diff --git "a/China/15.Sinopec_$104.55 B_Energy/2017/results.txt" "b/China/15.Sinopec_$104.55 B_Energy/2017/results.txt"
new file mode 100644--- /dev/null
+++ "b/China/15.Sinopec_$104.55 B_Energy/2017/results.txt"
@@ -0,0 +1,23884 @@
+As of 31 December
+Non-current assets
+Net current liabilities
+Non-current liabilities
+Non-controlling interests
+Total equity attributable to owners of the Company
+Net assets per share (RMB)
+Adjusted net assets per share (RMB)
+2017
+1,066,455
+2016
+1,086,348
+2015
+2014
+1,113,611
+1,094,035
+2013
+1,012,703
+Items
+Unit: RMB million
+1.305
+1.267
+Return on capital employed (%)
+8.26
+7.30
+5.23
+6.06
+8.03
+Return on net assets (%)
+50,397
+7.06
+4.81
+7.84
+11.62
+Net cash generated from operating activities per share (RMB)
+1.577
+1.772
+1.371
+6.56
+0.536
+73,282
+242,892
+4.860
+3 MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER ASBE AND IFRS PLEASE REFER TO PAGE 206 OF
+THE REPORT.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+5
+Principal Financial Data and Indicators
+Changes in Share Capital and
+Shareholdings of Principal Shareholders
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
+1
+CHANGES IN THE SHARE CAPITAL
+There is no change on the number and nature of shares of Sinopec Corp. during the reporting period
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+As of 31 December 2017, the total number of shareholders of Sinopec Corp. was 508,659 including 502,590 holders of domestic A shares and 6,069
+holders of overseas H shares. As of 28 February 2018, the total number of shareholders of Sinopec Corp. was 496,137. Sinopec Corp. has complied
+with requirement for minimum public float under the Hong Kong Listing Rules.
+(1) Shareholdings of top ten shareholders
+The shareholdings of top ten shareholders as of 31 December 2017 are listed as below:
+4.969
+4.899
+5.033
+5.585
+5.517
+197,440
+163,168
+181,831
+196,275
+201,540
+189,485
+126,770
+129,175
+120,241
+726,120
+710,994
+676,197
+54,348
+595,255
+54,691
+571,087
+5.997
+5.868
+5.873
+5.808
+111,964
+0.399
+0.269
+0.385
+19,054
+36.0
+Debentures payable
+31,370
+54,985
+(23,615)
+Financial expenses
+1,560
+6,611
+(5,051)
+(35.7) Mainly due to the decrease of crude oil trade deposit and internal
+borrowings received from the Sichuan-to-East China Pipeline Co.
+The Company dispatched an executive to the Board of SIBUR in
+2017 and it is able to exercise significant influence in SIBUR. So the
+Company turned the available for-sale financial assets to long term
+equity investment.
+Mainly due to increase in profit as well as the impact of timing of tax
+payment.
+(42.9) Parts of debentures payable are converted to non-current liabilities due
+within one year.
+(76.4) Mainly due to increase in profit, sufficient capital reserve and increase
+in interest revenue
+Income of investment
+52,886
+71,940
+Taxes payable
+(85.3)
+2016
+RMB million
+50,289
+Increase/(decrease)
+Amount Percentage
+RMB million
+(%)
+Reasons for change
+18,205
+36.2
+19,060
+Mainly due to the increase in crude oil price and refined oil products
+export.
+16,467
+25,596
+(9,129)
+Available-for-sale financial assets
+1,676
+11,408
+(9,732)
+Other receivables
+30,779
+(11,719)
+(38.1) Mainly due to the income from restructuring of pipeline assets in 2016
+and the impact of equity acquisition of Shanghai SECCO in 2017.
+65,818
+95,444
+Profit attributable to owners of the Company
+51,244
+46,672
+32,512
+46,639
+56,411
+66,348
+0.423
+0.385
+0.269
+0.399
+0.571
+Diluted earnings per share (RMB)
+0.423
+Basic earnings per share (RMB)
+Unit: Share
+80,151
+96,763
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS
+Unit: RMB million
+Items
+Turnover and other operating revenues
+Operating profit
+Profit before taxation
+86,697
+2017
+For the year ended 31 December
+2016
+1,930,911
+2015
+2,020,375
+2014
+2,827,566
+71,470
+77,193
+56,822
+73,439
+2,360,193
+Number of
+Nature of
+Name of shareholders
+Shares of other listed companies directly
+held by China Petrochemical Corporation
+Number of Shareholding
+Shares Held Percentage
+Name of Company
+Sinopec Engineering
+(Group) Co. Ltd
+Sinopec Oilfield Service
+2,907,856,000
+65.67%
+Corporation
+9,224,327,662
+65.22%
+Sinopec Oilfield Equipment
+Corporation
+351,351,000
+58.74%
+China Merchants Energy
+Shipping Co., Ltd
+912,886,426
+17.23%
+(2) Other than HKSCC Nominees Limited,
+there was no other legal person
+shareholder holding 10% or more of the
+total issued share capital of Sinopec
+Corp.
+(3) Basic information of the de facto
+controller
+It provides well-drilling services, well-
+logging services, downhole operation
+services, services in connection with
+manufacturing and maintenance of
+production equipment, engineering
+construction, utility services including
+water and power and social services.
+The controlling shareholder of
+Sinopec Corp. is China Petrochemical
+Corporation. Established in July 1998,
+China Petrochemical Corporation is a
+state-authorised investment organisation
+and a state-owned enterprise. The
+legal representative is Mr. Wang Yupu.
+Through re-organisation in 2000, China
+Petrochemical Corporation injected its
+principal petroleum and petrochemical
+businesses into Sinopec Corp. and
+retained certain petrochemical facilities.
+(1) Controlling shareholder
+There was no change in the controlling
+shareholder and the de facto controller of
+Sinopec Corp. during the reporting period.
+0.02(S)
+1.82(L)
+0.89(S)
+0.07(L)
+0.00(L)
+3.86(L)
+5.01(L)
+China Petrochemical Corporation is the
+de facto controller of Sinopec Corp.
+CO
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+3 ISSUANCE AND LISTING OF SECURITIES
+(1) Issuance of securities in reporting
+period
+There is no issuance of shares of Sinopec
+Corp. during the reporting period
+(2) Existing employee shares
+As at the end of the reporting period,
+there were no employee shares.
+4 CHANGES IN THE CONTROLLING
+SHAREHOLDERS AND THE DE FACTO
+CONTROLLER
+6
+(4) Diagram of the equity and controlling
+relationship between Sinopec Corp. and
+its de facto controller
+*.
+China Petrochemical
+Corporation
+We actively fulfilled our social responsibilities,
+and green and low-carbon development strategy.
+We successfully concluded the Clear Water,
+Blue Sky environmental project while smoothly
+implemented the Efficiency Doubling Plan.
+Our major pollutant emissions were lower
+than government criterias. Meanwhile, we
+made further achievements in our partnership
+assistance and targeted poverty alleviation
+programs. For the period of 2016 through
+2017, we donated an aggregate amount of RMB
+284 million to these causes. The Company
+actively participated in social and philanthropic
+activities. The Lifeline Express hospital train
+has provided free cataract surgeries for more
+than 40,000 impoverished people and is widely
+acclaimed throughout the country.
+Over the past three years, the Company's
+turnover and total assets have grown steadily.
+Our businesses have expanded rapidly, and our
+overall performance has continued to improve.
+In accordance with IFRS, the Company's total
+assets increased by 9.9% and our shareholders'
+equity increased by 22.4% compared with 2014.
+In addition, we delivered good returns to our
+shareholders, with total dividends declared for
+the three-year period amounting to RMB 108.8
+billion.
+These achievements are the product of the
+joint efforts of the Board, the management and
+the entire staff, reflecting their hard work and
+their determination to reform. The support of
+our shareholders and the wider community
+has also been indispensable. In accordance
+with regulatory requirements, the terms of
+office of the current Board of Directors and the
+Supervisory Committee will soon expire. Mr.
+Jiang Xiaoming and Mr. Andrew Y. Yan will step
+down as directors. They have demonstrated
+dedication and diligence throughout their terms
+of office and have made outstanding contribution
+to the Company's decision-making, standardised
+operations, reforms and development. On behalf
+of the Board, I would also like to express my
+heartfelt gratitude to all independent directors
+and supervisors for their hard work and
+contribution.
+In 2018, the global economy will continue to
+recover. While China's economic development
+model will shift from high-speed growth to high-
+quality development, domestic demand for
+oil and chemical products will remain robust.
+This year is an important link between the
+preceding and the following for carrying out the
+Company's 13th Five-year Development Plan.
+In view of the new requirements in the new
+era, the Company will adhere to an underlying
+principle of progressing at a steady pace and
+under a new development model that makes
+quality and efficiency our top priorities. We
+will deepen supply-side structural reforms and
+enhance our corporate governance with China's
+characteristics. We will also strive diligently
+to improve our production and operational
+standards, reinforce our management and
+ensure the Company's sustainable development.
+In our upstream operations, we will pursue
+opportunities for high-efficiency exploration and
+cost-effective development, maintain the stability
+of our oil output, increase our gas supplies and
+reduce costs. At the same time, we will optimize
+our resource structure and drive the rapid
+development of the natural-gas business. In the
+refining, we will further optimize structure and
+implement a lean management model, optimise
+refining layout, and increase concentration ratio.
+We will continue to revamp our refining projects
+and upgrade our refined oil products. In the oil
+products marketing business, we will coordinate
+efforts to enhance market development and
+efficiency and expand our domestic and overseas
+businesses. In addition, we will strengthen our
+network and logistics system, accelerate the
+development of our non-fuel operations, and
+intensify efforts to boost our sales volume and
+profitability. In the chemicals business, we will
+improve quality and profitability and focus on
+transformation and development. We emphasise
+on the high end of our value chain, with more
+attention on the development of fine chemicals,
+bio-chemicals and new materials. In 2018, the
+capital expenditure of the Company will be RMB
+117 billion.
+solid resource foundation for promoting natural
+gas consumption in the Yangtze River Economic
+Belt. Moreover, we made continuous efforts to
+drive development of four world-class regional
+refining centers, sharpening our competitive
+edge. We took a market-driven approach to our
+refining and chemicals operations, vigorously
+promoting structural adjustments and increasing
+the production of high-value-added products
+to develop these businesses into our profit
+growth drivers. We actively coped with market
+competition, leading to steady growth in the
+sales volume of our refined oil products and
+the sustained rapid development of our non-
+fuel operations. We achieved record-breaking
+performance in various key operating indicators
+of the chemicals segment. As we continued to
+deepen our reform programs, the Company
+brought in new investors for the Sichuan-to-
+East China Pipeline Co., and introduced RMB
+22.8 billion. The mixed-ownership reform of
+Sinopec Marketing Company went smoothly,
+and we successfully introduced a flattened
+organisation structure in upstream enterprises.
+With an emphasis on innovation, we enhanced
+our mechanisms for commecializing scientific
+and technological achievements and focused
+on the development of core technologies in
+our key businesses. Technological innovations
+have become a pillar of our development.
+The Company won eight National Technology
+Invention Awards and five National Science
+and Technology Progress Awards, remaining
+a leading domestic company in the number
+of invention patents granted. Moreover, we
+capitalised on the opportunities created by the
+Belt and Road Initiative by investing in refining
+and chemical projects, and increasing our trade
+volumes.
+Looking ahead, the petroleum and chemical
+sectors are set to undergo significant and
+profound transformation. China's economy will
+see remarkable progress in its move towards
+high-quality development. Both opportunities
+and challenges lie ahead of us. It is our
+mission to build Sinopec Corp. into a world-
+class energy and chemical company and to
+drive its sustainable growth. We will adjust to
+overall market trends, adapt as our development
+warrants, and optimize our strategies and
+planning. In addition, we will adhere to our
+corporate strategy of reform, management,
+innovation and development, stressing the
+importance of quality development in our core
+businesses and accelerating the development
+of new businesses. We will strengthen efforts
+to make reforms that improve the Company's
+quality, efficiency and dynamism, and that
+enable sustainable and high-quality development.
+Dai Houliang
+Vice Chairman & President
+Beijing, China
+23 March 2018
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2017
+9
+Board's Statement
+The Board has nominated an exceptional
+group of new members to join it. They include
+outstanding managers and leading experts
+in the academic, macro-economic, corporate
+management and petrochemical fields. Drawing
+on their far-ranging professional backgrounds
+and extensive work experience, they will share
+their insights with and add vitality to the Board,
+thus enhancing the Board's decision-making
+capabilities. The new session of the Board will
+help the Company keep pace with overall market
+trends through their comprehensive view of
+our businesses and their pragmatic approach
+to market developments. We will redouble our
+efforts to develop Sinopec Corp. into a world-
+class energy and chemical company and to
+build a better community, delivering superior
+operating results to our shareholders and giving
+back to society and our employees.
+8.94(L)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Board's Statement
+71.32% *
+Sinopec Corp.
+Inclusive of 553,150,000 H shares held by
+Sinopec Century Bright Capital Investment
+Ltd. (overseas wholly-owned subsidiary of
+China Petrochemical Corporation) through
+HKSCC Nominees Limited.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+7
+ShareholShare anders
+BOARD'S STATEMENT
+8
+Mr. Dai Houliang, Vice Chairman & President
+On behalf of the Board of Directors, I would
+like to express my sincere gratitude to our
+shareholders and the wider community for their
+interest and support.
+In 2017, international oil prices fluctuated and
+showed upward movement in the midst of a
+complex and changeable global political and
+economic environment. Domestic demand for
+natural gas and chemicals remained robust as
+the Chinese economy maintained its steady
+growth. Competition in the domestic refined oil
+market was fierce. As it made major decisions,
+the Board of Directors (the "Board") focused on
+steady and firm improvement, and adhered to
+its overarching strategies of promoting value.
+oriented growth, innovation-driven development,
+integrated resource allocation, openness
+to cooperation, and green and low-carbon
+development. With an emphasis on delivering
+returns to shareholders, we continued to focus
+on supply-side structural reform and stepped up
+our efforts to enhance the Company's efficiency,
+profitability and corporate governance.
+Over the past year, under the leadership of
+our management, the entire staff focused on
+optimisation, cost reduction, market expansion,
+structural adjustment, reform, foundation
+building, and risk management. As a result, our
+operating results were better than expected, and
+we met all performance targets for the year. In
+our upstream business, we emphasized high-
+efficiency exploration activities and cost-effective
+development. Our crude oil reserve replacement
+ratio reached 116%. At the same time, we
+worked hard to ensure a stable gas supply for
+the winter season, with gas production and sales
+volume hitting record highs. Taking advantage
+of our integrated value chain, which extends
+from refining to marketing and distribution,
+we actively responded to competitive market
+conditions. We achieved satisfactory results and
+further strengthened our competitive advantage.
+In our chemical operations, we adopted a
+customer-focused approach and enhanced the
+adjustments in our product and feedstock mix.
+Both the sales volume and profitability of the
+chemicals segment reached record highs.
+In accordance with IFRS, the Company's
+turnover and other operating revenues reached
+RMB 2.36 trillion in 2017, up by 22.2% from
+the previous year. Profit attributable to equity
+shareholders of the Company was RMB 51.244
+billion. Basic earnings per share were RMB
+0.423, up by 9.9% from year on year. Taking
+into account the Company's profitability,
+cash position, shareholder return and future
+business development, the Board proposed a
+final dividend of RMB 0.40 per share, which
+combined with the interim dividend of RMB 0.10
+per share, brought the full-year dividend to RMB
+0.50 per share, up by 100.8% from the previous
+year.
+During the three years of the sixth session of
+the Board, the global economy recovered slowly,
+and China's economy entered a "new normal"
+phase. International oil prices fluctuated at
+low levels, with heavy repercussions for the
+upstream sector. At the same time, competition
+in the refined oil market intensified, with the
+government introducing a series of far-reaching
+policies in the oil and petrochemical industries.
+In the face of a complex and challenging
+operating environment, the Board emphasised on
+its principles of innovation, coordination, green
+development, openness and shared growth.
+We formulated our five major development
+strategies, 13th Five-Year Development Plan
+and Three-Year Rolling Development Program,
+taking advantage of our integrated value chain
+to accelerate the Company's transformation and
+structural adjustments, eventually we achieved
+excellent operating performance. At the same
+time, we made outstanding progress in our
+corporate governance, corporate development,
+reforms and adjustments, and technological
+innovation, as well as in the fulfillment of our
+social responsibilities.
+Over the past three years, we consistently
+enhanced the composition and operation of the
+Board and the Supervisory Committee. The effort
+of confirming the role of the Chinese Communist
+Party in the Company's corporate governance
+facilitated a better corporate governance
+mechanism featuring scientific decision-making
+and effective implementation and supervision.
+We focused on improving product quality,
+enhancing our efficiency and upgrading our
+businesses, thus driving the Company's
+sustainable development. In our upstream
+business, we implemented a low-cost strategy to
+address the challenge of low oil prices, focused
+on high-efficiency exploration and development,
+and enlarged our proved reserves to lay a
+stronger foundation for sustainable development.
+We also developed our natural gas business as
+a new driver for profit growth. We built up the
+production capacity of the Fuling shale gas field
+to 10 billion cubic meters per year, laying a
+Dear Shareholders and Friends:
+68,494
+Approximate percentage
+of Sinopec Corp.'s issued
+share capital (H Share) (%)
+20,400(L)
+A Share
+0.33
+400,982,945
+39,831,541
+0
+中央匯金資產管理有限責任公司
+A Share
+0.27
+322,037,900
+0
+長江證券股份有限公司
+A Share
+0.07
+88,458,695
+17,261,400
+HKSCC Nominees Limited
+0
+Unknown
+153,819
+1,470,304,825
+HKSCC Nominees Limited²
+China Petrochemical Corporation
+State-owned Share
+Percentage of
+Shareholders shareholdings %
+Total number of
+shares held
+85,792,671,101
+Changes of shares subject to
+shareholding pledges or lock-up
+70.86
+中國工商銀行-上證50交易型開放式指數證券投資基金
+0
+H Share
+20.96
+25,379,806,872
+中國證券金融股份有限公司
+A Share
+2.75
+3,331,730,143
+0
+A Share
+0.07
+80,551,930
+We are not aware of any connected relationship or acting in concert among or between the above-mentioned shareholders.
+(2) Information disclosed by the shareholders of H shares in accordance with the Securities and Futures Ordinance (SFO)
+Name of shareholders
+BlackRock, Inc.
+JPMorgan Chase & Co.
+Schroders Plc.
+Status of shareholders
+Interest of corporation controlled by the
+substantial shareholder
+Statement on the connected relationship or acting in concert among the above-mentioned shareholders:
+Beneficial owner
+Trustee (exclusive of passive trustee)
+Custodian corporation/approved lending agent
+Investment manager
+(L): Long position, (S): Short position
+Number of shares
+interests held or
+regarded as held (H Share)
+2,280,210,944(L)
+4,080,000(S)
+463,731,470(L)
+226,733,320(S)
+17,001,962(L)
+Investment manager
+984,349,338(L)
+1,278,173,372(L)
+Note 2: Sinopec Century Bright Capital Investment Limited, an overseas wholly-owned subsidiary of China Petrochemical Corporation, holds 553,150,000 H shares,
+accounting for 0.46% of the total issued share capital of Sinopec Crop. Those shareholdings are included in the total number of the shares held by HKSCC
+Nominees Limited.
+0
+2,693,300
+交通銀行股份有限公司-滙豐晉信大盤股票型
+證券投資基金
+A Share
+0.06
+68,970,054
+23,033,290
+Note 1: As compared with the number of shares held as of 31 December 2016.
+國泰君安證券股份有限公司
+0.05
+全國社保基金一一五組合
+A Share
+0.04
+54,884,077
+54,190,722
+(76,251,129)
+54,190,722
+200 000
+A Share
+Accounts receivable
+2013
+2,881,928
+Items
+10.1
+32,281
+45,582
+RMB million
+53.4
+28,901
+190,935
+214,543
+(11.0)
+165,740
+For the year of 2017
+Items
+Operating income
+First
+Quarter
+RMB million
+Second
+46,416
+51,119
+56,093
+8.4
+RMB million
+2016
+RMB million
+Change
+2015
+%
+RMB million
+2,360,193
+Third
+1,930,911
+2,020,375
+86,965
+77,389
+12.4
+51,553
+86,573
+79,877
+22.2
+Fourth
+Quarter
+Quarter
+10,619
+8,864
+45,582
+47,571
+50,346
+79,742
+190,935
+9,559
+As of 31 December
+2017
+Total assets
+Total liabilities
+RMB million
+1,595,504
+741,434
+2016
+RMB million
+Change
+Items
+Net cash flow from operating activities
+16,540
+13,276
+excluding extraordinary gains and losses
+Quarter
+Total
+RMB million
+RMB million
+RMB million
+RMB million
+582,185
+Net cash flow from operating activities
+Net profit attributable to equity shareholders of the Company
+Net profit attributable to equity shareholders of the Company
+583,652
+10,459
+579,118
+615,238
+2,360,193
+11,281
+12,746
+51,119
+16,633
+Net profit attributable to equity shareholders of the Company excluding
+extraordinary gains and losses
+Net profit attributable to equity shareholders of the Company
+Profit before taxation
+19
+Management's Discussion and Analysis
+29
+Significant Events
+40
+Connected Transactions
+43
+Business Review and Prospects
+Corporate Governance
+Report of the Board of Directors
+60
+Report of the Board of Supervisors
+62
+Directors, Supervisors, Senior
+Management and Employees
+78
+50
+Principal Wholly-owned and
+11
+8
+中国石化
+中国石化
+Slope SINOPEC
+2017
+Annual Report and Accounts
+(STOCK CODE
+A Share: 600028; H Share: 00386; ADR : SNP)
+Board's Statement
+中国石油化工股份有限公司
+CONTENTS
+23
+6
+Company Profile
+Principal Financial Data and Indicators
+Changes in Share Capital and Shareholdings
+of Principal Shareholders
+SINOPEC CORP.
+2015
+Controlled Subsidiaries
+Financial Statements
+RMC: Oil and Natural Gas Reserves Management Committee of the Company;
+CSRC: China Securities Regulatory Commission.
+Hong Kong Stock Exchange: The Stock Exchange of Hong Kong Limited
+Hong Kong Listing Rules: Listing Rules of the Hong Kong Stock Exchange
+CONVERSION:
+For domestic production of crude oil, 1 tonne = 7.1 barrels;
+For overseas production of crude oil: 2017, 1 tonne = 7.21 barrels; 2016, 1 tonne = 7.20 barrels; 2015, 1 tonne = 7.21 barrels;
+For production of natural gas, 1 cubic meter = 35.31 cubic feet;
+Sichuan-to-East China Pipeline Co.: Sinopec Sichuan-to-East China Natural Gas Pipeline Co., Ltd;
+Refinery throughput is converted at 1 tonne = 7.35 barrels.
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+1 FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH ASBE
+(1) Principal financial data
+For the year ended 31 December
+2017
+Items
+Operating income
+Operating profit
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+79
+Shanghai SECCO: Shanghai SECCO Petrochemical Company Limited;
+China Petrochemical Corporation: our controlling shareholder, China Petrochemical Corporation;
+213
+Corporate Information
+214
+Documents for Inspection
+This annual report includes forward-looking statements. All statements,
+other than statements of historical facts, that address activities, events or
+developments that the Company expects or anticipates will or may occur
+in the future (including but not limited to projections, targets, reserve
+and other estimates and business plans) are forward-looking statements.
+The Company's actual results or developments may differ materially
+from those indicated by these forward-looking statements as a result
+of various factors and uncertainties. The Company makes the forward-
+looking statements referred to herein as at 23 March 2018 and unless
+required by regulatory authorities, the Company undertakes no obligation
+to update these statements.
+2
+Company Profile
+Sinopec group: China Petrochemical Corporation and its subsidiaries;
+COMPANY PROFILE
+THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 OF THE COMPANY PREPARED IN ACCORDANCE WITH THE PRC
+ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES (ASBE) AND INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) HAVE BEEN
+AUDITED BY PRICEWATERHOUSECOOPERS ZHONG TIAN LLP AND PRICEWATERHOUSECOOPERS RESPECTIVELY. BOTH FIRMS HAVE ISSUED
+STANDARD UNQUALIFIED AUDITOR'S REPORT.
+AS APPROVED BY THE 17TH MEETING OF THE SIXTH SESSION OF THE BOARD OF DIRECTORS OF SINOPEC CORP., THE BOARD PROPOSED A
+FINAL CASH DIVIDEND OF RMB 0.40 (TAX INCLUSIVE) PER SHARE FOR 2017, COMBINING WITH THE INTERIM CASH DIVIDEND OF RMB 0.10 (TAX
+INCLUSIVE) PER SHARE, THE TOTAL CASH DIVIDEND FOR 2017 WILL BE RMB 0.50 (TAX INCLUSIVE) PER SHARE. THE DIVIDEND PROPOSAL IS
+SUBJECT TO THE SHAREHOLDERS' APPROVAL AT THE ANNUAL GENERAL MEETING FOR THE YEAR 2017.
+COMPANY PROFILE
+Sinopec Corp. is one of the largest integrated energy and chemical companies in China. Its principal operations include the exploration and production,
+pipeline transportation and sale of petroleum and natural gas; the production, sale, storage and transportation of refinery products, petrochemical
+products, coal chemical products, synthetic fibre, and other chemical products; the import and export, including an import and export agency
+business, of petroleum, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research,
+development and application of technologies and information.
+DEFINITIONS:
+In this report, unless the context otherwise requires, the following terms shall have the meaning set out below:
+Sinopec Corp.: China Petroleum & Chemical Corporation;
+Company: Sinopec Corp. and its subsidiaries;
+IMPORTANT NOTICE: THE BOARD OF DIRECTORS, THE BOARD OF SUPERVISORS, DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF
+SINOPEC CORP. WARRANT THAT THERE ARE NO FALSE REPRESENTATIONS, MISLEADING STATEMENTS OR MATERIAL OMISSIONS IN THIS
+ANNUAL REPORT, AND JOINTLY AND SEVERALLY ACCEPT FULL RESPONSIBILITY FOR THE AUTHENTICITY, ACCURACY AND COMPLETENESS
+OF THE INFORMATION CONTAINED IN THIS ANNUAL REPORT. THERE IS NO OCCUPANCY OF NON-OPERATING FUNDS BY THE CONTROLLING
+SHAREHOLDERS OF SINOPEC CORP. MR. JIAO FANGZHENG AND MR. MA YONGSHENG, DIRECTORS, MR. FAN GANG, INDEPENDENT NON-
+EXECUTIVE DIRECTOR, DID NOT ATTEND THE SEVENTEENTH MEETING OF THE SIXTH SESSION OF THE BOARD DUE TO OFFICIAL DUTIES. MR.
+JIAO FANGZHENG AUTHORISED MR. DAI HOULIANG, VICE CHAIRMAN AND PRESIDENT, MR. MA YONGSHENG AUTHORISED MR. LI YUNPENG,
+DIRECTOR, AND MR. FAN GANG AUTHORISED MR. TANG MIN, INDEPENDENT NON-EXECUTIVE DIRECTOR, TO VOTE ON THEIR BEHALVES IN
+RESPECT OF THE RESOLUTIONS PUT FORWARD AT THE MEETING. MR. DAI HOULIANG, VICE CHAIRMAN AND PRESIDENT, MR. WANG DEHUA,
+CHIEF FINANCIAL OFFICER AND HEAD OF THE FINACIAL DEPARTMENT OF SINOPEC CORP. WARRANT THE AUTHENTICITY AND COMPLETENESS
+OF THE FINANCIAL STATEMENTS CONTAINED IN THIS ANNUAL REPORT. THE AUDIT COMMITTEE OF SINOPEC CORP. HAS REVIEWED THE
+ANNUAL RESULTS OF SINOPEC CORP. FOR THE YEAR ENDED 31 DECEMBER 2017.
+%
+29,713
+1,498,609
+2016
+RMB million
+1,489
+133
+2015
+RMB million
+665
+112
+(3,987)
+(5,002)
+(518)
+(20,562)
+(943)
+(3,941)
+690
+1,367
+(86)
+(6,512)
+976
+(5,536)
+(22,164)
+5,578
+387
+1,518
+152
+(4,783)
+(148)
+RMB million
+2017
+For the year ended 31 December
+(Income)/expenses
+4
+Principal Financial Data and Indicators
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+(3) Extraordinary items and corresponding amounts
+Items
+Net loss on disposal of non-current assets
+Donations
+Government grants
+(134)
+(4,915)
+1,060
+Gain on holding and disposal of various investments
+Gain on remeasurement of interests in Shanghai SECCO
+Other non-operating expenses, net
+Gain on business combination under the same control
+Subtotal
+Tax effect
+Total
+Attributable to: Equity shareholders of the Company
+Minority interests
+(4) Items measured by fair values
+Investment income on loss of control and remeasuring interests in pipeline company
+(16,586)
+(3,855)
+(5,537)
+1
+2,407
+51,196
+51,196
+(3,448)
+49,235
+52,683
+The table below sets forth reasons for those changes where the fluctuation was more than 30% during the reporting period:
+(1,617)
+Unit: RMB million
+on the profit
+of the year
+41
+(1,105)
+(1,486)
+196
+(2,354)
+As of 31 December
+2017
+Influence
+Principal Financial Data and Indicators
+(4,024)
+(522)
+(16,703)
+117
+(3,380)
+(475)
+Items
+Available-for-sale financial assets
+Derivative financial instruments
+Cash flow hedging
+(836)
+Financial assets at fair value through profit and loss
+Total
+Beginning of
+the year
+End of
+the year
+RMB million
+262
+178
+(84)
+314
+(5) Significant changes of items in the financial statements
+3
+Changes
+points
+RMB
+%
+2015
+RMB
+Basic earnings per share
+0.422
+0.383
+10.2
+RMB
+0.267
+0.422
+0.383
+10.2
+0.267
+Basic earnings per share (excluding extraordinary gains and losses)
+Weighted average return on net assets (%)
+0.376
+0.245
+Diluted earnings per share
+53.5
+Items
+2016
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+6.5
+1,447,268
+666,084
+11.3
+657,703
+Total equity attributable to equity shareholders of the Company
+Total number of shares (1,000 shares)
+Change
+727,244
+2.1
+677,538
+121,071,210
+121,071,210
+(2) Principal financial indicators
+For the year ended 31 December
+2017
+712,232
+0.239
+121,071,210
+6.68
+Items
+RMB
+2016
+RMB
+Change
+2015
+%
+RMB
+2017
+Net assets attributable to equity shareholders of the Company per share
+Liabilities to assets ratio (%)
+2.1
+5.606
+46.47
+44.45
+2.02
+percentage
+7.14
+45.44
+5.883
+As of 31 December
+6.007
+(11.0)
+5.07
+1.371
+0.46
+percentage
+points
+Weighted average return (excluding extraordinary gains and losses)
+on net assets (%)
+4.33
+2.04
+6.37
+percentage
+1.772
+points
+1.577
+4.52
+Net cash flow from operating activities per share
+for the year ended 31 December 2017
+The Company and its subsidiaries (the "Group") engage in the oil and gas and chemical operations and businesses, including:
+Pursuant to the notice Guo Jing Mao Qi Gai [2000] No. 154 "Reply on the Formation of China Petroleum and Chemical Corporation", the Company
+obtained the approval from the State Economic and Trade Commission on 21 February 2000 for the formation of a joint stock limited company.
+The Company took over the exploration, development and production of crude oil and natural gas, refining, chemicals and related sales and
+marketing business of Sinopec Group Company after the establishment of the Company.
+In addition, pursuant to the notice Cai Guan Zi [2000] No. 34 "Reply to the Issue Regarding Management of State-Owned Equity by China Petroleum
+and Chemical Corporation" issued by the MOF, 68.8 billion domestic state-owned shares with a par value of RMB 1.00 each were issued to Sinopec
+Group Company, the amount of which is equivalent to 70% of the above net asset value transferred from Sinopec Group Company to the Company
+in connection with the Reorganisation.
+According to the State Council's approval to the "Preliminary Plan for the Reorganisation of China Petrochemical Corporation" (the "Reorganisation"),
+the Company was established by China Petrochemical Corporation ("Sinopec Group Company"), which transferred its core businesses together with
+the related assets and liabilities at 30 September 1999 to the Company. Such assets and liabilities had been valued jointly by China United Assets
+Appraisal Corporation, Beijing Zhong Zheng Appraisal Company, CIECC Assets Appraisal Corporation and Zhong Fa International Properties Valuation
+Corporation. The net asset value was determined at RMB 98,249,084,000. The valuation was reviewed and approved by the Ministry of Finance (the
+"MOF") (Cai Ping Zi [2000] No. 20 "Comments on the Review of the Valuation Regarding the Formation of a Joint Stock Limited Company by China
+Petrochemical Corporation").
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS
+(1) the exploration, development and production of crude oil and natural gas;
+1 STATUS OF THE COMPANY
+China Petroleum & Chemical Corporation (the "Company") was established on 25 February 2000 as a joint stock limited company. The company is
+registered in Beijing, the People's Republic of China, and the headquarter is located in Beijing, the People's Republic of China. The approval date of
+the financial report is 23 March 2018.
+(2) the refining, transportation, storage and marketing of crude oil and petroleum product; and
+The financial statements have been prepared in accordance with the requirements of Accounting Standards for Business Enterprises
+Standards, specific standards and relevant regulations (hereafter referred as ASBE collectively) issued by the MOF on or after 15 February
+2006. These financial statements also comply with the disclosure requirements of "Regulation on the Preparation of Information Disclosures of
+Companies Issuing Public Shares, No.15: General Requirements for Financial Reports" issued by the China Securities Regulatory Commission
+("CSRC"). These financial statements present truly and completely the consolidated and company financial position as at 31 December 2017,
+and the consolidated and company financial performance and the consolidated and company cash flows for the year then ended.
+Details of the Company's principal subsidiaries are set out in Note 56.
+2 BASIS OF PREPARATION
+(1) Statement of compliance of China Accounting Standards for Business Enterprises ("ASBE")
+- Basic
+These financial statements are prepared on a basis of going concern.
+(2) Accounting period
+The accounting year of the Group is from 1 January to 31 December.
+Available-for-sale financial assets (see Note 3(10))
+90
+The financial statements of the Group have been prepared under the historical cost convention, except for the assets and liabilities set out below:
+Financial asset and financial liability with change in fair value recognised through profit or loss (see Note 3(10))
+(3) Measurement basis
+(3) the production and sale of chemical.
+Financial Statements (PRC)
+94
+for the year ended 31 December 2017
+The cost of a purchased fixed asset comprises the purchase price, related taxes, and any directly attributable expenditure for bringing the asset
+to working condition for its intended use. The cost of self-constructed assets includes the cost of materials, direct labour, capitalised borrowing
+costs (see Note 3(18)), and any other costs directly attributable to bringing the asset to working condition for its intended use. According to legal
+or contractual obligations, costs of dismantling and removing the items and restoring the site on which the related assets located are included in
+the initial cost.
+Construction in progress is transferred to fixed assets when the asset is ready for its intended use. No depreciation is provided against
+construction in progress.
+Derivative financial instruments (see Note 3(10))
+Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment losses (see Note 3(11)). Construction in
+progress is stated in the balance sheet at cost less impairment losses (see Note 3(11)).
+Fixed assets represent the tangible assets held by the Group using in the production of goods, rendering of services and for operation and
+administrative purposes with useful life over one year.
+(6) Fixed assets and construction in progress
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+94
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+The impairment assessment and provision accrual on investments in subsidiaries, associates and joint ventures are stated in Note 3(11).
