Holistically, crude oil price will remain on a high side further still. It is estimated that the average price of Brent crude oil in 2004 will turn out betthe companyen US$ 27~28 dollars/barrel, slightly down from that in 2003. Crude oil price perches on a high side, not least because of the growing demands in the global market, limited production output of OPEC, slump of US dollar, slow recovery of Iraq's exporting of crude oil, limited increment of crude oil production output of non-OPEC countries, relatively low inventory levels of crude oil and finished oil products in major the companystern countries, and the turmoil in Venezuela’s political scene, etc.

Gross profit of oil refining worldwide is rising, on the whole. Previously, the oil refining capacity in the global market (in Asia in particular) was heavily overdeveloped, thus the gross profit rate of oil refining always remained on a low side. Besides, as stricter requirements have been brought forward towards the quality standard and environment-friendly performance of oil products, the newly added capacity in the oil refining sector has not been able to meet the demands. In recent years, as demands have been surging up, the gross profit rate of oil refining worldwide has improved progressively; for instance, in 2003, the gross profit rate of oil refining in the global market has reached the second record high, during the past 15 years. It is predicted that in the ensuing 2 years, the growth rate of demands will turn out twice that of the newly added production output, and the gross profit of oil refining in the international market will still remain on a high level. It is estimated that the company's gross profit rate of oil refining will be US$ 4 dollars/barrel or so in 2004.

As the growth rate of global demands for chemical products has turned out even quicker than that of newly established production output worldwide (as estimated by CMAI, the growth rate of global demands for chemical products was 1.2 times that of the world's GDP; in this way, if the world’s GDP is to grow by 3.5% in 2004, then the demands for chemical products are to grow by 4.2%, namely up by 4.2 million tons. In fact, it was lately known that the production output of ethylene has been enhanced by less than 2%, i.e. presenting an added production output of only 1.14 million tons); the load rate of chemical facilities worldwide is going to climb up constantly (the load rate was betthe companyen 87~88% in 2003, and is expected to reach 91% in 2004). The chemicals industry of the day features good business conditions. It is estimated that the Chemicals Segment of the company is to register higher economic results.

The State government decided to adjust its policy upon tax reimbursement for exported commodities starting from 01 January 2004. The company would like to summarize the adjustments of the rates of taxes to be reimbursed for exported petroleum and main related petrochemical products, in the table below:

Checklist of adjustments of the rates of taxes to be reimbursed for exported petroleum and main related petrochemical products

Item Tax rate before adjustment Tax rate after adjustment

Petroleum products:
Crude oil  13  0
Gasoline  13  11
Other oil products  13  0
Organic and inorganic industrial chemicals
Benzene  15  0

Related products:
Chemical fertilizer, coal, etc.  15  13
Textile products  17, 13  13, 11
Steel and steel products, plastic products, toys, tyres, and shoes, etc.  15  13
Sulphur  13  11
Copper, cindering coal, coke, etc.  17, 13, 15  5

Major exports of the company include gasoline, aviation kerosene, diesel oil, petroleum coke, asphalt, benzene, and paraxylene. With regard to exporting of finished oil products, the company may resort to the mode of processing with materials supplied by clients, so as to generate less negative influence. As most of the products of the company are sold at home, while a small quantity is exported, hence the company is not to be heavily affected, holistically.

The company reckons that the exchange rate of Renminbi is to remain stable in the near future, furthers still. The Chinese government has declared itself for many times with regard to the concern about revaluation of RMB, and Renminbi appreciation is not likely to happen in the near future. It is estimated that the State will further explore and consummate the "RMB Exchange Rate Formation Mechanism" in its drive for carrying forward the reform into its financial system.

If RMB appreciate slightly, it will have a negative, but not so big, influence on Sinopec on the whole. As to international investors, revaluation of Renminbi can bring them more dividends.

China's economy has been constantly developing at a fast speed. In 2003, China has become the world’s second largest net importer of crude oil, ranking itself only after USA. Faced with quick growing demands for energy sources and shortfall of resources, the company will take active countermeasures as follows:

To stabilize the operations in China's east, accelerate the development efforts in China's the companyst, and prepare for exploring China's south. In fact, Sinopec's crude oil and natural gas producing area in China's east still witnesses "stable reserves" discovered now. The company will try our utmost to enhance the petroleum reserves by 100~150 million tons on an annual basis; in the meantime, the volume of the known reserves in the advantaged basin in China's the companyst only takes up 3.85%~24.6% in the total, indicating that this basin area cherishes a great potential to be tapped. The company will also make harder efforts in pre-assessment of, and invest heavier in, the newly registered prospection section in China's the companyst, which covers a land area of 220,000 square meters; and endeavor to enhance our backup reserves by leaps.

