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China Petroleum & Chemical Corp : First Quarterly Results Announcement for 2013

04/26/2013 | 02:13am US/Eastern
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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.



(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 0386) First Quarterly Results Announcement for 2013 §1 Important Notice

1.1 The Board of Directors, the Board of Supervisors, directors, supervisors and senior management of China Petroleum & Chemical Corporation ("Sinopec Corp." or "the Company") warrant that there are no misrepresentations, misleading statements contained in or material omissions from this quarterly report, and severally and jointly accept full responsibility for the authenticity, accuracy and completeness of the information contained in this quarterly report.
1.2 This quarterly report was approved on the seventh meeting of the Fifth Session of the Board of
Directors of Sinopec Corp. All directors attended the meeting.
1.3 The financial statements in this quarterly report were not audited.
1.4 Mr. Fu Chengyu, Chairman of the Board of Directors, Mr. Wang Tianpu, Vice Chairman of the Board of Directors and President, Mr. Wang Xinhua, Chief Financial Officer and Head of the Accounting Department warrant the authenticity and completeness of the financial statements contained in this quarterly report.

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§2 Basic Information of Sinopec Corp.

2.1 Principal financial data and indicators
2.1.1 Principal financial data and indicators prepared in accordance with the China Accounting Standards for Business Enterprises ("ASBE")

Items

As at the end of the reporting period

As at the end of the preceding year

Changes from the

end of the preceding year to

the end of the reporting period

(%)

Total assets (RMB millions)

1,290,018

1,247,271

3.43

Equity attributable to equity shareholders

of the Company (RMB millions)

549,425

513,374

7.02

Net assets per share attributable to equity shareholders of the Company (RMB)

6.127

5.913

3.62

Items

From the beginning of the year to the end of the reporting period

Changes over the

same period of the preceding year

(%)

Net cash flows from operating activities

(RMB millions)

8,220

-

Net cash flows from operating activities

per share (RMB)

0.093

-

Items

In the reporting period

From the beginning of the

year to the end of the reporting period

From the

beginning of the

preceding year to the

end of the

preceding

reporting period

Changes over the same period of the preceding year (%)

Net profit attributable to equity

shareholders of the Company (RMB

millions)

15,834

15,834

12,829

23.42

Basic earnings per share (RMB)

0.179

0.179

0.148

20.95

Diluted earnings per share (RMB)

0.178

0.178

0.147

21.09

Basic earnings per share after deducting

extraordinary gain/loss items (RMB)

0.180

0.180

0.148

21.62

Weighted average return on net assets (%)

2.98

2.98

2.66

0.32

percentage points

Weighted average return on net assets

after deducting extraordinary gain/loss items (%)

2.99

2.99

2.67

0.32 percentage points

Extraordinary gain/loss items

From the beginning of the year to the end of

the reporting period

(gain)/loss (RMB millions)

Loss on disposal of non-current assets

33

Donations

53

Gain on holding and disposal of various investments

(19)

Other non-operating income and expenses, net

10

Subtotal

77

Tax effect

(19)

Total

58

Attributable to: Equity shareholders of the Company

47

Minority interests

11

2

2.1.2 Principal financial data and indicators prepared in accordance with International Financial Reporting
Standards ("IFRS")

Items

As at the end of the reporting period

As at the end of the preceding year

Changes from the

end of the preceding year to the end of

the reporting period

(%)

Total assets (RMB millions)

1,304,067

1,266,693

2.95

Equity attributable to equity

shareholders of the

Company (RMB millions)

546,871

510,914

7.04

Net assets per share

attributable to equity

shareholders of the

Company (RMB)

6.099

5.885

3.64

Items

In the reporting period

From the beginning of the year to the end of the reporting period

From the

beginning of the preceding year to the

end of the

preceding reporting period

Changes over the same period of the preceding year (%)

Net cash generated from

operating activities (RMB

millions)

8,111

8,111

(30,970)

-

Net profit attributable to

equity shareholders of the

Company (RMB millions)

16,677

16,677

13,406

24.40

Basic earnings per share

(RMB)

0.189

0.189

0.154

22.73

Diluted earnings per share

(RMB)

0.188

0.188

0.153

22.88

Return on net assets (%)

3.05

3.05

2.75

0.30

percentage points


2.1.3 Differences between net profit of the Company for the first quarter of 2013 under ASBE and IFRS
and shareholders' equity under ASBE and IFRS as at the end of the reporting period
The consolidated net profit for the reporting period under ASBE and IFRS were RMB 16,831 million and
17,692 million respectively, with a difference of RMB 861 million; the consolidated shareholders' equity
as at the end of the reporting period under ASBE and IFRS were RMB 588,013 million and 585,357 million respectively, with a difference of RMB 2,656 million. The differences were primarily due to safety production fund.

