Sinopec Shanghai Petrochemical Co Ltd 6-K, filed Aug 27, 2021
Sinopec Shanghai Petrochemical Co Ltd (SPTJF)
About this 6-K
Sinopec Shanghai Petrochemical Co Ltd filed this 6-K on August 27, 2021.
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2021
Commission File Number: 1-12158
Sinopec Shanghai Petrochemical Company Limited
(Translation of registrant’s name into English)
No. 48 Jinyi Road, Jinshan District, Shanghai, 200540
The People’s Republic of China
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
EXHIBITS
| Exhibit |
||
| 99.1 | 2021 Interim Results Announcement for the Six Months Ended 30 June 2021 | |
| 99.2 | Connected Transaction Announcement | |
SIGNATURES
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.
| SINOPEC SHANGHAI PETROCHEMICAL COMPANY LIMITED | ||||||
| Date: August 26, 2021 | By: | /s/ Wu Haijun | ||||
| Name: | Wu Haijun | |||||
| Title: | Chairman of the Board of Directors | |||||
(A joint stock limited company incorporated in the People’s Republic of China)
(Stock Code: 00338)
2021 Interim Results Announcement
For the Six Months Ended 30 June 2021
| 1. | IMPORTANT MESSAGE |
| 1.1 | This interim results summary of Sinopec Shanghai Petrochemical Company Limited (the “Company” or “Sinopec Shanghai”, together with its subsidiaries, the “Group”) for the six months ended 30 June 2021 (the “Reporting Period”) is extracted from the full text of the 2021 interim report. For detailed content, investors are advised to read the full text of the 2021 interim report which is published on the websites of the Shanghai Stock Exchange or other designated website of China Securities Regulatory Commission (“CSRC”), Hong Kong Exchanges and Clearing Limited and the Company. |
| 1.2 | Corporate Information |
| A Shares | Stock Exchange Listing Stock Short Name Stock Code |
Shanghai Stock Exchange SHANGHAI PECHEM 600688 | ||
| H Shares: | Stock Exchange Listing | The Stock Exchange of Hong Kong Limited (“Hong Kong Stock Exchange”) | ||
| Stock Short Name Stock Code |
SHANGHAI PECHEM 00338 | |||
| American Depository Receipts (“ADR”): |
Stock Exchange Listing Stock Code |
New York Stock Exchange SHI |
| Secretary to the Board |
Securities Affairs Representative | |||
| Name | Liu Gang | Yu Guangxian | ||
| Correspondence Address | 48 Jinyi Road, Jinshan District, Shanghai, the People’s Republic of China (the
“PRC”) |
48 Jinyi Road, Jinshan District, Shanghai, the PRC | ||
| Telephone | 8621-57943143 | 8621-57933728 | ||
| Fax | 8621-57940050 | 8621-57940050 | ||
| liugang@spc.com.cn | yuguangxian@spc.com.cn | |||
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| 2. | MAJOR FINANCIAL DATA AND SHAREHOLDERS STATUS |
| 2.1 | Major Financial Data |
Prepared under the People’s Republic of China (“China”) Accounting Standards for Business Enterprises (“CAS”)
| 2.1.1 | Major Accounting Data |
Unit: RMB’ 000
| Major accounting data |
The Reporting Period (January to June) |
Corresponding period of the previous year |
Increase/decrease as compared to the corresponding period of the previous year (%) |
|||||||||
| Operating income |
37,136,606 | 35,663,352 | 4.13 | |||||||||
| Total profit/(loss) |
1,510,713 | -2,354,618 | Not applicable | |||||||||
| Net profit/(loss) attributable to equity shareholders of the company |
1,244,189 | -1,716,072 | Not applicable | |||||||||
| Net profit/(loss) attributable to equity shareholders of the company excluding non-recurring items |
1,169,426 | -1,788,160 | Not applicable | |||||||||
| Net cash used in operating activities |
-2,389,552 | -2,904,166 | 17.72 | |||||||||
| As at the end of the Reporting Period |
As at the end of the previous year |
Increase/decrease at the end of the Reporting Period as compared to the end of the previous year (%) |
||||||||||
| Net assets attributable to equity shareholders of the Company |
29,463,540 | 29,218,033 | 0.84 | |||||||||
| Total assets |
46,829,792 | 44,749,173 | 4.65 | |||||||||
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| 2.1.2 | Major Financial Indicators |
| Major financial indicators |
The Reporting Period (January to June) |
Corresponding period of the previous year |
Increase/decrease as compared to the corresponding period of the previous year (%) |
|||||||||
| Basic earnings/(losses) per share (RMB/Share) |
0.115 | -0.159 | Not applicable | |||||||||
| Diluted earnings/(losses) per share (RMB/Share) |
0.115 | -0.159 | Not applicable | |||||||||
| Basic earnings/(losses) per share after non-recurring items (RMB/Share) |
0.108 | -0.164 | Not applicable | |||||||||
| Return/(loss) on net assets (weighted average) (%)* |
4.164 | -6.588 | |
Increase 10.75 percentage points |
| |||||||
| Return/(loss) on net assets after non-recurring items (weighted average) (%)* |
3.913 | -6.835 | |
Increase 10.75 percentage points |
| |||||||
| * | The above-mentioned net assets do not include non-controlling interests. |
| 2.1.3 | Differences between Financial Statements Prepared under CAS and those Prepared under International Financial Reporting Standards (“IFRS”) |
Unit: RMB’ 000
| Net profit/(loss) attributable to equity shareholders of the company |
Total equity attributable to equity shareholders of the company |
|||||||||||||||
| The Reporting Period |
Corresponding period of the previous year |
At the end of the Reporting Period |
At the beginning of the Reporting Period |
|||||||||||||
| Prepared under CAS |
1,244,189 | -1,716,072 | 29,463,540 | 29,218,033 | ||||||||||||
| Prepared under IFRS |
1,276,462 | -1,670,829 | 29,444,502 | 29,197,990 | ||||||||||||
For a detailed description of the differences between financial statements prepared under CAS and those prepared under IFRS, please refer to the Supplementary Information to the Financial Statements prepared under CAS contained in the 2021 interim report.
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| 2.1.4 | Non-recurring Profit and Loss Items (Prepared under CAS) |
Unit: RMB’ 000
| Non-recurring profit and loss items |
Amount | |||
| Gains on disposal of non-current assets |
62,290 | |||
| Government grants recorded in profit and loss |
11,412 | |||
| Employee reduction expenses |
-8,437 | |||
| Gains from changes in fair value of financial assets and liabilities |
23,343 | |||
| Gains from structured deposits |
22,209 | |||
| Loss on disposal of derivative financial instruments |
-151 | |||
| Loss on selling of financial assets at fair value through other comprehensive income |
-2,096 | |||
| Other non-operating income and expenses other than those mentioned above |
-9,421 | |||
| Income tax effect for the above items |
-24,840 | |||
| Effect attributable to non-controlling interests (after tax) |
454 | |||
|
|
|
|||
| Total |
74,763 | |||
|
|
|
|||
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| 2.2 | Shareholding of the Top Ten Shareholders as at the end of the Reporting Period |
| Number of shareholders of ordinary shares as at the end of the Reporting Period |
85,440 |
| Shareholding of the top ten shareholders |
Unit: Shares |
| Increase/ decrease of shareholding |
Number of shares held |
Number of shares held |
Pledged/frozen | |||||||||||||||||||||||||||||
| Name of shareholders (Full name) |
Class of shares |
during the Reporting Period (shares) |
at the end of the Reporting Period (shares) |
Percentage
of Shareholding (%) |
with selling restrictions (shares) |
Status of shares |
Number of shares |
Nature of shareholders |
||||||||||||||||||||||||
| China Petroleum & Chemical Corporation |
A shares | 0 | 5,460,000,000 | 50.44 | 0 | None | 0 | |
State-owned legal person |
| ||||||||||||||||||||||
| HKSCC (Nominees) Limited |
H shares | 140,000 | 3,454,023,030 | 31.91 | 0 | Unknown | — | |
Overseas legal person |
| ||||||||||||||||||||||
| HKSCC Limited |
A shares | 48,434,979 | 112,836,694 | 1.04 | 0 | None | 0 | |
Overseas legal person |
| ||||||||||||||||||||||
| Wu Wenbin |
A shares | 26,862,842 | 67,233,012 | 0.62 | 0 | None | 0 | |
Domestic natural person |
| ||||||||||||||||||||||
| China Merchants Bank Company Limited – SSE Dividend ETF |
A shares | 22,394,077 | 59,617,174 | 0.55 | 0 | None | 0 | Others | ||||||||||||||||||||||||
| China Securities Finance Corporation Limited |
A shares | -269,586,663 | 46,084,485 | 0.43 | 0 | None | 0 | Others | ||||||||||||||||||||||||
| GF Fund – Agricultural Bank of China – GF CSI Financial Asset Management Plan |
A shares | 0 | 45,222,300 | 0.42 | 0 | None | 0 | Others | ||||||||||||||||||||||||
| Dacheng Fund –Agricultural Bank of China – Dacheng CSI Financial Asset Management Plan |
A shares | 0 | 43,531,469 | 0.40 | 0 | None | 0 | Others | ||||||||||||||||||||||||
| China Asset Fund – Agricultural Bank of China – China Asset CSI Financial Asset Management Plan |
A shares | 0 | 43,083,750 | 0.40 | 0 | None | 0 | Others | ||||||||||||||||||||||||
| Bosera Fund –Agricultural Bank of China – Bosera CSI Financial Asset Management Plan |
A shares | 0 | 43,083,700 | 0.40 | 0 | None | 0 | Others | ||||||||||||||||||||||||
| E Fund Fund– Agricultural Bank of China – E Fund CSI Financial Asset Management Plan |
A shares | 0 | 43,083,700 | 0.40 | 0 | None | 0 | Others | ||||||||||||||||||||||||
| Harvest Fund– Agricultural Bank of China – Harvest CSI Financial Asset Management Plan |
A shares | 0 | 43,083,700 | 0.40 | 0 | None | 0 | Others | ||||||||||||||||||||||||
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| China EU Fund– Agricultural Bank of China – China EU CSI Financial Asset Management Plan |
A shares | 0 | 43,083,700 | 0.40 | 0 | None | 0 | Others | ||||||||||||||||||||||||
| Yinhua Fund– Agricultural Bank of China – Yinhua CSI Financial Asset Management Plan |
A shares | 0 | 43,083,700 | 0.40 | 0 | None | 0 | Others | ||||||||||||||||||||||||
| China Southern Fund– Agricultural Bank of China – China Southern CSI Financial Asset Management Plan |
A shares | 0 | 43,083,700 | 0.40 | 0 | None | 0 | Others | ||||||||||||||||||||||||
| ICBC Credit Suisse Fund – Agricultural Bank of China – ICBC Credit Suisse CSI Financial Assets Management Scheme |
A shares | 0 | 43,083,700 | 0.40 | 0 | None | 0 | Others |
| Note on connected relations or acting in concert of the above shareholders |
Among the above-mentioned shareholders, China Petroleum & Chemical Corporation (“Sinopec Corp.”), a State-owned legal person, does not have any connected relationship with the other shareholders, and does not constitute an act-in-concert party under the Administrative Measures on Acquisition of Listed Companies. Among the above-mentioned shareholders, HKSCC (Nominees) Limited is a nominee. Apart from the above, the Company is not aware of any connected relationship among the other shareholders, or whether any other shareholder constitutes an acting-in-concert party under the Administrative Measures on Acquisition of Listed Companies. | |||||||||||||||
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| 2.3 | Interests and short positions of the substantial shareholders of the Company in shares and underlying shares of the Company |
As at 30 June 2021, so far as was known to the Directors or chief executive of the Company, the interests and short positions of the Company’s substantial shareholders (being those who are entitled to exercise or control the exercise of 5% or more of the voting power at any general meeting of the Company but excluding the Directors, chief executive and Supervisors) in the shares and underlying shares of the Company who are required to disclose their interests pursuant to Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “SFO”) or as recorded in the register of interests required to be kept under section 336 of the SFO were as set out below:
Interests in ordinary shares of the Company
| Name of shareholder |
Interests held or deemed as held (shares) |
Note | Percentage of total issued shares of the Company (%) |
Percentage of total issued shares of the relevant class (%) |
Capacity | |||||||||||
| China Petroleum & Chemical Corporation (“Sinopec Corp.”) |
|
5,460,000,000 A shares Shares of legal person |
(L)
|
(1) | 50.44 | (L) | 74.50 | (L) | Beneficial owner | |||||||
| The Bank of New York Mellon Corporation |
|
350,747,474H shares 324,687,100H shares 24,696,874H shares |
(L) (S) (P) |
(2) | |
3.24 3.00 0.23 |
(L) (S) (P) |
|
10.04 9.29 0.71 |
(L) (S) (P) |
Interests of controlled corporation | |||||
| BlackRock, Inc. |
|
217,631,722H shares 464,000H shares |
(L) (S) |
(3) | |
2.01 0.00 |
(L) (S) |
|
6.23 0.01 |
(L) (S) |
Interests of controlled corporation | |||||
| Corn Capital Company Limited |
|
211,008,000H shares 200,020,000H shares |
(L) (S) |
(4) | |
1.95 1.85 |
(L) (S) |
|
6.04 5.72 |
(L) (S) |
Beneficial owner | |||||
| Hung Hin Fai |
|
211,008,000H shares 200,020,000H shares |
(L) (S) |
(4) | |
1.95 1.85 |
(L) (S) |
|
6.04 5.72 |
(L) (S) |
Interests of controlled corporation | |||||
| Yardley Finance Limited |
200,020,000H shares | (L) | (5) | 1.85 | (L) | 5.72 | (L) | Secured equity holders | ||||||||
| Chan Kin Sun |
200,020,000H shares | (L) | (5) | 1.85 | (L) | 5.72 | (L) | Interests of controlled corporation | ||||||||
(L): Long position; (S): Short position; (P): Lending Pool
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Note :
| (1) | Based on the information obtained by the Directors from the website of The Hong Kong Stock Exchange and as far as the Directors are aware, China Petrochemical Corporation directly and indirectly owned 68.31% of the issued share capital of Sinopec Corp as at 30 June 2021. By virtue of such relationship, Sinopec Group is deemed to have an interest in the 5,460,000,000 A shares of the Company directly owned by Sinopec Corp. |
| (2) | All the 350,747,474 H shares (long position) and 324,687,100 H shares (short position) are deemed to be held by The Bank of New York Mellon Corporation, due to control of multiple companies (among which 324,687,100 H shares (short position) are held through physical-settlement unlisted derivatives). Below are the companies indirectly or wholly owned by The Bank of New York Mellon Corporation: |
| (2.1) | All the 369,300 H shares (long position) are held by BNY Mellon Corporate Trustee Services Limited. Since BNY Mellon Corporate Trustee Services Limited is wholly owned by The Bank of New York Mellon Corporation, The Bank of New York Mellon Corporation is deemed to have an interest in the 369,300 H shares (long position) of the Company held by BNY Mellon Corporate Trustee Services Limited. |
| (2.2) | 350,747,474 H shares (long position) and 324,687,100 H shares (short position) of the Company are held directly or indirectly by The Bank of New York Mellon. The Bank of New York Mellon is wholly owned by The Bank of New York Mellon Corporation. Therefore, The Bank of New York Mellon Corporation was deemed to be interested in 350,747,474 H shares (long position) and 324,687,100 H shares (short position) held by The Bank of New York Mellon. |
| (3) | All the 217,631,722 H shares (long position) and 464,000 H shares (short position) (among which 1,646,000 H shares (long position) are held through cash settled unlisted derivatives) are deemed to be held by BlackRock, Inc., due to control of multiple companies. Below are the companies indirectly wholly owned by BlackRock, Inc: |
| (3.1) | All the 4,850,700 H shares (long position) are held by BlackRock Financial Management, Inc. Since BlackRock Financial Management, Inc. is indirectly wholly owned by BlackRock, Inc., BlackRock, Inc. is deemed to have an interest in the 4,850,700 H shares (long position) of the Company held by BlackRock Financial Management, Inc. In addition, BlackRock Financial Management, Inc. is indirectly interested in the shares of the Company through the following companies: |
| (3.1.1) | 28,035,300 H shares (long position) and 464,000 H shares (short position) are held by BlackRock Institutional Trust Company, National Association. |
| (3.1.2) | 27,722,000 H shares (long position) are held by BlackRock Advisors, LLC. |
| (3.2) | 86% of interest in BR Jersey International Holdings L.P. are indirectly held by BlackRock, Inc. BR Jersey International Holdings L.P. is interested in the shares of the Company through the following companies: |
| (3.2.1) | 3,313,548 H shares (long position) are held by BlackRock Japan Co., Ltd. |
| (3.2.2) | 500,000 H shares (long position) are held by BlackRock Asset Management Canada Limited |
| (3.2.3) | 639,497 H shares (long position) are held by BlackRock Asset Management North Asia Limited |
| (3.2.4) | 1,274,000 H shares (long position) are held by BlackRock (Netherlands) B.V. |
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| (3.3) | 100% of interest in BlackRock Group Limited is indirectly held by BR Jersey International Holdings L.P. (See (3.2) above). BlackRock Group Limited is interested in the shares of the Company through the following companies, which are directly or indirectly wholly owned by BlackRock Group Limited: |
| (3.3.1) | 786,000 H shares (long position) are held by BlackRock Investment Management (UK) Limited. |
| (3.3.2) | 20,669,051 H shares (long position) are held by BlackRock Fund Managers Limited. |
| (3.3.3) | 256,000 H shares (long position) are held by BlackRock Life Limited. |
| (3.3.4) | 91,688,000 H shares (long position) and 334,000 H shares (short position) are held by BLACKROCK (Luxembourg) S.A. |
| (3.3.5) | 13,791,511 H shares (long position) are held by BlackRock Asset Management Ireland Limited. |
| (3.4) | BlackRock Investment Management, LLC is indirectly held by BlackRock, Inc. BlackRock Investment Management, LLC is interested in the shares of the Company through the following companies: |
| (3.4.1) 18,896,115 | H shares (long position) are held by Aperio Group, LLC. |
| (4) | These shares were held by Corn Capital Company Limited. Hung Hin Fai held 100% interests in Corn Capital Company Limited. Pursuant to the SFO, Hung Hin Fai was deemed to be interested in the shares held by Corn Capital Company Limited. |
| (5) | These shares were held by Yardley Finance Limited. Chan Kin Sun held 100% interests in Yardley Finance Limited. Pursuant to the SFO, Chan Kin Sun was deemed to be interested in the shares held by Yardley Finance Limited. |
Save as disclosed above, as at 30 June 2021, the Directors have not been notified by any person (other than the Directors, chief executive and Supervisors) who had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO or as recorded in the register of interests required to be kept by the Company under Section 336 of the SFO.
