THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this 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 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 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 circular.

==> 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)

CONTINUING CONNECTED TRANSACTION SUPPLEMENTAL AGREEMENT TO INTEGRATED PRODUCT AND SERVICE FRAMEWORK AGREEMENT – REVISION OF ANNUAL CAP AND NOTICE OF EGM

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

A letter from the Board is set out on pages 1 to 8 of this circular. A letter from the Independent Board Committee is set out on pages 9 to 10 of this 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 11 to 22 of this circular.

A notice convening the EGM of the Company to be held at 4:30 p.m. on Friday, 27 April 2018 at No. 120 Zizhuyuan Road, Haidian District, Beijing, the PRC, is set out on pages 31 to 33 of this circular.

The proxy form for use at the EGM is enclosed with this circular and such 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 EGM, you are required to complete and return the accompanying form of proxy in accordance with the instructions printed thereon. For holders of H Shares, the form of proxy should be returned to the H Share Registrar and for holders of Domestic Shares, the form of proxy 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 EGM or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or at any other adjourned meeting should you so wish.

If you intend to attend the EGM in person or by proxy, you are required to complete and return the reply slip (for holders of H Shares) to the H Share Registrar or (for holders of Domestic Shares) to the Company’s board office in the PRC on or before Friday, 6 April 2018.

12 March 2018

For identification purpose only

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . .	9
LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED. . . . . . . . . . . . . . . . . . . . . . .	11
APPENDIX I – GENERAL INFORMATION OF THE GROUP. . . . . . . . . . . . . . . . . . . . . .	23
NOTICE OF THE EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31

– i –

DEFINITIONS

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

“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
	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
“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

– ii –

DEFINITIONS

“EGM” the extraordinary general meeting of the Company to be held at 4:30 p.m. on Friday, 27 April 2018 at No. 120 Zizhuyuan Road, Haidian District, Beijing, the PRC

“EPC” engineering, procurement and construction, a common form of contracting arrangement whereby the contractor is commissioned by the customer to carry out works, such as design, procurement, construction and trial operations, either through the contractor’s own employees or by subcontracting part or all of the works, and be responsible for the quality, safety, timely delivery and cost of the project

“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 Supplemental Agreement, the Transactions and the revised annual cap thereof

“Independent Shareholders”

the Shareholders who are not required to abstain from voting at the EGM for the resolution with respect to the Supplemental Agreement

– iii –

DEFINITIONS

“Integrated Product and Service	the integrated product and service framework agreement entered
Framework Agreement”	into by China Datang and the Company on 26 October 2016 which
	will take effect upon the listing of the H Shares on the Main Board
	of the Stock Exchange with an initial term of three years
“Latest Practicable Date”	6 March 2018, being the latest practicable date prior to the printing
	of this circular for the purpose of ascertaining certain information
	contained in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Prospectus”	the prospectus of the Company dated 3 November 2016 with
	respect to the listing of the Company on the Main Board of 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
“Supplemental Agreement”	the supplemental agreement to the Integrated Product and Service
	Framework Agreement entered into by the Company and China
	Datang dated on 12 March 2018
“Transactions”	the transactions contemplated under the Supplemental Agreement
“%”	per cent

– iv –

LETTER FROM THE BOARD

==> 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)

Non-executive Directors: Registered Office and Head Office in the PRC: Mr. Jin Yaohua No. 120 Zizhuyuan Road, Mr. Liu Chuandong Haidian District, Mr. Liu Guangming Beijing, Mr. Liang Yongpan the PRC

Executive Directors: Principal Place of Business in Hong Kong: Mr. Deng Xiandong 36/F, Tower Two, Times Square, Mr. Lu Shengli 1 Matheson Street, Causeway Bay, Hong Kong

Independent Non-executive Directors:

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

12 March 2018

To the Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTION SUPPLEMENTAL AGREEMENT TO INTEGRATED PRODUCT AND SERVICE FRAMEWORK AGREEMENT – REVISION OF ANNUAL CAP AND NOTICE OF EGM

INTRODUCTION

Reference is made to the Prospectus and the announcement of the Company dated 12 March 2018 (the “ Announcement ”).

For identification purpose only

– 1 –

LETTER FROM THE BOARD

As mentioned in the “Connected Transactions” section of the Prospectus, the Company entered into the Integrated Product and Service Framework Agreement with China Datang on 26 October 2016 which will take effect upon the listing of the H Shares on the Main Board of the Stock Exchange with an initial term of three years. Pursuant to this agreement, the products and services to be provided by the Group to China Datang Group include: environmental protection and energy conservation solutions, renewable energy engineering services, EPC for thermal power plants and others. And the products and services to be procured by the Group from China Datang Group include: water and power supply, ancillary services under the business model of concession operations (desulfurization and denitrification), logistics services, such as bidding services, conference services and training, and procurement of equipment. For further details of the Integrated Product and Service Framework Agreement, please refer to “Connected Transactions” section of the Prospectus.

The purposes of this circular are to provide you with, among other things: (i) further details of the Supplemental Agreement and the revised annual cap; (ii) a letter of recommendation from the Independent Board Committee in relation to the matters set out in (i); (iii) 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); (iv) a notice of the EGM; and (v) other information as required under the Listing Rules.

