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):  ☐

 

 

 



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


Exhibit 99.1

 

LOGO

(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”)
Postal Code: 200540

  

48 Jinyi Road, Jinshan District, Shanghai, the PRC
Postal Code: 200540

Telephone    8621-57943143    8621-57933728
Fax    8621-57940050    8621-57940050
E-mail    liugang@spc.com.cn    yuguangxian@spc.com.cn

 

1


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  

 

2


  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.

 

3


  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  
  

 

 

 

 

4


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  

 

5


                                                                                                                                                                                                               

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.

 

6


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

 

7


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.

 

8


  (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.

 

10


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.

 

11


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%.

 

12


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
31 December

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
(note(a))

    

Capital

surplus
(note(b))

    

Surplus

reserve
(note(c))

    

Other

reserve
(note(d))

    Hedging    

Share

premium
(note(e))

    

Safety

production

fund
(note(f))

    

Retained

earnings
(note(g))

    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     —    
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

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  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

 

60


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 -


Exhibit 99.2

 

LOGO

(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:

 

1


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.

 

2


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.

 

3


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