Summary of the results：

Total gas sales volume was 605 million cubic meters, up by 20.7% YoY, of which (i) Gas sales volume to industrial and commercial users was 336 million cubic meters, up by 27.8% YoY; (ii) gas sales volume to residential users was 123 million cubic meters, up by 48.2% YoY.

Revenue was RMB 1,899 million, representing a YoY increase of 27.4%, of which gas sales revenue was RMB 1,453 million, up by 25.0% YoY.

Gross profit was RMB498 million, representing a YoY increase of 31.3%. Overall gross profit margin was 26.2%. Gross profit margin for gas sales was 14.2%, representing an increase of 0.20 percentage points YoY.

Excluding gains/losses arising from cross currency swap contracts and exchange, adjusted profit attributable to owners of the Company amounted to RMB253 million, representing an increase of 34.9% YoY.

The Board recommends the payment of an interim dividend of RMB5.36 cents per share with the proportion of dividends of approximately 25%.

(On 27 August 2018, Hong Kong) China’s leading nation-wide city gas operator group China Tian Lun Gas Holdings Limited ( the “Company”, together with its subsidiaries collectively referred to as the “Group”) is pleased to announce the annual results of the Group for the six months ended 30 June 2018（“the Reporting Period”）.

During the Reporting Period, the Group’s revenue amounted to RMB1,899 million, up by 27.4% YoY. The Group realized gross profit of RMB498 million, representing a YoY increase of 31.3%. Adjusted profit attributable to owners of the Company amounted to RMB253 million, up by 34.9% YoY. The Group’s revenue was primarily derived from (i) the businesses of sales of gas; and (ii) gas pipeline connections, accounting for 76.5% and 21.0% of the total revenue (the corresponding period of last year: 78.0% and 20.0%), respectively.

Rapid Growth in Revenue from Gas Sales

During the Reporting Period, the Group had a significant growth in gas sales volume. Revenue from gas sales amounted to RMB1,453 million, representing a rapid increase of 25.0% YoY. In particular, revenue from gas sales to industrial and commercial users was RMB816 million, representing a rapid YoY increase of 30.6%; gas sales to industrial and commercial users accounted for 56.1% of total gas sales, representing an increase of 2.44 percentage points YoY; revenue from gas sales to residential users was RMB265 million, representing a rapid increase of 46.3% YoY.

For the Reporting Period, gas sales volume of the Group amounted to 605 million cubic meters, up by 20.7% YoY. Gas volume sold to industrial and commercial users, residential users, transportation gas users and wholesale users accounted for 55.6%, 20.3%, 9.5% and 14.6% of total gas sales volume, respectively. The performance is as following:

(1)   Gas volume sold to industrial and commercial users increased by 27.8% YoY, and the proportion of such sales volume to total sales volume increased by 3.10 percentage points YoY. Excluding the gas sale volume to industrial and commercial users through long-haul pipeline business segment, gas sales volume to industrial and commercial users of the rest gas projects of the Group grew by 49.1% YoY. The designed daily gas supply capacity for industrial and commercial users reached 7.26 million cubic meters, representing a significant increase of 38.3% YoY.

(2)   The overall gas sales volume to residential users increased by 48.2% YoY, mainly due to the Group’s innovative residential user development model which achieved double growth of both denotation and connotation as well as the significant growth in gas sales volume to residential customers in Jintang project in Sichuan, and the newly consolidated Mizhi and Wubu projects in Shaanxi in the first half of this year.

(3)   During the Reporting Period, pipeline gas transmission volume not included in total gas sales volume was 420 million cubic meters, representing an increase of 25 million cubic meters or 6.3% YoY, mainly due to increased demand from natural gas power plant users.

Rapid Growth in Revenue from Gas Pipeline Connection

During the Reporting Period, revenue from gas pipeline connections amounted to RMB398 million, up by 33.6% YoY.

