form6k.htm


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 August, 2016

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.
An interim results announcement of China Petroleum & Chemical Corporation (the “Registrant”);
2.
A list of directors and their roles and function of the Registrant;
3.
An announcement regarding election of vice chairman of the board, change of president and authorized representative and resignation of director of the Registrant; and
4.
An announcement on changes in accounting policy of the Registrant;

Each made by the Registrant on August 26, 2016.
 
 
 
 

 
 
Announcement 1
 
Hong Kong Exchanges and Clearing Limited and 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.

 
 
(a joint stock limited company incorporated in the People’s Republic of China with limited liability)
 
(Stock Code: 0386)

 
INTERIM RESULTS ANNOUNCEMENT
 
FOR THE SIX MONTHS ENDED 30 JUNE 2016

1
Important Notice

1.1
This announcement is a summary of the 2016 interim report of China Petroleum & Chemical Corporation (“Sinopec Corp.”). The full version of 2016 interim report is published on the website of Shanghai Stock Exchange (www.sse.com.cn), The Stock Exchange of Hong Kong Limited (“Hong Kong Stock Exchange”) (www.hkex.com.hk) and Sinopec Corp. (www.sinopec.com). Investors should read the 2016 interim report for more details.

1.2
The interim financial statements for the six-month period ended 30 June 2016 (the “reporting period”) of Sinopec Corp. and its subsidiaries (the “Company”), prepared in accordance with the Accounting Standards for Business Enterprises (“ASBE”) of the PRC and International Financial Reporting Standards (“IFRS”), have been audited by PricewaterhouseCoopers Zhong Tian LLP and PricewaterhouseCoopers Certified Public Accountants respectively, and both firms have issued standard unqualified opinions on the interim financial statements.


 
1

 

1.3
Basic Information of Sinopec Corp.

Stock name
中国石化
SINOPEC CORP
Stock code
600028
0386
SNP
SNP
Stock Exchange
Shanghai Stock Exchange
Hong Kong Stock Exchange
New York Stock Exchange
London Stock Exchange
         
 
Authorised
Representatives
Secretary to the
Board
Representative on Securities Matters
Name
Mr. Dai Houliang
Mr. Huang Wensheng
Mr. Huang Wensheng
Mr. Zheng Baomin
Address
22 Chaoyanmen North Street, Chaoyang District, Beijing, PRC
Tel
86-10-59960028
86-10-59960028
86-10-59960028
86-10-59960028
Fax
86-10-59960386
86-10-59960386
86-10-59960386
86-10-59960386
E-mail
ir@sinopec.com

2
Principal Financial Data and Indicators

2.1
Principal Financial Data and Indicators Prepared in Accordance with ASBE

Items
 
As at
30 June 2016
   
As at
31 December 2015
   
Changes from the end of last year
 
   
RMB million
   
RMB million
   
%
 
                   
Total assets
    1,432,624       1,447,268       (1.0 )
Total equity attributable to equity shareholders of the Company
    692,934       677,538       2.3  


 
2

 


Items
 
Six-month periods ended 30 June
   
Changes over the same period of
 
   
2016
   
2015
   
the preceding year
 
   
RMB million
   
RMB million
   
%
 
                   
Net cash flow from operating activities
    76,112       67,095       13.4  
Operating income
    879,220       1,041,131       (15.6 )
Net profit attributable to equity shareholders of the Company
    19,250       24,456       (21.3 )
Net profit attributable to equity shareholders of the Company excluding extraordinary gains and losses
    18,290       23,431       (21.9 )
Weighted average return on net assets (%)
    2.81       3.80    
(0.99)
percentage points
 
Basic earnings per share (RMB)
    0.159       0.203       (21.7 )
Diluted earnings per share (RMB)
    0.159       0.203       (21.7 )
 
2.2
Principal Financial Data and Indicators Prepared in Accordance with IFRS
 
Items
 
Six-month periods ended 30 June
   
Changes over the same period of
 
   
2016
   
2015
   
the preceding year
 
   
RMB million
   
RMB million
   
%
 
                   
Operating profit
    35,108       40,496       (13.3 )
Profit attributable to owners of the Company
    19,919       25,423       (21.6 )
Basic earnings per share (RMB)
    0.165       0.211       (21.8 )
Diluted earnings per share (RMB)
    0.165       0.211       (21.8 )
Net cash generated from operating activities
    76,112       67,095       13.4  
 
Items
 
As at
30 June 2016
   
As at
31 December 2015
   
Changes from the end of last year
 
   
RMB million
   
RMB million
   
%
 
                   
Total assets
    1,432,624       1,447,268       (1.0 )
Total equity attributable to owners of the Company
    691,642       676,197       2.3  


 
3

 

3
Number of Shareholders and Shareholdings of Principal Shareholders

 
As at 30 June 2016 there were a total of 683,549 shareholders of Sinopec Corp., of which 677,276 were holders of A shares and 6,273 were holders of H shares. The public float of Sinopec Corp. satisfied the minimum requirements under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”).

3.1
Top ten shareholders 
Unit: share

Name of Shareholders
 
Nature of shareholders
 
Percentage of shareholdings (%)
 
Total number of shares held
 
Changes of shareholdings1
 
Number of shares subject to pledge or lock-ups
                     
China Petrochemical Corporation
 
State-owned share
 
70.86
 
85,792,671,101
 
0
 
0
HKSCC (Nominees) Limited2
 
H share
 
20.96
 
25,375,555,769
 
1,214,149
 
Unknown
中國證券金融股份有限公司
 
A share
 
1.46
 
1,767,995,801
 
3,163,488
 
0
中央匯金資產管理有限責任公司
 
A share
 
0.27
 
322,037,900
 
0
 
0
Hong Kong Securities Clearing Company Ltd
 
A share
 
0.15
 
184,177,901
 
107,244,669
 
0
工銀瑞信基金-工商銀行-特定客戶資產管理
 
A share
 
0.13
 
151,784,654
 
151,784,654
 
0
國泰君安證券股份有限公司
 
A share
 
0.11
 
132,487,106
 
(2,050,800)
 
0
中國工商銀行-上證50交易型開放式指數證券投資基金
 
A share
 
0.06
 
76,881,480
 
243,700
 
0
中國工商銀行股份有限公司企業年金計劃-中國建設銀行股份有限公司
 
A share
 
0.06
 
69,722,830
 
69,722,830
 
0
中國人壽保險股份有限公司-傳統-普通保險產品-005L-CT001
 
A share
 
0.05
 
65,725,768
 
65,725,768
 
0
 
Note:
1.
As compared with the number of shares as at 31 December 2015.
2.
Sinopec Century Bright Capital Investment Limited, a wholly-owned overseas subsidiary of China Petrochemical Corporation, holds 553,150,000 H shares, accounting for 0.46% of the total share capital of Sinopec Corp. which is included in the total number of shares held by HKSCC Nominees Limited.

