Beijing Enterprises : DISCLOSEABLE TRANSACTIONS IN RELATION TO TOP-UP PLACING AND SUBSCRIPTION OF CHINA GAS SHARES

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement is for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

(Incorporated in Hong Kong with limited liability)

(Stock Code: 392)

DISCLOSEABLE TRANSACTIONS

IN RELATION TO

TOP-UP PLACING AND SUBSCRIPTION OF

CHINA GAS SHARES

References are made to the announcements of China Gas dated 22 April 2021 and 30 April 2021 in relation to, among others, the Placing and the Subscription.

PLACING AGREEMENT

On 22 April 2021, China Gas, the Vendors, the Placing Agents and HSBC entered into the Placing Agreement, pursuant to which the Vendors have agreed to appoint the Placing Agents, and the Placing Agents have agreed to act as agents, for the purpose of procuring (as the placing agents of the Vendors) Placees for, on a best effort basis, a total of 392,000,000 Sale Shares at the Placing Price, among which 72,000,000 and 320,000,000 Sale Shares were placed by the Company and CGGL respectively when completion of the Placing took place on 26 April 2021. The consideration of HK$2,142,000,000 for the 72,000,000 Sale Shares placed by the Company was settled to China Gas in cash at completion of the Placing Agreement with a view to securing the funds for payment of the consideration in respect of the 72,000,000 Subscription Shares subscribed by the Company.

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SUBSCRIPTION AGREEMENT

China Gas and the Vendors also on the same date entered into the Subscription Agreement, pursuant to which the Vendors have agreed to subscribe for, and China Gas has agreed to issue to the Vendors, a total of 392,000,000 new China Gas Shares (equivalent to the number of Sale Shares actually placed by the Vendors pursuant to the Placing Agreement) at the Subscription Price (being the same as the Placing Price) and free from all liens, charges, security interests, encumbrances and adverse claims, in consideration for the payment of the Subscription Monies by the Vendors to China Gas, among which 72,000,000 and 320,000,000 Subscription Shares were allotted to the Company and CGGL respectively by China Gas when completion of the Subscription took place on 30 April 2021. The consideration of HK$2,142,000,000 for the 72,000,000 Subscription Shares subscribed by the Company was settled to China Gas in cash at completion of the Subscription Agreement by utilising the funds for the 72,000,000 Sale Shares placed by the Company as described above.

The Placing Price was determined with reference to the prevailing market price of the China Gas Shares, the recent trading volume of the China Gas Shares and the prospects of China Gas and its subsidiaries and was negotiated on an arm's length basis. The Subscription Price is the same as the Placing Price. For further details of the Placing Agreement and the Subscription Agreement, please refer to the announcements of China Gas dated 22 April 2021 and 30 April 2021.

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EFFECT OF THE PLACING AND THE SUBSCRIPTION

The table set out below illustrates the Company's interest in China Gas on the Placing and the Subscription:

						Immediately after			Immediately after
						the Completion of			the Completion of
	Immediately before		the Placing but before	the Placing and
Shareholders of China Gas	the Placing			the Subscription			the Subscription
	No. of Shares	%		No. of Shares	%		No. of Shares	%
BE Group and its entities (Note)	1,239,163,143			23.77	1,167,163,143			22.39	1,239,163,143		22.11
- the Company	72,752,000			1.40	752,000			0.01		72,752,000			1.30
- Hong Mao Developments Limited
（泓茂發展有限公司）	1,164,911,143			22.35	1,164,911,143			22.35		1,164,911,143			20.78
- Other BE Group entity	1,500,000			0.03	1,500,000			0.03		1,500,000			0.03
Other existing shareholders
including CGGL	3,973,205,829			76.23	3,653,205,829			70.09	3,973,205,829		70.90
Placees	-	-	392,000,000			7.52	392,000,000		6.99
Total	5,212,368,972			100.00	5,212,368,972			100.00	5,604,368,972		100.00

Note: the Company and its wholly-owned subsidiary Hong Mao Developments Limited are ultimately controlled by BE Group, a state-owned enterprise.

