Sinopec Shanghai Petrochemical Company Limited (SPTJF) 6-K Current report (foreign)

Exhibit 99.2

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.

Sinopec Shanghai Petrochemical Company Limited

中國石化上海石油化工股份有限公司

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

(Stock Code: 00338)

2023 INTERIM RESULTS ANNOUNCEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2023

1. IMPORTANT MESSAGE

1.1 This interim results announcement of Sinopec Shanghai Petrochemical Company Limited (the “Company” or “Sinopec Shanghai”, together with its subsidiaries, the “Group”) for the six months ended 30 June 2023 (the “Reporting Period”) is extracted from the full text of the 2023 interim report. For detailed content, investors are advised to read the full text of the 2023 interim report which is published on the websites of the Shanghai Stock Exchange or other designated websites of China Securities Regulatory Commission, The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) and the Company.

1.2 Corporate Information

A Shares:	Stock Exchange Listing	Shanghai Stock Exchange
	Stock Short Name	SHANGHAI PECHEM
	Stock Code	600688
H Shares:	Stock Exchange Listing	Hong Kong Stock Exchange
	Stock Short Name	SHANGHAI PECHEM
	Stock Code	00338
	Secretary to the Board	Securities Affairs Representative
Name	Liu Gang	Yu Guangxian
Correspondence	48 Jinyi Road, Jinshan District,	48 Jinyi Road, Jinshan District,
Address	Shanghai, the PRC	Shanghai, the PRC
	Postal Code: 200540	Postal Code: 200540
Telephone	8621-57943143	8621-57933728
Fax	8621-57940050	8621-57940050
E-mail	liugang@spc.com.cn	yuguangxian@spc.com.cn

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2. MAJOR ACCOUNTING DATA, MAJOR FINANCIAL DATA AND SHAREHOLDERS STATUS

2.1 Major Accounting Data

Prepared under the People’s Republic of China (the “PRC”) Accounting Standards for Business Enterprises (“CAS”)

2.1.1 Major Accounting Data

Unit: RMB’000

							Increase/
							decrease as
							compared to the
							corresponding
							period of
	The Reporting		Corresponding period				the previous
	Period		of the previous year				year (After
	(January to		After		Before		restatement)
Major accounting data	June)		restatement		restatement		(%)
Revenue		44,937,051		45,900,355		45,900,355		-2.10
Total loss		-1,211,974		-442,601		-442,601		173.83
Net loss attributable to equity shareholders of the Company		-988,277		-436,042		-436,009		126.65
Net loss attributable to equity shareholders of the Company excluding non-recurring items		-972,150		-402,577		-402,544		141.48
Net cash used in operating activities		-226,882		-6,405,122		-6,405,122		-96.46

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							Increase/
							decrease at
							the end of
							the Reporting
							Period as
							compared to
							the end of
	As at the		As at the end of				the previous
	end of the		the previous year				year (After
	Reporting		After		Before		restatement)
	Period		restatement		restatement		(%)
Net assets attributable to equity shareholders of the Company		25,276,032		26,243,746		26,243,705		-3.69
Total assets		41,701,821		41,242,782		41,242,740		1.11

2.1.2 Major Financial Indicators

	The		Corresponding period of				Increase/decrease
	Reporting		the previous year				as compared to the
	Period						corresponding period of
	(January to		After		Before		the previous year (After
Major Financial Indicators	June)		restatement		restatement		restatement) (%)
Basic losses per share (RMB/Share)		-0.092		-0.040		-0.040		N/A
Diluted losses per share (RMB/Share)		-0.092		-0.040		-0.040		N/A
Basic losses per share excluding non-recurring items (RMB/Share)		-0.090		-0.037		-0.037		N/A
Loss on net assets (weighted average) (%)*		-3.818		-1.395		-1.448		Decreased by 2.42 percentage points
Loss on net assets after non-recurring items (weighted average) (%)*		-3.755		-1.288		-1.337		Decreased by 2.47 percentage points

* The above-mentioned net assets do not include non-controlling interests.

** Explanation of reasons for retroactive adjustment or restatement:

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Since 1 January 2023, the Group has implemented the requirement of the “Accounting of deferred income tax related to assets and liabilities arising from an individual transaction not applicable to initial recognition exemption” under the “Interpretation of Accounting Standards for Business Enterprises No. 16” promulgated by the Ministry of Finance.

According to the provisions of Interpretation No. 16, if the individual transaction of the Group is not a business combination, or its occurrence does not affect the accounting profit nor taxable income (or deductible loss), and the initially recognized assets and liabilities result in equal taxable temporary difference and deductible temporary difference, the provisions of “Accounting Standards for Business Enterprises No. 18-Income Tax” on the exemption from the initial recognition of deferred income tax liabilities and deferred income tax assets are not applicable. According to the “Accounting Standards for Business Enterprises No. 18- Income Tax” and other relevant regulations, as for the taxable temporary difference and deductible temporary difference arising from the initial recognition of assets and liabilities, the Group recognizes the corresponding deferred income tax liabilities and deferred income tax assets respectively when the transaction occurs.

The above regulations have come into effect on 1 January 2023. The Group has made retrospective adjustments to the individual transactions that occurred between 1 January 2022 and the date of initial implementation to which the regulations apply. For the lease liabilities and right-of-use assets recognized on 1 January 2022 due to the individual transactions subject to the regulations resulting in taxable temporary difference and deductible temporary difference, the Group adjusted the cumulative impact amount to the opening retained earnings and other related financial statement items of the earliest period presented in the financial statements in accordance with the regulations and the “Accounting Standards for Business Enterprises No. 18- Income Tax”.

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2.1.3 Differences between Financial Statements Prepared under CAS and International Financial Reporting Standards (“IFRS”)

Unit: RMB’000

Net loss attributable to equity

Net assets attributable to equity

shareholders of the Company

shareholders of the Company

Corresponding period

At the beginning

of the previous year

At the end of

of the Reporting Period

The Reporting

After

Before

the Reporting

After

Before

Period

restatement

restatement

Period

restatement

restatement

Prepared under CAS

-988,277

-436,042

-436,009

25,276,032

26,243,746

26,243,705

Prepared under IFRS

-966,688

-426,551

-426,518

25,261,014

26,227,723

26,227,682

For details of the differences between the financial statements prepared under CAS and IFRS, please refer to supplements to the financial statements prepared under CAS.

2.1.4 Non-recurring Profit and Loss Items (Prepared under CAS)

Unit: RMB’000

Non-recurring profit and loss items	Amount
Losses on disposal of non-current assets		-8,876
Government grants recognised through profit or loss		12,399
Employee reduction expenses		-9,965
Discount loss of receivables		-1,997
Other non-operating income and expenses other than those mentioned above		-9,894
Income tax effect amount		2,359
Effect on non-controlling interests (after tax)		-153
Total		-16,127

2.2 Shareholding of the Top Ten Shareholders as at the end of the Reporting Period

Number of shareholders of ordinary shares as at the end of the Reporting Period 94,357

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Shareholding of the top ten shareholders

Unit: Shares

			Shareholding of the top ten shareholders
			Increase/									Pledged/frozen
			decrease of		Number of					Number of
			shareholding		shares held at					shares held
			during the		the end of the		Percentage of			with selling
Name of shareholders (Full name)	Class of shares		Reporting Period (shares)		Reporting Period (shares)		Shareholding (%)			restrictions (shares)		Status of shares		Number of shares		Nature of shareholders
China Petroleum & Chemical Corporation		A shares		0		5,459,455,000		50.55	%		0		None		0		State-owned legal person
HKSCC (Nominees) Limited		H shares		-1,199,000		3,451,316,030		31.96	%		0		Unknown		—		Overseas legal person
HKSCC Limited		A shares		-4,797,256		91,748,532		0.85	%		0		None		0		Overseas legal person
Wang Lei		A shares		0		46,120,300		0.43	%		0		None		0		Domestic natural person
China Southern Fund– Agricultural Bank of China – China Southern CSI Financial Asset Management Plan		A shares		-4,024,500		39,059,200		0.36	%		0		None		0		Others
GF Fund – Agricultural Bank of China – GF CSI Financial Asset Management Plan		A shares		-6,882,300		38,340,000		0.36	%		0		None		0		Others
Dacheng Fund – Agricultural Bank of China – Dacheng CSI Financial Asset Management Plan		A shares		-5,959,600		37,571,869		0.35	%		0		None		0		Others
Yinhua Fund– Agricultural Bank of China – Yinhua CSI Financial Asset Management Plan		A shares		-5,800,200		37,251,516		0.34	%		0		None		0		Others
China Merchants Bank Co., Ltd. – Wanjia CSI 1000 Index Enhanced Initiated Securities Investment Fund		A shares		20,266,198		29,036,198		0.27	%		0		None		0		Others
Bosera Fund – Agricultural Bank of China – Bosera CSI Financial Asset Management Plan		A shares		-14,265,900		28,409,800		0.26	%		0		None		0		Others
Note on connected relations or acting in concert of the above shareholders		Among the above-mentioned shareholders, China Petroleum & Chemical Corporation (“Sinopec Corp.”), a State-owned legal person, does not have any connected relationship with the other shareholders, and does not constitute an acting-in-concert party under the Administrative Measures on Acquisition of Listed Companies. Among the above-mentioned shareholders, HKSCC (Nominees) Limited is a nominee. HKSCC Limited is the nominal holder for Shanghai-Hong Kong Stock Connect Program of the Company. Apart from the above shareholders, the Company is not aware of any connected relationship among the other shareholders, or whether any other shareholder constitutes an acting-in-concert party under the Administrative Measures on Acquisition of Listed Companies.

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Note: China Petrochemical Corporation (“Sinopec Group”) held 44,660,000 H shares of the Company through its overseas wholly-owned subsidiary Sinopec Century Bright Capital Investment Limited, accounting for 0.4135% of the total shares of Sinopec Shanghai. These shares were included in the total shares held by HKSCC (Nominees) Limited.

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

As at 30 June 2023, so far as was known to the Company’s directors (the “Directors”) or chief executive, the interests and short positions of the Company’s substantial shareholders (being those who are entitled to exercise or control the exercise of 5% or more of the voting power at any general meeting of the Company) (excluding the Directors, chief executive and supervisors of the Company (the “Supervisors”)) in the shares and underlying shares of the Company who are required to disclose their interests pursuant to Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance (the “SFO”) or as recorded in the register of interests required to be kept under section 336 of the SFO were as set out below:

Interests in ordinary shares of the Company

					Percentage of		Percentage of
					total issued		total issued
					shares of the		shares of the
	Interests held or				Company		relevant class
Name of shareholder	deemed as held (shares)	Note			(%)		(%)		Capacity
Sinopec Corp.	5,459,455,000 A shares (L) Shares of legal person		(1	)		50.55		74.49	Beneficial owner
Corn Capital	211,008,000 H shares (L)		(2	)		1.95		6.04	Beneficial owner
Company Limited	200,020,000 H shares (S)					1.85		5.72
Hung Hin Fai	211,008,000 H shares (L)		(2	)		1.95		6.04	Interests of controlled corporation
	200,020,000 H shares (S)					1.85		5.72
Yardley Finance Limited	200,020,000 H shares (L)		(3	)		1.85		5.72	Secured equity holders
Chan Kin Sun	200,020,000 H shares (L)		(3	)		1.85		5.72	Interests of controlled corporation

(L): Long position; (S): Short position

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Notes:

(1) Based on the information obtained by the Directors from the website of the Hong Kong Stock Exchange and as far as to the knowledge of the Directors, Sinopec Group directly and indirectly owned 67.84% of the issued share capital of Sinopec Corp. as at 30 June 2023. By virtue of such relationship, Sinopec Group is deemed to have an interest in the 5,459,455,000 A shares of the Company directly owned by Sinopec Corp.

