CStone Pharmaceuticals — Capital/Financing Update 2020

Mar 27, 2020

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.

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兗州煤業股份有限公司

YANZHOU COAL MINING COMPANY LIMITED

(A joint stock limited company incorporated in the "PRC with limited liability) (Stock Code: 1171)

CONNECTED TRANSACTION

DISPOSAL OF 100% EQUITY INTERESTS OF TRADING SUBSIDIARIES

On 27 March 2020, Yancoal International, a wholly-owned subsidiary of the Company, entered into the Equity Interest Transfer Agreements with ALYK, a wholly-owned subsidiary of Yankuang Group, pursuant to which Yancoal International agreed to sell and ALYK agreed to purchase 100% equity interests of Yancoal International Trading and Yancoal International (Singapore) at a consideration of RMB78,630,500 and RMB72,040,700, respectively (the " Proposed Transactions ").

Yankuang Group is the controlling shareholder of the Company, holding directly and indirectly approximately 53.79% of the issued share capital of the Company as at the date of this announcement. Therefore, ALYK, a wholly-owned subsidiary of Yankuang Group, constitutes an associate of Yankuang Group and thus a connected person of the Company. Pursuant to Chapter 14A of the Hong Kong Listing Rules, the transactions contemplated under the Equity Interest Transfer Agreements constitute connected transactions of the Company.

As the highest applicable percentage ratio (as defined under the Hong Kong Listing Rules) of the two transactions contemplated under the Equity Interest Transfer Agreements, on aggregated basis, exceeds 0.1% but is less than 5%, the Proposed Transactions are subject to the reporting and announcement requirements, but exempted from the independent shareholders' approval under Chapter 14A of the Hong Kong Listing Rules.

I. The Equity Interest Transfer Agreements

1. Background and main contents

On 27 March 2020, Yancoal International, a wholly-owned subsidiary of the Company, entered into the Equity Interest Transfer Agreements with ALYK, a wholly-owned subsidiary of Yankuang Group, pursuant to which Yancoal International agreed to sell and ALYK agreed to purchase 100% equity interests of Yancoal International Trading (the " Yancoal International Trading Agreement ") and Yancoal International (Singapore) (the " Yancoal International (Singapore) Agreement ") at a consideration of RMB78,630,500 and RMB72,040,700, respectively.

2. Date

27 March 2020

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3. Parties

(1) Yancoal International; and

(2) ALYK.

4. Pricing and payment

According to the Yancoal International Trading Agreement, ALYK shall pay RMB78,630,500 to Yancoal International as the consideration for 100% equity interests of Yancoal International Trading. The consideration is determined based on the Asset Evaluation Report issued by Tianjian Xingye, according to which the total equity value of shareholders of Yancoal International Trading as of the Evaluation Benchmark Day is RMB78,630,500.

According to the Yancoal International (Singapore) Agreement, ALYK shall pay RMB72,040,700 to Yancoal International as the consideration for 100% equity interests of Yancoal International (Singapore). The consideration is determined based on the Asset Evaluation Report issued by Tianjian Xingye, according to which the total equity value of shareholders of Yancoal International (Singapore) Agreement as of the Evaluation Benchmark Day is RMB72,040,700.

The consideration, totaling RMB150,671,200, will be paid by ALYK on the Settlement Date.

Adjustment Amount

To ensure that Yancoal International will receive the economic benefit/bear the loss of the Trading Subsidiaries from the Evaluation Benchmark Day until the Settlement Date, ALYK and Yancoal International have agreed an adjustment mechanism whereby an audit report in relation to the economic benefit/loss of the Trading Subsidiaries during such period will be issued within 60 days after the Settlement Date (the " Settlement Audit Report "). An adjustment amount of the consideration will be calculated based on the Settlement Audit Report, and the benefit/loss shall be determined and received/paid by Yancoal International within 5 business days after the issuance of the Settlement Audit Report.

The Company intends to use the sale proceeds received from the Proposed Transaction to supplement its working capital.

5. Conditions precedent

The conditions precedent for the Equity Interest Transfer Agreements include:

(1) ALYK and Yancoal International sign and affix seals on the Equity Interest Transfer Agreements respectively;

(2) ALYK and Yancoal International complete the internal approval procedures for the Equity Interest Transfer Agreements respectively; and

(3) the relevant evaluation report filed with the relevant authorities.

6. Reasons and benefits for the Proposed Transactions

As compared to coal business, trading business is with relevantly lower gross margin and generates lower cash flows. The completion of the Proposed Transactions is expected to benefit the Company in concentrating on the coal business and enhancing core competitiveness with relevantly low influence on the total profits of the Company.

