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, 2004
China Petroleum & Chemical Corporation
A6, Huixindong Street,
Chaoyang District Beijing, 100029
People's Republic of China
Tel: (8610) 6499-0060
(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:
An announcement on 2004 first quarterly report made on
April 29, 2004, in English of China Petroleum & Chemical Corporation (the
"Registrant").
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/ Chen Ge
Name: Chen Ge
Title: Secretary to the Board of Directors
Date: April 29, 2004
The Stock Exchange of Hong Kong Limited takes no responsibility for the
contents of this announcement, makes no representation as to its accuracy or
completeness and expressly disclaims any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of the
contents of this announcement.
[GRAPHIC OMITTED][GRAPHIC OMITTED]
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
(Stock Code: 0386)
First Quarterly Report for 2004
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Highlights of the results of the Company for the first quarter ended 31 March
2004
During this reporting period, income from principal operations and net profit
of China Petroleum & Chemical Corporation and its subsidiaries ("the Company")
under the PRC Accounting Rules and Regulations amounted to RMB 123,490 million
and RMB 7,430 million respectively. Turnover and other operating revenues, and
profit attributable to shareholders of the Company under International
Financial Reporting Standards ("IFRS") amounted to RMB 128,363 million and RMB
8,008 million respectively.
This quarterly report announcement is prepared in accordance with the
regulations on Disclosure of Information in Quarterly Reports for Listed
Companies issued by the China Securities Regulatory Commission ("CSRC"). This
announcement is published simultaneously in Shanghai and Hong Kong and the
contents of the announcements published in Shanghai and Hong Kong are the
same. Financial information set out in this quarterly report announcement has
been prepared in accordance with the PRC Accounting Rules and Regulations.
Although it is not required by CSRC, Sinopec Corp. has also included in this
announcement the relevant financial information prepared in accordance with
IFRS.
This announcement is made pursuant to the disclosure requirement under Rule
13.09 of the Listing Rules for its publication in Hong Kong.
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ss1 Important Notice
1.1 The Board of Directors of China Petroleum & Chemical Corporation
("Sinopec Corp.") and its Directors warrant that there are no material
omissions from, or misrepresentations or misleading statements contained
in this quarterly report, and severally and jointly accept full
responsibility for the authenticity, accuracy and completeness of the
information contained in this quarterly report.
1.2 This quarterly report has been reviewed and unanimously approved at the
eighth meeting of the second session of the Board of Directors of
Sinopec Corp.
1.3 This quarterly financial report has not been audited.
1.4 Mr Chen Tonghai, Chairman of the Board of Sinopec Corp., Mr Wang Jiming,
Vice-Chairman and President of Sinopec Corp., Mr Zhang Jiaren, Director,
Senior Vice President and Chief Financial Officer of Sinopec Corp., and
Mr Liu Yun, Head of the Accounting Division of Sinopec Corp., hereby
declare that the authenticity and completeness of the financial
statements contained in this quarterly report are warranted.
ss2 Basic Information of Sinopec Corp.
