2011 Annual Results Announcement. March 30, 2012 Hong Kong

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1 2011 Annual Results Announcement March 30, 2012 Hong Kong

2 Disclaimer This presentation and subsequent discussion may contain forward-looking statements that involve risks and uncertainties. These statements typically use "believe," "expects," "expect," "estimate," "plans," "anticipates," "target," "may," "will," forward-looking terminology to express or may be described as possible or expected results of operations will occur in the future. You should not place undue reliance on these apply only to the date of the forward-looking statements in this report. These forward-looking statements based on our own information from the sources which we believe is reliable. Such statements related to future events or our future financial, business or other performance and are subject to a number may cause actual results to differ materially from the uncertainties. 2

3 Management Team President & Executive Director Mr. WEN Shugang Vice President & General Manager of International Engineering Company Mr. HAN Zhiqiao CFO & Secretary of the Board Mr. GONG Dan Marketing Dep. Director & General Manager of Gas Turbine Business Sector Mr. REN Fangmin Representative of Securities Affairs & Director of the Board Office Mr. HUANG Yong 3

4 Content Operation Results Operation Highlights 3. Developments of power generation equipment 4. Prospects 4

5 Operation Results 5

6 1.1 Annual Operation Results Complete the production and achieve new records Continuous upgrading of operating income the profitability continuously enhance New orders stay stable Achieve results in technological innovation Remarkable results in International expansion 6

7 1.2 Annual Operation Results Review Calculated according to the China Accounting Standards Compared with Operating Revenue: RMB42.917Billion Increase: 12.70% 2. Net Profit: RMB3.056 Billion Increase: 18.60% 3. EPS:RMB1.53 Increase: RMB1.29 YOY 4. Consolidated GP Margin: 20.74% Increase: 0.81 percentage points 5. Net Assets: RMB Billion Increase: 25.04% 6. Total Assets: RMB Billion Increase: 0.23% 7

04 Engineering projects and services Hydro power and environmental protection New energy equipment

8 1.3 Business Segments Review Overall Operating revenue breakdown by business segment Gross profit margin by segment RMB Billion Engineering projects and services Hydro power and environmental protection New energy equipment High efficiency and clean energy generation equipment Consolidated High Efficient and Clean New Energy Hydro and Environmental Engineering projects and services 8

9 1.4 Business Segments Review high efficient & clean energy generation equipment Revenue and breakdown of high efficient & clean energy generation equipment Gross profit of high efficient & clean energy generation equipment RMB Billion Gas turbine equipment Nuclear power conventional island Thermal power equipment Segments gross profit Thermal power equipment Nuclear power conventional island Gas Turbine equipment 9

10 1.5 Business Segments Review New Energy Equipment Revenue and breakdown of new energy equipment Gross profit of new energy equipment RMB Billion Nuclear power island Wind power Segments gross profit Wind power Nuclear power island 10

1.6 Business Segments Review Hydro power and environmental

environmental protection Gross profit of Hydro power and

41 Environmental protection equipment Hydro power 2010 2011

11 1.6 Business Segments Review Hydro power and environmental protection Revenue and breakdown of Hydro power and environmental protection Gross profit of Hydro power and environmental protection RMB Billion Environmental protection equipment Hydro power Segments gross profit Hydro Power Environmental protection equipment 11

1.7 Business Segments Review Engineering projects and

and services Gross profit of Engineering projects and

33 Power plant services Engineering projects Segments

12 1.7 Business Segments Review Engineering projects and services Revenue and breakdown of Engineering projects and services Gross profit of Engineering projects and services RMB Billion Others Power plant services Engineering projects Segments gross profit Engineering projects Power plant services Others

13 Annual Operation Highlights 13

14 2.1 Continuous growth in operating results Steady increase in operating results RMB Billion 14

15 2.2 New Record in Production Volume complete and reach a new record in power generation equipment production in 2011 MW hydro-electric turbine generator sets/546.45mkw steam turbine generators/3276.3mkw 949 wind power generation sets/145.4mkw 51 power station boilers/2190.2mkw 101 power station steam turbines/3916.7mkw 15

