GoFintech Quantum Innovation Limited - Proxy Solicitation & Information Statement 2013

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in 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 advisor.

If you have sold or transferred all your shares in New Times Energy Corporation Limited (the ‘‘Company’’), you should at once hand this circular to the purchaser(s) or the transferee(s) or to the bank, licensed securities dealer, registered institutions in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

This circular appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

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NEW TIMES ENERGY CORPORATION LIMITED 新時代能源有限公司[*]

(incorporated in Bermuda with limited liability) (Stock Code: 00166)

DISCLOSEABLE TRANSACTION IN RELATION TO THE PROPOSED ACQUISITION OF 100% EQUITY INTERESTS IN RESPECT OF GUIZHOU KUNYU TRADING COMPANY LIMITED INVOLVING THE PROPOSED ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE AND

NOTICE OF SPECIAL GENERAL MEETING

Financial Adviser to the Company

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A letter from the board of directors of the Company is set out on pages 7 to 44 of this circular.

A notice convening the special general meeting of the Company (the ‘‘SGM’’) to be convened and held at 3/F, Nexxus Building, 77 Des Voeux Road Central, Hong Kong on Friday, 15 March 2013 at 10:00 a.m. is set out on pages 69 to 71 of this circular. A form of proxy for the SGM is enclosed with this circular. Whether or not you intend to attend the SGM in person, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited, at 26/F Tesbury Centre, 28 Queen’s Road East, Wan Chai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

For identification purpose only

19 February 2013

		Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Appendix I	— Project evaluation report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	45
Appendix II	— Reports on forecasts underlying the valuation
	of the Target Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	64
Appendix III — Experts’ qualifications and consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		68
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		69

– i –

DEFINITIONS

Terms or expressions used in this circular shall, unless the context otherwise requires, have the meanings ascribed to them below:

‘‘Acquisition’’

the proposed acquisition of 100% equity interest in the Target Company by the Purchaser from the Vendors on the terms and subject to the conditions set out in the Acquisition Agreement

‘‘Acquisition Agreement’’
the agreement and the first supplemental agreement both dated 12 November 2012 as supplemented by the second supplemental agreement dated 10 December 2012 entered into between the Purchaser, the Target Company and the Vendors in respect of the Acquisition
‘‘Board’’ the board of Directors
‘‘Business Day’’
a day (excluding Saturday) on which licensed banks in the PRC are generally open for banking business
‘‘BVI’’ British Virgin Islands
‘‘CNG’’ compressed natural gas
‘‘Company’’ New Times Energy Corporation Limited, a company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the Main Board of the Stock Exchange (stock code: 00166)
‘‘Completion’’ the completion of the Acquisition, which is collectively, Completion A, B and C
‘‘Completion A’’ completion of the transfer of 100% equity interest of the Target Company from the Vendors to the Purchaser
‘‘Completion B’’
completion of the transfer of the legal and contractual interests, rights and benefits of each of the Projects to the Target Company
‘‘Completion C’’
completion of the transfer of the legal and contractual interests, rights and benefits of each of the JV Projects to the Target Company
‘‘Completion Date A’’ the completion date of Completion A, the date the conditions precedent to Completion A are fully fulfilled or waived by the Purchaser

– 1 –

DEFINITIONS

‘‘Consideration’’
the aggregate consideration of RMB80,000,000 (equivalent to approximately HK$99,200,000) payable by the Purchaser to the Vendors for the Acquisition pursuant to the Acquisition Agreement
‘‘Conversion Price’’
the initial conversion price(s) of HK$1.00 per Conversion Share
‘‘Conversion Shares’’
the new Shares to be issued and allotted by the Company upon the exercise of the conversion rights thereunder in full by the holders of the Convertible Bonds at the Conversion Price
‘‘Convertible Bonds’’
the convertible bonds in the aggregate principal amount of H K $ 3 9 , 6 8 0 , 0 0 0 ( e q u i v a l e n t t o a p p r o x i m a t e l y RMB32,000,000) proposed to be issued by the Company in favour of the Vendors and/or their nominee(s) upon Completion B and C
‘‘Convertible Bonds A’’
the convertible bonds in the aggregate principal amount of H K $ 3 4 , 7 2 0 , 0 0 0 ( e q u i v a l e n t t o a p p r o x i m a t e l y RMB28,000,000) proposed to be issued by the Company in favour of the Vendors and/or their nominee(s) upon Completion B
‘‘Convertible Bonds B’’
the convertible bonds in the aggregate principal amount of H K $ 4 , 9 6 0 , 0 0 0 ( e q u i v a l e n t t o a p p r o x i m a t e l y RMB4,000,000) proposed to be issued by the Company in favour of the Vendors and/or their nominee(s) upon Completion C
‘‘Director(s)’’ the director(s) of the Company
‘‘First Installment’’
the payment of the first installment of RMB8,512,981.20 in cash from the Jointly Controlled Account owned by the Purchaser and the Vendors to the Vendors’ designated account upon fulfillment of the conditions set out under paragraph headed ‘‘Conditions for jointly controlled payment release’’
‘‘GEM’’ the Growth Enterprises Market of the Stock Exchange
‘‘General Mandate’’
the general mandate to allot and issue up to 114,492,417 Shares of the Company with par value of HK$0.50 per Share granted by the Shareholders to the Directors at the special general meeting of the Company held on 29 August 2012

– 2 –

DEFINITIONS

‘‘Group’’
‘‘Hong Kong’’
‘‘Independent Third Party(ies)’’
‘‘Jointly Controlled Account’’
‘‘JV Company’’
‘‘JV Cooperation Agreement’’
‘‘JV Projects’’
‘‘KT Cooperation Agreement’’
‘‘KunLun’’
‘‘L-CNG’’
‘‘Latest Practicable Date’’
‘‘Listing Rules’’
the Company and its subsidiaries from time to time
the Hong Kong Special Administrative Region of the PRC
third party(ies) who is/are independent of and not connected with the Company and the connected person(s) (as defined in the Listing Rules) of the Company
the jointly controlled account owned by the Purchaser and the Vendors
六盤水新時代能源有限公司 (LiuPanShui New Times Energy Limited*)
the cooperation agreement entered into between the Purchaser and the Vendors on 12 November 2012 pursuant to which, the JV Company will be established with the Purchaser contributing RMB24,000,000 or 80% of the registered capital of the JV Company and the Vendors contributing RMB6,000,000, or 20% of the registered capital of the JV Company
Projects 4 and 5 as shown in Table 1 in the section headed ‘‘Details of the Consideration settlement upon Completion B and Completion C’’
the cooperation agreement entered into on 20 April 2011 between KunLun and the Target Company to set up LiuPanShui KunLun for a term of business operation of 30 years
PetroChina KunLun Piped Gas Company Limited, a company incorporated in the PRC with limited liability, a wholly-owned subsidiary of PetroChina
liquefied to compressed natural gas, i.e. CNG re-processed from LNG at refilling stations
Thursday, 14 February 2013, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
the Rules Governing the Listing of Securities on the Stock Exchange

– 3 –

DEFINITIONS

‘‘LiuPanShui KunLun’’
六盤水中石油昆侖天然氣利用有限公司 (LiuPanShui KunLun Company Limited), a company to be incorporated in GuiZhou Province of PRC with a registered capital of RMB30,000,000, which is 60% owned by KunLun and 40% owned by the Target Company under KT Cooperation Agreement
‘‘LNG’’
liquefied natural gas
‘‘Long Stop Date A’’
31 March 2013, the latest time for the fulfillment of the conditions precedent to the Completion A
‘‘NT Gas’’
新時代燃氣(香港)有限公司 (New Times Gas (Hong Kong) Limited*), a company incorporated in Hong Kong with limited liability, a wholly-owned subsidiary of the Company
‘‘Other Company’s CB’’
convertible bonds of another company listed on the Stock Exchange with an equal aggregate principal amount to the Convertible Bonds
‘‘PBOC’’ The People’s Bank of China
‘‘PetroChina’’
PetroChina Company Limited, a joint stock limited company incorporated in the PRC under the Company Law of the PRC, and listed on the main board of Shanghai Stock Exchange and The Stock Exchange of Hong Kong Limited together with American depository shares listed on the New York Stock Exchange
‘‘PRC’’
the People’s Republic of China, which for the purpose of this circular excludes Hong Kong, Macau Special Administrative Region of the PRC and Taiwan
‘‘Projects’’
the Wholly-owned Projects and the JV Projects, collectively
‘‘Purchaser’’
深圳中港新時代能源有限公司 (Shen Zhen Sino Hong Kong New Time Energy Corporation Limited*), a wholly foreign owned enterprise established in the PRC with limited liability and an indirectly wholly-owned subsidiary of the Company
‘‘Second Installment’’
the payment of the second installment of RMB9,000,000 in cash by the Purchaser to the Vendors or theirs nominees and the issue of Convertible Bonds A by the Company, as procured by the Purchaser, with a principal amount of H K $ 3 4 , 7 2 0 , 0 0 0 ( e q u i v a l e n t t o a p p r o x i m a t e l y RMB28,000,000) to the Vendors or theirs nominees, upon Completion B

– 4 –

DEFINITIONS

‘‘SGM’’
a special general meeting of the Company to be convened and held for the purpose of considering and, if thought fit, passing the relevant resolution(s) to approve, among other things, the grant of the Specific Mandate for the allotment and issue of the Conversion Shares falling to be issued upon the exercise of the conversion rights attaching to the Convertible Bonds and the transactions contemplated thereunder
‘‘Share(s)’’
ordinary share(s) of HK$0.50 each in the share capital of the Company
‘‘Shareholder(s)’’ the holder(s) of the Shares
‘‘Shine Great’’
盛宏投資有限公司 (Shine Great Investments Limited*), a company incorporated in the BVI with limited liability, an indirectly held wholly-owned subsidiary of the Company and is an investment holding company
‘‘Specific Mandate’’
the specific mandate to be obtained from the Shareholders at the SGM for the allotment and issue of the Conversion Shares falling to be issued upon the exercise of the conversion rights attaching to the Convertible Bonds
‘‘Stock Exchange’’
The Stock Exchange of Hong Kong Limited
‘‘substantial shareholder(s)’’
‘‘Takeovers Code’’
‘‘Target Company’’
has the same meaning ascribed to it under the Listing Rules The Codes on Takeovers and Mergers and Share Repurchases issued by the Securities and Futures Commission of Hong Kong 貴州坤煜經貿有限公司 (GuiZhou KunYu Trading Co., Ltd.*), a limited company incorporated in the GuiZhou province of PRC with an issued share capital of RMB20,000,000
‘‘Third Installment’’
the payment of the third installment of RMB4,000,000 cash by the Purchaser to the Vendors or theirs nominees and the issue of Convertible Bonds B by the Company, as procured by the Purchaser, with a principal amount of HK$4,960,000 (equivalent to approximately RMB4,000,000) to the Vendors, upon Completion C
‘‘Threshold Level’’
120% of the Conversion Price of the Convertible Bonds

– 5 –

DEFINITIONS

‘‘Total Belief’’ 確信有限公司 (Total Belief Limited*), a company incorporated in the BVI with limited liability, a directly held wholly-owned subsidiary of the Company and is an investment holding company
‘‘Vendors’’ the shareholders of the Target Company prior to the Acquisition, namely Mr. Zhu ZhiQing (朱志清), Mr. Su RongLi (蘇榮利), and Mr. Tang Feng (唐烽), who respectively held 62.5%, 30%, and 7.5% of the shareholdings of the Target Company and being the vendors under the Acquisition Agreement
‘‘Warrants’’ 100,000,000 unlisted transferable warrants issued by the Company on 29 May 2012 conferring rights entitling its holder(s) to subscribe for up to 100,000,000 new Shares at the initial exercise price of HK$1.05 (subject to adjustment)
‘‘Wholly-owned Projects’’ Projects 1–3 and Projects 6–16 as shown in Table 1 in the section headed ‘‘Details of the Consideration settlement upon Completion B and Completion C’’
‘‘HK$’’ Hong Kong dollar(s), the lawful currency of Hong Kong
‘‘RMB’’ Renminbi, the lawful currency of the PRC
‘‘%’’ per cent

In the event of any inconsistency, the English text of this circular shall prevail over the Chinese text.

For the purpose of this circular, unless otherwise specified, conversion of RMB into Hong Kong dollars are based on the approximate exchange rate of RMB1.00 to HK$1.24.

– 6 –

LETTER FROM THE BOARD

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NEW TIMES ENERGY CORPORATION LIMITED 新時代能源有限公司[*]

(incorporated in Bermuda with limited liability)

(Stock Code: 00166)

Executive Directors: Mr. Cheng Kam Chiu, Stewart (Chairman) Mr. Cheng Ming Kit (Chief Executive Officer) Mr. Sun Jiang Tian

Non-executive Director: Mr. Wong Man Kong, Peter

Independent non-executive Directors:

Mr. Fung Siu To, Clement Mr. Chan Chi Yuen Mr. Chiu Wai On

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head office and principal place of business in Hong Kong: Room 1007–8, 10/F New World Tower 1 18 Queen’s Road Central Central, Hong Kong

19 February 2013

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION IN RELATION TO THE PROPOSED ACQUISITION OF 100% EQUITY INTERESTS IN RESPECT OF GUIZHOU KUNYU TRADING COMPANY LIMITED INVOLVING THE PROPOSED ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE AND

NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the announcements dated 12 November 2012, 10 December 2012, 3 January 2013 and 24 January 2013 in relation to the Acquisition. On 12 November 2012 (after trading hours), the Purchaser entered into the Acquisition Agreement with the Vendors pursuant to which, the Purchaser has conditionally agreed to acquire and the Vendors have conditionally agreed to dispose of 100% equity interests in the Target Company at the Consideration of RMB80,000,000 (equivalent to approximately HK$99,200,000).

For identification purpose only

– 7 –

LETTER FROM THE BOARD

To ensure that the mandate is sufficient at all times for the issue of the Conversion Shares, the Company will issue the Convertible Bonds under the Specific Mandate. As a result, the General Mandate will not be utilised to issue the Convertible Bonds. The issue of the Convertible Bonds and the Conversion Shares under the Specific Mandate is subject to the Shareholders’ approval at the SGM.

The purpose of this circular is to provide you with, among other things, (i) further details of the Acquisition; (ii) the evaluation report of the Projects; (iii) further details of the Convertible Bonds to be issued under the Specific Mandate; and (iv) the notice of SGM to be convened and held for the purpose of considering and, if thought fit, passing the relevant resolution(s) to approve, among other things, the grant of the Specific Mandate for the allotment and issue of the Conversion Shares falling to be issued upon the exercise of the conversion rights attaching to the Convertible Bonds and the transactions contemplated thereunder.

It is expected the Company shall publish a further announcement between the Latest Practicable Date and the date of the SGM to disclose the details of a supplementary agreement to the Acquisition Agreement, which if entered by the relevant parties, shall replace the Purchaser by another indirectly wholly-owned subsidiary of the Company as the purchaser of the Acquisition.

A. The Proposed Acquisition Agreement of 100% Shareholding of the Target Company

The Acquisition Agreement

The principal terms of the Acquisition Agreement are as follows:

Date: 12 November 2012

Parties:

(i) Purchaser: ShenZhen Sino Hong Kong New Time Energy Corporation Limited (深圳中港新時代能源有限公司); (ii) Vendors: Mr. Zhu ZhiQing (朱志清), Mr. Su RongLi (蘇榮利), and Mr. Tang Feng (唐烽); and (iii) Target Company: GuiZhou KunYu Trading Company Limited* (貴州坤煜經貿有限公司)

The Purchaser is a wholly foreign-owned enterprise established in the PRC with limited liability, an indirectly wholly-owned subsidiary of the Company and is an investment holding company.

The Target Company is an investment holding company incorporated in the PRC with limited liability.

– 8 –

LETTER FROM THE BOARD

alternative wholly-owned subsidiary, the Vendors and the Target Company. As at the Latest Practicable Date, the terms and conditions of this agreement have not been finalised and the replacement may or may not proceed. Upon entering into the agreement by the relevant parties, the Company shall publish an announcement between the Latest Practicable Date and the date of the SGM to disclose the details of the agreement.

Pursuant to the Acquisition Agreement, the Target Company shall hold the Projects. The Target Company shall apply for the granting of the legal and contractual interests, rights and benefits of each of the Projects from the relevant government and regulatory authorities at Completion B. Assuming the said legal and contractual interests, rights and benefits of each of the Projects are obtained, the Target Company will hold the 100% legal and contractual interests, rights and benefits in the sixteen (16) Projects. The shareholding structure is set out in the section headed ‘‘Shareholding structure of the Target Company after Completion assuming the legal and contractual interests, rights and benefits of the Projects are obtained at Completion B’’.

If, for any reasons, the Target Company is unable to obtain the legal and contractual interests, rights and benefits of the JV Projects at Completion B, the right to apply for the granting of the legal and contractual interests, rights and benefits of the JV Projects from the relevant government and regulatory authorities will be provided to LiuPanShui KunLun at Completion C. Assuming LiuPanShui KunLun obtains the legal and contractual interests, rights and benefits of the JV Projects, the Purchaser will indirectly hold 40% interest, through LiuPanShui KunLun, in the two (2) JV Projects and 100% interest, through the Target Company, in the fourteen (14) Wholly-owned Projects. The shareholding structure is set out in the section headed ‘‘Shareholding structure of the Target Company after Completion assuming the legal and contractual interests, rights and benefits of the Wholly-Owned Projects are obtained at Completion B and the JV Projects are obtained by LiuPanShui KunLun at Completion C’’.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Vendors are Independent Third Parties.

