History and Corporate Structure
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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY AND CORPORATE STRUCTURE HISTORY OF OUR COMPANY Introduction Our business can be traced back to 1958 when our predecessor, an enterprise owned by the whole people* (全民所有制企業) named Luzhou City Tap Water Plant* (瀘州市自來水廠), was established. Luzhou City Tap Water Plant* (瀘州市自來水廠) was subsequently renamed as Luzhou City Tap Water Company* (瀘州市自來水公司) and then as Luzhou City Tap Water Main Company* (瀘州市自來水總公司). On 31 July 2002, our Company, Luzhou Water (Group) Company Limited* (瀘州市水務(集團)有限公司), was established in the PRC with a registered capital of RMB66.28 million based on the reorganisation of Luzhou City Tap Water Main Company* (瀘州市自來水總公司). On 13 July 2007, Luzhou Water (Group) Company Limited* (瀘州市水務(集團)有限公司) was renamed and re-registered as Luzhou Xinglu Water (Group) Company Limited* (瀘州市 興瀘水務(集團)有限公司) with a registered capital of approximately RMB83.50 million. On 25 December 2015, Luzhou Xinglu Water (Group) Company Limited* (瀘州市興瀘水 務(集團)有限公司) was converted into a joint stock company with limited liability, and was re-named as Luzhou Xinglu Water (Group) Co., Ltd.* (瀘州市興瀘水務(集團)股份有限公司) with a registered capital of RMB600 million, and was held by three promoters, namely, Xinglu Investment as to 87.86%, Luzhou Laojiao as to 10.92% and Luzhou Infrastructure as to 1.22%. For further details in relation to our three promoters, please refer to the paragraphs headed “— Information of Existing Shareholders” below. As of the Latest Practicable Date, our registered capital was RMB664.31 million and our Company was held by Xinglu Investment as to 79.35%, Luzhou Laojiao as to 10.92% and Luzhou Infrastructure as to 9.73%. Our Company is currently primarily engaged in tap water supply and wastewater treatment business. For further details on the principal business of our Group, please refer to the paragraphs headed “Our Business — Overview” in this document. Our Business Milestones Set out below is a list of key milestones in the founding and development of our Group: Year Business Milestones 1958 • Our water supply business commenced operations in Luzhou City, Sichuan Province, the PRC. 1987 • We constructed Nanjiao Supply Plant. 1994 • We constructed Beijiao Supply Plant. 2002 • Our Company was established as a limited liability company, namely Luzhou Water (Group) Company Limited* (瀘州市水務(集團)有限公 司). – 113 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY AND CORPORATE STRUCTURE Year Business Milestones • We acquired Qiancao Supply Plant from an Independent Third Party. 2003 • We started our wastewater treatment business by constructing our first wastewater treatment plant in Yaerdang. • We acquired approximately 70.4% equity interest in Hejiang Water, which owns our Hejiang Supply Plant, from People’s Government of Hejiang County. 2004 • Beijiao Water, the entity which owns Beijiao Supply Plant, was established and was held by our Company as to approximately 25% at that time. 2009 • We set up Luzhou Xinglu Water (Group) Co., Ltd. Water Supply and Drainage Quality Monitoring Station* (瀘州市興瀘水務(集團)有限公 司供水排水水質監測站) to monitor the water quality of water supply and drainage in Luzhou City. 2010 • We constructed Erdaoxi Treatment Plant. 2011 • We acquired Xuyong Treatment Plant from the People’s Government of Xuyong County. 2012 • We acquired additional 96.6% equity interest in Xinglu Wastewater Treatment from Xinglu Investment. • We acquired Naxi Treatment Plant from Luzhou Naxi District Guoxing Wastewater Treatment Co., Ltd.* (瀘州市納溪區國興污水處 理有限公司), a SOE. – 114 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY AND CORPORATE STRUCTURE Year Business Milestones 2014 • We started the construction of Nanjiao Supply Plant II, Chengdong Treatment Plant and Chengnan Treatment Plant. • Xinglu Wastewater Treatment was awarded the certificate for compliance with the GB/T19001-2008/ISO9001:2008 quality management system. • Upon completion of our acquisition of Hejiang Treatment Plant and Gulin Treatment Plant, our wastewater treatment service covered the entire Luzhou Area, including four counties (Lu County, Hejiang County, Xuyong County and Gulin County) and three districts in Luzhou urban area (Jiangyang District, Longmatan District and Naxi District). • We implemented the geographic information system (GIS) for collection of the data in relation to the location, operation and maintenance records, and for conducting real-time monitoring of the operational status of and water flow in our pipeline network. 2015 • We started the construction of the Beijiao Supply Plant Phase III. • We converted into a joint stock company with limited liability and were re-named as Luzhou Xinglu Water (Group) Co., Ltd.