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 limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1065) DISCLOSEABLE TRANSACTION A PPP PROJECT FOR SEWAGE TREATMENT IN JIESHOU CITY (2nd Batch) References are made to the overseas regulatory announcement of the Company dated 2 February 2018 in relation to the PPP Project (1st Batch) and the overseas regulatory announcement of the Company dated 30 January 2019 in relation to the bid winning of the PPP Project. On 30 January 2019, the Board considered and approved the implementation of the PPP Project for Sewage Treatment in Jieshou City (2nd Batch), pursuant to which Jieshou Company proposes to enter into a project agreement with Jieshou Development Bureau to implement the PPP Project. The total investment amount for the PPP Project is expected to be approximately RMB487,248,600. As it is expected that the Project Agreement will be entered into within a 12-month period after the date of the Project (1st Batch) Agreement, pursuant to Rule 14.22 of the Listing Rules, the transactions contemplated under the Project Agreement shall be aggregated together with the transactions contemplated under the Project (1st Batch) Agreement. As one or more of the applicable percentage ratios (after aggregation) are more than 5% but less than 25%, the transaction contemplated under the Project Agreement constitutes a discloseable transaction of the Company under the Listing Rules. Accordingly, such transaction is subject to the reporting and announcement requirements only but exempt from the shareholders’ approval requirement under Chapter 14 of the Listing Rules. —1— INTRODUCTION References are made to the overseas regulatory announcement of the Company dated 2 February 2018 in relation to the PPP Project (1st Batch) and the overseas regulatory announcement of the Company dated 30 January 2019 in relation to the bid winning of the PPP Project. On 30 January 2019, the Board considered and approved the implementation of the PPP Project for Sewage Treatment in Jieshou City (2nd Batch), pursuant to which Jieshou Company proposes to enter into a project agreement with Jieshou Development Bureau to implement the PPP Project. A summary of the principal terms of the Project Agreement is set out below. PROJECT AGREEMENT (1) Parties (a) Jieshou Company; and (b) Jieshou Development Bureau. (2) Principal Terms According to the provisions of the Project Agreement, Jieshou Development Bureau agreed to grant the concession rights for the PPP Project to Jieshou Company, including financing, design, construction, operation and maintenance of the township sewage treatment plants and supporting pipeline network in Jieshou City, the sewage treatment plant and supporting pipeline network for Jinzhai Employment and Venture Parks in Jieshou City, and the sewage outlet regulation project in Jieshou City. The total investment amount of the PPP Project is expected to be approximately RMB487,248,600, of which RMB146,182,200 will be used as the funding of the project and financed by additional registered capital of Jieshou Company; The remaining construction funds will be sought by Jieshou Company through bank financing etc. With respect to the funding of the project, the Company intends to increase its capital contribution to Fuyang Company by RMB146,182,200, which will then be used to increase the capital contribution of Fuyang Company to Jieshou Company for the investment in the PPP Project; Fuyang Company shall complete the contribution of RMB146,182,200 to Jieshou Company within 180 days after entering into the Project Agreement. —2— (3) Information on the PPP Project As provided in the Project Agreement, the PPP Project refers to the PPP project for sewage treatment in Jieshou City (2nd Batch) implemented by Jieshou Company in cooperation with Jieshou Development Bureau, which consists of three sub-projects, i.e. the new township sewage treatment plants and supporting pipeline network project, the new sewage treatment plants and supporting pipeline network for Jinzhai Employment and Venture Park project, and the new sewage outlet regulation project. The new township sewage treatment plants and supporting pipeline network project include 11 sewage treatment plants and 4 integrated lift stations in 15 townships of Jieshou City. The short term capacity of the sewage treatment plant is 9,100 tons/day, which can be lifted to 15,500 tons/day in the future, with a total length of the supporting pipeline of 161.87 kilometers. With respect to the new sewage treatment plants and supporting pipeline network for Jinzhai Employment and Venture Park project, the short term capacity of the sewage treatment plant is 7,500 tons/day, which can be lifted to 15,000 tons/day in the future, with a total length of the supporting pipeline of 4.03 kilometers. The new sewage outlet renovation project in Jieshou City comprises seven sewage outlets, i.e. 5 sewage outlets on the north bank, and 2 sewage outlets on the south bank of Yinghe River, with a total length of supporting pipeline of about 4.096 kilometers. (4) Concession Rights The concession period of the PPP Project will be 30 years commencing from the effective date of the Project Agreement, including approximately 1 year for construction and 29 years for operation. Jieshou Company is responsible for investing, constructing and operating the PPP Project. During the concession period, Jieshou Company receives the sewage treatment service fees, sewage pipe network service fees and sewage service fees from the government. After expiration of the concession period, Jieshou Company shall transfer the facilities of the PPP Project in normal operating conditions to Jieshou Development Bureau or an entity it designated at nil consideration according to the provisions of the Project Agreement. —3— (5) Letter of Guarantee (a) Letter of Performance Guarantee Jieshou Company shall provide a Letter of Performance Guarantee in the amount of RMB35,000,000 to Jieshou Development Bureau when entering into the Project Agreement to secure the due performance of the obligations of Jieshou Company under the Project Agreement. The Letter of Performance Guarantee will be discharged within 5 days after the delivery of the Letter of Transfer Guarantee by Jieshou Company. (b) Letter of Transfer Guarantee Jieshou Company shall provide a Letter of Transfer Guarantee in the amount equivalent to the total amount of government payment of services fees under the Project Agreement for the six months prior to the delivery of the Letter of Transfer Guarantee to Jieshou Development Bureau before the commencement of the final operation year within the project operation period. The Letter of Transfer Guarantee will be discharged within 5 days after the expiration of the warranty period of the PPP Project (ie. 12 months from the delivery of facilities of PPP Project). INFORMATION ON THE COMPANY, FUYANG COMPANY, JIESHOU COMPANY AND JIESHOU DEVELOPMENT BUREAU The Company is principally engaged in 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. Fuyang Company is a wholly-owned subsidiary of the Company. It is mainly engaged in, including but not limited to, the development, construction, operation and management of municipal sewage treatment plants, tap water plants and ancillary facilities and solid waste treatment facilities; research and development and promotion of environmental protection technology; project consulting services for water treatment facilities, environmental works, municipal works, highway works and transportation works, etc. —4— Jieshou Company is a wholly-owned subsidiary of Fuyang Company. It is mainly engaged in, including but not limited to, investment, construction, operation, management, technical consultation and auxiliary services of treatment facilities of sewage water, tap water and other types of water; development and operation of environmental protection technology and products, etc. Jieshou Development Bureau is the institution authorized by the People’s Government of Jieshou for implementing the PPP Project. It is mainly responsible for urban construction and management of, including but not limited to, municipal public facilities such as urban roads, sewage treatment, garbage treatment and drainage. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Jieshou Development Bureau and its ultimate beneficial owners are third parties independent of the Company and its connected persons. REASONS FOR ENTERING INTO THE PROJECT AGREEMENT The PPP Project will help the Company expand the market share of its sewage treatment business and increase the revenue and profitability of the Company.