SNP.L Regulatory News (SNP)

28 Apr 2006 07:00

China Petroleum & Chemical Corp28 April 2006 (a joint stock limited company incorporated in the People's Republic of China with limited liability) (Stock code: 0386) First Quarter Results Announcement for 2006 1. Important Notice 1.1 The Board of Directors of China Petroleum & Chemical Corporation("Sinopec Corp.") and its Directors warrant that there are no material omissionsfrom, 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 atthe twenty-sixth meeting of the Second Session of the Board of Directors ofSinopec Corp. 1.3 The financial statements contained in this announcement have not beenaudited. 1.4 Mr. Chen Tonghai, Chairman of the Board of Sinopec Corp., Mr. WangTianpu, President of Sinopec Corp., Mr. Zhang Jiaren, Director, and ChiefFinancial Officer of Sinopec Corp., and Mr. Liu Yun, Head of the AccountingDivision of Sinopec Corp., hereby declare that the authenticity and completenessof the financial statements contained in this quarterly results announcement arewarranted. 2. Basic Information of Sinopec Corp. 2.1 Summary of the information of Sinopec Corp. Stock name SINOPEC CORP SINOPEC CORP SINOPEC CORP Stock code 0386 SNP SNP 600028 Place of Hong Kong New York Stock London Stock Shanghai Stocklisting Stock Exchange Exchange Exchange Exchange Authorised Representatives Secretary to Representative the Board of on Securities Directors Matters Name Mr. Wang Mr. Chen Ge Mr. Chen Ge Mr. Huang Jiming Wensheng Address 6A Huixindong Street, Chaoyang District, Beijing, China Postcode 100029 Tel 86-10-64990060 86-10-64990060 86-10-64990060 86-10-64990060Fax 86-10-64990022 86-10-64990022 86-10-64990022 86-10-64990022E-mail ir @sinopec.com.cn / media @sinopec.com.cn 2.2 Financial Information 2.2.1 Principal accounting data and financial indicators 2.2.1.1 Principal accounting data and financial indicators prepared inaccordance with the PRC Accounting Rules and Regulations At At Changes at 31 March 31 December the end of 2006 2005 this reporting period compared with data at the end of the preceding year end (%)Total assets (RMB millions) 539,927 520,572 3.72Shareholders' funds (excluding 224,764 215,623 4.24 minority interests) (RMB millions) Net assets per share (RMB) 2.592 2.487 4.24Adjusted net assets per share 2.526 2.426 4.12(RMB) Three-month Three-month Changes in period ended period ended this 31 March 31 March reporting 2006 2005 period compared to the same period of the preceding year (%)Net cash flow from operating 3,463 14,854 (79.69)activities (RMB millions) Earnings per share (RMB) 0.105 0.104 0.96Return on net assets (%) 4.062 4.608 (0.55) percentage pointReturn (adjusted for 4.118 4.681 (0.56)non-operating profits/losses) percentageon net assets (%) point Non-operating profits/losses Three-month period ended 31 March 2006 RMB millionsWritten back of provisions on assets provided in (13)previous years Non-operating expenses (excluding normal provisions 251on assets provided in accordance with the Accounting Regulation for Business Enterprises) Of which:Losses on disposal of fixed assets 12Donations 18Non-operating income (52)Tax effect of the above (61)Total 125 2.2.1.2 Principal accounting data and financial indicators prepared inaccordance with IFRS At 31 March At 31 Changes at the 2006 December end of this 2005 reporting period compared with data at the end of the preceding year end (%)Total assets (RMB millions) 557,382 537,321 3.73Total equity attributable to 232,844 223,556 4.15equity shareholders of the Company (RMB millions) Net assets per share (RMB) 2.686 2.578 4.15Adjusted net assets per 2.620 2.518 4.05share (RMB) Three-month Three-month Changes in this period period reporting ended 31 ended 31 period compared March 2006 March 2005 to the same period of the preceding year (%)Net cash flow from operating 1,612 12,793 (87.40)activities (RMB millions) Earnings per share (RMB) 0.107 0.111 (3.60)Return on net assets (%) 3.989 4.755 (0.77) percentage point 2.2.2 Income statements This section includes the income statements for the first quarter ended 31 March2005 prepared in accordance with both the PRC Accounting Rules and Regulationsand IFRS with comparative figures for the same period of 2004. 