2015 Interim Report 中期報告 Bench-marking for Excellence 學標杆追求卓越

Transcription

1 2015 Interim Report 中期報告 Bench-marking for Excellence 學標杆追求卓越

2 Canon s Court 22 Victoria Street Hamilton HM12 Bermuda MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08 Bermuda

3 Contents 4 Corporate Profile 5 Chairman s Statement and Review of Operations and Results 15 Corporate Governance and Other Information 26 Financial & Operational Highlights 30 Report on Review of Condensed Consolidated Financial Statements 32 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 33 Condensed Consolidated Statement of Financial Position 35 Condensed Consolidated Statement of Changes in Equity 37 Condensed Consolidated Statement of Cash Flows 38 Notes to the Condensed Consolidated Financial Statements

4 Pan-China Footprint of CR Gas 213 CR Gas City Gas Projects Provinces Provincial Capitals 3 Municipalities (Chongqing, Shanghai, Tianjin) 71 Prefecture-level Cities New projects Anhui Regional Centre Anhui Huaibei Fuyang Jingde Lingbi Jinzhai Hefei VG Suzhou Shitai Dongzhi Huoshan Fujian Regional Centre Fujian 1 Fuzhou Xiamen Pingtan Jianyang Longyan Guangdong Regional Centre Guangdong Xinhui Zhongshan Dayawan Deqing Heping Jiangmen Kaiping Heyuan Longchuan Yangjiang Chaoan Gaozhou Shantou Longmen Yangjiang Hi-Tech Zone Suixi Yingde Lufeng Xuwen Yunan Xingning Fogang Dongyuan Heshan Guangxi 2 Nanning VG Liuzhou Eastern New Zone Hezhou Industrial Park Qinzhou Heiji Regional Centre Jilin Tonghua Ji an Liaoyuan 3 Changchun LNG Jilin Yongji Songyuan Baicheng Hunchun Development Zone Heilongjiang 4 Harbin Development Zone Yichun Shangzhi Henan Regional Centre Henan 5 Zhengzhou Anyang Zhenping Puyang Fangcheng Zhumadian Tongxu Luoning Minquan Xiayi Nanzhao Dengzhou Hubei Regional Centre Hubei 6 Wuhan Zaoyang Xiangfan Yicheng Qianjiang Gucheng Hongan Wuhan Chemical Park Nanzhang Zhongxiang Jingshan Shayang Wuhan Wugang Jiangling Xianning Hunan Regional Centre Hunan Yueyang Wangcheng Chenzhou Zixing Loudi Xiangxi Lengshuijiang Qiyang Lianyuan Shuangfeng Jiangsu Regional Centre Jiangsu 7 Nanjing Jiangning Nanjing VG Wuxi Suzhou Hi-Tech Zone Tongzhou Zhenjiang Kunshan Qidong Haimen Suqian Shuyang Jiangyan Dafeng Changzhou VG Jiangxi Regional Centre Jiangxi 8 Nanchang Yingtan Jingdezhen Guixi Wannian Fuzhou Jian City Jian County Jingdezhen VG Yongfeng Jinji Regional Centre 9 Tianjin Hebei Hengshui Cangzhou Handan Qianan Zaoqiang Tangshan Hi-Tech Zone Liaoning Regional Centre Liaoning Fengcheng Benxi Xiuyan Gaosheng Economic Area Huanren Nanfen Dandong Huayuankou Dalian Free Trade Zone Haicheng Panjin Liaoyang Jinzhou Yingkou Yingkou Development Zone Inner Mongolia Chifeng Shandong Regional Centre Shandong 10 Jinan Yutai Yanzhou Zibo Jining Tengzhou Fangzi Anqiu Weifang Hi-Tech Zone Luozhuang Zaozhuang Dongying Laizhou Yucheng Guangrao Qihe Development Zone Zaozhuang VG Zhangqiu Shanghai Regional Centre Shanghai 11 Baoshan Zhejiang Fuyang Linhai Hangzhouwan Cixi Sanmen Hangzhou Tongneng Hangzhou Luneng Taizhou Fenghua Wuyi Lishui Yueqing Xianju Ninghai 12 Hangzhou VG Taizhou Eastern New Zone Changxing Pan an Xiangshan Construction and Design Centre Chengdu Design Centre Zhengzhou Design Centre Nanjing Design Centre Shanxi Regional Centre Shanxi Hongdong Huozhou Yangqu Datong Yangquan Changzhi Shanxi VG Loufan Sichuan Regional Centre Sichuan 13 Chengdu Luzhou Yibin Neijiang Longchang Zizhong Suining Shifang Panzhihua Tongjiang Dazhou Pengzhou Quxian Dazhu Kaijiang Xibei Regional Centre Qinghai Golmud Huangzhong Ledu Shaanxi 14 Xi an Lintong Yungui Regional Centre Yunnan 15 kunming Kunming VG Dongchuan Yunnan VG Chuxiong Yunnan Pipeline Kunming Hi-Tech Zone Guizhou Qingzhen Development Zone Qingzhen 16 Chongqing

5 TIANJIN天津 SHANGHAI 上海 重慶 開建日期 (Commissioning Year) 建成日期 (Completion Date) 運氣能力 (Capacity) 運營商 (Operator) 1.西氣東輸一期 West to East Bn m3 中石油 (Petrochina) 2.西氣東輸二期 West to East Bn m3 中石油 (Petrochina) 3.西氣東輸三期 West to East Bn m 中石油 (Petrochina) 4.川氣東送 Sichuan to East Bn m3 中石化 (Sinopec) 3 中石油 (Petrochina) 管道名(Pipeline Name) 3 5.中緬油氣 Myanmar to China Bn m 6.俄羅斯天然氣東線 Russia to China Eastern Pipeline Bn m3 中石油 (Petrochina) 7.俄羅斯天然氣西線 Russia to China Western Pipeline 不詳 Unknown 不詳 Unknown 30Bn m 中石油 (Petrochina) 3 現有液化天然氣接收站 Existing LNG Receiving Terminal 正在建設中液化天然氣接收站 LNG Terminal under construction 正在計畫中液化天然氣接收站 LNG Terminal under planning Interim Report 2015

