Beijing Enterprises Environment GroupLtd : CONTINUING CONNECTED TRANSACTIONS IN RELATION TO THE RENEWED PROPERTY ESCROW AGREEMENT

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.

(Incorporated in Hong Kong with limited liability)

(Stock Code: 154)

CONTINUING CONNECTED TRANSACTIONS

IN RELATION TO

THE RENEWED PROPERTY ESCROW AGREEMENT

Reference is made to the announcement of the Company dated 1 September 2015 regarding the Company's continuing connected transactions in relation to property escrow agreement.

On 25 October 2018, the Company entered into the Renewed Property Escrow Agreement with Beikong Hong Chuang, pursuant to which Beikong Hong Chuang will extend to provide the Escrow Services to the Company during the term of the Renewed Property Escrow Agreement.

As Beikong Hong Chuang is an indirect wholly-owned subsidiary of BEHL and BEHL is the controlling shareholder of the Company, Beikong Hong Chuang is a connected person of the Company and the Escrow Services constitute continuing connected transactions to the Company under Chapter 14A of the Listing Rules.

As all the applicable percentage ratios as defined under Rule 14.07 of the Listing Rules (other than the profits ratio) in respect of the Escrow Services are more than 0.1% but less than 5%, the Escrow Services are subject to the announcement, reporting and annual review requirements but exempt from the circular (including independent financial advice) and independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

INTRODUCTION

Reference is made to the announcement of the Company dated 1 September 2015 regarding the Company's continuing connected transactions in relation to property escrow agreement.

On 25 October 2018, the Company entered into the Renewed Property Escrow Agreement with Beikong Hong Chuang, pursuant to which Beikong Hong Chuang will extend to provide the Escrow Services to the Company during the term of the Renewed Property Escrow Agreement.

RENEWED PROPERTY ESCROW AGREEMENT

Date 25 October 2018

Parties	(i)	The Company
(ii)	Beikong Hong Chuang
The Property

The Property subjected to escrow is Block 5 of Beikong Hong Chuang Technology Park €̏ છ҃௴߅Ҧ෤which is situated at No. A1, Chaoqian Road of Science and Technology Park in Changping District, Beijing, the PRC. The Property is a six storeys office premises with gross floor area of approximately 4,705 square metres (the gross floor area is subject to finalisation by the surveying and mapping department in Beijing or the premises permit).

Terms of the Renewed Property Escrow Agreement

The escrow period for the Property shall be three years from 1 September 2018 to 31 August 2021 (the "Escrow Period").

Beikong Hong Chuang shall pay the Rent of RMB2,575,987 (equivalent to approximately HK$2,911,000) to the Company for the first year of the Escrow Period, which is calculated based on an escrow fee of RMB1.50 per square metre per day.

Both parties agreed to review the Rent for the remaining two years of the Escrow Period based on the market value, subject to an aggregate increment of not more than 20%.

During the Escrow Period, the property management fee, heating fee and other expenses incurred (including but not limited to expenses for water, electricity, gas, telecommunication, etc.) in respect of the Property will be borne by Beikong Hong Chuang.

Beikong Hong Chuang shall pay all the Rent to the Company in accordance with the terms and payment schedule of the Renewed Property Escrow Agreement, and guaranteed the Company to fulfil all the obligations in the Renewed Property Escrow Agreement even the Property is not sublet to any tenant. Beikong Hong Chuang is granted the right to determine the rent offer to tenant(s) solely when subletting.

The Rent payable by Beikong Hong Chuang to the Company was arrived at after arm's length negotiation between the parties and is reference to the rent payable by independent third parties with reference to the prevailing market rent generally applicable to similar properties in the market.

Annual caps

The aggregate of the Rent payable by Beikong Hong Chuang to the Company for the four years ending 31 December 2018, 2019, 2020 and 2021 are subject to the annual caps of HK$3,200,000, HK$3,500,000, HK$4,000,000, and HK$2,800,000 respectively.

The annual caps are based on the current annual Rent of RMB2,575,987 (equivalent to approximately HK$2,911,000) payable by Beikong Hong Chuang to the Company, the potential adjustments to the prevailing market rent generally applicable to similar properties in Beijing during the term of the Renewed Property Escrow Agreement and the exchange rate fluctuations.

REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS

Beikong Hong Chuang is the property manager of Beikong Hong Chuang Technology Park €̏છ҃௴߅Ҧ෤. Beikong Hong Chuang is licensed and experienced in housing agency management and leasing and is capable of assisting the Company in providing professional and market-oriented management for the leasing of the Property.

Save and except for Mr. E Meng (also serves as an executive director of BEHL) who has voluntarily abstained from voting on the relevant Board resolutions approving the Renewed Property Escrow Agreement, none of the Directors has a material interest in the Renewed Property Escrow Agreement or was required to abstain from voting on the Board resolutions for considering and approving the same.

The Directors (including the independent non-executive Directors but other than Mr. E Meng who has abstained from voting on the relevant Board resolutions approving the Renewed Property Escrow Agreement as referred to above) consider that the Renewed Property Escrow Agreement is entered into in the ordinary and usual course of business of the Company on normal commercial terms and that the terms of the Renewed Property Escrow Agreement (together with the relevant annual caps) are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

INFORMATION OF THE COMPANY, BEIKONG HONG CHUANG AND BEHL

Information of the Company

The Company is a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of the Stock Exchange (stock code: 154). The Company is an investment holding company and the Group's subsidiaries are principally engaged in environmental protection and solid waste treatment in the PRC.

Information of Beikong Hong Chuang

Beikong Hong Chuang is a limited liability company established in the PRC and an indirect wholly-owned subsidiary of BEHL. Beikong Hong Chuang is principally engaged in property development, investment and management.

Information of BEHL

BEHL is a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of the Stock Exchange (stock code: 392). BEHL's group of companies is principally engaged in natural gas operations, brewery operations, water and environmental operations, as well as solid waste treatment operations in the PRC.

LISTING RULES IMPLICATIONS

As Beikong Hong Chuang is an indirect wholly-owned subsidiary of BEHL and BEHL is the controlling shareholder of the Company, Beikong Hong Chuang is a connected person of the Company and the Escrow Services constitute continuing connected transactions to the Company under Chapter 14A of the Listing Rules.

As all the applicable percentage ratios as defined under Rule 14.07 of the Listing Rules (other than the profits ratio) in respect of the Escrow Services are more than 0.1% but less than 5%, the Escrow Services are subject to the announcement, reporting and annual review requirements but exempt from the circular (including independent financial advice) and independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

DEFINITIONS

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

"BEHL"

Beijing Enterprises Holdings Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of the Stock Exchange (stock code: 392);

"Beikong Hong Chuang"

Beijing Enterprises Holdings Hong Chuang Co., Ltd.* €̏ ԯ̏છ҃௴߅ҦϞࠢʮ̡, a limited liability company established in the PRC and an indirect wholly-owned subsidiary of BEHL;

"Board"

the board of Directors;