2.2.2.1 Income statements prepared in accordance with the PRCAccounting Rules and Regulations Item Three-month period Three-month period ended 31 March 2006 ended 31 March 2005 The The The The Group Company Group Company RMB RMB RMB RMB millions millions millions millions1. Income from principal 222,699 178,340 169,040 114,331operations Less: Cost of sales 191,137 152,235 136,187 98,798 Sales taxes and 4,419 3,413 4,207 2,766surcharges 2. Profit from principal 27,143 22,692 28,646 12,767operations Add: Profit from other 248 35 320 15operations Less: Selling expenses 5,189 3,308 4,880 3,140 Administrative 5,720 4,649 6,056 3,555expenses Financial 1,606 1,172 1,372 954expenses Exploration 1,493 1,474 1,370 1,070expenses, including dry holes 3. Operating profit 13,383 12,124 15,288 4,063Add: Investment income 172 1,214 143 9,513 Non-operating 52 18 90 31income Less: Non-operating expenses 251 177 427 2584. Profit before taxation 13,356 13,179 15,094 13,349Less: Taxation 4,156 4,056 4,629 4,345 Minority 59 - 1,398 -interests Add: Reversal of (11) - (63) -unrecognised investment losses 5. Net profit 9,130 9,123 9,004 9,004 Notes: The "Company" represents China Petroleum & Chemical Corporation; The "Group" represents China Petroleum & Chemical Corporation and itssubsidiaries. 2.2.2.2 Consolidated income statements prepared in accordance with IFRS Item Three-month period ended 31 March 2006 2005 RMB millions RMB millions1. Turnover and other operating revenues 227,195 174,127 Including:Turnover 222,699 169,040 Other operating revenues 4,496 5,0872. Operating expenses (212,333) (157,247) Including:Purchased crude oil, products (185,949) (131,349) and operating supplies and expenses Selling, general and administrative (7,920) (7,577) expenses Depreciation, depletion and (7,991) (8,090) amortisation Exploration expenses, including (1,493) (1,370) dry-holes Personnel expenses (4,362) (4,317) Taxes other than income tax (4,419) (4,207) Other operating expenses, net (199) (337)3. Operating profit 14,862 16,8804. Finance costs (1,469) (1,239) Including:Interest expense (1,672) (1,330) Interest income 98 78 Foreign exchange losses (59) (25) Foreign exchange gains 164 385. Investment income 27 336. Share of profits less losses from 185 117 associates 7. Profit before taxation 13,605 15,7918. Taxation (4,266) (4,749)9. Profit for the period 9,339 11,042Attributable to: Equity shareholders of the Company 9,288 9,637 Minority interests 51 1,40510. Profit for the period 9,339 11,042 2.2.3 Differences between the net profit for the first quarter of 2006 andshareholders' funds as at 31 March 2006 under the PRC Accounting Rules andRegulations and IFRS 2.2.3.1 Effects of major differences between the net profit under thePRC Accounting Rules and Regulations and the profit for the year under IFRS areanalysed as follows: Three-month period ended 31 March 2006 2005 RMB millions RMB millions Net profit under the PRC Accounting Rules 9,130 9,004and Regulations Adjustments: Depreciation of oil and gas properties 185 186Capitalisation of general borrowing 101 108costs, net of depreciation effect Equity investment differences 40 7Acquisition of Sinopec National Star 29 29Unrecognised investment losses 11 63Reduced amortisation on revaluation of 6 5land use rights Reduced depreciation on government grants 3 1Pre-operating expenditures (7) 457Disposal of oil and gas properties, net (100) (103)of depreciation effect Effects of the above adjustments on (110) (120)taxation Profit attributable to equity 9,288 9,637shareholders of the Company under IFRS Minority interests 51 1,405 _____________ ______________Profit for the period under IFRS 9,339 11,042 ============= ============= 2.2.3.2 Effects of major differences between the shareholders' fundsunder the PRC Accounting Rules and Regulations and the total equity under IFRSare analysed as follows: At At 31 March 31 December 2006 2005 RMB millions RMB millions Shareholders' funds under the PRC Accounting Rules 224,764 215,623and Regulations Adjustments: Depreciation of oil and gas properties 12,418 12,233Capitalisation of general borrowing costs 2,213 2,112Equity investment differences 240 200Acquisition of Sinopec National Star (2,549) (2,578)Revaluation of land use rights (947) (953)Government grants (585) (588)Pre-operating expenditures (29) (22)Disposal of oil and gas properties 2,960 3,060Effects of the above adjustments on taxation (5,641) (5,531)Total equity attributable to equity shareholders of 232,844 233,556the Company under IFRS Minority interests 29,491 29,440 _____________ _____________Total equity under IFRS 262,335 252,996 ============= ============= 2.3 Top ten shareholders with tradable shares Number of shareholders Number of shareholders of Sinopec Corp. as as at 31 March 2006 at 31 March 2006: 