Guodian Technology & Environment : CONNECTED TRANSACTION - FORMATION OF THE JOINT VENTURE

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國 電 科 技 環 保 集 團 股 份 有 限 公 司

GUODIAN TECHNOLOGY & ENVIRONMENT GROUP CORPORATION LIMITED*

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

(Stock code: 01296)

CONNECTED TRANSACTION

FORMATION OF THE JOINT VENTURE

The Board of the Company announces that, on 13 August 2020, Longyuan Environmental, a subsidiary of the Company, entered into an investment agreement (the "Investment Agreement") with Tianshenggang Power and Jin Tong Ling for the formation of a joint venture (the "Joint Venture"). Longyuan Environmental will contribute RMB26 million in cash to the Joint Venture, accounting for 26% of the registered capital of the Joint Venture.

China Energy holds directly and indirectly approximately 78.40% equity interests of the Company. China Energy and its subsidiaries are connected persons of the Company as defined under Chapter 14A of the Listing Rules. The transactions between the Group and China Energy and its subsidiaries constitute connected transactions of the Company under the Listing Rules. China Energy holds directly and indirectly approximately 58.44% of the issued share capital of Longyuan Power, Longyuan Power holds directly and indirectly approximately 31.94% of the issued share capital of Tianshenggang Power, and Tianshenggang Power is therefore a connected person of the Company. The formation of the Joint Venture constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratio (as defined under the Listing Rules) is more than 0.1% but less than 5%, this transaction shall be subject to the reporting and announcement requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

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INVESTMENT AGREEMENT ON ESTABLISHMENT OF JOINT VENTURE

On 13 August 2020, Longyuan Environmental, a subsidiary of the Company, entered into the Investment Agreement with Tianshenggang Power and Jin Tong Ling for the formation of the Joint Venture. The summary of the major terms of the Investment Agreement is set out as follows:

PARTIES

Longyuan Environmental, Tianshenggang Power and Jin Tong Ling (hereinafter individually or collectively as the "Investor(s)").

BUSINESS SCOPE OF THE JOINT VENTURE

The Joint Venture will be principally engaged in: manufacturing of gas and liquid separation and purification equipment; sale of gas and liquid separation and purification equipment; heat production and supply; energy management contract; solar power generation technology services; solid waste treatment; water pollution control and treatment; energy management services; project management services; technical services, technology development, technical consultation, technical exchange, technology transfer, technology promotion, etc. (subject to the final review by and registration with the administration department for industry and commerce).

NAME OF THE JOINT VENTURE

Nantong Tianshenggang Smart Energy Company (subject to the final review by and registration with the administration department for industry and commerce)

	Amount
	of capital	Percentage of
	contribution	shareholding
	to the Joint	in the Joint
Parties	Venture	Venture
	(RMB'0000)	(%)
Tianshenggang Power	5,100		51
Longyuan Environmental	2,600	26
Jin Tong Ling	2,300	23
Total	10,000		100

The amount of capital contribution under the Investment Agreement was determined after arm's length negotiation between the Company and the other Investors of the Joint Venture.

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SCHEDULE FOR THE CONTRIBUTION

The amount of the first payment of the capital contribution is RMB30 million, which will be made within two months after the approval by the shareholders of the Joint Venture at a general meeting following the incorporation of the Joint Venture. The amount of the second payment of the capital contribution is RMB30 million, which will be made before 30 December 2023. The amount of the third payment of the capital contribution is RMB40 million, which will be made before 30 December 2025.

The above three payments shall be made by the three parties according to their respective contribution percentage. The amount and specific time for the second and third payments of the capital contribution shall be determined according to the investment progress of the investment project and be implemented after the unanimous approval by the shareholders of the Joint Venture as a whole.

LIABILITIES ON DEFAULT

Any Investor who breaches the Investment Agreement for delinquency on payment or underpayment shall pay the other parties liquidated damages at an amount which equals to 0.5% of the underpayment for each overdue day. The other parties are entitled to jointly determine whether to terminate the qualification of any Investor who fails to make his payment after one month since its default as an Investor, or request it to perform its contribution obligation.

