REG - China Pet &Chem Corp - 3rd Quarter Results
China Petroleum & Chemical Corporation
The Third Quarterly Report for 2018
30 October 2018
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 third quarterly report for 2018 (the "Quarterly Report") was approved at the 4th meeting of the Seventh Session of the Board of Directors of Sinopec Corp. All the directors attended this meeting.
1.3 Mr. Dai Houliang, Chairman of the Board of Directors and President, Mr. Wang Dehua, Chief Financial Officer and Head of the Corporate Financial Department of Sinopec Corp. warrant the authenticity, accuracy and completeness of the financial statements contained in the Quarterly Report.
1.4 The financial statements in the 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 PRC Accounting Standards for Business Enterprises ("ASBE")
RMB million
Items
As of 30 September
2018
As of 31 December
2017
Changes from the end of last year to the end of the reporting period (%)
Total assets
1,662,760
1,595,504
4.2
Total equity attributable to equity shareholders of the Company
722,317
727,244
(0.7)
Items
Nine Months
Changes compare with the same period last year (%)
2018
2017
Net cash flow from operating activities
137,919
111,193
24.0
Operating income
2,072,970
1,744,955
18.8
Net profit attributable to equity shareholders of the Company
59,980
38,373
56.3
Net profit attributable to equity shareholders of the Company excluding extraordinary gains and losses
57,150
36,718
55.6
Weighted average return on net assets (%)
8.28
5.37
2.91
percentage points
Basic earnings per share (RMB)
0.495
0.317
56.3
Diluted earnings per share (RMB)
0.495
0.317
56.3
Extraordinary (gain)/loss items
Third Quarter 2018
RMB million
Nine Months 2018
RMB million
Net loss/(gain) on disposal of non-current assets
143
(75)
Donations
27
84
Government grants
(1,709)
(3,742)
Gains on holding and disposal of various investments
(525)
(993)
Other extraordinary income and expenses, net
549
763
Subtotal
(1,515)
(3,963)
Tax effect
338
994
Total
(1,177)
(2,969)
Equity shareholders of the Company
(1,021)
(2,830)
Minority interests
(156)
(139)
2.1.2 Principal financial data and indicators prepared in accordance with International Financial Reporting standards ("IFRS")
RMB million
As of 30 September
2018
As of 31 December
2017
Changes from the end of last year to the end of the reporting period (%)
Total assets
1,662,760
1,595,504
4.2
Equity attributable to equity shareholders of the Company
721,261
726,120
(0.7)
Nine Months
Changes compare with the same period last year (%)
2018
2017
Operating profit
85,865
55,757
54.0
Net profit attributable to equity shareholders of the Company
60,155
39,404
52.7
Basic earnings per share (RMB)
0.497
0.325
52.7
Diluted earnings per share (RMB)
0.497
0.325
52.7
Return on net assets (%)
8.34
5.51
2.83
percentage points
Net cash generated from operating activities
137,919
111,193
24.0
2.2 Total number of shareholders and top ten shareholders at the end of the reporting period
Total number of shareholders
444,254, including 438,434 shareholders of domestic A shares and 5,820 shareholders of overseas H shares.
Top ten shareholders (Top ten shareholders holding shares without selling restrictions)
Name of shareholders
Total number of shares held
Percentage
(%)
Number of shares subject to pledge or lock-ups
Nature of shareholder
China Petrochemical Corporation
83,309,227,393
68.81
0
State-owned share
HKSCC (Nominees) Limited 1
25,393,600,612
20.97
Unknown
H share
中国证券金融股份有限公司
2,607,552,057
2.15
0
A share
国新投资有限公司
1,241,918,354
1.03
0
A share
北京诚通金控投资有限公司
1,241,721,854
1.03
0
A share
香港中央结算有限公司
1,071,108,784
0.88
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－分红－个人分红－005L－FH002沪
137,083,192
0.11
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
109,690,765
0.09
0
A share
中国工商银行－上证50交易型开放式指数证券投资基金
92,194,730
0.08
0
A share
Note 1: 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and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 three quarters of 2018, global economy recorded slow recovery, while China economy maintained an overall stable performance securing progress in its economic development with gross domestic product (GDP) up by 6.7% year on year. International crude oil prices fluctuated with upward trend. The average spot price of Platts Brent of the period increased by 39.0% year on year. While the domestic demand for oil products maintained steady growth, the market witnessed strong competition because of abundant supply. According to the statistics of NDRC, domestic consumption of refined oil products increased by 5.4% compared with the same period last year, among which gasoline consumption increased by 6.4%, consumption growth for kerosene and diesel was 9.2% and 3.7%, respectively. Domestic demand for natural gas recorded high growth rate, up by 18.0% compared with the same period last year. Domestic consumption of major chemicals maintained significant growth with consumption of ethylene equivalent up by 7.8% year on year, and gross margin for chemical products remained at a high level.
In accordance with ASBE, net profit attributable to equity shareholders of the Company was RMB 59.980 billion, up by 56.3% compared with the same period last year. In accordance with IFRS, net profit attributable to equity shareholders of the Company was RMB 60.155 billion, up by 52.7% compared with the same period last year.
