ITF on the London Stock Exchange

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT.

Neither this announcement, nor anything contained herein, shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction. Investors should not subscribe for or purchase any securities referred to in this announcement except solely on the basis of the information contained in the prospectus in its final form (together with any supplementary prospectus, if relevant, the "Prospectus"), including the risk factors set out therein, expected to be published by SDIC Power Holdings CO., LTD (the "Company") in due course in connection with a proposed offer of global depositary receipts ("GDRs") representing the Company's A shares and the proposed admission of such GDRs to the standard listing segment of the Official List of the United Kingdom Financial Conduct Authority and to trading on the Shanghai-London Stock Connect segment of the main market for listed securities of London Stock Exchange plc. A copy of the Prospectus will, following publication, be available for inspection on the Company's website at www.sdicpower.com, subject to certain access restrictions.

16 October 2020                                                                             

SDIC Power Holdings CO., LTD

Intention to Float on the London Stock Exchange

SDIC Power Holdings CO., LTD (the "Company" and together with its subsidiaries, the "Group"), a leading power generation company in China, today announces its intention to proceed with an offering (the "Offering") of approximately 16,350,000 global depositary receipts (the "GDRs") representing A shares of the Company with a fully paid nominal value of RMB1.00 each (the "A Shares"). The Offering will represent approximately 2.4% of the total ordinary share capital of the Company prior to the Offering.

The price range for the Offering is expected to be between USD 12.27 and USD 13.37 per GDR. The final offer price in respect of the Offering (the "Offer Price") will be determined following a book-building process. The book-building process is expected to be today on 16 October 2020.

The GDRs are expected to be admitted to listing on the standard segment of the Official List maintained by the United Kingdom Financial Conduct Authority (the "FCA") and to trading on the Shanghai-London Stock Connect segment of the main market for listed securities of London Stock Exchange plc (the "LSE") (together the "Admission"). Admission is expected to take place on or around 22 October 2020.

 

The Group Overview

·      The Group is a leading power generation company in China, with a diversified portfolio of projects across hydropower, coal-fired power, wind power, solar power and other renewable energy. The Group develops, acquires and operates power projects and sells the electricity generated by them to grid companies.

·      As at 30 June 2020, the Group's consolidated installed capacity was 31.0 GW, and the breakdown of the Group's consolidated installed capacity for hydropower, coal-fired power, and wind and solar power and other renewable energy projects was 54.0%, 38.2% and 7.8%, respectively.

·      The Group has a leading hydropower business in China. Among all publicly listed PRC power generation companies, the Group was the third largest hydropower company in China in terms of consolidated hydro installed capacity of 16.8 GW as at 31 December 2019, according to Frost & Sullivan.

·      The Group has been actively optimising its coal-fired power projects by focusing on large capacity, efficient and energy-saving power units. As at 30 June 2020, all of the Group's coal-fired installed capacity of 11,846.0 MW consisted of large units with a single installed capacity of at least 300.0 MW.

·      In addition, the Group is dedicated to expanding its wind power, solar power and other renewable energy portfolio, whose combined installed capacity has been growing at a CAGR of c. 30% over the past five years to 31 December 2019. Moreover, leveraging its early mover's advantage in acquiring and operating offshore wind power projects in the UK and waste-to-energy power projects in Thailand, the Group expands its international footprints by further developing overseas renewable energy projects.

·      The Group's total revenue increased steadily from RMB27,894.6 million in 2017 to RMB36,485.8 million in 2018 and further to RMB37,752.0 million in 2019, with a CAGR of 16.3%. In the same periods, the Group's net profit from continuing operations was RMB7,115.6 million, RMB8,976.3 million and RMB8,612.9 million, respectively, its profit attributable to owners of the Company was RMB3,232.3 million, RMB4,329.2 million and RMB4,726.5 million, respectively, and the net cash flows generated from operating activities was RMB18,089.9 million, RMB19,132.9 million and RMB20,235.5 million, respectively.

ZHU Jiwei, Chairman of the Company, stated:

"SDIC Power remains committed to its global growth strategy, through which we will increase our clean energy capacity and continue our international expansion. We believe a listing on the London Stock Exchange will support this new phase of our development, following our transformation from a coal-fired power focused company to one of China's leading clean energy generators.

With our diversified portfolio of generating assets, we are well-positioned to meet China's growing energy needs, bringing hydropower from the country's mountainous west to its industrial east coast. Outside China we will target acquisitions and new projects where we see attractive opportunities, including in Asia and Europe, where SDIC Power is already a co-investor in the Beatrice Offshore Wind Power Project, which is the largest operating offshore wind project in Scotland." 

Confirmation of Offering Details

·      The Offering will consist of an offer of approximately 16,350,000 GDRs representing newly issued underlying A Shares of the Company.

