China Petroleum & Chemical Corporation Announces 2011 Annual Results

Excellent Operational Results Benefited from Fully Integrated Business Model and Efficient Management
China Petroleum & Chemical Corporation ("Sinopec" or "the Company") announced its audited annual results for the year ended 31 December, 2011.
Financial Highlights:
In accordance with the PRC Accounting Standards for Business Enterprises ("ASBE"), in the 2011, the Company's operating income was RMB2505.7 billion, up 31.0% from the same period in 2010. Net profit attributable to equity holders of the company was RMB71.7 billion and basic earnings per share was RMB0.827, both up 1.4% over the same period of last year.
In accordance with the International Financial Reporting Standards (IFRS), in 2011, the Company's turnover, other operating revenues and other income amounted to RMB2505.7 billion, up 31.0% from the same period in 2010. Operating profit rose by 0.5% to RMB105.5 billion. Net profit attributable to equity holders of the Company and basic earnings per share were RMB73.2 billion and RMB0.845 respectively, both up 2.0% over the same period of last year.
The Board of Directors declared a final dividend of RMB0.20 per share which brings the total annual dividend for 2011 to RMB0.30 per share, an increase of 42.8% over the previous year. Based on the stock price on Dec 31, 2011, the dividend ratio was 4.5%.
Business Highlights:
In 2011, the reserves grew and production remained stable throughout the year, and the Company made an initial breakthrough in the exploration and production of unconventional oil and gas. The operating profit of the exploration and production segment recorded historical high. The oil and gas equivalent production reached 408 million barrels in 2011, representing a year-on-year increase of 1.6%. The segment recorded an operating profit of RMB71.6 billion, representing a year-on-year increase of 51.9%.
The Company increased both refining capacity and throughput, leading to major gains in its competitiveness in refining business. Refinery throughput of crude recorded a year-on-year increase of 3.0% to 217 million tonnes. The Company also increased the production on oil products by 2.9% to 128 million tonnes. However, it suffered an operating loss of RMB35.8 billion due to a combination of global crude price surge and continuing price controls on refined oil products in domestic market.
Sales of refined oil products grew robustly. The Company continued to optimize the balance between production and sales, with retail volumes breaking through 100 million tonnes. Sinopec's non-fuel business also grew at a rapid pace. Total domestic sales volume of refined oil products reached 162 million tonnes, representing a year-on-year increase of 8.8%. The marketing and distribution business recorded an operating profit of RMB44.7 billion, up 45.3% over the same period of last year.
Chemical business achieved record profitability driven by significant increase in both sales and production. Total sales volume of chemical products reached 50.8 million tonnes. Ethylene output reached 9.894 million tonnes, up 9.2% over the same period of last year. The chemicals segment recorded an operating profit of RMB26.7 billion, a surge of 78.1% from the same period of last year.
Total capital expenditure was RMB130.18 billion for 2011.
The complex and turbulent worldwide political and economic environment in 2011 saw global crude oil prices remain high and volatile. Rising domestic inflationary pressure and continuing price controls on refined oil in China generated immense challenges for the business.
In response to those difficulties, Sinopec continued to review the company's processes in an effort to increase efficiency, ensure safe production, and improve energy savings and reduce emissions. As a result, the company achieved the best performance in its history. . The reserves and production grew steadily throughout the year, and the Company made an initial breakthrough in the exploration and production of unconventional oil and gas. Sinopec also increased both refining capacity and throughput, further increasing its competitiveness in this area. In addition, chemical business achieved record profitability, with a significant rise in both production and revenue. Sales of refined oil products once again grew robustly, and the Company continued to optimize the balance between production and sales, with retail volumes surpassing 100 million tonnes for the first time. The non-fuel business also grew at a rapid pace. The Company also achieved significant results in scientific and technological innovation.
In 2011, the Company's total revenues and other operating income amounted to RMB 2,505.7 billion, an increase of 31% from 2010, while profits attributable to shareholders in accordance with International Financial Reporting Standards were RMB 73.225 billion, an increase of 2.0% from the previous year. The Board of Directors recommended a final dividend of RMB 0.20 per share, which when combined with the interim dividend of RMB 0.10 per share brings the total annual dividend for 2011 to RMB 0.30 per share, representing an increase of 42.8% over previous year.
Mr. Fu Chengyu, Chairman of Sinopec commented, "I believe our established presence and competitiveness put us in a strong position for future expansion. Enjoying the benefits of our vertically integrated business model, Sinopec made great strides in optimizing our operations in resources, product and services, promoting the production of clean energy and in conducting R&D for alternative and new energy sources."
He continued, "The global economy in 2012 continues to face serious challenges, and in light of complex geopolitical tensions, international oil prices are expected to remain high. With domestic economic growth facing downward pressure, the growth in demand for refining and chemical products is expected to ease. We will continue to remain dedicated to building a first-class global energy and petrochemical company. We will implement our strategic focus on resources, marketing, integration, internationalization, differentiation and low-carbon development. Quality and return will be prioritised in the course of our development, along with the spirit of innovation, a commitment to low-carbon and a focus on people. We seek to gain more access to resources with a global vision and develop both domestic and international businesses in home market and aboard. At the same time we will increase the reserve and production of crude oil and natural gas and expedite our exploration and production of unconventional oil and gas resources. In addition, we will seek to accelerate the upgrading of refined oil product quality and further promote the development of our chemical business. We are confident that these actions will enhance the company's overall profitability and further minimise the risks related to our business, and in so doing improve returns for our shareholders."
BUSINESS REVIEW
Exploration and Production Business
In 2011, due to geopolitical, the price of international crude oil rose sharply in the first quarter and then fluctuated in an elevated price range. The annual average spot price of Platts Brent crude oil was USD 111.27 per barrel, representing an increase of 40.0% from 2010. The trend of the domestic crude oil price was basically in line with the international markets.
In 2011, the Company focused on exploration breakthroughs in key regions and on intensive exploration in mature fields, making significant breakthroughs in regions such as the Northern rim of Jungar, the Western Sichuan Depression, the Northern Slope of Tazhong, new areas in Songnan and in Southeast offshore Hainan Island. Exploration for unconventional oil and gas has borne initial results. Proved reserves of oil and gas increased by 411 million barrels of oil equivalent for the year. In crude development, the Company focused on steady production in eastern China and growth of production in western China and actively promoted technological breakthroughs and tests on horizontal drilling and staged fracturing. As a result, domestic crude oil production continued to grow, with major development parameters, such as the recovery rate, remained stable. In the development of natural gas, the Company focused on projects in Sichuan Basin and Ordos Basin as well as on building capacity. As a result, our natural gas business continued to grow rapidly.
In 2011, the oil and gas equivalent production reached 408 million barrels in 2011, representing a year-on-year increase of 1.6%. The company produced 303 million barrels of crude oil in China, remaining the same as last year. The Company produced 517.07 billion cubic feet of natural gas, representing an increase of 17.1% from last year. Overseas production of crude oil was affected by the overhaul on offshore facility.
In 2011, operating revenues of the segment were RMB241.8 billion, representing an increase of 29.2% over 2010. This was mainly attributable to the increase in crude oil and natural gas prices, and the increase of natural gas sales volume. The exploration and production business realized an operating profit of RMB71.6 billion, up 51.9% over the same period of last year.
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