REG - China Pet &Chem Corp - 1st Quarter Results
China Petroleum & Chemical Corporation
The First Quarterly Report for 2020
29 April 2020
Beijing, China
1 Important notice
1.1 The Board of Directors, the Board of Supervisors of China Petroleum & Chemical Corporation ("Sinopec Corp." or "the Company") and its directors, supervisors and senior management warrant that there are no false representations, misleading statements or material omissions 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 2020 was approved at the 14th meeting of the Seventh Session of the Board of Directors of Sinopec Corp. All directors attended this meeting.
1.3 Mr. Zhang Yuzhuo, Chairman, Mr. Ma Yongsheng, President, Ms. Shou Donghua, Chief Financial Officer and Head of the Financial 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 2020
As of 31 December 2019
Changes from the end of the preceding year to the end of the reporting period (%)
Total assets
1,807,539
1,755,071
3.0
Total equity attributable to equity shareholders of the Company
712,350
739,169
(3.6)
RMB million
Items
Three-month period ended 31 March
Changes over the same period of the preceding year (%)
2020
2019
Net cash flow from operating activities
(68,125)
(14,609)
-
Operating income
555,502
717,579
(22.6)
Net profit attributable to equity shareholders of the Company
(19,782)
14,763
-
Net profit attributable to equity shareholders of the Company excluding extraordinary gains and losses
(20,444)
14,370
-
Weighted average return on net assets (%)
(2.73)
2.03
(4.76) percentage points
Basic earnings per share (RMB)
(0.163)
0.122
-
Diluted earnings per share (RMB)
(0.163)
0.122
-
RMB million
Extraordinary items
During the reporting period
(income)/expenses（RMB million）
Net gain on disposal of non-current assets
(60)
Donations
73
Government grants
(1,164)
Gains on holding and disposal of various investments
(26)
Other extraordinary income and expenses, net
255
Subtotal
(922)
Tax effect
234
Total
(688)
Attributable to:
Equity shareholders of the Company
(662)
Minority interests
(26)
2.1.2 Principal financial data and indicators prepared in accordance with International Financial Reporting Standards (IFRS)
RMB million
Items
As of 31 March
2020
As of 31 December
2019
Changes from the end of the preceding year to the end of the reporting period (%)
Total assets
1,807,539
1,755,071
3.0
Total equity attributable to shareholders of the Company
711,343
738,150
(3.6)
RMB million
Items
Three-month period ended 31 March
Changes over the same period of the preceding year (%)
2020
2019
Net cash generated from operating activities
(68,125)
(14,609)
-
Operating profit
(26,305)
24,841
-
Net profit attributable to shareholders of the Company
(19,145)
15,468
-
Basic earnings per share (RMB)
(0.158)
0.128
-
Diluted earnings per share (RMB)
(0.158)
0.128
-
Return on net assets (%)
(2.69)
2.09
(4.78) 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 553,217, including 547,424 holders of domestic A shares and 5,793 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
25,389,028,547
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
997,141,120
0.82
0
A share
北京诚通金控投资有限公司
756,822,451
0.63
0
A share
中国人寿保险股份有限公司－分红－个人分红－005L－FH002沪
480,607,041
0.40
0
A share
香港中央结算有限公司
463,936,458
0.38
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
449,301,461
0.37
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
汇添富基金管理股份有限公司－社保基金1103组合
133,250,000
0.11
0
A share
Note 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－分红－个人分红－005L-FH002沪和中国人寿保险股份有限公司－传统－普通保险产品－005L-CT001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 2020, as the COVID-19 outbreak spread worldwide, the world economy faced mounting downside risk packing with notably increasing instability and uncertainty. China's GDP decreased by 6.8% year on year. Due to plunging market demand for petroleum and petrochemical products coupled with slump of crude oil price, oil and gas industry was severely impacted.
Facing the complicated and severe situation, the Company adhered to the principles of "concentrating material tasks, system optimisation, controlling risk and seizing opportunities out of crisis", coordinated epidemic prevention and control with work resumption, brought our advantages of integrated business into full play, optimised production plan, refined operation plan, adjusted products slate, optimised inventory, expanded market, and tapped potentials and reduced cost to minimize the negative impact and maintained safe and steady operations. In particular, to combat the COVID-19, we maintained a stable supply of oil and gas, made great efforts to increase production of medical-use materials, coordinated online and offline non-fuel business to facilitate our customers with wider variety of products and services, and advanced resumption of work and production with industry chain partners.
In accordance with China Accounting Standards for Business Enterprises, net profit attributable to equity shareholders of the Company was RMB -19.782 billion. In accordance with IFRS, net profit attributable to equity shareholders of the Company was RMB -19.145 billion.
