SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934

For the month of April 2019

CHINA PETROLEUM & CHEMICAL CORPORATION
22 Chaoyangmen North Street,
Chaoyang District, Beijing, 100728
People's Republic of China
Tel: (8610) 59960114

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
 
  Form 20-F 
X
  Form 40-F 
   

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
 
  Yes 
 
  No 
X
 

(If "Yes" is marked, indicate below the file number assigned to registrant in connection with Rule 12g3-2(b): 82-__________. )
N/A



This Form 6-K consists of:

1.          a copy of the first quarterly report for 2019 of China Petroleum & Chemical Corporation; and
2.          an announcement regarding connected transaction, capital increase and deemed disposal of the Registrant;

Each made by the Registrant on April 29, 2019.








China Petroleum & Chemical Corporation
The First Quarterly Report for 2019


















29 April 2019
Beijing, China





1
Important notice

1.1
The Board of Directors, the Supervisory Board of China Petroleum & Chemical Corporation (“Sinopec Corp.” or the "Company") and its directors, supervisors and senior management warrant that there are no material omissions, misrepresentations or misleading statements contained in this report and severally and jointly accept full responsibility for the authenticity, accuracy and completeness of the information contained in this report.

1.2
The first quarterly report for 2019 was approved at the 6th meeting of the Seventh Session of the Board of Directors of Sinopec Corp. All directors attended this meeting.

1.3
Mr. Dai Houliang, Chairman, Mr. Ma Yongsheng, President, Mr. Wang Dehua, Chief Financial Officer and Head of the Corporate Finance Department of Sinopec Corp. warrant the authenticity, accuracy and completeness of the financial statements contained in this quarterly report.

1.4
The financial statements in this quarterly report were not audited.






2
Basic information of Sinopec Corp.
2.1
Principal financial data and indicators
2.1.1
Principal financial data and indicators prepared in accordance with China Accounting Standards for Business Enterprises (CASs)

RMB million
 
Items
 
As of 31 March 2019
   
As of 31 December 2018
   
Changes from the end of the preceding year to the end of the reporting period (%)
 
Total assets
   
1,813,445
     
1,592,308
     
13.9
 
Total equity attributable to equity shareholders of the Company
   
739,653
     
718,355
     
3.0
 


    RMB million  
Items
 
Three-month period ended 31 March
   
Changes over the same period of the preceding year (%)
 
 
2019
   
2018
 
Net cash flow from operating activities
   
(14,609
)
   
12,052
     
-
 
   
Operating income
   
717,579
     
621,251
     
15.5
 
Net profit attributable to equity shareholders of the Company
   
14,763
     
18,770
     
(21.3
)
Net profit attributable to equity shareholders of the Company excluding extraordinary gains and losses
   
14,370
     
17,982
     
(20.1
)
Weighted average return on net assets (%)
   
2.03
     
2.55
   
(0.52) percentage points
 
Basic earnings per share (RMB)
   
0.122
     
0.155
     
(21.3
)
Diluted earnings per share (RMB)
   
0.122
     
0.155
     
(21.3
)


  RMB million  
Extraordinary items
 
During the reporting period
 
 
(income)/expensesRMB million
 
Net loss on disposal of non-current assets
   
64
 
Donations
   
3
 
Government grants
   
(870
)
Gains on holding and disposal of various investments
   
20
 
Other extraordinary income and expenses, net
   
285
 
Subtotal
   
(498
)
Tax effect
   
126
 
Total
   
(372
)
Attributable to:
       
Equity shareholders of the Company
   
(393
)
Minority interests
   
21
 





2.1.2
Principal financial data and indicators prepared in accordance with International Financial Reporting Standards (IFRS)
RMB million
 
Items
 
As of 31 March 2019
   
As of 31 December 2018
   
Changes from the end of the preceding year to the end of the reporting period (%)
 
Total assets
   
1,813,445
     
1,592,308
     
13.9
 
Total equity attributable to owners of the Company
   
738,578
     
717,284
     
3.0
 


    RMB million  
Items
 
Three-month period ended 31 March
   
Changes over the same period of the preceding year (%)
 
 
2019
   
2018
 
Net cash generated from operating activities
   
(14,609
)
   
12,052
     
-
 
   
Operating profit
   
24,841
     
29,218
     
(15.0
)
Net profit attributable to owners of the Company
   
15,468
     
19,306
     
(19.9
)
Basic earnings per share (RMB)
   
0.128
     
0.159
     
(19.5
)
Diluted earnings per share (RMB)
   
0.128
     
0.159
     
(19.5
)
Return on net assets (%)
   
2.09
     
2.59
   
(0.50) percentage points
 







2.2
Total number of shareholders and top ten shareholders at the end of the reporting period
Total number of shareholders at the end of the reporting period
 
Total number of shareholders was 486,896, including 481,107 holders of domestic A shares and 5,789 holders of overseas H shares.
Top ten shareholders
Name of shareholder
 
Total number of shares held
   
Percentage (%)
   
Number of shares subject to pledge or lock-ups
 
Nature of shareholder
China Petrochemical Corporation
   
82,709,227,393
     
68.31
     
0
 
State-owned share
HKSCC (Nominees) Limited 1
   
25,392,285,486
     
20.97
   
Unknown
 
H share
中国证券金融股份有限公司
   
2,609,312,057
     
2.16
     
0
 
A share
国新投资有限公司
   
1,252,427,354
     
1.03
     
0
 
A share
香港中央结算有限公司
   
999,101,462
     
0.83
     
0
 
A share
北京诚通金控投资有限公司
   
947,604,254
     
0.78
     
0
 
A share
中央汇金资产管理有限责任公司
   
322,037,900
     
0.27
     
0
 
A share
中国人寿保险股份有限公司-传统-普通保险产品-005LCT001
   
259,205,354
     
0.21
     
0
 
A share
中国人寿保险股份有限公司-分红-个人分红-005LFH002
   
240,956,971
     
0.20
     
0
 
A share
国泰君安证券股份有限公司
   
143,442,801
     
0.12
     
0
 
A share

Note1
Sinopec Century Bright Capital Investment Limited, overseas wholly-owned subsidiary of China Petrochemical Corporation, holds 553,150,000 H shares, which is included in the total number of the shares held by HKSCC (Nominees) Limited.

Statement on the connected relationship or acting in concert among the aforementioned shareholders:

Apart from中国人寿保险股份有限公司-传统-普通保险产品-005LCT001 and 中国人寿保险股份有限公司-分红-个人分红-005LFH002 which were both administrated by 中国人寿保险股份有限公司, Sinopec Corp. is not aware of any connected relationship or acting in concert among or between the above-mentioned shareholders.





2.3
Review of operating results
In the first quarter of 2019, the global economy experienced weak growth momentum while China’s economy maintained stable growth with gross domestic product (GDP) up by 6.4%. International oil prices recovered from low level at the end of last year, domestic refined oil products prices were adjusted in a timely manner. Domestic demand for natural gas grew rapidly with apparent consumption up by 11%. Refined oil products market, with ample supply, witnessed strong competition. Demand for chemicals increased steadily.
Adhering to the general principle of making progress while maintaining stability and the requirements for high-quality development, we will accelerate the strategic plan of our phased goals for year 2020 through year 2050. Guided by “reform, management, innovation and development”, we stick to the operating principles of “specialised development, market-based operation, international layout and overall coordination” and make great efforts in optimising operation, expanding market, reducing costs, controling risks, deepening reform and reinforcing management.
In accordance with CASs, net profit attributable to equity shareholders of the Company was RMB 14.763 billion in the first quarter, down by 21.3% over the same period of last year. In accordance with IFRS, net profit attributable to equity shareholders of the Company was RMB 15.468 billion, down by 19.9% compared with the same period of last year.
Exploration and Production: With the recovery of oil price, the Company fully implemented the action plan of redoubling efforts in oil and gas exploration and production. Measures were taken to accelerate the formation of an integrated value chain of natural gas business including production, supply, storage and marketing and continuously reduce cost and expenditure on all fronts. Tangible results were achieved in maintaining oil production and increasing gas output. In exploration, we reinforced preliminary exploration in new areas and strengthened integrated detailed evaluation in mature fields, which led to new discoveries in Jiyang Depression and Sichuan basins. In crude oil development, we made a full-fledged push to build profitable production capacity, deepen the structural adjustment of mature fields, reduce natural decline rate and ensure steady production. In natural gas development, we constantly pushed forward capacity building in Hangjinqi of Neimongol, west Sichuan Depression and Weirong gas fields. We accelerated construction of natural gas production, supply, storage and marketing system and promoted a coordinated growth along the value chain.
In the first quarter, the oil and gas production of the Company was 113.46 million barrels of oil equivalent, up by 1.9% over the same period of last year, among which domestic crude oil increased by 0.2% while natural gas increased by 6.7%, compared with the same period of last year. Exploration and Production Segment realised an operating profit of RMB 2.143 billion from previous loss.
 
Three-month period ended 31 March
     
Exploration and Production
Unit
 
2019
   
2018
   
Changes (%)
 
Oil and gas production2
million boe
   
113.46
     
111.33
     
1.9
 
Crude oil production
million barrels
   
70.81
     
71.35
     
(0.8
)
China
million barrels
   
61.55
     
61.43
     
0.2
 
Overseas
million barrels
   
9.26
     
9.92
     
(6.7
)
Natural gas production
billion cubic feet
   
255.79
     
239.83
     
6.7
 
Realised crude oil price
USD/barrel
   
57.66
     
59.8
     
(3.6
)
Realised natural gas price
USD/thousand cubic feet
   
7.07
     
6.28
     
12.6
 
Note2
Conversion: for domestic production of crude oil, 1 tonne = 7.10 barrels; for overseas production of crude oil, 1 tonne=7.21 barrels; for production of natural gas, 1 cubic meter = 35.31 cubic feet.





Refining: The Company adjusted the product mix in response to market demand by increasing production of gasoline and jet fuel. Diesel-to-gasoline ratio further declined to 1.01. We comprehensively optimised our production plans, moderately increased the export of oil products and realized stable operation at high utilisation rate. At the meantime, we implemented bunker fuel quality upgrading plan. In the first quarter, refinery throughput grew by 2.7% and refined oil products production grew by 3.8%, among which gasoline up by 5.9% and kerosene up by 6.6% over the same period of last year. Refining Segment realised an operating profit of RMB 11.963 billion.
 
Three-month period ended 31 March
     
Refining3
Unit
 
2019
   
2018
   
Changes (%)
 
Refinery throughput
million tonnes
   
61.78
     
60.16
     
2.7
 
Gasoline, diesel and kerosene production
million tonnes
   
39.44
     
37.98
     
3.8
 
Gasoline
million tonnes
   
15.87
     
14.98
     
5.9
 
Diesel
million tonnes
   
16.03
     
15.93
     
0.6
 
Kerosene
million tonnes
   
7.54
     
7.07
     
6.6
 
Light chemical feedstock
million tonnes
   
10.07
     
9.94
     
1.3
 
Light product yield
%
   
76.14
     
76.22
   
(0.08) Percentage points
 
Refining yield
%
   
94.76
     
95.23
   
(0.47) Percentage points
 
Note3
Including 100% production of domestic joint ventures.
Marketing and Distribution: We brought our advantages of integrated business and distribution network into full play. Through increasing marketing efforts and a flexible and targeted marketing strategy to maintain sustained growth in total domestic sales volume and retail business scale. The Company upgraded distribution network to further strengthen our existing advantages. Vehicle natural gas market was further expanded. Self-owned brands development ensured steady development of non-fuel business. In the first quarter, total sales volume of refined oil products was 49.74 million tonnes with an increase of 5.4%, among which domestic sales volume up by 5.2% and retail business scale up by 2.5% over the same period of last year. The Marketing and Distribution Segment realised an operating profit of RMB 7.866 billion.
 
