Datang Intnl Pwr Gen - Proxy Solicitation & Information Statement 2015

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in DATANG INTERNATIONAL POWER GENERATION CO., LTD. , you should at once hand this circular to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make 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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(a sino-foreign joint stock limited company incorporated in the People’s Republic of China) (Stock Code: 00991)

MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 3 to 8 of this circular. A letter from the Independent Board Committee is set out on page 9 to page 11 of this circular. A letter from Quam Capital containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 11 to 21 of this circular.

The Company will convene the EGM at the Summer Room of 2/F, The Westin Beijing Financial Street, No. 9B Financial Street, Xicheng District, Beijing, the PRC on 29 October 2015 (Thursday) at 9:30 a.m. The notice convening the EGM has been despatched to the shareholders on 11 September 2015.

Completion and return of the proxy form shall not preclude you from attending and voting in person at the EGM or at any adjourned meetings should you so wish.

13 October 2015

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . . 9
LETTER FROM QUAM CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
APPENDIX I – FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . . . . . . . . . . . . 22
APPENDIX II – GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

“associate(s)”	has the meaning ascribed to it under the Listing Rules
“Board”	the board of directors
“CDC”	China Datang Corporation, a State-owned enterprise established
	under the laws of the PRC and is a controlling shareholder of the
	Company. CDC and its subsidiaries own approximately 34.77%
	of the issued share capital of the Company as at the Latest
	Practicable Date
“Company”	Datang International Power Generation Co., Ltd., a sino-foreign
	joint stock limited company incorporated in the PRC on 13
	December 1994, whose H Shares are listed on the Stock Exchange
	and the London Stock Exchange and whose A Shares are listed on
	the Shanghai Stock Exchange, details of which are set out in the
	section headed “Information of the Parties”
“connected person”	has the meaning ascribed to it under the Listing Rules
“connected transaction(s)”	has the meaning ascribed to it under the Listing Rules
“Director(s)”	the director(s) of the Company
“EGM”	the extraordinary general meeting of the Company to be held at
	Summer Room of 2/F, The Westin Beijing Financial Street, No.
	9B Financial Street, Xicheng District Beijing, the PRC on 29
	October 2015 (Thursday) at 9:30 a.m. to consider and approve,
	among others, the Leasing and Factoring Business Cooperation
	Agreement
“Group”	the Company and its subsidiaries
“Independent Board Committee”	the independent board committee of the Company, comprising
	five independent non-executive Directors, and each of them
	does not have any material interest in the Leasing and Factoring
	Business Corporation Agreement
“Independent Shareholders”	has the meaning ascribed to it under the Listing Rules
“Latest Practicable Date”	9 October 2015, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information in this
	circular

DEFINITIONS

“Leasing and Factoring Business	the leasing and factoring business cooperation agreement entered
Cooperation Agreement”	into between the Company and Shanghai Datang Financial Lease
	Company on 11 September 2015
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“PRC”	the People’s Republic of China
“Quam Capital”	Quam Capital Limited, a licensed corporation to carry out type 6
	(advising on corporate finance) regulated activity under the SFO,
	being the independent financial adviser to the Independent Board
	Committee and the Independent Shareholders in respect of the
	Leasing and Factoring Business Cooperation Agreement
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Shanghai Datang Financial	Shanghai Datang Financial Lease Co., Ltd., details of which are
Lease Company”	set out in the section headed “Information of the Parties”
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“%”	percent

LETTER FROM THE BOARD

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(a sino-foreign joint stock limited company incorporated in the People’s Republic of China) (Stock Code: 00991)

Executive Directors: Mr. Wu Jing

Non-executive Directors:

Mr. Chen Jinhang (Chairman) Mr. Hu Shengmu Mr. Liang Yongpan Mr. Cao Xin Mr. Cai Shuwen Mr. Liu Haixia Ms. Guan Tiangang Mr. Yang Wenchun

Office address: No.9 Guangningbo Street Xicheng District Beijing, 100033 the PRC

Principal place of business in Hong Kong: c/o Eversheds 21/F, Gloucester Tower The Landmark 15 Queen’s Road Central Hong Kong

Independent non-executive Directors:

Mr. Jiang Guohua Mr. Feng Genfu Mr. Luo Zhongwei Mr. Liu Huangsong Mr. Jiang Fuxiu

13 October 2015

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS

BACKGROUND

On 11 September 2015, the Company entered into the Leasing and Factoring Business Cooperation Agreement with Shanghai Datang Financial Lease Company, pursuant to which, Shanghai Datang Financial Lease Company shall provide support on financial leasing and factoring business to the Company and its subsidiaries with a principal of not exceeding RMB10.0 billion for every 12 months from the effective date of the agreement for a term of 36 months from the date of entering into the agreement.

LETTER FROM THE BOARD

The purpose of this circular is:

(1) to provide you with further details of the Leasing and Factoring Business Cooperation Agreement;
(2) to set out the recommendation of the Independent Board Committee in respect of the Leasing and Factoring Business Cooperation Agreement; and
(3) to set out the letter of advice from Quam Capital to the Independent Board Committee and the Independent Shareholders in respect of the Leasing and Factoring Business Cooperation Agreement.

Major Terms:

In accordance with the business principles of a financial leasing company, Shanghai Datang Financial Lease Company shall provide the Company and its subsidiaries with support on leasing and factoring business with a principal of not exceeding RMB10.0 billion for every 12 months (from the effective date of the agreement) for the investment and construction of key projects of the Company in areas including thermal power, hydropower, wind power and recycling economy.
By making use of its professional advantages in the financial area, Shanghai Datang Financial Lease Company shall provide the Company with various financial consulting services such as investment and financing consulting, financial advisory, financial leasing consulting, receivables factoring products design and transaction arrangements.
Within the scope of the business development and planning of the Company, Shanghai Datang Financial Lease Company shall assist the Company to choose suitable lessees and projects, and design and provide customized leasing and factoring business proposals.
Shanghai Datang Financial Lease Company shall provide the Company with the most favourable rates for lease fees pursuant to the relevant policies and regulations of the PRC and in line with the supply and demand of capitals in the market as well as the different structural features of different lease and factoring products. The general rates for lease fees shall be equivalent to or more favourable than those offered by other domestic financial leasing companies in China for providing similar services.
The agreement shall become effective when it is duly signed by the parties and affixed with their respective company seals and upon the approval by the internal authority of each of the parties, including obtaining approval of the agreement by the independent Shareholders at the general meeting.

LETTER FROM THE BOARD

Pricing policy and control measures:

After taking future development and financing plans into consideration, the Company has confirmed the financial leasing and factoring business with a principal of not exceeding RMB10.0 billion for every 12 months from the effective date of the agreement.
Prior to cooperation with Shanghai Datang Financial Lease Company, the Company shall collect information about the terms and conditions of the relevant transactions and their respective interest rates from major domestic leasing companies in China who are independent of the Company and its connected persons, and compare them with the benchmark interest rate on term loans issued by the People’s Bank of China to ensure that the Company receives the most favourable terms, the general rates for lease fees shall be equivalent to or more favourable than those offered by other domestic financial leasing companies in China, and the Company’s overall interests will be maximised.

Annual caps:

	11 September 2015	1 January 2016	1 January 2017	1 January 2018
	to	to	to	to
Transaction period	31 December 2015	31 December 2016	31 December 2017 10 September 2018
Principal	RMB3.0 billion	RMB10.0 billion	RMB10.0 billion	RMB7.0 billion

The above proposed annual caps are determined with reference to the financing plan of the Company which is derived from the expected demand of capital of the Company for the coming 36 months, after principally considering that (i) approximately two third (2/3) of the principal of the financial leases will be used for the replacement of part of the existing loans upon expiration as the Company anticipates that approximately RMB40 billion to RMB60 billion of the loans of the Company will be expired in each of 2016-2018; and (ii) approximately one third (1/3) of the principal of the financial leases will be used for fulfilling part of the future capital needs for construction of existing and new projects which were approved by the Board, including but not limited to the Sichuan Dadu River Huangjinping Hydropower Station Project (a project involving generating units with a total installed capacity of 850MW and with a total investment amount of approximately RMB11.768 billion), and the Sichuan Dadu River Changheba Hydropower Station Project (a project involving generating units with a total installed capacity of 2,600MW and with a total investment amount of approximately RMB21.905 billion).

