FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
June, 2003
Huaneng Power International, Inc.
West Wing, Building C, Tianyin Mansion
No. 2C Fuxingmennan Street
Xicheng District
Beijing, 100031 PRC
This Form 6-K consists of:
A circular of the connected transaction by Huaneng Power
International Inc. made on June 12, 2003, in English by Huaneng Power
International Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
under- signed, thereunto duly authorized.
HUANENG POWER INTERNATIONAL, INC.
By /s/ Wang Xiaosong
______________________________
Name: Wang Xiaosong
Title: Vice Chairman
Date: June 12, 2003
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CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ACTION
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If you are in any doubt as to any aspect of this circular or as to the action
to be taken, you should consult your stockbroker, bank manager, solicitor,
professional accountant or other professional adviser.
If you have sold or transferred all your shares in Huaneng Power
International, Inc., you should at once hand this circular and the
accompanying form of proxy to the purchaser or transferee or to the bank,
stockbroker or other agent through whom the sale or transfer was effected for
transmission to the purchaser or transferee.
The Stock Exchange of Hong Kong Limited takes no responsibility for the
contents of this circular, makes no representation as to its accuracy or
completeness and expressly disclaims any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of the
contents of this circular.
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[GRAPHIC OMITTED]
HUANENG POWER INTERNATIONAL, INC.
(A Sino-foreign joint stock limited company incorporated in the
People's Republic of China)
CONNECTED TRANSACTION
Financial Adviser to Huaneng Power International, Inc.
[GRAPHIC OMITTED]
J.P. Morgan Securities (Asia Pacific) Limited
Independent Financial Adviser to the Independent Directors
[GRAPHIC OMITTED]
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A letter from the Board of Huaneng Power International, Inc. (the "Company")
is set out on pages 3 to 14 of this circular. A letter from the Independent
Directors is set out on page 15 of this circular.
A notice convening an Extraordinary General Meeting of the Company to be held
at 9 a.m. on 22nd July, 2003 at Beijing International Convention Centre at No.
8 Beichen East Road, Chaoyang District, Beijing, the People's Republic of
China is set out on pages 29 to 33 of this circular. Whether or not you are
able to attend the meeting, you are requested to complete and return the
enclosed reply slip and form of proxy in accordance with the instructions
printed thereon as soon as possible and in any event the form of proxy should
be returned not less than 24 hours before the time appointed for holding such
meeting.
Completion and return of the form of proxy shall not preclude you from
attending and voting in person at the meeting or at any adjourned meeting
should you so wish.
12th June, 2003
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CONTENTS
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Page
Definitions ............................................................. 1
Letter from the Board
1. Introduction ................................................... 3
2. Transfer Agreement ............................................. 4
3. Reasons for the Acquisition and Pricing Factors................. 5
4. Information Regarding the Target Power Plants .................. 7
5. Selected Financial Information of the Target Power Plants ...... 11
6. Connected Transaction under Shanghai Listing Rules ............ 13
7. The EGM ........................................................ 13
8. Recommendation ................................................. 14
9. Other Information .............................................. 14
Letter from the Independent Directors .................................... 15
Letter from BNP Paribas Peregrine ........................................ 16
Appendix I -- General Information .................................... 26
Notice of Extraordinary General Meeting .................................. 29
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DEFINITIONS
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In this document, unless the context otherwise requires, the following
expressions have the following meanings:
"Acquisition" the purchase by the Company of the
Huaneng Group Interest at a cash
consideration of RMB550 million (so far
as the Independent Shareholders' approval
is concerned, together with the Company's
future capital commitment of
approximately RMB730 million (subject to
adjustments) for the first phase of
Qinbei Power Plant and the second phase
of Yushe Power Plant);
"Associate" the meaning ascribed to it in the Hong
Kong Listing Rules;
"BNP Paribas Peregrine" BNP Paribas Peregrine Capital Limited,
deemed licensed to conduct type 1
(dealing in securities) and type 6
(advising on corporate finance) regulated
activities under the Securities and
Futures Ordinance;
"Closing" the closing of the purchase by the Company
of the Huaneng Group Interest;
"Company" Huaneng Power International, Inc.;
"Directors" the directors of the Company;
"EGM" an extraordinary general meeting of the
Company to consider and approve the
Acquisition and Shanghai Connected
Transactions;
"Guotai Junan" Guotai Junan Securities Co., Ltd.;
"HIPDC" Huaneng International Power Development
Corporation;
"Hong Kong Listing Rules" the Rules Governing the Listing of
Securities on the Hong Kong Stock
Exchange;
"Huaneng Group" China Huaneng Group;
"Huaneng Group Interest" the 55% equity interest in Qinbei Power
Plant, 60% equity interest in Yushe Power
Plant and the entire assets and
liabilities of Xindian Power Plant, which
are held by Huaneng Group;
"Independent Directors" the independent directors of the Company,
who are invited to advise the Independent
Shareholders in connection with the
Acquisition;
"Independent Shareholders" shareholders of the Company other than
HIPDC and its Associates;
"IFRS" International Financial Reporting Standards
"JPMorgan" J.P. Morgan Securities (Asia Pacific)
Limited;
"KPMG" KPMG Huazhen, Certified Public Accountants;
"Latest Practicable Date" 5th June, 2003, being the latest
practicable date prior to the publication
of this circular for ascertaining certain
information referred to in this circular;
"PRC" the People's Republic of China;
"PRC GAAP" accounting principles generally accepted
in the PRC
"Qinbei Power Plant" Henan Huaneng Qinbei Power Generation
Limited Liability Company, a limited
liability company incorporated in the PRC
with a registered capital of RMB10
million, in which Huaneng Group holds 55%
equity interest thereof;
"RMB" the lawful currency of the PRC;
"Shanghai Listing Rules" The Listing Rules of Shanghai Stock
Exchange
"Stock Exchange" The Stock Exchange of Hong Kong Limited;
"Target Power Plants" Qinbei Power Plant, Yushe Power Plant and
Xindian Power Plant;
"Transfer Agreement" the transfer agreement dated 5th June,
2003 entered into by the Company and
Huaneng Group relating to the purchase of
the Huaneng Group Interest;
"Xindian Power Plant" China Huaneng Group Xindian Power Plant
which is not a legal person, and is
wholly owned by Huaneng Group;
"Yushe Power Plant" Shanxi Huaneng Yushe Power Limited
Liability Company, a limited liability
company incorporated in the PRC with a
registered capital of RMB80 million, in
which Huaneng Group holds 60% equity
interest thereof; and
"Zhonghua" Zhonghua Financial and Accounting
Consulting Company Limited, a qualified
assets appraisal firm in China,
independent from the Company.
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LETTER FROM THE BOARD
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[GRAPHIC OMITTED]
(A Sino-foreign joint stock limited company incorporated in the
People's Republic of China)
Directors: Legal Address:
Li Xiaopeng West Wing, Building C,
Wang Xiaosong Tianyin Mansion,
Ye Daji No. 2C Fuxingmennan Street,
Huang Jinkai Xicheng District,
Liu Jinlong Beijing 100031,
Shan Qunying People's Republic of China.
Yang Shengming
Xu Zujian
Independent Directors:
Gao Zongze
Zheng Jianchao
Qian Zhongwei
Xia Donglin
12th June, 2003
To the Shareholders
Dear Sir or Madam,
CONNECTED TRANSACTION
1. INTRODUCTION
On 5th June, 2003, the Board of Directors announced that the Company
entered into a Transfer Agreement with Huaneng Group, pursuant to which the
Company agreed to acquire the Huaneng Group Interest for a consideration of
RMB550 million. After Closing, the Company shall make an aggregate amount of
approximately RMB730 million (subject to adjustments) equity contribution for
the first phase of Qinbei Power Plant and the second phase of Yushe Power
Plant. These will be funded by the Company's internal cash reserves. The
purchase price for the Acquisition is based on normal commercial terms and was
determined through arm's length negotiation between the Company and Huaneng
Group.
Huaneng Group is an indirect controlling shareholder of the Company,
holding a 51.98% interest in HIPDC. As of the Latest Practicable Date, HIPDC
held 2,554,840,000 domestic shares in the Company, representing 42.58% of the
total issued share capital (domestic shares and H Shares) of the Company.
Accordingly, the Acquisition contemplated by the Transfer Agreement
constitutes a connected transaction for the Company within the meaning of the
Hong Kong Listing Rules, and is subject to approval by the Independent
Shareholders.
The Company and the Independent Directors have reviewed the Acquisition.
The Company has appointed JPMorgan as the financial adviser in connection with
the Acquisition. The Company has also appointed BNP Paribas Peregrine as the
independent financial adviser to provide opinions to the Independent Directors
in connection with the Acquisition.
The purpose of this circular is to provide you with further information
in relation to the Acquisition and the Transfer Agreement, and to set out the
recommendation of the Independent Directors and the Notice of the EGM.
2. TRANSFER AGREEMENT
The Transfer Agreement was approved by the Directors on 5th June, 2003
and signed by Huaneng Group and the Company on that day.
Date: 5th June, 2003
Parties: Seller: Huaneng Group
Purchaser: the Company
Huaneng Group Interest (i) equity interest representing 55% of
to be acquired: the registered capital of Qinbei
Power Plant;
(ii) equity interest representing 60% of
the registered capital of Yushe
Power Plant; and
(iii) the entire assets and liabilities
of Xindian Power Plant.
Consideration: The consideration for the Acquisition is
RMB550 million payable in cash on the
Closing date. It will be funded by the
Company's internal cash reserves. The
purchase price for the Acquisition was
determined on the basis of normal
commercial terms and arm's length
negotiation between the parties thereto.
