China Literature Limited — Proxy Solicitation & Information Statement 2005

Dec 6, 2005

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your securities in China Gas Holdings Limited, you should at once hand this circular to the purchaser or the transferee, or to the bank, stockbroker or other agent through whom the sale or the transfer was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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CHINA GAS HOLDINGS LIMITED 中國燃氣控股有限公司[*] (incorporated in Bermuda with limited liability) (Stock Code: 384)

DISCLOSEABLE TRANSACTION

FORMATION OF A JOINT VENTURE COMPANY

5 December 2005

* for identifi cation purpose only

CONTENTS

	Page
Def nitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Appendix – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9

• i -

DEFINITIONS

In this circular, the following expressions shall have the following meanings unless the context requires otherwise:

• “Board”

the board of Directors

• “Company” China Gas Holdings Limited (中國燃氣控股有限公司)*, a company incorporated in Bermuda with limited liability and the issued Shares of which are listed on the Stock Exchange

• “Directors” directors (including the independent non-executive directors) of the Company from time to time

• “Group” the Company and its subsidiaries “Hantan” 邯鄲新興重型機械有限公司 (Hantan Xin Xing Heavy Machinery Company Limited)[#] , a limited liability company incorporated and subsisting in Hebei Province, PRC

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC “JV Agreement” the joint venture agreement dated 11 November 2005 and entered into between Yangzhou Holdings, Zhongran Investment and Hantan

• “Latest Practicable Date” 1 December 2005, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “PRC” the People’s Republic of China “SFO” Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong “Shares” ordinary shares of HK$0.01 each in the share capital of the Company “Shareholders” holders of the Shares “Stock Exchange” The Stock Exchange of Hong Kong Limited “Trust Agreement” a share custody agreement entered into between Zhongran Investment and Hantan on 14 November 2005

• 1 -

DEFINITIONS

• “Yangzhou Holdings” 揚州市城建國有資產控股 ( 集團 ) 有限責任公司 (Yangzhou City Construction National Assets Holdings (Group) Company Limited)#, a limited liability company incorporated and subsisting in Jiangsu Province, PRC

• “Yangzhou JV” 揚州中燃城市燃氣發展有限公司 (Yangzhou Zhongran City Gas Development Co., Limited) a joint venture to be established in Yangzhou City, Jiangsu Province, PRC to be engaged principally in the natural gas business pursuant to the JV Agreement

• “Zhongran Investment” 中燃投資有限公司 (Zhongran Investment Limited)[#] , a limited liability company incorporated and subsisting in Shenzhen, PRC, and a wholly owned subsidiary of the Company

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “RMB” Renminbi, the lawful currency of the PRC “%” per cent.

For the purpose of this circular, unless otherwise indicated, conversion of RMB into HK$ is calculated at the approximate exchange rate of HK$1.00 to RMB1.04. This exchange rate is for illustration purpose only and does not constitute a representation that any amounts have been, could have been, or may be exchanged at this or any other rate at all.

* for identifi cation purpose only

• # the English translations of Chinese names or words in this circular, where indicated, are included for information purpose only, and should not be regarded as the offi cial English translation of such Chinese names or words

• 2 -

LETTER FROM THE BOARD

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CHINA GAS HOLDINGS LIMITED 中國燃氣控股有限公司[*]

(incorporated in Bermuda with limited liability)

(Stock Code: 384)

Executive Directors: Mr. Li Xiaoyun (Chairman) Mr. Xu Ying (Vice Chairman) Mr. Liu Ming Hui (Managing Director) Mr. Ma Jin Long Mr. Zhu Wei Wei

Registered offi ce: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head offi ce and principal place of Non-executive Director: business in Hong Kong: Mr. Feng Zhuo Zhi Room 1601 16th Floor Independent non-executive Directors: AXA Centre Mr. Zhao Yu Hua No. 151 Gloucester Road Dr. Mao Er Wan Wanchai Ms. Wong Sin Yue, Cynthia Hong Kong

5 December 2005

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION FORMATION OF A JOINT VENTURE COMPANY

INTRODUCTION

The Board announced on 14 November 2005 that the JV Agreement was entered into between Yangzhou Holdings, Zhongran Investment and Hantan on 11 November 2005, pursuant to which the Yangzhou JV will be established in Yangzhou City, Jiangsu Province, PRC. The Yangzhou JV will be engaged principally in the natural gas business. The Yangzhou JV will be owned benefi cially as to 50% by Yangzhou Holdings and 50% by Zhongran Investment. Upon establishment, the Yangzhou JV will become a jointly-controlled entity of the Company.

