FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

The Securities Exchange Act of 1934

 For the month of March 2017

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F     X   Form 40-F _____

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. )

Yes ____No   X          

(If "Yes" is marked, indicate below the file number assigned to registrant in connection with Rule 12g3-2(b): 82-__________. )

N/A

Huaneng Power International, Inc.

Huaneng Building,

6 Fuxingmennei Street,

Xicheng District,

Beijing, 100031 PRC

This Form 6-K consists of:

1.          An announcement regarding 2016 annual results of Huaneng Power International, Inc. (the Registrant”);

2.          An announcement regarding resolutions  passed at the twenty fourth meeting of the eighth session of the board of directors; and

3.          An announcement regarding proposed re-election and appointment of directors and supervisors;

Each made by the Registrant on March 22, 2017.

 

Announcement 1

 

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

(Stock Code: 902)

ANNOUNCEMENT OF ANNUAL RESULTS FOR 2016

SUMMARY OF OPERATING RESULTS

The Board of Directors (the “Board”) of Huaneng Power International, Inc. (the “Company” or “Huaneng International”) hereby announces the audited operating results of the Company and its subsidiaries for the year ended 31 December 2016.

For the twelve months ended 31 December 2016, the Company realized operating revenue of RMB113.814 billion, representing a decrease of 11.71% compared to the same period last year, and net profit attributable to equity holders of the Company amounted to RMB8.520 billion, representing a decrease of 37.59% as compared with the same period last year. Earnings per share amounted to RMB0.56. The Board is satisfied with the Company’s results last year.

The Board of the Company proposed to declare a cash dividend of RMB0.29 (inclusive of tax) for each ordinary share of the Company held by shareholders.

Details of the operating results are set out in the financial information.

BUSINESS REVIEW OF YEAR 2016

In 2016, the Company actively responded to the new changes of power system reform and the significant rise of coal price, and took proactive initiatives to progress the relevant work, so as to maintain overall stable operation in clean and safe production and strict cost control, thereby achieving a better annual operating objective. Meanwhile, the Company continued to fulfill the duties of providing sufficient, reliable and green power to the society.

1.	Operating Results

For the twelve months ended 31 December 2016, the Company realized operating revenue of RMB113.814 billion, representing a decrease of 11.71% compared to the same period last year. Net profit attributable to equity holders of the Company amounted to RMB8.520 billion, representing a decrease of 37.59% as compared with the same period last year. Earnings per share amounted to RMB0.56.

As at 31 December 2016, net assets per share attributable to the equity holders of the Company amounted to RMB5.66, representing an increase of 2.21% as compared with the year end of last year.

The Audit Committee of the Company convened a meeting on 20 March 2017 and reviewed the 2016 annual results of the Company.

2.	Power Generation

Total power generated by the Company’s domestic operating power plants for the year of 2016 on consolidated basis amounted to 313.69 billion kWh, representing a year-on-year decrease of 2.13%. The electricity sold amounted to 295.80 billion kWh, representing a year-on-year decrease of 2.05%. The annual average utilization hours of the Company’s domestic power plants reached 3,921 hours. The utilization hours of coal-fired power generating unit was 4,107 hours. In most of the areas where the Company’s coal-fired power plants are located, the utilization hours of the Company was in a leading position within those areas.

3.	Cost Control

Throughout 2016, the Company procured coal in an aggregate of 132 million tons. By continuously reinforcing cooperation with major coal mines, innovating cooperation mode and procurement strategy, optimizing regional supply structure, accurately judging coal market trends, targeting high-quality low-cost imported coal resources in advanced basis, and reducing the unit procurement price of standard coal, the Company controlled the fuel procurement costs in a better way, while the coal price rose significantly in the second half of the year. The unit fuel cost of our domestic power plants throughout the year occurred for sales of power was RMB170.62/MWh, representing a year-on-year decrease of 1.76%.

4.	Energy Saving and Environmental Protection

The Company has always placed energy saving and environmental protection as its utmost priority. In 2016, the Company continued to lead its peers in terms of production safety, technical, economic and energy consumption indicators. The average equivalent availability ratio of coal-fired units of the Company’s domestic power plants was 95.05% and its weighted average house consumption rate was 4.57%. The average yearly coal consumption rate of the Company’s coal-fired units for the power generated was 290.34 grams/kWh, which was 0.62 grams/kWh lower than that of the same period last year. The Company’s average coal consumption rate for power sold was 307.69 grams/kWh, representing a decrease of 0.87 grams/kWh from that of the same period last year.

Under the policy of green development and with the targets of “nil pollution to environment” and maintaining “leading position in various indicators”, the Company has been vigorously promoting business upgrade and reform to emphasize energy conservation and emission reduction. It continues to reinforce maintenance and operation of environment protection equipment, and continues to optimize its systems for the sake of long term development. Its core technology in relating to flue gas synergic management won the first prize in sector of power technology of China in 2016, and has been successfully applied in a number of our environment enhancement and new related projects. Also, the Company will continue to implement the requirements on ultra-low emissions and new energy consumption standards on coal-fired generating plants and improve the performance of the Company in energy conservation and environmental protection, realizing clean and green development.

5.	Capital Operation

In 2016, the Company signed agreement to acquire interests in four companies from parent company for the consideration of approximately RMB15.114 billion, so that it expanded the asset scale, operational scale and territory scope of the Company. Upon completion of the transaction on 1 January 2017, the Company increased its controlled generating capacity in operation by 15,607 MW, and capacity under construction by 3,666 MW.

Besides, the Company completed the acquisition of 100% equity interest in Luoyang Yangguang Cogeneration (with an installed capacity of 270 MW) in the third quarter of 2016.

6.	Project Development

The Company progressed smoothly in construction of power supply projects. During the year, the controlled generation capacity of the newly commissioned coal-fired generating units, wind power generating units and photovoltaic units of the Company was 850 MW, 328 MW and 99 MW, respectively. As of 31 December 2016, the Company’s controlled and equity-based generation capacity was 83,878 MW and 76,618 MW, respectively.

Besides, the Company has commenced operation of certain photovoltaic units and coal-fired generating units recently. As of 21 March 2017, the Company’s controlled and equity-based generation capacity was 101,116 MW and 89,545 MW, respectively.

7.	Overseas Business

 

The Company continues to deliver promising performance in the capital markets. It was awarded “Golden Governance 2016 Listed Company – Outstanding Board Secretaries” by the Shanghai Securities News (investor relations), and “the Most Investment Value of Listed Company” and “the Best Board Secretary” of the China Securities Golden Bauhinia Awards. The Company’s annual report of H Shares in 2015 won Gold Award in the 30th International ARC Awards Competition. Besides, the Company was on the list of “Platts Top 250 Global Energy Listed Company Ranking” for eight consecutive years and ranked 27th in 2016 with its ranking moving higher continuously.

PROSPECTS FOR 2017

In 2017, the Company will further firmly establish a sense of leadership, competitive awareness, market awareness and risk awareness. The Company will adhere to an issue-oriented approach, strengthen innovation drive, undertake responsibility and missions, enhance corporate vitality, and place more emphases on quality and efficiency, transformation and upgrading, standardizing management and risk prevention work, constantly improve the profitability, competitive strength and sustainable development capability of the Company.

In respect of the power market, the Company will continue to deeply research market supply and demand situation, and take active part in market competition. We will ensure market share is higher than capacity share, and strive for a leading position in the region in terms of utilization hour benchmark in an effort to achieve a power generation of 392.0 billion kWh and 3,800 utilization hours for the year.

Regarding the fuel market, the Company will adhere to the market-oriented development, and reinforce the benchmark system construction, deepen the refined management and thus creating a cost advantage. We will continue to optimize fuel procurement chain and production and operation chain.

In respect of the capital market, the Company will make active response to changes in the financial market, expand financing channels, strengthen internal control over capital and improve capital usage efficiency, continuing to maintain the Company’s leading position in the industry in terms of financing cost.

In respect of innovative development, the Company will further perform innovation-driven development strategy, strengthen production management innovation and improve intelligent production, enhance management efficiency and effectiveness. Innovation will become the Company’s primary driver for establishing its new competitive advantages and for steering the Company’s future development.

OPERATING AND FINANCIAL REVIEWS AND PROSPECTS

MANAGEMENT’S DISCUSSION AND ANALYSIS

(Prepared under International Financial Reporting Standards (“IFRS”))

General

The principal activities of the Company are investment in and construction, operation and management of power plants. The Company provides consistent and reliable electricity to customers through grid operators where its operating plants are located. The Company is committed to scientific development through increasing economic efficiency, enhancing returns for shareholders, conserving resources and protecting the environment. The Company also attaches importance to social responsibilities and makes active contribution to the building of a harmonious society.

Since its incorporation, the Company has continued to expand its operational scale and has been the leader in its industry in competitiveness, resource utilization efficiency and environmental protection. The Company is Asia’s largest listed power producer and China’s most dynamic power generator. Its power generation operations are widely located in China with coverage in Northeastern China Grid, Northern China Grid, Northwestern China Grid, Eastern China Grid, Central China Grid and Southern China Grid, as well as overseas market in Singapore.

Looking back in 2016, with strong support of its shareholders, the employees of the Company made active and concerted efforts to respond to the changes in power, coal and capital markets by expanding overseas market, improving marketing analysis and enhancing internal management with focus on key operations, as well as thorough planning and sound internal control. These efforts have contributed to growth of the Company in various aspects. During 2016, the Company maintained its leading position in major technological and economic indices and utilization hours through safe production and active marketing activities. Fuel management was enhanced and financial costs were effectively controlled. The Company achieved a remarkable improvement in its growth quality as a result of active power generation restructuring efforts. The Company has also made new developments in energy saving, ultra-low emission and technological renovation, diligently fulfilling its social responsibilities as a reliable provider of sufficient, stable and environment-friendly power to the society.

A.	OPERATING RESULTS

1.