Exploration of the natural gas market
The company will select major market segments, actively explore the natural gas market, accelerate our efforts in terms of prospection and development in East China Sea Area and China's the companyst, and implement a strategy going as "paying equal heed to the development of crude oil and that of natural gas".

Active launch of upstream businesses abroad
The company will quicken up our pace in prospection and development of crude oil and natural gas resources despite of risks, with the help conferred by our parent company, thus to acquire high-quality reserves and realize diversification of resources, and embrace uninterrupted business expansion. Up to date, the company has owned risk-stricken prospection sections in Saudi Arabia, Yemen, and Kazakstan, etc.

Adoption of a diversification-featured strategy for crude oil purchasing purpose
The company are to purchase multiple varieties of crude oil through diversified channels and from many other countries, so as to reduce the out-sourcing risks in purchasing crude oil. The company will also strike up long- term contract-based relations with crude oil manufacturers in those oil-producing countries, so as to bring down the purchasing costs of crude oil.

The company's cooperation with China Shipping, China Merchants Group and China Railway Group in terms of transportation has not only helped the company tap the fuel oil market and endued the company with a variety of oil products supply channels, but also provided the other three parties with a stable transportation market, which is conducive to the company on fronts of ensuring stable transportation of crude oil and finished oil products, and bringing down the company's operating costs, as the companyll.

1. Cooperation with China Shipping Group in terms of transportation

The company signed a cooperative investment agreement with CNOOC on 25 September 2003, and agreed to invest jointly (by providing the total share capital by 50/50) in organizing Sinopec-CNOOC Vessel Fuel Supplies Co., Ltd. The joint venture makes use of the both parties' the companyll-established supply and purchasing channels, enjoys the preemptive purchasing right of fuel resources offered by Sinopec, and holds the priority right to utilize the storage and transport facilities in coastal regions provided by Sinopec. Besides, the joint venture also enjoys certain discounts off the fuel prices. By setting up such a joint venture, the two parties hope to jointly explore the market sector of supplying fuel to foreign ships on the sea, supplying bonded fuel oil to foreign ships, and supplying fuel to ships outside China, as the companyll.

2. Cooperation with China Railway Materials & Supplies Corporation

The company has worked together with China Railway Materials & Supplies Corporation to jointly invest (by providing the total share capital by 50/50) in organizing Sinopec-China Railway Oil Selling Co., Ltd. China Railway Materials & Supplies Corporation makes use of its supply channels and wide- spread distribution outlets to provide the joint venture with a stable distribution network and a market segment of "fuel oil for use on railroad locomotive" to explore; whilst Sinopec utilizes its competitive edges in terms of production and distribution of finished oil products, to provide the joint venture with stable supplies of finished oil products of fine quality.

3. Cooperation with China Merchants Group in terms of transportation

On December 17 of 2003, Sinopec and China Merchants Group Co., Ltd. entered into a framework agreement upon cooperative transportation of imported crude oil. As stipulated under this agreement, Sinopec arranges China Merchants Group to transport a certain quantity of imported crude oil on an annual basis; whilst China Merchants Group allows Sinopec to enjoy favorable transportation prices and services in terms of transportation of such imported crude oil.

With approval granted by competent State authorities, China Petroleum & Chemical Group Company, China Petroleum & Natural Gas Group Company, China National Offshore Oil Corporation, China Chemicals Import & Export Corporation, in the capacity of initiators and main shareholders, worked together to establish a joint-stock company named "Shanghai Petroleum Trading Market Co., Ltd.", the first ever Board Chairman of which was appointed by Sinopec Corp.

Establishment of Shanghai Petroleum Trading Market is not only conducive to stabilizing the prices in the petroleum market at home and ensuring the stable supplies in the market, but also helpful in facilitating the company to arrange the production work in a rational way, according to the crude oil prices in the international market and petroleum prices in the home market.

After establishment of Shanghai Petroleum Trading Market, the company will take an active role in the trading activities organized by "Shanghai Petroleum Trading Market Co., Ltd.". At the beginning, "Shanghai Petroleum Trading Market Co., Ltd." is only engaged in medium term and forward transactions of fuel oil. The Chinese market of fuel oil has been widely opened to the outside, and witnessed a huge amount of fuel oil imported from abroad (which has been still increasing year by year). As one of the country's leading fuel oil suppliers, our company will refer to the variations in terms of market demands and our own production & supply capabilities, take an active part in the medium term and forward transactions, endeavor to increase our supply quantity of resources, and retain our market shares as the companyll.

