Chairman's Message

Dear shareholders:

In 2017, the year of the 15th anniversary of the establishment of CYPC, the Company studied and implemented the spirit of the 19th National Congress of the Communist Party of China conscientiously. Guided by Xi Jinping's Thought on Socialism with Chinese Characteristics for a New Era, the Company also resolutely implemented the decisions of the Central Party Committee and the Board of Directors. The entire staff has worked hard to tackle problems and was enthusiastic to overcome multiple negative factors such as the decreasing of water flow in the Yangtze River, oversupply in the power market, low shocks in the capital market and dramatic increase in financing costs. The Company gave full play to the subjective initiative and fully over-achieved the annual production and management tasks, and created a number of historical highs including annual power generation, total profits and the Company's market value, which were hard-earned.

In 2017, CYPC scientifically carried out the unified optimal operation for pivotal cascade hydropower stations and leanly carried out the equipment management. In the case that the total inflow of the Yangtze River Basin is relatively low compared to the multi-year average, the annual cumulative power generation reached 210,893 GWh, setting a new record for the annual power generation of the cascade hydropower stations. Among them, the Xiluodu and Gezhouba Hydropower Stations have both reached historical highs. Thereby, the Three Gorges Hydropower Station has become the hydropower station having the highest generating capacity in 2017 in the world. The Company's work safety throughout the year hit the best level in history, and successfully achieved the “Double Zero” goal of “the number of major accidents was zero and the number of casualties among employees was zero,” and no abandoning energy has generated due to equipment problems.

Facing the unfavorable situation of the comprehensive deepening of the reformation of national electric power system, the continued oversupply of the electric power market and the severe situation of power consumption, in 2017, CYPC actively promoted the market transformation, strengthened the close contact with the provinces and cities receiving electricity and seized the favorable opportunity related to risen coal prices, and successfully realized the first increase in electricity prices since the Xiluodu and Xiangjiaba Hydropower Stations’ pricings. The annual overfulfilled power generation capacity has been fully consumed, and the comprehensive electricity price has remained unchanged from last year's level, and all the electricity charges have been recovered on time and in full.

In 2017, CYPC vigorously promoted strategic investment projects such as the integration of hydropower assets in upper and middle reaches of the Yangtze River, and achieved major breakthroughs in the distribution and selling of electricity; steadily launched its financial investment and achieved an investment income of RMB 2.3 billion, a record high; achieved remarkable success in cost control, fully recovered the repayment of outstanding VAT related to the Jinsha River region and actively carried out international credit ratings, and battled to reduce the financial expenses by optimizing the financing strategy. Therefore, the Company achieved a total profit of RMB 26.65 billion in the year, a year-on-year increase of 6% and a new record high.

The Company systematically planned to strengthen market value management throughout the year, launched performance promotion activities at home and abroad several times to speak about the “CYPC’s Story”, fulfilled the reorganization commitment and formulated the dividend schemes, which enabled the Company's value to be widely recognized in the capital market. CYPC's share price rose by 23.14% throughout the year, with a market value of up to RMB 379.94 billion. It deservedly became a model of value investment and a leader in the hydropower sector.

The above achievements have benefited from the active participation of the majority of shareholders and the diligent performance of duties by all directors, supervisors and management, from the standardized and efficient, well-functioning governance systems, from the courageous efforts and unremitting efforts of all employees, and from the enterprise culture of upright atmosphere and pursuit of excellence.

The year 2018 marks the first year of fully implementing the spirit of the 19th National Congress of the Communist Party of China, the 40th anniversary of national reform and opening-up and a crucial connecting stage in securing a decisive victory in building a moderately prosperous society in all respects and implementing the 13th Five-Year Plan. In the year 2018, CYPC will use Xi Jinping's Thought on Socialism with Chinese Characteristics for a New Era as a guide to comprehensively deepen Party building; intensively cultivate its core business to constantly strengthen, optimize, and expand its main hydropower business, and promote the integration of hydropower resources in upper reaches of the Yangtze River. Moreover, the Company will plan the layout in advance to grasp the general trend of the development of the energy industry by plotting, studying and preparing in advance; adhere to green development and actively play a key role in the protection of the Yangtze River, and comprehensively deepen reforms to stimulate the vigor and endogenous power of the Company's development; promote the achievement of the connotative development of better structure, higher efficiency and stronger resistance to risks. The Company shall strive to win the "Good Start" of the new era and create a new situation for the development and reform of the CYPC.

Lu Chun, Board Chairman

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