Edgar Filing: SINOPEC SHANGHAI PETROCHEMICAL CO LTD

SINOPEC SHANGHAI PETROCHEMICAL COMPANY LIMITED

Date: August 30, 2011

/s/ Wang Zhiqing

Wang Zhiqing

Form 6-K

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 2011

Commission File Number: 1-12158

Sinopec Shanghai Petrochemical Company Limited

(Translation of registrant’s name into English)

Jinshanwei, Shanghai

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 x 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):

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨ No x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-Not Applicable

SINOPEC SHANGHAI PETROCHEMICAL COMPANY LIMITED

Form 6-K

TABLE OF CONTENTS


	Page

Signature Page		3

2011 Interim Results Annoucement		4

Press Release - Shanghai Petrochemical Announces 2011 Interim Results		53

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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.

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

LOGO

(A joint stock limited company incorporated in the People’s Republic of China)

(Stock Code: 00338)

2011 Interim Results Announcement

1	IMPORTANT MESSAGE

1.1

The board of directors (the “Board”) and the Supervisory Committee of Sinopec Shanghai Petrochemical Company Limited (the “Company” or “SPC”) as well as its Directors, Supervisors and Senior Management warrant that there are no false representations or misleading statements contained in, or material omission from, the 2011 interim report, and severally and jointly accept full responsibility for the truthfulness, accuracy and completeness of the information contained in the 2011 interim report.

This summary of the interim report is extracted from the full text of the interim report. The full report is published on www.sse.com.cn simultaneously. For detailed content, investors are advised to read the full text of the interim report.

1.2

If any Director fails to attend the Board meeting for considering and approving the 2011 interim report of the Company, his name shall be set out separately:


Name of Director not Attending	Position	Reasons for the Absence	Name of Proxy

Wu Haijun	Vice Chairman	Business engagement	Rong Guangdao
Lei Dianwu	Director	Business engagement	Rong Guangdao

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1.3

The financial report of the Company for the six-month period ended 30 June 2011 (the “Reporting Period”) was unaudited.

1.4

There was no appropriation of funds by controlling shareholder and its connected parties for non-operation purpose.

1.5

The Company did not provide external guarantees in violation of required decision-making procedures.

1.6

Mr. Rong Guangdao, our Chairman and the responsible person of the Company, Mr. Ye Guohua, our Chief Financial Officer (overseeing the accounting operations) and Mr. Hua Xin, our Finance Manager (Accounting Chief) hereby warrant the truthfulness and completeness of the financial report contained in the 2011 interim report.

2	CORPORATE INFORMATION

2.1

Corporate Information


Stock Abbreviation		S上石化
Shares Stock Code		600688
Stock Exchange Listing		Shanghai Stock Exchange
Stock Abbreviation		Shanghai Petrochemical
Shares Stock Code		00338
Stock Exchange Listing		Hong Kong Exchanges and Clearing Limited (“Hong Kong Stock Exchange”)
Shares Stock Code		SHI
Stock Exchange Listing		New York Stock Exchange


	Secretary to the Board	Securities Affairs Representative

Name	Zhang Jingming	Tang Weizhong
Correspondence Address	48 Jinyi Road, Jinshan District, Shanghai, the People’s Republic of China (the “PRC”) Postal Code: 200540	Suite B, 28 / F, Huamin Empire Plaza, 728 West Yan’an Road, Shanghai, PRC Postal Code: 200050
Telephone	86-21-57943143 / 52377880	86-21-57943143/52377880
Fax	86-21-57940050 / 52375091	86-21-57940050/52375091
E-mail	spc@spc.com.cn	tom@spc.com.cn

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2.2

Major Financial Data and Indicators

Prepared under the China Accounting Standards for Business Enterprises (“CAS”)

2.2.1

Major Accounting Data and Financial Indicators (Unaudited)


					Unit: RMB ’000

	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 (%)
Total assets		32,943,260		29,158,104		12.98

Total equity attributable to equity shareholders of the Company		18,612,631		17,913,040		3.91

Net asset value per share attributable to equity shareholders of the Company (RMB)*		2.585		2.488		3.91

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	The Reporting Period (January to June)		Corresponding period of the previous year		Increase/decrease during the Reporting Period as compared to the corresponding period of the previous year (%)
Operating profit		1,818,377		1,887,627		-3.67

Profit before income tax		1,805,805		1,882,526		-4.08

Net profit attributable to equity shareholders of the Company		1,381,533		1,493,930		-7.52

Net profit attributable to equity shareholders of the Company excluding non-recurring items		1,391,700		1,497,812		-7.08

Basic earnings per share (RMB)		0.192		0.207		-7.52

Basic earnings per share excluding non-recurring items (RMB)		0.193		0.208		-7.08

Diluted earnings per share (RMB)		0.192		0.207		-7.52

Return on net assets (weighted average) (%)*		7.565		9.344		Decreased by 1.779 percentage points

Net cash inflow from operating activities		1,115,924		366,735		204.29

Net cash inflow per share from operating activities (RMB)		0.155		0.051		204.29

*	The above-mentioned net assets do not include minority shareholders’ interests.

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2.2.2

Non-recurring items


	Unit: RMB ’000

Non-recurring Items	Amount
Net loss from disposal of non-current assets		-7,198
Employee reduction expenses		-1,158
Government grants recorded in profit and loss (except for government grants under the State’s unified standards on quota and amount entitlements and closely related to corporate business)		5,240
Income from external entrusted loans		705
Other non-operating income and expenses other than those mentioned above		-10,614
Income tax effect		3,135
Effect attributable to minority interests (after tax)		-277

Total		-10,167

2.2.3

Differences between financial report prepared under CAS and International Financial Reporting Standards (“IFRS”)


						Unit: RMB ’000

	Net profit 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 (restated)			At the beginning of the Reporting Period (restated)			At the end of the Reporting Period
Prepared under CAS		1,381,533		1,493,930			17,913,040			18,612,631
Prepared under IFRS		1,425,719		1,513,739	*		17,689,457	*		18,395,176

For detailed differences, please refer to 7.3.

*	For details, please refer to Note 2, Changes in Accounting Policies, of 7.2.

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3	CHANGE IN SHARE CAPITAL AND SHAREHOLDERS

3.1

Total Number of Shareholders and Their Shareholdings


	Unit: share

Total number of shareholders as at the end of the Reporting Period		106,724

Shareholdings of top ten shareholders

Name of shareholders

Type of

shareholders

Percentage of
total
shareholding
(%)

Number of
shares held

Increase (+)/
decrease (–)
during the
Reporting
Period

Type of shares

Number of
non-circulating
shares held

Number of
shares
pledged or
frozen

China Petroleum & Chemical Corporation

State-owned enterprise shareholder

55.56

4,000,000,000

Non-circulating

4,000,000,000

Nil

HKSCC (Nominees) Limited

Foreign shareholder

31.86

2,293,834,101

+370,000

Circulating

Unknown

China Construction Bank - CIFM China Advantage Security Investment Fund

Others

0.90

64,515,310

-7,484,690

Circulating

Unknown

Shanghai Kangli Gong Mao Company

Others

0.23

16,730,000

Non-circulating

16,730,000

Unknown

ICBC - SWS MU New Economy Balanced Equity Fund

Others

0.23

16,255,747

Unknown

Circulating

Unknown

China Life Insurance Company Limited - Bonus - Individual Bonus - 005L-FH002 Shanghai

Others

0.21

15,294,394

+5,578,590

Circulating

Unknown

China Life Insurance Company Limited - Tradition - Ordinary Insurance Product - 005L-CT001-Shanghai

Others

0.17

12,408,194

-2,000,000

Circulating

Unknown

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Name of shareholders

Type of

shareholders

Percentage of
total
shareholding
(%)

Number of
shares held

Increase (+)/
decrease (–)
during the
Reporting
Period

Type of shares

Number of
non-circulating
shares held

Number of
shares
pledged or
frozen

Zhejiang Economic Construction Investment Co., Ltd

Others

0.17

12,000,000

Non-circulating

12,000,000

Unknown

CBC - HFT Style Rotation Equity Fund

Others

0.15

10,845,757

Unknown

Circulating

Unknown

ICBC - China Universal Aggressive Growth Equity Fund

Others

0.14

10,000,000

Unknown

Circulating

Unknown

Top ten shareholders of shares in circulation


Name of shareholders	Number of circulating shares held		Type of shares
HKSCC (Nominees) Limited		2,293,834,101	Overseas listed foreign shares

China Construction Bank - CIFM China Advantage Security Investment Fund		64,515,310	RMB-denominated ordinary shares

ICBC - SWS MU New Economy Balanced Equity Fund		16,255,747	RMB-denominated ordinary shares

China Life Insurance Company Limited - Bonus - Individual Bonus - 005L-FH002 Shanghai		15,294,394	RMB-denominated ordinary shares

China Life Insurance Company Limited - Tradition - Ordinary Insurance Product - 005L-CT001 Shanghai		12,408,194	RMB-denominated ordinary shares

- 10 -


Name of shareholders	Number of circulating shares held	Type of shares
CBC - HFT Style Rotation Equity Fund	10,845,757	RMB-denominated ordinary shares

ICBC - China Universal Aggressive Growth Equity Fund	10,000,000	RMB-denominated ordinary shares

BOC - HFT Equity Fund	9,018,432	RMB-denominated ordinary shares

BOC - E Fund Stable Growth Balanced Equity Fund	6,500,390	RMB-denominated ordinary shares

Agricultural Bank of China - BOCOM Schroder Growth Equity Fund	5,699,933	RMB-denominated ordinary shares

Description of any connected relationship or act-in-concert parties relationships among the above shareholders	Among the above-mentioned shareholders, China Petroleum & Chemical Corporation, the State-owned enterprise shareholder, does not have any connected relationship with the other shareholders, and is not a act-in-concert party of the other shareholders under the Administrative Measures on Acquisition of Listed Companies. Among the above-mentioned shareholders, HKSCC (Nominees) Limited is a nominee shareholder. Apart from the above, the Company is not aware of any other connected relationships among the other shareholders, or any act-in-concert parties under the Administrative Measures on Acquisition of Listed Companies.

