Freetech Road Recycling Technology : CONTINUING CONNECTED TRANSACTIONS

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(incorporated in the Cayman Islands with limited liability)

(stock code: 6888)

CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

The Board is pleased to announce that on 28 October 2019, Tianjin Expressway Maintenance (an indirect non-wholly owned subsidiary of the Company) entered into certain service agreements with the Contract Parties in relation to the Continuing Connected Transactions conducted on a regular and continuing basis.

IMPLICATIONS UNDER THE LISTING RULES

Tianjin Expressway Maintenance is an indirect non-wholly owned subsidiary of the Company. As at the date of this announcement, Tianjin Expressway Maintenance is owned as to 55% and 45% by Freetech Smart Road Recycling Engineering Investment Limited (an indirect non-wholly owned subsidiary of the Company) and Tianjin Expressway Group respectively. As Tianjin Expressway Group is a substantial shareholder (as defined under the Listing Rules) of Tianjin Expressway Maintenance, the Contract Parties are connected persons of the Company at the subsidiary level. Therefore, the Continuing Connected Transactions between Tianjin Expressway Maintenance and each of the Contract Parties constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As (i) the Contract Parties are connected persons at the subsidiary level of the Company; (ii) the Continuing Connected Transactions are on normal commercial terms; and (iii) the Board (including all the independent non-executive Directors) has approved the Continuing Connected Transactions and confirmed that the terms of the Continuing Connected Transactions are fair and reasonable and are on normal commercial terms and in the interests of the Company and its shareholders as a whole, according to Rule 14A.101 of the Listing Rules, the Continuing Connected Transactions are subject to the reporting, announcement and annual review requirements but are exempt from the circular, independent financial advice and shareholders' approval requirements.

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INTRODUCTION

Reference is made to the announcement of Freetech Road Recycling Technology (Holdings) Limited (the "Company", together with its subsidiaries, the "Group") dated 31 August 2015 in relation to, among others, the continuing connected transactions between the Group and Tianjin Expressway Group Company Limited* (天津高速公路集團有限公司) ("Tianjin Expressway Group"). The board ("Board") of directors ("Directors") of the Company is pleased to announce that on 28 October 2019, Tianjin Expressway Maintenance Company Limited* (天津市高速公路 養護有限公司)("Tianjin Expressway Maintenance") (an indirect non-wholly owned subsidiary of the Company) and each of (1) Tianjin Tianlang Expressway Co. Ltd.* (天津天朗高速公路有限 公司) (a subsidiary of Tianjin Expressway Group), (2) Tianjin Jinfu Expressway Co. Ltd.* (天津津 富 高 速 公 路 有 限 公 司 ) (an associate of Tianjin Expressway Group), (3) Tianjin Tian'ang Expressway Co. Ltd.* (天津天昂高速公路有限公司) (an associate of Tianjin Expressway Group),

1. Tianjin Xinzan Expressway Co. Ltd.* (天津新展高速公路有限公司) (an associate of Tianjin Expressway Group), (5) Tianjin Xinyu Expressway Co. Ltd* (天津鑫宇高速公路有限責任公司) (a subsidiary of Tianjin Expressway Group) and (6) Tianjin Tianyong Expressway Co. Ltd.* (天津 天永高速公路有限公司) (an associate of Tianjin Expressway Group) (collectively, the "Contract Parties") entered into certain service agreements in relation to the renewal of the ongoing transactions of the Group conducted on a regular and continuing basis (the "Continuing Connected Transactions"). The details of the Continuing Connected Transactions are set out below:

No.	Transaction	Services	Consideration	Terms of the relevant service
	party	period	amount (RMB)	agreement
1.	Tianjin	1 November	890,570	Provision of daily maintenance at
	Tianlang	2019 - 31		Jinchang	Expressway	(Northern
	Expressway	March 2020		Section)* ( 津滄（北段）高速公
	Co. Ltd.*			路 ) by Tianjin Expressway
	(天津天朗高			Maintenance.	The	consideration
			shall	be	paid	in	the	following
	速公路有限
			manner:
	公司) (a
	subsidiary of			(a) 30% of the consideration as
	Tianjin			prepayment shall be paid upon
	Expressway			commencement of the provision of
	Group)			the	services;	and	thereafter
				quarterly settlement based on the
				actual volume; and

(b) the prepayment shall net off against the quarterly settlement.