Exploration and Production: Under low crude oil price environment, we pressed ahead with high-efficiency exploration and paid more efforts on profit-oriented development, reduced cost and expenditure on all fronts and accelerated the formation of an integrated value chain of natural gas business including production, supply, storage and marketing. In exploration, we focused on organisation and operation of major projects and new discovery breakthrough. In crude oil development, we pushed to build profitable production capacity, and deepened structure adjustment in mature oil fields. In natural gas development, we expanded the market and promoted a coordinated growth along the value chain. In the first quarter, oil and gas production of the Company was 112.28 million barrels of oil equivalent, among which the production of crude oil was broadly flat compared with the same period of last year. Exploration and Production Segment realised an operating profit of RMB 1.518 billion
Exploration and Production
Unit
Three-month period ended 31 March
Changes
2020
2019
(%)
Oil and gas production
million boe
112.28
113.46
(1.0)
Crude oil production
million barrels
70.65
70.81
(0.2)
China
million barrels
62.11
61.55
0.9
Overseas
million barrels
8.54
9.26
(7.8)
Natural gas production
billion cubic feet
249.68
255.79
(2.4)
Realised crude oil price
USD/barrel
49.15
57.66
(14.8)
Realised natural gas price
USD/thousand cubic feet
6.43
7.07
(9.2)
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: Facing severe situation of plunged market demand, high-level inventory and slump of crude oil price, we persistently coordinated the integration of production and marketing, optimised allocation of resources and product slate based on market demand and continuously implemented low sulfur fuel oil projects. We coordinated domestic and overseas markets and increased the export of refined oil products, maintaining a steady operation of refining facility. In the first quarter, refinery throughput was 53.74 million tonnes, decreased by 13% year on year. The refining segment's operating loss was RMB 25.794 billion.
Refining
Unit
Three-month period ended 31 March
Changes
(%)
2020
2019
Refinery throughput
million tonnes
53.74
61.78
(13.0)
Gasoline, diesel and kerosene production
million tonnes
33.00
39.44
(16.3)
Gasoline
million tonnes
13.02
15.87
(18.0)
Diesel
million tonnes
14.19
16.03
(11.5)
Kerosene
million tonnes
5.79
7.54
(23.2)
Light chemical feedstock production
million tonnes
9.84
10.07
(2.2)
Light product yield
%
75.31
76.14
(0.83)
percentage points
Refining yield
%
94.64
94.76
(0.12)
percentage points
Note: Including 100% production of domestic joint ventures.
Marketing and Distribution: To address the dramatic decline of market demand, we enhanced market analysis, pressed ahead measures for market expansion, promoted targeted marketing strategy and tapped the potentials of distribution network. In order to satisfy the market demands during the epidemic, we innovated the non-fuel business model by coordinating online and offline business with wider variety of products and services, which not only realised a beneficial exploration of the sales model but also provided convenience to our consumers. In the first quarter, total sales volume of refined oil products was 53.68 million tonnes and marketing and distribution segment's operating loss was RMB 1.536 billion.
Marketing and Distribution
Unit
Three-month period ended 31 March
Changes
(%)
2020
2019
Total sales volume of refined oil products
million tonnes
48.61
62.37
(22.1)
Total domestic sales volume of refined oil products
million tonnes
32.48
45.61
(28.8)
Retail
million tonnes
21.83
30.20
(27.7)
Direct sales & Distribution
million tonnes
10.65
15.41
(30.9)
Annualized average throughput per station
tonnes
2,844
3,939
(27.8)
Note: The total sales volume of refined oil products includes the amount of trading volume.
Chemicals: Under the circumstances of dramatic demand decline and price tumble of chemical products, we actively optimised resources allocation, reduced feedstock cost, adjusted operation plan and enhanced the dynamic optimisation of facilities and product chain, and improved the utilisation and production scheduling based on market demand. Giving full play to our industry advantages, we extended business value chain by increasing production of medical-use materials to ensure market supply. We put more efforts on market expansion to create space for production optimisation and adjustment as well as facilities stable operation. In the first quarter, the ethylene production was 3.026 million tonnes, being flat compared with the same period of last year, synthetic resin production increased by 2.8% year on year. The total chemical sales volume was 17.95 million tonnes. The Chemical segment's operating loss was RMB 1.568 billion.
Chemicals
Unit
Three-month period ended 31 March
Changes
(%)
2020
2019
Ethylene
thousand tonnes
3,026
3,049
(0.8)
Synthetic resin
thousand tonnes
4,293
4,178
2.8
Synthetic rubber
thousand tonnes
256
271
(5.5)
Monomers and polymers for synthetic fibre
thousand tonnes
2,333
2,575
(9.4)
Synthetic fibre
thousand tonnes
266
322
(17.4)
Note: Including 100% production of domestic joint ventures.