(2) These shares were held by Corn Capital Company Limited. Hung Hin Fai held 100% interests in Corn Capital Company Limited. Pursuant to the SFO, Hung Hin Fai was deemed to be interested in the shares held by Corn Capital Company Limited.

(3) These shares were held by Yardley Finance Limited. Chan Kin Sun held 100% interests in Yardley Finance Limited. Pursuant to the SFO, Chan Kin Sun was deemed to be interested in the shares held by Yardley Finance Limited.

Save as disclosed above, as at 30 June 2023, the Directors have not been notified by any person (other than the Directors, chief executive and Supervisors) who had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO or as recorded in the register of interests required to be kept by the Company under Section 336 of the SFO.

2.4 Interests and Short Positions of the Directors, Chief Executive and Supervisors in the Shares, Underlying Shares and Debentures of the Company or its Associated Corporations

As at 30 June 2023, the interests and short positions of the Directors, chief executive and Supervisors of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or to be recorded in the register of interests required to be kept under Section 352 of the SFO; or as otherwise notified to the Company and the Hong Kong Stock Exchange pursuant the “Model Code for Securities Transactions” set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (“Hong Kong Listing Rules”) were as follows:

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Interests in the Shares and Underlying Shares of the Company

					Percentage of
					total issued
					shares of the	Percentage of
		Number of shares			Company	total issued A
Name	Position	held (shares)			(%)	shares (%)	Capacity
Huang Xiangyu	Executive Director and Vice President		140,000 A shares	(L)	0.0013	0.0019	Beneficial owner
Zhang Feng	Supervisor		10,000 A shares	(L)	0.0001	0.0001	Beneficial owner
Chen Hongjun	Supervisor		31,400 A shares	(L)	0.0003	0.0004	Beneficial owner

(L): Long position

Save as disclosed above, as at 30 June 2023, so far as was known to the Directors, chief executive and Supervisors of the Company, none of the Directors, chief executive or Supervisors of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or its associated corporations which were required to be disclosed or recorded pursuant to the SFO and the Hong Kong Listing Rules as mentioned above.

3. MANAGEMENT DISCUSSION AND ANALYSIS

3.1 Management Discussion and Analysis of the Overall Operations during the Reporting Period

(The following discussion and analysis should be read in conjunction with the unaudited interim financial statements of the Group and the notes in this interim results announcement. Unless otherwise specified, certain financial data involved hereinafter are extracted from the unaudited interim financial statements of the Group prepared in accordance with IFRS.)

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Review of the Company’s operations during the Reporting Period

In the first half of 2023, economy in China has continued to recover with a positive upturn as a whole. However, the global economic recovery continued to be under pressure, encompassing the Russian-Ukrainian conflict and the risk of overflowing financial turbulence in the United States and Europe, the concussive downturn of crude oil price, the chemical market falling consumptive stagnation, and multiple unpredictable uncertainties. In the face of the complicated environment, the Group adhered to the general principle of seeking progress while maintaining stability, tightened internal management, strengthened grassroots construction, basic work and skills training, pressed down on safety and environmental protection responsibilities, and focused on system optimization, and generally maintained stable production and operation, and vigorously and effectively pushed forward key projects, thus continuously building the foundation for high-quality development. As of 30 June 2023, the Group generated revenue of RMB44.889 billion, representing a decrease of RMB0.970 billion or a decrease rate of 2.12%. Loss before taxation amounted to RMB1.190 billion (1H2022: loss before taxation of RMB0.433 billion), representing an increase of loss of RMB0.757 billion from the same period of last year. Loss after taxation and excluding non-controlling shareholders’ interests was RMB0.967 billion (1H2022: loss after taxation and excluding non-controlling shareholders’ interests of RMB0.427 billion), representing an increase of loss of RMB0.54 billion from the same period of last year.

In the first half of 2023, the total volume of goods within the main commodity categories produced by the Group increased by 16.30% year-on-year to 6.3172 million tons. The Group processed a total of 7.0939 million tons of crude oil (of which 403.1 thousand tons were processed on order), representing an increase of 22.41% year-on-year. Refined oil output amounted to 4.2661 million tons, representing an increase of 35.29% year-on-year. Among them, the gasoline production increased by 10.80% year-on-year to 1.6047 million tons, the diesel production increased by 40.74% year-on-year to 1.8454 million tons, the jet fuel production increased by 107.24% year-on-year to 816.1 thousand tons, while the liquefied gas production increased by 29.08% year-on-year to 421.2 thousand tons. Ethylene production increased by 1.05% year-on-year to 357.2 thousand tons, and p-xylene production increased by 11.21% year-on-year to 354.1 thousand tons. Production of plastics, resins and copolymers (excluding polyesters and polyvinyl alcohol) increased by 11.92% year-on-year to 504.2 thousand tons, production of raw materials of synthetic fibers reduced by 17.08% year-on-year to 50.5 thousand tons, production of synthetic fibre polymers decreased by 45.04% year-on-year to 37.7 thousand tons, and production of synthetic fibres increased by 12.26% year-on-year to 11.9 thousand tons. The Group’s product sale rate for the first half of this year was 98.93% and the payment return rate was 100% (excluding connected companies).

Safety and environmental protection were generally under control. Learning lessons from accidents, the Group emphasized the strict management and seriously launched the “Year of Safety Management Enhancement” campaign. Insisting on strict management, strict standards and strict emission reduction; the average value of VOCs concentration at the Company’s boundary was 73.4ug/m3; the rate of industrial wastewater discharged outward reached 100%, the rate of controlled emissions reached 100%, and the rate of hazardous waste properly handled and disposed of was 100%, and the total amount of COD for major pollutants and ammonia and nitrogen discharged decreased by 7.85% and 61.26% year-on-year, respectively.

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Production operations were generally stable. Professional management of process technology and equipment integrity was strengthened to ensure that professional safety and system requirements penetrated to the grassroots level. The cumulative number of shutdowns was reduced by 12 times year-on-year, with no second-tier unplanned shutdowns, and the operation of major plants was generally stable. Among the 58 major technical and economic indicators under monitoring, 16 items reached the advanced level of the industry while the performance of 48 items was better than last year, with a year-on-year progress rate of 82.76%.

System optimization has begun to bear fruit. The Group coordinated and promoted the integrated optimization, cost reduction and fee cutting, reduced crude oil procurement and processing costs, actively promoted refining structure optimization and chemical structure optimization, and increased production of efficiency product lines while limiting production and stopping production of marginal profit devices. The Group optimized business processes, promoted energy saving and consumption reduction, reduced costs and expenses, and took multiple measures to improve production, increase efficiency and reduce losses.

Transformation and development were steadily advanced. In accordance with the Company’s “14th Five-Year Plan” development idea of “oil refining to chemical industry, chemical industry to materials, materials to high-end products, and parks to ecology”, the Group optimized its industrial layout and promoted transformation and upgrading for high-quality development. The Group has made every effort to promote comprehensive technological transformation and quality upgrading, and the implementation of 250,000 tons/year thermoplastic elastomer, power units cleaning and efficiency improving, 300,000 tons/year vinyl acetate facility and new energy sources, and other key projects. The Group has been fully promoting the development of carbon fiber industry, with projects such as 48K large tow carbon fiber project (Phase I), 100 tons of high-performance carbon fiber test device, and aerospace composites progressing steadily. Meanwhile, the Group has comprehensively pushed forward the research on the application of composite materials in the fields of aviation, rail transportation, civil engineering, and new energy sources.

Reform and management developed in depth. In accordance with the work deployment of the SASAC of the State Council, the Group comprehensively promoted the work of improving the quality of listed companies and the value creation action against first-class enterprises, and continuously enhanced the standard of corporate governance. The Group has strengthened life-cycle management and professional management of the systems, and enhanced organizational performance, remuneration and labor management. The Group has also strengthened its basic team, improved the incentive and discipline mechanism and continuously upgraded the competence of its cadres and staff.

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The following table sets forth the Group’s sales volume and net sales after business tax and surcharges for the Reporting Period:

	For the six months ended 30 June
	2023						2022
	Sales						Sales
	volume		Net sales				volume		Net sales
	(’000		(RMB				(’000		(RMB
	tons)		million)		%		tons)		million)		%
Synthetic fibers		13.52		223.06		0.58		11.26		229.96		0.57
Resins and plastics		523.53		3,845.52		9.95		502.13		4,300.40		10.71
Intermediate petrochemicals		883.05		5,435.95		14.06		908.94		6,409.23		15.97
Petroleum products		4,763.85		24,470.70		63.29		3,940.92		21,846.67		54.42
Trading of petrochemical products		—		4,257.24		11.01		—		6,950.74		17.32
Others		—		430.06		1.11		—		405.17		1.01
Total		6,183.95		38,662.53		100.00		5,363.25		40,142.17		100.00

In the first half of 2023, the Group achieved a total net sales of RMB38.663 billion, a decrease of 3.69% compared with the same period last year, of which the net sales of synthetic fibers, resins and plastics, intermediate petrochemical products and trading of petrochemical products decreased by 3.0%, 10.58%, 15.19% and 38.75% respectively, while the net sales of petroleum products increased by 12.01%. The sales volume of synthetic fibers, resins and plastics and petroleum products increased by 20.07%, 4.26% and 20.88% respectively due to the increase in production volume. The sales volume of intermediate petrochemical products decreased by 2.85%, mainly due to the decrease in the production volume of ethylene oxide as a result of the shutdown of the ethylene oxide-ethylene glycol facility. The weighted average selling prices of all sectors decreased over the same period of last year due to the decrease in crude oil prices. In the first half of 2023, the Group’s cost of sales was RMB39.753 billion, a decrease of 2.28% from the same period last year and accounting for 102.82% of net sales.

In the first half of 2023, the Group’s crude oil unit processing cost was RMB4,209.84/ton, a decrease of RMB330.59/ton or 7.28% compared to the same period last year. From January to June this year, the cost of crude oil processing increased by RMB2.639 billion. Among them, the increase of crude oil processing volume resulted in the cost increase of RMB4.851 billion, and the unit processing cost decrease resulted in the cost decrease of RMB2.212 billion. Crude oil costs accounted for 70.86% of the Group’s cost of sales in the first half of the year.

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In the first half of 2023, the Group’s expenditure on other excipients was RMB3.726 billion, a decrease of 23.74% from the same period last year. During the Reporting Period, the Group’s depreciation and amortization expenses and maintenance expenses were RMB983 million and RMB480 million respectively. Depreciation and amortization expenses increased by 12.21% year-on-year mainly due to the increase of depreciation expenses as a result of the transfer of raw silks (24,000 tons/year) and 48K large tow carbon fiber (12,000 tons/year) project into fixed assets. Maintenance expenses reduced 42.45% year-on-year mainly due to the fact that last year’s overhaul was concentrated in the second quarter of the year.

In the first half of 2023, the Group recorded sales expenses of RMB151 million, a decrease of 13.71% from RMB175 million in the same period last year mainly because the transportation fee decreased by RMB14 million due to optimization of the shipping process and the sales commission decreased by RMB8 million due to the decrease in agency sales during the Reporting Period.

In the first half of 2023, the Group’s other operating income was RMB62.0 million, an increase of RMB14 million over the same period last year mainly due to an increase in rental income of RMB7 million and an increase in other income of RMB7 million during the Reporting Period.

In the first half of 2023, the Group reported a net financial income of RMB130 million, compared to net financial income of RMB279 million in the same period last year. The decrease was mainly due to a decrease in interest income of RMB144 million during the Reporting Period. In the first half of 2023, the Group achieved a loss after taxation excluding non-controlling interests of RMB967 million, an increase of RMB540 million from the loss of RMB427 million in the same period last year.

Liquidity and Capital Sources

In the first half of 2023, the Group’s net cash outflow from operating activities was RMB280 million, compared with a net cash outflow of RMB6,445 million in the same period last year. This was mainly due to the decrease in payment for goods by the Group of RMB2,078 million and the decrease in payment for income tax by RMB3,634 million during the Reporting Period as compared to the same period last year.

