SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of October, 2004
China Petroleum & Chemical Corporation
A6, Huixindong Street,
Chaoyang District Beijing, 100029
People's Republic of China
Tel: (8610) 6499-0060
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
------- ------
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934. )
Yes No X
------- ------
(If "Yes" is marked, indicate below the file number assigned to
registrant in connection with Rule 12g3-2(b): 82-__________. )
N/A
This Form 6-K consists of:
an announcement on the third quarterly results of 2004, made on
October 28, 2004, in English of China Petroleum & Chemical Corporation (the
"Registrant").
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
China Petroleum & Chemical Corporation
By: /s/ Chen Ge
Name: Chen Ge
Title: Secretary to the Board of Directors
Date: October 28, 2004
[GRAPHIC OMITTED]
(a joint stock limited company incorporated in the
People's Republic of China with limited liability)
(Stock code: 386)
Third Quarterly Results for 2004
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Highlights of the results of the Company for the third quarter ended
30 September 2004
During the third quarter of 2004, income from principal operations and net
profit of China Petroleum & Chemical Corporation and its subsidiaries (the
"Company") under the PRC Accounting Rules and Regulations amounted to RMB
151,986 million and RMB 9,003 million respectively, increased by 43.63% and
78.67%, over those during the third quarter of 2003 respectively. Turnover &
other operating revenues and profit attributable to shareholders of the
Company under International Financial Reporting Standards ("IFRS") amounted to
RMB 158,204 million and RMB 10,502 million respectively, increased by 39.63%
and 62.02% over those during the third quarter of 2003 respectively.
This quarterly report announcement is prepared in accordance with the
regulations on Disclosure of Information in Quarterly Reports for Listed
Companies issued by the China Securities Regulatory Commission ("CSRC"). This
announcement is published simultaneously in Shanghai and Hong Kong and the
contents of the announcements published in Shanghai and Hong Kong are the
same. Financial information set out in this quarterly results announcement has
been prepared in accordance with the PRC Accounting Rules and Regulations.
Although it is not required by CSRC, Sinopec Corp. has also included in this
announcement the relevant financial information prepared in accordance with
IFRS.
This announcement is made pursuant to the disclosure requirement under rule
13.09(2) of the Listing Rules for its publication in Hong Kong.
--------------------------------------------------------------------------------
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
omissions from, or misrepresentations or misleading statements contained
in this announcement, and severally and jointly accept full
responsibility for the authenticity, accuracy and completeness of the
information contained in this report.
1.2 This quarterly results announcement has been reviewed and approved at
the eleventh meeting of the second session of the Board of Directors of
Sinopec Corp.
1.3 The quarterly financial statements contained in this report are not
audited.
1.4 Mr. Chen Tonghai, Chairman of the Board of Sinopec Corp., Mr. Wang
Jiming, Vice Chairman and President of Sinopec Corp., Mr. Zhang Jiaren,
Director, Senior Vice President and Chief Financial Officer of Sinopec
Corp., and Mr. Liu Yun, Head of the Accounting Department of Sinopec
Corp., hereby warrant the authenticity and completeness of the financial
statements contained in this quarterly results announcement.
2. Basic Information
2.1 Basic information of Sinopec Corp.
Stock name SINOPEC CORP. SINOPEC CORP. SINOPEC CORP. SINOPEC CORP.