Capital expenditure: In the first quarter, total capital expenditures of the Company was RMB 13.2 billion. Capital expenditure for the exploration and production segment was RMB 6.1 billion, mainly for Shengli and Northwest crude oil development projects, Fuling and Weirong shale gas projects. Capital expenditure for the refining segment was RMB 2.4 billion, mainly for Zhongke Refining and Petrochemical project, Zhenhai, Tianjin, Maoming and Beihai refining upgrading projects, low sulfur fuel oil projects and high-end carbon materials projects. Capital expenditure for the marketing and distribution segment was RMB 2.6 billion, mainly for construction of service stations, refined oil products depots and non-fuel businesses. Capital expenditure for the chemicals segment was RMB 2.1 billion, mainly for Zhongke Refining and Petrochemical project, Zhenhai, Gulei, Sinopec-SK ethylene projects renovation, Hainan ethylene projects.
2.4 Business Prospects
China's epidemic prevention and control trend has been further consolidated, the country's economic and social activities have gradually returned to normal, the production and living order has been restored at a faster pace, and the pent-up demand for petroleum and petrochemical products is being released. Under this opportunity, we have initiated a campaign that will last for 100 days to address the tough challenges and to improve performance. With management and staffs joint efforts, we are to reinforce measures on market expansion, operations optimisation, cost reduction, tapping potentials, and maintaining safe and steady operations, to minimise the negative impact of the epidemic. We will adjust dynamically the production and operation arrangement and the investment plan, focusing on achieving a high-quality and more profitable operation. While ensuring prevention and control of the pandemic and maintaining safe and stable operation, we will give priority to the following tasks:
More vigorous efforts on market expansion. We will keep pace with the market recovery and the industry utilisation rate to seize the market opportunities, provide targeted services to reinforce the market share. Through innovation of business model and analysis of consumption demand changes, we will exploit potential demand to expand market share. By giving full play to the advantages of the industry chain, we will strengthen cooperation with partner and realise coordinative development.
More vigorous efforts on optimisation and adjustment. We will bring our advantages of integrated business into full play, refine the allocation of resources, and coordinate all the activities including procurement, transportation, production, storage and marketing. In the E&P segment, we will strengthen the overall coordination of "investment, reserves, output, cost, and profit". In the mid- and down-stream, we will coordinate the operation, feedstock slate, product mix and regional resources, accelerate advantages cultivation and production capacity building, and reinforce the effort in the integration of the production with the marketing.
More vigorous efforts on tapping potentials and cost reduction. We will conduct fine management and strengthen cost control involving all employees, covering all resources and conducting in all processes. We will improve the capital efficiency, expand financing channels and reduce financing cost.
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
2020
As of 31
December
2019
Increase/(Decrease)
Main reasons for changes
Amount
Percentage
RMB million
RMB million
RMB million
（%）
Financial assets held for trading
2,012
3,319
(1,307)
(39.4)
Receipt of the structured deposits at maturity
Derivative financial assets
14,459
837
13,622
1,627.5
Changes of fair value loss and profit position of derivative hedging financial instruments due to fluctuation of crude oil price
Derivative financial liabilities
26,362
2,729
23,633
866.0
Prepayments
7,296
5,066
2,230
44.0
Increase in projects down payment
Other receivables
57,149
24,109
33,040
137.0
Increase in margin deposit in financial derivatives business due to decline of crude oil price
Short-term loans
98,203
31,196
67,007
214.8
Increase in low-interest short-term loans
Taxes payable
37,622
69,339
(31,717)
(45.7)
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 current liabilities
19,997
-
19,997
-
Issuing short-term debentures payable of RMB 20 billion
Long-term loans
52,870
39,625
13,245
33.4
Increase in project loans of subsidiaries
Other comprehensive income
(7,983)
(321)
(7,662)
-
Increase in fair value loss of hedging business for crude oil
Items of Consolidated Income Statement
For three-month period ended 31 March
Increase/(Decrease)
Main reasons for changes
2020
2019
Amount
Percentage
RMB Million
RMB Million
RMB Million
（%）
Gains/ (losses) from
changes in fair value
8,342
(2,226)
10,568
-
Increase in fair value profit on derivative financial instruments not qualified as hedging
Impairment losses
(10,360)
136
(10,496)
-
Increase of inventory impairment