Subject of the Acquisition

Pursuant to the Acquisition Agreement, the Purchaser conditionally agreed to acquire, and the Vendors conditionally agreed to dispose of 100% equity interests in the Target Company at the Consideration of RMB80,000,000 (equivalent to approximately HK$99,200,000).

Consideration and Payment

Pursuant to the terms of the Acquisition Agreement, the Consideration of RMB80,000,000 (equivalent to approximately HK$99,200,000) shall be settled in the following manner:

(i) within 10 Business Days after the date of signing the Acquisition Agreement, the refundable deposit of RMB10,000,000 (equivalent to approximately HK$12,400,000) (the ‘‘Refundable Deposit A’’) shall be paid in cash by the Purchaser to the Vendors or their nominees;

– 9 –

LETTER FROM THE BOARD

(ii) within 10 Business Days after duly appointment and registration of the nominee(s) of the Purchaser as the legal representative of the Target Company and delivery of the Target Company’s updated business license, the refundable deposit of RMB16,487,018.80 (equivalent to approximately HK$20,443,903.31) (the ‘‘Refundable Deposit B’’) shall be paid in cash by the Purchaser to the Vendors or their nominees;
(iii) upon Completion A, the Jointly Controlled Account shall be established by the Purchaser and the Vendors and the balance of RMB8,512,981.20 (equivalent to approximately HK$10,556,096.69) shall be deposited by the Purchaser into the Jointly Controlled Account;
(iv) upon the fulfillment of all conditions as set out in the paragraph headed ‘‘Conditions for jointly controlled payment release’’, the balance of RMB8,512,981.20 (equivalent to approximately HK$10,556,096.69) shall be transferred from the Jointly Controlled Account to the Vendors or their nominees;
(v) upon Completion B, the balance of RMB37,000,000 (equivalent to approximately HK$45,880,000) of which RMB9,000,000 (equivalent to approximately HK$11,160,000) shall be paid in cash by the Purchaser to the Vendors or their nominees and the remaining balance shall be settled by the Purchaser procuring the Company to issue Convertible Bonds A with a principal amount of HK$34,720,000 (equivalent to approximately RMB28,000,000) to the Vendors or their nominees; and
(vi) upon Completion C, the balance of RMB8,000,000 (equivalent to approximately HK$9,920,000) of which RMB4,000,000 (equivalent to approximately HK$4,960,000) shall be paid in cash by the Purchaser to the Vendors or their nominees and the remaining balance shall be settled by the Purchaser procuring the Company to issue Convertible Bonds B with a principal amount of HK$4,960,000 (equivalent to approximately RMB4,000,000) to the Vendors or their nominees.

Refundable Deposits (Refundable Deposit A and Refundable Deposit B)

Pursuant to the Acquisition Agreement, upon fulfillment of the relevant conditions of the payment manner (i) and (ii) as set out above, the Purchaser will pay RMB26,487,018.80 (equivalent to approximately HK$32,843,903.31) in cash as the Refundable Deposit A and Refundable Deposit B (collectively, the ‘‘Refundable Deposits’’) to the Vendors or their nominees. If Completion A is unable to take place on or before Long Stop Date A, the Acquisition Agreement shall be terminated and the Acquisition will not proceed. The Vendors shall, within three (3) Business Days of the date of termination of the Acquisition Agreement, refund the said Refundable Deposits of RMB26,487,018.80 (equivalent to approximately HK$32,843,903.31) with the accrued interest. The accrued interest shall be calculated in reference to 120% of the one year basic lending rate of the PBOC.

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LETTER FROM THE BOARD

Entrusted Payment

Pursuant to the Acquisition Agreement, the Vendors and the Purchaser confirm that all the accounts payable (including other payables) and any other subsequent expenses accrued before Completion A to be paid by the Target Company shall be solely borne by the Vendors. As at the date of the Acquisition Agreement, the said accounts payable (including other payables) that shall be paid by the Vendors, on behalf of the Target Company, is RMB21,512,981.20 (equivalent to approximately HK$26,676,096.69) (the ‘‘Entrusted Payment’’). The Vendors entrust the Purchaser to pay the said Entrusted Payment on behalf of the Vendors as the cash portion of the Consideration in the following manner:

(i) RMB8,512,981.20 (equivalent to approximately HK$10,556,096.69) upon fulfillment of all conditions as set out in the paragraph headed ‘‘Conditions for jointly controlled payment release’’;
(ii) RMB9,000,000 (equivalent to approximately HK$11,160,000) upon Completion B; and
(iii) RMB4,000,000 (equivalent to approximately HK$4,960,000) upon Completion C.

In the event that the Vendors are unable to, pursuant to condition precedent (iii) to Completion B, facilitate and procure the Target Company to obtain any of the Wholly-owned Projects, the Vendors shall compensate the Purchaser for any amount paid by the Purchaser on behalf of the Vendors for the purposes of the establishment, construction and business operation of the Wholly-owned Projects. The said compensation shall be paid by the Vendors to the Purchaser within ten (10) Business Days after the deadline for the transfer of the Wholly-owned Projects has expired (i.e. 12 months from the date of signing the Acquisition Agreement).

Details of the Consideration settlement upon Completion B and Completion C

The payment schedule for Completion B is as follows:

Table 1

No.	No.				Consideration payable by Convertible Bonds A RMB(’000)
	No.	Project Title (all within GuiZhou Province)	Total Consideration RMB(’000)	Consideration payable by Cash RMB(’000)	Consideration payable by Convertible Bonds A RMB(’000)
	1	LiuPanShui City BaZhongBei LNG/L-CNG Refilling Station* (六盤水市八中北LNG/L- CNG加氣站)	18,900	2,126	6,615
	2	LiuPanShui City XiaYunPan LNG/L-CNG Refilling Station* (六盤水市下雲盤LNG/L- CNG加氣站)	19,200	2,160	6,720
3	3	Qianxinan Buyei and Miao Autonomous Prefecture XinYi City East Link Gas Refilling Station* 黔西南布依族苗族自治州興義市東環線加氣站	7,800	878	2,730

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LETTER FROM THE BOARD

No.				Consideration payable by Convertible Bonds A RMB(’000)
No.	Project Title (all within GuiZhou Province)	Total Consideration RMB(’000)	Consideration payable by Cash RMB(’000)	Consideration payable by Convertible Bonds A RMB(’000)
4	LiuPanShui City ZhongShan Economic Development District (HongQiao New District) Integrated Natural Gas Utilisation Project* 六盤水市鐘山經濟開發區(紅橋新區) 天然氣綜合利用項目	1,000	113	350
5	LiuPanShui City BaiNi CNG Compression Station* 六盤水市白泥加氣母站	2,800	315	980
6	GuiYang City JinYang New District YingBin East Road CNG Refilling Station* 貴陽市金陽迎賓東路CNG加氣站	3,400	383	1,190
7	LiuPanShui City ZhongShan District L-CNG Refilling Station* 六盤水市鐘山L-CNG加氣站	2,700	304	945
8	LiuPanShui City ZhongShan District DeWu District L-CNG Refilling Station* 六盤水市德塢L-CNG加氣站	3,000	338	1,050
9	LiuPanShui City ZhongShan District FengHuang District L-CNG Refilling Station* 六盤水市鳳凰街L-CNG加氣站	2,700	304	945
10	LiuPanShui City LiuZhi Special District SiJiaoTian L-CNG Refilling Station* 六盤水市六枝特區四角田L-CNG加氣站	1,800	203	630
11	LiuPanShui City ShuiYue Industrial Park Integrated Natural Gas Utilisation Project* 六盤水市鐘山水月產業園天然氣綜合利用項目	3,000	338	1,050
12	LiuPanShui City ShuiCheng Economic Development District Integrated Natural Gas Utilisation Project* 六盤水市水城經濟開發區天然氣綜合利用項目	3,000	338	1,050
13	LiuPanShui City LiuZhi Special District MuGang Industrial Park Integrated Natural Gas Utilisation Project* 六盤水市六枝特區木崗(鎮)產業園天然氣綜合利用項目	2,600	293	910
14	Qianxinan Buyei and Miao Autonomous Prefecture XinRen County Integrated Natural Gas Utilisation Project* 黔西南布依族苗族自治州興仁縣天然氣綜合利用項目	3,500	394	1,225
15	LiuPanShui City LiuZhi Special District GongKuang Group Residential Gas Utilisation Project* 六盤水市六枝特區工礦集團居民燃氣項目	2,800	315	980
16	LiuPanShui City LiuZhi Special District LangDai Town (LiuZhi Old County) Gas Utilisation Project* 六盤水市六枝特區郎岱鎮(六枝老縣城)城市燃氣項目	1,800	203	630

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LETTER FROM THE BOARD

Based on the payment schedule as set out in the column ‘‘Consideration payable by cash’’ of Table 1 above, the Purchaser shall pay within ten (10) Business Days, on behalf of the Vendors, the equivalent amount of the Entrusted Payment as the cash portion of the Consideration upon fulfillment of the conditions precedent to Completion B for each of the Projects.

Based on the payment schedule as set out in the column ‘‘Consideration payable by Convertible Bonds A’’ of Table 1 above, the Purchaser shall procure the Company to issue Convertible Bonds A upon fulfillment of the conditions precedent to Completion B for each of the Projects. The Convertible Bonds A shall be issued on the last day of each of the three respective time frames (31 March 2013, 30 June 2013 and 30 September 2013). The relevant amount of Convertible Bonds A to be issued shall be determined according to the number of Projects completed within each time frame.

In the event that all of the conditions precedent to Completion B for Projects 4 and 5 (as shown in Table 1 above) are fulfilled and satisfied, including but not limited to the Target Company obtaining the legal and contractual interests, rights and benefits of the JV Projects from the relevant government and regulatory authorities at Completion B, the Purchaser agrees to waive condition precedent (iii) as set out in the section headed ‘‘Conditions precedent to Completion C’’.

In the event that any of the conditions precedent to Completion B for Projects 4 and 5 (as shown in Table 1 above) are not fulfilled and satisfied, but the conditions precedent to Completion C for Projects 4 and 5 (as shown in Table 1 above) are fulfilled and satisfied, including but not limited to LiuPanShui KunLun obtaining the legal and contractual interests, rights and benefits of the JV Projects from the relevant government and regulatory authorities at Completion C, the Purchaser agrees to (i) pay the Vendors, at the same time of paying the cash portion of the Third Installment, the relevant amount of cash as set out in the column ‘‘Consideration payable by cash’’ of Table 1 above for Projects 4 and 5; and (ii) procure the Company to issue to the Vendors, at the same time of issuing Convertible Bonds B, the relevant amount of Convertible Bonds A as set out in the column ‘‘Consideration payable by Convertible Bonds A’’ of Table 1 above for Projects 4 and 5.

Consideration for the JV Projects

Pursuant to the Acquisition Agreement, the Consideration to be paid to the Vendors in respect of the JV Projects will be the same if the conditions precedent for obtaining the JV Projects are fulfilled and satisfied at either Completion B or Completion C.

Pursuant to the KT Cooperation Agreement, in the event the JV Projects are held by LiuPanShui KunLun, KunLun, as the 60% shareholder of LiuPanShui KunLun, shall provide the major support and contribution of natural gas resources, capital, technology, distribution network and brand name of KunLun to LiuPanShui KunLun.

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LETTER FROM THE BOARD

In view the huge investment scales of the JV Projects are among the highest within the Projects, the cooperation with KunLun and receiving major support and contribution from KunLun could be vital to the success of operation of the JV Projects and could provide intangible benefits to the Wholly-owned Projects. In such circumstance, the Company is not required to wholly bear the contribution and risk of such huge investment. Therefore, the Board holds the view that the 60% less interest in the JV Projects is justified by the benefits and support brought by KunLun.

Basis for determining the Consideration payment

The Consideration has been arrived at after arm’s length negotiations between the Company, the Purchaser and the Vendors and was determined with reference to, amongst others:

(i) the completion of construction of two LNG/L-CNG refilling stations, Project 1 and Project 2, at the cost of approximately RMB39 million (equivalent to approximately HK$48.36 million);
(ii) the setting up of a joint venture company with Kunlun provides the opportunity to develop a relationship with PetroChina, which is in favour of the Company’s long-term LNG business development plans;
(iii) the preliminary valuation of the financial net present value of the Projects of the Target Company prepared by LCH (Asia-Pacific) Surveyors Limited, an independent professional valuer, according to which the total financial net present value of 100% of the Wholly-owned Projects and 40% of the JV Projects of the Target Company, if successful, was in the region of RMB210,000,000 (equivalent to approximately HK$260,400,000) as at 6 November 2012; and
(iv) the unaudited net asset value of the Target Company of RMB18,398,089.23 (equivalent to approximately HK$22,814,000) as at 31 December 2011.

The cash proportion of the Consideration to be paid by the Purchaser to the Vendors will be financed by internal resources of the Group.

Upon the fulfillment of the conditions to the payment of the Second Installment or the Third Installment, the Purchaser has the right to transfer the Other Company’s CB in place of the Convertible Bonds.

The Company does not, at present, hold the Other Company’s CB and has not yet identified the Other Company. Accordingly, the Company is unable to ascertain the terms and conditions of the Other Company’s CB. The specific terms and conditions of the Other Company’s CB shall be agreed by the Purchaser and the Vendors before the transfer of the Other Company’s CB.

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LETTER FROM THE BOARD

In the event that the Purchaser elects to transfer the Other Company’s CB in place of the Convertible Bonds, the Company will comply with all applicable announcement and/or shareholder approval requirements under the Listing Rules. A further announcement will be published to update the Shareholders when the Company transfers the Other Company’s CB to settle the Consideration.

Terms of the Convertible Bonds

The principal terms of the Convertible Bonds are summarised below:

Issuer: The Company

Principal amount: An aggregate of HK$39,680,000 (equivalent to RMB32,000,000), which consists of (i) Convertible Bonds A with a principal amount equal HK$34,720,000 (equivalent to RMB28,000,000); and (ii) Convertible Bonds B with a principal amount equal HK$4,960,000 (equivalent to RMB4,000,000)

Denomination: In the denomination of HK$1,000,000

Interest: 3% per annum Maturity date: 1 year from the date of issue Conversion Price: Initially, HK$1.00 per Conversion Share

Adjustments to the The Conversion Price will be adjusted in accordance with Conversion Price: the relevant provisions under the terms and conditions of the Convertible Bonds upon occurrence of, among other things, the following events:
(a) any alteration to the nominal value of the Shares as a result of consolidation or sub-division;
(b) issue of Shares by way of capitalisation of profits or reserves (other than Share issued in lieu of a cash dividend);
(c) capital distribution (as defined in the instrument creating Convertible Bonds) to Shareholders;
(d) right issue of Shares or options, warrants or other rights to subscribe for or purchase Shares at less than 80% of the then current market price per Share;

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LETTER FROM THE BOARD

(e) right issue of other securities of the Company (other than Shares or options, warrants or other rights to subscribe for or purchase Shares) at less than 80% of the then current market price per Share;
(f) issue for cash of Shares or options, warrants or other rights to subscribe for or purchase Share at less than 80% of the then current market price per Share;
(g) issue for cash of any securities carrying rights of conversion into, or conversion or subscription for Shares to be issued by the Company upon conversion, conversion or subscription at a consideration per Share which is less than 80% of the then current market price per Share;
(h) where there is any modification made to the rights of conversion, conversion or subscription attached to any such securities issued under sub-paragraph (g) above so that the consideration per Share is less than 80% of the then current market price per Share;
(i) offer of securities in connection with which Shareholders generally (meaning for this purpose holders of at least 60% of the Shares outstanding at the time such offer is made) are entitled to participate in arrangement whereby such securities may be acquired by them (except where the Conversion Price falls to be adjusted under sub-paragraph (d) or (e) above); and
(j) if the Company determines that any adjustment should be made to the Conversion Price as a result of one or more events not referred to in sub-paragraphs (a) to (i) above, the Company shall request its auditors or other professional parties to determine what adjustment, if any, to the Conversion Price is fair and reasonable.