+The Group discontinues recognising its share of net losses of the investee after the carrying amount of the long-term equity investment and
+any long-term interest that is in substance forms part of the Group's net investment in the associate or the joint ventures is reduced to
+zero, except to the extent that the Group has an obligation to assume additional losses. However, if the Group has incurred obligations for
+additional losses and the conditions on recognition of provision are satisfied in accordance with the accounting standard on contingencies,
+the Group continues recognising the investment losses and the provision. Where net profits are subsequently made by the associate or joint
+venture, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.
+The Group adjusts the carrying amount of the long-term equity investment for changes in owners' equity of the investee other than those
+arising from net profits or losses and other comprehensive income, and recognises the corresponding adjustment in capital reserve.
+The Group recognises its share of the investee's net profits or losses after making appropriate adjustments to align the accounting policies
+or accounting periods with those of the Group based on the fair values of the investee's net identifiable assets at the time of acquisition.
+Under the equity accounting method, unrealised profits and losses resulting from transactions between the Group and its associates or joint
+ventures are eliminated to the extent of the Group's interest in the associates or joint ventures. Unrealised losses resulting from transactions
+between the Group and its associates or joint ventures are fully recognised in the event that there is an evidence of impairment.
+Where the initial investment cost of a long-term equity investment exceeds the Group's interest in the fair value of the investee's identifiable
+net assets at the date of acquisition, the investment is initially recognised at the initial investment cost. Where the initial investment cost is
+less than the Group's interest in the fair value of the investee's identifiable net assets at the time of acquisition, the investment is initially
+recognised at the investor's share of the fair value of the investee's identifiable net assets, and the difference is charged to profit or loss.
+After the acquisition of the investment, the Group recognises its share of the investee's net profits or losses and other comprehensive income
+as investment income or losses and other comprehensive income, and adjusts the carrying amount of the investment accordingly. Once the
+investee declares any cash dividends or profits distributions, the carrying amount of the investment is reduced by that attributable to the
+Group.
+The Group's accounting treatments when adopting the equity method include:
+The initial cost of investment in joint ventures and associates is stated at the consideration paid except for cash dividends or profits
+distributions declared but unpaid at the time of acquisition and therefore included in the consideration paid should be deducted if the
+investment is made in cash. Under the circumstances that the long-term investment is obtained through non-monetary asset exchange, the
+initial cost of the investment is stated at the fair value of the assets exchanged if the transaction has commercial substance, the difference
+between the fair value of the assets exchanged and its carrying amount is charged to profit or loss; or stated at the carrying amount of the
+assets exchanged if the transaction lacks commercial substance.
+An investment in a joint ventures or an associate is accounted for using the equity method, unless the investment is classified as held for
+sale.
+An associate is the investee that the Group has significant influence on their financial and operating policies. Significant influence represents
+the right to participate in the financial and operating policy decisions of the investee but is not control or joint control over the establishment
+of these policies. The Group generally considers the following circumstances in determining whether it can exercise significant influence
+over the investee: whether there is representative appointed to the board of directors or equivalent governing body of the investee; whether
+to participate in the investee's policy-making process; whether there are significant transactions with the investees; whether there is
+management personnel sent to the investee; whether to provide critical technical information to the investee.
+A joint venture is an incorporated entity over which the Group, based on legal form, contractual terms and other facts and circumstances,
+has joint control with the other parties to the joint venture and rights to the net assets of the joint venture. Joint control is the contractually
+agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of
+the Group and the parties sharing control.
+(b) Investment in joint ventures and associates
+(5) Long-term equity investments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(c) The impairment assessment method and provision accrual on investment
+(4) Functional currency and presentation currency
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+The unrealised profit or loss arising from the sale of assets by the Company to its subsidiaries is eliminated in full against the net profit
+attributed to shareholders; the unrealised profit or loss from the sale of assets by subsidiaries to the Company is eliminated according to the
+distribution ratio between shareholders of the parent company and minority interests. For sale of assets that occurred between subsidiaries,
+the unrealised gains and losses is eliminated according to the distribution ratio for its subsidiaries seller between net profit attributable to
+shareholders of the parent company and minority interests.
+(2) Transactions in foreign currencies and translation of financial statements in foreign currencies
+Foreign currency transactions are, on initial recognition, translated into Renminbi at the spot exchange rates quoted by the People's Bank of
+China ("PBOC rates") at the transaction dates.
+Foreign currency monetary items are translated at the PBOC rates at the balance sheet date. Exchange differences, except for those directly
+related to the acquisition, construction or production of qualified assets, are recognised as income or expenses in the income statement. Non-
+monetary items denominated in foreign currency measured at historical cost are not translated. Non-monetary items denominated in foreign
+currency that are measured at fair value are translated using the exchange rates at the date when the fair value was determined. The difference
+between the translated amount and the original currency amount is recognised as other comprehensive income, if it is classified as available-for-
+sale financial assets; or charged to the income statement if it is measured at fair value through profit or loss.
+The assets and liabilities of foreign operation are translated into Renminbi at the spot exchange rates at the balance sheet date. The equity
+items, excluding “Retained earnings", are translated into Renminbi at the spot exchange rates at the transaction dates. The income and
+expenses of foreign operation are translated into Renminbi at the spot exchange rates or an exchange rate that approximates the spot exchange
+rates on the transaction dates. The resulting exchange differences are separately presented as other comprehensive income in the balance sheet
+within equity. Upon disposal of a foreign operation, the cumulative amount of the exchange differences recognised in which relate to that foreign
+operation is transferred to profit or loss in the year in which the disposal occurs.
+(3) Cash and cash equivalents
+Cash and cash equivalents comprise cash on hand, demand deposits, short-term and highly liquid investments which are readily convertible into
+known amounts of cash and are subject to an insignificant risk of change in value.
+92
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(4) Inventories
+Where the accounting policies and accounting period adopted by the subsidiaries are different from those adopted by the Company,
+adjustments are made to the subsidiaries' financial statements according to the Company's accounting policies and accounting period. Intra-
+group balances and transactions, and any unrealised profit or loss arising from intra-group transactions, are eliminated in preparing the
+consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised
+gains but only to the extent that there is no evidence of impairment.
+Inventories are initially measured at cost. Cost includes the cost of purchase and processing, and other expenditures incurred in bringing the
+inventories to their present location and condition. The cost of inventories is calculated using the weighted average method. In addition to the
+cost of purchase of raw material, work in progress and finished goods include direct labour and an appropriate allocation of manufacturing
+overhead costs.
+Any excess of the cost over the net realisable value of each item of inventories is recognised as a provision for diminution in the value of
+inventories. Net realisable value is the estimated selling price in the normal course of business less the estimated costs of completion and the
+estimated costs necessary to make the sale and relevant taxes. The net realisable value of materials held for use in the production is measured
+based on the net realisable value of the finished goods in which they will be incorporated. The net realisable value of the quantity of inventory
+held to satisfy sales or service contracts is measured based on the contract price. If the quantities held by the Group are more than the
+quantities of inventories specified in sales contracts, the net realisable value of the excess portion of inventories is measured based on general
+selling prices.
+Inventories include raw materials, work in progress, semi-finished goods, finished goods and reusable materials. Reusable materials include
+low-value consumables, packaging materials and other materials, which can be used repeatedly but do not meet the definition of fixed assets.
+Reusable materials are amortised in full when received for use. The amounts of the amortisation are included in the cost of the related assets or
+profit or loss.
+Inventories are recorded by perpetual method.
+(5) Long-term equity investments
+(a) Investment in subsidiaries
+In the Company's separate financial statements, long-term equity investments in subsidiaries are accounted for using the cost method.
+Except for cash dividends or profits distributions declared but not yet distributed that have been included in the price or consideration paid
+in obtaining the investments, the Company recognises its share of the cash dividends or profit distributions declared by the investee as
+investment income irrespective of whether these represent the net profit realised by the investee before or after the investment. Investments
+in subsidiaries are stated at cost less impairment losses (see Note 3(11)) in the balance sheet. At initial recognition, such investments are
+measured as follows:
+The initial investment cost of a long-term equity investment obtained through a business combination involving entities under common
+control is the Company's share of the carrying amount of the subsidiary's equity at the combination date. The difference between the initial
+investment cost and the carrying amounts of the consideration given is adjusted to share premium in capital reserve. If the balance of the
+share premium is insufficient, any excess is adjusted to retained earnings.
+For a long-term equity investment obtained through a business combination not involving enterprises under common control, the initial
+investment cost comprises the aggregate of the fair values of assets transferred, liabilities incurred or assumed, and equity securities issued
+by the Company, in exchange for control of the acquiree. For a long-term equity investment obtained through a business combination not
+involving enterprises under common control, if it is achieved in stages, the initial cost comprises the carrying value of previously-held equity
+investment in the acquiree immediately before the acquisition date, and the additional investment cost at the acquisition date.
+An investment in a subsidiary acquired otherwise than through a business combination is initially recognised at actual purchase cost if the
+Group acquires the investment by cash, or at the fair value of the equity securities issued if an investment is acquired by issuing equity
+securities, or at the value stipulated in the investment contract or agreement if an investment is contributed by investors.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Where the individual component parts of an item of fixed asset have different useful lives or provide benefits to the Group in different patterns
+thus necessitating use of different depreciation rates or methods, each part is recognised as a separate fixed asset.
+At the balance sheet date, inventories are stated at the lower of cost and net realisable value.
+The functional currency of the Company's and most of its subsidiaries are Renminbi. The Group's consolidated financial statements are
+presented in Renminbi. The Company and its subsidiaries determine their functional currency according to the main economic environment in
+where they operate. Some of subsidiaries use other currency as the functional currency. The Company translates the financial statements of
+subsidiaries from their respective functional currencies into Renminbi (see Note 3(2)) if the subsidiaries' functional currencies are not Renminbi.
+The excess of the loss attributable to the minority interests during the period over the minority interests' share of the equity at the beginning
+of the reporting period is deducted from minority interests.
+In a business combination involving entities not under common control achieved in stages, the Group remeasures its previously held equity
+interest in the acquiree on the acquisition date. The difference between the fair value and the net book value is recognised as investment
+income for the year. If other comprehensive income was recognised regarding the equity interest previously held in the acquiree before the
+acquisition date, the relevant other comprehensive income is transferred to investment income in the period in which the acquisition occurs.
+Where control of a subsidiary is lost due to partial disposal of the equity investment held in a subsidiary, or any other reasons, the Group
+derecognises assets, liabilities, minority interests and other equity items related to the subsidiary. The remaining equity investment is
+remeasured to fair value at the date in which control is lost. The sum of consideration received from disposal of equity investment and the
+fair value of the remaining equity investment, net of the fair value of the Group's previous share of the subsidiary's identifiable net assets
+recorded from the acquisition date, is recognised in investment income in the period in which control is lost. Other comprehensive income
+related to the previous equity investment in the subsidiary, is transferred to investment income when control is lost. Other comprehensive
+income related to the equity investment of the orginal subsidiary shall be converted into the current investment income in the event of loss of
+control.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+3 SIGNIFICANT ACCOUNTING POLICIES
+The Group determines specific accounting policies and accounting estimates based on the characteristics of production and operational activities,
+mainly reflected in the accounting for allowance for accounts receivable (Note 3(11)), valuation of inventories (Note 3(4)), depreciation of fixed
+assets and depletion of oil and gas properties (Note 3(6), (7)), measurement of provisions (Note 3(15)), ect.
+Principal accounting estimates and judgements of the Group are set out in Note 55.
+(1) Accounting treatment of business combination involving entities under common control and not under common control
+(a) Business combination involving entities under common control
+A business combination involving entities or businesses under common control is a business combination in which all of the combining
+entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that
+control is not transitory. The assets and liabilities that the acquirer receives in the acquisition are accounted for at the acquiree's carrying
+amount on the acquisition date. The difference between the carrying amount of the acquired net assets and the carrying amount of the
+consideration paid for the acquisition (or the total nominal value of shares issued) is recognised in the share premium of capital reserve, or
+the retained earnings in case of any shortfall in the share premium of capital reserve. Any costs directly attributable to the combination shall
+be recognised in profit or loss for the current period when occurred. The expense incurred for equity securities and debt securities issued as
+the consideration of the combination is recognised in the initial cost of the securities. The combination date is the date on which the acquirer
+effectively obtains control of the acquiree.
+(b) Business combination involving entities not under common control
+A business combination involving entities or businesses not under common control is a business combination in which all of the combining
+entities or businesses are not ultimately controlled by the same party or parties both before and after the business combination. Difference
+between the consideration paid by the Group as the acquirer, comprises of the aggregate of the fair value at the acquisition date of assets
+given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree, and the Group's
+interest in the fair value of the identifiable net assets of the acquiree, is recognised as goodwill (Note 3(9)) if it is an excess, otherwise in the
+profit or loss. The expense incurred for equity securities and debt securities issued as the consideration of the combination is recognised
+in the initial cost of the securities. Any other expense directly attributable to the business combination is recognised in the profit or loss
+for the year. The difference between the fair value and the book value of the assets given is recognised in profit or loss. The acquiree's
+identifiable assets, liabilities and contingent liabilities, if satisfying the recognition criteria, are recognised by the Group at their fair value at
+the acquisition date. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree.
+(c) Method for preparation of consolidated financial statements
+Minority interest is presented separately in the consolidated balance sheet within shareholders' equity. Net profit or loss attributable to
+minority shareholders is presented separately in the consolidated income statement below the net profit line item.
+The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Company and its
+subsidiaries. Control means an entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability
+to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial
+statements from the date that control commences until the date that control ceases.
+Where the Company acquires a subsidiary during the reporting year through a business combination involving entities not under common
+control, the identifiable assets, liabilities and results of operations of the subsidiaries are consolidated into consolidated financial statements
+from the date that control commences, based on the fair value of those identifiable assets and liabilities at the acquisition date.
+Where the Company acquired a minority interest from a subsidiary's minority shareholders, the difference between the investment cost and
+the newly acquired interest into the subsidiary's identifiable net assets at the acquisition date is adjusted to the capital reserve (capital
+surplus) in the consolidated balance sheet. Where the Company partially disposed an investment of a subsidiary that do not result in a loss
+of control, the difference between the proceeds and the corresponding share of the interest into the subsidiary is adjusted to the capital
+reserve (capital surplus) in the consolidated balance sheet. If the credit balance of capital reserve (capital surplus) is insufficient, any excess
+is adjusted to retained profits.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+91
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(1) Accounting treatment of business combination involving entities under common control and not under common control (Continued)
+(c) Method for preparation of consolidated financial statements (Continued)
+Where the Company combines a subsidiary during the reporting period through a business combination involving entities under common
+control, the financial statements of the subsidiary are included in the consolidated financial statements as if the combination had occurred at
+the beginning of the earliest comparative year presented or, if later, at the date that common control was established. Therefore the opening
+balances and the comparative figures of the consolidated financial statements are restated. In the preparation of the consolidated financial
+statements, the subsidiary's assets, liabilities and results of operations are included in the consolidated balance sheet and the consolidated
+income statement, respectively, based on their carrying amounts in the subsidiary's financial statements, from the date that common control
+was established.
+The subsequent costs including the cost of replacing part of an item of fixed assets are recognised in the carrying amount of the item if the
+recognition criteria are satisfied, and the carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of fixed
+assets are recognised in profit or loss as incurred.
+Hedged items are the items that expose the Group to risks of changes in fair value or future cash flows and that are designated as being
+hedged. The Group's hedged items include fixed-rate borrowings that expose the Group to risk of changes in fair values, floating rate
+borrowings that expose the Group to risk of variability in cash flows, and a forecast transaction that is settled with a fixed amount of foreign
+currency and expose the Group to foreign currency risk, and a forecast transaction that is settled with an undetermined future market price
+and exposes the Group to risk of variability in cash flows, etc.
+Other than oil and gas properties, the cost of fixed assets less residual value and accumulated impairment losses is depreciated using the
+straight-line method over their estimated useful lives, unless the fixed asset is classified as held for sale. The estimated useful lives and the
+estimated rate of residual values adopted for respective classes of fixed assets are as follows:
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+98
+When a hedging instrument expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for hedge accounting,
+the Group will discontinue the hedge accounting treatments prospectively. In this case, the gain or loss on the hedging instrument that
+remains recognised directly in shareholders' equity from the period when the hedge was effective shall not be reclassified into profit or
+loss and is recognised in accordance with the above policy when the forecast transaction occurs. If the forecast transaction is no longer
+expected to occur, the gain or loss on the hedging instrument that remains recognised directly in shareholders' equity from the period
+when the hedge was effective shall be reclassified into profit or loss immediately.
+For cash flow hedges, other than those covered by the preceding two policy statements, the associated gain or loss is removed from
+shareholders' equity and recognised in profit or loss in the same period or periods during which the hedged forecast transaction affects
+profit or loss.
+If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gain
+or loss is removed from equity and recognised in profit or loss in the same period during which the financial asset or financial liability
+affects profit or loss. However, if the Group expects that all or a portion of a net loss recognised directly in shareholders' equity will not
+be recovered in future accounting periods, it reclassifies the amount that is not expected to be recovered into profit or loss.
+the cumulative change in present value of the expected future cash flows on the hedged item from inception of the hedge.
+The portion of the gain or loss on the hedging instrument that is determined to be an ineffective hedge is recognised in profit or loss.
+If a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset, the associated gain or loss is removed
+from shareholders' equity, included in the initial cost of the non-financial asset, and recognised in profit or loss in the same year during
+which the non-financial asset affects profit or loss. However, if the Group expects that all or a portion of a net loss recognised directly in
+shareholders' equity will not be recovered in future accounting periods, it reclassifies the amount that is not expected to be recovered into
+profit or loss.
+the cumulative gain or loss on the hedging instrument from inception of the hedge;
+A cash flow hedge is a hedge of the exposure to variability in cash flows. The portion of the gain or loss on the hedging instrument that
+is determined to be an effective hedge is recognised directly in shareholders' equity as a separate component. That effective portion is
+adjusted to the lesser of the following (in absolute amounts):
+Cash flow hedges
+The hedge is assessed by the Group for effectiveness on an ongoing basis and determined to have been highly effective throughout the
+accounting periods for which the hedging relationship was designated. The Group uses a ratio analysis to assess the subsequent effectiveness
+of a cash flow hedge, and uses a regression analysis to assess the subsequent effectiveness of a fair value hedge.
+A hedging instrument is a designated derivative whose changes in fair value or cash flows are expected to offset changes in the fair value or
+cash flows of the hedged item.
+Hedge accounting is a method which recognises the offsetting effects on profit or loss of changes in the fair values of the hedging instrument
+and the hedged item in the same accounting period(s).
+(d) Hedge accounting
+(10) Financial Instruments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+97
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+The Group terminates the recognition of an item of fixed asset when it is in a state of disposal or it is estimated that it is unable to generate
+any economic benefits through use or disposal. Gains or losses arising from the retirement or disposal of an item of fixed asset are determined
+as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in profit or loss on the date of
+retirement or disposal.
+(10) Financial Instruments (Continued)
+A fair value hedge is a hedge of the exposure to changes in fair value of a recognised asset or liability or an unrecognised firm
+commitment, or an identified portion of such an asset, liability or unrecognised firm commitment.
+93
+Financial Statements (PRC)
+99
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+(vi) a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
+(v) significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; and the cost of
+investment may not be recoverable; and
+(iv) due to the significant financial difficulty of the debtor, financial assets is unable to be traded in active market;
+(iii) it becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
+(ii) a breach of contract, such as a default or delinquency in interest or principal payments;
+(i) significant financial difficulty of the debtor;
+Objective evidences of impairment include but not limited to:
+The carrying amount of financial assets (except those financial assets stated at fair value with changes in the fair values charged to profit or
+loss) are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. If any such evidence exists,
+impairment loss is provided.
+(a) Impairment of financial assets
+Where the obligations for financial liabilities are completely or partially discharged, the entire or parts of financial liabilities are derecognised.
+(11) Impairment of financial assets and non-financial long-term assets
+the sum of the consideration received and any cumulative gain or loss that had been recognised directly in equity.
+the carrying amounts; and
+On derecognition of a financial asset, the difference between the following amounts is recognised in profit or loss:
+The Group derecognises a financial asset when the contractual right to receive cash flows from the financial asset expires, or where the Group
+transfers substantially all risks and rewards of ownership of the financial asset, or where the Group neither transfers nor retains substantially
+all risks and rewards of ownership of the financial asset but the Group gives up the control of a financial asset.
+(e) Derecognition of financial assets and financial liabilities
+A hedge of a net investment in a foreign operation is a hedge of the exposure to foreign exchange risk associated with a net investment
+in a foreign operation. The portion of the gain or loss on a hedging instrument that is determined to be an effective hedge is recognised
+directly in equity as a separate component until the disposal of the foreign operation, at which time the cumulative gain or loss
+recognised directly in equity is recognised in profit or loss. The ineffective portion is recognised immediately in profit or loss.
+Hedge of net investment in foreign operation
+When a hedging instrument expires or is sold, terminated or exercised, or no longer meets the criteria for hedge accounting, the Group
+discontinues prospectively the hedge accounting treatments. If the hedged item is a financial instrument measured at amortised cost, any
+adjustment to the carrying amount of the hedged item is amortised to profit or loss from the adjustment date to the maturity date using
+the recalculated effective interest rate at the adjustment date.
+The gain or loss from remeasuring the hedging instrument at fair value is recognised in profit or loss. The gain or loss on the hedged
+item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised in profit or loss.
+(d) Hedge accounting (Continued)
+Fair value hedges
+If there is an active market for a financial asset or financial liability, the quoted price in the active market is used to establish the fair value
+of the financial asset or financial liability.
+If no active market exists for a financial instrument, a valuation technique is used to establish the fair value. Valuation techniques include
+using arm's length market transactions between knowledge, and willing parties; reference to the current fair value of other instrument that is
+substantially the same; discounted cash flows and option pricing model. The Group calibrates the valuation technique and tests it for validity
+periodically.
+the Group intends to settle the financial assets and liabilities on a net basis, or to realise the assets and settle the liabilities
+simultaneously.
+Goodwill is not amortised and is stated at cost less accumulated impairment losses (see Note 3(11)). On disposal of an asset group or a set of
+asset groups, any attributable amount of purchased goodwill is written off and included in the calculation of the profit or loss on disposal.
+The initial cost of goodwill represents the excess of cost of acquisition over the acquirer's interest in the fair value of the identifiable net assets
+of the acquiree under the business combination involving entities not under common control.
+(9) Goodwill
+Useful lives and amortisation methods are reviewed at least each year end.
+Intangible assets, where the estimated useful life is finite, are stated in the balance sheet at cost less accumulated amortisation and provision
+for impairment losses (see Note 3(11)). For an intangible asset with finite useful life, its cost less estimated residual value and accumulated
+impairment losses is amortised on a straight-line basis over the expected useful lives, unless the intangible assets are classified as held for sale.
+An intangible asset is regarded as having an indefinite useful life and is not amortised when there is no foreseeable limit to the year over which
+the asset is expected to generate economic benefits for the Group.
+(8) Intangible assets
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+95
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes produced and reserves.
+The Group estimates future dismantlement costs for oil and gas properties with reference to engineering estimates after taking into consideration
+the anticipated method of dismantlement required in accordance with the industry practices. These estimated future dismantlement costs are
+discounted at credit-adjusted risk-free rate and are capitalised as oil and gas properties, which are subsequently amortised as part of the costs
+of the oil and gas properties.
+The acquisition cost of mineral interest is capitalised as oil and gas properties. Costs of development wells and related support equipment are
+capitalised. The cost of exploratory wells is initially capitalised as construction in progress pending determination of whether the well has found
+proved reserves. Exploratory well costs are charged to expenses upon the determination that the well has not found proved reserves. However,
+in the absence of a determination of the discovery of proved reserves, exploratory well costs are not carried as an asset for more than one
+year following completion of drilling. If, after one year has passed, a determination of the discovery of proved reserves cannot be made, the
+exploratory well costs are impaired and charged to expense. All other exploration costs, including geological and geophysical costs, are charged
+to profit or loss in the year as incurred.
+Oil and gas properties include the mineral interests in properties, wells and related support equipment arising from oil and gas exploration and
+production activities.
+3%
+Estimated Estimated rate
+useful life of residual value
+12.50 years
+3%
+4.30 years
+(7) Oil and gas properties
+Useful lives, residual values and depreciation methods are reviewed at least each year end.
+Equipment, machinery and others
+Plants and buildings
+(c) Determination of fair value
+Financial instruments of the Group include cash and cash equivalents, bond investments, equity securities other than long-term equity
+investments, receivables, derivative financial instruments, payables, loans, bonds payable, and share capital, financial asset with change in fair
+value recognised through profit or loss, etc.
+(10) Financial Instruments
+The Group recognises a financial asset or a financial liability on its balance sheet when the Group enters into and becomes a party to the
+underlining contract of the financial instrument.
+the Group has a legally enforceable right to set off financial assets against financial liabilities; and
+In the balance sheet, financial assets and liabilities are not offset unless all the following conditions are met:
+(b) Disclosure of financial assets and financial liabilities
+Except for the other financial liabilities described above, subsequent to initial recognition, other financial liabilities are measured at
+amortised cost using the effective interest method.
+Other financial liabilities include the liabilities arising from financial guarantee contracts. Financial guarantees are contracts that require
+the issuer (i.e. the guarantor) to make specified payments to reimburse the beneficiary of the guarantee (the holder) for a loss the holder
+incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Where the Group
+issues a financial guarantee, subsequent to initial recognition, the guarantee is measured at the higher of the amount initially recognised
+less accumulated amortisation and the amount of a provision determined in accordance with the principles of contingencies (see Note
+3(15)).
+Financial liabilities other than the financial liabilities at fair value through profit or loss are classified as other financial liabilities.
+Other financial liabilities
+Available-for-sale financial assets whose fair value cannot be measured reliably are measured at cost subsequent to initial recognition.
+Other than the above equity instrument investments whose fair values cannot be measured reliably, other available-for-sale financial assets
+are initially stated at fair values. The gains or losses arising from changes in the fair value are directly recognised in equity, except for
+the impairment losses and exchange differences from monetary financial assets denominated in foreign currencies, which are recognised
+in profit or loss. The cumulative gains and losses previously recognised in equity are transferred to profit or loss when the available-for-
+sale financial assets are derecognised. Dividend income from these equity instruments is recognised in profit or loss when the investee
+declares the dividends. Interest on available-for-sale debt instrument investments calculated using the effective interest rate method is
+recognised in profit or loss (see Note 3(16) (c)).
+Available-for-sale financial assets include non-derivative financial assets that are designated as available for sales and other financial
+assets which do not fall into any of the above categories.
+-
+(a) Classification, recognition and measurement of financial instruments
+(10) Financial Instruments (Continued)
+(a) Classification, recognition and measurement of financial instruments (Continued)
+Available-for-sale financial assets
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+96
+Held-to-maturity investment includes non-derivative financial assets with fixed or determinable recoverable amount and fixed maturity that
+the Group has the positive intention and ability to hold to maturity. Subsequent to initial recognition, held-to-maturity investments are
+measured at amortised cost using the effective interest method.
+Loans and Receivables are non-derivative financial assets with fixed or determinable recoverable amount and with no quoted price in
+active market. After the initial recognition, loans and receivables are measured at amortised cost using the effective interest rate method.
+Held-to-maturity investment
+Loans and Receivables
+A financial asset or financial liability is classified as at fair value through profit or loss if it is acquired or incurred principally for the
+purpose of selling or repurchasing in the near term or if it is a derivative, unless the derivative is a designated and effective hedging
+instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity
+instrument (without a quoted price from an active market) whose fair value cannot be reliably measured. These financial instruments
+are initially measured at fair value with subsequently changes in fair value recognised in profit or loss. Subsequent to initial recognition,
+financial assets and financial liabilities at fair value through profit or loss are measured at fair value, and changes therein are recognised
+in profit or loss.
+Financial asset or financial liability with change in fair value recognised through profit or loss
+Financial assets and financial liabilities are initially recognised at fair value. For financial asset or financial liability of which the change in its
+fair value is recognised in profit or loss, the relevant transaction cost is recognised in profit or loss. The transaction costs for other financial
+assets or financial liabilities are included in the initially recognised amount. Subsequent to initial recognition financial assets and liabilities
+are measured as follows:
+The Group classifies financial assets and liabilities into different categories at initial recognition based on the purpose of acquiring assets
+and assuming liabilities: financial assets and financial liabilities at fair value through profit or loss, loans and receivables, held-to-maturity
+investments, available-for-sale financial assets and other financial liabilities.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Financial Statements (PRC)
+109
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+2016
+1,354
+683
+612
+68,494
+38,560
+37,756
+50,972
+69,106
+1,720
+3,383
+39,994
+56,203
+50,289
+Ageing analysis on accounts receivable is as follows:
+Less: Allowance for doubtful accounts
+Amounts due from others
+2,036
+2,051
+4,580
+4,962
+1,662
+1,417
+6,398
+7,941
+Total
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from associates and joint ventures
+147
+37,609
+Within one year
+accounts
+receivable
+Amount
+to total
+to accounts
+to total
+Percentage
+of allowance
+Percentage
+At 31 December 2016
+of allowance
+Percentage
+228
+38,332
+Percentage
+The Group
+Total
+Over three years
+Between two and three years
+Between one and two years
+Within one year
+Total
+Over three years
+Between two and three years
+Between one and two years
+At 31 December 2017
+33,142
+30,905
+Amounts due from subsidiaries
+At 31 December
+2017
+Total
+Structural deposits
+Current assets
+6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
+At 31 December 2017, structured deposits included in cash at bank and on hand with financial institutions of the Group amounted to RMB 65,250
+million (2016: RMB 75,000 million).
+At 31 December 2017, time deposits with financial institutions of the Group amounted to RMB 51,786 million (2016: RMB 18,029 million).
+Deposits at related parties represent deposits placed at Sinopec Finance Company Limited and Sinopec Century Bright Capital Investment Limited.
+Deposits interest is calculated based on market rate.
+142,497
+40,073
+At 31 December
+47,514
+165,004
+34
+7.3068
+18,181
+6.9370
+2,619
+5
+126
+15
+7.8023
+15,256
+6.5342
+2,336
+16
+15
+RMB million
+51,196
+51,196
+2016
+RMB million
+million
+million
+million
+million
+RMB
+RMB
+RMB
+RMB
+2016
+At 31 December
+At 31 December
+2017
+At 31 December
+2016
+At 31 December
+2017
+The Company
+The Group
+8 ACCOUNTS RECEIVABLE
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December 2017, the Group's outstanding endorsed or discounted bills (with recourse) amounted to RMB 10,441 million (2016: RMB 7,523
+million).
+Bills receivable represents mainly the bills of acceptance issued by banks for sales of goods and products.
+7 BILLS RECEIVABLE
+The changes in the financial assets at fair value through profit or loss for the year ended 31 December 2017 amounted to RMB 196 million (2016:nil),
+which has been recorded in gain from changes in fair value.
+The financial assets are the structured deposit with financial institutions and cannot be readily convertible to known amounts of cash, which are
+presented as current assets since they are expected to be expired within 12 months from the end of the reporting period.
+Allowance
+21,843
+receivable
+balance
+% RMB million
+12.7
+17
+0.4
+134
+%
+receivable
+balance
+Allowance
+RMB million
+%
+98.7
+38,023
+98.8
+357
+37,331
+% RMB million
+RMB million
+accounts
+receivable
+Amount
+receivable
+balance
+Allowance
+receivable
+Amount
+accounts
+to accounts
+% RMB million
+to total
+0.9
+31.9
+228
+100.0
+38.560
+147
+100.0
+37,756
+79.4
+104
+0.3
+131
+114
+73.7
+0.4
+137
+20.4
+10
+0.1
+49
+18.8
+29
+0.4
+154
+101
+to accounts
+to total
+of allowance
+426
+0.8
+527
+0.4
+225
+50.6
+44
+0.1
+87
+0.9
+80.8
+464
+142
+1.0
+715
+97.8
+49,854
+98.1
+67,777
+35.8%
+Amount
+RMB million
+%
+19.9
+429
+0.9
+69,106
+Percentage
+Percentage
+At 31 December 2016
+of allowance
+Percentage
+Percentage
+At 31 December 2017
+The Company
+683
+94.2
+404
+21.3
+48
+49.8
+231
+%
+to accounts
+receivable
+balance
+Allowance
+% RMB million
+68640
+100.0
+50,972
+612
+100.0
+RMB million
+At 31 December 2017 and 2016, the total amounts of the top five accounts receivable of the Group are set out below:
+32,117
+117,490
+The Group determines the revenue from the rendering of services according to the fair value of the received or to-be received price of the
+party that receives the services as stipulated in the contract or agreement.
+(b) Revenues from rendering services
+(16) Revenue recognition (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Revenue from the sales of goods is measured at fair value of the considerations received or receivable under the sales contract or agreement.
+the Group does not retain the management rights, which is normally associated with owner, on goods sold and has no control over the
+goods sold.
+Revenue from the sales of goods is recognised when all of the general conditions stated above and following conditions are satisfied:
+the significant risks and rewards of ownership and title have been transferred to buyers; and
+At the balance sheet date, when the outcome of a transaction involving the rendering of services can be estimated reliably, revenue from
+rendering of services is recognised in the income statement by reference to the stage of completion of the transaction based on the
+proportion of services performed to date to the total services to be performed.
+(a) Revenues from sales of goods
+(16) Revenue recognition
+Provisions for future dismantlement costs are initially recognised based on the present value of the future costs expected to be incurred in
+respect of the Group's expected dismantlement and abandonment costs at the end of related oil and gas exploration and development activities.
+Any subsequent change in the present value of the estimated costs, other than the change due to passage of time which is regarded as interest
+costs, is reflected as an adjustment to the provision of oil and gas properties.
+Provisions are recognised when the Group has a present obligation as a result of a contingent event, it is probable that an outflow of economic
+benefits will be required to settle the obligations and a reliable estimate can be made. Where the effect of time value of money is material,
+provisions are determined by discounting the expected future cash flows.
+(15) Provisions
+different taxable entities which either to intend to settle the current tax liabilities and assets on a net basis, or to realise the assets and
+settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to
+be settled or recovered.
+the same taxable entity; or
+-
+they relate to income taxes levied by the same tax authority on either:
+the taxable entity has a legally enforceable right to offset current tax assets and current tax liabilities; and
+At the balance sheet date, deferred tax assets and liabilities are offset if all the following conditions are met:
+Revenue is the gross inflow of economic benefits arising in the course of the Group's normal activities when the inflows result in increase in
+shareholder's equity, other than increase relating to contributions from shareholders. Revenue is recognised in profit or loss when it is probable
+that the economic benefits will flow to the Group, the revenue and costs can be measured reliably and the following respective conditions are
+met.
+The carrying amount of deferred tax assets is reviewed at each balance sheet date. If it is unlikely to obtain sufficient taxable income to offset
+against the benefit of deferred tax asset, the carrying amount of the deferred tax assets is written down. Any such write-down should be
+subsequently reversed where it becomes probable that sufficient taxable income will be available.
+When the outcome of rendering the services cannot be estimated reliably, revenues are recognised only to the extent that the costs incurred
+are expected to be recoverable. If the costs of rendering of services are not expected to be recoverable, the costs are recognised in profit or
+loss when incurred, and revenues are not recognised.
+Interest income is recognised on a time proportion basis with reference to the principal outstanding and the applicable effective interest rate.
+(17) Government grants
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+103
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Dividends and distributions of profits proposed in the profit appropriation plan which will be authorised and declared after the balance sheet
+date, are not recognised as a liability at the balance sheet date and are separately disclosed in the notes to the financial statements. Dividends
+are recognised as a liability in the period in which they are declared.
+(23) Dividends
+Operating lease payments are charged as expenses on a straight-line basis over the period of the respective leases.
+(22) Operating leases
+(c) Interest income
+Research costs and development costs that cannot meet the capitalisation crateria are recognised in profit or loss when incurred.
