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, 2006
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 first quarter results for 2006 of China Petroleum &
Chemical Corporation (the "Registrant"), made by the Registrant in English on
April 27, 2006.
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, 2006
[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 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 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 twenty-sixth 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, 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 Shanghai Stock
Exchange Exchange Exchange Exchange
------------------------------------------------------------------------------------------
Authorised Representatives Secretary to the Representative
Board of on Securities
Directors 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
------------------------------------------------------------------------------------------
1
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
compared with
data at the
At end of the
At 31 December preceding year
31 March 2006 2005 end (%)
-------------------------------------------------------------------------------------------
Total assets (RMB millions) 539,927 520,572 3.72
-------------------------------------------------------------------------------------------
Shareholders' funds (excluding
minority interests) (RMB millions) 224,764 215,623 4.24
-------------------------------------------------------------------------------------------
Net assets per share (RMB) 2.592 2.487 4.24
-------------------------------------------------------------------------------------------
Adjusted net assets per share (RMB) 2.526 2.426 4.12
-------------------------------------------------------------------------------------------
Changes in
this reporting
period
compared to
the same
Three-month Three-month period of the
period ended period ended preceding year
31 March 2006 31 March 2005 (%)
-------------------------------------------------------------------------------------------
Net cash flow from operating activities
(RMB millions) 3,463 14,854 (79.69)
-------------------------------------------------------------------------------------------
Earnings per share (RMB) 0.105 0.104 0.96
-------------------------------------------------------------------------------------------
Return on net assets (%) (0.55)
percentage
4.062 4.608 point
-------------------------------------------------------------------------------------------
Return (adjusted for non-operating (0.56)
profits/losses) on net assets (%) percentage
4.118 4.681 point
-------------------------------------------------------------------------------------------
Non-operating profits/losses Three-month period
ended
31 March 2006
-------------------------------------------------------------------------------------------
RMB millions
-------------------------------------------------------------------------------------------
Written back of provisions on assets provided in previous years (13)
-------------------------------------------------------------------------------------------
Non-operating expenses (excluding normal provisions on assets
provided in accordance with the Accounting Regulation for Business
Enterprises) 251
-------------------------------------------------------------------------------------------
Of which:Losses on disposal of fixed assets 12
-------------------------------------------------------------------------------------------
Donations 18
-------------------------------------------------------------------------------------------
Non-operating income (52)
-------------------------------------------------------------------------------------------
Tax effect of the above (61)
-------------------------------------------------------------------------------------------
Total 125
-------------------------------------------------------------------------------------------
2
2.2.1.2 Principal accounting data and financial indicators prepared in accordance with IFRS
-------------------------------------------------------------------------------------------
Changes at the end
of this reporting
period compared
with data at the
end of the
At 31 March At 31 December preceding year
2006 2005 end (%)
-------------------------------------------------------------------------------------------
Total assets (RMB millions) 557,382 537,321 3.73
-------------------------------------------------------------------------------------------
Total equity attributable to equity
shareholders of the Company (RMB
millions) 232,844 223,556 4.15
-------------------------------------------------------------------------------------------
Net assets per share (RMB) 2.686 2.578 4.15
-------------------------------------------------------------------------------------------
Adjusted net assets per share (RMB) 2.620 2.518 4.05
------------------------------------------------------------------------------------------
Changes in this
reporting period
Three-month Three-month compared to the
period ended period ended same period of
31 March 31 March the preceding year
2006 2005 (%)
------------------------------------------------------------------------------------------
Net cash flow from operating
activities (RMB millions) 1,612 12,793 (87.40)
------------------------------------------------------------------------------------------
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 March 2005 prepared in accordance with both the PRC
Accounting Rules and Regulations and IFRS with comparative figures
for the same period of 2004.
