Datang Environment Industry Group Co., Ltd. - AGM Information 2018

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this supplemental circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional advisers.

If you have sold or transferred all your shares in Datang Environment Industry Group Co., Ltd., you should at once hand this supplemental circular together with the accompanying proxy form and reply slip to the purchaser(s) or the transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this supplemental circular, 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 supplemental circular.

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**Datang Environment Industry Group Co., Ltd.* 大唐環境產業集團股份有限公司**

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

(Stock Code: 1272)

CONTINUING CONNECTED TRANSACTIONS – FINANCIAL SERVICES AGREEMENT PROPOSED RE-ELECTION OF DIRECTORS AND SUPERVISORS AND SUPPLEMENTAL NOTICE OF THE AGM

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

This supplemental circular (“ Supplemental Circular ”) should be read in conjunction with the circular (“ Original Circular ”) of Datang Environmental Industry Group Co., Ltd. (the “ Company ”) dated 14 May 2018.

A letter from the Board is set out on pages 1 to 20 of this Supplemental Circular. A letter from the Independent Board Committee is set out on pages 21 to 22 of this Supplemental Circular. A letter from the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 23 to 34 of this Supplemental Circular.

The AGM of the Company will be held as originally scheduled at 3:30 p.m. on Friday, 29 June 2018 at No. 120 Zizhuyuan Road, Haidian District, Beijing, the PRC. The supplemental notice of AGM is set out on pages 42 to 45 of this Supplemental Circular.

The supplemental proxy form for use at the AGM is enclosed with this circular and such supplemental proxy form is also published on the websites of the Stock Exchange ( www.hkexnews.hk ) and the Company ( www.dteg.com.cn ).

If you intend to appoint a proxy to attend the AGM, you are required to complete and return the accompanying supplemental proxy form in accordance with the instructions printed thereon. For holders of H Shares, the supplemental proxy form should be returned to the H Share Registrar and for holders of Domestic Shares, the supplemental proxy form should be returned to the Company’s board office in the PRC in person or by post not less than 24 hours before the time fixed for holding the AGM or any adjourned meeting thereof. Completion and return of the supplemental proxy form will not preclude you from attending and voting in person at the AGM or at any other adjourned meeting should you so wish.

For identification purpose only

14 June 2018

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . . .	21
LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED. . . . . . . . . . . . . . . . . . . . . . . .	23
APPENDIX I – GENERAL INFORMATION OF THE GROUP. . . . . . . . . . . . . . . . . . . . . . .	35
SUPPLEMENTAL NOTICE OF THE AGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	42

– i –

DEFINITIONS

Unless the context otherwise requires, the following expressions shall have the following meanings in this Supplemental Circular:

“AGM”	the 2017 annual general meeting of the Company to be held at 3:30
	p.m. on Friday, 29 June 2018 at No. 120 Zizhuyuan Road, Haidian
	District, Beijing, the PRC
“Articles of Association”	the articles of association of the Company (as amended, altered or
	otherwise supplemented from time to time)
“associate(s)”	has the meaning ascribed under the Listing Rules
“Board”	the board of Directors of the Company
“China” or “PRC”	the People’s Republic of China excluding, for the purpose of this
	Supplemental Circular, Hong Kong, Macau Special Administrative
	Region and Taiwan
“China Datang”	China Datang Corporation Ltd. (中國大唐集團有限公司), a state-
	owned enterprise established on 9 April 2003 in accordance with
	the PRC laws and the controlling shareholder and a promoter of
	the Company
“China Datang Group”	China Datang and its subsidiaries (excluding the Group)
“Company”	Datang Environment Industry Group Co., Ltd.* (大唐環境產業集
	團股份有限公司), a joint stock company incorporated in the PRC
	with limited liability, the H Shares of which are listed on the Main
	Board of the Stock Exchange (stock code: 1272)
“connected person”	has the meaning ascribed under the Listing Rules
“continuing connected	has the meaning ascribed under the Listing Rules
transaction(s)”
“controlling shareholder”	has the meaning ascribed under the Listing Rules
“Datang Capital”	China Datang Group Capital Holding Co., Ltd. (中國大唐集團資
	本控股有限公司), a company established on 30 November 2011
	pursuant to the PRC laws, and a subsidiary of China Datang, the
	controlling shareholder of the Company

– ii –

DEFINITIONS

“Director(s)”

director(s) of the Company
“Domestic Shares” the ordinary shares in the share capital of the Company with a nominal value of RMB1.00 each, which are subscribed for and paid up in RMB and have not been listed on any stock exchanges
“Financial Services Agreement”

the financial services agreement entered into by Datang Capital and the Company on 14 June 2018

“Group”

the Company and its subsidiaries

“H Share(s)”
the overseas listed foreign shares of the Company with a nominal value of RMB1.00 each, which are listed on the Main Board of the Stock Exchange
“H Share Registrar”
Computershare Hong Kong Investor Services Limited, the H Share registrar of the Company
“Hong Kong” or “HK”

Hong Kong Special Administrative Region of the PRC

“Independent Board Committee”
an independent committee of the Board comprising Mr. Ye Xiang, Mr. Mao Zhuanjian and Mr. Gao Jiaxiang, all being independent non-executive Directors
“Independent Financial Adviser” or “Orient Capital”
Orient Capital (Hong Kong) Limited, a corporation licensed to carry out type 6 (advising on corporate finance) regulated activities under SFO, and is the independent financial adviser appointed for the purpose of advising the Independent Board Committee and the Independent Shareholders as to the Financial Services Agreement, the Transactions and the revised annual cap thereof
“Independent Shareholders”
the Shareholders who are not required to abstain from voting at the AGM for the resolutions with respect to the Financial Services Agreement
“Latest Practicable Date”
11 June 2018, being the latest practicable date prior to the printing of this Supplemental Circular for the purpose of ascertaining certain information contained in this Supplemental Circular

– iii –

DEFINITIONS

“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Share(s)”	Domestic Share(s) and/or H Share(s)
“Shareholder(s)”	holder(s) of Share(s) of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“subsidiaries”	has the meaning ascribed under the Listing Rules
“Supervisor(s)”	supervisor(s) of the Company
“Transactions”	the transactions contemplated under the Financial Services
	Agreement, in relation to the provision of finance lease and
	commercial factoring service by Datang Capital to the Company
“%”	per cent

– iv –

LETTER FROM THE BOARD

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**Datang Environment Industry Group Co., Ltd.* 大唐環境產業集團股份有限公司**

(A joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1272)

Non-executive Directors:

Mr. Jin Yaohua Mr. Liu Chuandong Mr. Liang Yongpan Mr. Liu Guangming

Executive Directors: Mr. Deng Xiandong Mr. Lu Shengli

Independent Non-executive Directors:

Mr. Ye Xiang Mr. Mao Zhuanjian Mr. Gao Jiaxiang

Registered Office and Head Office

in the PRC: No. 120 Zizhuyuan Road, Haidian District, Beijing, the PRC

Principal Place of Business

in Hong Kong: 31/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong

14 June 2018

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS – FINANCIAL SERVICES AGREEMENT PROPOSED RE-ELECTION OF DIRECTORS AND SUPERVISORS AND SUPPLEMENTAL NOTICE OF THE AGM

I. INTRODUCTION

Reference is made to the announcement of the Company dated 14 June 2018 (the “ Announcement ”), in relation to the entering into of the Financial Services Agreement between the Company and Datang Capital. Details of relevant continuing connected transactions (including annual caps) are set out in this supplemental circular.

For identification purpose only

– 1 –

LETTER FROM THE BOARD

Reference is made to the announcement of the Company dated 14 June 2018 in relation to the proposed change of session of the Board and the supervisory committee.

This supplemental circular (the “ Supplemental Circular ”) shall be read in conjunction with the circular of the Company dated 14 May 2018 (the “ Original Circular ”). Unless the context otherwise requires, the terms used in the Supplemental Circular shall have the same meaning as those defined in the Original Circular.

The purposes of this Supplemental Circular are to provide you with, among other things: (i) further details of Financial Services Agreement and the proposed annual caps; (ii) further details of the proposed change of session of the Board and the supervisory committee; (iii) a letter of recommendation from the Independent Board Committee in relation to the matters set out in (i); (iv) the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the matters set out in (i); (v) a supplemental notice of the AGM; and (vi) other information as required under the Listing Rules.

II. FINANCIAL SERVICES AGREEMENT

Introduction

On 14 June 2018, the Company entered into the Financial Services Agreement with Datang Capital. According to the Financial Services Agreement, Datang Capital agreed to provide the Company with finance lease and commercial factoring service. Details of the Financial Services Agreement are set out as follows.

Date:

14 June 2018

Parties: (1) Datang Capital; and

(2) the Company

Term: From the date of agreement until 31 December 2020, and could be renewed as agreed by both parties.

Principal terms:

According to the Financial Services Agreement, Datang Capital agreed to provide the Company with (i) finance lease service; and (ii) commercial factoring service.

– 2 –

LETTER FROM THE BOARD

Proposed annual caps

The proposed annual caps of financial leasing services under the Financial Services Agreement for each of the year ended 31 December 2018, 31 December 2019 and 31 December 2020 are as follows:

	Proposed annual caps for the year ended 31 December	Proposed annual caps for the year ended 31 December	Proposed annual caps for the year ended 31 December
	2018	2019	2020
		(RMB’000)
Maximum daily balances of leasing principal	910,000	910,000	910,000
Annual interests and other payments:
Outstanding interest fee and handling fee	90,000	90,000	90,000

The proposed annual caps of commercial factoring services under the Financial Services Agreement for each of the year ended 31 December 2018, 31 December 2019 and 31 December 2020 are RMB500 million, RMB500 million and RMB500 million, respectively.

As of 31 December 2017, the payable principal and interests of bank loans of the Group due within 1 year amounted to approximately RMB1,427 million in aggregate, and the payable principal and interests of bank loans of the Group due between 1–2 years amounted to approximately RMB709 million in aggregate. The total amount of banks loans due within 1 year and between 1–2 years will be approximately RMB2,136 million. Upon maturity of such bank loans, the Group expects to perform refinancing to cover the abovementioned bank loans as well as the fresh working capital for expanding the business of the Group. However, impacted by the increasingly tightening macro lending policies in the PRC, since 2017, the interest rate of the bank loans of the Group presented an upward trend and terms of the bank loans also have become much less favourable. As a result, the Group expects, based on the bank loan facilities which it has obtained, to obtain a lower level of financing through banks loan and thus is actively expanding financing channels so as to meet a need for financing amounting to approximately RMB1.4 billion. Of such need for financing and having discussed and negotiated with the Datang Capital on an arm’s length, Datang Capital would be able to provide the Group with financing services by way of commercial factoring of around RMB500 million pursuant to its internal business planning, while the remaining financing will be provided by Datang Capital by way of financial leasing services.

Given the above, taking into account (i) the abovementioned amount of principal and interests to be repaid upon maturity of the bank loans of the Group; (ii) the expected decreasing amount of bank loans and higher interest rate level to be obtained by the Group in the future for refinancing the abovementioned banks loans and for the expanding business of the Group; and (iii) the relevant terms of finance leasing service and commercial factoring service provided by Datang Capital to accommodate the Group’s need for financing, the Group has determined the proposed annual caps of the finance leasing service and commercial factoring service under the Financial Services Agreement, respectively.

– 3 –

LETTER FROM THE BOARD

Historical transaction amount

There was no historical transaction amount between the Company and Datang Capital for the finance lease services and commercial factoring services under the Financial Services Agreement.

Pricing policy

(1) Financial leasing under the Financial Services Agreement

The rent paid by the Group to Datang Capital includes (i) procurement costs and (ii) interests. The interests are determined based on the benchmark interest rates for loan as implemented by the People’s Bank of China.

The Financial and Property Management Department of the Company will be responsible for the adoption and implementation of the pricing policies in relation to the financial leasing services under the Financial Services Agreement. Before entering into financial leasing transactions, the Financial and Property Management Department will seek, obtain and refer to the price quotes and business proposals from at least three third party providers independent from the Datang Capital. It will then compare such quotes and proposals with the price quotes and proposals offered by the Datang Capital, taking into various factors such as price quotes, other commercial terms, level of synergy to be achieved, historical transactional records with such party, etc.. The Group will enter into financial leasing transactions with such third party providers if their terms are more favourable than that offered by the Datang Capital as a result of the aforesaid comparison and consideration.