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

Sinopec Corp. is not aware of any connected relationship or acting in concert among or between the above-mentioned shareholders.

 
4

 

3.2
Information disclosed by H share shareholders in accordance with the Securities and Futures Ordinance as at 30 June 2016

Name of shareholders
 
Status of shareholders
 
Number of shares interests held or regarded as held
 
Approximate percentage of Sinopec Corp.’s issued share capital (H share) (%)
             
JPMorgan Chase & Co.
 
Beneficial owner
 
670,090,733(L)
 
2.63(L)
       
80,000,138(S)
 
0.31(S)
   
Investment manager
 
147,682,700(L)
 
0.58(L)
 
 
Custodian corporation/Approved lending agent
 
1,175,388,643(L)
 
4.60(L)
Blackrock, Inc.
 
Interests of corporation controlled
 
2,053,525,753(L)
 
8.05(L)
 
 
by the substantial shareholder
 
108,000(S)
 
0.00(S)
Schroders Plc.
 
Investment manager
 
1,275,857,318(L)
 
5.00(L)
Citigroup Inc.
 
Interests of corporation controlled
 
161,041,118(L)
 
0.63(L)
   
by the substantial shareholder
 
171,882,989(S)
 
0.67(S)
   
Custodian corporation/Approved lending agent
 
1,380,335,597(L)
 
5.41(L)
 
 
Person having a security interest in shares
 
2,999,999(L)
 
0.01(L)

 
Note:
(L): Long position, (S): Short position

3.3
Changes in the Controlling Shareholders and the de facto Controller

 
There was no change in the controlling shareholder or the de facto controller of Sinopec Corp. during the reporting period.

4
Equity Interests of Directors, Supervisors and Other Senior Management

 
As at 30 June 3016, apart from the 13,000 A shares of Sinopec Corp. held by vice president Mr. Ling Yiqun, none of the directors, supervisors and other senior management of Sinopec Corp.  held any shares of Sinopec Corp.
 
 
5

 

 
Save as disclosed above, none of the directors, supervisors and other senior management of Sinopec Corp. or their associates had any interests or short positions in the shares, underlying shares or debentures (including any interest or short position in shares that is regarded or treated as being held in accordance with the Securities and Futures Ordinance (the “Ordinance”)) of Sinopec Corp. or any of its associated corporations (within the meaning of Part XV of the Ordinance), which would fall to be disclosed to Sinopec Corp. and the Hong Kong Stock Exchange under Divisions 7 and 8 of Part XV of the Ordinance, or to be recorded in the register kept by Sinopec Corp. pursuant to the section 352 of the Ordinance, or as otherwise to be notified to the Sinopec Corp. and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Hong Kong Listing Rules (“Model Code”).

5
Business Review and Prospects and Management’s Discussion and Analysis

5.1
Business Review

 
The first half of 2016 saw weak global economic recovery. China’s GDP grew by 6.7% year on year. The oil products pricing mechanism was further improved with the price floor put into place. Domestic consumption of oil products was up by 4.4%, driven by gasoline and kerosene consumption growth and partly offset by continuing decline in diesel consumption, showing continuous divergence in the consumption mix of oil products. Domestic consumption of major chemicals continued to grow. Ethylene equivalent consumption increased by 1.7% compared with the first half of 2015. Chemical prices were lower following decline in feedstock prices, but chemical products margin remains at high levels.

 
In the first half of 2016, international crude prices recorded a sharp decline from prices in the first half of 2015, and bottomed out during the period, with the average spot price of Platts Brent at USD 39.81 per barrel, 31.2% below the level in the same period last year.


 
Movement of International Crude Oil Prices
 
 
6

 

5.1.1
Operation Review

(1)
Exploration and production

 
To address the challenge of low oil prices, we effectively optimised exploration and development activities in the first half of this year. Our continuing efforts in exploration paid off with new oil discoveries in the Tahe of Xingjiang Autonomous Region, the Beibu Gulf off-shore in Guangxi and the Yin-E Basin in the Nei Mongol Autonomous Region and new natural gas findings in west Sichuan and the Erdos Basin. A strong focus was placed on the development of natural gas. Phase Two shale gas development project in Fuling Shale Gas field further facilitated our shale gas development. Production in the first half of 2016 was 218.99 million barrels of oil equivalent, of which domestic crude production was 128.38 million barrels, overseas crude production was 25.79 million barrels, and total gas production was 388.69 billion cubic feet. In production, we strengthened cost discipline, reduced high-cost oil production, and increased natural gas production.

 
Exploration and Production: Summary of Operations

   
Six-month period ended 30 June
   
Changes
 
   
2016
   
2015
   
(%)
 
                   
Oil and gas production (mmboe)
    218.99       232.95       (5.99 )
Crude oil production (mmbbls)
    154.17       174.07       (11.43 )
 China
    128.38       147.47       (12.95 )
 Overseas
    25.79       26.60       (3.05 )
Natural gas production (bcf)
    388.69       353.26       10.03  


 
7

 

(2)
Refining

 
In the first half of this year, we adjusted our product mix in response to sharp increase of throughput from independent refineries and ample market supply. We further optimised our oil product slate by increasing the production of gasoline, kerosene and light chemical feedstock and decreasing diesel-to-gasoline ratio to 1.17, reduced our crude purchasing costs, moderately increased refined oil products export and pressed ahead with oil products standards upgrading. Centralised marketing of the lubricant, LPG and asphalt businesses helped enhance the profitability of those products. In the first half of 2016, we processed 116 million tonnes of crude oil and produced 73.26 million tonnes of refined oil products, with production of gasoline and kerosene up by 3.74% and 3.36%, respectively, from levels in the first half of 2015.