9
| 2.4 | Interests and Short Positions of the Directors, Chief Executive and Supervisors in Shares and Underlying Shares and Debentures of the Company or its Associate Corporation |
As at 30 June 2021, the interests and short positions of the Directors, chief executive and Supervisors of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or to be recorded in the register of interests required to be kept under Section 352 of the SFO; or as otherwise notified to the Company and the Hong Kong Stock Exchange pursuant the “Model Code for Securities Transactions” set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (“Hong Kong Listing Rules”) were as follows:
Interests in the Shares and Underlying Shares of the Company
| Name |
Position | Number of shares (shares) |
Percentage of total issued shares (%) |
Percentage of total issued A shares (%) |
Capacity | |||||||||||||
| Jin Qiang |
|
Executive Director and Vice President |
|
301,000 A shares (L) |
0.0028 | 0.0041 | Beneficial owner | |||||||||||
| Jin Wenmin |
|
Executive Director and Vice President |
|
175,000 A shares (L) |
0.0016 | 0.0024 | Beneficial owner | |||||||||||
| Huang Xiangyu |
|
Executive Director and Vice President |
|
140,000 A shares (L) |
0.0013 | 0.0019 | Beneficial owner | |||||||||||
| Zhang Feng |
Supervisor | 10,000 A shares (L) |
0.0001 | 0.0001 | Beneficial owner | |||||||||||||
| Chen Hongjun |
Supervisor | 31,400 A shares (L) |
0.0003 | 0.0004 | Beneficial owner | |||||||||||||
(L) : Long position
Save as disclosed above, as at 30 June 2021, so far as was known to the Directors, chief executive and Supervisors of the Company, none of the Directors, chief executive or Supervisors of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or its associated corporations which were required to be disclosed or recorded pursuant to the SFO and the Hong Kong Listing Rules as mentioned above.
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| 3. | REPORT OF THE DIRECTORS |
| 3.1 | Management Discussion and Analysis of the Overall Operations during the Reporting Period |
(The following discussion and analysis should be read in conjunction with the unaudited financial report of the Group and the notes in the 2021 interim report. Unless otherwise specified, certain financial data involved interim report hereinafter are extracted from the unaudited interim financial report of the Group prepared in accordance with IFRS.)
Review and Discussion of Operating Results
In the first half of 2021, the global economy gradually recovered from the recession caused by COVID-19, but the pace of recovery varied across countries. China’s achievements in coordinating epidemic prevention and control as well as economic and social development have been continuously expanded and consolidated, and the economy has continued to recover steadily. In the first half of the year, there was a year-on-year increase of 12.7% in China’s GDP. China’s petrochemical industry got off to a good start with substantial growth in revenue and profits. There was an increase in the production quantity of major products in the petrochemical industry and the consumption of major products in the market has been performing well. However, in response to climate changes, the development of the petrochemical industry has also faced new challenges. The aim to peak carbon dioxide emissions and to achieve carbon neutrality has put forward new requirements to the development mode and quality of the industry.
In the first half of 2021, faced with rare opportunities of operational development such as gradual recovery of global economy, strong upward rise of international oil prices and obvious recovery of market demand, the Company adhered to the working philosophy of “to challenge advanced levels, to emulate highest standards”. The Company focused on stable operation, system optimization, reform and innovation, and team building to achieve overall stable production operation, complete the largest equipment overhaul in history, and steadily promote the reform and development of various tasks. Therefore, the Company has largely achieved its production and operation goals, and had a good start in the 14th Five Year Plan.
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For the six months ended 30 June 2021, the revenue of the Group was RMB37.0885 billion, an increase of RMB1.461 billion or 4.10% over the same period last year; pre-tax profit achieved RMB1.543 billion (compared with a pre-tax loss of RMB2.3094 billion in the same period last year), an increase of RMB3.8524 billion; profit after tax and non-controlling shareholders’ equity achieved RMB1.2765 billion (a loss of RMB1.6708 billion in the same period last year), an increase of RMB2.9473 billion.
In the first half of 2021, affected by the major overhaul, the Group produced a total of 5.9085 million tons of main commodities, representing a decrease of 11.19% from the same period last year. From January to June 2021, 6.2101 million tons of crude oil were processed (including 197,500 tons of imported materials), representing a year-on-year decrease of 11.52%. The production of refined oil amounted to 3.6183 million tons, representing a year-on-year decrease of 8.34%, and the production of gasoline amounted to 1.4612 million tons, representing a year-on-year decrease of 0.86%; the production of diesel recorded 1.5484 million tons, representing a year-on-year decrease of 15.67%; the production of aviation kerosene recorded 608,800 tons, representing a year-on-year decrease of 4.52%; the production of liquified gas recorded 264,400 tons, representing a year-on-year decrease of 38.58%. The production of ethylene recorded 303,000 tons, representing a year-on-year decrease of 25.92%; the production of paraxylene recorded 147,400 tons, representing 53.97% less than last year. The production of plastic resins and copolymers recorded 451,200 tons, a year-on-year decrease of 15.09%. The production of synthetic fiber raw materials recorded 134,200 tons, representing a decrease of 50.95% year-on-year; the production of synthetic fiber polymer recorded 171,900 tons, representing a year-on-year increase of 3.80%; the production of synthetic fiber recorded 54,500 tons, representing a year-on-year decrease of 24.93%. In the first half of the year, the Group’s production and sales ratio was 100.66%, and the payment recovery rate (excluding related parties) was 99.59%.
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The major overhaul was successfully completed. The overhaul, which lasted nearly three and a half months and involved a total of 58 sets of devices, is the largest shutdown maintenance in the history of the Company. As of 23 June 2021, all the overhauled devices have been successfully put to production.
Overall safety and environmental protection were under control. In the first half of the year, the Group coordinated the relationship between development and safety, implemented and promoted the construction of process safety management system, and effectively laid the foundation for stable operations. Leaders at all levels shall be responsible for business safety production, strengthen the management of the direct operation links and contractor management, and start the revision of the Company’s HSE management system manual. Achievements in building green enterprises have been consolidated. The Company actively promoted the green enterprise plan and the green infrastructure and foundation establishment, carried out pollution prevention and control, started to promote the 3rd round of comprehensive environmental improvement action in Jinshan area, strengthened the operation and management of environmental protection facilities, established the boundary pollutant alarm and odor tracing mechanism, and realized the intelligent control of LDAR testing data of the Company. The Company actively participated in carbon trading. From January 2021 to June 2021, the Company’s effluent comprehensive compliance rate was 100%, and the total discharge of COD, ammonia nitrogen and nitrogen oxide decreased by 32.36%, 39.59% and 18.79% respectively. The Company’s cumulative comprehensive energy consumption recorded 1.039 tons of standard coal per RMB10,000, compared with 1.067 tons of standard coal per RMB10,000 last year, a decrease of 2.66%. Affected by the overhaul, the average value of VOCs concentration at plant boundary in the first half of the year rose 5.52% year-on-year.
13
The operation of the devices was generally stable. In the first half of the year, keeping it as the goal to rein “three smalls” (small fluctuation, small abnormality, small deviation) and put an end to “three unplanneds” (unplanned lockout, unplanned shutdown, unplanned knocking-off), the Group worked hard to avoid unplanned lockout, increased the inspection of unit running quality, and paid special attention to material balance and public works coordination during the major overhaul. In the first half of the year, there was no level 2 or above unplanned lockout, and the expected goal was achieved. The Company established the process changing management system and online approval process to realize PDCA closed-loop management. Among the 58 main technical and economic indicators included in the monitoring, 18 indicators showed improvement as compared to the level of last year, with a year-on-year improvement rate of 31.03%. 16 items reached the industry advanced level, and the industry advanced rate reached 27.59%.
There was continuous improvement in the Company’s system optimization. In the first half of the year, the Group continued to prioritize effectiveness and benefits and be guided by the market to achieve economic benefit which exceeded the expected target. The Company optimized its crude oil procurement, timely adjusted the mix of light, medium and heavy crude oil according to the trend of international crude oil prices and increased mutual substitution and procurement flexibility. Meanwhile, the Company made rational use of financial derivatives to maintain the DME (Dubai Mercantile Exchange) pricing of Oman crude oil. The Company optimized the product structure, and timely adjusted the product structure according to the market and efficiency. In the first half of the year, the diesel ratio was 1.06, representing a year-on-year decrease of 0.19. The Company made an effort to increase the output of high value-added chemical products, new products and differentiated products, and adopted intermediary materials such as cracked C4, C5, ethylene and propylene to ensure the high load operation of efficient devices such as polyethylene and butadiene. The Company strengthened the connection between production and sales, made a three-month rolling price forecast, actively promoted the increase of the total amount of petroleum coke replacement, opened up the export process of gasoline and low-sulfur aviation coal in the form of general trade, and implemented the dynamic optimization of production scheduling mechanism in multiple products. The Company strengthened the cost control, strictly reduced the non-productive expenses, promoted the Company to reduce the cost scale, and improved the cost input-output efficiency.
14
Steady progress was made in reform and development. The Company comprehensively promoted the three-year action of deepening reform, carried out the action of improving the world-class management, revised the performance appraisal management methods and implementation rules, standardized the advanced units in the industry to ensure the normalization of the “three basic” work, and sought new development in “oil to chemicals”. The Company vigorously promoted the security risk rectification project of the central control room of the olefin division and other projects, and completed the overhaul synchronously. The Company promoted the construction of the large-tow carbon fiber project, accelerated the hydrogen demonstration project and the 250,000 tons/year thermoplastic elastomer new material project built in cooperation with Baling Petrochemical. We increased research efforts in key application fields of carbon fiber composite materials, expanded cooperation in 3D braiding and processing applications, alternative materials for precision instruments, spinning rollers and other projects, so as to create a new engine for the transformation and development of the Company.
The team building of the Group continued to be optimized. The Company did a good job at talent selection and recruitment, and strengthened staff education and training. The Company strengthened the introduction of talents, and actively introduced “high-quality, excellent, advanced and scarce” talents in light of the needs of carbon fiber development. The Company strengthened staff management, strictly implemented the epidemic normalization prevention and control measures, and the vaccination rate of registered staff reached 94.42%.
The following table sets forth the Group’s sales volume and net sales after business tax and surcharges for the Reporting Period:
| For the six months ended 30 June | ||||||||||||||||||||||||
| 2021 | 2020 | |||||||||||||||||||||||
| Sales volume (‘000 tons) |
Net sales (RMB million) |
% | Sales volume (‘000 tons) |
Net sales (RMB million) |
% | |||||||||||||||||||
| Synthetic fibers |
56.2 | 728.7 | 2.3 | 73.1 | 717.6 | 2.4 | ||||||||||||||||||
| Resins and plastics |
591.2 | 4,657.6 | 14.7 | 655.8 | 4,411.3 | 14.7 | ||||||||||||||||||
| Intermediate petrochemicals |
771.3 | 3,839.8 | 12.2 | 1,092.7 | 4,094.7 | 13.7 | ||||||||||||||||||
| Petroleum products |
4,528.8 | 17,005.9 | 53.8 | 4,889.4 | 14,680.8 | 49.1 | ||||||||||||||||||
| Trading of petrochemical products |
— | 5,042.7 | 15.9 | — | 5,693.3 | 19.0 | ||||||||||||||||||
| Others |
— | 360.8 | 1.1 | — | 328.1 | 1.1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
5,947.5 | 31,635.5 | 100.0 | 6,711.0 | 29,925.8 | 100.0 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
15
In the first half of 2021, the Group achieved a total net sales profit of RMB31.636 billion, an increase of 5.71% compared with the same period last year, of which the net sales of synthetic fibers, resins and plastics and petroleum products increased by 1.55%, 5.58% and 15.84% respectively; trade in intermediate petrochemicals and petrochemical products fell by 6.23% and 11.43% respectively. Affected by the overhaul, the sales volume of each sector has a significant decline, synthetic fiber, resin and plastic, intermediate petrochemical products and petroleum products decreased by 23.12%, 9.85%, 29.41% and 7.38% respectively. The weighted average selling prices of all sectors increased compared to the same period, due to the increase in crude oil prices and the positive economic outlook.
In the first half of 2021, the Group’s cost of sales was RMB30.832 billion, a decrease of 5.28% from the same period last year, accounting for 97.46% of net sales. The Group’s main raw material is crude oil. In the first half of 2021, under the background of global COVID-19 vaccination and economic recovery, the outlook for global oil demand improved and international crude futures prices rose in the first half of this year under the price fluctuation. With the exception of March, when international benchmark oil prices fell due to second wave of COVID-19 outbreak in Europe, all months ended higher. In the first half of the year, Brent crude futures closed as high as USD76.18 / barrel and as low as USD51.09 / barrel. The average of half-year price was around USD65.23 / barrel, an increase of 54.90% year-on-year; WTI crude oil futures closed as high as USD74.05 / barrel and as low as USD47.62 / barrel. The half-year average was around USD62.22 / barrel, an increase of 69.00% year-on-year; Dubai crude futures closed as high as USD73.85 / barrel and as low as USD50.45 / barrel, with a half-year average of around USD63.62 / barrel, an increase of 56.20% year-on-year.
In the first half of 2021, the Group’s crude oil unit processing cost was RMB2,849.13 / ton, an increase of RMB132.14 / ton or 4.86% compared to the same period last year. The crude oil processing capacity of the Group was 6,210,100 tons (including 197,500 tons of processing materials supplied), 808,200 tons less than the same period last year (among which, the crude oil processing capacity of the Group was 794,017 tons less). From January to June this year, the cost of crude oil processing decreased by RMB1.363 billion. Among them, the cost of crude oil processing decreased by RMB2.157 billion, and the unit processing cost increased by RMB0.794 billion. Crude oil costs accounted for 55.56% of the Group’s cost of sales in the first half of the year.
