Panva Gas Holdings Limited

1
Panva Gas Holdings Limited
(Stock Code 1083)

• Interim Results
• September, 2006

2
Agenda
I. Corporate Profile ... 3
II. Financial Highlights 7
III. Business Review. 17
IV. Outlook Prospect..... 23

3
Corporate Profile
4
Shareholding Structure
Enerchina Holdings Limited (stock code
622.hk) 60.42
Hutchison Whampoa Limited (stock code
0013.hk) 4.07
Public 35.51
Panva Gas Holdings Limited (stock code 1083.hk)
5
Panva Gas

• Chinas leading downstream gas distributor,
  primarily engaged in sales and distribution of
  bottled Liquefied Petroleum Gas (LPG) and piped
  gas, gas pipeline construction
• Largest bottled LPG distributor in China serving
  over 2 million customer base
• The leading city piped gas distributor in Sichuan
  with operations in 12 cities and in Northeastern
  China with operation in 7 cities, serving over 1
  million users
• Currently operates 42 projects in 12 provinces

6
Geographic Coverage
Heilongjiang Qiqihaer (NG)
Jilin Changchun (NG, CG)
Sichuan (NG) Ziyang Pengxi Weiyuan Lezhi Pingchan
g Dayi Yuechi Cangxi Pengshan Zhongjiang Chengdu J
ianyang
Liaoning (Piped) Anshan (NG, CG) Benxi
(CG) Chaoyang (CG) Tieling (CBM) Fuxin (CBM)
Shandong Jinan (LPG) Jinan (Piped LPG) Jinan (NG)
Jiangsu Yangzi (LPG) Nanjing (LPG) Nanjing
(Piped LPG) Yangzhou (LPG)
Yunnan (LPG) Kunming
Anhui Wuhu (LPG) Chizhou (Piped LPG)
Guizhou (LPG) Guiyang Zunyi
Zhejiang Hangzhou (LPG)
Hunan (LPG) Changsha Chenzhou Yiyang Changde Heng
yang Xiangtan Yongzhou
Guangdong (Piped LPG) Foshan Shaoguan Qingyuan
Pipe Gas Projects 26 Bottled LPG Projects
16 Geographic coverage data is as of 30 June,
2006
7
Financial Highlights
8
Financial Summary
(HKD000) 2006 2005 Change ()
(HKD000) As at 30 June As at 30 June Change ()
Turnover 1,243,931 958,053 29.8
Gross profit 215,417 225,036 (4.3)
SGA Expense (140,348) (83,884) 67.3
Interest Expense (126,765) (33,027) 283.8
Associate Income 4,225 28,561 (85.2)
Swaps Provision (181,608) (4,833) 3657.7
Net profit (221,139) 128,249 (272.4)
Basic EPS (HK cents) (23.41) 13.61 (272)
9
Capital Structure
(HK000) 30 June 2006 31 Dec 2005 Change (-)
Cash Equivalent 953,607 1,189,327 (19.8)
Total Assets 5,242,926 4,921,745 6.5
Total Current Debt 64,423 86,770 (25.8)
Total Long-Term Debt 2,005,026 1,928,535 4.0
Equity attributable to equity shareholders of the Company 1,428,162 1,642,726 (13.1)
10
Turnover Breakdown
Turnover 2006 2005 Change
Turnover As at 30 June (HK million) As at 30 June (HK million) Change
Wholesale of LPG 513 419 22
Retail of Bottled LPG 369 256 44
Sale of Piped Gas 184 55 236
Gas Pipeline Construction 164 199 (18)
Sales of Appliances 14 29 (52)
Total 1,244 958 30
11
Continuous Shift of Turnover Mix
6 months ended 30 June
12
Gross Margin Breakdown
6 months ended 30 June
2006 Gross Profit In HK 000 Change vs. 2005 GM
Wholesale of LPG 14,375 10.6 2.8
Retail of Bottled LPG 43,738 66.5 11.84
Sale of Piped Gas 39,643 231.5 21.54
Gas Pipeline Construction 113,497 (29.3) 69.12
Sales of Appliances 4,164 (68.6) 30.06
Total 215,417 (4.3) 17.32
13
Increase of Expenses

