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Share Name | Share Symbol | Market | Type |
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Huaneng Power International Inc | NYSE:HNP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 21.51 | 0 | 01:00:00 |
On 29 June 2020, Shandong Company and Taishan Power signed the Transfer Agreement, pursuant to which Shandong Company proposes to acquire Taifeng Renewable
Energy Interest held by Taishan Power at consideration of RMB228.42 million. Shandong Company will settle the consideration by way of cash with its own funds.
Shandong Company is a holding subsidiary of the Company. Taishan Power is a holding subsidiary of Huaneng E&C, a wholly-owned subsidiary of Huaneng Group.
As at the date of publication of this announcement, the Company holds an 80% equity interest in Shandong Company. Through its wholly owned subsidiary, Huaneng E&C, Huaneng Group indirectly holds a 56.53% equity interest in Taishan
Power. Huaneng Group holds a 75% direct equity interest and a 25% indirect equity interest in HIPDC, whilst HIPDC, being the direct controlling shareholder of the Company, holds a 32.28% equity interest in the Company. Huaneng Group also
holds a 9.91% direct equity interest in the Company, a 3.01% indirect equity interest in the Company through Hua Neng HK (a wholly-owned subsidiary of Huaneng Group), a 0.59% indirect equity interest in the Company through China Huaneng
Group Treasury Management (Hong Kong) Limited (an indirect wholly-owned subsidiary of Huaneng Group) and a 0.39% indirect equity interest in the Company through China Huaneng Finance Corporation Limited (a controlling subsidiary of Huaneng
Group).
Under the Hong Kong Listing Rules, Huaneng Group is a connected person of the Company and Taishan Power is an associate of Huaneng Group. Pursuant to the
relevant requirements of the Hong Kong Listing Rules, the Transaction constitutes a connected transaction of the Company,
With respect to the Transaction, given the scale of the transaction amount does not exceed 5% of the applicable percentage ratios as calculated pursuant to
Rule 14.07 of the Hong Kong Listing Rules, the Transaction does not constitute a notifiable transaction under Chapter 14 of the Hong
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Kong Listing Rules. The Transaction also constitutes a connected transaction under Chapter 14A of the Hong Kong Listing Rules. As
the scale of the transaction amount exceeds 0.1% but does not exceed 5% of the applicable percentage ratios as calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules, therefore, the Company
is only required to comply with the reporting and announcement requirements under Rules 14A.71 and 14A.35 of the Hong Kong Listing Rules but is exempt from independent shareholders’ approval requirement.
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I. |
BACKGROUND
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II. |
RELATIONSHIP BETWEEN THE COMPANY, HUANENG GROUP AND TAISHAN POWER
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* |
Huaneng Group, through Hua Neng HK, its wholly-owned subsidiary, indirectly holds an 100% interest in Pro-Power Investment Limited which in turn holds a 25%
interest in HIPDC. Therefore, Huaneng Group indirectly holds a 25% interest in HIPDC.
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** |
Huaneng Group holds a 9.91% direct interest in the Company, a 3.01% indirect equity interest in the Company through Hua Neng HK (a wholly-owned subsidiary of
Huaneng Group), a 0.59% indirect equity interest in the Company through China Huaneng Group Treasury Management (Hong Kong) Limited (an indirect wholly-owned subsidiary of Huaneng Group) and a 0.39% indirect equity interest in the Company
through China Huaneng Finance Corporation Limited (a controlling subsidiary of Huaneng Group).
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III. |
TRANSFER AGREEMENT
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Parties: |
Seller: Taishan Power
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Consideration: |
Both parties agreed that the 82.23% equity interest in Taifeng Renewable Energy will be transferred by Taishan Power to Shandong Company at consideration of RMB228.42 million.
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Method of payment: |
The consideration shall be paid by Shandong Company by way of cash.
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Payment schedule: |
Both parties agreed that 90% of the consideration shall be paid by Shandong Company to Taishan Power by way of cash within 15 working days after signing of the Transfer Agreement.
Shandong Company shall pay the remaining consideration to Taishan Power by way of cash within 3 working days from completion of the industrial and commercial change registration by Taifeng Renewable Energy.
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Completion and transfer
arrangement:
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Both parties agreed that the date of payment of the first tranche of the consideration by Shandong Company shall be the completion date. Within 30 working days from the completion,
Shandong Company shall procure Taishan Renewable Energy to complete the industrial and commercial change registration procedures relevant to the equity transfer under the Transfer Agreement, and Taishan Power shall provide necessary
assistance and cooperation.
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Effectiveness: |
The Transfer Agreement shall become effective from the date of signing (with official seals) by the legal representative or authorised representative of Shandong Company and
Taishan Power.
