Dynagreen Environmental Protection Group Co., Ltd.

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 adviser.

If you have sold or transferred all your shares in Dynagreen Environmental Protection Group Co., Ltd.* , you should at once hand this circular to the purchaser or to the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of Dynagreen Environmental Protection Group Co., Ltd .

綠色動力環保集團股份有限公司

Dynagreen Environmental Protection Group Co., Ltd.*

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

(Stock Code: 1330)

PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

A letter from the Board is set out on pages 4 to 27 of this circular.

A notice convening the EGM and a notice convening the H Shares Class Meeting to be held at 2:00 p.m. and immediately after the A Shares Class Meeting respectively on Tuesday, 24 August 2021 at Complex of Beijing Dynagreen Environment Co., Ltd.* (北京綠色動力環保有限公司), Cailin Road, Yujiawu Township, Tongzhou District, Beijing, are set out on pages 28 to 31 and pages 32 to 35 of this circular, respectively.

Whether or not you intend to attend the EGM and/or the H Shares Class Meeting, you are requested to complete and return the form of proxy in accordance with the instructions printed thereon. The proxy forms should be returned to the H share registrar of the Company, Tricor Investor Services Limited (Address: Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong) as soon as possible and in any event not less than 24 hours before the time appointed for the EGM and/or the H Shares Class Meeting or any adjournment thereof. Completion and return of the proxy forms will not preclude you from attending and voting in person at the EGM and the H Shares Class Meeting or at any adjourned thereof should you so wish.

6 August 2021

* For identification purpose only

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
NOTICE OF EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . . . . .	28
NOTICE OF H SHARES CLASS MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
APPENDIX I: PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE
CONVERTIBLE CORPORATE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
APPENDIX II: FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE
PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS . . . . . . . . .	II-1
APPENDIX III: DILUTION OF IMMEDIATE RETURN RESULTING
FROM THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE
CORPORATE BONDS, THE REMEDIAL MEASURES ADOPTED BY THE
COMPANY AND UNDERTAKINGS ISSUED BY RELEVANT SUBJECTS . . . . .	III-1
APPENDIX IV: THE PLAN FOR RETURN TO THE SHAREHOLDERS FOR THE
NEXT THREE YEARS (2021-2023) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
APPENDIX V: RULES OF A SHARE CONVERTIBLE CORPORATE BOND
HOLDERS’ MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
APPENDIX VI: REPORT ON UTILIZATION OF PREVIOUSLY RAISED
PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	VI-1
APPENDIX VII: RESOLUTION AUTHORISING THE BOARD AND ITS
AUTHORISED PERSONS TO EXERCISE IN FULL THE POWER TO DEAL
WITH SPECIFIC MATTERS RELATING TO THE COMPANY’S PROPOSED
ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS . . . . . . . . . . .	VII-1
APPENDIX VIII: GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .VIII-1

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

“Annual Interest”

the interest accrued to the A Share Convertible Corporate Bond Holders in each year on each anniversary of the date of issuance of the A Share Convertible Corporate Bonds, calculated based on the aggregate nominal value of the A Share Convertible Corporate Bonds

“Articles”
the articles of association of the Company, as amended from time to time
“A Share(s)”
the domestic share(s) in the ordinary share capital of the Company with a par value of RMB1.00 each, which are listed for trading on the Shanghai Stock Exchange
“A Share Convertible Corporate Bond Holder(s)”
holder(s) of A Share Convertible Corporate Bonds proposed to be issued by the Company
“A Share Convertible Corporate Bond Issuance Plan”
the A Share Convertible Corporate Bond issuance plan of the Company to be considered and, if thought fit, approved at the EGM and the Class Meetings, details of which are set out in this circular
“A Share Convertible Corporate Bonds”
the convertible corporate bonds in the total amount of not more than RMB2.39 billion which are convertible into new A Shares and proposed to be issued by the Company within the PRC
“A Shareholder(s)”
holder(s) of A Share(s)
“A Shares Class Meeting”

the class meeting of the A Shareholders to be convened to consider and, if thought fit, approve, amongst other things, the Proposed Issuance of A Share Convertible Corporate Bonds

“BSAM”

Beijing State-owned Assets Management Co., Ltd.* (北京市國有資產經營有限責任公司), a company established in the PRC with limited liability and is wholly-owned by the Beijing Municipal Government, being a Controlling Shareholder of the Company

“Board”

the board of Directors

– 1 –

DEFINITIONS

“Class Meetings”
the class meeting for holders of A Shares and the class meeting for holders of H Shares of the Company to be convened to, amongst other things, approve the Proposed Issuance of A Share Convertible Corporate Bonds
“Company”
Dynagreen Environmental Protection Group Co., Ltd.* (綠色動力環保集團股份有限公司), a joint stock limited liability company incorporated in the PRC on 23 April 2012, whose H Shares are listed on the Main Board of Hong Kong Stock Exchange (Stock Code: 1330) and A Shares are listed on the Shanghai Stock Exchange (Stock Code: 601330)
“Company Law”
the Company Law of the People’s Republic of China 《中華人民共和國公司法》( ), as amended from time to time
“connected person(s)” has the meaning ascribed thereto under the Listing Rules
“Controlling Shareholder”
has the meaning ascribed thereto under the Listing Rules
“CSRC”
the China Securities Regulatory Commission (中國證券監督管理委員會)
“Director(s)” the director(s) of the Company
“EGM”
the extraordinary general meeting of the Company to be convened to, amongst other things, approve the Proposed Issuance of A Share Convertible Corporate Bonds
“Hong Kong”
the Hong Kong Special Administrative Region of the PRC
“H Share(s)”
the oversea listed foreign shares in the ordinary share capital of the Company with a par value of RMB1.00 each, which are listed on the Hong Kong Stock Exchange and traded in Hong Kong dollars
“H Shareholder(s)”
holder(s) of H Share(s)

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DEFINITIONS

“Latest Practicable Date”
“H Shares Class Meeting”
“Listing Rules”
“Offering Document”
“PRC”
“Proposed Issuance of A Share Convertible Corporate Bonds”
“RMB”
“Securities Laws”
“SFO”
“Shareholder(s)”
“Stock Exchange”
“%”
4 August 2021, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular
the class meeting of the H Shareholders to be convened to consider and, if thought fit, approve, amongst other things, the Proposed Issuance of A Share Convertible Corporate Bonds
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended from time to time
offering document of the Proposed Issuance of A Share Convertible Corporate Bonds by Dynagreen Environmental Protection Group Co., Ltd.* (綠色動力環保集團股份有限公司)
the People’s Republic of China which, for the purposes of this circular, excludes the Hong Kong Special Administrative Region, the Macau Special Administrative Region of the People’s Republic of China and Taiwan
the issuance of A Share Convertible Corporate Bonds proposed by the Company according to the A Share Convertible Corporate Bond Issuance Plan
Renminbi, the lawful currency of the PRC
Securities Laws of the People’s Republic of China, as amended from time to time
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time
the shareholder(s) of the Company
The Stock Exchange of Hong Kong Limited
percent

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LETTER FROM THE BOARD

綠色動力環保集團股份有限公司 Dynagreen Environmental Protection Group Co., Ltd.*

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

(Stock Code: 1330)

Executive Directors: Mr. QIAO Dewei (Chairman) Ms. ZHONG Xia Mr. HU Shengyong

Non-executive Directors: Mr. LIU Shuguang Mr. CHENG Suning Mr. ZHANG Zhenhai

Independent non-executive Directors: Mr. OU Yuezhou Ms. FU Jie Mr. XIE Lanjun

Registered Office: 2nd Floor, Jiuzhou Electronic Building, Keji South 12th Street, Nanshan District, Shenzhen, the PRC

Principal place of business in Hong Kong: 1st Floor, Xiu Ping Commercial Building, 104 Jervois Street, Hong Kong

6 August 2021

To the Shareholders

Dear Sir or Madam,

PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

I. INTRODUCTION

Reference is made to the announcement of the Company dated 23 July 2021 in relation to Proposed Issuance of A Share Convertible Corporate Bonds.

The purpose of this circular is to provide you with further information in relation to (i) satisfying the conditions of the public issuance of A share convertible corporate bonds; (ii) the Proposed Issuance of A Share Convertible Corporate Bonds; (iii) proposal of the Proposed Issuance of A Share Convertible Corporate Bonds; (iv) feasibility report on the

* For identification purposes only

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LETTER FROM THE BOARD

use of proceeds from the Proposed Issuance of A Share Convertible Corporate Bonds; (v) dilution of immediate return resulting from the Proposed Issuance of A Share Convertible Corporate Bonds, remedial measures and undertakings issued by relevant subjects; (vi) the plan for return to the Shareholders for the next three years (2021-2023); (vii) formulation of rules of A Share Convertible Corporate Bond holders’ meeting; (viii) report on utilization of previously raised proceeds; and (ix) the resolution authorising the Board or its authorised persons to exercise in full the power to deal with specific matters relating to the Company’s Proposed Issuance of A Share Convertible Corporate Bonds, to enable you to make an informed decision on whether to vote for or against the proposed resolutions at the EGM and the Class Meetings (if applicable).

II. PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Pursuant to the relevant requirements under the Company Law, the Securities Law, the Administrative Measures for the Issuance of Securities by Listed Companies 《上市公( 司證券發行管理辦法》) and other laws, regulations and normative documents, upon the Company’s review on the qualifications and conditions of applying for public issuance of A share convertible corporate bonds, the Company believes that it has satisfied all the regulations and requirements of the relevant laws, regulations and normative documents in relation to the public issuance of A share convertible corporate bonds by listed companies, that it is not a subject of bad faith and that it conforms to the conditions for public issuance of A share convertible corporate bonds.

Details of the A Share Convertible Corporate Bond Issuance Plan are as follows:

(1) Proposed Issuance of A Share Convertible Corporate Bonds

1. Type of securities to be issued

The type of the securities to be issued is convertible corporate bonds which can be converted into A Shares of the Company. The A Share Convertible Corporate Bonds and the A Shares to be converted will be listed on the Shanghai Stock Exchange.

2. Size of issuance

The total amount of the A Share Convertible Corporate Bonds proposed to be issued will not exceed RMB2.39 billion (including RMB2.39 billion). The actual size of the issuance shall be determined by the Board within the above range, subject to the authorisation by the Shareholders at the general meetings and the Class Meetings.

3. Par value and issue price

The A Share Convertible Corporate Bonds will be issued at par with a nominal value of RMB100 each pursuant to the Administrative Measures for the Issuance of Securities by Listed Companies.

No prescribed minimum issue price is set for the Proposed Issuance of A Share Convertible Corporate Bonds. There are no regulatory requirements in either the PRC or Hong Kong on setting a prescribed minimum issue price for issuance of corporate bonds.

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LETTER FROM THE BOARD

4. Term

The term of the A Share Convertible Corporate Bonds to be issued will be six years from the date of the issuance.

5. Coupon rate

The Board proposed to the Shareholders at the general meetings and the Class Meetings to authorise the Board to determine, before issuance, the method of determining the coupon rate of the A Share Convertible Corporate Bonds to be issued as well as the final interest rate for each interest accrual year upon negotiation with the sponsor (the lead underwriter) in accordance with national policies, market conditions and the actual conditions of the Company.

6. Method and timing of interest payment and repayment of the principal

The interest of the A Share Convertible Corporate Bonds to be issued will be paid annually. The principal of the unconverted A Share Convertible Corporate Bonds will be repaid and the interest for the final year will be paid upon maturity.

(1) Calculation of Annual Interest

Annual Interest means the interest accrued to a bond holder in each year on each anniversary of the date of issuance of the A Share Convertible Corporate Bonds which is calculated based on the aggregate nominal value of the A Share Convertible Corporate Bonds held by him/her.

The formula for calculating the Annual Interest is: I = B × i

I: denotes the Annual Interest;

B: denotes the aggregate nominal value of the convertible bonds held by a convertible bond holder as at the record date for interest payment in an interest accrual year (“that year” or “each year”);

i: denotes the coupon rate of the convertible bonds of that year.

(2) Method of interest payment

a. The interest of the A Share Convertible Corporate Bonds will be paid annually, accruing from the date of the issuance of the A Share Convertible Corporate Bonds.

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LETTER FROM THE BOARD

b. Interest payment date: The interest is payable annually on each anniversary of the date of the issuance of the A Share Convertible Corporate Bonds. Where such a date falls on a statutory holiday or rest day, the interest payment date shall be postponed to the next working day, with no additional interest accrued during the period of postponement. The period between any two consecutive interest payment dates will be an interest accrual year.
c. Record date for interest payment: The record date for interest payment in each year will be the trading day immediately preceding the interest payment date. The Company will pay the interest accrued for that year within five trading days from the interest payment date. Where an A Share Convertible Corporate Bond holder converts his/her A Share Convertible Corporate Bonds into A Shares on or before the record date for interest payment in any interest accrual year, that A Share Convertible Corporate Bond holder shall not be entitled to any interest for that year and any subsequent interest accrual year.
d. Tax payable on the interest income of an A Share Convertible Corporate Bond holder shall be borne by such holder him/herself.

7. Conversion period

The conversion period of the A Share Convertible Corporate Bonds shall commence on the first trading day immediately following the expiry of the six-month period after the date of the issuance of the A Share Convertible Corporate Bonds, and end on the maturity date of the A Share Convertible Corporate Bonds.

8. Security

No security will be provided in relation to the issuance of the A Share Convertible Corporate Bonds.

9. Determination and adjustment of the conversion price

(1) Basis for determining the initial conversion price

The initial conversion price of the A Share Convertible Corporate Bonds shall not be lower than the higher of the average trading price of A Shares during the 20 trading days immediately preceding the date of publication of the Offering Document (in the event that during such 20 trading days, the share price has been adjusted due to ex-rights or

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LETTER FROM THE BOARD

ex-dividend, the average share price for the trading days before the adjustment shall be accordingly adjusted with reference to the adjusted share price following the ex-rights or ex-dividend) and the average trading price of A Shares on the trading day immediately preceding the date of publication of the Offering Document; and shall not be lower than the latest audited net asset value per Share and the par value per Share. The actual initial conversion price shall be determined, before issuance, by the Board upon negotiation with the sponsor (the lead underwriter) in accordance with the market conditions, subject to the authorisation by the Shareholders at the general meetings and the Class Meetings.

The average trading price of A Shares for the 20 trading days immediately preceding the date of publication of the Offering Document = the total trading amount of A Shares during such 20 trading days/the total trading volume of A Shares during such 20 trading days.

The average trading price of A Shares for the trading day immediately preceding the date of publication of the Offering Document = the total trading amount of A Shares on such a trading day/the total trading volume of A Shares on such a trading day.

(2) Method of adjustment to the conversion price and the calculation formula

The conversion price is subject to adjustments in certain events that lead to changes in the number of Shares of the Company subsequent to the issuance of the A Share Convertible Corporate Bonds, such as distribution of share dividends, capitalisation, issuance of new shares or rights issue and distribution of cash dividends (excluding any increase in the share capital as a result of conversion of the A Share Convertible Corporate Bonds). The Company will adjust the conversion price based on the following formula (rounded off to two decimal places):

Distribution of share dividends or capitalisation: P1=P0/(1+n);

Issuance of new shares or rights issue: P1=(P0+A×k)/(1+k);

The above two events occurring concurrently: P1=(P0+A×k)/(1+n+k);

Distribution of cash dividends: P1=P0-D;

The above three events occurring concurrently: P1=(P0-D+A×k)/(1+n+k).

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LETTER FROM THE BOARD

In the aforesaid formulae, “P0” denotes the conversion price before the adjustment; “n” denotes the rate of distribution of share dividends or capitalisation; “k” denotes the rate of issuance of new shares or rights issue; “A” denotes the price of issuance of new shares or rights issue; “D” denotes the cash dividend per share and “P1” denotes the adjusted conversion price.

Upon occurrence of any of the abovementioned changes in Shares and/or Shareholders’ interests, the Company will adjust the conversion price in accordance with the above method, and an announcement in relation to resolutions of the Board will be made on the website of Shanghai Stock Exchange and on the media designated by CSRC for information disclosure of listed companies. Such an announcement will indicate the date of the adjustment to the conversion price, method of the adjustment and suspension period of share conversion (if necessary). Meanwhile, the Company shall disclose such information to the Hong Kong market in accordance with the Listing Rules and the Articles (if necessary). If the conversion price adjustment date is on or after the date on which an A Share Convertible Corporate Bond holder applies for conversion of his/her A Share Convertible Corporate Bonds but before the registration date of the shares to be issued upon conversion, such conversion will be executed based on the adjusted conversion price.

In the event that the A Share Convertible Corporate Bond holders’ interests or the interests derived from the share conversion are affected by the change in the Company’s share class, quantity and/or Shareholders’ interests due to any possible share repurchase, consolidation, division or any other circumstances, the Company will adjust the conversion price based on the actual situations and in accordance with the principles of fairness, justice and equality so as to fully protect the interests of the A Share Convertible Corporate Bond holders. The details of the adjustment to the conversion price and its implementation measures shall be determined in accordance with the relevant national laws and regulations and the relevant requirements of the securities regulatory authorities.

10. Terms of downward adjustment to conversion price

(1) Authorisation and magnitude of adjustment

If, during the term of the A Share Convertible Corporate Bonds, the closing prices of A Shares in at least 15 trading days out of any 30 consecutive trading days are lower than 85% (excluding 85%) of the prevailing conversion price, the Board may propose a downward adjustment to the conversion price to Shareholders at the general meetings and the Class Meetings for their consideration and approval.

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LETTER FROM THE BOARD

The abovementioned proposal is subject to approvals of more than two-thirds of the voting rights of the Shareholders who attend the general meeting and the Class Meetings. Shareholders who hold the A Share Convertible Corporate Bonds should abstain from voting at the general meetings and Class Meetings. The adjusted conversion price should be no less than the higher of the average trading price of A Shares during the 20 trading days immediately preceding the date of the aforementioned general meeting and Class Meetings and the average trading price of A Shares on the trading day immediately preceding the date of such general meetings and Class Meetings. At the same time, the adjusted conversion price shall not be lower than the latest audited net asset value per Share and par value per Share.

In the event that an adjustment to the conversion price by the Company is made during the aforementioned 30 trading days, in respect of the trading days prior to the adjustment to the conversion price, the calculation shall be based on the unadjusted conversion price and the closing price of the A Shares on each such day, while in respect of the trading day on which adjustment to the conversion price is made and the trading days afterwards, the calculation shall be based on the adjusted conversion price and the closing price of the A Shares on each such day.

(2) Procedures of adjustment

In the event that the Company decides to adjust the conversion price downwards, the Company shall publish an announcement in connection therewith on the website of Shanghai Stock Exchange and media designated by the CSRC for information disclosure of listed companies. Such announcement shall disclose information including the magnitude of the adjustment, the suspension period of share conversion, and other relevant information. Meanwhile, the Company shall disclose the information to the Hong Kong market in accordance with the Listing Rules and the Articles (if necessary). Application for conversion of the A Share Convertible Corporate Bonds at the adjusted conversion price shall be resumed upon the conversion price adjustment date.

If the conversion price adjustment date is on or after the date of the application for conversion but before the registration date of the shares to be issued upon conversion, such conversion will be executed based on the adjusted conversion price.

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LETTER FROM THE BOARD

11. Method of determining the number of shares for conversion

Where an A Share Convertible Corporate Bond Holder applies to convert his/her A Share Convertible Corporate Bonds into A Shares during the conversion period, the formula for calculating the number of A Shares to be issued upon conversion is as below:

Q = V/P, any fractional share shall be rounded down to the nearest integer.

Q: denotes the number of A Shares to be issued upon conversion.

V: denotes the aggregate nominal value of the A Share Convertible Corporate Bonds in respect of which the A Share Convertible Corporate Bond Holder applies for conversion.

P: denotes the effective conversion price on the date of application for conversion.

Within five trading days from the date of conversion by A Share Convertible Corporate Bond Holder, the Company shall pay the A Share Convertible Corporate Bond Holder in cash an amount equal to the remaining balance of such A Share Convertible Corporate Bonds which is insufficient to be converted into one A Share and the interest accrued on such balance in accordance with the relevant requirements of the Shanghai Stock Exchange and such other authorities.

12. Terms of redemption

(1) Terms of redemption upon maturity

Within five trading days upon maturity of the A Share Convertible Corporate Bonds, the Company will redeem the A Share Convertible Corporate Bonds which have not been converted into A Shares by then, at a price determined by the Board upon negotiation with the sponsor (the lead underwriter) with reference to national policies, market conditions and the actual conditions of the Company upon the issuance, subject to the authorisation by the Shareholders at the general meetings and Class Meetings.

(2) Terms of conditional redemption

During the conversion period, in case of one of the following two circumstances, the Company has the right to redeem all or part of the A Share Convertible Corporate Bonds which have not been converted into shares based on the par value plus the accrued interest then:

a. where the closing prices of A Shares for at least 15 trading days out of 30 consecutive trading days during the conversion period are no less than 130% (including 130%) of the prevailing conversion price;

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LETTER FROM THE BOARD

b. where the balance of the outstanding A Share Convertible Corporate Bonds under the issuance is lower than RMB30 million.

Formula for calculating the then accrued interest is: IA=B×i×t/365

IA: denotes the accrued interest for the current period;

B: denotes the aggregate nominal value of the A Share Convertible Corporate Bonds to be deemed that are held by the A Share Convertible Corporate Bond Holders under the issuance;

i: denotes the coupon rate of the A Share Convertible Corporate Bonds for current year;

t: denotes the number of days on which interest is accrued, i.e. the actual number of calendar days from the last interest payment date up to the redemption date of that interest accrual year (including the last interest payment date and excluding the redemption date).

In the event that an adjustment to the conversion price is made during the aforesaid 30 trading days, the amount for trading days prior to the date of the adjustment shall be calculated based on the conversion price and the closing price of the A Shares before the adjustment, while the amount for trading days after the adjustment shall be calculated based on the conversion price and the closing price after the date of the adjustment.

13. Terms of sale back

(1) Terms of conditional sale back

During the last two interest accrual years within the term of the A Share Convertible Corporate Bonds, if the closing prices of the A Shares of the Company on any 30 consecutive trading days are lower than 70% (excluding 70%) of the prevailing conversion price, the A Share Convertible Corporate Bond Holders are entitled to sell back all or part of the A Share Convertible Corporate Bonds they hold to the Company at par plus the then accrued interest.

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LETTER FROM THE BOARD

conversion price and the closing price of the A Shares on each such day, and in respect of the trading days after the adjustment, the calculation shall be based on the adjusted conversion price and the closing price of the A Shares on each such day. In the event that there is a downward adjustment to the conversion price, the aforesaid “30 consecutive trading days” shall be re-counted from the first trading day following the adjustment to the conversion price.

The A Share Convertible Corporate Bond Holders can exercise their sale back rights once every year when the sale back conditions are initially satisfied according to the abovementioned agreed terms in the last two interest accrual years within the term of the A Share Convertible Corporate Bonds. If the sale back conditions are initially satisfied, but the A Share Convertible Corporate Bond Holders do not apply for and exercise their sale back rights during the sale back declaration period then announced by the Company, they shall not exercise the sale back rights during such interest accrual years. The A Share Convertible Corporate Bond Holders are not allowed to exercise part of their sale back rights for multiple times.

(2) Additional terms of sale back

If the actual use of the proceeds raised from the A Share Convertible Corporate Bonds to be issued significantly differs from the undertakings of the use of proceeds set out by the Company in the Offering Document, and such change is considered by the CSRC as a deviation in the use of proceeds, the A Share Convertible Corporate Bond Holders shall be entitled to a one-off right to sell all or part of the A Share Convertible Corporate Bond they hold back to the Company at par plus then accrued interest. Upon the satisfaction of the additional condition of sale back, the A Share Convertible Corporate Bond Holders may sell their A Share Convertible Corporate Bond back to the Company during the additional sale back declaration period after it is announced by the Company. If the A Share Convertible Corporate Bond Holders do not exercise their sale back rights during such period, they shall not exercise such rights later.

14. Entitlement to dividend in the year of conversion

The new A Shares to be issued as a result of the conversion of the A Share Convertible Corporate Bonds shall rank pari passu with all the existing A Shares, and all ordinary A Shareholders (including those derived from the conversion of the A Share Convertible Corporate Bonds) whose names are recorded on the register of members of the Company on the record date for dividend distribution shall be entitled to receive the dividend of that period and enjoy equal rights and interests.

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LETTER FROM THE BOARD

15. Method of the issuance and target subscribers

The specific method of the issuance of the A Share Convertible Corporate Bonds shall be determined by the Board upon negotiation with the sponsor (the lead underwriter), which is subject to authorisation by the Shareholders at the EGM and the Class Meetings. The target subscribers of the A Share Convertible Corporate Bonds are natural persons, legal persons, securities investment funds and other investors in compliance with legal requirements who have maintained securities accounts at the China Securities Depository and Clearing Corporation Limited Shanghai Branch (excluding those prohibited by the PRC laws and regulations).

16. Subscription arrangement for the existing A Shareholders

The existing A Shareholders are entitled to the pre-emptive rights to subscribe for the A Share Convertible Corporate Bonds. It will be proposed at the EGM and the Class Meetings to authorise the Board to determine, before issuance, the actual amount of the A Share Convertible Corporate Bonds which are subject to the abovementioned pre-emptive rights in accordance with the market conditions. Such determination shall be disclosed in the announcement regarding the issuance of A Share Convertible Corporate Bonds. Such pre-emptive rights shall be subject to the Company Law, the Listing Rules and any other applicable laws, regulations and rules of any government or regulatory authorities (including but not limited to any rules and requirements regarding connected transactions). The A Share Convertible Corporate Bonds which are not subject to the abovementioned pre-emptive rights and which are not subscribed for upon the exercise of the abovementioned pre-emptive rights will be either offered to institutional investors offline and issued by way of online fixed price offering through the trading system of the Shanghai Stock Exchange, with the remaining balance underwritten by the underwriter(s) in case of undersubscription.

17. Bond holders and bond holders’ meeting

During the duration of the A Share Convertible Corporate Bonds, decisions shall be made by means of resolutions of the bond holders’ meeting upon the occurrence of any of the following events:

(1) proposed changes to the important terms of the Offering Document:
a. changes to basic components of the bonds regarding repayment (including repaying parties, duration, coupon rate adjustment mechanism, etc.);

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LETTER FROM THE BOARD

b. changes to credit enhancement or other debt service coverage and relevant implementation arrangements;
c. changes to the protection measures to bond investors and relevant implementation arrangements;
d. changes to the use of proceeds as stipulated in the Offering Document;
e. other changes to significant events closely related to repayment arrangement for principal and interest of bonds and the solvency.
(2) proposed amendments to the rules of procedures for bond holders’ meetings;
(3) proposed dismissal or change of the bond trustee manager or change to key terms of the bond trustee management agreement (including but not limited to the scope of mandate for entrusted management matters, the risk prevention and solving mechanism for conflicts of interest, the liability for breach of contract closely related to the rights and interests of bond holders, and other stipulations);
(4) any of the following events, where it is necessary to decide on or authorise to take corresponding measures (including but not limited to negotiating with the Company and other relevant parties, initiating or participating in arbitration or litigation proceedings, disposal of collaterals or other measures conducive to the protection of rights and interests of investors, etc.):
a. the Company has been or is expected to be unable to satisfy as scheduled the principal or interest of the Bonds;
b. the Company has been or is expected to be unable to satisfy as scheduled the interest-bearing liabilities other than the Bonds, and the outstanding amount exceeds RMB50 million and reaches 10% or more of the latest audited net asset value of the parent of the Company, which may lead to a default of the Bonds;
c. the Company undertakes a capital reduction (except for capital reduction resulting from the share buy-backs under share incentive schemes and the repurchase and cancellation of part of the restricted shares), consolidation, subdivision, order to suspend its production or business, temporarily detained or revoked license, receivership,

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LETTER FROM THE BOARD

dissolution, application for bankruptcy, or bankruptcy proceedings according to law;

d. the Company’s solvency is in serious uncertainty due to failure of the Company’s management in performing its duties normally;
e. the Company’s solvency is in serious uncertainty due to a transfer of assets at nil or obviously unreasonable consideration, waiver of debt, or provision of large-value guarantees to external parties by the Company, its controlling shareholder or de facto controller;
f. material adverse changes to credit enhancement providers, credit enhancement measures or other debt service coverage, if any; and
g. other events that may have a material adverse impact on the rights and interests of bond holders.
(5) a major debt restructuring plan proposed by the Company;
(6) other circumstances that shall be resolved by the bond holders’ meeting, as provided by the laws, administrative regulations, departmental rules, regulatory documents, or stipulated in the Offering Document of the Bonds and the rules of procedures for bond holders’ meetings.

The Company will stipulate the measures to protect the rights of bond holders, as well as the rights, procedures and effective conditions for the resolutions of the bond holders’ meeting in the Offering Document.

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LETTER FROM THE BOARD

*18.* *Use of proceeds*	The total amounts of proceeds from the public issuance of the A Share Convertible Corporate Bonds will not exceed	RMB2.39 billion (RMB2.39 billion inclusive), which will be used for the following projects after deducting issuance expenses:	Amount of	Amount of proceeds	Project name Project location Date of commencement Update on project status Treatment scale Installed capacity Operation mode Franchise period(1) investment required Total amount of investment proposed to be used	(Tonne per day) (MW) (Year) (RMB0’000) (RMB0’000) (RMB0’000)	Dengfeng Project Dengfeng City, September 2020 Under construction 800 18 BOT 30 39,920.00 39,920.00 15,000.00	Henan Province	Enshi Project Enshi City, Hubei June 2021 Under construction 1200 25 BOT 30 69,000.00 69,000.00 40,000.00	Province	Shuozhou Project Shuozhou City, December 2020 Under construction 800 18 BOT 30 66,015.15 66,015.15 44,000.00	Shanxi Province	Wuhan Phase II Project Wuhan City, Hubei October 2021 To be commenced 1200 30 BOT 27 69,985.00 69,985.00 48,000.00	Province	Huludao Power Generation Project Huludao City, October 2020 Under construction 1000 25 PPP 30 67,471.00 67,471.00 32,000.00	Liaoning Province	Replenishment of working capital and repayment of bank loans(2)(3) N/A N/A N/A N/A N/A N/A N/A N/A N/A 60,000.00	372,391.15 239,000.00		Notes:	(1) All of the franchise periods include the construction periods.	(2) Replenishment of working capital includes payments for goods to suppliers, staff costs and other daily operating expenditures.	(3) The bank loans to be repaid are due in May and July 2022 respectively. The amount of the loans was RMB195 million and RMB410 million	respectively. The amount of proceeds that will be used for the repayment of bank loans will be approximately RMB550 million to RMB580	million. The shortfall that cannot be covered by the proceeds will be repaid by the Company with its self-raised funds.
					No.		1		2		3		4		5		6	Total

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LETTER FROM THE BOARD

Prior to receipt of the proceeds from this issuance, the Company will first make investment with its self-raised funds, and depending on the progress of the proceeds funded projects, will replace such funds according to the relevant specified procedures after receipt of the proceeds. With regard to the schedule for the use of proceeds, once the proceeds have been received, the Company will first utilise such proceeds to replace its self-raised funds that have been invested in the above projects prior to the receipt of the proceeds in accordance with the specified procedures, which include the issuance of a report by the accountants certifying the pre-invested funds and the consideration by the Board. Replacement of the proceeds will be completed within two months following the receipt thereof. Secondly, the Company will use the remaining proceeds to finance the construction expenditures of the above projects and disburse such proceeds according to the progress of construction.

If the actual amount of proceeds (after deducting the issuance expenses) is less than the amount of proceeds to be invested in the abovementioned projects, the Company will, within the scope of ultimately determined proceeds funded projects, adjust and ultimately decide the specific proceeds funded projects, priority, and specific amount of investment in each project according to the actual amount of proceeds and taking into account the Company’s operation and the construction progress of the projects. The insufficient funds that cannot be covered by the proceeds will be raised by the Company itself.

19. Management of proceeds and deposit account

The Company has formulated a system for the management of the proceeds. The proceeds from the issuance of the A Share Convertible Corporate Bonds must be deposited in a specific account for proceeds as decided by the Board of the Company for centralized management. The Board shall determine specific matters relating to the opening of the account before the issuance.

20. Validity period of the plan for A Share Convertible Corporate Bonds

The A Share Convertible Corporate Bond Issuance Plan is valid for 12 months from the date of approving such issuance plan at the EGM and the Class Meetings of the Company.

The plan for the public issuance of the A Share Convertible Corporate Bonds shall be implemented subject to the approval of the CSRC, and ultimately subject to the plan approved by the CSRC.

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LETTER FROM THE BOARD

21. Trustee manager

The Company appointed the lead underwriter for the public issuance of A Share Convertible Corporate Bonds as the trustee manager and entered into a trustee management agreement with the trustee manager for matters relating to the entrusted management.

(2) Authorisation to be granted to the board

Subject to approvals of the Shareholders at the EGM and the Class Meetings, the Board shall be authorised to make such decisions, enter into such documents, amend the Articles of Association, carry out such procedures and take any other such actions as are in its discretion necessary to effect and complete the public issuance of A Share Convertible Corporate Bonds.

(3) Reasons for and benefits of the issuance of A Share Convertible Corporate Bonds

The issuance of A Share Convertible Corporate Bonds can meet the Company’s capital requirements for the construction of projects in progress and proposed projects, and expand the scale of its waste incineration power generation business; improve the debt structure, reduce finance costs, and improve the gearing ratio and sustainability of the Company. Based on the management’s estimation of financial data of the Company as at 31 March 2021, after the issuance of A Share Convertible Corporate Bonds, the ratio of current liabilities to total liabilities of the Company decreased from 38.70% to 32.06%, and the current ratio increased from 0.66 to 1.19, representing a more sound debt structure; after the conversion of all the A Share Convertible Corporate Bonds, the balance sheet ratio of the Company decreased from 65.84% to 57.94%, representing a significant reduction in the leverage ratio. Based on the benchmark interest rate of 4.9% for a 5-year bank loan, the Company would have to pay interest of RMB117 million per annum on an amount of RMB2,390 million to be raised by means of bank loans, whereas by issuing convertible bonds, the Company would have to pay interest of approximately RMB4.78 million to RMB47.80 million per annum, representing a significant reduction in interest costs. Moreover, no further interest needs to be paid following the conversion of the convertible bonds, which would further reduce the Company’s interest costs. As the price of the Company’s A Shares is significantly higher than the price of its H Shares, the Company has chosen to refinance in the A share market to protect the interests of its shareholders. Compared with other financing instruments, the conversion price of A Share Convertible Corporate Bonds is higher than the reserve price for non-public issuance and rights issue. Therefore, so far as the Shareholders are concerned, the issuance of convertible bonds can help reduce the extent of equity dilution and the impact on earnings per share with the same scale of fund raising, thus maximizing the protection of the interests of original Shareholders. The A Share Convertible Corporate Bonds, being a convertible bond, will be issued at a lower coupon rate compared with other varieties of bonds, with a coupon rate ranging from 0.2 to 2%. By replacing the Company’s original debt with such convertible bonds, the interest payment pressure of the Company can be effectively reduced.