* for identifi cation purpose only

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LETTER FROM THE BOARD

The JV Agreement constitutes a discloseable transaction on the part of the Company under Chapter 14 of the Listing Rules. The purpose of this circular is to provide you with further details regarding the Group and the JV Agreement prescribed by the Listing Rules.

THE JV AGREEMENT

Date : 11 November 2005 Parties : (a) Yangzhou Holdings (b) Zhongran Investment (c) Hantan

Yangzhou Holdings is principally engaged in all gas business/projects and related facilities in Yangzhou City. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Yangzhou Holdings and its ultimate beneficial owners are third parties independent of the Company and its connected persons (as defi ned under the Listing Rules) and are not connected persons (as defi ned under the Listing Rules) of the Company.

Hantan is principally engaged in industrial production in the PRC.

Pursuant to the JV Agreement, the Yangzhou JV will be owned benefi cially as to 50% by Yangzhou Holdings and 50% by Zhongran Investment. 1% of the benefi cial interest owned by Zhongran Investment will be held on trust by Hantan as its nominee pursuant to the Trust Agreement. The Trust Agreement further provides that Zhongran Investment will be entitled to all benefi ts, the exercise of all rights and will be responsible to all risks and liabilities in respect of the 1% equity interest held on trust by Hantan. Upon receiving notice from Zhongran Investment, Hantan has to transfer such 1% interest to Zhongran Investment or its nominee within 15 working days. The arrangement of entering into the Trust Agreement between Zhongran Investment and Hantan was required by the local government of Yangzhou City as one of the conditions for the setting up of the Yangzhou JV. According to the advice of the Group’s PRC legal advisers, the Trust Agreement is legal and valid under the PRC laws.

Save and except the foregoing, Hantan and its ultimate beneficial owners (新興鑄管股份有限公 司 (Xinxing Ductile Iron Pipes Co., Limited), a company listed in the Shenzhen Stock Exchange (Stock code: 778) and 新興鑄管集團有限公司 (Xinxing Ductile Iron Pipes Group Co., Limited), a state-owned company of the PRC government), to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, are third parties independent of the Company and its connected persons (as defi ned under the Listing Rules) and are not connected persons (as defi ned under the Listing Rules) of the Company.

The Yangzhou JV

The parties to the JV Agreement agreed that the Yangzhou JV will be established in Yangzhou City, Jiangsu Province, PRC. The Yangzhou JV will be engaged principally in the natural gas business in Yangzhou City, Jinagsu Province, PRC. As at the Latest Practicable Date, the establishment of the Yangzhou JV is still in progress and application for the business licence certifi cate (營業執照) had already been made to the relevant authorities. The Yangzhou JV will exist for an initial term of 30 years and may be extended pursuant to the relevant applicable PRC laws and if agreed by the parties to the JV Agreement.

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LETTER FROM THE BOARD

Registered capital and total investment

The registered capital of the Yangzhou JV will be RMB369,000,000 (equivalent to about HK$354,807,692) which has yet to be paid up by the parties in proportion to their respective shareholdings in the Yangzhou JV. RMB184,500,000 (equivalent to about HK$177,403,846) will be contributed by Yangzhou Holdings by way of contribution in kind (including gas pipes networks and related facilities). RMB215,500,000 (equivalent to about HK$207,211,538) will be contributed by Zhongran Investment by way of cash, in which RMB184,500,000 (equivalent to about HK$177,403,846) being the registered capital to be contributed by Zhongran Investment and the remaining RMB31,000,000 (equivalent to about HK$29,807,692) as a premium.

