Beijing Gas Blue Sky : CONTINUING CONNECTED TRANSACTIONS

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BEIJING GAS BLUE SKY HOLDINGS LIMITED 北京燃氣藍天控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 6828)

CONTINUING CONNECTED TRANSACTIONS

THE MASTER AGREEMENT

The Board is pleased to announce that on 25 February 2021 (after trading hours), the Company entered into the Master Agreement with BGGCL, pursuant to which BGGCL (or its designated subsidiaries or associates) agreed to sell and the Company (or its designated subsidiaries or associates) agreed to purchase LNG for a term of a period commencing from 25 February 2021 to 31 December 2023 (both days inclusive).

LISTING RULES IMPLICATIONS

As at the date of this announcement, Beijing Gas, the controlling shareholder of the Company holding approximately 41.13% of the issued share capital of the Company, was indirectly wholly-owned by BGGCL. Therefore, BGGCL is a connected person of the Company under the Listing Rules. Accordingly, the transactions contemplated under the Master Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Annual Caps exceed 5% and the maximum annual consideration is more than HK$10,000,000, the transactions contemplated under the Master Agreement constitute non-exempt continuing connected transactions for the Company and are subject to reporting, announcement and Independent Shareholders' approval requirements pursuant to Chapter 14A of the Listing Rules. BGGCL and Beijing Gas and their respective associate(s) are required to abstain from voting on the resolution(s) for approving the Master Agreement (including the Annual Caps) and the transactions contemplated thereunder at the SGM.

The Independent Board Committee (comprising of all the independent non-executive Directors) has been established to advise the Independent Shareholders in respect of the terms of the Master Agreement (including the Annual Caps) and the transactions contemplated thereunder. Messis Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the fairness and reasonableness of the terms of the Master Agreement and the Annual Caps.

The SGM will be convened and held to consider and, if thought fit, to approve the Master Agreement (including the Annual Caps) and the transactions contemplated thereunder.

A circular containing, among other things, (i) further information on the Master Agreement (including the Annual Caps); (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; (iv) a notice of the SGM; and (v) other information as required by the Listing Rules, will be despatched to the Shareholders in accordance with the Listing Rules. The circular is expected to be despatched by the Company to the Shareholders on or before 17 March 2021.

INTRODUCTION

The Board is pleased to announce that on 25 February 2021 (after trading hours), the Company entered into the Master Agreement with BGGCL, pursuant to which BGGCL (or its designated subsidiaries or associates) agreed to sell and the Company (or its designated subsidiaries or associates) agreed to purchase LNG for a term of a period commencing from 25 February 2021 to 31 December 2023 (both days inclusive).

PRINCIPAL TERMS OF THE MASTER AGREEMENT

Date

25 February 2021 (after trading hours)

Parties

• (i) the Company; and

• (ii) BGGCL.

Term

Pursuant to the Master Agreement and subject to the approval by the Independent Shareholders, the Company entered into the Master Agreement with BGGCL, pursuant to which BGGCL (or its designated subsidiaries or associates) agreed to sell and the Company (or its designated subsidiaries or associates) agreed to purchase LNG for a term of a period commencing from 25 February 2021 to 31 December 2023 (both days inclusive).

Condition Precedent

The Master Agreement is conditional upon the fulfilment of the following conditions:

(a) the Company has obtained all necessary internal approvals required for the Master Agreement (including the Annual Caps) and the transactions contemplated thereunder; and

(b) the Company has obtained the approval on the Master Agreement (including the Annual Caps)

and the transactions contemplated thereunder from the Independent Shareholders at the SGM in accordance with the bye-laws of the Company and the Listing Rules.

Basis of Pricing

The sale and purchase price of LNG under the Master Agreement is determined by arm's length negotiations based on normal commercial terms which are no less favourable to the Company than that are available from Independent Third Parties and the purchase price of LNG shall be determined with reference to the market price quoted from the respective local LNG terminal.

The sale and purchase price of LNG shall be agreed by both BGGCL (or its designated subsidiaries or associates) and the Company (or its designated subsidiaries or associates) by written confirmations for each order.

The supply of LNG by BGGCL (or its designated subsidiaries or associates) will be subject to prepayment for LNG made by the Company (or its designated subsidiaries or associates) pursuant to the Master Agreement. The actual settlement amount shall be based on the actual sale and purchase amount of LNG between the parties to the Master Agreement.

Annual Caps

The Annual Caps for the Master Agreement for each of the three years ending 31 December 2021, 2022 and 2023 are set out as follows:

The Annual Caps for a term of a period commencing from 25 February 2021 to 31 December 2023 are determined based on the followings:

• (a) the estimated usage of LNG by the Company; and

• (b) the current market price of LNG of approximately RMB3,500 per ton.

