Netjoy Holdings Limited — Capital/Financing Update 2021

Jun 22, 2021

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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(Stock Code: 902)

CONNECTED TRANSACTION CAPITAL INCREASE IN CLEAN ENERGY INSTITUTE

On 22 June 2021, the Company entered into the Capital Increase Agreement with Huaneng Group, Xi’an Institute, New Energy Co., Northern Co., Mongolia Eastern Co. and Clean Energy Institute. Pursuant to the terms and conditions of the Capital Increase Agreement, the Company shall subscribe part of the new registered capital of Clean Energy Institute in an amount of RMB389,616,900. After completion of the Capital Increase, the Company will become a shareholder of Clean Energy Institute, holding 30% shareholding interest in Clean Energy Institute.

As of the date of publication of this announcement, Huaneng Group holds a 75% direct equity interest and a 25% indirect equity interest in HIPDC, whilst HIPDC, being the direct controlling shareholder of the Company, holds a 32.28% equity interest in the Company. Huaneng Group also holds a 9.91% direct equity interest in the Company, a 3.01% indirect equity interest in the Company through Hua Neng HK (a wholly-owned subsidiary of Huaneng Group), a 0.84% indirect equity interest in the Company through Huaneng Treasury (an indirect wholly-owned subsidiary of Huaneng Group) and a 0.39% indirect equity interest in the Company through Huaneng Finance (a controlling subsidiary of Huaneng Group). Huaneng Group is a connected person of the Company, Xi’an Institute, New Energy Co., Northern Co. and Mongolia Eastern Co., all being the controlling subsidiaries of Huaneng Group, are associates of connected persons according to the Hong Kong Listing Rules. According to the relevant provisions of the Hong Kong Listing Rules, the Capital Increase constitutes a connected transaction of the Company.

With respect to the Capital Increase, given the scale of the Capital Increase does not exceed 5% of the applicable percentage ratios as calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules, the Capital Increase does not constitute a discloseable transaction under Chapter 14 of the

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Hong Kong Listing Rules. The Capital Increase also constitutes a connected transaction under Chapter 14A of the Hong Kong Listing Rules. As the scale of the Capital Increase exceeds 0.1% but does not exceed 5% of the applicable percentage ratios as calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules, therefore, the Company is only required to comply with the reporting and announcement requirements under Rules 14A.71 and 14A.35 of the Hong Kong Listing Rules but is exempt from independent shareholders’ approval requirement.

I. INTRODUCTION

On 22 June 2021, the Company entered into the Capital Increase Agreement with Huaneng Group, Xi’an Institute, New Energy Co., Northern Co., Mongolia Eastern Co. and Clean Energy Institute. Pursuant to the terms and conditions of the Capital Increase Agreement, the Company shall subscribe part of the new registered capital of Clean Energy Institute in an amount of RMB389,616,900. After completion of the Capital Increase, the Company will become a shareholder of Clean Energy Institute, holding 30% shareholding interest in Clean Energy Institute.

II. RELATIONSHIP BETWEEN THE COMPANY, HUANENG GROUP, XI’AN INSTITUTE AND NEW ENERGY CO.

The Company and its subsidiaries mainly develop, construct, operate and manage large-scale power plants in China nationwide. It is one of the largest listed power producers in China. As at the date of publication of this announcement, the controlled generation capacity is 113,805 MW and the equity-based generation capacity is 99,570 MW.

Huaneng Group is principally engaged in the operation and management of enterprises investments, development, investment, construction, operation and management of power plants; organising the generation and sale of power (and heat); and the development, investment, construction, production and sale of products in relation to energy, transportation, new energy and environmental protection industries.

Xi’an Institute is a controlling subsidiary of Huaneng Group. Xi’an Institute is an energy conservation and environmental protection service provider, focusing on key areas such as energy conservation and environmental protection, water treatment and zero discharge of wastewater, new energy, smart power stations, metal materials, power station chemistry, gas turbines and distributed energy, nuclear power, electricity and other key areas, specialising on clean coal utilization, intelligentization and new material technology. The products mainly include power station cleaning and combustion technology steam turbine technology, water treatment equipment, etc.

New Energy Co. is a controlling subsidiary of Huaneng Group, dedicated to the investment, development and research of wind energy and other new energy businesses.

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Northern Co. is a controlling subsidiary of Huaneng Group, dedicated to the investment, development and research of electric power, heat, coal resources, railway and supporting infrastructure projects.

Mongolia Eastern Co. is a wholly-owned regional subsidiary of Huaneng Group, dedicated to the investment, production, operation and sales of power, heat, coal, water, railway transportation, and coal chemical industries.