Exploration and Production: With the recovery of crude oil price, the Company pursued efficient exploration and effective production to increase proved reserves. Our continuing efforts in exploration paid off with new oil and gas discoveries in Sichuan Basin, Tarim Basin, Yin'e Basin and southern Songliao Basin. In development, we adopted a profit-oriented approach to speed up the crude oil new production. We also accelerated natural gas development by enhancing production-supply-storage-marketing system building to realise synergy along the entire value chain. In the first three quarters, oil and gas production of the Company was 335.34 million barrels of oil equivalent, of which domestic crude oil production increased by 0.2% while natural gas grew by 5.9%. The Exploration and Production Segment's operating loss narrowed by RMB 25.442 billion to RMB 1.081 billion compared with same period last year.
Exploration and Production
Unit
For nine-month period ended 30 September
Changes
2018
2017
(%)
Oil and gas production2
million boe
335.34
332.63
0.8
Crude oil production
million barrels
216.49
220.21
(1.7)
China
million barrels
186.50
186.09
0.2
Overseas
million barrels
29.82
34.12
(12.6)
Natural gas production
billion cubic feet
713.77
674.15
5.9
Realised crude oil price
USD/barrel
65.12
47.05
38.4
Realised natural gas price
USD/thousand cubic feet
5.91
5.23
13.0
Note 2: Conversion: for domestic production of crude oil, 1 tonne = 7.10 barrels. For overseas production of crude oil in 2017 1 tonne = 7.21 barrels, in 2018 1 tonne=7.20 barrels. For production of natural gas, 1 cubic meter = 35.31 cubic feet. 1 barrel of oil equivalent=6,000 cubic feet.
Refining: With the market-oriented approach, we optimised product mix to produce more gasoline and jet fuel, and the diesel-to-gasoline ratio further decreased. The GB VI refined oil products quality upgrading was constantly pushed forward. We allocated domestic and overseas resources as a whole and export of refined oil products was increased to help maintain high utilisation of refining facilities. Crude oil sourcing optimisation continued to lower our feedstock cost. We comprehensively optimised our production plans to ensure safe and reliable operations. The advantage of centralised marketing was given full play, and profitability of LPG, asphalt, and sulphur maintained at a high level. In the first three quarters, refinery throughput increased by 3.0% compared with the same period last year. Refined oil products production increased by 3.5%, among which gasoline up by 7.0%, kerosene up by 9.0% and diesel down by 1.8% compared with the same period last year. The Refining Segment realised an operating profit of RMB 54.680 billion, up by 24.7% compared with the same period last year.
Refining3
Unit
For nine-month period ended 30 September
Changes
(%)
2018
2017
Refinery throughput
million tonnes
182.74
177.46
3.0
Gasoline, diesel and kerosene production
million tonnes
116.13
112.20
3.5
Gasoline
million tonnes
45.74
42.73
7.0
Diesel
million tonnes
48.62
49.50
(1.8)
Kerosene
million tonnes
21.77
19.97
9.0
Light chemical feedstock
million tonnes
29.01
28.54
1.6
Light product yield
%
76.11
75.84
0.27
percentage points
Refining yield
%
94.98
94.76
0.22
percentage points
Note 3: Including 100% production of domestic joint ventures.
Marketing and Distribution: Faced with the intensified marketing competition, the Company brought our advantages in integrated operation and distribution network into full play and coordinated internal and external resources. We proactively promoted precision marketing and differentiated marketing to achieve sustained growth in total domestic sales volume and retail business scale. We improved our environmental protection measures for our service station and revamped the storage and transportation facilities of refined oil products. We further promoted integration of fuel business and non-fuel business, perfected the system for self-owned brand products and accelerated the construction of integrated service stations. Our non-fuel business kept increasing rapidly. In the first three quarters, total sales volume of refined oil products was 148 million tonnes. Total domestic sales volume of refined oil products was 135 million tonnes, up by 1.3%. The operating revenues of non-fuel business reached RMB 24.250 billion, up by 13.4% compared with the same period last year. The Marketing and Distribution Segment realised an operating profit of RMB 23.389 billion, basically flat year on year.
Marketing and Distribution
Unit
For nine-month period ended 30 September
Changes
(%)
2018
2017
Total sales volume of refined oil products
million tonnes
147.78
150.23
(1.6)
Total domestic sales of refined oil products
million tonnes
135.02
133.26
1.3
Retail
million tonnes
90.82
90.67
0.2
Direct sales & Distribution
million tonnes
44.20
42.60
3.8
Throughput per station4
tonnes
3,953
3,935
0.5
Note 4: Throughput per station was annualised.
Unit: stations
As of 30 September
2018
As of 31 December
2017
Changes from the end of last year to the end of the reporting period (%)
Total number of Sinopec-branded service stations
30,643
30,633
0.03
Number of company-operated stations
30,637
30,627
0.03
Number of convenience stores
26,981
25,775
4.68
Chemicals: With the clients-oriented approach, we provided more products needed by the market through enhancing the dynamic optimisation of facilities and product chains and continued adjusting our product mix to reduce chemical feedstock cost and pressed ahead optimisation of product slate. We improved the coordination among mechanism combining production, marketing, research and application, advance new high-end products development, promotion and application. We put advantages of marketing network into full play and conducted differentiated and tailor-made measures to expand sales scale. We focused on value-added, green, and eco-friendly materials to satisfy clients' requirement on high quality. In the first three quarters, ethylene production reached 8.784 million tonnes, up by 2.9% and chemical sales volume was 64.98 million tonnes, up by 12.8% compared with the same period last year. The differential ratio of synthetic fibre reached 90.4% and ratio of specialty products of synthetic resin reached 64.0%. The Chemicals Segment realised an operating profit of RMB 23.944 billion, up by 43.1% compared with the same period last year.