2016 operating results

The power generation of the Company’s domestic power plants for the year ended 31 December 2016 are as listed below (in 100 million kWh):

Domestic Power Plant		Power Generation				Electricity sold
		2016		Change		2016		Change
Liaoning Province		198.24		-2.21%		186.28		-2.11%
Coal-fired		194.76		-2.28%		182.84		-2.18%
Wind power		2.97		2.75%		2.95		2.60%
Hydropower		0.34		-32.36%		0.34		-32.41%
PV		0.160		–		0.157		–
Inner Mongolia		2.18		12.82%		2.16		12.84%
Wind power		2.18		12.82%		2.16		12.84%
Heibei Province		130.63		3.54%		122.90		3.88%
Coal-fired		129.31		3.29%		121.69		3.65%
Wind power		1.16		19.68%		1.09		19.75%
PV		0.16		–		0.121		–
Gansu Province		97.16		37.76%		94.06		39.96%
Coal-fired		84.43		40.24%		81.85		42.72%
Wind power		12.73		23.15%		12.21		23.91%
Beijing		75.43		-6.67%		70.06		-6.49%
Coal-fired		34.06		-13.19%		29.65		-13.47%
Combined Cycle		41.36		-0.54%		40.41		-0.61%
Tianjin		72.53		-1.88%		68.43		-1.91%
Coal-fired		52.80		-2.71%		49.18		-2.74%
Combined Cycle		19.73		0.35%		19.24		0.28%
Shanxi Province		107.07		12.53%		100.67		17.09%
Coal-fired		81.61		-2.55%		75.94		-2.85%
Combined Cycle		25.46		123.53%		24.73		216.65%
Shandong Province		413.54		-2.31%		389.28		-2.34%
Coal-fired		413.54		-2.31%		389.28		-2.34%

 

Domestic Power Plant		Power Generation				Electricity sold
		2016		Change		2016		Change

Henan Province		214.52		6.23%		194.53		2.86%
Coal-fired		214.34		6.14%		194.41		2.80%
Wind power		0.19		–		0.12		–
Jiangsu Province		430.21		2.33%		408.8		2.08%
Coal-fired		389.25		4.31%		368.66		4.11%
Combined Cycle		35.17		-18.05%		34.54		-17.89%
Wind power		5.79		32.99%		5.59		31.00%
Shanghai		181.38		0.06%		171.81		0.01%
Coal-fired		164.89		0.84%		155.72		0.82%
Combined Cycle		16.49		-7.11%		16.09		-7.17%
Chongqing		100.16		-6.43%		93.14		-6.04%
Coal-fired		81.54		-16.51%		75.01		-16.68%
Combined Cycle		18.62		98.50%		18.13		99.02%
Zhejiang Province		247.11		0.15%		237.05		0.50%
Coal-fired		241.71		-0.92%		231.77		-0.58%
Combined Cycle		5.18		91.87%		5.06		90.83%
PV		0.215		169.30%		0.215		158.25%
Hubei Province		140.85		6.52%		132.07		7.02%
Coal-fired		136.02		4.48%		127.51		4.90%
Wind power		1.88		248.65%		1.74		289.00%
Hydropower		2.94		97.31%		2.83		100.71%
Hunan Province		83.16		-3.41%		78.27		-3.21%
Coal-fired		74.44		-5.28%		69.67		-5.36%
Wind power		5.37		38.78%		5.32		44.13%
Hydropower		3.34		-7.94%		3.28		-7.88%
Jiangxi Province		174.42		13.35%		166.41		15.50%
Coal-fired		173.35		13.33%		165.40		15.51%
Wind power		1.07		19.14%		1.01		13.65%
Anhui Province		58.46		-2.17%		55.76		-1.98%
Coal-fired		56.17		-3.94%		53.54		-3.70%
Wind power		0.89		–		0.82		–
Hydropower		1.40		8.66%		1.40		8.87%

 

Fujian Province		76.77		-29.52%		72.29		-30.00%
Coal-fired		76.77		-29.52%		72.29		-30.00%
Guangdong Province		174.53		-16.70%		166.94		-16.82%
Coal-fired		174.45		-16.74%		166.87		-16.85%
PV		0.07		–		0.064		–
Yunnan Province		38.83		-32.19%		35.73		-32.41%
Coal-fired		35.84		-35.76%		32.96		-36.02%
Wind power		2.99		103.21%		2.78		103.98%
Guizhou Province		0.45		16515.56%		0.38		–
Wind power		0.45		16515.56%		0.38		–
Hainan Province		119.28		-28.00%		111.00		-28.10%
Coal-fired		115.28		-28.52%		107.11		-28.65%
Combined Cycle		1.27		-48.64%		1.21		-49.29%
Wind power		1.01		1.93%		0.99		1.86%
Hydropower		1.64		75.99%		1.61		77.21%
PV		0.083		–		0.082		–
Total		3,136.90		-2.13%		2,958.00		-2.05%

The decrease in the Company’s power generation for the year was mainly attributable to the following reasons: (1) the installed capacity growth outpaced the growth of the nationwide power consumption while the utilization hours of coal-fired power generation units saw a year-on-year fall; (2) the growth of the Company’s installed capacity was below the regional average; and (3) the launch of new nuclear power generators in areas including Liaoning, Guangdong, Fujian and Hainan provinces had a relatively great impact on the output of the coal-fired power generation units in these regions.

For the year ended 31 December 2016, the accumulated power generation of Tuas Power Ltd., the Company’s wholly owned subsidiary in Singapore, accounted for a market share of 21.5%, representing a decrease of 0.2% compared to the same period last year.

In respect of the tariff, the Company’s domestic average tariff for the year ended 31 December 2016 was RMB396.60 per MWh, decreased by RMB46.66 per MWh from the year ended 31 December 2015. SinoSing Power’s average tariff for 2016 was RMB514.00 per MWh, representing a decrease of 17.88% from last year.

In respect of fuel costs, the effective cost controls of the Company contributed to reduced fuel costs of the Company. Compared with 2015, the Company’s fuel cost per unit of power sold of domestic power plant decreased by 1.76% to RMB170.62 per MWh.

Combining the forgoing factors, for the year ended 31 December 2016, the Company recorded an operating revenue of RMB113.814 billion, representing a decrease of 11.71% from RMB128.905 billion of last year, and the net profit attributable to equity holders of the Company of RMB8.520 billion, representing a decrease of 37.59% from RMB13.652 billion of last year.

For the year ended 31 December 2016, the net profit attributable to equity holders of the Company from domestic operations was RMB8.760 billion, representing a decrease of RMB4.951 billion from RMB13.711 billion for the same period last year. The decrease was primarily attributable to lowered on-grid tariff for coal-fired power generator administered by the National Development and Reform Commission (“NDRC”), reduced domestic power generation of the Company and increased volume of market power transactions. The net loss attributable to equity holders of the Company from its operations in Singapore was RMB240 million, representing an increase of RMB181 million compared to the same period last year.

2.

Comparative Analysis of Operating results

2.1

Operating revenue and tax and levies on operations

Operating revenue mainly consists of revenue from electricity sold. For the year ended 31 December 2016, the consolidated operating revenue of the Company and its subsidiaries amounted to RMB113.814 billion, representing a decrease of 11.71% from RMB128.905 billion for the year ended 31 December 2015. The operating revenue from domestic operations of the Company decreased by RMB13.706 billion over the same period of last year, while the operating revenue generated from newly acquired entities and newly operated generating units was RMB3.525 billion.

The operating revenue from the operations of the Company in Singapore decreased by RMB1.385 billion over the same period of last year, which was mainly attributed to the continued oversupply in the Singapore power and natural gas market, causing continued decline of electricity tariff and a drop of the operating revenue.

Region/type of power generation		Average tariff rate (VAT inclusive)
		(RMB/MWh)
		2016		2015		Change
Liaoning Province
Coal-fired		344.42		374.38		-8.00%
Wind power		618.74		593.25		4.30%
Hydropower		332.67		329.96		0.82%
PV		950.00		–		Not applicable
Inner Mongolia
Wind power		471.22		520.00		-9.38%
Hebei Province
Coal-fired		358.48		401.79		-10.78%
Wind power		554.60		538.14		3.06%
PV		784.95		–		Not applicable

Gansu Province
Coal-fired		207.63		259.51		-19.99%
Wind power		398.34		483.75		-17.66%
Beijing
Coal-fired		454.99		480.70		-5.35%
Combined Cycle		687.33		959.91		-28.40%
Tianjin
Coal-fired		370.82		416.54		-10.98%
Combined Cycle		726.44		817.57		-11.15%
Shanxi Province
Coal-fired		252.98		333.78		-24.21%
Combined Cycle		682.40		703.80		-3.04%
Shandong Province
Coal-fired		381.99		436.47		-12.48%
Henan Province
Coal-fired		355.46		400.54		-11.25%
Wind power		610.00		–		Not applicable
Jiangsu Province
Coal-fired		378.06		410.86		-7.94%
Combined Cycle		661.52		731.69		-9.59%
Wind power		570.50		568.33		0.38%
Shanghai
Coal-fired		385.59		424.38		-9.14%
Combined Cycle		899.62		937.13		-4.00%
Chongqing
Coal-fired		376.92		427.84		-11.90%
Combined Cycle		649.74		872.20		-25.51%
Zhejiang Province
Coal-fired		407.76		460.76		-11.50%
Combined Cycle		887.70		1,278.17		-30.55%
PV		1,076.50		1,125.67		-4.37%

Hubei Province
Coal-fired		378.65		439.98		-13.94%
Wind power		610.00		610.00		0.00%
Hydropower		378.81		376.60		0.59%
Hunan Province
Coal-fired		449.87		480.55		-6.38%
Wind power		610.00		611.43		-0.23%
Hydropower		404.19		410.00		-1.42%
Jiangxi Province
Coal-fired		399.78		439.7		-9.08%
Wind power		610.00		610.00		0.00%
Anhui Province
Coal-fired		351.24		409.79		-14.29%
Wind power		610.00		–		Not applicable
Hydropower		385.60		392.89		-1.86%
Fujian Province
Coal-fired		348.95		392.29		-11.05%
Guangdong Province
Coal-fired		448.36		487.41		-8.01%
PV		980.00		–		Not applicable
Yunnan Province
Coal-fired		579.58		311.78		85.89%
Wind power		494.71		–		Not applicable
Guizhou Province
Wind power		610.00		–		Not applicable
Hainan Province
Coal-fired		420.72		459.31		-8.40%
Combined Cycle		672.26		629.32		6.82%
Wind power		609.78		571.95		6.61%
Hydropower		400.07		399.78		0.07%
PV		1,010.00		–		Not applicable

Domestic total		396.60		443.26		-10.53%
SinoSing Power		514.00		625.88		-17.88%

Note:

The tariff of combined-cycle power plants in Shanghai and Zhejiang consists of on-grid settlement price and capacity subsidy income.

Tax and levies on operations mainly consist of surcharges of value-added tax. According to relevant administrative regulations, these surcharges include City Construction Tax and Education Surcharges calculated at prescribed percentages on the amounts of the value-added tax paid. For the year ended 31 December 2016, the tax and levis on operations of the Company and its subsidiaries were RMB1.178 billion, representing an increase of RMB20 million from RMB1.158 billion for the same period of last year, of which the tax and levies on operations attributable to newly acquired entities and new generating units accounted for RMB14 million.

2.2

Operating expenses

For the year ended 31 December 2016, the total operating expenses of the Company and its subsidiaries was RMB94.259 billion, representing a decrease of 4.41% from the same period last year. The operating expenses in domestic operations of the Company decreased by RMB2.823 billion, or 3.19%, from the same period last year, of which the newly acquired entities and the new generating units accounted for RMB2.945 billion; the costs attributable to the existing entities decreased by RMB5.768 billion, which was primarily attributable to the decreased fuel costs for domestic operations in China.

