China Gas- Company Analysis:

China Gas Holdings Ltd.

Business Portfolio:

China Gas Holdings Limited is a natural gas services operator listed on the main board of The Hong Kong Stock Exchange Limited. The company was established in the year 2002. It engages principally in the investment, operation and management of city gas pipeline infrastructure, distribution of natural gas and LPG to residential, commercial and industrial users, construction and operation of oil stations and gas stations, and development and application of natural gas and LPG related technologies in China.

The Company operates in five operating divisions: 1. Sales of piped gas. 2. Gas connection.3. Sales of coke and gas appliances. 4. Property investment. 5. Financial and securities investment.

China Gas owns a total of 79 natural gas projects, including exclusive piped gas development rights in 69 cities and region, six natural gas pipeline transmission projects, one natural gas exploration project, one natural gas purification project, and one coal bed methane project, as well as the licence to import and export liquified natural gas (LNG) and other fuel products in China. The Company has secured exclusive gas operations in Hubei, Hunan, Guangxi, Guangdong, Anhui, Jiangsu, Zhejiang, Hebei, Shaanxi and Inner Mongolia, which are the major cities along the West-East gas pipeline, the Chongqing-Wuhan gas pipeline and the Shaanxi-Beijing gas pipeline.In July 2008, the Company acquired a 57% stake in Jiamusi Hengjia Gas Ltd.

CNG and LNG:

As a clean, environmental friendly and economic fuel, natural gas is now extensively used among vehicles, presenting the Group with great business prospects. China Gas sees CNG/LNG automobile refilling station business a new and key growth driver of the Group in the future and they have therefore commenced detailed planning and implementation of our CNG/LNG automobile refilling business in China. The willleverage on its competitive strengths such as gas supply, route design, and equipment and site selection in order to achieve optimal business implementation. They will adopt the most suitable organisational structure, technical standards and management systems for CNG automobile refilling business. Use of imported compressors of high quality and provide staff trainings regularly to ensure efficient operations of the refilling stations. With buses and taxies as the starting points of our CNG refilling business, they are now extending into LNG refilling business for long distance transportation as their new profit driver to continuously expand their automobile refilling business. In recent years, the Group has set up and

operated 105 CNG automobile refilling stations in over 32 cities nationwide, providing refilling services for approximately 50,000 public vehicles and taxies in total. With this low carbon vehicular fuel, the company has succeeded in improving the environment, lowering the costs of public transportation and gaining support from the local governments.

Liquefied Petroleum Gas Business:

Since its entry into the LPG business about two years ago, the Group, leveraging onits market position as the PRC’s largest midstream LPG distributor, has successfullyconsolidated the upstream supply of LPG, and enhanced the gross profit margins forthe existing midstream distribution business. With such midstream lead and upstream consolidation, the Group began gradually to expand into the downstream market in the previous fiscal year via acquisitions of retail LPG businesses in its existing markets and their surrounding areas. Over the past year, the Group successfully integrated part of the industry chain in the Pearl River Delta and Yangtze River Delta regions.

In March 2011, the Group announced its acquisition of Panva Gas, the biggestdomestic LPG retailer in China. The acquisition of Panva Gas enabled the construction of an integrated industry chain of the LPG market including the coastal area of southeast China as well as Yangtze River Basin. The “Regulation on the Administration of Urban Gas” promulgated by the State Council in March 2011 further regulated the operation of, and competition within, the industry, which is an opportunity for the Group to begin the consolidation of the industry and the construction of an integrated industry chain. In FY 2012, the Group will perfect the integration of the midstream and downstream industry chains, as well as further consolidate the industry chains in selected regions. With such integration, the Group will be able to optimise resource allocations, phase out obsolete and surplus capacities, reduce unit operating costs and at the same time improve sales volume and service quality and increase market share without compromising the safety and quality of products and services. The Group will adopt a unified brand strategy, increase brand investment, enhance brand awareness and brand image of China Gas among LPG users in order to further improve its competitiveness. In the future, through further market integration, the Group will be able to enhance the economy of scale and cost effectiveness of its LPG business, expand its market share and sales, and improve its LPG profit margin, thereby rendering its LPG business the second major business line of the Group.

Value-added Services for End Users:

In the coming five years, the Group will be supplying natural gas to more than12,000,000 households, and LPG to more than 30,000,000 households, servingover 150 million customers in total. This represents a big market for value-addedservices to be provided to these customers in addition to the natural gas and LPG that the Group is supplying to them.

The Group will be creating more value and profit for its shareholders by providing services such as gas insurance, maintenance services, gas equipment improvement services, sales and installation of gas appliances. This will be a new and important source of revenue and income for the Group which does not require intensive capital expenditures.

Project Locations and Service Areas:

China Gas has a presence in over 20 provinces of Peoples’ Republic of China and its covers an urban population of more than 59.16 million people, serving around 7.14 million customers out of which 6.07 million are residential customers, around 1,270 industrial customers and around 37,470 commercial customers. China Gas operates around 105 CNG stations in 20 provinces around China. The company has around 148 projects in hand as of 2012.

