Rego Interactive Co., Ltd — Proxy Solicitation & Information Statement 2008

Apr 8, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in 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 Tianjin Capital Environmental Protection Company Limited, you should at once hand this circular to the purchaser or the transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee(s).

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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

(Stock Code: 1065)

DISCLOSEABLE TRANSACTION IN RESPECT OF THE ACQUISITION AND LICENSED OPERATION OF XIAN SEWAGE WATER TREATMENT PLANTS

A letter from the board of directors of Tianjin Capital Environmental Protection Company Limited is set out on pages 4 to 13 of this circular.

7 April 2008

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Asset Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Licensed Operation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Sewage Water Treatment Service Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Staff Reallocation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Reasons for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Financial Effects of the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Information of the Xian Sewage Water Treatment Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Information of the Group, the Project Company,
Xian Assets Trading Center, Xian Infrastructure Investment and
Construction Company, Xian Municipal Administration Committee and
Xian Sewage Water Treatment Company Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Listing Rules Implication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Addition Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Appendix — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14

— i —

DEFINITIONS

In this circular, the following expressions shall have the meanings set out below unless the content requires otherwise:

• “Acquisition”

the acquisition of all rights and interests in the Xian Sewage Water Treatment Plants, together with all menus, summaries, memorandums, plans and documents and technical information required for the operation and management of Xian Sewage Water Treatment Plants, by the Project Company from Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) at the Consideration

• “A Shares”

Renminbi-denominated domestic shares of nominal value of RMB1.00 each in the ordinary share capital of the Company

• “Asset Transfer Agreement”

an assets transfer agreement entered into between the Project Company and Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) on 18 March 2008, in relation to the Acquisition

• “Board”

the board of Directors

• “Company”

Tianjin Capital Environmental Protection Company Limited, a joint stock limited company established in the PRC whose A Shares and H Shares are listed on the Shanghai Stock Exchange and the Stock Exchange respectively

• “Completion Date” or “Business Operation Date”

• the first business day after fulfillment of all the conditions of the Assets Transfer Agreement, but not later than 2 months after the Effective Date

• “connected person”

has the same meaning ascribed to it in the Listing Rules

• “Consideration”

consideration of acquisition of the Xian Sewage Water Treatment Plants in the total sum of RMB643,000,000

• “Directors”

the directors of the Company

• “Effective Date”

18 March 2008, the date of execution of the Asset Transfer Agreement, the Licensed Operation Agreement, the Sewage Water Treatment Service Agreements and the Staff Reallocation Agreement

• “Group” the Company and its subsidiaries

• “H Shares”

Overseas listed foreign shares in the ordinary share capital of the Company, with a nominal value of RMB1.00 each, which are listed on the Stock Exchange

— 1 —

DEFINITIONS

• “Hand Over Date” the next date after the expiry of the License Period or the other date as agreed by the parties of the Licensed Operation Agreement, for the hand over of the Xian Sewage Water Treatment Plants

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Latest Practicable Date” 3 April 2008, being the latest practicable date before the printing of this circular for ascertaining certain information

• “Licensed Operation Agreement” a licensed operation agreement entered into between the Project Company and Xian Municipal Administration Committee (西安市市政管理委員會) on 18 March 2008 in relation to the Xian Project

• “Licensed Period” 25 years commencing from the Effective Date or the extension period pursuant to the Licensed Operation Agreement or the date of termination of the Licensed Operation Agreement

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

• “Operation Period” the period commencing from the Business Operation Date of Xian Sewage Water Treatment Plants to the expiry of the Licensed Period

• “Original Contracts” the contracts, agreements or orders still effective on or after the Effective Date entered into by Sewage Water Treatment Plant or Purification Center or Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司) or Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司), for and on behalf of the Sewage Water Treatment Plant and Purification Center, with the relevant contractors, manufacturers or suppliers

• “percentage ratios” has the meaning ascribed to it under the Listing Rules, as application to a transaction

• “PRC” the People’s Republic of China “Project Company” 西安創業水務有限公司 (Xian Capital Water Company Limited), a limited liability company incorporated in the PRC and wholly-owned by the Company