(2) Commercial factoring services under the Financial Services Agreement

The comprehensive interest rate relating to the commercial factoring services provided by Datang Capital to the Group shall be based on fair and reasonable market pricing and normal commercial terms. In particular, the rate shall not be higher than the interest rate level provided by independent third parties to the Group for the same type of service during the same period or the interest rate of the same type of service provided by Datang Capital to third parties with same credit rating.

The Financial and Property Management Department of the Company will be responsible for the adoption and implementation of the pricing policies in relation to the commercial factoring services under the Financial Services Agreement. Before entering into commercial factoring transactions, the Financial and Property Management Department will seek, obtain and refer to the price quotes and business proposals from at least three third party providers independent from the Datang Capital. It will then compare such quotes and proposals with the price quotes and proposals offered by the Datang Capital, taking into various factors such as price quotes, other commercial terms, level of synergy to be achieved, historical transactional records with such party, etc.. The Group will enter into commercial factoring transactions with such third party providers if their terms are more favourable than that offered by the Datang Capital as a result of the aforesaid comparison and consideration.

– 4 –

LETTER FROM THE BOARD

Reasons for and benefits of the transactions under the Financial Services Agreement

(1) Financial leasing services

Datang Capital is a professional financial leasing service provider. Based on the needs of business operations, the Group negotiated with Datang Capital in respect of financial leasing arrangements on normal commercial terms.

(2) Commercial factoring services

The transactions under the commercial factoring service will help the Company optimize its asset structure, accelerate the efficiency of asset turnover, save costs, improve the efficiency of capital use, broaden the financing channels, and reduce financing costs, which is in line with the overall development strategies of the Company and is in the interests of the Company and the shareholders as a whole.

Based on the above, the Directors of the Company (including independent non-executive Directors) are of the view that the terms of the Financial Services Agreement and the transactions contemplated thereunder are entered into based on arm’s length negotiations, in the ordinary and usual course of business of the Group and on normal commercial terms, and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Relevant Internal Control Measures of Continuing Connected Transactions

We have implemented the following internal control procedures to closely monitor and manage new and on-going connected transactions with China Datang Group (including Datang Capital):

At the beginning of each calendar year, the Financial and Property Management Department will issue an internal notice circulating the annual cap of connected transactions with China Datang Group for this particular year and remind each member and department of our Group to follow internal control procedures for the control of transaction value with China Datang Group in daily business operations.

– 5 –

LETTER FROM THE BOARD

The Financial and Property Management Department is responsible for maintaining and updating the list of connected persons of our Group. Such list will be circulated to members and relevant departments of our Group on a regular basis.

• Business contracts of our Group are negotiated by the relevant business departments which are subject to review and approval by the Strategic Planning and Cost Management Department before execution. Before submitting any new business contract to the Strategic Planning and Cost Management Department, the relevant business department is required to check the identity of each party to such contract against the latest list of connected persons of our Group. If any party is identified as a connected person, the relevant business department will initiate special application procedures (“Connected Transaction Identification Process”) with required information of the proposed transaction to the Strategic Planning and Cost Management Department for review and approval. In addition, the Materials Management Department (物資管理部) and the Market Development Department (市場開發部) will screen the Connected Transaction Identification Process and ensure all connected transactions will be submitted to the Strategic Planning and Cost Management Department for approval. The Strategic Planning and Cost Management Department has adopted stringent control policies in reviewing and approving connected transactions, including, cross checking relevant information of the projects (e.g., transaction amounts, expected project completion date and progress) against the annual caps. If the proposed transaction is generally consistent with the Strategic Planning and Cost Management Department’s planning, usually such contract can proceed to execution. However, if there exists significant difference, the Strategic Planning and Cost Management Department will check against the monthly report provided by the Financial and Property Management Department for assessment on whether the value of the proposed contract would potentially cause the actual total transaction value to exceed the annual cap of that year, taking into consideration of the actual amount of connected transactions that have already occurred. In the case that the proposed contract is expected to potentially cause the total actual transaction value to exceed the annual cap of that year, the Strategic Planning and Cost Management Department usually will not approve such contract to proceed to execution. In the case that any proposed transaction that may potentially cause the actual total transaction value to exceed the annual cap, if the Strategic Planning and Cost Management Department considers such transaction has great commercial value or other significant benefits to our Group, it may escalate to senior management or the Board for decision making by going through relevant corporate governance procedures in compliance with relevant rules and regulatory requirements. In the event that our Company decides to proceed with the proposed transactions, it would be required to seek shareholders’ approval for revision of the annual caps in accordance with the requirements under the Listing Rules. In addition, any amendment of existing connected transaction contract will follow the same procedures as execution of new business contracts.

– 6 –

LETTER FROM THE BOARD

The Financial and Property Management Department has set up a monthly reporting system for connected transactions, where it requires all members and departments of our Group to report in the beginning of each month (i) the amount of connected transactions occurred in the previous month; (ii) the accumulative connected transaction amount occurred in that year; and (iii) the expected transaction amount for the rest of the year. If the accumulative connected transaction amount has proportionately exceeded the annual cap of the year in a substantial manner or if the amount of the connected transactions occurred together with the expected transaction amount for the rest of the year will exceed the annual cap, the relevant member or department of our Group is required to report to the Financial and Property Management Department the reasons for deviation and the proposed rectification measures. Subsequently, the Financial and Property Management Department will notify the Strategic Planning and Cost Management Department of such deviation or potential deviation by relevant member or department, and the Strategic Planning and Cost Management Department will closely monitor and control the approval of new business contracts for relevant member or department.
For all the on-going projects, if the relevant business departments is aware of any material change in relation to transaction amounts or expected timing that could potentially cause the actual total transaction value to exceed the annual cap of that year, such change is required to be promptly reported to the Financial and Property Management Department for approval, who will cross check with annual planning and monthly report for assessment. In the case that such material change is likely to cause the actual total transaction value to exceed the annual cap of that year, the Financial and Property Management Department usually will not approve such material change. Despite the above, if the Financial and Property Management Department considers such material change has great commercial value or other significant benefits to our Group, it may escalate to senior management or the Board for decision making by going through relevant corporate governance procedures in compliance with relevant rules and regulatory requirements. In the event that our Company decides to proceed with the proposed transactions, it would be required to seek shareholders’ approval for revision of the annual caps in accordance with the requirements under the Listing Rules.
Furthermore, our Group has adopted relevant assessment standards in its employee performance evaluation system, where each department and employee will be evaluated on their contribution in terms of exploring independent contracts and controlling the amount and ratio of connected transactions, which has direct impact on their remuneration.

– 7 –

LETTER FROM THE BOARD

Listing Rules Implications

As China Datang directly held approximately 78.17% of the issued share capital of the Company as at the Latest Practicable Date, it is a controlling shareholder of the Company. Datang Capital is a wholly-owned subsidiary of China Datang. Pursuant to Chapter 14A of the Listing Rules, China Datang and Datang Capital are therefore connected persons of the Company. Accordingly, the Financial Services Agreement and the Transactions constitute continuing connected transactions of the Company under the Listing Rules.

Given that one or more of the relevant percentage ratios (as defined in Rule 14.07 of the Listing Rules) of the Transactions calculated with reference to the proposed annual cap is more than 5%, the Financial Services Agreement, the Transactions (including finance lease services and commercial factoring services) and the proposed annual caps are subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Mr. Jin Yaohua, Mr. Liu Chuandong, Mr. Liu Guangming and Mr. Liang Yongpan are holding positions in China Datang or its subsidiaries and therefore have abstained from voting at relevant Board meeting approving the Financial Services Agreement and the Transactions. Save as mentioned above, all Directors have confirmed that they have no material interests in the Financial Services Agreement and the Transactions thereof.

General Information

The Company is a non-wholly-owned subsidiary of China Datang, and is the sole platform for the development of environmental protection and energy conservation business under China Datang Group, one of the five major state wholly-owned power generation groups in the PRC. The principal business of the Group includes environmental protection facility concession operation, denitrification catalysts, environmental protection facilities engineering, water treatment business, energy conservation business and renewable energy engineering business.

China Datang is a state-owned enterprise established in the PRC in April 2003 and is the controlling shareholder of the Company. China Datang is primarily engaged in the development, investment, construction, operation and management of power energy; organization of power (thermal) production and sales; manufacture, maintenance and commissioning of electric power equipment; power technology development and consultation; contracting and consulting of electric power engineering and environmental protection projects; development of renewable power; and selfoperating and being an agent for import and export of any kind of goods and technology save for those where the import or export of the goods and technology are restricted or prohibited by national laws and regulations.

– 8 –

LETTER FROM THE BOARD

Datang Capital was established on 30 November 2011, and is a subsidiary of China Datang, controlling shareholder of the Company. The main business scope is: investment management, asset management and investment consultation.

III. PROPOSED RE-ELECTION OF DIRECTORS AND SUPERVISORS

Reference is made to the announcement of the Company dated 14 June 2018 in relation to the proposed change of session of the Board and the supervisory committee.

The term of office of members of the first session of the Board and the supervisory committee of the Company will expire in June 2018. According to the relevant provisions in the Articles of Association of the Company, all members of the First Session of the Board of Directors and the First Session of the supervisory committee of the Company will continue to perform their duties as the directors and supervisors of the Company before the completion of change of session of the Board of Directors and the supervisory committee of the Company.

The Board hereby announces that the following persons (the “ Nominees ”) had been nominated as members of the second session of the Board and the supervisory committee of the Company. Ordinary resolutions approving their election will be submitted to the Shareholders at the AGM for consideration and approval.

Candidates for the proposed election of Directors:

(1) Mr. Jin Yaohua, Mr. Liu Chuandong, Mr. Liu Guangming and Mr. Li Yi as non-executive Directors;
(2) Mr. Deng Xiandong and Mr. Lu Shengli as executive Directors; and
(3) Mr. Ye Xiang, Mr. Mao Zhuanjian and Mr. Gao Jiaxiang as independent non-executive Directors.

Candidates for the proposed election of Supervisors:

(1) Mr. Wang Yuanchun and Mr. Miao Shihai as non-employee representative Supervisors.

Mr. Liang Yongpan and Mr. Liu Liming will retire and will not stand for election as the Director of the Second Session of the Board of Directors and the Supervisor of the Second Session of the supervisory committee of the Company, respectively. The retiring Director (i.e. Mr. Liang Yongpan) and Supervisor (i.e. Mr. Liu Liming) have confirmed that they have no disagreement with the Board of Directors and the supervisory committee and there are no matters that need to be brought to the attention of the Shareholders.

– 9 –

LETTER FROM THE BOARD

Information about Nominees of Directors

Mr. Jin Yaohua (金耀華)

Aged 58, is the chairman of the Board and a non-executive Director of the Company. Mr. Jin had approximately 20 years of working experience in the power industry. Before joining the Company, Mr. Jin successively served as the technician, engineer, deputy director, director, and secretary of Communist Party Branch at the Thermal Workshop of Huabei Power (華北電力試驗所) from August 1982 to January 1994. He then worked in the Science Research Institute of Huabei Power (華北電力科學研究院) serving successively as the deputy secretary of the Communist Party Committee, vice dean and deputy secretary from January 1994 to September 1996. Mr. Jin was the secretary of the Communist Party Committee and deputy manager of Zhangjiakou Power Plant (張家口發電廠) from September 1996 to February 1998; and he was the manager of Qinghuangdao Thermal Power Plant (秦皇島熱電廠) from February 1998 to November 1999. Between November 1999 and January 2003, Mr. Jin successively served as the deputy chief engineer, chief engineer and deputy general manager of Beijing Datang Power Generation Co., Ltd. (北京大唐發電股份有限公司). Mr. Jin held various positions at China Datang from January 2003 to August 2011, including the director of the safety production department, deputy chief engineer and chief engineer; and he has been serving as the deputy general manager of China Datang commencing from August 2010. From April 2010 to August 2014, Mr. Jin served as the director of Datang Huayin (a company listed on the Shanghai Stock Exchange, stock code: 600744). Mr. Jin obtained a bachelor’s degree in thermal surveying and automation of power plants at the School of Water Resources and Electric Power of Wuhan University (武漢水利電力學院) in 1982. Mr. Jin was recognized as a senior engineer by the North China Electric Power Administration Bureau (華北電業管理局) in October 1992.

