Tianjin Jinran Public Utilities : CONTINUING CONNECTED TRANSACTION IN RELATION TO ENTRUSTED PURCHASE AGREEMENT

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天 津 津 燃 公 用 事 業 股 份 有 限 公 司

TIANJIN JINRAN PUBLIC UTILITIES COMPANY LIMITED

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

(Stock Code: 01265)

CONTINUING CONNECTED TRANSACTION IN RELATION TO

ENTRUSTED PURCHASE AGREEMENT

ENTRUSTED PURCHASE AGREEMENT

On 5 December 2019, the Company entered into an Entrusted Purchase Agreement with Jinran China Resources, pursuant to which the Company entrusted Jinran China Resources to purchase IoT gas metres for the Gas Metres Replacement Scheme to be carried out for the users of the Company under the Gas Metres Replacement Scheme for the period commencing on 5 December 2019 and ending on 31 December 2021. The aggregate purchase price under the Entrusted Purchase Agreement for the period from 5 December 2019 to 31 December 2019, and the years ending 31 December 2020 and 31 December 2021 shall not exceed RMB38,556,350, RMB49,999,600 and RMB49,999,600, respectively.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Jinran China Resources is held as to 51% by Tianjin Gas, which is the controlling shareholder of the Company, holding approximately 70.54% of the issued shares of the Company. Jinran China Resources is hence a connected person of the Company, and the entering into of the Entrusted Purchase Agreement constitutes a continuing connected transaction of the Company under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio under the Listing Rules for the annual cap for the purchase of gas metres under the Entrusted Purchase Agreement, on an annual basis, will be more than 0.1% but less than 5%, the transactions contemplated thereunder are subject to the annual review, reporting and announcement requirements under Chapter 14A of the Listing Rules, but are exempt from the independent shareholders' approval requirements.

On 5 December 2019, the Company entered into an Entrusted Purchase Agreement with Jinran China Resources, pursuant to which the Company entrusted Jinran China Resources to purchase IoT gas metres for the Gas Metres Replacement Scheme to be carried out for the users of the Company under the Gas Metres Replacement Scheme for the period commencing on 5 December 2019 and ending on 31 December 2021. The aggregate purchase price under the Entrusted Purchase Agreement for the period from 5 December 2019 to 31 December 2019, and the years ending 31 December 2020 and 31 December 2021 shall not exceed RMB38,556,350, RMB49,999,600 and RMB49,999,600, respectively.

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ENTRUSTED PURCHASE AGREEMENT

The principal terms of the Entrusted Purchase Agreement are as follows:-

Date:

5 December 2019

Parties:

1. The Company; and
2. Jinran China Resources

Subject matter:

Pursuant to the Entrusted Purchase Agreement, the Company entrusted Jinran China Resources to purchase IoT gas metres for the Gas Metres Replacement Scheme for the term commencing on 5 December 2019 and ending on 31 December 2021.

Annual caps:

The maximum quantities and aggregate purchase price of the gas metres to be purchased for the following periods are set out below:

	For the
	period from
	5 December 2019
	to 31 December	For the year ending 31 December
	2019	2020	2021
Maximum quantities of gas metres
to be purchased	110,161	142,856	142,856
Maximum aggregate purchase price of
gas metres to be purchased	RMB38,556,350	RMB49,999,600	RMB49,999,600

The above annual caps under the Entrusted Purchase Agreement were determined by the parties after arm's length negotiation and with reference to (i) the replacement schedule and the number of gas metres required to be replaced under the Gas Metres Replacement Scheme; (ii) the prevailing market prices of the gas metres offered by independent third party suppliers; and (iii) potential fluctuations in the price of the gas metres.

The Company will pay the purchase price with its internal resources.

Payment arrangement:

The unit price of the gas metres will be based on the actual purchase price of the gas metres by Jinran China Resources.

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The Company has the right to withhold 5% of the total transaction amount of the gas metres purchased each year as the quality assurance fund which will be refunded in full to Jinran China Resources without interest after expiry of the warranty period.