In the first half of 2023, the Group’s net cash inflow from investment activities was RMB503 million, compared with a net cash inflow of RMB1,766 million in the same period last year. This is mainly due to the recovery of RMB5,950 million of time deposits purchased by the Group in previous years in the first half of 2022, as well as the purchase of time deposits and structured deposits of RMB3,600 million, and the recovery of time deposits of RMB1,000 million in the Reporting Period, which resulted in a decrease of RMB1,350 million of net cash inflow from time deposits in the Reporting Period as compared with the same period last year.

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In the first half of 2023, the Group generated a net cash inflow of RMB3,491 million from financing activities, compared with a net cash inflow of RMB1,997 million in the same period last year. This is mainly due to an increase of RMB3,563 million in net cash flow generated from borrowings and an increase of RMB2,065 million in cash paid for repayment of borrowings and short-term bonds by the Group during the Reporting Period compared with the same period last year.

Borrowings and Debts

The Group’s long-term borrowings are mainly used for capital expansion projects. The Group generally arranges long-term borrowings in accordance with capital expenditure plans. The short-term debt is used to supplement the working capital required by the normal production and operation of the Group. As of 30 June 2023, the total loan balance of the Group increased by RMB3,498 million from the opening balance to RMB5,748 million. The Group had no short-term bonds in the Reporting Period. The Group’s total borrowings at fixed interest rates were RMB5,048 million.

Capital Expenditures

In the first half of 2023, the Group’s capital expenditure was RMB365 million. It was mainly used for the construction of the raw silks (24,000 tons/year), the 48K large tow carbon fiber (12,000 tons/year) project and the compliance transformation project of control room of the synthetic resin department (the former plastics department) etc.

In the second half of the year, the Group will continue to promote the implementation of precursor fiber (24,000 tons/year) and 48K large tow carbon fiber (12,000 tons/year) project and ancillary engineering project of 250,000 tons/year thermoplastic elastomer project, etc. The planned capital expenditure of the Group can be financed from operating cash and bank credit.

Gearing Ratio

As of 30 June 2023, the Group’s gearing ratio was 38.97% (as of 30 June 2022: 31.58%). The

gearing ratio was calculated as: total liabilities/total assets.

The Group’s Employees

As of 30 June 2023, the number of registered employees of the Group was 7,641, among which 4,663 were production personnel, 2,003 were sales, finance and other personnel, and 975 were administrative personnel. 64.53% of the Group’s employees were college graduates or above.

- 14 -

The Group determines the remuneration of its employees and Directors on the basis of their positions, performance, experience and current market payment trends. Other benefits include equity incentive plans and state-administered pension plans. The Group also provides professional and vocational training for its employees.

Income Tax

The Enterprise Income Tax Law of the PRC took effect from 1 January 2008, subsequent to which the income tax rate for enterprises was uniformly adjusted to 25%. As of the half year ended 30 June 2023, the income tax rate applicable to the Group is 25%.

Disclosure Required by the Hong Kong Listing Rules

Save as disclosed herein, pursuant to paragraph 40 of Appendix 16 to the Hong Kong Listing Rules, the Company confirms that there were no material differences between the existing information of the Company relating to the matters as set out in paragraph 32 of Appendix 16 to the Hong Kong Listing Rules and the relevant information disclosed in the Company’s 2022 annual report.

Market Outlook and Work Plans for the Second Half of the Year

Looking ahead to the second half of the year, under the combined impact of geopolitical, financial turmoil, economic stagflation and other risk factors, the downward pressure on the global economy will continue to increase, and the trend of oil prices will face uncertainties. The Chinese economy is expected to continue its recovery. It is expected that the domestic demand for refined oil will continuously improve and the demand for chemical products will gradually recover.

In the second half of the year, the Group will continue to adhere to the general principle of seeking progress amidst stability, and insist on being problem-oriented, target-oriented and result-oriented, and coordinate the key work in safety and environmental protection, operation and efficiency creation, key project construction and human resources and team building, so as to make every effort to achieve the annual targets and tasks.

1. Focusing on safe and stable operation and building a solid foundation for efficiency creation. The Group will strengthen the effectiveness of strict management, consistently implement safety leadership, business and technical support, and effective execution at the grassroots level, and strictly implement localized and professional management responsibilities and the system of responsibility of safety production for all employees, so as to ensure safety production and strengthen the foundation for efficiency creation.

- 15 -

2. Focusing on optimization and cost reduction, and digging into the potential for efficiency creation. The Group will adhere to the market-oriented and efficiency-centered approach, and continue to focus on product structural adjustment, optimize refining and chemical integration, and endeavor to reduce losses and increase efficiency.

3. Focusing on transformation and development to enhance efficiency creation. The Group will focus on grasping the developmental window of opportunity for transformation and development, accelerating the construction of key projects and tackling key core technologies, and consolidating the foundation for high-quality development. The Group will make every effort to promote comprehensive technological transformation and quality upgrades, power units cleaning and efficiency improving, 250,000 tons/year thermoplastic elastomer project, 300,000 tons/year vinyl acetate and other key projects. The Group will accelerate the 48K large tow carbon fiber project (Phase I) to reach the production target, and promote the research and development of the 100-ton high-performance carbon fiber test line technology and development and application of carbon fiber thermoplastic composite materials. The Group will enhance the construction of innovation platform and speed up the development of carbon fiber and its composite material industry.

4. Focusing on team building to stimulate efficiency creation. The Group will focus on strengthening the foundation, making up for the shortcomings and adjusting the structure, promoting the construction of market-oriented personnel and labor distribution mechanism, improving the talent ladder construction, and enhancing training for position competence to build up a strong talent team. Meanwhile, the Group will further optimize its organization and enhance the efficiency of its operation and management to better serve its corporate development strategy.

- 16 -

3.2 Analysis of the Company’s Principal Performance during the Reporting Period (Certain of the following financial data is extracted from the unaudited interim report prepared under CAS)

3.2.1 Analysis of Changes in the Company’s Related Financial Data

Unit: RMB’000

	For the six months
	ended 30 June
			2022
			(After
Item	2023		restatement)		Change (%)		Reason for change
Research and development expenses		68,062		36,426		86.85	R&D projects in the Reporting Period increased.
Financial expenses (“-” for income)		-125,281		-295,996		-57.67	The interest income in the Reporting Period decreased.
Investment income (“-” for losses)		-120,360		-50,675		137.51	The operating losses of the associates resulted in investment losses.
Gains from changes in fair value		—		313		-100.00	No derivative investments were made in the Reporting Period.
Credit losses (“-” for losses)		167		-4,887		-103.42	Bad debts recognised in the previous period was recovered in the Reporting Period.
Gains from asset disposals (“-” for losses)		434		-1,062		-140.87	Gains from disposal of fixed assets increased.
Income tax benefits		-226,288		-11,731		1,828.97	Losses in the Reporting Period increased compared with the same period of last year, resulting in income tax benefits.
Net loss attributable to shareholders of the Company		-988,277		-436,042		126.65	Price of crude oil declined slightly compared with the same period of last year, but the decline in selling prices was greater than the decline in cost prices as downstream market demand recovered slowly, resulting in the year-on-year decrease in operating results.
Other comprehensive income, net of tax (“-” for losses)		-21		273,513		-100.00	No commodities hedging business was carried out in the Reporting Period.
Net cash used in operating activities		-226,882		-6,405,122		-96.46	The cash paid for purchasing goods and receiving services and the taxes paid in the Reporting Period decreased compared with the same period last year.
Net cash flow generated from investing activities		513,477		1,776,708		-71.11	The net cash flow from refund of time deposits in the Reporting Period decreased compared with the same period of last year.
Net cash flow generated from financing activities		3,427,414		1,946,321		76.10	The net cash flow generated from and repaid for borrowings by the Group during the Reporting Period increased compared with the same period last year.

- 17 -

3.2.2 Analysis of Business Operations by Industry, Product or Geographical Location Segment

(1) Principal Operations by Industry or Product

Unit: RMB’000

							Increase/		Increase/
							decrease		decrease in
							in revenue		operating cost
							compared to		compared to
							corresponding		corresponding
							period of the		period of the		Increase/decrease in
Business Segment/ Product Segment	Revenue		Cost of sales		Gross profit margin (%)		previous year (%)		previous year (%)		gross profit margin compared to last year
Petroleum products		30,675,736		24,774,204		19.24		11.48		19.66	Decreased by 5.52 percentage points
Intermediate petrochemicals		5,444,886		4,832,795		11.24		-15.35		-24.03	Increased by 10.14 percentage points
Trading of petrochemical products		4,260,964		4,203,453		1.35		-38.74		-39.07	Increased by 0.53 percentage point
Resins and plastics		3,852,413		3,889,805		-0.97		-10.71		-10.48	Decreased by 0.26 percentage point
Synthetic fibers		223,383		459,266		-105.60		-3.18		18.28	Decreased by 37.30 percentage points
Others		252,801		249,214		1.42		-2.82		-16.06	Increased by 15.54 percentage points

Note: This gross profit margin is calculated according to the price of petroleum products which includes consumption tax. Gross profit margin of petroleum products after deducting consumption tax was 1.22%.

(2) Revenue by Geographical Location

Unit: RMB’000

			Increase/decrease
			in revenue as
			compared to the
			same period last
Geographical location segment	Revenue		year (%)
Eastern China		41,042,934		2.20	%
Other regions in the PRC		452,574		-14.26	%
Exports		3,214,675		-36.00	%

- 18 -

3.2.3 Analysis of Assets and Liabilities

Unit: RMB’000

									Change of amount
									on 30 June 2023
	As at 30 June 2023				As at 31 December 2022				compared to 31
			% of total		Amount (After		% of total		December 2022
Item	Amount		assets		restatement)		assets		(%)		Main reason for change
Cash at bank and on hand		6,931,677		16.62		3,998,332		9.69		73.36	Net cash inflows from financing activities amounted RMB3,427 million in the Reporting Period.
Other receivables		87,375		0.21		190,579		0.46		-54.15	Receivables related to hedging business decreased significantly as hedging business was not conducted in the Reporting Period.
Other current assets		340,861		0.82		1,121,187		2.72		-69.60	The value-added tax to be deducted decreased.
Construction in progress		1,749,110		4.19		3,748,461		9.09		-53.34	Part of carbon fiber projects under construction completed intermediate handover in the Reporting Period.
Short-term borrowings		5,048,000		12.10		1,550,000		3.76		225.68	Short-term borrowings increased in the Reporting Period to supplement funding needs.
Bills payable		103,950		0.25		40,951		0.10		153.84	The number of bills issued in the Reporting Period increased to pay for goods and expenses.
Employee benefits payable		680,651		1.63		317,891		0.77		114.11	The year-end bonus accrued in the Reporting Period has not yet been fully paid, resulting in an increase in the balance of employee benefits payable.

As of the end of the Reporting Period, there was no case where the Company’s main assets were sealed up, seized, frozen, mortgaged or pledged, and there was no case or arrangement where the possession, use, income and disposal rights of main assets were subject to other restrictions.

- 19 -

Overseas assets

During the Reporting Period, the Group’s overseas assets were RMB14,573 thousand, accounting for 0.03% of the total assets.

3.2.4 Analysis of Core Competitiveness

As one of the major integrated petrochemical enterprises in China with an integrated refinery and petrochemical capacity, the Company possesses competitive business scale and strength, which made it a major manufacturer of refined oil, intermediate petrochemicals, synthetic resins and synthetic fibers in China. The Company also has self-owned utilities and environmental protection systems, as well as sea transport, inland shipping, rail transport and road transport ancillary facilities.