Any Investor who does not make the contribution as required which results in the failing of the establishment of the Joint Venture shall assume the liabilities for its default by paying to the other Investors an amount which equals to 2% of the unpaid capital contribution.

Any Investor who damages the interests of other Investors or the Joint Venture deliberately or by material faults during the establishment of the Joint Venture shall assume the liabilities for its default by compensating other Investors or the Joint Venture.

GOVERNANCE STRUCTURE OF THE JOINT VENTURE

The board of directors shall consist of five directors, among which, two from Tianshenggang Power, one from each of Longyuan Environmental and Jin Tong Ling, and one from the employees of the Joint Venture. The board of directors will be chaired by one chairman whose candidate shall be recommended by Tianshenggang Power and appointed through selection procedure with more than half of the votes of all the directors. The chairman is the legal representative of the Joint Venture.

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The Joint Venture shall have one general manager, who will be nominated by the chairman and appointed by the board of directors with Tianshenggang Power's recommendation after seeking for the opinions and the agreement of other shareholders. The chief financial officer shall be recommended by Tianshenggang Power. Each of Tianshenggang Power, Longyuan Environmental and Jin Tong Ling shall recommend a candidate for vice general manager who will be nominated by the general manager and appointed by the board of directors.

The Joint Venture shall set up a board of supervisors consisting of four supervisors. Two of them shall be nominated by each of Longyuan Environmental and Jin Tong Ling, respectively and another two of them shall be employee supervisors. The board of supervisors shall have a chairman to be nominated by Longyuan Environmental and elected and appointed through more than half of the votes of all the supervisors.

REASONS FOR AND BENEFITS OF THE TRANSACTION

The Joint Venture will build a centralized compressed air supply station powered by heating steam in plants of the Tianshenggang Power, and provide centralized gas supply to the outside through cogeneration of gas and heat. This business is in line with the strategic development direction of Longyuan Environmental to carry out comprehensive management of the industrial park. It is a positive practice of the park's circular governance, which can accumulate valuable experience and results for the transformation and development of Longyuan Environmental. The terms of the Investment Agreement were determined after arm's length negotiations between all parties. The Directors (including independent non-executive Directors) consider that the terms of the Investment Agreement are determined on normal commercial terms in the ordinary and usual course of business of the Company, fair and reasonable and in the interests of the Company and its shareholders as a whole. The Directors (including independent non-executive Directors) believe that the formation of the Joint Venture will make full use of the superior resources of the partners, which is beneficial for Longyuan Environmental to expand the business in the fields of distributed energy, hydrogen energy, energy and information, environmental engineering, water environmental governance and solid waste governance, and promote new development in the field of development and utilization of comprehensive smart new energy.

LISTING RULES IMPLICATIONS

China Energy holds directly and indirectly approximately 78.40% equity interests of the Company. China Energy and its subsidiaries are connected persons of the Company as defined under Chapter 14A of the Listing Rules. The transactions between the Group and China Energy and its subsidiaries constitute connected transactions of the Company under the Listing Rules. China Energy holds directly and indirectly approximately 58.44% of the issued share capital of Longyuan Power, Longyuan Power holds directly and indirectly approximately 31.94% of the issued share capital of Tianshenggang Power, and Tianshenggang Power is therefore a connected person of the Company. The formation of the Joint Venture constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

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As one or more of the applicable percentage ratio (as defined under the Listing Rules) is more than 0.1% but less than 5%, this transaction shall be subject to the reporting and announcement requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

Mr. Wang Zhongqu, Mr. Zhang Wenjian and Mr. Gu Yuchun, being Directors connected with China Energy or their subsidiaries, have abstained from voting at the Board meeting of the Company. Saved as disclosed above and to the best knowledge, information and belief of Directors, having made all reasonable enquiries, as at the date of the announcement, none of the Directors has any material interests in the formation of the Joint Venture.

INFORMATION ON THE PARTIES

China Energy

As a state-owned enterprise established in accordance with the laws of the PRC, China Energy is the controlling shareholder of the Company, and operates eight business segments including coal, thermal power, new energy, hydropower, transportation, chemicals, environmental technology and finance. It is the world's largest producer of coal, thermal power, wind power, as well as coal-to-liquids and coal chemical products.

