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SNP China Petroleum & Chemical



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

For the month of April 2020

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-FXForm 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 NoX 

(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 announcement regarding 2020 first quarterly report of China Petroleum & Chemical Corporation (the “Registrant”); and

2.          an announcement regarding connected transaction of absorption and merger of Zhanjiang Dongxing;

Each made by the Registrant on April 29, 2020.



Document 1

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

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

Overseas Regulatory Announcement
China Petroleum & Chemical Corporation
The First Quarterly Report for 2020

This announcement is made pursuant to Rule 13.09 and Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong).






 By Order of the Board
 China Petroleum & Chemical Corporation
 Huang Wensheng
 Vice President and Secretary to the Board of Directors

Beijing, the PRC,
29 April 2020

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

#Executive Director
*Non-executive Director
+Independent Non-executive Director
1





China Petroleum & Chemical Corporation
The First Quarterly Report for 2020


















29 April 2020
Beijing, China
2


1Important notice

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

1.2The first quarterly report for 2020 was approved at the 14th meeting of the Seventh Session of the Board of Directors of Sinopec Corp. All directors attended this meeting.

1.3Mr. Zhang Yuzhuo, Chairman, Mr. Ma Yongsheng, President, Ms. Shou Donghua, Chief Financial Officer and Head of the Financial Department of Sinopec Corp. warrant the authenticity, accuracy and completeness of the financial statements contained in this quarterly report.

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

3


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

RMB million
Items As of 31 March 2020  As of 31 December 2019  Changes from the end of the preceding year to the end of the reporting period (%) 
Total assets  1,807,539   1,755,071   3.0 
Total equity attributable to equity shareholders of the Company
  712,350   739,169   (3.6)

RMB million
 Three-month period ended 31 March   
Items 2020  2019  Changes over the same period of the preceding year (%) 
Net cash flow from operating activities  (68,125)  (14,609)  - 
  
Operating income
  555,502   717,579   (22.6)
Net profit attributable to equity shareholders of the Company  (19,782)  14,763   - 
Net profit attributable to equity shareholders of the Company excluding extraordinary gains and losses  (20,444)  14,370   - 
Weighted average return on net assets (%)  (2.73)  2.03  
(4.76) percentage points
 
Basic earnings per share (RMB)  (0.163)  0.122   - 
Diluted earnings per share (RMB)  (0.163)  0.122   - 

RMB million
 During the reporting period 
Extraordinary items 
(income)/expensesRMB million
 
Net gain on disposal of non-current assets  (60)
Donations  73 
Government grants  (1,164)
Gains on holding and disposal of various investments  (26)
Other extraordinary income and expenses, net  255 
Subtotal  (922)
Tax effect  234 
Total  (688)
Attributable to:    
Equity shareholders of the Company  (662)
Minority interests  (26)

4

2.1.2Principal financial data and indicators prepared in accordance with International Financial Reporting Standards (IFRS)
RMB million 
Items 
As of 31 March
2020
  
As of 31 December
2019
  Changes from the end of the preceding year to the end of the reporting period (%) 
Total assets  1,807,539   1,755,071   3.0 
Total equity attributable to shareholders of the Company  711,343   738,150   (3.6)


RMB million    
Items Three-month period ended 31 March  Changes over the same period of the preceding year (%) 
 2020  2019 
Net cash generated from operating activities  (68,125)  (14,609)  - 
  
Operating profit  (26,305)  24,841   - 
Net profit attributable to shareholders of the Company
  (19,145)  15,468   - 
Basic earnings per share (RMB)  (0.158)  0.128   - 
Diluted earnings per share (RMB)  (0.158)  0.128   - 
Return on net assets (%)  (2.69)  2.09  (4.78)
percentage points
 

5


2.2Total number of shareholders and top ten shareholders at the end of the reporting period
Total number of shareholders at the end of the reporting period Total number of shareholders was 553,217, including 547,424 holders of domestic A shares and 5,793 holders of overseas H shares.
Top ten shareholders
Name of shareholder Total number of shares held  
Percentage
(%)
  Number of shares subject to pledge or lock-ups Nature of shareholder
China Petrochemical Corporation  82,709,227,393   68.31   0 State-owned share
HKSCC (Nominees) Limited  25,389,028,547   20.97  Unknown H share
中国证券金融股份有限公司  2,609,312,057   2.16   0 A share
国新投资有限公司  997,141,120   0.82   0 A share
北京诚通金控投资有限公司  756,822,451   0.63   0 A share
中国人寿保险股份有限公司-分红-个人分红-005LFH002
  480,607,041   0.40   0 A share
香港中央结算有限公司  463,936,458   0.38   0 A share
中国人寿保险股份有限公司-传统-普通保险产品-005LCT001
  449,301,461   0.37   0 A share
中央汇金资产管理有限责任公司  322,037,900   0.27   0 A share
汇添富基金管理股份有限公司-社保基金1103组合
  133,250,000   0.11   0 A share

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

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

6

Apart from中��人寿保险股份有限公司-分红-个人分红-005L-FH002沪和中国人寿保险股份有限公司-传统-普通保险产品-005L-CT001 which were both administrated by 中国人寿保险股份有限公司, Sinopec Corp. is not aware of any connected relationship or acting in concert among or between the above-mentioned shareholders.
7


2.3Review of operating results

In the first quarter of 2020, as the COVID-19 outbreak spread worldwide, the world economy faced mounting downside risk packing with notably increasing instability and uncertainty. China’s GDP decreased by 6.8% year on year. Due to plunging market demand for petroleum and petrochemical products coupled with slump of crude oil price, oil and gas industry was severely impacted.

Facing the complicated and severe situation, the Company adhered to the principles of “concentrating material tasks, system optimisation, controlling risk and seizing opportunities out of crisis”, coordinated epidemic prevention and control with work resumption, brought our advantages of integrated business into full play, optimised production plan, refined operation plan, adjusted products slate, optimised inventory, expanded market, and tapped potentials and reduced cost to minimize the negative impact and maintained safe and steady operations. In particular, to combat the COVID-19, we maintained a stable supply of oil and gas, made great efforts to increase production of medical-use materials, coordinated online and offline non-fuel business to facilitate our customers with wider variety of products and services, and advanced resumption of work and production with industry chain partners.

In accordance with China Accounting Standards for Business Enterprises, net profit attributable to equity shareholders of the Company was RMB -19.782 billion. In accordance with IFRS, net profit attributable to equity shareholders of the Company was RMB -19.145 billion.

Exploration and Production: Under low crude oil price environment, we pressed ahead with high-efficiency exploration and paid more efforts on profit-oriented development, reduced cost and expenditure on all fronts and accelerated the formation of an integrated value chain of natural gas business including production, supply, storage and marketing. In exploration, we focused on organisation and operation of major projects and new discovery breakthrough. In crude oil development, we pushed to build profitable production capacity, and deepened structure adjustment in mature oil fields. In natural gas development, we expanded the market and promoted a coordinated growth along the value chain. In the first quarter, oil and gas production of the Company was 112.28 million barrels of oil equivalent, among which the production of crude oil was broadly flat compared with the same period of last year. Exploration and Production Segment realised an operating profit of RMB 1.518 billion

 Three-month period ended 31 March  Changes 
Exploration and ProductionUnit 2020  2019  (%) 
Oil and gas productionmillion boe  112.28   113.46   (1.0)
Crude oil productionmillion barrels  70.65   70.81   (0.2)
Chinamillion barrels  62.11   61.55   0.9 
Overseasmillion barrels  8.54   9.26   (7.8)
Natural gas productionbillion cubic feet  249.68   255.79   (2.4)
Realised crude oil priceUSD/barrel  49.15   57.66   (14.8)
Realised natural gas priceUSD/thousand cubic feet  6.43   7.07   (9.2)
Conversion: For domestic production of crude oil, 1 tonne = 7.10 barrels. For overseas production of crude oil,
1 tonne = 7.21 barrels. For production of natural gas, 1 cubic meter = 35.31 cubic feet.