+Environmental expenditures that relate to current ongoing operations or to conditions caused by past operations is expensed as incurred.
+Liabilities related to future remediation costs are recorded when environmental assessments and/or cleanups are probable and the costs can
+be reliably estimated. As facts concerning environmental contingencies become known to the Group, the Group reassesses its position both with
+respect to accrued liabilities and other potential exposures.
+(20) Environmental expenditures
+Repairs and maintenance (including overhauling expenses) expenses are recognised in profit or loss when incurred.
+(19) Repairs and maintenance expenses
+Except for the above, other borrowing costs are recognised as financial expenses in the income statement when incurred.
+Borrowing costs incurred on borrowings for the acquisition, construction or production of qualified assets are capitalised into the cost of the
+related assets.
+(18) Borrowing costs
+Government grants received in relation to assets are recorded as deferred income, and recognised evenly in profit or loss over the assets'
+useful lives. Government grants received in relation to revenue are recorded as deferred income, and recognised as income in future periods as
+compensation when the associated future expenses or losses arise; or directly recognised as income in the current period as compensation for
+past expenses or losses.
+Government grants are recognised when there is reasonable assurance that the grants will be received and the Group is able to comply with
+the conditions attaching to them. Government grants in the form of monetary assets are recorded based on the amount received or receivable,
+whereas non-monetary assets are measured at fair value.
+Government grants are the gratuitous monetary assets or non-monetary assets that the Group receives from the government, excluding capital
+injection by the government as an investor. Special funds such as investment grants allocated by the government, if clearly defined in official
+documents as part of "capital reserve" are dealt with as capital contributions, and not regarded as government grants.
+(21) Research and development costs
+At the balance sheet date, the amounts of deferred tax recognised is measured based on the expected manner of recovery or settlement of the
+carrying amount of the assets and liabilities, using tax rates that are expected to be applied in the period when the asset is recovered or the
+liability is settled in accordance with tax laws.
+Temporary differences arise in a transaction, which is not a business combination, and at the time of transaction, does not affect accounting
+profit or taxable profit (or unused tax losses), will not result in deferred tax. Temporary differences arising from the initial recognition of goodwill
+will not result in deferred tax.
+Deferred tax assets and liabilities are recognised based on deductible temporary differences and taxable temporary differences respectively.
+Temporary difference is the difference between the carrying amounts of assets and liabilities and their tax bases. Unused tax losses and unused
+tax credits able to be utilised in subsequent years are treated as temporary differences. Deferred tax assets are recognised to the extent that it
+is probable that future taxable income will be available to offset the deductible temporary differences.
+The recoverable amount is the greater of the fair value less costs to sell and the present value of expected future cash flows generated by the
+asset (or asset unit, set of asset units).
+An asset unit is the smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets
+or groups of assets. An asset unit comprises related assets that generate associated cash inflows. In identifying an asset unit, the Group
+primarily considers whether the asset unit is able to generate cash inflows independently as well as the management style of production and
+operational activities, and the decision for the use or disposal of asset.
+Assets are tested for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
+The recoverable amounts of goodwill and intangible assets with uncertain useful lives are estimated annually no matter there are any
+indications of impairment. Goodwill is tested for impairment together with related asset units or groups of asset units.
+Internal and external sources of information are reviewed at each balance sheet date for indications that the following assets, including fixed
+assets, construction in progress, goodwill, intangible assets and investments in subsidiaries, associates and joint ventures may be impaired.
+(b) Impairment of other non-financial long-term assets
+(11) Impairment of financial assets and non-financial long-term assets (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+100 Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Fair value less costs to sell of an asset is based on its selling price in an arm's length transaction less any direct costs attributable to
+the disposal. Present value of expected future cash flows is the estimation of future cash flows to be generated from the use of and upon
+disposal of the asset, discounted at an appropriate pre-tax discount rate over the asset's remaining useful life.
+Impairment loss of available-for-sale debt instrument is reversed, if the reason for the subsequent increase in fair value is objectively as
+a result of an event occurred after the recognition of the impairment loss. Impairment loss for available-for-sale equity instrument is not
+reversed through profit or loss. Impairment loss for available-for-sale financial assets measured by the cost cannot be reversed in the
+following period.
+When available-for-sale financial assets measured at fair value are impaired, despite not being derecognised, the cumulative losses
+resulted from the decrease in fair value which had previously been recognised directly in shareholders' equity, are reversed and charged
+to profit or loss.
+Available-for-sale financial assets are assessed for impairment on an individual basis. Objective evidence of impairment for equity
+instruments classified as available-for-sale includes information about significant but not temporary decline in the fair value of the equity
+investment instrument below its cost. The Group assesses equity instruments classified as available-for-sale separately at the end of
+each reporting period, it will be considered as impaired if the fair value of the equity instrument at reporting date is less than its initial
+investment cost over 50% (including 50%) or the duration of the fair value below its initial investment cost is more than one (including
+one) year, if the fair value of the equity instrument at reporting date is less than its initial investment cost over 20% (including 20%) but
+below 50%, other related factors such as price volatility will be taken into consideration to assess if it is impaired.
+Available-for-sale financial assets
+Where impairment is assessed on an individual basis, an impairment loss in respect of a receivable or held-to-maturity investment is
+calculated as the excess of its carrying amount over the present value of the estimated future cash flows (exclusive of future credit losses
+that have not been incurred) discounted at the original effective interest rate. All impairment losses are recognised in profit or loss.
+Impairment loss on receivables and held-to-maturity investments is reversed in profit or loss if evidence suggests that the financial assets'
+carrying amounts have increased and the reason for the increase is objectively as a result of an event occurred after the recognition of the
+impairment loss. The reversed carrying amount shall not exceed the amortised cost if the financial assets had no impairment recognised.
+Receivables are assessed for impairment on the combination of an individual basis and the aging analysis.
+Held-to-maturity investments are assessed for impairment on an individual basis.
+Receivables and held-to-maturity investments
+(a) Impairment of financial assets (Continued)
+(11) Impairment of financial assets and non-financial long-term assets (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2017
+When available-for-sale financial assets measured at cost are impaired, the differences between the book value and the discounted present
+value with the market return of similar financial assets are charged to profit or loss.
+If the recoverable amount of an asset is less than its carrying amount, the carrying amount is reduced to the recoverable amount. The
+amount by which the carrying amount is reduced is recognised as an impairment loss in profit or loss. A provision for impairment loss of
+the asset is recognised accordingly. Impairment losses related to an asset unit or a set of asset units first reduce the carrying amount of any
+goodwill allocated to the asset unit or set of asset units, and then reduce the carrying amount of the other assets in the asset unit or set of
+asset units on a pro rata basis. However, the carrying amount of an impaired asset will not be reduced below the highest of its individual fair
+value less costs to sell (if determinable), the present value of expected future cash flows (if determinable) and zero.
+Impairment losses for assets are not reversed.
+(12) Long-term deferred expenses
+At the balance sheet date, current tax assets and liabilities are offset if the Group has a legally enforceable right to set them off and also intends
+either to settle on a net basis or to realize the asset and settle the liability simultaneously.
+Current tax is the expected tax payable calculated at the applicable tax rate on taxable income for the year, plus any adjustment to tax payable
+in respect of previous years.
+Current tax and deferred tax are recognised in profit or loss except to the extent that they relate to business combinations and items recognised
+directly in equity (including other comprehensive income).
+(14) Income tax
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+102
+Financial Statements (PRC)
+101
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+When the Group terminates the employment relationship with employees before the employment contracts expire, or provides compensation
+as an offer to encourage employees to accept voluntary redundancy, a provision for the termination benefits provided is recognised in profit
+or loss under the conditions of both the Group has a formal plan for the termination of employment or has made an offer to employees for
+voluntary redundancy, which will be implemented shortly; and the Group is not allowed to withdraw from termination plan or redundancy
+offer unilaterally.
+(c) Termination benefits
+Employees of the Group participate in the social insurance system established and managed by local labor and social security department.
+The Group makes basic pension insurance to the local social insurance agencies every month, at the applicable benchmarks and rates
+stipulated by the government for the benefits of its employees. After the employees retire, the local labor and social security department has
+obligations to pay them the basic pension. When an employee has rendered service to the Group during an accounting period, the Group
+shall recognise the accrued amount according to the above social security provisions as a liability and charge to the cost of an asset or to
+profit or loss in the same period.
+Basic pension insurance
+The Group classifies post-employment benefits into either Defined Contribution Plan (DC plan) or Defined Benefit Plan (DB plan). DC plan
+means the Group only contributes a fixed amount to an independent fund and no longer bears other payment obligation; DB plan is post-
+employment benefits other than DC plan. In this reporting period, the post-employment benefits of the Group primarily comprise basic
+pension insurance and unemployment insurance and both of them are DC plans.
+(b) Post-employment benefits
+Short term compensation includes salaries, bonuses, allowances and subsidies, employee benefits, medical insurance premiums, work-
+related injury insurance premium, maternity insurance premium, contributions to housing fund, unions and education fund and short-term
+absence with payment etc. When an employee has rendered service to the Group during an accounting period, the Group shall recognise the
+short term compensation actually incurred as a liability and charge to the cost of an asset or to profit or loss in the same period, and non-
+monetary benefits are valued with the fair value.
+(a) Short term compensation
+Employee benefits are all forms of considerations and compensation given in exchange for services rendered by employees, including short term
+compensation, post-employment benefits, termination benefits and other long term employee benefits.
+(13) Employee benefits
+Long-term deferred expenses are amortised on a straight-line basis over their beneficial periods.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+102,424
+(24) Related parties
+(a) the holding company of the Company;
+At 31 December 2017
+At 31 December 2016
+Total
+Others
+US Dollars
+EUR
+Renminbi
+Deposits at related parities
+Others
+Hong Kong Dollars
+US Dollars
+Original
+currency
+Renminbi
+Renminbi
+Cash on hand
+The Group
+5 CASH AT BANK AND ON HAND
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+106
+Financial Statements (PRC)
+105
+Cash at bank
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Original
+Exchange
+rates
+75
+122
+78
+0.8945
+10,406
+6.9370
+1,499
+87
+82
+0.8359
+98
+million
+24,561
+3,760
+91,855
+92,711
+10
+14
+million
+RMB
+Exchange
+rates
+currency
+million
+RMB
+million
+6.5342
+Pursuant to the 'Circular on the Overall Promotion of Pilot Program of Levying VAT in place of Business Tax'(Cai Shui [2016] 36) jointly issued by
+the Ministry of Finance and the State Administration of Taxation, revenue from modern service of the subsidiaries of the Group, are subject to VAT
+from 1 May 2016, and the applicable tax rate is 6%. Before 1 May 2016, revenue from modern service of the subsidiaries of the Group, are subject
+to the business tax with a tax rate of 3% to 5%.
+1,495.20
+1,218.00
+(26) Changes in significant accounting policies
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+104 Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment reporting, and segment
+accounting policies are consistent with those for the consolidated financial statements.
+for which financial information regarding financial position, results of operations and cash flows are available.
+whose operating results are regularly reviewed by the Group's management to make decisions about resource to be allocated to the segment
+and assess its performance; and
+engage in business activities from which it may earn revenues and incur expenses;
+Reportable segments are identified based on operating segments which are determined based on the structure of the Group's internal
+organisation, management requirements and internal reporting system. An operating segment is a component of the Group that meets the
+following respective conditions:
+MOF issued "No.42 Accounting Standards for Business Enterprises - non-current assets held for sale, disposition and discontinuing operation",
+revised "No.16 Accounting Standards for Business Enterprises-government grants" and Cai Kuai [2017] No. 30 “Announcement of the revision
+of general enterprise financial statements format." The group has adopted the above guidelines to prepare financial statements of 2017. The
+impact to the group's financial statements is presented as below:
+(25) Segment reporting
+(k) close family members of key management personnel of the Company's holding company; and
+(j) key management personnel of the Company's holding company;
+(i) key management personnel of the Group, and close family members of such individuals;
+(h) principle individual investors of the Group and close family members of such individuals;
+(g) associates of the Group, including subsidiaries of the associates;
+(f) joint ventures of the Group, including subsidiaries of the joint ventures;
+(e) enterprises or individuals if a party has control, joint control over both the enterprises or individuals and the Group;
+(d) investors that have joint control or exercise significant influence over the Group;
+(c) the parties that are subject to common control with the Company;
+(b) the subsidiaries of the Company;
+(I) an entity which is under control, joint control of principle individual investor, key management personnel or close family members of such
+individuals.
+The reason of change
+The profits and losses of 2017 of disposing of fixed assets
+and intangible assets are included in the asset disposal
+income project. The comparative financial statements of
+2016 have been adjusted accordingly.
+Subject
+1,711.52
+1,948.64
+2,105.20
+1,411.20
+2,109.76
+(RMB/Ton)
+13 January 2015
+Effective from
+Jet fuel oil
+Lubricant oil
+Fuel oil
+Solvent oil
+Naphtha
+Diesel
+Gasoline
+Products
+Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Major types of tax applicable to the Group are income tax, consumption tax, resources tax, value added tax, city construction tax, education
+surcharge and local education surcharge.
+4 TAXATION
+Less 1,745
+1,487
+Less 258
+year of 2016
+Amount (RMB million)
+Asset disposal income
+Non-operating income
+Non-operating expenses
+If a party has the power to control, jointly control or exercise significant influence over another party, or vice versa, or where two or more parties
+are subject to common control, joint control from another party, they are considered to be related parties. Related parties may be individuals or
+enterprises. Where enterprises are subject to state control but are otherwise unrelated, they are not related parties. Related parties of the Group
+and the Company include, but not limited to:
+Total amount (RMB million)
+accounts
+receivable
+Allowance for doubtful accounts
+Allowance
+Amount prepayments
+allowance to
+prepayments
+Percentage
+to total
+prepayments
+to total
+Percentage of
+Percentage of
+allowance to
+At 31 December 2016
+Percentage
+At 31 December 2017
+The Group
+11
+3,454
+4,429
+3,749
+4
+31
+balance
+Amount prepayments
+Percentage to the total balance of accounts receivable
+balance
+8.1
+14
+3.5
+173
+91.7
+3,465
+93.5
+4,605
+25
+4,901
+Over three years
+Total
+Between one and two years
+Within one year
+%
+% RMB million
+RMB million
+%
+% RMB million
+RMB million
+Between two and three years
+3,465
+364
+568
+4,433
+Amounts to subsidiaries
+10 PREPAYMENTS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+108
+During the year ended 31 December 2017 and 2016, the Group and the Company had no individually significant write-off or recovery of doubtful
+debts which had been fully or substantially provided for in prior years.
+During the year ended 31 December 2017 and 2016, the Group and the Company had no individually significant other receivables been fully or
+substantially provided allowance for doubtful accounts.
+Allowance for doubtful accounts
+Amounts to Sinopec Group Company and fellow subsidiaries
+Within one year
+41.7%
+2017
+7,672
+Within one year
+42.7%
+At 31 December
+Percentage to the total balance of other receivables
+Ageing
+Total amount (RMB million)
+At 31 December 2017 and 2016, the total amounts of the top five other receivables of the Group are set out below:
+1,124
+100.0
+At 31 December
+2016
+11,226
+211
+Amounts to associates and joint ventures
+Less: Allowance for doubtful accounts
+3,550
+3,780
+4,926
+4,737
+24
+63
+58
+2016
+RMB million
+3,043
+At 31 December
+Amounts to others
+At 31 December
+2017
+RMB million
+3,766
+99
+126
+At 31 December
+2016
+RMB million
+RMB million
+At 31 December
+2017
+The Company
+The Group
+Ageing analysis of prepayments is as follows:
+Total
+206
+41,313
+5.6
+1.7
+-
+0.6
+25
+1.8
+62
+1.0
+1
+2.3
+101
+95.4
+3,306
+95.3
+4,227
+At 31 December 2017 and 2016, the total amounts of the top five prepayments of the Group are set out below:
+Total
+Between one and two years
+Between two and three years
+Over three years
+Within one year
+13
+0.4
+80
+4,433
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+1,472
+29.9%
+2017
+At 31 December
+At 31 December
+Percentage to the total balance of prepayments
+Total amount (RMB million)
+11
+% RMB million
+100.0
+4
+13.1
+11
+2.4
+84
+3.8
+3
+1.8
+100.0
+3,465
+RMB million
+% RMB million
+RMB million
+12
+16980
+100.0
+3,780
+25
+0.8
+32
+11.1
+1
+7
+100.0
+4,926
+1.3
+63
+1.9
+72
+4.7
+4
+:30
+85
+18
+5.7
+balance
+Allowance
+Percentage of
+allowance to
+prepayments
+to total
+Amount prepayments
+balance
+Allowance
+Amount prepayments
+prepayments
+516
+to total
+Percentage of
+allowance to
+At 31 December 2016
+Percentage
+At 31 December 2017
+The Company
+31
+56.3
+1.4
+Percentage
+1,162
+Allowance
+24.5
+17,953
+10.1
+1,820
+433
+to other
+receivables
+balance
+Percentage
+of allowance
+Percentage
+At 31 December 2016
+Allowance
+RMB million
+%
+receivables
+Amount
+RMB million
+100.0
+%
+RMB million
+15,191
+509
+balance
+Allowance
+to total
+other
+to other
+receivables
+to total
+other
+receivables
+Amount
+of allowance
+Percentage
+Percentage
+At 31 December 2017
+The Group
+% RMB million
+84.7
+220
+8410
+2.8
+6.2
+0.2
+1656
+%
+1,247
+13
+32
+57
+26990
+100.0
+6.9
+0.9
+2.0
+90.2
+22060
+26,945
+1,486
+1,860
+74.7
+1,360
+254
+10.2
+44
+24,316
+515
+16.1
+82
+2.4
+Total
+Over three years
+Between two and three years
+Between one and two years
+164
+147
+8,019
+4,985
+35,370
+2016
+RMB million
+100.0
+At 31 December
+46,900
+At 31 December
+2016
+RMB million
+2017
+At 31 December
+The Group
+9 OTHER RECEIVABLES
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+107
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+During the year ended 31 December 2017 and 2016, the Group and the Company had no individually significant write-off or recovery of doubtful
+debts which had been fully or substantially provided for in prior years.
+During the year ended 31 December 2017 and 2016, the Group and the Company had no individually significant accounts receivable been fully or
+substantially provided allowance for doubtful accounts.
+29.4%
+14,967
+At 31 December
+2016
+2017
+17,920
+25.9%
+At 31 December
+459
+5.1
+4,841
+12,509
+Within one year
+Total
+Over three years
+Between two and three years
+Between one and two years
+Within one year
+RMB million
+Ageing analysis of other receivables is as follows:
+Total
+Less: Allowance for doubtful accounts
+Amounts due from others
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from associates and joint ventures
+Amounts due from subsidiaries
+40,189
+47,493
+25,596
+1,124
+1,162
+1,349
+1,486
+16,467
+41,313
+48,655
+26,945
+17,953
+1,793
+1,608
+14,085
+3,986
+67.0
+The Company
+At 31 December
+2017
+RMB million
+1,349
+26.6
+12,920
+69.6
+28,763
+-
+49.2
+1
+23,946
+of allowance
+Percentage
+Allowance
+RMB million
+%
+receivables
+Amount
+RMB million
+to other
+receivables
+balance
+2,740
+6.6
+1
+2210
+1,122
+11.1
+4,573
+12.6
+1,159
+18.9
+9,219
+48,655
+1
+12.7
+5,237
+0.1
+2
+5.3
+2,570
+%
+% RMB million
+At 31 December 2016
+balance
+Allowance
+to total
+other
+receivables
+Amount
+Percentage
+of allowance
+Percentage
+Percentage
+At 31 December 2017
+RMB million
+to total
+other
+The Company
+to other
+receivables
+120,425
+Cost:
+15 CONSTRUCTION IN PROGRESS
+At 31 December 2017 and 2016, the Group and the Company had no individually significant fully depreciated fixed assets which were still in use.
+At 31 December 2017 and 2016, the Group and the Company had no individually significant fixed assets which were temporarily idle or pending for
+disposal.
+At 31 December 2017 and 2016, the Group and the Company had no individually significant fixed assets which were pledged.
+Impairment losses on fixed assets for the year ended 31 December 2017 primarily represent impairment losses recognised in the exploration and
+production ("E&P") segment of RMB 12,611 million (2016: RMB 10,594 million) on fixed assets, for the chemicals segment of RMB 4,779 million
+(2016: RMB 2,840 million) of fixed assets and for the refining segment of RMB 1,836 million (2016: RMB 1,245 million) of fixed assets. The primary
+factors resulting in the E&P segment impairment loss were downward revision of oil and gas reserve due to price change and high operating and
+development cost for certain oil fields. The carrying values of these E&P properties were written down to recoverable amounts which were determined
+based on the present values of the expected future cash flows of the assets using a pre-tax discount rate 10.47% (2016: 10.47%). Further future
+downward revisions to the Group's oil price outlook would lead to further impairments which, in aggregate, are likely to be material. It is estimated
+that a general decrease of 5% in oil price, with all other variables held constant, would result in additional impairment loss in Group's fixed assets
+relating to oil and gas producing activities by approximately RMB 3,145 million. It is estimated that a general increase of 5% in operating cost,
+with all other variables held constant, would result in additional impairment in Group's fixed assets relating to oil and gas producing activities by
+approximately RMB 2,659 million. It is estimated that a general increase of 5% in discount rate, with all other variables held constant, would result
+in additional impairment loss in Group's fixed assets relating to oil and gas producing activities by approximately RMB 461 million. The assets in
+the refining segment were written down due to the suspension of operations of certain production facilities, while the assets in the chemical segment
+were written down because of evidence indicates the economic performance of certain production facilities are worse than expected and due to the
+suspension of operations of certain production facilities.
+The additions to oil and gas properties of the Group and the Company for the year ended 31 December 2017 included RMB 1,627 million (2016:
+RMB 3,420 million) (Note 32) and RMB 982 million (2016: RMB 2,939 million), respectively of the estimated dismantlement costs for site
+restoration.
+47
+14 FIXED ASSETS (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+116
+Financial Statements (PRC)
+115
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+373,020
+172,080
+329,814
+(165)
+(46)
+1,780
+413
+118,645
+129,581
+50,046
+49,277
+Accumulated
+interest
+capitalised at
+Project name
+Balance at 1 January 2017
+Additions for the year
+Disposals for the year
+Dry hole costs written off
+(101)
+(859)
+(7,773)
+(37,505)
+(81,275)
+(6,567)
+(6,876)
+(376)
+1,693
+252
+45,701
+85,552
+49,689
+131,274
+50,459
+The Company
+RMB million
+At 31 December 2017, major construction projects of the Group are as follows:
+Balance at 31 December 2016
+Balance at 31 December 2017
+Net book value:
+Balance at 31 December 2017
+Decreases for the year
+Additions for the year
+Balance at 1 January 2017
+412
+Balance at 31 December 2017
+Exchange adjustments
+Reclassification to other assets
+Transferred to fixed assets
+The Group
+RMB million
+Provision for impairment losses:
+Transferred from subsidiaries
+(1,155)
+26,727
+7,556
+15,954
+44,304
+6,042
+13,959
+Reclassifications
+361
+Transferred from subsidiaries
+19
+35
+Transferred to subsidiaries
+(165)
+(27)
+(192)
+16
+Additions for the year
+1,623
+Balance at 1 January 2017
+31
+688
+(470)
+(282)
+614,246
+66,320
+719
+(752)
+Decreases for the year
+(230)
+Balance at 31 December 2017
+22,402
+(1,487)
+379,137
+(5,428)
+271,849
+(7,145)
+673,388
+Provision for impairment losses:
+Decreases for the year
+23
+(38)
+1,797
+Transferred to subsidiaries
+Reclassifications
+Additions for the year
+Balance at 1 January 2017
+Accumulated depreciation:
+1,061,094
+21,401
+(9,121)
+555,133
+49,022
+Balance at 31 December 2017
+(1,911)
+(482)
+Decreases for the year
+(6,728)
+456,939
+337,394
+Budgeted
+amount
+255,451
+(12)
+34,271
+(164)
+21,824
+(214)
+57,892
+Net book value:
+Balance at 31 December 2017
+24,823
+Balance at 31 December 2016
+24,562
+141,725
+176,378
+163,266
+21,397
+43,305
+(75)
+52
+1,618
+Balance at 31 December 2017
+Balance at
+1 January
+68%
+2017
+RMB million
+14,015
+Balance at 1 January 2017
+Accumulated amortisation:
+138,008
+4,662
+48,613
+3,845
+5,160
+75,728
+Balance at 31 December 2017
+(4,644)
+(249)
+(132)
+(479)
+3,261
+(293)
+Decreases for the year
+24,752
+898
+11,837
+190
+1,075
+10,752
+Additions for the year
+117,900
+4,013
+36,908
+4,134
+4,378
+68,467
+(3,491)
+2,259
+9,892
+2,596
+Additions for the year
+854
+16
+120
+24
+483
+211
+Balance at 1 January 2017
+Provision for impairment losses:
+39,996
+2,870
+14,206
+2,774
+(503)
+3,168
+16,978
+Balance at 31 December 2017
+32,023
+Additions for the year
+4,082
+162
+515
+4,338
+Balance at 1 January 2017
+448
+Decreases for the year
+(1,119)
+(255)
+(24)
+(174)
+(1,572)
+9,545
+Cost:
+Total
+RMB million
+Others
+RMB million
+10%
+1,329
+1,205
+124
+13,865
+Wen 23 gas storage project (first-stage)
+self-financing
+670
+Bank loans &
+2,365
+(2,538)
+4,903
+15,475
+Guangxi LNG Project
+self-financing
+25
+Bank loans &
+Net change
+for the year
+RMB million
+31 December
+2017
+RMB million
+Balance at
+Percentage of
+Completion
+Source of
+funding
+Bank loans &
+31 December
+Zhongke Refine Integration Project
+34,667
+3,274
+3,716
+6,990
+20%
+2017
+RMB million
+RMB million
+1
+Tianjin LNG Project
+rights
+RMB million
+RMB million
+RMB million
+technology
+Patents
+Operation
+Non-patent
+Land use
+rights
+RMB million
+The Group
+16 INTANGIBLE ASSETS
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+construction project (first-stage)
+self-financing
+gas (SNG) export pipeline
+Bank loans &
+13,639
+8,213
+(5,059)
+3,154
+78%
+Bank loans &
+self-financing
+148
+Xinjiang coal-based substitute natural
+11,589
+651
+1,041
+1,692
+15%
+self-financing
+(652)
+13,683
+(160)
+809
+2,709
+6,826
+10,816
+1,616
+2,462
+4,852
+5,335
+10,269
+11,013
+Other current assets
+3,634
+1,886
+6,524
+4,916
+1,165
+2,352
+1,394
+1,800
+8,172
+5,772
+Cash and cash equivalents
+Current assets
+RMB million
+RMB million
+1,259
+RMB million
+Total current assets
+18,441
+(233)
+(1,781)
+(1,135)
+Current financial liabilities (i)
+Current liabilities
+14,003
+13,248
+57,054
+51,553
+8,279
+7,978
+16,785
+13,530
+21,903
+19,740
+Non-current assets
+5,520
+9,233
+8,085
+15,732
+2,781
+4,814
+6,246
+7,135
+12,075
+RMB million
+RMB million
+RMB million
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Except that SIBUR is a public joint stock company, other joint ventures and associates above are limited companies.
+gas extraction
+50.00%
+Crude oil and natural 10,000 USD
+NA
+The Republic of British Virgin
+Kazakhstan Islands
+Ltd. ("CIR")
+Caspian Investments Resources
+13 LONG-TERM EQUITY INVESTMENTS (CONTINUED)
+of coal-chemical
+products
+Company Limited ("Zhongtian
+Synergetic Energy")
+38.75%
+17,516
+Mining coal and
+Peng Yi
+PRC
+PRC
+Zhongtian Synergetic Energy
+petrochemical
+products
+manufacturing
+RUB
+manufacturing
+(b) Major financial information of principal joint ventures
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+FREP
+At 31
+December
+RMB million
+RMB million
+RMB million
+RMB million
+2016
+2017
+2016
+At 31
+December
+At 31
+December
+At 31
+December
+At 31
+December
+2017
+2016
+2017
+2016
+2017
+2016
+2017
+At 31
+December
+At 31
+December
+At 31
+December
+Sinopec SABIC Tianjin
+YASREF
+Taihu
+BASF-YPC
+At 31
+December
+At 31
+December
+(783)
+(20)
+(334)
+(5,407)
+11,497
+12,557
+13,454
+13,505
+6,690
+7,818
+15,384
+16,021
+21
+16,451
+of the company
+Net assets attributable to
+Net assets attributable to owners
+12,557
+13,454
+13,505
+6,931
+8,100
+15,384
+16,021
+13,683
+16,451
+Net assets
+(5,369)
+11,497
+minority interests
+282
+241
+Summarised income statement
+5,749
+6,279
+5,045
+5,064
+4,021
+3,831
+6,154
+6,409
+6,842
+8,226
+Carrying Amounts
+743
+Others (iii)
+5,749
+6,279
+5,045
+5.064
+3,278
+3,831
+6,154
+6,409
+6,842
+8,226
+Share of net assets from joint ventures
+(4,142)
+natural gas and
+(44,032)
+(2,179)
+(2,657)
+(5,782)
+(7,653)
+(17,271)
+(1,950)
+(1,934)
+(2,890)
+(2,215)
+(6,424)
+(6,184)
+Total current liabilities
+Non-current liabilities
+(2,657)
+(6,466)
+(11,864)
+(1,616)
+(1,914)
+(2,107)
+(1,982)
+(4,643)
+(5,049)
+Other current liabilities
+(1,236)
+(1,187)
+(4,546)
+Non-current financial liabilities(ii)
+(13,654)
+(19,985)
+(2,758)
+(1,502)
+(974)
+(20,237)
+(13,890)
+Total non-current liabilities
+(32)
+(41)
+(1,004)
+(890)
+(2,130)
+(2,686)
+(10)
+(19)
+(252)
+(236)
+Other non-current liabilities
+(5,337)
+(4,101)
+(43,028)
+(35,619)
+(49)
+(72)
+(1,492)
+(955)
+(36,509)
+Year ended 31 December
+10.00%
+Proccessing
+66,838
+RMB million
+Total
+losses
+RMB million
+(722)
+Provision for
+impairment
+associates
+RMB million
+Investments in
+50,696
+2,437
+RMB million
+Investments in
+joint ventures
+Balance at 31 December 2017
+116,812
+Movement of provision for impairment
+Disposals for the year
+Dividends declared
+Change of other comprehensive loss under the equity method
+Share of profits less losses under the equity method
+Additions for the year
+Balance at 1 January 2017
+The Company
+Balance at 31 December 2017
+Movement of provision for impairment
+Other movements
+Investments transferred to subsidiaries
+Investments transferred to subsidiaries
+Reclassification
+11,129
+10,615
+(892)
+(892)
+(1,614)
+80,429
+52,272
+68
+40
+28
+(6,195)
+(6,195)
+(1,289)
+(387)
+13,566
+(902)
+(607)
+(7,954)
+(2,755)
+(5,199)
+6
+(6)
+1,053
+255
+798
+16,525
+5,910
+(607)
+Disposals for the year
+Dividends declared
+Change of other comprehensive income under the equity method
+187,848
+1,155
+186,693
+1,838
+2,651
+65,772
+84,448
+14,141
+14,774
+75,680
+85,975
+RMB million
+2016
+157,431
+At 31 December
+At 31 December
+2017
+Less: Provision for diminution in value of inventories
+Total
+Spare parts and consumables
+Finished goods
+Work in progress
+Raw materials
+The Group
+11 INVENTORIES
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+RMB million
+920
+156,511
+Provision for diminution in value of inventories is mainly against spare parts and consumables. For the year ended 31 December 2017, the provision
+for diminution in value of inventories of the Group was primarily due to the costs of spare parts and consumables of the refining segment and
+chemical segment were higher than their net realisable value.
+Share of profits less losses under the equity method
+Additions for the year
+Balance at 1 January 2017
+The Group
+13 LONG-TERM EQUITY INVESTMENTS
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+110
+The impairment losses relating to investments for the year ended 31 December 2017 amounted to 17 million (2016: nil).
+Other investment, unlisted and at cost, represents the Group's interests in privately owned enterprises which are mainly engaged in oil and natural
+gas activities and chemical production.
+11,408
+1,676
+Total
+29
+262
+11,175
+11,437
+46
+Less: Impairment loss for investments
+1,722
+1,544
+178
+Equity securities, listed and at quoted market price
+Other investment, unlisted and at cost
+At 31 December
+2016
+RMB million
+At 31 December
+2017
+RMB million
+12 AVAILABLE-FOR-SALE FINANCIAL ASSETS
+131,087
+subsidiaries joint ventures
+RMB million
+Investments in Investments in Investments in
+Provision for
+impairment
+Petroleum refining
+NA
+Saudi Arabia
+Saudi Arabia
+Sinopec SABIC Tianjin Petrochemical
+Company Ltd. ("YASREF”)
+Yanbu Aramco Sinopec Refining
+49.00%
+Crude oil and natural 25,000 USD
+gas extraction
+NA
+Cyprus
+1,560 million
+Russia
+products
+of petrochemical
+and distribution
+40.00%
+12,547
+Manufacturing
+Wang Jingyi
+PRC
+BASF-YPC Company Limited ("BASF-YPC") PRC
+products
+refining oil
+Taihu Limited ("Taihu")
+37.50%
+PRC
+PRC
+NA
+Russia
+Russia
+PAO SIBUR Holding ("SIBUR")
+49.00%
+18,000
+50.00%
+200
+Operation of natural
+gas pipelines and
+auxiliary facilities
+Provision of non-
+banking financial
+services
+Zhao Dong
+PRC
+PRC
+Sinopec Finance Company Limited
+("Sinopec Finance")
+Quan Kai
+PRC
+PRC
+Sinopec Sichuan to East China Gas
+Pipeline Co., Ltd. ("Pipeline Ltd")
+2.Associates
+and distribution
+of petrochemical
+products
+UWAIDH AL-
+HARETHI
+Company Limited ("Sinopec SABIC
+Tianjin")
+50.00%
+9,796
+USD
+and processing
+Manufacturing
+50.00%
+21,784 million
+14,758
+Gu Yuefeng
+3,722
+(375)
+(375)
+(2,335)
+(145)
+(2,190)
+(120)
+(120)
+5,774
+970
+4,804
+(3,722)
+4,360
+434
+3,743
+268,451
+Total
+RMB million
+RMB million
+(7,657)
+14,691
+15,496
+245,921
+associates
+RMB million
+RMB million
+losses
+183
+253,011
+14,822
+15,579
+PRC
+Fujian Refining & Petrochemical Company PRC
+Limited ("FREP")
+1.Joint ventures
+Percentage of
+equity/voting
+right directly
+or indirectly
+held by the
+Company
+Registered
+Capital RMB
+million
+Principal
+activities
+Legal
+representative
+Register
+location
+business
+Name of investees
+place of
+Principal
+(a) Principal joint ventures and associates
+Principal joint ventures and associates of the Group are as fllows:
+13 LONG-TERM EQUITY INVESTMENTS (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+112
+Financial Statements (PRC)
+111
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+For the year 2017, the Group and the Company had no individually significant long-term investment impairment.
+Details of the Company's principal subsidiaries are set out in Note 56.
+(198)
+275,557
+(198)
+(7,855)
+Manufacturing
+867
+FREP
+Taihu
+48
+960
+748
+753
+26
+1,272
+Share of profit/(loss) from associates
+221
+23
+(2,856)
+(944)
+(305)
+123
+1,351
+1,290
+51
+2,543
+662
+(334)
+(260)
+(175)
+(246)
+(3,518)
+(610)
+9,341
+123
+(1,759)
+(loss)/income from associates (iv)
+Balance at 31 December 2017
+Exchange adjustments
+Decreases for the year
+Reclassifications
+Transferred from construction in progress
+Additions for the year
+Balance at 1 January 2017
+Cost:
+Plants and
+buildings
+RMB million
+The Group
+14 FIXED ASSETS
+Share of other comprehensive
+for the year ended 31 December 2017
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+(vi) The summarised income statement for the year 2016 of Pipeline Ltd presents the operating results from the date when the Group lost control to 31 December
+2016.