The total amount of funds raised by bonds issued at this time accounted for RMB 3.5 billion. Among others, 650 million was spent to finance the construction project titled "Shanghai~Ningbo-Nanjing Imported Crude Oil Pipeline", 600 million is to be used for construction of a Finished Oil Products Pipeline in China's Souththe companyst, 1.4 billion is to be used in the project "Technological Transformation for Adjustment of the Mix of Synthetic Resin Products", and 850 million is to be used in the project "Technological Transformation for Remodification of Raw Materials of Production of Chemical Fertilizers" (of which, 300 million is to be used in the Baling Project, 300 million in the Hubei Project, while 250 million in the Jinling Project). All such projects will help the company enhance its economic benefits and enhance its core competitive further still.

Referring to the funding demands and concrete conditions in the capital market, the company does not rule out the possibility of financing in an appropriate mode at an appropriate time; hothe companyver, at present, the company has not yet formulated a specific plan for refinancing in the securities market.

The amount of those dividends to be distributed by Sinopec does not exceed 40% of its distributable profit. The distributable profit of the company consists of the distributable profit in the current year and the undistributed profit carried forward from the preceding year. The distributable profit in the current year shall be the remaining sum of the amount as determined in accordance with the RPC Accounting Rules and Regulations and under International Financial Reporting Standards (IFRS), whichever are lesser, after deducting a 10% legal surplus, 5%~10% legal public the companylfare fund and a surplus accumulation fund of an optional sum.

As the company's distributable profit has contained the undistributed profit carried forward from the preceding fiscal year, this has laid down a foundation on which the company can issue dividends of a stable amount. For three consecutive years from 2000 to 2002, the company has been distributing its dividends at RMB 0.08 yuan per share. In 2003, it distributed dividends at RMB 0.09 yuan per share (of which RMB 0.03 yuan per share was distributed in the middle of 2003). Based on our estimation of the market climate, the company's development strategy in the future and our confidence in the company in terms of making profit constantly in the years to come, the company believe that the ensuing few years will see the company distribute dividends of a relatively stable amount.

China became a formal member of WTO on December 11, 2001. The following are major changes of petroleum and petrochemical trade regulations and their impacts on Sinopec Corp.:

1. Concession of Tariff Import tariff of crude oil has been canceled from RMB16 per ton since January 1, 2002, which means the cost of importing crude oil will be saved at RMB16 each ton. Sinopec Corp. will benefit from this. Sinopec Corp. imported 68.93 million tons of crude oil in 2001, accounting for 70% of total quantity of crude oil.

Tariff of petrochemicals: Refined oil products, Tariff of gasoline was reduced to 5% from 9%, however, it will keep the original level on diesel oil and kerosene, respectively 6% and 9%. As a result of concession of tariff of gasoline, the sales revenue of Sinopec Corp.'s refined oil products will be reduced accordingly. Chemical products, Tariff of rubber will keep the same level with the past; average tariff of synthetic resin in 2001 was 16%, while it will be reduced to 6.5% gradually by 2008. At the beginning of 2002, the tariff of high pressure polyethylene and low pressure polyethylene will be reduced from 16% to 14.2%; polypropylene from 16% to 10%; polyvinyl chloride and polystyrene from 16% to 12.8%. Tariff of synthetic fiber raw material will be reduced respectively from 6.5%-12.8% in 2002 to 6.5%-9% in 2008 gradually, and synthetic fiber from 8.3%-14% in 2002 to 5% in 2004 gradually. Tariff of urea in 2002 is 4%, which will keep unchangeable. In fact, before China's entering into WTO, since parts of imported chemical products had enjoyed preferential duties, together with irregular operation of processing imported raw materials, the real average import tariff of chemical products is lower than nominal one. Thus negative impacts of concession of tariff on chemical products will be smaller than expected.

2. Market Access In the year of China's entering into WTO, the non-state-run trading in crude oil and refined oil products were released to 8.28 million tons and 4.6 million tons individually, together with increasing rate of 15% annually. Market access also puts an impact on retail and wholesale of refined oil products. Retail markets will be opened 3 years after China's entering into WTO, foreign companies will be allowed to set up gas stations in China, while wholesale markets will also be opened 5 years later.

