Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2019-66
Hangzhou Steam Turbine Co., Ltd.
Announcement on the plan for share repurchase
The members of the Board and the Company acknowledge being responsible for the
truthfulness, accuracy, and completeness of the announcement. Not any false record,
misleading statement or significant omission carried in this announcement.
Important Tips on Contents:
1. Total capital for share repurchase: the total capital for share repurchase this time is notless than HKD 160 million (inclusive) and not more than HKD 320 million (inclusive)；
2. Share repurchase price: the share repurchase price does not exceed HKD 9.5 per share;
3. Time limit for repurchase of shares: not more than 12 months from the date when therepurchase plan is reviewed and approved by the shareholders' meeting;
4. Sources of share repurchase funds: the company's own funds;
5. Purpose of share repurchase: intended to implement employee stock ownership plan orequity incentive.
6. Review and implementation procedure of share repurchase: The Company will holdits 7th meeting 39th session of Board of Directors on November 22, 2019 and deliberated andpassed the Proposal on Share Repurchase of the Company. The proposal needs to be submitted tothe company's second provisional shareholders' meeting in 2019 for deliberation. The company
requests the shareholders' meeting to authorize the Board of Directors to handle matters related to
share repurchase.
Important Tips on Risk:
1. The risk that the shareholders' meeting fails to deliberate and approve the proposal onshare repurchase;
2.The risk of the shareholders’ general meeting to authorize the board of directors to change this repurchase program or terminate it;
3.The risk that the company is unable to meet the creditor's demand to pay off debts orprovide corresponding guarantees, thus causing the repurchase program to be impossible toimplement;
4. There is an uncertain risk that the price of the company's shares will continue to exceed theprice limit of the repurchase plan during the repurchase period, resulting in that the repurchase
plan cannot be implemented or can only be partially implemented;
5. The capital for this share repurchase comes from the company's own funds, which maylead to the risk that the repurchase plan cannot be implemented as planned because the fundsrequired for share repurchase are not in place in time.
6. The repurchased shares will be used for employee stock ownership plan or equity incentive.There may be risks that the repurchased shares cannot be fully granted due to the failure of the
equity incentive plan to pass the review and approval of the board of directors, shareholders'
meeting and other decision-making bodies, the failure of the state-owned assets supervision and
administration department to approve, and the abandonment of subscription by the incentive
object;
7. The repurchase still requires the approval of the foreign exchange management departmentfor the purchase and payment of foreign exchange involved in the repurchase. Due to the influenceof foreign exchange purchase, there are uncertainties in the amount and implementation of the
repurchase.
I. Main Contents of the Repurchase Plan
1. Purpose and purpose of share repurchase
According to relevant laws, regulations and normative documents, combined with thecurrent situation of the company's stock price in the secondary market, and considering thecompany's operation and future development prospects, the company plans to repurchase someshares of the company in order to establish a long-term incentive and restraint mechanism for thecompany, safeguard the interests of the majority of investors and enhance the confidence of
investors. The repurchased shares of the company are all used to implement employee stock
ownership plan or equity incentive.
If the company fails to implement the above-mentioned purposes within 36 months after thecompletion of share repurchase, or the shares repurchased are not all used for the
above-mentioned purposes, the unused part will be cancelled according to law.
2. Methods of share repurchase
Through the trading system of Shenzhen Stock Exchange, shares of the company will berepurchased through centralized competitive bidding.
3. Price or price range and pricing principle of repurchased shares
The price of the repurchased shares is based on the company's net assets per shareattributable to the shareholders of the listed company in September 2019. The repurchased pricedoes not exceed HKD 9.5 per share (inclusive). The price range of the repurchased shares does notexceed 150% of the average trading price of the company's shares in the 30 trading days before
the board of directors approves the resolution on the repurchased shares.
From the date of approval by the board of directors to the completion of the repurchaseperiod, if the company implements such ex-dividend items as dividend distribution, stock bonus,capital accumulation fund conversion to capital stock, stock split, stock reduction and other
ex-dividend items, the repurchase price ceiling shall be adjusted according to the relevant
regulations of the China Securities Regulatory Commission and Shenzhen Stock Exchange from
the date of ex-dividend of stock price.
4. Types and quantity of shares to be repurchased and their proportion in the totalshare capital of the company
Types of shares to be repurchased: shares of foreign capital stocks (B shares) listed within theterritory of the company.
The number of repurchases and their proportion to the company's total share capital: based onthe calculation according to the maximum amount of repurchases of HKD 320 million and the
maximum price of repurchases of HKD 9.5 per share, the number of repurchased shares is
expected to be 33,684,210, accounting for about 4.47% of the company's current total share capital.
The specific number of shares to be repurchased and the proportion to the total share capital shall
be subject to the actual number of shares to be repurchased and the proportion to the total share
capital when the repurchase expires.