+(v) Sinopec is able to exercise significant influence in SIBUR since Sinopec has a member in SIBUR's Board of Director and has a member in SIBUR's Management
+Board.
+(iv) Including foreign currency translation differences.
+Note:
+The share of profit and other comprehensive income for the year ended 31 December 2017 in all individually immaterial associates accounted
+for using equity method in aggregate was RMB 3,182 million (2016: RMB 2,869 million) and RMB 569 million (2016: other comprehensive loss
+RMB 384 million) respectively. As at 31 December 2017, the carrying amount of all individually immaterial associates for using equity method in
+aggregate was RMB 23,899 million (2016: RMB 21,510 million).
+331
+(167)
+(26)
+(86)
+(121)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+9,601
+1.526
+1,536
+2016
+Sinopec Finance
+Pipeline Ltd (vi)
+2017
+Turnover
+Year ended 31 December
+Summarised income statement
+3,576
+3,104
+6,734
+6,829
+9,676
+2017
+11,496
+22,800
+24,090
+Carrying Amounts
+3,576
+3,104
+6,734
+6,829
+9,676
+11,496
+12.128
+22,800
+12,128
+2016
+SIBUR (v)
+2017
+Zhongtian Synergetic Energy
+51
+2,543
+Total comprehensive income/(loss)
+Dividends declared by associates
+Other comprehensive (loss)/income
+Profit/(loss) for the year
+2,205
+2,563
+RMB million
+RMB million
+2016
+2017
+2016
+RMB million
+RMB million
+3,569
+52,496
+2,442
+3,542
+191
+5,644
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2017
+CIR
+Accumulated depreciation:
+Balance at 1 January 2017
+114,920
+854
+650,685
+1,627
+171,840
+67,813
+Balance at 31 December 2017
+Net book value:
+74,135
+30,945
+39,358
+3,832
+Balance at 31 December 2017
+(105)
+(1)
+411,121
+(104)
+(358)
+(295)
+(12)
+(51)
+Decreases for the year
+Reclassifications
+19,836
+10,450
+8,832
+554
+Additions for the year
+Exchange adjustments
+650,774
+Balance at 31 December 2016
+66,348
+(46)
+37,505
+19,636
+1,031,570
+1,428
+443,485
+400
+540,499
+982
+15,609
+47,586
+46
+2,260
+206
+58
+Transferred to subsidiaries
+Transferred from subsidiaries
+Reclassifications
+Transferred from construction in progress
+Additions for the year
+Balance at 1 January 2017
+Cost:
+Total
+RMB million
+machinery
+and others
+RMB million
+RMB million
+RMB million
+Equipment
+Oil
+and gas
+properties
+Plants and
+buildings
+The company
+690,594
+409,122
+215,124
+54,762
+24,090
+20,791
+3,329
+667,657
+120,013
+(2,912)
+(199)
+(2,573)
+(140)
+(19,736)
+723
+54,605
+11,983
+892,936
+940,312
+(23,386)
+1,658,541
+14,464
+Total
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+and gas
+properties
+RMB million
+Oil
+(1,913)
+(1,737)
+(50)
+(673)
+19,881
+6,789
+81,275
+1,727,982
+45,243
+404,919
+Balance at 1 January 2017
+Provision for impairment losses:
+(13,725)
+(2,104)
+1,003,073
+498,246
+456,459
+48,368
+Balance at 31 December 2017
+(95)
+(1,952)
+(57)
+Exchange adjustments
+(11,466)
+(1,488)
+(771)
+Decreases for the year
+199
+(77)
+(122)
+Reclassifications
+913,185
+105,717
+46,585
+55,057
+4,075
+Additions for the year
+463,023
+30,642
+BASF-YPC
+Share of net assets from associates
+minority interests
+1,893
+1,144
+1,958
+3,414
+4,902
+5,278
+Profit for the year
+(783)
+(1,279)
+56
+57
+605
+(518)
+(648)
+(1,151)
+(1,574)
+(1,699)
+Tax expense
+3,184
+5,113
+28
+548
+2,411
+1,697
+(553)
+2,606
+84
+2,401
+joint ventures
+Share of net profit from
+300
+1,375
+155
+1,109
+1,250
+Dividends from joint ventures
+2,401
+3,834
+731
+3,834
+51
+1,169
+1,958
+3,414
+4,902
+5,278
+Total comprehensive income
+647
+(554)
+1,851
+25
+Other comprehensive income/(loss)
+3,744
+4,565
+6,476
+6,977
+17,323
+21,020
+41,764
+49,356
+Turnover
+RMB million
+RMB million
+2016
+2017
+2016
+RMB million
+Sinopec SABIC Tianjin
+12,520
+YASREF
+2017
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2016
+2017
+2016
+2017
+2016
+2017
+RMB million
+9,658
+61,587
+41,286
+Profit before taxation
+(245)
+(223)
+(1,216)
+(1,382)
+(113)
+(142)
+(173)
+(71)
+(929)
+(857)
+Interest expense
+30
+104
+33
+45
+40
+142
+19
+36
+130
+208
+Interest income
+16,337
+22,286
+2,639
+2,451
+1,366
+783
+(3,350)
+(3,176)
+Non-current liabilities
+(928)
+(908)
+(8,078)
+(10,668)
+(20,554)
+(142,386)
+(154,212)
+(5,009)
+(6)
+(933)
+3,842
+1,673
+50,301
+51,553
+158,938
+16,478
+17,782
+42,124
+40,972
+5,120
+5,612
+Current liabilities
+(88)
+(61,771)
+(31,494)
+Net assets attributable to
+7,151
+6,207
+17,378
+17,623
+96,761
+23,461
+24,751
+45,600
+48,180
+of the Company
+Net assets attributable to owners
+7,151
+6,207
+17,378
+17,623
+97,332
+23,461
+24,751
+45,600
+48,180
+Net assets
+(883)
+(170)
+(32,137)
+7,292
+571
+8,232
+149,457
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+114
+Financial Statements (PRC)
+113
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+(iii) Other reflects the excess of fair value of the consideration transferred over the Group's share of net fair value of the investee's identifiable assets acquired and
+liabilities as of the transaction date.
+(ii) Excluding provisions.
+(i) Excluding accounts payable, other payables.
+Note:
+13 LONG-TERM EQUITY INVESTMENTS (Continued)
+The share of profit and other comprehensive income for the year ended 31 December 2017 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was RMB 3,925 million (2016: RMB 2,061 million) and RMB 994 million (2016: other comprehensive loss
+RMB 934 million) respectively. As at 31 December 2017, the carrying amount of all individually immaterial joint ventures accounted for using
+equity method in aggregate was RMB 21,552 million (2016: RMB 22,885 million).
+(208)
+875
+12
+income/(loss) from joint ventures (iv)
+Share of other comprehensive
+1,201
+1,917
+31
+227
+895
+541
+243
+(c) Major financial information of principal associates
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal associates:
+Pipeline Ltd
+At 31
+December
+161,187
+11,835
+11,317
+Current assets
+Non-current assets
+RMB million
+RMB million
+RMB million
+RMB million
+2016
+2017
+2017
+2016
+At 31
+December
+HP
+CIR
+At 31
+December
+At 31
+December
+Zhongtian Synergetic Energy
+At 31
+December
+SIBUR (v)
+At 31
+December
+2017
+RMB million
+2016
+RMB million
+At 31
+December
+Sinopec Finance
+At 31
+December
+2017
+RMB million
+2016
+RMB million
+RMB million
+2017
+At 31
+December
+20,719
+23
+Other equity movement under the equity method
+45
+14
+(1)
+19
+854
+16
+Intangible assets
+1,780
+(105)
+(60)
+252
+1,693
+15
+Construction in progress
+74,135
+(91)
+886
+(372)
+Goodwill
+7,663
+22 SHORT-TERM LOANS
+The reasons for recognising impairment losses are set out in the respective notes of respective assets.
+89,603
+(244)
+(664)
+(187)
+21,978
+49
+(11)
+17
+43
+68,720
+Total
+Others
+7,861
+198
+17
+The Group's short-term loans represent:
+19,836
+14
+(174)
+284
+2,063
+25
+(8)
+2
+31
+10
+Prepayments
+1,486
+(4)
+(18)
+(74)
+233
+1,349
+(39)
+54,762
+(11)
+Inventories
+Fixed assets
+1,614
+(42)
+(2)
+936
+722
+13
+Long-term equity investments
+1,155
+2
+(190)
+(13)
+436
+920
+11
+2,123
+9
+Short-term bank loans
+-US Dollar loans
+5
+7.3068
+1
+7.8023
+1,969
+0.8945
+13,577
+6.9370
+1,957
+2,202
+1,903
+0.8359
+2,277
+19,668
+6.5342
+3,010
+4
+2,858
+4.8831
+4
+1
+Financial Statements (PRC)
+119
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+At 31 December 2017 and 2016, the Group had no individually significant advances from customers aged over one year.
+25 ADVANCES FROM CUSTOMERS
+At 31 December 2017 and 2016, the Group had no individually significant accounts payable aged over one year.
+24 ACCOUNTS PAYABLE
+Bills payable primarily represented bank accepted bills for the purchase of material, goods and products. Bills payable were due within one year.
+At 31 December 2017 and 2016, the Group had no overdue unpaid bills.
+23 BILLS PAYABLE
+At 31 December 2017 and 2016, the Group had no significant overdue short-term loan.
+At 31 December 2017, the Group's interest rates on short-term loans were from interest 0.70% to 6.09% (2016: from interest 0.68% to 6.19%).
+The majority of the above loans are by credit.
+30,374
+21
+4.7995
+20
+54,701
+-Renminbi loans
+1,706
+23,297
+million
+currency
+Original
+At 31 December 2016
+At 31 December 2017
+Total
+-Singapore Dollar loans
+-Euro loans
+-HK Dollar loans
+-US Dollar loans
+-Renminbi loans
+fellow subsidiaries
+Short-term loans from Sinopec Group Company and
+-Renminbi loans
+Short-term other loans
+Exchange
+rates
+18,430
+RMB
+Original
+currency
+million
+299
+299
+1,013
+6.9370
+146
+7,420
+6.5342
+1,136
+10,931
+23,685
+11,944
+31,105
+million
+RMB
+Exchange
+rates
+million
+Other receivables
+34,268
+26,896
+1
+Goodwill represents the excess of the cost of purchase over the fair value of the underlying assets and liabilities. The recoverable amounts of the
+above cash generating units are determined based on value in use calculations. These calculations use cash flow projections based on financial
+budgets approved by management covering a one-year period and pre-tax discount rates primarily ranging from 10.8% to 11.4% (2016: 10.4% to
+11.0%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no major impairment loss
+was recognised.
+6,353
+8,634
+212
+167
+941
+879
+2,541
+petrochemical products
+Trading of petrochemical
+products
+4,043
+4,043
+petroleum products
+Production and sale of
+petrochemical products and
+Manufacturing of intermediate
+1,157
+Key assumptions used for cash flow forecasts for these entities are the gross margin and sales volume. Management determined the budgeted gross
+margin based on the gross margin achieved in the period immediately before the budget period and management's expectation on the future trend
+of the prices of crude oil and petrochemical products. The sales volume was based on the production capacity and/or the sales volume in the period
+immediately before the budget period.
+1,004
+18 LONG-TERM DEFERRED EXPENSES
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+RMB million
+2017
+At 31 December At 31 December
+Deferred tax liabilities
+At 31 December
+2016
+RMB million
+Deferred tax assets
+At 31 December
+2017
+RMB million
+381
+Accruals
+Receivables and inventories
+Deferred tax assets and liabilities before the consolidated elimination adjustments are as follows:
+19 DEFERRED TAX ASSETS AND LIABILITIES
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+117
+Long-term deferred expenses primarily represent prepaid rental expenses over one year and catalysts expenditures.
+2016
+Other units without individual significant goodwill
+Total
+Shanghai SECCO Petrochemical Company Limited ("Shanghai SECCO")
+(Note 53)
+Balance at 31 December 2017
+Net book value:
+886
+17
+139
+24
+482
+224
+Balance at 31 December 2017
+(13)
+(4)
+(1)
+(8)
+612
+Decreases for the year
+Balance at 31 December 2016
+Sinopec (Hong Kong) Limited
+58,526
+54,241
+1,775
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+Sinopec Zhenhai Refining and Chemical Branch ("Sinopec Zhenhai")
+Sinopec Beijing Yanshan Petrochemical Branch ("Sinopec Yanshan")
+2016
+RMB million
+RMB million
+2017
+At 31 December
+Principal activities
+Goodwill is allocated to the following Group's cash-generating units:
+Name of investees
+17 GOODWILL
+Amortisation of the intangible assets of the Group charged for the year ended 31 December 2017 is RMB 4,468 million (2016: RMB 4,299 million).
+85,023
+97,126
+1,510
+634
+1,401
+1,047
+1,851
+RMB million
+At 31 December
+1,925
+Written back
+for the year
+Provision for
+the year
+RMB million
+Balance at
+1 January
+2017
+RMB million
+Note
+At 31 December 2017, impairment losses of the Group are analysed as follows:
+21 DETAILS OF IMPAIRMENT LOSSES
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+118 Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Other non-current assets mainly represent prepayments for construction projects and purchases of equipment.
+20 OTHER NON-CURRENT ASSETS
+Periodically, management performed assessment on the probability that future taxable profit will be available over the period which the deferred tax
+assets can be realised or utilised. In assessing the probability, both positive and negative evidence was considered, including whether it is probable
+that the operations will have sufficient future taxable profits over the periods which the deferred tax assets are deductible or utilised and whether the
+tax losses result from identifiable causes which are unlikely to recur. During the year ended 31 December 2017, write-down of deferred tax assets
+amounted to RMB 26 million (2016: RMB 811 million) (Note 50).
+At 31 December 2017, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 20,821 million
+(2016: RMB 19,194 million), of which RMB 5,938 million (2016: RMB 3,833 million) was incurred for the year ended 31 December 2017, because
+it was not probable that the related tax benefit will be realised. These deductible losses carried forward of RMB 2,508 million, RMB 4,462 million,
+RMB 4,080 million, RMB 3,833 million and RMB 5,938 million will expire in 2018, 2019, 2020, 2021, 2022 and after, respectively.
+7,214
+7,661
+At 31 December
+2016
+RMB million
+Written off
+2017
+RMB million
+15,131
+6,466
+Other
+Balance at
+(100)
+87
+(21)
+49
+683
+8
+Included: Accounts receivable
+Allowance for doubtful accounts
+RMB million
+RMB million
+RMB million
+RMB million
+2017
+(decrease)
+for the year
+increase/
+At 31 December
+31 December
+Deferred tax assets
+227
+117
+Intangible assets
+Available-for-sale securities
+2.477
+2,325
+391
+260
+(50)
+(9,928)
+14,150
+27
+165
+Tax value of losses carried forward
+Fixed assets
+Deferred tax liabilities
+Cash flow hedges
+11,264
+(563)
+(242)
+(14,615)
+180
+RMB million
+Others
+At 31 December
+2016
+2017
+RMB million
+4,339
+4,339
+At 31 December
+Deferred tax liabilities
+Deferred tax assets
+Deferred tax assets and liabilities after the consolidated elimination adjustments are as follows:
+(229)
+(15,086)
+133
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+Deferred tax assets/(liabilities)
+19,470
+7,425
+7,425
+(264)
+(10,805)
+14,639
+(3,792)
+1,053
+(4,689)
+(3,792)
+1,053
+(3,792)
+1,053
+1,053
+(3,792)
+other comprehensive income during the year
+Subtotal
+(57)
+Other comprehensive income
+Subtotal
+Translation difference in foreign currency statements
+Share of other comprehensive income in associates and joint ventures
+Subtotal
+(57)
+(57)
+(1,580)
+Changes in fair value of available-for-sale financial assets recongnised during the year
+Less: Total amounts transferred to profit or loss from
+(57)
+313
+(5,164)
+2016
+(7)
+313
+(17)
+2,014
+(465)
+2,479
+Subtotal
+1,115
+(6,279)
+other comprehensive income during the year
+(3,161)
+(11)
+652
+2
+(3,813)
+(13)
+(Add)/Less: Adjustments of amounts transferred to initial carrying amount of hedged items
+Total amounts transferred to profit or loss from
+recognised during the year
+Effective portion of changes in fair value of hedging instruments
+Cash flow hedges:
+Net-of-tax
+amount
+RMB million
+Tax effect
+RMB million
+RMB million
+Before-tax
+amount
+(4,376)
+(1,893)
+124
+(72)
+Transaction with minority interests
+Balance at 1 January 2017
+RMB million
+The movements in capital reserve of the Group are as follows:
+35 CAPITAL RESERVE
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+Others
+123
+There were no changes in the management's approach to capital management of the Group during the year. Neither the Company nor any of its
+subsidiaries is subject to externally imposed capital requirements.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 30 and 57, respectively.
+Management optimises the structure of the Group's capital, which comprises of equity and debts and bonds. In order to maintain or adjust the
+capital structure of the Group, management may cause the Group to issue new shares, adjust the capital expenditure plan, sell assets to reduce
+debt, or adjust the proportion of short-term and long-term loans and bonds. Management monitors capital on the basis of the debt-to-capital ratio,
+which is calculated by dividing long-term loans (excluding current portion) and debentures payable, by the total of equity attributable to owners of
+the Company and long-term loans (excluding current portion) and debentures payable, and liability-to-asset ratio, which is calculated by dividing
+total liabilities by total assets. Management's strategy is to make appropriate adjustments according to the Group's operating and investment needs
+and the changes of market conditions, and to maintain the debt-to-capital ratio and the liability-to-asset ratio of the Group at a range considered
+reasonable. As at 31 December 2017, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 12.0% (2016: 14.2%) and 46.5%
+(2016: 44.5%), respectively.
+Capital management
+All A shares and H shares rank pari passu in all material aspects.
+During the year ended 31 December 2015, the Company issued 2,790,814,006 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2014, the Company issued 1,715,081,853 listed A shares with a par value of RMB 1.00 each, as a result of
+exercise of conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2013, the Company issued 114,076 listed A shares with a par value of RMB 1.00 each, as a result of exercise
+of conversion by the holders of the 2011 Convertible Bonds.
+(24)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Balance at 31 December 2017
+119,525
+(13)
+575
+other comprehensive income during the year
+Subtotal
+(1,074)
+3
+(1)
+4
+240
+(1,314)
+Less/(Add): Adjustments of amounts transferred to initial carrying amount of hedged items
+Total amounts transferred to profit or loss from
+Effective portion of changes in fair value of hedging instruments recognised
+during the year
+Cash flow hedges:
+amount
+RMB million
+Tax effect
+RMB million
+RMB million
+Net-of-tax
+Before-tax
+amount
+2017
+(a) Each item of other comprehensive income and the influence of the income tax and the process of change to profit or loss
+The Group
+36 OTHER COMPREHENSIVE INCOME
+Capital reserve represents mainly: (a) the difference between the total amount of the par value of shares issued and the amount of the net assets
+transferred from Sinopec Group Company in connection with the Reorganisation; (b) share premiums derived from issuances of H shares and
+A shares by the Company and excess of cash paid by investors over their proportionate shares in share capital, the proportionate shares of
+unexercised portion of the Bond with Warrants at the expiration date, and the amount transferred from the proportionate liability component and
+the derivative component of the converted portion of the 2011 Convertible Bonds; (c) difference between consideration paid for the combination of
+entities under common control and the transactions with minority interests over the carrying amount of the net assets acquired.
+45
+119,557
+503
+other comprehensive income during the year
+(4,413)
+Share of other comprehensive loss in associates and joint ventures
+(3,481)
+(2,479)
+(1,642)
+(510)
+57
+(40)
+680
+(3,481)
+(2,820)
+(1,888)
+(932)
+(4,376)
+2,000
+97
+6,333
+(719)
+7,052
+2,703
+1,970
+(17)
+(9,153)
+(1,169)
+1,132
+(479)
+In June 2013, the Company issued 21,011,962,225 listed A shares and 5,887,716,600 listed H shares as a result of bonus issues of 2 shares
+converted from the retained earnings, and 1 share transferred from capital reserves for every 10 existing shares.
+(2,783)
+117,000
+196,640
+3,042
+RMB million
+Total
+surplus reserves
+RMB million
+117,000
+79,640
+3,042
+82,682
+Balance at 31 December 2017
+Appropriation
+Balance at 1 January 2017
+The Group
+Discretionary
+Statutory
+surplus reserve
+RMB million
+765
+3,280
+(3,157)
+888
+The Group
+RMB million
+Movements in surplus reserves are as follows:
+38 SURPLUS RESERVES
+Balance at 31 December 2017
+Utilisation for the year
+Provision for the year
+Balance at 1 January 2017
+According to 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 or based on the production volume of crude oil and natural gas. The movements of specific
+reserve are as follows:
+(7,196)
+(7,984)
+Subtotal
+(703)
+114
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+6,333
+(472)
+6,805
+4,298
+4,298
+4,298
+4,298
+for the year ended 31 December 2017
+45
+45
+45
+(24)
+(7)
+(17)
+Other comprehensive income
+Subtotal
+Translation difference in foreign currency statements
+Subtotal
+45
+36 OTHER COMPREHENSIVE INCOME (Continued)
+The Group (Continued)
+(b) Reconciliation of other comprehensive income
+RMB Million
+RMB Million
+Subtotal
+RMB Million
+statements
+RMB Million
+RMB Million
+RMB Million
+Cash flow hedges
+Translation
+difference in
+foreign currency
+Changes in fair
+value of
+available-for-sale
+financial assets
+income
+Total other
+comprehensive
+Minority interests
+Equity Attributable to shareholders of the company
+37 SPECIFIC RESERVE
+31 December 2017
+(4,161)
+(6,557)
+2,396
+method
+RMB Million
+The share of other
+comprehensive
+income which
+being reclassified
+to profit and
+loss in the future
+under equity
+31 December 2016
+Changes in 2017
+31 December 2015
+Changes in 2016
+(838)
+On 14 February 2013, the Company issued 2,845,234,000 listed H shares ("the Placing") with a par value of RMB 1.00 each at the Placing Price
+of HKD 8.45 per share. The aggregate gross proceeds from the Placing amounted to approximately HKD 24,042,227,300.00 and the aggregate net
+proceeds (after deduction of the commissions and estimated expenses) amounted to approximately HKD 23,970,100,618.00.
+48,238
+During the year ended 31 December 2011, the Company issued 34,662 listed A shares with a par value of RMB 1.00 each, as a result of conversion
+by the holders of the 2011 Convertible Bonds.
+currency
+million
+Original
+Original
+At 31 December 2016
+At 31 December 2017
+Interest rates ranging from interest
+1.08% to 4.66% per annum at 31
+December 2017 with maturities
+through 2030
+Long-term bank loans
+- Renminbi loans
+Interest rate and final maturity
+The Group's long-term loans represent:
+Exchange
+rates
+30 LONG-TERM LOANS
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December 2017 and 2016, the Group had no significant overdue long-term loan.
+38,972
+26,681
+Non-current liabilities due within one year
+527
+733
+Others
+29,500
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+RMB
+million
+currency
+million
+Exchange
+- Renminbi loans
+and fellow subsidiaries
+17,689
+(8,795)
+24,434
+(1,402)
+Long-term loans from Sinopec Group Company
+Long-term bank loans
+Less: Current portion
+426
+6.9370
+61
+192
+6.5342
+29
+Interest rates ranging from interest
+1.55% to 4.29% per annum at 31
+December 2017 with maturities
+through 2031
+- US Dollar loans
+26,058
+25,644
+RMB
+million
+rates
+22,532
+6.9370
+6,532
+6.5342
+4
+RMB
+million
+Exchange
+rates
+currency
+million
+RMB
+million
+rates
+Exchange
+At 31 December 2016
+Original
+Original
+currency
+million
+At 31 December 2017
+- Renminbi loans
+Long-term bank loans
+The Group's non-current liabilities due within one year represent:
+29 NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR
+At 31 December 2017 and 2016, the Group's other payables primarily represented payables for constructions.
+At 31 December 2017 and 2016, the Group had no individually significant other payables aged over three years.
+28 OTHER PAYABLES
+Total
+Other taxes
+Mineral resources compensation fee
+Income tax
+Value-added tax payable
+Consumption tax
+6.5342
+Interest rates ranging from interest
+free to 4.99% per annum at 31
+1,379
+23
+6
+1,000
+29,500
+16,000
+8,945
+3,416
+150
+2,014
+150
+2,014
+- US Dollar debentures
+Renminbi debentures
+Debentures payable due within one year
+Long-term loans due within one year
+- Renminbi loans
+fellow subsidiaries
+Long-term loans from Sinopec Group Company and
+- US Dollar loans
+8,795
+1,402
+42
+6.9370
+8,753
+During the year ended 31 December 2012, the Company issued 117,724,450 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+45,334
+December 2017 with maturities
+through 2022
+(467)
+1,501
+1,627
+36,918
+The Group
+RMB million
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+33 OTHER NON-CURRENT LIABILITIES
+Balance at 31 December 2017
+(172)
+Exchange adjustments
+Accretion expenses
+Provision for the year
+Balance at 1 January 2017
+Provisions primarily represent provision for future dismantlement costs of oil and gas properties. The Group has established certain standardised
+measures for the dismantlement of its retired oil and gas properties by making reference to the industry practices and is thereafter constructively
+obligated to take dismantlement measures of its retired oil and gas properties. Movement of provision of the Group's obligations for the
+dismantlement of its retired oil and gas properties is as follows:
+32 PROVISIONS
+(ii) These corporate bonds are carried at amortised cost, including USD denominated corporate bonds of RMB 17,902 million, and RMB denominated corporate bonds
+of RMB 36,000 million (2016: USD denominated corporate bonds of RMB 18,985 million, and RMB denominated corporate bonds of RMB 65,500 million). At 31
+December 2017, corporate bonds of RMB 17,902 million (2016: RMB 18,985 million) are guaranteed by Sinopec Group Company.
+(i) The company issued 182-day corporate bonds of face value RMB 6 billion to corporate investors in the PRC debenture market on 12 September 2016 at par value of
+RMB 100. The effective cost of the 182-day corporate bonds is 2.54% per annum. The short-term bonds were due on 14 March 2017 and have been fully paid by the
+Group at maturity.
+54,985
+(29,500)
+Utilised for the year
+39,407
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+During the year ended 31 December 2010, the Company issued 88,774 listed A shares with a par value of RMB 1.00 each, as a result of exercise of
+188,292 warrants entitled to the Bonds with Warrants.
+In July 2001, the Company issued 2.8 billion listed A shares with a par value of RMB 1.00 each at RMB 4.22 by way of a public offering to natural
+persons and institutional investors in the PRC.
+In October 2000, the Company issued 15,102,439,000 H shares with a par value of RMB 1.00 each, representing 12,521,864,000 H shares and
+25,805,750 American Depositary Shares ("ADSS", each representing 100 H shares), at prices of HKD 1.59 per H share and USD 20.645 per ADS,
+respectively, by way of a global initial public offering to Hong Kong and overseas investors. As part of the global initial public offering, 1,678,049,000
+state-owned ordinary shares of RMB 1.00 each owned by Sinopec Group Company were converted into H shares and sold to Hong Kong and
+overseas investors.
+Pursuant to the resolutions passed at an Extraordinary General Meeting held on 25 July 2000 and approvals from relevant government authorities,
+the Company is authorised to increase its share capital to a maximum of 88.3 billion shares with a par value of RMB 1.00 each and offer not more
+than 19.5 billion shares with a par value of RMB 1.00 each to investors outside the PRC. Sinopec Group Company is authorised to offer not more
+than 3.5 billion shares of its shareholdings in the Company to investors outside the PRC. The shares sold by Sinopec Group Company to investors
+outside the PRC would be converted into H shares.
+The Company was established on 25 February 2000 with a registered capital of 68.8 billion domestic state-owned shares with a par value of RMB 1.00
+each. Such shares were issued to Sinopec Group Company in consideration for the assets and liabilities transferred to the Company (Note 1).
+121,071
+121,071
+25,513
+25,513
+95,558
+95,558
+RMB million
+RMB million
+2016
+At 31 December
+At 31 December
+2017
+Total
+95,557,771,046 domestic listed A shares (2016: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 overseas listed H shares (2016: 25,513,438,600) of RMB 1.00 each
+Registered, issued and fully paid:
+The Group
+34 SHARE CAPITAL
+(22,532)
+31,370
+84,485
+53,902
+6,000
+16,822
+RMB million
+RMB million
+2016
+At 31 December
+At 31 December
+2017
+62,461
+(150)
+44,772
+Long-term loans are primarily unsecured, and carried at amortised costs.
+Total
+After five years
+Between two and five years
+Between one and two years
+The maturity analysis of the Group's long-term loans is as follows:
+67,754
+43,320
+(2,014)
+Total
+and fellow subsidiaries
+Long-term loans from Sinopec Group Company
+Less: Current portion
+3,957
+44,922
+199,682
+2,694
+Note:
+Total
+Less: Current portion
+- Corporate Bonds (ii)
+Short-term corporate bonds (i)
+Debentures payable:
+RMB million
+2016
+At 31 December
+At 31 December
+2017
+RMB million
+The Group
+31 DEBENTURES PAYABLE
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+122
+Financial Statements (PRC)
+121
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+62,461
+67,754
+1,779
+56,725
+The PRC Company Law and Articles of Association of the Company have set out the following profit appropriation plans:
+1,057
+(b) After the transfer to the statutory surplus reserve, a transfer to discretionary surplus reserve can be made upon the passing of a resolution at the
+shareholders' meeting.
+26,668
+RMB million
+RMB million
+2016
+2017
+2,218
+1,709
+1,933
+1,468
+21,313
+133
+152
+89
+RMB million
+RMB million
+2016
+2017
+Note:
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+Write-down of deferred tax assets
+152
+(10,317)
+(72)
+16,279
+(834)
+228
+958
+1,485
+(453)
+(613)
+299
+(1,394)
+83
+(793)
+(2,757)
+(5,939)
+1,569
+1,936
+19,969
+21,643
+79,877
+86,573
+RMB million
+RMB million
+2016
+2017
+20,707
+Tax effect of tax losses not recognised
+26
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of preferential tax rate (i)
+3,987
+427
+RMB million
+RMB million
+2016
+2017
+Total
+Others
+Government grants
+890
+The Group
+Other income are mainly the government grants related to the business activities.
+47 OTHER INCOME
+43,519
+1,576
+1,262
+38,058
+30,779
+19,060
+Total
+79
+48 NON-OPERATING INCOME
+1,317
+719
+4,706
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Tax effect of non-taxable income
+Tax effect of non-deductible expenses
+Expected income tax expense at a tax rate of 25%
+Profit before taxation
+Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows:
+Total
+Under-provision for income tax in respect of preceding year
+Deferred taxation
+Provision for income tax for the year
+The Group
+50 INCOME TAX EXPENSE
+Total
+Others
+Fines, penalties and compensation
+Donations
+The Group
+49 NON-OPERATING EXPENSES
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+127
+Effect of income taxes at foreign operations (ii)
+811
+(72)
+228
+(28,903)
+126
+(2,553)
+(5,610)
+1,719
+(4,707)
+(30,779)
+(19,060)
+4,336
+676
+(11,364)
+216
+1,528
+1,518
+7,467
+6,876
+8,833
+9,161
+99,592
+106,149
+17,076
+13
+160
+(31,151)
+(22,549)
+Financial Statements (PRC)
+129
+10
+124,458
+124,468
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+14
+113,204
+113,218
+2016
+RMB million
+2017
+RMB million
+55,535
+68,933
+(11,250)
+124,468
+124,468
+RMB million
+113,218
+RMB million
+2016
+2017
+214,543
+190,935
+81,691
+63,762
+21,791
+59,170
+70,294
+RMB million
+Depreciation of fixed assets
+Impairment losses on assets
+Net profit
+Add:
+(a) Reconciliation of net profit to cash flows from operating activities:
+The Group
+52 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+128
+Pursuant to the shareholders' approval at the Annual General Meeting on 18 May 2016, a final dividend of RMB 0.06 per share totaling RMB 7,264
+million of the year ended 31 December 2015 was declared.
+Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 26 August 2016, the directors authorised
+to declare the interim dividends for the year ended 31 December 2016 of RMB 0.079 per share totaling RMB 9,565 million.
+Pursuant to the shareholders' approval at the Annual General Meeting on 28 June 2017, a final dividend of RMB 0.17 per share totaling RMB
+20,582 million of the year ended 31 December 2016 was declared.
+Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 25 August 2017, the directors authorised
+to declare the interim dividends for the year ended 31 December 2017 of RMB 0.10 per share totaling RMB 12,107 million.
+(b) Dividends of ordinary shares declared during the year
+Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 23 March 2018, the directors authorised
+to declare the final dividends during the year ended 31 December 2017 of RMB 0.40 per share totaling RMB 48,428 million. Dividends declared
+after the balance sheet date are not recognised as a liability at the balance sheet date.
+(a) Dividends of ordinary shares declared after the balance sheet date
+51 DIVIDENDS
+(ii) It is mainly due to the foreign operation in the Republic of Angola ("Angola") calculated the assessable income in accordance with the relevant income tax rules and
+regulations of Angola, and taxed at 50% of the assessable income as determined.
+(i) The provision for PRC current income tax is based on a statutory income tax rate of 25% of the assessable income of the Group as determined in accordance with the
+relevant income tax rules and regulations of the PRC, except for certain entities of the Group in western regions in the PRC are taxed at preferential income tax rate of
+15% through the year 2020.
+20,707
+16,279
+Amortisation of intangible assets and long-term deferred expenses
+89
+Dry hole costs written off
+Fair value loss
+RMB million
+2016
+2017
+Cash at the end of the year
+- Demand deposits
+- Cash on hand
+Cash at bank and on hand
+(c) The analysis of cash held by the Group is as follows:
+Net (decrease)/increase of cash
+Less: Cash at the beginning of the year
+Cash balance at the end of the year
+(b) Net change in cash:
+Net cash flow from operating activities
+Increase in operating payables
+Increase in operating receivables
+Safety fund reserve
+Increase in inventories
+Decrease in deferred tax liabilities
+(Increase)/decrease in deferred tax assets
+Investment income
+Financial expenses
+Net loss on disposal of non-current assets
+Others
+3,941
+Gain on remeasurement of interests in Shanghai SECCO (Note53)
+8,162
+5,645
+859
+9,021
+2016
+RMB million
+RMB million
+6,368
+723
+Interest income
+Accretion expenses (Note 32)
+Net interest expenses
+1,501
+Less: Capitalised interest expenses
+2017
+The Group
+41 FINANCIAL EXPENSES
+The applicable tax rate of the taxes and surcharges are set out in Note 4.
+232,006
+235,292
+2,449
+5,459
+3,871
+Interest expenses incurred
+52,886
+(5,254)
+(3,218)
+2016
+RMB million
+2017
+RMB million
+1,770,651
+74,854
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+126
+Exploration expenses include geological and geophysical expenses and written-off of unsuccessful dry hole costs.
+43 EXPLORATION EXPENSES
+Total
+Other expenses
+Exploration expenses (including dry holes)
+Depreciation, depletion and amortization
+Personnel expenses
+Purchased crude oil, products and operating supplies and expenses
+The operation costs, selling and distribution expenses, general and administrative expenses and exploration expenses (including dry holes) in
+consolidated income statement classified by nature are as follows:
+42 CLASSIFICATION OF EXPENSES BY NATURE
+The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2017 by the Group ranged from 2.37%
+to 4.41% (2016: 2.65% to 4.82%).
