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 April, 2005
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:
The announcement of the results of China Petroleum & Chemical Corporation (the
"Registrant") for the first quarter ended 31 March 2005, made by the
Registrant in English on April 28, 2005.
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: April 28, 2005
The Stock Exchange of Hong Kong Limited takes no responsibility for the
contents of this announcement, makes no representation as to its accuracy or
completeness and expressly disclaims any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of the
contents of this announcement.
[GRAPHIC OMITTED]
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock code: 0386)
First Quarter Results Announcement for 2005
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Highlights of the results of the Company for the first quarter ended
31 March 2005
During this reporting period, income from principal operations and net
profit of China Petroleum & Chemical Corporation ("Sinopec Corp.") and its
subsidiaries (the "Company") under the PRC Accounting Rules and Regulations
amounted to RMB 169,040 million and RMB 9,004 million respectively.
Turnover and other operating revenues and profit attributable to
shareholders of Sinopec Corp. under International Financial Reporting
Standards ("IFRS") amounted to RMB 174,127 million and RMB 9,637 million
respectively.
This quarterly results 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 of the Listing Rules for its publication in Hong Kong.
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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
announcement.
1.2 This quarterly results announcement has been reviewed and approved
at the seventeenth meeting of the Second Session of the Board of
Directors of Sinopec Corp.
1.3 The financial statements contained in this announcement have not
been audited.
1.4 Mr. Chen Tonghai, Chairman of the Board of Sinopec Corp., Mr. Wang
Tianpu, 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 Division of Sinopec
Corp., hereby declare that the authenticity and completeness of
the financial statements contained in this quarterly results
announcement are warranted.
2. Basic Information of Sinopec Corp.
2.1 Summary of the information of Sinopec Corp.
Stock name SINOPEC CORP SINOPEC CORP SINOPEC CORP [GRAPHIC OMITTED]
Stock code 0386 SNP SNP 600028
Place of listing Hong Kong Stock New York Stock London Stock Exchange Shanghai Stock
Exchange Exchange Exchange
Authorised Representatives Secretary to the Representative on
Board of Directors Securities Matters
Name Mr. Wang Jiming Mr. Chen Ge Mr. Chen Ge Mr. Huang Wensheng
Address 6A Huixindong Street, Chaoyang District, Beijing, China
Postcode 100029
Tel 86-10-64990060 86-10-64990060 86-10-64990060 86-10-64990060
Fax 86-10-64990022 86-10-64990022 86-10-64990022 86-10-64990022
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 at the end of
this reporting period
At At compared with data at
31 March 31 December the end of the preceding
2005 2004 year end (%)
Total assets (RMB millions) 481,785 460,081 4.72
Shareholders' funds (excluding minority 195,417 186,350 4.87
interests) (RMB millions)
Net assets per share (RMB) 2.254 2.149 4.87
Adjusted net assets per share (RMB) 2.206 2.102 4.95
Changes in this
Three-month Three-month reporting period
period ended period ended compared to the same
31 March 31 March period of the preceding
2005 2004 year (%)
Net cash flow from operating activities 14,854 11,208 32.53
(RMB millions)
Earnings per share (RMB) 0.104 0.086 20.93
Return on net assets (%) 4.608 4.363 0.25 percentage point
Return (adjusted for non-operating 4.681 4.852 (0.17) percentage point
profits/losses) on net assets (%)
Three-month period ended
Non-operating profits/losses 31 March 2005
(RMB millions)
Written back of provisions on assets provided in previous years (123)
Non-operating expenses (excluding normal provisions on assets provided in 427
accordance with the Accounting Regulation for Business Enterprises)
Of which: Losses on disposal of fixed assets 349
Donations 33
Non-operating income (90)
Tax effect of the above (71)
Total 143
2.2.1.2 Principal accounting data and financial indicators prepared in accordance with IFRS
Changes at the end of
this reporting period
At At compared with data at
31 March 31 December the end of the preceding
2005 2004 year end (%)
Total assets (RMB millions) 497,046 474,594 4.73
Shareholders' funds attributable to 202,677 193,040 4.99
shareholders of the parent (excluding
minority interests) (RMB millions)
Net assets per share (RMB) 2.338 2.226 4.99
Adjusted net assets per share (RMB) 2.294 2.187 4.89
Changes in this
reporting period
compared to
Three-month Three-month the same period of
period ended period ended the preceding year
31 March 2005 31 March 2004 (%)
Net cash flow from operating activities 12,793 9,874 29.56
(RMB millions)
Earnings per share (RMB) 0.111 0.096 15.63
Return on net assets (%) 4.755 4.612 0.14 percentage point
Note: The data for the first quarter ended 31 March 2004 was
restated, please refer to Section 3.3.2 to this quarterly
results announcement for more details.
