Notice of the First EGM in 2024

Ming Yang Smart Energy Group Ltd

05 August 2024

 

MING YANG SMART ENERGY GROUP LIMITED

(GDR under the symbol: "MYSE")

(a joint stock company established under the laws of the People's Republic of China with limited liability)

Notice of the First Extraordinary General Meeting in 2024

NOTICE IS HEREBY GIVEN that the First Extraordinary General Meeting in 2024 of Ming Yang Smart Energy Group Limited will be held at conference room on the 5th floor of Ming Yang Smart Energy Group Limited, Ming Yang Industrial Park, No.22, Torch Avenue, Zhongshan Torch High-tech Industrial Development Zone, Zhongshan City, Guangdong, People's Republic of China, on Tuesday, 27 August 2024 at 15:00 (Beijing Time), for the purpose of considering, and if thought fit, passing the following resolution：

Ordinary Resolution

To consider and approve the Changes in Some of Proceeds-funded Projects

Ming Yang Smart Energy Group Limited

5 August, 2024

Appendix：Proposal on the Changes in Some of Proceeds-funded Projects

To all Shareholders and Shareholders' proxies,

In order to improve the efficiency of the use of proceeds, according to strategic planning and business needs, as considered and approved at the eleventh meeting of the third session of Board of Directors and the seventh meeting of the third session of Board of Supervisors of Ming Yang Smart Energy Group Limited (the "Company" and "MYSE") held on 5 August 2024, it is proposed to change the remaining proceeds of 891,112,000 (RMB, same as below) and net interest of the project of 29,431,200(interest income less handling fee expenses, the actual amount is subject to the bank balance of proceeds on the date when it is transferred out) originally planned to be invested in the Shanwei Marine Engineering Base (Lufeng) Project MYSE Offshore Wind Power Industrial Park Project (the "Shanwei Industrial Park Project") under the 2020 non-public offering of shares (the "2020 Private Placement") to be used for the investment and construction of : 1) the Mingyang Yumen Xinminbao 100MW Wind Farm Project (the "Mingyang Xinminbao Project"), the amount of proceeds to be used in such project shall be 201,112,000 together with net interest of 29,431,200 (interest income less handling fee expenses, the actual amount is subject to the bank balance of proceeds on the date when it is transferred out), totalling 230,543,200; and 2) the Zhangjiakou Mingyang Chabei Alibaba Data Center Source-Grid-Load-Storage Project (the "Mingyang Chabei Project"), the amount of proceeds to be used in such project shall be 690,000,000). Details of relevant matters are disclosed as follows:

I. Overview of Proceeds

(I) Basic information on proceeds

Approved by the China Securities Regulatory Commission's Reply on Approval of Ming Yang Smart Energy Group Limited's Non-Public Issuance of Shares ([2020] No. 1516), the Company issued 413,916,713 ordinary shares (A shares) to specific investors in a non-public offering at an issue price of 14.02 per share. As of 26 October 2020, the Company actually received a total of 5,803,112,300 in proceeds from this non-public offering. After deducting the issuance fee of 31,065,000, the net proceeds amounted to 5,772,047,300. The above-mentioned proceeds have been verified by the capital verification report (Zhi Tong Yan Zi (2020) No. 110ZC00394) issued by Grant Thornton (Special General Partnership).

In order to standardize the Company's proceeds management and protect the rights and interests of investors, the Company has opened a special account for proceeds in accordance with relevant laws and regulations, and entered into a special account supervision agreement for proceeds with the sponsor and the special account storage bank for proceeds to implement special account storage management for the proceeds.

(II) Changes in these proceeds-funded projects

The Shanwei Industrial Park Project originally proposed to use proceeds of 1,499,514,100, and as of 31 July 2024, the actual proceeds invested were 608,402,100, l with the remaining principal amount of proceeds of 891,112,000. It is proposed to change the remaining proceeds of 891,112,000 and net interest of the project of 29,431,200(interest income less handling fee expenses, the actual amount is subject to the bank balance of proceeds on the date when it is transferred out) originally planned to be invested in the Shanwei Industrial Park Project under the 2020 non-public offering of shares to be used for the investment and construction of the Mingyang Xinminbao Project and the Mingyang Chabei Project. The amount involved in change of the use of proceeds accounts for 15.44% of the net proceeds from the 2020 Private Placement. Details of such change are as follows:

