Acquisition of 100% Equity Interest in Gaoyou Compro

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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.

(A joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1065)

DISCLOSEABLE TRANSACTIONS - (1) ACQUISITION OF 100% EQUITY INTEREST IN GAOYOU COMPRO ENVIRONMENTAL RESOURCES COMPANY LIMITED; AND (2) ACQUISITION OF 100% EQUITY INTEREST IN JIANGSU YONGHUI RESOURCES UTILIZATION COMPANY LIMITED

THE ACQUISITIONS

The Board is pleased to announce that on 24 December 2020, the Board considered and approved the resolution in respect of the proposed signing of the Equity Transfer Agreement I by the Company with the Transferors of Target Company I, pursuant to which the Company has conditionally agreed to acquire and the Transferors of Target Company I have conditionally agreed to sell 100% equity interest in Target Company I at a consideration of RMB382,910,000 (equivalent to approximately HK$451,833,800).

On the same date, the Board considered and approved the resolution in respect of the proposed signing of the Equity Transfer Agreement II by the Company with the Transferors of Target Company II, pursuant to which the Company has conditionally agreed to acquire and the Transferors of Target Company II have conditionally agreed to sell 100% equity interest in Target Company II at a consideration of RMB397,090,000 (equivalent to approximately HK$468,566,200).

The Acquisitions are not inter-conditional with each other pursuant to the Equity Transfer Agreements.

Upon Completion, the Target Companies will become direct wholly-owned subsidiaries of the Company and the financial results of the Target Companies will be consolidated into the financial statements of the Group.

1 LISTING RULES IMPLICATIONS

As the discounted cash flow method of the income approach was applied in the Valuation Report I and Valuation Report II, the calculations of the value of the entire equity interest in the Target Companies as set out in the Valuation Report I and Valuation Report II are regarded as profit forecast under Rule 14.61 of the Listing Rules. Further announcement will be made by the Company within 15 business days after publication of this announcement in compliance with Rule 14.60A and Rule 14.62 of the Listing Rules.

Pursuant to Rule 14.22 and Rule 14.23 of the Listing Rules, the Acquisitions shall be aggregated as the Equity Transfer Agreements are entered into by the Company with, among others, the same parties, i.e. Bosideng and Gaoyou City Minjing Knitting & Garment. As one or more of the applicable percentage ratios (after aggregation) in respect of the Acquisitions exceed 5% but are all less than 25%, the Acquisitions constitute discloseable transactions of the Company under Chapter 14 of the Listing Rules. Accordingly, the Acquisitions are only subject to the reporting and announcement requirements but are exempt from the Shareholders’ approval requirement under Chapter 14 of the Listing Rules.

Completion is subject to the fulfillment of the terms and conditions precedent set out under the Equity Transfer Agreements and the Acquisitions may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company.

INTRODUCTION

On the same date, the Board considered and approved the resolution in respect of the proposed signing of the Equity Transfer Agreement II by the Company with the Transferors of Target Company II, pursuant to which the Company has conditionally agreed to acquire and the Transferors of Target Company II has conditionally agreed to sell 100% equity interest in Target Company II at a consideration of RMB397,090,000 (equivalent to approximately HK$468,566,200).

2 EQUITY TRANSFER AGREEMENTS

Principal terms of the Acquisitions under the Equity Transfer Agreements are as follows:

(1) EQUITY TRANSFER AGREEMENT I

Parties

(i) Bosideng (as the transferor I);

(ii) Jiangsu Suyong International Trade (as the transferor II);

(iii) Suzhou Kangbo Circuit Technology (as the transferor III);

(iv) Gaoyou City Minjing Knitting & Garment (as the transferor IV);

(v) Suzhou Industrial Park Xinkai Investment Consulting (as the transferor V);

(vi) Gu Jieping (as the transferor VI); and

(vii) the Company (as the transferee).

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, the Transferors of Target Company I and their respective ultimate beneficial owners are third parties independent of the Company and its Connected Persons.

Subject of transfer

The Transferors of Target Company I agreed to sell and the Company agreed to acquire 100% equity interest in the Target Company I, which comprises:

(i) 15% equity interest in Target Company I held by Bosideng;

(ii) 34% equity interest in Target Company I held by Jiangsu Suyong International Trade;

(iii) 6% equity interest in Target Company I held by Suzhou Kangbo Circuit Technology;

(iv) 25% equity interest in Target Company I held by Gaoyou City Minjing Knitting & Garment;

(v) 15% equity interest in Target Company I held by Suzhou Industrial Park Xinkai Investment Consulting; and

(vi) 5% equity interest in Target Company I held by Gu Jieping.