REASONS FOR THE PLACING AND THE SUBSCRIPTION FOR THE GROUP

The Directors consider that the Placing will facilitate the raising of funds by China Gas of which the Group (through the Company and its wholly-owned subsidiary Hong Mao Developments Limited) is one of the substantial shareholders (as defined in the Listing Rules) whereas the Subscription will enable the Group to restore its investment in China Gas in terms of the number of China Gas Shares held to the same level immediately prior to the Placing. The Directors (including the independent non-executive Directors) are of the view that the terms of the Placing and the Subscription are fair and reasonable and the Placing and the Subscription are in the interests of the Company and its shareholders as a whole.

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FINANCIAL INFORMATION OF CHINA GAS

Based on the 2020/2021 interim results of China Gas as at 30 September 2020, China Gas had an unaudited consolidated equity attributable to owners of China Gas of approximately HK$44,688 million, unaudited consolidated total assets of approximately HK$124,514 million and unaudited consolidated total liabilities of approximately HK$72,611 million.

The following information is extracted respectively from the financial statements for the two financial years ended 31 March 2020 and 31 March 2019 of China Gas:

For the year ended 31 March	2020	2019
	HK$' million	HK$' million
	(audited)	(audited)
Revenue	59,540	59,386
Profit before taxation	12,725	11,183
Profit after taxation attributable to owners of China Gas	9,188	8,224

FINANCIAL EFFECTS OF THE PLACING AND SUBSCRIPTION ON THE GROUP

Prior to the Placing and the Subscription, the Group (through the Company and its wholly- owned subsidiary Hong Mao Developments Limited) held an aggregate of 1,237,663,143 China Gas Shares, representing approximately 23.74% of the entire issued share capital of China Gas as at the date of signing the Placing Agreement. Upon completion of the Placing and the Subscription on 26 April 2021 and 30 April 2021 respectively and as at the date of this announcement, the Group held approximately 22.08% of the China Gas Shares as enlarged by the Subscription Shares. China Gas will continue to be accounted for as an associate of the Company, and since there was no change in the number of China Gas Shares held by the Company before the Placing and after the Subscription, and the Placing Price was the same as the Subscription Price, hence there is no gain or loss directly arising from the transactions under the Placing Agreement and the Subscription Agreement for the Company.

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IMPLICATIONS UNDER THE LISTING RULES

Pursuant to the Placing Agreement, the Company has agreed to temporarily dispose of part of its shareholding interest in China Gas. Further, pursuant to the Subscription Agreement, China Gas has agreed to allot and issue new China Gas Shares to the Company which is equivalent to the number of Sale Shares actually placed by the Company under the Placing. As one of the applicable Percentage Ratios in respect of each of the Placing and the Subscription exceeds 5% and is below 25%, each of the Placing and the Subscription constitutes a discloseable transaction for the Company under the Listing Rules, which is subject to the reporting and announcement requirements and exempt from the shareholders' approval requirement under the Listing Rules.

The main reason for the delayed disclosure for the Placing and the Subscription by the Company was due to different interpretations of a figure affecting the calculation of one of the Percentage Ratios. After clarifying with the Stock Exchange on such calculation, the Company has published this announcement to provide further details of the transactions under the Placing and the Subscription without further undue delay.

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiry, all counterparties in the Placing Agreement and the Subscription Agreement and their ultimate beneficial owners are independent third parties and are not connected persons of the Company.

GENERAL INFORMATION

The Group is principally engaged in integrated public utility with core businesses covering city gas, water treatment, solid waste treatment, and beer.

China Gas and its subsidiaries are principally engaged in the investment, construction and operation of city and town gas pipeline infrastructure facilities, gas terminals, storage and transportation facilities and gas logistics systems, transmission of natural gas and LPG to residential, industrial and commercial users, construction and operation of compressed natural gas/liquefied natural gas refilling stations; and development and application of technologies relating to natural gas and LPG in the PRC.

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