Kunming Dianchi Water Treatment : DISCLOSEABLE TRANSACTION IN RELATION TO ASSET MANAGEMENT AGREEMENT

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Kunming Dianchi Water Treatment Co., Ltd.

昆明滇池水務股份有限公司

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

(Stock Code: 3768)

DISCLOSEABLE TRANSACTION IN RELATION TO

ASSET MANAGEMENT AGREEMENT

The Board announces that the Company (as the asset entrustor) entered into the Asset Management Agreement with Bosera Capital (as the asset manager) and China Merchants Bank (as the asset entrustee) on 27 December 2019 in relation to the investment and management of the Entrusted Assets.

Pursuant to the Asset Management Agreement, the Company agreed to entrust an amount of up to RMB400 million as the Entrusted Assets, which will be funded by the internal resources of the Company.

The Entrusted Assets will be used to invest in the credits of accounts receivable and other non-standardised credit assets held by IDI.

LISTING RULES IMPLICATIONS

As one or more applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in respect to the Asset Management Agreement are more than 5% and less than 25%, the entering into of the Asset Management Agreement and the transaction contemplated thereunder constitutes a discloseable transaction of the Company and is subject to the notification and announcement requirements under Chapter 14 of the Listing Rules.

The Board announces that the Company (as the asset entrustor) entered into the Asset Management Agreement with Bosera Capital (as the asset manager) and China Merchants Bank (as the asset entrustee) on 27 December 2019 in relation to the investment and management of the Entrusted Assets.

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ASSET MANAGEMENT AGREEMENT

Salient terms of the Asset Management Agreement are set out below:

Date:	27 December 2019
Parties:	(1)	the Company, as the asset entrustor;
	(2)	Bosera Capital, as the asset manager; and
	(3)	China Merchants Bank, as the asset entrustee.
Entrusted amount:	Up to RMB400 million, which will be funded by internal resources of the
	Company
Use of Entrusted Assets:	The Entrusted Assets will be used to invest in the credits of accounts
	receivable and other non-standardised credit assets held by IDI
Term:	12 months and may be early terminated or extended upon mutual
	agreement
Funding of the Entrusted	the entrusted amount will be funded in two installments with the first
Assets:	installment no less than RMB10 million but no more than RMB200
	million and the remaining entrusted amount to be funded by the end of
	February 2020
Expected rate of investment	Approximately 7.5%
return per annum:
Management fee:	0.15% of the balance of the principal of the Entrusted Assets per annum
Custodian fee:	0.01% of the balance of the principal of the Entrusted Assets per annum

To the best of the Directors' knowledge, information and belief having made all reasonable enquiry, as of the date of this announcement, both Bosera Capital and China Merchants Bank are third parties independent from the Company and its connected person(s).

REASONS FOR AND BENEFITS OF THE TRANSACTION

As far as the Company is aware, IDI intends to transfer the credits of accounts receivable and other non-standardised credit assets with an amount of approximately RMB400 million. For this purpose, Bosera Capital issued a single asset management plan which is based on these assets. IDI invited the Company to enter into the Asset Management Agreement to invest in this single asset management plan.

By entering into the Asset Management Agreement and entrusting funds in accordance therewith, the Company intends to increase the rate of return of its cash and cash equivalents which can improve the Company's investment income and profit earnings. The entering into the Asset Management Agreement may also increase the chance to cooperate with IDI in the future in the aspects such as the cooperation in the form of innovative financing, project investment and resources sharing.

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The terms of the Asset Management Agreement were negotiated by the parties on an arm's length basis. The Directors are of the view that the terms of the Asset Management Agreement are on normal commercial terms, fair and reasonable and are in the interests of the Company and its shareholders as a whole.

GENERAL INFORMATION

The Company

The Company is a leading municipal wastewater treatment and reclaimed water supply services provider in Yunnan Province, the PRC, an integrated water-related services (including running water supply service) provider and a core enterprise implementing the PRC's strategic goal to treat pollutants at Dianchi Lake.