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LETTER FROM THE BOARD

(4) Basis of determination of coupon rate of the A Share Convertible Corporate Bonds

In determining the coupon rate of the A Share Convertible Corporate Bonds, the Company and the underwriter will make reference to, among others, (i) the interest rates of the convertible bonds issued by other PRC issuers (the “ Market Comparables ”) with a size comparable to that of the Company around the time of determination of coupon rate; (ii) the then trading price of A Shares of the Company; (iii) the then condition and investment sentiment of the PRC bond market; and (iv) the credit rating of the Company and the A Share Convertible Corporate Bonds. The Company expects that the coupon rate of the A Share Convertible Corporate Bonds will not substantially deviate from that of the Market Comparables.

Taking into account that (i) the determination mechanism of the coupon rate is subject to the approval of the Shareholders at the EGM and the Class Meetings; (ii) the final coupon rate is subject to the approval of the CSRC; (iii) the Company and the underwriter will make reference to other factors as set out in the previous paragraph when determining the coupon rate; (iv) the final coupon rate is expected not to be deviated substantially from that of the Market Comparables; (v) the determination mechanism of the coupon rate is in compliance with the applicable laws and regulations in the PRC, the Board therefore considers that the proposed determination mechanism of the coupon rate of the A Share Convertible Corporate Bonds is fair and reasonable and in the interest of the Shareholders and the Company as a whole.

(5) Implications on the proposed issuance of A Share Convertible Corporate Bonds under the PRC regulatory requirements

The A Share Convertible Corporate Bonds proposed to be issued by the Company may lead to the issuance of new A Shares upon the exercise of the conversion rights of the A Share Convertible Corporate Bonds, the actual number of which depends on a number of factors, including the conversion price of the A Share Convertible Corporate Bonds. The Board considers that the conversion of A Share Convertible Corporate Bonds into new A Shares will dilute the interests of the existing A Shareholders and H Shareholders in the Company’s share capital.

Pursuant to the Articles and the provisions of the relevant PRC laws and regulations, the Proposed Issuance of A Share Convertible Corporate Bonds shall be subject to, among others, the Shareholders’ approvals at the general meetings and the Class Meetings, and approvals from the relevant PRC regulatory authorities.

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LETTER FROM THE BOARD

(6) Equity fund raising activities in the past twelve months

On 9 December 2020, the Company completed a non-public A share issuance of 232,240,000 A Shares in total. The net proceeds raised therefrom amounted to approximately RMB1.786 billion. As at 31 December 2020, approximately RMB1.725 billion of the proceeds was utilized by the Company to replace those funds for investment projects with the proceeds, to repay bank loans and to increase capital and provide borrowings to wholly-owned subsidiaries. The Company utilized the proceeds to repay a bank loan of RMB1 million in January 2021; the remaining RMB60 million to finance the registered capital of wholly-owned subsidiaries in July 2021.

Save as disclosed above, the Company has not conducted any fundraising activities involving the issuance of equity securities during the 12 months immediately before the Latest Practicable Date.

(7) Implications of the proposed issuance of A Share Convertible Corporate Bonds on the shareholding structure of the Company

Based on the A Share Convertible Corporate Bond Issuance Plan, the initial conversion price of the A Share Convertible Corporate Bonds shall not be lower than the higher of the average trading price of A Shares during the 20 trading days immediately preceding the date of publication of the Offering Document (in the event that during such 20 trading days, the share price has been adjusted due to ex-rights or ex-dividend, the closing price for the trading days before the adjustment shall be accordingly adjusted with reference to the adjusted share price following the ex-rights or ex-dividend) and the average trading price of A Shares on the trading day immediately preceding the date of publication of the Offering Document; and shall not be lower than the latest audited net asset value per Share and the par value per Share. The actual initial conversion price shall be determined, before issuance, by the Board upon negotiation with the sponsor (the lead underwriter) in accordance with the market conditions, subject to the authorisation by the Shareholders at the general meetings and the Class Meetings.

For reference only and to illustrate the abovementioned pricing mechanism, assuming that, the Offering Document has been issued on Latest Practicable Date, the average trading price of A Shares during the 20 trading days immediately preceding Latest Practicable Date is RMB8.67 per Share and the average trading price of A Shares on the trading day immediately preceding Latest Practicable Date is RMB8.67 per Share, the latest audited net asset value per Share is RMB4.07, and the par value per Share is RMB1.00, the minimum initial conversion price on Latest Practicable Date will be RMB8.67 per Share, being the higher of the abovementioned average trading prices. For the avoidance of doubt, the actual initial conversion price shall be determined by the Board before the issuance of the A Share Convertible Corporate Bonds. Based on the minimum initial conversion price of RMB8.67 per Share and the maximum issuance size of the A Share Convertible

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LETTER FROM THE BOARD

Corporate Bonds to be issued (i.e. RMB2.39 billion), the maximum number of the A Shares to be converted is 275,663,206.

The shareholding structure of the Company as at Latest Practicable Date and after completion of the Proposed Issuance of A Share Convertible Corporate Bonds and conversion of all the A Share Convertible Corporate Bonds into A Shares (assuming that (i) the Company has issued the A Share Convertible Corporate Bonds at the maximum issuance amount of RMB2.39 billion; (ii) except BSAM, all the A Shareholders have subscribed in full for the respective maximum subscription amount of the A Share Convertible Corporate Bonds on pro-rata basis on their current shareholding; (iii) all the A Share Convertible Corporate Bonds are converted in full into A Shares at the minimum initial conversion price of RMB8.67 per share; and (iv) the Company does not issue and allot any Shares before all the A Share Convertible Corporate Bonds are converted into A Shares) (the “ Calculation Assumptions ”) is as follows:

Name of Shareholders Shares Class BSAM and its wholly-owned subsidiary2 A Shares H Shares Subtotal Public A Shareholders A Shares Public H Shareholders H Shares Total	As at Latest Practicable Date Number of Shares Approximate Percentage of the issued A Shares Approximate percentage of the issued Shares 594,085,618 60.06% 42.63% 24,859,792 – 1.78% 618,945,410 – 44.42% 394,994,590 39.94% 28.35% 379,500,000 – 27.23% 1,393,440,000 100% 100%	After completion of the Proposed Issuance of A Share Convertible Corporate Bonds and conversion of all the A Share Convertible Corporate Bonds into A Shares under the Calculation Assumptions Number of shares Approximate percentage of the issued A Shares Approximate percentage of the issued Shares 594,085,618 46.97% 35.59% 24,859,792 – 1.49% 618,945,410 – 37.08% 670,657,796 53.03% 40.18% 379,500,000 – 22.74% 1,669,103,206 100% 100%	After completion of the Proposed Issuance of A Share Convertible Corporate Bonds and conversion of all the A Share Convertible Corporate Bonds into A Shares under the Calculation Assumptions Number of shares Approximate percentage of the issued A Shares Approximate percentage of the issued Shares 594,085,618 46.97% 35.59% 24,859,792 – 1.49% 618,945,410 – 37.08% 670,657,796 53.03% 40.18% 379,500,000 – 22.74% 1,669,103,206 100% 100%
			37.08%

			40.18% 22.74%
			100%

Notes:

Discrepancies between the column sum and the total sum are due to rounding of numbers.
BSAM holds 594,085,618 A Shares directly and 24,859,792 H Shares through its wholly-owned subsidiary. BSAM holds a total of 618,945,410 Shares, representing approximately 44.42% of the share capital of the Company, which is also the controlling shareholder of the Company.

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LETTER FROM THE BOARD

The conversion price is subject to adjustments in certain events subsequent to the issuance of the A Share Convertible Corporate Bonds, such as distribution of share dividends, capitalisation, issuance of new shares or rights issue and distribution of cash dividends (excluding any increase in the share capital as a result of conversion of the A Share Convertible Corporate Bonds).

Under such circumstances, the Company will adjust the conversion price in accordance with the determined method, and an announcement in relation to resolutions of the Board will be made on the website of Shanghai Stock Exchange and on the media designated by CSRC for information disclosure of listed companies. Such an announcement will indicate the date of the adjustment to the conversion price, method of the adjustment and suspension period of share conversion (if necessary). Meanwhile, the Company shall disclose such information to the Hong Kong market in accordance with the Listing Rules and the Articles (if necessary). For details of the computation for conversion price, please also refer to the chapters “II. PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS — (1) Proposed Issuance of A Share Convertible Corporate Bonds — 9. Determination and adjustment of the conversion price” and “II. PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS — (1) Proposed Issuance of A Share Convertible Corporate Bonds — 10. Terms of downward adjustment to conversion price” in this circular.

(8) The public issuance of A Share Convertible Corporate Bonds not leading to changes in the control of the company

As at the Latest Practicable Date, BSAM, a controlling shareholder of the Company, held 618,945,410 shares in the Company, representing approximately 44.42% of the total share capital of the Company.

The total amount of A Share Convertible Corporate Bonds to be issued under the Public Issuance of A Share Convertible Corporate Bonds of the Company will not exceed RMB2.39 billion. If BSAM does not exercise the right of first refusal under the Public Issuance of A Share Convertible Corporate Bonds and does not subscribe for the A Share Convertible Corporate Bonds to be issued thereunder, BSAM will still remain the controlling shareholder of the Company after completion of the Public Issuance of A Share Convertible Corporate Bonds and conversion in full of all the A Share Convertible Corporate Bonds into A Shares at a minimum initial conversion price of RMB8.67 per share.

Therefore, the Public Issuance of A Share Convertible Corporate Bonds and the Possible Subscription for A Share Convertible Corporate Bonds by BSAM will not lead to changes in the control of the Company, and will not lead to a distribution of its shareholding which cannot satisfy relevant listing conditions.

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LETTER FROM THE BOARD

(9) Information on parties to the transaction

The Company is a joint stock limited liability company incorporated in the PRC and its issued H shares and A shares are listed on the Main Board of the Stock Exchange and the Shanghai Stock Exchange, respectively. The Company is mainly engaged in the investment, construction, operation, maintenance and technical consulting in relation to waste-to-energy plants.

(10) Implications under the listing rules

Pursuant to Rule 19A.38 of the Listing Rules, the Proposed Issuance of A Share Convertible Corporate Bonds is subject to the Shareholders’ approvals at the EGM and the Class Meetings.

So far as is known to the Directors, none of the connected persons of the Company intends to subscribe for the A Share Convertible Corporate Bonds under the A Share Convertible Corporate Bond Issuance Plan. If the subscription by existing Shareholders involves connected transactions as defined under the Listing Rules, the Company shall comply with the requirements relating to connected transactions under Chapter 14A of the Listing Rules, including but not limited to the requirements of announcement, circular and independent shareholders’ approval.

None of the Directors has or is deemed to have a material interest in the Proposed Issuance of A Share Convertible Corporate Bonds. Accordingly, none of the Directors is required to abstain from voting on the relevant resolutions at the relevant Board meetings.

The Board expects that the Company will maintain sufficient public float to meet the applicable minimum requirement under the Listing Rules.

(11) Relevant resolutions in relation to proposed issuance of A Share Convertible Corporate Bonds

The resolutions in relation to Proposed Issuance of A Share Convertible Corporate Bonds include: (i) the resolution in relation to the satisfaction of the conditions for the public issuance of A share Convertible Corporate Bonds by the Company; (ii) the resolution in relation to the plan of public issuance of A Share Convertible Corporate Bonds by the Company; (iii) the resolution in relation to the proposal of public issuance of A Share Convertible Corporate Bonds by the Company; (iv) the resolution in relation to the feasibility report on the use of proceeds from the public issuance of A Share Convertible Corporate Bonds by the Company; (v) the resolution in relation to the dilution of immediate return resulting from the Company’s public issuance of A Share Convertible Corporate Bonds, the remedial measures and undertakings issued by relevant subjects; (vi) the resolution in relation to the plan for return to the shareholders for the next three years (2021-2023); (vii) the resolution in relation to the rules of A Share Convertible Corporate Bond Holders’ meeting of the Company; (viii) the resolution in relation to

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LETTER FROM THE BOARD

the report on the utilization of previously raised proceeds of the Company; and (ix) the resolution authorising the Board or its authorised persons to exercise in full the power to deal with specific matters relating to the Company’s public issuance of A Share Convertible Corporate Bonds.

Details of such resolutions are set out in the Appendix I to Appendix VII of this circular.

(12) Risk Warning

Investors should be aware that the Proposed Issuance of A Share Convertible Corporate Bonds is subject to: (i) approvals of Shareholders at the EGM and the Class Meetings; and (ii) approvals from CSRC and other relevant authorities. As the Proposed Issuance of A Share Convertible Corporate Bonds is still subject to the fulfilment of various conditions thereof, the Proposed Issuance of A Share Convertible Corporate Bonds may not proceed or may not become unconditional or may not become effective. Investors and potential investors in Shares of the Company should exercise caution and only rely on the information issued by the Company when dealing, or contemplate dealing, in the Shares.

III. EGM AND CLASS MEETINGS

EGM will be convened to consider and, if thought fit, approve, among others, the matters relating to the Proposed Issuance of A Share Convertible Corporate Bonds.

Class Meetings will be convened to consider and, if thought fit, approve, among others, the matters relating to the Proposed Issuance of A Share Convertible Corporate Bonds.

Completion and return of the proxy forms will not preclude you from attending and voting in person at the EGM and the H Shares Class Meeting or at any adjourned thereof should you so wish, but in such event the instrument appointing a proxy shall be deemed to be revoked.

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LETTER FROM THE BOARD

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of the Shareholders should be taken at a general meeting of the Company by poll except where the Chairman, in good faith, decides to allow a resolution which relates purely to procedural or administrative matter to be voted on by a show of hands. An announcement of the poll result will be made by the Company after the EGM and the H Shares Class Meeting in the manner prescribed under Rule 13.39(5) of the Listing Rules.

IV. RECOMMENDATION

The Board has passed the relevant resolution of the proposals to be submitted to the Shareholders for consideration and approval. No Directors are interested or deemed to be materially interested in the above transaction. Therefore, no Directors shall abstain from voting on the relevant resolutions at relevant Board meetings.

The Board also considers non-public issue of shares, and bond issues and other financial channels. On the basis that (1) the non-public issue of A Shares usually requires an issue price to be determined at 80% of the average trading price of the Company’s shares during the 20 trading days prior to the pricing base date, which has more dilutive effect on the original Shareholders; (2) the interest rate for issuance of corporate bonds is relatively higher. The interest rate for the issuance of 5-year corporate bonds with the same rating is expected to be 4.5%-5%, while the coupon rate of convertible bonds is between 0.2% and 2%, with relatively lesser interest expenses. In addition, there are very few successful issuances of corporate bonds with maturity of more than 5 years in the domestic bond market at present, which is not conducive to the optimisation of the Company's debt structure; and (3) in the long run, convertible bonds are conducive to reducing the Company’s gearing ratio, the Board recommends the adoption of convertible bonds for fund raising.

In addition, given that (1) the initial conversion price of convertible bonds is not lower than the higher of the average trading price of the Company’s A Shares during the 20 trading days immediately preceding the date of publication of the Offering Document and the average trading price of the Company’s A shares for the previous trading day, representing a higher basis for pricing the conversion price; (2) the convertible bonds will not be convertible until six months after issue, and the bond holders will gradually convert their bonds according to the Company’s share price, thus will not have an immediate dilutive effect on the interests of original Shareholders; (3) the convertible bonds are subject to a redemption clause which allows the Company to redeem the convertible bonds in the event of a significant increase in the Company’s share price to avoid significant dilution to the interests of original Shareholders; and (4) shareholders’ returns will be increased after the proceeds funded projects are completed and put into operation, the Board considers that the terms of the Proposed Issuance of A Share Convertible Bonds are fair and reasonable and in the best interests of the Shareholders.

In view of the factors above, the Board (including all independent non-executive Directors) is of the view that the resolutions to be proposed at the EGM and/or the H Shares Class Meeting (if applicable) are in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favor of such resolutions at the EGM and/or the H Shares Class Meeting (if applicable).

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LETTER FROM THE BOARD

V. ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular.

Yours faithfully, By Order of the Board

Dynagreen Environmental Protection Group Co., Ltd.* Qiao Dewei

Chairman

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NOTICE OF EXTRAORDINARY GENERAL MEETING

綠色動力環保集團股份有限公司 Dynagreen Environmental Protection Group Co., Ltd.*

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

(Stock Code: 1330)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the “ EGM ”) of Dynagreen Environmental Protection Group Co., Ltd. (the “ Company ”) will be held at Complex of Beijing Dynagreen Environment Co., Ltd. (北京綠色動力環保有限公司), Cailin Road, Yujiawu Township, Tongzhou District, Beijing at 2:00 p.m. on Tuesday, 24 August 2021 for the purposes of considering and, if thought fit, passing (with or without modifications) the following resolutions.

ORDINARY RESOLUTIONS

To consider and approve the satisfaction of the conditions for the public issuance of A Share Convertible Corporate Bonds by the Company.
To consider and approve the feasibility report on the use of proceeds from the public issuance of A Share Convertible Corporate Bonds by the Company.
To consider and approve the dilution of immediate return resulting from the Company’s public issuance of A Share Convertible Corporate Bonds, the remedial measures and undertakings issued by relevant subjects.
To consider and approve the Shareholders’ return plan for the next three years (year 2021-2023) of the Company.
To consider and approve the rules for A Share Convertible Corporate Bond holders’ meetings of the Company.
To consider and approve the report on the utilization of previously raised proceeds of the Company.

* For identification purposes only

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NOTICE OF EXTRAORDINARY GENERAL MEETING

SPECIAL RESOLUTIONS

To consider and approve the plan of the public issuance of A Share Convertible Corporate Bonds by the Company (the following resolutions to be voted item by item):
7.1. Type of securities to be issued;
7.2. Size of issuance;
7.3. Par value and issue price;
7.4. Term;
7.5. Coupon rate;
7.6. Method and timing of interest payment and repayment of the principal;
7.7. Conversion period;
7.8. Security;
7.9. Determination and adjustment of the conversion price;
7.10. Terms of downward adjustment to conversion price;
7.11. Method of determining the number of shares for conversion;
7.12. Terms of redemption;
7.13. Terms of sale back;
7.14. Entitlement to dividend in the year of conversion;
7.15. Method of the issuance and target subscribers;
7.16. Subscription arrangement for the existing A Shareholders;
7.17. Bond holders and bond holders’ meeting;
7.18. Use of proceeds;
7.19. Management of proceeds and deposit account;
7.20. Validity period of the plan for A Share Convertible Corporate Bonds; and
7.21. Trustee manager.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

To consider and approve the proposal in respect of the public issuance of A Share Convertible Corporate Bonds of the Company.
To consider and approve the authorisation to the Board or its authorised persons to exercise in full the power to deal with specific matters relating to the Company’s public issuance of A Share Convertible Corporate Bonds.

By Order of the Board **Dynagreen Environmental Protection Group Co., Ltd.* Qiao Dewei**

Chairman

Shenzhen, the PRC 6 August 2021

Notes:

1. Shareholders’ circular

For details, please refer to the circular of the Company dated 6 August 2021. Unless otherwise defined, the capitalised terms used herein shall have the meanings defined in the circular of the Company dated 6 August 2021.

2. Persons who are entitled to attend the EGM

Holders of the H Shares and A Shares whose names appear on the register of holders of H Shares and register of holders of A Shares of the Company respectively, on Wednesday, 18 August 2021 (“ Eligible Shareholders ”) or their representatives are entitled to attend the EGM and the Class Meetings after completion of the required registration procedures in accordance with Note 4 “Registration procedures for attending the EGM”. Holders of A Shares shall receive a notice separately.

3. Proxy

3.1. A member eligible to attend and vote at the EGM may appoint one or more proxies in writing to attend and vote on his behalf. A proxy need not be a shareholder of the Company.
3.2. The instrument appointing a proxy must be signed by the appointor or his attorney duly authorized in writing. If that instrument is signed by an attorney of the appointor, the power of attorney authorising that attorney to sign or other document of authorisation must be notarised.
3.3. To be valid, the completed form of proxy and notarised power of attorney must be delivered to the place of business of the Company or the Company’s H Share registrar, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 24 hours before the time designated for holding the EGM. Completion and delivery of the form of proxy will not preclude you from attending and voting at the EGM if you so wish.
3.4. A shareholder or his proxy may exercise the right to vote by poll.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

4. Registration procedures for attending the EGM

4.1. For the purpose of ascertaining holders of H Shares who are entitled to attend and vote at the EGM and H Shares Class Meeting, holders of H Shares shall lodge their share certificates accompanied with the transfer documents to the H Share Registrar of the Company, Tricor Investor Services Limited (address: Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong) before 4:30 p.m. (Hong Kong time) on Wednesday, 18 August 2021, being the last share registration date.
4.2. A shareholder or his proxy shall produce proof of identity when attending the EGM. If a shareholder is a legal person, its legal representative or other person authorised by the board of directors or other governing body of such shareholder may attend the EGM by providing a copy of the resolution of the board of directors or other governing body of such shareholder appointing such person to attend the meeting.
4.3. Shareholders intending to attend the EGM shall lodge the reply slip and the related documents indicating their intention to attend the EGM with the Company on or before Friday, 13 August 2021.
4.4. Shareholders may lodge the above reply slip with the Company or the Company’s H Share registrar in person, by post, or by fax.

5. Miscellaneous

5.1. The EGM will not last for more than half a day. Shareholders who attend the meeting in person or by proxy shall bear their own travelling and accommodation expenses.
5.2. The address of the Company’s H Share registrar, Tricor Investor Services Limited, is:

Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong

5.3. The address of the registered office of the Company is:

2nd Floor, Jiuzhou Electronic Building, Keji South 12th Street, Nanshan District, Shenzhen, The People’s Republic of China Post Code: 518057 Telephone No.: (+86) 755 3363 1256 Fax No.: (+86) 755 3363 1220

– 31 –

NOTICE OF H SHARES CLASS MEETING

綠色動力環保集團股份有限公司

Dynagreen Environmental Protection Group Co., Ltd.*

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

(Stock Code: 1330)

NOTICE OF H SHARES CLASS MEETING

NOTICE IS HEREBY GIVEN that the class meeting of H shareholders (the “ H Shares Class Meeting ”) of Dynagreen Environmental Protection Group Co., Ltd. (the “ Company ”) will be held at Complex of Beijing Dynagreen Environment Co., Ltd. (北京綠色動力環保有限公司), Cailin Road, Yujiawu Township, Tongzhou District, Beijing on Tuesday, 24 August 2021 immediately following the conclusion of the extraordinary general meeting and the class meeting of A shareholders of the Company to be convened and held on the same date and at the same place for the purposes of considering and, if thought fit, passing (with or without modifications) the following resolutions.

SPECIAL RESOLUTIONS

To consider and approve the plan of the public issuance of A Share Convertible Corporate Bonds by the Company (the following resolutions to be voted item by item):
1.1. Type of securities to be issued;
1.2. Size of issuance;
1.3. Par value and issue price;
1.4. Term;
1.5. Coupon rate;
1.6. Method and timing of interest payment and repayment of the principal;
1.7. Conversion period;
1.8. Security;

* For identification purposes only

– 32 –

NOTICE OF H SHARES CLASS MEETING

1.9. Determination and adjustment of the conversion price;
1.10. Terms of downward adjustment to conversion price;
1.11. Method of determining the number of shares for conversion;
1.12. Terms of redemption;
1.13. Terms of sale back;
1.14. Entitlement to dividend in the year of conversion;
1.15. Method of the issuance and target subscribers;
1.16. Subscription arrangement for the existing A Shareholders;
1.17. Bond holders and bond holders’ meeting;
1.18. Use of proceeds;
1.19. Management of proceeds and deposit account;
1.20. Validity period of the plan for A Share Convertible Corporate Bonds; and
1.21. Trustee manager.
To consider and approve the proposal in respect of the public issuance of A Share Convertible Corporate Bonds of the Company.
To consider and approve the authorisation to the Board or its authorised persons to exercise in full the power to deal with specific matters relating to the Company’s public issuance of A Share Convertible Corporate Bonds.

By Order of the Board

Dynagreen Environmental Protection Group Co., Ltd.*

Qiao Dewei

Chairman

Shenzhen, the PRC

6 August 2021

– 33 –

NOTICE OF H SHARES CLASS MEETING

Notes:

1. Shareholders’ circular

2. Persons who are entitled to attend the H Shares Class Meeting

Holders of the H Shares whose names appear on the register of holders of H Shares of the Company, on Wednesday, 18 August 2021 (“ Eligible Shareholders ”) or their representatives are entitled to attend the H Shares Class Meeting after completion of the required registration procedures in accordance with Note 4 “Registration procedures for attending the H Shares Class Meeting”.

3. Proxy

3.1. A member eligible to attend and vote at the H Shares Class Meeting may appoint one or more proxies in writing to attend and vote on his behalf. A proxy need not be a shareholder of the Company.
3.2. The instrument appointing a proxy must be signed by the appointor or his attorney duly authorized in writing. If that instrument is signed by an attorney of the appointor, the power of attorney authorising that attorney to sign or other document of authorisation must be notarised.
3.3. To be valid, the completed form of proxy and notarised power of attorney must be delivered to the place of business of the Company or the Company’s H Share registrar, Tricor Investor Services Limited, at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 24 hours before the time designated for holding the H Shares Class Meeting. Completion and delivery of the form of proxy will not preclude you from attending and voting at the H Shares Class Meeting if you so wish.
3.4. A shareholder or his proxy may exercise the right to vote by poll.

4. Registration procedures for attending the H Shares Class Meeting

4.1. For the purpose of ascertaining holders of H Shares who are entitled to attend and vote at the EGM and H Shares Class Meeting, holders of H Shares shall lodge their share certificates accompanied with the transfer documents to the H Share Registrar of the Company, Tricor Investor Services Limited (address: Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong) before 4:30 p.m. (Hong Kong time) on Wednesday, 18 August 2021, being the last share registration date.
4.2. A shareholder or his proxy shall produce proof of identity when attending the H Shares Class Meeting. If a shareholder is a legal person, its legal representative or other person authorised by the board of directors or other governing body of such shareholder may attend the H Shares Class Meeting by providing a copy of the resolution of the board of directors or other governing body of such shareholder appointing such person to attend the meeting.
4.3. Shareholders intending to attend the H Shares Class Meeting shall lodge the reply slip and the related documents indicating their intention to attend the H Shares Class Meeting with the Company on or before Friday, 13 August 2021.
4.4. Shareholders may lodge the reply slip with the Company or the Company’s H Share registrar in person, by post, or by fax.

– 34 –

NOTICE OF H SHARES CLASS MEETING

5. Miscellaneous

5.1. The H Shares Class Meeting will not last for more than half a day. Shareholders who attend the meeting in person or by proxy shall bear their own travelling and accommodation expenses.
5.2. The address of the Company’s H Share registrar, Tricor Investor Services Limited, is:

Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong

5.3. The address of the registered office of the Company is:

– 35 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

This English version is for reference only. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.

PLAN OF THE PUBLIC ISSUANCE OF CONVERTIBLE CORPORATE BONDS

COMPANY STATEMENT

The Company and all members of the Board warrant that the contents of this plan are true, accurate and complete and do not contain any misrepresentations, misleading statement or material omission, and severally and jointly accept legal responsibility for the truthfulness, accuracy and completeness of the information contained herein.

Upon completion of the issuance of the convertible corporate bonds, the changes in the operation and income shall be borne by the Company at its own and the investment risks arising from the issuance of the convertible corporate bonds shall be assumed by the investors.

This plan is the description of the issuance of the convertible corporate bonds by the Board, and any other statements to the contrary shall be misrepresentation.

The matters mentioned in this plan do not represent the substantive judgment, confirmation, approval or ratification of the approval authorities on the matters relating to the issuance of the convertible corporate bonds, and the effectiveness and completion of the matters relating to the issuance of the convertible corporate bonds mentioned in this plan shall be subject to the approval at the general meeting of the Company or verification of the relevant approval authorities.

Investors should consult their own stockbrokers, lawyers, professional accountants or other professional consultants if in doubt.

– I-1 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-4
I.	THE ISSUANCE SATISFIES THE REQUIREMENTS IN RELATION TO
	THE PUBLIC ISSUANCE OF THE SECURITIES SPECIFIED IN		THE
	ADMINISTRATIVE MEASURES FOR THE ISSUANCE OF SECURITIES
	BY	LISTED COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-7
II.	OVERVIEW OF THE ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . .		. . . . . . . .	I-7
	(I)	Type of securities to be issued . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-7
	(II)	Size of issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-7
	(III)	Par value and issue price . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-7
	(IV)	Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-7
	(V)	Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-8
	(VI)	Method and timing of interest payment and repayment of the
		principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-8
	(VII)	Conversion period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-9
	(VIII)	Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-9
	(IX)	Determination and adjustment of the conversion price . . . .	. . . . . . . .	I-9
	(X)	Terms of downward adjustment to conversion price . . . . . . .	. . . . . . . .	I-11
	(XI)	Method of determining the number of shares for conversion	. . . . . . . .	I-12
	(XII)	Terms of redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-12
	(XIII)	Terms of sale back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-14
	(XIV)	Entitlement to dividend in the year of conversion . . . . . . . .	. . . . . . . .	I-15
	(XV)	Method of the issuance and target subscribers . . . . . . . . . . .	. . . . . . . .	I-15
	(XVI)	Subscription arrangement for the existing A shareholders . .	. . . . . . . .	I-15
	(XVII)	Bond holders and bond holders’ meeting . . . . . . . . . . . . . . .	. . . . . . . .	I-16
	(XVIII)	Use of proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-18
	(XIX)	Management of proceeds and deposit account . . . . . . . . . . .	. . . . . . . .	I-18
	(XX)	Validity period of the plan for Convertible Bonds . . . . . . . .	. . . . . . . .	I-19
	(XXI)	Trustee manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . .	I-19

– I-2 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

III.	FINANCIAL INFORMATION AND MANAGEMENT’S DISCUSSION	FINANCIAL INFORMATION AND MANAGEMENT’S DISCUSSION
	AND ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		I-19
	(I)	Balance sheet, income statement and cash flow statement for the latest
		three years and period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-20
	(II)	Changes in scope of consolidated financial statements . . . . . . . . . . . . .	I-36
	(III)	Major financial indicators of the Company for the latest three years
		and period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-37
	(IV)	Analysis of the financial position of the Company . . . . . . . . . . . . . . . .	I-38
IV.	USE	OF THE PROCEEDS FROM THE PUBLIC ISSUANCE OF
	CONVERTIBLE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		I-45
V.	DISTRIBUTION OF THE COMPANY’S PROFITS . . . . . . . . . . . . . . . . . . . .		I-46
	(I)	Existing profit distribution policy of the Company . . . . . . . . . . . . . . . .	I-46
	(II)	The Company’s profit distribution for the last three years . . . . . . . . . .	I-50
	(III)	Arrangements for the use of undistributed profits of the Company in
		the last three years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-52

– I-3 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

DEFINITIONS

In this plan, unless the context otherwise requires, the following expressions have the following meanings:

I. GENERAL TERMS

Issuer, Company, Dynagreen

Dynagreen Environmental Protection Group Co., Ltd. (綠色動力環保集團股份有限公司)

General Meeting

the general meeting of the Company

Board the board of directors of the Company

Convertible Bonds
the convertible corporate bonds

Issuance

The proposed public issuance of convertible corporate bonds by Dynagreen to non-specific investors
Dengfeng Project
a municipal waste-to-energy project in Dengfeng City (登封市生活垃圾焚燒發電項目)
Enshi Project a municipal waste-to-energy project in Enshi City (恩施城市生活垃圾焚燒發電項目)
Shuozhou Project
the Nanshan enviro-energy project (including the municipal solid waste-to-energy project and the kitchen waste treatment project) in Shuozhou (朔州南山環境能源項目（生活垃圾焚燒發電項目和餐廚垃圾處理項目）)
Wuhan Phase II Project
the phase II project of Xinghuo Waste-to-Energy Plant in Wuhan (武漢星火垃圾焚燒發電廠二期項目)
Huludao Power
Generation Project
a municipal waste-to-energy project of Huludao East Waste-to-Energy Power Plant (葫蘆島東部垃圾焚燒發電綜合處理廠生活垃圾焚燒發電項目)
Administrative Measures
The Administrative Measures for the Issuance of Securities by Listed Companies 《上市公司證券發行管( 理辦法》)
Company Law
the Company Law of the People’s Republic of China 《中華人民共和國公司法》( )

– I-4 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

CSRC

SSE

SSE Listing Rules

PRC Accounting Standards
Reporting Period
RMB/RMB’0,000/ RMB’00,000,000

the China Securities Regulatory Commission (中國證券監督管理委員會)

the Shanghai Stock Exchange

The Rules Governing the Listing of Stocks on the Shanghai Stock Exchange

the China Accounting Standards for Business Enterprises formulated and promulgated by the Ministry of Finance of the PRC

2018, 2019, 2020 and January to March 2021
Renminbi/ Renminbi ten thousand/Renminbi hundred million

II. TECHNICAL TERMS

PPP

Build-Operate-Transfer; BOT is a business model in which the owner authorizes the contracting enterprise to finance, design, build, operate, and maintain the infrastructure through a franchise agreement. The contracting enterprise can charge the user during the franchise period to offset its investment, operation and maintenance costs and obtain reasonable returns. Upon expiry of the franchise period, the relevant facilities will be returned to the owner

Build-Transfer, BT is a business model which refers to the process of project operation that the project be handed over to the owners upon general contracting, financing, construction acceptance by project company, and the owners pay the total investments of the project plus a reasonable return to investors.

