Beijing Gas Blue Sky Achieved Turnaround in Profit in 2018; Revenue Increased by 48.1%

Highlights

• Revenue increased by 48.1% to HK$2,148.5 million
• Recorded a turnaround in profit, with profit for the year attributable to owners of the Company amounted to HK$260.7 million
• EBITDA of the Company increased by 162.6% to HK$642.6 million
• Total gas sales and throughput volume increased by 898.4% to approximately 5,125 million cubic meters
• As at 31 December 2018, the Group's natural gas projects covered 14 provinces and autonomous regions in the PRC, namely Liaoning, Jilin, Hubei, Hebei, Shandong, Anhui, Zhejiang, Shaanxi, Guizhou, Hainan, Guangxi, Ningxia Autonomous Region, Shanxi and Beijing City
• The Group owns a total of 34 gas refueling stations for vehicles and 5 city gas projects

Financial Highlights

HONG KONG, CHINA - Media OutReach - 29 March 2019 - 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 annual results for the year ended 31 December 2018 ("2018"). During the year, Beijing Gas Blue Sky recorded total revenue of HK$2,148.5 million (2017: 1,451.1 million), representing a growth of 48.1% year-on-year, which was mainly attributable to a diversified income structure of the Group which contribute a growth in revenue generated from city gas business and liquefied natural gas ("LNG") related business. The Company recorded a profit attributable to owners of the Company amounted to HK$260.7 million (2017: loss 12.5 million).

During the Year, earnings per share were HK2.77 cents (2017: loss per share HK0.13 cents).

BUSINESS REVIEW

In 2018, the improvement on the overall profitability of the Group was mainly due to its diversified business structure, under which different business segments all contributed to its profit growth. Specifically, the scale of the urban gas supply business has been expanding rapidly. Benefiting from the "coal to gas" policy, the Group's rural coal-to-gas project in Shanxi has achieved good profits. Benefiting from the commencement of gas supply for the new projects secured in the Northeast, East and South China, the business scale and gross profit of the Group's direct supply business also increased significantly. The trading and distribution business, notwithstanding its slightly shrunken scale, achieved an improvement in income and profitability as the Group attached greater importance to the quality of its business and the concerted development of the whole LNG industrial chain; benefiting from the national environmental protection policy, the demand for the gas from the Group's Shanxi and Hainan projects increased significantly, expanding the business scale and driving up the profit.

During the Year, total gas sales and throughput volume of the Group increased by 898.4% as compared to the corresponding period of last year to approximately 5,125 million cubic meters (2017: 513.3 million cubic meters). As at 31 December 2018, the Group's natural gas projects covered 14 provinces and autonomous regions in the PRC, namely Liaoning, Jilin, Hubei, Hebei, Shandong, Anhui, Zhejiang, Shaanxi, Guizhou, Hainan, Guangxi, Ningxia Autonomous Region, Shanxi and Beijing City.

CITY GAS BUSINESS

As of 2018, the Group had 5 city gas projects in Shanxi Province, Jilin Province, Liaoning Province and Hubei Province. During the year, the Group together with its associates and joint ventures completed connection of piped gas for 59,870 new residential households, and the accumulated residential households reached 432,401 households, of which 59,571 were new residential households. The volume of natural gas sold by the Group to residential users amounted to 53.8 million cubic meters (2017: 18.9 million cubic meters). The Group secured 299 new industrial and commercial users, totaling 2,236, and the natural gas sold to the industrial and commercial users reached 84.4 million cubic meters (2017: 24.4 million cubic meters), with connection fee income of HK$209.9 million (2017: HK$135.6 million), representing growth of 58.3% as compared to the corresponding period of last year.

During the period, the number of rural "coal to gas" users of the Group's Shanxi project amounted to approximately 7,000. Taking advantage of the "2+26" cities under the national air pollution prevention program, the Group vigorously promoted the implementation of the coal-to-gas project in Shanxi, and through effective management, its rural coal-to-gas program has produced satisfactory results, with its scale securing a leading position in Shanxi province.