2.1 Summary of the information of Sinopec Corp.
Stock name SINOPEC CORP SINOPEC CORP SINOPEC CORP [GRAPHIC OMITTED]
Stock code 0386 SNP SNP 600028
Place of listing Hong Kong New York Stock London Stock Shanghai Stock
Stock Exchange Exchange Exchange Exchange
Secretary to the Representative on
Authorised Representatives Board of Directors Securities Matters
Name Mr Wang Jiming Mr Chen Ge Mr Chen Ge Mr Huang Wensheng
Address 6A Huixindong Street, Chaoyang District, Beijing, China
Postcode 100029
Tel 86-10-64990060 86-10-64990060 86-10-64990060 86-10-64990060
Fax 86-10-64990022 86-10-64990022 86-10-64990022 86-10-64990022
E-mail ir @sinopec.com.cn/media @sinopec.com.cn
2.2 Financial Information
2.2.1 Principal accounting data and financial indicators
2.2.1.1 Principal accounting data and financial indicators prepared in
accordance with the PRC Accounting Rules and Regulations
Changes at the end of
this reporting period
At At compared with data at the
31 March 31 December end of the preceding
2004 2003 year end (%)
Total assets (RMB millions) 406,900 390,213 4.89
Shareholders' funds (excluding minority interests)
(RMB millions) 170,309 162,946 4.52
Net assets per share (RMB) 1.964 1.879 4.52
Adjusted net assets per share (RMB) 1.942 1.850 4.97
Changes in this reporting
Three-month Three-month period compared to the
period ended period ended same period of the
31 March 2004 31 March 2003 preceding year (%)
Net cash flows from operating activities (RMB millions) 11,208 13,605 (17.62)
Earnings per share (RMB) 0.086 0.067 28.36
Return on net assets (%) 4.363 3.816 0.55 percentage points
Return on net assets before non-operating profits/losses
(%)
(Fully diluted) 4.852 3.926 0.93 percentage points
(Weighted average) 4.958 4.002 0.96 percentage points
Non operating profits/losses Three-month period ended
31 March 2003
(RMB millions)
Losses on disposal of long-term equity investments 20
Written back of provisions on assets provided in previous years (24)
Non-operating expenses(excluding normal provisions on assets provided in accordance 1,320
with the Accounting Regulation for Business Enterprises)
Of which: losses on disposal of fixed assets 844
donations 13
Non-operating income (72)
Income tax effect (411)
Total 833
2.2.1.2 Principal accounting data and financial indicators prepared in
accordance with IFRS
Changes at the end of
this reporting period
compared with data at the
At 31 At 31 end of the preceding
March 2004 December 2003 year end (%)
Total assets (RMB millions) 418,308 400,818 4.97
Shareholders' funds (excluding minority interests) 175,907 167,899 4.77
(RMB millions)
Net assets per share (RMB) 2.029 1.937 4.75
Adjusted net assets per share (RMB) 2.008 1.908 5.24
Three-month Three-month Changes in this reporting
period ended period ended period compared to the
31 March 2004 31 March 2003 same period of the
preceding year (%)
Net cash flows from operating activities (RMB millions) 10,073 12,851 (21.62)
Earnings per share (RMB) 0.092 0.074 24.32
Return on net assets (%) 4.552 3.771 0.78 percentage points
2.2.2 Income statements
This section includes the income statements for the first quarter ended 31
March 2004 prepared in accordance with both the PRC Accounting Rules and
Regulations and IFRS with comparative figures for the corresponding period in
2003.
2.2.2.1 Income statements prepared in accordance with the PRC Accounting
Rules and Regulations
Three-month periods ended 31 Three-month periods ended 31
Item March 2004 March 2003
The Group The Company The Group The Company
(Note 1) (Note 1) (Note 1) (Note 1)
RMB millions RMB millions RMB millions RMB millions
1. Income from principal operations 123,490 86,063 98,519 63,927
Less: Cost of sales 94,583 71,740 76,178 53,129
Sales taxes and surcharges 3,835 2,290 3,161 1,969
2. Profit from principal operations 25,072 12,033 19,180 8,829
Add: Profit/(loss) from other operations 149 (138) 119 (20)
Less: Selling expenses 4,203 2,732 3,393 2,239
Administrative expenses 5,065 3,358 4,270 2,684
Financial expenses 1,162 926 1,168 730
Exploration expenses, including dry holes 1,454 911 1,211 873
3. Operating profit/(loss) 13,337 3,968 9,257 2,283
Add: Investment income 141 8,088 70 6,290
Non-operating income 72 52 26 16
Less: Non-operating expenses 1,590 1,446 264 169
4. Profit before taxation 11,960 10,662 9,089 8,420
Less: Taxation 3,456 3,299 2,788 2,607
Minority interests 1,141 - 488 -
Add: unrecognized investment losses (Note 2) 67 - - -
5. Net profit 7,430 7,363 5,813 5,813
Notes:
(1) The "Company" means China Petroleum & Chemical Corporation; The "Group"
means China Petroleum & Chemical Corporation and its subsidiaries;
(2) This item represents the recognized investment losses exceeding the
carrying value of investment on long-term equity investment.
