Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the 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 PROJECT PROCUREMENT AND CONSTRUCTION AGREEMENT THE PROJECT PROCUREMENT AND CONSTRUCTION AGREEMENT On 3 May 2018, the Parties entered into the Agreement pursuant to which the Contract Letting Party (being an indirect wholly-owned subsidiary of the Company) engaged the Contractor to carry out the procurement and construction work for the Project, which involves the construction of a photovoltaic power plant in Meipu Village, Tongan District, Fujian province, PRC with an installed capacity of 10MW. The total consideration under the Agreement is RMB34,276,000. The power plant is expected to commence operation within three months from the commencement of construction. IMPLICATIONS UNDER THE LISTING RULES The Contract Letting Party is an indirect wholly-owned subsidiary of the Company. The Contractor is a subsidiary of SPIC, an indirect substantial shareholder of the Company. The Contractor is therefore an associate of a substantial shareholder of the Company and a connected person of the Company for the purpose of the Listing Rules. As such, the Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As the highest Percentage Ratio (other than the profits ratio) applicable to the Agreement is more than 0.1% but less than 5%, the Agreement is subject to the reporting and announcement requirements but exempt from the independent shareholders approval requirement under Chapter 14A of the Listing Rules. 1
INTRODUCTION The Parties entered into the Agreement pursuant to which the Contractor has agreed to complete the procurement and construction for the Project on behalf of the Contract Letting Party. THE AGREEMENT Date 3 May 2018 Parties (i) Xiamen China Power Photovoltaic Power Company Limited* ( 廈門中電光伏發電有限公司 ) (as contract letting party); and (ii) Shanghai Power Equipment Research Institute Co., Ltd* ( 上海發電設備成套設計研究院有限責任公司 ) (as contractor). Scope of Work The Contractor shall be responsible for the procurement and construction work for the Project, including, without limitation, the supply, installation, inspection, testing, single unit commissioning and sub-systems trial run and complete start-up of all equipment and systems in the Project, start-up and acceptance testing, a 72-hour trial run of the power grid at full capacity, defect elimination, performance testing, performance assurance, inspection and acceptance of the entire system, technical and after-sales service, personnel training, and all work involved in acceptance testing before handover for production. The scope of work also includes the provision of all materials, spare parts, specialised tools, consumables, and related technical data. Timing of project commencement and delivery The project supervisor shall deliver a notice of commencement to the Contractor seven days prior to the commencement of the Project. The power plant under the Project is expected to be delivered within three months after date of commencement of construction as specified in the notice. Consideration and payment terms The total consideration under the Agreement is RMB34,276,000. 2
(1) Within 15 days of (a) the Contractor having signed the Agreement with the Contract Letting Party, (b) the Parties having agreed the payment schedule for the Project, (c) the Contractor having submitting an irrevocable performance guarantee amount to 10% of the total consideration, (d) delivery of the major construction equipment to the site of the Project and (e) the Contractor having opened a designated bank account at the location of the Project, the Contract Letting Party shall pay to the Contractor an amount equal to 10% of the total consideration as pre-payment. (2) Following the issuance of the notice of commencement, the Contractor, the supervising engineer and the Contract Letting Party will follow an agreed procedure to reach an agreement on a detailed payment schedule. If the Parties cannot reach an agreement before a prescribed deadline, the monthly cashflow plan submitted by the Contractor in its tender will be adopted as the payment schedule. The Contractor shall, on or before the fifth day of each month, submit to the supervision engineer and the Contract Letting Party an application for payment together with supporting documents reasonably required by the supervision engineer and the Contract Letting Party evidencing the progress of the Contractor as at the twenty-first day of the previous month. The Contract Letting Party shall make payment to the Contractor for the Project within thirty days upon receiving such valid payment application. (3) Each payment is subject to a deduction of 10% representing a retention money. Upon the satisfaction of quality, progress and safety requirements as stipulated in the Agreement and the issuance of the project handover certificates by the Contract Letting Party, 75% of such retention money shall be released to the Contractor and the performance guarantee shall be returned to the Contractor. The balance of the retention money shall be retained as a warranty for quality assurance until the end of the warranty period. (4) The Contract Letting Party shall pay any due and outstanding balance to the Contractor within 30 days after the completion of the Project, the passing of the trial production assessment, the expiration of the quality guarantee and the fulfillment of other conditions stipulated in the Agreement. (5) The Company intends to finance the Project using its internal resources and bank borrowings. 3
REASONS FOR AND BENEFITS OF THE AGREEMENT The Project was awarded to the Contractor by way of tender under which bidders were assessed with reference to their specialized technological know-how, equipment, facilities, personnel and practical experience, and different scores were assigned to each of the selection criteria for each bidder. After conducting a comparison of the service and prices offered by all bidders, the Project was awarded to the Contractor on the basis that it obtained the highest total score and offered the best price. The terms of the Agreement were determined after arm s length negotiations with reference to the costs involved and the prevailing rates charged by other independent third parties in comparable projects. The Directors are of the view that the terms of the Agreement are no less favourable to the Company than the terms available from independent third parties. As a developer and operator of clean energy power plants in China, the Group, similar to other developers of