Modern Innovative Digital Technology Company Limited — Proxy Solicitation & Information Statement 2002

Nov 8, 2002

THIS DOCUMENT 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 your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Beijing Datang Power Generation Company Limited, you should at once hand this circular 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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(A Sino-foreign joint stock limited company incorporated in the People’s Republic of China)
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DISCLOSEABLE TRANSACTION

7 November, 2002

Beijing Datang Power Generation Co. Ltd

CONTENTS

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
2.	The Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
3.	The Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
4.	Information Relating to the Li Xian Jiang Hydropower Project . . . . . . . . . . . . . . . .	4
5.	Reasons for the Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
6.	Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Appendix	— General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7

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Beijing Datang Power Generation Co. Ltd

DEFINITIONS

In this Circular, unless otherwise specified, the following words and expressions shall have the meanings ascribed thereto.

BIC: Directors: HCI: HK$: H Shares: Latest Practicable Date: Li Xian Jiang Company: NCPGC: PRC: SDI Ordinance: Shareholders: Si Mau Asset: The Company: The Group:

Beijing International Power Development Investment Company, a state-owned enterprise established in the PRC The directors of the Company Hebei Province Construction Investment Company, a state-owned enterprise established in the PRC Hong Kong dollars, the lawful currency of Hong Kong Overseas listed foreign invested shares issued by the Company, with a nominal value of RMB1.00 each, which are subscribed for and traded in Hong Kong dollars and for which listing and dealing are permitted on the Stock Exchange of Hong Kong Limited and on the Official List of the London Stock Exchange 7 November, 2002, being the latest practicable date prior to the printing of this document for ascertaining certain information referred to herein Yunnan Datang Li Xian Jiang Hydropower Development Company Limited North China Power Group Company, a state-owned enterprise established in the PRC and holding 35.43% of the Company’s registered share capital The People’s Republic of China Securities (Disclosure of Interests) Ordinance (Chapter 396 of the Laws of Hong Kong) Registered holders of the Company’s issued shares Si Mau Area State-Owned Asset Operation Company Limited Beijing Datang Power Generation Company Limited, incorporated as a Sino-foreign joint stock limited company established in the PRC The Company and its subsidiaries

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Beijing Datang Power Generation Co. Ltd

DEFINITIONS

The Li Xian Jiang Hydropower Project: The Li Xian Jiang Joint Venture Agreement: The Listing Rules: The Stock Exchange: The Three Power Stations: TJC:

The planning, construction and operation of the Three Hydropower Stations The agreement dated 18 October 2002 between the Company and Si Mau Asset in respect of the establishment of Li Xian Jiang Company The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited The Stock Exchange of Hong Kong Limited Ya Yang Shan Hydropower Station, Long Ma Hydropower Station, Ju Pu Du Hydropower Station Tianjin Jinneng Investment Company, a state-owned enterprise established in Tianjin

Note: For the purpose of this circular, all amounts in RMB were translated into HK$ at an exchange rate of RMB1.06: HK$1.00.

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Beijing Datang Power Generation Co. Ltd

LETTER FROM THE BOARD

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(A Sino-foreign joint stock limited company incorporated in the People’s Republic of China)

Executive Directors:

Yu Hongji Zhang Yi Yang Hongming Wang Xianzhou

Independent Non-Executive Directors:

Legal Address and Head Office:

No. 482 Guanganmennei Avenue Xuanwu District Beijing The PRC

Zhai Ruoyu Hu Shengmu Yang Jiayi Liu Haixia Su Tiegang Ye Yonghui Tong Yunshang Zhang Wantuo Xu Daping Wu Zhentao

Principal Place of Business in Hong Kong

c/o Simmons & Simmons 35/F Cheung Kong Center 2 Queen’s Road Central Hong Kong

7 November, 2002

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

1. INTRODUCTION

On 18 October 2002, the Company entered into the Li Xian Jiang Joint Venture Agreement with Si Mau Asset. Pursuant to the Li Xian Jiang Joint Venture Agreement, the Company and Si Mau Asset agreed to invest 70% and 30% respectively, in the registered capital of Li Xian Jiang Company for the purpose of constructing and operating three hydropower stations of the Li Xian Jiang Hydropower Project.

Si Mau Asset is independent and is not connected with the promoters, directors, supervisors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of its associates.

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Beijing Datang Power Generation Co. Ltd

LETTER FROM THE BOARD

The Li Xian Jiang Joint Venture Agreement constitutes a discloseable transaction for the company pursuant to Chapter 14 of the Listing Rules as the consideration paid by the Company (by way of contribution towards the registered capital of Li Xian Jiang Company) plus the maximum amount to be guaranteed by the Company in respect of future borrowings of Li Xian Jiang Company equals to 15.2% of the latest consolidated net tangible assets of the Group.