The Company’s major competitive advantages include quality, geographical location and its vertically integrated production. The Company has more than 50 years of petrochemical production and management experience, and has accumulated extensive resources in the petrochemical industry. The Company has won several quality product awards from the central and local governments. Located at the core region of Yangtze River Delta, the most economically active region in China with a strong demand for petrochemical products, the Company has built a comprehensive logistics system and supporting facilities with close geographic proximity with most of its clients which enables the Company to enjoy the convenience of coastal and inland shipping. This gave the Company a competitive edge in terms of transportation costs and timely delivery. The Company has leveraged its advantages in integrated refinery and petrochemical capacity to actively strengthen product structure, while continuously improving products quality and variety. The Company has also improved production technology and boosted capacity of key upstream units to maximize the use and the efficiency in the utilization of its corporate resources, and is therefore able to achieve strong and sustainable development.

3.3 Analysis of Investments (Certain of the following financial data is extracted from the unaudited interim report prepared under CAS)

3.3.1 Entrusted Wealth Managements and Entrusted Loans

(1) Entrusted Wealth Managements

The Company did not engage in entrusted wealth management during the Reporting Period.

(2) Entrusted Loans

The Company did not engage in entrusted loans during the Reporting Period.

- 20 -

3.3.2 Projects Funded by Fund Raising Capital

During the Reporting Period, the Company did not raise funds, nor has it used the funds raised from the previous reporting periods.

3.3.3 Analysis of the Companies in which the Company has Controlling Interests or Investment Interests

As at 30 June 2023, the Company had more than 50% equity interests in the following principal subsidiaries:

Percentage

Net (loss)/

of equity

Percentage

profit in

Place for

held by the

of equity

Registered

the first

Place of

principal

Type of legal

Company

held by the

capital

half of 2023

Company name

registration

Principal activities

activities

person

(%)

Group (%)

(RMB’000)

(RMB’000)

Shanghai Petrochemical Investment Development Company Limited (“Shanghai Investment Development”)

China

Investment management

China

Limited liability company

100.00

100.00

RMB 2,100,000

18,667

China Jinshan Associated Trading Corporation (“Jinshan Associated Trading”)

China

Import and export of petrochemical products and equipment

China

Limited liability company

67.33

67.33

RMB 25,000

22,431

Shanghai Jinchang Engineering Plastics Company Limited (“Shanghai Jinchang”)

China

Production of polyethylene compound products

China

Limited liability company

—

74.25

USD 9,154

(12,721

)

Shanghai Golden Phillips Petrochemical Company Limited (“Shanghai Golden Phillips”)

China

Production of polypropylene products

China

Limited liability company

—

100.00

RMB 415,623

3,820

Shanghai Jinshan Trading Corporation (“JMGJ”)

China

Import and export of petrochemical products and equipment

China

Limited liability company

—

67.33

RMB 100,000

5,525

Zhejiang Jinlian Petrochemical Storage and Transportation Co., Ltd.

China

Trading of Petrochemical Products

China

Limited liability company

—

100.00

RMB 400,000

(7,800

)

Note: None of the subsidiaries has issued any debt securities.

The Group’s share of interests in associates comprises a 38.26% interest in the Shanghai Chemical Industry Park Development Co., Ltd. (“Chemical Industrial Park”) established in the PRC in the amount of RMB2,228 million, and a 20% interest in the Shanghai SECCO Petrochemical Company Limited (“Shanghai SECCO”) established in the PRC in the amount of RMB120 million. The principal businesses of the Chemical Industry Park include the planning, development and operation of a chemical industrial park located in Shanghai of the PRC. The principal business of the Shanghai SECCO is the production and distribution of petrochemical products.

- 21 -

(1) Explanation of profits of major controlling companies and investing companies affecting more than 10% of the net profit of the Group

In the first half of 2023, Shanghai SECCO recorded a revenue of RMB8,352 million, and its loss after tax reached RMB1,068 million, among which RMB214 million was attributed to the Company.

(2) Analysis of operational performance of major controlling companies and investing companies with a 30% or more year-on-year change

a) In the first half of 2023, the operating results of Shanghai Investment Development increased by 30,501.64% year on year, which was mainly due to the increase of investment income in the current period, resulting in an increase in the operating profit in the first half of 2023.

b) In the first half of 2023, the operating results of Shanghai Golden Phillips have seen an increase of 133.80% year on year, which was mainly due to the substantial increase in sales by Shanghai Golden Phillips in the current period, resulting in an increase in operating results for the first half of 2023.

c) In the first half of 2023, the operating results of Jinshan Associated Trading have seen an increase of 68.01% year on year, which was mainly due to an increase in gross profit of olefin products, resulting in a significant increase in operating results for the first half of 2023.

d) In the first half of 2023, the operating results of JMGJ have seen a decrease of 56.69% year on year, which was mainly due to the decrease in export sales in the current period, resulting in a decrease in operating results for the first half of 2023.

- 22 -

3.3.4 Projects Funded by Non-fund Raising Capital

Major Project	Total project investment RMB’000		Total project investment in the Reporting Period RMB’000		Status as at 30 June 2023
Sinopec Shanghai precursor fiber (24,000 tons/year) and 48K large tow carbon fiber (12,000 tons/year) project		3,489,638		176,439	Interim delivery of part of the projects
Roof distributed photovoltaic power generation project of Southern Suitang River and Acrylic Department of Sinopec Shanghai		54,759		29,990	Interim delivery
Compliance transformation project of control room of the synthetic resin department (the former plastics department)		121,991		24,273	Under construction
Improvement transformation project of clean water and sewage separation of Sinopec Shanghai		155,293		18,795	Under construction
Sinopec Shanghai test line project of aviation carbon fiber reinforced thermoplastic composite material		87,682		13,923	Interim delivery
100 tons high-performance carbon fiber test plant		566,183		7,662	Interim delivery
Supporting engineering project of 250,000 tons/year thermoplastic elastomer project		201,785		4,710	Preliminary design phase

3.4 Plan for Profit Distribution or Capital Reserves Capitalization

3.4.1 Implementation of or Amendment to Profit Distribution Plan during the Reporting Period

The 2022 Profit Distribution Plan was considered and approved at the 2022 Annual General Meeting held on 28 June 2023 that the Company will not distribute dividend or capitalize capital reserves for the year of 2022. The relevant announcement was published in China Securities Journal and Securities Times on 29 June 2023 and was uploaded to the websites of the Hong Kong Stock Exchange and Shanghai Stock Exchange on 28 June 2023.

3.4.2 Plan for Profit Distribution or Capital Reserves Capitalization during the Reporting Period

Nil.

- 23 -

4. OTHER MATTERS

4.1 Changes in Directors’ and Supervisors’ Information

During the Reporting Period, there was no change in the information of Directors and Supervisors in accordance with Rule 13.51B(1) of the Hong Kong Listing Rules that needs to be disclosed.

4.2 Audit and Compliance Management Committee

On 22 August 2023, the Audit and Compliance Management Committee of the Eleventh Session of the Board held its first meeting, primarily to review the financial report of the Group for the Reporting Period, and discussed matters relating to the risk management, internal control, compliance management and financial reporting.

4.3 Purchase, Sale and Redemption of the Company’s Securities

During the Reporting Period, the Company did not purchase, sell or redeem any of the Company’s securities (for the definition of “securities”, please refer to paragraph 1 of Appendix 16 to the Hong Kong Listing Rules).

4.4 Compliance with Corporate Governance Code

During the Reporting Period, the Company applied and complied with all code provisions as set out in the Corporate Governance Code contained in Appendix 14 to the Hong Kong Listing Rules.

4.5 Compliance with Model Code for Securities Transactions

The Company has adopted and implemented the Model Code for Securities Transactions to regulate the securities transactions of the Directors and Supervisors of the Company. After making specific enquiries with all Directors and Supervisors of the Company and having obtained written confirmations from each Director and Supervisor, the Company is not aware of any incident of non-compliance with the Model Code for Securities Transactions by the Directors and Supervisors of the Company during the Reporting Period.

The Model Code for Securities Transactions is also applicable to the senior management who may be in possession of unpublished inside information of the Company. The Company is not aware of any incident of non-compliance with the Model Code for Securities Transactions by the senior management of the Company.

- 24 -

5. INTERIM FINANCIAL STATEMENTS

5.1 Interim financial statements prepared under China Accounting Standard for Business Enterprise

CONSOLIDATED AND COMPANY BALANCE SHEETS

AS AT 30 JUNE 2023

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

	30 June 2023 (Unaudited)		31 December 2022 (Restated)		30 June 2023 (Unaudited)		31 December 2022 (Restated)
ASSETS	Consolidated		Consolidated		Company		Company
Current Assets
Cash at bank and on hand		6,931,677		3,998,332		6,627,460		3,780,454
Accounts receivable		1,629,950		2,512,362		1,472,545		2,334,828
Receivables under financing		328,879		582,354		137,200		127,558
Prepayments		19,503		67,008		13,724		55,961
Other receivables		87,375		190,579		69,216		172,076
Inventories		7,662,790		7,294,060		7,491,623		7,043,613
Other current asset		340,861		1,121,187		326,816		1,108,285
Total Current Assets		17,001,035		15,765,882		16,138,584		14,622,775
Non-Current Assets
Long-term equity investments		3,384,009		3,594,393		4,646,390		4,837,366
Investments in other equity instruments		5,000		5,000		—		—
Other non-current financial assets		26,500		—		—		—
Investment properties		328,657		336,863		356,407		365,147
Fixed assets		13,714,030		12,195,527		13,382,022		11,839,585
Construction in progress		1,749,110		3,748,461		1,645,005		3,647,200
Right-of-use assets		14,290		16,085		12,921		13,494
Intangible assets		362,656		372,640		255,289		261,432
Long-term deferred expenses		654,233		776,480		649,813		771,397
Deferred tax assets		1,226,394		991,892		1,221,718		986,870
Other non-current assets		3,235,907		3,439,559		3,235,907		3,189,559
Total Non-Current Assets		24,700,786		25,476,900		25,405,472		25,912,050
Total Assets		41,701,821		41,242,782		41,544,056		40,534,825

- 25 -

	30 June 2023 (Unaudited)		31 December 2022 (Restated)		30 June 2023 (Unaudited)		31 December 2022 (Restated)
Liabilities and shareholders’ equity	Consolidated		Consolidated		Company		Company
Current Liabilities
Short-term loans		5,048,000		1,550,000		5,000,000		1,500,000
Bills payable		103,950		40,951		103,950		—
Accounts payable		7,155,483		9,144,554		6,573,081		8,295,462
Contract liabilities		366,929		383,246		280,334		300,168
Employee benefits payable		680,651		317,891		664,750		307,190
Taxes payable		1,020,888		889,856		1,008,901		874,213
Other payables		1,001,629		1,618,352		2,361,946		2,721,047
Non-current liabilities due within one year		9,982		8,738		9,303		7,172
Other current liabilities		40,828		44,750		36,444		39,018
Total Current Liabilities		15,428,340		13,998,338		16,038,709		14,044,270
Non-Current Liabilities
Long-term loans		700,000		700,000		700,000		700,000
Lease liabilities		4,656		7,513		4,103		6,481
Deferred income		130,613		134,608		130,483		134,494
Deferred tax liabilities		31,910		30,898		—		—
Total Non-Current Liabilities		867,179		873,019		834,586		840,975
Total Liabilities		16,295,519		14,871,357		16,873,295		14,885,245

- 26 -

	30 June 2023 (Unaudited)			31 December 2022 (Restated)			30 June 2023 (Unaudited)			31 December 2022 (Restated)
Liabilities and shareholders’ equity (Continued)	Consolidated			Consolidated			Company			Company
Shareholders’ equity
Share capital		10,799,286			10,823,814			10,799,286			10,823,814
Capital reserve		609,166			610,327			599,607			600,768
Less: Treasury shares		—			25,689			—			25,689
Other comprehensive income		(827	)		(806	)		(827	)		(806	)
Specific reserve		261,002			240,418			260,996			239,689
Surplus reserve		6,672,634			6,672,634			6,672,634			6,672,634
Retained earnings		6,934,771			7,923,048			6,339,065			7,339,170
Total equity attributable to shareholders of the
Company		25,276,032			26,243,746			—			—
Non-controlling interests		130,270			127,679			—			—
Total Shareholders’ Equity		25,406,302			26,371,425			24,670,761			25,649,580
Total liabilities and Shareholders’ Equity		41,701,821			41,242,782			41,544,056			40,534,825