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No.	Transaction	Services	Consideration	Terms of the relevant service
	party	period	amount (RMB)	agreement
2.	Tianjin Jinfu	1 November	10,103,327.36	Provision of daily maintenance at
	Expressway	2019 - 31		Jinbao	and	Rongwu Expressway*
	Co. Ltd.*	December		(津保、榮烏高速公路) by Tianjin
	(天津津富高	2021		Expressway	Maintenance.	The
			consideration shall be	paid	in	the
	速公路有限
			following manner:
	公司) (an
			(a) 30% of	the	consideration	as
	associate of
			prepayment	shall	be	paid	upon
	Tianjin
			commencement of the provision of
	Expressway
			the	services;	and	thereafter

Group)

quarterly settlement based on the actual volume; and

(b) the prepayment shall net off against the quarterly settlement.

3.	Tianjin	29 October	3,170,496	Provision	of	daily	maintenance at
	Tian'ang	2019 - 31		Jingha Expressway* (京哈高速公
	Expressway	December		路 )	by	Tianjin Expressway
	Co. Ltd.*	2019
		Maintenance.		The	consideration
	(天津天昂高			shall	be	paid	in	the	following
			manner:
	速公路有限
	公司) (an			(a) 30% of the consideration as
	associate of			prepayment shall be paid upon
	Tianjin			commencement of the provision of
	Expressway			the	services;	and	thereafter
	Group)			quarterly settlement based on the
				actual volume; and

(b) the prepayment shall net off against the quarterly settlement.

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No.	Transaction	Services	Consideration	Terms of the relevant service
	party	period	amount (RMB)	agreement
4.	Tianjin	1 November	3,241,490	Provision	of	renovation
	Tian'ang	2019 - 15		maintenance	at	Jingha
	Expressway	December		Expressway* ( 京哈高速公路) by
	Co. Ltd.*	2019		Tianjin Expressway	Maintenance.
	(天津天昂高			The consideration shall be paid in
			the following manner:

速公路有限

公司) (an associate of Tianjin Expressway Group)

20% of the consideration as prepayment shall be paid upon commencement of the provision of the services; 75% of the consideration shall be paid upon completion of the provision of the services; and the remaining 5% of the consideration shall be paid after 2 years from completion of the provision of the services as warranty deposit.

5.	Tianjin	1 November 14,807,518	Provision	of	renovation
	Xinzan	2019 - 31	maintenance	at	Changshen
	Expressway	December	Expressway* ( 長深高速公路) by
	Co. Ltd.*	2019	Tianjin Expressway	Maintenance.
	(天津新展高		The consideration shall be paid in
		the following manner:

速公路有限

公司) (an associate of Tianjin Expressway Group)

20% of the consideration as prepayment shall be paid upon commencement of the provision of the services; 75% of the consideration shall be paid upon completion of the provision of the services; and the remaining 5% of the consideration shall be paid after 2 years from completion of the provision of the services as warranty deposit.

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No.	Transaction	Services	Consideration	Terms of the relevant service
	party	period	amount (RMB)	agreement
6.	Tianjin	1 November	6,831,891	Provision		of		renovation
	Xinyu	2019 - 15		maintenance	at	Jingjun
	Expressway	December		Expressway* (津晉高速公路) and
	Co. Ltd.*	2019		Rongwu Expressway* ( 榮烏 高 速
	(天津鑫宇高			公 路 )	by Tianjin	Expressway
			Maintenance.	The	consideration
	速公路有限
			shall	be	paid	in	the following
	責任公司) (a
			manner:
	subsidiary of
	Tianjin			20% of the consideration as
	Expressway			prepayment shall be paid upon
	Group)			commencement of the provision of
				the	services;	75%	of the

consideration shall be paid upon completion of the provision of the services; and the remaining 5% of the consideration shall be paid after 2 years from completion of the provision of the services as warranty deposit.

