Tianjin Capital Environmental Protection : Announcement on the Guarantees for Project Companies' Financing and Authorization to the Board

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

(Stock Code: 1065)

Announcement on the Guarantees for Project Companies' Financing

and Authorization to the Board

The board of directors (the "Board") of Tianjin Capital Environmental Protection Group Company Limited (the "Company") and all the directors warrant that there are no false information, misleading statements or material omissions in this announcement, and accept joint and several responsibility for the truthfulness, accuracy and completeness of the contents contained in this announcement.

References are made to the overseas regulatory announcement of the Company dated 13 August

2019 in relation to the increase in the registered capital of Fuyang Chuangye Water Co. Ltd* (阜 陽創業水務有限公司) and the announcement of the Company dated 16 September 2019 in relation to the guarantee for the loan granted to Chibi Capital Water Company Limited*(赤壁創業水務 有限公司) (the "Announcements"). Unless otherwise specified, capitalised terms used in this

announcement shall have the same meanings as those defined in the Announcements.

The Board hereby announces that on 25 October 2019, the Board considered and approved that the Company intended to provide additional financing guarantees (the "Guarantees") amounting

to a total amount of not exceeding RMB2,000,000,000 (the "Guaranteed Amount") to Chibi Capital Water Company Limited* (赤壁創業水務有限公司) ("Chibi Company"), an indirect wholly-owned subsidiary of the Company, Fuyang Chuangye Water Co. Ltd* (阜陽創業水務 有限公司) ("Fuyang Company"), an immediate wholly-owned subsidiary of the Company, and

the new subsidiaries of the Company within the scope of the consolidated financial statements established from the date of this announcement to the date of the 2019 Annual General Meeting of the Company (collectively, the "Project Companies" or the "Guaranteed Parties").

As the total amount of the external guarantees of the Company exceeds 50% of the net assets in the consolidated financial statements of the most recent accounting year, the Guarantees shall be subject to the consideration and approval of the shareholders at the general meeting of the Company in accordance with the Articles of Association of the Company. The Company will despatch a circular and a notice of the general meeting containing, among other things, the provision of the Guarantees for the Project Companies by the Company to the shareholders of the Company in due course.

The details of the Guarantees are as follows:

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1. Reasons for entering into the Guarantees
   Respective investments and construction for each of the Project Companies have been made or will be made according to the relevant agreements for their respective PPP projects on water utilities business or other projects in environmental business areas. The investment, operation and financing model of the project agreements usually requires the Company to fund the establishment of the Project Companies and provide guarantees for project financing when the Project Companies require. The water utilities business is the principal businesses of the Company and is the key business development area of the Company in the future, therefore, it is expected that the PPP projects on water utilities business will be obtained from time to time, and strategic new businesses, including other environmental protection businesses, will be actively developed. In order to improve efficiency and achieve efficient fundraising for the Project Companies, the Board proposed that the shareholders shall, at the general meeting, consider and approve the above-mentioned Guarantees and authorise the Board to consider and approve the specific matters of the Guarantees within the scope of Guaranteed Amount of the Guarantees.

1. Basic information on the Guarantees

							Unit: RMB' 0,000
Serial	Guaranteed		Financing	Guaranteed	Guaranteed
No.	Parties	Project name	amount	amount	percentage
1	Chibi	Upgrade and	14,358	14,358	100%, pro rata to
	Company	Expansion of the					the equity interest
		PPP Project of					of Chibi Company
		Chibi Sewage					indirectly owned by
		Treatment Plant					the Company
2	Fuyang	Yingdong Sewage	12,280	12,280	100%, pro rata
	Company	Treatment Plant					to the equity
		Project (2nd batch)					interest of Fuyang
							Company directly
							owned by the
							Company
		Total:	26,638		26,638

In addition to the above Guarantees, the Company also intends to provide additional guarantees for financing with a total amount of not exceeding RMB1,733,620,000 granted to the new subsidiaries of the Company within the scope of the consolidated financial statements established from the date of this announcement to the date of the 2019 Annual General Meeting of the Company.

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The conclusive financing guarantees, guaranteed parties, guaranteed amounts and guaranteed parties of the Guarantees to be provided by the Company for the Project Companies are subject to the final guarantee contracts to be signed between the parties thereto. Each of the Project Companies shall provide to the Company the respective counter guarantee, which comprises rights to derive income and its revenue from its respective projects, not less than the guaranteed amount for such Project Company in order to reasonably safeguard the Company from risk taking.

