Sichuan Expressway : RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

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.

RENEWAL OF CONTINUING CONNECTED

TRANSACTIONS

Reference is made to the announcement of the Company dated 27 December 2018 in relation to, among other things, the Previous Refined Oil Framework Agreement entered into between the Company and PetroChina Sichuan Sales Branch on 27 December 2018.

REFINED OIL FRAMEWORK AGREEMENT

As the Previous Refined Oil Framework Agreement will be expired on 31 December 2019, Zhonglu Energy, a subsidiary of the Company, and PetroChina Sichuan Sales Branch agreed to renew the transaction terms and entered into Refined Oil Framework Agreement on 31 December 2019. Pursuant to the Refined Oil Framework Agreement, Zhonglu Energy, a subsidiary of the Company, agreed to purchase refined oil from and accept refined oil carriage service provided by PetroChina Sichuan Sales Branch (for itself and on behalf of PetroChina Sichuan Group) for the period from 1 January 2020 to 31 December 2020.

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LISTING RULES IMPLICATIONS

As at the date of this announcement, PetroChina holds 49% equity interest in Zhonglu Energy, a subsidiary of the Company. Therefore, PetroChina and its branch, PetroChina Sichuan Sales Branch, are connected persons at the subsidiary level of the Company under Rule 14A.06(9) of the Listing Rules. As (i) the Board has approved the transactions contemplated under the Refined Oil Framework Agreement; and (ii) the independent non-executive Directors have confirmed that the terms of each of the transactions contemplated under the Refined Oil Framework Agreement are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole; the Refined Oil Framework Agreement is subject to the reporting, announcement and annual review requirements, but is exempted from the circular, independent financial advisor's advices and independent shareholders' approval requirements under Rule 14A.101 of the Listing Rules.

REFINED OIL FRAMEWORK AGREEMENT

Reference is made to the announcement of the Company dated 27 December 2018 in relation to, among other things, the Previous Refined Oil Framework Agreement entered into between the Company and PetroChina Sichuan Sales Branch on 27 December 2018.

As the Previous Refined Oil Framework Agreement will be expired on 31 December 2019, Zhonglu Energy, a subsidiary of the Company, and PetroChina Sichuan Sales Branch agreed to renew the transaction terms, and entered into the following Refined Oil Framework Agreement on 31 December 2019:

Date:	31 December 2019
Term:	1 January 2020 to 31 December 2020
Parties:	Zhonglu Energy, a subsidiary of the Company, as
	purchaser; and
	PetroChina Sichuan Sales Branch (for itself and on behalf
	of PetroChina Sichuan Group) as supplier and provider of
	the relevant refined oil carriage service
Nature of transaction:	Zhonglu Energy shall purchase specified types of refined
	oil from PetroChina Sichuan Group (including carriage
	service) during the term of agreement

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Pricing policy:	The prices for all the transactions under the Refined
	Oil Framework Agreement were determined by adding
	transportation fees to the selling price of the refined oil.
	The most favourable selling price of refined oil offered by
	PetroChina Sichuan Group to Zhonglu Energy shall not be
	higher than the price offered by PetroChina Sichuan Group
	to all gas stations within Sichuan Province during the same
	period. Specific price shall be subject to the price as at the
	corresponding date of sales invoice and the transportation
	fee is set at RMB10 per tonne of refined oil (regardless of
	the distance of transportation).
Payment term:	Zhonglu Energy will make regular payment of trade
	payables on a monthly basis, i.e. pay for all trade payables
	incurred during the first 25 days (inclusive of the 25th
	day) of every month (including those outstanding from the
	precedent month) at the end of the month. The payment
	terms shall not be less favourable than those between
	PetroChina Sichuan Group and other independent third-
	parties.
Conditions precedent:	The effectiveness of the agreement is conditional upon,
	among other things, the Company having complied with
	the requirements in relation to continuing connected
	transactions under the relevant listing rules of the Stock
	Exchange and the Shanghai Stock Exchange, which
	include but not limited to reporting, announcement and/
	or independent shareholders' approval requirements (if
	applicable).

Annual cap and basis for determining the annual cap

In considering the annual cap for the Refined Oil Framework Agreement, the Directors have considered a number of factors including: (i) the historical transaction amount with PetroChina Sichuan Group for the purchase of refined oil and carriage service; (ii) the expected sales volume of refined oil of Zhonglu Energy for the year from 1 January 2020 to 31 December 2020; and (iii) the current average unit price of refined oil.

