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PTR PetroChina

Filed: 29 Oct 20, 9:59am

Exhibit 99.1

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility 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.

 

LOGO

PETROCHINA COMPANY LIMITED

(A joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Hong Kong Stock Exchange Stock Code: 857; Shanghai Stock Exchange Stock Code: 601857)

ANNOUNCEMENT

Third Quarterly Report of 2020

 

1.

Important Notice

 

1.1.

The Board of Directors, the Supervisory Committee and the Directors, Supervisors and Senior Management of PetroChina Company Limited (the “Company”) warrant that there are no material omissions from, or misrepresentation or misleading statements contained in this quarterly report, and jointly and severally accept full responsibility for the truthfulness, accuracy and completeness of the information contained in this quarterly report.

 

1.2.

This quarterly report has been approved at the eighth meeting of the Board of Directors of the Company in 2020. All Directors have attended the meeting of the Board of Directors.

 

1.3.

Mr. Dai Houliang, Chairman of the Board of Directors of the Company, Mr. Duan Liangwei, Director and President of the Company, and Mr. Chai Shouping, Chief Financial Officer of the Company, warrant the truthfulness, accuracy and completeness of the financial statements set out in this quarterly report.

 

1.4.

The financial statements of the Company and its subsidiaries (the “Group”) have been prepared in accordance with the China Accounting Standards (“CAS”) and the International Financial Reporting Standards (“IFRS”), respectively. The financial statements for the third quarterly report of the Company is unaudited.

 

1


2.

Basic Information of the Company

 

2.1

Key Financial Data

2.1.1

Key Financial Data and Financial Indicators Prepared under IFRS

 

           Unit: RMB Million 

Items

  As at the end of
the reporting
period
   As at the end of
the preceding
year
   Changes from the end of the
preceding year to the end of
the reporting period (%)
 

Total assets

   2,566,644    2,732,910    (6.1

Equity attributable to owners of the Company

   1,210,287    1,230,156    (1.6

Items

  From the
beginning of the

year to the end of
the reporting
period
   From the
beginning of the
preceding year to the
end of the preceding
reporting period
   Changes over the
same period of the
preceding year (%)
 

Net cash flows from operating activities

   163,303    239,396    (31.8

 

                      Unit: RMB Million 
   For the three months ended
September 30
(July-September)
  For the nine months ended
September 30
(January-September)
 

Items

  2020   2019   Changes over
the same period
of the preceding
year (%)
  2020   2019   Changes over
the same period
of the preceding
year (%)
 

Revenue

   497,125    618,143    (19.6  1,426,170    1,814,402    (21.4

Profit attributable to owners of the Company

   40,050    8,830    353.6   10,067    37,253    (73.0

Return on net assets (%)

   3.31    0.72    
2.59
percentage points
 
 
  0.83    3.04    

(2.21

percentage points


 

Basic earnings per share (RMB Yuan)

   0.219    0.048    353.6   0.055    0.204    (73.0

Diluted earnings per share (RMB Yuan)

   0.219    0.048    353.6   0.055    0.204    (73.0

 

Note:

The Company sold its major oil & gas pipelines, certain gas storages, LNG terminals and initial oil and gas (including its equity interests) to China Oil&Gas Pipeline Network Corporation (“PipeChina”) for its equity interests and corresponding cash consideration. On September 30, 2020, all of the conditions precedent set out in the Transaction Agreements have been satisfied, and the corresponding ownership and risk were passed to PipeChina. (Please see Section 3.6 for details)

 

2


2.1.2

Key Financial Data and Financial Indicators Prepared under CAS

 

           Unit: RMB Million 

Items

  As at the end of the
reporting period
   As at the end of the
preceding year
   Changes from the end of the
preceding year to the end of
the reporting period (%)
 

Total assets

   2,566,916    2,733,190    (6.1

Equity attributable to equity holders of the Company

   1,210,550    1,230,428    (1.6

Items

  From the beginning
of the year to the
end of the reporting
period
   From the beginning of the
preceding year to the end
of the preceding reporting
period
   Changes over the same
period of the preceding
year (%)
 

Net cash flows from operating activities

   163,303    239,396    (31.8

 

                     Unit: RMB Million 
   For the three months ended
September 30
(July-September)
  For the nine months ended
September 30
(January-September)
 

Items

  2020   2019   Changes over
the same period
of the preceding
year (%)
  2020  2019   Changes over
the same period
of the preceding
year (%)
 

Operating income

   497,125    618,143    (19.6  1,426,170   1,814,402    (21.4

Net profit attributable to equity holders of the Company

   40,050    8,862    351.9   10,064   37,282    (73.0

Net profit after deducting non-recurring profit/loss items attributable to equity holders of the Company

   8,586    10,272    (16.4  (23,204  40,658    (157.1

Weighted average return on net assets (%)

   3.34    0.73    

2.61

percentage points

 

 

  0.82   3.06    
(2.24)
percentage points
 
 

Basic earnings per share (RMB Yuan)

   0.219    0.048    351.9   0.055   0.204    (73.0

Diluted earnings per share (RMB Yuan)

   0.219    0.048    351.9   0.055   0.204    (73.0

 

3


   Unit: RMB Million 

Non-recurring profit/loss items

  For the nine months ended
September 30, 2020
profit/(loss)
 

Net loss on disposal of non-current assets

   (1,545

Government grants recognised in the income statement

   381 

Reversal of provisions for bad debts against receivables

   22 

Net profit or loss on disposal of associated companies and joint ventures

   4 

Net profit or loss arising from disposal of subsidiary

   331 

Net profit arising from restructuring of pipeline assets

   45,820 

Other non-operating income and expenses

   2,678 
  

 

 

 

Sub-total

   47,691 
  

 

 

 

Tax impact of non-recurring profit/loss items

   (14,404

Impact of non-controlling interests

   (19
  

 

 

 

Total

   33,268 
  

 

 

 

 

2.1.3

Differences between CAS and IFRS

✓ Applicable      ☐ Inapplicable

The consolidated net profit for the nine months ended September 30, 2020 under IFRS and CAS were RMB20,678 million and RMB20,675 million, respectively, with a difference of RMB3 million; the consolidated shareholders’ equity as at the end of the reporting period under IFRS and CAS were RMB1,360,985 million and RMB1,361,249 million, respectively, with a difference of RMB264 million, which was primarily due to the revaluation for assets other than fixed assets and oil and gas properties revalued in 1999. During the restructuring in 1999, a valuation was carried out for assets and liabilities injected by China National Petroleum Corporation (中國石油天然氣集團公司, now renamed 中國石油天然氣集團有限公司 on 19 December 2017, “CNPC” before and after the change of name). The valuation results on assets other than fixed assets and oil and gas properties were not recognised in the financial statements prepared under IFRS.

 

4


2.2

Total Number of Shareholders, Shareholdings of Top Ten Shareholders and Shareholdings of Top Ten Holders of Marketable Shares (or Holders of Shares Without Selling Restrictions) as at the End of the Reporting Period

 

Number of shareholders as at the end of the reporting period  706,651 shareholders including 700,383 holders of A shares and 6,268 holders of H shares (including 148 holders of the American Depository Shares)

 

Shareholdings of the top ten shareholders 

Name of shareholders

  

Nature of

shareholder

  Percentage of
Shareholdings
(%)
   Number of shares
held
  Number of
shares with
selling
restrictions
   Number of
pledged or frozen
shares
 

CNPC

  State-owned Legal Person   80.25    
146,882,339,136
 
(1)
 
  0    0 

HKSCC Nominees Limited(2)

  Overseas Legal Person   11.42    
20,894,384,550
 
(3) 
  0    0 

CNPC-CSC-17 CNPC E2 Pledge and Trust Special Account

  State-owned Legal Person   2.09    3,819,972,916   0    3,819,972,916 

CNPC-CSC-17 CNPC EB Pledge and Trust Special Account

  State-owned Legal Person   1.12    2,051,488,603   0    2,051,488,603 

China Securities Finance Corporation Limited

  State-owned Legal Person   0.62    1,139,138,704   0    0 

China Metallurgical Group Corporation

  State-owned Legal Person   0.31    560,000,000   0    0 

China Baowu Steel Group Corporation Limited

  State-owned Legal Person   0.23    425,874,926   0    0 

Hong Kong Securities Clearing Company Limited (“HKSCC”)(4)

  Overseas Legal Person   0.18    322,347,283   0    0 

Ansteel Group Corporation

  State-owned Legal Person   0.12    220,000,000   0    0 

Central Huijin Asset Management Ltd.