2.2.2 Income statements
This section includes the income statements for the first quarter
ended 31 March 2005 prepared in accordance with both the PRC
Accounting Rules and Regulations and IFRS with comparative figures
for the same period of 2004.
2.2.2.1 Income statements prepared in accordance with the PRC Accounting
Rules and Regulations
Item Three-month period ended Three-month period ended
31 March 2005 31 March 2004
The Group The Company The Group The Company
(Note 1) (Note 1) (Note 1) (Note 1)
RMB millions RMB millions RMB millions RMB millions
1. Income from principal 169,040 114,331 123,490 86,063
operations
Less: Cost of sales 136,187 98,798 94,583 71,740
Sales taxes and surcharges 4,207 2,766 3,835 2,290
2. Profit from principal 28,646 12,767 25,072 12,033
operations
Add: Profit/(loss) from other 320 15 149 (138)
operations
Less: Selling expenses 4,880 3,140 4,203 2,732
Administrative expenses 6,056 3,555 5,065 3,358
Financial expenses 1,372 954 1,162 926
Exploration expenses, 1,370 1,070 1,454 911
including dry-holes
3. Operating profit 15,288 4,063 13,337 3,968
Add:Investment income 143 9,513 141 8,088
Non-operating income 90 31 72 52
Less:Non-operating expenses 427 258 1,590 1,446
4. Profit before taxation 15,094 13,349 11,960 10,662
Less: Taxation 4,629 4,345 3,456 3,299
Minority interests 1,398 - 1,141 -
Add: Unrecognised investment losses (63) - 67 -
(Note 2)
5. Net profit 9,004 9,004 7,430 7,363
Notes: (1) The "Company" means China Petroleum & Chemical
Corporation; The "Group" means China Petroleum &
Chemical Corporation and its subsidiaries;
(2) This item represents the (written back) unrecognised
investment losses exceeding the carrying value of
long-term equity investments.
2.2.2.2 Consolidated income statements prepared in accordance with IFRS
Item Three-month period
ended 31 March
2005 2004
RMB millions RMB millions
1. Turnover and other operating revenues 174,127 129,608
Including: Turnover 169,040 124,678
Other operating revenues 5,087 4,930
2. Operating expenses (157,247) (115,220)
Including: Purchased crude oil, products and operating (131,349) (90,506)
supplies and expenses
Selling, general and administrative expenses (7,577) (7,169)
Depreciation, depletion and amortisation (8,090) (7,138)
Exploration expenses, including dry-holes (1,370) (1,454)
Personnel expenses (4,317) (4,048)
Taxes other than income tax (4,207) (3,863)
Other operating expenses (net) (337) (1,042)
3. Operating profit 16,880 14,388
4. Finance costs (1,239) (1,184)
Including: Interest expense (1,330) (1,244)
Interest income 78 77
Foreign exchange losses (25) (24)
Foreign exchange gains 38 7
5. Investment income/(loss) 33 (11)
6. Share of profits less losses from associates 117 123
7. Profit from ordinary activities before taxation 15,791 13,316
8. Taxation (4,749) (3,868)
9. Profit from ordinary activities after taxation 11,042 9,448
Attributable to:
10. Shareholders of the parent 9,637 8,306
11. Minority interests 1,405 1,142
12. Profit from ordinary 11,042 9,448
activities after taxation
2.2.3 Difference between the net profit for the first quarter of 2005
and shareholders' funds as at 31 March 2005 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:
Three-month period ended
31 March
2005 2004
RMB millions RMB millions
Net profit under the PRC Accounting Rules and Regulations 9,004 7,430
Adjustments:
Pre-operating expenditures 457 (44)
Depreciation of oil and gas properties 190 237
Capitalisation of general borrowing costs, net of depreciation 108 94
effect
Unrecognised investment losses 63 (67)
Acquisition of Sinopec National Star 29 29
Acquisitions of Tianjin Petrochemical, Luoyang Petrochemical, - 460
Zhongyuan Petrochemical and Catalyst Plants
Revaluation of land use rights 8 8
Amortisation of Goodwill 7 -
Government grants 1 -
Disposal of oil and gas properties net of depreciation effect (103) 572
Effects of the above adjustments on taxation (120) (412)
Effects of the above adjustments on minority interests (7) (1)
Profit attributable to shareholders of the parent under IFRS 9,637 8,306
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 31 March 2005 At 31 December
2004
RMB millions RMB millions
Shareholders' funds under the PRC Accounting Rules and 195,417 186,350