Having considered the above factors, the Directors propose that the annual cap for the Refined Oil Framework Agreement for the year from 1 January 2020 to 31 December

2020 shall be as follows:

Annual cap (RMB'000)

For the year ending 31 December 2020

1,600,000

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Historical Transaction Amount

The total historical transaction amounts recognised by the Group/Zhonglu Energy for purchase and carriage of refined oil are as follows:

	RMB
	(RMB'000)
For the period from 1 January 2018 to 31 December 2018 (audited)	1,021,483
For the six months ended 30 June 2019 (unaudited)	543,208

Reasons and benefits for entering into the Refined Oil Framework Agreement

The Group is principally engaged in the investment, construction, operation and management of expressways infrastructure projects in Sichuan Province, the PRC as well as the operation of other businesses related to toll roads within Sichuan Province. The Group also engages in gas stations operation through its non-wholly owned subsidiary Zhonglu Energy.

The Refined Oil Framework Agreement is entered into in order to realize the sustainable and sound development of the "energy segment" of the "five major segments" of the Group, to obtain a steady supply of refined oil and to meet the ordinary business needs of Zhonglu Energy.

DIRECTORS' VIEW ON THE CONTINUING CONNECTED TRANSACTIONS

The Directors (including the independent non-executive Directors) consider that the Refined Oil Framework Agreement was entered into in the ordinary and usual course of business of the Group and the terms as contained therein are normal commercial terms, which are arrived at after arm's length negotiations between the parties, the annual cap and transaction terms for the Refined Oil Framework Agreement are fair and reasonable and in the interests of the Group and the Shareholders as a whole.

DIRECTORS' OPINION ON INTERNAL CONTROL PROCEDURES OF TRANSACTIONS TERMS SUCH AS PRICING POLICY AND PAYMENT METHOD OF CONTINUING CONNECTED TRANSACTIONS

The Directors consider that in respect of the Refined Oil Framework Agreement, the Group has implemented complete internal control procedures and steps in practicing the transactions terms such as pricing policy and payment method of continuing connected transactions. Meanwhile, in order to safeguard the interests of the Company

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and the Shareholders as a whole, the Company has adopted the following measures in monitoring the transactions under the Refined Oil Framework Agreement. These internal control procedures and steps and the measures adopted for safeguarding the interests of the Company and the Shareholders as a whole are as follows:

1. After the above continuing connected transactions were proposed and reported by the department responsible for connected transaction business, the Directors (including the independent Directors) of the Company conducted review on the necessity, reasonableness and fairness of pricing of the connected transactions, and considered that the connected transactions terms are fair and reasonable and in the interests of the Company and its Shareholders as a whole.
2. The Supervisory Committee of the Company has effectively supervised the consideration and voting of the connected transactions and also considered and approved the foresaid connected transactions.
3. The Directors Office ( 董 事 會 辦 公 室) and the manager of the Discipline Inspection (Audit) Unit ( 紀 檢 監 察（審 計）部) of the Company will review the connected transactions under the continuing connected transaction agreements on a regular basis, to consider (i) effective implementation of the pricing policies and the payment methods, evaluation of balances of annual caps; and (ii) identification of management weakness, and recommendation of improvement measures to ensure that the internal control measures in respect of the continuing connected transactions remain complete and effective and where any weaknesses are identified, the Company will take measures to address them as soon as practicable.
4. The Discipline Inspection (Audit) Unit ( 紀 檢 監 察（審 計）部) of the Company will conduct internal review at least twice a year to ensure that internal control measures in respect of the transactions under the continuing connected transaction agreements remain complete and effective.

ABSTENTION FROM VOTING ON BOARD RESOLUTIONS

None of the Directors of the Company has any material interest in the Refined Oil Framework Agreement and was required to abstain from voting on the Board resolutions to approve the same.

INFORMATION OF THE COMPANY, ZHONGLU ENERGY, A SUBSIDIARY OF THE COMPANY, AND PETROCHINA SICHUAN SALES BRANCH

The business of the Company mainly includes the investment, construction, operation and management of expressways infrastructure projects in Sichuan Province, the PRC, as well as the operation of other businesses related to toll roads.

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The business of Zhonglu Energy, a subsidiary of the Company, mainly includes operation related to refined oil, investment in energy projects, business information consulting, commodity wholesale and retail as well as hazardous chemicals operation (subject to license).

PetroChina Sichuan Sales Branch is a branch of PetroChina. It principally engages in commissioned exploration, production and sale of onshore oil and natural gas; refining, production and sale of oil; and operation and management of oil and gas pipelines.