THE SUPPLEMENTAL AGREEMENT

The principal terms of the Integrated Product and Service Framework Agreement as amended and supplemented by the Supplemental Agreement are summarized as below:

Date: 12 March 2018 Parties: (1) the Company; and (2) China Datang

Terms amended: In accordance with the Supplemental Agreement, the Company proposes to provide China Datang with product and service in relation to thermal power plant contracting business, with an annual cap of RMB1,200 million for 2018.

– 2 –

LETTER FROM THE BOARD

Save as disclosed above, all existing terms and conditions (including but not limited to the pricing policies) under the Integrated Product and Service Framework Agreement remain unchanged. In the event of any discrepancy between the Integrated Product and Service Framework Agreement and the Supplemental Agreement, the Supplemental Agreement shall prevail. Matters not mentioned in the Supplemental Agreement shall be subject to the Integrated Product and Service Framework Agreement.

For further details of the EPC of the thermal power plants services, please refer to “Business” section of the Prospectus.

THE REVISION OF THE ANNUAL CAP

The existing and revised annual caps in respect of EPC of thermal power plants under the Integrated Product and Service Framework Agreement for the financial year ending 31 December 2018 are as follows:

	Existing annual cap	Revised annual cap	Revised annual cap
	for year ending		for year ending
	31 December 2018	31	December 2018
	(RMB	million)
Products and Services Provided by the Group to
China Datang Group
EPC of thermal power plants	0		1,200

Historical transaction amounts

The total transaction amounts relating to the EPC of thermal power plants under the Integrated Product and Service Framework Agreement for the financial year ended 31 December 2016 and 2017 are as follows:

Historical transaction amounts for	Historical transaction amounts for
year	ended 31 December
2016	2017
	(RMB million)

Products and Services Provided by the Group to China Datang Group EPC of thermal power plants 0 0

– 3 –

LETTER FROM THE BOARD

Basis of determination of the revised annual cap

The revised annual cap in respect of the EPC of thermal power plants under the Integrated Product and Service Framework Agreement (as amended by the Supplemental Agreement) is determined by the Company after taking into account the following:

The Group proposes to undertake the EPC project of a thermal power plant of China Datang Group, the total contract value of which is almost RMB2,200 million and approximately RMB1,100–1,200 million of it is expected to be attributable to the Group in 2018, according to the expected progress of the EPC project.

Besides the EPC project above, the Group does not plan to undertake any other EPC projects for thermal power plants in 2018.

At the time of the listing of the Company on the Stock Exchange, the Group did not have the qualification to independently undertake the EPC of thermal power generation project with a single unit capacity of more than 100MW, and at that time the Group had undertaken only one project of such type in its operating history, therefore it was then expected that the Group would not have any competitive advantage in the relevant market in the future. As such, at the time of listing, the Group expected the chance of undertaking new EPC of thermal power generation projects would be very low for the next three years, and thus the Group set the annual caps of continuing connected transaction for this segment at zero. Since the listing of the Company, the depth of reserve of the China’s natural resources and the development of its macro energy consumption structure have forecasted that thermal power generation would still be one of the dominant methods of power generation in the near future. Therefore, it is estimated that the EPC business of thermal power generation projects will still have a large market space. Meanwhile, the Group also possesses its own personnel and technical strength to undertake EPC thermal power projects. The Group’s operational capability in this business segment has continued to improve since its listing, and its marketing efforts in this business segment have not been abandoned. As such, taking all the above factors since the listing of the Company into consideration, the Group considers that it is now conducive for it to engage in the EPC business of thermal power generation again due to the favourable internal and external developments.

According to the applicable PRC laws and regulations, the undertaking of the above EPC project requires companies to possess qualifications of Class A or above in the power industry of engineering and design, or Grade I or above in the EPC construction of electric power engineering. The Group had undertaken one EPC project of thermal power plant prior to its listing, where the Group failed to meet the qualification requirements for such project. The Group had duly resolved such compliance issue at the time its listing. For relevant details, please refer to the Prospectus.

– 4 –

LETTER FROM THE BOARD

The Group proposes to undertake the abovementioned new project by way of forming a consortium with an independent third party (which has the relevant requisite qualification for the EPC project above) where the allocation of responsibilities between, and the relevant EPC services to be provided by, this party and the Group will enable the Group’s participation in this project to be in full compliance with the requirements on the grade or class of qualification and is therefore allowed under our existing qualification under the applicable PRC laws and regulations.

Pricing procedures for the EPC project of thermal power plant

For the EPC project of a thermal power plant, a bidding procedure shall be conducted by China Datang Group and the bidding price offered by the successful bidder shall be implemented. Prior to the bidding procedures, China Datang shall publish announcements on its bidding invitation on public websites. There must be at least three bidders attending the bidding procedure, otherwise the bidding will be cancelled. The review panel for any bidding consists of experts selected by China Datang who have no interest in the bidding, who will score the bids by categories where bidding price is an important but not the only factor to be considered. The bidder with the highest score comprehensively determined by the review panel wins and the bidding price offered by the bidder will be implemented. Therefore, only in the event that the Group wins the bidding with the highest score determined by the review panel, China Datang Group will enter into specific agreements with the Group under the Supplemental Agreement.

Therefore, the transactions contemplated under the Supplemental Agreement will be conducted in the ordinary and usual course of business of the Group and on normal or better commercial terms, and are fair and reasonable and in the interests of the Group and the Shareholders as a whole.