16
In the first half of 2021, the Group’s expenditure on other excipients was RMB5.210 billion, an increase of 32.27% from the same period last year. During the Reporting Period, the Group’s depreciation and amortization expenses and maintenance expenses were RMB938 million and RMB1,007.5 million respectively, representing a year-on-year increase of 5.65% in depreciation and amortization expenses, mainly due to the addition of new fixed assets during the Reporting Period; maintenance costs increased by 75.10% year-on-year, mainly because of the increase in maintenance costs due to major overhaul during the Reporting Period.
In the first half of 2021, the Group’s sales and administrative expenses recorded RMB209.7 million, a decrease of 10.31% from RMB233.8 million in the same period last year, mainly due to a RMB24.7 million decrease in handling and incidental expenses during the Reporting Period.
In the first half of 2021, the Group’s income from other business was RMB56.2 million, an increase of RMB2.2 million over the same period last year, mainly due to the combined impact of RMB10 million decrease in government subsidy income and RMB12 million increase in rental income during the Reporting Period.
In the first half of 2021, the Group reported a financial net income of RMB210.5 million, compared to financial net income of RMB151.0 million over the same period last year, mainly due to an increase in interest income of RMB70.5 million during the Reporting Period. In the first half of 2021, the Group’s profit after tax and non-controlling interest was RMB1,276.5 million, an increase of RMB2,947.3 million compared with the loss of RMB1,670.8 million in the same period last year.
17
Liquidity and Capital Resources
In the first half of 2021, the Group’s net cash outflow from operating activities was RMB2,443.4 million, compared with a net cash outflow of RMB2,938.9 million in the same period last year.
In the first half of 2021, the Group’s net cash outflow from investment activities was RMB3,106.4 million, compared with a net cash outflow of RMB3,120.6 million in the same period last year.
In the first half of 2021, the Group generated a net cash inflow of RMB2.8 million from financing activities, compared with a net cash inflow of RMB1,469.2 million in the same period last year. This is mainly due to the decrease of net cash flow generated by borrows obtained by the Group during the Reporting Period of RMB1,467.5 million compared with the same period last year.
Borrowings and Debts
The Group’s long-term borrowings are mainly used for capital expansion projects. The Group generally arranges long-term borrowings in accordance with capital expenditure plans. The short-term debt is used to supplement the working capital required by the normal production and operation of the Group. As of 30 June, 2021, the total loan balance of the Group increased by RMB2.012 billion from the opening balance to RMB3.56 billion. The balance of the Group’s short-term bonds decreased by RMB2.017 billion compared with the opening balance to RMB1.001 billion. The Group’s total borrows at fixed interest rates are RMB4.54 billion.
Capital Expenditures
In the first half of 2021, the Group’s capital expenditure was RMB1.193 billion. It was mainly used for the preliminary work and construction of raw silks (24,000 tons/year) and 48K large-tow carbon fiber (12,000 ton/year) project, security risk rectification project of the central control room of the olefin division, and adaptability revamping project of adsorption tower internals and control system of parax unit 2# of aromatic division.
In the second half of the year, the Group will continue to promote the raw silks (24,000 tons/year) and 48K large-tow carbon fiber (12,000 tons/year) project, and adaptability revamping project of adsorption tower internals and control system of parax unit 2# of aromatic division. The projects to be commenced will include hydrogen demonstration project, high-pressure air-cooling material upgrading project for medium pressure hydrocracking unit of the oil refining department, etc. The planned capital expenditure of the Group can be financed from operating cash and bank credit.
Gearing Ratio
As of 30 June 2021, the Group’s gearing ratio was 36.65% (as at 30 June 2020: 35.92%). The gearing ratio was calculated as: total liabilities/total assets.
18
The Group’s Employees
As of 30 June 2021, the number of registered employees of the Group was 8,199, among which 5,008 were production personnel, 2,143 were sales, finance and other personnel, and 1,048 were administrative personnel. 59.63% of the Group’s employees were college graduates or above.
The Group determines the remuneration of its employees and directors on the basis of their position, performance, experience and current market pay trends. Other benefits include equity incentive plans and state-administered pension plans. The Group also provides professional and vocational training for its employees.
Income Tax
The Enterprise Income Tax Law of the PRC took effect from 1 January 2008, subsequent to which the income tax rate for enterprises was uniformly adjusted to 25%. As of half year ended 30 June 2021, the income tax rate applicable to the Group is 25%.
Disclosure Required by the Hong Kong Listing Rules
Save as disclosed herein, pursuant to paragraph 40 of Appendix 16 to the Hong Kong Listing Rules, the Company confirms that there were no material differences between the existing information of the Company relating to the matters as set out in paragraph 32 of Appendix 16 to the Hong Kong Listing Rules and the relevant information disclosed in the Company’s 2020 annual report.
Market Outlook and Work Plans for the Second Half of the Year
Looking forward to the second half of 2021, although the world economic recovery is relatively strong, the uncertainty of COVID-19, the game between major powers which continues to intensify, the industrial chain and supply chain to recover, the US monetary policy shift and other factors will increase the security pressure on China’s economic development. The base effect, policy stimulus effect and trade substitution effect are weakening, and the macroeconomic growth rate will continue to fall. OPEC+ reached a new production increase agreement combined with the overall high inventory pressure, so the rising situation of the petrochemical industry market may fall back, and profitability may be weaker than the first half.
19
In the face of the grim situation and arduous tasks, the Group will enhance the awareness of opportunities, establish the bottom line thinking, actively promote the Company’s operating performance in a stable and good direction, promote all-round high-quality development, and resolutely complete the annual targets and tasks.
| 1. | The Company will strictly ensure system implementation and continue to consolidate the foundation for stable operation. First is to strengthen the system operation. The Company will establish systematic thinking, grasp the implementation of HSE management system and manual revision and audit, consolidate HSE responsibilities at all levels, and strive to improve leadership. The Company will strengthen the supervision of direct operation links and continue to fully implement process safety management. Second, The Company will promote the carbon reduction action. According to the national “3060” goals, the Company will pay close attention to the implementation path of carbon neutrality and peak carbon dioxide emissions, promote the implementation of energy efficiency improvement plan, strictly implement environmental traceability, ensure that the annual boundary VOCs concentration is lower than 100 micrograms / m3, and continue to consolidate the achievements of green enterprises and green infrastructure foundations. Third, the Company will pay close attention to the improvement of ability and employees’ safety awareness, quality and ability as well as training and evidence collection reinforcement. The Company will pay close attention to professional safety improvement to comprehensively improve professional safety guarantee ability. Fourth, the Company will implement normalized prevention and control through grasping the epidemic prevention and controlling with a high sense of responsibility to ensure the life safety and physical and mental health of employees. |
| 2. | The Company will focus on the optimization of the system and continue to tap the potential to increase efficiency. First, the Company will ensure the completion of crude oil processing volume, actively promote the mix of light and heavy crude oil resources, strive to seek the optimal procurement mix and continue to optimize the mix of refined oil products. Second, the Company will adjust the structure of chemical products. The Company will increase the output and proportion of high value-added, new, and differentiated products, further optimize the structure of ethylene raw materials, improve the yield of olefin and reduce the production cost of ethylene. Third, the Company will put efforts to expand market sales and efficiency. The Company will strictly control the product inventory, optimize the incremental sales of products after equipment overhaul and constantly improve the market resilience and profitability. Fourth, the Company will continue to strengthen the integration of business and finance. The Company will focus on value-added, carry out weekly rolling benefit forecast, effectively guide production and operation. The Company will deepen budget control, strictly control expenditure on key items, reduce non-productive expenses and constantly increase the input and output rate of costs. |
20
| 3. | The Company will continue to improve the quality and efficiency of enterprise development through reform and innovation. First, the Company will improve enterprise management, continue to improve management systems and operational mechanisms, and thoroughly implement the three-year action plan for reform. Second, the Company will promote the new progress of key projects, refine and improve the 14th Five-Year industry development plan, implement comprehensive emission reduction, quality improvement, upgrading and transformation, promote the polyester upgrading and transformation and other projects preliminary work. Third, the Company will promote innovation and development to a higher level, focusing on key areas such as aviation and aerospace, and increase project research in key applications of carbon fiber composite materials. Fourth, the Company will deepen the integration of information technology and industrialization. The Company will continue to explore the application of new technologies such as big data and artificial intelligence and continue to promote the construction of professional portal platforms for each business line. |
| 4. | The Company will further improve the management and continue to play a supporting role. First, the Company will give full play to the advantages of enterprise and local cooperation, strive for the support and cooperation of surrounding communities, and provide a good external environment for the company to accelerate the pace of high-quality development. Second, the Company will strengthen the “qualitied selection” of talents, improve the market-oriented selection and employment mechanism, optimize the design of talents training path, and provide talent support for the high-quality development of the Company. |
21
| 3.2 | Analysis of the Company’s Principal Performance during the Reporting Period (Certain of the following financial data is extracted from the unaudited interim report prepared under CAS) |
| 3.2.1 | Analysis of Changes in the Company’s Related Financial Data |
Unit: RMB’ 000
| For the six months ended 30 June |
Change |
|||||||||||||
| Item |
2021 | 2020 | (%) | Reason for change | ||||||||||
| Revenue |
37,136,606 | 35,663,352 | 4.13 | The increase of product price during the Reporting Period led to the increase in revenue. | ||||||||||
| Finance income |
206,583 | 145,840 | 41.65 | The interest income increased. | ||||||||||
| Investment income |
602,510 | 334,728 | 80.00 | During the Reporting Period, the operating conditions of the associated company has improved, increasing investment income. | ||||||||||
| Asset impairment losses |
-80,093 | -120,928 | -33.77 | In the Reporting Period, the product prices have risen, resulting in the decrease of inventory provision. | ||||||||||
| Income tax expenses |
261,344 | -646,300 | -140.44 | In the Reporting Period, the market demand for petroleum and petrochemical products has greatly improved, increasing product prices. The Group has achieved operating profits, which led to the increase of income tax expenses accordingly. | ||||||||||
| Net profit/(loss) attributable to shareholders of the Company |
1,244,189 | -1,716,072 | -172.50 | In the Reporting Period, the market demand for petroleum and petrochemical products has greatly improved, increasing product prices. The Group has achieved operating profits. | ||||||||||
| Net cash (used in) /generated from financing activities |
-51,020 | 1,434,389 | -103.56 | The net increase in borrowings in the Reporting Period has decreased than the same period last year. | ||||||||||
22
| 3.2.2 | Analysis of Business Operations by Industry, Product or Geographical Location Segment |
(1) Principal Operations by Industry or Product
Unit: RMB’ 000
| Business Segment/ Product Segment |
Revenue | Cost of sales |
Gross profit margin (%) |
Increase/ decrease in revenue compared to corresponding period of the previous year (%) |
Increase/ decrease in cost of sales compared to corresponding period of the previous year (%) |
Increase/ decrease in gross profit margin compared to last year (percentage point) |
||||||||||||||||||
| Synthetic fibers |
731,451 | 865,587 | -18.34 | 1.49 | -12.00 | |
Increase 18.15 percentage points |
| ||||||||||||||||
| Resins and plastics |
4,674,657 | 3,982,825 | 14.8 | 5.47 | -6.87 | |
Increase 11.29 percentage points |
| ||||||||||||||||
| Intermediate petrochemicals |
3,856,301 | 3,397,259 | 11.9 | -6.23 | -17.99 | |
Increase 12.63 percentage points |
| ||||||||||||||||
| Petroleum products |
22,416,218 | 15,265,274 | 31.9 | 10.24 | -1.85 | |
Increase 8.39 percentage points |
| ||||||||||||||||
| Trading of petrochemical products |
5,047,125 | 4,975,185 | 1.43 | -11.41 | -11.84 | |
Increase 0.48 percentage points |
| ||||||||||||||||
| Others |
205,709 | 232,103 | -12.83 | -0.69 | 19.00 | |
Decrease 18.66 percentage points |
| ||||||||||||||||
| Note: | This gross profit margin is calculated according to the price of petroleum products which includes consumption tax. Gross profit margin of petroleum products after consumption tax was 13.36%. |
(2) Revenue by Geographical Location
Unit: RMB’ 000
| Geographical location segment |
Revenue | Increase/decrease in revenue as compared to the same period last year (%) |
||||||
| Eastern China |
32,332,221 | 13.50 | ||||||
| Other regions in the PRC |
622,360 | -70.77 | ||||||
| Exports |
3,976,880 | -18.64 | ||||||
23
| 3.2.3 | Analysis of Assets and Liabilities |
Unit: RMB’ 000
| Item |
As at 30 June 2021 |
As at 31 December 2020 |
Change of amount on 30 June 2021 compared to 31 December 2020 (%) |
Main reason for change | ||||||||||||||||||
| Amount | % of total assets |
Amount | % of total assets |
|||||||||||||||||||
| Cash at bank and on hand |
3,173,126 | 6.78 | 7,920,852 | 17.70 | -59.94 | The increase of inventories and the payment of taxes during the Reporting Period led to net cash outflow from operating activities and a decrease in the balance of monetary funds. | ||||||||||||||||
| Financial assets held for trading |
3,973,343 | 8.48 | — | — | — | The Reporting Period recorded RMB3.97 billion purchase of the structured deposits. At the end of the previous period, the structured deposits had been redeemed and had no balance. | ||||||||||||||||
| Accounts receivable |
1,860,953 | 3.97 | 1,145,504 | 2.56 | 62.46 | The increase of sales income during the Reporting Period led to the increase in accounts receivable. | ||||||||||||||||
| Other receivables |
723,048 | 1.54 | 41,299 | 0.09 | 1650.76 | Increase of other receivables is caused by dividend declared but uncollected by associates, Shanghai SECCO and Shanghai Chemical Industrial Park. | ||||||||||||||||
| Inventories |
7,452,255 | 15.91 | 3,888,746 | 8.69 | 91.64 | Affected by the rise in international crude oil prices, the unit cost of the Company’s inventory increased. | ||||||||||||||||
| Other current assets |
202,853 | 0.43 | 3,057,587 | 6.83 | -93.37 | The time deposits in other current assets at the end of the previous year have all matured and been redeemed in the current period. | ||||||||||||||||
| Construction in progress |
2,196,393 | 4.69 | 1,710,124 | 3.82 | 28.43 | Carbon fiber project continued during the Reporting Period. | ||||||||||||||||
| Long-term deferred expenses |
798,364 | 1.70 | 410,191 | 0.92 | 94.63 | A large amount of catalyst expired during the period and has been replaced and refilled during the overhaul. | ||||||||||||||||
| Deferred tax assets |
109,797 | 0.23 | 252,121 | 0.56 | -56.45 | The tax losses of the previous year were utilised in the Reporting Period, resulting in a decrease in the balance of deferred income tax assets. | ||||||||||||||||
24
| Short-term borrowings |
3,540,000 | 7.56 | 1,548,000 | 3.46 | 128.68 | The net increase of short-term borrowings mainly due to temporary working capital needs. | ||||||||||||||||
| Accounts payable |
7,747,916 | 16.54 | 4,671,635 | 10.44 | 65.85 | The unit price of Group’s raw material like crude oil and procurement volume increased at the same time, resulted in the increase of the balance of accounts payable. | ||||||||||||||||
| Tax payable |
1,464,558 | 3.13 | 3,385,910 | 7.57 | -56.75 | Taxes paid in the current period. | ||||||||||||||||
| Other payables |
2,002,624 | 4.28 | 1,664,812 | 3.72 | 20.29 | Other payables increased mainly due to the Group declared the dividend in June 2021 but paid in July 2021, resulting in an increase of RMB1.082 billion in dividends payable at the period end. | ||||||||||||||||
| Other current liabilities |
1,034,671 | 2.21 | 3,072,150 | 6.87 | -66.32 | The other current liabilities over the Reporting Period is mainly due to the decrease of issuance of short-term bonds at the period end as compared to the previous period end. |
Overseas assets
During the Reporting Period, the Group’s overseas assets were RMB16.94 million, accounting for 0.04% of the total assets.