1. Approval conditions for the Guarantees
   The Board considered and approved that from the date of the general meeting of the Company in relation to the consideration and approval of the provision of the Guarantees to the date of the 2019 Annual General Meeting of the Company, the Company intended to provide additional financing guarantees within the scope of Guaranteed Amount to the Project Companies subject to the following six conditions:
2. 1. The Guaranteed Parties and Guaranteed Amount: (1) guaranteed amount for Chibi Company shall amount to RMB143,580,000; (2) guaranteed amount for Fuyang Company shall amount to RMB122,800,000; (3) expected guaranteed amounts for the new subsidiaries of the Company within the scope of the consolidated financial statements established from the date of this announcement to the date of the 2019 Annual General Meeting of the Company shall not exceed RMB1,733,620,000;
   2. The respective Guaranteed Amount shall not exceed the shareholding percentage of the Company in the relevant subsidiaries;
   3. The subject projects for financing are legally obtained, and have been approved by the authority of the Company that has the right to approve;
   4. The income level of each of the subject projects for financing meets investment requirements and standards of the Company;
   5. The Guaranteed Parties have been provided with counter guarantees no less than the guaranteed amounts;
   6. The Guaranteed Parties operate in a regulated manner and the risks are controllable.

The Board considered and approved to propose that the shareholders shall, at the general meeting, consider and approve the above-mentioned Guarantees and authorize the Board to consider and approve the following specific matters of the Guarantees within the scope of Guaranteed Amount of the Guarantees, and subject to the above-mentioned six conditions and that the accumulated amount of the guarantees of the Comapany shall not exceed 100% of the latest audited net assets of the Company:

1. Specifically approve and make disclosure in time for each loan guarantee according to the actual progress of the PPP projects won by the Company and the actual needs of the relevant subsidiaries; and
2. Specifically approve whether pledge or mortgage shall be provided for the respective loan.

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IV. Basic information and financial conditions of the Project Companies

Chibi Company

The Company indirectly holds 100% equity interest of Chibi Company through an immediate wholly-owned subsidiary, Wuhan Company. Chibi Company was incorporated on 29 June 2005.

As at 31 December 2018, Chibi Company's total assets amounted to RMB82,835,400, with net assets, liabilities, revenue and net profit of RMB55,209,300, RMB27,626,100, RMB14,667,000 and RMB1,816,600 respectively, and its gearing ratio was 33.35%.

As at 30 September 2019, Chibi Company's total assets amounted to RMB260,801,500, with net assets, liabilities, revenue and net profit of RMB117,543,500, RMB143,258,000, RMB11,018,500 and RMB2,101,800 respectively, and its gearing ratio was 54.93%.

Fuyang Company

The Company directly holds 100% equity interest of Fuyang Company. Fuyang Company was incorporated on 15 December 2005.

As at 31 December 2018, Fuyang Company's audited total assets amounted to RMB757,090,000, with net assets and liabilities of RMB344,161,000 and RMB412,929,000, respectively, and its revenue and net profit amounted to RMB111,887,500 and RMB32,742,000, respectively, and its gearing ratio was 54.54%.

As at 30 September 2019, Fuyang Company's unaudited total assets amounted to RMB897,294,000, with net assets and liabilities of RMB512,302,600 and RMB384,991,400, respectively, and its revenue and net profit amounted to RMB100,246,400 and RMB30,379,200, respectively, and its gearing ratio was 42.91%.

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1. The Company's decision-making procedures for the Guarantee
   As at the date of this announcement, the total amount of the external guarantees of the Company amounted to RMB3,943,531,800, all of which were financing guarantees to the wholly-owned and controlling subsidiaries within the scope of the consolidated financial statements, accounting for approximately 67.78% of the latest audited net assets of the Company. As the total amount of the external guarantees of the Company (including the Guarantees) exceeded 50% of the net assets in the consolidated financial statements of the most recent accounting year, in accordance with the Articles of Association of the Company, the Guarantees shall be subject to the approval of the shareholders at the general meeting of the Company.

By order of the Board

Liu Yujun

Chairman

Tianjin, the PRC

25 October 2019

As at the date of this announcement, the Board comprises three executive Directors: Mr. Liu

Yujun, Ms. Wang Jing and Mr. Niu Bo; three non-executive Directors: Mr. Yu Zhongpeng, Mr.

Han Wei and Mr. Si Xiaolong; and three independent non-executive Directors: Mr. Di Xiaofeng, Mr. Guo Yongqing and Mr. Wang Xiangfei.

• For identification purposes only

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