3

2.2 List for number of shareholders and top ten shareholders holding shares without selling restrictions at the end of the reporting period

Number of shareholders at the end of the

reporting period

Number of shareholders 694,929, including 688,428

holders of A shares and 6,501holders of H shares.

Top ten shareholders holding shares without selling restrictions

Name of Shareholders

Number of shares without

selling restrictions held as at the end of the reporting period (1,000 shares)

Type of shares (A, B, H shares or others)

China Petrochemical Corporation

65,797,128

A

HKSCC Nominees Limited note

19,523,590

H

China Securities Finance Co., Ltd. -

refinancing collateral securities account

181,100

A

China Life Insurance Company Limited -

Bonus - Personal Insurance Bonus

100,428

A

Guotai Junan Securities Co., Ltd

78,205

A

China Life Insurance Co., Ltd. - dividends -

personal bonus - 005L - FH002 Shanghai

62,226

A

Bank of Communications - E_Fund 50 index

securities investment funds

54,829

A

National Social Security Fund No. 106

portfolio

47,507

A

China Construction Bank -Yinhua Core Value

Selected Stock Based Securities Investment

Fund

46,000

A

China Construction Bank - China AM

Advantage Growth Stock Securities

Investment Fund

42,664

A

Note: Sinopec Century Bright Capital Investment Limited, overseas wholly-owned subsidiary of China Petrochemical

Corporation, holds 425,500,000 H shares, which is included in the total number of the shares held by HKSCC Nominees

Limited.

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2.3 Review of operating results
In the first quarter of 2013, the quantitative easing of major economies in the world stimulated the slow recovery of the global economy, the Chinese economy maintained steady growth at the beginning of the year, with a GDP growth rate of 7.7% over the same period of last year. On 26th March, the National Development and Reform Commission adjusted the pricing mechanism for oil products, to enable domestic oil products prices to closely reflect fluctuations of international crude oil prices.
In the first quarter, the Company gave more prominence to the quality and performance of development based on safe and stable operation and market orientation. Motivated by the strengthening of management and the innovation of science and technology, the Company managed to increase sales, optimized production and operation. In the first quarter, the Company realized an operating profit of RMB 27.569 billion, with an increase of 26.41% over the same period of last year, and net profit attributable to equity shareholders of the Company was RMB 16.677 billion, with an increase of 24.40% over the same period of last year.
Exploration & Production Segment: The Company strengthened oilfield exploration and development, increased the production of crude oil and natural gas. In exploration, new progress was made in the mature blocks in East China (such as Jiyang trough, etc.), Tarim Basin, and Ordos Basin. In development, initial progress was made in certain key projects for crude oil development and production capacity construction, initial effect was achieved in the comprehensive harnessing work in old areas; key natural gas production projects in Yuanba and Western Sichuan are on schedule. In the first quarter, the Company's crude oil and natural gas production increased steadily, crude oil production was 82.17 million barrels, with a growth of
0.78% over the same period of last year, and natural gas production was 163.20 billion cubic feet, with a growth of 13.98% over the same period of last year. The realized price of oil was 98.83 USD/barrel, 6.85% lower than a year ago, while the realized price of natural gas was 5.86 USD/thousand cubic feet, 3.90%
higher than last year. In the first quarter, the exploration and production segment realized an operating
profit of RMB 16.23 billion, with a decrease of 16.99% over the same period of last year.
Refining Segment: Taking market as the orientation, economic benefit as the center, cost reduction as the emphasis, technical innovation and intensive management as the means, refineries were operated at high load with production of more high value-added products. Major economic indicators improved significantly, light products yield reached 76.44%. In the first quarter, the Company processed 58.6923 million tonnes of crude oil, with a growth of 5.92% over the same period of last year; oil products output was 35.2953 million tonnes, with a growth of 7.39% over the same period of last year. The refining segment realized a turn-around in profitability with an operating profit of RMB 2.204 billion.
Marketing and Distribution Segment: In the market of slower demand growth for oil products and stronger competition, the Company brought into play its advantages of systematic management, marketing network and brand value, to innovate the commercial mode of non-fuel business. In the first quarter, the Company's domestic sales volume of oil products reached 38.917 million tonnes, with a growth of 1.70% over the same period of last year, among which, the retail sales volume reached 26.641 million tonnes, with a growth of 1.74% over the same period of last year. In the first quarter, the marketing and distribution segment realized an operating profit of RMB 9.126 billion, with a decrease of 11.20% over the same period of last year.
Chemicals Segment: The first quarter of 2013 experienced a difficult market environment for chemicals with high feedstock price, sluggish demand and declining product prices. The Company upheld market-oriented and benefit-centered principle, steadily pushed forward integrated business operation, maintained the safe and stable operation of chemical plants, optimized feedstock mix and product slate, accelerated the transformation of chemical business from production type to marketing type. In the first quarter, ethylene output was 2.442 million tonnes, with a decrease of 0.53% over the same period of last year; the outputs of synthetic resin, synthetic rubber and synthetic fiber were 3.3948 million tonnes, 247.5 thousand tonnes and 351.6 thousand tonnes respectively. In the first quarter, chemical segment realized an operating profit of RMB 164 million, with a decrease of 87.47% over the same period of last year.