2.2.2.2 Consolidated income statement prepared in accordance with IFRS
Item Three-month periods ended 31 March
2004 2003
RMB millions RMB millions
1. Turnover and other operating revenues 128,363 104,200
Including: Turnover 123,490 99,956
Other operating revenues 4,873 4,244
2. Operating expenses (114,585) (93,183)
Including: Purchased crude oil, products and operating supplies and expenses (90,804) (73,220)
Selling, general and administrative expenses (6,875) (5,609)
Depreciation, depletion and amortisation (6,814) (6,350)
Exploration expenses, including dry holes (1,454) (1,211)
Personnel expenses (3,857) (3,356)
Taxes other than income tax (3,835) (3,185)
Other operating expenses, net (946) (252)
3. Operating profit 13,778 11,017
4. Finance costs (1,047) (1,057)
Including: Interest expense (1,101) (1,117)
Interest income 71 65
Foreign exchange losses (24) (8)
Foreign exchange gains 7 3
5. Investment income 2 (10)
6. Share of profits less losses from associates 123 66
7. Profit from ordinary activities before taxation 12,856 10,016
8. Taxation (3,716) (3,097)
9. Profit from ordinary activities after taxation 9,140 6,919
10. Minority interests (1,132) (500)
11. Profit attributable to shareholders 8,008 6,419
2.2.3 Difference between the net profit for the first quarter of 2004 and the
shareholders' funds at the end of the reporting period under the PRC
Accounting Rules and Regulations and IFRS
2.2.3.1 Effects of major differences between the PRC Accounting Rules and
Regulations and IFRS on the net profit are analysed as follows:
Three-month periods ended 31 March
2004 2003
RMB millions RMB millions
Net profit under the PRC Accounting Rules and Regulations 7,430 5,813
Adjustments:
Disposal of oil and gas properties 572 -
Depreciation of oil and gas properties 232 754
Capitalisation of general borrowing costs 94 128
Acquisition of Sinopec National Star, Sinopec Maoming, Tahe Petrochemical 29 28
and Xi'an Petrochemical
Revaluation of land use rights 5 4
Unrecognized losses of subsidiaries (50) -
Pre-operating expenditures (44) -
Effects of the above adjustments on taxation (260) (308)
Net profit under IFRS 8,008 6,419
2.2.3.2 Effects of major differences between the PRC Accounting Rules and
Regulations and IFRS on the shareholders' funds are analysed as follows:
At As at
31 March 31 December
2004 2003
RMB millions RMB millions
Shareholders' funds under the PRC Accounting Rules and Regulations 170,309 162,946
Adjustments:
Disposal of oil and gas properties 1,832 1,260
Depreciation of oil and gas properties 11,117 10,885
Capitalisation of general borrowing costs 1,219 1,125
Acquisition of Sinopec National Star (2,783) (2,812)
Revaluation of land use rights (865) (870)
Minority interests on unrecognized losses of subsidiaries 78 61
Pre-operating expenditures (213) (169)
Impairment losses on long-lived assets (113) (113)
Government grants (326) (326)
Effects of the above adjustments on taxation (4,348) (4,088)
Shareholders' funds under IFRS 175,907 167,899
2.3 Total number of shareholders is 300,087 at the end of this reporting
period, among which 288,658 shareholders are domestic shareholders, and
11,429 shareholders are overseas shareholders.
ss3 Management's Discussion and Analysis
3.1 Business review
In the first quarter of 2004, the Chinese economy continued to maintain a
rapid growth momentum and domestic demand for refined oil and petrochemical
products remained strong. Influenced by international market, the prices of
crude oil and refined oil products had fluctuated at a fairly high level, and
as the chemical business was going up the cycle, the prices of chemical
products had increased to a certain extent over the same period last year. By
seizing the market opportunities, devoting to increase production volume and
optimizing production operation, the Company has obtained fairly good results
in oil and gas production, the processing volume of crude oil, the sales of
refined oil products and ethylene production etc.
