Binhai Investment : Announced 2016 Annual Results, Continue to Maintain a Steady Growth of Business, Gross Profit Amounted to HK$540 Million, Gross Profit Margin Reached 25%, and Dividend Paid HK$0.05

• Total revenue was about HK$2.145 billion by a YOY decline of 16%

• Gross profit was about HK$540 million, indicating a YOY decline of 1%; Gross profit margin representing an increase of 4 percentage points to 25%

• Total asset increased 3% to approximately HK$4.072 billion

• Profit for the year was HK$178 million, indicating a YOY decline of 13%

• Profit attributable to equity owners of the Company was approximately HK$172 million; Profit attributable to equity owners of the Company excluding the unrealised exchange loss amounted to HK$287 million, representing an increase of 44%

• Aggregate length of all of the gas pipeline networks was approximately 2,129 kilometers, representing a YOY increase of 155 kilometers

• The piped gas sales income decreased 18% to HK$1.672 billion

• The connection service revenue decreased 7% to HK$460 million

• Final dividends paid were HK$ 0.05 per ordinary share. The Group declared a dividend for four consecutive years

(17 March 2017 - Hong Kong) Binhai Investment Company Limited ("Binhai Investment" or the "Company", stock code: 2886.HK, together with its subsidiaries, the "Group") are principally engaged in the construction of gas pipeline networks, provision of connection services and the sale of liquefied petroleum gas and piped gas. Binhai Investment is pleased to announce the consolidated results of the Company for the year ended 31 December 2016 (the "Reporting Period").

For the Reporting Period, the Group recorded revenue of HK$2.145 billion (2015: HK$2.555 billion), representing a decline of 16%. The gross profit amounted to HK$540 million (2015: HK$543 million), representing a year-on-year ("YOY") decline of 1%. The Group devoted to lower the average purchase cost and the gross profit margin representing an increase of 4 percentage

points to 25%. The total asset was HK$4.072 billion (2015: HK$3.968 billion) by a significant increase of 3%. Profit for the year was HK$178 million (2015: HK$204 million), indicating a YOY decline of 13%. The Group recorded an unrealised exchange loss of HK$115 million caused by fluctuations in RMB exchange rate in 2016. Profit attributable to equity owners of the Company excluding the unrealized exchange loss amounted to HK$287 million for the Reporting Period. Two of the Group's subsidiaries obtained the "High Technology Enterprise Certificate" and were entitled to enjoy a preferential tax rate, which contributed to the Group's corporate income tax rate YOY decline of HK$210 million. The Board has recommended a final dividend for the year ended 31 December 2016 of HK$0.05 per ordinary share. The Company declared a dividend for four consecutive years.

The Group constructs gas pipelines for its clients and connects such pipelines to the Group's main gas pipeline networks. The Group then charges connection service fees from industrial and commercial customers, property developers and property management companies. As at 31 December 2016, the aggregate length of all of the gas pipeline networks owned by the Group was approximately 2,129 kilometers, representing an increase of 155 kilometers from the length of 1,974 kilometers as at 31 December 2015. For the year ended 31 December 2016, connection service fees received by the Group amounted to approximately HK$459,759,000, representing a decrease of HK$34,059,000 or 7% compared to the HK$493,818,000 service fees received in the year ended 31 December 2015.

For the Reporting Period, consumption of piped gas by domestic and industrial users amounted to approximately 3,576 x106 and 17,177 x106 mega-joules respectively, as compared to 2,901x106 and 16,914x106 mega-joules respectively for the year ended 31 December 2015. During the year, sales income of the Group from piped gas amounted to HK$1,671,742,000, representing an decrease of HK$362,856,000 or 18% compared to the amount of HK$2,034,598,000 recorded in the year ended 31 December 2015.

In 2016, the world experienced many challenges. Under the circumstances of uncertain economic outlook and the international unstable political environment, the pace of growth remains fragile. In the energy sector, the Chinese government expects oil production to fall by 7% while natural gas production to increase by 63% in 2020. In particular, the Chinese government expects a significant increase in the use of clean energy such as natural gas to reduce pollution, which will promote healthy growth in China's natural gas industry. The Group achieved growth for the eighth consecutive year under the consistent focus on development of the natural gas business.