The Group actively responded to national policies. In order to win the blue sky defense battle and improve the quality of the atmospheric environment, the Group deepened the existing project regional market and vigorously promoted the coal-to-gas process in the plain areas. What's more, by developing highquality industrial and commercial users to adjust the gas consumption structure of the Northeast market, we continued to improve the market system with the goal of "market integration" and made important contributions to the Group's overall gas volume and revenue.

In 2018, 12 ministries including the Ministry of Ecology and Environment and six provinces and cities such as Beijing jointly issued the "Action Plan for the Comprehensive Management of Air Pollution in the Autumn and Winter of 2018-2019 in Beijing-Tianjin-Hebei and Surrounding Areas", which clearly pointed out that the scattered coal shall be basically replaced in the plain areas of "2+26" cities. At the same time, according to the guidelines of the National 13th Five-Year Plan, by 2020, the proportion of natural gas consumption to primary energy will increase from 6% in 2016 to 10%, and the population using natural gas will increase from 330 million in 2015 to 470 million. In the future, the Group will continue to commit itself to promoting the "coal to gas" work to improve the overall natural gas penetration rate and hence contribute positively to the Group's overall profit.

In addition, the Group has entered into a strategic cooperation agreement with Guizhou Branch of PetroChina KunLun Gas Co., Ltd.（中石油昆侖燃氣有限公司貴州分公司）("KunLun Guizhou") during the year, and both parties would also strengthen strategic cooperation in the city gas segment in the region.

Industrial Direct Supply Business

During the year, the Group sold 89.2 million cubic meters of natural gas (2017: 55.4 million cubic meters) to industrial and commercial users, representing growth of 61.0% as compared to the corresponding period of last year, covering Jilin Province, Liaoning Province, Hubei Province, Shandong Province, Anhui Province, Hainan Province, Guizhou Province and Zhejiang Province, etc. The Group relied on the high-quality gas sources obtained in the North China, East China and South China coastal areas and the inland LNG factories to provide industrial and commercial users with stable gas sources. During the year, thanks to the rapid growth in the demand of the domestic industrial gas users and the continuous growth of imported LNG, the Group successfully secured a number of new users in the Northeast, East and South China with continuous and stable gas supply. During the period, both the revenue and profit of the business segment recorded an increase.

CNG and LNG refueling stations

The Group together with its associates and joint ventures sold natural gas to LNG vehicles (trucks and buses) and CNG vehicles (taxis, buses and private cars). During 2018, the Group owned 34 gas refueling stations including 19 CNG refueling stations and 15 LNG refueling stations (2017: 39 gas refueling stations including 22 CNG refueling stations and 17 LNG refueling stations), mainly covering Hainan Province, Anhui Province, Shandong Province, Guizhou Province, Jilin Province, Shanxi Province and Liaoning Province, with gas sales volume of 87.0 million cubic meters (2017: 75.3 million cubic meters) and sales income of HK$173.0 million (2017: HK$74.8 million), representing growth of 131.3% as compared to the corresponding period of last year, which was mainly due to the effective implementation of the environmental protection policy on air pollution in Shanxi Province and Hainan Province.

Driven by the PRC government's promotion of clean energy vehicles, relevant policies on promoting application of environmentally-friendly vehicles were recently introduced. Hainan Province issued the "Hainan Province Clean Energy Vehicles Development Plan" (hereinafter referred to as the "Plan"), which clearly points out that clean alternative fuel vehicles mainly include natural gas vehicles, and plans to realize the overall adoption of clean energy vehicles within the whole island by 2030, with 80% of the vehicles installed with clean energy engines. The Group will actively expand the gas refueling stations business in this region by grasping opportunities and acting in response to national policies, in order to improve its market share.

Trading and distribution of CNG and LNG

As of Year 2018, the Group currently owned 29% equity interests in PetroChina Jingtang LNG Co., Ltd., and distributed LNG with gas sources from Sinopec's Dongjiakou receiving terminal in the Bohai Rim and distributed LNG with gas sources from CNOOC's Ningbo receiving terminal in the Eastern China. As the Group attached higher importance to the quality of its trading business and actively adjusted its customer base, it recorded slight decline in sales with total trading volume of 312.0 million cubic meters (2017: 339.4 million cubic meters), through distributing LNG and 52 self-owned natural gas transportation vehicles (2017: 67 natural gas transportation vehicles). The trading and distribution business recorded a segment trading volume of HK$917.1 million (2017: 876.8 million cubic meters).