Stock code 386 SNP SNP 600028
Place of listing Hong Kong New York Stock London Stock Shanghai
Stock Exchange Exchange Exchange Stock Exchange
Authorized Representatives Secretary to the Representative on
Board of Securities Matters
Directors
Name Mr. Wang Mr. Chen Ge Mr. Chen Ge Mr. Huang
Jiming Wensheng
Address 6A Huixindong Street, Chaoyang District, Beijing, PRC
Post Code 100029
Tel 64990060 64990060 64990060 64990060
Fax 64990022 64990022 64990022 64990022
E-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 in accordance with the PRC
Accounting Rules and Regulations
Changes
compared
At 30 At 31 with the
September December preceding
2004 2003 year-end
(%)
Total assets (RMB millions) 430,304 390,213 10.27
Shareholders' funds (excluding minority
interests) (RMB millions) 177,835 162,946 9.14
Net assets per share (RMB) 2.051 1.879 9.14
Adjusted net assets per share (RMB) 2.020 1.850 9.19
Three-month period ended Nine-month period ended
30 September 30 September
(July to September) (January to September)
Changes compared Changes compared
with the same with the same
period of the period of the
2004 2003 preceding year 2004 2003 preceding year
(%) (%)
Net cash flow from operating 23,543 15,987 47.26 45,237 45,969 (1.59)
activities
(RMB millions)
Earnings per share 0.104 0.058 79.31 0.277 0.171 61.99
(RMB)
Return on net assets (%) 5.06 3.17 2.04 percentage 13.52 9.33 4.19 percentage
points points
Return on net assets 5.88 4.26 1.62 percentage 15.06 10.70 4.36 percentage
before non-operating points points
profits/losses
(Fully diluted) (%)
(Weighted average) (%) 6.04 4.28 1.76 percentage 15.49 10.81 4.68 percentage
points points
Nine-month period
ended
Non operating profits/losses 30 September 2004
(RMB millions)
Profits on disposal of long-term equity investment (12)
Written back of provisions on assets provided in previous years (80)
Non-operating expenses (excluding normal provisions on assets provided in
accordance with the Accounting Regulation for Business Enterprises) 4,440
Of which: loss on disposal of fixed assets 3,118
donations 92
employee reduction expenses 412
Non-operating income (269)
Tax effect (1,346)
Total 2,733
2.2.1.2 Principal accounting data and financial indicators prepared in accordance with IFRS
Changes
compared
At 30 At 31 with the
September December preceding
2004 2003 year-end
(%)
Total assets (RMB millions) 443,923 400,818 10.75
Shareholders' funds (excluding minority
interests) (RMB millions) 185,122 167,899 10.26
Net assets per share (RMB) 2.135 1.937 10.26
Adjusted net assets per share (RMB) 2.107 1.908 10.43
Three-month period ended Nine-month period ended
30 September 30 September
(July to September) (January to September)
Changes
Changes compared
with the same with the same
period of the period of the
2004 2003 preceding 2004 2003 preceding
year year
(%) (%)
Net cash flow from
operating activities
(RMB millions) 21,726 15,080 44.07 41,017 42,935 (4.47)
Earnings per share
(RMB) 0.121 0.073 65.75 0.307 0.197 55.84
Return on net assets (%) 1.80 3.99
percentage percentage
5.67 3.87 points 14.40 10.41 points
2.2.2 Income statements This section includes the income statements for the
third quarter ended 30 September 2004 prepared in accordance with both
the PRC Accounting Rules and Regulations and IFRS with comparative
figures for the corresponding period in 2003.
2.2.2.1 Income statements prepared in accordance with the PRC Accounting Rules
and Regulations
(1) Income statements for the three-month period ended 30 September (July to
September)
Three-month period ended 30 Three-month period ended 30
September 2004 September 2003
Item (July to September) (July to September)
The Group The Company The Group The Company
(Note) (Note) (Note) (Note)
RMB millions RMB millions RMB millions RMB millions
1. Income from principal
operations 151,986 102,886 105,820 66,781
Less:Cost of sales 116,956 86,593 81,906 53,945
Sales taxes and surcharges 4,222 2,540 3,411 2,190
2. Profit from principal
operations 30,808 13,753 20,503 10,646
Add: Profit/(loss) from other
operations 134 (157) 238 39
Less:Selling expenses 4,992 3,697 3,800 2,784
Administrative expenses 5,141 2,943 4,158 2,496
Financial expenses 1,067 665 1,151 685
Exploration expenses,
including dry holes 1,629 1,291 1,213 867
3. Operating profit 18,113 5,000 10,419 3,853
Add: Investment income 272 10,869 56 4,707
Non-operating income 88 63 77 9
Less:Non-operating expenses 3,885 3,143 2,641 1,457
4. Profit before taxation 14,588 12,789 7,911 7,112
Less:Taxation 4,162 3,786 2,233 2,073
Minority interests 1,399 - 639 -
Add: Unrecognized losses of investment (24) - - -
5. Net profit 9,003 9,003 5,039 5,039
Note: The "Company" means China Petroleum & Chemical Corporation.
The "Group" means China Petroleum & Chemical Corporation and its
subsidiaries on a consolidated basis.