The Group

The Group mainly conducts business within the PRC through its two main business segments, namely the business of environmental protection and energy conservation solutions and the business of renewable energy equipment manufacturing and services.

Longyuan Environmental

Longyuan Environmental is a wholly-owned subsidiary of the Company and a leading enterprise in the desulfurization and denitrification business of the domestic thermal power industry, which is mainly engaged in desulfurization and denitrification EPC, franchising, environmental protection equipment manufacturing, environmental engineering, water environment treatment and solid waste treatment, etc.

Longyuan Power

Longyuan Power is a leading wind power generation company in the PRC, primarily engaged in the design, development, construction, management and operation of wind farms. In addition to the wind power business, Longyuan Power also operates other power projects such as coal power, solar power, tidal, biomass and geothermal energy. Meanwhile, Longyuan Power also provides consultation, repair and maintenance,

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training and other professional services to wind farms, as well as manufactures and sells power equipment used in the power grids, wind farms and coal power plants. The ultimate beneficial owner of Longyuan Power is China Energy.

Tianshenggang Power

Tianshenggang Power is a subsidiary of Longyuan Power and mainly engaged in production and sales of electricity, heat and related products, port operations for cargo unloading and warehousing, and thermal power unit inspection and maintenance, etc. The ultimate beneficial owner of Tianshenggang Power is China Energy.

Jin Tong Ling

Jin Tong Ling is a company listed on the Shenzhen Stock Exchange (stock code: 300091), whose main products and research and development fields involve high-efficiency centrifugal air compressor, distributed power supply, emergency power supply, cooling system, hydrogen energy, etc., which have capabilities in compressed air station integration, new energy system integration, renewable energy system integration, etc. The ultimate beneficial owner of Jin Tong Ling is the State-owned Assets Supervision and Administration Commission of Nantong Municipal People's Government. Jin Tong Ling is an independent third party of the Company.

DEFINITIONS
"Board"	the board of directors of the Company
"China Energy"	China Energy Investment Corporation Limited ( 國
	家 能 源 投 資 集 團 有 限 責 任 公 司), as at the date
	of this announcement, China Energy holds 78.40%
	equity interests of the Company, and is the controlling
	shareholder of the Company
"Company"	Guodian Technology & Environment Group Corporation
	Limited* ( 國 電 科 技 環 保 集 團 股 份 有 限 公 司), a
	joint stock limited liability company incorporated in the
	PRC, the H shares of which are listed on the Hong Kong
	Stock Exchange (stock code: 1296)
"connected person"	has the meaning ascribed to it under the Listing Rules
"controlling shareholder"	has the meaning ascribed to it under the Listing Rules
"Director(s)"	the director(s) of the Company

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"Longyuan Power"	China Longyuan Power Group Corporation Limited* (龍
	源 電 力 集 團 股 份 有 限 公 司), a joint stock limited
	liability company incorporated in the PRC, the H shares
	of which are listed on the Hong Kong Stock Exchange
	(stock code: 916)
"Hong Kong Stock Exchange" The Stock Exchange of Hong Kong Limited
"Jin Tong Ling"	Jin Tong Ling Technology Group Co., Ltd.
"Listing Rules"	the Rules Governing the Listing of Securities on The
	Stock Exchange of Hong Kong Limited
"Longyuan Environmental"	Beijing Guodian Longyuan Environmental Engineering
	Co., Ltd.
"PRC"	The People's Republic of China
"RMB"	Renminbi, the lawful currency of the PRC
"Tianshenggang Power"	Nantong Tianshenggang Power Generation Co., Ltd.

By order of the Board of

Guodian Technology & Environment Group Corporation Limited

Mr. CHEN Dongqing

Chairman

Beijing, PRC, 13 August 2020

As at the date of this announcement, the executive Directors of the Company are Mr. Chen Dongqing, Mr. Zhang Jun and Mr. Tang Chaoxiong; the non-executive Directors are Mr. Wang Zhongqu, Mr. Zhang Wenjian, Mr. Gu Yuchun and Ms. Ge Xiaojing; and the independent non-executive Directors are Mr. Shen Xiaoliu, Mr. Qu Jiuhui, Mr. Xie Qiuye and Mr. Yeung Chi Tat.

• For identification purpose only

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