Tianjin Capital Environmental Protection : REVISION OF SERVICE FEES AND ANNUAL CAPS OF CONTINUING CONNECTED TRANSACTIONS

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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

(Stock code: 1065)

REVISION OF SERVICE FEES AND ANNUAL CAPS OF

CONTINUING CONNECTED TRANSACTIONS

References are made to the announcements of the Company dated 29 June 2018 and 1 July 2019 in respect of, inter alia, (1) the 2018 Sewage Water Plant Operation Agreement and the 2018 Sludge Disposal Centre Operation Agreement dated 29 June 2018 entered into between the Company and Tianjin Infrastructure Construction, pursuant to which the Company agreed to operate and maintain the Plant and the Sludge Disposal Centre for Tianjin Infrastructure Construction during the Service Period I; and (2) the New Sewage Water Plant Operation Agreement and the New Sludge Disposal Centre Operation Agreement dated 1 July 2019 entered into between the Company and Tianjin Infrastructure Construction, pursuant to which the Company agreed to operate and maintain the Plant and the Sludge Disposal Centre for Tianjin Infrastructure Construction during the Service Period II.

The Board announces that on 31 December 2019, the Company and Tianjin Infrastructure Construction have entered into a Supplementary Agreement to amend the terms of 2018 Sewage Water Plant Operation Agreement and the New Sewage Water Plant Operation Agreement, pursuant to which the service fees under the 2018 Sewage Water Plant Operation Agreement and the New Sewage Water Plant Operation Agreement would be amended as the Revised Service Fees. Therefore, the Existing Annual Caps for the 2018 Sewage Water Plant Operation Agreement and the New Sewage Water Plant Operation Agreement would be amended as the Revised Annual Caps accordingly.

Other than the service fees under the 2018 Sewage Water Plant Operation Agreement and the New Sewage Water Plant Operation Agreement would be amended as the Revised Service Fees and the modifications made to the other terms in the 2018 Sewage Water Plant Operation Agreement and the New Sewage Water Plant Operation Agreement, all other terms and conditions under the 2018 Sewage Water Plant Operation Agreement and the New Sewage Water Plant Operation Agreement will remain in full force and effect.

IMPLICATIONS OF THE LISTING RULES

Tianjin Infrastructure Construction is the ultimate controller of the Company. Therefore, pursuant to the Listing Rules, Tianjin Infrastructure Construction is a connected person of the Company. According to Rule 14A.81 of the Listing Rules, the transactions contemplated under the New Agreements shall be aggregated with those under the 2018 Agreements.

According to Rule 14A.54 of the Listing Rules, if the Company intends to revise the annual caps or proposes to effect material changes to the terms of the continuing connected transactions, the Company shall re-comply with the relevant provisions relating to continuing connected transactions under Chapter 14A of the Listing Rules.

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As all the applicable percentage ratios in respect of the Revised Annual Caps under the 2018 Agreements and the New Agreements for each of the financial years ended 31 December 2019 and 31 December 2020 of the Company are more than 0.1% but all are less than 5%, therefore the transactions under the Supplementary Agreement constitute continuing connected transactions of the Company and are subject to the reporting and announcement requirements only but are exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

INTRODUCTION

References are made to the announcements of the Company dated 29 June 2018 and 1 July 2019 (collectively, the "Announcements") in respect of, inter alia, (1) the 2018 Sewage Water Plant Operation Agreement and the 2018 Sludge Disposal Centre Operation Agreement dated 29 June 2018 (collectively, the "2018 Agreements") entered into between the Company and Tianjin Infrastructure Construction, pursuant to which the Company agreed to operate and maintain the Plant and the Sludge Disposal Centre for Tianjin Infrastructure Construction during the Service Period I; and (2) the New Sewage Water Plant Operation Agreement and the New Sludge Disposal Centre Operation Agreement dated 1 July 2019 (collectively, the "New Agreements") entered into between the Company and Tianjin Infrastructure Construction, pursuant to which the Company agreed to operate and maintain the Plant and the Sludge Disposal Centre for Tianjin Infrastructure Construction during the Service Period II.

