ANNOUNCEMENT - CONTINUING CONNECTED TRANSACTIONS: ENTERING INTO NETWORK SERVICES AGREEMENT IN WRITING

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

安徽皖通高速公路股份有限公司

ANHUI EXPRESSWAY COMPANY LIMITED

(incorporated in the People's Republic of China with limited liability as a joint stock company)

(Stock Code: 995)

ANNOUNCEMENT

CONTINUING CONNECTED TRANSACTIONS:

ENTERING INTO NETWORK

SERVICES AGREEMENT IN WRITING

Reference is made to the announcement dated 28 December 2018 of the Company in relation to the Network Services Agreement.

The Network Services Agreement will expire on 31 December 2019. For continuous performance of the transactions under the Network Services Agreement, the Board announces that on 31 December 2019, the Company entered into a new network services agreement (the "New Network Services Agreement") in writing with Anhui Expressway Network Operations to obtain the Network Services for toll expressways held and operated by the Company, Guangci Company, Ningxuanhang Company and Xuanguang Company within Anhui Province (for the sake of clarity, excluding Tianchang Section of National Highway 205 and Tianchang Section of Ninghuai Expressway).

As Anhui Transportation Group currently holds approximately 31.63% of the total issued shares of the Company, it is a controlling shareholder and connected person of the Company under the Listing Rules. Anhui Expressway Network Operations is a subsidiary of Anhui Transportation Group, and is therefore an associate (as defined in the Listing Rules) of Anhui Transportation Group and also a connected person of the Company under Chapter 14A of the Listing Rules. The Company currently holds 55.47% equity interest in Guangci Company, 51% equity interest in Ningxuanhang Company and 55.47% equity interest in Xuanguang Company, all of which are subsidiaries of the Company. Therefore, the services under the New Network Services Agreement constitute continuing connected transactions.

Since the continuing connected transactions under the New Network Services Agreement are conducted with the same connected person, namely Anhui Expressway Network Operations, such continuing connected transactions may be aggregated under Rule 14A.83 of the Listing Rules.

Since the highest applicable percentage ratio in respect of the Annual Cap for the continuing connected transactions under the New Network Services Agreement aggregated on annual basis is more than 0.1% but less than 5%, and such transactions are conducted on normal commercial terms, they are exempt from the independent shareholders' approval requirement, but are subject to the announcement, annual reporting and annual review requirements under the Listing Rules.

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Date

31 December 2019

Parties

1. The Company; and
2. Anhui Expressway Network Operations.

Subject Matter

Under the New Network Services Agreement, Anhui Expressway Network Operations shall provide Network Services to the Company, Guangci Company, Ningxuanhang Company and Xuanguang Company.

Term of Services

The term of services is from 1 January 2020 to 31 December 2020.

Basis for Services Fees and Payment Terms

The Company, Guangci Company, Ningxuanhang Company and Xuanguang Company shall pay to Anhui Expressway Network Operations quarterly fees in relation to the Network Services at the end of each quarter and within 15 business days after receiving the invoice issued by Anhui Expressway Network Operations based on the following rates:

1. the standard rate for cash receipts settlement service fees is 0.18% of the tolls collected in cash;
2. the standard rate for electronic receipts settlement service fees is:
3. 1. not more than 2% on the portion of tolls collected by electronic means for expressways in the province that does not exceed RMB1.5 billion (including RMB1.5 billion);
   2. not more than 1% on the portion of tolls collected by electronic means for expressways in the province that exceeds RMB1.5 billion but does not exceed RMB4.5 billion (including RMB4.5 billion); and
   3. not more than 0.5% on the portion of tolls collected by electronic means for expressways in the province that exceeds RMB4.5 billion.

The above mentioned "tolls collected by electronic means for expressways in the province" shall mean the aggregate amount in the calendar year.

The above rates are subject to any subsequent adjustments that may be made by the Management Committee during the term of the New Network Services Agreement.

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Service Fees and Annual Caps

For the years ended 31 December 2017 and 2018 and for the nine months ended 30 September 2019, the total consideration for the Network Services incurred (calculated in aggregation with the Network Services obtained respectively by Guangci Company, Ningxuanhang Company and Xuanguang Company) were as follows:

	Total consideration
	for Network
	Services
	(RMB' 000)
For the year ended 31 December 2017	14,970.3
For the year ended 31 December 2018	13,936.7
For the nine months ended 30 September 2019	11,878.0

The Annual Cap for the financial year ending 31 December 2020 for transactions under the New Network Services Agreement (calculated in aggregation with the Network Services obtained respectively by Guangci Company, Ningxuanhang Company and Xuanguang Company) is RMB22,100.0 thousand, the estimated Annual Cap has been determined with reference to factors, among other things, (1) the proposed basis of fees for Network Services as disclosed in this announcement; (2) the historical utilization volume of Network Services (the total consideration for Network Services consumed during the year ended 31 December 2018 was RMB13,936.7 thousand); (3) the expected volume of Network Services to be utilized; and (4) the development plans of the Group.

