REG - China Pet &Chem Corp - 1st Quarter Results
China Petroleum & Chemical Corporation
The First Quarterly Report for 2019
29 April 2019
Beijing, China
1 Important notice
1.1 The Board of Directors, the Supervisory Board of China Petroleum & Chemical Corporation ("Sinopec Corp." or the "Company") and its directors, supervisors and senior management warrant that there are no material omissions, misrepresentations or misleading statements contained in this report and severally and jointly accept full responsibility for the authenticity, accuracy and completeness of the information contained in this report.
1.2 The first quarterly report for 2019 was approved at the 6th meeting of the Seventh Session of the Board of Directors of Sinopec Corp. All directors attended this meeting.
1.3 Mr. Dai Houliang, Chairman, Mr. Ma Yongsheng, President, Mr. Wang Dehua, Chief Financial Officer and Head of the Corporate Finance Department of Sinopec Corp. warrant the authenticity, accuracy and completeness of the financial statements contained in this quarterly report.
1.4 The financial statements in this quarterly report were not audited.
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 China Accounting Standards for Business Enterprises (CASs)
RMB million
Items
As of 31 March 2019
As of 31 December 2018
Changes from the end of the preceding year to the end of the reporting period (%)
Total assets
1,813,445
1,592,308
13.9
Total equity attributable to equity shareholders of the Company
739,653
718,355
3.0
RMB million
Items
Three-month period ended 31 March
Changes over the same period of the preceding year (%)
2019
2018
Net cash flow from operating activities
(14,609)
12,052
-
Operating income
717,579
621,251
15.5
Net profit attributable to equity shareholders of the Company
14,763
18,770
(21.3)
Net profit attributable to equity shareholders of the Company excluding extraordinary gains and losses
14,370
17,982
(20.1)
Weighted average return on net assets (%)
2.03
2.55
(0.52) percentage points
Basic earnings per share (RMB)
0.122
0.155
(21.3)
Diluted earnings per share (RMB)
0.122
0.155
(21.3)
RMB million
Extraordinary items
During the reporting period
(income)/expenses（RMB million）
Net loss on disposal of non-current assets
64
Donations
3
Government grants
(870)
Gains on holding and disposal of various investments
20
Other extraordinary income and expenses, net
285
Subtotal
(498)
Tax effect
126
Total
(372)
Attributable to:
Equity shareholders of the Company
(393)
Minority interests
21
2.1.2 Principal financial data and indicators prepared in accordance with International Financial Reporting Standards (IFRS)
RMB million
Items
As of 31 March
2019
As of 31 December
2018
Changes from the end of the preceding year to the end of the reporting period (%)
Total assets
1,813,445
1,592,308
13.9
Total equity attributable to owners of the Company
738,578
717,284
3.0
RMB million
Items
Three-month period ended 31 March
Changes over the same period of the preceding year (%)
2019
2018
Net cash generated from operating activities
(14,609)
12,052
-
Operating profit
24,841
29,218
(15.0)
Net profit attributable to owners of the Company
15,468
19,306
(19.9)
Basic earnings per share (RMB)
0.128
0.159
(19.5)
Diluted earnings per share (RMB)
0.128
0.159
(19.5)
Return on net assets (%)
2.09
2.59
(0.50) percentage points
2.2 Total number of shareholders and top ten shareholders at the end of the reporting period
Total number of shareholders at the end of the reporting period
Total number of shareholders was 486,896, including 481,107 holders of domestic A shares and 5,789 holders of overseas H shares.
Top ten shareholders
Name of shareholder
Total number of shares held
Percentage
(%)
Number of shares subject to pledge or lock-ups
Nature of shareholder
China Petrochemical Corporation
82,709,227,393
68.31
0
State-owned share
HKSCC (Nominees) Limited 1
25,392,285,486
20.97
Unknown
H share
中国证券金融股份有限公司
2,609,312,057
2.16
0
A share
国新投资有限公司
1,252,427,354
1.03
0
A share
香港中央结算有限公司
999,101,462
0.83
0
A share
北京诚通金控投资有限公司
947,604,254
0.78
0
A share
中央汇金资产管理有限责任公司
322,037,900
0.27
0
A share
中国人寿保险股份有限公司－传统－普通保险产品－005L－CT001沪
259,205,354
0.21
0
A share
中国人寿保险股份有限公司－分红－个人分红－005L－FH002沪
240,956,971
0.20
0
A share
国泰君安证券股份有限公司
143,442,801
0.12
0
A share
Note1 Sinopec Century Bright Capital Investment Limited, overseas wholly-owned subsidiary of China Petrochemical Corporation, holds 553,150,000 H shares, which is included in the total number of the shares held by HKSCC (Nominees) Limited.
Statement on the connected relationship or acting in concert among the aforementioned shareholders:
Apart from中国人寿保险股份有限公司－传统－普通保险产品－005L－CT001沪 and 中国人寿保险股份有限公司－分红－个人分红－005L－FH002沪 which were both administrated by 中国人寿保险股份有限公司, Sinopec Corp. is not aware of any connected relationship or acting in concert among or between the above-mentioned shareholders.
2.3 Review of operating results
In the first quarter of 2019, the global economy experienced weak growth momentum while China's economy maintained stable growth with gross domestic product (GDP) up by 6.4%. International oil prices recovered from low level at the end of last year, domestic refined oil products prices were adjusted in a timely manner. Domestic demand for natural gas grew rapidly with apparent consumption up by 11%. Refined oil products market, with ample supply, witnessed strong competition. Demand for chemicals increased steadily.
Adhering to the general principle of making progress while maintaining stability and the requirements for high-quality development, we will accelerate the strategic plan of our phased goals for year 2020 through year 2050. Guided by "reform, management, innovation and development", we stick to the operating principles of "specialised development, market-based operation, international layout and overall coordination" and make great efforts in optimising operation, expanding market, reducing costs, controling risks, deepening reform and reinforcing management.
