Sany Heavy Equipment International : CONNECTED TRANSACTION FORMATION OF A JOINT VENTURE SANY MACHINERY INTELLIGENCE

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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)

CONNECTED TRANSACTION

FORMATION OF A JOINT VENTURE

SANY MACHINERY INTELLIGENCE

FORMATION OF A JOINT VENTURE

The Board announces that on 2 December 2019, Sany Heavy Equipment entered into the JV Articles with Sany Group, pursuant to which Sany Heavy Equipment and Sany Group agreed to jointly establish Sany Machinery Intelligence. Sany Machinery Intelligence will be principally engaged in the development, manufacturing and sales of automated and intelligent equipment.

LISTING RULES IMPLICATIONS

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 2,098,447,688 ordinary Shares and 479,781,034 convertible preference shares of the Company, which, in aggregate, represents 83.53% of the issued share capital of the Company.

Sany Group, being held by Mr. Liang Wengen as to 56.74%, is therefore an associate of Mr. Liang Wengen and hence a connected person of the Company under the Listing Rules.

Accordingly, the formation of Sany Machinery Intelligence pursuant to the JV Articles constitutes a connected transaction of the Company under the Listing Rules.

As each of the applicable percentage ratios (other than the profits ratio) as calculated in accordance with Chapter 14 of the Listing Rules in respect of the capital contribution to be made by the Company under the JV Articles is more than 0.1% but less than 5%, the formation of Sany Machinery Intelligence pursuant to the JV Articles is only subject to the reporting and announcement requirements and is exempt from the independent shareholders' approval requirements of Chapter 14A of the Listing Rules.

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The Directors (including the independent non-executive Directors) consider that the JV Articles have been entered into on normal commercial terms, and the terms of the transactions thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Since Sany Group, being a party to the JV Articles, is an associate of Mr. Liang Wengen, Mr. Liang Zaizhong, being the son of Mr. Liang Wengen, has abstained from voting on the Board resolution approving the JV Articles due to conflict of interests.

Save as disclosed, none of the Directors has a material interest in the formation of Sany Machinery Intelligence or is required to abstain from voting on the Board resolution for considering and approving the same pursuant to the articles of association of the Company.

On 2 December 2019, Sany Heavy Equipment entered into the JV Articles with Sany Group, pursuant to which Sany Heavy Equipment and Sany Group agreed to jointly establish Sany Machinery Intelligence.

THE JV ARTICLES

The principal terms of the JV Articles are set out below:

Date:

2 December 2019

Parties:(1) Sany Heavy Equipment;

(2) Sany Group;

Capital Contribution: Pursuant to the JV Articles, Sany Heavy Equipment and Sany Group have agreed to establish Sany Machinery Intelligence with a registered capital of RMB50 million. Each of the shareholders shall contribute to the registered capital of Sany Machinery Intelligence in cash as follow:

		% of Registered
JV Shareholders	Capital Contribution	Capital
Sany Heavy Equipment	RMB32.5 million	65%
Sany Group	RMB17.5 million	35%
Total:	RMB50 million	100%

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The registered capital of RMB50 million was determined by the Shareholders with reference to the immediate funding needs of Sany Machinery Intelligence. The initial capital contribution of RMB2 million (representing approximately 4% of the registered capital of Sany Machinery Intelligence shall be paid by the JV Shareholders by 31 December 2019. The second instalment, being RMB 10 million (representing approximately 20% of the registered capital of Sany Machinery Intelligence) shall be paid by the JV Shareholders by 31 December 2020 and the balance amount shall be settled by 31 December 2024.

As at the date of this announcement, the Shareholders have no concrete plan and timetable for contributing any additional capital to Sany Machinery Intelligence. However, if the Company is subsequently required to contribute additional capital to Sany Machinery Intelligence, the Company will comply with the applicable requirements under Chapter 14 and Chapter 14A of the Listing Rules in respect of its capital contribution as and when required.

Condition:The establishment of Sany Machinery Intelligence is subject to approval by the State Administration for Market Regulation* ( 國家市場監督管理總局) or its

appointed approval authority.

Scope of business: Sany Machinery Intelligence will be principally engaged in development, manufacturing and sales of automated and intelligent equipment.

Board Composition: There is no board in Sany Machinery Intelligence. The executive director shall be selected by the JV Shareholders.

Profit Sharing: The JV Shareholders shall share the profits according to their equity interest in Sany Machinery Intelligence.

Source of funding: The capital contribution to be paid by the Company in cash as registered capital of Sany Machinery Intelligence will come from the internal resources of the Group.

REASONS FOR AND BENEFITS OF THE FORMATION OF SANY MACHINERY INTELLIGENCE

According to the national construction and development plan, the intelligent technology will become the major development trend and technology competition for the new mining industry and port operation in the future. The establishment of Sany Machinery Intelligence with Sany Group will (i) facilitate the Group to expedite the development of equipment with intelligent technologies such as perception, analysis, decision-making and automatic control; (ii) enable the Group to leverage on Sany Group's technological advantages, realise a sharing of technologies and protect the relevant technological achievements; and (iii) accelerate the research and development of the Group's intelligent, unmanned and electric technologies, and enhance the Company's comprehensive competitiveness and intelligent manufacturing standards.