INTERNAL CONTROL PROCEDURES IN RELATION TO THE REVISED ANNUAL CAP UNDER SUPPLEMENTAL AGREEMENT

The revised annual cap under the Supplemental Agreement will be subject to the approval of the Board and Independent Shareholders. After obtaining such approvals, the Financial and Property Management Department of the Company will issue an internal notice circulating the revised annual cap under the Supplemental Agreement for 2018 within the Group in order to remind about the strict compliance thereof. Specific business contracts in relation to the EPC project of the thermal power plant will be negotiated by the relevant business departments of the Company, and are subject to review and approval by the Strategic Planning and Cost Management Department in line with stringent control policies before execution.

– 5 –

LETTER FROM THE BOARD

As for the continuing running of the connected transactions, the Financial and Property Management Department of the Company has set up a monthly reporting system to track and trace the continuing connected transactions of the Group. If the accumulative connected transaction amount for the EPC project of thermal power plant has proportionately exceeded the revised 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 revised annual cap, the relevant member or department of the 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 business contracts for relevant member or department and ensure that the revised annual cap will not be exceeded.

REASONS FOR AND BENEFITS OF THE SUPPLEMENTAL AGREEMENT AND REVISION OF THE ANNUAL CAP

According to the Company’s internal estimation, the EPC project is expected to be profitable for the Group. Furthermore, such project experience is beneficial for the Group’s market expansion in power generation industry.

Given the above, the Board (including the independent non-executive Directors who have obtained advice from Independent Financial Adviser) considers that the Supplemental Agreement, the corresponding revised annual cap and the Transactions have been conducted by the Company in its ordinary and usual course of business, on normal or better commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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. Pursuant to Chapter 14A of the Listing Rules, China Datang is therefore a connected person of the Company. Accordingly, the Supplemental 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 revised annual cap is more than 5%, the Supplemental Agreement, the Transactions and the revised annual cap are subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

– 6 –

LETTER FROM THE BOARD

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 Supplemental Agreement and the Transactions. Save as mentioned above, all Directors have confirmed that they have no material interests in the Supplemental 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 self-operating 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.

THE EGM

The EGM is proposed to be held at 4:30 p.m. on Friday, 27 April 2018 at No. 120 Zizhuyuan Road, Haidian District, Beijing, the PRC by the Company to consider and, if thought fit, to pass the matters set out in the notice of the EGM. A proxy form and a reply slip have been dispatched to the Shareholders in accordance with the Listing Rules on 12 March 2018. The notice of the EGM is set out on pages 31 to 33 of this circular.

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

As at the Latest Practicable Date, China Datang and its associates are required to abstain from voting on the relevant resolution to be proposed at the EGM, and no other Shareholders are required to abstain from voting on the ordinary resolution in relation to the Supplemental Agreement and the Transactions (including the respective revised annual cap) to be proposed at the EGM.

– 7 –

LETTER FROM THE BOARD

A form of proxy for use at the EGM is also enclosed herewith. Whether or not you intend to attend the EGM, you are advised to read the notice and complete the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and return the form of proxy to the H Share Registrar (for the holders of H Shares) or the Company’s board office in the PRC (for the holders of Domestic Shares) as soon as possible and in any event not less than 24 hours before the time appointed for the EGM (i.e. no later than 4:30 p.m. (Hong Kong time) on Thursday, 26 April 2018) or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM if you so wish.

RECOMMENDATION

The Board (excluding the Directors who are required to abstain, but including independent non-executive directors) recommends the Independent Shareholders to vote in favour of the relevant resolution set out in the notice of the EGM 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

– 8 –

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)

12 March 2018

To the Independent Shareholders

Dear Sir or Madam,

CONTINUING CONNECTED TRANSACTION SUPPLEMENTAL AGREEMENT TO INTEGRATED PRODUCT AND SERVICE FRAMEWORK AGREEMENT – REVISION OF ANNUAL CAP AND NOTICE OF EGM

We refer to the circular issued by the Company to the Shareholders dated 12 March 2018 (the “ Circular ”) of which this letter forms part. Terms defined in the Circular shall have the same meaning in this letter unless the context otherwise requires.

Under the Listing Rules, the Transactions constitute continuing connected transaction for the Company and are subject to the approval of the Independent Shareholders at the EGM.

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 Supplemental Agreement, the Transactions and the revised annual cap 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 Supplemental Agreement, the Transactions and the revised annual cap. 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 11 to 22 of the Circular.

– 9 –

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 Circular. Having considered the Supplemental Agreement, the Transactions and the revised annual cap, and taken into account the advice of the Independent Financial Adviser, we consider that the Supplemental Agreement and the Transactions are in the ordinary and usual course of business of the Group and the Supplemental Agreement has been negotiated on an arm’s length basis and on normal commercial terms and that the terms of the Supplemental Agreement, the Transactions and the revised annual cap 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 resolution to be proposed at the EGM to approve the Supplemental Agreement and the Transactions and proposed revision of the annual cap contemplated under the Supplemental Agreement.

Yours faithfully,

for and on behalf of

Independent Board Committee

Datang Environment Industry Group Co., Ltd.*

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

Mr. Gao Jiaxiang Independent non-executive Director

For identification purpose only

– 10 –

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 Supplemental Agreement to Integrated Product and Service Framework Agreement and Revision of Annual Cap for the purpose of incorporation in this circular.