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3.2

Interests and Short Positions of Substantial Shareholders and Other Persons in Shares and Underlying Shares of the Company

As at 30 June 2011, the interests and short positions of the Company’s substantial shareholders (including 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) and other persons (excluding the Directors, Supervisors and Senior Management of the Company) who are required to disclose their interests pursuant to Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (“SFO”) in the shares, underlying shares of equity derivatives or debentures of the Company as recorded in the register which is required to be kept under Section 336 of the SFO were as set out below:

(i)

Interests in ordinary shares of the Company

Name of shareholders

Number and type
of shares held

% of total
issued
share
capital

% of
shareholding
in the
Company’s
total issued H
shares

Capacity

China Petroleum & Chemical Corporation

4,000,000,000 Promoter legal person shares (L)

55.56

—

Beneficial owner

JPMorgan Chase & Co.

159,205,090(L)

2.21

(L)

6.83

(L)

Beneficial owner;

3,055,000(S)

0.04

(S)

0.13

(S)

Investment managers;

30,222,238(P)

0.42

(P)

1.30

(P)

Other (Available-for- lending shares)

(L):	Long position (S): Short position (P): Available-for-lending shares

Save as disclosed above, no interests of substantial shareholders or other persons (excluding the Directors, Supervisors and Senior Management of the Company) who are required to disclose their interests pursuant to Part XV of the SFO in the shares, underlying shares of equity derivatives or debentures of the Company were recorded in the register required to be kept under Section 336 of the SFO.

(ii)

Short positions in shares and underlying shares of the Company

As at 30 June 2011, no short positions of substantial shareholders or other persons (excluding the Directors, Supervisors and Senior Management of the Company) who are required to disclose their interests pursuant to Part XV of the SFO in the shares, underlying shares of equity derivatives, or debentures of the Company were recorded in the register required to be kept under Section 336 of the SFO.

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4.	DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

4.1

Shareholdings of Directors, Supervisors and Senior Management

During the Reporting Period, there were no changes to the number of shares of the Company held by the Directors, Supervisors and Senior Management of the Company. The actual number of shares in the issued share capital of the Company held by the Directors, Supervisors and Senior Management as at the end of the Reporting Period were as follows:

Unit: share

Name

Position

Number
of shares
held at the
beginning
of the
Reporting
Period

Number
of shares
held at the
end of the
Reporting
Period

Change

Rong Guangdao

Chairman

3,600

No change

Wang Zhiqing

Vice Chairman and President

Nil

No change

Wu Haijun

Vice Chairman

Nil

No change

Li Honggen

Director and Vice President

Nil

No change

Shi Wei

Director and Vice President

Nil

No change

Ye Guohua

Director and Chief Financial Officer

Nil

No change

Lei Dianwu

Director

Nil

No change

Xiang Hanyin

Director

Nil

No change

Shen Liqiang

Independent Director

Nil

No change

Jin Mingda

Independent Director

Nil

No change

Wang Yongshou

Independent Director

3,600

No change

Cai Tingji

Independent Director

Nil

No change

Gao Jinping

Chairman of the Supervisory Committee

Nil

No change

Zuo Qiang

Supervisor

Nil

No change

- 13 -

Name

Position

Number
of shares
held at the
beginning
of the
Reporting
Period

Number
of shares
held at the
end of the
Reporting
Period

Change

Li Xiaoxia

Supervisor

Nil

No change

Zhai Yalin

Supervisor

Nil

No change

Wang Liqun

Supervisor

Nil

No change

Chen Xinyuan

Independent Supervisor

Nil

No change

Zhou Yunnong

Independent Supervisor

Nil

No change

Zhang Zhiliang

Vice President

Nil

No change

Zhang Jianping

Vice President

Nil

No change

Tang Chengjian

Vice President

Nil

No change

Zhang Jingming

Company Secretary and General Counsel

Nil

No change

Shares held by the above individuals are A shares and represent their personal interests in their capacity as beneficial owners.

4.2

Interests and Short Positions of Directors, Supervisors and Senior Management in Shares, Underlying Shares and Debentures of the Company

Save as disclosed above, as at 30 June 2011, none of the Directors, Supervisors or Senior Management of the Company had any interests or short positions in any shares, underlying shares of equity derivatives or debentures of the Company or its associated corporations (within the meaning ascribed to it in Part XV of the SFO) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”).

As of 30 June 2011, none of the Directors or Supervisors of the Company or their respective spouses and children under 18 years of age had been granted by the Company or had exercised any rights to subscribe for shares or debentures of the Company or any of its associated corporations.

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5.	REPORT OF THE DIRECTORS

5.1

Discussion and analysis of the overall operation during the Reporting Period

The following discussion and analysis should be read in conjunction with the unaudited financial report of the Group (the Company and its subsidiaries) and notes in the interim report. The financial data involved hereinafter are extracted from the unaudited financial report prepared in accordance with IFRS.

Review and discussion on operating results

In the first half of 2011, the world economy went through a strenuous recovery due to a number of difficulties such as the war in Libya, the political turmoil in West Asia and North Africa, the major earthquake, tsunami and nuclear leakage accident that severely hit the Japanese economy, the lower-than-expected economic recovery and a rebound in the unemployment rate in the U.S., the challenging sovereign debt crisis in Europe, and the spread of inflation from countries with emerging markets to developed nations. The Chinese economy continued to maintain stable and relatively fast growth amid a complex and volatile international environment, the continuous implementation of the macro-economic control initiatives in the country and the emergence of more new situations and new issues in China’s economic operation. In the first half of 2011, China’s gross domestic product (GDP) grew 9.6%, and its economic operation looked sound in general, moving towards the expected direction set in the macro-economic control initiatives. China’s petrochemical industry continued to maintain a healthy and steady operation, witnessed by a steady and relatively fast growth in production, expanded market demand, stable supply and demand as a whole, active import and export trade, stable pace of growth in industrial investment and satisfactory profitability as a whole.

During the first half of 2011, the Group was faced with a complex and volatile international environment, an overall stability of the domestic macro-economy, a healthy and steady operation of the petrochemical industry, high international crude oil prices after a significant surge, and a substantial decline in the profitability of the oil refining industry resulting in a turnaround from profits to losses. The Group applied the “assurance of safety, maximisation of profitability, focusing on reform, strengthening of management, adjustment on structure and promotion of development” as its work theme, coping with external market changes in an aggressive approach, continuing to increase total physical production volume of products, and pushing forward various tasks on production, operation, reform and development. In the first half of 2011, the Group maintained sound operations and production, and crude oil processing volume and output of gasoline, diesel, jet fuel, synthetic resin, plastics and other products reached record highs once again as compared to previous corresponding periods. No accidents involving serious consequences or major fires, explosions or environmental pollution happened. Major production plants maintained high utilisation and load rates. Major technical and economic indices were fulfilled well. The output-to-sales ratio and the receivable recovery ratio continued to remain at satisfactory levels. The natural gas integrated utilisation project reaped good economic benefits. As at 30 June 2011, the Group’s turnover amounted to RMB49,500.8 million, an increase of RMB13,372.5 million or 37.01% year-on-year; profit before taxation amounted to RMB1,858.1 million, a decrease of RMB37.9 million year-on-year; and profit after taxation and non-controlling interests amounted to RMB1,425.7 million, a decrease of RMB 88.0 million year-on-year.

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The fully completed Phase 5 Project of the Group continued to effectively produce its overall scale effect during the first half of 2011. As a result, total volume of goods produced increased by 14.87% over the corresponding period of the previous year. From January to June 2011, the Group processed 5,678,300 tons of crude oil (including 131,400 tons of crude oil processed on a sub-contracting basis), an increase of 635,500 tons or 12.60% over the corresponding period of the previous year. Specifically, imported crude oil and offshore crude oil processed amounted to 5,165,900 tons and 512,400 tons respectively. Output of gasoline, diesel and jet fuel were 510,300 tons, 2,055,700 tons and 402,500 tons respectively, representing increases of 10.24%, 33.49% and 5.78% year-on-year respectively. Output of ethylene and propylene were 492,100 tons and 258,700 tons respectively, representing decreases of 0.36% and 4.30% year-on-year respectively. Output of synthetic resins and plastics (excluding polyester and polyvinyl alcohol) was 570,800 tons, representing an increase of 0.39% year-on-year. Output of synthetic fibre monomers, synthetic fibre polymers and synthetic fibres were 499,600 tons, 326,400 tons and 129,100 tons respectively, representing an increase of 0.04%, a decrease of 1.03% and an increase of 4.20% year-on-year respectively. The Group’s output-to-sales ratio and receivable recovery ratio in the first half of 2011 were 99.85% and 99.37% respectively.