The Group participated in the bidding in the window period with its partners last year, and won the joint distribution right of offshore gas in the peak period of demand for LNG and completed the distribution of 12 million cubic meters of LNG. The layout of the Group's LNG business has become solid, building up the upstream gas resources, the stronger midstream logistics deployment capacity as well as the downstream terminal distribution advantages in the whole LNG industry; at the meantime, the Group has formed a "technology + finance" overall solution for the industrial transfer of key industries such as metal processing, ceramics and glass, which became our powerful tool for market development. Therefore, the entire industrial chain of LNG has been fully developed, so that all links could fully exert synergy effects and promote the rapid growth of sales volume of LNG business.

LNG RECEIVING TERMINAL PROJECTS

Petrochina Jingtang Project (Caofeidian LNG Receiving Terminal)

The completion of the PetroChina Jingtang Project took place on 6 June 2018. The total amount of LNG received in this project reached 4,498.5 million cubic meters after the mergers and acquisition, among which, the gas volume externally delivered to the pipelines through gasification was 4,097.7 million cubic meters while the gas transportation volume of the tank truck was 400.8 million cubic meters. Currently, as part of the Tangshan LNG expanding project, roof lifting for two storage tanks has been completed. It is expected that the utilization rate of the piers will continue to increase in the future, providing stable gas supply guarantee for natural gas consumption in the entire Beijing-Tianjin-Hebei region and making positive contributions to the blue sky defense battle in the region.

FUTURE PROSPECTS

Looking forward to 2019, the natural gas industry will continue to maintain its growth momentum. The 2019 Chinese government work report pointed out that the state should continue to strengthen pollution prevention and control and ecological construction, vigorously promote green development, continue to promote pollution prevention and control and consolidate and expand the achievements of the blue sky defense battle. It also continued to carry out the air pollution control of the Beijing-Tianjin-Hebei region and the surrounding areas, Yangtze River Delta and the Yan-Ping Plains and strengthened the management of three major pollution sources of industry, coal-firing and motor vehicles, striving to do well in clean heating in the northern regions and ensure that the people can enjoy a warm winter. The Group expects natural gas consumption to continue to grow steadily. Imported natural gas will continue to be a major source of growth for the supply. The Group will strive to capture relevant opportunities arising from the growth in LNG import and the integration of the pipelines in the PRC.

As for the market, the Group will focus on the layout of projects related to LNG import and new project opportunities with with the support of major shareholder. After several years of hard work, the Group has built a large-scale LNG operation and distritribution capacity and completed the layout of the entire industrial chain of LNG. On the upstream side, we have stable gas sources for several LNG receiving terminals, hold the equity of the LNG receiving terminal located in Tangshan and successfully participated in the first international trading of LNG. We have built a proprietary trading and logistics network in the key Beijing-Tianjin-Hebei and the East China region for the midstream, while there are stable and large-scale industrial users in the downstream.

In the future, in addition to continuing to consolidate the trading and operating capabilities as well as the size and quality of the end customers in the midstream and downstream, the Group will participate more in the upstream LNG trading and obtain more opportunities to independently import offshore resources under the general trend of the natural gas industry marketization, with a view to enhancing the Group's competitiveness and market share in the LNG industry.

In terms of city gas business, the Group will leverage the unique advantages of the major shareholder Beijing Gas Group to explore project opportunities of major shareholders in the Beijing-Tianjin-Hebei region and the northeast region along the East Pipeline between China and Russia and lay out key new project markets. For the existing city gas projects, the Group will adhere to refined management to improve the profitability of existing projects and achieve steady growth in the income of existing urban gas assets, and also leverage the existing projects' "point-to-face" capability to focus on tapping the market potential of Shanxi and Jilin.

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 14 provinces and autonomous regions in the PRC, namely Liaoning, Jilin, Hubei, Hebei, Shandong, Anhui, Zhejiang, Shaanxi, Guizhou, Hainan, Guangxi, Ningxia Autonomous Region, Shanxi and Beijing City. 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.