(2) Income statements for the nine-month period ended 30 September
(January to September)
Nine-month period ended Nine-month period ended
30 September 2004 30 September 2003
Item (January to September) (January to September)
The Group The Company The Group The Company
(Note) (Note) (Note) (Note)
RMB millions RMB millions RMB millions RMB millions
1. Income from principal
operations 417,695 286,722 300,662 199,048
Less: Cost of sales 323,054 241,271 234,209 165,733
Sales taxes and surcharges 11,998 7,201 9,552 6,045
2. Profit from principal operations 82,643 38,250 56,901 27,270
Add: Profit/(loss) from other operations 750 (128) 821 116
Less: Selling expenses 13,656 9,287 10,492 7,232
Administrative expenses 16,006 10,147 13,804 8,669
Financial expenses 3,161 1,952 3,385 1,885
Exploration expenses, including dry
holes 4,104 3,122 3,997 2,833
3. Operating profit/(loss) 46,466 13,614 26,044 6,767
Add: Investment income 788 27,509 397 16,656
Non-operating income 269 175 165 38
Less: Non-operating expenses 8,837 6,695 3,409 2,025
4. Profit before taxation 38,686 34,603 23,197 21,436
Less: Taxation 11,316 10,318 6,995 6,632
Minority interests 3,811 - 1,398 -
Add: Unrecognized losses of investment 483 - - -
5. Net profit 24,042 24,285 14,804 14,804
Note: The "Company" means China Petroleum & Chemical Corporation.
The "Group" means China Petroleum & Chemical Corporation and its
subsidiaries on a consolidated basis.
2.2.2.2 Consolidated income statements prepared in accordance with IFRS
Item Three-month period ended 30 Nine-month period ended 30
September September
(July to September) (January to September)
RMB millions RMB millions RMB millions RMB millions
2004 2003 2004 2003
1. Turnover and other operating revenues 158,204 113,301 433,646 318,636
Including: Turnover 151,986 108,327 417,695 305,941
Other operating revenues 6,218 4,974 15,951 12,695
2. Operating expenses (140,980) (102,197) (389,083) (288,963)
Including: Expenses on purchase of
crude oil, products
and operating supplies (113,316) (80,162) (310,439) (224,527)
Selling, general and
administrative expenses (7,810) (6,317) (22,022) (17,745)
Depreciation, depletion
and amortisation (7,642) (6,191) (22,415) (19,138)
Exploration expenses,
including dry holes (1,629) (1,213) (4,104) (3,997)
Personnel expenses (4,282) (3,473) (12,628) (11,811)
Employee reduction
expenses - - (412) -
Taxes other than income
tax (4,222) (3,449) (11,998) (9,639)
Other operating
expenses, net (2,079) (1,392) (5,065) (2,106)
3. Operating profit 17,224 11,104 44,563 29,673
4. Finance costs (888) (1,153) (2,691) (3,227)
Including: Interest expense (976) (1,044) (2,962) (3,238)
Interest income 80 68 249 213
Foreign exchange losses (35) (196) (64) (235)
Foreign exchange gains 43 19 86 33
5. Investment income 27 21 57 19
6. Share of profits less losses from
associates 223 41 674 313
7. Profit from ordinary activities before
taxation 16,586 10,013 42,603 26,778
8. Taxation (4,666) (2,878) (12,379) (8,142)
9. Profit from ordinary activities
after taxation 11,920 7,135 30,224 18,636
10. Minority interests (1,418) (653) (3,571) (1,427)
11. Profit attributable to shareholders 10,502 6,482 26,653 17,209
2.2.3 Differences between the net profit for the first three quarters of 2004
and shareholders' funds under the PRC Accounting Rules and Regulations
and IFRS
2.2.3.1 Effects of major differences between the PRC Accounting Rules and
Regulations and IFRS on the net profit are analysed as follows:
Nine-month period ended 30
September
2004 2003
RMB millions RMB millions
Net profit under the PRC Accounting Rules and Regulations 24,042 14,804
Adjustments:
Disposal of oil and gas properties, net of depreciation effect 2,234 1,199
Impairment losses on revaluated assets 760 -
Depreciation of oil and gas properties 541 1,914
Capitalization of general borrowing costs 405 295
Acquisition of Sinopec National Star 87 87
Acquisition of Sinopec Maoming, Xi'an Petrochemical and Tahe Petrochemical - 172
Revaluation of land use rights 14 13
Unrecognized losses of subsidiaries (220) -
Pre-operating expenditures (147) (127)
Impairment losses on long-lived assets - (5)
Effects of the above adjustments on taxation (1,063) (1,143)
Net profit under IFRS 26,653 17,209
2.2.3.2 Effects of major differences between the PRC Accounting Rules and
Regulations and IFRS on the shareholders' funds are analysed as follows:
At 30 September At 31 December
2004 2003
RMB millions RMB millions
Shareholders' funds under the PRC Accounting Rules and Regulations 177,835 162,946
Adjustments:
Disposal of oil and gas properties, net of depreciation effect 3,494 1,260
Depreciation of oil and gas properties 11,426 10,885
Capitalization of general borrowing costs 1,530 1,125
Acquisition of Sinopec National Star (2,725) (2,812)
Revaluation of land use rights (856) (870)
Effect of minority interests on unrecognized losses of subsidiaries 324 61
Pre-operating expenditures (316) (169)
Impairment losses on long-lived assets (113) (113)
Government grants (326) (326)
Effects of the above adjustments on taxation (5,151) (4,088)
Shareholders' funds under IFRS 185,122 167,899
2.3 Total number of shareholders at the end of this reporting period is
286,030, among which 275,018 shareholders are domestic holders of A
shares, and 11,012 shareholders are overseas shareholders.