Regulations
Adjustments:
Pre-operating expenditures - (457)
Depreciation of oil and gas properties 11,884 11,694
Capitalisation of general borrowing costs 1,778 1,670
Acquisition of Sinopec National Star (2,666) (2,695)
Revaluation of land use rights (1,303) (1,311)
Goodwill 7 -
Government grants (604) (605)
Disposal of oil and gas properties 3,280 3,383
Impairment losses on long-lived assets (113) (113)
Effects of the above adjustments on taxation (5,166) (5,046)
Effects of the above adjustments on minority interests 163 170
Shareholders' funds attributable to shareholders of the parent 202,677 193,040
under IFRS
2.3 Top ten shareholders with tradable shares
Number of shareholders Number of shareholders of Sinopec Corp.
as at 31 March 2005 as at 31 March 2005: 266,547, including
256,195 holders of A shares and 10,352
holders of H Shares.
Top ten shareholders with tradable shares
Number of shares
held at the end of Nature
the reporting period (A, B, H share
Name of shareholders (10,000 shares) or others)
HKSCC (Nominees) Limited 1,667,892.8 H Share
EFUND 50 Securities Investment Fund 7,226.1 A Share
Xinghe Securities Investment Fund 6,521.9 A Share
Harvest Service Sector Fund 6,148.8 A Share
Qingdao Port Authority 6,000.0 A Share
CITIC Classic Securities Co., Ltd. 5,870.5 A Share
China Fund SSE 50ETF Investment Fund 5,706.7 A Share
Haifutong Profits Securities 4,703.9 A Share
Xinghua Securities Investment Fund 3,950.0 A Share
China Southern Sustaining Growth Fund 3,620.0 A Share
2.4. Business review
In the first quarter of 2005, the Chinese economy continued to
maintain growth and domestic demand for refined oil products and
petrochemical products remained strong. International prices of
crude oil had fluctuated at a fairly high level. By adopting
various measures to increase production volume and optimise
operations in respond to the changing market, the Company obtained
reasonably good operating results in various areas, including oil
and gas production, processing volume of crude oil, sales volume
of refined oil products and ethylene production.
Exploration and Production Segment: the Company has made further
efforts in exploration and development. Significant achievements
have been made in exploration of concealed oil and gas reserves in
the mature oil fields in eastern China. The exploration in the
Tahe oilfield in western China has shown good discoveries. During
the period, the Company accelerated the pace of construction for
the increase of production capacity in major areas. Oil production
was stable and gas production increased over the same period last
year.
Refining Segment: under the backdrop of pricing control over oil
products in domestic market, the Company optimised refining
process and resources allocation, adjusted product mix and
increased the production of high value-added products. In
addition, resources allocation and transportation were optimized
and the price difference between sour and sweet crude oil was
taken advantage of, processing volume of sour crude oil was
increased and stable operation of the refining facilities which
had been operated at a high utilization rate was maintained.
Marketing and Distribution Segment: the Company coordinated
production and sales closely in an effort to meet the strong
demand for oil products in domestic market, which resulted in a
increase in its domestic sales volume of refined oil products. At
the same time, the Company took measures to raise its retail and
distribution volume, which resulted in the steady increase in the
proportion of retail and distribution sales as a percentage of
total domestic sales.
Chemicals Segment: the Company adhered to the marketing strategy
of "focusing on market, full-load production and low inventories".
It also strives to adjust its product mix and optimise its
marketing structure. During the period, the production of major
chemical products such as synthetic resin, synthetic rubber,
monomer and polymers for synthetic fibers has increased
significantly. The production volume of high value-added products
such as performance compound resins and differential fibers also
experienced further increase. In the first quarter of 2005,
production has been commissioned for the Secco ethylene project.