7.	Tianjin	1 November 6,239,858	Provision of daily maintenance at
	Xinyu	2019 - 31	Jingjun Expressway* (津晉高速公
	Expressway	March 2020	路) and Rongwu Expressway* (榮
	Co. Ltd.*		烏 高 速 公 路 )	by	Tianjin
	(天津鑫宇高		Expressway	Maintenance.	The
	速公路有限		consideration	shall be	paid	in the
		following manner:
	責任公司) (a
	subsidiary of		(a) 30% of the consideration as
	Tianjin		prepayment shall be paid upon
	Expressway		commencement of the provision of
	Group)		the services; and	thereafter
			quarterly settlement based on the
			actual volume; and

(b) the prepayment shall net off against the quarterly settlement.

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No.	Transaction	Services	Consideration	Terms of the relevant service
	party	period	amount (RMB)	agreement
8.	Tianjin	29 October	4,072,057	Provision		of		renovation
	Tianyong	2019 - 31		maintenance (from the expressway
	Expressway	December		section k12+500 to k54-128)by
	Co. Ltd.*	2019		Tianjin Expressway Maintenance.
	(天津天永高			The consideration shall be paid in
			the following manner:
	速公路有限
			20%	of	the	consideration as
	公司) (an
			prepayment	shall	be	paid	upon
	associate of
			commencement of the provision of
	Tianjin
			the	services;	75%	of	the
	Expressway
			consideration shall	be	paid	upon
	Group)
			completion of the provision of the

services; and the remaining 5% of the consideration shall be paid after 2 years from completion of the provision of the services as warranty deposit.

* for identification purpose only

BASIS FOR DETERMINING THE CONSIDERATIONS

The considerations of the Continuing Connected Transactions were determined with reference to the pricing guidelines issued by the local government of Tianjin, the People's Republic of China, the considerations of the historical transactions, the market price of raw materials costs and similar services rendered, and the duration and location of the projects. The details of the pricing mechanism are set out below:

The pricing guidelines issued by the local government of Tianjin set out the price references for labour, certain raw materials and machines used in maintenance services projects similar to the projects under the Continuing Connected Transactions. Although the pricing guidelines are not mandatory and there is no requirement for Tianjin Expressway Maintenance to follow the pricing guidelines, Tianjin Expressway Maintenance uses the pricing guidelines for reference only. Furthermore, Tianjin Expressway Maintenance would adjust the labour costs and estimate the raw material costs set out in the pricing guidelines by comparing them with the prevailing market prices of labour costs and raw material costs and taking into account of any recent or anticipated changes in the market that are of the Group's knowledge.

Under the Continuing Connected Transactions, based on the Group's knowledge and extensive experience in the road maintenance and construction sector, the Group was of the view that there

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were no changes or anticipated changes that could significantly affect the relevant considerations. Furthermore, the purchasing team of Tianjin Expressway Maintenance conducted market research on the prevailing market prices of raw materials and obtained 15 fee quotes from other suppliers for raw materials in Tianjin as references in determining the considerations.

The considerations were further determined on a cost-plus basis. Depending on the types of the services provided, certain percentage of the profit margin was determined based on the historical transaction experience of Tianjin Expressway Maintenance which included 20 transactions of renovation maintenance works and daily maintenance works recently performed by the Group.

The head of renovation maintenance department, the head of daily maintenance department and the head of operation management department of Tianjin Expressway Maintenance jointly determined the relevant considerations of the Continuing Connected Transactions based on the above pricing mechanism and negotiated the considerations with the Contract Parties. Before Tianjin Expressway Maintenance entered into the agreements in relation to the Continuing Connected Transactions with the Contract Parties, the deputy general manager of Tianjin Expressway Maintenance appointed by the Company obtained approval from the Company through the director of Tianjin Expressway Maintenance appointed by the Company ("Tianjin Director"). Tianjin Director has sought final approval from both the Chief Financial Officer of the Company and an executive Director to ensure that the basis for determining the considerations was effectively implemented.

REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS

The Continuing Connected Transactions between Tianjin Expressway Maintenance and the Contract Parties were entered into in the ordinary and usual course of business of the Group. Taking into account of the long-term and stable business relationship between Tianjin Expressway Maintenance and the Contract Parties, the aforementioned transactions can provide a stable business environment and operating instruments for Tianjin Expressway Maintenance as a whole so as to bring stable contributions to the Company and its shareholders.

