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Shandong Huaneng Power Development Co. Ltd. Announces Its 1997 Annual Results With Net Income of RMB 684 Million.

JINAN, SHANDONG, China--(BUSINESS WIRE)--March 5, 1998--Shandong Huaneng Power Development Co. Ltd. (NYSE:SH) announced today consolidated net income of RMB 684.64 million (US$82.7 million translated at the March 4, 1998 exchange rate of US$1.00 = RMB 8.2790) for the year ended December 31, 1997.

Operating revenue was down 3.23% to RMB 2,590.65 million (US$312.95 million) from RMB 2,677.15 million (US$331 million) for the previous year. Earnings per ordinary share were RMB 0.159, compared with RMB 0.1723 the previous year. Earnings per ADS were RMB 7.9523, a 7.7% reduction compared to RMB 8.6172 for 1996.

The Board of Directors has recommended the payment of a year-end dividend of RMB 0.04 per ordinary share (US$0.2416 per ADS, translated at the March 4, 1998 exchange rate of US$1.00 = RMB 8.279), subject to the approval of the shareholders at the forthcoming Annual General Meeting on May 19, 1998.

Together with the interim dividend of RMB 0.02 per ordinary share, the proposed total dividend for 1997 will be RMB 0.06 per ordinary share, representing approximately 38% of the profit achieved during the year. The record date for the dividend and for shareholders eligible to vote at the Annual General Meeting is March 26, 1998 and the payment date is set for May 26, 1998.

Expansion Projects

Weihai Phase II: The Weihai Phase II expansion project, including construction of 2x300 MW coal-fired generators, has been proceeding according to schedule. The first unit of the Weihai Phase II began its trial operation since the end of 1997 and its commerical operation is expected at the end of the first quarter of 1998, while the second unit is expected to begin its commercial operation at the end of this year. Total installed capacity of the Weihai Plant will then be 850 MW, of which the company's proportionate ownership will be 510 MW.

Rizhao Power Plant Phase I: The construction contract for the Rizhao Power Plant became effective in the fourth quarter of 1996 and the project has been proceeding according to plan. Two units of imported 350 MW generators will be installed, with the first unit coming on-line expected in 1999 and the second expected in 2000. The Company's proportionate interests in the Rizhao Plant is 25.5%

Dezhou Phase III: The feasibility study report for installing 2x600 MW generators has been submitted to the State Planning Commission for its final approval. The Company has already confirmed the purchase of its main equipment and it is expected that this project is to be listed into the government's new construction plan for 1998.

The Company acurrently holds interests in three operating power plants, which include the Dezhou Plant (100%), the Jining Plant (75%) and the Weihai Plant (60%) in Shandong Province of the People's Republic of China. The total installed capacity of the plants in which the Company holds interests is 1,750 MW, of which the Company's proportionate ownership interest is 1,575 MW.

Attachment: The Company's Audited Consolidated Financial Statements as of December 31, 1997. -0-
 SHANDONG HUANENG POWER DEVELOPMENT CO. LTD
 CONSOLIDATED STATEMENTS OF INCOME
 For the Years Ended December 31, 1997, 1996 and 1995
 (Amounts in thousands, except number of shares and per share data)

 For the
 Year Ended
 Dec. 31, 1997
 Rmb US$

Operating revenues 2,590,652 312,918
Operating expenses:
Operations:
Fuel used in electric
 generation 894,961 108,100
Salaries and Wages,
 including early retirement 100,408 12,128
 payments of Rmb 20,568 in 1997
Maintenance
 and material supplies 116,351 14,054
Service fees 27,180 3,283
Depreciation and amortization 367,755 44,541
Others 196,590 23,746
Total expenses incurred
 in operations 1,704,245 205,852
Financial expenses
 (Income):
 Interest charges 62,583 7,559
 Interest income (262,386) (31,693)
 Exchange losses 4,633 560
Total financial income (195,170) (23,574)
Taxes:
 Income Tax 351,043 42,402
 Other regulatory taxes 45,885 5,542
 Total taxes 396,928 47,944
Total operating expenses 1,906,003 230,222
Net income 684,649 82,696
Earnings per ordinary share 0.1590 0.0192
Earnings per equivalent ADS 7.9523 0.9605
Weighted average number of
 ordinary shares
 outstanding 4,304,716,000 4,304,716,000
Weight average number of
 equivalent ADSs
 outstanding 86,094,320 86,094,320
 (one ADS represents
 50 ordinary shares)

Translation of amounts from Renminbi (Rmb) into United States
dollars (U.S.$) for the convenience of the reader has been made at the
noon buying rate in New York City for cable transfers in foreign
currencies certified for customs purposes by the Federa Reserve Bank
of New York on February 2, 1998 of U.S. $100 = Rmb 8.2790. No
representation is made that the Renminibi amounts could have been, or
could be, converted into United States dollars at that rate on
February 2, 1998 or any other certain rate.

