Datang Intl H Regulatory News (DAT)

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibilityfor the contents of this announcement, make no representation as to its accuracy or completeness andexpressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon thewhole 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: 00991) ANNOUNCEMENT CONTINUING CONNECTED TRANSACTIONSFRAMEWORK AGREEMENT FOR PRODUCTION MATERIALS On 13 January 2015, the Company entered into the Framework Agreement for Production Materials with ChinaWater Resources and Power in connection with the centralised purchase of machinery, equipment andmaterials required for technical transformation projects through China Water Resources and Power. LISTING RULES IMPLICATIONS As at the date of this announcement, CDC and its subsidiaries hold a total of approximately 34.71%of the issued share capital of the Company. As China Water Resources and Power is a wholly-ownedsubsidiary of CDC, China Water Resources and Power is therefore a connected person of the Companyunder Chapter 14A of the Listing Rules. The transactions contemplated under the Framework Agreementfor Production Materials constitute continuing connected transactions of the Company. As each of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) of theFramework Agreement for Production Materials is more than 0.1% but less than 5%, such transactionsare only subject to the annual review, reporting and announcement requirements, but do not requirethe approval by the independent shareholders of the Company under Chapter 14A of the Listing Rules. BACKGROUND In order to regulate and enhance the management of purchase of materials for technical transformationprojects and to leverage bulk purchase advantages, the Company and China Water Resources and Powerentered into the Framework Agreement for Production Materials on 13 January 2015 to centralise thepurchase of machinery, equipment and materials required for technical transformation projectsthrough China Water Resources and Power so as to enhance quality of purchase and lower purchasecosts, thereby enhancing the profitability of the Company.FRAMEWORK AGREEMENT FOR PRODUCTION MATERIALS Date 13 January 2015 Parties 1.The Company; and2.China Water Resources and Power Subject Matter of the Framework Agreement 1.China Water Resources and Power agreed to conduct centralised purchase of machinery, equipment and materials required for technical transformation projects in accordance with the demands of the Company and its subsidiaries for the machinery, equipment and materials of technical transformation projects. The selling prices of such machinery, equipment and materials of technical transformation projects shall not be higher than the prevailing average market prices of such machinery, equipment and materials of technical transformation projects. 2.According to the actual demands of the Company and its subsidiaries, China Water Resources and Power will conduct tender of materials purchase in accordance with relevant law and regulations of the State. The process of purchase tender conducted by China Water Resources and Power will be under the supervision of the Company. 3.Pursuant to the tender results, the Company and its subsidiaries will enter into specific purchase contracts with China Water Resources and such purchase contracts shall be consistent with the terms and principles of the Framework Agreement for Production Materials. Term The term of the Framework Agreement for Production Materials is from 1 January 2015 to 31 December 2015. The Company confirms that the transaction amounts under the Framework Agreement for Production Materialfor the period from 1 January 2015 to the date of this announcement is below the de minimis thresholdunder Chapter 14A of the Listing Rules. Fee Standard and Calculation During the course of centralised purchase, China Water Resources and Power will be responsible for thecoordination of tenders invitation, contract signing and the implementation thereafter, transportation,examination of the arrival goods and claims submission, etc. As such, China Water Resources and Powerwill collect a management service fee (which shall be from 3% to 5% of the amount of the purchase contracts).Such management service fee is determined after arm's length negotiation between the parties taking intoaccount the management service fee to be charged for the provision of similar services by other independentcooperating service providers. The relevant management service fee to be collected by China Water Resourcesand Power shall not be higher than the fee to be charged by China Water Resources and Power for theprovision of similar services to other independent third parties and other companies of CDC. Before the specific purchase contracts are entered into, the professional departments or subsidiaries ofthe Company will consult and seek confirmation from China Water Resources and Power so that the relevantmanagement service fee charged is not higher than the fee charged due to the provision of same servicesto other independent assisting plants or other companies of CDC. China Water Resources and Power will issue a value added tax invoice comprising the purchase amountand the management service fee to the Company and its subsidiaries. Annual Cap Taking into account the machinery, equipment and materials of technical transformation projectsapplicable for centralised purchase which are required by the Company and its subsidiaries for theyear ending 31 December 2015, the continuing connected transactions contemplated under the FrameworkAgreement for Production Materials are subject to an annual cap of RMB600 million (including thepurchase costs for the machinery, equipment and materials of technical transformation projects andthe management service fees payable to China Water Resources and Power) for the year ending 31December 2015. Since the purchase costs for