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.

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

(Stock Code: 01088) ANNOUNCEMENT CONNECTED TRANSACTION ESTABLISHMENT OF SHENHUA GUOHUA JIANGSU POWER SALES CO., LTD.

On 19 January 2017, the Company and Shenhua Renewables entered into an investment agreement on the establishment of Shenhua Guohua Jiangsu Power Sales Co., Ltd. to establish a joint venture, Shenhua Guohua Jiangsu Power Sales Co., Ltd.. Pursuant to the JV Agreement, the registered capital of Jiangsu Power Sales shall be RMB500,000,000. The Company and Shenhua Renewables shall contribute 65% and 35%, respectively, of the registered capital of Jiangsu Power Sales.

Shenhua Renewables is a subsidiary of Shenhua Group Co. Shenhua Group Co holds 73.06% equity interest in the Company and is the controlling shareholder of the Company. Therefore, Shenhua Renewables is a connected person of the Company as defined in the Hong Kong Listing Rules. As such, the entering into the JV Agreement and the transaction contemplated thereunder constitutes a connected transaction of the Company pursuant to Chapter 14A of the Hong Kong Listing Rules.

On 20 July 2016, the Company executed the Shenhua Guohua Ningdong Power JV Agreement with Zheneng Group and Shenhua Ningxia Coal to establish Shenhua Guohua Ningdong Power. The JV Agreement and the Shenhua Guohua Ningdong Power JV Agreement were entered into between the Company and the subsidiaries of Shenhua Group Co. Pursuant to Rule 14A.81 of the Hong Kong Listing Rules, these transactions shall be aggregated. As one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Hong Kong Listing Rules) of the aggregated transaction amounts of the JV Agreement and the Shenhua Guohua Ningdong Power JV Agreement exceeds 0.1% but all are less than 5%, the JV Agreement and the transaction contemplated thereunder are subject to the reporting and announcement requirements but is exempt from the independent shareholders' approval requirement under Chapter 14A of the Hong Kong Listing Rules.

  1. BACKGROUND

    On 19 January 2017, the Company and Shenhua Renewables entered into an investment agreement on the establishment of Shenhua Guohua Jiangsu Power Sales Co., Ltd. to establish a joint venture, Shenhua Guohua Jiangsu Power Sales Co., Ltd.. Pursuant to the JV Agreement, the registered capital of Jiangsu Power Sales shall be RMB500,000,000. The Company and Shenhua Renewables shall contribute 65% and 35%, respectively, of the registered capital of Jiangsu Power Sales.

  2. JV AGREEMENT Date

    19 January 2017

    Parties

    The Company

    Shenhua Renewables

    Basic information of Jiangsu Power Sales

    Name of company to be established:

    Shenhua Guohua Jiangsu Power Sales Co., Ltd. (tentative name subject to registration at the Administration for Industry and Commerce)

    Registered capital: RMB500,000,000

    Place of registration: 5 Jiangning Road, Qinhuai District, Nanjing,

    Jiangsu Province, the PRC

    Business scope: Purchase and sale of electricity and the

    operation and management of the multi- generation of heat, electricity, cooling, gas and water; technology development of new energy, technology consultation, technology transfer, technical services; technology development of distributed energy and related services; EPC; development, promotion and consultation services of energy conservation technology; set-up and design, construction, repairs and maintenance of the distribution network; set-up and design, construction, repairs and maintenance for electricity generation; set-up and design, construction, repairs and maintenance for heat generation; integration and development of relevant application data and related services. (Except for those businesses prohibited by national laws and regulations. Products under licensing arrangement shall only be rendered after obtaining relevant permits and subject to the final approval of the Administration for Industry and Commerce.)

    Term of operation: Permanent existence

    Contribution of registered capital The Company Shenhua Renewables

    Total amount of contribution

    (percentage of total registered capital)

    RMB325,000,000

    (65%)

    RMB175,000,000

    (35%)

    Payment method of registered capital To be paid in full

    within 20 business days commencing from the execution of the JV Agreement

    To be paid in full within 20 business days commencing from the execution ofthe JV Agreement

    After the establishment of Jiangsu Power Sales, if registered capital needs to be increased, the Company and Shenhua Renewables will increase their contribution according to shareholding percentage of 65% and 35%, respectively. If one party does not increase their contribution according to the above ratio and shareholding percentage is changed, the shareholding percentage shall be adjusted on the basis of asset valuation and the actual capital contribution amount of each party.

    The board of directors

    The board of directors of Jiangsu Power Sales shall comprise five directors, in which the Company shall nominate three directors (one will be the chairman of the board of directors), Shenhua Renewables shall nominate one director, and all of the employees shall elect one director.

    The supervisory committee

    The supervisory committee of Jiangsu Power Sales shall comprise three supervisors, in which the Company shall nominate one supervisor, Shenhua Renewables shall nominate one supervisor who will be the chairman of the supervisory committee, and all of the employees shall elect one supervisor.

    Senior management

    Jiangsu Power Sales shall have one general manager and one chief financial officer who shall be nominated by the Company. Vice general managers shall be nominated by the general manager and appointed by the board of directors.

    Consolidation of financial statements

    The Company will consolidate the financial statements of Jiangsu Power Sales.

    Share of profits

    Pro rata to the registered capital actually contributed by the Company and Shenhua Renewables.

    Applicable law

    The laws of the PRC.

    The terms of the JV Agreement were arrived after arm's length negotiation between the parties.

  3. REASONS FOR AND BENEFITS OF ENTERING INTO THE JV AGREEMENT AND ESTABLISHMENT OF JIANGSU POWER SALES

By the end of 2016, the installed capacity of three coal-fired generation enterprises controlled and operated by the Company in Jiangsu Province amounted to approximately 4,580MW; and the installed capacity of wind power and solar power generators controlled and operated by Shenhua Renewables in Jiangsu Province amounted to approximately 691MW. Jiangsu Power Sales will serve as the business platform of the Company and Shenhua Renewables in Jiangsu Province and will mainly be engaged in the distribution and sale of electricity generated by self-owned generation units and third party generation units and are available to be sold in the market.

CSEC - China Shenhua Energy Company Ltd. published this content on 19 January 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 20 January 2017 08:23:04 UTC.

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