2016 was a crucial year in which the Group seized every opportunity, through strenuous efforts, to lay a more solid foundation for the realisation of faster development. Major steps taken by the Group included:

1. Pro-actively Developed Large-scale Gas Project

   On 13 June 2016, the Company entered into a letter of intent on gas supply with China Huadian Group Clean Energy Co., Ltd. It is about to construct the gas pipelines from the Nangang transmission substation of China Petroleum & Chemical Corporation to Dagang Regulating and Metering Station of the Company and the section from Nanjiang Power Plant to Junliangcheng Power Plant in Tianjin. It is provisionally determined that the supply of gas through those pipelines will commence in September 2017 for 20 years.

2. Create a New Financing Channel and Reduce Financial Cost

   A Finance Leasing Contract of a total of RMB230 million was entered into between Tianjin Binda Gas Enterprise Company Limited, a subsidiary of the Company and Bank of Communications Financial Leasing Co.,Ltd. dated 29 April 2016 and the drawdown was completed in June 2016. The financing lease term is 60 months and the annual interest rate is the RMB benchmark lending rate published by the People's Bank of China for the same period decreased by 12%.The financing is the longest and lowest interest rates among all financing projects of the Company so far. Moreover, it is the first time for the Company to acquire financing by sales and lease financing method, which created a new financing channel for the Company.

3. Pro-actively Developed Downstream Markets for Natural Gas and Has Continuously Made Progress

The Group proactively participated in the "coal to gas" project in Binhai New Area. A subsidiary of the Company entered into natural gas supply contracts with a couple of customers in relation to "coal to gas" projects as well as new industrial customers, and has implemented the gas supply one after another. There are currently 9 projects of "coal to gas" in Binhai New Area and 7 of those project companies have entered into gas supply agreement with the Company. The Company will continue to concentrate on developing "coal to gas" customers.

The Group obtained a 30-year operating right for the operation of piped gas in Xin Shi Town, Zhong Guan Town, Yu Yue Town, Mo Gan Mountain Town (including Mo Gan Moutain Scenic Area) and Fa Tou Xiang Administrative Region of Deqing County in Zhejiang Province, and the Group's market share in the domestic natural gas business will be further strengthened and enlarged.

The Group expected to complete the constructions of heating steam boiler-to-gas grid in the downtown area and core areas in Binhai New Area, and in the areas of our existing pipeline

network in Dongli, Wuqing, Baodi, Binhai New Area and Ninghe being all major development areas.

Looking forward to 2017, Beijing has incorporated air quality compliance programs of 2022 Winter Olympics into the Beijing environmental plan, the corresponding government authorities will boost commitment to environment protection in Beijing, Tianjin, Hebei province and greater areas, especially on reduction of haze. The requirement of a 40% reduction in the level of PM2.5 in 2017 comparing to that in 2013 is clearly specified. The Group is confident in the enhanced development opportunities for the natural gas industry in China.

The major tasks of the Group in 2017 include the followings: a number of new projects had settled in Binhai New Area in 2016, projects with enormous potentials entering into production stage will promote a boom in gas sales volume growth in coming years. The Group will seize the development opportunities of the gas industry in the PRC, exploit in depth the opportunities of the integration of Binhai New Area, Beijing, Tianjin and Hebei and continue to expand the Company's geographical advantage; the Group have always endeavored to leverage on opportunities related to environmental policies of the PRC state and regional government such as those on promotion of the use of clean natural gas energy and "conversion of coal to gas". The Group will continue to pro-actively develop downstream markets for natural gas. Obtaining new customers and the successful implementation of the supply of natural gas to them have positive meaning in terms of expansion of the scope of operation of the Group, enlarging the customer base of the Group and diversifying the risk of customer concentration; and further strengthen the close communication and cooperation amongst stakeholders such as shareholders, investors, the government and creditors to achieve win-win results for all parties.

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