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

The board (the "Board") of directors (the "Directors") 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 responsibilities for the truthfulness, accuracy and completeness of the contents contained in this announcement.

The Board hereby announces that on 25 March 2021, the Board considered and approved that the Company is expected to provide additional guarantees (the "Guarantees") up to a total amount of not exceeding RMB3,637,000,000 (the "Guaranteed Amount") (including the guaranteed amount of approximately RMB1,407,000,000 on the replacement of existing loans of subsidiaries) to subsidiaries of the Company within the period from the date of the 2020 annual general meeting to the date of 2021 annual general meeting of the Company (collectively, the "Subsidiaries" or the "Guaranteed Parties") based on business development plans and subject to the approval conditions.

As the total amount of external guarantees of the Company (including the amount of the Guarantees) exceeds 50% of the latest audited net assets of the Company, according to the Articles of Association of the Company, the Guarantees shall be subject to the consideration and approval of the shareholders of the Company as a special resolution at the annual general meeting of the Company. The Company will despatch a circular and a notice of the annual general meeting containing, among other things, the provision of the Guarantees for the Subsidiaries by the Company to shareholders of the Company in due course.

The details of the Guarantees are as follows:

• I. GUARANTEE MODEL

  As at the date of this announcement, the guarantees provided by the Company for the financing of Subsidiaries are generally in the following model:

  • (1) For subsidiaries in the water utilities business sector

    The Company obtains Public Private Partnership ("PPP") projects in the water utilities business through public competition, negotiations and other means. Under the current policy environment, the operation model of PPP projects in water utilities in the market requires the Company to establish a project company (or leverage on the previous project company) and the project company invests in and operates the PPP project as an independent legal entity. The registered capital of the project company is generally 20% to 30% of the total investment in the PPP project. Meanwhile, it requires bidding winners to guarantee the completion of financing for the PPP project as a shareholder of the project company. The Company shall contribute to the establishment of a project company (or make capital increase in the previous project company) and provide guarantees to the project financing of the project company when necessary.

  • (2) For subsidiaries in other environmental business sectors

    In addition to the water utilities business, the current businesses of the Company also include hazardous waste disposal, sludge disposal and new energy cooling and heating supply and relevant businesses. The project investments and the financing models for hazardous waste disposal, sludge disposal and new energy cooling and heating supply business are generally the same as the water utilities business, namely that the Company contributes capital to establish a project company with 20% to 30% of the total investment in the project and provides guarantees to the project financing of the project company when necessary.

• II. REASONS FOR ENTERING INTO THE GUARANTEES

  The water utilities business is the principal business of the Company and the key business development area of the Company in the future, therefore, it is expected that 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. As such, the Company shall provide guarantee for the project financing of the project companies.

  In order to improve efficiency and achieve efficient fundraising for the project companies, the Board proposed that the shareholders shall, at the annual 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 the Guaranteed Amount.

III. GUARANTEED AMOUNT AND APPROVAL CONDITIONS FOR THE GUARANTEES

Based on business development plans and during the period from the date of the 2020 annual general meeting to the date of 2021 annual general meeting of the Company, the Company is expected to provide an amount of new guarantees of not exceeding RMB3,637,000,000 (including the guaranteed amount of approximately RMB1,407,000,000 on the replacement of existing loans of Subsidiaries) to the Subsidiaries of the Company subject to the following six approval conditions:

(1) Breakdown of Guaranteed Parties and the guarantee amount are as follows:

Unit: 0,000 Currency: RMB

Serial Name of GuaranteedProportion of equity interest held by the Company in Guaranteed

Amount of loans/lettersNo.