In accordance with CASs, net profit attributable to equity shareholders of the Company was RMB 14.763 billion in the first quarter, down by 21.3% over the same period of last year. In accordance with IFRS, net profit attributable to equity shareholders of the Company was RMB 15.468 billion, down by 19.9% compared with the same period of last year.
Exploration and Production: With the recovery of oil price, the Company fully implemented the action plan of redoubling efforts in oil and gas exploration and production. Measures were taken to accelerate the formation of an integrated value chain of natural gas business including production, supply, storage and marketing and continuously reduce cost and expenditure on all fronts. Tangible results were achieved in maintaining oil production and increasing gas output. In exploration, we reinforced preliminary exploration in new areas and strengthened integrated detailed evaluation in mature fields, which led to new discoveries in Jiyang Depression and Sichuan basins. In crude oil development, we made a full-fledged push to build profitable production capacity, deepen the structural adjustment of mature fields, reduce natural decline rate and ensure steady production. In natural gas development, we constantly pushed forward capacity building in Hangjinqi of Neimongol, west Sichuan Depression and Weirong gas fields. We accelerated construction of natural gas production, supply, storage and marketing system and promoted a coordinated growth along the value chain.
In the first quarter, the oil and gas production of the Company was 113.46 million barrels of oil equivalent, up by 1.9% over the same period of last year, among which domestic crude oil increased by 0.2% while natural gas increased by 6.7%, compared with the same period of last year. Exploration and Production Segment realised an operating profit of RMB 2.143 billion from previous loss.
Exploration and Production
Unit
Three-month period ended 31 March
Changes
(%)
2019
2018
Oil and gas production2
million boe
113.46
111.33
1.9
Crude oil production
million barrels
70.81
71.35
(0.8)
China
million barrels
61.55
61.43
0.2
Overseas
million barrels
9.26
9.92
(6.7)
Natural gas production
billion cubic feet
255.79
239.83
6.7
Realised crude oil price
USD/barrel
57.66
59.8
(3.6)
Realised natural gas price
USD/thousand cubic feet
7.07
6.28
12.6
Note2 Conversion: for domestic production of crude oil, 1 tonne = 7.10 barrels; for overseas production of crude oil, 1 tonne=7.21 barrels; for production of natural gas, 1 cubic meter = 35.31 cubic feet.
Refining: The Company adjusted the product mix in response to market demand by increasing production of gasoline and jet fuel. Diesel-to-gasoline ratio further declined to 1.01. We comprehensively optimised our production plans, moderately increased the export of oil products and realized stable operation at high utilisation rate. At the meantime, we implemented bunker fuel quality upgrading plan. In the first quarter, refinery throughput grew by 2.7% and refined oil products production grew by 3.8%, among which gasoline up by 5.9% and kerosene up by 6.6% over the same period of last year. Refining Segment realised an operating profit of RMB 11.963 billion.
Refining3
Unit
Three-month period ended 31 March
Changes
(%)
2019
2018
Refinery throughput
million tonnes
61.78
60.16
2.7
Gasoline, diesel and kerosene production
million tonnes
39.44
37.98
3.8
Gasoline
million tonnes
15.87
14.98
5.9
Diesel
million tonnes
16.03
15.93
0.6
Kerosene
million tonnes
7.54
7.07
6.6
Light chemical feedstock
million tonnes
10.07
9.94
1.3
Light product yield
%
76.14
76.22
(0.08) Percentage points
Refining yield
%
94.76
95.23
(0.47) Percentage points
Note3 Including 100% production of domestic joint ventures.
Marketing and Distribution: We brought our advantages of integrated business and distribution network into full play. Through increasing marketing efforts and a flexible and targeted marketing strategy to maintain sustained growth in total domestic sales volume and retail business scale. The Company upgraded distribution network to further strengthen our existing advantages. Vehicle natural gas market was further expanded. Self-owned brands development ensured steady development of non-fuel business. In the first quarter, total sales volume of refined oil products was 49.74 million tonnes with an increase of 5.4%, among which domestic sales volume up by 5.2% and retail business scale up by 2.5% over the same period of last year. The Marketing and Distribution Segment realised an operating profit of RMB 7.866 billion.
Marketing and Distribution
Unit
Three-month period ended 31 March
Changes
(%)
2019
2018
Total sales volume of refined oil products
million tonnes
49.74
47.21
5.4
Total domestic sales of refined oil products
million tonnes
45.61
43.35
5.2
Retail
million tonnes
30.20
29.46
2.5
Direct sales & Distribution
million tonnes
15.41
13.89
10.9
Throughput per station4
tonnes
3,939
3,846
2.4
Unit: stations
As of 31 March
2019
As of 31 December
2018
Changes from the end of last year to the end of the reporting period (%)
Total number of Sinopec-branded service stations
30,671
30,648
0.1
Number of company-operated stations
30,665
30,642
0.1
Note4 Throughput per station was annualised.
Chemicals: The Company followed the development philosophy of "basic plus high-end" to enhance effective supply. We persistently fine-tuned chemical feedstock mix to lower cost. The Company strengthened the links among R&D, production, marketing and customer, and maximised production of high-end products output tailored to market demands. The ratio of new and specialty products in synthetic resin reached 63.6% and differential ratio of synthetic fibre reached 90.3%. We enhanced the dynamic optimisation of facilities and product chain, and improved the utilisation and production scheduling based on market demand. We reinforced the capacity structural adjustment by constructing several key projects actively. The Company promoted targeted marketing and servicing to further expand our business. In the first quarter, ethylene production reached 3.049 million tonnes, up by 1.8% and chemical sales volume was 23.373 million tonnes, up by 14.3% over the same period of last year. The Chemicals Segment realised an operating profit of RMB 6.953 billion.