Chemicals5
Unit
For nine-month period ended 30 September
Changes
(%)
2018
2017
Ethylene
thousand tonnes
8,784
8,534
2.9
Synthetic resin
thousand tonnes
12,171
11,791
3.2
Synthetic rubber
thousand tonnes
646
642
0.6
Monomers and polymers for synthetic fibre
thousand tonnes
7,100
7,061
0.6
Synthetic fibre
thousand tonnes
940
923
1.8
Note 5: Including 100% production of domestic joint ventures.
Capital expenditure: In the first three quarters, total capital expenditures were RMB 48.012 billion. Capital expenditures for the exploration and production segment were RMB 19.761 billion, mainly for oil and gas capacity building, Wen 23 Gas Storage Project, Erdos-Anping-Cangzhou Gas Pipeline Project, the first phase of Xinqi Pipeline Project as well as overseas projects. Capital expenditures for the refining segment were RMB 9.689 billion, mainly for the Zhongke integrated refining and chemical project, product mix optimisation of Zhenhai, Maoming and Tianjin, GB VI gasoline and diesel quality upgrading projects, and crude oil pipeline construction of Rizhao-Puyang-Luoyang as well as other Pipeline Storage & Transportation construction. Capital expenditures for the marketing and distribution segment were RMB 9.712 billion, mainly for constructing refined oil products depots, pipelines and service stations and revamping of underground oil tanks, as well as other safety and environmental protection hazard removal projects. Capital expenditures for the chemicals segment were RMB 6.304 billion, mainly for integrated refining and basic chemical projects of Zhongke, Gulei, high-efficiency and environment-friendly aromatics project in Hainan, Zhong'an United Coal Chemical project and high-end value-added projects of Zhongsha PC, Yangzi EVA and Yizheng high-performance fibre. Capital expenditures for corporate and others were RMB 2.546 billion, mainly for R&D facilities and information technology application projects.
3 Significant events
3.1 Significant changes in major items contained in the consolidated financial statements prepared in accordance with ASBE and the reasons for such changes.
Items of Consolidated Balance Sheet
30 September
2018
31 December
2017
Increase/(decrease)
Major reasons for changes
Amount
Percentage
RMB
million
RMB
million
RMB
million
(%)
Prepayments
10,463
4,901
5,562
113
Increase in the prepayment for land acquisition and fixed assets procurement of service stations.
Employee benefits payable
11,922
7,162
4,760
66
The increased base of social insurance, housing fund and enterprise annuity payment in 2018. As the Company improved its profit significantly, income of employee was increased accordingly in line with its incentive mechanism.
Tax Payable
43,349
71,940
(28,591)
(40)
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.
Specific reserve
1,889
888
1,001
113
The provision of safety production fund.
Items of consolidated income statement
For nine-month period ended 30 September
2018
For nine-month period ended 30 September 2017
Increase/(decrease)
Main reasons for changes
Amount
Percentage
RMB
million
RMB
million
RMB
million
(%)
Financial expenses
632
1,790
(1,158)
(64.7)
Increase in interest income from free cash flow operation as the Company strengthened cash flow management and optimised unused capital.
Impairment losses
728
7,090
(6,362)
(89.7)
The impairment losses of fixed assets decreased compared with the same period last year.
Tax expenses
20,923
12,996
7,927
61.0
Increase in taxable income and decrease in tax-exempt investment income compared with the same period last year
Items of consolidated cash flow statement
For nine-month period ended 30 September
2018
For nine-month period ended 30 September 2017
Increase/(decrease)
Main reasons for changes
Amount
Percentage
RMB
million
RMB
million
RMB
million
(%)
Cash received from disposal of investments
49,695
894
48,801
99
Increase in proceeds from sales of financial assets which are measured at fair value and whose changes are recorded into current period profit or loss.
Cash received from returns on investments
7,338
4,922
2,416
67
Increase in investment income from associates and joint ventures.
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
8,490
530
7,960
106
Subsidiary companies received relocation compensation and land disposal income from government.
Other cash received relating to investing activities
55,003
31,589
23,414
55
Increase cash received from time deposits received at maturity compare with the same period last year.
Cash paid for dividends, profits distribution or interest
(85,928)
(41,494)
(44,434)
76
Increase of dividends.
3.2 This quarterly results announcement is published in both Chinese and English languages. In the event of any discrepancies, the Chinese version shall prevail.