·      In addition, the Company will grant an over-allotment option to Goldman Sachs International (the "Stabilising Manager"), acting on behalf of the Joint Bookrunners (as defined below), pursuant to which the Stabilising Manager may purchase or procure purchasers for additional GDRs up to a maximum of 10% of the total number of GDRs sold in the Offering at the Offer Price (the "Over-allotment GDRs").

·      The GDRs are expected to be admitted to listing on the standard segment of the Official List maintained by the FCA and to trading of the GDRs to the Shanghai-London Stock Connect segment of the main market for listed securities of London Stock Exchange plc.

·      The Company will also apply to the Shanghai Stock Exchange (the "SSE") for admission to listing of the underlying A Shares represented by the GDRs, with the listing expected to be effective on the date of Admission.

·      Assuming the maximum number of GDRs are issued and full exercise of the Over-Allotment Option, gross proceeds from the Offering are expected to amount to between approximately USD 220 million and USD 240 million. The proceeds will be used for expanding the Group's renewable energy business overseas and repaying the Group's offshore indebtedness.

·      No securities are expected to be sold by existing shareholders of the Company as part of the Offering.

·      The GDRs are being offered and sold outside the United States in "offshore transactions" within the meaning of Regulation S under the Securities Act (as defined below).

·      The Offering is subject to the receipt of all relevant registrations and regulatory approvals.

·      Full details of the Offering, including the final Offer Price per GDR and the final number of GDRs, will be determined and included in the Prospectus, expected to be published by the Company on or around 19 October 2020.

·      The Company has entered into a cornerstone investment agreement dated 7 September 2020 (the "Cornerstone Investment Agreement") with China Yangtze Power International (Hongkong) Co., Limited (the "Cornerstone Investor"), which is a wholly-owned subsidiary of China Yangtze Power Co., Ltd. (which is the Company's second largest shareholder as at the date of this Announcement). Pursuant to the Cornerstone Investment Agreement, the Cornerstone Investor has agreed to acquire the number of Offer GDRs (rounded down to the nearest whole GDR) that may be purchased at the Offer Price for an aggregate amount of US$100 million.

·      It is expected that conditional dealings in the GDRs on the London Stock Exchange will commence on a "when-issued" basis on or around 19 October 2020 and Admission will take place on or around 22 October 2020. Investors should rely only on the information contained in the Prospectus when making a decision as to whether to invest in the GDRs.

·      Goldman Sachs International, UBS AG London Branch and HSBC Bank plc are acting as Joint Global Co-ordinators (together, the "Joint Global Co-ordinators") and China International Capital Corporation (UK) Limited and CLSA Limited are acting as Joint Bookrunners (together with the Joint Global Coordinators, the "Joint Bookrunners").

Investment Highlights

The Group believes the competitive strengths set out below place it at the forefront of the power generation industry in China:

Rare and premium hydropower resources with vast potential for growth

·      The Group's hydropower projects are predominantly located along the Yalong River, the Lantsang River and the Yellow River. These rivers are rich in hydrological resources and are suitable for developing cascade hydropower projects. Hydropower projects along the Yalong River are the core hydropower assets of the Group. With an exploitable capacity of over 30.0 GW, the Yalong River is the third largest hydropower base among China's 13 largest hydropower bases. Around half of the river's runoff comes from ample and steady annual discharge from underground water and meltwater, which results in low seasonal and annual variance in flow. The Group's Jinping I and Jinping II hydropower projects are among the ten largest hydropower projects in China. The Group's principal subsidiary, Yalong River Hydropower, has the exclusive right to develop hydropower resources of the Yalong River, which is the only instance where a power generation company has exclusive right to develop hydropower resources of a major hydropower base in China.

·      The Group strategically scheduled the construction of large-scale hydropower projects on the river, leveraging the scale of its hydraulics resources. As at 30 June 2020, the Group has five large-scale hydropower projects in operation on the lower reach of the Yalong River, totalling 14.7 GW in consolidated installed capacity, which have over 70 TWh of annual power generation for the past three years. The Group plans to develop seven hydropower projects on the middle reach of the Yalong River, with a total designed capacity of 11.8 GW and designed power output of approximately 49.7 TWh per year.

·      In addition, the Group's Dachaoshan Hydropower Project, with a total of 1,350.0 MW installed capacity, is located on the middle reach of the Lantsang River, and Daxia, Xiaoxia and Wujinxia (also known as Xiaosanxia) hydropower projects are located on the upper reach of the Yellow River, with an installed capacity of 709.5 MW. Both areas are among China's 13 largest hydropower bases, characterised by abundant and stable water resources.

Outstanding hydropower profitability due to sound coordination and regulating capability of hydropower projects

·      The "unit gross profit" (gross profit divided by hydro installed capacity) of the Group's hydropower business in 2019 was RMB730,489 per MW, which was the highest among all A-share listed power generation companies with hydropower installed capacity at the GW level in the same year, according to Frost & Sullivan.