The operating expenses from the operations in Singapore decreased by RMB1.522 billion, or 14.89%, from the same period last year, which was mainly due to the decline of fuel costs resulting from decreased natural gas price.

2.2.1

Fuel costs

Fuel costs account for the majority of the operating expenses for the Company and its subsidiaries. For the year ended 31 December 2016, fuel costs of the Company and its subsidiaries decreased by 4.43% to RMB56.618 billion from the RMB59.242 billion for the year ended 31 December 2015. The fuel costs from domestic operations of the Company and its subsidiaries decreased by RMB1.603 billion, which was primarily attributable to the decreased power generation in the domestic market. The fuel costs of the newly acquired entities and new generating units were RMB2.043 billion and the fuel costs of the existing generating units decreased by RMB3.646 billion from same period last year. Fuel costs in Singapore decreased by RMB1.022 billion from the same period last year, mainly due to decreased fuel costs arising from decreased natural gas prices. For the year ended 31 December 2016, the average price (excluding tax) of natural fuel coal consumed of the Company and its domestic subsidiaries was RMB376.30 per ton, representing a 2.73% increase from RMB366.30 per ton for the year ended 31 December 2015. The fuel cost per unit of power sold by the Company’s domestic power plants decreased by 1.76% to RMB170.62/MWh from RMB173.67/MWh in 2015.

2.2.2

Maintenance

For the year ended 31 December 2016, the maintenance expenses of the Company and its subsidiaries amounted to RMB4.343 billion, representing a decrease of RMB213 million from RMB4.556 billion for the year ended 31 December 2015. The maintenance expenses of the Company’s domestic operations decreased by RMB225 million compared to the same period last year. The maintenance expenses of operations in Singapore increased by RMB12 million compared to the same period last year.

2.2.3

Depreciation

For the year ended 31 December 2016, depreciation expenses of the Company and its subsidiaries increased by 2.80% to RMB14.816 billion, compared to RMB14.412 billion in the year ended 31 December 2015; the increase is mainly due to the expansion of the Company’s operations. The depreciation expenses of domestic operations increased by RMB397 million compared to the same period last year, of which the depreciation costs incurred by the newly acquired entities and new generating units was RMB605 million. The depreciation expenses of the operations in Singapore increased by RMB7 million compared to the same period last year.

2.2.4

Labor

Labor costs consist of salaries to employees and contributions payable for employees’ housing funds, medical insurance, pension and unemployment insurance, as well as training costs. For the year ended 31 December 2016, the labor costs of the Company and its subsidiaries amounted to RMB8.043 billion, representing an increase of RMB291 million from RMB7.752 billion for the year ended 31 December 2015. This is mainly attributable to labor costs of the newly acquired entities and new generating units,

which were RMB164 million. Labor costs for Singapore operations increased by RMB14 million compared to the same period last year.

2.2.5

Other operating expenses (including electricity power purchase costs and service fees paid to HIPDC)

Other operating expenses include environmental protection expenses, land fee, insurance premiums, office expenses, amortization, Tuas Power’s electricity power purchase costs, impairment losses, government subsidies and net losses on disposal of properties, plant and equipment. For the year ended 31 December 2016, other operating expenses (including electricity power purchase costs and service fees paid to HIPDC) of the Company and its subsidiaries was RMB10.439 billion, representing a decrease of RMB2.203 billion from RMB12.642 billion for the year ended 31 December 2015. The other operating expenses from the Company’s domestic operations decreased by RMB1.669 billion; other operating expenses of the existing entities decreased by RMB1.650 billion compared to the same period last year. The impairment loss experienced a decrease of RMB1.886 billion compared to the same period last year.

Other operating expenses of the operations in Singapore decreased by RMB534 million compared to the same period last year. The electricity power purchase cost decreased by RMB523 million compared to the same period last year, which was largely due to the decreased price of electricity in retail business.

2.3

Financial expenses

 

2.3.1

Interest expenses

For the year ended 31 December 2016, the interest expenses of the Company and its subsidiaries were RMB6.818 billion, representing a decrease of 14.20% from RMB7.946 billion for the year ended 31 December 2015. The interest expenses from the Company’s domestic operations decreased by RMB1.157 billion. The interest expenses from the newly acquired entities and new generating units were RMB303 million and those incurred by the existing entities in China decreased by RMB1.460 billion, which is largely attributable to decreased benchmark interest rate of RMB. The interest expenses of Singapore operations increased by RMB29 million compared to the same period last year.

2.3.2

Net exchange differences and bank charges

For the year ended 31 December 2016, the Company and its subsidiaries recorded a net loss of RMB250 million in net exchange losses and bank charges, representing a net loss increase of RMB226 million compared with the net loss of RMB24 million for the year ended 31 December 2015, mainly due to the weakened exchange rate of RMB against U.S. dollar.

The operations in Singapore recorded net gains of RMB50 million from net exchange difference and bank charges, representing a decrease of RMB120 million from the net gains of RMB170 million for the year ended 31 December 2015, mainly due to the strengthened exchange rate of U.S. dollar against Singapore dollar.

2.4

Share of profits less losses of associates and joint ventures

For the year ended 31 December 2016, the share of profits less losses of associates and joint ventures was RMB1.299 billion, representing a decrease of RMB227 million from RMB1.526 billion from last year, mainly due to decreased profit of associates and joint ventures.

 

 

2.5

Income tax expenses

For the year ended 31 December 2016, the Company and its subsidiaries recognised income tax expense of RMB3.465 billion, representing a decrease of RMB2.234 billion from RMB5.699 billion for the year ended 31 December 2015. The income tax expenses for the domestic operations decreased by RMB2.445 billion primarily attributable to the decrease of pre-tax profit. The income tax expenses of the operations in Singapore increased by RMB211 million. It is mainly due to RMB204 million of income tax credit granted by Singapore government last year and no such tax credit was granted in the current year.

2.6

Net profit, net profit attributable to the equity holders of the Company and non-controlling interests

For the year ended 31 December 2016, the Company and its subsidiaries achieved a net profit of RMB10.348 billion, representing a decrease of RMB6.911 billion, or 40.04% from RMB17.259 billion for the year ended 31 December 2015; the net profit attributable to equity holders of the Company was RMB8.520 billion, representing a decrease of RMB5.132 billion from RMB13.652 billion for the year ended 31 December 2015.

The net profit attributable to equity holders of the Company from its domestic operations was RMB4.951 billion, mainly contributable to lowered on-grid tariff for coal-fired power generators administered by NDRC, reduced domestic power generation of the Company and increased volume of market power transactions. The net loss attributable to equity holders of the Company from its operations in Singapore was RMB240 million, representing an increase of RMB181 million from the same period last year. This was mainly due to commenced operation of many generators during the recent years, which led to the continued oversupply in the Singapore’s power and natural gas market and subsequently continued reduction of power tariff and a marked drop in the profitability of the Company’s overseas power generation business.

The Company’s recorded net profit attributable to non-controlling interests decreased to RMB1.828 billion for the year ended 31 December 2016 from RMB3.607 billion for the year ended 31 December 2015, mainly attributable to reduced profit of the Company’s non-wholly owned subsidiaries.

2.7

Comparison of financial positions

2.7.1

Comparison of asset items

As of 31 December 2016, consolidated total assets of the Company and its subsidiaries were RMB314.840 billion, representing an increase of 1.93% from RMB308.866 billion as of 31 December 2015; total assets of the domestic operations increased by RMB5.312 billion to RMB286.557 billion, including a net increase of RMB2.004 billion in non-current assets, which is mainly attributable to the capital expenditure on construction projects.

As of 31 December 2016, total assets of the operations in Singapore were RMB28.283 billion, representing an increase of RMB661 million as of 31 December 2015. Non-current assets increased by RMB568 million to RMB24.174 billion, primarily attributable to appreciation of Singapore dollar against RMB resulting in higher RMB value of goodwill, power generation license and other non-current assets.

2.7.2

Comparison of liability items

As of 31 December 2016, consolidated total liabilities of the Company and its subsidiaries were RMB212.653 billion, representing an increase of 2.65% from RMB207.173 billion as of 31 December 2015.

As of 31 December 2016, interest-bearing debts of the Company and its subsidiaries totaled RMB176.098 billion. The interest-bearing debts consist of long-term loans (including those maturing within a year), long-term bonds payable (including those maturing within a year), short-term loans, short-term bonds and financial leases payable. The interest-bearing debts denominated in foreign currencies amounted to RMB3.290 billion.

As of 31 December 2016, the total liabilities of the operations in Singapore were RMB15.205 billion, representing a decrease of 4.09% from RMB15.853 billion as of 31 December 2015, principally due to fair value changes of fuel swap contract.

2.7.3

Comparison of equity items

Excluding the impact of profit and profit appropriations, total equity attributable to the equity holders of the Company increased as of 31 December 2016, including a decrease of post-tax impact of RMB890 million arising from disposal of available-for-sale financial asset and fair value changes of available-for-sale financial assets held by the Company and its subsidiaries, a decrease of post-tax impact of RMB181 million arising from changes in other comprehensive income of the Company’s investees accounted for under equity method, an increase of post-tax impact of RMB1.015 billion arising from fair value changes of cash flow hedge instruments, an increase of RMB540 million from translation difference of the financial statements of foreign operations.

Non-controlling interests as of 31 December 2016 increased by RMB1.368 billion.

2.7.4

Major financial position ratios

		2016				2015
Current ratio			0.28				0.27
Quick ratio			0.23				0.23
Ratio of liability to shareholders’ equity			2.47				2.46
Multiples of interest earned			2.84				3.55

Formula of the financial ratios:

Current ratio	=	balance of current assets as of the year end
		balance of current liabilities as of the year end
Quick ratio	=	(balance of current assets as of the year end – net inventories as of the year end)
		balance of current liabilities as of the year end
Ratio of liabilities to shareholders’ equity	=	balance of liabilities as of the year end
		balance of shareholders’ equity (excluding non-controlling interests) as of the year end
Multiples of interest earned	=	(profit before tax + interest expense)
		interest expenditure (inclusive of capitalized interest)

The current ratio increased as of 31 December 2016 compared to that of 31 December 2015 mainly due to increase of current assets especially inventories and other current assets. The ratio of liabilities to shareholders’ equity as of 31 December 2016 increased compared to that of 31 December 2015 mainly due to the increase in loans at the year end. The multiples of interest earned decreased mainly due to reduced pre-tax profit for the year ended 31 December 2016.

B.	LIQUIDITY AND CASH RESOURCES

1.