- 16 -

The following table sets forth the Group’s sales volume and net sales, net of sales taxes and surcharges, for the Reporting Period:


	For the six-month period ended 30 June
	2011						2010
	Sales Volume (’000 tons)		Net Sales (RMB Million)		% of Total		Sales Volume (’000 tons)		Net Sales (RMB Million)		% of Total

Synthetic fibres		128.7		2,292.8		4.95		123.7		1,871.2		5.56
Resins and plastics		804.2		8,505.9		18.35		821.6		7,524.6		22.34
Intermediate petrochemicals		1,202.3		10,197.0		22.00		1,117.1		7,851.4		23.31
Petroleum products		3,593.0		18,899.6		40.78		2,852.5		12,876.4		38.23
Trading of petrochemical products		—		5,988.0		12.92		—		3,200.5		9.50
Others		—		461.8		1.00		—		354.1		1.06

Total		5,728.2		46,345.1		100.00		4,914.9		33,678.2		100.00

In the first half of 2011, the Group realised total net sales of RMB46,345.1 million, representing an increase of 37.61% as compared to the corresponding period of the previous year, of which net sales derived from petroleum products, intermediate petrochemicals, resins and plastics, synthetic fibres and trading of petrochemical products increased by 46.78%, 29.87%, 13.04%, 22.53% and 87.10% respectively. Increase in net sales of products were primarily attributable to increased prices of raw materials and energy, resulting in increased prices for petroleum products, intermediate petrochemicals, resins and plastics and synthetic fibres, as well as increases in sales volume for a portion of products as compared to the corresponding period of the previous year. Compared to the first half of 2010, the average prices (excluding tax) of the Group’s petroleum products, intermediate petrochemicals, resins and plastics and synthetic fibres increased by 16.53%, 20.67%, 15.49% and 17.77% respectively during the Reporting Period. When comparing to the second half of 2010, the average prices (excluding tax) of the above four major categories of products of the Group increased by 15.78%, 15.08%, 14.52% and 15.72% respectively. In the first half of 2011, net sales of the Group’s trading of petrochemical products increased by 87.10% as compared to the corresponding period of the previous year, primarily because the business volume of the trading company controlled by the Group increased significantly. In the first half of 2011, net sales of the Group’s other activities increased by 30.42% as compared to the corresponding period of the previous year, primarily because the Group’s other activities including sales of water, electricity and gas, and revenues from processing crude oil on a sub-contracting basis increased substantially as compared to the corresponding period of the previous year.

- 17 -

A majority of the Group’s products were sold in eastern China.

During the first half of 2011, the Group’s cost of sales increased by 39.38% year-on-year to RMB44,348.7 million, accounting for 95.69% of net sales.

Crude oil is the Group’s major raw material. Under the impact of a number of factors such as the war in Libya, the turmoil in West Asia and North Africa, the major earthquake and the nuclear leak in Japan as well as the European debt crisis during the first half of 2011, international crude oil prices fell after a rise but in general tended to surge substantially and remained at high levels. In particular, the increase in Brent crude oil prices was approximately 18 percentage points higher than that in West Texas Intermediate (“WTI”) crude oil prices. This situation may remain unchanged in the short run. In the first half of 2011, Brent crude oil futures closed highest at US$126.65/barrel and lowest at US$93.33/barrel. The average price over the first half was approximately US$111/barrel, a year-on-year increase of approximately 44%. WTI crude oil futures closed highest at US$113.93/barrel and lowest at US$84.32/barrel. The average price over the first half was approximately US$98/barrel, a year-on-year increase of approximately 26%. With such impact, the Group’s average unit cost of crude oil processed (the portion traded for the Group’s own account) was RMB4,937.91/ton in the first half of 2011, representing an increase of RMB1,005.54/ton or 25.57% over the corresponding period of the previous year. As a result of the significant increase in the average price of crude oil and the increase in the volume of crude oil processed, the Group’s total costs of crude oil processed during the Reporting Period increased substantially by 42.89% to RMB27,390.2 million year-on-year. The crude oil costs accounted for 61.76% of the Group’s cost of sales in the first half of 2011.

Expenses on other auxiliary raw materials of the Group amounted to RMB9,880.5 million in the first half of 2011, representing an increase of 57.04% as compared to the corresponding period of the previous year, primarily attributable to increases in prices and volumes of production materials. During the Reporting Period, depreciation and maintenance costs of the Group amounted to RMB830.2 million and RMB523.0 million respectively. Depreciation cost decreased slightly year-on-year while maintenance cost increased year-on-year. Fuel and power expenses increased by RMB290.0 million year-on-year to RMB1,288.2 million as a result of the year-on-year increases to various degrees in both purchase volume and purchase prices of coal for power generation.

- 18 -

The Group’s selling and administrative expenses in the first half of 2011 amounted to RMB335.4 million, representing an increase of 31.22% from RMB255.6 million in the corresponding period of the previous year. The increase was primarily attributable to the increase in sales transportation expenses as a result of a substantial increase in sales volume (as one of the measures to cope with the intense market competition, the percentage of product distribution was raised substantially year-on-year during the first half of 2011, thereby increasing sales transportation and miscellaneous charges accordingly), and the increase in agency fees with respect to product sales in ordinary (continuing) connected transactions as a result of an increase in sales volume during the Reporting Period.

The Group’s other operating expenses in the first half of 2011 increased by RMB12.7 million year-on-year to RMB27.5 million, primarily attributable to the provision for the impairment of fixed assets amounting to RMB10.6 million during the Reporting Period.

Financing costs of the Group in the first half of 2011 decreased by 112.11% year-on-year to RMB-14.1 million, primarily because of the appreciation of Renminbi against US dollar during the current period. As a result, there was an increase in net foreign exchange gains of the Group during the Reporting Period. Furthermore, the Group has adjusted the borrowing structure between US dollar-denominated loans and Renminbi-denominated loans, and borrowed more US dollar-denominated borrowings with lower interest rates during the Reporting Period than in the corresponding period of the previous year, resulting in a drop in interest expenses.

The Group’s profit after taxation and non-controlling interests was RMB1,425.7 million in the first half of 2011, representing a decrease of RMB88.0 million from RMB1,513.7 million in the corresponding period of the previous year.

- 19 -

Liquidity and capital resources

The Group’s net cash inflow from operating activities amounted to RMB965.6 million for the first half of 2011, representing an increase in cash inflow of RMB757.9 million as compared to net cash inflow of RMB207.7 million in the corresponding period of the previous year, due to the following reasons: (1) the Group’s net cash inflow from profit before tax (net of share of profit of associates and jointly controlled entities) amounted to RMB1,675.5 million, representing an increase in cash inflow of RMB170.2 million as compared to net cash inflow of RMB1,505.3 million in the corresponding period of the previous year; (2) the increased inventory balance by RMB3,632.6 million led to an increase in cash outflow of RMB 3,084.5 million as compared to the increased inventory balance by RMB548.1 million in the corresponding period of the previous year; and (3) the increased balance of net amounts due to related parties by RMB2,747.9 million led to a decrease in cash outflow of RMB3,621.9 million as compared to the decreased balance by RMB874.0 million in the corresponding period of the previous year.

In the first half of 2011, the Group’s net cash outflow from investing activities amounted to RMB833.7 million, as compared to the net cash inflow of RMB572.4 million in the corresponding period of the previous year, due to the following reasons: (1) in the corresponding period of the previous year, the Group redeemed the financial products which were purchased from state-controlled banks in China at the end of 2009, amounting to RMB700.0 million, and (2) the Group purchased financial products amounting to RMB700.0 million from state-controlled banks in China during the Reporting Period.

In the first half of 2011, the Group’s net cash inflow from financing activities amounted to RMB105.2 million, while the net cash outflow amounted to RMB506.0 million in the corresponding period of the previous year, primarily attributable to the Group’s repayments of a substantial amount of short-term borrowings during the corresponding period of the previous year.

Borrowings and debts

The Group’s long-term borrowings are mainly applied to capital expansion projects. In general, the Group arranges long-term borrowings according to capital expenditure plans and on the whole, there are no seasonal borrowings. Short-term debts are used to replenish the Group’s working capital requirements during the normal course of production operation.

- 20 -

During the first half of 2011, the Group’s total borrowings increased by RMB32.1 million to RMB4,602.5 million as compared to the beginning of the Reporting Period. Of such amount, short-term debts increased by RMB32.1 million while long-term borrowings remained unchanged.

Risks associated with exchange rate fluctuation

Since the Group purchases its major raw materials, particularly crude oil, from overseas sources and also exports a portion of the Group’s petrochemical products directly as well, exchange rate changes will indirectly affect the prices of the Group’s raw materials and petrochemical products. This may, in turn, have a discernible impact on the Group’s profitability. In addition, a change in the relevant exchange rates will affect the level of the Group’s financial expenses since the majority of the Group’s debts are denominated in foreign currencies. Accordingly, the Group’s profitability will be affected as well. As at 30 June 2011, the Group’s loans denominated in US dollars amounted to RMB4,249.6 million.

Capital expenditure

In the first half of 2011, the Group fully commenced the construction of the Phase 6 Project, with the refinery revamping and expansion project as the key project, according to the development strategy of “giving due consideration to both cost-leadership and differentiation, attaching equal importance to scale and refinement, laying particular emphasis on being cost and scale effective at upstream and being highly value-added and highly refined at downstream”. Under the refinery revamping and expansion project, the construction of the new 3,900,000 tons/year residual oil hydrogenation plant, the new 3,500,000 tons/year catalytic cracking plant and the carbon fiber project with a capacity of 1,500 tons/year has already commenced; the preliminary work for other projects such as the ethanolamine project with a capacity of 50,000 tons/year and the EVA (ethylene-vinyl acetate copolymer) project with a capacity of 100,000 tons/year proceeded actively as planned. Meanwhile, other key technological renovation projects of the Group, such as the optimisation of energy saving and consumption reduction of No. 2 PTA plant, renovation on energy conservation and consumption reduction of No. 2 and No. 3 aromatics complexes, No. 4 main transformer of the 220 KV petrochemical substation and the capacity expansion on No. 6 main transformer of the No. 1 thermal power station, were also being carried out in an orderly manner.

- 21 -

In the first half of 2011, the Group’s capital expenditure amounted to RMB731.6 million, mainly invested in the refinery revamping and expansion project, the carbon fiber project and the upgrade project for optimisation of energy saving and consumption reduction at No. 2 PTA Plant. In the second half of 2011, the Group will continue to actively push forward the above construction projects and other projects regarding technological renovation, safety and environmental protection, energy conservation and consumption reduction. The Group plans to fund the capital expenditure with cash from operations and banking facilities.

Liability-to-asset ratio

As at 30 June 2011, the Group’s liability-to-asset ratio was 42.59% (31 December 2010: 37.45%). The ratio is calculated using this formula: total liabilities/ total assets.

Employees

As at 30 June 2011, the Group’s on-record employees totaled 15,959. Staff salaries for the six-month period ended 30 June 2011 amounted to RMB1,080.8 million.