==> picture [456 x 36] intentionally omitted <==

12 March 2018

To: the Independent Board Committee and the Independent Shareholders

Dear Sirs/Madams,

CONTINUING CONNECTED TRANSACTIONS SUPPLEMENTAL AGREEMENT TO INTEGRATED PRODUCT AND SERVICE FRAMEWORK AGREEMENT – REVISION OF ANNUAL CAP

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 Supplemental Agreement, the Transactions and the revised annual cap (the “ Revised Annual Cap ”), details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 12 March 2018 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

According to the Board Letter, as mentioned in the “Connected Transactions” section of the Prospectus, the Company entered into the Integrated Product and Service Framework Agreement (the “ Agreement ”) with China Datang on 26 October 2016 which will take effect upon the Listing with an initial term of three years. Pursuant to this agreement, the products and services to be provided by the Group to the China Datang Group include: Environmental protection and energy conservation solutions, Renewable energy engineering services, EPC for thermal power plants and others. And the products and services to be procured by the Group from the China Datang Group include: water and power supply, ancillary services under the business model of concession operations (desulfurization and denitrification), logistics services, such as bidding services, conference services and training, and procurement of equipment. For further details of the Integrated Product and Service Framework Agreement, please refer to “Connected Transactions” section of the Prospectus.

– 11 –

LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

As disclosed in the Announcement, on 12 March 2018, the Company entered into the Supplemental Agreement with China Datang to revise certain terms of the Integrated Product and Service Framework Agreement. Pursuant to the requirements of the Listing Rules, the Supplemental Agreement and the Revised Annual Cap are subject to the approval of the Independent Shareholders. 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. Pursuant to Chapter 14A of the Listing Rules, China Datang is therefore a connected person of the Company. Accordingly, the Supplemental Agreement and the transactions contemplated thereunder 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 Revised Annual Cap is more than 5%, the Supplemental Agreement, the Transactions and the Revised 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 EGM on resolutions to approve the Supplemental 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 Supplemental Agreement, the Transactions, the Revised 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 the Financial Services Agreement entered between the Company and China Datang Finance Co., Ltd and the transactions thereunder in 2017. 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.

– 12 –

LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

BASIS OF OUR OPINION

Basis of Our Advice

In formulating our opinion and recommendation, we have reviewed, among other things: (i) the Agreement; (ii) the Supplemental Agreement; (iii) the Announcement with respect to the Supplemental Agreement; (iv) the bidding documents of the China Datang Group and the tender documents of the Company for a thermal power plants engineering general contracting in Xinjiang China (the “ EPC Project ”); (v) the notice dated 5 August 2017 issued by the China Datang Group to the Company in respect of the tender result (the “ Notice ”), which indicated that the Company had been marked the highest score in the bidding of EPC Project by the review panel and was ranked number one in the candidates list of the general contractors of the EPC Project. The Group has not entered into the contract in relation to the EPC Project with the China Datang Group, which is subject to the approval of the Supplemental Agreement and the Revised Annual Cap by the Independent Shareholders at the EGM; (vi) the annual report of the Company for the year ended 31 December 2016 (the “ 2016 Annual Report ”); (vii) the interim report of the Company for the 6 months ended 30 June 2017 (the “ 2017 Interim Report ”), and (viii) prospectus of the Company dated 3 November 2016 (the “ Prospectus ”). 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 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 Circular were accurate at the time they were made and continue to be accurate up to the date of the EGM. 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 Supplemental Agreement.

– 13 –

LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

PRINCIPAL FACTORS AND REASONS CONSIDERED

The principal factors and reasons we have taken into account in assessing the Supplemental Agreement, the corresponding Revised Annual Cap and the transactions contemplated thereunder in giving our recommendation to the Independent Board Committee and the Independent Shareholders are set out below:

(1) Background of the Supplemental Agreement

Information on the Company

As extracted from 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 the 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.

Set forth below are the operating results of the Group for the six months ended 30 June 2017 and the two years ended 31 December 2016 as extracted from the 2017 Interim Report, 2016 Annual Report, and the Prospectus.

	For the	For the
	six months	six months	For the	For the
	ended	ended	year ended	year ended
	30 June	30 June	31 December	31 December
	2017	2016	2016	2015
	RMB’000	RMB’000	RMB’000	RMB’000
	(unaudited)	(unaudited)	(audited)	(audited)
Revenue	2,994,018	3,142,088	8,156,469	8,609,588
– Environmental Protection and
Energy Conservation Solutions	2,169,294	2,212,891	6,008,992	5,453,813
– Renewable Energy Engineering	717,114	888,653	1,919,564	2,674,166
– Thermal power plants
engineering general contracting	–	–	–	147,538
– Other businesses	107,610	40,544	227,913	334,071
Profit	297,706	438,046	1,084,730	750,309

– 14 –

LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

	As at	As at	As at
	30 June	31 December	31 December
	2017	2016	2015
	RMB’000	RMB’000	RMB’000
	(unaudited)	(audited)	(audited)
Total Assets	17,265,212	17,935,540	13,978,827
Total Equity	6,310,085	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 RMB2,994 million for the six months ended 30 June 2017, representing a decrease of 4.7% as compared to that for the same period of 2016. The thermal power plants engineering general contracting segment recorded revenue of RMB148 million in 2015 and did not contribute any revenue after that.