Summary of Principal Operating Results for the first quarter
Changes
compared with
Three-month period the same period
Operating Data Unit ended 31st March last year
2005 2004 (%)
Exploration and Production
Crude oil production thousand tonnes 9,530.5 9,538.3 (0.08)
Natural gas production million cubic meters 1,469 1,395 5.30
Realised crude oil price RMB/tonne 2,127.29 1,678.63 26.73
Realised natural gas price RMB/thousand 655.36 606.47 8.06
cubic meters
Refining
Crude processing volume thousand tonnes 34,334.7 32,368.6 6.07
Gasoline, diesel and kerosene thousand tonnes 20,607.2 19,250.9 7.05
production
Of which: Gasoline thousand tonnes 5,816.2 5,730.6 1.49
Diesel thousand tonnes 13,112.3 12,043.1 8.88
Kerosene incl. jetfuel thousand tonnes 1,678.7 1,477.2 13.64
Light chemical feedstock thousand tonnes 4,992.2 4,534.0 10.11
Light yield % 73.48 73.85 (0.37) percentage
point
Refining yield % 92.63 92.82 (0.19) percentage
point
Marketing and Distribution
Total domestic sales of refined oil thousand tonnes 24,130.5 21,704.5 11.18
products
Of which: Retail thousand tonnes 13,46.0.0 11,977.2 12.38
Distribution thousand tonnes 5,350.6 4,401.4 21.00
Wholesale thousand tonnes 5,319.9 5,325.9 (0.11)
Total number of petrol stations Stations 30,164 30,416 (0.83)
Of which: Owned and self-operated Stations 26,682 24,680 8.11
Franchised Stations 3,482 5,736 (39.30)
Throughput per petrol station Tonne/station 2,018 1,757 14.85
(Note 1)
Chemicals (Note 2)
Ethylene thousand tonnes 1,121.8 1,041.5 7.71
Synthetic resins thousand tonnes 1,683.1 1,544.9 8.95
Of which: performance compound resins thousand tonnes 845.6 725.8 16.51
Synthetic rubbers thousand tonnes 158.1 152.1 3.94
Monomers and polymers for synthetic thousand tonnes 1,595.6 1,515.2 5.31
fibers
Synthetic fibers thousand tonnes 400.0 407.1 (1.75)
Of which: differential fibers thousand tonnes 195.1 133.7 45.92
Urea thousand tonnes 388.3 541.5 (28.29)
Notes 1: Throughput per petrol station is that of annual average;
2: The operating results for the three-month period ended 31 March
2004 are pro-forma data which includes the data of Chemical Assets
acquired from China Petrochemical Corporation and its subsidiaries
(excluding the Company,) ("Sinopec Group").
Capital expenditure:
The capital expenditure of the Company in the first quarter of 2005 was RMB
11.359 billion. The expenditure for Exploration and Production segment was RMB
4.451 billion. The newly added production capacity of crude oil and natural
gas amounted to 0.60 million tonnes/year and 90 million cubic meters/year
respectively. The expenditure for Refining segment was RMB 1.256 billion. The
second phase of the Ningbo-Shanghai-Nanjing crude oil pipeline will be put
into operation in the near future. The revamped refining facilities in Yangzi
Petrochemical and Jinling Petrochemical have come on stream. The revamping of
refining facilities in Yanshan and Guangzhou and construction of the crude oil
pipeline along the Yangzi river are on schedule. The expenditure for Chemical
segment was RMB 0.804 billion. The expansion of ethylene facilities in Sinopec
Maoming Chemical and ethylene glycol innovation project in Shanghai
Petrochemical, the Yangtze Petrochemical's PTA revamping project, Gaoqiao
Petrochemical's ABS facilities and other key technical innovation projects
such as chemical fertilizer coal-gasification projects progressed smoothly.
The expenditure for Marketing and Distribution segment was RMB 4.719 billion.
The construction of southwest oil products pipeline, revamping and acquization
of petrol stations are on schedule. The expenditure for the Company's
headquarters and others was RMB 0.129 billion. Information projects such as
ERP also made smooth progress.
In addition, the capital expenditure for joint ventures such as Shanghai Secco
ethylene project, Yueyang Sinopec-Shell coal gasification project and BASF-YPC
was approximately RMB 1.292 billion.