213,598, including 204,786 holders of A shares and 8,812 holders of H shares. Top ten shareholders with tradable shares Name of shareholders Number of Type of shares held shares (A, at the end B, H share of the or others) reporting period (10,000 shares) HKSCC (Nominees) Limited 1,668,510.2 H ShareHaifutong Profits Securities 4,760.0 A ShareJingfu Fund Management Co.,LTD 4,597.5 A ShareQingdao Port Authority 4,328.0 A ShareBoshi Fund Management Co.,LTD 3,693.1 A ShareChina Fund SSE 50ETF Investment Fund 3,598.1 A ShareCitygroup Global Markets Limited 3,553.4 A ShareEFUND 50 Securities Investment Fund 3,530.9 A ShareJinxin Fund Management Co.,LTD 3,470.0 A ShareJinghong Fund Management Co.,LTD 3,410.7 A Share 2.4. Business review In the first quarter of 2006, the Chinese economy continued to grow at a fastpace, and domestic demand for refined oil products and petrochemical productscontinued its growth. International prices of crude oil maintained at a highlevel. By actively working to optimize resources allocation and products mix,and by striving to expand its operational base, the Company secured continuousincrease, amongst others, in production of oil and gas, the volume of crude oilprocessed, sales volume of refined oil products, and production of ethylene andsynthetic resin. Exploration and Production: Through continuous efforts over the past five years,the Company has discovered the largest and most abundant marine facies gas fieldin China -Puguang Gas field, which is located in Northeast Sichuan Province.Also in the first quarter, the Company has made significant progress in theexploration and development in Tahe oilfields in western China and Ordos Basin.Production capacity construction of crude oil and natural gas has made smoothprogress. Output of crude oil and natural gas in the first quarter increased by2.81% and 23.4%, respectively, as against the same period last year. Refining: The Company actively optimized resource allocation and transportationand made full use of the potentials of the refining facilities which operatedstably and safely under high loads. Meanwhile, the facility operation has alsobeen optimized and the Company has made effort to increase production which waswell received by the market. Diesel to gasoline ratio and light yield have shownan increase. The processing volume of the crude oil and output of the refinedoil products of the Company in the first quarter increased by 2.45% and 1.36%,respectively, over the same period last year. Marketing and Distribution: The Company gathered resources through variouschannels in an effort to satisfy the demand for refined oil products in China,while optimizing the resource allocation of the refined products and reducingthe cost of storage and transportation. The Company's domestic sales and retailvolume of refined oil products in the first quarter increased by 7.87% and23.85%, respectively, as against the same period last year. Chemicals: The major chemical production facilities of the Company continuedstable operation. The sales system reform of the chemical products was furtheredimproved. All chemical products realised sales to production ratio of 100%. TheCompany's production of ethylene and synthetic resin in the first quarterincreased by 34.94% and 23.29%, respectively, as against the same period lastyear. Summary of Principal Operating Results for the First Quarter Operating Data Unit Three-month period Changes ended 31st March 2006 2005 (%)Exploration and Production Crude oil production thousand tonnes 9,798.7 9,530.5 2.81Natural gas production million cubic meters 1,813 1,469 23.42Realised crude oil RMB/tonne 3,112.81 2,127.29 46.33price Realised natural gas RMB/thousand cubic 745.10 655.36 13.69price meters Refining Crude processing volume thousand tonnes 35,170 34,330 2.45Gasoline, diesel and thousand tonnes 20,890 20,610 1.36kerosene production Of which: Gasoline thousand tonnes 5,530 5,820 (4.98)Diesel thousand tonnes 13,820 13,110 5.42Kerosene thousand tonnes 1,540 1,680 (8.33)Light chemical thousand tonnes 5,770 4,990 15.63feedstock Light yield % 74.81 73.48 1.33 percentage pointRefining yield % 93.64 92.63 1.01 percentage pointMarketing and Distribution Total domestic sales of thousand tonnes 26,030 24,130 7.87refined oil products Of which:Retail thousand tonnes 16,670 13,460 23.85Distribution thousand tonnes 4,910 5,350 (8.22)Wholesale thousand tonnes 4,450 5,320 (16.35)Total number of petrol stations 29,744 30,164 (1.39)stations Of which:Owned and stations 27,464 26,682 