 
Refining: Summary of Operations

   
Six-month period ended 30 June
   
Changes
 
   
2016
   
2015
   
(%)
 
                   
Refinery throughput (million tonnes)
    115.90       118.89       (2.51 )
Gasoline, diesel and kerosene production (million tonnes)
    73.26       74.75       (1.99 )
Gasoline (million tonnes)
    28.03       27.02       3.74  
Diesel (million tonnes)
    32.93       35.82       (8.07 )
Kerosene (million tonnes)
    12.30       11.90       3.36  
Light chemical feedstock production (million tonnes)
    19.37       19.07       1.57  
Light yield (%)
    76.61       76.69       (0.08 )
 
                 
percentage points
 
Refining yield (%)
    94.75       94.98       (0.23 )
 
                 
percentage points
 

Note:Includes 100% of production of domestic joint ventures.


 
8

 

(3)
Marketing and distribution

 
In the first half of 2016, we coordinated and optimised resources and took full advantage of the synergy between our fuel and non-fuel businesses, achieving growth in both total business volume and retail sales despite ample domestic fuel supply and strong competition in the market. In addition, we adjusted marketing efforts by increasing the retailing of premium products with high octane number. We further improved our product pipeline network, accelerated the building of service stations and optimised marketing network. The total sales volume of refined oil products in the first half of 2016 was up by 4.5% from the corresponding period last year to 97.17 million tonnes, of which domestic sales accounted for 86.51 million tonnes, up by 3.1%. Non-fuel business transaction was up by 43% from the first half of 2015 to RMB 18.5 billion owing to Internet+ marketing promotions and other measures

 
Marketing and Distribution: Summary of Operations

   
Six-month period ended 30 June
   
Change
 
   
2016
   
2015
   
(%)
 
                   
Total sales volume of refined oil products (million tonnes)
    97.17       92.97       4.52  
Total domestic sales volume of refined oil products (million tonnes)
    86.51       83.92       3.09  
Retail (million tonnes)
    59.65       58.19       2.51  
Direct sales and Distribution (million tonnes)
    26.86       25.73       4.39  
Annualised average throughput per station (tonne/station)
    3,889       3,816       1.91  

               
Change
 
   
As of
   
As of
   
from the end
 
   
30 June
   
31 December
   
of last year
 
   
2016
   
2015
   
(%)
 
                   
Total number of Sinopec-branded service stations
    30,688       30,560       0.42  
Company-operated
    30,675       30,547       0.42  


 
9

 

(4)
Chemicals

 
In the first half of this year, we continued to adjust the structure of our feedstock, products and facilities to address market changes and maximise profit. We further lowered the feedstock cost for ethylene, strengthened the integration among production, sales, product R&D and customer needs, and continuously optimised operations of our manufacturing facilities, which has achieved great results. Ethylene production for the first half of 2016 was 5.478 million tonnes, up by 0.38% from the corresponding period last year. We strengthened the R&D, production and marketing capabilities of new high value-added products, with the ratio of performance polymer reaching 58% and the differential ratio of synthetic fiber reaching 83.2%. We also focused on bettering customer services and enhancing customer loyalty. At the same time, we held firm to our strategies of low inventories and differentiated marketing. In the first half of 2016, total chemicals sales volume increased by 8.3% from the corresponding period last year to 32.82 million tonnes.

Major Chemical Products: Summary of Operations
       
Unit: thousand tonnes
 
   
Six-month period ended 30 June
   
Changes
 
   
2016
   
2015
   
(%)
 
                   
Ethylene
    5,478       5,457       0.38  
Synthetic resin
    7,500       7,476       0.32  
Synthetic fiber monomer and polymer
    4,672       4,322       8.10  
Synthetic fiber
    637       638       (0.16 )
Synthetic rubber
    411       453       (9.27 )

 
Note:
Includes 100% of production of domestic joint ventures.

5.1.2
Safety Management and Environmental Protection

Work safety has always been at the core of our operations and we continued to strengthen our safety management in the first half of 2016. We conducted special work to reduce safety risks in our oil and gas pipelines and tank farms, put protective measures in place to cope with strong rainfall and bad weather, spared no efforts to implement prevention & control measures, and realised safe production in general.

We strengthened our green and low-carbon strategy by intensifying our work in environmental protection, energy conservation and emissions control. We continued to advance our energy performance contract model and energy management system, defined the projects of our Energy Efficiency Doubling initiative, and completed our Clear Water, Blue Sky program. In the first half of 2016, energy intensity was down by 0.69%, chemical oxygen demand in discharged waste water was down by 7.88%, ammoniac nitrogen emissions were down by 3.96%, sulfur dioxide emissions were down by 6.88%, and NOx emissions were down by 3.02% from levels in the corresponding period last year, and all hazardous chemicals, discharged water, gas, and solid waste were properly treated.


 
10

 

5.1.3
Capital Expenditures

To address the changing business environment, we improved the decision-making mechanism for investments and focused on managing investment return and increasing growth quality and efficiency. In the first half of 2016 total capital expenditure was RMB 13.474 billion. Capital expenditure for the exploration and production segment was RMB 5.168 billion, mainly for Phase Two of shale gas development in Fuling, the LNG terminals in Guangxi and Tianjin, and Phase Two of the Jinan-Qingdao gas pipeline. Capital expenditure for the refining segment was RMB 2.774 billion, mainly for gasoline and diesel quality upgrading and refinery optimisation projects. Capital expenditure for the marketing and distribution segment was RMB 2.61 billion, mainly for renovations of service stations, refined oil products pipelines and depots and safety projects. Capital expenditure for the chemicals segment was RMB 2.44 billion, mainly for feedstock and product optimisation projects and coal chemical projects of East Ningxia project and Zhongtianhechuang project. Capital expenditure for corporate and others was RMB 482 million, mainly for R&D facilities and IT application projects.