By Order of the Board
Chairman, President
Dai Houliang
30 October 2018
4. Appendix
4.1 Quarterly financial statements prepared under China Accounting Standards for Business Enterprises ("ASBE")
Consolidated Balance Sheet
as at 30 September 2018
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
At 30 September 2018
At 31 December 2017
Current assets:
Cash at bank and on hand
228,938
165,004
Financial assets held for trading
7,418
51,196
Bills receivable and accounts receivable
105,194
84,701
Including：Bills receivable
15,570
16,207
Accounts receivable
89,624
68,494
Prepayments
10,463
4,901
Other receivables
25,653
16,467
Including：Interests receivable
1,340
431
Dividends receivable
271
366
Inventories
213,398
186,693
Other current assets
20,854
20,087
Total current assets
611,918
529,049
Non-current assets:
Available-for-sale financial assets
-
1,676
Long-term equity investments
140,055
131,087
Other equity instrument investments
1,496
-
Fixed assets
607,926
650,920
Construction in progress
123,180
118,645
Intangible assets
99,411
97,126
Goodwill
8,680
8,634
Long-term deferred expenses
14,443
14,720
Deferred tax assets
19,912
15,131
Other non-current assets
35,739
28,516
Total non-current assets
1,050,842
1,066,455
Total assets
1,662,760
1,595,504
Current liability:
Short-term loans
69,864
54,701
Bills payable and accounts payable
237,828
206,535
Advances from customers
-
120,734
Contract liabilities
138,257
-
Employee benefits payable
11,922
7,162
Taxes payable
43,349
71,940
Other payables
94,991
91,693
Including：Interest payable
1,191
723
Dividend payable
660
6,843
Non-current liabilities due within one year
24,342
26,681
Total current liabilities
620,553
579,446
Non-current liabilities:
Long-term loans
70,972
67,754
Debentures payable
31,977
31,370
Provisions
42,147
39,958
Deferred tax liabilities
5,906
6,466
Other non-current liabilities
28,480
16,440
Total non-current liabilities
179,482
161,988
Total liabilities
800,035
741,434
Shareholders' equity:
Share capital
121,071
121,071
Capital reserve
119,549
119,557
Other comprehensive income
(1,677)
(4,413)
Specific reserve
1,889
888
Surplus reserves
199,682
199,682
Retained earnings
281,803
290,459
Total equity attributable to shareholders of the Company
722,317
727,244
Minority interests
140,408
126,826
Total shareholders' equity
862,725
854,070
Total liabilities and shareholders' equity
1,662,760
1,595,504
Dai Houliang Wang Dehua
Chairman, President Chief Financial Officer
Balance Sheet
as at 30 September 2018
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
At 30 September 2018
At 31 December 2017
Current assets：
Cash at bank and on hand
120,897
92,545
Financial assets held for trading
2,008
48,179
Bills receivable and accounts receivable
31,861
37,766
Including：Bills receivable
786
157
Accounts receivable
31,075
37,609
Prepayments
5,163
4,429
Other receivables
54,496
63,820
Including：Interest receivable
909
331
Dividend receivable
3,130
16,327
Inventories
50,379
44,933
Other current assets
17,152
27,189
Total current assets
281,956
318,861
Non-current assets：
Available-for-sale financial assets
-
395
Long-term equity investments
280,645
275,557
Other equity instrument investments
395
-
Fixed assets
301,903
329,814
Construction in progress
48,621
50,046
Intangible assets
8,383
8,340
Long-term deferred expenses
2,286
1,958
Deferred tax assets
10,636
6,834
Other non-current assets
9,717
10,690
Total non-current assets
662,586
683,634
Total assets
944,542
1,002,495
Current liabilities：
Short-term loans
13,751
17,330
Bills payable and accounts payable
96,194
86,604
Advances from customers
-
3,413
Contract liabilities
3,715
-
Employee benefits payable
7,167
4,854
Taxes payable
28,435
42,549
Other payables
129,731
143,274
Including：Dividend payable
944
576
Short-term debentures payable
21,298
19,539
Total current liabilities
300,291
317,563
Non-current liabilities：
Long-term loans
59,616
63,667
Debentures payable
20,000
20,000
Provisions
32,523
31,405
Other non-current liabilities
2,903
2,591
Total non-current liabilities
115,042
117,663
Total liabilities
415,333
435,226
Shareholders' equity：
Share capital
121,071
121,071
Capital reserve
68,794
68,789
Other comprehensive income
210
196
Specific reserve
1,020
482
Surplus reserves
199,682
199,682
Retained earnings
138,432
177,049
Total shareholders' equity
529,209
567,269
Total liabilities and shareholders' equity
944,542
1,002,495
Dai Houliang Wang Dehua
Chairman, President Chief Financial Officer
Consolidated Income Statement
for the nine-month periods ended 30 September 2018
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Three-month
periods
ended 30
September 2018
Three-month
periods
ended 30
September
2017
Nine-month
periods ended 30
September 2018
Nine-month
periods ended 30
September 2017
I. Operating income
772,718
579,118
2,072,970
1,744,955
II. Total Operating costs
749,631
564,133
1,989,444
1,694,797
Including: Operating costs
645,961
462,954
1,696,680
1,405,556
Taxes and surcharges
64,824
60,032
183,545
176,329
Selling and distribution
expenses
15,057
14,173
42,718
40,128
General and
administrative expenses
18,817
18,514
52,725
51,745
Research and
development costs
1,641
2,572
5,721
5,244
Financial expenses
369
501
632
1,790
Exploration expenses,
including dry holes
2,357
2,373
6,719
6,915