2.93self-operated Franchised stations 2,280 3,482 (34.52)Throughput per petrol tonne/station 2,428 2,018 20.32station (Note 1) Chemicals (Note 2) Ethylene thousand tonnes 1,514 1,122 34.94Synthetic resins thousand tonnes 2,075 1,683 23.29Synthetic rubbers thousand tonnes 161 158 1.90Monomers and polymers thousand tonnes 1,782 1,596 11.65for synthetic fibers Synthetic fibers thousand tonnes 390 400 (2.50)Urea thousand tonnes 441 388 13.66 Notes 1: Throughput per petrol station data is an annualized average; 2: BASF-YPC and Shanghai Secco were put into commercial operations in thelate June of 2005, the operating results of ethylene and synthetic resins forthe three-month period ended 31 March 2006 included 100% output of BASF-YPC andShanghai Secco. Capital Expenditure: In the first quarter of 2006, capital expenditure of the Company aggregated atRMB 14,390 million, of which the capital expenditure of the Exploration andProduction Segment was RMB 5,372 million; newly-built production capacity ofcrude oil reached 1.27 million ton per annum and newly-built production capacityof natural gas reached 469 million cubic meters per annum. Capital expenditureof the Refining Segment was RMB 2,821 million, the expansion and upgradingprojects in Guangzhou and Yanshan and refining as well as some of the secondaryprocessing units under technical innovation progressed smoothly. Capitalexpenditure of the Chemical Segment was RMB 1,725 million, which expenditure wasmainly used for the second phase of Maoming ethylene reconstruction project,ethylene glycol unit of Shanghai Petrochemical Company Limited, aromatics andPTA reconstruction of Sinopec Yangzi Petrochemical Company Ltd. and coalgasification projects for the three sets of chemical fertilizer facilities.Capital expenditure of the Marketing and Distribution Segment was RMB 4,136million, which expenditure was mainly used for establishing logistics system andconstructing and purchasing gas stations. Ninety-seven gas stations were addedduring the reporting period. Capital expenditure of the Company's headquartersand others was RMB 336 million. 3 Management's Discussion and Analysis 3.1 Brief analysis of the Company's general operating activities during thereporting period Based on the PRC Accounting Rules and Regulations, income from principaloperations of the Company for the first quarter of 2006 amounted to RMB 222.699billion, representing an increase of 31.74% over the same period of last year,and the net profit amounted to RMB 9.13 billion, representing an increase of1.4% over the same period of last year. Based on IFRS, the turnover and other operating revenues of the Company for thefirst quarter of 2006 amounted to RMB 227.195 billion, representing an increaseof 30.48% over the same period of last year. Profit attributable to equityshareholders of the Company amounted to RMB 9.288 billion, representing adecrease of 3.62% over the same period of last year. 3.1.1 Principal segments or products accounting for over 10% of income orprofit from principal operations ( X ) applicable ( ) not applicable The table below shows segmental information prepared in accordance with the PRCAccounting Rules and Regulations: By segments or by products Income Costs of Profit Gross from sales from profit principal principal margin operations operations (%) RMB RMB RMB millions millions millions Exploration and production 30,342 9,552 19,544 64.41Refining 126,913 130,342 (6,637) (5.23)Marketing and distribution 126,045 117,254 8,665 6.87Chemicals 45,537 40,180 5,028 11.04Corporate and others 40,621 40,068 543 1.34Elimination of (146,759) (146,259) N/A N/Ainter-segment sales Total 222,699 191,137 27,143 12.19Of which related party 19,305 16,834 2,424 12.56transactions Note: Gross profit margin = profit from principal operations/income fromprincipal operations The table below shows segmental information prepared in accordance with IFRS: By segments or by products Operating Operating Operating Percentage revenues expenses profit/ of (loss) operating profit/ (loss) over operating revenues (RMB (RMB (RMB (%) millions) millions) millions) Exploration and production 31,914 14,791 16,623 52.09Refining 127,872 135,747 (7,875) (6.16)Marketing and distribution 126,182 122,853 3,329 2.64Chemicals 47,254 44,119 3,135 6.63Corporate and others 40,732 41,082 (350) (0.86)Elimination of inter-segment (146,759) (146,259) N/A N/Asales Total 227,195 212,333 14,862 6.54 3.1.2 Seasonal or periodic nature of the Company's operations ( ) applicable ( X ) not