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Dear investors, good afternoon. Welcome to join us with the interim results announcement of CGH.

First, let me recognize the management. They are Chairman, President and Managing Director, Mr. Liu Ming Hui; Executive Director, Executive President, Vice President, Huang Yong. In our Hong Kong venue, we have Mr. Zhu Weiwei, Executive Director and Managing VP. We also have Assistant to President, GM of Capital Management Centre, Liu Chang.

First, remarks from Chairman Liu.

Good afternoon, everyone. Thank you for joining us online for China Gas interim announcements. Thank you to the analysts, investors, people who have supported China Gas Holdings for the long period of time in the past. Thank you for staying with us, supporting and carrying with the China Gas as well as China Gas Holdings.

Taking this opportunity, we'd like to report to you the past half year performance, which is a period heavily impacted by COVID-19. I'd like to report to you our past half year journey as well as our performance and announcements. We're very honored to have this opportunity. In today's announcement, our management team would love to really open up our hearts and frankly engaging and interacting with each and every one of you.

Without further ado, let's kick off the announcements. First, Mr. Zhu Weiwei will give you an update on the first half of 2020 financial year performance. Thank you.

Dear analysts, dear investors, on behalf of China Gas Holdings, I'd like to report to you our interim results for the financial year 2020.

As you could see, the basic conclusion for the performance is, our economy was heavily impacted by COVID-19 in terms of the construction installations and overall gas volume. However, our financial performance is quite outstanding. Especially the operational cash flow and free cash flow are all very outstanding. Comparing with the previous financial year, we could see a drastic increase.

If you look at this financial year, we have secured 32 piped gas projects. Our piped gas projects, in total, reaching 636, covering 30 provinces and autonomous regions and municipalities in China, among which 15 are provincial capital cities or municipalities.

The total natural gas sales volume had increased by 8.4%, reaching 12.8 billion cubic meters, among which the natural gas sold through retail projects increased by 10.5%, reaching 7.6 billion cubic meters.

For the asset-light value-added services, in the last 5 consecutive years, has been expanding rapidly. Operating profits, reaching almost HKD 1 billion, increased year-on-year on 47.8%.

Profit attributable to owners of the company, reaching HKD 5.08 billion, reaching -- an increase by 3.7%, with the core profit attributable to owners of the company grew by 5.5%. If we take into consideration of the 2.3% depreciation of RMB against Hong Kong dollars, then the core profit attributable to the owners of the company has realized a growth of 7.8%. If you look at our operating cash flow, has significantly increased by 71%, reaching HKD 6.89 billion, with free cash flow amounting to HKD 3.78 billion.

China Gas Holdings had also incorporated ESG development into our business. We have not only been included by the Hang Seng ESG 50 Index, but also Hang Seng ESG Ratings. Also, according to MSCI Ratings, we have been lifted to BBB ratings.

Now I'd like to share with you on the next 3 segments operational performance, financial performance and outlook and prospect on the past 6 months performance. First, let's look at operational performance, including natural gas, value-added service, LPG and Smart MicroGrid.

First, on natural gas, the total sales of the volume. If you look at the past 6 months, comparing with same period of last year, the overall volume sold by 8.4%, reaching 12.8 billion, among which the piped gas to traded gas had increased by 5.4%. If you look at the sales points, it's been increased also drastically.

If you look at LNG trading business, we have seen exponential growth from [ 7.35 billion ], reaching 1.43 million tons. How did we realize that? We have reinforced our collaboration with the major players, the Pipe China and LNG importers. Also, we have cooperated with them in the stations, in the filings. Also for the LNG and piped gas projects, we also had thorough collaboration with these players.

Now China Gas has become the largest LNG trader for CNOOC in Guangdong. We have found a JV, specializing on the sales of the LNG where China Gas had 70% of the holdings. We also have expanded the end users market by supplying LNG to nearly 1,000 external industrial and commercial users. We also are optimizing our transportation routes covering 10,000 routes in operations. We also are expanding to the third users as well as the industrial and commercial users. Our LNG trading business has made us the largest distributor of the LNG in China market.

If you look at the overall financial year goal, we want to realize the sales of 3.5 million tons. That's about 4.8 billion cubic meters. If you look at the retail business, according to 4 different categories of users, if you look at the residential users this year, increased by 19.8%, reaching 25.6% in the total retail gas volume; industrial increased by 9.8%, now taking up 53%; for commercial users, increased by 4.9%, increasing to 14.9%; for the CNG and LNG, down by 2.1%, accounting for 6.5% in the total sales.

