SNP.L Regulatory News (SNP)

16 Apr 2007 07:00

China Petroleum & Chemical Corp15 April 2007 (a joint stock limited company incorporated in the People's Republic of China with limited liability) First Quarter Results Announcement for 2007 1. Important Notice 1.1 The Board of Directors and the Supervisory Board of China Petroleum &Chemical Corporation ("Sinopec Corp.") and their Directors, Supervisors andsenior management warrant that there are no material omissions from, ormisrepresentations or misleading statements contained in this announcement, andseverally and jointly accept full responsibility for the authenticity, accuracyand completeness of the information contained in this announcement. 1.2 This quarterly results announcement has been reviewed and approved at thetenth meeting of the Third Session of the Board of Directors of Sinopec Corp.. 1.3 The financial statements contained in this announcement have not beenaudited. 1.4 Mr. Chen Tonghai, 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, Vice Financial Office and Head of the Accounting Division ofSinopec Corp., hereby declare that the authenticity and completeness of thefinancial statements contained in this quarterly results announcement arewarranted. 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. At 31 At 31 Changes March 2007 December 2006 compared with the preceding year-end (%)Total assets (RMB millions) 623,066 596,519 4.45Shareholders' funds (excluding 277,311 257,893 7.53minority interests) (RMB millions)Net assets per share (RMB) 3.198 2.974 7.53 Three-month Three-month Changes period ended period ended compared 31 March 31 March with the 2007 2006 same period of the preceding year (%)Net cash flow from 31,891 3,053 944.58operating activities (RMB millions)Net cash flow from 0.368 0.035 944.58operating activities per share (RMB )Profit attributable to the equity 19,418 9,135 112.57shareholders of the ParentBasic earnings per share (RMB) 0.224 0.105 112.57Diluted earnings per share (RMB) 0.224 0.105 112.57Return on net assets (%) 7.002 4.031 2.971 percentage pointReturn (before non-operating 7.030 4.086 2.944 percentage pointprofits/losses) on net assets (%) Non-operating profits/losses Three-month period ended 31 March 2007 (Income) / Expenses RMB millionsWritten back of provisions for impairment losses in previous years -Non-operating expenses (excluding normal provisions on assets provided in 178accordance with PRC Accounting Standards for Business Enterprises)Of which: Losses on disposal of fixed assets 7Donations 10Non-operating income (62)Tax effect of the above (38)Total 78 2.1.2 Principal accounting data and financial indicators prepared in accordancewith IFRS At 31 At 31 Changes compared March 2007 December with the 2006 preceding year-end (%)Total assets (RMB millions) 646,365 611,790 5.65Total equity attributable to equity 282,289 262,845 7.40shareholders of the Parent (RMB millions)Net assets per share (RMB) 3.256 3.032 7.40Adjusted net assets per share (RMB) 3.183 2.957 7.64 Three-month period Three-month period Changes compared ended ended with the 31 March 31 March same period 2007 2006 of the preceding year (%)Net cash flow from operating activities 30,206 1,369 2,106.43(RMB millions)Profit attributable to equity 19,444 9,547 103.67shareholders of the Parent (RMB millions)Earnings per share (RMB) 0.224 0.110 103.67Return on net assets (%) 6.888 4.083 2.805 percentage point 2.1.3 Difference between the net profit for the first quarter of 2007 andshareholders' funds as at 31 March 2007 under the PRC Accounting Standards forBusiness Enterprises and IFRS 2.1.3.1 A Effects of major differences between the net profit under the PRCAccounting Standards for Business Enterprises and the profit for the periodunder IFRS are analysed as follows: Three-month periods ended 31 March 2007 2006 RMB millions RMB millions Net profit under the PRC Accounting Standards for Business 20,257 9,195Enterprises (including minority interests)Adjustments:Oil and gas properties 88 794Reduced amortisation on revaluation of land use rights 7 7Effects of the above adjustments on taxation (68) (265) ______________ _____________ Profit for the period under IFRS 20,284 9,731 ============= ============= 2.1.3.2 Effects of major differences between the shareholders' funds underthe PRC Accounting Standards for Business Enterprises and the total equity underIFRS are analysed as follows At 31 At 31 March December 2007 2006 RMB millions RMB millions Shareholders' funds under the PRC Accounting Standards for 300,191 279,931Business Enterprises (including minority interests)Adjustments:Oil and gas properties 10,904 10,816Revaluation of land use rights (1,065) (1,072)Effects of the above adjustments on taxation (4,954) (4,886) ______________ _____________ Total equity under IFRS 305,076 284,789 ============= ============= 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 2007 Number of shareholders of Sinopec Corp. as at 31 March 2007: 322,901, including 315,297 holders of A shares and 7,604 holders of H shares. Top ten shareholders holding shares without selling restrictionsName of shareholders Number of shares held at the end Type of shares (A, of the reporting period (10,000 B, H share or others) shares)HKSCC (Nominees) Limited 1,668,635.3 HChina Life Insurance Group Company - Traditional - 8,079.6 AOrdinary Insurance ProductsChina Life Insurance Company Limited - Dividend - 7,370.1 AIndividual Dividend - 005L - FH002 ShanghaiBaoying Strategy Growth Stock Investment Fund 5,195.3 ABank of Communications Schroders Selected Stock 4,800.0 AInvestment FundJiashi Growth Revenue Investment Fund 4,800.0Boshi Selected Investment Fund 4,200.0 AChina Pingan Insurance Co.,Ltd - Dividend - 4,000.0 ABank-assured DividendHuitianfu Growth Focus Stock Investment Fund 3,912.5 AJiashi Strategy Growth Mixed Investment Fund 3,889.3 A 2.3 Business review In the first quarter of 2007, the Chinese economy continued to grow at a fastpace, international prices of crude oil was still fluctuating at high level.Domestic demand for petrochemical products continued its reasonable growthtendency, and prices of petrochemical products maintained at a relatively highlevel. In accordance with the working principle of "reform, adjustment,management, innovation and development" as identified by the Board of Directors,by actively working to cope with market changes, focusing on health, safety andenvironmental protection, striving to cut down cost and expense, acceleratingstructure adjustment, strengthening enterprise management and promoting science& technology innovation, the Company maintained increases, amongst others, inproduction of oil and gas, the volume of crude oil processed, sales volume ofrefined oil products and production of ethylene, and realized excellent businessperformance. Exploration and Production Segment: The Company has made new progress in theexploration in marine facies oil gas in Northeast Sichuan Province, old easternregion, Tahe oilfields in western China ,placing a basis for the resourcereplacement in the future. Output of crude oil and natural gas of the Company inthe first quarter increased by 2.0% and 10.1%, respectively, over the sameperiod last year. Refining Segment: The Company actively optimized resource allocation and productstructure, increased the processing ratio of lower quality crude oil andexpanded the production volume of higher value-added products. The processingvolume of crude oil of the Company in the first quarter increased by 5.0% overthe same period last year. Marketing and Distribution Segment: The Company strengthened resourceco-ordination, optimized marketing and distribution network, logisticsoperation, leading to further increases in total sales volume, retail volume andself-operated service station. The Company's domestic sales and retail volumeof refined oil products in the first quarter increased by 5.5% and 3.5%,respectively, over the same period last year. 