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7. Financial effects of the Proposed Transactions

After the Proposed Transaction is completed, the shareholding of the Company in the Trading Subsidiaries will decrease from 100% to nil. The Trading Subsidiaries will no longer be subsidiaries of the Company and their accounts will no longer be consolidated into the accounts of the Group.

Since the Proposed Transactions under the Equity Interest Transfer Agreements will be recorded as an equity transaction in accordance with the accounting policy of the Group, it is expected that any gain or loss from the Proposed Transaction will be reflected in the Group's consolidated capital reserve.

The exact financial effects of the Proposed Transaction are subject to the review by the Company’s auditors.

II. Implication of the Hong Kong Listing Rules

Yankuang Group is the controlling shareholder of the Company, holding directly and indirectly approximately 53.79% of the issued share capital of the Company as at the date of this announcement. Therefore, ALYK, a wholly-owned subsidiary of Yankuang Group, constitutes an associate of Yankuang Group and thus a connected person of the Company. Pursuant to Chapter 14A of the Hong Kong Listing Rules, the transactions contemplated under the Equity Interest Transfer Agreements constitute connected transactions of the Company.

As the highest applicable percentage ratio (as defined under the Hong Kong Listing Rules) of the two transactions contemplated under the Equity Interest Transfer Agreements, on aggregated basis, exceeds 0.1% but is less than 5%, the Proposed Transactions are subject to the reporting and announcement requirements, but exempted from the independent shareholders' approval under Chapter 14A of the Hong Kong Listing Rules.

The Directors (including the independent non-executive Directors) consider that the terms and conditions of the Equity Interest Transfer Agreements are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

III. General Information

The Equity Interest Transfer Agreements has been approved by the Board meeting held on 27 March 2020.

At the aforesaid Board meeting, two connected Directors (i.e. Mr. Li Xiyong and Mr. Li Wei) were regarded as having a material interest in the Share Transfer Agreement and abstained from voting on the relevant resolution. The other nine Directors considered and approved the transaction. Save as disclosed in above, none of the Directors abstained from voting on the relevant resolution at the aforesaid Board meeting convened for the purpose of approving such transaction.

IV. Information of the Parties

Yanzhou Coal

Yanzhou Coal is principally engaged in the business of mining, preparation, processing and sales of coal and coal chemicals. Yanzhou Coal’s main products are steam coal for use in large-scale power plants, coking coal for metallurgical production and prime quality low sulphur coal for use in pulverized coal injection.

Yancoal International

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Yancoal International is a wholly-owned subsidiary of the Company as of the date of this announcement, and is principally engaged in investment and financing management, import and export trade, and coal mining and sales.

Yankuang Group

Yankuang Group is a state-controlled limited liability company with a registered capital of RMB7,769.2 million and its legal representative is Mr. Li Xiyong. The principal business of Yankuang Group includes the exploration, processing, trade and provision of auxiliary services of mining (coal and nonferrous metal), highend chemical industry, modern logistics, and engineering and technology services.

As at the date of this announcement, Yankuang Group is the controlling Shareholder of the Company, holding directly or indirectly approximately 53.79% of the issued share capital of the Company, and is hence a connected person of the Company.

ALYK

ALYK is a wholly-owned subsidiary of Yankuang Group as of the date of this announcement, and is principally engaged in the trading of non-ferrous metal, mechanical equipment and metal ores.

Yancoal International Trading

As at the date of this announcement, Yancoal International Trading is a wholly-owned subsidiary of Yancoal International and is principally engaged in, among others, import and export trade of coal, nonferrous metal, ores and oil products.

The financial information of Yancoal International Trading for the years ended 31 December 2017 and 2018 is shown in the following table (prepared according to the PRC GAAP):

	Unit: RMB thousand For the year ended 31 December 2017 (audited) 2018 (audited) 82,046 87,677 82,046 87,677	Unit: RMB thousand For the year ended 31 December 2017 (audited) 2018 (audited) 82,046 87,677 82,046 87,677
	For the year ended 31 December
	2017 (audited)	2018 (audited)
Net Profit (before tax and extraordinary items)	82,046	87,677
Net Profit (after tax and extraordinary items)	82,046	87,677

Yancoal International (Singapore)

As at the date of this announcement, Yancoal International (Singapore) is is a wholly-owned subsidiary of Yancoal International and is principally engaged in, among others, import and export trade of oil products.