Conditions: Closing is subject to the satisfaction or
waiver (if permitted by the relevant laws
and securities regulations) of all of the
following conditions:
(1) the independent financial advisers
to the Independent Directors, have
advised the Independent Directors
that the terms and conditions of
the transactions contemplated under
the Acquisition are fair and
reasonable so far as the
Independent Shareholders are
concerned;
(2) the Independent Directors
recommended that the shareholders
vote in favour of the Acquisition
and the Transfer Agreement;
(3) the Transfer Agreement and the
Acquisition have been approved and
adopted by the Independent
Shareholders;
(4) the Company has obtained all
necessary government approvals on
the Transfer Agreement and the
Acquisition;
(5) the representations and warranties
respectively made by Huaneng Group
and the Company in the Transfer
Agreement are true and complete in
all material respects; and
(6) each of Huaneng Group and the
Company has fulfilled in all
material respects their respective
obligations under the Transfer
Agreement.
Completion: Closing shall take place on the day
agreed upon by both parties, within 30
days after the conditions have been
satisfied or waived.
3. REASONS FOR THE ACQUISITION AND PRICING FACTORS
The Company develops, constructs, operates and manages large thermal
power plants in China nationwide. It currently owns a total generation
capacity of 14,780 MW on an equity basis, with another 10,629 MW on an equity
basis under the Company's entrusted management.
The Acquisition will enlarge the operation scale and regional scope of
the Company and increase profitability and further strengthen the position of
the Company as one of the largest independent power generation companies in
China. The average availability factor of the Target Power Plants in operation
(excluding the first phase of Xindian Power Plant as after the Closing and
before the end of 2003, the oil-fueled generation units of the first phase of
Xindian Power Plant will be closed down for transformation to coal-fueled
generation units) for 2002 reached 92.6%, which is slightly higher than the
average level of the Company in the previous year (92.5%). The total on-grid
output of the Target Power Plants (excluding the first phase of Xindian Power
Plant) in 2002 was approximately 3.56 billion kWh, of which Huaneng Group
accounted for 3.07 billion kWh, representing 4.6% of the 67.33 billion kWh
on-grid output of the Company in 2002. After completion of the Acquisition,
the net installed capacity (on an equity basis) owned by the Company will
increase by 770 MW and aggregate net installed capacity (on an equity basis)
will increase from 14,780 MW to 15,550 MW, representing an increase of 5.2%.
In addition, the Acquisition will further increase the net installed capacity
(on an equity basis) under construction of the Company by 1,020 MW.
The Acquisition will further strengthen the market position of the
Company in Shandong Province which is undergoing rapid economic growth with
strong demand for power. At the same time, the Company will for the first time
enter into the power market of Henan Province and Shanxi Province which are
important energy bases in China with rapid growth in power consumption.
The Acquisition price has been determined through arm's length
negotiations between the two parties and their respective financial advisers,
taking into account various factors, including the market environments, the
technical and operating conditions of the Target Power Plants, the Target
Power Plants' earnings potentials and their abilities to generate cash flow.
The Company has also considered the appraisal report provided by an
independent qualified assets appraisal firm in China, Zhonghua, which values
the acquired interests at RMB541.35 million as of 31st December, 2002 using
replacement cost method. According to the Target Power Plants' audited
financial statements for the year ended 31st December, 2002 audited by KPMG,
the book value of Huaneng Group Interest as at 31st December, 2002 is
RMB165.41 million. The acquisition price is close to the valuation result of
the Target Power Plants by Zhonghua, and being 3.3 times of their book value
in the audited financial statements as at 31st December, 2002. The main reason
for such difference is that the historical costs of the Target Power Plants
are relatively low. With the improvement of the technical settings of the
Target Power Plants, the capacity and efficiency of their generation units
will be enhanced, thus creating greater return from its operations in the
future. The losses of the first phase of Xindian Power Plant has also been
considered in the determination of the acquisition price.
After Closing, the Company shall make an aggregate amount of
approximately RMB730 million (subject to adjustments) equity contribution to
the first phase of Qinbei Power Plant and the second phase of Yushe Power
Plant. These will be funded by the Company's internal cash reserves. Any
adjustments exceeding the above amount and any further capital commitments in
relation to the Target Power Plants shall be subject to compliance of the
relevant requirements of the Hong Kong Listing Rules.
According to PRC GAAP, the total profit after tax of the Target Power
Plants and the profit attributable to the Huaneng Group Interest in 2002 were
RMB89.77 million and RMB82.12 million respectively. According to the pro forma
calculation, if the Acquisition occurred on 1st January, 2002 and assuming
that the internal cash of the Company was used for the Acquisition and taking
into account the appreciation of the value of the fixed assets after
revaluation, together with other factors such as amortization of goodwill, the
consolidated profit of the Company for 2002 would increase by RMB46.59
million, representing an increase of 1.14%.
The board of Directors is of the view that taking into account the above
factors, the Acquisition price and terms are fair and reasonable to the
Company and its Independent Shareholders. This transaction is consistent with
the Company's long-term business strategy and will benefit the Company and its
shareholders.
4. INFORMATION REGARDING THE Target POWER PLANTS
(1) Overview of the provinces where the Target Power Plants are located
Henan Province
Henan Province is situated at the middle and lower reaches of the
Yellow River. It is in the Central China region and is an important
energy base of China. The coal and oil production volumes of the whole
province occupy top positions nationwide. The area of the province is
167,000 square kilometres. At the end of 2002, the population was
approximately 96.13 million. In 2002, the gross domestic product of the
province reached RMB616.3 billion, representing an increase of 9.5% over
the previous year (the average annual growth rate of the whole nation is
8%). The average annual growth rate of the gross domestic product of
Henan Province over the past ten years has exceeded 11%.
Henan Province is a thermal power generation base of the power
grids in Central China and is also one of the three largest thermal
power generation bases in China. At the end of 2002, the installed
capacity of Henan Province reached approximately 18,207 MW. In 2002, the
power consumption of Henan Province was approximately 91.62 billion kWh,
representing an increase of 13.3% over 2001 (social power consumption of
the whole nation has increased by 11.6%).
Shanxi Province
Shanxi Province is situated in the Northern China region and is
the top one coal province of China. With proven coal reserves accounting
for one-third of the total reserves of the whole nation, Shanxi Province
is accordingly called the "Native Place of Coal". The area of the
province is 156,000 square kilometres. At the end of 2002, the
population was approximately 32.94 million. In 2002, the gross domestic
product of the province reached RMB200.2 billion, representing an
increase of 10.8% over the previous year (the average growth rate of the
whole nation is 8%). The average annual growth rate of the gross
domestic product of Shanxi Province over the past ten years has exceeded
9.5%.
Shanxi Province occupies a decisive position in terms of the power
grids in Northern China. Almost 2,000 towns and villages in the whole
province have electricity supply and Shanxi Province ranks No.1 in terms
of the volume of power transmitted to regions outside the province
nationwide. Currently, one-fourth of the electricity of Beijing comes
from Shanxi. At the end of 2002, the installed capacity of Shanxi
Province reached approximately 15,063 MW. In 2002, the power consumption
of Shanxi Province was approximately 62.85 billion kWh, representing an
increase of 12.6% over 2001 (social power consumption of the whole
nation has increased by 11.6%).
Shandong Province
Shandong Province is situated in the coastal region in Eastern
China and the lower reaches of the Yellow River. It is one of the most
economically developed provinces in China and also one of the important
energy bases in China. The area of the province is 156,700 square
kilometres. At the end of 2002, the population was approximately 90.82
million. In 2002, the gross domestic product of the province reached
RMB1,055.2 billion, representing an increase of 11.6% over the previous
year (the average growth rate of the whole nation is 8%). The average
annual growth rate of the gross domestic product of Shandong Province
over the past ten years has exceeded 12.5%.
The Shandong provincial power grid is the only independent
provincial power grid among the six largest power grids of China. At the
end of 2002, the installed capacity of Shandong Province reached
approximately 19,412 MW. In 2002, the power consumption of Shandong
Province was approximately 124.17 billion kWh, representing an increase
of 12.4% over 2001 (social power consumption of the whole nation has
increased by 11.6%).
(2) Description of the Target Power Plants
Qinbei Power Plant
Qinbei Power Plant is a power plant under construction, located in
Jiyuan Municipality of Henan Province. Its planned installed capacity is
3,600 MW, the first phase of which comprises two 600 MW supercritical
generation units. Qinbei Power Plant will be the first coal-fired power
plant with stand-alone 600 MW generation unit in Central China region.
In December 1998, the State Power Corporation confirmed this project as
the Exemplary Power Plant with Coal Optimization Design of the 21st
Century. In July 1999, the State Development and Planning Commission
confirmed this project as the Supporting Project for the Domestic
Production of 600 MW Supercritical Coal-fired Generation Units. The
first phase of Qinbei Power Plant is under construction and as planned,
its two generation units will commence operation in 2004 and 2005
respectively. According to the project estimate, the total investment to
be deployed in the construction of the first phase of Qinbei Power Plant
is expected to amount to approximately RMB4.68 billion, in which 20%
will be financed by shareholders' equity. On the basis that the Company
holds 55% of equity interest in Qinbei Power Plant after Closing, the
Company's share in the equity contribution of the first phase of Qinbei
Power Plant is expected to be in the amount of approximately not more
than RMB420 million (subject to adjustments). The Company will use its
internal cash reserves to meet such capital expenses.
