Beijing Gas Blue Sky Announces 2017 Interim Results

Highlights

• Revenue from natural gas business increased by 491.4% to HK$681.8 million
• Total gas sales volume sold increased by 441.9% to HK$292.1 million cubic meters
• Profit for the period attributable to owners of the Company increased by 1,116.0% to HK$26.9 Million
• The Group's natural gas projects covered 10 provinces in the PRC, namely Hainan, Anhui, Shandong, Liaoning, Guizhou, Sichuan, Hubei, Zhejiang, Jilin and Jiangsu Provinces

Financial Highlights

HONG KONG, CHINA - Media OutReach - 30 August 2017 - Beijing Gas Blue Sky Holdings Limited ("the Company" or "Beijing Gas Blue Sky", together with its subsidiaries, the "Group", HKSE stock code: 6828) announced its interim results for the six month ended 30 June 2017 ("HY2017"). In HY2017, Beijing Gas Blue Sky recorded a profit attributable to owners of the Company amounted to HK$26.9 million (HY2016: 2.2 million), representing an increase of 1,116%, and recorded total revenue of HK$681.8 million (HY2016: 115.3 million), representing a growth of 491.4% period-on-period.

During the Reporting Period, earnings per share were HK0.27 cents (HY2016: HK0.03 cents).

BUSINESS REVIEW

During HY2017, total gas sales volume increased by 441.9% year-on-year, amounted to 292.1 million cubic meters (HY2016: 53.9 million cubic meters). The growth was attributable to the further development of existing projects and the acquisition of new projects that were immediately operational.

As at 30 June 2017, the Group's natural gas projects covered 10 provinces in the PRC, namely Hainan, Anhui, Shandong, Liaoning, Guizhou, Sichuan, Hubei, Zhejiang, Jilin and Jiangsu Provinces. The Group owned a total of 32 gas refueling stations for vehicles and 3 city gas projects.

RESIDENTIAL USERS

During HY2017, the volume of natural gas sold by the Group to residential users amounted to 5.1 million cubic meters, with connection fee income of HK$15.5 million, representing an increase of 229.8% year-on-year (HY2016: HK$4.7million). The newly acquired city gas project in Jilin province completed connection of piped gas for 6,256 new residential households. In view of the new real estate projects to be completed in Songyuan city, Jilin province as well as the existing residential areas being converted to use piped gas, Jilin Haoyuan is expected to further construct new gas pipelines connecting residential users. Separately, the Group is in the process of acquiring and merging the gas projects in Yuncheng city and Yongji city, Shanxi province, which are expected to contribute significantly to gas sales volume, cash flow and net profit of the Group upon completion of the acquisition. Along with the continuous acceleration of urbanisation in the future, the Group will continue to seize the opportunities and invest in city gas projects actively.

INDUSTRIAL AND COMMERCIAL USERS

The Group is currently supplying gas to the industrial and commercial users in Jilin, Liaoning, Shandong, Anhui, Zhejiang and Hubei provinces, and the gas supply volume continues to show an upward trend. As at 30 June 2017, the Group recorded a gas volume of 23.0 million cubic meters sold to the industrial and commercial users. The PRC government is stepping up its efforts to implement the "coal-to-gas" policy to solve the serious haze weather situation, and the areas where the Group is supplying gas to the industrial and commercial users, will benefit from such policy. At the same time, such policy will also be beneficial to the projects in Shanxi that are under acquisition as more and more commercial users and public buildings (e.g. schools, restaurants, hospitals and commercial complex) in these regions are considering using gas-fired boilers for heating and air conditioning to replace the old coal-fired boilers. The industrial and commercial users will be a key growth driver of the Group's gas sales in the coming years. The Group will actively explore the market development potential, targeting at investing in high-quality industrial and commercial gas projects.

CNG AND LNG REFUELING STATIONS

The Group sells natural gas to LNG vehicles (trucks and motor buses) and CNG vehicles (taxis, motor buses and private cars). During HY2017, the Group's CNG refueling station were increased by 2 new CNG refueling stations for vehicles. As at 30 June 2017, the Group owned 18 CNG refueling stations and 14 LNG refueling stations, 32 stations in total. The Group adopted the practical business development policies and promoting strategies, and offered more value-added services such as car washing and inspection services to large customers of the refueling stations including logistics companies, to enhance customers' experience, satisfaction and loyalty. At the same time, the Group constantly reviewed cost effectiveness, efficiency and brand image, and took corresponding actions accordingly, such as shutting down certain unprofitable gas stations and investing in pipelines and equipment and renovating gas stations.

TRADING AND DISTRIBUTION OF CNG AND LNG

During HY2017, the Group has a total of 52 natural gas tank trucks (HY2016: 41 natural gas tank trucks). Total trading volume amounted to over 227.2 million cubic meters, representing a six-fold increase as compared to the corresponding period of last year (HY2016: 37.0 million cubic meters). The trading and distribution business recorded a segment profit of HK$2.9 million. With its growing natural gas transportation fleet and increasingly sophisticated logistics platform, the Group is expected to optimise its natural gas industry chain via centralised procurement and logistics planning to significantly enhance our price bargaining power when negotiating with upstream suppliers and improve our efficiency. The Group owns 10% equity interests of CNPC's Haikou LNG receiving terminal, and distributes LNG with gas source from CNOOC's Ningbo receiving terminal and Sinopec's Dongjiakou receiving terminal. In order to ensure stable gas supply of the imported LNG along the coastal area and lower the cost effectively, the Group will continue to explore the cooperation opportunities in the industry and strengthen the improvement of the trading and distribution gas volume of the Group.

