Rego Interactive Co., Ltd — Regulatory Filings 2021

Dec 30, 2021

Hong Kong Exchanges 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)

CONNECTED TRANSACTION RENEWAL OF CONTRACT OPERATION AGREEMENT ON ZHANGGUIZHUANG WATER RECYCLING PLANT AND ITS SUPPORTING WATER PIPE-NETWORK ASSETS

The Board is pleased to announce that since the contract operation of assets under the Original Agreement will expire on 31 December 2021, the Board has considered and approved the resolution in respect of the renewal of the Original Agreement between Tianjin Infrastructure Construction and Water Recycling Company on 30 December 2021. Pursuant to the New Agreement, Tianjin Infrastructure Construction shall continue to contract the operation of the Zhangguizhuang Water Recycling Plant and its supporting water pipe-network assets to Water Recycling Company during the Operating Term, while Water Recycling Company shall be responsible for the contract operation of the Zhangguizhuang Water Recycling Plant Project constructed by Tianjin Infrastructure Construction, and shall be engaged in the production and sales of recycled water.

Tianjin Infrastructure Construction is the ultimate controlling company of the Company. Therefore, pursuant to the Listing Rules, Tianjin Infrastructure Construction is a connected person of the Company. According to the Listing Rules, the transaction contemplated under the New Agreement constitutes a connected transaction of the Company. As one or more of the applicable percentage ratios of the relevant transaction contemplated under the New Agreement are more than 0.1% but lower than 5%, the transaction contemplated thereunder is subject to the reporting and announcement requirements only, but exempt from the independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

INTRODUCTION

Reference is made to the announcement in relation to the contract operation agreement on Zhangguizhuang Water Recycling Plant and its supporting water pipe-network assets dated on 7 August 2020.

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The Board is pleased to announce that since contract operation of assets under the Original Agreement will expire on 31 December 2021, the Board has considered and approved the resolution in respect of the renewal of the Original Agreement between Tianjin Infrastructure Construction and Water Recycling Company on 30 December 2021. Pursuant to the New Agreement, Tianjin Infrastructure Construction shall continue to contract the operation of the Zhangguizhuang Water Recycling Plant and its supporting water pipe-network assets to Water Recycling Company during the Operating Term, while Water Recycling Company shall be responsible for the contract operation of the Zhangguizhuang Water Recycling Plant Project constructed by Tianjin Infrastructure Construction, and shall be engaged in the production and sales of recycled water.

THE NEW AGREEMENT

Set out below is a summary of the principal terms of the New Agreement:

Date

30 December 2021

Parties

• (a) Tianjin Infrastructure Construction; and

• (b) Water Recycling Company.

Location of Assets under Management

Zhangguizhuang Water Recycling Plant and its supporting water pipe-network

Management Matters, Requirements and Mode of Management during the Operating Term

According to the New Agreement, the management matters, requirements and mode of management during the Operating Term are as follows:

• (1) Adjust and improve the overall operating process of the Zhangguizhuang Water Recycling Plant Project to its best operating condition while ensuring its safe and stable operation during the Operating Term.

• (2) Water Recycling Company shall contract for the operation and management of the facilities and assets of Zhangguizhuang Water Recycling Plant Project and charge fees from water users and provide corresponding bills in accordance with the requirements specified by the price department of Tianjin city, and shall bear the production and operation costs, responsibilities and risks, and assume its own profits and losses during the Operating Term.

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Assets Contracting and Operating Term

The Operating Term shall be one year from 1 January 2022 to 31 December 2022. The New Agreement shall be terminated automatically in advance if Tianjin Infrastructure Construction transfers the assets of Zhangguizhuang Water Recycling Plant Project and changes its operation rights during the term of the New Agreement, and Water Recycling Company shall cooperate in the transfer of operation rights.

Contracting Fees and Payment

Water Recycling Company shall charge the recycled water fees from its recycled water users, and pay all reasonable production expenses.

