China Smarter Energy : INSIDE INFORMATION MEMORANDUM OF UNDERSTANDING IN RELATION TO THE POSSIBLE DISPOSAL OF SUBSIDIARY

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.

CHINA SMARTER ENERGY GROUP HOLDINGS LIMITED

中 國 智 慧 能 源 集 團 控 股 有 限 公 司 *

(Incorporated in Bermuda with limited liability)

(Stock Code: 1004)

INSIDE INFORMATION

MEMORANDUM OF UNDERSTANDING IN RELATION TO

THE POSSIBLE DISPOSAL OF SUBSIDIARY

The announcement is made by the Company pursuant to Rule 13.09 of the Listing Rules and the provisions of inside information under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

THE MOU

The Board hereby announces that on 6 August 2020, the Seller entered into the MOU with the Potential Purchaser in relation to the Possible Disposal.

GENERAL

In the event that the Possible Disposal materialises, it may constitute a notifiable transaction of the Company under the Listing Rules. Further announcement(s) in relation to the Possible Disposal will be made by the Company as and when appropriate in compliance with the Listing Rules.

There is no assurance of the Company that any transactions referred to in this announcement will materialise or eventually be consummated. Shareholders of the Company and potential investors should note that the Possible Disposal is subject to, among other things, the entering into of a formal equity transfer agreement (the "Formal Agreement"), the major terms and conditions of which are yet to be agreed upon. Shareholders of the Company and potential investors are advised to exercise caution when dealing in the shares of the Company.

The announcement is made by China Smarter Energy Group Holdings Limited (the "Company") pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the provisions of inside information under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

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The board of directors of the Company (the "Board") hereby announces that on 6 August 2020, 上海國之杰智慧能源有限公司 (Shanghai Gorgeous Smarter Energy Company Limited*),

a company incorporated in the PRC and an indirect wholly-owned subsidiary of the Company (the "Seller") entered into a memorandum of understanding (the "MOU") with 新疆絲路坤元 能源有限責任公司 (Xinjiang Silk Road Kunyuan Energy Company Limited*) (the "Potential

Purchaser") in respect of the mutual intention on the possible disposal of all of the equity interests beneficially held by the Seller in its direct wholly-owned subsidiary 青島谷欣電力投資

有限公司 (Qingdao Guxin Electricity Investment Company Limited*) (the "Target Company") to the Potential Purchaser (the "Possible Disposal"). Details of the MOU are set out as follows:

THE MOU
Date:	6 August 2020
Parties:	(1)	上海國之杰智慧能源有限公司 (Shanghai Gorgeous Smarter
		Energy Company Limited*), as the Seller
	(2)	新疆絲路坤元能源有限責任公司 (Xinjiang Silk Road Kunyuan
		Energy Company Limited*), as the Potential Purchaser

The MOU is valid for three months from the date of the MOU and the Potential Purchaser shall enjoy exclusivity during the term of the MOU.

To the directors' knowledge, information and belief after having made all reasonable inquires, both the Potential Purchaser and its ultimate beneficial owners are the third parties independent from the Company and its connected persons.

ASSETS PROPOSED TO BE DISPOSED

Pursuant to the MOU, the Seller intends to sell and the Potential Purchaser intends to acquire all the interests in the Target Company. As at the date of this announcement, the Seller beneficially owns 100% of the interests in the Target Company.

DUE DILIGENCE

Upon signing the MOU, the Potential Purchaser will engage independent third parties to prepare a valuation report and perform due diligence on the financial and legal and other matters of the Target Company. The Seller will assist the Potential Purchaser in this regard.

CONSIDERATION

The consideration for the Possible Disposal shall comprise of (i) the final consideration not higher than RMB287,180,000, which will be determined by both parties to the MOU after arm's length negotiations based on the valuation of the Target Company by a third-party valuer, and (ii) repayment of shareholder's loan of approximately RMB147,000,000 from Jinchang Disheng (as defined below) to the Seller.

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FORMAL AGREEMENT

Subject to the result of due diligence, the parties to the MOU shall enter into the Formal Agreement after the parties have determined the terms of the transaction and the other relevant conditions are met.

LEGAL EFFECTS

Save for those general provisions including but not limited to due diligence review, confidentiality, term of the MOU, exclusivity and governing law, the MOU does not impose legally binding obligations on the parties in relation to the material terms of the Possible Disposal (including consideration).

INFORMATION OF THE TARGET COMPANY AND THE POTENTIAL PURCHASER

The Target Company is an indirect wholly-owned subsidiary of the Company and it is an investment holding company holding the 100% interest in 金昌迪生太陽能發電有限公司

(Jinchang Disheng Solar Energy Company Limited*) ("Jinchang Disheng") a company in the People's Republic of China (the "PRC") which is principally engaged in the operation of solar power plant.

To the best of the knowledge, information and belief of the Directors, having made all reasonable

enquiries, the Potential Purchaser is a company established in the PRC and it is a wholly-owned subsidiary of 國家電投集團新疆能源化工有限責任公司 (State Power Investment Corporate

Xinjiang Energy Chemical Company Limited*) and is principally engaged in thermal power, hydropower, wind power, photovoltaic power generation, heating services, coal, coal chemical, salt chemical and related upstream and downstream industries.

REASONS FOR AND BENEFIT OF THE POSSIBLE DISPOSAL

As at the date of this announcement, and with reference to the announcements of the Company dated 15 May 2020, 20 May 2020 and 10 July 2020 (the "Announcements"), the Company has received two winding-up petitions which concern a sum of US$26,401,747.22 (equivalent to approximately HK$205,933,628.32) and US$7,600,666.67 (equivalent to approximately HK$58,910,107.13), respectively. As disclosed in the Announcements, the respective hearing dates have been fixed on 12 August 2020 and 14 October 2020. The Possible Disposal, if materialised, will generate an immediate cash inflow of approximately RMB434 million, which would significantly help the Company to repay its debts as mentioned above and improve its cash flow condition.

GENERAL

In the event that the Possible Disposal materialises, it may constitute a notifiable transaction of the Company under the Listing Rules. Further announcement(s) in relation to the Possible Disposal will be made by the Company as and when appropriate in compliance with the Listing Rules.

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There is no assurance of the Company that any transactions referred to in this announcement will materialise or eventually be consummated. Shareholders of the Company and potential investors should note that the Possible Disposal is subject to, among other things, the entering into of the Formal Agreement, the major terms and conditions of which are yet to be agreed upon. Shareholders of the Company and potential investors are advised to exercise caution when dealing in the shares of the Company.

By order of the Board

China Smarter Energy Group Holdings Limited

Zhang Liang

Chairman

Hong Kong, 6 August 2020

As at the date of this announcement, Mr. Zhang Liang, Mr. Hu Hanyang, Mr. Weng Xiaoquan, Mr. Bo Dateng, Mr. Gao Fei and Mr. Yin Yilin are the executive directors of the Company; and Mr. Lam Cheung Mau, Mr. Pun Hau Man and Mr. Wang Yuzhou are the independent non-executive directors of the Company.

• For identification purposes only

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