Refining: Facing severe situation of plunged market demand, high-level inventory and slump of crude oil
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price, we persistently coordinated the integration of production and marketing, optimised allocation of resources and product slate based on market demand and continuously implemented low sulfur fuel oil projects. We coordinated domestic and overseas markets and increased the export of refined oil products, maintaining a steady operation of refining facility. In the first quarter, refinery throughput was 53.74 million tonnes, decreased by 13% year on year. The refining segment’s operating loss was RMB 25.794 billion.

 Three-month period ended 31 March   
RefiningUnit 2020  2019  
Changes
(%)
 
Refinery throughputmillion tonnes  53.74   61.78   (13.0)
Gasoline, diesel and kerosene productionmillion tonnes  33.00   39.44   (16.3)
Gasolinemillion tonnes  13.02   15.87   (18.0)
Dieselmillion tonnes  14.19   16.03   (11.5)
Kerosenemillion tonnes  5.79   7.54   (23.2)
Light chemical feedstock productionmillion tonnes  9.84   10.07   (2.2)
Light product yield%  75.31   76.14  
(0.83)
percentage points
 
Refining yield%  94.64   94.76  
(0.12)
percentage points
 
Note: Including 100% production of domestic joint ventures.

Marketing and Distribution: To address the dramatic decline of market demand, we enhanced market analysis, pressed ahead measures for market expansion, promoted targeted marketing strategy and tapped the potentials of distribution network. In order to satisfy the market demands during the epidemic, we innovated the non-fuel business model by coordinating online and offline business with wider variety of products and services, which not only realised a beneficial exploration of the sales model but also provided convenience to our consumers. In the first quarter, total sales volume of refined oil products was 53.68 million tonnes and marketing and distribution segment’s operating loss was RMB 1.536 billion.

 Three-month period ended 31 March   
Marketing and DistributionUnit 2020  2019  
Changes
(%)
 
Total sales volume of refined oil productsmillion tonnes  48.61   62.37   (22.1)
Total domestic sales volume of refined oil productsmillion tonnes  32.48   45.61   (28.8)
Retailmillion tonnes  21.83   30.20   (27.7)
Direct sales & Distributionmillion tonnes  10.65   15.41   (30.9)
Annualized average throughput per stationtonnes  2,844   3,939   (27.8)
Note: The total sales volume of refined oil products includes the amount of trading volume.

Chemicals: Under the circumstances of dramatic demand decline and price tumble of chemical products,
9

we actively optimised resources allocation, reduced feedstock cost, adjusted operation plan and enhanced the dynamic optimisation of facilities and product chain, and improved the utilisation and production scheduling based on market demand. Giving full play to our industry advantages, we extended business value chain by increasing production of medical-use materials to ensure market supply. We put more efforts on market expansion to create space for production optimisation and adjustment as well as facilities stable operation. In the first quarter, the ethylene production was 3.026 million tonnes, being flat compared with the same period of last year, synthetic resin production increased by 2.8% year on year. The total chemical sales volume was 17.95 million tonnes. The Chemical segment’s operating loss was RMB 1.568 billion.

 Three-month period ended 31 March   
ChemicalsUnit 2020  2019  
Changes
(%)
 
Ethylenethousand tonnes  3,026   3,049   (0.8)
Synthetic resinthousand tonnes  4,293   4,178   2.8 
Synthetic rubberthousand tonnes  256   271   (5.5)
Monomers and polymers for synthetic fibrethousand tonnes  2,333   2,575   (9.4)
Synthetic fibrethousand tonnes  266   322   (17.4)
Note: Including 100% production of domestic joint ventures.

Capital expenditure: In the first quarter, total capital expenditures of the Company was RMB 13.2 billion. Capital expenditure for the exploration and production segment was RMB 6.1 billion, mainly for Shengli and Northwest crude oil development projects, Fuling and Weirong shale gas projects. Capital expenditure for the refining segment was RMB 2.4 billion, mainly for Zhongke Refining and Petrochemical project, Zhenhai, Tianjin, Maoming and Beihai refining upgrading projects, low sulfur fuel oil projects and high-end carbon materials projects. Capital expenditure for the marketing and distribution segment was RMB 2.6 billion, mainly for construction of service stations, refined oil products depots and non-fuel businesses. Capital expenditure for the chemicals segment was RMB 2.1 billion, mainly for Zhongke Refining and Petrochemical project, Zhenhai, Gulei, Sinopec-SK ethylene projects renovation, Hainan ethylene projects.

2.4Business Prospects
China’s epidemic prevention and control trend has been further consolidated, the country’s economic and social activities have gradually returned to normal, the production and living order has been restored at a faster pace, and the pent-up demand for petroleum and petrochemical products is being released. Under this opportunity, we have initiated a campaign that will last for 100 days to address the tough challenges and to improve performance. With management and staffs joint efforts, we are to reinforce measures on market expansion, operations optimisation, cost reduction, tapping potentials, and maintaining safe and steady operations, to minimise the negative impact of the epidemic. We will adjust dynamically the production and operation arrangement and the investment plan, focusing on achieving a high-quality and more profitable operation. While ensuring prevention and control of the pandemic and maintaining safe and stable operation, we will give priority to the following tasks:

More vigorous efforts on market expansion. We will keep pace with the market recovery and the industry utilisation rate to seize the market opportunities, provide targeted services to reinforce the market share. Through innovation of business model and analysis of consumption demand changes, we will ex-
10

ploit potential demand to expand market share. By giving full play to the advantages of the industry chain, we will strengthen cooperation with partner and realise coordinative development.

More vigorous efforts on optimisation and adjustment. We will bring our advantages of integrated business into full play, refine the allocation of resources, and coordinate all the activities including procurement, transportation, production, storage and marketing. In the E&P segment, we will strengthen the overall coordination of "investment, reserves, output, cost, and profit". In the mid- and down-stream, we will coordinate the operation, feedstock slate, product mix and regional resources, accelerate advantages cultivation and production capacity building, and reinforce the effort in the integration of the production with the marketing.

More vigorous efforts on tapping potentials and cost reduction. We will conduct fine management and strengthen cost control involving all employees, covering all resources and conducting in all processes. We will improve the capital efficiency, expand financing channels and reduce financing cost.