  State-owned Legal Person   0.11    206,109,200   0    0 

 

5


Shareholdings of the top ten shareholders without selling restrictions 

Name of shareholders

  Number of
shares held
   Type of
shares
 

CNPC

   146,882,339,136    A shares 

HKSCC Nominees Limited

   20,894,384,550    H shares 

CNPC-CSC-17 CNPC E2 Pledge and Trust Special Account

   3,819,972,916    A shares 

CNPC-CSC-17 CNPC EB Pledge and Trust Special Account

   2,051,488,603    A shares 

China Securities Finance Corporation Limited

   1,139,138,704    A shares 

China Metallurgical Group Corporation

   560,000,000    A shares 

China Baowu Steel Group Corporation Limited

   425,874,926    A shares 

Hong Kong Securities Clearing Company Limited

   322,347,283    A shares 

Ansteel Group Corporation

   220,000,000    A shares 

Central Huijin Asset Management Ltd.

   206,109,200    A shares 

 

Statement on the connection or activities acting in concert among the above-mentioned shareholders:

 

Except for HKSCC Nominees Limited and HKSCC that are wholly-owned subsidiaries of Hong Kong Exchanges and Clearing Limited, the Company is not aware of any connection among or between the other top ten shareholders or that they are persons acting in concert as provided for in the Measures for the Administration of Acquisitions by Listed Companies.

 

 

 

 Notes: (1)

Such figure excludes the H shares indirectly held by CNPC through Fairy King Investments Limited, an overseas wholly-owned subsidiary of CNPC.

 

  (2)

HKSCC Nominees Limited is a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited and acts as nominee on behalf of other corporate or individual shareholders to hold the H shares of the Company.

 

  (3)

291,518,000 H shares were indirectly held by CNPC through Fairy King Investments Limited, an overseas wholly-owned subsidiary of CNPC, representing 0.16% of the total issued shares of the Company. These shares were held in the name of HKSCC Nominees Limited.

 

  (4)

HKSCC is a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited and acts as the nominee on behalf of investors of Hong Kong Stock Exchange to hold the A shares of the Company listed on Shanghai Stock Exchange.

 

2.3

Number of Shareholders of Preferred Shares, Shareholdings of Top Ten Shareholders of Preferred Shares and Shareholdings of Top Ten Shareholders of Preferred Shares without Selling Restrictions as at the End of the Reporting Period

☐ Applicable        ✓Inapplicable

 

6


2.4

Business Review

In the first three quarters in 2020, the global economy was in deep recession affected by the Coronavirus Disease 2019 (“COVID-19”), which in turn further loosened supply and demand balance in the international oil market. After witnessing a cliff-like drop, the international crude oil price recorded a sluggish rebound and is currently fluctuating at low level. There was a significant decrease in the average international oil prices as compared with the same period of last year, in which the average spot price of North Sea Brent crude oil and the average spot price of the West Texas Intermediate (“WTI”) crude oil were US$40.99 per barrel and US$38.13 per barrel, representing a decline of 36.5% and 33.2% as compared with the same period of last year, respectively. As China managed to bring COVID-19 under effective control, the domestic macro-economic operation has been recovering steadily with signs of improvement quarter-by-quarter and there was a change in the domestic economic growth in the first three quarters from negative growth to positive growth. According to the data published by the National Bureau of Statistics of China, the gross domestic product (GDP) in the third quarter recorded a 2.7% increase on a quarter-on-quarter basis and a 4.9% increase on a year-on-year basis, and there was also a 0.7% growth in the GDP of the first three quarters as compared with the same period of last year. In addition, the imbalance between the supply and demand arising from the abundant production capability in the domestic refined products market was further widened. There was also a drop in the demand growth in the natural gas market, but the situation of supply over demand is changing better.

In facing of the complicated and severe economic landscape within and outside China, the Group maintained the strategic strength, strengthened the bottom-line thinking, adhered to high-quality development, while sticking to law-abiding and compliant corporate governance following the governance principles of professional development, market-oriented operation, lean management and integrated planning. The Group paid more attention to green and low-carbon development, digital transformation, intelligent development and value creation to promote quality and profitability improvement. The Group coordinated the prevention and control of COVID-19 and facilitating its production and operation and also its reform and development. Pipeline assets restructuring was completed smoothly based on the market-oriented principle. The Group continued to promote the modernisation of its corporate governance system and capability and proactively took special actions to improve quality and profitability. As a result, the Group maintained stable production and operation under control.

In the first three quarters of 2020, the average realised price for crude oil of the Group was US$40.06 per barrel, representing a decrease of 34.9% as compared with the same period of last year, of which the domestic realised price was US$41.43 per barrel, representing a decrease of 32.5% as compared with the same period of last year. The average realised price for natural gas was US$4.61 per thousand cubic feet, representing a decrease of 16.0% as compared with the same period of last year, of which the domestic realised price was US$5.25 per thousand cubic feet, representing a decrease of 11.6% as compared with the same period of last year. In light of the adverse situation arising from the sharp fall in oil and gas prices, the Group facilitated the implementation of initiatives to improve both quality and profitability and enhanced its control over capital expenditure and also costs and expenses. There was a 7.8% year-on-year decrease in the capital expenditure in cash, a 10.7% year-on-year decrease in the unit oil and gas lifting cost, a 4.3% year-on-year decrease in employee compensation costs and a 7.9% year-on-year decrease in the selling and administrative expenses. The operating results of the first three quarters returned from negative to positive. According to IFRS, the Group generated a revenue of RMB1,426,170 million and a net profit attributable to owners of the Company of RMB10,067 million. The operating results have been improving on a quarter-by-quarter basis, which is evidenced by the fact that the net profit attributable to owners of the Company realised in the third quarter stood at RMB40,050 million, representing a substantial quarter-on-quarter increase of RMB53,803 million from the previous loss, or a substantial increase of RMB21,803 million from the previous loss after excluding the profit generated from pipeline assets restructuring. The financial position of the Group was generally stable. The free cash flows turned positive in the first three quarters of 2020 from negative in the first half of 2020.

 

7


In respect of domestic exploration and production business, the Group continued to optimise the deployment of its exploration activities and to strengthen its comprehensive geological research and the risk exploration target research. By focusing on launching sizeable and profitable exploration activities in large basins and key areas, the Group made important discoveries and strategic breakthroughs in Tarim, Sichuan, Junggar, Erdos and other basins. In adhering to the practice of stressing both the production quantity and profitability, the Group on one hand secured the stable production in the existing oil fields and on the other hand focused on building up its centralised production capacity in a sizeable and profitable manner so as to strictly control its investments as well as production and operating costs, and in turn to promote improvements in terms of both production and proficiency. For overseas operation, in addition to coordinate the safe and stable operation of its existing projects and the development of new projects, the Group also stepped up its efforts in the prevention and control of risks, including those arising from COVID-19. In the first three quarters of 2020, the crude oil output from the Group amounted to 701.2 million barrels, representing an increase of 2.7% as compared with the same period of last year. The marketable natural gas output of the Group amounted to 3,079.8 billion cubic feet, representing an increase of 6.5% as compared with the same period of last year, of which the domestic marketable natural gas output of the Group amounted to 2,907.4 billion cubic feet, representing an increase of 8.2% as compared with the same period of last year. The oil and gas equivalent output was 1,214.6 million barrels, representing an increase of 4.3% as compared with the same period of last year, of which the domestic oil and gas equivalent output was 1,044.7 million barrels, representing an increase of 4.0% as compared with the same period of last year. The overseas oil and gas equivalent output was 169.9 million barrels, representing an increase of 6.2% as compared with the same period of last year. The unit oil and gas lifting cost was US$10.07 per barrel, representing a decrease of 10.7% as compared with the same period of last year. Due to the combined effect of factors such as the decrease in price of crude oil and increase in the sales volume of crude oil and natural gas, the exploration and production segment generated an operating profit of RMB20,000 million, representing a decrease of 74.0% as compared with RMB76,935 million for the same period of last year. In the third quarter of 2020, the exploration and production segment generated an operating profit of RMB9,649 million, representing a quarter-on-quarter increase of RMB14,181 million in profit from the loss of the second quarter of 2020.