Public-Private-Partnership, PPP refers to a cooperative arrangement between public and private sectors and it is one kind of project operation model in the public infrastructure, under which the private enterprises and private capital are encouraged to cooperate with the government taking part in the public infrastructure construction.

– I-5 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

solid waste
domestic waste, industrial solid waste and agricultural solid waste. According to the treatment method, solid waste can be divided into medical waste, construction waste, industrial waste and domestic waste
domestic waste
daily domestic waste, clean-keeping waste, commercial waste and municipal waste, the main components of which include coal ash, kitchen waste, peel, plastic, defoliation, plants, wood, glass, ceramics, leather, and paper, as well as a small amount of batteries, pharmaceutical packaging material of aluminum foil, SP composite film, rubber, etc.
waste incineration
the combustibles in waste react with oxygen in the incinerator, and the incineration can oxidize and decompose the combustible solid waste to achieve the purpose of removing toxicity, recycling energy and obtaining by-products
waste-to-energy
high-temperature incineration of waste with high calorific value, in which the heat energy generated is converted into high-temperature steam which drives the turbine and the generator to generate electricity
KWH
energy measurement unit. One kilowatt hour is equal to the power generated by a 1KW generator at the rated power in one hour

MWH

energy measurement unit. 1 MWH=1,000 KWH

Some figures shown as totals herein may not be an arithmetic aggregation of the figures preceding them due to rounding adjustments.

– I-6 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

I. THE ISSUANCE SATISFIES THE REQUIREMENTS IN RELATION TO THE PUBLIC ISSUANCE OF THE SECURITIES SPECIFIED IN THE ADMINISTRATIVE MEASURES FOR THE ISSUANCE OF SECURITIES BY LISTED COMPANIES

Pursuant to the relevant requirements under the Company Law of the People’s Republic of China 《中華人民共和國公司法》( ), the Securities Law of the People’s Republic of China 《中華人民共和國證券法》( ), the Administrative Measures for the Issuance of Securities by Listed Companies (《上市公司證券發行管理辦法》) and other laws, regulations and normative documents, upon the Company’s review on the qualifications and conditions of a company applying for issuance of A share convertible corporate bonds, the Company believes that it has satisfied all the regulations and requirements of the relevant laws, regulations and normative documents in relation to the public issuance of A share convertible corporate bonds by listed companies, that it is not a subject of bad faith and that it conforms to the conditions for public issuance of A share convertible corporate bonds.

II. OVERVIEW OF THE ISSUANCE

(I) Type of securities to be issued

The type of the securities to be issued is convertible corporate bonds which can be converted into A shares of the Company. The Convertible Bonds and the A shares to be converted will be listed on the Shanghai Stock Exchange.

(II) Size of issuance

The total amount of the Convertible Bonds proposed to be issued will not exceed RMB2.39 billion (including RMB2.39 billion). The actual size of the issuance shall be determined by the directors of the Company or persons authorised by the Board within the above range, subject to the authorization by the shareholders at the General Meeting.

(III) Par value and issue price

The Convertible Bonds will be issued at par with a nominal value of RMB100 each.

(IV) Term

The term of the Convertible Bonds to be issued will be six years from the date of the issuance.

– I-7 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

(V) Interest rate

The Board proposed to the shareholders at the General Meeting to authorise the Board or persons authorized by the Board to determine the method of determining the nominal interest rate as well as the final interest rate for each interest accrual year upon negotiation with the sponsor (the lead underwriter) in accordance with national policies, market conditions and the actual conditions of the Company before the Issuance of the Convertible Bonds.

(VI) Method and timing of interest payment and repayment of the principal

The interest of the Convertible Bonds will be paid annually. The principal will be repaid and the interest for the final year will be paid upon maturity.

1. Calculation of annual interest

The interest for an interest accrual year (hereafter referred to as the “ Annual Interest ”) means the interest accrued to a bondholder in each year on each anniversary of the date of issuance of the Convertible Bonds which is calculated based on the aggregate nominal value of the Convertible Bonds held by him/her.

The formula for calculating the Annual Interest is: I=B×i

I: denotes the Annual Interest;
B: denotes the aggregate nominal value of the Convertible Bonds held by a Convertible Bonds holder as at the record date for interest payment in an interest accrual year (“ that year ” or “ each year ”);
i: denotes the nominal interest rate of the Convertible Bonds of that year.

2. Method of interest payment

(1) The interest of the Convertible Bonds will be paid annually, accruing from the date of the issuance of the Convertible Bonds.
(2) Interest payment date: The interest is payable annually on each anniversary of the date of the Issuance of the Convertible Bonds. Where such a date falls on a statutory holiday or rest day, the interest payment date shall be postponed to the next working day, with no additional interest accrued during the period of postponement.

– I-8 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

The period between any two consecutive interest payment dates will be an interest accrual year.

(3) Record date for interest payment: The record date for interest payment in each year will be the trading day immediately preceding the interest payment date. The Company will pay the interest accrued for that year within five trading days from the interest payment date. Where a Convertible Bond holder converts his/her Convertible Bonds into A shares on or before the record date for interest payment in any interest accrual year, that Convertible Bond holder shall not be entitled to any interest for that year and any subsequent interest accrual year.
(4) Tax payable on the interest income of a Convertible Bond holder shall be borne by such holder him/herself.

(VII) Conversion period

The conversion period of the Convertible Bonds shall commence on the first trading day immediately following the expiry of the six-month period after the date of the issuance of the Convertible Bonds, and end on the maturity date of the Convertible Bonds.

(VIII) Security

No security will be provided in relation to the Issuance.

(IX) Determination and adjustment of the conversion price

1. Basis for determining the initial conversion price

The initial conversion price of the Convertible Bonds shall not be lower than the higher of the average trading price of A shares during the 20 trading days immediately preceding the date of publication of the offering document (in the event that during such 20 trading days, the share price has been adjusted due to ex-rights or ex-dividend, the average share price for the trading days before the adjustment shall be accordingly adjusted with reference to the adjusted share price following the ex-rights or ex-dividend) and the average trading price of A shares on the trading day immediately preceding the date of publication of the offering document; and shall not be lower than the latest audited net asset value per share and the par value per Share. The actual initial conversion price shall be determined by the Board or persons authorised by the Board upon negotiation with the sponsor (the lead underwriter) in accordance with the market conditions before the Issuance, subject to the authorisation by the shareholders at the General Meeting.

– I-9 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

The average trading price of A shares for the 20 trading days immediately preceding the date of publication of the offering document = the total trading amount of A shares during such 20 trading days/the total trading volume of A shares during such 20 trading days;

The average trading price of A shares for the trading day immediately preceding the date of publication of the offering document = the total trading amount of A shares on such a trading day/the total trading volume of A shares on such a trading day.

2. Method of adjustment to the conversion price and the calculation formula

The conversion price is subject to adjustments in certain events that lead to changes in the number of shares of the Company subsequent to the Issuance, such as distribution of share dividends, capitalisation, issuance of new shares or rights issue and distribution of cash dividends (excluding any increase in the share capital as a result of conversion of the Convertible Bonds). The Company will adjust the conversion price based on the following formula (rounded off to two decimal places):

Distribution of share dividends or capitalisation: P1=P0/(1+n);

Issuance of new shares or rights issue: P1=(P0+A×k)/(1+k);

The above two events occurring concurrently: P1=(P0+A×k)/(1+n+k);

Distribution of cash dividends: P1=P0-D;

The above three events occurring concurrently: P1 = (P0-D+A×k)/(1+n+k).

Upon occurrence of any of the above-mentioned changes in shares and/ or shareholders’ interests, the Company will adjust the conversion price in accordance with the above method, and an announcement in relation to resolutions of the Board will be made on the websites of Shanghai Stock Exchange and on the media designated by CSRC for information disclosure of listed companies. Such an announcement will indicate the date of the adjustment to the conversion price, method of the adjustment and suspension period of share conversion (if necessary). Meanwhile, the Company shall disclose such information to the Hong Kong market in accordance with the

– I-10 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Rules Governing the Listing Securities on The Stock Exchange of Hong Kong Limited and the articles of association of the Company (if necessary). If the conversion price adjustment date is on or after the date on which a Convertible Bond holder applies for conversion of his/her Convertible Bonds but before the registration date of the shares to be issued upon conversion, such conversion will be executed based on the adjusted conversion price.

In the event that the Convertible Bond holders’ interests or the interests derived from the share conversion are affected by the change in the Company’s share class, quantity and/or shareholders’ interests due to any possible share repurchase, consolidation, division or any other circumstances, the Company will adjust the conversion price based on the actual situations and in accordance with the principles of fairness, justice and equality so as to fully protect the interests of the Convertible Bond holders. The details of the adjustment to the conversion price and its implementation measures shall be determined in accordance with the relevant national laws and regulations and the relevant requirements of the securities regulatory authorities.

(X) Terms of downward adjustment to conversion price

1. Authorisation and magnitude of adjustment

If, during the term of the Convertible Bonds, the closing prices of A shares in at least 15 trading days out of any 30 consecutive trading days are lower than 85% (excluding 85%) of the prevailing conversion price, the Board may propose a downward adjustment to the conversion price to shareholders at the general meetings and the class meetings for their consideration and approval.

The abovementioned proposal is subject to approvals of more than two-thirds of the voting rights of the shareholders who attend the general meeting and the class meetings. Shareholders who hold the Convertible Bonds should abstain from voting at the General Meeting. The adjusted conversion price should be no less than the higher of the average trading price of A shares during the 20 trading days immediately preceding the date of the aforementioned General Meeting and the average trading price of A shares on the trading day immediately preceding the date of such General Meeting. At the same time, the adjusted conversion price shall not be lower than the latest audited net asset value per share and par value per share.

In the event that an adjustment to the conversion price by the Company is made during the aforementioned 30 trading days, in respect of the trading days prior to the adjustment to the conversion price, the calculation shall be based on the unadjusted conversion price and the closing price of the A shares on each such day, while in respect of the trading day on which adjustment to the conversion price is made and the trading days afterwards, the calculation shall be based on the adjusted conversion price and the closing price of the A shares on each such day.

– I-11 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

2. Procedures of adjustment

In the event that the Company decides to adjust the conversion price downwards, the Company shall publish an announcement in connection therewith on the website of Shanghai Stock Exchange and media designated by the CSRC for information disclosure of listed companies. Such announcement shall disclose information including the magnitude of the adjustment, the suspension period of share conversion, and other relevant information. Meanwhile, the Company shall disclose the information to the Hong Kong market in accordance with the Rules Governing the Listing Securities on The Stock Exchange of Hong Kong Limited and the articles of association of the Company (if necessary). Application for conversion of the Convertible Bonds at the adjusted conversion price shall be resumed upon the conversion price adjustment date.

(XI) Method of determining the number of shares for conversion

Where a Convertible Bond holder applies to convert his/her Convertible Bonds into A shares during the conversion period, the formula for calculating the number of A shares to be issued upon conversion is as below:

Q = V/P, any fractional share shall be rounded down to the nearest integer.

Where, V denotes the aggregate nominal value of the Convertible Bonds in respect of which the Convertible Bond holder applies for conversion.

P: denotes the effective conversion price on the date of application for conversion.

Within five trading days from the date of conversion by a Convertible Bond holder, the Company shall pay the Convertible Bond holder in cash an amount equal to the remaining balance of such Convertible Bonds which is insufficient to be converted into one A share and the interest accrued on such balance in accordance with the relevant requirements of the Shanghai Stock Exchange and such other authorities.

(XII) Terms of redemption

1. Terms of redemption upon maturity

Within five trading days upon maturity of the Convertible Bonds, the Company will redeem the Convertible Bonds which have not been converted into A shares by then, at a price determined by the Board or persons authorized by the Board upon negotiation with the sponsor (the lead

– I-12 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

underwriter) with reference to national policies, market conditions and the actual conditions of the Company upon the issuance, subject to the authorisation by the shareholders at the General Meeting.

2. Terms of conditional redemption

During the conversion period, in case of one of the following two circumstances, the Company has the right to redeem all or part of the Convertible Bonds which have not been converted into shares based on the par value plus the accrued interest then:

(1) where the closing prices of A shares for at least 15 trading days out of 30 consecutive trading days during the conversion period are no less than 130% (including 130%) of the prevailing conversion price;
(2) where the balance of the outstanding Convertible Bonds under the issuance is lower than RMB30 million.

Formula for calculating the then accrued interest is: IA=B×i×t/365

IA: denotes the accrued interest for the current period;
B: denotes the aggregate nominal value of the Convertible Bonds to be deemed that are held by the Convertible Bond holders under the Issuance;
i: denotes the nominal interest rate of the Convertible Bonds for current year;
t: denotes the number of days on which interest is accrued, i.e. the actual number of calendar days from the last interest payment date up to the redemption date of that interest accrual year (including the last interest-payment date and excluding the redemption date).

In the event that an adjustment to the conversion price is made during the aforesaid 30 trading days, the amount for trading days prior to the date of the adjustment shall be calculated based on the conversion price and the closing price of the A shares before the adjustment, while the amount for trading days after the adjustment shall be calculated based on the conversion price and the closing price after the date of the adjustment.

– I-13 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

(XIII) Terms of sale back

1. Terms of conditional sale back

During the last two interest accrual years within the term of the Convertible Bonds, if the closing prices of the A shares of the Company on any 30 consecutive trading days are lower than 70% (excluding 70%) of the prevailing conversion price, the Convertible Bond holders are entitled to sell back all or part of the Convertible Bonds they hold to the Company at par plus the then accrued interest.

In the event that an adjustment to the conversion price by the Company is made due to distribution of share dividends, conversion or increase of share capital, issuance of new shares (excluding any increase in the share capital as a result of conversion of the Convertible Bonds) or rights issue, distribution of cash dividends during the aforementioned trading days, in respect of the trading days prior to the adjustment, the calculation shall be based on the unadjusted conversion price and the closing price of the A shares on each such day, and in respect of the trading days after the adjustment, the calculation shall be based on the adjusted conversion price and the closing price of the A shares on each such day. In the event that there is a downward adjustment to the conversion price, the aforesaid “30 consecutive trading days” shall be re-counted from the first trading day following the adjustment to the conversion price.

The Convertible Bond holders can exercise their sale back rights once every year when the sale back conditions are initially satisfied according to the abovementioned agreed terms in the last two interest accrual years within the term of the Convertible Bonds. If the sale back conditions are initially satisfied, but the Convertible Bond holders do not apply for and exercise their sale back rights during the sale back declaration period then announced by the Company, they shall not exercise the sale back rights during such interest accrual years. The Convertible Bond holders are not allowed to exercise part of their sale back rights for multiple times.

2. Additional terms of sale back

If the actual use of the proceeds raised from the Issuance of the Convertible Bonds significantly differs from the undertakings of the use of proceeds set out by the Company in the offering document, and such change is considered by the CSRC as a deviation in the use of proceeds, the Convertible Bonds holders shall be entitled to a one-off right to sell all or part of the Convertible Bonds they hold back to the Company at par plus then accrued interest. Upon the satisfaction of the additional condition of sale back, the Convertible Bonds holders may sell their Convertible Bonds back to the Company during the additional sale back declaration period after it is

– I-14 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

announced by the Company. If the Convertible Bonds holders do not exercise their sale back rights during such period, they shall not exercise such rights later.

(XIV) Entitlement to dividend in the year of conversion

The new A shares to be issued as a result of the conversion of the Convertible Bonds shall rank pari passu with all the existing A shares, and all ordinary A shareholders (including those derived from the conversion of the Convertible Bonds) whose names are recorded on the register of members of the Company on the record date for dividend distribution shall be entitled to receive the dividend of that period and enjoy equal rights and interests.

(XV) Method of the issuance and target subscribers

The specific method of the Issuance of the Convertible Bonds shall be determined by the Board or persons authorised by the Board upon negotiation with the sponsor (the lead underwriter), which is subject to authorisation by the shareholders at the General Meeting. The target subscribers of the Convertible Bonds are natural persons, legal persons, securities investment funds and other investors in compliance with legal requirements who have maintained securities accounts at the China Securities Depository and Clearing Corporation Limited Shanghai Branch (excluding those prohibited by the PRC laws and regulations).

(XVI) Subscription arrangement for the existing A shareholders

The existing A shareholders are entitled to the pre-emptive rights to subscribe for the Convertible Bonds. It will be proposed at the General Meeting to authorise the Board or persons authorised by the Board to determine the actual amount of the A Share Convertible Corporate Bonds which are subject to the abovementioned pre-emptive rights in accordance with the market conditions before issuance. Such determination shall be disclosed in the announcement regarding the issuance of Convertible Bonds. The Convertible Bonds which are not subject to the abovementioned pre-emptive rights and which are not subscribed for upon the exercise of the abovementioned pre-emptive rights will be either offered to institutional investors offline and issued by way of online fixed price offering through the trading system of the Shanghai Stock Exchange, with the remaining balance underwritten by the underwriter(s) in case of under subscription.

– I-15 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

(XVII) Bond holders and bond holders’ meeting

During the duration of the Convertible Bonds, decisions shall be made by means of resolutions of bond holders’ meeting upon the occurrence of any of the following events:

proposed changes to the important terms of the offering document:
a. changes to basic components of the bonds regarding repayment (including repaying parties, duration, coupon rate adjustment mechanism, etc.);
b. changes to credit enhancement or other debt service coverage and relevant implementation arrangements;
c. changes to the protection measures to bond investors and relevant implementation arrangements;
d. changes to the use of proceeds as stipulated in the Offering Document;
e. other changes to significant events closely related to repayment arrangement for principal and interest of bonds and the solvency.
proposed amendments to the rules of procedures for bond holders’ meetings;
proposed dismissal or change of the bond trustee manager or change to key terms of the bond trustee management agreement (including but not limited to the scope of mandate for entrusted management matters, the risk prevention and solving mechanism for conflicts of interest, the liability for breach of contract closely related to the rights and interests of bond holders, and other stipulations);
any of the following events, where it is necessary to decide on or authorize to take corresponding measures (including but not limited to negotiating with the Issuer and other relevant parties, initiating or participating in arbitration or litigation proceedings, disposal of collaterals or other measures conducive to the protection of rights and interests of investors, etc.):
a. the Issuer has been or is expected to be unable to satisfy as scheduled the principal or interest of the Convertible Bonds;

– I-16 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

b. the Issuer has been or is expected to be unable to satisfy as scheduled the interest-bearing liabilities other than the Convertible Bonds, and the outstanding amount exceeds RMB50 million and reaches 10% or more of the latest audited net asset value of the parent of the Company, which may lead to a default of the Convertible Bonds;
c. the issuer undertakes a capital reduction (except for capital reduction resulting from the share buy-backs under share incentive schemes and the repurchase and cancellation of part of the restricted shares), consolidation, subdivision, an order to suspend its production or business, temporarily detained or revoked license, receivership, dissolution, application for bankruptcy, or bankruptcy proceedings according to law;
d. the issuer’s solvency is in serious uncertainty due to failure of the issuer’s management in performing its duties normally;
e. the issuer’s solvency is in serious uncertainty due to a transfer of assets at nil or obviously unreasonable consideration, waiver of debt, or provision of large-value guarantees to external parties by the issuer, its controlling shareholder or actual controller;
f. material adverse changes to credit enhancement providers, credit enhancement measures or other debt service coverage, if any; and
g. other events that may have a material adverse impact on the rights and interests of bond holders.
major debt restructuring plan proposed by the Issuer;
other circumstances that shall be resolved by the bond holders’ meeting, as provided by the laws, administrative regulations, departmental rules, regulatory documents, or stipulated in the offering document of the Convertible Bonds and the rules of procedures for bond holders’ meetings.

– I-17 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

(XVIII) Use of proceeds

The total amounts of proceeds from the public issuance of the Convertible Bonds will not exceed RMB2.39 billion (RMB2.39 billion inclusive), which will be used for the following projects after deducting issuance expenses:

Unit: RMB0’000

No. Project name 1 Dengfeng Project 2 Enshi Project 3 Shuozhou Project 4 Wuhan Phase II Project 5 Huludao Power Generation Project 6 Replenishment of working capital and repayment of bank loans Total	Total amount of investment 39,920.00 69,000.00 66,015.15 69,985.00 67,471.00 60,000.00 372,391.15	Amount of proceeds Proposed to be used 15,000.00 40,000.00 44,000.00 48,000.00 32,000.00 60,000.00
		239,000.00

Prior to receipt of the proceeds from the Issuance, the Company will first make investment with its self-raised funds depending on the progress of the proceeds funded projects, and will replace such funds according to the relevant specified procedures after receipt of the proceeds.

(XIX) Management of proceeds and deposit account

The Company has formulated a system for the management of the proceeds. The proceeds from the Issuance of the Convertible Bonds must be deposited in a specific account for proceeds as decided by the Board of the Company for centralized management. The Board shall determine specific matters relating to the opening of the account before the issuance.

– I-18 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

(XX) Validity period of the plan for Convertible Bonds

The issuance plan for the Convertible Bonds is valid for 12 months from the date of approving such issuance plan at the General Meeting of the Company.

The plan for the public issuance of the Convertible Bonds shall be implemented subject to the approval of the CSRC, and ultimately subject to the plan approved by the CSRC.

(XXI) Trustee manager

The Company appointed the lead underwriter for the public issuance of A Share Convertible Corporate Bonds as the trustee manager and enter into a trustee management agreement with the trustee manager for matters relating to the entrusted management.

III. FINANCIAL INFORMATION AND MANAGEMENT’S DISCUSSION AND ANALYSIS

The financial statements of the Company for 2018, 2019 and 2020 have been audited by KPMG Huazhen LLP, for which standard unqualified opinions have been issued. The financial statement of the Company for January to March 2021 has not been audited.

According to the Notice on Publication of the Revised PRC Accounting Standards No.22 – Recognition and Measurement of Financial Instruments (《關於印發修訂〈企業會計準則第22號—金融工具確認和計量〉的通知》), the Notice on Publication of the Revised PRC Accounting Standards No.23 – Transfer of Financial Assets 《關於印發修訂〈企業會計準則( 第23號—金融資產轉移〉的通知》), the Notice on Publication of the Revised PRC Accounting Standards No.24 – Hedge Accounting 《關於印發修訂〈企業會計準則第( 24號—套期會計〉的通知》) and the Notice on Publication of the Revised PRC Accounting Standards No. 37 – Presentation of Financial Instrument (《關於印發修訂〈企業會計準則第37號—金融工具列報〉的通知》) (collectively the “ New Financial Instrument Standards ”) which were revised and promulgated by the Ministry of Finance of the PRC in 2017, domestic listed companies are required to apply the New Financial Instrument Standards from 1 January 2019. According to the transitional provisions, enterprises shall present information in relation to financial instruments in accordance with requirements of the New Financial Instrument Standards. Where there are inconsistencies between the information presented in comparative financial statements and those required by the standards, no retrospective adjustment is required to be made according to the New Financial Instrument Standards.

– I-19 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

On 15 November 2018, the Company issued the Announcement in Relation to the Change in Accounting Policy (Lin 2018-056) to change the accounting policy for the recognition of tariff revenue from the national renewable energy subsidies (the “ National Subsidies ”) from the recognition of the National Subsidies upon inclusion in the national subsidy catalogue and after the right of control of relevant commodities being transferred to the competent electricity authorities, and one-off recognition for all the National Subsidies received since the commencement of operation of the project to the recognition of the National Subsidies since the date of commencement of operation of the project, with the grid-connected power generation, and after the right of control of relevant commodities being transferred to the competent electricity authorities.

To maintain the consistency and practicality of the disclosure caliber of the data in financial statements and useful financial and accounting information, the financial data for 2018 of the Company has been restated to reflect the retrospective adjustment of the change in accounting policy and the Company has conducted an analysis on the data restated to reflect the retrospective adjustment of the change in accounting policy.

(I) Balance sheet, income statement and cash flow statement for the latest three years and period

1. Balance sheet

  - _(1) Consolidated balance sheet_

Unit: RMB

Items Current assets: Cash at bank and on hand Bills receivable Accounts receivable Receivables under financing Prepayments Other receivables Including: Dividends receivable Interest receivable Inventories Contract assets Non-current assets due within one year Other current assets Total current assets	2021.3.31 1,124,112,037.82 26,850,000.00 989,406,294.95 – 19,532,015.01 44,586,320.76 – – 36,953,656.70 363,093,266.97 138,111,645.31 190,044,608.75 2,932,689,846.27	2020.12.31 1,608,061,795.80 27,687,500.00 785,699,955.92 2,000,000.00 15,139,014.07 42,029,816.24 – – 37,184,080.74 467,951,853.72 135,193,612.91 208,380,072.22 3,329,327,701.62	2019.12.31 432,140,938.55 – 452,783,629.70 10,036,291.46 15,355,672.33 22,779,939.42 – – 29,114,023.28 395,564,422.73 87,687,596.31 181,724,630.58 1,627,187,144.36	2018.12.31 710,736,003.72 16,329,816.00 231,720,897.81 – 35,883,159.32 67,278,534.97 – 63,972.93 20,094,393.80 155,318,993.04 71,704,170.76 136,983,506.10
				1,446,049,475.52

– I-20 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Items Non-current assets: Long-term receivables Long-term equity investments Fixed assets Construction in progress Right-of-use assets Intangible assets Goodwill Long-term deferred expenses Deferred tax assets Other non-current assets Total non-current assets Total assets Current liabilities: Short-term loans Accounts payable Contract liabilities Employee benefits payable Taxes payable Other payables Including: Interest payable Dividends payable Non-current liabilities due within one year Total current liabilities	2021.3.31 5,448,410,686.56 68,475,565.03 51,721,552.39 215,688,841.57 692,025.14 7,649,290,814.66 43,910,821.67 226,434.13 209,479,434.24 906,394,121.50 14,594,290,296.89 17,526,980,143.16 2,461,064,156.61 1,124,286,591.07 29,239,948.61 34,859,821.97 54,607,238.63 65,487,530.26 – – 696,601,283.69 4,466,146,570.84	2020.12.31 5,239,640,603.64 66,190,681.00 53,174,313.11 184,879,239.06 781,466.98 7,366,230,070.06 43,910,821.67 402,028.28 207,536,077.65 953,998,419.31 14,116,743,720.76 17,446,071,422.38 2,495,169,633.87 1,291,193,658.66 26,043,106.14 95,551,982.29 47,874,599.04 101,598,868.06 – – 674,419,529.18 4,731,851,377.24	2019.12.31 4,466,535,132.13 62,907,982.84 49,996,842.55 – 1,464,901.09 6,453,018,803.00 43,910,821.67 581,287.19 203,427,135.40 761,757,354.24 12,043,600,260.11 13,670,787,404.47 2,433,082,965.96 1,212,897,951.38 9,737,256.69 85,954,559.07 49,034,096.54 149,645,055.37 22,003,438.71 – 705,048,955.21 4,645,400,840.22	2018.12.31 3,836,000,876.02 31,222,775.27 49,538,030.79 – – 4,411,246,358.86 43,910,821.67 1,300,011.71 180,996,600.65 688,741,531.41
				9,242,957,006.38

				10,689,006,481.90

				854,000,000.00 900,854,708.97 6,145,947.92 76,002,585.39 43,246,575.79 369,910,815.21 14,141,187.13 – 539,592,998.16
				2,789,753,631.44

– I-21 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Items Non-current liabilities: Long-term loans Lease liabilities Long-term payables Deferred tax liabilities Deferred income Total non-current liabilities Total liabilities Shareholders’ equity: Share capital Capital reserve Other comprehensive income Surplus reserve Retained earnings Total equity attributable to shareholders of the Company Non-controlling interests Total shareholders’ equity Total liabilities and shareholders’ equity	2021.3.31 6,525,339,013.53 445,121.76 288,127,074.72 156,619,379.04 103,524,609.07 7,074,055,198.12 11,540,201,768.96 1,393,440,000.00 2,412,410,905.73 8,466,734.66 101,862,397.11 1,752,343,460.30 5,668,523,497.80 318,254,876.40 5,986,778,374.20 17,526,980,143.16	2020.12.31 6,414,689,592.99 515,729.38 289,389,673.47 150,915,654.85 78,431,192.88 6,933,941,843.57 11,665,793,220.81 1,393,440,000.00 2,412,410,905.73 10,473,349.95 101,862,397.11 1,569,479,247.47 5,487,665,900.26 292,612,301.31 5,780,278,201.57 17,446,071,422.38	2019.12.31 5,057,022,246.80 554,586.70 297,314,473.80 127,386,997.96 46,592,569.32 5,528,870,874.58 10,174,271,714.80 1,161,200,000.00 859,074,607.53 –8,121,791.15 87,319,205.31 1,196,756,895.66 3,296,228,917.35 200,286,772.32 3,496,515,689.67 13,670,787,404.47	2018.12.31 4,390,551,321.62 – 305,098,322.59 109,709,057.59 21,297,023.96
				4,826,655,725.76

				7,616,409,357.20

				1,161,200,000.00 858,803,441.83 –8,118,159.45 71,532,851.40 912,574,775.97
				2,995,992,909.75

				76,604,214.95
				3,072,597,124.70

				10,689,006,481.90

– I-22 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

(2) Company balance sheet

Items Current assets: Cash at bank and on hand Accounts receivable Prepayments Other receivables Including: Dividends receivable Interest receivable Non-current assets due within one year Other current assets Total current assets Non-current assets: Long-term receivables Long-term equity investments Fixed assets Right-of-use assets Intangible assets Deferred tax assets Other non-current assets Total non-current assets Total assets	2021.3.31 129,529,112.49 111,969,781.14 670,825.22 1,363,978,849.50 81,000,000.00 45,598,081.64 146,490,427.49 506,167.61 1,753,145,163.45 250,244,200.00 5,577,136,432.24 2,406,964.91 – 1,374,598.42 2,162,021.11 5,860,000.00 5,839,184,216.68 7,592,329,380.13	2020.12.31 439,958,075.95 107,336,363.20 833,325.22 1,189,714,812.51 96,000,000.00 40,370,526.16 196,727,227.49 1,267,822.89 1,935,837,627.26 261,664,200.00 5,509,051,548.21 2,360,453.27 – 1,356,377.85 1,925,917.36 9,860,000.00 5,786,218,496.69 7,722,056,123.95	2019.12.31 47,174,478.11 75,971,673.15 71,288.95 904,583,206.37 42,200,000.00 31,491,969.96 195,400,000.00 1,351,164.06 1,224,551,810.64 463,320,000.00 4,726,940,333.87 2,160,807.88 510,805.36 1,117,232.18 938,062.23 – 5,194,987,241.52 6,419,539,052.16	Unit: RMB 2018.12.31 280,410,049.42 20,487,404.22 824,071.91 476,680,139.04 – 18,816,987.12 25,744,348.18 3,500,000.00
				807,646,012.77

				338,175,651.82 3,811,481,435.51 1,173,504.80 – 538,087.51 948,156.39 –
				4,152,316,836.03

				4,959,962,848.80

– I-23 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Items Current liabilities: Short-term loans Accounts payable Contract liabilities Employee benefits payable Taxes payable Other payables Including: Interest payable Dividends payable Non-current liabilities due within one year Total current liabilities Non-current liabilities: Long-term loans Total non-current liabilities Total liabilities Shareholders’ equity: Share capital Capital reserve Surplus reserve Retained earnings Total shareholders’ equity Total liabilities and shareholders’ equity	2021.3.31 2,443,094,833.85 188,971.24 25,559,321.99 3,054,623.55 1,802,463.33 202,176,052.50 – – 112,255,411.06 2,788,131,677.52 370,900,304.30 370,900,304.30 3,159,031,981.82 1,393,440,000.00 2,459,501,733.70 101,862,397.11 478,493,267.50 4,433,297,398.31 7,592,329,380.13	2020.12.31 2,484,118,926.91 172,721.24 25,864,406.74 20,060,092.10 243,209.46 242,880,113.84 – – 108,475,385.22 2,881,814,855.51 388,354,927.77 388,354,927.77 3,270,169,783.28 1,393,440,000.00 2,459,501,733.70 101,862,397.11 497,082,209.86 4,451,886,340.67 7,722,056,123.95	2019.12.31 2,415,000,000.00 172,721.24 10,000,000.00 20,287,897.76 449,290.11 229,503,503.87 – – 253,828,192.74 2,929,241,605.72 853,299,321.97 853,299,321.97 3,782,540,927.69 1,161,200,000.00 906,165,435.50 87,319,205.31 482,313,483.66 2,636,998,124.47 6,419,539,052.16	2018.12.31 860,000,000.00 2,451,600.02 10,000,000.00 18,466,649.40 1,945,247.00 271,886,881.28 – – 155,354,661.34
				1,320,105,039.04
				1,044,603,224.39
				1,044,603,224.39

				2,364,708,263.43

				1,161,200,000.00 906,165,435.50 71,532,851.40 456,356,298.47
				2,595,254,585.37

				4,959,962,848.80

– I-24 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

2. Income statement

(1) Consolidated income statement

Unit: RMB

Items I. Total operating income Including: Operating income II. Total operating costs Including: Operating costs Taxes and surcharges Selling expenses General and administrative expenses Research and development expenses Finance expense Including: Interest expense Interest income Add: Other income Investment income (loss expressed with “–”) Including: Income from investment in associates and joint ventures Impairment losses of assets (loss expressed with “–”) Impairment losses of credit (loss expressed with “–”) Gains from asset disposals (loss expressed with “–”)	January to March 2021 597,920,313.95 597,920,313.95 391,672,648.21 244,610,824.12 10,848,244.25 – 33,997,639.70 1,076,887.72 101,139,052.42 104,426,948.85 1,666,779.26 16,902,292.09 2,357,110.45 2,284,884.03 8,330,959.23 –13,330,206.57 –4,265.39	2020 2,277,618,815.00 2,277,618,815.00 1,629,344,819.29 967,675,984.97 46,567,497.50 – 161,321,513.88 7,603,578.05 446,176,244.89 429,221,807.42 6,528,405.47 82,424,498.85 3,286,528.36 3,282,698.16 –76,628,379.14 –30,451,159.44 57,092.39	2019 1,752,449,088.97 1,752,449,088.97 1,323,998,196.44 806,468,273.61 36,269,997.46 – 142,237,649.84 10,667,001.22 328,355,274.31 330,832,005.04 4,493,227.56 93,631,981.53 860,528.23 6,735.47 –12,547,763.33 –37,752,762.71 –128,702.00	2018 1,140,074,395.71