But the CNG and LNG station markets have been heavily impacted by the COVID-19. If you look at the total retail market, it has a volume increase of 10.5%.

Now let's look at the users' data. If you look at the past half year, we have connected to 2.8 million users and households, where the statistics last year is 2.93 million, among which, for the city projects is 2.12 million, and last year, it's 1.7 million, so we increased 27%.

For the RCG projects, its 700,000, also increase; for the Smart MicroGrid down, now 6,500. For the Smart MicroGrid, in the past 6 months, we have developed 6,500 users. For the industrial users, new connections, 901, comparing with last period -- same period of last year, 1,431, down by 500 players. For the commercial users, we have new connection of 18,000. Currently, we own residential users amounting to 370 million, among which 310 million are the residential users. For the industrial users, 1.15 million; and gassing stations, 556 stations in total.

If you look at the installation fees, quite stable. If you look at the mid-term, the installation fee is CNY 2,490. For the coal to gas average, CNY 2,930. And same period of last year, about CNY 2,300. Currently, we have covered 140 million populations, penetration, 67.7%.

Of course, you also are looking into the installations. Currently, 50% of the projects have realized the auditing and down per project by CNY 400. But by optimized design by IoT meters, the dollar margins for each of the household did not depreciate. We expect that the installation fee in the future will remain between CNY 2,200 and CNY 2,300. Among all the players in the market, we are the least impacted. So that's for the installation for the piped gas.

Now let's look at the dollar margins and the sales of natural gas. This financial year, the interim household residential usage after tax is CNY 2.59; industrial, CNY 2.63; and in commercial end users, CNY 3.02. And the blended -- the procurement price is 2.88 (sic) [ CNY 1.88 ]. And the average margin gap is CNY 0.66, with the improvement of CNY 0.45 compared to last year. While the blended dollar margin for RCG projects is CNY 0.50. 44% of the projects have completed the waste gas retrieve, and none of the project is below the average dollar margin. And we are expecting the gross margin gap will be grow -- will be increased stably.

This winter, this year, the increase of the price will be at the level -- average level of 22% to 23%. And the nonresidential gas procurement purchasing price will be between 26%. About 96% of the projects companies have reached an agreement with us, and the nonresidential gas procurement price increase will not give us an impact to the gross profit margin.

We would also like to report to you the project -- the gross margin of the gas -- coal replacement by gas. In Hubei Province, the residential households and also the 2 provincial governments have already released the documents. And also the NDRC has required the upstream enterprises to guarantee the gas supply, and prohibited the increase of price.

The policy is very explicit. Take Hubei as an example. The residents' basic sales price is CNY 26.68, while there is a margin gap of 84% -- CNY 84 cents. Deducted the prevention network and also the outsourced pipe and storage service fee, we expect the total second half year, the replacement of gas to coal project margin will maintain CNY 50 cents. And we are very confident from the leadership management team.

Okay. Value-added services. This year, first half year, our self-owned brands have realized 700,000 units sales with year-on-year growth of 43%. And we are definitely the industry leading manufacturers and suppliers. The revenue with a massive growth of 53.1%, reaching HKD 3.333 billion (sic) [ HKD 3.381 billion ] and the gross margin is close to HKD 100 million, with the interim year-on-year growth of 47.8% operating profit.

As you see that the gross margin -- gross profit margin has increased -- the gross profit has reached by 65.4%, while the operating profit growth is only 47.8%. That's because the -- some of the operating cost has been deducted. While the operation margin is 30.6%, averagely speaking, the value-added service after 5 years development, the ratio has been increased to 56% with a growth -- year-on-year growth of 4.3% as light asset increased.

The value-added service, we have our self-owned brands, like Gasbo and also the [indiscernible] from Japan. The very high-end home appliance, we do co-branding to provide a better service to our end customers. At the same time, we have like smart furnishing. And also, we are also agency for insurance products.

We use a new type of retail service platform to increase the revenue. We also have the online/offline integrated service, including the vertical e-commerce, China Gas HOMNLY.

And we position ourselves as an urban rural integrated service provider. And these are the measures we have taken. The measures have been constantly excelling its function to increase our revenue and our profit with a very good growth rate.

Liquid gas. China Gas is the #1 largest distributor of LPG. We have 7 piers and 2 large vessels for long-distance offshore transportation. And also, we have 1,100 stores on -- on-site stores. We have expanded the Southern 10 provinces to China, 21 provinces for distribution and retailing sales. The sales has been maintained very stabilized with the retail -- wholesale amount of the growth as 3.6%, while the retail with a growth of 17.8%. And we see that the industrial and the commercial users demand has been impacted by COVID-19.