3 Consideration and payment method

Base consideration I

The base consideration of the transfer of the entire equity interest in Target Company I is RMB382,910,000 (equivalent to approximately HK$451,833,800) (the “Base Consideration I”).

Payment method

The Company intends to acquire the entire equity interest in Target Company I in cash by instalments, which will be funded by the Company’s internal funds and merger and acquisition loans.

First instalment: Within 15 working days after the signing of the Equity Transfer Agreement I, the Company shall pay 50% of the Base Consideration I to the jointly designated receiving accounts of the Transferors of Target Company I;

Final instalment: Upon payment of the aforesaid first instalment, the Company will engage an audit firm recognized by each party of the Equity Transfer Agreement I to conduct a supplemental audit on Target Company I by taking the Completion Date I as the benchmark date to confirm the book balance of construction payables, the book balance of other payables and the balance of non-operating liabilities (including bank loans) of Target Company I, and calculate the final consideration payable by the Company after deducting the above three balances on the basis of the Base Consideration I, and confirm the amount of the final instalment.

The aforesaid final instalment shall be made by the Company within 2 months after the completion of the registration of the change of the Target Company I Equity Interest.

Basis of consideration

The consideration of the Target Company I was agreed after arm’s length negotiations between the Transferors of Target Company I and the Company on normal commercial terms with reference to, among others, (i) the business development opportunities and prospects of Target Company I; (ii) the asset valuation report (the “Valuation Report I”) dated 18 November 2020 prepared by Jiangsu China Enterprise Appraisals Zhongtian Asset Co., Ltd.* (江蘇中企華中天資產評估有限公司), an independent valuer (the “Independent Valuer”), which shows that the value of the entire equity interest in Target Company I is RMB405,000,000 (equivalent to approximately HK$477,900,000) based on the income approach; and (iii) the factors set out in the paragraph headed “REASONS FOR AND BENEFITS OF THE ACQUISITIONS” below.

4 Conditions precedent to the Completion I

Completion I is subject to the fulfillment of the following conditions precedent set out in the Equity Transfer Agreement I. The Acquisitions are not inter-conditional with each other pursuant to the Equity Transfer Agreements.

The conditions precedent to the Completion I undertaken by the Transferors of Target Company I are:

(i) all authorizations, permits or approvals required to be obtained for the signing and performance of the Equity Transfer Agreement I have been obtained by the Transferors of Target Company I, including but not limited to the authorization of all internal authorities and the approvals of all approving authorities as required by the articles of association of the Transferors of Target Company I currently in force;

(ii) the shareholders’ meeting and all internal authorities of Target Company I have approved the equity transfer under the Equity Transfer Agreement I and each shareholder of Target Company I has waived its pre-emptive rights;

(iii) the Transferors of Target Company I and Target Company I have substantially performed and complied with all agreements, undertakings, obligations and conditions contained in the Equity Transfer Agreement I that are required to be performed or complied with at Completion I;

(iv) there does not exist any on-going litigation, judicial proceedings, administrative penalties or other administrative orders or material adverse changes of the Transferors of Target Company I and Target Company I that would prohibit or restrict the equity transfer under the Equity Transfer Agreement I;

(v) Target Company I does not have any undisclosed assets and liabilities (including contingent liabilities), and guarantees the truthfulness and accuracy of the financial statements of Target Company I as at the financial benchmark date;

(vi) the Transferors of Target Company I have paid up the entire registered capital of Target Company I and completed the industrial and commercial registration, without any defects in the industrial and commercial registration or filing;

(vii) the Transferors of Target Company I have signed all the letters of undertaking set out in the appendix to the Equity Transfer Agreement I;

(viii) Target Company I has obtained the “Hazardous Waste Operation License” for 2020;

(ix) Target Company I is under normal operation and there is no material adverse change in the business, financial position and operating prospects of Target Company I.

