1ANNUAL REPORT

Speech

Annual Work Report of the Group

03

05

33

31

Glories of the Company

Ten Events of 2018

Leadership of Party Construction

Safety Production

Operation State

Sustainable Environmental Protection

Human Resource

Harmonious Development

24

25

26

28

29

30

23 Our Performance

Company Profile

Governance Framework

Leading Group

Control Governance

12

13

14

15

11 About Guangdong Energy Group

Business Introduction

Distribution Diagram of Controllable Power Plant

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21

17 Our Business

CONTENTS

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.

0403 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT

Speech

In 2018, in the face of the complicated and ever-changing external situation and business environment, Guangdong Energy Group, led by Xi Jinping’s socialism with Chinese characteristics in the new era and the spirit of the 19th Party Congress, directly faced challenges, overcome difficulties, gathered together and make efforts to strive for a strengthened self-discipline of the Party, the stable overall security situation, stable business performance, and positive results of high-quality development, reform and innovation.

Making great efforts to grasp the new requirements of the era andStriving to create a new situation of work in the Group

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” 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.

In 2018, we vigorously accelerated the development of clean energy construction. The preliminary work of the water pumping and energy storage 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-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 Huizhou natural gas generator sets to enhance Guangdong’s green recycling and low-carbon development.

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!

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 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 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 contribution to the goal of “four aspects ranking first in the country” and “two important windows” of Guangdong.

Party Committee Secretary, Board Chairman

0605 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT

Director, General Manager, Vice Secretary of the Party Committee

Work Review

Annual Work Report of the Group

In 2018, Guangdong Energy Group thoroughly studied and implemented Xi Jinping’s socialist ideology with Chinese characteristics in the new

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

important talks on work of Guangdong, and the spirit of the Third and Fourth Plenary Sessions of the 12th Provincial Party Committee, implemented

the decision-making arrangements of the provincial Party Committee and the provincial government and the work requirements of the provincial

state-owned assets commission, actively handled profound changes in the external environment, and solidly promoted steady growth, promoted

reform, adjusted the structure, reduced debt and strengthened the main business, better completed its annual work goals and achieved the

preservation and appreciation of state-owned assets.

Be Brave to Bear the Responsibilities and Create a Competitive Integrated Energy Group

In 2018, the Group implemented the three-level management and control mode adjustment and reform of “Group Headquarters+ Platform Enterprise+ Business Unit”, focused on optimizing management and control, effectively integrated resources and enhanced professional management capabilities. The Group constantly promoted the structural reform of the supply side, cleared up and reorganized 8 “zombie enterprises”, steadily advanced the “three supply and one industry” and the separation and transfer of municipal facilities, and intensified efforts to deal with inefficient and invalid assets and multi-business clean-up and disposal; further optimized the group’s asset structure; continued to build and improve the Group’s power marketing system, and established six plant-level (sales) integrated energy companies, thus laying a solid foundation for building a nationwide sales network.

Strive to Promote Reform and Actively Adapt to the Reform of State-owned Enterprise and Requirements of Electricity Reform

In 2018, the Group resolutely implemented the requirements of comprehensive administration of the Party strictly, focused on further consolidating the results of inspections and rectifications, strengthened supervision and accountability, continued to correct the “four cultures”, solidly promoted the building of Party culture and clean government and anti-corruption work, and strived to create a clean and ethical environment for development. The Group resolutely performed “two responsibilities”, promptly revised the list of the main 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 comprehensive development of the Party construction; continued to carry out special inspections, patrol inspections and rectifications, make special inspections on corruption and work styles in poverty alleviation, and implement special rectification on corruption issues, “small treasury”, formalism and bureaucracy, strictly implemented the spirit of the eight central regulations, and constantly corrected “four bad cultures”. The Group strengthened discipline education, conducted clean conversions with 14 new leaders; organized 65 units and 71 senior executives to carry out the work review and assessment and continuously strengthened the incorruptible concept of “sunshine management and clean office”.

Adhere to the Strict Management of the Party and Promote the Construction of the Ethical Party and Clean Government

In 2018, the Group comprehensively strengthened the party building work, conscientiously implemented the general requirements of the Party construction, and earnestly exerted the role of the Party organization in controlling the direction of production management and operation. The members and leaders of the Party Committee of the Group took the lead in setting a good example and deepened the activities of “big study, deep research and true implementation”. The Group focused on improving organizational strength, strengthening the construction of grassroots organizations, and completing the incorporation of second and third-level enterprise party construction into the articles of association; issued the Implementation Scheme for Three-Year Action Plan for Strengthening the Party's Grassroots Organization Construction (2018-2020); solidly promoted spiritual civilization, corporate culture and youth work development, solidly 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” 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.

Adhere to the Leadership of the Party and Comprehensively Strengthen the Party Building Work of the Group

In 2018, the Group continued to optimize its power supply structure and asset structure, and made new breakthroughs in power supply structure adjustment. In the whole year, a total of 2,524,900 kilowatts of power projects were put into operation, and a number of F-class improved heavy-duty gas turbines were established and put into operation. A number of photovoltaic projects such as Huadu Airport Logistics Park and Foshan Shundemei were put into operation, and the Group’s coal-fired power ratio decreased by 80% in the past to 75% or below. The Group’s first large-scale offshore megawatt wind power project entered the stage of mass installation. A total of 328,000 kilowatts of onshore wind power and photovoltaic projects inside and outside the province had been approved or filed. Five projects of the natural gas main pipe network in eastern, western and northern part of Guangdong were approved, and the 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 foundation for building a natural gas industry chain and achieving the planned goal of constructing natural gas main pipeline network at 21 prefecture cities in 2020. The Group actively and steadily implemented the “going out” strategy and promoted the construction of the Jordan oil shale mining and electric joint management project as planned.

