CLP : Continuing Connected Transactions (3 January 2017)

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中 電 控 股 有 限 公 司

CLP Holdings Limited (incorporated in Hong Kong with limited liability)

(Stock Code: 00002)

Continuing Connected Transactions

On 30 December 2016, CLP Group entered into the 2017 power purchase agreement for the Fangchenggang coal-fired project with the CSG Group. This 2017 FCG PPA constitutes a continuing connected transaction for the CLP Group as the CSG Group is a connected person of the Company (at its subsidiary level) by virtue of CSG HK being a substantial shareholder of CAPCO, a subsidiary of the Company.

This announcement obligation was triggered with the entering into the 2017 FCG PPA, because when aggregated with other continuing connected transactions entered into or renewed between the CLP Group and the CSG Group relating to power purchases by the CSG Group since the 2016 Second Announcement, the projected Annual Aggregate Cap exceeds the 5% threshold (revenue ratio) under the Listing Rules.

The Transactions, including the 2017 FCG PPA, despite exceeding the 5% threshold, are exempt from the circular, independent financial advice and shareholders' approval requirements on the basis that:

1. CSG Group is a connected person of the Company at the subsidiary level;

2. the 2017 FCG PPA has been approved by the Directors; and

3. the Independent Non-executive Directors have confirmed that the terms of the 2017 FCG PPA are fair and reasonable, on normal commercial terms, in the ordinary and usual course of business of the CLP Group and in the interests of the Company and its Shareholders as a whole.

1. CONTINUING CONNECTED TRANSACTIONS BETWEEN THE CLP GROUP AND THE CSG GROUP

The Company last made an announcement in relation to the ongoing continuing connected transactions between the CLP Group and the CSG Group in its 2016 Second Announcement as the value of the aggregate cap for these transactions was anticipated to exceed the 5% threshold under the Listing Rules.

On 30 December 2016, a member of the CLP Group entered into the 2017 FCG PPA, and when aggregated with other Transactions entered into or renewed since the 2016 Second Announcement, the projected Annual Aggregate Cap for these Transactions exceeds the 5% threshold under the Listing Rules.

These Transactions include (a) renewal of some of the existing continuing connected transactions and (b) entering into new agreements for some existing projects which constitute continuing connected transactions. They comprise the Power Sales Contract, a number of PPAs (including the 2017 FCG PPA) and other agreements relating to power purchases by the CSG Group. These renewals and the entering into of the new agreements were conducted in the ordinary and usual course of business of the CLP Group.

The principal terms of the Transactions are summarised in Table A below:

Table A - Details of the Transactions

Name, date and current term of the agreement	Transaction party within the CLP Group	Transaction party within the CSG Group	Start date of current contractual arrangement (see Note (a))	Nature and description of the transaction	Basis for determining the consideration
CLP Power electricity sales to Mainland China
1.	Power Sales Contract Date: 15 December 2016 Term: From 1 January 2017 to 31 December 2017	CLP Power	CSG-GPG Guangdong Guang-hua Industry Import and Export Co., Ltd, as payment agent of CSG-GPG	10 February 2012	CLP Power sells electricity to CSG-GPG.	Payment is based on the number of GWh sold multiplied by an arm's length tariff agreed between the parties. The tariff is determined after taking into account available market information and the relevant cost.
2.	Energy Economy Interchange Agreement (see Note (b)) Date: 25 December 2015 Term: From 25 December 2015 to 24 December 2017 (potential extension for one year subject to mutual consent of both parties upon expiry of the agreement)	CLP Power	CSG-GPG	25 December 2015	Economic interchange of electricity from, on the one side, CLP Power to CSG-GPG and, on the other, from CSG-GPG to CLP Power, depending on which party is affected by an emergency incident resulting in interruption of normal electricity supply to its customers. The potential sale of electricity by CLP Power to CSG-GPG falls to be aggregated with the Transactions.	As in item 1 above