In respect of refining and chemicals business, the Group strengthened its production and operation by optimising the connection between production and sales in order to ensure a safe and stable operation in circumstances where production facilities were operated in low load. At the same time of adhering to the market-oriented approach, the Group also proactively promoted the reduction of refined products and the increase in chemical products with an aim to optimise its product structure through dynamic adjustment and, in turn, to increase the output of value-added products. The Group also intensified its efforts in controlling its costs and expenses as a mean to improve its competitiveness in cost. In the first three quarters of 2020, the Group processed a total amount of 877.3 million barrels of crude oil, representing a decrease of 3.2% as compared with the same period of last year. The Group produced 80.192 million tons of gasoline, diesel and kerosene, representing a decrease of 7.4% as compared with the same period of last year. The output of chemical products amounted to 21.511 million tons, representing an increase of 14.4% as compared with the same period of last year. Due to the combined effect of factors such as the decrease in demand, the fall in price, the reduction in margin and also the decline in profit from inventories prevailing in the domestic refined oil market, the refining and chemicals segment recorded in the first three quarters in 2020 an operating loss of RMB1,668 million, representing a decrease of 118.5% as compared with RMB9,004 million in profit for the same period of last year, of which the refining operations recorded an operating loss of RMB8,270 million, representing a decrease of 256.6% as compared with RMB5,281 million in profit for the same period of last year, and the chemicals operations achieved an operating profit of RMB6,602 million, representing an increase of 77.3% as compared with RMB3,723 million for the same period of last year. In the third quarter of 2020, the refining and chemicals segment generated an operating profit of RMB8,872 million, representing a quarter-on-quarter increase of RMB10,703 million in profit from the loss of the second quarter of 2020.

 

8


In respect of marketing business, the Group adopted proactive actions to cope with adversities arising from the decline in market demand, which included intensifying its sales efforts, diligently improving price realisation rate and stringently controlling its marketing costs. Through enhancing the coordination between production and sales, the Group was able to effectively control its inventory scale. Further, the Group made flexible adjustments to its product export based on changes prevailing in the market as well as the change in prices in order to improve the overall profitability of the industry chain. In the first three quarters of 2020, the marketing segment sold 120.645 million tons of gasoline, kerosene and diesel, representing an decrease of 13.0% as compared with the same period of last year, of which the marketing segment domestically sold 77.837 million tons of gasoline, kerosene and diesel, representing an decrease of 12.9% as compared with the same period of last year. However, due to the impact brought by factors such as the decrease in sales volume, fall in price and decline in profit from inventories prevailing in domestic refined oil market, the marketing segment recorded an operating loss of RMB4,936 million, representing an increase in loss of RMB3,487 million as compared with RMB1,449 million for the same period of last year. In the third quarter of 2020, the marketing segment generated an operating profit of RMB7,956 million, representing a quarter-on-quarter increase of RMB4,262 million from the second quarter of 2020.

In respect of natural gas and pipeline business, by following the market-oriented and profitability-focused approach, the Group proactively conducted research and evaluation towards seasonal gas consumption pattern and market competition environment, and subsequently developed differentiated marketing strategies targeted at different regions, industries and clientele. Additionally, the Group focused on source control and conducted dynamic tracking to analyse the international gas price trend and strive to lower the natural gas procurement costs. The Group continued to enhance its effort in exploring end user markets and to improve its market shares. The Group strengthened the safety and also the management of pipeline operations, and steadily promoted the restructuring of its pipeline assets by following the market-oriented principles. In the first three quarters of 2020, due to the combined effect of factors such as the decrease in both the sales volume and price of natural gas and also the impact brought by the profit from pipeline assets restructuring, the natural gas and pipeline segment generated an operating profit of RMB57,707 million (including certain profit from pipeline assets restructuring) , representing an increase of 162.9% as compared with RMB21,950 million in profit for the same period of last year. Due to the effect from the decrease in procurement costs and reduction in procurement amount, the net loss incurred from sales of imported gas and liquified nature gas (LNG) in the natural gas and pipeline segment amounted to RMB17,548 million, representing a significant decrease in loss of RMB4,216 million as compared with the same period of last year. The Group will make further efforts in controlling loss caused by imported gas by controlling the import volume, lowering import costs together with other relevant measures. In the third quarter of 2020, the natural gas and pipeline segment generated an operating profit of RMB43,335 million, representing a quarter-on-quarter increase of RMB40,322 million from the second quarter of 2020.

Note: In 2020, in order to optimise production, operation and management, the Group shifted PetroChina Fuel Oil Company Limited and PetroChina Lubricant Company from the Marketing segment to the Refining and Chemicals segment. Accordingly, the comparative data in respect of Refining and Chemicals segment and also the Marketing segment against those of the same period of last year have been restated, which implies that the two companies mentioned above shall be deemed to have been incorporated in the Refining and Chemical segment since the earliest financial reporting period presented.

 

9


Summary of Key Operating Data for the First Three Quarters of 2020

 

Operating Data

  Unit   For the nine months
ended September 30
   Changes over the
same period of the
preceding year (%)
 
  2020   2019 

Total crude oil output

   Million barrels    701.2    682.7    2.7 

of which: domestic

   Million barrels    560.0    556.9    0.6 

overseas

   Million barrels    141.2    125.8    12.2 

Marketable natural gas output

   Billion cubic feet    3,079.8    2,892.8    6.5 

of which: domestic

   Billion cubic feet    2,907.4    2,688.0    8.2 

overseas

   Billion cubic feet    172.4    204.8    (15.8

Oil and natural gas equivalent output

   Million barrels    1,214.6    1,165.0    4.3 

of which: domestic

   Million barrels    1,044.7    1,005.0    4.0 

overseas

   Million barrels    169.9    160.0    6.2 

Processed crude oil

   Million barrels    877.3    905.9    (3.2

Gasoline, kerosene and diesel output

   Thousand tons    80,192    86,583    (7.4

of which: Gasoline

   Thousand tons    34,007    37,084    (8.3

Kerosene

   Thousand tons    7,186    9,378    (23.4

Diesel

   Thousand tons    38,999    40,121    (2.8

Gasoline, kerosene and diesel gross sales

   Thousand tons    120,645    138,680    (13.0

of which: Gasoline

   Thousand tons    50,251    56,850    (11.6

Kerosene

   Thousand tons    10,264    15,020    (31.7

Diesel

   Thousand tons    60,130    66,810    (10.0

Gasoline, kerosene and diesel domestic sales

   Thousand tons    77,837    89,384    (12.9

of which: Gasoline

   Thousand tons    36,349    40,326    (9.9

Kerosene

   Thousand tons    5,402    6,423    (15.9

Diesel

   Thousand tons    36,086    42,635    (15.4

Output of key chemical products

        

Ethylene

   Thousand tons    4,714    4,290    9.9 

Synthetic resin

   Thousand tons    7,637    7,018    8.8 

Synthetic fibre raw materials and polymer

   Thousand tons    953    983    (3.1

Synthetic rubber

   Thousand tons    743    669    11.1 

Urea

   Thousand tons    1,634    919    77.8 

 

Notes:

Figures have been converted at the rate of 1 ton of crude oil = 7.389 barrels and 1 cubic metre of natural gas = 35.315 cubic feet.

 

Number of self-operated gas station and convenience store  Unit   As at
September 30,
2020
   As at
December 31,
2019
   Changes over the
same period of the
preceding year (%)
 

Number of self-operated gas station

   station    22,523    22,365    0.7 

Number of convenience store

   store    20,521    20,021    2.5 

 

10


3.    

Significant Events

 

3.1

Significant changes in key accounting items and financial indicators under CAS and explanation of such changes

✓ Applicable    ☐ Inapplicable

Unit: RMB Million

Items

  September 30,
2020
   December 31,
2019
   Changes
(%)
   

Key explanation of the changes

Accounts receivable

   159,664    64,184    148.8   Mainly due to corresponding cash consideration receipts from the pipeline assets restructuring for the Company sold its major oil and gas pipelines, certain gas storage facilities, LNG terminals and other related assets to PipeChina

Advances to suppliers

   28,479    17,038    67.1   Mainly due to the increase in prepayments such as those for goods and materials

Other receivables

   28,965    21,199    36.6   Mainly due to the pipeline assets restructuring, the one-off dividend distribution of PetroChina Pipelines Co., Ltd. in September led to the increase in dividend receivables

Long-term equity Investment

   251,116    102,165    145.8   Mainly due to corresponding equity interests from the pipeline assets restructuring for the Company sold major oil and gas pipelines, certain gas storage facilities, LNG terminals and other related assets to PipeChina

Fixed Asset

   436,289    703,414    (38.0  Mainly due to the pipeline assets restructuring, the Company sold related assets to PipeChina

Goodwill

   8,485    42,808    (80.2  Mainly due to the goodwill of related pipeline companies was transferred along with the pipeline assets restructuring