Three-month period ended 31 March
     
Marketing and Distribution
Unit
 
2019
   
2018
   
Changes
(%)
 
Total sales volume of refined oil products
million tonnes
   
49.74
     
47.21
     
5.4
 
Total domestic sales of refined oil products
million tonnes
   
45.61
     
43.35
     
5.2
 
Retail
million tonnes
   
30.20
     
29.46
     
2.5
 
Direct sales & Distribution
million tonnes
   
15.41
     
13.89
     
10.9
 
Throughput per station4
tonnes
   
3,939
   
3,846 
     
2.4
 

Unit: stations
 
As of 31 March
2019
   
As of 31 December
2018
   
Changes from the end of last year to the end of the reporting period (%)
 
Total number of Sinopec-branded service stations
   
30,671
     
30,648
     
0.1
 
Number of company-operated stations
   
30,665
     
30,642
     
0.1
 
Note4
Throughput per station was annualised.






Chemicals: The Company followed the development philosophy of “basic plus high-end” to enhance effective supply. We persistently fine-tuned chemical feedstock mix to lower cost. The Company strengthened the links among R&D, production, marketing and customer, and maximised production of high-end products output tailored to market demands. The ratio of new and specialty products in synthetic resin reached 63.6% and differential ratio of synthetic fibre reached 90.3%. We enhanced the dynamic optimisation of facilities and product chain, and improved the utilisation and production scheduling based on market demand. We reinforced the capacity structural adjustment by constructing several key projects actively. The Company promoted targeted marketing and servicing to further expand our business. In the first quarter, ethylene production reached 3.049 million tonnes, up by 1.8% and chemical sales volume was 23.373 million tonnes, up by 14.3% over the same period of last year. The Chemicals Segment realised an operating profit of RMB 6.953 billion.
 
Three-month period ended 31 March
     
Chemicals5
Unit
 
2019
   
2018
   
Changes
(%)
 
Ethylene
thousand tonnes
   
3,049
     
2,995
     
1.8
 
Synthetic resin
thousand tonnes
   
4,178
     
4,117
     
1.5
 
Synthetic rubber
thousand tonnes
   
271
     
199
     
36.2
 
Monomers and polymers for synthetic fiber
thousand tonnes
   
2,575
     
2,246
     
14.6
 
Synthetic fiber
thousand tonnes
   
322
     
296
     
8.8
 
Note5 Including 100% production of domestic joint ventures.

Capital expenditure: In the first quarter, the total capital expenditure was RMB 11.914 billion. Capital expenditures for Exploration and Production Segment were RMB 5.562 billion, mainly for Fuling and Weirong shale gas development projects, Hangjinqi natural gas development project, Shengli and Northwest crude oil development projects, phase I of Xinjiang gas pipeline, phase I of Erdos-Anping-Cangzhou gas pipeline, Wen 23 and Jintan gas storages, as well as overseas projects. Capital expenditure for the refining segment was RMB 1.995 billion, mainly for Zhongke Refining and Petrochemical project, Zhenhai, Tianjin, Maoming and Luoyang refineries and the construction of Rizhao-Puyang-Luoyang crude oil pipeline. Capital expenditure for the marketing and distribution segment was RMB 2.521 billion, mainly for construction of refined oil products depots, pipelines, service stations, non-fuel business and the renovation of underground oil tanks etc. Capital expenditure for the chemicals segment was RMB 1.799 billion, mainly for ethylene projects in Zhongke, Zhenhai and Phase II of Hainan high-efficiency and environment-friendly aromatics project. Capital expenditure for corporate and others was RMB 37 million, mainly for R&D facilities and information technology projects.





3
Significant events
3.1
Significant changes in major items contained in the consolidated financial statements prepared in accordance with CASs and the reasons for such changes.

           
Increase/(Decrease)
 
 
As of 31 March 2019
   
As of 31 December 2018
   
Amount
   
Percentage
 
Items of Consolidated Balance Sheet
 
RMB million
   
RMB million
   
RMB million
   
%
 
Main reasons for changes
Financial assets held for trading
   
16,872
     
25,732
     
(8,860
)
   
(34.4
)
Receipt of the structured deposits at maturity
Derivative financial assets
   
4,977
     
7,887
     
(2,910
)
   
(36.9
)
Decrease in loss position and increase in profitable position of derivative hedging financial instruments
Derivative financial liabilities
   
3,078
     
13,571
     
(10,493
)
   
(77.3
)
Long-term deferred expenses
   
7,489
     
15,659
     
(8,170
)
   
(52.2
)
Decrease in long-term deferred expenses under New Leases Standard
Right-of-use assets
   
206,743
     
-
     
206,743
   
- 
 
New item under New Leases Standard
Lease liabilities
   
182,765
     
-
   
182,765 
   
- 
 
Short-term loans
   
72,757
     
44,692
     
28,065
     
62.8
 
Increase in short-term loans
Taxes payable
   
35,875
     
87,060
     
(51,185
)
   
(58.8
)
Due to the time difference of tax payment, part of the unpaid tax from the end of last year had been paid during this reporting period
Other comprehensive income
   
(930
)
   
(6,774
)
   
5,844
     
(86.3
)
Cash flow hedging and foreign currency translation differences

 
Three-month period ended 31 March
   
Increase/(Decrease)
 
 
2019
   
2018
   
Amount
   
Percentage
 
Items of Consolidated Income Statement
 
RMB Million
   
RMB Million
   
RMB Million
   
%
 
Main reasons for changes
Financial Expense
   
2,330
     
455
     
1,875
     
412.1
 
Increase in Financial Expense under New Leases Standard
Investment income
   
1,285
     
3,355
     
(2,070
)
   
(61.7
)
Decrease in profit  of associates and joint ventures
Minority interests
   
3,708
     
5,752
     
(2,044
)
   
(35.5
)
Decrease in profit of some subsidiaries
(Losses)/gains from changes in fair value
   
(2,226
)
   
126
     
(2,352
)
   
-
 
Increase in fair value loss on derivative financial instruments not qualified as hedging
Asset disposal income/(loss)
   
(64
)
   
227
     
(291
)
   
-
 
Income in 2018 is mainly due to gain from the disposal of land  from subsidiary







 
Three-month period ended 31 March
   
Increase/(Decrease)
 
 
2019
   
2018
   
Amount
   
Percentage
 
Items of consolidated cash flow statement
 
RMB
million
   
RMB
million
   
RMB million
   
%
 
Main reasons for changes
Other cash received relating to operational activities
   
31,379
     
16,695
     
14,684
     
88.0
 
Decrease in Margin deposit in financial derivatives business
Other cash paid relating to operational activities
   
(39,806
)
   
(25,234
)
   
14,572
     
57.7
 
Increase in Margin deposit in financial derivatives business
Other cash received relating to investing activities
   
13,165
     
21,325
     
(8,160
)
   
(38.3
)
Decrease in value of certificate of deposit, over three months, expired and recovered
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
   
(23,514
)
   
(17,901
)
   
5,613
     
31.4
 
Investment cash outflow during this reporting period
Net cash paid for the acquisition of subsidiaries and other business entities
   
-
     
(3,188
)
   
(3,188
)
   
-
 
Net cash paid for the acquisition of SECCO
Other cash paid relating to investing activities
   
(24,388
)
   
(13,499
)
   
10,889
     
80.7
 
Increase in the value of certificate of deposit, over three months

3.2
This quarterly results announcement is published in both Chinese and English languages. In the event of any inconsistency between the two versions, the Chinese version shall prevail.




 
By Order of the Board
 
Chairman
 
Dai Houliang
 
29 April, 2019




4
Appendix
4.1
Quarterly financial statements prepared under China Accounting Standards for Business Enterprises (“CASs”)

Consolidated Balance Sheet
as at 31 March 2019
Prepared by: China Petroleum & Chemical Corporation

RMB million, unaudited
 
Items
 
At 31 March 2019
   
At 31 December 2018
 
Current assets:
           
Cash at bank and on hand
   
168,386
     
167,015
 
Financial assets held for trading
   
16,872
     
25,732
 
Derivative financial assets
   
4,977
     
7,887
 
Bills receivable and accounts receivable
   
80,464
     
64,879
 
Prepayments
   
8,231
     
5,937
 
Other receivables
   
19,682
     
25,312
 
Inventories
   
219,830
     
184,584
 
Other current assets
   
20,671
     
22,774
 
Total current assets
   
539,113
     
504,120
 
Non-current assets:
               
Long-term equity investments
   
147,471
     
145,721
 
Other equity instrument investments
   
1,447
     
1,450
 
Fixed assets
   
605,388
     
617,812
 
Construction in progress
   
138,584
     
136,963
 
Right-of-use assets
   
206,743
     
-
 
Intangible assets
   
102,913
     
103,855
 
Goodwill
   
8,657
     
8,676
 
Long-term deferred expenses
   
7,489
     
15,659
 
Deferred tax assets
   
19,451
     
21,694
 
Other non-current assets
   
36,189
     
36,358
 
Total non-current assets
   
1,274,332
     
1,088,188
 
Total assets
   
1,813,445
     
1,592,308
 
Current liability:
               
Short-term loans
   
72,757
     
44,692
 
Derivative financial liabilties
   
3,078
     
13,571
 
Bills payable and accounts payable
   
218,170
     
192,757
 
Contract liabilities
   
129,199
     
124,793
 
Employee benefits payable
   
7,948
     
7,312
 
Taxes payable
   
35,875
     
87,060
 
Other payables
   
73,293
     
77,463
 
Non-current liabilities due within one year
   
35,284
     
17,450
 
Total current liabilities
   
575,604
     
565,098
 
Non-current liabilities:
               






RMB million, unaudited
 
Items
 
At 31 March 2019
   
At 31 December 2018
 
Long-term loans
   
63,763
     
61,576
 
Debentures payable
   
31,727
     
31,951
 
Lease liabilities
   
182,765
     
-
 
Provisions
   
43,256
     
42,800
 
Deferred tax liabilities
   
6,520
     
5,948
 
Other non-current liabilities
   
27,716
     
27,276
 
Total non-current liabilities
   
355,747
     
169,551
 
Total liabilities
   
931,351
     
734,649
 
Shareholders’ equity:
               
Share capital
   
121,071
     
121,071
 
Capital reserve
   
119,192
     
119,192
 
Other comprehensive income
   
(930
)
   
(6,774
)
Specific reserve
   
2,397
     
1,706
 
Surplus reserves
   
203,678
     
203,678
 
Retained earnings
   
294,245
     
279,482
 
Total equity attributable to shareholders of the Company
   
739,653
     
718,355
 
Minority interests
   
142,441
     
139,304
 
Total shareholders’ equity
   
882,094
     
857,659
 
Total liabilities and shareholders’ equity
   
1,813,445
     
1,592,308
 


Dai Houliang
Ma Yongsheng
Wang Dehua
Chairman
President
Chief Financial Officer








Balance Sheet
as at 31 March 2019
Prepared by: China Petroleum & Chemical Corporation