• “Purification Center” Xian Beishiqiao Purification Center, located in Xian, the PRC, with a sewage water processing capacity of 150,000 m[3] per day

— 2 —

DEFINITIONS

“RMB”

Renminbi, the lawful currency of the PRC

“Sewage Water Treatment Plant” a sewage water treatment plant located in Xian, the PRC, with a sewage water processing capacity of 160,000 m[3] per day

“Sewage Water Treatment Service two sewage water treatment service agreements entered into Agreements” between the Project Company and Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) on 18 March 2008 in relation to the provisions of sewage water treatment services by the Sewage Water Treatment Plant and the Purification Center “SFO” the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong “Shareholders” the shareholders of the Company “Shares” A Shares and H Shares

“Staff Reallocation Agreement”

a staff reallocation agreement entered into between the Project Company and Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司) on 18 March 2008 in relation to the reallocation of the staff in Xian Sewage Water Treatment Plants

• “Staff Reallocation Proposal”

a staff reallocation proposal in relation to the Xian Sewage Water Treatment Plants asset transfer-operation-hand over project issued by the Xian Labour and Social Protection Bureau (西安市勞動和社會保障局)

• “Stock Exchange”

The Stock Exchange of Hong Kong Limited

“Xian Project”

a project in relation to the grant of an operation licence to the Project Company for the exclusive rights to acquire, operate and manage the Xian Sewage Water Treatment Plants and the provision of sewage water treatment services

• “Xian Sewage Water Treatment Plants”

The facilities, buildings, constructions and other production related fix assets (not including water recycling system) in the Sewage Water Treatment Plant and Purification Center, both situated at Xian, the PRC

“%”

per cent

— 3 —

LETTER FROM THE BOARD

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

(Stock Code: 1065)

Executive Directors: Ms. Ma Baiyu (Chairman) Mr. Gu Qifeng (Vice Chairman) Mr. An Pindong Mr. Wang Zhanying Mr. Tan Zhaofu Ms. Fu Yana

Registered address: No. 45 Guizhou Road Heping District Tianjin, the PRC Postal Code: 300051

Independent non-executive Directors: Mr. Wang Xiangfei Mr. Gao Zongze Mr. Ko Poming

7 April 2008

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION IN RESPECT OF THE ACQUISITION AND LICENSED OPERATION OF XIAN SEWAGE WATER TREATMENT PLANTS

INTRODUCTION

Reference is made to the announcement of the Company dated 20 December 2007 and 18 March 2008.

In order to explore the market, the Company has participated in the tender of the Xian Sewage Water Treatment Plants asset transfer-operation-hand over project in Xian organized by Xian Assets Trading Center (西安產權交易中心). On 17 December 2007, the Company received a notice from Xian Assets Trading Center advising that the Company won the tender. Upon winning the tender, the Company established the Project Company on 21 January 2008 for the purpose of acquiring and operating the Xian Sewage Water Treatment Plants under license for a term of 25 years from the Effective Date.

On 18 March 2008, the Project Company entered into the Asset Transfer Agreement and the Sewage Water Treatment Service Agreements with Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司), the Licensed Operation Agreement with Xian Municipal Administration Committee (西安市市政管理委員會), and the Staff Reallocation Agreement with Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司).

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LETTER FROM THE BOARD

The purpose of this circular is to provide Shareholders with further information relating to the Acquisition which constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

Set out below is a summary of the principal terms of the above agreements.

ASSET TRANSFER AGREEMENT

Date:

18 March 2008

Parties:

• (i) Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公 司); and

• (ii) the Project Company

Subject matters:

Pursuant to the Asset Transfer Agreement and subject to the fulfillment of the conditions precedent described below, on the Completion Date, the Project Company has agreed to acquire the Xian Sewage Water Treatment Plants and Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) has agreed to transfer Xian Sewage Water Treatment Plants at a Consideration of RMB643,000,000. During the Licensed Period, the Project Company was granted the right to operate and manage the Xian Sewage Water Treatment Plants. On the Hand Over Date, the Project Company is required to hand over the Xian Sewage Water Treatment Plants to the People’s Government of Xian, the PRC or other designated institutions. Details of the licensed operation and hand over of the Xian Sewage Water Treatment Plants will be discussed below under the heading of “Licensed Operation Agreement”.