Income tax

Since the official implementation of the “Enterprise Income Tax Law of the People’s Republic of China” on 1 January 2008, the enterprise income tax rate has been uniformly adjusted to 25%. Accordingly, the Group’s income tax rate is 25% for 2011.

Disclosure required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Hong Kong Listing Rules”)

Save as disclosed herein, pursuant to paragraph 46 in Appendix 16 to the Hong Kong Listing Rules, the Company confirmed that there have been no material changes in the existing information of the Company relating to the matters as set out in paragraph 46(3) in Appendix 16 and the relevant information disclosed in the Company’s 2010 annual report.

- 22 -

Market outlook and work plans for the second half of 2011

In the second half of 2011, there were complexities and numerous uncertainties and instabilities during the process of recovery of the world economy due to various unfavorable factors such as a continuation slackening economic growth in developed economies, mounting global inflationary pressures the degrading of sovereign credit rating of US and the possibility of having further deterioration and spread of the sovereign debt crisis in Europe. China’s economy will continue to maintain steady and relatively fast development. Although the fundamentals of the development look sound, the problem of unbalanced and uncoordinated development will be more acute, and there are a number of factors that restrict growth in internal and external demand such as rising general commodity price level, an unplanned mode of economic growth, and a prominent problem regarding inconsistency between supply and demand of production factors such as energy and resources. Although the economic operation of the domestic petrochemical industry will maintain a stable and sound trend in general, the pace of growth of the industry is likely to gradually slow down due to pressures from all fronts, such as further tightening of the policy environment, further strengthening of environmental protection restrictions on energy resources, an acute imbalance in structural surplus of production capacity, rising operating costs of the industry, further short-term and local volatility of market prices of products, and more demanding tasks on energy conservation and emissions reduction.

Due to increasing uncertainties over the recovery of the world economy and increasing risks of having a declining economy, international crude oil prices are likely to lose the momentum for a substantial rise but to fluctuate at relatively high price levels. This is due to the impact of a number of factors such as slackened economic growth, weakened demand for petroleum, relatively stable geopolitics, a deterioration of debt crisis in Europe and the US, excessive liquidity, anticipated inflation, and rising market sentiment favoring risk aversion. Although the Chinese government is taking proactive measures to explore and improve the pricing mechanism for refined oil products, the possibility is not ruled out that the Chinese government may still exercise controls over the prices of domestic refined oil products if international crude oil prices reach a higher level.

To sum up, the Group expects that the cost pressure upon enterprises will increase and market competition will further intensify in the second half as the prices of energy and resources will stay high, and therefore the Group cannot take an optimistic view towards its production and operation. In the second half of 2011, the Group will continue to proceed with various tasks in a proactive, diligent, pragmatic and effective manner according to the tasks and objectives set out at the beginning of 2011:

Attach great importance to HSE (health, safety and environment) to ensure the Group maintains safe and stable operation.

- 23 -

Continue to focus on the “safe, steady, long-team, full-capacity and optimised” operation of plants, and strive to increase the total physical production volume of products.

Further optimise production and operation and strive to improve profitability.

Push forward in full scale the construction of the Phase 6 Project, and constantly enhance the development potential of the Group.

Further improve the managerial system and mechanism and push forward sophisticated management on an ongoing basis.

Continue to strengthen cultivation of corporate culture and proactively maintain a harmonious and stable corporate atmosphere.

5.2

Principal operations by segment or product (prepared under CAS)


									Unit: RMB’000

By segment or by product	Operating income		Operating costs		Gross profit margin		Increase/ decrease of operating income compared to the corresponding period of the previous year		Increase/ decrease of operating costs compared to the corresponding period of the previous year		Increase/decrease of gross profit margin compared to the corresponding period of the previous year
					(%)		(%)		(%)		(percentage points)

Synthetic fibres		2,320,085		1,795,924		22.59		22.66		22.21		0.28
Resins and plastics		8,597,308		7,971,507		7.28		13.16		12.22		0.78
Intermediate petrochemicals		10,317,965		8,597,179		16.68		30.01		17.36		8.98
Petroleum products ^Note		21,806,087		18,294,492		16.10		44.01		58.89		-7.86
Trading of petrochemical products		5,989,376		5,944,881		0.74		87.12		93.87		-3.46
Others		494,171		403,121		18.42		29.02		17.49		8.01
Including: connected transactions		27,631,155		23,873,340		13.60		46.14		47.61		-0.86

- 24 -


Pricing principles of connected transactions		The Directors of the Company (including the Independent Non-executive Directors) are of the view that the above- mentioned connected transactions were conducted on normal commercial terms or on terms which were no less favourable than those offered to or by any independent third party, and were conducted in the ordinary course of business. This was confirmed by the Independent Non-executive Directors of the Company.

Description of the necessity and continuity of connected transactions		The Company purchases crude oil and related materials from China Petroleum & Chemical Corporation (the “Sinopec Corp.”) and its associates in accordance with the State’s regulatory system regarding crude oil operation. The Company uses the crude oil storage tanks and pipeline transportation facilities of Sinopec Corp. and its associates to ensure stable and secured supply of crude oil for the Company, thereby reducing storage and transportation costs of crude oil. The Company sells petroleum products to Sinopec Corp. and its associates in accordance with the State’s relevant policies, and given the widespread sales networks and a fairly high market share possessed by Sinopec Corp. and its associates. The Company sold petrochemicals to Sinopec Corp. and its associates, and Sinopec Corp. and its associates acted as agents for the sale of petrochemicals, in order to reduce the Company’s inventories, to expand its trading, distribution and sales networks, to improve the Company’s bargaining power with its customers and to eliminate the competition between the Company and subsidiaries under Sinopec Corp. The Company obtained construction installation and engineering design services, petrochemical industry insurance services and financial services from China Petrochemical Corporation (“Sinopec”) and its associates in order to secure steady, timely and reliable services at reasonable prices. For relevant details, please refer to the announcement regarding the continuing connected transactions dated 11 November 2010 and the circular regarding the continuing connected transactions dated 26 November 2010 published on the websites of the Hong Kong Stock Exchange and the Shanghai Stock Exchange.

This includes an amount of RMB26,294.057 million for the connected transactions in respect of the sale of products or the provision of services to the controlling shareholder and its subsidiaries and jointly controlled entities by the listed company during the Reporting Period.

Note:

The gross profit margin is calculated according to the price of petroleum products which includes consumption tax. The gross profit margin of petroleum products after deducting consumption tax amounts to 3.20%.

- 25 -

5.3

Principal operations by geographical location (prepared under CAS)


	Unit: RMB’000

Geographical location	Operating income		Increase/decrease of operating income compared to the corresponding period of the previous year (%)
Eastern China		46,230,809		39.60
Other regions in the PRC		3,114,575		11.92
Exports		179,608		-28.42

5.4

Description of substantial changes in the Company’s major financial data during the Reporting Period as compared to the previous year (prepared under the CAS)

(Details of reporting items with changes of 30% or more and occupying 5% or more of the Group’s total assets at the reporting date or 10% or more of the profit before income tax for the Reporting Period, together with reasons for the changes)


							Unit: RMB’000

	For the six-month
	period ended 30 June				Increase/
Item	2011		2010		(decrease) amount		Change (%)		Reason for change

Operating income		49,524,992		36,151,430		13,373,562		36.99	Both sales volume and unit price increased during the Reporting Period.

Operating costs		43,007,104		30,821,820		12,185,284		39.53	Unit cost of crude oil increased as a result of the increase in international crude oil prices during the Reporting Period. The volume of crude oil processed also increased during the Reporting Period.

Selling and distribution expenses		335,445		255,584		79,861		31.25	Selling expenses increased as a result of the increase in sales volume.

- 26 -


Item	As at 30 June 2011		As at 31 December 2010		Increase / (decrease) amount		Change (%)		Reason for change

Inventories		8,984,946		5,352,301		3,632,645		67.87	The purchase of crude oil at the end of the Reporting Period increased, and the price of raw materials increased significantly during the Reporting Period.

Short-term loans		4,327,516		3,295,438		1,032,078		31.32	The Company borrowed short-term loans to replenish the working capital during the Reporting Period.

Accounts payable		5,966,685		3,322,811		2,643,874		79.57	The payables for purchase of crude oil increased at the end of the Reporting Period.

5.5

Projects from non-raised capital


Project	Total project investment RMB million		Project progress as at 30 June 2011

The Refinery Upgrade Project		6,627.7	Under construction

The Carbon Fiber Project with a Capacity of 1,500 tons/year		847.8	Under construction

Upgrade Project for Optimization of Energy Saving and Consumption Reduction for No. 2 Oxidation Device System		185.6	Under construction

- 27 -

6	MAJOR EVENTS

6.1

Non-operating connected creditor’s rights and liabilities


								RMB’000

								Funds provided by
		Funds provided to						connected parties
		connected parties						to the Group
Connected party	Connected relationship	Net transaction			Balance			Net transaction			Balance

Sinopec Corp.	Controlling shareholder		(7,786	)		405			408,109			424,308	^Note ¹
Sinopec and other related parties	Controlling company of the controlling shareholder and other related parties		1,780			10,271	^Note 2		(17,378	)		11,147
Total			(6,006	)		10,676			390,731			435,455

Note 1:

The balance of the funds at the end of the Reporting Period provided by connected parties to the Group included the balance of dividends payable amounting to RMB 400,000,000 due to Sinopec Corp.

Note 2:

The balance of the funds provided by the Group to its connected parties at the end of the Reporting Period mainly included unsettled receivables arising from rendering of services to the Group’s associates and jointly controlled entities.

6.2

Audit Committee

On 25 August 2011, the Audit Committee of the seventh session of the Board held its first meeting, primarily to review the interim financial report of the Group for the Reporting Period.

6.3

Purchase, Sale and Redemption of the Company’s Securities

During the Reporting Period, the Group has not purchased, sold or redeemed any of the Company’s securities (for the definition of “security”, please refer to paragraph 1 of Appendix 16 to the Hong Kong Listing Rules).