LISTING RULES IMPLICATIONS

As at the date of this announcement, PetroChina holds 49% equity interest in Zhonglu Energy, a subsidiary of the Company. Therefore, PetroChina and its branch, PetroChina Sichuan Sales Branch, are connected persons at the subsidiary level of the Company under Rule 14A.06(9) of the Listing Rules. As (i) the Board has approved the transactions contemplated under the Refined Oil Framework Agreement; and (ii) the independent non-executive Directors have confirmed that the terms of each of the transactions contemplated under the Refined Oil Framework Agreement are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole; the Refined Oil Framework Agreement is subject to the reporting, announcement and annual review requirements, but is exempted from the circular, independent financial advisor's advices and independent shareholders' approval requirements under Rule 14A.101 of the Listing Rules.

DEFINITIONS

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

"A Share(s)"	ordinary shares of the Company with a nominal value of
	RMB1.00 each, which are issued in the PRC, subscribed for
	in RMB and listed on the Shanghai Stock Exchange (stock
	code: 601107)
"associate(s)"	has the meaning ascribed to it under the Listing Rules
"Board"	the board of Directors of the Company
"Company"	Sichuan Expressway Company Limited* ( 四 川 成 渝 高
	速 公 路 股 份 有 限 公 司), a joint stock limited company
	incorporated in the PRC with limited liability, the H Shares
	and A Shares of which are listed on the Stock Exchange and
	the Shanghai Stock Exchange respectively
"connected person(s)"	has the meaning ascribed to it under the Listing Rules

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"Director(s)"	the director(s) of the Company
"Group"	the Company and its subsidiaries
"H Share(s)"	overseas listed shares of the Company with a nominal
	value of RMB1.00 each, which are issued in Hong Kong,
	subscribed for in Hong Kong dollars and listed on the main
	board of the Stock Exchange (stock code: 00107)
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock
	Exchange
"PetroChina"	PetroChina Company Limited ( 中 國 石 油 天 然 氣 股 份
	有 限 公 司), a joint stock limited company incorporated
	in the PRC with limited liability which is listed on the
	Stock Exchange (stock code: 857) and the Shanghai Stock
	Exchange (stock code: 601857), and the holder of 49% equity
	interest in Zhonglu Energy
"PetroChina Sichuan	PetroChina Company Limited Sichuan Sales Branch* ( 中 國
Group"	石 油 天 然 氣 股 份 有 限 公 司 四 川 銷 售 分 公 司) and its
	subsidiaries
"PetroChina Sichuan	PetroChina Company Limited Sichuan Sales Branch* ( 中
Sales Branch"	國 石 油 天 然 氣 股 份 有 限 公 司 四 川 銷 售 分 公 司), a
	subsidiary of PetroChina
"PRC"	the People's Republic of China, for the purpose of this
	announcement, excluding Hong Kong, the Macao Special
	Administrative Region of the PRC and Taiwan
"Previous Refined	the Framework Agreement of Connected Transaction for
Oil Framework	the Sale and Purchase of Refined Oil entered into between
Agreement"	the Company and PetroChina Sichuan Sales Branch on
	27 December 2018, details of which are set out in the
	announcement of the Company dated 27 December 2018

"Refined Oil Framework the Framework Agreement of Connected Transaction for

Agreement" the Sale and Purchase of Refined Oil entered into between Zhonglu Energy and PetroChina Sichuan Sales Branch on 31 December 2019 for the purchase of refined oil by Zhonglu Energy from and the provision of refined oil carriage service by PetroChina Sichuan Group during the period from 1 January 2020 to 31 December 2020

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"RMB"	renminbi, the lawful currency of the PRC
"SFO"	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
"Share(s)"	A Shares and H Shares
"Shareholders"	registered holder(s) of the Shares
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Supervisor(s)"	the supervisors of the Company
"Zhonglu Energy"	Sichuan Zhonglu Energy Company Limited ( 四 川 中 路
	能 源 有 限 公 司), a non wholly-owned subsidiary of the
	Company which is owned as to 51% by the Company and
	49% by PetroChina
"%"	per cent
	By order of the Board
	Sichuan Expressway Company Limited*
	Zhang Yongnian
	Company Secretary

Chengdu, Sichuan, the PRC

31 December 2019

As at the date of this announcement, the Board comprises Mr. Zhou Liming (Chairman), Mr. Gan Yongyi (Vice Chairman), Mr. Luo Maoquan and Mr. He Zhuqing as executive Directors, Mr. Ni Shilin (Vice Chairman), Mr. You Zhiming, Mr. Li Wenhu and Mr. Li Chengyong as non-executive Directors, Madam Liu Lina, Mr. Gao Jinkang, Mr. Yan Qixiang and Madam Bu Danlu as independent non-executive Directors.

• For identification purposes only

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