FY2018/19 INTERIM RESULTS (2018.04-2018.09) 27th November 2018 CONTENTS: Operational Performance • Natural Gas • LPG • Value-added Services Financial Performance Future Strategy 2 Operational Performance Natural Gas New Investments Acquired 11 city concessions in Heilongjiang Province and Inner Mongolia Autonomous Region, increasing the total number of piped-gas projects to 508 (including 147 county and district level township “replacement of coal with gas” projects) Provinces/Autonomous Regions/Municipalities Cities/Districts Heilongjiang Province Acheng District of Harbin City Jiguan New District of Jixi City Wuchang City Anda City Tailai County Bin County Zhaoyuan County Fangzheng County Jiansanjiang Farming Zone Inner Mongolia Autonomous Region Ganqimaodu Industrial Park of Urad Middle Banner Dengkou County of Bayannaoer 4 Total Gas Sales Volume 12,000 11,099.3 11,000 122.7 10,000 9,000 8,352.2 ) 3 Period Volume Growth: Total Piped Gas 106.7 8,000 1HFY18/19 32.9% 7,000 6,000 1HFY17/18 73.6% 4,811.6 10,976.6 5,000 79.6 1HFY16/17 7.1% 4,000 8,245.5 Totalsales volumem (million 3,000 4,732.0 2,000 1,000 0 1HFY16/17 1HFY17/18 1HFY18/19 Natural Gas Coal Gas & Piped LPG 6 Natural Gas - Volume Growth 10,976.6 11,000 10,500 10,000 9,500 Period Volume Growth: Pipelines & Trade 9,000 8,245.5 8,500 5,017.7 1HFY18/19 39.6% ) 3 8,000 7,500 7,000 1HFY17/18 154.7% 6,500 3,593.8 6,000 1HFY16/17 1.8% 5,500 4,732.0 5,000 4,500 Volume Growth: City and 4,000 1,410.8 Period 3,500 Township Projects 3,000 5,958.9 Totalsales volumem (million 2,500 4,651.7 1HFY18/19 28.1% 2,000 1,500 3,321.2 1,000 1HFY17/18 40.1% 500 0 1HFY16/17 11.1% 1HFY16/17 1HFY17/18 1HFY18/19 City & Township Projects Pipelines & Trade 7 Natural Gas - Customer Breakdown % of City & Volume Growth 11,000 Township Customer 10,500 Residential Gas Volume 10,000 1,369.8 1HFY18/19 1HFY18/19 1HFY17/18 9,500 9,000 Residential 23.0% 21.0% 65.0% ) 8,500 3 Industrial City & 8,000 Industrial 52.1% 38.4% 40.9% 3,104.4 Township 7,500 1,132.0 gas volume 7,000 Commercial 15.9% 24.1% 40.6% 6,500 Commercial CNG/LNG 6,000 2,243.0 9.1% 4.8% 2.7% 944.7 Stations 5,500 CNG/LNG 5,000 540.0 4,500 686.0 761.5 4,000 515.2 3,500 Volume Growth 1,592.0 Pipelines 3,000 Pipelines & Natural gas sales Naturalvolume(million m 2,500 Trade & Trade Customer 1HFY18/19 1HFY17/18 1HFY16/17 2,000 541.7 5,017.7 volume 3,593.8 Trading or 501.4 39.6% 154.7% 1.8% 1,500 pipelines 1,000 1,410.8 500 0 1HFY16/17 1HFY17/18 1HFY18/19 Pipelines & Trade CNG/LNG Commercial Industrial Residential 8 Natural Gas – Effective Connections Total New Residential Connections City Gas Projects: Existing Building Connections / Total Connections 3,000,000 2,534,709 40% 36% 2,500,000 35% 30% 2,000,000 25% 1,500,000 20% 15% 1,000,000 Households 10% 500,000 5% 0 0% Proactively optimising its connection strategy to promote new connections of existing residential buildings, CGH continues to deliver stable new connections in city gas projects, at the same time, continue to boost its robust growth of new connections in township gas projects. In 1HFY18/19, the proportion of existing residential connections over total new connections in city gas projects reached 36%. 9 Natural Gas - Customer Organic Growth 1HFY18/19 Change 1HFY17/18 Customer Change from Portfolio from Portfolio 1HFY18/19 1HFY17/18 1HFY17/18 Total 1HFY17/18 Total Residential 2,534,709 18.3% 2,142,114 27,105,030 18.8% 22,823,770 City projects 1,412,193 -1.7% 1,436,384 24,833,381 12.3% 22,118,040 Township Projects 1,122,516 59.1% 705,730 2,271,649 221.9% 705,730 Industrial 1,110 0.1% 1,109 10,831 27.2% 8,512 Commercial 15,622 16.1% 13,454 184,586 18.8% 155,423 CNG/LNG Stations - - - 580 - 580 10 Natural Gas – Tariff & Dollar Margin City Gas Projects Change from 1HFY18/19 1HFY17/18 Customer Tariffs (ex-tax) (RMB / m3) 1HFY16/17 Residential 2.49 2.45 1.6% Industrial 2.46 2.39 2.9% Commercial 2.58 2.52 2.4% CNG/LNG Stations 2.91 2.82 3.2% Dollar Margins (ex-tax) (RMB / m3) 1HFY18/19 FY17/18 1HFY17/18 Overall Dollar Margin (city gas projects) 0.625 0.623 0.651 Residential 0.47 0.51 0.57 Industrial 0.59 0.60 0.60 Commercial 0.82 0.78 0.78 CNG/LNG Stations 0.88 0.75 0.86 11 Natural Gas - Other Operational Data 1HFY18/19 1HFY17/18 1HFY16/17 Residential Connection Fee City Projects 2,549 2,496 2,529 (RMB per customer) Township Projects 3,038 3,142 - Urban Population Covered (million) 125.6 