6.4

Compliance with Code on Corporate Governance Practices

The Company has complied with all the principles and code provisions set out in the Code on Corporate Governance Practices set out in Appendix 14 to Hong Kong Listing Rules during the Reporting Period.

- 28 -

6.5

Implementation of Model Code

The Directors of the Company confirm that the Company has adopted the Model Code. After making specific enquiries with all the Directors and Supervisors of the Company, the Company is not aware of any information that would reasonably indicate that the Directors and Supervisors of the Company were not in compliance with the requirements of the Model Code for securities transactions during the Reporting Period.

- 29 -

7	INTERIM FINANCIAL REPORT

7.1

Interim financial statements prepared under China Accounting Standards for Business Enterprises (Unaudited)

Balance Sheets (Unaudited)


	The Group				The Company
	At 30		At 31		At 30		At 31
	June		December		June		December
	2011		2010		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000

Current assets
Cash at bank and on hand		337,006		100,110		270,802		89,224
Bills receivable		2,213,515		2,043,493		1,965,196		1,887,416
Accounts receivable		941,888		751,935		659,376		347,327
Prepayments		202,610		146,865		200,305		147,004
Dividends receivable		—		5,042		—		5,042
Other receivables		58,072		58,185		23,535		18,650
Inventories		8,984,946		5,352,301		8,518,979		5,110,036
Other current assets		783,998		73,910		722,185		21,729


Total current assets		13,522,035		8,531,841		12,360,378		7,626,428


Non-current assets
Long-term receivables		—		30,000		—		—
Long-term equity investments		3,182,705		3,526,290		4,214,794		4,578,274
Investment property		459,180		465,805		517,098		524,560
Fixed assets		13,027,839		13,802,184		12,427,462		13,176,847
Construction in progress		1,619,856		1,192,225		1,585,961		1,176,229
Intangible assets		528,398		537,599		425,902		432,418
Long-term deferred expenses		202,832		261,706		202,584		260,956
Deferred tax assets		400,415		810,454		400,186		810,225


Total non-current assets		19,421,225		20,626,263		19,773,987		20,959,509


Total assets		32,943,260		29,158,104		32,134,365		28,585,937

- 30 -


	The Group				The Company
	At 30		At 31		At 30		At 31
	June		December		June		December
	2011		2010		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000

Current liabilities
Short-term loans		4,327,516		3,295,438		4,289,616		3,116,438
Bills payable		38,946		41,034		38,946		41,034
Accounts payable		5,966,685		3,322,811		5,348,763		2,888,621
Advances from customers		513,391		809,908		462,462		741,364
Employee benefits payable		144,503		8,920		139,766		5,060
Taxes payable		953,561		1,042,054		946,210		1,013,520
Interest payable		7,647		24,553		7,590		24,553
Dividends payable		734,401		15,490		720,000		15,490
Other payables		869,620		834,780		1,283,136		1,325,260
Short-term debentures payable		—		1,000,000		—		1,000,000
Non-current liabilities due within one year		100,000		178,237		145,000		100,000


Total current liabilities		13,656,270		10,573,225		13,381,489		10,271,340


Non-current liabilities
Long-term loans		175,000		175,000		175,000		220,000
Other non-current liabilities		253,296		236,986		253,296		236,986


Total non-current liabilities		428,296		411,986		428,296		456,986


Total liabilities		14,084,566		10,985,211		13,809,785		10,728,326


Shareholders’ equity
Share capital		7,200,000		7,200,000		7,200,000		7,200,000
Capital reserve		2,914,763		2,914,763		2,914,763		2,914,763
Specific reserve		84,806		46,748		75,638		43,380
Surplus reserve		5,081,314		5,081,314		5,081,314		5,081,314
Retained earnings		3,331,748		2,670,215		3,052,865		2,618,154


Total equity attributable to equity shareholders of the Company		18,612,631		17,913,040		18,324,580		17,857,611
Minority interests		246,063		259,853		—		—


Total equity		18,858,694		18,172,893		18,324,580		17,857,611


Total liabilities and shareholders’ equity		32,943,260		29,158,104		32,134,365		28,585,937

- 31 -

Income statements (Unaudited)


	Six-month period ended 30 June
	The Group						The Company
	2011			2010			2011			2010
	RMB’000			RMB’000			RMB’000			RMB’000

Operating income		49,524,992			36,151,430			42,110,743			31,915,310
Less: Operating costs		43,007,104			30,821,820			35,691,900			26,674,152
Business taxes and surcharges		3,155,653			2,450,087			3,151,643			2,449,119
Selling and distribution expenses		335,445			255,584			292,515			217,327
General and administrative expenses		1,243,528			958,094			1,178,477			893,393
Financial (income)/expenses		(14,132	)		116,712			(4,537	)		106,785
Impairment losses		156,581			47,354			379,563			73,266
Add: Investment income		177,564			385,848			156,696			385,028
(Including: Income from investment in associates and jointly controlled enterprises)		177,564			385,633			148,616			377,407

Operating profit		1,818,377			1,887,627			1,577,878			1,886,296
Add: Non-operating income		8,663			13,358			8,088			12,944
Less: Non-operating expenses		21,235			18,459			21,216			15,792
(Including: Losses from disposal of non-current assets)		9,133			4,678			9,125			3,650

Profit before income tax		1,805,805			1,882,526			1,564,750			1,883,448
Less: Income tax expenses		417,894			388,954			410,039			383,790

Net profit for the period		1,387,911			1,493,572			1,154,711			1,499,658

Attributable to:
Equity shareholders of the Company		1,381,533			1,493,930
Minority shareholders		6,378			(358	)
Earnings per share:
Basic		RMB0.192			RMB0.207

Diluted		RMB0.192			RMB0.207

Other comprehensive income		—			—			—			—

Total comprehensive income		1,387,911			1,493,572			1,154,711			1,499,658

Attributable to:
Equity shareholders of the Company		1,381,533			1,493,930
Minority shareholders		6,378			(358	)

- 32 -

Cash flow statements (Unaudited)


	Six-month period ended 30 June
	The Group						The Company
	2011			2010			2011			2010
	RMB’000			RMB’000			RMB’000			RMB’000

Cash flows from operating activities:
Cash received from sale of goods and rendering of services		57,417,667			41,993,214			48,570,448			36,846,570
Refund of taxes		43,578			—			—			—
Cash received relating to other operating activities		23,038			62,710			22,463			64,881


Sub-total of cash inflows		57,484,283			42,055,924			48,592,911			36,911,451

Cash paid for goods and services		(50,313,527	)		(36,529,514	)		(41,759,114	)		(31,481,854	)
Cash paid to and for employees		(945,237	)		(868,974	)		(876,807	)		(806,019	)
Cash paid for all types of taxes		(4,835,934	)		(4,042,318	)		(4,767,677	)		(3,963,519	)
Cash paid relating to other operating activities		(273,661	)		(248,383	)		(252,462	)		(219,272	)


Sub-total of cash outflows		(56,368,359	)		(41,689,189	)		(47,656,060	)		(36,470,664	)


Net cash inflow from operating activities		1,115,924			366,735			936,851			440,787


Cash flows from investing activities:
Cash received from disposal of investments		26,000			770,000			—			700,000
Cash received from investment income		526,191			63,079			525,218			61,505
Net cash received from disposal of fixed assets		2,826			979			2,779			914
Cash received relating to other investing activities		42,874			17,266			37,757			12,870


Sub-total of cash inflows		597,891			851,324			565,754			775,289

- 33 -


	Six-month period ended 30 June
	The Group						The Company
	2011 RMB’000			2010 RMB’000			2011 RMB’000			2010 RMB’000

Cash paid for acquisition of fixed assets		(731,550	)		(278,946	)		(713,932	)		(282,935	)
Cash paid for acquisition of investments		(700,000	)		—			(700,000	)		—


Sub-total of cash outflows		(1,431,550	)		(278,946	)		(1,413,932	)		(282,935	)


Net cash (outflow)/inflow from investing activities		(833,659	)		572,378			(848,178	)		492,354


Cash flows from financing activities:
Cash received from issuance of corporate bonds		—			1,000,000			—			1,000,000
Cash received from borrowings		18,477,796			22,642,235			18,429,596			22,580,835


Sub-total of cash inflows		18,477,796			23,642,235			18,429,596			23,580,835


Cash repayments of corporate bonds		(1,000,000	)		(1,000,000	)		(1,000,000	)		(1,000,000	)
Cash repayments of borrowings		(17,351,351	)		(23,138,235	)		(17,179,272	)		(23,202,420	)
Cash paid for dividends, profits distribution and interest		(171,614	)		(169,000	)		(157,243	)		(148,060	)


Sub-total of cash outflows		(18,522,965	)		(24,307,235	)		(18,336,515	)		(24,350,480	)


Net cash (outflow)/inflow from financing activities		(45,169	)		(665,000	)		93,081			(769,645	)


Effect of foreign exchange rate changes on cash and cash equivalents		(200	)		(182	)		(176	)		(153	)


Net increase in cash and cash equivalents		236,896			273,931			181,578			163,343
Add: cash and cash equivalents at the beginning of the period		100,110			125,917			89,224			101,076


Cash and cash equivalents at the end of the period		337,006			399,848			270,802			264,419

- 34 -

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)

(Expressed in thousands of renminbi yuan)


	Six month period ended 30 June
	2011																		2010
	Attributable to equity shareholders of the Company																		Attributable to equity shareholders of the Company
	Share capital		Capital reserve		Specific reserve			Surplus reserve		Retained earnings			Minority interests			Total			Share capital		Capital reserve		Specific reserve		Surplus reserve		Retained earnings			Minority interests			Total

Balance at 1 January		7,200,000		2,914,763		46,748			5,081,314		2,670,215			259,853			18,172,893			7,200,000		2,882,278		—		4,801,766		462,029			294,285			15,640,358
Changes in equity for the period
1. Net profit/(loss) for the period		—		—		—			—		1,381,533			6,378			1,387,911			—		—		—		—		1,493,930			(358	)		1,493,572
2. Other comprehensive income for the period		—		—		—			—		—			—			—			—		—		—		—		—			—			—