25
| 3.2.4 | Analysis of Core Competitiveness |
As one of the largest integrated petrochemical enterprises in China with an integrated refinery and petrochemical capacity, the Company possesses competitive business scale and strength, which made it a major manufacturer of refined oil, intermediate petrochemicals, synthetic resins and synthetic fibers in China. The Company also has self-owned utilities and environmental protection systems, as well as sea transport, inland shipping, rail transport and road transport ancillary facilities.
The Company’s major competitive advantages include quality, geographical location and its vertically integrated production. The Company has over 40 years of petrochemical production and management experience, and has accumulated extensive resources in the petrochemical industry. The Company has won several quality product awards from the central and local governments. Located at the core region of Yangtze River Delta, the most economically active region in China with a strong demand for petrochemical products, the Company has built a comprehensive logistics system and supporting facilities with close geographic proximity with most of its clients which enables the Company to enjoy the convenience of coastal and inland shipping. This gave the Company a competitive edge in terms of transportation costs and timely delivery. The Company has leveraged its advantages in integrated refinery and petrochemical capacity to actively strengthen product structure, while continuously improving products quality and variety. The Company has also improved production technology and boosted capacity of key upstream units to maximize the use and the efficiency in the utilization of its corporate resources, and is therefore able to achieve strong and sustainable development.
| 3.3 | Analysis of Investments |
| 3.3.1 | Entrusted Wealth Managements and Entrusted loans |
(1) Entrusted Wealth Management
The Company did not engage in entrusted wealth management during the Reporting Period.
(2) Entrusted Loans
The Company did not engage in entrusted loans during the Reporting Period.
26
| 3.3.2 | Projects funded by Non-fund Raising Capital |
During the Reporting Period, the Company did not raise funds, nor has it used the funds raised from the previous reporting periods.
| 3.3.3 | Analysis of the Companies in which the Company has Controlling Interests or Investment Interests |
Shanghai SECCO Petrochemical Company Limited, an associate company of the Group, recorded a net profit of RMB2,328.0 million during the Reporting Period, and recorded a profit attributable to the Group of RMB466.0 million, representing 37.46% of net profit or loss attributable to equity shareholders of the Company during the Reporting Period.
| 3.3.4 | Projects funded by Non-fund Raising Capital |
Unit: RMB’ 000
| Major Project |
Estimated total project investment |
Project investment in the Reporting Period |
Status as at 30 June 2021 |
|||||||||
| Raw silks (24,000 ton/year) and 48K large-tow carbon fiber (12,000 ton/year) project |
3,489,638 | 296,709 | |
Under construction |
| |||||||
| PAN (Polyacrylonitrile) based carbon fiber project (second stage) with annual production of 1500 tons |
847,794 | 0 | |
Mechanical completion |
| |||||||
| Security risk rectification project of the central control room of the olefin division |
99,940 | 21,998 | |
Mechanical completion |
| |||||||
| 2# olefin division, energy-saving transformation of three GK-VI cracking furnaces in the old area of olefin plant |
92,255 | 61,417 | |
Under construction |
| |||||||
| Adaptability revamping project of adsorption tower internals and control system of parax unit 2# of aromatic division |
85,474 | 38,794 | |
Mechanical completion |
| |||||||
27
| 3.4 | Plan for Profit Distribution or Capital Reserves Capitalization |
| 3.4.1 | Implementation of or Amendment to Profit Distribution Plan during the Reporting Period |
The 2020 Profit Distribution Plan was considered and approved at the 2020 Annual General Meeting held on 16 June 2021 to distribute a dividend of RMB1.00 per 10 shares (including tax) totaling RMB1,082,381,350 based on the total issued share of 10,823,813,500 as at dividend payout date. The relevant announcement was published in Shanghai Securities News, China Securities Journal and Securities Times on 17 June 2021 and was uploaded to the websites of the Hong Kong Stock Exchange and Shanghai Stock Exchange on 16 June 2021. The record date for H shares dividend payment was 28 June 2021 and the dividend payment date for H shares was 20 July 2021. On 12 July 2021, the Company published an announcement on the implementation of profit distribution for A shares for the year 2020. The record date for A shares dividend payment was 19 July 2021 and the ex-dividend date was 20 July 2021. The dividend payment date for A shares was 20 July 2021. The Profit Distribution Plan was implemented as scheduled.
| 3.4.2 | Plan for Profit Distribution or Capital Reserves Capitalization during the Reporting Period |
Nil.
28
| 4. | OTHER MATTERS |
| 4.1 | Corporate Governance |
The Company acted in strict compliance with regulatory legislations such as the PRC Company Law, the PRC Securities Law, the Corporate Governance Principles for Listed Companies and the Guidelines for Establishing the Independent Directors System for Listed Companies issued by the CSRC, as well as the relevant requirements of the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the New York Stock Exchange to push forward the innovation of the Company’s system and management, to improve the corporate governance structure, and to strengthen the establishment of the Company’s system in order to enhance the overall image of the Company.
| 4.2 | Audit Committee |
On 24 August 2021, the Audit Committee of the Tenth Session of the Board held its sixth meeting, primarily to review the financial report of the Group for the Reporting Period, and discussed matters relating to the risk management, internal control and financial reporting.
| 4.3 | Purchase, Sale and Redemption of the Company’s Securities |
During the Reporting Period, the Company did not purchase, sell or redeem any of the Company’s securities (for the definition of “securities”, please refer to paragraph 1 of Appendix 16 to the Hong Kong Listing Rules).
| 4.4 | Compliance with Corporate Governance Code |
During the Reporting Period, the Company applied and complied with all code provisions as set out in the Corporate Governance Code contained in Appendix 14 to the Hong Kong Listing Rules.
| 4.5 | Compliance with Model Code for Securities Transactions |
The Company has adopted and implemented the Model Code for Securities Transactions to regulate the securities transactions of the Directors and Supervisors of the Company. After making specific enquiries with all Directors and Supervisors of the Company and having obtained written confirmations from each Director and Supervisor, the Company is not aware of any incident of non-compliance with the Model Code for Securities Transactions by the Directors and Supervisors of the Company during the Reporting Period.
The Model Code for Securities Transactions is also applicable to the senior management who may be in possession of unpublished inside information of the Company. The Company is not aware of any incident of non-compliance with the Model Code for Securities Transactions by the senior management of the Company.
29
| 5. | INTERIM FINANCIAL STATEMENTS |
| 5.1 | Interim financial statements prepared under China Accounting Standard for Business Enterprise |
CONSOLIDATED AND COMPANY BALANCE SHEETS
AS AT 30 JUNE 2021
(All amounts in thousands of Renminbi Yuan unless otherwise stated)
| 30 June 2021 (unaudited) |
31 December 2020 |
30 June 2021 (unaudited) |
31 December 2020 |
|||||||||||||
| ASSETS | Consolidated | Consolidated | Company | Company | ||||||||||||
| Current Assets |
||||||||||||||||
| Cash at bank and on hand |
3,173,126 | 7,920,852 | 2,778,941 | 6,464,509 | ||||||||||||
| Derivative Financial instruments |
80,047 | — | 80,047 | — | ||||||||||||
| Financial assets held for trading |
3,973,343 | — | 3,319,151 | — | ||||||||||||
| Accounts receivable |
1,860,953 | 1,145,504 | 1,699,782 | 919,061 | ||||||||||||
| Receivables under financing |
1,243,176 | 1,217,114 | 585,987 | 745,262 | ||||||||||||
| Prepayments |
18,597 | 33,741 | 15,242 | 30,972 | ||||||||||||
| Other receivables |
723,048 | 41,299 | 707,410 | 26,932 | ||||||||||||
| Inventories |
7,452,255 | 3,888,746 | 7,177,199 | 3,685,456 | ||||||||||||
| Other current asset |
202,853 | 3,057,587 | 177,790 | 3,048,476 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Current Assets |
18,727,398 | 17,304,843 | 16,541,549 | 14,920,668 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-Current Assets |
||||||||||||||||
| Long-term equity investments |
5,339,474 | 5,497,834 | 6,651,335 | 6,797,666 | ||||||||||||
| Investments in other equity instruments |
5,000 | 5,000 | — | — | ||||||||||||
| Investment properties |
359,850 | 367,586 | 389,736 | 396,676 | ||||||||||||
| Fixed assets |
11,596,390 | 11,733,065 | 11,185,311 | 11,299,527 | ||||||||||||
| Construction in progress |
2,196,393 | 1,710,124 | 2,168,496 | 1,694,937 | ||||||||||||
| Right-of-use assets |
13,141 | 12,993 | 8,612 | 10,366 | ||||||||||||
| Intangible assets |
402,592 | 412,576 | 279,862 | 286,005 | ||||||||||||
| Long-term deferred expenses |
798,364 | 410,191 | 791,185 | 402,304 | ||||||||||||
| Deferred tax assets |
109,797 | 252,121 | 95,283 | 238,040 | ||||||||||||
| Other non-current assets |
7,281,393 | 7,042,840 | 7,081,182 | 7,042,840 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Non-Current Assets |
28,102,394 | 27,444,330 | 28,651,002 | 28,168,361 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Assets |
46,829,792 | 44,749,173 | 45,192,551 | 43,089,029 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
30
CONSOLIDATED AND COMPANY BALANCE SHEETS (CONTINUED)
AS AT 30 JUNE 2021
(All amounts in thousands of Renminbi Yuan unless otherwise stated)
| 30 June 2021 (unaudited) |
31 December 2020 |
30 June 2021 (unaudited) |
31 December 2020 |
|||||||||||||
| Liabilities and shareholders’ equity | Consolidated | Consolidated | Company | Company | ||||||||||||
| Current Liabilities |
||||||||||||||||
| Short-term loans |
3,540,000 | 1,548,000 | 3,500,000 | 1,500,000 | ||||||||||||
| Derivative financial liabilities |
11,075 | — | 11,075 | — | ||||||||||||
| Bills payable |
446,744 | 139,360 | 300,090 | 96,196 | ||||||||||||
| Accounts payable |
7,747,916 | 4,671,635 | 6,825,242 | 3,892,330 | ||||||||||||
| Contract liabilities |
279,900 | 496,521 | 224,408 | 425,385 | ||||||||||||
| Employee benefits payable |
511,376 | 244,506 | 500,580 | 239,537 | ||||||||||||
| Taxes payable |
1,464,558 | 3,385,910 | 1,453,035 | 3,346,544 | ||||||||||||
| Other payables |
2,002,624 | 1,664,812 | 2,434,761 | 1,805,186 | ||||||||||||
| Non-current liabilities due within one year |
9,829 | 9,352 | 6,844 | 7,897 | ||||||||||||
| Other current liabilities |
1,034,671 | 3,072,150 | 1,029,973 | 3,064,189 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Current Liabilities |
17,048,693 | 15,232,246 | 16,286,008 | 14,377,264 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-Current Liabilities |
||||||||||||||||
| Long-term loans |
20,000 | — | — | — | ||||||||||||
| Lease liabilities |
2,210 | 3,119 | 1,020 | 1,911 | ||||||||||||
| Deferred income |
118,433 | 123,433 | 118,433 | 123,433 | ||||||||||||
| Defer tax liabilities |
34,751 | 35,357 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Non-Current Liabilities |
175,394 | 161,909 | 119,453 | 125,344 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Liabilities |
17,224,087 | 15,394,155 | 16,405,461 | 14,502,608 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Shareholders’ equity |
||||||||||||||||
| Share capital |
10,823,814 | 10,823,814 | 10,823,814 | 10,823,814 | ||||||||||||
| Capital reserve |
610,327 | 610,327 | 600,768 | 600,768 | ||||||||||||
| Other comprehensive income |
58,757 | 6,326 | 58,757 | 6,326 | ||||||||||||
| Specific reserve |
176,865 | 145,597 | 176,865 | 145,597 | ||||||||||||
| Surplus reserve |
6,474,103 | 6,474,103 | 6,474,103 | 6,474,103 | ||||||||||||
| Retained earnings |
11,319,674 | 11,157,866 | 10,652,783 | 10,535,813 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total equity attributable to shareholders of the Company |
29,463,540 | 29,218,033 | 28,787,090 | 28,586,421 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Non-controlling interests |
142,165 | 136,985 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Shareholders’ Equity |
29,605,705 | 29,355,018 | 28,787,090 | 28,586,421 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total liabilities and Shareholders’ Equity |
46,829,792 | 44,749,173 | 45,192,551 | 43,089,029 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
31
CONSOLIDATED AND COMPANY INCOME STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
(All amounts in thousands of Renminbi Yuan unless otherwise stated)
| Six months ended 30 June | Six months ended 30 June | |||||||||||||||
| 2021 (unaudited) |
2020 (unaudited) |
2021 (unaudited) |
2020 (unaudited) |
|||||||||||||
| Items | Consolidated | Consolidated | Company | Company | ||||||||||||
| I. Operating income |
37,136,606 | 35,663,352 | 31,978,683 | 29,679,232 | ||||||||||||
| Less: Operating costs |
28,849,768 | 30,909,800 | 23,808,137 | 25,098,218 | ||||||||||||
| Taxes and surcharges |
5,453,022 | 5,701,797 | 5,446,828 | 5,694,869 | ||||||||||||
| Selling and distribution expenses |
206,782 | 229,966 | 164,841 | 191,543 | ||||||||||||
| General and administrative expenses |
1,905,002 | 1,511,043 | 1,848,744 | 1,472,892 | ||||||||||||
| Research and development expenses |
27,943 | 47,528 | 22,860 | 43,664 | ||||||||||||
| Finance expenses (“-” for income) |
(206,583 | ) | (145,840 | ) | (203,124 | ) | (129,590 | ) | ||||||||
| Including: interest expense |
38,299 | 28,120 | 37,149 | 27,300 | ||||||||||||
| interest income |
248,813 | 176,082 | 240,798 | 161,542 | ||||||||||||
| Add: Other income |
6,412 | 16,495 | 6,263 | 15,144 | ||||||||||||
| Investment income (“-”for losses) |
602,510 | 334,728 | 556,932 | 286,378 | ||||||||||||
| Including: Income from investment in associates and joint ventures |
582,548 | 273,712 | 539,533 | 227,993 | ||||||||||||
| Gains from changes in fair value (“-” for losses) |
23,343 | 9,281 | 19,151 | 9,037 | ||||||||||||
| Impairment losses (“-” for losses) |
(80,093 | ) | (120,928 | ) | (80,093 | ) | (120,140 | ) | ||||||||
| Gains from asset disposals (“-” for losses) |
