HONG KONG, CHINA, -- 29 August 2018 - 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 2018 ("HY2018"). 

In HY2018, Beijing Gas Blue Sky recorded total revenue of HK$842.6 million (HY2017: 681.8 million), representing a growth of 23.6% year-on-year, and recorded a profit attributable to owners of the Company amounted to HK$78.7 million (HY2017: 26.9million), representing an increase of 193.0%.

During the Reporting Period, earnings per share were HK0.77 cents (HY2017: HK0.27 cents).

BUSINESS REVIEW

During HY2018, total gas sales volume reached 247.9 million cubic meters, and LNG throughput volume for June was 411.2 million cubic meters.

For the six month ended 30 June 2018, the total gas sales volume from subsidiaries amounted to 196.0 million cubic meters. In addition, the total gas sales volume from the associates of the Group amounted to 49.2 million cubic meters.

In June 2018, The Group completed the acquisition of 29% equity interests in PetroChina Jingtang LNG Co., Ltd. ("PetroChina Jingtang"). 

As at 30 June 2018, the LNG gasification volume amounted to 3.2 billion cubic meters and LNG unloading volume was 256,000 tons. Gasification and unloading volume for June reached around 374 million cubic meters and 27,000 tons respectively.

As at 30 June 2018, the Group's natural gas projects covered Beijing, Ningxia Self Administrative Region and 11 Provinces in the PRC, namely Jilin, Liaoning, Hebei, Shandong, Shanxi, Shaanxi, Hubei, Anhui, Zhejiang, Guizhou, and Hainan Provinces. The Group owns a total of 34 gas refueling stations for vehicles and 5 city gas projects.

RESIDENTIAL USERS

During HY2018, the Group's city gas projects are households located in Liaoning Province, Jilin Province, Shanxi Province and Hubei Province. During the period, the Group completed connection of piped gas for 17,047 new residential households, and the accumulated connected domestic households reached 387,640 households (accumulated 83,764 households after acquisition), the volume of natural gas sold by the Group together with its associates and joint ventures to residential users amounted to 28.2 million cubic meters, with connection fee income of HK$59.5 million (HY2017: HK$15.5 million). 

During the period, the Group's residential household gas penetration rates in Songyuan City, Yuncheng City and Yongji City reached approximately 43.8%, 69.9% and 32.8%, respectively. As there is still room for growth in the number of residential households connected, the Group will continue to promote the growth of new connected residential households for the whole year by organic growth and acquisition of new projects.

Recently, the State Council issued the "Three-Year Action Plan for Winning the Blue Sky Defense Battle" (hereinafter referred to as the "Three-Year Action Plan") aiming at the prevention and control of air pollution in the next three years. The scheme set out air quality targets requiring that the ratio of days with good air quality at prefecture level and above should reach 80%, and the percentage of heavily polluted days decrease by more than 25% from 2015. 

The Group will remain its focus on expanding its city gas market in key areas with relatively low gas penetration rate, such as Northern, Central and Eastern China, which will contribute significantly to gas sales volume of the Group. At the same time, the Group will also focus on the city gas projects in areas with higher dollar margin through cooperation with upstream operator Kunlun Energy and Beijing Gas Group, major shareholder of the Company, to enhance the overall profit of the segment. 

The Group has entered into a strategic cooperation agreement with Guizhou Branch of PetroChina KunLun Gas Co., Ltd.??????????????????("KunLun Guizhou") to explore and develop the natural gas market in Guizhou Province and expand its market share.

INDUSTRIAL AND COMMERCIAL USERS

The "Three-Year Action Plan" has made important strategic deployments for clean winter heating in the northern region, requiring to focus on promoting the treatment of scattered coal in Beijing-Tianjin-Hebei and surrounding areas and the Fenhe and Weihe Plain, and proposing that the scattered coal will be basically replaced for winter heating in plain areas before the heating season of 2020. 

Looking back to 2016 to 2017, the "2+26" cities completed "coal-to-gas" and "coal-to-electricity" for more than 4.7 million users. Relying on the growing logistics fleet and access to rich imported gas sources from coastal LNG receiving terminal, the Group's direct supply business has covered Beijing-Tianjin-Hebei, Bohai Rim and Pearl River Delta regions. 

During the reporting period, the Group sold 78.7 million cubic meters of gas, covering Jilin Province, Liaoning Province, Shanxi Province, Shaanxi Province, Hubei Province, Shandong Province, Anhui Province and Zhejiang Province. The sales income amounted to HK$438.5 million, and the number of users accumulated 2,137 including 220 newly added users, of which 30 were "coal-to-gas" users.

