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This presentation and subsequent discussion may contain certain forward-looking statements. These forward-looking statements reflect the company s view on some future events and involve known and unknown risks and uncertainties and other factors which may cause actual performance and development differ materially. Past performance cannot be relied on as a guide for future performance. 2
o o o o o Double digit organic growth >10 new City Gas projects a year Urbanization drives housing demands Air Quality issue favors gas consumption Upstream Supply remains bottleneck, but improving Mainland China o o o Natural gas reformed happened, was smoothly dealt with Operating costs on the rise, countered by economies of scale C&I gas sales dominates at 76%, and increasing 3
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Heilongjiang Jilin Liaoning Inner Mongolia Hebei Shandong Anhui Jiangsu Sichuan Chongqing Zhejiang Hunan Jiangxi Fujiang Guizhou Guangxi Guangdong Hong Kong projects covering provincial regions Piped city-gas City-gas Midstream 14 new city-gas (2013) 5 new city-gas (2014) 1 new Filling Station (2014) As of Feb 28, 2014 5
City-gas 19 projects 12. Feicheng, Shandong 10. 9 Cangxian, Hebei 17 18. Xingyi, Guizhou 2 3. Zhengpugang, Anhui 11. Mengcun, Hebei 18 19. Lishui Songyang, Zhejiang 3 4. Mianzhu, Sichuan 11 12. Dafeng, Jiangsu 19 20. Baotou Guyang, Inner Mongolia 4 5. Boxing, Shandong 12 13. Jiangping, Liaoning 56. Wuhu, Anhu 13 14. Zhongwei, Guangxi 67. Fengxi, Guangdong 14 15. Shijiazhuang, Hebei 78. Bozhou, Anhui 15 16. Leshan, Sichuan 89. Yanshan, Hebei 16 17. Siping, Jilin 10 Gas consumption in 5 years: 2.1Bn m³ /year Investment: Rmb2.9Bn Inner Mongolia 19 Hebei Heilongjiang 20 16 Liaoning 12 9 8 10 4 14 1 Shandong Jilin Filling Station 1 project 21. 20 Qiqihar, Heilongjiang Gas consumption in 5 years: 7Mn m³ Investment: Rmb22Mn 3 Jiangsu Henan 11 Shaanxi 7 23 24 1 5 Sichuan Hubei Anhui 15 Chongqing Zhejiang Hunan Jiangxi 18 Guizhou Fujian 17 Guangxi 6 12 Guangdong Hainan 6
100 90 80 70 60 50 40 30 20 10 0 2006 2007 2008 2009 2010 2011 2012 2013 1Q14 25 37 40 47 61 66 74 87 93 Injection from HKCG New Existing 10 2 25 25 3 7 37 40 6 8 47 5 8 61 66 2006 2007 2008 2009 2010 2011 2012 2013 1Q14 14 73 6 87 7
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o Strong profit growth of 32% to HK$1,106Mn o Exchange gain accounted for 13.6% o Gas sales volume grew by 15% (excluding 13% owned Chengdu JV) o Total 93 JVs (17 provincial regions) 14 projects added in 2013 6 projects added in 2014 9
(HK$Mn) 2012 2013 Change Turnover Gas Sales Connection Fees 3,972 1,211 5,265 1,451 +33% +20% 5,183 6,716 +30% Profit attributable to shareholders 841 1,106 +32% Basic EPS (HK cents per share) 34.17 42.46 +24% Full Year Dividend (HK cents per share) 6 8 +33% 10
(HK$Mn) 2012 2013 Change Total Assets 21,255 25,628 +21% Total Liabilities 9,968 12,150 +22% Total Equity 11,287 13,478 +19% Gearing Ratio * 18.6% 20.9% Note: * Definition of Gearing Ratio: Net Debt excluding HKCG loans ( ND ) to equity attributable to shareholders plus ND 11
(HK$Mn) 2012 2013 Change Shared Turnover 10,103 12,046 +19% Operating profit 1,025 1,213 +18% Profit margin ratio 10.1% 10.1% Margin Maintained Exchange difference 45 160 Administration expenses (116) (140) Financial cost (113) (127) Profit attributable to shareholders 841 1,106 +32% *All JVs on attributable basis
