23rd Mar 2011 10:28
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong KongLimited take no responsibility for the contents of this announcement, make norepresentation as to its accuracy or completeness and expressly disclaim anyliability whatsoever for any loss howsoever arising from or in reliance uponthe whole or any part of the contents of this announcement. DATANG INTERNATIONAL POWER GENERATION CO., LTD. (a sino-foreign joint stock limited company incorporated in the People's Republic of China)(Stock Code: 991) ANNOUNCEMENT CONTINUING CONNECTED TRANSACTIONS
The Company is pleased to announcement that on 22 March 2011, the Company entered into the 2011 Supplemental Agreement to the Ash Disposal Agreement withCDC, pursuant to which, CDC agreed to provide disposal service for the ashes generated by all power plants which are wholly-owned, operated and managed by the Company. The annual caps for ash disposal fees payable to CDC by the Company for each of the three years ending 31 December 2013 is RMB57,890,000. The 2011 Supplemental Agreement to the Ash Disposal Agreement is effective for a term commencing from the date of the agreement and expiring on 31 December 2013.
As at the date of this announcement, CDC and its subsidiaries hold a total of approximately 36.07% of the issued share capital of the Company. CDC is a
connected person of the Company under Chapter 14A of the Listing Rules, and the entering into the 2011 Supplemental Agreement to the Ash Disposal Agreement
constitutes continuing connected transactions of the Company under Chapter 14A of the Listing Rules.
As each of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the 2011 Supplemental Agreement to the Ash
Disposal Agreement is more than 0.1% but less than 5%, such continuing connected transactions are only subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules and are exempt from the approval by the independent shareholders of the Company under Chapter 14A of the Listing Rules. BACKGROUND
The Company entered into the Ash Disposal Agreement with NCPGC on 5 August1996. On 16 March 2004, the Company, CDC and NCPGC entered into the VariationAgreement to the Ash Disposal Agreement, pursuant to which NCPGC transferredall its rights and obligations under the Ash Disposal Agreement to CDC. The AshDisposal Agreement (as revised by the Variation Agreement to the Ash DisposalAgreement) provided that CDC was responsible for disposing of all the ashesgenerated by the power plants of the Company in accordance with the PRC'snational and local environmental protection requirements and industry policies.The Company and CDC renewed the Supplemental Agreement to the Ash DisposalAgreement for a term of 3 years in 2005 and 2008, respectively. Since the 2008Supplemental Agreement to the Ash Disposal Agreement will expire on 21 August2011 and that the ash yards owned by CDC are located in the vicinity of thepower plants owned and managed by the Company, and also with an aim to reduceoperating costs and enhance overall benefits of the Company, the Companyentered into the 2011 Supplemental Agreement to the Ash Disposal Agreement withCDC on 22 March 2011 in order to continue to engage CDC to provide ash-disposalservices to the power plants of the Company.
THE 2011 SUPPLEMENTAL AGREEMENT TO THE ASH DISPOSAL AGREEMENT
Date22 March 2011Parties(i) the Company; and(ii) CDC.Subject MatterThe scope of the services to be provided by CDC pursuant to the 2011Supplemental Agreement to the Ash Disposal Agreement remains unchanged underthe Ash Disposal Agreement. CDC will continue to be responsible for disposingof all ashes generated by the power plants which are wholly-owned, operated andmanaged by the Company in accordance with PRC national and local environmentalprotection requirements and industry policies.
Term
The 2011 Supplemental Agreement to the Ash Disposal Agreement is effective fora term commencing from the date of the agreement and expiring on 31 December2013.PricingThe Company and CDC will continue to agree annually on the unit ash disposalfee, which shall reflect CDC's estimated operating costs, depreciation of itsash yards, amortisation charges for the construction of the ash yards and aprofit margin (to be confirmed annually by the Company and CDC based on arm'slength negotiations between the Company and CDC), ranging between 5% to 10% ofCDC's costs. The ash disposal fees will continue to be determined between theCompany and CDC based on the actual volume of ashes disposed of by CDC everymonth at the agreed unit ash disposal fee, and payable by the Company in cashto CDC on an annual basis. The ash disposal fees levied by CDC under the 2011Supplemental Agreement to the Ash Disposal Agreement from the Company are noless favourable to the Company than terms available from other independentthird parties.
Annual Caps
The maximum annual ash disposal fees payable to CDC by the Company for each ofthe three years ending 31 December 2013 under the 2011 Supplemental Agreementto the Ash Disposal Agreement is RMB57,890,000, which have been determined withreference to the historical transaction amounts in relation to the provision ofash disposal services by CDC to the Company in the past three years, whichamounted to RMB57,890,000, RMB57,890,000 and RMB57,890,000, for the years ended31 December 2008, 31 December 2009 and 31 December 2010, respectively.During the period from 1 January 2011 to the date of the 2011 SupplementalAgreement to the Ash Disposal Agreement, the Company has made a provision forash disposal charges under the 2008 Supplemental Agreement to the Ash DisposalAgreement amounting to RMB14,470,000, which has not yet been paid by theCompany as at the date of this announcement.
INFORMATION RELATING TO THE PARTIES TO THE 2011 SUPPLEMENTAL AGREEMENT TO THE ASH DISPOSAL AGREEMENT
The Company is principally engaged in the development and operation of powerplants, the sale of electricity and thermal power, and the repair, testing andmaintenance of power equipment and power related technical services. TheGroup's main service areas are in the PRC.
