Continuing Connected Transactions

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DATANG INTERNATIONAL POWER GENERATION CO., LTD.
(a sino-foreign joint stock limited company incorporated in the People's Republic of China)
(Stock Code: 00991)

ANNOUNCEMENT
CONTINUING CONNECTED TRANSACTIONS

FRAMEWORK AGREEMENT FOR ENGINEERING MATERIALS PURCHASE

On 29 December 2015, the Company entered into the Framework Agreement for Engineering Materials Purchase with China Water Resources and Power, pursuant to which the Company agreed to centralise the purchase of machinery, equipment and materials required for project construction through China Water Resources and Power.

LISTING RULES IMPLICATIONS

As at the date of this announcement, CDC and its subsidiaries hold a total of approximately 34.77% of the issued share capital of the Company. As China Water Resources and Power is a wholly-owned subsidiary of CDC, China Water Resources and Power is therefore a connected person of the Company under Chapter 14A of the Listing Rules. As such, the transactions under the Framework Agreement for Engineering Materials Purchase constitute continuing connected transactions of the Company.

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) of the Framework Agreement for Engineering Materials Purchase is more than 5% but all the applicable percentage ratios are less than 25%, the relevant continuing connected transactions are subject to the requirements of reporting, announcement and approval by the independent shareholders of the Company under Chapter 14A 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. A circular, containing details of the Framework Agreement for Engineering Materials Purchase, a letter from the independent Board committee and a letter from the independent financial advisor of the Company, both advising on the terms of the Framework Agreement for Engineering Materials Purchase, will be despatched to the shareholders on or before 20 January 2016.

BACKGROUND

The Company and China Water Resources and Power entered into the Framework Agreement for Engineering Materials Purchase on 29 December 2015 to centralise the purchase of machinery, equipment and materials required for project construction through China Water Resources and Power, so as to enhance the efficiency of purchase and lower purchase costs, thereby enhancing the profitability of the Company.

FRAMEWORK AGREEMENT FOR ENGINEERING MATERIALS PURCHASE

Date
29 December 2015

Parties
1.      The Company; and
2.      China Water Resources and Power

Subject Matter in the Framework Agreement

1.      China Water Resources and Power agreed to conduct centralised purchase of machinery, equipment and materials required for project construction in accordance with the demand of the Company and its subsidiaries for project construction machinery, equipment and materials. The selling prices of such project construction machinery, equipment and materials shall not be higher than the prevailing average market prices of such project construction machinery, equipment and materials.

2.      According to the actual demands of the Company and its subsidiaries, China Water Resources and Power will conduct tender of materials purchase in accordance with relevant law and regulations of the State. The process of purchase tender conducted by China Water Resources and Power will be under the supervision of the Company.

3.      Pursuant to the tender results, the Company and its subsidiaries will enter into specific purchase contracts with China Water Resources and Power, and such purchase contracts shall be bound by the terms and principles of the Framework Agreement for Engineering Materials Purchase.

Term

The effective term of the Framework Agreement for Engineering Materials Purchase is from 1 January 2016 to 31 December 2016.

Fee Standard and Settlement

During the course of centralised purchase, China Water Resources and Power will be responsible for the coordination of tenders invitation, contract signing and the implementation, delivery, check-and-acceptance and claims submission, etc. As such, China Water Resources and Power will charge a management service fee (which shall be no more than 6% of the purchase amount). Such management service fee is determined after arm's length negotiation between the parties taking into account the management service fee to be charged for the provision of similar services by other independent cooperating service providers. The relevant management service fee to be charged by China Water Resources and Power shall not be higher than the fee to be charged by China Water Resources and Power for the provision of identical services to other independent third parties and other companies of CDC.

Before entering into specific purchase contracts, the relevant departments or subsidiaries of the Company will consult and confirm with China Water Resources and Power to ensure the relevant management service fee shall not be higher than the fee to be charged by China Water Resources and Power for the provision of identical services to other independent third parties and other companies of CDC.

China Water Resources and Power will issue a value added-tax invoice comprising the purchase amount and the management service fee to the Company and its subsidiaries.

Annual Cap and Basis for Determination

Taking into account the requirement of project construction machinery, equipment and materials applicable for centralised purchase which are used in the construction of infrastructure projects of the Company and its subsidiaries for the year ending 31 December 2016, the continuing connected transactions under the Framework Agreement for Engineering Materials Purchase are subject to an annual cap of RMB1,900 million (including the purchase costs for the project construction machinery, equipment and materials and the management service fees payable to China Water Resources and Power) for the year ending 31 December 2016.

The prices of project construction machinery, equipment and materials under the Framework Agreement for Engineering Materials Purchase were all determined by way of public tender carried out by China Water Resources and Power.

According to the anticipated demand on project construction machinery, equipment and materials for the infrastructure projects of the Company and its subsidiaries for the year ending 31 December 2016 as well as the result of negotiation between the parties, the annual cap for the year ending 31 December 2016 is expected to be substantially higher when compared to the historical transaction amounts.