– 10 –

LETTER FROM THE BOARD

Mr. Liu Chuandong (劉傳東)

Aged 55, is a non-executive Director of the Company. Mr. Liu had more than 30 years of experience in financial management in the power industry. Prior to joining the Company, Mr. Liu served successively as the person in charge of the Youth League Committee, deputy director (in charge) of the finance department, deputy chief accountant and head of the finance department of Shandong Jining Power Plant (山東濟寧發電廠) from July 1981 to March 1996. From March 1996 to November 1997, Mr. Liu worked as the head of the accounting and audit division of the finance department and the deputy director of the finance department at Shandong Electric Power Industry Bureau (山東省電力工業局). He was the chief accountant at Jinan Yingda International Trust Co., Ltd. (濟南英大國際信託投資公司) from November 1997 to September 1999; the chief accountant and member of the Communist Party Committee of Shandong Power Generation Company (山東電力發電公司) from September 1999 to December 2001; and the deputy chief accountant at Shandong Branch of Huaneng Power International Inc. (華能國際電力股份有限公司山東分公司) from December 2001 to May 2003. During the periods from May 2003 to June 2006, July 2008 to April 2011, and May 2012 to January 2014, Mr. Liu successively served as the senior officer of property and capital at the finance and property management department, deputy director of fund settlement and management center, deputy director of finance and property management department, and director of fund settlement and management center at China Power Investment Corporation (中國電力投資集團公司). Mr. Liu worked for CPI Financial Co., Ltd. (中電投財務有限公司) during the periods from June 2006 to July 2008 and from April 2011 to January 2014, serving successively as the deputy general manager, member of the Communist Party Committee, deputy director of fund settlement and management center, general manager and deputy secretary of the Communist Party Committee. Mr. Liu was a member of the Communist Party Committee of CPI Ronghe Holdings Investment Group Company (中電投融和控股投資有限公司) from December 2011 to January 2014; the general manager and secretary of the Communist Party Committee of China Datang Group Finance Co., Ltd. (中國大唐集團財務有限公司) from January 2014 to May 2014; and the director of the financial management department of China Datang from May 2014 to November 2015. Mr. Liu has been the secretary of the Communist Party Committee of Capital Holding since May 2014 and the chief accountant and member of the Communist Party Community of China Datang since November 2015. In addition, Mr. Liu also holds directorships in other listed companies. He served as a director of Datang Huayin (a company listed on the Shanghai Stock Exchange, stock code: 600744) from June 2015 to June 2016. Mr. Liu has been serving as a nonexecutive director of Datang International Power Generation Co., Ltd. (a company listed on the Shanghai Stock Exchange, stock code: 601991; a company listed on the Stock Exchange, stock code: 991) since July 2016. Mr. Liu graduated from Shandong Electric Power School (山東電力學校) in 1981, majoring in thermal power equipment in power plants. He further graduated from the Central Party School of the Communist Party of China (中央黨校) in 2001, majoring in economics. He was also accredited as a senior accountant by the Power Industry Bureau of Shandong Province (山東省電力工業局) in February 1998.

– 11 –

LETTER FROM THE BOARD

Mr. Liu Guangming (劉光明)

Aged 46, is a non-executive Director of the Company. Mr. Liu has over 10 years of extensive experience in the power industry. Before joining the Company, Mr. Liu worked in China Huadian Corporation serving successively as head of directors and supervisors office and head of 2nd division of cadre management of Human Resources Department from July 2005 to February 2008. Between February 2008 and June 2010, Mr. Liu served as an assistant general manager of China Huadian Corporation Capital Holdings Limited (中國華電集團資本控股公司). He held various positions at China Huadian Corporation Finance Company Limited (中國華電集團財務有限公司) from June 2010 to May 2014, including a deputy general manager and a party member. From May 2014 to March 2016, he served as the general manager and deputy secretary of Communist Party Committee at China Datang Group Finance Co., Ltd. (中國大唐集團財務有限公司). Since March 2016, he has been serving as the head of capital operation and assets management department of China Datang. Since March 2018, he served as the chief economist of China Datang. In addition, Mr. Liu also holds directorships in other listed companies. He has served as a director of Guangxi Guiguan Electric Power Co., Ltd. (a company listed on the Shanghai Stock Exchange, stock code: 600236) since June 2016, a director of Datang Huayin (a company listed on the Shanghai Stock Exchange, stock code: 600744) since June 2016 and a non-executive director of Datang Renewable (a company listed on the Stock Exchange, stock code: 1798) since June 2016. Mr. Liu obtained a master’s degree in electric power system and automation from North China Electric Power University (華北電力大學) in June 2005. He was accredited as a senior engineer by State Power Corporation of China (國家電力公司) in December 2003.

Mr. Li Yi (李奕)

Aged 51, before joining the Company, Mr. Li served successively in Changchun No.1 Thermal Power Plant (長春熱電一廠) from August 1990 to March 2000 as a mechanic in Turbine Engine Department, technician, deputy director and the director of the Turbine Engine Department, as well as the division chief of Biotechnology Division, deputy chief engineer and division chief of Biotechnology Division, and deputy chief engineer and standing manager of the Head Office. From March 2000 to November 2006, he held various positions in Changshan Thermal Power Plant (長山熱電廠), including deputy director, director and member of the Party Committee. Mr Li was the general manager of Datang Changchun No.2 Cogeneration Power Co., Ltd. (大唐長春第二熱電有限責任公司) and Changchun Thermal Power Development Co., Ltd. (長春熱電發展有限公司) from November 2006 to November 2007. From November 2007 to April 2009, Mr. Li served as the director of the ideological and political work department and the secretary of Party Committee of Datang Jilin Power Generation Co., Ltd. (大唐吉林發電有限公司). During the period of April 2009 to July 2010, he served as the general manager of Datang Jilin Renewable Power Co., Ltd. (大唐吉林瑞豐新能源發電有限公司). Mr. Li served successively in Datang Shandong Power General Plant (大唐山東發電有限公司) from July 2010 to December 2014 as the director of Engineering Management Department, deputy chief engineer and the director of Engineering Management Department, as well as deputy general manager, and the member of the Party Committee (equivalent

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LETTER FROM THE BOARD

to Deputy Head Rank in the Headquarter of the Group). In the periods of December 2014 to December 2016 and December 2016 to December 2017, he held the position of the deputy director of the safety production department of the China Datang Corporation (中國大唐集團公司), and the deputy director of the safety production department of the China Datang Corporation and the deputy director of the training center of Beijing International Clean Energy Power Generation (北京國際清潔能源發電培訓中心) respectively. From December 2017 to April 2018, he was the director of the Safety Management and Production Department of the China Datang Corporation, Datang International Power Generation Co., Ltd. and China Datang Corporation Renewable Power Co., Limited, and the deputy director of the training center of Beijing International Clean Energy Power Generation. Mr. Li obtained the Bachelor of Engineering in Power Engineering from Southeast University in July 1990 and a Master’s Degree in Economics from the School of Economics of Jilin University in June 2004. In December 2000, Mr. Li was qualified as a senior engineer by the Senior Technical Expert Qualifications Boards of State Electric Power Corporation (國家電力公司高級專業技術資格評審委員會).

Mr. Deng Xiandong (鄧賢東)

Aged 53, has been serving as the general manager of the Company since July 2013, an executive Director of the Company since August 2013, and the vice secretary of the Communist Party Committee of the Company since January 2015, being responsible for the overall business operation and management of the Company. Mr. Deng possessed approximately 30 years of working experience in the power industry and used to be responsible for the business operation and management of various electric power enterprises. Before joining the Company, Mr. Deng worked as a specialized technician of the production division at Xia Huan Yuan Power Plant (下花園發電廠) and Zhangjiakou Power Plant (張家口發電廠) from July 1987 to March 1993, and he served as the specialized technician of the powder production workshop and deputy manager of the production technology department of Zhangjiakou Power Plant from March 1993 to December 1998. During the period from December 1998 to September 2004, he served successively as the deputy plant manager, deputy chief engineer and head of equipment division and chief engineer at Plant A of Beijing Datang Power Zhangjiakou Power Plant (北京大唐發電張家口發電廠). Moreover, Mr. Deng was the general manager of Shanxi Datang International Yungang Thermal Power Company Limited (山西大唐國際雲岡熱電有限責任公司) from September 2004 to August 2006. From August 2006 to March 2009, Mr. Deng served successively as the deputy director of the Yunnan Representative Office of China Datang, the member of Communist Party Committee, deputy general manager and deputy director of planning and development department of the Yunnan Branch of China Datang. From August 2006 to June 2007, he worked successively as the general manager, member of Communist Party Committee of the Yunnan Branch of Datang International Power Generation Co., Ltd. (大唐國際發電股份有限公司). From June 2007 to April 2008, he was the secretary of the Communist Party Committee and general manager of Yunnan Datang International Electric Power Generation Company Limited (雲南大唐國際電力有限公司). From March 2009 to July 2013, Mr. Deng served as the vice secretary and secretary of Communist Party Committee, deputy general manager (in charge) and general manager of Datang Shandong Power Generation

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LETTER FROM THE BOARD

Co., Ltd. (大唐山東發電有限公司). Mr. Deng graduated from Northeast China Institute of Electric Power (東北電力學院) and obtained a bachelor’s degree in thermal power engineering for power plants in 1987. He further obtained a master’s degree in power engineering at North China Electric Power University (華北電力大學) in 2004. Mr. Deng was accredited as a senior engineer by the North China Power Administration Bureau of the Ministry of Power Industry (電力工業部華北電業管理局) in September 1998.

Mr. Lu Shengli (路勝利)

Aged 58, was the vice secretary of Communist Party Committee of the Company and a Supervisor from December 2013 to January 2015. He has been serving as the secretary of Communist Party Committee, deputy general manager and head of the disciplinary committee of the Company since January 2015 and has been the executive Director of the Company since June 2015, being responsible for work related to the Communist Party Committee, disciplinary inspection affairs, staff salaries, legal affairs and logistics work of the Company. Mr. Lu had approximately 20 years of extensive experience in the power industry. Before joining the Company, Mr. Lu served successively as a member and director of the first division of the Supervisory Administration Bureau of the Ministry of Electric Power (電力部監察局) from August 1994 to August 1996. From August 1996 to January 2003, he worked successively as the deputy manager and manager of the third supervisory division of the supervisory administration of the State Power Corporation (國家電力公司). From January 2003 to December 2003, he was the manager of the first division of the supervision department of China Datang. During the period from December 2003 and November 2006, Mr. Lu served successively as the member of the Communist Party Committee, head of the disciplinary and supervisory committee and chairman of the labor union of Longtan Hydropower Development Co., Ltd. (龍灘水電開發有限公司). From November 2006 to December 2013, he was the vice secretary of Communist Party Committee, secretary of the disciplinary and supervisory committee and chairman of the labor union of China National Water Resources & Electric Power Materials & Equipment Co., Ltd. (中國水利電力物資有限公司). Mr. Lu graduated from Engineering Institute of the People’s Liberation Army for Engineering Soldiers (中國人民解放軍工程兵工程學院) and obtained a bachelor’s degree in mechanical engineering in 1983. He further obtained a master’s degree in business administration at Ukrainian-American Humanitarian University (烏克蘭烏美人文大學) in 2002. Mr. Lu was accredited as a senior engineer by the Ministry of Power Industry (電力工業部) in October 1995.