Security:

Unsecured

Exchange rate: The HK$ and RMB exchange rate is HK$1.24 = RMB1.00 for all purposes under the Convertible Bonds

Ranking of the The Convertible Bonds rank equally among themselves and Convertible Bonds: pari passu with all other present and future unsecured and unsubordinated obligations of the Company except for obligations accorded preference by mandatory provisions of applicable law

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LETTER FROM THE BOARD

Ranking:

Upon issue and allotment, the Conversion Shares will rank pari passu in all respects with all the Shares in issue at the date on which the conversion rights attaching to the Convertible Bonds are exercised
Conversion period: Upon issue of the Convertible Bonds, the holders of the Convertible Bonds will have the right to convert the whole or part of the principal amount in multiples of HK$1,000,000 of each of the Convertible Bonds into Conversion Shares at any time and from time to time, commencing from the date of issue and up to and inclusive of the respective maturity date
Mandatory Without breaching any of the conversion restriction terms conversion: of the Convertible Bonds, the holders of the Convertible Bonds must exercise in full the outstanding conversion rights attaching to the Convertible Bonds at the Conversion Price on the first trading day immediately after the average of the closing prices per Share for five consecutive trading days (‘‘Average Closing Price’’) equals or exceeds the Threshold Level. If the Average Closing Price equals or exceeds the Threshold Level on the date of issue of the relevant convertible bonds, the Company shall directly deliver the corresponding number of Conversion Shares to the respective holders after 4:00 p.m. on the date of issue
Conversion restriction: The holders of any Convertible Bonds shall not have the right to convert the whole or part of the principal amount of the Convertible Bonds into Conversion Shares to the extent that immediately after such conversion, (i) the holders of the Convertible Bonds together with parties acting in concert with it or deemed to be so with it, taken together will, directly and indirectly, control or be interested in 20% or more of the voting rights of the Company, or such other percentage specified in the Takeovers Code which the holders of the Convertible Bonds and/or parties acting in concert with it would be obliged to make a general offer or be deemed to be an ‘‘associated company’’ as defined under the Takeovers Code or deemed to be acting in concert under Takeovers Code in force from time to time whichever shall be the lowest; or (ii) there will not be sufficient public float of the Shares as required under the Listing Rules
Redemption:
The Convertible Bonds will be redeemed by the Company of their principal amounts at the maturity dates of the corresponding Convertible Bonds, together with accrued but unpaid interest to the relevant date fixed for such redemption

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LETTER FROM THE BOARD

Early redemption:

(1) Upon delisting or change of control of the Company

Upon (i) the Shares cease to be listed or admitted to trading on the Stock Exchange; or (ii) trading in the Shares on the Stock Exchange has been suspended for a continuous period of 180 days or more; or (iii) the occurrence of a change of control of the Company, the Convertible Bonds may be redeemed at the option of the holders of the Convertible Bonds in whole or in part of the Convertible Bonds at their principal amount at the date fixed for such redemption, together with accrued but unpaid interest up to the relevant date fixed for such redemption

(2) Upon issue of early redemption notice by the Company

Unless conversion notice shall have previously been given by the holders of the Convertible Bonds to the Company, the Company shall have the right at any time after the issue of the Convertible Bonds and up to and inclusive of the maturity date to redeem the whole or part of the outstanding Convertible Bonds (other than that part of the outstanding Convertible Bonds to which the conversion notice relates) at the redemption amount provided that (a) the Company shall have given to the holders of the Convertible Bonds not less than one (1) Business Day’s prior irrevocable notice of its intention to make such redemption, specifying the amount to be redeemed and the date of such redemption provided that such date of redemption must be a Business Day; and (b) any redemption shall be made in an amount of not less than an integral multiple of HK$1,000,000

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LETTER FROM THE BOARD

(3) Upon occurrence of any events of default

Upon occurrence of any events of default as set out in the terms and conditions of the Convertible Bonds, including (i) if there is not a sufficient number of authorised but unissued Shares available for fulfilling the conversion rights attaching to the Convertible Bonds; (ii) default of the Company in the performance of, or observance of or compliance with any covenant, condition or provision contained in the terms and conditions of the Convertible Bonds (other than the covenant to pay the principal or the interest in respect of the Convertible Bonds) and such default is not remedied for a period of 14 days immediately following any holder of the Convertible Bonds filing a relevant notice in respect of such default; (iii) a resolution is passed or an order of a court of competent jurisdiction is made that the Company be wound up or dissolved otherwise than for the purposes of or pursuant to and followed by a consolidation, amalgamation, merger or reconstruction; (iv) an encumbrancer takes possession or a receiver is appointed of the whole or any material part of the assets of the Company; (v) a distress, execution or seizure before judgment is levied or enforced upon or sued out against the whole or any material part of the assets of the Company and is not discharged within thirty days thereof; or (vi) the trading in the Shares on the Stock Exchange has been suspended for a continuous period of 180 days or more or the Shares cease to be listed or admitted to trading on the Stock Exchange, the Convertible Bonds may be redeemed at the option of the Holders of the Convertible Bonds in whole or in part of the Convertible Bonds at their principal amount at the date fixed for such redemption, together with accrued but unpaid interest up to the relevant date fixed for such redemption

Listing:

No application will be made for the listing of the Convertible Bonds on the Stock Exchange or any other stock exchange. An application will be made by the Company to the Stock Exchange for the approval of the listing and permission to deal in the Conversion Shares on the Stock Exchange

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LETTER FROM THE BOARD

Transferability:

The Convertible Bonds may be assigned or transferred with the prior consent of the Company (whose consent shall not be unreasonably withheld or delayed) and (if required) that of Stock Exchange, to any party, and the Company shall use all reasonable endeavours to facilitate any such assignment or transfer of the Convertible Bonds, including making any necessary applications to the Stock Exchange for approval (if required). Transfer of the Convertible Bonds shall be subject to the other provisions of the Convertible Bonds provided that the whole or part of principal amount of each the Convertible Bonds may be assigned and transferred

Voting: The Convertible Bonds shall not carry any voting rights

Assuming the conversion right attaching to the Convertible Bonds are exercise in full at the initial Conversion Price of HK$1.00 per Conversion Share by the Vendors, the Company will allot and issue an aggregate of 39,680,000 Conversion Shares, of which (i) 34,720,000 Conversion Shares will be allotted and issued upon exercise in full of the conversion right attaching to the Convertible Bonds A; and (ii) 4,960,000 Conversion Shares will be allotted and issued upon exercise in full of the conversion right attaching to the Convertible Bonds B. As at the Latest Practicable Date, the said aggregate of 39,680,000 Conversion Shares represents (i) approximately 5.31% of the existing issued share capital of the Company; and (ii) approximately 5.04% of the issued share capital of the Company as enlarged by the allotment and issue of the Conversion Shares.

The Conversion Price of HK$1.00 per Conversion Share was arrived at after arm’s length negotiation between the Company and the Vendors with reference to the recent performance of the Shares and current market conditions. The Conversion Price of HK$1.00 per Conversion Share represents:

(i) a premium of approximately 4.17% over the closing price of HK$0.960 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a premium of approximately 7.53% over the closing price of HK$0.930 per Share as quoted on the Stock Exchange on the date of the Acquisition Agreement;
(iii) a premium of approximately 1.21% over the average of the closing prices per Share of HK$0.988 for the last five consecutive trading days prior to the date of the Acquisition Agreement;
(iv) a premium of approximately 0.70% over the average of the closing prices per Share of HK$0.993 for the last ten consecutive trading days prior to the date of the Acquisition Agreement; and

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LETTER FROM THE BOARD

(v) a discount of approximately 84.79% from the unaudited consolidated net asset value as at 30 June 2012 of approximately HK$6.573 per Share, calculated based on the unaudited consolidated net asset value attributable to the owners of the Company as at 30 June 2012 and 572,462,087 Shares in issue as at the date of the Acquisition Agreement.

The Conversion Price was arrived at after arm’s length negotiation between the Company and the Vendors with reference to the prevailing market conditions, the Company’s recent share price performance and future prospects of the Target Company.

Conditions Precedent to the Acquisition Agreement

Completion A shall be conditional upon, inter alia, the followings as conditions precedent (subject to the Vendors’ written notice of modifications, variations and/or waivers, in whole or in part, of the conditions precedent):

(i) 10 days before Completion Date A, the Purchaser should complete all the due diligence checking, and be satisfied with the results of the due diligence of the Projects, and the Target Company legal and financial;
(ii) The Target Company and the Vendors have fully complied with the obligations under the Acquisition Agreement;
(iii) Each and every representations and warranties as provided by the Vendors under the Acquisition Agreement remain true and accurate, and they are neither misleading, nor consists of omissions in material respects between the date of signing the Acquisition Agreement and Completion Date A;
(iv) The articles of association of the Target Company shall be approved by the Vendors and the Purchaser, and be signed by the Target Company and the Purchaser, the processing on business registration needs not be completed;
(v) All necessary approvals for Completion A have been obtained, and have not been withdrawn or revoked by any third parties (including but not limited to any government bodies and other institutions which have jurisdiction over the Acquisition), and if the revoked approvals are deemed to affect the conditions precedent of any parties in the Acquisition Agreement, those conditions shall have been accepted by the parties affected, and if the conditions shall be accomplished before Completion A, those conditions shall have been completed. Approvals of all completed transactions must include: (1) approvals obtained by the Purchaser in accordance with the internal procedures required by Completion A; (2) approvals by the board of directors and shareholders of the Target Company on the Completion. All other documents as required under particular circumstances and the PRC law shall also be needed. All necessary approvals include (but not limited to):
a. the Company having complied to the satisfaction of the Stock Exchange and where applicable, the Securities and Futures Commission of Hong Kong with all applicable requirements under the Listing Rules and, where

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LETTER FROM THE BOARD

applicable, the Takeovers Code in relation to the issue of the Convertible Bonds and the allotment and issue of the Conversion Shares upon the exercise of the conversion rights attaching to the Convertible Bonds and other transactions contemplated herein;

b. the Company having obtained any necessary waiver, consent, approval, license, authorisation, permission, order and exemption (if required) from the relevant governmental or regulatory authorities or other third parties which are necessary in connection with the execution and performance of the Acquisition Agreement and any of the transactions contemplated under the Acquisition Agreement, including but not limited to (where required) the Bermuda Monetary Authority granting its permission to the issue of the Convertible Bonds, the allotment and issue of the Conversion Shares upon the exercise of the conversion rights attaching to the Convertible Bonds;
c. the Listing Committee of the Stock Exchange, having granted the listing of and permission to deal in the Conversion Shares, approved, where required, the issue of the Convertible Bonds;
d. the passing of the relevant resolution(s) by the Shareholders (other than those who are required to abstain from voting, if any) to approve the transactions contemplated under the Acquisition Agreement, including the allotment and issue of the Conversion Shares upon exercise in full of the conversion rights attaching to the Convertible Bonds under the Specific Mandate at the SGM.
(vi) No occurrence or continuation of any material adverse effects between the signing date of the Acquisition Agreement and Completion Date A.

The Vendors shall on or before the Completion Date A, or for submissions of all the carbon copies and scanned copies of the required documents, at least (5) five days before Completion Date A:

(1) provide to the Purchaser a copy of the register of members of the Target Company, signed by the chairman of the board of directors of the Target Company and affixed with the Company seal of the Target Company, recording the duly completed transfer of shareholdings from the Vendors to the Purchaser;
(2) provide to the Purchaser a photocopy of duly amended memorandum and articles of association of the Target Company showing that the Purchaser has successfully obtained shareholdings of the Target Company;
(3) provide to the Purchaser a copy of each of the general meeting resolution(s) and the board resolution(s) resolving: (A) the approval of the transfer of shareholdings from the Vendors to the Purchaser; and (B) the approval of the corresponding amendments to the memorandum and articles of association;

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LETTER FROM THE BOARD

(4) provide to the Purchaser a copy of duly signed resignation letter of each of the director(s), supervisor(s), general manager(s), deputy general manager(s) and Chief Financial Officer, indicating that the resigning party’s waivers on any rights to make claim or sue for damages from the Purchaser and/or the Target Company regardless of whether the resigning party shall be compensated or not as a result of loss of office or other benefits;
(5) provide to the Purchaser the original copies and all copies (not less than (2) two copies), which the Vendors and the Target Company are in possession of, of each of the KT Cooperation Agreement entered between the Target Company and KunLun dated 20 April 2011 and the memorandum and articles of association of LiuPanShui KunLun;
(6) provide to the Purchaser copies of all minutes, correspondences and financerelated documents between the Purchaser, the Target Company, KunLun and/or KunLun’s subsidiaries in Guizhou;
(7) provide to the Purchaser a copy of payment advice requesting the Purchaser to deposit the First Installment into the account jointly controlled by the Vendors and the Purchaser;
(8) provide to the Purchaser a copy of representations and warranties indicating that at all material times the Vendors fully complied with the obligations under the Acquisition Agreement dated 12 November 2012 and warranting that from the signing date of the Acquisition agreement to the date of Completion A (both days inclusive, the representations and warranties are true, accurate and complete in all material respects;
(9) provide to the Purchaser copies of interim financial statements for 2011 and 2012 and the monthly financial statement for September 2012 of each of the Target Company and LiuPanShui KunLun indicating the accounting policies and treatments of the Vendors and the actual business results and financial status of the Target Company and LiuPanShui KunLun;
(10) facilitate and procure the staff of the Target Company appointed by the Vendors to list out all relevant stamps and documents to be transferred to the Purchaser including but not limited to the relevant stamps such as company seal, contract seal and financial seal, the relevant licenses such as business license, tax registration certificate, legal person code certificate, organisation code certificate, social insurance registration certificate and loan card, government approvals, tenancy agreements, land ownership certificate and other relevant documents, and transfer the same to the person(s) authorized/designated by the Purchaser. All the stamps and documents involved should be under joint custody of the Vendors, the Purchaser and the Target Company;

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LETTER FROM THE BOARD

(11) facilitate and procure the staff of the Target Company appointed by the Vendors to list out all relevant ledgers, certificates, personnel records, relevant agreements, documents and information related to construction of the natural gas projects and transfer the same to the person(s) authorised/designated by the Purchaser;
(12) facilitate and procure the Target Company to transfer the right of control and signature to all its bank accounts to the person(s) authorised/designated by the Purchaser;
(13) facilitate and procure the Target Company to cancel all existing authorisation letters unless otherwise agreed in writing by the Purchaser, and confirm the same to the Purchaser in writing; and
(14) sign any relevant documents and/or take any relevant actions in accordance with the Purchaser’s reasonable requests, in order to complete the transaction as scheduled and expected under the Acquisition Agreement dated 12 November 2012.

Conditions for jointly controlled payment release

The payment of the First Installment from the account jointly owned by the Purchaser and the Vendors to the Vendors designated account shall be conditional upon, inter alia, the satisfaction of the following conditions precedent:

(i) Completion A has already taken place;
(ii) From the date Acquisition Agreement to the date of transfer of the First Installment, the representations and warranties stated in the Acquisition Agreement are true, accurate and complete in all material respects and the Vendors shall issue a confirmation letter to the Purchaser in this respect;
(iii) The Vendors has produced to the Purchaser the original copies of the Target Company’s (i) register of shareholders; and (ii) proof of transfer of the entire equity interests of the Target Company to the Purchaser and the corresponding amended memorandum and articles of association of the Target Company;
(iv) The Purchaser has been duly registered as the 100% shareholder of the Target Company at the Industry and Commerce Administration of Guiyang of the PRC, and the nominee(s) of the Purchaser has been duly appointed and registered (if necessary) as the director, legal representative and supervisor of the Target Company;
(v) The memorandum and articles of association of the Target Company and the 工商信息查詢單 (Business Information Enquiry Form) have been filed to the Administration for Industry and Commerce of Guiyang of the PRC. The contents of the 工商信息查詢單 (Business Information Enquiry Form) shall be consistent with the Acquisition Agreement and the memorandum and articles of association of the Target Company;

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LETTER FROM THE BOARD

(vi) The Vendors have provided to the Purchaser a copy of the business licence issued by the Administration for Industry and Commerce of Guiyang of the PRC. The contents of the said business licence shall be consistent with the Acquisition Agreement and the memorandum and articles of association of the Target Company; and
(vii) The Vendors have sent to the Purchaser a notification letter requesting the Purchaser to proceed with the payment of the First Installment.

The Purchaser may in its sole and absolute discretion, at any time before the date of transfer of the First Installment, waive, vary, and/or modify any of the conditions for jointly controlled payment release or to deem the conditions for jointly controlled payment release as the conditions precedent to Completion B and/or C by rendering notice in writing to the other parties to the Acquisition Agreement.

Pursuant to the Acquisition Agreement, in the event that any of the above conditions precedent are not be satisfied within 10 Business Days after Completion A and the Purchaser has not waived, varied or modified the said conditions precedent, the Purchaser has the right to cancel the Acquisition, and the Vendors will fully indemnify the Purchaser any loss caused therefrom.

In the event that any of the conditions precedent set out above are not fulfilled, but the Purchaser has nonetheless injected additional capital, provided a loan or provided any other form of financial support to the Target Company (the ‘‘Financial Support’’), the Vendors warrant to undertake the obligation of the Target Company to return the Financial Support together with any accrued interest if the Target Company is unable to fulfill the said obligations.

Conditions precedent to Completion B

The payment of the Second Installment shall be conditional upon, inter alia, the satisfaction of the following conditions precedent:

(i) The conditions for jointly controlled payment release have been fulfilled and satisfied and the transfer of the First Installment has been completed (i.e. the Purchaser had facilitated the Vendors in providing and executing all necessary documents and approvals and had instructed the bank of the jointly controlled account to effect the transfer of the First Installment to the Vendors’ designated account);
(ii) From the date of signing of the Acquisition Agreement to the date of the transfer of the Second Installment, the representations and warranties stated in the Acquisition Agreement are true, accurate and complete in all material respects and the Vendors shall issue a confirmation letter to the Purchaser in this respect;
(iii) Concerning each of the Projects, the Vendors and the Target Company have used their best endeavours to provide assistance to the Target Company to obtain all the relevant and necessary approvals and documents

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for the establishment, construction and business operation of the Projects in accordance with applicable policies, laws and regulations including but not limited to:

a. legal and valid land use rights executed by the relevant regional government authorities or land department of the corresponding Project; and/or
b. agreement signed by the relevant regional government authorities or government departments and confirmation from the government or relevant government departments that the corresponding Project is officially an operating business; and
(iv) The Vendors have sent to the Purchaser a notification letter requesting the Purchaser to proceed with payment of the Second Installment in accordance with the payment schedule as shown in Table 1 in the section headed ‘‘Details of the Consideration settlement upon Completion B and Completion C’’ for the satisfaction of condition precedent (iii) above for each of the Projects.