Upon Closing, the Company will guarantee the loans owed by the
power plant, to an extent which is proportional to the Company's
interest in the power plant, upon normal commercial terms. No
significant assets of Qinbei Power Plant is subject to any mortgage,
charge, lien or third party rights. Huaneng Group has warranted that its
55% interest in Qinbei Power Plant is not subject to any mortgage,
charge, lien or third party rights.
Upon Closing, the Company will hold 55% interest in the registered
capital of Qinbei Power Plant. Other shareholders of Qinbei Power Plant
are Henan Provincial Construction Investment Corporation, Henan
Provincial Power Corporation and Henan Jiyuan Municipality Construction
Investment Company, which hold 35%, 5% and 5% interest, respectively.
All of them are not connected persons (as defined under the Hong Kong
Listing Rules) to the Company.
As Qinbei Power Plant is still under construction, operating data
is not available.
Yushe Power Plant
Yushe Power Plant, located in Yushe County of Shanxi Province, has
a total planned installed capacity of 2,000 MW. Its first phase
comprises two 100 MW coal-fired generation units. Yushe Power Plant was
regarded as a major item of the State's Eighth Five-year Plan. Its
construction started on 31st October, 1992 and the two generation units
came into operation in August and December 1994, respectively. The
depreciation years of the generation units are approximately 12 years.
Currently, the two generation units operate properly. In 2002, the
annual output of Yushe Power Plant reached 1.219 billion kWh with a
house consumption rate of 7.6%. The power tariff is determined according
to the rate prescribed by Shanxi Pricing Bureau.
The second phase project of Yushe Power Plant commenced on 30th
November, 2002. It will comprise two 300 MW domestic sub-critical
air-cooled desulferized coal-fired generation units. In 2001, this
project was classified as one of the major items of the Tenth Five-year
Plan power development projects of Shanxi Province. The construction
period of the second phase project is expected to last 23 months and as
planned, such two generation units will commence operation in July and
October, 2004 respectively. According to the project estimate, the total
investment to be deployed in the construction of second phase of Yushe
Power Plant is expected to amount to approximately RMB2.69 billion, in
which 20% will be financed by shareholders' equity. On the basis that
the Company holds 60% equity interest in Yushe Power Plant after
Closing, the Company's share in the equity contribution of the second
phase of Yushe Power Plant is expected to be in the amount of
approximately not more than RMB310 million (subject to adjustments). The
Company will use its internal cash reserves to meet such capital
expenses.
Upon Closing, the Company will guarantee the loans owned by the
power plant, to an extent which is proportional to the Company's
interest in the power plant, upon normal commercial terms. No
significant assets of Yushe Power Plant is subject to any mortgage,
charge, lien or third party rights. Huaneng Group has warranted that its
60% interest in Yushe Power Plant is not subject to any mortgage,
charge, lien and third party parties.
Upon Closing, the Company will hold 60% interest in Yushe Power
Plant and the remaining 40% interest will continue to be held by Shanxi
International Power Group Limited Company. Shanxi International Power
Group Limited Company is not a connected person (as defined under the
Hong Kong Listing Rules) to the Company.
The following table sets out certain operating data of Yushe Power
Plant for 2002:
2002
Installed capacity (MW) 200
Power generation (billion kWh) 1.219
Utilization hours (hours) 6,094
Availability factor (%) 93.0
House consumption rate (%) 7.6
Average on-grid power rate (RMB/MWh) 329.2
Coal consumption rate for power sold (grams/kWh) 397.4
Unit fuel cost for power sold (RMB/ MWh) 80.7
Xindian Power Plant
Xindian Power Plant is located in Zibo Municipality of Shandong
Province, with an installed capacity of 600 MW. Its construction work is
divided into two phases. Its first phase consists of two 100 MW
oil-fueled generation units and its second phase consists of two 200 MW
oil-fueled generation units. The construction started from June 1973 and
the first generation unit came into operation in October 1974. In
January 1977, the whole power plant was completed and came into
operation. It was then the largest thermal power plant in Shandong
Province. By the end of 2002, the accumulated output of Xindian Power
Plant reached 90 billion kWh. In view of the rise of fuel price and the
increase of generation cost, Huaneng Group transformed the two 200 MW
oil-fueled generation units to coal-fired generation units and each of
the generation units had increased its capacity to 225 MW. The
reconstruction works commenced on 11th December, 2000 and were completed
on 31st December, 2001 and 22nd January, 2002, respectively. The
reconstruction works had passed the quality examinations and the
environmental tests of the State Environment Protection Bureau. In view
of the increase of the price of oil fuel and for the purpose of reducing
the generation cost, the Company plans to close down the two 100 MW
oil-fueled generation units in the first phase of Xindian Power Plant
after the Acquisition and transform the existing oil-fueled generation
units to coal-fueled generation units with greater generation capacity.
The depreciation years of Xindian Power Plant's generation units
are approximately 12 years. Currently, the generation units operate
properly. In 2002, the annual output of the generation units in the
first phase reached 0.334 billion kWh with a house consumption rate of
18.6%. The annual output of the generation units in the second phase of
Xindian Power Plant reached approximately 2.337 billion kWh with a house
consumption rate of 7.6%. Power tariffs are determined according to the
rates prescribed by Shandong Pricing Bureau.
Huaneng Group has warranted that none of any significant assets of
Xindian Power Plant is subject to any mortgage, charge, lien and third
party rights.
Upon Closing, Xindian Power Plant will be wholly owned by the
Company.
The following table sets out certain operating data of the first
and second phase of Xindian Power Plant for 2002:
First Phase Second Phase
Installed capacity (MW) 200 450
Power Generation (billion kWh) 0.334 2.337
Utilization hours (hours) 1,671 5,193
Availability factor (%) 98.9 92.1
House consumption rate (%) 18.6 7.6
Average on-grid power rate (RMB/MWh) 343.7 320.7
Coal consumption rate for power sold (grams/kWh) 484.1 366.7
Unit fuel cost for power sold (RMB/ MWh) 442.9 99.7
5. SELECTED FINANCIAL INFORMATION OF THE TARGET POWER PLANTS
The following is a summary of financial information of certain balance
sheet items as at 31st December, 2001 and 2002 and certain income statement
items for the two years ended 31st December, 2002 of the Target Power Plants,
prepared in accordance with PRC GAAP. The financial information of 2001 is
unaudited. The financial information of 2002 is extracted from the financial
statements of the Target Power Plants audited by KPMG.
Qinbei Yushe Xindian
Power Plant Power Plant Power Plant
2001 2002 2001 2002 2001 2002
(RMB in thousands, except percentage)
Total assets: 604,056 881,902 633,706 713,004 820,903 822,255
Total liabilities 666,357 804,290 586,539 600,104 834,407 767,279
Accounts receivable -- -- 65,637 44,042 86,280 105,783
Net assets (liabilities) (62,301) 77,612 47,167 112,900 (13,504) 54,976
Contingent liabilities -- -- 684 436 -- --
Interest attributable to
Huaneng Group 55% 55% 50% 60% 100% 100%
Net assets (liabilities)
attributable to Huaneng
Group according to the
above ratio (34,266) 42,687 23,584 67,740 (13,504) 54,976
Revenue from principal
business -- -- 259,634 316,759 199,653 671,731
Profit/(loss) from principal
business -- -- 94,042 110,696 (44,279) 153,851
Profit/(loss) from operating
activities (23,520) (16,832) 36,632 56,439 (59,881) 69,482
Applicable tax rate 33% 33% 33% 33% 33% 33%
Net profit/(loss) (23,365) (17,297) 18,951 38,591 (60,983) 68,480
The financial statements of the Target Power Plants have been prepared
based on the PRC GAAP, which differs in certain material respects from IFRS.
The Directors estimate that the significant unaudited IFRS adjustments to the
income statements of 2001 and 2002 would include the following:
Reconciliation between PRC GAAP and IFRS:
(a) Under PRC GAAP, the impact of deferred taxation is not recorded.
Under IFRS, deferred taxation is provided using the liability
method in respect of the taxation effect arising from all
significant timing differences. For the year ended 31st December,
2001 and 2002, taxation charged to the income statement under IFRS
was more than that charged under PRC GAAP, except for Xindian
Power Plant in 2001 which was a tax credit of RMB20 million.
(b) In 2002, Qinbei Power Plant incurred certain staff training costs.
According to IFRS, staff training costs are recognised as expense
when incurred. According to PRC GAAP, staff training costs are
deferred and recognised as expense upon the commencement of
operation. For the year ended 31st December, 2002, the staff
training costs incurred was charged to the income statement under
IFRS, however, it was deferred under PRC GAAP.
Qinbei Yushe Xindian
Power Plant Power Plant Power Plant Total
2001 2002 2001 2002 2001 2002 2001 2002
(RMB in millions)
Net profit/(loss) under PRC GAAP (23) (17) 19 39 (61) 68 (65) 90
(a) Deferred tax adjustment -- -- (1) (1) 20 (23) 19 (24)
(b) Adjustment for pre-operation staff
training cost -- (3) -- -- -- -- -- (3)
Net profit/(loss) under IFRS (23) (20) 18 38 (41) 45 (46) 63
After taking into consideration of the major IFRS adjustments, the
unaudited operating results of Qinbei Power Plant, Yushe Power Plant and
Xindian Power Plant for the two years ended 31st December, 2002 under IFRS
were loss of RMB23 million and RMB20 million, profit of RMB18 million and
RMB38 million, loss of RMB41 million and profit of RMB45 million,
respectively. Under IFRS, the combined unaudited operating results for the two
years ended 31st December, 2002 were loss of RMB46 million and profit of RMB63
million, respectively. Compared with the operating results under PRC GAAP, the
loss recorded in 2001 was lower than that under PRC GAAP by RMB19 million,
while the profit recorded in 2002 was also lower than that under PRC GAAP by
RMB27 million.