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LETTER FROM THE BOARD

Mr. Ye Xiang (叶翔)

Aged 54, is an independent non-executive Director of the Company. Mr. Ye possessed over 20 years of extensive experience in the industries relating to finance, banking and regulation. Mr. Ye was an economist of the People’s Bank of China from August 1994 to July 1998, and he worked for Hong Kong Monetary Authority (香港金融管理局) as a senior analyst from August 1998 to July 2000. Mr. Ye served as the executive director of the Bank of China International Holdings Limited (中銀國際控股有限公司) from August 2000 to July 2001. During the period from August 2001 to October 2007, he served successively as the director of China affairs of the Securities and Futures Commission of Hong Kong. Mr. Ye has been acting as the managing director of Vision Gain Capital limited (匯信資本有限公司) since November 2007; an independent director of UBS Securities LLC (瑞銀證券有限責任公司) since March 2010; and a member of the Public Shareholders Group of the SFC since April 2015. In addition, Mr. Ye has held directorship in other listed companies, including the position of independent non-executive director of Wuling Motors Holdings Limited (五菱汽車集團控股有限公司) (a company listed on the Stock Exchange, stock code: 0305) since October 2008 and the position of independent director of Shenzhen Shenxin Taifeng (Group) Co., Ltd. (深圳市深信泰豐（集團）股份有限公司) (a company listed on the Shenzhen Stock Exchange, stock code: 000034) from June 2011 to May 2016. Mr. Ye obtained a doctoral degree in economics at the Financial Research Institute of the People’s Bank of China (中國人民銀行總行金融研究所) in 1995. Mr. Ye was accredited as a chartered financial analyst by the CFA Institute in September 2004.

Mr. Mao Zhuanjian (毛專建)

Aged 65, is an independent non-executive Director of the Company. Mr. Mao possessed extensive experience in the environmental protection, energy conservation and clean production of the power industry. Mr. Mao currently serves as the senior expert of the energy conservation and environmental protection division of CEC (中國電力企業聯合會節能環保分會), member of the specialized committee for energy and environment of China Energy Research Society (中國能源研究會能源與環境專業委員會), member of the specialized committee for electric power and environmental protection of the Chinese Society for Electrical Engineering (中國電機工程學會電力環保專業委員會) and member of the low-carbon economics taskforce of the China Association of Plant Engineering Consultants (中國設備監理協會低碳經濟工作委員會). Before joining the Company, Mr. Mao was the engineer and deputy head of the environmental protection office of the planning department of the Ministry of Water and Power Industry (國家水電部) from February 1986 to November 1988. Between November 1988 and November 1993, Mr. Mao served as the deputy head of the Environmental Protection and Management Division (環境保護管理處) under the environmental protection center for China Electricity Council (中國電力企業聯合會環境保護中心). From November 1995 to September 2005, he served as director of the consulting division of CEC Electric Power Construction Technical Center (中電聯電力建設技術中心) under the State Power Corporation. From October 2005 to June 2017, he served successively as the manager of

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LETTER FROM THE BOARD

environmental protection division and the manager of climate change response division under the CEC, the vice secretary for the National Collaborative Network for Desulfurization and Denitrification Technologies for the Power Industry (全國電力行業脫硫脫硝技術協作網), and the deputy secretary and deputy secretary general for the energy conservation and environmental protection sub-division under the CEC. Mr. Mao graduated from Guizhou Industrial College (貴州工學院) in 1976, majoring in inorganic chemistry. Mr. Mao was accredited as a professor-level senior engineer by the Ministry of Power Industry in April 1999 and was engaged by the energy conservation and environmental protection sub-division under CEC as a core professional for CEC (中國電力企業聯合會核心專家) in June 2014. Mr. Mao was twice accredited as an expert in the expert reserves for environmental protection and energy conservation professionals for the power industry (電力行業環保節能專家庫專家) by CEC in October 2013 and August 2014, respectively.

Mr. Gao Jiaxiang (高家祥)

Aged 44, is an independent non-executive Director of the Company. Mr. Gao has considerable working experience in internal and external corporate audit, investment, merger and acquisition, restructuring and corporate valuation. Before joining the Company, Mr. Gao served as an audit manager at Xinxiang Juzhongyuan Certified Public Accountants (新鄉巨中元會計師事務所有限責任公司) from May 1996 to July 2003. He then worked at the Beijing branch of Nanfang Minhe Certified Public Accountants as the manager of audit department from August 2003 to June 2006. He worked as the department manager at Beijing Zhonghe Dingxin Certified Public Accountants (北京中和鼎信會計師事務所) from July 2006 to August 2007 and the department manager at Beijing Tianyuanquan Certified Public Accountants (北京天圓全會計師事務所) from September 2007 to February 2009. He then served as the chief financial officer of Beijing Guanshi Foundation International Investment Management Company Limited (北京管氏基業國際投資管理有限公司) from March 2009 to June 2017. From June 2017 to October 2017, Mr. Gao served as the chief financial officer of Risun Chemical Co., Ltd. (旭陽化工有限公司). Since October 2017, he has been serving as an executive director and the general manager of Beijing Huamai Huizhong Technology Co., Ltd. (北京華麥惠眾科技有限公司). Mr. Gao graduated from Central University of Finance and Economics (中央財經大學) in January 2009 and obtained a bachelor’s degree in accounting. He then obtained an MBA from Central University of Finance and Economics in June 2016. He was accredited as a certified public accountant by the Chinese Institute of Certified Public Accountants in April 2003 and as a certified tax agent by Henan Certified Tax Agent Management Center in June 2002.

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LETTER FROM THE BOARD

Information about Nominees of Supervisors

Mr. Wang Yuanchun (王元春)

Aged 54, is the chairman of the Supervisory Committee of the Company. He had nearly 30 years of working experience in the power related industries. Prior to joining the Company, Mr. Wang served successively as the director of the boiler department, specialized technician of the biotechnology division, manager of the biotechnology division, and deputy plant manager and the engineer of Hancheng Power Plant (韓城發電廠) under Datang Xiaxi Power Co., Ltd. (大唐陝西發電有限公司) from July 1986 to September 1999. Mr. Wang worked as the deputy head of Baoji Power Plant (寶鷄發電廠) from September 1999 to April 2001, the deputy general manager at the North West Power Development Co., Ltd. (西北電力開發有限責任公司) from April 2001 to October 2001, and the general manager at Xi’an Baqiao Thermal Power Co., Ltd. (西安灞橋熱電有限責任公司) from October 2001 to June 2003. From June 2003 to November 2006, he successively served as the deputy general manager, general manager, member of and secretary of the Communist Party Committee at Hancheng No. 2 Power Co., Ltd. (韓城第二發電有限責任公司). From November 2006 to July 2013, he successively served as the deputy manager of the engineering management department of China Datang, the member of the Communist Party Committee, vice secretary and secretary of the Communist Party Committee, deputy general manager and general manager at the Shanxi Branch of China Datang (中國大唐山西分公司). Mr. Wang has been serving as the deputy director of the disciplinary team of the Communist Party Committee of China Datang and the director of monitoring division (the office of disciplinary team) of the Communist Party Committee of China Datang since July 2013, and the director of inspection office of China Datang (中國大唐巡視工作辦公室) since February 2015, and the director and secretary of Communist Party Committee of China Datang Techno-Economic Research Institute (中國大唐集團技術經濟研究院) since June 2017 but he has ceased to serve as the director of monitoring division (the office of disciplinary team of the Communist Party Committee) of China Datang since October 2017, and the director and secretary of Communist Party Committee of China Datang Techno-Economic Research Institute from December 2017. Mr. Wang obtained a bachelor’s degree in thermal power engineering for power plants in 1986 from Xi’an Jiaotong University (西安交通大學), where he further obtained a master’s degree in electronic and information engineering from the same university in 2001. Mr. Wang was accredited as a senior engineer by the Northwest Electric Power Administration (西北電業管理局) in December 1997.

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LETTER FROM THE BOARD

Mr. Miao Shihai (繆士海)

Aged 52, before joining the Company, Mr. Miao was an employee and the director of the Finance Department in Shandong Shiheng Power Plant (山東石橫發電廠) from August 1988 to December 1998, the director of Finance Department of Shandong Luneng Taishan Cable Co., Ltd. (魯能泰山電纜電器有限公司) from December 1998 to January 2005, the officer in charge of finance in Shandong Luneng Taishan Cable Co., Ltd. (山東魯能泰山電纜股份公司) from August 2003 to January 2005, the chief accountant of Shanxi Luneng Jinbei Aluminum Co., Ltd. (山西魯能晉北鋁業有限公司) from January 2005 to April 2010, the leader of the working group of Sanya International Culture Exchange Center (三亞國際文化交流中心) from April 2010 to August 2010, a member of the party committee, deputy general manager and the chief accountant of Hainan Luneng Guangda Properties Co., Ltd. (海南魯能廣大置業有限公司) and Hainan Sanya Harbour New City Development Co., Ltd. (海南三亞灣新城開發有限公司) from August 2010 to September 2011, a member of the party committee, deputy general manager and chief accountant of Shanxi Luneng Jinbei Aluminum Co., Ltd. from September 2011 to June 2012, was the supervisor of audit department, deputy general manager (executive) of CPI Financial Company Limited (中電投財務有限公司) from June 2012 to July 2013, the deputy director (executive) of Comprehensive Management Department of CPI Ronghe Financial Holding Co., Ltd. and CPI Financial Company Limited from July 2013 to May 2014, the manager of Institutional Building and Management Department of China Datang Corporation Capital Holding Limited (中國大唐集團資本控股有限公司) from September 2014 to March 2015, the secretary of the party branch, and general manager and secretary of the party branch in Datang Financial Lease Co., Ltd from April 2015 to December 2016, the deputy general manager and a member of the party committee (equivalent to Deputy Head Rank in the Headquarter of the Group) of China Datang Corporation Capital Holding Limited from December 2016 to August 2017, the deputy director in Finance Management Department of China Datang Corporation from August 2017 to December 2017, the deputy director in Finance Deparment of China Datang Corporation Ltd. and director of Finance Management Department of China Datang Corporation Renewable Power Co., Ltd. from December 2017 to April 2018, the deputy director of the audit department of China Datang Corporation Ltd., Datang International Power Generation Company Limited and China Datang Corporation Renewable Power Co., Ltd. since April 2018. Mr. Miao obtained the association degree in industrial business management from Shanghai University of Electric Power in July 1988 and a Master’s degree in Accounting from the Hebei Branch of Correspondence Institute of the Party School of the CPC Central Committee in July 2012. In December 2012, Mr. Miao was qualified as a senior economist by the China Power Investment Corporation.

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LETTER FROM THE BOARD

Except for those afore-stated, no Nominee has held any directorship in any other listed companies or taken up a post in any affiliated companies of the Group in the past three years. In addition, except for those afore-stated, no Nominee has any relationship with any other director, supervisor, senior management, substantial shareholder or controlling shareholder of the Company. No Nominee has any equity interest in the Company within meaning of Part XV of the SFO.

The Nominees will be elected subject to approval by shareholders at the AGM, and their terms will be effective from the date of such approval at the AGM. It is expected that each of the Nominees will enter into a service contract with the Company (with effect from the date of the relevant resolution for a term of three years).

After obtaining the relevant approval from the shareholders at the AGM, the remuneration packages of the directors and supervisors will be determined by the remuneration and evaluation committee of the Board and according to the remuneration plan for directors and supervisors to be approved at the AGM of the Company.

The Nomination Committee and the Board are of the view that the Nominees for the second session of the Board possess diverse expertise in terms of energy, finance, accounting and management. They possess professional experience and knowledge which are strongly complementary to each other and such knowledge and experience are conducive to the scientific decision-making of the Board. At the same time, there are also diverse characteristics among the Nominees for the Board in terms of age and years of service, which can enhance the performance of the Company.

Except for those stated in this circular, the Company considers that there is no other information relating to the Nominees to be disclosed pursuant to Rule 13.51(2)(h) to (v) of the Listing Rules nor any matter which needs to be brought to the attention of the shareholders.

The AGM

The supplemental notice of AGM is set out on pages 42 to 45 of this Supplemental Circular. The AGM of the Company will be held as originally scheduled at 3:30 p.m. on Friday, 29 June 2018 at No. 120 Zizhuyuan Road, Haidian District, Beijing, the PRC.

Please refer to the Original Circular and the notice of the AGM of the Company dated 14 May 2018 for details of other resolutions to be considered at the AGM, qualification for attendance of the AGM, registration procedures, closure of register of members, voting and other related matters.

In accordance with the Listing Rules, any connected person or Shareholder and its associates with a material interest in the Financial Services Agreement and the Transactions must abstain from voting on the resolutions to approve the Financial Services Agreement and the Transactions (including the respective proposed annual cap) at the AGM.

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LETTER FROM THE BOARD

China Datang and its associates are required to abstain from voting on the relevant resolutions to be proposed at the AGM, and no other Shareholders are required to abstain from voting on the ordinary resolutions in relation to the Financial Services Agreement and the Transactions (including the respective proposed annual cap) to be proposed at the AGM.