Parties/SubsidiariesProject

Parties of guaranteeUse of loans/ letters of guarantee

Guaranteed amount

• 1 Anhui Tianchuang

  Capital Water Company Limited *(τ Ꮟ˂௴˥ਕϞࠢʮ̡)

  PPP Project of Yuwan Sewage Treatment Plant in Hefei

  100.00%

  450.00 Letter of 450.00 performance guarantee

  ("Anhui Tianchuang Capital Water")

• 2 Anhui Tianchuang Capital PPP Project of Yuwan Sewage

  100.00%

  500.00 New liquidity loans 500.00

  Water

• 3 Anhui Tianchuang

  Capital WaterTreatment Plant in Hefei PPP Project of Yuwan Sewage Treatment Plant in Hefei

  100.00%

  13,358.00 Replacement of 13,358.00 loans on existing projects

• 4 Changsha Tianchuang

  Capital Water Co., Ltd.

  *(ڗӍ˂௴˥ਕϞ ࠢʮ̡) ("Changsha Tianchuang Capital Water")

  Changes to Phase-I Project of Sewage Treatment and Recycling Plant in Ningxiang Economic Development Zone

  80.00%

  841.86 New project loans 673.49

• 5 Changsha Tianchuang

  Environmental Protection Co., Ltd.

  Construction of Emergency Pool for Sewage Treatment Plant in Ningxiang Economic Development Zone

  81.43%

  1,070.71 New project loans 871.88

  *(ڗӍ˂௴ᐑڭϞ ࠢʮ̡) ("Changsha Tianchuang Environmental Protection")

Serial Name of GuaranteedNo.

Parties/SubsidiariesProportion of equity interest held by the Company in Guaranteed

Amount of loans/lettersProject

Parties of guaranteeUse of loans/ letters of guarantee

Guaranteed amount

• 6 Shibinggui Capital Water PPP Project of Sewage Treatment forCompany Limited *(݄ ٢൮௴˥ਕϞࠢʮ̡)

  ("Shibinggui Capital Water")

• 7 Shandong Capital

  Environmental Protection Technology Development Co.,

  Ltd. *(ʆ؇௴ุᐑڭ ߅Ҧ೯࢝Ϟࠢʮ̡)

  ("Shandong Capital Environmental Protection")

• 8 Jiuquan Capital Water

  Company Limited *(ৢ ݰ௴ุ˥ਕϞࠢʮ ̡) ("Jiuquan Capital Water")

• 9 Jieshou Capital Water

  Company Limited *

  (ޢ࠯̹௴ุ˥ਕϞ ࠢʮ̡) ("Jieshou Capital Water")

• 10 Jieshou Capital Water

• 11 Hangzhou Tianchuang

  Capital Water Company Limited *(؄ψ˂௴˥ਕϞࠢ ʮ̡) ("Hangzhou Tianchuang Capital Water")

• 12 Hangzhou Tianchuang

  Capital WaterTowns and Townships in Shibing County

  Project of Tancheng Ecological Treatment Center for Comprehensive Materials

  Construction of the First and Second Sewage Treatment Plants in Suzhou District, Jiuquan City under the Public-Private Partnership (PPP) Model

  Existing and New PPP Project for Sewage Treatment in Jieshou City (1st Batch)

  PPP Project for Sewage Treatment in Jieshou City (2nd Batch)

  Hangzhou Qige Sewage Treatment Plant Project

  Hangzhou Qige Sewage Treatment Plant Project

• 13 Deqing Capital Water Co., PPP Project of Qianyuan Sewage

  Ltd. *(ᅃ૶௴ᐑ˥ਕ

  Ϟࠢʮ̡) ("Deqing Capital Water")

• 14 Dongying Tianchi

  Environmental Technology Co., Ltd. *(؇ᐄ˂ཱུᐑ ڭ߅ҦϞࠢʮ̡)

  ("Dongying Tianchi Environmental")

• 15 Yingshang Capital Water

  Company Limited *(⤭ ɪ௴ุ˥ਕϞࠢʮ̡)

  ("Yingshang Capital Water")

Treatment Plant in DeqingProject of Ecological Treatment Center for Comprehensive Materials in the Agricultural High and New-tech Development Zone