The assets to be contributed by Yangzhou Holdings will be free from all encumbrances and will be valued at costs by an independent valuer in the PRC. Any shortfalls will be made up for by other appropriate assets by Yangzhou Holdings.

The total investment of the Yangzhou JV will be RMB400,000,000 (equivalent to about HK$384,615,385) which has been agreed on a preliminary basis by the parties based on the expected scale of operation by the Yangzhou JV. This total investment amount is subject to adjustment based upon the fi nal outcome of a feasibility study regarding the natural gas utilisation program in Yangzhou City authorised by the Yangzhou government. The difference, if any, between the total investment and the registered capital will be fi nanced by credit facilities to be obtained from independent fi nancial institutions by the Yangzhou JV. If necessary, the Company will make further announcement in respect of the same.

All parties are required to pay up 50% of their respective contribution within 30 days from the date of issue of the business licence certifi cate of the Yangzhou JV and their respective remaining contribution within 60 days from the date of issue of the business licence certifi cate of the Yangzhou JV. If any party fails to pay up their respective contribution in time, the defaulting party shall pay a daily default fi ne (0.00021 multiplied by the defaulting amount) to the Yangzhou JV.

The Company intends to finance the capital contribution of Zhongran Investment from internal resources and the proceeds from the recent fund raising exercises of the Company.

Principal obligations of the parties

Yangzhou Holdings shall, among other matters:

1. assist the Yangzhou JV to obtain all necessary approvals and consents from the PRC government;

2. assist the Yangzhou JV to procure and purchase, within the PRC, necessary equipments and materials for the construction and improvements of its factories and the manufacture, sale and service of its products;

3. assist the Yangzhou JV to recruit the necessary personnel;

4. 5 -

LETTER FROM THE BOARD

1. assist the Yangzhou JV to arrange for the necessary fi nancing for its daily business operation;

2. assist the Yangzhou JV’s overseas employees and their family members regarding their dwelling, medical and educational issues, and to assist the personnel of the Group for the granting of the necessary visas and fi ling necessary documentation to the PRC government; and

3. assist the Yangzhou JV for its general importing matters (including regulatory matters and clearance of customs).

Zhongran Investment shall, among other matters:

1. not transfer, charge or deal with their respective capital contribution within three years from the date of the establishment of the Yangzhou JV without the prior written consent from Yangzhou Holdings;

2. agree and approve (through their directors to be appointed to the Yangzhou JV) all personnel and employees currently or to be employed by Yangzhou Holdings pending the establishment of the Yangzhou JV to be transferred and recruited by the Yangzhou JV (The transfer and recruitment by the Yangzhou JV upon its establishment of the employees of the state-owned 揚州市燃氣總公司 (Yangzhou City Gas Holdings Company) through Yangzhou Holdings was one of the conditions for the setting up of the Yangzhou JV stipulated by the local government of Yangzhou. The Directors consider that it would be in the interests of the Yangzhou JV that a suffi cient level of work force with appropriate experience would be immediately available to the Yangzhou JV upon its establishment.);

3. assist the Yangzhou JV to procure and purchase, outside the territory of the PRC, necessary equipments and materials for the construction and improvements of its factories and the manufacture, sale and service of its products, and to recruit the necessary personnel; and

4. provide the technical, management, and intellectual properties rights and skills to the Yangzhou JV for enhancing its business management level.

Profi ts sharing in the Yangzhou JV

Yangzhou Holdings and Zhongran Investment will be entitled to share the net profi ts of the Yangzhou JV in proportion to their equity interests in the Yangzhou JV upon its establishment.

Board of directors of the Yangzhou JV

The board of directors of the Yangzhou JV will comprise seven directors. Yangzhou Holdings and Zhongran Investment will each appoint three directors to the board of the Yangzhou JV. The remaining one will be an independent director to be nominated by 揚州市建設局 (Yangzhou City Construction Bureau)# as required by the local government of Yangzhou City. The Chairman of the Yangzhou JV will be nominated by Yangzhou Holdings.

