ANNUAL REPORT 1 CONTENTS Speech 03 Annual Work Report 05 of the Group

About 11 Energy Group Company Profile 12 Governance Framework 13 Leading Group 14 Control Governance 15

17 Our Business

Business Introduction 18 Distribution Diagram of 21 23 Our Performance Controllable Power Plant

Leadership of Party Construction 24 Safety Production 25 Operation State 26 Sustainable Environmental Protection 28 Human Resource 29 Harmonious Development 30

Ten Events of 2018 31 Glories of the Company 33

Note: “Guangdong Yudean Group Co., Ltd.” was officially renamed as “Guangdong Energy Group Co., Ltd.” on Feb. 18, 2019, which is hereinafter referred to as “Guangdong Energy Group”, “the Company”, “the Group” or “we” in the Report. 03 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 04

In 2018, we insisted on putting political construction in the first place and strictly administered the Party and controlled the Party comprehensively; carried out the activities of “leader’s leadership and supervision” and “learning, deep research, and effective implementation” to promote Xi Jinping’s socialism with Chinese characteristics in the new era and the spirit of the 19th National Congress of the Communist Party of China, and spirit indicated and approved by General Secretary Xi Jinping’s important talks on work of Guangdong and the detailed implementation of the spirit of the Third and Fourth Plenary Sessions of the 12th Provincial Committee of the Communist Party of China in the Group, which strengthened the leadership of the Party and continuously improved the quality of party building, thus providing a strong political guarantee for the reform, development, operation and management of the Group.

In 2018, we closely adhered to the goal of safety production, adhered to the concept of safety development, strictly implemented safety production responsibilities, and strengthened and innovated safety management, risk prevention and control, and solidified the foundation work in a targeted manner, focused on implementing two responsibilities, reinforced the responsibility to strengthen the basic grassroots level, effectively implemented safety production, and maintained a stable safety production situation throughout the year.

In 2018, we adhered to the market-oriented and efficiency-centered principle and fully played financial guarantee and promotion role, continued to build and improve the Group’s power marketing system, accelerated the construction of the province’s electricity sales network, and focused on improving the ability of participation in the power spot market. The annual sales volume of electricity sold was 48.943 billion kWh, and the scale of electricity sales ranked first in the province. The efficiency of foreign investment and diversified business operations had increased significantly. The Group issued corporate bonds of RMB 2 billion for the first time and the financial company was once again awarded the “National Best Finance Company of the Year”, and the self-insured company successfully conducted the first international road show for offshore wind power insurance.

In 2018, we focused on implementing the reform of state-owned enterprises and the structural reform at energy supply side. The key reforms such as the adjustment of the Group’s management and control mode, the disposal of “zombie enterprises” and the “three supply and one industry” Speech separation and transfer were fully promoted. The power supply structure and asset structure were continuously optimized. The proportion of coal- fired installed capacity had dropped from over 80% to less than 75%; the development and construction of natural gas pipeline network in eastern, western and northern part of Guangdong was accelerated; the layout of upstream and downstream industrial chains was progressing steadily; and deep diversification and optimization were carried out continuously.

In 2018, we adhered to innovation and leadership, thoroughly implemented the strategy of innovation-driven development of provincial enterprises, vigorously carried out independent innovation and technological innovation, and focused on innovative R&D and transformation of results in energy conservation, emission reduction, and operational efficiency so as to achieve innovation and economic benefits. We have won 3 China Power Science and Technology Awards, 6 China Power Innovation Awards, 7 National Power Staff Technical Achievement Awards; 75 new authorized patents and 18 new software copyrights.

Party Committee Secretary, In 2018, we vigorously accelerated the development of clean energy construction. The preliminary work of the water pumping and energy storage Board Chairman project inside and outside the province was steadily advanced. The first large-scale offshore megawatt wind power project entered the batch installation stage. Several offshore wind power projects were approved. A total of 328,000 kilowatts of onshore wind power and photovoltaic projects inside and outside the province were approved or filed. New progress had been made in the clean energy resource reserve.

In 2018, we actively fulfilled our commitment to “create green energy with heart”, fulfilled our social responsibilities, continued to carry out in-depth pollution control, completed the ultra-low emission transformation of all conventional coal-fired units in the Group system, and enhanced on- Making great efforts to grasp the new requirements site environmental monitoring. We promoted the construction of “Green Water Project” in an orderly manner, accelerated the implementation of the zero-emission project of wastewater from thermal power plant and the denitrification transformation of Guangqian and natural gas of the era andStriving to create a new situation of generator sets to enhance Guangdong’s green recycling and low-carbon development. work in the Group Looking back on 2018, Guangdong Energy Group’s achievements were inseparable from the correct leadership of the provincial Party Committee, the provincial government and the provincial state-owned assets committee and were inseparable from the strong support of the shareholders, the care and support of all walks of life and hard work of all Guangdong Energy Group’s employees. We would like to express our highest respect and heartfelt thanks to everyone!

In 2018, in the face of the complicated and ever-changing external situation and business environment, Guangdong The year of 2019 is the 70th anniversary of the founding of New China. It is the key year for building a well-off society in an all-round way and Energy Group, led by Xi Jinping’s socialism with Chinese characteristics in the new era and the spirit of the 19th successfully achieving the 13th Five-Year Plan. It is also the first year of the official operation of the Group’s three-level management and control Party Congress, directly faced challenges, overcome difficulties, gathered together and make efforts to strive for a mode. We shall always insist on Xi Jinping’s socialist ideology with Chinese characteristics in the new era and strive to create a new situation for the work of the Group with new duties and measures, and promote the Group to continue to be stronger and better, in order to make a due strengthened self-discipline of the Party, the stable overall security situation, stable business performance, and positive contribution to the goal of “four aspects ranking first in the country” and “two important windows” of Guangdong. results of high-quality development, reform and innovation. 05 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 06

and solve the problem of safe production. The Group implemented the company’s responsible person in-depth on-site inspection system, took Work Review the lead in practicing the “full responsibility” requirements, and transmitted the responsibility and pressure of safety production to the grassroots. The Adhere to the Leadership of the Party and Group deeply conducted risk point hazard source investigation, hazardous Comprehensively Strengthen the Party chemicals management, fire protection, infrastructure and other special safety production special operations, completed the safety cross-inspection Building Work of the Group of 46 production and business units. The Group solidly carried out the “three Annual Work defenses” work, successfully resisted the attack of super typhoons such In 2018, the Group comprehensively strengthened the party building as Mangosteen. The Group completed the work of safety registration and work, conscientiously implemented the general requirements of the Party renewal of certificate for 7 dams, and vigorously promoted the cleanup of construction, and earnestly exerted the role of the Party organization in flood barriers at the downstream of Nanshui Reservoir. The Group actively Report of the controlling the direction of production management and operation. The performed environmental responsibility, vigorously carried out pollutant members and leaders of the Party Committee of the Group took the lead control, and organized the implementation of the Action Plan for Pollution in setting a good example and deepened the activities of “big study, deep Prevention and Control (2018-2020). The Group completed the ultra-low research and true implementation”. The Group focused on improving Group emission transformation of the conventional coal-fired units of the Group, and organizational strength, strengthening the construction of grassroots promoted the zero-emission project of thermal power plant wastewater and the organizations, and completing the incorporation of second and third-level denitrification transformation of Guangqian and Huizhou natural gas generator enterprise party construction into the articles of association; issued the sets in an orderly manner. The Group prepared and implemented the Group’s Implementation Scheme for Three-Year Action Plan for Strengthening the three-year network security action plan, carried out network security work in Party's Grassroots Organization Construction (2018-2020); solidly promoted an orderly manner, and enhanced the Group’s network security protection spiritual civilization, corporate culture and youth work development, solidly capabilities. carried out the creation of “post”, two production collectives won the title of “National Youth Safety Production Demonstration Post”; moreover, the Group also innovatively carried out “Yudean Youth Talent Show”, “Yudean i Volunteer” Strive to Promote Reform and Actively Adapt and other activities, guided the young members of the Youth League to act actively, and strived to be good assistant and reserve force for the Party. to the Reform of State-owned Enterprise and Requirements of Electricity Reform