6. CONNECTED TRANSACTION UNDER SHANGHAI LISTING RULES
As the domestic public shares of the Company are listed on the Shanghai
Stock Exchange, the Company is required, in addition to the Hong Kong Listing
Rules, to comply with the Shanghai Listing Rules.
After Closing, certain transactions in relation to the Target Power
Plants, including the guarantees to be provided by the Company to the banks in
respect of the Target Power Plants' bank loans and the loans obtained from
Huaneng Group and its associate, China Huaneng Finance Company, both being
connected persons of the Company, by the Target Power Plants in the ordinary
and usual course of the Target Power Plants' business, which are subject to
compliance with the relevant requirements of the Hong Kong Listing Rules, will
constitute connected transactions under the Shanghai Listing Rules ("Shanghai
Connected Transactions"), which shall be subject to the approval of the
Company's shareholders. The connected persons (as defined under the Shanghai
Listing Rules) shall abstain from voting on resolutions related to Shanghai
Connected Transactions. Details of the Shanghai Connected Transactions were
set out in the notice of EGM issued to the Company's shareholders.
In accordance with Rule 7.3.11(9) of the Shanghai Listing Rules, the
Company has appointed Guotai Junan as the PRC independent financial adviser in
respect of the Acquisition.
Upon careful and necessary enquiry, Guotai Junan is of the view that the
Acquisition and the Shanghai Connected Transactions met the relevant legal
requirements under the Company Law of the PRC, the Securities Law of the PRC
and the Shanghai Listing Rules (as amended in 2001) and the requirements of
the articles of association of the Company, reflecting the principles of
equality, justice and reasonableness; and that the Acquisition will not in any
way affect the interests of either the Company or the non-connected
shareholders.
The Independent Directors are of the view that (1) the board of
Directors has met the relevant requirements of the Shanghai Listing Rules and
the articles of association of the Company regarding approval of the relevant
resolutions of the Acquisition and the Shanghai Connected Transactions; and
(2) the Acquisition and the Shanghai Connected Transactions are fair to the
Company's shareholders.
7. THE EGM
The Company will convene an EGM at 9 a.m. on 22nd July, 2003 at Beijing
International Convention Centre at No. 8 Beichen East Road, Chaoyang District,
Beijing, PRC to consider the approval of the Acquisition (including the
Transfer Agreement) and Shanghai Connected Transactions. Huaneng Group and its
Associates will abstain from voting in the EGM in respect of the ordinary
resolution to approve the Acquisition (including the Transfer Agreement) and
Shanghai Connected Transactions. Notice of the EGM is set out on pages 29 to
33 in this circular.
A reply slip and a form of proxy for use by the Independent
Shareholders at the Extraordinary General Meeting are enclosed with this
circular. Whether or not you intend to attend the meeting in person, you are
requested to complete and return the reply slip in accordance with the
instructions printed thereon to the registered office of the Company at West
Wing, Building C, Tianyin Mansion, 2C, Fuxingmennan Street, Xichang District,
Beijing, PRC as soon as possible but in any event by 2nd July, 2003. The
enclosed form of proxy should be completed and returned to the Company's H
Share Registrar, Hong Kong Registrars Limited, at Room 1901-5, 19/F, Hopewell
Centre, 183 Queen's Road East, Hong Kong or the registered office of the
Company in accordance with the instructions printed thereon as soon as
practicable and in any event by not later than 24 hours before the time
appointed for the holding of the EGM. Completion and return of the form of
proxy will not preclude you from attending and voting in person at the meeting
should you so wish.
8. RECOMMENDATION
According to the requirements of the Hong Kong Listing Rules, the
Independent Directors will advise the Independent Shareholders in connection
with the Acquisition (including the Transfer Agreement). BNP Paribas Peregrine
has been appointed as an independent financial adviser to advise the
Independent Directors with respect to the fairness and reasonableness of the
Acquisition (including the Transfer Agreement).
The Independent Directors, having taken into account the advice of BNP
Paribas Peregrine, consider the terms of the Transfer Agreement to be fair and
reasonable insofar as the Independent Shareholders are concerned and consider
the transaction contemplated by the Transfer Agreement to be in the interests
of the Company and its shareholders. Accordingly, the Independent Directors
recommend that the Independent Shareholders vote in favour of the resolutions
to approve the Acquisition and the Transfer Agreement at the Extraordinary
General Meeting.
9. OTHER INFORMATION
Your attention is also drawn to the letter from the Independent
Directors and the letter from BNP Paribas Peregrine, which sets out its advice
to the Independent Directors, and the additional information set out in the
appendices of this circular.
Yours faithfully,
For and on behalf of
Huaneng Power International, Inc.
Wang Xiaosong
Vice Chairman
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LETTER FROM THE INDEPENDENT DIRECTORS
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[GRAPHIC OMITTED]
HUANENG POWER INTERNATIONAL, INC.
(A Sino-foreign joint stock limited company incorporated in the
People's Republic of China)
Registered office:
West Wing, Building C
Tianyin Mansion
2C Fuxingmennan Street
Xicheng District
Beijing 100031
The People's Republic of China
12th June, 2003
To the Independent Shareholders
Dear Sir or Madam,
CONNECTED TRANSACTION
We, the Independent Directors of Huaneng Power International, Inc., are
advising the Independent Shareholders in connection with the Acquisition,
details of which are set out in the letter from the Board contained in the
circular ("Circular") of the Company to the Shareholders dated 12th June,
2003, of which this letter forms a part. Terms defined in the Circular shall
have the same meanings when used herein unless the context otherwise requires.
Under the Hong Kong Listing Rules, the Acquisition and the Transfer
Agreement constitute connected transactions for the Company. Accordingly, the
Acquisition and the Transfer Agreement will require the approval of the
Independent Shareholders at the EGM.
We wish to draw your attention to the letter of advice from BNP Paribas
Peregrine set out on pages 16 to 25 of the Circular. We have discussed the
letter and the opinion contained in it with BNP Paribas Peregrine.
We have also considered the opinion of Guotai Junan with respect to the
Acquisition.
Having considered, inter alia, the factors and reasons considered by,
and the opinion of, BNP Paribas Peregrine, as stated in its aforementioned
letter, we consider the Acquisition and the Transfer Agreement to be fair and
reasonable so far as the Independent Shareholders are concerned. Accordingly,
we recommend that the Independent Shareholders vote in favour of the ordinary
resolutions in the Notice of EGM set out at the end of the Circular to be
proposed at the EGM to be held on 22nd July, 2003 and thereby approve the
Acquisition and the Transfer Agreement.
Yours faithfully,
Gao Zongze Zheng Jianchao Qian Zhongwei Xia Donglin
Independent Directors
------------------------------------------------------------------------------
LETTER FROM BNP PARIBAS PEREGRINE
------------------------------------------------------------------------------
[GRAPHIC OMITTED]
The Independent Directors
Huaneng Power International, Inc.
West Wing, Building C
Tianyin Mansion
2C Fuxingmennan Street
Xicheng District
Beijing 100031
The People's Republic of China
12th June, 2003
Dear Sirs,
CONNECTED TRANSACTION
INTRODUCTION
We refer to our appointment as the independent financial adviser to
advise the Independent Directors in respect of the Acquisition, details of
which are set out in the letter from the Board contained in the circular of
the Company dated 12th June, 2003 (the "Circular") of which this letter forms
part. Terms defined in the Circular shall have the same meanings when used in
this letter unless the context requires otherwise.
On 5th June, 2003, the Company entered into the Transfer Agreement with
Huaneng Group. As at the Latest Practical Date, Huaneng Group is the parent
company of HIPDC which is the controlling shareholder of the Company and owns
2,554,840,000 domestic shares in the Company, representing approximately
42.58% of the issued share capital (comprising domestic shares and H shares)
of the Company. Accordingly, the Acquisition contemplated by the Transfer
Agreement constitutes a connected transaction for the Company under the Hong
Kong Listing Rules. As the sum of the consideration for acquiring the Huaneng
Group Interest payable to Huaneng Group (being RMB550 million) together with
the future equity commitment of the Company, which arises as a result of the
Acquisition (being approximately RMB730 million), is greater than 3% of the
latest published consolidated net tangible assets of the Company, the
Acquisition and the Transfer Agreement are therefore subject to the disclosure
requirement and Independent Shareholders' approval under the Hong Kong Listing
Rules.
[GRAPHIC OMITTED]
The Independent Directors have been appointed to consider the terms of
the Acquisition and to advise the Independent Shareholders in relation to the
Acquisition. We have been appointed as the independent financial adviser to
the Independent Directors to advise on the fairness and reasonableness of the
terms of the Acquisition in accordance with the requirements of the Hong Kong
Listing Rules.
Apart from normal professional fees for our services to the Company as
described above, no arrangement exists whereby we will receive any fees or
benefits from the Company, Huaneng Group, their respective subsidiaries, or
any of their respective associates (as defined under the Hong Kong Listing
Rules). We are independent of the directors, chief executive or substantial
shareholders of the Company, Huaneng Group, any of their respective
subsidiaries or their respective associates (as defined under the Hong Kong
Listing Rules) and we consider ourselves suitable to give independent
financial advice to the Independent Directors in relation to the Acquisition.