·      The Group has the unique advantage of operating a multilevel cascade hydropower system consisting of five large-scale hydropower projects in operation and two under construction along the Yalong River. The combination of cascade hydropower projects and large regulating reservoirs optimises hydropower resource allocation, mitigates adverse hydrological conditions and maximises hydropower generation efficiency, which lead to higher and more stable hydropower generation. The Group's Lianghekou Hydropower Project (under construction), Jinping I Hydropower Project and Ertan Hydropower Project are equipped with large-scale regulating reservoirs. In particular, Jinping I Hydropower Project's arch dam is 305 metres in height, which is the world's highest double-curvature arch dam, according to Frost & Sullivan. These large regulating reservoirs can increase water storage during the wet season, and increase the water flow for downstream hydropower projects during the dry season, thus significantly increasing their power generation and enabling the Company to enjoy a tariff premium. When Lianghekou Hydropower Project commences operation, it is targeted to increase the theoretical multi-year average annual electricity generation of the Group's hydropower projects by over 10 TWh.

Industry-leading hydropower utilisation hours

·      Due to the preferential offtake arrangements and designated power transmission lines, together with the Group's premium hydropower resources and sound water regulating capability, the Group's average utilisation hours of hydropower projects in 2017, 2018 and 2019 was 4,965 hours, 5,048 hours and 5,156 hours, respectively, far greater than the average national hydropower utilisation hours of 3,597 hours, 3,607 hours and 3,726 hours in the same periods, respectively.

·      The PRC government has committed to supporting the development of clean energy, in particular, prioritising hydropower, wind power and solar power generation. The Group's hydropower projects have benefited, and will continue to benefit from preferential offtake arrangements and designated power transmission lines. In 2019, the amount of hydropower generated under preferential offtake arrangements under the clean energy policy accounted for more than 90.0% of the hydropower generated by the Group. In particular, most of the power generation from the Group's Jinping I, II and Guandi hydropower projects is transmitted to one of the most developed provinces in China through the designated ultra-high-voltage power transmission lines built under the state's "West-to-East" electricity transmission project. Moreover, Dachaoshan Power Project in Yunnan province and Xiaosanxia Power Project in Gansu province enjoy preferential offtake arrangements as well.

Efficient and clean coal-fired power assets

·      In addition to the premium hydropower assets, the Group has been actively optimising its coal-fired power project portfolio and investing in equipment and technology upgrades. The Group's coal-fired power projects focus on large-capacity, energy-saving power generating units, and operate in an efficient and environmentally friendly manner. As at 30 June 2020, the Group's coal-fired installed capacity reached 11,846.0 MW, consisting of units with single installed capacity of at least 300.0 MW.

·      The Group has eight units at the GW level, representing 67.5% of total installed capacity of coal-fired power, substantially higher than other A-share listed coal-fired power companies with a coal-fired installed capacity of over 5.0 GW. In addition, the Group has eight ultra-supercritical coal-fired power generating units and two supercritical coal-fired power generating units, with a total installed capacity of 9,260.0 MW. The operation of a large number of advanced coal-fired units is conducive to reducing coal consumption for power generation. Moreover, all of the coal-fired power generating units operated by the Group have retrofitted with desulphurisation, dedust and denitrification equipment. Over 90% of the Group's coal-fired power units in terms of installed capacity have achieved ultra-low emission levels. For example, Beijiang Coal-fired Power Project has four 1.0 GW ultra-supercritical power generating units and achieved a net standard coal consumption rate of 283.0g/kWh for the year ended 31 December 2019, as compared to the national average rate for coal-fired power plants of 306.2g/ kWh.

Successfully acquiring, developing and operating high-quality overseas power generation assets

·      The Group has built a diversified portfolio of high-quality power generating assets in Europe and Asia. By acquiring three wind power projects in the UK, the Group has entered into the European renewable energy market. The Group is an industry leader in exploring international opportunities relating to wind power projects. In 2016, the Group acquired a 100.0% equity interest in Red Rock Power Limited, through which it owned a 25.0% equity interest in Beatrice Offshore Wind Power Project and a 100.0% equity interest in Inch Cape Offshore Wind Power Project. The Beatrice project is an offshore wind project located off the north east coast of Scotland with an installed capacity of 588.0 MW and reached full commercial operation in July 2019, with a 15-year fixed tariff of GBP140/MWh (2012 real price and indexed to CPI), which is higher than the local wholesale electricity price. In 2018, the Group acquired the Afton Onshore Wind Power Project, which enjoys a 19-year ROC (Renewables Obligation Certificate) subsidy from the date of commercial operation. The Group has accumulated extensive experience in developing and managing offshore and onshore wind power projects through these acquisitions, which enables the Group to access best-in-class international operation models and advanced technology to further explore renewable energy business opportunities globally.