Total number of shareholders at the end of this reporting period 286,030
Top ten shareholders with tradable shares
Number of shares Type
held (thousand (A, H Share or
Full name share) others)
HKSCC(Nominees)Limited 16,676,156 H
Xinghe Security Investment Fund 64,387 A
Qingdao Port Authority 60,000 A
EFUND 50 Security Investment Fund 55,906 A
Xinghua Security Investment Fund 50,610 A
CITIC Classical Securities Investment Fund 49,888 A
CITIC Securities CO., Ltd. 46,574 A
Harvest Service Sector Fund 45,707 A
China Southern Sustaining Growth Fund 44,000 A
Hai Futong Income Securities Investment Fund 41,807 A
2.4 Business Review and and Business prospects
2.4.1 Business Review
In the first three quarters of year 2004, the Chinese economy continued to
grow steadily with a GDP growth rate of 9.5%. As a result, demands for
petroleum and petrochemical products have increased accordingly.
Looking back into the first three quarters of this year, price of
international crude oil fluctuated at a high level and the chemical industries
were in the upturn cycle. The Company closely monitored the changes in
domestic and overseas market of crude oil and petrochemical products, and
actively explored the market, optimized resources, rationalised structures,
and increased operation volume. As a result, the oil and gas production
increased steadily, refinery and petrochemical facilities operated at a high
utilisation rate, the sales of refined oil products increased significantly
and marketing structures were further optimized. At the same time, the Company
further enhanced the internal reform, optimized the assets portfolio and
reinforced internal management, thus the Company achieved remarkable operating
results.
In the first three quarters of 2004, the Company's income from principal
operations and net profit, according to the PRC Accounting Rules and
Regulations, were RMB 417.695 billion and RMB 24.042 billion respectively
(among others, those recorded in the third quarter were RMB 151.986 billion
and RMB 9.003 billion respectively).
In the first three quarters of 2004, according to the IFRS, turnover and other
operating revenues amounted to RMB 433.646 billion and profit attributable to
shareholders was RMB 26.653 billion (among others, those recorded in the third
quarter were RMB 158.204 billion and RMB 10.502 billion respectively).
Exploration and Production Segment:
In the third quarter, the Company seized the opportunity of high crude oil
prices and carefully arranged oil and gas production with a focus focused on
increasing the recovery rate and development level of existing oil fields,
expediting the production capacity build-up in Tahe Oil Field, new blocks in
the western area, and maintained the production of oil and gas at a good
level.
Refining Segment:
In the third quarter, the Company kept its facilities running at safe, stable,
sustained, optimal and full load operation, thus increased the processing
volume of crude oil. The Company optimised the allocation of crude oil
resources, further increased the processing volume of sour crude, also
optimised product mix, increased production of high value-added products.
Furthermore, the Company enhanced its management over the operation of
production facilities, and further improved major economic and technical
indicators for oil refining, such as light product yield and refining yield.
The pace of expansion in some plants also accelerated.
Marketing and Distribution Segment:
In the third quarter, the Company seized the market opportunities of strong
demands for refined oil products in the domestic market, The Company actively
explored the market, expanded and optimized the marketing network of refined
oil products, As a result, the Company's domestic sales, especially the retail
volume and direct sales volume were increased significantly. And the marketing
network of refined oil products and products flow was more rational. The
Company reduced the export volume of its refined oil products to meet the
domestic demand.