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Operational Data for the First Quarter

Operational Data

Unit

For three-month period

ended 31 March

Changes (%)

Operational Data

Unit

2013

2012

Changes (%)

Exploration and Production

Oil and gas production (Note 1)

million BOE

109.37

105.39

3.78

Crude oil production

million barrels

82.17

81.53

0.78

Domestic

million barrels

76.22

75.78

0.58

Oversea

million barrels

5.95

5.75

3.48

Natural gas production

billion cubic feet

163.20

143.18

13.98

Realized crude oil price

USD/barrel

98.83

106.10

(6.85)

Realized natural gas price

USD/thousand cubic

feet

5.86

5.64

3.90

Refining (Note 4)

Refinery throughput

million tonnes

58.6923

55.4104

5.92

Gasoline, diesel and kerosene

production

million tonnes

35.2953

32.8676

7.39

Gasoline

million tonnes

11.3470

9.6530

17.55

Diesel

million tonnes

19.7587

19.6352

0.63

Kerosene

million tonnes

4.1896

3.5794

17.05

Light chemical feedstock

milliom tonnes

9.7652

9.2569

5.49

Light products yield

%

76.44

76.71

(0.27)

percentage points

Refining yield

%

94.72

94.99

(0.27)

percentage points

Marketing and Distribution

Total sales of refined oil

products

million tonnes

42.1297

41.3501

1.89

Total domestic sales of refined

oil products

million tonnes

38.9170

38.2650

1.70

Retail

million tonnes

26.6410

26.1850

1.74

Distribution

million tonnes

7.6290

8.0850

(5.64)

Wholesale

million tonnes

4.6470

3.9950

16.32

Total number of domestic

service stations (Note2)

stations

30,685

30,836

(0.49)

Company owned and

company-operated

stations

30,672

30,823

(0.49)

Throughput per domestic station

of company owned and company-operated (Note3)

tonnes/station

3,473

3,450

0.67

Chemicals (Note 4)

Ethylene

thousand tonnes

2,442.0

2,455.1

(0.53)

Synthetic resins

thousand tonnes

3,394.8

3,431.6

(1.07)

Synthetic rubbers

thousand tonnes

247.5

242.6

2.02

Monomers and polymers for

synthetic fibers

thousand tonnes

2,267.0

2,332.8

(2.82)

Synthetic fibers

thousand tonnes

351.6

337.8

4.09

Note 1: Including 100% of SSI output; For domestic production of crude oil, 1 tonne = 7.1 barrels; for production of natural gas, 1 cubic meter = 35.31 cubic feet; for converting natural gas to oil, 1 BOE = 6,000 cubic feet; for production of crude oil in overseas, 1 tonne = 7.27 barrels.

Note 2: The number of service stations in 2012 was the number as at 31 December 2012.

Note 3: Throughput per service station data was an annualized average. Note 4: Including 100% output of the joint ventures companies.