Liquidity

	For the year ended 31 December
	2016				2015				Change
	RMB billion				RMB billion				%
Net cash provided by operating activities			31.511				42.363				-25.62
Net cash used in investing activities			-17.650				-33.015				-46.54
Net cash used in financing activities			-13.602				-14.141				-3.81
Currency exchange impact			0.073				0.033				122.01
Net increase/(decrease) in cash and cash equivalents			0.332				-4.760				–106.98
Cash and cash equivalents as at the beginning of the year			7.478				12.238				-38.90
Cash and cash equivalents as at the end of the year			7.810				7.478				4.44

For the year ended 31 December 2016, net cash provided by operating activities of the Company and its subsidiaries was RMB31.511 billion, representing a decrease of 25.62% from last year, mainly attributable to reduced operating revenue as a result of decrease of power generation and tariff. Net cash provided by operating activities in Singapore was RMB772 million. The net cash used in investing activities was RMB17.650 billion, representing a decrease of 46.54% from last year, mainly due to consideration paid for newly acquired entities in 2015. The net cash used in financing activities was RMB13.602 billion, representing a decrease of 3.81% from last year. As of 31 December 2016, the cash and cash equivalents of the Company and its subsidiaries denominated in RMB, Singapore dollar and U.S. dollar were RMB6.620 billion, RMB870 million and RMB320 million, respectively.

As of 31 December 2016, net current liabilities of the Company and its subsidiaries were approximately RMB93.230 billion. Based on the Company’s proven financing record, readily available banking facilities and sound credibility, the Company believes it is able to duly repay outstanding debts, obtain long-term financing and secure funding necessary for its operations. The Company has also capitalized on its good credit record to make short-term loans at relatively lower interest rates, thus reducing its interest expenses.

2.

Capital expenditure and cash resources

2.1

Capital expenditure on infrastructure construction and renovation projects

The capital expenditures for the year ended 31 December 2016 were RMB20.285 billion, mainly for construction and renovation of projects, including RMB1.558 billion for Rudong Baxianjiao Offshore Wind Power project, RMB878 million for Beijing Cogeneration project, RMB594 million for Hainan Power project, RMB587 million for Xianrendao Cogeneration project, RMB558 million for Jiangxi Clean Energy project, RMB537 million for Guilin Gas Distributed Energy project, RMB534 million for Tongwei Wind Power project, RMB520 million for Suzhou combined cycle project, RMB493 million for Taiyuan Combined Cycle project, RMB467 million for Mianchi Cogeneration project, RMB458 million for Yuhuan project, RMB448 million for Luoyuan Power project, RMB423 million for Dezhou project, RMB405 million for Shang’an project, RMB401 million for Qinbei Power project, RMB384 million for Nanjing Cogeneration project, RMB348 million for Wuhan Power project, RMB325 million for Jieshan Wind Power project, RMB323 million for Changxing project, RMB299 million for Luoyang Power project, RMB274 million for Weihai Power project, RMB267 million for Guanyun Cogeneration project, RMB259 million for Shidongkou Power project, RMB252 million for Yingcheng Cogeneration project, RMB239 million for

Fuzhou project. The capital expenditures of the Company’s operations in Singapore were RMB151 million. The expenditures on other projects were RMB8.303 billion.

The above capital expenditures are sourced mainly from internal capital, cash flows provided by operating activities and debt financing.

The Company expects to have significant capital expenditures in the next few years. During the course, the Company will make active efforts to improve project planning process on a commercially viable basis. The Company will also actively develop newly planned projects to pave the way for its long-term growth. The Company expects to finance the above capital expenditures through internal capital, cash flows provided by operating activities, and debt and equity financing.

The cash requirements, usage plans and cash resources of the Company are as following:

(Unit: RMB100 million)

Capital Expenditure Project		Capital Expenditure Plan for 2017		Cash resources arrangements		Financing costs and note on use
Thermal power projects		58.74		Including internal cash resources and bank loans		Within the floating range of benchmark lending interest rates of PBOC
Hydropower projects		0		Including internal cash resources and bank loans		Within the floating range of benchmark lending interest rates of PBOC
Wind power projects		103		Including internal cash resources and bank loans		Within the floating range of benchmark lending interest rates of PBOC
Coal mining projects		0		Including internal cash resources and bank loans		Within the floating range of benchmark lending interest rates of PBOC
Photovoltaic power projects		13.50		Including internal cash resources and bank loans		Within the floating range of benchmark lending interest rates of PBOC

Capital Expenditure Project		Capital Expenditure Plan for 2017		Cash resources arrangements		Financing costs and note on use
Others		0		Including internal cash resources and bank loans		Within the floating range of benchmark lending interest rates of PBOC
Technology renovation		51.83		Including internal cash resources and bank loans		Within the floating range of benchmark lending interest rates of PBOC

2.2

Cash resources and anticipated financing costs

The Company expects to finance its capital expenditure and acquisition costs primarily with internal capital, cash flow provided by operating activities, and debt and equity financing.

Good operating results and sound credit status provide the Company with strong financing capabilities. As of 31 December 2016, the undrawn banking facilities available to the Company and its subsidiaries amount to approximately RMB262.8 billion, which are granted by Bank of China, China Construction Bank and Industrial and Commercial Bank of China, etc.

The Company completed issuances of unsecured short-term notes in two installments on 4 August 2016 and 14 October 2016, each at a principal amount of RMB3 billion with nominal annual interest rates of 2.5% and 2.6%, respectively. Each installment of the notes was denominated in RMB, issued at par value, and would mature in 365 days from the value date.

The Company completed issuances of unsecured super short-term notes in nine installments on 3 March, 9 March, 23 March, 8 April, 20 April, 26 May, 13 July, 9 November, and 1 December 2016, at a principal amount of RMB2 billion, RMB2 billion, RMB2 billion, RMB4 billion, RMB3 billion, RMB3 billion, RMB4 billion, RMB2 billion and RMB2 billion with nominal annual interest rates of 2.59%, 2.48%, 2.48%, 2.42%, 2.62%, 2.73%, 2.50%, 2.79% and 3.45%, respectively. Each installment of the notes was denominated in RMB, issued at par value, and would mature in 270 days from the value date.

The Company completed issuance of one installment of unsecured super short-term note on 16 November 2016 at a principal amount of RMB3 billion with a nominal annual interest rate of 2.98%. The note was denominated in RMB, issued at par value, and would mature in 180 days from the value date.

The Company completed issuances of unsecured corporate notes in two installments on 8 June 2016 at a principal amount of RMB3 billion and RMB1.2 billion with nominal annual interest rates of 3.48% and 3.98%, respectively. Each installment of the notes was denominated in RMB, issued at par value, and would mature in five years and ten years, respectively, from the value date.

As of 31 December 2016, short-term loans of the Company and its subsidiaries totalled RMB57.669 billion (2015: RMB49.883 billion). Loans from banks were charged at interest rates ranging from 2.77% to 4.35% per annum (2015: 3.19% to 5.60%).

Short-term bonds payable by the Company and its subsidiaries were RMB27.311 billion (2015: RMB19.348 billion).

As of 31 December 2016, long-term loans (including those maturing within a year) of the Company and its subsidiaries totalled RMB74.551 billion (2015: RMB78.379 billion), including RMB denominated borrowings of RMB58.876 billion (2015: RMB62.441 billion), U.S. dollar denominated loans of approximately US$410 million (2015: US$473 million), Euro denominated loans of approximately €39 million (2015: €49 million), Singapore dollar denominated loans of S$2.581 billion (2015: S$2.697 billion), and Japanese yen denominated loans of ¥2.703 billion (2015: ¥2.812 billion). Among them, all loans denominated in US dollar and Singapore dollar were floating rate, and loans denominated in all other foreign currencies were fixed rate. As of 31 December 2016, long-term bank loans of the Company and its subsidiaries had interest rates ranging from 0.75% to 5.65% per annum (31 December 2015: 0.75% to 6.55%).

The Company and its subsidiaries will closely monitor any change in the exchange rate and interest rate markets and cautiously assess the currency rate and interest rate risks.

Combining the current development of the power generation industry and the growth of the Company, the Company will make continuous efforts to not only meet cash requirements of daily operations, constructions and acquisitions, but also establish an optimal capital structure to minimize the cost of capital and manage financial risks through effective financial management activities, thus maintaining sustainable and stable returns to the shareholders.

2.4

Other financing requirements

The objective of the Company is to bring steadily growing returns to shareholders in the long run. In line with this objective, the Company follows a proactive, stable and balanced dividend policy. In accordance with the profit appropriation plan of the board of directors of the Company (subject to the approval at annual general meeting) for 2016, the Company expects to pay a cash dividend of RMB4.408 billion.

2.5

Maturity profile of loans and bonds

	2017				2018				2019				2020				2021
Maturity Profile (RMB billion)
Principal amount planned for repayment			97.530				16.090				13.203				9.221				9.407
Interest amount planned for repayment			5.545				3.150				2.443				1.755				1.386
Total			103.075				19.240				15.646				10.976				10.793

Note:

The amount of principle to be paid in 2017 is relatively large because this includes expected repayment of short-term loans and short-term bonds.

C.	LONG-TERM DEVELOPMENT STRATEGY AND PLANNING

 

D.	TREND ANALYSIS

It is predicted by China Electricity Council that in 2017, total electricity consumption nationwide will grow by approximately 3%.

2017 will see newly installed generating capacity of approximately 110 million kW, including new non-petrochemical energy capacity of 60 million kW; the installed generating capacity nationwide is expected to reach 1.75 billion kW, representing 6% increase from 2016, of which non-petrochemical energy capacity will reach 660 million kW, increasing its percentage to approximately 38% in the total installed capacity.

2017 is expected to witness a generally abundant power supply in China with redundant generating capacities in certain regions. Specifically, Northern region is expected to have a balanced supply and demand power market; Central, Eastern, and Southern regions will experience generally sufficient power supply with abundant generating capacities in many provinces; Northeast and Northwest regions will see a market of generally redundant power supply with abundant capacities in some provinces. In 2017, the annual power generation utilization hours nationwide are expected to be 3,600 hours, and utilization hours of thermal generating units are estimated to reduce to 4,000 hours.

According to the Center for Forecasting Science of Chinese Academy of Sciences, thermal generating units are expected to use less coal in 2017 than in 2016 as a result of the government policy to reduce production capacities in the coal sector and a weakened power market in China. Total coal consumption is expected to experience a year-on-year decrease of 3% in 2017, while excessive coal supply will continue due to the generally weak-supply-and-weak-demand and structural-oversupply situation nationwide. Railway transport and air freight capacity will further loosen. Considering the effect of RMB exchange rate and a gradually stabilized domestic coal market, less coal may be imported than in 2016 while coal imports are expected to have certain impact on domestic coal price. The Company estimates that the coal price in 2017 will gradually stabilize after fluctuation within a narrow range.