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

      Increase/(Decrease) 
 
As of 31 March
2020
  
As of 31
December
2019
  Amount  Percentage 
Items of Consolidated Balance Sheet RMB million  RMB million  RMB million  
%
 Main reasons for changes
Financial assets held for trading  2,012   3,319   (1,307)  (39.4)Receipt of the structured deposits at maturity
Derivative financial assets  14,459   837   13,622   
1,627.5
 Changes of fair value loss and profit position of derivative hedging financial instruments due to fluctuation of crude oil price
Derivative financial liabilities  26,362   2,729   23,633   866.0 
Prepayments  7,296   5,066   2,230   44.0 Increase in projects down payment
Other receivables  57,149   24,109   33,040   137.0 Increase in margin deposit in financial derivatives business due to decline of crude oil price
Short-term loans  98,203   31,196   67,007   214.8 Increase in low-interest short-term loans
Taxes payable  37,622   69,339   (31,717)  (45.7)Due to the time difference of tax payment, part of the unpaid tax from the end of last year had been paid during this reporting period
Other current liabilities  19,997   -   19,997   - Issuing short-term debentures payable of RMB 20 billion
Long-term loans  52,870   39,625   13,245   33.4 Increase in project loans of subsidiaries
Other comprehensive income  (7,983)  (321)  (7,662)  - 
Increase in fair value loss of hedging business for crude oil

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 For three-month period ended 31 March  Increase/(Decrease) 
 2020  2019  Amount  Percentage Main reasons for changes
Items of Consolidated Income Statement RMB Million  RMB Million  RMB Million  
%
  
Gains/ (losses) from
changes in fair value
  8,342   (2,226)  10,568   - Increase in fair value profit on derivative financial instruments not qualified as hedging
Impairment losses  (10,360)  136   (10,496)  - Increase of inventory impairment

 For three-month period ended 31 March  Increase/(Decrease) 
 2020  2019  Amount  Percentage 
Items of consolidated cash flow statement 
RMB
million
  
RMB
million
  RMB million  
%
 Main reasons for changes
Other cash paid relating to operating activities  (59,028)  (39,806)  (19,222)  - Mainly due to increase in margin deposit of financial derivative business
Cash received from disposal of investments  3,402   9,636   (6,234)  (64.7)Decrease in structured deposits at maturity
Other cash received relating to investing activities  19,162   13,165   5,997   45.6 Increase in value of certificate of deposit, over three months, expired and recovered
Other cash paid relating to investing activities  (14,094)  (24,388)  10,294   - Decrease in the value of certificate of deposit, over three months
Cash received from borrowings  274,615   149,622   124,993   83.5 Increase in low-interest short-term loans
Cash repayments of borrowings  (172,518)  (118,511)  (54,007)  - Increase in repayment of short-term loans at maturity

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


 By Order of the Board
 Chairman
 Zhang Yuzhuo
 29 April, 2020
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4Appendix
4.1Quarterly financial statements prepared under China Accounting Standards for Business Enterprises (CASs)

Consolidated Balance Sheet 
as at 31 March 2020 
Prepared by: China Petroleum & Chemical Corporation    
Units: million Currency: RMB Type: unaudited 
Items At 31 March 2020  At 31 December 2019 
Current assets:      
Cash at bank and on hand  138,773   127,927 
Financial assets held for trading  2,012   3,319 
Derivative financial assets  14,459   837 
Accounts receivable  54,246   54,865 
Receivables financing  8,746   8,622 
Prepayments  7,296   5,066 
Other receivables  57,149   24,109 
Inventories  183,277   192,442 
Other current assets  30,074   28,669 
Total current assets  496,032   445,856 
Non-current assets:        
Long-term equity investments  152,561   152,204 
Other equity instrument investments  1,525   1,521 
Fixed assets  611,564   622,423 
Construction in progress  177,021   173,482 
Right-of-use assets  197,349   198,051 
Intangible assets  108,039   108,956 
Goodwill  8,716   8,697 
Long-term deferred expenses  8,531   8,930 
Deferred tax assets  29,343   17,616 
Other non-current assets  16,858   17,335 
Total non-current assets  1,311,507   1,309,215 
Total assets  1,807,539   1,755,071 











13


Current liability:      
Short-term loans  98,203   31,196 
Derivative financial liabilities  26,362   2,729 
Bills payable  14,479   11,834 
Accounts payable  154,103   187,958 
Contract liabilities  137,563   126,735 
Employee benefits payable  7,126   4,769 
Taxes payable  37,622   69,339 
Other payables  73,908   72,324 
Non-current liabilities due within one year  69,903   69,490 
Other current liabilities  19,997   - 
Total current liabilities  639,266   576,374 
Non-current liabilities:        
Long-term loans  52,870   39,625 
Debentures payable  19,349   19,157 
Lease liabilities  178,774   177,674 
Provisions  43,375   43,163 
Deferred tax liabilities  7,273   6,809 
Other non-current liabilities  18,966   15,364 
Total non-current liabilities  320,607   301,792 
Total liabilities  959,873   878,166 
Shareholders’ equity:        
Share capital  121,071   121,071 
Capital reserve  122,128   122,127 
Other comprehensive income  (7,983)  (321)
Specific reserve  2,365   1,741 
Surplus reserves  207,423   207,423 
Retained earnings  267,346   287,128 
Total equity attributable to shareholders of the Company  712,350   739,169 
Minority interests  135,316   137,736 
Total shareholders’ equity  847,666   876,905 
Total liabilities and shareholders’ equity  1,807,539   1,755,071 

Zhang YuzhuoMa YongshengShou Donghua
ChairmanPresidentChief Financial Officer



14


Balance Sheet
as at 31 March 2020
Prepared by: China Petroleum & Chemical Corporation

Units: million Currency: RMB Type: unaudited 
Items At 31 March 2020  At 31 December 2019 
Current assets
      
Cash at bank and on hand  70,783   54,072 
Derivative financial assets  940   940 
Accounts receivable  22,184   21,544 
Receivables financing  751   207 
Prepayments  3,685   2,665 
Other receivables  75,833   78,872 
Inventories  40,926   49,116 
Other current assets  22,555   25,149 
Total current assets  237,657   232,565 
Non-current assets
        
Long-term equity investments  306,225   304,687 
Other equity instrument investments  395   395 
Fixed assets  284,804   291,547 
Construction in progress  62,353   60,493 
Right-of-use assets  112,968   112,832 
Intangible assets  8,654   8,809 
Long-term deferred expenses  2,390   2,630 
Deferred tax assets  15,847   7,315 
Other non-current assets  2,314   2,490 
Total non-current assets  795,950   791,198 
Total assets  1,033,607   1,023,763 
Current liabilities
        
Short-term loans  64,609   19,919 
Derivative financial liabilities  157   157 
Bills payable  4,862   4,766 
Accounts payable  70,495   75,352 
Contract liabilities  4,769   5,112 
Employee benefits payable  2,903   1,214 
Taxes payable  25,033   43,025 
Other payables  108,861   118,064 
Non-current liabilities due within one year  59,775   59,596 
Other current liabilities  19,997   - 
Total current liabilities  361,461   327,205 


15


Non-current liabilities
      
Long-term loans  12,125   12,680 
Debentures payable  7,000   7,000 
Lease liabilities  108,782   107,783 
Provisions  34,825   34,514 
Other non-current liabilities  4,337   4,471 
Total non-current liabilities  167,069   166,448 
Total liabilities  528,530   493,653 
Shareholders’ equity
        
Share capital  121,071   121,071 
Capital reserve  68,841   68,841 
Other comprehensive income  (6,322)  1,181 
Specific reserve  1,241   949 
Surplus reserves  207,423   207,423 
Retained earnings  112,823   130,645 
Total shareholders’ equity  505,077   530,110 
Total liabilities and shareholders’ equity  1,033,607   1,023,763 

Zhang YuzhuoMa YongshengShou Donghua
ChairmanPresidentChief Financial Officer

16


Consolidated Income Statement
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited
Items 
Three-month period
ended 31 March
2020
  