Chemicals5
Unit
Three-month
period ended 31 March
Changes
(%)
2019
2018
Ethylene
thousand tonnes
3,049
2,995
1.8
Synthetic resin
thousand tonnes
4,178
4,117
1.5
Synthetic rubber
thousand tonnes
271
199
36.2
Monomers and polymers for synthetic fiber
thousand tonnes
2,575
2,246
14.6
Synthetic fiber
thousand tonnes
322
296
8.8
Note5 Including 100% production of domestic joint ventures.
Capital expenditure: In the first quarter, the total capital expenditure was RMB 11.914 billion. Capital expenditures for Exploration and Production Segment were RMB 5.562 billion, mainly for Fuling and Weirong shale gas development projects, Hangjinqi natural gas development project, Shengli and Northwest crude oil development projects, phase I of Xinjiang gas pipeline, phase I of Erdos-Anping-Cangzhou gas pipeline, Wen 23 and Jintan gas storages, as well as overseas projects. Capital expenditure for the refining segment was RMB 1.995 billion, mainly for Zhongke Refining and Petrochemical project, Zhenhai, Tianjin, Maoming and Luoyang refineries and the construction of Rizhao-Puyang-Luoyang crude oil pipeline. Capital expenditure for the marketing and distribution segment was RMB 2.521 billion, mainly for construction of refined oil products depots, pipelines, service stations, non-fuel business and the renovation of underground oil tanks etc. Capital expenditure for the chemicals segment was RMB 1.799 billion, mainly for ethylene projects in Zhongke, Zhenhai and Phase II of Hainan high-efficiency and environment-friendly aromatics project. Capital expenditure for corporate and others was RMB 37 million, mainly for R&D facilities and information technology projects.
3 Significant events
3.1 Significant changes in major items contained in the consolidated financial statements prepared in accordance with CASs and the reasons for such changes.
Items of Consolidated Balance Sheet
As of 31 March
2019
As of 31 December
2018
Increase/(Decrease)
Main reasons for changes
Amount
Percentage
RMB million
RMB million
RMB million
（%）
Financial assets held for trading
16,872
25,732
(8,860)
(34.4)
Receipt of the structured deposits at maturity
Derivative financial assets
4,977
7,887
(2,910)
(36.9)
Decrease in loss position and increase in profitable position of derivative hedging financial instruments
Derivative financial liabilities
3,078
13,571
(10,493)
(77.3)
Long-term deferred expenses
7,489
15,659
(8,170)
(52.2)
Decrease in long-term deferred expenses under New Leases Standard
Right-of-use assets
206,743
-
206,743
-
New item under New Leases Standard
Lease liabilities
182,765
-
182,765
-
Short-term loans
72,757
44,692
28,065
62.8
Increase in short-term loans
Taxes payable
35,875
87,060
(51,185)
(58.8)
Due to the time difference of tax payment, part of the unpaid tax from the end of last year had been paid during this reporting period
Other comprehensive income
(930)
(6,774)
5,844
(86.3)
Cash flow hedging and foreign currency translation differences
Items of Consolidated Income Statement
Three-month period ended 31 March
Increase/(Decrease)
Main reasons for changes
2019
2018
Amount
Percentage
RMB Million
RMB Million
RMB Million
（%）
Financial Expense
2,330
455
1,875
412.1
Increase in Financial Expense under New Leases Standard
Investment income
1,285
3,355
(2,070)
(61.7)
Decrease in profit of associates and joint ventures
Minority interests
3,708
5,752
(2,044)
(35.5)
Decrease in profit of some subsidiaries
(Losses)/gains from changes in fair value
(2,226)
126
(2,352)
-
Increase in fair value loss on derivative financial instruments not qualified as hedging
Asset disposal income/(loss)
(64)
227
(291)
-
Income in 2018 is mainly due to gain from the disposal of land from subsidiary
Items of consolidated cash flow statement
Three-month period ended 31 March
Increase/(Decrease)
Main reasons for changes
2019
2018
Amount
Percentage
RMB
million
RMB
million
RMB million
（%）
Other cash received relating to operational activities
31,379
16,695
14,684
88.0
Decrease in Margin deposit in financial derivatives business
Other cash paid relating to operational activities
(39,806)
(25,234)
14,572
57.7
Increase in Margin deposit in financial derivatives business
Other cash received relating to investing activities
13,165
21,325
(8,160)
(38.3)
Decrease in value of certificate of deposit, over three months, expired and recovered
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
(23,514)
(17,901)
5,613
31.4
Investment cash outflow during this reporting period
Net cash paid for the acquisition of subsidiaries and other business entities
-
(3,188)
(3,188)
-
Net cash paid for the acquisition of SECCO
Other cash paid relating to investing activities
(24,388)
(13,499)
10,889
80.7
Increase in the value of certificate of deposit, over three months
3.2 This quarterly results announcement is published in both Chinese and English languages. In the event of any inconsistency between the two versions, the Chinese version shall prevail.