E.	PERFORMANCE OF SIGNIFICANT INVESTMENTS AND THEIR PROSPECTS

The Company acquired 25% equity interest in Shenzhen Energy Group for RMB2.39 billion on 22 April 2003. In 2011, Shenzhen Energy Group divided into a remainder company of the same name and a new company Shenzhen Energy Management Company (“SE Management”), and the Company holds 25% equity interests in each of the two successors. The Company acquired 200 million shares from Shenzhen Energy Corporation (“Shenzhen Energy”), a subsidiary of Shenzhen Energy Group, in December 2007. Shenzhen Energy allotted shares with its capital surplus in 2011. In February 2013, Shenzhen Energy merged SE Management through the combination of directional seasoned offering and cash payment to the shareholders of SE Management, Shenzhen State-owned Assets Administration Commission and the Company. After the merger, the Company directly held 661 million shares of Shenzhen Energy, representing 25.02% of its equity interests. In 2016, Shenzhen Energy distributed two shares of stock dividend out of every 10 shares to its shareholders, and therefore the Company held 992 million shares of Shenzhen Energy by 31 December 2016. These investments brought a net profit attributable to the equity holders of the Company of RMB435 million for the Company for the year ended 31 December 2016 under IFRS. This investment is expected to provide steady returns to the Company.

The Company held 60% direct equity interest in Sichuan Hydropower as of 31 December 2006. In January 2007, Huaneng Group increased its capital investment in Sichuan Hydropower by RMB615 million, thus reducing the Company’s equity interest in Sichuan Hydropower to 49% and making Huaneng Group the controlling shareholder of Sichuan Hydropower. This investment brought a net profit attributable to the equity holders of the Company of RMB85 million for the year ended 31 December 2016 under IFRS. This investment is expected to provide steady returns to the Company.

F.	EMPLOYEE BENEFITS

As of 31 December 2016, the Company and its subsidiaries had 42,210 employees within and outside the PRC. The Company and its subsidiaries provide employees with competitive remuneration and linked such remuneration to operating results to provide incentives for the employees. Currently, the Company and its subsidiaries do not have any stock or option based incentive plan.

Based on the development plans of the Company and its subsidiaries and the requirements of individual positions, together with consideration of specific characteristics of individual employees, the Company and its subsidiaries tailored various training programs for their employees on management, technology and the skills. These programs enhanced the comprehensive skills of the employees.

G.	GUARANTEE FOR LOANS AND RESTRICTED ASSETS

As of 31 December 2016, the Company provided guarantees of approximately RMB12.379 billion for the long-term bank loans of Tuas Power.

As of 31 December 2016, the details of secured loans of the Company and its subsidiaries were as follows:

(1)

As of 31 December 2016, short-term loans of RMB126 million represented the notes receivable that were discounted with recourse. As these notes receivable had not yet matured, the proceeds received were recorded as short-term loans.

(2)

As of 31 December 2016, long-term loans of RMB2.902 billion of the Company and its subsidiaries were secured by certain property, plant and equipment with net book value of approximately RMB3.105 billion.

(3)

As of 31 December 2016, long-term loans of approximately RMB9.032 billion were secured by future electricity revenue of the Company and its subsidiaries.

As of 31 December 2016, the restricted bank deposits of the Company and its subsidiaries were RMB71 million.

As of 31 December 2016, the property, plant and equipment leased under finance lease of the Company and its subsidiaries with net book value amounted to RMB1.763 billion.

H.	ACCOUNTING STANDARDS HAVING MATERIAL IMPACT ON THE COMPANY’S FINANCIAL STATEMENTS

For the accounting standards that have a material impact on the Company’s financial statements, please refer to the Note 2 to the financial information extracted from financial statements prepared in accordance with IFRS.

I.	IMPAIRMENT SENSITIVITY ANALYSIS

1.

Goodwill impairment

The Company and its subsidiaries conducts impairment test on each individually recognised goodwill at the end of each year. In 2016, the management recognized no goodwill impairment based on the impairment assessment.

For goodwill allocated to CGUs in the PRC, changes of assumptions in tariff and fuel price could have affected the results of goodwill impairment assessment. As at 31 December 2016, if tariff had decreased by 1% or 5% from management’s estimates with other variables constant with the expectations, the Company and its subsidiaries would have to recognize impairment against goodwill by approximately RMB176 million and RMB1,043 million, respectively. If fuel price had increased by 1% or 5% from the management’s estimates with other variables constant with the expectations, the Company and its subsidiaries would have to recognize impairment against goodwill by approximately RMB37 million and RMB899 million, respectively.

2.

Impairment of other non-current assets

The Company and its subsidiaries will test its property, plant and equipment, land use rights and mining rights suffered any impairment whenever an impairment indication exists.

In 2016, impairment losses for certain property, plant and equipment and land use rights of approximately RMB1,064 million and RMB52 million have been recognized, respectively. Factors leading to the impairment of operating projects primarily included lower utilization hours and tariff of two coal-fired power plants as a result of over supply of electricity in two provinces, as well as low utilization hours of a hydropower plant as a result of low level of water inflow.

Changes of assumptions in tariff and fuel price will affect the result of property, plant and equipment, land use rights and mining rights impairment assessment. As at 31 December 2016, if tariff had decreased by 1% or 5% from management’s estimates with other variables constant with the expectation, the Company and its subsidiaries would have to further recognise impairment against property, plant and equipment and land use rights by approximately RMB92 million and RMB779 million, respectively; if fuel price had increased by 1% or 5% from the management’s estimates with other variables constant with the expectations, the impairment against property, plant and equipment, land use rights and mining rights of the Company and its subsidiaries would decrease by approximately RMB8 million and RMB38 million, respectively.

J.	RISK FACTORS

1.

Risks relating to power market

Due to the distribution characteristics of the Company’s coal-fired power generating units and the gradual development of power market reforms, the previous market competition pattern will be further affected. All above factors will have a significant impact on the power generation growth of the Company.

The Company will further implement various government policies and improve its power supply pattern, strengthen its efforts in analyzing and studying relevant policies and conditions of power market, design effective marketing strategies to respond to market change, and make efforts to effectively participate in both market transactions and the transactions subject to government plans. By leveraging strengths on efficiency, energy saving and environment protection of its generating units, the Company will take initiatives to participate in various transactions, maintain and strive to expand market share, effectively increase equipment utilization hours and strictly control the risks in electricity market.

2.

Risks relating to electricity tariff

With the gradually relaxed control of planned power generation, continuously deepened market competition and policies behind changes of coal price, the Company’s electricity tariff faces reduction pressure.

The Company will closely monitor relevant government policies and power market reform development, strengthen communication with central and local pricing authorities, actively call for continuous improvement of the mechanism of coal-electricity price linkage, and strongly support the government to establish a reasonable, fair and regulated market environment. The Company will also strictly implement state tariff policies to seek timely utilization of the policies regarding environmental protection tariff as well as standard tariffs for the electricity generated by newly operated generating units are timely put in place.

3.

Risks relating to environmental protection policies

In 2016, the Action Plan on Air Pollution Prevention and Treatment, Action Plan of Energy Saving, Emission Reduction, Upgrading and Transformation (2014-2020), and Target Missions for Central Generating Enterprises in Energy Saving, Emission Reduction, Upgrading and Transformation (2015), Integrated Reform Plan for Promoting Ecological Progress, as well as the new Environmental Protection Law came gradually into force in China. National standards for energy saving environmental protection are increasingly higher, environmental protection restrictions for energy development are further tightened, which will increase the energy saving and transformation costs of the coal-fired generating sets which account for a high percentage of the Company’s installed capacity.

To respond to the state’s proposition actively, the Company diligently promoted environmental protection projects focused on ultra-low emission renovation to coal-fired generating units. By the end of 2016, most coal-fire generating units had completed the ultra-low emission renovation, of which all generating units of 21 subsidiaries had met the ultra-low emission standards and all subsidiaries in five regions (i.e. Northern China, etc.) had completed the renovation projects.

4.

Interest rate risks

The interest-bearing debts of the Company are mostly denominated in RMB. Fluctuations of interest rates applicable to RMB loan contracts will directly affect the company’s debts cost. The monetary policy of PBOC will be more neutral and prudent in 2017. With the anticipation of raising interest rates of U.S. dollar and interaction of global markets, 2017 is expected to see a liquidity shortage. The likely interest rate hike of U.S. dollar will bring about certain impact on our U.S. dollar debt costs, which is not expected to have material adverse effect due to its small percentage in the overall debt costs of the Company. In the Singapore capital market, the SOR interest rate will be influenced by increased U.S. dollar lending rates as well as fluctuated exchange rate of Singapore dollar, which will bring uncertainties to financing costs of Tuas Power.

With close watch on changes in domestic and overseas capital markets, the Company will make reasonable financing arrangements, explore new financing methods, and strive to control financing costs subject to the satisfaction of funding requirements, and strive to control risks of foreign currency interest rate by RMB debt replacement and interest rate swap and other methods.

5.

Risks relating to coal market

In 2017, China will further the “Supply Side” reform of the coal market, which will bring certain degree of risks to the fuel cost control. Fluctuation of exchange rate of RMB and change of coal policies of Indonesia and other major coal export countries will also bring uncertainties to the coal import. On the other hand, with the issuance of Notice on Distributing the Memorandum of Stabilizing the Abnormal Fluctuations of Coal Price, Chinese government has established early warning mechanism monitoring price abnormal fluctuation, and make clear that the green range of coal price is between RMB500 to RMB570 per ton. These measures are expected to significantly reduce the possibility of excessive fluctuation of coal price. In 2017, the coal supply and price situations will gradually return to normal.

The Company will closely monitor the changes in policies and coal market, enhance its cooperation with major competent mine operators, continuously explore new sourcing channels, conduct bidding of existing commodities, strengthen the refining management of the fuel and strive to control fuel costs.

STRUCTURE OF SHARE CAPITAL

As at 31 December 2016, the entire issued share capital of the Company amounted to 15,200,383,440 shares, of which 10,500,000,000 shares were domestic shares, representing 69.08% of the total issued share capital, and 4,700,383,440 shares were foreign shares, representing 30.92% of the total issued share capital of the Company. In respect of foreign shares, China Huaneng Group Corporation (“Huaneng Group”) held 472,000,000 shares through its wholly owned subsidiary, China Hua Neng Group Hong Kong Limited, representing 3.11% of the total issued capital of the Company. In respect of domestic shares, Huaneng International Power Development Corporation (“HIPDC”) owned a total of 5,066,662,118 shares, representing 33.33% of the total issued share capital of the Company, while Huaneng Group held 1,555,124,549 shares, representing 10.23% of the total issued share capital of the Company, and held 74,139,853 shares through its controlling subsidiary, China Huaneng Finance Corporation Limited, representing 0.49% of the total issued share capital of the Company. Other domestic shareholders held a total of 3,804,073,480 shares, representing 25.03% of the total issued share capital.

DIVIDENDS

Since the listing of the Company, shareholders have given great support to and cared much for the Company. The Company has also generated returns that have been growing continuously and steadily over the years. The Company has been paying dividends to shareholders every year since 1998, with an accumulated dividend of RMB50.245 billion paid.