6 Corporate Profile ,190 5% 10% THE PRC CITY GAS DISTRIBUTION FLAGSHIP OF CHINA RESOURCES GROUP China Resources Gas Group Limited ( CR Gas ), substantially owned by China Resources (Holdings) Company Limited, one of the largest state-owned conglomerates in China, is a leading gas utilities group in China, which is principally engaged in downstream city gas distribution business including piped natural gas distribution and natural gas filling stations operation. Its operations are strategically located in areas of China, which are economically more developed and densely populated and areas with rich reserves of natural gas. Leveraging on the excellent industry fundamentals and the Group s execution competency, CR Gas continues to expand rapidly in 2015 via organic and acquisition growths. As at 30th June 2015, CR Gas s portfolio is consisted of 213 city gas projects in 22 provinces of China including 13 provincial capitals and 3 direct administrative municipalities with 21.9 million customers. In order to diversify energy resources and reduce reliance on polluting energy sources such as coal and crude oil, the PRC government has, in recent years, taken various measures to promote the development and utilization of less polluting energy sources. Natural gas is considered as a cleaner and superior substitute for conventional energy sources such as coal and crude oil. The PRC government has therefore been very supportive of the development of the natural gas industry in order to meet its stated goal of natural gas making 10% or more of the total Chinese energy sources by 2020, up from the current 5% level. CR Gas is well placed to take advantage of such a favorable operating environment and aspires to become the most respectable leader in the PRC s downstream city gas distribution sector by continuously expanding through organic and external growths; diligently enhancing its operational efficiency in pursue of excellence; delivering a safe and reliable supply of clean energy as well as the caring, competent and efficient service to our customers; offering growing and sustainable performance to shareholders; providing extensive professional and personal development opportunities to employees; and contributing to the protection and improvement of the Chinese and global environment. 4

7 Chairman s Statement and Review of Operations and Results 7% 2.1% 8.9% 10.9% 12.5% % 25.0% Results AND BUSINESS REVIEW Results The downstream city gas industry in China experienced a challenging year during 2014 with gas demand softening after another round of increase of city-gate gas price in September 2014 following the previous price hike in July This coupled with the significant drop in price of oil and related products during the last quarter of 2014, resulting in reduction of price competitiveness of gas and caused the demand for gas to slow down. This situation continued during the first 6 months of 2015 despite a small cut in city gate gas price in April This is aggravated by the slow down in industrial activity and hence demand for gas by industrial users, as reflected by the relatively weak Chinese economy which registered a lower 7% GDP growth rate for first 6 months of The overall first 6 months of 2015 gas volume demand growth in China was only 2.1%, significantly down from the growth rate of 8.9% registered in corresponding period of Despite these challenging environment, the Group s city gas distribution business in China continued to contribute significant profit and cash inflow to the Group driven by continuing improvement in operational efficiency. The Group s gross gas sales volume increased by 10.9% and connected customers increased by 12.5%. For the period ended 30th June, 2015, the Group recorded turnover and profit attributable to the Company s equity holders of HK$15,091 million and HK$1,564 million, an increase of 17.5% and 25.0% respectively over the HK$12,846 million and HK$1,251 million of the previous corresponding period. Interim Report

8 Chairman s Statement and Review of Operations and Results 83% 17% 83% 17% % % % Revenue and Profit Drivers The total revenue of city gas operation comprises of recurring gas sales and one-time gas connection fee which accounts for 83% and 17% of the revenue for the period ended 30th June, 2015 (2014: 83% and 17%, respectively). The turnover of the city gas distribution operation for the period ended 30th June, 2015 amounted to HK$15,091 million, an increase of 17.5% over the HK$12,846 million of the previous corresponding period. The significant increase was mainly due to the increase in gas sales revenue by 17.6% from HK$10,633 million to HK$12,506 million and the increase in connection fee income by 16.8% from HK$2,212 million to HK$2,584 million. 30.0% 30.2% % 10.36% 9.74% The gross profit margin for the six months ended 30th June, 2015 was 30.0% is comparable to the previous corresponding period s 30.2%. The net profit attributable to shareholders of the Company for the period ended 30th June, 2015 was HK$1,564 million, an increase of 25.0% over that of the previous corresponding period. This represents a net profit margin of 10.36%, 0.62 percentage point more than that of the previous period s 9.74%. The increase was mainly due to the decrease in other income of gas installation and service fee by 0.8 percentage point, compensated by the overall 0.63 percentage point reduction in operating expenses (improvement in operating efficiency) and reduction in financing costs of 0.29 percentage point as well as higher 0.13 percentage point contributions from joint ventures and associates. With the continuing focus on Lean Management and Benchmarking measures by the Group, operational efficiency will continue to improve going forward. 6

