Zhongyu Energy Holdings Limited (Zhongyu Energy) has released details of previously undisclosed continuing connected transactions with its 35.42 % shareholder China Gas Holdings Limited and its subsidiaries (collectively, China Gas Group) involving the purchase and sale of liquefied natural gas (LNG) from FY2020 to FY2025, as well as limited volumes in early 2026.
Key Transaction Figures • LNG purchases from China Gas Group totalled RMB 549.32 million (approximately HKD 621.78 million) over FY2020-25, with an additional RMB 16.16 million recorded from 1 January 2026 to 20 April 2026. • LNG sales to China Gas Group amounted to RMB 354.04 million (approximately HKD 399.54 million) during FY2020-25, with a further RMB 3.91 million booked in 2026 year-to-date. • Annual purchase volumes remained below the 5 % Listing Rules threshold each year but exceeded the 0.1 % disclosure trigger, necessitating announcement and annual caps that were not set at the time.
Chronology of Agreements Between 2020 and 2025 Zhongyu Energy, through subsidiaries Zhongyu Henan and Nantong Zhongyu, signed seven LNG Purchase Agreements with China Gas subsidiaries Hongda, Shunda and former subsidiary Shunan Storage. Concurrently, the Group executed seven LNG Sales Agreements supplying LNG to Hongda and Shunda. Contract tenors ranged from one to three years, with pricing set by monthly Price Confirmation Letters referencing prevailing market rates and allowing adjustments for regulatory or cost changes.
Compliance Breach and Remediation During the preparation of FY2025 results, management identified that the connected-party status of Hongda, Shunda and Shunan Storage had not been re-verified for subsequent transactions, leading to non-compliance with Chapter 14A of the Hong Kong Listing Rules.
Corrective measures implemented include: 1. Introduction (effective 1 April 2026) of a formal connected-transactions policy mandating regular updates of the connected-person register and pre-transaction counterparty checks. 2. Legal counsel-led training for directors, senior management and trading personnel on 16 March 2026. 3. Strengthened coordination between business and finance teams for real-time monitoring of connected-party dealings, pricing and payment terms. 4. Public disclosure of historical transactions through the current announcement.
Business Rationale Management states that trading LNG with China Gas Group provided diversified, stable and cost-efficient supply, while outbound sales created additional income. Transaction terms were described as “no less favourable” than those available with independent third parties.
Future Outlook The Group indicates it currently has no intention to continue LNG transactions with China Gas Group beyond the date of the announcement.
Corporate Profiles • Zhongyu Energy: Engaged in gas pipeline networks, smart energy, value-added services and CNG/LNG vehicle filling stations across the PRC. • China Gas Group: One of China’s largest integrated energy suppliers, spanning city gas distribution, LPG, LNG, smart energy and related services.
The Board confirms that none of the directors had a material interest in the transactions and all have approved the remedial steps and internal control enhancements.
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