- 27 -

CONSOLIDATED AND COMPANY INCOME STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2023

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

	Six months ended 30 June						Six months ended 30 June
	2023 (Unaudited)			2022 (Unaudited) (Restated)			2023 (Unaudited)			2022 (Unaudited) (Restated)
	Consolidated			Consolidated			Company			Company
I. Operating income		44,937,051			45,900,355			40,895,068			39,106,248
Less: Operating costs		38,555,927			39,118,453			34,593,186			32,381,777
Taxes and surcharges		6,226,581			5,717,033			6,220,308			5,710,416
Selling and distribution expenses		148,459			171,259			107,411			127,442
General and administrative expenses		958,227			1,347,594			911,458			1,292,155
Research and development expenses		68,062			36,426			65,181			32,725
Finance expenses (“-” for income)		(125,281	)		(295,996	)		(118,283	)		(271,812	)
Including: interest expense		55,547			50,043			54,622			48,935
Interest income		185,052			329,305			173,082			320,891
Add: Other income		7,399			5,905			5,481			4,524
Investment income (“-” for losses)		(120,360	)		(50,675	)		(145,974	)		(46,913	)
Including: Losses from investment in associates and joint ventures		(118,363	)		(32,537	)		(144,851	)		(53,346	)
Gains from changes in fair value (“-” for losses)		—			313			—			313
Credit impairment losses (“-” for losses)		167			(4,887	)		(13	)		(4,877	)
Impairment losses of assets (“-” for losses)		(190,486	)		(177,777	)		(190,486	)		(177,777	)
Gains from asset disposals (“-” for losses)		434			(1,062	)		—			—
II. Operating profit (“-” for losses)		(1,197,770	)		(422,597	)		(1,215,185	)		(391,185	)
Add: Non-operating income		14,505			11,594			8,920			11,594
Less: Non-operating expenses		28,709			31,598			28,688			31,510
III. Profit before income tax (“-” for losses)		(1,211,974	)		(442,601	)		(1,234,953	)		(411,101	)
Less: Income tax benefits		(226,288	)		(11,731	)		(234,848	)		(15,979	)

- 28 -

	Six months ended 30 June						Six months ended 30 June
	2023 (Unaudited)			2022 (Unaudited) (Restated)			2023 (Unaudited)			2022 (Unaudited) (Restated)
	Consolidated			Consolidated			Company			Company
IV. Net profit (“-” for net losses)		(985,686	)		(430,870	)		(1,000,105	)		(395,122	)
(1) Net profit classified by continuity of operations:
1. Net profit from continuing operations (“-” for net losses)		(985,686	)		(430,870	)		(1,000,105	)		(395,122	)
2. Net profit from discontinued operations (“-” for net losses)		—			—			—			—
(2) Net profit classified by ownership:
1. Shareholders of the Company (“-” for net losses)		(988,277	)		(436,042	)		—			—
2. Non-controlling interests (“-” for net losses)		2,591			5,172			—			—
V. Other comprehensive income, net of tax		(21	)		273,513			(21	)		273,513
(1) Other comprehensive income (net of tax) attributable to shareholders of the Company		(21	)		273,513			(21	)		273,513
Items that may be reclassified to profit or loss		(21	)		273,513			(21	)		273,513
(a) Items that may be reclassified to profit or loss using the equity method		(21	)		(22,558	)		(21	)		(22,558	)
(b) Cash flow hedging reserves		—			296,071			—			296,071
(2) Other comprehensive income (net of tax) attributable to non-controlling interests		—			—			—			—
VI. Total comprehensive income		(985,707	)		(157,357	)		(1,000,126	)		(121,609	)
(1) Attributable to shareholders of the Company		(988,298	)		(162,529	)		—			—
(2) Attributable to non-controlling interests		2,591			5,172			—			—
VII. Losses per share
(1) Basic losses per share (RMB/share)		(0.092	)		(0.040	)		—			—
(2) Diluted losses per share (RMB/share)		(0.092	)		(0.040	)		—			—

- 29 -

CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2023

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

	Six months ended 30 June						Six months ended 30 June
	2023			2022			2023			2022
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	Consolidated			Consolidated			Company			Company
I. Cash flows from operating activities
Proceeds from sales of goods and rendering of services		50,445,781			50,088,166			45,897,646			43,170,120
Refund of taxes		241,174			432,955			143,615			289,064
Proceeds from other operating activities		131,515			111,725			119,982			108,602
Sub-total of cash inflows		50,818,470			50,632,846			46,161,243			43,567,786
Payment for goods and services		(43,541,676	)		(45,620,035	)		(39,086,208	)		(38,852,353	)
Payment to and for employees		(1,407,170	)		(1,526,165	)		(1,330,011	)		(1,443,976	)
Payment of various taxes		(5,844,435	)		(9,728,629	)		(5,810,905	)		(9,693,475	)
Payment for other operating activities		(252,071	)		(163,139	)		24,177			(299,371	)
Sub-total of cash outflows		(51,045,352	)		(57,037,968	)		(46,202,947	)		(50,289,175	)
Net cash flows used in operating activities		(226,882	)		(6,405,122	)		(41,704	)		(6,721,389	)
II. Cash flows from investing activities
Proceeds from capital reduction of an associate		50,000			—			—			—
Cash received from returns on investments		92,000			584,002			46,262			561,947
Net cash received from disposal of fixed assets and other long-term assets		24,589			8,882			23,654			8,877
Proceeds from other investing activities		1,058,167			6,168,238			1,054,114			6,164,397
Sub-total of cash inflows		1,224,756			6,761,122			1,124,030			6,735,221
Payment for acquisition of fixed assets, intangible assets and other long-term assets		(682,782	)		(1,048,727	)		(678,135	)		(1,037,357	)
Payment of structured deposits		—			(1,000,000	)		—			(1,000,000	)
Cash paid for investment		(26,500	)		—			—			—
Payment for establishing of a subsidiary and an associate		—			(130,000	)		—			(50,000	)
Payment for other investing activities		(1,997	)		(2,805,687	)		(1,123	)		(2,750,827	)
Sub-total of cash outflows		(711,279	)		(4,984,414	)		(679,258	)		(4,838,184	)
Net cash flows generated from investing activities		513,477			1,776,708			444,772			1,897,037

- 30 -

	Six months ended 30 June						Six months ended 30 June
	2023			2022			2023			2022
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	Consolidated			Consolidated			Company			Company
III. Cashflows from financing activities
Proceeds from borrowings		16,018,000			9,455,000			16,000,000			9,435,000
Proceeds from short-term bonds		—			3,000,000			—			3,000,000
Sub-total of cash inflows		16,018,000			12,455,000			16,000,000			12,435,000
Repayments of borrowings		(12,520,000	)		(8,955,200	)		(12,500,000	)		(8,935,000	)
Repayments of short-term bonds		—			(1,500,000	)		—			(1,500,000	)
Payment for dividends, profit distributions or interest		(63,761	)		(50,488	)		(62,864	)		(49,419	)
Including: Dividends paid by subsidiaries to non-controlling interests		—			—			—			—
Payment for other financing activities		(6,825	)		(2,991	)		(5,198	)		(1,115	)
Sub-total of cash outflows		(12,590,586	)		(10,508,679	)		(12,568,062	)		(10,485,534	)
Net cash flows generated from financing activities		3,427,414			1,946,321			3,431,938			1,949,466
IV. Effect of foreign exchange rate changes on cash and cash equivalents		7,336			8,733			—			—
V. Net increase in cash and cash equivalents (“-” for decrease)		3,721,345			(2,673,360	)		3,835,006			(2,874,886	)
Add: Cash and cash equivalents at beginning of the period		889,413			5,112,010			671,538			4,927,519
VI. Cash and cash equivalents at end of the period		4,610,758			2,438,650			4,506,544			2,052,633

- 31 -

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2023

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

	Attributable to equity shareholders of the Company
	Share capital			Capital reserve			Less: Treasury shares			Other comprehensive income			Specific reserve			Surplus reserve			Retained earnings			Sub-total			Non- controlling interests			Total
I. Balance at 1 January 2023		10,823,814			610,327			25,689			(806	)		240,418			6,672,639			7,923,002			26,243,705			127,681			26,371,386
Add: Changes in accounting policies		—			—			—			—			—			(5	)		46			41			(2	)		39
Adjusted balance at the beginning of the period		10,823,814			610,327			25,689			(806	)		240,418			6,672,634			7,923,048			26,243,746			127,679			26,371,425
II. Changes in equity for the period from 1 January 2023 to 30 June 2023 (Unaudited) (“-” for decreases)
1. Total comprehensive income
(1) Net profit (“-” for net loss)		—			—			—			—			—			—			(988,277	)		(988,277	)		2,591			(985,686	)
(2) Other comprehensive income		—			—			—			(21	)		—			—			—			(21	)		—			(21	)
2. The capital of shareholders’ reduction
(1) Cancellation of repurchased shares		(24,528	)		(1,161	)		(25,689	)		—			—			—			—			—			—			—
3. Specific reserve
(1) Accrued		—			—			—			—			76,290			—			—			76,290			—			76,290
(2) Utilized		—			—			—			—			(55,706	)		—			—			(55,706	)		—			(55,706	)
III. Balance at 30 June 2023 (Unaudited)		10,799,286			609,166			—			(827	)		261,002			6,672,634			6,934,771			25,276,032			130,270			25,406,302

- 32 -

					Attributable to equity shareholders of the Company
	Share capital		Capital reserve		Other comprehensive income			Specific reserve			Surplus reserve			Retained earnings			Sub-total			Non- controlling interests			Total
I. Balance at 1 January 2022		10,823,814		610,327		59,425			216,512			6,672,639			11,877,455			30,260,172			135,259			30,395,431
Add: Changes in accounting policies		—		—		—			—			(5	)		(57	)		(62	)		(5	)		(67	)
Adjusted balance at the beginning of the period		10,823,814		610,327		59,425			216,512			6,672,634			11,877,398			30,260,110			135,254			30,395,364
II. Changes in equity for the period from 1 January 2022 to 30 June 2022 (Unaudited) (“-” for decreases)
1. Total comprehensive income
(1) Net profit (“-” for net losses) (Restated)		—		—		—			—			—			(436,042	)		(436,042	)		5,172			(430,870	)
(2) Other comprehensive income		—		—		273,513			—			—			—			273,513			—			273,513
2. Amounts transferred from hedging reserve to initial carrying amount of hedged items		—		—		(151,817	)		—			—			—			(151,817	)		—			(151,817	)
3. Appropriation of profits
(1) Distributions to shareholders		—		—		—			—			—			(1,082,381	)		(1,082,381	)		(11,434	)		(1,093,815	)
4. Specific reserve
(1) Accrued		—		—		—			68,912			—			—			68,912			—			68,912
(2) Utilized		—		—		—			(60,426	)		—			—			(60,426	)		—			(60,426	)
5. Others		—		3,860		—			—			—			—			3,860			—			3,860
III. Balance at 30 June 2022 (Unaudited) (Restated)		10,823,814		614,187		181,121			224,998			6,672,634			10,358,975			28,875,729			128,992			29,004,721

- 33 -

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2023

(All amounts in thousands of Renminbi Yuan unless otherwise stated)