Three-month period
ended 31 March
2019
 
I. Operating income  555,502   717,579 
II. Total Operating costs
  583,107   693,269 
Including: Operating costs  499,274   596,412 
Taxes and surcharges  49,691   60,459 
Selling and distribution expenses  14,653   14,748 
General and administrative expenses  14,128   15,485 
Research and development costs  1,083   1,292 
Financial expenses  2,010   2,330 
Exploration expenses, including dry holes  2,268   2,543 
Add:Other income  1,100   761 
Investment income  153   1,285 
Gains/(losses) from changes in fair value  8,342   (2,226)
Credit impairment losses  5   (19)
Impairment losses  (10,360)  136 
Asset disposal gains/(losses)  60   (64)
III. Operating profit
  (28,305)  24,183 
Add:Non-operating income  215   243 
Less:Non-operating expenses  471   416 
IV. Profit before taxation
  (28,561)  24,010 
Less:Income tax expense  (7,529)  5,539 
V. Net profit
  (21,032)  18,471 
Classification by going concern:        
(i) Continuous operating net profit
  (21,032)  18,471 
(ii) Termination of net profit
  -   - 
Classification by ownership:        
(i)Equity shareholders of the Company
  (19,782)  14,763 
(ii) Minority interests
  (1,250)  3,708 


17


Consolidated Income Statement (Continued)

VI. Other comprehensive income
  (7,360)  3,759 
Items that may not be reclassified subsequently to profit or loss:        
Changes in fair value of other equity instrument investments  -   1 
Items that may be reclassified subsequently to profit or loss:        
Other comprehensive income that can be converted into profit or loss under the equity method  (76)  66 
Cash flow hedges  (8,401)  4,853 
Foreign currency translation differences  1,117   (1,161)
VII. Total comprehensive income
  (28,392)  22,230 
Equity shareholders of the Company  (27,103)  19,029 
Minority interests  (1,289)  3,201 
VIII. Earnings per share:
        
(i) Basic earnings per share (RMB/Share)
  (0.163)  0.122 
(ii) Diluted earnings per share (RMB/Share)
  (0.163)  0.122 

Zhang YuzhuoMa YongshengShou Donghua
ChairmanPresidentChief Financial Officer

18


Income Statement
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million   Currency: RMB   Type: unaudited

Items 
Three-month period
ended 31 March 2020
  
Three-month period
ended 31 March 2019
 
I.Operating income
  199,942   249,978 
Less:Operating costs  171,987   191,844 
Taxes and surcharges  32,996   40,952 
Selling and distribution expenses  724   754 
General and administrative expenses  6,992   7,612 
Research and development costs  1,034   1,197 
Financial expenses  2,050   1,635 
Exploration expenses,
including dry holes
  1,936   2,429 
Add:Other income  896   631 
Investment income  814   1,777 
Gains from changes in
fair value
  400   20 
Credit impairment losses  31   5 
Impairment losses  (7,992)  - 
Asset disposal gains/ (losses)  1   (1)
II. Operating profit
  (23,627)  5,987 
Add:Non-operating income  33   34 
Less:Non-operating expenses  232   147 
III. Profit before taxation
  (23,826)  5,874 
Less:Income tax expense  (6,002)  1,003 
IV. Net profit
  (17,824)  4,871 
(i) Continuous operating net profit
  (17,824)  4,871 
(ii) Termination of net profit
  -   - 
V. Other comprehensive income
  (7,387)  817 
Items that may be reclassified subsequently to profit or loss        
Other comprehensive loss that can be converted into profit or loss under the equity method  49   (33)
Cash flow hedges  (7,436)  850 
VI. Total comprehensive income
  (25,211)  5,688 

Zhang YuzhuoMa YongshengShou Donghua
ChairmanPresidentChief Financial Officer

19


Consolidated Cash Flow Statement
for the three-month period ended 31 March 2020

Prepared by: China Petroleum & Chemical Corporation
Units: million  Currency: RMB  Type: unaudited

Items 
Three-month period
ended 31 March 2020
  
Three-month period
ended 31 March 2019
 
I. Cash flows from operating activities:
       
Cash received from sale of goods and rendering of services  600,228   760,693 
Refund of taxes and levies  818   760 
Other cash received relating to operating activities  35,326   31,379 
Sub-total of cash inflows  636,372   792,832 
Cash paid for goods and services  (544,121)  (625,310)
Cash paid to and for employees  (16,826)  (17,224)
Payments of taxes and levies  (84,522)  (125,101)
Other cash paid relating to operating activities  (59,028)  (39,806)
Sub-total of cash outflows  (704,497)  (807,441)
Net cash flow from operating activities  (68,125)  (14,609)
II.Cash flows from investing activities:
        
Cash received from disposal of investments  3,402   9,636 
Cash received from returns on investments  986   1,288 
Net cash received from disposal of fixed assets, intangible assets and other long-term assets  18   24 
Other cash received relating to investing activities  19,162   13,165 
Sub-total of cash inflows  23,568   24,113 
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets  (22,327)  (23,514)
Cash paid for acquisition of investments  (1,672)  (1,793)
Other cash paid relating to investing activities  (14,094)  (24,388)
Sub-total of cash outflows  (38,093)  (49,695)
Net cash flow from investing activities  (14,525)  (25,582)
III.Cash flows from financing activities:
        
Cash received from capital contributions  260   94 
Including: Cash received from minority shareholders’ capital contributions to subsidiaries  260   94 
Cash received from borrowings  274,615   149,622 
20


Consolidated Cash Flow Statement (Continued)

Other cash received relating to financing activities  276   190 
Sub-total of cash inflows  275,151   149,906 
Cash repayments of borrowings  (172,518)  (118,511)
Cash paid for dividends, profits distribution or interest  (1,557)  (1,396)
Including: Subsidiaries’ cash payments for distribution of dividends or profits to minority shareholders  (160)  (235)
Other cash paid relating to financing activities  (3,492)  (630)
Sub-total of cash outflows  (177,567)  (120,537)
Net cash flow from financing activities  97,584   29,369 
IV. Effects of changes in foreign exchange rate
  553   (340)
V. Net increase/(decrease) in cash and cash equivalents
  15,487   (11,162)
Add
Initial balance of cash and cash equivalents
  60,313   111,922 
VI. Ending balance of cash and cash equivalents  75,800   100,760 

Zhang YuzhuoMa YongshengShou Donghua
ChairmanPresidentChief Financial Officer

21



Cash Flow Statement
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation

Units: million  Currency: RMB  Type: unaudited

Items 
Three-month period
ended 31 March 2020
  
Three-month period
ended 31 March 2019
 
I. Cash flows from operating activities:
      
Cash received from sale of goods and rendering of services  217,331   280,152 
Refund of taxes and levies  798   519 
Other cash received relating to operating activities  1,619   757 
Sub-total of cash inflows  219,748   281,428 
Cash paid for goods and services  (175,248)  (208,261)
Cash paid to and for employees  (8,835)  (9,274)
Payments of taxes and levies  (53,244)  (76,898)
Other cash paid relating to operating activities  (5,349)  (2,939)
Sub-total of cash outflows  (242,676)  (297,372)
Net cash flow from operating activities  (22,928)  (15,944)
II. Cash flows from investing activities:
        
Cash received from disposal of investments  4,759   9,285 
Cash received from returns on investments  1,224   1,270 
Net cash received from disposal of fixed assets, intangible assets and other long-term assets  3   3 
Other cash received relating to investing activities  44,575   9,933 
Sub-total of cash inflows  50,561   20,491 
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets  (9,307)  (7,459)
Cash paid for acquisition of investments  (2,807)  (1,376)
Other cash paid relating to investing activities  (47,607)  (10,800)
Sub-total of cash outflows  (59,721)  (19,635)
Net cash flow from investing activities  (9,160)  856 
III. Cash flows from financing activities:
        