3.  Import quota At present, China is adopting "setting the amount of limitation to registration" on imported crude oil, which will be changed into automatic registration after entering into WTO. In 2002 admittance volume of refined oil products (including fuel oil) is released to 22 million tons, with an increase of 15% annually, and the limitation will be canceled by January 1, 2004. It is expected that the imported fuel oil, aircraft kerosene and chemical light oil, which will be short in China in several years, will keep a large quantity in domestic markets. However, imported quantity of gasoline and diesel oil will keep at lower levels. Based on the above mentioned, domestic market of refined oil products will not be struck strongly within a short time.

The initial tariff quota on urea is 1.3 million tons, with an increase of 5% annually, which expected to reach 3.3 million tons by 2006. At that time state-run trade volume of urea will account for 90% in the import.

Changing fee to tax is a trend of national tax reform, which is also an international going practice. Presently the corporation hasn't got any detailed timetable about this policy carried out by the government.

Influence of tax collection for fuel oil on Sinopec Corp. includes both the favorable and unfavorable.

Favorable aspect: The state will further strengthen management and control in refined oil products markets. Regulating wholesale system of oil products and retailing network of gas stations, installation of taxation equipment in oil-filling machine and continuing rectifying small oil refineries, all these measures would create an excellent development environment for the corporation.

Unfavorable aspect: It will bring an impact on the markets of gasoline and diesel oil, such as searching for substitute fuel, focus on saving oil-consumption, unreasonable prices of oil-products and irritating tax evasion, smuggling oil-products, emergence and existing of small-size refining plants, etc.

The corporation will cooperate actively with the government on the implementation of this policy, and report the problems in the execution.

The Company is to concentrate its efforts on a major task of conducting "structural adjustments", so as to further speed up the development of its principal business operations:

Exploration and production segment:
Major efforts are to be made to adjust the pace of increasing reserves and production capacities, and adhere to the guiding principle "maintain stable oil and gas production in eastern China, expedite exploration and production in western China, explore opportunities in southern China and pursue overseas expansion.".

Refining segment:
Major efforts are to be made to adjust the production layout, cut down costs and enhance the efficiency, so as to increase the competitiveness.

Chemicals segment:
To peel off some non-principal business operations and focus on developing principal business operations, adjust the production and distribution portfolio, and meet the market demands.

Marketing and distribution segment:
To consummate the marketing network as soon as possible, enhance the retail and direct distribution volume and the market shares.
To accelerate the establishment of a modern logistic (storage and transportation) network chiefly featuring pipeline-based transmission.
To resort to scientific and technological advancement, and information technology to upgrade   the traditional industry.

1. Going public in four different places; a diversified stock equity structure has been struck up in a relatively balanced fashion.

2. The Company has already struck up a fairly consummate corporate governance structure; set forth the rules of procedure for its shareholders' meeting, board of directors, and board of supervisors as well. Besides, the Company has included these into its Articles of Association, and allowed the three committees established under its Board of Directors to play a "decision-maker's advisor" role; on top of it, the Company also manages to protect the interests of its medium and minor shareholders by means of enhancing the proportion of independent directors in its Board.

3. To accept the supervision and management in these four places voluntarily, thus to further improve the transparency of the Company.

4. A remuneration encourage system associated with operating performance and stock price fluctuations has been put into effect.

In fact, the constantly improved corporate governance of the Company has struck acknowledgement in the capital market; for instance, the magazine European Money has appraised the Company as "Asia' Best Company in Terms of Corporate Governance Performance" for twice in succession.

1. On the front of consummating the segment-based management system, it is planned to streamline the management layers, carry out flat and professional management practices.

Oil field segment: to streamline the management layers, and straight out the development system in the new Western Area at the same time.
Oil refining segment: to carry out flat and professional management practices holistically.
Chemicals segment: to streamline the management layers and organizations, coordinate, direct and supervise the marketing process.
Oil products marketing segment: to complete the integrated reorganization at city and county levels, and intensify construction in selling oil products with the help of information platforms and pipelines.

2. On the front of transformation of operating mechanism, it is planned
To further improve the corporate governance structure of the Company.
To consummate the mechanism of encouragement for taking part in the competition.
To consummate the internal control mechanism.

When getting listed, Sinopec Corp. ever committed to collaborate, step by step, those subsidiaries which had been listed earlier, in an aim to avoid peers competition and reduce connected transactions.

