Shenzhen Development Bank Announcement on Related-party Transaction Involved in Non-public Offering of Shares
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Stock code: 000001 Stock name: SDB A Announcement number: 2011-033
Shenzhen Development Bank Announcement on Related-party
Transaction Involved in Non-public Offering of Shares
The Company and all members of the Board of Directors guarantee the authenticity,
accuracy and completeness of this proposal and confirm that there is no false
documentation, misleading representation or material omission in this proposal.
Special notes
1. Shenzhen Development Bank Co., Ltd. (hereinafter referred to as “the company”)
plans to issue A shares to particular subscribers via non-public offering
(hereinafter referred to as “this non-public offering”), and Ping An Insurance
(Group) Company of China, Ltd. (hereinafter referred to as “PAG”) plans to
subscribe for all shares issued via non-public offering in cash.
As PAG is the controlling shareholder and the actual controller of the company,
this non-public offering constitutes a RPT of the company according to
regulations specified in SZSE Rules Governing Listing of Shares.
2. This non-public offering still needs to be discussed and passed at the company’s
shareholder’s meeting and approved by China Banking Regulatory Commission
(hereinafter referred to as “CBRC”) and China Securities Regulatory Commission
(hereinafter referred to as “CSRC”) before it is implemented. Shareholders
connected to this non-public offering will abstain from voting at the shareholder’s
meeting.
I. Overview of the RPT
(I) Basic introduction to this RPT
According to the Share-subscription Agreement Between Shenzhen Development Bank
Co., Ltd. and Ping An Insurance (Group) Company Of China, Ltd. (hereinafter
referred to as “subscription contract”) signed between the company and PAG in
Shenzhen on Aug 17, 2011, the company plans to issue shares to PAG via non-public
offering, and the volume of issuance is no less than 892,325,997 shares but no more
than 1,189,767,995 shares. The issuing price is the company’s average stock price for
20 trading days prior to the base date for pricing, i.e., 16.81 Yuan/share. The amount
of funds raised shall not exceed RMB 20bn.
1(II) Situation of voting at the BoD meeting
On Aug 17, 2011, the company convened the seventh session of the eighth BoD,
where proposals on this non-public offering were discussed. Four connected
shareholders abstained from voting, the rest 13 unconnected shareholders casted
affirmative vote, and the company’s independent directors including Lu Mai, Liu
Nanyuan, Duan Yongkuan, Xia Donglin, Chu Yiyun, Ma Lin and Chen Yingming, all
agree to such proposal. This deal still needs to be approved at the shareholder’s
meeting. Shareholders connected to this non-public offering will abstain from voting
at the shareholder’s meeting.
II. Basic information of the related party
(I) Basic information
Chinese name: 中国平安保险（集团）股份有限公司
English name: Ping An Insurance (Group) Company of China, Ltd.
Registered address: 15th - 18th Floor, Galaxy Development Centre, Fuhua Third
Road, Futian Central Zone, Shenzhen, Guangdong
Legal representative: Ma Mingzhe
Registered capital: RMB 7,644,142,092 1
Paid-in capital: RMB 7,916,142,092
AIC registration No.: 100000000012314
Organization code: 10001231-6
Type of corporation: Joint stock limited company (listed)
Business scope: Authorized business items: None
General business items: investment in financial and
insurance companies; supervision and management of
various domestic and international businesses of enterprises
1
On June 17, 2011, PAG issued 272,000,000 overseas listed foreign shares through NPO to Jinjun Co., Ltd., with
the total equity hitting 7,916,142,092 shares. This equity change has not yet been registered in the Administration
for Industry and Commerce.
2under control; fund application businesses
Duration of Operation: Long term
Tax Registration No.: SDSZ # 440300100012316
Listing Information: A-share listing exchange: Shanghai Stock Exchange
A-share stock abbreviation: PAG
A-share stock code: 601318
H-share listing exchange: HKEX
H-share stock abbreviation: PAG
H-share stock code: 2318
Address: 15th - 18th Floor, Galaxy Development Centre, Fuhua Third
Road, Futian Central Zone, Shenzhen, Guangdong;
Postcode: 518048
Contact Details: TEL: 4008-866-338
FAX: (0755) 82431029
Website: www.pingan.com
Email: ir@pingan.com.cn; pr@pingan.com.cn
PAG was founded in 1988 with HQ located in SZ. As China’s first joint-stock
insurance enterprise in China, Ping An has developed into a financial group that
provides integrated financial services including insurance, banking and investment,
etc. In Jun 2004 and Mar 2007, it was listed in succession on the main board of the
Stock Exchange of Hong Kong and Shanghai Stock Exchange. The stock name is
“PAG”, stock code in the Stock Exchange of Hong Kong is 2318 and stock code in
Shanghai Stock Exchange is 601318.
PAG’s stock right structure is scattered without shareholders who can exert significant
influence on resolutions of PAG’s shareholder meeting through voting rights granted
by shares held by them. There is no controlling shareholder or the actual controller
stipulated in Article 217 of the Company Law in PAG.
