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The Board of Directors will declare dividends semiannually, if any, in Renminbi, with respect to H Shares on a per Share basis and will pay dividends in Hong Kong dollars.

The declaration of dividends is subject to the discretion of the Board of Directors. The amounts of dividends actually distributed to H Share and ADS holders will depend upon the following factors:

  • general business conditions;
  • fiancial results of the Company;
  • capital requirements;
  • contractual restrictions on the payment of dividends by the Company to its shareholders or by theCompany's subsidiaries to the Company;
  • interests of the Company's shareholders;
  • the effect on the Company's debt ratings; and
  • other factors the Board of Directors may deem relevant.

The Company may only distribute dividends after it has made allowance for:

  • recovery of losses, if any;
  • allocations to the statutory common reserve fund;
  • allocations to the statutory common welfare fund; and
  • allocations to a discretionary common reserve fund if approved by its shareholders.

The minimum and maximum aggregate allocations to the statutory funds are 15 per cent. and 20 percent, respectively, of the Company's net profit determined in accordance with PRC accounting rules. Under PRC law, the Company's distributable earnings will be equal to its net profit determined in accordance with PRC accounting rules or IAS, whichever is lower, less allocations to the statutory and discretionary funds.

Any final dividend for a financial year shall be subject to shareholder's approval. Subject to the above and to ensure that the Company's dividend policy is consistent with that of major international oil and gas companies, the Company currently expects that it will distribute as dividends approximately 40 per cent. to 50 per cent. of its reported net profit for all years commencing on or after 1 January 2000.The Directors believe that the dividend policy of the Company strikes a balance between two important goals:

  • providing its shareholders with a competitive return on investment; and
  • assuring sufficient reinvestment of profits to enable the Company to achieve its strategic objectives.

The Directors anticipate that CNPC may incur future operating losses arising in part from its obligations to provide supplementary social services to the employees of the CNPC Group and a limited number of third parties. These services include education, hospitals, public transportation services, property management and security services. Dividends received from the Company are likely to be one of CNPC's principal means of funding these losses. The Directors believe that subsidies which the Ministry of Finance has committed to provide will enable CNPC to fund substantially all of any future operating shortfalls arising out of CNPC's obligations to provide social services. The Directors believe that these subsidies will substantially reduce CNPC's reliance on dividends from the Company. These subsidies are to be provided until the social services currently provided by CNPC have been fully assumed by the PRC Government. Nevertheless, subject to the relevant provisions of the Company Law and the Articles of Association, CNPC may seek to influence the Company's determination of dividends with a view to satisfying its cash flow requirements. However, the Directors believe that CNPC's financial condition will benefit from the Company's success and that by supporting a dividend policy intended to enhance the Company's long-term profitability and the market value of its securities, CNPC will increase the value of its own interest in the Company.

The Directors believe that CNPC's operating losses are likely to decline significantly in the future as a result of continued restructuring of CNPC's operations, repayment by CNPC of a significant portion of its borrowings and the gradual transfer by CNPC to the PRC Government of CNPC's social service functions. The PRC Government has begun implementing a policy of gradually assuming the social service functions historically performed by State-owned enterprises. As a result, the Directors believe that CNPC will be able gradually to reduce, and eventually eliminate, its financial obligations in respect of these social service functions. However, the PRC Government is still in the process of establishing a precise timetable for completing the assumption of these financial obligations.

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Address:16 Andelu Dongcheng District Beijing The People's Republic of China