Implement New Development Concept and Focus on Expansion of Development Space of the Group

In 2018, the Group fully implemented the responsibility of safety production, actively reversed the passive situation of production safety, improved two liability systems, and strengthened the fulfillment of two responsibilities so that overall situation of safe production was stable. The Group regularly held regular safety production meetings such as the Party Committee, the Board of Directors, and the Security Committee to coordinate research

Fulfill Two Responsibilities and Maintain Overall Stable Safety and Environmental Protection Situation

and solve the problem of safe production. The Group implemented the company’s responsible person in-depth on-site inspection system, took the lead in practicing the “full responsibility” requirements, and transmitted the responsibility and pressure of safety production to the grassroots. The Group deeply conducted risk point hazard source investigation, hazardous chemicals management, fire protection, infrastructure and other special safety production special operations, completed the safety cross-inspection of 46 production and business units. The Group solidly carried out the “three defenses” work, successfully resisted the attack of super typhoons such as Mangosteen. The Group completed the work of safety registration and renewal of certificate for 7 dams, and vigorously promoted the cleanup of flood barriers at the downstream of Nanshui Reservoir. The Group actively performed environmental responsibility, vigorously carried out pollutant control, and organized the implementation of the Action Plan for Pollution Prevention and Control (2018-2020). The Group completed the ultra-low emission transformation of the conventional coal-fired units of the Group, and promoted the zero-emission project of thermal power plant wastewater and the denitrification transformation of Guangqian and Huizhou natural gas generator sets in an orderly manner. The Group prepared and implemented the Group’s three-year network security action plan, carried out network security work in an orderly manner, and enhanced the Group’s network security protection capabilities.

0807 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT

In 2018, the Group continued to strengthen the construction of trade union organizations, strengthened the service functions of trade unions, promoted democratic management, safeguarded the legitimate rights and interests of employees, performed practical service for workers, and strived to build harmonious labor relations. The Group deeply carried out safety production knowledge, provincial key projects and other labor competitions, and encouraged and guided the majority of employees to make contributions to the company. In the whole year, all units of the system carried out more than 170 factory-level labor competitions, more than 16,000 people participated in the competitions, and two people won the title of “Guangdong May 1st Labor Medal”. The Group actively carried out various forms of activities such as rationalization proposals and democratic dialogue meetings, and built various forms of employee communication platforms. All units of the system received 286 proposals from the workers’ congress, and 221 cases were filed and settled; earnestly fulfilled social responsibilities, solidly performed precision poverty alleviation, and won “Golden Cup of Guangdong Poverty Alleviation” for 8 consecutive years. The Group compiled and completed Guangdong Energy Group Report (2001-2015), summed up the history of the company and passed on the entrepreneurial spirit.

Create Good Atmosphere and Focus on Promoting the Harmonious Development of Enterprise

In 2019, the scale of electricity in Guangdong will increase to 46% of the electr icity purchased in the province, reaching 200 billion kWh, with a year-on-year growth of about 25%. The province’s coal and gas units all entered the

market, and the market-oriented transaction power ratio exceeded 70%. At the same time, it is expected that the Guangdong power spot market will start trial operation in the second half of 2019, and the power market reform will accelerate.

With the continuous expansion of the Group’s industrial chain and the continuous expansion o f i t s b u s i n e s s s c o p e , especially the accelerated development of investment projects such as natural gas

pipeline networks and offshore wind power, the difficulty and risk of safety production management have further increased.

It is estimated that in 2019, the province’s total electricity c o n s u m p t i o n w i l l r e a c h 6 63 .5 b i l l i on kWh, up by 5%. The province’s newly ins ta l led capac i t y w i l l be 8.42 mill ion kilowatts. The coordinated maximum power generation capacity will reach 167.63 million kilowatts, with a year-on-year increase of 7.1%, higher than the province’s coordinated maximum load (estimated to be 118 million kilowatts) of 49.63 million kilowatts. Therefore, the power generation capacity is oversupplied. Under the policy of clean energy, nuclear power and preferential consumption of western power, the average utilization hours of conventional thermal power units will fall back.

The adjustment and reform of the management and cont ro l mode involves a wide range of tasks, heavy tasks and tight time schedule. There will be various d i f f i c u l t i e s a n d u n ex p e c te d situations during the adjustment

and reform. There is st i l l much room for improvement in the construction and implementation of the system, and the construction of the talent team in each sector needs to be cont inuously strengthened.

In 2018, the Group adjusted its reform objectives based on the control model, and adjusted and optimized the “three important and one major” decision-making system. The Group further improved its state-owned assets supervision mechanism, and promulgated and implemented the accountability investigation method for illegal business investment. The Group strengthened risk prevention and control investigation and system unit risk control system construction, and completed the construction of 42 enterprise risk control systems, which accounted for about 85% of the total assets of the Group. The Group deeply carried out risk prevention and control of the Group’s business and trade operations, strictly controlled the important links of bulk commodity trading such as fuel procurement and power sales, and prohibited high-risk businesses such as financing trade. The Group carried out special investigations and audit investigations over overseas investment projects and conducted special risk investigations on some new energy projects to ensure that risks are under control. The Group actively cooperated with the Group’s Board of Supervisors to conduct on-site inspections and investigations of more than 20 units, and implemented rectification in accordance with the requirements of the Provincial State-owned Assets Supervision and Administration Commission, and strived to eliminate strategic and operational risks. The Group actively responded to the market environment fluctuations caused by financial “risk prevention and deleveraging”, implemented the requirements of the provincial and State-owned Assets Supervision and Administration Commission for asset and liability constraints, and prevented the financial risks caused by excessive leverage. The Group established a long-term mechanism for the Group’s risk prevention, strictly prevented debt risks, fully performed risk assessment of major decision-making social stability, and fulfilled confidentiality and social responsibility. The reform and development and the workforce of the Group remained stable.

Strengthen Risk Awareness and Take Various Measures to Prevent and Deal with Risks

In 2018, the Group adhered to the principle of management of cadres by Party, focused on the reform goals and tasks of the Group management and control model, strengthened the construction of human resources management system, and promoted the transformation and upgrading of human resources management. The Group clarified the principle of setting up the power marketing organization structure of power generation enterprises, and continuously optimized the organization management of new energy projects. The Group implemented the safety director system at the Group level, and clarified the requirements for the establishment of safety inspection institution of the system production and operation units to meet the requirements of reform and development and safety supervision. The Group adhered to the principles of fairness, justice, competition and selection, and selected and recruited outstanding talents through multiple channels. The Group formulated the budget management measures for the total amount of wages of the management units of the Group, and established a mechanism for wage-benefit linkage and market-based wage determination. The Group solidly developed vocational skill training and skill competitions, and focused on cultivating knowledge talented, skilled and innovative persons.