·      In addition, the Group acquired a 40.0% equity interest in the Banten Coal-fired Power Project in 2016. The project is located at the power load centre of Indonesia and is one of the major power plants for the Jawa-Bali grid. The project has entered into a 25-year PPA with a state-owned power grid company in Indonesia which provides a stable income. The Group has years of experience in developing, operating and managing coal-fired power projects in China and is well positioned to apply the experience to enhance the efficiency of the invested project.

·      Further, the Group has been substantially involved in overseas waste-to-energy power business and vigorously grasped the first-mover advantage in the waste-to-energy market in Southeast Asia. In 2019, the Group acquired a 60% equity interest in Newsky China. Through Newsky China, the Group operates one waste-to-energy power project and has two waste-to-energy power projects under construction, which are all located in Bangkok, Thailand with a combined installed capacity of 79.8 MW. By leveraging the resource advantages possessed by Newsky China, the Group has successfully expanded its footprint to the waste-to-energy market in Thailand, and is well positioned to seize more opportunities overseas.

Visionary and experienced management team supported by highly skilled employees

·      The Group is led by a management team consisting of highly qualified experts with in-depth knowledge and expertise in the power industry. Having deep insights and a comprehensive understanding of the development and future trends of the power industry, the management team has successfully steered the Group in growing from a coal-fired power focused company to a leading diversified power generation company in China with a focus on hydropower. In addition, the Group was among the first batch of state-owned enterprises in China to recruit executives. The Group's senior management members have an average industry experience of 20 years and have been with the Group for an average of 14 years.

·      The management team is supported by professional technicians with extensive experience in developing and operating power projects. In particular, they managed to successfully complete the construction of the Ertan Hydropower Project and Jin-guan Hydropower Project Group, and enhanced the Group's brand awareness globally. As at 30 June 2020, the Group has 8,161 employees, 53.5% of whom have a college degree or above. The Group provides employees with professional on-the-job training to ensure that they continue to stay abreast of the latest developments in the power industry.

Business Strategies

The Group is committed to strengthening its position as a leading diversified power generation company in China and increasing its international presence through the following strategies:

Continue to strengthen hydropower business

·      The Group will continue to strengthen its leading position in China's hydropower industry by developing more hydropower projects in the upper and middle reaches of the Yalong River.

·      Additionally, the Group intends to increase operation efficiency and lower development and maintenance costs with the help of a skilled technical team.

·      The Group also plans to identify quality acquisition targets of hydropower projects and to explore hydropower opportunities both in China and overseas.

Strategically expand international footprint

·      The Group intends to gradually conduct international business and further expand its international footprint, with a focus on renewable energy projects in developed countries and diversified energy projects in developing countries, thereby expanding its overseas asset portfolio.

·      The Group plans to actively develop its offshore and onshore wind power projects in the UK and European markets, and also to seek potential investment opportunities in renewable energy projects, including solar power, waste-to-energy and energy storage projects through Red Rock Power, its European development platform.

·      The Group will also explore investment opportunities in diversified energy projects in Southeast Asia.

Further expand wind and solar power generating assets

·      The Group intends to increase investment in renewable energy assets, particularly wind power and solar power. With strong PRC government support for wind and solar power development, the Group plans to continue to develop greenfield wind and solar power projects.

·      The Group also intends to selectively acquire wind power and solar power projects, focusing on both increasing its scale and meeting its investment return expectation.

Continue to optimise coal-fired power asset structure

·      The Group will continue to improve the efficiency and cleanliness of its coal-fired power projects. Specifically, it plans to optimise its coal-fired power asset structure by increasing the proportion of large capacity power generating units, and accelerate the upgrading to improve energy efficiency and reduce emissions.

·      In addition, the Group intends to further optimise its operations to enhance efficiency and the financial performance of its coal-fired power projects.

Establish a diversified and emerging industry value chain

·      The Group is also actively developing waste-to-energy business. In 2019, the Group acquired a waste-to-energy power project in Guizhou province, China and three waste-to-energy power projects in Bangkok, Thailand, and it intends to further explore acquisition opportunities to expand its waste-to-energy business in the future. The Group is also exploring opportunities to develop solar thermal power projects.

·      In addition, the Group intends to explore opportunities for growth across the industry value chain and to pursue vertical integration by expanding into incremental distribution network business and electricity sales business.

Dividend Policy

If the Company has profits and no unrecovered losses during the year and there are no significant investment or capital expenditure plans, it shall distribute cash dividends. The accumulated profits for distribution in the most recent three fiscal years shall be no less than 30% of the average annual distributable profits realised in the same period. Any proposed distribution of dividends is subject to the discretion of the Board and the approval of the shareholders. The Board may recommend a distribution of dividends in the future after taking into account the Group's results of operations, financial condition, operating requirements, capital requirements, shareholders' interests and any other conditions that the Board may deem relevant.