In 2018, the Group implemented the three-level management and control Adhere to the Strict Management of the Party mode adjustment and reform of “Group Headquarters+ Platform Enterprise+ and Promote the Construction of the Ethical Business Unit”, focused on optimizing management and control, effectively Party and Clean Government integrated resources and enhanced professional management capabilities. The Group constantly promoted the structural reform of the supply side, In 2018, the Group resolutely implemented the requirements of comprehensive cleared up and reorganized 8 “zombie enterprises”, steadily advanced the administration of the Party strictly, focused on further consolidating the “three supply and one industry” and the separation and transfer of municipal results of inspections and rectifications, strengthened supervision and facilities, and intensified efforts to deal with inefficient and invalid assets and accountability, continued to correct the “four cultures”, solidly promoted the multi-business clean-up and disposal; further optimized the group’s asset building of Party culture and clean government and anti-corruption work, and structure; continued to build and improve the Group’s power marketing system, strived to create a clean and ethical environment for development. The Group and established six plant-level (sales) integrated energy companies, thus Director, General Manager, Vice resolutely performed “two responsibilities”, promptly revised the list of the main laying a solid foundation for building a nationwide sales network. Secretary of the Party Committee responsibility of the fine Party culture and clean government, and promoted the system units to further build the Party culture and clean government; organized subordinate units to conduct special inspections and promoted the Implement New Development Concept and comprehensive development of the Party construction; continued to carry Focus on Expansion of Development Space out special inspections, patrol inspections and rectifications, make special inspections on corruption and work styles in poverty alleviation, and implement of the Group special rectification on corruption issues, “small treasury”, formalism and In 2018, the Group continued to optimize its power supply structure and asset bureaucracy, strictly implemented the spirit of the eight central regulations, and structure, and made new breakthroughs in power supply structure adjustment. Be Brave to Bear the Responsibilities and Create a constantly corrected “four bad cultures”. The Group strengthened discipline In the whole year, a total of 2,524,900 kilowatts of power projects were put into education, conducted clean conversions with 14 new leaders; organized 65 operation, and a number of F-class improved heavy-duty gas turbines were units and 71 senior executives to carry out the work review and assessment Competitive Integrated Energy Group established and put into operation. A number of photovoltaic projects such as and continuously strengthened the incorruptible concept of “sunshine Huadu Airport Logistics Park and Shundemei were put into operation, management and clean office”. and the Group’s coal-fired power ratio decreased by 80% in the past to 75% In 2018, Guangdong Energy Group thoroughly studied and implemented Xi Jinping’s socialist ideology with Chinese characteristics in the new or below. The Group’s first large-scale offshore megawatt wind power project era and the spirit of the 19th National Congress of the Communist Party of China, spirit indicated and approved by General Secretary Xi Jinping’s entered the stage of mass installation. A total of 328,000 kilowatts of onshore Fulfill Two Responsibilities and Maintain wind power and photovoltaic projects inside and outside the province had important talks on work of Guangdong, and the spirit of the Third and Fourth Plenary Sessions of the 12th Provincial Party Committee, implemented Overall Stable Safety and Environmental been approved or filed. Five projects of the natural gas main pipe network in the decision-making arrangements of the provincial Party Committee and the provincial government and the work requirements of the provincial Protection Situation eastern, western and northern part of Guangdong were approved, and the state-owned assets commission, actively handled profound changes in the external environment, and solidly promoted steady growth, promoted main pipeline of the western Guangdong Province was started, which opened the prelude to the construction of the province’s pipe network and laid a reform, adjusted the structure, reduced debt and strengthened the main business, better completed its annual work goals and achieved the In 2018, the Group fully implemented the responsibility of safety production, actively reversed the passive situation of production safety, improved two foundation for building a natural gas industry chain and achieving the planned preservation and appreciation of state-owned assets. liability systems, and strengthened the fulfillment of two responsibilities so goal of constructing natural gas main pipeline network at 21 prefecture cities that overall situation of safe production was stable. The Group regularly in 2020. The Group actively and steadily implemented the “going out” strategy held regular safety production meetings such as the Party Committee, the and promoted the construction of the Jordan oil shale mining and electric joint Board of Directors, and the Security Committee to coordinate research management project as planned. 07 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 08

Strengthen Market Awareness and and development and transformation of results in power operation and Adhere to the Principle of Management of Create Good Atmosphere and Focus on Take Various Measures to Improve the management mode, energy conservation and emission reduction, and operational efficiency. The Group actively deployed new formats such as Cadres by Party and Build a Team Composed Promoting the Harmonious Development of Management Performance integrated energy services and heat supply of district. The Group enhanced of High-quality Talents Enterprise the heating reform of coal-fired units and strengthened the information In 2018, the Group actively occupied the market share of electricity, fully In 2018, the Group adhered to the principle of management of cadres by In 2018, the Group continued to strengthen the construction of trade union construction of the Group. The system unit made a number of innovative exploited the market, focused on reducing operating costs, actively sought Party, focused on the reform goals and tasks of the Group management organizations, strengthened the service functions of trade unions, promoted achievements which can be transformed into obvious economic benefits. The favorable policies, and strived to improve quality and efficiency. The basic and control model, strengthened the construction of human resources democratic management, safeguarded the legitimate rights and interests Group obtained 3 China Electric Power Science and Technology Awards (1 electricity of the B-type units in the province actually reached 36.249 billion management system, and promoted the transformation and upgrading of employees, performed practical service for workers, and strived to build second prize and 2 third prizes), 6 China Power Innovation Awards, and 7 kWh, and the over-plan completion rate was 25.57%. The power sales of human resources management. The Group clarified the principle of harmonious labor relations. The Group deeply carried out safety production National Power Staff Technical Achievement Awards (1 first prize, 2 second companies and power plants strived for a market power of 48.943 billion setting up the power marketing organization structure of power generation knowledge, provincial key projects and other labor competitions, and encouraged prizes and 4 third prizes). There were 75 new authorized patents and 18 new kWh, ranking first in the province in terms of the scale. The Group signed the enterprises, and continuously optimized the organization management of and guided the majority of employees to make contributions to the company. software copyrights. Dapeng TUA agreement, which laid a solid foundation for independent natural new energy projects. The Group implemented the safety director system at In the whole year, all units of the system carried out more than 170 factory-level gas international procurement and external market operation; continued to the Group level, and clarified the requirements for the establishment of safety labor competitions, more than 16,000 people participated in the competitions, expand shipping marketization business, with the market freight turnover inspection institution of the system production and operation units to meet the and two people won the title of “Guangdong May 1st Labor Medal”. The Group increased by 2.4%. The Group strengthened the coordination of coal long- Strengthen Risk Awareness and Take requirements of reform and development and safety supervision. The Group actively carried out various forms of activities such as rationalization proposals term cooperation, and saved coal costs of about RMB 600 million throughout Various Measures to Prevent and Deal with adhered to the principles of fairness, justice, competition and selection, and and democratic dialogue meetings, and built various forms of employee the year. The Group seized the low price of the natural gas price in the Risks selected and recruited outstanding talents through multiple channels. The communication platforms. All units of the system received 286 proposals from whole year and saved about RMB 60 million in natural gas fuel costs. The Group formulated the budget management measures for the total amount of the workers’ congress, and 221 cases were filed and settled; earnestly fulfilled Group continued to improve its foreign investment and diversified business In 2018, the Group adjusted its reform objectives based on the control wages of the management units of the Group, and established a mechanism social responsibilities, solidly performed precision poverty alleviation, and won performance. The annual investment income increased by 54.72% on a year- model, and adjusted and optimized the “three important and one major” for wage-benefit linkage and market-based wage determination. The Group “Golden Cup of Guangdong Poverty Alleviation” for 8 consecutive years. The on-year basis, and the diversified business income increased significantly on a decision-making system. The Group further improved its state-owned assets solidly developed vocational skill training and skill competitions, and focused Group compiled and completed Guangdong Energy Group Report (2001-2015), year-on-year basis. supervision mechanism, and promulgated and implemented the accountability on cultivating knowledge talented, skilled and innovative persons. summed up the history of the company and passed on the entrepreneurial spirit. investigation method for illegal business investment. The Group strengthened risk prevention and control investigation and system unit risk control system The high prices of bulk construction, and completed the construction of 42 enterprise risk control Focus on Management Accounting and Give raw materials such as systems, which accounted for about 85% of the total assets of the Group. Full Play to the Guarantee and Promotion coal and natural gas and The Group deeply carried out risk prevention and control of the Group’s Role of Finance the downward adjustment business and trade operations, strictly controlled the important links of bulk In 2019, the scale of electricity in of electricity prices have commodity trading such as fuel procurement and power sales, and prohibited Guangdong will increase to 46% In 2018, the Group relied on the capital budget and coordinated financing; severely constrained high-risk businesses such as financing trade. The Group carried out special of the electricity purchased in formulated a fund management strategy of “attaching equal attention to safety the Group’s business investigations and audit investigations over overseas investment projects and the province, reaching 200 billion and efficiency and paying more attention to safety”, and continued to promote development. The mountainous power plants and the old power plants conducted special risk investigations on some new energy projects to ensure kWh, with a year-on-year growth the budget preparation mode of “taking the budget preparation outline as continued to suffer losses, and the cost of gas for new natural gas that risks are under control. The Group actively cooperated with the Group’s of about 25%. The province’s the guideline and effectively played the role of setting business objectives, units was high. As a result, the overall profitability of the Group was Board of Supervisors to conduct on-site inspections and investigations coal and gas units all entered the transmitting business pressure, and effectively allocating resources. The under downward pressure. of more than 20 units, and implemented rectification in accordance with market, and the market-oriented transaction power ratio exceeded annual financing cost decreased by 26.37% compared with the average 70%. At the same time, it is expected that the Guangdong power spot the requirements of the Provincial State-owned Assets Supervision and The ecological and environmental protection policies are becoming social financing level in Guangdong Province, which was 6.62% lower than market will start trial operation in the second half of 2019, and the Administration Commission, and strived to eliminate strategic and operational stricter and the state actively promotes connection of grid via wind the benchmark interest rate. The Group opened up the financing channels of power market reform will accelerate. risks. The Group actively responded to the market environment fluctuations power and photovoltaic power generation at an equal price, and puts the exchange, enriched the financing varieties, optimized the debt structure, caused by financial “risk prevention and deleveraging”, implemented the forward higher requirements for the investment and development of successfully issued the Group’s first 2 billion corporate bonds, and provided requirements of the provincial and State-owned Assets Supervision and new energy projects. The coal-fired power development space has a strong financial guarantee for the Group to cope with the continued tight It is estimated that in 2019, Administration Commission for asset and liability constraints, and prevented continued to narrow, and the current coal-fired power units have faced capital market environment. The Group innovatively introduced low-cost loans the province’s total electricity the financial risks caused by excessive leverage. The Group established many difficulties in retirement and rebuilding. from the international financial organization BRICS New Development Banks, consumption will reach a long-term mechanism for the Group’s risk prevention, strictly prevented and actively applied for the National Clean Energy Fund to provide strong 663.5 billion kWh, up by debt risks, fully performed risk assessment of major decision-making social support for the development of new energy industries such as offshore wind 5%. The province’s newly It is necessary to find a balance stability, and fulfilled confidentiality and social responsibility. The reform and power. The financial company’s centralized management benefits continued installed capacity will be between the conflicts of cyclical development and the workforce of the Group remained stable. to show up, which directly or indirectly reduced the financing cost for the Group 8.42 million kilowatts. The fluctuations in the capital market and its member units by more than RMB 70 million. In addition, the company coordinated maximum power generation capacity will reach 167.63 and the guarantee of the liquidity was awarded the “National Best Finance Company of the Year” for the third million kilowatts, with a year-on-year increase of 7.1%, higher than safety of enterprises, and to find consecutive year. The financial leasing company actively explored the service Challenges and the province’s coordinated maximum load (estimated to be 118 million a balance between the country’s business and new financing mode at the upstream and downstream of the kilowatts) of 49.63 million kilowatts. Therefore, the power generation strong implementation of the “debt Group’s industrial chain, and promoted the optimization and development capacity is oversupplied. Under the policy of clean energy, nuclear reduction” policy and the great demand of large capital investment in of the Group’s industrial structure. The self-insured company successfully Opportunities power and preferential consumption of western power, the average the development of the Group’s new energy. Moreover, it needs to find conducted the first international road show for offshore wind power insurance, utilization hours of conventional thermal power units will fall back. a balance between the stock loan control, financial expense reduction In 2019, comprehensively deepening reform and opening up, the greater which directly docked the international reinsurance market, and improved the and cash flow safety guarantee based on actual business condition of bay area construction of Guangdong, Hong Kong and Macao, and the Group’s popularity in the international insurance market. The adjustment and reform of the enterprise. construction of a new regional development pattern of “one nuclear, the management and control one belt and one district” in Guangdong brought new opportunities mode involves a wide range of With the continuous expansion and challenges for the development of the Group. We shall maintain Adhere to Innovation Leadership and Vigorously tasks, heavy tasks and tight time of the Group’s industrial chain strategic strength, firm development conviction, and strive to overcome schedule. There will be various and the continuous expansion Carry out Independent Innovation and difficulties, further enhance competition awareness, cost awareness, difficulties and unexpected of its business scope, Technological Innovation responsibility awareness, urgency awareness and risk awareness, and situations during the adjustment especially the accelerated turn the pressure and difficulties into the driving force for reform and and reform. There is still much room for improvement in the development of investment In 2018, the Group vigorously promoted technological innovation and development to actively identify opportunities, create opportunities, and construction and implementation of the system, and the construction projects such as natural gas management model innovation. In the whole year, technological innovation use opportunities in the changing situation in order to promote and realize of the talent team in each sector needs to be continuously pipeline networks and offshore wind power, the difficulty and risk of funds of RMB 1.5 billion were invested to focus on the innovative research the high-quality development of the Group. strengthened. safety production management have further increased. 09 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 10