The Company will pay the purchase price to Jinran China Resources within five days after Jinran China Resources has presented relevant invoices each month, provided that Jinran China Resources could provide a confirmation order confirming the number of the replaced gas metres which are duly received and accepted after completion of the relevant installation works and such data could be verified with the users' information available on the Company's IoT platform.

Other terms:

The Company shall provide the number and types of gas metres to be purchased to Jinran China Resources and Jinran China Resources shall state clearly the total purchase price of the gas metres.

Jinran China Resources shall complete the services within the term of the Entrusted Purchase Agreement and shall not assign in whole or in part any of the services to be furnished under the Entrusted Purchase Agreement to any third party. If Jinran China Resources assigns any of the services under the Entrusted Purchase Agreement to a third party, the Company has the right to rescind the Entrusted Purchase Agreement and demand Jinran China Resources to pay a penalty in a sum equal to 20% of the total transaction amount incurred in the relevant year.

Jinran China Resources shall bear the same obligations of the suppliers in respect of the quality of the gas metres. Should there be any default in the quality of the gas metres, the Company shall have the right to claim damages against Jinran China Resources within two years upon delivery of the relevant gas metres.

INTERNAL CONTROL MEASURES

To ensure that the transactions contemplated under the Entrusted Purchase Agreement is conducted on normal commercial terms or better, the Company will adopt the following internal control procedures:

1. The Group will maintain monthly records of the market prices of the gas metres offered by independent third party suppliers and compare the market prices with the price quoted by Jinran China Resources before entering into a transaction under the Entrusted Purchase Agreement to ensure that the price charged by Jinran China Resources will reflect the prevailing market price and will be on an arm's length basis under normal commercial terms;
2. The finance department of the Company will monitor the invoices issued by Jinran China Resources to the Company in respect of the transactions under the Entrusted Purchase Agreement on a monthly basis and will inform the management of the Company and the Board on a timely basis in the event the aggregated amount of gas metres purchased exceeds 75% of the applicable annual cap. The Board shall eventually determine if the Annual Cap should be revised upward in accordance with the Listing Rules; and
3. The independent non-executive Directors will review the transactions under the Entrusted Purchase Agreement pursuant to Rule 14A.55 of the Listing Rules, and the auditors of the Company will also conduct an annual review on the pricing terms and annual caps under the Entrusted Purchase Agreement.

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REASONS FOR AND BENEFITS OF THE ENTERING INTO OF THE ENTRUSTED PURCHASE AGREEMENT

Having considered that Jinran China Resources is the only natural gas wholesaler in Tianjin, which has an extensive network of suppliers, and the quantities of gas metres to be purchased for its business is much more than that to be purchased by the Group, the Board believes that Jinran China Resources has a better bargaining power than the Group, and accordingly, the Group could obtain the gas metres at a more favourable price from the suppliers and assure the quality of the gas metres through Jinran China Resources.

The Board (including independent non-executive Directors) considers that the Entrusted Purchase Agreement is entered into in the ordinary and usual course of business of the Group, on normal commercial terms or better, and the terms of the Entrusted Purchase Agreement and the proposed annual cap are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

As Mr. Hou Shuang Jiang, the non-executive Director, has directorship in 津燃貿易諮詢有限公司 (Jinran

Trading Consultancy Company Limited*), a wholly-owned subsidiary of Tianjin Gas, Mr. Wang Jin, the non- executive Director, has directorship in 天津市津燃置業投資有限公司 (Tianjin Jinran Property Investment

Limited*), a wholly-owned subsidiary of Tianjin Gas, and Mr. Zhao Heng Hai, the non-executive Director, has directorship in Jinran China Resources, all three of them had abstained from voting in the passing of Board resolutions in relation to the Entrusted Purchase Agreement, and were not counted in the quorum in the relevant meeting of the Board in relation to the Entrusted Purchase Agreement.

INFORMATION OF THE GROUP

The Group's principal activities are the operation and management of gas pipeline infrastructure and the sale and distribution of piped gas in the PRC.