Supplementary Agreement

The Board announces that on 31 December 2019, the Company and Tianjin Infrastructure Construction have entered into a Supplementary Agreement to amend the terms of 2018 Sewage Water Plant Operation Agreement and the New Sewage Water Plant Operation Agreement (collectively, the "Sewage Water Plant Operation Agreements"), pursuant to which the service fees under the Sewage Water Plant Operation Agreements would be amended as the Revised Service Fees. Therefore, the Existing Annual Caps for the Sewage Water Plant Operation Agreements would be amended as the Revised Annual Caps accordingly.

Other than the service fees under the Sewage Water Plant Operation Agreements would be amended as the Revised Service Fees and the modifications made to the other terms in the Sewage Water Plant Operation Agreements, all other terms and conditions under the Sewage Water Plant Operation Agreements will remain in full force and effect.

The principal terms of the Supplementary Agreement are summarized as follows:

Date of signing:	31 December 2019
Parties:	(a)	the Company; and
	(b)	Tianjin Infrastructure Construction
Price adjustment	The commencement date of price adjustment to the service fees shall
effective date	take effect from 1 January 2019

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Revised Service Fees:	Currently, the Plant has completed its upgrade and renovation. Its
	water discharge standard shall comply the Class A standard under
	the Standard for Discharge of Pollutants from Municipal Sewage
	Treatment Plant* 《( 城鎮污水處理廠污染物排放標準》) (DB12-599-
	2015) of Tianjin (the "Standard"). In respect of the service fees after
	implementation of the Standard, after verification by an independent
	third-party auditor, the service fee rate is revised to RMB0.98/cubic
	metre.
	For the period of the financial year ended 31 December 2019, in respect
	of the Sewage Water Plant Operation Agreements, the verified water
	volume is based on the monthly actual sewage water treatment volume,
	but shall not exceed 220,000 tonnes/day.
	For the period of the financial year ended 30 June 2020,in respect of
	the New Sewage Water Plant Operation Agreement, the verified water
	volume is based on the monthly actual sewage water treatment volume,
	but shall not exceed 240,000 tonnes/day. If the actual sewage water
	treatment volume exceeds 240,000 tonnes/day, the excess portion will
	not be settled.
	The above service fees will be settled on quarterly basis by Tianjin
	Infrastructure Construction, and shall be calculated according to the
	following formula:
	Monthly Service Fees = service fee rate x monthly actual sewage water
	treatment volume
Payment Term:	In respect of the Sewage Water Plant Operation Agreements, on the
	basis of deducting the service fees for the first three quarters of 2019
	which have been settled by Tianjin Infrastructure Construction (i.e. the
	service fees from January 2019 to June 2019 under the 2018 Sewage
	Water Plant Operation Agreement and from July 2019 to September
	2019 under the New Sewage Water Plant Operation Agreement), the
	shortfall in the service fees for the first three quarters of 2019 and the
	service fees for the fourth quarter of 2019 shall be paid to the Company
	in one-off amount by Tianjin Infrastructure Construction.

Revision of Existing Annual Caps

As mentioned in the Announcements, the Company and Tianjin Infrastructure Construction entered into the 2018 Agreements on 29 June 2018. According to the requirements under Rule 14A.81 of the Listing Rules, the 2018 Agreements shall be aggregated with the New Agreements.

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Existing Annual Cap for 2019

Based on (1) the 2018 Sewage Water Plant Operation Agreement, the monthly existing service fees payable by Tianjin Infrastructure Construction for the financial year ended 31 December 2019 of the Company were RMB4,198,000; (2) the 2018 Sludge Disposal Centre Operation Agreement, the total amount of service fees payable by Tianjin Infrastructure Construction for the financial year ended 31 December 2019 of the Company would not exceed RMB4,760,000; (3) the New Sewage Water Plant Operation Agreement, the monthly existing service fees payable by Tianjin Infrastructure Construction for the financial year ended 31 December 2019 of the Company were RMB4,198,000; and (4) the New Sludge Disposal Centre Operation Agreement, the total amount of service fees payable by Tianjin Infrastructure Construction for the financial year ended 31 December 2019 of the Company would not exceed RMB6,753,500. For the financial year ended 31 December 2019 of the Company, the existing annual cap for the above four agreements would not exceed RMB61,889,500.