As at the Latest Practicable Date, a wholly-owned subsidiary ("BNP Paribas
Subsidiary") of the holding company of BNP Paribas Peregrine Capital Limited
("BNP Paribas Peregrine" together with its holding company and the
subsidiaries of its holding company as "BNP Paribas Group") held 966,000 H
Shares in the Company, representing approximately 0.016% of the issued share
capital (comprising domestic shares and H shares) of the Company. We do not
consider this shareholding interests would affect the objectivity of our
advice, given the fact that we are not a party to the Transfer Agreement, the
interests of the BNP Paribas Subsidiary in the Company is the same as the
Independent Shareholders in respect of the Acquisition, the value of the H
shares in the Company held by BNP Paribas Subsidiary is immaterial in terms of
either the consolidated gross or net assets of BNP Paribas Group, and there is
a Chinese wall between BNP Paribas Subsidiary and BNP Paribas Peregrine. As
such, BNP Paribas Subsidiary is entitled to vote at the EGM.
In arriving at our advice, we have relied on the information and facts
supplied, and the opinions expressed by the management of the Company, its
financial adviser and/or the Directors and assumed that all statements,
opinions and representations made were true and accurate at the time they were
made and continue to be true and accurate at the date of the Circular. We have
relied on such information and considered that we have been provided with and
have reviewed sufficient information and opinion to reach an informed view and
to justify our reliance on the accuracy of the information contained in the
Circular. We have no reasons to believe that any material information has been
withheld, or doubt the truth or accuracy of the information provided. We have
assumed that the intentions and plans of the Directors regarding the future
operations of each of the Target Power Plants can be materialised. We have
not, however, carried out any independent verification of such information,
nor have we conducted an independent investigation into the business and
affairs of the Company or each of its subsidiaries or each of the Target Power
Plants.
TRANSACTION IN SUMMARY
On 5th June, 2003, the Company entered into the Transfer Agreement with
Huaneng Group, pursuant to which, the Company has agreed to acquire from
Huaneng Group the entire assets and liabilities of Xindian Power Plant, a 60%
equity interests in Yushe Power Plant and a 55% equity interests in Qinbei
Power Plant for an aggregate consideration of RMB550 million (approximately
HK$519 million) payable in cash. Such consideration will be satisfied by
internal resources of the Company.
As noted in the letter from the Board, the Target Power Plants consist
of both projects that are in operation (being Xindian Phase I, Xindian Phase
II and Yushe Phase I together the "Operating Projects") and projects that are
under construction (being Yushe Phase II and Qinbei Phase I together the
"Projects Under Construction"), details of which can be summarised as follows:
Percentage
interests
held by
Huaneng
Group Year of
immediately operation/
prior to Expected Operation
Target the year of installed capacity Planned installed
Power Plants Acquisition Status operation (MW) capacity (MW)
(%)
Attributable Attributable
Based to Huaneng Based to Huaneng
on the on Group (on the Group (on
entire an equity entire an equity
interests basis) interests basis)
Xindian Power Plant
Phase I 100 In operation 1977 200(1) 200(1)
Phase II 100 In operation 2002 450 450
Yushe Power Plant
Phase I 60 In operation 1994 200 120
Phase II 60 Under 2004 600 360
construction
Qinbei Power Plant
Phase I 55 Under 2004 & 2005 1,200 660
construction
------ ------- ------- -------
Total 850 770(2) 1,800 1,020
====== ======= ======= =======
Notes:
1. The 2 x 100MW oil-fueled generation units under Xindian Phase I
will be closed down for transformation to coal-fueled generation
units after the Closing and before the end of 2003.
2. In view of the reason set out in note 1 above, the total net
operation installed capacity of the Target Power Plants will
become 570MW before the end of 2003.
PRINCIPAL REASONS AND FACTORS CONSIDERED
In arriving at our advice to the Independent Directors, we have
considered the following principal reasons and factors:
Reasons for the Acquisition
Business operation and strategy
The Company develops, constructs, operates and manages large thermal
power plants in China nationwide. As stated in the Company's annual report
2002, the Company will continue to actively and steadily expand its assets
scale, including acquiring assets from the parent company and selecting
suitable opportunities to acquire assets outside the parent company.
Enhancement to operation installed capacity
As stated in the letter from the Board, the Acquisition will enlarge the
operation scale and regional scope of the Company and increase profitability
and further strengthen the position of the Company as one of the largest
independent power generation companies in China. The average availability
factor of the Target Power Plants in operation (excluding Xindian Phase I,
which will be closed down for transformation to coal-fueled generation units
after the Closing and before the end of 2003) for 2002 reached 92.6%, which is
slightly higher than the average level of the Company in the previous year
(92.5%).
The total on-grid output of the Target Power Plants (excluding Xindian
Phase I) in 2002 was approximately 3.56 billion kWh, of which Huaneng Group
accounted for 3.07 billion kWh (equivalent to approximately 4.6% of the 67.33
billion kWh on-grid output of the Company in 2002). Immediately after
completion of the Acquisition, the net installed capacity (on an equity basis)
owned by the Company will increase by 770 MW and aggregate net installed
capacity (on an equity basis) will increase from 14,780MW to 15,550 MW,
representing an increase of approximately 5.2%. However, Independent
Shareholders should note that the 2 x 100MW oil-fueled generation units under
Xindian Phase I will be closed down for transformation to coal-fueled
generation units after the Closing and before the end of 2003.
Besides, the Acquisition will further increase the net installed
capacity under construction of the Company by 1,020 MW.
Capturing market shares in the central region of the PRC
The Directors believe that the Acquisition will further strengthen the
market position of the Company in Shandong Province which is undergoing rapid
economic growth with strong demand for power. At the same time, the Company
will for the first time enter into the power market of Henan Province and
Shanxi Province which are important energy bases in China with rapid growth in
power consumption.
Having considered the above reasons for the Acquisition, we concur with
the view of the Directors that the Acquisition is in line with the business
strategy of the Company.
Consideration
As stated in the letter from the Board, the consideration of RMB550
million (the "Consideration") payable by the Company to Huaneng Group in cash
under the Acquisition, was based on normal commercial terms and was arrived at
after arm's length negotiations between the Company, Huaneng Group and their
respective financial advisers. Such Consideration was determined after taken
into the account various factors including the losses of the first phase of
Xindian Power Plant, the market environments, the technical and operating
conditions of the Target Power Plants, the earnings potentials of the Target
Power Plants and their abilities to generate cash flow. In view of the
relevant requirements in the PRC, the Directors have engaged Zhonghua who is
an independent qualified assets appraisal firm in the PRC to prepare a
valuation in connection with the Acquisition. As stated in the letter from the
Board, in considering the Acquisition price, the Company has taken into
account the appraisal by Zhonghua, which valued Huaneng Group Interest at
RMB541.35 million as at 31st December, 2002 using replacement cost method.
Nevertheless, we have not relied on such valuation in arriving at our opinion
as Zhonghua is a qualified assets appraisal firm in the PRC but does not carry
on such business in Hong Kong.
In assessing the fairness and reasonableness of the Consideration
payable by the Company to Huaneng Group under the Acquisition, we consider it
appropriate to conduct our analysis for the Target Power Plants as well as for
the Operating Projects for the following reasons:
o the Projects Under Construction will only become operational in
2004 and 2005 respectively and, accordingly, have yet to record
any earnings;
o the installed capacity attributable to Huaneng Group's interests
in the Project Under Construction will represent a significant
portion of the total installed capacity of the Target Power Plants
upon completion of the construction work; and
o the equity to be committed by the Company in respect of the
Projects Under Construction of RMB730 million is also material
when compared to the Consideration payable by the Company to
Huaneng Group.
In formulating our opinion, we have conducted the ratio analysis set out
below and have considered such ratios of certain listed companies principally
engaged in the generation and sale of power in the Asia Pacific (ex-Japan)
region.
The financial information applied in conducting the ratio analysis is
derived from the unaudited financial statements of the Target Power Plants as
at 31st December, 2002 prepared in accordance with the IFRS. For the purpose
of comparison, we have considered the following multiples:
o Price-earning multiples ("P/E")
Based on the net profit of the Target Power Plants attributable to
Huaneng Group Interest for the year ended 31st December, 2002 of
approximately RMB56.9 million, the Consideration would represent
an earning multiple of 9.7 times.
For analysis purpose only, on the assumption that the acquisition
price for the Projects Under Construction were determined on a
"dollar-to-dollar" basis based on the equity contributed to the
Projects Under Construction by Huaneng Group up to 31st December,
2002 of approximately RMB109.3 million, the consideration for the
Operating Projects ("Consideration For Operating Interests") would
be approximately RMB440.7 million. Based on the aforesaid, the
Consideration For Operating Interests implies a multiple of
approximately 6.5 times the net profit attributable to Huaneng
Group's interests in the Operating Projects for the year ended
31st December, 2002 of approximately RMB67.9 million.
o Enterprise value ("EV") per megawatt ("MW")
It should be noted that the EV for the Operating Projects refers
to the sum of the Consideration For Operating Interests and their
respective net debt as at 31st December, 2002. As the Company
intends to close down the 2x100MW generation units in Xindian
Phase I before the end of 2003 and the net installed capacity of
the Operating Projects will be reduced to 570MW by then, we
consider it appropriate to disregard these generation units when
calculating the EV per MW. As such, the implied EV per MW
calculated below were based on the net operational installed
capacity of 570MW and did not take into account the potential
additional capacity in terms of MW of the Projects Under
Construction.