Chemicals Segment:
In the third quarter, the chemical industries were still in the upturn cycle,
The Company seized the favorable opportunities of strong domestic demand and
higher prices and maintained operation of its chemical facilities at full
load. As a result, production of major chemical products was increased. The
chemical product mix has been further improved and the portion of high
value-added products such as performance compound of synthetic resin and
differential fiber was further increased.
Summary of Principal Operating Results for the first three quarters
Nine-months Changes
period ended compared with
September 30 the same period
of the preceding
Operating Results Unit 2004 2003 year (%)
Exploration and Production
Crude oil production '000 tonne 28,802.2 28,548.8 0.89
Natural gas production billion
cubic meter 4.310 3.918 10.01
Crude oil realized price RMB/tonne 1,838.21 1,635.75 12.38
Natural gas realized price RMB/ '000
cubic meter 604.48 598.11 1.07
Refining(1)
Refining throughput '000 tonne 98,678.2 84,905.7 16.22
Production of gasoline, diesel and kerosene '000 tonne 59,887.0 50,228.6 19.23
Of which: Gasoline '000 tonne 17,480.9 15,811.5 10.56
Diesel '000 tonne 37,762.8 30,574.8 23.51
Kerosene '000 tonne 4,643.2 3,842.2 20.85
Chemical feedstock '000 tonne 13,021.7 12,323.2 5.67
Light yield % 73.94% 73.50% 0.44 percentage points
Refining yield % 92.93% 92.71% 0.22 percentage points
Marketing and Distribution
Total domestic sales of refined oil products '000 tonne 70,187.5 55,171.4 27.22
Of which: Retail volume '000 tonne 38,571.3 27,992.2 37.79
Direct sales volume '000 tonne 15,025.0 11,315.5 32.78
Wholesale volume '000 tonne 16,591.2 15,863.7 4.59
Total number of petrol stations station 31,030 29,612 4.79
Of which: Owned and self-operated station 25,654 24,286 5.63
Franchised station 5,376 5,326 0.94
Throughput per petrol station (2) tonne/station 2,005 1,652 21.37
Chemicals(1)
Ethylene '000 tonne 2,670.1 2,613.8 2.15
Synthetic resin '000 tonne 4,061.9 3,828.8 6.09
Of which: Performance compound resins '000 tonne 2,104.8 1,771.3 18.83
Synthetic rubber '000 tonne 414.6 392.5 5.63
Synthetic monomer and polyners '000 tonne 3,620.1 3,302.6 9.61
Synthetic fibers '000 tonne 971.5 935.3 3.87
Of which: Differential fiber '000 tonne 430.1 379.8 13.24
Urea '000 tonne 2,151.6 1,617.1 33.05
(1) Operational data of 2003 and 2004 include that of Maoming Ethylene, Tahe
Petrochemical and Xi'an Petrochemical.
(2) Throughput per petrol station data was annualized average.
Capital Expenditure:
In the first three quarters of year 2004, the Company's total capital
expenditure was RMB 42.33 billion. Out of such expenditure, RMB 14.254 billion
were spent on the Exploration and Production Segment, as a result, the newly
built production capacity of crude oil and the newly added production capacity
of natural gas reached 3.33 million tonnes/year and 158 million cubic
meters/year, respectively. RMB7.33 billion were spent on the Refining Segment
to accelerate the construction of the new facilities which are expected to
have a comprehensive processing capacity of 9.5 million tonnes per year, part
of which have been put into operation during the first-three quarter period.
RMB 5.71 billion were spent on the Chemicals Segment - Qilu's second round 720
thousand tpa ethylene expansion project was successfully put into production.
RMB 14.37 billion were spent on the Marketing and Distribution Segment and
additional of 1,148 gas stations were acquired by the Company. RMB 0.67
billion were spent on the Corporate and others.
In addition, the joint venture projects, such as Shanghai Secco, proceeded
smoothly and the total capital expenditure incurred was RMB 5.0 billion.
