Towngas China : SCRIP DIVIDEND SCHEME IN RELATION TO THE FINAL DIVIDEND FOR THE YEAR ENDED 31 DECEMBER 2018

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional advisor.

If you have sold or transferred all your shares in Towngas China Company Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

No Shareholder receiving a copy of this circular and/or an Election Form in any territory outside Hong Kong may treat the same as an invitation to elect for Shares unless in the relevant territory such invitation could lawfully be made to him/her/it without Towngas China Company Limited having to comply with any registration or other legal requirements, governmental or regulatory procedures or any other similar formalities. It is the responsibility of any Shareholder outside Hong Kong who wishes to receive New Shares under the Scrip Dividend Scheme to comply with the laws of the relevant jurisdictions including procedures or any other similar formalities.

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1083)

SCRIP DIVIDEND SCHEME IN RELATION TO

THE FINAL DIVIDEND

FOR THE YEAR ENDED 31 DECEMBER 2018

5 June 2019

DEFINITIONS

In this circular, the following expressions have the following meanings unless the context requires otherwise:

"AGM"

"Board"

"CCASS"

"Company"

"Director(s)"

"Election Form"

"Eligible Shareholders"

"Final Dividend"

"Hong Kong"

the annual general meeting of the Company held at Meeting Rooms S426-S427 (Harbour Road Entrance), Hong Kong Convention and Exhibition Centre, Wanchai, Hong Kong on Tuesday, 21 May 2019 at 11:00 a.m.

the board of directors of the Company

the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited

Towngas China Company Limited (Stock Code: 1083), a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the main board of the Stock Exchange

the director(s) of the Company

the form of election in relation to the Scrip Dividend Scheme

Shareholders whose names appeared on the register of members of the Company on the Record Date

the final dividend of HK fifteen cents per Share for the year ended 31 December 2018 payable on Thursday, 4 July 2019 to Shareholders whose names appeared on the register of members of the Company on the Record Date

the Hong Kong Special Administrative Region of the People's Republic of China

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DEFINITIONS

"Latest Practicable Date"

"New Share(s)"

"Overseas Shareholders"

"Record Date"

"Scrip Dividend Scheme"

"Share(s)"

"Shareholder(s)"

"Stock Exchange"

"HK$"

Wednesday, 29 May 2019, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

new Share(s) credited as fully paid to be issued under the Scrip Dividend Scheme

Shareholders whose names appeared on the register of members of the Company on the Record Date and whose addresses as shown on such register on that date were in places outside Hong Kong

Wednesday, 29 May 2019, being the date for determining Shareholders who qualify for the Final Dividend

the scrip dividend scheme proposed by the Board and announced in the results announcement of the Company on Tuesday, 19 March 2019 which offers Shareholders a scrip alternative whereby Shareholders may elect to receive the Final Dividend wholly or partly by the allotment of New Shares in lieu of cash

share(s) of nominal value of HK$0.10 each in the share capital of the Company

holder(s) of Shares

The Stock Exchange of Hong Kong Limited

Hong Kong dollars, the lawful currency of Hong Kong

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LETTER FROM THE BOARD

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1083)

Executive Directors:	Registered Office:
Mr. Alfred Chan Wing-kin(Chairman)	P.O. Box 309
Mr. Peter Wong Wai-yee (Chief Executive Officer)	Ugland House
Mr. John Ho Hon-ming(Company Secretary)	Grand Cayman
Mr. Martin Kee Wai-ngai (Chief Operating Officer)	KY1-1104
	Cayman Islands
Independent Non-Executive Directors:
Dr. Moses Cheng Mo-chi	Head Office and Principal Place of
Mr. Brian David Li Man-bun	Business in Hong Kong:
Mr. James Kwan Yuk-choi	23rd Floor
	363 Java Road
	North Point
	Hong Kong
	5 June 2019
To the Shareholders
Dear Sir or Madam,

SCRIP DIVIDEND SCHEME IN RELATION TO

THE FINAL DIVIDEND

FOR THE YEAR ENDED 31 DECEMBER 2018

INTRODUCTION

On 19 March 2019, the Company announced that the Board had declared the payment of the Final Dividend to Shareholders whose names appear on the register of members of the Company on the Record Date. At the AGM, the Final Dividend was approved by the Shareholders. Eligible Shareholders may elect to receive the Final Dividend in cash, or in the form of fully paid New Shares in lieu of cash, or partly in cash and partly in the form of fully paid New Shares under the Scrip Dividend Scheme.

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LETTER FROM THE BOARD

The purpose of this circular is to provide you with the procedures which apply in relation to the Scrip Dividend Scheme and the action which should be taken by the Shareholders in relation thereto.

PARTICULARS OF THE SCRIP DIVIDEND SCHEME

Eligible Shareholders may elect to receive the Final Dividend in one of the following

ways:

1. cash of HK fifteen cents per Share; or
2. an allotment of such number of New Shares having a market value (as calculated below) equal to, save for adjustment for fractions, the amount of Final Dividend which Shareholders would otherwise be entitled to receive in cash; or
3. partly cash and partly New Shares.

BASIS OF ALLOTMENT OF NEW SHARES

For the purpose of calculating the number of New Shares to be allotted pursuant to the Scrip Dividend Scheme, the market value of a New Share, which is calculated as equivalent to the average closing price of one Share as quoted on the Stock Exchange for the five consecutive trading days commencing from Thursday, 23 May 2019 to Wednesday, 29 May 2019 (both days inclusive), is HK$5.712 per Share (the "Average Closing Price"). Accordingly, the number of New Shares which the Eligible Shareholders are entitled to receive in respect of the Shares registered in their names as at the Record Date is calculated as follows:

Number of New Shares	=	Number of Shares held on the Record	×	HK$0.15 (Final Dividend per Share)
to be received	Date and elected for the New Shares	HK$5.712 (Average Closing Price)

The number of New Shares to be issued to the Eligible Shareholders will be rounded down to the nearest whole number. Fractional entitlements to the New Shares in respect of choices (b) and (c) above will be paid in the form of cash dividend to the respective Shareholders concerned. The New Shares will, on issue, rank pari passu in all respects with the Shares in issue on the date of the allotment and issue of the New Shares except that they shall not be entitled to the Final Dividend.

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