DISCLOSEABLE TRANSACTION THE ACQUISITION OF COMPAGNIE GÉNÉRALE DES EAUX (PORTUGAL) CONSULTADORIA E ENGENHARIA, S.A. Financial Adviser to the Company

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1 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 Bermuda with limited liability) (Stock Code: 371) DISCLOSEABLE TRANSACTION THE ACQUISITION OF COMPAGNIE GÉNÉRALE DES EAUX (PORTUGAL) CONSULTADORIA E ENGENHARIA, S.A. Financial Adviser to the Company Banco Santander Totta, S.A. The Board is pleased to announce that on 21 March 2013 the Company and Veolia Water entered into the Sale and Purchase Agreement, pursuant to which the Company, or a wholly-owned subsidiary of the Company, will acquire from Veolia Water the entire share capital of CGEP together with related Quasi-capital Contributions and Shareholder Loan. The aggregate consideration is C= 95,093,073 (equivalent to approximately HK$960,440,037) subject to an adjustment of up to C= 5,000,000 (equivalent to approximately HK$50,500,000), giving a maximum aggregate consideration of C= 100,093,073 (equivalent to approximately HK$1,010,940,037). All of the consideration is payable in cash on the Closing Date. As one or more of the applicable percentage ratios as defined in Rule of the Listing Rules in respect of the Sale and Purchase Agreement is greater than 5% but less than 25%, the Sale and Purchase Agreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is subject to the notification and announcement requirements under Rule of the Listing Rules but is not subject to approval by the Company s shareholders under the Listing Rules. 1

2 SALE AND PURCHASE AGREEMENT Date 21 March 2013 Parties (1) Veolia Water, as seller (2) The Company, as purchaser Assets to be acquired The Company has agreed to purchase from Veolia Water, directly or through a wholly-owned subsidiary of the Company incorporated in Portugal, and Veolia Water has agreed to sell, the Shares, the Quasi-capital Contributions and the Shareholder Loan. Consideration The aggregate consideration is C= 95,093,073 (equivalent to approximately HK$960,440,037), subject to an adjustment of up to C= 5,000,000 (equivalent to approximately HK$50,500,000), giving a maximum aggregate consideration of C= 100,093,073 (equivalent to approximately HK$1,010,940,037). All of the consideration is payable in cash on the Closing Date. Basis of consideration The consideration was determined after arm s length negotiations between the Company and Veolia Water on normal commercial terms and having regard to the financial information disclosed under the heading Information on CGEP below. Closing Closing of the sale and purchase of the Shares, the Quasi-capital Contributions and the Shareholder Loan pursuant to the Sale and Purchase Agreement is expected to occur on or before 30 June Security If any guarantees provided by Veolia Water for obligations of CGEP or its subsidiaries remain in place on the Closing Date, such guarantees (if any) shall be replaced by the Company or, if not replaced, secured by the Company using a letter of credit in an amount equal to the aggregate amount of such guarantees. 2

3 REASONS FOR AND BENEFITS OF TRANSACTION The acquisition of CGEP is in line with the Group s strategy to diversify its geographical presence in order to achieve a more balanced investment risk portfolio and in particular to enter the European water sector. It is also envisaged that CGEP, with its business engaging in public/private partnerships in an infrastructure sector, should deliver stable and predictable financial returns. The Group expects to benefit from the integration of its own extensive experience and the management skills and experience of CGEP, helping it to increase management efficiency and enhance international competitiveness. CGEP operates in the Portuguese water sector, which has shown stable profitability during recent years, coupled with a well-established regulatory environment. CGEP also shows a stable revenue line mainly based on long term concession contracts. The Directors (including the independent non-executive Directors) consider that the Sale and Purchase Agreement is on normal commercial terms and in the ordinary and usual course of business of the Group, and the terms of the Sale and Purchase Agreement are fair and reasonable and in the interests of the Company and its shareholders as a whole. INFORMATION ON CGEP The CGEP Group is a Portuguese private water operator. Its members are all incorporated and operate in Portugal. Its activities include: (i) operation and management of the systems for the supply of drinking water and the collection, treatment and disposal of waste water for the municipalities of Mafra, Ourém, Valongo and Paredes, (ii) operation and maintenance services for waste water treatment plants in two areas in the Algarve region and maintenance of drinking water plants for the whole Algarve region; and (iii) maintenance of sewerage/drainage networks and management of both recycling centres and waste storage systems for several private companies. The audited financial data of the CGEP Group for the years ended 31 December 2011 and 2012 were as follows: 2011 Revenues: C= 41,663,504 (equivalent to approximately HK$420,801,390) 2011 EBITDA: C= 7,408,497 (equivalent to approximately HK$74,825,820) 2011 Net Profit (before taxation): C= 1,235,000 (equivalent to approximately HK$12,473,500) 3