										Other
							Less: Treasury			comprehensive			Specific			Surplus			Retained
	Share capital			Capital reserve			shares			income			reserve			reserve			earnings			Total
I. Balance at 1 January 2023		10,823,814			600,768			25,689			(806	)		239,689			6,672,639			7,339,125			25,649,540
Add: Changes in accounting policies		—			—			—			—			—			(5	)		45			40
Adjusted balance at the beginning of the period		10,823,814			600,768			25,689			(806	)		239,689			6,672,634			7,339,170			25,649,580
II. Changes in equity for the period from 1 January 2023 to 30 June 2023 (Unaudited) (“-” for decreases)
1. Total comprehensive income
(1) Net profit (“-” for net loss)		—			—			—			—			—			—			(1,000,105	)		(1,000,105	)
(2) Other comprehensive income		—			—			—			(21	)		—			—			—			(21	)
2. The capital of shareholders’ reduction
(1) Cancellation of repurchased shares		(24,528	)		(1,161	)		(25,689	)		—			—			—			—			—
3. Specific reserve
(1) Accrued		—			—			—			—			73,200			—			—			73,200
(2) Utilized		—			—			—			—			(51,893	)		—			—			(51,893	)
III. Balance at 30 June 2023 (Unaudited)		10,799,286			599,607			—			(827	)		260,996			6,672,634			6,339,065			24,670,761

- 34 -

					Other
					comprehensive									Retained
	Share capital		Capital reserve		income			Specific reserve			Surplus reserve			earnings			Total
I. Balance at 1 January 2022		10,823,814		600,768		59,425			216,508			6,672,639			11,240,259			29,613,413
Add: Changes in accounting policies		—		—		—			—			(5	)		(44	)		(49	)
Adjusted balance at the beginning of the period		10,823,814		600,768		59,425			216,508			6,672,634			11,240,215			29,613,364
II. Changes in equity or the period from 1 January 2022 to 30 June 2022 (Unaudited) (“-” for decreases)
1. Total comprehensive income
(1) Net profit (“-” for net losses) (Restated)		—		—		—			—			—			(395,122	)		(395,122	)
(2) Other comprehensive income		—		—		273,513			—			—			—			273,513
2. Amounts transferred from hedging reserve to initial carrying amount of hedged items		—		—		(151,817	)		—			—			—			(151,817	)
3. Appropriation of profits
(1) Distributions to shareholders		—		—		—			—			—			(1,082,381	)		(1,082,381	)
4. Specific reserve
(1) Accrued		—		—		—			65,279			—			—			65,279
(2) Utilized		—		—		—			(56,957	)		—			—			(56,957	)
5. Others		—		3,860		—			—			—			—			3,860
III. Balance at 30 June 2022 (Unaudited) (Restated)		10,823,814		604,628		181,121			224,830			6,672,634			9,762,712			28,269,739

- 35 -

5.2 Interim financial information prepared under International Financial Reporting Standard (Unaudited)

Consolidated statement of profit or loss

For the six months ended 30 June 2023 – Unaudited

(Expressed in Renminbi Yuan)

	Six months ended 30 June
	2023			2022
	RMB’000			(Restated)
				RMB’000
Revenue		44,889,109			45,859,205
Taxes and surcharge		(6,226,581	)		(5,717,033	)
Net sales		38,662,528			40,142,172
Cost of sales		(39,752,809	)		(40,681,204	)
Gross loss		(1,090,281	)		(539,032	)
Selling and administrative expenses		(150,736	)		(179,494	)
Other operating income		62,021			47,661
Other operating expenses		(14,878	)		(9,448	)
Other losses – net		(12,653	)		(4,522	)
Loss from operations		(1,206,527	)		(684,835	)
Finance income		185,052			329,305
Finance expenses		(55,547	)		(50,043	)
Finance income – net		129,505			279,262
Share of losses of investments accounted for using the equity method		(113,363	)		(27,537	)
Loss before taxation		(1,190,385	)		(433,110	)
Income tax		226,288			11,731
Loss for the period		(964,097	)		(421,379	)
Loss Attributable to:
–Equity shareholders of the Company		(966,688	)		(426,551	)
–Non-controlling interests		2,591			5,172
		(964,097	)		(421,379	)
Losses per share
Basic losses per share		RMB (0.090	)		RMB (0.039	)
Diluted losses per share		RMB (0.090	)		RMB (0.039	)

- 36 -

Consolidated statement of profit or loss and consolidated other comprehensive income

For the six months ended 30 June 2023 – Unaudited

(Expressed in Renminbi Yuan)

	Six months ended 30 June
	2023			2022
				(Restated)
	RMB’000			RMB’000
Loss for the period		(964,097	)		(421,379	)
Other comprehensive income for the period (after tax and reclassification adjustments)
Items that are or may be reclassified subsequently to profit or loss
Share of other comprehensive income of associates accounted for using the equity method		(21	)		(22,558	)
Profit on cash flow hedges		—			394,762
Income tax related to projects		—			(98,691	)
Other comprehensive income for the period		(21	)		273,513
Total comprehensive income for the period		(964,118	)		(147,866	)
Attributable to:
– Equity shareholders of the Company		(966,709	)		(153,038	)
– Non-controlling interests		2,591			5,172
Total comprehensive income for the period		(964,118	)		(147,866	)

- 37 -

Consolidated statement of financial position

At 30 June 2023 – Unaudited

(Expressed in Renminbi Yuan)

	30 June 2023		31 December 2022
			(Restated)
	RMB’000		RMB’000
Non-current assets
Property, plant and equipment		13,699,012		12,179,504
Right-of-use assets		369,488		379,805
Investment property		328,657		336,863
Construction in progress		1,749,110		3,748,461
Investments accounted for using the equity method		3,299,009		3,504,393
Deferred tax assets		1,226,394		991,892
Financial assets at fair value through other comprehensive income		5,000		5,000
Financial assets at fair value through profit or loss		26,500		–
Time deposits with banks		3,235,907		3,389,559
Other non-current assets		661,691		835,400
		24,600,768		25,370,877
Current assets
Inventories		7,662,790		7,294,060
Trade receivables		40,304		69,351
Other receivables		137,879		107,507
Amounts due from related parties		1,604,454		2,638,983
Prepayments		17,474		17,832
Value added tax recoverable		277,578		1,057,463
Financial assets at fair value through other comprehensive income		328,879		582,354
Time deposits with banks		2,320,919		3,108,919
Cash and cash equivalents		4,610,758		889,413
		17,001,035		15,765,882

- 38 -

	30 June 2023		31 December 2022
			(Restated)
	RMB’000		RMB’000
Current liabilities
Trade and other payables		2,162,096		2,926,534
Contract liabilities		359,283		372,760
Amounts due to related parties		6,106,612		7,887,809
Staff salaries and welfares payable		680,651		317,891
Borrowings		5,048,000		1,550,000
Lease liabilities		9,982		8,738
Income tax payable		4,187		2,754
Current tax liabilities		1,057,529		931,852
		15,428,340		13,998,338
Net current assets		1,572,695		1,767,544
Total assets less current liabilities		26,173,463		27,138,421
Non-current liabilities
Borrowings		700,000		700,000
Lease liabilities		4,656		7,513
Deferred tax liabilities		31,910		30,898
Deferred income		45,613		44,608
		782,179		783,019
NET ASSETS		25,391,284		26,355,402
CAPITAL AND RESERVES
Share capital		10,799,286		10,823,814
Reserves		14,461,728		15,403,909
Total equity attributable to equity shareholders of the Company		25,261,014		26,227,723
Non-controlling interests		130,270		127,679
TOTAL EQUITY		25,391,284		26,355,402

- 39 -

Consolidated statement of changes in equity

For the six months ended 30 June 2023 – Unaudited

(Expressed in Renminbi Yuan)

	Attributable to equity shareholders of the Company
												Non-
	Share		Other			Retained						controlling
	capital		reserves			earnings			Total			interests			Total equity
	RMB’000		RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
Balance at 31 December 2021		10,823,814		7,038,975			12,379,350			30,242,139			135,259			30,377,398
Changes in accounting policies		—		(5	)		(57	)		(62	)		(5	)		(67	)
Balance at 1 January 2022 (Restated)		10,823,814		7,038,970			12,379,293			30,242,077			135,254			30,377,331
Changes in equity for the six months ended 30 June 2022:
Loss for the period		—		—			(426,551	)		(426,551	)		5,172			(421,379	)
Other comprehensive income		—		273,513			—			273,513			—			273,513
Total comprehensive income for the period		—		273,513			(426,551	)		(153,038	)		5,172			(147,866	)
Amounts transferred from hedging reserve to initial carrying amount of hedged items		—		(151,817	)		—			(151,817	)		—			(151,817	)
Dividends proposed and approved		—		—			(1,082,381	)		(1,082,381	)		(11,434	)		(1,093,815	)
Appropriation of safety production fund		—		38,672			(38,672	)		—			—			—
Others		—		3,860			—			3,860			—			3,860
Balance at 30 June 2022 (Restated)		10,823,814		7,203,198			10,831,689			28,858,701			128,992			28,987,693
Changes in equity for the six months ended 31 December 2022:
Loss for the period		—		—			(2,419,502	)		(2,419,502	)		(1,313	)		(2,420,815	)
Other comprehensive income		—		(95,765	)		—			(95,765	)		—			(95,765	)
Total comprehensive income for the period		—		(95,765	)		(2,419,502	)		(2,515,267	)		(1,313	)		(2,516,580	)
Amounts transferred from hedging reserve to initial carrying amount of hedged items		—		(86,162	)		—			(86,162	)		—			(86,162	)
Purchase of own shares		—		(25,689	)		—			(25,689	)		—			(25,689	)
Appropriation of safety production fund		—		15,420			(15,420	)		—			—			—
Others		—		(3,860	)		—			(3,860	)		—			(3,860	)
Balance at 31 December 2022 (Restated)		10,823,814		7,007,142			8,396,767			26,227,723			127,679			26,355,402

- 40 -

	Attributable to equity shareholders of the Company
													Non-
	Share			Other			Retained						controlling
	capital			reserves			earnings			Total			interests		Total equity
	RMB’000			RMB’000			RMB’000			RMB’000			RMB’000		RMB’000
Balance at 1 January 2023		10,823,814			7,007,142			8,396,767			26,227,723			127,679		26,355,402
Changes in equity for the six months ended 30 June 2023:
(Loss)/profit for the period		—			—			(966,688	)		(966,688	)		2,591		(964,097	)
Other comprehensive income		—			(21	)		—			(21	)		—		(21	)
Total comprehensive income for the period		—			(21	)		(966,688	)		(966,709	)		2,591		(964,118	)
Appropriation of safety production fund		—			20,584			(20,584	)		—			—		—
Cancellation of repurchased own shares		(24,528	)		24,528			—			—			—		—
Balance at 30 June 2023		10,799,286			7,052,233			7,409,495			25,261,014			130,270		25,391,284

- 41 -

Condensed consolidated cash flow statement

For the six months ended 30 June 2023 – Unaudited

(Expressed in Renminbi Yuan)

	Six months ended 30 June
	2023			2022
	RMB’000			RMB’000
Operating activities
Cash used in operations		(167,151	)		(6,035,723	)
Interest paid		(53,368	)		(39,711	)
Income tax paid		(59,732	)		(369,399	)
Net cash used in operating activities		(280,251	)		(6,444,833	)
Investing activities
Dividends received from joint ventures and associates		92,000			576,138
Interest received		58,168			218,238
Net proceeds from disposal of property, plant and equipment		24,589			8,882
Cash received from time deposits with maturity less than one year		1,000,000			5,950,000
Cash received from refund of investment deposits		50,000			—
Cash payment for investment in structured deposits		—			(1,000,000	)
Cash payment for investment in time deposits		—			(2,600,000	)
Cash payment for investment in entrusted loans		—			(150,000	)
Cash payment for investment deposits		—			(53,500	)
Payment for the purchase of property, plant and equipment and other long-term assets		(693,175	)		(1,059,504	)
Payment for investment in an associate and a joint venture		—			(130,000	)
Cash payment for redeemable preference share investments		(26,500	)		—
Other cash flows arising from investing activities		(1,997	)		5,677
Net cash generated from investing activities		503,085			1,765,931

- 42 -

	Six months ended 30 June
	2023			2022
	RMB’000			RMB’000
Financing activities
Proceeds from borrowings		16,018,000			9,455,000
Issuance of short-term bonds		—			3,000,000
Repayments of borrowings		(12,520,000	)		(8,955,200	)
Redemption of short-term bonds		—			(1,500,000	)
Lease payments		(6,825	)		(2,991	)
Net cash generated from financing activities		3,491,175			1,996,809
Net increase/(decrease) in cash and cash equivalents		3,714,009			(2,682,093	)
Cash and cash equivalents at 1 January		889,413			5,112,010
Effect of foreign exchange rates changes		7,336			8,733
Cash and cash equivalents at 30 June		4,610,758			2,438,650

- 43 -

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 GENERAL INFORMATION AND BASIS OF PREPARATION

Sinopec Shanghai Petrochemical Co., Ltd. (hereinafter referred to as “the Company”), located in Jinshan District of Shanghai, is one of the largest refining-chemical integrated petrochemical companies in China. It is a controlling subsidiary of China Petroleum & Chemical Corporation (hereinafter referred to as “Sinopec Corp.”). The principal activity of the Company and its subsidiaries (hereinafter referred to as “the Group”) is processing the crude oil into synthetic fibres, resins and plastics, intermediate petrochemical and refined oil products.