Sales revenue is HKD 4.9 billion, dropped by 23.8%. And last financial year was HKD 6.5 billion. And the reason -- major reason is the sales price of LPG has been dropped by 20%, averagely speaking, because it's closely connected or linked to the price volatility of crude oil because the first half year for 2020, the crude oil price has dropped by more than 20%. That's why LPG price -- retail price has been dropped. But due to our very good risk management and relevant measures taken, the gross margin has been improved, and you can see interim gross margin had growth by 3.6% going to the 12.5%, while last year, only 8.9%. And operating profit, with 750 -- HKD 75 million with a very big growth of 233.4%.

Our next slide, Smart MicroGrid. It's asset-light piped gas business. It could be characterized as we're using 5G IoT technology and cloud platform to supervise and monitor the quality, and to join the new construction of the new rural areas.

At the same time, the construction cycle is very short. We don't need to construct the high or middle (sic) [ medium ] pressure pipes like LPG, which takes a long time.

The Smart MicroGrid construction cycle is very short with a very reliable cash flow inflow. Smart MicroGrid has a very vast application. It could be applied to a small community, rural area, a commercial hospital, schools and tourism site as well as emergency management sites. It's convenient, economically smart and easy to manage.

As well -- at the moment, we promote this Smart MicroGrid business, we've seen strong support from the national policy. NDRC issued a new policy on June 13, and the document or the file strengthened the network and the pipeline construction of Smart MicroGrid. September 13, another very highlighted documents again issued -- order issued by state counsel to prioritize the new rural village construction. By the end of the 14th 5-year plan, the profit by selling land will be invested into the rural village and area construction, and the ratio will be more than 50%. So that's a hardcore order or regulation.

At the same time, within as short as 4 months, we cooperated with Qinghai, Hainan, Yunnan and Guangdong. We have signed a provincial-level strategic agreement. Another cities from Hubei, Anhui and Hunan and also some other county-level regions, like 24 regions, we have signed agreements. The household number is about 20,000. Cumulatively speaking, we have signed up more than 600,000 households into -- in the range of the agreements, and the outcome will show in the coming months.

Okay. The second part, financial performance, income statement. Revenue is HKD 27 billion; while gas sales HKD 12 billion; and the connection fees, HKD 5.7 billion; LPG, HKD 4.96 billion; value-added services is HKD 3.3 billion; while construction, design and services is HKD 557 million.

You've seen that we have welcomed different scale of growth. The revenue dropped by 2.7%. Why? Due to the following reasons: first of all, LPG retail sales price dropped averagely by 4.2%; while trading business, the gas price dropped by 41%; and LPG, the sales price dropped by more than 20%. And also the exchange -- currency exchange ratio, RMB against Hong Kong dollars, averagely -- monthly average is 2.3%. RMB depreciated against the Hong Kong dollars by 2.3%. Only the recent 2 months, we see a good stable -- stability, but the previous month has always been dropped.

The total -- our gross profit has reached HKD 868 million -- HKD 86 million, while profit attributable to owners of the company is HKD 5 billion. If we see that -- if we set off the nonoperational items such as other income, revenue and projects at loss, so if we just offset the nonoperational items, the core profit attributable to owners of the company is 50 -- HKD 5.1 billion, while EPS core is HKD 0.99 with a growth of 5.5%.

If we -- also assuming that there is no deep RMB depreciation against Hong Kong dollars by 2.3%, then the core profit attributable to the owners of the company will be more than 8%. So the dividend per share has been decided $0.10, like last year.

That being said, we could see that all our types of businesses have contributed EBITDA as followings: for the gas pipeline projects, 30.4%, up by 1.8%; for LPG, contributing 1.2%, up by 0.8%; value-added services, up by 4.3%; the rest, connection of LNG plus constructions and installations, 49.7%, down by 6.6%.

Now let's look at the balance sheet. The total assets is HKD 124 billion; equities, 51.9% (sic) [ HKD 59.1 billion ], up by 13.4%; shareholders' equity, HKD 44.7 billion; cash, HKD 8.7 billion. Short-term banking loans and borrowings had increased by 4.4%. However, we could see that a majority of the borrowings was dominated by RMB. As I introduced to you, the RMB has been appreciating. However, if you're comparing the March 31 and September 3, you could see the appreciation of 4%. So plus the short-term borrowings and long-term borrowings, it really doesn't impact on our borrowings. But in Hong Kong dollars, of course, because of RMB appreciation against Hong Kong dollars, we get minor impacted.