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 six months ended 30 June 2017 decreased approximately 32.0% as compared to that for the same period of 2017 from RMB438 million to RMB298 million.

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, which was relatively stable as at 30 June 2017.

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, which was relatively stable as at 30 June 2017.

Information on China Datang

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 self-operating 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.

– 15 –

LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

Information on the Agreement and the Supplemental Agreement

As disclosed in the Prospectus, the Company entered into the Agreement with China Datang on 26 October 2016 which will take effect upon the Listing with an initial term of three years. Pursuant to the Agreement, the products and services to be provided by the Group to the China Datang Group include: Environmental protection and energy conservation solutions, Renewable energy engineering services, EPC for thermal power plants and others. The Stock Exchange granted a waiver to the Company in respect of the Group’s supply of products and services to the China Datang Group from strict compliance with the announcement and independent shareholders’ approval requirements under the Listing Rules. The waiver was subject to, among others, an annual cap for the each of two years ended 31 December 2017 and the year ending 31 December 2018.

As disclosed in the Prospectus, when entering into the Agreement with China Datang in 2016, the annual cap for the product and service provided by the Group to the China Datang Group in relation to thermal power plant contracting business for the year ended 31 December 2018 was proposed to be RMB0 million, because the (i) the Group had completed all the projects under the EPC business of thermal power plant and the relevant income had been recognized in 2015; and (ii) the Directors of the Company expected that there would be no further plan for the development of such business sector in 2016, 2017 and 2018.

With reference to the Board Letter, the Group proposes to undertake the EPC Project of China Datang Group, the total contract value of which is almost RMB2,200 million. The Existing Cap of provision of China Datang with product and service in in relation to thermal power plant contracting business will not be able to satisfy operation needs of the Group and the China Datang Group for the year ending 31 December 2018. The Board therefore proposes that the Existing Cap for the category of EPC for thermal power plant in respect of 2018 to be revised in order to meet the increasing demands of the Group and the China Datang Group for the year ending 31 December 2018.

(2) Reasons for and Benefits of Entering the Supplemental Agreement

According to the Board Letter, the EPC Project is expected to be profitable for the Group and such project experience is beneficial for the Group’s market expansion in power generation industry. We have discussed with the Management and understand that (a) the Company has made internal assessment in relation to the EPC Project, including but not limited to the factors shown below: the Company’s past experience of the EPC projects, the qualification of the Company for thermal power plants’ construction general contracting, the scales and the life cycles of the EPC projects, the available internal resource; (b) the Group has a good relationship with the Datang Group. During the past years, the Group has completed several EPC projects from the Datang Group, and no significant overdue account receivable from the Datang Group has been incurred.

– 16 –

LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

We noted that the revenue of the thermal power plants engineering general contracting segment of the Group was nil since year ended 31 December 2016 and according to the Management that it is mainly because (a) at the time of the listing of the Company on the Stock Exchange, the Group had undertaken only one EPC of thermal power generation project with a single unit capacity of more than 100MW in its operating history. The Group had completed all the work and the relevant income had been recognized in 2015; (b) the thermal power generation industry in China has been impacted by the government policies that the construction of new thermal power plants generally has suffered slowdown or has been temporarily suspended. The Group did not have the qualification to independently undertake the EPC of thermal power generation project with a single unit capacity of more than 100MW. Therefore, it was then expected that the Group would not have any competitive advantage in the relevant market in the future. As such, at the time of listing, the Group expected the chance of undertaking new EPC of thermal power generation projects would be very low for the next three years.

The Management further suggested that since the listing of the Company, the depth of the China’s natural resources and the development of its macro energy consumption structure have forecasted that thermal power generation would still be one of the dominant methods of power generation in the near future. Therefore, it is estimated that the EPC business of thermal power generation projects will still have a large market space. Meanwhile, the Group also possesses its own personnel and technical strength to undertake EPC thermal power projects. The Group’s operational capability in this business segment has continued to improve since its listing, and its marketing efforts in this business segment have not been abandoned. As such, taking all the above factors since the listing of the Company into consideration, the Group considers that it is now conducive for it to engage in the EPC business of thermal power generation again due to the favourable internal and external developments.

We have also reviewed the bidding documents and the tender documents of the EPC Project and as discussed with the Management, we noted that the scope of the EPC project is generally including design, procurement of equipment and raw materials, construction and installation, testing, trial operation, inspection and acceptance, warranty period and retention, which have always been part of the Group’s business scope of EPC model.

According to the Board Letter and the Prospectus, for EPC project of a thermal power plant, a bidding procedure shall be conducted by the China Datang Group and the bidding price offered by the successful bidder shall be implemented. Prior to the bidding procedures, China Datang shall publish announcements on its bidding invitation on public websites. There must be at least three bidders attending the bidding procedure, otherwise the bidding will be cancelled. The review panel for any bidding consists of experts selected by China Datang who have no interest in the bidding, who will score the bids by categories where bidding price is an important but not the only factor

– 17 –

LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

to be considered. The bidder with the highest score comprehensively determined by the review panel wins and the bidding price offered by the bidder will be implemented. Therefore, only in the event that the Group wins the bidding with the highest score determined by the review panel, China Datang Group will enter into specific agreements with the Group under the Supplemental Agreement.