3 Management's Discussion and Analysis
3.1 Brief analysis of the Company's general operating activities during the
reporting period
Based on the PRC Accounting Rules and Regulations, income from principal
operations of the Company for the first quarter of 2005 amounted to RMB
169.040 billion, representing an increase of 36.89% over the same period
of last year, and the net profit amounted to RMB 9.004 billion,
representing an increase of 21.18% over the same period of last year.
Based on IFRS, the turnover and other operating revenues of the Company
for the first quarter of 2005 amounted to RMB 174.127 billion,
representing an increase of 34.35% over the same period of last year.
Profit attributable to shareholders of the parent amounted to RMB 9.637
billion, representing an increase of 16.02% over the same period of last
year.
3.1.1 Principal segments or products accounting for over 10% of income or
profit from principal operations
|X| applicable |_| not applicable
The table below shows segmental information prepared in accordance with
the PRC Accounting Rules and Regulations:
Income from Profit from
principal principal Gross profit
By segments or by products operations Costs of sales operations ratio (%)
(RMB millions) (RMB millions) (RMB millions) (Note)
Exploration and production 20,169 8,343 9,104 45.14
Refining 100,035 93,497 2,961 2.96
Marketing and distribution 94,813 86,005 8,696 9.17
Chemicals 41,081 33,115 7,774 18.92
Corporate and others 23,425 23,310 111 0.47
Elimination of inter-segment sales (110,483) (108,083) N/A N/A
Total 169,040 136,187 28,646 16.95
Of which:related party transactions 14,533 13,056 1,431 9.85
Note: Gross profit ratio = profit from principal operations/income from
principal operations
The table below shows segmental information prepared in accordance with
IFRS:
Percentage of
operating
profit/(loss)
Operating Operating Operating over operating
By segments or by products revenues expenses profit/(loss) revenues
(RMB millions) (RMB millions) (RMB millions) (%)
Exploration and production 21,278 12,508 6,394 30.05
Refining 101,826 100,131 1,671 1.64
Marketing and distribution 95,061 91,519 3,542 3.73
Chemicals 42,620 36,709 5,911 13.87
Corporate and others 23,825 24,463 (638) -2.68
Elimination of inter-segment sales (110,483) (108,083) N/A N/A
Total 174,127 157,247 16,880 9.69
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 (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
are listed and explained below in accordance with the PRC Accounting
Rules and Regulations)
|X| applicable |_| not applicable
Three-month period Year ended 31 December
Item ended 31 March 2005 2004 Change in
Percentage Percentage percentage
of profit of profit of profit
before before before
Amount taxation Amount taxation taxation
(RMB (%) (RMB (%) (percentage
millions) millions) points)
Profit from principal operations 28,646 189.78 115,222 215.23 -25.45
Profit from other operations 320 2.12 1,102 2.06 0.06
Period expenses 13,678 90.62 53,371 99.69 -9.07
Investment income 143 0.95 1,088 2.03 -1.08
Net non-operating income/expenses 337 2.23 10,506 19.62 -17.39
Profit before taxation 15,094 100.00 53,535 100.00 -
Significant changes and explanations:
o Profit from principal operations
The percentage of profit from principal operations to the profit
before taxation was 189.78%, representing a decrease of 25.45
percentage points from 215.23% of the same period of the previous
year. This was mainly due to the fact that the prices of crude
oil, refined oil products and chemical products were still at high
level in the first quarter of 2005. The Company also seized the
market opportunities of strong demand for refined oil products and
chemical products and was devoted to expand the market and
increase its sales volume. Despite the significant increase in
income from principal operations, the percentage increase in
income from sales of goods was less than the percentage increase
in the cost of raw materials and, as a result, profit from
principal operations experienced a slight decrease of 0.56% over
the quarterly average value of RMB 28.806 billon of the previous
year; and profit before taxation had an increase of 12.78% over
the quarterly average of the previous year. Therefore, the profit
from principal operations accounted for a smaller percentage of
the total profit before taxation than last year.
o Net non-operating income/expenses
The Company experienced losses on disposal of fixed assets and
impairment losses on long-lived assets amounted to RMB 8.932
billion for the year ended 31 December 2004. However, the loss on
disposal of fixed assets was relatively small in the first quarter
of 2005.