79,085 | 15,256 | 79,085 | 15,256 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| II. Operating profit (“-” for loss) |
1,531,929 | (2,336,110 | ) | 1,471,735 | (2,486,689 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Add: Non-operating income |
6,660 | 6,706 | 6,436 | 6,566 | ||||||||||||
| Less: Non-operating expenses |
27,876 | 25,214 | 27,186 | 25,205 | ||||||||||||
| III. Profit before income tax (“-” for loss) |
1,510,713 | (2,354,618 | ) | 1,450,985 | (2,505,328 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less: Income tax expenses |
261,344 | (646,300 | ) | 251,634 | (673,190 | ) | ||||||||||
| IV.Net profit (“-” for net loss) |
1,249,369 | (1,708,318 | ) | 1,199,351 | (1,832,138 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (1) Net Net profit classified by continuity of operations (“-” for net loss) |
||||||||||||||||
| 1. Net profit from continuing operations (“-” for net loss) |
1,249,369 | (1,708,318 | ) | 1,199,351 | (1,832,138 | ) | ||||||||||
| 2. Net profit from discontinued operations (“-” for net loss) |
— | — | — | — | ||||||||||||
| (2) Net profit classified by ownership (“-” for net loss): |
||||||||||||||||
| 1. Shareholders of the Company (“-” for net loss) |
1,244,189 | (1,716,072 | ) | — | — | |||||||||||
| 2. Non-controlling interests (“-” for net loss) |
5,180 | 7,754 | — | — | ||||||||||||
32
CONSOLIDATED AND COMPANY INCOME STATEMENTS (CONTINUED)
FOR THE SIX MONTHS ENDED 30 JUNE 2021
(All amounts in thousands of Renminbi Yuan unless otherwise stated)
| Six months ended 30 June | Six months ended 30 June | |||||||||||||||
| 2021 (unaudited) |
2020 (unaudited) |
2021 (unaudited) |
2020 (unaudited) |
|||||||||||||
| Items | Consolidated | Consolidated | Company | Company | ||||||||||||
| V. Other comprehensive income, net of tax |
52,431 | (9,256 | ) | 52,431 | (9,256 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (1) Other comprehensive income (net of tax) attributable to shareholders of the Company |
52,431 | (9,256 | ) | 52,431 | (9,256 | ) | ||||||||||
| Items that may be reclassified to profit or loss |
52,431 | (9,256 | ) | 52,431 | (9,256 | ) | ||||||||||
| a. Other comprehensive income recognised under equity method |
702 | (748 | ) | 702 | (748 | ) | ||||||||||
| b. Cash flow hedge reserve |
51,729 | (8,508 | ) | 51,729 | (8,508 | ) | ||||||||||
| (2) Other comprehensive income (net of tax) attributable to non-controlling interests |
— | — | — | — | ||||||||||||
| VI. Total comprehensive income |
1,301,800 | (1,717,574 | ) | 1,251,782 | (1,841,394 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (1) Attributable to shareholders of the Company |
1,296,620 | (1,725,328 | ) | — | — | |||||||||||
| (2) Attributable to non-controlling interests |
5,180 | 7,754 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| VII. Earnings/(losses) per share |
||||||||||||||||
| (1) Basic earnings/(losses) per share (RMB Yuan) |
0.115 | (0.159 | ) | — | — | |||||||||||
| (2) Diluted earnings/(losses) per share (RMB Yuan) |
0.115 | (0.159 | ) | — | — | |||||||||||
33
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
(All amounts in thousands of Renminbi Yuan unless otherwise stated)
| Six months ended 30 June | Six months ended 30 June | |||||||||||||||
| 2021 (unaudited) |
2020 (unaudited) |
2021 (unaudited) |
2020 (unaudited) |
|||||||||||||
| Items | Consolidated | Consolidated | Company | Company | ||||||||||||
| I. Cash flows from operating activities |
||||||||||||||||
| Proceeds from sales of goods and rendering of services |
38,434,207 | 38,458,330 | 33,292,256 | 32,430,797 | ||||||||||||
| Refund of taxes |
57,673 | 1,347 | — | 1,115 | ||||||||||||
| Proceeds from other operating activities |
114,183 | 15,970 | 107,181 | 14,441 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Sub-total of cash inflows |
38,606,063 | 38,475,647 | 33,399,437 | 32,446,353 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Payment for goods and services |
(31,630,427 | ) | (31,791,568 | ) | (26,320,863 | ) | (25,509,820 | ) | ||||||||
| Payment to and for employees |
(1,381,271 | ) | (1,219,934 | ) | (1,300,205 | ) | (1,149,376 | ) | ||||||||
| Payment of various taxes |
(7,824,819 | ) | (8,177,756 | ) | (7,764,804 | ) | (8,135,238 | ) | ||||||||
| Payment for other operating activities |
(159,098 | ) | (190,555 | ) | (139,895 | ) | (114,250 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Sub-total of cash outflows |
(40,995,615 | ) | (41,379,813 | ) | (35,525,767 | ) | (34,908,684 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash flows used in operating activities |
(2,389,552 | ) | (2,904,166 | ) | (2,126,330 | ) | (2,462,331 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| II. Cash flows from investing activities |
||||||||||||||||
| Cash received from structured deposits |
2,700,000 | 7,273,170 | 2,200,000 | 6,869,412 | ||||||||||||
| Cash received from returns on investments |
54,893 | 51,432 | — | — | ||||||||||||
| Net cash received from disposal of fixed assets and intangible assets |
46,860 | 19,410 | 46,576 | 19,410 | ||||||||||||
| Proceeds from other investing activities |
3,235,749 | 685,155 | 3,226,832 | 669,655 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Sub-total of cash inflows |
6,037,502 | 8,029,167 | 5,473,408 | 7,558,477 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Payment for acquisition of fixed assets and other long-term assets |
(1,493,860 | ) | (696,245 | ) | (1,475,605 | ) | (692,921 | ) | ||||||||
| Payment of structured deposits |
(6,650,000 | ) | (7,600,000 | ) | (5,500,000 | ) | (7,200,000 | ) | ||||||||
| Payment for acquisition of a subsidiary |
— | (340,315 | ) | — | (200,000 | ) | ||||||||||
| Payment for other investing activities |
(1,000,000 | ) | (2,513,185 | ) | (800,000 | ) | (2,511,027 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Sub-total of cash outflows |
(9,143,860 | ) | (11,149,745 | ) | (7,775,605 | ) | (10,603,948 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash flows used in investing activities |
(3,106,358 | ) | (3,120,578 | ) | (2,302,197 | ) | (3,045,471 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
34
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS (CONTINUED)
FOR THE SIX MONTHS ENDED 30 JUNE 2021
(All amounts in thousands of Renminbi Yuan unless otherwise stated)
| Six months ended 30 June | Six months ended 30 June | |||||||||||||||
| 2021 (unaudited) |
2020 (unaudited) |
2021 (unaudited) |
2020 (unaudited) |
|||||||||||||
| Items | Consolidated | Consolidated | Company | Company | ||||||||||||
| III. Cash flows from financing activities |
||||||||||||||||
| Proceeds from borrowings |
11,879,423 | 3,438,100 | 11,839,423 | 3,398,107 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Sub-total of cash inflows |
11,879,423 | 3,438,100 | 11,839,423 | 3,398,107 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Repayments of borrowings |
(11,867,423 | ) | (1,958,562 | ) | (11,839,423 | ) | (1,900,969 | ) | ||||||||
| Payment for dividends, profit distributions or interest |
(53,489 | ) | (35,651 | ) | (52,429 | ) | (34,309 | ) | ||||||||
| Payment for other financing activities |
(9,531 | ) | (9,498 | ) | (6,879 | ) | (7,864 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Sub-total of cash outflows |
(11,930,443 | ) | (2,003,711 | ) | (11,898,731 | ) | (1,943,142 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash flows (used in) / generated from financing activities |
(51,020 | ) | 1,434,389 | (59,308 | ) | 1,454,965 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| IV. Effect of foreign exchange rate changes on cash and cash equivalents |
(2,063 | ) | 5,923 | — | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| V. Net increase in cash and cash equivalents (“-” for decrease) |
(5,548,993 | ) | (4,584,432 | ) | (4,487,835 | ) | (4,052,837 | ) | ||||||||
| Add: Cash and cash equivalents at beginning of the period |
6,916,408 | 7,449,699 | 5,460,067 | 5,754,440 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| VI. Cash and cash equivalents at end of the period |
1,367,415 | 2,865,267 | 972,232 | 1,701,603 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
35
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2021
(All amounts in thousands of Renminbi Yuan unless otherwise stated)
| Items | Attributable to equity shareholders of the Company | |||||||||||||||||||||||||||||||||||
| Share capital |
Capital surplus |
Other comprehensive income |
Specific reserve |
Surplus reserve |
Undistributed profits |
Sub-total | Non- controlling interests |
Total equity |
||||||||||||||||||||||||||||
| Balance at 1 January 2021 |
10,823,814 | 610,327 | 6,326 | 145,597 | 6,474,103 | 11,157,866 | 29,218,033 | 136,985 | 29,355,018 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Changes in equity for the six months ended 30 June 2021 (unaudited) (“-” for decreases) |
||||||||||||||||||||||||||||||||||||
| Total comprehensive income |
||||||||||||||||||||||||||||||||||||
| Net profit |
— | — | — | — | — | 1,244,189 | 1,244,189 | 5,180 | 1,249,369 | |||||||||||||||||||||||||||
| Other comprehensive income |
— | — | 52,431 | — | — | — | 52,431 | — | 52,431 | |||||||||||||||||||||||||||
| Appropriation of profits |
||||||||||||||||||||||||||||||||||||
| Distributions to shareholders |
— | — | — | — | — | (1,082,381 | ) | (1,082,381 | ) | — | (1,082,381 | ) | ||||||||||||||||||||||||
| Specific reserve |
||||||||||||||||||||||||||||||||||||
| Accrued |
— | — | — | 54,842 | — | — | 54,842 | — | 54,842 | |||||||||||||||||||||||||||
| Utilized |
— | — | — | (23,574 | ) | — | — | (23,574 | ) | — | (23,574 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance at 30 June 2021 (unaudited) |
10,823,814 | 610,327 | 58,757 | 176,865 | 6,474,103 | 11,319,674 | 29,463,540 | 142,165 | 29,605,705 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance at 1 January 2020 |
10,823,814 | 610,327 | 17,838 | 57,137 | 6,437,010 | 11,939,215 | 29,885,341 | 130,560 | 30,015,901 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Changes in equity for the six months ended 30 June 2020 (unaudited) (“-” for decreases) |
||||||||||||||||||||||||||||||||||||
| Total comprehensive loss |
||||||||||||||||||||||||||||||||||||
| Net (loss)/profit |
— | — | — | — | — | (1,716,072 | ) | (1,716,072 | ) | 7,754 | (1,708,318 | ) | ||||||||||||||||||||||||
| Other comprehensive income |
— | — | (9,256 | ) | — | — | — | (9,256 | ) | — | (9,256 | ) | ||||||||||||||||||||||||
| Appropriation of profits |
||||||||||||||||||||||||||||||||||||
| Distributions to Shareholders |
— | — | — | — | — | (1,298,858 | ) | (1,298,858 | ) | — | (1,298,858 | ) | ||||||||||||||||||||||||
| Specific reserve |
||||||||||||||||||||||||||||||||||||
| Accrued |
— | — | — | 69,588 | — | — | 69,588 | — | 69,588 | |||||||||||||||||||||||||||
| Utilized |
— | — | — | (25,350 | ) | — | — | (25,350 | ) | — | (25,350 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance at 30 June 2020 (unaudited) |
10,823,814 | 610,327 | 8,582 | 101,375 | 6,437,010 | 8,924,285 | 26,905,393 | 138,314 | 27,043,707 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
36
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2021
(All amounts in thousands of Renminbi Yuan unless otherwise stated)
| Items | Share capital |
Capital surplus |
Other comprehensive income |
Specific reserve |
Surplus reserve |
Undistributed profits |
Total equity |
|||||||||||||||||||||
| Balance at 1 January 2021 |
10,823,814 | 600,768 | 6,326 | 145,597 | 6,474,103 | 10,535,813 | 28,586,421 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Changes in equity for the six months ended 30 June 2021 (unaudited) (“-” for decreases) |
||||||||||||||||||||||||||||
| Total comprehensive income |
||||||||||||||||||||||||||||
| Net profit |
— | — | — | — | — | 1,199,351 | 1,199,351 | |||||||||||||||||||||
| Other comprehensive income |
— | — | 52,431 | — | — | — | 52,431 | |||||||||||||||||||||
| Appropriation of profits |
||||||||||||||||||||||||||||
| Distributions to shareholders |
— | — | — | — | — | (1,082,381 | ) | (1,082,381 | ) | |||||||||||||||||||
| Specific reserve |
||||||||||||||||||||||||||||
| Accrued |
— | — | — | 51,600 | — | — | 51,600 | |||||||||||||||||||||
| Utilized |
— | — | — | (20,332 | ) | — | — | (20,332 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Balance at 30 June 2021 (unaudited) |
10,823,814 | 600,768 | 58,757 | 176,865 | 6,474,103 | 10,652,783 | 28,787,090 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Balance at 1 January 2020 |
10,823,814 | 600,768 | 17,838 | 57,135 | 6,437,010 | 11,574,341 | 29,510,906 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Changes in equity for the six months ended 30 June 2020 (unaudited) (“-” for decreases) |
||||||||||||||||||||||||||||
| Total comprehensive income |
||||||||||||||||||||||||||||
| Net loss |
— | — | — | — | — | (1,832,138 | ) | (1,832,138 | ) | |||||||||||||||||||
| Other comprehensive income |
— | — | (9,256 | ) | — | — | — | (9,256 | ) | |||||||||||||||||||
| Appropriation of profits |
||||||||||||||||||||||||||||
| Distributions to shareholders |
— | — | — | — | — | (1,298,858 | ) | (1,298,858 | ) | |||||||||||||||||||
| Specific reserve |
||||||||||||||||||||||||||||
| Accrued |
— | — | — | 66,240 | — | — | 66,240 | |||||||||||||||||||||
| Utilized |
— | — | — | (22,000 | ) | — | — | (22,000 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Balance at 30 June 2020 (unaudited) |
10,823,814 | 600,768 | 8,582 | 101,375 | 6,437,010 | 8,443,345 | 26,414,894 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
37
| 5.2 | Interim financial information prepared under International Financial Reporting Standard (Unaudited) |
Condensed consolidated statement of profit or loss
for the six months ended 30 June 2021 - unaudited
(Expressed in Renminbi Yuan)
| Six months ended 30 June | ||||||||
| 2021 RMB’000 |
2020 RMB’000 |
|||||||
| Revenue |
37,088,509 | 35,627,558 | ||||||
| Taxes and surcharges |
(5,453,022 | ) | (5,701,797 | ) | ||||
|
|
|
|
|
|||||
| Net sales |
31,635,487 | 29,925,761 | ||||||
| Cost of sales |
(30,831,925 | ) | (32,549,404 | ) | ||||
|
|
|
|
|
|||||
| Gross profit/(loss) |
803,562 | (2,623,643 | ) | |||||
| Selling and administrative expenses |
(209,674 | ) | (233,782 | ) | ||||
| Other operating income |
56,169 | 53,995 | ||||||
| Other operating expenses |
(9,689 | ) | (6,796 | ) | ||||
| Other gains – net |
104,556 | 71,117 | ||||||
|
|
|
|
|
|||||
| Profit/(loss) from operations |
744,924 | (2,739,109 | ) | |||||
| Finance income |
248,813 | 179,142 | ||||||
| Finance expenses |
(38,299 | ) | (28,120 | ) | ||||
|
|
|
|
|
|||||
| Finance income – net |
210,514 | 151,022 | ||||||
|
|
|
|
|
|||||