RMB million, unaudited
 
Items
 
At 31 March 2019
   
At 31 December 2018
 
Current assets
           
Cash at bank and on hand
   
72,019
     
82,879
 
Financial assets held for trading
   
14,500
     
22,500
 
Bills receivable and accounts receivable
   
37,788
     
30,145
 
Prepayments
   
3,541
     
2,488
 
Other receivables
   
54,463
     
57,432
 
Inventories
   
50,273
     
45,825
 
Other current assets
   
17,174
     
15,835
 
Total current assets
   
249,758
     
257,104
 
Non-current assets
               
Long-term equity investments
   
290,891
     
289,207
 
Other equity instrument investments
   
395
     
395
 
Fixed assets
   
294,743
     
302,082
 
Construction in progress
   
50,708
     
51,598
 
Right-of-use assets
   
118,892
     
-
 
Intangible assets
   
8,492
     
8,571
 
Long-term deferred expenses
   
2,492
     
2,480
 
Deferred tax assets
   
9,634
     
11,021
 
Other non-current assets
   
7,591
     
9,145
 
Total non-current assets
   
783,838
     
674,499
 
Total assets
   
1,033,596
     
931,603
 
Current liabilities
               
Short-term loans
   
22,701
     
3,961
 
Derivative financial liabilties
   
-
     
967
 
Bills payable and accounts payable
   
85,760
     
84,418
 
Contract liabilities
   
4,239
     
4,230
 
Employee benefits payable
   
4,245
     
4,294
 
Taxes payable
   
23,681
     
54,764
 
Other payables
   
107,667
     
119,514
 
Non-current liabilities due within one year
   
25,941
     
16,729
 
Total current liabilities
   
274,234
     
288,877
 
Non-current liabilities
               
Long-term loans
   
47,161
     
48,104
 
Debentures payable
   
20,000
     
20,000
 
Lease liabilities
   
111,260
     
-
 
Provisions
   
33,422
     
33,094
 
Other non-current liabilities
   
4,311
     
4,332
 
Total non-current liabilities
   
216,154
     
105,530
 







RMB million, unaudited
 
Items
 
At 31 March 2019
   
At 31 December 2018
 
Total liabilities
   
490,388
     
394,407
 
Shareholders’ equity
               
Share capital
   
121,071
     
121,071
 
Capital reserve
   
68,801
     
68,795
 
Other comprehensive income
   
332
     
(485
)
Specific reserve
   
1,309
     
989
 
Surplus reserves
   
203,678
     
203,678
 
Retained earnings
   
148,017
     
143,148
 
Total shareholders’ equity
   
543,208
     
537,196
 
Total liabilities and shareholders’ equity
   
1,033,596
     
931,603
 

Dai Houliang
Ma Yongsheng
Wang Dehua
Chairman
President
Chief Financial Officer






Consolidated Income Statement
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
I. Operating income
   
717,579
     
621,251
 
II. Total Operating costs
   
693,152
     
594,063
 
Including: Operating costs
   
596,412
     
501,278
 
Taxes and surcharges
   
60,459
     
57,719
 
Selling and distribution expenses
   
14,748
     
13,688
 
General and administrative expenses
   
15,485
     
16,708
 
Research and development costs
   
1,292
     
1,998
 
Financial expenses
   
2,330
     
455
 
Exploration expenses, including dry holes
   
2,543
     
2,230
 
Impairment losses
   
(136
)
   
(13
)
Credit impairment losses
   
19
     
-
 
Add: Other income
   
761
     
594
 
Investment income
   
1,285
     
3,355
 
(Losses)/gains from changes in fair value
   
(2,226
)
   
126
 
Asset disposal (expense)/income
   
(64
)
   
227
 
III. Operating profit
   
24,183
     
31,490
 
Add: Non-operating income
   
243
     
378
 
Less: Non-operating  expenses
   
416
     
353
 
IV. Profit before taxation
   
24,010
     
31,515
 
Less: Income tax expense
   
5,539
     
6,993
 
V. Net profit
   
18,471
     
24,522
 
Classification by going concern:
               
(i) Continuous operating net profit
   
18,471
     
24,522
 
(ii) Termination of net profit
   
-
     
-
 
Classification by ownership:
               
(i) Equity shareholders of the Company
   
14,763
     
18,770
 
(ii) Minority interests
   
3,708
     
5,752
 







Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
VI. Other comprehensive income
   
3,759
     
(1,485
)
Items that may not be reclassified subsequently to profit or loss:
   
1
     
-
 
Changes in fair value of other equity instrument investments
   
1
     
-
 
Items that may be reclassified subsequently to profit or loss:
   
3,758
     
(1,485
)
Other comprehensive income that can be converted into profit or loss under the equity method
   
66
     
148
 
Cash flow hedges reserve
   
4,853
     
785
 
Foreign currency translation differences
   
(1,161
)
   
(2,418
)
VII. Total comprehensive income
   
22,230
     
23,037
 
Attributable to:
               
Equity shareholders of the Company
   
19,029
     
17,990
 
Minority interests
   
3,201
     
5,047
 
VIII. Earnings per share:
               
(i) Basic earnings per share (RMB/Share)
   
0.122
     
0.155
 
(ii) Diluted earnings per share (RMB/Share)
   
0.122
     
0.155
 

Dai Houliang
Ma Yongsheng
Wang Dehua
Chairman
President
Chief Financial Officer







Income Statement
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
 
Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
I.Operating income
   
249,978
     
241,136
 
Less: Operating costs
   
191,844
     
184,696
 
Taxes and surcharges
   
40,952
     
40,067
 
Selling and distribution expenses
   
754
     
693
 
General and administrative expenses
   
7,612
     
8,585
 
Research and development costs
   
1,197
     
1,782
 
Financial expenses
   
1,635
     
1,008
 
Exploration expenses, including dry holes
   
2,429
     
2,213
 
Impairment losses
   
-
     
4
 
Credit impairment losses
   
(5
)
   
-
 
Add: Other income
   
631
     
300
 
Investment income
   
1,777
     
2,931
 
Gains/(losses) from changes in fair value
   
20
     
(18
)
Asset disposal (expense)/income
   
(1
)
   
237
 
II. Operating profit
   
5,987
     
5,538
 
Add: Non-operating income
   
34
     
122
 
Less: Non-operating expenses
   
147
     
155
 
III. Profit before taxation
   
5,874
     
5,505
 
Less: Income tax expense
   
1,003
     
791
 
IV. Net profit
   
4,871
     
4,714
 
(i) Continuous operating net profit
   
4,871
     
4,714
 
(ii) Termination of net profit
   
-
     
-
 
V. Other comprehensive income
   
817
     
(53
)
Items that may be reclassified subsequently to profit or loss
   
817
     
(53
)
Other comprehensive loss that can be converted into profit or loss under the equity method
   
(33
)
   
(53
)
Cash flow hedges
   
850
     
-
 
VI. Total comprehensive income
   
5,688
     
4,661
 

Dai Houliang
Ma Yongsheng
Wang Dehua
Chairman
President
Chief Financial Officer






Consolidated Cash Flow Statement
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation

RMB million, unaudited
 
Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
I. Cash flows from operating activities:
           
Cash received from sale of goods and rendering of services
   
760,693
     
707,017
 
Refund of taxes and levies
   
760
     
593
 
Other cash received relating to operating activities
   
31,379
     
16,695
 
Sub-total of cash inflows
   
792,832
     
724,305
 
Cash paid for goods and services
   
(625,310
)
   
(561,416
)
Cash paid to and for employees
   
(17,224
)
   
(16,056
)
Payments of taxes and levies
   
(125,101
)
   
(109,547
)
Other cash paid relating to operating activities
   
(39,806
)
   
(25,234
)
Sub-total of cash outflows
   
(807,441
)
   
(712,253
)
Net cash flow from operating activities
   
(14,609
)
   
12,052
 
II.Cash flows from investing activities:
               
Cash received from disposal of investments
   
9,636
     
13,342
 
Cash received from returns on investments
   
1,288
     
674
 
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
   
24
     
-
 
Other cash received relating to investing activities
   
13,165
     
21,325
 
Sub-total of cash inflows
   
24,113
     
35,341
 
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
   
(23,514
)
   
(17,901
)
Cash paid for acquisition of investments
   
(1,793
)
   
(2,241
)
Net cash paid for the acquisition of subsidiaries and other business entities
   
-
     
(3,188
)
Other cash paid relating to investing activities
   
(24,388
)
   
(13,499
)
Sub-total of cash outflows
   
(49,695
)
   
(36,829
)
Net cash flow from investing activities
   
(25,582
)
   
(1,488
)
III.Cash flows from financing activities:
               
Cash received from capital contributions
   
94
     
70
 
Including: Cash received from minority shareholders’ capital contributions to subsidiaries
   
94
     
70
 







Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
Cash received from borrowings
   
149,622
     
126,432
 
Other cash received relating to financing   activities
   
190
     
-
 
Sub-total of cash inflows
   
149,906
     
126,502
 
Cash repayments of borrowings
   
(118,511
)
   
(118,865
)
Cash paid for dividends, profits distribution or interest
   
(1,396
)
   
(1,173
)
Including: Subsidiaries’ cash payments for distribution of dividends or profits to minority shareholders
   
(235
)
   
(390
)
Other cash paid relating to financing activities
   
(630
)
   
(3
)
Sub-total of cash outflows
   
(120,537
)
   
(120,041
)
Net cash flow from financing activities
   
29,369
     
6,461
 
IV. Effects of changes in foreign exchange rate
   
(340
)
   
(455
)
V. Net (decrease)/increase in cash and cash equivalents
   
(11,162
)
   
16,570
 
AddInitial balance of cash and cash equivalents
   
111,922
     
113,218
 
VI. Ending balance of cash and cash equivalents
   
100,760
     
129,788
 

Dai Houliang
Ma Yongsheng
Wang Dehua
Chairman
President
Chief Financial Officer






Cash Flow Statement
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation

RMB million, unaudited
 
Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
I.Cash flows from operating activities:
       
  
 
Cash received from sale of goods and rendering of services
   
280,152
     
285,228
 
Refund of taxes and levies
   
519
     
445
 
Other cash received relating to operating activities
   
757
     
6,926
 
Sub-total of cash inflows
   
281,428
     
292,599
 
Cash paid for goods and services
   
(208,261
)
   
(192,802
)
Cash paid to and for employees
   
(9,274
)
   
(8,515
)
Payments of taxes and levies
   
(76,898
)
   
(75,254
)
Other cash paid relating to operating activities
   
(2,939
)
   
(31,161
)
Sub-total of cash outflows
   
(297,372
)
   
(307,732
)
Net cash flow from operating activities
   
(15,944
)
   
(15,133
)
II.Cash flows from investing activities:
               
Cash received from disposal of investments
   
9,285
     
15,319
 
Cash received from returns on investments
   
1,270
     
2,116
 
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
   
3
     
289
 
Other cash received relating to investing activities
   
9,933
     
12,428
 
Sub-total of cash inflows
   
20,491
     
30,152
 
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
   
(7,459
)
   
(8,098
)
Cash paid for acquisition of investments
   
(1,376
)
   
(2,316
)
Other cash paid relating to investing activities
   
(10,800
)
   
-
 
Sub-total of cash outflows
   
(19,635
)
   
(10,414
)
Net cash flow from investing activities
   
856
     
19,738
 
III.Cash flows from financing activities:
               
Cash received from borrowings
   
39,186
     
25,723
 
Sub-total of cash inflows
   
39,186
     
25,723
 
Cash repayments of borrowings
   
(35,016
)
   
(18,654
)
Cash paid for dividends or interest
   
(1,476
)
   
(1,161
)
Other cash paid relating to financing activities
   
(266
)
   
-
 
Sub-total of cash outflows
   
(36,758
)
   