As of the date of publication of this announcement, Huaneng Group holds a 75% direct equity interest and a 25% indirect equity interest in HIPDC, whilst HIPDC, being the direct controlling shareholder of the Company, holds a 32.28% equity interest in the Company. Huaneng Group also holds a 9.91% direct equity interest in the Company, a 3.01% indirect equity interest in the Company through Hua Neng HK (a wholly-owned subsidiary of Huaneng Group), a 0.84% indirect equity interest in the Company through Huaneng Treasury (an indirect wholly-owned subsidiary of Huaneng Group) and a 0.39% indirect equity interest in the Company through Huaneng Finance (a controlling subsidiary of Huaneng Group). Huaneng Group is a connected person of the Company, Xi’an Institute, New Energy Co., Northern Co. and Mongolia Eastern Co., all being the controlling subsidiaries of Huaneng Group are associates of connected persons according to the Hong Kong Listing Rules. According to the relevant provisions of the Hong Kong Listing Rules, the Capital Increase constitutes a connected transaction of the Company, and are subject to the relevant disclosure and/or independent shareholders’ approval requirements under the Hong Kong Listing Rules.

As of the date of this announcement, the connected relationship between the Company, Huaneng Group, Xi’an Institute, New Energy Co., Northern Co. and Mongolia Eastern Co., is illustrated as follows:

2	Huaneng Group	Huaneng Group	Huaneng Group
	5%		100%
	HIPDC
	32.28%
	the Company	Mongolia Eastern Co.

• Huaneng Group, through Hua Neng HK (a wholly-owned subsidiary of Huaneng Group), indirectly holds 100% of Pro-Power Investment Limited while Pro-Power Investment Limited holds a 25% interest in HIPDC. Therefore, Huaneng Group holds a 25% indirect interest in HIPDC.

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• ** Huaneng Group holds a 9.91% direct interest in the Company, a 3.01% indirect in the Company through Hua Neng HK (a wholly-owned subsidiary of Huaneng Group), a 0.84% indirect interest in the Company through Huaneng Treasury (an wholly-owned subsidiary of Huaneng Group) and a 0.39% indirect interest in the Company through Huaneng Finance (a controlling subsidiary of Huaneng Group).

III. THE CAPITAL INCREASE

The Capital Increase was approved at the meeting of the board of Directors of the Company held on 22 June 2021. The Company entered into the Capital Increase Agreement on 22 June 2021 with Huaneng Group, Xi’an Institute, New Energy Co., Northern Co., Mongolia Eastern Co. and Clean Energy Energy. Major terms of the Capital Increase Agreement are as follows:

1. Capital increase: Huaneng Group will hold 33% of the shareholding interest, combined with the capital already contributed, an additional investment of RMB354,118,500 be contributed, of which RMB104.39 million will be by way of debt-to-equity swap, and RMB249,728,500 will be invested in cash; Xi’an Institute will hold 4.3% of the shareholding interest, combined with the capital already contributed, no additional investment be contributed; New Energy Co. will hold 4.7% of the shareholding interest, combined with the capital already contributed, an additional investment of RMB5,194,900 be contributed; the Company will hold 30% of the shareholding interest and as the consideration for the subscription of the new capital will contribute RMB389,616,900; Northern Co. will hold 14% of the shareholding interest and as the consideration for the subscription of the new capital will contribute RMB181,821,200; and Mongolia Eastern Co. will hold 14% of the shareholding interest and as the consideration for the subscription of the new capital will contribute RMB181,821,200. Of the capital contribution, RMB775 million will be used to increase the registered capital of Clean Energy Institute. The registered capital will be increased to RMB1 billion, which will be allocated to each shareholder according to the proportion of their contribution, the remaining portion will be allocated into the capital reserve.

2. Payment method: Huaneng Group contributed RMB104.39 million in debt-to-equity swap and RMB249,728,500 in cash. The Company, Northern Co., Mongolia Eastern Co. and New Energy Co. will all contribute capital in cash. Huaneng Group, the Company, Northern Co., Mongolia Eastern Co., and New Energy Co. shall pay all contribution into the account designated by Clean Energy Institute by bank remittance within 20 working days from the date of signing the Capital Increase Agreement.

3. Effectiveness: The Capital Increase Agreement shall become effective upon being signed and sealed by the parties.

The Company will use its own funds to pay to Clean Energy Institute for the consideration of the newly increased capital contribution.