| Share of net profits of associates and joint ventures accounted for using the equity method |
587,548 | 278,712 | ||||||
|
|
|
|
|
|||||
| Profit/(loss) before taxation |
1,542,986 | (2,309,375 | ) | |||||
| Income tax |
(261,344 | ) | 646,300 | |||||
|
|
|
|
|
|||||
| Profit/(loss) for the period |
1,281,642 | (1,663,075 | ) | |||||
|
|
|
|
|
|||||
| Attributable to: |
||||||||
| – Equity shareholders of the Company |
1,276,462 | (1,670,829 | ) | |||||
| – Non-controlling interests |
5,180 | 7,754 | ||||||
|
|
|
|
|
|||||
| 1,281,642 | (1,663,075) | |||||||
|
|
|
|
|
|||||
| Earnings/(loss) per share |
||||||||
| Basic |
RMB 0.118 | RMB (0.154) | ||||||
| Diluted |
RMB 0.118 | RMB (0.154) | ||||||
38
Condensed consolidated statement of profit or loss and other comprehensive income
for the six months ended 30 June 2021 - unaudited
(Expressed in Renminbi Yuan)
| Six months ended 30 June | ||||||||
| 2021 | 2020 | |||||||
| RMB’000 | RMB’000 | |||||||
| Profit/(loss) for the period |
1,281,642 | (1,663,075 | ) | |||||
|
|
|
|
|
|||||
| Other comprehensive income for the period (after tax and reclassification adjustments) |
||||||||
| Items that are or may be reclassified subsequently to profit or loss |
||||||||
| Share of other comprehensive income of associates accounted for using the equity method |
702 | (748 | ) | |||||
| Cash flow hedges: net movement in hedging reserve |
51,729 | (8,508 | ) | |||||
|
|
|
|
|
|||||
| Other comprehensive income for the period |
52,431 | (9,256 | ) | |||||
|
|
|
|
|
|||||
| Total comprehensive income for the period |
1,334,073 | (1,672,331 | ) | |||||
|
|
|
|
|
|||||
| Attributable to: |
||||||||
| – Equity shareholders of the Company |
1,328,893 | (1,680,085 | ) | |||||
| – Non-controlling interests |
5,180 | 7,754 | ||||||
|
|
|
|
|
|||||
| Total comprehensive income for the period |
1,334,073 | (1,672,331 | ) | |||||
|
|
|
|
|
|||||
39
Condensed consolidated statement of financial position
at 30 June 2021 - unaudited
(Expressed in Renminbi Yuan)
| At 30 June 2021 |
At 31 December 2020 |
|||||||
| RMB’000 | RMB’000 | |||||||
| Non-current assets |
||||||||
| Property, plant and equipment |
11,577,352 | 11,713,022 | ||||||
| Right-of-use assets |
402,427 | 410,801 | ||||||
| Investment property |
359,850 | 367,586 | ||||||
| Construction in progress |
2,196,393 | 1,710,124 | ||||||
| Interest in associates and jointly controlled entities |
5,234,474 | 5,387,834 | ||||||
| Financial assets at fair value through other comprehensive income |
5,000 | 5,000 | ||||||
| Time deposits with banks |
7,281,393 | 7,042,840 | ||||||
| Deferred tax assets |
109,797 | 252,121 | ||||||
| Other non-current assets |
811,670 | 424,959 | ||||||
|
|
|
|
|
|||||
| 27,978,356 | 27,314,287 | |||||||
|
|
|
|
|
|||||
| Current assets |
||||||||
| Derivative financial assets |
80,047 | — | ||||||
| Inventories |
7,452,255 | 3,888,746 | ||||||
| Trade receivables |
74,186 | 113,163 | ||||||
| Other receivables |
108,469 | 18,101 | ||||||
| Amounts due from related parties |
2,496,224 | 1,092,316 | ||||||
| Prepayments |
131,572 | 19,552 | ||||||
| Financial assets at fair value through other comprehensive income |
1,238,176 | 1,207,114 | ||||||
| Financial assets measured at fair value through profit or loss |
3,973,343 | — | ||||||
| Time deposits with banks |
1,805,711 | 4,049,443 | ||||||
| Cash and cash equivalents |
1,367,415 | 6,916,408 | ||||||
|
|
|
|
|
|||||
| 18,727,398 | 17,304,843 | |||||||
|
|
|
|
|
40
Condensed consolidated statement of financial position
at 30 June 2021 - unaudited (continued)
(Expressed in Renminbi Yuan)
| At 30 June 2021 |
At 2020 |
|||||||
| RMB’000 | RMB’000 | |||||||
| Current liabilities |
||||||||
| Trade and other payables |
5,117,129 | 2,820,083 | ||||||
| Contract liabilities |
277,442 | 495,404 | ||||||
| Amounts due to related parties |
5,082,613 | 3,656,841 | ||||||
| Staff salaries and welfares payable |
511,376 | 244,506 | ||||||
| Borrowings |
3,540,000 | 1,548,000 | ||||||
| Short-term bonds |
1,000,801 | 3,017,811 | ||||||
| Lease liabilities |
9,829 | 9,352 | ||||||
| Derivative financial liabilities |
11,075 | — | ||||||
| Income tax payable |
5,382 | 19,425 | ||||||
| Current tax liabilities |
1,493,046 | 3,420,824 | ||||||
|
|
|
|
|
|||||
| 17,048,693 | 15,232,246 | |||||||
|
|
|
|
|
|||||
| Net current assets |
1,678,705 | 2,072,597 | ||||||
|
|
|
|
|
|||||
| Total assets less current liabilities |
29,657,061 | 29,386,884 | ||||||
|
|
|
|
|
|||||
| Non-current liabilities |
||||||||
| Borrowings |
20,000 | — | ||||||
| Lease liabilities |
2,210 | 3,119 | ||||||
| Deferred tax liabilities |
34,751 | 35,357 | ||||||
| Deferred income |
13,433 | 13,433 | ||||||
|
|
|
|
|
|||||
| 70,394 | 51,909 | |||||||
|
|
|
|
|
|||||
| NET ASSETS |
29,586,667 | 29,334,975 | ||||||
|
|
|
|
|
|||||
41
Condensed consolidated statement of financial position
at 30 June 2021 - unaudited (continued)
(Expressed in Renminbi Yuan)
| At 30 June 2021 |
At 31 December 2020 |
|||||||
| RMB’000 | RMB’000 | |||||||
| CAPITAL AND RESERVES |
||||||||
| Share capital |
10,823,814 | 10,823,814 | ||||||
| Reserves |
18,620,688 | 18,374,176 | ||||||
|
|
|
|
|
|||||
| Total equity attributable to equity shareholders of the Company |
29,444,502 | 29,197,990 | ||||||
| Non-controlling interests |
142,165 | 136,985 | ||||||
|
|
|
|
|
|||||
| TOTAL EQUITY |
29,586,667 | 29,334,975 | ||||||
|
|
|
|
|
|||||
42
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2021 - unaudited
(Expressed in Renminbi Yuan)
| Attributable to equity shareholders of the Company | ||||||||||||||||||||||||
| Share capital |
Other reserves |
Retained earnings |
Total | Non-controlling interests |
Total equity |
|||||||||||||||||||
| RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | |||||||||||||||||||
| Balance at 1 January 2020 |
10,823,814 | 4,369,391 | 14,670,083 | 29,863,288 | 130,560 | 29,993,848 | ||||||||||||||||||
| Changes in equity for the six months ended 30 June 2020: |
||||||||||||||||||||||||
| (Loss)/profit for the period |
— | — | (1,670,829 | ) | (1,670,829 | ) | 7,754 | (1,663,075 | ) | |||||||||||||||
| Other comprehensive income |
— | (9,256 | ) | — | (9,256 | ) | — | (9,256 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total comprehensive income for the period |
(9,256 | ) | (1,670,829 | ) | (1,680,085 | ) | 7,754 | (1,672,331 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Dividends declared and approved in respect of the previous year |
— | — | (1,298,858 | ) | (1,298,858 | ) | — | (1,298,858 | ) | |||||||||||||||
| Appropriation of safety production fund |
— | 44,238 | (44,238 | ) | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at 30 June 2020 and 1 July 2020 |
10,823,814 | 4,404,373 | 11,656,158 | 26,884,345 | 138,314 | 27,022,659 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Changes in equity for the six months ended 31 December 2020: |
||||||||||||||||||||||||
| Profit for the period |
— | — | 2,315,901 | 2,315,901 | 3,572 | 2,319,473 | ||||||||||||||||||
| Other comprehensive income |
— | (2,256 | ) | — | (2,256 | ) | — | (2,256 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total comprehensive income for the period |
— | (2,256 | ) | 2,315,901 | 2,313,645 | 3,572 | 2,317,217 | |||||||||||||||||
| Dividends paid by subsidiaries to non-controlling interests |
— | — | — | — | (4,901 | ) | (4,901 | ) | ||||||||||||||||
| Appropriation of safety production fund |
— | 44,222 | (44,222 | ) | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at 31 December 2020 |
10,823,814 | 4,446,339 | 13,927,837 | 29,197,990 | 136,985 | 29,334,975 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
43
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2021 – unaudited (continued)
(Expressed in Renminbi Yuan)
| Attributable to equity shareholders of the Company | ||||||||||||||||||||||||
| Share capital |
Other reserves |
Retained earnings |
Total | Non-controlling interests |
Total equity |
|||||||||||||||||||
| RMB’000 |
RMB’000 |
RMB’000 | RMB’000 | RMB’000 | RMB’000 |
|||||||||||||||||||
| Balance at 1 January 2021 |
10,823,814 | 4,446,339 | 13,927,837 | 29,197,990 | 136,985 | 29,334,975 | ||||||||||||||||||
| Changes in equity for the six months ended 30 June 2021: |
||||||||||||||||||||||||
| Profit for the period |
— | — | 1,276,462 | 1,276,462 | 5,180 | 1,281,642 | ||||||||||||||||||
| Other comprehensive income |
— | 52,431 | — | 52,431 | — | 52,431 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total comprehensive income for the period |
— | 52,431 | 1,276,462 | 1,328,893 | 5,180 | 1,334,073 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Transfer to other reserves |
— | 2,300,272 | (2,300,272 | ) | — | — | — | |||||||||||||||||
| Dividends declared and approved in respect of the previous year |
— | — | (1,082,381 | ) | (1,082,381 | ) | — | (1,082,381 | ) | |||||||||||||||
| Appropriation of safety production fund |
— | 31,268 | (31,268 | ) | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at 30 June 2021 |
10,823,814 | 6,830,310 | 11,790,378 | 29,444,502 | 142,165 | 29,586,667 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
44
Condensed consolidated cash flow statement
for the six months ended 30 June 2021 – unaudited
(Expressed in Renminbi Yuan)
| Six months ended 30 June | ||||||||
| 2021 | 2020 | |||||||
| RMB’000 | RMB’000 | |||||||
| Operating activities |
||||||||
| Cash used in operations |
(2,155,135 | ) | (2,684,204 | ) | ||||
| Interest paid |
(53,828 | ) | (34,763 | ) | ||||
| Income tax paid |
(234,417 | ) | (219,962 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in operating activities |
(2,443,380 | ) | (2,938,929 | ) | ||||
|
|
|
|
|
|||||
| Investing activities |
||||||||
| Dividends received from joint ventures and associates |
55,044 | 51,432 | ||||||
| Interest received |
235,749 | 257,294 | ||||||
| Net proceeds from disposal of property, plant and equipment |
46,860 | 19,410 | ||||||
| Cash received from time deposits within one year |
3,000,000 | 500,000 | ||||||
| Cash received from structured deposits |
2,700,000 | 7,200,000 | ||||||
| Cash payment of structured deposits |
(6,650,000 | ) | (7,600,000 | ) | ||||
| Cash payment for time deposits within one year |
(800,000 | ) | (1,000,000 | ) | ||||
| Cash payment for time deposits above one year |
(200,000 | ) | (1,500,000 | ) | ||||
| Cash payment for acquisition of subsidiary |
— | (340,369 | ) | |||||
| Cash held by the subsidiary before acquisition |
— | 54 | ||||||
| Payment for the purchase of property, plant and equipment and other long-term assets |
(1,493,860 | ) | (696,245 | ) | ||||
| Other cash flows arising from investing activities |
(151 | ) | (12,154 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(3,106,358 | ) | (3,120,578 | ) | ||||
|
|
|
|
|
|||||
45
Condensed consolidated cash flow statement
for the six months ended 30 June 2021 – unaudited (continued)
(Expressed in Renminbi Yuan)
| Six months ended 30 June | ||||||||
| 2021 | 2020 | |||||||
| RMB’000 | RMB’000 | |||||||
| Financing activities |
||||||||
| Proceeds from borrowings |
11,879,423 | 3,438,100 | ||||||
| Capital elements of lease rentals paid |
(9,192 | ) | (9,498 | ) | ||||
| Repayments of borrowings |
(11,867,423 | ) | (1,958,562 | ) | ||||
| Dividends paid to the Company’s shareholders |
— | (888 | ) | |||||
|
|
|
|
|
|||||
| Net cash generated from financing activities |
2,808 | 1,469,152 | ||||||
|
|
|
|
|
|||||
| Net decrease in cash and cash equivalents |
(5,546,930 | ) | (4,590,355 | ) | ||||
| Cash and cash equivalents at 1 January |
6,916,408 | 7,449,699 | ||||||
| Effect of foreign exchange rates changes |
(2,063 | ) | 5,923 | |||||
|
|
|
|
|
|||||
| Cash and cash equivalents at 30 June |
1,367,415 | 2,865,267 | ||||||
|
|
|
|
|
|||||
46
Notes to the condensed unaudited interim financial report
(Expressed in Renminbi Yuan unless otherwise indicated)
| 1 | Basis of preparation |
This condensed interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, including compliance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, adopted by the International Accounting Standards Board (“IASB”). It was authorised for issue on 25th August 2021.
The interim financial report has been prepared in accordance with the same accounting policies adopted in the 2020 annual financial statements, except for the accounting policy changes that are expected to be reflected in the 2021 annual financial statements. Details of any changes in accounting policies are set out in note 2.
The preparation of an interim financial report in conformity with IAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.
This interim financial report contains condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the 2020 annual financial statements. The condensed consolidated interim financial statements and notes thereon do not include all of the information required for full set of financial statements prepared in accordance with International Financial Reporting Standards (“IFRSs”).
The interim financial report is unaudited, but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410, Review of interim financial information performed by the independent auditor of the entity, issued by the Hong Kong Institute of Certified Public Accountants.
47
| 2 | Changes in accounting policies |
The Group has applied the following amendments to IFRSs issued by IASB to the interim financial report for the current accounting period:
| • | Amendments to IFRS 16, COVID-19-related rent concessions beyond 30 June 2021 |
| • | Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, Interest rate benchmark reform — phase 2 |
None of these developments have had a material effect on how the Group’s results and financial position for the current or prior periods have been prepared or presented in this interim financial report. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.
| 3 | Segment reporting |
The Group manages its business by divisions, which are organised by business lines. In view of the fact that the Company and its subsidiaries operate mainly in the PRC, no geographical segment information is presented.
In a manner consistent with the way in which information is reported internally to the Group’s chief operating decision maker, Board of Directors, for the purposes of resource allocation and performance assessment, the Group has identified the following five reportable segments. No operating segments have been aggregated to form the following reportable segments.
The basis of segmentation and the basis of measurement of segment profits or losses, and assets and liabilities are consistent with those of the annual financial statements for the year ended 31 December 2020.