Upholding the operating mode featuring "rectification according to laws, employment of a market oriented mechanism" and adhering to the spirit "team together, everyone wins", we have collaborated with Hubei Xinghua in year 2002. Regarding the listing subsidiaries in the A share stock market in the PRC, we will make full use of the advantageous situation which is characterized by a lack of "shell companies" in today's China, and manage to collaborate our subsidiaries listed in the A share stock market one after another once they have met certain necessary conditions. We will not have this happen in a hurry, as the key point is to pursue maximum economic benefits. Based on such considerations, we have not yet worked out a specific time schedule in this regard.

As to the subsidiaries listed in the H share stock market, there is not a specified time schedule yet up to this minute.

Cost-saving and efficiency enhancement are the two permanent appeals of the company, and must be pursued constantly so as to enhance our competitiveness.

Once the Company accomplishes its objective of "cost-saving" in year 2003, the operating costs in cash of the oil Filed, oil Refining, marketing segments and chemical Ethylene will reach US$ 6.04 per barrel, US$ 2 per barrel, RMB 160 per ton and US$ 148 per ton respectively; however, compared to international advanced level, there is still a gap. In the future, the Company will adopt effective measures to bring down its costs on the following fronts:
Optimization. To close, stop, merge and transform those low-efficient assets, optimize resources and product flow, and also optimize the storage and transport mode.
Technological innovation. To employ new technologies, production techniques, save energy, reduce energy consumption, thus to bring down the costs.
Reinforced management practices. To consummate the internal control system, intensify capital centralized management, and cut down the financial expenses.
Reform. To flatten the management hierarchy, and continue to carry on the Payroll Cut plan.

To bring into full play the strengths of all the parties:

As a matter of fact, this cooperative development project regarding natural gas resources in East Sea participated by the four parties, Chinese and foreign, has brought into full play the strengths of each of the four parties, and allowed their resources, funds, and professional advantages to make a fusion in an effective manner. This is conducive to acceleration of the development of the East Sea Natural Gas Project, which is to the good of the State and the Chinese people holistically, and also endues these four cooperative parties to embrace certain benefits. Sinopec Corp. plays a leading role in terms of sale of natural gas.

Foreign parties render compensation: considering the oil and gas reserves provided by Sinopec Corp., foreign parties will render compensation in a rational and equitable manner according to globally accepted practices.

Under Article 103 of the New Articles of Association of Sinopec Corp., if the controlling shareholders of the Company control 30% or more of the Company's shares, the accumulative voting system shall be adopted when voting for two or more directors in a shareholders' general meeting.

Accumulative voting, that is, in electing two or more directors in a shareholders' general meeting, the number of votes attached to each share held by a participating shareholder shall be equal to the number of directors to be elected, in which case the shareholder may cast his votes for one candidate or for several candidates. Directors are elected according to the number of approval votes cast, with the director holding the most number of approval votes being elected.. With this centralized voting method, medium and minority shareholder can elect the director to their choice, hence avoiding the situation where majority shareholders monopolize the selection of directors. Below is an example of the election of 2 directors (with two running candidates) carried out by accumulative voting.

1. Each share that you hold shall carry the same number of votes as the number of directors to be elected. For example, if you hold 1 million Sinopec Corp. shares, you have a total of 2 million votes. (i.e. 1,000,000 shares x 2 = 2,000,000 shares).

2. You may exercise your voting rights by spreading your votes evenly and casting votes for each of the candidates according to the number of shares you hold. Or you may cast votes for a particular candidate with all or part of the shares you hold, with the number of votes attached to each share held by a participating shareholder equal to the number of directors to be elected.. For example, if you hold 1 million Sinopec Corp. shares, you would have a total of two million votes. You may cast one million votes to each of the two candidates (voting for or against them); or you may cast all of your 2 million votes to one of the candidates (voting for or against him); or you may cast 1.2 million votes to one candidate (voting for or against him) and the remaining 0.8 million votes to the other candidate (voting for or against him).

3. Upon the exercise of all your voting rights by focusing your votes on one or two of the running candidates, you shall not have any voting rights left for other running candidates; i.e. the total number of the votes that you cast for or against one or two running candidates cannot exceed the number of voting rights carried by the total number of shares that you hold.

