The Board of China Everbright Water Limited announced that, on 13 March 2024, the Company, Qingdao Environmental Energy and Laoshan Urban Management Bureau entered into the Concession Agreement in relation to the Project, pursuant to which, the Consortium will incorporate the Project Company. The total investment amount of the Project is expected to be RMB 688,330,000 (equivalent to approximately HKD 764,046,300) which includes the registered capital of the Project Company in the amount of RMB 206,499,000 (equivalent to approximately HKD 229,213,890). Accordingly, the Company and Qingdao Environmental Energy shall hold 49% and 51% equity interests in the Project Company, respectively, upon the incorporation of the Project Company.

Laoshan Urban Management Bureau has been authorised by the People's Government of Laoshan District, Qingdao City to implement the Project and the concession right of the Project will be granted to the Project Company on an exclusive basis for the investment in, financing, construction, implementation, operation, maintenance and transfer of the Waste Water Plant, the provision of waste water treatment services, as well as the receipt of waste water treatment service fees. The Project involves the upgrading of the Waste Water Plant (Phase I) with a designed daily waste water treatment capacity of 40,000 m3 and the construction of the Waste Water Plant (Phase II) with a designed daily waste water treatment capacity of 60,000 m3. During the Concession Period, the Project Company is entitled to use the land of the Project, and is entitled to build, operate and maintain the Project and receive the waste water treatment service fees.

The Project will be undertaken by the Project Company in Laoshan District, Qingdao City, which will involve the investment in, financing, construction and implementation, operation and maintenance, transfer of the Waste Water Plant, as well as provision of waste water treatment services and receipt of waste water treatment service fees. The Concession Period shall be for a period of 30 years, including a construction period of approximately 2 years and an operation period of 28 years (starting from the date of commercial operation of the Project). Laoshan Urban Management Bureau owns the assets of the Project, and the Project Company is entitled to, during the Concession Period, legally occupy and use the assets and facilities of the Project, and receive operation revenue.

The Project Company is also entitled to the land use right of the Project at nil consideration during the Concession Period, provided that the land used for the Project shall not be used for any purpose other than the construction, maintenance and operation of the Project. Upon the expiry of the Concession Period, the Project Company shall transfer the concession right, facilities, land, technologies, intellectual properties, machinery, equipment, components, and spare parts of the Project, as well as the relevant documents, records and information, at nil consideration in accordance with the transfer procedures prescribed under the Concession Agreement. The Project Company shall ensure that all debts, charges, pledges, liens and guarantees created by the Project Company or the Consortium, as well as claims of environmental pollution and claims of other natures initiated by or against the Project Company arising out of the construction, operation and maintenance of the Waste Water Plant shall have been discharged or satisfied.

The Project Company is also required to ensure the overall good condition of the key equipment of the Waste Water Plant as well as the quality and proper operation of the equipment and facilities. The Waste Water Plant shall be located in Laoshan District, Qingdao City, and will provide waste water treatment services. The Project involves the upgrading of the Waste Water Plant (Phase I) with a designed daily waste water treatment capacity of 40,000 m3 and the construction of the Waste Water Plant (Phase II) with a designed daily waste water treatment capacity of 60,000 m3.

The Project will be constructed entirely underground. The main structures of the Project include, among others, the facilities for pre-treatment, secondary treatment and advanced treatment of waste water, sludge treatment and odour control, two underground container corridors, a facility complex and an ozone-generating room. The Company has a business presence in Qingdao City and the Project is another waste water treatment project secured by the Company in Shandong Province, allowing the Company to further expand its presence, reputation and influence in Qingdao City and even the entire Shandong Province, enhance its market share in the waste water treatment industry, and strengthen its business scope.

By implementing the Project, the Company has demonstrated its long-established experience and extensive expertise in waste water treatment projects, assisting the Company in acquiring additional projects in Qingdao City and its surrounding areas in the future. The Company is of the view that the Project is in line with its strategic development plan and will enhance its revenue and profitability, and provide long-term returns and value to its shareholders. The Directors (including the independent non-executive Directors) are of the view that the terms of the Concession Agreement are entered into by each party after arm's length negotiations based on normal commercial terms, and are fair and reasonable and in the interests of the Company and its shareholders as a whole.