applicable 3.1.3 The composition of the profits during this reporting period (significantchanges in the profit from principal operations, profit from other operations,period expenses, investment income, subsidy income and net non-operating income/expenses as a percentage of profit before taxation are listed and explainedbelow in accordance with the PRC Accounting Rules and Regulations) ( X ) applicable ( ) not applicable Item Three-month Year ended Change in period ended 31 December 2005 percentage 31 March 2006 of profit Amount Percentage Amount Percentage before (RMB of profit (RMB of profit taxation millions) before millions) before (percentage taxation taxation points) (%) (%) Profit from principal 27,143 203.23 113,714 184.95 18.28operations Profit from other 248 1.86 839 1.36 0.50operations Periodical expenses (14,008) (104.88) (57,697) (93.84) (11.04)Investment income 172 1.29 813 1.32 (0.03)Subsidy income - - 9,415 15.31 (15.31)Net non-operating (199) (1.49) (5,602) (9.11) 7.62income/expenses Profit before taxation 13,356 100.00 61,482 100.00 - Significant changes and explanations: * Profit from Principal Operations The percentage of profit from principal operations to the profit before taxationwas 203.23%, representing a year on year increase of 18.28 percentage points.This was mainly due to the fact that the prices of crude oil rose continuouslyand the refining segment suffered a significant loss. As a result, the profitfrom principal operations fell by 4.52% over the quarterly average of the lastyear, while the profit before taxation witnessed a decrease of 13.11% over thequarterly average of the previous year. Therefore, the profit from principaloperations dropped less than the profit before taxation. * Periodical expenses The percentage of the periodical expenses to the profit before taxation was104.88%, representing an increase of 11.04 percentage points from 93.84% of theprevious year. This was mainly due to the fact that the periodical expense ofthe first quarter dropped by 2.89% over the quarterly average value of theprevious year, whereas the profit before taxation dropped by 13.11% over thequarterly average value of the previous year. So the decrease of the periodicalexpenses was less than that of the profit before taxation. * Subsidy Income The Company received a one- off government subsidy of RMB 9,415 million fromcentral finance in 2005. 3.1.4 Significant changes in, and explanations of, the principal operationsand their structures as compared with those during the previous reporting period ( ) applicable ( X ) not applicable 3.1.5 Significant changes in, and explanations of, the profitability (grossprofit ratio) of principal operations as compared with those during the previousreporting period prepared in accordance with the PRC Accounting Rules andRegulations ( ) applicable ( X ) not applicable 3.2 Significant events and their impacts as well as the analysis andexplanations 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 43.721 billion, of which, RMB21.788 billion was paid out by the Company, and RMB 21.933 billion (including,RMB 21.903 billion of sales of products and services, RMB 10 million of interestincome and RMB 20 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 19.351billion, representing 9.1% of the Company's operating expenses of the reportingperiod; the ancillary and social services provided by Sinopec Group to theCompany amounted to RMB 434 million, representing 0.2% of operating expenses ofthe reporting period; the product sales from the Company to Sinopec Group andother connected parties amounted to RMB 21.903 billion, representing 10.3% ofthe Company's operating revenue. During the reporting period, profit fromprincipal operations resulted from connected transactions amounted to RMB 2.424billion, representing 8.9% of the Company's profit from principal operations.The natures and pricing policies of connected transactions did not have anysignificant change compared with 2005. Other Connected Transactions When listed in 2000, Sinopec Corp. and Sinopec Group Company executed a seriesof agreements regarding continuing connected transactions, including the MutualSupply Agreement, the Community Services Agreement, the Property LeasingAgreement, the Intellectual Property Licence Agreement, the Agency Agreement andthe SPI Fund Document. On 24 December, 2003, the Stock Exchange of Hong KongLimited granted a conditional waiver of three years (from 2004 to 2006) toSinopec Corp. from strict compliance with relevant