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. CRRC CORPORATION LIMITED (a joint stock limited company incorporated in the People s Republic of China with limited liability) (Stock code: 1766) ANNOUNCEMENT ON CONNECTED TRANSACTION TRANSFER OF EQUITY INTEREST IN NANKOU SCIENCE AND INNOVATION PARK The Board announces that, on 11 December 2018, Nankou Company entered into the Equity Transfer Contract with CRRC Real Estate. Pursuant to the contract, Nankou Company agreed to sell and CRRC Real Estate agreed to acquire 70% equity interest in Nankou Science and Innovation Park. After completion of the Transaction, CRRC Real Estate will hold 70% equity interest in Nankou Science and Innovation Park, and Nankou Science and Innovation Park will cease to be a subsidiary of the Company. As at the date of this announcement, CRRC GROUP is the controlling shareholder of the Company holding, directly and indirectly, 51.43% of the shares of the Company, and is therefore a connected person of the Company under the Hong Kong Listing Rules. Nankou Company is a wholly-owned subsidiary of the Company, while CRRC Real Estate is a wholly-owned subsidiary of CRRC GROUP. Therefore, the entering into of the Equity Transfer Contract between Nankou Company and CRRC Real Estate constitutes a connected transaction of the Company under Chapter 14A of the Hong Kong Listing Rules. Pursuant to Rule 14A.81 of the Hong Kong Listing Rules, the Transaction shall be aggregated with the Previous Transactions. Following the aggregation, as the highest of the applicable size test percentage ratios calculated according to the Hong Kong Listing Rules exceeds 0.1% but is lower than 5%, the Transaction is subject to annual reporting and announcement requirements but is exempted from the requirement of independent shareholders approval under Chapter 14A of the Hong Kong Listing Rules. 1
1. INTRODUCTION The Board announces that, on 11 December 2018, Nankou Company entered into the Equity Transfer Contract with CRRC Real Estate. Pursuant to the contract, Nankou Company agreed to sell and CRRC Real Estate agreed to acquire 70% equity interest in Nankou Science and Innovation Park. After completion of the Transaction, CRRC Real Estate will hold 70% equity interest in Nankou Science and Innovation Park, and Nankou Science and Innovation Park will cease to be a subsidiary of the Company. 2. EQUITY TRANSFER CONTRACT 2.1 Date 11 December 2018 2.2 Parties (1) Nankou Company, as vendor; and (2) CRRC Real Estate, as purchaser. 2.3 Subject matter Subject matter of the Transaction is the 70% equity interest in Nankou Science and Innovation Park. 2.4 Consideration The consideration agreed in respect of the Transaction is RMB428.27589 million. The consideration was determined based on the net asset value of Nankou Science and Innovation Park as at 31 October 2018 (the Valuation Date) appraised by Beijing Hwasion Concord adopting the asset-based approach. The appraised value of the net assets of Nankou Science and Innovation Park by Beijing Hwasion Concord is approximately RMB611.8227 million. Accordingly, the appraised value of the equity interest acquired by CRRC Real Estate is approximately RMB428.27589 million. Within five business days after the contract becomes effective and completing the transfer of materials including approval documents from the government and corporate departments, financial information of the corporate, corporate chops, economic and legal documents, personnel files as well as machines and equipment, CRRC Real Estate shall pay to Nankou Company 70% of the total consideration, the current amount of which is RMB299,793,123. Within five 2
business days after completing the registration for the transfer of real estate contributed in kind by Nankou Company to Nankou Science and Innovation Park and the transfer of the relevant title certificate, CRRC Real Estate shall pay to Nankou Company 10% of the total consideration, the current amount of which is RMB42,827,589. Within five business days after Nankou Company transfers all the houses, lands and appurtenances of houses on the land lot as confirmed by CRRC Real Estate in writing, CRRC Real Estate shall pay to Nankou Company the remaining 20% of the total consideration, the current amount of which is RMB85,655,178. Nankou Company shall complete the transfer of the equity interest within 10 business days upon receipt of first payment for the transfer the equity interest from CRRC Real Estate. 2.5 Effective time of the contract Unless otherwise provided under the laws and regulations in respect of the effective time for agreements, the contract shall take effect after it has been signed and sealed by the authorized representatives of both parties and approved by CRRC GROUP. 