(19,815
)
Net cash flow from financing activities
   
2,428
     
5,908
 
IV. Effects of changes in foreign exchange rate
   
-
     
-
 
V. Net (decrease)/increase in cash and cash equivalents
   
(12,660
)
   
10,513
 
AddInitial balance of cash and cash equivalents
   
59,120
     
72,309
 
VI. Ending balance of cash and cash equivalents
   
46,460
     
82,822
 

Dai Houliang
Ma Yongsheng
Wang Dehua
Chairman
President
Chief Financial Officer







Segement Reporting
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
Income from principal operations
           
Exploration and production
           
External sales
   
29,367
     
20,933
 
Inter–segment sales
   
22,089
     
20,269
 
Subtotal
   
51,456
     
41,202
 
Refining
               
External sales
   
34,002
     
33,933
 
Inter–segment sales
   
255,752
     
252,897
 
Subtotal
   
289,754
     
286,830
 
Marketing and distribution
               
External sales
   
321,636
     
310,117
 
Inter–segment sales
   
965
     
1,176
 
Subtotal
   
322,601
     
311,293
 
Chemicals
               
External sales
   
110,990
     
104,780
 
Inter–segment sales
   
17,121
     
15,980
 
Subtotal
   
128,111
     
120,760
 
Corporate and others
               
External sales
   
205,504
     
135,500
 
Inter–segment sales
   
154,677
     
131,516
 
Subtotal
   
360,181
     
267,016
 
Elimination of inter–segment sales
   
(450,604
)
   
(421,838
)
Consolidated income from principal operations
   
701,499
     
605,263
 
Income from other operations
               
Exploration and production
   
1,821
     
1,742
 
Refining
   
1,251
     
1,125
 
Marketing and distribution
   
8,850
     
8,892
 
Chemicals
   
3,733
     
3,738
 







Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
Corporate and others
   
425
     
491
 
Consolidated income from other operations
   
16,080
     
15,988
 
Consolidated operating income
   
717,579
     
621,251
 
Operating profit/(loss)
               
By segment
               
Exploration and production
   
1,581
     
(573
)
Refining
   
11,481
     
18,549
 
Marketing and distribution
   
7,990
     
8,646
 
Chemicals
   
6,827
     
8,090
 
Corporate and others
   
(582
)
   
(1,069
)
Elimination
   
(540
)
   
(6,000
)
Total segment operating profit
   
26,757
     
27,643
 
Investment income
               
Exploration and production
   
777
     
337
 
Refining
   
(394
)
   
226
 
Marketing and distribution
   
215
     
646
 
Chemicals
   
1,047
     
1,490
 
Corporate and others
   
(360
)
   
656
 
Total segment investment income
   
1,285
     
3,355
 
Financial expenses
   
(2,330
)
   
(455
)
(Loss)/gain from changes in fair value
   
(2,226
)
   
126
 
Loss from asset disposal
   
(64
)
   
227
 
Other income
   
761
     
594
 
Operating profit
   
24,183
     
31,490
 
Add: Non-operating income
   
243
     
378
 
Less: Non-operating expenses
   
416
     
353
 
Profit before taxation
   
24,010
     
31,515
 





4.2
Quarterly financial statements prepared under International Financial Reporting Standards (“IFRS”)

Consolidated Income Statement
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
 
Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
Turnover and other operating revenues
           
Turnover
   
701,499
     
605,263
 
Other operating revenues
   
16,080
     
15,988
 
Subtotal
   
717,579
     
621,251
 
Operating expenses
               
Purchased crude oil, products and operating supplies and expenses
   
(572,138
)
   
(474,389
)
Selling, general and administrative expenses
   
(11,575
)
   
(16,708
)
Depreciation, depletion and amortization
   
(25,998
)
   
(25,111
)
Exploration expenses, including dry holes
   
(2,543
)
   
(2,230
)
Personnel expenses
   
(17,361
)
   
(16,861
)
Taxes other than income tax
   
(60,459
)
   
(57,719
)
Other operating (expense)/income, net
   
(2,664
)
   
985
 
Total operating expenses
   
(692,738
)
   
(592,033
)
Operating profit
   
24,841
     
29,218
 
Finance costs
               
Interest expense
   
(4,301
)
   
(1,989
)
Interest income
   
1,924
     
1,288
 
Foreign currency exchange income, net
   
47
     
246
 
Net finance costs
   
(2,330
)
   
(455
)
Investment income
   
55
     
217
 
Share of profits less losses from associates and     joint ventures
   
2,232
     
3,140
 
Profit before taxation
   
24,798
     
32,120
 
Income tax expense
   
(5,539
)
   
(6,993
)
Profit for the period
   
19,259
     
25,127
 
Attributable to
               
Owners of the Company
   
15,468
     
19,306
 
Non-controlling interests
   
3,791
     
5,821
 
Profit for the period
   
19,259
     
25,127
 
Earnings per share
               
Basic earnings per share (RMB)
   
0.128
     
0.159
 
Diluted earnings per share (RMB)
   
0.128
     
0.159
 





Consolidated Statement of Comprehensive Income
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
 
Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
Profit for the period
   
19,259
     
25,127
 
Other comprehensive income:
               
Items that may be reclassified subsequently to profit or loss (net of tax and after reclassification adjustments):
               
Financial assets at fair value through other comprehensive income
   
1
     
-
 
Total items that maynot be reclassifled subsequently to profit or loss
   
1
     
-
 
Items that may be reclassified subsequently to profit or loss:
               
Share of other comprehensive income of associates and joint ventures
   
66
     
148
 
Cash flow hedges
   
4,853
     
785
 
Foreign currency translation differences
   
(1,161
)
   
(2,418
)
Total items that may be reclassified subsequently to profit or loss
   
3,758
     
(1,485
)
Total other comprehensive income
   
3,759
     
(1,485
)
Total comprehensive income
   
23,018
     
23,642
 
Attributable to:
               
Shareholders of the Company
   
19,734
     
18,526
 
Non–controlling interests
   
3,284
     
5,116
 
Total comprehensive income
   
23,018
     
23,642
 





Consolidated Balance Sheet
as at 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
 
Items
 
At 31 March 2019
   
At 31 December 2018
 
Non-current assets
           
Property, plant and equipment, net
   
605,380
     
617,762
 
Construction in progress
   
138,584
     
136,963
 
Right-of-use assets
   
206,743
     
-
 
Goodwill
   
8,657
     
8,676
 
Interest in associates
   
90,332
     
89,537
 
Interest in joint ventures
   
57,139
     
56,184
 
Financial assets at fair value through other comprehensive income
   
1,447
     
1,450
 
Deferred tax assets
   
19,451
     
21,694
 
Lease prepayments
   
64,220
     
64,514
 
Long-term prepayments and other non-current  assets
   
82,379
     
91,408
 
Total non-current assets
   
1,274,332
     
1,088,188
 
Current assets:
               
Cash and cash equivalents
   
100,760
     
111,922
 
Time deposits with financial institutions
   
67,626
     
55,093
 
Financial assets at fair value through profit and loss
   
16,872
     
25,732
 
Derivatives financial assets
   
4,977
     
7,887
 
Trade accounts receivable and bills receivable
   
80,464
     
64,879
 
Inventories
   
219,830
     
184,584
 
Prepaid expenses and other current assets
   
48,584
     
54,023
 
Total current assets
   
539,113
     
504,120
 
Current liabilities
               
Short-term debts
   
50,694
     
29,462
 
Loans from Sinopec Group Company and fellow subsidiaries
   
38,661
     
31,665
 
Derivatives financial liabilities
   
3,078
     
13,571
 
Trade accounts payable and bills payable
   
218,170
     
192,757
 
Contract liabilities
   
129,199
     
124,793
 
Other payables
   
131,929
     
166,151
 
Income tax payable
   
3,873
     
6,699
 
Total current liabilities
   
575,604
     
565,098
 
Net current liabilities
   
36,491
     
60,978
 
Total assets less current liabilities
   
1,237,841
     
1,027,210
 
Non-current liabilities
               
Long-term debts
   
52,631
     
51,011
 







Items
 
At 31 March 2019
   
At 31 December 2018
 
Loans from Sinopec Group Company and fellow subsidiaries
   
42,859
     
42,516
 
Deferred tax liabilities
   
6,520
     
5,948
 
Provisions
   
43,256
     
42,800
 
Lease liabilities
   
182,765
     
-
 
Other non-current liabilities
   
28,827
     
28,400
 
Total non-current liabilities
   
356,858
     
170,675
 
Total net assets
   
880,983
     
856,535
 
Equity
               
Share capital
   
121,071
     
121,071
 
Reserves
   
617,507
     
596,213
 
Total equity attributable to owners of the Company
   
738,578
     
717,284
 
Non-controlling interests
   
142,405
     
139,251
 
Total equity
   
880,983
     
856,535
 






Consolidated Statement of Cash Flows
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
 
Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
Net cash generated from operating activities(a)
   
(14,609
)
   
12,052
 
Investing activities
               
Capital expenditure
   
(21,855
)
   
(17,294
)
Exploratory wells expenditure
   
(1,659
)
   
(607
)
Purchase of investments, investments in associates and investments in joint ventures
   
(1,793
)
   
(2,241
)
Payment for acquisition of subsidiary, net of cash acquired
   
-
     
(3,188
)
Proceeds from disposal of investments and investments in associates, net
   
9,636
     
13,342
 
Proceeds from disposal of property, plant, equipment and other non-current assets
   
24
     
-
 
Increase in time deposits with maturities over three months
   
(24,388
)
   
(13,445
)
Decrease in time deposits with maturities over three months
   
11,855
     
21,379
 
Interest received
   
1,310
     
(108
)
Investment and dividend income received
   
1,288
     
674
 
Net cash used in investing activities
   
(25,582
)
   
(1,488
)
Financing activities
               
Proceeds from bank and other loans
   
149,622
     
126,432
 
Repayments of bank and other loans
   
(118,511
)
   
(118,865
)
Contributions to subsidiaries from non-controlling interests
   
94
     
70
 
Distributions by subsidiaries to non-controlling interests
   
(319
)
   
(390
)
Interest paid
   
(1,077
)
   
(783
)
Cash payments for the principal portion of the lease liability
   
(440
)
   
-
 
Finance lease payment
   
-
     
(3
)
Net cash used in financing activities
   
29,369
     
6,461
 
Net (decrease)/increase in cash and cash equivalents
   
(10,822
)
   
17,025
 
Cash and cash equivalents at 1 January
   
111,922
     
113,218
 
Effect of foreign currency exchange rate changes
   
(340
)
   
(455
)
Cash and cash equivalents at 31 March
   
100,760
     
129,788
 






Note to consolidated statement of Cash Flows
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
(a)
Reconciliation of profit before taxation to net cash generated from operating activities
Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
Operating activities
           
Profit before taxation
   
24,798
     
32,120
 
Adjustments for:
               
Depreciation, depletion and amortization
   
25,998
     
26,336
 
Dry hole costs written off
   
1,836
     
1,974
 
Share of profits from associates and joint ventures
   
(2,232
)
   
(3,140
)
Investment income
   
(55
)
   
(217
)
Interest income
   
(1,924
)
   
(1,288
)
Interest expense
   
4,301
     
1,989
 
Loss/(gain) on foreign currency exchange rate changes and derivative financial instruments
   
1,295
     
(604
)
Loss on disposal of property, plant, equipment and other non-current assets, net
   
85
     
-
 
Impairment reversal on assets
   
(136
)
   
(13
)
Credit impairment losses
   
19
     
-
 
Operating profit before change of operating capital
   
53,985
     
57,157
 
Net change
               
Accounts receivable and other current assets
   
(7,199
)
   
