Dynagreen Environmental Protection : ANNOUNCEMENT REGARDING THE PROVISION FOR IMPAIRMENT OF INTANGIBLE ASSETS

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綠 色 動 力 環 保 集 團 股 份 有 限 公 司

Dynagreen Environmental Protection Group Co., Ltd.*

(a joint stock limited liability company incorporated in the People's Republic of China)

（Stock Code: 1330）

ANNOUNCEMENT REGARDING THE PROVISION

FOR IMPAIRMENT OF INTANGIBLE ASSETS

This announcement is made pursuant to Rule 13.09(2) and 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

On 30 March 2021, Dynagreen Environmental Protection Group Co., Ltd.* (the "Company", together with its subsidiaries, the "Group") convened the 29th meeting of the third session of the board (the "Board") of directors (the "Directors"), at which the Proposal Regarding the Provision for Impairment of Intangible Assets was considered and approved. Details of the provision for impairment of intangible assets are announced as follows:

In order to objectively reflect the Company's financial position and operating results in 2020, in accordance with the relevant provision in the Accounting Standards for Business Enterprises, and based on the principle of prudence, the Group conducted an impairment test on relevant assets that have indications of impairment at the end of the year. After the test, the Group proposes to make provision for impairment of intangible assets in a total amount of RMB61,338,200 in 2020.

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1. INFORMATION ON PROVISION FOR IMPAIRMENT OF INTANGIBLE ASSETS
2. 1. Method, basis and standards of provision for impairment
      In accordance with the relevant provisions of the Accounting Standards for Business Enterprises No. 8 - Asset Impairment and the accounting policies implemented by the Company: where there is any indication of existence of asset impairment, the recoverable amount of the assets should be estimated. Recoverable amount should be determined as the higher of the net amount of the fair value of assets minus the expenses on disposal and the present value of the expected future cash flow of assets. Where the measurement results show the recoverable amount of an asset is lower than its book value, the book value of the assets shall be written down to the recoverable amount, and the amount written down shall be recognised as impairment loss of the assets included in profit or loss for that period and provision for assets impairment shall be made accordingly.

1. Details of provision for impairment
2. 1. Amount of provision
      At the end of 2020, the Company conducted an impairment test on the straw incineration power generation project in Ninghe District, Tianjin ("Ninghe Project") and the municipal waste-to-energy project in Jiamusi City, Heilongjiang ("Jiamusi Project"). The results showed that the recoverable amount of the Ninghe Project and the Jiamusi Project was lower than their book value, and it was required to make provision for impairment of intangible assets. According to the test, in 2020, provisions were made for impairment of intangible assets for Ninghe Project and Jiamusi Project in an amount of RMB50,388,700 and RMB10,949,500, respectively, totaling RMB61,338,200.
   2. Reasons for impairment
      Affected by factors including high moisture content of local straws and high financial expenses due to the delay in national subsidies for renewable energy, Ninghe Project has continued to record losses since it was put into operation in 2017. In 2019, provision was made for impairment in an amount of RMB12,547,800 (based on the consolidated financial statements of the Group); Jiamusi Project is located in an extremely cold area, with a low calorific value of waste. In 2019, the project recorded losses in the year when it was put into operation. In 2020, it made a profit of RMB6,312.

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In October 2020, the Ministry of Finance, the National Development and Reform Commission, and the National Energy Administration jointly issued a supplementary notice (Cai Jian [2020] No. 426) on relevant matters under the Several Opinions on Promoting the Healthy Development of Non- aqueous Renewable Energy Power Generation, which clearly stipulates that: Biomass power generation projects which have connected to the grid for 15 years or with the number of reasonable utilization hours reaching 82,500 hours (whichever comes first) will no longer enjoy the national subsidies for renewable energy, and will be issued green certificates and allowed to participate in green certificate transactions. Comparing the situation before and after the introduction of the policy, it is estimated that the full life cycle operating income of the Ninghe Project and the Jiamusi Project will decrease.

1. IMPACT OF THE PROVISION FOR IMPAIRMENT ON THE FINANCIAL POSITION OF THE COMPANY

In 2020, the Company proposes to make provision for impairment of intangible assets in a total amount of RMB61,338,200 due to the above reasons, and the provision for impairment is proposed to be fully included in profit or loss of the Company for 2020, reducing the Company's net profit for 2020 by RMB61,338,200.

1. OPINIONS OF THE BOARD ON THE PROVISION FOR IMPAIRMENT OF INTANGIBLE ASSETS
   The Board is of the view that: the provision for impairment of intangible assets made by the subsidiary of the Company based on actual conditions complies with relevant provisions of the Accounting Standards for Business Enterprises and the Company's financial management system, and fairly and accurately reflects the Company's financial position and operating results. Therefore, it approves the provision for impairment of intangible assets.

IV. INDEPENDENT OPINIONS OF INDEPENDENT DIRECTORS ON THE PROVISION FOR IMPAIRMENT OF INTANGIBLE ASSETS

The independent directors of the Company are of the view that: the provision for impairment of intangible assets complies with relevant provisions of the Accounting Standards for Business Enterprises and the Company's financial management system, and the relevant consideration procedures are in line with laws and regulations. After the provision for impairment of intangible assets, the financial statements of the Company can reflect the financial position and operating results of the Company in a more fair way, which will help provide investors with more true, reliable and accurate accounting information, and there is no damage to the interests of the Company and all shareholders, in particular minority shareholders. Therefore, they approve the provision for impairment of intangible assets.

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1. OPINIONS OF THE AUDIT COMMITTEE ON THE PROVISION FOR IMPAIRMENT OF INTANGIBLE ASSETS
   The audit committee of the Company is of the view that: the provision for impairment of intangible assets complies with relevant provisions of the Accounting Standards for Business Enterprises and the Company's financial management system, and the provision for impairment of intangible assets is based on sufficient basis. After the provision for impairment of intangible assets, the financial statements of the Company can reflect the financial position and operating results of the Company in a more fair way, which will make the Company's accounting information more reasonable, and there is no damage to the interests of the Company and all shareholders. Therefore, it approves the provision for impairment of intangible assets and will submit the proposal to the Board for consideration.

VI. OPINIONS OF THE SUPERVISORY COMMITTEE ON THE PROVISION FOR IMPAIRMENT OF INTANGIBLE ASSETS

The supervisory committee of the Company is of the view that: The provision for impairment of intangible assets made by the Company in accordance with relevant provisions of the Accounting Standards for Business Enterprises and the Company's financial system is in line with the actual situation of the Company and can reflect the financial position and operating results of the Company in a more fair way. Therefore, it approves the provision for impairment of intangible assets.

By Order of the Board

Dynagreen Environmental Protection Group Co., Ltd.*

Qiao Dewei

Chairman

Shenzhen, the PRC

30 March 2021

As at the date of this announcement, the non-executive Directors of the Company are Mr. Liu Shuguang and Mr. Cheng Suning, the executive Directors of the Company are Mr. Qiao Dewei and Mr. Hu Shengyong and the independent non-executive Directors of the Company are Mr. Ou Yuezhou, Ms. Fu Jie and Mr. Xie Lanjun.

• For identification purposes only

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