3
2.2.2.1 Income statements prepared in accordance with the PRC Accounting 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 millions
-------------------------------------------------------------------------------------------
1. Income from principal operations 222,699 178,340 169,040 114,331
-------------------------------------------------------------------------------------------
Less: Cost of sales 191,137 152,235 136,187 98,798
-------------------------------------------------------------------------------------------
Sales taxes and surcharges 4,419 3,413 4,207 2,766
-------------------------------------------------------------------------------------------
2. Profit from principal operations 27,143 22,692 28,646 12,767
-------------------------------------------------------------------------------------------
Add: Profit from other operations 248 35 320 15
-------------------------------------------------------------------------------------------
Less: Selling expenses 5,189 3,308 4,880 3,140
-------------------------------------------------------------------------------------------
Administrative expenses 5,720 4,649 6,056 3,555
-------------------------------------------------------------------------------------------
Financial expenses 1,606 1,172 1,372 954
-------------------------------------------------------------------------------------------
Exploration expenses, including 1,493 1,474 1,370 1,070
dry holes
-------------------------------------------------------------------------------------------
3. Operating profit 13,383 12,124 15,288 4,063
-------------------------------------------------------------------------------------------
Add: Investment income 172 1,214 143 9,513
-------------------------------------------------------------------------------------------
Non-operating income 52 18 90 31
-------------------------------------------------------------------------------------------
Less: Non-operating expenses 251 177 427 258
-------------------------------------------------------------------------------------------
4. Profit before taxation 13,356 13,179 15,094 13,349
-------------------------------------------------------------------------------------------
Less: Taxation 4,156 4,056 4,629 4,345
-------------------------------------------------------------------------------------------
Minority interests 59 - 1,398 -
-------------------------------------------------------------------------------------------
Add: Reversal of unrecognised (11) - (63) -
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 its subsidiaries.
4
2.2.2.2 Consolidated income statements prepared in accordance with IFRS
-------------------------------------------------------------------------------------------
Item Three-month period
ended 31 March
-------------------------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------------------------
RMB millions RMB millions
-------------------------------------------------------------------------------------------
1. Turnover and other operating revenues 227,195 174,127
-------------------------------------------------------------------------------------------
Including:Turnover 222,699 169,040
-------------------------------------------------------------------------------------------
Other operating revenues 4,496 5,087
-------------------------------------------------------------------------------------------
2. Operating expenses (212,333) (157,247)
-------------------------------------------------------------------------------------------
Including:Purchased crude oil, products and (185,949) (131,349)
operating supplies and expenses
-------------------------------------------------------------------------------------------
Selling, general and administrative expenses (7,920) (7,577)
-------------------------------------------------------------------------------------------
Depreciation, depletion and amortisation (7,991) (8,090)
-------------------------------------------------------------------------------------------
Exploration expenses, including dry-holes (1,493) (1,370)
-------------------------------------------------------------------------------------------
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 16,880
-------------------------------------------------------------------------------------------
4. 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 38
-------------------------------------------------------------------------------------------
5. Investment income 27 33
-------------------------------------------------------------------------------------------
6. Share of profits less losses from associates 185 117
-------------------------------------------------------------------------------------------
7. Profit before taxation 13,605 15,791
-------------------------------------------------------------------------------------------
8. Taxation (4,266) (4,749)
-------------------------------------------------------------------------------------------
9. Profit for the period 9,339 11,042
-------------------------------------------------------------------------------------------
Attributable to:
-------------------------------------------------------------------------------------------
Equity shareholders of the Company 9,288 9,637
-------------------------------------------------------------------------------------------
Minority interests 51 1,405
-------------------------------------------------------------------------------------------
10. Profit for the period 9,339 11,042
-------------------------------------------------------------------------------------------
2.2.3 Differences between the net profit for the first quarter of 2006
and shareholders' funds as at 31 March 2006 under the PRC
Accounting Rules and Regulations and IFRS
5
2.2.3.1 Effects of major differences between the net profit under the PRC