7,815
 
Increase of inventories
   
(30,127
)
   
(4,630
)
Accounts payable and other current liabilities
   
(24,314
)
   
(39,182
)
Subtotal
   
(7,655
)
   
21,160
 
Income tax paid
   
(6,954
)
   
(9,108
)
Net cash generated from operating activities
   
(14,609
)
   
12,052
 






Segment Reporting
for the three-month periods ended 31 March 2019
Prepared by: China Petroleum & Chemical Corporation
RMB million, unaudited
 
Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
Turnover
           
Exploration and production
           
External sales
   
29,367
     
20,933
 
Inter-segment sales
   
22,089
     
20,269
 
Subtotal
   
51,456
     
41,202
 
Refining
               
External sales
   
34,002
     
33,933
 
Inter-segment sales
   
255,752
     
252,897
 
Subtotal
   
289,754
     
286,830
 
Marketing and distribution
               
External sales
   
321,636
     
310,117
 
Inter-segment sales
   
965
     
1,176
 
Subtotal
   
322,601
     
311,293
 
Chemicals
               
External sales
   
110,990
     
104,780
 
Inter-segment sales
   
17,121
     
15,980
 
Subtotal
   
128,111
     
120,760
 
Corporate and others
               
External sales
   
205,504
     
135,500
 
Inter-segment sales
   
154,677
     
131,516
 
Subtotal
   
360,181
     
267,016
 
Elimination of inter-segment sales
   
(450,604
)
   
(421,838
)
Turnover
   
701,499
     
605,263
 
Other operating revenues
               
Exploration and production
   
1,821
     
1,742
 
Refining
   
1,251
     
1,125
 
Marketing and distribution
   
8,850
     
8,892
 
Chemicals
   
3,733
     
3,738
 
Corporate and others
   
425
     
491
 
Other operating revenues
   
16,080
     
15,988
 
Turnover and other operating revenues
   
717,579
     
621,251
 
Result
               
Operating (loss)/profit
               
By segment
               
Exploration and production
   
2,143
     
(318
)
Refining
   
11,963
     
19,007
 
Marketing and distribution
   
7,866
     
8,925
 







Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
Chemicals
   
6,953
     
8,452
 
Corporate and others
   
(3,544
)
   
(848
)
Elimination
   
(540
)
   
(6,000
)
Total segment operating profit
   
24,841
     
29,218
 
Share of profits from associates and joint ventures
               
Exploration and production
   
777
     
276
 
Refining
   
(404
)
   
223
 
Marketing and distribution
   
247
     
641
 
Chemicals
   
1,061
     
1,495
 
Corporate and others
   
551
     
505
 
Aggregate share of profits from associates and joint ventures
   
2,232
     
3,140
 
Investment income/(losses)
               
Exploration and production
   
(1
)
   
61
 
Refining
   
10
     
3
 
Marketing and distribution
   
45
     
8
 
Chemicals
   
1
     
(6
)
Corporate and others
   
-
     
151
 
Aggregate investment income
   
55
     
217
 
Net finance costs
   
(2,330
)
   
(455
)
Profit before taxation
   
24,798
     
32,120
 






4.3
Differences between Consolidated Financial Statements prepared in accordance with the accounting policies complying with CASs and IFRS (unaudited)

Other than the differences in the classifications of certain financial statements captions and the accounting for the items described below, there are no material differences between the Group’s consolidated financial statements prepared in accordance with the accounting policies complying with CASs and IFRS. The reconciliation presented below is included as supplemental information, is not required as part of the basic financial statements and does not include differences related to classification, presentation or disclosures. Such information has not been subject to independent audit or review. The major differences are:

(i)
Government Grants

Under CASs, grants from the government are credited to capital reserve if required by relevant governmental regulations. Under IFRS, government grants relating to the purchase of fixed assets are recognised as deferred income and are transferred to the income statement over the useful life of these assets.

(ii)
Safety Production Fund

Under CASs, safety production fund should be recognised in profit or loss with a corresponding increase in reserve according to PRC regulations. Such reserve is reduced for expenses incurred for safety production purposes or, when safety production related fixed assets are purchased, is reduced by the purchased cost with a corresponding increase in the accumulated depreciation. Such fixed assets are not depreciated thereafter. Under IFRS, payments are expensed as incurred, or capitalised as fixed assets and depreciated according to applicable depreciation methods.

Effects of major differences between the net profit under CASs and the profit for the period under IFRS are analysed as follows:

Prepared by: China Petroleum & Chemical Corporation

RMB million, unaudited
Items
 
Three-month periods ended 31 March 2019
   
Three-month periods ended 31 March 2018
 
Net profit under CASs
   
18,471
     
24,522
 
Adjustments:
               
Government grants (i)
   
13
     
14
 
Safety production fund (ii)
   
775
     
591
 
                 
Profit for the period under IFRS
   
19,259
     
25,127
 






Effects of major differences between the shareholders’ equity under CASs and the total equity under IFRS are analysed as follows:

RMB million, unaudited
 
Items
 
At 31 March 2019
   
At 31 December 2018
 
Shareholders’ equity under CASs
   
882,094
     
857,659
 
Adjustments:
               
Government grants(i)
   
(1,111
)
   
(1,124
)
Total equity under IFRS
   
880,983
     
856,535
 

4.4
Adjustments to financial statements related items due to initial implementation of the New Financial Instruments Standards, New Income Standards, New Lease Standards at the beginning of the year is as below:
Consolidated Balance Sheet
RMB million

Items
 
At 31 December 2018
   
At 1 January 2019
   
Adjustment
 
Current assets:
                 
Cash at bank and on hand
   
167,015
     
167,015
       
Financial assets held for trading
   
25,732
     
25,732
       
Derivative financial assets
   
7,887
     
7,887
       
Bills receivable and accounts receivable
   
64,879
     
64,879
       
Prepayments
   
5,937
     
5,171
     
(766
)
Other receivables
   
25,312
     
25,312
         
Inventories
   
184,584
     
184,584
         
Other current assets
   
22,774
     
22,774
         
Total current assets
   
504,120
     
503,354
     
(766
)
Non-current assets:
                       
Long-term equity investments
   
145,721
     
145,721
         
Other equity instrument investments
   
1,450
     
1,450
         
Fixed assets
   
617,812
     
617,812
         
Construction in progress
   
136,963
     
136,963
         
Right-of-use assets
   
-
     
207,455
     
207,455
 
Intangible assets
   
103,855
     
103,855
         
Goodwill
   
8,676
     
8,676
         
Long-term deferred expenses
   
15,659
     
7,534
     
(8,125
)
Deferred tax assets
   
21,694
     
21,694
         
Other non-current assets
   
36,358
     
36,358
         







Items
 
At 31 December 2018
   
At 1 January 2019
   
Adjustment
 
Total non-current assets
   
1,088,188
     
1,287,518
     
199,330
 
Total assets
   
1,592,308
     
1,790,872
     
198,564
 
Current liability:
                       
Short-term loans
   
44,692
     
44,692
         
Derivative financial liabilties
   
13,571
     
13,571
         
Bills payable and accounts payable
   
192,757
     
192,757
         
Contract liabilities
   
124,793
     
124,793
         
Employee benefits payable
   
7,312
     
7,312
         
Taxes payable
   
87,060
     
87,060
         
Other payables
   
77,463
     
77,463
         
Non-current liabilities due within one year
   
17,450
     
31,344
     
13,894
 
Total current liabilities
   
565,098
     
578,992
     
13,894
 
Non-current liabilities:
                       
Long-term loans
   
61,576
     
61,576
         
Debentures payable
   
31,951
     
31,951
         
Lease liabilities
   
-
     
184,670
     
184,670
 
Provisions
   
42,800
     
42,800
         
Deferred tax liabilities
   
5,948
     
5,948
         
Other non-current liabilities
   
27,276
     
27,276
         
Total non-current liabilities
   
169,551
     
354,221
     
184,670
 
Total liabilities
   
734,649
     
933,213
     
198,564
 
Shareholders’ equity:
                       
Share capital
   
121,071
     
121,071
         
Capital reserve
   
119,192
     
119,192
         
Other comprehensive income
   
(6,774
)
   
(6,774
)
       
Specific reserve
   
1,706
     
1,706
         
Surplus reserves
   
203,678
     
203,678
         
Retained earnings
   
279,482
     
279,482
         
Total equity attributable to shareholders of the Company
   
718,355
     
718,355
         
Minority interests
   
139,304
     
139,304
         
Total shareholders’ equity
   
857,659
     
857,659
         
Total liabilities and shareholders’ equity
   
1,592,308
     
1,790,872
     
198,564
 







Balance Sheet
RMB million

Items
 
At 31 December 2018
   
At 1 January 2019
   
Adjustment
 
Current assets
                 
Cash at bank and on hand
   
82,879
     
82,879
       
Financial assets held for trading
   
22,500
     
22,500
       
Bills receivable and accounts receivable
   
30,145
     
30,145
       
Prepayments
   
2,488
     
2,488
       
Other receivables
   
57,432
     
57,432
       
Inventories
   
45,825
     
45,825
       
Other current assets
   
15,835
     
15,835
       
Total current assets
   
257,104
     
257,104
       
Non-current assets
                     
Long-term equity investments
   
289,207
     
289,207
       
Other equity instrument investments
   
395
     
395
       
Fixed assets
   
302,082
     
302,082
       
Construction in progress
   
51,598
     
51,598
       
Right-of-use assets
   
-
     
119,776
     
119,776
 
Intangible assets
   
8,571
     
8,571
         
Long-term deferred expenses
   
2,480
     
2,480
         
Deferred tax assets
   
11,021
     
11,021
         
Other non-current assets
   
9,145
     
9,145
         
Total non-current assets
   
674,499
     
794,275
     
119,776
 
Total assets
   
931,603
     
1,051,379
     
119,776
 
Current liabilities
                       
Short-term loans
   
3,961
     
3,961
         
Derivative financial liabilties
   
967
     
967
         
Bills payable and accounts payable
   
84,418
     
84,418
         
Contract liabilities
   
4,230
     
4,230
         
Employee benefits payable
   
4,294
     
4,294
         
Taxes payable
   
54,764
     
54,764
         
Other payables
   
119,514
     
119,514
         
Non-current liabilities due within one year
   
16,729
     
24,183
     
7,454
 
Total current liabilities
   
288,877
     
296,331
     
7,454
 
Non-current liabilities
                       
Long-term loans
   
48,104
     
48,104
         
Debentures payable
   
20,000
     
20,000
         
Lease liabilities
   
-
     
112,322
     
112,322
 
Provisions
   
33,094
     
33,094
         







Items
 
At 31 December 2018
   
At 1 January 2019
   
Adjustment
 
Other non-current liabilities
   
4,332
     
4,332
       
Total non-current liabilities
   
105,530
     
217,852
     
112,322
 
Total liabilities
   
394,407
     
514,183
     
119,776
 
Shareholders’ equity
                       
Share capital
   
121,071
     
121,071
         
Capital reserve
   
68,795
     
68,795
         
Other comprehensive income
   
(485
)
   
(485
)
       
Specific reserve
   
989
     
989
         
Surplus reserves
   
203,678
     
203,678
         
Retained earnings
   
143,148
     
143,148
         
Total shareholders’ equity
   
537,196
     
537,196
         
Total liabilities and shareholders’ equity
   
931,603
     
1,051,379
     
119,776
 






Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibilities for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.


