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February 2013 Corporate Presentation. China Gas Overview 2 Natural Gas Services Operator Operates in 172 city concessions with 30-year monopolistic operating.

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Presentation on theme: "February 2013 Corporate Presentation. China Gas Overview 2 Natural Gas Services Operator Operates in 172 city concessions with 30-year monopolistic operating."— Presentation transcript:

1 February 2013 Corporate Presentation

2 China Gas Overview 2 Natural Gas Services Operator Operates in 172 city concessions with 30-year monopolistic operating right each Possesses intermediate and arterial gas pipeline networks (excluding pipelines in the premises of our customers) of 35,000 km, serving more than 7.8 million household users and nearly 49,000 industrial and commercial users The only vertically-integrated LPG operator in PRC Owns 8 LPG receiving terminals, 285,000 m 3 of LPG storage capacity, upstream to downstream distribution network in PRC Covering wholesale and retail LPG supply in 12 provinces such as Guangdong, Guangxi, Fujian, Zhejiang and Jiangsu Owns a 49% stake in Panva Gas which controls 450 self-owned retail stores and 120 franchised outlets located in provinces such as Jiangsu, Hubei, and Zhejiang. The Company retains an option to acquire the remaining 51% of Panva LPG


4 4 Natural Gas – Business Model 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 National or provincial pipelines Storage tanks (spherical or cylinder) Residential households* Commercial users* Car refueling station

5 5 Natural gas business operates on a cost-plus pricing model 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 Natural Gas Pricing System Exploration Wellhead price Transportation Transmission tariffs Distribution Distribution cost + Return END-USER TARIFF COMPONENTS NDRC Approval Local Price Bureau Approval


7 Piped Gas Volume Growth (as at 30th Sep 2012) 7 Total sales volume (million m 3 ) PeriodVolume Growth: Total 1HFY1326.8% 1HFY1232.0% PeriodVolume Growth: Natural Gas Only 1HFY1327.6% 1HFY1230.3%

8 Natural Gas Volume Growth (as at 30th Sep 2012) 8 Natural gas sales volume (million m 3 ) Customer Volume Growth in 1HFY13 % of Total Volume 1HFY131HFY12 Residential21.5%10.5%11.0% Industrial32.0%71.8%69.4% Commercial8.3%9.1%10.7% CNG Stations23.8%8.6%8.9%

9 Natural Gas Volume Customer Breakdown (as at 30th Sep 2012) 9 Customer 1HFY12 Portfolio Total Growth 1HFY13 Portfolio Total Change from 1HFY12 OrganicAcquired Residential6,608,827591,54226,1087,805,54418.1% Industrial1,42825791,89532.7% Commercial40,5533,26217246,73515.2% CNG Stations11220-15336.6% Customer Tariffs (ex-tax) (RMB / m 3 )1HFY121HFY13 Change from 1HFY12 Residential2.142.223.74% Industrial2.322.5610.34% Commercial2.642.681.52% CNG Stations2.672.701.12%

10 Natural Gas Other Operational Data (as at 30th Sep 2012) 10 1H FY131H FY121H FY11 Residential Connection Fee (RMB per customer) 2,4592,4372,484 Urban Population Covered (million)65.062.558.9 Household Penetration Rate39.0%34.8%32.7%

11 LPG: Downstream Retail Focus 11 1H FY13*1H FY121H FY11 Sale tonnage (ton)411,011417,287508,482 Gross Margin (%)+5.50%+4.51%-0.14% Operating Margin (%)-0.46%+1.56%-3.67% Largest downstream retailer of LPG in China (via 49% owned Panva Gas, expecting to complete acquiring the remaining 51% of it within this year) Signing dollar margin contracts with wholesale industrial customers to avoid price risk of imported LPG, continued focus on downstream business to improve overall profitability and cost efficiency * Not inclusive of the operation of the 49% owned Panva Gas

12 LPG Business Model

13 13 LPG Coverage Network


15 Financial Summary - Income Statement 15 HK$ ('000)1H FY13% change1H FY12 Turnover 8,566,4838.3%7,912,488 Gas Sales 3,885,37015.4%3,367,891 Connection Fees 1,494,70123.3%1,212,634 LPG Sales 2,904,868-4.9%3,053,972 Other 281,5441.3%277,991 Gross Profit 1,905,33417.3%1,623,985 EBIT 1,459,60464.8%885,874 Profit after tax 935,009110.8%443,622 Profit attributable to owners of the Company 808,200116.3%373,608 Basic EPS (HK cents) 18.31114.9% 8.52 Dividend per share (HK cents)2.2- Gross Margin – Gas Sales 18.8%-19.0% Gross Margin – Connection Fees 68.3%-71.4% Gross Margin – LPG Sales 5.5%-4.5%

16 Financial Summary – Balance Sheet 16 HK$ ('000)1HFY13FY12 Total Assets33,344,22531,874,385 Total Equity11,842,55510,876,462 Shareholder's Equity10,636,7859,819,685 Cash5,345,9805,528,226 Short-term Bank Debt8,132,0158,963,385 Of which LPG trade finance related facilities 4,075,5875,097,600 Long-term Bank Debt6,525,2926,406,777 Net Gearing Ratio*44%* * Net gearing ratio is computed based on total net borrowings (total borrowings less cash and trade finances in relation to LPG business) as a percentage of net assets

17 FY2013 – 2014 GUIDANCE

18 18 Enhance organic growth in existing city gas projects Increase industrial and commercial customer connections as upstream supplies increase Expand “Hub-Satellite City” investment program to add more concessions to our portfolio Complete the acquisition of the remaining 51% of Panva Gas to focus on higher margin retail LPG distribution Actively promoting environmentally friendly and cost effective CNG and LNG fuels for vehicles and vessels FY2013 - 2014 Guidance For the year ended March 31FY2013FY2014 Total piped gas volume (m 3 )6.8 bn8 bn New residential connections1.1 m CNG stations175230 LPG sales (including Panva Gas)1.5m tons1.7m tons


20 20 Subject to applicable laws and regulations, China Gas and Sinopec intend to implement the following strategic initiatives:  the parties will form a JV company which will utilise the China Gas’s LPG assets, brands and sales channels to distribute the LPG produced by Sinopec’s refineries in the PRC, and jointly develop the LPG retail market in the PRC;  the parties will form a JV company which will utilise the China Gas’s city gas pipeline network and Sinopec’s network of petrol stations in the PRC to convert these petrol stations into petrol/CNG & LNG stations, and jointly develop the rapidly growing car and vessel natural gas refilling market in the PRC;  Sinopec will allow the China Gas priority access to its natural gas resources for the China Gas’s city gas projects;  and others Strategic Cooperation Framework Agreement with Sinopec

21 21 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. All the directors of China Gas jointly and severally accept full responsibility for the accuracy of the information contained in these materials and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in these materials have been arrived at after due and careful consideration and there are no other facts not contained in these materials, the omission of which would make any statement in these materials misleading. 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. DISCLAIMER

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