Items of consolidated cash flow statement
For three-month period ended 31 March
Increase/(Decrease)
Main reasons for changes
2020
2019
Amount
Percentage
RMB
million
RMB
million
RMB million
（%）
Other cash paid relating to operating activities
(59,028)
(39,806)
(19,222)
-
Mainly due to increase in margin deposit of financial derivative business
Cash received from disposal of investments
3,402
9,636
(6,234)
(64.7)
Decrease in structured deposits at maturity
Other cash received relating to investing activities
19,162
13,165
5,997
45.6
Increase in value of certificate of deposit, over three months, expired and recovered
Other cash paid relating to investing activities
(14,094)
(24,388)
10,294
-
Decrease in the value of certificate of deposit, over three months
Cash received from borrowings
274,615
149,622
124,993
83.5
Increase in low-interest short-term loans
Cash repayments of borrowings
(172,518)
(118,511)
(54,007)
-
Increase in repayment of short-term loans at maturity
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
Zhang Yuzhuo
29 April, 2020
4 Appendix
4.1 Quarterly financial statements prepared under China Accounting Standards for Business Enterprises (CASs)
Consolidated Balance Sheet
as at 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
At 31 March 2020
At 31 December 2019
Current assets:
Cash at bank and on hand
138,773
127,927
Financial assets held for trading
2,012
3,319
Derivative financial assets
14,459
837
Accounts receivable
54,246
54,865
Receivables financing
8,746
8,622
Prepayments
7,296
5,066
Other receivables
57,149
24,109
Inventories
183,277
192,442
Other current assets
30,074
28,669
Total current assets
496,032
445,856
Non-current assets:
Long-term equity investments
152,561
152,204
Other equity instrument investments
1,525
1,521
Fixed assets
611,564
622,423
Construction in progress
177,021
173,482
Right-of-use assets
197,349
198,051
Intangible assets
108,039
108,956
Goodwill
8,716
8,697
Long-term deferred expenses
8,531
8,930
Deferred tax assets
29,343
17,616
Other non-current assets
16,858
17,335
Total non-current assets
1,311,507
1,309,215
Total assets
1,807,539
1,755,071
Current liability:
Short-term loans
98,203
31,196
Derivative financial liabilities
26,362
2,729
Bills payable
14,479
11,834
Accounts payable
154,103
187,958
Contract liabilities
137,563
126,735
Employee benefits payable
7,126
4,769
Taxes payable
37,622
69,339
Other payables
73,908
72,324
Non-current liabilities due within one year
69,903
69,490
Other current liabilities
19,997
-
Total current liabilities
639,266
576,374
Non-current liabilities:
Long-term loans
52,870
39,625
Debentures payable
19,349
19,157
Lease liabilities
178,774
177,674
Provisions
43,375
43,163
Deferred tax liabilities
7,273
6,809
Other non-current liabilities
18,966
15,364
Total non-current liabilities
320,607
301,792
Total liabilities
959,873
878,166
Shareholders' equity:
Share capital
121,071
121,071
Capital reserve
122,128
122,127
Other comprehensive income
(7,983)
(321)
Specific reserve
2,365
1,741
Surplus reserves
207,423
207,423
Retained earnings
267,346
287,128
Total equity attributable to shareholders of the Company
712,350
739,169
Minority interests
135,316
137,736
Total shareholders' equity
847,666
876,905
Total liabilities and shareholders' equity
1,807,539
1,755,071
Zhang Yuzhuo Ma Yongsheng
Shou Donghua
Chairman President Chief Financial Officer
Balance Sheet
as at 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
At 31 March 2020
At 31 December 2019
Current assets：
Cash at bank and on hand
70,783
54,072
Derivative financial assets
940
940
Accounts receivable
22,184
21,544
Receivables financing
751
207
Prepayments
3,685
2,665
Other receivables
75,833
78,872
Inventories
40,926
49,116
Other current assets
22,555
25,149
Total current assets
237,657
232,565
Non-current assets：
Long-term equity investments
306,225
304,687
Other equity instrument investments
395
395
Fixed assets
284,804
291,547
Construction in progress
62,353
60,493
Right-of-use assets
112,968
112,832
Intangible assets
8,654
8,809
Long-term deferred expenses
2,390
2,630
Deferred tax assets
15,847
7,315
Other non-current assets
2,314
2,490
Total non-current assets
795,950
791,198
Total assets
1,033,607
1,023,763
Current liabilities：
Short-term loans
64,609
19,919
Derivative financial liabilities
157
157
Bills payable
4,862
4,766
Accounts payable
70,495
75,352
Contract liabilities
4,769
5,112
Employee benefits payable
2,903
1,214
Taxes payable
25,033
43,025
Other payables
108,861
118,064
Non-current liabilities due within one year
59,775
59,596
Other current liabilities
19,997
-
Total current liabilities
361,461
327,205
Non-current liabilities：
Long-term loans
12,125
12,680
Debentures payable
7,000
7,000
Lease liabilities
108,782
107,783
Provisions
34,825
34,514
Other non-current liabilities
4,337
4,471
Total non-current liabilities
167,069
166,448
Total liabilities
528,530
493,653
Shareholders' equity：
Share capital
121,071
121,071
Capital reserve
68,841
68,841
Other comprehensive income
(6,322)
1,181
Specific reserve
1,241
949