Exploration and Production Segment: In the first quarter of this year, the
Company has achieved good results in terms of exploration, development and oil
and gas production. In respect of exploration, the Company has made
significant achievements in the exploration of concealed oil and gas reserves
in the mature oil fields in eastern China. The exploration in Tahe oilfield
and the surrounding areas in western China has shown good discoveries. In
respect of production, the Company seized the valuable opportunities of higher
crude oil price, adhered to the four unity of "balanced reserves, production,
investment and efficiency", and improved the recovery rate. Oil and gas
production has increased over the same period last year in a stable manner.
Refining Segment: In the first quarter of 2004, the demand for domestic
refined oil products was strong. The Company seized the market opportunities,
optimized resources allocation, adjusted product mix, devoted to increase the
processing volume of crude oil, made full use of the price difference between
sour and sweet crude oil, increased the processing volume of sour crude oil,
and kept the refining facilities in stable operation with high utilization
rate. Meanwhile, the Company was flexible to adapt to market changes and
devoted to expand the sales of oil products other than refined oil products.
Marketing and Distribution Segment: In the first quarter of 2004, the Company
seized the market opportunities of a sustained brisk demand for refined oil
products, coordinated production and sales closely, and arranged resources
production and domestic marketing volume in a reasonable manner. This resulted
in a substantial increase in the sales volume of domestic refined oil
products. At the same time, the Company took measures to raise its retail and
direct distribution volume, which further optimized its sales portfolio.
Chemicals Segment: In the first quarter of 2004, influenced by international
market, the price of both major chemical products and gross margin had
increased to a fairly significant extent. The Company adhered to the marketing
strategy of "focusing on the market, full-load production and low
inventories", adjusted product mix and optimized marketing structure, and kept
major chemical plants in full-load production. The production volume of major
chemical products such as synthetic resin, synthetic rubber, monomer and
polymers for synthetic fibers has increased significantly. The production
volume of high added value products like performance compound resins and
differential fibers has further increased.
Summary of Principal Operating Results for the first quarter
Three-month Changes as
periods ended compared with the
31st March same period last
year (%)
Operating Results Unit 2004 2003
Exploration and Production
Crude oil production Ten thousand tonnes 953.83 928.72 2.70
Natural gas production One hundred million 13.95 12.60 10.71
cubic meters
Realized crude oil price RMB yuan/tonne 1,678.63 1,762.00 (4.73)
Realized natural gas price RMB yuan/thousand cubic 606.47 619.00 (2.02)
meters
Refining (Note 1)
Crude processing volume Ten thousand tonnes 3,236.86 2,763.10 17.15
Gasoline, diesel and kerosene production Ten thousand tonnes 1,925.09 1,645.23 17.01
Of which: Gasoline Ten thousand tonnes 573.06 512.84 11.74
Diesel Ten thousand tonnes 1,204.31 991.52 21.46
Kerosene Ten thousand tonnes 147.72 140.87 4.86
Chemical feedstock Ten thousand tonnes 453.40 421.13 7.66
Light yield % 73.85 74.30 (0.45) percentage
points
Refining yield % 92.82 92.64 0.18 percentage
points
Marketing and Distribution
Total domestic sales of refined oil products Ten thousand tonnes 2,170.45 1,781.44 21.84
Of which: Retail sales volume Ten thousand tonnes 1,197.72 895.20 33.79
Direct distribution volume Ten thousand tonnes 440.14 328.26 34.08
Wholesale volume Ten thousand tonnes 532.59 557.98 (4.55)
Total number of petrol stations Station 30,416 28,894 5.27
Of which: Owned and self-operated stations Station 24,680 24,065 2.56
Franchised petrol stations Station 5,736 4,829 18.78
Throughput per petrol station (Note 2) Tonne/station 1,757 1,686 4.21
Chemicals (Note 3)
Ethylene ten thousand tonnes 93.13 85.98 8.32
Synthetic resins ten thousand tonnes 139.34 126.16 10.45
Of which: performance compound resins ten thousand tonnes 72.58 57.40 26.45
Synthetic rubbers ten thousand tonnes 15.21 12.89 18.00
Monomers and polymers for synthetic fibers ten thousand tonnes 122.04 103.08 18.39
Synthetic fibers ten thousand tonnes 31.32 29.91 4.71
Of which: differential fibers ten thousand tonnes 13.37 11.50 16.26
Urea ten thousand tonnes 54.15 39.03 38.74
Notes:
1. The operating results for the first quarter of 2003 are proforma data
including the reference data of acquiring Xi'an Petrochemical and Tahe
Petrochemical;
2. Throughput per petrol station of 2004 was projected annual average;
throughput per petrol station of 2003 was actual annual average;
3. The operating results for the first quarter of 2003 are proforma data
including the reference data of acquiring Sinopec Maoming.