Cash received from borrowings  130,458   39,186 
Other cash received relating to financing activities  57,475   - 
Sub-total of cash inflows  187,933   39,186 
Cash repayments of borrowings  (66,328)  (35,016)
Cash paid for dividends or interest  (875)  (1,476)
Other cash paid relating to financing activities  (72,108)  (266)
Sub-total of cash outflows  (139,311)  (36,758)
Net cash flow from financing activities  48,622   2,428 
22


Cash Flow Statement (Continued)

IV. Net increase/(decrease) in cash and cash equivalents
  16,534   (12,660)
Add:Initial balance of cash and cash equivalents  38,616   59,120 
V. Ending balance of cash and cash equivalents
  55,150   46,460 

Zhang YuzhuoMa YongshengShou Donghua
ChairmanPresidentChief Financial Officer


23



Segment Reporting
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation

Units: million  Currency: RMB  Type: unaudited
Items 
Three-monthperiod
ended31March2020
  
Three-monthperiod
ended31March2019
 
Income from principal operations      
Exploration and production      
External sales  26,944   29,367 
Inter–segment sales  18,238   22,089 
Subtotal  45,182   51,456 
Refining        
External sales  25,145   34,002 
Inter–segment sales  217,468   255,752 
Subtotal  242,613   289,754 
Marketing and distribution        
External sales  248,725   321,636 
Inter–segment sales  1,226   965 
Subtotal  249,951   322,601 
Chemicals        
External sales  71,815   110,990 
Inter–segment sales  10,884   17,121 
Subtotal  82,699   128,111 
Corporate and others        
External sales  170,003   205,504 
Inter–segment sales  131,839   154,677 
Subtotal  301,842   360,181 
Elimination of inter–segment sales  (379,655)  (450,604)
Consolidated income from principal operations  542,632   701,499 
Income from other operations        
Exploration and production  1,272   1,821 
Refining  932   1,251 
Marketing and distribution  6,939   8,850 
Chemicals  3,401   3,733 
Corporate and others  326   425 
Consolidated income from other operations  12,870   16,080 
24


Segment Reporting (Continued)

Consolidated operating income  555,502   717,579 
Operating (loss)/profit        
By segment        
Exploration and production  404   1,581 
Refining  (26,299)  11,481 
Marketing and distribution  (2,621)  7,990 
Chemicals  (1,767)  6,827 
Corporate and others  (5,667)  (582)
Elimination  -   (540)
Total segment operating profit  (35,950)  26,757 
Investment income        
Exploration and production  476   777 
Refining  (680)  (394)
Marketing and distribution  657   215 
Chemicals  (66)  1,047 
Corporate and others  (234)  (360)
Total segment investment income  153   1,285 
Financial expenses  (2,010)  (2,330)
Gains/(losses) from changes in fair value  8,342   (2,226)
Asset disposal gains/(losses)  60   (64)
Other income  1,100   761 
Operating profit  (28,305)  24,183 
Add: Non-operating income  215   243 
Less: Non-operating expenses  471   416 
Profit before taxation  (28,561)  24,010 

25

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

Consolidated Income Statement
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million   Currency: RMB   Type: unaudited

Items 
Three-month period
ended 31 March 2020
  
Three-month period
ended 31 March 2019
 
Turnover and other operating revenues      
Turnover  542,632   701,499 
Other operating revenues  12,870   16,080 
Subtotal  555,502   717,579 
Operating expenses        
Purchased crude oil, products and operating supplies and expenses  (484,322)  (572,138)
Selling, general and administrative expenses  (10,488)  (11,575)
Depreciation, depletion and amortisation  (25,070)  (25,998)
Exploration expenses, including dry holes  (2,268)  (2,543)
Personnel expenses  (18,844)  (17,361)
Taxes other than income tax  (49,691)  (60,459)
Other operating revenue/(expense), net  8,876   (2,664)
Total operating expenses  (581,807)  (692,738)
Operating profit  (26,305)  24,841 
Finance costs        
Interest expense  (3,896)  (4,301)
Interest income  1,085   1,924 
Foreign currency exchange loss, net  801   47 
Net finance costs  (2,010)  (2,330)
Investment income  29   55 
Share of profits less losses from associates and     joint ventures  472   2,232 
Profit before taxation  (27,814)  24,798 
Income tax expense  7,529   (5,539)
Profit for the period  (20,285)  19,259 
Attributable to
        
Owners of the Company  (19,145)  15,468 
Non-controlling interests  (1,140)  3,791 
Profit for the period  (20,285)  19,259 
Earnings per share        
Basic earnings per share (RMB)  (0.158)  0.128 
Diluted earnings per share (RMB)  (0.158)  0.128 

26


Consolidated Statement of Comprehensive Income
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million   Currency: RMB   Type: unaudited


Items Three-month period ended 31 March 2020  Three-month period ended 31 March 2019 
Profit for the period  (20,285)  19,259 
Other comprehensive income:  (7,360)  3,759 
Items that may not be reclassified subsequently to profit or loss:        
Equity investments at fair value through other comprehensive income  -   1 
Items that may be reclassified subsequently to profit or loss:        
Share of other comprehensive income of associates and joint ventures  (76)  66 
Cash flow hedges  (8,401)  4,853 
Foreign currency translation differences  1,117   (1,161)
Total comprehensive income  (27,645)  23,018 
Attributable to:        
Shareholders of the Company  (26,466)  19,734 
Non–controlling interests  (1,179)  3,284 

27

Consolidated Balance Sheet
as at 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million   Currency: RMB   Type: unaudited

Items At 31 March 2020  At 31 December 2019 
Non-current assets
      
Property, plant and equipment, net  611,508   622,409 
Construction in progress  177,021   173,482 
Right-of-use assets  266,992   267,860 
Goodwill  8,716   8,697 
Interest in associates  96,691   95,737 
Interest in joint ventures  55,870   56,467 
Financial assets at fair value through other comprehensive income  1,525   1,521 
Deferred tax assets  29,343   17,616 
Long-term prepayments and other non-current  assets  63,841   65,426 
Total non-current assets  1,311,507   1,309,215 
Current assets:        
Cash and cash equivalents  75,800   60,313 
Time deposits with financial institutions  62,973   67,614 
Financial assets at fair value through profit and loss  2,012   3,319 
Derivatives financial assets  14,459   837 
Trade accounts receivable and bills receivable  54,246   54,865 
Financial assets at fair value through other comprehensive income  8,746   8,622 
Inventories  183,277   192,442 
Prepaid expenses and other current assets  94,519   57,844 
Total current assets  496,032   445,856 
Current liabilities
        
Short-term debts  97,476   40,521 
Loans from Sinopec Group Company and fellow subsidiaries  73,290   43,289 
Lease liabilities  15,586   15,198 
Derivatives financial liabilities  26,362   2,729 
Trade accounts payable and bills payable  168,582   199,792 
Contract liabilities  137,563   126,735 
Other payables  119,729   144,846 
Income tax payable  678   3,264 
Total current liabilities  639,266   576,374 
Consolidated Balance Sheet (Continued)

Net current liabilities  143,234   130,518 
Total assets less current liabilities  1,168,273   1,178,697 
28


Non-current liabilities
      
Long-term debts  56,235   49,156 
Loans from Sinopec Group Company and fellow subsidiaries  15,984   9,626 
Lease liabilities  178,774   177,674 
Deferred tax liabilities  7,273   6,809 
Provisions  43,375   43,163 
Other non-current liabilities  20,024   16,434 
Total non-current liabilities  321,665   302,862 
Total net assets  846,608   875,835 
Equity
        
Share capital  121,071   121,071 
Reserves  590,272   617,079 
Total equity attributable to shareholders of the Company  711,343   738,150 
Non-controlling interests  135,265   137,685 
Total equity  846,608   875,835 