3.1.4 Significant changes in, and explanations of, the principal operations
and 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 (gross
profit ratio) of principal operations as compared with those during the
previous reporting period prepared in accordance with the PRC Accounting
Rules and Regulations
|_| 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 Connected transactions
The aggregate amount of connected transactions actually occurred in
relation to the Company during the reporting period was RMB 32.529
billion, of which, incoming trade amounted to RMB 15.710 billion, and
outgoing trade amounted to RMB 16.819 billion (including, RMB 16.798
billion of sales of products and services, RMB 9 million of interest
earned, RMB 12 million of income from agency fee). During the reporting
period, the products and services provided by Sinopec Group (purchase,
storage and transportation, exploration and production services and
production-related services) to the Company amounted to RMB 14.261
billion, representing 9.1% of the Company's operating expenses of the
reporting period; the ancillary and social services provided by Sinopec
Group to the Company amounted to RMB 433 million, representing 0.3% of
operating expenses of the reporting period; the product sales from the
Company to Sinopec Group and other connected parties amounted to RMB
16.798 billion, representing 9.6% of the Company's operating revenue,
all of which were within expectation. During the reporting period,
profit from principal operations resulted from connected transactions
amounted to RMB 1.431 billion, representing 5.0% of the Company's profit
from principal operations. The natures and pricing policies of connected
transactions did not hav any significant change compared with 2004.
3.2.2 Interest of corporate bonds
On 8 March 2004, Sinopec Corp. successfully issued domestic 10-year term
corporate bonds which amounted to RMB 3.5 billion with a fixed coupon
rate of 4.61%. On 28 September 2004, the corporate bonds were listed on
the Shanghai Stock Exchange. On 24 February 2005, Sinopec Corp. repaid
coupon interests for the first year in full. For further 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 24
February 2004 , 28 September 2004 and 18 February 2005.
3.2.3 Acquisition of 40.5% shares held by Hong Kong Huarun in Qingdao Qirun
Sinopec Corp. and Hong Kong Huarun Petrochemical (Group) Company Limited
("Hong Kong Huarun") entered into a share transfer agreement on 17
November 2004, pursuant to which Sinopec Corp. acquired 30% interest in
Qingdao Qirun Petroleum and Chemical Company Limited ("Qingdao Qirun")
from Hong Kong Huarun. On 21 January 2005, the parties entered into
another share transfer agreement, pursuant to which Sinopec Corp.
acquired the remaining 10.5% interest held by Hong Kong Huarun in
Qingdao Qirun. The shares transfer represented an aggregate of 40.5%
interest in Qingdao Qirun and the total consideration for the transfer
amounted to RMB 480 million.
3.2.4 Merger by absorption of Beijing Yanhua
Sinopec Corp. proposed to privatise Beijing Yanhua Petrochemical Company
Limited (Beijing Yanhua) by way of merger by absorption through Beijing
Feitian Petrochemical Company Limited (Beijing Feitian), a wholly-owned
subsidiary of Sinopec Corp., established for the purpose of such merger.
Pursuant to the agreement entered into between Beijing Feitian and
Beijing Yanhua on 29 December 2004, Beijing Feitian will purchase the
listed shares of Beijing Yanhua from its shareholders at a unit price of
HKD 3.80 per share in cash, the total consideration involved amounts to
approximately HKD 3.846 billion. The proposed merger has been approved
by relevant shareholders and independent shareholders at the general
meeting of independent shareholders of Beijing Yanhua, the general
meeting of shareholders of Beijing Feitian, and by domestic and overseas
regulators. Beijing Yanhua is applying for the de-listing from the
overseas stock exchanges. 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 30 December 2004 and 7 March 2005 for details.
3.2.5 Changes in senior management
At the sixteenth meeting of the Second Session of the Board of Directors
of Sinopec Corp., the Board approved the resignation applications of Mr.
Wang Jiming from the President position and Mr. Mou Shuling from the
Senior Vice President position. The Board of Directors also approved the
appointment of Mr. Wang Tianpu as President, and Mr. Zhang Jianhua and
Mr. Wang Zhigang as Senior Vice President of Sinopec Corp.
3.3 Disclosure and explanations as to the changes in accounting policies,
accounting estimates and scope of consolidation and fundamental errors
|X| applicable |_| not applicable
3.3.1 Financial statements for the first quarter ended 31 March 2005 prepared
under the PRC Accounting Rules and Regulations
There is no significant change in the accounting policies, accounting
estimates and scope of consolidation adopted in preparing the financial
statements for the first quarter of 2005 by the Company as compared to
those adopted in preparing the financial statements for the year of
2004. There has been no retrospective adjustment resulting from
fundamental accounting errors reflected in the financial statements for
the first quarter of 2005.