2.4.2 Business Prospects
Looking into the fourth quarter of 2004, domestic demands for refined oil
products and chemicals are expected to continue their growth, Prices of
international crude oil are expected to fluctuate at a high level and the
chemical industries will remain in the upturn cycle. The Company will continue
toclosely monitor changes in the market and make rational arrangements in its
production and operational. In particular:
Exploration and Production: seize the opportunity when oil prices remain at
high level by increasing its production. The Company will continue to carry
out further exploration and development activities, especially in the new
blocks in western China with the view of balancing its production and newly
added reserve for the year to lay down a sound foundation for sustainable
development in the next year. The Company plans to produce 9.82 million tonnes
of crude oil and 1.5 billion cubic meters of natural gas in the fourth quarter
of this year.
Refining: keeping track of the changes in the international crude oil market
to optimize the allocation of crude oil resources, adjust refine product mix
according to market situation, strengthen production and operational
management and ensure its facilities will be running in a safe, stable,
sustained, optimal and full load manner. The Company is expected to process
34.24 million tonnes of crude oil in the fourth quarter.
Marketing and Distribution: the Company intends to enhanceits refined oil
products marketing network by accelerating the construction of its refined oil
pipelines, optimising the layout of its refined oil products depots and
expanding its refined oil products retail network. It also intends to further
enhance its sales structure and expand its retail sales and direct sales
volume. Following the principle of achieving regional and professional
management and flattening of the management hierarchy, the Company intends to
further implement reforms to its marketing system of refined oil products. The
Company is expected to sell 24 million tonnes of refined oil products to the
domestic market in the fourth quarter (among which, 12.6 million tonnes
through retail sales, and 4.5 million tonnes through direct sales).
Chemicals: continue to keep chemical production facilities at full load. It
will also optimize feedstock and resources allocation to achieve a reduction
in the material and energy consumption and an increase of product yield. The
Company also intends to continue to carry out reform of marketing system of
chemical products. In the fourth quarter, the Company is expected to produce
972.4 thousand tonnes of ethylene.
By the making of the efforts mentioned above, the Company is expected to over
fulfill the operation plans for the full year of 2004.
3 Management's Discussion and Analysis
3.1 Brief analysis of the Company's general operating activities during the
reporting period
In the third quarter of 2004, according to the PRC Accounting Rules and
Regulations, the Company's income from principal operations was RMB 151.986
billion, representing an increase of 43.63% over the same period of the
preceding year. Its net profit was RMB 9.003 billion, representing an increase
of 78.67% over the same period of the preceding year.
In the third quarter of 2004, according to the IFRS, turnover and other
operating revenues of the Company were RMB 158.204 billion, representing an
increase of 39.63% over the same period of the preceding year. The profit
attributable to shareholders was RMB 10.502 billion, representing an increase
of 62.02% over the same period of the preceding year.
3.1.1 The principal segments or products accounting for over 10% of income or
profit from principal operations
X applicable |_| not applicable
The table below shows segment information prepared in accordance with the PRC
Accounting Rules and Regulations:
Income from Costs of sales, Profit from
principal sales taxes and principal Gross profit
Segments operations surcharges operations margin (%)
(RMB millions) (RMB millions) (RMB millions) (Note)
Exploration and production 19,629 8,588 9,953 50.71
Refining 91,322 84,753 3,058 3.35
Marketing and distribution 90,249 79,099 10,690 11.85
Chemicals 29,647 22,486 6,961 23.48
Corporate and others 21,513 21,353 146 0.68
Elimination of inter-segment sales (100,374) (99,323) - -
Total 151,986 116,956 30,808 20.27
Of which: connected transactions 15,248 13,677 1,522 9.98
Note: Gross profit margin = profit from principal operations/income from principal operations
The table below shows segment information prepared in accordance with IFRS
Percentage of
operating
profit/(loss)
Operating over operating
Segments Operating revenues Operating expenses profit/(loss) revenues
(RMB millions) (RMB millions) (RMB millions) (%)
Exploration and production 21,898 14,220 6,912 31.56
Refining 92,575 91,112 1,479 1.60
Marketing and distribution 90,431 85,885 4,246 4.70
Chemicals 31,807 26,710 5,096 16.02
Corporate and others 21,867 22,376 (509) (2.33)
Elimination of inter-segment sales (100,374) (99,323) - -
Total 158,204 140,980 17,224 10.89
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 (under the
PRC Accounting Rules and Regulations, significant changes 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 compared with
the preceding reporting period (from January to June) are listed and
explained below)
X applicable |_| not applicable
Three-month period ended 30
September 2004 (July to Six-month period ended 30
Item September) June 2004 (January to June)
Changes in
Percentage percentage
of profit Percentage of of profit
before profit before before
Amount taxation Amount taxation taxation
(percentage
(RMB millions) (%) (RMB millions) (%) point)
Profit from principal operations 30,808 211.19 51,835 215.10 (3.91)
Profit from other operations 134 0.92 616 2.56 (1.64)
Period expenses 12,829 87.94 24,098 100.00 (12.06)
Investment income 272 1.86 516 2.14 (0.28)
Net non-operating income/expenses 3,797 26.03 4,771 19.80 6.23
Profit before taxation 14,588 100.00 24,098 100.00 0.00
3.1.4 Significant changes in, and explanations of, the principal operations
and their structures as compared with those during the previous
reporting period (January to June)
|_| applicable X not applicable
3.1.5 Significant changes in, and explanations of, the profitability (gross
profit margin) of principal operations as compared with those during the
previous reporting period (January to June)
|_| applicable X not applicable
3.2 Significant events and their impacts as well as the analysis and
explanations for the solutions
X applicable |_| not applicable
3.2.1 Transfer State-owned Legal Person Shares China Phoenix Held by Sinopec
Corp.