The Purchaser may in its sole and absolute discretion at any time before Completion B waive, vary, and/or modify any of the conditions precedent to Completion B by rendering notice in writing to the other parties to the Acquisition Agreement.

Upon the fulfillment and satisfaction of or the valid waiver of all the conditions precedent to Completion B for each of the Projects, in accordance with the payment schedule set out in Table 1 in the section headed ‘‘Details of the Consideration settlement upon Completion B and Completion C’’, (i) the Purchaser shall pay to the Vendors the corresponding cash consideration within ten (10) Business Days; and (ii) the Purchaser shall procure the Company to issue to the Vendors the corresponding amount of Convertible Bonds A.

Convertible Bonds A shall be issued on the last day of each of the three respective time frames (31 March 2013, 30 June 2013 and 30 September 2013). The relevant amount of Convertible Bonds A to be issued shall be determined according to the number of Projects completed within each time frame.

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legal and contractual interests, rights and benefits of the JV Projects from the relevant government and regulatory authorities at Completion C, the Purchaser agrees to (i) pay the Vendors, at the same time of paying the cash portion of the Third Installment, the relevant amount of cash as set out in the column ‘‘Consideration payable by cash’’ of Table 1 above for Projects 4 and 5; and (ii) procure the Company to issue to the Vendors, at the same time of issuing Convertible Bonds B, the relevant amount of Convertible Bonds A as set out in the column ‘‘Consideration payable by Convertible Bonds A’’ of Table 1 above for Projects 4 and 5.

Unless otherwise agreed with the Purchaser, the Vendors shall use their best endeavours to procure and facilitate the fulfillment and satisfaction of the conditions precedent to Completion B within 12 months from the date of signing the Acquisition Agreement. If the conditions precedent to Completion B are not fulfilled and satisfied, or waived by the Purchaser, for any of the Projects within the said timeframe, the Purchaser has the absolute discretion not to effect the payment of the Second Installment for each Project where the conditions precedent to Completion B are not satisfied.

In the event that the Vendors are unable to, pursuant to condition precedent (iii) to Completion B, facilitate and procure the Target Company to obtain any of the Projects, the Vendors shall compensate the Purchaser for any amount paid by the Purchaser on behalf of the Vendors for the purposes of the establishment, construction and business operation of the corresponding Project(s). The said compensation shall be paid by the Vendors to the Purchaser within ten (10) Business Days after the deadline for the transfer of the Projects has expired (i.e. 12 months from the date of signing the Acquisition Agreement).

The Vendors undertake that they shall hold the Purchaser or the Target Company fully indemnified (indemnified amount should be payable within three (3) Business Days) from any litigation or arbitration actions, suits or proceedings, including but not limited to civil, criminal, administrative proceedings: (a) associated with any of the Projects for any reason prior to the fulfillment and satisfaction of condition precedent (iii) to Completion B; and (b) arising from obtaining the legal and contractual interests, rights and benefits of the Projects by the Target Company. The Purchaser shall not be responsible for any and all losses, liabilities, costs, claims, charges, actions, proceedings, damages, expenses, suits or demands arising therefrom.

Conditions precedent to Completion C

The payment of the Third Installment shall be conditional upon, inter alia, the satisfaction of the following conditions precedent:

(i) The conditions precedent to Completion B have been fulfilled and satisfied and the transfer of the Second Installment has been completed;

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LETTER FROM THE BOARD

(ii) From the date of the signing of the Acquisition Agreement to the date of the transfer of the Third Installment, the representations and warranties stated in the Acquisition Agreement are true, accurate and complete in all material respects and the Vendors shall issue a confirmation letter to the Purchaser in this respect;
(iii) Concerning LiuPanShui KunLun:
a. Relevant registration procedures have been completed, a valid business licence has been obtained and the registered capital has been fully paid up. The registered capital, business scope and shareholding structure as stated on the said business licence shall be in line with the memorandum and the article of association of LiuPanShui KunLun;
b. The Target Company has obtained written confirmation from KunLun that the Target Company has not breached any conditions, obligations, representations nor warranties under KT Cooperation Agreement and all the cost incurred from obtaining the legal and contractual interests, rights and benefits of the JV Projects are to be borne solely by LiuPanShui KunLun;
c. LiuPanShui KunLun has obtained all the relevant and necessary approvals and documents for the establishment and business operation of the JV Projects in accordance with applicable policies, laws and regulations including but not limited to land use rights executed by the relevant regional government authorities or land department of the corresponding JV Project; and
d. If the Target Company and LiuPanShui KunLun mutually agree to terminate the KT Cooperation Agreement, all legal and contractual interests, rights and benefits in the JV Projects shall be transferred to the Target Company. All relevant and necessary approvals and documents for the establishment and business operation of the JV Projects in accordance with applicable policies, laws and regulations, including but not limited to legal and valid land use rights executed by the relevant regional government authorities or land department of the corresponding JV Project, shall then be obtained by the Target Company;
(iv) LiuPanShui KunLun has obtained all the relevant approvals and documents for the construction and business operation of the JV Projects in accordance with applicable policies, laws and regulations. In the event that legal and contractual interests, rights and benefits of the JV Projects are to be obtained by the Target Company, the Target Company has obtained all the relevant and necessary approvals and documents for the construction and business operation of the JV Projects in accordance with applicable policies, laws and regulations. The Vendors and the Target Company have used their best endeavours to provide assistance to the Target Company to

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LETTER FROM THE BOARD

obtain all the relevant and necessary approvals and documents for the construction and business operation of the JV Projects in accordance with applicable policies, laws and regulations; and

(v) The Vendors have sent to the Purchaser a notification letter requesting the Purchaser to proceed with payment of the Third Installment.

The Purchaser may in its sole and absolute discretion at any time before Completion C waive, vary, and/or modify any of the conditions to Completion C by rendering notice in writing to other parties of the Acquisition Agreement. The Purchaser shall effect the payment of the Third Installment within ten (10) Business Days after the date of fulfilment of or the valid waiver of all of the conditions precedent to Completion C.

Unless otherwise agreed with the Purchaser, the Vendors shall use their best endeavours to procure and facilitate the fulfillment and satisfaction of the conditions precedent to Completion B within 18 months from the date of signing the Acquisition Agreement. If any of the conditions precedent to Completion C are not fulfilled and satisfied before the timeframe, the Purchaser has the absolute discretion not to effect the payment of the Third Installment.

In the event that the representations and warranties of the Acquisition Agreement are untrue, inaccurate, incomplete in any material respects, misleading or the Vendors have breached any conditions or obligations, the Purchaser has the absolute discretion to determine and reduce the amount of the First Installment, the Second Installment and the Third Installment to be paid to the Vendors.

Variation of Terms

If the amendments and waiver are made in writing and signed by both parties of the Acquisition Agreement, any provisions and terms of the Acquisition Agreement can be amended and waived.

A Supplementary Agreement Anticipated by the Company

It is expected that between the Latest Practicable Date and the date of the SGM, the Company intends to replace the Purchaser by another indirectly wholly-owned subsidiary of the Company as the purchaser of the Acquisition. If materialised, a supplementary agreement to the Acquisition Agreement shall be entered between the Purchaser, the alternative wholly-owned subsidiary, the Vendors and the Target Company. As at the Latest Practicable Date, the terms and conditions of this agreement have not been finalised and the replacement may or may not proceed. Upon entering into the agreement by the relevant parties, the Company shall publish an announcement between the Latest Practicable Date and the date of the SGM to disclose the details of the agreement.

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LETTER FROM THE BOARD

B. Background Information

Shareholding structure of the Target Company before Completion

==> picture [247 x 273] intentionally omitted <==

----- Start of picture text -----

Vendors PRC
100%
Target Kunlun
Company
KT Cooperation
Agreement
Wholly- JV
owned
Projects
Projects
----- End of picture text -----

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LETTER FROM THE BOARD

Shareholding structure of the Target Company after Completion assuming the legal and contractual interests, rights and benefits of the Projects are obtained at Completion B

==> picture [374 x 449] intentionally omitted <==

----- Start of picture text -----

The
Company
100%
Total
Belief
100%
Shine
Great
100%
NT Gas
Overseas
100%
PRC
Purchaser
100%
Target
Company
100% 100%
Wholly-
JV
owned
Projects
Projects
----- End of picture text -----

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LETTER FROM THE BOARD

Shareholding structure of the Target Company after Completion assuming the legal and contractual interests, rights and benefits of the Wholly-owned Projects are obtained at Completion B and the JV Projects are obtained by LiuPanShui KunLun at Completion C

==> picture [374 x 480] intentionally omitted <==

----- Start of picture text -----

The
Company
100%
Total
Belief
100%
Shine
Great
100%
NT Gas
Overseas
100%
PRC
Purchaser
100%
Kunlun Target
Company
60% 40%
LiuPanShui 100%
Kunlun
100%
Wholly-
JV Projects owned
Projects
----- End of picture text -----

Information on the Group

The principal activity of the Company is investment holding, and its subsidiaries are mainly engaged in general trading, oil exploration and exploitation, energy and natural resources related business.

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LETTER FROM THE BOARD

Information on Kunlun

Established in 2008, KunLun is a wholly-owned subsidiary of PetroChina. With operation in seven provinces in the southern PRC, its main businesses consist of the operation of LNG and CNG refilling stations, as well as the management of gas pipeline connections, transportation, distribution and sales of natural gas.

Contracts entered into between the PRC government and KunLun

KunLun and its subsidiaries have entered into contracts with several local governments and companies at LiuPanShui City (六盤水市) in GuiZhou Province to provide residential, industrial, and commercial natural gas utilities. These contracts include natural gas concessions, urban pipelined gas concessions, and natural gas integrated utilisation cooperation agreements (or framework agreements), which have terms of 20 to 30 years.

To construct and operate several CNG and LNG/L-CNG refilling stations, KunLun and its subsidiaries also obtained relevant approvals and land use rights from the local governments at the above regions and GuiYang City (貴陽市).

Information on the Target Company

The Target Company

The Target Company is a limited company incorporated in the GuiZhou province of PRC with an issued share capital of RMB20,000,000. The principal businesses of the Target Company are sales, installation of equipment and technical consultation for natural gas stations and pipe network; and sales of auto parts, machinery, electronic products and rubber products.

Pursuant to the Acquisition Agreement, the Target Company shall hold the Projects. The Vendors and the Target Company shall use their best endeavours to provide assistance to the Target Company to obtain the legal and contractual interests, rights and benefits of each of the Projects from the relevant government and regulatory authorities at Completion B. Assuming the said legal and contractual interests, rights and benefits of each of the Projects are obtained, the Target Company will hold the 100% legal and contractual interests, rights and benefits in the sixteen (16) Projects. The shareholding structure is set out in the section headed ‘‘Shareholding structure of the Target Company after Completion assuming the legal and contractual interests, rights and benefits of the Projects are obtained at Completion B’’.

If, for any reasons, the Target Company is unable to obtain the legal and contractual interests, rights and benefits of the JV Projects at Completion B, the Vendors and the Target Company shall use their best endeavours to provide assistance to LiuPanShui KunLun to obtain the legal and contractual interests, rights and benefits of the JV Projects from the relevant government and regulatory authorities at Completion C. Assuming LiuPanShui KunLun obtains the legal and contractual interests, rights and benefits of the JV Projects, the Purchaser will indirectly hold 40% interest, through LiuPanShui KunLun, in the two (2) JV Projects and 100% interest, through the Target Company, in the fourteen

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LETTER FROM THE BOARD

(14) Wholly-owned Projects. The shareholding structure is set out in the section headed ‘‘Shareholding structure of the Target Company after Completion assuming the legal and contractual interests, rights and benefits of the Wholly-Owned Projects are obtained at Completion B and the JV Projects are obtained by LiuPanShui KunLun at Completion C’’.

Financial information of the Target Company

Based on the unaudited financial statements prepared in accordance with the PRC Financial Reporting Standards, the Target Company recorded a net asset value of RMB18,398,089.23 (equivalent to approximately HK$22,814,000) as at 31 December 2011 (RMB6,709,178.48 (equivalent to approximately HK$8,319,000) as at 31 December 2010). The current assets were RMB26,552,609.95 (equivalent to approximately HK$32,925,000) (RMB14,709,178.80 (equivalent to approximately HK$18,239,000) as at 31 December 2010) and the current liabilities were RMB8,341,500.00 (equivalent to approximately HK$10,343,000) as at 31 December 2011 (RMB8,250,000 (equivalent to approximately HK$10,230,000) as at 31 December 2010).

As at 31 December 2011, the Target Company had RMB12,264,038.27 (equivalent to approximately HK$15,207,000) of cash (RMB1,650,042.16 (equivalent to approximately HK$2,046,000) as at 31 December 2010) and RMB11,144,261.68 (equivalent to approximately HK$13,819,000) of other receivables (RMB9,914,826.64 (equivalent to approximately HK$12,294,000) as at 31 December 2010).

The Target Company had no turnover for the years ended 31 December 2010 and 2011. For the year ended 31 December 2011, the Target Company recorded a net loss of RMB311,089.25 (equivalent to approximately HK$386,000) (a net loss of RMB1,292,960.84 (equivalent to approximately HK$1,603,000) for the year ended 31 December 2010).

The KT Cooperation Agreement entered into between KunLun & the Target Company

On 20 April 2011, KunLun and the Target Company entered into the KT Cooperation Agreement to set up LiuPanShui KunLun with the Target Company contributing 40% of the registered capital of LiuPanShui KunLun and KunLun contributing 60% of the registered capital of LiuPanShui KunLun. LiuPanShui KunLun will be established for a term of business operation of 30 years. The cooperation will utilise KunLun’s natural gas resources, capital, technology, distribution network and brand name, and the Target Company’s natural gas projects management experiences and local networks. KunLun will ensure sufficient and timely supply of natural gas to LiuPanShui KunLun’s projects, while the Target Company will assist on developing CNG and LNG/ L-CNG refilling stations, and applying for the relevant land use rights, construction and operating permits.

Pursuant to the Acquisition Agreement, if the Target Company is unable to obtain the legal and contractual interests, rights and benefits of the JV Projects at Completion B, the Vendors and the Target Company shall use their best endeavours to provide assistance to LiuPanShui KunLun to obtain the legal and contractual interests, rights and benefits of the JV Projects from the relevant government and regulatory authorities at Completion C.

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LETTER FROM THE BOARD

Assuming LiuPanShui KunLun obtains the legal and contractual interests, rights and benefits of the JV Projects, the Purchaser will indirectly hold 40% interest, through LiuPanShui KunLun, in the two (2) JV Projects.

Information of the Projects

The Wholly-owned Projects consist of LNG/L-CNG and CNG refilling stations, CNG master filling stations, natural gas supply to industrial parks and contracts to supply natural gas to approximately 45,000 residents in the GuiZhou Province.

The JV Projects consist of a CNG master filling station in LiuPanShui City (六盤水市) (Project 5 as shown in Table 1 in the section headed ‘‘Details of the Consideration settlement upon Completion B and Completion C’’) and contracts to supply natural gas to approximately 28,500 residents in the ZhongShan Economic Development Zone of LiuPanShui City (貴州省六盤水鐘山經濟開發區) (Project 4 as shown in Table 1 in the section headed ‘‘Details of the Consideration settlement upon Completion B and Completion C’’).

As at the Latest Practicable Date, Project 1 has started operation, while Project 2 is planning to open by the end of January 2013. All the remaining projects (Projects 3 to 16 as shown in Table 1 in the section headed ‘‘Details of the Consideration settlement upon Completion B and Completion C’’) are under planning stage, and are scheduled to commence operation in the second half of 2013 or 2014.

JV Cooperation Agreement entered into between the Purchaser & the Vendors

Pursuant to the Acquisition Agreement, the Purchaser entered into the JV Cooperation Agreement with the Vendors. Pursuant to the JV Cooperation Agreement, the JV Company will be established with the Purchaser contributing RMB24,000,000 (equivalent to approximately HK$29,760,000), or 80% of the registered capital of the JV Company and the Vendors contributing RMB6,000,000 (equivalent to approximately HK$7,440,000) or 20% of the registered capital of the JV Company, among which, Mr. Zhu ZhiQing (朱志清), Mr. Su RongLi (蘇榮利), and Mr. Tang Feng (唐烽) will contribute RMB2,400,000, RMB2,100,000 and RMB1,500,000 respectively (equivalent to approximately HK$2,976,000, HK$2,604,000 and HK$1,860,000 respectively). The JV Company’s term of business operation is 30 years. Its main businesses include natural gas and other new energy projects together with the related facilities investment, technology development and technical services, wholesale of gas supply facilities, and modification into and sales of vehicles and vessels powered by natural gas. The JV Company will not be involved in the Projects.

