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Corporate Presentation December 2009
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Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

Mar 30, 2015

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Page 1: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

Corporate Presentation

December 2009

Page 2: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

2

Table of contents

23FY2010/11 guidance4

PageSection

18Financial performance FY07-093

Operational performance FY07-09

About China Gas

12

4

2

1

25Demand growth outlook5

27Natural gas pricing outlook6

Page 3: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

About China Gas

Page 4: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

4

Overview

Principal Businesses

1. Natural gas services operator: Principally engaged in the investment, operation and management of city gas pipeline infrastructure, distribution of natural gas to residential and industrial users, construction and operation of natural gas refilling stations; started this business in 2002 when China decided to build the West-East Pipeline

– Operates in 113 city concessions with 30-year monopolistic operating right each

– Has a pipeline network of more than 27,000 km serving around 4.1 million household users and nearly 30,000 industrial and commercial users

2. LPG Supplier: The only vertically-integrated LPG operator in PRC; entered into the LPG industry in September 2008

– Owns 11 LPG receiving terminals, 275,000 m3 of LPG storage capacity, upstream to downstream distribution network in PRC

Have strategic cooperation with PetroChina in both the natural gas and LPG businesses in China

Page 5: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

5

Natural gasBusiness model

Storage tanks(spherical or cylinder)

Natural gas fields

Assets owned by the Group:

Main pipelines

Branch pipelines

Pressure regulating boxes

Switches

Processing stations

* Customers’ pipelines which are not owned by the Group are within the customers’ premises and are not highlighted in this diagram.

City gate

Industrial users*

Residentialhouseholds*

Commercial users*Car refueling station

National or provincialpipelines

Page 6: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

6

Natural gasRevenue model and pricing

2 main sources of revenue

– Gas connection: one-off payment mainly from residential users, less so from industrial and commercial users

– Sale of piped gas: recurring income at tariffs approved by the local governments

Exploration

Wellhead priceTransportation

Transmission tariffsDistribution

Distribution cost & margin

FINAL TARIFF COMPONENTS

NDRC approval Local price bureau approval

Natural gas business operates on a cost-plus pricing model

Page 7: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

7

Natural gasProject development process

Bid & award Construction & development12-18 months

Operation30 years

About 15 projects under review

Investment criteria include:1. Project IRR > 15% 2. Industrial demand3. Natural gas accessibility

Revenues: Gas connection fees

Projects under development2007: 20 projects2008: 18 projects2009: 47 projects

Revenues: Sales of piped gas

Projects in operation2007: 37 sites2008: 50 sites2009: 66 sites

China Gas has a strong track record of developing city gas projects on time and on budget

Page 8: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

8

Natural gasCurrent project locations

Beijing

Shanghai

Heilongjiang

Jilin

Liaoning

Inner Mongolia

Xinjiang

Tibet

Qinghai

Gansu

Ningxia

Shaanxi

Shanxi

Henan

ShandongHebei

Jiangsu

Anhui

Zhejiang

Fujian

JiangxiHunan

Guangdong TaiwanGuangxi

Hainan

Yunnan

Guizhou

Sichuan

Chongqing

Tianjin

Shaanxi Baoji, Qishan Xian, Yulin

Hebei Cangzhou, Cangzhou Economic Development Zone, Nanpi, Qinghe, Leting, Xinle, Gaocheng, Pingshan, Feng Nan, Neiqiu, Wangdu, Nanbao, Bohai New Area, Hebei Pipeline

Hubei Yichang, Xiaogan, Hanchuan, Yingcheng, Yunmeng, Suizhou, Tianmen, Guangshui, Dangyang, Xiaogan Pipeline, Dangyang Pipeline, Huanggang-Daye pipeline

Hunan Yiyang, Yuanjiang

Guangdong Maoming, Conghua, Meizhou, Yunfu, Shanwei

Guangxi Yuling, Qinzhou, Liuzhou, Fongchenggang, Laibin, Baise, Nanning Dongmeng Development Zone

Chongqing Dianjiang E&P, Yubei District, Dingwang purification, Chongqing Pipeline

Inner Mongolia Hohhot, Wushenqi, Wushenqi Pipeline, Changmeng Pipeline, Baotou, 5 counties

Ningxia Zhongwei

Fujian 28 city gas concessions

Jiangsu Pizhou, Yangzhong, Nanjing (Jiang Bei), Xuzhou (Jiawang), Xuzhou (Xinyi), Yangzhou

