Sany Heavy Eqt Hldg COLtd : CONTINUING CONNECTED TRANSACTIONS PROJECT CONTRACTING AGREEMENT AND PROJECT MANAGEMENT AGREEMENT

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SANY HEAVY EQUIPMENT INTERNATIONAL

HOLDINGS COMPANY LIMITED 三 一 重 裝 國 際 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 631)

CONTINUING CONNECTED TRANSACTIONS

PROJECT CONTRACTING AGREEMENT

AND

PROJECT MANAGEMENT AGREEMENT

CONTINUING CONNECTED TRANSACTIONS

Project Contracting Agreement

On 12 April 2019, Sany Marine Heavy Industry, a wholly-owned subsidiary of the Company, entered into the Project Contracting Agreement with Shenyang Sany Construction, which won such engagement through the tender process of the Group, pursuant to which Shenyang Sany Construction agreed to provide project design and construction services to Sany Marine Heavy Industry, with a fixed term from the signing date of the agreement to 31 December 2019. Pursuant to the Project Contracting Agreement, the annual caps thereunder for the years ending 31 December 2019 and 31 December 2020 are RMB52,860,150 and RMB1,634,850, respectively.

Project Management Agreement

On the same date, Sany Marine Heavy Industry entered into the Project Management Agreement with Shenyang Sany Construction, pursuant to which Shenyang Sany Construction agreed to provide project management services to Sany Marine Heavy Industry, with a fixed term from the signing date of the agreement to 31 December 2020. Pursuant to the Project Management Agreement, the annual caps thereunder for the years ending 31 December 2019 and 31 December 2020 are RMB8,000,000 and RMB8,501,200, respectively.

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IMPLICATION UNDER THE LISTING RULES

As at the date of this announcement, Mr. Liang Wengen is a controlling shareholder of the Company by virtue of 10,870,000 ordinary Shares directly held by him and his indirect 56.38% interests in Sany Hong Kong, which in turn holds 2,134,580,188 ordinary Shares and 479,781,034 convertible preference shares of the Company, which, in aggregate, represents 86.33% of the issued share capital of the Company.

Shenyang Sany Construction is wholly held by Sany Zhugong Science, which in turn is wholly held by Sany Group. Sany Group is beneficially held by Mr. Liang Wengen as to 56.74%. As such, Shenyang Sany Construction is an associate of Mr. Liang Wengen under Rule 14A.12(1)(c) and hence a connected person of the Company under the Listing Rules.

Accordingly, the transactions under both of the Project Contracting Agreement and the Project Management Agreement constitute continuing connected transactions of the Company under the Listing Rules.

Since both of the Project Contracting Agreement and the Project Management Agreement were entered into between the Group and Shenyang Sany Construction on the same date, therefore, the transactions under both agreements shall be aggregated pursuant to Rule 14A.83 of the Listing Rules. As each of the applicable percentage ratios (other than the profits ratio) in respect of the proposed caps under the Project Contracting Agreement and the Project Management Agreement, as aggregated, is more than 0.1% but less than 5%, the transactions under the Project Contracting Agreement and Project Management Agreement are subject to the reporting and announcement requirements but exempt from the Independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.

(A)PROJECT CONTRACTING AGREEMENT

Background

On 12 April 2019, Sany Marine Heavy Industry, a wholly-owned subsidiary of the Company, entered into the Project Contracting Agreement with Shenyang Sany Construction, which won such engagement through tender process of the Group, pursuant to which Shenyang Sany Construction agreed to provide project design and construction services to Sany Marine Heavy Industry, with a fixed term from the signing date of the agreement to 31 December 2019.