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LETTER FROM THE BOARD

C. Risk Factors

Set out below are the risk factors which may be associated with the Acquisition:

Risks Relating to the Business

The legal and contractual interests, rights and benefits of the Projects are nontransferrable

The relevant legal and contractual interests, rights and benefits of the Projects granted by the relevant PRC authority to KunLun, including but not limited to the construction and operating permit and licence and land use rights, are non-transferrable. KunYu may not be able to procure KunLun to transfer the said legal and contractual interests, rights and benefits of the Projects held by KunLun to the Target Company. Pursuant to the Acquisition Agreement, the legal and contractual interests, rights and benefits will be surrendered by KunLun to the relevant PRC authority and the Target Company shall apply for granting of the said legal and contractual interests, rights and benefits from the relevant government and regulatory authorities. The decision to grant the legal and contractual interests, rights and benefits by the said government and regulatory authorities is beyond the control of the Vendors, KunLun, the Target Company and the Company. To counteract the said risks, the payment of the Second Installment and the Third Installment are conditional on the Target Company obtaining the legal and contractual interests, rights and benefits of the Projects.

Completion of the Acquisition is subject to satisfaction of the conditions under the Acquisition Agreement and there is no assurance that all of those conditions will be satisfied

Completion of the acquisition of the 100% equity interest of the Target Company under the Acquisition Agreement, and thereby the construction and operation of the Projects, is subject to the satisfaction of the conditions set out in the Acquisition Agreement (or in the case of a limited number of those conditions, the waiver by the Company if any of them is not satisfied). Details of those conditions are set out in the section headed ‘‘Conditions Precedent to the Acquisition Agreement’’.

The fulfillment of certain of the conditions set out in the Acquisition Agreement is dependent on the fulfillment of obligations by the Vendors and KunLun with respect to which the Company is not able to exercise any control.

Similarly, the fulfillment of certain of the conditions set out in the Acquisition Agreement is dependent on the decision of government or regulatory authorities with respect to which none of the Vendors, the Target Company or the Company will be able to exercise any control.

There is no assurance that all of those conditions will be fulfilled within the deadline specified in the Acquisition Agreement or at all. If any of those conditions are not satisfied (and if it is capable of being waived by the Company as provided under the Acquisition Agreement, so waived by the Company), completion of the acquisition of the 100% equity interest of the Target Company will not proceed.

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LETTER FROM THE BOARD

Most of the Projects are at a preliminary construction stage

Except for Projects 1 and 2, as at the Latest Practicable Date, the remaining Projects (Projects 3 to 16) are at a preliminary construction stage.

There may be unidentified risks relating to the Acquisition

Although the Group has conducted preliminary due diligence with respect to the Acquisition, the Group may not be able to identify all material risks associated with the Acquisition due to inherent limitations of due diligence, including, among other things, unforeseen contingent risks or latent liabilities relating to the entities acquired or to be acquired that may not become apparent until in the future. Any such unidentified risk could have a material adverse impact on the Group’s business, financial condition and results of operations after the completion of the Acquisition. Even if the Group identifies any such risk and terminate the Acquisition Agreement prior to the Completion, the Group’s reputation may be harmed and the Group’s prospects may be materially and adversely affected.

Fluctuation in the price of and supply and demand for CNG, L-CNG and LNG and the price of natural gas refilling station related equipment, accessories and materials

The Board considers that there are many factors which may influence the price of and supply and demand for CNG, L-CNG and LNG, among others, the stability of the PRC economic situation and the fluctuation of the political and social condition, which are beyond the control of the Group.

Continuous investment in the repair and maintenance of the natural gas refilling stations is necessary for safety purposes and in order to maintain stable operations. The price of equipment, accessories and materials for this purpose may fluctuate, resulting in fluctuations in corporate profits.

Flexibility to raise or set prices is limited by state-imposed price control measures

The price of natural gas in the PRC is subject to the control of the relevant state and provincial price administration authorities. The actual price for any given price-controlled natural resource set by suppliers cannot exceed the price ceiling imposed in accordance with the applicable government price control rules.

Hence, the Target Company may not be able to increase, at its discretion, the price of their CNG, L-CNG and LNG above the controlled price ceiling without prior governmental approval and the Target Company does not have unfettered freedom to maximise profits.

Significant and continuous capital investment

The businesses of the Target Company require significant and continuous capital investment. Projects may not be completed as planned or scheduled or adversely affected by numerous factors, including failure to obtain necessary regulatory approvals or sufficient funding, technical difficulties and manpower or other resource constraints. The costs of these projects may exceed the original budgets and may not achieve the intended

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LETTER FROM THE BOARD

economic results or commercial viability. Thus, the actual capital investment for operation and development may significantly exceed the Target Company’s budgets because of factors beyond the Target Company’s control, which could adversely affect the Target Company’s financial condition and results of operations.

Majority of the LNG/L-CNG and CNG refilling stations do not possess exclusive rights at their regions of operation

Similar refilling stations owned by competitors have already been operating in several regions, such as ZhongShan District (鐘山區), where several Projects (Projects 1, 7 to 9 in ZhongShan District) are located. As a newcomer, the Target Company will face competition from the existing stations.

The timetables proposed by provincial or local governments for modification of motor vehicles (mainly taxis, buses and private cars) into natural gas use are not clear

As at the Latest Practicable Date, the government policies on mandatory modification of existing motor vehicles have not been finalized in all regions of operation of the Projects (Projects 1 to 3, 6 to 14, and 16). The corresponding amounts of end-users available to be serviced by the time these Projects begin operations remain uncertain.

Volatile natural gas consumption by the industrial park (Projects 11 to 14)

Since the completion of factories construction and start of production by manufacturers may not be as scheduled, the natural gas consumption rates in the first few years of the service contract remain uncertain.

Assumption and factors of the preliminary valuation may not be realized

The preliminary valuation was compiled by the valuer based on certain factors and assumptions estimated by the management of the Company in running the Projects. The said assumptions and factors may not be realised and may affect the valuation significantly.

Any failure to obtain and maintain required government approvals, permits and licences for operation and land use or renewals thereof could materially and adversely affect the Target Company’s business and results of operations

Under relevant PRC laws, the Target Company is required to obtain certain government approvals, permits and licences, including but not limited to project approvals, environmental approvals, planning and construction permits, construction land use rights, business qualification and industrial and commercial registration, for construction and operation of the Projects, which are crucial to the Target Company’s business operations. There is no assurance that the Target Company will obtain such approvals, permits and licences in a timely manner in the future or at all. Any failure to obtain or any delay in obtaining or retaining any required governmental approvals, permits or licences could subject the Target Company to a variety of administrative penalties or other government actions and adversely impact the Target Company’s business operations.

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LETTER FROM THE BOARD

The development and operation of projects under the Target Company are subject to risks relating to occupational hazards and operation safety

The Target Company may encounter accidents, maintenance or technical difficulties, mechanical failures or breakdowns during the development and operation processes. Accidents such as explosions, fires, equipment mishandling and/or mechanical failures may occur during the course of the Company’s operations. These risks subject the Target Company to potentially significant liabilities relating to personal injury, death or property damage, civil and/or criminal liabilities, including the revocation of its operation licences and land use rights, and the Target Company may be forced to suspend its operations, which may adversely affect its business, reputation, financial condition and results of operations.

Risks Relating to the PRC

Adverse changes in economic policies of the PRC government could have a material adverse effect on the overall economic growth of the PRC, which could materially and adversely affect the Target Company’s business

All of its assets are located in and all of the Target Company’s revenues are sourced from the PRC. Accordingly, its business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic and social conditions in the PRC generally, including the overall economic growth in the PRC.

The PRC economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures since the late 1970s emphasising the utilisation of market forces in the economic reform, the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the PRC government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over the PRC’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

While the PRC economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall PRC economy, but may have a negative effect on the Target Company.

For example, the Target Company’s operating results and financial condition may be adversely affected by changes in tax regulations that are applicable to it. On the other hand, as the natural gas industry is regulated by the National Development and Reform Commission and its relevant provincial office, any substantial amendments to the

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LETTER FROM THE BOARD

industry’s policy and regulation by the commission may adjust the natural gas concessions and projects approval system, and obstruct the construction and operation of the Target Company’s projects.

In addition, any future calamities, including natural disasters, outbreaks of contagious diseases and political or social unrest may adversely affect the economic growth in the PRC and therefore the business and financial performance of the Target Company.

D. Shareholding Structure of the Target Company

Upon Completion, the Company will indirectly hold 100% equity interest of the Target Company, which will hold assets relating to the natural gas supply business. The shareholding structure of the Target Company before and after Completion is as follows:

Effect on the Shareholding Structure

The following table depicts the effects of the issue of the Conversion Shares on the shareholding structure of the Company based on: (i) the issued share capital and shareholding structure of the Company as at the Latest Practicable Date; (ii) assuming Completion, the issue and allotment of the Convertible Bonds and the full conversion of the Conversion Shares at the initial conversion price, without taking into account the issues of other new Shares, if any; and (iii) assuming Completion, the issue and allotment of the Convertible Bonds and the full conversion of the Conversion Shares at the initial conversion price, assuming full exercise of all subscription rights attaching to the Warrants.

Substantial Shareholder Max Sun Enterprises Limited (Note 1) Directors’ Interests Mr. Cheng Ming Kit (Note 2) Mr. Fung Siu To, Clement (Note 2) Existing Public Shareholders Vendors Other Shareholders Total	As at the Latest Practicable Date Number of Shares Approximate % 77,030,276 10.31 1,000 0.0001 30,000 0.0040 — — 670,354,811 89.69 747,416,087 100.00	Immediately after full exercise of the conversion rights under the Convertible Bonds, and none of the subscription rights attaching to the Warrants are exercised Number of Shares Approximate % 77,030,276 9.79 1,000 0.0001 30,000 0.0038 39,680,000 5.04 670,354,811 85.17 787,096,087 100.00	Immediately after full exercise of the conversion rights under the Convertible Bonds, assuming full exercise of all subscription rights attaching to the Warrants Number of Shares Approximate % 177,030,276 19.96 1,000 0.0001 30,000 0.0034 39,680,000 4.47 670,354,811 75.57 887,096,087 100.00	Immediately after full exercise of the conversion rights under the Convertible Bonds, assuming full exercise of all subscription rights attaching to the Warrants Number of Shares Approximate % 177,030,276 19.96 1,000 0.0001 30,000 0.0034 39,680,000 4.47 670,354,811 75.57 887,096,087 100.00
				100.00

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LETTER FROM THE BOARD

Note:

(1) Max Sun Enterprises Limited is a wholly-owned subsidiary of Chow Tai Fook Nominee Limited, which is in turn controlled by Dato’ Dr. Cheng Yu Tung. As such, Chow Tai Fook Nominee Limited and Dato’ Dr. Cheng Yu-Tung were deemed to have interest in the shares held by Max Sun Enterprises Limited for the purposes of Securities and Futures Ordinance. Pursuant to the warrant subscription agreement dated 29 May 2012 entered by the Company and the subscriber Max Sun Enterprises Limited, the subscriber was issued with an aggregate of 100,000,000 warrants at the issue price of HK$0.02 per warrant conferring the rights to subscribe for an aggregate of 100,000,000 shares at the exercise price of HK$1.05 per share (subject to adjustment upon the occurrence of some adjustment events). Each warrant carries the right to subscribe for one share. The subscription rights will be exercisable within sixty months from the date of the issue of the warrants.
(2) Mr. Cheng Man Kit is an executive Director and Mr. Fung Siu To, Clement is an independent non-executive Director.

Fund Raising Activities in the Past Twelve Months

Save as disclosed below, the Company has not conducted any fund raising activities in the past twelve months as at the Latest Practicable Date.

			Intended use of
Date of		Net proceeds	proceeds as	Actual use of
announcement	Event	(approximately)	announced	proceeds
25 January	Placing of new	HK$13.11 million	For general working	Not yet utilised
2013	Shares under		capital and financing
	general		future investment
	mandate		opportunities
18 January	Placing of new	HK$19.14 million	For general working	Not yet utilised
2013	Shares under		capital and for
	general		financing future
	mandate		investment
			opportunities
20 December	Placing of new	HK$30.48 million	For general working	Use as intended
2012	Shares under		capital and for
	general		financing future
	mandate		investment
			opportunities

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LETTER FROM THE BOARD

			Intended use of
Date of		Net proceeds	proceeds as	Actual use of
announcement	Event	(approximately)	announced	proceeds
30 August 2012	Placing of new	HK$89.2 million	For general working	Use as intended
	Shares under		capital purpose and
	specific		for financing future
	mandate		investment
			opportunities
			including but not
			limited to (i) the
			development of the
			Tartagal Oriental and
			the Morillo
			concessions, (ii)
			another four
			concessions in
			Argentina as
			announced by the
			Company on 15 May
			2012 and 31 July
			2012; and (iii)
			financing the
			Liquefied Natural
			Gas and related
			business in the PRC.
29 May 2012	Subscription of	Approximately	For general working	Use as intended
	unlisted	HK$1.7 million	capital of the Group
	warrants under
	the specific
	mandate

REASONS AND BENEFITS OF THE ACQUISITION

The Board believes that acquisition of the Target Company and the Projects through the Acquisition will enhance the Group’s position in the PRC energy resources market, and will provide the Group with a better opportunity for further project development in the same sector in the PRC. The Board (including the independent non-executive Directors) holds the view that the Acquisition has been made on normal commercial terms and such terms are fair and reasonable so far as the Company and the Shareholders are concerned and that the Acquisition is in the interest of the Company and the Shareholders as a whole.

GENERAL

The issue of the Convertible Bonds and the Conversion Shares under the Specific Mandate is subject to the Shareholders’ approval at the SGM.

The SGM will be convened and held to consider and, if thought fit, approve, among other matters, the grant of the Specific Mandate for the allotment and issue of the Conversion Shares falling to be issued upon the exercise of the conversion rights attaching to the Convertible Bonds and the transactions contemplated thereunder.

– 42 –

LETTER FROM THE BOARD

To the best knowledge of the Directors, none of the Shareholders has a material interest in the transactions contemplated under the Acquisition Agreement as at the Latest Practicable Date. Accordingly, none of the Shareholders will be required to abstain from voting at the SGM in respect of the relevant resolution(s) relating to the Specific Mandate.

Upon the passing of the relevant resolution(s) by the Shareholders at the SGM, an application will be made by the Company to the Stock Exchange for the approval of the listing of, and permission to deal in the Conversion Shares to be allotted and issued upon the exercise of the conversion rights attaching to the Convertible Bonds.

SGM

A notice of the SGM is set out on pages 69 to 71 of this circular. The SGM will be convened and held at 3/F, Nexxus Building, 77 Des Voeux Road Central, Hong Kong on Friday, 15 March 2013 at 10:00 a.m., at which, the relevant resolution(s) will be proposed to the Shareholders to consider and, if thought fit, to approve, among other things, the grant of the Specific Mandate for the allotment and issue of the Conversion Shares falling to be issued upon the exercise of the conversion rights attaching to the Convertible Bonds and the transactions contemplated thereunder. Pursuant to Rule 13.39(4) of the Listing Rules, all votes to be taken at the SGM will be taken by way of poll.

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you intend to attend the SGM in person, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar of the Company in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wan Chai, Hong Kong as soon as possible but in any event, not later than 48 hours before the time of the SGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjourned meeting should you so wish.

RECOMMENDATION

Having considered the reasons as set out herein, the Board hereby recommends the Shareholders to vote in favour of the relevant resolution(s) to approve, among other things, the allotment and issue of the Conversion Shares falling to be issued upon the exercise of the conversion rights attaching to the Convertible Bonds and the transactions contemplated thereunder at the SGM.

The Acquisition Agreement is subject to a series of conditions precedent as set out in the section headed ‘‘Conditions Precedent to the Acquisition Agreement’’ and under the Acquisition Agreement. As the Acquisition may or may not proceed, Shareholders and potential investors of the Company are advised to exercise caution when dealing in securities of the Company, and if they are in any doubt about their position, they should consult their professional advisers.

– 43 –

LETTER FROM THE BOARD

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

By Order of the Board New Times Energy Corporation Limited Cheng Kam Chiu, Stewart Chairman

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PROJECT EVALUATION REPORT

APPENDIX I

利駿行測量師有限公司

The readers are reminded that the report which follows has been prepared in accordance with the guidelines set by the International Valuation Standards 2011 published by the International Valuation Standards Council which entitles the valuer to make assumptions which may on further investigation, for instance by the readers’ legal representative, prove to be inaccurate. Any exception is clearly stated below. Headings are inserted for convenient reference only and have no effect in limiting or extending the language of the paragraphs to which they refer. Translation of terms in English or in Chinese are for readers’ identification purpose only and have no legal status or implication on the report. This report is prepared and signed off in English format, translation of this report in language other than English should not be regarded as a substitute to this report. Piecemeal reference to this report is considered to be inappropriate and no responsibility is assumed from our part for such piecemeal reference. It is emphasised that the findings and conclusion presented below are based on the documents and facts known to the valuer at the date of this report. If additional documents and facts are made available, the valuer reserves the right to amend this report and its conclusion.

