SNP.L Regulatory News (SNP)

28 Apr 2008 07:00

China Petroleum & Chemical Corp27 April 2008 China Petroleum & Chemical Corporation First Quarterly Results for 2008 Pursuant to the regulations of the China Securities Regulatory Commission, ChinaPetroleum & Chemical Corporation is required to publish a quarterly report foreach of the first and third quarters. All financial information set out in this quarterly report is unaudited andprepared in accordance with the PRC Accounting Standards for BusinessEnterprises and the International Financial Reporting Standards. This announcement is made pursuant to Rule 13.09(1) and 13.09(2) of the RulesGoverning the Listing of Securities on The Stock Exchange of Hong Kong Limited. 1. Important Notice 1.1 The Board of Directors and the Supervisory Board of China Petroleum &Chemical Corporation ("Sinopec Corp." or the "Company") and theDirectors, Supervisors and Senior Management warrant that there are no materialomissions from, or misrepresentations or misleading statements contained in thisannouncement, and severally and jointly accept full responsibility for theauthenticity, accuracy and completeness of the information contained in thisannouncement. 1.2 This quarterly results announcement has been reviewed and approved at thetwentieth meeting of the Third Session of the Board of Directors of SinopecCorp. 1.3 The financial statements contained in this announcement have not beenaudited. 1.4 Mr. Su Shulin, Chairman of the Board of Directors of Sinopec Corp., Mr.Wang Tianpu, Director and President of Sinopec Corp., Mr. Dai Houliang,Director, Senior Vice President and Chief Financial Officer of Sinopec Corp.,and Mr. Liu Yun, Deputy Chief Financial Officer and Head of the CorporateFinance Department of Sinopec Corp., hereby declare that the authenticity andcompleteness of the financial statements contained in this quarterly resultsannouncement are warranted. 2 Basic Information of Sinopec Corp. 2.1 Principal accounting data and financial indicators 2.1.1 Principal accounting data and financial indicators prepared in accordancewith the PRC Accounting Standards for Business Enterprises (ASBE) At 31 March 2008 At 31 December 2007 Changes compared with the preceding year-end (%)Total assets (RMB millions) 773,761 718,572 7.68Shareholders' Equity attributable to the 314,529 300,949 4.51equity shareholders of the Company (RMBmillions)Net assets per share attributable to the 3.628 3.471 4.51equity shareholders of the Company (RMB) Three-month Three-month period Changes compared period ended 31 ended 31 March 2007 with the same March 2008 period of the preceding year (%)Net cash flow from operating activities 5,255 33,289 (84.21)(RMB millions)Net cash flow from operating activities 0.061 0.384 (84.21)per share (RMB)Net profit attributable to the equity 6,701 19,582 (65.78)shareholders of the Company (RMB millions)Basic earnings per share (RMB) 0.077 0.226 (65.78)Basic earnings per share before (0.002) 0.227 (100.88)extraordinary gain and loss (RMB)Diluted earnings per share (RMB) 0.050 0.226 (77.88)Fully diluted return on net assets (%) 2.130 7.022 (4.892) percentage pointFully diluted return (before extraordinary (0.001) 7.050 (7.051) percentagegain and loss) on net assets points Extraordinary gain and loss Three-month period ended 31 March 2008 (Income) /Expenses (RMB millions)Gain on disposal of fixed assets (2)Employee reduction expenses 19Donations 53Gain on disposal of long-term equity investment (4) Other non-operating income and expenses (7,321)Written back on provisions for impairment losses in (31)previous yearsSubtotal (7,286)Tax effect 3Total (7,283)Attributable to the equity shareholders of the (6,907)CompanyMinority interest (376) 2.1.2 Principal financial data and indicators prepared in accordance withInternational Financial Reporting Standards (IFRS) At 31 March 2008 At 31 December 2007 Changes compared with the preceding year-end (%)Total assets (RMB millions) 789,534 732,725 7.75Total equity attributable to 320,374 307,433 4.21equity shareholders of theCompany (RMB millions)Net assets per share (RMB) 3.695 3.546 4.21Adjusted net assets per share 3.627 3.466 4.65(RMB) Three-month period Three-month period Changes compared with ended 31 March 