Adhere to the Principle of Management of Cadres by Party and Build a Team Composed of High-quality Talents

In 2019, comprehensively deepening reform and opening up, the greater bay area construction of Guangdong, Hong Kong and Macao, and the construction of a new regional development pattern of “one nuclear, one belt and one district” in Guangdong brought new opportunities and challenges for the development of the Group. We shall maintain strategic strength, firm development conviction, and strive to overcome difficulties, further enhance competition awareness, cost awareness, responsibility awareness, urgency awareness and risk awareness, and turn the pressure and difficulties into the driving force for reform and development to actively identify opportunities, create opportunities, and use opportunities in the changing situation in order to promote and realize the high-quality development of the Group.

In 2018, the Group actively occupied the market share of electricity, fully exploited the market, focused on reducing operating costs, actively sought favorable policies, and strived to improve quality and efficiency. The basic electricity of the B-type units in the province actually reached 36.249 billion kWh, and the over-plan completion rate was 25.57%. The power sales companies and power plants strived for a market power of 48.943 billion kWh, ranking first in the province in terms of the scale. The Group signed the Dapeng TUA agreement, which laid a solid foundation for independent natural gas international procurement and external market operation; continued to expand shipping marketization business, with the market freight turnover increased by 2.4%. The Group strengthened the coordination of coal long-term cooperation, and saved coal costs of about RMB 600 million throughout the year. The Group seized the low price of the natural gas price in the whole year and saved about RMB 60 million in natural gas fuel costs. The Group continued to improve its foreign investment and diversified business performance. The annual investment income increased by 54.72% on a year-on-year basis, and the diversified business income increased significantly on a year-on-year basis.

S t r e n g t h e n M a r k e t Aw a r e n e s s a n d Take Various Measures to Improve the Management Performance

In 2018, the Group relied on the capital budget and coordinated financing; formulated a fund management strategy of “attaching equal attention to safety and efficiency and paying more attention to safety”, and continued to promote the budget preparation mode of “taking the budget preparation outline as the guideline and effectively played the role of setting business objectives, transmitting business pressure, and effectively allocating resources. The annual financing cost decreased by 26.37% compared with the average social financing level in Guangdong Province, which was 6.62% lower than the benchmark interest rate. The Group opened up the financing channels of the exchange, enriched the financing varieties, optimized the debt structure, successfully issued the Group’s first 2 billion corporate bonds, and provided a strong financial guarantee for the Group to cope with the continued tight capital market environment. The Group innovatively introduced low-cost loans from the international financial organization BRICS New Development Banks, and actively applied for the National Clean Energy Fund to provide strong support for the development of new energy industries such as offshore wind power. The financial company’s centralized management benefits continued to show up, which directly or indirectly reduced the financing cost for the Group and its member units by more than RMB 70 million. In addition, the company was awarded the “National Best Finance Company of the Year” for the third consecutive year. The financial leasing company actively explored the service business and new financing mode at the upstream and downstream of the Group’s industrial chain, and promoted the optimization and development of the Group’s industrial structure. The self-insured company successfully conducted the first international road show for offshore wind power insurance, which directly docked the international reinsurance market, and improved the Group’s popularity in the international insurance market.

Focus on Management Accounting and Give Full Play to the Guarantee and Promotion Role of Finance

In 2018, the Group vigorously promoted technological innovation and management model innovation. In the whole year, technological innovation funds of RMB 1.5 billion were invested to focus on the innovative research

Adhere to Innovation Leadership and Vigorously Carry out Independent Innovation and Technological Innovation

It is necessary to f ind a balance between the conf licts of cyclical f luctuations in the capital market and the guarantee of the liquidity safety of enterprises, and to f ind a balance between the country’s strong implementation of the “debt reduction” policy and the great demand of large capital investment in the development of the Group’s new energy. Moreover, it needs to find a balance between the stock loan control, financial expense reduction and cash flow safety guarantee based on actual business condition of the enterprise.

and development and transformation of results in power operation and management mode, energy conservation and emission reduction, and operational efficiency. The Group actively deployed new formats such as integrated energy services and heat supply of district. The Group enhanced the heating reform of coal-fired units and strengthened the information construction of the Group. The system unit made a number of innovative achievements which can be transformed into obvious economic benefits. The Group obtained 3 China Electric Power Science and Technology Awards (1 second prize and 2 third prizes), 6 China Power Innovation Awards, and 7 National Power Staff Technical Achievement Awards (1 first prize, 2 second prizes and 4 third prizes). There were 75 new authorized patents and 18 new software copyrights.

Challenges and Opportunities

The high pr ices of bulk r aw m a te r i a l s s u c h a s coal and natural gas and the downward adjustment of electr icity prices have s e v e r e l y c o n s t r a i n e d t h e G r o u p ’ s b u s i n e s s

development. The mountainous power plants and the old power plants continued to suffer losses, and the cost of gas for new natural gas units was high. As a result, the overall profitability of the Group was under downward pressure.

The ecological and environmental protection policies are becoming stricter and the state actively promotes connection of grid via wind power and photovoltaic power generation at an equal price, and puts forward higher requirements for the investment and development of new energy projects. The coal-fired power development space has continued to narrow, and the current coal-fired power units have faced many difficulties in retirement and rebuilding.

1009 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT

Outlook for 2019

achieve a total asset of RMB 156.5 billion, operating income of RMB 49.2 billion and on-line electricity of 118.1 billion kWh.

Objectives of Party Building

The Group needs to continue to study and implement Xi Jinping’s socialism with Chinese characteristics in the new era, the spirit of the 19th National Congress of the Communist Party of China and the Second and Third Plenary Sessions of the 19th Central Committee, 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 in striving for stability, adhere to the new development concept, promote high-quality development, actively adapt to the supply-side structural reform and power system reform requirements, and strive to promote the reform and implementation of the Group’s management and control model, fully stimulate the momentum and vitality of enterprise development, solidly promote the state-owned enterprises' party building, safe production, reform and development, operation management, risk prevention and control and continue to strive to build the Group into a comprehensive energy group that is competitive and that can better serve Guangdong’s economic and social development.

well perform political construction, firmly adhere to the “four consciousnesses”, strengthen "four self-confidences", resolutely adhere to “two maintenance”, and always keep ideological and political action in line with the actions required by Party Central Committee taking Comrade Xi Jinping’s ideas as the core. Implement the general requirements for party building in the new era and promote the comprehensive and strict development of the Party. There will be no major 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.