3.3.2 Financial statements for the first quarter ended 31 March 2005 prepared
under IFRS
3.3.2.1 Basis of presentation
Pursuant to the resolutions passed at the Extraordinary General Meeting
held on 21 December 2004, the Company acquired the equity interests of
Sinopec Group Tianjin Petrochemical Company ("Tianjin Petrochemical"),
Sinopec Group Luoyang Petrochemical General Plant ("Luoyang
Petrochemical"), Zhongyuan Petrochemical Company Limited ("Zhongyuan
Petrochemical"), Sinopec Group Guangzhou Petrochemical General Plant
("Guangzhou Petrochemical") and certain catalyst plants ("Catalyst
Plants") from Sinopec Group Company (hereinafter referred to as the
"Acquisition of Petrochemical and Catalyst Assets").
As the Company, Tianjin Petrochemical, Luoyang Petrochemical, Zhongyuan
Petrochemical, Guangzhou Petrochemical and Catalyst Plants are under the
common control of Sinopec Group Company, the Acquisition of
Petrochemical and Catalyst Assets are considered as "combination of
entities under common control" which are accounted in a manner similar
to a pooling-of-interests ("as-if pooling-of-interests accounting").
Accordingly, the assets and liabilities acquired from Tianjin
Petrochemical, Luoyang Petrochemical, Zhongyuan Petrochemical, Guangzhou
Petrochemical and Catalyst Plants have been accounted for at historical
cost and the financial statements of the Company for periods prior to
the combination have been restated to include the results of operations
of Tianjin Petrochemical, Luoyang Petrochemical, Zhongyuan
Petrochemical, Guangzhou Petrochemical and Catalyst Plants on a combined
basis. In connection with these acquisitions, certain assets, primarily
property, plant and equipment and construction in progress, were
retained by Sinopec Group Company. The assets retained by Sinopec Group
Company were reflected as a distribution in the shareholders' funds. The
considerations for these acquisitions were treated as equity
transactions.
The summarisd results of operations previously reported by the Company
for the first quarter ended 31 March 2004 have been restated to include
the results of of operations of Tianjin Petrochemical, Luoyang
Petrochemical, Zhongyuan Petrochemical, Guangzhou Petrochemical and
Catalyst Plants (collectively the "Acquired Group") as set out below:
The Company without the
Acquired Group The Acquired Group Combined
RMB millions RMB millions RMB millions
Results of operations:
Operating revenues 128,363 1,245 129,608
Profit attributable to shareholders
of the parent 8,008 298 8,306
For the period presented, all significant balances and transactions
between the Company and the Acquired Group have been eliminated.
3.3.2.2 Accounting policies
The International Accounting Standards Board has issued a number of new
and revised IFRS and International Accounting Standards (collectively
the "new IFRS") effective from 1 January 2005. The Company has amended
the Company's accounting policies according to the new IFRS in
preparation of the financial statements for the first quarter ended 31
March 2005. According to the newly effective IFRS No. 3 "Business
Combinations", goodwill is no longer amortised and instead reviewed for
impairment during reporting period. Except for the accounting policy for
goodwill as stated above, the new IFRS has no significant impact on the
results of operations and financial condition of the Company for the
reporting period.
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 the anticipated loss of accumulated net
profits from the beginning of the year to the end of the next reporting
period or 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 been
disclosed
|_| applicable |X| not applicable
3.7 This quarterly results announcement is published in both Chinese and
English languages. The Chinese version shall prevail.
By Order of the Board
Chen Tonghai
Chairman
Beijing, PRC, 28 April 2005
As at the date of this announcement, the directors of Sinopec Corp. are
Messrs. Chen Tonghai, Wang Jiming, Mou Shuling, Zhang Jiaren, Cao Xianghong,
Liu Genyuan, Gao Jian and Fan Yifei; the independent non-executive directors
of the Company are Messrs. Chen Qingtai, Ho Tsu Kwok Charles, Shi Wanpeng and
Zhang Youcai; and the employee representative director of the Company is Mr.
Cao Yaofeng.