Anhui Wuhu, Huainan, Shouxian, Suzhou, Wuhuxian, Nanling, Huoshan, Fengtai , Wuwei

Zhejiang Hangzhou (Xiaoshan), Shaoxing, Taizhou, Jinhua

Liaoning Dalian, Fushun, Jinzhou, Sujiatun(Shenyang), Jinzhou D. Zone, Liaoyang, Gaizhou, zhuanghe, linghai, Wafangdian, Pulandian

Shandong Dezhou, Qingdao

Tianjin Tianjin Pipeline

Heilongjiang Harbin, Jiamusi, Shuangcheng

Hubei

Page 9: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

9

Liquefied petroleum gas

China Gas is the largest and only vertically integrated LPG supplier in the PRC covering retail and wholesale

Our LPG business covers:

– Upstream: Direct supply from PetroChina’s 28 refineries (total capacity 6m tons); also import from the Middle East;

– Midstream: 11 receiving terminals, 275,000 m3 LPG storage facilities, fleets of vessels and trucks, and distribution logistics in Guangdong, Guangxi, Fujian, Zhejiang and Jiangsu;

– Downstream: Direct retail of bottled LPG to households.

Our vertically integrated LPG business provides a sustainable gross margin of 17+%

Page 10: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

10

Strategic partnerships

China Gas has joint venture with each of GAIL, Oman Oil and SK E&S to leverage on their technical knowhow and experience in their respective expertise

Each of GAIL, Oman Oil, SK E&S and ADB has senior person on the board of China Gas, providing valuable insights and advice from the international and diversified perspectives

Strategic shareholders have partnered and helped China Gas’ growth through the years

CHINA GAS

Management

SINOPEC

Strait Finance

GAIL

Oman Oil

ADB

Oman Fund Public

SK E&S

8.64% 6.30% 10.20% 6.30% 7.13% 4.50% 4.85% 4.98% 47.10%

Page 11: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

Operational performance

FY07-09

Page 12: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

12

Gas volume growth

357.71,043.5

2,130.3

74.5

105.3

195.6

0

500

1,000

1,500

2,000

2,500

FY07 FY08 FY09

Mill

ion

M3

Natural gas Coal gas & piped LPG

2,325.9

1,148.8

432.2

Page 13: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

13

Natural gasCustomer breakdown

62.0 150.7 276.7

669.5

1,463.3117.8

221.9

105.5

168.4

357.7

1,043.5

2,130.3

239.7 33.222.7

0

500

1,000

1,500

2,000

2,500

FY07 FY08 FY09

Residential Industrial Commercial CNG Stations

mill

ion

m3

Page 14: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

14

Natural gasCustomer growth

No. of end users

Portfolio total New connections

FY2007 FY2008 FY2009 FY2008 FY2009

Residential 1,349,782 2,253,044 3,745,370 280,230 418,695

Industrial 111 185 420 56 186

Commercial 10,451 19,325 28,511 1,852 2,616

CNG Stations 21 45 60 24 15

Page 15: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

15

Natural gasAverage tariffs (RMB/m3) (ex-tax)

Type of end user FY2007 FY2008 FY2009

Residential 1.75 1.75 1.85

Industrial 1.66 1.84 1.97

Commercial 2.31 1.85 2.06

CNG stations 2.23 1.95 2.08

Page 16: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

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Other operational data

FY2007 Growth % FY2008 Growth % FY2009

Total Daily NG Consumption (m3) 1,618,160 142.9% 3,931,089 74.4% 6,855,126

Total Pipelines (km) 9,843 64.8% 16,217 59.5% 25,866

Urban Population Covered 32,008,000 33.7% 42,801,000 18.1% 50,550,000

Penetration Rate 16.5% 20.6% 24.7%

Average Connection Fees 2,092 9.7% 2,295 6.2% 2,437

Page 17: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

Financial performance

FY07-09

Page 18: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

18

Financial summaryIncome statement

FY2007 FY2008

FY2009

HK$ (‘000) (restated) (restated) Natural Gas LPG Total

Turnover 1,236,469 2,552,075 4,051,650 2,272,173 6,323,823

Gas Sales 750,101 1,691,159 2,678,377 2,272,173 4,950,550

Connection Fees 387,243 615,282 1,127,403 1,127,403

Other Sales 99,125 245,634 245,870 245,870

Gross Profit 419,764 746,119 1,300,204 129,145 1,429,349

EBITDA 406,474 817,325 1,215,699

EBIT 307,045 620,006 869,100

Profit after Tax 236,249 187,571* 133,959**

Profit Att’ble to shareholders 200,789 141,059* 103,679**

Basic EPS (HK Cents) 6.70 4.39* 3.11*** after a HK$167m non-cash impairment due to convertible bonds issued in June 2005