Before such change		After such change
Project name	Amount of proceeds to be used	Project name	Amount of proceeds to be used
Shanwei Industrial Park Project	891,112,000 and net interest of the project of 29,431,200(interest income less handling fee expenses, the actual amount is subject to the bank balance of proceeds on the date when it is transferred out)	Mingyang Xinminbao Project	201,112,000 together with net interest of 29,431,200, totalling 230,543,200(the actual amount is subject to the bank balance of proceeds on the date when it is transferred out)
		Mingyang Chabei Project	690,000,000

On 5 August 2024, the Company held the eleventh meeting of the third session of Board of Directors and the seventh meeting of the third session of Board of Supervisors, and considered and approved the changes in some of proceeds-funded projects. The changes in some of proceeds-funded projects still need to be submitted to the General Meeting of the Company for consideration. The changes in some of proceeds-funded projects do not constitute a related party transaction.

On 14 December 2023, the Company held the third meeting of the third session of Board of Directors and the third meeting of the third session of Board of Supervisors, and considered and approved the Resolution on the Use of Part of Idle Proceeds to Temporarily Supplement Working Capital. The Company intended to use part of the idle proceeds from the non-public offering of shares in 2020 to temporarily supplement working capital, with a total amount not exceeding 1.3 billion and a term not exceeding 12 months.. As of 1 July 2024, the balance of the special account for proceeds of the Shanwei Industrial Park Project amounted to 20,543,200, and the temporary supplementary working capital has not yet been returned to the special account, with a balance of 900 million.

The Company plans to return the temporary supplementary working capital to the special account of the Shanwei Industrial Park Project after the approval of the shareholders' general meeting and open a special account for proceeds for the new project, and sign a supervision agreement with the sponsor and the bank supervising the special account for proceeds. The remaining proceeds of the Shanwei Industrial Park Project will be transferred to the changed special account for proceeds according to the above-mentioned amount of the proceeds to be used after consideration, and the corresponding net interest (interest income less handling fee expenses, subject to the bank balance of proceeds on the date when it is transferred out) will be transferred in full to the special account for proceeds of the Mingyang Xinminbao Project. The special account for proceeds of the Shanwei Industrial Park Project will be cancelled accordingly, and the supervision agreement for proceeds signed by the Company with the sponsor and the bank supervising the special account for proceeds will also be terminated accordingly.

II. Specific reasons for changes in the proceeds-funded projects

(I) Planned investment and actual investment in the original project

The implementing entity of the original Shanwei Industrial Park Project is Shanwei Mingyang New Energy Technology Co., Ltd. ("Shanwei Mingyang"), a wholly-owned subsidiary of the Company. Its construction work is the R&D and production base for large offshore wind power equipment, including the R&D and manufacturing of large offshore wind turbines, the manufacturing of offshore wind turbine blade equipment and the construction of related supporting facilities. Specific construction content includes plant, production equipment and supporting office building, dormitory, floating dock and 12-15MW offshore wind turbine R & D project of the production base project.

The Shanwei Industrial Park Project originally proposed to use proceeds of 1,499,514,100, and as at 31 July 2024, actual proceeds of 608,402,100 had been invested. At present, the construction of plant, some production equipment and ancillary office buildings, dormitories and the research and development project of 12-15MW offshore wind turbines for the production base project of the project has been completed. By the end of 2023, the Shanwei Industrial Park Project has achieved cumulative benefits of 488,453,100.

(II) Specific reasons for the changes in the proceeds-funded projects

According to the project feasibility study report, the total investment of the project was 2,500 million, as at 31 July 2024, the cumulative total amount invested in the project was 1,623,746,500, and the difference between the actual investment amount and the planned investment amount was 876,253,500, and the main reasons for the large difference between the actual investment amount and the planned investment amount of the project were: 1) the reduction of investment in some of the equipment and production lines due to the market situation in Shanwei area and the Company's business layout; 2) the saving of cost by adopting optimized design for some of the construction elements and the replacement of imported equipment with domestic equipment. The project was proposed to use the proceeds of 1,499,514,100, and as of 31 July 2024, the amount of proceeds invested was 608,402,100, the remaining unutilised proceeds amounted to 891,112,000.