5.2
Business Prospects

China’s economic growth is expected to be steady in the second half of 2016, which will drive the growth of domestic demand for refined oil products and petrochemical products. The consumption mix of oil products shall continue to change, and demand for chemical products shall be gradually going for more high-end products. Yet over-supply in the international oil market is likely to persist, and international oil prices will stay at a low level. The competitiveness of naphtha based chemicals will remain strong.

Against this background, we will spare no effort to expand our markets, optimise our operations, control costs, adjust asset structure and manage risks with the following focuses in each business segment:

We will maintain the level of input intensity in exploration and optimise planning of our exploration program to achieve high efficiency. For oil, we will strengthen progressive exploration and reservoir evaluation for oil projects to increase the quality of new projects and apply refined management over existing projects. For natural gas, we will speed up key capacity building projects, optimise production and sales, intensify reservoir assessment in west Sichuan and Northeast China, and press ahead with development of Fuling Shale Gas field. In the second half of 2016, we plan to produce 147 million barrels of crude oil, of which domestic production will account for 125 million barrels and overseas production will account for 22 million barrels. We plan to produce 421.2 billion cubic feet of natural gas during the period.


 
11

 

We will base our refining facility utilisation rates on market conditions, allocate crude resources and refining throughput according to profit margins and regional conditions, optimise our product slate to increase high value-added products, and emphasise technology R&D. We will continue to lower the diesel-to-gasoline ratio, upgrade the refined oil products’ quality, increase clean fuel production and expand the sales volume of lubricants, LPG and asphalt. We plan to process 120 million tonnes of crude in the second half of this year.

We will focus on both sales volume and profits in marketing and distribution business, with profits as priority goals of operation. We will redouble efforts to expand our markets, increase our retail volume, optimise our sales structure, develop our automotive gas business by building and operating more CNG/LNG stations, and promote our non-fuel businesses by improving operations of convenience stores, adding new and specialty products and innovating our business model, and shall facilitate our transformation into a modern and comprehensive service provider. We plan to sell 84 million tonnes of refined oil products in domestic market in the second half of this year.

We will further optimise our chemical feedstock structure to further reduce cost of feedstock, and operations and intensify profit analysis and evaluation of our product value chain and facilities. Contribution to profit margins will determine the slate of production and utilisation of facilities, and we will strengthen optimisation of product mix, produce more new and high value-added products in accordance with market demand. We will strengthen the development and application of new products, and upgrade three major synthetic materials. We will also make further improvements to the marketing network and customer services by providing our customers with value-added services and integrated solutions. We plan to produce 5.56 million tonnes of ethylene in the second half of 2016.

In the second half of the year, we will remain focused on implementing the development plan for 2016 through 2020, transforming the pattern of growth, adjusting asset structure, upgrading asset quality and promoting sustainable growth to achieve solid business results.

5.3
Management’s Discussion and Analysis

The following discussion and analysis should be read in conjunction with the Company’s audited interim financial statements and the accompanying notes in the interim report of Sinopec Corp. Parts of the following financial data, unless otherwise stated, were abstracted from the company’s audited interim financial statements that have been prepared according to IFRS.

5.3.1
Consolidated results of operations

In the first half of 2016, the Company’s turnover and other operating revenues were RMB 879.2 billion, representing a decline of 15.6% year on year, and operating profit was RMB 35.1 billion, representing a decline of 13.3% year on year.


 
12

 

The following table sets forth the principal revenue and expenses items from the Company’s consolidated financial statements for the first half of 2016 and the corresponding period in 2015:

   
Six-month periods ended 30 June
       
   
2016
   
2015
   
Change
 
   
RMB million
   
(%)
 
                   
Turnover and other operating revenues
    879,220       1,041,131       (15.6 )
Turnover
    856,796       1,022,449       (16.2 )
Other operating revenues
    22,424       18,682       20.0  
Operating expenses
    (844,112 )     (1,000,635 )     (15.6 )
Purchased crude oil, products, and operating supplies and expenses
    (615,419 )     (770,998 )     (20.2 )
Selling, general and administrative expenses
    (33,056 )     (32,236 )     2.5  
Depreciation, depletion and amortisation
    (49,105 )     (46,295 )     6.1  
Exploration expenses, including dry holes
    (4,730 )     (6,031 )     (21.6 )
Personnel expenses
    (29,063 )     (26,719 )     8.8  
Taxes other than income tax
    (112,831 )     (119,889 )     (5.9 )
Other operating income, net
    92       1,533       (94.0 )
Operating profit
    35,108       40,496       (13.3 )
Net finance costs
    (4,284 )     (3,383 )     26.6  
Investment income and share of profit less losses from associates and joint ventures
    4,697       4,221       11.3  
Profit before taxation
    35,521       41,334       (14.1 )
Tax expense
    (8,379 )     (9,674 )     (13.4 )
Profit for the period
    27,142       31,660       (14.3 )
Attributable to:
                       
Owners of the Company
    19,919       25,423       (21.6 )
Non-controlling interests
    7,223       6,237       15.8  

(1)
Turnover and other operating revenues

In the first half of 2016, the Company’s turnover was RMB 856.8 billion, representing a decrease of 16.2% year on year. The change was mainly attributable to the decline of international crude oil price and petrochemical product prices as compared with the same period of last year.


 
13

 

The following table sets forth the external sales volume, average realised prices and respective change rates of the Company’s major products in the first half of 2016 as compared with the first half of 2015.