9 Chairman s Statement and Review of Operations and Results 33%100% 49% 70% 36% 71% Increase in Shareholdings of Business Units Following the increase in shareholdings of existing projects in Zhenjiang and Hengshui in 2010, Zibo and Nanjing Jiangning in 2011, Zhengzhou in 2012 and Neijiang in 2013, during 2014 the Group increased its shareholdings in Fujian Runmin Energy Co., Ltd from 33% to 100%, Qingzhen Economic Development Zone China Resources Gas Co., Ltd from 49% to 70% and during 2015 Longyan Kunrun Gas Co., Ltd from 36% to 71%. The Group will continue to execute this strategy of enhancing results via increasing its stakes in existing gas projects and thereby increase earnings contribution to the Group. Continue Enhancement of Operational Efficiencies The Group is intensively executing its company-wide Lean Management and Benchmarking measures to enhance its operational and financial efficiencies continuously. It constantly seeks for improvements in various areas such as speed of signing up new customers, customer service, project tendering, safety standards, gas leakages control, centralised cash management, centralised procurement, tax management, etc. The ongoing organic enhancement of existing city gas distribution operations and the external acquisition of new city gas businesses will continue to deliver stable cash flow as well as excellent growth opportunity for the enhancement of the Company s shareholders value in the foreseeable future. Interim Report

10 Chairman s Statement and Review of Operations and Results % 10% 24% Prospects and outlook On 28th February, 2015, The National Development and Reform Committee ( NDRC ) announced that with effect from 1st April, 2015, the ceiling city gate gas price for existing volume will increase by RMB0.04/m 3 and that for incremental volume will reduce by RMB0.44/m 3. This effectively merges the gas prices of existing and incremental gas volumes resulting in an overall net reduction in blended price of city gate gas. As at 30th June 2015, the Group has passed on the price reduction to 43% of the Group s affected gas volume. This historic first reduction of city gate price since gas price reform started in 2011, signals the unwavering objective of NDRC to support the development of Chinese gas industry to ultimately achieve market based gas price for the PRC. This measure to enhance the price competitiveness of gas is expected to continue and will ensure that the NDRC s target of gas comprising about 10% or more of the total energy sources in China by 2020 is achievable. With the coming availability of abundant cheaper gas globally and in China within the next 3 to 5 years, such market driven approach of gas pricing will spike the continue demand for gas and will be extremely positive for the entire downstream city gas industry. To rationalise and alleviate the burden on industrial customers in cross subsidising residential customers, in March 2014, the NDRC announced that a three-tiered progressive gas tariff system for the residential sector will be implemented nationwide by By the end of June 2015, the Group has adopted steppricing system for residential customers to 24% of the Group s affected gas volume. This step-pricing mechanism, once fully implemented throughout CR Gas s projects by the end of 2015, could lead to a further upside in residential dollar-margin. The above factors augur well for the natural gas industry in China and offer significant opportunity for the continuous growth of the Group in the foreseeable future. 8

11 Chairman s Statement and Review of Operations and Results The Group s key business units in Zhengzhou, Wuxi, Chengdu, Nanjing, etc have continued to register good operating performances. Financial performance and profit contribution from Chongqing Project is expected to improve steadily going forward. The Group s external acquisitions have started to rise again after hitting a trough in 2013, having spent only HK$836 million for such purpose. External acquisitions have significantly increased to HK$1,943 million in The Group invested HK$387.2 million during the first half of 2015 and expects external acquisitions to accelerate in second half of % % The Group has embarked on various operational enhancement measures to boost the quality of its organic growth, starting with Lean Management practice in 2012 and Bench-marking for Excellence measure in The Group continues in 2015 to focus intensely on various Bench-marking measures to improve operation efficiencies relentlessly. Leveraging on the above mentioned factors, the Group will continue to grow steadily during the second half of the year and beyond. The Group will ride on the continuing favourable industry fundamentals and its experienced management team with strong execution record to scale new heights via quality organic growth and external acquisitions. FINANCIAL REVIEW The Group s unaudited consolidated turnover for the period amounted to HK$15,091 million (2014: HK$12,846 million) with gross profit of HK$4,533 million or 30.0% gross profit margin (2014: HK$3,878 million or 30.2%) and a profit before non-controlling interests for the period of HK$1,564 million (2014: HK$1,251 million). Cash Flow The net cash inflow from operations during the period amounted to HK$2,953 million (2014: HK$2,335 million). Interim Report

12 Chairman s Statement and Review of Operations and Results %95% 2% %22% 4% 57% 38% 1% 4% 57% 38% 1% 59% 59% 41% 41% % 26% 1311 The Group has spent HK$1,234 million in operating capital expenditure during the period (2014: HK$1,312 million). The above required funding was financed by the operating cash flow, bank borrowings and cash on hand of the Group. As at period end, the Group s free cash on hand was HK$11,077 million (2014: HK$9,708 million). Among the cash balance 3% was denominated in Hong Kong dollar, 95% in Renminbi and 2% in US dollar. Liquidity and Financial Resources It is the Group s policy to use the cash flow generated from operations and appropriate level of borrowings as the principal source of fund to finance major expansion and acquisition. As at the end of the period, the Group has total bank and note borrowings of HK$14,917 million (2014: HK$14,929 million). 30% (2014: 22%) of the borrowings is considered as current liabilities and repayable within one year, the remaining are repayable in two to seven years. Renminbi, HK, US and Japanese dollar denominated borrowings accounted for 4%, 57%, 38% and 1% of the total borrowings respectively (2014: 4%, 57%, 38% and 1%). 59% (2014: 59%) of borrowings are interest bearing bank loans on floating rate terms and 41% (2014: 41%) are interest bearing bank loans and senior notes as fixed interest rate. The cash balance of the Group was HK$11,077 million as at the period end (2014: HK$9,708 million). The gearing ratio of the Group at the end of the period, calculated as total debt over total assets, was 24%, compared to 26% as at the year ended 31st December, The EBITDA to interest cover ratio was at the very healthy level of 13 times (2014: 11 times). On the whole, the financial position and liquidity of the Group is healthy and stable. The healthy operating cash flow will provide sufficient funding for foreseeable expansion and working capital requirement % As at the end of the period, the Group has been granted a total of HK$8.5 billion term loan facilities with maturities from 2015 to The facilities are unsecured and with floating interest rates. As at the end of the period, 100% of the facilities has been drawn down. 10