Resolutely avoid all major and above safety production accidents, general and above emergency environmental incidents, and above and above information security incidents. No general safety production accidents shall be found. No major incidents affecting the image of the Group, and no abnormal petitions and mass incidents are permitted.

Safety objectives

Newly build unit capacity of 2 million kilowatts; accelerate the development and construction of the natural gas pipeline network and LNG receiving station in eastern, western and northern part of Guangdong.

Development objectives

Business objectives

Overall Requirements:Key work:

Main Objectives:

Comprehensively strengthen the party building of state-owned enterprises

Fully implement the responsibility of managing and governing the Party

Fully improve the level of safety production management and energy conservation and

environmental protection

Deeply promote the reform of state-owned enterprises

Focus on promoting the high quality development of the Group

Overcome difficulties to improve the operation performance

Continuously improve the value of financial management

Focus on promoting scientific and technological innovation to a new level

Optimize and improve the management system of the Group

Continue to take risk prevention and control measures

Focus on strengthening the construction of talent team

Continue to create a good environment for reform and development

12ANNUAL REPORT

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

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

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.

About Guangdong Energy Group

12ANNUAL REPORT

14ANNUAL REPORT13 2018 Annual Report of Guangdong Energy Group

Leading GroupGovernance Structure

Li Zhuoxian Party Secretary and Chairman

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

Li KaishengDeputy Secretary of the Par ty Commit tee and Secretary of the Discipline Inspection Commission

Li YanxuDirector, Deputy Secretary of the Party Committee, Chairman of the Labor Union

Li Mingliang Director, Deputy General Manager and Member of Party Committee

Xu Ping Deputy General Manager

Yang XinliDeputy General Manager and Member of Par ty Committee

Yao Jiheng Deputy General Manager and Member of Party Committee

14

Board of Shareholders

Board of Supervisors

Board of Directors

Party Committee

Management Group

General O

ffice

HR

Departm

ent

Strategic D

evelopment D

epartment

Departm

ent of Legal Affairs and Capital O

peration

Financial Departm

ent

Audit and Board of Supervisors Work D

epartment

Electrical Power and IT C

enter Preparatory Group

Safety Monitoring and Production Technology Departm

ent

Operation M

anagement D

epartment

Party Committee Department(Corporate Culture Department)

Discipline Inspection and S

upervision Departm

ent(P

arty Com

mittee Inspection O

ffice)

Labor Union

13 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT

16ANNUAL REPORT15 2018 Annual Report of Guangdong Energy Group

Management Structure

16

The Company implements the three-level management structure of “Group Headquarters + Platform Enterprise + Business

Unit”.

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.

Group Headquarters

Level-three Operating Companies (including internal management organs)

Secondary platform enterprises

YUDEAN Hydropower Subsidiaries

Guangdong Wind Power Generation Co., Ltd.

Development Company

Yudean Power Sales Company

Yudean Natural Gas Company

Fuel Company

Shipping Company

Finance Company

Yudean Guizhou Company

Upper Horn Company

Guangdong Electric Power Development Co., Ltd.

Shajiao A Power Plant (branch)

Xinfengjiang Power Company

Tianyi Company

Tianyi Power Plant (branch)

Liuxihe Generation Company

Yuemeng New Energy Company

Bayan Obo New Energy Company

Zhanjiang Wind Power Company

Development District New Energy Company

Huizhou New Energy Company

Dongguan New Energy Company

Shanxi Yuedian Energy Company

Yuncheng Yuezhongyi Company

Yuefengyi Photovoltaic Company

Qujiang New Energy Company

Deqiang New Energy Company

Maoming New Energy Company

Yanyuan New Energy Company

Congjiang Wind Energy Company

Guizhou Power Sales Company

Energy Transportation Company

Dongfang Transportation Company

Yuezhong Energy Company

Yuewang Energy Company

Yuebang Energy Company

Australia Company

Yudean Investment Company

Yudean International Company

Zhuhai Hengda Energy Company

Linzhou New Energy CompanyShiqian Wind Energy Company

Liupanshui Energy Company

Zuiyi Wind Energy Company

Ocean Shipping Company

Ocean Transportation Company

Yuexing Wind Power Company

Xinlei Wind Power Company

Faneng Company

Yangxi New Energy Company

Yangxi Shuangyu New Energy Company

Leizhou New Energy Company

Yangjiang Port Affairs Company

Ruiheng Company

Zhuhai Tourist Hotel

Xuwen New Energy Company

Maonan New Energy Company

Environmental Protection Company

Environmental Protection Material Company

Gaolangang Environmental Protection Company

Qujie Wind Power Company

Shantou LNG Company

Shipping Company

Yudean Financial Leasing Company

Xuwen Wind Power Company

Dianbai Wind Power Company

Leizhou Wind Power Company

Shibeishan Wind Power Company

Yangjiang LNG Company

Mingzhu Transportation Company

Yudean Captive Insurance Company

Huilai Wind Power Company

Pingyuan Wind Power Company

Heping Wind Power Company

Wuxuan New Energy Company

Guangdong Natural Gas Grid Co., Ltd.

Ship Management Company

Tianxin Insurance Company

Shipping Service Company

Xupu New Energy Company

Tongdao Yuexin Wind Power Company

Yangjiang Offshore Wind Power Company

Zhuhai Offshore Wind Power Company

Water Company

Nanyuan Company

Lincang Company

Fengshuba Power Company

Qingxi Generation Company

Penglatan Hydropower Company

Nanshui Generation Company

Changhu Generation Company

Changyuan Generation Company

Changtan Power Company

Changlong Generation Company

Shajiao C Power Plant (branch)

Yuehua HR Company

Anxin Maintenance Company

Yuehua Power Generation Company

Huangdian Training Center

Humen Power Generation Company

Guanghe Company

Huangpu Petroleum Storage and Transportation Company

Shajiao C Company

Huangpu Power Engineering Company

Yuehua Comprehensive Energy Company

Honghaiwan Generation Company

Zhanjiang Power Company

Yongan Natural Gas Power Generation Company

Huadu Thermal Power Company

Yuejia Power Company

Yuejiang Hongrui Company

Jinghai Power Company

Zhanjiang Yuheng Company

Yuejiang Generation Company

Huizhou Natural Gas Power Generation Company

Zhongyue Energy Company

Zhenneng Thermal Power Co., Ltd.