5 The conditions precedent to the Completion I undertaken by the Company (as the transferee of Target Company I) are:

(i) the state-owned assets supervisory and administrative department of the Company has filed the appraisal results of the assets involved in the equity transfer pursuant to the Equity Transfer Agreement I;

(ii) the Company has obtained all the authorizations, permits or approvals required for the signing and performance of the Equity Transfer Agreement I, including but not limited to the authorization of all internal authorities and the approvals of all approval authorities as required by the articles of association of the Company currently in force;

(iii) the Company has substantially performed and complied with all the agreements, undertakings, obligations and conditions contained in the Equity Transfer Agreement I that are required to be performed or complied with at Completion I.

Completion I

The parties to the Equity Transfer Agreement I shall complete the industrial and commercial registration of the equity transfer within 1 calendar month after the signing of the Equity Transfer Agreement I. The Completion Date I shall be the date of completion of the industrial and commercial registration of the equity transfer under the Equity Transfer Agreement I.

Bank guarantee letter or letter of undertaking

With respect to the contingent liabilities of Target Company I incurred prior to the equity transfer, including but not limited to the actual or potential arrears, penalties, external guarantees, outstanding land premium, etc., before the final instalment of the equity transfer, Bosideng shall provide a bank guarantee letter to the Company in the amount of RMB10,000,000 with a term of two years or Bosideng shall issue a letter of undertaking bearing joint liabilities.

Transition Period I arrangements

During the Transition Period I, the Transferors of Target Company I have undertaken, among others, that:

(i) they shall perform their management obligations in good faith, and in accordance with the rules and regulations and past practices of Target Company I, so as to ensure its normal business and operation. They shall maintain the material and existing relationship of Target Company I with customers, creditors, business partners and other persons with business contacts, so that the good reputation and business continuity of Target Company I will not be impaired at the Completion Date I; and

(ii) the Target Company I shall perform the contracts necessary for the daily operation of Target Company I which have been entered into before the benchmark date or after the benchmark date and have been approved by the Company, provided that it is in the interest of Target Company I. Except for normal operation, the Transferors of Target Company I shall undertake and guarantee that the Target Company I shall not create additional liabilities or increase any other obligations, liabilities or encumbrances.

6 From the date of signing of the Equity Transfer Agreement I, the Company may send certain management personnel to Target Company I to understand the daily operation of Target Company I, inspect and have the right to copy the documents of Target Company I, and the Transferors of Target Company I shall actively cooperate in this regard.

Termination

If any of the following circumstances occurs, any party to the Equity Transfer Agreement I may terminate the Equity Transfer Agreement I by written notice to the other party:

(i) the breach by one party causes the purpose of the Equity Transfer Agreement I failing to be fulfilled and the other party has the right to unilaterally terminate the Equity Transfer Agreement I;

(ii) one party is unable to perform the contract due to bankruptcy, dissolution, cancellation by law or other reasons which causes the purpose of the Equity Transfer Agreement I failing to be fulfilled, and the other party has the right to unilaterally terminate the Equity Transfer Agreement I;

(iii) any party to the Equity Transfer Agreement I may terminate the Equity Transfer Agreement I should the purpose of the Equity Transfer Agreement I fail to be fulfilled due to force majeure; and

(iv) other circumstances of termination as agreed in the Equity Transfer Agreement I.

Upon termination of the Equity Transfer Agreement I, the obligations yet to be performed shall be ceased, and those already performed shall be reinstated to the original position. The non-defaulting party may demand the defaulting party to be liable for the breach and compensation according to the performance conditions.

(2) EQUITY TRANSFER AGREEMENT II

Parties

(i) Bosideng (as the transferor I);

(ii) Gaoyou City Minjing Knitting & Garment (as the transferor II); and

(iii) the Company (as the transferee).

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, the Transferors of Target Company II and their respective ultimate beneficial owners are third parties independent of the Company and its Connected Persons.

7 Subject of transfer

The Transferors of Target Company II agreed to sell and the Company agreed to acquire 100% equity interest in the Target Company II, which comprises:

(i) 70% equity interest in Target Company II held by Bosideng; and

(ii) 30% equity interest in Target Company II held by Gaoyou City Minjing Knitting & Garment.

Consideration and payment method

Base Consideration II

The base consideration for the transfer of the entire equity interest in Target Company II is RMB397,090,000 (equivalent to approximately HK$468,566,200) (the “Base Consideration II”).

Payment method

The Company intends to acquire the entire equity interest in Target Company II in cash by instalments, which will be funded by the Company’s internal funds and the merger and acquisition loans.