13 Chairman s Statement and Review of Operations and Results Save for the above, the Group has no other committed borrowing facilities. For day-to-day liquidity management and maintaining flexibility in funding, the Group has managed to obtain sufficient uncommitted short-term facilities from banks. 8,8006, Charge of Assets As at 30th June, 2015, a bank deposit of HK$88 million (2014: HK$66 million) was pledged as security to supplier of natural gas. Property, Plant and Equipment During the period ended 30th June, 2015, the Group spent HK$417 million on additions of gas pipelines and HK$729 million on construction in progress. Contingent Liabilities As at 30th June, 2015, the Group did not have any material contingent liabilities. Financial Management and Treasury Policy The financial risk management of the Group is the responsibility of the Group s treasury function at the head office in Hong Kong. One of the major objectives of the Group s treasury policies is to manage its exposure to fluctuation in interest rates and foreign currency exchange rates. It is the Group s policy not to engage in speculative activities. Most of the Group s assets and liabilities are denominated in Hong Kong dollar, US dollar and Renminbi. The Group does not expect significant exposure to foreign exchange fluctuations in this regard. Interim Report

14 Chairman s Statement and Review of Operations and Results , SIGNIFICANT INVESTMENTS AND ACQUISITIONS Investments As at 30th June, 2015, the Group made new investments of approximately RMB217 million (approximately HK$271.3 million) in 9 city gas projects in Jilin, Yunnan, Zhejiang, Hunan, Guangxi, Shandong, Guangdong and Hebei Provinces. Two of these projects are wholly owned by the Group while the rest are joint ventures with majority controls. Another 5 projects totalling RMB92.7 million (approximately HK$115.9 million) were invested at the sub-business units level. A further 17 projects of RMB1,924.9 million (approximately HK$2,406.1 million) have been announced or approved by the Board up to 25th August, These include the bigger projects in Qingdao, Qinghuangdao and Dalian The acquisitions will add to the Company s existing footprint in these provinces and create further cluster synergy with existing city gas projects in terms of centralized procurement, pipeline design & construction and management efficiency. GOING CONCERN Taking into account of the internally generated funds of the Group and the good track records and relationship with banks which would enhance the Group s ability to renew the existing borrowing facilities, the directors of the Company are of the view that the Group has sufficient working capital for its present requirements for the next twelve months from 30th June, Accordingly, the going concern basis continues to be adopted in preparing the consolidated financial statements. INTERIM DIVIDEND The Directors have resolved to declare the payment of an interim dividend of 10 HK cents per share for the six months ended 30th June, 2015 (six months ended 30th June, 2014: 5 HK cents per share), payable on 5th October, 2015 to shareholders on the register of members of the Company on 25th September,

15 Chairman s Statement and Review of Operations and Results ,000, ,534,680 70,000, % CLOSURE OF REGISTER OF MEMBERS The register of members of the Company will be closed from 21st September, 2015 to 25th September, 2015, both days inclusive. In order to qualify for the proposed interim dividend payment, completed transfer forms accompanied by the relevant share certificates must be lodged with the Company s branch share registrar and transfer office in Hong Kong, Tricor Secretaries Limited, at Level 22, Hopewell Centre, 183 Queen s Road East, Hong Kong, not later than 4:30 p.m. on 18th September, INCENTIVE AWARD SCHEME On 1st December, 2008, the Company adopted a share repurchased cash award scheme (the Incentive Award Scheme ) for the purpose of recognizing the contribution of employees and providing incentives to employees. Unless early termination by the Board, the Incentive Award Scheme shall be valid and effective for a term of 10 years commencing on the adoption date. The maximum aggregate numbers of award shares which can be awarded under the Incentive Award Scheme is 70,000,000. Pursuant to the rules of the Incentive Award Scheme, the Company has appointed BOCI-Prudential Trustee Limited as trustee (the Trustee ), pursuant to which existing shares will be purchased by the Trustee from the market out of cash contributed by the Group and be held in trust for relevant selected employees until such shares are vested with relevant selected employees in accordance with the provisions of the Incentive Award Scheme. A total of 70,000,000 shares, representing approximately 4.95% of the issued share capital of the Company as at date of acquisition and held by the Trustee, were purchased at an aggregate cost of approximately of HK$253,534,680 (including transaction costs) on 7th April, 2009 and held by the Trustee. The Company does not intend to purchase any further share under the Incentive Award Scheme. Interim Report

16 Chairman s Statement and Review of Operations and Results 49,373,384 44,600 On 16th March, 2010, the Company amended the Incentive Award Scheme such that cash instead of award shares will be awarded under the Incentive Award Scheme. The Company will utilize the proceeds generated from disposal of the award shares held by the Trustee for the cash awards to be made under the scheme. The awards are subject to the approval of the Company s Remuneration Committee and the cash under the award will only be paid upon fulfillment of relevant vesting conditions imposed on the date of grant of the award. There was no movement of the award shares during the period. There are 49,373,384 award shares held by the trustee as at 30th June, REWARD FOR EMPLOYEES As at 30th June, 2015, the Group employs approximately 44,600 employees in Hong Kong and the PRC. The Group values human talent and recognizes the importance of attracting and retaining quality staff for its continual success. The Group remunerates its employees based on their performance, work experience and the prevailing market wage level. Further, staff bonuses are granted to certain employees and incentive awards may be made to selected employees based on individual performance. The Group believes this will assist the Group to attract and retain quality staff and at the same time encourage the employees to give their best performance. APPRECIATION On behalf of the Board, I would like to take this opportunity to express our most sincere appreciation to our business partners, customers and shareholders for their unfailing support as well as all the Group s employees for their hard work and dedication in carrying out their duties and in achieving the Group s business goal. On behalf of the Board Wang Chuandong Chairman Hong Kong, 25th August,