2008 ended 31 March 2007 the same period of the preceding year (%)Net cash generated from 2,663 31,139 (91.45)operating activities (RMBmillions)Profit attributable to equity 6,062 19,609 (69.09)shareholders of the Company (RMBmillions)Basic earnings per share (RMB) 0.070 0.226 (69.09)Diluted earnings per share (RMB) 0.043 0.226 (80.97)Return on net assets (%) 1.892 6.908 (5.016) percentage point 2.1.3 Major difference between the net profit for the first quarter of 2008 andshareholders' equity as at 31 March 2008 under ASBE and IFRS 2.1.3.1 Effects of major differences between the net profit under ASBE and theprofit for the period under IFRS are analysed as follows: Three-month periods ended 31 March 2008 2007 RMB millions RMB millions Net profit under ASBE(including minority interests) 6,644 20,454Adjustments:Oil and gas properties (800) 88Reduced amortisation on revaluation of land use rights 7 7Effects of the above adjustments on taxation 155 (68) £-£-£-£-£-£-£- £-£-£-£-£-£-£-Profit for the period under IFRS 6,006 20,481 ============= ============= 2.1.3.2 Effects of major differences between the shareholders' Equity under ASBEand that under IFRS are analysed as follows: At 31 March 2008 At 31 December 2007 RMB millions RMB millions Shareholders' equity under ASBE (including minority interests) 340,332 326,347Adjustments:Oil and gas properties 10,539 11,339Reduced amortisation on revaluation of land use rights (1,035) (1,042)Effects of the above adjustments on taxation (3,731) (3,886) £-£-£-£-£-£-£- £-£-£-£-£-£-£-Total equity under IFRS 346,105 332,758 ============= ============= 2.2 Number of shareholders and top ten shareholders holding shares withoutselling restrictions at the end of the reporting period Number of shareholders as at 31 March 2008 Number of shareholders of Sinopec Corp. as at 31 March 2008: 1,357,265, including 1,350,463 holders of A shares and 6,802 holders of H shares. Top ten shareholders holding shares without selling restrictions Name of shareholders (Full Name) Number of shares held at the Type of shares (A, B, end of the reporting period H share or others) (10,000 shares)HKSCC (Nominees) Limited 1,669,913.2 HChina Petrochemical Corporation 433,512.2 AGuotai Junan Securities Co., Ltd. 37,990.6 ABoshi Theme Industry Stocks & Securities 12,196.3 AInvestment FundE Fund 50-Index Securities Investment Fund 11,819.0 ATongde Securities Investment Fund 5,030.6 ABoshi Selected Stocks & Securities Investment 4,207.6 AFundNational Social Security Fund - 106 3,700.0 ASSE Dividend Transaction Type Open Index 3,658.4 ASecurities Investment FundSSE 50 Transaction Type Open Index Securities 3,184.8 AInvestment Fund 2.3 Business Review In the first quarter of 2008, China!s economy kept growing at a relatively fastspeed. The prices of international crude oil continued to go up. The prices ofoil products in China were still under tight control. The demands forpetrochemical products carried on their trend of reasonable growth. The pricesof petrochemical products remained on a relatively high level. The Company tookproactive measures to cope with the changes arising in the market and ensure itssupply of products into the market. Besides, the Company also attachedimportance to production safety, energy conservation and effluent reduction,intensified its corporate management practices, improved its product mix, andkept growing in its oil and gas production, crude oil processing volume, salesvolume of oil products and yield of ethylene. In a word, the Company hasrecorded good results of production and business operation. Exploration and Production Segment: The Company seized the opportunity of highcrude oil prices, and developed more marginal oil reserves and activelyfacilitated the construction of Sichuan-East China gas project. Output of crudeoil and natural gas of the Company in the first quarter was increased by 3.39%and 3.06%, respectively, over the same period of last year. Refining Segment: The Company has kept its facilities operating safely at fullcapacity, enhanced its processing volume of crude oil of lower quality, andincreased the output of oil products, so as to ensure the domestic demands to besatisfied. The refining throughput of the Company in the first