This announcement is made by Zhonghua Gas Holdings Limited (the 'Company', together with its subsidiaries, collectively the 'Group') pursuant to Rule 17.10 of the Rules Governing the Listing of Securities on GEM of the Stock Exchange of Hong Kong Limited and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance.

The board (the 'Board') of directors (the 'Directors' and each a 'Director') of the Company wishes to inform the shareholders and potential investors of the Company that, based on the information currently available to the Board and the preliminary review of the relevant unaudited consolidated financial results of the Group for the year ended 31 December 2020 (the 'Current Year'), the Group is expected to record (i) a significant decrease in revenue of around 33.1% from approximately RMB344.77 million for the previous year ended 31 December 2019 (the 'Previous Year') to approximately RMB230.72 million for the Current Year; (ii) a decrease in gross profit ratio of the Group of approximately 35% as compared to the Previous Year and (iii) a net loss after tax of the Group of approximately RMB110 million to RMB140 million for the Current Year as compared to the net profit after tax of the Group of approximately RMB53.74 million for the Previous Year.

The Board considers that the expected decrease in the revenue and the net loss of the Group for the Current Year were mainly attributable to: (1) a significant drop of sales of the Group and other severe impact to the Group's business operations and overall performance of the Group which were resulted from the slowdown in economic growth and sustained poor market conditions in the PRC and worldwide brought by outbreak of the novel coronavirus pandemic ('COVID-19'). Along with challenging global economic prospect and adverse global cash and liquidity position, the collection of account receivable of the Group was affected, and a provision for expected credit losses on the trade receivables is expected to be made in an amount of not less than RMB120 million and (2) the adjustment of fair value of the convertible bonds in the aggregate principal amount of HK$97.8 million issued by the Company on 16 November 2020 so that fair value loss of approximately HK$16.7 million (equivalent to RMB14 million) would be expected to be recorded.

The Board has been closely monitoring the market conditions and the impact of COVID-19, and will continue to assess the impact of COVID-19 on the financial position and operations of the Group in the coming year. The Group will also timely implement measures and adjust its business strategies to mitigate any possible business risks and minimize losses.

As the Company is still in the process of finalising its audited consolidated financial results for the Current Year, the information contained in this announcement is only based on a preliminary assessment by the Board with reference to the unaudited consolidated financial results of the Group for the Current Year and the information currently available to the Board as at the date hereof. Shareholders and potential investors of the Company are advised to read carefully the audited annual results announcement of the Company for the Current Year which is expected to be published by the Company within the timeframe as stipulated under the GEM Listing Rules.

Contact:

Tel: (852) 3547 2200

Fax: (852) 3547 2210

Email: info@8246hk.com

Web: www.8246hk.com

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