48
| 3 | Segment information (continued) |
| Six months ended 30 June 2021 |
Petroleum products |
Intermediate petrochemicals |
Trading of petrochemical product |
Resins and plastics |
Synthetic fibres |
Others | Total | |||||||||||||||||||||
| RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | ||||||||||||||||||||||
| Total segment revenue |
26,212,341 | 9,267,436 | 5,893,808 | 4,731,109 | 781,301 | 667,721 | 47,553,716 | |||||||||||||||||||||
| Inter segment revenue |
(3,796,123 | ) | (5,411,135 | ) | (846,683 | ) | (56,452 | ) | (49,850 | ) | (304,964 | ) | (10,465,207 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Revenue from external customers |
22,416,218 | 3,856,301 | 5,047,125 | 4,674,657 | 731,451 | 362,757 | 37,088,509 | |||||||||||||||||||||
| Timing of revenue recognition At a point in time |
22,416,218 | 3,856,301 | 5,036,097 | 4,674,657 | 731,451 | 362,757 | 37,077,481 | |||||||||||||||||||||
| Over time |
— | — | 11,028 | — | — | — | 11,028 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 22,416,218 | 3,856,301 | 5,047,125 | 4,674,657 | 731,451 | 362,757 | 37,088,509 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total gross profit/(loss) |
1,065,225 | (150,942 | ) | 65,004 | 333,960 | (369,060 | ) | (140,625 | ) | 803,562 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Impairment of plant and machinery |
15,000 | — | — | — | 1,803 | — | 16,803 | |||||||||||||||||||||
| As at 30 June 2021 |
|
|||||||||||||||||||||||||||
| Segment assets |
15,199,997 | 3,994,701 | 1,522,908 | 1,545,412 | 1,314,049 | 2,382,088 | 25,959,155 | |||||||||||||||||||||
| Segment liabilities |
6,488,638 | 2,039,221 | 1,395,874 | 1,155,483 | 151,901 | 156,007 | 11,387,124 | |||||||||||||||||||||
49
| 3 | Segment information (continued) |
| Six months ended 30 June 2020 |
Petroleum products |
Intermediate petrochemicals |
Trading of petrochemical product |
Resins and plastics |
Synthetic fibres |
Others | Total | |||||||||||||||||||||
| RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | ||||||||||||||||||||||
| Total segment revenue |
24,275,022 | 9,192,552 | 5,889,864 | 4,479,214 | 720,697 | 660,449 | 45,217,798 | |||||||||||||||||||||
| Inter segment revenue |
(3,940,247 | ) | (5,080,015 | ) | (192,470 | ) | (47,073 | ) | — | (330,435 | ) | (9,590,240 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Revenue from external customers |
20,334,775 | 4,112,537 | 5,697,394 | 4,432,141 | 720,697 | 330,014 | 35,627,558 | |||||||||||||||||||||
| Timing of revenue recognition At a point in time |
20,334,775 | 4,112,537 | 5,696,343 | 4,432,141 | 720,697 | 330,014 | 35,626,507 | |||||||||||||||||||||
| Over time |
— | — | 1,051 | — | — | — | 1,051 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 20,334,775 | 4,112,537 | 5,697,394 | 4,432,141 | 720,697 | 330,014 | 35,627,558 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total gross (loss)/profit |
(1,720,744 | ) | (383,396 | ) | 48,550 | (226,806 | ) | (323,920 | ) | (17,327 | ) | (2,623,643 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Impairment of plant and machinery |
— | — | — | — | — | — | — | |||||||||||||||||||||
| As at 31 December 2020 |
|
|||||||||||||||||||||||||||
| Segment assets |
11,344,760 | 3,176,092 | 1,357,884 | 1,654,920 | 986,391 | 2,432,339 | 20,952,386 | |||||||||||||||||||||
| Segment liabilities |
6,669,419 | 1,267,313 | 1,224,420 | 1,233,286 | 209,621 | 78,928 | 10,682,987 | |||||||||||||||||||||
50
| Six months ended 30 June |
||||||||
| 2021 | 2020 | |||||||
| RMB’000 | RMB’000 | |||||||
| Segment result – profit/(loss) from operations |
||||||||
| Petroleum products |
942,353 | (1,745,070 | ) | |||||
| Intermediate petrochemicals |
(92,569 | ) | (460,168 | ) | ||||
| Trading of petrochemical products |
33,650 | 20,983 | ||||||
| Resins and plastics |
300,703 | (313,186 | ) | |||||
| Synthetic fibres |
(374,788 | ) | (337,374 | ) | ||||
| Others |
(64,425 | ) | 95,706 | |||||
|
|
|
|
|
|||||
| Profit/(loss) from operations |
744,924 | (2,739,109 | ) | |||||
|
|
|
|
|
|||||
| Finance income – net |
210,514 | 151,022 | ||||||
| Share of net profit of associates and joint ventures accounted for using the equity method |
587,548 | 278,712 | ||||||
|
|
|
|
|
|||||
| Profit/(loss) before income tax |
1,542,986 | (2,309,375 | ) | |||||
|
|
|
|
|
|||||
51
| 4 | Profit/(loss) before taxation |
Profit before taxation is arrived at after charging/(crediting):
| (a) | Finance income – net |
| Six months ended 30 June | ||||||||
| 2021 | 2020 | |||||||
| RMB’000 | RMB’000 | |||||||
| Interest income |
248,813 | 176,082 | ||||||
| Net foreign exchange gains |
— | 3,060 | ||||||
|
|
|
|
|
|||||
| Finance income |
248,813 | 179,142 | ||||||
|
|
|
|
|
|||||
| Interest on bank and other borrowings |
(41,887 | ) | (35,274 | ) | ||||
| Less: interest expense capitalised into construction in progress |
3,588 | 7,154 | ||||||
|
|
|
|
|
|||||
| Finance expenses |
(38,299 | ) | (28,120 | ) | ||||
|
|
|
|
|
|||||
|
|
|
|
|
|||||
| Finance income – net |
210,514 | 151,022 | ||||||
|
|
|
|
|
|||||
| (b) | Other gains – net |
| Six months ended 30 June | ||||||||
| 2021 | 2020 | |||||||
| RMB’000 | RMB’000 | |||||||
| Gains from structured deposits |
45,552 | 82,207 | ||||||
| Net gains on disposal of property, plant and equipment |
62,290 | 2,186 | ||||||
| Net (losses)/gains on derivative financial instruments |
(151 | ) | 1,275 | |||||
| Net foreign exchange losses |
(1,039 | ) | (1,366 | ) | ||||
| Net losses on selling of financial assets at fair value through other comprehensive income (“FVOCI”) |
(2,096 | ) | (13,185 | ) | ||||
|
|
|
|
|
|||||
| 104,556 | 71,117 | |||||||
|
|
|
|
|
|||||
52
| (c) | Other items |
| Six months ended 30 June | ||||||||
| 2021 | 2020 | |||||||
| RMB’000 | RMB’000 | |||||||
| Depreciation of property, plant and equipment |
800,196 | 755,835 | ||||||
| Depreciation of right-of-use assets |
17,134 | 15,932 | ||||||
| Depreciation of investment properties |
7,663 | 7,518 | ||||||
| Amortisation of other non-current assets |
112,998 | 116,251 | ||||||
| Research and development costs (other than depreciation and amortisation) |
25,208 | 44,752 | ||||||
| Impairment losses on property, plant and equipment |
16,803 | — | ||||||
| Provision of inventory write-down |
63,290 | 120,928 | ||||||
53
| 5 | Income tax |
| Six months ended 30 June | ||||||||
| 2021 | 2020 | |||||||
| RMB’000 | RMB’000 | |||||||
| Current tax: |
||||||||
| Provision for PRC current income tax for the period |
(136,869 | ) | (26,556 | ) | ||||
| Tax filing difference |
— | 9,079 | ||||||
|
|
|
|
|
|||||
| (136,869) | (17,477) | |||||||
| Deferred tax: |
||||||||
| Origination and reversal of temporary differences |
(124,475 | ) | 663,777 | |||||
|
|
|
|
|
|||||
| (261,344) | 646,300 | |||||||
|
|
|
|
|
|||||
The provision for PRC income tax is calculated at the rate of 25% (six months ended 30 June 2020: 25%) on the estimated taxable income of the six months ended 30 June 2021 determined in accordance with relevant income tax rules and regulations. The Company did not carry out business overseas and therefore does not incur overseas income taxes.
| 6 | Earnings/(loss) per share |
| (a) | Basic earnings/(loss) per share |
The calculation of basic earnings/(loss) per share is based on the profit attributable to equity shareholders of the Company for the six months ended 30 June 2021 of RMB 1,276,462,000 (six months ended 30 June 2020: loss of RMB 1,670,829,000) and 10,823,813,500 shares (six months ended 30 June 2020: 10,823,813,500 shares) in issue during the interim period.
| Six months ended 30 June | ||||||||
| 2021 | 2020 | |||||||
| RMB’000 | RMB’000 | |||||||
| Profit/(loss) attributable to equity shareholders of the Company |
1,276,462 | (1,670,829 | ) | |||||
| Weighted average number of ordinary shares in issue (thousands of shares) |
10,823,814 | 10,823,814 | ||||||
|
|
|
|
|
|||||
| Basic earnings/(loss) per share (RMB per share) |
RMB 0.118 | RMB (0.154 | ) | |||||
|
|
|
|
|
|||||
| (b) | Diluted earnings/(loss) per share |
There were no dilutive potential ordinary shares for the six months ended 30 June 2021 and 2020, therefore diluted earnings per share is the same as basic earnings per share.
54
| 7 | Dividends |
| (i) | Dividends payable to equity shareholders of the Company attributable to the interim period |
The Board of Directors did not propose any dividend in respect of the six months ended 30 June 2021 (six months ended 30 June 2020: Nil).
| (ii) | Dividends payable to equity shareholders of the Company attributable to the previous financial year, approved during the interim period |
| Six months ended 30 June | ||||||||
| 2021 | 2020 | |||||||
| RMB’000 | RMB’000 | |||||||
| Final dividend in respect of the previous financial year, approved during the following interim period, of RMB 0.10 per ordinary share (six months ended 30 June 2020: RMB 0.12 per ordinary share) |
1,082,381 | 1,298,858 | ||||||
|
|
|
|
|
|||||
Pursuant to a resolution passed at the Annual General Meeting held on 16 June 2021, a total dividend of RMB 1,082,381,000 was declared for the year ended 31 December 2020 and subsequently paid in July 2021.
Pursuant to a resolution passed at the Annual General Meeting held on 18 June 2020, a total dividend of RMB 1,298,858,000 was declared for the year ended 31 December 2019 and subsequently paid in July 2020.
55
| 8 | Trade and other receivables |
| As at 30 June 2021 |
As at 31 December 2020 |
|||||||
| RMB’000 | RMB’000 | |||||||
| Trade receivables |
74,820 | 113,797 | ||||||
| Less: loss allowance |
(634 | ) | (634 | ) | ||||
|
|
|
|
|
|||||
| 74,186 | 113,163 | |||||||
|
|
|
|
|
|||||
| Amounts due from related parties excluded prepayments and bills receivable |
2,484,851 | 1,055,539 | ||||||
|
|
|
|
|
|||||
| 2,559,037 | 1,168,702 | |||||||
|
|
|
|
|
|||||
| Other receivables |
25,103 | 18,240 | ||||||
| Less: loss allowance |
(139 | ) | (139 | ) | ||||
|
|
|
|
|
|||||
| 24,964 | 18,101 | |||||||
|
|
|
|
|
|||||
| Financial assets measured at amortised cost |
2,584,001 | 1,186,803 | ||||||
|
|
|
|
|
|||||
| Amounts due from related parties - prepayments |
6,373 | 26,777 | ||||||
| Amounts due from related parties - bills receivables |
5,000 | 10,000 | ||||||
| Other receivables - Income tax recoverable |
83,505 | — | ||||||
|
|
|
|
|
|||||
| 2,678,879 | 1,223,580 | |||||||
|
|
|
|
|
|||||
Amounts due from related parties mainly represent trade-related balances and dividends receivable, unsecured in nature and bear no interest.
56
| 8 | Trade and other receivables (continued) |
The aging analysis based on invoice date of trade receivables and amounts due from related parties excluded prepayments (net of allowance for doubtful debts) is as follows:
| As at 30 June 2021 |
As at 31 December 2020 |
|||||||
| RMB’000 | RMB’000 | |||||||
| Within 1 year |
2,557,557 | 1,167,222 | ||||||
| 1-2 year |
1,480 | 1,480 | ||||||
|
|
|
|
|
|||||
| 2,559,037 | 1,168,702 | |||||||
|
|
|
|
|
|||||
Movements in the loss allowance account in respect of trade and other receivables during the period is as follows:
| Six months ended 30 June | ||||||||
| 2021 | 2020 | |||||||
| RMB’000 | RMB’000 | |||||||
| Balance at 1 January |
773 | 139 | ||||||
| Impairment losses recognised during the period |
— | — | ||||||
|
|
|
|
|
|||||
| Balance at 30 June |
773 | 139 | ||||||
|
|
|
|
|
|||||
As at 30 June 2021 and 31 December 2020, no trade receivable was pledged as collateral. Sale to third parties are generally on cash basis or on letter of credit. Subject to negotiation, credit is generally only available for major customers with well-established trading records.
57
| 9 | Trade and other payables |
| As at 30 June 2021 |
As at 31 December 2020 |
|||||||
| RMB’000 | RMB’000 | |||||||
| Trade payables |
2,963,547 | 1,294,138 | ||||||
| Bills payable |
225,154 | 26,196 | ||||||
| Amounts due to related parties exclude advances received |
5,080,155 | 3,655,724 | ||||||
|
|
|
|
|
|||||
| 8,268,856 | 4,976,058 | |||||||
|
|
|
|
|
|||||
| Dividends payable |
1,111,903 | 29,522 | ||||||
| Construction payable |
129,920 | 299,205 | ||||||
| Oil price risk reserve |
— | 546,055 | ||||||
| Accrued expenses |
608,287 | 518,333 | ||||||
| Other liabilities |
78,318 | 106,634 | ||||||
|
|
|
|
|
|||||
| 1,928,428 | 1,499,749 | |||||||
|
|
|
|
|
|||||
| Financial liabilities measured at amortised cost |
10,197,284 | 6,475,807 | ||||||
| Amounts due to related parties – advances received |
2,458 | 1,117 | ||||||
|
|
|
|
|
|||||
| 10,199,742 | 6,476,924 | |||||||
|
|
|
|
|
|||||
As at 30 June 2021 and 31 December 2020, all trade and other payables of the Group were non-interest bearing, and their fair value, approximated their carrying amounts due to their short maturities.
As at 30 June 2021, the amounts due to related parties included the dividend payable due to Sinopec Corp. of RMB 546,000,000 (31 December 2020: Nil).
As at 30 June 2021 and 31 December 2020, the ageing analysis of the trade payables (including amounts due to related parties of trading in nature) and bills payable based on invoice date were as follows:
| As at 30 June 2021 |
As at 31 December 2020 |
|||||||
| RMB’000 | RMB’000 | |||||||
| Within one year |
8,265,662 | 4,973,711 | ||||||
| Between one and two years |
3,194 | 1,973 | ||||||
| Over two years |
— | 374 | ||||||
|
|
|
|
|
|||||
| 8,268,856 | 4,976,058 | |||||||
|
|
|
|
|
|||||
58
| 10 | Borrowings |
| As at 30 June 2021 |
As at 31 December 2020 |
|||||||
| RMB’000 | RMB’000 | |||||||
| Short term bank loan: |
||||||||
| Credit loan due within one year |
3,540,000 | 1,548,000 | ||||||
| Long term bank loan: |
||||||||
| Credit loan due over one year but within two years |
20,000 | — | ||||||
|
|
|
|
|
|||||
| 3,560,000 | 1,548,000 | |||||||
|
|
|
|
|
|||||
The weighted average interest rate for the Group’s borrowings was 2.84% as at 30 June 2021 (31 December 2020: 2.79%). As at 30 June 2021 and 31 December 2020, no borrowings were secured by property, plant and equipment.
The Group has the following undrawn facilities:
| As at 30 June 2021 |
As at 31 December 2020 |
|||||||
| RMB’000 | RMB’000 | |||||||
| Expiring within one year |
20,737,346 | 13,183,016 | ||||||
| Expiring beyond one year |
9,705,050 | 14,167,750 | ||||||
|
|
|
|
|
|||||
| 30,442,396 | 27,350,766 | |||||||
|
|
|
|
|
|||||
These facilities have been arranged to finance the working capitals as well as ongoing investments on long-term assets.
The Company does not have any exposure to collateralised debt obligations. The Company has sufficient headroom to enable it to conform to covenants on its existing borrowings. The Company has sufficient undrawn financing facilities to service its operating activities and ongoing investments.
59
| 11 | Reserves |
| Legal surplus |
Capital surplus |
Surplus reserve |
Other reserve |
Hedging | Share premium |
Safety production fund |
Retained earnings |
Total | ||||||||||||||||||||||||||||
| RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | ||||||||||||||||||||||||||||
| Balance at 1 January 2020 |
4,072,476 | 13,739 | 101,355 | 17,838 | — | 106,846 | 57,137 | 14,670,083 | 19,039,474 | |||||||||||||||||||||||||||
| Total comprehensive income for the period |
— | — | — | (748 | ) | (8,508 | ) | — | — | (1,670,829 | ) | (1,680,085 | ) | |||||||||||||||||||||||
| Dividends declared and approved in respect of previous year |
— | — | — | — | — | — | — | (1,298,858 | ) | (1,298,858 | ) | |||||||||||||||||||||||||
| Appropriation of safety production fund |
— | — | — | — | — | — | 44,238 | (44,238 | ) | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance at 30 June 2020 and 1 July 2020 |
4,072,476 | 13,739 | 101,355 | 17,090 | (8,508 | ) | 106,846 | 101,375 | 11,656,158 | 16,060,531 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total comprehensive income for the period |
— | — | — | (10,764 | ) | 8,508 | — | — | 2,315,901 | 2,313,645 | ||||||||||||||||||||||||||
| Appropriation of safety production fund |
— | — | — | — | — | — | 44,222 | (44,222 | ) | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance at 31 December 2020 and 1 January 2021 |
4,072,476 | 13,739 | 101,355 | 6,326 | — | 106,846 | 145,597 | 13,927,837 | 18,374,176 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total comprehensive income for the period |
— | — | — | 702 | 51,729 | — | — | 1,276,462 | 1,328,893 | |||||||||||||||||||||||||||
| Dividends declared and approved in respect of previous year |
— | — | — | — | — | — | — | (1,082,381 | ) | (1,082,381 | ) | |||||||||||||||||||||||||
| Transfer to legal surplus |
2,300,272 | — | — | — | — | — | — | (2,300,272 | ) | — | ||||||||||||||||||||||||||
| Appropriation of safety production fund |
— | — | — | — | — | — | 31,268 | (31,268 | ) | — | ||||||||||||||||||||||||||
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| Balance at 30 June 2021 |
6,372,748 | 13,739 | 101,355 | 7,028 | 51,729 | 106,846 | 176,865 | 11,790,378 | 18,620,688 | |||||||||||||||||||||||||||
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| 11 | Reserves (continued) |
Notes:
| (a) | Under PRC rules and regulations, the Company and its PRC subsidiaries are required to set aside 10% of the net income determined in accordance with the PRC accounting rules and regulations to a legal surplus reserve. The transfer to this reserve must be made before distribution of any dividend to shareholders. |
The legal surplus reserve is non-distributable other than in liquidation and can be used to make good of previous years’ losses, if any, and may be utilised for business expansion or converted into ordinary shares by the issuance of new shares to shareholders in proportion to their existing shareholdings or by increasing the par value of the shares currently held by the shareholders, provided that the balance after such issuance is not less than 25% of the registered capital.