6

Capital Expenditure: Capital expenditure of the Company was about RMB 21.535 billion in the first quarter, of which RMB 9.416 billion was for the exploration and production segment, mainly for Shengli shallow water oilfield, Tahe oilfield, Ordos oil and gas field, Sichuan Basin gas field exploration and development project and Shandong LNG project, etc. RMB 2.837 billion was for the refining segment, mainly for the construction of Anqing, Maoming, Shijiazhuang and Yangtze projects. Capital expenditure for the chemicals segment was RMB 2.277 billion, mainly for the construction of 800 ktpa Wuhan ethylene project, 600 ktpa Hainan aromatic hydrocarbon project, and 200 ktpa Hubei synthetic gas to ethylene glycol project. Capital expenditure for the marketing and distribution segment was RMB 6.396 billion, mainly for the construction and acquisition of service stations in key areas such as highways, major cities and newly planned regions as well as in other regions, accelerating the construction of oil products pipelines and oil depots, promoting non-fuel businesses and fueling card value-added services.

285 service stations have been developed. Capital expenditure for the Headquarters' scientific research information and others was RMB 609 million, with emphasis on the construction of scientific research facilities and IT projects.

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§3 Significant Events


3.1 Significant changes of key accounting items and financial indicators (under ASBE) of the Company and the reasons for the changes:
Items of Consolidated Balance Sheet
As at the end of the
As at the end of the
Increase/(decrease)
Cash at bank and on hand
Prepayments
Other current assets
Short-term borrowings Non-current liabilities due within one year Capital reserve

Items of Consolidated Income Statement

From the beginning of the year to

the end of the reporting period

From the beginning

of the preceding

year to the

end of the

preceding reporting

period

Increase/(decrease)

Main Reason for Changes

Items of Consolidated Income Statement

From the beginning of the year to

the end of the reporting period

From the beginning

of the preceding

year to the

end of the

preceding reporting

period

Amount

Percentage

Main Reason for Changes

Items of Consolidated Income Statement

RMB millions

%

Main Reason for Changes

Asset impairment losses

(12)

425

(437)

(102.82)

Mainly due to the expected net realizable value of some inventories in the first quarter of 2012 are less than the carrying amount and impairment losses accrued accordingly.

Loss from

changes in

fair value

1,627

539

1,088

201.86

Increase in fair value of convertible and embedded derivatives due to

the change of share price.

Income tax

expense

6,175

4,437

1,738

39.17

Due to the increase in profit before taxation

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3.2 The progress of significant events and their impacts as well as the analysis and explanations for the solutions
3.2.1 Complete the Placing of H Shares
An aggregate of 2,845,234,000 new H shares, representing approximately 3.2% of the total number of issued shares (as enlarged by the allotment and issue of the Placing Shares) and approximately 14.5% of the total number of issued H shares (as enlarged by the allotment and issue of the Placing Shares), have been allotted and issued by the Company on 14 February 2013 at the Placing Price of HK$8.45 per share to not more than ten Placees. The aggregate net proceeds amount to HK$23,970,100,618. As a result of the Placing, the total number of issued H shares has increased from 16,780,488,000 H shares to
19,625,722,000 H shares. For further details, please refer to the relevant announcements of Sinopec Corp. dated 14 February 2013, published on the websites of the Stock Exchange of Hong Kong Limited; and the relevant announcements dated 18 February 2013, published in China Securities Journal, Shanghai Securities News and Securities Times.
3.2.2 Acquisition of overseas oil and gas assets from China Petrochemical Corporation
On 22 March 2013, SHI (a wholly-owned subsidiary of Sinopec Corp.) and Tiptop HK (a wholly-owned subsidiary of China Petrochemical Corporation) entered into the Framework Agreement in Beijing, pursuant to which SHI and Tiptop HK agreed (1) to establish a joint venture company, namely Sinopec International Petroleum E&P Hongkong Overseas Limited, or JV HK, in Hong Kong. SHI and Tiptop HK shall respectively hold 50% of the issued share capital of JV HK, and SHI shall enjoy actual control over JV HK through contractual arrangements with Tiptop HK. JV HK shall hence become a non-wholly owned subsidiary of the Company through actual control; and (2) following the establishment of JV HK, JV HK (as the purchaser), to enter into the purchase agreements with the relevant vendors for the acquisition of the CIR Sale Shares, the Mansarovar Transaction Assets and the Taihu Transaction Assets. On 28 March 2013, JV HK entered into the purchase agreements with the relevant vendors. For further details, please refer to relevant announcements of Sinopec Corp., published on the websites of the Stock Exchange of Hong Kong Limited on 24 March 2013 and 28 March 2013 respectively; and announcements published in China Securities Journal, Shanghai Securities News and Securities Times dated 25 March
2013 and 29 March 2013 respectively.
3.3 Status of fulfillment of commitments undertaken by the Company, shareholder and actual controller.

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