17th Floor, Champion Building 287–291 Des Voeux Road Central Hong Kong 19 February 2013

The Board of Directors New Times Energy Corporation Limited Units 1007 to 1008 10th Floor New World Tower I 18 Queen’s Road Central Hong Kong

Dear Sirs,

In accordance with the recent instructions given by the management of New Times Energy Corporation Limited (hereinafter referred to as ‘‘New Times’’ or the ‘‘Company’’) to us, we were retained to analyse and prepare an agreed-upon procedures evaluation on the financial net present value of 16 various proposed projects (hereinafter referred to as the ‘‘Guizhou Projects’’) as at 6 November 2012 (hereinafter referred to as the ‘‘Relevant Date’’) for the Company’s internal management reference. The Guizhou Projects are located at various locations of LiuPanShui City, Guizhou Province, the People’s Republic of China (hereinafter referred to as the ‘‘PRC’’ or ‘‘China’’). We confirm that we have carried out inspections, made relevant inquiries and have based our work on a set of documents as supplied by the respective management of the Company and the PRC Target Company (to be defined in the report) or its appointed personnel to arrive at our conclusion.

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PROJECT EVALUATION REPORT

APPENDIX I

We understand that the management of the Company will use our work product as part of its business due diligence, and we have not been engaged to make specific sale or purchase recommendations, or to give our opinion of value for the Company’s financing arrangement. We further understand that the management of the Company will not rely solely on our work, and that the use of our work product will not supplant other due diligence which the management of the Company should conduct in reaching its business decision with regard to the Guizhou Projects. Our work is designed solely to give the management of the Company a reference in forming part of its internal due diligence, and our work should not be the only factor to be considered by the management of the Company.

OUR INSTRUCTION TO THIS ENGAGEMENT

At the instruction of the management of the Company, we were retained to base on a set of documents provided by the respective management of the PRC Target Company and the Company or its appointed personnel to analyse and prepare an agreed-upon procedures project evaluation report to evaluate the financial net present value of the Guizhou Projects.

According to the Company’s Announcement, 深圳中港新時代能源有限公司 (translated as Shenzhen Sino Hong Kong New Time Energy Corporation Limited), an indirectly whollyowned subsidiary of the Company, is going to acquire 100% equity interest of the 貴州坤煜經貿有限公司 (translated as Guizhou KunYu Trading Company Limited and hereinafter referred to as the ‘‘PRC Target Company’’) from Mr. Zhu ZhiQing (朱志清), Mr. Su RongLi (蘇榮利) and Mr. Tang Feng (唐烽) at a consideration of HK$99,200,000 which is to be satisfied by HK$59,520,000 in cash and HK$39,680,000 in Convertible Bonds.

Overview (See Note)

The Economic Outlook of China

The economy of the PRC is the second largest in the world when measured by nominal GDP (Gross Domestic Product). Its growth rate for 2011 was 9.6%. The PRC joined WTO in 2001, doubling the manufacturing output and recorded a massive trade surplus. At the beginning of 2010, China replaced Germany as the world largest export market. The compound

Note: The information provided in this section relating to the related industry and market is derived in part or extracted or referred to from various official and unofficial sources. The official sources include various governmental websites. The unofficial sources include information provided by the management of the company, various websites (included Bloomberg.com), newspapers and journals from various industry practitioners or analysts. We need to state that such official and unofficial information have not been prepared or independently verified by us, and may not be consistent with other information complied within or outside China. None of our staff involved in preparing this report make any representation as to the correctness or accuracy of such information and accordingly such information should not be unduly relied upon. The readers should conduct his/her due diligence with regard to the correctness and accuracy of such information for his/her own use.

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PROJECT EVALUATION REPORT

APPENDIX I

annual growth rate is approximately 10% for the period from 1996 to 2011. The following figures indicated China’s real GDP from 1996 to 2011:

==> picture [352 x 208] intentionally omitted <==

----- Start of picture text -----

GDP Growth Rate (%)
16.0%
14.0%
12.0%
10.0%
GDP
Growth
8.0%
Rate (%)
6.0%
4.0%
2.0%
0.0%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----- End of picture text -----

Source: National Bureau of Statistics of China

Since the Chinese government provides massive protection and encouragement such as economic stimulus package to private sectors, China remains the position of the fastest growing economy in the world. According to the National Bureau of Statistics of China, during 1996 to 2011, the consumer prices index (‘‘CPI’’) was at an average of approximate 2%, and recorded at 5.4% in 2011.

==> picture [361 x 218] intentionally omitted <==

----- Start of picture text -----

CPI Growth Rate (%)
9.0%
7.0%
5.0%
CPI
Growth
3.0%
Rate (%)
1.0%
-1.0%
1996 1998 2000 2002 2004 2006 2008 2010
-3.0%
-5.0%
----- End of picture text -----

Source: National Bureau of Statistics of China

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PROJECT EVALUATION REPORT

APPENDIX I

These figures show that the economic growth becomes more broadly based by rising of domestic consumption. The major force of economic growth is by the rapid urbanization and massive investments in construction projects mainly in Beijing and Shanghai as well as some inland cities such as Xian and Wuhan, etc. China has replaced Germany as the world’s third biggest economy since 2007, and has also replaced Japan as the second-largest economy in 2010. However, many analysts expect China would face heightened pressure from imported inflation, as the weakening U.S. dollar, a result of an ultra-loose monetary policy in the United States, which could further push up commodity prices.

Energy Consumption in China

According to the National Bureau of Statistics, the total energy consumption in China reached 3.48 billion metric tons in 2011 from 1.35 billion metric tons in 1996, with a compounded annual growth rate of 6% approximately.

==> picture [337 x 194] intentionally omitted <==

----- Start of picture text -----

Energy Consumption
400,000
350,000
300,000
250,000
200,000
Energy
150,000 Consumption
(10 thousand tons)
100,000
50,000
–
19961998200020022004200620082010
----- End of picture text -----

Source: National Bureau of Statistics of China

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PROJECT EVALUATION REPORT

APPENDIX I

Approximately 70% of the energy consumed in 2011 was relied on coal, whereas only approximate 5% of the consumption was relied on natural gas.

==> picture [355 x 212] intentionally omitted <==

----- Start of picture text -----

Energy Consumption (%)
Hydro-power, Nuclear
Power, Wind Power
Natural Gas
Energy
Consumption
(%)
Crude oil
Coal
0% 20% 40% 60% 80%
----- End of picture text -----

Source: National Bureau of Statistics of China

THE PRC TARGET COMPANY AND THE GUIZHOU PROJECTS

The PRC Target Company is a limited company incorporated in the Guizhou Province of the PRC with an issued share capital of RMB20,000,000 as at the date of the Company’s Announcement. The principal businesses of the Target Company are sales, installation of equipment and technical consultation for natural gas stations and pipe network; and sales of auto parts, machinery, electronic products and rubber products.

On 20 April 2011, PetroChina Kunlun Piped Gas Company Limited (hereinafter referred to as ‘‘KunLun’’) and the Target Company entered into the KT Cooperation Agreement to set up 六盤水中石油昆侖天然氣利用有限公司 (translate as LiuPanShui KunLun Company Limited and hereinafter referred to as ‘‘LiuPanShui KunLun’’) for a term of business operation of 30 years. As at 12 November 2012, KunLun and its subsidiaries have entered into various contracts with several local governments and companies at LiuPanShui City (六盤水市) in Guizhou Province to provide residential, industrial, and commercial natural gas utilities. These contracts include natural gas concessions, urban pipelined gas concessions, and natural gas integrated utilisation cooperation agreements (or framework agreements), which is assumed to have operation term of 30 years.

For details of the PRC Target Company and the Guizhou Projects, the readers should refer to the Letter from the Board in this circular.

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APPENDIX I

ESTABLISHMENT OF TITLES

For the purpose of this engagement, the management of the Company was requested to provide us the necessary documents to support that the legally interested parties in the Guizhou Projects have free and uninterrupted rights, directly or indirectly, to assign or to transfer the Guizhou Projects (a part of or the whole of) free of all encumbrances and any premiums/ administrative costs payable have already been paid in full. However, our procedures to evaluate as agreed with the management of the Company did not require us to conduct legal due diligence on the legality and formality on the way that the legally interested parties obtained the Guizhou Projects from the relevant authorities. We agreed with the management of the Company that this should be the responsibility of the legal advisor to the management of the Company. Thus, no responsibility or liability is assumed from our part to the origin and continuity of the title to the Guizhou Projects.

In our evaluation, we have assumed that the legally interested parties in the Guizhou Projects have obtained all the approval and/or endorsement from the relevant authorities for operation, and that there would be no legal impediment (especially from the regulators) for the legally interested parties to continue the interest of the Guizhou Projects. Should this not be the case, it will affect our conclusion in this report significantly. The readers are reminded to have their own legal due diligence work on such issues. No responsibility or liability is assumed.

PROCEDURES TO EVALUATE

In performing our work, we have adopted the following procedures which were agreed with the management of the Company before the engagement. They were:

. to read and based on the content of the supplied information, such as the profit forecast, market information, financial information, and its related materials such as explanatory statements and relevant correspondence and recent updates from the management of the Company or its appointed personnel, to arrive at our conclusion. In the course of our evaluation, we will assume that the information provided in the materials is correct and we will only verify the information when and where possible. However, we will not ascertain the correctness of the information contained in the materials like an auditor in giving an audit opinion;
. to conduct a limited scope on-site inspection to the locations of the Guizhou Projects at the direction of relevant appointed personnel;
. to hold discussions with relevant appointed personnel of the Company in order to have a better understanding of the Guizhou Projects;
. to conduct appropriate research in order to obtain sufficient information to arrive at our conclusion. The extent of research and consultation is at our discretion;
. to evaluate the financial net present value of the Guizhou Projects using the appropriate method(s); and
. to document our findings and conclusion in our project evaluation report.

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PROJECT EVALUATION REPORT

APPENDIX I

THE BASIS OF EVALUATION AND ASSUMPTIONS

The Guizhou Projects is evaluated on the basis of continued use and as part of a going concern business of a business enterprise (see Note), in this case the PRC Target Company. The continued use premise assumes that the Guizhou Projects will be operated in accordance with the scheduled development plan.

Our evaluation has been made on the following assumptions as at the Relevant Date. They are:

the legally interested parties in the Guizhou Projects have free and uninterrupted rights to use or assign, directly or indirectly, a part of or the whole of the interests of the Guizhou Projects for the whole terms granted and any relevant costs payable have already been fully paid;
the relevant operating licence(s) and business registration documents are able to be renewed after their expiration from time to time in order to achieve the expected result;
all required licences, certificates, consents, or other legislative or administrative authority from any local, provincial, or national government or private entity or organization have been or can readily be obtained before commencing the operation and be renewed or replaced on which the evaluation contained in our report are based;
the PRC Target Company successfully raises fund to finance and to develop the Guizhou Projects as planned;
the Guizhou Projects successfully yields the economic benefits as projected in the profit forecast which includes but not limited to:
i. Each of the L-CNG (liquefied to compressed natural gas) refilling stations will have daily service capacity of 35,000 m[3] . CNG (compressed natural gas) master filling stations will have daily service capacity of 200,000 m[3] . The daily service capacity supplying to industrial parks and residential users is able to satisfy the growth in demand of Guizhou Projects during its granted term;
ii. annual growth rate of consumption will be at 15% from 2015 to 2022, and 5% thereafter until it reached its capacity;
iii. the LNG (liquefied natural gas) will cost RMB3.45 per m[3] as advised by the management of the Company;

Note: A business enterprise is defined as a commercial, industrial, service, or investment entity, or a combination thereof, pursuing an economic activity.

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PROJECT EVALUATION REPORT

APPENDIX I

iv. as advised by the management of the Company, the LNG can be sold at an unit price ranging from RMB4.00 to RMB5.30, which is based on the analysis of the affordability of the users. The Company expected a lower affordability of the residential user and higher affordability for the commercial user (industrial park), which is assumed to be charged at RMB4.00 and RMB5.30, respectively;
v. the gross profit is assumed to be the same throughout the operation period;
vi. the Guizhou Projects is expected to receive an activation fee of RMB800 per residence at inception, which is expected to be received in the period of 2013 and 2014;
vii. no additional capital expenditure is needed to support the growth after 2014;
viii. the PRC Target Company can lease the equipment according to the development schedule to support its business operation; and
ix. operating expenses are 40% of gross profit and the ratio will be constant throughout the whole operation period of the Guizhou Projects.
the prospective earnings would provide a return to the PRC Target Company as projected in the profit forecast, and that the PRC Target Company has adequate working capital to implement the operation from time to time;
the legally interested parties in the Guizhou Projects have adopted reasonable and necessary security measures, and have considered several contingency plans against any disruption (such as fire, change of government policy, labour dispute and other types of unexpected accidence) to its operations;
the Guizhou Projects, as part of a going concern business of the PRC Target Company, can be freely disposed of and transferred free of all encumbrances for its existing or approved uses in the market to both local and overseas purchasers without payment of any premium to the government;
total capital expenditure, as advised by the management of the Company, is approximately over RMB177 million and to be invested between 2012 and 2014;
all equipment is assumed to be usable for the entire operating period; and
the tax payable by the PRC Target Company is only the corporate tax rate of 25%, as stated in the profit forecast.

Should these not be the case, it could have adverse impact to our reported findings and conclusion.

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PROJECT EVALUATION REPORT

APPENDIX I

FACTORS CONSIDERED IN THE EVALUATION

Unless otherwise stated, the evaluation of the Guizhou Projects has taken into account a number of pertinent factors affecting the Guizhou Projects and its ability, if successful, to generate future investment returns as part of a going concern business of the PRC Target Company. The factors considered in the evaluation included, but were not limited to, the following:

. the nature and the characteristics of the Guizhou Projects, including the historical background and the remaining operation term of the Guizhou Projects;
. the PRC Government’s support on promoting the use of LNG;
. the use of the Guizhou Projects as part of a going concern business of the PRC Target Company;
. the cost and financial information as contained in the profit forecast;
. the projected future returns mentioned in the profit forecast and based on the assumptions made by the appointed personnel of the PRC Target Company or the management of the Company;
. the economic interest and general characteristics of the Guizhou Projects;
. the PRC Target Company being able to obtain all relevant licences to operate its going concern business;
. the PRC Target Company being able to raise fund to the acquisition of equipment, and construction of facilities and its subsequent operations;
. the capability and determination of the PRC Target Company to follow the planned development schedule in the profit forecast;
. the capability and determination of the PRC Target Company to follow the government and industry management quality standards and to review/up-lift its standards to catch the industry need from time to time;
. the capability and determination of the legally interested parties in the Guizhou Projects to protect its operations against any disruption of the normal operation in the Guizhou Projects;
. the capability and determination of the PRC Target Company to maintain a cost effective operation in the Guizhou Projects;
. the capability and determination of the PRC Target Company to maintain an experienced management team as to operate its going concern business; and
. the economic and industry data affecting the Guizhou Projects and natural gas business in the PRC.

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PROJECT EVALUATION REPORT

APPENDIX I

FINANCIAL EVALUATION

Generally speaking, there are several conventional capital investment evaluation techniques, namely the Payback Period, the Rate of Return Method and the Discounted Cash Flows Method. The use of the Payback Period and the Rate of Return Method or the like is designed to serve the purpose of comparing between two or more capital investment projects simultaneously, and to help the investor(s) to examine a sound investment decision between the analysed projects by comparing the period to recover cost of investments or rate of return on capital employed. While the Discounted Cash Flows Method is designed to serve the purpose of evaluating the total sum of money to be received during the useful life of a project by investing certain amount of capital after considering the time value of money (see Note).

Payback Period

Payback measures the number of years it is expected to take to recover the cost of the original investment. It is calculated by estimating the annual cash flows from the commencement of a project to the end of its useful life. Initially the outflow will be negative, but, within a year or two from the start of most projects, positive cash flows will occur. This is a simple method and usually used as a first screening method (quoted from Investment Appraisal by G. Mott for the readers’ easy reference).

However, we have reservation to use this simple method for it ignores any cash received after the payback period which cash flows after the payback period are usually much larger than before. And, it makes no attempt to relate the cash earned on the investment to the amount actually invested. In other words, it failed to measure the total profitability over the whole life of the investment. Some analysts commented this method encouraging a short term view and discriminate against long term projects and growth projects, like the Guizhou Projects. This technique is only good to making comparison between two capital investment projects and to help examine a sound investment decision between the two projects and, appropriate for entity where short term cash flows is more important than long term cash flows.

Return on Capital Employed

This method is also known as the accounting rate of return. It is calculated by estimating average annual pre-tax profit as a percentage of the average capital employment i.e. the original investment. Analysts considered this method is good to measure a project if the entity is concerned with profits rather than liquidity over a period of time. However, like the previous method, it ignores the time value of money and takes no account of the timing of the profits for it takes averaging over a period of time (quoted from Investment Appraisal of The CIMA for the readers’ easy reference).

We consider this method as irrelevant for the ratio in consideration is based on averaging profit over a period of time, not cash flows, which is hard to determine to the Guizhou Projects at present moment.

Note: The time value of money is based on the premise that one will prefer to receive a certain amount of money today than the same amount in the future, all else equal.

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PROJECT EVALUATION REPORT

APPENDIX I

Ipso facto, we have reservation to use the non-discounting but comparison evaluation technique in evaluating the Guizhou Projects for there is no other capital investment project(s) to compare. We take the view that the comparison evaluation technique, in this instance, can only be used when there are benchmarks to compare, say, statutory planned rate of return or payback period, and the evaluation is required for statutory purposes. However, to the best of our understanding, this evaluation is not intended to serve such statutory purposes nor there are reasonable, market-orientated benchmarks published by any recognised authorities in China for the investors to follow. Last but not the least, our instruction was to conduct a financial evaluation based on the materials provided in the profit forecast and to arrive at the financial net present value of the Guizhou Projects, if successful. Under such circumstance, we consider the use of the non-discounting comparison evaluation technique in this engagement is irrelevant.