Recommendation

The Board (excluding the Directors who are required to abstain, but including independent nonexecutive directors) recommends the Independent Shareholders to vote in favour of the relevant resolutions set out in the supplemental notice of the AGM as it is in the interests of the Company and the Shareholders as a whole.

Yours faithfully,

By order of the Board Datang Environment Industry Group Co., Ltd.* Jin Yaohua Chairman

For identification purpose only

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [47 x 48] intentionally omitted <==

**Datang Environment Industry Group Co., Ltd.* 大唐環境產業集團股份有限公司**

(A joint stock company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1272)

14 June 2018

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTIONS – FINANCIAL SERVICES AGREEMENT

We refer to the supplemental circular issued by the Company to the Shareholders dated 14 June 2018 (the “ Supplemental Circular ”) of which this letter forms part. Terms defined in the Supplemental Circular shall have the same meaning in this letter unless the context otherwise requires.

Under the Listing Rules, the Transactions (including the finance lease transactions and commercial factoring transactions) constitute continuing connected transactions for the Company and are subject to the approval of the Independent Shareholders at the AGM.

We have been appointed by the Board as the members of the Independent Board Committee to advise the Independent Shareholders as to whether, in our opinion, the terms of the Financial Services Agreement, the Transactions (including the finance lease transactions and commercial factoring transactions) and the relevant proposed annual caps are fair and reasonable so far as the Independent Shareholders are concerned. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the fairness and reasonableness of the terms of the Financial Services Agreement, the Transactions (including the finance lease transactions and commercial factoring transactions) and the proposed annual caps. Details of its advice, together with the principal factors taken into consideration in arriving at such, are set out in its letter set out on pages 23 to 34 of the Supplemental Circular.

For identification purpose only

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We wish to draw your attention to the Letter from the Board and the Letter from Independent Financial Adviser as set out in the Supplemental Circular. Having considered the Financial Services Agreement, the Transactions (including the finance lease transactions and commercial factoring transactions) and the relevant proposed annual caps, and taken into account the advice of the Independent Financial Adviser, we consider that the Financial Services Agreement and the Transactions (including the finance lease transactions and commercial factoring transactions) are in the ordinary and usual course of business of the Group and the Financial Services Agreement have been negotiated on an arm’s length basis and on normal commercial terms and that the terms of the Financial Services Agreement, the Transactions (including the finance lease transactions and commercial factoring transactions) and the proposed annual caps are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole.

Accordingly, we advise the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the AGM to approve the Financial Services Agreement and the Transactions (including the finance lease transactions and commercial factoring transactions) and the relevant proposed annual caps.

Yours faithfully,

for and on behalf of Independent Board Committee

Datang Environment Industry Group Co., Ltd.*

Mr. Ye Xiang Mr. Mao Zhuanjian Mr. Gao Jiaxiang Independent non-executive Independent non-executive Independent non-executive Director Director Director

For identification purpose only

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LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

The following is the full text of the letter of advice from Orient Capital to the Independent Board Committee and the Independent Shareholders in respect of the Financial Services Agreement, the Transactions and the proposed annual cap for the purpose of incorporation in this circular.

==> picture [206 x 31] intentionally omitted <==

香港中環皇后大道中100號28樓-29樓 28/F-29/F, 100 Queen’s Road Central, Hong Kong Tel: (852) 3519 1188 Fax: (852) 2259 9211 Website: www.dfzq.com.hk 證監會持牌法團編號 CE No.: BDN128

14 June 2018

To: The Independent Board Committee and the Independent Shareholders of Datang Environment Industry Group Co., Ltd.

Dear Sirs/Madams,

CONTINUING CONNECTED TRANSACTIONS – FINANCIAL SERVICES AGREEMENT

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the fairness and reasonableness of the term of the Financial Services Agreement, the Transactions and the proposed annual cap, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the supplemental circular dated 14 June 2018 issued by the Company to the Shareholders (the “ Supplemental Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Supplemental Circular unless the context requires otherwise.

According to the Board Letter, the Company entered into the Financial Services Agreement with Datang Capital, a financial services provider, on 14 June 2018. Such agreement will be effective from the date of agreement until 31 December 2020, which could be renewed as agreed by both parties. According to the Financial Services Agreement, Datang Capital agreed to provide the Company with financial lease and commercial factoring service.

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LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

Given that one or more of the relevant percentage ratios (as defined in Rule 14.07 of the Listing Rules) of the Transactions calculated with reference to the proposed annual cap is more than 5%, the Financial Services Agreement, the Transactions and the proposed annual cap are subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules. China Datang and its associates shall abstain from voting at the AGM on resolutions to approve the Financial Services Agreement and the transactions contemplated thereunder.

An Independent Board Committee, comprising Mr. Ye Xiang, Mr. Mao Zhuanjian and Mr. Gao Jiaxiang, has been appointed by the Board to advise the Independent Shareholders as to whether, in their opinion, the terms of the Financial Services Agreement, the Transactions and the relevant proposed annual cap are fair and reasonable so far as the Independent Shareholders are concerned. We, Orient Capital (Hong Kong) Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

Orient Capital is a licensed corporation to carry out regulated activities of advising on corporate finance under the SFO. Orient Capital and its affiliates, whose ordinary business involves the trading of, dealing in and the holding of securities, may be involved in the trading of, dealing in, and the holding of the securities of the Company for client accounts. During the past two years, Orient Capital was appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of (1) the Financial Services Agreement entered between the Company and China Datang Finance Co., Ltd. and the transactions thereunder in 2017 and (2) the Supplemental Agreement to Integrated Product and Service Framework Agreement entered between the Company and China Datang and the transactions thereunder in 2018. The Orient Capital had no past engagement with the Group or any relationship or interest with the Group or any other parties that could reasonably be regarded as relevant to the independence of Orient Capital as the Independent Financial Adviser. As at the Latest Practicable Date, we were independent from and not connected with the Group under Rule 13.84 of the Listing Rules, and accordingly, are qualified to give independent advice to the Independent Board Committee and the Independent Shareholders in respect of the Supplemental Agreement and the transactions contemplated thereunder.

BASIS OF OUR OPINION

In formulating our opinion and recommendation, we have reviewed, among other things: (i) the Financial Services Agreement; (ii) the annual report of the Company for the year ended 31 December 2016 (the “ 2016 Annual Report ”); (iii) the annual report of the Company for the year ended 31 December 2017 (the “ 2017 Annual Report ”); (iv) prospectus of the Company dated 3 November 2016 (the “ Prospectus ”) and (v) the relevant internal documents of the Group prepared by its key personnel. We have relied, without assuming any responsibility for independent verification, on the information, opinions and facts supplied and representations made to us by the Company, who has assumed full responsibility for the accuracy of the information contained in the Circular and that any information and representations made to us are true, accurate and complete in all material respects as at the date hereof and that they may be

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LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

relied upon. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Company. We have discussed with the management of the Company (the “ Management ”) regarding their plans and prospects of the Company. We have also relied on certain information available to the public and have assumed such information to be accurate and reliable, and we have not independently verified the accuracy of such information. We have also assumed that statements and representations made or referred to in the Supplemental Circular were accurate at the time they were made and continue to be accurate up to the date of the AGM. We consider that we have reviewed sufficient information to reach an informed view in order to provide a reasonable basis for our advice. We have not, however, for the purpose of this exercise, conducted any independent detailed investigation or audit into the business, affairs of future prospects of the Company. Our advice was necessarily based on financial, economic, market and other conditions in effect, and the information made available to us, as at the Latest Practicable Date. As the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, we have not been involved in the negotiations in respect of the terms of the Financial Services Agreement.

PRINCIPAL FACTORS AND REASONS CONSIDERED

The principal factors and reasons we have taken into account in assessing the fairness and reasonableness of the term of the Financial Services Agreement, the Transactions and the proposed annual cap contemplated thereunder in giving our recommendation to the Independent Board Committee and the Independent Shareholders are set out below:

I. Background of the Company, China Datang and Datang Capital

According to the Board Letter, the Company is a non-wholly-owned subsidiary of China Datang, and is the sole platform for the development of environmental protection and energy conservation business under China Datang Group, one of the five major state wholly-owned power generation groups in the PRC. The principal business of the Group includes environmental protection facility concession operation, denitrification catalysts, environmental protection facilities engineering, water treatment business, energy conservation business and renewable energy engineering business.

China Datang is a state-owned enterprise established in the PRC in April 2003 and is the controlling shareholder of the Company. China Datang is primarily engaged in the development, investment, construction, operation and management of power energy; organization of power (thermal) production and sales; manufacture, maintenance and commissioning of electric power equipment; power technology development and consultation; contracting and consulting of electric power engineering and environmental protection projects; development of renewable power; and selfoperating and being an agent for import and export of any kind of goods and technology save for those where the import or explore of the goods and technology are restricted or prohibited by national laws and regulations.

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LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

II. Financial Performance of the Company

Set forth below are the operating results of the Group’s financial information for the three years ended 31 December 2015, 2016 and 2017 prepared in accordance with the International Financial Reporting Standards (the “ IFRS ”) extracted from the annual report of the Company for the year ended 31 December 2017 and 2016, and the Prospectus.

	For the	For the	For the
	year ended	year ended	year ended
	31 December	31 December	31 December
	2017	2016	2015
	RMB’000	RMB’000	RMB’000
	(audited)	(audited)	(audited)
Revenue	8,024,494	8,156,469	8,609,588
– E nvironmental protection and energy
conservation business	5,786,528	6,008,992	5,453,813
– Renewable energy engineering	1,842,955	1,919,564	2,674,166
– Thermal power engineering	–	–	147,538
– Other businesses	413,011	227,913	334,071
Profit	914,912	1,084,730	750,309
	As at	As at	As at
	31 December	31 December	31 December
	2017	2016	2015
	RMB’000	RMB’000	RMB’000
	(audited)	(audited)	(audited)
Total Assets	18,161,452	17,935,540	13,978,827
Total Equity	6,926,361	6,415,354	3,627,071

As depicted by the above table, the Group’s revenue decreased from RMB8,610 million for the year ended 31 December 2015 to RMB8,156 million for the year ended 31 December 2016, representing a decrease of 5.3%. The Group recorded revenue of RMB8,024 million for the year ended 31 December 2017, representing a slight decrease of 1.6% as compared to that for the same period of 2016.

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LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

The profit of the Group for the year ended 31 December 2016 increased approximately RMB334 million, or approximately 44.6% as compared to that for the year ended 31 December 2015. The profit of the Group for the year ended 31 December 2017 decreased approximately RMB170 million, or approximately 15.7% as compared to that for the year ended 31 December 2016.

The total asset of the Group as at 31 December 2016 increased approximately RMB3,957 million, or approximately 28.3% as compared to that as at 31 December 2015. The total asset of the Group as at 31 December 2017 was further increased approximately RMB226 million, or approximately 1.3% as compared to that as at 31 December 2016.

The total equity of the Group as at 31 December 2016 increased approximately RMB2,788 million, or approximately 76.9% as compared to that as at 31 December 2015. The total equity of the Group as at 31 December 2017 was approximately RMB6,926 million, which increased approximately RMB511 million, or approximately 8.0% as compared to that as at 31 December 2016.

III. Financial Services Agreement

A. Principal Terms of the Financial Services Agreement

As mentioned in the Board Letter, the Company entered into the Financial Services Agreement with Datang Capital on 14 June 2018. Such agreement will be effective from the date of agreement until 31 December 2020. According to the Financial Services Agreement, Datang Capital agreed to provide the Company with finance lease and commercial factoring service. Datang Capital was established on 30 November 2011, and is a subsidiary of China Datang, controlling shareholder of the Company. The main business scope is: investment management, asset management and investment consultation.

A.1 Subject Matter

According to the Financial Services Agreement, Datang Capital agreed to provide the Company with finance lease and commercial factoring service. For specific terms (including service type, interest rate, service fees, payment terms and time, rights and obligations of both parties, etc.) of each specific commercial factoring business under commercial factoring services, Datang Capital will then enter into specific agreements with the Company in accordance with the principles and provisions set out in the general business practice and commercial factoring framework agreement. The specific agreement shall have a term of no more than 3 years.