Deferred tax asset

   10,359    24,259    (57.3  Mainly due to the changes of related deferred income tax expenses from pipeline assets restructuring

Other non-current assets

   38,779    28,169    37.7   Mainly due to the increase in prepayments for large equipment and time deposits with maturities over one year

Taxes payable

   43,554    67,382    (35.4  Mainly due to the decrease in the outstanding amount of taxes payable as compared with that at the end of last year

Other Payables

   89,865    34,699    159.0   Mainly due to the increase in accrued expenses and other business accounts payables

Other current liabilities

   53,454    30,048    77.9   Mainly due to the increase of ultra short term financing bond

 

11


Items

  For the nine months ended
September 30
   Changes
(%)
   

Key explanation of the changes

  2020   2019 

Net investment income

   45,706    7,123    541.7   

Mainly due to gains recognised due to the pipeline assets restructuring

Credit losses

   381    (732   (152.0  

Mainly due to the increase in provision for bad debt of account receivable

Asset impairment losses

   8,112    777    944.0   

Mainly due to the increase in provision for inventory depreciation

Gains on asset disposals

   929    203    357.6   

Mainly due to the increase in disposal of assets with low and no efficiency

Non-operating expenses

   2,165    8,051    (73.1  

Mainly due to the decrease in the loss on retirement of assets

Net cash flows from operating activities

   163,303    239,396    (31.8  

Mainly due to the decrease in cash received from sales of goods and rendering of services, and changes in working capitals

Net cash flows from / (used for) financing activities

   4,803    (9,151   (152.5  

Mainly due to the increase of net borrowings

 

12


3.2

Developments and impacts of significant events as well as the analysis of and explanation for the solutions

☐ Applicable    ✓ Inapplicable

 

3.3

Status of fulfilment of undertakings given by the Company and shareholders with a shareholding of 5% or more

✓ Applicable    ☐ Inapplicable

During the reporting period, the undertaking given by CNPC, the controlling shareholder of the Company, and the fulfilment thereof were consistent with the information disclosed in the section headed “Significant Events” of the 2020 Interim Report of the Company. There have been no events affecting the performance of these undertakings.

 

3.4

Caution and explanation as to the anticipated accumulated losses or significant changes over the same period of the preceding year

☐ Applicable    ✓ Inapplicable

 

3.5

Securities Investment

☐ Applicable    ✓ Inapplicable

 

3.6

Other Significant Events

✓ Applicable    ☐ Inapplicable

Transaction on restructuring of pipeline assets

On July 23, 2020, the Company entered into the Framework Agreement on Transaction of Oil and Gas Pipeline Relevant Assets and 10 sub-agreements including the Equity Acquisition Agreement on PetroChina Pipeline Co., Ltd., and the Production and Operation Agreement with PipeChina upon approval by sixth meeting of the Board of Directors of the Company in 2020 and forth meeting of the Supervisory Committee of the Company in 2020. The Company sold its major oil & gas pipelines, certain gas storages, LNG terminals and initial oil and gas (including its equity interests) to PipeChina for 29.9% of its equity interests and corresponding cash consideration (the “Transaction”). The consideration of the Transaction is based on the appraised value on December 31, 2019 (as the base date), taking into account factors such as the profit and loss during the transition period, subsequent adjustment events and the price at the timing of the delivery of initial oil and gas assets, which will be determined after audit.

On September 28, 2020, the Transaction was reviewed and approved by the second extraordinary general meeting of the Company in 2020, with a support rate of 99.9963%.

On September 30, 2020, all of the conditions precedent set out in the Transaction Agreements have been satisfied. The ownership and risk of the Target Assets were passed to PipeChina at 24:00 on September 30, 2020.

The total assets sold in the Transaction amounted to RMB354,075 million, the book value of net assets attributable to the owners of the Company was RMB201,428 million, and the transaction value was RMB247,248 million. As the consideration, the Company recognised a long-term equity investment of RMB149,500 million in the PipeChina, and received a consideration in cash of RMB97,748 million. For the Transaction, the Company recognised profit before taxation of RMB45,820 million and net profit after taxation of RMB32,000 million. The difference between the relevant amount and the amount set out in the circular of the Company dated 12 August 2020 on the Hong Kong Stock Exchange is mainly due to the change in price and quantity of the initial oil and gas and profits distribution to the Company in advance made by certain pipeline enterprises. The audit for closing is in the process and the final consideration and the profit arising from restructuring will be determined based on the results of audit.

 

13


For details, please refer to the announcements published by the Company on the Shanghai Stock Exchange (with the announcement numbers of Lin 2020-032, Lin 2020-041, and Lin 2020-042 respectively) and the announcements published by the Company on the Hong Kong Stock Exchange on July 23, 2020, September 28, 2020, and September 30, 2020.

Such matter does not affect the continuity of the business or the stability of management of the Group, it may have an impact on the operating results of the Group’s natural gas and pipeline business in the short term, and be conducive to the sustainable and healthy development of the Group and achieving sustainable and positive operating results in the long term.

By Order of the Board of Directors

PetroChina Company Limited

Dai Houliang

Chairman

Beijing, the PRC

October 29, 2020

As at the date of this announcement, the Board of Directors of the Company comprises Mr. Dai Houliang as the Chairman; Mr. Li Fanrong as Vice Chairman and non-executive director; Mr. Liu Yuezhen, Mr. Jiao Fangzheng and Mr. Huang Yongzhang as non-executive directors; Mr. Duan Liangwei as executive director; and Ms. Elsie Leung Oi-sie, Mr. Tokuchi Tatsuhito, Mr. Simon Henry, Mr. Cai Jinyong and Mr. Jiang, Simon X. as independent non-executive directors.

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

 

14


Appendix

A. Financial statements for the third quarter of 2020 prepared in accordance with CAS

 

1.

Consolidated Balance Sheet

 

   September 30, 2020   December 31, 2019 

ASSETS

  RMB million   RMB million 

Current assets

    

Cash at bank and on hand

   106,311    110,665 

Accounts receivable

   159,664    64,184 

Receivables financing

   7,190    7,016 

Advances to suppliers

   28,479    17,038 

Other receivables

   28,965    21,199 

Inventories

   159,144    181,921 

Other current assets

   62,128    64,890 
  

 

 

   

 

 

 

Total current assets

   551,881    466,913 
  

 

 

   

 

 

 

Non-current assets

    

Investments in other equity instruments

   909    930 

Long-term equity investments

   251,116    102,165 

Fixed assets

   436,289    703,414 

Oil and gas properties

   790,219    831,814 

Construction in progress

   240,215    247,996 

Right-of-use assets

   145,673    189,632 

Intangible assets

   81,317    84,832 

Goodwill

   8,485    42,808 

Long-term prepaid expenses

   11,674    10,258 

Deferred tax assets

   10,359    24,259 

Other non-current assets

   38,779    28,169 
  

 

 

   

 

 

 

Total non-current assets

   2,015,035    2,266,277 
  

 

 

   

 

 

 

TOTAL ASSETS

   2,566,916    2,733,190 
  

 

 

   

 

 

 

 

 

Chairman

  

 

Director and President

  

 

Chief Financial Officer

Dai Houliang  Duan Liangwei  Chai Shouping

 

15


1. Consolidated Balance Sheet (Continued)

 

   September 30, 2020  December 31, 2019 

LIABILITIES AND SHAREHOLDERS’ EQUITY

  RMB million  RMB million 

Current liabilities

   

Short-term borrowings

   75,738   70,497 

Notes payable

   13,452   13,153 

Accounts payable

   188,697   260,102 

Contracts liabilities

   93,316   82,490 

Employee compensation payable

   12,202   10,169 

Taxes payable

   43,554   67,382 

Other payables

   89,865   34,699 

Current portion of non-current liabilities

   111,696   92,879 

Other current liabilities

   53,454   30,048 
  

 

 

  

 

 

 

Total current liabilities

   681,974   661,419 
  

 

 

  

 

 

 

Non-current liabilities

   

Long-term borrowings

   148,439   174,411 

Debentures payable

   89,379   116,471 

Lease liabilities

   123,947   164,143 

Provisions

   134,923   137,935 

Deferred tax liabilities

   16,306   21,418 

Other non-current liabilities

   10,699   12,815 
  

 

 

  

 

 

 

Total non-current liabilities

   523,693   627,193 
  

 

 

  

 

 

 

Total liabilities

   1,205,667   1,288,612 
  

 

 

  

 

 

 

Shareholders’ equity

   