Zhencheng Comprehensive Energy Company

Guangqian Power Company

Bohe Coal Power Company

Dabu Power Generation Co., Ltd.

Xinhui Generation Company

IGCC Company, Xitou Company

Yueqian Company

Yueqian Investment Company

Zhongshan Thermal Power Company

Jinwan Power Company

Yundian Energy Company

Zhuhai Power Plant Company

Yunhe Generation Company

Pinghai Generation Company

Guangzhu Company

Yuelong Power Generation Company

Zhanjiang Biomass Power Generation Co., Ltd.

Zhuhai Power Plant (branch)

Yunfu Jinhui Company

Pingdian Comprehensive Energy Company

Comprehensive Administrative

Discipline Inspection and Monitoring

Strategy Development

Labor Union

Work Safety

Legal Affairs and Capital Operation

HR

Work of the Party and Communist Youth League

Financial Management

Operation Management

Audit and Internal Control

Guangdong E

nergy Group C

o., Ltd.

Technical and service center

15 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT

18ANNUAL REPORT

Guangdong Energy Group Company, as the largest comprehensive energy group in Guangdong Province, currently has 11

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.

With the implementation of power structure

transformation and upgrading, we actively

promoted the optimization and development

of thermal power projects, reducing the

proportion of coal-fired units from 80%

to 74.71%. At the same time, we also made stable investment in

gas units. Huizhou No. 4-5, Xinhui No. 1-2 and Zhongshan No. 1

units were completed and put into

operation successively. The

installed capacity of the

Group’s natural gas power

generation sets increased

by 2.286 million kilowatts,

and clean energy ratio

reached 25.29%, which

demonstrated that we

had achieved sustainable

development of thermal power.

We kep t up

w i t h t h e

changes in

the national

i n d u s t r i a l

policy and the power market, and

intensified the innovation from the

traditional coal-fired power generation

to offshore wind power and onshore wind power

generation, and our clean energy resources acquisition and project development

reached a new level. In 2018, offshore wind power projects such as Zhuhai

Jinwan, Zhanjiang Wailuo Phase II, Zhanjiang Xinyi and Yangjiang Qingzhou

were successively approved, and the capacity of the developed offshore wind

power project reached 2.2 million kilowatts. Among them, the successful hoisting

of the first wind turbine of Zhanjiang Wailuo offshore wind power project marked

a significant progress in the construction of the Group’s first offshore wind power

project, and also marked that first large-scale offshore megawatt wind 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.

Our Business

18

electric power, coal

electric power, coal

coal

coalelectric power,coal

e l e c t r i c p o w e r , f i n a n c e , l o g i s t i c s , natural gas

electric power

electric power

electric power,coal

Inner Mongolia

Australia

JordanIndonesia

Netherlands

Guizhou Guangdong

Yunnan

Shanxi

South ChinaSea Islands

Industrial distribution in overseas countriesDomestic industrial distribution

electric powerBritain

ANNUAL REPORT

2019 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT

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

the first provincial-level natural gas pipeline network company in the country that is invested by the three major national oil companies and

controlled by Guangdong provincial enterprises. At the same time, we actively participate in the provincial “three-level pipeline network” and

“one provincial network” trunk network planning and the construction of the operation mechanism, promote the interconnection of the main

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

a synergistic and efficient natural gas industrial chain. In 2018, five projects (including 679 km pipelines), such as Zhaoqing-Yunfu-Yangjiang-Jiangmen Line, Yuedong

Huizhou-Heyuan and Meizhou Branch Line, and Shaoguan-Guangzhou Line in Guangdong Province, were successively approved for construction, thus laying a

solid foundation for promotion of construction of “one provincial network” and achieving the goal of establishing 830 kilometers of provincial natural gas main pipeline

network at 21 prefecture-level cities in 2020.

Focusing on the goal of developing new energy

business, we actively carried out fixed asset

investment businesses such as photovoltaic,

distributed energy, multi-energy complementary,

energy storage, microgrid, charging pile and incremental distribution network.

Guangdong Yangxi Weaving Decentralized Wind

Power Phase I and Phase II Projects were

approved. The first 8 MW distributed

photovoltaic power plant invested by

Shanxi Province was successfully

connected to the grid, and a

number of PV projects such as

Huadu Airport Logistics Park and

Foshan Shundemei were put into

operation. The annual installed capacity

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

business, expand value-added service which takes

power sales as a carrier, and build a nationwide sales network. At present,

six plant-level (sales) integrated energy companies have been established. In

the whole year, the Company has won a total of 48.943 billion kWh of market

electricity, and the power generation capacity with power generation rights

was 4.53 billion kWh, and the total number of customers signed was 1,293.

The market electricity price was better than the average price. The electricity

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

trading electricity accounted for 13.35% of the total electricity in the market.

We transform our business into coal supply chain integrated service business by expanding our

comprehensive energy business in the northern region and strengthening our coal supply, storage,

shipment, sales and solid waste disposal capabilities. At the same time, we actively participate in the

coal mine investment, invest high-quality coal mine projects in Shanxi and Inner Mongolia with rich

coal resources, Indonesia, Australia and other regions and countries. The Group has 7 coal mining

projects, with an annual production of about 7 million tons of coal.

Through the establishment of the shipping business segment, we continue to deepen the

shipping management reform while ensuring the Group’s power coal transportation, and

continue to explore market business and stimulate the vitality of the market. At present, the

Group owns 5 wholly-owned and controllable shipping companies, with 33 bulk carriers and a

controllable shipping capacity of 2.39 million DWT. In 2018, the accumulated

market freight volume reached 16.46 million tons, and the market freight turnover was 29.1

billion tons nautical miles, with a year-on-year increase of 2.4%; the Group expanded the

businesses of Baolihua Jiahuwan Power Plant and Jieyang CNOOC LNG project. The

shipping capacity ranked second in Guangdong Province and 8th in China.

We treat financial companies, self-insured companies and financial

leasing companies as the main body to establish corporate financial

services through the establishment of financial business segments,

deepen the strategic coordination of internal and external financial

resources, enrich the corporate financial format, and play a financial

support role to promote the integration of industry and finance. In 2018, the Group invested

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

Guangdong Province, and decreased by 6.62% compared with the benchmark interest rate.