requirements of the Hong KongListing Rules in relation to the continuing connected transactions. The waiverwill expire on 31 December 2006. It is expected that Sinopec Corp. will continue to conduct the relatedcontinuing connected transactions after the expiry of the waiver period. SinopecCorp. has entered into the supplemental agreement to the connected transactionswith Sinopec Group Company on 31 March 2006, which served as supplements ofcertain provisions governing the connected transactions. The relevantsupplements will apply to the continuing connected transactions of the Companyto be conducted after 1 January, 2007. The above supplemental agreement to the connected transactions has been approvedby the Board of Directors of Sinopec Corp. and announced. Sinopec Corp. willseek the approval of independent shareholders in relation to the amendment ofthe agreements, major continuing connected transactions, the caps of the majorcontinuing connected transactions and non-major continuing connectedtransactions in accordance with the requirements of Shanghai Stock Exchange. Thecircular containing the recommendations of the independent financial adviser,ICEA, details of the continuing connected transactions, letter of theindependent directors together with the notice convening of the general meetingof shareholders has been sent to shareholders and is available on the website(www.sse.com.cn) of Shanghai Stock Exchange prior to the annual general meetingof shareholders. The matters will be submitted to the annual general meeting ofshareholders to be held on 24 May 2006 for consideration and approval. 3.2.2 The Discovery of Large-scale Marine Facies Gas Field-Puguang Gas field The Company discovered the largest and most abundant marine facies natural gasfield (Puguang Gas Field) in China, which is located in northeast SichuanProvince. According to the appraisal undertaken by the Mineral Resource ReserveEvaluation Center under the Ministry of Land and Resources, reserve in place inthe Puguang Gas Field is estimated to be 251.071 billion cubic meters, withtechnical recoverable reserve of 188.304 billion cubic meters. Puguang Gas fieldmeets the conditions for commercial development. Sinopec Corp. has prepared aphase I Development Plan, which plans to achieve commercial production of morethan 4 billion cubic meters per annum of gas by 2008 and 8 billion cubic metersper annum by 2010. In connection with the contemplated project, a natural gaspipeline from northeast Sichuan Province to Jinan, Shandong Province will beconstructed. The government has approved Sinopec Corp. to proceed withpreparatory work for the project. The discovery of Puguang Gas Field isattributable to the innovations in marine facies exploration theory, explorationmethodology exploration technology and management innovation, representing amajor breakthrough in marine facies exploration theory and practices in China.The discovery expanded the Company's exploration territory, thereby paving theway for future growth in both reserve and production. 3.2.3 Sinopec Corp. Successfully Consolidated for Four A-share Subsidiaries byway of General Offer On 15 February, 2006, the Twenty-Fourth meeting of the Second Session of theBoard of Directors of Sinopec Corp. approved the making of a voluntary generaloffer for all tradeable shares of Sinopec Qilu Company Ltd. ("Sinopec Qilu") atRMB 10.18 per share, all tradeable shares of Sinopec Yangzi PetrochemicalCompany Ltd. ("Sinopec Yangzi") at RMB 13.95 per share, all tradeale shares ofSinopec Zhongyuan Petroleum Co., Ltd. ("Sinopec Zhongyuan") at RMB 12.12 pershare and all tradeable shares and non-tradeable shares held by othershareholders excluding Sinopec Corp. of Shengli Oil Field Dynamic (Group) Co.,Ltd. ("Sinopec Dynamic") at RMB 10.30 (tradeable share) and RMB5.60 (tradeableshare) per share, respectively. At the expiration of the offer period ended on 6April 2006, the number of the tradeable shares of Sinopec Qilu, Sinopec Yangzi,Sinopec Zhongyuan and Sinopec Dynamic which accepted the offer, and have notwithdrawn from the acceptance, was 332,199,784 shares, 338, 612,282 shares,234,055,130 shares and 233,828,641 shares, respectively. They all exceeded theminimum number of acceptance required by the conditions of the general offer,thus making the general offer unconditional. At present, the liquidation andshare transfers procedures have been completed. The Shenzhan Stock Exchange hasapproved the termination of trading of the tradeable shares of Sinopec Yangzi,Sinopec Zhongyuan and Sinopec Dynamic with effect from 21 April 2006. TheShanghai Stock Exchange has approved the termination of trading of the tradeableshares of Sinopec Qilu with effect from 24 April 2006. At present, Sinopec Corp.is purchasing the remaining shares of the four subsidiaries, which will last twomonths. Please refer to the relevant announcements set out in the ChinaSecurities Journal, Shanghai Securities News and/or Securities Times on 16February and 10 April 2006 for details. 