Share capital

   183,021   183,021 

Capital surplus

   127,085   127,314 

Special reserve

   14,409   12,443 

Other comprehensive income

   (31,558  (27,756

Surplus reserves

   197,282   197,282 

Undistributed profits

   720,311   738,124 
  

 

 

  

 

 

 

Equity attributable to equity holders of the Company

   1,210,550   1,230,428 
  

 

 

  

 

 

 

Non-controlling interests

   150,699   214,150 
  

 

 

  

 

 

 

Total shareholders’ equity

   1,361,249   1,444,578 
  

 

 

  

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

   2,566,916   2,733,190 
  

 

 

  

 

 

 

 

 

  

 

  

 

Chairman  Director and President  Chief Financial Officer
Dai Houliang  Duan Liangwei  Chai Shouping

 

16


2. Company Balance Sheet

 

   September 30, 2020   December 31, 2019 

ASSETS

  RMB million   RMB million 

Current assets

    

Cash at bank and on hand

   10,208    6,636 

Accounts receivable

   109,591    10,072 

Receivables financing

   2,894    2,538 

Advances to suppliers

   13,895    6,980 

Other receivables

   17,448    8,997 

Inventories

   93,409    117,757 

Other current assets

   46,336    47,565 
  

 

 

   

 

 

 

Total current assets

   293,781    200,545 
  

 

 

   

 

 

 

Non-current assets

    

Investments in other equity instruments

   401    437 

Long-term equity investments

   447,030    402,584 

Fixed assets

   252,725    347,649 

Oil and gas properties

   577,792    599,230 

Construction in progress

   155,271    158,823 

Right-of-use assets

   67,518    107,852 

Intangible assets

   62,646    64,530 

Long-term prepaid expenses

   8,881    8,198 

Deferred tax assets

   2,481    14,725 

Other non-current assets

   14,957    10,571 
  

 

 

   

 

 

 

Total non-current assets

   1,589,702    1,714,599 
  

 

 

   

 

 

 

TOTAL ASSETS

��  1,883,483    1,915,144 
  

 

 

   

 

 

 

 

 

  

 

  

 

Chairman  Director and President  Chief Financial Officer
Dai Houliang  Duan Liangwei  Chai Shouping

 

17


2. Company Balance Sheet (Continued)

 

   September 30, 2020   December 31, 2019 

LIABILITIES AND SHAREHOLDERS’ EQUITY

  RMB million   RMB million 

Current liabilities

    

Short-term borrowings

   44,779    66,027 

Notes payable

   11,702    12,046 

Accounts payable

   80,027    102,780 

Contracts liabilities

   58,679    54,014 

Employee compensation payable

   9,903    7,931 

Taxes payable

   26,248    42,779 

Other payables

   102,009    60,291 

Current portion of non-current liabilities

   85,255    36,799 

Other current liabilities

   47,662    25,882 
  

 

 

   

 

 

 

Total current liabilities

   466,264    408,549 
  

 

 

   

 

 

 

Non-current liabilities

    

Long-term borrowings

   58,844    110,717 

Debentures payable

   87,000    113,000 

Lease liabilities

   48,459    85,449 

Provisions

   99,910    95,643 

Other non-current liabilities

   5,232    6,511 
  

 

 

   

 

 

 

Total non-current liabilities

   299,445    411,320 
  

 

 

   

 

 

 

Total liabilities

   765,709    819,869 
  

 

 

   

 

 

 

Shareholders’ equity

    

Share capital

   183,021    183,021 

Capital surplus

   126,923    127,845 

Special reserve

   8,123    6,513 

Other comprehensive income

   723    979 

Surplus reserves

   186,190    186,190 

Undistributed profits

   612,794    590,727 
  

 

 

   

 

 

 

Total shareholders’ equity

   1,117,774    1,095,275 
  

 

 

   

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

   1,883,483    1,915,144 
  

 

 

   

 

 

 

 

 

  

 

  

 

Chairman  Director and President  Chief Financial Officer
Dai Houliang  Duan Liangwei  Chai Shouping

 

18


3-1. Consolidated Income Statement

 

   Three months ended September 30 
   2020  2019 

Items

  RMB million  RMB million 

Operating income

   497,125   618,143 

Less: Cost of sales

   (393,546  (501,163

Taxes and surcharges

   (48,397  (57,508

Selling expenses

   (17,068  (18,186

General and administrative expenses

   (13,833  (15,440

Research and development expenses

   (3,639  (2,854

Finance expenses

   (5,863  (6,007

Including: Interest expenses

   5,967   7,450 

Interest income

   755   928 

Add: Other income

   2,621   3,782 

Investment income

   44,643   1,890 

Including: Income from investment in associates and joint ventures

   858   1,950 

Credit (losses) / reversal

   (30  507 

Asset impairment reversal

   39   7 

Gains on asset disposals

   68   116 
  

 

 

  

 

 

 

Operating profit

   62,120   23,287 
  

 

 

  

 

 

 

Add: Non-operating income

   1,291   910 

Less: Non-operating expenses

   (1,935  (3,208
  

 

 

  

 

 

 

Profit before income tax

   61,476   20,989 
  

 

 

  

 

 

 

Less: Income tax expenses

   (17,474  (6,587
  

 

 

  

 

 

 

Net profit

   44,002   14,402 
  

 

 

  

 

 

 

Classified by continuity of operations:

   

Net profit from continuous operation

   44,002   14,402 

Net profit from discontinued operation

   —     —   

Classified by ownership:

   

Shareholders of the Company

   40,050   8,862 

Non-controlling interests

   3,952   5,540 

Earnings per share

   

Basic earnings per share (RMB Yuan)

   0.219   0.048 

Diluted earnings per share (RMB Yuan)

   0.219   0.048 
  

 

 

  

 

 

 

Other comprehensive income

   (6,711  5,134 

Other comprehensive income attributable to equity holders of the Company, net of tax

   (2,488  3,321 

(1) Item that will not be reclassified to profit or loss:

   

Changes in fair value of investments in other equity instruments

   39   (85

(2) Items that may be reclassified to profit or loss:

   

Other comprehensive income recognized under equity method

   (233  100 

Translation differences arising from translation of foreign currency financial statements

   (2,294  3,306 

Other comprehensive income (net of tax) attributable to non-controlling interests

   (4,223  1,813 
  

 

 

  

 

 

 

Total comprehensive income

   37,291   19,536 
  

 

 

  

 

 

 

Attributable to

   

Equity holders of the Company

   37,562   12,183 

Non-controlling interests

   (271  7,353 
  

 

 

  

 

 

 

 

 

  

 

  

 

Chairman  Director and President  Chief Financial Officer
Dai Houliang  Duan Liangwei  Chai Shouping

 

19


3-2. Consolidated Income Statement

 

   Nine months ended September 30 
   2020  2019 

Items

  RMB million  RMB million 

Operating income

   1,426,170   1,814,402 

Less: Cost of sales

   (1,163,739  (1,446,106

Taxes and surcharges

   (146,820  (169,927

Selling expenses

   (49,340  (51,087

General and administrative expenses

   (38,968  (44,045

Research and development expenses

   (10,414  (10,541

Finance expenses

   (19,368  (20,035

Including: Interest expenses

   20,853   22,647 

Interest income

   2,151   2,821 

Add: Other income

   6,704   8,437 

Investment income

   45,706   7,123 

Including: Income from investment in associates and joint ventures

   1,428   6,657 

Credit (losses) / reversal

   (381  732 

Asset impairment losses

   (8,112  (777

Gains on asset disposals

   929   203 
  

 

 

  

 

 

 

Operating profit

   42,367   88,379 
  

 

 

  

 

 

 

Add: Non-operating income

   2,751   2,434 

Less: Non-operating expenses

   (2,165  (8,051
  

 

 

  

 

 

 

Profit before income tax

   42,953   82,762 
  

 

 

  

 

 

 

Less: Income tax expenses

   (22,278  (29,225
  

 

 

  

 

 

 

Net profit

   20,675   53,537 
  

 

 

  

 

 

 

Classified by continuity of operations:

   

Net profit from continuous operation

   20,675   53,537 

Net profit from discontinued operation

   —     —   

Classified by ownership:

   

Shareholders of the Company

   10,064   37,282 

Non-controlling interests

   10,611   16,255 

Earnings per share

   

Basic earnings per share (RMB Yuan)

   0.055   0.204 

Diluted earnings per share (RMB Yuan)

   0.055   0.204 
  

 

 

  

 

 

 

Other comprehensive income

   (7,144  8,141 

Other comprehensive income attributable to equity holders of the Company, net of tax

