Rego Interactive Co., Ltd — Capital/Financing Update 2014

Feb 17, 2014

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

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(a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1065)

ANNOUNCEMENT IN RESPECT OF OBTAINING THE LICENSED OPERATION RIGHT OF THE FOUR SEWAGE WATER TREATMENT PLANTS IN TIANJIN INCLUDING JIZHUANGZI SEWAGE WATER TREATMENT PLANT AND SIGNING THE LICENSED OPERATION AGREEMENT BY THE COMPANY

Tianjin Capital Environmental Protection Group Company Limited (the “ Company ”) and all members of the board (the “ Board ”) of directors (the “ Directors ”) of the Company warrant the truthfulness, accuracy and completeness of this announcement, and jointly accept the responsibility for any false information, misleading statements or material omissions.

I. Board Resolutions

The 14th meeting of the Sixth Board of the Company was convened on 17 February 2014 by way of voting by correspondence (facsimile). Nine Directors should participate the meeting and nine Directors have attended the meeting. The Company has sent by email the notice of meeting and meeting materials of this Board meeting to all Directors of the Company on 17 January 2014. This Board meeting was convened in compliance with the relevant requirements of the Company Law of the People’s Republic of China (the “ PRC ”) and the Articles of Association of the Company. At the meeting, the “Resolution on Signing of the Licensed Operation Agreement in respect of the Four Sewage Water Treatment Plants including Jizhuangzi Sewage Water Treatment Plant” was considered and passed.

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• II. Background of Obtaining the Licensed Operation Right of the Four Sewage Water Treatment Plants in Tianjin Including Jizhuangzi Sewage Water Treatment Plant and Signing the Licensed Operation Agreement

In order to strengthen the management of the sewage water treatment industry in Tianjin, implement sewage water treatment licensed operation in city and protect the legitimate interest of sewage water treatment enterprises, upon the authorization from the Tianjin Municipal People’s Government recently, Tianjin Water Bureau (天津市水務局) and Tianjin Construction and Communication Administration Committee (天津市建設交通管理委員會) (“ Tianjin Construction Committee ”) jointly granted the Company the licensed operation right of Jizhuangzi Sewage Water Treatment Plant, Dongjiao Sewage Water Treatment Plant, Xianyanglu Sewage Water Treatment Plant and Beicang Sewage Water Treatment Plant (the “ Four Sewage Water Treatment Plants ”), for the Company to operate, maintain and manage the Four Sewage Water Treatment Plants. And Tianjin Water Bureau and Tianjin Construction Committee shall enter into the licensed operation agreement (the “ Licensed Operation Agreement ”) with the Company.

III. Key Terms of the Licensed Operation Agreement Proposed to be Signed

(I) Parties

• (1) Tianjin Water Bureau and Tianjin Construction Committee

Tianjin Water Bureau is a government department of the Tianjin Municipal People’s Government and is in charge of Tianjin municipal water administration. Tianjin Construction Committee is a department in charge of Tianjin municipal construction and administration.

• (2) The Company

(II) Scope of the Licensed Operation

1. The sewage water treatment capacity of Jizhuangzi Sewage Water Treatment Plant is 450,000 tonnes per day and the quality of treated water shall meet the first class-B graded standard of the Pollutants Emission Standards of Urban Sewage Water Treatment Plant (GB18918-2002) 《城鎮污水處理廠( 污染物排放標準》(GB18918-2002)) with ancillary out-plant drainage pipe of 47.52 kilometers and four drainage pumping stations.

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1. The sewage water treatment capacity of Dongjiao Sewage Water Treatment Plant is 400,000 tonnes per day, among which the quality of treated water of 120,000 tonnes per day shall meet the first class-A graded standard of the Pollutants Emission Standards of Urban Sewage Water Treatment Plant (GB18918-2002) 《城鎮污水處理廠污染物排放標準》( (GB18918-2002)) and the quality of treated water of 280,000 tonnes per day shall meet the first class-B graded standard of the Pollutants Emission Standards of Urban Sewage Water Treatment Plant (GB18918-2002) 《城鎮污水處理廠污染物( 排放標準》(GB18918-2002)) with ancillary out-plant drainage river of 32.7 kilometers.

2. The sewage water treatment capacity of Xianyanglu Sewage Water Treatment Plant is 450,000 tonnes per day and the quality of treated water shall meet the first class-B graded standard of the Pollutants Emission Standards of Urban Sewage Water Treatment Plant (GB18918-2002) 《城鎮( 污水處理廠污染物排放標準》(GB18918-2002)) with ancillary out-plant drainage pipe of 18.2 kilometers and two drainage pumping stations.

