Digital China Holdings Limited — Proxy Solicitation & Information Statement 2004

Apr 6, 2004

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, 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 announcement.

DONG FANG GAS HOLDINGS LIMITED

(incorporated in Bermuda with limited liability)

(Stock Code: 432)

DESPATCH OF CIRCULAR

PROPOSED ACQUISITION OF VARIOUS PROPERTY INTERESTS OF PCCW LIMITED AND PROPOSED CAPITAL REORGANISATION MAJOR TRANSACTION

APPLICATION FOR SHARE WHITEWASH WAIVER FROM THE OBLIGATION TO MAKE A MANDATORY GENERAL OFFER TO ACQUIRE SHARES IN DONG FANG GAS HOLDINGS LIMITED PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL PROPOSED AMENDMENT TO BYE-LAWS PROPOSED CHANGE OF COMPANY NAME AND CHANGE OF BOARD LOT SIZE

• The DFG Board announces that the Circular containing detailed information in relation to, among other things, (i) the Transaction; (ii) the Whitewash Waivers; (iii) the proposed Capital Reorganisation; (iv) the proposed increase in the authorised share capital of DFG; (v) the proposed amendment to Bye-Laws; (vi) proposed change of name of DFG; (vii) the change of board lot size; (viii) the letter of advice of the independent financial adviser; and (ix) a notice of the SGM to be held on 28 April 2004 has been despatched to the Shareholders on 2 April 2004.

• The change of board lot size involves changing the trading board lot from 5,000 Existing DFG Shares to 1,000 DFG Shares upon the Capital Reorganisation becoming effective.

• The DFG Board proposes to change the company name of DFG to “Pacific Century Premium Developments Limited”.

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• The DFG Board also proposes to amend the Bye-Laws.

• The proposed timetable for the Capital Reorganisation and the relevant exchange and trading arrangements are set out below.

• The statement of unaudited proforma adjusted consolidated net tangible asset value of the Enlarged DFG Group is set out below.

DESPATCH OF CIRCULAR

Reference is made to the joint announcements of Dong Fang Gas Holdings Limited (the “Company”) and PCCW Limited dated 5 March 2004 (the “Announcement”) and the announcement of the Company dated 26 March 2004 in relation to, among other things, the Transaction, the Whitewash Waivers and the Capital Reorganisation. Capitalised terms used in this announcement shall have the same meanings as those defined in the Announcement unless defined otherwise.

The DFG Board announces that the circular (the “Circular”) containing detailed information in relation to, among other things, (i) the Transaction; (ii) the Whitewash Waivers; (iii) the proposed Capital Reorganisation; (iv) the proposed increase in the authorised share capital of DFG; (v) the proposed amendment to Bye-Laws; (vi) the proposed change of name of DFG; (vii) the change of board lot size; (viii) the letter of advice of the independent financial adviser; and (ix) a notice of the SGM to be held on 28 April 2004 has been despatched to the Shareholders on 2 April 2004. .

CHANGE OF BOARD LOT SIZE

Currently the Existing DFG Shares are traded in board lots of 5,000 Existing DFG Shares. To correspond with the Share Consolidation, the DFG Directors have resolved to change the board lot for trading on the Stock Exchange to 1,000 DFG Shares upon the Capital Reduction and Share Consolidation becoming effective, and subject to the Listing Committee of the Stock Exchange granting listing of, and permission to deal in, the new DFG Shares.

CHANGE OF COMPANY NAME

The DFG Board proposes that upon approval by the Shareholders, and subject to and conditional upon (a) completion of the Acquisition Agreement; and (b) the approval of the Registrar of Companies in Bermuda, the name of DFG be changed to “Pacific Century Premium Developments Limited”. The proposed name change is to signify the new identity of DFG following the Completion and will take effect from the date on which the new name is entered on the register by the Registrar of Companies in Bermuda in place of the current name.