Outlook for 2019

Key work: Overall Requirements:

The Group needs to continue to study and implement Xi Jinping’s socialism with Chinese characteristics in the new era, the spirit of the Comprehensively strengthen the party building of Continuously improve the value of financial 19th National Congress of the Communist Party of China and the Second and Third Plenary Sessions of the 19th Central Committee, state-owned enterprises management obey the overall strategic deployment and economic development of the provincial party committee and the provincial government, and implement the work requirements of the Provincial and State-owned Assets Supervision and Administration Commission, persist Fully implement the responsibility of managing and Focus on promoting scientific and technological in striving for stability, adhere to the new development concept, promote high-quality development, actively adapt to the supply- governing the Party innovation to a new level side structural reform and power system reform requirements, and strive to promote the reform and implementation of the Group’s Fully improve the level of safety production Optimize and improve the management system of management and control model, fully stimulate the momentum and vitality of enterprise development, solidly promote the state-owned management and energy conservation and the Group enterprises' party building, safe production, reform and development, operation management, risk prevention and control and continue environmental protection to strive to build the Group into a comprehensive energy group that is competitive and that can better serve Guangdong’s economic and Continue to take risk prevention and control social development. Deeply promote the reform of state-owned measures enterprises Focus on strengthening the construction of talent Main Objectives: Focus on promoting the high quality development team of the Group Continue to create a good environment for reform Objectives of Party Building Development objectives Overcome difficulties to improve the operation and development performance

well perform political construction, firmly adhere to the “four consciousnesses”, Newly build unit capacity of 2 million strengthen "four self-confidences", resolutely adhere to “two maintenance”, kilowatts; accelerate the development and and always keep ideological and political action in line with the actions required construction of the natural gas pipeline by Party Central Committee taking Comrade Xi Jinping’s ideas as the core. network and LNG receiving station in Implement the general requirements for party building in the new era and promote eastern, western and northern part of the comprehensive and strict development of the Party. There will be no major Guangdong. violations of law and discipline by senior management personnel and party and government leading groups at all levels; no major economic losses will be caused by defects in systems and processes.

Safety objectives Business objectives

Resolutely avoid all major and above safety production accidents, general and achieve a total asset of RMB 156.5 billion, above emergency environmental incidents, and above and above information operating income of RMB 49.2 billion and security incidents. No general safety production accidents shall be found. No on-line electricity of 118.1 billion kWh. major incidents affecting the image of the Group, and no abnormal petitions and mass incidents are permitted. ANNUAL REPORT 12

Guangdong Energy Group Co., Ltd. was established on August 8, 2001. Its predecessor, Guangdong Yudean Asset Management Co., Ltd., was the first power generation enterprise in China which was established due to the reform of the power system of “plant and network separation”. In 2003, it was renamed Guangdong About Guangdong Yudean Group Co., Ltd. On February 18, 2019, Guangdong Yudean Group Co., Ltd. was officially renamed as Guangdong Energy Group Co., Ltd. (hereinafter referred to as Guangdong Energy Group Company or the Company). The registered capital of the Company is RMB 23 billion, and the Guangdong Provincial Energy Group Government and Huaneng Group hold 76% and 24% of the shares respectively. Since the establishment of Guangdong Energy Group Co., Ltd., under the strong leadership of the Guangdong Provincial Party Committee and the Provincial State- owned Assets Supervision and Administration Commission, the Company has been adhering to the fine tradition of Guangdong Power and actively practicing the corporate philosophy of “harmony and symbiosis, making innovations according to laws” and the corporate mission of “self-discipline and social commitment and providing benefits for the country and the citizens” and firmly implementing the development strategy of “taking energy as the core and developing relevant industries in a coordinated manner, developing business based on Guangdong, facing the whole country, exploring the international market, and building a domestic first- class and internationally competitive energy group”. Moreover, the Group strives to protect the province’s energy security and clean supply and the preservation and appreciation of state-owned assets and has created good economic and social benefits and made due contributions to Guangdong’s economic and social development. After more than 10 years of reform and development, the Company has deepened its energy industry and created green energy with its heart. It has grown into the strongest and largest energy enterprise in Guangdong Province. Moreover, it is the main force for Guangdong to promote energy transformation and build a modern energy system.

By the end of 2018, the Company’s total assets exceeded RMB 140 billion. The Company has more than 14,000 employees, controllable installed capacity of over 32 million kilowatts, 619 kilometers of natural gas pipelines in operation, and controllable shipping capacity of 2.39 million deadweight tons; the Company has achieved annual operating income of nearly RMB 46 billion, and its on-grid electricity exceeds 112 billion kWh, the amount of natural gas transmitted exceeds 4 billion cubic meters, and the coal supply is nearly 39 million tons. The Company owns 188 wholly-owned, holding and shareholding units, and one A-share listed holding company. (Guangdong Power Development Co., Ltd.). Guangdong Energy Group has 11 business segments including thermal power, hydropower, wind power, new energy, integrated energy services, natural gas, fuel, shipping, finance, Guizhou regional and overseas investment. The industry covers all parts of Guangdong and has been extended to the province and overseas market. In 2018, the Group ranked 354th and 46th respectively among top 500 Chinese enterprises and the top 500 enterprises in Guangdong.