Impairment losses
591
3,014
728
7,090
Credit impairment losses
14
-
(24)
-
Add: Other income
1,628
1,292
3,477
2,613
Investment income
3,819
3,868
9,703
12,020
Gains from
changes in fair value
926
162
476
531
Asset disposal
(expense)/income
(143)
(121)
75
(219)
III. Operating profit
29,317
20,186
97,257
65,103
Add: Non-operating
income
270
282
900
1,023
Less: Non-operating
expenses
752
675
1,455
1,301
IV. Profit before taxation
28,835
19,793
96,702
64,825
Less: Income tax expense
6,337
4,081
20,923
12,996
V. Net profit
22,498
15,712
75,779
51,829
Classification by going concern:
(i) Continuous operating net
profit
22,498
15,712
75,779
51,829
(ii) Termination of net profit
-
-
-
-
Classification by ownership:
(i)Equity shareholders of the
Company
18,380
11,281
59,980
38,373
(ii) Minority interests
4,118
4,431
15,799
13,456
VI. Other comprehensive
income
3,619
(2,083)
3,877
(3,193)
Items that may not be reclassified subsequently to profit or loss:
Changes in fair value of other equity instrument investments
3
-
(14)
-
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
(172)
(12)
(285)
265
Changes in fair value of available-for-sale financial assets
-
-
-
(7)
Cash flow hedges reserve
1,092
(766)
584
(604)
Foreign currency translation differences
2,696
(1,305)
3,592
(2,847)
VII. Total comprehensive income
26,117
13,629
79,656
48,636
Attributable to:
Equity shareholders of the Company
21,125
9,608
62,728
36,058
Minority interests
4,992
4,021
16,928
12,578
VIII. Earnings per share:
(i) Basic earnings per share
(RMB/Share)
0.151
0.093
0.495
0.317
(ii) Diluted earnings per
share (RMB/Share)
0.151
0.093
0.495
0.317
Dai Houliang Wang Dehua
Chairman, President Chief Financial Officer
Income Statement
for the nine-month periods ended 30 September 2018
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Three-month
periods
ended 30
September
2018
Three-month
periods
ended 30
September
2017
Nine-month
periods
ended 30
September
2018
Nine-month
periods
ended 30
September
2017
I.Operating income
279,491
205,403
774,103
616,813
Less: Operating costs
220,145
151,418
589,706
457,921
Taxes and surcharges
43,702
40,001
126,747
117,325
Selling and distribution
expenses
833
669
2,238
1,949
General and
administrative expenses
9,269
9,049
26,079
26,052
Research and
development costs
1,385
2,432
5,273
4,938
Financial expenses
322
642
1,711
2,037
Exploration expenses,
including dry holes
2,232
2,348
6,405
6,491
Impairment losses
29
1,433
78
5,114
Credit impairment
losses
(1)
-
(15)
-
Add: Other income
677
718
1,270
1,076
Investment income
7,925
2,869
17,786
11,742
Losses from changes in
fair value
-
-
(171)
-
Asset disposal income
(27)
(25)
225
(143)
II. Operating profit
10,150
973
34,991
7,661
Add: Non-operating income
94
107
239
410
Less: Non-operating expenses
412
296
701
636
III. Profit before taxation
9,832
784
34,529
7,435
Less: Income tax expense
438
(402)
4,520
76
IV. Net profit
9,394
1,186
30,009
7,359
(i) Continuous operating net profit
9,394
1,186
30,009
7,359
(ii) Termination of net profit
-
-
-
-
V. Other comprehensive income
14
45
14
56
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
14
(10)
14
(21)
Cash flow hedges
-
55
-
77
VI. Total comprehensive income
9,408
1,231
30,023
7,415
Dai Houliang Wang Dehua
Chairman, President Chief Financial Officer
Consolidated Cash Flow Statement
for the nine-month periods ended 30 September 2018
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Nine-month periods
ended 30 September 2018
Nine-month periods
ended 31 March 2017
I. Cash flows from operating activities:
Cash received from sale of goods and
rendering of services
2,310,756
1,976,601
Refund of taxes and levies
1,208
1,475
Other cash received relating to operating
activities
57,437
45,260
Sub-total of cash inflows
2,369,401
2,023,336
Cash paid for goods and services
(1,810,925)
(1,534,680)
Cash paid to and for employees
(49,995)
(44,390)
Payments of taxes and levies
(288,801)
(267,888)
Other cash paid relating to operating
activities
(81,761)
(65,185)
Sub-total of cash outflows
(2,231,482)
(1,912,143)
Net cash flow from operating activities
137,919
111,193
II. Cash flows from investing activities:
Cash received from disposal of
investments
49,695
894
Cash received from returns on
investments
7,338
4,922
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
8,490
530
Net cash received from disposal of
subsidiaries and other business entities
-
1
Other cash received relating to investing
activities
55,003
31,589
Sub-total of cash inflows
120,526
37,936
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
(54,464)
(43,992)
Cash paid for acquisition of investments
(10,551)
(4,914)
Net cash paid for the acquisition of subsidiaries and other business entities
(3,188)
(44)
Other cash paid relating to investing
activities
(55,593)
(59,091)
Sub-total of cash outflows
(123,796)
(108,041)
Net cash flow from investing activities
(3,270)
(70,105)
III. Cash flows from financing activities:
Cash received from capital contributions
874
853
Including: Cash received from minority shareholders' capital contributions to subsidiaries
868
853
Cash received from borrowings
526,630
361,470
Sub-total of cash inflows
527,504
362,323
Cash repayments of borrowings
(517,451)
(371,045)
Cash paid for dividends, profits
distribution or interest
(85,928)