By Order of the Board
Chairman
Dai Houliang
29 April, 2019
4 Appendix
4.1 Quarterly financial statements prepared under China Accounting Standards for Business Enterprises ("CASs")
Consolidated Balance Sheet
as at 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
At 31 March 2019
At 31 December 2018
Current assets:
Cash at bank and on hand
168,386
167,015
Financial assets held for trading
16,872
25,732
Derivative financial assets
4,977
7,887
Bills receivable and accounts receivable
80,464
64,879
Prepayments
8,231
5,937
Other receivables
19,682
25,312
Inventories
219,830
184,584
Other current assets
20,671
22,774
Total current assets
539,113
504,120
Non-current assets:
Long-term equity investments
147,471
145,721
Other equity instrument investments
1,447
1,450
Fixed assets
605,388
617,812
Construction in progress
138,584
136,963
Right-of-use assets
206,743
-
Intangible assets
102,913
103,855
Goodwill
8,657
8,676
Long-term deferred expenses
7,489
15,659
Deferred tax assets
19,451
21,694
Other non-current assets
36,189
36,358
Total non-current assets
1,274,332
1,088,188
Total assets
1,813,445
1,592,308
Current liability:
Short-term loans
72,757
44,692
Derivative financial liabilties
3,078
13,571
Bills payable and accounts payable
218,170
192,757
Contract liabilities
129,199
124,793
Employee benefits payable
7,948
7,312
Taxes payable
35,875
87,060
Other payables
73,293
77,463
Non-current liabilities due within one year
35,284
17,450
Total current liabilities
575,604
565,098
Non-current liabilities:
Long-term loans
63,763
61,576
Debentures payable
31,727
31,951
Lease liabilities
182,765
-
Provisions
43,256
42,800
Deferred tax liabilities
6,520
5,948
Other non-current liabilities
27,716
27,276
Total non-current liabilities
355,747
169,551
Total liabilities
931,351
734,649
Shareholders' equity:
Share capital
121,071
121,071
Capital reserve
119,192
119,192
Other comprehensive income
(930)
(6,774)
Specific reserve
2,397
1,706
Surplus reserves
203,678
203,678
Retained earnings
294,245
279,482
Total equity attributable to shareholders of the Company
739,653
718,355
Minority interests
142,441
139,304
Total shareholders' equity
882,094
857,659
Total liabilities and shareholders' equity
1,813,445
1,592,308
Dai Houliang Ma Yongsheng
Wang Dehua
Chairman President Chief Financial Officer
Balance Sheet
as at 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
At 31 March 2019
At 31 December 2018
Current assets：
Cash at bank and on hand
72,019
82,879
Financial assets held for trading
14,500
22,500
Bills receivable and accounts receivable
37,788
30,145
Prepayments
3,541
2,488
Other receivables
54,463
57,432
Inventories
50,273
45,825
Other current assets
17,174
15,835
Total current assets
249,758
257,104
Non-current assets：
Long-term equity investments
290,891
289,207
Other equity instrument investments
395
395
Fixed assets
294,743
302,082
Construction in progress
50,708
51,598
Right-of-use assets
118,892
-
Intangible assets
8,492
8,571
Long-term deferred expenses
2,492
2,480
Deferred tax assets
9,634
11,021
Other non-current assets
7,591
9,145
Total non-current assets
783,838
674,499
Total assets
1,033,596
931,603
Current liabilities：
Short-term loans
22,701
3,961
Derivative financial liabilties
-
967
Bills payable and accounts payable
85,760
84,418
Contract liabilities
4,239
4,230
Employee benefits payable
4,245
4,294
Taxes payable
23,681
54,764
Other payables
107,667
119,514
Non-current liabilities due within one year
25,941
16,729
Total current liabilities
274,234
288,877
Non-current liabilities：
Long-term loans
47,161
48,104
Debentures payable
20,000
20,000
Lease liabilities
111,260
-
Provisions
33,422
33,094
Other non-current liabilities
4,311
4,332
Total non-current liabilities
216,154
105,530
Total liabilities
490,388
394,407
Shareholders' equity：
Share capital
121,071
121,071
Capital reserve
68,801
68,795
Other comprehensive income
332
(485)
Specific reserve
1,309
989
Surplus reserves
203,678
203,678
Retained earnings
148,017
143,148
Total shareholders' equity
543,208
537,196
Total liabilities and shareholders' equity
1,033,596
931,603
Dai Houliang Ma Yongsheng Wang Dehua
Chairman President Chief Financial Officer
Consolidated Income Statement
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
Three-month periods
ended 31 March 2019
Three-month periods
ended 31 March 2018
I. Operating income
717,579
621,251
II. Total Operating costs
693,152
594,063
Including: Operating costs
596,412
501,278
Taxes and surcharges
60,459
57,719
Selling and distribution
expenses
14,748
13,688
General and
administrative expenses
15,485
16,708
Research and
development costs
1,292
1,998
Financial expenses
2,330
455
Exploration expenses,
including dry holes
2,543
2,230
Impairment losses
(136)
(13)
Credit impairment losses
19
-
Add: Other income
761
594
Investment income
1,285
3,355
(Losses)/gains from
changes in fair value
(2,226)
126
Asset disposal
(expense)/income
(64)
227
III. Operating profit
24,183
31,490
Add: Non-operating
income
243
378
Less: Non-operating
expenses
416
353
IV. Profit before taxation
24,010
31,515
Less: Income tax expense
5,539
6,993
V. Net profit
18,471
24,522
Classification by going concern:
(i) Continuous operating net
profit
18,471
24,522
(ii) Termination of net profit
-
-
Classification by ownership:
(i)Equity shareholders of the
Company
14,763
18,770
(ii) Minority interests
3,708
5,752
VI. Other comprehensive
income
3,759
(1,485)
Items that may not be reclassified subsequently to profit or loss:
1
-
Changes in fair value of other equity instrument investments
1
-
Items that may be reclassified subsequently to profit or loss:
3,758
(1,485)
Other comprehensive income that can be converted into profit or loss under the equity method
66
148
Cash flow hedges reserve
4,853
785
Foreign currency translation differences
(1,161)
(2,418)
VII. Total comprehensive income
22,230
23,037
Attributable to:
Equity shareholders of the Company
19,029
17,990
Minority interests
3,201
5,047
VIII. Earnings per share:
(i) Basic earnings per share
(RMB/Share)
0.122
0.155