The Consideration and the Consideration For Operating Interests
imply an EV of approximately US$0.349 million (approximately
RMB2.9 million) per MW and US$0.270 million (approximately RMB2.2
million) per MW respectively.
o EV to earnings before interests, taxes, depreciation and
amortisation ("EBITDA")
The EBITDA attributable to the Huaneng Group Interest and the
EBITDA attributable to the Huaneng Group's interests in the
Operating Projects for the year ended 31st December, 2002 were
approximately RMB242.6 million and approximately RMB244.5 million
respectively. The Consideration and the Consideration For
Operating Interests imply an EV/EBITDA multiple of approximately
6.8 times and approximately 5.2 times respectively.
o Price to book value ("P/BV")
Based on the aggregate net book value of the Target Power Plants
attributable to Huaneng Group Interest as at 31st December, 2002
of approximately RMB113.4 million, the Consideration would
represent approximately 4.8 times such book value.
Taking account of the equity contributed to the Projects Under
Construction by Huaneng Group up to 31st December, 2002, the
Consideration For Operating Interests represents a multiple of
approximately 7.9 times the aggregate net book value attributable
to Huaneng Group's interests in the Operating Projects as at 31st
December, 2002 of approximately RMB55.8 million.
The following table sets out the relevant ratios of certain comparable
listed companies located in Hong Kong, the PRC and other Asian countries based
on their respective market price as at the Latest Practicable Date and their
latest publicly available full year financial information.
EV/
Company Name Location P/E EV/MW EBITDA P/BV
(x) US$m/MW (x) (x)
Hong Kong / PRC
Hong Kong companies
CLP Holdings Ltd. Hong Kong 11.2 N/M 10.4 2.2
HongKong Electric Holdings Ltd. Hong Kong 9.6 N/M 8.2 1.7
Average 10.4 N/M 9.3 2.0
H shares companies
Beijing Datang Power Generation Co. Ltd. PRC 12.5 0.456 5.6 1.2
The Company PRC 13.0 0.508 6.8 1.7
Shandong Int'l Power Development Co. Ltd. PRC 9.2 0.413 5.7 1.3
Average 11.5 0.459 6.0 1.4
B shares companies
Guangdong Electric Power Development Co. Ltd PRC 11.0 0.607 4.4 1.6
Shenzhen Nanshan Power Station Co. Ltd. PRC 11.0 0.657 5.8 3.0
Zhejiang Southeast Electric Power Co. Ltd. PRC 20.0 0.680 8.9 1.8
Heilongjiang Electric Power Co. Ltd PRC 22.9 0.556 12.3 1.8
Average 16.2 0.625 7.8 2.1
Other Asian Countries
Tenaga Nasional Berhad Malaysia 23.1 N/M 12.4 1.6
Malakoff Berhad Malaysia 9.5 0.887 6.2 1.5
YTL Power International Berhad Malaysia 11.5 N/M 15.2 1.5
Electricity Generating Public Co. Ltd. Thailand 8.2 0.576 7.1 1.2
Ratchaburi Electricity Generating Holding Public Co. Ltd. Thailand 6.9 0.514 9.6 1.6
Korea Electric Power Corp. South 4.1 N/M 3.4 0.4
Korea
Average 10.6 0.659 9.0 1.3
Overall average 12.2 0.585 8.1 1.6
Implied multiples for the Consideration 9.7 0.349 6.8 4.8
Implied multiples for the Consideration For Operating 6.5 0.270 5.2 7.9
Interests
Source: Bloomberg
Notes:
For the purpose of comparison only:
(1) The ratios were calculated on the basis of the companies' respective
market capitalisation determined as according to Bloomberg as at the
Latest Practicable Date and the companies' financial data as at the end
of financial year 2002 as according to Bloomberg and the companies'
respective annual reports.
(2) Price refers to market capitalisation as at the Latest Practicable Date.
(3) Enterprise Value refers to the sum of market capitalization as at the
Latest Practicable Date and net indebtedness as at the end of financial
year 2002.
(4) Earnings refer to net profit excluding extraordinary items as according
to the financial statements for financial year 2002. The net profit of
the Target Power Plants attributable to Huaneng Group Interest and to
Huaneng Group's interests in the Operating Projects for the year ended
31st December, 2002 include the results of Xindian Phase I, which will
be closed down for transformation to coal-fueled generation units after
the Closing and before the end of 2003.
(5) EBITDA refers to the earnings before interest, tax, amortisation and
depreciation expenses as according to the financial statements for
financial year 2002. The EBITDA of the Target Power Plants attributable
to Huaneng Group Interest and to Huaneng Group's interests in the
Operating Projects for the year ended 31st December, 2002 include the
results of Xindian Phase I, which will be closed down for transformation
to coal-fueled generation units after the Closing and before the end of
2003.
(6) BV refers to net asset value as according to the financial statements
for financial year 2002. The BV of the Target Power Plants attributable
to Huaneng Group Interest and to Huaneng Group's interests in the
Operating Projects as at 31st December, 2002 include the BV of Xindian
Phase I, which will be closed down for transformation to coal-fueled
generation units after the Closing and before the end of 2003.
(7) MW refers to the net installed capacity in megawatt of the respective
companies. The net installed capacity of the Target Power Plants adopted
for the above table is 570MW, taking into consideration that the
Company's intention to close down Xindian Power Plant's first phase
2x100MW after the Acquisition.
(8) We have derived the implied valuation multiples of Huaneng Group's
interest in Operating Projects on the basis of the Consideration For
Operating Interests as at 31st December, 2002.
(9) The country and regional averages are included for the convenience of
the reader only and do not necessarily represent the actual country and
regional averages if other power generation companies are included.
(10) N/M means "not meaningful". As those comparable companies which are also
in businesses other than power generation business, their enterprise
values do not correspond to the installed capacity of their power
generation business owned by them.
(11) An exchange rate of RMB8.3 = US$1.0 has been used.
(12) An exchange rate of HK$7.8 = US$1.0 has been used.
(13) An exchange rate of Malaysian Ringgit 3.8 = US$1.0 has been used.
(14) An exchange rate of Philippines Peso 53.3 = US$1.0 has been used.
(15) An exchange rate of Thai Baht 41.6 = US$1.0 has been used.
(16) An exchange rate of Korean Won 1,200 = US$1.0 has been used.
The respective implied P/E multiple, the EV/EBITDA multiple and the EV
per MV for the Consideration represent discount to the overall average set out
above. The respective implied P/E multiple, the EV/EBITDA multiple and the EV
per MV for the Consideration For Operating Interests represent discount to the
overall average set out above. We consider that this is reasonable given the
size, operation and prospects of the Target Power Plants.
The respective implied P/BV multiple is, however, substantially higher
than the overall average set out above. Nevertheless, it is noted that the net
book value of the Target Power Plants as at 31st December, 2002 was relatively
low as the generation units under Xindian Phase I and Yushe Phase I have been
in operation for approximately 26 years and approximately nine years
respectively and have been significantly depreciated, and there were
significant losses accumulated in the accounts of the Target Power Plants. In
the circumstances, we consider it to be reasonable.
It should, however, be noted that the businesses, operations and
prospects of the Target Power Plants are not completely the same to those
companies set out in the table above. As such, such information should be used
with care.
Financing of the Acquisition and future capital commitment
As stated in the letter from the Board, the Consideration payable to
Huaneng Group will be financed by internal resources of the Company. It is
projected that the total investment to be deployed in the construction of
Yushe Phase II and Qinbei Phase I was approximately RMB2.69 billion and
approximately RMB4.68 billion respectively, in which, 20% of the total
investment of each of Yushe Phase II and Qinbei Phase I will be financed by
shareholders' equity. On the basis that the Company will hold 60% and 55%
equity interests in Yushe Power Plant and Qinbei Power Plant respectively, it
is projected that the equity to be contributed by the Company after the
Acquisition in respect of Yushe Phase II and Qinbei Phase I will be not more
than RMB310 million (subject to adjustments) and RMB420 million (subject to
adjustments) respectively. It was stated in the letter from Board that the
Company will utilise its internal resources to meet such capital commitment.
It was stated in the letter from the Board that any adjustment exceeding
the above amount and any further capital commitments in relation to the Target
Power Plants shall be subject to compliance of the relevant requirements of
the Hong Kong Listing Rules.
Based on the audited financial statements of the Company prepared in
accordance with the IFRS, the cash and cash equivalents held by the Company
and its subsidiaries as at 31st December, 2002 were approximately RMB3,003
million. The Company confirmed that it has sufficient internal resources to
fund the Acquisition and the related capital commitment. We have no reason to
believe that the Company will not be able to fund the Acquistion and the
related capital commitment.
Financial impacts of the Acquisition on the Company
It was stated in the letter from the Board that under the PRC GAAP the
profit after taxation of the Target Power Plants and the profit attributable
to the Huaneng Group Interest for the year ended 31st December, 2002 were
RMB89.77 million and RMB82.12 million respectively. According to the pro forma
calculation, if the Acquisition occurred on 1st January 2002 and assuming that
the internal cash of the Company was used for the Acquisition and taking into
account the appreciation of the value of the fixed assets after revaluation,
together with other factors such as amortization of goodwill, the consolidated
profit of the Company for the year ended 31st December, 2002 would be
increased by RMB46.59 million, representing an increase of 1.14%. We note that
this would represent an enhancement to earnings. Nevertheless, the Independent
Shareholders should note that the PRC GAAP differs in certain material
respects from the IFRS. As stated in the letter from the Board, the aggregate
net profits of the Target Power Plants for the year ended 31st December, 2002
as per the audited accounts prepared in accordance with the PRC GAAP was
approximately RMB90 million and was adjusted to approximately RMB63 million
after taking into account certain unaudited adjustments under the IFRS.