Anhui Guangxi Zhuang Autonomous Region

Guangdong Liaoning Inner Mongolia Autonomous Region

Huoshan County

Yulin Maoming Liaoyang Hohhot

Huainan Qinzhou Conghua Fushun Wushen Banner

Shou County Liuzhou Meizhou Shenyang Sujiatun

Helingeer County

Wuhu Fangchenggang Yunfu Pulandian Baotou

Suzhou Nanning ASEAN Development Zone

Shanwei Jinzhou Economic Hi–Tech Development Zone

Zuo Banner Tenggeli Industrial Zone

Wuhu County

Wuxuan Xinxing County

Zhuanghe Industrial Park

Tuoketuo County

Nanling County

Laibin Fengshun County

Liaoyang Economic Zone

Wuchuan County

Wuwei Baise Pingyuan County

Dalian/ Dalian Jinzhou Development Zone

Alashan Meng

Huoqiu Bobai Dapu County

Zhuanghe Tuzuo Banner

Maoji Development Zone

Nanning Wuhua County

Jinzhou Longxiwan New Zone

Xinle

Xiuning Huazhou Linghai

Fengtai County

Gaizhou

Shaanxi Hunan Shandong Jiangxi Chongqing:

Baoji Yiyang Dezhou Nanchang Wanli

Yubei

Qishan County You County Qingdao Xinfeng County

Yulin Zhangjiajie Zhongyu Gas’s 3 Cities

Linyou County

Hebei Hubei Jiangsu Heilongjiang ZhejiangCangzhou Yichang Pizhou Harbin TaizhouNanpi County Xiaogan Yangzhong Jiamusi JinhuaQinghe County Hanchuan Jiangbei

District, Nanjing

Shuangcheng Xiaoshan District, Hangzhou

Wangdu Yingcheng Pukou District, Nanjing

Mudanjiang Hangzhou Jiangdong Development Zone

Tangshan Nanpu

Yunmeng Jiawang District, Xuzhou

Jiagedaqi

Leting County, Gaocheng

Suizhou Xinyi, Xuzhou

Tang County Tianmen Yangzhou City

Pingshan County, Fengnan

Dangyang

Cangzhou Development Zone

Wuhan Qingshan

Bohai New ZoneDistrict of Tangshan, Neiqiu County

Fujian Gansu Henan Ningxia Hui Autonomous Region

Tianjin

29 cities/regions

Lingtai County

Zhongyu Gas’s 8 Cities

Zhongwei

Operational Map:

Physical Performance:China Gas was established in 2002 and embarked on a rapid growth of natural gas business in China. China Gas Entered into the LPG business in 2009 having identified a large population in China who resided in the suburban and rural areas and would not have access to natural gas supply, China Gas entered into the LPG industry with the ambition of becoming a leading vertically integrated LPG supplier in China. Year 2010 Natural gas business emerged into organic growth with the most number of city gas concessions in its portfolio, China Gas’ natural gas business emerged into organic growth, leading to reduced capital expenditure and increased connections and gas sale in its cities. To strengthen natural gas organic growth and achieve LPG integration in 2012, China Gas will further strengthen the organic growth of its existing city gas portfolio through its new “Hub-Satellite” investment initiatives andalso its enhanced CNG/LNG refueling rollout. China Gas will enter into the LPG retail market this year, and achieve its LPG business integration in China.

Gas Sales Volume 2005-2011:

Gas Sales Volume

2011(million m3)

2010(million m3)

2009(million m3)

2008(million m3)

2007(million m3)

2006(million m3)

2005(million m3)

Natural Gas

4,452.4 3,380.0 2130.3 1,043.5 161.8 172.3 37.09

Coal Gas & LPG

162.4 212.4 195.6 105.3 74.4 40.5 39.1

Sales of Natural Piped Gas 2005-2011:

Sales of Piped Natural Gas

2011(million m3)

2010(million m3)

2009(million m3)

2008(million m3)

2007(million m3)

2006(million m3)

2005(million m3)

Residential 568.7 392.1 276.7 150.7 62.02 32.02 9.66

Industrial 3,011.1 2,403.2 1463.3 669.5 233.41 126.0 24.73

Commercial 492.8 338.0 221.9 117.8 22.7 12.4 2.70

CNG Stations

379.8 246.7 168.4 105.5 63.17 31.3 0

No. of Customers 2005-2011:

Customers 2011 2010 2009 2008 2007 2006 2005

Residential 6,078,906 4,837,436 3,745,370 2,251,044 1,349,782 806,103 411,064

Industrial 1,270 810 420 185 109 72 35

Commercial 37,470 33,476 28,511 19,325 10,451 1,395 489

CNG Stations

105 91 60 45 24 8 0

Urban Population Covered 2005-2011: *in millions

Urban Population Covered

2011 2010 2009 2008 2007 2006 2005

59.16 55.91 50.55 42.80 32.00 23.03 11.88

Financial Performance:

Financial Analysis:*in million HK$

Year 2011 2010 2009 2008 2007 2006 2005

Turnover 15,861 10,211 6,323 2,552 1,236 6,305 411

Gross Profit

2,910 2,116 1,429 746 419 305 247

Profit for the year

781 1,051 133 166 236 180 132

Basis EPS(HK Cents)

16.31 26.19 3.11 4.39 6.35 6.15 5.24

*in million HK$Year 2011 2010 2009 208 2007 2006 2005

Total Assets 30,886 22,997 18,086 11,306 7,293 5,093 2,750

Cash Balance 6,279 4,361 2,896 1,674 1,482 1,727 712

Shareholders’ Equity

8,764 4,123 3,223 3,140 2,692 1,836 966

Final Dividend (HK Cents)

2.2 1.7 1.4 1.2 1.2 1.0 1.0

Earnings Before Interests & Taxes and Earnings Before Interests, Taxes, Depreciation & Amortization: *in million HK$