4 2011 Net Profit (after taxation): C= 888,440 (equivalent to approximately HK$8,973,244) 2012 Revenues: C= 42,147,846 (equivalent to approximately HK$425,693,245) 2012 EBITDA: C= 8,170,971 (equivalent to approximately HK$82,526,807) 2012 Net Profit (before taxation): C= 1,406,734 (equivalent to approximately HK$14,208,013) 2012 Net Profit (after taxation): C= 1,040,030 (equivalent to approximately HK$10,504,303) The audited total assets value of the CGEP Group as at 31 December 2012 was C= 97,867,972 (equivalent to approximately HK$988,466,517) and the net asset value was C= 17,479,673 (equivalent to approximately HK$176,544,697). INFORMATION ON THE COMPANY AND THE GROUP The Company is an investment holding company and the holding company of the Group. The Group is principally engaged in the construction of sewage and reclaimed water treatment and seawater desalination plants, and the provision of construction services for comprehensive renovation projects in the PRC and Malaysia; the provision of sewage treatment services in the PRC; the provision of reclaimed water treatment services and distribution and sales of piped water in the PRC; the provision of technical and consultancy services that are related to sewage treatment and construction and comprehensive renovation projects in the PRC; and the licensing of technical know-how that is related to sewage treatment in the PRC. INFORMATION ON VEOLIA WATER Veolia Water is one of Veolia Environment s four divisions. Veolia Water provides delegated management of water and wastewater services for municipal and industrial clients. It also designs the technological solutions and builds the facilities required for these services. As at the date of this announcement, to the best of the Directors knowledge, information and belief, having made all reasonable enquiries, Veolia Water and its ultimate beneficial owner are third parties independent of the Company and its connected persons. LISTING RULES IMPLICATIONS As one or more of the applicable percentage ratios as defined in Rule of the Listing Rules in respect of the Sale and Purchase Agreement is greater than 5% but 4

5 less than 25%, the Sale and Purchase Agreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is subject to the notification and announcement requirements under Rule of the Listing Rules but is not subject to approval by the Company s shareholders under the Listing Rules. DEFINITIONS In this announcement, the following expressions have the meanings set out below unless the context requires otherwise: Board Business Day CGEP CGEP Group Closing Date the board of directors of the Company; a day which is not a Saturday, a Sunday or a public holiday in Lisbon, Portugal, in Paris, France, or in Hong Kong; Compagnie Générale des Eaux (Portugal) Consultadoria e Engenharia, S.A., a company incorporated and operating under the laws of Portugal; CGEP and its subsidiaries; the date of closing of the sale and purchase of the Shares, the Quasi-capital Contributions and the Shareholder Loan pursuant to the Sale and Purchase Agreement; Company Beijing Enterprises Water Group Limited (Stock code: 371), a company incorporated in Bermuda with limited liability and the shares of which are listed on the Main Board of the Stock Exchange; Concession Agreements connected person Directors Group the agreements for the operation and management of the systems for the supply of distribution of drinking water and the operation and management of the municipality systems for collection, treatment and dumping of waste waters and realisation of all works required for the execution of the investment plan with the municipalities of Mafra, Ourém, Valongo and Paredes; has the meaning ascribed to it under the Listing Rules; the directors of the Company; the Company and its subsidiaries; 5

6 Hong Kong the Hong Kong Special Administrative Region of the People s Republic of China; Listing Rules PRC Quasi-capital Contributions Sale and Purchase Agreement the Rules Governing the Listing of Securities on the Stock Exchange; the People s Republic of China, which for the purpose of this announcement refers exclusively to Mainland China; contributions made by Veolia Water to CGEP; the conditional shares sale and purchase agreement dated 21 March 2013 entered into between the Company and Veolia Water pursuant to which the Company has agreed to buy and Veolia Water has agreed to sell the Shares, the Quasi-capital Contributions and the Shareholder Loan; Shares 2,397,400 shares with the par value of C= 5.00 each, representing 100% of the share capital of CGEP; Shareholder Loan Stock Exchange Veolia Water Veolia Environment the loans granted by Veolia Water to CGEP (including any interest payable on such loans); The Stock Exchange of Hong Kong Limited; Veolia Eau Compagnie Générale des Eaux, S.C.A.; and Veolia Environnement S.A.. Figures in Euro are converted into HK$ at the rate of C= 1: HK$10.1 throughout this announcement for indicative purpose only. Hong Kong, 21 March 2013 By order of the Board Beijing Enterprises Water Group Limited Zhang Honghai Chairman As at the date of this announcement, the board of directors of the Company comprises eleven executive Directors, namely Mr. Zhang Honghai (Chairman), Mr. E Meng, Mr. Jiang Xinhao, Mr. Hu Xiaoyong (Chief Executive Officer), Mr. Zhou Min, Mr. Li Haifeng, Mr. Zhang Tiefu, Mr. Hou Feng, Ms. Qi Xiaohong, Mr. Ke Jian and Mr. Tung Woon Cheung Eric and six independent non-executive Directors, namely Mr. Shea Chun Lok Quadrant, Mr. Zhang Gaobo, Mr. Guo Rui, Ms. Hang Shijun, Mr. Wang Kaijun and Mr. Yu Ning. 6