Surplus reserves
207,423
207,423
Retained earnings
112,823
130,645
Total shareholders' equity
505,077
530,110
Total liabilities and shareholders' equity
1,033,607
1,023,763
Zhang Yuzhuo Ma Yongsheng Shou Donghua
Chairman President Chief Financial Officer
Consolidated Income Statement
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Three-month period
ended 31 March
2020
Three-month period
ended 31 March
2019
I. Operating income
555,502
717,579
II. Total Operating costs
583,107
693,269
Including: Operating costs
499,274
596,412
Taxes and surcharges
49,691
60,459
Selling and distribution expenses
14,653
14,748
General and administrative expenses
14,128
15,485
Research and development costs
1,083
1,292
Financial expenses
2,010
2,330
Exploration expenses,
including dry holes
2,268
2,543
Add: Other income
1,100
761
Investment income
153
1,285
Gains/(losses) from
changes in fair value
8,342
(2,226)
Credit impairment losses
5
(19)
Impairment losses
(10,360)
136
Asset disposal gains/(losses)
60
(64)
III. Operating profit
(28,305)
24,183
Add: Non-operating income
215
243
Less: Non-operating expenses
471
416
IV. Profit before taxation
(28,561)
24,010
Less: Income tax expense
(7,529)
5,539
V. Net profit
(21,032)
18,471
Classification by going concern:
(i) Continuous operating net profit
(21,032)
18,471
(ii) Termination of net profit
-
-
Classification by ownership:
(i)Equity shareholders of the
Company
(19,782)
14,763
(ii) Minority interests
(1,250)
3,708
Consolidated Income Statement (Continued)
VI. Other comprehensive income
(7,360)
3,759
Items that may not be reclassified subsequently to profit or loss:
Changes in fair value of other equity instrument investments
-
1
Items that may be reclassified subsequently to profit or loss:
Other comprehensive income that can be converted into profit or loss under the equity method
(76)
66
Cash flow hedges
(8,401)
4,853
Foreign currency translation differences
1,117
(1,161)
VII. Total comprehensive income
(28,392)
22,230
Equity shareholders of the Company
(27,103)
19,029
Minority interests
(1,289)
3,201
VIII. Earnings per share:
(i) Basic earnings per share
(RMB/Share)
(0.163)
0.122
(ii) Diluted earnings per
share (RMB/Share)
(0.163)
0.122
Zhang Yuzhuo Ma Yongsheng Shou Donghua
Chairman President Chief Financial Officer
Income Statement
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Three-month period
ended 31 March 2020
Three-month period
ended 31 March 2019
I.Operating income
199,942
249,978
Less: Operating costs
171,987
191,844
Taxes and surcharges
32,996
40,952
Selling and distribution expenses
724
754
General and administrative expenses
6,992
7,612
Research and development costs
1,034
1,197
Financial expenses
2,050
1,635
Exploration expenses,
including dry holes
1,936
2,429
Add: Other income
896
631
Investment income
814
1,777
Gains from changes in
fair value
400
20
Credit impairment losses
31
5
Impairment losses
(7,992)
-
Asset disposal gains/ (losses)
1
(1)
II. Operating profit
(23,627)
5,987
Add: Non-operating income
33
34
Less: Non-operating expenses
232
147
III. Profit before taxation
(23,826)
5,874
Less: Income tax expense
(6,002)
1,003
IV. Net profit
(17,824)
4,871
(i) Continuous operating net profit
(17,824)
4,871
(ii) Termination of net profit
-
-
V. Other comprehensive income
(7,387)
817
Items that may be reclassified subsequently to profit or loss
Other comprehensive loss that can be converted into profit or loss under the equity method
49
(33)
Cash flow hedges
(7,436)
850
VI. Total comprehensive income
(25,211)
5,688
Zhang Yuzhuo Ma Yongsheng Shou Donghua
Chairman President Chief Financial Officer
Consolidated Cash Flow Statement
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Three-month period
ended 31 March 2020
Three-month period
ended 31 March 2019
I. Cash flows from operating activities:
Cash received from sale of goods and
rendering of services
600,228
760,693
Refund of taxes and levies
818
760
Other cash received relating to operating
activities
35,326
31,379
Sub-total of cash inflows
636,372
792,832
Cash paid for goods and services
(544,121)
(625,310)
Cash paid to and for employees
(16,826)
(17,224)
Payments of taxes and levies
(84,522)
(125,101)
Other cash paid relating to operating
activities
(59,028)
(39,806)
Sub-total of cash outflows
(704,497)
(807,441)
Net cash flow from operating activities
(68,125)
(14,609)
II.Cash flows from investing activities:
Cash received from disposal of investments
3,402
9,636
Cash received from returns on investments
986
1,288
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
18
24
Other cash received relating to investing
activities
19,162
13,165
Sub-total of cash inflows
23,568
24,113
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
(22,327)
(23,514)
Cash paid for acquisition of investments
(1,672)
(1,793)
Other cash paid relating to investing
activities
(14,094)
(24,388)
Sub-total of cash outflows
(38,093)
(49,695)
Net cash flow from investing activities
(14,525)
(25,582)
III.Cash flows from financing activities:
Cash received from capital contributions