3. REASONS FOR AND BENEFITS OF THE TRANSACTION Nankou Company intends to transfer its 70% equity interest in Nankou Science and Innovation Park. After the equity transfer, the relevant gains recorded in the consolidated statements of Nankou Company will be RMB1,022 million without taking account of taxation implication. Upon the completion of the Transaction, Nankou Company will cease its control of Nankou Science and Innovation Park and Nankou Science and Innovation Park will no longer be incorporated into its consolidated statements. Proceeds from the Transaction will be applied to supplement funds for industrial upgrade, business expansion and capital expenditure of Nankou Company. This Transaction will help Nankou Company to improve its asset structure and cash flow, therefore speeding up the process of its transformation and upgrade. It will also help the Company to activate its idle assets and improve operation efficiency. 4. INFORMATION ABOUT NANKOU SCIENCE AND INNOVATION PARK Nankou Science and Innovation Park is a limited liability company incorporated in the PRC on 26 September 2018. It was established by Nankou Company by restructuring of its real estates and land use rights, relevant equipment and part 3
of creditor s rights and debtor s obligations with an appraisal value of RMB599,056,285. As at the date of the announcement, its entire equity interest is held by Nankou Company. The business scope of Nankou Science and Innovation Park includes business management; property management; leasing of construction machinery and equipment; sale of machinery and equipment; market research; conference services; leasing of office buildings and commercial buildings. The net asset value of Nankou Science and Innovation Park as at 31 October 2018 (the Valuation Date) was RMB 594.0281 million; according to the Valuation Report, the appraised value of the net assets of Nankou Science and Innovation Park was RMB 611.8227 million. 5. GENERAL INFORMATIION OF THE COMPANY, CRRC GROUP AND PARTIES TO THE TRANSACTION The Company The Company is a joint stock limited company incorporated in the PRC. The Group is the largest rolling stock provider in the world, with the most diverse offerings and leading technologies. The main scope of business of the Company includes research and development, design, manufacturing, refurbishment, sales, leasing and technical support of railway locomotives, EMUs, rapid transit vehicles, engineering machinery, various electromechanical equipment, electronic equipment and components, as well as electric devices and environmental protection equipment; information consultation; business investment and management; asset management; import and export businesses. CRRC GROUP CRRC GROUP is a large-scale wholly state-owned enterprise approved for establishment by the State Council and the controlling shareholder of the Company. The principal businesses of CRRC GROUP (through the Company) include research and development, manufacturing, sales, refurbishment and leasing of rolling stock and key components, and the extended businesses relying on the proprietary technology of rolling stock. Nankou Company Nankou Company is a wholly-owned subsidiary of the Company, the business scope of which includes the manufacture of locomotive spares and components, railway transit machinery products, gears and transmission system, compressors and air source system, general machinery, and the processing and refurbishment 4
of machinery parts; general logistics; technical development; technical service; machinery equipment repair, sales of machinery equipment, building materials, hardware, electrical appliances, chemical products(excluding hazardous chemicals and category I precursor chemicals); warehousing service; import and export of commodities and technology and acting as import and export agency; and leasing of machinery equipment (excluding vehicle leasing). CRRC Real Estate CRRC Real Estate is a wholly-owned subsidiary of CRRC GROUP. The principal businesses of CRRC Real Estate include real estate development; sales of commodity house; real estate brokerage; property management; engineering survey and design; sales of building materials and construction equipment; engineering management services. 6. IMPLICATIONS OF THE LISTING RULES As at the date of this announcement, CRRC GROUP is the controlling shareholder of the Company holding, directly and indirectly, 51.43% of the shares of the Company, and is therefore a connected person of the Company under the Hong Kong Listing Rules. Nankou Company is a wholly-owned subsidiary of the Company, while CRRC Real Estate is a wholly-owned subsidiary of CRRC GROUP. Therefore, the entering into of the Equity Transfer Contract between Nankou Company and CRRC Real Estate constitutes a connected transaction of the Company under Chapter 14A of the Hong Kong Listing Rules. Pursuant to Rule 14A.81 of the Hong Kong Listing Rules, the Transaction shall be aggregated with the Previous Transactions. Following the aggregation, as the highest of the applicable size test percentage ratios calculated according to the Hong Kong Listing Rules exceeds 0.1% but is lower than 5%, the Transaction is subject to annual reporting and announcement requirements but is exempted from the requirement of independent shareholders approval under Chapter 14A of the Hong Kong Listing Rules. Three Directors, namely Liu Hualong, Sun Yongcai and Xu Zongxiang, hold positions in CRRC GROUP and have abstained from voting on the Board resolution approving for entering into the Equity Transfer Contract and the transaction thereunder. Save as stated above, none of the Directors have any material interest in the Transaction, and hence no other Director has abstained from voting on the relevant Board resolution. 5