The proposed change of name of DFG will not affect any of the rights of the Shareholders. All existing peach colour share certificates for the Existing DFG Shares in issue bearing the current name of DFG will continue to be evidence of title to the shares of DFG under the new name and will not require replacement as a result of the change of name becoming effective. It is currently intended that the change of name will take effect on the same date when the

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Capital Reorganisation becomes effective, which is expected to be on 6 May 2004. The new green colour share certificates for the DFG Shares referred to in the paragraph headed “ Timetable for implementation of the Capital Reorganisation and trading arrangements for the new DFG Shares” below will bear the new company name “Pacific Century Premium Developments Limited” on the basis that the proposed change of name takes effect at Completion and Completion occurs on or before 30 June 2004.

If the change of name takes effect on a date different from the effective date of the Capital Reorganisation, further announcement will be made by DFG on the free exchange of shares certificates arrangement. The SGM has been convened at which a special resolution will be proposed to consider, and if thought fit, to approve the change of name of DFG.

AMENDMENT TO BYE-LAWS

The DFG Board proposes that conditional upon the Capital Reorganisation becoming effective, an amendment to Bye-Law 3(1) be made to reflect the new par value of the DFG Shares.

In addition, due to the recent enactment of the SFO and taking into account of the latest changes to the requirements of the Listing Rules, DFG also proposes to put forward to the Shareholders for approval at the SGM resolutions to amend the relevant parts of the Bye-Laws.

INTENTION REGARDING THE DFG GROUP

The scope of the business of the DFG Group will be expanded by virtue of the acquisition of the Property Group. PCCW’s intention is that the Enlarged DFG Group will focus on investment in prime property projects. Other than that, DFG has been informed that PCCW has no intention to effect any major changes in relation to the business, including any redeployment of the fixed assets, of DFG Group or the existing employment of the staff of DFG Group after Completion.

CONTINUING CONNECTED TRANSACTIONS

It is a term of the sale by PCCW-HKT Telephone Limited, a wholly-owned subsidiary of PCCW, to the DFG Group of the Queen’s Road Exchange (forming part of the Sale Assets under the Acquisition Agreement) that, upon Completion, the Queen’s Road Exchange (except those parts which are then subject to third party licences, tenancies and lettings) will be leased back to the PCCW Group for the remaining term of the government lease (less 1 day) at a monthly rental of approximately HK$248,000 per calendar month (exclusive of Government rates, air conditioning and management charges which are to be borne by the tenant). The existing government lease is for a term of 999 years from 26 June 1843. The tenant may terminate the leaseback by not less than 6 months prior notice. The landlord (being on Completion a member of the DFG Group) has the right to terminate the leaseback for redevelopment purposes by giving not less than 2 years prior notice. If there is to be

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redevelopment, the leaseback will also provide that the redeveloped building must provide designated space for a telephone exchange and continued lease of that space to the tenant at the open market rent on otherwise the same basis as described above. DFG will comply with the Revised Listing Rules in respect of the leaseback if there is to be redevelopment.

Details of any continuing connected transactions (between the PCCW Group and the DFG Group after Completion) will be included in a further announcement or relevant approval by Shareholders will be sought (when appropriate), as required by the Revised Listing Rules on or before Completion.

TIMETABLE FOR IMPLEMENTATION OF THE CAPITAL REORGANISATION AND TRADING ARRANGEMENTS FOR THE NEW DFG SHARES

The following timetable is subject to changes, depending on the date on which Completion is to take place.

==> picture [25 x 9] intentionally omitted <==

Latest time for lodging forms of

proxy for the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:30 a.m. on Monday, 26 April

SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:30 a.m. on Wednesday, 28 April

This assumes all conditions precedent for Completion are fulfilled or waived on 29 April 2004 and Completion takes place on 6 May 2004.

Capital Reorganisation (Note 1) becomes effective . . . . . . . . . . . . . . . . . . Thursday, 6 May

Proposed change of name (Note 2) becomes effective . . . . . . . . . . . . . . . . Thursday, 6 May

Closure of original counter for trading in

Existing DFG Shares in board lots of 5,000 (represented by peach colour share certificates for Existing DFG Shares) . . . . . . . . . . . 9:30 a.m. on Thursday, 6 May

Establishment of temporary counter

for trading in DFG Shares in board lots of 500 (represented by peach colour share certificates for Existing DFG Shares) . . . . . . . . . . . 9:30 a.m. on Thursday, 6 May