Risk factors
It should be noted that the Target Power Plants consist of Projects
Under Construction. The construction work of these projects may involve a
number of risks, including weather interference, unforeseen engineering,
design, environmental problems, shortages of equipment and materials and
unanticipated cost increases, any of which can give rise to delays or cost
overruns.
As stated in the letter from the Board, the Company will for the first
time enter into the power generation environment of Henan Province and Shanxi
Province. As the Company currently operates power plants in the coastal
regions including Liaoning Province, Hebei Province, Jiangsu Province,
Guangdong Province, Zhejiang Province, Shangdong Province, Fujian Province and
Shanghai Municipal, the operating environment of which may be different from
those in the central region of the PRC.
ADVICE
Having considered the above principal reasons and factors, we consider
that the terms of the Acquisition and the Transfer Agreement are fair and
reasonable so far as the Independent Shareholders taken as a whole are
concerned. Accordingly, we advise the Independent Directors to recommend the
Independent Shareholders to vote in favour of the ordinary resolution to
approve the Acquisition and the Transfer Agreement.
Yours faithfully,
For and on behalf of
BNP Paribas Peregrine Capital Limited
Isadora Li
Managing Director
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APPENDIX I GENERAL INFORMATION
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1. RESPONSIBILITY STATEMENT
This circular includes particulars given in compliance with the Hong
Kong Listing Rules for the purpose of giving information with regard to the
Company. The Directors collectively and individually accept full
responsibility for the accuracy of the information contained in this circular
and confirm, having made all reasonable enquiries, that to the best of their
knowledge and belief there are no other facts the omission of which would make
any statement herein misleading.
2. DISCLOSURE OF INTERESTS
(a) As at the Latest Practicable Date, none of the Directors, chief
executive officer or Supervisors of the Company had any interest
or short position in the shares, underlying shares and/or
debentures (as the case may be) of the Company or any of its
associated corporations (within the meaning of Part XV of the SFO)
which was required to be notified to the Company and the Hong Kong
Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO
(including interest and short position which any such Director,
chief executive or supervisor is taken or deemed to have under
such provisions of the SFO) or which was required to be entered in
the register required to be kept by the Company pursuant to
Section 352 of the SFO or which was otherwise required to be
notified to the Company and the Hong Kong Stock Exchange pursuant
to the Model Code for Securities Transactions by Directors of
Listed Companies as contained in Appendix 10 to the Listing Rules.
(b) As at the Latest Practicable Date, so far as the Directors, chief
executive officer and Supervisors of the Company are aware, each
of the following persons, not being a Director, chief executive or
Supervisor of the Company, had an interest in the Company's shares
which falls to be disclosed to the Company and the Hong Kong Stock
Exchange under the provisions of Divisions 2 and 3 of Part XV of
the SFO:
Shares held/Approximate shareholding percentage
Short
Name of shareholder Interest position
Approximate
percentage Approximate Approximate
of share- percentage percentage
holding of of
in the shareholding shareholding
Company's in the in the
total Company's Company's
Number of issued total issued total
shares share domestic issued
Shares held capital shares H shares
Huaneng International Power domestic 2,554,840,000 42.58% 56.77% - -
Development Corporation shares
(Note 1)
Hebei Provincial Construction domestic 452,250,000 7.54% 10.05% - -
Investment Company shares
Fujian International Trust & domestic 334,850,000 5.58% 7.44% - -
Investment Company shares
Jiangsu Province domestic 312,375,000 5.20% 6.93% - -
International shares
Trust & Investment Company
Liaoning Energy Corporation domestic 229,685,000 3.83% 5.11% - -
shares
The Hongkong and Shanghai H shares 533,532,612 8.89% - 35.56% -
Banking Corporation Ltd.
(Note 2)
Standard Chartered Bank (Note H shares 440,809,982 7.34% - 29.38% -
2)
Citibank N.A. (Note 2) H shares 99,355,303 1.65% - 6.62% -
Note 1: As at the Latest Practicable Date, China Huaneng Group
holds 51.98% of the equity interest in Huaneng
International Power Development Corporation.
Note 2: Such H shares were held through HKSCC Nominees Limited.
Save as disclosed above and so far as the Directors, chief
executive officer and Supervisors of the Company are aware, as at
the Latest Practicable Date, no other person had an interest or
short position in the Company's shares or underlying shares (as
the case may be) which would fall to be disclosed to the Company
and the Hong Kong Stock Exchange under the provisions of Divisions
2 and 3 Part XV of the SFO, or was otherwise a substantial
shareholder (as such term is defined in the Listing Rules) of the
Company.
(c) None of the Directors or Supervisors is materially interested in
any contract or arrangement subsisting at the date of this
circular which is significant in relation to the business of the
Company.
(d) As at the Latest Practicable Date, none of the Directors or
Supervisors had entered, or proposed to enter, into a service
contract with the Company which is not determinable by the Company
within one year without payment of compensation, other than
statutory compensation.
(e) As at the Latest Practicable Date, BNP Paribas Peregrine does not
have any shareholding in the Company or any right (whether legally
enforceable or not) to subscribe for or to nominate persons to
subscribe for securities in the Company.
(f) As at the Latest Practicable Date, none of the Directors or
Supervisors nor BNP Paribas Peregrine had any direct or indirect
interest in any asset which had been acquired, or disposed of by,
or leased to the Company, or was proposed to be acquired, or
disposed of by, or leased to the Company, since 31st December,
2002, the date to which the latest published financial statements
of the Company and its subsidiaries were made up.
3. MATERIAL ADVERSE CHANGE
The Directors are not aware of any material adverse change in the
financial or trading position of the Company since 31st December, 2002, the
date to which the latest published audited financial statements of the Company
and of its subsidiaries were made up.
4. CONSENT
BNP Paribas Peregrine has given and has not withdrawn its written
consent to the issue of this circular with the inclusion of and references to
its name and letter or report (as the case may be), in the form and context in
which they appear.
5. MISCELLANEOUS
(1) The legal address of the Company is at West Wing, Building C,
Tianyin Mansion, 2C Fuxingmennan Street, Xicheng District,
Beijing, The People's Republic of China.
(2) The share registrar of the Company in Hong Kong is Hong Kong
Registrars Limited at Room 1901-5, 19/F, Hopewell Centre, 183
Queen's Road East, Hong Kong.
(3) The secretary of the Company is Mr. Huang Long.
(4) The following is the qualification of the expert who has given an
opinion or advice which is contained in this circular:
BNPParibas Deemed licensed to conduct type 1 (dealing in
Peregrine: securities) and type 6 (advising on corporate
finance) regulated activities under the
Securities and Future Ordinance.
6. DOCUMENTS FOR INSPECTION
Copies of the following documents will be available for inspection at
the offices of Herbert Smith at 23rd Floor, Gloucester Tower, 11 Pedder
Street, Hong Kong during normal business hours on any day (except public
holidays) up to and including 22nd July, 2003:
(1) the Transfer Agreement;
(2) the letter from the Independent Directors as set out in this
circular;
(3) the letter from BNP Paribas Peregrine as set out in this circular;
(4) the written consent referred to in paragraph 4 of this appendix;
(5) the annual report of the Company for the year ended 31st December,
2002; and
(6) the articles of association of the Company.
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NOTICE OF EXTRAORDINARY GENERAL MEETING
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[GRAPHIC OMITTED]
(A Sino-foreign joint stock limited company incorporated in
the People's Republic of China)
Notice is hereby given that an extraordinary general meeting of Huaneng
Power International, Inc. (the "Company") will be held at 9 a.m. on 22nd July,
2003 (Tuesday) at Beijing International Convention Centre at No. 8 Beichen
East Road, Chaoyang District, Beijing, The People's Republic of China, for the
purpose of considering and, if thought fit, passing the following ordinary
resolutions:
Ordinary resolutions:
1. To approve the terms of the Transfer Agreement (as defined in the
announcement made by the Company dated 5th June, 2003) entered into by
the Company and China Huaneng Group on 5th June, 2003, and the
transaction contemplated therein.
2. Approval of the following connected transactions under the Listing Rules
of Shanghai Stock Exchange:
2.1. To consider the arrangement in respect of the guarantees and the
relevant agreements among Henan Huaneng Qinbei Power Generation
Limited Liability Company, Shanxi Huaneng Yushe Power Limited
Liability Company, China Huaneng Group Xindian Power Plant and
China Huaneng Group. (Note 1)
2.2 To consider the loan borrowing arrangement and the relevant
agreement in respect of the loan provided by China Huaneng Group
to Shanxi Huaneng Yushe Power Limited Liability Company (Note 2)
2.3. To consider the arrangement in respect of the deposit and loan
borrowings among Henan Huaneng Qinbei Power Generation Limited
Liability Company, Shanxi Huaneng Yushe Power Limited Liability
Company, China Huaneng Group Xindian Power Plant and China Huaneng
Finance Company. (Note 3)
By Order of the Board
Huang Long
Company Secretary
6th June, 2003
Registered address of the Company:
West Wing, Building C,
Tianyin Mansion,
2C Fuxingmennan Street,
Xicheng District,
Beijing 100031,
The People's Republic of China
Notes:
1. (The terms used hereinafter shall have the same meaning as stated in the
announcement made by the Company dated 5th June, 2003)
(a) According to a maximum amount guarantee contract entered into
between China Huaneng Group and China Construction Bank Henan
Branch on 25th December, 2002, China Huaneng Group agreed to
guarantee the repayment of a loan of an maximum amount of up to
RMB1,463,000,000 owed by Qinbei Power Plant to China Construction
Bank Henan Branch incurred during the period from 1st December,
2002 to 1st December, 2006. As at 31st March, 2003, the amount
guaranteed was RMB190 million.