   
Sales Volume (thousand tonnes)
   
Average realised price (VAT excluded)
(RMB/tonne, RMB/thousand cubic meters)
 
   
Six-month periods ended 30 June
   
Change
   
Six-month periods ended 30 June
   
Change
 
   
2016
   
2015
   
(%)
   
2016
   
2015
   
(%)
 
                                     
Crude oil
    3,669       4,874       (24.7 )     1,596       2,152       (25.8 )
Natural gas (million cubic meters)
    9,844       8,777       12.2       1,267       1,571       (19.4 )
Gasoline
    38,689       34,626       11.7       6,176       6,881       (10.2 )
Diesel
    46,260       46,714       (1.0 )     4,273       5,133       (16.8 )
Kerosene
    12,241       11,410       7.3       2,497       3,594       (30.5 )
Basic chemical feedstock
    14,665       13,983       4.9       3,862       4,508       (14.3 )
Synthetic fibre monomer and polymer
    3,304       2,887       14.4       5,108       6,259       (18.4 )
Synthetic resin
    5,889       5,851       0.6       7,049       8,187       (13.9 )
Synthetic fibre
    666       689       (3.3 )     6,949       8,046       (13.6 )
Synthetic rubber
    518       579       (10.5 )     8,812       8,730       0.9  

Most of the crude oil and a small portion of natural gas produced by the Company were internally used for refining and chemical production with the remaining sold to other customers. In the first half of 2016, the turnover from crude oil, natural gas and other upstream products sold externally amounted to RMB 23.0 billion, decreased by 20.9% year on year, accounting for 2.6% of the Company’s turnover and other operating revenues. The change was mainly attributable to lower prices of crude oil and natural gas as well as declined external sales volume of crude oil under the Company’s profit-oriented production plan with a focus on optimisation of crude oil production.

Petroleum products (mainly consisting of oil products and other refined petroleum products) sold by the Refining Segment and the Marketing and Distribution Segment achieved external sales revenues of RMB 538.6 billion, representing a decrease of 13.0% year on year and accounting for 61.3% of the Company’s turnover and other operating revenues. Those changes were mainly due to the decline of downstream product prices driven by sharp drop of crude oil prices. The sales revenue of gasoline, diesel and kerosene was RMB 467.2 billion, representing a decrease of 10.0% year on year, accounting for 86.7% of the sales revenue of petroleum products. Sales revenue of other refined petroleum products was RMB 71.5 billion, representing a decline of 28.5% year on year, accounting for 13.3% of the sales revenue of petroleum products.

The Company’s external sales revenue of chemical products was RMB 126.3 billion, representing a decrease of 10.8% year on year, accounting for 14.4% of its turnover and other operating revenues. The decreased sales revenue as a result of lower chemical product price was partly offset by the company’s marketing effort in expanding market.


 
14

 

(2)
Operating expenses

In the first half of 2016, the Company’s operating expenses were RMB 844.1 billion, representing a decrease of 15.6% year on year. The operating expenses mainly consisted of the following:

Purchased Crude oil, products and operating supplies and expenses were RMB 615.4 billion, representing a decrease of 20.2% year on year, accounting for 72.9% of total operating expenses, of which:

 
Crude oil purchasing expenses were RMB 163.1 billion, representing a decrease of 35.2% year on year. Throughput of crude oil purchased externally in the first half of 2016 was 85.88 million tonnes (excluding the volume processed for third parties), decreased by 4.4% year on year. The average cost of crude oil purchased externally was RMB 1,900 per tonne, decreased by 32.2% year on year.

 
Other purchasing expenses were RMB 452.3 billion, decreased by 12.8% year on year. The change was mainly due to the decline of crude oil prices, which resulted in lower purchase prices of crude oil related petrochemical products.

Selling, general and administrative expenses of the Company totaled RMB 33.1 billion, representing an increase of 2.5% year on year. The change was mainly due to increased investment in R&D and intensified conversions of research outcomes into productivity. The R&D expense was up by RMB 1.2 billion year on year. Under the Company’s cost-saving efforts, other expenses decreased as compared with the corresponding period of 2015.

Depreciation, depletion and amortisation expenses of the Company were RMB 49.1 billion, representing an increase of 6.1% year on year. This was mainly due to the continued investments in fixed assets.

Exploration expenses in the first half of 2016 were RMB 4.7 billion, representing a decrease of 21.6% year on year. This was mainly due to higher successful exploration rate and optimised deployment.

Personnel expenses were RMB 29.1 billion, representing an increase of 8.8 % year on year. The change was mainly attributable to the improvement of our recruitment system, resulting in transfer of part of remuneration related expense from selling, general and administrative expenses into personnel expenses.

Taxes other than income tax were RMB 112.8 billion, representing a decrease of 5.9% year on year. This was mainly due to declined domestic consumption of diesel, resulting in a decrease of sales volume of diesel from refineries as compared with the corresponding period of 2015, which cause a decrease of RMB 5.6 billion in consumption tax. The special oil income levy decreased by RMB 0.8 billion as a result of decreased prices of crude oil and natural gas.


 
15

 

(3)
Operating profit

In the first half of 2016, the Company’s operating profit was RMB 35.1 billion, representing a decrease of 13.3% year on year.

(4)
Net finance costs

In the first half of 2016, the Company’s net finance costs were RMB 4.3 billion, up by RMB 0.9 billion, representing an increase of 26.6% year on year, of which: foreign currency exchange losses amounted to RMB 0.48 billion due to RMB depreciation, compared with a net gain of RMB 0.16 billion in the corresponding period of 2015. After the implementation of exchange rate reform by People’s Bank of China in 2015, the Company has adjusted its debt structure in time by gradually deleveraging its debt in foreign currencies. As of the end of this period, the Company had almost eliminated its foreign exchange rate risk exposure of debt in foreign currencies. Meanwhile, the Company took measures to hedge exchange risk of accounts payable with financial derivatives while relevant earnings were added into investment incomes, offsetting effects of currency fluctuations on the Company’s performance.

(5)
Profit before taxation

In the first half of 2016, the Company’s profit before taxation amounted to RMB 35.5 billion, representing a decrease of 14.1% year on year.

(6)
Tax expense

In the first half of 2016,the Company’s tax expense totaled RMB 8.4 billion, down by 13.4% year on year.

(7)
Profit attributable to non-controlling interests of the Company

In the first half of 2016, profit attributable to non-controlling shareholders was RMB 7.2 billion, up by RMB 1 billion, representing an increase of 15.8% year on year, This was mainly due to higher profitability of the Company’s non-controlling subsidiaries in refining and chemicals segments.

(8)
Profit attributable to Owners of the Company

In the first half of 2016, profit attributable to owners of the Company was RMB 19.9 billion, representing a decrease of 21.6 % year on year. The Company’s upstream business suffered a wider loss year on year due to declined prices of crude oil and natural gas, however, profits from refining and marketing segments increased while performance of chemicals segment remained stable, demonstrating advantages of the Company’s integrated business model.