Gas Sales Volume (Bn m³) (Bn m³) 2012 2013 Change Industrial 3.10 3.50 +13% Commercial 0.89 0.99 +11% Residential 1.32 1.45 +10% Total 5.31 5.94 +12% 5 4.7 5.3 5.9 4 4.0 3 2.7 3.2 2 2.1 1 1.3 0 2006 2007 2008 2009 2010 2011 2012 2013 *All JVs (100%) 13
Volume (Mn m 3 ) 2012 2013 Change Subsidiaries 1,318 1,575 +20% JCEs & Associates 2,890 3,246 +12% Chengdu JV 1,108 1,124 +1% Total 5,316 5,945 +12% Excluding Chengdu 4,208 4,821 +15% Note: Chengdu JV with 13% shareholding is classified as financial investment 14
Net Profit (HK$Mn) 1200 1000 1,106 800 600 709 841 400 436 200 0 145 202 265-200 -400-256 HKCG became a major shareholder in 2007 2006 2007 2008 2009 2010 2011 2012 2013 15
Effective 10 July 2013 Affect non-residential consumption 49 JVs affected Progress-to-date: o 46 out of 49 affected JV passing-through o 98% of the affected volume passing-through o 2013 financial impact not significant 16
Gas Sales Volume Mix (%) No. of Customers & Efficiency Residential Commercial Industrial 25% 24% (Mn) 10 287 Customers No. (LHS) Gas Volume/Employee No. (RHS) 293 ( 000 m³) 300 58% 17% 59% 17% 8 250 2012 2013 6 4 7.6 8.5 200 150 2 2012 2013 100 * All JVs (100%) 17
16 January 2013 No. of share placed Net Proceeds raised Over-subscription 18
Henderson Land Development Company Ltd (12 HK) Hong Kong and China Gas Company Ltd (3 HK) 41.50% Towngas China Company Limited ( TCCL ) (1083 HK) 62.31% 19
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300 National NG Demand Forecast 400 250 Bn m 3 200 150 230 2020 vs 2010 272% 100 108 50 25 47 0 2000 2005 2010 2015 2020 (Source:BP, Guangdong Oil & Gas Association, CNPC) 21
o o o Increasing natural gas supplies: - W2E2, W2E3 - W2E4, W2E5 (planning) - Myanmar pipeline - Russia Eastern Pipeline China remains a worldwide manufacturing base Increase in urbanization rate: Urbanization rate: 47.5% 53.4% 57% 70% o o Year: 2010 No change in connection fee policy Chinese government plans to invest Rmb1,700 billion to tackle pollution problems in next 5 years - reduce emissions - promote utilization of natural gas 2013E 2020E 2035E 22
An Immense National Grid A Heilongjiang A 3 2 6 Jilin Xinjiang 1 Inner Mongolia Beijing Liaoning NG Source Commissioning Year Capacity 1 2 3 West to East 1 2004 17 Bn m 3 West to East 2 2011 30 Bn m 3 Central Asia 2010 2014 >55 Bn m 3 Qinghai Ningxia Gansu Shaanxi Hebei Shanxi Shandong Jiangsu Henan 4 5 Sichuan to East 2010 12 Bn m 3 Myanmar to China Oct 2013 12 Bn m 3 Sichuan 4 Chongqing Hubei Anhui Zhejiang A Russia to China 2018 (expected) 38 Bn m 3 Hunan Jiangxi HKCG Shanxi LCBM 2009 250Mn m³ Guizhou Fujian 6 West to East 3 2015 30 Bn m 3 5 Guangxi Guangdong West to East 4 & 5 Route survey completed Each 45 Bn m 3 Yunnan Hong Kong Existing LNG Terminal 44M tonnes LNG Terminal under construction 30M tonnes Hainan LNG Terminal under planning 65M tonnes 23
Heilongjiang Jilin o Target: 10 new projects / year Sichuan Yunnan Liaoning Beijing Hebei Shanxi Shandong Shaanxi Henan Hubei Jiangsu Anhui Chongqing Zhejiang Inner Mongolia Guizhou Guangxi Hunan Jiangxi Fujian Guangdong Hong Kong o Penetration into neighboring cities o Focusing in new territories: Inner Mongolia Shanxi Guangxi Guizhou Yunnan Hainan 24
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