In the new era, Guangdong Energy Group Company will adhere to the guidance of Xi Jinping’s socialism with Chinese characteristics in the new era, comprehensively implement the spirit indicated and approved by General Secretary Xi Jinping’s important talks on work of Guangdong, and conscientiously implement the various strategic deployments of the provincial party committee and the provincial government as well as the work requirements of the State-owned Assets Supervision and Administration Commission. Moreover, the Group will be brave in actions and actively adjust the structure, promote upgrading, improve efficiency and ensure supply, safety and appreciation, so as to make the Group become stronger, and build a comprehensive energy group with international comprehensiveness, give full play to the role of Guangdong’s main energy force, and make a due contribution to the goal of “four aspects ranking first in the country” and “two important windows” of Guangdong. 13 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 14

Governance Structure Leading Group

Board of Shareholders Li Zhuoxian Party Secretary and Chairman

Director, General Manager and Deputy Secretary of Huang Zhenhai Party Committee

Board of Board of Party Deputy Secretary of the Party Committee and Supervisors Directors Committee Li Kaisheng Secretary of the Discipline Inspection Commission

Director, Deputy Secretary of the Party Committee, Li Yanxu Chairman of the Labor Union Management Group Director, Deputy General Manager and Member of Li Mingliang Party Committee

Xu Ping Deputy General Manager

Deputy General Manager and Member of Party General Office HR Department Strategic Development Department Financial Department Safety Monitoring and Production Technology Department Operation Management Department Department of Legal Affairs and Capital Operation Audit and Board of Supervisors Work Department Electrical Power and IT Center Preparatory Group Party Committee Department(Corporate Culture Department) (Party Committee Inspection Office) Discipline Inspection and Supervision Department Labor Union Yang Xinli Committee

Deputy General Manager and Member of Party Yao Jiheng Committee 15 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 16

Management Structure Level-three Operating Companies (including internal management organs)

The Company implements the three-level management structure of “Group Headquarters + Platform Enterprise + Business Shajiao A Power Plant (branch) Thermal Power Company Honghaiwan Generation Company Zhenneng Thermal Power Co., Ltd. Unit”. Humen Power Generation Company Guangzhu Company Jinghai Power Company Zhencheng Comprehensive Energy Company Anxin Maintenance Company Power Plant Company Huadu Thermal Power Company Guangqian Power Company Group Headquarters Secondary platform enterprises Shajiao C Company Zhuhai Power Plant (branch) Huizhou Natural Gas Power Bohe Coal Power Company Shajiao C Power Plant (branch) Jinwan Power Company Generation Company Dabu Power Generation Co., Ltd. Guanghe Company Yuelong Power Generation Company Power Company Xinhui Generation Company Guangdong Electric Power Yuehua Power Generation Company Yunhe Generation Company Zhanjiang Yuheng Company Development Co., Ltd. IGCC Company, Xitou Company Huangpu Power Engineering Company Jinhui Company Yuejia Power Company Comprehensive Administrative Yueqian Company Yuehua HR Company Yundian Energy Company Zhongyue Energy Company Yueqian Investment Company Huangpu Petroleum Storage Zhanjiang Biomass Power and Transportation Company Generation Co., Ltd. Yongan Natural Gas Power Generation Company HR Huangdian Training Center Pinghai Generation Company Yuejiang Generation Company Yuehua Comprehensive Pingdian Comprehensive Energy Company Energy Company Yuejiang Hongrui Company Strategy Development

Xinfengjiang Power Company Changhu Generation Company Fengshuba Power Company Water Company Guangdong Energy Group Co., Ltd. Tianyi Company Changyuan Generation Company Qingxi Generation Company Nanyuan Company Financial Management YUDEAN Hydropower Subsidiaries Tianyi Power Plant (branch) Changtan Power Company Penglatan Hydropower Company Lincang Company Liuxihe Generation Company Changlong Generation Company Nanshui Generation Company Work Safety

Yuemeng New Energy Company Xuwen Wind Power Company Huilai Wind Power Company Xupu New Energy Company Bayan Obo New Energy Company Dianbai Wind Power Company Pingyuan Wind Power Company Tongdao Yuexin Wind Power Company Operation Management Guangdong Wind Power Generation Co., Ltd. Zhanjiang Wind Power Company Wind Power Company Heping Wind Power Company Offshore Wind Power Company Qujie Wind Power Company Shibeishan Wind Power Company Wuxuan New Energy Company Zhuhai Offshore Wind Power Company

Legal Affairs and Capital Technical and service center Operation Development District New Development Company Energy Company Qujiang New Energy Company Yangxi New Energy Company Xuwen New Energy Company Deqiang New Energy Company Yangxi Shuangyu New Energy Company Maonan New Energy Company Audit and Internal Control Huizhou New Energy Company Yudean Power Sales Company New Energy Company New Energy Company Leizhou New Energy Company

Work of the Party and Yudean Natural Gas Company LNG Company Yangjiang LNG Company Guangdong Natural Gas Grid Co., Ltd. Communist Youth League

Shanxi Yuedian Energy Company Yuexing Wind Power Company Yangjiang Port Affairs Company Environmental Protection Company Discipline Inspection Environmental Protection Material Company and Monitoring Fuel Company Yuncheng Yuezhongyi Company Xinlei Wind Power Company Ruiheng Company Gaolangang Environmental Yuefengyi Photovoltaic Company Faneng Company Zhuhai Tourist Hotel Protection Company

Labor Union Shipping Company Shipping Company Mingzhu Transportation Company Ship Management Company Shipping Service Company

Finance Company Yudean Financial Leasing Company Yudean Captive Insurance Company Tianxin Insurance Company

Shiqian Wind Energy Company Yanyuan New Energy Company Yuezhong Energy Company Linzhou New Energy Company Yudean Guizhou Company Liupanshui Energy Company Congjiang Wind Energy Company Yuewang Energy Company Zuiyi Wind Energy Company Guizhou Power Sales Company Yuebang Energy Company

Ocean Shipping Company Energy Transportation Company Australia Company Yudean International Company Upper Horn Company Ocean Transportation Company Dongfang Transportation Company Yudean Investment Company Zhuhai Hengda Energy Company

Note: The enterprises or units included in this management & control structure are mainly the wholly owned and holding companies and management units of the Group. ANNUAL REPORT 18

Guangdong Energy Group Company, as the largest comprehensive energy group in Guangdong Province, currently has 11 Our Business business segments namely thermal power, hydropower, wind power, new energy, integrated energy service, natural gas, fuel, shipping, finance, Guizhou regional and overseas investment. Its businesses are developed all over the province and some of them are extended to the regions outside the province and country.

Domestic industrial distribution Industrial distribution in overseas countries

Inner Mongolia Netherlands electric power, coal electric power

Shanxi electric power, Britain coal electric power

Indonesia Jordan coal Yunnan electric electric power, power coal

Australia Guizhou Guangdong coal electric power, electric power, South China Sea Islands coal finance,logistics, natural gas

With the implementation of power structure We kept up transformation and upgrading, we actively with the promoted the optimization and development changes in of thermal power projects, reducing the the national proportion of coal-fired units from 80% industrial to 74.71%. At the same time, we also made stable investment in policy and the power market, and gas units. Huizhou No. 4-5, Xinhui No. 1-2 and Zhongshan No. 1 intensified the innovation from the units were completed and put into traditional coal-fired power generation operation successively. The to offshore wind power and onshore wind power installed capacity of the generation, and our clean energy resources acquisition and project development Group’s natural gas power reached a new level. In 2018, offshore wind power projects such as Zhuhai generation sets increased Jinwan, Zhanjiang Wailuo Phase II, Zhanjiang Xinyi and Yangjiang Qingzhou by 2.286 million kilowatts, were successively approved, and the capacity of the developed offshore wind and clean energy ratio power project reached 2.2 million kilowatts. Among them, the successful hoisting reached 25.29%, which of the first wind turbine of Zhanjiang Wailuo offshore wind power project marked demonstrated that we a significant progress in the construction of the Group’s first offshore wind power had achieved sustainable project, and also marked that first large-scale offshore megawatt wind power development of thermal power. project in Guangdong Province entered into the mass installation stage. We will continue to explore wind power resources inside and outside Guangdong Province to achieve specialized, market-oriented, intensive and high-quality development of wind power sector. 19 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 20

