On October 9th, Gelunhui reported that Ell Env (01395.HK) announced that on September 29, 2024, the Rugao Economic and Technological Development Zone Management Committee entered into a facility expansion and upgrading agreement with Hengfa Water Affairs (an indirectly wholly-owned subsidiary of the company), according to which, Hengfa Water Affairs and Rugao Hengfa (an indirectly wholly-owned subsidiary of the company) will invest and carry out expansion and upgrading projects according to the terms and conditions of the agreement.

According to the disclosure, the Rugao Economic and Technological Development Zone Management Committee and Hengfa Water Affairs entered into agreements in 2003 and 2009 respectively. The agreements relate to the Rugao Economic and Technological Development Zone Management Committee granting certain operating franchise rights to Rugao Hengfa, to invest, design, construct, operate, and maintain the Rugao Hengfa Phase I and Phase II facilities in accordance with the "Build-Operate-Transfer" (BOT) model within the franchise period.

According to the facility expansion and upgrading agreement, the parties involved currently have no intention to change the existing BOT model, franchise period, or water fees related to the Rugao Hengfa facilities due to expansion and upgrading projects. The project aims to expand the existing Rugao Hengfa facilities to increase its industrial sewerage treatment capacity from 40,000 tons per day to 50,000 tons per day, an increase of 10,000 tons per day. After the completion of the expansion and upgrading project, in addition to increasing the total industrial sewage treatment capacity to 50,000 tons per day, all discharged water will meet the Class C standards of the "Jiangsu Local Standard Urban Sewage Treatment Plant Pollutant Discharge Standard" (DB32/4440-2022). The expansion and upgrading projects mentioned above will be carried out simultaneously during the expansion and upgrading project.

The announcement states that the yau lee hold intends to align its sewerage business with the goal of enhancing the local sewerage treatment capacity in line with Rugao's development through entering into the facility expansion and upgrading agreement. After the completion of the expansion and upgrading project, upgrading the Rugao Hengfa facilities will generate additional income for the group from collecting extra sewerage treatment fees. Therefore, the facility expansion and upgrading agreement is beneficial for the continuous operation of the Rugao Hengfa facilities, as well as for the continuous expansion of the group's business.