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IV. INFORMATION OF CLEAN ENERGY INSTITUTE

Clean Energy Institute was established in April 2010. The current shareholding ratio of Clean Energy Institute is: Huaneng Group holds 40%, Xi’an Institute holds 30%, and New Energy Co. holds 30%. The following is the relevant financial information as of 31 December 2018, 2019 and 2020 prepared by Clean Energy Institute in accordance with Chinese Accounting Standards (among which, Beijing Zhongzheng Tiantong Certified Public Accountants (Special General Partnership), which is qualified to engage in securities and futures business, audited the financial statement of Clean Energy Institute as of 31 December 2018 and issued the “Audit Report of Zhongzheng Tiantong (2019) Shen Zi No. 0201045; Zhongshen Asia-Pacific Certified Public Accountants (Special General Partnership), which is qualified to engage in securities and futures business, audited the financial statements of Clean Energy Institute as of 31 December 2019 and 31 December 2020 and issued the “Audit Report of Zhongshen Yatai Zi (2020) 010033 and Zhongshen Yatai Zi (2021) 010119, respectively):

	As of	As of	As of
	31 December	31 December	31 December
	2018	2019	2020
	(RMB0,000)	(RMB0,000)	(RMB0,000)
	(Audited)	(Audited)	(Audited)
Operating income	16,660.23	17,893.08	15,888.68
Profit before taxation	-6,363.67	-5,649.40	-19,218.44
Net Profit	-5,286.66	-4,798.91	-19,251.14
Net Profit after deducting
non-recurring gains and losses	-3,275.77	-3,261.98	-19,226.03
Total Assets	47,478.63	44,042.74	65,534.36
Net Assets	13,205.25	8,406.34	7,780.20

V. PRICING DETERMINATION OF THIS TRANSACTION

The Company will invest no more than RMB389,616,900, Huaneng Group will invest RMB354,118,500, New Energy Co. will invest RMB5,194,900, Northern Co. will invest RMB181,821,200, Mongolia Eastern Co. will invest RMB181,821,200, and Xi’an Institute will not participate in this capital increase. After the completion of this Transaction, Huaneng Group will hold 33% of shareholding interest in Clean Energy Institute, Xi’an Institute will hold 4.3% of shareholding interest in Clean Energy Institute, New Energy Co. will hold 4.7% of shareholding interest in Clean Energy Institute, and the Company will hold 30% of shareholding interest in Clean Energy Institute, Northern Co. will hold 14% of shareholding interest in Clean Energy Institute, and Mongolia Eastern Co. will hold 14% of shareholding interest in Clean Energy Institute.

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VI. PURPOSE OF THE CAPITAL INCREASE AND THE FINANCIAL IMPACT ON THE COMPANY

The proposal of carbon peak and carbon neutrality targets basically defines the carbon emission reduction path of the PRC in the next 40 years. Domestic coal power will reach its peak scale between 2020 to 2025, and the energy transformation will accelerate. The Company is transforming to green and clean energy, and it is imperative to achieve carbon peak and carbon neutrality as soon as possible. Clean Energy Institute is a platform for technology research and development, technical service and experimental exchanges, and also a platform for achievements transformation in the new energy field of Huaneng Group. It is committed to the research of smart energy and clean energy technology and has solutions for the full life cycle of new energy. Its technology in terms of the capture, utilization and storage of carbon dioxide, integrated removal of pollutants and coal gasification, etc. is at the world or domestic leading level. It has a relatively enriched technical accumulation in smart micro-grid, smart heating, green energy use, peak and frequency modulation, system optimization and energy storage, etc.. It has cutting-edge research and engineering verification in the fields of energy big data analysis and utilization, new power generation materials such as perovskite, hydrogen energy, biomass energy and geothermal energy, which are in line with the energy development trend and the transformation and development direction of the Company.

During the “14th Five-Year Plan” period, and against the background of green transformation and development, this Transaction is an actual implementation by the Company to accelerate the leapfrog development of new energy and increase technological innovation to lead high-quality development. After the completion of this Transaction, the Company can leverage on the advantages of Clean Energy Institute in scientific and technological research and development to improve its research and development and application capabilities in key core technologies such as clean and efficient development and utilization of coal and new energy, and improve the core competitiveness of the Company.

After the completion of the Capital Increase, the Company will not consolidate the financial statements of Clean Energy Institute. The Capital increase will not have a significant impact on the Company’s financial status, and there will be no circumstances that harm the interests of the Company and its shareholders.