** after a HK$366m non-cash impairment due to interest rate swap contracts

Page 19: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

19

Financial summaryBalance sheet & debt position

HK$ (‘000) FY2007 FY2008 FY2009

Total assets 7,308,847 11,306,127 18,086,766

including Construction in progress 922,124 1,399,851 1,950,637

Total equity 2,692,805 3,686,006 4,017,271

Cash 1,512,347 1,674,641 2,896,457

Short term bank debt 686,781 157,061 3,103,855*

Long term bank debt 2,242,452 5,624,454 7,194,067

* Of which HK$2,669m comes from the LPG subsidiary, about 84% of it was 30-90 day Letter of Credit financing for its LPG import business

Page 20: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

20

Connec-tion Fees

31.3%

Sales of Piped Gas

60.7%

Sales of Others8.0%

Sales of LPG0.0%

Connec-tion Fees

24.1%

Sales of Piped Gas

66.3%

Sales of Others9.6%

Sales of LPG0.0%

Connec-tion Fees

17.8%

Sales of Piped Gas

42.4%

Sales of Others3.9%

Sales of LPG

35.9%

Income statementTurnover breakdown

FY2007 FY2008 FY2009

Page 21: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

21

Balance sheetDebt maturity profile

Short-term debt of the Group primarily consists of trade financing from banks for the LPG trading business

Bank borrowings consist primarily of bank loans

Management is committed to prudent capital management, and currently most of Group’s debt is long term

Debt Maturity Profile

Page 22: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

FY2010/11 guidance

Page 23: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

23

FY2010~2011 guidance

Management will focus on organic growth of existing city gas and pipeline projects.New investments will be on opportunistic basis.

FY2010 FY2011

Gas volume (m3) 3.3 – 3.5 bn 4.5 – 5.0 bn

New residential connections 500,000 – 520,000 600,000 – 650,000

CNG stations to reach 90 – 100 120 – 130

LPG sales to reach 1.3m tons 2.0 – 2.2 m tons

Page 24: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

Demand growth outlook

Page 25: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

25

Demand growth outlook

Major volume and revenue growth drivers FY10-12:

– Increase in penetration rate: From 25% to 60% by 2014 – enhanced connection fee income

– More industrial connections: Previously constrained by limited supply of gas; waiting lists in cities will gradually be shortened

– CNG stations rollout: To build at least 120 new CNG stations in 30 cities by 2012

Growth made possible by:

– Commissioning of new gas fields and national pipelines

– Import of piped gas from Central Asia

– Completion of more LNG terminals

Page 26: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

Natural gas pricing outlook

Page 27: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

27

Natural gas pricing outlook

Wellhead and retail prices are bound to hike because of new gas sources and imports

Expect an average of 8~10% increase per annum in the next 5 years

Natural gas pricing reform is expected to be implemented end of 2009 or early 2010

Pricing reform helps:

– Transparency and clarity of price adjustment mechanism

– Maintain price competitiveness of natural gas against alternative fuels

Cost pass-through mechanism will continue to work to pass on price adjustments to users

Page 28: Corporate Presentation December 2009. 2 Table of contents 23FY2010/11 guidance4 PageSection 18Financial performance FY07-093 Operational performance FY07-09.

28

Disclaimer

Statements in this presentation and handout that are not strictly historical are “forward-looking” statements. Forward-looking statements involve risks and uncertainties, including, but not limited to, continued acceptance of the Company’s product and services in the marketplace, competitive factors, new products and technology changes, the Company’s dependence upon third party suppliers and other risks detailed from time to time in the presentation, handout and other related documents. China Gas is not responsible for the accuracy and completeness of the contents of such presentations and/or other documents. The materials and information in the presentations and other documents are for informational purposes only, and are not an offer or solicitation for the purchase or sale of any securities or financial instruments or to provide any investment service or investment advice.