At the ninth meeting of the Second Session of the Board of Directors of
Sinopec Corp. held on 6 July 2004, the Board reviewed and approved to
transfer 211,423,651 state-owned legal person shares held by Sinopec
Corp. in Sinopec Wuhan Phoenix Company Limited ("China Phoenix")
(representing 40.72% of the total issued share capital of China Phoenix)
to Hubei Qingjiang Water Power Investment Limited ("Qingjiang
Investment") and China Guodian (Group) Corporation ("Guodian Group").
The total consideration payable was RMB 620,954,100. Meanwhile, the
Board reviewed and approved the proposed acquisition by Sinopec Corp.
from Qingjiang Investment and Guodian Group of petrochemical assets
(including production facilities, inventories and corresponding accounts
receivables) which they had obtained by way of assets swap from China
Phoenix (the Petrochemical Assets). The total consideration payable in
respect of the acquisition was RMB 548,040,500 in cash. The Board of
Directors authorized the Chairman, Mr. Chen Tonghai, to sign the Asset
Acquisition Agreement and related documents on behalf of Sinopec Corp.
after SASAC approved the share transfer and CSRC approved the
Petrochemical Assets swap. For relevant details, please refer to Sinopec
Corp.'s announcement published in China Securities, Shanghai Securities,
and Securities Times in Mainland China, and South China Morning Post and
Hong Kong Economic Times in Hong Kong on 7 July 2004.
3.2.2 The Establishment of Sinopec-Shell (Jiang Su) Petroleum Sales Ltd.
On 13 July 2004, Ministry of Commerce approved the establishment of
Sinpec-Shell (Jiangsu) Petroleum Sales Co. Ltd.(the Joint Venture)
jointly invested by Sinopec Corp., Royal Dutch/Shell (China) Holding BV
and Shell (China) Ltd. and approved the joint venture contract and the
Articles of Association signed by each party on 11 May 2004. The total
investment amounts to RMB 1,551.54 million and the registered capital
amounts to RMB 0.83 billion. The investment proportion is 60%, 30% and
10% by Sinopec Corp., Royal Dutch/Shell (China) Holding BV and Shell
(China) Ltd. respectively. The Joint Venture established on 28 August
2004.
3.2.3 Qingdao Refining Project
On 22 July 2004, the Report of Feasibility study on Qingdao Refining
Project was approved by National Development and Reform Commission
("NDRC"). The capacity of the refinery is expected to be 10 million
tonnes per year. Total investment of the project is estimated to be RMB
9.7 million. Construction of the project is expected to be completed in
2007.
3.2.4 The Payment of Interest, Redemption and Delist of Mao Lian Convertible
Bonds for 2004
Approved by CSRC (document Zheng Jian Fa [1999] No.90), Sinopec Mao Ming
Refining and Chemical Company Limited ("Maoming Oil Refinery") issued
convertible bonds ("Mao Lian Convertible Bonds") in the total sum of RMB
1.5 billion with a 5-year term through the Shenzhen Stock Exchange on 28
July 1999 and listed on Shenzhen Stock Exchange on 17 August 1999. In
accordance with the Provisional Rules on the Management of Convertible
Corporate Bonds and Convertible Corporate Bonds Prospectus prepared by
Maoming Oil Refinery, the resolution of its Board of Directors on 7 July
2003 and the resolution of its General Meeting of Shareholders on 23
March 2004, trading of the Mao Lian Convertible Bonds had been
terminated on 28 July 2004, and they were delisted on the same day. For
those convertible bonds which were not yet repurchased by Maoming Oil
Refinery by the expiration date, they were redeemed with the redemption
price of RMB 118.5/piece (tax exempted).