Sub-total of 1&2		—		—		—			—		1,381,533			6,378			1,387,911			—		—		—		—		1,493,930			(358	)		1,493,572
3. Appropriation of profits
- Distribution to shareholders		—		—		—			—		(720,000	)		(20,168	)		(740,168	)		—		—		—		—		(216,000	)		(58,345	)		(274,345	)
4. Specific reserve
- Accrued		—		—		56,800			—		—			—			56,800			—		—		5,473		—		—			—			5,473
- Utilised		—		—		(18,742	)		—		—			—			(18,742	)		—		—		—		—		—			—			—

Balance at 30 June		7,200,000		2,914,763		84,806			5,081,314		3,331,748			246,063			18,858,694			7,200,000		2,882,278		5,473		4,801,766		1,739,959			235,582			16,865,058

Statements of Changes in Shareholders’ Equity (Unaudited)

(Expressed in thousands of renminbi yuan)


	Six-month period ended 30 June
	2011															2010
	Share capital		Specific reserve		Capital reserve			Surplus reserve		Retained earnings			Total			Share capital		Specific reserve		Capital reserve		Surplus reserve		Retained earnings			Total

Balance at 1 January		7,200,000		2,914,763		43,380			5,081,314		2,618,154			17,857,611			7,200,000		2,882,278		—		4,801,766		318,224			15,202,268
Changes in equity for the period
1. Net profit for the period		—		—		—			—		1,154,711			1,154,711			—		—		—		—		1,499,658			1,499,658
2. Other comprehensive income for the period		—		—		—			—		—			—			—		—		—		—		—			—

Sub-total of 1&2		—		—		—			—		1,154,711			1,154,711			—		—		—		—		1,499,658			1,499,658
3. Appropriation of profits
- Distribution to shareholders		—		—		—			—		(720,000	)		(720,000	)		—		—		—		—		(216,000	)		(216,000	)
4. Specific reserve
- Accrued		—		—		51,000			—		—			51,000			—		—		5,473		—		—			5,473
- Utilised		—		—		(18,742	)		—		—			(18,742	)		—		—		—		—		—			—

Balance at 30 June		7,200,000		2,914,763		75,638			5,081,314		3,052,865			18,324,580			7,200,000		2,882,278		5,473		4,801,766		1,601,882			16,491,399

- 35 -

7.2

Interim financial report prepared under International Financial Reporting Standards (Unaudited)

This interim financial report for the six-month period ended 30 June 2011 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, whose unmodified review report is included in the interim report to be sent to shareholders.

Consolidated Income Statement

For the six-month period ended 30 June 2011(unaudited)

(Expressed in Renminbi)


		Six-month period ended 30 June
	Note	2011 RMB’000			2010 RMB’000
					(Restated)

Turnover	3		49,500,789			36,128,309
Sales taxes and surcharges			(3,155,653	)		(2,450,087	)


Net sales			46,345,136			33,678,222
Cost of sales			(44,348,719	)		(31,817,534	)


Gross profit			1,996,417			1,860,688

Selling and administrative expenses			(335,445	)		(255,584	)
Other operating income			27,866			31,479
Other operating expenses			(27,478	)		(14,813	)


Profit from operations			1,661,360			1,621,770


Financial income			131,303			29,607
Financial expenses			(117,171	)		(146,319	)


Net financing income/(costs)	4		14,132			(116,712	)


Investment income			—			215

- 36 -


		Six-month period ended 30 June
	Note	2011 RMB’000			2010 RMB’000
					(Restated)
Share of profit of associates and jointly controlled entities			182,564			390,633


Profit before taxation	3, 4		1,858,056			1,895,906
Income tax	5		(425,959	)		(388,954	)


Profit for the period			1,432,097			1,506,952


Attributable to:
Equity shareholders of the Company			1,425,719			1,513,739
Non-controlling interests			6,378			(6,787	)


Profit for the period			1,432,097			1,506,952


Earnings per share	6
Basic		RMB	0.198		RMB	0.210


Diluted		RMB	0.198		RMB	0.210

- 37 -

Consolidated Statement of Comprehensive Income

For the six-month period ended 30 June 2011 (unaudited)

(Expressed in Renminbi)


		Six-month period ended 30 June
	Note	2011 RMB’000		2010 RMB’000
				(Restated)

Profit for the period			1,432,097		1,506,952
Other comprehensive income for the period			—		—


Total comprehensive income for the period			1,432,097		1,506,952


Attributable to:
Equity shareholders of the Company			1,425,719		1,513,739
Non-controlling interests			6,378		(6,787	)


Total comprehensive income for the period			1,432,097		1,506,952

- 38 -

Consolidated Balance Sheet

As at 30 June 2011 (unaudited)

(Expressed in Renminbi)


	Note	At 30 June 2011 RMB’000			At 31 December 2010 RMB’000
					(Restated)

Non-current assets
Property, plant and equipment			12,855,294			13,570,559
Investment property			459,180			465,805
Construction in progress			1,545,560			1,139,239
Interest in associates and jointly controlled entities			2,977,705			3,316,290
Lease prepayments and other assets			731,230			874,192
Deferred tax assets			381,505			799,609


Total non-current assets			18,950,474			20,165,694


Current assets
Inventories			8,984,946			5,352,301
Other investments			700,000			—
Trade debtors	8		155,479			74,193
Bills receivable	8		2,106,341			1,993,273
Other debtors and prepayments			288,399			235,730
Amounts due from related parties	8		949,864			776,234
Cash and cash equivalents			337,006			100,110


Total current assets			13,522,035			8,531,841


Current liabilities
Loans and borrowings	9		4,427,516			4,395,438
Trade creditors	10		1,798,600			2,376,452
Bills payable	10		33,346			41,034
Other creditors			2,669,932			1,943,327
Amounts due to related parties	10		4,722,531			1,800,991
Income tax payable			4,345			15,983


Total current liabilities			13,656,270			10,573,225


Net current liabilities			(134,235	)		(2,041,384	)


Total assets less current liabilities carried forward			18,816,239			18,124,310

- 39 -


	Note	At 30 June 2011 RMB’000		At 31 December 2010 RMB’000
				(Restated)

Total assets less current liabilities brought forward			18,816,239		18,124,310


Non-current liabilities
Loans and borrowings	9		175,000		175,000


Total non-current liabilities			175,000		175,000


Net assets			18,641,239		17,949,310


Shareholders’ equity
Share capital			7,200,000		7,200,000
Reserves			11,195,176		10,489,457


Total equity attributable to equity shareholders of the Company			18,395,176		17,689,457
Non-controlling interests			246,063		259,853


Total equity			18,641,239		17,949,310

- 40 -

Notes to the unaudited interim financial report

1	Principal activities and basis of preparation

Sinopec Shanghai Petrochemical Company Limited (“the Company”) and its subsidiaries (collectively “the Group”) is an integrated entity which processes crude oil into synthetic fibres, resins and plastics, intermediate petrochemicals and petroleum products. The Company is a subsidiary of China Petroleum & Chemical Corporation (“Sinopec Corp”).

This 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.

The 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 issued by the International Accounting Standards Board (“IASB”).

The interim financial report has been prepared in accordance with the same accounting policies adopted in the 2010 annual financial statements. Accounting policy changes that are expected to be reflected in the 2011 annual financial statements 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.

The financial information relating to the financial year ended 31 December 2010 that is included in the interim financial report as being previously reported information does not constitute the Company’s statutory financial statements for that financial year but is derived from those financial statements. Statutory financial statements for the year ended 31 December 2010 are available from the Company’s registered office. The auditors have expressed an unqualified opinion on those financial statements in their report dated 25 March 2011.

2	Changes in accounting policies

The IASB has issued a number of amendments to International Financial Reporting Standards (“IFRSs”) and one new Interpretation that are first effective for the current accounting period of the Group. Of these, the following developments are relevant to the Group’s financial statements:

•

IAS 24 (revised 2009), Related party disclosures

•

Improvements to IFRS (2010)

- 41 -

IAS 24 (revised 2009), Related party disclosures, simplifies the definition of “related party” and removes inconsistencies, which emphasises a symmetrical view of related party transactions. The revised standard also provides limited relief from disclosure of information by government-related entities in respect of transactions with the government to which the Group is related, or transactions with other entities related to the same government. The amendments to IAS 24 have had no material impact on the Group’s interim financial report.

In the Improvements to IFRSs (2010) omnibus standard, the IASB extended the scope of paragraph D8 of IFRS 1, First time adoption of IFRSs, for the use of the deemed cost exemption for an event-driven fair value. Under the amended standard, an entity is permitted to take as deemed cost the fair value of some or all of its assets and liabilities, when these fair values were determined under previous GAAP at one particular date because of a specific event which occurred during the period covered by its first financial statements prepared under IFRSs. Previously, IFRS 1 only permitted such valuations to be used as deemed cost if the event occurred before the date of the entity’s transition to IFRSs (being the start of the earliest comparative period included in the first set of IFRS financial statements).

The Group’s first financial statements prepared under IFRSs were for the year ended 31 December 1992, with the start of the earliest comparative period being 1 January 1990. During that period and pursuant to applicable laws and regulations of the PRC, the Group’s financial statements prepared under Accounting Standards for Business Enterprises and other relevant rules and regulations (collectively “PRC GAAP”) included leasehold land use rights at deemed cost based on the valuation performed by an independent valuer as of 1 January 1993. As this valuation was performed as of a date later than the date of transition to IFRSs, the Group was not permitted to adopt these valuations as deemed cost for the purposes of its IFRS financial statements and instead adopted the IFRS policy that leasehold land use rights were measured at historical cost and therefore, the related revaluation gains arising from the revaluation in 1993 as mentioned above were not recognised. The Group has chosen to adopt the amendments to IFRS 1 by making retrospective adjustments in order to eliminate the aforementioned differences between the Group’s financial statements under IFRSs and those under PRC GAAP. Specifically, the Group has retrospectively adjusted the amounts reported for previous periods in its IFRS financial statements to reflect the recognition of the leasehold land use rights at their deemed cost based on the valuation performed by the independent valuer as of 1 January 1993, with consequential adjustments for amortisation charged in subsequent periods.