(a joint stock limited company incorporated in the People’s Republic of China with limited liability)
(Stock Code: 00386)

CONNECTED TRANSACTION
CAPITAL INCREASE AND DEEMED DISPOSAL

CAPITAL INCREASE
 
The Board is pleased to announce that on 29 April 2019, the Company entered into the Sinopec-SK Capital Increase Agreement with Sinopec Asset, SKGC and Sinopec-SK, respectively, to agree upon the Capital Increase in Sinopec-SK. Pursuant to the Sinopec-SK Capital Increase Agreement, (i) the Company shall contribute the Capital Increase Assets of Sinopec equivalent to RMB549.0 million to Sinopec-SK, of which to subscribe for the newly increased registered capital of Sinopec-SK of RMB168.37 million and the remaining part shall be included in the capital reserve of Sinopec-SK, (ii) Sinopec Asset shall contribute the Capital Increase Assets of Sinopec Asset equivalent to RMB1.5022 billion to Sinopec-SK, of which to subscribe for the newly increased registered capital of Sinopec-SK of RMB431.58 million and the remaining part shall be included in the capital reserve of Sinopec-SK, and (iii) SKGC shall contribute cash in RMB1.1045 billion or equivalent USD to Sinopec-SK, of which to subscribe for the newly increased registered capital of Sinopec-SK of RMB323.05 million and the remaining part shall be included in the capital reserve of Sinopec-SK. Upon Completion of the Capital Increase, the registered capital of Sinopec-SK will increase to RMB7.1930 billion from RMB6.27 billion, in which the Company’s shareholding will be reduced from 65% to 59%, Sinopec Asset's shareholding will increase to 6% from 0%, and SKGC's shareholding will remain unchanged at 35%. On the same date, the Company, Sinopec Asset and SKGC also entered into the Sinopec-SK Joint Venture Contract and entered into the Sinopec-SK Articles with Sinopec-SK.
 
LISTING RULES IMPLICATIONS
 




As at the date of this announcement, China Petrochemical Corporation is the controlling shareholder of the Company. As Sinopec Asset is a subsidiary of China Petrochemical Corporation, pursuant to Chapter 14A of the Listing Rules, Sinopec Asset is an associate of China Petrochemical Corporation and thus constitutes a connected person of the Company. As the Capital Increase constitutes deemed disposal of the Company under Rule 14.29 of the Listing Rules, accordingly, the Capital Increase constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.
 
As the highest applicable percentage ratio in respect of the Capital Increase exceeds 0.1% but is less than 5%, the Capital Increase is subject to the reporting and announcement requirements, but exempt from the independent shareholders’ approval requirement under Chapter 14A of the Listing Rules.
 


INTRODUCTION

The Board is pleased to announce that on 29 April 2019, the Company entered into the Sinopec-SK Capital Increase Agreement with Sinopec Asset, SKGC and Sinopec-SK, respectively, to agree upon the Capital Increase in Sinopec-SK. Upon Completion of the Capital Increase, the Company’s shareholding will be reduced from 65% to 59%, Sinopec Asset's shareholding will increase to 6% from 0%, and SKGC's shareholding will remain unchanged at 35%. On the same date, the Company, Sinopec Asset and SKGC also entered into the Sinopec-SK Joint Venture Contract and entered into the Sinopec-SK Articles with Sinopec-SK.

On the same date, the Company entered into the Asset Transfer Agreement with Sinopec-SK, where the Company agreed to dispose the Transferred Assets to Sinopec-SK. The Asset Transfer Agreement is a transaction within the Group and does not constitute a transaction under Chapter 14 or Chapter 14A of the Listing Rules.

In respect of the Capital Increase, Sinopec Asset has made capital contribution to Sinopec-SK and the Company does not exercise the relevant pre-emptive rights, which constitutes a connected transaction between the Company and China Petrochemical Corporation pursuant to the Rules Governing the Listing of Stocks on Shanghai Stock Exchange but does not reach the minimum disclosure threshold pursuant to Chapter X of the Rules Governing the Listing of Stocks on Shanghai Stock Exchange and also there is no need to be submitted to the Company's general meeting for shareholders' approval. In respect of the disposal of Transfer Assets from the Company to Sinopec-SK, as it is a transaction between the Company and its consolidated subsidiary, the transaction is exempted from disclosure procedure pursuant to Chapter IX of the Rules Governing the Listing of Stocks on Shanghai Stock Exchange.


PRINCIPAL TERMS OF THE SINOPEC-SK CAPITAL INCREASE AGREEMENT

Date: 29 April 2019

Parties:

(1)
the Company

(2)
Sinopec Asset

(3)
SKGC; and

(4)
Sinopec-SK
(collectively, the “Parties”)

Amount of increase in capital and registered capital
The Parties agreed upon the increase of the registered capital of Sinopec-SK to RMB7.1930 billion from RMB6.27 billion. (i) The Company shall contribute the Capital Increase Assets of Sinopec equivalent to RMB549.0 million to Sinopec-SK, of which to subscribe for the newly increased registered capital of Sinopec-SK of RMB168.37 million and the remaining part shall be included in the capital reserve of Sinopec-SK, (ii) Sinopec Asset shall contribute the Capital Increase Assets of Sinopec Asset equivalent to RMB1.5022 billion to Sinopec-SK, of which to subscribe for the newly increased registered capital of Sinopec-SK of RMB431.58 million and the remaining part shall be included in the capital reserve of Sinopec-SK, and (iii) SKGC shall contribute cash in RMB1.1045 billion or equivalent USD to Sinopec-SK, of which to subscribe for the newly increased registered capital of Sinopec-SK of RMB323.05 million and the remaining part shall be included in the capital reserve of Sinopec-SK.

After the issuance of the New Business License, the percentage of each Party’s contribution to the registered capital of Sinopec-SK is as follows:
No.
Shareholder
Subscribed Registered Capital (RMB)
Contribution Percentage (%)
1
Company
4,243,870,000.00
59
2
Sinopec Asset
431,580,000.00
6
3
SKGC
2,517,550,000.00
35
Total
/
7,193,000,000.00
100


Basis for the Capital Increase amount
The amounts of the Capital Increase to be made by the Parties were determined after arm’s length negotiations among the Parties to the Capital Increase Agreement with reference to (i) the valuation results of the net assets of Sinopec-SK prepared by the Valuer using the income approach as of the Valuation Date, and (ii) the production, operation and financial position and the future planning for development of Sinopec-SK. Pursuant to the valuation results as of 30 April 2018, being the Valuation Date, prepared by the Valuer using the income approach, the appraised value of the net assets of Sinopec-SK is RMB21.438 billion.


The values of Capital Increase Assets were determined based on the appraised value of the net assets of the Capital Increase Assets as of the Valuation Date prepared by the Valuer using the asset-based approach.

Handover of Capital Increase Assets and Payment of Capital Increase Amount of SKGC
The Company shall hand over the Capital Increase Assets of Sinopec (the “Handover of the Capital Increase Assets of Sinopec”) and Sinopec Asset shall hand over the Capital Increase Assets of Sinopec Asset (the “Handover of the Capital Increase Assets of Sinopec Asset”) to Sinopec-SK within thirty (30) days after the issuance of the New Business License following the full satisfaction or waiver by relevant Party of all Conditions. The Handover of the Capital Increase Assets of Sinopec and the Handover of the Capital Increase Assets of Sinopec Asset shall be completed on the same day as the handover of the Transferred Assets, and such day shall be referred to as the “Asset Handover Date”;

1)
On the Asset Handover Date, the Company and Sinopec Asset shall deliver the Capital Increase Assets of Sinopec, the Capital Increase Assets of Sinopec Asset and all relevant materials to Sinopec-SK on a lump-sum basis;

2)
On the Asset Handover Date, the Company shall deliver the Transferred Assets and all relevant materials to Sinopec-SK on a lump-sum basis in accordance with the provisions of the Asset Transfer Agreement; and

3)
Sinopec-SK and the Company, Sinopec-SK and Sinopec Asset shall make an inventory of and confirm the Capital Increase Assets of Sinopec, the Transferred Assets and the Capital Increase Assets of Sinopec Asset, respectively. Upon inventory and confirmation, the authorised representatives designated by the Company, Sinopec Asset and Sinopec-SK (the authorised representatives of Sinopec-SK shall include at least one employee appointed by SKGC) shall jointly execute the confirmation letter of Handover of the Capital Increase Assets of Sinopec and the Transferred Assets, and the confirmation letter of Handover of the Capital Increase Assets of Sinopec Asset.
Since the Asset Handover Date, all rights and obligations and risks of damage and loss associated with the Capital Increase Assets shall be deemed to have been transferred from the Company and Sinopec Asset to Sinopec-SK and Sinopec-SK shall have full rights to occupy, use, receive proceeds from and dispose of such assets. SKGC shall pay the Capital Increase Amount of SKGC to Sinopec-SK on a lump-sum basis within thirty (30) days after the issuance of the New Business License following the full satisfaction or waiver by relevant Party of all Conditions. If SKGC makes payment in cash in USD, the USD: RMB exchange rate shall be the USD: RMB base exchange rate (central parity rate) published by the People’s Bank of China on the day when SKGC makes capital contribution in accordance with Sinopec-SK Capital Increase Agreement. The day on which the Capital Increase Amount of SKGC is paid shall be referred to as the “Payment Date of the Capital Increase Amount of SKGC”.


Conditions Precedent
Upon the satisfaction or due waiver by relevant Party of the following Conditions, the Company and Sinopec Asset shall handover the Capital Increase Assets to Sinopec-SK and SKGC shall pay the Capital Increase Amount of SKGC to Sinopec-SK:

1)
the Transaction Agreements shall have been duly executed by the relevant Parties;

2)
Sinopec-SK shall have obtained the New Business License;

3)
The Parties shall have obtained necessary prior consents, approval or permits of government authorities and third parties, if applicable, with respect to the Capital Increase;

4)
Each of the Company and Sinopec Asset shall have taken all necessary measures to ensure the change of the policyholder and beneficiary of the insurance covering its Capital Increase Assets to Sinopec-SK on the Asset Handover Date;

5)
The representations and warranties of the parties contained in Transaction Agreements shall have been true and accurate;

6)
The parties shall have performed in all material respects any agreements, covenants, conditions and obligations to be performed or complied with by them in accordance with the Transaction Agreements;

7)
No government authority shall have enacted, issued, promulgated, implemented or adopted any Law or Governmental Order which would render the Capital Increase illegal or otherwise restrict or prohibit the Capital Increase or the Asset Transfer; and

8)
Sinopec-SK shall have completed filing with Ministry of Commerce of the People's Republic of China and foreign exchange change registration and other approvals of or registration or filing with government authorities, if necessary, as required by the acceptance of the Capital Increase Amount of SKGC.

Undertakings after the Handover of Assets
The Company and Sinopec Asset respectively undertakes that after the Asset Handover Date, the Company shall complete the change of registrations of the land use rights and ownership of buildings and structures in the Capital Increase Assets of Sinopec within maximum five(5) years (“Sinopec Capital Contribution Registration Period”) and Sinopec Asset shall complete the change of registrations of the land use rights and ownership of buildings and structures in the Capital Increase Assets of Sinopec Asset within three(3) or five(5) years subject to the nature of the lands (“Sinopec Asset Capital Contribution Registration Period”);.