				1,140,074,395.71
				838,294,083.35

				468,611,731.36 27,794,343.41 – 112,904,942.74 13,150,331.97 208,520,625.74 208,347,903.03 3,718,738.93 89,337,663.01 –1,714.55 –1,714.55 – –12,913,629.41 7,837.86

– I-25 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Items III. Operating profit (loss expressed with “–”) Add: Non-operating income Less: Non-operating expenses IV. Total profit (total loss expressed with “–”) Less: Income tax expenses V. Net profit (loss expressed with “–”) (I) Net profit from continuing operations (net loss expressed with “–”) (II) Net profit from discontinued operations (net loss expressed with “–”) Net profit attributable to shareholders of the company Non-controlling interests	January to March 2021 220,503,555.55 672,331.46 15,295.16 221,160,591.85 28,853,803.93 192,306,787.92 192,306,787.92 – 182,864,212.83 9,442,575.09	2020 626,962,576.73 2,455,092.02 1,529,078.65 627,888,590.10 99,453,958.03 528,434,632.07 528,434,632.07 – 503,385,543.61 25,049,088.46	2019 472,514,174.25 2,428,556.02 1,020,639.15 473,922,091.12 57,067,526.80 416,854,564.32 416,854,564.32 – 416,088,473.60 766,090.72	2018 385,522,577.40

				14,295,923.04 1,571,646.63
				398,246,853.81

				32,567,226.33
				365,679,627.48

				365,679,627.48 –
				365,651,040.25

				28,587.23

– I-26 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Items VI. Other comprehensive income, net of tax (I) Other comprehensive income attributable to shareholders of the Company, net of tax (II) Other comprehensive income attributable to non-controlling interests, net of tax VII.Total comprehensive income (I) Total comprehensive income attributable to shareholders of the Company (II) Total comprehensive income attributable to non-controlling interests VIII. Earnings per share: Basic earnings per share Diluted earnings per share	January to March 2021 –2,006,615.29 –2,006,615.29 – 190,300,172.63 180,857,597.54 9,442,575.09 0.13 0.13	2020 18,595,141.10 18,595,141.10 – 547,029,773.17 521,980,684.71 25,049,088.46 0.43 0.43	2019 –3,631.70 –3,631.70 – 416,850,932.62 416,084,841.90 766,090.72 0.36 0.36	2018 1,980,060.88

				1,980,060.88 –
				367,659,688.36

				367,631,101.13 28,587.23
				0.33 0.33

– I-27 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

(2) Company income statement

Unit: RMB

Items I. Operating income Less: Operating costs Taxes and surcharges Selling expenses General and administrative expenses Research and development expenses Finance expenses Including: Interest expense Interest income Add: Other income Investment income (loss expressed with “–”) Including: Income from investment in joint ventures and associates Impairment losses of credit (loss expressed with “–”) Gains from asset disposals (loss expressed with “–”)	January to March 2021 10,939,795.72 1,690,770.60 79,762.30 – 7,554,845.89 1,076,887.72 30,384,788.36 31,143,659.65 916,651.41 212,653.02 11,758,240.42 2,284,884.03 –944,415.01 –4,265.39	2020 69,352,381.54 9,005,561.30 692,849.38 – 44,138,416.55 7,603,578.05 160,865,895.79 161,628,711.94 4,127,837.18 1,268,318.40 297,530,515.88 3,282,698.16 –1,449,921.25 49,073.38	2019 116,665,855.23 8,664,581.08 593,417.93 – 46,202,081.43 8,615,733.03 136,078,887.50 135,231,247.22 1,777,320.74 579,406.67 240,638,934.28 –6,131,302.61 67,294.43 10,145.67	2018 125,215,044.72

				9,004,114.52 591,851.33 – 41,490,719.78 10,991,458.02 68,929,836.77 68,906,311.06 2,433,278.50 505,359.44 159,384,789.95 –1,714.55 –2,841,388.62 –

– I-28 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Items II. Operating profit (loss expressed with “–”) Add: Non-operating income Less: Non-operating expenses III. Total profit (total loss expressed with “–”) Less: Income tax expenses IV. Net profit (net loss expressed with “–”) (I) Net profit from continuing operations (net loss expressed with “–”) (II) Net profit from discontinued operations (net loss expressed with “–”) V. Other comprehensive income, net of tax VI. Total comprehensive income	January to March 2021 –18,825,046.11 – – –18,825,046.11 –236,103.75 –18,588,942.36 –18,588,942.36 – – –18,588,942.36	2020 144,444,066.88 – 4.01 144,444,062.87 –987,855.13 145,431,918.00 145,431,918.00 – – 145,431,918.00	2019 157,806,935.31 – – 157,806,935.31 –56,603.79 157,863,539.10 157,863,539.10 – – 157,863,539.10	2018 151,255,825.07

				3,413.79 7,733.03
				151,251,505.83

				–279,835.80
				151,531,341.63

				151,531,341.63 –
				–

				151,531,341.63

– I-29 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

3. Cash flow statement

(1) Consolidated cash flow statement

Unit: RMB

Items I. Cash flows from operating activities: Cash received from sale of goods, rendering of services and the Build-Operate-Transfer (“BOT”) projects and the Build-Transfer (“BT”) projects Refund of taxes Cash received from other operating activities Sub-total of cash inflows from operating activities Cash paid for goods and services Increase of principal of long-term receivables of BOT projects and BT projects Cash paid to and for employees Payments of various taxes Cash paid for other operating activities Sub-total of cash outflows for operating activities Net cash generated from operating activities	January to March 2021 576,989,368.91 18,304,998.61 32,435,228.61 627,729,596.13 161,853,660.25 247,102,736.36 138,797,840.68 49,547,823.34 9,422,866.82 606,724,927.45 21,004,668.68	2020 2,175,616,049.41 59,441,547.76 146,749,926.15 2,381,807,523.32 659,630,599.25 868,984,007.15 325,538,692.22 203,260,415.84 94,358,734.31 2,151,772,448.77 230,035,074.55	2019 1,581,019,824.12 71,068,724.08 100,443,759.85 1,752,532,308.05 541,159,462.88 699,417,945.94 288,236,968.73 182,809,981.78 89,097,484.27 1,800,721,843.60 –48,189,535.55	2018 1,159,829,740.08 85,979,263.60 65,723,490.13
				1,311,532,493.81

				322,793,404.80 717,017,878.55 239,442,568.93 170,748,569.69 84,246,726.44
				1,534,249,148.41

				–222,716,654.60

– I-30 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Items II. Cash flows from investing activities: Cash received from recovery of an investment Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other companies Cash received from other investing activities Sub-total of cash inflows from investing activities Cash paid for acquisition of fixed assets, intangible assets and other long-term assets Cash paid for investments Cash paid for acquisition of subsidiaries Cash paid for other investing activities Sub-total of cash outflows for investing activities Net cash flows from investing activities	January to March 2021 – 8,288.50 – 5,200,000.00 5,208,288.50 479,084,772.48 – 35,182,997.10 8,953,000.00 523,220,769.58 –518,012,481.08	2020 – 420,674.80 – 2,003,830.20 2,424,505.00 1,599,009,706.95 – 19,332,500.00 27,860,000.00 1,646,202,206.95 –1,643,777,701.95	2019 3,500,000.00 192,343.96 – 58,734,275.91 62,426,619.87 2,001,872,546.01 37,816,510.20 257,548,030.05 30,000,000.00 2,327,237,086.26 –2,264,810,466.39	2018 – 362,729.95 30,636,578.02 3,900,354.64
				34,899,662.61

				880,476,896.80 62,224,489.80 439,238,742.38 65,316,510.20
				1,447,256,639.18

				–1,412,356,976.57

– I-31 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Items III. Cash flows from financing activities: Cash received from investments Including: Cash received from non-controlling shareholders of subsidiaries Proceeds from initial public offering Cash received from non-public issuance of shares Cash received from loans Sub-total of cash inflows from financing activities Cash paid for repayment of loans Cash paid for distribution of dividends, profits or payment of interests Cash paid for other financing activities Sub-total of cash outflows for financing activities Net cash generated from financing activities IV. Effect of foreign exchange rate changes on cash and cash equivalents V. Net increase in cash and cash equivalents Add: Balance of cash and cash equivalents at the beginning of the period VI. Balance of cash and cash equivalents at the end of the period	January to March 2021 16,200,000.00 16,200,000.00 – – 536,574,929.14 552,774,929.14 444,496,365.94 99,364,404.32 349,557.03 544,210,327.29 8,564,601.85 –6,547.43 –488,449,757.98 1,592,968,039.86 1,104,518,281.88	2020 67,400,000.00 67,400,000.00 – 1,816,116,800.00 3,958,912,274.30 5,842,429,074.30 2,590,329,167.68 556,650,057.28 42,607,949.27 3,189,587,174.23 2,652,841,900.07 1,885,348.64 1,240,984,621.31 351,983,418.55 1,592,968,039.86	2019 123,187,632.34 123,187,632.34 – – 3,369,572,393.53 3,492,760,025.87 1,006,847,714.68 450,793,898.59 4,324,032.43 1,461,965,645.70 2,030,794,380.17 210,556.60 –281,995,065.17 633,978,483.72 351,983,418.55	2018 62,012,939.95 62,012,939.95 382,298,000.00 – 2,245,454,431.14
				2,689,765,371.09

				862,542,906.66 195,699,693.98 31,194,642.56
				1,089,437,243.20

				1,600,328,127.89

				3,431,617.78

				–31,313,885.50 665,292,369.22

				633,978,483.72

– I-32 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

(2) Company cash flow statement

Unit: RMB

Items I. Cash flows from operating activities: Cash received from sale of goods and rendering of services Refund of taxes Cash received from other operating activities Sub-total of cash inflows from operating activities Cash paid for goods and services Cash paid to and for employees Payments of various taxes Cash paid for other operating activities Sub-total of cash outflows for operating activities Net cash generated from operating	January to March 2021 7,089,172.69 – 8,509,821.54 15,598,994.23 393,140.67 22,726,942.24 79,762.30 33,163,857.67 56,363,702.88 –40,764,708.65	2020 55,870,473.34 – 52,376,107.12 108,246,580.46 4,025,535.70 44,048,207.62 1,700,184.53 89,185,824.58 138,959,752.43 –30,713,171.97	2019 63,500,759.26 – 60,128,142.64 123,628,901.90 3,857,789.07 43,213,095.86 3,890,826.88 76,452,446.58 127,414,158.39 –3,785,256.49	2018 127,367,825.85 1,646,585.06 213,995,608.79
				343,010,019.70

				6,518,922.21 28,777,235.83 6,111,424.66 244,106,149.72
				285,513,732.42

				57,496,287.28

– I-33 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Items II. Cash flows from investing activities: Proceeds from disposal of an investment Cash received from investment income Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other companies Cash received from other investing activities Sub-total of cash inflows from investing activities Cash paid for acquisition of fixed assets, intangible assets and other long-term assets Cash paid for investments Cash paid for acquisition of subsidiaries Cash paid for acquisition of joint ventures Cash paid for other investing activities Sub-total of cash outflows for investing activities Net cash generated from investing activities	January to March 2021 – 15,000,000.00 8,288.50 – 178,800,540.91 193,808,829.41 119,480.08 65,800,000.00 35,182,997.10 – 280,700,000.00 381,802,477.18 –187,993,647.77	2020 – 215,200,000.00 102,495.88 – 1,171,239,206.53 1,386,541,702.41 1,298,641.29 622,457,500.00 48,995,272.50 – 1,239,694,100.00 1,912,445,513.79 –525,903,811.38	2019 18,500,000.00 166,175,738.10 26,097.22 – 625,826,026.15 810,527,861.47 1,491,935.46 728,109,200.89 258,048,280.00 – 1,264,600,000.00 2,252,249,416.35 –1,441,721,554.88	2018 – 130,500,000.00 304,316.28 30,636,578.02 790,902,527.03
				952,343,421.33

				701,142.43 625,424,489.80 448,000,000.00 – 902,606,510.19
				1,976,732,142.42

				–1,024,388,721.09

– I-34 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Items III. Cash flows from financing activities: Cash received from loans Net proceed from initial public offering Cash received from non-public issuance of shares Sub-total of cash inflows from financing activities Cash paid for repayment of loans Cash paid for distribution of dividend, profit or payment of interests Cash paid for other financing activities Sub-total of cash outflows for financing activities Net cash generated from financing activities IV. Effect of foreign exchange rate changes on cash and cash equivalents V. Net increase in cash and cash equivalents Add: Balance of cash and cash equivalents at the beginning of the period VI. Balance of cash and cash equivalents at the end of the period	January to March 2021 150,000,000.00 – – 150,000,000.00 207,047,248.67 28,887,726.87 235,849.06 236,170,824.60 –86,170,824.60 217.56 –314,928,963.46 430,958,075.95 116,029,112.49	2020 1,260,000,000.00 – 1,816,116,800.00 3,076,116,800.00 1,810,568,407.39 283,072,650.52 30,094,754.47 2,123,735,812.38 952,380,987.62 19,593.57 395,783,597.84 35,174,478.11 430,958,075.95	2019 2,003,000,000.00 – – 2,003,000,000.00 543,354,661.34 247,164,839.54 3,521,097.37 794,040,598.25 1,208,959,401.75 –88,161.69 –236,635,571.31 271,810,049.42 35,174,478.11	2018 1,262,990,000.00 382,298,000.00 –
				1,645,288,000.00

				419,555,661.34 68,553,287.96 31,194,642.56
				519,303,591.86

				1,125,984,408.14

				36,761.73

				159,128,736.06 112,681,313.36

				271,810,049.42

– I-35 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

(II) Changes in scope of consolidated financial statements

1. Changes in scope of consolidated financial statements in 2018

Huizhou Dynagreen Renewable Energy Co., Ltd. (惠州綠色動力再生能源有限公司), Dengfeng Dynagreen Renewable Energy Co., Ltd. (登封綠色動力再生能源有限公司), Haining Dynagreen Haiyun Environmental Protection Energy Co., Ltd. (海寧綠動海雲環保能源有限公司) and Shishou Dynagreen Renewable Energy Co., Ltd. (石首綠色動力再生能源有限公司) were newly established as subsidiaries by the Company in 2018 and have been included in the consolidated financial statements since their establishment dates.

Lvyi (Huludao) Environmental Services Limited (綠益(葫蘆島)環境服務有限公司) and Guangdong Promising Environmental Protection Company Limited (廣東博海昕能環保有限公司) were merged by the Company in January 2018 and December 2018, respectively under non-common control, and have been included in the consolidated financial statements since the purchase dates.

2. Changes in scope of consolidated financial statements in 2019

Pingyang Dynagreen Environmental Energy Co., Ltd. (平陽綠動環保能源有限公司), Baise Dynagreen Environmental Protection Co., Ltd. (百色綠動環保有限公司), Enshi Green Power Renewable Energy Co., Ltd. (恩施綠色動力再生能源有限公司) and Huludao Dynagreen Environment Co., Ltd. (葫蘆島綠動環保有限公司) were newly established as subsidiaries by the Company in 2019 and have been included in the consolidated financial statements since their establishment dates.

Guizhou Jinsha Green Energy Co., Ltd. (貴州金沙綠色能源有限公司) was merged by the Company in March 2019 under non-common control, and has been included in the consolidated financial statements since its purchase date.

3. Changes in scope of consolidated financial statements in 2020

Shantou Dynagreen Environmental Services Co., Ltd. (汕頭市綠色動力環境服務有限公司), Shuozhou Dynagreen Nanshan Environmental Energy Co., Ltd. (朔州綠動南山環境能源有限公司), Jinan Dynagreen Environmental Co., Ltd.(濟南綠動環保有限公司)and Huizhou Dynagreen Environmental Services Co., Ltd. (惠州綠色動力環境服務有限公司) were newly established as subsidiaries by the Company in 2020 and have been included in the consolidated financial statements since their establishment dates.

Laizhou Haikang Environmental Protection Energy Co., Ltd. (萊州海康環保能源有限公司) was merged by the Company in April 2020 under non-common control, and has been included in the consolidated financial statements since its purchase date.

– I-36 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

4. Changes in scope of consolidated financial statements during January to March 2021

There was no change in the scope of consolidated financial statements of the Company during January to March 2021.

(III) Major financial indicators of the Company for the latest three years and period

1. Return on net assets and earnings per share

Return on net assets and earnings per share of the Company calculated pursuant to requirements under the Information Disclosure Compiling Rule No. 9 of Companies Publicly Issuing Securities – Calculation and Disclosure of Return on Net Assets and Earnings Per Share (Revised in 2010) (the Announcement of China Securities Regulatory Commission [2010] No. 2) 《公開發行證券的公司信息披露編報規則第( 9號——淨資產收益率和每股收益的計算及披露(2010年修訂)》 (中國證券監督管理委員會公告【2010】2號)) and Explanatory Announcement No. 1 on Information Disclosure by Companies Publicly Issuing Securities – Extraordinary Gain and Loss (the Announcement of China Securities Regulatory Commission [2008] No. 43) 《公開發行證券的公司信息披露解釋性公告第( 1號——非經常性損益》(中國證券監督管理委員會公告【2008】43號)) issued by China Securities Regulatory Commission were as follows:

			Earnings per share	(RMB/share)
		Weighted		Diluted
		average return	Basic earnings	earnings per
Item	Period	on net assets	per share	share
Net profit attributable to	January to	3.28%	0.13	0.13
ordinary shareholders of	March 2021
the Company	2020	13.80%	0.43	0.43
	2019	13.23%	0.36	0.36
	2018	13.85%	0.33	0.33
Net profit excluding	January to	3.24%	0.13	0.13
extraordinary	March 2021
gain and loss attributable	2020	13.29%	0.41	0.41
to the shareholders	2019	12.34%	0.36	0.36
	2018	13.09%	0.31	0.31

Note: The measurement and analysis is based on restated financial data for 2018, the same as below.

– I-37 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

2. Solvency and operating capacity indicators

The key solvency and operating capacity indicators of the Company for the latest three years and period are as follows:

Key indicator	2021.3.31	2020.12.31	2019.12.31	2018.12.31
Current ratio_(times)_	0.66	0.70	0.35	0.52
Quick ratio_(times)_	0.65	0.70	0.34	0.51
Gearing ratio (parent company)	41.61%	42.35%	58.92%	47.68%
Gearing ratio (combined)	65.84%	66.87%	74.42%	71.25%
	January to
Key indicator	March 2021	2020	2019	2018
Total assets turnover rate_(times)_	0.03	0.15	0.14	0.13
Accounts receivable turnover rate_(times)_	0.67	3.68	5.12	5.28
Inventories turnover rate_(times)_	6.60	29.19	32.78	27.92

(IV) Analysis of the financial position of the Company

1. Analysis of the assets composition

The assets composition of the Company during the Reporting Period is as below:

Unit: 0’000

Item Current assets: Cash at bank and on hand Bills receivable Accounts receivable Accounts receivables under financing Prepayments Other receivables Including: Dividends receivable Interest receivable Inventories Contract assets Non-current assets due within one year Other non-current assets Total current assets	2021.3.31 Amount Proportion 112,411.20 6.41% 2,685.00 0.15% 98,940.63 5.65% – – 1,953.20 0.11% 4,458.63 0.25% – – – – 3,695.37 0.21% 36,309.33 2.07% 13,811.16 0.79% 19,004.46 1.08% 293,268.98 16.73%	2020.12.31 Amount Proportion 160,806.18 9.22% 2,768.75 0.16% 78,570.00 4.50% 200.00 0.01% 1,513.90 0.09% 4,202.98 0.24% – – – – 3,718.41 0.21% 46,795.19 2.68% 13,519.36 0.77% 20,838.01 1.19% 332,932.77 19.08%	2019.12.31 Amount Proportion 43,214.09 3.16% – – 45,278.36 3.31% 1,003.63 0.07% 1,535.57 0.11% 2,277.99 0.17% – – – – 2,911.40 0.21% 39,556.44 2.89% 8,768.76 0.64% 18,172.46 1.33% 162,718.71 11.90%	2018.12.31 Amount Proportion 71,073.60 6.65% 1,632.98 0.15% 23,172.09 2.17% 0.00 0.00% 3,588.32 0.34% 6,727.85 0.63% – – 6.40 0.00% 2,009.44 0.19% 15,531.90 1.45% 7,170.42 0.67% 13,698.35 1.28% 144,604.95 13.53%	2018.12.31 Amount Proportion 71,073.60 6.65% 1,632.98 0.15% 23,172.09 2.17% 0.00 0.00% 3,588.32 0.34% 6,727.85 0.63% – – 6.40 0.00% 2,009.44 0.19% 15,531.90 1.45% 7,170.42 0.67% 13,698.35 1.28% 144,604.95 13.53%
					13.53%

– I-38 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Item Non-current assets: Long-term receivables Long-term equity investments Fixed assets Construction in progress Right-of-use assets Intangible assets Goodwill Long-term deferred expenses Deferred tax assets Other non-current assets Total non-current assets Total assets	2021.3.31 Amount Proportion 544,841.07 31.09% 6,847.56 0.39% 5,172.16 0.30% 21,568.88 1.23% 69.20 0.00% 764,929.08 43.64% 4,391.08 0.25% 22.64 0.00% 20,947.94 1.20% 90,639.41 5.17% 1,459,429.03 83.27% 1,752,698.01 100.00%	2020.12.31 Amount Proportion 523,964.06 30.03% 6,619.07 0.38% 5,317.43 0.30% 18,487.92 1.06% 78.15 0.00% 736,623.01 42.22% 4,391.08 0.25% 40.20 0.00% 20,753.61 1.19% 95,399.84 5.47% 1,411,674.37 80.92% 1,744,607.14 100.00%	2019.12.31 Amount Proportion 446,653.51 32.67% 6,290.80 0.46% 4,999.68 0.37% – – 146.49 0.01% 645,301.88 47.20% 4,391.08 0.32% 58.13 0.00% 20,342.71 1.49% 76,175.74 5.57% 1,204,360.03 88.10% 1,367,078.74 100.00%	2018.12.31 Amount Proportion 383,600.09 35.89% 3,122.28 0.29% 4,953.80 0.46% – – – – 441,124.64 41.27% 4,391.08 0.41% 130.00 0.01% 18,099.66 1.69% 68,874.15 6.44% 924,295.70 86.47% 1,068,900.65 100.00%	2018.12.31 Amount Proportion 383,600.09 35.89% 3,122.28 0.29% 4,953.80 0.46% – – – – 441,124.64 41.27% 4,391.08 0.41% 130.00 0.01% 18,099.66 1.69% 68,874.15 6.44% 924,295.70 86.47% 1,068,900.65 100.00%
					86.47%

					100.00%

At the end of each Reporting Period, the total assets of the Company amounted to RMB10,689,006,500, RMB13,670,787,400, RMB17,446,071,400 and RMB17,526,980,100 respectively, with the size of the Company’s assets showing an increasing trend in line with the Company’s business development.

As for the composition of assets, the Company’s assets were mainly non-current assets. As at the end of each Reporting Period, the Company’s non-current assets accounted for 86.47%, 88.10%, 80.92% and 83.27% of its total assets respectively. The Company’s non-current assets were mainly long-term receivables and intangible assets arising from BOT projects, which was in line with the Company’s model of engaging in the investment, operation, maintenance and technical consulting business of municipal waste-to-energy plants under BOT and other concessions.

At the end of each Reporting Period, the Company’s current assets accounted for 13.53%, 11.90%, 19.08% and 16.73% of its total assets respectively. The Company’s current assets mainly consist of cash at bank and on hand, accounts receivable, contract assets and non-current assets due within one year.

– I-39 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

2. Analysis of the liabilities composition

The liabilities composition of the Company during the Reporting Period was as below:

Unit: 0’000

Item Current liabilities: Short-term loans Accounts payable Contract liabilities Employee benefits payable Taxes payable Other payables Including: Dividends payable Interest payable Non-current liabilities due within one year Total current liabilities Non-current liabilities: Long-term loans Lease liabilities Long-term payables Deferred tax liabilities Deferred income Total non-current liabilities Total liabilities	2021.3.31 Amount Proportion 246,106.42 21.33% 112,428.66 9.74% 2,923.99 0.25% 3,485.98 0.30% 5,460.72 0.47% 6,548.75 0.57% – – – – 69,660.13 6.04% 446,614.66 38.70% 652,533.90 56.54% 44.51 0.00% 28,812.71 2.50% 15,661.94 1.36% 10,352.46 0.90% 707,405.52 61.30% 1,154,020.18 100.00%	2020.12.31 Amount Proportion 249,516.96 21.39% 129,119.37 11.07% 2,604.31 0.22% 9,555.20 0.82% 4,787.46 0.41% 10,159.89 0.87% – – – – 67,441.95 5.78% 473,185.14 40.56% 641,468.96 54.99% 51.57 0.00% 28,938.97 2.48% 15,091.57 1.29% 7,843.12 0.67% 693,394.18 59.44% 1,166,579.32 100.00%	2019.12.31 Amount Proportion 243,308.30 23.91% 121,289.80 11.92% 973.73 0.10% 8,595.46 0.84% 4,903.41 0.48% 14,964.51 1.47% 2,200.34 0.22% – – 70,504.90 6.93% 464,540.08 45.66% 505,702.22 49.70% 55.46 0.01% 29,731.45 2.92% 12,738.70 1.25% 4,659.26 0.46% 552,887.09 54.34% 1,017,427.17 100.00%	2018.12.31 Amount Proportion 85,400.00 11.21% 90,085.47 11.83% 614.59 0.08% 7,600.26 1.00% 4,324.66 0.57% 36,991.08 4.86% 1,414.12 0.19% – – 53,959.30 7.08% 278,975.36 36.63% 439,055.13 57.65% – – 30,509.83 4.01% 10,970.91 1.44% 2,129.70 0.28% 482,665.57 63.37% 761,640.94 100.00%	2018.12.31 Amount Proportion 85,400.00 11.21% 90,085.47 11.83% 614.59 0.08% 7,600.26 1.00% 4,324.66 0.57% 36,991.08 4.86% 1,414.12 0.19% – – 53,959.30 7.08% 278,975.36 36.63% 439,055.13 57.65% – – 30,509.83 4.01% 10,970.91 1.44% 2,129.70 0.28% 482,665.57 63.37% 761,640.94 100.00%
					36.63%

					57.65% – 4.01% 1.44% 0.28%
					63.37%

					100.00%

– I-40 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

At the end of each Reporting Period, the Company’s total liabilities amounted to RMB7,616,409,400, RMB10,174,271,700, RMB11,665,793,200 and RMB11,540,201,800 respectively.

As for the composition of liabilities, the Company’s liabilities were mainly non-current liabilities. At the end of each Reporting Period, the Company’s non-current liabilities accounted for 63.37%, 54.34%, 59.44% and 61.30% of its total liabilities respectively. The Company’s non-current liabilities were mainly long-term loans and long-term payables.

At the end of each Reporting Period, the Company’s current liabilities accounted for 36.63%, 45.66%, 40.56% and 38.70% of its total liabilities respectively. The Company’s current liabilities were mainly short-term loans, accounts payable and non-current liabilities due within one year.

3. Analysis of the profitability

The Company’s key profitability indicators during the Reporting Period were as follows:

Unit: 0’000

Item Operating income Operating costs Expenses for the period Net profit Net profit attributable to owners of the parent company Indicator Gross operating margin Expense ratio for the period	January to March 2021 Amount Year-over-year change 59,792.03 38.11% 24,461.08 25.60% 13,621.36 12.81% 19,230.68 102.37% 18,286.42 93.69% Ratio Change 59.09% 4.07% 22.78% –5.11%	2020 Amount Year-over-year change 227,761.88 29.97% 96,767.60 19.99% 61,510.13 27.81% 52,843.46 26.77% 50,338.55 20.98% Ratio Change 57.51% 3.53% 27.01% –0.46%	2019 Amount Year-over-year change 175,244.91 66.10% 80,646.83 72.10% 48,125.99 43.84% 41,685.46 52.80% 41,608.85 52.54% Ratio Change 53.98% –4.92% 27.46% –1.88%	2018 Amount 114,007.44 46,861.17 33,457.59 36,567.96 36,565.10

				Ratio 58.90% 29.35%

– I-41 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Note 1: The specific formulae for each indicator in the above table are as follows:

(1) Gross operating margin = (operating income - operating costs) / operating income
(2) Expenses for the period = selling expenses + administrative expenses + finance costs + research and development expenses
(3) Expense ratio for the period = expenses for the period / operating income

Note 2: January to March 2021 is compared to the same period in 2020

During the Reporting Period, the Company’s income and profit were mainly derived from operating municipal waste-to-energy plants under BOT model and other main business. With the continuous growth of the Company’s business, the Company has formed a market layout based on the Yangtze River Delta, Pearl River Delta and Bohai Rim and spanning across the country. As at 31 March 2021, the Company operated 28 domestic waste incineration power generation projects, and all these operating projects brought in a waste treatment capacity of 28,000 tonnes per day, ranking the Company top in the industry in terms of both number of projects and waste treatment capacity, and reinforcing its profitability further.

4. Analysis of the cash flows

The cash flows of the Company during the Reporting Period were as follows.

Unit: 0’000

	January to
Item	March 2021	2020	2019	2018
Net cash flow generated from
operating activities	2,100.47	23,003.51	–4,818.95	–22,271.67
Net cash flow generated from
investing activities	–51,801.25	–164,377.77	–226,481.05	–141,235.70
Net cash flow generated from
financing activities	856.46	265,284.19	203,079.44	160,032.81
Effect of foreign exchange rate
changes on cash and cash
equivalents	–0.65	188.53	21.06	343.16
Net increase in cash and cash
equivalents	–48,844.98	124,098.46	–28,199.51	–3,131.39

– I-42 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

During the Reporting Period, the Company’s cash flows generated from operating activities were mainly derived from the income generated from the operation of the municipal waste-to-energy business under the BOT model. During the Reporting Period, the Company’s net cash flows generated from operating activities were RMB-222,716,700, RMB-48,189,500, RMB230,035,100 and RMB21,004,700 respectively, with cash flows generated from operating activities continuing to improve in the last three years.

During the Reporting Period, the net cash flows generated from investing activities of the Company amounted to RMB-1,412,357,000, RMB-2,264,810,500, RMB-1,643,777,700 and RMB-518,012,500 respectively. The net cash flows generated from investing activities continued to be negative, mainly due to the growing scale of the Company’s BOT projects and the continued investments resulted in the formation of intangible assets.

During the Reporting Period, the net cash flows generated from the Company’s financing activities amounted to RMB1,600,328,100, RMB2,030,794,400, RMB2,652,841,900 and RMB8,564,600 respectively. During the Reporting Period, the net cash inflow from the Company’s financing activities continued to increase, mainly due to the Company’s continued increase in debt financing and the raising of RMB1,816,116,800 through a non-public issue of shares in 2020 to ensure the growth of its BOT business.

5. Analysis of the solvency

The Company’s key solvency indicators during the Reporting Period were as follows:

Indicator	2021.3.31	2020.12.31	2019.12.31	2018.12.31
Current ratio_(times)_	0.66	0.70	0.35	0.52
Quick ratio_(times)_	0.65	0.70	0.34	0.51
Gearing ratio (parent company)	41.61%	42.35%	58.92%	47.68%
Gearing ratio (combined)	65.84%	66.87%	74.42%	71.25%

In December 2020, the Company raised funds of RMB1,816,116,800 through a non-public offering to finance the phase II of a municipal waste-to-energy PPP project in Huiyang Environmental Park (惠陽環境園), Guangdong (廣東惠陽環境園生活垃圾焚燒二期PPP項目), the municipal waste-to-energy project in Jinsha County, Guizhou (貴州省金沙縣生活垃圾焚燒發電項目), the phase II of expansion of waste-to-energy power plant PPP project in Pingyang County, Zhejiang (浙江省平陽縣垃圾焚燒發電廠二期擴建 PPP項目), the municipal waste-to-energy project in Shishou City, Hubei (湖北石首市生活垃圾焚燒發電項目), the municipal waste-to-energy plant upgrading and reconstruction project in Yongjia County, Zhejiang (浙江永嘉縣垃圾焚燒發電廠改造提升工程項目) and the repayment of bank loans, which effectively

– I-43 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

improved the Company’s asset structure, reduced the Company’s liquidity risk and enhanced its ability to withstand risks and sustainable development.

6. Analysis of the operational capacity

The Company’s key operational capacity indicators during the Reporting Period were as follows:

	January to
Indicator	March 2021	2020	2019	2018
Total assets turnover rate_(times)_	0.03	0.15	0.14	0.13
Accounts receivable turnover rate
(times)	0.67	3.68	5.12	5.28
Inventories turnover rate_(times)_	6.60	29.19	32.78	27.92

Note 1: The specific formulae for each indicator in the above table are as follows:

(1) Total assets turnover rate = operating income / average total assets
(2) Accounts receivable turnover rate = operating income / average balance of accounts receivable
(3) Inventories turnover rate = operating cost / average balance of inventories

Note 2: Data for January to March 2021 are not annualised

In the last three years, the Company’s total asset turnover capacity has continued to improve and was in good condition. In the last three years, the Company’s accounts receivable turnover rate and inventory turnover rate fluctuated within the normal range, and the Company’s operating capacity of its main business was stable.

– I-44 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

IV. USE OF THE PROCEEDS FROM THE PUBLIC ISSUANCE OF CONVERTIBLE BONDS

The total proceeds from the public issuance of convertible corporate bonds will not exceed RMB2,390,000,000 (inclusive) and, after deducting the issue expenses, the proceeds will be used for the following projects:

Unit: 0’000

No. Project name 1 Dengfeng Project 2 Enshi Project 3 Shuozhou Project 4 Wuhan Phase II Project 5 Huludao Power Generation Project 6 Replenishment of the liquidity and repayment of bank loans Total	Total Investment amount 39,920.00 69,000.00 66,015.15 69,985.00 67,471.00 60,000.00 372,391.15	Amount of Proceeds raised to be used 15,000.00 40,000.00 44,000.00 48,000.00 32,000.00 60,000.00
		239,000.00

Prior to the receipt of the proceeds from the Issuance, the Company will first make investment with its self-raised funds depending on the progress of the proceeds funded projects, and will replace such funds according to the relevant specified procedures after the receipt of the proceeds.