 

Enquiries

SDIC Power Holdings CO., LTD
XU Xinlan	+86 10 8800 6327
Citigate Dewe Rogerson (International public relations advisor to the Company)
David Westover Caroline Merrell Toby Moore	+44 7768 897722 +44 7852 210329 +44 7768 981763
Citigate Dewe Rogerson (Regional public relations advisor to the Company)
Benny Liu Kathryn Tse	+86 10 6567 5056 +86 10 6567 7550

 

 

Key Performance Indicators and Other Financial Metrics

The following table sets forth the key measurements of the Group's profitability:

(RMB in millions, except percentages)	For the year ended 31 December			For the six months ended 30 June
	2017	2018	2019	2019	2020
				(unaudited)
Profit for the year/period	7,115.6	8,976.3	8,612.9	4,146.3	4,505.0
Net margin	25.5%	24.6%	22.8%	24.1%	25.8%
EBITDA (unaudited)	18,629.5	21,551.2	21,661.4	10,646.5	11,294.5
EBITDA margin (unaudited)	66.8%	59.1%	57.4%	61.9%	64.6%

Net Margin

Net margin is calculated by dividing profit for the year/period by revenue.

EBITDA

EBITDA is defined as profit before tax from continuing operations, plus depreciation of property, plant and equipment, amortisation of intangible assets and finance costs (excluding net foreign exchange gain or loss and others).

EBITDA Margin

EBITDA margin is calculated by dividing EBITDA by revenue.

Board of Directors

The membership of the Board of Directors of the Company is as set out below.

Name	Age	Current Position	Since
ZHU Jiwei	50	Chairman of the Board of Directors	2019
LUO Shaoxiang	56	Vice Chairman of the Board of Directors	2016
JIANG Hua	41	Director, General Manager	2019
ZHANG Yuanling	58	Director	2017
ZHAN Pingyuan	47	Director	2019
YU Yingmin	53	Independent Director	2019
SHAO Lvwei	54	Independent Director	2015
ZENG Ming	62	Independent Director	2015

The biographies of the members of the Board of Directors of the Company are set out below.

ZHU Jiwei-Chairman of the Board of Directors

Mr. ZHU Jiwei is the Chairman of the Board of Directors of the Company. He holds a bachelor's degree and a title of engineer. He served as assistant general manager of Xiamen Huaxia International Power Development Co., Ltd (厦门华夏国际电力发展有限公司) from March 2004 to September 2005. He served in SDIC Qujing Power Co., Ltd. (国投曲靖发电有限公司) as chief engineer and deputy general manager from September 2005 to November 2007, and as general manager from November 2007 to July 2012. Mr. Zhu previously served as general manager of Xiamen Huaxia International Power Development Co., Ltd. (厦门华夏国际电力发展有限公司) from July 2012 to August 2016. He served as general manager and deputy party secretary of the Company from August 2016 to March 2019. Mr. Zhu has been the party secretary of the Company since March 2019, and a Director of the Company since September 2016 with a current term of office from September 2019 to September 2022. Mr. Zhu has been the Chairman of the Board of Directors since March 2019 with a current term of office from September 2019 to September 2022.

LUO Shaoxiang-Vice Chairman of the Board of Directors

Mr. LUO Shaoxiang is the Vice Chairman of the Board of Directors of the Company. He holds a master's degree and a title of senior engineer. He previously served at SDIC as deputy director and director of the strategy development department from October 2005 to December 2012 and from December 2012 to December 2014, respectively, and as director of the business management department from December 2014 to April 2016. Mr. Luo has served as department director of SDIC since April 2016 and as the director of SDIC Mining Investment Co., Ltd. (国投矿业投资有限公司) since December 2015. He has served as a director of China SDIC Gaoxin Industrial Investment Corp., Ltd. (中国国投高新产业投资有限公司 ) since March 2020. He has served as Vice Chairman of the Board of Directors of the Company since February 2016 with a current term of office from September 2019 to September 2022.

JIANG Hua-Director and the General Manager

Mr. JIANG Hua is a Director and the general manager of the Company. He holds a master's degree and a title of senior engineer. He previously served as deputy manager and manager of the production and operation department of the Company from December 2009 to April 2013 and from April 2013 to October 2013, respectively. He served as department manager of the Company and was seconded to serve as deputy general manager of SDIC Jinneng from October 2013 to May 2016. Mr. Jiang served as assistant general manager and was seconded to serve as general manager of SDIC Qinzhou from May 2016 to November 2016. Mr. Jiang served as deputy general manager of the Company from August 2016 to March 2019. Mr. Jiang has been the deputy party secretary of the Company since March 2019, and a Director and the general manager of the Company since March 2019 both with a current term of office from September 2019 to September 2022.