After considering the growing importance of lease financing as a financing alternative under the general debt financing condition and taxation arrangements in China, and particularly, the fact that Shanghai Datang Financial Lease Company has been established on 31 March 2015 for providing more convenient, effective and efficient financial leasing as well as factoring products design services to the Company when compared to other financial leasing companies, the Company plans to increase the amounts of lease financing, and also the proportion of lease financing to the aggregate debt financing of the Group for the period from 11 September 2015 to 10 September 2018.

LETTER FROM THE BOARD

In view of the above, the Board considers that such annual caps and the determination basis are fair and reasonable so far as the shareholders are concerned and in the interest of both the Company and the shareholders as a whole.

Historical transaction amounts

Shanghai Datang Financial Lease Company was established on 31 March 2015. The Company did not conduct any transaction in relation to financial leasing and factoring business with Shanghai Datang Financial Lease Company in the past.

REASONS FOR AND BENEFITS OF ENTERING INTO THE LEASING AND FACTORING BUSINESS COOPERATION AGREEMENT

Relevant arrangements under the Leasing and Factoring Business Cooperation Agreement are beneficial to the Company to obtain financing support and relevant financing services at a lower-thanmarket interest rate, so as to further lower its capital costs; and to further strengthen the Company’s and relevant unit’s negotiation power when deploying the financing leasing business with other leasing companies. Meanwhile, Shanghai Datang Financial Lease Company would be able to develop a deeper understanding in the operation of the Company and relevant units, which in turn would be able to provide more convenient, effective and efficient financial leasing as well as factoring products design services to the Company when compared to those services provided by other financial leasing companies.

The Directors (including the independent non-executive Directors) are of the view that the relevant terms of the Leasing and Factoring Business Cooperation Agreement are fair and reasonable, have been entered into after arm’s length negotiation between all parties thereto and determined on normal commercial terms and are in the interests of the Company and its Shareholders as a whole.

INFORMATION OF THE PARTIES

The Company was established in December 1994 and is principally engaged in the construction and operation of power plants, the sale of electricity and thermal power, the repair and maintenance of power equipment and power related technical services. The Group’s main service areas are in the PRC.

LETTER FROM THE BOARD

CDC was established on 9 March 2003 with registered capital of RMB18.009 billion. It is principally engaged in the development, investment, construction, operation and management of power energy, organisation of power (thermal) production and sales; manufacturing, repair and maintenance of power equipment; power technology development and consultation; power engineering, contracting and consultation of environmental power engineering; development of new energy as well as development and production of power related coal resources.
Shanghai Datang Financial Lease Company is a subsidiary of CDC with registered capital of approximately RMB1.0 billion, which legal representative is Chi Rundong and registered address is No. 530, Zhengding Road, China (Shanghai) Pilot Free-Trade Zone. Shanghai Datang Financial Lease Company is principally engaged in the financial leasing business, leasing business, purchase and leasing of properties in the PRC and from overseas countries, treatment of residual value of and maintenance of leased properties, consultation and guarantee for leasing transactions, and commercial factoring business related to its principal businesses.

LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, CDC together with its subsidiaries hold 34.77% of the issued share capital of the Company. Since Shanghai Datang Financial Lease Company is an indirectly owned subsidiary of CDC, Shanghai Datang Financial Lease Company is a connected person of the Company, and the Leasing and Factoring Business Cooperation Agreement and the transactions thereunder constitute continuing connected transactions of the Company.

Since one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the transactions under the Leasing and Factoring Business Cooperation Agreement are all above 5%, the Leasing and Factoring Business Cooperation Agreement and the transactions thereunder are subject to the requirements of reporting, announcement and approval by independent Shareholders of the Company under Chapter 14A of the Listing Rules.

Since one or more of the applicable percentage ratios in respect of the transaction under the Leasing and Factoring Business Cooperation Agreement are above 25% but less than 75%, such transaction constitutes a major transaction of the Company, and is subject to the requirements of reporting, announcement and approval by Shareholders of the Company under Chapter 14 of the Listing Rules.

The Company will disclose the relevant details of the relevant transactions in the next annual report and accounts of the Company in accordance with the relevant requirements as set out in Chapter 14A of the Listing Rules.

LETTER FROM THE BOARD

BOARD’S APPROVAL

None of the Directors has any material interest in the Leasing and Factoring Business Cooperation Agreement. Those connected Directors, including Chen Jinhang, Hu Shengmu and Liang Yongpan, who are, or have been, the principal management staff of CDC, have abstained from voting at the Board’s meeting for approval of the relevant transactions in accordance with the requirements of the listing rules of the Shanghai Stock Exchange.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

EGM

The Company will convene the EGM to, among other things, consider and approve the Leasing and Factoring Business Cooperation Agreement.

Any Shareholder with a material interest in the transactions and its associates shall abstain from voting at the relevant resolution to approve the Leasing and Factoring Business Cooperation Agreement and its annual caps at the EGM. Therefore, CDC and its associates, which hold approximately 34.77% of the issued share capital of the Company as at the Latest Practicable Date, shall abstain from voting at the EGM in approving the Leasing and Factoring Business Cooperation Agreement and its annual caps.

RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee as set out on pages 9 to 10 of this circular which contains its recommendation to the Independent Shareholders on the terms of the Leasing and Factoring Business Cooperation Agreement. Your attention is also drawn to the letter of advice received from Quam Capital, the independent financial adviser to the Independent Board Committee and the Independent Shareholders as set out on pages 11 to 21 of this circular which contains, among others, its advice to the Independent Board Committee and the Independent Shareholders in relation to the terms of the Leasing and Factoring Business Cooperation Agreement, the casting of votes for or against the resolution approving the Leasing and Factoring Business Cooperation Agreement by poll at the EGM as well as the principal factors and reasons considered by it in concluding its advice.

The Directors consider that the terms of the Leasing and Factoring Business Cooperation Agreement are fair and reasonable and in the interest of the Shareholders and the Company as a whole and they recommend the Shareholders to vote in favour of the relevant resolution at the EGM.

Yours faithfully, By Order of the Board of Datang International Power Generation Co., Ltd.

Ying Xuejun

Acting Company Secretary

LETTER FROM INDEPENDENT BOARD COMMITTEE

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(a sino-foreign joint stock limited company incorporated in the People’s Republic of China) (Stock Code: 00991)

Office address: No.9 Guangningbo Street Xicheng District Beijing, 100033 The PRC

13 October 2015

To the Independent Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS

We refer to the circular issued by the Company to the shareholders dated 13 October 2015 (the “Circular”) of which this letter forms part. Terms defined in the Circular shall have the same meanings in this letter unless the context otherwise requires.

Under the Listing Rules, the Leasing and Factoring Business Cooperation Agreement constitutes continuing connected transactions of the Company, and is subject to the approval of the Independent Shareholders at the EGM.

We have been appointed as the Independent Board Committee to consider the terms of the Leasing and Factoring Business Cooperation Agreement and to advise the Independent Shareholders in connection with the Leasing and Factoring Business Cooperation Agreement as to whether, in our opinion, their terms are fair and reasonable and whether the Leasing and Factoring Business Cooperation Agreement are in the interests of the Company and the shareholders as a whole. Quam Capital has been appointed as the independent financial adviser to advise us in this respect.

We wish to draw your attention to the letter from the Board and the letter from Quam Capital as set out in the Circular. Having considered the principal factors and reasons considered by, and the advice of, Quam Capital as set out in its letter of advice, we consider that the Leasing and Factoring Business Cooperation Agreement are on normal commercial terms, and that the Leasing and Factoring Business Cooperation Agreement are in the best interests of the Company and the Shareholders as a whole.