If the actual amount of proceeds (after deducting the issue expenses) is less than the amount of proceeds to be invested in the abovementioned projects, the Company will, within the scope of ultimately determined proceeds funded projects, adjust and ultimately decide the specific proceeds funded projects, priority, and specific amount of investment in each project taking into account the Company’s operation and the construction progress of projects. The insufficient funds that cannot be covered by the proceeds will be raised by the Company itself.

– I-45 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

V. DISTRIBUTION OF THE COMPANY’S PROFITS

(I) Existing profit distribution policy of the Company

The requirements on profit distribution policy of the existing effective Articles of Association of the Company are as follows:

“Article 218 Profit distribution policies and decision-making mechanism

(1) Any profit distribution of the Company shall not exceed the amount of accumulated distributable profits and shall not adversely affect the continued operation of the Company. The Company may distribute interim dividends according to its profit and capital requirements.
(2) Terms and policies of cash dividends

The Company shall give priority to the payment of cash dividends. If no cash dividends are available, no scrip dividends shall be declared for the same year. Any cash dividends proposed shall satisfy the following criteria: The current profit and accumulated retained earnings of the Company shall be positive and its cash flow shall be sufficient to support the continued operation and long-term development of the Company; the profit to be distributed in cash shall not be less than 10% of the distributable profits of the year, and the cumulative profit distributed in cash in any three consecutive financial years shall not be less than 30% of the average distributable profit of the Company for such three years.

With a view to providing investment returns to its shareholders and sharing its corporate values, the Company may declare the payment of scrip dividends in addition to the cash dividends, taking into account practical and reasonable factors such as the growth of the Company, dilution of net asset value per share and the maintenance of an adequate reflection of its share capital on its share price.

Where the Company records surplus for consecutive years, each cash dividend shall not be more than 24 months apart.

– I-46 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

The board of directors shall distinguish the following situations and formulate/diversified cash dividend distribution proposals in accordance with requirements of these Articles of Association and comprehensively take into account of the Company’s industry, stage of development, business model, and profitability and other factors such as whether there are significant capital expenditure arrangements:

If the Company is at a mature stage of development and has no significant capital expenditure arrangements, the proportion of cash dividends should be at least 80% in the profit distribution;
If the Company is at a mature stage of development and has significant capital expenditure arrangements, the proportion of cash dividends should be at least 40% in the profit distribution;
If the Company is at a development stage and has significant capital expenditure arrangements, the proportion of cash dividends should be at least 20% in the profit distribution.

When it is difficult to assess the Company’s stage of development but there are significant capital expenditure arrangements, the profit distribution may be determined in accordance with the foregoing provisions.

Significant capital expenditure arrangements are transactions involving, among other things, acquisition of assets, external investment and investment in fixed assets contemplated by the Company and settled in cash in the following 12 months with expenditure amounting to or exceeding an aggregate of 30% of the latest audited total assets, or exceeding 50% of the latest audited net assets and RMB50 million, in each case except for project investments through raised capital.

(3) Decision-making mechanism

Particulars of any profit distribution shall be determined by the board of directors in accordance with the requirements of these Articles of Association, the Company’s profits, capital supply and requirements and shareholders’ return as approved by a simple majority at the supervisory committee and as proposed for approval at a general meeting.

The board of directors shall specify the use of retained earnings and, where scrip dividends are to be distributed, the reasonableness and feasibility thereof in any profit distribution proposal. In the event that the board of directors does not declare any cash dividend in its annual profit distribution plan in accordance with relevant requirements

– I-47 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

herein, the board shall provide reasons for not declaring the cash dividend or declaring a dividend below the stipulated percentage and the specific use of the retained profits and expected return thereon, which shall be opined by independent directors and proposed at a general meeting for shareholders’ approval. Such information shall be disclosed in the announcement on results of the meeting of the board of directors of the Company and periodic reports.

Independent directors may collect opinions from minority shareholders, propose dividend distribution proposals and directly submit it to the board of directors for approval.

The Company shall elicit opinion of investors on profit distribution through effective means such as investors’ interaction platforms, the website of the Company, telephone, facsimile and electronic mail. Such opinion shall be summarized by the secretary to the board of directors and provided at the meeting thereof considering a proposal for profit distribution.

When considering a proposal for profit distribution at a board meeting, such proposal shall be passed by two-thirds of independent directors by a separate voting. By considering a cash dividend proposal, the board of directors shall earnestly research and determine the timing, conditions, minimum proportion, adjustment conditions and other decision-making procedures in relation thereto. The independent directors shall express clear opinions before such proposals are considered in a board meeting. Such proposals shall be proposed at a general meeting upon being approved by the board of directors.

Before a cash dividend proposal is considered at a shareholders’ meeting, the Company shall communicate with shareholders, especially minority shareholders through various channels to listen to the opinion and requests of minority shareholders and give timely responses to issues which minority shareholders are concerned about. When convening a general meeting to consider a proposal for profit distribution, online voting shall be provided in addition to the on-site meeting for the convenience of minority shareholders. A proposal for profit distribution shall be passed by over half of the shareholders present (including their proxies). Upon passage of the resolution on such proposal at the general meeting, the Company’s board of directors shall complete the dividend payout within two months after the general meeting is held.

If, due to the Company’s operating conditions, investment planning and needs for long-term development or changes in the Company’s external operating environment, it is necessary to adjust the profit distribution policy, the adjusted profit distribution policy should focus on protecting

– I-48 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

the rights and interests of shareholders and shall not violate relevant laws and regulations, and provisions of regulatory documents and these Articles of Association. The proposal to adjust the profit distribution policy, together with opinions expressed by independent directors, will be considered by the board of directors before submission to the general meeting of the Company for approval, and will be passed by more than two-thirds of the voting rights held by shareholders attending the general meeting. Regular reports shall explain in details whether the conditions for and the process of such policy adjustment comply with relevant requirements.

Article 219 The Company may distribute dividends in either or both of the following forms:

(1) cash;
(2) shares.

Any cash dividends and other payments to domestic shareholders shall be paid in RMB. Any cash dividends and payments to foreign shareholders will be denominated and declared in RMB and paid in foreign currency. The Company will, according to regulations on foreign exchange, deal with foreign currency matters for cash dividends and other payments to foreign shareholders.

Unless otherwise provided by the relevant laws and regulations, for the payment of cash dividends and other payments in foreign currency, the applicable exchange rates shall be the average sell price announced by the People’s Bank of China in one calendar week immediately preceding the declaration date of such cash dividends and other payments.

Article 220 Any amount paid up in advance of calls on any share of the Company may carry interest but shall not entitle the holder of the share to participate in respect thereof in a dividend subsequently declared.

Article 221 The Company shall appoint a receiving agent for holders of overseas listed foreign shares to collect on behalf of the relevant shareholders the dividends distributed and other funds payable in respect of overseas listed foreign shares.

The receiving agent appointed by the Company shall meet the requirements of the laws of the place(s), or the relevant regulations of the stock exchange(s), where the Company’s shares are listed.

The receiving agent appointed by the Company for shareholders of overseas listed foreign shares listed on the Stock Exchange shall be a trust company registered under the Trustee Ordinance of Hong Kong.

– I-49 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

Subject to relevant PRC laws and regulations, the Company may exercise the power to retain unclaimed dividends, but that power shall not be exercised until the applicable limitations period applicable to claim of such dividends expires.

The Company has the right to cease sending dividend warrants by post to certain holders of overseas listed foreign shares, provided that such right may not be exercised until such warrants have been so left uncashed on two consecutive occasions. However, such right may be exercised after the first occasion on which such a warrant is returned undelivered.

The Company has the right to sell the shares held by a holder of overseas listed foreign shares who is untraceable in such manner as the Board shall think fit under the following circumstances:

(1) during a period of 12 years at least three dividends in respect of the shares in question have become payable and no dividend during that period has been claimed; and
(2) on expiry of such 12 years the Company gives notice of its intention to sell the shares by way of an advertisement published in the newspapers and notifies the stock exchange where such shares are listed of such intention.

Article 222 After the general meeting has resolved on the plan to allocate profits, the board of directors shall complete the distribution of dividends (or bonus shares) within 2 months of the general meeting.

Article 223 The Company will give full consideration to the interests of shareholders and adopt a reasonable profit distribution policy according to business situation and market environment. The Company’s profit distribution policy shall to the greatest extent maintain continuity and stability, and give priority to cash dividends, with the specific dividend rate to be passed with a resolution at the general meeting in accordance with relevant laws and regulations.”

(II) The Company’s profit distribution for the last three years

The Company’s profit distribution plans for 2018, 2019 and 2020 were as follows:

Reporting period Profit distribution plan 2018 To distribute cash dividends of RMB1 (tax included) per ten shares to all Shareholders based on the total share capital on the share-based equity registration date without conversion of capital reserve into share capital and issuance of bonus shares

– I-50 –

APPENDIX I

PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

2019

To distribute cash dividends of RMB0.1 (tax included) per share to all Shareholders based on the total share capital on the share-based equity registration date without conversion of capital reserve into share capital and issuance of bonus shares

2020

To distribute cash dividends of RMB0.2 (before tax) per share to all Shareholders based on the total share capital on the share-based equity registration date without conversion of capital reserve into share capital and issuance of bonus shares

The Company’s distribution of profits for 2018, 2019 and 2020 was as follows.

Unit: 0’000

Year of distributing dividends 2020 2019 Cash dividends (tax inclusive) 27,868.80 11,612.00 Net profit attributable to owners of the parent company 50,338.55 41,608.85 Accumulated cash dividends for the last three years Average annual attributable profit for the last three years Accumulated cash distributable profit as a percentage of average annual distributable profit for the last three years	2018 11,612.00 36,565.10 51,092.80 42,837.50
	119.27%

Year of distributing dividends
2020
2019
Cash dividends (tax inclusive)
27,868.80
11,612.00
Net profit attributable to
owners of the parent company
50,338.55
41,608.85
Accumulated cash dividends for
the last three years
Average annual attributable
profit for the last three years
Accumulated cash
distributable profit as a
percentage of average annual
distributable profit for the
last three years

2018
11,612.00
36,565.10
51,092.80
42,837.50

119.27%

Note: The measurement and analysis is based on restated financial data for 2018.

The accumulated profits distributed in cash by the Company in the last three years totalled RMB510,928,000, representing 119.27% of the annual average distributable profits of RMB428,375,000 achieved in the last three years, which was in compliance with the relevant provisions of the Administrative Measures for the Issuance of Securities by Listed Companies 《上市公司證券發行管理辦法》( ), the Decision on Amendments to Certain Regulations on Cash Dividends for Listed Companies 《關於修改上市公司現金分紅若干規定的決定》( ) and the Articles of Association.

– I-51 –

APPENDIX I PROPOSAL OF THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

(III) Arrangements for the use of undistributed profits of the Company in the last three years

In order to maintain the sustainable development of the Company, the retained undistributed profits of the Company are mainly used as part of the Company’s business development funds to finance the Company’s daily production and operation, expand the scale of its existing business, promote the Company’s sustainable development and ultimately maximise the interests of Shareholders.

– I-52 –

APPENDIX II

FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

This English version is for reference only. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail. Dynagreen Environmental Protection Group Co., Ltd. Feasibility Report on the Use of Proceeds from the Public Issuance of Convertible Corporate Bonds

To implement the overall corporate development strategy, respond to national policy trends, expand and strengthen the core business and further enhance the core competitiveness, Dynagreen Environmental Protection Group Co., Ltd. (the “ Company ”) proposes to raise funds through public issuance of A Share convertible corporate bonds (the “ Issuance ” or the “ Convertible Corporate Bonds ”), with the proceeds after deducting the issue expenses to be used for the municipal waste-to-energy project in Dengfeng (“ Dengfeng Project ”), the municipal solid waste-to-energy project in Enshi (“ Enshi Project ”), Nanshan enviro-energy project (including the municipal solid waste-to-energy project and the kitchen waste treatment project) in Shuozhou (“ Shuozhou Project ”), Phase II of Xinghuo Waste-to-Energy Plant project in Wuhan (“ Wuhan Phase II Project ”), the municipal waste-to-energy project of Huludao East Waste-to-Energy Power Plant (“ Huludao Power Generation Project ”), and replenishment of working capital and repayment of bank loans. The feasibility analysis conducted by the Company on the use of proceeds from the Convertible Corporate Bonds is set out below:

– II-1 –

APPENDIX II

FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

I. PLAN FOR THE USE OF PROCEEDS FROM THE PUBLIC ISSUANCE OF CONVERTIBLE CORPORATE BONDS

Total proceeds from the Convertible Corporate Bonds will not exceed RMB2.39 billion (inclusive of RMB2.39 billion), which, after deducting the issue expenses, will be used for Dengfeng Project, Enshi Project, Shuozhou Project, Wuhan Phase II Project, Huludao Power Generation Project, and replenishment of working capital and repayment of bank loans. The feasibility analysis conducted by the Company on the use of proceeds from the Convertible Corporate Bonds is set out below:

Unit: RMB0’000

No. Project name 1 Dengfeng Project 2 Enshi Project 3 Shuozhou Project 4 Wuhan Phase II Project 5 Huludao Power Generation Project 6 Replenishment of working capital and repayment of bank loans Total	Total amount of investment 39,920.00 69,000.00 66,015.15 69,985.00 67,471.00 60,000.00 372,391.15	Amount of proceeds proposed to be used 15,000.00 40,000.00 44,000.00 48,000.00 32,000.00 60,000.00
		239,000.00

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

If the actual amount of proceeds (after deducting the issue expenses) is less than the amount of proceeds to be invested in the abovementioned projects, the Company will, within the scope of ultimately determined proceeds funded projects, adjust and ultimately decide the specific proceeds funded projects, priority, and specific amount of investment in each project according to the actual amount of proceeds and taking into account the Company’s operation and the construction progress of the projects. The insufficient funds that cannot be covered by the proceeds will be raised by the Company itself.

II. BACKGROUND AND NECESSITY OF PROCEEDS FUNDED PROJECTS

(i) Background of Project Investment

1. The 14th Five-Year Plan encourages municipal solid waste sorting and waste incineration

The Plan on the Development of Municipal Solid Waste Soring and Treatment Facilities for the 14th Five-Year Plan Period 《「十四五」城鎮生活( 垃圾分類和處理設施發展規劃》) (the “ 14th Five-Year Plan ”) mentions that municipal solid waste sorting and treatment facilities are an integral part of a city’s environmental infrastructures and the fundamental guarantee for the implementation of waste sorting system and the achievement of waste minimization, waste recycling and environmentally sound management. The plan states that by the end of 2025, 46 key cities, including municipalities, provincial capitals and cities specially designated in the state plan, will further improve their municipal solid waste sorting and treatment capacity; prefecture cities will basically establish the municipal solid waste sorting and treatment system based on practical conditions; counties in Beijing-Tianjin-Hebei Region and its surrounding areas, Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, Yangtze River Economic Belt, Yellow River Valley and ecological civilization pilot zones, where conditions mature, will basically establish the municipal solid waste sorting and treatment system; other regions are encouraged to actively expand the coverage of waste sorting and treatment facilities. The plan supports established towns to accelerate the improvement of facilities for collection, transport, environmentally sound management of municipal solid wastes. In terms of waste incineration capacity, by the end of 2025, the national municipal solid waste incineration capacity will reach about 800,000 tons per day, and the urban waste incineration capacity will account for about 65% of the overall capacity. The 14th Five-Year Plan states that policy-level support will be offered to qualified enterprises to engage in relevant projects with proceeds from issuance of corporate bonds, debentures and asset-backed securities.

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

2. Waste incineration power generation benefits from industrial policies and taxation policies

(1) Industrial policies

In June 2018, the CPC Central Committee and the State Council released the Opinions on Comprehensively Strengthening Ecological and Environmental Protection and Promoting Triumph in the Uphill Battle for Prevention and Control of Pollution 《關於全面加強生態環境( 保護堅決打好污染防治攻堅戰的意見》), which explicitly proposed in the section headed “Accelerating the Development of Waste Sorting and Treatment” that “waste recycling will be promoted, and vigorous efforts will be made to develop waste incineration power generation”.

In December 2018, the General Office of the State Council released the Work Plan for the Pilot Program of “Zero-Waste City” Building (Guo Ban Fa [2018] No. 128) 《「無廢城市」建設試點工作方案》( (國辦發 [2018]128號）), which proposed the “zero-waste city” management concept and required that waste recycling including reuse of recyclable wastes, waste incineration power generation and biological treatment should be promoted.

In July 2020, the National Development and Reform Commission, the Ministry of Housing and Urban-Rural Development and the Ministry of Ecology and Environment jointly released the Implementation Plan to Bolster Areas of Weakness in Municipal Solid Waste Sorting and Treatment Facilities (《城鎮生活垃圾分類和處理設施補短板強弱項實施方案》). The document proposed that vigorous efforts should be made to improve the waste incineration capacity; areas disposing municipal solid waste exceeding 300 tons per day should accelerate the development of waste treatment that takes incineration as the principal way; waste incineration facilities should be built with moderate forward thinking to match the amount of municipal solid waste to be disposed of; “zero landfill” of raw municipal solid wastes will be basically achieved by 2023.

In March 2021, the Outline of the 14th Five-Year Plan for National Economic and Social Development and the Long-Range Objectives Through the Year 2035 stated that efforts will be made to comprehensively improve the level of environmental infrastructure and build a domestic waste treatment system for differentiated storage, collection, transport and treatment.

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

(2) Taxation policies

In March 2012, the National Development and Reform Commission released the Notice of the National Development and Reform Commission on Improving the Tariff Policy for Waste Incineration Power Generation (Fa Gai Jia Ge [2012] No. 801) (《國家發展改革委關於完善垃圾焚燒發電價格政策的通知》(發改價格[2012]801號）). The notice further improved the tariff policy for waste incineration power generation and required that “waste incineration power generation projects that take municipal solid wastes as raw materials should settle the price by translating the incoming waste disposal to on-grid energy, with the translation of one ton of municipal solid waste to on-grid energy tentatively being 280 KWH, and exercise the national unified benchmark tariff for waste incineration power generation of RMB0.65 per KWH (inclusive of tax); other on-grid energies exercise the local feed-in tariff for similar coal-fired power generating units.”

According to the Catalogue of Value-Added Tax Preferences for Products and Labor Services Involving the Comprehensive Utilization of Resources (Cai Shui [2015] No. 78) 《資源綜合利用產品和勞務增值稅( 優惠目錄》(財稅[2015]78號）), enterprises that take wastes as materials for electric power or thermal power generation, use wastes as over 80% of power generation materials and meet the emission standards may be recognized as state-encouraged enterprises that comprehensively utilize resources and may enjoy the preferential VAT policy of immediate refund upon payment. 70 percent of value-added taxes paid in respect of waste disposal services enjoy the policy of immediate refund upon payment. According to the Enterprise Income Tax Law and its implementation regulation, incomes from environmental protection, energy and water conservation projects that meet the required conditions are exempt from enterprise income taxes for the first year to third year from the taxable year when such projects record the first operating income and enjoy the preferential policy of halved levy in the fourth year to sixth year.

The State’s industrial policies and taxation policies on waste incineration power generation have greatly supported the rapid development of waste incineration power generation enterprises.

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

3. Domestic waste incineration technologies continue to improve

Municipal solid waste incineration power generation is a complicated and systematically integrated technology program, which comprises a series of sophisticated system technologies including waste incineration, waste heat power generation, flue-gas treatment, leachate treatment and residue treatment.

China witnesses significant improvement of municipal solid waste incineration technologies, as a group of domestic leading enterprises and research and development institutes continuously upgrade and innovate the technologies according to the characteristics of municipal solid wastes in China, which is on the basis of absorbing advanced waste incineration technologies of other counties, and some enterprises with strong technical strength accumulate a series of mature technologies with proprietary intellectual property rights in process and technology, and equipment development and manufacturing. As China achieves continuous development of waste incineration research and development strength, waste incineration equipment achieves increasingly higher domestication, which lays a solid foundation for the development of waste incineration power generation industry in China.

(ii) Necessity of the Projects

1. Requirements of developing the circular economy and improving social benefits

The level of municipal solid waste treatment is a mark of the civilization, economic strength and technical strength of a city and a mirror of the environmental awareness and modern consciousness of city administrators. Municipal solid waste management and pollution prevention and control have become an important part of urban environmental protection.

Proceeds funded projects use municipal solid wastes as raw materials and achieve waste minimization via incineration, and the heat produced from incineration can generate power and realize waste recycling. The construction and operation of such proceeds funded projects can effectively solve the problem of waste pollution and resource recycling, generate considerable economic and social benefits, and therefore achieve a harmony of material circulation between the economic system and the natural system.

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

2. Requirements of improving corporate competitiveness

The Company is one of the first domestic enterprises that explore the industrialization of waste treatment and also one of the first domestic enterprises that focus on improving and further developing advanced international incineration power generation technologies. Since its establishment in 2000, the Company has accumulated extensive experience in project investment, construction and operation management, has been recognized as “China’s 10 Most Influential Enterprises of Solid Waste Treatment” for 11 consecutive years, and has accumulated abundant customer resources and built a good reputation.

In the context of flourishing environmental protection industry, the Company bases on its own advantages, actively develops new projects and achieves remarkable success in market development. After these proceeds funded projects are put into operation, the Company will witness greater municipal solid waste treatment business scale and stronger regional radiation capability, and consolidate its market position.

III. FEASIBILITY OF PROCEEDS FUNDED PROJECTS

(i) Waste incineration industry has considerable development potential

As the urbanization develops continuously, the amount of municipal solid waste to be collected and disposed of will increase significantly. In 2020, China had an urban population of 902,000,000; from 2008 to 2020, the urbanization rate grew from 46.99% to 63.89%. According to the estimate of China’s National Health Commission, China’s urbanization rate will reach about 70% in 2030; further promotion of urbanization will certainly boost the sustainable growth of waste treatment demands, and the market of environmentally sound management of municipal solid wastes is expected to develop continuously.

According to China Urban Construction Statistical Yearbook 《中國城市建設( 統計年鑒》), the amount of municipal solid waste under China’s environmentally sound management reached 240,000,000 tons in 2019, including 122,000,000 tons through incineration, which accounted for approximately 51% of the overall amount; the daily municipal solid waste incineration capacity was 457,600 tons in 2019. Compared with the targets of 14th Five-Year Plan, the proportion of waste incineration being 65% and the daily incineration capacity being 800,000 tons, the aforesaid data indicate a considerable growth potential and space.

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

(ii) Proceeds funded projects align with the Company’s current business capability

Since its establishment, the Company has been promoting proactive market development strategies and vigorously expanding regional markets. With the focus on the broad market of Yangtze River Delta, Pearl River Delta and Bohai Economic Rim, where the economy is more developed, the Company extends its businesses to Central and Western China, including Anhui, Hubei, Guizhou, Shanxi, Guangxi, Jiangxi, Hunan, Shaanxi, Henan and Sichuan, and builds a market layout that bases on Yangtze River Delta, Pearl River Delta and Bohai Rim and radiates to the whole country.

Proceeds funded projects align with the Company’s current business scale, financial position, technical strength and management capability, will further expand its capacity, rapidly improve its market share, and strengthen the profitability. The Company has the business capability to implement proceeds funded projects.

(iii) The Company has talents and technical reserves to guarantee project implementation

The Company’s management team has been engaging in business management, market development, technology development and construction and operation of waste-to-energy plants for years. With the combination of internal selection, early cultivation and external talent recruitment, the Company will provide managerial personnel, production personnel and relevant operation personnel who are experienced, well trained and extremely skilled to implement proceeds funded projects, so as to ensure smooth progress of these projects. The Company satisfies the talent requirement for implementing these proceeds funded projects.

The Company has been emphasizing product research and development, and making technology development and process innovation as the focus of its work. By upholding the idea that research and development serves production and growth and setting commercialization of practical technologies as the main purpose of technology development, the Company continuously advances technology and service innovation and upgrading to adapt to market changes and demands. The “multiple drive expeller grate waste incinerator” technology independently developed by the Company was selected by the Ministry of Housing and Urban-Rural Development as a core technology to promote for use during the “11th Five-Year Plan” period, and was successfully listed in the 2019 Directory of Key Environmental Protection Practical Technologies and Demonstration Projects 《( 2019年重點環境保護實用技術及示範工程名錄》) by China Association of Environmental Protection Industry. “A multiple drive expeller grate waste incinerator with an online warning and control system of dioxin” independently

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

developed by the Company was awarded the second prize for technical progress for 2019 by China Association of Environmental Protection Industry. Many projects of the Company were recognized by multiple honors, including “National Model Project for Use of Environmental Protection Technologies” (「使用環保技術的國家模範項目」), “Quality Chinese Project for Electricity Engineering Award” (「中國電力優質工程獎」), “National Quality Project Award” (「國家優質工程獎」) and “Luban Prize” (「魯班獎」). The Company satisfies the technology requirement for implementing proceeds funded projects as it continues to increase investments in research and development and the accumulation of core technologies lays a technical foundation for such projects.

IV. BASIC INFORMATION OF PROCEEDS FUNDED PROJECTS

(i) Dengfeng Project

1. Basic information

Project name: Dengfeng Municipal Waste-to-Energy Project Location: Chatinggou Village, Gaocheng Town, Dengfeng City, Zhengzhou, Henan Province Entity: Dengfeng Dynagreen Renewable Energy Co., Ltd. Construction designed scale of municipal solid waste incineration scope: of 800 tons/day, adopting 2×400 tons/day mechanical grate incinerators and 1×18 MW steam turbine generator unit. Construction 2 years period:

2. Investment estimate

The estimated total investment is RMB399,200,000. The proceeds to be utilized are RMB150,000,000, which will be all used as the capital expenditure in the project construction.

3. Economic benefit analysis

By estimate, the financial internal rate of return of Dengfeng Project is 5.48%, indicating moderately good economic benefits.

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

4. Approval procedures performed

(1) Project approval

The project approval document “Zheng Fa Gai Shen Pi [2019] No. 3” issued by Zhengzhou Municipal Development and Reform Commission has been obtained in January 2019.

(2) Environmental assessment approval

The environmental assessment approval document “Zheng Huan Shen [2020] No. 17” issued by Environmental Protection Bureau of Zhengzhou Municipality has been obtained in April 2020.

(ii) Enshi Project

1. Basic information

Project name: Enshi Municipal Solid Waste-to-Energy Project Location: Yantangwan, Gaoqiaoba Village, Liujiaoting Sub-district, Enshi City, Hubei Province Entity: Enshi Green Power Renewable Energy Co., Ltd. Construction designed scale of municipal solid waste incineration scope: of 1,200 tons/day, adopting 2×600 tons/day mechanical grate incinerators and 1×25 MW steam turbine generator unit. Construction 2 years period:

2. Investment estimate

The estimated total investment is RMB690,000,000. The proceeds to be utilized are RMB400,000,000, which will be all used as the capital expenditure in the project construction.

3. Economic benefit analysis

By estimate, the financial internal rate of return of Enshi Project is 6.05%, indicating moderately good economic benefits.

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

4. Approval procedures performed

(1) Project approval

The project approval document “En Shi Fa Gai Shen Pi [2020] No. 276” issued by Enshi Municipal Development and Reform Commission has been obtained in June 2020.

(2) Environmental assessment approval

The environmental assessment approval document “En Zhou Huan Shen [2020] No. 26” issued by Enshi Ecological Environment Bureau has been obtained in October 2020.

(iii) Shuozhou Project

1. Basic information

Project name: Shuozhou Nanshan Enviro-Energy Project (including the Municipal Solid Waste-to-Energy Project and the Kitchen Waste Treatment Project) Location: South of Zhangjiazui Village and East of Haojiagou Village, Shalenghe Town, Shuocheng District, Shuozhou City, Shanxi Province Entity: Shuozhou Dynagreen Nanshan Environmental Energy Co., Ltd. Construction designed scale of municipal solid waste incineration scope: of 800 tons/day, adopting 2×400 tons/day mechanical grate incinerators and 1×18 MW steam turbine generator unit.

Construction 2 years period:

2. Investment estimate

The estimated total investment is RMB660,151,500. The proceeds to be utilized are RMB440,000,000, which will be all used as the capital expenditure in the project construction.

3. Economic benefit analysis

By estimate, the financial internal rate of return of Shuozhou Project is 5.81%, indicating moderately good economic benefits.

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

4. Approval procedures performed

(1) Project approval

The project approval document “Shuo Fa Gai Shen Pi [2019] No. 84” issued by Shuozhou Municipal Development and Reform Commission has been obtained in September 2019.

(2) Environmental assessment approval

The environmental assessment approval document “Shuo Shen Pi Han [2021] No. 93” issued by Shuozhou Municipal Administration Services Management Development has been obtained in July 2021.

(iv) Wuhan Phase II Project

1. Basic information

Project name: Phase II of Wuhan Xinghuo Waste-to-Energy Plant Project Location: 500 meters in the Southwest of the intersection of Bajifu Avenue and Lvse Road (currently South of Wuhan Xinghuo Waste-to-Energy Plant), Qingshan District, Wuhan City Entity: Wuhan Dynagreen Renewable Energy Co., Ltd. Construction designed scale of municipal solid waste incineration scope: of 1,200 tons/day, adopting 2×600 tons/day mechanical grate incinerators and 1×30 MW steam turbine generator unit. Construction 1.5 years period:

2. Investment estimate

The estimated total investment is RMB699,850,000. The proceeds to be utilized are RMB480,000,000, which will be all used as the capital expenditure in the project construction.

3. Economic benefit analysis

By estimate, the financial internal rate of return of Wuhan Phase II Project is 6.41%, indicating moderately good economic benefits.

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

4. Approval procedures performed

(1) Project approval

The project approval document “Qing Shen Pi He Zhun [2020] No. 10” issued by Qingshan District’s Administrative Examination and Approval Service Bureau of Wuhan has been obtained in November 2020.

(2) Environmental assessment approval

The environmental assessment approval document “Wu Huan Guan [2021] No. 40” issued by Wuhan Municipal Ecological Environment Bureau has been obtained in May 2021.

(v) Huludao Power Generation Project

1. Basic information

Project name: Municipal Waste-to-Energy Project of Huludao East Waste-to-Energy Power Plant Location: Southwest of Xintun Village, Tashan Town, Lianshan District, Huludao City, Liaoning Province Entity: Huludao Dynagreen Environment Co., Ltd. Construction designed scale of municipal solid waste incineration scope: of 1,000 tons/day, adopting 2×500 tons/day mechanical grate incinerators and 1×25 MW steam turbine generator unit. Construction 2 years period:

2. Investment estimate

The estimated total investment is RMB674,710,000. The proceeds to be utilized are RMB320,000,000, which will be all used as the capital expenditure in the project construction.

3. Economic benefit analysis

By estimate, the financial internal rate of return of Huludao Power Generation Project is 6.10%, indicating moderately good economic benefits.

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

4. Approval procedures performed

(1) Project approval

The project approval document “Hu Fa Gai Fa [2019] No. 98” issued by Huludao Municipal Commission of Development and Reform has been obtained in May 2019.

(2) Environmental assessment approval

The environmental assessment approval document “Hu Huan Shen [2019] No. 33” issued by Ecological Environment Bureau of Huludao Municipality has been obtained in October 2019.

(vi) Replenishment of working capital and repayment of bank loans

1. Project overview

The Company proposes to use RMB600,000,000 of proceeds for replenishment of working capital and repayment of bank loans to satisfy its business development needs.

2. Necessity of the project

Benefiting from the rapid growth of demands for environmentally sound management of wastes and the support of relevant policies, the Company witnessed continuous expansion of business scale and year-on-year growth of revenues in recent years. In the future, the Company will pursue the mission of “creating a better living environment”, plough deeply in the waste incineration power generation industry and develop new projects through multiple channels to consolidate its industry leading position. As the number of construction projects and operation projects increases, the Company’s production and sales scale will expand continuously, which will demand more funds to satisfy the working capital requirement.

As at the end of March 2021, total assets recorded in the consolidated financial statements of the Company amounted to RMB17.527 billion; total liabilities were RMB11.540 billion; the gearing ratio was 65.84%. Among these figures, the balances of short-term loans, long-term loans and non-current liabilities due within one year totaled RMB9.683 billion, indicating that the Company has a large amount of interest-bearing debt and a relatively higher debt repayment pressure.

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

Therefore, the replenishment of working capital and repayment of bank loans will help the Company to effectively relieve the financial pressure, strengthen the competitiveness, reinforce the risk resistance ability, and is necessary and reasonable.

V. IMPACT OF THE ISSUANCE OF CONVERTIBLE CORPORATE BONDS ON OPERATION MANAGEMENT AND FINANCIAL POSITION OF THE COMPANY

(i) Impact of the Issuance of Convertible Corporate Bonds on the operation management of the Company

Proceeds funded projects include Dengfeng Project, Enshi Project, Shuozhou Project, Wuhan Phase II Project, Huludao Power Generation Project and replenishment of working capital and repayment of bank loans. These proceeds funded projects are closely related to the Company’s core business, waste incineration power generation, comply with relevant industrial policies released by the State, and have comparatively great development prospect and economic benefits.

The Issuance is conducive to further improving the Company’s profitability, consolidating its market position and strengthening its competitiveness, and lays a solid foundation for its sustainable development.

(ii) Impact of the Issuance of Convertible Corporate Bonds on the financial position of the Company

When the Issuance of Convertible Corporate Bonds is completed, the amounts of total assets and liabilities will increase in the short term. During the term of Convertible Corporate Bonds, the Company shall pay the interests of unconverted Convertible Corporate Bonds at the predetermined coupon rate. However, the proceeds funded projects will gradually bring economic benefits to the Company, and, normally, the profit growth boosted by the Company’s utilization of proceeds from Convertible Corporate Bonds will exceed the payable interests of Convertible Corporate Bonds. The Company’s revenue and profit levels will improve as the proceeds funded projects are implemented.

When part of or all the Convertible Corporate Bonds held by investors are converted into shares, the total share capital and net asset of the Company will increase to some extent, and shareholdings of original shareholders, return on equity and earnings per share of the Company will be diluted to some degree. In addition, the Convertible Corporate Bonds contain terms of downward adjustment to conversion price. If the terms are triggered, the Company may apply for downward adjustment to conversion price, which may lead to the increase in the total of new share capital resulted from the conversion of Convertible Corporate Bonds, and therefore enlarge the potential dilution effect of the conversion of Convertible Corporate Bonds publicly issued on the Company’s original holders of

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FEASIBILITY REPORT ON THE USE OF PROCEEDS FROM THE PROPOSED ISSUANCE OF CONVERTIBLE CORPORATE BONDS

original shares. Hence, the current returns following the public issuance of Convertible Corporate Bonds is subject to the dilution risk.