Name, date and current term of the agreement	Transaction party within the CLP Group	Transaction party within the CSG Group	Start date of current contractual arrangement (see Note (a))	Nature and description of the transaction	Basis for determining the consideration
The Huaiji hydro project
3.	Zelian Hydro Station PPA (see Note (c)) Date: 28 September 2015 Term: From 28 September 2016 to 27 September 2017 (automatically renewable - see Note (d))	Guangdong Huaiji Xinlian Hydro-electric Power Company Limited, a subsidiary of the Company ("CLP-GHX")	Zhaoqing Power Bureau of CSG-GPG, a subsidiary of CSG ("CSG-ZPB")	23 July 2009	CLP-GHX sells electricity to CSG-ZPB.	Payment is based on the number of GWh sold multiplied by a state pre-determined tariff, determined by the Zhaoqing City Price Bureau. This tariff is published at Zhaoqing Price Bureau Document ZhaoJia [2012] No. 67 and is updated from time to time. The above pricing also applies to items 4-9.
4.	Longzhongtan Hydro Station PPA (see Note (c)) Date: 28 September 2015 Term: From 28 September 2016 to 27 September 2017 (automatically renewable - see Note (d))	CLP-GHX	CSG-ZPB	23 July 2009	As in item 3 above	As in item 3 above
5.	Jiaoping Hydro Station PPA (see Note (c)) Date: 28 September 2015 Term: From 28 September 2016 to 27 September 2017 (automatically renewable - see Note (d))	CLP-GHX	CSG-ZPB	23 July 2009	As in item 3 above	As in item 3 above
6.	Xiazhu Hydro Station PPA (see Note (c)) Date: 28 September 2015 Term: From 28 September 2016 to 27 September 2017 (automatically renewable - see Note (d))	CLP-GHX	CSG-ZPB	23 July 2009	As in item 3 above	As in item 3 above
7.	Shuixia Hydro Station PPA (see Note (c)) Date: 28 September 2015 Term: From 28 September 2016 to 27 September 2017 (automatically renewable - see Note (d))	Guangdong Huaiji Weifa Hydro-electric Power Company Limited, a subsidiary of the Company ("CLP-GHW")	CSG-ZPB	23 February 2012	CLP-GHW sells electricity to CSG-ZPB.	As in item 3 above

Name, date and current term of the agreement	Transaction party within the CLP Group	Transaction party within the CSG Group	Start date of current contractual arrangement (see Note (a))	Nature and description of the transaction	Basis for determining the consideration
8.	Baishuihe Four Hydro Stations PPA (see Note (c)) Date: 28 September 2015 Term: From 28 September 2016 to 27 September 2017 (automatically renewable - see Note (d))	Guangdong Huaiji Changxin Hydro-electric Power Company Limited ("CLP-GHC") Guangdong Huaiji Gaotang Hydro-electric Power Company Limited ("CLP-GHG") CLP-GHW CLP-GHX All of the above companies are subsidiaries of the Company.	CSG-ZPB	23 February 2012	CLP-GHC, CLP-GHG, CLP-GHW and CLP-GHX sell electricity to CSG-ZPB.	As in item 3 above
9.	Niuqi Hydro Station PPA (see Note (c)) Date: 26 July 2016 Term: From 26 July 2016 to 25 July 2017 (automatically renewable - see Note (d))	CLP-GHX	CSG-ZPB	12 January 2009	As in item 3 above	As in item 3 above
The Yang_er hydro project
10.	Yang_er Hydro Project PPA (see Note (c) and Section 2 of this announcement) Date: 14 October 2016 Term: From 1 January 2017 to 31 December 2017 (automatically renewable - see Note (e))	Dali Yang_er Hydropower Development Co., Ltd., a wholly-owned subsidiary of the Company ("CLP Dali Yang_er")	Yunnan Power Grid Company Limited, a subsidiary of CSG ("CSG-YPG")	19 August 2009	CLP Dali Yang_er sells electricity to CSG-YPG.	Payment is based on the number of GWh sold multiplied by a state pre-determined tariff, determined by the Yunnan Provincial Development and Reform Commission ("Yunnan PDRC") and subject to adjustment in accordance with the Implementation Scheme for Trading in Yunnan Electricity Market issued by Yunnan Provincial Industry and Information Technology Commission in 2016 ("Yunnan Implementation Scheme Document").