LETTER FROM INDEPENDENT BOARD COMMITTEE

We also consider that the terms of the Leasing and Factoring Business Cooperation Agreement (including its annual caps contemplated thereunder) are fair and reasonable. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to approve the Leasing and Factoring Business Cooperation Agreement (including its annual caps contemplated thereunder) at the EGM.

Yours faithfully,

For and on behalf of the Independent Board Committee

Jiang Guohua, Feng Genfu, Luo Zhongwei, Liu Huangsong and Jiang Fuxiu Independent non-executive Directors Datang International Power Generation Co., Ltd.

LETTER FROM QUAM CAPITAL

The following is the full text of the letter of advice from Quam Capital, the independent financial adviser to the Independent Board Committee and the Independent Shareholders, in respect of the Leasing and Factoring Business Cooperation Agreement which have been prepared for the purpose of inclusion in this circular.

13 October 2015

To the Independent Board Committee and the Independent Shareholders

Dear Sirs/Madam,

MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Leasing and Factoring Business Cooperation Agreement, details of which are set out in the “Letter from the Board” (the “ Letter from the Board ”) contained in the circular issued by the Company to the Shareholders dated 13 October 2015 (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect of the transactions under the Leasing and Factoring Business Cooperation Agreement are above 25% but less than 75%, such transactions under the Leasing and Factoring Business Cooperation Agreement constitute major transactions of the Company.

Since one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) of the transactions under the Leasing and Factoring Business Cooperation Agreement are all above 5%, the Leasing and Factoring Business Cooperation Agreement and the transactions thereunder are subject to the requirements of reporting, announcement and approval by the independent Shareholders of the Company under Chapter 14A of the Listing Rules.

LETTER FROM QUAM CAPITAL

As at the Latest Practicable Date, CDC, together with its subsidiaries, holds approximately 34.77% of the issued share capital of the Company. Since Shanghai Datang Financial Lease Company is an indirectly owned subsidiary of CDC, Shanghai Datang Financial Lease Company is a connected person of the Company. As such, the Leasing and Factoring Business Cooperation Agreement and the transactions thereunder constitute connected transactions of the Company, and are subject to the requirements of reporting, announcement and approval by the Independent Shareholders under Chapter 14A of the Listing Rules.

Any Shareholder with a material interest in the transaction and its associates will abstain from voting at the general meeting to be held to (including but not limited to) consider and approve the Leasing and Factoring Business Cooperation Agreement and the transactions thereunder. Therefore, CDC and its associates shall abstain from voting at the general meeting to approve the Leasing and Factoring Business Cooperation Agreement and the transactions thereunder.

The Independent Board Committee, comprising all the independent non-executive Directors, namely Mr. Luo Zhongwei, Mr. Liu Huangsong, Mr. Jiang Fuxiu, Mr. Jiang Guohua and Mr. Feng Genfu, has been established to advise the Independent Shareholders as to whether the terms of the Leasing and Factoring Business Cooperation Agreement are fair and reasonable so far as the Company and Independent Shareholders are concerned and whether the terms of the Leasing and Factoring Business Cooperation Agreement are in the interests of the Company and the Shareholders as a whole, and to advise the Independent Shareholders as to whether to vote in favour of the relevant resolution to be proposed at the EGM to approve the Leasing and Factoring Business Cooperation Agreement. As the independent financial adviser, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders in such regard.

As at the Latest Practicable Date, Quam Capital did not have any relationships or interests with the Company or any other parties that could reasonably be regarded as relevant to the independence of Quam Capital. In the last two years, Quam Capital has acted as an independent financial adviser to the then independent board committee and independent shareholders of the Company in relation to certain continuing connected transactions and connected transactions (details of which were set out in the announcement or circular of the Company dated 20 May 2014, 16 July 2014, 17 September 2014, 1 December 2014, 22 January 2015, 29 January 2015, 29 June 2015 and 30 June 2015). Apart from normal professional fees paid or payable to us in connection with such appointment, no arrangements exist whereby we had received or will receive any fees or benefits from the Company or any other party to the transactions, therefore we consider such relationship would not affect our independence.

LETTER FROM QUAM CAPITAL

BASIS OF OUR OPINION

In formulating our opinion and advice, we have relied on (i) the information and facts contained or referred to in the Circular; (ii) the information supplied by the Group and its advisers; (iii) the opinions expressed by and the representations of the Directors and the management of the Group; and (iv) our review of the relevant public information. We have assumed that all the information provided and representations and opinions expressed to us or contained or referred to in the Circular were true, accurate and complete in all respects as at the date thereof and may be relied upon. We have also assumed that all statements contained and representations made or referred to in the Circular are true at the time they were made and continue to be true up to the date of this letter and all such statements of belief, opinions and intention of the Directors and the management of the Group and those as set out or referred to in the Circular were reasonably made after due and careful enquiry. The Directors have confirmed that, after having made all reasonable enquiries and to the best of their knowledge and belief, all relevant information has been supplied to us and that no material facts have been omitted from the information supplied and representations expressed to us. We have also relied on certain information available to the public and have assumed such information to be accurate and reliable. We have no reason to doubt the completeness, truth or accuracy of the information and facts provided and we are not aware of any facts or circumstances which would render such information provided and representations made to us untrue, inaccurate or misleading.

We consider that we have reviewed the relevant information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis for our recommendation. We have not, however, carried out any independent verification of the information provided, representations made or opinion expressed by the Directors and the management of the Group, nor have we conducted any form of in-depth investigation into the business, affairs, operations, financial position or future prospects of the Company and Shanghai Datang Financial Lease Company or any of their respective subsidiaries or associates.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our recommendation, we have taken into consideration the following principal factors and reasons:

1. Information of the Group

The Group is principally engaged in the development and operation of power plants, the sale of electricity and thermal power, and the repair, testing and maintenance of power equipment as well as the provision of power-related technical services, with its main service areas being in the PRC.

Set out below is a summary of the consolidated financial statements of the Group for the three years ended 31 December 2012, 2013 and 2014 and the six months ended 30 June 2015.

LETTER FROM QUAM CAPITAL

				As a
		As at 31 December		30 June
	2012	2013	2014	2015
	(Audited)	(Audited)	(Audited)	(Unaudited)
		(restated)
	RMB’000	RMB’000	RMB’000	RMB’000
Current assets	29,927,395	32,037,536	28,578,169	31,936,074
Current liabilities	65,492,802	70,373,725	76,481,106	75,732,314
Total assets	275,245,533	299,939,829	307,528,433	309,625,373
Total liabilities	218,672,835	236,109,973	244,070,240	245,833,184
Equity attributable to owners
of the Company	41,589,940	43,764,584	44,164,881	44,643,139
				For the
				six months
	For	the year ended 31 December		ended
	2012	2013	2014	30 June 2015
	(Audited)	(Audited)	(Audited)	(Unaudited)
		(restated)
	RMB’000	RMB’000	RMB’000	RMB’000
Revenue	77,598,103	77,227,458	70,194,327	31,608,564
Power generation segment	68,491,810	65,629,209	64,406,294	29,772,642
Coal segment	5,982,644	4,210,348	1,768,329	192,912
Chemical segment	2,580,135	4,937,628	3,619,255	353,321
Other segments	543,514	450,273	400,449	1,289,689
Profit for the year/period
after tax	6,180,829	5,591,225	1,888,494	2,713,649

As illustrated in the table above, the Group recorded net current liabilities as at 31 December 2012, 2013 and 2014 and 30 June 2015. As at 30 June 2015, the Group recorded net current liabilities of approximately RMB43.8 billion. According to the interim report of the Company for the six months ended 30 June 2015 (the “ 2015 Interim Report ”), the net current liabilities position of the Group was mainly attributable to the fact that significant portion of the funding requirements of the Group for capital expenditures was satisfied by short-term borrowings. As at 30 June 2015, the Group had short-term loans, short-term bonds and current portion of the non-current liabilities in aggregate of approximately RMB44.4 billion representing approximately 67.8% of total current liabilities. According to the 2015 Interim Report, the Group had significant undrawn borrowing facilities, subject to certain conditions, amounting to approximately RMB253.5 billion and may refinance and/or restructure certain short-term borrowings into long-term borrowings and will also consider alternative sources of financing, where applicable, and the Directors are of the opinion that the Group will be able to meet its liabilities as and when they fall due within the next twelve months and have prepared the financial statements for the six months ended 30 June 2015 on a going concern.