The actual settlement amount shall be based on the actual sale and purchase amount of LNG between the parties to the Master Agreement.

Should the actual annual purchase amount exceed the above proposed Annual Caps, the Company will revise the Annual Caps in compliance with the relevant requirements under Chapter 14A of the Listing Rules.

REASONS FOR AND THE BENEFITS OF ENTERING INTO THE MASTER AGREEMENT

The Company is an investment holding company. The Group is principally engaged in (i) development and operation of city gas projects; (ii) direct supply of LNG to industrial end users; (iii) trading and distribution of compressed natural gas ("CNG") and LNG; and (iv) operating CNG and LNG refueling stations for vehicles.

BGGCL is a company established in the PRC with limited liability whose principal activities include natural gas production and distribution services. BGGCL is wholly-owned by Beijing Enterprises Holdings Limited, which in turn is ultimately wholly-owned by the State-owned Assets Supervision and Administration Commission of the People's Government of Beijing Municipality. Beijing Enterprises Holdings Limited is a company incorporated in Hong Kong with limited liability and listed on the Main Board of the Stock Exchange (Stock Code: 392.HK). Beijing Enterprises Holdings Limited, together with its subsidiaries, are principally engaged in the distribution and sale of piped natural gas in the PRC.

The Master Agreement between BGGCL and the Company was entered into by the Company in the ordinary and usual course of business of the Group. The purchase of LNG from BGGCL could provide the Group with a stable and alternative gas source of LNG.

In light of the above, and given the LNG purchase price will be determined with reference to the market price quoted from the respective local LNG terminal, the Directors (excluding the independent non-executive Directors whose opinion will be subject to the advice of the Independent Financial Adviser) consider that the Annual Caps have been determined on an arm's length basis and the Master Agreement was entered into on normal commercial terms in the ordinary and usual course of business of the Company after arm's length negotiation, and the terms of the Master Agreement are fair and reasonable, and in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Beijing Gas, the controlling shareholder of the Company holding approximately 41.13% of the issued share capital of the Company, was indirectly wholly-owned by BGGCL. Therefore, BGGCL is a connected person of the Company under the Listing Rules. Accordingly, the transactions contemplated under the Master Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios (as defined under the Listing Rules) in respect of the Annual Caps exceed 5% and the maximum annual consideration is more than HK$10,000,000, the transactions contemplated under the Master Agreement constitute non-exempt continuing connected transactions for the Company and are subject to reporting, announcement and Independent Shareholders' approval requirements pursuant to Chapter 14A of the Listing Rules. BGGCL and Beijing Gas and their respective associate(s) are required to abstain from voting on the resolution(s) for approving the Master Agreement (including the Annual Caps) and the transactions contemplated thereunder at the SGM.

GENERAL

The Independent Board Committee (comprising of all the independent non-executive Directors) has been established to advise the Independent Shareholders in respect of the terms of the Master Agreement (including the Annual Caps) and the transactions contemplated thereunder. MessisCapital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the fairness and reasonableness of the terms of the Master Agreement and the Annual Caps.

The SGM will be convened and held to consider and, if thought fit, to approve the Master Agreement (including the Annual Caps) and the transactions contemplated thereunder.

A circular containing, among other things, (i) further information on the Master Agreement (including the Annual Caps); (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; (iv) a notice of the SGM; and (v) other information as required by the Listing Rules, will be despatched to the Shareholders in accordance with the Listing Rules. The circular is expected to be despatched by the Company to the Shareholders on or before 17 March 2021.

DEFINITIONS

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

* The English translation of Chinese names or words in this announcement, where indicated, are included for information purpose only, and should not be regarded as the official English translation of such Chinese names or words.

If there is any inconsistency in this announcement between the Chinese and English versions and the English version shall prevail.

By order of the Board

Beijing Gas Blue Sky Holdings Limited

Zhi Xiaoye

Chairman

Hong Kong, 25 February 2021

As at the date of this announcement, the executive directors of the Company are Mr. Li Weiqi, Mr. Jin Qiang, Ms. Yang Fuyan and Mr. Ye Hongjun; the non-executive directors of the Company are Mr. Zhi Xiaoye and Mr. Cheng Ming Kit (duties suspended); and the independent non-executive directors of the Company are Mr. Lim Siang Kai, Mr. Wee Piew, Mr. Ma Arthur On-hing, Mr. Cui Yulei and Ms. Hsu Wai Man Helen.