Year 2011 2010 2009 2008 2007 2006 2005

EBIT 1,778 1,270 856 567 239 182 133

EBITDA 2,426 1,765 1.202 765 461 273 172

Key Financial Indicators:

Year 2011 2010 2009 2008 2007 2006 2005Current Ratio(times)

1.17 1.10 1.39 2.19 1.65 3.37 3.19

Gross Profit Margin

18.3% 20.7% 22.6% 29.2% 34% 48% 60%

Net Gearing Ratio

0.48 1.24 1.37 1.21 0.74 0.38 0.72

Net Profit Margin

4.9% 9.9% 2.1% 7.3% 19% 29% 32%

Return On Average Equity

9.7% 23.8% 3.3% 4.4% 11.30% 11.00% 13.00%

Definitions:• Current ratio:Current assets/Current liabilities• Gross profit margin:Gross profit/Turnover• Net gearing ratio:Net borrowing/Shareholders’ funds, excluding LPG trade finance related facilities• Net profit margin:Net profit for the year/Turnover• Return on average equity:Profit attributable to equity holders of the Company/ Average equity attributable to equity holders of the Company

Financial Performance Of Year 2010-2011:

Corporate Information:

Board Of Directors:

Ms. WONG Sin Yue, Cynthia, aged 59, was appointed as an independent non-executive director of the Company in October 2003. Ms. WONG is currently a Deputy General Manager of China Merchants Holdings (International) Company Limited and is responsible for finance. Ms. WONG holds a MBA degree. She held various senior positions at reputable international investment banks including Societe Generale, Deutsche Morgan Grenfell, Samuel Montague and Bear Stearns Asia for over 15 years during which period she had advised more than 50 companies in Greater China and Asia in their equity, equity finance or equity-related activities.

Mr LEUNG Wing Cheong, Eric, aged 50, is currently the Joint Managing Director and the Chief Financial Officer of the Company. He is responsible for the business operations as well as financial, financing, international business development and investor relations activities of the Company. Mr. Leung joined the Company in early 2005 after a 13-year career in investment banking, during which he helped numerous companies in Greater China raise debt and equity capital, especially for energy and infrastructure projects. Investment banks he has served include Lehman Brothers, Jardine Fleming, Barclays Capital, Prudential Securities and UFJ Securities. Mr. Leung is a lawyer by training, and is qualified to practice law in Hong Kong, England & Wales and Australia and he holds bachelor degrees from the University of Hong Kong and University of London, and a master degree from the ChineseUniversity of Hong Kong.

Mr. PANG Yingxue, aged 56, is currently the Joint Managing Director of the Company and Chief Executive of Shanghai Zhongyou Energy Holdings Limited a wholly owned subsidiary of the Company. Mr. Pang joined the Group in 2002 and was responsible for the management and operation of natural gas business. From 2008 onwards, Mr. Pang was in charge of the Group’s LPG business. He has substantial experiences in corporate management, engineering and financial management.

Mr. ZHU Weiwei, aged 38, is a Director of the Company since September 2002. Mr. ZHU received his Master degree in Finance from Zhong-nan University of Finance & Economic. Mr. ZHU has substantial experiences in financing and project management.

Mr. MA Jinlong, aged 44, is a Director of the Company since September 2002. Mr. MA received his Degree in Economics from Hebei University and EMBA from University of International Business and Economics. He has substantial experiences in financial management. Mr. MA is the President of Beijing Zhongran Xiangke Oil Gas Technology Company Limited.

Mr. FENG Zhuozhi, aged 55, is a non-executive Director of the Company since May 2005. Mr. FENG graduated from Artillery College of the People’s Liberation Army, he was the General Manager of Haixia Economy and Technology Cooperation Centre under Taiwan Affairs Office of the State Council of China, at present he is the Routine Director of China Enterprises Investment Association.

Mr. P K JAIN, aged 56, possess substantial experiences in corporate finance and internal audit. He obtained his MBA (Finance) from University of Hull, UK and is a Chartered Accountant in India. He joined GAIL (India) Limited in 1986. His last position in GAIL was an Executive Director of Internal Audit and was appointed as the Director (Finance) of GAIL in 1 March 2011.

Mr. Jo YAMAGATA, aged 57, was appointed as a non-executive director of the Company in October 2006. He received a master degree in Management from Massachusetts Institute of Technology and is specialized in international management and finance and is currently a Deputy Director General of Private Sector Operations Department of Asian Development Bank. Prior joining Asian Development Bank in 1994, Mr. YAMAGATA has been working in Toshiba Corporation, Tokyo, Japan for 15 years.

Mr. Mulham Basheer Abdullah AL-JARF, aged 41, was appointed as a non-executive director of the Company in April 2010 and was a graduate of International Business & Finance from Marymount University and a registered Barrister at the Bar of England & Wales. He is currently the Deputy Chief Executive Officer of OOC. He has substantial experience in the energy sector. Mr. ALJARF was previously Head of Project & Structured Finance at OOC, Legal Counsel at OOC, Legal Officer at Oman Gas Company S.A.O.C., and Legal Researcher at the Ministry of Oil & Gas. Prior to that he was a Business Planning Officer and then Legal Researcher at GTO (now Omantel), and also worked at INTESLAT in Washington DC.

Mr. MOON Duk Kyu, aged 59, was appointed as a non-executive director of the Company in April 2010. He graduated from Korea University and is currently the Representative Director of SK E&S, a subsidiary of SK Group which is specializing in city gas distribution, power generation and energy-related business and services. Mr. MOON joined SK Group since 1975 and has substantial experiences in international financial management.