If the company implements such ex-dividend items as dividend distribution, stock bonus,capital accumulation fund conversion to capital stock, stock split, stock reduction and other
ex-dividend items within the implementation period of the repurchase, the number of shares to be
repurchased shall be adjusted accordingly in accordance with the relevant regulations of the China
Securities Regulatory Commission and Shenzhen Stock Exchange from the date of ex-dividend of
stock price.
If the company fails to implement the employee stock ownership plan or equity incentive, thecompany will cancel the repurchased shares according to law.
5. Sources of repo funds and total funds
The source of funds for this share repurchase is the company's own funds. The total amount of
repo funds shall not be less than HKD 160 million (inclusive) and not more than HKD 320 million
(inclusive). The specific amount of repurchase shall be subject to the funds actually used to
repurchase shares at the expiration of the repurchase period.
6. Implementation period of repurchase of shares
The implementation period of the share repurchase is within 12 months from the date of thesecond provisional shareholders' meeting in 2019 to deliberate and approve the share repurchaseplan.
During the implementation of the repurchase plan, if the shares of the company aresuspended for more than ten consecutive trading days due to major planning issues, the repurchaseperiod shall be extended, and the extended period shall not exceed the maximum period stipulatedby the China Securities Regulatory Commission and the Shenzhen Stock Exchange.
If the following conditions are met, the repurchase period shall expire in advance and therepurchase plan shall be completed:
(1) If the use amount of repurchase funds reaches the maximum limit within the repurchaseperiod, the repurchase plan will be completed, i.e. the repurchase period will expire in advancefrom that date;
(2) If the general meeting of shareholders of the company decides to terminate thisrepurchase plan, the repurchase period will expire in advance from the date when the generalmeeting of shareholders decides to terminate this repurchase plan;
The company shall not repurchase its shares during the following periods:
(1) Within 10 trading days prior to the announcement of the company's regular report,performance forecast or performance express report;
(2) From the date of occurrence of major events that may have a significant impact on thecompany's stock trading price or during the decision-making process to within 2 trading days afterdisclosure according to law;
(3) Other circumstances stipulated by the CSRC and Shenzhen Stock Exchange.
7. Validity period of repurchase resolution
The validity period of this repurchase resolution shall be within 12 months from the date ofthe second provisional shareholders' meeting in 2019 when this repurchase plan is deliberated andapproved.
8. Expected changes in the company's equity structure after repurchase
(1) Based on the calculation according to the maximum repurchase amount of HKD 320million and the maximum repurchase price of HKD 9.5 per share, it is estimated that the
maximum number of shares to be repurchased is 33,684,210. The changes in the company's equity
after the shares repurchase are expected to be as follows:
After thisrepurchase
Items Beforethisrepurchase Iftheemployeestockownership Iftheemployeestockownership
planorequityincentiveis planorequityincentivecannotbe
completedandallarelockedin completedandallarecancelled
Numberof Proportion Numberof Proportion Numberof Proportion
shares(shares) shares(shares) shares(shares)
Limitedsaleof 479824800 63.64% 513509010 68.10% 479824800 66.61%
conditionalshares
Unlimited 274185600 36.36% 240501390 31.90% 240501390 33.39%
conditionalshares
Totalsharecapital 754010400 100% 754010400 100% 720326190 100%
(2) If calculated according to the minimum repurchase amount of HKD 160 million and themaximum repurchase price of HKD 9.5 per share. it is estimated that the maximum number ofshares to be repurchased is 16,842,105. The changes in the company's equity after the sharesrepurchase are expected to be as follows:
After thisrepurchase
Items Beforethisrepurchase Iftheemployeestockownership Iftheemployeestockownership
planorequityincentiveis planorequityincentivecannotbe
completedandallarelockedin completedandallarecancelled
Numberof Proportion Numberof Proportion Numberof Proportion
shares(shares) shares(shares) shares(shares)
Limitedsaleof 479824800 63.64% 496666905 65.87% 479824800 65.10%
conditionalshares
Unlimited 274185600 36.36% 257343495 34.13% 257343495 34.90%
conditionalshares
Totalsharecapital 754010400 100% 754010400 100% 737168295 100%
9.Management'sanalysisoftheimpactofthesharerepurchaseonthecompany's
operation,profitability,finance,researchanddevelopment,debtfulfillmentcapacity,
future developmentandmaintenanceoflistingstatus
(1)Theimpactofrepofundsonthecompany'soperation,finance,researchand
development,anddebtfulfillmentcapacity
According to the company's operation, finance and future development, the companybelieves that the use of no more than HKD 320 million for repurchase will not have a significantimpact on the company's operation, profitability, finance, research and development, debt
performance and future development. All the directors of the company promise that this share
repurchase will not damage the company's ability for debt performance and continuous operation.
(2) The impact of share repurchase on the company's future development
The company's repurchase of public shares reflects the management's affirmation of thecompany's intrinsic value, which is conducive to enhancing the confidence of public investors,maintaining the company's share price and enhancing the company's capital market image,creating favorable conditions for the company's further development in the future. This sharerepurchase will be used to implement the employee stock ownership plan or equity incentive. Itwill improve the company's long-term incentive mechanism, fully mobilize the enthusiasm of thecompany's managers and core cadres, improve team cohesion and competitiveness, andeffectively promote the company's long-term development.