Accounting Rules and Regulations and the profit for the year under
IFRS are analysed as follows:
Three-month
period ended
31 March
2006 2005
RMB millions RMB millions
Net profit under the PRC Accounting Rules and Regulations 9,130 9,004
Adjustments:
Depreciation of oil and gas properties 185 186
Capitalisation of general borrowing costs, net of
depreciation effect 101 108
Equity investment differences 40 7
Acquisition of Sinopec National Star 29 29
Unrecognised investment losses 11 63
Reduced amortisation on revaluation of land use rights 6 5
Reduced depreciation on government grants 3 1
Pre-operating expenditures (7) 457
Disposal of oil and gas properties, net of depreciation
effect (100) (103)
Effects of the above adjustments on taxation (110) (120)
Profit attributable to equity shareholders of the
Company under IFRS 9,288 9,637
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' funds
under the PRC Accounting Rules and Regulations and the total equity
under IFRS are analysed as follows:
At At
31 March 31 December
2006 2005
RMB millions RMB millions
Shareholders' funds under the PRC Accounting Rules and 224,764 215,623
Regulations
Adjustments:
Depreciation of oil and gas properties 12,418 12,233
Capitalisation of general borrowing costs 2,213 2,112
Equity investment differences 240 200
Acquisition 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 3,060
Effects of the above adjustments on taxation (5,641) (5,531)
Total equity attributable to equity shareholders of the 232,844 233,556
Company under IFRS
Minority interests 29,491 29,440
----------- -----------
Total equity under IFRS 262,335 252,996
============= =============
6
2.3 Top ten shareholders with tradable shares
-------------------------------------------------------------------------------------------
Number of shareholders as at Number of shareholders of Sinopec Corp. as at 31 March
31 March 2006 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
shares held at
the end of the Type of shares
reporting period (A, B, H share
(10,000 shares) or others)
-------------------------------------------------------------------------------------------
HKSCC (Nominees) Limited 1,668,510.2 H Share
-------------------------------------------------------------------------------------------
Haifutong Profits Securities 4,760.0 A Share
-------------------------------------------------------------------------------------------
Jingfu Fund Management Co.,LTD 4,597.5 A Share
-------------------------------------------------------------------------------------------
Qingdao Port Authority 4,328.0 A Share
-------------------------------------------------------------------------------------------
Boshi Fund Management Co.,LTD 3,693.1 A Share
-------------------------------------------------------------------------------------------
China Fund SSE 50ETF Investment Fund 3,598.1 A Share
-------------------------------------------------------------------------------------------
Citygroup Global Markets Limited 3,553.4 A Share
-------------------------------------------------------------------------------------------
EFUND 50 Securities Investment Fund 3,530.9 A Share
-------------------------------------------------------------------------------------------
Jinxin Fund Management Co.,LTD 3,470.0 A Share
-------------------------------------------------------------------------------------------
Jinghong 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 fast pace, and domestic demand for refined oil products and
petrochemical products continued its growth. International prices
of crude oil maintained at a high level. By actively working to
optimize resources allocation and products mix, and by striving to
expand its operational base, the Company secured continuous
increase, amongst others, in production of oil and gas, the volume
of crude oil processed, sales volume of refined oil products, and
production of ethylene and synthetic resin.
Exploration and Production: Through continuous efforts over the
past five years, the Company has discovered the largest and most
abundant marine facies gas field in China -Puguang Gas field, which
is located in Northeast Sichuan Province. Also in the first
quarter, the Company has made significant progress in the
exploration and development in Tahe oilfields in western China and
Ordos Basin. Production capacity construction of crude oil and
natural gas has made smooth progress. Output of crude oil and
natural gas in the first quarter increased by 2.81% and 23.4%,
respectively, as against the same period last year.
Refining: The Company actively optimized resource allocation and
transportation and made full use of the potentials of the refining
facilities which operated stably and safely under high loads.
Meanwhile, the facility operation has also been optimized and the
Company has made effort to increase production which was well
received by the market. Diesel to gasoline ratio and light yield
have shown an increase. The processing volume of the crude oil and
output of the refined oil 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
various channels in an effort to satisfy the demand for refined oil
products in China, while optimizing the resource allocation of the
refined products and reducing the cost of storage and
transportation. The Company's domestic sales and retail volume of
refined oil products in the first quarter increased by 7.87% and
23.85%, respectively, as against the same period last year.
7
Chemicals: The major chemical production facilities of the Company
continued stable operation. The sales system reform of the chemical
products was furthered improved. All chemical products realised
sales to production ratio of 100%. The Company's production of
ethylene and synthetic resin in the first quarter increased by
34.94% and 23.29%, respectively, as against the same period last
year.
