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contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this
announcement.
CONNECTED TRANSACTION
CAPITAL INCREASE IN XIAPU NUCLEAR
RELATIONSHIP BETWEEN THE COMPANY, HUANENG GROUP, HIPDC AND
XIAPU NUCLEAR
The Company and its subsidiaries mainly develop, construct, operate and manage large-scale power
plants in China nationwide. It is one of the largest listed power producers in China. As at the date of publication of this announcement, the controlled generation capacity of the Company is 108,111 MW and the equity-based generation capacity is
94,878 MW.
Huaneng Group is principally engaged in the operation and management of enterprise investments, the
development, investment, construction, operation and management of power plants; organising the generation and sale of power (and heat); and the development, investment, construction, production and sale of products in relation to energy,
transportation, new energy and environmental protection industries.
HIPDC is principally engaged in the investment, construction and management of power plants and
related projects, including raising domestic and foreign funds, importing complete sets, supporting equipment, machinery, etc., as well as providing accessories, materials, fuel, etc. for the construction and operation of power plants.
Huaneng Nuclear, a wholly-owned subsidiary of Huaneng Group, is principally engaged in the
development, investment, construction, operation, management and sales of nuclear power; and the development and technical services of nuclear power and related technology.
China Nuclear is principally engaged in the development, investment, construction, operation and
management of nuclear power projects and supporting facilities; investment and development of clean energy project; investment and investment management of power transmission and distribution project; nuclear power operation safety technology
research and related technical services and consulting business; and power sales.
Ningde Investment is principally engaged in energy investment, equity investment, enterprise asset
operation management, urban construction, development and operation of real estate, and undertaking the municipal government’s major project investment and construction tasks.
Fujian Funeng is principally engaged in power generation and heating; related technology research and development,
training, technical consulting services for power and new energy industries, etc.
Xiapu Nuclear is principally engaged in development, construction, operation and management of pressurised water
reactor power stations and high-temperature gas-cooled reactor nuclear power stations, production and sales of power and related products.
As at the date of publication of this announcement, Huaneng Group holds a 75% direct equity
interest and a 25% indirect equity interest in HIPDC, whilst HIPDC, being the direct controlling shareholder of the Company, holds a 32.28% equity interest in the Company. Huaneng Group holds a 9.91% direct interest in the Company, a 3.01%
indirect equity interest in the Company through Hua Neng HK (a wholly-owned subsidiary of Huaneng Group), a 0.84% indirect equity interest in the Company through Huaneng Treasury (an indirect wholly-owned subsidiary of Huaneng Group) and a 0.39%
indirect equity interest in the Company through Huaneng Finance (a controlling subsidiary of Huaneng Group). At the same time, the Company, Huaneng Nuclear, HIPDC, China Nuclear, Fujian Funeng and Ningde Investment respectively hold 22.50%, 30%,
22.50%, 10%, 10% and 5% equity interest in Xiapu Nuclear. Huaneng Goup and HIPDC are connected persons of the Company; Huaneng Nuclear and Xiapu Nuclear are its associates. Pursuant to the relevant stipulations of the Hong Kong Listing Rules, the
Capital Increase constitutes a connected transaction of the Company and is subject to the reporting and announcement requirement and/or independent shareholders’ approval requirement under the Hong Kong Listing Rules.
The relationship among the Company, Huaneng Group, HIPDC and Xiapu Nuclear is as follows:
Therefore, under the Hong Kong Listing Rules, Huaneng Group and HIPDC are connected persons of the Company; Huaneng Nuclear and Xiapu Nuclear are its
associates.
CAPITAL INCREASE AGREEMENT
The Capital Increase was approved at the meeting of the board of Directors of the Company held on
29 July 2020. The Company entered into the Capital Increase Agreement with the existing shareholders of Xiapu Nuclear, being Huaneng
Nuclear, HIPDC, China Nuclear, Fujian Funeng and Ningde Investment. Major terms of the Capital Increase Agreement are as follows:
The Company shall use its own internal fund to pay Xiapu Nuclear RMB63 million as the consideration of the Capital Increase. Upon the completion of the
Capital Increase, the amount of the registered capital of Xiapu Nuclear shall be increased to RMB890 million and the Company’s shareholding in Xiapu Nuclear shall remain unchanged at 22.5%.