260
94
Including: Cash received from minority shareholders' capital contributions to subsidiaries
260
94
Cash received from borrowings
274,615
149,622
Consolidated Cash Flow Statement (Continued)
Other cash received relating to financing activities
276
190
Sub-total of cash inflows
275,151
149,906
Cash repayments of borrowings
(172,518)
(118,511)
Cash paid for dividends, profits
distribution or interest
(1,557)
(1,396)
Including: Subsidiaries' cash payments for distribution of dividends or profits to minority shareholders
(160)
(235)
Other cash paid relating to financing
activities
(3,492)
(630)
Sub-total of cash outflows
(177,567)
(120,537)
Net cash flow from financing activities
97,584
29,369
IV. Effects of changes in foreign exchange rate
553
(340)
V. Net increase/(decrease) in cash and cash equivalents
15,487
(11,162)
Add：Initial balance of cash and cash equivalents
60,313
111,922
VI. Ending balance of cash and cash equivalents
75,800
100,760
Zhang Yuzhuo Ma Yongsheng Shou Donghua
Chairman President Chief Financial Officer
Cash Flow Statement
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Three-month period
ended 31 March 2020
Three-month period
ended 31 March 2019
I.Cash flows from operating activities:
Cash received from sale of goods and rendering of services
217,331
280,152
Refund of taxes and levies
798
519
Other cash received relating to operating activities
1,619
757
Sub-total of cash inflows
219,748
281,428
Cash paid for goods and services
(175,248)
(208,261)
Cash paid to and for employees
(8,835)
(9,274)
Payments of taxes and levies
(53,244)
(76,898)
Other cash paid relating to operating activities
(5,349)
(2,939)
Sub-total of cash outflows
(242,676)
(297,372)
Net cash flow from operating activities
(22,928)
(15,944)
II.Cash flows from investing activities:
Cash received from disposal of investments
4,759
9,285
Cash received from returns on investments
1,224
1,270
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
3
3
Other cash received relating to investing activities
44,575
9,933
Sub-total of cash inflows
50,561
20,491
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
(9,307)
(7,459)
Cash paid for acquisition of investments
(2,807)
(1,376)
Other cash paid relating to investing activities
(47,607)
(10,800)
Sub-total of cash outflows
(59,721)
(19,635)
Net cash flow from investing activities
(9,160)
856
III.Cash flows from financing activities:
Cash received from borrowings
130,458
39,186
Other cash received relating to financing activities
57,475
-
Sub-total of cash inflows
187,933
39,186
Cash repayments of borrowings
(66,328)
(35,016)
Cash paid for dividends or interest
(875)
(1,476)
Other cash paid relating to financing activities
(72,108)
(266)
Sub-total of cash outflows
(139,311)
(36,758)
Net cash flow from financing activities
48,622
2,428
Cash Flow Statement (Continued)
IV. Net increase/(decrease) in cash and cash equivalents
16,534
(12,660)
Add：Initial balance of cash and cash equivalents
38,616
59,120
V. Ending balance of cash and cash equivalents
55,150
46,460
Zhang Yuzhuo Ma Yongsheng Shou Donghua
Chairman President Chief Financial Officer
Segment Reporting
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Three-month period
ended 31 March 2020
Three-month period
ended 31 March 2019
Income from principal operations
Exploration and production
External sales
26,944
29,367
Inter-segment sales
18,238
22,089
Subtotal
45,182
51,456
Refining
External sales
25,145
34,002
Inter-segment sales
217,468
255,752
Subtotal
242,613
289,754
Marketing and distribution
External sales
248,725
321,636
Inter-segment sales
1,226
965
Subtotal
249,951
322,601
Chemicals
External sales
71,815
110,990
Inter-segment sales
10,884
17,121
Subtotal
82,699
128,111
Corporate and others
External sales
170,003
205,504
Inter-segment sales
131,839
154,677
Subtotal
301,842
360,181
Elimination of inter-segment sales
(379,655)
(450,604)
Consolidated income from principal operations
542,632
701,499
Income from other operations
Exploration and production
1,272
1,821
Refining
932
1,251
Marketing and distribution
6,939
8,850
Chemicals
3,401
3,733
Corporate and others
326
425
Consolidated income from other operations
12,870
16,080
Segment Reporting (Continued)
Consolidated operating income
555,502
717,579
Operating (loss)/profit
By segment
Exploration and production
404
1,581
Refining
(26,299)
11,481
Marketing and distribution
(2,621)
7,990
Chemicals
(1,767)
6,827
Corporate and others
(5,667)
(582)
Elimination
-
(540)
Total segment operating profit
(35,950)
26,757
Investment income
Exploration and production
476
777
Refining
(680)
(394)
Marketing and distribution
657
215
Chemicals
(66)
1,047
Corporate and others
(234)
(360)
Total segment investment income
153
1,285
Financial expenses
(2,010)
(2,330)
Gains/(losses) from changes in fair value
8,342
(2,226)
Asset disposal gains/(losses)
60
(64)
Other income
1,100
761
Operating profit
(28,305)
24,183
Add: Non-operating income
215
243
Less: Non-operating expenses
471
416
Profit before taxation
(28,561)
24,010