 
16

 

5.3.2
Assets, liabilities, equity and cash flows

(1)
Assets, liabilities and equity
 
Units: RMB million

   
As of
30 June
   
As of
31 December
   
Amount of
 
   
2016
   
2015
   
Change
 
                   
Total assets
    1,432,624       1,447,268       (14,644 )
Current assets
    347,674       333,657       14,017  
Non-current assets
    1,084,950       1,113,611       (28,661 )
Total liabilities
    623,990       659,107       (35,117 )
Current liabilities
    445,396       462,832       (17,436 )
Non-current liabilities
    178,594       196,275       (17,681 )
Total equity attributable to owners of the Company
    691,642       676,197       15,445  
Share capital
    121,071       121,071        
Reserves
    570,571       555,126       15,445  
Non-controlling Interests
    116,992       111,964       5,028  
Total equity
    808,634       788,161       20,473  

(2)
Cash Flow

 
The following table sets forth the major items in the consolidated cash flow statements for the first half of 2016 and of 2015.

 
Units: RMB million

   
Six-month periods ended 30 June
   
Changes
 
Major items of cash flows
 
2016
   
2015
   
in amount
 
                   
Net cash generated from operating activities
    76,112       67,095       9,017  
Net cash used in investing activities
    (26,059 )     (54,952 )     28,893  
Net cash (used in)/generate from financing activities
    (45,930 )     51,071       (97,001 )
Net increase in cash and cash equivalents
    4,123       63,214       (59,091 )


 
17

 

5.4
The results of the principal operations by segments (under ASBE)

   
Operating income
   
Operating cost
   
Gross profit margin*
   
Increase/(decrease) of operating income on a year-on-year
   
Increase/(decrease) of operating cost on a year-on-year
   
Increase/(decrease) of gross profit margin on a year-on-year
 
Segments
 
(RMB million)
   
(RMB million)
   
(%)
   
basis (%)
   
basis (%)
   
basis (%)
 
                                     
Exploration and Production
    52,509       58,612       (15.6 )     (25.4 )     7.1       (33.2 )
Refining
    396,969       244,163       11.1       (18.3 )     (29.6 )     6.1  
Marketing and Distribution
    500,969       458,309       8.3       (11.4 )     (12.7 )     1.3  
Chemicals
    149,186       128,197       13.5       (11.0 )     (12.3 )     1.9  
Corporate and Others
    312,816       307,713       1.6       (24.8 )     (25.2 )     0.6  
Elimination of inter-segment sales
    (533,229 )     (531,801 )     N/A       N/A       N/A       N/A  
Total
    879,220       665,193       11.5       (15.6 )     (18.9 )     1.8  

 
*:
Gross profit margin = (Operating income - Operating cost, tax and surcharges)/Operating income

6
Dividend

6.1
Dividend distribution for the year ended 31 December 2015

Upon its approval at the annual general meeting of the Sinopec Corp. for the year 2015, Sinopec Corp. distributed the final dividend of RMB 0.06 per share (tax inclusive). The final dividend for 2015 has been distributed to shareholders on and before 30 June 2016 who were registered as existing shareholders as at 23 June 2016. Combined with the 2015 interim dividend of RMB 0.09 per share (tax inclusive), the total cash dividend for the year 2015 amounted to RMB 0.15 per share (tax inclusive).

6.2
Interim dividend distribution plan for the six-month ended 30 June 2016

As approved by the 8th meeting of the sixth session of the board of directors of Sinopec Corp. (the “Board”), the interim dividend for the six-month ended 30 June 2016 of RMB 0.079 per share (tax inclusive) will be distributed based on the total number of shares as of 20 September 2016 (the Record Date) in cash.

The Sinopec Corp’s 2016 interim profit distribution proposal is in compliance with the Articles of Association and relevant procedures. The independent non-executive directors have issued independent opinions on it.


 
18

 

The interim cash dividend will be distributed on or before 30 September 2016 (Friday) to all shareholders whose names appear on the register of members of Sinopec Corp. on the record date of 20 September 2016 (Tuesday). To be entitled to the interim dividend, holders of H shares shall lodge their share certificate(s) and transfer documents with Hong Kong Registrars Limited at 1712-1716, 17th floor, Hopewell Centre, No. 183 Queen’s Road East, Wanchai, Hong Kong, for registration of transfer, no later than 4:30 p.m. on 12 September 2016 (Monday). The register of members of the H shares of Sinopec Corp. will be closed from 13 September 2016 (Tuesday) to 20 September 2016 (Tuesday) (both dates inclusive).

The dividend will be denominated and declared in Renminbi (RMB), and distributed to domestic and Shanghai-Hong Kong Stock Connect shareholders in RMB and to foreign shareholders in Hong Kong Dollar. The exchange rate for dividend to be paid in Hong Kong dollars is based on the average benchmark exchange rate of RMB against Hong Kong dollar as published by the People’s Bank of China one week preceding the date of declaration of the interim dividend, being 26 August 2016 (Friday).

In accordance with the Enterprise Income Tax Law of the People’s Republic of China and its implementation regulations which came into effect on 1 January 2008, Sinopec Corp. is required to withhold and pay enterprise income tax at the rate of 10% on behalf of the non-resident enterprise shareholders whose names appear on the register of members for H Shares of Sinopec Corp. when distributing the cash dividends to them. Any H Shares of the Sinopec Corp. registered not under the name of an individual shareholder, including HKSCC Nominees Limited, other nominees, agents or trustees, or other organisations or groups, shall be deemed as shares held by non-resident enterprise shareholders. Therefore, enterprise income tax shall be withheld from dividends payable to such shareholders. If holders of H Shares intend to change their shareholder status, they should enquire about the relevant procedures with their agents or trustees. Sinopec Corp. will withhold and pay enterprise income tax on behalf of the relevant shareholders based on the register of members for H shares of Sinopec Corp. as at the Record Date in accordance with the laws or the requirements of relevant government anthorities.