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Transitional arrangement: | (1) | During the transitional period of the Transfer Agreement, Taishan Power has an obligation to upkeep the good management of Taifeng Renewable Energy and its assets. Taishan Power shall ensure and promote the normal operation of Taifeng Renewable Energy. During the transitional period, Taishan Power shall notify Shandong Company of any significant adverse effects in a timely manner and take appropriate measures. |
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(2) |
During the transitional period of the Transfer Agreement, Taishan Power and Taifeng Renewable Energy warrant that, save for the normal operation of Taifeng Renewable Energy, they
will not sign, alter, amend or terminate any agreements and transactions associated with Taifeng Renewable Energy, will not assume or incur liabilities which are not within the asset appraisal report, and will not transfer or waive any
rights, or dispose of any assets of Taifeng Renewable Energy.
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(3) |
All profits and losses arising from the operation of Taifeng Renewable Energy during the transitional period shall be assumed and borne by Shandong Company.
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Obligations on breach: |
If Shandong Company fails to pay the due consideration in full within the time limit stipulated in the Transfer Agreement, Shandong Company shall pay Taishan Power a default amount
at 0.05% on the total consideration for each day overdue. In addition to paying the default amount to Taishan Power, Taishan Power has the right to terminate the Transfer Agreement and demand Shandong Company to compensate the loss.
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IV. |
BASIC INFORMATION OF TAIFENG RENEWABLE ENERGY
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Date of Establishment: |
November 2016
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Type of Enterprise: |
Limited liability company (other)
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Registered capital: |
RMB200 million
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Scope of business: |
Investment, development, construction and management of photovoltaic power generation projects; crop planting and sales. (Projects that must be approved according to law and can
only be operated after approval by the relevant departments)
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V. |
FINANCIAL INFORMATION OF TAIFENG RENEWABLE ENERGY
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As at
31 December
2018
(Audited)
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As at
31 December
2019
(Audited)
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|||||||
Total assets
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1,026,493,909.74
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949,221,257.56
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||||||
Total liabilities
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809,923,662.00
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712,714,454.09
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||||||
Net assets
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216,570,247.74
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236,506,803.47
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For the 12 months period ended
31 December
2018
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For the 12 months period ended
31 December
2019
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|||||||
Operating revenue
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87,275,216.47
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94,902,991.27
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||||||
Profit before income tax expense
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16,109,953.51
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8,732,325.50
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||||||
Net profit
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16,109,953.51
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8,625,736.08
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VI. |
ASSET VALUATION OF TAIFENG RENEWABLE ENERGY
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Name of Company
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Shareholding percentage
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Book value of shareholders’ total equity
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Applicable approach
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Approach adopted
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Appraised value of shareholders’ equity
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Difference
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Appreciation rate
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|||||||||||||||||
Taifeng Renewable Energy
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82.23
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%
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23,739.16
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Asset based approach and income approach
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Income approach
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27,778.20
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4,039.04
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17.01
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(2) |
Valuation assumptions
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1. |
Assumption of the Transaction
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2. |
Assumption for Open Market
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3. |
Assumption for Continuing Operation of Assets
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1. |
This assumption assumes that the external economic environment remains unchanged on the Valuation Benchmark Date, and that the country’s current macroeconomic environment does not
change significantly; there are no major changes in the socio-economic environment in which the enterprise is located, and the taxes and tax rates implemented.
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2. |
It is assumed that the complete electricity price of the project will be based in accordance with Huaneng Group’s “Shandong Xintai City Coal Mining Subsidence Area National
Advanced Technology Photovoltaic Power Generation Demonstration Base 2016 Project – Bidding Documents – C Declaration of Electricity Price” (Evaluation code: PVP-SDXT/SDG-2016-01), Part 17, 26 September 2016 when Huaneng Group submitted to
Xintai City People’s Government on the photovoltaic power generation demonstration project to declare the electricity price commitment letter to determine the
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3. |
According to Guoshuifa [2009] No. 80 “Notice of the State Administration of Taxation on the Implementation of Enterprise Income Tax Preferential Issues for Public Infrastructure
Projects Supported by the State”, Caishui [2014] No. 55 of the State Administration of Taxation on Preferential Corporate Income Tax Policies for Public Infrastructure Projects “Supplementary Notice to Issues” and “Measures for Dealing with
Preferential Policies on Corporate Income Tax” (Announcement No. 23 of 2018), corporate income tax enjoys the preferential policies of “three exemptions and three halves”. The first phase of the Company’s photovoltaic power generation in
September 2017, the project achieved the first tranche of the sales income, and enjoyed a three-year exemption period from 2017 to 2019, and from 2020 to 2022 onwards, they will enjoy a 50% reduction in corporate tax (tax rate 12.5%). This
assessment hypothesis assumes that enterprises can enjoy relevant preferential income tax policies after the Valuation Benchmark Date.