Details of the difference between the actual investment amount and the planned investment amount of the project are as follows:

                                                            Unit；RMB'0,000

NO.	Engineering projects	Amount of investment in the feasibility study	Actual investment amount	Difference (actual investment amount - Amount of investment in the feasibility study)	Remarks
1	Construction and installation costs	40,000.00	47,369.82	7,369.82
2	Technology and equipment costs	135,000.00	37,052.59	-97,947.41
2.1	Of which: 12-15MW offshore wind turbine development	45,068.00	13,238.47	-31,829.53	Note 1
2.2	Purchase of production equipment	89,932.00	23,814.12	-66,117.88	Note 2
3	Land acquisition cost	5,000.00	7,952.24	2,952.24
4	Liquidity	70,000.00	70,000.00	-
	Total	250,000.00	162,374.65	-87,625.35

Note 1: The balance of 12-15MW offshore wind turbine development amounted to 318,295,300, as detailed below:

(1) Optimization of the number of prototype development units: Due to the complexity of the research and development and system structure design of offshore ultra-large wind turbines, in order to guarantee the successful development of the project, the original plan was to install two prototypes successively for testing and validation. The completion of the first prototype testing and verification results showed that the project has reached the expected goals, and there was no need to invest in the research and development of another prototype, reducing the prototype materials and related investment of 162,076,000;

(2) As a result of the research and development innovation, the research and development of the project was adjusted from single main bearing compact semi-direct drive technology to double main bearing semi-direct drive technology, the research and development cost was significantly reduced, while the price of some components in the industry was reduced, and the overall cost of the research and development for a single unit was reduced by 73,820,500;

(3) No inputs such as sea cable and conduit rack foundation, reducing inputs by 70.0000 million. According to the planning of the project feasibility study, the offshore wind farm where the prototype is located needs to install the conduit rack foundation, sea cables and other ancillary equipment, but in the actual research and development process of the project to make full use of the testing environment that has already been available, and arranged for the prototype to be tested at the owner's offshore wind farms that have the same testing conditions, so that there is no need to invest in the sea cables and conduit rack foundation;

(4) The design and testing of the prototype part was changed from the original planning of joint development to independent research and development and testing, reducing the technical service fee by 12,398,800.

Note 2: The balance of the purchase of production equipment amounted to661,178,800, as detailed below:

 (1) The total investment in equipment purchase for the production base project reduced by 559,138,800 for optimization purpose, including 1) the investment in purchase of certain equipment reduced t by 495,138,800. As the market demand for projects in Hainan region and Yangjiang region increases, the two regions have attracted more investment and production resources, resulting in a decrease in the demand for production resources and the demand for delivery of wind turbine orders in the Shanwei area. Therefore, in light of the market conditions, the Company reduced the investment and construction of certain equipment originally planned for the project. 2) Due to factors such as process optimization, the optimization of production line design as well as the substitution of domestic equipment for imported equipment, the investment reduced by 64 million.

(2) The total investment for optimization of floating wind turbine wharfs amounted to 102.04 million. In order to develop the offshore industry, the local government has optimized the construction of the wharf and related supporting infrastructure, which can provide complete wharf loading and unloading services to the Company. Therefore, the Company suspended the construction of the floating wind turbine wharf originally planned for such project and changed to leasing the governmental wharf for loading and unloading, so reducing the investment by 102.04 million.

III. Information on New Projects to be Changed

 (I) Mingyang Xinminbao Project

1.    Project Overview

1) Project name: Mingyang's Xinminbao 100,000 kW wind farm project in Yumen .

2) Project subject and place: This project is implemented by Yumen Mingzhi Wind Power Generation Co., Ltd., a wholly-owned subsidiary of the Company. The construction site is located in Laojunmiao Town, southeast of Yumen City, Gansu Province.

3) Project content: Builing a new wind power project with a total installed capacity of 100MW.

4) Estimated investment progress: The construction period is approximately one year with construction expected to commence in the second half of 2024 and be completed in 2025.

5) Source of funds: It is proposed to change 201,112,000 of the proceeds originally planned to be used for the Shanwei Industrial Park Project together with net interest of 29,431,200 (interest income less handling fee expenses, subject to the bank balance of the proceeds on the date when it is transferred out) to be used for the project, with the shortfall to be funded out of the project company's internal resources.