119.5 101.0 Household Penetration Rate (City Gas Projects) 59.8% 55.7% 51.8% 12 Operational Performance LPG 13 LPG - Vertical Integration of the Value Chain Upstream Midstream Downstream End Users LPG Import LPG Class II Industrial receiving Stations terminals 8 LPG Terminals (Class 1 & 2) LPG Fleet Capacity: 12,600 tonnes Commercial LPG Domestic Bottling Storage Oil Refinery Stations / facilities Retail Points 100 LPG Distribution Projects 3 Over 300,000 m Storage Capacity 1,100 LPG Retail Stores Residential CGH Core Business Areas CGH Facilities / Customers China Gas owns: 8 LPG receiving terminals 300,000 m3 of LPG storage capacity 100 LPG distribution projects and 1,100 retail stores LPG distribution coverage in 19 provinces in China 14 LPG - Vertical Integration of the Value Chain Retail: • A more popular clean energy in townships and villages LPG Sales Volume Breakdown (Tonnes) where natural gas is not available; • Consolidating retail market through better service, safety standard and quality of goods; 1,938,300 1,958,441 • Owning a national call no. “95007”; 1,800,000 1,717,887 524,100 574,177 1,500,000 Retail 526,687 1,200,000 Wholesale: • Demand driven, such as rapid growth of the 900,000 petrochemical synthesis and processing sector where 1,414,200 1,384,264 LPG is used as a raw material; 600,000 1,191,200 • Contractual sales accounts for about 60% of the total Wholesale wholesale volume, so as to effectively avoid LPG price 300,000 fluctuation risk; 0 1HFY16/17 1HFY17/18 1HFY18/19 Wholesale Retail Further market penetration Economies of scale Fully liberalized market LPG price-setter 15 LPG - Vertical Integration of the Value Chain Change from 1HFY18/19 1HFY17/18 1HFY16/17 1HFY15/16 1HFY17/18 Sales Volume (tonnes) 1,958,441 1.0% 1,938,300 1,717,887 1,367,081 wholesale 1,384,264 -2.1% 1,414,200 1,191,200 895,429 retail 574,177 9.6% 524,100 526,687 471,652 Sales Revenue (HK$’000) 9,812,779 45.7% 6,736,886 4,830,057 5,483,218 Gross Profit (HK$’000) 721,770 9.1% 661,501 604,276 684,529 Net: FX gain/loss (178,460) 9,400 (16,141) (93,588) Core Operating Profit (HK$’000) 264,362 -6.3% * 282,247 251,112 306,317 GP Margin (%) 7.4% - 2.4 pts ** 9.8% 12.5% 12.5% Core OP Margin (%) 2.7% - 1.5 pts 4.2% 5.2% 5.6% • The drop of Core Operating Profit was due to the increase of SG&A, which was attributable to the new expansion of LPG coverage from 16 provinces one-year ago to 19 provinces in 1HFY18/19, during the expansion period, the start-up/marketing expenses increased immediately, while the growth of sales volume to follow in coming periods ** The drop of GP margin was due to the 30.0% hike of LPG’s ASP (average selling price) 16 Operational Performance Value-added Services 18 Value-added services, asset-light business Sale and/or delivery of products/services via existing network with 32M+ customers Gas heaters & kitchen appliances under the brand of Gasbo (中燃寶), such as gas stoves, disinfection cabinet, range hood, etc. Comprehensive gas insurance Sale of water purifier Online Sale of air purifier + Gas alarm system offline Bottled water Gas corrugated pipes Maintenance and equipment conversion services and more… 19 Value-added services, asset-light business Huge PRC market, High margin, Strong growth Performance (HK$ millions) Change from Value-added services 1HFY18/19 1HFY17/18 1HFY17/18 Revenue 1,011.4 45.0% 697.4 Blue Gross profit 416.9 18.9% 350.7 Ocean GP margin 41.2% -9.1 pts 50.3% Operating profit 341.5 18.2% 289.0 OP margin 33.8% -7.6 pts 41.4% value-added services Revenue & profit continue to grow at high double-digit in years 20 Financial Performance 21 Income Statement 1H FY17/18 HK$ (millions) 1H FY18/19 % change (restated) Revenue 28,877.2 +38.3% 20,875.4 Gas sales 11,973.6 +41.4% 8,468.3 Connection fees 5,312.6 +35.4% 3,923.2 LPG sales 9,812.8 +45.7% 6,736.9 Value-added services 1,011.4 +45.0% 697.4 Engineering design and construction 766.9 (26.9%) 1,049.6 Gross profit 6,499.9 +18.9% 5,468.9 EBIT 5,847.1 +18.1% 4,952.8 One-off or non-operational items 198.2 88.2 Profit attributable to owners of the Company 4,225.8 +24.5% 3,395.2 EPS - Basic (HK cents) 84.42 +23.5% 68.33 Core profit attributable to owners of the Company * 4,027.6 * +21.8% * 3,307.0 Interim dividend per share (HK cents) 8.0 - 8.0 * The growth of Core profit attributable to owners of the Company would have increased by more than 21.8% if RMB vs.