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The Directors (including the independent non-executive Directors) consider that the JV Articles have been entered into on normal commercial terms, and the terms of the transactions thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Since Sany Group, being a party to the JV Articles, is an associate of Mr. Liang Wengen, Mr. Liang Zaizhong, being the son of Mr. Liang Wengen, has abstained from voting on the Board resolution approving the JV Articles due to conflict of interests.

Save as disclosed, none of the Directors has a material interest in the formation of Sany Machinery Intelligence or is required to abstain from voting on the Board resolution for considering and approving the same pursuant to the articles of association of the Company.

LISTING RULES IMPLICATIONS

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 2,098,447,688 ordinary Shares and 479,781,034 convertible preference shares of the Company, which, in aggregate, represents 83.53% of the issued share capital of the Company.

Sany Group, being held by Mr. Liang Wengen as to 56.74%, is therefore an associate of Mr. Liang Wengen and hence a connected person of the Company under the Listing Rules.

Accordingly, the formation of Sany Machinery Intelligence pursuant to the JV Articles constitutes a connected transaction of the Company under the Listing Rules.

As each of the applicable percentage ratios (other than the profits ratio) as calculated in accordance with Chapter 14 of the Listing Rules in respect of the capital contribution to be made by the Company under the JV Articles is more than 0.1% but less than 5%, the formation of Sany Machinery Intelligence pursuant to the JV Articles is only subject to the reporting and announcement requirements and is exempt from the independent shareholders' approval requirements of Chapter 14A of the Listing Rules.

INFORMATION ABOUT THE COMPANY AND SANY GROUP

The Company is an investment holding company and its subsidiaries are principally engaged in the design, manufacturing and sales of roadheader, combined coal mining unit, mining transportation vehicles, port machinery and marine heavy equipment products. Sany Heavy Equipment is a wholly- owned subsidiary of the Company.

Sany Group is principally engaged in the research and development, manufacture and sales of engineering machinery equipment.

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DEFINITIONS

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

"associate"	has the same meaning ascribed to it under the Listing Rules;
"Board"	means the board of Directors;
"Company"	means Sany Heavy Equipment International Holdings Company
	Limited ( 三一重裝國際控股有限公司), a company incorporated with
	limited liability on 23 July 2009 under the laws of the Cayman Islands
	and the Shares of which are listed on the Stock Exchange (stock code:
	631);
"connected person"	has the same meaning ascribed to it under the Listing Rules;
"controlling shareholder"	has the same meaning ascribed to it under the Listing Rules;
"Director(s)"	means the director(s) of the Company;
"Group"	means the Company and its subsidiaries;
"HK$"	means Hong Kong dollar, the lawful currency of Hong Kong;
"Hong Kong"	means the Hong Kong Special Administrative Region of the PRC;
"JV Articles"	means the articles of association adopted on 2 December 2019 by the
	JV Shareholders pursuant to which Sany Machinery Intelligence will be
	established and governed under the terms thereof;
"JV Shareholders"	means Sany Group and Sany Heavy Equipment;
"Listing Rules"	means the Rules Governing the Listing of Securities on the Main Board
	of the Stock Exchange;
"PRC"	the People's Republic of China;
"RMB"	means Renminbi, the lawful currency of the PRC;
"Sany Group"	means 三一集團有限公司 (Sany Group Limited*), a company with
	limited liability established on 18 October 2000 under the laws of the
	PRC;

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"Sany Heavy Equipment"	means Sany Heavy Equipment Co., Ltd.* ( 三一重型裝備有限公司),
	a company established under the laws of the PRC and a wholly-owned
	subsidiary of the Company;
"Sany Machinery Intelligence"	means Sany Machinery Intelligence Co., Ltd.* ( 三一机器智能有限公
	司) (subject to the name approval by local administration for market
	regulation);
"Share(s)"	means ordinary share(s) of HK$0.10 each in the share capital of the
	Company;
"Shareholder(s)"	means the holder(s) of the ordinary share(s) of the Company;
"Stock Exchange"	means The Stock Exchange of Hong Kong Limited;
"subsidiary"	has the meaning ascribed to it in section 15 of the Companies
	Ordinance (Chapter 622 of the Laws of Hong Kong);
"%"	means per cent.
	By the order of the Board
	Sany Heavy Equipment International Holdings Company Limited
	Liang Zaizhong
	Chairman
Hong Kong, 2 December 2019

As at the date of this announcement, the executive Directors are Mr. Liang Zaizhong, Mr. Qi Jian, Mr. Fu Weizhong and Mr. Zhang Zhihong, the non-executive Directors are Mr. Tang Xiuguo and Mr. Xiang Wenbo, and the independent non-executive Directors are Mr. Ng Yuk Keung, Mr. Poon Chiu Kwok and Mr. Hu Jiquan.

• for identification purposes only

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