Discloseable Transaction in Relation to Acquisition of Land Use Rights

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(Incorporated in Cayman Islands with limited liability) (Stock code: 1129)

DISCLOSEABLE TRANSACTION IN RELATION TO ACQUISITION OF LAND USE RIGHTS

Reference is made to the announcements of the Company dated 29 April 2019, 17 May 2019 and 29 May 2019 in relation to the acquisition of a land use rights of the Land.

The Board is pleased to announce that following the entering into the Confirmation Letter with Yugan County Land Resources Trade Service Centre on 29 April 2019, in order to stipulated the terms in relation to the acquisition of the land use rights of the Land, the Purchaser entered into the Land Use Rights Grant Contract with Yugan County Natural Resources Bureau on 3 June 2019 (after trading hours) for the acquisition of the land use rights of the Land at a total consideration of RMB300.08 million (equivalent to approximately HK$351.09 million).

As one or more of the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the Land Acquisition exceeds 5% but is less than 25%, the Land Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the announcement requirement, but is exempt from the circular and Shareholders’ approval requirements, under the Listing Rules.

INTRODUCTION

Reference is made to the announcements of the Company dated 29 April 2019, 17 May 2019 and 29 May 2019 in relation to the acquisition of a land use rights of the Land.

* For identification purpose only

THE LAND USE RIGHTS GRANT CONTRACT

Date

3 June 2019

Parties: the Purchaser and Yugan County Natural Resources Bureau

Yugan County Natural Resources Bureau, a local PRC government authority which is in charge of, among others, the natural resources and land in Yugan County, Shangrao City, Jiangxi Province, the PRC and is also responsible for the sales of land use rights.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, these state-owned entities including, Yugan County Land Resources Trade Service Centre, Yugan County Natural Resources Bureau and their respective ultimate beneficial owner(s) are third parties independent of and not connected with the Company and its connected person(s).

Information relating to the Land

The Land is located at the East of Gai Zao Yu Ting Avenue, north of Century Avenue B18-02, Shanty Town, Yugan County, Shangrao City, Jiangxi Province*（江西省上饒市余干縣棚戶區改造玉亭大道以東，世紀大道以北 B18-02）with parcel No. DEI2019035. The Land has a total gross area of approximately 30,742 square meters with approximately 24,593 square meters to be of residential use and approximately 6,149 square meters to be of retail and commercial use. The terms of the land use rights of the Land for residential use is 70 years and retail and commercial use for 40 years, respectively.

Pursuant to the Land Use Rights Grant Contract, the handover of the Land shall take place on or before 31 July 2019.

Consideration and Payment Terms

The total consideration for the land use rights of the Land is RMB300.08 million (equivalent to approximately HK$351.09 million).

As at the date of this announcement, the Purchaser has paid RMB150.04 million by internal resources of the Group (equivalent to approximately HK$175.55 million) and remaining balance of the total consideration shall be payable on or before 3 April 2020.

As the payment of the total consideration for the land use rights of the Land will be settled by way of instalment payment, an interest will be charged to all remaining amounts unpaid after the first instalment at the rate pursuant to the PBOC borrowing rate on the date of the payment of the first instalment.

Upon the settlement of consideration of the Land in full, the Purchaser by way of provision of the Land Use Rights Grant Contract and all relevant payment evidence will be able to apply for the land use rights of the Land.

As the Land was acquired via online public auction, the price of the Land was determined by the result of the public auction which was subject to the relevant PRC laws and regulations.

The Group expects that it will finance the remaining payment for the Land Acquisition by the internal resources and banking facilities of the Group.

The Directors confirm that the consideration for the Land is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The development and utilization of the Land

The Land shall be utilized for the development of residential, retail and commercial properties and shall commence construction on or before 31 August 2019 and all development shall be completed by 31 August 2022. Should the commencement of construction is subject to delay, 1% of the consideration of the Land Acquisition shall be paid on a daily basis as penalty of such delay.

If the Land shall be idle for more than one year but below two years, the Land will be subject to land idle charge, if the Land remained idle for more than two years, the Yugan County Natural Resources Bureau shall have the right to reclaim the land use right of the Land.

Transfer, lease or pledge of the land use right

Subject to relevant terms and conditions of the Land Use Rights Grant Contract, the transfer, lease or pledge of the land use right shall be permitted upon settlement of the total consideration of the land use right of the Land. REASONS FOR THE LAND ACQUISITION AND THE ENTERING INTO THE LAND USE RIGHTS GRANT CONTRACT

The Group principally engages in (i) provision of water supply and sewage treatment services; (ii) construction of water supply and sewage treatment infrastructure; and (iii) investment and operation of new energy and renewable energy projects.