2. THE INVESTMENT

Pursuant to the Li Xian Jiang Joint Venture Agreement, the total investment of the Li Xian Jiang Hydropower Project is RMB3,052,860,000 (equivalent to approximately HK$2,880,056,604) (subject to the approval of the relevant PRC authorities) and the registered capital of Li Xian Jiang Company is RMB140,000,000 (equivalent to approximately HK$132,075,472). It is proposed that the difference between the total investment and the registered capital will be funded by Li Xian Jiang Company by means of third party borrowings, in respect of which the Company and Si Mau Asset agreed to guarantee 70% and 30% respectively on a several basis in accordance with the actual financial needs of Li Xian Jiang Company.

3. THE CONSIDERATION

Pursuant to the Li Xian Jiang Joint Venture Agreement, the registered capital of Li Xian Jiang Company will amount to approximately RMB140,000,000 (equivalent to approximately HK$132,075,472). The registered capital will be contributed in cash by the Company and Si Mau Asset in proportions of 70% and 30% respectively. Accordingly, the Company will contribute approximately RMB98,000,000 (equivalent to approximately HK$92,452,830) in total to the registered capital of Li Xian Jiang Company. Such amount will be funded from the Company’s internal financial resources. The detailed timing and manner of such capital contribution by each of the parties to the agreement will be set out in the Articles of Association of Li Xian Jiang Company.

Apart from its contribution to the registered capital of Li Xian Jiang Company and its obligation to provide guarantees for the funding of the Li Xian Jiang Hydropower Project according to the investment ratio as described above, the Company is not obliged to provide any other funding to Li Xian Jiang Company under the Li Xian Jiang Joint Venture Agreement.

4. INFORMATION RELATING TO THE LI XIAN JIANG HYDROPOWER PROJECT

It is proposed that Li Xian Jiang Company will be established in Si Mau, Yunnan Province and for a term of 30 years (excluding the construction period).

The Li Xian Jiang Hydropower Project consists of the Three Power Stations. The Company and Si Mau Asset have agreed to establish Li Xian Jiang Company as a joint venture company for the purpose of planning, constructing and operating the Three Hydropower Stations, namely:

(A) Ya Yang Shan Hydropower Station

The estimated total investment of this hydropower station amounts to RMB700,860,000. It is proposed to consist of a set of 3x33 MW hydraulic-turbine generating units.

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Beijing Datang Power Generation Co. Ltd

LETTER FROM THE BOARD

(B) Long Ma Hydropower Station

The estimated total investment of this hydropower station amounts to RMB1,330,000,000. It is proposed to consist of a set of 3x80 MW hydraulic-turbine generating units.

(C) Ju Pu Du Hydropower Station

The estimated total investment of this hydropower station amounts to RMB1,022,000,000. It is proposed to consist of a set of 3x80 MW hydraulic-turbine generating units.

The total amount of investment of the Li Xian Jiang Hydropower Project is estimated to be approximately RMB3,052,860,000. The final total investment will, however, be in accordance with the amount approved by the relevant government authorities in the PRC.

Major Terms

The registered capital of Li Xian Jiang Company is proposed to be RMB140,000,000. The Company agreed to contribute towards 70% (RMB98,000,000) while Si Mau Asset agreed to contribute towards 30% (RMB42,000,000) of the registered capital of Li Xian Jiang Company. All contributions shall be paid by the parties in cash. Any profits generated by Li Xian Jiang Company will be shared between the Company and Si Mau Asset in accordance with the percentage of their respective shareholdings in Li Xian Jiang Company. The timing and the amount for the injection of capital will be set out in the Articles of Association of Li Xian Jiang Company.

The total investment required by the Li Xian Jiang Hydropower Project is estimated to be approximately RMB3,052,860,000 (subject to any adjustment made by the relevant PRC government authorities). The Company and Si Mau Asset agreed that the difference between the total investment and the registered capital will be funded by Li Xian Jiang Company by means of third party borrowings, in respect of which the Company and Si Mau Asset agreed to guarantee 70% and 30% respectively on a several basis in accordance with the actual financial needs of Li Xian Jiang Company. The Company will comply with the relevant Listing Rules in relation to such guarantee.

The board of directors of Li Xian Jiang Company shall consist of seven directors in total, 4 of which shall be appointed by the Company, 2 of which shall be appointed by Si Mau Asset and 1 of which shall be appointed by and out of the employees of Li Xian Jiang Company.

The Li Xian Jiang Joint Venture Agreement will become effective when all necessary approvals in the PRC have been obtained.

The Directors expect that Li Xian Jiang Company, once established, will be treated as a subsidiary of the Company.

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Beijing Datang Power Generation Co. Ltd

LETTER FROM THE BOARD

5. REASONS FOR THE INVESTMENT

The resources for hydropower construction are abundant in Yunnan and the investment environment is relatively favourable for newly established power enterprises in the Western region of the PRC. In support of the development of the Western region, the PRC Government has granted certain favourable policies to such newly established power enterprises, including tax concessions, thereby enhancing their profitability and competitiveness and in return, increasing shareholder’s return. The Li Xian Jiang Hydropower Project has been included into Yunnan’s Power Construction Project Planning of the Tenth Five-Year Plan and the Eleventh Five-Year Plan, as well as the province-wide and Yunnan-to-Guangdong power balancing projects.