VII. IMPLICATIONS UNDER HONG KONG LISTING RULES AND SSE LISTING RULES

With respect to the Capital Increase, given the scale of the Capital Increase amount does not exceed 5% of the applicable percentage ratios as calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules, the Capital Increase does not constitute a discloseable transaction under Chapter 14 of the Hong Kong Listing Rules. The Capital Increase also constitutes a connected transaction under Chapter 14A of the Hong Kong Listing Rules. As the scale of the Capital Increase amount exceeds 0.1% but does not exceed 5% of the applicable percentage ratios as calculated pursuant to Rule 14.07 of the Hong Kong Listing Rules, therefore, the Company is

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only required to comply with the reporting and announcement requirements under Rules 14A.71 and 14A.35 of the Hong Kong Listing Rules but is exempt from independent shareholders’ approval requirement.

VIII. APPROVAL FROM THE BOARD

The Capital Increase was considered and approved at the 13th meeting of the tenth session of the Board of the Company on 22 June 2021. Zhao Keyu, Zhao Ping, Huang Jian, Wang Kui, Lu Fei, Teng Yu, all being Directors having connected relationship, abstained from voting on the board resolution relating to the Transaction. The resolution was voted by Directors who are not related to the Transaction.

The Directors (including independent non-executive Directors) are of the view that the Capital Increase Agreement was entered into: (i) on normal commercial terms (on arm’s length basis or on terms no less favourable to the Company than terms available from independent third parties); (ii) on terms that are fair and reasonable and are in the interests of the Company and its shareholders as a whole and (iii) in the ordinary and usual course of business of the Company.

IX. DEFINITIONS

In this announcement, unless the context requires otherwise, the following terms shall have the meanings set out below:

• “associate(s)”

• has the meaning ascribed to it under the Listing Rules

• “Capital Increase” or “this Transaction”

• the Company, Huaneng Group, New Energy Co., Northern Co. and Mongolia Eastern Co. will jointly contribute RMB1,112,572,700 (of which the Company will contribute no more than RMB389,616,900) to subscribe for part of the new registered capital of Clean Energy Institute pursuant to the terms and conditions of the Capital Increase Agreement. After completion of the Capital Increase, the Company will become a shareholder of Clean Energy Institute, holding 30% shareholding interest in Clean Energy Institute

• “Capital Increase Agreement”

• the agreement dated 22 June 2021 entered into among the Company, Huaneng Group, Xi’an Institute, New Energy Co., Northern Co., Mongolia Eastern Co. and Clean Energy Institute relating to the capital increase of China Huaneng Group Clean Energy Technology Research Institute Co., Ltd.

• “Clean Energy Institute” China Huaneng Group Clean Energy Technology Research Institute Co., Ltd.

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Huaneng Power International, Inc.

“Company”

“connected person(s)”	has the meaning ascribed to it under the Listing Rules	has the meaning ascribed to it under the Listing Rules
“Director(s)”	the director(s) (including independent	non-executive
	director(s)) of the Company
“HIPDC”	Huaneng International Power Development Corporation
“Hong Kong Listing Rules”	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited
“Hua Neng HK”	China Hua Neng Group Hong Kong Limited
“Huaneng Capital”	Huaneng Capital Service Co., Ltd.
“Huaneng Finance”	China Huaneng Finance Corporation Limited
“Huaneng Group”	China Huaneng Group Co., Ltd.
“Huaneng Treasury”	China Huaneng Group Treasury Management (Hong Kong)
	Limited
“Mongolia Eastern Co.”	Huaneng Inner Mongolia Eastern Energy Co.,	Ltd.
“New Energy Co.”	Huaneng New Energy Co., Ltd.
“Northern Co.”	Northern United Power Co., Ltd.
“PRC” or “China”	the People’s Republic of China
“RMB”	the lawful currency of the PRC
“SEE Listing Rules”	The Rules Governing the Listing of Securities on the
	Shanghai Stock Exchange
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“subsidiary(ies)”	has the meaning ascribed to it in the Hong Kong Listing
	Rules
“Xi’an Institute”	Xi’an Thermal Power Research Institute Co.,	Ltd.

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By Order of the Board Huaneng Power International, Inc. Huang Chaoquan Company Secretary

As at the date of this announcement, the Directors of the Company are:

Zhao Keyu (Executive Director) Zhao Ping (Executive Director) Huang Jian (Non-executive Director) Wang Kui (Non-executive Director) Lu Fei (Non-executive Director) Teng Yu (Non-executive Director) Mi Dabin (Non-executive Director) Cheng Heng (Non-executive Director) Li Haifeng (Non-executive Director) Lin Chong (Non-executive Director)

Xu Mengzhou (Independent Non-executive Director) Liu Jizhen (Independent Non-executive Director) Xu Haifeng (Independent Non-executive Director) Zhang Xianzhi (Independent Non-executive Director) Xia Qing (Independent Non-executive Director)

Beijing, the PRC 23 June 2021

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