Consideration

The Consideration for the acquisition of the Xian Sewage Water Treatment Plants from Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) was fixed when the Company submitted its tender, which was fixed at the total sum of RMB643,000,000 and not subject to change. At the time when the Company submitted its tender, the Consideration was considered by the Company with reference to the amount of the capital expenditure for the Acquisition, the length of the licensed period, possible operation costs for operating and managing the Xian Sewage Water Treatment Plants and the provision of the sewage water treatment service, and the expected return on the investment.

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LETTER FROM THE BOARD

The Consideration shall be funded by internal resources and bank loan (if required) and shall be settled in cash as follows:

• (a) 50% of the Consideration in the sum of RMB321,500,000 will be paid within 7 days after the Effective Date; and

• (b) 50% of the Consideration in the sum of RMB321,500,000 will be paid on or before the Completion Date.

50% of the Consideration in the sum of RMB321,500,000 was paid on 25 March 2008.

Conditions precedent

The Completion Date shall be the first business day after fulfillment of all the following conditions of the Assets Transfer Agreement, but not later than 2 months after the Effective Date:

• (a) Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公 司) has provided all information and documents in respect of the Xian Sewage Water Treatment Plants;

• (b) The checking of the Xian Sewage Water Treatment Plants is completed;

• (c) The transfer of the Original Contracts to the Project Company is completed;

• (d) The preparation work for the hand over of the Xian Sewage Water Treatment Plants to the Project Company is completed;

• (e) The Project Company has signed group employment contract and individual employment contracts with all the employees according to the Staff Reallocation Agreement;

• (f) Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公 司) has obtained the required approval in respect of the execution of the Assets Transfer Agreement from the relevant authorities in Xian; and

• (g) The Project Company has paid all the Consideration.

As at the latest Practicable Date, the above conditions (b), (c), (d) and (f) have already been fulfilled.

Completion

On the Completion Date, Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) shall transfer all the rights and interests in the Xian Sewage Water Treatment Plants, together with all menus, summaries, memorandums, plans and documents and technical information required for the operation and management of Xian Sewage Water Treatment Plants, to the Project Company.

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LETTER FROM THE BOARD

Other terms

Other terms of the Asset Transfer Agreement:

• (a) The Original Contracts shall be reviewed and assigned to the Project Company if no objection.

• (b) Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公 司) ensures that on the Completion Date, the Original Contracts (which are assignable) shall be assigned to the Project Company and Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) shall also be responsible for the completion of the relevant assignment procedures.

• (c) During the Licensed Period, the Project Company will be given, by way of transfer, the land use rights of the land where the Xian Sewage Water Treatment Plants located. However, the Project Company has no right to change the purpose of the land use to one which is not related to the operation of the Xian Sewage Water Treatment Plants. Upon the expiry of the Licensed Period, the Project Company shall return the land use rights to the People’s Government of Xian or other designated institutions at nil consideration and without imposing any conditions.

• (d) Xian Assets Trading Center (西安產權交易中心) shall issue the proof of trading of assets on the second day after the Completion Date.

LICENSED OPERATION AGREEMENT

Date:

18 March 2008

Parties:

• (i) Xian Municipal Administration Committee (西安市市政管理委員會); and

• (ii) the Project Company

Licensed Period:

25 years commencing from the Effective Date or the extension period pursuant to the Licensed Operation Agreement or the date of termination of the Licensed Operation Agreement.

Principal Terms:

• (1) With the authorization from the People’s Government of Xian, Xian Municipal Administration Committee (西安市市政管理委員會) grants to the Project Company an exclusive right to be transferred, to operate and to manage the Xian Sewage Water Treatment Plants and charge the sewage water treatment services fees during the Licensed Period while the Project Company shall bear the costs, responsibility and risks.

