China Energy Engineering : ANNOUNCEMENT CONNECTED TRANSACTION ACQUISITION OF THE TARGET ASSETS

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CHINA ENERGY ENGINEERING CORPORATION LIMITED*

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

(Stock Code: 3996)

ANNOUNCEMENT

CONNECTED TRANSACTION

ACQUISITION OF THE TARGET ASSETS

The board of directors (the "Board") of China Energy Engineering Corporation Limited (the "Company") is pleased to announce that on 21 November 2019, Guangdong Energy Engineering Power Equipment Factory Co., Ltd.* (廣東能建電力設備廠有限公司) ("Guangdong Equipment Company"), a subsidiary of the Company, has entered into the Physical Assets Transfer Agreement (the "Physical Assets Transfer Agreement") with China Energy Engineering Group Asset Management Company Limited* (中國能源建設集團資產管理有限公司) ("Asset Company"), pursuant to which, Asset Company agreed to transfer its surviving assets including the allocated land use right and the structures thereon at No. 5, Nanshi Road and No. 8, Nanshi Road, Haizhu District, Guangzhou, Guangdong Province to Guangdong Equipment Company at a consideration of RMB100,830,200.

Details of the principal terms and conditions of the transfer are set out below:

DATE

21 November 2019

PARTIES

Asset Company, as seller; and

Guangdong Equipment Company, as purchaser.

• For identification purpose only

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SUBJECT MATTER

Pursuant to the Physical Assets Transfer Agreement, Asset Company agreed to transfer its surviving assets (the "Target Assets") including the allocated land use right and the structures thereon at No.5, Nanshi Road and No. 8, Nanshi Road, Haizhu District, Guangzhou, Guangdong Province to Guangdong Equipment Company.

CONDITIONS PRECEDENT FOR TRANSFER

1. Asset Company and Guangdong Equipment Company have fulfilled their respective internal decision-making, asset evaluation and other related procedures in respect of the transfer of the Target Assets under the Physical Assets Transfer Agreement in accordance with laws;
2. Guangdong Equipment Company has promised to complete the land acquisition and storage for the Target Assets through the relevant government departments at the location where the Target Assets are located;
3. Guangdong Equipment Company has detailed information on the transfer of the Target Assets and agreed to acquire the Target Assets in accordance with the acquisition conditions proposed by Asset Company;
4. Guangdong Equipment Company has acquired the Target Assets owned by Asset Company according to the provisions of the Physical Assets Transfer Agreement; and
5. Transactions in relation to the Target Assets under the Physical Assets Transfer Agreement are subject to the approval of China Energy Engineering Group Co., Ltd. ("Energy Group") which funded Asset Company. Guangdong Equipment Company is legally designated as the purchaser to acquire the transferred Target Assets under the Physical Assets Transfer Agreement.

CONSIDERATION AND PAYMENT TERMS

According to the approval of Energy Group, Asset Company transferred the Target Assets under the Physical Assets Transfer Agreement to Guangdong Equipment Company at a consideration of RMB100,830,200. Guangdong Equipment Company shall remit the transfer consideration in one lump sum to the settlement account designated by Asset Company within 60 days after the effective date of the Physical Assets Transfer Agreement.

DELIVERY

Asset Company shall, as soon as possible after entering into the Physical Assets Transfer Agreement, deliver the Target Assets and related ownership documents and technical materials to Guangdong Equipment Company.

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After entering into the Physical Assets Transfer Agreement, Guangdong Equipment Company shall, as soon as possible, go through the registration procedures for the change of the Target Assets (if necessary) at the related departments in accordance with relevant state regulations, and Asset Company shall provide necessary assistance and cooperation.

LIABILITIES OF DEFAULTS

After the Physical Assets Transfer Agreement takes effect, if either party fails to perform or does not fully perform the agreements under the Physical Assets Transfer Agreement, it constitutes a breach of contract. The defaulting party shall be liable for breach of contract and shall compensate the observant party for the losses caused by the breach of contract.

INFORMATION ABOUT THE TARGET ASSETS

Beijing Zhongdi Huaxia Land and Real Estate Assets Appraisal Co., Ltd.* (北京中地華夏土地房地 產評估有限公司) has conducted an evaluation using the cost method and taking 31 May 2019 as the evaluation benchmark date, and issued the Real Estate Valuation Report (Zhong Di Hua Xia 2019 [Gu] Zi No. 156), according to which, the total appraisal value of the Target Assets was RMB100,830,200. Asset Company and Guangdong Equipment Company reached the terms of the Physical Assets Transfer Agreement based on Asset Company's ownership of the above-mentioned Target Assets and the evaluation results of the Real Estate Valuation Report.

The Target Assets does not have any form of guarantee, including but not limited to the existence of collateral for the Target Assets, or any restrictions or obligations that affect the transfer of the Target Assets. The Target Assets are also not subject to mandatory measures such as seizure by any authorized institution.

The Target Assets were originally allocated to the predecessor company before the restructuring of Guangdong Equipment Company at nil consideration. Before the Company's overall restructuring and initial public offering in 2014, according to the restructuring requirements of state-owned enterprises or relevant guidance, and in view of the imperfect land and housing title certificates, Energy Group issued the "Notice on the Relevant Matters Concerning the Detachment and Transfer of the Surviving Assets of China Energy Engineering Group Equipment Co., Ltd.* (中國能建集團裝備有限公司)" (Zhong Neng Jian Zi Cai [2014] No. 520) (the "Transfer Notice" ) to transfer the Target Assets to Asset Company and the Target Assets were detached from the assets scope of the Group. For policy reasons, the land and housing title certificates of the Target Assets can not been registered for alteration and are still registered under the name of the predecessor company before the restructuring of Guangdong Equipment Company.