We have reviewed (i) bidding documents of the EPC Project dated 1 June 2017 published on line; (ii) the tendering documents of the EPC Project dated 3 July 2017 by the Group and an independent third party under the consortium; (iii) Notice dated 5 August 2017 issued by the China Datang Group to the Company in respect of the tender result, which indicated that the Company had been marked the highest score in the bidding of EPC Project by the review panel and was ranked number one in the candidates list of the general contractors of the EPC Project. We noted that the pricing method in the bidding documents of the EPC Project is consistent with the pricing policy under the Agreement.

We have discussed with the Management and the PRC legal advisor of the Group regarding the legitimacy of the pricing method. The Management confirmed that the pricing method is in full compliance with the relevant rules and regulations in the PRC, i.e. The Bidding Law of the People’s Republic of China 《中華人民共和國招標投標法》 and Regulation on the Implementation of the Bidding Law of the People’s Republic of China 《中華人民共和國招標投標法實施條例》, which was opined by the PRC legal advisor of the Group.

The Management suggested that the Group proposed to undertake the EPC Project by way of forming a consortium with an independent third party (which has the relevant requisite qualification for the EPC Project) where the allocation of responsibilities between, and relevant EPC services to be provided by, this party and the Group will enable the Group’s participation in this project to be in full compliance with the requirements on the grade or class of qualification and is therefore allowed under the Group’s existing qualification under applicable PRC laws and regulations. According to the bidding documents of EPC Project, the bidding documents allow tendering by way of forming a consortium.

In this regard, we concur with the view of the Directors that the pricing policy under the tendering of the EPC Project are on normal commercial terms and in the interests of the Company and the Shareholders as a whole.

– 18 –

LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

The Group has not entered into the contract regarding the EPC Project with the China Datang Group, which is subject to the approval of the Supplemental Agreement and the Revised Annual Cap by the Independent Shareholders at the EGM. However, as advised by the Management that there will be no material difference from the expected contract terms and terms within the tendering documents of the EPC Project.

The Management also suggested that the Company may not obtain the approvals from the Independent Shareholders in time in respect of the undertaking of the EPC Project of the China Datang Group, which may therefore delay the progress of the EPC Project or make the Group lose the opportunity to undertake the EPC Project. Therefore, the Company is now seeking to revise the Existing Annual Cap for the EPC of thermal power plant contracting in advance.

In this regard, we concur with the view of the Directors that by entering into the Supplemental Agreement and the transactions contemplated thereunder have been conducted by the Company in its ordinary and usual course of business, on normal commercial terms, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

(3) The Principal Terms of the Supplemental Agreement

The principal terms of the Agreement, which is relevant to the proposed revision in the Supplemental Agreement are summarized as below:

Date: 12 March 2018 Parties: (1) the Company (2) China Datang

We have reviewed the Supplemental Agreement and the Agreement, we notice that save as the amendment to the Revised Annual Cap for the year ending 2018, all of the existing terms and conditions under the Agreement remain unchanged.

– 19 –

LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

(4) The Basis of the Revised Annual Cap

The existing and revised annual caps in respect of EPC of thermal power plants under the Agreement for the financial year ending 31 December 2018 are as follows:

	Existing	Revised
	Annual Cap for	Annual Cap for
	Year Ending	Year Ending
Products and Services Provided by the Group	31 December	31 December
to the China Datang Group	2018	2018
	(RMB million)	(RMB million)
EPC of thermal power plants	0	1,200

The total transaction amounts relating to the EPC of thermal power plants under the Agreement for the financial year ended 31 December 2016 and 2017 are as follows:

	Historical	Historical
	Transaction	Transaction
	Amounts for	Amounts for
	Year Ended	Year Ended
Products and Services Provided by the Group	31 December	31 December
to the China Datang Group	2016	2017
	(RMB million)	(RMB million)
EPC of thermal power plants	0	0

As mentioned in the Board Letter, the Group proposes to undertake the EPC Project of the China Datang Group, the total contract value of which is almost RMB2,200 million and approximately RMB1,100–1,200 million of it is expected to be attributable to the Group in 2018, according to the expected progress of the EPC project. Besides the EPC Project, the Group does not plan to undertake any other EPC projects for thermal power plants in 2018. As advised by the Management, the EPC project is expected to be profitable for the Group according to the Company’s internal estimation and such project experience is beneficial for the Group’s market expansion in power generation industry.

– 20 –

LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

We have reviewed the bidding documents and the tender documents of the EPC project, and the Notice dated 5 August 2017 issued by the China Datang Group to the Company. We have also discussed with the Management the nature, scale and the expected progress of the EPC project of the China Datang Group which the Group proposes to undertake. We consider the expected recognition of revenue of RMB1,100–1,200 million out of the total contract value of RMB2,200 million in 2018 is justifiable based on the estimated progress of the EPC Project by the Management, (i) the EPC Project is expected to commence in April 2018 and be completed in October 2019, the total project cycle of which is expected to be 19 months. However, as suggested by the Management, due to the harsh environmental condition in the winter of Xinjiang, the construction work can only be carried out in April to October each year. Therefore, both of the effective construction times in 2018 and 2019 are expected to be 7 months; (ii) according to the construction plan, approximately 50%, maximum 55%, of the EPC Project is planned to be finished in 2018.

According to the Group’s internal control in relation to the Revised Annual Caps, we have discussed with the Management and concur with the view of the Directors that such internal control procedures can ensure that the revised annual cap will not be exceeded. Details of which please refer to the Board Letter.