quarter wasincreased by 9.57% over the same period of last year. Marketing and Distribution Segment: The Company pooled resources by multiplemeans, employed many measures such as outsourcing and importation from abroad toincrease its supply volume of oil products, thus ensuring the stable supply tothe market. Also, it made active efforts to promote the sales of oil products ofhigh grade, improved the services of its petrol stations, made greater effortsin planning out its resources, optimized its marketing network and logisticoperations, thus further enhanced its total sales volume and retail volume. TheCompany!s domestic sales and retail volume of oil products in the first quarterwas increased by 9.87% and 17.59%, respectively, over the same period of lastyear. Chemicals Segment: The major chemical production facilities of the Companymaintained stable full-load operation, production volume and sales volume ofchemical products increased steadily, the advantages of centralized sales werebrought into further play. The Company!s production of ethylene and syntheticresin in the first quarter was increased by 3.85% and 4.97%, respectively, overthe same period of last year. Summary of Principal Operating Results for the First Quarter Operating Data Unit Three-month period ended 31st Changes (%) March Year 2008 Year 2007Exploration and ProductionCrude oil production 10 thousand tonnes 1033.30 999.43 3.39Natural gas production 100 Million cubic meters 20.57 19.96 3.06Realised crude oil price RMB/tonne 3943.01 2582.70 52.67Realised natural gas price RMB/thousand cubic meters 916.79 799.27 14.70Refining (Note 1)Crude processing volume 10 thousand tonnes 4188.53 3822.67 9.57Gasoline, diesel and kerosene 10 thousand tonnes 2553.52 2245.79 13.70productionOf which: Gasoline 10 thousand tonnes 692.99 619.41 11.88 Diesel 10 thousand tonnes 1660.86 1439.43 15.38 Kerosene 10 thousand tonnes 199.67 186.95 6.80Light chemical feedstock 10 thousand tonnes 629.09 615.46 2.21Light yield % 74.45 73.72 0.73 percentage pointRefining yield % 93.81 93.45 0.36 percentage pointMarketing and DistributionTotal domestic sales of 10 thousand tonnes 3017.70 2746.60 9.87refined oil productsOf which: Retail 10 thousand tonnes 2027.60 1724.30 17.59 Distribution 10 thousand tonnes 489.10 469.80 4.09 Wholesale 10 thousand tonnes 501.00 552.40 (9.30)Total number of service Stations 29130 28885 0.85stationsOf which: Owned and Stations 28477 28075 1.43 self-operated Franchised Stations 653 810 (19.38)Throughput per petrol station Tonne/station 2848 2457 15.91of owned and self-operated(Note 2)Chemicals (Note 3)Ethylene 10 thousand tonnes 169.51 163.23 3.85Synthetic resins 10 thousand tonnes 248.15 236.40 4.97Synthetic rubbers 10 thousand tonnes 22.62 18.88 19.81Monomers and polymers for 10 thousand tonnes 199.39 190.96 4.42synthetic fibersSynthetic fibers 10 thousand tonnes 35.49 35.52 (0.09)Urea 10 thousand tonnes 28.27 36.56 (22.69) Notes 1: The processing volume of crude oil and the output of gasoline, keroseneand diesel have included those of the five refineries including ZhanjiangDongxing etc. which were taken over from Sinopec Group Company in 2007. Notes 2: Throughput per service station data is an annualized average; Notes 3: Included 100% output of BASF-YPC and Shanghai Secco. Capital Expenditure: In the first quarter, capital expenditure of the Companyaggregated at approximately RMB 15,034 million, of which the capital expenditureof the Exploration and Production Segment was RMB 7,698 million. Sichuan-EastChina Gas Project progressed smoothly. Capital expenditure of the RefiningSegment was approximately RMB 1,773 million. The refining project in Qingdaowith an annual capacity of 10 million tonnes/year and other revamping projectsfor upgrading oil products' quality in Wuhan and other places have all proceededsmoothly. Capital expenditure of the Chemical Segment was RMB 2,097 million,which were mainly used for ethylene project in Tianjin of 1 million tonnes/yearand ethylene project in Zhenhai of 1 million tonnes/year and PX project inJinling of 600 thousand tonnes/year. Capital expenditure of the Marketing andDistribution Segment was RMB 3,092 million, achieving outstanding performance inthe construction of service stations in key areas with 100 service stationsadded. Capital expenditure of headquarters and others was RMB 374 million. 