(41,494)
Including: Subsidiaries' cash payments for distribution of dividends or profits to minority shareholders
(15,783)
(4,476)
Other cash paid relating to financing
activities
(23)
-
Sub-total of cash outflows
(603,402)
(412,539)
Net cash flow from financing activities
(75,898)
(50,216)
IV. Effects of changes in foreign exchange rate
315
(188)
V. Net increase in cash and cash equivalents
59,066
(9,316)
Add：Initial balance of cash and cash equivalents
113,218
124,468
VI. Ending balance of cash and cash equivalents
172,284
115,152
Dai Houliang Wang Dehua
Chairman, President Chief Financial Officer
Cash Flow Statement
for the nine-month periods ended 30 September 2018
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Nine-month
periods ended 30
September 2018
Nine-month
periods ended 31
March 2017
I. Cash flows from operating activities:
Cash received from sale of goods and rendering of services
902,672
726,478
Refund of taxes and levies
768
917
Other cash received relating to operating activities
18,654
33,412
Sub-total of cash inflows
922,094
760,807
Cash paid for goods and services
(626,237)
(478,741)
Cash paid to and for employees
(27,990)
(24,467)
Payments of taxes and levies
(184,068)
(168,152)
Other cash paid relating to operating activities
(10,499)
(25,730)
Sub-total of cash outflows
(848,794)
(697,090)
Net cash flow from operating activities
73,300
63,717
II. Cash flows from investing activities:
Cash received from disposal of investments
57,769
9,022
Cash received from returns on investments
30,145
14,025
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
477
706
Net cash received from disposal of subsidiaries and other
business entities
-
1
Other cash received relating to investing activities
20,175
20,370
Sub-total of cash inflows
108,566
44,124
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
(28,910)
(23,811)
Cash paid for acquisition of investments
(7,407)
(10,128)
Other cash paid relating to investing activities
(10,183)
(25,040)
Sub-total of cash outflows
(46,500)
(58,979)
Net cash flow from investing activities
62,066
(14,855)
III. Cash flows from financing activities:
Cash received from borrowings
98,500
85,212
Sub-total of cash inflows
98,500
85,212
Cash repayments of borrowings
(126,626)
(103,768)
Cash paid for dividends or interest
(68,911)
(36,164)
Sub-total of cash outflows
(195,537)
(139,932)
Net cash flow from financing activities
(97,037)
(54,720)
IV. Net increase in cash and cash equivalents
38,329
(5,858)
Add：Initial balance of cash and cash equivalents
72,309
88,120
V. Ending balance of cash and cash equivalents
110,638
82,262
Dai Houliang Wang Dehua
Chairman, President Chief Financial Officer
Segement Reporting
for the nine-month periods ended 30 September 2018
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Nine-month periods ended
30 September 2018
Nine-month periods ended 31 March 2017
Income from principal operations
Exploration and production
External sales
62,271
48,701
Inter-segment sales
71,033
55,769
Subtotal
133,304
104,470
Refining
External sales
109,029
96,041
Inter-segment sales
820,020
636,726
Subtotal
929,049
732,767
Marketing and distribution
External sales
1,028,274
886,263
Inter-segment sales
4,092
2,567
Subtotal
1,032,366
888,830
Chemicals
External sales
344,753
272,418
Inter-segment sales
46,626
36,418
Subtotal
391,379
308,836
Corporate and others
External sales
480,879
398,780
Inter-segment sales
458,916
320,750
Subtotal
939,795
719,530
Elimination of
inter-segment sales
(1,400,687)
(1,052,230)
Consolidated income from principal operations
2,025,206
1,702,203
Income from other operations
Exploration and
production
6,656
5,707
Refining
3,774
3,454
Marketing and distribution
24,944
22,309
Chemicals
11,400
10,336
Corporate and others
990
946
Consolidated income from other operations
47,764
42,752
Consolidated operating income
2,072,970
1,744,955
Operating (loss)/ profit
By segment
Exploration and
production
(2,017)
(27,592)
Refining
53,675
42,370
Marketing and distribution
23,784
23,070
Chemicals
23,280
16,462
Corporate and others
(7,124)
(1,150)
Elimination
(7,440)
(1,212)
Total segment operating profit
84,158
51,948
Investment income
Exploration and
production
2,066
1,494
Refining
604
546
Marketing and distribution
1,848
2,208
Chemicals
4,795
6,634
Corporate and others
390
1,138
Total segment investment income
9,703
12,020
Financial expenses
(632)
(1,790)
Gain from changes in fair value
476
531
Gain/(loss) from asset disposal
75
(219)
Other income
3,477
2,613
Operating profit
97,257
65,103
Add: Non-operating income
900
1,023
Less: Non-operating expenses
1,455
1,301
Profit before taxation
96,702
64,825
4.2 Quarterly financial statements prepared under International Financial Reporting Standards ("IFRS")
Consolidated Income Statement
for the nine-month periods ended 30 September 2018
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Three-month
periods ended 30 September
2018
Three-month
periods ended 30 September
2017
Nine-month
Periods ended 30 September
2018
Nine-month
Periods ended 30 September
2017
Turnover and other operating
revenues
Turnover
756,403
564,375
2,025,206
1,702,203
Other operating revenues
16,315
14,743
47,764
42,752
Subtotal
772,718
579,118
2,072,970
1,744,955
Operating expenses
Purchased crude oil, products
and operating supplies and