In this regard, we concur with the Management that that the Supplemental Agreement and the corresponding Revised Annual Cap are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 21 –

LETTER FROM ORIENT CAPITAL (HONG KONG) LIMITED

RECOMMENDATION

Having considered the above factors, we consider that the entering into of the Supplemental Agreement is in the ordinary and usual course of business of the Group. The terms of the Supplemental Agreement are on normal commercial terms and which, altogether with the Revised Annual Cap, are fair and reasonable, and the transactions contemplated under the Supplemental 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 Supplemental Agreements at the EGM.

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.

– 22 –

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 2016, 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 2016, being the date to which the latest published audited annual financial statements of the Company were made up;

– 23 –

GENERAL INFORMATION OF THE GROUP

APPENDIX I

(5) save as disclosed in the section “Interest of Directors in Competing Business” of Appendix I to this 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 2016, 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 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.

– 24 –

GENERAL INFORMATION OF THE GROUP

APPENDIX I

4. SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS HOLDING DISCLOSABLE 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/underlying	Percentage in	Percentage in
						Shares directly	the relevant class	the total
Name of Shareholders				Class of Shares	Capacity	or indirectly held	of Share capital (1)	Share capital (2)
						(Shares)	(%)	(%)
China Datang				Domestic Shares	Beneficial owner	2,343,245,800	100	78.96
						(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 Company Limited			(4)	H Shares	Beneficial owner	61,557,000	9.86	2.07
						(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 Limited				H Shares	Beneficial owner	61,557,000	9.86	2.07
(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)

– 25 –

GENERAL INFORMATION OF THE GROUP

APPENDIX I

						Number
						of Shares/underlying	Percentage in	Percentage in
						Shares directly	the relevant class	the total
Name of Shareholders				Class of Shares	Capacity	or indirectly held	of Share capital (1)	Share capital (2)
						(Shares)	(%)	(%)
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)
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 Limited				H Shares	Interest in controlled	41,038,000	6.57	1.38
(中國太平保險控股有限公司) (9)					corporation	(Long position)
China Taiping Insurance (HK) Company Limited				H Shares	Interest in controlled	41,038,000	6.57	1.38
(中國太平保險集團（香港）有限公司)		(9)			corporation	(Long position)
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		Co., Limited		H Shares	Beneficial owner	41,038,000	6.57	1.38
(中國人壽富蘭克林資產管理有限公司)			(10)			(Long position)
China Life Asset Management Company Limited				H Shares	Interest in controlled	41,038,000	6.57	1.38
(中國人壽資產管理有限公司) (10)					corporation	(Long position)

– 26 –

GENERAL INFORMATION OF THE GROUP

APPENDIX I

					Number
					of Shares/underlying		Percentage in	Percentage in
					Shares directly	the relevant class		the total
Name of Shareholders			Class of Shares	Capacity	or indirectly held	of	Share capital (1)	Share capital (2)
					(Shares)		(%)	(%)
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)

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..

– 27 –

GENERAL INFORMATION OF THE GROUP

APPENDIX I

(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.

5. QUALIFICATION EXPERT AND CONSENT

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

Name

Qualification

Orient Capital (Hong Kong) Limited A corporation licensed to conduct type 6 (advising on corporate 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 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 2016 (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 circular for incorporation herein.

– 28 –

GENERAL INFORMATION OF THE GROUP

APPENDIX I

6. LITIGATION

As at the Latest Practicable Date, save as disclosed in this 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.
(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 36/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 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 36/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong from the date of this circular up to and including 26 March 2018:

(1) Articles of Association;
(2) the letter from the Independent Board Committee, full text of which is set out on pages 9 to 10 of this circular;

– 29 –

GENERAL INFORMATION OF THE GROUP

APPENDIX I

(3) the letter from the Independent Financial Adviser, full text of which is set out on pages 11 to 22 of this circular;
(4) the written consent of the expert referred to paragraph 5 of Appendix I;
(5) this circular; and
(6) Integrated Product and Service Framework Agreement and Supplemental Agreement.

– 30 –

NOTICE OF THE EGM

==> 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)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting of Datang Environment Industry Group Co., Ltd. (the “ Company ”) will be convened at 4:30 p.m. on Friday, 27 April 2018 at No. 120 Zizhuyuan Road, Haidian District, Beijing, the PRC, for the purpose of considering and, if thought fit, passing the following matters (whether amended or not). Terms used in this notice shall have the same meanings as those defined in the circular of the Company dated 12 March 2018 (the “ Circular ”) unless otherwise specified.

Ordinary Resolution

(1) To consider and approve the Supplemental Agreement, the Transactions and the revised annual cap thereunder.

The main texts and relevant details of resolution at the EGM are set forth in the 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, 12 March 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

– 31 –

NOTICE OF THE EGM

Notes:

i. In order to ascertain the entitlements of the Shareholders to attend the EGM, the register of members of the Company will be closed from Wednesday, 28 March 2018 to Friday, 27 April 2018 (both days inclusive), during which period no transfer of Shares will be effected. Shareholders whose names appear on the register of members of the Company upon the end of business hours on Friday, 27 April 2018 are entitled to attend and vote at the EGM.