Capital expenditure
The capital expenditure of the Company in the first quarter of 2004 was RMB
11.157 billion. The capital expenditure for exploration and production segment
was RMB 4.856 billion, whereby breakthroughs in the exploration of concealed
oil and gas reserves were acheived in the mature oil fields in eastern China
with many exploratory wells generating industrial oil stream; some exploratory
wells in western China have generated high-yield industrial gas stream or
indication. The newly added production capacity of crude oil and natural gas
amounted to 0.82 million tonnes/year and 45 million cubic meters/year
respectively. The capital expenditure for refining segment was RMB 1.452
billion. The Ningbo-Shanghai-Nanjing imported crude oil pipeline will be put
into operation soon. Some refining facilities expansion and technical
revamping are on schedule. The capital expenditure for chemicals segment was
RMB 0.995 billion, whereby the revamping projects of ethylene facilities in
Sinopec Qilu and other chemical facilities are progressing smoothly. The
capital expenditure for marketing and distribution segment was RMB 3.447
billion, whereby the construction of southwest oil products pipeline,
construction and revamping projects for the petrol stations are implementing
on schedule. The capital expenditure for corporate and others was RMB 0.407
billion. Information projects like ERP etc. are progressing smoothly.
In addition, in the first quarter of 2004, the capital expenditure for joint
ventures such as the Shanghai Secco ethylene project and the Yueyang
Sinopec-Shell coal gasification project was approximately RMB 1.549 billion.
3.2 The brief analysis of the Company's general operating activities during
the reporting period
Based on the PRC Accounting Rules and Regulations, the income from principal
operations of the Company for the first quarter of 2004 amounted to RMB
123.490 billion, representing an increase of 25.30% over the same period last
year, and the net profits amounted to RMB 7.43 billion, representing an
increase of 27.8% over the same period last year.
Based on IFRS, the turnover and other operating revenues of the Company for
the first quarter of 2004 amounted to RMB 128.363 billion, representing an
increase of 23.2% over the same period last year. Profit attributable to
shareholders amounted to RMB 8.008 billion, representing an increase of 24.8%
over the same period last year.
3.2.1 The principal segments or products accounting for over 10% of income or
profit from principal operations
|X| applicable |_| not applicable
The table below shows segment information prepared in accordance with the PRC
Accounting Rules and Regulations:
Income from Costs of sales, Profit from
principal sales taxes and principal Gross profit
Segments or products operations surcharges operations margin (%)
(RMB millions) (RMB millions) (RMB millions) (Note)
Exploration and production 16,189 7,878 6,914 42.71
Refining 76,579 72,841 3,635 4.75
Marketing and distribution 73,217 64,348 8,869 12.11
Chemicals 26,416 20,900 5,516 20.88
Corporate and others 13,936 13,798 138 0.99
Elimination of inter-segment sales (82,847) (81,347) N/A N/A
Total 123,490 98,418 25,072 20.30
Of which: related party transactions 7,342 6,644 698 9.5
Note: Gross profit margin = profit from principal operations/income from
principal operations
The table below shows segment information prepared in accordance with IFRS:
Percentage of
operating
profit/(loss)
Operating Operating Operating over operating
Segments or products revenues expenses profit/(loss) revenues
(RMB millions) (RMB millions) (RMB millions) (%)
Exploration and production 17,399 11,457 4,545 26.12
Refining 77,880 75,608 2,169 2.79
Marketing and distribution 73,389 69,271 4,118 5.61
Chemicals 28,354 24,719 3,635 12.82
Corporate and others 14,188 14,877 (689) (4.86)
Elimination of inter-segment sales (82,847) (81,347) N/A N/A
Total 128,363 114,585 13,778 10.73
3.2.2 Seasonal or periodic nature of the Company's operations
|_| applicable |X| not applicable
3.2.3 The composition of the profits during this reporting period (significant
changes in the profit from principal operations, profit from other
operations, period expenses, investment income, subsidy income and net
non-operating income/expenses as a percentage of profit before taxation
are listed and explained below in accordance with the PRC Accounting