Mr. ZHAO Yuhua, aged 43, was appointed as an independent non-executive Director of the Company in November 2002. Mr. ZHAO graduated from Institute of International Economy, Nankai University and holds a master degree in economics. He joined J&A Securities Company in 1993, engaging in corporate financing and advisory business.

Dr. MAO Erwan, aged 48, was appointed as an independent non-executive Director of the Company in January 2003. Dr. MAO graduated from Mathematics and System Sciences, Chinese Academy of Sciences and holds a Doctor Degree. He was the Chief Economist of Da Cheng Fund Management Co. Ltd. He is currently a deputy professor of School of International Business, Beijing Foreign Studies University, a committee member of China Institute of Finance, Financial Engineering, deputy director of Financial and Securities Institute of BFSU and deputy director of Financial Quantity Analysis & Computation Committee.

Mr. Mark D. GELINAS, aged 43, graduated from the College of the Holy Cross with a bachelor degree in economics in 1989 and obtained a Juris Doctor degree from New England School of Law in 1993. He was admitted to the bar of the Commonwealth of Massachusetts in 1994. Mr. Gelinas is currently the chief legal officer and head of legal department of Oman Oil Company S.A.O.C. He is an energy lawyer with considerable experience in coordinating and leading cross-border teams of lawyers on large scale transactions in the energy and energy related sectors. Prior to joining Oman Oil in 2004, Mr. Gelinas worked at Clifford Chance, an international law firm, for over seven years.

Major Competitors:

ENN Energy Holding Ltd.

ENN Energy Holdings Limited (ENN Energy) is a clean energy distributor listed on the Hong Kong Stock Exchange (2688.HK). Its main business portfolio consists of the clean energy distribution including the city pipeline natural gas, LPG (Liquefied Petroleum Gas) and vehicle refueling gas (CNG and LPG), the non-pipeline energy delivery, and other value added services on the basis of clean energy distribution.With respect to the city pipeline natural gas distribution, ENN Energy has operated the gas distribution business in 88 cities in the PRC, covering a total urban population of over 45.7 million in 15 provinces, municipalities and autonomous regions in China such as Beijing, Fujian, Guangdong, Guangxi, Hebei, Henan, Anhui, Hunan, Inner Mongolia, Jiangsu, Jiangxi, Liaoning, Shandong, Yunnan and Zhejiang etc.. as of August, 2010. Apart from the projects in the PRC, ENN Energy has also secured 1 international project. The vehicle gas refueling business expands rapidly, with 176 gas refueling stations having been constructed in 46 cities. ENN Energy upholds the strategic principles of safety, rationality and sustainable development and insists on a code of conduct, namely, realistic, enterprising, modest and honest, and team spirit. ENN Energy will continue to pursue innovation and excellence in its unrelenting efforts to become a leading service provider in the clean energy industry in China.

Sinopec Corp.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group is a state-owned company solely invested by the State, functioning as a state-authorized investment organization in which the state holds the controlling share. Headquartered in Beijing, Sinopec Group has a registered capital of RMB 182 billion. Sinopec Group’s key business activities include: industrial investment and investment management; the exploration, production, storage and transportation (including pipeline transportation), marketing and comprehensive utilization of oil and natural gas; oil refining; the wholesale of gasoline, kerosene and diesel; the production, marketing, storage, transportation of petrochemicals and other chemical products; the design, construction and installation of petroleum and petrochemical engineering projects; the overhaul and maintenance of petroleum and petrochemical equipments; the manufacturing of electrical and mechanical equipments; the research, development, application and consulting services of technology, information and alternative energy products, the import and export of commodities and technologies both for the Group and as a proxy (with the exception of those commodities and technologies that are either banned by the State or to be carried out by the state-designated companies). Sinopec Group ranked the 5th in Fortune Global 500 in 2011.

Towngas.

Towngas China Company Limited (“Towngas China”) (Stock Code: 1083.HK) is a company listed on Main Board of the Stock Exchange of Hong Kong Limited, with The Hong Kong and China Gas Company Limited ("Towngas") (Stock Code: 0003.HK) being its main shareholder. Towngas China is an investment platform within the Towngas Group focusing on piped city-gas projects in the mainland China. Towngas China is a leading supplier of quality piped-gas in China and has been investing in the country's gas industry since 1998. Based on its high-growth business model and competitive advantages, Towngas China has cumulatively invested over HK$5 billion, and founded more than 60 piped city-gas projects in twelve provinces/autonomous region/municipality including Anhui, Guangdong, Guangxi, Heilongjiang, Jiangsu, Jiangxi, Jilin, Liaoning, Shandong, Sichuan, Zhejiang and Chongqing city, serving more than five million households, with sales in excess of 950 million MJ of piped-gas per annum. Towngas China has developed a comprehensive business network, which offers all the necessary facilities: storage, transportation, distribution and pipeline construction. Towngas China has built a reputation as the "The Gas Expert We Trust" in the end-user market. Its business philosophy is to improve the environment by provision of low-carbon and clean piped-gas to households, to strive for excellence and to provide innovative service, while adhering to the highest safety standards. At the same time, the Company has remained committed to one of its most important corporate missions: to enhance people's quality of life. Towngas China was the first in the industry to introduce the concept of a full range of services to its retail, wholesale, industrial and commercial users. Over the years, Towngas China has developed advanced information-management and highly efficient logistical systems, and is dedicated to improving both systems and service to meet the needs of the market and customer demand.

Fortune Oil Plc.