The financial information of Yancoal International (Singapore) for the years ended 31 December 2017 and 2018 is shown in the following table (prepared according to the PRC GAAP):

	Unit:RMBthousand For the year ended 31 December 2017 (audited) 2018 (audited) 56 1,108 56 1,065	Unit:RMBthousand For the year ended 31 December 2017 (audited) 2018 (audited) 56 1,108 56 1,065
	For the year ended 31 December
	2017 (audited)	2018 (audited)
Net Profit (before tax and extraordinary items)	56	1,108
Net Profit (after tax and extraordinary items)	56	1,065

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V. Definitions

In this announcement, unless the context requires otherwise, the following terms have the meanings set out below:

out below:
"ALYK"	ALYK (H.K.) Limited, a company with limited liability incorporated under the laws of Hong Kong in 2008 and a wholly owned subsidiary of Yankuang Group
"Asset Evaluation Report"	the Asset Evaluation Report of the Total Equity Value of Shareholders of Yancoal International (Singapore) in relation to the Proposed Equity Transfer by Yancoal Internationl (Tianxing Pingbao [2020] No. 0149) issued by Tianjian Xingye based on asset-based approach; and the Asset Evaluation Report of the Total Equity Value of Shareholders of Yancoal International Trading in relation to the Proposed Equity Transfer by Yancoal Internationl (Tianxing Pingbao [2020] No. 0150) issued by Tianjian Xingye based on asset-based approach
"Board"	the board of Directors of the Company
"Company" or "Yanzhou Coal"	兗州煤業股份有限公司, Yanzhou Coal Mining Company Limited, a joint stock limited company incorporated under the laws of the PRC in 1997, and the H shares and A shares of which are listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange, respectively
"connected person"	has the meaning ascribed to it under the Hong Kong Listing Rules
"Director(s)"	the director(s) of the Company
"Equity Interest Transfer Agreements"	the two agreements entered into between Yancoal Internationl and ALYK on 27 March 2020, pursuant to which, Yancoal International agreed to sell and ALYK agreed to purchase 100% equity interests of Yancoal International Trading and Yancoal International (Singapore) respectively
"Evaluation Benchmark Day"	31 July 2019, being the evaluation benchmark day adopted by the Asset Evaluation Report
"Group"	the Company and its subsidiaries
"Hong Kong Listing Rules"	the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
"Hong Kong Stock Exchange"	The Stock Exchange of Hong Kong Limited
"PRC"	the People's Republic of China
"RMB"	Renminbi, the lawful currency of the PRC

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"Settlement Date"	five business days after the Equity Interest Transfer Agreements come into effect or any other date as agreed by both parties in writing
"subsidiary"	has the meaning ascribed to it under the Hong Kong Listing Rules
"Tianjian Xingye"	Beijing Tianjian Xingye Asset Evaluation Company Limited* (北京天 健兴业资产评估有限公司), an independent qualified evaluation institute in the PRC
"Trading Subsidiaries"	Yancoal International Trading Agreement and Yancoal International (Singapore)
"Yancoal International"	Yancoal International (Holding) Company Limited, a company with limited liability incorporated under the laws of Hong Kong in 2011 and a wholly-owned subsidiary of the Company
"Yancoal International Trading"	Yancoal International Trading Co., Limited, a company with limited liability incorporated under the laws of Hong Kong in 2011 and a wholly-owned subsidiary of Yancoal International
Yancoal International (Singapore)	Yancoal International (Singapore) Pte. Ltd., a company with limited liability incorporated under the laws of Singapore in 2016 and a wholly-owned subsidiary of Yancoal International
"Yankuang Group"	Yankuang Group Company Limited* (兗礦集團有限公司), a limited liability company reformed and incorporated under the laws of the PRC in 1996, the controlling shareholder of the Company holding directly and indirectly approximately 53.79% of the total issued share capital of the Company as at the date of this announcement
"%"	per cent

By order of the Board Yanzhou Coal Mining Company Limited Li Xiyong Chairman

Zoucheng, Shandong Province, the PRC 27 March 2020

As at the date of this announcement, the directors of the Company are Mr. Li Xiyong, Mr. Li Wei, Mr. Wu Xiangqian, Mr. Liu Jian, Mr. Guo Dechun, Mr. Zhao Qingchun and Mr. Guo Jun, and the independent non-executive directors of the Company are Mr. Kong Xiangguo, Mr. Cai Chang, Mr. Poon Chiu Kwok and Mr. Qi Anbang.

* For identification purpose only

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