09:30 CHINA GAS HOLD<00384> - Announcement (2) connection transaction under the Listing Rules and will be subject to the disclosure requirements under Rule 14.25(2)(a) of the Listing Rules. Details of the shareholder's loan will be disclosed in the Company's next published annual report. Information on China City Gas China City Gas, a company incorporated in BVI with limited liability on 16 August 2002, is an investment holding company and is wholly owned by the Vendor as at the date of this announcement. China City Gas has an authorized capital of US$50,000, of which 100 shares of US$1 each have been issued and fully paid up. China City Gas has not commenced any business since its incorporation and its 92.9% equity interest in the JV Company constitutes its sole asset. Upon Completion, China City Gas will be owned as to 57% by West Region and 43% by Ji Xiangjun. China City Gas will be treated as a subsidiary of the Company upon Completion. Information on the JV Company The JV Company is a limited company incorporated in the PRC on 21 November 2002 and is owned as to 92.9% by China City Gas and 7.1% by Jiyuan Gas. Jiyuan Gas and its beneficial owners are independent of and not connected with any of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or their respective associates (as defined in the Listing Rules). The JV Company has a tenure of 30 years from the date of issue of the business licence, which is 21 November 2002. The JV Company is a subsidiary of China City Gas. It is principally engaged in the Natural Gas Project. Upon Completion, the JV Company will become a subsidiary of the Company and be consolidated into the Group's accounts. The registered capital of the JV Company is RMB40,280,000 (equivalent to approximately HK$38,000,000) which has yet to be paid up by China City Gas and Jiyuan Gas in such amounts in proportion to their respective shareholdings in the JV Company (i.e., as to HK$35,302,000 to be contributed by China City Gas and HK$2,698,000 to be contributed by Jiyuan Gas). Pursuant to the Agreement, the difference, being RMB34,290,000 (approximately HK$32,349,057) between the total investment which in the sum of RMB74,570,000 (approximately HK$70,349,057) and the registered capital which is in the sum of RMB40,280,000 (equivalent to approximately HK$38,000,000) of the JV Company will be funded from bank financing. The JV Company is entitled to enjoy certain preferential treatment granted by the People's Government in Jiyuan City, which includes, among others, the exclusive right to develop and operate the Natural Gas Project for 30 years in the Jiyuan City District. That is to say, the JV Company is the only party allowed to operate, manage and develop the Natural Gas Project in the Jiyuan City District. Jiyuan City is located in the northwest of the Henan Province, comprising 4 districts, 8 counties and 4 villages. At the end of 2001, Jiyuan City alone had a population of roughly about 650,000. Up to the end of 2000, there were a total of 9,434 production units in both the industrial and enterprises sectors in the whole of Jiyuan City, and the gross production income within Jiyuan City amounted to RMB590,000,000 for the year 2000. It is expected that by 2005, the gross production income within Jiyuan City will reach RMB12,000,000,000, with an average annual growth rate of 12%, whereas the average personal income will reach RMB16,500 which will be RMB8,649 higher than the average personal income in the Henan Province, with an average annual growth rate of 11.5%. At present, there is no natural gas consumption in Jiyuan City. It is estimated that by the year 2005 and year 2010, the natural gas consumption (for both industrial and domestic consumers) will reach 1.2 billion cubic metres annually and 1.5 billion cubic metres annually respectively.