Fortune Oil PLC focuses on investments and operations in oil and gas supply and infrastructure projects in China. Fortune Oil is listed on the London stock exchange. Fortune Oil has a unique portfolio of oil and gas supply infrastructure in China. The Company is now developing coal bed methane reserves which will ultimately integrate with our gas supply business and benefit China's environment.Fortune Oil PLC is a holding company. The Company is engaged in oil and natural gas and resource supply, operations and investments in China. It operates in seven segments: Natural Gas, Single point mooring facility, Aviation Refuelling, Trading, Products Terminal, resources and others. In June 2011, the Group acquired 55 per cent of the issued share capital of Beijing Fortune Power Technology Company Limited. The subsidiaries of the Company are: Maoming King Ming Petroleum Company Limited, Beijing Fortune Huiyuan Gas Company Limited, Xinyang Fortune Gas Company Limited and Sishui Fortune Gas Company Limited. In May 2011, it acquired 51% interest of Liaoning Jianping Fortune Gas Company Limited. In August 2011, it established Liaoning New Energy Company Limited to

operate LNG gas station. In January 2011, it disposed one subsidiary, Beijing Fuhua Dadi Gas Limited. On June 30, 2011, a subsidiary of the Company, Fortune Liulin Gas Company Limited, became a jointly controlled entity.

China Natural Gas Inc.

China Natural Gas, Inc., is one of the leading providers of pipeline natural gas for industrial, commercial and residential use and compressed natural gas (CNG) for vehicular fuel in Xi'an, China and the first China-based natural gas company publicly traded in the US. It currently owns and operates a 120 kilometer long compressed natural gas pipeline in Xi'an, China, a fast growing Chinese city supported by a population of approximately 8.5 million and is the "gateway" to the broad Western regions of China. CHNG has three profitable business segments: retail natural gas at company-owned natural gas fueling stations; end user delivery of natural gas services to residential, commercial and industrial customers; and conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles. The city of Xi'an has approximately 20,000 Taxis, 5,000 buses and 3,000 special purpose vehicles that are powered by compressed natural gas. In August 2006, the Company announced expansion of their retail natural gas business into China's Henan Province, which is China's most populous province with a population of more than100 million. By the end of March 2009, CHNG had operated 35 retail CNG fueling stations.

Competitors Analysis:

Company China Gas

ENN Energy

Sinopec Corp.

Town Gas

Fortune Oil Plc.

China Natural Gas

Urban Population Covered (in millions)

59.16 45.25 20 34.78 37.00 18.5

Projects 148 176 194 138 94 35Provinces Covered

20 16 20 21 10 4

Total Customers (in millions)

7.14 10.13 15 13.2 2.4 0.86

Share Price Movement Of China Gas (Since2005):Share Price Movement 2005-2012:

China Gas Holdings Ltd had net income fall 28.52% from 875.64m to 625.90m despite a 55.33% increase in revenues from 10.21bn to 15.86bn. An increase in the cost of goods sold as a percentage of sales from 79.28% to 81.65% was a component in the falling net income despite rising revenues. Year on year, growth in dividends per share increased 29.41% while earnings per share excluding extraordinary items fell by 36.87%. The positive trend in dividend payments is noteworthy since very few companies in the Oil & Gas Operations industry pay a dividend. Additionally when measured on a five year annualized basis, dividend per share growth is in-line with the industry average relative to its peers, while earnings per share growth is above the industry average. In 2011, China Gas Holdings Ltd increased its cash reserves by 31.23%, or 1.21bn. Cash Flow from Financing totalled 2.57bn or 16.23% of revenues. In addition the company generated 2.08bn in cash from operations while cash used for investing totalled 3.51bn.

Downturn in the Share Prices from December 2010-March2011:

Reason for the downturn:The Detention of two top officials by Shenzhen police over suspected embezzlement at an undisclosed organisation. Managing Director Liu Minghui and Executive President Huang Yong were arrested on charges of embezzlement of assets of an organisation in which they had duties.

Trading of the shares of China Gas Holding Ltd was suspended since 20 th December causing a downturn in the share prices. China Gas Holding Ltd. denied any discrepancies in the financial reports of the company. The company suffered a plunge of 78.5 percent and there was fall in the prices of the shares by 24% from that of the share prices in November.

Upward Trend In The share prices Since December 2011:

In 2011, China Gas Holdings Ltd increased its cash reserves by 31.23%, or 1.21bn. Cash Flow from Financing totalled 2.57bn or 16.23% of revenues. In addition the company generated 2.08bn in cash from operations while cash used for investing totalled 3.51bn.

Reasons for the upward trend:The most important reason that embarked an upward trend in the share prices of China Gas Holdings Ltd. shares is the hostile offer by ENN Energy and Sinopec Crop. together to acquire more than 50% shares of China Gas Holdings Ltd. The company has been expanding its presence in mainland China buy building a strong network of pipelines. It has strong presence in distribution of gas to its residential, commercial as well as industrial customers.

China Gas- Hostile Offer

PRE-CONDITIONAL VOLUNTARY GENERAL OFFER BY CITIGROUP GLOBAL MARKETS ASIA LIMITED ON BEHALF OF ENN ENERGY AND SINOPEC CORP. TO ACQUIRE ALL OF THE OUTSTANDING SHARES IN THE ISSUED SHARE CAPITAL OF CHINA GAS (OTHER THAN THOSE SHARES ALREADY HELD BY ENN ENERGY AND SINOPEC CORP. AND PARTIES ACTING IN CONCERT WITH THEM) AND TO CANCEL ALL THE OUTSTANDING SHARE OPTIONS OF CHINA GAS.