29


Consolidated Statement of Cash Flows
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million   Currency: RMB   Type: unaudited

Items Three-month period ended 31 March 2020  Three-month period ended 31 March 2019 
Net cash generated from operating activities(a)  (68,125)  (14,609)
Investing activities        
Capital expenditure  (20,432)  (21,855)
Exploratory wells expenditure  (1,895)  (1,659)
Purchase of investments, investments in associates and investments in joint ventures  (1,672)  (1,793)
Proceeds from disposal of investments and investments in associates  3,402   9,636 
Proceeds from disposal of property, plant, equipment and other non-current assets  18   24 
Increase in time deposits with maturities over three months  (13,912)  (24,388)
Decrease in time deposits with maturities over three months  18,553   11,855 
Interest received  609   1,310 
Investment and dividend income received  986   1,288 
Repayments of other investing activities  (182)  - 
Net cash used in investing activities  (14,525)  (25,582)
Financing activities        
Proceeds from bank and other loans  274,615   149,622 
Repayments of bank and other loans  (172,518)  (118,511)
Contributions to subsidiaries from non-controlling interests  260   94 
Distributions by subsidiaries to non-controlling interests  (160)  (319)
Interest paid  (1,397)  (1,077)
Payments made to acquire non-controlling interests  (1,117)  - 
Repayments of lease liabilities  (2,375)  (440)
Proceeds from other financing activities  276   - 
Net cash used in financing activities  97,584   29,369 
Net increase/ (decrease) in cash and cash equivalents  14,934   (10,822)
Cash and cash equivalents at 1 January  60,313   111,922 
Effect of foreign currency exchange rate changes  553   (340)
Cash and cash equivalents at 31 March  75,800   100,760 
30


Note to consolidated statement of Cash Flows
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million   Currency: RMB   Type: unaudited

(a)Reconciliation of profit before taxation to net cash generated from operating activities

Items Three-month period ended 31 March 2020  Three-month period ended 31 March 2019 
Operating activities      
Profit before taxation  (27,814)  24,798 
Adjustments for:        
Depreciation, depletion and amortisation  25,070   25,998 
Dry hole costs written off  1,863   1,836 
Share of profits from associates and joint ventures  (472)  (2,232)
Investment income  (29)  (55)
Interest income  (689)  (1,924)
Interest expense  3,683   4,301 
Gain/(loss) on foreign currency exchange rate changes and derivative financial instruments  (8,589)  1,295 
Gain/(loss) on disposal of property, plant, equipment and other non-current assets, net  (3)  85 
Impairment reversal on assets  10,360   (136)
Credit impairment losses  (5)  19 
Operating profit before change of operating capital  3,375   53,985 
Accounts receivable and other current assets  (48,286)  (7,199)
Inventories  (1,163)  (30,127)
Accounts payable and other current liabilities  (16,994)  (24,314)
Subtotal  (63,068)  (7,655)
Income tax paid  (5,057)  (6,954)
Net cash generated from operating activities  (68,125)  (14,609)

31


Segment Reporting
for the three-month period ended 31 March 2020
Prepared by: China Petroleum & Chemical Corporation
Units: million   Currency: RMB   Type: unaudited

Items Three-month period ended 31 March 2020  Three-month period ended 31 March 2019 
Turnover      
Exploration and production      
External sales  26,944   29,367 
Inter-segment sales  18,238   22,089 
Subtotal  45,182   51,456 
Refining        
External sales  25,145   34,002 
Inter-segment sales  217,468   255,752 
Subtotal  242,613   289,754 
Marketing and distribution        
External sales  248,725   321,636 
Inter-segment sales  1,226   965 
Subtotal  249,951   322,601 
Chemicals        
External sales  71,815   110,990 
Inter-segment sales  10,884   17,121 
Subtotal  82,699   128,111 
Corporate and others        
External sales  170,003   205,504 
Inter-segment sales  131,839   154,677 
Subtotal  301,842   360,181 
Elimination of inter-segment sales  (379,655)  (450,604)
Turnover  542,632   701,499 
Other operating revenues        
Exploration and production  1,272   1,821 
Refining  932   1,251 
Marketing and distribution  6,939   8,850 
Chemicals  3,401   3,733 
Corporate and others  326   425 
Other operating revenues  12,870   16,080 
Turnover and other operating revenues  555,502   717,579 
Result        
Operating (loss)/profit        
32


Segment Reporting (Continued)

By segment      
Exploration and production  1,518   2,143 
Refining  (25,794)  11,963 
Marketing and distribution  (1,536)  7,866 
Chemicals  (1,568)  6,953 
Corporate and others  1,075   (3,544)
Elimination  -   (540)
Total segment operating profit  (26,305)  24,841 
Share of profits from associates and joint ventures        
Exploration and production  476   777 
Refining  (682)  (404)
Marketing and distribution  287   247 
Chemicals  (76)  1,061 
Corporate and others  467   551 
Aggregate share of profits from associates and joint ventures  472   2,232 
Investment income/(losses)        
Exploration and production  -   (1)
Refining  2   10 
Marketing and distribution  14   45 
Chemicals  8   1 
Corporate and others  5   - 
Aggregate investment income  29   55 
Net finance costs  (2,010)  (2,330)
Profit before taxation  (27,814)  24,798 

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

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

(i) Government Grants

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

33


(ii) Safety Production Fund

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

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

Prepared by: China Petroleum & Chemical Corporation

Units: million   Currency: RMB   Type: unaudited
Items Three-month period ended 31 March 2020  Three-month period ended 31 March 2019 
Net profit under CASs  (21,032)  18,471 
Adjustments:        
Government grants (i)  12   13 
Safety production fund (ii)  735   775 
Profit for the period under IFRS  (20,285)  19,259 


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

Units: million   Currency: RMB   Type: unaudited
Items At 31 March 2020  At 31 December 2019 
Shareholders’ equity under CASs  847,666   876,905 
Adjustments:        
Government grants(i)  (1,058)  (1,070)
Total equity under IFRS  846,608   875,835 



34

Document 2


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

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

Connected Transaction
Absorption and Merger of Zhanjiang Dongxing

ABSORPTION AND MERGER
The Board is pleased to announce that on 29 April 2020, Zhongke Refining, a wholly-owned subsidiary of the Company, entered into the Merger Agreement with Zhanjiang Dongxing, and the Company entered into the Joint Venture Contract with Century Bright Company. Pursuant to the Transaction Documents, Zhongke Refining agreed to absorb and merge Zhanjiang Dongxing. Upon the Completion of the Absorption and Merger, Zhongke Refining will become the owner of all assets and liabilities of Zhanjiang Dongxing and will assume the existing businesses and personnel of Zhanjiang Dongxing. The Company and Century Bright Company will hold 90.3% and 9.7% equity interest in Zhongke Refining, respectively.
LISTING RULES IMPLICATIONS
As at the date of this announcement, China Petrochemical Corporation is the controlling shareholder of the Company. As Century Bright Company, a wholly-owned subsidiary of China Petrochemical Corporation, holds more than 10% equity interest in Zhanjiang Dongxing (a subsidiary of the Company), pursuant to Chapter 14A of the Listing Rules, Zhanjiang Dongxing is a connected subsidiary of the Company. As the highest applicable percentage ratio in respect of the Absorption and Merger exceeds 0.1% but falls below 5%, the Absorption and Merger is subject to the reporting and announcement requirements, but exempt from the independent shareholders’ approval requirement under Chapter 14A of the Listing Rules.
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INTRODUCTION
The Board is pleased to announce that on 29 April 2020, Zhongke Refining, a wholly-owned subsidiary of the Company, entered into the Merger Agreement with Zhanjiang Dongxing, and the Company entered into the Joint Venture Contract with Century Bright Company. Pursuant to the Transaction Documents, Zhongke Refining agreed to absorb and merge Zhanjiang Dongxing. Upon the Completion of the Absorption and Merger, Zhongke Refining will become the owner of all assets and liabilities of Zhanjiang Dongxing and will assume the existing businesses and personnel of Zhanjiang Dongxing. The Company and Century Bright Company will hold 90.3% and 9.7% equity interest in Zhongke Refining, respectively.

