The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. R14.58(1) 上 海 電 氣 集 團 股 份 有 限 公 司 (A joint stock company incorporated in the People s Republic of China with limited liability) (Stock Code: 2727) R13.51A DISCLOSEABLE TRANSACTION The Board wishes to announce that the Company has signed a Share Sale Agreement on 29 December 2007, to dispose of its entire 50.32% equity interest in Shanghai Diesel for a cash consideration of RMB923.42million to SAIC Motor. Reference is made to the announcements of the Company dated 30 August 2007 and 26 September 2007. As at the date of this announcement, Shanghai Diesel is a 50.32% owned subsidiary of the Company, and the A shares and B shares of Shanghai Diesel are listed on the Shanghai Stock Exchange. As the highest applicable percentage ratio (as defined in the Listing Rules) in respect of the Disposal is more than 5% but less than 25%, the Disposal constitutes a discloseable transaction of the Company under rules 14.06(2) of the Listing Rules. This transfer of shares is pending for the necessary approvals from the relevant stateowned assets supervision and administration authority and foreign investment approval authority and the waiver from China Securities Regulatory Commission for the General Offer. Public investors should beware of the uncertainties and risks involved and are advised to exercise caution in dealing in the H shares of the Company. A summary of the Disposal are disclosed in this announcement, further details of which will be set out in a circular to be despatched to the Shareholders as soon as practicable in accordance with the Listing Rules. THE DISPOSAL The Share Sale Agreement The principal terms of the Share Sale Agreement are summarised as follows:
Date of Share Sale Agreement : 29 December 2007 R14.58(3) Parties : the Company, as vendor SAIC Motor, an independent third partie that is not connected with the Company, as purchaser Subject matter of disposal : The Company s entire 50.32% equity interest in Shanghai Diesel R14.60(1) Consideration : RMB923.42 million Conditions Precedent : The Share Sale Agreement will become effective upon satisfaction of, among others, the following conditions: Requisite internal approval and authorization from the Company Requisite internal approval and authorization from SAIC Motor Requisite approval from the relevant stateowned assets supervision and administration authority and foreign investment approval authority Requisite waiver from China Securities Regulatory Commission for the General Offer Other requisite approvals required pursuant to relevant rules for transfer of the shares Completion : The completion of the Share Sale Agreement is subject to, among others, the following: successful registration with the relevant government authorities to effect the transfer of the legal title on the 50.32% equity interest of Shanghai Diesel to SAIC Motor Basis of consideration The consideration of approximately RMB923.42 million (the Consideration ) payable to the Company was determined on arm s length basis with reference to the net asset value of Shanghai Diesel of approximately RMB1,833.12 million (or approximately RMB922.43 million attributable to the 50.32% equity interest to be disposed of by the Company) as at 30 September 2007, as set out in the audited financial statements of Shanghai Diesel for the nine months ended 30 September 2007. In addition to the net asset value, the Board has also taken into account the return on R14.58(4) Page 2
equity, price-earnings ratio and the operation performance of Shanghai Diesel to arrive at the Consideration. Under the Share Sale Agreement, within 5 days of the signing of the Share Sale Agreement, SAIC Motor is required to make a payment equivalent to 30% of the Consideration (approximately RMB277.02 million) as deposit for the Share Sale Agreement. The balance of the Consideration will be payable by SAIC Motor to the Company upon completion of the required administrative procedures in respect of title transfer in the relevant Assets and Equity Exchange ( 產 權 交 易 所 ). Background information of Shanghai Diesel Shanghai Diesel, a company established in the PRC and whose A shares and B shares are listed on the Shanghai Stock Exchange under the stock code 600841 and stock code 900920 respectively, was owned as to 50.32% by the Company as at the date of this announcement. Shanghai Diesel is principally engaged in the design, development, manufacture and sale of diesel engines, diesel systems and diesel power-generating equipment, used for engineering, automotive, agriculture, ship building and power industries. It is also one of the key PRC suppliers in the diesel engine industry. According to the audited accounts of Shanghai Diesel prepared under the PRC GAAP, Shanghai Diesel recorded profit before tax of approximately RMB1.43 million, RMB11.92 million and RMB28.44 million for each of the two financial years ended 31 December 2005 and 2006 and for the nine months ended 30 September 2007 respectively; profit after tax net of minority interest amounted to approximately RMB5.88 million, RMB12.80 million and RMB14.70 million respectively for the same period. There was no extraordinary item recorded in the audited accounts of Shanghai Diesel for each of the two financial years ended 31 December 2005 and 2006 and for the nine month ended 30 September 2007. The net asset value of the Shanghai Diesel amounted to approximately RMB1,833.12 million as at 30 September 2007. After the completion of the Disposal under the Share Sale Agreement, Shanghai Diesel will cease to be a subsidiary of the Company. R14.58(2) R14.60(2) R14.58(7) R14.60(6) Reasons for and benefits of the Disposal In the past few years, performance of Shanghai Diesel has not been in tandem with the industry growth although automotive and ship building industries have been growing at a fast pace in the PRC. Directors are of the view that slow recovery of the business is mainly attributable to shanghai Diesel s inability to work in alliance with major automobile and ship manufacturers which do not have diesel engines manufacturing operation within the same group. As such, the Directors noted that most PRC diesel engine manufacturers are affiliated to automobile or ship manufacturers to spur their growth. Page 3