VERY SUBSTANTIAL ACQUISITION OF ENN ENERGY RESUMPTION OF TRADING OF ENN ENERGY

Salient Features:

Further to an initial approach by the Offerors to China Gas on December 7, 2011, the Offerors have decided that they intend to, subject to the satisfaction of the Pre-Conditions, make a voluntary conditional cash offer (i) to acquire all of the outstanding shares in the issued share capital of China Gas (other than those China Gas Shares already held by the Offerors and their Concert Parties) and (ii) to cancel all outstanding Options.

The Offers:The Offers will be made by the Financial Adviser on behalf of the Offerors, on the following basis:

The Share Offer:

Consideration of the Share Offer: For each Offer Share @HK$3.50 in cash.

The Option Offer:

The Offerors will make (or procure to be made on its behalf) appropriate offers to the China Gas Optionholders in accordance with Rule 13 of the Takeovers Code to cancel all Outstanding Options in exchange for cash.

(A) In respect of Options with an exercise price of HK$0.71: For cancellation of each such Option @ HK$2.79 in cash

(B) In respect of Options with an exercise price of HK$0.80: For cancellation of each such Option @ HK$2.70 in cash

(C) In respect of Options with an exercise price of HK$1.50: For cancellation of each such Option @ HK$2.00 in cash

(D) In respect of Options with an exercise price of HK$1.52: For cancellation of each such Option @ HK$1.98 in cash

(E) In respect of Options with an exercise price of HK$2.10: For cancellation of each such Option @ HK$1.40 in cash

(F) In respect of Options with an exercise price of HK$2.32: For cancellation of each such Option @ HK$1.18 in cash

(G) In respect of Options with an exercise price of HK$2.60: For cancellation of each such Option @HK$0.90 in cash

The Option Offer will be conditional upon the Share Offer becoming unconditional. The Option Offer will be extended to all China Gas Optionholders in accordance with the Takeovers Code. Further information on the Option Offer will be set out in a letter to the China Gas Optionholders which will be despatched as far as practicable contemporaneously with the despatch of the Offer Document. The Offers will be financed as to 55% of the Total Consideration by ENN Energy and 45% of the Total Consideration by Sinopec Corp. The Offer Price represents a premium of approximately 25.0% over the closing price of HK$2.80 per China Gas Share as quoted on the Stock Exchange on the Last Trading Date.

Pre-Conditions To The Offer:The making of the Offers by the Offerors is subject to the satisfaction of the following preconditions on or prior to the Long Stop Date (the “Pre-Conditions”):

(1) With respect to both Offerors, the joint submission by the Offerors to, and acceptance by MOFCOM, under the Anti Monopoly Law of the PRC in respect of the Transaction and the clearance or deemed clearance (through the expiration of the relevant statutory time periods for review by MOFCOM) by MOFCOM under the Anti Monopoly Law of the PRC of the Transaction, on terms reasonably acceptable to the Offerors;

(2) With respect to ENN Energy:

(a) The grant of approval of the Transaction (including the signing of the Consortium Agreement) as a “very substantial acquisition” pursuant to the Listing Rules at the EGM of ENN Energy; and (b) The clearance of any necessary PRC national security review in connection with the Transaction if required under applicable laws, on terms reasonably acceptable to ENN Energy;

(3) with respect to Sinopec Corp., the obtaining of approvals or authorizations of, the making of the necessary filings and registrations with, and notifications to, the NDRC, MOFCOM, SASAC and SAFE, in each case, of the PRC in connection with the Transaction, on terms reasonably acceptable to Sinopec Corp.;

(4) the obtaining of all other Approvals necessary in connection with the Transaction that are either to be submitted to the Relevant Authority(ties) by the Offerors jointly or by ENN Energy or Sinopec Corp. separately, which may be required as a result of or in connection with or otherwise arising from any changes in applicable laws and regulations that come into effect after the date of this announcement, on terms reasonably acceptable to the Offerors;

(5) that sufficient access to conduct due diligence on China Gas is given by China Gas to the Offerors for assessing whether Completion would result in any event of default or other event giving the lenders of China Gas a right to accelerate the repayment of any obligations prior to the stated maturity date arising from any financing documentations to which any member of the China Gas Group is a party and no lender of China Gas indicating on or prior to the Long Stop Date that it will exercise such rights to accelerate repayment or claim an event of default.

Conditions To The Offer:

The Offers to be made by the Offerors upon satisfaction of the Pre-Conditions are subject to the following Conditions:

(a) valid acceptances of the Share Offer being received (and not, where permitted, withdrawn) by 4:00 p.m. on the Closing Date (or such later time or date as the Offerors may, subject to the rules of the Takeovers Code, decide) in respect of such number of Offer Shares which would result in the Offerors and their Concert Parties holding more than 50% of the voting rights in China Gas;

(b) the China Gas Shares remaining listed and traded on the Stock Exchange up to the Closing Date (or, if earlier, the Unconditional Date) save for any temporary suspension(s) of trading of the China Gas Shares as a result of the Offers and no indication being received on or before the Closing Date (or, if earlier, the Unconditional Date) from the SFC and/or the Stock Exchange to the effect that the listing of the China Gas Shares on the Stock Exchange is or is likely to be withdrawn;