The consideration for Network Services will be paid by the Group's own funds.

Reasons for and Benefits of entering into the New Network Services Agreement

Obtaining the Network Services forms part of the ordinary and usual course of business of the Group. Since 2009, the Group has established business relationship with Anhui Expressway Network Operations, and made payments in respect of the Network Services obtained in accordance with the pricing standards set by the PRC government. The fees for Network Services were mandatory charges by the government before the issuance of the Approval, therefore the Group had never entered into any written agreement with Anhui Expressway Network Operations.

Prior to 1 September 2016, Anhui Expressway Network Operations was an independent third party not connected with the Company and its connected persons. Pursuant to the Approval and the Transfer Agreement, Anhui Transportation Group has fully taken over the management of Anhui Expressway Network Operations since 1 September 2016. Anhui Expressway Network Operations has accordingly become an associate of Anhui Transportation Group and is therefore a connected person of the Company under the Listing Rules. As a result, the relevant parties are required to enter into a written agreement and set annual caps pursuant to the Listing Rules.

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Implications of the Listing Rules

As Anhui Transportation Group currently holds approximately 31.63% of the total issued shares of the Company, it is a controlling shareholder and connected person of the Company under the Listing Rules. Anhui Expressway Network Operations is a subsidiary of Anhui Transportation Group, it is therefore an associate of Anhui Transportation Group and also a connected person of the Company under Chapter 14A of the Listing Rules. The Company currently holds 55.47% equity interest in Guangci Company, 51% equity interest in Ningxuanhang Company and 55.47% equity interest in Xuanguang Company. Therefore, the Network Services constitute continuing connected transactions.

Since the continuing connected transactions under the New Network Agreement are conducted with the same connected person, namely Anhui Expressway Network Operations, such continuing connected transactions may be aggregated under Rule 14A.83 of the Listing Rules.

Since the highest applicable percentage ratio in respect of the Annual Cap for the continuing connected transactions under the New Network Services Agreement aggregated on annual basis is more than 0.1% but less than 5%, and they are conducted on normal commercial terms, such continuing connected transactions are exempt from the independent shareholders' approval requirement, but are subject to the announcement, annual reporting and annual review requirements under the Listing Rules.

Confirmation of the Board

The Board has considered the resolution on the New Network Services Agreement. Mr. Chen Dafeng, Mr. Xu Zhen and Mr. Xie Xinyu, the directors of the Company, are directors or senior management of Anhui Transportation Group or its subsidiaries. Therefore, Mr. Chen Dafeng, Mr. Xu Zhen and Mr. Xie Xinyu are considered to have interests in the New Network Services Agreement, and have abstained from voting on the resolution on the connected transactions under the New Network Services Agreement under the Listing Rules. Save as aforesaid, none of the directors has any material interests in the New Network Services Agreement or is required to abstain from voting on the relevant Board resolution.

The Board (including independent non-executive directors) is of the view that the terms and the Annual Caps of the Network Services (aggregated with the Network Services obtained by the Company, Guangci Company, Ningxuanhang Company and Xuanguang Company, respectively) are

1. fair and reasonable; (ii) on normal commercial terms or better terms in the ordinary and usual course of business of the Group; and (iii) in the interests of the Company and its shareholders as a whole.

Information on the Parties involved in Network Services

The Company is principally engaged in: design, construction, supervision, fees collection, maintenance, emergency repairing, management of road assets and road right of high grade highways; storage; consultation services of expressway construction and operation; property leasing; development, production and sales of motor vehicles and components and new and hi-tech products.

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Guangci Company is principally engaged in the charging, maintenance, obstacles removal services and operation management of Guangci Expressway.

Ningxuanhang Company is principally engaged in the construction, collection of toll, maintenance, management and related advertisement service of high grade highways.

Xuanguang Company is principally engaged in the collection of toll, maintenance and obstacles removal services of Xuanguang Expressway.

Anhui Expressway Network Operations is principally engaged in the operation of expressway network toll systems in Anhui province.