(ii) Diluted earnings per
share (RMB/Share)
0.122
0.155
Dai Houliang Ma Yongsheng Wang Dehua
Chairman President Chief Financial Officer
Income Statement
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
Three-month periods
ended 31 March 2019
Three-month periods
ended 31 March 2018
I.Operating income
249,978
241,136
Less: Operating costs
191,844
184,696
Taxes and surcharges
40,952
40,067
Selling and distribution
expenses
754
693
General and
administrative expenses
7,612
8,585
Research and
development costs
1,197
1,782
Financial expenses
1,635
1,008
Exploration expenses,
including dry holes
2,429
2,213
Impairment losses
-
4
Credit impairment
losses
(5)
-
Add: Other income
631
300
Investment income
1,777
2,931
Gains/(losses) from changes in
fair value
20
(18)
Asset disposal (expense)/income
(1)
237
II. Operating profit
5,987
5,538
Add: Non-operating income
34
122
Less: Non-operating expenses
147
155
III. Profit before taxation
5,874
5,505
Less: Income tax expense
1,003
791
IV. Net profit
4,871
4,714
(i) Continuous operating net profit
4,871
4,714
(ii) Termination of net profit
-
-
V. Other comprehensive income
817
(53)
Items that may be reclassified subsequently to profit or loss
817
(53)
Other comprehensive loss that can be converted into profit or loss under the equity method
(33)
(53)
Cash flow hedges
850
-
VI. Total comprehensive income
5,688
4,661
Dai Houliang Ma Yongsheng Wang Dehua
Chairman President Chief Financial Officer
Consolidated Cash Flow Statement
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
Three-month
periods ended 31
March 2019
Three-month
periods ended 31
March 2018
I. Cash flows from operating activities:
Cash received from sale of goods and
rendering of services
760,693
707,017
Refund of taxes and levies
760
593
Other cash received relating to operating
activities
31,379
16,695
Sub-total of cash inflows
792,832
724,305
Cash paid for goods and services
(625,310)
(561,416)
Cash paid to and for employees
(17,224)
(16,056)
Payments of taxes and levies
(125,101)
(109,547)
Other cash paid relating to operating
activities
(39,806)
(25,234)
Sub-total of cash outflows
(807,441)
(712,253)
Net cash flow from operating activities
(14,609)
12,052
II.Cash flows from investing activities:
Cash received from disposal of
investments
9,636
13,342
Cash received from returns on
investments
1,288
674
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
24
-
Other cash received relating to investing
activities
13,165
21,325
Sub-total of cash inflows
24,113
35,341
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
(23,514)
(17,901)
Cash paid for acquisition of investments
(1,793)
(2,241)
Net cash paid for the acquisition of subsidiaries and other business entities
-
(3,188)
Other cash paid relating to investing
activities
(24,388)
(13,499)
Sub-total of cash outflows
(49,695)
(36,829)
Net cash flow from investing activities
(25,582)
(1,488)
III.Cash flows from financing activities:
Cash received from capital contributions
94
70
Including: Cash received from minority shareholders' capital contributions to subsidiaries
94
70
Cash received from borrowings
149,622
126,432
Other cash received relating to financing activities
190
-
Sub-total of cash inflows
149,906
126,502
Cash repayments of borrowings
(118,511)
(118,865)
Cash paid for dividends, profits
distribution or interest
(1,396)
(1,173)
Including: Subsidiaries' cash payments for distribution of dividends or profits to minority shareholders
(235)
(390)
Other cash paid relating to financing
activities
(630)
(3)
Sub-total of cash outflows
(120,537)
(120,041)
Net cash flow from financing activities
29,369
6,461
IV. Effects of changes in foreign exchange rate
(340)
(455)
V. Net (decrease)/increase in cash and cash equivalents
(11,162)
16,570
Add：Initial balance of cash and cash equivalents
111,922
113,218
VI. Ending balance of cash and cash equivalents
100,760
129,788
Dai Houliang Ma Yongsheng Wang Dehua
Chairman President Chief Financial Officer
Cash Flow Statement
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
Three-month
periods ended 31
March 2019
Three-month
periods ended 31
March 2018
I.Cash flows from operating activities:
Cash received from sale of goods and rendering of services
280,152
285,228
Refund of taxes and levies
519
445
Other cash received relating to operating activities
757
6,926
Sub-total of cash inflows
281,428
292,599
Cash paid for goods and services
(208,261)
(192,802)
Cash paid to and for employees
(9,274)
(8,515)
Payments of taxes and levies
(76,898)
(75,254)
Other cash paid relating to operating activities
(2,939)
(31,161)
Sub-total of cash outflows
(297,372)
(307,732)
Net cash flow from operating activities
(15,944)
(15,133)
II.Cash flows from investing activities:
Cash received from disposal of investments
9,285
15,319
Cash received from returns on investments
1,270
2,116
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
3
289
Other cash received relating to investing activities
9,933
12,428
Sub-total of cash inflows
20,491
30,152
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
(7,459)
(8,098)
Cash paid for acquisition of investments
(1,376)
(2,316)
Other cash paid relating to investing activities
(10,800)
-
Sub-total of cash outflows
(19,635)
(10,414)
Net cash flow from investing activities
856
19,738
III.Cash flows from financing activities:
Cash received from borrowings
39,186
25,723
Sub-total of cash inflows
39,186
25,723
Cash repayments of borrowings
(35,016)
(18,654)
Cash paid for dividends or interest
(1,476)
(1,161)
Other cash paid relating to financing activities
(266)
-
Sub-total of cash outflows
(36,758)
(19,815)
Net cash flow from financing activities
2,428
5,908
IV. Effects of changes in foreign exchange rate
-
-
V. Net (decrease)/increase in cash and cash equivalents
(12,660)
10,513
Add：Initial balance of cash and cash equivalents
59,120
72,309
VI. Ending balance of cash and cash equivalents
46,460
82,822
Dai Houliang Ma Yongsheng Wang Dehua
Chairman President Chief Financial Officer
Segement Reporting
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