First instalment: Within 15 working days after the signing of the Equity Transfer Agreement II, the Company shall pay 50% of the Base Consideration II to the jointly designated receiving accounts of the Transferors of Target Company II;

Final instalment: Upon payment of the aforesaid first instalment, the Company will engage an audit firm recognized by the parties to the Equity Transfer Agreement II to conduct a supplemental audit on Target Company II by taking the Completion Date II as the benchmark date, to confirm the book balance of construction payables, the book balance of other payables and the balance of non-operating debts (including bank loans) of Target Company II, and calculate the final consideration payable by the Company after deducting the above three balances on the basis of the Base Consideration II, and confirm the amount of final instalment.

The aforesaid final instalment shall be made by the Company within 2 months after the completion of the registration of the change of the Target Company II Equity Interest.

Basis of consideration

The consideration of Target Company II was agreed after arm’s length negotiations between the Transferors of Target Company II and the Company on normal commercial terms with reference to, among others, (i) the business development opportunities and prospects of Target Company II; (ii) the asset valuation report (the “Valuation Report II”) dated 18 November 2020 prepared by the Independent Valuer, which shows that the value of the entire equity interest in Target Company II is RMB420,000,000 (equivalent to approximately HK$495,600,000) based on the income approach; and (iii) the factors set out in the paragraph headed “REASONS FOR AND BENEFITS OF THE ACQUISITIONS” below. 8 Conditions precedent to the Completion II

Completion II is subject to the fulfilment of the following conditions precedent set out in the Equity Transfer Agreement II. The Acquisitions are not inter-conditional with each other pursuant to the Equity Transfer Agreements.

The conditions precedent to the Completion II undertaken by the Transferors of Target Company II are:

(i) all authorizations, permits or approvals required to be obtained for the signing and performance of the Equity Transfer Agreement II have been obtained by the Transferors of Target Company II, including but not limited to the authorization of all internal authorities and the approvals of all approving authorities as required by the articles of association of the Transferors of Target Company II currently in force;

(ii) the shareholders’ meeting and all internal authorities of Target Company II have approved the equity transfer under the Equity Transfer Agreement II and each shareholder of Target Company II has waived its pre-emptive rights;

(iii) the Transferors of Target Company II and Target Company II have substantially performed and complied with all agreements, undertakings, obligations and conditions contained in the Equity Transfer Agreement II that are required to be performed or complied with at the Completion II;

(iv) there does not exist any on-going litigation, judicial proceedings, administrative penalties or other administrative orders or material adverse changes of the Transferors of Target Company II and Target Company II that would prohibit or restrict the equity transfer under the Equity Transfer Agreement II;

(v) Target Company II does not have any undisclosed assets and liabilities (including contingent liabilities), and guarantees the truthfulness and accuracy of the financial statements of Target Company II as at the financial benchmark date;

(vi) the Transferors of Target Company II have paid up the entire registered capital of Target Company II and completed the industrial and commercial registration, without any defects in the industrial and commercial registration or filing;

(vii) the Transferors of Target Company II have signed all the letters of undertaking set out in the appendix to the Equity Transfer Agreement II;

(viii) Target Company II has obtained the “Hazardous Waste Operation License” for 2020;

(ix) Target Company II is under normal operation and there is no material adverse change in the business, financial position and operating prospects of Target Company II.

9 The conditions precedent to the Completion II undertaken by the Company (as the transferee of Target Company II) are:

(ii) the Company has obtained all the authorizations, permits or approvals required for the signing and performance of the Equity Transfer Agreement II, including but not limited to the authorization of all internal authorities and the approvals of all approval authorities as required by the articles of association of the Company currently in force;

(iii) the Company has substantially performed and complied with all the agreements, undertakings, obligations and conditions contained in the Equity Transfer Agreement II that are required to be performed or complied with at the Completion II.

Completion II

The parties to the Equity Transfer Agreement II shall complete the industrial and commercial registration of the equity transfer within 1 calendar month after the signing of the Equity Transfer Agreement II. The Completion Date II shall be the date of completion of the industrial and commercial registration of the equity transfer under the Equity Transfer Agreement II.

Bank guarantee letter or letter of undertaking

With respect to the contingent liabilities of Target Company II incurred prior to the equity transfer, including but not limited to the actual or potential arrears, penalties, external guarantees, outstanding land premium, etc., before the final instalment of the equity transfer, Bosideng shall provide a bank guarantee letter to the Company in the amount of RMB10,000,000 with a term of two years; or Bosideng shall issue a letter of undertaking bearing joint liabilities.