Existing Annual Cap for 2020

Based on (1) the New Sewage Water Plant Operation Agreement, the monthly existing service fees payable by Tianjin Infrastructure Construction for the financial year ended 31 December 2020 of the Company were RMB4,198,000; and (2) the New Sludge Disposal Centre Operation Agreement, the total amount of service fees payable by Tianjin Infrastructure Construction for the financial year ended 31 December 2020 of the Company would not exceed RMB6,753,500. For the financial year ended 31 December 2020 of the Company, the existing annual cap for the above two agreements would not exceed RMB31,941,500.

Revised Annual Cap for 2019

Based on (1) the 2018 Sewage Water Plant Operation Agreement (as revised and supplemented by the Supplementary Agreement), the total amount of monthly revised service fees payable by Tianjin Infrastructure Construction for the financial year ended 31 December 2019 of the Company would not exceed RMB6,600,000; (2) the 2018 Sludge Disposal Centre Operation Agreement, the total amount of service fees payable by Tianjin Infrastructure Construction for the financial year ended 31 December 2019 of the Company would not exceed RMB4,760,000; (3) the New Sewage Water Plant Operation Agreement (as revised and supplemented by the Supplementary Agreement), the total amount of monthly revised service fees payable by Tianjin Infrastructure Construction for the financial year ended 31 December 2019 of the Company would not exceed RMB6,600,000; and (4) the New Sludge Disposal Centre Operation Agreement, the total amount of service fees payable by Tianjin Infrastructure Construction for the financial year ended 31 December 2019 of the Company would not exceed RMB6,753,500. For the financial year ended 31 December 2019 of the Company, the revised annual cap for the above four agreements would not exceed RMB90,713,500.

Revised Annual Cap for 2020

Based on (1) the New Sewage Water Plant Operation Agreement (as revised and supplemented by the Supplementary Agreement), the total amount of monthly revised service fees payable by Tianjin Infrastructure Construction for the financial year ended 31 December 2020 of the Company would not exceed RMB7,134,400; and (2) the New Sludge Disposal Centre Operation Agreement, the total amount of service fees payable by Tianjin Infrastructure Construction for the financial year ended 31 December 2020 would not exceed RMB6,753,500. For the financial year ended 31 December 2020 of the Company, the revised annual cap for the above two agreements would not exceed RMB49,559,900.

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REASONS FOR ENTERING INTO THE SUPPLEMENTARY AGREEMENT AND THE BASIS FOR DETERMINATION OF THE SERVICE FEES

Since 1 January 2019, the Company has completed upgrading and renovation of the Plant, and water discharge complied with the Standard of Tianjin. With improved quality of water discharge, the operating cost of the Plant increased significantly, and it is intended that the plant would be added an emergency treatment facility of 20,000 tonnes in capacity which is expected to commence operation in early 2020, and the overall treatment capacity of the Plant will reach 240,000 tonnes/ day by then. Therefore, the Company and Tianjin Infrastructure Construction entered into a Supplementary Agreement on 31 December 2019, pursuant to which the existing service fees under the Sewage Water Plant Operation Agreements would be amended as Revised Service Fees. Hence, the existing annual caps under the Sewage Water Plant Operation Agreements would be amended as Revised Annual Caps accordingly.

The Revised Service Fees and Revised Annual Caps are determined after taking into account, inter alia, the following factors: (i) the historical amount of service fees for operating and maintaining the Plant for Tianjin Infrastructure Construction charged by the Company; (ii) the operating cost for upgrading and renovating the Plant and reasonable service fee rate verified by an independent third-party auditor; and (iii) the estimated water volume of monthly actual sewage water treatment volume.