The development conditions for the Three Power Stations developed along the Li Xian Jiang River are favourable, and resources for hydropower are abundant. Upon completion, the unit cost of hydropower generation will be much lower than that of thermal power generation.

The Yunnan power market consists of both hydropower and thermal power generation. While focusing on developing thermal power plants, the Company also constructs hydropower plants of large capacity. Hydropower plants and thermal power plants would complement each other during rainy versus dry seasons, thereby enabling the Company to maintain a balanced position in the power market.

The annual capital investment of the construction of Ya Yang Shan Hydropower Station, Long Ma Hydropower Station and Ju Pu Du Hydropower Station only represents a small portion of the Company’s capital revenue and, therefore, will not affect the Company’s capital operation and profit distribution.

The Directors expect that the Li Xian Jiang Hydropower Project will bring about an increase in the Company’s earnings.

The Li Xian Jiang Joint Venture Agreement allows the Company to participate in the development and operation of hydropower projects in Yunnan. This is consistent with the Company’s development strategies of “dual emphasis”, that is, development within versus outside the region, development of hydro versus thermal power plants, and greenfield development vs. acquisition, and as such will further strengthen the Company’s ability in continual development and enhance its shareholder value.

6. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices which form part of this circular.

By Order of the Board Beijing Datang Power Generation Company Limited Zhai Ruoyu Chairman

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Beijing Datang Power Generation Co. Ltd

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This document includes particulars given in compliance with the Listing Rules for the purpose of providing information with regard to the Li Xian Jiang Joint Venture Agreement and the Company.

The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this document 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

As of the Latest Practicable Date, none of the Directors had any interests in the share capital of the Company or its associated corporations (within the meaning of the SDI Ordinance) which have been notified to the Company and the Stock Exchange pursuant to section 28 of the SDI Ordinance (including interests which they are deemed or taken to have under section 31 of, or part 1 of the Schedule to, the SDI Ordinance) or which are required, pursuant to section 29 of the SDI Ordinance, to be entered in the register referred to therein or which are required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies.

3. SUBSTANTIAL SHAREHOLDERS

Save as disclosed below, there is no other person known to the Directors who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group:

		Number	Percentage
		of shares or	shareholding
Name of shareholder or		amount of paid	or paid equity
person so interested	Shares	equity held	holding
NCPGC	Domestic shares	1,828,768,200	35.43%
BIC	Domestic shares	671,792,400	13.01%
HCI	Domestic shares	671,792,400	13.01%
TJC	Domestic shares	559,827,000	10.84%

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Beijing Datang Power Generation Co. Ltd

GENERAL INFORMATION

APPENDIX

4. DIRECTORS’ SERVICE CONTRACTS

			Remuneration
		Date of contract,	and benefits
		unexpired term and	in kind
Director	Employed by	notice period	(per annum)	Others
Yu Hongji	The Company	The contract was signed on	RMB150,000	There are no provisions
		6 December 1999 with an		for commissions, profit-
		unexpired term of		sharing arrangements or
		approximately 21 months.		compensation in the
		Either party may terminate		event of early
		the contract by 6 months		termination.
		prior notice to the other
		party.
Zhang Yi	The Company	The contract was signed on	RMB150,000	There are no provisions
		24 June 1999 with an		for commissions, profit-
		unexpired term of		sharing arrangements or
		approximately 21 months.		compensation in the
		Either party may terminate		event of early
		the contract by 6 months		termination.
		prior notice to the other
		party.
Yang Hongming	The Company	The contract was signed on	RMB150,000	There are no provisions
		29 October 1998 with an		for commission, profit-
		unexpired term of		sharing arrangements or
		approximately 21 months.		compensation in the
		Either party may terminate		event of early
		the contract by 6 months		termination.
		prior notice to the other
		party.
Wang Xianzhou	The Company	The contract was signed on	RMB150,000	There are no provisions
		18 November 2000 with an		for commissions, profit-
		unexpired term of		sharing arrangements or
		approximately 21 months.		compensation in the
		Either party may terminate		event of early
		the contract by 6 months		termination.
		prior notice to the other
		party.

Save as disclosed above, there are no other directors’ service contracts which are in force with any member of the Group.

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Beijing Datang Power Generation Co. Ltd

GENERAL INFORMATION

APPENDIX

5. LITIGATION

The Directors are not aware of any litigation or arbitration of material importance pending or threatened against any member of the Group.

6. MISCELLANEOUS

• (i) The Company Secretary is Yang Hongming.

• (ii) Save as disclosed herein, none of the Directors is materially interested in any contract or arrangement subsisting at the date of this document which is significant in relation to the business of the Group.

• (iii) The Directors are not aware of any adverse material change in the financial or trading position of the Group since the date on which the Company published its latest audited accounts.

• (iv) Save as disclosed herein, none of the Directors has any direct or indirect interest in any assets acquired or disposed of by or leased to any member of the Group or proposed to be acquired or disposed of by or leased to any member of the Group since the date on which the Company published its audited accounts for the year ended 31 December 2001.

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Beijing Datang Power Generation Co. Ltd