PRINCIPAL TERMS OF THE MERGER AGREEMENT

Date: 29 April 2020
Parties:

1)Zhongke Refining (as the merging party); and

2)Zhanjiang Dongxing (as the the merged party)

Current Status of Zhongke Refining and Zhanjiang Dongxing
 Registered CapitalShareholder(s)
Zhongke RefiningRMB 2,000,000,000Sinopec Corp.
Zhanjiang DongxingRMB 4,396,641,600Sinopec Corp. holds 75% interest and Century Bright Company holds 25% interest

Basic Information on the Surviving Company after the Absorption and Merger
1.Form of the merger: Absorption and merger. After the Absorption and Merger, Zhongke Refining will be the surviving company, while Zhanjiang Dongxing will be dissolved.
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2.Registered capital after the Absorption and Merger: RMB 6,396,641,600.
3.Shareholders information: There will be two shareholders after the Absorption and Merger. The capital contribution subscribed for by Sinopec Corp. will be RMB 5,776,167,400, representing 90.3% of the registered capital. The capital contribution subscribed for by Century Bright Company will be RMB 620,474,200, representing 9.7% of the registered capital.

Succession Arrangement of Relevant Creditor’s Rights and Debts
All existing debts of Zhanjiang Dongxing shall be assumed by Zhongke Refining and the creditor’s rights shall be enjoyed by Zhongke Refining. Zhanjiang Dongxing will not conduct property liquidation.

The obligation of notifying creditors and debtors in connection with the Absorption and Merger will be carried out in accordance with relevant provisions of the PRC Company Law.

Absorption and Merger Procedures
In order to approve the Merger Agreement, Zhanjiang Dongxing shall hold a board meeting in accordance with its articles of association to pass a board resolution and Zhongke Refining’s shareholder shall make a shareholder’s decision. Upon the approval of the Merger Agreement, Zhongke Refining shall perform the amendment registration procedures with the registration authority to complete the Absorption and Merger. Zhanjiang Dongxing shall perform the dissolving procedure with the registration authority.

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SHAREHOLDING STRUCTURE OF THE RELEVANT PARTIES BEFORE AND AFTER THE COMPLETION OF THE ABSORPTION AND MERGER
PRINCIPAL TERMS OF THE JOINT VENTURE CONTRACT
Date: 29 April 2020
Parties:

1)the Company

2)Century Bright Company
Business scope of the Joint Venture: Petroleum refining; petrochemical products and industrial gas production, sales, warehousing and transportation supporting services; construction management of refining and chemical project; automobile, railway loading and unloading and pipeline transportation of petrochemical products and raw and auxiliary materials; tank truck cleaning; docks and other ports facility operation; cargo handling, warehousing, logistics services in the port area; simple processing of the cargo and its packaging; provision of shore power and fresh water supply services for ships; provision of pollutants (contaminated oil water, residual oil, washing tank water, domestic sewage and garbage) receiving services; providing oil containment boom deployment services for ships; providing pushing and towing services for ships entering and leaving ports, docking and berthing, and mooring; research and development of petrochemical products and technologies, and its application consulting; supply and sales of water, electricity, wind and steam transportation energy; leasing of machinery and equipment facilities; leasing of proprietary property; information consulting services (except securities and futures investment, education and training consulting and other consulting services subject to pre-approval and franchise special control). Prepare the following projects (business activities of the following projects shall not be engaged in during the preparation period): provision of terminal security services, and operating hazardous goods at the terminal.
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Registered Capital and Contribution
The Company and Century Bright Company agreed to invest all of their respective owner’s equity in Zhongke Refining and Zhanjiang Dongxing into the Joint Venture. Based on the factors such as the operating profit and loss of Zhanjiang Dongxing and the capital contribution of the Company to be injected into Zhongke Refining prior to the Completion of the Absorption and Merger, the Company and Century Bright Company agreed to hold 90.3% and 9.7% equity interest in the Joint Venture, respectively, after the Absorption and Merger. The registered capital of the Joint Venture shall be RMB 6,396,641,600. At the Completion of the Absorption and Merger, if the value of the assets to be contributed by the Company or Century Bright Company does not satisfy that the Company and Century Bright Company holds 90.3% and 9.7% equity interest in the Joint Venture, respectively, then such shareholder shall make payment in cash to cover such shortfall.

The assets of the Joint Venture shall be determined based on the valuation report issued by the assets appraisal agency which shall be prepared based on the audited asset figures. If either the Company or Century Bright Company plans to dispose of its equity interest or its registered capital subscribed for through mortgage, pledge, lien or other disposal actions in any form, such disposal shall be subject to the written consent of the other party.

Equity Transfer
1.When either party desires to transfer, sell or otherwise dispose of its equity interest in Joint Venture, the other party may exercise its right of first refusal in accordance with the Joint Venture Contract. The transfer price shall be determined based on the valuation results issued by a qualified appraisal agency engaged by the parties and shall not violate the mandatory provisions of laws and regulations relating to the transfer of state-owned equity.

2.Notwithstanding the foregoing, neither party may exercise the right of first refusal in connection with the transfer of equity interest by the other party to its related parties including its wholly-owned subsidiaries or parent company, provided that the transferor provides written documents acceptable to the other party evidencing that the transferee of the equity interest is able to perform the obligations under the Joint Venture Contract and other relevant agreements in place of the transferor.

3.Neither party shall donate its equity interest in the Joint Venture to a third party or pledge its equity interest in the Joint Venture to the Joint Venture. If any party intends to create pledge security interest over its equity interest in the Joint Venture to creditors other than shareholders of Joint Venture, it shall obtain consent of both shareholders.
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Directors: The Joint Venture shall have an executive director, who shall be responsible for the shareholders’ general meeting of the Joint Venture.

BASIS FOR DETERMINING THE SHAREHOLDING RATIO OF THE COMPANY AND CENTURY BRIGHT COMPANY IN JOINT VENTURE AFTER THE ABSORPTION AND MERGER
The respective adjusted shareholding ratio of the Company and Century Bright Company in Joint Venture was determined with reference to (i) each of the valuation results of the net assets of Zhongke Refining and Zhanjiang Dongxing as sets out in the valuation report of Zhongke Refining and Zhanjiang Dongxing, respectively, prepared by the independent Valuer using the asset-based approach. Taking 31 December 2019 as the Valuation Date, the appraised value of the net assets of Zhanjiang Dongxing was RMB 9.390 billion, and the appraised value of the net assets of Zhongke Refining was RMB 13.493 billion (subject to the final valuation results in the filing record); (ii) the respective interest percentage of the Company and Century Bright Company in Zhongke Refining and Zhanjiang Dongxing prior to the Completion of the Absorption and Merger; (iii) the capital contributions of the Company to Zhongke Refining and Zhanjiang Dongxing and the profit and loss from the going concerns, from the Valuation Date to the Completion of the Absorption and Merger. At the Completion of the Absorption and Merger, after taking into account the above factors, if the value of the assets to be contributed by certain shareholder does not satisfy the respective adjusted equity interest of the Company and Century Bright Company in Joint Venture (i.e. the approximate 90.3% and 9.7% equity interest in Joint Venture, respectively held by the Company and Century Bright Company), such shareholder shall make payment in cash to cover such shortfall.