During the Reporting Period, new connections to residential users and industrial and commercial users of the Group were approximately 134,077 and approximately 1,061, representing YoY increases of 40.1% and 26.5%, respectively. As at 30 June 2018, the Group had a total of approximately 1,780,362 residential users and a total of approximately 16,496 industrial and commercial users, representing increases of 25.3% and 69.1% YoY, respectively.

Revenue from Other Businesses

Most of the revenue from other businesses of the Group comes from value-added services. During the Reporting Period, the Group vigorously expanded value-added services such as gas stove sales, gas comprehensive insurance agency, and gas modification and maintenance, and achieved good results, driving the revenue from other businesses to reach RMB48 million, representing a significant YoY increase of 63.2%.

Steady Growth in Margins

During the Reporting Period, the Group’s overall gross profit margin of the Group was 26.2%. Gross profit margin for gas sales was 14.2%, representing an increase of 0.20 percentage points YoY, mainly due to the continuous optimization of the Group’s gas sales structure. Gross profit margin for connection business was 65.4%, representing a decrease of 1.53 percentage points YoY, mainly due to the development of small- and medium-sized and township users and the increase in the cost of connection materials during the Reporting Period. Gross profit margin for other businesses was 64.0%, representing an increase of 7.86 percentage points YoY.

During the Reporting Period, the net adjusted profit margin was 13.9%, representing an increase of 0.66 percentage points YoY.

Development of New Projects

During the Reporting Period, the Group completed full takeover of the operation and management of the two target companies for the two urban gas projects in Mizhi County and Wubu County in Shaanxi Province, which were newly acquired at the end of last year, and began to conduct the consolidation of financial statements in February this year.

On 16 June 2018, the Group obtained the exclusive township pipeline gas concession right of Wugang City, Henan Province. The concession period will be 27 years

Establishment of a Coal-to-Gas Conversion Investment Fund

On 27 June 2018, Henan Tian Lun Gas Group Limited, an indirect wholly-owned subsidiary of the Company, entered into a partnership agreement with Henan Zhongyu Financial Holdings and Equity Investment Management Co., Ltd. and Henan Yuzi Urban and Rural Integration Construction and Development Co.,Ltd. to establish Henan Yuzi Tianlun New Energy Investment Fund Centre to invest in coal-to-gas conversion projects in the townships in Henan Province and the upstream and downstream natural gas industrial chain.

Pursuant to the Partnership Agreement: (i) the total capital contribution to the Fund to be made by all the Partners shall be RMB10 billion, of which RMB1 million, RMB5,999 million and RMB4 billion shall be made by Henan Zhongyu, Yuzi Development and Henan Tian Lun, respectively; (ii) the first phase of the Fund is RMB1 billion, of which RMB600 million will be contributed by Yuzi Development and RMB400 million by Henan Tian Lun; (iii) the remaining capital contribution to the fund to be made by each Partners shall be made by tranches in view of the investment plan and progress of the Fund.

The Fund intends to establish a project holding company, which will utilise the funds provided by the Fund, government grants and long-term facilities to be provided by policy banks and financial institutions to invest in coal-to-gas conversion projects in the townships in Henan Province and the upstream and downstream natural gas industrial chain, so as to capture the opportunities to be brought by the rapid development of the natural gas industry in the PRC and explore the huge potential of the natural gas market in the townships in Henan Province through making full use of the advantages of the Partners.

Outlook

In the second half of the year, the Group will vigorously promote the coal-to-gas conversion business in the townships of Henan Province and seek cooperation opportunities for coal-to-gas conversion in townships outside the province through copying the coal-to-gas conversion fund cooperation model. The Group will speed up the pace of entering the gas source trade industry upstream. The long- haul pipelines will mainly be built in the existing business areas. The Group will also develop high-quality and large-scale industrial direct supply projects, actively participate in the businesses of midstream gas source procurement, distributed energy and gas transmission and supply for industrial parks and power plants and strive to achieve upstream and downstream integration, in order to repay the shareholders with better performance.