Capital Environment : Announcements and Notices -

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.

首創環境控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 3989)

The Board is pleased to announce that all the conditions as set out in the Acquisition Agreement have been fulfilled, and the Company has issued 4,541,574,877 Consideration Shares (representing approximately 31.8% of the issued share capital of the Company as at the date of this announcement) at a price of HK$0.40 per share to the Vendors in accordance with the Acquisition Agreement and the Consideration of US$234,400,000. The Acquisition was completed on 2 September 2016.

Reference is made to the announcement dated 26 November 2015 (the "Announcement") and the circular dated 8 June 2016 (the "Circular") of Capital Environment Holdings Limited (the "Company" or the "Group") in relation to the very substantial acquisition and connected transaction regarding the acquisition of 51% of the issued share capital of BCG NZ Investment Holding Limited and specific mandate to issue the Consideration Shares. Unless the context otherwise required, capitalized terms used in this announcement shall have the same meanings as those defined in the Circular.

The Board is pleased to announce that all the conditions as set out in the Acquisition Agreement have been fulfilled, and the Company has issued 4,541,574,877 Consideration Shares (representing approximately 31.8% of the issued share capital of the Company as at the date of this announcement) at a price of HK$0.40 per share to the Vendors in accordance with the Acquisition Agreement and the Consideration of US$234,400,000. The Acquisition was completed on 2 September 2016.

Set out below is a table showing the shareholding structure of the Company upon completion of the issuance of the Consideration Shares:

Approximate percentage of

Approximate percentage of

Notes:

1. Both Beijing Capital (HK) and BC Water are wholly-owned subsidiaries of Beijing Capital. Beijing Capital is in turn controlled by Beijing Capital Group. For the purposes of the SFO, Beijing Capital and Beijing Capital Group are deemed to have interest in the Shares held by Beijing Capital (HK) and BC Water.

2. BCG is a wholly-owned subsidiary of Beijing Capital Group. Therefore, Beijing Capital Group is also deemed to be interested in the Shares held by BCG for the purposes of the SFO.

3. To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, all of the other Shareholders are public shareholders for the purpose of Rule 8.08 of the Listing Rules.

The Target Group has over a century of continuing operation and according to the research report entitled "NZ Waste Market Intelligence" prepared by Pacific Strategy Partners Advisory (which is an Australian strategy consulting firm) in 2013 based on publicly available information, was the largest waste management service provider in New Zealand with over 30% market share in 2013 and has established a national network of vertically integrated local waste systems. It generates revenue from comprehensive waste management services, ranging from collection, operation of transfer stations, landfills, recycling, waste disposal to hazardous and industrial waste treatment and serves more than 200,000 customers in New Zealand. The services provided by the Target Group primarily include the following:

• residential collections: curbside collection and transportation of household waste to transfer stations or disposal facilities, with long-term contracts generally awarded by local councils;
• commercial collections: regular and ad-hoc waste collection and transportation from commercial, industrial and construction customers to transfer stations or direct to disposal facilities;
• solid waste processing and disposal service: developing, investing in and operating modernized landfills, transfer stations and recycling facilities across New Zealand; and
• liquid & hazardous waste service: collection, processing, treatment and recycling of hazardous and non-hazardous liquid waste, medical wastes, solids (including packaged goods requiring secure disposal) and solvents.

  The Target Group mainly generates revenue in the following manners:

• residential collections: The Target Group enters into contracts which are generally awarded by local councils, with terms generally ranging from 5 to 15 years. Collection services vary by region as local councils may provide one (refuse), two (refuse and recycling) or three (refuse, recycling and organics). The Target Group also enters into contracts with private subscribers where local councils do not provide waste services or require additional waste services other than the local council's funded service. Service fees are paid to the Target Group pursuant to these contracts. Residential waste collection is normally funded through council rates or user pays models.
• commercial collections: The Target Group enters into contracts with commercial, industrial and construction customers for the provision of regular and/or ad-hoc waste collection services, with terms ranging from 1 to 5 years which roll over. The standard term for this type of service in the New Zealand waste industry is a 3-year contract with roll over provisions. Waste operators typically provide bins at the customer premises. Service fees are paid to the Target Group pursuant to these contracts. The Target Group's client base comprises clients with different sizes, ranging from large enterprises which generate a high volume of wastes and small-medium enterprises which account for a substantial share of the demand for commercial collections in New Zealand.
• solid waste processing and disposal service: The Target Group transports waste to refuse transfer stations where certain recyclable materials are sorted when it is safe and economically viable to do so. Collected recyclable materials are usually processed at specialized material recycling facilities. The rest of the waste will then be consolidated for more economical and efficient haulage to landfills. Revenue for the solid waste processing and disposal service is primarily generated from (i) the service fees paid by the local councils and the commercial customers with which the Target Group enters into service contracts for waste collection and (ii) the sale of recyclable commodities such as paper, plastic and glass. Refuse stations and landfills are typically owned by local councils or private operators (e.g. the Target Group).
• liquid & hazardous waste service: The Target Group enters into customer contracts with various types of customers which generate liquid and hazardous wastes in medical, industrial and manufacturing sites. Special purpose vehicles are used for collection of such liquid and hazardous wastes which are transported to treatment plants for specialized treatment before reuse, release to landfill or disposal as wastewater. The terms and scope of service provided in this type of customer contracts vary depending on the customers' demands. Some contracts are entered into on an ad-hoc basis. Service fees are paid to the Target Group pursuant to these contracts.