This interim financial report has been prepared in accordance with the requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and in conformity with International Accounting Standard (“IAS”) 34 “Interim Financial Reporting”. The interim financial report was approved for issue on 23 August 2023 by the Board of Directors.

The accounting policies used in the preparation of the condensed consolidated interim financial report are consistent with those used in the 2022 annual financial statements, except for the changes in accounting policies that are expected to be reflected in the 2023 annual financial statements. Please see note 2 for details of the change in accounting policy.

The preparation of an interim financial report in conformity with IAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.

This interim financial report contains condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the 2022 annual financial statements. The condensed consolidated interim financial statements and notes thereon do not include all of the information required for a full set of financial statements prepared in accordance with International Financial Reporting Standards (“IFRSs”).

The interim financial report is unaudited, but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410, Review of interim financial information performed by the independent auditor of the entity, issued by the Hong Kong Institute of Certified Public Accountants.

- 44 -

2 CHANGES IN ACCOUNTING POLICIES

The Group has applied the following amendments to IFRSs issued by the IASB to this interim financial report for the current accounting period:

• IFRS 17, Insurance contracts

• Amendments to IAS 8, Accounting policies, changes in accounting estimates and errors: Definition of accounting estimates

• Amendments to IAS 12, Income taxes: Deferred tax related to assets and liabilities arising from a single transaction

• Amendments to IAS 12, Income taxes: International Tax Reform – Pillar Two Legislation Model

Except for Amendments to IAS 12, Incomes taxes: Deferred tax related to assets and liabilities arising from a single transaction, none of these developments have had a material effect on how the Group’s results and financial position for the current or prior periods. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting.

Amendments to IAS 12, Incomes taxes: Deferred tax related to assets and liabilities arising from a single transaction

The amendments narrow the scope of the initial recognition exemption such that it does not apply to transactions that give rise to equal and offsetting temporary differences on initial recognition such as leases and decommissioning liabilities. For leases and decommissioning liabilities, the associated deferred tax assets and liabilities are required to be recognized from the beginning of the earliest comparative period presented, with any cumulative effect recognized as an adjustment to retained earnings or other components of equity at that date. For all other transactions, the amendments are applied to those transactions that occur after the beginning of the earliest period presented.

- 45 -

Prior to the amendments, the Group applied the initial recognition exemption to lease transactions and has not recognized the related deferred tax. Following the amendments, the Group has determined the temporary difference in relation to right-of-use assets and lease liabilities separately. This change in policy has been applied retrospectively by restating the balances at 1 January 2022 and 31 December 2022, with consequential adjustments to comparatives for the period ended 30 June 2022 as follows:

	As previously reported			Effect of adoption of amendments to IAS 12			As restated
	RMB’000			RMB’000			RMB’000
Consolidated income statement for the six months ended 30 June 2022:
Income tax		(11,780	)		49			(11,731	)
Loss for the period		(421,330	)		(49	)		(421,379	)
Attributable to:
– Equity shareholders of the Company		(426,518	)		(33	)		(426,551	)
– Non-controlling interests		5,188			(16	)		5,172
Basic losses per share		RMB (0.039	)		—			RMB (0.039	)
Diluted losses per share		RMB (0.039	)		—			RMB (0.039	)
Consolidated statement of financial position as at 31 December 2022:
Deferred tax assets		991,850			42			991,892
Total non-current assets		25,370,835			42			25,370,877
Total assets less current liabilities		27,138,379			42			27,138,421
Deferred tax liabilities		30,895			3			30,898
Total non-current liabilities		783,016			3			783,019
Net assets		26,355,363			39			26,355,402
Reserves		15,403,868			41			15,403,909
Total equity attributable to equity shareholders of the Company		26,227,682			41			26,227,723
Non-controlling interests		127,681			(2	)		127,679
Total equity		26,355,363			39			26,355,402
Consolidated statement of financial position as at 1 January 2022:
Deferred tax liabilities		33,344			67			33,411
Total non-current liabilities		747,448			67			747,515
Net assets		30,377,398			(67	)		30,377,331
Reserves		19,418,325			(62	)		19,418,263
Total equity attributable to equity shareholders of the Company		30,242,139			(62	)		30,242,077
Non-controlling interests		135,259			(5	)		135,254
Total equity		30,377,398			(67	)		30,377,331

- 46 -

3 SEGMENT INFORMATION AND REVENUE

3.1 Segment information

The Group manages its business by divisions, which are organized by business lines. In view of the fact that the Company and its subsidiaries operate mainly in the PRC, no geographical segment information is presented.

The chief operating decision maker is recognized as the steering committee that makes strategic decisions and is responsible for allocating resources and evaluating the performance of the operating segments. The Group’s chief operating decision maker has identified five reportable segments as follows. The Group does not consolidate two or more operating segments into one reportable segment.

The reportable segment confirmes that the segment’s profits or losses, assets and liabilities measured are in consistence with the standards set out in the 2022 annual report.

Six months ended	Petroleum			Intermediate			Trading of petrochemical			Resins and			Synthetic
30 June 2023	products			petrochemicals			product			plastics			fibres			Others			Total
	RMB’000			RMB’000			RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
Total segment revenue		41,283,131			10,363,735			4,492,096			3,998,321			223,383			857,330			61,217,996
Inter segment revenue		(10,607,395	)		(4,918,849	)		(231,132	)		(145,908	)		—			(425,603	)		(16,328,887	)
Revenue from external customers		30,675,736			5,444,886			4,260,964			3,852,413			223,383			431,727			44,889,109
Timing of revenue recognition
– At a point in time		30,675,736			5,444,886			4,230,925			3,852,413			223,383			431,727			44,859,070
– Over time		—			—			30,039			—			—			—			30,039
		30,675,736			5,444,886			4,260,964			3,852,413			223,383			431,727			44,889,109
Segment result – (loss)/profit from operations		(475,365	)		91,258			5,808			(262,462	)		(514,194	)		(51,572	)		(1,206,527	)
Impairment of plant and machinery		—			—			—			—			—			—			—
As at 30 June 2023
Segment assets		15,060,217			3,650,358			1,036,357			1,294,322			2,806,709			2,687,982			26,535,945
Segment liabilities		7,036,540			600,510			1,073,207			1,198,316			409,090			35,702			10,353,365

- 47 -

Six months ended	Petroleum			Intermediate			Trading of petrochemical			Resins and			Synthetic
30 June 2022	products			petrochemicals			product			plastics			fibres			Others				Total
	RMB’000			RMB’000			RMB’000			RMB’000			RMB’000			RMB’000				RMB’000
Total segment revenue		34,221,223			11,911,697			7,484,773			4,350,398			230,753			730,640				58,929,484
Inter segment revenue		(6,703,682	)		(5,479,120	)		(528,814	)		(35,990	)		(30	)		(322,643	)			(13,070,279	)
Revenue from external customers		27,517,541			6,432,577			6,955,959			4,314,408			230,723			407,997		��		45,859,205
Timing of revenue recognition
– At a point in time		27,517,541			6,432,577			6,915,528			4,314,408			230,723			407,997				45,818,774
– Over time		—			—			40,431			—			—			—				40,431
		27,517,541			6,432,577			6,955,959			4,314,408			230,723			407,997				45,859,205
Segment result – profit/(loss) from operations		464,776			(556,193	)		19,821			(220,997	)		(320,684	)		(71,558	)			(684,835	)
Impairment of plant and machinery		—			—			—			—			—			—				—
As at 30 June 2022
Segment assets (Restated)		16,021,111			3,803,989			1,391,104			1,359,796			2,734,193			2,765,693				28,075,886
Segment liabilities (Restated)		8,159,960			801,787			1,370,346			1,309,344			531,455			251,328				12,424,220

- 48 -

	Six months ended 30 June
	2023			2022
	RMB’000			RMB’000
Segment result – (loss)/profit from operations
Petroleum products		(475,365	)		464,776
Intermediate petrochemicals		91,258			(556,193	)
Trading of petrochemical products		5,808			19,821
Resins and plastics		(262,462	)		(220,997	)
Synthetic fibers		(514,194	)		(320,684	)
Others		(51,572	)		(71,558	)
Segment result – loss from operations		(1,206,527	)		(684,835	)
Finance income – net		129,505			279,262
Share of net losses of associates and joint ventures accounted for using the equity method		(113,363	)		(27,537	)
Loss before taxation		(1,190,385	)		(433,110	)

3.2 Revenue

The Group’s revenue from external customers are substantially all within Mainland China for the six months ended 30 June 2023 and 2022. As at 30 June 2023 and 31 December 2022, assets are also substantially all within Mainland China.

Revenue of approximately RMB31,462,732 thousand (six months ended 30 June 2022: RMB29,555,589 thousand) are derived from a single customer. These revenues are attributable to the petroleum products and other segments.

- 49 -

4 LOSS BEFORE TAXATION

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

(a) Finance income – net

	Six months ended 30 June
	2023			2022
	RMB’000			RMB’000
Interest income from time deposits with maturity more than 3 months		116,491			261,964
Interest income from time deposits with maturity less than 3 months		66,336			62,652
Others		2,225			4,689
Finance income		185,052			329,305
Interest and finance charges paid/payable for lease liabilities and financial liabilities not at fair value through profit or loss		(65,940	)		(60,820	)
Less: interest expense capitalized into construction in progress		10,393			10,777
Finance expenses		(55,547	)		(50,043	)
Finance income – net		129,505			279,262

(b) Other losses – net

	Six months ended 30 June
	2023			2022
	RMB’000			RMB’000
Gains from structured deposits		—			9,300
Net losses on disposal of property, plant and equipment		(8,876	)		(5,960	)
Net gains on foreign exchange option/forward contracts		—			7,583
Net losses on commodity swaps contracts applied non-hedging accounting		—			(35,188	)
Net foreign exchange (losses)/gains		(1,780	)		20,082
Net losses on selling of financial assets at fair value through other comprehensive income (“FVOCI”)		(1,997	)		(2,187	)
Net losses on disposal of inventory		—			(819	)
Interest income on entrusted loans		—			2,667
		(12,653	)		(4,522	)

- 50 -

(c) Other items

	Six months ended 30 June
	2023		2022
	RMB’000		RMB’000
Depreciation of property, plant and equipment		811,678		716,213
Depreciation of right-of-use assets		15,710		16,130
Depreciation of investment properties		7,650		7,661
Amortization of other non-current assets		146,944		136,125
Research and development costs (other than depreciation and amortization)		66,689		34,884
Provision of inventory write-down		190,486		177,777

5 INCOME TAX

	Six months ended 30 June
	2023			2022
				(Restated)
	RMB’000			RMB’000
Current tax:
Provision for PRC current income tax for the period		(7,429	)		(8,737	)
Tax filing difference		227			(54,017	)
		(7,202	)		(62,754	)
Deferred tax:
Origination and reversal of temporary differences		233,490			74,485
		226,288			11,731

The provision for PRC income tax is calculated at the rate of 25% (six months ended 30 June 2022: 25%) on the estimated taxable income of the six months ended 30 June 2023 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.