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LETTER FROM THE BOARD

• (2) The Project Company shall on the Hand Over Date hand over the Xian Sewage Water Treatment Plants, which can normally operate, and the land use rights to the People’s Government of Xian or other designated institutions at nil consideration.

• (3) Xian Municipal Administration Committee (西安市市政管理委員會) shall assist the Project Company to obtain the land use rights by way of transfer and procure Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) to implement the Asset Transfer Agreement and the Sewage Water Treatment Service Agreements and procure Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司) to implement the Staff Reallocation Agreement.

• (4) During the Operation Period, the Project Company shall be responsible for the collection of sewage water through the sewage water collection system inside the service area and for the discharge of the processed sewage water to the releasing point.

• (5) Xian Municipal Administration Committee (西安市市政管理委員會) shall provide the Project Company with the sewage water.

• (6) The Project Company shall be responsible for the improvement of the technology of Xian Sewage Water Treatment Plants.

SEWAGE WATER TREATMENT SERVICE AGREEMENTS

Date:

18 March 2008

Parties:

• (i) Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公 司); and

• (ii) the Project Company

Subject matters:

The Project Company entered into two Sewage Water Treatment Service Agreements with Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司). One relates to the provision of sewage water treatment services by Sewage Water Treatment Plant and the other one relates to the provision of sewage water treatment services by Purification Center. The terms of the two Sewage Water Treatment Service Agreements are principally the same.

Principal Terms:

• (1) The Sewage Water Treatment Service Agreements shall take effect on the same effective date of the Licensed Operation Agreement and shall be effective during the Licensed Period.

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LETTER FROM THE BOARD

• (2) The Project Company shall, from the Business Operation Date, receive from the receiving point and process the sewage water and discharge the processed sewage water attaining the quality standard to the releasing point every hour for each day and every day for each year.

• (3) Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公 司) shall assist Xian Municipal Administration Committee (西安市市政管理委員會) to provide sewage water to and collect the processed sewage water from the Project Company.

• (4) Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公 司) shall be responsible for the payment of the sewage water service fees to the Project Company every month from the Business Operation Date.

• (5) The sewage water service fees shall be the unit price of RMB0.8 per cubic meter, which shall be adjusted for the first time on 1 January 2011 and for every two years thereafter, with reference to the costs of electricity, chemical materials, wages, enterprise income tax, land use tax, disposal costs for sewage wastage soil and other relevant costs.

• (6) For each year during the Operation Period, the daily average basic volumes of sewage water to be processed by Sewage Water Treatment Plant are as follows:

• a. 102,000 cubic meter for the first year; and

• b. 114,000 cubic meter for the second year to the end of the Operation Period.

• (7) For each year during the Operation Period, the daily average basic volumes of sewage water to be processed by the Purification Center are as follows:

• a. 127,500 cubic meter for the first year; and

• b. 142,500 cubic meter for the second year to the end of the Operation Period.

• (8) If the actual volume of processed sewage water is higher than the daily average basic volume of sewage water, the sewage water service fees shall be calculated by the formula of “[the unit price x 80% x (actual volume of processed sewage water — basic volumes of sewage water) x number of days] + [the unit price x basic volumes of sewage water x number of days]”. However, if the actual volume of processed sewage water is lower than the daily average basic volume of sewage water, the Project Company shall charge the fee with reference to the daily average basis volume of sewage water.

• (9) The Project Company shall issue invoices to Xian Infrastructure Investment and Construction Company (西安市基礎設施建設投資總公司) on monthly basis and Xian Infrastructure Investment and Construction Company shall settle the invoices within 7 business days upon receipt of the invoices.

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LETTER FROM THE BOARD

STAFF REALLOCATION AGREEMENT

Date:

18 March 2008

Parties:

• (i) Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司); and

• (ii) the Project Company

Principal Terms:

• (1) The parties shall implement the Staff Reallocation Proposal.

• (2) The Project Company shall sign group employment contract and individual employment contracts with all the employees.

• (3) The Project Company shall pay to Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司) the retirement and medical insurances and housing allowance of the reallocated staffs on time.

