Yingde Gases reaffirms the board of directors’ collective decisions to place shares and restructure the management

HONG KONG, CHINA - Media OutReach - 15 December 2016 - Yingde Gases Group Company Limited ("Yingde Gases", the "Group" or the "Company"; SEHK stock code: 02168) was shocked at an open letter (the "Open Letter") on Hong Kong Economic Journal, which was published by Mr. Zhongguo Sun ("Mr. Sun") and Mr. Trevor Raymond Strutt ("Mr. Strutt") (collectively, the "Disgruntled Directors") without the authorization of the Board on December 14, 2016. The Company is uncertain about the purpose or motive of the Disgruntled Directors behind the publishing of the Open Letter, or whether there is any ulterior motive.

Yingde Gases published announcements on 6 November 2016, 8 November 2016 and 2 December 2016, to propose issuing 378,000,000 new shares (the "Proposed Placing") to Originwater Hong Kong Environmental Protection Co., Limited ("Originwater") under a general mandate. In addition, Yingde Gases also published an announcement on 6 November 2016 to reassign Mr. Sun and Mr. Strutt from executive directors to non-executive directors of the Company and remove Mr. Sun and Mr. Strutt from the posts of chief executive officer and chief operating officer of the Company respectively (the "Management Restructuring").

The Proposed Placing and the Management Restructuring were the collective decisions of the majority of the board of directors of the Company, including the independent non-executive directors at the Board meetings on 5 November 2016, in accordance with the articles of association of the Company. The Group is convinced that the Proposed Placing and the Management Restructuring are in the interest of the Company and its shareholders as a whole. The Proposed Placing would be able to improve the financial structure of the Company, lower its financial costs, and introduce Originwater as a strategic investor, which should be helpful in improving the management, long-term business development and corporate governance of the Company. As for the Management Restructuring, it will enable the senior management to cope with the challenges the Company is facing in the current market and economic environment and to encourage the senior management to work more efficiently at a higher performance level to create more value for the shareholders of the Company.

To the best knowledge of the Group, the public shareholders, investors and creditors generally responded positively to the Proposed Placing and the Management Restructuring. Meanwhile, the employees of the Company welcomedthe decisions with good morale.

However, following the announcement of the Proposed Placing and the Management Restructuring, the Disgruntled Directors have been trying to frustrate the Group's move to implement the above-mentioned decisions. After the announcement of Proposed Placing, the Disgruntled Directors engaged Anglo Chinese Corporate Finance, Limited to submit a number of complaint letters to the Securities and Futures Commission (the "SFC") alleging that Originwater is acting in concert with Mr. Zhao Xiangti ("Mr. Zhao", the chairman, an executive director and a substantial shareholder of the Company). Moreover, the Disgruntled Directors requested to convene an extraordinary general meeting to remove all the executive directors of the Company and reinstate themselves as executive directors of the Company on 12 December 2016 and published the Open Letter on 14 December 2016.

The Group believes that, the Disgruntled Directors' frustration of the Proposed Placing has caused severe delay in the completion of the Proposed Placing and, as a result, has added to the difficulty of the Company in repaying the bank loans. Given the urgency of loan repayment, the Company is proactively making financial arrangements by all reasonable means to minimize the adverse impact brought by the delay in the completion of the Proposed Placing.

On the other hand, due to the Disgruntled Directors' unsatisfactory performance when they were the executive directors, the Board, excluding the Disgruntled Directors, strongly believes that to reinstate them as executive directors of the Company is not in the best interest of the Company and its shareholders as a whole. As for the performance of the Disgruntled Directors during their term of office, the Company is conducting an internal financial and business investigation. The Company will disclose the key findings in due course. The Company reserves the right to hold the Disgruntled Directors accountable for any inappropriate actions during their tenure of office with the Company.

Mr. Zhao Xiangti, Chairman of Yingde Gases said, "We intend to introduce Originwater as a strategic investor into our company through the proposed share placement. This can serve to meet the Group's urgent financial needs so as to improve its financial structure and reduce its financial expense. On the other hand, the move can also help the Group to raise the standard of management and can be beneficial to its long-term development. The decision is in the interest of the Group and its shareholders as a whole. As a founder of the Group, I expect the investors and shareholders to share the same view with the board of directors and to act in the interest of the Group, that is, to support the current board of directors and management team in their move to start their work as per normal. This will enable the Company to quickly resume its normal operation and generate greater value for the shareholders."

The Company has applied to Hong Kong Stock Exchange for the resumption of trade in its shares at 9a.m. on15 December 2016.

About Yingde Gases Group Co. Ltd.

The Group has been the largest independent on-site gas supplier PRC since 2009. According to the SAI Report 2015, the Group remained as the largest industrial gas supplier in PRC in terms of total annual revenue as of 31 December 2015. The Company produces supplies and distributes a variety of industrial gas products to on-site and merchant customers in various regions in PRC. The main gas products are Oxygen, Nitrogen and Argon.