Furthermore, there is a trend that major automobile and ship manufacturers in the PRC choose to maintain an internal diesel engine division to support the needs of their group s manufacturing as well as to achieve cost savings. As such, Shanghai Diesel is finding it increasingly difficult to compete in the market in which it operates. In addition, the Disposal will allow the Group to focus its resources on the business sectors with more promising prospects. The book value of the long term investment of 50.32% equity interest in Shanghai Diesel being disposed of amounted to approximately RMB922.43 million according to the Company s accounts as at 30 September 2007, which is less than the consideration of RMB923.42 million. Accordingly, the disposal under the Share Sale Agreement would result in a gain of approximately RMB1.0 million before related expenses, which will be reflected in the income statement of the Company for the financial year ending 31 December 2008 accordingly. The net proceeds from the Disposal are intended to be utilized as working capital of the Company. The Directors (including the independent non-executive Directors) believe that the terms of the transactions are fair and reasonable and in the interests of the Company and the Shareholders as a whole. R14.58(5) R14.58(6) R14.60(3)(a) R14.60(3)(b) R14.58(8) GENERAL INFORMATION The Company is an industrial conglomerate principally engaged in the research, design, manufacture, sales and servicing of a wide range of products and services in the power equipment, electromechanical equipment, transportation equipment and environmental systems industries. SAIC Motor is a leading PRC manufacturer of passenger vehicles, the largest minivehicle manufacturer as well as a vehicle manufacturer that enjoys the biggest sales volume in China. The main business of SAIC Motor include R&D, manufacturing and sales of vehicles and parts that are closely related with vehicle development, as well as the auto financial business that is closely related with the auto industry. R14.58(2) R14.58(2) As of 31 December 2006, SAIC Motor s consolidated total assets amounted to RMB86.4 billion and consolidated net assets amounted to RMB31.6 billion, generating revenues of RMB30.5 billion with net profit of RMB1.4 billion. SAIC Motor s A shares are listed on the Shanghai Stock Exchange under the stock code 600104. As the highest applicable percentage ratio (as defined in the Listing Rules) of the Disposal is more than 5% but less than 25%, the Disposal constitutes a discloseable transaction of the Company under rules 14.06(2) of the Listing Rules and a circular containing further details of the Disposal will be sent to the Shareholders as soon as practicable and in accordance with the Listing Rules. Page 4
This transfer of shares is pending for the necessary approvals from the relevant stateowned assets supervision and administration authority and foreign investment approval authority and the waiver from China Securities Regulatory Commission for the General Offer. Public investors should beware of the uncertainties and risks involved and are advised to exercise caution in dealing in the H shares of the Company. As at the date of this announcement, the executive Directors of the Company are, Mr. XU Jianguo, Mr. HUANG Dinan, Ms. LI Manping, and Mr. YU Yingui, the nonexecutive Directors of the Company are Mr. ZHU Kelin and Ms. YAO Minfang, and the independent non-executive Directors of the Company are Dr. YAO Fusheng, Dr. CHEUNG Wai Bun and Mr. LEI Huai Chin. R2.14 DEFINITIONS Board Company Directors Disposal General Offer GAAP Group Listing Rules PRC or China SAIC Motor the board of directors of the Company, a joint stock company with limited liability incorporated in the PRC and whose H shares are listed on the Stock Exchange under the stock code of 2727 the directors of the Company the disposal of 50.32% equity interest in Shanghai Diesel to SAIC Motor pursuant to the Share Sale Agreement the general offer required to be made by SAIC Motor to the existing shareholders of Shanghai Diesel for the acquisition of 50.32% of Shanghai Diesel by SAIC Motor pursuant to the Share Sale Agreement Generally Accepted Accounting Principles the Company and its subsidiaries The Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited The People s Republic of China which, for the purpose of this announcement only, does not include the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan SAIC Motor Corporation Ltd., 上 海 汽 車 集 團 股 份 有 限 公 司, whose A shares are listed on the Shanghai Stock Exchange under the stock code 600104 Page 5
RMB Shanghai Diesel Share Sale Agreement Stock Exchange Shareholders Renminbi, the lawful currency of the PRC Shanghai Diesel Engine Co., Limited, 上 海 柴 油 機 股 份 有 限 公 司, whose A shares and B shares are listed on the Shanghai Stock Exchange under the stock code 600841 and the stock code 900920 respectively the agreement dated 29 December 2007 entered into between the Company and SAIC Motor pursuant to which, the Company agreed to sell 50.32% equity interest in Shanghai Diesel The Stock Exchange of Hong Kong Limited the holders of the shares of the Company By Order of the Board XU Jianguo Chairman Shanghai, the PRC, 2 January 2008 Page 6
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. 上 海 電 氣 集 團 股 份 有 限 公 司 (A joint stock company incorporated in the People s Republic of China with limited liability) (Stock Code: 2727) CLARIFICATION ANNOUNCEMENT DISCLOSEABLE TRANSACTION Reference is made to the English and Chinese version of the announcement of (the Company ) dated 2 January 2008 (the Announcement ). Unless otherwise defined, capitalized terms used in the Announcement shall have the same meanings when used herein. The Company wishes to clarify that SAIC Motor and its ultimate beneficial owners are independent third parties not connected with the Company. BOARD OF DIRECTORS As at the date of this announcement, the executive Directors of the Company are Mr. XU Jianguo, Mr. HUANG Dinan, Ms. LI Manping, and Mr. YU Yingui, the nonexecutive Directors of the Company are Mr. ZHU Kelin and Ms. YAO Minfang, and the independent non-executive Directors of the Company are Dr. YAO Fusheng, Dr. CHEUNG Wai Bun and Mr. LEI Huai Chin. Shanghai, the PRC, 3 January 2008 By Order of the Board XU Jianguo Chairman