We set up a regional business segment in Guizhou and are

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.

In 2018, we actively expanded overseas energy markets, strived to

improve overseas investment and financing management capabilities

and leveraged overseas financing functions. The Jordan Oil Shale

Mine-Electric Joint Management Project is the first overseas power

investment project of the Group that participates in the construction

period management and the highlight of the construction of the “One Belt and One Road”

in West Asia. The smooth implementation of the project is a successful model of strong

cooperation between Chinese enterprises in West Asia and the strategy of “going out”.

In 2018, we actively integrated and optimized the

hydropower business, accelerated the development

of water pumping and storage power stations and

extra-provincial hydropower projects; and expanded

the extended water resources business. The

Company now has 11 controllable hydropower plants with an installed capacity

of 2,336,800 kilowatts.

2221 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT

Note: the date is updated to

December 2018

Shanxi Province

Guangzhou

Inner Mongolia Autonomous Region

Guizhou Province

Yunnan Province

Units with a capacity of 600 MW and above

Units with a capacity of 300 MW to 600 MW

Units with a capacity below 300 MW

9.9%

58.8%31.3%

Unit capacity structure (%)

Coal power Hydropower

LNG

Wind power

Solar energy Biomass Gas

1.44%0.31%

0.08%

74.71%

1.8%

14.39%

7.27%Proportion of power structure(%)

In 2018, the Group’s newly added

power supply capaci ty reached

2.5249 million kilowatts, and the

capacity of power project under

construction was approximately 8.2

million kilowatts.

have an installed capacity of 2,336,800kilowatts, which are distributed in Guangdong Province, Yunnan Province and Guizhou Province.

have an installed capacity of 579,400 kilowatts, which are distributed in the coastal

area of Guangdong Province

and in Guizhou Province and

Inner Mongolia Autonomous Region. There are 4

have an installed capacity of 463,500 kilowatts, which are distributed in Guangdong Province and Shanxi Province.

Distribution Diagram of Controllable Power Plants

have an installed capacity of 24.02 million kilowatts, which are distributed in Guangdong

Province and Guizhou Province.

The coal-fired power plants

has an installed capacity of 4.626 million kilowatts, which is distributed in Guangdong Province.

LNG power plant

have an installed capacity of 100,000 kilowatts, which are located in Zhanjiang City,

Guangdong Province.

The biomass power plants

has an installed capacity of 2.49 million kilowatts, which is distributed in Guizhou Province.

The gas power plant

The hydropower plants

Wind farm

onshore wind power farms

offshore wind power projects

under construction and

approved for construction,

with an installed capacity of

2.2 million kilowatts, which are distributed in the central

and western coastal areas of

Guangdong Province.

Photovoltaic power generation units

24ANNUAL REPORT

Our Performance Leadership in Party ConstructionComprehensively 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.

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.

24

Organize the Party Committee theoretical study

center group to concentrate on study (expansion)

conferences in the whole year: 18 timesSenior management personnel participated in the study and training of the spirit of the Party’s 19th National Congress: 260 people. There were 152 people participated in the seminars about the indicated and approved by General Secretary Xi Jinping’s important talks on work of Guangdong and

283 people participated in the special trainings.

The Party Committee members of the Group Company conducted 18 investigations, held 19 publicity sessions, and formed 18 research reports

Party organizations at all levels took the lead in lectures on Party classes and special

lectures: organizing 414 sessions, 241 special surveys and writing 228 articles on learning experiences

ANNUAL REPORT

2625 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT

In 2018, we closely focused on the goal of safe production, earnestly implemented the responsibility of safety production, strengthened the operation and maintenance management of power generation equipment, intensified technical supervision, implemented the innovation-driven development strategy, continuously optimized the system construction, improved management efficiency, maintained overall stable safety production situation and better completed the work objectives set at the beginning of the year.

There were no general and above equipment accidents and electric

safety accidents throughout the year; there were no major accidents

such as fires, dam collapsing and plants flooding. There were 1 type

B obstacle and 43 type C obstacles.

Establish a safety production responsibility system with the chairman

and general manager of the Group as the main responsible person,

and sign a safety production responsibility book with the system’s

(46) production and operation units; establish the Company’s

Party Committee, Board of Directors, Security Committee, and

Monthly Office Safety Production Regular Meeting and other safety

production regular meeting systems and corporate leaders in-depth

on-site inspection system. In 2018, led by the main leaders of the

Group, a total of 24 inspection teams were set up to conduct special

spot checks on the safety production work of the production and

operation units.

In combination with the actual work of safety production, we have

focused on the prevention of electric shock personal accidents, the

implementation of “two votes”, the management of risk point hazard

sources, the comprehensive management of hazardous chemicals,

fire prevention and control, capital construction projects for safety

construction of engineering project and other special actions. A total

of 823 safety hazards were discovered, and 821 items were rectified,

with a rectification rate of 99.76%.

Resolutely avoid all major and above safety production accidents,

report the production safety accidents inside and outside the Group

in a timely manner, and address the outstanding problems such as

personal electric shock, inadequate construction site management

and fire safety, and learn from the accident lessons; research,

prepare and strictly implement preventive measures to eliminate

hidden dangers.

Solidly carry out the “three preventions” work, and promptly initiate

the three-proof emergency response I level for 1 time, II level for

1 time and III level for 4 times. In the face of the strong typhoon

“Hawthorn” attack, the Group arranged a total of 4,509 people

to handle the issue. During the typhoon landing, the Group still

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

strong guarantee for the province’s power supply.

Main responsible persons of the production and operation units took

the “Safe Production Month” activity as an opportunity to carry out the

publicity of safety production knowledge and key safety production

Safety ProductionIn 2018, we have closely focused on the Group’s “13th Five-Year Plan” development strategy planning and the central work of the Group, adhered to taking innovation and reform as the driving force to strive for policies, occupy electricity market share, expand the market and reduce costs, thus better achieving the Group’s overall business objectives.

State of Operation

We continue to promote the construction of the Group’s marketing

system, combine the new requirements for Guangdong Electric

Power Spot Market and the Group’s three-level management and

control model adjustment, revise and improve the relevant system,

and strengthen the system’s implementation and improvement.

We constantly improve the incentive mechanism, fully stimulate

the subjective initiative of all power plants and power sales

companies, and strive to grab the power market share. In 2018,

the annual trading power and sales scale ranked first in the

province, and the market electricity price was better than the

provincial average, leading the market as a whole.