16 2.3 Profitability continue growth Continuous enhance in net profit Steady increase in gross profit 16

2.4 Remarkable Development in Market Expansion New orders in 2011 48 Billion On-hand orders as of 2011 Over RMB150 Billion High efficient & clean energy generation equipment 25% New energy equipment

17 2.4 Remarkable Development in Market Expansion New orders in Billion On-hand orders as of 2011 Over RMB150 Billion High efficient & clean energy generation equipment 25% New energy equipment 20% High efficient & clean energy generation equipment New energy equipment 4% 60% Hydro power and environmental protection 10% 55% Hydro power and environmental protection 11% Engineering projects and services 15% Engineering projects and services Export contracts accounted for around USD2.1 billion, or 28.3% Export on-hand contracts accounted for 22.8% achieved the goal of keeping stable increase of new orders throughout the year under ba rely no newly increased nuclear power and hydropower orders 17

18 2.5 remarkable results in international market Enter 7 new contries while consolidate the exsting international market Overseas sales grow stadily with an increase of 39.5% billion overseas new contracts which accounting for 28% new orders Overseas business profitability significantly improved with 25.65% gross profit margin 18

19 3. Developments of power generation equipment 19

equipment production in the past five years MW 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011

20 3.1 the development of Power generation equipment industry continue stable the national installed capacity of power generation equipment in the past five years MW the national power generation equipment production in the past five years MW National power generation capacity in 2015 reached about 1.5 billion kilowatts, with an average annual growth of 8.5%. 20

21 3.2 Broad Development Room for Hydro Power Industry Update of Hydro Power According to the Report on the Work of the Government, Premier Wen pointed out on 5th March that, we ll actively develop hydro power and increase the proportion of new energies and renewable energies. According to the Electric Power Industry 12th Five Year Plan Repeated Research Comprehensive Report announced by CEC on 9th March that, during the 12th Five Year Plan period, we ll put the hydro power development in the priority. It is estimated that the nation s regular hydro power installed capacity will amount to 30,000GW by 2015, and 36,000GW by 2020; regular installed capacity of pumped-storage power station will amount to 41GW, and 60GW by NDRC recently approved the five large and middle scale hydro power projects in Dadu river and Jinsha river waterhood, with capacity amounting to 5.8GW, and total investment over RMB 60billion. According to the plan of NEA, the newly approved capacity of hydro power of this year will reach to 20GW, representing a YOY increase of 57%. 21

22 3.3 Gas turbine market ushered in opportunities The developments of gas turbine market Unconventional gas exploration will increase -Since December 31, 2011, Development and Reform Commission has issued the "12th Five-Year Plan" development of CBM. During "12th Five-Year Plan" period, company will further increase CBM proved reserves to 1 trillion cubic meters and build up Basin and Eastern Ordos Basin CBM industrial base. -Recently, Development and Reform Commission has issued Shale gas development plan( ). Mainland China will has 6.5 billions cubic meters of Shale gas during 2015 and strive 600 to 100 billion cubic meters during CEO (China Electricity Council) has issued Power Industry 12th Five-Year Plan Scroll Research Report. In 2015 and 2020 large-scale natural gas-fired capacity will become 40 million kilowatts and 50 million kilowatts. -Increase in natural gas resources: coalbed methane, significant increase of coal gas and foreign gas pipeline finish construction. -Environment and emission gas turbine market is full of vigor, especially in Beijing and Tianjin, the Yangtze River Delta, Pearl River Delta region. 22

23 3.4 Restart of nuclear power development Nuclear power development Premier Wen Jiabao's speech in the World Future Energy Summit on January 16, 2012: To develop renewable energy and clean energy Nuclear power is safe, reliable, mature technology of clean energy Safe and efficient development of nuclear power is the solution to future energy supply strategy Recently, the United States approved new nuclear reactors; The 11th National People's Congress meeting in the government work report clearly states: "safe and efficient development of nuclear power; CEC recently released the power industry "12" rolling planning the study pointed out that the 2020 planning nuclear power installed capacity of 80 million kilowatts 23