REASONS FOR AND BENEFITS OF THE ABSORPTION AND MERGER
The Absorption and Merger will help improve the integrated operation of the Company, optimise the allocation of regional resources so as to enhance the comprehensive competitiveness of the Company in its business locations, and will help reduce the connected transactions of the Company.

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FINANCIAL INFORMATION ON THE RELEVANT PARTIES

Zhanjiang Dongxing
Zhanjiang Dongxing is a limited liability company incorporated under the laws of the PRC. Prior to the Completion of the Absorption and Merger, according to the articles of association of Zhanjiang Dongxing, the Company holds 75% interest in Zhanjiang Dongxing, and China Petrochemical Corporation holds 25% interest in Zhanjiang Dongxing through Century Bright Company. It is principally engaged in sales and transportation supporting services of refined oil products.

The table below sets out certain audited financial information of Zhanjiang Dongxing for the two financial years ended 31 December 2018 and 31 December 2019 prepared under the China Accounting Standards for Business Enterprises:
Unit: RMB
  
As at 31
December 2018
  
As at 31
December 2019
 
Total assets  11,236,712,528.35   11,497,470,053.45 
Net assets  6,796,049,776.69   7,049,468,565.74 
  For the year ended 31 December 2018  For the year ended 31 December 2019 
Revenue  29,105,008,939.38   23,288,525,195.37 
Profit before income tax expense  2,144,354,460.37   1,160,384,137.93 
Profit after income tax expense  1,608,219,134.42   870,135,042.51 

Upon the Completion of the Absorption and Merger, the legal person status of Zhanjiang Dongxing will be dissolved.

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Zhongke Refining
Zhongke Refining is a limited liability company incorporated under the laws of the PRC. Prior to the Completion of the Absorption and Merger, the Company holds 100% equity interest in Zhongke Refining. Currently, Zhongke integrated refining and petrochemical project is still under construction and has not been put into operation. Zhongke Refining is principally engaged in oil refining, production, sales, storage and transportation supporting services of petrochemical products and industrial gases.

The table below sets out certain audited financial information of Zhongke Refining for the two financial years ended 31 December 2018 and 31 December 2019 prepared under the China Accounting Standards for Business Enterprises:

Unit: RMB
  
As at 31
December 2018
  
As at 31
December 2019
 
Total assets  19,264,497,773.62   32,927,235,505.42 
Net assets  5,893,043,000.00   10,784,540,300.00 
  For the year ended 31 December 2018  For the year ended 31 December 2019 
Revenue  0   0 
Profit before income tax expense  0   0 
Profit after income tax expense  0   0 

Upon the Completion of the Absorption and Merger, Zhongke Refining will remain a subsidiary of the Company.

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OPINIONS OF THE DIRECTORS
As at the date of this announcement, except for the INEDs, all other Directors are connected Directors and therefore required to abstain from voting on the resolution approving the Transaction Documents and the transactions contemplated thereunder at the Board meeting. The Board has considered and approved the resolution on the Absorption and Merger. All Directors (including all INEDs) are of the view that, (i) the Absorption and Merger is on normal commercial terms; (ii) the terms and conditions of the Transaction Documents are fair and reasonable; and (iii) the Absorption and Merger is in the interest of the Company and its shareholders as a whole.

LISTING RULES IMPLICATIONS
As at the date of this announcement, China Petrochemical Corporation is the controlling shareholder of the Company. As Century Bright Company, a wholly-owned subsidiary of China Petrochemical Corporation, holds more than 10% equity interest in Zhanjiang Dongxing (a subsidiary of the Company), pursuant to Chapter 14A of the Listing Rules, Zhanjiang Dongxing is a connected subsidiary of the Company. As the highest applicable percentage ratio in respect of the Absorption and Merger exceeds 0.1% but falls below 5%, the Absorption and Merger is subject to the reporting and announcement requirements, but exempt from the independent shareholders’ approval requirement under Chapter 14A of the Listing Rules.

The Absorption and Merger constitutes a related party transaction of the Company with China Petrochemical Corporation under the Rules Governing the Listing of Stocks on Shanghai Stock Exchange, but does not reach the threshold of disclosure under Chapter 10 of the Rules Governing the Listing of Stocks on Shanghai Stock Exchange, and is not subject to the consideration of the general meeting of the Company.


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

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Century Bright Company
Century Bright Company is a limited liability company incorporated under the laws of the Hong Kong. It mainly engages in relevant businesses as the overseas fund platform of China Petrochemical Corporation and is an overseas financing center, settlement center, foreign exchange center, cash management center and fund monitoring center of China Petrochemical Corporation. China Petrochemical Corporation directly holds 100% equity interest in Century Bright Company.

DEFINITIONS

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

“Absorption and Merger” 
the absorption and merger of Zhanjiang Dongxing by Zhongke Refining in accordance with the Merger Agreement and the Joint Venture Contract, upon the completion of which, the Company and Century Bright Company will hold 90.3% and 9.7% equity interest in the Joint Venture, respectively
 
“Board” the board of directors of the Company
“Century Bright Company” 
Sinopec Century Bright Capital Investment Limited, a wholly-owned subsidiary of China Petrochemical Corporation
 
“China” or “PRC” 
the People’s Republic of China
 
“China Petrochemical Corporation” 
China Petrochemical Corporation
 
“Company” or “Sinopec Corp.” 
China Petroleum & Chemical Corporation
 
“Completion” 
the completion of the Absorption and Merger in accordance with the Merger Agreement
 

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“connected person(s)” 
has the meaning ascribed thereto under the Listing Rules
 
“Director(s)” 
director(s) of the Company
 
“INED(s)” 
the independent non-executive directors of the Company, including Tang Min, Fan Gang, Cai Hongbin and Ng, Kar Ling Johnny
 
“Joint Venture” 
the joint venture, namely Zhongke Refining, after the Completion of the Absorption and Merger
 
“Joint Venture Contract” 
the Equity Joint Venture Contract dated 29 April 2020 entered into between the Company and Century Bright Company
 
“Listing Rules” 
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
 
“Merger Agreement” 
the agreement dated 29 April 2020 entered into between Zhongke Refining and Zhanjiang Dongxing on the absorption and merger of Zhanjiang Dongxing by Zhongke Refining
 
“RMB” 
Renminbi, the lawful currency of the PRC
 
“Stock Exchange” 
The Stock Exchange of Hong Kong Limited
 
“Transaction Documents” 
The Merger Agreement and the Joint Venture Contract
 
“Valuer” 
China United Asset Appraisal Group Co., Ltd.
 

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“Valuation Date” 
31 December 2019
 
“Zhanjiang Dongxing” 
Sinopec Zhanjiang Dongxing Petrochemical Company Limited
 
“Zhongke Refining” 
Zhongke (Guangdong) Refining and Petrochemical Co., Ltd.
 




 
By Order of the Board
China Petroleum & Chemical Corporation
Huang Wensheng
 Vice President and Secretary to the Board

Beijing, the PRC,
29 April 2020

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

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




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SIGNATURE



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



China Petroleum & Chemical Corporation



By: /s/ Huang Wensheng

Name: Huang Wensheng

Title: Vice President and Secretary to the Board of Directors



Date: April 29, 2020