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REASONS FOR AND BENEFITS OF ENTERING INTO THE PHYSICAL ASSETS TRANSFER AGREEMENT

Since the Target Assets are currently included in the land acquisition and storage plan of Guangzhou in 2019, and according to the requirements of the local government departments, the land acquisition and storage matters can be handled by Guangdong Equipment Company only, therefore, the signing of the Physical Assets Transfer Agreement could realize the government land acquisition and storage and meet the needs of asset disposal. In addition, the government's recovery price of the Target Assets is expected to be higher than the evaluated acquisition price of the Target Assets by Guangdong Equipment Company. Therefore, the subsidiary of the Company will obtain clear economic benefits by acquiring and further transferring the Target Assets to the government for storage.

GENERAL INFORMATION

The Company is a large comprehensive group company that provides overall solutions and full industry chain services to industries such as energy and power, infrastructure and real estate in China as well as over the world.

Guangdong Equipment Company is a limited liability company established and legally existing under the laws of the PRC and a subsidiary of the Company. It is principally engaged in the manufacture, maintenance, installation, testing and related consulting services for electric motors, power transmission, transformation equipments and their accessories; import and export of goods and technology; construction general contracting qualification (Class-C) for electric engineering; construction; labor contracting and labor subcontracting.

Asset Company is a reformed surviving asset management institution specially established by Energy Group according to the overall restructuring needs and the management requirements for surviving state-owned assets. It is a wholly-owned subsidiary directly managed by Energy Group and was formally established on 16 August 2014.

Energy Group was established on 29 September 2011. It is a extra large scale energy construction group approved by the State Council and directly managed by the State-owned Assets Supervision and Administration Commission of the State Council. It is the controlling shareholder of the Company and is mainly engaged in power and energy planning consultancy, survey and design and engineering contracting, equipment manufacturing and investment operations, etc.

LISTING RULES IMPLICATIONS

As of the date of this announcement, Energy Group directly or indirectly holds approximately 60.65% of the issued share capital of the Company and is the controlling shareholder of the Company, Asset Company is a wholly-owned subsidiary of Energy Group, and therefore, Asset Company constitutes a

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connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the Physical Assets Transfer Agreement and the transactions contemplated thereunder constitute connected transactions of the Company under the Listing Rules.

As one or more of the applicable percentage ratios under the Listing Rules in respect of the transfer of the Target Assets is more than 0.1% but less than 5%, the Physical Assets Transfer Agreement and the transactions contemplated thereunder shall be subject to, among other things, the reporting and announcement requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

CONFIRMATION OF THE DIRECTORS

Mr. Wang Jianping, an executive director of the Company, is also the chairman of Energy Group. Mr. Ding Yanzhang, an executive director of the Company, is also a director and general manager of Energy Group. Both of them have abstained from voting at the Board meeting approving the Physical Assets Transfer Agreement and the transactions contemplated thereunder in accordance with the requirements of the Listing Rules. Save as disclosed above, none of the directors has material interest in the Physical Assets Transfer Agreement.

The directors (including the independent non-executive directors) are of the view that the Physical Assets Transfer Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable, and entering into the Physical Assets Transfer Agreement and the transactions contemplated thereunder are in the interests of the Company and shareholders as a whole.

DEFINITIONS

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

"Asset Company"	China Energy Engineering Group Asset Management Company
	Limited* (中國能源建設集團資產管理有限公司), a wholly-owned
	subsidiary of Energy Group
"Company"	China Energy Engineering Corporation Limited* (中國能源建設股
	份有限公司), a joint stock limited company established in the PRC
	on 19 December 2014, whose H shares are listed on the Stock
	Exchange (Stock Code: 3996)
"Energy Group"	China Energy Engineering Group Co., Ltd.* (中國能源建設集團有
	限公司), a wholly state-owned company established in the PRC on
	29 September 2011, is the controlling shareholder and one of
	promoters of the Company and is therefore a connected person of
	the Company.

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"Group"	the Company and its subsidiaries
"Guangdong Equipment	Guangdong Energy Engineering Power Equipment Factory Co.,
Company"	Ltd.* (廣東能建電力設備廠有限公司), a subsidiary of the
	Company
"Listing Rules"	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited, as amended from time to time
"PRC"	the People's Republic of China
"Physical Assets Transfer	the physical assets transfer agreement entered into between
Agreement"	Guangdong Equipment Company, a subsidiary of the Company,
	and Asset Company on 21 November 2019, pursuant to which,
	Asset Company agreed to transfer its surviving assets including the
	allocated land use right and the structures thereon at No. 5, Nanshi
	Road and No. 8, Nanshi Road, Haizhu District, Guangzhou,
	Guangdong Province to Guangdong Equipment Company at a
	consideration of RMB100,830,200
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
	By Order of the Board
	CHINA ENERGY ENGINEERING CORPORATION LIMITED*
	Wang Jianping
	Chairman
Beijing, the PRC
21 November 2019

As at the date of this announcement, the executive directors of the Company are Mr. Wang Jianping, Mr. Ding Yanzhang and Mr. Zhang Xianchong; the non-executive directors are Mr. Ma Chuanjing, Mr. Liu Xueshi and Mr. Si Xinbo; and the independent non-executive directors are Mr. Ding Yuanchen, Mr. Zheng Qiyu and Mr. Cheung Yuk Ming

• For identification purpose only

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