17 Corporate Governance and Other Information THE BOARD As at the date of this interim report, the Board consists of four Executive Directors namely, Mr. Wang Chuandong, Mr. Shi Shanbo, Mr. Ge Bin and Mr. Ong Thiam Kin; four Non-executive Directors namely, Mr. Du Wenmin, Mr. Wei Bin, Mr. Chen Ying and Mr. Wang Yan and four Independent Non-executive Directors namely, Mr. Wong Tak Shing, Ms. Yu Jian, Mr. Yu Hon To, David and Mr. Qin Chaokui. BOARD COMMITTEEs Audit Committee As at the date of this interim report, the Audit Committee comprises of one Non-executive Director namely Mr. Wang Yan and two Independent Non-executive Directors namely Mr. Wong Tak Shing and Mr. Yu Hon To, David (Chairman). Remuneration Committee As at the date of this interim report, the Remuneration Committee comprises of one Non-executive Director namely Mr. Du Wenmin and two Independent Non-executive Directors namely Mr. Wong Tak Shing (Chairman) and Mr. Yu Hon To, David. Nomination Committee As at the date of this interim report, the Nomination Committee comprises of two Executive Directors namely Mr. Wang Chuandong (Chairman) and Mr. Shi Shanbo and three Independent Non-executive Directors namely Mr. Wong Tak Shing, Ms. Yu Jian and Mr. Qin Chaokui. Investment Committee As at the date of this interim report, the Investment Committee comprises of one Executive Director namely Mr. Wang Chuandong, two Non-executive Directors namely Mr. Wei Bin (Chairman) and Mr. Chen Ying and one Independent Nonexecutive Director namely Mr. Wong Tak Shing. Interim Report

18 Corporate Governance and Other Information 13.51(B)(1) XV XV Corporate Governance Committee As at the date of this interim report, the Corporate Governance Committee comprises of two Executive Directors namely Mr. Shi Shanbo and Mr. Ong Thiam Kin and three Independent Non-executive Directors namely Mr. Wong Tak Shing, Ms. Yu Jian (Chairman) and Mr. Qin Chaokui. CHANGE IN DIRECTOR S INFORMATION Ms. Yu Jian, the Independent Non-executive Director of the Company, resigned as Standing Committee Member of the 5th Shenzhen CPPCC with effect from 18th May, Save for the information disclosed above, there is no other information required to be disclosed pursuant to Rule 13.51(B)(1) of the Listing Rules. DIRECTORS INTEREST IN SECURITIES As at 30th June, 2015, the interests and short positions of the directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporation (within the meaning of Part XV of the Securities and Futures Ordinance ( SFO )) which have been notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO), or which are required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange, were as follows: 16

19 Corporate Governance and Other Information (a) Name of Directors Capacity (a) Interests in issued ordinary shares of the Company Long or short position Number of shares 1 Aggregate percentage of interest 1 Mr. Wang Chuandong Beneficial owner Long position 1,010, % Mr. Shi Shanbo Beneficial owner Long position 50, % Mr. Ge Bin Beneficial owner Long position 16, % Mr. Ong Thiam Kin Beneficial owner Long position 250, % Mr. Du Wenmin Beneficial owner Long position 54, % Note: This represents the percentage of aggregate long position in ordinary shares of the Company to the total issued shares of the Company as at 30th June, (b) Name of Directors Mr. Wang Chuandong (b) Interests in issued ordinary shares of China Resources Enterprise, Limited ( CRE ), an associated corporation of the Company Long or short position Long position Number of shares 1 Aggregate percentage of interest 1 600, % Mr. Du Wenmin Mr. Wang Yan Long position Long position Notes: 100, % 150, % This represents the percentage of aggregate long position in ordinary shares of CRE to the total issued shares of CRE as at 30th June, All interests disclosed above are being held by the Director in his capacity as beneficial owner. Interim Report

20 Corporate Governance and Other Information (c) Name of Directors (c) Interests in issued ordinary shares of China Resources Land Limited ( CRL ), an associated corporation of the Company Long or short position Number of shares 1 Aggregate percentage of interest 1 Mr. Shi Shanbo Mr. Du Wenmin Mr. Chen Ying Long position Long position Long position Notes: 171, % 640, % 500, % This represents the percentage of aggregate long position in ordinary shares of CRL to the total issued shares of CRL as at 30th June, All interests disclosed above are being held by the Director in his capacity as beneficial owner. (d) Name of Directors (d) Interests in issued ordinary shares of China Resources Power Holdings Company Limited ( CRP ), an associated corporation of the Company Long or short position Number of shares 1 Aggregate percentage of interest 1 Mr. Shi Shanbo Mr. Du Wenmin Mr. Wang Yan Long position Long position Long position Notes: 500, % 480, % 44, % This represents the percentage of aggregate long position in ordinary shares of CRP to the total issued shares of CRP as at 30th June, All interests disclosed above are being held by the Director in his capacity as beneficial owner. 18

21 Corporate Governance and Other Information (e) Name of Directors (e) Interests in issued ordinary shares of China Resources Cement Holdings Limited ( CR Cement ), an associated corporation of the Company Long or short position Number of shares 1 Aggregate percentage of interest 1 Mr. Shi Shanbo Mr. Chen Ying Long position Long position Notes: 280, % 230, % This represents the percentage of aggregate long position in ordinary shares of CR Cement to the total issued shares of CR Cement as at 30th June, All interests disclosed above are being held by the Director in his capacity as beneficial owner. INCENTIVE AWARD SCHEME No award under the Scheme was made during the period to any director or staff. Details of the movement during the period of the Award Shares held by the Trustee are as follows: Number of Award Shares Balance as at 1st January, ,373,384 Granted and disposed of during the period to 30th June, 2015 Balance as at 30th June, 2015 held by the Trustee 49,373,384 XV SUBSTANTIAL SHAREHOLDERS As at 30th June, 2015, so far as is known to the directors or chief executive of the Company, the following persons (not being a director or chief executive of the Company) had interests or short positions in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO or which were recorded in the register maintained by the Company pursuant to section 336 of the SFO: Interim Report