(b) According to a loan agreement entered into among the former
Preparation Office of Yushe Power Plant, former Huaneng Power
Company and China Construction Bank Shanxi Yushe Power Plant
Special Branch on 15th June, 1994, the former Huaneng Power
Company, pursuant to loan agreement (94) No.1, agreed to guarantee
the repayment of a loan of RMB170 million owed by the Preparation
Office of Yushe Power Plant to China Construction Bank Shanxi
Yushe Power Plant Special Branch. The guarantee obligation was
taken up by China Huaneng Group due to the restructuring of the
China Huaneng Group. As at 31st March, 2003, the amount guaranteed
was RMB10 million.
(c) Pursuant to a guarantee contract between China Huaneng Group,
Yushe Power Plant and China Construction Bank Yushe Power Plant
Special Branch (currently known as China Construction Bank Yushe
Power Plant Branch), China Huaneng Group agreed to guarantee the
repayment of the loan of RMB43.43 million by Yushe Power Plant
under the loan contract (reference number: Gu Ding Zi Chan (95)
No2). As at 31st March, 2003, the amount guaranteed was RMB13.43
million.
(d) Pursuant to a guarantee contract (No. Gong Liu 2001-1) among China
Huaneng Group, Yushe Power Plant and China Construction Bank
Shanxi Province Yushe County Branch, China Huaneng Group agreed to
guarantee the loan of RMB13 million owed by Yushe Power Plant to
China Construction Bank Shanxi Province Yushe County Branch under
the loan agreement (No. Gong Liu 2001-1). As at 31st March, 2003,
the amount guaranteed was RMB13 million.
(e) Pursuant to a loan agreement (No.200131025) entered into among
China Huaneng Group, Yushe Power Plant and China Huaneng Finance
Company, China Huaneng Group agreed to guarantee the loan of RMB35
million owed by the Yushe Power Plant to China Huaneng Finance
Company. As at 31st March, 2003, the amount guaranteed was RMB35
million.
(f) Pursuant to a guarantee contract (No. Bao Zheng 2002-2) among
China Huaneng Group, Yushe Power Plant and China Construction Bank
Shanxi Province Yushe County Branch, China Huaneng Group agreed to
guarantee the loan of RMB30 million owed by Yushe Power Plant to
China Construction Bank Shanxi Province Yushe County Branch under
the loan agreement (No. Gong Liu 2002-4). As at 31st March, 2003,
the amount guaranteed was RMB30 million.
(g) Pursuant to seven guarantee contracts entered into between China
Huaneng Group and China Construction Bank Zibo City Linzi Branch
from 2000 to 2002, China Huaneng Group agreed to guarantee the
repayment of nine loans with an aggregate amount of RMB500 million
owed by Xindian Power Plant to China Construction Bank Zibo City
Linzi Branch. As at 31st March, 2003, the amount guaranteed was
RMB500 million.
As at 31st March, 2003, the total amount guaranteed of the above is
RMB791.43 million.
2. (The terms used hereinafter shall have the same meaning as stated in the
announcement made by the Company dated 5th June, 2003)
According to a loan agreement between China Huaneng Group and Yushe
Power Plant entered into on 25th December, 2000, China Huaneng Group
allowed Yushe Power Plant to use the loans it obtained from the bank
whereby Yushe Power Plant was responsible for the repayment of loans it
used and the interest thereof. The loan amount was RMB65,040,495.06. The
loan period was from 21st December, 1999 to 20th December, 2004 and the
interest rate was 6.21% per annum, to be settled quarterly. The interest
rate did not exceed the prevailing prescribed rate of The People's Bank
of China at the time when the loan agreement was entered into. As at
31st March, 2003, the outstanding loan was RMB16 million.
3. (The terms used hereinafter shall have the same meaning as stated in the
announcement made by the Company dated 5th June, 2003)
(a) As at 31st March, 2003, Yushe Power Plant has deposited with
Huaneng Finance Company as amount of RMB13.73 million,
representing 82.66% of Yushe Power Plant's total deposit. The
interest rate was not lower than the rate offered by the banks at
the time when the deposits were made.
(b) On 9th May, 2003, Qinbei Power Plant entered into a RMB loan
agreement with China Huaneng Finance Company, pursuant to which
China Huaneng Finance Company provided a short term loan of RMB120
million for the period from 9th May, 2003 to 8th May, 2004 at an
interest rate of 0.39825% per month. The interest rate did not
exceed the prevailing prescribed rate of The People's Bank of
China at the time when the loan agreement was entered.
(c) On 2nd November, 2001, Yushe Power Plant entered into a RMB loan
agreement with China Huaneng Finance Company, pursuant to which
China Huaneng Finance Company provided a loan of RMB35 million to
Yushe Power Plant at an interest rate of 0.47025% per month (the
interest rate was adjusted downward to 0.434625% per month from
2nd November, 2002) for the period from 2nd November, 2001 to 1st
November, 2004. On 2nd September, 2002, Yushe Power Plant entered
into a RMB loan agreement with China Huaneng Finance Company,
pursuant to which China Huaneng Finance Company provided a loan of
RMB50 million to Yushe Power Plant at an interest rate of
0.420375% per month for the period from September 2002 to
September 2003. On 28th January, 2003, Yushe Power Plant entered
into a RMB loan agreement with China Huaneng Finance Company,
pursuant to which China Huaneng Finance Company provided a loan of
RMB50 million to Yushe Power Plant at an interest rate of
0.420375% per month for the period from 28th January, 2003 to 27th
January, 2004. The interest rates of the above loans did not
exceed prevailing interest rate of The People's Bank of China at
the time when the loans agreement was made. As at 31st March,
2003, the outstanding loan amount was RMB13.5 million.
(d) On 27th May, 2003, Yushe Power Plant entered into a RMB loan
agreement with China Huaneng Finance Company, pursuant to which
China Huaneng Finance Company provided a loan of RMB41 million to
Yushe Power Plant at an interest rate of 0.39825% per month for
the period from 27th May, 2003 to 26th May, 2004. The interest
rate did not exceed the prevailing interest rate of The People's
Bank of China at the time when the loan agreement was made.
(e) On 9th April, 2003, Xindian Power Plant entered into a RMB loan
agreement with China Huaneng Finance Company, pursuant to which
China Huaneng Finance Company provided a loan of RMB50 million to
Yushe Power Plant at an interest rate of 0.39825% per month for
the period from 9th April, 2003 to 8th April, 2004. The interest
rate did not exceed the prevailing interest rate of The People's
Bank of China at the time when the loan agreement was made.
4. Eligibility for attending the Extraordinary General Meeting
Holders of the Company's foreign Shares whose names appear on the HK$
Dividend foreign Shares Register and/or the US$ Dividend foreign Shares
Register maintained by Hong Kong Registrars Limited and holders of domestic
shares whose names appear on the domestic shares register maintained by the
Company at the close of business on 23rd June, 2003 are eligible to attend the
Extraordinary General Meeting.
5. Proxy
(i) A member eligible to attend and vote at the Extraordinary General
Meeting is entitled to appoint, in written form, one or more
proxies to attend and vote on behalf of him. A proxy needs not be
a shareholder.
(ii) A proxy should be appointed by a written instrument signed by the
appointor or its attorney duly authorised in writing. If the form
of proxy is signed by the attorney of the appointor, the power of
attorney authorising that attorney to sign or other authorisation
document(s) shall be notarised.
(iii) To be valid, the power of attorney or other authorisation
document(s) which have been notarised together with the completed
form of proxy must be delivered, in the case of holders of
domestic shares, to the Company and, in the case of holders of
foreign Shares, to Hong Kong Registrars Limited, not less than 24
hours before the time designated for holding of the Extraordinary
General Meeting.
(iv) A proxy may exercise the right to vote by a show of hands or by
poll. However, if more than one proxy is appointed by a
shareholder, such proxies shall only exercise the right to vote by
poll.
6. Registration procedures for attending the Extraordinary General Meeting
(i) A shareholder or his proxy shall produce proof of identity when
attending the meeting. If a shareholder is a legal person, its
legal representative or other persons authorised by the board of
directors or other governing body of such shareholder may attend
the Extraordinary General Meeting by producing a copy of the
resolution of the board of directors or other governing body of
such shareholder appointing such persons to attend the meeting.
(ii) Holders of foreign Shares and domestic shares intending to attend
the Extraordinary General Meeting should return the reply slip for
attending the Extraordinary General Meeting to the Company on or
before 2nd July, 2003.
(iii) Shareholders may send the above reply slip to the Company in
person, by post or by fax (Attn: The Secretary office of the
Board).
7. Closure of Register of Members
The register of members of the Company will be closed from 22nd June,
2003 to 21st July, 2003 (both days inclusive).
8. Other Businesses
(i) The Extraordinary General Meeting will not last for more than half
day. Shareholders who attend shall bear their own travelling and
accommodation expenses.
(ii) The address of the share registrar for Foreign Shares of the
Company, Hong Kong Registrars Limited is at:
1901-5
19/F., Hopewell Centre
183 Queen's Road East,
Hong Kong
(iii) The registered address of the Company is at:
West Wing, Building C,
Tianyin Mansion,
2C Fuxingmennan Street,
Xicheng District,
Beijing 100031,
The People's Republic of China
Telephone No.: (+86)-10-66491999
Facsimile No.: (+86)-10-66491860