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 increased by 7.8% and 13.9%, respectively, over thesame period last year. Summary of Principal Operating Results for the First Quarter Operating Data Unit Three-month period Changes ended 31st March (%) 2007 2006Exploration and ProductionCrude oil production 10 thousand tonnes 999.43 979.86 2.00Natural gas million cubic meters 1,996 1,813 1,007productionRealised crude oil RMB/tonne 2582.70 3112.81 (17.03)priceRealised natural gas RMB/thousand cubic 799.27 745.10 7.27price metersRefiningCrude processing 10 thousand tonnes 3691.40 3516.88 4.96volumeGasoline, diesel and 10 thousand tonnes 2164.94 2088.87 3.64kerosene productionOf which: Gasoline 10 housand tonnes 587.24 553.40 6.11Diesel 10 thousand tonnes 1390.88 1381.87 0.65Kerosene 10 thousand tonnes 186.82 153.60 21.63Light chemical 10 thousand tonnes 608.50 576.81 5.49feedstockLight yield % 74.31 74.81 (0.50) percentage pointRefining yield % 93.38 93.64 (0.26) percentage pointMarketing and DistributionTotal domestic sales 10 thousand tonnes 2746.60 2603.00 5.51of refined oilproductsOf which: Retail 10 thousand tonnes 1724.30 1666.80 3.45Distribution 10 thousand tonnes 469.80 491.50 (4.40)Wholesale 10 thousand tonnes 552.40 444.80 24.19Total number of stations 28885 29744 (2.89)service stationsOf which: Owned and stations 28075 27464 2.22self-operatedFranchised stations 810 2280 (64.47)Throughput per petrol tonne/station 2457 2428 1.19station (Note 1)Chemicals (Note 2)Ethylene 10 thousand tonnes 163.23 151.36 7.84Synthetic resins 10 thousand tonnes 236.40 207.49 13.93Synthetic rubbers 10 thousand tonnes 18.88 16.12 17.15Monomers and polymers 10 thousand tonnes 190.96 178.18 7.17for synthetic fibersSynthetic fibers 10 thousand tonnes 35.52 39.02 (8.98)Urea 10 thousand tonnes 36.56 44.13 (17.16) Notes 1: Throughput per service station data is an annualized average; 2: Included 100% output of BASF-YPC and Shanghai Secco. Capital Expenditure: In the first quarter, capital expenditure of the Companyaggregated at approximately RMB 15,150 million, of which the capital expenditureof the Exploration and Production Segment was RMB 6,927 million; oil and gasexploration in Northeast Sichuan Province and the preparations of "Sichuan-to-East China Gas Project" progressed smoothly, newly-builtproduction capacity of crude oil reached 880,000 tonnes and newly-builtproduction capacity of natural gas reached 269 million cubic meters. Capitalexpenditure of the Refining Segment was approximately RMB .4,377 million, whichwere mainly used for Cao Feidian Import Crude Oil Pier and auxiliary engineeringand Jin-Yan Crude Oil Pipeline; and the refinery upgrading projects in Yanshan,Guangzhou Gaoqiao. The new refining project in Qingdao of 10 million tonnes/yearwas fully carried out. Capital expenditure of the Chemical Segment was RMB 1,729million, the projects of Maoming high-pressure ethylene and Shanghai glycol werecompleted and commenced production; Tianjin and Zhenhai ethene projects andJinling PX project have fully commenced. Capital expenditure of the Marketingand Distribution Segment was RMB 1,970 million, achieving outstandingperformance in the construction of service stations in key areas withseventy-four service stations added; construction of finished oil pipelines madenew progress. Capital expenditure of headquarters and others was RMB 147million. In addition, the capital expenditure of the Company's joint ventures was RMB20 million. 3 Significant Events 3.1 Significant changes of key accounting items and financial indices of theCompany and the reasons for the changes: (X)applicable ( ) not applicable Item Three-month period Changes compared with the ended 31 March same period of the 2006 2007 preceding year RMB millions RMB millions %Operating revenues 278,250 226,131 52,119 23.05Sales tax and surcharges 6,313 4,418 1,895 42.89Administrative expenses 8,295 5,694 2,601 45.68Exploration expenses 2,412 1,493 919 61.55Investment income 1,175 563 612 108.70Profit before taxation 28,050 13,352 14,698 110.08Net cash flow from operating activities 31,891 3,053 28,838 944.58 Operating revenues Operating revenues for the first quarter of 2007 was increased by 23.05%compared to the same period last year. This was mainly due to the fact that theCompany continuously expanded business scale, optimized marketing anddistribution structure and enhanced market share by grasping the opportunitiesarising from the continuous high level of price of domestic petrochemicalproducts. Sales tax and surcharges Sales tax and surcharges for the first quarter of 2007 was increased by 42.89%compared to the same period last