In 2018, we actively integrated and optimized the Focusing on the goal of developing new energy We transform our business into coal supply chain integrated service business by expanding our hydropower business, accelerated the development business, we actively carried out fixed asset comprehensive energy business in the northern region and strengthening our coal supply, storage, of water pumping and storage power stations and investment businesses such as photovoltaic, shipment, sales and solid waste disposal capabilities. At the same time, we actively participate in the extra-provincial hydropower projects; and expanded distributed energy, multi-energy complementary, coal mine investment, invest high-quality coal mine projects in Shanxi and Inner Mongolia with rich the extended water resources business. The energy storage, microgrid, charging pile and incremental distribution network. coal resources, Indonesia, Australia and other regions and countries. The Group has 7 coal mining Company now has 11 controllable hydropower plants with an installed capacity Guangdong Yangxi Weaving Decentralized Wind projects, with an annual production of about 7 million tons of coal. of 2,336,800 kilowatts. Power Phase I and Phase II Projects were Through the establishment of the shipping business segment, we continue to deepen the approved. The first 8 MW distributed shipping management reform while ensuring the Group’s power coal transportation, and photovoltaic power plant invested by continue to explore market business and stimulate the vitality of the market. At present, the Shanxi Province was successfully Group owns 5 wholly-owned and controllable shipping companies, with 33 bulk carriers and a connected to the grid, and a controllable shipping capacity of 2.39 million DWT. In 2018, the accumulated number of PV projects such as market freight volume reached 16.46 million tons, and the market freight turnover was 29.1 Huadu Airport Logistics Park and billion tons nautical miles, with a year-on-year increase of 2.4%; the Group expanded the Foshan Shundemei were put into businesses of Baolihua Jiahuwan Power Plant and CNOOC LNG project. The operation. The annual installed capacity shipping capacity ranked second in Guangdong Province and 8th in China. of photovoltaic power generation was 237,500 kilowatts. Now, the Group has 28 controllable photovoltaic power plants with an installed capacity of 463,500 kilowatts.

We rely on the integrated energy services business segment to develop electricity sales and integrated energy services. By promoting business model

innovation, we combine carbon asset management We treat financial companies, self-insured companies and financial business, expand value-added service which takes leasing companies as the main body to establish corporate financial power sales as a carrier, and build a nationwide sales network. At present, services through the establishment of financial business segments, six plant-level (sales) integrated energy companies have been established. In deepen the strategic coordination of internal and external financial the whole year, the Company has won a total of 48.943 billion kWh of market resources, enrich the corporate financial format, and play a financial electricity, and the power generation capacity with power generation rights support role to promote the integration of industry and finance. In 2018, the Group invested was 4.53 billion kWh, and the total number of customers signed was 1,293. RMB 24.3 billion in support of operation and development throughout the year. The annual financing cost has decreased by 26.37% compared with the average social financing level of The market electricity price was better than the average price. The electricity Guangdong Province, and decreased by 6.62% compared with the benchmark interest rate. sold by the electricity sales company reached 20.983 billion kWh throughout the year, ranking first in the province. The electricity sales company’s annual We set up a regional business segment in Guizhou and are trading electricity accounted for 13.35% of the total electricity in the market. responsible for the Company’s integrated energy development, investment, construction and operation in the western region and related regions. By leveraging the advantages of localization, we will strengthen local resource docking and integration, and promote the Company’s business development in the western region and related regions. At present, the Group has several power generation projects such as thermal power, hydropower, wind power and gas power generation projects in Guizhou. Through the development, investment, construction and operation of natural gas business, we strive to build a professional platform that has the full industrial chain functions of resource procurement, transportation, reception, management and market development. We have In 2018, we actively expanded overseas energy markets, strived to the first provincial-level natural gas pipeline network company in the country that is invested by the three major national oil companies and improve overseas investment and financing management capabilities controlled by Guangdong provincial enterprises. At the same time, we actively participate in the provincial “three-level pipeline network” and and leveraged overseas financing functions. The Jordan Oil Shale “one provincial network” trunk network planning and the construction of the operation mechanism, promote the interconnection of the main Mine-Electric Joint Management Project is the first overseas power pipeline network in the province; steadily carry out the layout of the provincial LNG receiving station, gasification station and ship filling station, and unswervingly build investment project of the Group that participates in the construction a synergistic and efficient natural gas industrial chain. In 2018, five projects (including 679 km pipelines), such as -Yunfu-Yangjiang- Line, Yuedong period management and the highlight of the construction of the “One Belt and One Road” Huizhou- and Branch Line, and - Line in Guangdong Province, were successively approved for construction, thus laying a in West Asia. The smooth implementation of the project is a successful model of strong solid foundation for promotion of construction of “one provincial network” and achieving the goal of establishing 830 kilometers of provincial natural gas main pipeline cooperation between Chinese enterprises in West Asia and the strategy of “going out”. network at 21 prefecture-level cities in 2020. 21 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 22

In 2018, the Group’s newly added The hydropower power supply capacity reached Distribution Diagram Shanxi Province 2.5249 million kilowatts, and the plants capacity of power project under of Controllable construction was approximately 8.2 have an installed capacity 2,336,800 million kilowatts. Power Plants of kilowatts, which are distributed in Guangdong Province, Yunnan Province and Guizhou The coal-fired Province. power plants Inner Mongolia Autonomous Region

Wind farm have an installed capacity of Guangzhou 24.02 million kilowatts, which onshore wind are distributed in Guangdong power farms Province and Guizhou Province. have an installed capacity of 579,400 kilowatts, which are distributed in the coastal area of Guangdong Province LNG power plant Guizhou Province and in Guizhou Province and Inner Mongolia Autonomous has an installed capacity of Yunnan Province Region. There are 4 4.626 million kilowatts, which is distributed in Guangdong Province. offshore wind power projects

under construction and The biomass power approved for construction, plants with an installed capacity of 2.2 million kilowatts, which have an installed capacity of are distributed in the central 100,000 kilowatts, which and western coastal areas of are located in Zhanjiang City, Guangdong Province.

Guangdong Province. 0.31% 9.9% 1.44% 0.08%

14.39% The gas power plant Photovoltaic power 1.8% generation units 7.27% Proportion Unit capacity of power has an installed capacity of structure (%) structure(%) have an installed capacity 2.49 million kilowatts, which is of 463,500 kilowatts, distributed in Guizhou Province. which are distributed in Guangdong Province and 74.71% Shanxi Province. 31.3% 58.8%

Units with a capacity of 600 MW and above Coal power Hydropower Wind power Units with a capacity of 300 MW to 600 MW Note: the date is updated to LNG Solar energy Biomass Gas Units with a capacity below 300 MW December 2018 ANNUAL REPORT 24

Our Performance Leadership in Party Construction Comprehensively strengthen the Party’s ideological construction and leadership

In 2018, we have deeply carried out the activities of “leadership in study and supervision”, “big study, deep research, and true implementation”, promoted socialism with Chinese characteristics in the new era and the spirit of the 19th Party Congress, and the detailed implementation of the spirit indicated and approved by General Secretary Xi Jinping’s important talks on work of Guangdong. The members of the Party Committee of the Company made speeches and conducted propaganda activities at the branches of the grassroots Party organization or the Party organization relationship. The party organization secretary at all levels took the lead in Party lectures and special lectures, and organized senior executives to participate in the trainings on spirit of the 19th Party Congress and the spirit of important speeches made by General Secretary Xi Jinping during investigation on work of Guangdong.

Organize the Party Committee theoretical study center group to concentrate on study (expansion) 18 Senior management personnel conferences in the whole year: times participated in the study and training of the spirit of the The Party Committee members of the Group 260Party’s 19th National Congress: Company conducted 18 investigations, people. There were 152 held 19 publicity sessions, and formed people participated in the 18 research reports seminars about the indicated and approved by General Secretary Xi Jinping’s important talks on work of Guangdong and Party organizations at all levels took the 283 lead in lectures on Party classes and special people participated in the special trainings. lectures: organizing 414 sessions, 241 special surveys and writing 228 articles on learning experiences

In 2018, we formulated and issued the Implementation Scheme for Three-Year Action Plan for Strengthening the Party’s Grassroots Organization Construction by the Party Committee of Guangdong Energy Group Co., Ltd. (2018-2020), formulated the leadership of the Company’s Party Committee leadership to supervise the implementation of “three-year action plan” and completed the preparation of articles of association for Party construction of 60 second- and third-level enterprise; put forward Party’s organization structure setup scheme based on the Group’s management and control mode adjustment scheme, set the second-level platform enterprise party organization and achieve “four synchronization and four dockings”; carried out special investigation and rectification of grassroots Party organizations, and identified nine assistance points to help grass-roots Party organizations; and formulated a work plan for company leaders to help Party organizations at grassroots level, and regularly tracked and inspected the condition of designated service points.