• (4) The Project Company shall transfer to Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司) relevant fees such as transportation fees of the retired staffs on time.

REASONS FOR THE ACQUISITION

In order to increase the commercialisation on the municipal public utilities and to enhance operational efficiency of the municipal public utilities, the People’s Government of Xian decided to grant an operation licence to a company to operate the Xian Sewage Water Treatment Plants for a licensed period of 25 years by way of public tender. The winner of the public tender shall be granted the rights to acquire the Xian Sewage Water Treatment Plants, operate the Xian Sewage Water Treatment Plants and provide sewage water treatment services. With a view to exploring the market, the Company has participated in the said tender, and on 17 December 2007, the Company received a notice from Xian Assets Trading Center advising that the Company won the tender.

To allow the Project Company to acquire the Xian Sewage Water Treatment Plants, operate the Xian Sewage Water Treatment Plants and provide sewage water treatment services, the Project Company, pursuant to the tender documents, entered into the Asset Transfer Agreement, the Licensed Operation Agreement, the Sewage Water Treatment Service Agreement and the Staff Reallocation Agreement.

By entering into the above agreements, the Project Company can operate and manage the Xian Sewage Water Treatment Plants and can provide sewage water treatment services and in return, charge

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LETTER FROM THE BOARD

the sewage water treatment service fees in relation to the provision of sewage water treatment services. The Directors, including the independent non-executive Directors, are of the opinion that the Acquisition is fair and reasonable and are in the interest of the Shareholders and the Company as a whole.

FINANCIAL EFFECTS OF THE ACQUISITION

Effect on earnings

Upon completion of the Acquisition, the Company shall have all rights and interests in the Xian Sewage Water Treatment Plants and can operate the Xian Sewage Water Treatment Plants. The Company is also able to provide sewage water treatment services in Xian and thus can charge the sewage water treatment service fees in relation to the provision of sewage water treatment services. There will be a positive impact on the earning of the Group.

Effect on assets and liabilities

Since the Consideration will first be satisfied by internal resources of the Group, the Board expects that there will be no material effect on the consolidated total assets, total liabilities and net asset value of the Group upon completion of the Acquisition. If bank loan is required for payment of the Consideration, the total liabilities of the Group will increase.

INFORMATION OF THE XIAN SEWAGE WATER TREATMENT PLANTS

Xian Sewage Water Treatment Plants include the Sewage Water Treatment Plant and the Purification Center, both located in Xian. The Sewage Water Treatment Plant was built in 1956 and commenced operation in 1958. The plant was expanded in 1963, 1976 and 1999 and now has a sewage water processing capacity of 160,000 m[3] per day. Regarding the Purification Center, it was built in 1992 and commenced operation in 1998. The Purification Center has a sewage water processing capacity of 150,000 m[3] per day. The total sewage water processing capacity of the Xian Sewage Water Treatment Plants is 310,000 m[3] per day. The total net asset value of Xian Sewage Water Treatment Plants is approximately RMB234,000,000 as at 30 June 2007. As Xian Sewage Water Treatment Plants were state-owned enterprise’s assets before the Acquisition, there is no profit figure for the two financial years immediately preceding the Acquisition.

INFORMATION OF THE GROUP, THE PROJECT COMPANY, XIAN ASSETS TRADING CENTER (西安產權交易中心), XIAN INFRASTRUCTURE INVESTMENT AND CONSTRUCTION COMPANY (西安市基礎設施建設投資總公司), XIAN MUNICIPAL ADMINISTRATION COMMITTEE (西安市市政管理委員會) AND XIAN SEWAGE WATER TREATMENT COMPANY LIMITED (西安市污水處理有限責任公司)

The Group is principally engaged in (i) the design, management, operation, technological consultation of sewage water treatment plants and their related infrastructure facilities and auxiliary services; (ii) the design, toll collection, repair and maintenance, management, operation, technological

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LETTER FROM THE BOARD

consultation of toll roads and auxiliary services in relation to the operation of the South-eastern Half Ring Road of the Middle Ring of Tianjin, Tianjin City Indebted Road Construction for Vehicle-passage Toll Collection Office and their related auxiliary facilities; and (iii) the development and operation of environmental protection technology and products.