ZHANG Yuanling-Director

Mr. ZHANG Yuanling is a Director of the Company. He holds a bachelor's degree and a title of senior engineer. Mr. Zhang previously served as deputy manager of the project management department of the Company from August 2000 to August 2001, general manager of SDIC Gansu Xiaosanxia Power Co., Ltd. (国投甘肃小三峡发电有限公司) from August 2001 to January 2005, deputy general manager of the Company from January 2005 to December 2013, and general manager of SDIC Chuangyi Industry Fund Management Co., Ltd. (国投创益产业基金管理有限公司) from December 2013 to June 2017. He has served as department director of SDIC since June 2017 and director of SDIC Asset Management Co., Ltd. (国投资产管理有限公司) since August 2017. Mr. Zhang has served as a Director of the Company since November 2017 with a current term of office from September 2019 to September 2022.

ZHAN Pingyuan-Director

Mr. ZHAN Pingyuan is a Director of the Company. He holds a doctor's degree and is a senior accountant and a senior international financial manager. Mr. Zhan previously served in various finance and accounting related positions in China International Water & Electric Corp. (中国水利电力对外公司) from June 2006 to August 2011, China Three Gorges Group International Investment Corp. (长江三峡集团国际投资有限公司) from August 2011 to July 2012, China Water & Electric International Investment Co., Ltd. (中水电国际投资有限公司) from July 2012 to April 2015 and China Three Gorges Group International Corp. (三峡国际能源投资集团有限公司) from April 2015 to March 2019. From January 2017 to May 2019, Mr. Zhan also served as a director of China Three Gorges South Asia Investment Limited (中国三峡南亚投资有限公司), China Three Gorges (Brazil) Co., Ltd. (中国三峡（巴西）有限公司), China Three Gorges (Hong Kong) Company Limited (中国三峡（香港）有限公司), and China Three Gorges Hong Kong Investment Company Limited (中国三峡港源投资有限公司). From June 2018 to May 2019, he also served as a director of Three Gorges Overseas Clean Energy Investment Fund Management Company (三峡境外清洁能源投资基金管理公司). Mr. Zhan has been the chief financial officer of China Yangtze Power Co., Ltd. (中国长江电力股份有限公司) (Stock Code: 600900.SZ) since March 2019. He served as a director of Yangtze Andes Holding Co., Limited (长电安第斯投资有限公司) from November 2019 to April 2020. He has served as the chairman of the board of directors and the chief executive officer of Yangtze Power Capital Co., Ltd. (长江资本控股有限责任公司) since November 2019. He has also been a Director of the Company since September 2019 with a current term of office from September 2019 to September 2022.

YU Yingmin-Independent Director

Mr. YU Yingmin is an independent Director of the Company. He holds a doctor's degree and is a professor of the School of Accountancy of the Central University of Finance and Economics and a member of China Association of Certified Public Accountants. Mr. Yu served as an independent director of Eastone Century Technology Co., Ltd. (宜通世纪科技股份有限公司) (stock code: 300310.SZ) from August 2010 to August 2016, Guangdong CHJ Industry Co., Ltd. (广东潮宏基实业股份有限公司) (stock code: 002345.SZ) from September 2012 to November 2018, Northern United Publishing & Media (Group) Company Limited (北方联合出版传媒（集团）股份有限公司) (stock code: 601999.SH) from December 2015 to December 2016, Sinotrans Air Transportation Development Co., Ltd. (中外运空运发展股份有限公司) (a former listed company on SSE under the stock code 600270, delisted due to merger) from August 2017 to November 2018, Sichuan Shuangma Cement Co., Ltd. (四川双马股份有限公司) (stock code: 000935.SZ) from August 2017 to August 2020，and Zhuhai Sailong Pharmaceutical Co., Ltd. (珠海塞隆药业股份有限公司) (stock code: 002898.SZ) from November 2015 to November 2018. Mr. Yu has been an independent director of Genimous Technology Co., Ltd. (智度科技股份有限公司) (stock code: 000676.SZ) since January 2015, Huabao Flavours & Fragrances Co., Ltd. (华宝香精股份有限公司) (stock code: 300741.SZ) since November 2016, and Guangzhou Tech-Long Packaging Machinery Co., Ltd. (广州达意隆包装机械股份有限公司) (stock code: 002209.SZ) since December 2018. Mr. Yu has been an independent Director of the Company since September 2019 with a current term of office from September 2019 to September 2022.

SHAO Lvwei-Independent Director

Mr. SHAO Lvwei is an independent Director of the Company. He holds a bachelor's degree. Mr. Shao is currently a partner and director of Jiangsu Xintianlun Law Firm (江苏新天伦律师事务所). He has served as independent director of Jiangsu Yangnong Chemical Co., Ltd. (江苏扬农化工股份有限公司) since April 2016, he has also served as independent director of Jiangsu Aoyang Health Industry Co., Ltd. (江苏澳洋健康产业股份有限公司) since March 2018. Mr. Shao has served as an independent Director of the Company since May 2015 with a current term of office from September 2019 to September 2022.