expenses
(619,364)
(434,997)
(1,614,161)
(1,322,025)
Selling, general and
administrative expenses
(16,182)
(18,104)
(47,514)
(48,235)
Depreciation, depletion and
amortisation
(28,146)
(27,454)
(80,048)
(82,671)
Exploration expenses,
including dry holes
(2,357)
(2,373)
(6,719)
(6,915)
Personnel expenses
(17,656)
(17,446)
(54,996)
(48,774)
Taxes other than income tax
(64,824)
(60,032)
(183,545)
(176,329)
Other operating
income/(expense), net
100
(2,264)
(122)
(4,249)
Total operating expenses
(748,429)
(562,670)
(1,987,105)
(1,689,198)
Operating profit
24,289
16,448
85,865
55,757
Finance costs
Interest expense
(2,053)
(1,870)
(6,025)
(5,849)
Interest income
2,022
1,437
5,529
3,894
Foreign currency exchange
(losses)/gains, net
(338)
(68)
(136)
165
Net finance costs
(369)
(501)
(632)
(1,790)
Investment income
53
130
893
416
Share of profits less losses from associates and joint ventures
4,273
3,960
10,891
11,611
Profit before taxation
28,246
20,037
97,017
65,994
Income tax expense
(6,337)
(4,081)
(20,923)
(12,996)
Profit for the period
21,909
15,956
76,094
52,998
Attributable to:
Shareholders of the Company
17,769
11,489
60,155
39,404
Non-controlling interests
4,140
4,467
15,939
13,594
Profit for the period
21,909
15,956
76,094
52,998
Earnings per share
Basic
0.147
0.094
0.497
0.325
Diluted
0.147
0.094
0.497
0.325
Consolidated of Comprehensive Income
for the nine-month periods ended 30 September 2018
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Item
Three month periods ended 30 September
2018
Three month periods ended 30 September
2017
Nine month
periods
ended 30
September
2018
Nine month
periods
ended 30
September
2017
Profit for the period
21,909
15,956
76,094
52,998
Other comprehensive income:
3,619
(2,083)
3,877
(3,193)
Items that maynot be reclassified subsequently to profit or loss
Financial assets at
fair value through
other comprehensive income
3
-
(14)
-
Items that may be reclassified subsequently to profit or loss
Cash flow hedges
1,092
(766)
584
(604)
Available-for-sale securities
-
0
-
(7)
Share of other comprehensive income of associates and joint ventures
(172)
(12)
(285)
265
Foreign currency translation differences
2,696
(1,305)
3,592
(2,847)
Total other comprehensive income
25,528
13,873
79,971
49,805
Attributable to:
Shareholders of the Company
20,514
9,816
62,903
37,089
Non-controlling interests
5,014
4,057
17,068
12,716
Consolidated Balance Sheet
for the nine-month periods ended 30 September 2018
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
As at 30 September 2018
At 31 December
2017
Non-current assets：
Property, plant and equipment, net
607,900
650,774
Construction in progress
123,180
118,645
Goodwill
8,680
8,634
Interest in associates
84,630
79,726
Interest in joint ventures
55,425
51,361
Available-for-sale financial assets
-
1,676
Financial assets at fair value through other comprehensive income
1,496
-
Deferred tax assets
19,912
15,131
Lease prepayments
60,420
58,526
Long-term prepayments and other assets
89,199
81,982
Total non-current assets
1,050,842
1,066,455
Current assets
Cash and cash equivalents
172,284
113,218
Time deposits with financial institutions
56,654
51,786
Financial assets at fair value through profit or loss
7,418
51,196
Trade accounts receivable
89,624
68,494
Bills receivable
15,570
16,207
Inventories
213,398
186,693
Prepaid expenses and other current assets
56,970
41,455
Total current assets
611,918
529,049
Current liabilities：
Short-term debts
56,326
55,338
Loans from Sinopec Group Company and fellow subsidiaries
37,880
25,311
Trade accounts payable
230,681
200,073
Contract liabilities
138,257
-
Bills payable
7,147
6,462
Other payables
140,072
279,247
Income tax payable
10,190
13,015
Total current liabilities
620,553
579,446
Net current liabilities
(8,635)
(50,397)
Total assets less current liabilities
1,042,207
1,016,058
Non-current liabilities
Long-term debts
54,883
55,804
Loans from Sinopec Group Company and fellow subsidiaries
48,066
43,320
Deferred tax liabilities
5,906
6,466
Provisions
42,147
39,958
Other long-term liabilities
29,589
17,620
Total non-current liabilities
180,591
163,168
Total net assets
861,616
852,890
Equity：
Share capital
121,071
121,071
Reserves
600,190
605,049
Total equity attributable to shareholders of the Company
721,261
726,120
Non-controlling interests
140,355
126,770
Total equity
861,616
852,890
Consolidated Statement of Cash Flows
for the nine-month periods ended 30 September 2018
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Nine-month periods ended
30 September
2018
Nine-month periods ended
30 September
2017
Net cash generated from operating activities（a）
137,919
111,193
Investing activities
Capital expenditure
(50,466)
(40,238)
Exploratory wells expenditure
(3,998)
(3,754)
Purchase of investments, investments in associates and investments in joint ventures
(6,551)
(4,958)
Payments for financial assets at fair value through profit or loss
(4,000)
-
Proceeds from sale of financial assets at fair value through profit or loss
48,000
-
Payment for acquisition of subsidiary, net of cash acquired
(3,188)
-
Proceeds from disposal of investments and investments in associates
1,695
895
Proceeds from disposal of property, plant, equipment and other non-current assets
8,490
530
Increase in time deposits with maturities over three months