power plants, will engage external contractors to provide procurement and construction services to construct its power generation projects. As a result, the Agreement entered into with the Contractor is important to the construction of the Project. By entering into the Agreement, the Contract Letting Party will be able to benefit from the expertise and resources of the Contractor in project management and reduce the cost of the Project as a whole. The Directors (including the independent non-executive Directors) are of the view that the terms of the Agreement are fair and reasonable and in the interests of the Company and its shareholders as a whole. Mr. Wang Binghua, a non-executive Director and the Chairman of the Company, is deemed to have a material interest in the Agreement as he holds the position of Chairman of SNPTC. Mr. Wang Fengxue, an executive Director of the Company, is deemed to have a material interest in the Agreement as he holds the position of the Nuclear Power Director of SPIC and the position of the General Manager of SNPTC. Mr. Zhao Xinyan, an executive Director of the Company, is deemed to have a material interest in the Agreement as he holds the positions of Capital Operation Director and General Manager of the Department of Capital Operation of SNPTC. Mr. Wang Binghua, Mr. Wang Fengxue and Mr. Zhao Xinyan have abstained from voting on the relevant Board resolutions in respect of the Agreement. Except for Mr. Wang Binghua, Mr. Wang Fengxue and Mr. Zhao Xinyan for the reasons stated above, none of the Directors has material interest in the transaction contemplated under the Agreement or is required to abstain from voting on the Board resolutions in relation to the Agreement and the transaction contemplated therein. 4
INFORMATION ON THE COMPANY, THE CONTRACT LETTING PARTY AND THE CONTRACTOR Information on the Company and the Contract Letting Party The Company, whose shares are listed on the Stock Exchange, has its head office in Hong Kong. The principal business activity of the Company is investment holding. The subsidiaries of the Company are principally engaged in the development, construction, ownership, operation and management of clean energy power plants in the PRC, and also engaged in investment holding in the clean energy power industry and property investments. The Contract Letting Party is an indirect wholly-owned subsidiary of the Company and is principally engaged in solar power generation. Information on the Contractor The Contractor became a subsidiary of SPIC in 2015 pursuant to the merger and reorganisation of State Nuclear Power Technology Corporation* ( 國家核電技術公司 ) and China Power Investment Corporation Limited* ( 中國電力投資集團有限公司 ). The Contractor is principally engaged in the research on technologies for three major areas including thermal power, clean energy (nuclear power and gas turbine power generation) and new energy. The Contractor has undertaken thousands of scientific and technological development projects consigned by the enterprises in the power generation equipment industry and electric power industry and won over 200 major scientific and technological achievement awards and new product awards presented by the State, Ministries and Shanghai Municipality. It has also received a number of National Science and Technology Progress Awards and obtained nearly 300 national patents. IMPLICATIONS UNDER THE LISTING RULES The Contract Letting Party is an indirect wholly-owned subsidiary of the Company. The Contractor is a subsidiary of SPIC, an indirect substantial shareholder of the Company. The Contractor is therefore an associate of a substantial shareholder of the Company and a connected person of the Company for the purpose of the Listing Rules. As such, the Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As the highest Percentage Ratio (other than the profits ratio) applicable to the Agreement is more than 0.1% but less than 5%, the Agreement is subject to the reporting and announcement requirements but exempt from the independent shareholders approval requirement under Chapter 14A of the Listing Rules. 5
DEFINITIONS In this announcement, unless the context otherwise requires, the following expressions have the following meanings: Agreement associate Board Company connected person Contract Letting Party Contractor Director(s) Hong Kong Listing Rules Parties Percentage Ratio PRC or China Project RMB the agreement dated 3 May 2018 between the Contract Letting Party and Contractor in relation to the procurement and construction work for the Project has the meaning given to it by the Listing Rules the board of Directors of the Company China Power Clean Energy Development Company Limited, a company incorporated in Hong Kong whose shares are listed on the Stock Exchange has the same meaning as given to it under the Listing Rules Xiamen China Power Photovoltaic Power Company Limited* ( 廈門中電光伏發電有限公司 ), a company incorporated in the PRC and an indirect wholly-owned subsidiary of the Company Shanghai Power Equipment Research Institute Co., Ltd* ( 上海發電設備成套設計研究院有限責任公司 ), a company incorporated in the PRC and a subsidiary of SPIC directors(s) of the Company Hong Kong Special Administrative Region of the PRC the Rules Governing the Listing of Securities on the Stock Exchange the Contract Letting Party and the Contractor has the meaning given to it under the Listing Rules the People s Republic of China, which as a jurisdiction excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan for the purpose of this announcement construction of a photovoltaic power plant in Meipu Village, Tongan District, Fujian province, PRC with an installed capacity of 10MW Renminbi, the lawful currency of the PRC 6
SNPTC SPIC Stock Exchange State Nuclear Power Technology Corporation ( 國家核電技術公司 ), a holding company of the Contractor State Power Investment Corporation Limited ( 國家電力投資集團有限公司 ) a substantial shareholder of the Company The Stock Exchange of Hong Kong Limited * English or Chinese translation, as the case may be, is for identification only Hong Kong, 3 May 2018 By order of the Board China Power Clean Energy Development Company Limited Wang Binghua Chairman As at the date of this announcement, the board of directors of the Company comprises four executive directors, namely Mr. Wang Fengxue, Mr. Zhao Xinyan, Mr. He Hongxin and Mr. Qi Tengyun; three non-executive directors, namely Mr. Wang Binghua, Mr. Wang Liangyou and Mr. Zhou Jiong; and four independent non-executive directors, namely Mr. Chu Kar Wing, Dr. Li Fang, Mr. Wong Kwok Tai, and Ms. Ng Yi Kum. 7