LETTER FROM QUAM CAPITAL

As set out in the announcement of the Company dated 17 July 2015, the Company has completed the issuance of the “The Fourth Tranche of Datang International Power Generation Co. Ltd’s Super Shortterm Debentures in 2015” with the issuance amount of RMB3 billion at the issuance interest rate of 3.00% and a maturity of 270 days.

As at 30 June 2015, the Company had cash and cash equivalents of approximately RMB9.2 billion and net assets of approximately RMB63.8 billion.

The revenue of the Company was mainly generated by the power generation, representing approximately 88.3%, 87.2%, 91.8% and 94.2% of the total revenue of the Group for the year ended 31 December 2012, 2013 and 2014 and for the six months ended 30 June 2015 respectively. The decrease in revenue of the Company throughout the past three financial years was mainly due to decrease in revenue contributed by coal segment from RMB6.0 billion for the year ended 31 December 2012 to RMB4.2 billion for the year ended 31 December 2013 and further decreased to RMB1.8 billion for the year ended 31 December 2014. The net profits after tax of the Group decreased by approximately 9.5% for the year ended 31 December 2013 as compared to the year ended 31 December 2012. Such decrease was mainly due to, among other things, (i) investment returns recorded a year-on-year decrease, leading to a decrease in profit of RMB1.8 billion; (ii) on-grid electricity recorded a year-on-year decrease of 7.994 billion kWh, leading to a decrease in profit of RMB1.1 billion; (iii) fixed cost recorded a year-on-year increase, leading to a decrease in profit of RMB799 million; and (iv) provision for fixed asset depreciation led to a year-on-year decrease in profit of RMB 718 million, which was partly offset by (a) a decrease of unit price of standard coal-into-furnace and coal equivalent of RMB111.7 per tonne, leading to an increase of profit of RMB6.1 billion; (b) a decrease in financial expenditure which led to an increase in profit of RMB1.1 billion; and (c) an increase in profit of other businesses of RMB315 million. For the year ended 31 December 2014, the net profit after tax decreased by approximately RMB3.7 billion or approximately 66.2% from approximately RMB5.6 billion for the year ended 31 December 2013 to approximately RMB1.9 billion for the year ended 31 December 2014. Such decrease was mainly due to impairment of certain assets which was approved by the 2015 first extraordinary general meeting on 10 February 2015 and the write-off of bad debt which was approved by the nineteenth meeting of the eighth session of the Board on 18 March 2015, which together decreased the profit by approximately RMB3.2 billion.

2. Information of Shanghai Datang Financial Lease Company

Shanghai Datang Financial Lease Company is a subsidiary of CDC with registered capital of approximately RMB1.0 billion. Shanghai Datang Financial Lease Company is principally engaged in the financial leasing business, leasing business, purchase and leasing of properties in the PRC and from overseas countries, treatment of residual value of and maintenance of leased properties, consultation and guarantee for leasing transactions, and commercial factoring business related to its principal business.

LETTER FROM QUAM CAPITAL

3. Major terms

As set out in the Letter from the Board, the major terms of the Leasing and Factoring Business Cooperation Agreement are as follows:

In accordance with the business principles of a financial leasing company, Shanghai Datang Financial Lease Company shall provide the Company and its subsidiaries with support on leasing factoring business with a principal of not exceeding RMB10.0 billion for every 12 months (from the effective date of the agreement) for the investment and construction of key projects of the Company in areas including thermal power, hydropower, wind power and recycling economy.
By making use of its professional advantages in financial area, Shanghai Datang Financial Lease Company shall provide the Company with various financial consulting services such as investment and financing consulting financial advisory, financial leasing consulting, receivables factoring products design and transaction arrangements.
Within the scope of the business development and planning of the Company, Shanghai Datang Financial Lease Company shall assist the Company to choose suitable lessees and projects, and design and provide customized leasing and factoring business proposals.
Shanghai Datang Financial Lease Company shall provide the Company with the most favourable rates for lease fees pursuant to the relevant policies and regulations of the PRC and in line with the supply and demand of capitals in the market as well as the different structural features of different lease and factoring products. The general rates for lease fees shall be equivalent to or more favourable than those offered by other domestic financial leasing companies in China for providing similar services.
The agreement shall become effective when it is duly signed by the parties and affixed with their respective company seals and upon the approval by the internal authority of each of parties, including obtaining approval of the agreement by independent Shareholders at general meeting.

LETTER FROM QUAM CAPITAL

Discussion of the major terms

As contemplated in the Leasing and Factoring Business Cooperation Agreement, Shanghai Datang Financial Lease Company shall provide the Company with the most favourable rates for lease fees, which shall be equivalent to or more favourable than those offered by other domestic financial leasing companies in China for providing similar services. Given that as at 30 June 2015, the Group had short-term loans, short-term bonds and current portion of the non-current liabilities in aggregate of approximately RMB44.4 billion, the Directors believe that such arrangement enable the Company to lower its overall cost of capital, to increase the financing flexibility of the Group and to further expand the Company’s financing channels. Meanwhile, Shanghai Datang Financial Lease Company, which is indirectly held by CDC and its subsidiaries, would be able to have a better understanding in the financial and operation of the Company and its subsidiaries, which will enable it to provide faster, more convenient, effective and efficient financial leasing as well as factoring products design services to the Company when compared to those services provided by other financial leasing companies.

In view of the aforesaid reasons, the Directors consider that this arrangement is in the interests of the Company and its Shareholders as a whole.

We have reviewed the Leasing and Factoring Business Cooperation Agreement and have discussed with the management of the Company regarding the major terms therein. We note that, based on the terms of the Leasing and Business Cooperation Agreement, prior to entering into each agreement with Shanghai Datang Financial Lease Company, the Company shall collect information about the terms and conditions of the relevant transactions and their respective interest rates from major domestic leasing companies in China who are independent of the Company and its connected persons, and shall compare them with the benchmark interest rate on term loans as set out by the People’s Bank of China to ensure that the Company receives general rates for lease fees, which shall be equivalent to or more favourable than those offered by other domestic financial leasing companies in China for providing similar services. Such interest rate is arrived at after arm’s length negotiations between the Company and Shanghai Datang Financial Lease Company in consideration of the overall reduction in capital cost to the Group. In addition, the Company is not restricted from conducting business with other providers of financial leasing products or services. On this basis, we consider that the terns of Leasing and Factoring Business Cooperation Agreement are in the interests of the Company and its Shareholders as a whole.

As at 30 June 2015, short-term loans of the Company amounted to approximately RMB15.7 billion, bearing annual interest rates ranging from 1.32% to 6.60%. Long-term loans of the Company (excluding those repayable within one year) amounted to approximately RMB137.8 billion and long-term loans repayable within one year amounted to approximately RMB11.9 billion. Long term loans (including those repayable within one year) were at annual interest rates ranging from 1.13% to 6.80%.

As at the Latest Practicable Date, the prevailing benchmark interest rate for one-year loans and three-year loans in RMB as announced by the People’s Bank of China is 4.60% and 5.00% per annum, respectively.

LETTER FROM QUAM CAPITAL

Having considered (i) that the overall cost of capital to the Company will be relatively reduced under the Leasing and Factoring Business Cooperation Agreement as discussed above; and (ii) the fairness and reasonableness of the major terms of the Leasing and Factoring Business Cooperation Agreement (with detailed analysis set out above), we are of the view that the entering into of the Leasing and Factoring Business Cooperation Agreement is in the interest of the Company and the Shareholders as a whole.