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LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

A.2 Term

The Financial Services Agreement, entered between the Company and Datang Capital, will be effective from the date of agreement until 31 December 2020, and could be renewed as agreed by both parties.

A.3 Consideration/Pricing Policy

(1) Financial leasing under the Financial Services Agreement

The Financial and Property Management Department of the Company will be responsible for the adoption and implementation of the pricing policies in relation to the financial leasing services under the Financial Services Agreement. Before entering into financial leasing transactions, the Financial and Property Management Department will seek, obtain and refer to the price quotes and business proposals from at least three third party providers independent from the Datang Capital. It will then compare such quotes and proposals with the price quotes and proposals offered by the Datang Capital, taking into various factors such as price quotes, other commercial terms, level of synergy to be achieved, historical transactional records with such party, etc.. The Group will enter into financial leasing transactions with such third party providers if their terms are more favorable than that offered by the Datang Capital as a result of the aforesaid comparison and consideration.

(2) Commercial factoring services under the Financial Services Agreement

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LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

The Financial and Property Management Department of the Company will be responsible for the adoption and implementation of the pricing policies in relation to the commercial factoring services under the Financial Services Agreement. Before entering into commercial factoring transactions, the Financial and Property Management Department will seek, obtain and refer to the price quotes and business proposals from at least three third party providers independent from the Datang Capital. It will then compare such quotes and proposals with the price quotes and proposals offered by the Datang Capital, taking into various factors such as price quotes, other commercial terms, level of synergy to be achieved, historical transactional records with such party, etc.. The Group will enter into commercial factoring transactions with such third party providers if their terms are more favorable than that offered by the Datang Capital as a result of the aforesaid comparison and consideration.

For the purpose of our due diligence, we have reviewed the Financial Services Agreement and we have discussed with the management of the Company regarding the transactions under the Financial Services Agreements. We were given to understand that prior to make transactions with Datang Capital, the Company shall collect information of the potential transactions including, but not limit to the terms, their respective interest rates and other particular terms, from other financial institutions in China which are independent of the Company and its connected persons. The Group will compare them to ensure that the Company receives the most favorable terms. Furthermore, in the course of reviewing the Financial Services Agreement, we note that there is no lower limit on the aggregate transaction amount of financial leasing and commercial factoring services between the Company and Datang Capital under Financial Services Agreement and we are not aware of any clause therein which might bound the Company from conducting businesses with other financial leasing and commercial factoring companies, if the interest rates or the terms offered by other financial institutions are more favorable than the conditions offered by Datang Capital. In this regard, we concur with the Directors’ view that the Company has the flexibility to choose the most favorable terms to conduct financial leasing and commercial factoring services, and therefore maximize the overall interest of the Group.

As disclosed in the 2017 Annual Report, we note that the Group’s capital expenditure increased by 10.2% to RMB1,280.0 million in 2017 as compared with RMB1,162.0 million in 2016. A significant portion of the funding requirements of the Group for capital expenditures was satisfied by short-term loans. As at 31 December 2017, the short-term loans of the Group amounted to approximately RMB1,234 million. Given that the general interest rates for financial lease and commercial factoring shall not be less favorable than those offered by other financial institution in China, we concur with the Directors’ view that financial leasing and commercial factoring through Datang Capital, as a form of debt financing alternative, would enable the Group broaden the financing channels, and lower its overall cost of capital, and hence increase the financing flexibility of the Group.

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LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

Having considered that (i) the Group is able to obtain financial leasing and commercial factoring services from Datang Capital at an interest rate equivalent to or more favorable than those offered by other financial institution in the market; (ii) such interest rate is arrived at after arm’s length negotiations between the Group and Datang Capital; and (iii) the Group is not restricted from conducting business with other financial leasing and commercial factoring services providers, we concur with the Directors’ view that the terms of the Financial Services Agreement and the transactions contemplated thereunder are entered into based on arm’s length negotiations, in the ordinary and usual course of business of the Group and on normal commercial terms, and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

B. Historical Transaction Amount

There was no any historical transaction amount between the Company and Datang Capital for the transactions under the financial leasing services and commercial factoring services under the Financial Services Agreement.

C. Proposed annual caps

The proposed annual caps of financial leasing services and commercial factoring services under the Financial Services Agreement for each of the year ended 31 December 2018, 31 December 2019 and 31 December 2020 are as follows:

	Proposed annual	caps for the year ended 31 December	caps for the year ended 31 December
	2018	2019	2020
		(RMB’000)
Maximum daily balances of
leasing principal	910,000	910,000	910,000
Annual interests and other payments-
Outstanding interest fee and handling
fee	90,000	90,000	90,000
Commercial factoring services	500,000	500,000	500,000

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LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

With reference of the Board Letter, the Group has determined the proposed annual caps of the financing leasing service and commercial factoring services under the Financial Services Agreement respectively considering the following factors: (i) the amount of principle and interests to be repaid upon maturity of the bank loans of the Group; (ii) the expected decreasing amount of bank loans and higher interest rate level to be obtained by the Group in the future for refinancing the banks loans and for the expanding business of the Group; and (iii) the relevant terms of finance leasing service and commercial factoring service provided by Datang Capital to accommodate the Group’s need for financing.

In order to assess the fairness and reasonableness of the proposed annual caps, we have reviewed the 2017 Annual Report and discussed the structure of the borrowings of the Group in 2018 and 2019 with the Management. As disclosed in the 2017 Annual Report, as at 31 December 2017, (i) the short-term loans of the Group amounted to approximately RMB1,427 million; (ii) approximately RMB709 million of long-term loans will be matured within 1 – 2 years; and (3) approximately RMB1,971 million of long-term loans will be matured within 2 – 5 years. We are suggested by the Management that the Group intends to refinance upon expiry of such loans. We are informed by the Management that of such need for financing and having discussed and negotiated with the Datang Capital on an arm’s length, Datang Capital would be able to provide the Group with financing services by way of commercial factoring of around RMB500 million pursuant to its internal business planning, while the remaining financing will be provided by Datang Capital by way of financial leasing services.

As suggested by the Management, according to the asset condition and business model of the Group, the environmental protection facilities concession operation business, relevant machines and equipment and other assets of water treatment business of the Group were suitable for financing by way of finance leasing. We note that the proposed cap of maximum daily balances of leasing principal only accounts for 22.2% of the total interest-bearing bank borrowings and other loans. If the interest rate under the Financial Services Agreement is more favorable than that of such borrowings and other loans, the group will replace such borrowings and other loans by the services provide by Datang Capital. The proposed outstanding interest fee and handling fee of annual interests and other payments is 90 million, which only accounts for 12.0% interest payables for loans and borrowings of RMB752 million as at 31 December 2016.

Furthermore, the trade and bill receivable of the Group as at 31 December 2017 was approximately RMB7,192 million, which was suitable for financing by way of commercial factoring and increased RMB816 million as compared to 31 December 2016. As suggested by the Management, the trade and bill receivable may be maintained or slightly increased at this level in the future years. The proposed annual cap of commercial factoring only accounts for 7.0% of the trade and bill receivable of the Group as at 31 December 2017.

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LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

In view of the benefits of lease financing and commercial factoring as a financing alternative under the general debt financing condition in China, we concur with the Directors that it is beneficial to the Company to apply the principal of the financial leases and commercial factoring to replace part of the existing loans upon expiration, which will help the Group optimize its asset structure, accelerate the efficiency of asset turnover, improve the efficiency of capital use, broaden the financing channel.

Having taken into account (i) the abovementioned amount of principal and interests to be repaid upon maturity of the bank loans of the Group; (ii) the expected amount of bank loans and interest rate level to be obtained by the Group in the future for refinancing the abovementioned banks loans and for the expanding business of the Group; and (iii) the relevant terms of finance leasing service and commercial factoring service provided by Datang Capital, we concur the view of the Directors that the proposed annual caps set by the Directors are made after due and careful consideration and the basis of the determination of the proposed annual caps are fair and reasonable so far as the Company and the Independent Shareholders are concerned.

D. Reasons for and benefits of entering into the Financial Services Agreement

As stated in the Board Letter, relevant arrangements under the Financial Services Agreement are beneficial to the Company to obtain financing support and relevant financing services at an interest rate equivalent to or lower than the market rate, which in turn may further lower the overall capital costs of the Group. Furthermore, the transactions under the financing lease and commercial factoring service will help the Company optimize its asset structure, accelerate the efficiency of asset turnover, save costs, improve the efficiency of capital use, broaden the financing channels, and reduce financing costs, which is in line with the overall development strategies of the Company. Finally, with the option to obtain premium financial support from Datang Capital at favorable terms, it is believed that the Company would strengthen their bargaining power in negotiating various services on financial leases and factoring products and therefore enhance the overall competitiveness of the Group.

In addition, we understand from the Directors that Datang Capital is professional financial service provider and has established a sound management structure with experienced financial professionals who possess expertise in financial leasing and factoring businesses. It is noted that the corporate credit rating of Datang Capital is AAA, which is the highest possible rating in PRC. Moreover, in view of the fact that both the Company and Datang Capital are subsidiaries of China Datang Group which would facilitate communication and cooperation between the two companies, we concur with the Directors’ view that Datang Capital would be able to develop a deeper understanding in the operation of the Company and relevant units, which in turn would be able to provide more convenient, effective and efficient financial leasing as well as factoring products design services to the Company as compared to those services provided by other financial leasing companies.

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LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

Having considered that, among others, (i) the relevant major terms of the Financial Services Agreement are fair and reasonable and have been entered into after arm’s length negotiation between all parties thereto; (ii) the proposed annual caps for the transactions are reasonably determined after due and careful consideration; and (iii) the foregoing reasons and benefits mentioned in this letter, the Directors consider, and we concur that the entering into of the Financial Services Agreement are in the interests of the Company and its Shareholders as a whole.

IV. Internal Control Measures

The Group implemented the following internal control procedures to closely monitor and manage new and on-going connected transactions with China Datang Group:

The Board has approved the estimated annual caps of connected transactions with China Datang Group for each of its business segments for the three years ending December 31, 2019, 2020 and 2021, which were proposed by the Strategic Planning and Cost Management Department (計劃與成本管理部) and the Financial and Property Management Department (財務與產權管理部) based on the Group’s business demands and China Datang Group’s projects planning and their estimated completion time and progress.
At the beginning of each calendar year, the Financial and Property Management Department will issue an internal notice circulating the annual cap of connected transactions with China Datang Group for this particular year and remind each member and department of the Group to follow internal control procedures for the control of transaction value with China Datang Group in daily business operations.
The Financial and Property Management Department is responsible for maintaining and updating the list of connected persons of the Group. Such list will be circulated to members and relevant departments of the Group on a regular basis.

– Business contracts of the Group are negotiated by the relevant business departments which are subject to review and approval by the Strategic Planning and Cost Management Department before execution. The Strategic Planning and Cost Management Department has adopted stringent control policies in reviewing and approving connected transactions, including, cross checking relevant information of the projects (e.g., transaction amounts, expected project completion date and progress) against the annual caps.

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LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

The Financial and Property Management Department has set up a monthly reporting system for connected transactions, where it requires all members and departments of the Group to report in the beginning of each month (i) the amount of connected transactions occurred in the previous month; (ii) the accumulative connected transaction amount occurred in that year; and (iii) the expected transaction amount for the rest of the year.
Furthermore, Group has adopted relevant assessment standards in its employee performance evaluation system, where each department and employee will be evaluated on their contribution in terms of exploring independent contracts and controlling the amount and ratio of connected transactions, which has direct impact on their remuneration.

In light of the above, we consider that the procedures and internal control measures to guarantee the transactions between the Company and Datang Capital were in place and are fair and reasonable so far as the Company and Independent Shareholders are concerned.

RECOMMENDATION

Having considered the above factors, we consider that the entering into the Financial Services Agreement is in the ordinary and usual course of business of the Group. The terms of the Financial Services Agreement are on normal commercial terms and which, altogether with the relevant proposed annual cap are fair and reasonable, and the transactions contemplated under and the Financial Services Agreement are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favor of the resolutions to approve the Financial Services Agreement at the AGM.