The Project Company is principally engaged in the development, construction, management and operation of sewage water treatment plants, their auxiliary facilities and equipment for unused solid materials, research and development and promotion of environmental protection technology, application of renewable energy and the related equipment, installation services of equipment of sewage water treatment plants, and consultation services of water treatment facilities, environmental engineering, municipal engineering, road engineering and transportation engineering.

Xian Assets Trading Center (西安產權交易中心) is established upon approval by the People’s Government of Xian and is assigned by the State-owned Assets Supervision and Administration Commission of the People’s Government of Xian to deal with trading of property assets, debts, share interests and intellectual property.

Xian Municipal Infrastructure Investment and Construction Company (西安市基礎設施建設投資 總公司) is managed by the People’s Government of Xian and is a platform for the financing and investment of city infrastructures.

Xian Municipal Administration Committee (西安市市政管理委員會) is established by the People’s Government of Xian for administrating the municipal public utilities.

Xian Sewage Water Treatment Company Limited (西安市污水處理有限責任公司) was established in 2006 and was responsible for the management of the Xian Sewage Water Treatment Plants.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Xian Assets Trading Center, Xian Municipal Administration Committee, Xian Municipal Infrastructure Investment and Construction Company and Xian Sewage Water Treatment Company Limited and their ultimate beneficial owner are third parties independent of the Company and the connected persons of the Company.

LISTING RULES IMPLICATION

As the relevant percentage ratios of the Acquisition is more than 5% but less than 25%, the Acquisition by the Project Company constitutes a discloseable transaction under Chapter 14 of the Listing Rules. It is subject to the reporting and announcement requirements, but is exempt from the Shareholders’ approval requirement.

— 12 —

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to the general information set out in Appendix to this circular.

Yours faithfully, For and on behalf of the Board Ma Baiyu Chairman

— 13 —

GENERAL INFORMATION

APPENDIX

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with respect to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which will make any statement herein misleading.

DISCLOSURE OF INTERESTS

Interests of Directors and chief executive of the Company

As at the Latest Practicable Date, save as disclosed below, none of the Directors, supervisors and chief executives of the Company and their associates had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and 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 which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or which were required pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, to be notified to the Company and the Stock Exchange:

				Approximate
				Percentage
				in the issued
	The Company/		Number and	share capital of
	name of		class of	the Company/
	associated		securities	associated
Name	corporation	Capacity	(Note)	corporations
Director	The Company	Beneficial	6,850	0.00048%
Wang Zhangying		owner	A Shares (L)
Supervisor	The Company	Beneficial	959	0.000067%
Nie Youzhuang		owner	A Shares (L)

Note: The letter “L” represents the person’s long position in the Shares.

As at the Latest Practicable Date, none of the Directors, supervisors or chief executives of the Company or their spouses or children under 18 years of age were granted or had exercised any right to subscribe for any equity or debt securities of the Company or any of its associated corporations (within the meaning of Part XV of the SFO).

As at the Latest Practicable Date, so far as known to the Directors, supervisors or chief executives of the Company, Ms. Ma Baiyu, the chairman and executive Director of the Company, is also the chairman of Tianjin Municipal Investment Company Limited (“ TMICL ”), being the controlling shareholder and holding company of the Company, and Mr. An Pindong, the executive

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GENERAL INFORMATION

APPENDIX

Director of the Company, is also the general manager of TMICL. Save as disclosed above, none of the Directors is a director or employee of a company which had any interests or short positions in any shares and underlying shares (including options) of the Company which would fall to be disclosed to the Company under Divisions 2 and 3 of Part XV of the SFO.

None of the Directors or supervisor of the Company has any direct or indirect interest in any assets which have been acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2006, the date to which the latest published audited financial statement of the Group was made up.