4. Annual Caps

The proposed annual caps for the transactions under the Leasing and Factoring Business Cooperation Agreement with a principal of not exceeding RMB10.0 billion for every 12 months from the effective date of the agreement for a term of 36 months from the date of entering into the agreement which is determined after considering the Company’s financing plan for the four years ending 31 December 2018 as follow:

	11 September 2015	1 January 2016	1 January 2017	1 January 2018
	to	to	to	to
Transaction Period	31 December 2015	31 December 2016	31 December 2017 10 September 2018
Principal	RMB3.0 billion	RMB10.0 billion	RMB10.0 billion	RMB7.0 billion

The Directors consider that as the above proposed annual caps are determined with reference to the financing plan of the Company which is derived from the expected demand of capital of the Company for the coming 36 months, the above proposed annual caps are fair and reasonable.

Historical transactions amount

LETTER FROM QUAM CAPITAL

Assessment of the proposal annual caps

As advised by the management of the Group, the Annual Caps have been determined with reference to (i) approximately two-third of the principal of the financial leases will be used for the replacement of part of the existing loans upon expiration as the Company anticipates that approximately RMB40 billion to RMB60 billion of the loans of the Company will be expired in each of 2016-2018; and (ii) approximately one-third of the principal of the finance leases will be used for fulfilling part of the future capital needs for construction of existing and new projects which were approved by the Board, including but not limited to the – Sichuan Dadu River Huangjinping Hydropower Station Project (a project involving generating units with a total installed capacity of 850MW and with a total investment amount of approximately RMB11.768 billion), and the Sichuan Dadu River Changheba Hydropower Station Project (a project involving generating units with a total installed capacity of 2,600MW and with a total investment amount of approximately 21.905 billion). We were advised by the Company that after considering the growing importance of lease financing as a financing alternative under the general debt financing condition and taxation arrangements in China, and particularly, the fact that Shanghai Datang Financial Lease Company has been established on 31 March 2015 for providing more convenient, effective and efficient financial leasing as well as factoring products design services to the Company when compared to other financial leasing companies, the Company plans to increase the amounts of lease financing, and also the proportion of lease financing to the aggregate debt financing of the Group for the period from 11 September 2015 to 10 September 2018.

Based on the above, we are of the view that the Annual Caps set by the Directors are made after due and careful consideration, and that the Annual Caps and the determination basis are fair and reasonable so far as the Shareholders are concerned and in the interest of both the Company and the Shareholders as a whole.

5. Reasons for and benefits of entering into the Leasing and Factoring Business Cooperation Agreement

As stated in the Letter from the Board, relevant arrangements under the Leasing and Factoring Business Cooperation Agreement are beneficial to the Company to obtain financing support and relevant financing services at a lower-than-market interest rate, so as to further lower its capital costs; and to further strengthen the Company’s and relevant unit’s negotiation power when deploying the financial leasing business with other leasing companies. Meanwhile, Shanghai Datang Financial Lease Company would be able to develop a deeper understanding in the operation of the Company and relevant units, which in turn would be able to provide more convenient, effective and efficient financial leasing as well as factoring products design services to the Company when compared to those services provided by other financial leasing companies.

LETTER FROM QUAM CAPITAL

Even though Shanghai Datang Financial Lease Company was only incorporated on 31 March 2015, it has established a sound management structure with sufficient experienced financial professionals who possess expertise and experience in financial leasing and factoring businesses. In terms of professional ability, Shanghai Datang Financial Leases Company will specialize in developing power-related projects and therefore be able to accumulate abundant experience in the area of business which the Company is engaging in. Further, since both the Company and Shanghai Datang Financial Lease Company are subsidiaries of CDC, this will therefore facilitate the communication and cooperation between the two parties. In view of the above, Shanghai Datang Financial Lease Company possesses strong and experienced professional management and personnel, strong ability in developing projects, prompt decision making and strategic planning abilities and therefore the Company believes that Shanghai Datang Financial Lease Company will be able to provide customized leasing and factoring business proposals for the Company. Having considered that the management structure of Shanghai Datang Financial Lease Company consist of sufficient experienced financial professionals who possess expertise and experience in financial leasing and factoring business, we are of the view that based on the experience and expertise, Shanghai Datang Financial Lease Company would be able to develop a deeper understanding in the operation, provide assistance to the Company in developing and providing customized leasing and factoring proposals of the power-related projects even though Shanghai Datang Financial Lease Company was only incorporated on 31 March 2015.

The Directors are of the view that the relevant terms of the Leasing and Factoring Business Cooperation Agreement are fair and reasonable, have been entered into after arm’s length negotiation between all parties thereto and determined on normal commercial terms in ordinary and usual course of business and are in the interests of the Company and its Shareholders as a whole.

We have discussed with the management of the Company and understand that the Company is expecting to lower its capital costs; and to further strengthen the Company’s and relevant unit’s negotiation power when deploying the financial leasing business with other leasing companies. We are of the view that entering into the Leasing and Factoring Business Cooperation Agreement is in the ordinary and usual course of business of the Company and is in the interest of the Company and its Shareholders as whole.

6. Pricing Policy and control measures

As stated above, pursuant to the Leasing and Factoring Business Cooperation Agreement, prior to cooperation with Shanghai Datang Finance Lease Company, the Company shall collect information about the terms and conditions of the relevant transactions and their respective interest rates from major domestic leasing companies in China who are independent of the Company and its connected persons, and shall compare them with the benchmark interest rate on term loans issued by the People’s Bank of China to ensure that the Company receives the most favourable terms. The general rates for lease fees shall be equivalent to or more favourable than those offered by other domestic financial leasing companies in China, and the Company’s overall interests will be maximised. We have discussed with the management of the Company and note that an internal control procedure has been established for the purpose of ensuring that the finance leasing and factoring business to be provided by Shanghai Datang Finance Lease Company shall be at terms no less favourable than that offered by other providers.

LETTER FROM QUAM CAPITAL

RECOMMENDATIONS

Having considered the principal factors and reasons described above, we are of the opinion that the terms of the Leasing and Factoring Business Cooperation Agreement are on normal commercial terms, fair and reasonable so far as the Company and the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to approve the Leasing and Factoring Business Cooperation Agreement.

Yours faithfully, For and on behalf of

Quam Capital Limited Gary Mui

Deputy Chief Executive Officer

Note: Mr. Gary Mui is a licensed person registered with the Securities and Futures Commission and a responsible officer of Quam Capital Limited to carry out Type 6 (advising on corporate finance) regulated activity under the SFO. He has over 15 years of experience in the finance and investment banking industry.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

The financial information of the Group (i) for the year ended 31 December 2012 has been disclosed on pages 74 to 165 of the annual report of the Company for the year ended 31 December 2012 published on 29 April 2012; (ii) for the year ended 31 December 2013 has been disclosed on pages 85 to 201 of the annual report of the Company for the year ended 31 December 2013 published on 24 April 2013; (iii) for the year ended 31 December 2014 has been disclosed on pages 88 to 217 of the annual report of the Company for the year ended 31 December 2014 published on 24 April 2014; All the above annual reports of the Company have been published on the website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.dtpower.com).

2. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

In 2015, the Company will continue to adhere to the value-focused and result-oriented principles; consolidate the basis for safe production; explore space for corporate development; fight for increase in power generation; control its costs and expenses strictly; and enhance its profitability, so as to ensure it could accomplish the operation target of the entire year as planned.