- 42 -

The major adjustments made to the amounts reported for previous periods and the effect of the changes on the current period, as reported in this interim financial report, are set out below:

Consolidated balance sheet items


	1 January 2011 Increase/(decrease) RMB’000			1 January 2010 Increase/(decrease) RMB’000

Lease prepayments and other assets		156,760			160,258
Deferred tax assets		(27,967	)		(28,842	)
Total equity attributable to equity shareholders of the Company		128,793			131,416

Consolidated income statement items


	Six month period ended 30 June
	2011 Increase/(decrease) RMB’000			2010 Increase/(decrease) RMB’000

Cost of sales		1,749			1,749
Income tax		(437	)		(437	)
Profit for the period		(1,312	)		(1,312	)
Profit attributable to equity shareholders of the Company		(1,312	)		(1,312	)
Basic and diluted earnings per share (RMB)		—			—

The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

- 43 -

3	Segment reporting

(a)	Reportable information on the Group’s operating segments is as follows:


	Six-month period ended 30 June
	2011 RMB’000			2010 RMB’000
				(Restated)

*Turnover*

Manufactured Products

Synthetic fibres
- External sales		2,320,085			1,891,401
- Intersegment sales		81			56


Total		2,320,166			1,891,457


Resins and plastics
- External sales		8,597,308			7,597,388
- Intersegment sales		57,158			44,053


Total		8,654,466			7,641,441


Intermediate petrochemicals
- External sales (Note a)		10,317,965			7,936,403
- Intersegment sales		10,588,623			9,728,886


Total		20,906,588			17,665,289


Petroleum products
- External sales (Note a)		21,806,087			15,142,333
- Intersegment sales		3,409,625			1,347,563


Total		25,215,712			16,489,896


Trading of petrochemical products
- External sales (Note a)		5,989,376			3,200,879
- Intersegment sales		1,735,103			791,147


Total		7,724,479			3,992,026


All others
- External sales (Note a)		469,968			359,905
- Intersegment sales		512,269			334,308


Total		982,237			694,213


Elimination of intersegment sales		(16,302,859	)		(12,246,013	)


Turnover		49,500,789			36,128,309

- 44 -


	Six-month period ended 30 June
	2011 RMB’000		2010 RMB’000
			(Restated)

*Profit before taxation*

Profit from operation
Synthetic fibres		364,407		314,507
Resins and plastics		43,349		81,972
Intermediate petrochemicals		1,044,617		261,370
Petroleum products		144,960		930,489
Trading of petrochemical products		7,968		6,553
All others		56,059		26,879


Consolidated profit from operations		1,661,360		1,621,770

Net financing income/ (costs)		14,132		(116,712	)

Investment income		—		215

Share of profit of associates and jointly controlled entities		182,564		390,633


Profit before taxation		1,858,056		1,895,906

Note (a):

External sales include sales to Sinopec Corp, its subsidiaries and jointly controlled entities as follows:


	Six-month period ended 30 June
	2011 RMB’000		2010 RMB’000
			(Restated)

Intermediate petrochemicals		3,201,242		3,310,910
Petroleum products		18,867,720		13,027,296
Trading of petrochemical products		4,016,116		1,561,762
All others		208,979		143,405


Total		26,294,057		18,043,373

- 45 -

Segment assets

The major changes in segment assets during the period relate to additions of construction in progress in petroleum products segment.

The total segment assets of the petroleum products segment at 30 June 2011 is RMB 15,038,115,000 (31 December 2010: RMB 11,749,387,000).

4	Profit before taxation

Profit before taxation is arrived at after charging/ (crediting):


	Six-month period ended 30 June
	2011 RMB’000			2010 RMB’000
				(Restated)

(a) Net finance (income) / costs
Interest on bank loans and advances		133,451			147,130
Less: Amount capitalised into construction in progress		(16,280	)		(811	)


Total financial expenses		117,171			146,319


Net foreign exchange gain		(88,429	)		(12,341	)
Interest income		(42,874	)		(17,266	)


Total financial income		(131,303	)		(29,607	)


(b) Other items
Amortisation of lease prepayments		9,201			9,786
Depreciation		821,511			840,056
Research and development costs		25,138			7,014
Write-down of inventories (Note a)		128,602			48,499
Impairment loss on property, plant and equipment		10,552			—
Net loss on disposal of property, plant and equipment		7,198			3,893
Gain on sale of available-for-sale financial assets		—			(215	)

Note a:

The write-down of inventories mainly represents the write-down of long aged spare parts amounting to RMB 128,602,000 for the six-month period ended 30 June 2011 (six-month period ended 30 June 2010: RMB 48,499,000).

- 46 -

5	Income tax


	Six-month period ended 30 June
	2011 RMB’000		2010 RMB’000
			(Restated)

Provision for PRC income tax for the period		7,855		5,164
Deferred taxation		418,104		383,790


		425,959		388,954

The provision for PRC income tax is calculated at the rate of 25% (2010: 25%) on the estimated assessable income of the period 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 per share

The calculation of basic earnings per share is based on the profit attributable to equity shareholders of the Company for the six-month period ended 30 June 2011 of RMB 1,425,719,000 (six-month period ended 30 June 2010: RMB 1,513,739,000) and 7,200,000,000 (six-month period ended 30 June 2010: 7,200,000,000) shares in issue during the interim period.

The Group had no dilutive potential ordinary shares in existence during the six-month periods ended 30 June 2011 and 2010.

7	Dividends


	Six-month period ended 30 June
	2011 RMB’000		2010 RMB’000

Final dividend in respect of the previous financial year, approved during the period, of RMB 0.10 per share (2010: RMB 0.03 per share)		720,000		216,000

Pursuant to a resolution passed at the Annual General Meeting held on 29 June 2011, a final dividend of RMB 720,000,000 was declared and approved for the year ended 31 December 2010 (2009: RMB 216,000,000).

The Board of Directors did not declare the payment of an interim dividend for the period (2010: RMB nil).

- 47 -

8	Trade receivables


	At 30 June 2011 RMB’000			At 31 December 2010 RMB’000

Trade debtors		162,958			82,030
Less: Impairment losses for bad and doubtful debts		(7,479	)		(7,837	)


		155,479			74,193

Bills receivable		2,106,341			1,993,273
Amounts due from related parties		949,864			776,234


		3,211,684			2,843,700

Amounts due from related parties represent trade-related balances.

The aging analysis of trade debtors, bills receivable and amounts due from related parties (net of impairment losses for bad and doubtful debts) is as follows:


	At 30 June 2011 RMB’000		At 31 December 2010 RMB’000

Invoice date:
Within one year		3,210,615		2,842,788
Between one and two years		1,069		912


		3,211,684		2,843,700

Sales are generally on a cash basis. Subject to negotiation, credit is generally only available for major customers with well-established trading records.

- 48 -

9	Loans and borrowings


	At 30 June 2011 RMB’000		At 31 December 2010 RMB’000

Short-term loans		4,327,516		3,295,438
Corporate bonds (Note a)		—		1,000,000
Current portion of long-term loans		100,000		100,000


Loans and borrowings — current		4,427,516		4,395,438
Loans and borrowings — non-current		175,000		175,000


		4,602,516		4,570,438

Note a:

In June 2011, the Group repaid the RMB 1 billion 365-day unsecured corporate bonds which were issued to corporate investors in the PRC inter-bank debenture market on 23 June 2010. The bonds were issued at 100% of face value, with an effective yield of 3.27% per annum, and mature on 23 June 2011.

10	Trade payables


	At 30 June 2011 RMB’000		At 31 December 2010 RMB’000

Trade creditors		1,798,600		2,376,452
Bills payable		33,346		41,034
Amounts due to related parties		4,722,531		1,800,991


		6,554,477		4,218,477

The maturity analysis of trade accounts payable is as follows:


	At 30 June 2011 RMB’000		At 31 December 2010 RMB’000

Due within 1 month or on demand		6,305,119		4,082,246
Due after 1 month but within 3 months		249,358		136,231


		6,554,477		4,218,477

- 49 -

7.3

DIFFERENCES BETWEEN FINANCIAL REPORT PREPARED UNDER CAS AND IFRS

The below figures are extracted from the interim financial report prepared in accordance with CAS and IFRS, both of which have not been audited.

Other than the differences in the classification of certain financial statement items and the accounting treatment of the items described below, there are no material differences between the Group’s financial report prepared in accordance with CAS and IFRS. The major differences are:

Notes:

(i)

Government grants

Under CAS, government subsidies defined as capital contributions according to the relevant government requirements are not considered a government grant, but instead should be recorded as an increase in capital reserves.

Under IFRS, such grants are offset against the cost of asset to which the grants are related. Upon transfer to property, plant and equipment, the grant is recognised as income over the useful life of the property, plant and equipment by way of a reduced depreciation charge.

(ii)

Safety production costs

Under CAS, safety production costs should be recognised in profit or loss with a corresponding increase in reserve according to PRC regulations. Such reserve is reduced for expenses incurred for safety production purposes or, when safety production related fixed assets are purchased, is reduced by the purchased cost with a corresponding increase in the accumulated depreciation. Such fixed assets are not depreciated thereafter. Under IFRS, these expenses are recognised in profit or loss when incurred, and property, plant and equipment are depreciated with applicable methods.