Rules and Regulations)
|X| applicable |_| not applicable
Item Three-month period Year ended
ended 31 March 2004 31 December 2003 Change in
Percentage Percentage percentage
of profit of profit of profit
before before before
Amount taxation Amount taxation taxation
(percentage
(RMB millions) (%) (RMB millions) (%) points)
Profit from principal operations 25,072 209.63 80,716 268.92 (59.29)
Profit from other operations 149 1.25 856 2.85 (1.60)
Period expenses 11,884 99.36 46,063 153.47 (54.11)
Investment income 141 1.18 548 1.83 (0.65)
Net non-operating income/expenses 1,518 12.69 6,042 20.13 (7.44)
Profit before taxation 11,960 100.00 30,015 100.00 0.00
Significant changes and explanations:
o Profit from principal operations
The percentage of profit from principal operations to the profit before
taxation was 209.63%, representing a decrease of 59.29 percentage points
over 268.92% of the previous year. This was largely due to the fact that
although profit from principal operations has increased by 24.25% over
the quarterly average value of RMB 20.179 billion of the previous year;
expenses in the reporting period had a slight increase of 3.20% over the
quarterly average value of the previous year; profit before taxation had
an increase of 59.39% over the quarterly average of the previous year;
and profit before taxation attained a higher growth than profit from
principal operations.
The major reason for the increase in profit from principal operations
and profit before taxation is that prices for crude oil, refined oil
products and chemical products were still on a high level in the first
quarter of 2004. The Company seized opportunities of the high demand for
refined oil and chemical products, devoted to develop the market, and
raised its sales volume. At the same time, profit from principal
operations increased substantially, and the total margin ratio increased
from 19.47% in the first quarter of 2003 to 20.30% in the first quarter
of 2004, especially the chemicals margin ratio which rapidly increased
from 10.46% in the first quarter of 2003 to 20.88% in the first quarter
of 2004.
o Expenses in the reporting period
Expenses in the reporting period amounted to RMB 11.884 billion,
accounting for 99.36% of the profit before taxation, and representing a
decrease of 54.11 percentage points over 153.47% of the previous year.
This is mainly due to the fact that expenses in the reporting period
rose slightly by 3.2% as compared with the quarterly average value of
the previous year. Affected by the higher refining and chemicals gross
margin ratio, profit before taxation has increased by 59.39% as compared
with the quarterly average value of the previous year.
3.2.4 Significant changes in, and explanations of, the principal operations
and their structures as compared with those during the previous
reporting period
|_| applicable |X| not applicable
3.2.5 Significant changes in, and explanations of, the profitability (gross
profit margin) of principal operations as compared with those during the
previous reporting period prepared in accordance with the PRC Accounting
Rules and Regulations
|_| applicable |X| not applicable
3.3 Significant events and their impacts as well as the analysis and
explanations for the solutions
|X| applicable |_| not applicable
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3.3.1 Issuance of corporate bonds
At Sinopec Corp.'s Second Extraordinary General Meeting of Shareholders for
year 2003 held on 15 October 2003, the Board considered and approved "The
Proposal Concerning the Issuance of Domestic Corporate Bonds Amounting to RMB
3.5 billion". On 16 January 2004, Sinopec Corp. obtained the approval from the
National Development and Reform Commission ("NDRC") to issue 10-year domestic
corporate bonds of RMB 3.5 billion. On 23 February 2004, the sixth meeting of
Sinopec Corp.'s second session of the Board of Directors and the NDRC approved
and confirmed the coupon rate of the corporate bonds to be 4.61%. As of the
date of 8 March 2004, the corporate bonds of Sinopec Corp. have been issued
successfully. For relevant details, please refer to Sinopec Corp.'s
announcement published in China Securities, Shanghai Securities, and
Securities Times in China, and South China Morning Post and Hong Kong Economic
Times in Hong Kong, respectively on 15 October 2003, 30 January 2004, and 24
February 2004.