Water Recycling Company shall pay contracting fees to Tianjin Infrastructure Construction, which is equivalent to 60% of the annual profits (i.e. sales revenue from recycled water sales less expenses), based on the figures audited annually during the Operating Term.

Based on the current operating condition of Zhangguizhuang Water Recycling Plant, the Company estimates that the sales volume of water from the Zhangguizhuang Water Recycling Plant Project during the term of the Original Agreement will be 16.73 million tonnes and the estimated profit available for distribution for the year will be RMB12.74 million, and the contracting fees to be paid by Water Recycling Company to Tianjin Infrastructure Construction will be RMB7.64 million. Pursuant to the New Agreement, it is estimated that the profit of the Company during the Operating Term of the New Agreement will be RMB14.20 million based on the sales volume and cost, and the contracting fees payable by Water Recycling Company to Tianjin Infrastructure Construction will be approximately RMB8.52 million based on the agreed profit sharing ratio of 60% under the New Agreement. The Company will make further disclosures in accordance with the Listing Rules and based on the actual conditions in a timely manner if the contracting fees exceed the expected amount of the contracting fees above.

REASONS AND BENEFITS FOR ENTERING INTO THE NEW AGREEMENT

Water Recycling Company is expected to be able to expand its sales in recycled water and pipeline connection business stemming from Zhangguizhuang Water Recycling Plant. The Directors (including independent non-executive Directors) are of the view that the contract operation of Zhangguizhuang Water Recycling Plant will help Water Recycling Company to gain operating revenue and develop new markets for its recycled water business in the future, which is in line with market principles.

The terms of the New Agreement are determined by the parties after arm’s length negotiation. The Directors (including independent non-executive Directors) are of the view that the terms of the New Agreement are entered into in the ordinary and usual course of business of the Group on normal commercial terms, and are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

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INFORMATION ON THE COMPANY, WATER RECYCLING COMPANY AND TIANJIN INFRASTRUCTURE CONSTRUCTION

The Company is principally engaged in the investment, construction, design, management, operation, technical consultation and auxiliary services of treatment facilities of sewage water, tap water and other types of water; design, construction, management, building and operation management of municipal infrastructures; license operation, technical consultation and auxiliary services of Southeastern Half Ring Urban Road of the Middle Ring of Tianjin City; development and operation of environmental protection technology and products; leasing of self-owned properties, etc.

Water Recycling Company is a directly wholly-owned subsidiary of the Company. It is principally engaged in business such as establishment and operation of city water supply, water drainage, waste water treatment and recycled water usage projects.

Tianjin Infrastructure Construction is the ultimate controlling company of the Company and the sole shareholder of TMICL (the controlling shareholder of the Company), holding 100% equity interest in TMICL. Tianjin Infrastructure Construction is principally engaged in investment in sea and river comprehensive development and renovation, subway trains, urban roads and bridges, underground pipeline networks, urban environment infrastructures with self-owned funds; investment planning; corporate management consultancy; market construction development services; leasing of self-owned properties; leasing of infrastructures and development and operation of utilities; licensed operation of infrastructures and transfer of licensed operations with government authorization; production, development, operation of construction materials, decoration materials, electrical products (excluding cars); construction investment consultation. As at the date of this announcement, the ultimate beneficial owner of Tianjin Infrastructure Construction is Tianjin SASAC.

IMPLICATIONS OF THE LISTING RULES

As mentioned above, Tianjin Infrastructure Construction is the ultimate controlling company of the Company. Therefore, pursuant to the Listing Rules, Tianjin Infrastructure Construction is a connected person of the Company. According to the Listing Rules, the transaction contemplated under the New Agreement constitutes a connected transaction of the Company. As one or more of the applicable percentage ratios of the relevant transaction contemplated under the New Agreement are more than 0.1% but lower than 5%, the transaction contemplated thereunder is subject to the reporting and announcement requirements only, but exempt from the independent Shareholders’ approval requirement under Chapter 14A of the Listing Rules.