1) Proactive adaptation to the power market. Conduct thorough analysis on the situation of the power supply and look for new opportunities in the market. Firmly put the power generation expansion of coal-fired power as the priority for boosting profits; enhance the integrated coordination on issues such as hydropower abolishment and energy curtailment; step up efforts on the optimisation and adjustment of the hydropower and wind power areas in order to reduce the loss resulted from water and wind abolishment; proactively commence marketing in heating market and make heat supply a new profit generation and growth driver of the Company.
2) Enhance control on operating costs. Thoroughly implement working plans on revenue expansion and cost saving; step up management of fuel costs and enhance management over costs and expenses; co-ordinate and arrange the Company’s funding allocation plans in order to effectively prevent and control financial risks and optimise debt structure; implement various measures so as to ensure the accomplishment of the profit target for the year.
3) Optimise prevention and control on safety risks. Further strengthen monitoring of safety; consolidate the basis for safety production; and strive to attain inherent safety targets, in order to foster steady and healthy development via safe production.
4) Strengthen energy conservation and emission reduction. Complete modification works on environmental protection as scheduled in order to comply with the State’s policies as well as local governments’ requirement on environment protection; step up efforts on monitoring and regulation for environment protection to ensure emissions always meeting standards; take initiatives to facilitate upgrading and modification plans on energy conservation and commence operation optimisation experiments to further explore the potential of power generating units.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5) Accelerate development of key projects. Rapidly approve quality preliminary projects and proactively facilitate the construction of key projects to make sure the Jiangxi Fuzhou generating unit No.1 (1,000 MW), Sichuan Huangjinping hydropower project (800 MW), Sichuan Jinyuan hydropower project (120 MW) and other hydropower and wind power projects commence operation within this year, in order to enhance the power generation capability, improve the power structure and quality of development of the Company.
6) Keep abreast of the power sector reform. Conduct researches on policy direction and stay dedicated to seek for new market opportunities under power sector reform; carry out proactive exploration on new and innovative development model of the Company to facilitate the healthy and sustainable development of the Company

3. INDEBTEDNESS

As at the close of business on 30 June 2015, the Group had unaudited outstanding interest bearing debts of approximately RMB212.9 billion, comprising borrowings from financial institutions of RMB169.3 billion, and bonds outstanding of RMB15.4 billion, and financial leasing outstanding of RMB13.3 billion.

Save as aforesaid and apart from intra-group liabilities, the Group did not have any mortgages, charges, debentures, loan capital, bank loans and overdrafts, debt securities or other similar indebtedness, finance leases or hire purchase commitments, liabilities under acceptances or acceptances credits, or any guarantees, or any other contingent liabilities outstanding at the close of business on 30 June 2015.

As at the Latest Practicable Date, the Directors are not aware of any material adverse changes in the Group’s indebtedness position and contingent liabilities since the close of business on 30 June 2015.

4. WORKING CAPITAL

The Directors are of the opinion that, after taking into account the present available banking facilities and the internally generated resources of the Group, the Group has sufficient working capital for its requirements with the next 12 months from the date of this circular.

5. EFFECT ON EARNINGS, ASSETS AND LIABILITIES OF THE COMPANY

The entering into of the Leasing and Factoring Business Cooperation Agreement between the Company and Shanghai Datang Financial Lease Company are beneficial to the Company to obtain financing support and relevant financing services at a lower-than-market interest rate, so as to further lower its capital costs; and to further strengthen the Company’s and relevant unit’s negotiation power when deploying the financing leasing business with other leasing companies. Meanwhile, Shanghai Datang Financial Lease Company would be able to develop a deeper understanding in the operation of the Company and relevant units, which in turn would be able to provide more convenient, effective and efficient financial leasing as well as factoring products design services to the Company when compared to those services provided by other financial leasing companies. Though, the Company does not expect to develop dependency on Datang Financial Lease Company on acquiring such services, and the entering into of the Leasing and Factoring Business Cooperation Agreement will not hinder the Company to consider enter into similar agreements with other financial lease companies when deemed necessary.

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS OF DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE OF THE COMPANY

(i) As at the Latest Practicable Date, none of the Directors, supervisors and chief executive of the Company have any interests and short positions 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 the SFO) which was required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions 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 into the register required to be kept by the Company under section 352 of the SFO or which was otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in the Listing Rules.
(ii) As at the Latest Practicable Date, none of the Directors, proposed Directors, supervisors or proposed supervisors of the Company has any direct or indirect interest in any assets which have since 31 December 2014 (being the date to which the latest published audited financial statements of the Company were made up) been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

3. SERVICE AGREEMENTS

As at the Latest Practicable Date, none of the Directors, proposed directors, supervisors or proposed supervisors of the Company had any existing or proposed service contract with any member of the Group (excluding contracts expiring or determinable by the Company within one year without payment of compensation (other than statutory compensation)).

4. INTEREST CONTRACT

As at the Latest Practicable Date, none of the Directors or supervisors of the Company was materially interested in any contract or arrangement entered into by any member of the Group, and which was significant in relation to the business of the Group.

GENERAL INFORMATION

APPENDIX II

5. MATERIAL CHANGES

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2014, being the date to which the latest published audited financial statements of the Group were made up.

6. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors of the Company and its Subsidiaries, or their respective Associates has interests in the businesses which compete or are likely to compete, either directly or indirectly, with the businesses of the Company and its subsidiaries.

7. EXPERT

(a) The following sets out the qualifications of the expert which has given its opinion or advice as contained in this circular:

Name Qualifications Quam Capital

a licensed corporation to carry out type 6 (advising on corporate finance) regulated activity under the SFO

(b) Quam Capital did not have any shareholding, direct or indirect, in any members of the Group or any rights (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any members of the Group as at the Latest Practicable Date.
(c) Quam Capital does not have any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any members of the Group, or which are proposed to be acquired or disposed of by or leased to any members of the Group since 31 December 2014, the date to which the latest published audited financial statements of the Company were made up.
(d) Quam Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which they are included.

8. LITIGATION

No member of the Company and its subsidiaries is at present engaged in any litigation or arbitration of material importance to the Company and its subsidiaries and no litigation or claim of material importance to the Company and its subsidiaries is known to the Directors or the Company to be pending or threatened by or against any member of the Company and its subsidiaries.

GENERAL INFORMATION

APPENDIX II

9. MISCELLANEOUS

(a) The registered office of the Company is No. 482, Guanganmennei Avenue, Xuanwu District, Beijing, the PRC and the office address of the Company is No. 9 Guangningbo Street, Xicheng District, Beijing, the PRC.
(b) The place of business of the Company in Hong Kong is at c/o Eversheds, 21/F, Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong.
(c) The Hong Kong share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited at 46/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
(d) The acting secretary to the Board of the Company is Ying Xuejun.

10. MATERIAL CONTRACTS

In the two years immediately preceding the date of this circular and up to the Latest Practicable Date, the following contracts, not being contracts entered into the ordinary course of business, were entered into by the Company or any of its subsidiaries which are or may be material:

(1) On 15 October 2013, the Company entered into the Capital Contribution Agreement with CDC, in which both parties agreed to make capital contributions in the sum of approximately RMB80 million and RMB120 million, respectively for the purpose of setting up Datang Nuclear Power Company.
(2) On 15 October 2013, the Company and Datang Finance entered into the Financial Services Agreement with a term of three years commencing from 1 January 2014 and ending on 31 December 2016, with the daily maximum balance of the Group’s deposits with China Datang Finance Co., Ltd. (“Datang Finance Company”) for each of the three years is RMB12 billion. Datang Finance agreed to provide the Group with deposit services, loan services and other financial services subject to the terms and conditions provided therein.
(3) On 15 October 2013, the Company and Energy and Chemical Company entered into the Entrusted Loan Framework Agreement with Datang Finance Company and Duolun Coal Chemical Company in relation to the provision of the Entrusted Loan of an amount not exceeding RMB6 billion by the Company or Energy and Chemical Company to Duolun Coal Chemical Company in the form of revolving loan facility through the Entrusted Loan Arrangement, in which Datang Finance Company acts as the lending agent.
(4) On 9 December 2013, The Company entered into the Coal Purchase and Sale Framework Agreement (Beijing) with Beijing Datang Fuel Company, pursuant to which the Company agreed to purchase coal from Beijing Datang Fuel Company with a maximum aggregate annual transaction amount of approximately RMB40,500 million for a term of one year commencing from 1 January 2014 to 31 December 2014.