   (3,802  4,073 

(1) Item that will not be reclassified to profit or loss:

   

Changes in fair value of investments in other equity instruments

   (27  53 

(2) Items that may be reclassified to profit or loss:

   

Other comprehensive income recognized under equity method

   (158  437 

Translation differences arising from translation of foreign currency financial statements

   (3,617  3,583 

Other comprehensive income (net of tax) attributable to non-controlling interests

   (3,342  4,068 
  

 

 

  

 

 

 

Total comprehensive income

   13,531   61,678 
  

 

 

  

 

 

 

Attributable to

   

Equity holders of the Company

   6,262   41,355 

Non-controlling interests

   7,269   20,323 
  

 

 

  

 

 

 

 

 

  

 

  

 

Chairman  Director and President  Chief Financial Officer
Dai Houliang  Duan Liangwei  Chai Shouping

 

20


4-1. Income Statement

 

   Three months ended September 30 
   2020  2019 

Items

  RMB million  RMB million 

Operating income

   287,879   331,796 

Less: Cost of sales

   (223,164  (263,385

Taxes and surcharges

   (37,672  (44,109

Selling expenses

   (12,396  (12,638

General and administrative expenses

   (8,259  (10,411

Research and development expenses

   (2,614  (1,820

Finance expenses

   (5,201  (4,875

Including: Interest expenses

   3,581   5,182 

Interest income

   375   332 

Add: Other income

   1,815   3,380 

Investment income

   88,592   1,527 

Including: Income from investment in associates and joint ventures

   1,194   1,037 

Credit (losses) / reversal

   (22  499 

Asset impairment reversal / (losses)

   7   (1

Gains on asset disposals

   336   132 
  

 

 

  

 

 

 

Operating profit

   89,301   95 
  

 

 

  

 

 

 

Add: Non-operating income

   1,095   552 

Less: Non-operating expenses

   (1,618  (1,617
  

 

 

  

 

 

 

Profit / (loss) before income tax

   88,778   (970
  

 

 

  

 

 

 

Less: Income tax expenses

   (18,133  555 
  

 

 

  

 

 

 

Net profit / (loss)

   70,645   (415
  

 

 

  

 

 

 

Classified by continuity of operations:

   

Net profit / (loss) from continuous operation

   70,645   (415

Net profit from discontinued operation

   —     —   
  

 

 

  

 

 

 

Earnings per share

   

Basic earnings / (loss) per share (RMB Yuan)

   0.386   (0.002

Diluted earnings / (loss) per share (RMB Yuan)

   0.386   (0.002
  

 

 

  

 

 

 

Other comprehensive income

   (283  187 

Other comprehensive income attributable to equity holders of the Company, net of tax

   (283  187 

(1) Item that will not be reclassified to profit or loss:

   

Changes in fair value of investments in other equity instruments

   21   (28

(2) Item that may be reclassified to profit or loss:

   

Other comprehensive income recognized under equity method

   (304  215 
  

 

 

  

 

 

 

Total comprehensive income

   70,362   (228
  

 

 

  

 

 

 

 

 

  

 

  

 

Chairman  Director and President  Chief Financial Officer
Dai Houliang  Duan Liangwei  Chai Shouping

 

21


4-2. Income Statement

 

   Nine months ended September 30 
   2020  2019 

Items

  RMB million  RMB million 

Operating income

   801,995   1,000,923 

Less: Cost of sales

   (650,293  (777,698

Taxes and surcharges

   (114,510  (130,370

Selling expenses

   (34,609  (35,173

General and administrative expenses

   (24,318  (29,395

Research and development expenses

   (8,250  (8,722

Finance expenses

   (16,304  (14,995

Including: Interest expenses

   14,797   15,518 

Interest income

   726   797 

Add: Other income

   5,016   7,282 

Investment income

   106,318   20,028 

Including: Income from investment in associates and joint ventures

   2,586   3,247 

Credit losses

   (161  764 

Asset impairment losses

   (1,960  17 

Gains on asset disposals

   1,192   207 
  

 

 

  

 

 

 

Operating profit

   64,116   32,868 
  

 

 

  

 

 

 

Add: Non-operating income

   2,217   1,817 

Less: Non-operating expenses

   (4,414  (5,989
  

 

 

  

 

 

 

Profit before income tax

   61,919   28,696 
  

 

 

  

 

 

 

Less: Income tax expenses

   (12,022  (6,362
  

 

 

  

 

 

 

Net profit

   49,897   22,334 
  

 

 

  

 

 

 

Classified by continuity of operations:

   

Net profit from continuous operation

   49,897   22,334 

Net profit from discontinued operation

   —     —   
  

 

 

  

 

 

 

Earnings per share

   

Basic earnings per share (RMB Yuan)

   0.273   0.122 

Diluted earnings per share (RMB Yuan)

   0.273   0.122 
  

 

 

  

 

 

 

Other comprehensive income

   (256  508 
  

 

 

  

 

 

 

Other comprehensive income attributable to equity holders of the Company, net of tax

   (256  508 
  

 

 

  

 

 

 

(1) Item that will not be reclassified to profit or loss:

   

Changes in fair value of investments in other equity instruments

   (27  27 

(2) Item that may be reclassified to profit or loss:

   

Other comprehensive income recognized under equity method

   (229  481 
  

 

 

  

 

 

 

Total comprehensive income

   49,641   22,842 
  

 

 

  

 

 

 

 

 

Chairman

  

 

Director and President

  

 

Chief Financial Officer

Dai Houliang  Duan Liangwei  Chai Shouping

 

22


5. Consolidated Cash Flow Statement

 

   Nine months ended September 30 
   2020  2019 

Items

  RMB million  RMB million 

Cash flows from operating activities

   

Cash received from sales of goods and rendering of services

   1,587,335   2,057,566 

Cash received from other operating activities

   7,164   6,301 
  

 

 

  

 

 

 

Sub-total of cash inflows

   1,594,499   2,063,867 
  

 

 

  

 

 

 

Cash paid for goods and services

   (1,095,006  (1,408,400

Cash paid to and on behalf of employees

   (94,449  (94,856

Payments of various taxes

   (220,111  (289,834

Cash paid relating to other operating activities

   (21,630  (31,381
  

 

 

  

 

 

 

Sub-total of cash outflows

   (1,431,196  (1,824,471
  

 

 

  

 

 

 

Net cash flows from operating activities

   163,303   239,396 
  

 

 

  

 

 

 

Cash flows from investing activities

   

Cash received from disposal of investments

   276   1,950 

Cash received from returns on investments

   3,701   5,095 

Net cash received from disposal of fixed assets, oil and gas properties, intangible assets and other long-term assets

   251   499 
  

 

 

  

 

 

 

Sub-total of cash inflows

   4,228   7,544 
  

 

 

  

 

 

 

Cash paid to acquire fixed assets, oil and gas properties, intangible assets and other long-term assets

   (167,035  (187,119

Cash paid to acquire investments

   (14,639  (27,816
  

 

 

  

 

 

 

Sub-total of cash outflows

   (181,674  (214,935
  

 

 

  

 

 

 

Net cash flows used for investing activities

   (177,446  (207,391
  

 

 

  

 

 

 

 

 

Chairman

  

 

Director and President

  

 

Chief Financial Officer

Dai Houliang  Duan Liangwei  Chai Shouping

 

23


5. Consolidated Cash Flow Statement (Continued)

 

   Nine months ended September 30 
   2020  2019 

Items

  RMB million  RMB million 

Cash flows from financing activities

   

Cash received from capital contributions

   143   500 

Including: Cash received from non-controlling interests’ capital contributions to subsidiaries

   143   500 

Cash received from borrowings

   831,465   656,378 
  

 

 

  

 

 

 

Sub-total of cash inflows

   831,608   656,878 
  

 

 

  

 

 

 

Cash repayments of borrowings

   (774,579  (611,154

Cash payments for interest expenses and distribution of dividends or profits

   (41,253  (42,264

Including: Subsidiaries’ cash payments for distribution of dividends or profits to non-controlling interests

   (14,172  (11,533

Capital reduction of subsidiaries

   —     (48

Cash payments relating to other financing activities

   (10,973  (12,563
  

 

 

  

 

 

 

Sub-total of cash outflows

   (826,805  (666,029
  

 

 

  

 

 

 

Net cash flows generate from / (used for) financing activities

   4,803   (9,151
  

 

 

  

 

 

 

Effect of foreign exchange rate changes on cash and cash equivalents

   (1,546  2,761 
  

 

 

  

 

 

 