year. This was mainly due to the fact thatspecial oil income levy, consumption tax and additional were increased Administrative expenses Administrative expenses for the first quarter of 2007 was increased by 45.68%compared to the same period last year. This was mainly due to the fact thatrepair expense of the first quarter was accumulated in management expense as pernew PRC Accounting Standards for Business Enterprises, and was increased byapproximately RMB 2.3 billion compared to the same period last year. Exploration expense Exploration expense for the first quarter of 2007 was increased by 61.55%compared to the same period last year. This was mainly due to the fact that theCompany has enhanced the exploration strength for south marine facies and newwestern area including Northeast Sichuan Province. Investment income Investment income for the first quarter of 2007 was increased by 108.7% comparedto the same period last year. This was mainly due to the fact that results ofjointly controlled entities BASF-YPC and Secco of the Company achievedsignificant increase compared to the same period last year. Profit before taxation Profit before taxation for the first quarter of 2007 enjoyed a growth of 110.08%compared to the same period last year. This was mainly due to the fact thatinternational crude oil price decreased in the first quarter, while domesticpetrochemical products price still maintained at high level, therefore therefining business of the Company reversed losses and made profits. Meanwhile theCompany continuously expanded sales of products, strengthened the Company'smanagement, thereby realizing better operating results. Net cash flow from operating activities Net cash flow from operating activities for the first quarter of 2007 wasincreased by 944.58% compared to the same period last year. This was mainly dueto the fact that net profit and depreciation of the Company were increased andinventory carrying change was decreased in the first quarter compared to thesame period last year. 3.2 The progress of significant events and their impacts as well as theanalysis and explanations for the solutions (X)applicable ( ) not applicable 3.2.1 Connected transactions The aggregate amount of connected transactions actually occurred in relation tothe Company during the reporting period was RMB 52.9 billion, of which, RMB24.757 billion was paid out by the Company, and RMB 28.143 billion (including,RMB 28.114 billion of sales of products and services, RMB 8 million of interestincome and RMB 21 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 20.887billion, representing 8.3% of the Company's operating expenses of thereporting period; the ancillary and social services provided by Sinopec Group tothe Company amounted to RMB 400 million, representing 0.16% of operatingexpenses of the reporting period. During the reporting period, the product salesfrom the Company to Sinopec Group and other connected parties amounted to RMB28.114 billion, representing 11.2% of the Company's operating revenue. 3.2.2 Issuance of domestic corporate bonds and oveseas convertible corporatebonds overseas In the First Extraordinary General Meeting of Shareholders of Sinopec Corp. for2007, approval was given to the issuance of domestic corporate bonds of up toRMB 10 billion ; issuance of overseas corporate bonds convertible to listedoverseas shares of Sinopec Corp. of up to USD 1.5 billion (or approximately HKD11.7 billion) and an unconditional general mandate was granted to the Board ofDirectors of Sinopec Corp. to allot, issue and handle new domestic shares listedin China and new overseas shares listed overseas(up to twenty percent of theissued domestic shares and the issued overseas shares of Sinopec Corp.respectively). For further details, please refer to Sinopec Corp.'s announcement publishedin China Securities Journal, Shanghai Securities News and Securities Times inmainland China on December 7, 2006, and South China Morning Post and Hong KongEconomic Times in Hong Kong on January 23, 2007. 