3.2.5 Shell and Unocal Exit from East China Sea project
Sinopec, CNOOC, Shell and Unocal had reached an agreement to explore,
develop and market natural gas, oil and condensate in the East China Sea
on 19 August 2003. The agreement permits foreign partners' final
investment decision to be made 12 month after signing the agreements.
Shell and Unocal have declared not to continue their next phase
participation in Xihu Trough project for business reasons on 29
September 2004.
3.2.6 Issuance and Listing of Corporate Bonds
At Sinopec Corp.'s second Extraordinary General Meeting of Shareholders
for Year 2003 held on 15 October 2003, the shareholders considered and
approved "the Proposal Concerning the Issuance of Domestic Corporate
Bonds Amounting to RMB 3.5 billion". On 16 January 2004, Sinopec Corp.
obtained the approval from the NDRC to issue 10-year term domestic
corporate bonds in the total sum of RMB 3.5 billion. On 23 February
2004, the sixth meeting of Sinopec Corp.'s Second Session of the Board
of Directors and the NDRC determined the coupon rate of the corporate
bonds to be 4.61%. On 28 September 2004, corporate bonds of Sinopec Corp
totaling RMB 579.5 million were listed on the Shanghai Stock Exchange.
For relevant details, please refer to Sinopec Corp.'s announcement
published in China Securities, Shanghai Securities, and Securities Times
in Mainland China, and South China Morning Post and Hong Kong Economic
Times in Hong Kong, respectively on 25 August 2003, 16 October 2003, 30
January 2004, 9 February 2004, 24 February 2004 and 28 September 2004.
3.2.7 State-owned shares Transfer to Sinopec Group
Sinopec's shareholders namely the China Development Bank ("CDB") and
China Cinda Asset Management Corporation ("Cinda") have each entered
into a Share Transfer Agreement with China Petrochemical Corporation (
"Sinopec Group Company") pursuant to which Cinda agreed to transfer
5,000,000,000 state-owned shares of Sinopec Corp. (representing 5.767%
of the total number of shares of Sinopec Corp.) to Sinopec Group Company
and CDB agreed to transfer 6,143,000,000 state-owned shares of Sinopec
Corp. (representing 7.085% of the total issued share capital) to Sinopec
Group Company. According to the agreements , the total consideration for
the transfer of shares from Cinda is RMB9,000,000,000 and from CDB is
RMB11,057,400,000 in cash. payable by Sinopec Group. Please refer to the
announcement published in China Securities, Shanghai Securities, and
Securities Times in Mainland China, and South China Morning Post and
Hong Kong Economic Times in Hong Kong on 15 October 2004.
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 the Supervisory
Committee after the audit and presentation of "non standard opinion".
|_| applicable X not applicable
3.5 Caution and explanation as to an anticipated loss from the beginning of
the year to the end of the next reporting period or significant changes
in accumulated net profits for the period over the same period of the
preceding year
|_| applicable X not applicable
3.6 Adjustments to the annual business plan or budget which have been
disclosed
|_| applicable X not applicable
3.7 The full version of the Company's balance sheet, income statement and
cash-flow statement is published on the website of the Shanghai Stock
Exchange at http://www.sse.com.cn.
3.8 This quarterly report is published in both English and Chinese
languages. The Chinese version shall prevail.
By Order of the Board
Chen Tonghai
Chairman
Beijing, PRC, 28 October 2004
As at the date of this announcement, the directors of the Company are Messrs.
Chen Tonghai, Wang Jiming, Mou Shuling, Zhang Jiaren, Cao Xianghong, Liu
Genyuan, Gao Jian and Fan Yifei; the independent non-executive directors are
Messrs. Chen Qingtai, Ho Tsu Kwok Charles, Shi Wanpeng and Zhang Youcai; and
the employee representative director is Mr Cao Yaofeng.