 SHANDONG HUANENG POWER DEVELOPMENT CO. LTD
 CONSOLIDATED STATEMENTS OF INCOME
 For the Years Ended December 31, 1997, 1996 and 1995
 (Amounts in thousands, except number of shares and per share data)

 For the For the
 Year Ended Year Ended
 Dec. 31, 1996 Dec. 31, 1995
 Rmb Rmb

Operating revenues 2,677,151 2,241,470
Operating expenses:
Operations:
Fuel used in electric
 generation 909,321 685,947
Salaries and Wages,
 including early retirement 59,040 42,255
 payments of Rmb 20,568 in 1997
Maintenance
 and material supplies 129,617 116,653
Service fees 28,546 27,617
Depreciation and amortization 368,250 320,444
Others 157,216 153,001


Total expenses incurred
 in operations 1,651,990 1,345,917

Financial expenses
 (Income):
Interest charges 87,764 68,145
Interest income (238,831) (224,044)
Exchange losses 5,210 30,381


Total financial income (145,857) (125,518)
Taxes:
Income Tax 389,558 322,665
Other regulatory taxes 39,568 37,518
Total taxes 429,126 360,183

Total operating expenses 1,935,259 1,580,582
Net income 741,892 660,888
Earnings per ordinary share 0.1723 0.1535
Earnings per equivalent ADS 8.6172 7.6763

Weighted average number of
 ordinary shares
 outstanding 4,304,716,000 4,304,716,000


Weight average number of
 equivalent ADSs
 outstanding 86,094,320 86,094,320
 (one ADS represents
 50 ordinary shares)

 Translation of amounts from Renminbi (Rmb) into United States
dollars (U.S.$) for the convenience of the reader has been made at the
noon buying rate in New York City for cable transfers in foreign
currencies certified for customs purposes by the Federa Reserve Bank
of New York on February 2, 1998 of U.S. $100 = Rmb 8.2790. No
representation is made that the Renminibi amounts could have been, or
could be, converted into United States dollars at that rate on
February 2, 1998 or any other certain rate.
-0-




SHANDONG HUANENG POWER DEVELOPMENT CO. LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the Years Ended December 31, 1997, 1996 and 1995

(Amounts in thousands, except number of shares and per share data)

Additional

Ordinary Paid-in

Shares Capital

Number Rmb Rmb

Balance as of Dec. 31, 1994 4,304,716 4,304,716 1,516,378 Net income for the year ended Dec. 31, 1995 --- --- --- Dividends(a) --- --- --- Transfer to statutory reserves --- --- --- Balance as of Dec. 31, 1995 4,304,716 4,304,716 1,516,378 Net income for the year ended Dec. 31, 1996 --- --- --- Dividends(b) --- --- --- Transfer to statutory reserves --- --- --- Balance as of Dec. 31, 1996 4,304,716 4,304,716 1,516,378 Net income for the year ended Dec. 31, 1997 --- --- --- Dividends(c) --- --- --- Transfer to statutory reserves --- --- --- Balance as of Dec. 31, 1997 4,304,716 4,304,716 1,516,378

(a) Final dividend for the six months ended Dec. 31, 1994 was Rmb 0.03505 per share for all outstanding shares at Dec. 31, 1994. Interim dividend for the six months ended June 30, 1995 was Rmb 0.04 per share for all outstanding shares at June 30, 1995.

(b) Final dividend for the six months ended Dec. 31, 1995 was Rmb 0.02 per share for all outstanding shares at Dec. 31, 1995. Interim dividend for the six months ended June 30, 1996 was Rmb 0.02 per share for all outstanding shares at June 30, 1996.