In 2018, we resolutely implemented the requirements of comprehensively and strictly administering the Party, and further consolidated the results of inspections and rectifications, firmly performed “two responsibilities”, resolutely performed the main responsibility of strictly administering the Party, strengthened “one post and double responsibility”, and insisted on the close integration of Party culture and clean government construction and the promotion of enterprise development. In addition, we adopted the “four forms” to strengthen the supervision and discipline accountability and handle violations of disciplines from strictly. We adhered to the problem-oriented principle and specified focus of supervision, and focused on preventing “four risks” (i.e. investment risk, decision risk, business management risk and integrity risk). We further promoted the construction of work culture, focused on solving the problem that affects the development of enterprises, carried out 7 special rectification work, and continued to correct the problem of “four cultures”. Through discipline education, special supervision and guidance, special democratic life meetings and watching warning films, we strengthened the integrity education and guided the majority of party members and cadres to develop a sense of anti-corruption and anti-degeneration. 25 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 26

Safety Production State of Operation

In 2018, we closely focused on the goal of safe production, earnestly implemented the responsibility of safety production, strengthened In 2018, we have closely focused on the Group’s “13th Five-Year Plan” development strategy planning and the central work of the Group, the operation and maintenance management of power generation equipment, intensified technical supervision, implemented the adhered to taking innovation and reform as the driving force to strive for policies, occupy electricity market share, expand the market and innovation-driven development strategy, continuously optimized the system construction, improved management efficiency, maintained reduce costs, thus better achieving the Group’s overall business objectives. overall stable safety production situation and better completed the work objectives set at the beginning of the year. Market share of power purchase in We actively integrate resources and make plans to promote integrated energy distribution. Accelerate the construction of There were no general and above equipment accidents and electric work for employees, with a total of more than 12,000 participants; Guangdong Province % （ ） plant-level integrated energy sales companies and the sales safety accidents throughout the year; there were no major accidents carry out safety education video lectures for two hidden danger network covering the whole province; arrange the Guangdong such as fires, dam collapsing and plants flooding. There were 1 type investigations, risk grading control and emergency management, with power On-grid power energy of controllable power FM auxiliary service market in advance, actively participate in B obstacle and 43 type C obstacles. a total of more than 3,500 people attended the training. purchased from plantsin Guangdong the incremental distribution network business, and continue to other provinces province of the Company promote the transformation of AGC energy storage FM system in Establish a safety production responsibility system with the chairman Strengthen technical supervision, carry out special supervision of Yunfu, Yuejiang and other power plants as well as the incremental and general manager of the Group as the main responsible person, metal supervision, complete self-examination of 19 thermal power 32.34% 16.62% power distribution project construction in and Heyuan. and sign a safety production responsibility book with the system’s plants of the Group and conduct spot checks on 12 units; implement (46) production and operation units; establish the Company’s rectification for identified equipment and management hidden We strengthen management and continuously improve cost Party Committee, Board of Directors, Security Committee, and dangers and amend relevant production management systems other power energies in control. By exerting the advantages of self-owned capacity Monthly Office Safety Production Regular Meeting and other safety and technical standards in time to ensure that applicable rules Guangdong province safety guarantee and on-time liner ship, combined with effective production regular meeting systems and corporate leaders in-depth are available for technical supervision and constantly improve the measures such as early cashing and accelerating settlement, on-site inspection system. In 2018, led by the main leaders of the technical management level and good condition of equipment. 51.04% the upstream and downstream supply chain management is Group, a total of 24 inspection teams were set up to conduct special strengthened and the Group’s fuel safety and economic supply is spot checks on the safety production work of the production and Organize regular dam inspections and hidden danger investigations We continue to promote the construction of the Group’s marketing effectively guaranteed. operation units. to keep dams safe. Complete the safety registration and renewal of system, combine the new requirements for Guangdong Electric certificate for seven dams such as Tianyi, Xinfengjiang, Fengshuba, Power Spot Market and the Group’s three-level management and We actively adjust the financial management and control model, In combination with the actual work of safety production, we have Changhu, Changtan, Qingxi and Penglangtan, all of which maintain control model adjustment, revise and improve the relevant system, pay close attention to cost effectiveness, gradually establish a focused on the prevention of electric shock personal accidents, the Class A registration, and Fengshuba, Changtan, and Tianyi dams and strengthen the system’s implementation and improvement. sound asset management strategy system, continuously optimize implementation of “two votes”, the management of risk point hazard ares at the domestic leading level. the Group’s insurance overall management system, and fully sources, the comprehensive management of hazardous chemicals, We constantly improve the incentive mechanism, fully stimulate utilize the financial platform resources and advantages of financial fire prevention and control, capital construction projects for safety Actively refine the experience of standardization construction, lead the subjective initiative of all power plants and power sales companies and financial leasing companies to prevent risks and construction of engineering project and other special actions. A total the revision of the two industrial standards namely the Guidelines for companies, and strive to grab the power market share. In 2018, ensure the overall financial security of the Group. of 823 safety hazards were discovered, and 821 items were rectified, the Preparation of the Standard System for Power Enterprises and the annual trading power and sales scale ranked first in the the Guidelines for the Preparation of Standards for Power Enterprises with a rectification rate of 99.76%. province, and the market electricity price was better than the The financial settlement work has been praised by the superior to achieve management output. Actively undertake the preparatory provincial average, leading the market as a whole. competent departments for 17 consecutive years; the financial Resolutely avoid all major and above safety production accidents, work for the CEC Biomass Power Generation Standardization company’s centralized management benefits have continued to report the production safety accidents inside and outside the Group Technical Committee and develop the high-quality technical We actively prepare for the spot market, reserve trading talents, appear and the Group has won the title of “National Best Finance in a timely manner, and address the outstanding problems such as standards. accelerate the construction of marketing big data technology Company of the Year” for three consecutive years; the self- personal electric shock, inadequate construction site management support system, and carry out spot trading training and drills insured company has successfully conducted the international and fire safety, and learn from the accident lessons; research, Cooperate with the China Electricity Council for the first time and through multiple channels and multiple methods. road show for offshore wind power insurance and increased the prepare and strictly implement preventive measures to eliminate complete the Guangdong Energy Group Benchmarking Report for Group’s popularity in the international insurance market through hidden dangers. the Year of 2018; promote 29 management innovation projects, direct docking of the international reinsurance market. including 7 demonstration projects, which cover safety production, Solidly carry out the “three preventions” work, and promptly initiate operation management, human resources, financial management, the three-proof emergency response I level for 1 time, II level for Party building and administrative logistics; evaluate 42 cases of 1 time and III level for 4 times. In the face of the strong typhoon corporate management innovations, some of which won the first prize “Hawthorn” attack, the Group arranged a total of 4,509 people and the second prize of the management category of 2018 China to handle the issue. During the typhoon landing, the Group still Power Innovation Award. maintained a load of 1,002 kilowatts, accounting for 5.6% of the province’s overall load ratio over the same period, thus providing a Deeply inspect standards implementation condition and establish strong guarantee for the province’s power supply. standardized good behavior enterprise confirmation work. By the end of 2018, 14 power generation enterprises had passed Grade A A A A Main responsible persons of the production and operation units took confirmation of the standardized good behavior, and 12 enterprises the “Safe Production Month” activity as an opportunity to carry out the had passed Grade A A A confirmation, which were in the leading publicity of safety production knowledge and key safety production position among the national power generation group. 27 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 28

Standard coal consumption for power supply(g/kWh) Standard coal consumed annually(10000t) Sustainable Environmental Protection 315.40 3161 314.70 314.78 313.40 312.52 2943 3013 3007 2617 In 2018, we have actively adapted to the new requirements of environmental protection, actively fulfilled corporate social responsibility, and vigorously promoted energy conservation and emission reduction and environmental monitoring.

Continuously carry out in-depth treatment of pollutants. The ultra-low emission transformation of the Group’s conventional coal-fired units (excluding W-type flame boilers and circulating fluidized bed boilers) has been completed, and all transformation tasks have been completed ahead of the national requirements. In accordance with the requirements of the Work Plan of Guangdong Province for Winning the Blue Sky Defence War in 2018, the ultra-low emission transformation of unconventional coal-fired units such as W-type flame boilers and circulating fluidized bed boilers will be further 2014 2015 2016 2017 2018（(Year)） 2014 2015 2016 2017 2018（(Year） promoted. At present, the preliminary work for ultra-low emission renovation project of Yuejiang No. 10 and No. 11 units and Yunhe No. 5 and No. 6 units has been completed and is planned to be completed in batches by the end of 2020. In accordance with the requirements of local governments, two LNG power plants in Guangqian and Huizhou were promoted to implement the denitration transformation in an orderly manner. At present, the Fuel consumed annually(10000t) Average equivalent available factor(%) denitration of No. 1 unit of Guangqian has been completed, and the denitrification project of Unit 2 is under construction; the denitration transformation bidding of Huizhou No. 1-3 units has been completed. Yudean Group’s Action Plan for Fighting Pollution Prevention and Control (2018-2020) is formulated to actively adapt to the new requirements of environmental protection and fulfill corporate social responsibility. 0.85 0.87 0.83 91.26 91.10 91.60 90.50 0.81 0.79 86.60 Implement the “Bishui Project” and promote the implementation of the zero-emission project of thermal power plant wastewater in an orderly manner. At present, the zero-emission project of wastewater in units such as Dapu, Jinghai and Honghai Bay has completed the review of the feasibility study report, and the project bidding work is being carried out one after another.

