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HONGKONG INTERNATIONAL (QINGDAO) COMPANY LIMITED

（香港國際（青島）有限公司）

(Incorporated with limited liability in Hong Kong)

US$174,000,000 5.30 Per Cent. Bonds Due 2019 (Stock Code: 5191)

Irrevocable Standby Facility Agreement issued by

（青島城市建設投資（集團）有限責任公司）

A voluntary announcement is hereby made with respect to the proposed asset restructuring of certain subsidiaries of Qingdao City Construction Investment (Group) Limited (the “Company”), which directly and wholly owns Hongkong International (Qingdao) Company Limited (the “Issuer”).

THE ASSET RESTRUCTURING

On 1 August 2019, the Company entered into an Asset Restructuring Agreement (the “Agreement”) with Qingdao Water Group Co., Ltd. (the “Water Group”), pursuant to which the Company and the Water Group intend to cooperate through jointly establishing a listing vehicle specialised in the waste water treatment business (the “Asset Restructuring”). The Asset Restructuring was approved by the 2019 Twenty-Fourth Party Committee Meeting of the Company on 27 May 2019.

According to the Agreement, a reorganization of the assets of certain subsidiaries of the Company and the Water Group is contemplated to facilitate the set-up of a limited liability company to be controlled by the Water Group (and will be an associate of the Company). The specific shareholding proportions and transaction structure will be subsequently determined through mutual negotiations between the two parties.

The Company’s subsidiaries that are subject to the Asset Restructuring (the “Company’s Subsidiaries”) include:

? Qingdao City Investment Environment and Energy Co., Ltd.（青島(dao)城投環境(jing)能源有(you)限公 司(si)） and its subsidiaries;

? Qingdao Development and Investment Environment Protection Investment Co., Ltd.（青島開(kai)投環保投資(zi)有限公(gong)司） and its subsidiaries;

? Qingdao Bay Zhongshui Co., Ltd.（青島(dao)海灣中水有限公司） ; and

? Qingdao Tuandao Waste Water Treatment Plant（青島(dao)市團島(dao)污水處理廠） .

The Water Group’s subsidiaries that are subject to the Asset Restructuring include:

? Qingdao Zhangcun River Water Co., Ltd.（青(qing)島張村河水務有限公司） ;

? Qingdao Zhengyang Water Co., Ltd（青島(dao)正(zheng)陽水務有限(xian)公司） ;

? Qingdao Loushan River Water Resources Co., Ltd.（青島婁(lou)山河水務資源(yuan)有(you)限(xian)公司） ;

? Qingdao Langu Daren Water Co., Ltd.（青島藍谷(gu)大任水務有限(xian)公司） ; and

? Qingdao Licun River Water Co., Ltd.（青(qing)島李村(cun)河水務有限(xian)公司） .

IMPACT ANALYSIS

The Asset Restructuring will not have any material adverse effect on the Company’s business, operations, financial condition and ability to repay debt.

The following tables set forth certain financial details relating to the Company’s Subsidiaries as at and for the year ended 31 December 2018 and the three months ended 31 March 2019:

Company’s Subsidiaries	As at 31 December 2018	For the year ended 31 December 2018
Total Assets	Net Assets	Operating Income	Net Profit
(RMB in thousand, except for percentages)
Qingdao City Investment Environment and Energy Co., Ltd.	1,051,446.3	23,793.4	149,628.3	(1,266.1)
Qingdao Development and Investment Environment Protection Investment Co., Ltd.	122,537.8	63,179.4	–	1,963.2
Qingdao Bay Zhongshui Co., Ltd.	35,683.0	24,218.0	13,700.1	(958.8)
Qingdao Tuandao Waste Water Treatment Plant	216,361.6	141,766.9	100,383.7	29,664.2
Total	1,426,028.7	252,957.7	263,712.2	29,402.5
Contribution to consolidated amounts (%)	0.71	0.37	2.26	2.92

Company’s Subsidiaries	As at 31 March 2019	For the three months ended 31 March 2019
Total Assets	Net Assets	Operating Income	Net Profit
(RMB in thousand, except for percentages)
Qingdao City Investment Environment and Energy Co., Ltd.	1,034,827.9	52,907.5	35,786.6	2,028.2
Qingdao Development and Investment Environment Protection Investment Co., Ltd.	122,534.3	60,740.0	–	(1,190.1)
Qingdao Bay Zhongshui Co., Ltd.	32,284.7	21,408.1	200.1	(2,810.0)
Qingdao Tuandao Waste Water Treatment Plant	212,710.7	143,508.3	19,094.4	1,741.4
Total	1,402,357.6	278,563.8	55,081.1	(230.5)
Contribution to consolidated amounts (%)	0.68	0.40	2.41	(0.06)

The Issuer and the Company will continue to monitor the progress of the Asset Restructuring and ensure that they fulfil their obligations to provide updated information in a timely manner in accordance with applicable laws and regulations.

HONGKONG INTERNATIONAL (QINGDAO) COMPANY LIMITED

香港國際（青島）有限公司

23 August 2019

As at the date of this announcement, the directors of Hongkong International (Qingdao)
Company Limited are Mr. Xing Luzheng, Mr. Jiang Yi and Mr. Yuan Zhi and the directors
of Qingdao City Construction Investment (Group) Limited are Mr. Xing Luzheng and
Mr. Liu Yungang.