In accordance with PRC rules and regulations, the Company has set aside RMB6,372,748,000 of legal surplus as of 30 June 2021.
| (b) | This reserve represents gifts or grants received from China Petrochemical Corporation, the ultimate parent company and which are required to be included in this reserve fund by PRC regulations. |
| (c) | The transfer to this reserve from the retained profits is subject to the approval by shareholders at general meetings. Its usage is similar to that of legal surplus reserve. |
| (d) | Other reserve comprises share of post-acquisition movements in other comprehensive income from associates and joint ventures using the equity methods of accounting with a corresponding adjustment to the carrying amount of the investment. |
| (e) | The application of the share premium account is governed by Sections 167 and 168 of the PRC Company Law. |
| (f) | According to the relevant PRC regulations, the Group is required to transfer an amount to specific reserve for the safety production fund based on the turnover of certain refining and chemicals products. This reserve represents unutilised safety production fund. |
| (g) | According to the Company’s Articles of Association, the reserve available for distribution is the lower of the amount determined under China Accounting Standards for Business Enterprises and the amount determined under IFRS. The Board of Directors did not propose any dividend in respect of the six months ended 30 June 2021 (six months ended 30 June 2020: Nil). |
- 61 -
| By Order of the Board Sinopec Shanghai Petrochemical Company Limited Liu Gang Joint Company Secretary |
Shanghai, the PRC, 25 August 2021
- 62 -
(A joint stock limited company incorporated in the People’s Republic of China)
(Stock Code: 00338)
Announcement
Connected Transaction
The ninth meeting of the tenth session of the board of directors (the “Board”) of the Company was held on 25 August 2021, in which the Joint Venture Agreement between the Company and Sinopec Baling Petrochemical Limited (“Baling Petrochemical”) was reviewed and approved for signing to jointly invest and establish the Joint Venture Company (as defined below). The Company will subscribe for and contribute RMB400 million of capital in cash to the Joint Venture Company (the “Transaction”). The Joint Venture Agreement will be signed after being reviewed and approved by the Board.
Baling Petrochemical is a subsidiary of China Petroleum & Chemical Corporation ( “Sinopec Corp.”), which is the controlling shareholder of the Company. As a subsidiary of Sinopec Corp., Baling Petrochemical is a related party of the Company under the Shanghai Listing Rules and a connected person of the Company under the Hong Kong Listing Rules. Therefore, the Transaction constitutes a related party transaction of the Company under the Shanghai Listing Rules and also constitutes a connected transaction under the Hong Kong Listing Rules.
In accordance with the requirements under Rule 14A.76(2) of the Hong Kong Listing Rules, as the highest applicable percentage ratio (as defined in the Hong Kong Listing Rules) in respect of the Transaction exceeds 0.1% but is less than 5%, the Transaction is subject to the reporting and announcement requirements but is exempted from the circular and independent shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules.
1. INTRODUCTION
The Company intends to sign the Joint Venture Agreement with Baling Petrochemical with a total investment of RMB 800 million from both parties to set up a joint venture company, Shanghai Jinshan Baling New Materials Co., Ltd. (tentative name, subject to the name that will be finally approved by the industrial and commercial registration authority, the “Joint Venture Company”). The Company will subscribe for and contribute RMB400 million of capital in cash, accounting for 50% of the total registered capital, and hold 50% of the equity of the Joint Venture Company. Baling Petrochemical will subscribe for and contribute RMB400 million of capital in cash, accounting for 50% of the total registered capital, and hold 50% of the equity of the Joint Venture Company.
2. CONNECTED PERSON AND CONNECTED RELATIONSHIP
The basic information of Baling Petrochemical is set out below:
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| Name of enterprise | Sinopec Baling Petrochemical Co., Ltd. | |
| Type of enterprise | Limited liability company (a state-owned holding company) | |
| Place of incorporation | Room 625, Science and Technology Entrepreneurship Service Center, Hunan Yueyang Green Chemical Industrial Park, Yunxi District, Yueyang City, Hunan Province, PRC | |
| Registered capital | RMB3 billion | |
| Legal representative | Wu Zhiyong | |
| Scope of business | Production and sales of petrochemicals, chemical fibres, chemical fertilizers, fine chemical products and other chemical products allowed by the policy (dangerous chemicals are operated in accordance with the varieties and methods approved in the Work Safety License); coal gasification processed syngas; industrial gas production and sales; production and energy sales of electricity and heat; sales of coal ashes; processing and supply of industrial and domestic water; solid waste (excluding hazardous waste treatment), air pollution and water pollution treatment; sales of petrochemical raw materials, mechanical equipment and spare parts; operation management of road transport, self-provided railway transport, warehouses and ports; proprietary import and export and import and export agency businesses (except commodities and technologies restricted by the State for operation by a company or prohibited from import and export); petrochemical technology design and development, technical consultation and achievement transfer services; computer information and management consulting services; petroleum refining; analysis and inspection of petrochemical products; photovoltaic power generation; leasing of machinery and equipment, land and self-owned houses (except financial leasing); export of human resources in the form of outsourcing (excluding export of overseas labour); accommodation and catering services. | |
The shareholders of Baling Petrochemical are Sinopec Corp. and Sinopec Group Asset Management Co., Ltd. ( “Sinopec Group Asset”), whereby Sinopec Corp. holds 55% of the shares in Baling Petrochemical and Sinopec Group Asset holds 45% of the shares in Baling Petrochemical.
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Sinopec Corp. holds 50.44% of shares of the Company and is the controlling shareholder of the Company. Baling Petrochemical is a connected person of the Company.
As at 31 December, 2020, the total assets, total liabilities and owner’s equity of Baling Petrochemical are, respectively, RMB11.36806 billion, RMB6.62802 billion, and RMB4.74004 billion. In 2020, Baling Petrochemical achieved operating income of RMB2.90467 billion and net profit of RMB0.25682 billion (audited).
3. BASIC INFORMATION OF THE TRANSACTION
The Transaction is a joint foreign investment with a connected person. The Joint Venture Company has not been established. The basic information below is the proposed information, which specifics are subject to the information in the industrial and commercial registration:
| Name of enterprise | Shanghai Jinshan Baling New Materials Co., Ltd. | |
| Type of enterprise | Limited liability company (a state-owned holding company) | |
| Place of incorporation | The Second Industrial Zone, Jinshan District, Shanghai, PRC | |
| Scope of business | Production and sales of new styrene thermoplastic elastomer materials (i.e. SBS, SIS, SEBS, SEPS, SSBR, together “SBC”) and their raw materials, intermediate goods and by-products; import and export trades (subject to industrial and commercial registration; for projects subject to approval according to the law, business activities may only be carried out after they have been approved by the relevant departments) | |
| Registered capital | RMB800 million | |
The names, amounts of capital subscribed, proportions of capital contribution and methods of capital contribution of the shareholders of the Joint Venture Company:
RMB’0000
| Shareholder’s name |
Amount of capital contribution |
Proportion of capital contribution |
Method of capital contribution |
|||||||||
| Baling Petrochemical |
40,000 | 50 | % | Cash | ||||||||
| Shanghai Petrochemical |
40,000 | 50 | % | Cash | ||||||||
| Total |
80,000 | 100 | % | / | ||||||||
The Transaction will not cause any changes in the scope of the consolidated statements of the Company.
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4. PRICING POLICY AND PRICING BASIS FOR THE CONNECTED TRANSACTION
The pricing of the Transaction is determined by the parties through negotiation in accordance with general commercial terms, combined with industry practices and market prices, and observing the principle of fairness, and will not damage the interests of either party, other shareholders or the relevant parties. The Company and Baling Petrochemical will jointly invest in accordance with the proportions of capital contribution and share profits and risks.
5. MAJOR INFORMATION OF THE JOINT VENTURE AGREEMENT
(1) Parties of the Agreement
Shanghai Petrochemical and Baling Petrochemical.
(2) Methods of Cooperation
The registered capital of the Joint Venture Company will be RMB800 million, of which, Baling Petrochemical will subscribe for and contribute RMB400 million of capital in cash, representing 50% of the total registered capital, and hold 50% of the equity of the Joint Venture Company. The financials of the Joint Venture Company will be reported on a consolidated basis in the financial statements of Baling Petrochemical. The Company will subscribe for and contribute RMB400 million of capital in cash, representing 50% of the total registered capital, and hold 50% of the equity of the Joint Venture Company.
(3) Scope of Business of the Joint Venture Company
Production and sales of new styrene thermoplastic elastomer materials and their raw materials, intermediate goods and by-products; import and export trades (subject to industrial and commercial registration; for projects subject to approval according to the law, business activities may only be carried out after they have been approved by the relevant authorities).
(4) Effectiveness
The Joint Venture Agreement shall be established upon being signed and sealed by both parties and shall become effective upon the internal and external approvals of both parties respectively. The parties may jointly negotiate and agree on matters not mentioned in the Joint Venture Agreement by means of written supplemental agreements.
(5) Board of Directors and Directors of the Joint Venture Company
The Joint Venture Company shall establish a board of directors, which comprises seven directors and of which three directors are nominated by Baling Petrochemical, three directors are nominated by Shanghai Petrochemical and one worker director.
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(6) Liabilities for Breach of Agreement
The Company and Baling Petrochemical shall be respectively liable for making false capital contributions and compensating for any damage caused to third parties during the course of the agreement. If the amount of capital contribution for the registered capital remains due from the defaulting party for more than three months, the other party that has fulfilled its capital contribution obligation may terminate the Joint Venture Agreement in accordance with its provisions, require the defaulting party to contribute the agreed amount of capital and pay 2% of its capital contribution as damages in a timely manner, and shall be entitled to demand compensation from the defaulting party.
For all costs, fees, third-party compensation liabilities or losses caused by the breach of the agreement by any party to the Joint Venture Company or the other party, the defaulting party shall compensate the Joint Venture Company or the other party for such costs, fees, compensation liabilities or losses so that they will be free from damage.
If any party fails to perform its obligations under the Joint Venture Agreement due to administrative actions of the government or force majeure, it should promptly notify the other party to the Joint Venture Agreement of the reasons for its non-performance, its need to postpone its performance or partial performance, and shall provide the other party with written evidence of the relevant departments within 15 days. After receiving such written evidence, the Company and Baling Petrochemical shall negotiate whether to postpone the performance, partially perform or not to perform the Joint Venture Agreement and may partly or fully waive the liabilities for the breach in light of actual circumstances.
If any one of the Company and Baling Petrochemical fails to fully perform its obligations under the Joint Venture Agreement due to force majeure, it shall proactively take effective measures to minimize the economic losses caused to the Joint Venture Company and the other party.
(7) Others
Following the establishment of the Joint Venture Company, Shanghai Petrochemical shall provide the relevant raw materials and utilities to the Joint Venture Company. Upon the establishment of the Joint Venture Company, the Joint Venture Company and Shanghai Petrochemical shall enter into agreements regarding specific issues in accordance with national and local laws and regulations. Any other matters not mentioned in the Joint Venture Agreement shall be negotiated and resolved by both parties prior to signing such agreements regarding specific issues.
6. THE EFFECT OF THE CONNECTED TRANSACTION TO THE COMPANY
The newly established Joint Venture Company’s relevant raw materials, utilities and other resources will be supplied by the Company and use Baling Petrochemical’s advanced technologies for SBC products to approach the robust SBC market in Eastern China and facilitate the Company to extend the production chains of C4, C5 and other downstream materials, so as to improve the Company’s ability to develop efficiencies.
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7. THE IMPACT OF THE HONG KONG LISTING RULES AND SHANGHAI LISTING RULES
The Transaction constitutes a related party transaction of the Company under the Shanghai Listing Rules and also constitutes a connected transaction under the Hong Kong Listing Rules. In accordance with the requirements under Rule 14A.76(2) of the Hong Kong Listing Rules, as the highest applicable percentage ratio (as defined in the Hong Kong Listing Rules) in respect of the Transaction exceeds 0.1% but is less than 5%, the Transaction shall be subject to the reporting and announcement requirements but is exempted from the circular and independent shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules.
8. EVALUATION PROCESS TO BE PERFORMED FOR THE CONNECTED TRANSACTION
At the ninth meeting of the tenth session of the Board of the Company held on 25 August 2021, the Board approved the Joint Venture Agreement. None of the directors of the Company has a material interest in the Joint Venture Agreement. As Mr. Wu Haijun, Mr. Du Jun and Mr. Xie Zhenglin are employed in related parties of the Company, the three directors abstained from voting at the Board meeting.
The Board of the Company (including independent non-executive directors) takes the view that the terms of the Joint Venture Agreement are fair, reasonable and on normal commercial terms. They are entered into in the usual and ordinary course of business and are in the interests of the Company and its shareholders as a whole.
The independent non-executive directors of the Company, namely Ms. Li Yuanqin, Mr. Tang Song, Mr. Chen Haifeng, Mr. Yang Jun and Mr. Gao Song gave the following independent opinions:
(1) The signing of the Joint Venture Agreement complies with the relevant laws, regulations and regulatory documents within and outside the PRC and the relevant provisions of the articles of association of the Company;
(2) At the time of voting on the relevant resolution by the Board of the Company with respect to the Transaction, under the Shanghai Listing Rules, the related directors, namely, Mr. Wu Haijun, Mr. Du Jun and Mr. Xie Zhenglin, abstained from voting and the voting process complied with relevant laws, regulations and regulatory documents within and outside the PRC and the relevant provisions of the articles of association of the Company;
(3) This Joint Venture Agreement is entered into on normal commercial terms in the ordinary and usual course of business and the terms of the Joint Venture Agreement are fair and reasonable to the Company. It does not damage the interests of the Company and its minority shareholders and the terms are also in the interests of the Company and its shareholders as a whole;
(4) The execution of the agreement with respect to this joint venture by the Company with Baling Petrochemical shall be approved.
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9. GENERAL INFORMATION
Located at Jinshanwei in the southwest of Shanghai, the Company is a highly integrated petrochemical enterprise which mainly processes crude oil into a broad range of petroleum products, intermediate petrochemicals, resins and plastics and synthetic fibres.
Baling Petrochemical is the subsidiary of Sinopec Corp., which is the Company’s controlling shareholder. Sinopec Corp.’s principal operations include the exploration and production, pipeline transportation, sale of petroleum and natural gas; the production and sale, storage and transportation of petroleum refinery products, petrochemicals, coal chemicals, synthetic fibre and other chemical products; the import and export and the import and export agency business of petroleum, natural gas, petroleum products, petrochemical and other chemical products, and other commodities and technologies; research, development and application of technologies and information.
10. DEFINITIONS
In this announcement, unless the context otherwise requires, the following expressions have the following meanings:
| “Company” or “Shanghai Petrochemical” | Sinopec Shanghai Petrochemical Company Limited, a company incorporated in the PRC and listed on the Main Board of the Hong Kong Stock Exchange (stock code: 00338), as well as in Shanghai (stock code: 600688) and New York (stock code: SHI) | |
| “Hong Kong” | Hong Kong Special Administrative Region of the PRC | |
| “Hong Kong Listing Rules” | the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited | |
| “Hong Kong Stock Exchange” | The Stock Exchange of Hong Kong Limited | |
| “Joint Venture Agreement” | the agreement plans to be signed between the Company and Baling Petrochemical in relation to jointly invest and establish the Joint Venture Company | |
| “PRC” or “China” | the People’s Republic of China | |
| “RMB” | Renminbi, the lawful currency of the PRC | |
| “Shanghai Listing Rules” | the listing rules of the Shanghai Stock Exchange | |
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| By Order of the Board
Sinopec Shanghai Petrochemical Company Limited
Liu Gang
Joint Company Secretary |
Shanghai, the PRC, 25 August 2021
8