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4. |
The management of the evaluation target will perform due diligence in the future operating period. It does not take into account future gains and losses that may result from
changes in the main business conditions due to changes in management, business strategy, and business environment.
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5. |
Assume that the real estate property rights certificate related to the corporate’s photovoltaic land can be obtained according to the enterprise plan.
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6. |
In view of the frequent changes or large changes in the corporate’s monetary funds or its bank deposits during the production and operation process, the profit forecast of this
report does not take into account the interest income generated by corporate deposits.
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7. |
Each assets under evaluation is based on the actual stock on the Valuation Benchmark Date, and the current market price of the relevant asset is based on the domestic effective
price on the Valuation Benchmark Date.
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8. |
This assessment assumes that the basic information and financial information provided by the client and the assessed unit are true, accurate and complete.
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9. |
The scope of the evaluation is only based on the assessment declaration form provided by the principal and the assessed unit, without considering the contingent assets and
contingent liabilities that may exist beyond the list provided by the principal and the assessed unit.
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10. |
The value of each parameter measured in this evaluation does not take into account the effect of inflation.
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VII. |
PRICING DETERMINATION OF THE TRANSACTION
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VIII. |
THE PURPOSE OF THE TRANSACTION AND ITS EFFECT ON THE COMPANY
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IX. |
IMPLICATIONS UNDER THE HONG KONG LISTING RULES
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Name |
Qualification
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Fortune Financial Capital
Limited
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A licensed corporation to carry out Type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance
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Ernest & Young |
Certified Public Accountants in Hong Kong
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X. |
DEFINITIONS
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“associate(s)” |
has the meaning ascribed to it in the Hong Kong Listing Rules;
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“Board” |
the board of directors of the Company;
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“Company” |
Huaneng Power International, Inc.;
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“connected person(s)” |
has the meaning ascribed to it in the Hong Kong ListingRules;
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“Directors” |
the directors (including independent non-executive directors) of the Company;
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“HIPDC” |
Huaneng International Power Development Corporation;
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“Hong Kong Listing Rules” |
the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited;
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“Hua Neng HK” |
China Hua Neng Group Hong Kong Limited;
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“Huaneng E&C” |
Huaneng Energy & Communications Holdings Co., Ltd. “Huaneng Group”China Huaneng Group Co., Ltd.;
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“PRC” or “China” |
the People’s Republic of China;
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“RMB” |
the lawful currency of the PRC;
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“Shandong Company” |
Huaneng Shandong Power Generation Limited; “Taishan Power”Huaneng Taishan Power Co., Ltd.;
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“Taifeng Renewable Energy” |
Huaneng Shandong Taifeng Renewable Energy Co., Ltd.;
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“Taifeng Renewable Energy
Interest”
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the 82.23% equity interest in the registered capital of Taifeng Renewable Energy owned by Taishai Power;
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“Transaction” |
the acquisition of the Taifeng Renewable Energy Interest by Shandong Company from Taishai Power at consideration of RMB228.42 million pursuant to the terms and conditions of the
Transfer Agreement;
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“Transfer Agreement” |
the Agreement for the Transfer of the Equity Interest of Huaneng Shandong Taifeng Renewable Energy Co., Ltd. signed between Shandong Company and Taishan Power on 29 June 2020; and
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“Valuation Benchmark Date” |
30 September 2019.
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By Order of the Board
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Huaneng Power International, Inc.
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Huang Chaoquan
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Company Secretary
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Zhao Keyu (Executive Director)
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Xu Mengzhou (Independent Non-executive Director)
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Zhao Ping (Executive Director)
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Liu Jizhen (Independent Non-executive Director)
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Huang Jian (Non-executive Director)
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Xu Haifeng (Independent Non-executive Director)
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Wang Kui (Non-executive Director)
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Zhang Xianzhi (Independent Non-executive Director)
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Lu Fei (Non-executive Director)
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Xia Qing (Independent Non-executive Director)
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Teng Yu (Non-executive Director)
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Mi Dabin (Non-executive Director)
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Cheng Heng (Non-executive Director)
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Guo Hongbo (Non-executive Director)
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Lin Chong (Non-executive Director)
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Ernst & Young 22/F,
CITIC Tower 1 Tim
Mei Avenue Central,
Hong Kong
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安永會計師事務所
香港中環添美道1號
中信大廈22樓
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Tel 電 話 : +852 2846 9888
Fax 傳 真 : +852 2868 4432
ey.com
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Yours faithfully,
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For and on behalf of
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Fortune Financial Capital Limited
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Jiang Jun
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Chief Executive Officer
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HUANENG POWER INTERNATIONAL, INC.
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By /s/ Huang Chaoquan
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Name:
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Huang Chaoquan
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Title:
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Company Secretary
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1 Year Huaneng Power Chart |
1 Month Huaneng Power Chart |
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