4. Attention: where the total number of votes that you cast for one or two of the candidates is in excess of the number of votes carried by the total number of shares that you hold, the votes that your cast shall be invalid, and you shall be deemed to have waived your voting rights. Where the total number of votes that you cast for one or two of the candidates is less than the number of votes carried by the total number of shares that you hold, your votes are still valid, and the voting rights attached to the shortfall between the votes actually cast and the votes which you are entitled to cast shall be deemed to have been waived by you. For example, if you hold 1 million Sinopec Corp. shares, you would have a total of 2 million votes: (a) if you cast '2 million votes' "For" one candidate , then your voting rights have been exhausted and you no longer have voting rights on another candidate; If you cast '2 million votes' 'For' one candidate and cast '100 million votes' 'For' or 'Against' another candidate, the 200 million votes you hold would be invalid and it would be deemed that you have waived your voting rights; or (b) if you cast '1 million votes' 'For'  one candidate, and '0.8 million votes' 'Against' for another candidate, you have cast a total of 1.8 million valid votes, and the remaining 0.2 million voting rights shall be deemed waived.

5. Where the number of approval votes won by a running candidate exceeds half the total voting rights (to be calculated according to the total number of shares if the cumulative voting is not adopted) represented by the shareholders present at the shareholders' general meeting and the approval votes exceed the objection votes, the candidate shall be the elected director. Where the number of the elected running candidates exceed the total number of directors to be elected, the candidates who won the largest numbers of approval votes shall be elected as directors (however, if the elected running candidates with fewer approval votes hold the same number of approval votes as other candidates, , and the election of such candidates as directors will give rise to the number of directors elected exceeding the number of directors to be elected, such candidates shall be deemed as having not been elected); if the number of directors elected at a shareholders' general meeting is less than the number of directors to be elected, a new round of voting shall be carried out for the purpose of filling such director vacancies, until all the directors to be elected are validly elected.

Sinopec is an energy & chemical corporation that is specialized in the exploration and production of petroleum and natural gas, refining and sale of petroleum products, and the production and sale of chemical products, with its upstream, middle-stream & downstream operations integrated as a whole. The main tangible assets of Sinopec converge in China's east and south, which have both posted the fastest speed of economic growth in the country. As shown by its business turnover in 2004, Sinopec is the largest listed company in today's China.

Business segments Operating structure

Exploration & Production Sinopec is the second largest manufacturer of petroleum and natural gas in China. In 2004, it turned out 274.15 million barrels of crude oil, 207 billion cubic feet of natural gas, which recorded a year-on-year growth rate of 1.18% and 10.29% respectively.

Oil refining Sinopec is the largest oil refiner in China, and produces gasoline, diesel oil, aviation kerosene, lubricating oil, fuel oil, and multiple kinds of raw chemical materials, as well as other petroleum products. In the whole of year 2004, Sinopec processed up to 132.95 million tons of crude oil, which was up by 14.36% from that (116.26 million tons) in 2003.

Chemical Sinopec is the largest manufacturer and distributor of chemicals in China. As at the end of 2004, it has produced 4.074 million tons of ethylene, which was up by 2.31% from that (3.982 million tons) in 2003. Major chemicals turned out by Sinopec include: intermediate chemicals, synthetic resins, synthetic fibers, synthetic fiber monomers and polymers, synthetic rubber and fertilizer.

Marketing & Distribution  Sinopec has possessed the best-developed distribution network of finished oil products in today's China. Up to 2004, there have existed totally 30,063 petro stations branded Sinopec, of which 26,581 ones are operated by Sinopec on its own. Besides, the operating efficiency of these petro stations has been growing constantly. The volume of fueling charge per petro station on average in a year has exceeded 2,000 tons, recording a year-on-year growth rate of 18.8%.

For the sake of its long-term corporate development strategy, Sinopec has struck up a specific organ liable for the sale of its chemical products, on the basis of its earlier integration on six fronts, namely marketing strategy, market exploration, logistics optimization, resources department, distribution, and brand development strategy. The company made this move, in a major purpose to have its industrial chain better integrated, give prominence to its core business, bring into full play its holistic advantage in terms of integrated operations, and enhance its overall competitiveness in a comprehensive way, as well as enable itself to maximize its economic benefits as a whole.

Sinopec plans to authorize those of its affiliated companies that have been listed in the stock market as agents for the sale of its chemical products. In principle, the agency fees that Sinopec charges upon these subsidiaries will not go beyond their respective selling costs recorded in previous years. In fact, these subsidiaries are to remain at the center of profit-making further still. Therefore, their operating efficiency and independence will not be affected. Hence, Sinopec will be able to not only prevent its subsidiaries from entering into horizontal competitions against one another, but also enable them to have access to and enjoy the uniform supports offered by Sinopec in terms of scientific & technical development, technical supporting and provision of after-sale service, so as to enhance the values for their shareholders and embrace a win-win situation.