Yours faithfully, For and on behalf of

Orient Capital (Hong Kong) Limited Jiang Jun Managing Director

Ms. Jiang Jun is a licensed person of the Securities and Future Commission of Hong Kong and a Responsible Officer of Orient Capital to carry out Type 6 (advising on corporate finance) regulated activity as defined under the Securities and Future Ordinance (Chapter 571 of the Laws of Hong Kong), and has over 9 years of experience in corporate finance in Hong Kong.

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GENERAL INFORMATION OF THE GROUP

APPENDIX I

1. RESPONSIBILITY STATEMENT

This document, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this document is accurate and complete in all material aspects and not misleading or deceptive, and there are no other matters, the omission of which would make any statement herein or this document misleading.

2. DISCLOSURE OF INTERESTS AND CONFIRMATIONS

(1) as at the Latest Practicable Date, none of the Directors, Supervisors or senior management of the Company had any interest or short positions in the Shares, underlying Shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO), which are required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he is taken or deemed to have under such provision of the SFO); or are required pursuant to section 352 of the SFO to be entered in the register referred to therein, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers;
(2) the Company has not granted its Directors, Supervisors, senior management of the Company or their respective spouses or children below 18 any rights to subscribe for its equity securities or debt securities;
(3) as at the Latest Practicable Date, four (4) Directors held the following positions with China Datang: (a) Mr. Jin Yaohua held the position as a deputy general manager of China Datang; (b) Mr. Liu Chuandong held the position as the chief accountant of China Datang; (c) Mr. Liu Guangming held the position as the director of capital operation and property management department of China Datang; and (d) Mr. Liang Yongpan held the position as the chairman of Datang Beijing-Tianjin-Hebei Energy Development Co., Ltd.. Save as disclosed above, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group since 31 December 2017, being the date to which the latest published audited annual financial statements of the Company were made up, and which was subsisting as at the Latest Practicable Date and significant in relation to the business of the Group;
(4) none of the Directors had any direct or indirect interest in any assets which have been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group, since 31 December 2017, being the date to which the latest published audited annual financial statements of the Company were made up;

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GENERAL INFORMATION OF THE GROUP

APPENDIX I

(5) save as disclosed in the section “Interests of Directors in Competing Business” of Appendix I to this Supplemental Circular, none of the Directors or, so far as is known to them, any of their respective associates was interested in any business (apart from the Group’s business) which competes or is likely to compete either directly or indirectly with the Group’s business (as would be required to be disclosed under Rule 8.10 of the Listing Rules if each of them were a controlling shareholder);
(6) save as disclosed in the announcement of the Company dated 5 March 2018, the Directors are not aware of any material adverse change in the financial or trading positions of the Company since 31 December 2017, the date to which the latest published audited annual financial statements of the Company were made up;
(7) none of the Directors had entered into any service contract with the Company or any member of the Group (excluding contracts expiring or terminable by the employer within one year without payment of compensation (other than statutory compensation)); and
(8) the Board confirms that, after making all reasonable enquires and to the best of their knowledge, information and belief, there are no voting trust or other agreement or arrangement or understanding (other than an outright sale) entered into by or binding upon any Shareholders, or any obligation or entitlement of any Shareholders as at the Latest Practicable Date, whereby such Shareholders have or may have temporarily or permanently passed control over the exercise of the voting right in respect of his Shares, either generally or on a case-by-case basis.

3. INTERESTS OF DIRECTORS IN COMPETING BUSINESS

Save as disclosed in this Supplemental Circular, our Directors confirm that, as of the Latest Practicable Date, none of the Directors or their close associates had any direct or indirect interest in any business which competes or might compete with our principal business.

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GENERAL INFORMATION OF THE GROUP

APPENDIX I

4. SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS HOLDING DISCLOSEABLE INTERESTS IN THE COMPANY

As at the Latest Practicable Date, to the best of the Directors’ knowledge, having made all reasonable enquiries, the following persons (other than the Directors, Supervisors or chief executive of the Company) had interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO and, which were entered in the register required to be kept by the Company pursuant to Section 336 of the SFO:

					Number of Shares/	Percentage in
					underlying Shares	the relevant	Percentage in
			Class of		directly or	class of Share	the total Share
Name of Shareholders			Shares	Capacity	indirectly held	capital (1)	capital (2)
					(Shares)	(%)	(%)
China Datang			Domestic	Beneficial owner	2,343,245,800	100	78.96
			Shares		(Long position)
Anbang Investment Holdings Co., Limited			H Shares	Beneficial owner	120,540,000	19.31	4.06
(安邦投資控股有限公司) (3)					(Long position)
Anbang Group Holdings Co., Limited			H Shares	Interest in controlled	120,540,000	19.31	4.06
(安邦集團控股有限公司) (3)				corporation	(Long position)
Anbang Life Insurance Co., Ltd.			H Shares	Interest in controlled	120,540,000	19.31	4.06
(安邦人壽保險股份有限公司)	(3)			corporation	(Long position)
Anbang Insurance Group Co., Ltd.			H Shares	Interest in controlled	120,540,000	19.31	4.06
(安邦保險集團股份有限公司)	(3)			corporation	(Long position)
China Chengtong Investment			H Shares	Beneficial owner	61,557,000	9.86	2.07
Company Limited (4)					(Long position)
China Chengtong Holdings Group Ltd.		(4)	H Shares	Interest in controlled	61,557,000	9.86	2.07
				corporation	(Long position)
China Energy Engineering Corporation			H Shares	Beneficial owner	61,557,000	9.86	2.07
Limited (中國能源建設集團有限公司)					(Long position)
State Grid International Development Limited			H Shares	Beneficial owner	61,467,000	9.85	2.07
(國家電網國際發展有限公司)	(5)				(Long position)
State Grid Corporation of China			H Shares	Interest in controlled	61,467,000	9.85	2.07
(國家電網公司) (5)				corporation	(Long position)
Three Gorges Capital Holdings Co., Ltd.			H Shares	Beneficial owner	59,506,000	9.53	2.01
(三峽資本控股有限責任公司)	(6)				(Long position)
China Three Gorges Corporation			H Shares	Interest in controlled	59,506,000	9.53	2.01
(中國長江三峽集團公司) (6)				corporation	(Long position)
National Council for Social Security Fund			H Shares	Beneficial owner	56,754,200	9.09	1.91
					(Long position)

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GENERAL INFORMATION OF THE GROUP

APPENDIX I

						Number of Shares/	Percentage in
						underlying Shares	the relevant	Percentage in
				Class of		directly or	class of Share	the total Share
Name of Shareholders				Shares	Capacity	indirectly held	capital (1)	capital (2)
						(Shares)	(%)	(%)
China Huaneng Group Hong Kong Limited				H Shares	Beneficial owner	49,002,000	7.85	1.65
(中國華能集團香港有限公司) (7)						(Long position)
China Huaneng Group				H Shares	Interest in controlled	49,002,000	7.85	1.65
(中國華能集團公司) (7)					corporation	(Long position)
China Huadian Hong Kong Limited				H Shares	Beneficial owner	48,628,000	7.79	1.64
(中國華電香港有限公司) (8)						(Long position)
China Huadian Corporation				H Shares	Interest in controlled	48,628,000	7.79	1.64
(中國華電集團公司) (8)					corporation	(Long position)
Taiping General Insurance Co., Ltd.				H Shares	Beneficial owner	41,038,000	6.57	1.38
(太平財產保險有限公司) (9)						(Long position)
China Taiping Insurance Holdings Company				H Shares	Interest in controlled	41,038,000	6.57	1.38
Limited (中國太平保險控股有限公司)			(9)		corporation	(Long position)
China Taiping Insurance (HK)				H Shares	Interest in controlled	41,038,000	6.57	1.38
Company Limited					corporation	(Long position)
(中國太平保險集團（香港）有限公司)		(9)
China Taiping Insurance Group Ltd.				H Shares	Interest in controlled	41,038,000	6.57	1.38
(中國太平保險集團有限責任公司)	(9)				corporation	(Long position)
China Life Franklin Asset Management				H Shares	Beneficial owner	41,038,000	6.57	1.38
Co., Limited (中國人壽富蘭克林資產管						(Long position)
理有限公司) (10)
China Life Asset Management Company				H Shares	Interest in controlled	41,038,000	6.57	1.38
Limited (中國人壽資產管理有限公司)			(10)		corporation	(Long position)
China Life Insurance Company Limited				H Shares	Beneficial owner	20,519,000	3.29	0.69
(中國人壽保險股份有限公司) (10)						(Long position)
					Interest in controlled	41,038,000	6.57	1.38
					corporation	(Long position)
China Life Insurance (Group) Company				H Shares	Beneficial owner	41,038,000	6.57	1.38
中國人壽保險（集團）公司 (10)						(Long position)
					Interest in controlled	20,519,000	3.29	0.69
					corporation	(Long position)
					Interest in controlled	41,038,000	6.57	1.38
					corporation	(Long position)

– 38 –

GENERAL INFORMATION OF THE GROUP

APPENDIX I

Notes:

(1) The calculation is based on the percentage of shareholding in a total of 2,343,245,800 Domestic Shares and a total of 624,296,200 H Shares respectively as at the Latest Practicable Date.
(2) The calculation is based on the percentage of shareholding in a total of 2,967,542,000 Shares as at the Latest Practicable Date.
(3) Anbang Investment Holdings Co., Limited is a wholly-owned subsidiary of Anbang Group Holdings Co., Limited. Anbang Group Holdings Co., Limited is a wholly-owned subsidiary of Anbang Life Insurance Co., Ltd., which is wholly-owned by Anbang Insurance Group Co., Ltd..
(4) China Chengtong Investment Company Limited is a wholly-owned subsidiary of China Chengtong Holdings Group Ltd..
(5) State Grid International Development Limited is a wholly-owned subsidiary of State Grid Corporation of China.
(6) Three Gorges Capital Holdings Co., Ltd. is the wholly-owned subsidiary of China Three Gorges Corporation.
(7) China Huaneng Group Hong Kong Limited is a wholly-owned subsidiary of China Huaneng Group.
(8) China Huadian Hong Kong Company Limited is a wholly-owned subsidiary of China Huadian Corporation.
(9) Taiping General Insurance Co., Ltd. is a subsidiary of China Taiping Insurance Holdings Company Limited. China Taiping Insurance Holdings Company Limited is a subsidiary of China Taiping Insurance (HK) Company Limited, which is a wholly-owned subsidiary of China Taiping Insurance Group Ltd..
(10) China Life Asset Management Company Limited is a controlling shareholder of China Life Franklin Asset Management Co., Limited. China Life Asset Management Company Limited is a subsidiary of China Life Insurance Company Limited, which is controlled by China Life Insurance (Group) Company.

Save as disclosed above, as at the Latest Practicable Date, to the best knowledge of the Directors, the Directors were not aware of any persons who had interests and/or short positions in the Shares or underlying Shares which would be required to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO and which were entered in the register required to be kept by the Company pursuant to section 336 of the SFO.

– 39 –

GENERAL INFORMATION OF THE GROUP

APPENDIX I

5. QUALIFICATION EXPERT AND CONSENT

The following are the qualifications of the expert who has provided opinions or advice contained in this Supplemental Circular:

Name Qualification

Orient Capital (Hong Kong) A corporation licensed to conduct type 6 (advising on corporate Limited finance) regulated activities under the SFO

(1) As at the Latest Practicable Date, the expert listed above did not hold any beneficial interest in the share capital of any member of the Group, nor did it have the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
(2) The expert listed above has given and has not withdrawn its written consent to the issue of this Supplemental Circular with inclusion of its letter (as the case may be) and the reference to its name included herein in the form and context in which they currently appear.
(3) As at the Latest Practicable Date, the expert listed above did not have any interest in any assets which have been, since 31 December 2017 (being the date to which the latest published audited annual accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.
(4) The letter and recommendation given by Orient Capital are given as of the date of this Supplemental Circular for incorporation herein.

6. LITIGATION

As at the Latest Practicable Date, save as disclosed in this Supplemental Circular, no member of the Group was engaged in any litigation, arbitration or claim of material importance and, so far as the Directors are aware, no litigation, arbitration or claim of material importance was pending or threatened against any member of the Group.

7. OTHER INFORMATION

(1) The joint company secretaries of the Company are Mr. Zeng Bing, who is the chief economist and the authorised representative of the Company, and Ms. Wong Sau Ping, who is a member of The Hong Kong Institute of Chartered Secretaries.