3 Significant Events 3.1 Significant changes of key accounting items and financial indices of theCompany and the reasons for the changes: Item At 31 March At 31 Increase/(decrease) Changes compared with the same 2008 December period of the preceding year 2007 Sum Percentage RMB millions RMB % millionsCash at bank and 28,397 8,364 20,033 240 Mainly due to the Company!sin hand received subsidies and received cash from its issue of convertible bonds with warrants within the reporting periodAdvance payments 14,462 9,402 5,060 54 Mainly due to the increased pre-payment of the crude oil import duty margin and the increased pre-payment of equipment costOther 7,356 11,822 (4,466) (38) Mainly due to the offsetting ofreceivables other receivables by the subsidies received in the reporting periodDebentures 62,108 42,606 19,502 46 Mainly due to the Company!spayable issue of convertible bonds with warrants in the reporting period Item At 31 March At 31 March Increase/(decrease) Changes compared with the same 2008 2007 period of the preceding year Sum Percentage RMB millions RMB % millionsOperating income 332,010 277,149 54,861 20 Mainly due to the domestic high-standing prices of petrochemical products and the Company!s active efforts in enhancing the sales volume of its petrochemical productsCost of sales 295,510 226,698 68,812 30 Mainly due to the increase of purchasing costs of raw materials as a consequence of the rise of crude oil prices and the enhancement of the sales volume of petrochemical products.Sales taxes and 13,737 6,475 7,262 112 Mainly due to the increase ofsurcharges petroleum special proceedsFinancial 765 1,503 (738) (49) Mainly due to the increase ofexpenses net exchange gainsImpairment loss 9,012 13 8,999 69,223 Mainly due to the prices of finished oil products being controlled and the devaluation of crude oil because of the rise of crude oil purchasing costs in the 1st quarterFair value gain 2,996 - 2,996 - Due to the variations of the fair value of H share convertible bond embedded derivatives incurred by such factors as the change in the estimated value of the Company! s H shares, etc.Investment 779 1,195 (416) (35) Mainly due to the reducedincome returns of investment in joint ventures and affiliated companiesNon-operating 7,452 62 7,390 11,919 Mainly due to the confirmedincome subsidy proceeds in 2008Income tax 190 7,793 (7,603) (98) Mainly due to the influence by the year-on-year decrease of total profits on the income tax payable in the reporting period 3.2 The progress of significant events and their impacts as well as the analysisand explanations for the solutions 3.2.1 Connected transactions The aggregate amount of connected transactions actually occurred in relation tothe Company during the reporting period was RMB 68.957 billion, of which, RMB26.911 billion was paid out by the Company, and RMB 42.047 billion (including,RMB 41.969 billion of sales of products and services, RMB 2 million of interestincome and RMB 75 million of income from agency fee) was received by theCompany. During the reporting period, the products and services provided bySinopec Group (purchase, storage and transportation, exploration and productionservices and production-related services) to the Company amounted to RMB 20.198billion, representing 6.0% of the Company!s operating expenses of the reportingperiod; the ancillary and social services provided by Sinopec Group to theCompany amounted to RMB 392 million, representing 0.12% of operating expenses ofthe reporting period. During the reporting period, the product sales from theCompany to Sinopec Group amounted to RMB 17.454 billion, representing 5.25% ofthe Company's operating revenue. 