4.2 Quarterly financial statements prepared under International Financial Reporting
Standards (IFRS)
Consolidated Income Statement
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Three-month period
ended 31 March 2020
Three-month period
ended 31 March 2019
Turnover and other operating revenues
Turnover
542,632
701,499
Other operating revenues
12,870
16,080
Subtotal
555,502
717,579
Operating expenses
Purchased crude oil, products and operating
supplies and expenses
(484,322)
(572,138)
Selling, general and administrative expenses
(10,488)
(11,575)
Depreciation, depletion and amortisation
(25,070)
(25,998)
Exploration expenses, including dry holes
(2,268)
(2,543)
Personnel expenses
(18,844)
(17,361)
Taxes other than income tax
(49,691)
(60,459)
Other operating revenue/(expense), net
8,876
(2,664)
Total operating expenses
(581,807)
(692,738)
Operating profit
(26,305)
24,841
Finance costs
Interest expense
(3,896)
(4,301)
Interest income
1,085
1,924
Foreign currency exchange loss, net
801
47
Net finance costs
(2,010)
(2,330)
Investment income
29
55
Share of profits less losses from associates and joint ventures
472
2,232
Profit before taxation
(27,814)
24,798
Income tax expense
7,529
(5,539)
Profit for the period
(20,285)
19,259
Attributable to：
Owners of the Company
(19,145)
15,468
Non-controlling interests
(1,140)
3,791
Profit for the period
(20,285)
19,259
Earnings per share
Basic earnings per share (RMB)
(0.158)
0.128
Diluted earnings per share (RMB)
(0.158)
0.128
Consolidated Statement of Comprehensive Income
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Three-month period ended 31 March 2020
Three-month period ended 31 March 2019
Profit for the period
(20,285)
19,259
Other comprehensive income:
(7,360)
3,759
Items that may not be reclassified subsequently to profit or loss:
Equity investments at fair value through other comprehensive income
-
1
Items that may be reclassified subsequently to profit or loss:
Share of other comprehensive income of associates and joint ventures
(76)
66
Cash flow hedges
(8,401)
4,853
Foreign currency translation differences
1,117
(1,161)
Total comprehensive income
(27,645)
23,018
Attributable to:
Shareholders of the Company
(26,466)
19,734
Non-controlling interests
(1,179)
3,284
Consolidated Balance Sheet
as at 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
At 31 March 2020
At 31 December 2019
Non-current assets：
Property, plant and equipment, net
611,508
622,409
Construction in progress
177,021
173,482
Right-of-use assets
266,992
267,860
Goodwill
8,716
8,697
Interest in associates
96,691
95,737
Interest in joint ventures
55,870
56,467
Financial assets at fair value through other
comprehensive income
1,525
1,521
Deferred tax assets
29,343
17,616
Long-term prepayments and other non-current assets
63,841
65,426
Total non-current assets
1,311,507
1,309,215
Current assets:
Cash and cash equivalents
75,800
60,313
Time deposits with financial institutions
62,973
67,614
Financial assets at fair value through profit and loss
2,012
3,319
Derivatives financial assets
14,459
837
Trade accounts receivable and bills receivable
54,246
54,865
Financial assets at fair value through other comprehensive income
8,746
8,622
Inventories
183,277
192,442
Prepaid expenses and other current assets
94,519
57,844
Total current assets
496,032
445,856
Current liabilities：
Short-term debts
97,476
40,521
Loans from Sinopec Group Company and fellow subsidiaries
73,290
43,289
Lease liabilities
15,586
15,198
Derivatives financial liabilities
26,362
2,729
Trade accounts payable and bills payable
168,582
199,792
Contract liabilities
137,563
126,735
Other payables
119,729
144,846
Income tax payable
678
3,264
Total current liabilities
639,266
576,374
Consolidated Balance Sheet (Continued)
Net current liabilities
143,234
130,518
Total assets less current liabilities
1,168,273
1,178,697
Non-current liabilities：
Long-term debts
56,235
49,156
Loans from Sinopec Group Company and fellow subsidiaries
15,984
9,626
Lease liabilities
178,774
177,674
Deferred tax liabilities
7,273
6,809
Provisions
43,375
43,163
Other non-current liabilities
20,024
16,434
Total non-current liabilities
321,665
302,862
Total net assets
846,608
875,835
Equity：
Share capital
121,071
121,071
Reserves
590,272
617,079
Total equity attributable to shareholders of the Company
711,343
738,150
Non-controlling interests
135,265
137,685
Total equity
846,608
875,835
Consolidated Statement of Cash Flows
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Three-month period ended 31 March 2020
Three-month period ended 31 March 2019
Net cash generated from operating activities(a)
(68,125)
(14,609)
Investing activities
Capital expenditure
(20,432)
(21,855)
Exploratory wells expenditure
(1,895)
(1,659)
Purchase of investments, investments in associates and
investments in joint ventures
(1,672)
(1,793)
Proceeds from disposal of investments and investments in associates
3,402
9,636
Proceeds from disposal of property, plant, equipment and other non-current assets
18
24
Increase in time deposits with maturities over three months
