CHINA HUARONG ENERGY CO LTD 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.
CHINA HUARONG ENERGY COMPANY LIMITED中國華榮能源股份有限公司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 01101)
FURTHER INFORMATION IN RELATION TO ANNUAL REPORT 2014
Reference is made to the annual report 2014 (the "Annual Report") of China Huarong Energy Company Limited (the "Company"). Unless otherwise stated, capitalised terms used in this announcement shall have the same meanings as defined in the Annual Report.
The Company would like to provide additional information in relation to the Annual Report as follows:
Reference is made to page 23 of the Annual Report regarding the Share Option Scheme, which was approved by the shareholders of the Company on 24 October 2010. Under the Share Option Scheme, the maximum number of shares which may be issued by the Company pursuant to the exercise of the share options under the Share Option Scheme is 700,000,000
Shares, representing 10% of the total issued share capital of the Company on the day on which trading of the Shares commenced on the Stock Exchange on 19 November 2010. As at
30 March 2015, being the date of the directors' report in the Annual Report, the maximum number of Shares which may be issued by the Company pursuant to the exercise of the share options under the Share Option Scheme (after taking into account of any lapse of share options thereunder) is 95,080,000 Shares, representing approximately 1.00% of the total issued share capital of the Company comprising 9,490,194,599 Shares.
Reference is made to page 20 of the Annual Report regarding the issue and conversion of the convertible bonds of the Company. Set forth in the below table are further details of the convertible bonds issued by the Company and the conversion thereof during the year ended
31 December 2014:
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Maximum number of | Maximum | |||||||
ordinary shares to be | number of | |||||||
issued upon the | ordinary shares | |||||||
exercise of the | Total conversion | to be issued | ||||||
conversion rights as | shares issued | upon the | ||||||
7.0% | Principal amount as at | at the date of issue (after the | Net proceeds received by the | Conversion dates | during the year ended 31 | exercise of conversion | ||
Convertible | the date of | adjustments to the | Company from | (During the year | December 2014 | rights as at 31 | ||
Bonds | issue | conversion price per | the issue | ended 31 | Conversion | (conversion price | December 2014 | |
due 2016 | (HK$) | Date of issue | Share if applicable) | (HK$) | December 2014) | shares issued | per Share) | (Note) |
1st 1,400,000,000 7 August 2013 1,400,000,000 1,379,000,000 N/A 0 0 1,400,000,000
24 September 2014 54,255,319 86,170,212
2nd 1,000,000,000 9 January 2014 1,063,829,787 992,500,000
4 November 2014 31,914,893
(HK$0.94) 977,659,574
3rd 530,000,000 30 April 2014 546,391,752 526,025,000
30 October 2014 103,092,783 443,298,968
103,092,783
28 November 2014 340,206,185
31 October 2014 50,505,050
4th 470,000,000 20 May 2014 474,747,474 466,475,000
5th 1,000,000,000 20 June 2014 961,538,461 1,000,000,000
4 November 2014 20,202,020
7 November 2014 60,606,060
18 August 2014 14,423,076
27 August 2014 24,038,461
29 August 2014 9,615,384
31 October 2014 52,884,615
5 November 2014 48,076,923
131,313,130 (HK$0.99)
149,038,459 (HK$1.04)
343,434,343
812,500,000
6th 1,000,000,000 20 June 2014 934,579,439 1,000,000,000
24 June 2014 93,457,943 280,373,830
654,205,607
28 August 2014 186,915,887
Note: Pursuant to the terms and conditions of each of the respective convertible bonds of the Company, if more than one of such convertible bond of the Company held by the same holder is converted at any one time by the same holder, the number of Shares to be issued upon conversion will be calculated on the basis of the aggregate principal amount of such convertible bonds of the Company to be converted. No fraction of a Share shall be issued on conversion.
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Structure Agreements
Reference is made to page 25 of the Annual Report regarding (i) the services agreement dated
20 October 2010 entered into amongst Rongsheng Heavy Industries, Rongsheng Shipbuilding and Rongsheng Investment; and (ii) a shareholders' agreement entered into between Rongsheng Heavy Industries and Rongsheng Investment (dated 8 January 2009 but effective as at 21 May 2008), and a supplemental agreement in relation thereto between Rongsheng Heavy Industries with Rongsheng Investment dated 18 October 2010 but effective as at 21
May 2008 (collectively, the "Structure Agreements"). In view of the Foreign Investment Industries Catalogue which stipulate that foreign ownership in a ship repair, design and manufacturing company in PRC may not exceed 49%, the Structure Agreements were entered into to enable the Group to govern and control the financial and operating policies of Rongsheng Shipbuilding and for Rongsheng Heavy Industries to enjoy 100% of the economic benefits of Rongsheng Shipbuilding. The Group does not have a controlling equity interest in Rongsheng Shipbuilding and therefore can only rely on contractual arrangements under the Structure Agreements to carry out its shipbuilding operations.
However, the PRC governmental authorities may in the future interpret or issue laws, regulations or policies that result in the contractual arrangements under the Structure Agreements being deemed to be in violation of the existing or then prevailing PRC laws and regulations, which would materially impact on the Group's entitlement to the economic benefits of Rongsheng Shipbuilding, as a result of which the Group's business, financial condition and results of operations may be materially and adversely affected. In addition, the contractual arrangement under the Structure Agreements may not give the Group as effective control and power as direct legal and beneficial ownership of 100% of Rongsheng Shipbuilding. In the event of any breach or default by Rongsheng Investment and/or Rongsheng Shipbuilding, the Group would need to resort to legal remedies under PRC laws to enforce its rights, which may or may not be effective to provide the Group with adequate remedies.
To reduce the above-mentioned risks to the Group, the Company regularly monitors compliance by Rongsheng Investment with the Structure Agreements and internal controls are in place over Rongsheng Shipbuilding to safeguard its interests under the Structure Agreements. The Company's legal department also works closely with its external PRC counsel to monitor the PRC regulatory environment and seek to reduce risks associated under the Structure Agreements. In the event that there are changes to PRC laws such that the Group is permitted to have legal and beneficial ownership of Rongsheng Shipbuilding without the Structure Agreements, the Group shall seek to unwind the Structure Agreements in accordance with applicable laws and regulations.
By Order of the Board
Company Secretary
Hong Kong, 18 September 2015
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As at the date of this announcement, the directors of the Company are:
Executive directors:
Mr. CHEN Qiang (Chairman), Mr. HONG Liang, Mr. Sean S J WANG, Mr. WANG Tao, Mr. WEI A Ning and Ms. ZHU Wen Hua;
Independent non-executive directors:
Mr. XIA Da Wei, Mr. WANG Jin Lian and Ms. ZHOU Zhan.
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