Mr. Liu Yujun, an executive Director of the Company, and Mr. Gu Wenhui and Mr. Si Xiaolong, non-executive Directors of the Company, are connected with Tianjin Infrastructure Construction or TMICL, and are deemed to be unable to provide recommendation opinion to the Board in an independent capacity. Therefore, they have abstained from voting at the Board meeting on approving the New Agreement.

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DEFINITIONS

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

DEFINITIONSIn this announcement, unless the contextfollowing meanings:	otherwise requires, the following expressions have the
“Original Agreement”the contract opPlant and its sTianjin Infrastr7 August 2020,shall contract tPlant and its suCompany durin“Board”the board of Di“China” or “PRC”the People’sannouncement,Region of the P“Company”Tianjin Capitala joint stock cthe A shares aExchange and H“connected person(s)”and “controllinghave the same	eration agreement on Zhangguizhuang Water Recyclingupporting water pipe-network assets entered into byucture Construction and Water Recycling Company onpursuant to which, Tianjin Infrastructure Constructionhe operation of the Zhangguizhuang Water Recyclingpporting water pipe-network assets to Water Recyclingg the period from 7 August 2020 to 31 December 2021rectors of the CompanyRepublic of China, but for the purposes of thisexcluding Hong Kong, Macau Special AdministrativeRC and TaiwanEnvironmental Protection Group Company Limited,ompany incorporated in the PRC with limited liability,nd H shares of which are listed on the Shanghai Stockong Kong Stock Exchange, respectivelymeaning as ascribed to it under the Listing Rules
shareholder(s)”“Director(s)”the director(s)directors)“Group”the Company a“HK$” or “HK dollars”Hong Kong dol“Hong Kong”the Hong Kong	of the Company (including independent non-executivend its subsidiarieslars, the lawful currency of Hong KongSpecial Administrative Region of the PRC
“Listing Rules”The Rules Governing the Listing of Securities on the Stock Exchange“New Agreement”the Original Agreement proposed to be renewed between TianjinInfrastructure Construction and Water Recycling Company, pursuant towhich, Tianjin Infrastructure Construction shall contract the operationof the Zhangguizhuang Water Recycling Plant and its supporting waterpipe-network assets to Water Recycling Company during the OperatingTerm“Operating Term”from 1 January 2022 to 31 December 2022

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“percentage ratio(s)” has the same meaning as ascribed to it under the Listing Rules, as applicable to a transaction “RMB” Renminbi, the lawful currency of the PRC “Share(s)” ordinary share(s) of nominal value of RMB1.00 each in the existing share capital of the Company “Shareholder(s)” holder(s) of the Shares “Stock Exchange” The Stock Exchange of Hong Kong Limited “Tianjin SASAC” the State-owned Assets Supervision and Administration Commission of Tianjin People’s Government, a PRC Government Body as defined in Article 19A.04 of the Listing Rules “Tianjin Infrastructure Tianjin City Infrastructure Construction and Investment Group Construction” Company Limited* (天津城市基礎設施建設投資集團有限公司), the ultimate controlling company of the Company and the sole shareholder of TMICL, holding 100% equity interest in TMICL “TMICL” Tianjin Municipal Investment Company Limited* (天津市政投資 有限公司), the controlling shareholder of the Company, holding approximately 50.14% equity interest in the Company “Water Recycling Tianjin Water Recycling Co., Ltd.*(天津中水有限公司), a wholly-owned Company” subsidiary of the Company “Zhangguizhuang Water Zhangguizhuang Water Recycling Plant and its supporting water pipe Recycling Plant – network project invested and constructed by Tianjin Infrastructure Project” Construction

By order of the Board Liu Yujun Chairman

Tianjin, the PRC 30 December 2021

As at the date of this announcement, the Board comprises three executive Directors: Mr. Liu Yujun, Ms. Wang Jing and Mr. Niu Bo; three non-executive Directors: Mr. Gu Wenhui, Mr. Si Xiaolong and Mr. Liu Tao; and three independent non-executive Directors: Mr. Xu Zhiming, Mr. Guo Yongqing and Ms. Lu Yingying.

• For identification purpose only

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