Kunming Industrial Development and Investment Co., Ltd.

Kunming Industrial Development and Investment Co., Ltd. is a wholly state-owned company, which is principally engaged in the integration of state-owned enterprise shareholding and management and operation of state-owned assets. It is an existing shareholder of the Company holding 59,000,000 H Shares and 2,620,449 Domestic Shares, representing 5.99% of the total issued share capital of the Company as at the date of this announcement.

Bosera Capital

Bosera Capital is a China-based financial institution that focuses on specific-asset management such as primary-market investment, asset securitization, and other CSRC-licensed businesses.

China Merchants Bank

China Merchants Bank is a China-based financial institution that mainly engages in taking public deposits and providing loans and other activities.

LISTING RULES IMPLICATIONS

As one or more applicable percentage ratios are more than 5% and less than 25%, the transaction constitutes a discloseable transaction of the Company and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

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DEFINITIONS

In this announcement, unless context otherwise requires, the terms listed below have the following meanings:

"Asset Management Agreement"	the asset management agreement dated 27 December 2019
	entered into by the Company, as the asset entrustor; Bosera
	Capital, as the asset manager; and China Merchants Bank, as
	the asset entrustee
"Board"	the board of Directors
"Bosera Capital"	Bosera Capital Management Co., Ltd.* ( 博 時 資 本 管 理 有
	限公司), a third party independent from the Company and its
	connected person(s)
"China Merchants Bank"	Kunming Branch of China Merchants Bank Company Limited,
	a third party independent from the Company and its connected
	person(s)
"Company"	Kunming Dianchi Water Treatment Co., Ltd. ( 昆 明 滇 池 水
	務 股 份 有 限 公 司), a joint stock company incorporated in
	the PRC with limited liability on 23 December 2010, and its H
	Shares are listed on the Stock Exchange (stock code: 3768)
"connected person(s)"	has the meaning ascribed to it under the Listing Rules
"CSRC"	China Securities Regulatory Commission
"Directors"	the director(s) of the Company
"Domestic Shares"	ordinary shares in the Company's share capital, with a nominal
	value of RMB1.00 each, which are subscribed for and paid up
	in RMB by PRC nationals and/or PRC incorporated entities
"Entrusted Assets"	the entrusted assets of an amount of up to RMB400 million to
	be entrusted by the Company from time to time under the Asset
	Management Agreement
"H Shares"	overseas listed foreign shares in the share capital of the
	Company with a nominal value of RMB1.00 each, which are
	subscribed for and traded in Hong Kong dollars and are listed
	on the Main Board of the Stock Exchange

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"IDI"	Kunming Industrial Development and Investment Co., Ltd.*
	( 昆明產業開發投資有限責任公司), a wholly state-owned
	company with limited liability incorporated in the PRC on 30
	November 2005, which directly and indirectly holds 5.99% of
	the shares of the Company as at the date of this announcement
	and is a third party independent of the Company and its
	connected persons
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock
	Exchange, as amended, supplemented and otherwise modified
	from time to time
"PRC" or "China"	the People's Republic of China, and for the purpose of this
	announcement only, excluding Hong Kong, Macao Special
	Administrative Region and Taiwan region
"RMB"	Renminbi, the lawful currency of the PRC
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"%"	per cent.
	By order of the Board
	Kunming Dianchi Water Treatment Co., Ltd.
	Guo Yumei
	Chairperson
Kunming, the PRC, 27 December 2019

As of the date of this announcement, the Board comprises Ms. Guo Yumei and Mr. Luo Yun, as executive Directors; Ms. Song Hong and Ms. Zhao Zhu, as non-executive Directors; and Mr. Yin Xiaobing, Mr. He Xifeng and Mr. Sin Lik Man, as independent non-executive Directors.

• For identification purpose only

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