3. The sewage water treatment capacity of Beicang Sewage Water Treatment Plant is 100,000 tonnes per day and the quality of treated water shall meet the first class-B graded standard of the Pollutants Emission Standards of Urban Sewage Water Treatment Plant (GB18918-2002) 《城鎮( 污水處理廠污染物排放標準》(GB18918-2002)) with ancillary out-plant drainage pipe of 7.2 kilometers and one drainage pumping station.

(III) Term of the Licensed Operation

30 years from 1 January 2014.

(IV) The Licensed Operation Right

Tianjin Water Bureau and Tianjin Construction Committee shall grant the exclusive right to the Company in order for the Company to raise fund, operate and maintain project facilities and receive the sewage water treatment service fees during the term of the licensed operation according to the relevant laws and regulations. The licensed operation right of the Company shall remain and continue to be in force throughout the term of the licensed operation.

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(V) Sewage Water Treatment Service Standards

The quality of water treated by the Four Sewage Water Treatment Plants shall meet the first class-B graded standard of the Pollutants Emission Standards of Urban Sewage Water Treatment Plant (GB18918-2002) 《城鎮污水處理廠污染( 物排放標準》(GB18918-2002)) of the PRC.

(VI) Guaranteed Water Volume

Starting from the date of commercial operation, the guaranteed monthly sewage water treated by the Four Sewage Water Treatment Plants during the term of the licensed operation shall amount to 80% of their respective designed sewage water treatment capacities.

(VII) Unit Price of Sewage Water Treatment Service and Adjustment

1. In 2014, the unit price of sewage water treatment service shall be RMB1.77 per cubic meter. In 2015, the unit price of sewage water treatment service shall be RMB1.76 per cubic meter. The change in the unit price of sewage water treatment service between 2014 and 2015 is mainly due to the effect of yearly finance costs of the Four Sewage Water Treatment Plants.

2. Starting from 2014, adjustments shall be made to the unit price of sewage water treatment service every two years and the first adjustment shall be made in 2016. The adjustment shall be made after taking into account the changes of the relevant costs item in the sewage water treatment service unit price composition and the effect of the finance costs of the Four Sewage Water Treatment Plants on the unit price. The change rate of the costs item shall be the change rate of the relevant indexes in the corresponding years obtained from the publicly available statistical data such as Tianjin Statistical Yearbook 《天津統計年鑑》( ).

(VIII) Calculation of Sewage Water Treatment Service Fees

Where the quality of treated water meets the relevant standards or fails to meet the relevant standards which is not caused by the Company:

1. The designed sewage water treatment capacity of the relevant sewage water treatment plant ≥ if monthly actual inflow of sewage water ≥ monthly guaranteed water volume:

Sewage water treatment service fees = monthly actual inflow of sewage water x unit price of sewage water treatment service

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1. If monthly actual inflow of sewage water < monthly guaranteed water volume

Sewage water treatment service fees = monthly actual inflow of sewage water x unit price of sewage water treatment service + difference between actual inflow of sewage water and guaranteed water volume x unit price of sewage water treatment service x 75%

If the quality of treated water fails to meet the relevant standards which is caused by the Company, in addition to the payment of sewage water treatment service fees, Tianjin Water Bureau shall deduct money in respect of the treated sewage water which fails to meet the relevant standards in accordance with the Licensed Operation Agreement, and the Company shall assume corresponding legal responsibility.

(IX) Settlement of Sewage Water Treatment Service Fees

Tianjin Water Bureau shall pay the sewage water treatment service fees payable monthly in arrears to the Company within 15 working days upon billing.

(X) Default

Either party shall be entitled to receive compensation for losses, costs and expenses suffered by it as a result of the other party’s breach of contract. Such compensation shall be paid by the defaulting party.

(XI) Resolution of Disputes

All disputes arising from or in connection with the Licensed Operation Agreement shall be arbitrated by Tianjin Municipal Arbitration Commission.

(XII) Date and Place of Signing the Agreement

The Licensed Operation Agreement shall be signed on 18 February 2014 at Tianjin.

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IV. Effects on the Company

(I) Effects on the Service Price of the Four Sewage Water Treatment Plants

According to the Licensed Operation Agreement, in 2014, the unit price of sewage water treatment service shall be RMB1.77 per cubic meter, representing a decrease of 8.29% as compared with the present unit price of sewage water treatment service (the “ Present Unit Price ”). In 2015, the unit price of sewage water treatment service shall be RMB1.76 per cubic meter, representing a decrease of 8.81% as compared with the Present Unit Price.