If you look at net gearing ratios, excluding LPG import LC-related trade finance, it's about HKD 1 billion. That's about 61%. And last financial year, 64%, so down by 3%.

Let's look at our cash flow. Of course, you're concerned about the cash flow a lot. I remember last year, after the announcement in June, many people raised the questions regarding cash flows. Now let me report to you on the strong cash flow performance in the past 6 months. We could see the operational cash flow is HKD 6.8 billion, increase of 71%. You know last financial year, it was only HKD 60.48 billion (sic) [ HKD 6.48 billion ]. This year, net cash used in innovative (sic) [ investment ] activities down to HKD 3.09 billion (sic) [ HKD 3.79 billion]. One increased, one decreased. Therefore, our free cash flow is now positive, up by 341%.

So operational cash flow increased by a lot, mostly contributed by, firstly, in the interim results, our contracted assets and accounts receivable, all have increased HKD 720 million compared with last year. Also, the accounts receivable from the associated companies, we have increased by HKD 1.6 billion. Thirdly, the contracted liability, we have received more than HKD 300 million. All that together is about HKD 2.6 billion. That's why the operational cash flow is about HKD 2.86 billion.

For the cash in investment activities down by HKD 2.56 billion. Why? We have HKD 1.86 billion less of the merger and acquisition. Last year, we had the Shenyang project in large city gas pipeline projects of HKD 1.56 billion. However, this year, the total investment spent on acquisition is about HKD 100 million. It's about HKD 1.86 billion less year-on-year.

On the equipment and factories, we have less expenditure of HKD 800 million. That's why our free cash flow is now largely positive, due to the changes in the operating cash flow and cash flow used in investment activities.

Of course, you're concerned about the payments collection for the coal to gas. It's also increasing exponentially. In the first half of this year, we had HKD 3.43 billion. However, if you look at last year, the whole year was HKD 4.8 billion.

If you look at the rural coal to gas connection -- connected households, the payment collection is related to the operation of the gas at each household. By now, we have more than 1.5 million new households connected. Before, in the last 3 financial years together, it's about 2.03 million households. That's why we're speeding up the connectable households. And that also propelled the recovery of the payment.

If you look at contracted assets and accounts receivable, also recovered. We have taken prudent investment policies for the rural coal to gas projects, so accounts receivable had HKD 700 million decrease.

If you look at AP, accounts payable, it's been decreasing at last year's interim and annual announcements. This year, after COVID-19, in terms of the procurement, the accounts payable is now recovered. The accounts payable is also being very good, recovered, and that also had generated operational cash flow increase.

That's the explanation regarding the cash flow increase. Currently, we have CNY 108.2 billion credits. Of course, there's only 13.9% of the loans and borrowings in foreign currencies.

If you look at the profit margin, it has been increased to 23.6% from 21.5%. The sales is now reaching 15.6%. For LPG sales, it's been increased to 1.8%; value-added services, 29.6%.

If you look at the connection fee, it's been decreased. However, in the same time, the constructions and services have all been improved. Before, we have introduced to you these performance. Coal to gas, we have a PMC construction system. And now the RCG also has been covered by that construction system.

Our construction companies, these professional companies, they provide installation, design and connection services. We will charge according to the fair value in the market. And that's why the construction, design and services had also witnessed increase. And LNG sales had decreased in terms of its profit margin.

Now let's look at the prospect and outlook. For our group, China Gas, in next 10 years, our core market with the rapid growth is where we heavily invest, includes the 3 provinces in Northeastern China, Shandong and 15 provinces in northern part of China. Where the government is promoting clean energy, we also are heavily investing in GBA. Of the 15 provinces, clean energy for winter heating, we have talked about that previously.

For the 3 provinces in Northeastern China, you could see the Russian gas is also showing positive growth. It has started from December 2019, and reaching a capacity of 38 billion cubic meters by 2024. We own more than 100 natural gas projects in Northeastern China. We expect that our sales in the region is expected to reach 20 billion cubic meters by 2030. That's why the supply from the Russian gas is also being increasing dramatically this year.

For the GBA market, China Gas is also heavily investing. You could see, we have showed the circular. In terms of the GBA market, we reached a lot of comprehensive partners. We're promoting the rural clean gas services in the GBA. We're also expanding our direct supply businesses. We're also developing the integrated energy businesses with LNG fueling in structure (sic) [ infrastructure ] for vessels. We're also developing the LNG and hydrogen fueling stations, charging stations for vehicles.