Transition Period II arrangements

During the Transition Period II, the Transferors of Target Company II have undertaken, among others, that:

(i) they shall perform their management obligations in good faith, and in accordance with the rules and regulations and past practices of Target Company II, so as to ensure its normal business and operation. They shall maintain the material and existing relationship of Target Company II with customers, creditors, business partners and other persons with business contacts, so that the good reputation and business continuity of Target Company II will not be impaired at the Completion Date II; and

(ii) the Target Company II shall perform the contracts necessary for the daily operation of Target Company II which have been entered into before the benchmark date or after the benchmark date and have been approved by the Company, provided that it is in the interest of Target Company II. Except for normal operation, the Transferors of Target Company II shall undertake and guarantee that the Target Company II shall not create additional liabilities or increase any other obligations, liabilities or encumbrances.

10 From the date of signing of the Equity Transfer Agreement II, the Company may send certain management personnel to Target Company II to understand the daily operation of Target Company II, inspect and have the right to copy the documents of Target Company II, and the Transferors of Target Company II shall actively cooperate in this regard.

Termination

If any of the following circumstances occurs, any party to the Equity Transfer Agreement II may terminate the Equity Transfer Agreement II by written notice to the other party:

(i) the breach by one party causes the purpose of the Equity Transfer Agreement II failing to be fulfilled and the other party has the right to unilaterally terminate the Equity Transfer Agreement II;

(ii) one party is unable to perform the contract due to bankruptcy, dissolution, cancellation by law or other reasons which causes the purpose of the Equity Transfer Agreement II failing to be fulfilled, and the other party has the right to unilaterally terminate the Equity Transfer Agreement II;

(iii) any party to the Equity Transfer Agreement II may terminate the Equity Transfer Agreement II should the purpose of the Equity Transfer Agreement II fail to be fulfilled due to force majeure; and

(iv) other circumstances of termination as agreed in the Equity Transfer Agreement II.

Upon termination of the Equity Transfer Agreement II, the obligations yet to be performed shall be ceased and those already performed shall be reinstated to the original position. The non-defaulting party may demand the defaulting party to be liable for the breach and compensation according to the performance conditions.

INFORMATION ON THE PARTIES

The Company

The Company is principally engaged in the investment, construction, design, management, operation, technical consultation and auxiliary services of treatment facilities of sewage water, tap water and other types of water; design, construction, management, building and operation management of municipal infrastructures; license operation, technical consultation and auxiliary services of Southeastern Half Ring Urban Road of the Middle Ring of Tianjin City; development and operation of environmental protection technology and products; leasing of self-owned properties, etc.

Information on the Target Companies

Target Company I is a company established under the laws of the PRC on 31 March 2016 with limited liability, its registered capital is RMB100,000,000 and its main business scope includes industrial solid waste incineration treatment, general waste recycling and integrated utilization. Its service users cover areas such as chemical engineering, pharmaceutical, mechanical, printing and dyeing, electrical, etc.

11 Target Company II is a company established under the laws of the PRC on 9 January 2018 with limited liability, its registered capital is RMB50,000,000 and its main business scope includes industrial solid waste incineration treatment, general waste recycling and integrated utilization. Its service users cover areas such as chemical engineering, pharmaceutical, mechanical, printing and dyeing, electrical, etc.

Financial information of the Target Companies

Set out below is the audited financial information of Target Company I for the two financial years ended 31 December 2018 and 31 December 2019 prepared in accordance with the China Accounting Standards for Business Enterprises:

For the year ended 31 December/ As at 31 December 2018 2019 Audited Audited (RMB) (RMB)

Net profit before tax 52,558,174.11 64,183,998.75 Net profit after tax 52,558,174.11 64,183,998.75 Net assets 37,748,506.19 60,132,504.94

Set out below is the audited financial information of Target Company II for the financial year ended 31 December 2019 and the unaudited financial information of Target Company II for the financial year ended 31 December 2018 prepared in accordance with the China Accounting Standards for Business Enterprises:

For the year ended 31 December/ As at 31 December 2018 2019 Unaudited Audited (RMB) (RMB)

Net profit before tax N/A (Note 1) 6,744,225.47 Net profit after tax N/A (Note 1) 6,744,225.47 Net assets 41,650,000 56,744,225.47

The audited net assets of Target Company I and Target Company II as at 30 April 2020 prepared in accordance with the China Accounting Standards for Business Enterprises were RMB56,659,390.67 and RMB63,886,732.3, respectively.