Historical Transaction Amounts

The transaction amount of engineering materials purchase by the Company and its subsidiaries from China Water Resources and Power for the period from 1 January 2015 to the date of this announcement is estimated to be approximately RMB642 million.

For the year ended 31 December 2014, the transaction amount of engineering materials purchase by the Company and its subsidiaries from China Water Resources and Power was approximately RMB340 million.

For the year ended 31 December 2013, the transaction amount of engineering materials purchase by the Company and its subsidiaries from China Water Resources and Power was approximately RMB782 million.

INFORMATION OF PARTIES RELATING TO THE FRAMEWORK AGREEMENT FOR ENGINEERING MATERIALS PURCHASE

1.      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 major service area is in the PRC.

2.      CDC was established on 9 March 2003 with a 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.

3.      China Water Resources and Power is a wholly-owned subsidiary of CDC which was established on 6 March 1989. Its principal businesses include acting as agent for tenders invitation and import, pipe supplies, project consultation, spare parts, equipment supervision, management of project materials resources, CDM, safety evaluation, and so forth.

REASONS FOR AND BENEFITS OF ENTERING INTO THE FRAMEWORK AGREEMENT FOR ENGINEERING MATERIALS PURCHASE

After taking into account the necessity for lowering purchase costs and successful completion of the Company's infrastructure project materials purchase tasks during the year, the Company entered into the Framework Agreement for Engineering Materials Purchase to leverage on the role of China Water Resources and Power as a professional institution in sourcing project construction machinery, equipment and materials, and to leverage on the advantage of bulk purchasing, in order to enhance purchase efficiency, lower purchase costs and further enhance the profitability of the Company.

The Directors (excluding the independent non-executive Directors whose views will be contained in a circular to be despatched to the shareholders after considering the views of independent financial adviser to be appointed by the Company) are of the view that the continuing connected transactions under the Framework Agreement for Engineering Materials Purchase are conducted in the ordinary and usual course of business of the Company, and are fair and reasonable and are in the interest of the Company and the shareholders as a whole. None of the Directors has any material interest in the transactions under the Framework Agreement for Engineering Materials Purchase. Connected Directors, namely Chen Jinhang, Hu Shengmu and Liang Yongpan, have abstained from voting for this resolution pursuant to the listing rules of the Shanghai Stock Exchange.

LISTING RULES IMPLICATIONS

As at the date of this announcement, CDC and its subsidiaries hold a total of approximately 34.77% of the issued share capital of the Company. As China Water Resources and Power is a wholly-owned subsidiary of CDC, China Water Resources and Power is therefore a connected person of the Company under Chapter 14A of the Listing Rules. As such, the transactions under the Framework Agreement for Engineering Materials Purchase constitute continuing connected transactions of the Company.

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) of the Framework Agreement for Engineering Materials Purchase is more than 5%, but all the applicable percentage ratios are less than 25%, the relevant continuing connected transactions are subject to the requirements of reporting, announcement and approval by the independent shareholders of the Company under Chapter 14A 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. A circular, containing details of the Framework Agreement for Engineering Materials Purchase, a letter from the independent Board committee and a letter from the independent financial advisor of the Company, both advising on the terms of the Framework Agreement for Engineering Materials Purchase, will be despatched to the shareholders on or before 20 January 2016.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISOR

An independent board committee comprising the independent non-executive Directors will be formed to advise the independent shareholders on the terms of the Framework Agreement for Engineering Materials Purchase.

The Company will appoint an independent financial advisor to advise the independent board committee and the independent shareholders of the Company on the terms of the Framework Agreement for Engineering Materials Purchase.

DEFINITIONS

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

"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 in aggregate as at the date of this announcement
"China Water Resources and Power"		China National Water Resources & Electric Power Materials & Equipment Group Co., Ltd., details of which are set out in the section headed "Information of Parties Relating to the Framework Agreement for Engineering Materials Purchase"
"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
"Director(s)"		the director(s) of the Company
"Framework Agreement for Engineering Materials Purchase"		the Framework Agreement for Centralised Purchase in connection with project construction machinery, equipment and materials entered into between the Company and China Water Resources and Power on 29 December 2015
"Listing Rules"		the Rules Governing the Listing of Securities on the Stock Exchange
"PRC"		the People's Republic of China
"RMB"		Renminbi, the lawful currency of the PRC
"Stock Exchange"		The Stock Exchange of Hong Kong Limited

By Order of the Board 
Ying Xuejun    
Company Secretary

Beijing, the PRC, 29 December 2015

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

Chen Jinhang, Hu Shengmu, Wu Jing, Liang Yongpan, Ying Xuejun, Cao Xin,
Cai Shuwen, Liu Haixia, Guan Tiangang, Yang Wenchun,                                                    
Jiang Guohua*, Feng Genfu*, Luo Zhongwei*, Liu Huangsong*, Jiang Fuxiu*

* Independent non-executive Directors