None of the Directors or supervisor of the Company is materially interested in any contract or arrangement entered into by the Company or any of its subsidiaries which are the contract or arrangement subsisting at the Latest Practicable Date and which is significant in relation to the business of the Group taken as a whole.

As at the Latest Practicable Date, none of the Directors or supervisors of the Company and their respective associates have interests in a business, apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with the business of the Group.

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GENERAL INFORMATION

APPENDIX

Substantial Shareholders’ Interests

• (a) As at the Latest Practicable Date, so far as is known to, or can be ascertained after reasonable enquiries by, the Directors, supervisors or chief executives of the Company, the following entities (other than a Director, supervisor or chief executive of the Company) had an interest or short position in the shares or underlying shares (including options) of the Company which would fall to be disclosed to the Company under Divisions 2 and 3 of Part XV of the SFO:

				Approximate
			Approximate	percentage
		Number and	percentage in	in the total
		class of	the relevant	issued share
		securities	class of	capital of the
Name of Shareholder	Capacity	(Note 1)	securities	Company
TMICL	Beneficial	774,984,445	72.09%	54.30%
	Owner	A Shares (L)
Atlantis Investment	Investment	29,500,000	8.68%	2.07%
Management Ltd	Manager	H Shares (L)
ISIS Asset Management	Investment	17,286,000	5.08%	1.21%
Plc.	Manager	H Shares (L)
HSBC Asset Management	Investment	20,000,000	5.88%	1.40%
(Hong Kong) Limited	Manager	H Shares (L)

Note: The letter “L” represents the person’s long position in the Shares.

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GENERAL INFORMATION

APPENDIX

• (b) As at the Latest Practicable Date, so far as is known to, or can be ascertained after reasonable enquiries by the Directors, supervisors or chief executives of the Company, the following entities (other than a Director, supervisor or chief executive of the Company) were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any members of the Group:

		Approximate
		percentage
	Name of member of the	of equity
Name of entity	Group	interests held
Tianjin Sewage Engineering Group	Tianjin Capital New	18.67%
	Materials Company Limited
Tianjin Senyuan Technology	Tianjin Capital New	10.66%
Development Company Limited	Materials Company Limited
Xianhe Sewage Water Treatment Plant	Baoying Capital Water	30%
	Company Limited
Hangzhou City Construction Property	Hangzhou Tianjin Capital	30%
Operation Company Limited	Water Company Limited
(杭州市城市建設資產經營有限公司)	(杭州天創水務有限公司)

• (c) Save as disclosed above, there is no other person (other than a Director, supervisor or chief executive of the Company) so far as is known to the Directors, supervisors or chief executives of the Company who, as at the Latest Practicable Date, had an interest or short position in the shares or underlying shares (including options) of the Company which would fall to be disclosed to the Company under Divisions 2 and 3 of Part XV of the SFO, or, had, directly or indirectly, interested in 10% or more of nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any members of the Group.

SERVICE CONTRACTS OF THE DIRECTORS AND THE SUPERVISORS

As at the Latest Practicable Date, none of the Directors or supervisors of the Company had entered into or was proposing to enter into a service contract with the Company or any of its subsidiaries (excluding contracts expiring or determinable by the Company within one year without payment of compensation other than statutory compensation).

LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and no litigation or arbitration or claim of material importance is known to the Directors to be pending or threatened by or against the Company.

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GENERAL INFORMATION

APPENDIX

GENERAL

• (a) The Company secretaries of the Company are Ms. Fu Yana and Mr. Kwan Man Fai. Mr. Kwan is a solicitor practising in Hong Kong.

• (b) The qualified accountant of the Company is Mr. Wong Kok Hon, who is currently a member of the Hong Kong Institute of Certified Public Accountants and a fellow member of the Association of Chartered Certified Accountants.

• (c) The registered office address of the Company is at No.45, Guizhou Road, Heping District, Tianjin, the PRC and the head office address of the Company is at TCEP Building, 76 Weijin South Road, Nankai District, Tianjin, the PRC.

• (d) The H Share transfer office of the Company in Hong Kong is Hong Kong Registrars Limited at 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

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