Net (decrease) / increase in cash and cash equivalents

   (10,886  25,615 

Add: Cash and cash equivalents at beginning of the period

   86,409   85,954 
  

 

 

  

 

 

 

Cash and cash equivalents at end of the period

   75,523   111,569 
  

 

 

  

 

 

 

 

 

Chairman

  

 

Director and President

  

 

Chief Financial Officer

Dai Houliang  Duan Liangwei  Chai Shouping

 

24


6. Company Cash Flow Statement

 

   Nine months ended September 30 
   2020  2019 

Items

  RMB million  RMB million 

Cash flows from operating activities

   

Cash received from sales of goods and rendering of services

   880,264   1,157,653 

Cash received from other operating activities

   5,049   33,756 
  

 

 

  

 

 

 

Sub-total of cash inflows

   885,313   1,191,409 
  

 

 

  

 

 

 

Cash paid for goods and services

   (540,116  (746,967

Cash paid to and on behalf of employees

   (66,645  (69,139

Payments of various taxes

   (162,965  (201,505

Cash paid relating to other operating activities

   (26,627  (20,038
  

 

 

  

 

 

 

Sub-total of cash outflows

   (796,353  (1,037,649
  

 

 

  

 

 

 

Net cash flows from operating activities

   88,960   153,760 
  

 

 

  

 

 

 

Cash flows from investing activities

   

Cash received from disposal of investments

   13,510   7,902 

Cash received from returns on investments

   18,011   20,480 

Net cash received from disposal of fixed assets, oil and gas properties, intangible assets and other long-term assets

   241   490 
  

 

 

  

 

 

 

Sub-total of cash inflows

   31,762   28,872 
  

 

 

  

 

 

 

Cash paid to acquire fixed assets, oil and gas properties, intangible assets and other long-term assets

   (105,675  (135,117

Cash paid to acquire investments

   (18,917  (14,659
  

 

 

  

 

 

 

Sub-total of cash outflows

   (124,592  (149,776
  

 

 

  

 

 

 

Net cash flows used for investing activities

   (92,830  (120,904
  

 

 

  

 

 

 

 

 

Chairman

  

 

Director and President

  

 

Chief Financial Officer

Dai Houliang  Duan Liangwei  Chai Shouping

 

25


6. Company Cash Flow Statement (Continued)

 

   Nine months ended September 30 
   2020  2019 

Items

  RMB million  RMB million 

Cash flows from financing activities

   

Cash received from borrowings

   269,474   288,587 
  

 

 

  

 

 

 

Sub-total of cash inflows

   269,474   288,587 
  

 

 

  

 

 

 

Cash repayments of borrowings

   (236,068  (271,606

Cash payments for interest expenses and distribution of dividends or profits

   (23,550  (26,023

Cash payments relating to other financing activities

   (5,535  (6,620
  

 

 

  

 

 

 

Sub-total of cash outflows

   (265,153  (304,249
  

 

 

  

 

 

 

Net cash flows generate from / (used for) financing activities

   4,321   (15,662
  

 

 

  

 

 

 

Net increase in cash and cash equivalents

   451   17,194 

Add: Cash and cash equivalents at beginning of the period

   4,636   13,109 
  

 

 

  

 

 

 

Cash and cash equivalents at end of the period

   5,087   30,303 
  

 

 

  

 

 

 

 

 

Chairman

  

 

Director and President

  

 

Chief Financial Officer

Dai Houliang  Duan Liangwei  Chai Shouping

 

26


B. Financial statements for the third quarter of 2020 prepared in accordance with IFRS

1-1    Consolidated Statement of Comprehensive Income

 

   Three months ended September 30 
   2020  2019 
   RMB million  RMB million 

REVENUE

   497,125   618,143 
  

 

 

  

 

 

 

OPERATING EXPENSES

   

Purchases, services and other

   (321,763  (424,124

Employee compensation costs

   (34,931  (34,987

Exploration expenses, including exploratory dry holes

   (4,424  (4,425

Depreciation, depletion and amortisation

   (51,001  (56,374

Selling, general and administrative expenses

   (15,929  (17,071

Taxes other than income taxes

   (48,713  (57,923

Other income net

   45,960   1,481 
  

 

 

  

 

 

 

TOTAL OPERATING EXPENSES

   (430,801  (593,423
  

 

 

  

 

 

 

PROFIT FROM OPERATIONS

   66,324   24,720 
  

 

 

  

 

 

 

FINANCE COSTS

   

Exchange gain

   3,962   3,285 

Exchange loss

   (4,456  (2,513

Interest income

   755   928 

Interest expense

   (5,967  (7,450
  

 

 

  

 

 

 

TOTAL NET FINANCE COSTS

   (5,706  (5,750
  

 

 

  

 

 

 

SHARE OF PROFIT OF ASSOCIATES AND JOINT VENTURES

   858   1,950 
  

 

 

  

 

 

 

PROFIT BEFORE INCOME TAX EXPENSE

   61,476   20,920 

INCOME TAX EXPENSE

   (17,474  (6,583
  

 

 

  

 

 

 

PROFIT FOR THE PERIOD

   44,002   14,337 
  

 

 

  

 

 

 

OTHER COMPREHENSIVE INCOME

   

Item that will not be reclassified to profit or loss

   

Fair value changes in equity investment measured at fair value through other comprehensive income

   146   (125

Items that are or may be reclassified subsequently to profit or loss

   

Currency translation differences

   (6,624  5,223 

Share of the other comprehensive income of associates and joint ventures accounted for using the equity method

   (233  100 
  

 

 

  

 

 

 

OTHER COMPREHENSIVE INCOME , NET OF TAX

   (6,711  5,198 
  

 

 

  

 

 

 

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

   37,291   19,535 
  

 

 

  

 

 

 

PROFIT FOR THE PERIOD ATTRIBUTABLE TO:

   

Owners of the Company

   40,050   8,830 

Non-controlling interests

   3,952   5,507 
  

 

 

  

 

 

 
   44,002   14,337 
  

 

 

  

 

 

 

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO:

   

Owners of the Company

   37,562   12,181 

Non-controlling interests

   (271  7,354 
  

 

 

  

 

 

 
   37,291   19,535 
  

 

 

  

 

 

 

BASIC AND DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY (RMB)

   0.219   0.048 
  

 

 

  

 

 

 

 

27


1-2    Consolidated Statement of Comprehensive Income

 

 

   Nine months ended September 30 
   2020  2019 
   RMB million  RMB million 

REVENUE

   1,426,170   1,814,402 
  

 

 

  

 

 

 

OPERATING EXPENSES

   

Purchases, services and other

   (948,951  (1,220,227

Employee compensation costs

   (95,677  (100,015

Exploration expenses, including exploratory dry holes

   (14,993  (16,692

Depreciation, depletion and amortisation

   (165,389  (164,981

Selling, general and administrative expenses

   (45,812  (49,766

Taxes other than income taxes

   (147,644  (171,011

Other income net

   52,577   3,673 
  

 

 

  

 

 

 

TOTAL OPERATING EXPENSES

   (1,365,889  (1,719,019
  

 

 

  

 

 

 

PROFIT FROM OPERATIONS

   60,281   95,383 
  

 

 

  

 

 

 

FINANCE COSTS

   

Exchange gain

   10,371   8,192 

Exchange loss

   (10,422  (7,710

Interest income

   2,151   2,821 

Interest expense

   (20,853  (22,647
  

 

 

  

 

 

 

TOTAL NET FINANCE COSTS

   (18,753  (19,344
  

 

 

  

 

 

 

SHARE OF PROFIT OF ASSOCIATES AND JOINT VENTURES

   1,428   6,657 
  

 

 

  

 

 

 

PROFIT BEFORE INCOME TAX EXPENSE

   42,956   82,696 

INCOME TAX EXPENSE

   (22,278  (29,221
  

 

 

  

 

 

 

PROFIT FOR THE PERIOD

   20,678   53,475 
  

 

 

  

 

 

 

OTHER COMPREHENSIVE INCOME

   

Item that will not be reclassified to profit or loss

   

Fair value changes in equity investment measured at fair value through other comprehensive income

   82   70 

Items that are or may be reclassified subsequently to profit or loss

   

Currency translation differences

   (7,068  7,698 

Share of the other comprehensive income of associates and joint ventures accounted for using the equity method

   (158  437 
  

 

 

  

 

 

 

OTHER COMPREHENSIVE INCOME, NET OF TAX

   (7,144  8,205 
  

 

 

  

 

 

 

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

   13,534   61,680 
  

 

 

  

 

 

 