EXPANSION INITIATIVES

The Group has adopted its own "One Belt, One Road" Expansion Strategy. Along the key "One Belt" coastal economic areas such as the Jing-Jin-Ji Economic Circle and the Yangtze River Delta, the Group aims to leverage CNOOC, Sinopec and CNPC's LNG receiving terminals to distribute more low cost imported LNG as a wholesaler and distributor to our own sales outlets. The Group aims to significantly ramp up its distribution network along China's coastal areas to reach a wider potential customer base to further increase its market share and bargaining power with upstream gas suppliers. For inland, along the "One Road", from Shanxi all the way to the western and northwestern provinces of China, the Group will seek to identify projects that have above market average investment-return, such as city gas projects, trading and distribution opportunities and refueling gas stations where imminent gas demand is available.

During HY2017, the Group acquired a project in Jilin Province and is in the process of acquiring projects at Yuncheng and Yongji in Shanxi Province.

FUTURE PROSPECTS

The PRC will facilitate the application of natural gas energetically during the "13th Five-Year Plan" period. According to the Opinions on Speeding up in Promoting the Utilisation of Natural Gas jointly issued by 13 departments and committees including NDRC officially, it clearly pointed out that PRC will gradually foster natural gas as the main energy of the domestic modern clean energy system and strive to achieve the proportion of natural gas in the one-time energy consumption structure by about 10% by 2020. With clean fuel alternative and emerging market development as the main starting point, the PRC will focus on making breakthrough in the four sectors, namely city gas, gas-fired power generation, industrial gas and transportation gas, and make significant deployment in policy protection, resource supply protection and other aspects. The Group will follow the policy guidance closely, and actively explore industry's market opportunities. The Group will exert its own advantages, and continue to consolidate the trading and distribution of natural gas, city gas infrastructure and transportation gas, whilst continuously leveraging on the "coal-to-gas" policy opportunities, intensifying its efforts in market development to improve the overall scale of the industrial "coal-to-gas conversion" business. Through the standardised management system and all-round performance benchmark management measures, the Group will constantly improve and enhance its operational and financial efficiencies in order to ensure an ongoing and sustainable business growth.

During HY2017, the Company was included in the Hang Seng Mainland China Oil and Gas Index, Hang Seng Global Composite Index, and Hang Seng Composite Index Series (including the Hang Seng Composite Index, the Hang Seng Composite Industry Index -- Energy Sector, the Hang Seng Composite SmallCap Index and the Hang Seng Composite MidCap and SmallCap Index) for the first time, demonstrating a recognition of the Company's performance in market capitalisation, trading volume and liquidity, as well as reflecting the Hong Kong capital market's confidence in the Company. It can help to foster the Company's shareholder diversification, and further enhance shares liquidity and broaden its shareholders base. Besides, the Company also introduced investors, including China Huarong International Holdings Limited ("China Huarong") and Central China International Investment Company Limited ("Central China"), recognising our market values in the process of business exploration and further enhancing our capital strengths. With the tremendous advantages of the industry and financial resources gained from Beijing Gas, our single largest shareholder, we will continue to explore and identify more potential opportunities with them, in terms of co-investments and cooperation in both project and regional levels, whereby generating more synergetic effects and creating more investment values for investors and shareholders.

Mr. Tommy Cheng, Co-Chairman of the Group, stated that, "In future, the Group will invest and develop the natural gas business proactively and expand business layout by taking the 'develop clean energy, improve customer value, and create a better Blue Sky' as the mission and adhering to the corporate values of 'openness, innovation, cohesion, pragmatism, accountability, listening and inclusiveness'."

About Beijing Gas Blue Sky Holdings Limited

Beijing Gas Blue Sky Holdings Limited ("Beijing Gas Blue Sky", HKSE stock code: 6828) is an integrated natural gas provider, distributor and operator, with an emphasis on the midstream and downstream natural gas development. Our natural gas business includes: (i) construction and operation of compressed natural gas ("CNG") and liquefied natural gas ("LNG") refueling stations for vehicles; (ii) construction of natural gas pipelines and operation of city gas projects by providing piped gas; (iii) direct supply of LNG to end-users; and (iv) trading and distribution of CNG and LNG.

The Group has adapted to the "One Belt One Road" policy, and focus on operating and investing natural gas business. The Group is actively expanding its business development and distribution, as well as continues to gradually expanding the scale of operations. Currently, the Group's natural gas projects covered 10 provinces in the PRC, namely Hainan, Anhui, Shandong, Liaoning, Guizhou, Sichuan, Hubei, Zhejiang, Jilin and Jiangsu Provinces. The Group is committed to its vision: "develop clean energy, enhance customer value, create a beautiful blue sky". In the future, it will continue to actively investing and developing natural gas business, as well as participating in the development of natural gas industry value chain.