Note 1: Target Company II was mainly in the construction period in 2018 and had not commenced any economic business. As such, Target Company II did not have any operating revenue and profit in 2018. The construction of the projects by the Target Company II was completed in 2019 and it generated operating revenue and profit in 2019.

12 Information on the Transferors

Bosideng is a joint stock company established in the PRC with limited liability and is principally engaged in manufacturing and sales of down clothing, investment in environmental protection business, real estate development, etc. As at the date of this announcement, the ultimate beneficial owner of Bosideng is Gao Dekang, who is an independent individual.

Jiangsu Suyong International Trade is a company established in the PRC with limited liability and is principally engaged in the manufacturing and sales of clothing. As at the date of this announcement, the ultimate beneficial owners of Jiangsu Suyong International Trade are Gao Xiaodong and Ai Yan, who are the independent individuals and ultimately and beneficially hold 90% and 10% equity interest in Jiangsu Suyong International Trade, respectively.

Suzhou Kangbo Circuit Technology is a company established in the PRC with limited liability and its principal business includes research and development, production, processing and sales of single-sided, double-sided, high-density and multi-layered printed circuit boards (excluding rubber products). As at the date of this announcement, the ultimate beneficial owner of Suzhou Kangbo Circuit Technology is Gao Dekang, who is an independent individual.

Gaoyou City Minjing Knitting & Garment is a company established in the PRC with limited liability and its principal business includes the production and sales of knitted clothing. As at the date of this announcement, the ultimate beneficial owners of Gaoyou City Minjing Knitting & Garment are He Fei and Zhang Jing, who are the independent individuals and ultimately and beneficially hold 51% and 49% equity interest in Gaoyou City Minjing Knitting & Garment, respectively.

Suzhou Industrial Park Xinkai Investment Consulting is a limited partnership and is principally engaged in investment consulting and equity investment. As at the date of this announcement, the ultimate beneficial owners of Suzhou Industrial Park Xinkai Investment Consulting are Huang Ying, Han Zhengchang and Jiang Wei, who are the independent individuals and ultimately and beneficially hold 40%, 30% and 30% equity interest in Suzhou Industrial Park Xinkai Investment Consulting, respectively.

Gu Jieping is an independent individual with PRC nationality.

REASONS FOR AND BENEFITS OF THE ACQUISITIONS

Target Company I and Target Company II are mainly engaged in industrial solid waste incineration treatment business, which belongs to the solid waste business segment of “sludge disposal and hazardous waste treatment” of the Company and meets the requirements of the “13th Five-Year” development plan and strategy of the Company, and is a strategic new business of development focus.

Target Company I and Target Company II have certain competitive advantages in terms of scale, technology and geographical location among similar enterprises in Jiangsu Province. Through the merger and acquisition of the subject project, the Company can realize the expansion of its hazardous waste business in Jiangsu region, which is in line with the Company’s strategic development direction. At the same time, through the merger and acquisition of the project, it will create synergy with the Company’s hazardous waste projects in Shandong region and leverage the complementary business in different regions to gain more room for business development, thereby maintaining sound development momentum and market competitiveness.

13 The terms of the Equity Transfer Agreements were determined after arm’s length negotiations between the parties. In view of the above, the Directors (including the independent non-executive Directors) consider that the Equity Transfer Agreements are on normal commercial terms, fair and reasonable, and in the interests of the Company and the Shareholders a whole.

LISTING RULES IMPLICATIONS

DEFINITIONS

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

“Acquisitions” the Company’s acquisitions of (i) the entire equity interest in Target Company I from the Transferors of Target Company I pursuant to the Equity Transfer Agreement I; and (ii) the entire equity interest in Target Company II from the Transferors of Target Company II pursuant to the Equity Transfer Agreement II

“Audit/Valuation benchmark date for conducting audit and valuation work, i.e. 30 Benchmark Date” April 2020

“Board” the board of directors

“Bosideng” Bosideng Corporation Limited* (波司登股份有限公司), a joint stock company established in the PRC with limited liability

“Company” Tianjin Capital Environmental Protection Group Company Limited, a joint stock limited company established in the PRC, whose A Shares and H Shares are listed on the Shanghai Stock Exchange and the Stock Exchange, respectively