ZENG Ming-Independent Director

Mr. ZENG Ming is an independent Director of the Company. He holds a master's degree and is a professor of economics and management of electric power technology and director of research and consulting centre of energy and power economy at the North China Electric Power University. He has served as independent director of Creative Distribution Automation Co., Ltd. (北京科锐配电自动化股份有限公司) from May 2016 to May 2019. He has served as an independent director of Jointo Energy Investment Co., Ltd. Hebei. (河北建投能源投资股份有限公司) since March 2016. From 2016 to April 2019, Mr. Zeng served as the independent director of Nari Technology Co., Ltd. (国电南瑞科技股份有限公司). Mr. Zeng served as director of Suzhou Taigu Power Mange Co., Ltd. (苏州太谷电力股份有限公司) from January 2017 to January 2020 and director of GCL Intelligent Energy Co., Ltd. (协鑫智慧能源股份有限公司) from August 2017 to June 2019. He has served as director of GCL Energy Technology Co., Ltd. (协鑫能源科技股份有限公司) (stock code: 002015.SZ) since June 2019. He has served as an independent Director of the Company since July 2015 with a current term of office from September 2019 to September 2022.

 

Important Legal Information

The contents of this announcement have been prepared by and are the sole responsibility of the Company.

The information contained in this announcement is for background purposes only and does not purport to be full or complete nor does it constitute or form part of any invitation or inducement to engage in investment activity, nor does it constitute an offer or invitation to buy any securities in any jurisdiction including the United States, or a recommendation in respect of buying, holding or selling any securities. No reliance may be placed by any person for any purpose on the information contained in this announcement or its accuracy, fairness or completeness.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Australia, Canada, Japan or South Africa or any other jurisdiction where to do so would constitute a violation of relevant laws of such jurisdiction. This announcement does not constitute or form a part of any offering or solicitation to purchase or subscribe for, or otherwise invest in, securities in the United States, Australia, Canada, Japan or South Africa. The GDRs referred to herein have not been, and will not be, registered under the United States Securities Act of 1933 (the "Securities Act"). The GDRs are being offered and sold outside the United States in "offshore transactions" within the meaning of Regulation S under the Securities Act. The GDRs may not be offered or sold in the United States except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act. There will be no public offering of securities in the United States.

This announcement is only addressed to and directed at persons in Member States of the European Economic Area ("Member States") and the United Kingdom who are "qualified investors" within the meaning of Article 2(e) of the Prospectus Regulation (Regulation (EU) 2017/1129) (the "Prospectus Regulation") and related implementation measures ("Qualified Investors"). In addition, in the United Kingdom, this announcement is only addressed to and directed at Qualified Investors who have professional experience in matters relating to investments and who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") or who fall within Article 49 of the Order or any other persons to whom it may otherwise be lawfully communicated (all such persons together being referred to as "relevant persons"). This announcement must not be acted on or relied on: (i) in the United Kingdom, by persons who are not relevant persons; and (ii) in any Member State by persons who are not Qualified Investors. Any investment or investment activity to which this announcement relates is available only to: (i) in the United Kingdom, relevant persons; and (ii) in any Member State, Qualified Persons and other persons who are permitted to subscribe for the GDRs described herein pursuant to an exemption from the Prospectus Regulation and other applicable legislation, and will only be engaged in with such persons.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Group's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Group's business, results of operations, financial position, liquidity, prospects, growth and strategies. Forward-looking statements speak only as of the date they are made.

To the fullest extent permitted under applicable laws, the Company and each of the Joint Bookrunners and their respective affiliates as defined under Rule 501(b) of Regulation D under the Securities Act, expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future development or otherwise.

Any subscription or purchase of GDRs in the proposed Offering should be made solely on the basis of information contained in the Prospectus which is expected to be issued by the Company in connection with the Offering. The information in this announcement is subject to change. Before subscribing for or purchasing any GDRs, persons viewing this announcement should ensure that they fully understand and accept the risks which will be set out in the Prospectus if published. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. This announcement shall not form the basis of or constitute any offering or invitation to sell or issue, or any solicitation of any offering to purchase or subscribe for any GDRs or any other securities nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor.

The timing of any Offering and Admission may be influenced by a variety of factors which include market conditions. The Group may decide not to go ahead with the Offering and there is therefore no guarantee that the Prospectus will be published or Admission will occur. Potential investors should not base their financial decision on this announcement. Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested.

Persons considering making investments should consult an authorised person specialising in advising on such investments. This announcement does not constitute a recommendation concerning the Offering. The value of GDRs can decrease as well as increase. Past performance is not a guide to future performance. Information in this announcement cannot be relied upon as a guide to future performance. Before purchasing any securities in the Company, persons viewing this announcement should ensure that they fully understand and accept the risks which will be set out in the Prospectus, if published. Potential investors should consult a professional advisor as to the suitability of the proposed Offering for the person concerned.