3.2.2 Issuance of Bonds with Warrants in Domestic Market At the third extraordinary general meeting of shareholders of Sinopec Corp. for2007 held on 15 November 2007, the proposal relating to the issuance of bondswith warrants ("Bonds with Warrants") was reviewed and approved. Theproceeds from issuance will be used to fund the Sichuan-East China Gas Project,Tianjin 1 million tonnes per annum (tpa) ethylene project, Zhenhai 1 million tpaethylene project and repayment of bank loans. The proceeds from the exercise ofwarrants, if exercised, will be used to fund Tianjin 1 million tpa ethyleneproject, Zhenhai 1 million tpa ethylene project, Wuhan ethylene project,repayment of bank loans or replenishment of working capital of Sinopec Corp. Theissuance of Bonds with Warrants in the amount of up to RMB 30 billion wasapproved by China Securities Regulatory Commission (CSRC) on 31 January 2008.The Bonds with Warrants were issued on 20 February 2008. The Bonds with Warrantshave a 6-year term and 0.8% per annum fixed coupon rate, and the 3.03 billionwarrants were distributed with exercise ratio of 2 to 1 and a term of 2 years.The bonds and warrants were listed on Shanghai Stock Exchange on 4 March 2008. 3.2.3 Subsidies Since 2007, the international prices of crude oil have been soaring up. Domesticprices of oil products have been kept under tight control, and have even turnedout lower than the prices of crude oil. Some local refineries have experiencedinsufficient operation and even discontinued their production work. Besides, dueto the increased consumption of diesel oil in wintertime, the oil productsmarkets in some regions have began to see a short supply scene. In order toensure the smooth operations of the finished oil products market, the Companyhas taken multiple measures to enhance its production of oil products, purchasedoil products from local refineries at high prices, in an effort to ensure itssupply of oil products to the domestic market. These measures have worked outsalient results, but have also given rise to a relatively big loss in therefining segment of the Company. In March 2008, the Company received subsidiesin the amount of RMB 12.3 billion; among others, RMB 4.9 billion wasincorporated into the subsidy income of 2007, and RMB 7.4 billion wasincorporated into the subsidy income of the first quarter of 2008. 3.2.4 Proposal to issue domestic corporate bonds The 19th meeting of the 3rd Board of Directors of Sinopec Corp. has passed on 3April 2008 the proposal with regard to the issue of domestic corporate bondswith a total amount of no more than RMB 20 billion yuan, and will submit thisproposal to the annual general meeting of shareholders to be held on 26 May 2008for review and approval. It is intended to use a raised fund of RMB 10 billionyuan to adjust the Company's current debt structure; and the remaining fundsraised are intended to be used to replenish the Company!s working capital andimprove the Company!s funding condition. 3.3 Status of fulfillment of commitments undertaken by the Company, shareholderand actual controller. (X)applicable ( )not applicable 3.4 Caution and explanation as to the anticipated loss of accumulated netprofits from the beginning of the year to the end of the next reporting periodor significant changes over the same period of last year (X)applicable ( )not applicable 3.5 The Company!s holding of stock shares issued by other listed companies andits securities investments No. Stock code Shortened as Quantity of Shareholding ratio in Initial cost of Accounting stock shares this company investment settlement heading held 1 384 (Hong China Gas Holdings 210 million 6.5% HK$ 128 million Long-term equity Kong) shares investmentOther securities investments held at the - - - - end of the reporting period Total - - - - In addition, Sinopec Corp. has not held any non-listed financial enterprise, orequity interests of any company to be listed in future, and has not conductedany purchase or sale of stock shares of any other listed company, either. 3.6 This quarterly results announcement is published in both Chinese and Englishlanguages. The Chinese version shall prevail. By Order of the Board of Directors China Petroleum & Chemical Corporation Su Shulin Chairman Beijing, the PRC 25 April 2008 As at the date of this Announcement, the directors of Sinopec Corp are Messrs.Su Shulin*, Zhou Yuan*, Wang Tianpu#, Zhang Jianhua#, Wang Zhigang#, DaiHouliang#, Fan Yifei*, Yao Zhongmin*, Shi Wanpeng+, Liu Zhongli+ and Li Deshui+. # Executive Directors * Non-executive Directors + Independent Non-executive Directors This information is provided by RNS The company news service from the London Stock Exchange