The Company’s articles clearly defines the Company’s cash dividend policy, i.e. when the Company’s earnings and accumulative undistributable profits for the current year are positive, and on condition that the Company’s cash flow can satisfy the Company’s normal operation and sustainable development, the Company shall adopt a cash dividend appropriation policy on principle that the cash dividend payout will not be less than 50% of the distributable profit realized in the then year’s consolidated financial statement.

In the future, the Company will continue to follow a proactive, balanced and stable dividend policy and persistently enhance its profitability, striving for realization of increasing returns to shareholders.

In accordance with the requirements of relevant laws and regulations and the articles of association of the Company, the Company adheres to the profit distribution policy whereby the distributable profits shall be the lower of distributable profits as stated in the financial statements prepared under the PRC GAAP and the International Financial Reporting Standards.

The Company proposed to declare a cash dividend of RMB0.29 (inclusive of tax) for each share to all shareholders for 2016. All dividends payable to shareholders shall be subject to shareholders’ approval at the annual general meeting of the Company.

In accordance with the “Enterprise Income Tax Law of China” and its implementation regulations which came into effect on 1 January 2008, the Company is required to withhold and pay enterprise income tax at the rate of 10% on behalf of the non-resident enterprise shareholders whose names appear on the register of members for H share of the Company when distributing final dividends to them. For H shares of the Company registered other than in the name(s) of individual(s), including HKSCC Nominees Limited, other nominees, trustees, or other organizations or groups, shall be deemed to be shares held by non-resident enterprise shareholder(s). On the basis, enterprise income tax shall be withheld from dividends payable to such shareholder(s).

As the Company is yet to confirm the date of the 2016 annual general meeting, the record date(s) for determining the eligibility to attend and vote at the 2016 annual general meeting and the entitlement to the final dividend and the period(s) for closure of register, the Company will upon confirmation thereof announce such details in the notice of the 2016 annual general meeting. Such notice is expected to be issued to shareholders in April 2017.

The Company shall comply with the relevant rules and regulations to withhold and pay enterprise income tax on behalf of the relevant shareholders with reference to the register of members of the Company as of the record date.

 

 

PRE-EMPTIVE RIGHTS

According to the articles of the Company and the laws of the PRC, there are no provisions for pre-emptive rights requiring the Company to offer new shares to the existing shareholders of the Company in proportion to their shareholdings.

LARGEST SUPPLIERS AND CUSTOMERS

The five largest suppliers of the Company and its subsidiaries for 2016 were China Huaneng Group Fuel Co., Ltd., Shanxi Yangquan Coal Industry Group Company, China Shenhua Group, Huating Coal Group Limited Liability Company and China National Coal Group Corporation respectively. The total purchase from them amounted to approximately RMB28.6 billion, representing approximately 51.41% of the total coal purchase of the year.

As a power producer, the Company sells the electricity generated by its power plants through local grid operators only and has no other customer. The five largest customers of the Company and its subsidiaries for 2016 were State Grid Jiangsu Electric Power Company, State Grid Shandong Electric Power Company, State Grid Zhejiang Electric Power Company, Guangdong Power Grid Corporation, and State Grid Shanghai Municipal Electric Power Company. The five customers accounted for approximately 41.64% of the operating revenue for the year while the largest customer, namely State Grid Jiangsu Electric Power Company, accounted for approximately 11.86% of the operating revenue.

None of the directors, supervisors and their respective close associates (as defined in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”)) had any interest in the five largest suppliers and customers of the Company mentioned above in 2016.

BUSINESS COMPETITION WITH CONTROLLING SHAREHOLDERS

The ultimate controlling shareholder of the Company, Huaneng Group, is also engaged in the power industry in China. HIPDC, the direct controlling shareholder of the Company, is also engaged in the power industry in China. The Company and Huaneng Group (ultimate controlling shareholder) have power plants located in certain same regions. Huaneng Group and the Company have already entrusted mutually to manage certain of their power plants, and Huaneng Group was also entrusted to manage certain coal assets of the Company.

On 17 September 2010, the Company received an undertaking from Huaneng Group regarding further avoidance of business competition. On the premises of continuing the undertaking previously provided, Huaneng Group further undertook that: (1) it shall treat the Company as the only platform for integrating the conventional energy business of Huaneng Group; (2) with respect to the conventional energy business assets of Huaneng Group located in Shandong Province, Huaneng group undertakes that it will take approximately 5 years to improve the profitability of such assets and when the terms become appropriate, it will inject those assets into the Company. The Company has a right of first refusal to acquire from Huaneng Group the newly developed, acquired or invested projects which are engaged in the conventional energy business of Huaneng Group located in Shandong Province; (3) with respect to the other non-listed conventional energy business assets of Huaneng Group located in other provincial administrative regions, Huaneng Group undertook that it will take approximately 5 years, and upon such assets meeting the conditions for listing, to inject such assets into the Company, with a view to supporting the Company’s continuous and stable development; and (4) Huaneng Group will continue to perform each of its undertakings to support the development of its subordinated listed companies.

On 28 June 2014, with a view to executing the contract and satisfying situation as well as the requirements stated in Guideline No. 4 for the Supervision of Listed Companies - Commitments and Fulfillment of Commitments of the Actual Controllers, Shareholders, Affiliates, and Acquirers of Listed Companies as well as the Listed Companies, Huaneng Group will perfect the aforesaid avoidance of business competition by further undertaking that: (1) it shall treat the Company as the only platform for integrating the conventional energy business of Huaneng Group; (2) with respect to the conventional energy business assets of Huaneng Group located in Shandong Province, Huaneng Group undertakes that by the end of 2016, it will improve the profitability of such assets and when the terms become appropriate, it will inject those assets into the Company. Appropriate terms include clear ownership of assets and shares, no decrease in earnings per share of the Company after injection, no unlawful events of significance or events against regulations, appreciation of state-own assets, right of pre-emption of shareholders. The Company has a right of first refusal to acquire from Huaneng Group the newly developed, acquired or invested projects which are engaged in the conventional energy business of Huaneng Group located in Shandong Province; (3) with respect to the other non-listed conventional energy business assets of Huaneng Group located in other provincial administrative regions, Huaneng Group undertook that by the end of 2016, upon such assets meeting the conditions for listing, the Group will inject such assets into the Company, with a view to supporting the Company’s continuous and stable development. Appropriate terms include clear ownership of assets and shares, no decrease in earnings per share of the Company after injection, no unlawful events of significance or events against regulations, appreciation of state-own assets, right of pre-emption of shareholders; and (4) Huaneng Group will continue to perform each of its undertakings to support the development of its subordinated listed companies. The period of such undertakings is between 28 June 2014 and 31 December 2016.

Huaneng Group had performed the relevant undertaking as mentioned above at time as specified.

Currently, the Company has 15 directors and only six of them have positions in Huaneng Group and/or HIPDC. According to the articles of the Company, in case a conflict of interest arises, the relevant directors shall abstain from voting in the relevant resolutions. Therefore, the operation of the Company is independent from Huaneng Group and HIPDC and the operation of the Company is conducted for its own benefit.

PURCHASE, SALE OR REDEMPTION OF SHARES OF THE COMPANY

The Company and its subsidiaries did not sell, purchase or redeem any shares or other securities of the Company in 2016.

DIRECTORS OF THE COMPANY

The directors of the Company in 2016 were as follows:

Name of Director		Position		Date of appointment
Cao Peixi		Chairman		Appointed on 18 September 2014
Guo Junming		Vice Chairman		Appointed on 18 September 2014
Liu Guoyue		Director		Appointed on 18 September 2014
Fan Xiaxia		Director		Appointed on 18 September 2014
Li Shiqi		Director		Appointed on 18 September 2014
Huang Jian		Director		Appointed on 18 September 2014
Mi Dabin		Director		Appointed on 18 September 2014
Guo Hongbo		Director		Appointed on 18 September 2014
Zhu Yousheng		Director		Appointed on 25 June 2015
Li Song		Director		Appointed on 18 September 2014
Li Zhensheng		Independent Director		Appointed on 18 September 2014
Yue Heng		Independent Director		Appointed on 18 September 2014
Geng Jianxin		Independent Director		Appointed on 25 June 2015
Xia Qing		Independent Director		Appointed on 25 June 2015
Xu Mengzhou		Independent Director		Appointed on 23 June 2016
Resigned Directors
Zhang Shouwen		Independent Director		Appointed on 18 September 2014
				Resigned on 23 June 2016

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS AND SUPERVISORS

On 31 March 2009, the Company’s Board considered and approved the Amended Management Guidelines Regarding the Holding of the Company’s Shares by the Directors, Supervisors and Senior Management of Huaneng Power International, Inc. The standard of such guidelines is no less exacting than those set out in the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules. Enquiry has been made with all Directors and Supervisors and all of them confirmed that they have complied with the code throughout 2016.

DIRECTORS’, CHIEF EXECUTIVES’ AND SUPERVISORS’ RIGHT TO PURCHASE SHARES

For the year ended 31 December 2016, none of the Directors, Chief Executives, Supervisors of the Company or their respective associates had any interests in the shares of the Company or any associated corporations (within the meaning of the Securities and Futures Ordinance (“SFO”)) which are (a) required to be notified to the Company and The Stock Exchange of Hong Kong Limited (“Hong Kong Stock Exchange”) pursuant to Divisions 7 and 8 of Part XV of the SFO; or (b) required to be recorded in the register kept by the Company pursuant to Section 352 of the SFO; (c) required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

For the year ended 31 December 2016, none of the Directors, Chief Executives, Supervisors, senior management of the Company or their spouses and children under the age of 18 was given the right to acquire any shares, underlying shares or debentures of the Company or any associated corporations (within the meaning of the SFO).

DIRECTORS’ AND SUPERVISORS’ INTEREST IN CONTRACTS AND SERVICE CONTRACTS

Save for the service contracts mentioned below, as at the end of 2016, the directors and supervisors of the Company did not have any material interests in any contracts entered into by the Company.

No director and supervisor has entered into any service contract which is not terminable by the Company within one year without payment of compensation (other than statutory compensation).

Each and every Director and Supervisor of the Company had entered into a service contract with the Company for a term of three years commencing from the signing of the contract.

INDEPENDENT DIRECTORS’ CONFIRMATION OF INDEPENDENCE

Each of the independent directors of the Company, namely Mr. Li Zhensheng,
Mr. Yue Heng, Mr. Geng Jianxin, Mr. Xia Qing and Mr. Xu Mengzhou, has signed a confirmation letter by independent non-executive directors for 2016 on 20 March 2017 to confirm his compliance with the relevant requirements regarding independence under the Listing Rules and the Company considers them to be independent.

PUBLIC FLOAT

As at the date of this announcement, the Company has maintained the prescribed public float under the Listing Rules and as agreed with the Hong Kong Stock Exchange, based on the information that is publicly available to the Company and within the knowledge of the directors.

