The Directors of Yingde Gases Group (02168.hk), Mr. Trevor Raymond Strutt and Mr. Zhongguo Sun issued Open Letter to All Shareholders

Propose to Make Changes to The Board
and
to Solicit Offers for the Whole of the Issued Share Capital of The Company

The shareholders owned 29.48% issued share capital of Yingde Gases Group Company Limited (02168.hk) ("Yingde Gases" or "the Company") and its directors, Mr. Trevor Raymond Strutt ("Mr. Strutt") and Mr. Zhongguo Sun ("Mr. Sun"), issued open letter to all shareholders propose to make changes to the board and to solicit offers for the whole of the issued share capital of Yingde Gases Group.

On 6th November, 2016 the Company made two announcements. In one it announced that with effect from 5th November, 2016, Mr. Strutt and Mr. Sun had been redesignated from executive directors to non-executive directors. According to the announcement: Mr. Zhao Xiangti ("Mr. Zhao") was appointed as chairman of the board in place of Mr. Sun; Mr. Sun was also removed as chief executive officer and replaced by Mr. He Yuanping ("Mr. He"); Mr. Strutt was also removed as chief operating officer and replaced by Mr. Zhang Yunfeng who was also appointed as an executive director; Mr. Suo Yaotang was appointed as a non-executive director and Dr. Feng Ke was appointed as an independent non-executive director.

Mr. He is a director, executive vice president, chief financial officer and board secretary of Beijing Originwater Technology Co., Ltd ("BOW") which is listed on the Shenzhen Stock Exchange (stock code: 300070)

We believe that the meeting was invalid and the changes were ineffective. We have therefore requisitioned a shareholders' meeting to reverse these appointments and change the board. This is considered less damaging to the Company than litigation.

In addition, according to the other of the Company's announcements the proposed placing of 378,000,000 shares in the Company to Originwater Hong Kong Environmental Protection Co., Limited ("Originwater"), a wholly owned subsidiary of BOW was also approved at the meeting. The placing is conditional, inter alia, on the Listing Committee of the Hong Kong Stock Exchange having granted the listing of, and permission to deal in, the new shares. The proposed placing has not been completed and under the agreement relating to the proposed placing the parties have a period of six months in which to complete, suggesting little urgency for receipt of funds in the proposed placing.

The proposed placing will if it proceeds increase Originwater's interest in the Company to 20.17% of the enlarged share capital. Mr. Zhao controls 12.33% of the existing share capital of the Company. It has been submitted on behalf of Mr. Strutt and Mr. Sun to the Securities and Futures Commission (the "SFC") that Originwater and Mr. Zhao (with others) are acting in concert and therefore on completion of the placing would control 30% or more of voting rights of the Company. Under The Hong Kong Code on Takeovers and Mergers (the "Code") they should be required to make a general offer for all the shares in the Company not owned by Originwater and persons acting in concert with it at the highest price paid during the six months period to the commencement of the offer period. We believe that the principal objective of the placing was for Originwater and Mr. Zhao to obtain or consolidate control of the Company without paying the premium for control that would be generally expected. Your director Mr. He, at a conference held on 26th November, 2016, stated (translated from Chinese), ". We, Originwater, in the early November 2016, obtained control of the largest gas supplier in mainland China - Yingde Gases. This merger and acquisition was executed by me, and the means of doing this, we think, was the cheapest, quickest and easiest hostile takeover."

In the interest of all shareholders we are proposing the following:
- the holding of a general meeting of the Company at which resolutions will be proposed to remove the following directors from the board of the Company:
- Mr. Zhao;
- Mr. He;
- Mr. Zhang Yunfeng;
- Mr. Suo Yaotang;
- Dr. Feng Ke;
and to appoint Mr. Johnny Mah Zhihe as an independent non-executive director.

Mr. Johnny Mah Zhihe, aged 68, worked in Yingde Gases from 2008-2013. Prior to Yingde Gases, Mr. Mah was the General Manager of Shipley Union DFR (Cayman) Co., Ltd in 2001-2006 and the Assistant Vice President of Lien Hwa Industrial Gases in 1970-1999. Mr. Mah also was the supervisor of Taiwan H.P. Gases Association in 1985-1988, Director of H.P. Vessel Industry Association in 1998-2001, and Director of Welding Industry Association in 1998-2001. Mr. Mah completed study in English for Business in Tamkang University of Art and Science, Taiwan in 1973 and in Management and Marketing in University of Hawaii, USA in 1985;

- following the removal and appointment of some or all of the directors named above a board meeting will be immediately convened at which it will be proposed that Mr. Sun will be reinstated as an executive chairman of the board and chief executive officer and Mr. Strutt as an executive director; and

- immediately thereafter it is also proposed formally to solicit offers for the whole of the issued share capital of the Company. Provided the price per share proposed is fair and reasonable, we, Mr. Strutt and Mr. Sun will commit our shares for acceptance of such offer or such higher offer that may subsequently be made. Originwater will be welcome to submit a proposal to make a general offer if it should so wish. Approaches will also be made to other potentially interested parties in the industry sector in which the Company operates. Private equity and buyout funds will also be welcome to submit proposals.

The proposals outlined above, if supported by you, will ensure that all shareholders are given an opportunity to realise their investment at a price which reflects the acquisition of control of the Company.

This open letter is issued by Mr. Strutt and Mr. Sun.

Dated 12th December, 2016

Mr. Zhongguo Sun, Director Mr. Trevor Raymond Strutt, Director

For enquires:

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