Sinopec Achieves Operating Profit RMB35.1 Billion in 1H2016

BEIJING, Aug. 28, 2016

Financial Highlights：

• In accordance with the International Financial Reporting Standards (IFRS), the Company's operating profit was RMB 35.1 billion, representing a decline of 13.3% from the same period last year. Profit attributable to equity shareholders of the Company was RMB 19.9 billion. Basic earnings per share were RMB 0.165.
• In accordance with China Accounting Standards for Business Enterprises ("ASBE"), the Company's operating profit was RMB 34.3 billion, representing a decrease of 12.9% over the same period of 2015. Net profit attributable to the equity shareholders of the Company was RMB 19.3 billion. Basic earnings per share were RMB 0.159
• In accordance with IFRS, the Company's liability-to-asset ratio was 43.46%, representing a decrease of 1.98 percentage points compared with the end of last year, the lowest level since its listing. The Company's cash and cash equivalents increased by RMB 4.1 billion as compared to the beginning of this year. The Company's cash flow and financial position further improved.
• The Board of Directors declared an interim dividend of RMB0.079 per share, which was in line with payout ceiling set out in the Articles of Association.

Business Highlights：

The first half of 2016 saw weak global economic recovery. China's GDP grew by 6.7% year on year. The oil products pricing mechanism was further improved and the floor on refined oil price was established. Domestic apparent consumption of refined oil products was up 4.4% year on year. Gasoline and kerosene consumption remained growth momentum, while diesel consumption declined further, showing continuous divergence in the consumption mix of oil products. Domestic consumption of major chemicals continued to grow. Ethylene equivalent consumption increased by 1.7% when compared with the first half of 2015. Chemical prices dropped amid the decline in feedstock prices, but chemical products margin maintained at high levels.

• Exploration and Production: the Company effectively optimised exploration and development activities. Its continuing efforts in exploration paid off with major discoveries in a number of regions. It attached great importance to the development of natural gas and actively expanded shale gas business. As for production operation, the Company strengthened cost discipline, substantially reduced low-efficiency and high-cost oil production, and increased natural gas production. This segment realized an operating loss of RMB 21.9 billion in the first half of 2016 but continued to generate cash inflow from operating activities.
• Refining: the Company adjusted its product mix in response to sharp increase of throughput from other refineries and abundant market supply. The Company further optimised its oil product mix by increasing the production of gasoline, kerosene and light chemical feedstock with a further decline in diesel-to-gasoline ratio. In the first half of 2016, this segment realised an operating profit of RMB 32.6 billion, representing an increase of 113% year on year. The refining margin was RMB 514.4 per tonne, representing an increase of 47.9% year on year.
• Marketing and Distribution: the Company coordinated and optimised internal and external resources and took full advantage of the synergies between its fuel and non-fuel businesses, achieving growth in their total business volume and retail transactions despite ample fuel supply and strong competition in the market. In addition, the Company adjusted marketing efforts by increasing the retail operation of premium products with high-octane numbers. Non-fuel business sustained rapid development with transaction amount significantly increased by 43% year on year. This segment's operating profit was RMB 15.8 billion, representing an increase of RMB 600 million year on year.
• Chemicals: the Company continued to adjust the structure of its feedstock, products and facilities. The Company further lowered the feedstock cost for ethylene, strengthened the integration among production, sales, product R&D and customer needs. The proportion of performance polymer and differentiated products further increased. The Company maintained low inventory operation and implemented differentiated marketing strategy. Total transaction of chemical products increased by 8.3% year on year. This segment's operating profit in the first half of 2016 stabilized at RMB 9.7 billion.

Mr. Wang Yupu, Chairman of Sinopec, said, "In the first half of 2016, the Company  spared no effort to expand its markets, optimise its operations, control costs, adjust asset structure and manage risks. Focusing on the growth of quality and profitability, the Company emphasised on structural adjustment, deepening reform, innovation-driven strategy and strengthening coordination of all aspects of work. Looking ahead into the second half of 2016, China's economic growth is expected to remain steady, which will drive the growth of domestic demand for refined oil products and petrochemical products. We will remain focused on implementing the development plan for 2016 through 2020—transforming the pattern of growth, adjusting asset structure, upgrading asset quality and promoting sustainable growth to achieve superior business results."

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