(53,357)
(58,841)
Decrease in time deposits with maturities over three months
50,080
30,119
Interest received
2,687
1,220
Investment and dividend income received
7,338
4,922
Net cash generated used in investing activities
(3,270)
(70,105)
Financing activities
Proceeds from bank and other loans
526,630
361,470
Repayments of bank and other loans
(517,451)
(371,045)
Contributions to subsidiaries from non-controlling
interests
874
853
Dividends paid by the Company
(67,800)
(32,693)
Distributions by subsidiaries to non-controlling
interests
(14,006)
(4,476)
Interest paid
(4,122)
(4,325)
Payments to non-controlling interests due to capital
reduction of subsidiaries
(23)
-
Net cash used in financing activities
(75,898)
(50,216)
Net increase in cash and cash equivalents
58,751
(9,128)
Cash and cash equivalents at 1 January
113,218
124,468
Effect of foreign currency exchange rate changes
315
(188)
Cash and cash equivalents at 30 September
172,284
115,152
Note to consolidated statement of Cash Flows
for the nine-month periods ended 30 September 2018
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
Nine-month periods ended 30 September
2018
Nine-month periods ended 30 September
2017
Operating activities
Profit before taxation
97,017
65,994
Adjustments for:
Depreciation, depletion and amortisation
80,048
82,671
Dry hole costs written off
5,534
5,953
Share of profits from associates and joint
ventures
(10,891)
(11,611)
Investment income
(893)
(416)
Interest income
(5,529)
(3,894)
Interest expense
6,025
5,849
Loss/(gain) on foreign currency exchange
rate changes and derivative financial
instruments
5,465
(1,131)
(Gain)/loss on disposal of property, plant,
equipment and other non-currents assets,
net
(75)
219
Impairment losses on assets
704
7,090
Operating profit before change of operating capital
177,405
150,724
Accounts receivable and other current assets
(81,391)
(3,608)
Inventories
(43,745)
(4,561)
Accounts payable and other current
liabilities
115,295
(13,609)
Subtotal
167,564
128,946
Income tax paid
(29,645)
(17,753)
Net cash generated from operating activities
137,919
111,193
Segment Reporting
for the nine-month periods ended 30 September 2018
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Nine-month periods
ended 30 September
2018
Nine-month periods
ended 30 September
2017
Turnover
Exploration and production
External sales
62,271
48,701
Inter-segment sales
71,033
55,769
133,304
104,470
Refining
External sales
109,029
96,041
Inter-segment sales
820,020
636,726
929,049
732,767
Marketing and distribution
External sales
1,028,274
886,263
Inter-segment sales
4,092
2,567
1,032,366
888,830
Chemicals
External sales
344,753
272,418
Inter-segment sales
46,626
36,418
391,379
308,836
Corporate and others
External sales
480,879
398,780
Inter-segment sales
458,916
320,750
939,795
719,530
Elimination of inter-segment sales
(1,400,687)
(1,052,230)
Turnover
2,025,206
1,702,203
Other operating revenues
Exploration and production
6,656
5,707
Refining
3,774
3,454
Marketing and distribution
24,944
22,309
Chemicals
11,400
10,336
Corporate and others
990
946
Other operating revenues
47,764
42,752
Turnover and other operating revenues
2,072,970
1,744,955
Result
Operating (loss)/ profit
By segment
- Exploration and production
(1,081)
(26,523)
- Refining
54,680
43,854
- Marketing and distribution
23,389
23,482
- Chemicals
23,944
16,727
- Corporate and others
(7,627)
(571)
- Elimination
(7,440)
(1,212)
Total segment operating profit
85,865
55,757
Share of profits from associates and joint ventures
- Exploration and production
2,064
1,446
- Refining
583
525
- Marketing and distribution
2,255
2,068
- Chemicals
4,733
6,430
- Corporate and others
1,256
1,142
Aggregate share of profits from associates and joint ventures
10,891
11,611
Investment income
- Exploration and production
2
48
- Refining
16
21
- Marketing and distribution
30
108
- Chemicals
36
204
- Corporate and others
809
35
Aggregate investment income
893
416
Net finance costs
(632)
(1,790)
Profit before taxation
97,017
65,994
4.3 Differences between Financial Statements prepared in accordance with the accounting policies complying with ASBE 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 ASBE 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 ASBE, 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 ASBE, 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 ASBE and the profit for the year under
IFRS are analysed as follows:
Prepared by: China Petroleum & Chemical Corporation
Units: million Currency: RMB Type: unaudited
Items
Nine-month periods ended
30 September 2018
Nine-month periods ended
30 September 2017
Net profit under ASBE
75,779
51,829
Adjustments:
Government grants
71
83
Safety production fund
1,140
1,086
Others
(896)
-
Profit for the year under IFRS
76,094
52,998
Effects of major differences between the shareholders' equity under ASBE and the total equity under
IFRS are analysed as follows:
Units: million Currency: RMB Type: unaudited
Items
At 30 September 2018
At 31 December 2017
Shareholders' equity under
ASBE
862,725
854,070
Adjustments:
Government grants
(1,109)
(1,180)
Total equity under IFRS
861,616
852,890
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.ENDQRTEAFEEDSLPFFF
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