INFORMATION REGARDING XIAPU NUCLEAR
Incorporated on 13 July 2015 with the approval of the Administration for Industry and Commerce of Ningde City, Fujian Province, Xiapu Nuclear is an
independent legal entity with limited liability jointly established by Huaneng Nuclear, HIPDC, the Company, China Nuclear, Fujian Funeng and Ningde Investment with 30%, 22.5%, 22.5%, 10%, 10%, and 5% shareholding, respectively. It is
principally engaged in the construction and operation of a xiapu nuclear project in Fujian, a 600,000- kilowatt high-temperature
gas-cooled reactor nuclear power project and 4 million-kilowatt pressurised water reactor nuclear power project.
The capital contributions and shareholding ratios of shareholders of Xiapu Nuclear before and after the Capital Increase are as follows:
Unit: RMB
Selected Financial Information of Xiapu Nuclear
The following sets out certain financial information of Xiapu Nuclear as at 31 December 2018 and 31 December 2019, prepared in accordance with the PRC
Accounting Standards:
Unit: RMB Ten Thousand
Reasons for the Capital Increase and the Impact on the Company
In 2020, the project of Xiapu Nuclear was granted the annual investment budget of RMB280 million and capital budget of RMB280 million. On the account
that the project does not yet have the conditions for bank financing loans, the financing needs of Xiapu Nuclear in 2020 are planned to be resolved by shareholders’ injecting new capital in accordance with the existing proportions of
shareholding. Xiapu Nuclear will not be consolidated into the accounts of the Company following the completion of the Capital Increase. Accordingly, after completion of the Capital Increase, it will not impose any material impact on the
financial position of the Company and will not prejudice the interests of the Company and its shareholders.
IMPLICATION UNDER THE HONG KONG LISTING RULES
With respect to the Capital Increase, given the scale of the subscription amount does not exceed 5% of the applicable percentage ratios as calculated
pursuant to Rule 14.07 of the Hong Kong Listing Rules, the Capital Increase does not constitute a notifiable transaction under Chapter 14 of the Hong Kong Listing Rules. The Capital Increase constitutes a connected transaction under Chapter 14A
of the Hong Kong Listing Rules. As the scale of the Capital Increase exceeds 0.1% but does not exceed 5% of the applicable percentage ratios as calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules, therefore, the Company is only
required to comply with the reporting and announcement requirements under Rules 14A.71 and 14A.35 of the Hong Kong Listing Rules but is exempt from independent shareholders’ approval requirement.
The board of Directors of the Company has approved the resolution regarding the Capital Increase. Zhao Keyu, Zhao Ping, Huang Jian, Wang Kui, Lu Fei and
Teng Yu, all being directors of the Company having connected relationship, abstained from voting on the board resolution relating to the transaction. The resolution was voted by Directors who are not connected to the transaction. The Directors
(including independent non-executive Directors) are of the view that the Capital Increase Agreement was entered into: (i) on normal commercial terms (on arm’s length basis or on terms no less favourable to the Company than terms available from
independent third parties); (ii) on terms that are fair and reasonable and are in the interests of the Company and its shareholders as a whole; and (iii) in the ordinary and usual course of business of the Company.
In the past 12 months, the existing shareholders of Xiapu Nuclear conducted a pro rata capital increase to Xiapu Nuclear. The Company has paid RMB33.75
million with its own funds. According to the requirements of Rules 14A.81 and 14.22 of the Hong Kong Listing Rules, the Company’s capital increase to Xiapu Nuclear in 2019 and the Capital Increase are required to be aggregated. As the amount of
capital increase, in aggregate, exceeds 0.1% but does not exceed 5% of the applicable percentage ratios as calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules, the Capital Increase is only subject to compliance with the reporting
and announcement requirements under Rules 14A.71 and 14A.35 of the Hong Kong Listing Rules but is exempt from independent shareholders’ approval requirement.
DEFINITIONS
As at the date of this announcement, the Directors of the Company are:
Beijing, the PRC 30 July 2020