We actively prepare for the spot market, reserve trading talents,

accelerate the construction of marketing big data technology

support system, and carry out spot trading training and drills

through multiple channels and multiple methods.

We actively integrate resources and make plans to promote

integrated energy distribution. Accelerate the construction of

plant-level integrated energy sales companies and the sales

network covering the whole province; arrange the Guangdong

FM auxiliary service market in advance, actively participate in

the incremental distribution network business, and continue to

promote the transformation of AGC energy storage FM system in

Yunfu, Yuejiang and other power plants as well as the incremental

power distribution project construction in Chaozhou and Heyuan.

We strengthen management and continuously improve cost

control. By exerting the advantages of self-owned capacity

safety guarantee and on-time liner ship, combined with effective

measures such as early cashing and accelerating settlement,

the upstream and downstream supply chain management is

strengthened and the Group’s fuel safety and economic supply is

effectively guaranteed.

We actively adjust the financial management and control model,

pay close attention to cost effectiveness, gradually establish a

sound asset management strategy system, continuously optimize

the Group’s insurance overall management system, and fully

utilize the financial platform resources and advantages of financial

companies and financial leasing companies to prevent risks and

ensure the overall financial security of the Group.

The financial settlement work has been praised by the superior

competent departments for 17 consecutive years; the financial

company’s centralized management benefits have continued to

appear and the Group has won the title of “National Best Finance

Company of the Year” for three consecutive years; the self-

insured company has successfully conducted the international

road show for offshore wind power insurance and increased the

Group’s popularity in the international insurance market through

direct docking of the international reinsurance market.

work for employees, with a total of more than 12,000 participants;

carry out safety education video lectures for two hidden danger

investigations, risk grading control and emergency management, with

a total of more than 3,500 people attended the training.

Strengthen technical supervision, carry out special supervision of

metal supervision, complete self-examination of 19 thermal power

plants of the Group and conduct spot checks on 12 units; implement

rectification for identified equipment and management hidden

dangers and amend relevant production management systems

and technical standards in time to ensure that applicable rules

are available for technical supervision and constantly improve the

technical management level and good condition of equipment.

Organize regular dam inspections and hidden danger investigations

to keep dams safe. Complete the safety registration and renewal of

certificate for seven dams such as Tianyi, Xinfengjiang, Fengshuba,

Changhu, Changtan, Qingxi and Penglangtan, all of which maintain

Class A registration, and Fengshuba, Changtan, and Tianyi dams

ares at the domestic leading level.

Actively refine the experience of standardization construction, lead

the revision of the two industrial standards namely the Guidelines for

the Preparation of the Standard System for Power Enterprises and

the Guidelines for the Preparation of Standards for Power Enterprises

to achieve management output. Actively undertake the preparatory

work for the CEC Biomass Power Generation Standardization

Technical Committee and develop the high-quality technical

standards.

Cooperate with the China Electricity Council for the first time and

complete the Guangdong Energy Group Benchmarking Report for

the Year of 2018; promote 29 management innovation projects,

including 7 demonstration projects, which cover safety production,

operation management, human resources, financial management,

Party building and administrative logistics; evaluate 42 cases of

corporate management innovations, some of which won the first prize

and the second prize of the management category of 2018 China

Power Innovation Award.

Deeply inspect standards implementation condition and establish

standardized good behavior enterprise confirmation work. By the end

of 2018, 14 power generation enterprises had passed Grade A A A A

confirmation of the standardized good behavior, and 12 enterprises

had passed Grade A A A confirmation, which were in the leading

position among the national power generation group.

25 2018 Annual Report of Guangdong Energy Group

On-grid power energy of controllable power plantsin Guangdong province of the Company

other power energies in Guangdong province

power purchased from other provinces

32.34% 16.62%

51.04%

Market share of power purchase in Guangdong Province（%）

2827 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT

Standard coal consumption for power supply(g/kWh)

Fuel consumed annually(10000t)

Case C and above failures(times)

Standard coal consumed annually(10000t)

Average equivalent available factor(%)

Average direct station service power consumption rate(%)

2014

2014

2014

2014

2014

2014

315.40

0.81

19

3161

91.26

5.53

2015

2015

2015

2015

2015

2015

314.70

0.85

27

2943

91.10

5.46

2016

2016

2016

2016

2016

2016

314.78

0.87

26

2617

91.60

5.35

2017

2017

2017

2017

2017

2017

2018（(Year)）

2018（Year）

2018（Year）

2018（(Year）

2018（(Year)）

2018（Year）

313.40

0.79

24

3013

86.60

5.38

312.52

0.83

43

3007

90.50

5.72

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

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

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.

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

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.

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

the pilot project of mixed burning municipal sludge with coal-fired units.

In 2018, the Group’s environmental emission indicators remain the advanced level of the industry.

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.

Sustainable Environmental Protection

Comprehensive utilization rate of solid waste(%)

2014

2014

2014

2014

87.2

0.35

0.05

0.25

2015

2015

2015

2015

93.4

0.20

0.04

0.20

2016

2016

2016

2016

95.1

0.1850.03

0.15

2017

2017

2017

2017

2018（Year）

2018（Year）

2018（Year）

2018（Year）

98.3 97.58

0.172 0.1370.02

0.01

0.106

0.06

Discharge of nitrogen oxide(g/kWh) Flue gas emission(g/kWh)

Sulfur dioxide emission(g/kWh)

28ANNUAL REPORT

Twelve coal-fired power companies are rated

as environmentally-friendly

and honest enterprises

(green cards)

3 coal-fired power companies are awarded

environmentally-friendly

enterprises (blue cards)

3029 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT 30

Human Resources

double-professionally-titled talent

senior technician

technician

senior worker

secondary workerand below

3.72%

72.38%

23.90%

technical secondary school and below

bachelor and junior college

postgraduateand above 17.28%

under 30

26.18%30-39

38.00%40-49

18.55%above 50

9.64%senior titleprimary title

21.83%intermediate title

20.50%

2.76%

24.59%

14.05%

30.17%

12.36%

We insist on self-discipline and social commitment and providing benefits for the country and the citizens. We are supported by a high sense of social responsibility, focus on the country and the people’s livelihood development, provide reliable energy for the society and create development value; carry out accurate poverty alleviation work, participate in social welfare undertakings enthusiastically and create corporate citizenship values; adhere to people-oriented principle, care for employees, make the company and employees develop together and create harmonious values.