For detailed information of PAG, please refer to SDB Plan for Non-public Offering of
A-Shares released by the Company at the same day.
(II) Major financial data
Below is PAG’s audited financial data for recent three years:
3In RMB million
Dec 31, 2009 Dec 31, 2008
Item Dec 31, 2010
(2) (2)
Total asset 1,171,627 935,712 704,564
Shareholder’s equity 116,883 91,743 67,195
Equity attributable to parent
112,030 84,970 64,542
company’s shareholder
Liability/asset ratio (1) 90.4% 90.9% 90.8%
Item 2010 2009 2008
Operating income 189,439 147,835 108,516
Total profit 22,347 19,919 -1,486
Net profit 17,938 14,482 1,635
Net profit attributable to
parent company’s 17,311 13,883 1,418
shareholder
Net profit attributable to
shareholders of listed
17,314 13,689 1,569
company with non-recurring
items deducted
Net cash flow from
139,255 93,301 58,871
operating activities
Basic earnings per share
2.30 1.89 0.19
(Yuan/share)
Net cash flow from per
share operating activities 18.52 12.70 8.02
(Yuan/share)
Weighted average net asset
17.3% 18.5% 1.8%
yield
Note: (1) Liability/asset ratio = (total liabilities + few shareholder’s equity) / total
asset;
(2) In 2009, PAG adjusted accounting policies related to split of mixed
insurance contract, material insurance risk test and provision for insurance contract
according to Interpretation No. 2 of the Accounting Standards for Business
Enterprises. 2008 data are subject to retroactive adjustment.
(III) Introduction to the association relationship
As of the announcement day, PAG directly and indirectly holds 52.38% stocks of the
4company and becomes the controlling shareholder and the actual controller of the
company. According to regulations in SZSE Rules Governing Listing of Stocks, PAG is
a connected party of the company and this non-public offering constitutes a RPT to
the company.
III. Pricing policy and basis of the deal
(I) Pricing approach
The base date for pricing of this non-public offering is the announcement day of
resolutions of the 7th session of the 8th BoD. Price of this non-public offering is the
company’s average stock price for 20 trading days prior to the base date for pricing,
i.e., 16.81 Yuan/share.
(II) Fairness of the pricing
The pricing principle of this non-public offering is in accordance with related
regulations stipulated in Company Law of the People’s Republic of China, Securities
Law of the People's Republic as well as Administrative Rules for Securities Issuance
of Listed Companies and Implementation Rules for the Non-public Issuance of Stocks
by Listed Companies released by CSRC.
IV. Abstract of the share subscription contract with conditions precedent
(I) Parties to the contract and signing date
1. Parties to the contract
Party A: Shenzhen Development Bank., Ltd
Party B: Ping An Insurance (Group) Company of China , Ltd
2. Signing date
August 17, 2011
(II) Mode of subscription and payment
The subscriber will subscribe shares through this non-public offering in cash.
(III) Conditions precedent and effective date
The Company signed share subscription agreement (subscription contract) with PAG
on August 17, 2011, and the contract comes into effect after signing.
(IV) Any saving clause and preconditions attached to the contract
The effectiveness of transaction obligations in the subscription contract between the
Company and PAG is based on the precondition that below conditions are met:
1) All approvals have been got properly and continue to be effective on the
transaction day;
52) Relevant authorities haven’t issued or implemented any law, regulation, rule,
instruction, order or notice to ban the completion of the transaction
proposed in the subscription transaction;
3) As to obligations PAG needs to perform in order to complete the transaction,
the Company should ensure that all the statements and promises in the
subscription contract should be authentic and accurate on the contract
signing day in all significant terms and will continue to be authentic and
accurate on the transaction day;
4) As to obligations the Company needs to perform in order to complete the
transaction, PAG should ensure that all the statements and promises in the
subscription contract should be authentic and accurate on the contract
signing day in all significant terms and will continue to be authentic and
accurate on the transaction day;
(V) Default liability clause
Bounded by the following clauses, in case any party infringes any statements and
warrants under the Subscription Contract or breach any commitments or obligations
under the Subscription Contract, thereby (directly or indirectly) incurring any losses,
liabilities and/or expenses (including interests, reasonable legal service fees and other
expense of experts) to the other party, the default party shall indemnify the other party
in full amount.
The company does not undertake responsibilities for any claims raised by Ping An,
unless and until the total amount of such claims exceeds RMB 20 million. If the total
amount of any claims exceeds RMB 20 million, the company shall undertake
responsibilities for the total amount of such claims; Ping An does not undertake
responsibilities for any claims raised by the company, unless and until the total
amount of such claims exceeds RMB 20 million. If the total amount of any claims
exceeds RMB 20 million, Ping An shall undertake responsibilities for the total amount
of such claims. The whole responsibilities each party undertakes for all claims as per
the Subscription Contract shall be within the limit of the total subscription price.