Regarding the adjustment to the unit price of sewage water treatment service pursuant to the Licensed Operation Agreement, adjustment shall be made to the unit price of sewage water treatment service every two years in accordance with the change rate in the relevant indexes such as consumer price index between T year and T-2 year obtained from publicly available statistics such as data from “Tianjin Statistical Yearbook”. Assuming the change in relevant data of consumer price index published in “Tianjin Statistical Yearbook” in 2011 and 2009 is adopted as the adjustment factor for calculating future price adjustment, it is expected that after the two adjustments to the unit price of sewage water treatment service in 2016 and 2018, the unit price of sewage water treatment service will gradually increase, and there will have a positive effect after 2018.

(II) Effects on the Operation Income of the Four Sewage Water Treatment Plants

If the actual treating volume of the Four Sewage Water Treatment Plants in 2014 and 2015 is more than or equal to the above guaranteed water volume, when comparing with the Present Unit Price, the operation income of the Four Sewage Water Treatment Plants will decline at the same magnitude as the decline of the unit price of sewage water treatment service. If the actual treating volume of the Four Sewage Water Treatment Plants in 2014 and 2015 is less than the above guaranteed water volume, when comparing with the Present Unit Price, the operation income of the Four Sewage Water Treatment Plants will decline at a smaller magnitude than the decline of the unit price of sewage water treatment service.

(III) Effects on the Accounting Items

Under the current operation model, fixed assets and intangible assets of the Four Sewage Water Treatment Plants would be recorded, and would be accrued, depreciated and amortized according to the class of assets and limitation period. After implementation of licensed operation of the Four Sewage Water Treatment

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Plants, according to the requirements of International Financial Reporting Standards, the Company will record the net book value of the fixed assets and intangible assets of the Four Sewage Water Treatment Plants as of the end of 2013 as licensed operation right. The licensed operation right will be amortized in average over 30 years during the licensed operation period. It is expected that the amortization amount will be less than the current depreciation amount in 2014. Meanwhile, the Company will actively reduce the costs through cost control. The management expects that the possible negative effects of the decrease in the unit price of sewage water treatment service on the income of the Four Sewage Water Treatment Plants will reduce by the mutual effects of the above two factors.

• (IV) It is beneficial to the Company’s long-term and stable operation of the Four Sewage Water Treatment Plants and the healthy and sustainable development of the Company’s sewage water treatment business in the next 30 years.

The Company can ensure stable operation of the Four Sewage Water Treatment Plants for the next 30 years by obtaining the licensed operation right of the Four Sewage Water Treatment Plants for a term of 30 years from 1 January 2014. In addition, the Company can generate stable revenue from operating the Four Sewage Water Treatment Plants, thus can ensure its stable operation of sewage water treatment business in the central area of Tianjin City while can eliminate uncertainties existed before obtaining the licensed operation right.

The sewage water treatment service fees and price adjustment formula in the Licensed Operation Agreement have been determined after taking into account all the relevant factors and the adjustment of market price on the basis of determination of base period costs. They were set in accordance with the market principles and in line with the current relevant policies of the sewage water treatment industry in the PRC. The Company can also utilize its technical expertise to reduce its costs of operating sewage water treatment plants and enhance the operating efficiency of sewage water treatment plants, which is beneficial to the healthy and sustainable development of the Company’s sewage water treatment business.

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V. Analysis on Risks of Performance of the Licensed Operation Agreement

As Tianjin Water Bureau shall sign the Licensed Operation Agreement with the Company under the authorization by the Tianjin Municipal People’s Government, there are no risks in respect of its performance capabilities. However, as sewage water treatment is one of the public utilities, if the PRC or Tianjin Municipal People’s Government makes adjustments to its policies for sewage water treatment industry in response to changes in the social and economic conditions, the Company may face risks of the Licensed Operation Agreement being amended or terminated as a result of changes in the policy environment.

By Order of the Board Zhang Wenhui Chairman

Tianjin, the PRC 17 February 2014

As at the date of this announcement, the Board comprises four executive Directors: Mr. Zhang Wenhui, Mr. Lin Wenbo, Ms. Fu Yana and Ms. Shi Zhenjuan; two non-executive Directors: Mr. An Pindong and Ms. Chen Yinxing; and three independent non-executive Directors: Mr. Xie Rong, Mr. Di Xiaofeng and Ms. Lee Kit Ying, Karen.

• For identification purposes only

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