Harmonious Development

The Group continued with management of employee’s career, organized different levels of training and skill practice to build a greater stage and provide more 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 23 principals),the rate of trainingof entire staf f was 91.5% . Two persons won the title of “May 1st Labour Medal of Guangdong Province”.

Education developmentLabor productivity of personnelin duty(10k yuan/person)

Education background

Professional technical position structure

Age structure

Professional skill structure

We have ac t i ve ly c ar r ied ou t donations and volunteer services. We

have donated 12 schools throughout the year, carried out supporting education for 12 times, and aided 211 students, with donation fund reaching RMB 200,000. Relying on the Guangdong i volunteer service platform, the “i Volunteer Service” was launched in the Group, and the “Youth Volunteer Service Corps” and 39 volunteer service teams were established. More than a thousand youth members became registered

volunteers. We have organized the “Guangdong Youth Volunteer Forest” tree

planting activities and “Safe Home” to enrich various youth volunteer activities such as the Spring

Festival activities, care for empty nesters, love and aid for students. The tree planting activities were carried out 10 times

throughout the year, with 895 trees planted and an area of 15.9 mu covered. Yunhe Power Generation Company

was selected as the “Guangdong Province Leifeng Activity Demonstration Site”, and Luo Guoping

f rom Huizhou Natura l Gas Power Generation Company was awarded

“Guangdong Post Lei Feng Model”.

We have act ive ly car r ied out

poverty alleviation work. By the end

of 2018, the Group had invested

more than RMB 160 million in

poverty alleviation. Among them,

the poverty alleviation donations

in 2018 totaled about RMB 16.947

million. We won the “Golden Cup

of Guangdong Poverty Alleviation”

for 8 consecutive years. According

to local conditions, we accurately

assist Yuexi Village in Hetian Town,

Luhe County, Shanwei City to carry out

relevant tasks. We have accumulatively

invested RMB 8.2 million in poverty alleviation

in Yuexi Village and successfully helped 292 indiviuals

out of 74 poor households in the village to get rid of

poverty.

99.462TWh

108.556TWh

113.548TWh

112.327TWh

We closely follow the new situation of reform of state-owned enterprises and the reform of power system, accurately grasp the new requirements

for personnel management of state-owned enterprises, closely focus on the development strategy of the Group, focus on strengthening the

construction of the workforce, continuously optimize the organization of human resources, control and distribution, and promote the education

and training system. Construction provides a strong talent supply and organizational guarantee for the Group's sustainable development.

2016

277.01

2017 2018（Year）

305.34 323.85

29 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT

3231 2018 Annual Report of Guangdong Energy Group ANNUAL REPORT

The Group implements the management and control mode adjustment and reform

New breakthroughs in power supply structure adjustment

Adhere to the leadership of the Party and comprehensively strengthen Party building work

According to the deployment of the provincial Party committee, the Group carried out the activities of “leaders leading the study and supervision” and “big study, deep research, and true implementation” to promote Xi Jinping’s 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. In the whole year, 18 studies, 18 researches, and 19 seminars were organized, and 18 research reports were formed.

On December 21, 2018, the Group held a conference on the implementation of the management and control mode adjustment and reform to clearly establish the three-level management structure of “Group Headquarters + Platform Enterprise + Business Unit” and implement the level-by-level management.

The reform of the Group’s management and control mode is not only a key task for comprehensively deepening the reform of state-owned enterprises and pushing reforms forward, but also the internal need of the Group to better adapt to market competition and create more specialized development capabilities, further promote structural adjustment and stimulate the vitality of subordinate enterprises.

Complete the hoisting of Guangdong’s first large megawatt offshore wind turbine generator

On December 6, 2018, the hoisting of the first wind turbine of Zhanjiang Wailuo offshore wind power project was completed, which marked the significant 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 project in Guangdong Province entered into the batch installation stage. The Zhanjiang Wailuo offshore wind power project had a planned installed capacity 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 diameter is 158 meters. It is the first domestic anti-typhoon wind turbine generator set with 5 MW and above capacity under scale application.

Jordan Oil Shale Power Station Project boosts the development of “One Belt and One Road” and opens “new era” of Jordan energy

On February 22, 2018, the largest power station project in Jordan, jointly invested by the Group, Malaysian YTL Power Company and Enefit Power Company of Estonia, i.e. the Attarat Oil Shale Circulating Fluidized Bed Mine and Power Joint Project held the ceremony for the first anniversary of the closure of project financing in Attarat. The Belt and Road Initiative promotes the Chinese government and Chinese companies to truly develop Jordan’s oil shale power generation project. The smooth implementation of the project has helped Chinese power companies to open up the international high-end power market, which has become a successful example of Chinese companies’ s t r o n g c o o p e r a t i o n a n d cohesion in West Asia.

In 2018, the Group undertook 32 projects under construction, of which the power project capacity was about 8.2 million kilowatts. Lots of projects had been completed and put into production, such as Huizhou 4-5, Xinhui 1-2 and Zhongshan N o. 1 F - c l as s imp rove d heavy-duty gas turbines, and a number of photovoltaic projects such as Huadu Airport Logistics and Shundemei of Foshan have been put into operation and connected to the grid. The newly added power supply capacity has reached 2.5249 million kilowatts.

The Group becomes the first pilot enterprise to optimize the financing supervision of the Shanghai Stock Exchange and the Shenzhen Stock Exchange

In 2018, Shanghai Stock Exchange and the Shenzhen Stock Exchange respectively issued the Letter on the Application of Optimized Supervision and Regulation of Corporate Bonds for Guangdong Yudean Group Co., Ltd. To the Group and the Group became the first pilot enterprise to optimize financing supervision. This is a strong evidence of the Group’s stable operation over the years and its focus on financing innovation. It highlights the stock exchanges’ recognition of the Group’s industry status and brand qualifications and further enhances the company’s reputation and position in the bond market.

The Group signed a project cooperation memorandum with ExxonMobil

On the afternoon of September 5, 2018, the Guangdong Provincial Government, Huizhou Municipal Government and the Group signed a strategic cooperation

framework agreement, a preliminary investment agreement for the chemical complex 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