Conduct energy review, operation optimization, comprehensive benchmarking and energy consumption analysis. After completing the first batch of 600,000 kW subcritical unit flow conversion project of the Group, and transformation of Shajiao C Power Plant No. 2 and Zhongyue Energy Company Units 1 and 2, the coal consumption of power supply will be reduced by 14g/kWh, and the annual coal saving will be 76,000 tons, the emission of 2014 2015 2016 2017 2018（Year） 2014 2015 2016 2017 2018（(Year)） carbon dioxide will be reduced by 205,200 tons, and the cost of power generation will be reduced by about RMB 0.7 billion. In the case that the utilization hours of the units continued to be low and the environmental protection facilities continued to increase, the Group continued to achieve a year-on-year decrease of coal consumption of 0.86 g/kWh. Case C and above failures(times) Average direct station service power consumption rate(%) Continue to further promote the heating reform of the pure condensing unit, and actively promote the implementation of the heat energy conversion project of the Zhenneng, Yunhe and Yuejiang. Respond to the national policy on coal-fired units coupled with biomass power generation, and promote 43 5.72 5.53 5.46 5.35 5.38 the pilot project of mixed burning municipal sludge with coal-fired units.

27 In 2018, the Group’s environmental emission indicators remain the advanced level of the industry. 26 24 19 Comprehensive utilization rate of solid waste(%) Sulfur dioxide emission(g/kWh)

coal-fired Twelve 93.4 95.1 98.3 97.58 power companies are rated 87.2 0.25 2014 2015 2016 2017 2018（Year） 2014 2015 2016 2017 2018（Year） as environmentally-friendly 0.20 and honest enterprises 0.15 0.106 (green cards) 0.06

2014 2015 2016 2017 2018（Year） 2014 2015 2016 2017 2018（Year）

Discharge of nitrogen oxide(g/kWh) Flue gas emission(g/kWh) 3 coal-fired power companies are awarded 0.05 environmentally-friendly 0.04 0.35 enterprises (blue cards) 0.03 0.20 0.185 0.172 0.02 0.137 0.01

2014 2015 2016 2017 2018（Year） 2014 2015 2016 2017 2018（Year） 29 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 30

Human Resources Harmonious Development

We closely follow the new situation of reform of state-owned enterprises and the reform of power system, accurately grasp the new requirements We insist on self-discipline and social commitment and providing benefits for the country and the citizens. We are supported by a high for personnel management of state-owned enterprises, closely focus on the development strategy of the Group, focus on strengthening the sense of social responsibility, focus on the country and the people’s livelihood development, provide reliable energy for the society and construction of the workforce, continuously optimize the organization of human resources, control and distribution, and promote the education create development value; carry out accurate poverty alleviation work, participate in social welfare undertakings enthusiastically and and training system. Construction provides a strong talent supply and organizational guarantee for the Group's sustainable development. create corporate citizenship values; adhere to people-oriented principle, care for employees, make the company and employees develop together and create harmonious values.

Labor productivity of personnel in duty(10k yuan/person) Education development

The Group continued with management of employee’s 305.34 323.85 277.01 career, organized different levels of training and skill TWh practice to build a greater stage and provide more 99.462 efficient paths for employee’s development. In 2018, we promoted 11 executives (including 5 from exchange of posts), and changed posts for 47 persons (including TWh 112.327TWh 23 principals),the rate of trainingof entire staff was 108.556 2016 2017 2018（Year） 91.5%. Two persons won the title of “May 1st ”. Labour Medal of Guangdong Province 113.548TWh

Education background Age structure

postgraduate technical secondary above 50 under 30 and above school and below We have actively carried out We have actively carried out 18.55% 17.28% donations and volunteer services. We poverty alleviation work. By the end 3.72% 23.90% have donated 12 schools throughout of 2018, the Group had invested the year, carried out supporting more than RMB 160 million in education for 12 times, and aided 211 students, with donation fund poverty alleviation. Among them, reaching RMB 200,000. Relying on the poverty alleviation donations the Guangdong i volunteer service in 2018 totaled about RMB 16.947 platform, the “i Volunteer Service” million. We won the “Golden Cup was launched in the Group, and the of Guangdong Poverty Alleviation” “Youth Volunteer Service Corps” for 8 consecutive years. According bachelor and 40-49 30-39 and 39 volunteer service teams were junior college established. More than a thousand to local conditions, we accurately 38.00% 26.18% youth members became registered assist Yuexi Village in Hetian Town, 72.38% volunteers. We have organized the Luhe County, City to carry out “Guangdong Youth Volunteer Forest” tree Professional technical position structure Professional skill structure relevant tasks. We have accumulatively planting activities and “Safe Home” to enrich invested RMB 8.2 million in poverty alleviation various youth volunteer activities such as the Spring in Yuexi Village and successfully helped 292 indiviuals double-professionally- senior worker Festival activities, care for empty nesters, love and aid for titled talent students. The tree planting activities were carried out 10 times out of 74 poor households in the village to get rid of secondary worker throughout the year, with 895 trees planted and an area of poverty. primary title senior title technician 30.17% and below 15.9 mu covered. Yunhe Power Generation Company senior was selected as the “Guangdong Province Leifeng 20.50% 9.64% 24.59% technician Activity Demonstration Site”, and Luo Guoping 14.05% 12.36% from Huizhou Natural Gas Power 2.76% Generation Company was awarded “Guangdong Post Lei Feng Model”.

intermediate title

21.83% 31 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 32

Ten Major Events in 2018

Adhere to the leadership of the Party Jordan Oil Shale Power Station Project boosts the Build a characteristic power marketing system and comprehensively strengthen Party development of “One Belt and One Road” and opens “new On April 18, 2018, the Group held the power marketing system publicity and 2018 annual market transaction summary meeting, marking the innovation building work era” of Jordan energy of the Group’s management philosophy as well as the significant transformation from the planned economic system model to the market-oriented According to the deployment of the provincial Party On February 22, 2018, the largest power station project in Jordan, jointly invested by management model. committee, the Group carried out the activities of the Group, Malaysian YTL Power Company and Enefit Power Company of Estonia, i.e. Constructing a power marketing system with group characteristics is an important part of the Group’s active promotion and participation in supply-side “leaders leading the study and supervision” and the Attarat Oil Shale Circulating Fluidized Bed Mine and Power Joint Project held the structural reforms and improvement of supply quality, an important measure to deal with power market reforms, integrate system resources, and reconstruct “big study, deep research, and true implementation” ceremony for the first anniversary of the closure of project financing in Attarat. The Belt competitive advantages and an institutional arrangement for transformation of supply mode, grasping market opportunities and improving system to promote Xi Jinping’s socialism with Chinese and Road Initiative promotes the Chinese government and Chinese companies coordination. characteristics in the new era and the spirit of the 19th to truly develop Jordan’s oil shale power generation project. Party Congress, and the detailed implementation of the The smooth implementation of the project has The Group signed a project cooperation memorandum with spirit indicated and approved by General Secretary Xi helped Chinese power companies to open up Jinping’s important talks on work of Guangdong. In the the international high-end power market, ExxonMobil whole year, 18 studies, 18 researches, and 19 seminars which has become a successful On the afternoon of September 5, 2018, the Guangdong Provincial Government, were organized, and 18 research reports were formed. example of Chinese companies’ Huizhou Municipal Government and the Group signed a strategic cooperation strong cooperation and framework agreement, a preliminary investment agreement for the chemical complex cohesion in West Asia. 1 project and a memorandum of cooperation for the Huizhou LNG receiving station project with representatives of ExxonMobil. Li Zhuoxian, Secretary of the Party Committee and Chairman of the Group, signed a memorandum of investment on Huizhou LNG receiving station on behalf of the Group with Guo Lekai, Global Vice President of ExxonMobil and President of Natural Gas and Power Marketing Company. Provincial Party Secretary Li Xi, Governor Ma Xingrui, Executive Vice Governor Lin Shaochun, and Woodron, ExxonMobil Chairman and CEO witnessed the conclusion. The conclusion of the contract opened a long-term strategic cooperation between the Group and ExxonMobil in establishing a full industrial chain in the New breakthroughs The Group natural gas field and laying a solid foundation for further deepening cooperation between both parties. in power supply becomes the first pilot structure adjustment Commence the construction of Guangdong natural gas pipeline network enterprise to optimize and Yuexi natural gas main pipeline network project In 2018, the Group undertook the financing supervision 32 projects under construction, of the Shanghai On October 23, 2018, the commencement ceremony of the Zhaoqing-Yunfu trunk line project of Guangdong natural gas of which the power project Stock Exchange and pipeline network and Yuexi natural gas main pipeline network project was held in Yunfu. The commencement of the project capacity was about 8.2 million marked that the focus of the construction of “One Network in the Whole Province” had been converted from the Pearl River Delta kilowatts. Lots of projects had the Stock to the east and west wings of Guangdong Province and the northern part of the country, which opened the prelude to the construction been completed and put into Exchange The Group of the natural gas pipeline network in eastern, western and northern part of Guangdong, and laid a solid foundation for achieving production, such as Huizhou planned goal of constructing natural gas main pipeline network at 21 prefecture cities in 2020. 4-5, Xinhui 1-2 and Zhongshan In 2018, Shanghai Stock Exchange implements the No. 1 F-class improved and the Shenzhen Stock Exchange management and control The first international road show for offshore wind power insurance was successful heavy-duty gas turbines, respectively issued the Letter on the mode adjustment and reform Application of Optimized Supervision and a number of photovoltaic From October 23 to 27, 2018, in order to do a good job in the Group’s offshore wind power insurance, the Group organized the first insurance international and Regulation of Corporate Bonds projects such as Huadu Airport On December 21, 2018, the Group held a conference on road show and went to London to conduct overseas road shows. Through this insurance overseas road show, the Group’s risk management concepts and for Guangdong Yudean Group Co., Logistics and Shundemei of the implementation of the management and control mode measures were fully explained to the international reinsurers. The nearly 100 professional issues raised by the reinsurers were answered in detail, and Ltd. To the Group and the Group Foshan have been put into adjustment and reform to clearly establish the three-level the good feedback and universal recognition of the international reinsurance market were obtained. The activity enhanced the international reinsurer’s became the first pilot enterprise to operation and connected to the management structure of “Group Headquarters + Platform confidence in the Group’s offshore wind power projects and further enhanced the Group’s offshore wind power insurance support capabilities. grid. The newly added power optimize financing supervision. This is Enterprise + Business Unit” and implement the level-by-level supply capacity has reached a strong evidence of the Group’s stable management. 2.5249 million kilowatts. operation over the years and its focus Complete the hoisting of Guangdong’s first large megawatt offshore wind turbine generator on financing innovation. It highlights The reform of the Group’s management and control mode is On December 6, 2018, the hoisting of the first wind turbine of Zhanjiang Wailuo offshore wind power project was completed, which marked the significant the stock exchanges’ recognition of not only a key task for comprehensively deepening the reform progress in the construction of the Group’s first offshore wind power project. Moreover, it also marked that the first large megawatt wind power offshore the Group’s industry status and brand of state-owned enterprises and pushing reforms forward, but project in Guangdong Province entered into the batch installation stage. The Zhanjiang Wailuo offshore wind power project had a planned installed capacity qualifications and further enhances the also the internal need of the Group to better adapt to market of 198 MW and a total number of 36 wind turbines installed with a capacity of 5.5 MW. The center height of the fan hub is 100 meters and the impeller company’s reputation and position in competition and create more specialized development diameter is 158 meters. It is the first domestic anti-typhoon wind turbine generator set with 5 MW and above capacity under scale application. the bond market. capabilities, further promote structural adjustment and stimulate the vitality of subordinate enterprises.