In Shandong Province, it's also a major province for the LNG. In Shandong, we also are heavily invested. In Shandong, we have a Shandong LNG company there where China Gas is an important shareholder. There, we planned the receiving terminals. We also designed to build the northern and western pipeline to build storage facilities. We would love to integrate the province market and develop the rural market for LNG.

As of today, the China Gas group had worked with Tianjin, Hebei, Hunan, Shanxi, Anhui, Yunnan, Hainan, Heilongjiang, Hubei, Jilin, Guizhou, Sichuan, Hunan and Liaoning provinces. Altogether, 16 provinces have signed strategic cooperation agreement with China Gas. Together, we will promote our business, including rural clean gas, the Smart MicroGrid, the LNG for vehicles, distributed energy, storage facilities, beautiful countryside as well as the Smart MicroGrid projects.

These measures have been very welcomed by the local and government bodies. In the same time, China Gas is the only company that have strategic cooperation with the major 3 players. By working with these companies in the upstream, we will together tap into the integrated development in the upper stream.

In terms of the policies and strategies, each year, we have developed more than 20-plus city gas pipeline projects. For the strong -- industrial and commercial replacement of coal with gas, that's also our strong momentum. That's the reason why we have increasing our sales to the industrial and commercial users.

In the same time, we will consolidate our collaboration with the existing households as well as new households connection in the cities and nearby the cities. In the same time, of the 15 provinces in northern part of China for the coal to gas for winter heating, we will also advance that project by working with CNOOC and the China pipeline (sic) [ Pipe China ]. We are also planning that by the year 2021, import more than 1 million (sic) [ 1 million tons of ] LNG imported for the LNG trade business in the future. The distribution will reach 5 to 10 million (sic) [ 10 million tons ].

If you look at the value-added services, currently, we have more than 44 million users for the LPG plus the pipeline gas. And each year, we have increased about a large number of new households. We're increasing the types of services we provide.

For the value-added services, we also are improving our market penetration. Now we have worked with McKenzie (sic) [ Baker & McKenzie ], the top-tier consultancy company, to help China Gas to build a smart sales and data management platform.

In terms of the Smart MicroGrid projects, we think that there are great potential chances to meet the growing gas demand in rural areas or small communities of south and the coastal region. The asset-light Smart MicroGrid is the best option and the only best option for building up the infrastructure. And China Gas has the advantage of uniqueness among all the suppliers.

And we are also proactively looking for new opportunities. We have established 100 -- more than 150 heating projects companies, 300 energy stations, and we expect to serve more than 100 million square meters heating area in the next 3 years, approximately equivalent to 1 million users. Comprehensive energy business. At this moment, we were concentrated on heating provider, and we think that is a very massive project -- market with great potential.

Okay. Let's take a look at the guidance indicators. First of all, the core profit attributable to owners of the company, 5.5%, while the total financial year remain more than 15%, 15% to 20%. That's our outlook indicator. Free cash flow sustaining at a positive level. RCG connection fee collection, we want to speed it up; first half year, HKD 3.4 billion; while the second half year, HKD 4.5 billion to HKD 5 billion. And we are speeding up the fee collection. And we are very confident that the total financial year, the RCG connection fee collection will be HKD 8 billion to HKD 9 billion.

Retail gas sales volume growth will be 15%. 15%, meaning second half year, the gas growth -- volume growth will be 1.7 billion cubic meters with a year-on-year growth of 18%. How do we reach that? The RCG -- 1.5 million household RCG has been connected, with the new increase of 700 to 1 million -- 700 million to 1 billion cubic meters. While the -- except for the projects in Northeast China, the rest of the projects with growth of about 300 million cubic meter increase.

So Q4 of last financial year, the base scale was small, and the retail gas sales volume dropped by 13%. And this year, the Q4 growth ratio will be expected to be high, and that's the reality we can see.

So that's the outlook. And new connections, we maintain 5.5 million to 6 million households. City against RCG is -- city and RCG is 50 million, while Smart MicroGrid is 500,000. And LPG sales volume, we estimate of 400 million tons. This is the same number as last year. While value-added service gross profit or operating profit growth maintain more than 30%.

And you are also concerned with the CapEx. Last -- first half-year, HKD 3.1 billion; and the second half-year, less than HKD 6 billion. So in total, we will keep the control within HKD 9 billion for CapEx.

Okay. That concludes the outlook and indicators. Basically concludes my presentation. Thank you very much for your patience. If you have any questions, please direct it to me.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]