2.    Project Investment Plan and Benefits

1) Project Investment Estimate

The total investment of the project was 567,038,600, as detailed below:

Unit: RMB'0,000

Project	Project/cost name	Total investment amount
I	Construction auxiliary engineering	2,936.05
II	Equipment and installation engineering	39,280.89
III	Construction project	5,034.30
IV	Other expenses	2,910.17
V	Basic provision	1,003.23
VI	Special expenses	4,838.17
Sub-total	Investment in projects	56,002.79
VII	Interest during construction period	701.07
Total	Total investment	56,703.86

2) Project benefits

The financial internal rate of return (after tax) for project investment is 6.98%,  with the investment payback period (after tax) of 11.02 years.

3. Project approval and filing

For the approval of the project, the Mingyang Xinminbao Project has obtained the Reply from Jiuquan Energy Bureau on the Approval of the 100,000 kW Wind Farm Project of Yumen Mingzhi Wind Power Generation Co., Ltd. in Xinminbao, Yumen City (Jiuneng Xingui [2022] No. 289), for the project land, the project has obtained the "Opinion on Land Use Preliminary Examination and Site Selection for Construction Projects" (Yongzi No. 620900202200033) issued by the Jiuquan Natural Resources Bureau and land approval is expected in September 2024;for the environmental assessment of the project, the project has obtained the Reply Letter on the Opinions on Regional Environmental Protection of the 100,000 kW Wind Farm Project of Ming Yang Group in Xinminbao, Yumen City (Yuhuan Letter [2022] No.123) issued by Yumen Sub-bureau of Jiuquan Ecological Environment Bureau.

 (II) Mingyang Chabei Project

1. Project Overview

1) Project name: Zhangjiakou Mingyang Chabei Alibaba Data Center Generation-Grid-Load-Storage Integration Project.

2) Project subject and place: This project is implemented by Zhangjiakou Chabei District Yunneng New Energy Co., Ltd., a subsidiary of the Company. The construction site is located in Chabei Administrative Districe, Zhangjiakou, Hebei Province.

3) Project content: Building a new wind farm project with a total installed capacity of 200MW and corresponding energy storage equipment.

4) Estimated investment progress: The construction period is approximately one year with construction is expected to commence in the second half of 2024 and be completed in 2025.

5) Source of funds: It is proposed to change 690,000,000 of the proceeds originally planned to be used for the Shanwei Industrial Park Project to be used for the project, with the shortfall to be funded out of the project company's internal resources.

2. Project Investment Plan and Benefits

1) Project Investment Estimate

The total investment of the project was 1,215,168,500, as detailed below:

Unit: RMB'0,000

Project	Project/cost name	Total investment amount
I	Construction auxiliary engineering	1,096.92
II	Equipment and installation engineering	63,519.39
III	Construction project	15,266.63
IV	Other expenses	9,859.57
V	Basic provision	1,794.85
VI	Transmission and storage systems	27,980.00
Sub-total	Investment in projects	119,517.36
VII	Interest during construction period	1,999.49
Total	Total investment	121,516.85

2) Project benefits

The financial internal rate of return (after tax) for project investment is 11.6%, with the investment payback period (after tax) of 8.19 years.

3. Project approval and filing

For the project filing process, the Mingyang Chabei Project has been filed with the Administrative Approval Bureau of Chabei Administrative Region (Filing No.: Cha Xing Shen Bei Zi [2023] No. 28) ; for the project land, it has obtained the Opinion on Preliminary Examination of Land Use and Selection of Sites for Construction Projects issued by the Natural Resources Bureau and Planning Bureau of the Chabei Administrative Region (Yongzi No. 1307902023000053) and land approval is expected in September 2024,; for the environmental assessment of the project, it has obtained the approval of the environmental impact report form issued by the Administrative Approval Bureau of Zhangjiakou (Zhang Xing Ping Li Zi [2023] No. 672) .

(III) Feasibility analysis of project construction

The Company has conducted a long period of wind measurement data collection and feasibility study on the site selection of wind farms for the Mingyang Xinminbao project and Mingyang Chabei project, and has hired relevant professional institutions to issue project feasibility analysis reports. The finalised wind farm projects have the advantages of good regional wind energy resources, convenient traffic and construction conditions, and reliable networking conditions, etc., which are suitable for the construction of wind farms, and therefore the implementation of the projects is feasible.

(IV) Risks faced by the project

There is a certain degree of uncertainty as to the implementation progress and implementation effect of the investment project after this change. Although the investment project after this change is closely related to the Company's existing main business, there may still be implementation risks caused by changes in project progress, investment costs and market demand during the implementation of the project.

 

END