Sinopec Kantons Holdings Limited (“Sinopec Kantons” or the “Company”; stock code: 0934) today announcedthe audited annual results of the Company and its subsidiaries (collectivelyknown as the “Group”) for the twelve months ended 31 December 2022 (the“Reporting Period”).

The year 2022 was a very challenging year. TheGroup proactively responded to them and posted revenue of approximately HK$616million, slightly down by 3.2% year-on-year. Its gross profit grew by 1.6%year-on-year to approximately HK$288 million. The profit for the year amountedto HK$403 million, representing a 61.6% decrease from a year ago. In order toreward our shareholders for their long-standing support to the Company, theBoard recommended the payment of a final dividend of HK12 cents per share aftertaking into account the Company’s cashflow situation and future businessdevelopment needs. If the interim dividend of HK8 cents per share is taken intoaccount, the total dividend for the year 2022 is HK20 cents per share,unchanged from the previous year.

Summary of Financial Data:

During the Reporting Period, the globaleconomy lost steam due to a combination of negative factors, includingrecurrent outbreaks of COVID-19, intensified geopolitical conflicts and the turbulencein the financial markets caused by successive interest rate hikes of the US.This posed leading to a material adjustment in the pattern of energy supply anddemand. In the face ofsevere and complicated operating situation, the Group effectively coordinated itsproduction and operations, pushed for reform and development, and implementedrisk control, thereby ensuring safe and stable production and operation of theGroup’s operating entities.

Operations of the Group’stwo business segments generally maintained stable in the Reporting Period.However, due to the provision made by the Company for the investment lossesarising from long-term equity investment in Vesta Terminal B.V. (“Vesta”), thesegment results of the crude oil jetty and storage business were, to some extent,adversely affected. The segment results of oil jetty and storage business reachedapproximately HK$1.09 billion, up 2.6% year-on-year. The segment results of vessel charteringand logistics business were approximately HK$116 million, up 16.4% year-on-year.

Active market expansionwith vigorous efforts to enhance efficiency. The year 2022 marked the second year ofthe Company’s direct management of the Six Domestic Terminal Companies. In the faceof changes in the market and industry environment, the Group adhered to itsoperational targets, took the board of directors of the subsidiary as thestarting point, actively pushed its operating entities to enhance theircorporate governance standards and actively explore the market, strived to improveefficiency and continuously strengthened the control of various costs andexpenses. In 2022, under the impact of factors such as the pandemic andsluggish demand, the aggregate terminal throughout of the Six Domestic TerminalCompanies amounted to approximately 210 million tonnes; and they generated atotal investment return of approximately HK$798 million for the Company.

Captureopportunities to boost business scale and profitability. HuadePetrochemical Co., Ltd. (“Huade Petrochemical”) in Huizhou Daya Bay, a wholly-ownedsubsidiary of the Company, proceeded with lean management, better coordinatedthe production and operation, and exercised stringent cost control. It seized theopportunity to sign a long-term contract with a third party for the use of portfacilities to further enhance the scale of its business and increaseprofitability in the future. In 2022, Huade Petrochemical unloaded crude oilfrom 90 tankers with a total volume of approximately 12.37 million tonnes, up 5.8%year-on-year. It transmitted approximately 11.31 million tonnes of crude oil, down2.9% year-on-year. The segment revenue of approximately HK$616 million wasachieved, representing a 3.2% decrease year-on-year. The segment results of HuadePetrochemical surged 109.9% year-on-year to approximately HK$494 million due toa one-off gain on disposal of assets for the exchange of submarine pipelines.

Stepped-upmarketing efforts and stringent cost control. In 2022, the operating environment ofVesta storage area in Estonia substantially deteriorated as a result ofgeopolitical conflicts. The Company made a provision of approximately HK$261million for the valuation loss due to its interest in Vesta. In order toimprove its operating condition, Vesta made changes to its management, strengthenedmarketing efforts in Estonian storage area, optimized its operating costs,also, made relentless effort to reduce costs and increase efficiency.

Various effective measures toprotect interests of the Company and its shareholders. In view of the updatedfeasibility study for the Batam Island integrated storage and terminal project(“Batam Project”) in Indonesia, the Board of the Company decided not to proceedwith the project and made a provision of approximately HK$630 million for theCompany’s interest in PT. West Point Terminal because it was economicallyimpractical. The Group will continue to adopt various effective measuresactively to protect the legitimate rights and interests of the Company and itsshareholders.

Active response tothe changing market and relentless efforts to expand market reach. Fujairah OilTerminal FZC (“FOT”), a joint venture of the Company in the Middle East,actively responded to changes in the market, vigorously expanded its marketreach, overcame the adverse effects of a major flooding and quickly resumeproduction. The average occupancy rate of FOT’s facilities in the year reachedapproximately 99.3%. In addition, construction of a pipeline network connectingthe storage area to the very large crude carrier (“VLCC”) terminal at the portcontinued in the year to enhance FOT’s business capabilities and improve its futurerevenue and profit. In 2022, FOT generated an investment income ofapproximately HK$70.38 million for the Company.

Better economicbenefits from LNG vessels logistics business. As for the liquefied natural gas (“LNG”)vessel logistics business, the Group overcame the impacts brought by thepandemic in 2022, maintained stable operation and achieved better economicbenefits. A total of 102 voyages were completed by the eight LNG vessels duringthe year. A total of investment return of approximately HK$116 million wasgenerated for the Company, representing a 16.4% year-on-year increase.

Future outlook: Looking aheadto the year 2023, despite various unfavourable situations such as inflationaryrisks, geopolitical conflicts and a global economic slowdown, the world’s economyis gaining momentum on the relaxation of COVID restrictions around the worldand a stabilization and recovery of the Chinese economy. The Group will seize theopportunities and endeavor to achieve its annual production and operationtargets, striving to expand core businesses and promote the sustainable andhigh quality development of the Group.