INFORMATION OF JINRAN CHINA RESOURCES

Jinran China Resources is held by Tianjin Gas (a controlling shareholder of the Company) and China Resources Gas Group Limited (a company listed on the main board of the Stock Exchange, Stock Code: 1193) as to 51% and 49%, respectively, and is the sole wholesale supplier of natural gas in the Tianjin City and part of the rural areas of Tianjin. The principal business of Jinran China Resources comprises operation of gas pipeline infrastructure, supply of natural gas to other gas supply operators in the Tianjin area, the sales and distribution of piped gas to end users and the sale of gas appliances and equipment in connection with gas supply in certain areas in Tianjin.

The ultimate beneficial owner of Tianjin Gas is the State-owned Assets Supervision and Administration Commission of the Tianjin Municipal People's Government, a special commission directly under the Tianjin Municipal People's Government.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Jinran China Resources is held as to 51% by Tianjin Gas, which is the controlling shareholder of the Company, holding approximately 70.54% of the issued shares of the Company. Jinran China Resources is hence a connected person of the Company, and the entering into of the Entrusted Purchase Agreement constitutes a continuing connected transaction of the Company under Chapter 14A of the Listing Rules.

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As the highest applicable percentage ratio under the Listing Rules for the annual cap for the purchase of gas metres under the Entrusted Purchase Agreement, on an annual basis, will be more than 0.1% but less than 5%, the transactions contemplated thereunder are subject to the annual review, reporting and announcement requirements under Chapter 14A of the Listing Rules, but are exempt from the independent shareholders' approval requirements.

DEFINITIONS
"Board"	the board of Directors
"Company"	天津津燃公用事業股份有限公司 (Tianjin Jinran Public Utilities
	Company Limited), a joint stock limited company incorporated in the
	PRC, whose H shares are listed on the Stock Exchange
"connected person(s)"	has the meaning ascribed to in the Listing Rules
"controlling shareholder(s)"	has the meaning ascribed to in the Listing Rules
"Director(s)"	the director(s) of the Company
"Entrusted Purchase	the entrusted purchase agreement dated 5 December 2019 entered into
Agreement"	between the Company and Jinran China Resources in respect of the
	purchase of gas metres by Jinran China Resources for the Gas Metres
	Replacement Scheme
"Gas Metres Replacement	the Company's plan for replacement of the existing gas metres for
Scheme"	the Company's users in Heping District（和平區）, Hedong District
	（河東區）, Xiqing District（西青區）, Ninghe District（寧河區）, Hangu
	District（漢沽區）and part of the Jinnan District（津南區）in Tianjin with
	the IoT gas metres
"Group"	the Company and its subsidiaries
"IoT"	Internet of Things
"Jinran China Resources"	津燃華潤燃氣有限公司 (Jinran China Resources Gas Co., Ltd*), a
	company established in the PRC with limited liability
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock Exchange
"normal commercial terms	has the meaning ascribed to in the Listing Rules
or better"

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"PRC"	The People's Republic of China and for the purpose of this announcement,
	does not include the Hong Kong Special Administrative Region, the
	Macau Special Administrative Region and Taiwan

"RMB"

"Shareholder(s)"

"Stock Exchange"

"Tianjin Gas"

Tianjin, PRC, 5 December 2019

Renminbi, the lawful currency of the PRC

shareholder(s) of the Company

The Stock Exchange of Hong Kong Limited

天津市燃氣集團有限公司 (Tianjin Gas Group Company Limited*), a state-owned enterprise established in the PRC with limited liability

By Order of the Board

Tianjin Jinran Public Utilities Company Limited

Zhao Wei

Chairman

As at the date of this announcement, the Board comprises three executive Directors, namely Mr. Zhao Wei (Chairman), Ms. Tang Jie and Mr. Wang Quan Hong, three non-executive Directors, namely Mr. Hou Shuang Jiang, Mr. Wang Jin and Mr. Zhao Heng Hai, and three independent non-executive Directors, namely Mr. Zhang Ying Hua, Mr. Yu Jian Jun and Mr. Guo Jia Li.

• For identification purpose only

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