Summary of Principal Operating Results for the First Quarter
--------------------------------------------------------------------------------------------------------
Operating Data Unit Three-month period ended Changes
31st March
--------------------------------------------------------------------------------------------------------
2006 2005 (%)
--------------------------------------------------------------------------------------------------------
Exploration and Production
--------------------------------------------------------------------------------------------------------
Crude oil production thousand tonnes 9,798.7 9,530.5 2.81
--------------------------------------------------------------------------------------------------------
Natural gas production million cubic meters 1,813 1,469 23.42
--------------------------------------------------------------------------------------------------------
Realised crude oil price RMB/tonne 3,112.81 2,127.29 46.33
--------------------------------------------------------------------------------------------------------
Realised natural gas price RMB/thousand cubic meters 745.10 655.36 13.69
--------------------------------------------------------------------------------------------------------
Refining
--------------------------------------------------------------------------------------------------------
Crude processing volume thousand tonnes 35,170 34,330 2.45
--------------------------------------------------------------------------------------------------------
Gasoline, diesel and kerosene thousand tonnes 20,890 20,610 1.36
production
--------------------------------------------------------------------------------------------------------
Of which: Gasoline thousand tonnes 5,530 5,820 (4.98)
--------------------------------------------------------------------------------------------------------
Diesel thousand tonnes 13,820 13,110 5.42
--------------------------------------------------------------------------------------------------------
Kerosene thousand tonnes 1,540 1,680 (8.33)
--------------------------------------------------------------------------------------------------------
Light chemical feedstock thousand tonnes 5,770 4,990 15.63
--------------------------------------------------------------------------------------------------------
Light yield % 74.81 73.48 1.33
percentage
point
--------------------------------------------------------------------------------------------------------
Refining yield % 93.64 92.63 1.01
percentage
point
--------------------------------------------------------------------------------------------------------
Marketing and Distribution
--------------------------------------------------------------------------------------------------------
Total domestic sales of refined thousand tonnes 26,030 24,130 7.87
oil products
--------------------------------------------------------------------------------------------------------
Of which:Retail thousand tonnes 16,670 13,460 23.85
--------------------------------------------------------------------------------------------------------
Distribution thousand tonnes 4,910 5,350 (8.22)
--------------------------------------------------------------------------------------------------------
Wholesale thousand tonnes 4,450 5,320 (16.35)
--------------------------------------------------------------------------------------------------------
Total number of petrol stations stations 29,744 30,164 (1.39)
--------------------------------------------------------------------------------------------------------
Of which:Owned and self-operated stations 27,464 26,682 2.93
--------------------------------------------------------------------------------------------------------
Franchised stations 2,280 3,482 (34.52)
--------------------------------------------------------------------------------------------------------
Throughput per petrol station tonne/station 2,428 2,018 20.32
(Note 1)
--------------------------------------------------------------------------------------------------------
Chemicals (Note 2)
--------------------------------------------------------------------------------------------------------
Ethylene thousand tonnes 1,514 1,122 34.94
--------------------------------------------------------------------------------------------------------
Synthetic resins thousand tonnes 2,075 1,683 23.29
--------------------------------------------------------------------------------------------------------
Synthetic rubbers thousand tonnes 161 158 1.90
--------------------------------------------------------------------------------------------------------
Monomers and polymers for thousand tonnes 1,782 1,596 11.65
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
the late June of 2005, the operating results of ethylene and
synthetic resins for the three-month period ended 31 March 2006
included 100% output of BASF-YPC and Shanghai Secco.
8
Capital Expenditure:
In the first quarter of 2006, capital expenditure of the Company aggregated at
RMB 14,390 million, of which the capital expenditure of the Exploration and
Production Segment was RMB 5,372 million; newly-built production capacity of
crude oil reached 1.27 million ton per annum and newly-built production
capacity of natural gas reached 469 million cubic meters per annum. Capital
expenditure of the Refining Segment was RMB 2,821 million, the expansion and
upgrading projects in Guangzhou and Yanshan and refining as well as some of the
secondary processing units under technical innovation progressed smoothly.
Capital expenditure of the Chemical Segment was RMB 1,725 million, which
expenditure was mainly used for the second phase of Maoming ethylene
reconstruction project, ethylene glycol unit of Shanghai Petrochemical Company
Limited, aromatics and PTA reconstruction of Sinopec Yangzi Petrochemical
Company Ltd. and coal gasification projects for the three sets of chemical
fertilizer facilities. Capital expenditure of the Marketing and Distribution
Segment was RMB 4,136 million, which expenditure was mainly used for
establishing logistics system and constructing and purchasing gas stations.