Three-month
periods ended 31 March 2019
Three-month
periods ended 31 March 2018
Income from principal operations
Exploration and production
External sales
29,367
20,933
Inter-segment sales
22,089
20,269
Subtotal
51,456
41,202
Refining
External sales
34,002
33,933
Inter-segment sales
255,752
252,897
Subtotal
289,754
286,830
Marketing and distribution
External sales
321,636
310,117
Inter-segment sales
965
1,176
Subtotal
322,601
311,293
Chemicals
External sales
110,990
104,780
Inter-segment sales
17,121
15,980
Subtotal
128,111
120,760
Corporate and others
External sales
205,504
135,500
Inter-segment sales
154,677
131,516
Subtotal
360,181
267,016
Elimination of
inter-segment sales
(450,604)
(421,838)
Consolidated income from principal operations
701,499
605,263
Income from other operations
Exploration and
production
1,821
1,742
Refining
1,251
1,125
Marketing and distribution
8,850
8,892
Chemicals
3,733
3,738
Corporate and others
425
491
Consolidated income from other operations
16,080
15,988
Consolidated operating income
717,579
621,251
Operating profit/(loss)
By segment
Exploration and
production
1,581
(573)
Refining
11,481
18,549
Marketing and distribution
7,990
8,646
Chemicals
6,827
8,090
Corporate and others
(582)
(1,069)
Elimination
(540)
(6,000)
Total segment operating profit
26,757
27,643
Investment income
Exploration and
production
777
337
Refining
(394)
226
Marketing and distribution
215
646
Chemicals
1,047
1,490
Corporate and others
(360)
656
Total segment investment income
1,285
3,355
Financial expenses
(2,330)
(455)
(Loss)/gain from changes in fair value
(2,226)
126
Loss from asset disposal
(64)
227
Other income
761
594
Operating profit
24,183
31,490
Add: Non-operating income
243
378
Less: Non-operating expenses
416
353
Profit before taxation
24,010
31,515
4.2 Quarterly financial statements prepared under International Financial Reporting
Standards ("IFRS")
Consolidated Income Statement
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
Three-month periods ended 31 March 2019
Three-month periods ended 31 March 2018
Turnover and other operating revenues
Turnover
701,499
605,263
Other operating revenues
16,080
15,988
Subtotal
717,579
621,251
Operating expenses
Purchased crude oil, products and operating
supplies and expenses
(572,138)
(474,389)
Selling, general and administrative expenses
(11,575)
(16,708)
Depreciation, depletion and amortization
(25,998)
(25,111)
Exploration expenses, including dry holes
(2,543)
(2,230)
Personnel expenses
(17,361)
(16,861)
Taxes other than income tax
(60,459)
(57,719)
Other operating (expense)/income, net
(2,664)
985
Total operating expenses
(692,738)
(592,033)
Operating profit
24,841
29,218
Finance costs
Interest expense
(4,301)
(1,989)
Interest income
1,924
1,288
Foreign currency exchange income, net
47
246
Net finance costs
(2,330)
(455)
Investment income
55
217
Share of profits less losses from associates and joint ventures
2,232
3,140
Profit before taxation
24,798
32,120
Income tax expense
(5,539)
(6,993)
Profit for the period
19,259
25,127
Attributable to：
Owners of the Company
15,468
19,306
Non-controlling interests
3,791
5,821
Profit for the period
19,259
25,127
Earnings per share
Basic earnings per share (RMB)
0.128
0.159
Diluted earnings per share (RMB)
0.128
0.159
Consolidated Statement of Comprehensive Income
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
Three-month periods ended 31 March 2019
Three-month periods ended 31 March 2018
Profit for the period
19,259
25,127
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss (net of tax and after reclassification adjustments):
Financial assets at fair value through other comprehensive income
1
-
Total items that maynot be reclassifled subsequently to profit or loss
1
-
Items that may be reclassified subsequently to profit or loss:
Share of other comprehensive income of associates and joint ventures
66
148
Cash flow hedges
4,853
785
Foreign currency translation differences
(1,161)
(2,418)
Total items that may be reclassified subsequently to profit or loss
3,758
(1,485)
Total other comprehensive income
3,759
(1,485)
Total comprehensive income
23,018
23,642
Attributable to:
Shareholders of the Company
19,734
18,526
Non-controlling interests
3,284
5,116
Total comprehensive income
23,018
23,642
Consolidated Balance Sheet
as at 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
At 31 March 2019
At 31 December 2018
Non-current assets：
Property, plant and equipment, net
605,380
617,762
Construction in progress
138,584
136,963
Right-of-use assets
206,743
-
Goodwill
8,657
8,676
Interest in associates
90,332
89,537
Interest in joint ventures
57,139
56,184
Financial assets at fair value through other
comprehensive income
1,447
1,450
Deferred tax assets
19,451
21,694
Lease prepayments
64,220
64,514
Long-term prepayments and other non-current assets
82,379
91,408
Total non-current assets
1,274,332
1,088,188
Current assets:
Cash and cash equivalents
100,760
111,922
Time deposits with financial institutions
67,626
55,093
Financial assets at fair value through profit and loss
16,872
25,732
Derivatives financial assets
4,977
7,887
Trade accounts receivable and bills receivable
80,464
64,879
Inventories
219,830
184,584
Prepaid expenses and other current assets
48,584
54,023
Total current assets
539,113
504,120
Current liabilities：
Short-term debts
50,694
29,462
Loans from Sinopec Group Company and fellow subsidiaries
38,661
31,665
Derivatives financial liabilities
3,078
13,571
Trade accounts payable and bills payable
218,170
192,757
Contract liabilities
129,199
124,793
Other payables
131,929
166,151
Income tax payable
3,873
6,699
Total current liabilities
575,604
565,098
Net current liabilities
36,491
60,978
Total assets less current liabilities
1,237,841
1,027,210
Non-current liabilities：
Long-term debts
52,631
51,011
Loans from Sinopec Group Company and fellow subsidiaries
42,859
42,516
Deferred tax liabilities
6,520
5,948
Provisions
43,256
42,800
Lease liabilities
182,765
-
Other non-current liabilities
28,827
28,400
Total non-current liabilities
356,858