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LETTER FROM THE BOARD

Any decision to be made by the board of directors of the Yangzhou JV requires the approval of not less than two third of all the members of the board. The following matters will require the unanimous approval of the members of the board:

1. amendment to the articles of association of the Yangzhou JV;

2. the termination of the Yangzhou JV;

3. the increase or transfer of the registered capital of the Yangzhou JV; and

4. the merger of the Yangzhou JV with other entities.

INFORMATION ON YANGZHOU CITY

Yangzhou occupies a total area of 6,650 sq. km. with a population of about 4.57 million. Yangzhou has already developed piped gas connections to 70,000 households, and recently has linked up to the west-to-east natural gas pipelines. According to a prediction made by 揚州市天然氣利用專業規劃 (2002-2020) (Yangzhou’s Natural Gas Utilisation Professional Planning (2002-2020))# commissioned by the local government of Yangzhou City, piped gas connections will reach 253,500 households in 2010 and 666,800 households in 2020, and the demands of natural gas in Yangzhou area will reach 220 million cubic metres in 2010 and 480 million cubic metres in 2020. Further, natural gas demands in Yangzhou are huge, as the second electricity plant in Yangzhou will consume 500 million cubic metres and 儀征化纖公司 (Yizheng Chemical Fibre Corporation)# will consume 197 million cubic metres.

REASONS FOR THE JV AGREEMENT

The Group is principally engaged in the investment in, and the operation and management of, gas pipeline infrastructure and the sale and distribution of piped natural gas and compressed natural gas in the PRC.

The Group has moved into urban gas distribution market since 2002 to take advantage of the PRC government’s decision to open the downstream natural gas distribution market to foreign investors. As at 30 June 2005, the Group has already secured the exclusive operating rights of city piped gas projects in 43 cities and districts across 9 provinces in the PRC. With the experience and expertise, the Directors consider that the entering into the JV Agreement represents an excellent opportunity for the Group to further invest in the natural gas business in Yangzhou City, PRC, which is in line with the Group’s strategy to expand into the natural gas industries in the PRC.

The Directors, including the non-executive Directors, consider that the terms of the JV Agreement are entered into upon normal commercial terms following arm’s length negotiations among the parties and that the terms of the JV Agreement are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

FINANCIAL EFFECTS OF THE FORMATION OF JOINT VENTURE COMPANY

As Yangzhou JV is a jointly-controlled entity of the Group after establishment, the Group will recognise its interests in Yangzhou JV using proportionate consolidation. The Group’s share of each of the assets, liabilities, income and expenses of Yangzhou JV will be combined with the Group’s similar line items, line by line, in the consolidated fi nancial statements.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendix to this circular.

By Order of the Board China Gas Holdings Limited Liu Ming Hui Managing Director

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GENERAL INFORMATION

APPENDIX

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confi rm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement contained in this circular misleading.

DISCLOSURE OF INTERESTS

(a) Directors’ and chief executive’s interests in the Company

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notifi ed to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required to be notifi ed to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, were as follows:

(i) Shares:

				Approximate
				percentage or
		Nature of		attribute percentage
Name of Director	Note	interest	Total	of shareholdings (%)
Mr. Liu Ming Hui
(“Mr. Liu”)	1	Personal	474,856,000 (L)	18.19
			128,500,000 (S)	4.94

• (L) Long position

• (S) Short position

Notes:

1. These 474,856,000 Shares represent 211,356,000 beneficially owned by Mr. Liu, 135,000,000 options held by Mr. Liu and 128,500,000 to be delivered to Hai Xia Finance Holdings Limited (“Hai Xia”). Pursuant to a sale and purchase agreement dated 8 March 2005 and entered into between Hai Xia and Mr. Liu, Mr. Liu agreed to sell and Hai Xia agreed to purchase 190,000,000 Shares from Mr. Liu in five tranches for a cash consideration in the aggregate amount of HK$330,000,000. Details of the transaction were set out in the announcement of the Company dated 9 March 2005. As at the Latest Practicable Date, the sale and purchase of 61,500,000 Shares had been completed.