(3) Analysis of whether this share repurchase affects the status of listed companies
There will be no major changes in the company's equity structure after the repurchase iscompleted. After the implementation of this repurchase, the control right of the company will notchange, nor will the listing status of the company be changed. The distribution of shares stillmeets the listing conditions.
10. The situation that the company's directors, supervisors, senior managementpersonnel, controlling shareholders and actual controllers bought and sold the company'sshares within six months before the board of directors made a resolution to repurchase theshares, whether there was any explanation about insider trading and market manipulationalone or jointly with others, and an explanation of the increase or decrease plan during therepurchase period.
After self-examination by the company, within six months before the board of directors madethe resolution to repurchase shares, the company's directors, supervisors, senior management
personnel, actual controllers and their persons acting in concert have not bought or sold shares of
the company, nor havethey conducted insider trading and market manipulation alone or jointly
with others.
Up to now, the company's directors, supervisors, senior management personnel, actualcontrollers and their persons acting in concert have no clear plans for share increase or decrease.If a share increase or decrease plan is to be implemented in the future, the company will performits information disclosure obligations in a timely manner in accordance with relevant regulations.
11. Relevant arrangements for cancellation or transfer according to law afterrepurchase of shares
The repurchased shares are intended to be used for the implementation of employee stockownership plan or equity incentive. If the company fails to use the repurchased shares within 36months after the implementation of the repurchased shares, the repurchased shares that have notbeen used will be cancelled, which will be implemented in accordance with relevant laws,regulations and policies.
12. Relevant arrangements for the company to prevent infringement on creditors'interests
This share repurchase will not affect the normal and continuous operation of the companyand will not lead to insolvency of the company. If the company cancels the share repurchase, thecompany will notify creditors in accordance with the Company Law and other relevantregulations to fully protect the legitimate rights and interests of creditors.
13. Risk tips for repurchase schemes
(1) The risk that the shareholders' meeting fails to deliberate and approve the proposal onshare repurchase;
(2)The risk of the shareholders’ general meeting to authorize the board of directors to change this r
epurchase program or terminate it;
(3)The risk that the company is unable to meet the creditor's demand to pay off debts orprovide corresponding guarantees, thus causing the repurchase program to be impossible toimplement;
(4) There is an uncertain risk that the price of the company's shares will continue to exceedthe price limit of the repurchase plan during the repurchase period, resulting in that the repurchaseplan cannot be implemented or can only be partially implemented;
(5) The capital for this share repurchase comes from the company's own funds, which maylead to the risk that the repurchase plan cannot be implemented as planned because the funds
required for share repurchase are not in place in time;
(6) The repurchased shares will be used for employee stock ownership plan or equityincentive. There may be risks that the repurchased shares cannot be fully granted due to the failureof the equity incentive plan to pass the review and approval of the board of directors, shareholders'meeting and other decision-making bodies, the failure of the state-owned assets supervision and
administration department to approve, and the abandonment of subscription by the incentive
object;
(7) The repurchase still requires the approval of the foreign exchange managementdepartment for the purchase and payment of foreign exchange involved in the repurchase. Due tothe influence of foreign exchange purchase, there are uncertainties in the amount and
implementation of the repurchase.
14. With regard to requesting the general meeting of shareholders to authorize theboard of directors to handle matters related to share repurchase
The board of directors of the company requests the general meeting of shareholders of thecompany to authorize the board of directors to handle matters related to this share repurchase. Thecontents and scope of authorization include but are not limited to:
(1) Authorize the board of directors of the company to decide on the specific purpose of sharerepurchase, implement employee stock ownership plan or equity incentive, and cancel to reduce
the registered capital of the company, etc. in accordance with relevant laws and regulations;
(2) Select opportunity to repurchase shares within the repurchase period, including time,price and quantity of shares to be repurchased;
(3) Authorize the board of directors of the company to make corresponding amendments tothe articles of association of the company concerning the registered capital, total share capital andother relevant clauses according to the actual repurchase situation, and handle the industrial andcommercial registration for the record;
(4) Authorize the board of directors of the company to adjust the specific implementationplan and handle other matters related to share repurchase in accordance with relevant provisions(i.e. applicable laws, regulations and relevant provisions of regulatory authorities);
(5) Handle other legal contents not listed above but necessary for this share repurchase andcancellation.
Where it is necessary to change or terminate the repurchase program due to relevant laws andregulations, policy changes, natural disasters, inability to perform the repurchase program or the performance will be detrimental to the protection of the rights and interests of the listed company, the board of directors shall be authorized to change or terminate the repurchase program.
This authorization starts from the date when the shareholders' meeting of the companydeliberates and approves the share repurchase plan to the date when the above authorizationmatters are completed.
The Board of Directors of Hangzhou Steam Turbine Co., Ltd.
November 22,2019
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