* (瀘州市興 瀘水務(集團)股份有限公司). • Our Company was awarded the certificate for compliance with the GB/T19001-2008/ISO9001:2008 and GB/T50430-2007 quality management systems. MAJOR CHANGES IN SHARE CAPITAL Since our establishment and up to the Latest Practicable Date, we have undergone the below major changes in our registered capital and paid-up share capital as a result of capital injection: • On 13 July 2007, upon registration with Luzhou City AIC, the registered capital of our Company was increased from RMB66.28 million to approximately RMB83.50 million. According to a registered capital verification report issued by an independent third party auditor, as of 4 June 2007, 100% of the increased registered capital had been paid up. • On 11 August 2009, upon registration with Luzhou City AIC, the registered capital of our Company was increased from approximately RMB83.50 million to approximately RMB84.90 million. According to a registered capital verification report issued by an independent third party auditor, as of 14 July 2009, 100% of the increased registered capital had been paid up. • On 27 December 2012, upon registration with Luzhou City AIC, the registered capital of our Company was increased from approximately RMB84.90 million to – 115 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY AND CORPORATE STRUCTURE approximately RMB184.90 million. According to a registered capital verification report issued by an independent third party auditor, as of 5 December 2012, 100% of the increased registered capital had been paid up. • On 4 September 2014, upon registration with Luzhou City AIC, the registered capital of our Company was decreased from approximately RMB184.90 million to approximately RMB184.40 million. Please refer to the subsection headed “— Major Acquisition and Disposal — Capital Reduction and Disposal of Non-principal Business Related Assets” in this section for further details. • On 5 January 2015, upon registration with Luzhou City AIC, the registered capital of our Company was increased from RMB184.40 million to RMB278.71 million. • On 25 December 2015, upon registration with Luzhou City AIC, we were converted from a limited liability company to a joint stock company with the registered capital of RMB600 million. According to a registered capital verification report issued by an Independent Third Party Auditor, as of 17 December 2015, 100% of the increased registered capital had been paid up. • On 11 May 2016, upon registration with Luzhou City AIC, the registered capital of our Company was increased from RMB600 million to RMB664.31 million. According to a registered capital verification report issued by an Independent Third Party auditor, as of 12 May 2016, 100% of the increase registered capital had been paid up. MAJOR ACQUISITION AND DISPOSAL Acquisition of Xinglu Wastewater Treatment With a view to further supplement our wastewater treatment business, on 31 December 2012, we acquired an equity interest of approximately 96.6% in Xinglu Wastewater Treatment from Xinglu Investment at a consideration of approximately RMB67.2 million, which was determined based on an assets appraisal report issued by an independent valuer and after arm’s length negotiation and was fully paid by us by December 2012. Upon the completion of such acquisition, Xinglu Wastewater Treatment was held by our Company and Xinglu Investment as to 98% and 2%, respectively, and Xinglu Wastewater Treatment became one of our non-wholly owned subsidiaries. Capital Reduction and Disposal of Non-principal Businesses Related Assets With a view to focus on our principal business and centralize our management and financial resources, upon approval from Luzhou City SASAC and pursuant to the resolution passed at the Shareholders’ meeting 30 June 2014, our Company disposed our non-principal businesses related assets, i.e. certain long-term equity investments, investment properties, buildings and structures and land use rights, with an aggregate book value of approximately RMB55.07 million as at 30 June 2013, and injected the same into a separate company named Luzhou City Xinglu Assets Management Co., Ltd.* (瀘州市興瀘資產管理有限公司)(“Xinglu Assets Management”) establised by way of company division (分立) from our Company. In – 116 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT. HISTORY AND CORPORATE STRUCTURE connection with the establishment of Xinglu Assets Management, our registered capital was also reduced by RMB0.5 million, which was contributed into Xinglu Assets Management as its registered capital. Upon completion of the establishment of Xinglu Assets Management, Xinglu Assets Management was held by Xinglu Investment and Luzhou Infrastructure as to 98.15% and 1.85%, respectively. On 25 December 2015, the 1.85% equity interest in Xinglu Assets Management held by Luzhou Infrastructure was transferred to Xinglu Investment.