CDC is a state-owned enterprise. Its scope of operations includes the development, investment, construction, operation and management of power energy; organisation of power (thermal) production and sales; as well as power technology development and consultation.
REASONS FOR AND BENEFITS OF ENTERING INTO THE 2011 SUPPLEMENTAL AGREEMENT TO THE ASH DISPOSAL AGREEMENT
Since the ash yards owned by CDC are located in the vicinity of the powerplants owned and managed by the Company, the entering into of the 2011Supplemental Agreement to the Ash Disposal Agreement will enable the Company tocontinue to use CDC's ash yards and engage CDC to provide ash disposal servicesto the power plants of the Company, thereby lowering the operating costs of theCompany and enhancing the overall benefits of the Company.The Directors (including the independent non-executive Directors) are of theview that the continuing connected transactions under the 2011 SupplementalAgreement to the Ash Disposal Agreement are conducted in the ordinary and usualcourse of business of the Company, are fair and reasonable and are in theinterest of the Company and the shareholders as a whole.
CONTINUING CONNECTED TRANSACTIONS
As at the date of this announcement, CDC and its subsidiaries hold a total ofapproximately 36.07% of the issued share capital of the Company. CDC is aconnected person of the Company under Chapter 14A of the Listing Rules, and theentering into the 2011 Supplemental Agreement to the Ash Disposal Agreementconstitutes continuing connected transactions of the Company under Chapter 14Aof the Listing Rules.As each of the applicable percentage ratios (as defined in Rule 14.07 of theListing Rules) of the 2011 Supplemental Agreement to the Ash Disposal Agreementis more than 0.1% but less than 5%, such continuing connected transactions areonly subject to the reporting and announcement requirements under Chapter 14Aof the Listing Rules and are exempt from the approval by the independentshareholders of the Company under Chapter 14A of the Listing Rules.
BOARD'S APPROVAL
The 2011 Supplemental Agreement to the Ash Disposal Agreement was consideredand approved by the Board on 22 March 2011. Mr. Liu Shunda, Mr. Hu Shengmu andMr. Fang Qinghai, Directors who have material interests in the transaction (byvirtue of being the principal management staff of CDC) have abstained fromvoting at the Board meeting for approval of the 2011 Supplemental Agreement
tothe Ash Disposal Agreement.DEFINITIONS
In this announcement, the following expressions have the meanings set out below unless the context otherwise requires:
"2008 Supplemental the further supplemental agreement entered into Agreement to the Ash between the Company and CDC on 22 August 2008 in Disposal Agreement" relation to the Ash Disposal Agreement with a term of three years expiring on 21 August 2011, details of which please refer to the announcement of the Company dated 25 August 2008 "2011 Supplemental the further supplemental agreement entered into Agreement to the Ash between the Company and CDC on 22 March 2011 in Disposal Agreement" relation to the Ash Disposal Agreement with a term commencing from the date of the agreement and expiring on 31 December 2013 "Ash Disposal Agreement" the agreement entered into between the Company and NCPGC on 5 August 1996, as amended by the Variation Agreement to the Ash Disposal Agreement, in relation to the disposal of all ashes generated by the power plants of the Company by CDC in accordance with the PRC national and local environmental protection requirements and industry policies "Board" the board of Directors "CDC" China Datang Corporation is a state-owned enterprise established under the laws of the PRC and a controlling Shareholder of the Company. CDC and its subsidiaries hold a total of approximately 36.07% of the issued share capital of the Company as at the date of this announcement "Company" Datang International Power Generation Co., Ltd., a sino-foreign joint stock limited company incorporated in the PRC on 13 December 1994, whose H Shares are listed on the Stock Exchange and the London Stock Exchange and whose A Shares are listed on the Shanghai Stock Exchange "Director(s)" the director(s) of the Company "Listing Rules" The Rules Governing the Listing of Securities on the Stock Exchange "NCPGC" North China Power Group Company (formerly known as North China Grid Company Limited), is a State-owned enterprise established in 1993 and currently managed by the State Grid Corporation, which is in turn managed by the central government of the PRC "PRC" the People's Republic of China "RMB" Renminbi, the lawful currency of the PRC "Stock Exchange" The Stock Exchange of Hong Kong Limited "Variation Agreement to the agreement entered into among the Company, the Ash Disposal NCPGC and CDC on 16 March 2004, pursuant to which Agreement" NCPGC transferred all its rights and obligations under the Ash Disposal Agreement to CDC. That is, CDC was responsible for disposing of all ashes generated by the power plants of the Company in accordance with the PRC national and local environmental protection requirements and industry policies By Order of the Board Zhou Gang Secretary to the Board
Beijing, the PRC, 22 March 2011
As at the date of this announcement, the directors of the Company are:
Liu Shunda, Hu Shengmu, Cao Jingshan, Fang Qinghai, Zhou Gang, Liu Haixia, GuanTiangang, Su Tiegang, Ye Yonghui, Li Gengsheng, Li Yanmeng*, Zhao Zunlian*, LiHengyuan*, Zhao Jie*, Jiang Guohua*
* Independent non-executive directors
vendorRelated Shares:
Datang Intl H