3.2.4 Delisting of Sinopec Zhenhai Refining and Chemical Company Ltd. According to the Agreement of Merger by Absorption entered into between NingboYonglian Co., Ltd. ("Ningbo Yonglian"), a wholly owned subsidiary of SinopecCorp. established for the purpose of such a merger, and Sinopec Zhenhai Refiningand Chemical Company Ltd. ("ZRCC") on 12 November 2005, Ningbo Yonglian willpurchase the listed H shares of ZRCC from its shareholders at the price ofHK$10.60 per share in cash, the total consideration being HK$7.672 billion. ZRCCwas delisted on 24 March 2006. Please refer to Sinopec Corp.'s announcementpublished in China Securities Journal, Shanghai Securities News and SecuritiesTimes in Mainland China and South China Morning Post and Hong Kong EconomicTimes in Hong Kong on 14 November 2005 and 1 March 2006, respectively, fordetails. 3.2.5 Increase of Equity Investment on Sinopec Finance Co., Ltd. On 31 March, 2006 Sinopec Corp. and Sinopec Group have entered into thearrangement ("Arrangement") with Sinopec Finance Co.,Ltd. ("Sinopec Finance").In accordance with the Arrangement, the registered capital of Sinopec Financewill be increased to RMB 6 billion from RMB 2.5 billion. Sinopec Corp. andSinopec Group Company will inject RMB 1602.3 million and 897.7 million,respectively, into Sinopec Finance. Upon completion of the Arrangement, theequity holding of Sinopec Corp. in Sinopec Finance will increase to 49% from38.22%, while the equity holding of Sinopec Group Company in Sinopec Financewill decrease to 51% from 61.78%. Please refer to the relevant announcements setout in the China Securities Journal, Shanghai Securities News and SecuritiesTimes in Mainland China and Hong Kong Economic Times and South China MorningPost in Hong Kong on 3 April 2006 for details. 3.2.6 Special Oil Income Levy Pursuant to the relevant documents issued by the Ministry of Finance of PRC, thestate government imposed a special oil income levy on any income derived fromthe sale by an oil exploration and production company of locally produced crudeoil at a price which exceeds US$40 per barrel since 26 March, 2006. The specialoil income levy will have 5 levels and will be calculated and charged accordingto the progressive ad valorem rates on the excess amounts. The levy will becalculated on a monthly basis and charged and collected on a quarterly basis.The applicable level of the special oil income levy will be determined based onthe weighted average crude oil sale price of a particular month. The level oflevy will be determined based on US$ per barrel which starts at US$40 perbarrel, please refer to the relevant announcements set out in the ChinaSecurities Journal, Shanghai Securities News and Securities Times in MainlandChina and Hong Kong Economic Times and South China Morning Post in Hong Kong on4 April 2006 for details. 3.3 Disclosure and explanations as to the changes in accounting policies,accounting estimates and scope of consolidation and fundamental errors ( ) applicable ( X ) not applicable 3.4 Relevant explanations made by the Board of Directors and theSupervisory Committee after the audit and presentation of "non-standardopinion". ( ) applicable ( X ) not applicable 3.5 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 ( ) applicable ( X ) not applicable 3.6 Adjustments to the annual business plan or budget which have beendisclosed ( ) applicable ( X ) not applicable 3.7 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, 27 April 2006 As at the date of this announcement, the executive directors of Sinopec Corp.are Wang Jiming, Mou Shuling, Zhang Jiaren, Cao Xianghong; the non-executivedirectors of Sinopec Corp. are Messrs. Chen Tonghai, Liu Genyuan, Gao Jian andFan Yifei; the independent non-executive directors of Sinopec Corp. are Messrs.Chen Qingtai, Ho Tsu Kwok Charles, Shi Wanpeng and Zhang Youcai; and theemployee representative director of Sinopec Corp. is Mr. Cao Yaofeng. This information is provided by RNS The company news service from the London Stock Exchange