11:10     XINAO GAS<02688> - Announcement (4)                                 

    HK$23,400,000) of which US$2,400,000 (equivalent                          
    to approximately HK$18,720,000) and US$600,000                            
    (equivalent to approximately HK$4,680,000) were                           
    contributed by Zhucheng BVI and Zhucheng Gas                              
    respectively. Each of Zhucheng BVI and Zhucheng Gas                       
    has contributed in accordance with its proportional                       
    equity interest.                                                          
                                                                              
    The unaudited net profit before and after tax of                          
    Zhucheng Xinao for the two financial years ended                          
    31 December 2003 was approximately RMB1,905,000 and                       
    RMB2,152,000 respectively (equivalent to                                  
    approximately HK$1,797,000 and HK$2,030,000                               
    respectively). There were no extraordinary items                          
    for each of the two financial years ended 31                              
    December 2003. The unaudited net asset value of                           
    Zhucheng Xinao was RMB25,815,000 (equivalent to                           
    approximately HK$24,354,000) as at 31 December 2003.                      
    Based on the unaudited net asset value of Zhucheng                        
    Xinao as at 31 December 2003, the value of the                            
    Acquisition is approximately RMB5,163,000                                 
    (equivalent to approximately HK$4,871,000).                               
                                                                              
    Consideration                                                             
                                                                              
    RMB5,000,000 (equivalent to approximately                                 
    HK$4,717,000). The consideration will be satisfied                        
    in cash from internal resources of the Group and                          
    will be paid by the Group to Zhucheng Gas upon                            
    satisfaction of all the conditions in the Equity                          
    Transfer Agreement. The consideration was arrived                         
    at after arm's length negotiations and based on the                       
    unaudited net asset value of Zhucheng Xinao as at                         
    31 December 2003.                                                         
                                                                              
    Conditions                                                                
                                                                              
    Completion of the Acquisition is conditional on,                          
    among other things, all necessary approvals from                          
    the relevant PRC government authorities being                             
    obtained in relation to the Equity Transfer                               
    Agreement.                                                                
                                                                              
    Reasons for and effects of the Acquisition                                
                                                                              
    The Board anticipates steady growth in the demand                         
    for piped gas in the Zhucheng district centre for                         
    the foreseeable future. Upon the completion of the                        
    Acquisition, the Group's equity interests in                              
    Zhucheng Xinao will be increased from 80% to 100%,                        
    thereby increasing the Group's share of profit (if                        
    any) in Zhucheng Xinao by 20%.                                            
                                                                              
    The Board, including independent non-executive                            
    Directors, is of the view that the Equity Transfer                        
    Agreement is entered into on normal commercial                            
    terms after arm's length negotiations and that the                        
    terms of the Equity Transfer Agreement are fair and                       
    reasonable and in the interests of the Company so                         
    far as the independent shareholders of the Company                        
    are concerned.                                                            
                                                                              
    As Zhucheng Gas is a substantial shareholder of                           
    Zhucheng Xinao, a subsidiary of the Company, in                           
    which the Group owns 80% equity interests, Zhucheng                       
    Gas is a connected person as defined in the Listing                       
    Rules. Hence, the signing of the Equity Transfer                          
    Agreement shall constitute a connected transaction                        
    for the Company under Chapter 14A of the Listing                          
    Rules and shall be subject to the reporting and                           
    announcement requirements pursuant to Rule 14A.45                         
    to Rule 14A.47 of the Listing Rules.                                      
                                                                              
    GENERAL