14 “Completion” Completion I and Completion II

“Completion Dates” the Completion Date I and the Completion Date II

“Completion Date I” the completion date of industrial and commercial registration of change of the equity transfer of the Target Company I

“Completion Date II” the completion date of industrial and commercial registration of change of the equity transfer of the Target Company II

“Completion I” the completion of acquisition of the Target Company I Equity Interest pursuant to the Equity Transfer Agreement I

“Completion II” the completion of acquisition of the Target Company II Equity Interest pursuant to the Equity Transfer Agreement II

“Connected Person(s)” has the same meaning as ascribed to it under the Listing Rules

“Director(s)” the director(s) of the Company (including independent non-executive Directors)

“Equity Transfer the Equity Transfer Agreement I and the Equity Transfer Agreement Agreements” II

“Equity Transfer the agreement which is intended to be entered into between the Agreement I” Transferors of Target Company I and the Company in relation to the acquisition of the Target Company I Equity Interest

“Equity Transfer the agreement which is intended to be entered into between the Agreement II” Transferors of Target Company II and the Company in relation to the acquisition of the Target Company II Equity Interest

“Gaoyou City Minjing Gaoyou City Minjing Knitting & Garment Co., Ltd.* (高郵市民靖 Knitting & Garment” 針織服飾有限公司), a company established in the PRC with limited liability

“Group” the Company and its subsidiaries

“Gu Jieping” Gu Jieping (顧介平), an independent individual with PRC nationality

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

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

“Jiangsu Suyong Jiangsu Suyong International Trade Co., Ltd.* (江蘇蘇甬國際貿易 International Trade” 有限公司), a company established in the PRC with limited liability

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

“percentage ratio(s)” has the same meaning as ascribed to it under the Listing Rules, as applicable to a transaction

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

“RMB” Renminbi, the lawful currency of the PRC

“Shareholder(s)” holder(s) of Shares

“Share(s)” the ordinary share(s) of nominal value of RMB1.00 each in the existing share capital of the Company

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Suzhou Industrial Suzhou Industrial Park Xinkai Investment Consulting Partnership Park Xinkai (Limited Partnership)* (蘇州工業園區新凱投資諮詢合夥企業（有限 Investment Consulting” 合夥)), a limited partnership established in the PRC

“Suzhou Kangbo Suzhou Kangbo Circuit Technology Co., Ltd.* (蘇州康博電路科技 Circuit Technology” 有限公司), a company established in the PRC with limited liability

“Target Companies” Target Company I and Target Company II

“Target Company I” Gaoyou Compro Environmental Resources Company Limited* (高郵康博環境資源有限公司), a company legally established and validly existing under the laws of the PRC with limited liability

“Target Company I the entire equity interest held in aggregate by Bosideng, Jiangsu Equity Interest” Suyong International Trade, Suzhou Kangbo Circuit Technology, Gaoyou City Minjing Knitting & Garment, Suzhou Industrial Park Xinkai Investment Consulting and Gu Jieping as at the date of this announcement

“Target Company II” Jiangsu Yonghui Resources Utilization Company Limited* (江蘇永輝資源利用有限公司), a company established and validly existing under the laws of the PRC with limited liability

“Target Company II the entire equity interest held in aggregate by Bosideng and Equity Interest” Gaoyou City Minjing Knitting & Garment as at the date of this announcement

“Transferors of Bosideng, Jiangsu Suyong International Trade, Suzhou Kangbo Target Company I” Circuit Technology, Gaoyou City Minjing Knitting & Garment, Suzhou Industrial Park Xinkai Investment Consulting and Gu Jieping

“Transferors of Bosideng and Gaoyou City Minjing Knitting & Garment Target Company II”

“Transition Period I” the period from the Audit/Valuation Benchmark Date to the Completion Date I

16 “Transition Period II” the period from the Audit/Valuation Benchmark Date to the Completion Date II

“%” per cent.

By order of the Board Liu Yujun Chairman

Tianjin, the PRC 24 December 2020

As at the date of the announcement, the Board comprises three executive Directors: Mr. Liu Yujun, Ms. Wang Jing and Mr. Niu Bo; two non-executive Directors: Mr. Gu Wenhui and Mr. Si Xiaolong; and three independent non-executive Directors: Mr. Di Xiaofeng, Mr. Guo Yongqing and Mr. Wang Xiangfei.

For the purpose of this announcement, the following exchange rate is used: RMB1.00 = HK$1.18.

* For identification purpose only