(c) (i) all Consents as are necessary for the acquisition of the Offer Shares and in connection with, including, without limitation, any change in the direct or indirect shareholder(s) or ultimate controlling shareholder(s) of any member of the China Gas Group that has been granted the concession rights or licences to carry out its operations having been obtained in form and substance satisfactory to the Offerors and remaining in full force and effect without variation from all Relevant Authority(ies) and all conditions (if any) to such Consents having been fulfilled; (ii) each member of the China Gas Group possessing or having obtained all licences and permits from the Relevant Authority(ies) that are necessary to carry on its business; and (iii) all mandatory consents from third parties having been obtained for the acquisition of the China Gas Shares;

(d) no event having occurred which would make the Offers or the acquisition of any of the Offer Shares void, unenforceable, illegal or prohibit implementation of the Offers;

(e) no Relevant Authority(ies) in any jurisdiction having taken or instituted any action, proceeding, suit, investigation or enquiry, or enacted or made or proposed, and there not continuing to be outstanding, any statute, regulation, demand or order that would make the Offers void, unenforceable or illegal or prohibit the implementation of, or which would impose any material conditions or obligations with respect to the Offers (other than such orders or decisions as would not have a material adverse effect on the legal ability of the Offerors to proceed with or consummate the Offers); and

(f) since the date of the last audited consolidated financial statements of China Gas, there having been no change, effect, fact, event or circumstance which has had or would reasonably be expected to have a material adverse effect on, or to cause a material adverse change in, the general affairs, management, financial position, business, prospects, conditions (whether financial, operational, legal or otherwise), earnings, solvency, current or future consolidated financial position, shareholders’ equity or results of operations of China Gas or any member of the China Gas Group, whether or not arising in the ordinary course of business.

The Offerors reserve the right to waive, in whole or in part, all or any of the Conditions to the Offers set out above (except for Conditions (a) and (d) which may not be waived).

Intentions of the Offerors in Relation to The China Gas Group:

It is the intention of the Offerors to continue with the existing principal businesses of the China Gas Group upon completion of the Offers. The Offerors do not intend to introduce any significant changes to the operations of China Gas. Following Completion, other than the corresponding arrangements in relation to the China Gas Board and senior management as contemplated in the Consortium Agreement, the Offerors have no intention to make any other material changes to the continued employment of the employees of the China Gas Group. The Offerors intend to further collaborate with the China Gas Group with a view to develop their respective PRC natural gas distribution market.

Subject to market conditions, the Offerors will explore various opportunities to further develop and expand the business of the China Gas Group, including but not limited to the possibility of undertaking new investments and/or conducting fund raising exercises to increase capital.

The Offerors have entered into the Consortium Agreement in relation to the conduct of the Offers, corporate governance of the China Gas Group after completion of the Offers, post-completion arrangements and other matters in relation to the Offers.

Financing of the Offers:The maximum cash consideration for the Offers is approximately HK$16,699,756,843, assuming all the holders of Options exercise their Options and accept the Share Offer. The Offers will be financed as to 55% of the Total Consideration by ENN Energy by (i) a committed bridge facility available under the Facility Agreement; and (ii) cash from its internal resources of ENN Energy and as to 45% of the Total Consideration by Sinopec Corp. by a credit facility available under the Sinopec Letter of Credit and/or cash from its internal sources and/or other financing resources.

Reasons for the Offer:

Benefits for ENN EnergyENN Energy believes that the commercial reasons for entering into the Transaction are as follows:

Synergies between China Gas’s business and ENN Energy’s business:Both China Gas and ENN Energy are major integrated gas suppliers and operators in the PRC with diverse businesses covering supply and distribution of natural gas and LPG and construction and management of natural gas supply infrastructure on a nationwide basis. The similar sizes, regional spread and distribution network of China Gas and ENN Energy are expected to help improve their respective management efficiencies, reduce their respective costs, and optimize their respective use of resources. The Transaction will enable China Gas and ENN Energy to share their operational and management experiences in order to further enhance their business models and operations. Further, the synergy between the respective management skills and capabilities of China Gas and ENN Energy are expected to lead to enhanced proficiency and strategic planning of their respective businesses.

Enhanced market position and geographical coverage:As at June 30, 2011, ENN Energy has 100 piped gas projects which reaches into 15 provinces, autonomous regions and directly administered cities in the PRC. As at September 30, 2011, China Gas operates 151 city pipe gas projects, 9 long distance natural gas pipeline projects,

112 Compressed Natural Gas (“CNG”) refilling stations for vehicles, 1 natural gas development project and 44 LPG distribution projects in 20 provinces, autonomous regions and directly-administered cities in the PRC. As at September 30, 2011, the natural gas supply projects operated by China Gas had a connectable city population of approximately 62,494,950 (approximately 18,983,808 households), as well as 1,428 industrial and 40,553 commercial acquired and connected customers. The synergy between the existing businesses of ENN Energy and China Gas will further expand their respective penetration in the PRC natural gas distribution market and further enhance their aggregate market coverage and market positions. Further, China Gas has relatively more established presence in the natural gas markets of Inner Mongolia and Shaanxi Provinces. This will allow ENN Energy to capitalize on the experience of operation in those provinces and complement its plans to expand into those markets which are relatively new to ENN Energy.

Benefits for Sinopec Corp.Sinopec Corp. believes that the commercial reasons for entering into the Transaction are as follows:

To Optimize the Integrated Business Chain:Sinopec Corp. is an integrated energy and chemical company with operations in the upstream, midstream and downstream operations. It is also the largest LPG supplier in the PRC and one of the major natural gas suppliers in the PRC. The Transaction is consistent with Sinopec Corp.’s overall business development strategy in the PRC natural gas supply market. Through this Transaction, Sinopec Corp. hopes to rapidly expand its supply of natural gas to end users and in doing so, optimize its integrated business chain. In addition, Sinopec Corp. believes that the Transaction will optimize the synergies between the businesses of Sinopec Corp. and China Gas, which it believes will help to enhance the stability of the overall natural gas supply market in the PRC and allow it to deliver high quality services to its end customers.