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 HY2018, the Group owned 34 refueling stations including 20 CNG refueling stations and 14 LNG refueling stations for vehicles (HY2017, 16 CNG refueling stations and 16 LNG refueling station, 32 stations in total), with total gas sales volume of 40.7 million cubic meters and sales income of HK$64.9 million, mainly covering Hainan Province, Anhui Province, Shandong Province, Guizhou Province, Jinlin Province and Shanxi Province. Due to the pressure on the gross profit of the industry's refueling gas stations, the Group sold the refueling gas stations in Chiping, Shandong at the end of June in order to maintain and enhance the overall profit level of the business segment.

TRADING AND DISTRIBUTION OF CNG AND LNG

During HY2018, the Group owned 67 natural gas transportation vehicles (HY2017: 52 natural gas transportation vehicles). Total trading volume amounted to approximately 97.9 million cubic meters. The trading and distribution business recorded a segment profit of HK$7.7 million. During the period, the Group's volume of this segment has declined. 

In the second half of the year, the Group will focus on increase the scale effect and make full use of primary gas sources to improve the gross profit level. The Group owns 10% equity interests in 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 June 2018, the Group completed the acquisition of 29% equity interests in PetroChina Jingtang LNG Co., Ltd. The LNG receiving station of PetroChina Jingtang is located in Caofeidian Industrial Zone, Tangshan City, Hebei Province, and is an important natural gas supply facility in Northern China. 

The receiving station is not only responsible for the supply of natural gas to Beijing, but also supplies LNG through distributors to surrounding areas, such as Tangshan, Chengde, Tianjin and Qinhuangdao to secure stable supply of natural gas backing the Country's promotion of "coal-to-gas" and optimization of integrated use of natural gas. 

The Group is committed to the layout and development of the full LNG industry chain of LNG, and by acquiring equity interests in the upstream receiving stations, it will effectively promote the synergy between the upstream imported LNG gas source, the midstream trading and distribution and the downstream end-markets.

EXPANSION INITIATIVES

The Group has adopted its own "One Belt, One Road" Expansion Strategy to actively expand the full industry chain business of natural gas, with city gas as an important support and focusing on the development of the full industry chain of LNG.

Up to now, the Group's business has covered Beijing, Ningxia Self Administrative Region and 11 Provinces in the PRC. During HY2018, the Group completed the PetroChina Jingtang project and is in the process of acquiring the project of Teng County, Guangxi, all of which are funded by Beijing Gas Group, a major shareholder of the Company.

FUTURE PROSPECTS

Looking forward, by taking advantage of the development of the natural gas industry, 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. 

The "Three-Year Action Plan" issued by the State Council defined the overall thinking, basic objectives, main tasks and supporting measures for the treatment of air pollution in the middle and later stages of the "13th Five-Year Plan", and proposed a timetable and a route map for winning the blue sky defense battle in the next three years. 

Clean heating and "coal-to-gas" are important parts through the whole process. The Group will closely follow the policy guidance, actively explore industry and market opportunities, and leverage its own advantages to seize market opportunities arising from "coal-to-gas" and "industrial transformation".

On the basis of the original "One Belt, One Road" strategic layout, the Group dynamically adjusted the focus and direction of the Group's strategic development, refined the "One Belt, One Road" promotion strategy for the city gas business segment and the LNG business segment and further clarified the strategic positioning of "focus on city gas and LNG simultaneously": on the one hand, the Group will continue to generate stable revenue from city gas business segment, and on the other hand, it will seize the opportunity and actively explore a way to achieve more profits through the industry chain extension and supply chain finance of LNG segment, adapting itself to the current changing market and policy environment effectively.

The Group completed the acquisition of 29% equity interests in PetroChina Jingtang from Beijing Gas Group. The acquisition is of great significance to the Group, not only supplementing and strengthening the advantages of the Group's LNG industry chain, but significantly improving the profit attributable to the shareholders of the Company. In the future, Beijing Gas Group, as the largest shareholder, will continue to bring rich industry and financial resources to the Group, which will help generate great advantage. 

In the meantime, the Group has cooperated with international energy companies such as SK E&S in South Korea and GPS in Thailand, establishing an international shareholder structure and making itself a listed company with mixed ownership. 

In the future, capitalizing on the advantages of all parties, the Group will adhere to the pragmatic approach for changes and the principle of working in solidarity, and continuously strengthen the management including safety, manpower, performance, budget, matrix and service, continuously improve and enhance the Group's operational and financial efficiency to secure business growth with sustainability and quality, thereby creating greater investment value for investors and shareholders. (mor/roc).