BOT Project of Chengnan Sewage Treatment Plant in Yingshang County, Anhui

95.68%

7,500.00 New project loans 7,176.00

55.00%

8,500.00 New project loans 4,675.00

88.78%

41,500.00 Replacement of 36,843.70 loans on existing projects

100.00%

19,600.00 Replacement of 19,600.00 loans on existing projects

100.00%

34,000.00 Replacement of 34,000.00 loans on existing projects

70.00%

8,640.00 Replacement of 6,048.00 loans on existing projects

70.00%

7,360.00 New liquidity loans 5,152.00

90.00%

21,682.00 Replacement of 19,513.80 loans on existing projects

51.00%

31,700.00 New project loans 16,167.00

100.00%

11,363.22 Replacement of 11,363.22 loans on existing projects

Total

208,065.79 176,392.09

Guarantees with serial No. 1-15 for above-mentioned Subsidiaries provided by the Company were joint liability guarantees provided on the basis of the proportion of the contributions in respect of financing, interest, penalty interest, liquidated damages and all other expenses in a total amount of no more than RMB1,763,920,900, for which counter-guarantee agreements will be entered into. The above-mentioned Subsidiaries shall, leveraging their rights of charge and revenue arising therefrom, provide counter-guarantees to the Company in an amount no less than their respective guarantees, to ensure that the Company reasonably prevents and controls risks.

In addition to the guarantees for the above-mentioned projects with serial No. 1-15, the Guarantees also include an expected amount of guarantee of not exceeding RMB1,872,729,400 to the subsidiaries of the Company within the scope of the consolidated financial statements existing within the period from the date of the 2020 annual general meeting to the date of 2021 annual general meeting of the Company for project financing and financing demands in routine operation of Subsidiaries.

• (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; and

• (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 annual general meeting, consider and approve the Guaranteed Amount of the above-mentioned Guarantees and authorize the Board to consider and approve the following specific matters of the Guarantees within the expanded scope of Guaranteed Amount of the Guarantees subject to the above-mentioned six conditions and that the accumulated amount of the guarantees shall not exceed 100% of the latest audited net assets of the Company:

• (1) approve and make timely disclosure for each guarantee matter according to the actual progress of the projects obtained by the Company and the actual needs of the relevant subsidiaries; and

• (2) approve whether the financing and the corresponding guarantee will provide pledge or mortgage.

IV. FINANCIAL CONDITIONS OF GUARANTEED PARTIES

Unit: 0,000 Currency: RMB

As at and for the year ended 31 December 2020

Serial	Name of Guaranteed Parties/	Total	Net	Current	Current
No.	Subsidiaries	assets	assets	Liabilities	assets	liabilities	Revenue	Net profit	ratio
1	Anhui Tianchuang Capital Water	20,440.64	5,432.44	15,008.21	881.07	4,573.92	1,540.44	- 739.44	73.42%
2	Changsha Tianchuang Capital
Water	10,218.91	2,047.90	8,171.02	954.28	2,193.42	1,120.24	- 10.54	79.96%
3	Changsha Tianchuang
Environmental Protection	13,788.87	4,054.85	9,734.02	606.61	1,937.27	1,469.00	- 167.25	70.59%
4	Shibinggui Capital Water	11,714.42	2,985.28	8,729.14	3,497.65	8,729.14	0.00	- 1.03	74.52%
5	Shandong Capital Environmental
Protection	58,058.30	20,472.40	37,585.90	8,797.43	8,286.66	6,141.94	596.24	64.74%
6	Jiuquan Capital Water	60,612.90	19,293.72	41,319.18	15,369.61	1,819.18	5,655.29	1,574.32	68.17%
7	Jieshou Capital Water	67,026.69	25,677.88	41,348.81	5,754.89	5,346.74	5,586.11	1,407.98	61.69%
8	Hangzhou Tianchuang Capital
Water	91,409.12	69,696.92	21,712.20	40,429.54	6,214.32	29,696.54	8,693.49	23.75%
9	Deqing Capital Water	28,419.58	6,335.85	22,083.73	3,148.05	1,383.06	3,373.80	296.44	77.71%
10	Dongying Tianchi Environmental	500.00	499.63	0.37	320.77	0.37	0.00	- 0.37	0.07%
11	Yingshang Capital Water	11,283.58	6,065.93	5,217.65	1,522.14	337.43	1,577.96	424.54	46.24%