VI. CONCLUSION OF FEASIBILITY ANALYSIS

Based on the foregoing, the proceeds funded projects are out of the Company’s comprehensive consideration based on industry development trends, market prospects and its strategic development plans, can help the Company to expand its scale and reinforce the strength, enhance the competitiveness and promote the sustainable development. These proceeds funded projects confirm to industrial policies released by the State and development needs of the Company, and have a relatively strong profitability and a bright prospect. The utilization of proceeds will bring positive return on investment to the Company, can improve its financial position and create better returns for shareholders.

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APPENDIX III DILUTION OF IMMEDIATE RETURN RESULTING FROM THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS, THE REMEDIAL MEASURES ADOPTED BY THE COMPANY AND UNDERTAKINGS ISSUED BY RELEVANT SUBJECTS

This English version is for reference only. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.

DYNAGREEN ENVIRONMENTAL PROTECTION GROUP CO., LTD.

DILUTION OF IMMEDIATE RETURN RESULTING FROM THE PUBLIC ISSUANCE OF CONVERTIBLE CORPORATE BONDS, THE REMEDIAL MEASURES ADOPTED BY THE COMPANY AND UNDERTAKINGS ISSUED BY RELEVANT SUBJECTS

Pursuant to relevant requirements of the Several Opinions of the State Council on Further Promoting the Healthy Development of the Capital Market (Guo Fa [2014] No. 17) 《國務院關於進一步促進資本市場健康發展的若干意見》( （國發[2014]17號）), the Opinions of the General Office of the State Council on Further Strengthening the Protection of Small and Medium Investors’ Legitimate Interests in the Capital Markets (Guo Ban Fa [2013] No. 110) 《國務院辦公廳關於進一步加強資本市場中小投資者合法權益保護工作的意見》( （國辦發 [2013]110號）) and the Guiding Opinions on Matters Concerning the Dilution of Current Return by Initial Public Offering, Refinancing and Material Asset Restructuring (CSRC Announcement [2015] No. 31) 《關於首發及再融資、重大資產重組攤薄即期回報有關事項的( 指導意見》（證監會公告[2015]31號）), in order to safeguard the interests of small and medium investors, the Company has made analysis on the influence of dilution of immediate return of the issuance and proposed specific remedial measures, and relevant subjects have also made undertakings to effectively fulfill the remedial measures of the Company. The effect of the issuance on the dilution of immediate return and the relevant remedial measures are illustrated as follows:

I. RISKS OF AND ANALYSIS ON THE IMPACT OF DILUTION OF IMMEDIATE RETURN UPON THE PUBLIC ISSUANCE OF CONVERTIBLE CORPORATE BONDS ON KEY FINANCIAL INDICATORS OF THE COMPANY

(I) Key Assumptions and Premises of the Calculation of Financial Indicators

The following assumptions are only for the purpose of measuring the impact of the issuance on the immediate return of the Company. It does not represent the Company’s judgment on the operation and trend of 2021 and 2022, and it is not a profit forecast. Investors should not make investment decisions accordingly, and if investors make investment decisions based on it and incur losses, the Company shall not assume liability for compensation.

It is assumed that the macroeconomic environment, industry development trends and the Company’s operations have no material and adverse changes;
The influence on the business operation and financial position of the Company (such as finance cost, investment income), etc. when the proceeds from the issuance are credited into account will not be considered;

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APPENDIX III DILUTION OF IMMEDIATE RETURN RESULTING FROM THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS, THE REMEDIAL MEASURES ADOPTED BY THE COMPANY AND UNDERTAKINGS ISSUED BY RELEVANT SUBJECTS

It is assumed that the issuance of Convertible Corporate Bonds shall be completed by the end of December 2021. The time of completion is only used for calculating the dilution influence of the issuance of the Convertible Corporate Bonds on the immediate return. The final time shall be the actual completion time of the issuance, which shall be subject to the approval of the CSRC;
It is assumed that full conversion shall be effected as of 30 June 2022, and all Convertible Corporate Bonds shall not be converted into shares as of 31 December 2022. The completion time of conversion is for estimation only. The final time shall be the actual time when the holders of the Convertible Corporate Bonds complete the conversion;
It is assumed that the total proceeds from the issuance of the Convertible Corporate Bonds will be RMB2.390 billion, without consideration of the impact of the issuance expenses. The proceeds actually generated from the issuance of the Convertible Corporate Bonds will be determined on basis of factors including the approval of the regulatory authorities, the subscription of the issuance and the issuance expenses;
It is assumed that the conversion price of the issuance shall be RMB9/share (the conversion price is only a simulated price, and does not constitute a forecast of the actual conversion price). Such conversion price is only available for calculating the effect of diluted current return on the issuance of convertible debt on major financial indicators. Prior to the issuance, the initial conversion price will be eventually determined by the Board under the authorization by the general meeting based on market conditions, and may be subject to ex-rights, ex-dividend or downward revisions;
It is assumed that the Company’s net profit attributable to owners of the parent company and net profit excluding extraordinary gain and loss attributable to owners of the parent company in 2021 and 2022 will increase by an average of 15% per annum as compared with that in 2020;
It is assumed that the proportion of cash dividend to be distributed in 2021 to the net profit attributable to owners of the parent company is consistent with that in 2020, and the implementation could be completed by the end of June 2022;
When predicting the net assets of the Company after the issuance, the influence of other factors other than cash dividends, proceeds and net profits on the net assets is not considered;

– III-2 –

It is assumed that the equity attributable to the owners of the parent company as at 31 December 2021 = the equity attributable to the owners of the parent company at the beginning of 2021 + net profit attributable to the owners of the parent company in 2021 - amount of cash dividend in 2021;

It is assumed that the equity attributable to the owners of the parent company as at 31 December 2022 = the equity attributable to the owners of the parent company at the beginning of 2022 + net profit attributable to the owners of the parent company in 2022 - amount of cash dividend in 2022 + owners’ equity increased from conversion;

It is assumed that the Convertible Corporate Bonds will be listed in the financial statements as liabilities as a whole after the completion of issuance. Such assumption is only for stimulated calculation of financial indicators. Specific situation shall be based on the actual accounting after the completion of issuance. Furthermore, the impacts of interest accrued on unused portions of proceeds and interest charges on Convertible Corporate Bonds are not considered;
It is assumed that, except for the conversion of Convertible Corporate Bonds, the Company’s total equity has not changed until 31 December 2022, and there are no other possible equity changes.

(II) Estimation of the Impact on the Key Financial Indicators

Based on the above assumptions, the impact of the dilution of current return by the issuance on the Company’s key financial indicators is calculated as follows:

			2022/31 December 2022	2022/31 December 2022
			End of
			2022	End of
	2020/31	2021/31	Without	June 2022
	December	December	any	Full
Item	2020	2021	conversion	conversion
Total share capital at the end
of period (‘0,000 shares)	139,344.00	139,344.00	139,344.00	165,899.56
Total proceeds from the
issuance (RMB’0,000)				239,000.00
Equity attributable to the
owners of the parent
company (RMB’0,000)	548,766.59	578,787.13	613,310.75	852,310.75

– III-3 –

			2022/31 December 2022	2022/31 December 2022
			End of
			2022	End of
	2020/31	2021/31	Without	June 2022
	December	December	any	Full
Item	2020	2021	conversion	conversion
Net profit attributable to the
owners of the parent
company (RMB’0,000)	50,338.55	57,889.34	66,572.74	66,572.74
Net profit excluding
extraordinary gain and loss
attributable to the parent
company (RMB’0,000)	48,469.97	55,740.47	64,101.54	64,101.54
Basic earnings per share
(RMB/share)	0.43	0.42	0.48	0.44
Diluted earnings per share
(RMB/share)	0.43	0.42	0.40	0.40
Basic earnings per share
excluding extraordinary
gain and loss (RMB/share)	0.41	0.40	0.46	0.42
Diluted earnings per share
excluding extraordinary
gain and loss (RMB/share)	0.41	0.40	0.39	0.39
Weighted average return on
net assets	13.80%	10.27%	11.17%	9.30%
Weighted average return on
net assets excluding
extraordinary gain and loss	13.29%	9.89%	10.75%	8.96%

Note: The earnings per share and the weighted average return on net assets are calculated based on Compilation Rules for Information Disclosure on Public Issuance of Securities by Companies No. 9 – Calculation and Disclosure of Return on Equity and Earnings per Share 《公開發行證券的公司信息披露編報規則第( 9號–淨資產收益率和每股收益的計算及披露》).

– III-4 –

APPENDIX III DILUTION OF IMMEDIATE RETURN RESULTING FROM THE PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS, THE REMEDIAL MEASURES ADOPTED BY THE COMPANY AND UNDERTAKINGS ISSUED BY RELEVANT SUBJECTS

II. SPECIAL RISK WARNING FOR THE DILUTION OF CURRENT RETURN BY THE PUBLIC ISSUANCE OF CONVERTIBLE CORPORATE BONDS

Upon conversion of the Convertible Corporate Bonds held by investors in part or in whole, the Company’s total share capital and net assets will increase to a certain degree, which will result in a dilution effect on the original shareholding, return on net assets and the earnings per share of the Company to a certain extent. In addition, the public issuance of the Convertible Corporate Bonds is subject to the term of downward adjustment. When the term is triggered, the Company may apply for the downward adjustment of the conversion price, which results in the increase of the total amount of the additional share capital through the public issuance of the Convertible Corporate Bonds, hence enlarging the potential dilution effect on the original ordinary Shareholders of the Company therefrom.

The current return faces dilutive risks after the public issuance of Convertible Corporate Bonds by the Company. Investors are advised to make rational investment and pay attention to investment risks.

III. THE NECESSITY AND FEASIBILITY OF THE ISSUANCE

The investment projects to be funded by the proceeds from the public issuance have been strictly demonstrated, the implementation of which is necessary and feasible. The relevant descriptions are as follows:

(I) The Necessity of the Proceeds Funded Projects

1. The Need to Develop Circular Economy and Improve Social Benefits

The level of municipal solid waste disposal is a sign of the degree of civilization, economic strength, scientific and technological strength of a city, as well as the environmental awareness and modern consciousness of city regulators. Domestic waste management and pollution prevention have become an important part of urban environmental protection.

The projects invested and constructed with proceeds raised this time use municipal solid waste as raw materials, and has achieved waste reduction after incineration treatment, and the heat generated by incineration treatment has realized resource recycling through power generation. The construction and operation of the proceeds funded investment projects can effectively solve the problems of urban waste pollution and resource recovery, obtain greater economic and social benefits, and achieve harmony between the economic system and the natural system in terms of material circulation.

– III-5 –

2. The Need to Enhance the Competitiveness of the Company in the Industry

The Company is among the first companies to explore industrial applications for waste treatment in the PRC, and is also one of the earliest enterprises to focus on upgrading and further developing advanced international waste-to-energy technologies in the PRC. Since its establishment in 2000, the Company has accumulated extensive experience in project investment, construction and operation management. It has been recognised as the “Top 10 Most Influential Solid Waste Enterprises” for eleven consecutive years, which has accumulated abundant resources and established a good reputation.

Under the background of the great development of the environmental protection industry, the Company is based on its own advantages and actively strives for new projects, with remarkable results in market development. After these proceeds funded projects are put into operation, the Company will witness greater municipal solid waste treatment business scale and stronger regional radiation capability, and consolidate its market position.

(II) The Feasibility of Proceeds Funded Projects

1. Considerable Development Space for Waste Incineration Power Generation

With the continuous development of urbanization, the collection and transportation volume of domestic waste will also increase substantially. In 2020, the urban population reached 902 million in China; from 2008 to 2020, the urbanization rate increased from 46.99% to 63.89% in China. According to the calculations of the National Health and Family Planning Commission, the urbanization rate will reach about 70% in 2030 in China. The continuous advancement of urbanization will inevitably drive the sustainable growth of demand for waste treatment, and the market for the hazard-free treatment of domestic waste is expected to continue to develop.

According to the China Urban Construction Statistical Yearbook, the hazard-free treatment of municipal solid waste in China in 2019 was 240 million tons, of which 122 million tons were treated by incineration, accounting for approximately 51%; the daily treatment capacity of municipal solid waste incineration in China in 2019 was 457,600 tons. Compared with the targets of the Plan on the Development of Municipal Solid Waste Soring and Treatment Facilities for the 14th Five-Year Plan Period 《「十四五」城鎮生活( 垃圾分類和處理設施發展規劃》), i.e. the proportion of waste incineration being 65% and the daily incineration capacity being 800,000 tons, the aforesaid data indicate a considerable growth potential and space.

– III-6 –

2. The Waste Incineration Power Generation Benefits from Industrial Policies and Taxation Policies

(1) Industrial Policies

In June 2018, the Central Committee of the Communist Party of China and the State Council promulgated the Opinion on Strengthening Ecological Environment Protection in a Comprehensive Manner to Facilitate Pollution Prevention and Control (《關於全面加強生態環境保護堅決打好污染防治攻堅戰的意見》), which explicitly proposed that “waste recycling will be promoted, and vigorous efforts will be made to develop waste incineration power generation” in the section of “Accelerating Waste Sorting and Disposal”.

In December 2018, the General Office of the State Council issued the Working Plan for the Pilot Construction of “Waste-Free City” 《( ”無廢城市”建設試點工作方案》) (Guo Ban Fa [2018] No. 128), proposing the management concept of “Waste-free City” and requiring the promotion of recycling of recyclables, waste incineration power generation, biological treatment, etc.

In July 2020, the National Development and Reform Commission, the Ministry of Housing and Urban Rural Development, and the Ministry of Ecology and Environment jointly issued the Implementation Plan for Strengthening Weaknesses of Municipal Solid Waste Sorting and Treatment Facilities 《城鎮生活垃圾分類和處理設施補短板強弱項實( 施方案》), proposing to vigorously improve the waste incineration treatment capacity and stipulating that in areas where the daily domestic waste removal volume is more than 300 tons, it is necessary to accelerate the development of waste treatment methods with a focus on incineration, and moderately advance the construction of incineration facilities that are compatible with the daily domestic waste removal volume to basically achieve “zero landfilling” of primary domestic waste by 2023.

In March 2021, the 14th Five-Year Plan for National Economic and Social Development of the People’s Republic of China and the Outline of the Vision 2035 pointed out that it is necessary to comprehensively improve the level of environmental infrastructure and establish a domestic waste treatment system that includes sorted placement, sorted collection, sorted transportation and sorted disposal.

– III-7 –

(2) Taxation Policies

In March 2012, the National Development and Reform Commission released the Notice of the National Development and Reform Commission on Improving the Tariff Policy for Waste Incineration Power Generation (Fa Gai Jia Ge [2012] No. 801) (《國家發展改革委關於完善垃圾焚燒發電價格政策的通知》（發改價格[2012]801號）). The notice further improved the tariff policy for waste incineration power generation and required that “waste incineration power generation projects that take municipal solid wastes as raw materials should settle the price by translating the incoming waste disposal to on-grid energy, with the translation of one ton of municipal solid waste to on-grid energy tentatively being 280 KWH, and exercise the national unified benchmark tariff for waste incineration power generation of RMB0.65 per KWH (inclusive of tax); other on-grid energies exercise the local feed-in tariff for similar coal-fired power generating units.”

According to the Catalogue of Value-Added Tax Preferences for Products and Labor Services Involving the Comprehensive Utilization of Resources (Cai Shui [2015] No. 78) 《資源綜合利用產品和勞務增值稅( 優惠目錄》（財稅[2015]78號）), enterprises that take wastes as materials for electric power or thermal power generation, use wastes as over 80% of power generation materials and meet the emission standards may be recognized as state-encouraged enterprises that comprehensively utilize resources and may enjoy the preferential VAT policy of immediate refund upon payment. 70 percent of value-added taxes paid in respect of waste disposal services enjoy the policy of immediate refund upon payment. According to the Enterprise Income Tax Law and its implementation regulation, incomes from environmental protection, energy and water conservation projects that meet the required conditions are exempt from enterprise income taxes for the first year to third year from the taxable year when such projects record the first operating income and enjoy the preferential policy of halved levy in the fourth year to sixth year.

The State’s industrial policies and taxation policies on waste incineration power generation have greatly supported the rapid development of waste incineration power generation enterprises.

– III-8 –

IV. THE RELATIONSHIP BETWEEN THE USE OF THE PROCEEDS AND THE EXISTING BUSINESSES OF THE COMPANY, AS WELL AS ITS RESERVES IN TERMS OF TALENT, TECHNOLOGY AND MARKET
(I) The Relationship Between the Proceeds Funded Investment Projects and the Existing Businesses of the Company

Since its establishment, the Company has adopted a proactive strategy in market development and strives to develop various regional markets. Focusing on the vast market space of the economically developed Yangtze River Delta, Pearl River Delta and Bohai Economic Rim, the Company has extended its business network to the central and western regions such as Anhui, Hubei, Guizhou, Shanxi, Guangxi, Jiangxi, Hunan, Shaanxi, Henan and Sichuan, preliminary forming a market layout based on the Yangtze River Delta, Pearl River Delta and Bohai Rim and spanning across the country

The implementation of the proceeds funded investment projects is compatible with the Company’s existing business scale, financial status, technical level and management capabilities, and will further expand the Company’s production capacity, rapidly increase the Company’s market scale, and improve its profitability. The Company has the business ability to implement the proceeds funded investment projects.

(II) The Company’s Reserves for the proceeds funded investment projects in Terms of Talent, Technology and Market

The management team of the Company has been engaged in business management, market expansion, technology development, construction and operation of waste incineration power plants for many years. The Company will combine various methods such as internal selection, advance training, and external talent recruitment to provide experienced and high-level management personnel, production personnel and related operating personnel for the implementation of the proceeds funded investment projects to ensure that the proceeds funded investment projects can be implemented smoothly. The Company has the personnel qualifications to implement the proceeds funded investment projects.

The Company has always attached great importance to product research and development, and always takes technology research and development and process innovation as the Company’s key tasks, insists on research and development to serve production and development, treats practical engineering transformative application of technology as the main working goal of technology research and development, and continuously promotes the Company’s technical service innovation and optimisation to adapt to market changes and needs. The “multiple drive expeller grate waste incinerator” technology independently developed by the Company was selected by the Ministry of Housing and Urban-Rural Development

– III-9 –

(住建部) as a core technology to promote for use during the “11th Five-Year Plan” period, and was successfully incorporated in the 2019 Directory of Key Environmental Protection Practical Technologies and Demonstration Projects 《( 2019年重點環境保護實用技術及示範工程名錄》) by China Association of Environmental Protection Industry (中國環境保護產業協會); “A multiple drive expeller grate waste incinerator with an online warning and control system of dioxin” as independently developed by the Company was awarded the second prize for technical progress for 2019 by China Association of Environmental Protection Industry. Various projects of the Company were awarded the honors and awards including “National Model Project for Use of Environmental Protection Technologies” (使用環保技術的國家模範項目), the “Quality Chinese Project for Electricity Engineering Award” (中國電力優質工程獎), the “National Quality Project Award” (國家優質工程獎) and “Luban Prize” (魯班獎). The Company continuously increases its investment in scientific research, and the accumulation of core technologies has laid the technical foundation for the implementation of the proceeds funded investment projects. The Company possesses the technical conditions for the implementation of proceeds funded investment projects.

V. MEASURES TO BE ADOPTED BY THE COMPANY TO DEAL WITH THE DILUTION ON CURRENT RETURNS BY THE PUBLIC ISSUANCE OF CONVERTIBLE CORPORATE BONDS

In order to safeguard the interests of investors, reduce the risk of dilution of current return and enhance the capability of creating long-term return for shareholders, the Company will strengthen the supervision of proceeds funded projects and speed up project implementation progress. It will improve management and internal control to enhance the Company’s profitability and strengthen the return mechanism for investors. The specific measures are as follows:

1. Accelerate the progress of investment in the proceeds funded projects and realize the expected benefits of the projects as soon as possible

The projects funded with the proceeds from the public issuance of Convertible Corporate Bonds of the Company have been fully investigated and discussed, and are in line with the national industrial policy and the Company’s overall strategic development direction. The expected return on investment is relatively high. With the completion of the projects and the realization of benefits, the Company’s profitability and operating results will be significantly improved, helping to remedy the dilution of the current return to shareholders by the issuance.

Before receipt of the proceeds from the issuance, in order to implement the proceeds funded projects as soon as possible, the Company will proactively allocate resources and implement the preparatory work for the proceeds funded projects in advance as well as first make investment with its self-raised funds depending on the progress of the proceeds funded projects; after receipt of the proceeds from the issuance, the Company will accelerate the construction of the proceeds funded

– III-10 –

projects, striving to complete the proceeds funded projects and achieve the expected benefits as soon as possible, to increase return to shareholders in the following years and reduce the risk of dilution of current return to shareholders by the issuance.

2. Strengthen the management of proceeds to ensure that the proceeds are used as planned

After receipt of proceeds, the Company will deposit the proceeds from the issuance in the special account for proceeds as designated by the Board of the Company in accordance with the relevant laws and regulations and the relevant regulatory regimes of the Company. The Board of the Company will manage the proceeds in strict accordance with the relevant laws and regulations and the relevant regimes on management of proceeds, to ensure the reasonable, standardized and effective use of the proceeds and to reasonably prevent risks in relation to the use of proceeds. The Company will improve and strengthen the investment decision-making process and strictly manage the use of proceeds, to prevent the risks in relation to the use of proceeds; rationally use various financing tools and channels to reduce capital costs, improve the use efficiency of proceeds, and comprehensively control the risks in relation to the Company’s operations and management control, endeavouring to achieve the expected benefits for the proceeds funded projects as early as possible.

3. Continuously improve corporate governance to comprehensively improve the Company’s operation management level

The Company will be in strict compliance with the requirements of laws, regulations and normative documents including the Company Law, the Securities Law and Code of Corporate Governance of Listed Companies 《上市公司治理準( 則》) and constantly improve the Company’s governance structure to ensure that shareholders can fully exercise their rights, the Board can perform its functions and powers in accordance with the provisions of laws, regulations and Articles of Association to make scientific, quick and cautious decisions, and the independent directors can earnestly perform their duties, protect the Company’s interests as a whole, especially the legitimate rights of minority shareholders; and the Supervisory Committee can independently and effectively exercise the right of supervision and inspection against directors, managers and other senior management members as well as the finance of the Company to provide system guarantee for the development of the Company.

The Company will improve business processes, strengthen information management for all aspects including R&D, procurement and operation, and strengthen internal control, to improve the turnover efficiency of working capital. Meanwhile, the Company will strengthen budget management and strictly implement the Company’s procurement approval system. In addition, the Company will consummate the compensation and incentive mechanism, introduce excellent talents from the market, and stimulate the enthusiasm of employees and tap the

– III-11 –

creativity and potential of employees to the greatest extent. Through the above measures, the Company will comprehensively improve its operating efficiency, reduce costs, and enhance its operating results.

The remedial measures of the Company do not represent guarantee for the Company’s future profits. Investors should not make investment decisions based thereon. The Company is not liable for compensating the losses caused by the investment decisions made by the investors based thereon. Investors are advised to pay attention to investment risks.

4. Improve Profit Distribution Policy and Strengthen Investor Return Mechanism

In accordance with requirements of the Notice on Further Implementation of Relevant Matters Concerning Cash Dividend Distribution of Listed Companies (Zheng Jian Fa [2012] No. 37) 《關於進一步落實上市公司現金分紅有關事項的通知》( （證監發[2012]37號）) and the Guidelines No. 3 on the Supervision and Administration of Listed Companies (CSRC Announcement [2013] No. 43) 《上市公( 司監管指引第3號－上市公司現金分紅》（證監會公告[2013]43號）) of the CSRC, the board of directors of the Company has formulated the Plan for Return to the Shareholders for the Next Three Years (2021-2023) of Dynagreen Environmental Protection Group Co., Ltd., and further improved and perfected the profit distribution policy of the Company. The Company will strictly implement relevant regulations, effectively safeguard the legitimate rights and interests of investors, and strengthen the protection mechanism for the rights and interests of small and medium investors.

Investors are reminded that the above-mentioned remedial measures for the returns prepared by the Company do not represent guarantee for the future profit of the Company and investors shall not make investment decisions based thereon. Investors should be aware that the Company is not liable for compensation for the losses caused by the investment decisions made by investors based thereon.

VI. UNDERTAKINGS ISSUED BY RELEVANT SUBJECTS

In accordance with relevant requirements of the Several Opinions of the State Council on Further Promoting the Healthy Development of the Capital Market (Guo Fa [2014] No. 17) 《國務院關於進一步促進資本市場健康發展的若干意見》( （國發[2014]17號）), the Opinions of the General Office of the State Council on Further Strengthening the Protection of Small and Medium Investors’ Legitimate Interests in the Capital Markets (Guo Ban Fa [2013] No. 110) 《國務院辦公廳關於進一步加強資本市場中小投資者合法權益保( 護工作的意見》（國辦發[2013]110號）) and the Guiding Opinions on Matters Concerning the Dilution of Current Return by Initial Public Offering, Refinancing and Material Asset Restructuring (CSRC Announcement [2015] No. 31) 《關於首發及再融資、重大資產( 重組攤薄即期回報有關事項的指導意見》（證監會公告[2015]31號）), all directors, senior management, and controlling shareholder and actual controller of the Company have

– III-12 –

made the following undertakings to ensure the practical implementation of the Company’s measures to remedy current return:

(I) Undertakings of the controlling shareholder and actual controller

As the controlling shareholder and actual controller of the Company, BSAM has issued the Undertakings of Beijing State-owned Assets Management Co., Ltd. on Taking Remedial Measures for Dilution of Current Return by the Public Issuance of A Share Convertible Corporate Bonds by Dynagreen Environmental Protection Group Co., Ltd. 《北京市國有資產經營有限責任公司關於綠色動力環保集團股份有限公司公開( 發行A股可轉換公司債券攤薄即期回報採取填補措施的承諾》). The undertakings are as follows:

I. As at the date of this letter, the company has never interfered with the operation management activities of Dynagreen or encroach on the interests of Dynagreen.
II. the Company undertakes not to interfere with the operation management activities of Dynagreen or encroach on the interests of Dynagreen in the future.

(II) Undertakings of all directors and senior management

In accordance with the Undertakings of the Directors and Senior Management of Dynagreen Environmental Protection Group Co., Ltd. on Taking Remedial Measures for Dilution of Current Return by the Public Issuance of A Share Convertible Corporate Bonds 《綠色動力環保集團股份有限公司董事、高級管理人員關於公開發行( A股可轉換公司債券攤薄即期回報採取填補措施的承諾》), the Undertakings made by the directors and senior management of the Company are as follows:

I pledge to neither transfer interests to other entities or individuals without compensation or under unfair conditions, nor damage the interest of the Company by other means;
I pledge to restrain their own occupational consumption behavior;
I pledge not to appropriate the Company’s assets to engage in investment and consumption activities unrelated to its performance of duties;
I pledge that the remuneration system formulated by the Board or the Remuneration and Assessment Committee will be linked to the implementation of the Company’s remedial measures for the return;
I pledge that, if the Company introduces equity incentive policy in the future, the conditions for exercise of the equity incentive to be publicized by the Company will be linked to the implementation of the Company’s remedial measures for the returns;

– III-13 –

For any new regulatory requirements introduced by the CSRC in relation to the remedial measures and relevant Undertakings during the period from the date of the undertaking to the completion of the Public Issuance of A Share Convertible Corporate Bonds of the Company that make the said undertaking fail to meet such requirements of the CSRC, I pledge to give further undertaking(s) in accordance with those new requirements of the CSRC.

If I violate the above Undertakings and cause losses to the Company or shareholders, I will bear the corresponding liabilities.

– III-14 –

APPENDIX IV

THE PLAN FOR RETURN TO THE SHAREHOLDERS FOR THE NEXT THREE YEARS (2021-2023)

This English version is for reference only. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.

**DYNAGREEN ENVIRONMENTAL PROTECTION GROUP CO., LTD.* THE PLAN FOR RETURN TO THE SHAREHOLDERS FOR THE NEXT THREE YEARS (2021-2023)**

In order to improve and refine the scientific, sustainable, stable and transparent decision-making for dividend distribution and supervision mechanisms of Dynagreen Environmental Protection Group Co., Ltd. (the “ Company ”) as well as to further highlight the importance of return to the shareholders, pursuant to the relevant requirements of Notice Regarding Further Implementation of Certain Matters Relating to Cash Dividend Distribution by Listed Companies (Zheng Jian Fa [2012] No. 37) (《關於進一步落實上市公司現金分紅有關事項的通知》(證監發[2012]37號)) and the Listed Companies Regulatory Guidance No. 3 – Cash Dividends Distribution of Listed Companies (CSRC Announcement [2013] No. 43) 《上市公司監管指引第( 3號–上市公司現金分紅》(證監會公告 [2013]43號)) issued by China Securities Regulatory Commission (the “ CSRC ”) and the articles of association of Dynagreen Environmental Protection Group Co., Ltd. (the “ Articles of Association ”), the Company has formulated the Plan for Return to the Shareholders for the Next Three Years (2021-2023) of Dynagreen Environmental Protection Group Co., Ltd. (the “ Plan ”), details of which are as follows:

I. FACTORS CONSIDERED FOR FORMULATION OF THE PLAN

The Company shall adopt a continuous and steady profit distribution policy after giving a comprehensive consideration to strategic plan on development, development goals and industry development trend. The Company’s profit distribution shall focus on providing investors with reasonable investment return as well as maintaining the sustainable development of the Company.

II. PRINCIPLES FOR FORMULATION OF THE PLAN

Subject to the relevant laws and regulations and the relevant rules on profit distribution in the Articles of Association, the formulation of the Plan shall fully take into account of and consider the opinions from independent directors, supervisors and public shareholders, and balance short-term benefits and long-term development of the Company according to the actual operating development and capital requirement in order to establish a sustainable, stable and scientific return plan and mechanism for the investors, thus to make an institutional arrangement for profit distribution and ensure the continuity and stability of the profit distribution policy.

– IV-1 –

APPENDIX IV

THE PLAN FOR RETURN TO THE SHAREHOLDERS FOR THE NEXT THREE YEARS (2021-2023)

III. SPECIFIC SHAREHOLDERS’ RETURN PLAN FOR THE NEXT THREE YEARS (2021-2023)

(I) Any profit distribution of the Company shall not exceed the amount of accumulated distributable profits and shall not adversely affect the continued operation of the Company. The Company may distribute interim dividends according to its profit and capital needs.

(II) Terms and policies of cash dividends

The Company shall give priority to the payment of cash dividends. If no cash dividends are available, no scrip dividends shall be declared for the same year. Any cash dividends proposed shall satisfy the following criteria: the Company records surplus in the same year and the retained undistributed profits shall be positive and its cash flow shall be sufficient to support the continued operation and long-term development of the Company, then distribution of cash dividend shall be adopted positively; the profit to be distributed in cash each year shall not be less than 10% of the distributable profits of the year, and the cumulative profit distributed in cash in the past three years shall not be less than 30% of the yearly average distributable profit of the Company for such three years.

With a view to provide investment returns to shareholders and share corporate values, the Company may declare scrip dividends in addition to the cash dividends, taking into account practical and reasonable factors such as the growth of the Company, dilution to the net asset per share and the adequate match between the share price and the size of the share capital of the Company.

Where the Company records surplus for consecutive years, each cash dividend shall not be more than 24 months apart.

The board of directors of the Company shall distinguish the following situations and formulate diversified cash dividend distribution policies in accordance with requirements of the Articles of Association and comprehensively take into account the characteristics of the industry in which the Company operates, stage of development, its own business model, profitability and other factors such as whether there are significant capital expenditure arrangements:

If the Company is at a mature stage of development and has no significant capital expenditure arrangements, the proportion of cash dividends should be at least 80% in the profit distribution;
If the Company is at a mature stage of development and has significant capital expenditure arrangements, the proportion of cash dividends should be at least 40% in the profit distribution;

– IV-2 –

APPENDIX IV

THE PLAN FOR RETURN TO THE SHAREHOLDERS FOR THE NEXT THREE YEARS (2021-2023)

If the Company is at a growing stage and has significant capital expenditure arrangements, the proportion of cash dividends should be at least 20% in the profit distribution.

When it is difficult to distinguish the Company’s stage of development but there are significant capital expenditure arrangements, the profit distribution may be arranged in accordance with the foregoing provisions.

Significant capital expenditure arrangements are transactions involving, among other things, acquisition of assets, external investment and investment in fixed assets contemplated by the Company and settled in cash in the following 12 months with the cumulative expenditure amounting to or exceeding 30% of the latest audited total assets, or exceeding 50% of the latest audited net assets and RMB50 million, in each case except for project investments through raised capital.

(III) Decision-making mechanism for profit distribution

Particulars of any profit distribution plan shall be determined by the board of directors in accordance with the requirements of the Articles of Association, the Company’s profits, capital supply and demands and shareholders’ return plan as approved by a simple majority at the supervisory committee and as proposed for approval at a general meeting.

The board of directors shall specify the planned use of retained undistributed profits and, where scrip dividends are to be distributed, the reasonableness and feasibility thereof in any profit distribution proposal. In the event that the board of directors does not declare any cash dividend in its annual profit distribution plan in accordance with the dividend distribution policies under the Articles of Association, the board shall provide reasons for not declaring the cash dividend or declaring a dividend below the stipulated percentage and the specific use of the retained profits and expected return thereon, which shall be opined by independent directors and proposed at a general meeting for shareholders’ approval. Such information shall be disclosed in the announcement on results of the meeting of the board of directors of the Company and periodic reports.

Independent directors may collect opinions from minority shareholders, propose dividend distribution proposals and directly submit it to the board of directors for consideration.

The Company shall elicit opinion from investors on profit distribution through effective means such as investors’ interaction platforms, the website of the Company, telephone, facsimile and electronic mail. Such opinion shall be summarized by the secretary to the board of directors and provided at the board meeting considering a proposal for profit distribution.

