09:52     XINAO GAS<02688> - Announcement (4)                                 

    the Group can otherwise obtain in the market. The                         
    Directors (including the independent non-executive                        
    Directors) are of the view that the terms of the                          
    Property Management Services Agreement are fair and                       
    reasonable so far as the Independent Shareholders are                     
    concerned and that the Property Management Services                       
    Agreement is on normal commercial terms and is in the                     
    interest of the Company and its shareholders as a                         
    whole.                                                                    
                                                                              
    (2)     New Transaction 2 - "Property Leasing                             
    Agreement"                                                                
    Date:   31 January 2005                                                   
                                                                              
    Parties:        a.      the Group                                         
                                                                              
    b.      Wang Family Companies                                             
                                                                              
    Subject matter:                                                           
    Each of the Group and the Wang Family Companies has                       
    agreed to lease to each other certain properties owned                    
    by the Group and the Wang Family Companies                                
    respectively.                                                             
                                                                              
    Duration and fees:                                                        
    For the lease of the properties, the Group and the                        
    Wang Family Companies will pay to each other a rental                     
    fee to be determined by the parties by reference to                       
    the prevailing market rent (comparable to the rent                        
    payable for similar properties in proximity), taking                      
    into account various factors including the location,                      
    size, nature of the properties and length of the lease,                   
    of the particular premises for a term of three years                      
    commencing 1 January 2005.                                                
                                                                              
    Reasons for and benefits of the Property Leasing                          
    Agreement:                                                                
    As the operations of the Group are located in close                       
    proximity to the facilities of the Wang Family                            
    Companies, the entering into of the Property Leasing                      
    Agreement would facilitate the operation of the Group.                    
    By leasing the factory premises and residential                           
    premises which are in close proximity to the                              
    operations of the Group from the Wang Family Companies                    
    at reasonable costs, the Directors believe that it                        
    would be beneficial and convenient to the Group's                         
    overall business operations. Before 2005, the Group                       
    has not been leasing premises from the Wang Family                        
    Companies. The Group has commenced leasing certain                        
    factory premises and residential premises from the                        
    Wang Family Companies in January 2005 but no rental                       
    fee has yet been paid to the Wang Family Companies.                       
    After execution of the Property Leasing Agreement,                        
    the Company intends to enter into specific lease                          
    agreements with these Wang Family Companies pursuant                      
    to the Property Leasing Agreement.                                        
                                                                              
    The Group had purchased certain properties in                             
    Langfang City, the PRC from the Wang Family Companies                     
    before the Shares were listed on the Stock Exchange                       
    in 2001. The said properties have since been used as                      
    the headquarters for the Group. As some of the                            
    management staff of the Group (Mr. Wang and Mr. Yang                      
    Yu) are also managing the businesses of certain Wang                      
    Family Companies, and in order to facilitate Mr. Wang                     
    and Mr. Yang to manage the businesses of the Group                        
    and these Wong Family Companies in an efficient manner,                   
    these Wang Family Companies therefore lease back                          
    certain unoccupied premises in the headquarters from                      
    the Group so as to facilitate the said management                         
    staff to oversee the businesses of the Group and the                      
    said Wang Family Companies in the same headquarters.                      
    Such transaction (i.e. Transaction 2) had been                            
    granted