170,675
Total net assets
880,983
856,535
Equity：
Share capital
121,071
121,071
Reserves
617,507
596,213
Total equity attributable to owners of the Company
738,578
717,284
Non-controlling interests
142,405
139,251
Total equity
880,983
856,535
Consolidated Statement of Cash Flows
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
Three-month periods ended 31 March 2019
Three-month periods ended 31 March 2018
Net cash generated from operating activities(a)
(14,609)
12,052
Investing activities
Capital expenditure
(21,855)
(17,294)
Exploratory wells expenditure
(1,659)
(607)
Purchase of investments, investments in associates and
investments in joint ventures
(1,793)
(2,241)
Payment for acquisition of subsidiary, net of cash acquired
-
(3,188)
Proceeds from disposal of investments and investments in associates, net
9,636
13,342
Proceeds from disposal of property, plant, equipment and other non-current assets
24
-
Increase in time deposits with maturities over three months
(24,388)
(13,445)
Decrease in time deposits with maturities over three months
11,855
21,379
Interest received
1,310
(108)
Investment and dividend income received
1,288
674
Net cash used in investing activities
(25,582)
(1,488)
Financing activities
Proceeds from bank and other loans
149,622
126,432
Repayments of bank and other loans
(118,511)
(118,865)
Contributions to subsidiaries from non-controlling interests
94
70
Distributions by subsidiaries to non-controlling interests
(319)
(390)
Interest paid
(1,077)
(783)
Cash payments for the principal portion of the lease liability
(440)
-
Finance lease payment
-
(3)
Net cash used in financing activities
29,369
6,461
Net (decrease)/increase in cash and cash equivalents
(10,822)
17,025
Cash and cash equivalents at 1 January
111,922
113,218
Effect of foreign currency exchange rate changes
(340)
(455)
Cash and cash equivalents at 31 March
100,760
129,788
Note to consolidated statement of Cash Flows
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
(a) Reconciliation of profit before taxation to net cash generated from operating activities
Items
Three-month periods ended 31 March 2019
Three-month periods ended 31 March 2018
Operating activities
Profit before taxation
24,798
32,120
Adjustments for:
Depreciation, depletion and amortization
25,998
26,336
Dry hole costs written off
1,836
1,974
Share of profits from associates and joint
ventures
(2,232)
(3,140)
Investment income
(55)
(217)
Interest income
(1,924)
(1,288)
Interest expense
4,301
1,989
Loss/(gain) on foreign currency exchange rate changes and derivative financial instruments
1,295
(604)
Loss on disposal of property, plant, equipment and other non-current assets, net
85
-
Impairment reversal on assets
(136)
(13)
Credit impairment losses
19
-
Operating profit before change of operating capital
53,985
57,157
Net change
Accounts receivable and other current assets
(7,199)
7,815
Increase of inventories
(30,127)
(4,630)
Accounts payable and other current liabilities
(24,314)
(39,182)
Subtotal
(7,655)
21,160
Income tax paid
(6,954)
(9,108)
Net cash generated from operating activities
(14,609)
12,052
Segment Reporting
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
Three-month periods ended 31 March 2019
Three-month periods ended 31 March 2018
Turnover
Exploration and production
External sales
29,367
20,933
Inter-segment sales
22,089
20,269
Subtotal
51,456
41,202
Refining
External sales
34,002
33,933
Inter-segment sales
255,752
252,897
Subtotal
289,754
286,830
Marketing and distribution
External sales
321,636
310,117
Inter-segment sales
965
1,176
Subtotal
322,601
311,293
Chemicals
External sales
110,990
104,780
Inter-segment sales
17,121
15,980
Subtotal
128,111
120,760
Corporate and others
External sales
205,504
135,500
Inter-segment sales
154,677
131,516
Subtotal
360,181
267,016
Elimination of inter-segment sales
(450,604)
(421,838)
Turnover
701,499
605,263
Other operating revenues
Exploration and production
1,821
1,742
Refining
1,251
1,125
Marketing and distribution
8,850
8,892
Chemicals
3,733
3,738
Corporate and others
425
491
Other operating revenues
16,080
15,988
Turnover and other operating revenues
717,579
621,251
Result
Operating (loss)/profit
By segment
Exploration and production
2,143
(318)
Refining
11,963
19,007
Marketing and distribution
7,866
8,925
Chemicals
6,953
8,452
Corporate and others
(3,544)
(848)
Elimination
(540)
(6,000)
Total segment operating profit
24,841
29,218
Share of profits from associates and joint ventures
Exploration and production
777
276
Refining
(404)
223
Marketing and distribution
247
641
Chemicals
1,061
1,495
Corporate and others
551
505
Aggregate share of profits from associates and joint ventures
2,232
3,140
Investment income/(losses)
Exploration and production
(1)
61
Refining
10
3
Marketing and distribution
45
8
Chemicals
1
(6)
Corporate and others
-
151
Aggregate investment income
55
217
Net finance costs
(2,330)
(455)
Profit before taxation
24,798
32,120
4.3 Differences between Consolidated Financial Statements prepared in accordance with the accounting policies complying with CASs and IFRS (unaudited)
Other than the differences in the classifications of certain financial statements captions and the accounting for the items described below, there are no material differences between the Group's consolidated financial statements prepared in accordance with the accounting policies complying with CASs and IFRS. The reconciliation presented below is included as supplemental information, is not required as part of the basic financial statements and does not include differences related to classification, presentation or disclosures. Such information has not been subject to independent audit or review. The major differences are:
(i) Government Grants
Under CASs, grants from the government are credited to capital reserve if required by relevant governmental regulations. Under IFRS, government grants relating to the purchase of fixed assets are recognised as deferred income and are transferred to the income statement over the useful life of these assets.