Capital Contribution Compensation
If the Company or Sinopec Asset has handed over to Sinopec-SK all the Capital Increase Assets of Sinopec or the Capital Increase Assets of Sinopec Asset, respectively, in accordance with the Sinopec-SK Capital Increase Agreement but fails to complete the change of registration in accordance with the agreement, the Company or Sinopec Asset shall pay to Sinopec-SK respectively within thirty(30) days upon the expiration of the Sinopec Capital

Contribution Registration Period or Sinopec Asset Capital Contribution Registration Period (or the extended period as agreed) the compensation in an amount equal to the value of the assets in the Capital Increase Assets of Sinopec or the Capital Increase Assets of Sinopec Asset, in respect of which the change of registration is not completed, as listed in the capital contribution certificate issued by Sinopec-SK. The Company and Sinopec-SK, or Sinopec Asset and Sinopec-SK shall enter into a lease agreement in form and substance satisfactory to the Parties with respect to Sinopec-SK’s use of those assets of the Company or Sinopec Asset whose change of registration is not completed.

Effectiveness and Completion
Sinopec-SK Capital Increase Agreement shall become effective upon the duly signing/sealing by the Parties or their duly authorised representatives.

The Asset Handover Date or the Payment Date of the Capital Increase Amount of SKGC (the latter one) shall be regarded as the completion date of the Capital Increase. However, the Completion of the Capital Increase does not mean that the Company and Sinopec Asset have fulfilled their capital contribution obligations.


PRINCIPAL TERMS OF THE SINOPEC-SK JOINT VENTURE CONTRACT

Date: 29 April 2019

Parties:

1)
the Company

2)
Sinopec Asset; and

3)
SKGC

Registered Capital and Total Amount of Investment
The total amount of investment of Sinopec-SK shall be increased from RMB18,630,000,000.00 to RMB21,579,000,000.00. The parties agree to increase the registered capital of Sinopec-SK from RMB6,270,000,000.00 to RMB7,193,000,000.00.

Assignment Transfer of Equity Interest of Sinopec-SK
Subject to the requirements under PRC laws (including regulations related to supervision of state-owned assets), no party shall assign all or part of its equity interest in Sinopec-SK without the prior written consent of the other two parties, whose consent shall not be withheld unreasonably. If at any time a party (the “Assigning Party”) desires to assign its equity interest in Sinopec-SK (“Equity Interest to Be Sold”), it shall notify the other two parties in writing setting forth its intent to assign, the purchase price offered by the potential purchaser (the “Potential Purchaser”), other major terms and conditions governing the assignment, and the name of such Potential Purchaser (“Disposal Notice”). The other two parties shall have a

pre-emptive right to purchase the Equity Interest to Be Sold by serving a written notice (“Purchase Notice”) to the Assigning Party within thirty (30) days after receipt of the Disposal Notice setting forth its wish to purchase all the Equity Interest to Be Sold at (a) the purchase price set out in the Disposal Notice and preliminarily accepted by the Assigning Party, or (b) the price determined in accordance with the valuation procedure set forth in Sinopec-SK Joint Venture Contract.

(i)
If neither of the other two parties gives the Assigning Party the Purchase Notice pursuant to the Sinopec-SK Joint Venture Contract, it shall be deemed to have waived its pre-emptive right;

(ii)
In the event that only one of the other two parties serves the Purchase Notice, the party who serves the Purchase Notice shall purchase all the Equity Interest to Be Sold at the price chosen by it in the Purchase Notice;

(iii)
In the event that both of the other two parties serve the Purchase Notice to the Assigning Party but only one of them accepts the price set out in the Disposal Notice, then such party shall purchase all the Equity Interest to Be Sold at the price set out in the Disposal Notice;

(iv)
In the event that both of the other two parties serve the Purchase Notice to the Assigning Party but neither of them accepts the price set out in the Disposal Notice, then this party is entitled to nominate two (2) reputable accounting firms registered in the PRC and engaged in international businesses and notify the Assigning Party of such nominees. The Assigning Party shall select within fifteen (15) days of receipt of such nominee list from such party one (1) nominee to be the independent appraiser to appraise the fair market value of Sinopec-SK in accordance with PRC Laws (provided that in the event that SKGC is the party requesting the valuation, the independent appraiser shall be selected from the two accounting firms nominated by SKGC). All the costs relating to appraisement shall be shared equally among the Assigning Party and the parties which give the purchase notice but do not accept the price set forth in the Disposal Notice. That portion of the fair market value of Sinopec-SK that corresponds to the Equity Interest to Be Sold shall be the purchase price of the Equity Interest to Be Sold unless otherwise agreed by the parties.


During the joint venture term of Sinopec-SK, SKGC may make a request to the Company that SKGC or its designated affiliate shall purchase from the Company five percent (5%) of equity interest in Sinopec-SK, and the Company shall agree to proceed such assignment of equity interest in the manner provided in PRC laws (including regulations related to supervision of state-owned assets) to the extent permitted by PRC laws (including regulations related to supervision of state-owned assets).

Board of Directors
The board of Sinopec-SK shall be comprised of eight (8) directors.  Five (5) shall be appointed by the Company and Sinopec Asset and three (3) by SKGC. The board of directors

of Sinopec-SK shall have one (1) chairman. So long as the Company and SKGC are the largest shareholder and the second largest shareholder of Sinopec-SK respectively, the chairman shall be appointed by the Company and the vice chairman shall be appointed by SKGC.

Distribution of Profits
Unless the board of Sinopec-SK unanimously decides otherwise, all after-tax profits (remaining after contributions to the reserve fund, the enterprise development fund and the bonus and welfare fund for employees) shall be distributed to the parties in proportion to their subscribed capital contribution.

Joint Venture Term
The initial joint venture term shall be thirty (30) years starting from the date on which the business license of Sinopec-SK is issued by the registration authority for the first time. (i.e. 28 October 2013)

PROFIT FORECASTS REGARDING THE VALUATION METHOD

Since the aforementioned asset valuation reports of Sinopec-SK were prepared by the Valuer using the income approach, the calculations of net assets valuation of Sinopec-SK as set out in the asset valuation reports are deemed as profit forecasts under Rule 14.61 of the Hong Kong Listing Rules. As such, the Company discloses details of the valuations in accordance with Rule 14.62 of the Hong Kong Listing Rules as follows.
Set out below are details of the principal assumptions:
(I)
General Assumptions

1.
Transaction Assumption
To assume that all the assets to be valued are already in the process of transaction, and the Valuer carries out the valuation based on a simulated market which involves the transaction conditions of the assets to be valued.
Transaction assumption is the most basic assumption for asset valuation.


2.
Open Market Assumption
To assume that the assets to be valued are traded or can be traded on the open market, and both of the parties to the transaction of the assets are in equal position and have enough opportunities and time to obtain market information so as to make reasonable and rational judgment on the functions, purpose and considerations of the assets. The open market assumption is based on the assumption that assets can be bought and sold on the market.


3.
Asset Continuous Use Assumption
Asset continuous use assumption refers to the confirmation of the valuation method, parameters and references base on the assets to be valued will continue to be used for current or revised purpose, by current or revised use method with the similar or revised size, frequency and in the similar or changed environment and other status.


(II)
Special Assumptions

1.
This valuation assumes that the future external economic environment remains unchanged as the Valuation Date and the current national macroeconomic conditions will not change significantly;


2.
There will be no significant change to the social economic environment of the enterprises or to any policies of tax and tax rate adopted by the enterprises.


3.
There will be no significant change to the national interest rate and exchange rate policies after the Valuation Date.


4.
The future management members of the enterprises will duly perform their duties and continue to carry out the operation and management in the same manner as currently adopted.


5.
The valuation of each asset shall be based on the actual quantity of such asset as at the Valuation Date, and the current market price of the asset to be valued shall be determined with reference to the effective prevailing market price where the asset is located as at the Valuation Date.


6.
Assuming the basic materials and financial materials provided by Sinopec-SK are true, accurate and complete.


7.
The valuation scope only includes the assets in the valuation declaration form provided by Sinopec-SK, without considering the possible assets or liabilities which may not be included in the valuation declaration form provided by Sinopec-SK.


8.
Assuming the cash inflow and outflow of Sinopec-SK after the Valuation Date are average cash inflows and cash outflows.


9.
Assuming Sinopec-SK will expand its ethylene production capacity to 1.1 million tons/year based on its existing 800,000 tons/year ethylene production capacity, by tapping potential and reforming, and its investment for the production expansion will be in place on time, and its production capacity will be increased on schedule.


10.
Adoption of the valuation parameters in this valuation did not consider the impact of inflation factors.

PricewaterhouseCoopers, the auditor of the Company, has reviewed the arithmetical accuracy of the calculations for the relevant forecasts under the revenue-based method, which do not

involve the adoption of accounting policies, for the valuation. The Board has confirmed that the profit forecasts for net assets valuation of Sinopec-SK as set out in the valuation reports have been made after due and careful enquiry by the Board. The letters issued by PricewaterhouseCoopers and the Board are set out in Appendix I and Appendix II to this announcement, respectively. The qualification of the expert who has given its opinion or advice included in this announcement is set out below:

Name
Qualification
Date of conclusion or opinion
PricewaterhouseCoopers
Certified Public Accountant
29 April 2019

As at the date of this announcement, as far as the Directors are aware, the aforesaid expert was not beneficially interested in the share capital of any member of the Group nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate others to subscribe for any shares, convertible securities, warrants, options or derivative securities which carry voting rights in any member of the Group.

The aforesaid expert has given and has not withdrawn its written consent to the publication of this announcement with the inclusion herein of its letter or report and/or references to its name.

INFORMATION ON SINOPEC-SK

Sinopec-SK, a limited liability company, was established on 28 October 2013 under the Laws of the PRC. Prior to the completion of the Capital Increase, the Company holds 65% of equity interest in Sinopec-SK, and SKGC holds 35% of equity interest in Sinopec-SK. Its principal business includes: the production, sales and R&D of ethylene plants and the downstream products of naphtha cracking ethylene project; the provision of technical services related to petrochemical products and relevant auxiliary activities to customers.

The table below sets out certain audited financial information of Sinopec-SK for the two financial years ended 31 December 2017 and 31 December 2018 prepared under the China Accounting Standards for Business Enterprises:


   
For the year ended 31 December 2017
   
For the year ended 31 December 2018
 
   
Unit: RMB
   
Unit: RMB
 
Revenue
   
16,139,133,804.55
     
17,133,907,427.94
 
Profit before income tax expense
   
3,642,978,560.99
     
2,504,584,417.16
 
Profit after income tax expense
   
2,733,042,368.87
     
1,879,165,018.66
 


As at 31 December 2018, the audited total assets of Sinopec-SK amount to RMB15,360,041,642.29, and the audited net assets of Sinopec-SK amount to RMB13,029,049,944.14 under the China Accounting Standards for Business Enterprises

Set out below is the shareholding structure of Sinopec-SK immediately before and after the Capital Increase:

Before the Capital Increase


After the Capital Increase

After the completion of the Capital Increase, Sinopec-SK will remain a subsidiary of the Company.


REASONS FOR AND BENEFITS OF THE CAPITAL INCREASE
The Capital Increase will help reduce the connected transactions between the Company and China Petrochemical Corporation and further improve the integrated operation level of the Company, so as to enhance the comprehensive competitiveness of the Company in its business locations, the overall capability of risk resistance and expand its regional influence.

OPINIONS OF THE DIRECTORS
As at the date of this announcement, except for the INEDs, all other Directors are connected Directors and therefore required to abstain from voting on the resolution approving the Capital Increase and the transactions contemplated thereunder at the Board meeting. The Board has considered and approved the resolution on the Capital Increase. All Directors (including all INEDs) are of the opinion that, (i) the Capital Increase is on normal commercial terms; (ii) the terms and conditions of the Sinopec-SK Capital Increase Agreement, the Sinopec-SK Joint Venture Contract and the Sinopec-SK Articles are fair and reasonable; and (iii) the Capital Increase is in the interest of the Company and the Shareholders as a whole.