 
19

 

If the individual holders of the H shares who are Hong Kong or Macau residents or residents of the countries which had an agreed tax rate of 10% for cash dividends to them with China under relevant tax agreement, Sinopec Corp. should withhold and pay individual income tax on behalf of the relevant shareholders at a rate of 10%. Should the individual holders of the H Shares are residents of the countries which had an agreed tax rate of less than 10% with China under relevant tax agreement, Sinopec Corp. shall withhold and pay individual income tax on behalf of the relevant shareholders at a rate of 10%. In that case, if the relevant individual holders of the H Shares wish to reclaim the extra amount withheld (the “Extra Amount”) due to the application of 10% tax rate, Sinopec Corp. can apply for the relevant agreed preferential tax treatment provided that the relevant shareholders submit the evidence required by the notice of the tax agreement to the share register for H shares of Sinopec Corp. Sinopec Corp. will assist with the tax refund after the approval of the competent tax authority. Should the individual holders of the H Shares are residents of the countries which had an agreed tax rate of over 10% but less than 20% with China under the tax agreement, Sinopec Corp. shall withhold and pay the individual income tax at the agreed actual rate in accordance with relevant tax agreements. In the case that the individual holders of the H Shares are residents of the countries which had an agreed tax rate of 20% with China, or which has not entered into any tax agreement with China, or otherwise, Sinopec Corp. shall withhold and pay the individual income tax at a rate of 20%.

Pursuant to the Notice on the Tax Policies Related to the Pilot Program of the Shanghai-Hong Kong Stock Connect (關於滬港股票市場交易互聯互通機制試點有關稅收政策的通知) (Caishui [2014] No. 81):

For domestic investors investing in the H Shares of Sinopec Corp. through Shanghai-Hong Kong Stock Connect, Sinopec Corp. shall withhold and pay income tax at the rate of 20% on behalf of individual investors and securities investment funds. Sinopec Corp. will not withhold or pay the income tax of dividends for domestic enterprise investors and those domestic enterprise investors shall report and pay the relevant tax themselves.

For investors of the Hong Kong Stock Exchange (including enterprises and individuals) investing in the A Shares of Sinopec Corp. through Shanghai-Hong Kong Stock Connect, the Company will withhold and pay income taxes at the rate of 10% on behalf of those investors and will report to the tax authorities for the withholding. For investors who are tax residents of other countries and whose country of domicile is a country which has entered into a tax treaty with China stipulating a dividend tax rate of lower than 10%, those enterprises and individuals may, or may entrust a withholding agent to, apply to the competent tax authorities for the entitlement of the rate under such tax treaty. Upon approval by the tax authorities, the paid amount in excess of the tax payable based on the tax rate according to such tax treaty will be refunded.


 
20

 

7
Financial statements

7.1
Auditors’ opinion

Financial statements
□ Unaudited
√ Audited
Auditors’ opinion
√ Standard unqualified opinion
□ Not standard opinion

7.2
Financial Statements

7.2.1
Interim financial statements prepared under ASBE

 
Consolidated and Parent Balance Sheets

 
Unit: RMB million

   
At 30 June 2016
   
At 31 December 2015
 
Items
 
Consolidated
   
Parent
   
Consolidated
   
Parent
 
                         
Assets
                       
Current assets
                       
Cash at bank and on hand
    76,986       45,941       69,666       46,453  
Bills receivable
    11,962       554       10,964       540  
Accounts receivable
    63,253       31,078       56,142       29,512  
Other receivables
    19,125       69,864       21,453       64,620  
Prepayments
    3,797       1,729       2,920       1,296  
Inventories
    149,443       39,291       145,608       46,029  
Other current assets
    23,108       37,570       26,904       36,559  
                                 
Total current assets
    347,674       226,027       333,657       225,009  
Non-current assets
                               
Available-for-sale financial assets
    11,137       297       10,964       297  
Long-term equity investments
    88,711       228,462       84,293       219,230  
Fixed assets
    723,465       410,694       733,449       439,477  
Construction in progress
    126,790       53,066       152,325       72,763  
Intangible assets
    82,156       7,987       81,086       8,397  
Goodwill
    6,317             6,271        
Long-term deferred expenses
    13,634       1,854       13,919       2,154  
Deferred tax assets
    6,818             7,469        
Other non-current assets
    25,922       12,347       23,835       11,959  
                                 
Total non-current assets
    1,084,950       714,707       1,113,611       754,277  
                                 
Total assets
    1,432,624       940,734       1,447,268       979,286  


 
21

 

 
Unit: RMB million

   
At 30 June 2016
   
At 31 December 2015
 
Items
 
Consolidated
   
Parent
   
Consolidated
   
Parent
 
                         
Liabilities and shareholders’ equity
                       
Current liabilities
                       
Short-term loans
    70,327       37,274       74,729       32,517  
Bills payable
    3,836       2,007       3,566       1,852  
Accounts payable
    151,800       80,931       130,558       85,182  
Advances from customers
    85,968       2,311       92,688       3,151  
Employee benefits payable
    3,619       1,670       1,185       290  
Taxes payable
    30,696       18,244       32,492       20,832  
Other payables
    63,799       68,287       86,337       86,427  
Short-term debentures payable
    10,000       10,000       30,000       30,000  
Non-current liabilities due within one year
    25,351       24,358       11,277       5,352  
                                 
                                 
Total current liabilities
    445,396       245,082       462,832       265,603  
                                 
Non-current liabilities
                               
Long-term loans
    54,404       52,542       56,493       54,526  
Debentures payable
    65,638       47,500       83,253       65,500  
Provisions
    35,233       30,868       33,186       28,968  
Deferred tax liabilities
    8,431       989       8,259       177  
Other non-current liabilities
    13,539       2,067       13,680       2,238  
                                 
                                 
Total non-current liabilities
    177,245       133,966       194,871       151,409  
                                 
Total liabilities
    622,641       379,048       657,703       417,012  
                                 
Shareholders’ equity
                               
Share capital
    121,071       121,071       121,071       121,071  
Capital reserve
    119,430       68,664       121,576       68,716  
Other comprehensive income
    (3,001 )     147       (7,984 )     (145 )
Specific reserve
    1,232       591       612       313  
Surplus reserves
    196,640       196,640       196,640       196,640  
Retained earnings
    257,562       174,573       245,623       175,679  
                                 