Assets liability

Unit: 0,000 Currency: RMB

For the two months ended between 1 January 2021 and 28

As at 28 February 2021

February 2021 Assets

Serial	Name of Guaranteed Parties/	Total	Net	Current	liability
No.	Subsidiaries	assets	assets	Liabilities	assets	liabilities	ratio	Revenue	Net profit
1	Anhui Tianchuang Capital Water	20,253.90	5,240.71	15,013.19	822.72	4,578.91	74.12%	160.23	-191.72
2	Changsha Tianchuang Capital
Water	10,463.52	2,032.08	8,431.45	1,256.42	2,453.85	80.58%	159.63	-15.82
3	Changsha Tianchuang
Environmental Protection	13,705.33	4,039.60	9,665.73	598.03	1,884.50	70.53%	233.77	-15.25
4	Shibinggui Capital Water	13,196.13	2,985.10	10,211.03	4,362.66	10,211.03	77.38%	0.00	-0.18
5	Shandong Capital Environmental
Protection	56,199.63	19,618.21	36,581.42	7,207.03	6,882.18	65.09%	385.71	-905.59
6	Jiuquan Capital Water	61,132.15	19,535.32	41,596.83	16,009.16	2,096.84	68.04%	1,003.59	241.59
7	Jieshou Capital Water	67,412.00	25,927.51	41,484.49	5,786.32	2,655.92	61.54%	961.32	249.63
8	Hangzhou Tianchuang Capital
Water	92,079.19	71,423.83	20,655.37	41,972.02	5,157.48	22.43%	4,364.25	1,700.90
9	Deqing Capital Water	27,789.13	6,087.23	21,701.90	2,752.36	1,001.22	78.09%	144.85	-248.62
10	Dongying Tianchi Environmental	499.76	499.63	0.13	186.16	0.13	0.03%	0.00	0.00
11	Yingshang Capital Water	10,550.83	6,169.44	4,381.40	853.50	- 294.43	41.53%	259.99	103.50

Current

V. THE COMPANY'S DECISION-MAKING PROCEDURES FOR THE GUARANTEES

As at the date of this announcement, the total amount of external guarantees of the Company amounted to RMB4,447,813,900 (excluding the amount of Guarantees), all of which were financing guarantees to the wholly-owned and controlling subsidiaries within the scope of the consolidated financial statements of the Company, representing approximately 67.48% of the latest audited net assets of the Company.

As at the date of this announcement, the total amount of external guarantees of the Company amounted to RMB6,677,197,000 (including the amount of Guarantees), all of which were financing guarantees to the wholly-owned and controlling subsidiaries within the scope of the consolidated financial statements of the Company, representing approximately 101.3% of the latest audited net assets of the Company as at 31 December 2020, and there is no overdue guarantee.

As the total amount of external guarantees of the Company (including the amount of the Guarantees) exceeds 50% of the latest audited net assets of the Company, according to the Articles of Association of the Company, such Guarantees shall be subject to consideration and approval of the shareholders of the Company as a special resolution at the annual general meeting of the Company.

By order of the Board

Liu Yujun Chairman

Tianjin, the PRC

25 March 2021

As at the date of the announcement, the Board comprises three executive Directors: Mr. Liu Yujun, Ms. Wang Jing and Mr. Niu Bo; two non-executive Directors: Mr. Gu Wenhui and Mr. Si Xiaolong; and three independent non-executive Directors: Mr. Di Xiaofeng, Mr. Guo Yongqing and Mr. Wang Xiangfei.

* For identification purpose only