2. 9 -

GENERAL INFORMATION

APPENDIX

(ii) Share options:

				Approximate
				percentage of the
				issued share
	Number of	Nature of	Number of	capital of the
Name of Director	options held	interest	underlying Shares	Company (%)
Mr. Li Xiaoyun	5,000,000_(Note 1)_	Personal	5,000,000	0.19
	5,000,000_(Note 5)_	Personal	5,000,000	0.19
Mr. Xu Ying	5,000,000_(Note 1)_	Personal	5,000,000	0.19
	90,000,000_(Note 3)_	Personal	90,000,000	3.46
Mr. Liu Ming Hui	5,000,000_(Note 1)_	Personal	5,000,000	0.19
	130,000,000_(Note 3)_	Personal	130,000,000	5.00
Mr. Ma Jin Long	9,240,711_(Note 1)_	Personal	9,240,711	0.36
Mr. Zhu Wei Wei	4,000,000_(Note 1)_	Personal	4,000,000	0.15
	6,000,000_(Note 2)_	Personal	6,000,000	0.23
Mr. Mao Er Wan	1,000,000_(Note 1)_	Personal	1,000,000	0.04
	700,000_(Note 4)_	Personal	700,000	0.03
Ms. Wong Sin Yue	1,000,000_(Note 1)_	Personal	1,000,000	0.04
Cynthia	700,000_(Note 4)_	Personal	700,000	0.03
Mr. Zhao Yu Hua	1,000,000_(Note 1)_	Personal	1,000,000	0.04
	700,000_(Note 4)_	Personal	700,000	0.03

Notes:

1. These options were granted under the share option scheme adopted by the Company on 6 February 2003 and entitle the holders thereof to subscribe for Shares at an exercise price of HK$0.80 per Share during the period from 1 September 2004 to 8 January 2014.

2. These options were granted under the share option scheme adopted by the Company on 6 February 2003 and entitle the holders thereof to subscribe for Shares at an exercise price of HK$0.71 per Share during the period from 20 March 2005 to 5 October 2014.

3. These options were granted under the share option scheme adopted by the Company on 6 February 2003 and entitle the holders thereof to subscribe for Shares at an exercise price of HK$0.71 per Share during the period from 22 November 2004 to 5 October 2014. The exercise of options will be subject to the condition that the consolidated net asset value of the Group which shall be certified by the auditors appointed by the Company as at the date of exercise of the options being not less than HK$1 billion.

4. These options were granted under the share option scheme adopted by the Company on 6 February 2003 and entitle the holders thereof to subscribe for Shares at an exercise price of HK$0.71 per Share during the period from 1 January 2005 to 5 October 2014.

5. These options were granted under the share option scheme adopted by the Company on 6 February 2003 and entitle the holders thereof to subscribe for Shares at an exercise price of HK$1.50 per Share during the period from 20 October 2010 to 19 October 2015.

6. 10 -

GENERAL INFORMATION

APPENDIX

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests and short positions in the shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notifi ed to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required to be notifi ed to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules.

(b) Substantial shareholders

So far as is known to the Directors and the chief executive of the Company, as at the Latest Practicable Date, the following person (not being Directors or chief executive of the Company) had, or was deemed to have, interests or short positions in the shares or underlying shares of the Company (including any interests in options in respect of such capital) which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who is, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group:

(i) Substantial shareholders of the Company:

				Approximate
				percentage or
		Nature of		attribute percentage
Name of Shareholder	Notes	interest	Total	of shareholdings (%)
Madam Xu Xau Lan	1	Deemed interest	474,856,000 (L)	18.19
			128,500,000 (S)	4.94
Hai Xia	2	Benef cial owner	340,000,003 (L)	13.02
			150,000,003 (S)	5.75
China Petroleum &		Benef cial owner	210,000,000 (L)	8.04
Chemical Corporation
GAIL (India) Limited		Benef cial owner	210,000,000 (L)	8.04
Oman Oil Company S.A.O.C.	3	Benef cial owner	210,000,000 (L)	8.04
(“OOC”)