V. Purpose of this RPT and its impact on the company
(I) Purpose of this RPT
Since 2010, CBRC kept in line with global financial regulation reform and
strengthened prudent regulation with successive unveiling of new regulatory
standards. On Apr 27, 2011, CBRC officially released Guidelines on Implementing
New Regulatory Standards in the Banking Industry [2011] No. 44 on Apr 27, 2011,
which raised minimum CAR requirement for non-systematically important banks
from 8.0% to 10.5%. The new standard will be implemented from Jan 1, 2012, and
non-systematically important banks are required to reach target by end of 2016.
Depending on CAR level, CBRC classify capital status of commercial banks into
three types: adequate capital, inadequate capital and severely inadequate capital; and
adopt classified regulatory measures in respect of business access, scale expansion
6and outlet establishment, etc. based on that. Therefore, it will be of strategic
significance to keep meeting CAR regulatory requirement and adapt to hard capital
restraint.
As a listed bank in China’s A-share market, the company gradually increased CAR via
accumulated capitals and various financing channels since 2004 in order to cope with
constantly changing economic, financial and regulatory environment at home and
abroad. In 2007 and 2008, the company supplemented about 5.7bn Yuan core capitals
through exercise of warrant. In 2008, it issued 8bn Yuan subordinated debt in total in
2008, 1.5bn hybrid debt in 2009, 6.93bn Yuan new shares to PA Life via non-public
offering, and 3.65bn Yuan hybrid debt in Apr 2011. As of Jun 30, 2011, the company’s
core CAR and CAR is 7.01% and 10.58%, respectively.
To meet capital requirements on steady and sustainable development of business and
proper expansion of the asset scale and to reach CBRC’s new regulatory standard as
soon as possible, the company needs to further issue shares to raise capital,
supplement core capital and improve CAR so that it can cope with rapid change and
challenge in domestic an foreign economy, achieve stable business, improve risk
prevention capabilities and bring more return to all shareholders.
(II) Impact on the company
This non-public offering will be helpful to raise the company’s CAR, thus increasing
risk preventing capabilities, boosting competitiveness and obtaining more business
development opportunities. Below is impact of this non-public offering on the
company’s business management and financial position:
1. Impact on net asset, net asset per share and net asset yield
Through this non-public offering, the net asset scale of the company will increase.
The issuing price this time is higher than the company’s net asset per share of Jun 30,
2011, so the net asset per share will increase accordingly. This offering will dilute the
company’s net asset yield in the short run, but it will be positive to increase the net
asset yield as raised funds begin to produce return in the long run.
2. Impact on the CAR
With funds raised through this non-public offering, the company’s CAR and core
CAR will further increase, thus boosting the risk-resisting capability.
3. Impact on the profitability
This non-public offering will promote rapid development of various business and
further improve the company’s profitability.
VI. Total amount of various related-party transactions between the company
and this related party
Below lists the EOP balance of RPTs between PAG and the company as of Jun 30,
72011:
(In RMB Thousand)
Items Jun 30 2011
100,000
AR investment
82,634
FI placement
5,670,615
Deposit absorption
129,497
AP bonds
Factoring credit limit -
FI credit limit -
Below lists the amount of RPTs between PAG and the company from Jan to Jun
2011:
(In RMB Thousand)
Items Jan to Jun, 2011
2,080
AR bond interest income
8,167
Agency fee income
544
Custody fee income
74
FI placement interest expense
91,417
Deposit absorption interest expense
3,505
AP bond interest expense
1,360
Premium expense
All above transactions proceed as per general commercial clause and normal business
procedures.
The company issues 1,638,336,654 shares to purchase 7,825,181,106 PAB shares
8(accounting for about 90.75% of total PAB shares) held by PAG and raise
2,690,052,300 Yuan in cash equaling the valuation of the 9.25% shares of PAB. The
transaction was approved by CSRC on June 28, 2011 and was implemented on July
29, 2011. Other than this RPT, no other material RPT happed between PAG and the
company between Jun 30, 2011 and the disclosure day of this announcement.
VII.Recognition and independent opinions from independent directors
The company’s independent directors including Lu Mai, Liu Nanyuan, Duan
Yongkuan, Xia Donglin, Chu Yiyun, Ma Lin and Chen Yingming recognized this
non-public offering in advance, and agreed to submit this non-public offering to the
BoD for discussion. Independent directors of the company expressed their
independent opinions, believing that: (1) This non-public offering is fair to the
company and all shareholders and is in the interests of the company; (2) Pricing of
this non-public offering is fair without doing harm to interests of the company and its
shareholders; (3) Voting procedures of the company’s BoD for proposals on this
non-public offering comply with SZSE Rules Governing Listing of Shares and
regulations of the company’s Article of Association; (4) Proposals involved with this
non-public offering which need deliberation by a shareholders’ meeting of the
company shall be submitted to a shareholders’ meeting for voting, and the company
shall provide an online voting platform to all shareholders, at the same time, the
related shareholders of the company shall avoid the voting.
Document for reference
1. Resolutions of the 7th session of the 8th BoD
2. Opinions of independent directors
3. Shares-subscription Agreement between Shenzhen Development Bank Co., Ltd
and Ping An Insurance (Group) Company of China, Ltd.
It is hereby announced.
Board of Directors of Shenzhen Development Bank Co., Ltd
Aug 18, 2011
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