Discounted Cash Flows Method (see Note)

In considering the Discounted Cash Flow (‘‘DCF’’) Method as the most appropriate method to assess the profitability of the Guizhou Projects, we have used the Net Present Value Analysis. By using this method, the expected cash flows on the Guizhou Projects is set out year by year and brought to a present value by use of present value factors at the appropriate rate. In constructing the cumulative present value table, positive present values are netted off against deficit present values so as to arrive at the ‘‘net present value’’ or in short form, NPV. When this net figure is positive then the Guizhou Projects is said to be viable because the stream of net cashflows is sufficient to pay the required rate of return at the specified rate. Conversely, when the net present value is negative then the Guizhou Projects is not viable.

The NPV is the difference between the present values of project benefits and project costs. The financial NPV is computed using the following formula (for illustration purpose):

==> picture [108 x 25] intentionally omitted <==

where, bi = benefits in period i ci = costs in period i r = discount rate n = discounting period

The decision criterion is, as said, simple — to accept a project with NPV greater than or equal to zero, and reject if otherwise.

By constructing a cumulative present value table, a cash flows table is required. The cash flows table consists of (1) cash inflow items including revenues generated from the subject project, net working capital inflows and debt borrowing; and (2) cash outflow items including all cash related expenses such as operating expenses, administrative expenses, tax expenses, capital expenditures, net working capital outflows and debt repayment. The use of the NPV Analysis and its related analysis reflect investment criteria and requires the valuer to make empirical and subjective assumptions.

Note: Data from Bloomberg.com

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PROJECT EVALUATION REPORT

APPENDIX I

The first step of the evaluation is to estimate the economic income projection. The projections of the future revenues used in this evaluation were based on the profit forecast provided by the appointed personnel of the PRC Target Company and the management of the Company (including both companies’ directors), and they are responsible for the assumptions upon which the projections are based. We are given to understand that the profit forecast was prepared after due and careful enquiry. Having discussed with the appointed personnel of the PRC Target Company and the Company, we were instructed to follow the projection as contained in the information provided to us and no further verification work is required.

The next step is to estimate the appropriate present value factor i.e. discount rate. Discount rate equals to cost of capital. The cost of capital represents investors’ expectations and for any given investment is a combination of three basic factors, namely the risk-free rate and a premium for risk. There are many ways to estimate the discount rate such as the Buildup Model, the Capital Asset Pricing Model (‘‘CAPM’’) and the Arbitrage Pricing Model for equity investment, and the Weighted Average Cost of Capital for normal project investment. The use of the appropriate model in each analysis depends on numerous factors, in particular the future capital structure of the investment. There is no universal model that applies to all cases. In this case, we have adopted the CAPM in the evaluation which reflecting the value of the project to the project investors.

The CAPM is a model in which the cost of capital for any stock or portfolio of stocks equals a risk-free rate plus a risk premium that is proportionate to the systematic risk of the stock or portfolio (See ASA Business Valuation Standards).

The CAPM concluded that a security’s equity risk premium (the required excess rate of return for a security over and above the risk-free rate) is a linear function of the security’s beta. This linear function is described as follows (for illustration purpose),

ra = rf + ba (rm – rf) Where, ra = CAPM derived discount rate rf = risk free rate ba = beta of the asset rm = expected market return

In estimating the discount rate in the evaluation, we have adopted the market-derived discount rate by the CAPM by using the market data of various listed companies with business related to the PRC Target Company in the Guizhou Projects.

In the course of our analysis, we established a set of criteria to select the guideline companies, and identified 9 guideline companies used in the evaluation of the Guizhou Projects. The selection criteria are:

. the main business of the comparable companies should be operated in the PRC;
. the comparable company should be listed in the stock exchange of China (either in Shanghai or Shenzhen); and

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PROJECT EVALUATION REPORT

APPENDIX I

. the business of the comparable companies should be related to oil and gas or energy sector.

Based on the selection criteria stated above, we believe the list of companies can fairly reflect the representative industry risk.

Details of the conclusive guideline companies are set out as follows:

Name of the		Debt/	Adjusted
Listed Companies	Description of the business	Equity	Beta
Shenzhen Gas Corp	Shenzhen Gas Corporation Ltd., supplies gas in	18%	1.101
Ltd	Shenzhen. The Company business includes wholesale of
	gas, pipeline and the supply of bottled gas, investment
	and construction in the distribution network of gas
	transmission.
Shenergy Co Ltd	Shenergy Company Limited develops, constructs, and	39%	1.030
	invests in electric power and other energy related
	projects. The Company distributes electric power, heat,
	and gas.
Lanpec Technologies	Lanpec Technologies Company Limited develops,	12%	1.218
Co Ltd	designs, produces and installs petroleum and
	petrochemical equipments. The company’s main products
	are oil drilling machinery, oil refining and chemical
	equipment, offshore oil equipment and light industrial
	food machinery.
PetroChina Co Ltd	PetroChina Company Limited explores, develops, and	28%	0.823
	produces crude oil and natural gas. The Company also
	refines, transports, and distributes crude oil and
	petroleum products, produces and sells chemicals, and
	transmits, markets and sells natural gas.
Zhangjiagang Furui	Zhangjiagang Furui Special Equipment Company	6%	0.944
Special Equipment	Limited designs, manufactures and sells metallic
Co Ltd	pressure vessels. The Company’s main products include
	low-temperature storage and transportation equipment,
	heat exchangers and gas separation equipment.

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APPENDIX I

Name of the		Debt/	Adjusted
Listed Companies	Description of the business	Equity	Beta
Hangzhou Hangyang	Hangzhou Hangyang Co., Ltd. manufactures and sells	15%	1.002
Co Ltd	air separation equipment, industrial gas products and
	petrochemical equipment. The Company’s products are
	medium & large sets of air separation equipment, small-
	scale air separation equipment, liquefied nitrogen wash
	cold box, liquefied natural gas separation equipment,
	and liquefied petroleum gas storage & distribution
	devices.
Guanghui Energy	Guanghui Energy Co., Ltd. sells and leases real estate	18%	1.073
Co Ltd	properties. The Company also mines, processes, and
	sells granite materials, produces and markets plastic
	doors and windows, and trades general merchandise. The
	company is also in the business of coal mining and
	related coal chemicals manufacturing.
Weichai Power	Weichai Power Co., Ltd. manufactures high-speed	25%	0.975
Co Ltd	heavy-duty diesel engines. The Company’s products are
	used in heavy-duty vehicles, wheel-loaders, bulldozers,
	and road-rollers.
Sinopec Shanghai	Sinopec Shanghai Petrochemical Co., Ltd. processes	31%	0.908
Petrochemical	crude oil into a broad range of synthetic fibers, resins
Co Ltd	and plastics, intermediate petrochemical products and
	petroleum products.

Due to rounding process, the figures will be different from the actual worksheet. Source: Bloomberg, as at the Relevant Date

The beta of each guideline company represents its industry risk and return relative to the domestic market, the PRC. In calculating the discount rate, the average adjusted beta of the guideline companies, as sourced directly from Bloomberg, is adopted. The adjusted beta, which according to our understanding, is modified from corresponding raw beta by assuming the guideline company’s beta will move toward to the market average (i.e. beta equals to 1) in the long run.

By taking the averaged debt to equity ratio of 21%, the adopted average re-levered beta is 1.01 which reflecting the industry risk of the Guizhou Projects. Together with the 10-year China Sovereign Fixed Rate of 3.59% and the market premium of China 11.16% as at 5 November 2012 (sourced from Bloomberg), the equity risk premium would be approximately 15%. By adding the size premium of 3.89% (sourced from 2012 Ibbotson SBBI Valuation, Yearbook), and specific risk premium of, say, 10%, the cost of equity adopted in this evaluation is 29% (rounded) for 2012 to 2018. Due to a more maturity stage of the operation, the specific risk premium is assumed to be reduced to, say, 5%, and the cost of equity from 2018 to the remaining life of Guizhou Projects is 24% (rounded).

– 58 –

PROJECT EVALUATION REPORT

APPENDIX I

MATTERS THAT MIGHT AFFECT THE VALUE REPORTED

No allowance has been made in our evaluation for any charges, mortgages, outstanding premium or amounts owing on the Guizhou Projects. Also, no allowance has been made in our evaluation for any expenses or depreciation or taxation, which may be incurred in effecting a sale of the Guizhou Projects. Unless otherwise stated, it is assumed that the Guizhou Projects is free from all encumbrances, restrictions, and outgoings of an onerous nature which could affect its value.

In the course of evaluation, we have assumed that the Guizhou Projects is able to implement without any legal impediment (especially from the regulators). Should this not be the case, it will affect the reported conclusion significantly. The readers are reminded to have their own legal due diligence work on such issues. No responsibility or liability is assumed.

INSPECTIONS AND INVESTIGATIONS

At the representation of the appointed personnel of both the PRC Target Company and the Company, we have conducted a limited scope on-site inspection to the locations of the natural gas business in respect of which we have been provided with such information as we have requested for the purpose of our evaluation. We have not inspected those parts of the properties/facilities which were covered, unexposed, not being arranged or inaccessible and such parts have been assumed to be in reasonable condition. We cannot express an opinion about or advice upon the condition of uninspected parts and our report should not be taken as making any implied representation or statement about such parts. No structural survey, investigation, test or examination has been made, but in the course of our inspections we did not note any serious defects in the properties/facilities. We are not, however, able to report that the properties/facilities is free from rot, insect, infestation or any other defects. No tests were carried out to the services (if any) and we are unable to identify those services covered, unexposed or inaccessible.

Our evaluation has been made on the assumption that no unauthorised alteration, extension or addition has been made on the land that occupied by the Guizhou Projects (if any), and that the inspection and the use of our report do not purport to be a building or conditional survey of the inspected properties/facilities. We have assumed that the premises are free of rot and inherent danger or unsuitable materials and techniques.

If there is a third party other than the legally interested parties in the Guizhou Projects proposing to acquire the Guizhou Projects and wants to satisfy them as to the Guizhou Projects of which forms part of a going concern business of the PRC Target Company, if successful, then the third party should obtain a relevant surveyor’s detailed inspection and report of their own before deciding whether or not to enter into an agreement for sale and purchase.

We have not carried out on-site measurements to verify the correctness of the areas or specifications of the Guizhou Projects, but have assumed that the areas and specifications shown on the documents and handed to us are correct. All dimensions, measurements and areas are approximations.

– 59 –

PROJECT EVALUATION REPORT

APPENDIX I

Our engagement did not include an independent land survey to verify the information or location provided. Since we are not the authorised person to conduct land survey in China and the enormous resources required in conducting a detailed inspection and survey, we were further instructed to conduct our work based on the information given. We are unable to accept any responsibility for the reliability of the information given in these documents.

We are not aware of the content of any environmental audit or other environmental investigation or soil survey which may have been carried out on the inspected land which may draw attention to any contamination or the possibility of any such contamination. In undertaking our work, we have been instructed to assume that no contaminative or potentially contaminative uses have ever been carried out in the land. We have not carried out any investigation into past or present uses, either of the land or of any neighbouring land, to establish whether there is any contamination or potential for contamination to the land from these uses or sites, and have therefore assumed that none exists. However, should it be established subsequently that contamination, seepage or pollution exists at the inspected land or any neighbouring land, or that the inspected land has been or is being put to a contaminative use, this might reduce the value now reported.

SOURCES OF INFORMATION AND ITS VERIFICATION

For the purpose of our work, we were provided with a latest version of financial projections from the appointed personnel of the PRC Target Company and the management of the Company, and they are responsible for the assumptions upon which the projections are based. Having discussed with the appointed personnel of the PRC Target Company and the management of the Company, we understood that the assumptions adopted by the appointed personnel of the PRC Target Company and the management of the Company reflect their judgment of their ability to promote and to commercialise the contracts through its marketing strategy and sales platform. The projections are based on their view of the most likely action to be taken by the respective management of the PRC Target Company and the Company in the operation of the business, and they attested that the supplied data are accurate and reasonable. The financial projection is the source of the cash inflow and cash outflow items mentioned above. This information have been utilised without further verification. We have had no reason to doubt the truth and accuracy of the information that we have been furnished. No responsibility is assumed for the accuracy of the provided information.

For the purpose of this evaluation, we were furnished with various copies of the above named or unnamed documents related to this report and these copies have been referenced without further verifying with the relevant bodies and/or authorities. We need to state that we are not legal professionals, therefore, we are not in the position to advise and comment on the legality and effectiveness of the documents provided by the respective management of the PRC Target Company and the Company. No responsibility is assumed.

We have relied solely on the information provided by the respective management of the PRC Target Company and the Company or its appointed personnel without further verification and have fully accepted advice given to us on such matters as planning approvals or statutory notices, procedures to obtain necessary approvals, locations, titles, easements, clientele, products (type and class), and all other relevant matters.

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PROJECT EVALUATION REPORT

APPENDIX I

We are not contracted to conduct a due diligence to review the existing natural gas industry in the PRC. In the course of our work, we have solely depended on the advice given by the respective management of the PRC Target Company and the Company. We are unable to accept any responsibility for the reliability of the advice.

Also, we are not contracted to conduct a detailed pre-feasibility study or feasibility study, thus, the report is not a detailed evaluation of the feasibility of developing natural gas business. In the course of our work, we have solely depended on the profit forecast and advice given by the respective management of the PRC Target Company and the Company. We are unable to accept any responsibility for the reliability of the advice.

Information furnished by others, upon which all or portions of our report are based, is believed to be reliable but has not been verified in all cases. Our procedures to evaluate or work do not constitute an audit, review, or compilation of the information provided. Thus, no warranty is made nor liability assumed for the accuracy of any data, advice, opinions, or estimates identified as being furnished by others which have been used in formulating our report.

When we adopted the work products from other professions, external service/data providers and/or the respective management of the PRC Target Company and the Company in our evaluation, the assumptions and caveats adopted by them in arriving at their opinions also applied in our evaluation. The procedures we have taken do not require us to examine all the evidences, like an auditor, in reaching at our opinion. As we have not performed an audit, we are not expressing an audit opinion in our evaluation.

We are unable to accept any responsibility for the information that has not been supplied to us by the respective management of the PRC Target Company and the Company. We have sought and received confirmation from the respective management of the PRC Target Company and the Company that no material factors have been omitted from the information supplied. The report is based upon the assumption of full disclosure between the PRC Target Company and the Company and us of material and latent facts that may affect the evaluation. No responsibility is assumed for withheld information (if any).

Unless otherwise stated, the base currency of our report is Renminbi Yuan (‘‘RMB’’).

LIMITING CONDITIONS OF THIS REPORT

This report is provided strictly for the sole use of the instructing party. Neither the whole nor any part of this report or any reference made hereto may be included in any published documents, circular or statement, or published in any way, without our written approval of the form and context in which it may appear. Nonetheless, we consent to the publication of this report in this circular for the Company’s shareholders’ reference.

Our findings and opinion in this report are valid only for the stated purpose and only for the Relevant Date and only of the sole use of the instructing party. We or our personnel shall not be required to give testimony or attendance in court or to any government agency by

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PROJECT EVALUATION REPORT

APPENDIX I

reason of this report, and we accept no responsibility whatsoever to any other person. Should any other parties interested in the Guizhou Projects, they shall conduct their own due diligence work and shall not rely on this report.

No responsibility is taken for changes in market conditions and no obligation is assumed to revise this report to reflect events or change of government policy or financial condition or other conditions, which occur subsequent to the date hereof. Our maximum liability relating to services rendered under this engagement (regardless of form of action, whether in contract, negligence or otherwise) shall be limited to the charges paid to us for the portion of our services or work products giving rise to liability. In no event shall we be liable for consequential, special, incidental or punitive loss, damage or expense (including without limitation, lost profits, opportunity costs, etc.), even if it has been advised of their possible existence.

It is agreed that the Company is required to indemnify and hold us and our personnel harmless from any claims, liabilities, costs and expenses (including, without limitation, attorney’s fees and the time of our personnel involved) brought against, paid or incurred by us at a time and in any way based on the information made available in connection with our report except to the extent that any such loses, expenses, damages or liabilities are ultimately determined to be the result of gross negligence of our engagement team in conducting its work. This provision shall survive even after the termination of this engagement for any reason.

CONCLUSION

Based on the investigation, analysis, reasoning and data outlined as above, and on the method employed, it is our opinion that as at the Relevant Date, the financial net present value of the Guizhou Projects as part of a going concern business of the PRC Target Company for a term of 30 years, if successful (before taking into consideration any transaction costs), was reasonably stated by the amount in the region of RENMINBI TWO HUNDRED AND TEN MILLION YUAN ONLY (RMB210,000,000).

STATEMENTS

Our conclusion is based on generally accepted evaluation procedures and practices that rely extensively on assumptions and considerations, not all of which can be easily quantified or ascertained exactly. While we have exercised our professional judgement in arriving at the evaluation, the readers are urged to consider carefully the nature of such assumptions which are disclosed in our report and should exercise caution in interpreting our report.

The evaluation has been undertaken by valuer, acting as external valuer, qualified for the purpose of the evaluation.