+6,611
+1,560
+Total
+610
+(332)
+Net foreign exchange (gain)/loss
+4,841
+13,695
+13,811
+18,155
+59,723
+1,880,190
+RMB million
+2,300,470
+RMB million
+The Group
+2017
+RMB million
+2016
+RMB million
+The Company
+2017
+2016
+Operating costs
+Total
+Income from other operations
+Income from principal operations
+39 OPERATING INCOME AND OPERATING COSTS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+Financial Statements (PRC)
+Financial Statements (PRC)
+125
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+2,360,193
+1,379,691
+1,890,398
+1,930,911
+18,274
+2016
+RMB million
+193,836
+RMB million
+192,907
+Total
+Other taxes
+Education surcharge
+Resources tax
+City construction tax
+Consumption tax
+2017
+The Group
+40 TAXES AND SURCHARGES
+The income from principal operations mainly represents revenue from sales of crude oil, natural gas, refined petroleum products and chemical
+products. The income from other operations mainly represents revenue from sale of materials, service, rental income and others. Operating costs
+primarily represent the products cost related to the principal operations. The Group's segmental information is set out in Note 59.
+633,114
+513,514
+726,178
+29,967
+696,211
+857,478
+33,378
+824,100
+1,492,165
+50,721
+(a) 10% of the net profit is transferred to the statutory surplus reserve. In the event that the reserve balance reaches 50% of the registered capital,
+no transfer is needed;
+63,887
+108,425
+9,306
+16,525
+Investment (loss)/income from disposal of long-term
+Income from investment accounted for under equity method
+under cost method
+Income from investment of subsidiaries accounted for
+RMB million
+RMB million
+RMB million
+31,118
+5,774
+RMB million
+2017
+2016
+The Company
+The Group
+2017
+(216)
+(13)
+(67)
+41
+46 INVESTMENT INCOME
+2016
+17,769
+3,749
+equity investments
+20,562
+20,562
+interests in the Pipeline Ltd (Note 13(vi)).
+(135)
+(88)
+293
+(916)
+(Losses)/gains from ineffective portion of cash flow hedge
+Investment income on loss of control and remeasuring
+355
+(752)
+Investment income from holding/disposal of financial assets and
+liabilities and derivative financial instruments at fair value through
+profit or loss
+4
+13
+173
+199
+available-for-sale financial assets
+Investment income from holding/disposal of
+(6)
+(21)
+11
+(26)
+Total
+Others
+11
+103
+2017
+The Group
+45 GAIN FROM CHANGES IN FAIR VALUE
+Total
+Others
+Intangible assets (Note 16)
+Construction in Progress (Note 15)
+Fixed assets (Note 14)
+Long-term equity investment (Note 13)
+Inventories (Note 11)
+Receivables (Note 8,9,10)
+The Group
+44 IMPAIRMENT LOSSES
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+1,626,905
+2,036,470
+63,867
+64,566
+11.035
+11,089
+2016
+115,310
+RMB million
+110
+(160)
+(157)
+Changes in fair value of financial assets and financial liabilities at fair value through loss, net
+Unrealised gains from ineffective portion cash flow hedges, net
+2016
+RMB million
+RMB million
+2017
+17,076
+21,791
+6
+215
+11
+19
+1,486
+252
+14,921
+19,836
+1
+936
+420
+423
+231
+RMB million
+8,289
+(895)
+196
+10,228
+71,940
+120
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+26 EMPLOYEE BENEFITS PAYABLE
+At 31 December 2017 and 2016, the Group's employee benefits payable primarily represented wages payable and social insurance payables.
+27 TAXES PAYABLE
+The Group
+At 31 December
+2017
+Changes in fair value of available-for-sale financial assets recongnised during the year
+Less: Total amounts transferred to profit or loss from
+RMB million
+175
+6,051
+13,015
+29,682
+At 31 December
+2016
+8,668
+8,899
+RMB million
+39,623
+Related parties under common control of a parent company with the Company:
+(2) Related parties not having the ability to exercise control over the Group
+Types of legal entity
+RMB 274,867 million
+Wang Yupu
+State-owned
+Exploration, production, storage and transportation (including pipeline transportation), sales
+and utilisation of crude oil and natural gas; refining; wholesale and retail of gasoline, kerosene
+and diesel; production, sales, storage and transportation of petrochemical and other chemical
+products; industrial investment and investment management; exploration, construction, installation
+and maintenance of petroleum and petrochemical constructions and equipments; manufacturing
+electrical equipment; research, development, application and consulting services of information
+technology and alternative energy products; import & export of goods and technology.
+Ultimate holding company
+No. 22, Chaoyangmen North Street, Chaoyang District, Beijing
+Registered capital
+Authorised representative
+Sinopec Group Company is an enterprise controlled by the PRC government. Sinopec Group Company directly and indirectly holds 71.32%
+shareholding of the Company.
+:
+Principal activities
+Registered address
+China Petrochemical Corporation
+9111000010169286X1
+Sinopec Finance (Note)
+Unified social credit identifier
+The name of the company
+(1) Related parties having the ability to exercise control over the Group
+54 RELATED PARTIES AND RELATED PARTY TRANSACTIONS
+As Sinopec Group Company controls both the Group and SAMC, the non-cash transaction described above between Sinopec and SAMC has been
+accounted as business combination under common. Accordingly, the assets and liabilities of Gaoqiao Branch of SAMC have been accounted for
+at historical cost, and the consolidated financial statements of the Group prior to these acquisitions have been restated to include the results of
+operation and the assets and liabilities of Gaoqiao Branch of SAMC on a combined basis.
+Pursuant to the resolution passed at the Directors' meeting on 29 October 2015, the Company entered into the JV Agreement with Sinopec
+Assets Management Corporation ("SAMC") in relation to the formation of the Gaoqiao Petrochemical Co., Ltd. According to the JV Agreement,
+the Company and SAMC jointly set up Gaoqiao Petrochemical Co., Ltd. for RMB 100 million in cash in 2016. Subsequently, the Company
+subscribed capital contribution with the net assets of Gaoqiao Branch of the Company and SAMC subscribed capital contribution with the net
+assets of Gaoqiao Branch of SAMC. The capital contribution was completed on 1 June 2016, after which the Company held 55% of Gaoqiao
+Petrochemical Co., Ltd.'s voting rights and became the parent company of Gaoqiao Petrochemical Co., Ltd.
+(b) Business combination involving entities under common control
+53 BUSINESS COMBAINATION (Continued)
+Relationship with the Group
+Sinopec Shengli Petroleum Administration Bureau
+Sinopec Petroleum Storage and Reserve Limited
+Sinopec Assets Management Corporation
+(3) The principal related party transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures, which were
+carried out in the ordinary course of business, are as follows:
+54 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+132
+Financial Statements (PRC)
+131
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Note: Sinopec Finance is under common control of a parent company with the Company and is also the associate of the Group.
+Sinopec SABIC Tianjin
+Sinopec Zhongyuan Petroleum Exploration Bureau
+YASREF
+BASF-YPC
+FREP
+Joint ventures of the Group:
+Zhongtian Synergetic Energy
+CIR
+SIBUR
+Sinopec Finance
+Pipeline Ltd
+Associates of the Group:
+for the year ended 31 December 2017
+Sinopec Century Bright Capital Investment Limited
+Sinopec Engineering Incorporation
+Taihu
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+10,196
+As of Acquisition Date, a gain of RMB 3,941 million was recognised as a result of remeasuring the 50% equity interest held before the
+Transaction to its fair value, which is included in investment income (Note 46) in the Group's consolidated income statement for the year ended
+31 December 2017.
+Accounts and other payables
+Total assets
+6,582
+5,887
+12,883
+Total non-current assets
+7
+Other non-current assets
+19
+12
+11
+Deferred tax assets
+168
+117
+117
+Long-term deferred expenses
+613
+662
+2,937
+Intangible assets
+117
+229
+231
+Construction in progress
+5,665
+Bills payable
+Advances from customers
+Employee benefits payable
+Taxes payable
+The goodwill is attributable to the high profitability of the acquired business and synergy to be achieved post the Transaction among Shanghai
+SECCO and the Group's existing petrochemical operations located in eastern China.
+Sales of goods
+12,405
+17,729
+Net assets acquired
+(1,786)
+(1,984)
+(4,032)
+(4,032)
+(538)
+(1,438)
+(1,438)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+(99)
+(383)
+(96)
+(96)
+(383)
+(35)
+(936)
+(2,115)
+(2,115)
+12,180
+16,437
+23,547
+Deferred tax liabilities
+Total current liabilities
+(376)
+Purchases
+Operating lease charges for land
+Exploration and development services
+⋅
+where there is no government-prescribed price, the government-guidance price;
+•
+the government-prescribed price;
+•
+(a) The Company has entered into a non-exclusive "Agreement for Mutual Provision of Products and Ancillary Services" ("Mutual Provision
+Agreement") with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the
+Group with certain ancillary production services, construction services, information advisory services, supply services and other services and
+products. While each of Sinopec Group Company and the Company is permitted to terminate the Mutual Provision Agreement upon at least
+six months' notice, Sinopec Group Company has agreed not to terminate the agreement if the Group is unable to obtain comparable services
+from a third party. The pricing policy for these services and products provided by Sinopec Group Company to the Group is as follows:
+In connection with the Reorganisation, the Company and Sinopec Group Company entered into a number of agreements under which 1) Sinopec
+Group Company will provide goods and products and a range of ancillary, social and supporting services to the Group and 2) the Group will sell
+certain goods to Sinopec Group Company. These agreements impacted the operating results of the Group for the year ended 31 December 2017.
+The terms of these agreements are summarised as follows:
+(3) The principal related party transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures, which were
+carried out in the ordinary course of business, are as follows: (Continued)
+54 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+(x) Interest expense represents interest charges on the loans and advances obtained from Sinopec Group Company and fellow subsidiaries.
+(ix) Interest income represents interest received from deposits placed with Sinopec Finance and Sinopec Century Bright Capital Investment Limited, finance companies
+controlled by Sinopec Group Company. The applicable interest rate is determined in accordance with the prevailing saving deposit rate.
+(viii) Agency commission income represents commission earned for acting as an agent in respect of sales of products and purchase of materials for certain entities
+owned by Sinopec Group Company.
+(vii) Operating lease charges represent the rental paid to Sinopec Group Company for operating leases in respect of land, buildings and equipment.
+(vi) Ancillary and social services represent expenditures for social welfare and support services such as educational facilities, media communication services, sanitation,
+accommodation, canteens, property maintenance and management services.
+(v) Production related services represent ancillary services rendered in relation to the Group's operations such as equipment repair and general maintenance,
+insurance premium, technical research, communications, firefighting, security, product quality testing and analysis, information technology, design and engineering,
+construction of oilfield ground facilities, refineries and chemical plants, manufacture of replacement parts and machinery, installation, project management and
+environmental protection.
+(iii) Transportation and storage represents the cost for the use of railway, road and marine transportation services, pipelines, loading, unloading and storage facilities.
+(iv) Exploration and development services comprise direct costs incurred in the exploration and development such as geophysical, drilling, well testing and well
+measurement services.
+(ii) Purchases represent the purchase of material and utility supplies directly related to the Group's operations such as the procurement of raw and ancillary materials
+and related services, supply of water, electricity and gas.
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+Note:
+As at 31 December 2017 and 2016, there was no guarantee given to banks by the Group in respect of banking facilities to Sinopec Group
+Company and fellow subsidiaries, associates and joint ventures, except for the disclosure set out in Note 58(b). Guarantees given to banks by the
+Group in respect of banking facilities to associates and joint ventures are disclosed in Note 58(b).
+(xi) The Group obtained or repaid loans from or to Sinopec Group Company and fellow subsidiaries.
+•
+where none of the above is applicable, the price to be agreed between the parties, which shall be based on a reasonable cost incurred in
+providing such services plus a profit margin not exceeding 6%.
+(b) The Company has entered into a non-exclusive "Agreement for Provision of Cultural and Educational, Health Care and Community Services"
+with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the Group with certain
+cultural, educational, health care and community services on the same pricing terms and termination conditions as agreed to in the above
+Mutual Provision Agreement.
+Long-term loans (including current portion) (Note)
+Short-term loans
+Other non-current liabilities
+Other payables
+Advances from customers
+Accounts payable
+Other non-current assets
+Prepayments and other current assets
+Other receivables
+Accounts receivable
+Cash and cash equivalents
+At 31 December
+At 31 December
+Other related companies
+The ultimate holding company
+At 31 December At 31 December
+2017
+2016
+RMB million
+(4) Balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+The balances with the Group's related parties at 31 December 2017 and 2016 are as follows:
+54 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+133
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+(d) The Company has entered into agreements with Sinopec Group Company effective from 1 January 2000 under which the Group has been
+granted the right to use certain trademarks, patents, technology and computer software developed by Sinopec Group Company.
+(e) The Company has entered into a service station franchise agreement with Sinopec Group Company effective from 1 January 2000 under
+which its service stations and retail stores would exclusively sell the refined products supplied by the Group.
+(c) The Company has entered into a number of lease agreements with Sinopec Group Company to lease certain lands and buildings effective
+on 1 January 2000. The lease term is 40 or 50 years for lands and 20 years for buildings, respectively. The Company and Sinopec Group
+Company can renegotiate the rental amount every three years for land. The Company and Sinopec Group Company can renegotiate the rental
+amount for buildings every year. However such amount cannot exceed the market price as determined by an independent third party.
+Included in the transactions disclosed above, for the year ended 31 December 2017 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 128,350 million (2016: RMB 114,526 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 112,619
+million (2016: RMB 96,023 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 6,652
+million (2016: RMB 6,584 million), operating lease charges for land and buildings paid by the Group of RMB 8,015 million and 510 million
+(2016: RMB 10,474 million and RMB 449 million), respectively and interest expenses of RMB 554 million (2016: RMB 996 million); and b) sales
+by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 60,045 million (2016: RMB 56,251 million), comprising
+RMB 59,213 million (2016: RMB 56,010 million) for sales of goods, RMB 807 million (2016: RMB 209 million) for interest income and RMB 25
+million (2016: RMB 32 million) for agency commission income.
+The amounts set out in the table above in respect of the year ended 31 December 2017 and 2016 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+(24,877)
+(21,770)
+(v)
+27,201
+21,210
+(iv)
+1,333
+7,716
+(iii)
+118,242
+165,993
+(ii)
+194,179
+244,211
+(i)
+2016
+RMB million
+RMB million
+The Group
+2017
+Note
+Interest expense
+Interest income
+Agency commission income
+Other operating lease charges
+Operating lease charges for buildings
+4,860
+Ancillary and social services
+Production related services
+20,824
+Transportation and storage
+10,816
+6,653
+Net loans obtained from/(repaid to) related parties
+Net deposits placed with related parties
+5,279
+(xi)
+(7,441)
+(ix)
+996
+554
+(x)
+209
+807
+(ix)
+129
+127
+(viii)
+456
+626
+(vii)
+449
+510
+(vii)
+10,474
+8,015
+(vii)
+6,584
+(vi)
+9,587
+Total current assets
+5,598
+Total
+120,386
+57,997
+116,379
+31,720
+178,383
+148,099
+These capital commitments relate to oil and gas exploration and development, refining and petrochemical production capacity expansion projects,
+the construction of service stations and oil depots and investment commitments.
+Note:
+(i) The investment commitments of the Group is RMB 3,364 million (2016: RMB 4,173 million).
+Commitments to joint ventures
+Pursuant to certain of the joint venture agreements entered into by the Group, the Group is obliged to purchase products from the joint ventures
+based on market prices.
+Exploration and production licenses
+Authorised and contracted for (i)
+Authorised but not contracted for
+Exploration licenses for exploration activities are registered with the Ministry of Land and Resources. The maximum term of the Group's exploration
+licenses is 7 years, and may be renewed twice within 30 days prior to expiration of the original term with each renewal being for a two-year term.
+The Group is obligated to make progressive annual minimum exploration investment relating to the exploration blocks in respect of which the license
+is issued. The Ministry of Land and Resources also issues production licenses to the Group on the basis of the reserve reports approved by relevant
+authorities. The maximum term of a full production license is 30 years unless a special dispensation is given by the State Council. The maximum
+term of the production licenses issued to the Group is 80 years as a special dispensation was given to the Group by the State Council. The Group's
+production license is renewable upon application by the Group 30 days prior to expiration.
+Estimated future annual payments of the Group are as follows:
+At 31 December
+2017
+At 31 December
+2016
+RMB million
+RMB million
+Within one year
+Between one and two years
+205
+83
+263
+123
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Land and Resources annually
+and recognised in profit and loss. Payments incurred were approximately RMB 308 million for the year ended 31 December 2017 (2016: RMB 333
+million).
+At 31 December
+2016
+RMB million
+2017
+RMB million
+At 31 December
+At 31 December 2017 and 2016, the future minimum lease payments of the Group under operating leases are as follows:
+Within one year
+Between one and two years
+Between two and three years
+Between three and four years
+Between four and five years
+After five years
+Total
+Capital commitments
+At 31 December
+2016
+RMB million
+RMB million
+11,114
+14,917
+14,228
+10,730
+13,966
+10,552
+13,217
+10,428
+12,980
+202,806
+275,570
+257,122
+344,878
+At 31 December 2017 and 2016, the capital commitments of the Group are as follows:
+Between two and three years
+Between three and four years
+32
+25
+940
+658
+13,520
+9,732
+11,545
+10,669
+22,872
+24,192
+(i) The group provided a guarantee in respect to standby credit facilities granted to Zhongtian Synergetic Energy by banks amount to RMB
+17,050 million. As at 31 December 2017, the amount withdrawn by Zhongtian Synergetic Energy from banks and guaranteed by the group
+was RMB 13,520 million.
+The Group monitors the conditions that are subject to the guarantees to identify whether it is probable that a loss will occur, and recognises any
+such losses under guarantees when those losses are reliably estimable. At 31 December 2017 and 2016, it was not probable that the Group will
+be required to make payments under the guarantees. Thus no liabilities have been accrued for a loss related to the Group's obligation under these
+guarantee arrangements.
+Environmental contingencies
+Under existing legislation, management believes that there are no probable liabilities that will have a material adverse effect on the financial
+position or operating results of the Group. The PRC government, however, has moved, and may move further towards more rigorous enforcement
+of applicable laws, and towards the adoption of more stringent environmental standards. Environmental liabilities are subject to considerable
+uncertainties which affect the Group's ability to estimate the ultimate cost of remediation efforts. These uncertainties include (i) the exact nature and
+extent of the contamination at various sites including, but not limited to refineries, oil fields, service stations, terminals and land development areas,
+whether operating, closed or sold, (ii) the extent of required cleanup efforts, (iii) varying costs of alternative remediation strategies, (iv) changes.
+in environmental remediation requirements, and (v) the identification of new remediation sites. The amount of such future cost is indeterminable
+due to such factors as the unknown magnitude of possible contamination and the unknown timing and extent of the corrective actions that may be
+required. Accordingly, the outcome of environmental liabilities under proposed or future environmental legislation cannot reasonably be estimated at
+present, and could be material.
+The Group paid normal routine pollutant discharge fees of approximately RMB 7,851 million for the year ended 31 December 2017 (2016: RMB 6,358
+million).
+Legal contingencies
+The Group is a defendant in certain lawsuits as well as the named party in other proceedings arising in the ordinary course of business.
+Management has assessed the likelihood of an unfavourable outcome of such contingencies, lawsuits or other proceedings and believes that any
+resulting liabilities will not have a material adverse effect on the financial position, operating results or cash flows of the Group.
+59 SEGMENT REPORTING
+Segment information is presented in respect of the Group's operating segments. The format is based on the Group's management and internal
+reporting structure.
+In a manner consistent with the way in which information is reported internally to the Group's chief operating decision maker for the purposes of
+resource allocation and performance assessment, the Group has identified the following five reportable segments. No operating segments have been
+aggregated to form the following reportable segments.
+(i) Exploration and production ― which explores and develops oil fields, produces crude oil and natural gas and sells such products to the refining
+segment of the Group and external customers.
+(ii) Refining ― which processes and purifies crude oil, which is sourced from the exploration and production segment of the Group and external
+suppliers, and manufactures and sells petroleum products to the chemicals and marketing and distribution segments of the Group and external
+customers.
+(iii) Marketing and distribution which owns and operates oil depots and service stations in the PRC, and distributes and sells refined petroleum
+products (mainly gasoline and diesel) in the PRC through wholesale and retail sales networks.
+(iv) Chemicals which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products to external
+customers.
+(v) Corporate and others - which largely comprise the trading activities of the import and export companies of the Group and research and
+development undertaken by other subsidiaries.
+The segments were determined primarily because the Group manages its exploration and production, refining, marketing and distribution,
+chemicals, and corporate and others businesses separately. The reportable segments are each managed separately because they manufacture and/
+or distribute distinct products with different production processes and due to their distinct operating and gross margin characteristics.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+139
+RMB million
+The Group lease land and buildings, service stations and other equipment through non-cancellable operating leases. These operating leases do not
+contain provisions for contingent lease rentals. None of the rental agreements contains escalation provisions that may require higher future rental
+payments.
+RMB million
+2017
+28
+Between four and five years
+After five years
+Total
+28
+882
+1,258
+1,327
+12262
+24
+25
+867
+The implementation of commitments in previous year and the Group's commitments did not have material discrepancy.
+138
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+58 CONTINGENT LIABILITIES
+(a) The Company has been advised by its PRC lawyers that, except for liabilities constituting or arising out of or relating to the business assumed
+by the Company in the Reorganisation, no other liabilities were assumed by the Company, and the Company is not jointly and severally liable for
+other debts and obligations incurred by Sinopec Group Company prior to the Reorganisation.
+(b) At 31 December 2017 and 2016, guarantees by the Group in respect of facilities granted to the parties below are as follows:
+Financial Statements (PRC)
+Joint ventures
+Associates (i)
+Others
+Total
+At 31 December
+At 31 December
+2016
+Fixed assets
+Operating lease commitments
+for the year ended 31 December 2017
+2,541
+17,729
+20,270
+10,135
+10,135
+Shanghai SECCO
+RMB million
+Details of the net assets acquired are as follows:
+Goodwill (Note 17)
+Less: Net assets acquired
+- Acquisition-date fair value of the 50% equity interest held before the acquisition
+Total purchase consideration
+- Cash consideration for the purchase of 50% equity interest acquired
+Cash and cash equivalents
+Purchase consideration
+over acquiree
+million
+million
+RMB 7,205
+RMB 1,639
+end of year
+end of year
+the acquiree
+from
+Income of the
+of the
+of the
+Basis of acquiree from acquiree from acquiree from
+determination the acquisition the acquisition the acquisition the acquisition
+Acquisition on the acquisition
+date to
+date to
+date to
+date to
+date
+end of year
+end of year
+Acquirer gaining
+RMB 5,222 RMB 726
+actual control
+million
+million
+date
+26/10/2017
+Details of combination cost and goodwill are as follows:
+Bills receivable
+Accounts and other receivables
+Inventories
+10,550
+10,664
+2017
+386
+791
+761
+354
+1,349
+1,349
+1,643
+1,558
+1,702
+251
+558
+558
+621
+641
+2,343
+5,653
+2016
+Book value
+At December 31
+Book value
+at the
+Acquisition Date
+Fair value
+at the
+Acquisition Date
+5,653
+641
+Other current assets
+Prepayments
+Cash
+Acquisition
+method
+Share of
+acquired
+equity
+50%
+Cost of
+acquisition
+RMB 10,135
+million
+70
+70
+51
+Net cash generated from/
+(used in) operating activities
+51,038
+50,840
+2,758
+2.576
+7,078
+7,211
+(558)
+617
+968
+505
+1,639
+2.976
+3,636
+Note:
+(ii) The summarised consolidated statement of comprehensive income and cash flow of Shanghai SECCO presents the results from the acquisition date to 31 December
+2017.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+137
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+625
+57 COMMITMENTS
+25
+1,344
+SECCO
+Time of
+acquisition
+26/10/2017
+Shanghai
+Acquiree
+flow of
+Net cash
+Operating
+cash flow
+Net profits
+etc.
+Shanghai SECCO is principally engaged in the production and sale of petrochemical products including acrylonitrile, polystyrene, polyethylene,
+On 26 October 2017, a subsidiary of the Company, Gaoqiao Petrochemical Co., Ltd., purchased 50% equity interest in Shanghai SECCO from
+BP Chemicals East China Investment Limited with a cash consideration of RMB 10,135 million ("the Transaction"). Before the Transaction, the
+Company and one of its subsidiaries held 30% and 20% equity interest in Shanghai SECCO, respectively. After the Transaction, the Company,
+together with its subsidiaries, hold 100% equity interest of Shanghai SECCO, which became a subsidiary of the Company.
+Business combination under different control in this year
+(a) Business combination involving entities not under common control
+53 BUSINESS COMBAINATION
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+130
+235
+957
+545
+Dividends paid to minority
+interests
+9,544
+4,932
+563
+2016
+11,492
+19
+(7,521)
+(3,975)
+(4,174)
+(2,891)
+(2,351)
+(812)
+(376)
+(8,942)
+(10,922)
+(824)
+(7,118)
+Net current
+(168,366)
+Current liabilities
+1,489
+1,636
+11,602
+1,352
+1,196
+926
+992
+14,876
+19,866
+18,116
+(212,620)
+(liabilities)/assets
+(56,126)
+(47,106)
+14,686
+13,598
+12,797
+13,228
+13,089
+7,845
+9,925
+19,248
+19,743
+40,067
+34,769
+246,514
+253,455
+Non-current assets
+(6,032)
+(2,339)
+7,428
+(1,539)
+(1,155)
+114
+616
+5,934
+8,944
+17,292
+12,437
+19,555
+121,260
+156,494
+Current assets
+At 31
+SECCO
+Sinopec Kantons
+At 31
+December
+December
+December
+December
+At 31
+At 31
+Fujian Petrochemical
+Shanghai Petrochemical
+At 31
+At 31
+December
+December
+At 31
+SIPL
+At 31
+December
+2017
+2016
+2017
+December
+December
+At 31
+Marketing Company
+At 31
+Shanghai
+Summarised consolidated balance sheet
+Set out below are the summarised financial information which the amount before inter-company eliminations for each subsidiary that has minority
+interests that are material to the Group.
+Summarised financial information on subsidiaries with material minority interests
+56 PRINCIPAL SUBSIDIARIES (Continued)
+December
+Non-current liabilities
+At 31
+December
+At 31
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2016
+2017
+2017
+2016
+2017
+2016
+2017
+2016
+2017
+2016
+December
+December
+Zhonghan Wuhan
+At 31
+(1,774)
+(1,460) (28,523)
+(39,322)
+income/(loss)
+Total comprehensive
+1,558
+2,733
+726
+860
+1,046
+2,513
+2,757
+5,969
+6,152
+(4,604)
+1,075
+26.461
+27,517
+Profit/(loss) for the year
+11,703
+16,139
+5,222
+1,512
+1,498
+4,968
+6,068
+77,894
+92,014
+26,983
+4,016
+27,385
+(2,481)
+RMB million
+449
+349
+433
+1,256
+1,378
+2.966
+3,081
+(3,279)
+(38)
+9,028
+9,033
+minority interests
+(loss) attributable to
+Comprehensive income/
+1,558
+2,733
+726
+20
+879
+1,146
+2.513
+2,757
+5,988
+6.152
+396
+for the year ended 31 December 2017
+6,136
+1,221,530
+Marketing Company
+2017
+Year ended 31 December
+Shanghai
+Summarised consolidated statement of comprehensive income and cash flow
+14,686
+13,598
+11.057
+10.127
+10,659
+7,124
+9.244
+19,098
+19,597
+745
+6,246
+245,054
+215,681
+Net non-current assets
+(1,740)
+(3,101)
+(2,430)
+(721)
+(681)
+(150)
+(146)
+SIPL
+1,050,294
+2016
+2016
+Turnover
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2016
+2017
+2017
+2016
+Zhonghan Wuhan
+SECCO (ii)
+Sinopec Kantons
+2017
+2016
+Fujian Petrochemical
+2017
+2016
+Shanghai Petrochemical
+2017
+2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+At 31 December
+2017
+136
+Sinopec Yangzi Petrochemical Company Limited
+Sinopec Catalyst Company Limited
+(a) Subsidiaries acquired through group restructuring:
+China Petrochemical International Company Limited
+China International United Petroleum and Chemical
+Company Limited
+Full name of enterprise
+31 December
+Minority
+Interests at
+Percentage
+of equity
+interest/
+voting right
+held by
+31 December
+Actual
+investment at
+Registered
+capital/paid-
+The Company's principal subsidiaries have been consolidated into the Group's financial statements for the year ended 31 December 2017. The
+following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the Group:
+56 PRINCIPAL SUBSIDIARIES
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017 135
+If the costs of inventories become higher than their net realisable values, an allowance for diminution in value of inventories is recognised.
+Net realisable value represents the estimated selling price in the ordinary course of business, less the estimated costs of completion and the
+estimated costs necessary to make the sale. Management bases the estimates on all available information, including the current market prices of
+the finished goods and raw materials, and historical operating costs. If the actual selling prices were to be lower or the costs of completion were
+to be higher than estimated, the actual allowance for diminution in value of inventories would be higher than estimated.
+(e) Allowance for diminution in value of inventories
+Management estimates impairment losses for bad and doubtful debts resulting from the inability of the Group's customers to make the required
+payments. Management bases the estimates on the ageing of the accounts receivable balance, customer credit-worthiness, and historical write-
+off experience. If the financial condition of the customers were to deteriorate, actual write-offs would be higher than estimated.
+(d) Allowances for doubtful accounts
+Fixed assets are depreciated on a straight-line basis over the estimated useful lives of the assets, after taking into account the estimated residual
+value. Management reviews the estimated useful lives of the assets at least annually in order to determine the amount of depreciation expense
+to be recorded during any reporting year. The useful lives are based on the Group's historical experience with similar assets and taking into
+account anticipated technological changes. The depreciation expense for future years is adjusted if there are significant changes from previous
+estimates.
+(c) Depreciation
+If circumstances indicate that the net book value of a long-lived asset may not be recoverable, the asset may be considered "impaired", and
+an impairment loss may be recognised in accordance with "ASBE 8 - Impairment of Assets". The carrying amounts of long-lived assets are
+reviewed periodically in order to assess whether the recoverable amounts have declined below the carrying amounts. These assets are tested for
+impairment whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. When such a
+decline has occurred, the carrying amount is reduced to recoverable amount. For goodwill, the recoverable amount is estimated annually. The
+recoverable amount is the greater of the fair value less costs to sell and the present value of expected future cash flows. It is difficult to precisely
+estimate the fair value because quoted market prices for the Group's assets or cash-generating units are not readily available. In determining
+the value of expected future cash flows, expected cash flows generated by the asset or the cash-generating unit are discounted to their present
+value, which requires significant judgement relating to sales volume, selling price, amount of operating costs and discount rate. The Group uses
+all readily available information in determining an amount that is a reasonable approximation of recoverable amount, including estimates based
+on reasonable and supportable assumptions and projections of sales volume, selling price, amount of operating costs and discount rate.
+(b) Impairment for assets
+Sinopec Pipeline Storage & Transportation
+Company Limited
+Despite the inherent imprecision in these engineering estimates, these estimates are used in determining depreciation expense, impairment
+expense and future dismantlement costs. Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based
+on volumes produced and reserves.
+Sinopec Lubricant Company Limited
+Liability Company
+Trading of petrochemical products
+RMB million
+%
+2017
+the Group
+2017
+million
+million
+up capital
+Principal activities
+(d) Subsidiaries acquired through business combination not under common control:
+Sinopec Zhanjiang Dongxing Petrochemical
+Trading of crude oil and petroleum products
+Gaoqiao Petrochemical Company Limited (Note 53)
+Sinopec Qingdao Petrochemical Company Limited
+Company Limited
+(c) Subsidiaries acquired through business combination
+Sinopec Hainan Refining and Chemical
+Sinopec-SK(Wuhan) Petrochemical Company Limited
+("Zhonghan Wuhan")
+Sinopec Qingdao Refining and Chemical
+Company Limited
+Sinopec Beihai Refining and Chemical Limited
+Liability Company
+Sinopec Overseas Investment Holding Limited ("SOIH")
+Sinopec Chemical Sales Company Limited
+Sinopec Great Wall Energy & Chemical
+Company Limited
+Sinopec International Petroleum Exploration and
+Production Limited ("SIPL")
+(b) Subsidiaries established by the Group:
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical") (i)
+Sinopec Kantons Holdings Limited ("Sinopec Kantons")
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+("Marketing Company")
+Sinopec Marketing Company Limited
+Sinopec Yizheng Chemical Fibre Limited
+RMB 1,400
+Future dismantlement costs for oil and gas properties are estimated with reference to engineering estimates after taking into consideration
+the anticipated method of dismantlement required in accordance with industry practices in the similar geographic area, including estimation
+of economic life of oil and gas properties, technology and price level. The present values of these estimated future dismantlement costs are
+capitalised as oil and gas properties with equivalent amounts recognised as provisions for dismantlement costs.
+The accounting for the exploration and production segment's oil and gas activities is subject to accounting rules that are unique to the oil and
+gas industry. The Group has used the successful efforts method to account for oil and gas business activities. The successful efforts method
+reflects the volatility that is inherent in exploring for mineral resources in that costs of unsuccessful exploratory efforts are charged to expense.
+These costs primarily include dry hole costs, seismic costs and other exploratory costs.
+178
+1,969
+2,763
+13
+12
+104
+19,416
+22,806
+3
+43
+20,385
+20,726
+570
+189
+12,827
+5,411
+33
+10,953
+12,884
+25
+40,073
+47,514
+RMB million
+RMB million
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+33
+19,430
+Engineering estimates of the Group's oil and gas reserves are inherently imprecise and represent only approximate amounts because of the
+subjective judgements involved in developing such information. There are authoritative guidelines regarding the engineering criteria that have
+to be met before estimated oil and gas reserves can be designated as "proved". Proved and proved developed reserves estimates are updated
+at least annually and take into account recent production and technical information about each field. In addition, as prices and cost levels
+change from year to year, the estimate of proved and proved developed reserves also changes. This change is considered a change in estimate
+for accounting purposes and is reflected on a prospective basis in related depreciation rates. Oil and gas reserves have a direct impact on
+the assessment of the recoverability of the carrying amounts of oil and gas properties reported in the financial statements. If proved reserves
+estimates are revised downwards, earnings could be affected by changes in depreciation expense or an immediate write-down of the property's
+carrying amount.
+10,165
+23,297
+(a) Oil and gas properties and reserves
+The selection of critical accounting policies, the judgements and other uncertainties affecting application of those policies and the sensitivity of
+reported results to changes in conditions and assumptions are factors to be considered when reviewing the financial statements. The significant
+accounting policies are set forth in Note 3. The Group believes the following critical accounting policies involve the most significant judgements and
+estimates used in the preparation of the financial statements.
+The Group's financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that underlie the
+preparation of the financial statements. The Group bases the assumptions and estimates on historical experience and on various other assumptions
+that it believes to be reasonable and which form the basis for making judgements about matters that are not readily apparent from other sources.
+On an on-going basis, management evaluates its estimates. Actual results may differ from those estimates as facts, circumstances and conditions
+change.
+55 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+6,147
+5,768
+499
+5,648
+5,344
+424
+2016
+RMB thousand
+RMB thousand
+2017
+134 Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Total
+Short-term employee benefits
+Retirement scheme contributions
+Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the
+Group, directly or indirectly, including directors and supervisors of the Group. The key management personnel compensations are as follows:
+(5) Key management personnel emoluments
+As at and for the year ended 31 December 2017 and 2016, no individually significant impairment losses for bad and doubtful debts were
+recorded in respect of amounts due from Sinopec Group Company and fellow subsidiaries, associates and joint ventures.