materials required for technical transformation projects in 2015 areexpected to increase when compared to that in 2014, the annual cap in 2015 is expected to behigher when compared to the actual transaction amount in 2014. Historical Transaction Amounts For the year ended 31 December 2014, the transaction amount of materials purchase for technicaltransformation projects by the Company and its subsidiaries from China Water Resources and Powerwas approximately RMB320 million. For the year ended 31 December 2013, the transaction amount of materials purchase for technicaltransformation projects by the Company and its subsidiaries from China Water Resources and Powerwas approximately RMB326 million. For the year ended 31 December 2012, the transaction amount of materials purchase for technicaltransformation projects by the Company and its subsidiaries from China Water Resources andPower was approximately RMB61.98 million. INFORMATION OF PARTIES RELATING TO THE FRAMEWORK AGREEMENT FOR PRODUCTION MATERIALS 1.The Company was established in December 1994 and is principally engaged in the construction and operation of power plants, the sale of electricity and thermal power, the repair and maintenance of power equipment and power related technical services. The Group's main service areas are in the PRC. 2.CDC was established on 9 March 2003 with registered capital of RMB18.009 billion. It is principally engaged in the development, investment, construction, operation and management of power energy, organisation of power (thermal) production and sales; manufacture, repair and maintenance of power equipment; power technology development and consultation; power engineering, contracting and consultation of environmental power engineering; development of new energy as well as development and production of power related coal resources. 3.China Water Resources and Power is a wholly-owned subsidiary of CDC which was established on 6 March 1989. Its core business includes acting as agent for tenders invitation and import, pipe supplies, project consultation, spare parts, equipment supervision, management of project materials resources, CDM, safety evaluation, and so forth. REASONS FOR AND BENEFITS OF ENTERING INTO THE FRAMEWORK AGREEMENT FOR PRODUCTION MATERIALS After taking into account the necessity for lowering purchase costs and successful completion of theCompany's technical transformation project materials purchase tasks during the year, the Companyentered into the Framework Agreement for Production Materials to leverage on the role of ChinaWater Resources and Power as a professional institution in sourcing the machinery, equipment andmaterials of technical transformation projects to leverage the bulk purchase advantage, enhancepurchase quality and lower purchase costs, thereby enhancing the profitability of the Company. The Directors (including the independent non-executive Directors) are of the view that thecontinuing connected transaction under the Framework Agreement for Production Materials areconducted in the ordinary and usual course of business of the Company, and are fair andreasonable and are in the interest of the Company and the shareholders as a whole. LISTING RULES IMPLICATIONS As at the date of this announcement, CDC and its subsidiaries hold a total of approximately34.71% of the issued share capital of the Company. China Water Resources and Power is awholly-owned subsidiary of CDC and accordingly is a connected person of the Company underChapter 14A of the Listing Rules. The transactions contemplated under the FrameworkAgreement for Production Materials constitute continuing connected transactions for the Company. As each of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) ofthe Framework Agreement for Production Materials is more than 0.1% but less than 5%, suchtransactions are only subject to the annual review, reporting and announcement requirements,but do not require the approval by the independent shareholders of the Company underChapter 14A of the Listing Rules. BOARD'S APPROVAL None of the Directors have any material interest in the transactions contemplated under theFramework Agreement for Production Materials. Those connected Directors, including ChenJinhang, Hu Shengmu and Liang Yongpan, have abstained from voting at the Board meeting forapproval of the relevant transaction in accordance with the requirements of the listingrules of the Shanghai Stock Exchange. DEFINITIONS In this announcement, unless the context otherwise requires, the following expressions havethe following meanings: "Board" the board of Directors "CDC" China Datang Corporation, a state-owned enterprise established under the laws of the PRC and is the controlling Shareholder of the Company which, together with its subsidiaries, own approximately 34.71% of the issued share capital of the Company as at the date of this announcement "China Water China National Water Resources & Electric Power Materials & EquipmentResources and CorporationPower" "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 "Framework the framework agreement for centralised purchase of machinery, equipmentAgreement for and materials required for technical transformation projects datedProduction 13 January 2015 entered into between the Company and China Water ResourcesMaterials" and Power "Listing Rules" the Rules Governing the Listing of Securities on the Stock Exchange "PRC" the People's Republic of China "RMB" Renminbi, the lawful currency of the PRC "Stock Exchange" The Stock Exchange of Hong Kong Limited By Order of the Board Zhou Gang Secretary to the Board Beijing, the PRC, 13 January 2015 As at the date of this announcement, the Directors of the Company are: Chen Jinhang, Hu Shengmu, Wu Jing, Liang Yongpan, Zhou Gang,Cao Xin, Cai Shuwen, Liu Haixia, Guan Tiangang, Yang Wenchun,Dong Heyi*, Ye Yansheng*, Zhao Jie*, Jiang Guohua*, Feng Genfu* * Independent non-executive Directors