Definitions

In this announcement, unless otherwise specified in the context, the following terms shall have the following meanings:

"Anhui Expressway	Anhui Expressway Network Operations Company Limited*
Network Operations"	( 安徽省高速公路聯網運營有限公司), an enterprise whose
	establishment was consented by the Transport Department of
	Anhui Province and approved by the Anhui Provincial Department
	of Finance, and has been a connected person of the Company
	since 1 September 2016
"Anhui Provincial	Anhui provincial government of the PRC
Government"
"Anhui Transportation	Anhui Transportation Holding Group Company Limited* (安徽省
Group"	交通控股集團有限公司), formerly known as Anhui Expressway
	Holding Group Company Limited* (安徽省高速公路控股集團有
	限公司)
"Annual Cap(s)"	the maximum aggregate annual value of Network Services fees
	incurred for the financial year ending 31 December 2020 based
	on the proposed basis of fees for Network Services as disclosed in
	this announcement

"Approval"

"associate(s)"

"Board"

Official Reply on Agreement to Adjust the Network Toll

Collection Management System in Our Province (Wan Zheng Mi [2016] No.128)* 《( 關於同意調整我省聯網收費管理體制的批覆》 (皖政秘[2016]128號)

has the meaning ascribed to it under the Listing Rules The board of directors of the Company

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"Company"

"connected person(s)" "Group"

"Guangci Company"

"Listing Rules"

"Management Committee"

"Network Services"

"Network Services

Agreement"

Anhui Expressway Company Limited, a joint stock limited company incorporated in the PRC, the overseas listed shares of which are listed on the Stock Exchange, and the domestic ordinary shares of which are listed on the Shanghai Stock Exchange in the

PRC

has the meaning ascribed to it under the Listing Rules

The Company and its subsidiaries

Xuancheng City Guangci Expressway Limited Liability Company* (宣城市廣祠高速公路有限責任公司), a company

incorporated under laws of the PRC in which the Company and

Xuancheng Transportation Investment Company Limited* (宣城 市交通投資有限公司) hold 55.47% and 44.53% equity interest

respectively

The Rules Governing the Listing of Securities on the Stock Exchange

Anhui Province Expressway Network Toll Management Committee organized pursuant to the Approval

A series of services provided from time to time by Anhui Expressway Network Operations (as service provider) to the Company, Guangci Company, Ningxuanhang Company and Xuanguang Company (as service users) in respect of toll expressways held and operated by them in Anhui province (for the sake of clarity, excluding Tianchang Section of National Highway 205 and Tianchang Section of Ninghuai Expressway), which mainly include (1) construction, operation and maintenance of systems such as provincial expressway network toll collection settlement system, electronic toll collection customer service system and integrated network toll collection processing system, ensuring the reliable operation of such systems; (2) accomplishing provincial expressway toll clearing settlement and national network inter-provincial electronic toll collection clearing settlement for Anhui province; (3) expressway toll clearing settlement and delivery of relevant data and electronic toll collection blacklist; (4) coordinating with banks to complete payment collection; (5) operation services and promotion of electronic toll collection, acceptance of complaints and settlement of disputes; and (6) establishing network toll collection data inquiry platform and providing toll collection statistical analysis and inquiry services

the written agreement for the Nework Services entered into on 28 December 2018 between the Company and Anhui Expressway Network Operations

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"Ningxuanhang Company"

"percentage ratio(s)"

"PRC"

"RMB"

"Stock Exchange"

"Transfer Agreement"

"Xuanguang Company"

"%"

Hefei, Anhui, the PRC 31 December 2019

Anhui Ningxuanhang Expressway Investment Company Limited* ( 安徽寧宣杭高速公路投資有限公司), a company in which

the Company, Xuancheng Transportation Investment Company Limited* (宣城市交通投資有限公司) and Anhui Transportation

Group hold 51%, 10% and 39% equity interest respectively, and a connected subsidiary of the Company under Chapter 14A of the Listing Rules

the percentage ratio(s) (other than the profits ratio and the equity capital ratio) under Rule 14.07 of the Listing Rules

The People's Republic of China and, for the purpose of this announcement only, excludes Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan

Renminbi, the lawful currency of the PRC

The Stock Exchange of Hong Kong Limited

The Provincial Expressway Network Toll Management Work Transfer Agreement (全省高速公路聯網收費管理工作移交協議)

entered into between Transport Department of Anhui Province and Anhui Transportation Group on 31 August 2016

Xuanguang Expressway Company Limited* (宣廣高速公路有限 責任公司), a company incorporated under the laws of the PRC,

in which the Company and Xuancheng Transportation Investment Company Limited* (宣城市交通投資有限公司) hold 55.47% and

44.53% equity interest respectively

Per cent

By Order of the Board

Anhui Expressway Company Limited

Xie Xinyu

Company Secretary

As at the date of this announcement, the board of directors of the Company comprises: Chen Dafeng, Xu Zhen and Xie Xinyu as executive directors, Yang Xudong and Du Jian as non-executive directors, and Kong Yat Fan, Jiang Jun and Liu Hao as independent non-executive directors.

This announcement is originally prepared in Chinese and if there is any discrepancy between the Chinese and English versions, the Chinese version shall prevail.

* For identification purpose only

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