LISTING RULES IMPLICATIONS
As at the date of this announcement, China Petrochemical Corporation is the controlling shareholder of the Company. As Sinopec Asset is a subsidiary of China Petrochemical Corporation, pursuant to Chapter 14A of the Listing Rules, Sinopec Asset is an associate of China Petrochemical Corporation and thus constitutes a connected person of the Company. As the Capital Increase constitutes deemed disposal of the Company under Rule 14.29 of the Listing Rules, accordingly, the Capital Increase constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio in respect of the Capital Increase exceeds 0.1% but is less than 5%, the Capital Increase is subject to the reporting and announcement requirements, but exempt from the independent shareholders’ approval requirement under Chapter 14A of the Listing Rules.

INFORMATION ON THE PARTIES

Sinopec Asset
Sinopec Asset is a company established under the Laws of the PRC with limited liability and is principally engaged in the business of authorised investment management; sales of chemical, chemical fibre, fine chemical products (excluding dangerous goods); thermal production and supply and water supply services; petroleum refining; land and proprietary properties leasing, etc.


SKGC
SKGC is a company established under the laws of the Republic of Korea and is principally engaged in the business of the production of basic chemical substance of the petrochemical industry; the post-treatment of oil refining products; the manufacture of synthetic rubber, synthetic resin and plastic materials; the wholesale, retail, engineering test, inspection and analysis services of synthetic rubber (i.e. plastic materials) and chemical materials, and other business support services.

The Company
The Company is one of the largest integrated energy and chemical companies in China and is mainly engaged in the exploration and production, pipeline transportation and sale of petroleum and natural gas; the production, sale, storage and transportation of refinery products, petrochemical products, coal chemical products, synthetic fibre and other chemical products; the import and export, including import and export agency business, of petroleum, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research, development and application of technologies and information.

DEFINITIONS

In this announcement, unless the context requires otherwise, the following terms shall have the meanings set out below:

"Asset Transfer Agreement"
 
the agreement dated 29 April 2019 entered between the Company and Sinopec-SK on the disposal of the Transfer Assets from the Company to Sinopec-SK
"associate"
 
has the meaning ascribed thereto under the Listing Rules
"Board"
 
the board of directors of the Company
"Capital Increase"
 
the capital increase in Sinopec-SK by the Company, Sinopec Asset and SKGC in accordance with the terms and conditions of Sinopec-SK Capital Increase Agreement, upon the completion of which, the Company, Sinopec Asset and SKGC will hold 59%, 6% and 35% of equity interest in Sinopec-SK, respectively
"Capital Increase Amount of SKGC"
 
the contribution of cash in RMB1.1045 billion or equivalent USD by SKGC in relation to the Capital Increase



"Capital Increase Assets"
 
the Capital Increase Assets of Sinopec and Capital Increase Assets of Sinopec Asset
"Capital Increase Assets of Sinopec"
 
the real estate assets and liabilities associated with the oil-refining production and operation of the Company's Wuhan Branch and the valuation results of which was RMB549 million using asset-based approach
"Capital Increase Assets of Sinopec Asset"
 
the assets and liabilities associated with the oil-refining production and operation of Sinopec Asset Wuhan Branch and the valuation results of which was RMB1.502 billion using asset-based approach
"China "or "PRC"
 
the People’s Republic of China
"China Petrochemical Corporation"
 
 
China Petrochemical Corporation
"Company"
 
China Petroleum & Chemical Corporation
"Completion"
 
the completion of the Capital Increase in accordance with the Sinopec-SK Capital Increase Agreement
"Conditions"
 
the conditions precedent to the handover of Capital Increase Assets in accordance with the Sinopec-SK Capital Increase Agreement
"connected person(s)"
 
has the meaning ascribed thereto under the Listing Rules
"Director(s)"
 
director(s) of the Company
"Group"
 
the Company and its subsidiaries
“INED(s)”
 
the independent non-executive directors of the Company, including Tang Min, Fan Gang, Cai Hongbin and Ng, Kar Ling Johnny
"Listing Rules"
 
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited


"New Business License"
 
the new business license of Sinopec-SK issued after the completion of change registration/filing with registration authority
"RMB"
 
Renminbi, the lawful currency of the PRC
"Sinopec Asset"
 
Sinopec Group Asset Management Co., Ltd., a limited liability company established under the Laws of the PRC
"Sinopec Group"
 
China Petrochemical Corporation and its subsidiaries
"SKGC"
 
SK Global Chemical Co., Ltd.(D)          SK Global, a limited liability company established under the laws of the Republic of Korea
"Sinopec-SK"
 
Sinopec-SK (Wuhan) Petrochemical Co., Ltd., a Sino-foreign equity joint venture company duly established under the laws of the PRC with limited liability
"Sinopec-SK Capital Increase Agreement"
 
the capital increase agreement dated 29 April 2019 in relation to the capital increase in Sinopec-SK entered into among the Company, Sinopec Asset, SKGC and Sinopec-SK
"Sinopec-SK Joint Venture Contract"
 
Sinopec-SK (Wuhan) Petrochemical Co., Ltd. Equity Joint Venture Contract dated 29 April 2019 entered into among the Company, Sinopec Asset and SKGC
"Sinopec-SK Articles"
 
the articles of association of Sinopec-SK entered into on 29 April 2019 among the Company, Sinopec Asset, SKGC and Sinopec-SK
"Stock Exchange"
 
The Stock Exchange of Hong Kong Limited
"Transaction Agreements"
 
the Sinopec-SK Capital Increase Agreement, Sinopec-SK Joint Venture Contract, Sinopec-SK Articles and the Asset Transfer Agreement and any amendments and supplements thereto (if any)


"Transferred Assets"
 
the oil-refining production equipment and the relevant rights, liabilities and employees of the Company's Wuhan Branch
"Valuer"
 
China United Asset Appraisal Group Co., Ltd.
     
"Valuation Date"
 
30 April 2018
"USD"
 
United States dollars, the lawful currency of the United States of America



 
By order of the Board
 
China Petroleum & Chemical Corporation
 
Huang Wensheng
 
Vice President, Secretary to the Board

Beijing, PRC
29 April 2019

As of the date of this announcement, directors of the Company are: Dai Houliang*, Ma Yongsheng#,  Li Yunpeng*, Yu Baocai*, Ling Yiqun#, Liu Zhongyun#, Li Yong*, Tang Min+, Fan Gang+, Cai Hongbin+, Ng, Kar Ling Johnny+

# Executive Director
* Non-executive Director
+ Independent Non-executive Director


APPENDIX I — LETTER FROM PRICEWATERHOUSECOOPERS The following is the text of the letter dated 29 April 2019 from PricewaterhouseCoopers, the Certified Public Accountants, which was prepared for inclusion in this announcement.

INDEPENDENT AUDITOR’S ASSURANCE REPORT ON THE CALCULATIONS OF DISCOUNTED FUTURE ESTIMATED CASH FLOWS IN CONNECTION WITH THE BUSINESS VALUATION OF SINOPEC-SK (WUHAN) PETROCHEMICAL CO., LTD.

TO THE BOARD OF DIRECTORS OF CHINA PETROLEUM & CHEMICAL CORPORATION

We have completed our assurance engagement to report on the calculations of the discounted future estimated cash flows on which the business valuation (the “Valuation”) dated 26 April 2019 prepared by China United Assets Appraisal Group Co., Ltd. in respect of the appraisal of the fair value of the 100% equity interests in Sinopec-SK (Wuhan) Petrochemical Co., Ltd. (the “Target Company”) is based.  The Valuation is set out in the announcement of China Petroleum & Chemical Corporation (the “Company”) dated 29 April 2019 (the “Announcement”) in connection with the proposed capital increase in the Target Company with assets and deemed disposal by the Company. The Valuation based on the discounted future estimated cash flows is regarded as a profit forecast under Rule 14.61 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

Directors’ Responsibility for the Discounted Future Estimated Cash Flows

The directors of the Company are responsible for the preparation of the discounted future estimated cash flows in accordance with the bases and assumptions determined by the directors and as set out in the Announcement. This responsibility includes carrying out appropriate procedures relevant to the preparation of the discounted future estimated cash flows for the Valuation and applying an appropriate basis of preparation; and making estimates that are reasonable in the circumstances.

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

Our firm applies Hong Kong Standard on Quality Control 1 issued by the HKICPA and accordingly maintains a comprehensive system of quality control including documented policies

and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Auditor’s Responsibilities

It is our responsibility to report, as required by paragraph 14.62(2) of the Listing Rules, on the calculations of the discounted future estimated cash flows on which the Valuation is based. We are not reporting on the appropriateness and validity of the bases and assumptions on which the discounted future estimated cash flows are based and our work does not constitute any valuation of the Target Company.

We conducted our work in accordance with the Hong Kong Standard on Assurance Engagements 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information issued by the HKICPA. This standard requires that we plan and perform the assurance engagement to obtain reasonable assurance on whether the discounted future estimated cash flows, so far as the calculations are concerned, has been properly compiled in accordance with the bases and assumptions made by the directors of the Company.  We reviewed the arithmetical calculations and the compilation of the discounted future estimated cash flows in accordance with the bases and assumptions.

The discounted cash flows do not involve the adoption of accounting policies. The discounted cash flows depend on future events and on a number of assumptions which cannot be confirmed and verified in the same way as past results and not all of which may remain valid throughout the period. Our work has been undertaken for the purpose of reporting solely to you under paragraph 14.62(2) of the Listing Rules and for no other purpose. We accept no responsibility to any other person in respect of our work, or arising out of or in connection with our work.


Opinion

In our opinion, based on the foregoing, so far as the calculations are concerned, the discounted future estimated cash flows, has been properly compiled in all material respects in accordance with the bases and assumptions made by the directors of the Company as set out in the Announcement.



PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 29 April 2019


APPENDIX II - LETTER FROM THE BOARD
The following is the text of the letter dated 29 April 2019 from the Board, which was prepared for inclusion in this announcement.

To: Listing Division
The Stock Exchange of Hong Kong Limited
12/F, Two Exchange Square,
8 Connaught Place, Central,
Hong Kong

Dear Sir/Madam,

Company: China Petroleum & Chemical Corporation (the “Company”)
Re: Profit forecast – Confirmation letter under the requirements of Rule 14.62(3) of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”)

Reference is made to the announcement of the Company dated 29 April 2019 in relation to, among other things, the valuation reports dated 26 April 2019 of Sinopec-SK (Wuhan) Petrochemical Co., Ltd., which were prepared by China United Asset Appraisal Group Co., Ltd. (the “Valuer”) using the revenue-based method (the "Valuation Report").
The board of directors of the Company has reviewed and discussed with the Valuer on the basis and assumptions of the valuation. The board of directors of the Company has also considered the report from PricewaterhouseCoopers, the auditor of the Company, dated 29 April 2019 in relation to the calculations of the discounted future estimated cash flows in the Valuation Report.
Pursuant to the requirements of Rule 14.62(3) of the Listing Rules, the board of directors of the Company confirmed that the profit forecast used in the Valuation Report has been made after due and careful enquiry.


The Board of Directors of China Petroleum & Chemical Corporation
29 April 2019



SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



China Petroleum & Chemical Corporation



By: /s/ Huang Wensheng

Name: Huang Wensheng

Title: Vice President and Secretary to the Board of Directors



Date: April 30, 2019