TOP TEN SHAREHOLDERS OF THE COMPANY

The following table sets out the shareholdings of the top ten shareholders of the Company as at 31 December 2016:

Name of shareholder		Number of Shares held at year end				Percentage of Shareholding (%)
Huaneng International Power Development Corporation			5,066,662,118				33.33
HKSCC Nominees Limited			3,935,332,060				25.89
China Huaneng Group			1,555,124,549				10.23
Hebei Construction & Investment Group Co., Ltd.			603,000,000				3.97
China Hua Neng Group Hong Kong Limited			472,000,000				3.11
Jiangsu Provincial Investment & Management Limited Liability Company			416,500,000				2.74
Liaoning Energy Investment (Group) Limited Liability Company			388,619,936				2.56
China Securities Finance Corporation Limited			373,260,261				2.46
Fujian Investment & Development Group Co., Ltd.			365,818,238				2.41
Dalian Construction Investment Group Co., Ltd.			301,150,000				1.98

REMUNERATION POLICY

The Company unceasingly improves its remuneration and distribution system and, in accordance with the overall development strategy of the Company, has formulated a set of remuneration management rules. Employees’ salaries are determined by reference to the job positions they hold and calculated based on their job performance. Giving consideration to both efficiency and fairness, the Company creates a methodic and effective incentive mechanism by linking the employees’ remuneration with their personal performance and the business performance of the Company as well. The remuneration of the Directors, Supervisors and senior management of the Company mainly consists of the following:

(1)	Salaries and allowances

The basic salary is mainly set by an evaluation of the job position and a factor analysis, and with reference to the salary level of the relevant position in the labor market. It accounts for about 35% of the total remuneration.

(2)	Discretionary bonus

Discretionary bonus is based on the operating results of the Company, the performance of the Directors, Supervisors and senior management. It accounts for about 50% of the total remuneration.

(3)	Payments on pension, etc.

Contributions for various pension schemes such as social insurances, corporate annuity and housing fund established by the Company for the Directors, Supervisors and senior management accounts for about 15% of the total remuneration.

According to the resolution at the general meeting, the Company pays each independent Director a subsidy amounted to RMB60,000 (after tax) each year. The Company also reimburses the independent Directors for the expenses they incur in attending board meetings and general meetings and other reasonable expenses they incur while fulfilling their obligations under the Company Law and the Company’s Articles of Association (including travelling expenses and administrative expenses). Besides these, the Company does not give the independent Directors any other benefit.

STAFF HOUSING

The Company made allocation to the housing fund for the employees of the Company and its subsidiaries in accordance with the relevant PRC regulations.

STAFF WELFARE QUARTERS

According to the relevant PRC regulations, the Company has not provided welfare quarters to its staff.

STAFF MEDICAL INSURANCE SCHEME

According to the requirements as prescribed by the relevant local governments, the Company and its subsidiaries have joined a medical insurance scheme for its staff, and have taken measures for its implementation according to planning.

RETIREMENT SCHEMES

The Company and its subsidiaries have implemented a series of specified retirement contribution schemes based on the local conditions and policies of the places where the Company and its subsidiaries have operations.

Pursuant to the specified retirement contribution schemes, the Company and its subsidiaries have paid contributions according to the contracted terms and obligations set out in the publicly administered retirement insurance plans. The Company has no other obligations to pay further contributions after paying the prescribed contributions. The contributions payable from time to time will be regarded as expenses for the period and capital construction expenditure during the year they are made and accounted for as labor cost.

GENERAL MEETINGS

During the reporting period, the Company convened one annual general meeting and two extraordinary general meetings.

1.	The Company’s 2015 Annual General Meeting was held on 23 June 2016. The resolutions passed at the meeting were published in China Securities Journal and Shanghai Securities News on 24 June 2016.

2.	The Company’s 2016 First Extraordinary General Meeting was held on 12 January 2016. The resolutions passed at the meeting were published in China Securities Journal and Shanghai Securities News on 13 January 2016.

3.	The Company’s 2016 Second Extraordinary General Meeting was held on 30 November 2016. The resolutions passed at the meeting were published in China Securities Journal and Shanghai Securities News on 1 December 2016.

DISCLOSURE OF MAJOR EVENTS

1.

Due to work requirement, Mr. Zhang Shouwen, independent non-executive director of the Company, submitted his resignation report to the Company to resign from the positions of independent director and member of specialised committees. At the recommendation of shareholders, the Board meeting and the general meeting were held on 22 March 2016 and 23 June 2016 respectively, at which the resolution regarding the change of Independent Directors of the Company was considered, and Mr. Xu Mengzhou was elected as Independent Director of the Eighth Session of the Board. At the same time, Mr. Zhang Shouwen officially resigned from his respective positions.

2.

Due to age, Mr. Wang Zhaobin and Ms. Zhang Ling, supervisors of the Company, submitted their resignation reports to the Company to resign from the position of supervisor. At the recommendation of employees, Ms. Zhang Xiaojun and Mr. Zhu Daqing were elected as supervisors of the eighth session of the Supervisory Committee on 14 April 2016.

 

3.

On 14 October 2016, the Company signed the Agreement for the Transfer of Equity Interests in Certain Companies with Huaneng Group and Huaneng Power International Inc. (the “Transfer Agreement”) and Profit Forecasting Compensation Agreement made between Huaneng Group and Huaneng Power International Inc. with Huaneng Group in Beijing. Pursuant to the Transfer Agreement, the Company shall accept the transfer of (i) 80% equity interest of Huaneng Shandong Power Limited; (ii) 100% equity interest of Huaneng Jilin Power Limited; (iii) 100% equity interest of Huaneng Heilongjiang Power Limited; and (iv) 90% equity interest of Huaneng Henan Zhongyuan Gas Power Generation Co., Ltd. from Huaneng Group for the consideration of RMB15,113,825,800. This transaction was considered and approved at the 21st meeting of the Eighth Session of the Board held on 14 October 2016, and was considered and approved at the 2016 Second Extraordinary General Meeting held on 30 November 2016. According to the terms of the agreements, the Company settled 50% of the consideration for such transaction to Huaneng Group on 9 January 2017.

4.

With the completion of H shares additional issue in November 2015, the marketized reform of state grid power market, and in accordance with the national laws and regulations, the Company has modified and improved the business scope, shareholding structure and registered capital stated in the Articles of Association.

CODE OF CORPORATE GOVERNANCE PRACTICES

During the year, the Company has complied with the Corporate Governance Code as set out in Appendix 14 of the Listing Rules. The annual report of the Company will contain a corporate governance report prepared in accordance with the requirements under the Listing Rules.

DESIGNATED DEPOSIT

As at 31 December 2016, the Company and its subsidiaries did not have any designated deposit with any financial institutions within the PRC nor any overdue fixed deposit which could not be recovered.

DONATION

During the reporting period, the Company made a donation of RMB6.68 million.

LEGAL PROCEEDINGS

In April 2015, a construction contractor of a subsidiary of the Company brought an arbitration application against the subsidiary due to its dispute on construction settlement, through which, the contractor required the subsidiary to indemnify an amount of approximately RMB83.46 million as construction payment and relevant interests incurred. As of 31 December 2016, it is difficult to predict reasonably the financial effect arising from this outstanding arbitration since it is still pending for final judgment, therefore no projected liability is not provided for in respect thereof.

Save as disclosed above, as at 31 December 2016, the Company and its subsidiaries were not involved in any material litigation or arbitration and no material litigation or claim was pending or threatened or made against the Company and its subsidiaries.

ANNUAL GENERAL MEETING AND CLOSURE OF REGISTER

As the Company has not yet confirmed the date for convening the 2016 annual general meeting, or the record date(s) or the period(s) for closure of register for determining eligibility to attend and vote at the 2016 annual general meeting and for determining the entitlement to the final dividend, the Company will upon confirmation thereof announce such details in the notice of the 2016 annual general meeting, such notice is expected to be issued to shareholders in April 2017.

AUDITORS

As approved at the 2015 annual general meeting, KPMG and KPMG Huazhen LLP were appointed as the Company’s international and PRC auditors respectively for the year 2016.

The Board has resolved to continue to appoint KPMG Huazhen LLP as the domestic auditors and U.S. 20F annual report auditors of the Company and KPMG as the Company’s Hong Kong auditors for 2017, with the proposal of the Audit Committee, where such proposal is subject to the approval by the Shareholders at the 2016 annual general meeting.

PUBLICATION OF RESULTS ON THE WEBSITES OF THE HONG KONG STOCK EXCHANGE AND THE COMPANY

This announcement of 2016 annual results is published on the Hong Kong Stock Exchange’s website (http://www.hkex.com.hk) and the Company’s website
(http://www.hpi.com.cn and http://www.hpi-ir.com.hk). The 2016 annual report of the Company containing all the information required by the Listing Rules will be despatched to the shareholders and available on the above websites in due course.

REQUIREMENTS UNDER THE ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTING GUIDELINES

Our environmental, social and governance report prepared and disclosed in accordance with “Environmental, Social and Governance Reporting Guide” of the Listing Rules will be published on websites of the Company and the Hong Kong Stock Exchange.

 

DOCUMENTS FOR INSPECTION

The Company’s annual reports (A share version and H share version) will be published in April 2017. As required by the United States securities laws, the Company will file an annual report in Form 20-F with the Securities and Exchange Commission of the U.S. before 30 April 2017. As the Company’s A shares have already been issued and listed, the Company shall, in compliance of the relevant regulations of the China Securities Regulatory Commission and the Shanghai Stock Exchange, prepare quarterly reports. Copies of the interim and annual reports as well as the Form 20-F, once filed, will be available at:

Beijing

Huaneng Power International, Inc.