Note: “Ten Major Events in 2018” are sorted by time of occurrence in principle 33 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 34

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Excellent member unit of Guangdong Province Circular Best Organization Award for Water Treatment Skills 25 Economy and Resources Comprehensive Utilization Competition of Guangdong Power Industry in 2018 Association in 2018 Glories of the Company Unit name Zhongyue Energy Company Unit name Zhanjiang Biomass Power Generation Company 2017 “Energy Conservation and Environmental Protection” 1 2 “Model Enterprise of Construction of Legal Enterprise” in Special Labor Competition Advanced Unit of National 26 Guangdong Province in 2017 Large-scale Hydropower Plant (Station) in 2017 Three Outstanding Research Achievement Awards for 27 China Electric Power Ideological and Political Work The business performance assessment in Unit name Guangdong Energy Group Unit name Tianyi Power Plant Research Association in 2017 2017 obtained the Grade “A” Unit name Jinwan Power Generation Company Excellent unit of Chinese corporate unit during Excellent Unit of Chinese Society of Ideological and Unit name Guangdong Energy Group 4 28 40 years of reform and opening up Political Work for Power Industry in 2017 Third Prize of Energy Innovation Award of China Energy Unit name Tianyi Power Plant 29 Chinese corporate culture model organization for 3 Unit name Huizhou Natural Gas Power Generation Research Society in 2017 40 years of reform and opening up Company Jinghai Power Generation Company Tianyi Power Plant Third Prize of 2017 China Electric Power Science and 30 Unit name Pinghai Power Generation Company Unit name Guangdong Energy Group Technology Progress Award 5 National best financial company for the year of 2018 2017 National Solar Photovoltaic Power Plant Production Unit name Pinghai Power Generation Company 31 Demonstration post of the safety production of national 6 and Operation Statistical Indicators AAAA Level youth Unit name Financial company Guangdong Agricultural Photovoltaic Demonstration Base 32 Unit name Development Company Unit name Jinghai Power Generation Company 7 National Staff Library Demonstration Site Unit name Development Company 33 First Prize for Science and Technology of First Prize of National Power Staff Technical Achievement 8 Unit name Zhenneng Thermal Power Company Guangdong Province Award Third Prize of Key Technology Application of Composite Anti-corrosion 34 Unit name Zhanjiang Biomass Power Generation Second Prize of National Power Staff Technical for Supercritical Unit Water Vapor System Unit name Dabu Power Generation Company 9 Company Zhongyue Energy Company Achievement Award Unit name Zhenneng Thermal Power Company Third Prize of National Power Staff Technical Achievement 10 Unit name Zhanjiang Power Company Award Third Prize of Key Technology Research on Large Generator Stator Core Defect and Rotor Interturn Unit name Yuelong Power Generation Company Dabu Power 11 First Prize of China Power Innovation Award of 2018 35 Insulation Fault Diagnosis Generation Company Yunhe Power Generation Company Unit name Jinghai Power Generation Company 36 Guangdong High-tech Enterprise Zhanjiang Power Company Unit name Zhenneng Thermal Power Company Unit name Zhanjiang Power Company Second Prize of China Power Innovation Award of 2018 12 Guangdong Cleaner Production Enterprise 37 Unit name Zhanjiang Power Company Unit name Zhanjiang Power Company Shajiao A Power Plant 13 Second Prize of China Electric Power Science and 38 Guangdong Province integrity model enterprise Xinfengjiang Power Generation Company Zhuhai Power Plant Technology Award of 2018 Excellent QC Achievement Award of Guangdong of Red Bay Power Generation Company 39 Unit name Red Bay Power Generation Company Unit name Huizhou Natural Gas Power Generation Company Power Industry

Third Prize of China Electric Power Science and 14 Unit name Jinwan Power Generation Company 40 Silver Award of “South Guangdong Star Excellent Quality Technology Award of 2018 Management Team” First Prize of 6th National Power Industry Equipment Special Organization Award and Group Second Unit name Huizhou Natural Gas Power Generation Company 15 Unit name Jinwan Power Generation Company Management Innovation Achievements Prize of hydropower plant skill competition in Three Yuejiang Power Generation Company 41 Provinces (Districts) namely “Guangdong, Fujian Jinghai Power Generation Company Unit name Yuehua Power Generation Company and Guizhou” Development Company 42 May 4th Red Flag Youth League Committee for Guangdong Second Prize of 6th National Power Industry 16 Unit name Tianyi Power Plant Provincial State-owned Assets Supervision and Administration Equipment Management Innovation Achievements System from 2017 to 2018 17 Advanced Unit for 7th China Electrical Equipment Guangdong Provincial SASAC System May 4th Red Unit name Red Bay Power Generation Company Management Work Flag Group Branch (General Branch) from 2017 to 43 Unit name Jinghai Power Generation Company Unit name Tianyi Power Plant 2018 Excellent Achievement Award and First Prize of Chemical Second Prize of 2017 Science and Technology Progress Award of 18 Unit name Huizhou Natural Gas Power Generation 44 Industry Technology Innovation in Power Industry Excellent Organization Unit for National Employee Guangdong Science and Technology Award Company Safety Protection and Self-help Escape Knowledge Unit name Jinwan Power Generation Company 19 Popularization and Competition Unit name Huizhou Natural Gas Power Generation Company First Prize of Guizhou Power Industry Environmental Advanced Unit of Safety Culture Promotion Activities of the 20 Unit name Red Bay Power Generation Company Protection Supervision, Power Quality, Boiler 2018 National “Ankang Cup” Competition 45 Jinghai Power Generation Company Supervision, Chemical Supervision and Energy Unit name Zhenneng Thermal Power Company Conservation Supervision in 2017 Winners of the 2016-2017 National “Ankang Cup” 21 46 Advanced Group of Comprehensive Management (Ping’an Competition Unit name Guangdong-Guizhou Company Finance) from 2016 to 2017 Third Prize of Intelligent and Innovative Achievements in Unit name Zhenneng Thermal Power Company 22 Unit name Finance company Thermal Power Management of 2018 “Ankang Cup” Competition Winning Team from First Prize of Intelligent and Innovative Achievements in 47 Unit name Zhuhai Power Plant 23 2016 to 2017 Thermal Power Management of 2018 Unit name Changtan Power Generation Company Unit name Zhuhai Power Plant Create Green Energy Wholeheartedly

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