22 Corporate Governance and Other Information Name of shareholder Capacity 2 CRH (Gas) Limited ( CRH Gas ) 2 Beneficial owner 2 China Resources (Holdings) Company Limited 2 Controlled company s interest CRC Bluesky Limited ( CRC Bluesky ) 2 Controlled company s interest 2 China Resources Co., Limited Controlled company s interest ( CRCL ) 2 2 China Resources National Corp. ( CRNC ) 2 The Capital Group Companies, Inc. 3 Controlled company s interest Controlled company s interest Capital Research and Management Company 3 Beneficial owner Long Position in the Company Nature of interest Beneficial interest Corporate interest Corporate interest Corporate interest Corporate interest Corporate interest Beneficial interest Long or short position Long position Long position Long position Long position Long position Long position Long position Number of shares 1 Aggregate percentage of interest 1 1,407,828, % 1,422,298, % 1,422,298, % 1,422,298, % 1,422,298, % 200,670, % 200,670, % 1. Notes: 1. This represents the percentage of aggregate long position in ordinary shares to the total issued shares of the Company as at 30th June, ,407,828,991 14,470,000 1,422,298,991 CRC Bluesky CRC Bluesky 1,422,298, CRH Gas and Commotra Company Limited were directly interested in 1,407,828,991 shares and 14,470,000 shares in the Company respectively and both companies are wholly-owned subsidiaries of China Resources (Holdings) Company Limited. China Resources (Holdings) Company Limited is therefore deemed to be interested in 1,422,298,991 shares of the Company. China Resources (Holdings) Company Limited is a wholly-owned subsidiary of CRC Bluesky, which is in turn wholly-owned by CRCL. CRCL is a wholly-owned subsidiary of CRNC. So, China Resources (Holdings) Company Limited, CRC Bluesky, CRCL and CRNC are therefore deemed to have interest in 1,422,298,991 shares of the Company. 3. Capital Research and Management Company The Capital Group Companies, Inc. The Capital Group Companies, Inc. 200,670, Capital Research and Management Company is a wholly-owned subsidiary of The Capital Group Companies, Inc. So, The Capital Group Companies, Inc. is deemed to have interest in 200,670,000 shares of the Company. 20

23 Corporate Governance and Other Information SPECIFIC PERFORMANCE OBLIGATIONS ON CONTROLLING SHAREHOLDER On 12th August, 2010, the Company as borrower entered into a facility agreement in relation to a HK$1 billion term loan facility with a bank. The loan facility is unsecured and interest bearing with any outstanding amount to be repaid in full on the date falling five years from the date of the facility agreement. On 15th February, 2011, the Company, as borrower, entered into a facility agreement with a bank in relation to a HK$800 million 5-year term loan facility. The loan facility is unsecured and interest bearing with any outstanding amount to be repaid in full on the date falling five years from the date of the facility agreement. On 11th July, 2011, the Company, as borrower, entered into a facility agreement with a bank in relation to a HK$800 million 5-year term loan facility. The facility is unsecured and interest bearing with any outstanding amount to be repaid in full on the date falling five years from the date of the facility agreement On 27th March, 2013, the Company, as borrower, entered into two facility agreements in relation to a HK$800 million 3-year term loan facility and a HK$300 million 3-year term loan facility with two banks respectively. The loan facilities are unsecured and interest bearing with any outstanding amounts to be repaid in full on the date falling three years from the date of the facility agreements. On 13th May, 2013, the Company, as borrower, entered into two facility agreements in relation to a HK$800 million 3-year term loan facility and a HK$500 million 3-year term loan facility with two banks respectively. The loan facilities are unsecured and interest bearing with any outstanding amounts to be repaid in full on the date falling three years from the date of the facility agreements. On 23rd December, 2013, the Company, as borrower, entered into a facility letter with a bank in relation to a HK$1,500 million 3-year term loan facility. The loan facility is unsecured and interest bearing with any outstanding amounts to be repaid in full on the date falling three years from the date of first drawdown. Interim Report

24 Corporate Governance and Other Information On 11th June, 2015, the Company, as borrower, entered into a facility agreement in relation to a HK$2,000 million 3-year term loan facility with a bank. The loan facility is unsecured and interest bearing with any outstanding amounts to be repaid in full on the date falling three years from the date of the facility agreement. The facility has been used to repay the existing HK$2,000 million bilateral loan facility on 15th June, % Pursuant to the aforesaid facility agreements and facility letter, the controlling shareholder of the Company, China Resources (Holdings) Company Limited is required, at all times, to hold an aggregate beneficial ownership (directly or indirectly) of not less than 50% in the issued share capital of the Company (the Specific Performance Obligation ). It will be an event of default if the Specific Performance Obligation is breached; and in such case, the relevant banks shall declare the commitments to be cancelled and/or declare all outstanding amounts together with interests accrued thereon and all other sums payable by the Company to be immediately due and payable. PURCHASE, SALE OR REDEMPTION OF THE COMPANY S LISTED SECURITIES Other than as disclosed in this report, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company s listed securities during the period ended 30th June, CORPORATE GOVERNANCE The Group is dedicated to maintaining a good credible framework of corporate governance with a view to being transparent, open and accountable to our shareholders as regards to the principles under which the Group is managed and directed. Going forward, the Group will continue to strengthen its corporate governance policies to ensure that they remain consistent with the prevailing practices and standards, which the shareholders would expect of us. To strengthen the functions of the Board and to enhance its expertise, there are five committees namely, the Audit, Remuneration, Nomination, Investment and Corporate Governance Committees under the Board, with each performing different functions. 22