(13,912)
(24,388)
Decrease in time deposits with maturities over three months
18,553
11,855
Interest received
609
1,310
Investment and dividend income received
986
1,288
Repayments of other investing activities
(182)
-
Net cash used in investing activities
(14,525)
(25,582)
Financing activities
Proceeds from bank and other loans
274,615
149,622
Repayments of bank and other loans
(172,518)
(118,511)
Contributions to subsidiaries from non-controlling interests
260
94
Distributions by subsidiaries to non-controlling interests
(160)
(319)
Interest paid
(1,397)
(1,077)
Payments made to acquire non-controlling interests
(1,117)
-
Repayments of lease liabilities
(2,375)
(440)
Proceeds from other financing activities
276
-
Net cash used in financing activities
97,584
29,369
Net increase/ (decrease) in cash and cash equivalents
14,934
(10,822)
Cash and cash equivalents at 1 January
60,313
111,922
Effect of foreign currency exchange rate changes
553
(340)
Cash and cash equivalents at 31 March
75,800
100,760
Note to consolidated statement of Cash Flows
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
(a) Reconciliation of profit before taxation to net cash generated from operating activities
Items
Three-month period ended 31 March 2020
Three-month period ended 31 March 2019
Operating activities
Profit before taxation
(27,814)
24,798
Adjustments for:
Depreciation, depletion and amortisation
25,070
25,998
Dry hole costs written off
1,863
1,836
Share of profits from associates and joint ventures
(472)
(2,232)
Investment income
(29)
(55)
Interest income
(689)
(1,924)
Interest expense
3,683
4,301
Gain/(loss) on foreign currency exchange rate changes and derivative financial instruments
(8,589)
1,295
Gain/(loss) on disposal of property, plant, equipment and other non-current assets, net
(3)
85
Impairment reversal on assets
10,360
(136)
Credit impairment losses
(5)
19
Operating profit before change of operating capital
3,375
53,985
Accounts receivable and other current assets
(48,286)
(7,199)
Inventories
(1,163)
(30,127)
Accounts payable and other current liabilities
(16,994)
(24,314)
Subtotal
(63,068)
(7,655)
Income tax paid
(5,057)
(6,954)
Net cash generated from operating activities
(68,125)
(14,609)
Segment Reporting
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Three-month period ended 31 March 2020
Three-month period ended 31 March 2019
Turnover
Exploration and production
External sales
26,944
29,367
Inter-segment sales
18,238
22,089
Subtotal
45,182
51,456
Refining
External sales
25,145
34,002
Inter-segment sales
217,468
255,752
Subtotal
242,613
289,754
Marketing and distribution
External sales
248,725
321,636
Inter-segment sales
1,226
965
Subtotal
249,951
322,601
Chemicals
External sales
71,815
110,990
Inter-segment sales
10,884
17,121
Subtotal
82,699
128,111
Corporate and others
External sales
170,003
205,504
Inter-segment sales
131,839
154,677
Subtotal
301,842
360,181
Elimination of inter-segment sales
(379,655)
(450,604)
Turnover
542,632
701,499
Other operating revenues
Exploration and production
1,272
1,821
Refining
932
1,251
Marketing and distribution
6,939
8,850
Chemicals
3,401
3,733
Corporate and others
326
425
Other operating revenues
12,870
16,080
Turnover and other operating revenues
555,502
717,579
Result
Operating (loss)/profit
Segment Reporting (Continued)
By segment
Exploration and production
1,518
2,143
Refining
(25,794)
11,963
Marketing and distribution
(1,536)
7,866
Chemicals
(1,568)
6,953
Corporate and others
1,075
(3,544)
Elimination
-
(540)
Total segment operating profit
(26,305)
24,841
Share of profits from associates and joint ventures
Exploration and production
476
777
Refining
(682)
(404)
Marketing and distribution
287
247
Chemicals
(76)
1,061
Corporate and others
467
551
Aggregate share of profits from associates and joint ventures
472
2,232
Investment income/(losses)
Exploration and production
-
(1)
Refining
2
10
Marketing and distribution
14
45
Chemicals
8
1
Corporate and others
5
-
Aggregate investment income
29
55
Net finance costs
(2,010)
(2,330)
Profit before taxation
(27,814)
24,798
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 recognized 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 recognized 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
Units: million Currency: RMB Type: unaudited
Items
Three-month period ended 31 March 2020
Three-month period ended 31 March 2019
Net profit under CASs
(21,032)
18,471
Adjustments:
Government grants (i)
12
13
Safety production fund (ii)
735
775
Profit for the period under IFRS
(20,285)
19,259
Effects of major differences between the shareholders' equity under CASs and the total equity under IFRS are analysed as follows:
Units: million Currency: RMB Type: unaudited
Items
At 31 March 2020
At 31 December 2019
Shareholders' equity under CASs
847,666
876,905
Adjustments:
Government grants(i)
(1,058)
(1,070)
Total equity under IFRS
846,608
875,835
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.ENDQRFEAPLNASLEEEA
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