3.3.2 Acquisition of shares of Jinzhi Company
On 26 March 2004, upon the approval at the seventh meeting of the second
session of the Board of Directors, Sinopec Corp. entered into an Acquisition
Agreement with Jinzhi Company, a wholly owned subsidiary of Sinopec Group
Beijing Yanhua Petrochemical Company Limited, of which Sinopec Group Company
is the parent company. Pursuant to the Acquisition Agreement, Sinopec Corp.
will use cash from its internal resources to acquire 100% of the issued shares
of Jinzhi Company at a consideration of RMB 230 million. For relevant details,
please refer to Sinopec Corp.'s announcement published in China Securities,
Shanghai Securities, and Securities Times in China, and South China Morning
Post and Hong Kong Economic Times in Hong Kong, on 29 March 2004.
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3.4 Disclosure and explanations as to the changes in accounting policies,
accounting estimates and scope of consolidation and fundamental errors
|_| applicable |X| not applicable
3.5 Relevant explanations made by the Board of Directors and the Supervisory
Committee after the audit and presentation of "non standard opinion"
|_| applicable |X| not applicable
3.6 Business prospects
Looking into the second quarter of 2004, the demand for domestic refined oil
and chemical products will maintain a rapid growth, creating a positive market
for the Company to expand its production and operation. Based on the current
market conditions, where the prices of crude oil and refined oil products has
been at a fairly high level, and the chemical business is going up the cycle,
the Company will closely track the market changes, optimize production and
operation, adopt flexible operating policies and continue to implement its
development strategies of "expanding resources, developing market, reducing
costs and disciplining investments" as detailed below:
Exploration and Production Segment: The Company will continue to maintain
stable and increased production of crude oil and natural gas, and strive for
the replacement resources and expansion of production capacity. Production of
crude oil and natural gas during the second quarter is expected to be 9.62
million tonnes and 1.44 billion cubic meters respectively.
Refining Segment: Based on the market conditions, the Company will continue to
adjust the product mix and throughput, secure the stable operation of
facilities, and increase the production of high added value products. The
processing volume of crude oil during the second quarter is expected to be
33.00 million tonnes.
Marketing and Distribution Segment: The Company will further enhance the
network construction of refined oil products and continue to increase retail
volume and direct distribution volume. The total sales volume of domestic
refined oil products during the second quarter is expected to reach 22.30
million tonnes, of which retail volume will be 12.50 million tonnes and direct
distribution volume will be 4.40 million tonnes.
Chemicals Segment: The Company will maintain efficient and full-capacity
operation of chemical facilities, promote the production of major chemicals
and continue to increase the production of high value-added products.
Production of ethylene during the second quarter is expected to reach 0.915
million tonnes.
3.7 Caution and explanation as to the anticipated loss of accumulated net
profits from the beginning of the year to the end of the next reporting
period or significant changes over the same period last year
|_| applicable |X| not applicable
3.8 Adjustments to the annual business plan or budget which have been
disclosed
|_| applicable |X| not applicable
3.9 This quarterly report is published in both English and Chinese languages.
The Chinese version shall prevail.
By Order of the Board
Chen Tonghai
Chairman
Beijing, PRC, 29 April 2004
As at the date of this announcement, the executive directors of the Company
are: Messrs. Chen Tonghai, Wang Jiming, Mou Shuling, Zhang Jiaren, Cao
Xianghong, Liu Genyuan, Liu Kegu and Fan Yifei; the independent directors are:
Messrs. Chen Qingtai, Ho Tsu Kwok Charles, Shi Wanpeng and Zhang Youcai; and
the employee representative director is: Mr Cao Yaofeng.