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures, other than short-term loans and long-term
+loans, bear no interest, are unsecured and are repayable in accordance with normal commercial terms. The terms and conditions associated
+with short-term loans and long-term loans payable to Sinopec Group Company and fellow subsidiaries are set out in Note 22 and Note 30.
+Note: The long-term borrowings mainly include an interest-free loan with a maturity period of 20 years amounting to RMB 35,560 million from the Sinopec Group
+Company through the Sinopec Finance. This borrowing is a special arrangement to reduce financing costs and improve liquidity of the Company during its initial
+global offering in 2000.
+44,922
+45,334
+18,430
+9,998
+RMB 1,856
+18,111
+27
+2,153
+75.00
+RMB 2,990
+RMB 3,986
+Manufacturing of intermediate petrochemical
+under common control:
+ethylene and downstream byproducts
+3,941
+65.00
+RMB 4,076
+RMB 6,270
+Production, sale, research and development of
+products and petroleum products
+1,527
+85.00
+RMB 4,250
+RMB 5,000
+Manufacturing of intermediate petrochemical
+98
+98.98
+RMB 5,240
+RMB 5,294
+49
+100.00
+RMB 22,759
+products and petroleum products
+RMB 22,761
+Manufacturing of intermediate petrochemical
+RMB 7,233
+Note:
+(i) The Group consolidated the financial statements of the entity because it is exposed to, or has rights to, variable returns from its involvement with the entity and has
+the ability to affect those return through its power over the entity.
+100.00
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong, respectively, all of the above principal subsidiaries are
+incorporated and operate their businesses principally in the PRC.
+The minority interests of subsidiaries which the Group holds 100% of equity interests at the end of the year are the minority interests of their subsidiaries.
+*
+("Shanghai SECCO") (Note 53)
+5,989
+67.60
+RMB 7,801
+RMB 7,801
+1,297
+75.00
+RMB 3,225
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of petrochemical products
+Shanghai SECCO Petrochemical Company Limited
+Company Limited
+products and petroleum products
+5,400
+55.00
+RMB 4,804
+RMB 10,000
+Manufacturing of intermediate petrochemical
+products and petroleum products
+100.00
+RMB 1,595
+68
+RMB 4,397
+RMB 1,165
+Marketing and distribution of refined petroleum
+products
+100.00
+RMB 6,713
+RMB 4,000
+56
+100.00
+RMB 3,374
+RMB 3,374
+Production and sale of refined petroleum products,
+lubricant base oil, and petrochemical materials
+Production and sale of polyester chips and polyester
+fibres
+100.00
+RMB 12,000
+RMB 28,403
+RMB 12,000
+RMB 15,651
+RMB 13,203
+225
+RMB 1,562
+RMB 1,500
+Production and sale of catalyst products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Pipeline storage and transportation of crude oil
+4,072
+100.00
+100.00
+Trading of crude oil and petrochemical products
+RMB 4,585
+100.00
+RMB 20,000
+100.00
+63,006
+RMB 1,000
+Marketing and distribution of petrochemical products
+Coal chemical industry investment management,
+production and sale of coal chemical products
+Import and processing of crude oil, production,
+storage and sale of petroleum products and
+petrochemical products
+54
+70.42
+100.00
+USD 1,638
+USD 1,638
+15,215
+100.00
+RMB 8,000
+RMB 8,000
+Investment in exploration, production and sale of
+petroleum and natural gas
+Investment holding
+4,930
+50.00
+RMB 3,000
+RMB 3,737
+HKD 248
+HKD 3,952
+60.34
+Manufacturing of synthetic fibres, resin and plastics,
+intermediate petrochemical products and petroleum
+products
+RMB 10,814
+3,788
+50.49
+14,275
+Manufacturing of plastics, intermediate petrochemical
+products and petroleum products
+RMB 6,898
+RMB 5,820
+million
+million
+US Dollars
+50
+33
+Other than the amounts as disclosed above, the amounts of other financial assets and liabilities of the Group are substantially denominated in
+the functional currency of respective entity of the Group.
+(b) Interest rate risk
+The Group's interest rate risk exposure arises primarily from its short-term and long-term loans. Loans carrying interest at variable interest rates
+and at fixed interest rates expose the Group to cash flow interest rate risk and fair value interest rate risk respectively. The interest rates and
+terms of repayment of short-term and long-term loans of the Group are disclosed in Note 22 and Note 30, respectively.
+The Group engages in oil and gas operations and is exposed to commodity price risk related to price volatility of crude oil, refined oil products
+and chemical products. The fluctuations in prices of crude oil, refined oil products and chemical products could have significant impact on the
+Group. The Group uses derivative financial instruments, including commodity futures and swaps, to manage a portion of such risk.
+(c) Commodity price risk
+2016
+At 31 December 2017, the Group had certain commodity contracts of crude oil, refined oil products and chemical products designated as
+qualified cash flow hedges and economic hedges. At 31 December 2017, the net fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB 515 million (2016: RMB 312 million) recognised in other receivables and derivative financial liabilities of RMB
+2,624 million (2016: RMB 4,336 million) recognised in other payables.
+At 31 December 2017, it is estimated that a general increase/decrease of USD 10 per barrel in basic price of derivative financial instruments,
+with all other variables held constant, would impact the fair value of derivative financial instruments which would decrease/increase the Group's
+profit for the year by approximately RMB 4,049 million (2016: decrease/increase RMB 634 million), and decrease/increase the Group's other
+comprehensive income by approximately RMB 701 million (2016: decrease/increase RMB 4,007 million). This sensitivity analysis has been
+determined assuming that the change in prices had occurred at the balance sheet date and the change was applied to the Group's derivative
+financial instruments at that date with exposure to commodity price risk. The analysis is performed on the same basis for 2016.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+145
+Financial Statements (PRC)
+Financial Statements (PRC)
+At 31 December 2017, it is estimated that a general increase/decrease of 100 basis points in variable interest rates, with all other variables held
+constant, would decrease/increase the Group's net profit for the year by approximately RMB 450 million (2016: decrease/increase RMB 327
+million). This sensitivity analysis has been determined assuming that the change in interest rates had occurred at the balance sheet date and the
+change was applied to the Group's loans outstanding at that date with exposure to cash flow interest rate risk. The analysis is performed on the
+same basis for 2016.
+At 31 December
+Market risk (Continued)
+The Group
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates. The objective of market risk management is
+to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
+(a) Currency risk
+Currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured.
+The Group's currency risk exposure primarily relates to short-term and long-term debts denominated in US Dollars and the Group enters into
+foreign exchange contracts to manage currency risk exposure.
+Included in short-term and long-term debts are the following amounts denominated in a currency other than the functional currency of the entity
+to which they relate:
+The Group
+Gross exposure arising from loans and borrowings
+US Dollars
+At 31 December
+2017
+million
+At 31 December
+2016
+million
+USD 126
+A 5 percent strengthening/weakening of Renminbi against the following currencies at 31 December 2017 and 2016 would have increased/
+decreased net profit for the year of the Group by the amounts shown below. This analysis has been determined assuming that the change in
+foreign exchange rates had occurred at the balance sheet date and had been applied to the foreign currency balances to which the Group has
+significant exposure as stated above, and that all other variables, in particular interest rates, remain constant. The analysis is performed on the
+Isame basis for 2016.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+60 FINANCIAL INSTRUMENTS (Continued)
+Market risk
+(a) Currency risk (Continued)
+Management believes that the Group's current cash on hand, expected cash flows from operations and available standby credit facilities from
+financial institutions will be sufficient to meet the Group's short-term and long-term capital requirements.
+At 31 December
+2017
+USD 204
+Assets
+60 FINANCIAL INSTRUMENTS (Continued)
+Available-for-sale financial assets:
+- Listed
+Derivative financial instruments:
+- Derivative financial assets
+Liabilities
+Derivative financial instruments:
+- Derivative financial liabilities
+Level 1
+Level 2
+RMB million
+RMB million
+Level 3
+RMB million
+Total
+RMB million
+51,196
+51,196
+178
+178
+24,537
+343
+The Group
+for the year ended 31 December 2017
+At 31 December 2016
+Derivative financial instruments:
+Fair values
+(i) Financial instruments carried at fair value
+The following table presents the carrying value of financial instruments measured at fair value at the balance sheet date across the three levels
+of the fair value hierarchy. With the fair value of each financial instrument categorised in its entirely based on the lowest level of input that is
+significant to that fair value measurement. The levels are defined as follows:
+•
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+⋅
+•
+Level 2: fair values measured using quoted prices in active markets for similar financial instruments, or using valuation techniques in which
+all significant inputs are directly or indirectly based on observable market data.
+Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
+At 31 December 2017
+The Group
+Assets
+Financial assets at fair value through profit and loss
+- Structural deposits
+Available-for-sale financial assets:
+Listed
+Derivative financial instruments:
+Derivative financial assets
+Liabilities
+Derivative financial liabilities
+73,331
+Within
+340,887
+Dividends payable
+6,843
+Other payables and employee benefits payable
+Total
+92,012
+485,896
+6,843
+92,012
+497,837
+6,843
+92,012
+390,355
+18,916
+71,323
+17,243
+Total
+contractual
+Carrying undiscounted
+amount
+RMB million
+cash flow
+RMB million
+one year or
+on demand
+RMB million
+At 31 December 2016
+More than
+one year
+but less than
+two years
+RMB million
+More than
+two years
+but less than
+200,073
+More than
+200,073
+Accounts payable
+183
+27,261
+Long-term loans
+67,754
+70,613
+1,003
+17,666
+49,038
+Debentures payable
+31,370
+39,122
+1,250
+1,250
+22,285
+2,906
+14,337
+Bills payable
+6,462
+6,462
+6,462
+200,073
+29,369
+RMB million
+five years
+57,262
+16,069
+1,752
+22,785
+5,828
+5,828
+5,828
+174,301
+174,301
+174,301
+Dividends payable
+Other payables and employee benefits payable
+Total
+2,006
+2,006
+2,006
+79,248
+79,248
+79,248
+454,175
+468,124
+24,717
+five years
+1,932
+54,985
+RMB million
+Debentures payable
+Short-term loans
+Non-current liabilities due within one year
+Short-term debentures payable
+Long-term loans
+Bills payable
+Accounts payable
+30,374
+30,708
+30,708
+38,972
+39,934
+39,934
+6,000
+6,030
+6,030
+62,461
+64,566
+900
+4,652
+65,503
+526
+2016
+183
+2017
+121,071
+121,071
+2016
+121,071
+121,071
+In accordance with "Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares No.9 - Calculation and Disclosure
+of the Return on Net Assets and Earnings Per Share" (2010 revised) issued by the CSRC and relevant accounting standards, the Group's return on
+net assets and earnings per share are calculated as follows:
+2017
+2016
+Weighted
+average
+return on
+net assets
+(%)
+Basic
+earnings
+per share
+per share
+(RMB/Share) (RMB/Share)
+Diluted
+earnings
+Weighted
+average
+return on
+net assets
+Basic
+earnings
+per share
+(%) (RMB/Share)
+Diluted
+earnings
+Net profit attributable to the Company's
+ordinary equity shareholders
+7.14
+0.383
+0.422
+121,071
+27,261
+Weighted average number of outstanding ordinary shares of the Company (million)
+Basic earnings per share (RMB/share)
+2017
+51,119
+121,071
+0.422
+2016
+46,416
+121,071
+0.383
+The calculation of the weighted average number of ordinary shares is as follows:
+Weighted average number of outstanding ordinary shares of the Company at 1 January (million)
+Weighted average number of outstanding ordinary shares of the Company at 31 December (million)
+(ii) Diluted earnings per share
+2017
+2016
+121,071
+121,071
+121,071
+121,071
+Diluted earnings per share is calculated by the net profit attributable to equity shareholders of the Company (diluted) and the weighted average
+number of ordinary shares of the Company (diluted):
+Net profit attributable to equity shareholders of the Company (diluted) (RMB million)
+Weighted average number of outstanding ordinary shares of the Company (diluted) (million)
+Diluted earnings per share (RMB/share)
+The calculation of the weighted average number of ordinary shares (diluted) is as follows:
+Weighted average number of the ordinary shares issued at 31 December (million)
+Weighted average number of the ordinary shares issued at 31 December (diluted) (million)
+63 RETURN ON NET ASSETS AND EARNINGS PER SHARE
+2017
+51,117
+121,071
+0.422
+46,413
+Net profit attributable to equity shareholders of the Company (RMB million)
+0.422
+per share
+(RMB/Share)
+the consolidated income statement for the year then ended;
+the consolidated statement of comprehensive income for the year then ended;
+the consolidated statement of changes in equity for the year then ended;
+the consolidated statement of cash flows for the year then ended; and
+the notes to the consolidated financial statements, which include a summary of significant accounting policies.
+Our opinion
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December
+2017, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial
+Reporting Standards ("IFRSS") as issued by the International Accounting Standard Board and have been properly prepared in compliance with the
+disclosure requirements of the Hong Kong Companies Ordinance.
+BASIS FOR OPINION
+We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAS") issued by the Hong Kong Institute of Certified Public
+Accountants ("HKICPA"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the
+Consolidated Financial Statements section of our report.
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+Independence
+We are independent of the Group in accordance with the HKICPA's Code of Ethics for Professional Accountants (the "Code"), and we have fulfilled our
+other ethical responsibilities in accordance with the Code.
+KEY AUDIT MATTERS
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements
+of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our
+opinion thereon, and we do not provide a separate opinion on these matters.
+PricewaterhouseCoopers, 22/F, Prince's Building, Central, Hong Kong
+T: +852 2289 8888, F: +852 2810 9888, www.pwchk.com
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+149
+Financial Statements (International)
+the consolidated balance sheet as at 31 December 2017;
+6.68
+•
+羅兵咸永道
+0.383
+0.383
+Net profit deducted extraordinary gains and
+losses attributable to the Company's ordinary
+equity shareholders
+6.37
+0.376
+0.376
+4.33
+0.245
+0.245
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+•
+•
+•
+REPORT OF THE INTERNATIONAL AUDITOR
+pwc
+Independent Auditor's Report
+To the Shareholders of China Petroleum & Chemical Corporation
+(incorporated in the People's Republic of China with limited liability)
+OPINION
+What we have audited
+The consolidated financial statements of China Petroleum & Chemical Corporation (the "Company") and its subsidiaries (the "Group") set out on pages
+152 to 205, which comprise:
+521
+Basic earnings per share is calculated by the net profit attributable to equity shareholders of the Company and the weighted average number of
+outstanding ordinary shares of the Company:
+62 BASIC AND DILUTED EARNINGS PER SHARE
+4,472
+4,472
+During the years ended 31 December 2017 and 2016, there was no transfer among instruments in Level 1, Level 2, Level 3.
+Management of the uses discounted cash flow model with inputted interest rate and commodity index, which were influenced by historical
+fluctuation and the probability of market fluctuation, to evaluate the fair value of the structural deposits classified as Level 3 financial assets.
+146
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+60 FINANCIAL INSTRUMENTS (Continued)
+Fair values (Continued)
+(ii) Fair values of financial instruments carried at other than fair value
+The fair values of the Group's financial instruments carried at other than fair value (other than long-term indebtedness and investments in
+unquoted equity securities) approximate their carrying amounts due to the short-term maturity of these instruments. The fair values of long-term
+indebtedness are estimated by discounting future cash flows using current market interest rates offered to the Group for debt with substantially
+the same characteristic and maturities range from 1.79% to 4.90% (2016: 1.06% to 4.90%). The following table presents the carrying amount
+and fair value of the Group's long-term indebtedness other than loans from Sinopec Group Company and fellow subsidiaries at 31 December
+2017 and 2016:
+Carrying amount
+Fair value
+At 31 December
+2017
+RMB million
+At 31 December
+79,738
+78,040
+2016
+RMB million
+110,969
+109,308
+The Group has not developed an internal valuation model necessary to make the estimate of the fair value of loans from Sinopec Group Company
+and fellow subsidiaries as it is not considered practicable to estimate their fair value because the cost of obtaining discount and borrowing rates
+for comparable borrowings would be excessive based on the Reorganisation of the Group, its existing capital structure and the terms of the
+borrowings.
+Other unquoted equity investments are individually and in the aggregate not material to the Group's financial position or results of operations.
+There are no listed market prices for such interests in the PRC and, accordingly, a reasonable estimate of fair value could not be made without
+incurring excessive costs. The Group intends to hold these unquoted equity investments for long term purpose.
+Except for the above items, the financial assets and liabilities of the Group are carried at amounts not materially different from their fair values
+at 31 December 2017 and 2016.
+1,024
+61 EXTRAORDINARY GAINS AND LOSSES
+762
+1,886
+1,886
+51,196
+51,900
+1,277
+1,388
+1,277
+1,388
+2,665
+Level 1
+Level 2
+RMB million
+RMB million
+Level 3
+RMB million
+Total
+RMB million
+262
+29
+733
+291
+733
+2,586
+2,586
+262
+(i) Basic earnings per share
+Pursuant to "Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public- Extraordinary Gain
+and Loss" (2008), the extraordinary gains and losses of the Group are as follows:
+2016
+(6,512)
+(22,164)
+Tax effect
+Total
+976
+(5,536)
+5,578
+(16,586)
+Attributable to:
+Equity shareholders of the Company
+(5,537)
+Minority interests
+1
+(16,703)
+117
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+147
+Financial Statements (PRC)
+148
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+(86)
+2017
+Net gains of combination under common control from 1 January 2017 to the consolidation date
+690
+RMB million
+RMB million
+Extraordinary (gains)/losses for the year:
+Net loss on disposal of non-current assets
+1,518
+1,489
+Donations
+152
+133
+Government grants
+(4,783)
+(3,987)
+Gain on holding and disposal of various investments
+(148)
+(518)
+Investment income on loss of control and remeasuring interests in the Pipeline Ltd (Note 13(vi))
+Gain on remeasurement of interests in the Shanghai SECCO (Note 53(a))
+(20,562)
+(3,941)
+Other non-operating loss, net
+1,367
+26,681
+Corporate and others
+55,451
+Long-term equity investments
+Deferred tax assets
+Other unallocated assets
+Total assets
+Liabilities
+Segment liabilities
+Exploration and production
+Refining
+Cash at bank and on hand
+Marketing and distribution
+Corporate and others
+2017
+RMB million
+2016
+RMB million
+(47,399)
+(58,531)
+64,047
+55,808
+Chemicals
+Total segment assets
+Corporate and others
+Marketing and distribution
+Chemicals
+Elimination
+Total segment operating profit
+Investment income
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Total segment investment income
+Financial expenses
+Loss from changes in fair value
+Asset disposal income
+Other income
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+Assets
+Segment assets
+Exploration and production
+Refining
+32,011
+32,385
+22,796
+(3,160)
+4.356
+86,965
+77,389
+1,317
+4,706
+1,709
+2,218
+86,573
+79,877
+At 31 December
+At 31 December
+2017
+RMB million
+2016
+RMB million
+343,404
+402,476
+273,123
+260,903
+309,727
+(1,487)
+Corporate and others
+(1,518)
+(13)
+2,912
+(1,655)
+1,581
+66,640
+54,924
+1,401
+19,248
+1,017
+1,071
+2,951
+2,928
+13,648
+5,815
+43
+1,717
+19,060
+30,779
+(1,560)
+(6,611)
+(216)
+Chemicals
+Marketing and distribution
+Refining
+Inter-segment sales
+Elimination of inter-segment sales
+Consolidated income from principal operations
+Income from other operations
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Consolidated income from other operations
+Consolidated operating income
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+2017
+RMB million
+2016
+RMB million
+69,168
+47,443
+77,804
+58,954
+146,972
+106,397
+External sales
+132,478
+Corporate and others
+External sales
+140
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+59 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+The Group's chief operating decision maker evaluates the performance and allocates resources to its operating segments on an operating profit
+basis, without considering the effects of finance costs or investment income. Inter-segment transfer pricing is based on the market price or cost
+plus an appropriate margin, as specified by the Group's policy.
+Assets and liabilities dedicated to a particular segment's operations are included in that segment's total assets and liabilities. Segment assets
+include all tangible and intangible assets, except for cash at bank and on hand, long-term equity investments, deferred tax assets and other
+unallocated assets. Segment liabilities exclude short-term loans, short-term debentures payable, non-current liabilities due within one year, long-
+term loans, debentures payable, deferred tax liabilities, other non-current liabilities and other unallocated liabilities.
+Reportable information on the Group's operating segments is as follows:
+Income from principal operations
+Exploration and production
+External sales
+Inter-segment sales
+Refining
+External sales
+Inter-segment sales
+Marketing and distribution
+External sales
+Inter-segment sales
+Chemicals
+Inter-segment sales
+292,328
+102,983
+747,317
+5,104
+5,486
+28,333
+22,004
+14,314
+12,211
+1,439
+1,478
+59,723
+50,721
+2,360,193
+1,930,911
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+59 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Operating (loss)/profit
+By segment
+Exploration and production
+9,542
+874,271
+10,533
+2,300,470
+1,006,749
+850,300
+1,191,902
+3,962
+1,195,864
+1,027,373
+3,480
+1,030,853
+373,814
+284,289
+49,615
+38,614
+423,429
+322,903
+533,108
+418,102
+440,303
+320,367
+973,411
+738,469
+(1,445,955)
+(1,168,732)
+1,880,190
+55,451
+158,472
+170,045
+Others
+Non-current assets
+Mainland China
+Others
+142
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+2017
+RMB million
+2016
+RMB million
+1,758,365
+269,349
+1,488,117
+152,068
+Mainland China
+Singapore
+332,479
+2,360,193
+1,930,911
+At 31 December
+2017
+RMB million
+979,329
+48,572
+1,027,901
+At 31 December
+2016
+290,726
+External sales
+The following tables set out information about the geographical information of the Group's external sales and the Group's non-current assets,
+excluding financial instruments and deferred tax assets. In presenting information on the basis of geographical segments, segment revenue is
+based on the geographical location of customers, and segment assets are based on the geographical location of the assets.
+11,605
+1.655
+18,408
+17,209
+15,463
+14,540
+12,873
+12,654
+1,723
+2,093
+115,310
+108,425
+13,556
+1,894
+267
+2,898
+211
+21,258
+16,425
+675
+4,922
+RMB million
+1,000,209
+45,887
+1,046,096
+60 FINANCIAL INSTRUMENTS (Continued)
+Liquidity risk (Continued)
+The following table sets out the remaining contractual maturities at the balance sheet date of the Group's financial liabilities, which are based on
+contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on prevailing rates at the
+balance sheet date) and the earliest date the Group would be required to repay:
+Carrying
+amount
+RMB million
+Total
+contractual
+undiscounted
+cash flow
+RMB million
+At 31 December 2017
+More than
+Within
+one year or
+on demand
+RMB million
+one year
+but less than
+two years
+RMB million
+More than
+two years
+but less than
+More than
+five years
+RMB million
+five years
+RMB million
+Short-term loans
+Non-current liabilities due within one year
+54,701
+for the year ended 31 December 2017
+61,929
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+144
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+60 FINANCIAL INSTRUMENTS
+Overview
+Financial assets of the Group include cash at bank, financial assets at fair value through profit and loss, equity investments other than long-term
+equity investment, accounts receivable, bills receivable, available-for-sale financial assets, derivative financial instruments and other receivables.
+Financial liabilities of the Group include short-term and long-term loans, accounts payable, bills payable, debentures payable, employee benefits
+payable, derivative financial instruments and other payables.
+The Group has exposure to the following risks from its uses of financial instruments:
+credit risk;
+liquidity risk;
+market risk;
+The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework, and developing
+and monitoring the Group's risk management policies.
+The Group's risk management policies are established to identify and analyse the risks faced by the Group, and set appropriate risk limits and
+controls to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
+conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and
+constructive control environment in which all employees understand their roles and obligations. Internal audit department undertakes both regular
+and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Group's audit committee.
+Credit risk
+Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations,
+and arises principally from the Group's deposits placed with financial institutions (including structured deposit) and receivables from customers.
+To limit exposure to credit risk relating to deposits, the Group primarily places cash deposits only with large financial institution in the PRC with
+acceptable credit ratings. The majority of the Group's accounts receivable relates to sales of petroleum and chemical products to related parties
+and third parties operating in the petroleum and chemical industries. No single customer accounted for greater than 10% of total accounts
+receivable at 31 December 2017, except for the amounts due from Sinopec Group Company and fellow subsidiaries. The Group performs ongoing
+credit evaluations of its customers' financial condition and generally does not require collateral on accounts receivable. The Group maintains an
+impairment loss for doubtful accounts and actual losses have been within management's expectations.
+The carrying amounts of cash at bank, trade accounts and bills receivables, derivative financial instruments, financial assets at fair value through
+profit or loss and other receivables, represent the Group's maximum exposure to credit risk in relation to financial assets.
+Liquidity risk
+Liquidity risk is the risk that the Group encounters short fall of capital when meeting its obligation of financial liabilities. The Group's approach to
+managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal
+and stressed capital conditions, without incurring unacceptable losses or risking damage to the Group's reputation. The Group prepares monthly
+cash flow budget to ensure that they will always have sufficient liquidity to meet its financial obligation as they fall due. The Group arranges and
+negotiates financing with financial institutions and maintains a certain level of standby credit facilities to reduce the liquidity risk.
+At 31 December 2017, the Group has standby credit facilities with several PRC financial institutions which provide the Group to borrow up to RMB
+361,852 million (2016: RMB 256,375 million) on an unsecured basis, at a weighted average interest rate of 3.40% (2016: 3.57%). At 31 December
+2017, the Group's outstanding borrowings under these facilities were RMB 56,567 million (2016: RMB 36,933 million) and were included in loans.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+143
+Financial Statements (PRC)
+Financial Statements (PRC)
+66,843
+76,456
+99,384
+440,042
+Short-term loans
+54,701
+30,374
+Non-current liabilities due within one year
+26,681
+38,972
+Long-term loans
+67,754
+62,461
+Debentures payable
+31,370
+54,985
+Deferred tax liabilities
+6,466
+7,661
+Other non-current liabilities
+Other unallocated liabilities
+Total liabilities
+517,439
+16,440
+Total segment liabilities
+117,756
+95,263
+1,254,771
+1,195,341
+165,004
+131,087
+142,497
+116,812
+15,131
+29,511
+7,214
+36,745
+1,595,504
+1,498,609
+99,367
+95,883
+101,429
+82,170
+163,680
+132,922
+35,207
+31,989
+97,078
+144,371
+16,136
+15,453
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+(2) Geographical information
+2017
+2016
+RMB million
+RMB million
+31,344
+32,187
+21,075
+14,347
+21,539
+18,493
+23,028
+8,849
+2,398
+2,580
+Exploration and production
+20,583
+Impairment losses on long-lived assets
+Marketing and distribution
+741,434
+666,084
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+141
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+59 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Capital expenditure
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Depreciation, depletion and amortisation
+Exploration and production
+Refining
+Chemicals
+20,769
+150
+(895)
+RMB
+RMB
+RMB
+RMB
+RMB
+121,071
+RMB
+28,341
+79.640 117,000
+(6,781)
+281,076
+676,197
+111,964
+788,161
+55,850
+46,672
+RMB
+RMB
+Non-
+capital
+reserve
+premium
+reserve
+reserve
+RMB
+Other
+reserves
+of the
+Company
+controlling
+interests
+Total
+equity
+RMB
+Retained
+earnings
+shareholders
+46.672
+59,444
+(2,137)
+(2,137)
+Changes in ownership interests in subsidiaries that do
+not result in a loss of control:
+Transaction with non-controlling interests
+Total changes in ownership interests in subsidiaries
+that do not result in a loss of control
+Total contributions by and distributions to owners
+Total transactions with owners
+Balance at 31 December 2016
+(7,264)
+(7,264)
+(7,264)
+(9,565)
+(9,565)
+Others
+12,772
+Branch of SAMC (Note 35)
+Profit distribution to SAMC (Note 35)
+-7.052
+7,052
+(719)
+6,333
+7,052
+46,672
+Distribution to SAMC in the Acquisition of Gaoqiao
+53,724
+65,777
+Transactions with owners, recorded directly in equity:
+Contributions by and distributions to owners:
+Final dividend for 2015 (Note 13).
+Interim dividend for 2016 (Note 13)
+Appropriation (Note (a))
+Distributions to non-controlling interests
+12.053
+(9,565)
+Statutory Discretionary
+surplus
+Share
+Reserves
+Total equity attributable to shareholders of the Company
+Non-controlling interests
+Total equity
+Approved and authorised for issue by the board of directors on 23 March 2018.
+279,247
+13,015
+579,446
+50,397
+1,016,058
+Share capital
+224,544
+485,543
+73,282
+1,013,066
+2222
+55,804
+43,320
+72,674
+44,772
+6,466
+6,051
+7,661
+Equity
+Other long-term liabilities
+30
+6,462
+5,828
+Accrued expenses and other payables
+31
+Income tax payable
+Total non-current liabilities
+Total current liabilities
+Net current liabilities
+Total assets less current liabilities
+Non-current liabilities
+Long-term debts
+Loans from Sinopec Group Company and fellow subsidiaries
+Deferred tax liabilities
+Provisions
+-------
+surplus
+39,958
+17,620
+Wang Dehua
+Chief Financial Officer
+The notes on pages 159 to 205 form part of these consolidated financial statements.
+154 Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+for the year ended 31 December 2017
+(Amounts in million)
+Vice Chairman, President
+Balance at 1 January 2016
+Other comprehensive income (Note 14)
+Total comprehensive income for the year
+Total equity
+attributable
+to
+Share
+Capital
+Profit for the year
+39,298
+Dai Houliang
+852,890
+17,426
+163,168
+181,831
+852,890
+831,235
+33
+831,235
+121,071
+605,049
+589,923
+726,120
+710,994
+126,770
+120,241
+121,071
+Bills payable
+(6,146)
+(47)
+interests
+equity
+RMB
+RMB
+RMB
+RMB
+Company
+RMB
+RMB
+121,071
+26,290
+55,850
+79,640
+117,000
+RMB
+424
+earnings
+reserve
+surplus
+Statutory Discretionary
+surplus
+shareholders
+Other
+Retained
+of the
+reserves
+Non-
+controlling
+capital
+reserve
+RMB
+RMB
+premium
+RMB
+reserve
+Total
+Share
+310,719
+120,241
+(12,107)
+3,042
+(3,042)
+(12,501)
+3,042
+(35,731)
+(12,107)
+(32,689)
+(45,190)
+(13)
+(13)
+724
+711
+(13)
+(12,501)
+710,994
+(12,107)
+(20,582)
+831,235
+51,244
+51,244
+19,174
+70,418
+-- (3,481)
+(20,582)
+(3,481)
+(3,481)
+51.244
+47,763
+18,279
+66,042
+(20,582)
+(4,376)
+(6,146)
+Capital
+to
+(16,876)
+(19,043)
+(3,785)
+(22,828)
+116
+153
+(2,167)
+(153)
+9
+125
+121,071
+26,290
+55,850
+79,640 117,000
+116
+424
+233
+(30)
+(47)
+(39)
+(86)
+(2,137)
+2,137
+(16,876)
+263
+(19,013)
+(23,061)
+(30)
+(30)
+263
+233
+(30)
+(4,048)
+Share
+310,719
+120,241
+Appropriation (Note (a))
+Distributions to non-controlling interests
+Total contributions by and distributions to owners
+Changes in ownership interests in subsidiaries that
+do not result in a loss of control:
+Transaction with non-controlling interests
+Interim dividend for 2017 (Note 13)
+Total changes in ownership interests in subsidiaries
+Total transactions with owners
+Others
+Balance at 31 December 2017
+Note:
+Total equity
+attributable
+that do not result in a loss of control
+710,994
+Final dividend for 2016 (Note 13).
+Transactions with owners, recorded directly in equity:
+831,235
+The notes on pages 159 to 205 form part of these consolidated financial statements.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+155
+Financial Statements (International)
+Financial Statements (International)
+Contributions by and distributions to owners:
+156
+for the year ended 31 December 2017
+(Amounts in million)
+Balance at 1 January 2017
+Profit for the year
+Other comprehensive income (Note 14)
+Total comprehensive income for the year
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+(13)
+174,301
+30
+7
+(235,292)
+(232,006)
+(16,554)
+5,686
+(2,288,723)
+71,470
+(63,887)
+(1,853,718)
+9
+(7,146)
+(9,219)
+Interest income
+5,254
+3,218
+77,193
+Foreign currency exchange gains/(losses), net
+(74,854)
+819
+(64,360)
+Depreciation, depletion and amortisation
+(115,310)
+(108,425)
+Exploration expenses, including dry holes.
+(11,089)
+6
+(11,035)
+Taxes other than income tax
+Other operating (expense)/income, net
+Total operating expenses
+Operating profit
+Finance costs
+Interest expense
+Personnel expenses
+(64,973)
+332
+Net finance costs
+Attributable to:
+Shareholders of the Company
+51,244
+46,672
+Non-controlling interests
+19,174
+59,444
+12,772
+70,418
+59,444
+Earnings per share:
+15
+Basic
+Diluted
+Profit for the year
+(610)
+70,418
+(20,707)
+Investment income
+(1,560)
+262
+(6,611)
+263
+Share of profits less losses from associates and joint ventures
+19, 20
+Profit for the year
+16,525
+Profit before taxation
+86,697
+80,151
+Tax expense
+10
+(16,279)
+9,306
+0.423
+5
+(1,379,691)
+Based on our work, we found the key assumptions and input data adopted
+were supported by the evidence we gathered and consistent with our
+expectations.
+OTHER INFORMATION
+The directors of the Company are responsible for the other information. The other information comprises all of the information included in the annual
+report other than the consolidated financial statements and our auditor's report thereon.
+Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion
+thereon.
+In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider
+whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise
+appears to be materially misstated.
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that
+fact. We have nothing to report in this regard.
+Evaluated the sensitivity analyses prepared by the Group, and assessed
+the potential impacts of a range of possible outcomes.
+RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern,
+disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to
+liquidate the Group or to cease operations, or have no realistic alternative but to do so.
+Those charged with governance are responsible for overseeing the Group's financial reporting process.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement,
+whether due to fraud or error, and to issue an auditor's report that includes our opinion. We report our opinion solely to you, as a body, and for no
+other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is
+a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAS will always detect a material misstatement when it
+exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
+to influence the economic decisions of users taken on the basis of these consolidated financial statements.
+The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance
+with IFRSS and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is
+necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
+As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
+• Assessed the methodology adopted in, and tested mathematical
+accuracy of, the discounted cash flow projections.
+• Independently estimated a range of discount rates, and found that the
+discount rates adopted by management were within the range.
+Financial Statements (International)
+Financial Statements (International)
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+The key audit matter identified in our audit is "Recoverability of the carrying amount of property, plant and equipment related to oil and gas producing
+activities".
+Key Audit Matter
+Recoverability of the carrying amount of property, plant and equipment
+related to oil and gas producing activities
+• Tested selected other key data inputs, such as natural gas prices and
+production profiles in the projections by reference to historical data
+and/or relevant budgets of the Group.
+Refer to note 8 "OTHER OPERATING (EXPENSE)/INCOME, NET", note
+16 “PROPERTY, PLANT AND EQUIPMENT", and note 41 "ACCOUNTING
+ESTIMATES AND JUDGEMENTS" to the consolidated financial
+statements.
+Future crude oil prices;
+Future production profiles;
+Future cost profiles; and
+Discount rates.
+Because of the significance of the carrying amount of property, plant
+and equipment related to oil and gas producing activities as at 31
+December 2017, together with the use of significant estimations or
+assumptions in determining their respective values in use, we had
+placed our audit emphasis on this matter.
