Shenzhen International : Joint Announcement - Connected Transaction - Capital Injection Agreement in relation to Capital Injection in Shenzhen Water Planning & Design Institute Company Limited by SZ Expressway

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Reference is made to the joint announcement of SZ International and SZ Expressway (a 50.889% owned subsidiary of SZ International) dated 6 April 2017 in relation to SZ Expressway was recognised as the finalised Type A investor in the Water Planning Company Capital Injection Project, and the proposed capital injection of RMB61,890,000 by SZ Expressway into Water Planning Company in return for 15% registered capital in Water Planning Company upon completion of the capital injection.

The respective board of directors of SZ International and SZ Expressway are pleased to announce that on 13 July 2017, SIHCL, Water Planning Company, SZ Expressway and the Other Investors entered into the Capital Injection Agreement, pursuant to which, among others, SZ Expressway agreed to inject RMB61,890,000 into Water Planning Company in return for 15% registered capital in Water Planning Company upon completion of the capital injection.

SZ Expressway's strategic choice of expanding into new industry has targeted on environmental protection industry which mainly comprises water environment management, solid waste treatment. The board of directors of SZ Expressway believes that, after years of development, Water Planning Company has become a comprehensive water planning and design institute with a number of A-grade water and municipal water supply and drainage qualifications. By investing in Water Planning Company at a reasonable price, SZ Expressway can, on the one hand, expand its environmental business and achieve a reasonable investment return; on the other hand, replenish its professional technical resources in expanding its business in water environmental management and thereby produce industrial synergies. Upon completion of the Capital Injection Agreement, SZ Expressway will appoint a director to Water Planning Company, which provides an opportunity for SZ Expressway to

accumulate management experience in the environmental protection industry and cultivate talents in the field of environmental protection. SZ Expressway is a subsidiary of SZ International, SZ Expressway could expand its environmental business at a reasonable price and expects to generate desirable investment return which is in the interests of SZ International as a whole.

As at the date of this announcement, SZ Expressway is a subsidiary of SZ International, SIHCL is the controlling shareholder of SZ International which indirectly holds approximately 44.45% equity interest in SZ International and the sole shareholder of Water Planning Company. Accordingly, SIHCL and Water Planning Company are connected persons of SZ International and SZ Expressway pursuant to Chapter 14A of the Listing Rules, and the transaction contemplated under the Capital Increase Agreement constitutes a connected transaction of SZ International and SZ Expressway.

For SZ International and SZ Expressway, as the applicable percentage ratios of the transaction under the Capital Injection Agreement are more than 0.1% but lower than 5%, the transaction under the Capital Injection Agreement is subject to the reporting and announcement requirements, but is exempted from the requirement for independent shareholders' approval under Chapter 14A of the Listing Rules.

Reference is made to the joint announcement of SZ International and SZ Expressway (a 50.889% owned subsidiary of SZ International) dated 6 April 2017 in relation to SZ Expressway was recognised as the finalised Type A investor in the Water Planning Company Capital Injection Project, and the proposed capital injection of RMB61,890,000 by SZ Expressway into Water Planning Company in return for 15% registered capital in Water Planning Company upon completion of the capital injection.

The respective board of directors of SZ International and SZ Expressway are pleased to announce that on 13 July 2017, SIHCL, Water Planning Company, SZ Expressway and the Other Investors entered into the Capital Injection Agreement. The principal terms of the Capital Injection Agreement are as follows:

Date

13 July 2017

Parties

1. SIHCL;

2. Water Planning Company;

3. SZ Expressway;

4. Shenzhen Water (Group) Co., Ltd.(深圳市水務(集團)有限公司);

5. Shenzhen Techand Ecology & Environment Co., Ltd.(深圳市鐵漢生態環境股份有限 公司); and

6. Shenzhen Water Planning & Design Institute Investment Co., Ltd.(深圳水規院投資股 份有限公司).

To the best of the knowledge, information and belief of the respective directors of SZ International and SZ Expressway, having made all reasonable enquiries, each of the Other Investors and their respective ultimate beneficial owner(s) are third parties independent of SZ International SZ Expressway.

Capital Injection

As at the date of this announcement, the registered capital of Water Planning Company is RMB20,000,000, which is wholly-owned by SIHCL.

Pursuant to the Capital Injection Agreement, SZ Expressway and the Other Investors agreed to make injection into the capital of Water Planning Company in return for the equity interest therein. Details of the amounts to be injected by SZ Expressway and the Other Investors and the allocation of such injections are as follow:

The shareholding structure of Water Planning Company upon completion of the Capital Injection Agreement is as follow:

Upon completion of the Capital Injection Agreement, SZ Expressway will own 15% equity interest in Water Planning Company, and Water Planning Company will not be included in the consolidated financial statements of SZ Expressway.

Payment manner

Each of SZ Expressway and the Other Investors shall make their respective injection to Water Planning Company within 5 business days from the effective date of the Capital Injection Agreement by way of bank transfer in a one-off payment. Since the next day upon full payment of their respective injection amounts, SZ Expressway and the Other Investors shall become the shareholders of Water Planning Company and enjoy the rights and bear the responsibility of the shareholder accordingly.

Bases for determination of the amount of capital injection

In order to solicit investors in public, SIHCL entrusted SZ Property Exchange to issue the Project Announcement in January 2017 for disclosing the information in relation to the capital injection in Water Planning Company. Pursuant to the Project Announcement, Water Planning Company will solicit 3 types of strategic investors (not more than 1 investor for each type of investor) and implement the policy of letting its management and core backbone members to become its shareholders. The listing price under Water Planning Company Capital Injection Project is RMB10.315 per registered capital. The strategic investors and the management and core backbone members are offered with the same price.

Potential investor shall apply for participation in the Water Planning Company Capital Injection Project with SZ Property Exchange during the period from 19 January 2017 to 20 March 2017. Potential investor who meets with the participation requirements is eligible to carry out the competitive negotiations with the competitive negotiation group organized by SZ Property Exchange. The finalised investor, price of the capital injection, and the proportion of shareholding in Water Planning Company will be determined in the competitive negotiations.

SZ Expressway intended to be a strategic investor and had made relevant application within the prescribed period. It had joined the competitive negotiation on 1 April 2017, during which the strategic investors mainly negotiated about their respective comprehensive strength, operation resources and their offer on the capital injection, of which the offer price for each registered capital of Water Planning Company shall not lower than the listing price of RMB10.315 per registered capital. On 6 April 2017, SZ Expressway and SZ Property Exchange signed the confirmation of the transaction, pursuant to which SZ Expressway is recognised as the finalised investor in the Water Planning Company Capital Injection Project, and it shall inject RMB61,890,000 into Water Planning Company in return for 15% registered capital in Water Planning Company upon completion of the capital injection. The price is RMB10.315 per registered capital, which is same as the listing price stated in the Project Announcement.

The respective board of directors of SZ International and SZ Expressway have considered the aforesaid bases for determination of the amount of capital injection, and are in the opinion that the capital injection of RMB61,890,000 by SZ Expressway into Water Planning Company in return for 15% registered capital therein (i.e. the price per registered capital of Water Planning Company is RMB10.315) is fair and reasonable.