(L) Long position

(S) Short position

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GENERAL INFORMATION

APPENDIX

Notes:

1. Madam Xu Xau Lan is deemed to be interested in the Shares held by her spouse, Mr. Liu.

2. These 340,000,003 Shares represent 211,500,003 beneficially owned by Hai Xia and 128,500,000 to be delivered by Mr. Liu to Hai Xia pursuant to the sale and purchase agreement dated 8 March 2005 and entered into between Hai Xia and Mr. Liu. Details of the transaction were set out in the announcement of the Company dated 9 March 2005. As at the Latest Practicable Date, the sale and purchase of 61,500,000 Shares had been completed.

3. On 28 November 2005, a subscription agreement was entered into between the Company and OOC in relation to the subscription of 210,000,000 Shares at a subscription price of HK$1.185 per new Share. Details of the transaction were set out in the announcement of the Company dated 29 November 2005.

4. (ii) Substantial shareholders of other members of the Group:

		Percentage of
Name of subsidiary	Name of substantial shareholder	shareholding (%)
Yichang China Gas & City Gas	宜昌天然氣有限責任公司	30
Company Limited	(Yichang City Natural Gas Company Limited)#
Wuhu City Natural Gas Development	安徽省蕪湖市燃氣總公司	10
Company Limited	(Anhui Province Wuhu City Natural Gas Head Company)#
Yiyang Central Gas & City Gas	益陽市城市建設投資開發有限責任公司	20
Development Company Limited	(Yiyang City Construction, Investments and
	Development Company Limited)#
Xiaogan Zhenrong Gas Co. Limited	北京裕隆倉燃氣技術有限公司	45
	(Beijing Yu Long Cang Technology Co. Limited)#
Suzhou Zhongran City Gas Development	宿州市燃氣有限公司	25
Company Limited
Shouxian Zhongran City Gas	壽縣建設投資公司	10
Development Limited
Beijing Xiangke Jiahua Oil &	北京中燃偉業投資有限公司	40
Gas Technology Company Limited	(Beijing Zhongran Wei Yip Investment Co. Limited)#

Save as disclosed above, as at the Latest Practicable Date, the Directors and the chief executive of the Company were not aware of any other person (other than the Directors and the chief executive of the Company) who had, or was deemed to have, interest or short positions in the shares or underlying shares of the Company (including any interests in options in respect of such capital), which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, who are, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

# the English translations of Chinese names or words in this circular, where indicated, are included for information purpose only, and should not be regarded as the offi cial English translation of such Chinese names or words

• 12 -

GENERAL INFORMATION

APPENDIX

DIRECTORS’ SERVICE CONTRACTS

Each of Mr. Xu Ying and Mr. Liu Ming Hui had entered into a service agreement with the Company commencing from 1 April 2005 for a period of three years.

At the Latest Practicable Date, save as disclosed above, none of the Directors has entered into or proposed to enter into any service agreement with any member of the Group which will expire or may not be terminated by the Company within a year without payment of any compensation (other than statutory compensation).

LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and there is no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Company or any of its subsidiaries.

COMPETING INTERESTS

As at the Latest Practicable Date, so far as the Directors are aware of, none of the Directors or their respective associates had any interests in a business which competes or may compete, either directly or indirectly, with the business of the Group or any other confl icts of interest with the Group.

MISCELLANEOUS

• (a) The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

• (b) The head offi ce and principal place of business in Hong Kong of the Company is located at Room 1601, 16th Floor, AXA Centre, No. 151 Gloucester Road, Wanchai, Hong Kong.

• (c) The branch share registrar and transfer offi ce of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited at Rooms 1901-05, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (d) The secretary of the Company is Ms. Yang Yan Tung Doris, ACS, ACIS .

• (e) The qualifi ed accountant of the Company is Mr. Li Wai Hung, FCCA .

• (f) The English text of this circular shall prevail over the Chinese text for the purpose of interpretation.

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