25 Corporate Governance and Other Information (i) (ii) Audit Committee The Audit Committee comprises of two Independent Nonexecutive Directors namely Mr. Yu Hon To, David and Mr. Wong Tak Shing and one Non-executive Director namely Mr. Wang Yan. Mr. Yu Hon To, David is the Chairman of the Audit Committee. The Audit Committee s role is to provide an independent and objective review of the effectiveness of the financial reporting process, internal control and risk management as well as internal audit function of the Group. It primarily aims to increase the Board s effectiveness, accountability, transparency and objectivity. The Audit Committee has reviewed with the management (i) the accounting principles and practices adopted by the Group and (ii) reviewed and discussed internal control and financial reporting matters including the unaudited interim results and the financial statements for the period. Remuneration Committee The Remuneration Committee comprises of two Independent Non-executive Directors namely Mr. Wong Tak Shing and Mr. Mr. Yu Hon To, David and one Non-executive Director namely Mr. Du Wenmin. Mr. Wong Tak Shing is the Chairman of the Remuneration Committee. The duties of the Remuneration Committee, among others, are to make recommendations to the Board on the Group s policy and structure for the remuneration of directors and senior management and to review and approve remuneration by reference to corporate goals and objectives resolved by the Board from time to time. Nomination Committee The Nomination Committee comprises of two Executive Directors namely Mr. Wang Chuandong and Mr. Shi Shanbo and three Independent Non-executive Directors namely Mr. Wong Tak Shing, Ms. Yu Jian and Mr. Qin Chaokui. Mr. Wang Chuandong is the Chairman of the Nomination Committee. The primary objective of the Nomination Committee is to assist the Board in establishing a formal, considered and transparent procedure for the appointment of new Directors to the Board. The Nomination Committee s duties also include, among others, the review of the structure, size and composition of the Board on a regular basis and make recommendations to the Board regarding any proposed changes. Interim Report

26 Corporate Governance and Other Information 14 D.1.4 Investment Committee The Investment Committee comprised of one Executive Director namely Mr. Wang Chuandong, two Non-executive Directors namely Mr. Wei Bin and Mr. Chen Ying and one Independent Non-executive Director namely Mr. Wong Tak Shing. Mr. Wei Bin is the Chairman of the Investment Committee. The primary duty of the Investment Committee is to assist the Board in making investment decisions in respect of the city gas distribution business within the investment threshold as authorized by the Board. Corporate Governance Committee The Corporate Governance Committee comprises of three Independent Non-executive Directors namely Ms. Yu Jian, Mr. Wong Tak Shing, Mr. Qin Chaokui and two Executive Directors Mr. Shi Shanbo and Mr. Ong Thiam Kin. Ms. Yu Jian is the Chairman of the Corporate Governance Committee. The primary objective of the Corporate Governance Committee is to assist the Board in developing and reviewing the policies and practices on corporate governance which are applicable to the Group and make recommendations to the Board. COMPLIANCE WITH CORPORATE GOVERNANCE CODE The Company has adopted the mandatory provisions of the Corporate Governance Code (the Code ) set out in Appendix 14 to the Listing Rules. In line with the mandatory provisions of the Code, the Company has adopted a Corporate Governance Handbook (the Handbook ) on 23rd December, 2005 and subsequently updated it in 2008, 2009, 2010, 2012, 2013 and The contents of the Handbook include, among others, directors duties, model code for directors transactions in securities, model code for securities transaction by relevant employees, the functions and terms of reference of the Audit, Remuneration, Nomination, Investment and Corporate Governance Committees, disclosure of information, communication with shareholders, procedures for shareholders to propose a person for election as a director and board diversity policy. All the mandatory provisions under the Code have been adopted and reflected in the Handbook. During the six months ended 30th June, 2015, the Company was in compliance with the mandatory provisions of the Code except for the deviation from code provision D.1.4 which is explained as follows: 24

27 Corporate Governance and Other Information D Under the code provision D.1.4, the Company should have formal letters of appointment for directors setting out the key terms and conditions of their appointment. The Company did not have formal letters of appointment for Directors. However, the Directors are subject to retirement by rotation at least once every three years in accordance with the Bye-Laws. In addition, the Directors are required to refer to the guidelines set out in A Guide on Directors Duties issued by the Companies Registry and Guidelines for Directors and Guide for Independent Non-Executive Directors (if applicable) published by the Hong Kong Institute of Directors in performing their duties and responsibilities as directors of the Company. Besides, the Directors are required to comply with the requirements under statute and common law, the Listing Rules, legal and other regulatory requirements and the Company s business and governance policies. Save as those mentioned above and in the opinion of the Directors, the Company has met the code provisions set out in the Code during the six months ended 30th June, model code for securities transactions by directors The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the Model Code ) set out in Appendix 10 to the Listing Rules as its own code of conduct regarding securities transactions by the Directors. Having made specific enquiry of all Directors, the Company confirmed that all Directors have complied with the required standard set out in the Model Code throughout the period. On behalf of the Board Wang Chuandong Chairman Hong Kong, 25th August, 2015 Interim Report