The Directors (including independent non-executive Directors) are of the view that the transactions under the aforesaid agreements are on normal commercial terms, in the ordinary and usual course of business of the Group, fair and reasonable and in the interests of the Company and its shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

Tianjin Expressway Maintenance is an indirect non-wholly owned subsidiary of the Company. As at the date of this announcement, Tianjin Expressway Maintenance is owned as to 55% and 45% by Freetech Smart Road Recycling Engineering Investment Limited (a non-wholly owned subsidiary of the Company) and Tianjin Expressway Group respectively. As Tianjin Expressway Group is a substantial shareholder (as defined under the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules")) of Tianjin Expressway Maintenance, the Contract Parties are connected persons of the Company at the subsidiary level. Therefore, the Continuing Connected

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Transactions between Tianjin Expressway Maintenance and each of the Contract Parties constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As (i) the Contract Parties are connected persons at the subsidiary level of the Company; (ii) the Continuing Connected Transactions are on normal commercial terms; and (iii) the Board (including all the independent non-executive Directors) has approved the Continuing Connected Transactions and confirmed that the terms of the Continuing Connected Transactions are fair and reasonable and are on normal commercial terms and in the interests of the Company and its shareholders as a whole, according to Rule 14A.101 of the Listing Rules, the Continuing Connected Transactions are subject to the reporting, announcement and annual review requirements but are exempt from the circular, independent financial advice and shareholders' approval requirements.

None of the Directors has any material interest in any of the Continuing Connected Transactions and they are not required to abstain from voting on the Board resolutions to approve the same.

INFORMATION ON THE PARTIES TO CONTINUING CONNECTED TRANSACTIONS

The Company is principally engaged in manufacturing and sale of road maintenance equipment and provision of road maintenance services in the People's Republic of China.

Tianjin Expressway Maintenance is a company established in the People's Republic of China with limited liability on 1 September 2009 by Tianjin Expressway Group. On 31 August 2015, Tianjin Expressway Maintenance became an indirect non-wholly owned subsidiary of the Company. As at the date of this announcement, its registered capital is RMB44,444,400. The principal activities of Tianjin Expressway Maintenance are provision of maintenance and repair services for expressways and expressway facilities, road projects, highway plantation engineering and construction projects; machinery and equipment leasing, highway engineering and technical advisory services.

Tianjin Expressway Group, a state-owned enterprise, is a company established in the People's Republic of China with limited liability. Its principal business is roads and bridges construction and management of expressways.

Tianjin Tianlang Expressway Co. Ltd., a subsidiary of Tianjin Expressway Group, is principally engaged in investment and management of expressway.

Tianjin Jinfu Expressway Co. Ltd. an associate of Tianjin Expressway Group, is principally engaged in investment and management of expressway.

Tianjin Tian'ang Expressway Co. Ltd. an associate of Tianjin Expressway Group, is principally engaged in investment and management of expressway.

Tianjin Xinzan Expressway Co. Ltd. an associate of Tianjin Expressway Group, is principally engaged in investment and management of expressway.

Tianjin Xinyu Expressway Co. Ltd. a wholly-owned subsidiary of Tianjin Expressway Group, is principally engaged in investment and management of expressway.

Tianjin Tianyong Expressway Co. Ltd. an associate of Tianjin Expressway Group, is principally engaged in investment and management of expressway.

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By order of the Board

Freetech Road Recycling Technology (Holdings) Limited

Sze Wai Pan

Chairman

Hong Kong, 28 October 2019

As at the date of this announcement, the executive Directors are Mr. Sze Wai Pan, Ms. Sze Wan Nga, and Mr. Chan Kai King; the non-executive Directors are Prof. Tong Wai Cheung Timothy, Dr. Chan Yan Chong and Mr. Wang Lei; and the independent non-executive Directors are Ms. Yeung Sum, Mr. Tang Koon Yiu Thomas and Dr. Lau Ching Kwong.

* for identification purposes only

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