First day of operation of odd lot trading facility . . . . . . . . . . . . . . . . . . . . Thursday, 6 May

First day of free exchange of existing peach colour share certificates for new green colour share certificates (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 6 May

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Original counter for trading in

DFG Shares represented by new green colour share certificates in board lots of 1,000 re-opens . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Thursday, 20 May

Parallel trading commences . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Thursday, 20 May

• Closure of temporary counter

for trading in DFG Shares in board lots of 500 (represented by peach colour share certificates for existing Shares) . . . . . . . . . . . 4:00 p.m. on Friday, 11 June

Parallel trading ends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Friday, 11 June

Last day of operation of odd lot trading facility . . . . . . . . . . . . . . . . . . . . . . Friday, 11 June

• Last day of free exchange of existing

• peach colour share certificates for new green colour share certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 16 June

No assurance is however given that Completion will take place on 6 May 2004 or at all.

Shareholders will be informed of any changes to the expected timetable by press announcement(s).

Notes:

1. If Completion does not take place on or before 30 June 2004, then the Capital Reorganisation will become effective on 30 June 2004.

2. This also assumes that the Registrar of Companies in Bermuda enters the new name of DFG in the register of companies on the date of Completion.

3. It is expected that new certificates for the new DFG Shares will be available for collection within a period of ten Business Day after the submission of certificates for the Existing DFG Shares to the share registrar and transfer office of DFG for exchange.

The DFG Shares will be traded in board lots of 1,000 each. Subject to the Capital Reorganisation becoming effective on 6 May 2004, dealings in the DFG Shares are expected to commence on the same day. Parallel trading arrangements will be established with the Stock Exchange and parallel trading will be permitted from Thursday, 20 May 2004 to Friday, 11 June 2004, both days inclusive, at the counters mentioned in (a) and (b) below:

• (a) with effect from 9:30 a.m. on Thursday, 6 May 2004, a temporary counter for trading in the new DFG Shares (represented by peach colour share certificates for the Existing DFG Shares in board lot of 500 new DFG Shares) will be established and only peach colour share certificates for Existing DFG Shares can be traded at this counter. Each peach colour share certificate for Existing DFG Shares will be valid for settlement and

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delivery for trading transacted at this counter on the basis of ten Existing DFG Shares for one new DFG Share. The original counter for trading in the Existing DFG Shares in board lot of 5,000 shares will be temporarily closed with effect from 9:30 a.m. on Thursday, 6 May 2004;

• (b) with effect from 9:30 a.m. on Thursday, 20 May 2004, the original counter will be re-opened and will become a counter for trading in the new DFG Shares in board lot of 1,000 new DFG Shares. Only new green colour share certificates for the new DFG Shares can be traded at this counter; and the temporary counter for trading in the new DFG Shares (represented by peach colour share certificates for the Existing DFG Shares in board lot of 500 new DFG Shares) will be removed after the close of business on Friday, 11 June 2004. The peach colour share certificates for the Existing DFG Shares will continue to be good evidence of legal title on the basis of ten Existing DFG Shares for one new DFG Share, but will not be acceptable for trading and settlement purposes thereafter.

Subject to the Capital Reorganisation becoming effective on 6 May 2004, Shareholders may, during 6 May 2004 to 16 June 2004, submit certificates for the Existing DFG Shares to the share registrar and transfer office of DFG, Standard Registrars Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong for exchange, at the expense of DFG, for certificates for the new DFG Shares. Thereafter, certificates for the Existing DFG Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may from time to time be allowed by the Stock Exchange) for each new certificate issued for the new DFG Shares, or for each certificate for the Existing DFG Share submitted for cancellation, whichever the number is greater. Nevertheless, the peach colour certificates for the Existing DFG Shares will continue to be good evidence of legal title and may be exchanged for certificates for the new DFG Shares at any time.

It is expected that new certificates for the new DFG Shares will be available for collection within a period of ten Business Day after the submission of certificates for the Existing DFG Shares to the share registrar and transfer office of DFG for exchange. Unless otherwise instructed, new share certificates will be issued in board lots of 1,000 new DFG Shares each.