Ninety-seven gas stations were added during the reporting period. Capital
expenditure of the Company's headquarters and others was RMB 336 million.
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 2006
amounted to RMB 222.699 billion, 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 of 1.4% over the same
period of last year.
Based on IFRS, the turnover and other operating revenues of the
Company for the first quarter of 2006 amounted to RMB 227.195
billion, representing an increase of 30.48% over the same period of
last year. Profit attributable to equity shareholders of the
Company amounted to RMB 9.288 billion, representing a decrease of
3.62% 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
v applicable i1/4 not applicable
The table below shows segmental information prepared in accordance
with the PRC Accounting Rules and Regulations:
------------------------------------------------------------------------------------------
Income Gross
from Profit from profit
principal Costs of principal margin
By segments or by products operations sales operations (%)
------------------------------------------------------------------------------------------
RMB RMB RMB
millions millions millions
------------------------------------------------------------------------------------------
Exploration and production 30,342 9,552 19,544 64.41
------------------------------------------------------------------------------------------
Refining 126,913 130,342 (6,637) (5.23)
------------------------------------------------------------------------------------------
Marketing and distribution 126,045 117,254 8,665 6.87
------------------------------------------------------------------------------------------
Chemicals 45,537 40,180 5,028 11.04
------------------------------------------------------------------------------------------
Corporate and others 40,621 40,068 543 1.34
------------------------------------------------------------------------------------------
Elimination of inter-segment sales (146,759) (146,259) N/A N/A
------------------------------------------------------------------------------------------
Total 222,699 191,137 27,143 12.19
------------------------------------------------------------------------------------------
Of which related party transactions 19,305 16,834 2,424 12.56
------------------------------------------------------------------------------------------
Note: Gross profit margin = profit from principal operations/income from principal operations
9
The table below shows segmental information prepared in accordance with IFRS:
------------------------------------------------------------------------------------------
By segments or by products Percentage
of
operating
profit/(loss)
Operating over
Operating Operating profit/ operating
revenues expenses (loss) revenues
(RMB (RMB (RMB
millions) millions) millions) (%)
------------------------------------------------------------------------------------------
Exploration and production 31,914 14,791 16,623 52.09
------------------------------------------------------------------------------------------
Refining 127,872 135,747 (7,875) (6.16)
------------------------------------------------------------------------------------------
Marketing and distribution 126,182 122,853 3,329 2.64
------------------------------------------------------------------------------------------
Chemicals 47,254 44,119 3,135 6.63
------------------------------------------------------------------------------------------
Corporate and others 40,732 41,082 (350) (0.86)
------------------------------------------------------------------------------------------
Elimination of inter-segment sales (146,759) (146,259) N/A N/A
------------------------------------------------------------------------------------------
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
(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 ended Year ended Change in
Item 31 March 2006 31 December 2005 percentage
-------------------------------------------------------------------------------of profit
Percentage Percentage before
of profit of profit taxation
Amount before Amount before (percentage
(RMB taxation (RMB taxation points)
millions) (%) millions) (%)
-------------------------------------------------------------------------------------------
Profit from principal operations 27,143 203.23 113,714 184.95 18.28
-------------------------------------------------------------------------------------------
Profit from other operations 248 1.86 839 1.36 0.50
-------------------------------------------------------------------------------------------
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 income/expenses (199) (1.49) (5,602) (9.11) 7.62
-------------------------------------------------------------------------------------------
Profit before taxation 13,356 100.00 61,482 100.00 -
-------------------------------------------------------------------------------------------
Significant changes and explanations:
o Profit from Principal Operations
The percentage of profit from principal operations to the profit
before taxation was 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 continuously and the refining segment
suffered a significant loss. As a result, the profit from principal
operations fell by 4.52% over the quarterly average of the last
year, while the profit before taxation witnessed a decrease of
13.11% over the quarterly average of the previous year. Therefore,
the profit
10
from principal operations dropped less than the profit before
taxation.
o Periodical expenses
The percentage of the periodical expenses to the profit before
taxation was 104.88%, representing an increase of 11.04 percentage
points from 93.84% of the previous year. This was mainly due to the
fact that the periodical expense of the first quarter dropped by
2.89% over the quarterly average value of the previous year,
whereas the profit before taxation dropped by 13.11% over the
quarterly average value of the previous year. So the decrease of
the periodical expenses was less than that of the profit before
taxation.
o Subsidy Income
The Company received a one- off government subsidy of RMB 9,415
million from central finance in 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
i1/4 applicable v 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 43.721
billion, of which, RMB 21.788 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 interest income and RMB 20
million of income from agency fee) was received by the Company.