The Company is specialized in operating and maintaining sewage water treatment plants and sludge disposal centre. Entering into the Supplementary Agreement enables the Company to make profit from operating the Plant and the Sludge Disposal Centre. The Directors, including the independent non-executive Directors, consider that the Supplementary Agreement is on normal commercial terms and in the ordinary and usual course of business of the Company, and the Revised Service Fees, Revised Annual Caps and the terms under the Supplementary Agreement are fair and reasonable, and in the interests of the Company and its shareholders as a whole.

I N F O R M A T I O N O F T H E C O M P A N Y A N D T I A N J I N I N F R A S T R U C T U R E CONSTRUCTION

The Company is principally engaged in the investment, construction, design, management, operation, technical consultation and auxiliary services of treatment facilities of sewage water, tap water and other types of water; design, construction, management, building and operation management of municipal infrastructures; license operation, technical consultation and auxiliary services of Southeastern Half Ring Urban Road of the Middle Ring of Tianjin City; development and operation of environmental protection technology and products; leasing of self-owned properties, etc.

Tianjin Infrastructure Construction is the ultimate controller of the Company and the sole shareholder of TMICL (the controlling shareholder of the Company), holding 100% equity interest in TMICL. It is principally engaged in investment in sea and river comprehensive development and renovation, subway trains, urban roads and bridges, underground pipeline networks, urban environment infrastructures with self-owned funds; investment planning; corporate management consultancy; market construction development services; leasing of self-owned properties; leasing of infrastructures and development and operation of utilities; licensed operation of infrastructures and transfer of licensed operations with government authorization; production, development, operation of construction materials, decoration materials, electrical products (excluding cars); construction investment consultation.

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IMPLICATIONS OF THE LISTING RULES

As mentioned above, Tianjin Infrastructure Construction is the ultimate controller of the Company. Therefore, pursuant to the Listing Rules, Tianjin Infrastructure Construction is a connected person of the Company. According to Rule 14A.81 of the Listing Rules, the transactions contemplated under the New Agreements shall be aggregated with those under the 2018 Agreements.

According to Rule 14A.54 of the Listing Rules, if the Company intends to revise the annual caps or proposes to effect material changes to the terms of the continuing connected transactions, the Company shall re-comply with the relevant provisions relating to continuing connected transactions under Chapter 14A of the Listing Rules.

As all the applicable percentage ratios in respect of the Revised Annual Caps under the 2018 Agreements and the New Agreements for each of the financial years ended 31 December 2019 and 31 December 2020 of the Company are more than 0.1% but all are less than 5%, therefore the transactions under the Supplementary Agreement constitute continuing connected transactions of the Company and are subject to the reporting and announcement requirements only but are exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

Mr. Liu Yujun, an executive Director of the Company, and Mr. Yu Zhongpeng, Mr. Han Wei and Mr. Si Xiaolong, the non-executive Directors of the Company, are connected with Tianjin Infrastructure Construction or TMICL, and are deemed to be unable to provide recommendation opinions to the Board in an independent capacity, therefore they have abstained from voting at the Board meeting on approving the Supplementary Agreement.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the following meanings:

"2018 Sewage Water	the operation agreement dated 29 June 2018 entered into between the
Plant Operation	Company and Tianjin Infrastructure Construction in respect of the
Agreement"	operation and maintenance of the Plant during the Service Period I, the
	details of which were set out in the Company's announcement dated 29
	June 2018
"2018 Sludge Disposal	the operation agreement dated 29 June 2018 entered into between the
Centre Operation	Company and Tianjin Infrastructure Construction in respect of the
Agreement"	operation and maintenance of the Sludge Disposal Centre during the
	Service Period I, the details of which were set out in the Company's
	announcement dated 29 June 2018

"Board"