(ii) Safety Production Fund
Under CASs, safety production fund should be recognised in profit or loss with a corresponding increase in reserve according to PRC regulations. Such reserve is reduced for expenses incurred for safety production purposes or, when safety production related fixed assets are purchased, is reduced by the purchased cost with a corresponding increase in the accumulated depreciation. Such fixed assets are not depreciated thereafter. Under IFRS, payments are expensed as incurred, or capitalised as fixed assets and depreciated according to applicable depreciation methods.
Effects of major differences between the net profit under CASs and the profit for the period under IFRS are analysed as follows:
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
Three-month periods ended 31 March 2019
Three-month periods ended 31 March 2018
Net profit under CASs
18,471
24,522
Adjustments:
Government grants (i)
13
14
Safety production fund (ii)
775
591
Profit for the period under IFRS
19,259
25,127
Effects of major differences between the shareholders' equity under CASs and the total equity under IFRS are analysed as follows:
RMB million, unaudited
Items
At 31 March 2019
At 31 December 2018
Shareholders' equity under CASs
882,094
857,659
Adjustments:
Government grants(i)
(1,111)
(1,124)
Total equity under IFRS
880,983
856,535
4.4 Adjustments to financial statements related items due to initial implementation of the New Financial Instruments Standards, New Income Standards, New Lease Standards at the beginning of the year is as below:
Consolidated Balance Sheet
RMB million
Items
At 31 December 2018
At 1 January 2019
Adjustment
Current assets:
Cash at bank and on hand
167,015
167,015
Financial assets held for trading
25,732
25,732
Derivative financial assets
7,887
7,887
Bills receivable and accounts receivable
64,879
64,879
Prepayments
5,937
5,171
(766)
Other receivables
25,312
25,312
Inventories
184,584
184,584
Other current assets
22,774
22,774
Total current assets
504,120
503,354
(766)
Non-current assets:
Long-term equity investments
145,721
145,721
Other equity instrument investments
1,450
1,450
Fixed assets
617,812
617,812
Construction in progress
136,963
136,963
Right-of-use assets
-
207,455
207,455
Intangible assets
103,855
103,855
Goodwill
8,676
8,676
Long-term deferred expenses
15,659
7,534
(8,125)
Deferred tax assets
21,694
21,694
Other non-current assets
36,358
36,358
Total non-current assets
1,088,188
1,287,518
199,330
Total assets
1,592,308
1,790,872
198,564
Current liability:
Short-term loans
44,692
44,692
Derivative financial liabilties
13,571
13,571
Bills payable and accounts payable
192,757
192,757
Contract liabilities
124,793
124,793
Employee benefits payable
7,312
7,312
Taxes payable
87,060
87,060
Other payables
77,463
77,463
Non-current liabilities due within one year
17,450
31,344
13,894
Total current liabilities
565,098
578,992
13,894
Non-current liabilities:
Long-term loans
61,576
61,576
Debentures payable
31,951
31,951
Lease liabilities
-
184,670
184,670
Provisions
42,800
42,800
Deferred tax liabilities
5,948
5,948
Other non-current liabilities
27,276
27,276
Total non-current liabilities
169,551
354,221
184,670
Total liabilities
734,649
933,213
198,564
Shareholders' equity:
Share capital
121,071
121,071
Capital reserve
119,192
119,192
Other comprehensive income
(6,774)
(6,774)
Specific reserve
1,706
1,706
Surplus reserves
203,678
203,678
Retained earnings
279,482
279,482
Total equity attributable to shareholders of the Company
718,355
718,355
Minority interests
139,304
139,304
Total shareholders' equity
857,659
857,659
Total liabilities and shareholders' equity
1,592,308
1,790,872
198,564
Balance Sheet
RMB million
Items
At 31 December 2018
At 1 January 2019
Adjustment
Current assets：
Cash at bank and on hand
82,879
82,879
Financial assets held for trading
22,500
22,500
Bills receivable and accounts receivable
30,145
30,145
Prepayments
2,488
2,488
Other receivables
57,432
57,432
Inventories
45,825
45,825
Other current assets
15,835
15,835
Total current assets
257,104
257,104
Non-current assets：
Long-term equity investments
289,207
289,207
Other equity instrument investments
395
395
Fixed assets
302,082
302,082
Construction in progress
51,598
51,598
Right-of-use assets
-
119,776
119,776
Intangible assets
8,571
8,571
Long-term deferred expenses
2,480
2,480
Deferred tax assets
11,021
11,021
Other non-current assets
9,145
9,145
Total non-current assets
674,499
794,275
119,776
Total assets
931,603
1,051,379
119,776
Current liabilities：
Short-term loans
3,961
3,961
Derivative financial liabilties
967
967
Bills payable and accounts payable
84,418
84,418
Contract liabilities
4,230
4,230
Employee benefits payable
4,294
4,294
Taxes payable
54,764
54,764
Other payables
119,514
119,514
Non-current liabilities due within one year
16,729
24,183
7,454
Total current liabilities
288,877
296,331
7,454
Non-current liabilities：
Long-term loans
48,104
48,104
Debentures payable
20,000
20,000
Lease liabilities
-
112,322
112,322
Provisions
33,094
33,094
Other non-current liabilities
4,332
4,332
Total non-current liabilities
105,530
217,852
112,322
Total liabilities
394,407
514,183
119,776
Shareholders' equity：
Share capital
121,071
121,071
Capital reserve
68,795
68,795
Other comprehensive income
(485)
(485)
Specific reserve
989
989
Surplus reserves
203,678
203,678
Retained earnings
143,148
143,148
Total shareholders' equity
537,196
537,196
Total liabilities and shareholders' equity
931,603
1,051,379
119,776
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDQRFEAELNADANEFF
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