With a view to broadening the revenue base and improving the profitability of the Group, in 2018, the Group commenced development of a research and development center comprising of 6 blocks of research and development centers and a underground car parks in Nanjing, the PRC, of which part of the development will be leased out to other tenants as investment properties or sold as property development depending on the then property market condition of Nanjing. The Group has also been continued to consider other investment opportunities to further invest into property development markets in the PRC (including investment in property development companies).

The Purchaser is a company established with limited liability in the PRC and is an indirect wholly- owned subsidiary of the Company. The Purchaser is principally engaged in trading of construction materials, office supplies, mechanical appliances and electrical appliances.

As disclosed in the announcement of the Company dated 29 April 2019, the Purchaser entered into the Confirmation Letter with Yugan County Land Resources Trade Service Centre on 29 April 2019 (after trading hours) to confirm the acquisition of a land use rights of the Land, pursuant to the Confirmation Letter, the Group was required to enter into the Land Use Rights Grant Contract to govern the terms and condition of the Land Acquisition.

The Purchaser will transfer the Land to its wholly-owned subsidiary, a project company, upon execution of the Land Use Rights Grant Contract for carrying out the property development. In view that: (i) the Land has a high development potential as it is easily accessible by transportation; and facilities in its proximity are relatively comprehensive; (ii) the Land Acquisition shall provide the Group a good business opportunity in the property development industry in Jiangxi Province; and (iii) the Land Acquisition will expand the Group’s land reserve, enhancing its ability for sustainable development, in order to complete the Land Acquisition, the Directors consider that the entering into of the Land Use Rights Grant Contract and the Land Acquisition are in the ordinary and usual course of business of the Company and the terms of the Land Use Rights Grant Contract are on normal commercial terms which is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

DEFINITIONS

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

“Board” the board of Directors

“Company” China Water Industry Group Limited (stock code: 1129), a company incorporated in Cayman Islands with limited liability and the issued shares of which are listed on the Main Board of the Stock Exchange

“Confirmation Letter” the auction confirmation letter（國有建設用地使用權成交確認書）entered into between the Purchaser and the Yugan County Land Resources Trade Service Centre on 29 April 2019 as a result of successfully winning the bid for the land use rights of the Land

“connected person(s)” has the meaning ascribed to it under the Listing Rules

“Director(s)” director(s) of the Company

“Group” the Company and its subsidiaries

“HK$” Hong Kong dollar, the lawful currency of Hong Kong

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

“Land” a piece of land located at 江西省上饒市余干縣棚戶區改造玉亭大道以東，世紀大道以北B18-02 (East of Gai Zao Yu Ting Avenue, north of Century Avenue B18-02, Shanty Town, Yugan County, Shangrao City, Jiangxi Province*) (Parcel No. DEI2019035), with a total site area of approximately 30,742 square meters

“Land Acquisition” the acquisition of land use rights of the Land through public bidding process at the auction

“Land Use Rights Grant the State-owned Construction Land Use Rights Grant Contract Contract” （國有建設用地使用權出讓合同）entered into by the Purchaser and the Yugan County Natural Resources Bureau pursuant to the Confirmation Letter on 29 April 2019

“Independent Third Party” a third party independent of the Company and the connected persons (has the meaning ascribed thereto in the Listing Rules) of the Company and is not a connected person (has the meaning ascribed thereto in the Listing Rules) of the Company

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

“PRC” the People’s Republic of China, which for the purpose of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

“Purchaser” Yingtan Hongzhu Trading Co., Ltd.*（鷹潭市宏築貿易有限公司）, a company incorporated in the PRC, which is an indirect wholly-owned subsidiary of the Company

“PBOC” People’s Bank of China

“RMB” Renminbi, the lawful currency of the PRC

“Shareholders” Shareholders of the Company

“Shares” shares of the company

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Yugan County Land Yugan County Land Resources Bureau*（余干縣國土資源局） Resources Bureau”

“Yugan County Land Yugan County Land Resources Trade Service Centre*（余干縣國 Resources Trade Service 土資源交易中心） Centre”

“Yugan County Natural Yugan County Natural Resources Bureau*（余干縣自然資源局） Resources Bureau”

“%” or “per cent.” percentage or per centum

Unless otherwise defined, for the purpose of this announcement and for the purpose of illustration only, RMB amounts have been translated using the following rates: RMB1.00:HK$1.17. Such translations should not be construed as a representation that the amounts in question have been, could have been or could be converted at any particular rate or at all.

By Order of the Board China Water Industry Group Limited Mr. Lin Yue Hui Chairman and CEO

Hong Kong, 3 June 2019

As at the date of this announcement, the Board comprises Mr. Lin Yue Hui (Chairman and CEO), Mr. Liu Feng, Ms. Chu Yin Yin, Georgiana, Ms. Deng Xiao Ting, Mr. Zhong Wei Guang and Mr. Ho Chi Ho, all being executive Directors, and Mr. Wong Siu Keung, Joe, Mr. Guo Chao Tian and Ms. Qiu Na, all being independent non-executive Directors.

* for identification purpose only