28 Financial & Operational Highlights For the period ended 30th June 2015 HK$ 000 (1) 2014 (1) Restated HK$ 000 Increase/ (Decrease) Turnover 15,090,569 12,845,540 17% Gross profit 4,533,277 3,877,671 17% Profit from operations (Before Finance Cost and Share of JV & associates results) 2,443,976 2,121,704 15% Profit for the period 2,009,577 1,694,453 19% Profit attributable to the Company s equity holders 1,563,802 1,251,010 25% Net cash from operating activities (after tax payments) 2,952,847 2,335,493 26% (2) Basic EPS (2) (HK cents) % Interim dividend proposed/paid per share (HK cents) % (1) (2) Notes: (1) Restated due to the effect of the finalization of accounting for acquisition of a subsidiary; (2) Basic earnings per share is calculated based on weighted average number of issued shares, excluding award shares held by the trustee. 26

29 Financial & Operational Highlights For the period ended 30th June st December 2014 Increase/ (Decrease) Restated HK$ 000 HK$ 000 Total assets 61,106,012 57,537,800 6% Bank balance and cash 11,077,061 9,707,507 14% Total bank and note borrowings 14,917,392 14,929,154 0% Net borrowings 3,840,331 5,221,647 (26%) Equity attributable to the Company s equity holders 17,207,431 16,063,368 7% Non-controlling interests 5,512,432 4,966,268 11% Total equity 22,719,863 21,029,636 8% Interim Report

30 Financial & Operational Highlights Financial Indicators As at 30th June 2015 As at 31st December 2014 Restated Gross profit margin 30.0% 30.2% (1) Net profit margin 10.4% 9.7% (1) Current ratio 0.8x 0.9x (2) Net debt to equity ratio (2) 22.3% 32.5% (3) Debt to capitalization ratio (3) 39.6% 41.5% (4) Debt to assets ratio (4) 24.4% 25.9% (5) Return on weighted average equity (5) (annualized) 18.2% 16.9% (1) (1) Notes: (1) Margin and return as at 30th June 2014 (Restated). (2) (2) Net debt/equity gearing ratio is the ratio of net bank and note borrowings to shareholders equity. (3) (3) Debt/capitalization gearing ratio is the ratio of total bank and note borrowings to total bank borrowings and total equity. (4) (4) Debt/asset gearing ratio is the ratio of total bank and note borrowings to total assets. (5) 12.1% 10.7% (5) If merger reserve is excluded, return was 12.1% (1H2015), 10.7% (1H2014). 28

31 Financial & Operational Highlights % Operational Performance As at 30 June 2015 As at 30 June 2014 Change/% As at 31 Dec 2014 Change Number of projects (2) Gross Gas Sale Volume (million m 3 ) 7,556 6, % 13,323 N/A Residential 2,123 1, % 3,467 N/A Commercial & Industrial 4,612 4, % 8,239 N/A Gas station % 1,617 N/A Connected Customers and Gas stations (1) Residential (1) 21,762,695 19,351,000 2,411,685 20,738,125 1,024,560 Commercial & Industrial 159, ,240 19, ,172 17,726 (CNG/LNG/L-CNG) Gas station (CNG/LNG/L-CNG) 294(196/66/32) 241(175/48/18) 53(21/18/14) 279(194/55/30) 15(2/11/2) Average Gas Tariff/ Cost/Gross Margin (RMB per m 3 ) 2.86/2.19/ /2.20/ /(0.01)/ /2.24/0.67 (0.05)/(0.05)/0.00 Residential 2.23/1.92/ /2.00/0.33 (0.10)/(0.08)/(0.02) 2.16/1.99/ /(0.07)/0.14 Commercial & Industrial 2.93/2.19/ /2.12/ /0.07/ /2.27/0.72 (0.06)/(0.08)/0.02 Gas station 3.70/2.59/ /2.63/ /(0.04)/ /2.55/ /0.04/0.04 Average Gas Gross Profit Margin 23.5% 22.7% 0.8%pt 22.2% 1.3%pt Residential 13.8% 14.3% (0.5%)pt 7.8% 6.0%pt Commercial & Industrial 25.3% 25.6% (0.3%)pt 24% 1.3%pt (CNG/LNG) Gas station (CNG/LNG) 30% (33.2%/21.1%) 26.1% (27.8%/14.6%) 3.9%pt 29.5% (30.1%/19.6%) 0.5%pt (1) Average Residential Connection Fee (RMB) (1) 2,580 3,004 (424) 3,160 (580) Installed designed capacity (%) for C&I customers (m 3 per day)/ Utilization rate (%) 49,866, % 47,359, % 2,507,870 (2.2%)pt 47,431, % 2,435,577 (0.7%)pt Penetration rate of residential household 43.1% 42.5% 0.6%pt 41.5% 1.6%pt Total length of pipeline (km) 105,952 93,139 12,813 98,512 7,440 (1) 1,024, , , ,196 (2) 9 8 Notes: (1) 1,024,560 (1H2014: 798,000) gross new households with paid connection fee during 1H2015, out of which 673,969 (1H2014: 521,196) are accounted in consolidated financial statements. (2) 9 new registered projects in 1H2015, Fuzhou LPG and Fuzhou China Resources Gas merged into one company, so that net increase in number of projects was 8. Interim Report

32 Report on Review of Condensed Consolidated Financial Statements TO THE BOARD OF DIRECTORS OF (incorporated in Bermuda with limited liability) Introduction We have reviewed the condensed consolidated financial statements of China Resources Gas Group Limited (the Company ) and its subsidiaries (collectively referred to as the Group ) set out on pages 32 to 60, which comprises the condensed consolidated statement of financial position as of 30th June, 2015 and the related condensed consolidated statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended, and certain explanatory notes. The Main Board Listing Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 Interim Financial Reporting ( HKAS 34 ) issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of these condensed consolidated financial statements in accordance with HKAS 34. Our responsibility is to express a conclusion on these condensed consolidated financial statements based on our review, and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. 30