• SGA Expense
• Restructuring of newly acquired projects
• Board migration expense
• Interest Expense
• HK 93million increase due to swap structure
• Of which, HK61 million was due to the swap
  structure, and HK32 million was due to the
  decreased interest savings in the current period
• Associate Income
• Contribution from Changchun Gas was reduced from
  HK28 million to HK 4 million, due to cyclical
  coking coal market

14
SWAP Update

• Price Waterhouse Coopers (PwC) was engaged in May
  2006 to evaluate various options in dealing with
  the swaps
• PwC delivered preliminary recommendation in July
  2006 of unwinding the swaps through a tender
  process
• Panvas special committee endorsed PwCs
  recommendation and proposed to the Board in
  August 2006
• The swaps were unwound through a tender process
  in September at an aggregate value of
  US55.95million. Interest payments that were due
  for the March-September 2006 period are no longer
  payable on September 23, 2006

15
Impact of Swap Unwinding

• Crystalized loss at US 55.95 Million
• Approximately US7 Million in the MTM loss of
  US63 million reflected in the mid-year results
  will be written back in 2006 full year results
• Swap interest of approximately US4 Million
  accrued to June 2006, will also be written back
  in 2006 full year results, with total net cash
  impact on interest expense as follows

Period Net Interest Paid Effective Interest Rate Cumulative Net Savings
24/9/2004 - 23/3/2005 US2,090,000 2.09 US6,160,000
24/3/2005 - 23/9/2005 US3,310,000 3.31 US11,100,000
24/9/2005 - 23/3/2006 US12,092,800 12.09 US7,257,200
24/3/2006 - 23/9/2006 US8,205,000 8.25 US7,257,200
Adding unwinding cost and interest saving, total
cost of swap was US48.7 million
16
Financial Ratios
2006 2005
As at 30 June As at 30 June
ROE (6 Months Trailing) Negative 9.07
ROA (6 Months Trailing) Negative 3.95
Current Ratio 1.32 5.77
Total Net Debt/ Equity attributable to equity shareholders of the Company 78 27
EBITDA Coverage 1.43 6.82
17

• Business Review

18
Growth in Gas Sales Volume
Bottled LPG (Retail)
Piped Gas
Tonnes
000 Cubic Meter
149
19
14
135
19
Growth in End-Users
Bottled LPG
Piped Gas
1,195,600
11.9
12.9
127.7
86
20
Business Segments
6 months ended 30 June
Volume Volume Mix New Connections No. of Total Users
Piped Gas (Million M3) (100)
Residential 76.7 58.2 50,400 1,195,600
Commercial 22.7 17.2
Industrial 26.6 20.2
Auto Gas 5.8 4.4
LPG (000 MT) (100)
Bottle Retail 56 24.7 50,000 2,350,000
Wholesale 171 75.3
Note Organic growth from Dec 31 2005 to Jun 30
2006
21
Slowdown in Connection Growth

• Relative high penetration achieved in urban
  centers of many Sichuan projects through recent
  years of rapid growth further connection growth
  will be through expansion to greater city area at
  slower pace
• Restructurings of newly acquired projects in
  Northeast China, Shandong and Guangdong are still
  ongoing and have constrained these projects
  connection growth
• The government austerity measures in the 1st half
  year resulted in slowdown in the property sector,
  hence the connection business growth

22
2006 Acquisition Summary
Projects Location Acquisition Cost (RMB000) Equity Stake Current Residential Users Current Commercial Industrial Users Gas Type Completion / Consolidation
Fuxin Liaoning 74,330.00 90 80,743 96 Coal Bed Methane July 2006
Hangzhou Zhejiang 25,000.00 50 220,000 _ LPG In Process
Total 99,330.00 300,743 96
23
Outlook Prospect
24
Business Prospects

• Swap issue resolved
• Focus on improving operational efficiency
• Continue to improve piped gas sales in existing
  areas, accelerating the evolution to a utility
  business model
• Continue to modernize LPG distribution system,
  strengthening leadership position and improving
  profit margin
• Reduce operating expenses through project
  restructuring and business improvement
• Continue new project acquisitions with greater
  prudence and selectivity

25
Thank you!