+How our audit addressed the Key Audit Matter
+In auditing the respective values in use calculations of property, plant and
+equipment related to oil and gas producing activities, we have performed
+the following key procedures on the relevant discounted cash flow
+projections prepared by management:
+• Evaluated and tested the key controls, relating to the preparation of
+the discounted cash flow projections of property, plant and equipment
+related to oil and gas producing activities.
+Compared estimates of future crude oil prices adopted by the Group
+against a range of reputable published crude oil price forecasts.
+Compared the future production profiles against the oil and gas
+reserve estimation report approved by the management. Evaluated
+the competence, capability and objectivity of the management's
+experts engaged in estimating the oil and gas reserves. Assessed key
+estimations or assumptions used in the reserve estimation, by reference
+to historical data, management plans and/or reputable external data.
+Compared the future cost profiles against historical costs or relevant
+budgets of the Group.
+Low crude oil prices gave rise to possible indication that the carrying
+amount of property, plant and equipment related to oil and gas
+producing activities as at 31 December 2017 might be impaired. The
+Group has adopted values in use as the respective recoverable amounts
+of property, plant and equipment related to oil and gas producing
+activities, which involved key estimations or assumptions including:
+Selling, general and administrative expenses
+•
+Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform
+audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
+of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
+intentional omissions, misrepresentations, or the override of internal control.
+Year ended 31 December
+2017
+RMB
+2016
+RMB
+Turnover and other operating revenues
+Turnover
+3
+Note
+Other operating revenues
+2,300,470
+59,723
+2,360,193
+1,880,190
+50,721
+1,930,911
+Operating expenses
+Purchased crude oil, products and operating supplies and expenses
+(1,770,651)
+4
+•
+(Amounts in million, except per share data)
+(B) FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
+CONSOLIDATED INCOME STATEMENT
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but
+not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
+directors.
+Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained,
+whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going
+concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the
+consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
+obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
+Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the
+consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an
+opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain
+solely responsible for our audit opinion.
+We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit
+findings, including any significant deficiencies in internal control that we identify during our audit.
+We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,
+and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
+related safeguards.
+for the year ended 31 December 2017
+From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the
+consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report
+unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
+be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
+such communication.
+PricewaterhouseCoopers
+Certified Public Accountants
+Hong Kong, 23 March 2018
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+151
+Financial Statements (International)
+Financial Statements (International)
+The engagement partner on the audit resulting in this independent auditor's report is HON CHONG HENG.
+200,073
+0.385
+0.385
+51,361
+50,696
+1,676
+11,408
+15,131
+7,214
+66,116
+58,526
+81,982
+70,145
+1,066,455
+1,086,348
+Cash and cash equivalents
+113,218
+54,241
+124,468
+79,726
+8,634
+Total non-current assets
+Current assets
+16
+17
+18
+19
+6,353
+20
+23
+678222222
+650,774
+690,594
+118,645
+129,581
+21
+Long-term prepayments and other assets
+Time deposits with financial institutions
+18,029
+49,767
+Total current assets
+529,049
+412,261
+Current liabilities
+Short-term debts.
+41,455
+29
+56,239
+Loans from Sinopec Group Company and fellow subsidiaries
+29
+25,311
+18,580
+Trade accounts payable
+55,338
+51,786
+27
+186,693
+Financial assets at fair value through profit or loss
+Trade accounts receivable
+Bills receivable
+Inventories
+Prepaid expenses and other current assets
+22222
+156,511
+24
+25
+68,494
+50,289
+16,207
+13,197
+26
+51,196
+0.423
+Lease prepayments
+Available-for-sale financial assets
+Total comprehensive income for the year
+Total comprehensive income for the year
+The notes on pages 159 to 205 form part of these consolidated financial statements.
+Note
+Year ended 31 December
+2017
+Non-controlling interests
+2016
+RMB
+70,418
+59,444
+14
+(1,580)
+(57)
+2,014
+RMB
+(24)
+Shareholders of the Company
+Total other comprehensive income
+The notes on pages 159 to 205 form part of these consolidated financial statements. Details of dividends payable to shareholders of the Company
+attributable to the profit for the year are set out in Note 13.
+152
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+for the year ended 31 December 2017
+(Amounts in million)
+Profit for the year
+Attributable to:
+Other comprehensive income:
+(net of tax and after reclassification adjustments):
+Cash flow hedges
+Available-for-sale securities
+Share of other comprehensive income of associates and joint ventures
+Foreign currency translation differences
+Total items that may be reclassified subsequently to profit or loss
+Items that may be reclassified subsequently to profit or loss
+Deferred tax assets
+1,053
+(3,792)
+As at 31 December 2017
+(Amounts in million)
+Note
+31 December
+2017
+31 December
+RMB
+CONSOLIDATED BALANCE SHEET
+2016
+Non-current assets
+Property, plant and equipment, net
+Construction in progress
+Goodwill
+Interest in associates
+Interest in joint ventures
+RMB
+45
+Financial Statements (International)
+153
+4,298
+(4,376)
+6,333
+(4,376)
+6,333
+66,042
+Financial Statements (International)
+65,777
+53,724
+18,279
+12,053
+66,042
+65,777
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+47,763
+724
+(12,501)
+(13)
+Dry hole costs written off
+Share of profits from associates and joint ventures
+Investment income
+Gain on dilution and remeasurement of interests in the Pipeline Ltd
+86,697
+80,151
+115,310
+108,425
+6,876
+Depreciation, depletion and amortisation
+7,467
+(9,306)
+(262)
+(263)
+(20,562)
+Gain on remeasurement of interests in the Shanghai SECCO (Note 35)
+(3,941)
+Interest income
+(5,254)
+(3,218)
+(16,525)
+Interest expense
+Adjustments for:
+Operating activities
+(93,047)
+(10,897)
+55,279
+124,468
+68,933
+(353)
+113,218
+256
+124,468
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Profit before taxation
+157
+Financial Statements (International)
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+for the year ended 31 December 2017
+(Amounts in million)
+(a) Reconciliation from profit before taxation to net cash generated from operating activities
+Year ended 31 December
+2017
+2016
+RMB
+RMB
+Financial Statements (International)
+(56,509)
+7,146
+(Gain)/loss on foreign currency exchange rate changes and derivative financial instruments
+Loss on disposal of property, plant, equipment and other non-currents assets, net
+Impairment losses on assets
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2017
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+158
+The notes on pages 159 to 205 form part of these consolidated financial statements.
+214,543
+190,935
+(23,236)
+(20,030)
+237,779
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION
+210,965
+59,210
+(28,903)
+(22,549)
+(31,151)
+Net cash generated from operating activities
+Income tax paid
+Accounts payable and other current liabilities
+Inventories
+711
+81,089
+9,219
+Principal activities
+Organisation
+(1,547)
+86
+1,518
+1,528
+21,791
+17,076
+211,809
+190,603
+Net charges from:
+China Petroleum & Chemical Corporation (the "Company") is an energy and chemical company that, through its subsidiaries (hereinafter collectively
+referred to as the "Group"), engages in oil and gas and chemical operations in the People's Republic of China (the "PRC"). Oil and gas operations
+consist of exploring for, developing and producing crude oil and natural gas; transporting crude oil and natural gas by pipelines; refining crude oil
+into finished petroleum products; and marketing crude oil, natural gas and refined petroleum products. Chemical operations include the manufacture
+and marketing of a wide range of chemicals for industrial uses.
+Accounts receivable and other current assets
+There have been no significant changes to the accounting policies applied in these financial statements for the periods presented as a result of
+these developments.
+Amendments to IAS 12, 'Income taxes', the IASB has issued amendments to IAS 12, 'Income taxes'. These amendments on the recognition
+of deferred tax assets for unrealised losses clarify how to account for deferred tax assets related to debt instruments measured at fair value.
+Amendments to IAS 12 are effective for annual periods beginning on 1 January 2017.
+Amendments to IAS 7, 'Statement of cash flows', the IASB has issued an amendment to IAS 7 introducing an additional disclosure that will
+enable users of financial statements to evaluate changes in liabilities arising from financing activities. The amendment is part of the IASB's
+Disclosure Initiative, which continues to explore how financial statement disclosure can be improved. Amendments to IAS 7 are effective for
+annual periods beginning on 1 January 2017.
+The following relevant IFRS, amendments to exisiting IFRS and interpretation of IFRS have been published and are mandatory for the year
+beginning on 1 January 2017 and have been adopted by the Group in current accounting period:
+(a) New and amended standards and interpretations adopted by the Group
+The accompanying consolidated financial statements have been prepared in accordance with all applicable IFRS as issued by the International
+Accounting Standards Board ("IASB"). IFRS includes International Accounting Standards ("IAS") and related interpretations ("IFRIC"). These
+consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock
+Exchange of Hong Kong Limited. A summary of the significant accounting policies adopted by the Group are set out in Note 2.
+Basis of preparation
+As part of the Reorganisation, certain of Sinopec Group Company's core oil and gas and chemical operations and businesses together with the
+related assets and liabilities were transferred to the Company. On 25 February 2000, in consideration for Sinopec Group Company transferring such
+oil and gas and chemical operations and businesses and the related assets and liabilities to the Company, the Company issued 68.8 billion domestic
+state-owned ordinary shares with a par value of RMB 1.00 each to Sinopec Group Company. The shares issued to Sinopec Group Company on 25
+February 2000 represented the entire registered and issued share capital of the Company on that date. The oil and gas and chemical operations and
+businesses transferred to the Company were related to (i) the exploration, development and production of crude oil and natural gas, (ii) the refining,
+transportation, storage and marketing of crude oil and petroleum products, and (iii) the production and sales of chemicals.
+The Company was established in the PRC on 25 February 2000 as a joint stock limited company as part of the reorganisation (the "Reorganisation")
+of China Petrochemical Corporation ("Sinopec Group Company"), the ultimate holding company of the Group and a ministry-level enterprise under
+the direct supervision of the State Council of the PRC. Prior to the incorporation of the Company, the oil and gas and chemical operations of the
+Group were carried on by oil administration bureaux, petrochemical and refining production enterprises and sales and marketing companies of
+Sinopec Group Company.
+The Group has not early adopted any new standard or interpretation that is not yet effective for the current accounting period.
+(155)
+(11,364)
+(5,535)
+(e) The application of the share premium account is governed by Sections 167 and 168 of the PRC Company Law.
+The notes on pages 159 to 205 form part of these consolidated financial statements.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+CONSOLIDATED STATEMENT OF CASH FLOWS
+for the year ended 31 December 2017
+(Amounts in million)
+Net cash generated from operating activities
+Investing activities
+(d) The capital reserve represents (i) the difference between the total amount of the par value of shares issued and the amount of the net assets transferred from Sinopec
+Group Company in connection with the Reorganisation (Note1); and (ii) the difference between the considerations paid over or received the amount of the net assets of
+entities and related operations acquired from or sold to Sinopec Group Company and non-controlling interests.
+Capital expenditure
+Purchase of investments, investments in associates and investments in joint ventures
+Payment for acquisition of subsidiary, net of cash acquired
+Proceeds from disposal of investments and investments in associates
+Proceeds from disposal of property, plant, equipment and other non-current assets
+Increase in time deposits with maturities over three months
+Decrease in time deposits with maturities over three months
+Interest received
+Investment and dividend income received
+Net cash used in investing activities
+Financing activities
+Proceeds from bank and other loans
+Exploratory wells expenditure
+Repayments of bank and other loans
+(c) As at 31 December 2017, the amount of retained earnings available for distribution was RMB 177,049 million (2016: RMB 182,440 million), being the amount
+determined in accordance with ASBE. According to the Articles of Association of the Company, the amount of retained earnings available for distribution to shareholders
+of the Company is lower of the amount determined in accordance with the accounting policies complying with ASBE and the amount determined in accordance with the
+accounting policies complying with International Financial Reporting Standards ("IFRS”).
+During the year ended 31 December 2017, the Company transferred RMB 3,042 million (2016: nil) to the statutory surplus reserve, being 10% of the current year's net
+profit determined in accordance with the accounting policies complying with ASBE to this reserve.
+3,042
+(6,967)
+(35,731)
+(32,702)
+(11,777)
+(44,479)
+49
+26,326
+(107)
+27
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+92
+82,682
+159
+117,000
+(2,934)
+326,125
+726,120
+126,770
+852,890
+(a) According to the PRC Company Law and the Articles of Association of the Company, the Company is required to transfer 10% of its net profit determined in accordance
+with the accounting policies complying with Accounting Standards for Business Enterprises ("ASBE"), adopted by the Group to statutory surplus reserve. In the event
+that the reserve balance reaches 50% of the registered capital, no transfer is required. The transfer to this reserve must be made before distribution of a dividend to
+shareholders. Statutory surplus reserve can be used to make good previous years' losses, if any, and may be converted into share capital by issuing of new shares to
+shareholders in proportion to their existing shareholdings or by increasing the par value of the shares currently held by them, provided that the balance after such issue is
+not less than 25% of the registered capital.
+55,850
+Contributions to subsidiaries from non-controlling interests
+121,071
+Distributions by subsidiaries to non-controlling interests
+Interest paid
+1,313
+440
+(82,577)
+(17,896)
+48,820
+600
+3,669
+2,331
+8,506
+33,516
+4,028
+(66,217)
+524,843
+(536,380)
+506,097
+(569,091)
+946
+(7,539)
+(32,689)
+(16,876)
+Dividends paid by the Company
+(6,553)
+(145,323)
+4,809
+343
+(16,389)
+Finance lease payment
+(1,288)
+Net (decrease)/increase in cash and cash equivalents
+Effect of foreign currency exchange rate changes
+Cash and cash equivalents at 31 December
+The notes on pages 159 to 205 form part of these consolidated financial statements.
+Note
+Year ended 31 December
+2017
+2016
+Cash and cash equivalents at 1 January
+RMB
+(57,627)
+(7,380)
+RMB
+(7,407)
+(65,467)
+Net cash used in financing activities
+(a)
+214,543
+190,935
+(63,541)
+For investments in associates and joint ventures accounted under the equity method (Note 2(a) (ii)), the impairment loss is measured by
+comparing the recoverable amount of the investment as a whole with its carrying amount in accordance with the accounting policy set out
+in Note 2(o) (ii). The impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable
+amount in accordance with the accounting policy set out in Note 2(o) (ii).
+Financial Statements (International)
+164
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(n) Hedging (Continued)
+(ii) Fair value hedges
+A fair value hedge is a hedge of the exposure to changes in fair value of a recognised asset or liability or an unrecognised firm commitment,
+or an identified portion of such an asset, liability or unrecognised firm commitment.
+The gain or loss from remeasuring the hedging instrument at fair value is recognised in the consolidated income statement. The gain or loss
+on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised in the consolidated
+income statement.
+When a hedging instrument expires or is sold, terminated or exercised, or no longer meets the criteria for hedge accounting, the Group
+discontinues prospectively the hedge accounting treatments. If the hedged item is a financial instrument measured at amortised cost, any
+adjustment to the carrying amount of the hedged item is amortised to profit or loss from the adjustment date to the maturity date using the
+recalculated effective interest rate at the adjustment date.
+The portion of the gain or loss on remeasurement to fair value of an instrument used to hedge a net investment in a foreign operation that is
+determined to be an effective hedge is recognised in other comprehensive income and accumulated separately in equity in the other reserve
+until the disposal of the foreign operation, at which time the cumulative gain or loss is reclassified from equity to the consolidated income
+statement. The ineffective portion is recognised immediately in the consolidated income statement. In this year no hedge of net investment in
+foreign operations was hold by the Group.
+(o) Impairment of assets
+(i) Trade accounts receivable, other receivables and investment in equity securities that do not have a quoted market price in an active market
+are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. If any such evidence exists, an
+impairment loss is determined and recognised.
+The impairment loss is measured as the difference between the asset's carrying amount and the estimated future cash flows, discounted at
+the current market rate of return for a similar financial asset where the effect of discounting is material, and is recognised as an expense
+in the consolidated income statement. Impairment losses for trade and other receivables are reversed through the consolidated income
+statement if in a subsequent period the amount of the impairment losses decreases. Impairment losses for equity securities carried at cost
+are not reversed.
+When a hedging instrument expires or is sold, terminated, exercised, or the entity revokes designation of the hedge relationship but the
+hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity until the transaction occurs
+and it is recognised in accordance with the above policy. If the hedged transaction is no longer expected to take place, the cumulative
+unrealised gain or loss is reclassified from equity to the consolidated income statement immediately.
+(ii) Impairment of other long-lived assets is accounted as follows:
+(iii)Hedge of net investments in foreign operations
+(I) Derivative financial instruments
+If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gain
+or loss is reclassified from equity to the consolidated income statement in the same period or periods during which the asset acquired or
+liability assumed affects the consolidated income statement (such as when interest income or expense is recognised).
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(j) Goodwill
+Goodwill represents amounts arising on acquisition of subsidiaries, associates or joint ventures. Goodwill represents the difference between the
+cost of acquisition and the fair value of the net identifiable assets acquired.
+Prior to 1 January 2008, the acquisition of the non-controlling interests of a consolidated subsidiary was accounted for using the acquisition
+method whereby the difference between the cost of acquisition and the fair value of the net identifiable assets acquired (on a proportionate
+share) was recognised as goodwill. From 1 January 2008, any difference between the amount by which the non-controlling interest is adjusted
+(such as through an acquisition of the non-controlling interests) and the cash or other considerations paid is recognised in equity.
+Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to each cash-generating
+unit, or groups of cash-generating units, that is expected to benefit the synergies of the combination and is tested annually for impairment
+(Note 2(0)). In respect of associates or joint ventures, the carrying amount of goodwill is included in the carrying amount of the interest in the
+associate or joint venture and the investment as a whole is tested for impairment whenever there is objective evidence of impairment (Note 2(o)).
+For cash flow hedges, other than those covered by the preceding two policy statements, the associated gain or loss is reclassified from equity
+to the consolidated income statement in the same period or periods during which the hedged forecast transaction affects the consolidated
+income statement.
+(k) Available-for-sale financial assets
+Investments in securities held for trading are classified as current assets. Any attributable transaction costs are recognised in the consolidated
+income statement as incurred. At each balance sheet date, the fair value is remeasured, with any resultant gain or loss being recognised in the
+consolidated income statement.
+Derivative financial instruments are recognised initially at fair value. At each balance sheet date, the fair value is remeasured. The gain or loss
+on remeasurement to fair value is recognised immediately in other operating (expense)/income, net, except where the derivatives qualify for cash
+flow hedge accounting or hedge the net investment in a foreign operation, in which case recognition of any resulting gain or loss depends on the
+nature of the item being hedged (Note 2(n)).
+(m) Offsetting financial instruments
+Financial assets and liabilities are presented respectively in the consolidated balance sheet, without any offset. However, they are offset and
+reported in the balance sheet when satisfied the following: (i) There is a legally enforceable right to offset the recognised amounts. (ii) There
+is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be
+contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of
+the Company or the counterparty.
+(n) Hedging
+(i) Cash flow hedges
+Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability or a highly
+probable forecast transaction or the foreign currency risk of a committed future transaction, the effective portion of any gains or losses on
+remeasurement of the derivative financial instrument to fair value are recognised in other comprehensive income and accumulated separately
+in equity in other reserves. The ineffective portion of any gain or loss is recognised immediately in the consolidated income statement.
+If a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset, the associated gain or loss is reclassified
+from equity to be included in the initial cost or other carrying amount of the non-financial asset.
+Investments in available-for-sale securities are carried at fair value with any change in fair value recognised in other comprehensive income
+and accumulated separately in equity in other reserves. When these investments are derecognised or impaired, the cumulative gain or loss is
+reclassified from equity to the consolidated income statement. Investments in equity securities, other than investments in associates and joint
+ventures, that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are recognised in the
+balance sheet at cost less impairment losses (Note 2(o)).
+The carrying amounts of other long-lived assets, including property, plant and equipment, construction in progress, lease prepayments and
+other assets, are reviewed at each balance sheet date to identify indicators that the assets may be impaired. These assets are tested for
+impairment whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. When such
+a decline has occurred, the carrying amount is reduced to the recoverable amount. For goodwill, the recoverable amount is estimated at each
+balance sheet date.
+(t) Borrowing costs
+The amount of the reduction is recognised as an expense in the consolidated income statement. Impairment losses recognised in respect
+of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then, to
+reduce the carrying amount of the other assets in the unit on a pro rata basis, except that the carrying value of an asset will not be reduced
+below its individual fair value less costs to disposal, or value in use, if determinable.
+(v) Environmental expenditures
+Environmental expenditures that relate to current ongoing operations or to conditions caused by past operations are expensed as incurred.
+Liabilities related to future remediation costs are recorded when environmental assessments and/or cleanups are probable and the costs can
+be reliably estimated. As facts concerning environmental contingencies become known to the Group, the Group reassesses its position both with
+respect to accrued liabilities and other potential exposures.
+(w) Research and development expense
+Research and development expenditures that cannot be capitalised are expensed in the period in which they are incurred. Research and
+development expense amounted to RMB 6,423 million for the year ended 31 December 2017 (2016: RMB 5,941 million).
+(x) Operating leases
+Operating lease payments are charged to the consolidated income statement on a straight-line basis over the period of the respective leases.
+(y) Employee benefits
+The contributions payable under the Group's retirement plans are recognised as an expense in the consolidated income statement as incurred
+and according to the contribution determined by the plans. Further information is set out in Note 37.
+Termination benefits, such as employee reduction expenses, are recognised when, and only when, the Group demonstrably commits itself to
+terminate employment or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic
+possibility of withdrawal.
+Repairs and maintenance expenditure is expensed as incurred.
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(z) Income tax
+Income tax comprises current and deferred tax. Current tax is calculated on taxable income by applying the applicable tax rates. Deferred tax is
+provided using the balance sheet liability method on all temporary differences between the carrying amounts of assets and liabilities for financial
+reporting purposes and the amounts used for taxation purposes only to the extent that it is probable that future taxable income will be available
+against which the assets can be utilised. Deferred tax is calculated on the basis of the enacted tax rates or substantially enacted tax rates that
+are expected to apply in the period when the asset is realised or the liability is settled. The effect on deferred tax of any changes in tax rates is
+charged or credited to the consolidated income statement, except for the effect of a change in tax rate on the carrying amount of deferred tax
+assets and liabilities which were previously charged or credited to other comprehensive income or directly in equity.
+The tax value of losses expected to be available for utilisation against future taxable income is set off against the deferred tax liability within the
+same legal tax unit and jurisdiction to the extent appropriate, and is not available for set off against the taxable profit of another legal tax unit.
+The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is reduced to the extent that it is no longer probable
+that the related tax benefit will be realised.
+163
+(aa) Dividends
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+The recoverable amount is the greater of the fair value less costs to disposal and the value in use. In determining the value in use,
+expected future cash flows generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current
+market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely
+independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows
+independently (i.e. a cash-generating unit).
+(u) Repairs and maintenance expenditure
+A government grant that becomes receivable as compensation for expenses or losses already incurred with no future related costs is recognised
+as income in the period in which it becomes receivable.
+Management assesses at each balance sheet date whether there is any indication that an impairment loss recognised for a long-lived asset,
+except in the case of goodwill, in prior years may no longer exist. An impairment loss is reversed if there has been a favourable change in the
+estimates used to determine the recoverable amount. A subsequent increase in the recoverable amount of an asset, when the circumstances
+and events that led to the write-down or write-off cease to exist, is recognised as an income. The reversal is reduced by the amount that
+would have been recognised as depreciation had the write-down or write-off not occurred. An impairment loss in respect of goodwill is not
+reversed.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+165
+Financial Statements (International)
+166
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Borrowing costs are expensed in the consolidated income statement in the period in which they are incurred, except to the extent that they are
+capitalised as being attributable to the construction of an asset which necessarily takes a period of time to get ready for its intended use.
+(p) Trade, bills and other payables
+(q) Interest-bearing borrowings
+Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-
+bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the consolidated
+income statement over the period of borrowings using the effective interest method.
+(r) Provisions and contingent liability
+A provision is recognised for liability of uncertain timing or amount when the Group has a legal or constructive obligation arising as a result of a
+past event, when it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made.
+When it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is
+disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only
+be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability
+of outflow of economic benefits is remote.
+Provisions for future dismantlement costs are initially recognised based on the present value of the future costs expected to be incurred in
+respect of the Group's expected dismantlement and abandonment costs at the end of related oil and gas exploration and development activities.
+Any subsequent change in the present value of the estimated costs, other than the change due to passage of time which is regarded as interest
+cost, is reflected as an adjustment to the provision and oil and gas properties.
+(s) Revenue recognition
+Revenues associated with the sale of crude oil, natural gas, petroleum and chemical products and ancillary materials are recorded when the
+customer accepts the goods and the significant risks and rewards of ownership and title have been transferred to the buyer. Revenue from the
+rendering of services is recognised in the consolidated income statement upon performance of the services. No revenue is recognised if there are
+significant uncertainties regarding recovery of the consideration due, the possible return of goods, or when the amount of revenue and the costs
+incurred or to be incurred in respect of the transaction cannot be measured reliably.
+Interest income is recognised on a time apportioned basis that takes into account the effective yield on the asset.
+Trade, bills and other payables are initially recognised at fair value and thereafter stated at amortised cost unless the effect of discounting would
+be immaterial, in which case they are stated at cost.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+161
+Construction in progress represents buildings, oil and gas properties, various plant and equipment under construction and pending installation,
+and is stated at cost less impairment losses (Note 2(o)). Cost comprises direct costs of construction as well as interest charges, and foreign
+exchange differences on related borrowed funds to the extent that they are regarded as an adjustment to interest charges, during the periods of
+construction.
+The consolidated financial statements comprise the Company and its subsidiaries, and interest in associates and joint ventures.
+(i) Subsidiaries and non-controlling interests
+Subsidiaries are those entities controlled by the Group. The Group controls an entity when the Group is exposed to, or has rights to, variable
+returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
+The financial statements of subsidiaries are included in the consolidated financial statements from the date that control effectively
+commences until the date that control effectively ceases.
+Non-controlling interests at the balance sheet date, being the portion of the net assets of subsidiaries attributable to equity interests that
+are not owned by the Company, whether directly or indirectly through subsidiaries, are presented in the consolidated balance sheet and
+consolidated statement of changes in equity within equity, separately from equity attributable to the shareholders of the Company. Non-
+controlling interests in the results of the Group are presented on the face of the consolidated income statement and the consolidated
+statement of comprehensive income as an allocation of the total profit or loss and total comprehensive income for the year between non-
+controlling interests and the shareholders of the Company.
+Changes in the Group's interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions, whereby
+adjustments are made to the amounts of controlling and non-controlling interests within consolidated equity to reflect the change in relative
+interests, but no adjustments are made to goodwill and no gain or loss is recognised.
+If a business combination involving entities not under common control is achieved in stages, the acquisition date carrying value of the
+acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from
+such remeasurement are recognised in the consolidated income statement.
+When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain
+or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is recognised at fair
+value and this amount is regarded as the fair value on initial recognition of a financial asset (Note 2(k)) or, when appropriate, the cost on
+initial recognition of an investment in an associate or joint venture (Note 2(a) (ii)).
+(a) Basis of consolidation
+In the Company's balance sheet, investments in subsidiaries are stated at cost less impairment losses (Note 2(o)).
+(ii) Associates and joint ventures
+An associate is an entity, not being a subsidiary, in which the Group exercises significant influence over its management. Significant influence
+is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
+The investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and
+obligations each investor has rather than the legal structure of the joint arrangement. A joint venture is a joint arrangement whereby the
+parties that have joint control of the arrangement have rights to the net assets of the arrangement.
+Investments in associates and joint ventures are accounted for in the consolidated and separate financial statements using the equity method
+from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. Under the
+equity method, the investment is initially recorded at cost and adjusted thereafter for the post acquisition change in the Group's share of the
+investee's net assets and any impairment loss relating to the investment (Note 2(j) and (o)).
+The Group's share of the post-acquisition, post-tax results of the investees and any impairment losses for the year are recognised in the
+consolidated income statement, whereas the Group's share of the post-acquisition, post-tax items of the investees' other comprehensive
+income is recognised in the consolidated statement of comprehensive income.
+When the Group ceases to have significant influence over an associate or joint control over a joint venture, it is accounted for as a disposal of
+the entire interest in that investee, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former investee
+at the date when significant influence or joint control is lost is recognised at fair value and this amount is regarded as the fair value on initial
+recognition of a financial asset (see Note 2(k)) or, when appropriate, the cost on initial recognition of an investment in an associate (see Note
+2(a) (ii)).
+(iii)Transactions eliminated on consolidation
+Inter-company balances and transactions and any unrealised gains arising from inter-company transactions are eliminated on consolidation.
+Unrealised gains arising from transactions with associates and joint ventures are eliminated to the extent of the Group's interest in the entity.
+Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
+The particulars of the Group's principal subsidiaries are set out in Note 39.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+2 SIGNIFICANT ACCOUNTING POLICIES
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Dividends and distributions of profits proposed in the profit appropriation plan which will be authorized and declared after the balance sheet
+date, are not recognised as a liability at the balance sheet date and are separately disclosed in the notes to the financial statements. Dividends
+are recognised as a liability in the period in which they are declared.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION (Continued)
+Basis of preparation (Continued)
+(b) New and amended standards and interpretations not yet adopted by the Group
+The following relevant IFRS, amendments to existing IFRS and interpretation of IFRS have been published and are mandatory for accounting
+periods beginning on or after 1 January 2018 or later periods and have not been early adopted by the Group. Management is in the process of
+making an assessment of what the impact of these amendments, new standards and new interpretations is expected to be in the period of initial
+application and has so far concluded that, except for IFRS 16, the adoption of these amendments, new standards and new interpretations is
+unlikely to have a significant impact on the Group's results of operations and financial position.
+IFRS 9, 'Financial instruments', addresses the classification, measurement and recognition of financial assets and financial liabilities. The
+complete version of IFRS 9 was issued in July 2014. It replaces the whole of IAS 39. IFRS 9 introduces a new model for the recognition of
+impairment losses - the expected credit losses model, which constitutes a change from the incurred loss model in IAS 39. IFRS 9 applies to all
+hedging relationships, with the exception of portfolio fair value hedges of interest rate risk. The new guidance better aligns hedge accounting
+with the risk management activities of an entity and provides relief from the more “rule-based" approach of IAS 39. IFRS 9 is effective for annual
+periods beginning on 1 January 2018. Earlier application is permitted.
+for the year ended 31 December 2017
+IFRS 15, 'Revenue from contracts with customers', establishes a comprehensive framework for determining when to recognise revenue and
+how much revenue to recognise through a 5-step approach. IFRS 15 provides specific guidance on capitalisation of contract cost and licence
+arrangements. It also includes a cohesive set of disclosure requirements about the nature, amount, timing and uncertainty of revenue and cash
+flows arising from the entity's contracts with customers. The core principle is that a company should recognise revenue to depict the transfer
+of promised goods or services to the customer in an amount that reflects the consideration to which the company expects to be entitled in
+exchange for those goods or services. IFRS 15 replaces the previous revenue standards: IAS 18 'Revenue' and IAS 11 'Construction Contracts'
+and the related Interpretations on revenue recognition: IFRIC 13 'Customer Loyalty Programmes', IFRIC 15 'Agreements for the Construction of
+Real Estate', IFRIC 18 'Transfers of Assets from Customers' and SIC-31 'Revenue-Barter Transactions Involving Advertising Services'. IFRS 15 is
+effective for annual reporting periods beginning on 1 January 2018. Earlier application is permitted.
+Amendments to IFRS 10 and IAS 28 on sale or contribution of assets between an investor and its associate or joint venture. The amendments
+address an inconsistency between IFRS 10 and IAS 28 in the sale and contribution of assets between an investor and its associate or joint
+venture. A full gain or loss is recognised when a transaction involves a business. A partial gain or loss is recognised when a transaction involves
+assets that do not constitute a business, even if those assets are in a subsidiary. The amendments were originally intended to be effective for
+annual periods beginning on or after 1 January 2016. The effective date has now been deferred/removed. Early application of the amendments
+continues to be permitted.
+The accompanying consolidated financial statements are prepared on the historical cost basis except for the remeasurement of available-for-sale
+securities (Note 2(k)), securities held for trading (Note 2(k)) and derivative financial instruments (Note 2(1) and (n)) to their fair values.
+The preparation of the consolidated financial statements in accordance with IFRS requires management to make judgements, estimates and
+assumptions that affect the application of policies and reported amounts of assets and liabilities and disclosure of contingent assets and
+liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. The
+estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under
+the circumstances, the results of which form the basis of making the judgements about the carrying values of assets and liabilities that are not
+readily apparent from other sources. Actual results could differ from those estimates.
+The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
+which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
+current and future periods.
+Key assumptions and estimation made by management in the application of IFRS that have significant effect on the consolidated financial
+statements and the major sources of estimation uncertainty are disclosed in Note 41.
+Financial Statements (International)
+160
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+IFRS 16, 'Leases', provides updated guidance on the definition of leases, and the guidance on the combination and separation of contracts.
+Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time
+in exchange for consideration. IFRS 16 requires lessees to recognise lease liability reflecting future lease payments and a ‘right-of-use-asset'
+for almost all lease contracts, with an exemption for certain short-term leases and leases of low-value assets. The lessors accounting stays
+almost the same as under IAS 17 'Leases'. IFRS 16 is effective for annual reporting periods beginning on 1 January 2019. Earlier application is
+permitted if IFRS 15 is also applied.
+Financial Statements (International)
+162
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(f) Property, plant and equipment
+An item of property, plant and equipment is initially recorded at cost, less accumulated depreciation and impairment losses (Note 2(o)). The cost
+of an asset comprises its purchase price, any directly attributable costs of bringing the asset to working condition and location for its intended
+use. The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when
+that cost is incurred, when it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the
+item can be measured reliably. All other expenditure is recognised as an expense in the consolidated income statement in the year in which it is
+incurred.
+Gains or losses arising from the retirement or disposal of an item of property, plant and equipment, other than oil and gas properties, are
+determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised as income or expense
+in the consolidated income statement on the date of retirement or disposal.
+Depreciation is provided to write off the cost amount of items of property, plant and equipment, other than oil and gas properties, over its
+estimated useful life on a straight-line basis, after taking into account its estimated residual value, as follows:
+Estimated
+Buildings
+Equipment, machinery and others
+Estimated
+usage period
+12 to 50 years
+4 to 30 years
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+residuals rate
+3%
+Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on a reasonable basis
+between the parts and each part is depreciated separately. Both the useful life of an asset and its residual value, if any, are reassessed annually.
+(g) Oil and gas properties
+The Group uses the successful efforts method of accounting for its oil and gas producing activities. Under this method, costs of development
+wells, the related supporting equipment and proved mineral interests in properties are capitalised. The cost of exploratory wells is initially
+capitalised as construction in progress pending determination of whether the well has found proved reserves. The impairment of exploratory well
+costs occurs upon the determination that the well has not found proved reserves. The exploratory well costs are usually not carried as an asset
+for more than one year following completion of drilling, unless (i) the well has found a sufficient quantity of reserves to justify its completion as
+a producing well if the required capital expenditure is made; (ii) drilling of the additional exploratory wells is under way or firmly planned for the
+near future; or (iii) other activities are being undertaken to sufficiently progress the assessing of the reserves and the economic and operating
+viability of the project. All other exploration costs, including geological and geophysical costs, other dry hole costs and annual lease rentals,
+are expensed as incurred. Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes
+produced and reserves.
+Management estimates future dismantlement costs for oil and gas properties with reference to engineering estimates after taking into
+consideration the anticipated method of dismantlement required in accordance with the industry practices and the future cash flows are adjusted
+to reflect such risks specific to the liability, as appropriate. These estimated future dismantlement costs are discounted at pre-tax risk-free rate
+and are capitalised as oil and gas properties, which are subsequently amortised as part of the costs of the oil and gas properties.