3.2.3 Major projects (1) Sichuan-to-East China Gas Project The project "Sichuan-to-East China Gas Project" was formally approved by theState Council on April 9, 2007, and was listed as major project during the "Eleventh Five-year Plan Period". The project "Sichuan-to-East China GasProject" consists of two parts, namely, the exploration, development and gasprocessing project of Puguang Gas Field and the long-distance transportationpipeline project from Puguang Gas Field to Shanghai The expected totalinvestment for the Sichuan-to-East China Gas Project is RMB 63.2 billion,according to assumptions based on present price, the internal rate of return ofthe project will be above 14%. According to present exploration and developmentdeployment, it is predicted that production capacity of 10 billion cubic meterof natural gas will be formed by the end of 2008, and supply of gas can bestarted by the end of 2008, production capacity of 15 billion cubic meter ofnatural gas will be formed by the end of 2009. (2) Fujian refinery & ethylene project and refined oil products marketingproject On February 25, 2007, Sinopec Corp., Fujian Province, Exxon Mobil and SaudiAramco entered into a joint venture contract for the Fujian refinery & ethyleneproject. At the same time, Sinopec Corp., Exxon Mobil and Saudi Aramco alsoentered into a joint venture contract for the Fujian refined oil productsmarketing project. According to the Fujian refinery & ethylene joint venture plan, the capacity ofthe existing oil refinery in Quanzhou of Fujian will be expanded from 4 milliontpa to 12 million tpa and in the meantime, new chemical installations will beconstructed, including 800 thousand tpa ethylene cracking units, 800 thousandtpa polyethylene units, 400 thousand tpa polypropylene units and 700 thousandtpa PX and aromatics units. In addition, the project also includes theconstruction of crude oil wharves with handling capacity of 300 thousand tonnesand its auxiliary utilities. The project will be constructed with 50%, 25% and25% of equity investments by Fujian Refinery & Chemicals Co., Ltd. (a companyincorporated with 50% and 50% equity investments by Sinopec Corp. and FujianProvince), Exxon Mobil and Saudi Aramco respectively, and it is planned to becompleted and put into production at the beginning of 2009. With 55%, 22.5% and22.5% investments by Sinopec Corp., Exxon Mobil and Saudi Aramco, respectively,the Fujian refined oil product marketing joint venture is planned to manage andoperate approximately 750 service stations and a number of oil depots. On 15March and 19 March 2007, the Ministry of Commerce approved the above jointventure contracts, and approved the establishment of Fujian Refining andPetrochemical Company Ltd. and Sinopec SenMei (Fujian) Petroleum Company Ltd.. 3.3 Status of fulfillment of commitments undertaken by the Company,shareholder and 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 Through adjustment of structure and expansion of total business volume, SinopecCorp. has achieved excellent business performance in this quarter. Based onpresent production and operation situation, provided that there is nosignificant changes to the market environment and in accordance with the PRCEnterprise Accounting Standards for Business Enterprises,, the initialestimation of accumulated net profit of the first half of 2007 is conducted. Itis estimated that combined net profit for the first half of 2007 will increasemore than 50% over the same period last year. The above estimation is an initialestimation by Sinopec Corp., and the actual figures will be disclosed in theFirst Half Year Report of 2007 in details. 3.5 Explanation of the reason for the difference between stockholder's equityat the beginning of 2007 in the balance sheet of this quarterly report and "Difference Adjustment Table for Stockholder's Equity Determined In AccordanceWith New/Old Accounting Rules" (X)applicable ( ) not applicable 3.6 This quarterly results announcement is published in both Chinese andEnglish languages. The Chinese version shall prevail. By Order of the Board Chen Tonghai Chairman Beijing, PRC, 15 April 2007 As at the date of this announcement, the directors of Sinopec Corp. are ChenTonghai*, Zhou Yuan*,Wang Tianpu#,Zhang Jianhua#, Wang Zhigang#, Dai Houliang#, Fan Yifei*, Yao Zhongmin*, ShiWanpeng+, 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