DFG has appointed Tai Fook Securities Company Limited as an agent to match the sale and purchase of odd lots of the new DFG Shares arising from the Share Consolidation from 6 May 2004 up to and including 11 June 2004. Such arrangement is to facilitate Shareholders who wish to dispose of or top up their odd lots of new DFG Shares. Shareholders who wish to take advantage of the facility should contact Ms. Eon Lee of Tai Fook Securities Company Limited at 25th Floor, New World Tower, 16-18 Queen’s Road Central, Hong Kong (Tel: 2160 9983). Such Shareholders are reminded that in order to effect the transactions, they will have to lodge with such broker the relevant Share certificate(s) and duly signed and completed transfer form(s) and, if any, other documents of title. Shareholders should note that the matching of the sale and purchase of odd lots of new DFG Shares are not guaranteed.

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UNAUDITED PROFORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS VALUE OF THE ENLARGED DFG GROUP AFTER COMPLETION

The Circular also contains an unaudited proforma statement of adjusted consolidated net tangible asset values of the Enlarged DFG Group after Completion, which has been prepared on the basis of the audited consolidated net asset value of the DFG Group as at 31 March 2003 and as adjusted as follows:

	HK$’million
Audited consolidated net asset value of the DFG Group as at
31 March 2003	185
Add: Unaudited interim results of the DFG Group for
the six-month ended 30 September 2003	(12)
Unaudited adjusted consolidated net asset value of the DFG
Group as at 30 September 2003	173
Less: Unaudited goodwill of the DFG Group as at
30 September 2003 (note a)	(107)
Unaudited proforma adjusted consolidated net tangible asset value
of the DFG Group as at 30 September 2003	66
Add: Proforma combined net assets of Property Group prior to
Completion as at 31 December 2003	2,166
Estimated goodwill arising from the Transaction	36
Unaudited goodwill of the DFG Group as at 30 September
2003	107
Unaudited proforma adjusted combined net assets of the DFG
Group immediately before Completion	2,375
Less: Estimated goodwill arising from the Transaction	(36)
Unaudited goodwill of the DFG Group as at 30 September
2003	(107)
Unaudited proforma adjusted consolidated net tangible asset value
of the Enlarged DFG Group after Completion but before
conversion of the Convertible Notes	2,232
Unaudited proforma adjusted consolidated net tangible asset value
of the Enlarged DFG Group after Completion and the full
conversion of the Convertible Notes	5,822

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HK$’million

Unaudited proforma adjusted consolidated net tangible asset value
attributable to each DFG share as at 30 September 2003
(note b)	HK$0.57
Unaudited proforma adjusted consolidated net tangible asset value
per DFG Share after Completion but before conversion of the
Convertible Notes (note b)	HK$1.26
Unaudited proforma adjusted consolidated net tangible asset value
per DFG Share after Completion and the full conversion of the
Convertible Notes (note b)	HK$1.97

Note a: The goodwill represents the goodwill arising from the acquisition of Top Power Holdings Limited and Beijing Continental Gas Co. Ltd. by a subsidiary of DFG as announced by DFG on 5 June 2003, details of which was included in the circular of DFG dated 26 June 2003.

Note b: The unaudited proforma adjusted consolidated net tangible asst value per DFG Share is calculated on the assumption that the 10:1 share consolidation in the Capital Reorganisation has completed.

As at the date of this announcement, the DFG Board comprises four executive directors, including Dr. Chan Kwok Keung, Charles, Dr. Yap, Allan, Mr. Chan Kwok Hung and Mr. Zhang Shi Chen; and two independent non-executive directors, including Mr. Tsang Link Carl, Brian and Mr. Zhao Wenfu. All the existing members of the DFG Board would resign after Completion and announcement will be made by DFG whenever there is any change in directorship.

By Order of the Board Dong Fang Gas Holdings Limited Feona Ng Company Secretary

Hong Kong, 2 April 2004

The directors of the Company jointly and severally accept full responsibility for the accuracy of the information contained in this announcement and confirm, having made all reasonable inquiries, that to the best of their knowledge, the opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

Please also refer to the published version of this announcement in China Daily.

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