The Board announced that the China Water Affairs Group Limited has entered into the Cooperation Agreement in relation to the strategic cooperation with Bozhou Water Company on direct drinking water projects in Bozhou city, Anhui Province. Pursuant to the Cooperation Agreement, the Company and Bozhou Water Company shall jointly invest in constructing pipeline direct drinking water supply system based on the existing water supply system in Bozhou city, Anhui Province. The projects are scheduled in phases with the aim of bringing high quality pipeline direct drinking water to basically the entire city covering households, work place, studying and other living places in five years.

It is expected that the pipeline direct drinking water system will cover a population of approximately 300,000 with a daily direct drinking water supply capacity of approximately 900 tonnes. The parties shall set up a joint working group to negotiate on the concrete terms of cooperation. It is expected that the projects will be carried out by a joint venture with Bozhou Water Company whose controlling shareholding will be held by the Group.

The Company considers that the prospects of pipeline direct drinking water business in China is huge and in line with the new concept of low-carbon green development. The Group currently has pipeline direct drinking water projects in Anhui. The Cooperation Agreement represents a further development of the Group's direct drinking water business in Anhui and will strengthen the synergy effect in the region and province.

To the best of the Directors' knowledge, information and belief, and after making all reasonable enquiries, Bozhou Water Company is an Independent Third Party.