- 50 -

The reconciliation between the net profit attributable to equity shareholders of the Company between CAS and IFRS is as follows:


				Six-month period ended 30 June
	Note			2011 RMB’000			2010 RMB’000
							(Restated)

Net profit attributable to equity shareholders of the Company under CAS					1,381,533			1,493,930

Adjustments:

Government grants		(i	)		14,193			13,380
Safety production costs		(ii	)		38,058			—
Others					—			6,429
Effects of the above adjustments on taxation					(8,065	)		—


Net profit attributable to equity shareholders of the Company under IFRS					1,425,719			1,513,739

- 51 -

The reconciliation between the shareholders’ equity attributable to the equity shareholders of the Company between CAS and IFRS is as follows:


				At 30 June 2011			At 31 December 2010
	Note			RMB’000			RMB’000
							(Restated)

Total equity attributable to equity shareholders of the Company under CAS					18,612,631			17,913,040

Adjustments:

Government grants		(i	)		(198,545	)		(212,738	)
Effects of the above adjustments on taxation					(18,910	)		(10,845	)


Total equity attributable to equity shareholders of the Company under IFRS					18,395,176			17,689,457

By order of the Board

Rong Guangdao

Chairman

Shanghai, the PRC, 26 August 2011

As at the date of this announcement, the executive directors of the Company are Rong Guangdao, Wang Zhiqing, Wu Haijun, Li Honggen, Shi Wei and Ye Guohua; the non-executive directors of the Company are Lei Dianwu and Xiang Hanyin, and the independent non-executive directors of the Company are Shen Liqiang, Jin Mingda, Wang Yongshou and Cai Tingji.

- 52 -

LOGO

To: Business Editor

[For Immediate Release]

Shanghai Petrochemical Announces 2011 Interim Results

Achieved Rapid Growth in Revenue in First Half,

Actively Coping with a Challenging Environment in Second Half.

Hong Kong, August 26, 2011 … Sinopec Shanghai Petrochemical Company Limited (“Shanghai Petrochemical” or the “Company”) (HKEx: 00338; SSE: 600688; NYSE: SHI) announced today the unaudited operating results of the Company and its subsidiaries (the “Group” ) prepared under International Financial Reporting Standards (“IFRS”) for the six months ended June 30, 2011 (the “Period”).

According to IFRS, turnover of the Group for the Period amounted to RMB49,500.8 million, representing an increase of 37.01% over the previous year. Profit attributable to equity shareholders of the Company amounted to RMB1,425.7 million (2010 interim: RMB1,513.7 million). Basic earnings per share was RMB0.198 (2010 interim: RMB0.210). The board of directors of the Company does not recommend a payment of any interim dividend for 2011 (2010 interim: Nil).

Mr. Rong Guangdao, Chairman of Shanghai Petrochemical, said, “In the first half of 2011, the Chinese economy continued to maintain stable and relatively fast growth, while China’s petrochemical industry continued to maintain a healthy and steady operation. However, international crude oil prices surged significantly and stayed at high levels, and the profitability of the oil refining industry declined substantially, resulting in a turnaround from profits to losses. Coping with external market changes with a proactive approach, the Company continued to increase total physical production volume of products, and made every effort to push forward various tasks on production, operation, reform and development. During the Period, crude oil processing volume and outputs of gasoline, diesel, jet fuel, synthetic resin & plastics and other products reached record highs once again as compared to previous corresponding periods. The natural gas comprehensive utilization project reaped good economic benefits.”

In the first half of 2011, the Group’s net sales amounted to RMB46,345.1 million, representing an increase of 37.61% year-on-year, of which net sales derived from petroleum products, intermediate petrochemicals, resins and plastics, synthetic fibres and trading of petrochemical products increased by 46.78%, 29.87%, 13.04%, 22.53% and 87.10% respectively.

The fully completed Phase 5 Project of the Group continued to effectively produce its overall scale effect during the first half of 2011. As a result, total volume of goods produced increased by 14.87% year-on-year. During the Period, the Group processed 5,678,300 tons of crude oil (including 131,400 tons of crude oil processed on a sub-contracting basis), an increase of 12.60% year-on-year. Outputs of gasoline, diesel and jet fuel were 510,300 tons, 2,055,700 tons and 402,500 tons respectively, representing increases of 10.24%, 33.49% and 5.78% year-on-year respectively. Outputs of ethylene and propylene were 492,100 tons and 258,700 tons respectively, representing decreases of 0.36% and 4.30% year-on-year respectively. Output of synthetic resins and plastics (excluding polyester and polyvinyl alcohol) was 570,800 tons, representing an increase of 0.39% year-on-year. Outputs of synthetic fibre monomers, synthetic fibre polymers and synthetic fibres were 499,600 tons, 326,400 tons and 129,100 tons respectively, representing an increase of 0.04%, a decrease of 1.03% and an increase of 4.20% year-on-year respectively. The Group’s output-to-sales ratio and receivable recovery ratio for the Period were 99.85% and 99.37% respectively.

In the first half of 2011, international crude oil prices fell after a rise but in general tended to surge significantly and remained at high levels. The Group’s average unit cost of crude oil processed was RMB4,937.91/ton in the first half of 2011, representing an increase of 25.57% year-on-year. The Group’s total costs of crude oil processed during the Period increased substantially by 42.89% year-on-year to RMB27,390.2 million, accounting for 61.76% of the Group’s cost of sales for the Period.

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Shanghai Petrochemical Announces 2011 Interim Results…p.2

During the Period, the Group fully commenced the construction of the Phase 6 Project, with the refinery revamping and expansion project as the key project, of which the construction of the new 3,900,000 tons/year residual oil hydrogenation plant, the new 3,500,000 tons/year catalytic cracking plant and the carbon fiber project with a capacity of 1,500 tons/year have already commenced; preliminary works for other projects such as the ethanolamine project with a capacity of 50,000 tons/year and the EVA (ethylene-vinyl acetate copolymer) project with a capacity of 100,000 tons/year proceeded actively as planned. Meanwhile, other key technological renovation projects of the Group such as optimization of energy saving and consumption reduction at No. 2 PTA Plant, the renovation on energy conservation and consumption reduction of No. 2 and No. 3 aromatics complexes, No. 4 main transformer of the 220 KV petrochemical substation and the capacity expansion of No. 6 main transformer of the No. 1 thermal power station, were also being carried out in an orderly manner.

Looking forward, Mr. Rong Guangdao said, “In the second half of 2011, there will be numerous uncertainties and instabilities during the process of recovery of the world economy. Amid steady and relatively fast development, China’s economy will be faced with the contradictions and problems of unbalanced and uncoordinated development. Although the economic operation of the domestic petrochemical industry will maintain a stable and sound trend in general, the industry also faces pressures from policies, energy resources and environmental protection restrictions. Meanwhile, international crude oil prices are likely to lose the momentum for a substantial rise but to fluctuate at relatively high price levels. The Group expects that the cost pressure upon enterprises will increase and market competition will further intensify in the second half. The Group will continue to focus on the operation of plants, strive to increase the total physical production volume of products, push forward in full scale the construction of the Phase 6 Project, further optimize production and operation, and strive to improve profitability.”

Shanghai Petrochemical is one of the largest petrochemical companies in China in terms of sales revenue and was one of the first Chinese companies to complete a global securities offering. Located in the Jinshan District which is at the southwest of Shanghai, it is a highly integrated petrochemical enterprise which processes crude oil into a broad range of products such as synthetic fibres, resins and plastics, intermediate petrochemicals and petroleum products.

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This press release contains statements of a forward-looking nature. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks such as: the risk that the PRC economy may not grow at the same rate in future periods as it has in the last several years, or at all, the risk that the PRC government’s implementation of macro-economic control measures to curb over-heating of the PRC economy may adversely affect the company; uncertainty as to global economic growth in future periods; the risk that prices of the Company’s raw materials, particularly crude oil, will continue to increase; the risk of not being able to raise the prices of the Company’s products as is appropriate thus adversely affecting the Company’s profitability; the risk that new marketing and sales strategies may not be effective; the risk that fluctuations in demand for the Company’s products may cause the Company to either over-invest or under-invest in production capacity in one or more of its four major product categories; the risk that investments in new technologies and development cycles may not produce the benefits anticipated by management; the risk that the trading price of the Company’s shares may decrease for a variety of reasons, some of which may be beyond the control of management; competition in the Company’s existing and potential markets; and other risks outlined in the Company’s filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update this forward-looking information, except as required under applicable law.

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Encl: Consolidated Income Statement (Unaudited)

For further information, please contact:

Ms. Leona Zeng / Ms. Christy Lai

Rikes Hill & Knowlton Limited

Tel: (852) 2520 2201 Fax: (852) 2520 2241

Email: leona.zeng@rikes.hillandknowlton.com

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Shanghai Petrochemical Announces 2011 Interim Results…p.3

Sinopec Shanghai Petrochemical Company Limited

2011 Interim Results

(Prepared under International Financial Reporting Standards)

Consolidated Income Statement (Unaudited)


	For the six months ended June 30
	2011 RMB’000			2010 RMB’000
				(Restated)

Turnover		49,500,789			36,128,309
Sales taxes and surcharges		(3,155,653	)		(2,450,087	)


Net sales		46,345,136			33,678,222
Cost of sales		(44,348,719	)		(31,817,534	)


Gross profit		1,996,417			1,860,688
Selling and administrative expenses		(335,445	)		(255,584	)
Other operating income		27,866			31,479
Other operating expenses		(27,478	)		(14,813	)


Profit from operations		1,661,360			1,621,770


Financial income		131,303			29,607
Financial expenses		(117,171	)		(146,319	)

Net financing income/(costs)		14,132			(116,712	)


Investment income		—			215

Share of profit of associates and jointly controlled entities		182,564			390,633


Profit before taxation		1,858,056			1,895,906
Income tax		(425,959	)		(388,954	)

Profit for the Period		1,432,097			1,506,952

Attributable to
Equity shareholders of the Company		1,425,719			1,513,739
Non-controlling interests		6,378			(6,787	)

Profit for the Period		1,432,097			1,506,952

Earnings per share
Basic	RMB	0.198		RMB	0.210

Diluted	RMB	0.198		RMB	0.210

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