- 51 -

6 LOSSES PER SHARE

(a) Basic losses per share

The calculation of basic losses per share is based on the loss attributable to equity shareholders of the Company for the six months ended 30 June 2023 of RMB966,688 thousand (six months ended 30 June 2022: Loss attributable to equity shareholders of the Company of RMB426,551 thousand) and 10,799,286 thousand shares (six months ended 30 June 2022: 10,823,814 thousand shares) in issue during the interim period.

	Six months ended 30 June
	2023			2022
				(Restated)
	RMB’000			RMB’000
Loss attributable to equity shareholders of the Company		(966,688	)		(426,551	)
Weighted average number of ordinary shares in issue (thousands of shares)		10,799,286			10,823,814
Basic losses per share (RMB per share)		RMB (0.090)			RMB (0.039)

(b) Diluted losses per share

There were no dilutive potential ordinary shares for the six months ended 30 June 2023 and 2022, therefore diluted losses per share is the same as basic losses per share.

7 DIVIDENDS

(a) Dividends payable to equity shareholders of the Company attributable to the interim period.

The Board of Directors did not propose any dividend in respect of the six months ended 30 June 2023 (six months ended 30 June 2022: Nil).

(b) Dividends payable to equity shareholders of the Group attributable to the previous financial year, approved during the interim period.

	Six months ended 30 June
	2023		2022
	RMB’000		RMB’000
No final dividend in respect of the previous financial year approved during the six months ended 30 June 2023 (six months ended 30 June 2022: RMB0.10 per ordinary share)		—		1,082,381

- 52 -

8 TRADE AND OTHER RECEIVABLES

	30 June 2023			31 December 2022
	RMB’000			RMB’000
Trade receivables		42,877			72,110
Less: loss allowance		(2,573	)		(2,759	)
		40,304			69,351
Amounts due from related parties excluded prepayments and bills receivable (*)		1,595,923			2,583,289
Less: loss allowance (*)		(2,818	)		(2,802	)
		1,633,409			2,649,838
Other receivables		139,815			109,440
Less: loss allowance		(1,936	)		(1,933	)
		137,879			107,507
Financial assets measured at amortized cost		1,771,288			2,757,345
Amounts due from related parties – prepayments (*)		11,349			58,496
		1,782,637			2,815,841
Amounts due from related parties (summary of *)		1,604,454			2,638,983

Amounts due from related parties mainly represent trade-related balances, unsecured in nature and bear no interest.

- 53 -

The analysis based on invoice date of trade receivables and amounts due from related parties excluded prepayments and bills receivable (net of allowance for doubtful debts) is as follows:

	30 June 2023		31 December 2022
	RMB’000		RMB’000
Within one year		1,632,940		2,649,673
Over one year within two years		469		165
		1,633,409		2,649,838

Movements in the loss allowance account in respect of trade and other receivables during the reporting period is as follows:

	Six months ended 30 June
	2023			2022
	RMB’000			RMB’000
Balance at 1 January		7,494			2,128
Impairment losses recognized during the period		19			4,887
Recovery or reversal during the period		(186	)		—
Balance at 30 June		7,327			7,015

As at 30 June 2023 and 31 December 2022, no trade receivable was pledged as collateral.

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

- 54 -

9 TRADE AND OTHER PAYABLES

	30 June 2023		31 December 2022
	RMB’000		RMB’000
Trade payables		1,364,570		1,818,453
Bills payable		103,950		24,951
Amounts due to related parties exclude advances received (*)		6,098,966		7,877,323
		7,567,486		9,720,727
Dividends payable		31,631		31,631
Construction payable		454,816		831,422
Accrued expenses		136,442		143,299
Other liabilities		70,687		76,778
		693,576		1,083,130
Financial liabilities measured at amortized cost		8,261,062		10,803,857
Amounts due to related parties – advances received (*)		7,646		10,486
		8,268,708		10,814,343
Less : total amount due to related parties (summary of *)		6,106,612		7,887,809
Trade and other payables		2,162,096		2,926,534

As at 30 June 2023 and 31 December 2022, all trade and other payables of the Group were non-interest bearing, and their fair value, approximated their carrying amounts due to their short maturities.

As at 30 June 2023 and 31 December 2022, the ageing analysis of the trade payables (including amounts due to related parties of trading in nature) and bills payable based on invoice date were as follows:

	30 June 2023		31 December 2022
	RMB’000		RMB’000
Within 1 year		7,556,208		9,708,441
1-2 years		336		2,524
Over 2 years		10,942		9,762
		7,567,486		9,720,727

- 55 -

10 BORROWINGS

	30 June 2023		31 December 2022
	RMB’000		RMB’000
Credit loans due within one year
– Short-term bank loan		5,048,000		1,550,000
Credit loans due over one year but within three years
– Long-term borrowings from a related party		700,000		700,000
		5,748,000		2,250,000

(a) The analysis of the repayment schedule of borrowings are as follows:

	30 June 2023		31 December 2022
	RMB’000		RMB’000
Within 1 year or on demand		5,048,000		1,550,000
Over one year but within two years		700,000		700,000
		5,748,000		2,250,000

The weighted average interest rate for the Group’s short-term bank loan was 1.99% as at 30 June 2023 (31 December 2022: 2.35%). The interest rate of the Group’s long-term borrowings was 1.08% as at 30 June 2023 (31 December 2022: 1.08%).

As at 30 June 2023 and 31 December 2022, no borrowings were secured by property, plant and equipment.

- 56 -

11 RESERVES

	Legal surplus			Capital			Surplus		Other			Hedging			Share			Safety production		Treasury			Retained
				surplus			reserve		reserve						premium			fund		shares			Earnings			Total
	(note(a))			(note(b))			(note(c))		(note(d))						(note(e))			(note(f))		(note(g))			(note(h))
	RMB’000			RMB’000			RMB’000		RMB’000			RMB’000			RMB’000			RMB’000		RMB’000			RMB’000			RMB’000
Balance at 31 December 2021		6,571,284			13,739			101,355		22,965			36,460			106,846			186,326		—			12,379,350			19,418,325
Change in accounting policy (Note 2)		(5	)		—			—		—			—			—			—		—			(57	)		(62	)
Balance at 1 January 2022 (Restated)		6,571,279			13,739			101,355		22,965			36,460			106,846			186,326		—			12,379,293			19,418,263
Total comprehensive income for the period attributable to shareholders of the Company		—			—			—		(22,558	)		296,071			—			—		—			(426,551	)		(153,038	)
Amounts transferred from hedging reserve to initial carrying amount of hedged items		—			—			—		—			(151,817	)		—			—		—			—			(151,817	)
Dividends declared and approved in respect of previous year		—			—			—		—			—			—			—		—			(1,082,381	)		(1,082,381	)
Appropriation of safety production fund		—			—			—		—			—			—			38,672		—			(38,672	)		—
Others		—			3,860			—		—			—			—			—		—			—			3,860
Balance at 30 June 2022 and 1 July 2022 (Restated)		6,571,279			17,599			101,355		407			180,714			106,846			224,998		—			10,831,689			18,034,887
Total comprehensive income for the period attributable to shareholders of the Company		—			—			—		(1,213	)		(94,552	)		—			—		—			(2,419,502	)		(2,515,267	)
Amounts transferred from hedging reserve to initial carrying amount of hedged items		—			—			—		—			(86,162	)		—			—		—			—			(86,162	)
Purchase of own shares		—			—			—		—			—			—			—		(25,689	)		—			(25,689	)
Appropriation of safety production fund		—			—			—		—			—			—			15,420		—			(15,420	)		—
Others		—			(3,860	)		—		—			—			—			—		—			—			(3,860	)
Balance at 31 December 2022 (Restated)		6,571,279			13,739			101,355		(806	)		—			106,846			240,418		(25,689	)		8,396,767			15,403,909
Balance at 1 January 2023		6,571,279			13,739			101,355		(806	)		—			106,846			240,418		(25,689	)		8,396,767			15,403,909
Total comprehensive income for the period attributable to shareholders of the Company		—			—			—		(21	)		—			—			—		—			(966,688	)		(966,709	)
Cancellation of repurchased own shares		—			—			—		—			—			(1,161	)		—		25,689			—			24,528
Appropriation of safety production fund		—			—			—		—			—			—			20,584		—			(20,584	)		—
Balance at 30 June 2023		6,571,279			13,739			101,355		(827	)		—			105,685			261,002		—			7,409,495			14,461,728

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Notes:

(a) Under PRC rules and regulations, the Company and its PRC subsidiaries are required to set aside 10% of the net income determined in accordance with the PRC accounting rules and regulations to a legal surplus reserve. The transfer to this reserve must be made before distribution of any dividend to shareholders.

The legal surplus reserve is non-distributable other than in liquidation and can be used to make good of previous years’ losses, if any, and may be utilized for business expansion or converted into ordinary shares by the issuance of new shares to shareholders in proportion to their existing shareholdings or by increasing the par value of the shares currently held by the shareholders, provided that the balance after such issuance is not less than 25% of the registered capital.

In accordance with PRC rules and regulations, the Company has set aside RMB6,571,279 thousand of legal surplus as of 30 June 2023.

(b) This reserve represents gifts or grants received from China Petrochemical Corporation, the ultimate parent company and which are required to be included in this reserve fund by PRC regulations.

(c) The transfer to this reserve from the retained profits is subject to the approval by shareholders at general meetings. Its usage is similar to that of legal surplus reserve.

(d) Other reserve comprises share of post-acquisition movements in other comprehensive income from associates and joint ventures using the equity methods of accounting with a corresponding adjustment to the carrying amount of the investment.

(e) The application of the share premium account is governed by Sections 167 and 168 of the PRC Company Law.

(f) According to the relevant PRC regulations, the Group is required to transfer an amount to specific reserve for the safety production fund based on the turnover of certain refining and chemicals products. This reserve represents unutilized safety production fund.

(g) The proposal to authorize the board of directors to repurchase domestic shares and/or overseas-listed foreign shares of the Company was approved at the 2021 Annual General Meeting, the Second A Shareholders Class Meeting for 2022 and the Second H Shareholders Class Meeting for 2022 on 22 June 2022. According to the authorization, the Company repurchased shares in call auction since 27 October 2022. As of 31 December 2022, the Company has repurchased 24,528 thousand H-share ordinary shares on the Hong Kong Stock Exchange for an aggregate consideration of RMB25,689 thousand.

On 17 February 2023, the Company cancelled 24,528 thousand H shares repurchased. After the cancellation, the total number of issued share capital reduced by RMB24,528 thousand, and the capital reserve reduced by RMB1,161 thousand.

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(h) According to the Company’s Articles of Association, the reserve available for distribution is the lower of the amount determined under China Accounting Standards for Business Enterprises and the amount determined under IFRS. The Board of Directors did not propose any dividend in respect of the six months ended 30 June 2023 (six months ended 30 June 2022: Nil).

By Order of the Board

Sinopec Shanghai Petrochemical Company Limited

Liu Gang

Joint Company Secretary

Shanghai, the PRC, 23 August 2023

As at the date of this announcement, the executive Directors of the Company are Wan Tao, Guan Zemin, Du Jun and Huang Xiangyu; the non-executive Directors of the Company are Xie Zhenglin and Qin Zhaohui; and the independent non-executive Directors of the Company are Tang Song, Chen Haifeng, Yang Jun, Zhou Ying and Huang Jiangdong.

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