All Directors (including all independent non-executive Directors) consider that the Equity Transfer Contract was entered into after negotiation on arm s length basis and on normal commercial terms, and the relevant terms are fair and reasonable and in the interests of the Company and its Shareholders as a whole. 7. DEFINITION In this announcement, unless the context otherwise requires, the terms used herein shall have the following meanings: Beijing Hwasion Concord Board connected person(s) Company CRRC Real Estate CRRC GROUP Beijing Hwasion Concord Assets Appraisal Co., Ltd. ( ), an independent valuer the Board of Directors of the Company has the meaning ascribed thereto under the Hong Kong Listing Rules CRRC Corporation Limited ( ), a joint stock company incorporated in the PRC with limited liability, the H shares and A shares of which are listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange, respectively CRRC Real Estate Co., Ltd.* ( ), a wholly-owned subsidiary of CRRC GROUP CRRC GROUP Co., Ltd.* ( ), a large-scale wholly state-owned enterprise and the controlling shareholder of the Company Director(s) directors of the Company (including independent non-executive directors) Group Hong Kong Hong Kong Listing Rules Hong Kong Stock Exchange the Company and its subsidiaries the Hong Kong Special Administrative Region of the People s Republic of China the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended from time to time The Stock Exchange of Hong Kong Limited 6
PRC Previous Transactions RMB the People s Republic of China similar transactions entered into between the Group and CRRC GROUP and its subsidiaries during the past 12 months, which, for the purpose of this announcement, include (i) the transaction under the equity transfer agreement dated 20 December 2017 between the Company and CRRC GROUP (please refer to the announcement of the Company dated 20 December 2017 for details), (ii) the transaction under the equity transfer agreement dated 24 August 2018 between the Company and CRRC GROUP (please refer to the announcement of the Company dated 24 August 2018 for details), (iii) the transaction under the equity transfer agreements entered into by CRRC Zhuzhou Electric Locomotive Co., Ltd.* ( ) (a subsidiary of the Company) with Hunan CRRC Times Electric Vehicle Co., Ltd.* ( ) (a subsidiary of CRRC GROUP) and CRRC Zhuzhou Electric Locomotive Industry Management Co., Ltd.* ( ) (a subsidiary of CRRC GROUP), respectively on 28 September 2018 (please refer to the announcement of the Company dated 28 September 2018 for details), (iv) the transaction under the equity transfer contract dated 28 September 2018 between CRRC Lanzhou Co., Ltd.* ( ) (a subsidiary of the Company) and Lanzhou Zhongqing Real Estate Development Co., Ltd.* ( ) (a subsidiary of CRRC GROUP) (please refer to the announcement of the Company dated 28 September 2018 for details) and (v) the transaction under the equity transfer contract dated 11 December 2018 between Tianjin CRRC Equipment Co., Ltd.* ( ) (a subsidiary of the Company) and CRRC Real Estate (a subsidiary of CRRC GROUP) (please refer to the announcement of the Company dated 11 December 2018 for details) Renminbi, the lawful currency of the PRC 7
Equity Transfer Contract Shareholder(s) Nankou Science and Innovation Park Nankou Company Transaction Valuation Report an equity transfer contract dated 11 December 2018 between Nankou Company and CRRC Real Estate, pursuant to which Nankou Company agreed to sell and CRRC Real Estate agreed to purchase 70% equity interest in Nankou Science and Innovation Park shareholders of the Company Beijing CRRC Nankou Science and Innovation Park Management Co., Ltd.* ( ), a limited liability company established in the PRC, with 100% of its equity interest held by Nankou Company as at the date of this announcement CRRC Beijing Nankou Co., Ltd.* ( ), a wholly-owned subsidiary of the Company the transaction in respect of the 70% equity interest in Nankou Science and Innovation Park under the Equity Transfer Contract the asset appraisal report dated 31 October 2018 issued by Beijing Hwasion Concord on the valuation of the total value of shareholders equity interest of Nankou Science and Innovation Park % per cent By order of the Board CRRC Corporation Limited Liu Hualong Chairman Beijing, the PRC 11 December 2018 As at the date of this announcement, the executive directors of the Company are Mr. Liu Hualong, Mr. Sun Yongcai and Mr. Xu Zongxiang; the non-executive director is Mr. Liu Zhiyong; and the independent non-executive directors are Mr. Li Guo an, Mr. Wu Zhuo and Mr. Sun Patrick. * For identification purposes only 8