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The major terms of the Project Contracting Agreement are set out as follows:

Parties	(1)	Sany Marine Heavy Industry; and
	(2)	Shenyang Sany Construction
Agreement Date	12 April 2019
Transaction	Shenyang Sany Construction agreed to provide the general contracting
	services for Sany Marine Heavy Industry for the Sany Zhuhai Project,
	which includes but not limited to the project design, construction,
	consultancy, site engineering, installation of pipelines, ditching and
	pavement work.
Term	The Project Contracting Agreement has a fixed term from the signing
	date of the agreement to 31 December 2019.
Pricing	The total service fee is made up of:
	(i)	the construction fee of up to RMB50,192,263.75, as calculated by
		the unit price for each construction task multiplied by the actual
		construction volume;
	(ii)	the design fee of up to RMB800,000, as calculated by the unit
		designing price multiplied by the actual construction volume;

(iii) the technical service fee of up to RMB3,502,736.25, as calculated by the construction fee for each construction task multiplied by the rate ranging from 5.84% to 7.05%,

all of which are determined based on arm's length negotiation and with reference to the prevailing market conditions with reference to the similar services sourced by the Group from Independent Third Parties, and should be in any event no less favorable to the Group than are available to Independent Third Parties.

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Payment	The service fee shall be paid in installments according to the project
	progress as below:
	(i)	by the end of each month, Shenyang Sany Construction shall
		report the project progress, submit the completed work status
		sheet and apply for the construction fee from Sany Marine Heavy
		Industry. Within 15 days after Shenyang Sany Construction
		provides the tax invoice: up to 80% of actual service fee based on
		completed project value;
	(ii)	after the inspection completion and acceptance of the Sany
		Zhuhai Project, and within 15 days after Shenyang Sany
		Construction provides the tax invoice: up to 85% of such actual
		service fee;
	(iii) after Sany Marine Heavy Industry provides the project
		completion payment settlement report that has been confirmed
		by both parties, and within 15 days after Shenyang Sany
		Construction provides the tax invoice: up to 97% of the total
		service fee;
	(iv) as the project quality warranty fee, the remaining 3% of the total
		service fee shall be paid within 15 days after Sany Marine Heavy
		Industry issued the warranty certificate to prove the qualification
		of the Sany Zhuhai Project, after deducting the maintenance fee
		during the warranty period, if any.
Proposed annual cap	The annual cap amount of the service fee for the years ending 31
for 2019 and 2020	December 2019 and 31 December 2020 are RMB52,860,150 and
	RMB1,634,850, respectively. It is expected that the project will finish
	by 2019 and the service fees to be paid in 2020 are mainly comprised
	of project quality warranty fees.
Basis of the proposed	The proposed annual caps are calculated and determined after taking
annual cap	into account the scale of the Sany Zhuhai Project, the progress of the
	project and anticipated contracting services needed.

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(B)PROJECT MANAGEMENT AGREEMENT

Background

On 12 April 2019, Sany Marine Heavy Industry entered into the Project Management Agreement with Shenyang Sany Construction, pursuant to which Shenyang Sany Construction agreed to provide project management services to Sany Marine Heavy Industry, with a fixed term from the signing date of the agreement to 31 December 2020.

The major terms of the Project Management Agreement are set out as follows:

Parties	(1) Sany Marine Heavy Industry; and
	(2) Shenyang Sany Construction
Agreement Date	12 April 2019
Transaction	Shenyang Sany Construction agreed to provide the management
	services for Sany Marine Heavy Industry for Sany Zhuhai Project,
	which includes but not limited to managing the construction process,
	project quality and design alteration, conducting on-site supervision,
	cooperating with external relationship and other supervisory and
	management work.
Term	The Project Management Agreement has a fixed term from the signing
	date of the agreement to 31 December 2020.
Pricing	The service fee shall be determined based on the construction cost of
	Sany Zhuhai Project, with reference to the below formula:
	8%* the amount of the total actual project costs for Sany Zhuhai
	Project
	The service fee is determined based on arm's length negotiation and
	the actual services provided, and with reference to the prevailing
	market conditions of the similar services sourced by the Group from
	the Independent Third Parties in respect of comparable projects,
	which should be in any event no less favorable to the Group than is
	available to Independent Third Parties.

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