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 19.351 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 434 million, representing 0.2% of operating
expenses of the reporting period; the product sales from the
Company to Sinopec Group and other connected parties amounted to
RMB 21.903 billion, representing 10.3% of the Company's operating
revenue. During the reporting period, profit from principal
operations resulted from connected transactions amounted to RMB
2.424 billion, representing 8.9% of the Company's profit from
principal operations. The natures and pricing policies of connected
transactions did not have any significant change compared with
2005.
Other Connected Transactions
When listed in 2000, Sinopec Corp. and Sinopec Group Company
executed a series of agreements regarding continuing connected
transactions, including the Mutual Supply Agreement, the Community
Services Agreement, the Property Leasing Agreement, the
Intellectual Property Licence Agreement, the Agency Agreement and
the SPI Fund Document. On 24 December, 2003, the Stock Exchange of
Hong Kong Limited granted a conditional waiver of three years (from
2004 to 2006) to Sinopec Corp. from strict
11
compliance with relevant requirements of the Hong Kong Listing
Rules in relation to the continuing connected transactions. The
waiver will expire on 31 December 2006. It is expected that Sinopec
Corp. will continue to conduct the related continuing connected
transactions after the expiry of the waiver period. Sinopec Corp.
has entered into the supplemental agreement to the connected
transactions with Sinopec Group Company on 31 March 2006, which
served as supplements of certain provisions governing the connected
transactions. The relevant supplements will apply to the continuing
connected transactions of the Company to be conducted after 1
January, 2007.
The above supplemental agreement to the connected transactions has
been approved by the Board of Directors of Sinopec Corp. and
announced. Sinopec Corp. will seek the approval of independent
shareholders in relation to the amendment of the agreements, major
continuing connected transactions, the caps of the major continuing
connected transactions and non-major continuing connected
transactions in accordance with the requirements of Shanghai Stock
Exchange. The circular containing the recommendations of the
independent financial adviser, ICEA, details of the continuing
connected transactions, letter of the independent directors
together with the notice convening of the general meeting of
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 meeting of shareholders. The matters will be
submitted to the annual general meeting of shareholders 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 gas field (Puguang Gas Field) in China, which is located in
northeast Sichuan Province. According to the appraisal undertaken
by the Mineral Resource Reserve Evaluation Center under the
Ministry of Land and Resources, reserve in place in the Puguang Gas
Field is estimated to be 251.071 billion cubic meters, with
technical recoverable reserve of 188.304 billion cubic meters.
Puguang Gas field meets the conditions for commercial development.
Sinopec Corp. has prepared a phase I Development Plan, which plans
to achieve commercial production of more than 4 billion cubic
meters per annum of gas by 2008 and 8 billion cubic meters per
annum by 2010. In connection with the contemplated project, a
natural gas pipeline from northeast Sichuan Province to Jinan,
Shandong Province will be constructed. The government has approved
Sinopec Corp. to proceed with preparatory work for the project. The
discovery of Puguang Gas Field is attributable to the innovations
in marine facies exploration theory, exploration methodology
exploration technology and management innovation, representing a
major breakthrough in marine facies exploration theory and
practices in China. The discovery expanded the Company's
exploration territory, thereby paving the way for future growth in
both reserve and production.
3.2.3 Sinopec Corp. Successfully Consolidated for Four A-share
Subsidiaries by way of General Offer
On 15 February, 2006, the Twenty-Fourth meeting of the Second
Session of the Board of Directors of Sinopec Corp. approved the
making of a voluntary general offer for all tradeable shares of
Sinopec Qilu Company Ltd. ("Sinopec Qilu") at RMB 10.18 per share,
all tradeable shares of Sinopec Yangzi Petrochemical Company Ltd.