GENERAL INFORMATION

APPENDIX II

(5) On 9 December 2013, The Company entered into the Coal Purchase and Sale Framework Agreement (Inner Mongolia) with Inner Mongolia Fuel Company, pursuant to which the Company agreed to purchase coal from Inner Mongolia Fuel Company with a maximum aggregate annual transaction amount of approximately RMB6,081 million for a term of one year commencing from 1 January 2014 to 31 December 2014.
(6) On 9 December 2013, Hong Kong Company entered into the Coal Purchase and Sale Framework Agreement (Hong Kong—Beijing) with Beijing Datang Fuel Company, pursuant to which Hong Kong Company agreed to sell coal to Beijing Datang Fuel Company, with a maximum aggregate annual transaction amount of approximately RMB2,740 million for a term of one year commencing from 1 January 2014 to 31 December 2014.
(7) On 9 December 2013, Hong Kong Company entered into the Coal Purchase and Sale Framework Agreement (Hong Kong—Company) with the Company, pursuant to which Hong Kong Company agreed to sell coal to Lvsigang Power Generation Company and Chaozhou Power Generation Company, both being subsidiaries of the Company, with a maximum aggregate annual transaction amount of approximately RMB3,670 million, for a term of one year commencing from 1 January 2014 to 31 December 2014.
(8) On 9 December 2013, the Company entered into the Coal Purchase and Sale Framework Agreement (Xilinhaote) with Xilinhaote Mining Company, pursuant to which the Company agreed to purchase coal from Xilinhaote Mining Company, with a maximum aggregate annual transaction amount of approximately RMB2,318 million, for a term of one year commencing from 1 January 2014 to 31 December 2014.
(9) On 4 April 2014, the Company entered into the Capital Increase Agreement with China Datang Corporation Capital Holding Co. Limited, China Datang Overseas (Hong Kong) Co., Limited and Datang Renewable Power (Hong Kong) Co., Limited, pursuant to which, the parties agreed to make further capital contribution to Datang Finance Leasing Co., Limited (“Datang Finance Leasing Company”) in proportion to their existing equity holding. Among which, the Company agreed to make further capital contribution of RMB200 million to Datang Finance Leasing Company. Upon completion of the capital increase, the Company will have made capital contribution in the total sum of RMB400 million in Datang Finance Leasing Company and its equity holding in Datang Finance Leasing Company will remain as 20%.
(10) On 25 April 2014, Energy and Chemical Marketing Company entered into the Framework Agreement of Sale of Natural Gas with Keqi Coal-based Gas Company, pursuant to which, Energy and Chemical Marketing Company agreed to purchase natural gas from Keqi Coalbased Gas Company with an annual cap for transaction amount of RMB4.029 billion for a term commencing from 18 December 2013 to 31 December 2014.
(11) On 25 April 2014, Energy and Chemical Marketing Company entered into the Sale and Purchase Contract of Chemical Products (Keqi) with Keqi Coal-based Gas Company; pursuant to which, Energy and Chemical Marketing Company agreed to purchase Chemical Products from Keqi Coal-based Gas Company with an annual cap for transaction amount of RMB623 million for a term commencing from 18 December 2013 to 31 December 2014.

GENERAL INFORMATION

APPENDIX II

(12) On 25 April 2014, Energy and Chemical Marketing Company entered into the Sale and Purchase Contract of Chemical Products (Duolun) with Duolun Coal Chemical Company, pursuant to which Energy and Chemical Marketing Company agreed to purchase Chemical Products from Duolun Coal Chemical Company with an annual cap for transaction amount of RMB3.63 billion.
(13) On 13 May 2014, the Company entered into the Entrusted Loan Agreement with Datang Finance Company and Xilinhaote Mining Co. in relation to the provision of the Entrusted Loan in an amount of not exceeding RMB1.5 billion by the Company to Xilinhaote Mining Co. in the form of revolving loan facility through the Entrusted Loan Arrangement, in which Datang Finance Company acts as the lending agent.
(14) On 16 June 2014, the Company entered into the Capital Contribution Agreement with CDC, Huayin Electric Power and Leizhou Peicai Construction Company, pursuant to which the parties agreed to make capital contribution to establish Leizhou Power Generation Company in order to construct the Leizhou Coal-fired Project (two 1,000MW coal-fired generating units). The total investment of the Leizhou Power Generation Company project amounted to RMB9,934,170,000 and the project capital amounted to RMB1,986,834,000. The proportion and amount of capital contribution to be made by each party were as follow: The Company agreed to contribute a sum of RMB675,523,600, which accounts for 34% of the equity interest of Leizhou Power Generation Company. Huayin Electric Power agreed to contribute a sum of RMB655,655,200, which accounts for 33% of the equity interest of Leizhou Power Generation Company. CDC agreed to contribute a sum of RMB596,050,200, which accounts for 30% of the equity interest of Leizhou Power Generation Company. Leizhou Peicai Construction Company agreed to contribute a sum of RMB59,605,000, which accounts for 3% of the equity interest of Leizhou Power Generation Company.
(15) On 30 June 2014, the Company entered into the Capital Increase Agreement with China Datang Corporation Nuclear Power Co., Limited (“Datang Nuclear Power Company”) and CDC, pursuant to which the parties agreed that the Company shall inject its 24% of equity interests (valued at approximately RMB132,088,300) in Liaoning Nuclear Power Company into Datang Nuclear Power Company, with a view to increase the amount of capital injection by the Company in Datang Nuclear Power Company, and that CDC shall agree to increase the capital by RMB198,132,500 in proportion to its equity holding in Datang Nuclear Power Company. Upon completion of the capital increase, the Company will have made capital contribution in the total sum of RMB156,088,300 in Datang Nuclear Power Company and its equity holding will remain as 40%, while CDC will have made capital contribution in the total sum of RMB234,132,500 in Datang Nuclear Power Company and its equity holding will remain at 60%.
(16) On 30 June 2014, the Company entered into an Equity Transfer Agreement with Datang Nuclear Power Company on 30 June 2014, pursuant to which the Company agreed to transfer the 24% equity interests in Liaoning Nuclear Power Company to Datang Nuclear Power Company for a price of RMB132,088,300.

GENERAL INFORMATION

APPENDIX II

(17) On 7 July 2014, the Company entered into the Framework Agreement for Reorganisation of Coal-to-chemical Segment and Related Projects with China Reform Holdings Corporation Ltd. (“China Reform Corporation”) for the proposed reorganisation of the Company’s coalto-chemical business segment and related projects. China Reform Corporation will, through the reorganisation, acquire the assets or equity interests of the coal-to-chemical business segment and related projects of the Company.
(18) On 27 August 2014, the Company, Energy and Chemical Company, Datang Finance Company and Duolun Coal Chemical Company entered into the Entrusted Loan Framework Agreement in relation to the provision of the Entrusted Loan of an aggregate amount of RMB4 billion by the Company or Energy and Chemical Company to Duolun Coal Chemical Company within the term of agreement, in which Datang Finance Company acts as the lending agent.
(19) On 30 October 2014, the Company entered into Renewable Resource Agreement (New) with Datang Finance Company and Inner Mongolia Datang International Renewable Energy Resource Development Company Limited (“Renewable Resource Company”) in relation to the provision of an entrusted loan of no more than RMB850 million by the Company to Renewable Resource Company through the Entrusted Loan Arrangement, in which Datang Finance Company acts as the lending agent.
(20) On 30 October 2014, the Company entered into the Xilinhaote Mining Entrusted Loan Agreement with Datang Finance Company and Xilinhaote Mining Company in relation to the provision of an entrusted loan of no more than RMB1,000 million by the Company to Xilinhaote Mining Company through the Entrusted Loan Arrangement, in which Datang Finance Company acts as the lending agent.
(21) On 26 November 2014, 13 shareholders of Datang Finance Company, including the Company and CDC, entered into the Capital Increase Agreement with Datang Finance Company, pursuant to which the parties agreed to increase the registered capital of Datang Finance Company by RMB1,869,871,590.23 from RMB3,000,000,000 to RMB4,869,871,590.23. The parties agreed to settle the capital increase to Datang Finance Company by way of cash or transfer of undistributed profit. After the completion of the capital increase, the Company’s shareholding in Datang Finance Company will decrease from 20% to 15.8931%.
(22) On 23 December 2014, the Company entered into the Fuel Purchase Framework Agreement (Beijing) with Beijing Datang Fuel Company, pursuant to which the Company and certain of its subsidiaries agreed to purchase coal from Beijing Datang Fuel Company with a maximum aggregate annual transaction amount of approximately RMB21,289 million for a term of one year commencing from 1 January 2015 to 31 December 2015.
(23) On 23 December 2014, the Company entered into the Fuel Purchase Framework Agreement (Inner Mongolia) with Inner Mongolia Fuel Company, pursuant to which the Company and certain of its subsidiaries agreed to purchase coal from Inner Mongolia Fuel Company with a maximum aggregate annual transaction amount of approximately RMB5,228 million for a term of one year commencing from 1 January 2015 to 31 December 2015.