– IV-3 –

APPENDIX IV

THE PLAN FOR RETURN TO THE SHAREHOLDERS FOR THE NEXT THREE YEARS (2021-2023)

When considering a proposal for profit distribution at a board meeting, such proposal shall be passed by more than two thirds of independent directors by a separate voting. By considering a cash dividend proposal, the board of directors shall earnestly research and determine the timing, conditions, minimum proportion, adjustment conditions and other decision-making procedures in relation thereto. The independent directors shall expressly issue independent opinions before such proposals are considered in a board meeting. Such proposals shall be proposed at a general meeting upon being approved by the board of directors.

Before a cash dividend proposal is considered at a general meeting, the Company shall communicate with shareholders, especially minority shareholders through various channels to listen to the opinion and requests from minority shareholders and give timely responses to issues which minority shareholders are concerned about. When convening a general meeting to consider a proposal for profit distribution, online voting shall be provided in addition to the on-site voting at the meeting for the shareholders. A proposal for profit distribution shall be passed by voting by over half of the shareholders who are present (in person or by their proxy(ies)) at the general meeting. Upon finalization of the resolution on such proposal at the general meeting, the Company’s board of directors shall complete the dividend payment within 2 months after the general meeting is held.

If the profit distribution policy should be adjusted due to the production and operation conditions, investment plans and long-term development, or the changes in external operation environment, the Company shall focus on the protection of shareholders’ rights and interests and the adjusted profit distribution policy should not violate relevant laws and regulations and provisions of regulatory documents and Articles of Association. The proposal to adjust the profit distribution policy, together with opinions expressed by independent directors, will be considered by the board of directors before submission to the general meeting of the Company for approval, the resolution must be passed by not less than two thirds of the voting rights held by the shareholders attending the general meeting, and whether the conditions and process of the adjustment are in compliance should be explained in detail in the periodic reports.

(IV) The Company may distribute dividends in either or both of the following forms:

cash; 2. shares.

Any cash dividends and other payments to domestic shareholders shall be paid in RMB. Any cash dividends and payments to foreign shareholders shall be denominated and declared in RMB and paid in foreign currency. The Company will, according to the national regulations on foreign exchange, address the foreign currency required for cash dividends and other payments to foreign shareholders.

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APPENDIX IV

THE PLAN FOR RETURN TO THE SHAREHOLDERS FOR THE NEXT THREE YEARS (2021-2023)

Unless otherwise provided by the relevant laws and regulations, for the payment of cash dividends and other payments in foreign currency, the applicable exchange rates shall be the average selling price announced by the People’s Bank of China in one calendar week immediately preceding the declaration date of such cash dividends and other payments.

(V) After the general meeting has resolved on the plan to allocate profits, the board of directors shall complete the distribution of dividends (or bonus shares) within 2 months of the general meeting.
(VI) The Company will give full consideration to the interests of shareholders and adopt a reasonable profit distribution policy according to its business operation and market conditions. The Company’s profit distribution policy shall to the greatest extent maintain continuity and stability, and give priority to cash dividends, with the specific dividend rate to be passed with a resolution at the general meeting in accordance with relevant laws and regulations.

IV. EFFECTIVE MECHANISM FOR THE PLAN

The Plan, as well as its amendments, shall be effective from the date of approval at the Company’s general meeting.
Any matters not covered in the Plan shall be implemented in accordance with relevant laws and regulations, regulatory documents and the Articles of Association.
The board of directors of the Company is responsible for the interpretation of the Plan.

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

This English version is for reference only. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail. DYNAGREEN ENVIRONMENTAL PROTECTION GROUP CO., LTD. RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

CHAPTER I GENERAL PROVISIONS

1.1 In order to regulate the organization and behaviors of meetings of bondholders of A share convertible corporate bonds (hereinafter referred to as the “ Bonds ”) to be publicly issued by Dynagreen Environmental Protection Group Co., Ltd. (hereinafter referred to as the “ Company ” or the “ Issuer ”), specify the rights and obligations of the bondholders’ meetings and safeguard the rights and interests of the bondholders, these rules have been formulated pursuant to the requirements of the Company Law of the People’s Republic of China, the Securities Law of the People’s Republic of China, the Measures for Administration of the Issue of Securities by Listed Companies, the Administrative Measures for Convertible Corporate Bonds, the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange and other relevant laws, regulations, rules and regulatory documents and with reference to the actual conditions of the Company.

The bond abbreviation and code, issuance date, redemption date, issuance interest rate, issuance scale, rights-containing clauses and investors’ rights protection clauses and other basic components of the Bonds as well as major stipulations thereunder are subject to the contents contained in the offering document of the Bonds.

1.2 The bondholders’ meetings will be established upon the completion of the issuance of the Bonds till the termination of debtor-creditor relationship in connection with the Bonds. The bondholders’ meetings comprise the holders who hold the outstanding Bonds, including those holding the Bonds through subscription, trading, transfer, inheritance or other legitimate means.

During the listing period of the Bonds, the scope of aforesaid holders is subject to the bondholders which appear on the register of bondholders maintained at China Securities Depository and Clearing Corporation Limited, unless otherwise provided by the laws and regulations.

1.3 The bondholders’ meetings are convened and held according to the procedures stipulated herein to consider and vote on the matters within the extent of authority stipulated herein.

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

The bondholders shall cooperate with the trustee manager and other meeting conveners in their relevant work, actively attend bondholders’ meetings, consider resolutions at the meetings, exercise their voting rights, coordinate in promoting the implementation of the valid resolutions passed at the meetings, and protect their own legal rights and interests in a lawful manner. Bondholders present at the meetings shall ensure they still hold the Bonds when voting at the meetings, and shall not make use of the relevant information obtained by attending the meetings for insider dealings, market manipulation, benefit transmission, securities fraud and other illegal activities which may damage the legal rights and interests of other bondholders.

Investors who hold the Bonds through subscription, trading, transfer, inheritance or other legitimate means are deemed to agree and accept the relevant stipulations herein and be bound by these rules.

1.4 The valid resolutions considered and passed at the bondholders’ meetings under the procedures stipulated herein shall be equally binding on all holders of the Bonds. The outcomes of the bond trustee manager’s conduct according to the valid resolutions passed at the bondholders’ meetings shall be borne by all bondholders. If there are other provisions in the laws and regulations or other stipulations in these rules, such provisions or stipulations shall prevail.
1.5 The bondholders’ meetings shall be witnessed by lawyers.
The witnessing lawyers shall issue legal opinions on the convening, holding and voting procedures of the meetings, entitlements to attend the meetings, determination of valid voting rights, validity and legality of resolutions and other matters. Such legal opinions shall be disclosed together with the resolutions passed at the bondholders’ meetings.
1.6 Bondholders shall bear their own travelling expenses, accommodations expenses, etc. arising from attending the bondholders’ meetings. The meeting conveners shall bear, on their own, the relevant meeting expenses arising from convening the bondholders’ meetings, unless otherwise agreed in these rules, the bond trustee management agreement or other agreements.

CHAPTER II EXTENT OF AUTHORITY OF THE BONDHOLDERS’ MEETING

2.1 During the term of the Bonds, the bondholders’ meetings shall consider and resolve on the matters in which the holders of the Bonds have a material interest within the extent of authority as stipulated in Article 2.2 hereof.

Save as the matters stipulated in Article 2.2 hereof, in order to safeguard the benefits of the holders of the Bonds, the trustee manager may perform its duties of management entrustment as agreed in the bond trustee management agreement without a separate authorization from the bondholders’ meetings.

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

2.2 During the term of the Bonds, a matter in any of the following circumstances shall be resolved through a resolution of the bondholders’ meetings:
2.2.1 proposed changes to the important stipulations of the offering document of the Bonds:
- a. changes to basic components of the Bonds regarding repayment (including repaying party, term, coupon rate adjustment mechanism, etc.);
- b. changes to credit enhancement or other debt service coverage and relevant implementation arrangements (if any);
- c. changes to the protection to bond investors and relevant implementation arrangements;
- d. changes to the use of proceeds as stipulated in the offering document;
- e. other changes to significant events closely related to repayment arrangement for principal and interest of bonds and the solvency.
2.2.2 proposed amendments to the rules of procedures for bondholders’ meetings;
2.2.3 proposed dismissal or change of the bond trustee manager or change to key terms of the bond trustee management agreement (including but not limited to the scope of mandate for entrusted management matters, the risk prevention and solving mechanism for conflicts of interest, the liability for breach of contract closely related to the rights and interests of bondholders, and other stipulations);
2.2.4 any of the following events, where it is necessary to decide on or authorize to take corresponding measures (including but not limited to negotiating with the Issuer and other relevant parties, initiating or participating in arbitration or litigation proceedings, disposal of collaterals or other measures conducive to the protection of rights and interests of investors, etc.):
- a. the Issuer has been or is expected to be unable to satisfy as scheduled the principal or interest of the Bonds;
- b. the Issuer has been or is expected to be unable to satisfy as scheduled the interest-bearing liabilities other than the Bonds, and the outstanding amount exceeds RMB50 million and reaches 10% or more of the latest audited net asset value of the parent company of the Issuer, which may lead to a default of the Bonds;

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

c. the Issuer is subject to capital reduction (other than capital reduction caused by a share buyback under equity incentive and a repurchase and issuance of certain restricted shares), consolidation, subdivision, an order to suspend its production or business, temporarily detained or revoked license, receivership, dissolution, application for bankruptcy, or bankruptcy proceedings according to law;
d. the Issuer’s solvency is in serious uncertainty due to failure of the Issuer’s management in performing its duties normally;
e. the Issuer’s solvency is in serious uncertainty due to a transfer of assets at nil or obviously unreasonable consideration, waiver of debt, or provision of large-value guarantees to external parties by the Issuer or its controlling shareholder(s) or actual controller(s);
f. material adverse changes to credit enhancement providers, credit enhancement measures or other debt service coverage (if any);
g. other events that may have a material adverse impact on the rights and interests of bondholders.
2.2.5 a major debt restructuring plan proposed by the Issuer;
2.2.6 other circumstances that shall be resolved by the bondholders’ meetings, as provided by the laws, administrative regulations, departmental rules, regulatory documents, or stipulated in the offering document of the Bonds and these rules.

CHAPTER III PREPARATION FOR THE BONDHOLDERS’ MEETINGS

Section I Convening of Meetings

3.1.1 Bondholders’ meetings are convened mainly by the trustee manager.

During the term of the Bonds, if one of the circumstances stipulated in Article 2.2 hereof takes place and the proposals to be considered meet the requirements stipulated herein, the trustee manager shall, in principle, convene a bondholders’ meeting within 15 trading days, unless otherwise approved for an extension by the bondholders holding individually or collectively 30% or more of the total outstanding Bonds during the period. Such extension shall not exceed 15 trading days in principle.

3.1.2 The Issuer, the bondholders holding individually or collectively 10% or more of the outstanding Bonds (hereinafter collectively referred to as the Proposers) have the right to propose to the trustee manager for convening a bondholders’ meeting.

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

If the Proposers propose to convene a bondholders’ meeting, they shall notify in writing the trustee manager, and put forward the proposals to be considered which meet the extent of authority and other requirements stipulated herein. The trustee manager shall give a written reply to the Proposers about whether or not to convene the bondholders’ meeting within 5 trading days upon receipt of the written proposal, and state the specific arrangement for convening the meeting or reasons for not convening the meeting. If it is approved, the bondholders’ meeting shall be convened within 15 trading days from the date of written reply, unless otherwise approved for an extension by the Proposers.

If the bondholders holding collectively 10% or more of the outstanding Bonds propose to convene a bondholders’ meeting, they may jointly elect 1 to 3 representatives as their contact person to assist the trustee manager in completing the convening of the meeting.

3.1.3 If the trustee manager disagrees with or fails in convening the meeting as required, the Issuer, the bondholders holding individually or collectively 10% or more of the outstanding Bonds have the right to convene a bondholders’ meeting on their own account, in which case the trustee manager shall provide necessary assistance for convening the bondholders’ meeting, including: assisting in the disclosure of bondholders’ meeting notices, meeting results and other documents, causing searches on the register of bondholders on behalf of the convener and providing contact information, assisting the convener in contacting relevant institutions or individuals that should be present at the meeting, etc.

Section II Raising of and Amendments to Proposals

3.2.1 Proposals submitted to the bondholders’ meetings for consideration shall be in compliance with the relevant provisions or stipulations in the laws, administrative regulations, department rules, regulatory documents, business rules of stock exchanges and these rules, and have explicit and practicable matters to be resolved.

The matters to be resolved at the bondholders’ meetings shall, in principle, include the specific proposals or measures to be resolved, implementing entity, implementation time and other relevant important matters.

3.2.2 After the convener discloses the notice of a bondholders’ meeting, the trustee manager, the Issuer, the bondholders holding individually or collectively 10% or more of the outstanding Bonds (hereinafter collectively referred to as the Proposers) may raise in writing proposals, and such proposals shall be submitted by the convener to the bondholders’ meeting for consideration.

The convener shall specify the method and period for raising proposals by Proposers in the notice of the meeting.

3.2.3 If the trustee manager or bondholders raise a proposal to be considered which requires the Issuer or its controlling shareholder(s) or actual controller(s),

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

successors of debt service obligations to perform obligations or to proceed or implement, the convener and Proposers shall fully communicate and negotiate with relevant institutions or individuals in advance to form practicable proposals as far as possible.

If the trustee manager or the Issuer raises a proposal to be considered which requires approval, promotion or implementation by the bondholders, the convener and Proposers shall fully communicate and negotiate with the major investors in advance to form practicable proposals as far as possible.

3.2.4 If the bondholders’ meetings intend to authorize the trustee manager, or elect a representative to, on behalf of the bondholders, negotiate and sign agreements with the Issuer or its controlling shareholder(s) or actual controller(s), successors of debt service obligations to initiate or participate in arbitration or litigation proceedings on behalf of the bondholders, the Proposers shall specify the following extent of authority in the matters to be resolved of the proposal for option of the bondholders:
a. special mandate to the trustee manager or the representative so elected to handle, with full authority and on behalf of the bondholders, the relevant matters within the specific extent of authority, including but not limited to reaching an agreement via negotiation or meditation, voting on the draft restructuring plan and reconciliation agreement of the Issuer during the bankruptcy procedures and other behaviors which materially impact or even impair or assign the benefits of bondholders.
b. mandate to the trustee manager or the representative so elected to handle, on behalf of the bondholders, the relevant matters within the specific extent of authority, and specifying that, in reaching an agreement via negotiation or meditation, voting on the draft restructuring plan and reconciliation agreement of the Issuer during the bankruptcy procedures, especially doing something which may impair or assign the benefits of bondholders, the trustee manager or the representative so elected shall seek the opinions of bondholders in advance, or convene a bondholders’ meeting for consideration thereof, and act based on the opinions of bondholders.
3.2.5 The convener shall fully communicate with the relevant Proposers, and stakeholders in question in respect of all proposals to be submitted for consideration, and make, or assist the Proposers in making, amendments or improvements to the proposals, in order to ensure, as nearly as possible, the proposals to be submitted for consideration will meet the stipulations contained in Article 3.2.1 hereof, and there will be no substantive contradictions among the proposals to be considered at the same bondholders’ meeting.

If it is impossible to avoid substantive contradictions among the matters to be resolved of the proposals to be considered at the same bondholders’ meeting even upon full communication between the convener and the Proposers, such proposals shall be voted according to the stipulations in Article 4.2.6 hereof. The convener

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

shall specify the proposals to be voted, voting procedures and conditions precedent in the notice of the bondholders’ meeting.

3.2.6 Proposals submitted at the same bondholders’ meeting for consideration shall be made public no later than the trading day preceding the record date. If proposals are not disclosed according to the regulations and stipulations, they shall not be submitted at this bondholders’ meeting for consideration.

Section III Notice of Meetings and Change and Cancelation Thereof

3.3.1 The convener shall disclose an announcement on the notice of convening a bondholders’ meeting no later than the 10th trading day prior to the date of such bondholders’ meeting. If the trustee manager deems it in urgent need to convene a bondholders’ meeting which is conducive to protecting the rights and interests of bondholders, an announcement on the notice of convening the bondholders’ meeting shall be disclosed no later than the 3rd trading day prior to the date of an on-site meeting (including meeting convened in combination with on-site and off-site means) or the 2nd trading day prior to the date of an off-site meeting.

The contents of the notice announcement stipulated in the preceding paragraph include but not limited to basic information on bonds, time of meeting, convening method of meeting, venue of meeting (if any), proposals to be considered at the meeting, record date, voting method of meeting, voting time and other procedures, entrusted matters, name and contact method of convener and person-in-charge of the meeting, etc.

3.3.2 Depending on the contents of the proposals to be considered, a bondholders’ meeting may be convened by on-site (including the form of on-site discussion via the Internet, and this applies to the below sections), off-site means or both. The convener shall specify the convening method and relevant specific arrangement for the meeting in the notice announcement of the bondholders’ meeting. For a meeting convened by way of online voting, the convener shall also disclose, as appropriate, the measures for online voting, voting method, principle and method of vote counting and other information.
3.3.3 If the convener intends to convene an on-site bondholders’ meeting, it may set up a link for attendance feedback before the date of the meeting to collect the attendance willingness of bondholders, and specify relevant arrangements in the notice announcement of the meeting.

Bondholders who intend to attend this bondholders’ meeting shall provide feedback on attendance in time. If not, their rights to attend and vote at this bondholders’ meeting will not be affected.

3.3.4 If bondholders disagree with the detailed contents of the notice of a bondholders’ meeting or have comments to supplement regarding thereof, they may communicate and negotiate with the convener, and the convener will decide whether to adjust relevant matters in the notice.

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

3.3.5 If the convener decides to postpone a bondholders’ meeting or change the convening method, venue of meeting, proposals to be considered and other matters in the notice of the bondholders’ meeting, it shall publish an announcement relating to changes in the notice of the meeting on the same information disclosure platform where the notice of the meeting is published no later than the trading day preceding the original record date.
3.3.6 The convening time of a meeting which has been disclosed shall not be brought forward at will in principle, except for in case of emergency where the trustee manager considers the rights of bondholders will be impaired if the bondholders’ meeting is not convened as soon as possible, provided that the notice time of the meeting meets the stipulations in Article 3.3.1 hereof.
3.3.7 Upon dispatch of the notice of a bondholders’ meeting, such bondholders’ meeting shall not be canceled at will, unless elimination of the cause for holding such bondholders’ meeting, or occurrence of force majeure events or otherwise stipulated herein.

If the convener intends to cancel such bondholders’ meeting, it shall disclose an announcement on such cancelation with reasons therefor on the same information disclosure platform where the notice of the meeting is published no later than the trading day preceding the original record date in principle.

If the bondholders’ meeting sets up a link for attendance feedback, the outstanding Bonds represented by the bondholders who provide a feedback to attend the meeting do not meet the minimum requirement for establishing a valid meeting as stipulated in Article 4.1.1 hereof, and the convener has indicated the risk that the meeting may be canceled in the notice of the meeting, then the convener has the right to cancel such meeting directly.

3.3.8 If the convener decides to convene another meeting as the attendees do not meet the minimum requirement for establishing a bondholders’ meeting as stipulated in Article 4.1.1 hereof, it may adjust, as appropriate, some of the details of the proposals to be considered based on the relevant opinions of bondholders during the convening of the previous meeting, to seek consideration and approval at the bondholders’ meeting to the greatest extent.

If the convener intends to convene another meeting for proposals of same or similar nature, it shall disclose an announcement on the notice of holding the bondholders’ meeting no later than the 3rd trading day prior to the date of an on-site meeting or the 2nd trading day prior to the date of an off-site meeting, with descriptions, in detail, on the following matters:

a. relevant opinions of bondholders on the proposals to be considered during the convening of the previous meeting;

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

b. adjustments to the proposals to be considered at this meeting compared to those considered at the previous meeting and reasons therefor;
c. possible impacts on rights and interests of investors from whether or not the proposals to be considered will be passed at this meeting;
d. if the attendees of this bondholders’ meeting still fail to meet the stipulated requirement, the relevant arrangements of convener for subsequent cancelation or convening another meeting, as well as possible impacts on rights and interests of investors.

CHAPTER IV HOLDING AND RESOLUTIONS OF THE BONDHOLDERS’ MEETINGS

Section I Holding of the Bondholders’ Meetings

4.1.1 A bondholders’ meeting may be held when bondholders representing a half or more of the outstanding Bonds carrying voting rights are present. Sign-in at an on-site meeting or voting at an off-site meeting will be deemed to attend such bondholders’ meeting.
4.1.2 Bondholders who appear on the register of bondholders on the record date and those holding the outstanding Bonds may be entitled to attend and vote at a bondholders’ meeting, unless otherwise stipulated herein.

The record date referred to in the preceding paragraph means the trading day preceding the date of the bondholders’ meeting. In the event of a change in holding time of the bondholders’ meeting with causes, the record date will be adjusted accordingly.

4.1.3 The trustee manager of the Bonds shall attend and organize to hold a bondholders’ meeting, or provide necessary assistance in convening a bondholders’ meeting by relevant institutions or individuals on their own according to the stipulations in Article 3.1.3 hereof, and promote communications and negotiations among bondholders, and between bondholders with the Issuer or its controlling shareholder(s) and actual controller(s), successors of debt service obligations at an on-site bondholders’ meeting to form valid and practicable resolutions, etc.
4.1.4 If a proposal to be considered requires the Issuer or its controlling shareholder(s) and actual controller(s), successors of debt service obligations to perform obligations or to proceed or implement, the above institutions or individuals shall, as required by the trustee manager or the convener, arrange personnel with proper authority to attend an on-site bondholders’ meeting on time, provide relevant explanations to bondholders, accept enquiries of bondholders, etc., communicate and negotiate with bondholders, and specify relevant arrangements for matters to be resolved of the proposal to be considered.

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

4.1.5 Credit rating agencies may be invited by the convener to attend an on-site bondholders’ meeting, and continue to follow up the credit status of the Issuer or its controlling shareholder(s) and actual controller(s), successors of debt service obligations with disclosure of followup rating reports thereon in a timely way.
4.1.6 Bondholders may attend and vote at a bondholders’ meeting on their own, or appoint the trustee manager, other bondholders or other proxies (hereinafter collectively referred to as the Proxies) to attend and vote at the bondholders’ meeting within the extent of authority.

For bondholders attending an on-site bondholders’ meeting on their own, they shall produce certificates of their own identity and entitlements to attend the meeting as required by the notice of the meeting. For bondholders appointing Proxies to attend an on-site bondholders’ meeting, the Proxies shall also produce the certificates of their own identity and the power of attorney issued by the principal setting out the Proxies’ authority, except for the legal representative of a bondholder attending and voting at the meeting in person.

For bondholders’ meetings held via off-site means, the convener shall specify in the notice of the meeting the method for determining entitlements of bondholders or their Proxies to attend the meeting, voting method, method of vote counting and other matters.

4.1.7 The trustee manager may, as a solicitor, solicit bondholders to appoint it to attend and vote at a bondholders’ meeting within the extent of authority on behalf of bondholders. The solicitor shall provide bondholders with explanations in an objective manner on the subject and matters to be voted at the bondholders’ meeting, and shall not conceal, mislead or solicit with payment. If the solicitor attends and votes at the bondholders’ meeting on behalf of bondholders, the solicitor shall obtain a power of attorney from the bondholders.
4.1.8 The agenda of a bondholders’ meeting may include but not limited to:
a. The convener introduces the cause for convening the meeting, background and attendees;
b. The convener or Proposers introduce the background, detailed contents, feasibility, etc. of the proposals raised;
c. Bondholders with voting rights inquire the Proposer or other stakeholders present at the meeting for the proposals to be considered, and communicate and negotiate among bondholders, bondholders and the Issuer or its controlling shareholder(s) and actual controller(s), successors of debt service obligations in connection with the proposals to be considered in the circumstances stipulated in Article 3.2.3 hereof;

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

d. Bondholders with voting rights vote according to the procedures stipulated herein.

Section II Voting of the Bondholders’ Meetings

4.2.1 Voting at the bondholders’ meetings shall take place by way of open ballot.
4.2.2 When voting by bondholders, every outstanding bond shall have one vote, except for the share of bonds directly held or indirectly controlled by the following institutions or persons:
a. the Issuer and its related parties, including, controlling shareholder(s) and actual controller(s) of the Issuer, subsidiaries within the scope of consolidation, related companies under the control of the same actual controller (except under the same control of the state only), etc.;
b. guarantors or other institutions or individuals providing credit enhancement or debt service coverage for the Bonds (if any);
c. successors of debt service obligations;
d. other institutions or individuals with conflict of interest in the matters to be considered.

Before voting at a bondholders’ meeting, the above institutions, individuals or the managers of asset management products they entrust for investment shall take the initiative to declare related relationships or conflict of interest to the convener and abstain from voting.

4.2.3 Bondholders present at the meeting and with voting rights shall vote according to three types, namely “for”, “against” and “abstention”, and voting opinions shall not be conditional. Voting with no explicit opinions, conditional voting, voting with multiple opinions on the same resolution, unreadable voting or voting which is not submitted at the on-site meeting, will be deemed as “abstention” in principle.
4.2.4 A bondholders’ meeting shall be conducted on a continual basis until completion of voting on all proposals. Except for special reasons such as force majeure that result in suspension of a bondholders’ meeting, failure to make any resolution or approval for delay in voting through unanimous consent by all bondholders present at the meeting, no matters to be considered as set forth in the notice of the meeting may be shelved or not be voted upon at the bondholders’ meeting.

For suspension of a meeting or failure to make any resolution caused by failure of online voting system, electronic communication system and other technical reasons, the convener shall adopt necessary measures to resume the meeting as soon as possible or change voting method, and an announcement shall be made timely.

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

4.2.5 Bondholders present at the meeting shall vote on the proposals submitted for consideration item by item according to the order of proposals disclosed in the notice of the meeting.
4.2.6 In the event of the circumstances stipulated in the second paragraph of Article 3.2.5 hereof, the convener shall provide special explanations on the contents of proposals with contradictions in matters to be resolved, and submit the relevant proposals at the same bondholders’ meeting for voting. Bondholders may vote “for” one of the proposals only, otherwise all votes thereon will be deemed as “abstention”.

Section III Taking Effect of Resolutions of the Bondholders’ Meetings

4.3.1 Resolutions of a bondholders’ meeting on one of the following major matters within the extent of authority stipulated in Article 2.2 hereof and with conditions precedent thereto being satisfied may take effect upon approval by two thirds or more of the voting rights held by all bondholders with voting rights:
a. proposed consent to assuming by a third party of the repayment obligations of the Bonds;
b. proposed downward adjustment to interest rate by the Issuer, unless the offering document of the bonds has clearly stipulated that the Issuer shall have corresponding decision right unilaterally;
c. proposed reduction or exemption of, or delay in repayment of, the principal and interest payable on the Bonds by the Issuer or other third parties with repayment obligations, unless the offering document of the bonds has clearly stipulated that the Issuer shall have corresponding decision right unilaterally;
d. proposed reduction or exemption of, or delay in payment of, money by credit enhancement providers or other third parties with repayment obligations;
e. proposed reduction in amount or value of charges/pledges and other collateral, which causes the remaining value of charges/pledges and other collateral to be insufficient to cover all of the outstanding principal and interest of the Bonds;
f. proposed amendments to the offering document of the bonds or relevant stipulations herein to realize items a to e under this Article, either directly or indirectly;
g. proposed amendments to relevant stipulations herein concerning the extent of authority of the bondholders’ meetings.

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

4.3.2 Resolutions of a bondholders’ meeting on other general matters within the scope stipulated in Article 2.2 hereof (other than the major matters stipulated in Article 4.3.1 hereof) and with conditions precedent thereto being satisfied may take effect upon approval by a half or more of the voting rights held by the bondholders present at the bondholders’ meeting and with voting rights. If there are other stipulations herein, such stipulations shall prevail.
4.3.3 If the proposals of a bondholders’ meeting require the Issuer or its controlling shareholder(s) and actual controller(s), successors of debt service obligations to perform obligations or to proceed or implement, but the conditions precedent are not satisfied due to failure to reach a consensus with relevant institutions or individuals above through negotiation, the bondholders’ meeting may authorize the trustee manager, the relevant institutions or individuals above or qualified bondholders to put forward proposals for adoption of corresponding measures according to these rules, and submit the same to the bondholders’ meeting for consideration.
4.3.4 Where the proposals to be considered at a bondholders’ meeting involve the matters where the trustee manager or a representative elected is authorized to initiate or participate in arbitration or litigation requiring the Issuer or credit enhancement providers to repay the principal and interest of bonds or perform the obligations of credit enhancement, or to apply for or participate in bankruptcy restructuring or bankruptcy liquidation of the Issuer, or to participate in bankruptcy reconciliation of the Issuer on behalf of the bondholders, and if it is authorized by all bondholders, the trustee manager or the representative elected will initiate or participate in relevant arbitration or litigation proceedings on behalf of all bondholders; if it is authorized by part of the bondholders only, the trustee manager or the representative elected will initiate or participate in relevant arbitration or litigation proceedings on behalf of the bondholders who have granted authorizations only.
4.3.5 Voting results of a bondholders’ meeting shall be counted and calculated jointly by a representative designated by the convener and the witnessing lawyer, and be included in the meeting minutes by the trustee manager. The convener shall disclose rules for vote counting and scrutinizing in the notice of the meeting, and determine vote counters and scrutineers before voting at the meeting.

Voting results of the bondholders’ meeting shall, in principle, not be announced earlier than the disclosure date of resolutions of the bondholders’ meeting. If the convener announces the voting results at the on-site meeting, relevant information shall be included in the meeting minutes.

4.3.6 If bondholders disagree with the voting results, they may apply to the convener for inspecting the votes cast at the meeting, vote counting results, meeting minutes and other relevant meeting materials, and the convener shall render cooperation.

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

CHAPTER V SUBSEQUENT EVENTS AND IMPLEMENTATION OF RESOLUTIONS OF THE BONDHOLDERS’ MEETINGS

5.1 Minutes of a bondholders’ meeting shall be prepared by the trustee manager, and be signed jointly by a representative designated by the convener and the witnessing lawyer.

Minutes of a meeting shall contain the following particulars:

(I) name (including session), convening and voting time, convening method, venue (if any) of the bondholders’ meeting;
(II) name, identity, proxy authority of bondholders and their Proxies, if any, present at the bondholders’ meeting, either on-site or off-site, aggregate nominal value and proportion of the outstanding Convertible Bonds they represent, and whether with vote rights or not;
(III) agenda of the meeting;
(IV) main points of enquiries by bondholders, brief information on communication and negotiation among bondholders, particulars of communication and negotiation between bondholders with the Issuer or its controlling shareholder(s) and actual controller(s), successors of debt service obligations in respect of the proposals to be considered in the circumstances stipulated in Article 3.2.3 hereof as well as details of changes to the proposals to be considered, if any;
(V) voting procedures (if voting in batches);
(VI) voting on each proposal and its result.

Minutes of the bondholders’ meeting, votes, certificates of bondholders’ entitlements to attend the meeting, power of attorney of Proxies and other meeting materials shall be kept by the bond trustee manager for a term of at least 5 years after the termination of the debtor-creditor relationship in connection with the Bonds.

Bondholders have the right to apply for inspecting the materials of all meetings convened during their holding of the Bonds, and the bond trustee manager shall not decline their application.

5.2 The convener shall disclose an announcement on resolutions of a bondholders’ meeting no later than the next trading day following the last day for voting at the meeting, and such announcement shall include, without limitation to, the following particulars:
(I) convening of the bondholders’ meeting, including name (including session), convening and voting time, convening method, venue (if any), etc.;

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

(II) voting rights held by the bondholders present at the meeting and validity of the meeting;
(III) subject matter and matters to be resolved of each proposal, whether its conditions precedent are satisfied, its voting result and whether it takes effect or not;
(IV) other major events subject to announcement.
5.3 The trustee manager shall actively implement, and timely notify the Issuer or other relevant parties and procure it or them to implement the valid resolutions of a bondholders’ meeting formed in accordance with the extent of authority and meeting procedures stipulated herein.

If the valid resolutions of a bondholders’ meeting require the Issuer or its controlling shareholder(s) and actual controller(s), successors of debt service obligations to perform obligations or to proceed or implement, the relevant institutions or individuals above shall earnestly perform corresponding obligations, or proceed or implement the valid resolutions according to the provisions, stipulations or relevant undertakings, and disclose the progress of implementation of the resolutions. If relevant institutions or individuals do not implement the valid resolutions of the bondholders’ meeting according to the provisions, stipulations or relevant undertakings, the trustee manager shall adopt further measures to earnestly protect the rights and interests of bondholders.

Bondholders shall actively cooperate with the trustee manager, the Issuer or other relevant parties in promoting and implementing relevant matters of the valid resolutions of the bondholders’ meeting.

5.4 If bondholders authorize the trustee manager to initiate or participate in arbitration or litigation proceedings on disputes from breach of contract relating to the bonds, or to apply for or participate in bankruptcy proceedings, the trustee manager shall diligently perform corresponding obligations according to the extent of authority, implementation arrangements and other requirements. The reasonable expenses incurred by the trustee manager from initiating or participating in the arbitration, litigation or bankruptcy proceedings shall be borne by the bondholders who have granted authorizations, or be prepaid by the trustee manager under the agreement with bondholders. If there are other stipulations in the bond trustee management agreement, such stipulations shall prevail.

Where the trustee manager is authorized by part of the bondholders only to initiate or participate in arbitration or litigation proceedings on disputes from breach of contract relating to the bonds, or to apply for or participate in bankruptcy proceedings, and the other bondholders later explicitly indicate to entrust the trustee manager to initiate or participate in the arbitration or litigation proceedings, then the trustee manager shall initiate or participate in the arbitration or litigation

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

proceedings on behalf of the other bondholders as well in addition to those who have granted authorizations. The trustee manager may also solicit the bondholders who have not granted authorizations previously to initiate or participate in the arbitration or litigation proceedings on behalf of them with reference to the stipulations in Article 4.1.7 hereof. The trustee manager shall not treat bondholders differently due to different time and method of authorization, except for different rights of bondholders objectively not for subjective reasons of the trustee manager.

If other bondholders do not entrust the trustee manager to initiate or participate in arbitration or litigation proceedings, they may initiate or participate in the arbitration or litigation proceedings on their own, or appoint or elect other representatives to initiate or participate in the arbitration or litigation proceedings.

