The board of directors of Kunming Dianchi Water Treatment Co., Ltd. announced that on 7 July 2022, the Company entered into the Kunming Luquan Yi and Miao Autonomous County Beautiful County Water Environment Comprehensive Improvement Project Contract with the People's Government of Luquan Yi and Miao Autonomous County in Kunming (the "People's Government of Luquan County"). Pursuant to the Project Contract, the People's Government of Luquan County will grant the Company or Luquan Dianchi Water Treatment Co., Ltd. ("Luquan Dianchi Water"), a wholly-owned subsidiary of the Company, the right to invest in, build, operate and transfer the water environment comprehensive improvement project (the "Water Environment Comprehensive Improvement Project") under the Project Contract and the concession rights for wastewater treatment and reclaimed water operation under the Project Contract. The Water Environment Comprehensive Improvement Project is divided into four sub-projects, including (i) sub-project 1: phase III expansion and phase I and II upgrading of the Luquan County Wastewater Treatment Plant; (ii) sub-project 2: the project of pollution interception engineering and reclaimed water replenishment of Zhangjiu River and Nantang River and the project of wastewater collection pipeline network of Xiaolongtan section; (iii) sub-project 3: the project of drainage pipeline network improvement of Sayingpan Town; and (iv) sub-project 4: the project of entrusted operation and maintenance of the wastewater collection trunk pipeline network along Zhangjiu River and Nantang River in Luquan County.

The total investment amount of the Water Environment Comprehensive Improvement Project is approximately RMB 250 million and the Company's investment is approximately RMB 170 million (subject to the amount to be confirmed by the audit of the project final account). In particular, (i) the estimated total investment amount of sub-project 1 is approximately RMB 90 million; (ii) the estimated total investment amount of sub-projects 2 and 3 is approximately RMB 160 million in aggregate, and the investment to be made by the Company/Luquan Dianchi Water in sub-projects 2 and 3 shall not exceed RMB 80 million in aggregate, with the remaining funds to be financed by the People's Government of Luquan County. However, if the remaining funds mentioned above are not received in a timely manner within 6 months from the date of signing of this contract, the parties will enter into a supplemental contract for the implementation of the ancillary projects.

The final investment amount to be made by the Company/Luquan Dianchi Water under the Project Contract shall be the audited total investment amount of the project less the funds to be financed by the People's Government of Luquan County. Pursuant to the Project Contract, the People's Government of Luquan County will grant the Company/Luquan Dianchi Water (i) a 30-year concession for sub-project 1 commencing from the date of expiry of 30 days from the date of submission of acceptance application by the Company/Luquan Dianchi Water upon completion of construction of sub-project 1, and extend the concession period for phase I and phase II of the wastewater treatment plant to 30 years, and within one month upon expiry of the concession period, the Company or Luquan Dianchi Water will transfer the project assets to the People's Government of Luquan County or its designated entity. The concession covers the wastewater collection area of the Luquan County wastewater treatment plant project; (ii) a 15-year concession for sub-projects 2 and 3 commencing from the expiry of 30 days from the date of submission of acceptance application by the Company/Luquan Dianchi Water upon completion of construction of sub-projects 2 and 3, and upon expiry of the concession period, the Company or Luquan Dianchi Water will transfer the project assets to the People's Government of Luquan County or its designated entity.

The concession covers the reclaimed water operation area within Luquan County; and (iii) entrust the operation and maintenance of sub-project 4 to Luquan Dianchi Water for a period of 2 years from the effective date of the Project Contract (official handover of the project), and upon expiry of the entrusted operation period, Luquan Dianchi Water will transfer sub-project 4 to the People's Government of Luquan County or its designated entity pursuant to the Project Contract.