Entering into New Profitable Business, Enhancing Shareholder Value:Through the Transaction, Sinopec Corp. will expand its businesses and improve its profitability. Combining Sinopec Corp.’s existing natural gas resources and pipeline networks and leveraging on China Gas’s independent and flexible management and operations platform as well as access to capital markets, Sinopec Corp. hopes to further develop potential opportunities in the fast-growing natural gas market in the PRC, thereby increasing its shareholders’ value.

Developments after the Offer:

Market Response:

After the offer there has being a positive response from the market. The share prices of the company are going up in the market since the offer was made in December 2011. Prior to the offer the share price of China Gas was @ HK$2.80 per share which has been on a constant rise HK$3.72 per share in January 2012 and the same in February 2012. In March 2012 the share prices rose to HK$ 3.88 per share and HK$3.79 per share in April. The share prices reached an all time high of HK$4.05 per share in May 2012 and HK$ 3.82 per share in June 2012. The share prices have been constant since June and with the average share price for July 2012 has been HK 3.81 per share.

There has been a change in the shareholding structure of China Gas since the offer was made. Oman Oil has sold its equity stake to Beijing Enterprise. The shareholding structures are given below.

Shareholders(before the offer) Shares Held (%)

Shareholders(after the offer) Shares Held (%)

SK E&S Co. Ltd. 10.84%2.25%

SK E&S Co. Ltd. 10.84%2.25%SK Gas SK Gas

China Gas Group Limited 9.57% China Gas Group Limited 9.57%Fortune Max Holdings Limited

4.53% Fortune Max Holdings Limited

4.53%

Liu Ming Hui 3.50% Liu Ming Hui 3.50%Beijing Enterprises Group Co. Ltd.

5.83% Beijing Enterprises Group Co. Ltd.

14.94%

Deutsche Bank 7.26% Deutsche Bank 7.26%Oman Oil 5.42%

3.69%Oman Oil -

-Oman Inv Fund Oman Inv FundSinopec 4.79% Sinopec 4.79%GAIL 4.79% GAIL 4.79%ADB 3.42% ADB 3.42%Sub - Total 65.90% Sub - Total 65.90%Public / Others 34.10% Public / Others 34.10%Total 100.00% Total 100.00% Energy companies from Oman to Beijing have been wrangling over one of China’s largest natural gas distributors with an unusual bow to state-private sector teamwork. The competition for control began in December when state-run oil company Sinopec (China Petroleum & Chemical Corp.) and privately-held ENN Energy Service Co. Ltd. joined forces in a hostile takeover bid for Hong Kong-listed China Gas Holdings Ltd.

The offer was HK$3.50 a share, or HK$16.7 billion ($2.14 billion), for all China Gas shares that Sinope, a China Gas minority stakeholder, didn’t already hold. Immediate resistance came from China Gas’ largest shareholder and founder Liu Minghui, who managed to block the takeover at least temporarily. One of South Korea’s largest industrial conglomerates SK Group reacted as well by increasing its stake in China Gas. The ownership struggle got more complicated in May, when a state-owned company under the Beijing municipal government with ties to state-owned China National Petroleum Corp. (CNPC) — Beijing Enterprises Group — also offered to buy a majority stake in China Gas. It got a foot in the door by buying foreign minority shareholder Oman Oil Co. sold its China Gas shares — a 5.4% stake — to Beijing Enterprises Group in May.

With HK$15 billion in market capitalization, a controlling stake in China Gas would not come cheap. But the competitive field proves that a variety of energy companies see significant potential in China Gas, which has exclusive rights to operate pipelines in 151 cities across the country.

The stock’s trading was suspended Dec. 6 in anticipation of a major announcement, and six days later the Sinopec-ENN team pitched its offer. ENN said it would buy a 55% stake, and Sinopec the rest.

Market watchers were generally puzzled to see Sinopec and ENN collaborating directly. It’s a more typical buyout strategy in China for a private concern to take over a company and then transfer ownership to a state-owned partner. A Sinopec executive later explained to institutional investors that the oil giant got involved as a passive investor to learn from ENN’s experience in the natural gas business. Sinopec wants to expand into the urban gas market, said Xu Bo, a senior economist at CNPC’s Economics & Technology Research Institute. Sinopec is a relative latecomer to the gas business compared to CNPC, Xu said, and faces a variety of challenges. CNPC has already moved into the upstream and downstream gas industry by, for example, buying distributor PetroChina Kunlun Gas Co. Ltd.

Response of China Gas:

China Gas responded to the offer in a negatively. A statement in view of the offer was released by China Gas after a few days after the offer was made by ENN Energy and Sinopec Corp. in December. China Gas responded to the offer as:• Wholly unsolicited;• Opportunistic;• The offer fails to reflect the fundamental value of the Company.

Shareholders’ attention is drawn to both the possible and pre-conditional nature of the approach. The unsolicited possible pre-conditional offer may or may not proceed. Shareholders, holders of share options and potential investors of the Company should exercise caution when dealing in the securities of the Company.

The board of directors of the Company approved the establishment of an independent board committee to consider the unsolicited possible pre-conditional offer, which comprises of the board of directors and high officials from the company.