09:53     XINAO GAS<02688> - Announcement (5)                                 

    a waiver (i.e. Existing Waiver) from the Stock                            
    Exchange for strict compliance with the relevant                          
    requirements of the Listing Rules. By leasing of the                      
    unoccupied offices of the Group to the Wang Family                        
    Companies, the Group is able to generate revenue and                      
    to fully utilize its existing vacant office units.                        
    The Directors (including the independent                                  
    non-executive Directors) are of the view that the                         
    terms of the Property Leasing Agreement are fair and                      
    reasonable so far as the Independent Shareholders are                     
    concerned and that the Property Leasing Agreement is                      
    on normal commercial terms and is in the interest of                      
    the Company and its shareholders as a whole.                              
                                                                              
    (3)     New Transaction 3 - "Product Sale Agreement"                      
    Date:   31 January 2005                                                   
                                                                              
    Parties:        a.      the Group                                         
                                                                              
    b.      Wang Family Companies                                             
                                                                              
    Subject matter:                                                           
    The Group has agreed to purchase and the Wang Family                      
    Companies have agreed to sell, in the ordinary course                     
    of its business, gas-related machinery and equipment                      
    manufactured by the Wang Family Companies (including                      
    but not limited to gas refueling stations, gas                            
    refueling daughter station trailers, storage tanks,                       
    CNG and LNG trailers and compressors).                                    
                                                                              
    Duration and fees:                                                        
    For the purchase of products by the Group from time                       
    to time, the price payable shall be determined between                    
    the parties by reference to the market price of the                       
    particular products for a term of three years                             
    commencing 1 January 2005 provided no such price shall                    
    be less favourable than those offered by Independent                      
    Third Parties.                                                            
                                                                              
    Reasons for and benefits of the Product Sale                              
    Agreement:                                                                
    Since some projects of the Group are not yet connected                    
    to long distance pipelines, they need to use CNG or                       
    LNG trucks for transporting natural gas from the gas                      
    sources to the operation locations. Therefore, the                        
    companies have to purchase CNG and LNG trucks for                         
    transporting natural gas until  those projects are                        
    connected with long distance pipelines. Also, the                         
    Directors (excluding the independent non-executive                        
    Directors) expect that starting from 2005, a large                        
    number of CNG vehicle refuelling stations will be                         
    constructed by the Group to increase gas usage in the                     
    long run. As a large number of public vehicles,                           
    including buses and taxis, are expected to be                             
    converted to using natural gas, the Directors                             
    (excluding the independent non-executive Directors)                       
    believe that it helps the Company to generate                             
    substantial and stable revenue and profits in the long                    
    run. As there are very few providers of the products                      
    contemplated under this agreement and the Wang Family                     
    Companies have long history in the provision of such                      
    products, the Directors (excluding the independent                        
    non-executive Directors) are of the view that                             
    entering into of this agreement will benefit both                         
    parties and the terms of the Product Sale Agreement                       
    are fair and reasonable so far as the Independent                         
    Shareholders are concerned and that the Product Sale                      
    Agreement is on normal commercial terms and is in the                     
    interest of the Company and its shareholders as a                         
    whole.                                                                    
                                                                              
    (4)     New Transaction 4 - "Finance Leasing