(c) Final dividend for the six months ended Dec. 31, 1996 was Rmb 0.04 per share for all outstanding shares at Dec. 31, 1996. Interim dividend for the six months ended June 30, 1997 was Rmb 0.02 per share for all outstanding shares at June 30, 1997.

The accompanying notes are an integral part of these consolidated financial statements.

SHANDONG HUANENG POWER DEVELOPMENT CO. LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the Years Ended December 31, 1997, 1996 and 1995

(Amounts in thousands, except number of shares and per share data)

Capital Statutory Retained

Reserve Reserves Earnings

Rmb Rmb Rmb

Balance as of Dec. 31, 1994 35,631 49,528 232,682 Net income for the year ended Dec. 31, 1995 --- --- 660,888 Dividends(a) --- --- (323,069) Transfer to statutory reserves --- 121,172 (121,172) Balance as of Dec. 31, 1995 35,631 170,700 449,329 Net income for the year ended Dec. 31, 1996 --- --- 741,892 Dividends(b) --- --- (172,188) Transfer to statutory reserves --- 636,632 (636,632) Balance as of Dec. 31, 1996 35,631 807,332 382,401 Net income for the year ended Dec. 31, 1997 --- --- 684,649 Dividends(c) --- --- (258,282) Transfer to statutory reserves --- 127,813 (127,813) Balance as of Dec. 31, 1997 35,631 935,145 680,955

(a) Final dividend for the six months ended Dec. 31, 1994 was Rmb 0.03505 per share for all outstanding shares at Dec. 31, 1994. Interim dividend for the six months ended June 30, 1995 was Rmb 0.04 per share for all outstanding shares at June 30, 1995.

(b) Final dividend for the six months ended Dec. 31, 1995 was Rmb 0.02 per share for all outstanding shares at Dec. 31, 1995. Interim dividend for the six months ended June 30, 1996 was Rmb 0.02 per share for all outstanding shares at June 30, 1996.

(c) Final dividend for the six months ended Dec. 31, 1996 was Rmb 0.04 per share for all outstanding shares at Dec. 31, 1996. Interim dividend for the six months ended June 30, 1997 was Rmb 0.02 per share for all outstanding shares at June 30, 1997.

The accompanying notes are an integral part of these consolidated financial statements. -0-

SHANDONG HUANENG POWER DEVELOPMENT CO. LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended Dec. 31, 1997, 1996 and 1995

(Amounts in thousands)

For the For the For the

Year Ended Year Ended Year Ended

Dec. 31, Dec. 31, Dec. 31,

1997 1996 1995

Rmb U.S.$ Rmb Rmb Cash flows from operating activities: Net income 684,649 82,696 741,892 660,888 Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and

amortization 368,755 44,541 368,250 320,444 (Increase) decrease in

assets:

Restricted cash deposits (165,596) (20,002) -- --

Trade receivables from

related companies 21,928 2,649 (3,161) 73,794

Other receivables and

other current assets (9,652) (1,166) 54,067 (138,779)

Fuel and supplies (7,605) (919) (67,554) 35,261

Deferred assets and

other assets (105,009) (12,684) (6,205) 3,437 Increase (decrease) in

liabilities:

Trade payables 15,440 1,865 (15,681) (3,464)

Other payables and

accrued liabilities 53,228 6,429 (3,554) (52,028)

Taxes payable (99,859) (12,062) (73,474) 185,198

Due to related companies 30,728 3,712 (40,137) (60,403)

Other liabilities -- -- 6,410 4,250

Net cash provided by

operating activities 787,007 95,059 960,853 1,028,598

Cash flows from investing activities: Net increase in short-term investments (768,067) (92,773) (536,633) (122,613) Net (increase) decrease in long-term investments (124,339) (15,019) (205,902) 168,843 Additions to property, plant and equipment (742,418) (89,675) (610,732) (329,922)

Net cash used in

investing activities: (1,634,824) (197,467)(1,353,267) (283,692)

Cash flows from financing activities: Drawdown of short-term bank loans 186,000 22,467 209,400 192,950 Repayment of short-term bank loans (203,400) (24,568) (125,600) (173,218) Drawdown of long-term bank loans 11,140 1,346 12,000 173,485 Repayment of long-term bank loans (35,139) (4,244) (20,000) (118) Drawdown of long-term loans from founding shareholders 43,299 5,230 -- 38,040 Dividends paid to founding shareholders -- -- (4,141) (156,325) Dividends paid to shareholders (258,282) (31,197) (172,188) (323,069)