If the trustee manager fails to diligently initiate or participate in arbitration or litigation proceedings on behalf of the bondholders according to the stipulations in the authorization document, or otherwise neglects its duties during the process, the bondholders may individually or jointly, or elect other representatives to, initiate or participate in the arbitration or litigation proceedings.

CHAPTER VI SPECIAL STIPULATIONS

Section I Special Stipulations on Voting Mechanism

6.1.1 Where bondholders exercise their sale back options or other rights provided in the laws or stipulated in the offering document which cause the rights of part of bondholders to claim repayment by the Issuer to be different from those of other bondholders of the same period, the bondholders with the same rights of claim may separately vote on the matters which do not relate to the interests of other bondholders.

The matters referred to in the preceding paragraph shall be proposed by the trustee manager, the bondholders holding 10% or more of all outstanding bonds carrying the same rights of claim or other qualified Proposers as special proposals, and shall be voted by concerned bondholders with only the trustee manager as the convener.

If the trustee manager intends to convene a bondholders’ meeting to consider the special proposals, it shall disclose in the notice of the meeting the contents of the proposals, scope of bondholders to vote, conditions precedent, with clean explanations on the reasons for not submitting relevant proposals to all bondholders for voting and whether there will be adverse impacts on the investors who do not vote after passing of the proposals.

Conditions precedent to the special proposals shall be subject to the conditions specified by the trustee manager in the notice of the meeting. The witnessing lawyer shall express its explicit opinions on the validity of the special proposals in the legal opinion.

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

Section II Simplified Procedures

6.2.1 The trustee manager may convene a bondholders’ meeting according to the simplified procedures stipulated in this section upon occurrence of the relevant matters stipulated in Article 2.2 hereof and in the event of one of the following circumstances, unless otherwise stipulated herein, in which case such stipulations shall prevail:
a. the Issuer intends to change the use of proceeds from the bonds, after which the solvency of the Issuer will not be impacted;
b. the Issuer reduces its capital due to repurchase of shares upon implementation of equity incentive plan, by an accumulative amount which is lower than 10% of the latest audited net assets on combined basis at the time of the issuance of the Bonds;
c. the trustee manager intends to implement relevant matters on behalf of the bondholders, which is expected to cause no material adverse impacts on the protection of rights and interests of bondholders;
d. the offering document of the bonds, these rules, the bond trustee management agreement and other documents have clearly stipulated the obligations on the part of the Issuer, the trustee manager and other entities upon occurrence of relevant unfavorable events, but do not clearly stipulate the detailed execution arrangements or on the failure of the relevant entities to fully perform corresponding obligations within the stipulated time, which shall be further stipulated;
e. the trustee manager and the Proposers have communicated and negotiated with the bondholders with voting rights in respect of the proposals to be considered with conditions precedent thereto being satisfied, and bondholders representing more than half of the voting rights held by the bondholders present at the bondholders’ meeting and with voting rights (for the purpose of the general matters stipulated in Article 4.3.2 hereof) or two thirds or more of the voting rights held by all bondholder with voting rights (for the purpose of the major matters stipulated in Article 4.3.1 hereof) have approved the contents of the proposals;
f. Number of holders of all outstanding bonds (several accounts held by the same manager are consolidated in calculation) does not exceed 4 and all of them approve in writing the convening and holding of a meeting based on simplified procedures;
6.2.2 In the event of the circumstances under items a to c in Article 6.2.1 hereof, the trustee manager may make an announcement stating the contents of the measures to be taken by the Issuer or the trustee manager, expected impacts on the Issuer’s solvency and the protection of rights and interests of investors, etc. If bondholders

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

dissent, they shall give a reply to the trustee manager within 5 trading days after the date of the announcement. If they do not give a reply within the specified time, they will be deemed to agree with the opinions or suggestions contained in the announcement made by the trustee manager.

For the matters which bondholders dissent, the trustee manager shall actively communicate with the dissenters, and decide whether to adjust relevant contents depending on the conditions and then seek opinions of bondholders, or terminate the application of simplified procedures. If the bondholders holding individually or collectively 10% or more of the outstanding Bonds propose to terminate the application of simplified procedures during the dissenting period, the trustee manager shall terminate immediately.

Upon expiry of the dissenting period, such meeting shall be deemed to be having been held and vote having been completed. The trustee manager shall determine the results of the meeting according to the stipulations in the first paragraph of Article 4.3.2 hereof, and disclose the announcement on resolutions of the bondholders’ meeting and the legal opinion issued by the witnessing lawyer on the next day.

6.2.3 In the event of the circumstances under items d to f in Article 6.2.1 hereof, the trustee manager shall disclose an announcement on the notice of convening a bondholders’ meeting with detailed explanations on the matters to be resolved and implementation arrangements of the proposals to be considered, expected impacts on the Issuer’s solvency and the protection of rights and interests of investors, convening and voting methods of the meeting and other matters no later than the 3rd trading day prior to the date of an on-site meeting or the 2nd trading day prior to the date of an off-site meeting. Bondholders may vote in the manner as specified in the notice of the meeting.

Convening, voting, taking effect and implementation of resolutions of a bondholders’ meeting shall still be subject to the stipulations in Chapter IV and Chapter V hereof.

CHAPTER VII SUPPLEMENTAL PROVISIONS

7.1 These rules shall take effect from the date of completion of the issuance of the Bonds.
7.2 If there are any changes or supplements to some of the stipulations herein according to the procedures stipulated herein, the rules after such changes or supplements shall, together with these Rules, constitute stipulations which have equal effect to all bondholders.
7.3 If there is any inconsistency or contradiction between relevant stipulations herein and those in the offering document of the bonds, the stipulations in the offering document of the bonds shall prevail; and if there is any inconsistency or contradiction with the bond trustee management agreement or other stipulations,

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APPENDIX V RULES OF A SHARE CONVERTIBLE CORPORATE BOND HOLDERS’ MEETING

these rules shall prevail except for relevant contents which have been clearly stipulated in the offering document of the bonds and have been disclosed.

7.4 If any matters are not specified in these rules or the relevant provisions of these rules are inconsistent with the relevant provisions of national laws, administrative regulations or the listing rules of the places where the company’s shares are listed, they shall be implemented in accordance with relevant laws, administrative regulations and the listing rules of the places where the company’s shares are listed.
7.5 For any disputes arising from the convening, holding and voting procedures of a bondholders’ meeting, validity of resolutions and other matters relating to the bondholders’ meeting, the people’s court with jurisdiction of the place where the Issuer is domiciled shall file a suit.
7.6 As agreed in these rules, the expressions of “above” and “within” shall be inclusive of the stated figure, while the expressions of “over” and “more than” shall be exclusive of the stated figure.

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APPENDIX VI

REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

This English version is for reference only. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.

The Board of Dynagreen Environmental Protection Group Co., Ltd. Special Report on Utilization of Previously Raised Proceeds

In accordance with the provisions of the Regulations on the Report on the Use of Previously Raised Proceeds (Zheng Jian Fa Xing Zi [2007] No.500) (《關於前次募集資金使用情況報告的規定》（證監發行字[2007]500號）) issued by China Securities Regulatory Commission, Dynagreen Environmental Protection Group Co., Ltd. (the “ Company ”) has prepared the report on the use of previously raised proceeds as at 31 March 2021.

I. BASIC INFORMATION OF THE PROCEEDS

(i) Actual amount and receipt of the proceeds

1. Proceeds from the initial public offering

The Company was approved by China Securities Regulatory Commission with the Reply on Approval of the Initial Public Offering of Shares by Dynagreen Environmental Protection Group Co., Ltd. (Zheng Jian Xu Ke [2018] No. 746) 《關於核准綠色動力環保集團股份有限公司首次公開發行( 股票的批覆》證監許可[2018]746號文) to issue not more than 116,200,000 RMB-denominated ordinary shares (“ A Shares ”) under public offering. In accordance with the Announcement on Listing of Shares under Initial Public Offering and the 2018 First Quarterly Review Report 《首次公開發行股票上市( 公告書暨2018年第一季度審閱報告》) published by the Company on 8 June 2018, the issue price was RMB3.29 per share, and the number of shares issued was 116,200,000 shares. The aggregate proceeds from the initial public offering of A Shares by the Company amounted to RMB382,298,000, and the net proceeds after deducting the issue expenses of RMB36,279,200 amounted to RMB346,018,800. The proceeds were received on 5 June 2018.

The proceeds from the Company’s initial public offering of new A Shares have been verified by Grant Thornton China, who has issued the Capital Verification Report (Zhi Tong Yan Zi (2018) No. 110ZC0182).

2. Proceeds from the non-public offering

As approved by China Securities Regulatory Commission with the Approval in Relation to the Non-public Offering of Shares by Dynagreen Environmental Protection Group Co., Ltd. (Zheng Jian Xu Ke [2020] No. 2493) 《關於核准綠色動力環保集團股份有限公司非公開發行股票的批覆》( （證監許可 [2020]2493號）), the Company privately issued 232,240,000 RMB-denominated ordinary shares (A Shares) of RMB1.00 each at the issue price of RMB7.82 per

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REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

share. Total proceeds amounted to RMB1,816,116,800, and net proceeds after deducting the issue expenses of RMB30,540,501.8 were RMB1,785,576,298.2. The proceeds were received on 19 November 2020.

The proceeds from the Company’s non-public offering of A Shares have been verified by KPMG Huazhen LLP, who has issued the Capital Verification Report (KPMG Huazhen Yan Zi No. 2000863).

(ii) Deposit of proceeds in special accounts

1. Proceeds from the initial public offering

As at 31 March 2021, balances of the special accounts for proceeds are shown as follows:

Name of bank for
deposit of proceeds	Bank account	Balance	Notes
		(RMB0’000)
China Merchants Bank	755903860310518	0.00	Cancelled
Shenzhen Branch
Gaoxinyuan
Sub-branch
Beijing Rural	1901000103000012784	0.00	Cancelled
Commercial Bank
Xuanwu Branch
Bank of Beijing	20000030483900022858696	0.00	Cancelled
Shenzhen Xiangmi
Sub-branch
China Merchants Bank	755930481810701	0.00	Cancelled
Shenzhen Branch
Gaoxinyuan
Sub-branch
Total		0.00

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REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

2. Proceeds from the non-public offering

As at 31 March 2021, balances of the special accounts for proceeds are shown as follows:

Name of bank for
deposit of proceeds	Bank account	Balance	Notes
		(RMB0’000)
China Merchants Bank	755903860310916	6,524.43
Shenzhen Branch
Gaoxinyuan
Sub-branch
Agricultural	20344138100100000184441	3,677.67
Development Bank
of China Huizhou
Huiyang Sub-branch
Postal Savings Bank of	944031010000382972	7,682.50
China Qianhai
Branch
China Merchants Bank	577904969310711	3,591.86
Wenzhou Branch
Ping An Bank	15540434620027	0.36
Shenzhen Branch
HSBC Bank (China)	622060150050	1,316.57
Company Limited
Shenzhen Branch
Total		22,793.39

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APPENDIX VI

REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

II. ACTUAL USE OF PREVIOUSLY RAISED PROCEEDS

(i) Checklist of the use of previously raised proceeds

Please refer to Annex 1 of this report for details of the checklist of the use of proceeds from the initial public offering.

Please refer to Annex 2 of this report for details of the checklist of the use of proceeds from the non-public offering.

(ii) Changes of projects actually funded by previously raised proceeds

The Company reports no change of proceeds funded projects.

(iii) Explanation on the difference between the total actual investment and the total committed investment of projects funded by previously raised proceeds

As at 31 March 2021, the Company reported no difference between the total actual investment and the total committed investment of projects funded by previously raised proceeds.

(iv) Transfer or replacement of projects funded by previously raised proceeds

1. Proceeds from the initial public offering

Prior to receipt of proceeds from the initial public offering, the Company financed part of the investment in proceeds funded projects by its self-raised funds. According to the Assurance Report on the Previous Investment of Dynagreen Environmental Protection Group Co., Ltd. in Proceeds Funded Projects by its Self-raised Funds (Zhi Tong Zhuan Zi (2018) No. 110ZB5782) 《關於綠色動力環保集團股份有限公司以自籌資金預先投入募集( 資金投資項目情況鑒證報告》（致同專字(2018)第110ZB5782號）) issued by Grant Thornton China, as at 5 June 2018, the total amount of the Company’s previous investment in proceeds funded projects by its self-raised funds was RMB900,115,700.

The 29th meeting of the second session of the Board considered and approved the Resolution on Using the Proceeds to Replace the Self-raised Funds Previously Invested in Proceeds Funded Projects, to which the Supervisory Committee and independent Directors expressed the explicit agreement and the sponsor issued the audit opinion, agreeing that the Company would use RMB246,018,800 of proceeds to replace the self-raised funds previously invested in proceeds funded projects. The Company completed the replacement of proceeds in August 2018.

As at 31 March 2021, balance of proceeds was zero.

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REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

2. Proceeds from the non-public offering

Prior to receipt of proceeds from the non-public offering, the Company utilized self-raised funds to invest in proceeds funded projects. According to the Assurance Report on the Previous Investment of Dynagreen Environmental Protection Group Co., Ltd. in Proceeds Funded Projects by its Self-raised Funds (Zhi Tong Zhuan Zi (2020) No. 110ZB10271) 《關於綠色動力( 環保集團股份有限公司以自籌資金預先投入募集資金投資項目情況鑒證報告》（致同專字(2020)第110ZB10271號）) issued by Grant Thornton China, as at 20 November 2020, the total amount of the Company’s previous investment in proceeds funded projects by its self-raised funds was RMB989,996,400. The 27th meeting of the third session of the Board considered and approved the Resolution on the Use of Proceeds, to which the Supervisory Committee and independent Directors expressed the explicit agreement and the sponsor issued the audit opinion, agreeing that the Company would use RMB989,996,400 of proceeds to replace the self-raised funds previously invested in proceeds funded projects. The Company completed the replacement of proceeds in December 2020.

As at 31 March 2021, the balance of proceeds (including interests and some unpaid issue expenses) was RMB227,933,900.

(v) Use of temporarily idle proceeds

As at 31 March 2021, the Company did not use any idle proceeds to replenish the working capital or make other investments.

III. ECONOMIC BENEFITS REALIZED BY PROCEEDS FUNDED PROJECTS

Please refer to Annex 3 of this report for details of the checklist of benefits realized by the projects funded by proceeds from the initial public offering.

Please refer to Annex 4 of this report for details of the checklist of benefits realized by the projects funded by proceeds from the non-public offering.

IV. OPERATION OF ASSETS IN THE PREVIOUSLY RAISED PROCEEDS THAT ARE USED TO SUBSCRIBE FOR SHARES

Previously raised proceeds of the Company have not been used to subscribe for shares.

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REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

V. EXPLANATIONS ON OTHER DIFFERENCES

There is no discrepancy between the actual use of the Company’s previously raised proceeds and the disclosures in the Company’s regular reports of each year and other information disclosure documents.

Annexes: 1. Checklist of the Use of Proceeds from the Initial Public Offering
Checklist of the Use of Proceeds from the Non-public Offering
Checklist of Benefits Realized by the Projects Funded by Proceeds from the Initial Public Offering
Checklist of Benefits Realized by the Projects Funded by Proceeds from the Non-public Offering

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REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

Annex 1 Checklist of the Use of Proceeds from the Initial Public Offering	As at 31 March 2021	Unit: RMB0’000	Net proceeds: 34,601.88 Net proceeds used cumulatively: 34,601.88	Net proceeds with the use changed: 0 Net proceeds used in each year: 34,601.88	Proportion of net proceeds with the use changed: 0 2019 0 2018 34,601.88	Cumulative investment funded by the proceeds	Investment projects Net investment of proceeds as at the cut-off date	Difference	between	the actual	investment	and the	The date on Committed Committed Committed Committed committed	which the investment investment investment investment investment	project reaches before the after the before the after the after the	the serviceable Committed Actual investment fund fund Actual fund fund Actual fund	conditions No. investment project project raising raising investment raising raising investment raising	1 Tianjin Ninghe Straw Tianjin Ninghe Straw 8,000.00 8,000.00 8,000.00 8,000.00 8,000.00 8,000.00 0 October 2017	Incineration Power Incineration Power	Generation Project Generation Project

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REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

							The date on	which the	project reaches	the serviceable	conditions	August 2018			November 2017				N/A		N/A
Cumulative investment funded by the proceeds	as at the cut-off date	Difference	between	the actual	investment	and the	Committed Committed committed	investment investment investment	before the after the after the	fund fund Actual fund	raising raising investment raising	8,000.00 8,000.00 8,000.00 0			15,225.28 8,601.88 8,601.88 0				10,000.00 10,000.00 10,000.00 0		41,225.28 34,601.88 34,601.88 0
	Net investment of proceeds						Committed Committed	investment investment	before the after the	fund fund Actual	raising raising investment	8,000.00 8,000.00 8,000.00			15,225.28 8,601.88 8,601.88				10,000.00 10,000.00 10,000.00		41,225.28 34,601.88 34,601.88
	Investment projects									Committed Actual investment	investment project project	Tianjin Ninghe Tianjin Ninghe	Biomass Power Biomass Power	Generation Project Generation Project	Bengbu Municipal Bengbu Municipal	Solid Solid	Waste-to-Energy Waste-to-Energy	Project Project	Replenishment of the Replenishment of the	working capital working capital
											No.	2			3				4		Total

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REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

Annex 2 Checklist of the Use of Proceeds from the Non-public Offering	As at 31 March 2021	Unit: RMB0’000	Net proceeds: 178,557.63 Net proceeds used cumulatively: 156,323.95	Net proceeds with the use changed: 0 Net proceeds used in each year:	Proportion of net proceeds with the use changed: 0 2021 23,540.58 2020 132,783.37	Cumulative investment funded by the proceeds	Investment projects Net investment of proceeds as at the cut-off date	Difference	between the	actual	The date on investment	which the Committed Committed Committed Committed and the	project investment investment investment investment committed	reaches the before the after the before the after the investment	serviceable Committed Actual investment fund fund Actual fund fund Actual after the fund	conditions investment project project raising raising investment raising raising investment raising	Huizhou Phase II Huizhou Phase II 60,000.00 39,640.00 35,970.58 60,000.00 39,640.00 35,970.58 3,669.42 May 2020	Project Project	Jinsha Project Jinsha Project 38,000.00 32,569.00 18,894.04 38,000.00 32,569.00 18,894.04 13,674.96 December	2021

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REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

					The date on	which the	project	reaches the	serviceable	conditions	April 2021		March 2021	April 2021		N/A
Cumulative investment funded by the proceeds	as at the cut-off date	Difference	between the	actual	investment	Committed Committed and the	investment investment committed	before the after the investment	fund fund Actual after the fund	raising raising investment raising	30,000.00 23,212.00 19,635.34 3,576.66		29,000.00 22,427.00 22,426.64 0.36	28,000.00 21,427.00 20,114.71 1,312.29		54,000.00 39,282.63 39,282.63 0.00		239,000.00 178,557.63 156,323.95 22,233.68
	Net investment of proceeds					Committed Committed	investment investment	before the after the	fund fund Actual	raising raising investment	30,000.00 23,212.00 19,635.34		29,000.00 22,427.00 22,426.64	28,000.00 21,427.00 20,114.71		54,000.00 39,282.63 39,282.63		239,000.00 178,557.63 156,323.95
	Investment projects								Committed Actual investment	investment project project	Pingyang Phase II Pingyang Phase II	Project Project	Shishou Project Shishou Project	Yongjia Phase II Yongjia Phase II	Project Project	Repayment of bank Repayment of bank	loans loans	Total

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APPENDIX VI

REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

					Benefits	realized Whether the	accumulatively estimated	as at the benefits are	cut-off date achieved	–12,870.82 (Note 3)			4,493.51 Yes			9,920.20 Yes
As at 31 March 2021					Actual benefits of the last three years and	Estimated benefits the latest period(Note 2)	January to January to	2019 2020 March 2021 2018 2019 2020 March 2021	(Net profit) (Net profit) (Net profit) (Net profit) (Net profit) (Net profit) (Net profit)	4,443 3,969 1,014 –2,092.12 –4,819.34 –5,164.27 –795.09			454 483 144 724.03 2,552.25 952.35 264.88			680.09 800.49 252.83 4,115.82 2,851.46 2,618.59 334.33
								2018	(Net profit)	4,365			364			456.83
	Cumulative	capacity	utilization	rate of the	investment	project as at	the cut-off	date	(Note 1)	51%			124%			115%
						Actual investment projects			No. Project name	1 Tianjin Ninghe Straw	Incineration Power	Generation Project	2 Tianjin Ninghe	Biomass Power	Generation Project	3 Bengbu Municipal	Solid	Waste-to-Energy	Project

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APPENDIX VI

REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

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APPENDIX VI

REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

Annex 4 Checklist of Benefits Realized by the Projects Funded by Proceeds from the Non-public Offering	As at 31 March 2021	Unit: RMB0’000	Cumulative	capacity	utilization	rate of the Actual benefits of the last three years and	Actual investment projects investment Estimated benefits the latest period Benefits Whether	project as realized the January to	at the accumulatively estimated March 2021 January to	cut-off date as at the benefits are 2018 2019 2020 (Net profit) 2018 2019 2020 March 2021	(Note 2) cut-off date achieved No. Project name (Net profit) (Net profit) (Net profit) (Note 3) (Net profit) (Net profit) (Net profit) (Net profit)	1 Huizhou Phase II Project 88% 797.95 223.72 4,481.89 1,245.97 5,727.86 Yes	2 Jinsha Project N/A N/A	(Note 1)	3 Pingyang Phase II Project N/A N/A	4 Shishou Project Note 2 83.91 202.78 202.78 Yes	5 Yongjia Phase II Project N/A N/A

– VI-13 –

APPENDIX VI

REPORT ON UTILIZATION OF PREVIOUSLY RAISED PROCEEDS

– VI-14 –

APPENDIX VII RESOLUTION AUTHORISING THE BOARD AND ITS AUTHORISED PERSONS TO EXERCISE IN FULL THE POWER TO DEAL WITH SPECIFIC MATTERS RELATING TO THE COMPANY’S PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

This English version is for reference only. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.

For the purpose of completion of the public issuance of A Share Convertible Corporate Bonds of the Company in an efficient and orderly manner, according to the relevant requirements under the Company Law of the People’s Republic of China, the Securities Law of the People’s Republic of China and other relevant laws and regulations and the Articles, the Board of the Company proposed at the general meeting of the Company to authorise the Board to exercise the full power to deal with all matters relating to the public issuance of A Share Convertible Corporate Bonds within the scope of the relevant laws and regulations, including but not limited to the following:

Authorise the Board to properly revise, adjust and supplement the relevant system files of plans, terms and rules for convertible corporate bonds holders’ meetings of the convertible corporate bonds within the scope permitted by the relevant laws, regulations, rules, normative documents and the Articles, according to the opinion of the regulatory authorities and taking into account the actual situation of the Company; clarify the specific issuance terms and plans prior to the issuance, formulate and implement the final plan of the issuance, including but not limited to determination of size of issuance, term, method of the issuance and target subscribers, proportion to be subscribed by the existing A Shareholders in priority, determination of initial conversion price, adjustment of conversion price, redemption, rating arrangement, bond interest rate, security, right to convene the bondholders’ meetings and its procedures, conditions to effectuate the resolutions, determination of the timing of the issuance, opening or adding special accounts for the proceeds raised and all other matters relating to the issuance;
Authorise the Board to proceed with the application and registration matters in the issuance; prepare, revise and submit the application documents in relation to the issuance according to the requirements and opinion of regulatory authorities;
Authorise the Board, the legal representative and its/his/her authorised person to amend, supplement, approve, sign, deliver, submit and execute all agreements, contracts and documents in relation to the issuance (including but not limited to underwriting and sponsor agreements, agreements in relation to the projects to be invested by the proceeds raised, agreements to engage intermediaries), deal with all relevant procedures of application, approval, registration and filing, as well as information disclosure matters in relation to the issuance in accordance with the regulatory requirements, and reply to the comments of the securities regulatory authorities and relevant government authorities with full discretion;

– VII-1 –

Within the scope of investment of the proceeds raised as considered and approved at the general meetings, according to the actual progress and capital requirements of the projects to be invested by the proceeds raised in the issuance, adjust or determine the specific use of proceeds raised; before the proceeds raised in the issuance are deposited in the accounts, the Company can invest in the projects to be invested by the proceeds raised by self-financing first, after the proceeds raised in the issuance are deposited in the accounts, the funds that have been invested in the projects shall be replaced; according to provisions in relevant laws, regulations, rules and normative documents and requirements of regulatory authorities as well as market conditions, make necessary adjustments to the projects to be invested by the proceeds raised; according to the requirements of the relevant authorities as well as the factual operating performance of the Company and within the scope of the resolutions of the general meeting, arrange and implement the use of raised funds in accordance with the importance and urgency of the projects;
In case of force majeure or other circumstances that make the plan of the issuance difficult to be implemented, or while it can be implemented, adverse consequences will be brought to the Company, or there are changes in the policies of issuing convertible corporate bonds, postpone or terminate the implementation of the plan of the issuance according to its discretions;
In the case where there are updated regulations and requirements on the dilutive impact on immediate returns and their recovery measures pursuant to the relevant laws, regulations, rules, and normative documents and the regulatory authorities, according to the then latest regulations and the requirements of the regulatory authorities, further analyse, research and substantiate the impact of the issuance on the Company’s immediate financial indicators and the Shareholders’ immediate returns, formulate and revise relevant recovery measures, and fully handle other related matters;
Authorise the Board, the legal representative and its/his/her authorised person, within the term of the convertible corporate bonds to be issued under the issuance, under the framework and principles considered and approved at the general meetings and in compliance with the relevant laws, regulations, rules and normative documents and the requirements of relevant regulatory authorities and the Articles, to handle all matters related to the redemption, conversion, and sale back of the convertible corporate bonds;
Authorise the Board, the legal representative and its/his/her authorised person to amend the relevant provisions of the Articles according to the status of the issuance and share conversion, and handle matters including industrial and commercial filing, registration of change of registered capital, and the listing of the A Share Convertible Corporate Bonds;

– VII-2 –

To take all necessary action to decide/deal with other matters related to the term of the convertible corporate bonds to the extent permitted by the relevant laws and regulations;
The above authorizations 7 to 9 are valid from the date of approval at the general meeting/class meeting of the Company to the duration of the relevant matters, while each of the others is valid for a period of 12 months from the date of approval at the general meeting of the Company.

– VII-3 –

APPENDIX VIII

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, 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 circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

a) Directors’ interests or short positions in the Shares

As at the Last Practicable Date, none of the Directors, Supervisors and chief executives of the Company had any interests or short positions in the Shares, underling Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (a) 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 they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of Part XV of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules, to be notified to the Company and the Stock Exchange.

– VIII-1 –

APPENDIX VIII

GENERAL INFORMATION

b) Substantial Shareholders’ interests or short positions in the Shares

As at the Latest Practicable Date, so far as was known to the Directors, the following persons (other than the Directors) had interest or short positions in the Shares and/or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

			Approximate
			percentage
			of the	Approximate
			relevant	percentage
	Nature of		class of	of the issued
Name	interest	Capacity	Shares		Shares
Beijing State-owned Assets	594,085,618
Management Co., Ltd.*	A shares	Beneficial
(“BSAM”)	(Long position)	owner	60.06%		42.63%
Beijing State-owned Assets
Management (Hong Kong)	24,859,792
Company Limited (“BSAM	H shares	Beneficial
(HK)”)1	(Long position)	owner	6.15%		1.78%
	24,859,792	Interest in
	H shares	controlled
BSAM1	(Long position)	corporation	6.15%		1.78%
	36,230,000
Tenbagger Capital Management	H shares	Investment
CO., LTD	(Long position)	manager	8.96%		2.60%
	77,949,314
Three Gorges Capital Holdings	A shares	Beneficial
Co., Ltd.	(Long position)	owner	7.88%		5.59%

Note:

1 BSAM (HK) is a wholly-owned subsidiary of BSAM. Pursuant to the SFO, BSAM is deemed to be interested in the H Shares held by BSAM (HK), holding 24,859,792 H Shares, representing approximately 6.15% of the total H Shares of the Company and approximately 1.78% of the total share capital of the Company.

Save as disclosed, as at the Latest Practicable Date, so far as was known to the Directors, no other person (other than the Directors) had interest or short positions in the Shares and/or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

– VIII-2 –

APPENDIX VIII

GENERAL INFORMATION

As at the Latest Practicable Date, so far as was known to the Directors, the following Director was a director or employee of the substantial Shareholders set out above:

Position held in Name of Director the Company Position held in BSAM Cheng Suning Non-executive director Employee of entity of BSAM

c) Competing Interests

As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors or their respective close associates had any interest in any business, which competes or may compete, either directly or indirectly, with the business of the Group as if each of them were treated as a controlling shareholder of the Company under Rule 8.10 of the Listing Rules.

3. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors or Supervisors had entered or proposed to enter into a service contract with any member of the Group which will not expire or is not determinable within one year without payment of compensation (other than statutory compensation).

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, there had been no material adverse change in the financial or trading position of the Group since 31 December 2020 (being the date to which the latest published audited consolidated financial statements of the Group were made up).

5. LITIGATION

So far as the Directors are aware, no member of the Group was engaged in any litigation or arbitration of material importance and no litigation or arbitration of material importance was pending or threatened against any member of the Group as at the Latest Practicable Date.

6. DIRECTORS’ AND SUPERVISORS’ INTEREST

None of the Directors or Supervisors has any direct or indirect interest in any assets which have been, since 31 December 2020, the date to which the latest published audited financial statements of the Company were made up, acquired or disposed of by or leased to, or which are proposed to be acquired or disposed of by, or leased to, any member of the Group.

– VIII-3 –

APPENDIX VIII

GENERAL INFORMATION

As at the date of this circular, none of the Directors or Supervisors was materially interested in any contract or arrangement subsisting which was significant in relation to the business of the Group.

7. MISCELLANEOUS

a) The company secretary of the Company is YUEN Wing Yan, Winnie. She is a Chartered Secretary and a fellow of both of The Hong Kong Institute of Chartered Secretaries (“ HKICS ”) and The Institute of Chartered Secretaries and Administrators in the United Kingdom.
b) The registered office and principal place of business of the Company in the PRC is located at 2nd Floor, Jiuzhou Electronic Building, Keji South 12th Street, Nanshan District, Shenzhen, the PRC.
c) The principal place of business of the Company in Hong Kong is 1st Floor, Xiu Ping Commercial Building, 104 Jervois Street, Hong Kong.
d) The Hong Kong H share registrar and transfer office of the Company is Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

– VIII-4 –

AI assistant

Dynagreen Environmental Protection Group Co., Ltd. — Capital/Financing Update 2021

49855_rns_2021-08-06_783adafe-3a44-4888-9848-079d1dc9a8e3.pdf

綠色動力環保集團股份有限公司

Dynagreen Environmental Protection Group Co., Ltd.*

PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

DEFINITIONS

綠色動力環保集團股份有限公司 Dynagreen Environmental Protection Group Co., Ltd.*

(Stock Code: 1330)

PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

I. INTRODUCTION

II. PROPOSED ISSUANCE OF A SHARE CONVERTIBLE CORPORATE BONDS

(1) Proposed Issuance of A Share Convertible Corporate Bonds

1. Type of securities to be issued

2. Size of issuance

3. Par value and issue price

4. Term

5. Coupon rate

6. Method and timing of interest payment and repayment of the principal

(1) Calculation of Annual Interest

I: denotes the Annual Interest;

(2) Method of interest payment

LETTER FROM THE BOARD

7. Conversion period

8. Security

9. Determination and adjustment of the conversion price

10. Terms of downward adjustment to conversion price

(1) Authorisation and magnitude of adjustment

(2) Procedures of adjustment

11. Method of determining the number of shares for conversion

12. Terms of redemption

13. Terms of sale back

(1) Terms of conditional sale back

(2) Additional terms of sale back

14. Entitlement to dividend in the year of conversion

15. Method of the issuance and target subscribers

16. Subscription arrangement for the existing A Shareholders

17. Bond holders and bond holders’ meeting

LETTER FROM THE BOARD

19. Management of proceeds and deposit account

20. Validity period of the plan for A Share Convertible Corporate Bonds

21. Trustee manager

(2) Authorisation to be granted to the board

(3) Reasons for and benefits of the issuance of A Share Convertible Corporate Bonds

(4) Basis of determination of coupon rate of the A Share Convertible Corporate Bonds

(5) Implications on the proposed issuance of A Share Convertible Corporate Bonds under the PRC regulatory requirements

(6) Equity fund raising activities in the past twelve months

(7) Implications of the proposed issuance of A Share Convertible Corporate Bonds on the shareholding structure of the Company

(8) The public issuance of A Share Convertible Corporate Bonds not leading to changes in the control of the company

(9) Information on parties to the transaction

(10) Implications under the listing rules

(11) Relevant resolutions in relation to proposed issuance of A Share Convertible Corporate Bonds

(12) Risk Warning

III. EGM AND CLASS MEETINGS

IV. RECOMMENDATION

V. ADDITIONAL INFORMATION

綠色動力環保集團股份有限公司 Dynagreen Environmental Protection Group Co., Ltd.*

(Stock Code: 1330)

NOTICE OF EXTRAORDINARY GENERAL MEETING

ORDINARY RESOLUTIONS

SPECIAL RESOLUTIONS

By Order of the Board Dynagreen Environmental Protection Group Co., Ltd.* Qiao Dewei

1. Shareholders’ circular

2. Persons who are entitled to attend the EGM

3. Proxy

4. Registration procedures for attending the EGM

5. Miscellaneous

綠色動力環保集團股份有限公司

Dynagreen Environmental Protection Group Co., Ltd.*

(Stock Code: 1330)

NOTICE OF H SHARES CLASS MEETING

SPECIAL RESOLUTIONS

By Order of the Board

1. Shareholders’ circular

2. Persons who are entitled to attend the H Shares Class Meeting

3. Proxy

4. Registration procedures for attending the H Shares Class Meeting

5. Miscellaneous

Dynagreen Environmental Protection Group Co., Ltd.

PLAN OF THE PUBLIC ISSUANCE OF CONVERTIBLE CORPORATE BONDS

Dynagreen Environmental Protection Group Co., Ltd. Capital/Financing Update 2021

By Order of the Board **Dynagreen Environmental Protection Group Co., Ltd.* Qiao Dewei**