Huaneng Building

6 Fuxingmennei Street

Xicheng District

Beijing

The People’s Republic of China

Tel: (8610) 6322 6999

Fax: (8610) 6322 6888

Hong Kong

Wonderful Sky Financial Group Limited

Unit 3102-05, 31/F., Office Tower,

Convention Plaza, 1 Harbour Road,

Wanchai, Hong Kong

Tel: (852) 2851 1038

Fax: (852) 2815 1352

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

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

Cao Peixi		Li Zhensheng
(Executive Director)		(Independent Non-executive Director)
Guo Junming		Yue Heng
(Non-executive Director)		(Independent Non-executive Director)
Liu Guoyue		Geng Jianxin
(Executive Director)		(Independent Non-executive Director)
Fan Xiaxia		Xia Qing
(Executive Director)		(Independent Non-executive Director)
Li Shiqi		Xu Mengzhou
(Non-executive Director)		(Independent Non-executive Director)
Huang Jian
(Non-executive Director)
Mi Dabin
(Non-executive Director)
Guo Hongbo
(Non-executive Director)
Zhu Yousheng
(Non-executive Director)
Li Song
(Non-executive Director)

Beijing, the PRC

22 March 2017

A.	FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2016

(Amounts expressed in thousands of RMB, except per share data)

				For the year ended
				31 December
		Note		2016		2015
Operating revenue		3		113,814,236		128,904,873
Tax and levies on operations				(1,177,818)		(1,157,760)
Operating expenses
Fuel				(56,617,542)		(59,242,367)
Maintenance				(4,343,349)		(4,556,361)
Depreciation				(14,815,620)		(14,411,632)
Labor				(8,043,406)		(7,751,551)
Service fees on transmission and
transformer facilities of HIPDC				(138,038)		(140,771)
Purchase of electricity				(3,066,415)		(3,581,517)
Others				(7,234,308)		(8,919,988)
Total operating expenses				(94,258,678)		(98,604,187)
Profit from operations				18,377,740		29,142,926
Interest income				147,063		160,723
Financial expenses, net
Interest expense				(6,817,526)		(7,945,734)
Exchange (loss)/gain and bank charges, net				(250,076)		(24,336)
Total financial expenses, net				(7,067,602)		(7,970,070)
Share of profits less losses of associates
and joint ventures				1,298,889		1,525,975
Loss on fair value changes of financial
assets/liabilities				(12,986)		(16,742)
Other investment income				1,070,034		115,238
Profit before income tax expense		10		13,813,138		22,958,050
Income tax expense		4		(3,465,151)		(5,698,943)
Net profit				10,347,987		17,259,107

				For the year ended
				31 December
		Note		2016		2015
Other comprehensive income, net of tax
Items that may be reclassified subsequently to profit or loss:
Fair value changes of available-for-sale financial asset				(148,041)		558,261
Gain on disposal of available-for-sale financial asset reclassified to profit or loss				1(741,648)		–
Share of other comprehensive (loss)/income of investees accounted for under the equity method				(180,572)		678,793
Effective portion of cash flow hedges				1,015,103		51,922
Translation differences of the financial statements of foreign operations				540,442		(133,116)
Other comprehensive income, net of tax				485,284		1,155,860
Total comprehensive income				10,833,271		18,414,967
Net profit attributable to:
– Equity holders of the Company				8,520,427		13,651,933
– Non-controlling interests				1,827,560		3,607,174
				10,347,987		17,259,107
Total comprehensive income attributable to:
– Equity holders of the Company				9,005,227		14,807,889
– Non-controlling interests				1,828,044		3,607,078
				10,833,271		18,414,967
Earnings per share attributable to the equity holders of the Company
(expressed in RMB per share)
– Basic and diluted		11		0.56		0.94

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2016

(Amounts expressed in thousands of RMB)

				As at 31 December
		Note		2016		2015
ASSETS
Non-current assets
Property, plant and equipment				223,061,809		219,673,070
Investments in associates and joint ventures				19,632,113		19,745,192
Available-for-sale financial assets				3,406,032		5,077,863
Land use rights				8,456,347		8,313,766
Power generation licenses				3,849,199		3,679,175
Mining rights				1,646,271		1,646,271
Deferred income tax assets				1,263,957		1,064,391
Derivative financial assets				99,721		45,044
Goodwill				12,135,729		11,677,182
Other non-current assets				4,321,945		4,378,997
Total non-current assets				277,873,123		275,300,951
Current assets
Inventories				6,879,143		5,422,732
Other receivables and assets				5,533,770		4,087,989
Accounts receivable		5		16,393,471		16,377,401
Derivative financial assets				278,602		139,468
Bank balances and cash				7,881,630		7,537,813
Total current assets				36,966,616		33,565,403
Total assets				314,839,739		308,866,354

				As at 31 December
		Note		2016		2015
EQUITY AND LIABILITIES
Capital and reserves attributable to equity holders of the Company
Share capital				15,200,383		15,200,383
Capital surplus				24,760,331		24,815,489
Surplus reserves				8,140,030		8,140,030
Currency translation differences				(787,881)		(1,327,839)
Retained earnings				38,690,132		37,313,885
				86,002,995		84,141,948
Non-controlling interests				16,183,742		17,551,741
Total equity				102,186,737		101,693,689
Non-current liabilities
Long-term loans				64,990,361		66,028,023
Long-term bonds		7		12,182,971		11,261,322
Deferred income tax liabilities				2,262,752		2,494,143
Derivative financial liabilities				201,169		430,089
Other non-current liabilities				2,819,498		3,122,455
Total non-current liabilities				82,456,751		83,336,032
Current liabilities
Accounts payable and other liabilities		8		28,325,227		26,185,764
Taxes payable				1,089,105		2,071,471
Dividends payable				1,575,180		788,895
Salary and welfare payables				421,390		313,284
Derivative financial liabilities				133,569		874,852
Short-term bonds				27,311,103		19,347,706
Short-term loans				57,668,874		49,883,489
Current portion of long-term loans				9,560,885		12,351,205
Current portion of long-term bonds				3,294,736		11,480,661
Current portion of other non-current liabilities				816,182		539,306
Total current liabilities				130,196,251		123,836,633
Total liabilities				212,653,002		207,172,665
Total equity and liabilities				314,839,739		308,866,354

 

 

NOTES TO THE FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS PREPARED UNDER IFRS

(Amount expressed in thousands of RMB unless otherwise stated)

1.	Basis of preparation

The financial statements included in the annual financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”) and the disclosure requirements of the Hong Kong Companies Ordinance. These financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited. These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets and derivative financial assets and liabilities.

As at and for the year ended 31 December 2016, a portion of the Company and its subsidiaries’ funding requirements for capital expenditures were satisfied by short-term financing. Consequently, as at 31 December 2016, the Company and its subsidiaries have net current liabilities of approximately RMB93.2 billion. Taking into consideration of the expected operating cash flows of the Company and its subsidiaries and the undrawn available banking facilities of approximately RMB262.8 billion as at 31 December 2016, the Company and its subsidiaries are expected to refinance certain of its short-term loans and bonds, and also consider alternative sources of financing, where applicable and when needed. Therefore, the directors of the Company are of the opinion that the Company and its subsidiaries will be able to meet its liabilities as and when they fall due within the next twelve months and accordingly, these consolidated financial statements are prepared on a going concern basis.

2.	Principal Accounting Policies

The IASB has issued a new standard and a number of amendments to IFRSs that are first effective for the current accounting period of the Company and its subsidiaries. None of these new standard or developments have had a material effect on how the Company and its subsidiaries’ results and financial position for the current or prior periods have been prepared or presented. The Company and its subsidiaries have not applied any new standard or interpretation that is not yet effective for current accounting period.

3.	Revenue and segment information

Revenues recognized during the year are as follows:

		For the year ended
		31 December
		2016				2015
Sales of power and heat			112,794,536				127,849,408
Port service			237,347				211,685
Transportation service			105,505				104,721
Others			676,848				739,059
Total			113,814,236				128,904,873

Directors and certain senior management of the Company perform the function as the chief operating decision maker (collectively referred to as the “senior management”). The senior management reviews the internal reporting of the Company and its subsidiaries in order to assess performance and allocate resources. The Company has determined the operating segments based on these reports. The reportable segments of the Company are the PRC power segment, Singapore segment and all other segments (mainly including port and transportation operations). No operating segments have been aggregated to form a reportable segment.

Senior management assesses the performance of the operating segments based on a measure of profit before income tax expense under China Accounting Standard for Business Enterprises (“PRC GAAP”) excluding dividend income received from available-for-sale financial assets, gains on disposal of available-for-sale financial asset and operating results of the centrally managed and resource allocation functions of headquarters (“Segment results”). Other information provided, except as noted below, to the senior management of the Company is measured under PRC GAAP.

Segment assets exclude prepaid income tax, deferred income tax assets, available-for-sale financial assets and assets related to the centrally managed and resource allocation functions of headquarters that are not attributable to any operating segment (“corporate assets”). Segment liabilities exclude current income tax liabilities, deferred income tax liabilities and liabilities related to the centrally managed and resource allocation functions of headquarters that are not attributable to any operating segment (“corporate liabilities”). These are part of the reconciliation to total assets and liabilities of consolidated statement of financial position.

All sales among the operating segments have been eliminated as internal transactions when preparing consolidated financial statements.

(Under PRC GAAP)

		PRC power segment				Singapore segment				All other segments				Total
For the year ended 31 December 2016
Total revenue			104,746,690				8,758,822				634,965				114,140,477
Inter-segment revenue			–				–				(326,241	)			(326,241	)
Revenue from external customers			104,746,690				8,758,822				308,724				113,814,236
Segment results			14,215,671				(282,703	)			(35,371	)			13,897,597
Interest income			76,768				69,672				623				147,063
Interest expense			(6,067,194	)			(481,263	)			(137,825	)			(6,686,282	)
Impairment (loss)/reversal			(1,197,382	)			899				(8,475	)			(1,204,958	)
Depreciation and amortization			(13,786,933	)			(778,426	)			(203,493	)			(14,768,852	)
Net loss on disposal of non-current assets			(577,322	)			(172	)			(14,303	)			(591,797	)
Share of profits less losses of associates and joint ventures			1,104,614				–				76,477				1,181,091
Income tax expense			(3,681,737	)			44,135				57,489				(3,580,113	)
For the year ended 31 December 2015
Total revenue			118,418,506				10,143,793				588,266				129,150,565
Inter-segment revenue			–				–				(245,692	)			(245,692	)
Revenue from external customers			118,418,506				10,143,793				342,574				128,904,873
Segment results			24,073,432				(313,253	)			(281,457	)			23,478,722
Interest income			93,324				66,898				501				160,723
Interest expense			(7,181,116	)			(452,034	)			(163,325	)			(7,796,475	)
Impairment (loss)/reversal			(2,913,766	)			1,744				(178,131	)			(3,090,153	)
Depreciation and amortization			(13,244,965	)			(772,003	)			(245,936	)			(14,262,904	)
Net (loss)/gain on disposal of non-current assets			(427,286	)			22,450				(1	)			(404,837	)
Share of profits less losses of associates and joint ventures			1,421,072				–				24,915				1,445,987
Income tax expense			(6,104,619	)			254,772				14,397				(5,835,450	)

(Under PRC GAAP)

		PRC power segment				Singapore segment				All other segments				Total
31 December 2016
Segment assets			262,832,643				28,141,718				11,611,683				302,586,044
Including:
Additions to non-current assets
(excluding financial assets and
deferred income tax assets)			19,962,461				230,974				854,484				21,047,919
Investments in associates			13,254,236				–				2,868,139				16,122,375
Investments in joint ventures			1,197,665				–				785,610				1,983,275
Segment liabilities			(186,489,967	)			(14,027,606	)			(5,620,515	)			(206,138,088	)
31 December 2015
Segment assets			253,376,399				27,487,701				10,703,373				291,567,473
Including:
Additions to non-current assets (excluding financial assets and deferred income tax assets)			22,421,000				160,282				642,949				23,224,231
Investments in associates			13,026,027				–				2,806,231				15,832,258
Investments in joint ventures			1,569,614				–				785,004				2,354,618
Segment liabilities			(176,406,566	)			(14,876,229	)			(5,097,402	)			(196,380,197	)