("Sinopec Yangzi") at RMB 13.95 per share, all tradeale shares of
Sinopec Zhongyuan Petroleum Co., Ltd. ("Sinopec Zhongyuan") at RMB
12.12 per share and all tradeable shares and non-tradeable shares
held by other shareholders excluding Sinopec Corp. of Shengli Oil
Field Dynamic (Group) Co., Ltd. ("Sinopec Dynamic") at RMB 10.30
(tradeable share) and RMB5.60 (tradeable share) per share,
respectively. At the expiration of the offer period ended on 6
April 2006, the number of the tradeable shares of Sinopec Qilu,
Sinopec Yangzi, Sinopec Zhongyuan and Sinopec Dynamic which
accepted the offer, and have not withdrawn 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 the minimum
number of acceptance required by the conditions of the general
offer, thus making the general offer unconditional. At present, the
liquidation and share transfers procedures have been completed. The
Shenzhan Stock Exchange has approved the termination of trading of
the tradeable shares
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of Sinopec Yangzi, Sinopec Zhongyuan and Sinopec Dynamic with
effect from 21 April 2006. The Shanghai Stock Exchange has approved
the termination of trading of the tradeable shares 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 two months. Please refer to the relevant announcements
set out in the China Securities Journal, Shanghai Securities News
and/or Securities Times on 16 February 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 Ningbo Yonglian Co., Ltd. ("Ningbo Yonglian"), a wholly
owned subsidiary of Sinopec Corp. established for the purpose of
such a merger, and Sinopec Zhenhai Refining and Chemical Company
Ltd. ("ZRCC") on 12 November 2005, Ningbo Yonglian will purchase
the listed H shares of ZRCC from its shareholders at the price of
HK$10.60 per share in cash, the total consideration being HK$7.672
billion. ZRCC was delisted on 24 March 2006. Please refer to
Sinopec Corp.'s announcement published in China Securities Journal,
Shanghai Securities News and Securities Times in Mainland China and
South China Morning Post and Hong Kong Economic Times in Hong Kong
on 14 November 2005 and 1 March 2006, respectively, for details.
3.2.5 Increase of Equity Investment on Sinopec Finance Co., Ltd.
On 31 March, 2006 Sinopec Corp. and Sinopec Group have entered into
the arrangement ("Arrangement") with Sinopec Finance Co.,Ltd.
("Sinopec Finance"). In accordance with the Arrangement, the
registered capital of Sinopec Finance will be increased to RMB 6
billion from RMB 2.5 billion. Sinopec Corp. and Sinopec Group
Company will inject RMB 1602.3 million and 897.7 million,
respectively, into Sinopec Finance. Upon completion of the
Arrangement, the equity holding of Sinopec Corp. in Sinopec Finance
will increase to 49% from 38.22%, while the equity holding of
Sinopec Group Company in Sinopec Finance will decrease to 51% from
61.78%. Please refer to the relevant announcements set out in the
China Securities Journal, Shanghai Securities News and Securities
Times in Mainland China and Hong Kong Economic Times and South
China Morning Post 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, the state government imposed a special oil income
levy on any income derived from the sale by an oil exploration and
production company of locally produced crude oil at a price which
exceeds US$40 per barrel since 26 March, 2006. The special oil
income levy will have 5 levels and will be calculated and charged
according to the progressive ad valorem rates on the excess
amounts. The levy will be calculated on a monthly basis and charged
and collected on a quarterly basis. The applicable level of the
special oil income levy will be determined based on the weighted
average crude oil sale price of a particular month. The level of
levy will be determined based on US$ per barrel which starts at
US$40 per barrel, please refer to the relevant announcements set
out in the China Securities Journal, Shanghai Securities News and
Securities Times in Mainland China and Hong Kong Economic Times and
South China Morning Post in Hong Kong on 4 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 the
Supervisory Committee after the audit and presentation
of "non-standard opinion".
|_| applicable X not applicable
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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, 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-executive
directors of Sinopec Corp. are Messrs. Chen Tonghai, Liu Genyuan, Gao Jian and
Fan Yifei; the independent non-executive directors of Sinopec Corp. are Messrs.
Chen Qingtai, Ho Tsu Kwok Charles, Shi Wanpeng and Zhang Youcai; and the
employee representative director of Sinopec Corp. is Mr. Cao Yaofeng.
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