GENERAL INFORMATION

APPENDIX II

(24) On 19 December 2014, Energy and Chemical Marketing Company and Keqi Coal-based Gas Company extended the Framework Agreement of Sale of Natural Gas, pursuant to which Keqi Coal-based Gas Company agreed to sell coal-based natural gas to Energy and Chemical Marketing Company. The annual transaction amount would be approximately RMB4.029 billion. The extended term of the agreement is from 1 January 2015 to 31 December 2015.
(25) On 19 December 2014, Energy and Chemical Marketing Company and Keqi Coal-based Gas Company extended the Sale and Purchase Contract of Chemical Products (Keqi), pursuant to which Keqi Coal-based Gas Company would sell chemical products to Energy. The annual transaction amount would be approximately RMB623 million. The extended term of the agreement is from 1 January 2015 to 31 December 2015.
(26) On 19 December 2014, Energy and Chemical Marketing Company and Duolun Coal Chemical Company extended the “Sale and Purchase Contract of Chemical Products (Duolun)”, pursuant to which Duolun Coal Chemical Company would sell the chemical products produced by it to Energy and Chemical Marketing Company; the annual sales amount of the chemical products would be approximately RMB4.147 billion. The extended term of the agreement is from 1 January 2015 to 31 December 2015.
(27) On 12 February 2015, the Company, Duolun Coal Chemical Company and Datang Finance Company entered into the Entrusted Loan Contract. The Company shall entrust Datang Finance Company as the lending agent to provide the entrusted loan of an aggregate amount of RMB1 billion to Duolun Coal Chemical Company during the term of the contract.
(28) On 21 May 2015, the Company, Duolun Coal Chemical Company and Construction Bank Railway Sub-branch entered into the Entrusted Loan Contract, pursuant to which, the Company shall entrust Construction Bank Railway Sub-branch to act as the lending agent to provide the entrusted loan of an aggregate amount of RMB1 billion to Duolun Coal Chemical Company during the term of the contract.
(29) On 19 June 2015, the Company and Xilinhaote Mining Company entered into the Entrusted Loan Agreement with Construction Bank Railway Sub-branch, pursuant to which, the Company agreed to entrust Construction Bank Railway Sub-branch to act as the lending agent to provide entrusted loan of an aggregate amount of RMB1.5 billion to Xilinhaote Mining Company during the term of the agreement.
(30) On 29 June 2015, the Company and ICBC Xuanwu Branch entered into the Entrusted Loan Framework Agreement, pursuant to which, the Company entrusted ICBC Xuanwu Branch to act as the lending agent to provide entrusted loan of an aggregate amount of RMB4.0 billion to Duolun Coal Chemical Company during the term of the agreement.
(31) On 29 June 2015, the Company and Xilinhaote Mining Company entered into the Entrusted Loan Agreement with Construction Bank Railway Sub-branch, pursuant to which, the Company agreed to entrust Construction Bank Railway Sub-branch to act as the lending agent to provide entrusted loan of an aggregate amount of RMB2.0 billion to Xilinhaote Mining Company during the term of the agreement.

GENERAL INFORMATION

APPENDIX II

(32) On 3 June 2015, 23 July 2015 and 5 August 2015, Duolun Coal Chemical Company entered into four Financial Leasing Contracts with Cornerstone Financial Leasing Company, pursuant to which Duolun Coal Chemical Company engages in financial leasing transaction with Cornerstone Financial Leasing Company by way of sale and leaseback of leased assets, Total principal of financial leasing amounted to approximately RMB8 billion.
(33) The Leasing and Factoring Business Cooperation Agreement, which is stated in this circular.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the principal place of business in Hong Kong of the Company at 21/F, Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong during normal business hours from the date of this circular up to and including 26 June 2013:

(a) the memorandum and articles of association of the Company;
(b) the financial information of the Company as set out in Appendix I of this Circular;
(c) the material contracts referred to in the paragraph headed “Material Contracts” in this Appendix;
(d) Leasing and Factoring Business Cooperation Agreement; and
(e) the consent letter and letter of advice from Quam Capital dated 13 October 2015.

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Datang Intnl Pwr Gen — Proxy Solicitation & Information Statement 2015

10467_rns_2015-10-13_e0d6c1ea-6782-43ee-893b-a0a17a4fbc72.pdf

MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS

CONTENTS

DEFINITIONS

DEFINITIONS

MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS

BACKGROUND

LETTER FROM THE BOARD

Major Terms:

LETTER FROM THE BOARD

Pricing policy and control measures:

Annual caps:

LETTER FROM THE BOARD

Historical transaction amounts

REASONS FOR AND BENEFITS OF ENTERING INTO THE LEASING AND FACTORING BUSINESS COOPERATION AGREEMENT

INFORMATION OF THE PARTIES

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

BOARD’S APPROVAL

ADDITIONAL INFORMATION

EGM

RECOMMENDATION

MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS

LETTER FROM INDEPENDENT BOARD COMMITTEE

LETTER FROM QUAM CAPITAL

MAJOR TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

LETTER FROM QUAM CAPITAL

LETTER FROM QUAM CAPITAL

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Information of the Group

LETTER FROM QUAM CAPITAL

LETTER FROM QUAM CAPITAL

2. Information of Shanghai Datang Financial Lease Company

LETTER FROM QUAM CAPITAL

3. Major terms

LETTER FROM QUAM CAPITAL

Discussion of the major terms

LETTER FROM QUAM CAPITAL

4. Annual Caps

Historical transactions amount

LETTER FROM QUAM CAPITAL

Assessment of the proposal annual caps

5. Reasons for and benefits of entering into the Leasing and Factoring Business Cooperation Agreement

LETTER FROM QUAM CAPITAL

6. Pricing Policy and control measures

LETTER FROM QUAM CAPITAL

RECOMMENDATIONS

Quam Capital Limited Gary Mui

1. FINANCIAL INFORMATION OF THE GROUP

2. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

APPENDIX I

3. INDEBTEDNESS

4. WORKING CAPITAL

5. EFFECT ON EARNINGS, ASSETS AND LIABILITIES OF THE COMPANY

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS OF DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE OF THE COMPANY

3. SERVICE AGREEMENTS

4. INTEREST CONTRACT

5. MATERIAL CHANGES

6. COMPETING INTEREST

7. EXPERT

8. LITIGATION

9. MISCELLANEOUS

10. MATERIAL CONTRACTS

APPENDIX II

APPENDIX II

APPENDIX II

APPENDIX II

11. DOCUMENTS AVAILABLE FOR INSPECTION

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Datang Intnl Pwr Gen Proxy Solicitation & Information Statement 2015