None of the Joint Bookrunners or any of their respective affiliates or any of their or their affiliates' directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith.

Goldman Sachs International and HSBC Bank plc are each authorised by the United Kingdom Prudential Regulation Authority (the "PRA") and regulated by the FCA and PRA in the United Kingdom. UBS AG London Branch is authorised and regulated by the Financial Market Supervisory Authority in Switzerland and in the United Kingdom is authorised by the PRA and subject to regulation by the FCA and limited regulation by the PRA. China International Capital Corporation (UK) Limited is regulated by the FCA in the United Kingdom. CLSA Limited is licensed by the Securities and Futures Commission of Hong Kong.

The Joint Bookrunners are acting exclusively for the Company and no one else in connection with the Offering and will not be responsible to any other person as their respective clients in relation to the Offering and for providing the protections afforded to their respective clients or for providing advice in relation to the Offering or any transaction or arrangement referred to herein.

In connection with the Offering, the Joint Bookrunners and/or any of their respective affiliates may subscribe for the GDRs and, in that capacity, may retain, purchase, sell, offer to sell or otherwise deal for its or their own account(s) in such GDRs, any other securities of the Company or other related investments in connection with the Offering or otherwise. Accordingly, any references in the Prospectus, if published, to the GDRs being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, the Joint Bookrunners and/or any of their respective affiliates acting in such capacity. In addition, certain of the Joint Bookrunners or their affiliates may enter into financing or hedging arrangements (including swaps or contracts for differences) with investors in connection with which such Joint Bookrunners (or their affiliates) may from time to time acquire, hold or dispose of GDRs. Neither the Joint Bookrunners nor any of their respective affiliates intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

In connection with the Offering, the Stabilising Manager, or any of its agents, may (but will be under no obligation to), to the extent permitted by applicable law, over-allot GDRs or effect other transactions with a view to supporting the market price of the GDRs at a level higher than that which might otherwise prevail in the open market. Deferred settlement arrangements have been made with the Cornerstone Investor in order to allow the Stabilising Manager to over-allot GDRs to facilitate any stabilisation action by the Stabilising Manager. However, there is no assurance that the Stabilising Manager (or persons acting on its behalf) will undertake stabilisation action. Any stabilisation action may begin on the date of adequate public disclosure of the Offer Price and, if begun, may be ended at any time but must end no later than 30 calendar days thereafter (the "Stabilisation Period"). Any stabilisation action must be undertaken in accordance with applicable laws and regulations. Save as required by law or regulation, the Stabilising Manager does not intend to disclose the extent of any over-allotments made and/or stabilisation transactions concluded in relation to the Offering.

In connection with the Offering, the Stabilising Manager may, for stabilisation purposes and subject to the deferred settlement arrangements described above, over-allot GDRs up to a maximum of 10% of the total number of GDRs comprised in the Offering (excluding the Over-allotment GDRs). For the purposes of allowing it to cover short positions resulting from any such over-allotments and/or from sales of GDRs effected by it during the Stabilisation Period, the Stabilising Manager will enter into over-allotment arrangements pursuant to which the Stabilising Manager may purchase or procure purchasers for additional GDRs up to a maximum of 10% of the total number of GDRs comprised in the Offering (excluding the Over-allotment GDRs) at the Offer Price. The over-allotment arrangements will be exercisable in whole or in part, upon notice by the Stabilising Manager, at any time on or before the 30th calendar day after the pricing date of the GDRs. Any Over-allotment GDRs made available pursuant to the over-allotment arrangements, including for all dividends and other distributions declared, made or paid on the GDRs, will be purchased on the same terms and conditions as the GDRs being issued or sold in the Offering and will form a single class for all purposes with the other GDRs.

Unless otherwise indicated, market, industry and competitive position data are estimates (and accordingly, approximate) and should be treated with caution. Such information has not been audited or independently verified, nor has the Company ascertained the underlying economic assumptions relied upon therein.

Certain data in this announcement, including financial, statistical, and operating information has been rounded. As a result of the rounding, the totals of data presented in this announcement may vary slightly from the actual arithmetic totals of such data. Percentages in tables may have been rounded and accordingly may not add up to 100%.

For the avoidance of doubt, the contents of the Company's website are not incorporated by reference into, and do not form part of, this announcement.

 

Information to Distributors

Solely for the purposes of the product governance requirements contained within (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"), (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II, and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the GDRs have been subject to a product approval process, which has determined that such GDRs are (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment").

Notwithstanding the Target Market Assessment, distributors should note that: the price of the GDRs may decline and investors could lose all or part of their investment; the GDRs offer no guaranteed income and no capital protection; and an investment in the GDRs is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the possible Offering. Furthermore, it is noted that, notwithstanding the Target Market Assessment, the Joint Bookrunners will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the GDRs.

Each distributor is responsible for undertaking its own target market assessment in respect of the GDRs and determining appropriate distribution channels.