"Company"

the board of Directors

Tianjin Capital Environmental Protection Group Company Limited, a joint stock limited company established in the PRC, whose A-shares and H-shares are listed on the Shanghai Stock Exchange and the Stock Exchange respectively

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"connected person(s)"

"Director(s)"

"Existing Annual Cap(s)"

has the same meaning as ascribed to it under the Listing Rules

the directors of the Company, including independent non-executive directors

the existing annual caps of the transactions under the 2018 Agreements and/or the New Agreements (as the case may be) for the two financial years ended 31 December 2019 and 31 December 2020, the details of which were set out in the paragraphs headed "Revision of Existing Annual Caps - Existing Annual Cap for 2019" and "Revision of Existing Annual Caps - Existing Annual Cap for 2020" of this announcement

"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock Exchange
"New Sewage Water	the operation agreement entered into between the Company and Tianjin
Plant Operation	Infrastructure Construction on 1 July 2019 in respect of the operation
Agreement"	and maintenance of the Plant during the Service Period II, the details of
	which were set out in the Company's announcement dated 1 July 2019
"New Sludge Disposal	the operation agreement entered into between the Company and
Centre Operation	Tianjin Infrastructure Construction on 1 July 2019 in respect of the
Agreement"	operation and maintenance of the Sludge Disposal Centre during the
	Service Period II, the details of which were set out in the Company's
	announcement dated 1 July 2019

"percentage ratio(s)"

"Plant"

"PRC"

has the same meaning as ascribed to it under the Listing Rules, as applicable to a transaction

the Zhangguizhuang Sewage Water Treatment Plant, located at Zhangguizhuang, Tianjin, the PRC

the People's Republic of China, for the purpose of this announcement, excluding Hong Kong, Macau Special Administrative Region of the PRC and Taiwan

"Revised Annual Cap(s)" the revised annual caps of transactions under the 2018 Agreements and/or the New Agreements (as the case may be) (as revised and supplemented by the Supplementary Agreement) for the two financial years ended 31 December 2019 and 31 December 2020, the details of which were set out in the paragraphs headed "Revision of Existing Annual Caps - Revised Annual Cap for 2019" and "Revision of Existing Annual Caps - Revised Annual Cap for 2020" of this announcement

"Revised Service Fees" the revised service fees under the Sewage Water Plant Operation Agreement (as revised and supplemented by the Supplementary Agreement), the details of which were set out in the paragraph headed "Supplementary Agreement - Revised Service Fees" of this announcement

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"RMB"

"Service Period I"

Renminbi, the lawful currency of the PRC

the service period from 1 July 2018 to 30 June 2019 (both days inclusive) under the 2018 Sewage Water Plant Operation Agreement and the 2018 Sludge Disposal Centre Operation Agreement

"Service Period II"	the service period from 1 July 2019 to 30 June 2020 (both days
	inclusive) under the New Sewage Water Plant Operation Agreement
	and the New Sludge Disposal Centre Operation Agreement
"Sludge Disposal Centre" the Sludge Disposal Centre of the Zhangguizhuang Sewage Water
	Treatment Plant located at Zhangguizhuang, Tianjin, the PRC
"Stock Exchange"	the Stock Exchange of Hong Kong Limited
"Supplementary	the supplementary agreement dated 31 December 2019 entered into
Agreement"	between the Company and Tianjin Infrastructure Construction pursuant
	to which, among others, the existing service fees under the Sewage
	Water Plant Operation Agreement were amended as the Revised
	Service Fees
"Tianjin Infrastructure	Tianjin City Infrastructure Construction and Investment Group
Construction"	Company Limited* (天津城市基礎設施建設投資集團有限公司), the

ultimate controller of the Company and the sole shareholder of TMICL, holding 100% equity interest in TMICL

"TMICL"

Tianjin, the PRC 31 December 2019

Tianjin Municipal Investment Company Limited* (天津市政投資有 限公司), the controlling shareholder of the Company, holding 50.14% equity interest in the Company

By Order of the Board

Liu Yujun

Chairman

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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