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PROJECT EVALUATION REPORT

APPENDIX I

We retain a copy of our report together with the data from which it was prepared, and these data and documents will, according to the Laws of Hong Kong, keep for a period of 6 years from the date of our report and to be destroyed thereafter. We considered these records confidential, and we do not permit access to them by anyone, with the exception for law enforcement authorities or court order, without the instructing party’s authorisation and prior arrangement made with us. Moreover, we will add the Company’s information into our client list for our future reference.

We hereby certify that the fee for this service is not contingent upon our conclusion of findings.

Yours faithfully, For and on behalf of

LCH (Asia-Pacific) Surveyors Limited

Ho Chin Choi, Joseph BSc PgD MSc RPS(GP) (PFM)

Managing Director

Contributing Valuers: Kevin Lee Ho Man BMath Brian Yu Man Ho BBA

BV-1211026

– 63 –

REPORTS ON FORECASTS UNDERLYING THE VALUATION OF THE TARGET COMPANY

APPENDIX II

Set out below are texts of the reports from (A) Crowe Horwath (HK) CPA Limited and (B) Wallbanck Brothers Securities (HK) Limited in connection with the profit forecasts underlying the valuation on the Target Company and prepared for the purpose of inclusion in this circular.

(A) REPORT FROM CROWE HORWATH (HK) CPA LIMITED

9/F, Leighton Centre, 77 Leighton Road, Causeway Bay, Hong Kong

19 February 2013

The Board of Directors New Times Energy Corporation Limited Room 1007–8, 10th Floor New World Tower I 18 Queen’s Road Central Hong Kong

Dear Sirs

New Times Energy Corporation Limited (the ‘‘Company’’)

Discloseable transaction in relation to the proposed acquisition of 100% equity interests in Guizhou Kunyu Trading Company Limited

We have been engaged to report on the arithmetical calculations of the discounted future estimated cash flows on which the valuations of various proposed CNG related projects, prepared by LCH (Asia-Pacific) Surveyors Limited (‘‘LCH’’) dated 19 February 2013, (the ‘‘Valuations’’) is based. The Valuations which is determined based on the discounted future estimated cash flows is regarded as a profit forecast under Rule 14.61 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’).

Responsibility for the Discounted Future Estimated Cash Flows

The directors of the Company and LCH are responsible for the preparation of the discounted future estimated cash flows in accordance with the bases and assumptions determined by the Company’s directors and LCH and as set out in the Valuations. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation of the discounted future estimated cash flows for the Valuations and applying an appropriate basis of preparation; and making estimates that are reasonable in the circumstances.

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REPORTS ON FORECASTS UNDERLYING THE VALUATION OF THE TARGET COMPANY

APPENDIX II

Reporting Accountants’ Responsibility

It is our responsibility to report, as required by Rule 14.62(2) of the Listing Rules, on the arithmetical calculations of the discounted future estimated cash flows on which the Valuations is based.

We conducted our work in accordance with the Hong Kong Standard on Assurance Engagements 3000 ‘‘Assurance Engagements Other Than Audits or Reviews of Historical Financial Information’’ issued by the Hong Kong Institute of Certified Public Accountants. This standard requires that we comply with ethical requirements and plan and perform the assurance engagement to obtain reasonable assurance on whether the discounted future estimated cash flows, so far as the arithmetical calculations are concerned, have been properly compiled in accordance with the bases and assumptions as set out in the Valuations. We reperformed the arithmetical calculations and compared the compilation of the discounted future estimated cash flows with the bases and assumptions.

We are not reporting on the appropriateness and validity of the bases and assumptions on which the discounted future estimated cash flows are based and our work does not constitute any valuation of the relevant CNG related projects or an expression of an audit or review opinion of the Valuations.

The discounted future estimated cash flows do not involve the adoption of accounting policies. The discounted future estimated cash flows depend on future events and on a number of assumptions which cannot be confirmed and verified in the same way as past results and not all of which may remain valid throughout the period. Our work has been undertaken for the purpose of reporting solely to you under paragraph 14.62(2) of the Listing Rules and for no other purpose. We accept no responsibility to any other person in respect of, arising out of or in connection with our work.

Opinion

Based on the foregoing, in our opinion, the discounted future estimated cash flows, so far as the arithmetical calculations are concerned, have been properly compiled in all material respects in accordance with the bases and assumptions made by the directors of the Company and LCH as set out in the Valuations.

Yours faithfully Crowe Horwath (HK) CPA Limited Certified Public Accountants Hong Kong

Sze Chor Chun, Yvonne

Practising Certificate Number P05049

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REPORTS ON FORECASTS UNDERLYING THE VALUATION OF THE TARGET COMPANY

APPENDIX II

(B) REPORT FROM WALLBANCK BROTHERS SECURITIES (HK) LIMITED

==> picture [193 x 78] intentionally omitted <==

1312, Tower 1, Lippo Centre, 89 Queensway, Central, Hong Kong

19 February 2013

The Board of Directors New Times Energy Corporation Limited Unit 1007–08, 10th Floor New World Tower I 18 Queen’s Road Central Central, Hong Kong

Dear Sirs,

We refer to the cash flow forecasts underlying the valuation on the Target Group (the ‘‘Valuations’’) prepared by the Directors and management of the Company as set out in Appendix I to the circular of the Company dated 19 February 2013 (the ‘‘Circular’’), of which this report forms part.

In formulating our opinion, we have relied on the accuracy of the information, opinions and representations provided to us by the Directors and management of the Company and LCH (Asia-Pacific) Surveyors Limited (the ‘‘Valuer’’), and have assumed that all information, opinions and representations contained or referred to in the Valuations were true and accurate at the time when they were made and will continue to be accurate at the date of the Circular. We have no reason to doubt that any relevant information has been withheld, nor are we aware of any fact or circumstance which would render the information provided and representations and opinions made to us untrue, inaccurate, misleading or deceptive. Having made all reasonable enquiries, the Directors and the Valuer have further confirmed that, to the best of their knowledge, they believe there are no other facts or representations the omission of which would make any statement in the Valuations, including this letter, misleading or deceptive. We have not, however, carried out any independent verification of the information provided by the Directors and management of the Company and the Valuer, nor have we conducted an independent investigation into the business, affairs and financial position of the Company.

In formulating our opinion, we have relied on the financial information provided by the Company and the Valuer, particularly, on the accuracy and reliability of financial statements and other financial data of the Company. We have not audited, compiled nor reviewed the said financial statements and financial data. We shall not express any opinion or any form of

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REPORTS ON FORECASTS UNDERLYING THE VALUATION OF THE TARGET COMPANY

APPENDIX II

assurance on them. We have had no reason to doubt the truth and accuracy of the information provided to us by the Company and the Valuer. The Directors and the Valuer have also advised us that no material facts have been omitted from the information to reach an informed view, and we have no reason to suspect that any material information has been withheld. We have not carried out any feasibility study on any past, existing and forthcoming investment decision, opportunity or project undertaken or be undertaken by the Company.

Our opinion has been formed on the assumption that any analysis, estimation, forecast, anticipation, condition and assumption provided by the Company and the Valuer are valid and sustainable. Our opinions shall not be constructed as to give any indication to the validity, sustainability and feasibility of any past, existing and forthcoming investment decision, opportunity or project undertaken or to be undertaken by the Company.

We have reviewed the forecasts upon which the Valuations have been made for which you as the directors of the Company are responsible and discussed with you and the Valuer the information and documents provided by you which formed part of the bases and assumptions upon which the forecast has been prepared. We have also considered the letter from Crowe Horwath (HK) CPA Limited dated 19 February 2013 addressed to yourselves as set out in Section (A) of Appendix II to the Circular regarding the accounting policies and calculations upon which the forecasts have been made.

Our opinion does not address on the appropriateness and validity of the bases and assumptions on which the discounted future estimated cash flows are based and our opinion shall not constitute any opinion on any valuation of the relevant projects or an expression of an audit or review opinion on the Valuations.

On the basis of the foregoing, on balance and in general terms, at this stage, we are of the opinion that in such circumstances, the forecasts upon which the Valuations have been made, for which you as the directors of the Company are solely responsible, have been made after due and careful enquiry by you.

We take no responsibility for the contents of the Circular, make 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 the Circular.

Yours faithfully, For and on behalf of WALLBANCK BROTHERS Securities (Hong Kong) Limited Phil Chan Chief Executive Officer

– 67 –

EXPERTS’ QUALIFICATIONS AND CONSENTS

APPENDIX III

EXPERTS’ QUALIFICATIONS AND CONSENTS

The followings are the qualifications of the experts who have provided their opinions or advices for inclusion in this circular:

Name

Qualification

Crowe Horwath (HK) CPA Limited Certified Public Accountants (‘‘CHHK’’)

LCH (Asia-Pacific) Surveyors Limited (‘‘LCH’’)

Professional Surveyor

Wallbanck Brothers Securities (HK) (‘‘Wallbanck’’)

A licensed corporation under the SFO to conduct type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities Limited

Each of CHHK, LCH and Wallbanck has given and has not withdrawn its written consent to the issue of this circular with the inclusion therein of its letter or report and the references to its name in the form and context in which they respectively appear.

As at the Latest Practicable Date, each of CHHK, LCH and Wallbanck was not beneficially interested in the share capital of any member of the Group nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, each of CHHK, LCH and Wallbanck did not have any direct or indirect interest in any assets which had since 31 December 2011 (being the date to which the latest published audited financial statements of the Group were made up) been acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

– 68 –

NOTICE OF SGM

==> picture [101 x 65] intentionally omitted <==

NEW TIMES ENERGY CORPORATION LIMITED

新時代能源有限公司[*]

(incorporated in Bermuda with limited liability)

(Stock Code: 00166)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (‘‘SGM’’) of New Times Energy Corporation Limited (the ‘‘Company’’) will be convened and held at 3/F, Nexxus Building, 77 Des Voeux Road Central, Hong Kong on 15 March 2013 at 10:00 a.m. for the purpose of considering and, if thought fit, passing with or without modifications, the following resolution of the Company:

ORDINARY RESOLUTION

‘‘THAT:

(a) the execution of the acquisition and the supplemental agreement both dated 12 November 2012 and the second supplementary agreement dated 10 December 2012 (collectively the ‘‘Acquisition Agreement’’, a copy of which is marked ‘‘A’’, ‘‘B’’ and ‘‘C’’ respectively and initialed by the chairman of the SGM for identification purpose and tabled at the SGM) entered into between 深圳中港新時代能源有限公司 (Shen Zhen Sino Hong Kong New Time Energy Corporation Limited*), an indirectly wholly-owned subsidiary of the Company (the ‘‘Purchaser’’), and Mr. Zhu ZhiQing (朱志清), Mr. Su RongLi (蘇榮利), and Mr. Tang Feng (唐烽) (the ‘‘Vendors’’), pursuant to which the Purchaser has conditionally agreed to procure the Company to issue and the Vendors have conditionally agreed to subscribe for the convertible bonds in the maximum principal amount of HK$39,800,000 (equivalent to approximately RMB32,000,000), with the right to convert at the initial conversion price of HK$1.00 (subject to adjustments) per conversion share (the ‘‘Convertible Bonds’’), and all transactions (if applicable, including the supplemental agreement anticipated by the Company as indicated in page 29 of this circular) contemplated thereunder be and are hereby approved, ratified and confirmed;
(b) the creation and issue by the Company of the Convertible Bonds to the Vendors in accordance with the terms and conditions of the Acquisition Agreement and the terms and conditions of the Convertible Bonds attached to the Acquisition Agreement and all transactions thereunder be and are hereby approved, ratified and confirmed;

For identification purpose only

– 69 –

NOTICE OF SGM

(c) the issue and allotment of up to 39,680,000 new ordinary shares of the Company at the initial conversion price of HK$1.00 each (subject to adjustments) which may fall to be issued upon the exercise of the conversion rights attaching to the Convertible Bonds be and are hereby approved, ratified and confirmed; and
(d) the directors of the Company (the ‘‘Directors’’) are hereby authorised to do all such acts and things (including, without limitation, signing, executing (under hand or under seal), perfecting and delivering all agreements, documents and instruments) which are in their opinion, necessary, appropriate, desirable or expedient to implement or to give effect to the terms of the Acquisition Agreement and all transactions contemplated thereunder and all other matters incidental thereto or in connection therewith and to agree to and make such variation, amendment and waiver of any of the matters relating thereto or in connection therewith that are, in the opinion of the Directors, not material to the terms of the Acquisition Agreement and all transactions contemplated thereunder and are in the interests of the Company.’’

By Order of the Board New Times Energy Corporation Limited Cheng Kam Chiu, Stewart Chairman

Hong Kong, 19 February 2013

Registered office: Head office and principal place of Clarendon House business in Hong Kong: 2 Church Street Room 1007–8, 10/F, New World Tower 1 Hamilton HM 11 18 Queen’s Road Central Bermuda Central Hong Kong

Notes:

(1) Any shareholder of the Company (the ‘‘Shareholder(s)’’) entitled to attend and vote at the SGM shall be entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a Shareholder.
(2) The form of proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same.
(3) Delivery of the form of proxy shall not preclude a Shareholder from attending and voting in person at the SGM and in such event, the form of proxy shall be deemed to be revoked.
(4) Where there are joint Shareholders any one of such joint Shareholder may vote, either in person or by proxy, in respect of such shares as if he were solely entitled thereto, but if more than one of such joint Shareholders be present at the SGM the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint Shareholders, and for this purpose seniority shall be determined by the order in which the names stand in the register of shareholders of the Company in respect of the joint holding.

– 70 –

NOTICE OF SGM

(5) The form of proxy and (if required by the board of directors of the Company) the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, shall be delivered to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited, at 26/F Tesbury Centre, 28 Queen’s Road East, Wan Chai, Hong Kong not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof.
(6) The translation into Chinese language of this notice is for reference only. In case of any inconsistency, the English version shall prevail.

– 71 –

AI assistant

GoFintech Quantum Innovation Limited — Proxy Solicitation & Information Statement 2013

49098_rns_2013-02-18_ad82db5f-df63-4c3d-b784-ded9b4b8d949.pdf

DISCLOSEABLE TRANSACTION IN RELATION TO THE PROPOSED ACQUISITION OF 100% EQUITY INTERESTS IN RESPECT OF GUIZHOU KUNYU TRADING COMPANY LIMITED INVOLVING THE PROPOSED ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE AND

NOTICE OF SPECIAL GENERAL MEETING

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

NEW TIMES ENERGY CORPORATION LIMITED 新 時 代 能 源 有 限 公 司[*]

NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

A. The Proposed Acquisition Agreement of 100% Shareholding of the Target Company

The Acquisition Agreement

Subject of the Acquisition

Consideration and Payment

Refundable Deposits (Refundable Deposit A and Refundable Deposit B)

Entrusted Payment

Details of the Consideration settlement upon Completion B and Completion C

LETTER FROM THE BOARD

Consideration for the JV Projects

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Terms of the Convertible Bonds

LETTER FROM THE BOARD

(2) Upon issue of early redemption notice by the Company

(3) Upon occurrence of any events of default

Conditions Precedent to the Acquisition Agreement

Conditions for jointly controlled payment release

Conditions precedent to Completion B

Conditions precedent to Completion C

Variation of Terms

A Supplementary Agreement Anticipated by the Company

B. Background Information

Information on the Group

Information on Kunlun

Contracts entered into between the PRC government and KunLun

Information on the Target Company

The Target Company

Financial information of the Target Company

The KT Cooperation Agreement entered into between KunLun & the Target Company

Information of the Projects

JV Cooperation Agreement entered into between the Purchaser & the Vendors

C. Risk Factors

Risks Relating to the Business

Risks Relating to the PRC

D. Shareholding Structure of the Target Company

Effect on the Shareholding Structure

Fund Raising Activities in the Past Twelve Months

REASONS AND BENEFITS OF THE ACQUISITION

GENERAL

SGM

RECOMMENDATION

RESPONSIBILITY STATEMENT

By Order of the Board New Times Energy Corporation Limited Cheng Kam Chiu, Stewart Chairman

利駿行測量師有限公司

Dear Sirs,

OUR INSTRUCTION TO THIS ENGAGEMENT

Overview (See Note)

The Economic Outlook of China

Energy Consumption in China

THE PRC TARGET COMPANY AND THE GUIZHOU PROJECTS

ESTABLISHMENT OF TITLES

PROCEDURES TO EVALUATE

THE BASIS OF EVALUATION AND ASSUMPTIONS

FACTORS CONSIDERED IN THE EVALUATION

FINANCIAL EVALUATION

Payback Period

Return on Capital Employed

Discounted Cash Flows Method (see Note)

MATTERS THAT MIGHT AFFECT THE VALUE REPORTED

INSPECTIONS AND INVESTIGATIONS

SOURCES OF INFORMATION AND ITS VERIFICATION

LIMITING CONDITIONS OF THIS REPORT

CONCLUSION

STATEMENTS

Ho Chin Choi, Joseph BSc PgD MSc RPS(GP) (PFM)

(A) REPORT FROM CROWE HORWATH (HK) CPA LIMITED

19 February 2013

GoFintech Quantum Innovation Limited Proxy Solicitation & Information Statement 2013

NEW TIMES ENERGY CORPORATION LIMITED 新時代能源有限公司[*]

新時代能源有限公司[*]