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GENERAL INFORMATION OF THE GROUP

APPENDIX I

(2) The registered office of the Company is No. 120 Zizhuyuan Road, Haidian District, Beijing, the PRC.
(3) The head office of the Company in the PRC is No. 120 Zizhuyuan Road, Haidian District, Beijing, the PRC, and the principal place of business in Hong Kong is 31/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong.
(4) H Share Registrar of the Company is Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
(5) The English text of this Supplemental Circular shall prevail over the Chinese text in the event of inconsistency.

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hour at the Company’s principal place of business in Hong Kong at 31/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong from the date of this Supplemental Circular up to and including 29 June 2018:

(1) Articles of Association;
(2) the letter from the Independent Board Committee, full text of which is set out on pages 21 to 22 of this Supplemental Circular;
(3) the letter from the Independent Financial Adviser, full text of which is set out on pages 23 to 34 of this Supplemental Circular;
(4) the written consent of the expert referred to paragraph 5 of Appendix I;
(5) this Supplemental Circular; and
(6) Financial Services Agreement.

– 41 –

SUPPLEMENTAL NOTICE OF THE AGM

==> picture [47 x 48] intentionally omitted <==

**Datang Environment Industry Group Co., Ltd.* 大唐環境產業集團股份有限公司**

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

(Stock Code: 1272)

SUPPLEMENTAL NOTICE OF THE AGM

Reference is made to the notice of the annual general meeting (the “ AGM ”) issued by Datang Environment Industry Group Co., Ltd. (the “ Company ”) on 14 May 2018, in which the resolutions to be considered by the Shareholders at the AGM to be convened at 3:30 p.m. on Friday, 29 June 2018 at No. 120 Zizhuyuan Road, Haidian District, Beijing, the PRC are set out. Unless otherwise specified, capitalised terms used in this supplemental notice shall have the same meanings as those defined in the Original Circular and Supplemental Circular of the Company dated 14 May 2018 and 14 June 2018, respectively.

SUPPLEMENTAL NOTICE IS HEREBY GIVEN that the AGM will be held as originally scheduled. In addition to the resolutions set out in the notice of the AGM of the Company dated 14 May 2018, the following resolutions will also be considered and approved, if thought fit:

Ordinary Resolutions

(10) To consider and approve the Financial Services Agreement entered into between the Company and Datang Capital and the continuing connected transactions on financial leasing services contemplated thereunder (including proposed annual caps);
(11) To consider and approve the Financial Services Agreement entered into between the Company and Datang Capital and the continuing connected transactions on commercial factoring services contemplated thereunder (including proposed annual caps); and
(12) (a) To consider and authorize the appointment of Mr. Jin Yaohua as a non-executive Director of the second session of the Board;
(b) To consider and authorize the appointment of Mr. Liu Chuandong as a non-executive Director of the second session of the Board;
(c) To consider and authorize the appointment of Mr. Liu Guangming as a non-executive Director of the second session of the Board;
For identification purpose only

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SUPPLEMENTAL NOTICE OF THE AGM

(d) To consider and authorize the appointment of Mr. Li Yi as a non-executive Director of the second session of the Board;
(e) To consider and authorize the appointment of Mr. Deng Xiandong as an executive Director of the second session of the Board;
(f) To consider and authorize the appointment of Mr. Lu Shengli as an executive Director of the second session of the Board;
(g) To consider and authorize the appointment of Mr. Ye Xiang as an independent non-executive Director of the second session of the Board;
(h) To consider and authorize the appointment of Mr. Mao Zhuanjian as an independent nonexecutive Director of the second session of the Board;
(i) To consider and authorize the appointment of Mr. Gao Jiaxiang as an independent nonexecutive Director of the second session of the Board;
(j) To consider and authorize the appointment of Mr. Wang Yuanchun as a Supervisor of the second session of the supervisory committee;
(k) To consider and authorize the appointment of Mr. Miao Shihai as a Supervisor of the second session of the supervisory committee;
(l) To consider and authorize the remuneration and evaluation committee of the Board to determine, upon the candidates for Directors and Supervisors being approved at the AGM, the remuneration of the Directors and Supervisors according to the remuneration plan for Directors and Supervisors to be approved at the AGM; and
(m) To consider and authorize the chairman of the Board or any other executive Director to enter into a service contract with the Directors and Supervisors being approved at the AGM and handle all other relevant matters on behalf of the Company upon the candidates for the Directors and the Supervisors being approved at the AGM.

– 43 –

SUPPLEMENTAL NOTICE OF THE AGM

The main texts and relevant details of resolutions at the AGM are set forth in the Original Circular and Supplemental Circular thereof, which are available on the website of the Stock Exchange (www.hkex.com. hk) and on the website of the Company (www.dteg.com.cn).

By order of the Board Datang Environment Industry Group Co., Ltd.* Jin Yaohua Chairman

Beijing, the PRC, 14 June 2018

As of the date of this notice, the non-executive directors of the Company are Mr. Jin Yaohua, Mr. Liu Chuandong, Mr. Liu Guangming and Mr. Liang Yongpan; the executive directors of the Company are Mr. Deng Xiandong and Mr. Lu Shengli; and the independent non-executive directors of the Company are Mr. Ye Xiang, Mr. Mao Zhuanjian and Mr. Gao Jiaxiang.

For identification purpose only

Notes:

i. Saved as the resolutions newly proposed, there are no any other changes to the resolutions set out in the notice of the AGM dated 14 May 2018. For details of other resolutions and other related matters to be considered at the AGM, please refer to the notice and circular of the AGM issued by the Company on 14 May 2018.
ii. As the proxy form enclosed in the circular despatched by the Company on 14 May 2018 (the “ First Proxy Form ”) does not contain the newly added resolutions set out in this supplemental notice, a supplemental proxy form containing the above newly added resolutions (the “ Supplemental Proxy Form ”) has been prepared and is enclosed in this supplemental notice. The Supplementary Proxy Form is the supplemental proxy form applicable to the supplemental resolutions set out in this supplemental notice and only serves as a supplement to the First Proxy Form. This Supplemental Proxy Form will not affect the validity of the First Proxy Form duly completed and lodged with the H share registrar of the Company.
iii. If a Shareholder has duly completed and only submitted the First Proxy Form in accordance with the instructions set out therein, the appointed proxy will vote on the resolutions set out in the First Proxy Form per the Shareholder’s instruction and he is entitled to vote on or abstain from voting on, at his own discretion, the resolutions set out in the Supplemental Proxy Form. Similarly, if a Shareholder has duly completed and only submitted the Supplemental Proxy Form in accordance with the instructions set out therein, the appointed proxy will vote on the resolutions set out in the Supplemental Proxy Form per the Shareholder’s instruction and he is entitled to vote on or abstain from voting on, at his discretion, the resolutions set out in the First Proxy Form. If a Shareholder wishes to provide specific instruction to his proxy regarding the voting of all resolutions set out in the First Proxy Form and the Supplemental Proxy Form, the Shareholder shall, at the same time, duly complete and submit the First Proxy Form and the Supplemental Proxy Form in accordance with the instructions set out therein.

– 44 –

SUPPLEMENTAL NOTICE OF THE AGM

iv. Each Shareholder entitled to attend and vote at the AGM may, by completing the Supplemental Proxy Form of the Company, appoint one or more proxies to attend and vote at the AGM on its behalf. A proxy need not be a Shareholder. With respect to any Shareholder who has appointed more than one proxy, the proxy holders may only vote on a poll.
v. The Supplemental Proxy Form shall be signed by the appointer or his attorney duly authorised in writing or, in the case of a legal person, must be either executed under its common seal or under the hand of its directors or attorney duly authorised.
vi. To be valid, the Supplemental Proxy Form must be lodged with the H Share Registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (for holders of H Shares) or the Company’s board office in the PRC (for holders of Domestic Shares) within 24 hours prior to the holding of the AGM. If the Supplemental Proxy Form is signed by another person under a power of attorney or other authorisation documents given by the appointer, such power of attorney or other authorisation documents shall be notarised. The notarised power of attorney or other authorisation documents shall, together with the Supplemental Proxy Form, be deposited at the specified place at the time set out in such form. Completion and return of the Supplemental Proxy Form will not preclude Shareholders from attending and voting in person at the AGM or any adjourned meetings should you so wish.

– 45 –

AI assistant

Datang Environment Industry Group Co., Ltd. — AGM Information 2018

49815_rns_2018-06-14_18862e4e-c39e-4edc-a762-2e85f8f39366.pdf

Datang Environment Industry Group Co., Ltd.* 大唐環境產業集團股份有限公司

CONTINUING CONNECTED TRANSACTIONS – FINANCIAL SERVICES AGREEMENT PROPOSED RE-ELECTION OF DIRECTORS AND SUPERVISORS AND SUPPLEMENTAL NOTICE OF THE AGM

CONTENTS

DEFINITIONS

Datang Environment Industry Group Co., Ltd.* 大唐環境產業集團股份有限公司

Registered Office and Head Office

CONTINUING CONNECTED TRANSACTIONS – FINANCIAL SERVICES AGREEMENT PROPOSED RE-ELECTION OF DIRECTORS AND SUPERVISORS AND SUPPLEMENTAL NOTICE OF THE AGM

I. INTRODUCTION

II. FINANCIAL SERVICES AGREEMENT

Introduction

Principal terms:

Proposed annual caps

Historical transaction amount

Pricing policy

(1) Financial leasing under the Financial Services Agreement

(2) Commercial factoring services under the Financial Services Agreement

Reasons for and benefits of the transactions under the Financial Services Agreement

(1) Financial leasing services

(2) Commercial factoring services

Relevant Internal Control Measures of Continuing Connected Transactions

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Listing Rules Implications

General Information

III. PROPOSED RE-ELECTION OF DIRECTORS AND SUPERVISORS

Information about Nominees of Directors

Mr. Jin Yaohua (金耀華)

Mr. Liu Chuandong (劉傳東)

Mr. Liu Guangming (劉光明)

Mr. Li Yi (李奕)

LETTER FROM THE BOARD

Mr. Deng Xiandong (鄧賢東)

LETTER FROM THE BOARD

Mr. Lu Shengli (路勝利)

Mr. Ye Xiang (叶翔)

Mr. Mao Zhuanjian (毛專建)

LETTER FROM THE BOARD

Mr. Gao Jiaxiang (高家祥)

Information about Nominees of Supervisors

Mr. Wang Yuanchun (王元春)

Mr. Miao Shihai (繆士海)

LETTER FROM THE BOARD

The AGM

Recommendation

Yours faithfully,

Datang Environment Industry Group Co., Ltd.* 大唐環境產業集團股份有限公司

CONTINUING CONNECTED TRANSACTIONS – FINANCIAL SERVICES AGREEMENT

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Yours faithfully,

Datang Environment Industry Group Co., Ltd.*

CONTINUING CONNECTED TRANSACTIONS – FINANCIAL SERVICES AGREEMENT

INTRODUCTION

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

I. Background of the Company, China Datang and Datang Capital

II. Financial Performance of the Company

III. Financial Services Agreement

A. Principal Terms of the Financial Services Agreement

A.1 Subject Matter

A.2 Term

A.3 Consideration/Pricing Policy

B. Historical Transaction Amount

C. Proposed annual caps

D. Reasons for and benefits of entering into the Financial Services Agreement

IV. Internal Control Measures

LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

RECOMMENDATION

Orient Capital (Hong Kong) Limited Jiang Jun Managing Director

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS AND CONFIRMATIONS

3. INTERESTS OF DIRECTORS IN COMPETING BUSINESS

4. SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS HOLDING DISCLOSEABLE INTERESTS IN THE COMPANY

5. QUALIFICATION EXPERT AND CONSENT

Name Qualification

6. LITIGATION

7. OTHER INFORMATION

8. DOCUMENTS AVAILABLE FOR INSPECTION

Datang Environment Industry Group Co., Ltd. AGM Information 2018

**Datang Environment Industry Group Co., Ltd.* 大唐環境產業集團股份有限公司**

**Datang Environment Industry Group Co., Ltd.* 大唐環境產業集團股份有限公司**

**Datang Environment Industry Group Co., Ltd.* 大唐環境產業集團股份有限公司**

**Datang Environment Industry Group Co., Ltd.* 大唐環境產業集團股份有限公司**