PROFIT FOR THE PERIOD ATTRIBUTABLE TO:

   

Owners of the Company

   10,067   37,253 

Non-controlling interests

   10,611   16,222 
  

 

 

  

 

 

 
   20,678   53,475 
  

 

 

  

 

 

 

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO:

   

Owners of the Company

   6,265   41,356 

Non-controlling interests

   7,269   20,324 
  

 

 

  

 

 

 
   13,534   61,680 
  

 

 

  

 

 

 

BASIC AND DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY (RMB)

   0.055   0.204 
  

 

 

  

 

 

 

 

28


2.     Consolidated Statement of Financial Position

 

   September 30, 2020   December 31, 2019 
   RMB million   RMB million 

NON-CURRENT ASSETS

    

Property, plant and equipment

   1,466,723    1,783,224 

Investments in associates and joint ventures

   251,022    102,073 

Equity investment measured at fair value through other comprehensive income

   901    922 

Right-of-use assets

   206,624    254,736 

Intangible and other non-current assets

   72,601    100,663 

Deferred tax assets

   10,359    24,259 

Time deposits with maturities over one year

   6,533    120 
  

 

 

   

 

 

 

TOTAL NON-CURRENT ASSETS

   2,014,763    2,265,997 
  

 

 

   

 

 

 

CURRENT ASSETS

    

Inventories

   159,144    181,921 

Accounts receivable

   159,664    64,184 

Prepayment and other current assets

   119,572    103,127 

Notes receivable

   7,190    7,016 

Time deposits with maturities over three months but within one year

   30,788    24,256 

Cash and cash equivalents

   75,523    86,409 
  

 

 

   

 

 

 

TOTAL CURRENT ASSETS

   551,881    466,913 
  

 

 

   

 

 

 

CURRENT LIABILITIES

    

Accounts payable and accrued liabilities

   314,820    328,314 

Contracts liabilities

   93,316    82,490 

Income taxes payable

   5,790    7,564 

Other taxes payable

   37,764    59,818 

Short-term borrowings

   224,480    175,840 

Lease liabilities

   5,803    7,393 
  

 

 

   

 

 

 

TOTAL CURRENT LIABILITIES

   681,973    661,419 
  

 

 

   

 

 

 

NET CURRENT LIABILITIES

   130,092    194,506 
  

 

 

   

 

 

 

TOTAL ASSETS LESS CURRENT LIABILITIES

   1,884,671    2,071,491 
  

 

 

   

 

 

 

EQUITY

    

EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY:

    

Share capital

   183,021    183,021 

Retained earnings

   725,325    743,124 

Reserves

   301,941    304,011 
  

 

 

   

 

 

 

TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY

   1,210,287    1,230,156 

NON-CONTROLLING INTERESTS

   150,698    214,149 
  

 

 

   

 

 

 

TOTAL EQUITY

   1,360,985    1,444,305 
  

 

 

   

 

 

 

NON-CURRENT LIABILITIES

    

Long-term borrowings

   237,818    290,882 

Asset retirement obligations

   134,923    137,935 

Lease liabilities

   123,947    164,143 

Deferred tax liabilities

   16,299    21,411 

Other long-term obligations

   10,699    12,815 
  

 

 

   

 

 

 

TOTAL NON-CURRENT LIABILITIES

   523,686    627,186 
  

 

 

   

 

 

 

TOTAL EQUITY AND NON-CURRENT LIABILITIES

   1,884,671    2,071,491 
  

 

 

   

 

 

 

 

29


3.     Consolidated Statement of Cash Flows

 

   Nine months ended September 30 
  2020  2019 
  RMB million  RMB million 

CASH FLOWS FROM OPERATING ACTIVITIES

   

Profit for the period

   20,678   53,475 

Adjustments for:

   

Income tax expense

   22,278   29,221 

Depreciation, depletion and amortisation

   165,389   164,981 

Capitalised exploratory costs charged to expense

   7,112   6,107 

Safety fund reserve

   2,063   2,846 

Share of profit of associates and joint ventures

   (1,428  (6,657

Accrual/(reversal) of provision for impairment of receivables, net

   381   (732

Write down in inventories, net

   8,112   777 

Loss on disposal of property, plant and equipment

   2,765   3,137 

Gain on disposal of other non-current assets

   (44,627  (422

Dividend income

   (18  (46

Interest income

   (2,151  (2,821

Interest expense

   20,853   22,647 

Changes in working capital:

   

Accounts receivable, prepayments and other current assets

   (26,998  (37,455

Inventories

   13,240   8,782 

Accounts payable and accrued liabilities

   (19,555  9,521 

Contracts liabilities

   10,826   15,966 
  

 

 

  

 

 

 

CASH FLOWS GENERATED FROM OPERATIONS

   178,920   269,327 

Income taxes paid

   (15,617  (29,931
  

 

 

  

 

 

 

NET CASH FLOWS FROM OPERATING ACTIVITIES

   163,303   239,396 
  

 

 

  

 

 

 

 

30


3.     Consolidated Statement of Cash Flows (Continued)

   Nine months ended September 30 
  2020  2019 
  RMB million  RMB million 

CASH FLOWS FROM INVESTING ACTIVITIES

   

Capital expenditures

   (160,816  (174,364

Acquisition of investments in associates and joint ventures

   (1,411  (1,201

Prepayments on long-term operating leases

   (2,233  (3,330

Acquisition of intangible assets and other non-current assets

   (3,986  (9,425

Proceeds from disposal of property, plant and equipment

   235   472 

Acquisition of subsidiaries

   (76  (57

Proceeds from disposal of other non-current assets

   85   190 

Interest received

   2,036   2,277 

Dividends received

   1,665   2,818 

Increase in time deposits with maturities over three months

   (12,945  (24,771
  

 

 

  

 

 

 

NET CASH FLOWS USED FOR INVESTING ACTIVITIES

   (177,446  (207,391
  

 

 

  

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

   

Repayments of short-term borrowings

   (597,474  (463,182

Repayments of long-term borrowings

   (177,105  (147,972

Repayments of lease liabilities

   (10,971  (11,565

Interest paid

   (13,691  (13,130

Dividends paid to non-controlling interests

   (14,172  (11,533

Dividends paid to owners of the Company

   (13,390  (17,601

Purchase of non-controlling interests

   (2  (998

Increase in short-term borrowings

   624,275   491,381 

Increase in long-term borrowings

   207,190   164,997 

Capital contribution from non-controlling interests

   143   500 

Capital reduction of subsidiaries

   —     (48
  

 

 

  

 

 

 

NET CASH FLOWS FROM/(USED FOR) FINANCING ACTIVITIES

   4,803   (9,151
  

 

 

  

 

 

 

TRANSLATION OF FOREIGN CURRENCY

   (1,546  2,761 
  

 

 

  

 

 

 

Increase in cash and cash equivalents

   (10,886  25,615 

Cash and cash equivalents at beginning of the period

   86,409   85,954 
  

 

 

  

 

 

 

Cash and cash equivalents at end of the period

   75,523   111,569 
  

 

 

  

 

 

 

 

31


4.    Segment Information

 

   Nine months ended
September 30
 
   2020  2019 
   RMB million  RMB million 

Revenue

   

Exploration and Production

   

Intersegment sales

   316,781   399,429 

Revenue from external customers

   70,757   90,047 
  

 

 

  

 

 

 
   387,538   489,476 

Refining and Chemicals

   

Intersegment sales

   379,410   518,876 

Revenue from external customers

   199,194   216,111 
  

 

 

  

 

 

 
   578,604   734,987 

Marketing

   

Intersegment sales

   206,737   245,636 

Revenue from external customers

   923,279   1,261,810 
  

 

 

  

 

 

 
   1,130,016   1,507,446 

Natural Gas and Pipeline

   

Intersegment sales

   26,244   31,957 

Revenue from external customers

   232,154   245,254 
  

 

 

  

 

 

 
   258,398   277,211 

Head Office and Other

   

Intersegment sales

   952   200 

Revenue from external customers

   786   1,180 
  

 

 

  

 

 

 
   1,738   1,380 

Total revenue from external customers

   1,426,170   1,814,402 
  

 

 

  

 

 

 

Profit/(loss) from operations

   

Exploration and Production

   20,000   76,935 

Refining and Chemicals

   (1,668  9,004 

Marketing

   (4,936  (1,449

Natural Gas and Pipeline

   57,707   21,950 

Head Office and Other

   (10,822  (11,057
  

 

 

  

 

 

 
   60,281   95,383 
  

 

 

  

 

 

 

 

32