                                 
Total equity attributable to shareholders of the Company
    692,934       561,686       677,538       562,274  
                                 
Minority interests
    117,049             112,027        
                                 
Total shareholders’ equity
    809,983       561,686       789,565       562,274  
                                 
Total liabilities and shareholders’ equity
    1,432,624       940,734       1,447,268       979,286  


 
22

 

 
Consolidated and Parent Income Statement

 
Unit: RMB million

   
Six-month periods ended 30 June
 
   
2016
   
2015
 
Items
 
Consolidated
   
Parent
   
Consolidated
   
Parent
 
                         
Operating income
    879,220       346,149       1,041,131       438,319  
Less: Operating costs
    665,193       237,835       820,372       317,844  
Sales taxes and surcharges
    112,831       79,602       119,889       86,020  
Selling and distribution expenses
    23,572       1,304       22,404       1,241  
General and administrative expenses
    38,416       21,527       34,421       19,321  
Financial expenses
    4,284       2,065       3,124       3,500  
Exploration expenses, including dry holes
    4,730       4,730       6,031       6,010  
Impairment losses
    1,423       1,124       205       98  
Add: Gain/(loss) from changes in fair value
    113             111       (272 )
Investment income
    5,394       8,750       4,539       4,979  
                                 
Operating profit
    34,278       6,712       39,335       8,992  
                                 
Add: Non-operating income
    1,357       767       1,866       1,101  
Less: Non-operating expenses
    875       469       933       471  
                                 
                                 
Profit before taxation
    34,760       7,010       40,268       9,622  
                                 
Less: Income tax expense
    8,379       852       9,674       1,409  
                                 
Net profit
    26,381       6,158       30,594       8,213  
                                 
Including: net profit of acquiree before the consolidation
    86             52        
Attributable to:
                               
Equity shareholders of the Company
    19,250       6,158       24,456       8,213  
Minority interests
    7,131             6,138        
                                 
Basic earnings per share(RMB)
    0.159       N/A       0.203       N/A  
                                 
Diluted earnings per share(RMB)
    0.159       N/A       0.203       N/A  
                                 
Net profit
    26,381       6,158       30,594       8,213  


 
23

 

 
Unit: RMB million

   
Six-month periods ended 30 June
 
   
2016
   
2015
 
Items
 
Consolidated
   
Parent
   
Consolidated
   
Parent
 
                         
Other comprehensive income
                       
Items that may be reclassified subsequently to profit or loss (net of tax and after reclassification adjustments):
                       
Cash flow hedges
    1,767       307       1,480       491  
Changes in fair value of available-for-sale financial assets
    (33 )           36        
Share of other comprehensive income/(loss) of associates and joint ventures
    99       (15 )     (118 )     (1 )
Foreign currency translation differences
    987             (43 )      
                                 
Total other comprehensive income
    2,820       292       1,355       490  
                                 
Total comprehensive income
    29,201       6,450       31,949       8,703  
                                 
Attributable to:
                               
Equity shareholders of the Company
    24,233       6,450       26,263       8,703  
Minority interests
    4,968             5,686        


 
24

 

 
Consolidated and Parent Cash Flow Statement

 
Unit: RMB million

   
Six-month periods ended 30 June
 
   
2016
   
2015
 
Items
 
Consolidated
   
Parent
   
Consolidated
   
Parent
 
                         
Cash flows from operating activities:
                       
Cash received from sale of goods and rendering of services
    1,024,105       385,148       1,153,197       502,027  
Refund of taxes and levies
    1,079       999       1,815       1,526  
Other cash received relating to operating activities
    39,148       10,499       54,256       51,022  
                                 
                                 
Sub-total of cash inflows
    1,064,332       396,646       1,209,268       554,575  
                                 
Cash paid for goods and services
    (732,307 )     (241,787 )     (873,724 )     (358,624 )
Cash paid to and for employees
    (27,480 )     (15,788 )     (25,130 )     (13,091 )
Payments of taxes and levies
    (169,094 )     (85,487 )     (165,729 )     (107,334 )
Other cash paid relating to operating activities
    (59,339 )     (20,785 )     (77,590 )     (28,122 )
                                 
                                 
Sub-total of cash outflows
    (988,220 )     (363,847 )     (1,142,173 )     (507,171 )
                                 
Net cash flow from operating activities
    76,112       32,799       67,095       47,404  
                                 
Cash flows from investing activities:
                               
Cash received from disposal of investments
    17,911       20,237       493       79,475  
Cash received from returns on investments
    1,459       12,224       1,274       3,465  
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
    306       593       222       2,303  
Other cash received relating to investing activities
    987       364       2,176       361  
Net cash received from disposal of subsidiaries and other business entities
    2,027       2,027              
                                 
Sub-total of cash inflows
    22,690       35,445       4,165       85,604  


 
25

 

 
Unit: RMB million

   
Six-month periods ended 30 June
 
   
2016
   
2015
 
Items
 
Consolidated
   
Parent
   
Consolidated
   
Parent
 
                         
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
    (31,353 )     (24,448 )     (52,933 )     (29,925 )
Cash paid for acquisition of investments
    (14,393 )     (19,692 )     (3,556 )     (15,869 )
Other cash paid relating to investing activities
    (3,003 )     (10 )     (2,628 )      
                                 
Sub-total of cash outflows
    (48,749 )     (44,150 )     (59,117 )     (45,794 )
                                 
Net cash flow from investing activities
    (26,059 )     (8,705 )     (54,952 )     39,810  
                                 
Cash flows from financing activities:
                               
Cash received from capital contributions
    192             105,196        
Including: Cash received from minority shareholders’ capital contributions to subsidiaries
    192             105,196        
Cash received from borrowings
    262,851       95,722       613,159       119,633  
                                 
Sub-total of cash inflows
    263,043       95,722       718,355       119,633  
                                 
Cash repayments of borrowings
    (293,977 )     (110,878 )     (648,938 )     (162,683