China Tian Lun Gas Holdings Limited 中 國 天 倫 燃 氣 控 股 有 限 公 司 (Incorporated in the Cayman Islands with limited liability) Stock Code: 01600 Annual Report 2011 01 Contents 1. Company Profile 2 2. Operation & Financial Highlights 4 3. Chairman's Statement 10 4. Management Discussion and Analysis 14 5. Directors and Senior Management 26 6. Directors' Report 29 7. Corporate Governance Report 37 8. Independent Auditor's Report 43 9. Consolidated Balance Sheet 45 10. Balance Sheet 47 11. Consolidated Statement of Comprehensive Income 48 12. Consolidated Statement of Changes in Equity 49 13. Consolidated Statement of Cash Flows 51 14. Notes to the Consolidated Financial Statements 52 15. Five Year Financial Summary 122 02 China Tian Lun Gas Holdings Limited | Annual Report 2011 Company Profile BOARD OF DIRECTORS AUTHORIZED REPRESENTATIVES Executive Directors Mr. Feng Yi Mr. Hung, Man Yuk Dicson Mr. Zhang Yingcen (Chairman) Mr. Xian Zhenyuan Mr. Feng Yi Mr. Sun Heng COMPANY SECRETARY Non-executive Director Mr. Hung, Man Yuk Dicson FCCA, HKICPA Mr. Zhang Daoyuan Independent Non-executive Directors HEAD OFFICE IN THE PRC Mr. Chang Zongxian 4th Floor, Ms. Zhao Jun Tian Lun Group Building, Mr. Zhang Jiaming No.6 Huang He East Road, Mr. Li Liuqing Zheng Dong Xin District, Zhengzhou City, Henan Province, the PRC AUDIT COMMITTEE Mr. Li Liuqing (Chairman) PRINCIPAL PLACE OF BUSINESS Mr. Chang Zongxian Ms. Zhao Jun IN HONG KONG Suites 2001-2005, 20th Floor, REMUNERATION COMMITTEE Jardine House, 1 Connaught Place, Ms. Zhao Jun Central, Hong Kong (appointed as the Chairman on 30 March 2012) Mr. Zhang Yingcen (resigned as the Chairman on 30 March 2012) Mr. Zhang Jiaming PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE Appleby Trust (Cayman) Ltd NOMINATION COMMITTEE Clifton House 75 Fort Street Mr. Zhang Yingcen (Chairman) PO Box 1350 Mr. Chang Zongxian Grand Cayman Ms. Zhao Jun KY1-1108 Cayman Islands 03 Company Profile HONG KONG BRANCH SHARE PRINCIPAL BANKERS REGISTRAR AND TRANSFER China Construction Bank Corporation OFFICE Bank of China Limited The Hongkong and Shanghai Banking Corporation Limited Computershare Hong Kong Investor Services Limited Room 1712-1716, 17th Floor, Hopewell Centre, STOCK CODE 183 Queen's Road East, Wanchai, Hong Kong 01600 AUDITOR INVESTOR RELATIONS PricewaterhouseCoopers Telephone: 86 371 6370 7151 22nd Floor, Fax: 86 371 6397 9930 Prince's Building, E-mail: [email protected] Central, Hong Kong Website: www.tianlungas.com Address: Department of Investor Relations, 4th Floor, Tian Lun Group Building, No.6 Huang He East Road, LEGAL ADVISER Zheng Dong Xin District, Zhengzhou City, Henan Province, AS TO HONG KONG LAW the PRC Zip Code: 450003 Loong & Yeung Suites 2001-2005, 20th Floor, Jardine House, 1 Connaught Place, Central, Hong Kong COMPLIANCE ADVISER CCB International Capital Limited 34th Floor, Two Pacific Place, 88 Queensway, Hong Kong 04 China Tian Lun Gas Holdings Limited | Annual Report 2011 05 23 20 13 3 Business Regions Operation regions Urban gas projects Exclusive vehicle-use Bases of gas sources * * *gas operation regions * Baiyin City Jilin Zhenlai County Da’an City Baicheng City Helong Town in Nong’an County Jiutai City Tongyu County Dunhua City Shuangyang District in Changchun City Panshi City Gansu Henan Guangyuan City Sichuan High-tech District in Puyang City Hebi City (3 regions) Minquan County Shangjie District in in Shangqiu City Zhengzhou City Yucheng County Song County in in Shangqiu City Luoyang City Xuchang City (2 regions) Guangxi Xinye County in Nanyang City Luzhai County in Liuzhou 06 China Tian Lun Gas Holdings Limited | Annual Report 2011 07 Operation 328,078 10,539 3,227 12 172,222 5,808 793 3 2010 2011 2010 2011 2010 2011 2010 2011 GAS salES VOLUME to VEHICLE USERS (0’000 m3) Total gas salES VOLUME (0’000 m3) AGGREgatE RESIDENTIAL USERS NUMBER OF gas FILLING statioNS Residential STRUCTURE OF REVENUE FroM GAS salES strUCTURE users gas salES Residential Vehicle users 18.60% Vehicle users 14.00% users During the year, the volume of gas of the Group sold to 41.90% 20.50% 30.62% 26.66% residential users, commercial and industrial users and 23.40% During the year, the revenue from gas sales of the Group 31.58% vehicle users accounted for 26.66%, 42.72% and 30.62% to residential users, commercial and industrial users and of total gas sales, respectively. The gas sales to vehicle users vehicle users accounted for 18.60%, 39.50% and 41.90% of the Group accounted for approximately 30.62% of total of total revenue from gas sales, respectively. The revenue 54.77% 56.10% gas sales in 2011, increased from approximately 7.35% in from gas sales to vehicle users of the Group accounted for 2009 and approximately 14.00% in 2010, representing a 2011 approximately 41.90% of total revenue from gas sales in 2011 Industrial and Industrial and CAGR of approximately 104.11%. 