To be eligible to attend and vote at the EGM, all transfer documents must be lodged with the H Share Registrar, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th 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 at No. 120 Zizhuyuan Road, Haidian District, Beijing, the PRC, 100097 (for holders of Domestic Shares), no later than 4:30 p.m. on Tuesday, 27 March 2018.

ii. Each Shareholder entitled to attend and vote at the EGM may, by completing the form of proxy of the Company, appoint one or more proxies to attend and vote at the EGM 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.
iii. The instrument to appoint a proxy 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.
iv. To be valid, the form of proxy 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 EGM. If such instrument 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 instrument appointing the proxy, be deposited at the specified place at the time set out in such instrument. Completion and return of the proxy form will not preclude Shareholders from attending and voting in person at the EGM or any adjourned meetings should you so wish.
v. Shareholders shall produce their identity documents and supporting documents in respect of Shares held when attending the EGM. If corporate Shareholders appoint authorised representative to attend the EGM, the authorised representative shall produce his/her identity documents and a notarised certified copy of the relevant authorised documents signed by the Board or other authorised parties of the Shareholders or other notarised certified documents allowed by the Company. Proxies shall produce their identity documents and the proxy forms signed by the Shareholders or their attorney when attending the EGM.
vi. The Company has the rights to request a proxy who attends the EGM on behalf of a Shareholder to provide proof of identity.
vii. H Shareholders (in person or by proxy) who intend to attend the EGM shall complete and deliver the reply slips to H Share Registrar, Computershare Hong Kong Investor Services Limited on or before Friday, 6 April 2018 in person, by mail or by fax. Domestic Shareholders (in person or by proxy) who intend to attend the EGM shall deliver the said document to the Company’s board office in the PRC subject to the same time limit.
viii. The EGM is expected to be held for less than half a day. Shareholders who intend to attend the EGM shall bear their own transportation and accommodation expenses.

– 32 –

NOTICE OF THE EGM

ix. In case of joint Shareholders, the vote of the most senior one (in person or by proxy) will be accepted to the exclusion of the votes of other joint Shareholders, and for this purpose, the seniority shall be determined by the order in which the names of such joint Shareholders stand in the register of members of the Company.
x. With respect to the resolution above, in view of the interests of China Datang in the proposed continuing connected transactions contemplated under the Supplemental Agreement, China Datang and its associates are required to abstain from voting on the resolution to be proposed at the EGM to approve such resolution.
xi. H Share Registrar, Computershare Hong Kong Investor Services Limited, is situated at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, and with the fax number: +852 2865 0990.
xii. The contact details of the Company’s board office in the PRC are as follows: Address: No. 120 Zizhuyuan Road, Haidian District, Beijing, the PRC, 100097 Fax number: +86 10 5838 9860

– 33 –

AI assistant

Datang Environment Industry Group Co., Ltd. — Proxy Solicitation & Information Statement 2018

49815_rns_2018-03-12_0d2d319b-52ff-4ccf-9745-28327e0b56be.pdf

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

CONTINUING CONNECTED TRANSACTION SUPPLEMENTAL AGREEMENT TO INTEGRATED PRODUCT AND SERVICE FRAMEWORK AGREEMENT – REVISION OF ANNUAL CAP AND NOTICE OF EGM

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

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

CONTINUING CONNECTED TRANSACTION SUPPLEMENTAL AGREEMENT TO INTEGRATED PRODUCT AND SERVICE FRAMEWORK AGREEMENT – REVISION OF ANNUAL CAP AND NOTICE OF EGM

INTRODUCTION

LETTER FROM THE BOARD

THE SUPPLEMENTAL AGREEMENT

LETTER FROM THE BOARD

THE REVISION OF THE ANNUAL CAP

Historical transaction amounts

Basis of determination of the revised annual cap

LETTER FROM THE BOARD

Pricing procedures for the EPC project of thermal power plant

INTERNAL CONTROL PROCEDURES IN RELATION TO THE REVISED ANNUAL CAP UNDER SUPPLEMENTAL AGREEMENT

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE SUPPLEMENTAL AGREEMENT AND REVISION OF THE ANNUAL CAP

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

GENERAL INFORMATION

THE EGM

LETTER FROM THE BOARD

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 TRANSACTION SUPPLEMENTAL AGREEMENT TO INTEGRATED PRODUCT AND SERVICE FRAMEWORK AGREEMENT – REVISION OF ANNUAL CAP AND NOTICE OF EGM

Yours faithfully,

Datang Environment Industry Group Co., Ltd.*

CONTINUING CONNECTED TRANSACTIONS SUPPLEMENTAL AGREEMENT TO INTEGRATED PRODUCT AND SERVICE FRAMEWORK AGREEMENT – REVISION OF ANNUAL CAP

INTRODUCTION

BASIS OF OUR OPINION

Basis of Our Advice

PRINCIPAL FACTORS AND REASONS CONSIDERED

(1) Background of the Supplemental Agreement

Information on the Company

Information on China Datang

Information on the Agreement and the Supplemental Agreement

(2) Reasons for and Benefits of Entering the Supplemental Agreement

(3) The Principal Terms of the Supplemental Agreement

(4) The Basis of the Revised Annual Cap

RECOMMENDATION

Yours faithfully,

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 DISCLOSABLE 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.* 大唐環境產業集團股份有限公司

NOTICE OF EXTRAORDINARY GENERAL MEETING

Ordinary Resolution

Notes:

More from Datang Environment Industry Group Co., Ltd.

Datang Environment Industry Group Co., Ltd. Proxy Solicitation & Information Statement 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**