Net cash used in

financing activities (256,382) (30,966) (100,529) (248,255)

Net (decrease) increase in cash and cash equivalents (1,104,199) (133,374) (492,943) 496,651 Cash and cash equivalents at beginning of period 2,237,064 270,210 2,730,007 2,233,356 Cash and cash equivalents at end of period 1,132,865 136,836 2,237,064 2,730,007

Translation of amounts from Renminbi (Rmb) into United States dollars (US$) for the convenience of the reader has been made at the noon buying rate in New York City for cable transfers in foreign currencies certified for customs purposes by the Federal Reserve Bank of New York on February 2, 1998 of U.S.$1.00 = Rmb 8.2790. No representation is made that the Renminbi amounts could have been, or could be, converted into United States dollars at that rate on February 2, 1998 or any other certain rate.

The accompanying notes are an integral part of these consolidated financial statements. -0-

SHANDONG HUANENG POWER DEVELOPMENT CO. LTD.

CONSOLIDATED BALANCE SHEETS

As of December 31, 1997 and 1996

(Amounts in thousands, except number of shares and per share data)

Dec. 31, 1997 Dec. 31, 1996

Rmb U.S.$ Rmb

ASSETS Property, plant and equipment, net 4,659,960 562,865 4,286,297 Long-term investments 331,859 40,084 207,520 Deferred assets and other assets 173,369 20,941 68,360 Current assets:

Cash and cash equivalents 1,132,865 136,836 2,237,064

Restricted cash deposits 165,596 20,002 ---

Short-term investments 1,596,237 192,806 828,170

Trade receivables from

related companies 247,612 29,909 269,540

Other receivables and

other current assets 138,575 16,738 128,923

Fuel and supplies 113,813 13,747 106,208

Total current assets 3,394,698 410,038 3,569,905

Total assets 8,559,886 1,033,928 8,132,082

CAPITALIZATION AND LIABILITIES CAPITALIZATION Shareholders' equity:

Common stock,

3,136,016,000 Class A

Ordinary Shares of par

value Rmb 1 each 3,136,016 378,792 3,136,016

Common stock,

1,168,700,000 Class N

Ordinary Shares of par

value Rmb 1 each 1,168,700 141,164 1,168,700

Additional paid-in

capital 1,516,378 183,160 1,516,378

Capital reserve 35,631 4,304 35,631

Statutory reserves 935,145 112,954 807,332

Retained earnings 680,955 82,251 382,401

Total shareholders'

equity 7,472,825 902,625 7,046,458 Long-term bank loans 135,470 16,363 161,485 Long-term loans from founding shareholders 124,699 15,062 81,400

Total capitalization 7,732,994 934,050 7,289,343 CURRENT LIABILITIES

Short-term bank loans 221,000 26,694 238,400

Current portion of

long-term bank loans 26,015 3,142 24,000

Trade payables 22,592 2,729 7,152

Other payables and

accrued liabilities 139,092 16,801 85,863

Taxes payable 296,972 35,870 396,831

Dividends payable to

founding shareholders 33,450 4,040 33,450

Due to related companies 42,111 5,087 11,383

Total current

liabilities 781,232 94,363 797,079 OTHER LIABILITIES 45,660 5,515 45,660

Total capitalization

and liabilities 8,559,886 1,033,928 8,132,082

Translation of amounts from Renminbi (Rmb) into United States dollars (U.S.$) for the convenience of the reader has been made at the noon buying rate in New York City for cable transfers in foreign currencies certified for customs purposes by the Federal Reserve Bank of New York on February 2, 1998 of U.S.$1.00 = Rmb 8.2790. No representation is made that the Renminbi amounts could have been, or could be, converted into United States dollars at that rate on February 2, 1998 or any other certain rate.

The accompanying notes are an integral part of these consolidated financial statements.




CONTACT: Shandong Huaneng Power Development Co. Ltd.

(Jinan) Gao Bing, Tel: (86) 531 290 2806

(Beijing) Ren Zhi, Tel: (86) 10 6822 2002

or

Gavin Anderson & Company

(New York) Jason Kendy, Tel: (1) 212 373 0236

(Hong Kong) Aubrey Ho/Fabrice Baron

Tel: (852) 2523 7189
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