24 4. Development Prospectus 24

4.1 2012 Operating Plans In 2012, the Company shall place priorities on highlighting principal operations, optimizing allocation and refining management in line with the development targets under the

25 Operating Plans In 2012, the Company shall place priorities on highlighting principal operations, optimizing allocation and refining management in line with the development targets under the 12th Five-Year Plan, speed up its transformation and upgrading and promote sustainable development by implementing three shifts, namely shifting from scale expansion to efficiency and profit growth, shifting from business expansion to strength enhancement, and shifting from manufacturing-based operations to manufacturing- and service-based operations. The Company is expected to produce power generation equipment with total capacity of 35,500MW in 2012, still maintaining a high output level. (1) shifting from scale expansion to efficiency and profit growth three shifts (2) shifting from business expansion to strength enhancement (3) shifting from manufacturing-based operations to manufacturing- and service based operations 25

4.2 Hydropower scheduling successive increments hydro power orders RMB Billion New orders in 2010 On-hand orders at the end of 2011 2012, hydropower planning

26 4.2 Hydropower scheduling successive increments hydro power orders RMB Billion New orders in 2010 On-hand orders at the end of , hydropower planning and scheduling production to more than 7 million kilowatts over the previous year and has increased by 32%; Hydropower profitability continued to improve. 26

4.3 Gas turbine market reached its climax The development of DEC gas turbine segment RMB Billion New orders in 2010 New orders in 2011

27 4.3 Gas turbine market reached its climax The development of DEC gas turbine segment RMB Billion New orders in 2010 New orders in high-speed growth of the gas turbine market is expected to gain more market orders 2012 gas turbine production scheduling double 27

3.4 Restart of nuclear power development Nuclear power orders Nuclear power development RMB Billion February 29, 2012, China's first AP1000 passive residual heat removal heat exchanger shipment

28 3.4 Restart of nuclear power development Nuclear power orders Nuclear power development RMB Billion February 29, 2012, China's first AP1000 passive residual heat removal heat exchanger shipment ceremony was held in the Dongfang Electric (Guangzhou) Heavy Machinery Co., Ltd., which marks DEC AP1000 nuclear island equipment manufacturers has achieved new breakthroughs. November 24, 2012, DEC has awarded a 2,3-class equipment for civilian nuclear safety mechanical equipment design permits by the National Nuclear Security Administration marking the construction of electrical equipment in the nuclear steam supply system design and manufacturing capabilities of the company has taken a solid step. In June 2011, DEC signed the nuclear power plant low pressure On-hand nuclear power orders at the end of 2011 Nuclear power conventional island Nuclear power island heater supply contract which marked the nuclear power product of the company has brought to the world. 28

29 4.5 great space of International expansion Overseas markets tracking projects up to 5,263 million kilowatts Thermal power in 26 countries,51 projects,46,000mw Hydropower 20 countries,32 projects,6,133mw Wind power 5 countries,6 projects,500mw 29

30 4.6 of the outbreak growth of Environmental protection and transformation Desulfurization stock policy forced forward, tariff encouragement Strategic positioning National implementation plan of the comprehensive upgrading of coal-fired power plants, the first project will start from 10 million kilowatts great potential of the world's power Mid-term Target plants System transformation, DEC has unique advantage Long-term Target 30

31 DEC Endeavor to build a world-class energy technology and equipment enterprise with international competitiveness 31

Xu Guosheng Zhaoheng Hydropower

Xu Guosheng Zhaoheng Hydropower China Renewable Energy Investment Opportunity: Focus on Hydropower MACQUARIE ASIA INFRASTRUCTURE CONFERENCE 8 9 DECEMBER 2008, MACAU Energy from Heaven Wind Energy Strong