2010 commercial 2011, increased from approximately 14.11%in 2009 and commercial 2010 users approximately 20.50% in 2010, representing a CAGR of users 39.50% approximately 72.32%. 42.72% 08 China Tian Lun Gas Holdings Limited | Annual Report 2011 09 Finance 2010 2011 RMB’000 RMB’000 Revenue Gross profit RMB’000 RMB’000 Revenue and profit Revenue 258,255 450,931 Profit before income tax 97,6 83 117,633 450,931 172,004 +61.74% +56.46% Income tax expense 21,715 27,28 0 Profit for the year 75,968 90,353 Assets and liabilities Non-current assets 198,400 1,051,497 258,255 121,074 Current assets 484,978 524,158 179,223 78,830 Non-current liabilities 6,350 241,262 Current liabilities 117,783 550,173 127,657 50,034 Cash and cash equivalents 411,926 310,762 65,888 28,703 Equity Share capital 7,077 7,07 7 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Share premium 454,188 454,188 Equity attributable to owners of the Company 556,400 616,130 Non-controlling interests 2,845 168,090 Total equity 559,245 784,220 Profit for the year Profit attributable to owners Earnings per share - basic and diluted 0.12 0.10 RMB’000 of the Company RMB’000 90,353 +81.70% +82.00% 82,730 75,968 75,136 Others 2.57% REVENUE STRUCTURE 2.95% Sale of gas 47,553 44,299 52.39% During the year, the revenue from gas pipeline connections operation, transportation and sales of 42.68% gas operation and other operation of the Group 54.37% accounted for approximately 45.04%, 52.39% and 25,551 23,538 2.57% of total revenue, respectively. The revenue from transportation and sales of gas operation 2011 increased by 114.34%, accounted for 52.39% of 8,290 7,54 0 2010 total revenue in 2011, in comparison with 42.68% Connections in 2010. 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 45.04% 10 China Tian Lun Gas Holdings Limited | Annual Report 2011 Chairman’s Statement As 2011 marks an important year to carry on the tasks during the period of “the Twelfth Five-Year Plan”, China’s economy continues to maintain a good momentum of vibrant development and a sustainable growth. Driven by the macro economy, the change in way of development of the energy industry has been accelerated and the effort in structural adjustment has been strengthened. The wide application of clean energies such as natural gas has been boosted due to policies on resources and environment and the target for energy-saving and emission-reduction. Zhang Yingcen, Chairman 11 Chairman’s Statement ANNUAL RESULTS CORPORATE MANAGEMENT 2011 is the first year after the successful listing of the The Group has initially established a systematic and Company and is also the first year to launch nationwide strategic performance management system, creating business layout and seek strategic upgrade. During this a system of separating goal into small tasks from the year, Tian Lun continued to carry out its work style of development strategy to specific task, from organization “Rapid response and high efficiency”, transforming itself to individual and from three-year plan to monthly plan from the regional company with its foothold in Henan and then implementing these tasks by every staff, so as to to a large corporation of being based in Henan and fully motivate staffs’ enthusiasm and make them to take spreading to the whole China. The Group has gained initiative. The system has inspired our staffs’ potentiality remarkable results in the three aspects of up-stream and boosted morale. gas source base construction project, urban gas project and terminal gas filling station project and has initially The Group continued the extension of the application of realized its nationwide business layout. The Group has its information management platform. The information recorded a stable growth in its original operation regions, management model was adopted in the operation, and has increased its customer bases through addition of administration, finance, capital and investment to enhance new projects and continuous expansion of the Group’s corporate management efficiency. Corporate data analysis operation scale. The number of terminal gas filling stations and information integration for management’s decision has been increased rapidly, so as to continuously facilitate making were carried out to ensure decision-making the Group’s strategic upgrade, which in turn facilitates Tian efficiency and operation quality. Lun to move forward with a grand goal about for its gas business. Meanwhile, the Group continued to strengthen team cooperation and recruitment. The Group provided During the year, with the dedication of the entire continuous training to cultivate the expertise and staff of the Group, the Company recorded substantial integration ability of staff and offered outstanding staff growth in its operating results.