+(h) Lease prepayments
+Lease prepayments represent land use rights paid to the relevant government authorities. Land use rights are carried at cost less accumulated
+amount charged to expense and impairment losses (Note 2(o)). The cost of lease prepayments is charged to expense on a straight-line basis
+over the respective periods of the rights.
+(i) Construction in progress
+3%
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+for the year ended 31 December 2017
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(a) Basis of consolidation (Continued)
+(iv) Merger accounting for common control combination
+The consolidated financial statements incorporate the financial statements of the combining entities or businesses in which the common
+control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the
+control of the controlling party. The net assets of the combining entities or businesses are combined using the existing book values from the
+controlling parties' perspective. No amount is recognised as consideration for goodwill or excess of acquirers' interest in the net fair value of
+acquiree's identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the extent of the
+continuation of the controlling party's interest.
+The consolidated income statement includes the results of each of the combining entities or businesses from the earliest date presented or
+since the date when the combining entities or businesses first came under the common control, where there is a shorter period, regardless
+of the date of the common control combination. The comparative amounts in the consolidated financial statements are presented as if the
+entities or businesses had been combined at the previous balance sheet date or when they first came under common control, whichever is
+shorter.
+A uniform set of accounting policies is adopted by those entities. All intra-group transactions, balances and unrealised gains on transactions
+between combining entities or businesses are eliminated on consolidation. Transaction costs, including professional fees, registration fees,
+costs of furnishing information to shareholders, costs or losses incurred in combining operations of the previously separate businesses, etc.,
+incurred in relation to the common control combination that is to be accounted for by using merger accounting is recognised as an expense
+in the period in which it is incurred.
+(b) Translation of foreign currencies
+The presentation currency of the Group is Renminbi. Foreign currency transactions during the year are translated into Renminbi at the applicable
+rates of exchange quoted by the People's Bank of China ("PBOC") prevailing on the transaction dates. Foreign currency monetary assets and
+liabilities are translated into Renminbi at the PBOC's rates at the balance sheet date.
+Exchange differences, other than those capitalised as construction in progress, are recognised as income or expense in the "finance costs"
+section of the consolidated income statement.
+The results of foreign operations are translated into Renminbi at the applicable rates quoted by the PBOC prevailing on the transaction dates.
+Balance sheet items, including goodwill arising on consolidation of foreign operations are translated into Renminbi at the closing foreign
+exchange rates at the balance sheet date. The income and expenses of foreign operation are translated into Renminbi at the spot exchange rates
+or an exchange rate that approximents the spot exchange rates on the transaction dates. The resulting exchange differences are recognised in
+other comprehensive income and accumulated in equity in the other reserves.
+On disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation is reclassified from
+equity to the consolidated income statement when the profit or loss on disposal is recognised.
+(c) Cash and cash equivalents
+Cash equivalents consist of time deposits with financial institutions with an initial term of less than three months when purchased. Cash
+equivalents are stated at cost, which approximates fair value.
+(d) Trade, bills and other receivables
+Trade, bills and other receivables are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method,
+less impairment losses for bad and doubtful debts (Note 2(o)). Trade, bills and other receivables are derecognised if the Group's contractual
+rights to the cash flows from these financial assets expire or if the Group transfers these financial assets to another party without retaining
+control or substantially all risks and rewards of the assets.
+(e) Inventories
+Inventories are stated at the lower of cost and net realisable value. Cost includes the cost of purchase computed using the weighted average
+method and, in the case of work in progress and finished goods, direct labour and an appropriate proportion of production overheads. Net
+realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs
+necessary to make the sale.
+Financial Statements (International)
+Construction in progress is transferred to property, plant and equipment when the asset is substantially ready for its intended use.
+No depreciation is provided in respect of construction in progress.
+(bb) Segment reporting
+193,836
+3 TURNOVER
+10 TAX EXPENSE
+Tax expense in the consolidated income statement represents:
+2017
+2016
+RMB million
+6,368
+RMB million
+9,021
+(723)
+(859)
+5,645
+* Interest rates per annum at which borrowing costs were capitalised for construction in progress
+8,162
+1,057
+7,146
+9,219
+2.37% to 4.41%
+2.65% to 4.82%
+Current tax
+- Provision for the year
+- Adjustment of prior years
+Deferred taxation (Note 28)
+2017
+1,501
+2016
+Interest expense
+Less: Interest expense capitalised*
+195
+(813)
+304
+Donations
+(152)
+(133)
+Fines, penalties and compensations
+(89)
+(152)
+Others
+Accretion expenses (Note 32)
+(649)
+(16,554)
+5,686
+Note:
+(i) Government grants for the years ended 31 December 2017 and 2016 primarily represent financial appropriation income and non-income tax refunds received from
+respective government agencies without conditions or other contingencies attached to the receipts of the grants.
+(ii) Impairment losses on long-lived assets for the year ended 31 December 2017 primarily represent impairment losses recognised in the exploration and production
+("E&P") segment of RMB 13,556 million (2016: RMB 11,605 million), the chemicals segment of RMB 4,922 million (2016: RMB 2,898 million) and for the refining
+segment of RMB 1,894 million (2016: RMB 1,655 million) (Note 38), most of which are impairment losses on property, plant and equipment (Note 16). The primary
+factors resulting in the E&P segment impairment loss were downward revision of oil and gas reserve due to price change and high operating and development cost
+for certain oil fields. The carrying values of these E&P properties were written down to recoverable amounts which were determined based on the present values of
+the expected future cash flows of the assets using a pre-tax discount rate 10.47% (2016: 10.47%). Further future downward revisions to the Group's oil price outlook
+would lead to further impairments which, in aggregate, are likely to be material. It is estimated that a general decrease of 5% in oil price, with all other variables held
+constant, would result in additional impairment loss on the Group's properties, plant and equipment relating to oil and gas producing activities by approximately RMB
+3,145 million. It is estimated that a general increase of 5% in operating cost, with all other variables held constant, would result in additional impairment loss on the
+Group's properties, plant and equipment relating to oil and gas producing activities by approximately RMB 2,659 million. It is estimated that a general increase of
+5% in discount rate, with all other variables held constant, would result in additional impairment loss on the Group's properties, plant and equipment relating to oil
+and gas producing activities by approximately RMB 461 million. The assets in the refining segment were written down due to the suspension of operations of certain
+production facilities, while the assets in the chemical segment were written down because of evidence indicates the economic performance of certain production
+facilities are worse than expected and due to the suspension of operations of certain production facilities.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+9 INTEREST EXPENSE
+Interest expense incurred
+Operating segments, and the amounts of each segment item reported in the consolidated financial statements, are identified from the financial
+information provided regularly to the Group's chief operating decision maker for the purposes of allocating resources to, and assessing the
+performance of the Group's various lines of business.
+RMB million
+RMB million
+26,668
+(72)
+(1,394)
+299
+(613)
+(453)
+Tax effect of tax losses not recognised
+1,485
+958
+Write-down of deferred tax assets
+Adjustment of prior years
+Actual income tax expense
+83
+Note:
+(ii) It is mainly due to the foreign operation in the Republic of Angola ("Angola") calculated the assessable income in accordance with the relevant income tax rules and
+regulations of Angola, and taxed at 50% of the assessable income as determined.
+26
+811
+(72)
+228
+16,279
+20,707
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+169
+Financial Statements (International)
+(i) The provision for PRC current income tax is based on a statutory income tax rate of 25% of the assessable income of the Group as determined in accordance with the
+relevant income tax rules and regulations of the PRC, except for certain entities of the Group in western regions in the PRC are taxed at preferential income tax rate of
+15% through the year 2020.
+(793)
+(2,786)
+(5,939)
+(10,317)
+21,313
+228
+(834)
+16,279
+20,707
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+2017
+2016
+Tax effect of non-deductible expenses
+Profit before taxation
+Expected PRC income tax expense at a statutory tax rate of 25%
+Tax effect of non-taxable income
+Tax effect of preferential tax rate (i)
+Effect of income taxes at foreign operations (ii)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+RMB million
+86,697
+RMB million
+80,151
+21,674
+20,038
+1,905
+1,529
+(909)
+Net realised and unrealised gain on derivative financial instruments not qualified as hedging
+Ineffective portion of change in fair value of cash flow hedges
+(1,277)
+(1,518)
+73
+5
+2
+(51)
+230
+159
+(12)
+2
+13
+2017
+72
+(1,489)
+RMB million
+65,873
+8,981
+74,854
+55,502
+8,385
+63,887
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+167
+Financial Statements (International)
+Financial Statements (International)
+168
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+RMB million
+14,410
+RMB million
+RMB million
+12,104
+Turnover primarily represents revenue from the sales of crude oil, natural gas, refined petroleum products and chemical products.
+4 OTHER OPERATING REVENUES
+Sale of materials, service and others
+Rental income
+5 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
+The following items are included in selling, general and administrative expenses:
+Operating lease charges
+Auditor's remuneration:
+- audit services
+others
+Impairment losses:
+- trade accounts receivable
+- other receivables
+- accounts prepayments
+6 PERSONNEL EXPENSES
+Salaries, wages and other benefits
+Contributions to retirement schemes (Note 37)
+2017
+RMB million
+58,930
+2016
+RMB million
+49,812
+793
+59,723
+909
+50,721
+2017
+2016
+for the year ended 31 December 2017
+7 TAXES OTHER THAN INCOME TAX
+2016
+City construction tax (ii)
+Jet fuel oil
+2,109.76
+1,411.20
+2,105.20
+1,948.64
+1,711.52
+1,218.00
+1,495.20
+(ii) City construction tax is levied on an entity based on its total paid amount of value-added tax, consumption tax and business tax. Pursuant to the 'Circular on the
+Overall Promotion of Pilot Program of Levying VAT in place of Business Tax'(Cai Shui [2016] 36) jointly issued by the Ministry of Finance and the State Administration
+of Taxation, revenue from modern service of the subsidiaries of the Group, are subject to VAT from 1 May 2016, and the applicable tax rate is 6%. Before May 1,
+2016, revenue from modern service of the subsidiaries of the Group, are subject to the business tax with a tax rate of 3% to 5%.
+8 OTHER OPERATING (EXPENSE)/INCOME, NET
+Fuel oil
+2017
+Gain on remeasurement of interests in the Shanghai SECCO (Note 35)
+Gain on dilution and remeasurement of interests in the Pipeline Ltd
+RMB million
+4,893
+2016
+RMB million
+4,101
+3,941
+20,562
+Impairment losses on long-lived assets (ii)
+(21,258)
+(16,425)
+Loss on disposal of property, plant, equipment and other non-currents assets, net
+Consumption tax (i)
+Lubricant oil
+Government grant (i)
+Naphtha
+Solvent oil
+Education surcharge
+Resources tax
+Other
+Note:
+(i) Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Products
+2016
+RMB million
+192,907
+RMB million
+18,274
+18,155
+2017
+13,695
+Diesel
+13,811
+Gasoline
+13 January 2015
+RMB/Ton
+232,006
+Effective from
+2,449
+5,459
+3,871
+4,841
+235,292
+227
+Supervisors' fee
+RMB'000
+RMB'000
+Total
+RMB'000
+or receivable in
+respect of a
+person's services
+as a director,
+whether of the
+2017
+Retirement
+scheme
+contributions
+Bonuses
+RMB'000
+Company or
+its subsidiary
+undertaking
+Emoluments paid
+537
+Directors'/
+76
+480
+207
+487
+76
+840
+770
+207
+480
+207
+480
+207
+Salaries,
+allowances and
+benefits in kind
+RMB'000
+122
+-
+Emoluments paid or receivable in respect of
+director's other services in connection with the
+management of the affairs of the Company or
+its subsidiary undertaking
+24,751
+170
+103
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+(a) Directors' and supervisors' emoluments
+The emoluments of every director and supervisor is set out below:
+Name
+Directors
+Wang Yupu (i)
+Dai Houliang
+Li Yunpeng
+Wang Zhigang
+Zhang Haichao
+Jiao Fangzheng
+Ma Yongsheng
+Independent non-executive directors
+Jiang Xiaoming
+Andrew Y. Yan
+Tang Min
+Fan Gang
+Supervisors
+Zhao Dong
+Liu Zhongyun
+Zhou Hengyou
+Zou Huiping
+Jiang Zhenying
+Yu Renming
+Yu Xizhi (ii)
+Liu Yun (iii)
+Wang Yajun (ii)
+Total
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+51
+45,600
+1,228
+161,187
+11,835
+11,317
+Current assets
+RMB million
+RMB million
+RMB million
+2016
+2017
+2016
+2017
+RMB million
+31 December
+31 December 31 December
+CIR
+Zhongtian Synergetic Energy
+31 December
+SIBUR (i)
+31 December
+2017
+RMB million
+2016
+RMB million
+31 December
+Sinopec Finance
+31 December 31 December
+2016
+2017
+RMB million RMB million
+RMB million
+31 December
+2017
+Pipeline Ltd
+The Republic of
+Kazakhstan
+British
+Virgin Islands
+of the Group's principal associates:
+Summarised financial information and reconciliation to their carrying amounts in respect
+gas extraction
+149,457
+Equity method
+20,719
+7,292
+(88)
+(6)
+(3,350)
+(3,176)
+Non-current liabilities
+(928)
+(908)
+(8,078)
+(10,668)
+(20,554)
+(142,386)
+(154,212)
+(5,009)
+(933)
+Current liabilities
+3,842
+1,673
+50,301
+51,553
+158,938
+16,478
+17,782
+42,124
+40,972
+Non-current assets
+5,120
+5,612
+8,232
+(61,771)
+manufacturing of
+coal-chemical products
+Crude oil and natural
+PRC
+Country of
+incorporation
+Measurement
+method
+Principal activities
+% of
+ownership
+interests
+50.00
+Sinopec Sichuan To East China Gas
+Name of company
+The Group's principal associates are as follows:
+The Group's investments in associates are with companies primarily engaged in the oil and gas, petrochemical, and marketing and distribution
+operations in the PRC.
+19 INTEREST IN ASSOCIATES
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+175
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Key assumptions used for cash flow forecasts for these entities are the gross margin and sales volume. Management determined the budgeted gross
+margin based on the gross margin achieved in the period immediately before the budget period and management's expectation on the future trend
+of the prices of crude oil and petrochemical products. The sales volume was based on the production capacity and/or the sales volume in the period
+immediately before the budget period.
+Goodwill represents the excess of the cost of purchase over the fair value of the underlying assets and liabilities. The recoverable amounts of the
+above cash generating units are determined based on value in use calculations. These calculations use cash flow projections based on financial
+budgets approved by management covering a one-year period and pre-tax discount rates primarily ranging from 10.8% to 11.4% (2016: 10.4% to
+11.0%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no major impairment loss
+was recognised.
+6,353
+212
+8,634
+167
+Other units without individually significant goodwill
+941
+879
+Trading of petrochemical products
+Sinopec (Hong Kong) Limited
+2,541
+Principal place
+50.00
+Operation of natural gas
+PRC
+PRC
+Equity method
+Mining coal and
+38.75
+("CIR")
+Caspian Investments Resources Ltd.
+("Zhongtian Synergetic Energy")
+Company Limited
+Zhongtian Synergetic Energy
+petrochemical products
+and manufacturing
+Russia
+Russia
+Equity method
+financial services
+Proccessing natural gas
+10.00
+PAO SIBUR Holding ("SIBUR")
+("Sinopec Finance")
+PRC
+PRC
+Equity method
+Provision of non-banking
+49.00
+Sinopec Finance Company Limited
+pipelines and auxiliary
+facilities
+Pipeline Co., Ltd. ("Pipeline Ltd")
+of business
+PRC
+Equity method
+4,043
+(31,494)
+(170)
+221
+75,728
+68,467
+14,226
+12,275
+2,076
+1,840
+2,027
+132
+(770)
+(12)
+(266)
+(83)
+(91)
+74
+17,202
+14,226
+58,526
+54,241
+Operating rights of service stations
+Long-term receivables from and prepayment to Sinopec Group Company and fellow subsidiaries
+Prepayments for construction projects to third parties
+Others (i)
+Balance at 31 December
+Note:
+31 December
+2017
+RMB million
+(357)
+31 December
+2016
+(422)
+(229)
+Reclassification to other assets
+Disposals
+Exchange adjustments
+Balance at 31 December
+Accumulated amortisation:
+Balance at 1 January
+Amortisation charge for the year
+Transferred from other long-term assets
+Reclassification to other assets
+Written back on disposals
+Exchange adjustments
+Balance at 31 December
+Net book value:
+23 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+2017
+2016
+RMB million
+RMB million
+68,467
+63,324
+2,614
+300
+4,151
+4,279
+3,987
+994
+(2,603)
+(531)
+(32,137)
+RMB million
+26,896
+36,908
+10,012
+8,310
+4,361
+1,777
+(28)
+(75)
+14,345
+10,012
+34,268
+26,896
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+179
+Financial Statements (International)
+48,180
+Net assets attributable to owners of the Company
+7,151
+6,207
+17,378
+17,623
+97,332
+23,461
+24,751
+45,600
+48,180
+Net assets
+(883)
+48,613
+34,268
+(169)
+2,670
+20,726
+20,385
+4,999
+2,234
+21,989
+20,630
+81,982
+70,145
+(i) Others mainly comprise prepaid operating lease charges over one year and catalyst expenditures.
+The cost of operating rights of service stations is charged to expense on a straight-line basis over the respective periods of the rights. The
+movement of operating rights of service stations is as follows:
+Operating rights of service stations
+Cost:
+Balance at 1 January
+Additions
+Decreases
+Balance at 31 December
+Accumulated amortisation:
+Balance at 1 January
+Additions
+Decreases
+Balance at 31 December
+Net book value at 31 December
+2017
+RMB million
+2016
+RMB million
+36,908
+11,837
+34,407
+(132)
+4,043
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of petrochemical products
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO") (Note 35)
+120,013
+Balance at 31 December 2017
+(2,573)
+(140)
+Exchange adjustments
+(211)
+(878)
+Disposals
+(1,702)
+(859)
+Reclassification to lease prepayments and other long-term assets
+(50)
+(673)
+Reclassifications
+81,275
+54,605
+19,881
+6.789
+Transferred from construction in progress
+14,464
+11,983
+1,627
+854
+Additions
+1,658,541
+1,658,541
+892,936
+650,685
+667,657
+114,920
+723
+(8,751)
+(10,985)
+(199)
+940,312
+(12,074)
+Written back on disposals
+(330)
+(316)
+(14)
+Reclassification to lease prepayments and other long-term assets
+(311)
+(58)
+369
+Reclassifications
+14,921
+3,901
+10,580
+440
+Impairment losses for the year
+100,734
+47,914
+49,005
+3,815
+Depreciation for the year
+868,269
+449,609
+374,191
+44,469
+Balance at 1 January 2016
+Accumulated depreciation:
+1,727,982
+(2,912)
+(11,312)
+(534)
+Balance at 1 January 2017
+650,685
+107,873
+Balance at 1 January 2016
+Cost:
+Total
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+Oil and gas,
+properties
+RMB million
+Plants and
+buildings
+RMB million
+16 PROPERTY, PLANT AND EQUIPMENT
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+173
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+of shares
+121,071,209,646
+121,071,209,646
+2016
+Number
+2017
+Number
+of shares
+121,071,209,646
+121,071,209,646
+(3)
+46,669
+(2)
+51,242
+2016
+RMB million
+46,672
+RMB million
+51,244
+2017
+Weighted average number of shares (diluted) at 31 December
+Weighted average number of shares at 31 December
+(ii) Weighted average number of shares (diluted)
+Profit attributable to ordinary shareholders of the Company
+After tax effect of employee share option scheme of Shanghai Petrochemical
+Profit attributable to ordinary shareholders of the Company (diluted)
+(i) Profit attributable to ordinary shareholders of the Company (diluted)
+Additions
+892,936
+277
+880,711
+114,920
+Balance at 31 December 2016
+3,069
+187
+2,800
+82
+Exchange adjustments
+(35,636)
+(35,100)
+(27)
+(509)
+Disposals
+(2,332)
+(2,202)
+(130)
+Reclassification to lease prepayments and other long-term assets
+(1,311)
+(115)
+1,426
+Reclassifications
+4,323
+87,399
+1,601,718
+50,025
+31,473
+5,901
+Transferred from construction in progress
+626
+613,134
+3,420
+(22)
+(17,067)
+(17,623)
+(6,900)
+(7,773)
+(87,399)
+(81,229)
+(7,467)
+(6,876)
+81,837
+85,552
+152,325
+RMB million
+RMB million
+129,581
+2016
+2017
+Exchange adjustments
+Disposals
+Impairment losses for the year
+Reclassification to lease prepayments and other long-term assets
+Transferred to property, plant and equipment
+Dry hole costs written off
+Additions
+Balance at 1 January
+17 CONSTRUCTION IN PROGRESS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+174
+The additions to oil and gas properties of the Group for the year ended 31 December 2017 included RMB 1,627 million (2016: RMB 3,420 million)
+of estimated dismantlement costs for site restoration (Note 32).
+650,774
+(252)
+411,121
+(1,486)
+(1,445)
+1,157
+1,004
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Sinopec Zhenhai Refining and Chemical Branch
+("Sinopec Zhenhai")
+Sinopec Beijing Yanshan Petrochemical Branch
+("Sinopec Yanshan")
+31 December
+2016
+RMB million
+RMB million
+2017
+31 December
+Principal activities
+(7,663)
+6,353
+14,016
+31 December
+2016
+RMB million
+8,634
+(7,861)
+16,495
+31 December
+2017
+RMB million
+Impairment tests for cash-generating units containing goodwill
+Goodwill is allocated to the following Group's cash-generating units:
+Less: Accumulated impairment losses
+Cost
+18 GOODWILL
+As at 31 December 2017, the amount of capitalised cost of exploratory wells included in construction in progress related to the exploration and
+production segment was RMB 9,737 million (2016: RMB 12,192 million). The geological and geophysical costs paid during the year ended 31
+December 2017 were RMB 3,710 million (2016: RMB 2,899 million).
+129,581
+Balance at 31 December
+118,645
+116
+(43)
+(315)
+171,840
+67,813
+Balance at 31 December 2017
+(122)
+Reclassifications
+19,836
+10,450
+8,832
+554
+Impairment losses for the year
+105,717
+46,585
+55,057
+4,075
+Depreciation for the year
+967,947
+483,814
+435,561
+48,572
+Balance at 1 January 2017
+967,947
+483,814
+435,561
+48,572
+Balance at 31 December 2016
+1,976
+84
+1,865
+27
+Exchange adjustments
+(77)
+199
+Reclassification to lease prepayments and other long-term assets
+(238)
+690,594
+409,122
+215,124
+66,348
+Balance at 31 December 2016
+733,449
+431,102
+238,943
+63,404
+Balance at 1 January 2016
+Net book value:
+1,077,208
+(2,209)
+Transferred from construction in progress
+Transferred from other long-term assets
+(96)
+529,191
+52,200
+Balance at 31 December 2017
+(2,056)
+(57)
+Exchange adjustments
+(9,858)
+(9,079)
+(195)
+(584)
+Written back on disposals
+(4,225)
+(2,682)
+(1,305)
+495,817
+The calculation of diluted earnings per share for the year ended 31 December 2017 is based on the profit attributable to ordinary shareholders of
+the Company (diluted) of RMB 51,242 million (2016: RMB 46,669 million) and the weighted average number of shares of 121,071,209,646 (2016:
+121,071,209,646) calculated as follows:
+Additions
+Cost:
+distribution of
+("Sinopec SABIC Tianjin")
+petrochemical products
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+FREP
+BASF-YPC
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2017
+2016
+2017
+2016
+2017
+2016
+2017
+2016
+2017
+2016
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+Current assets
+Cash and cash equivalents
+5,772
+8,172
+1,800
+1,394
+2,352
+1,165
+4,916
+1,259
+6,524
+3,634
+Other current assets
+11,013
+10,269
+5,335
+4,852
+Petrochemical Company Limited
+2,462
+PRC
+Equity method
+BASF-YPC Company Limited
+40.00
+Manufacturing and
+Equity method
+PRC
+PRC
+("BASF-YPC")
+distribution of
+petrochemical products
+Taihu Limited ("Taihu")
+49.00
+Crude oil and natural
+Equity method
+Cyprus
+Russia
+gas extraction
+Yanbu Aramco Sinopec Refining
+37.50
+Petroleum refining and
+Equity method
+Saudi Arabia
+Saudi Arabia
+Company Ltd. ("YASREF")
+processing business
+Sinopec SABIC Tianjin
+50.00
+Manufacturing and
+PRC
+PRC
+1,616
+6,826
+(334)
+(5,407)
+(1,187)
+(1,236)
+Other current liabilities
+(5,049)
+(4,643)
+(1,982)
+(2,107)
+(1,914)
+(1,616)
+(11,864) (6,466)
+(4,546)
+(2,657)
+Total current liabilities
+(6,184)
+(6,424)
+(2,215)
+(2,890)
+(1,934)
+(1,950)
+(17,271)
+(7,653)
+(5,782)
+(2,657)
+Non-current liabilities
+Non-current financial liabilities (ii)
+(20)
+10,816
+(783)
+(1,781)
+2,709
+1,886
+Total current assets
+16,785
+18,441
+7,135
+6,246
+4,814
+2,781
+15,732
+8,085
+9,233
+5,520
+Non-current assets
+19,740
+21,903
+12,075
+13,530
+7,978
+8,279
+51,553
+57,054
+13,248
+14,003
+Current liabilities
+Current financial liabilities (i)
+(1,135)
+(233)
+(13,654)
+PRC
+Manufacturing refining
+oil products
+Pipeline Ltd (ii)
+2017
+Sinopec Finance
+2016
+RMB million
+RMB million
+2017
+RMB million
+2016
+RMB million
+SIBUR(i)
+2017
+Zhongtian Synergetic Energy
+CIR
+2017
+RMB million
+RMB million
+2016
+RMB million
+2017
+2016
+RMB million
+RMB million
+Turnover
+Profit/(loss) for the year
+Other comprehensive (loss)/income
+Total comprehensive income/(loss)
+Dividends declared by associates
+5,644
+191
+3,542
+2,442
+52,496
+Year ended 31 December
+3,569
+Summarised statement of comprehensive income
+3,104
+23,461
+96,761
+17,623
+17,378
+6,207
+7,151
+Net assets attributable to non-controlling interests
+571
+Share of net assets from associates
+24,090
+22,800
+12,128
+11,496
+9,676
+6,829
+6,734
+3,104
+3,576
+Carrying
+Amounts
+24,090
+22,800
+12,128
+11,496
+9,676
+6,829
+6,734
+3,576
+Equity method
+2,563
+2,543
+960
+(26)
+48
+(305)
+(1,759)
+(167)
+331
+The share of profit and other comprehensive income for the year ended 31 December 2017 in all individually immaterial associates accounted for
+using equity method in aggregate was RMB 3,182 million (2016: RMB 2,869 million) and RMB 569 million (2016: other comprehensive loss RMB
+384 million) respectively. As at 31 December 2017, the carrying amount of all individually immaterial associates accounted for using equity method
+in aggregate was RMB 23,899 million (2016: RMB 21,510 million).
+Note:
+(i) Sinopec is able to exercise significant influence in SIBUR since Sinopec has a member in SIBUR's Board of Director and has a member in SIBUR's Management Board.
+(ii) The summarised income statement for the year 2016 of Pipeline Ltd presents the operating results from the date when the Group lost control to 31 December 2016.
+(iii) Including foreign currency translation differences.
+176
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+20 INTEREST IN JOINT VENTURES
+The Group's principal interests in joint ventures are as follows:
+Name of entity
+Fujian Refining & Petrochemical
+Company Limited ("FREP")
+% of ownership
+interests
+Principal activities
+Measurement
+method
+Country of
+incorporation
+of business
+Principal place
+50.00
+(86)
+2,205
+(121)
+748
+51
+1,536
+1,526
+9,601
+123
+(610)
+(3,518)
+-
+(246)
+(175)
+(260)
+(334)
+662
+2,543
+51
+1.290
+1,351
+9,341
+123
+(944)
+(2,856)
+23
+221
+Share of profit/(loss) from associates
+1,272
+26
+753
+Share of other comprehensive (loss)/income from associates (iii)
+(19,985)
+(955)
+(1,492)
+5,113
+3,184
+Tax expense
+(1,699)
+(1,574)
+(1,151)
+(648)
+(553)
+(518)
+57
+56
+(1,279)
+(783)
+Profit/(loss) for the year
+5,278
+4,902
+3,414
+1,958
+1,144
+1,893
+605
+84
+3,834
+2,401
+Other comprehensive income/(loss)
+25
+1,851
+28
+(554)
+548
+1,697
+(33)
+208
+130
+36
+19
+142
+40
+45
+33
+104
+30
+Interest expense
+(857)
+(929)
+(71)
+(173)
+(142)
+(113)
+(1,382)
+(1,216)
+(223)
+(245)
+Profit/(loss) before taxation
+6,977
+6,476
+4,565
+2,606
+2,411
+(36)
+647
+5,278
+(208)
+243
+The share of profit and other comprehensive income for the year ended 31 December 2017 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was RMB 3,925 million (2016: RMB 2,061 million) and RMB 994 million (2016: other comprehensive loss
+RMB 934 million) respectively. As at 31 December 2017, the carrying amount of all individually immaterial joint ventures accounted for using equity
+method in aggregate was RMB 21,552 million (2016: RMB 22,885 million).
+Note:
+(i) Excluding trade accounts payable and other payables.
+(ii) Excluding provisions.
+(iii) Other reflects the excess of fair value of the consideration transferred over the Group's share of the fair value of the investee's identifiable assets and liabilities as of
+the transaction date.
+(iv) Including foreign currency translation differences.
+21 AVAILABLE-FOR-SALE FINANCIAL ASSETS
+31 December
+2017
+RMB million
+31 December
+2016
+RMB million
+Equity securities, listed and at quoted market price
+Other investment, unlisted and at cost
+178
+1,544
+1,722
+262
+11,175
+11,437
+Less: Impairment loss for investments
+46
+29
+1,676
+11,408
+Other investment, unlisted and at cost, represents the Group's interests in privately owned enterprises which are mainly engaged in oil and natural
+gas activities and chemical production.
+The impairment losses relating to investments for the year ended 31 December 2017 amounted to RMB 17 million (2016: nil).
+178
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+22 LEASE PREPAYMENTS
+875
+Total comprehensive income/(loss)
+12
+Share of other comprehensive
+4,902
+3,414
+1,958
+1,169
+3,744
+51
+731
+3,834
+2,401
+Dividends declared by joint ventures
+1,250
+1,109
+155
+1,375
+300
+Share of net profit/(loss) from
+joint ventures
+2,639
+2,451
+1,366
+783
+541
+895
+227
+31
+1,917
+1,201
+income/(loss) from joint ventures (iv)
+(2,754)
+(2,763)
+(1,043)
+16,021
+15,384
+8,100
+6,931
+13,505
+13,454
+12,557
+11,497
+Net assets attributable to owners
+of the Company
+16,451
+13,683
+16,021
+15,384
+7,818
+6,690
+13,505
+13,454
+12,557
+11,497
+Net assets attributable to
+non-controlling interests
+282
+241
+Share of net assets from joint ventures
+8,226
+6,842
+13,683
+6,409
+16,451
+(5,369)
+(72)
+(49)
+(35,619)
+(43,028)
+(4,101)
+(5,337)
+Other non-current liabilities
+(236)
+(252)
+(19)
+(10)
+(2,686)
+(2,130)
+(890)
+(1,004)
+(41)
+(32)
+Total non-current liabilities
+(13,890)
+(20,237)
+(974)
+(1,502)
+(2,758)
+(2,179)
+(36,509)
+(44,032)
+(4,142)
+Net assets
+6,154
+3,831
+3,278
+2016
+2017
+2016
+2017
+2016
+RMB million RMB million RMB million RMB million RMB million RMB million
+Turnover
+Depreciation, depletion and
+amortisation
+Interest income
+49,356
+41,764
+21,020
+17,323
+12,520
+9,658
+2017
+2016
+RMB million RMB million
+61,587
+41,286
+2017
+2016
+RMB million RMB million
+22,286
+16,337
+(16)
+(52)
+(1,793)
+(2,275)
+(715)
+2017
+Sinopec SABIC Tianjin
+YASREF
+Taihu
+5,064
+5,045
+6,279
+5,749
+Other (iii)
+743
+Carrying Amounts
+8,226
+6,842
+6,409
+6,154
+3,831
+4,021
+Balance at 1 January
+5,064
+6,279
+5,749
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+177
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+20 INTEREST IN JOINT VENTURES (Continued)
+Summarised statement of comprehensive income
+Year ended 31 December
+FREP
+BASF-YPC
+5,045
+349
+The calculation of basic earnings per share for the year ended 31 December 2017 is based on the profit attributable to ordinary shareholders
+of the Company of RMB 51,244 million (2016: RMB 46,672 million) and the weighted average number of shares of 121,071,209,646 (2016:
+121,071,209,646) during the year.
+6,333
+300
+300
+300
+300
+300
+300
+300
+520
+41
+365
+114
+556
+47
+379
+130
+699
+745
+12211177
+431
+196
+2,916
+424
+|||| ||1=2
+300
+300
+218
+67
+(ii) Mr Yu Xizhi were elected to be supervisor from 28 June 2017; Mr Wang Yajun ceased being supervisor from 28 June 2017.
+(i) Mr. Wang Yupu ceased being chairman and independent director from 22 September 2017.
+Notes:
+Wang Yajun
+Total
+Yu Renming
+6,147
+1,200
+499
+2,936
+1,512
+595
+66
+325
+204
+594
+67
+309
+218
+619
+67
+334
+218
+619
+334
+300
+300
+300
+Ma Yongsheng(iv)
+Li Chunguang(iv)
+Zhang Jianhua(iv)
+Independent non-executive directors
+Andrew Y. Yan
+Tang Min
+Fan Gang
+Supervisors
+Liu Yun
+Liu Zhongyun
+Zhou Hengyou
+Zou Huiping
+Jiang Zhenying
+Salaries,
+allowances and
+benefits in kind
+RMB'000
+2016
+Retirement
+Bonuses
+RMB'000
+scheme
+contributions
+RMB'000
+Directors'/
+Supervisors' fee
+RMB'000
+Total
+RMB'000
+214
+459
+15 BASIC AND DILUTED EARNINGS PER SHARE
+Jiao Fangzheng
+Directors
+Wang Yupu
+Dai Houliang
+Wang Zhigang
+Zhang Haichao
+Name
+respect of a
+person's services
+as a director,
+whether of the
+Company or
+its subsidiary
+undertaking
+300
+300
+300
+300
+71
+758
+71
+758
+71
+758
+42
+(iii) Mr Liu Yun ceased being supervisor and chairman of board of supervisor from 16 March 2017.
+267
+417
+1,200
+5,768
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)
+(a) Directors' and supervisors' emoluments (Continued)
+The emoluments of every director and supervisor is set out below: (Continued)
+Emoluments paid or receivable in respect of
+director's other services in connection with the
+management of the affairs of the Company or
+its subsidiary undertaking
+Emoluments paid
+or receivable in
+17
+(iv) Mr. Zhang Jianhua ceased being director from 13 July 2016; Mr. Li Chunguang ceased being director from 26 August 2016; Mr. Ma Yongsheng was elected as
+director from 25 February 2016.
+Jiang Xiaoming
+171
+Changes in fair value recognised during the year
+Available-for-sale securities:
+2,014
+(465)
+2,479
+(1,580)
+313
+(1,893)
+in other comprehensive income
+Net movement during the year recognised
+5,164
+(1,115)
+6,279
+(503)
+72
+(575)
+to the consolidated income statement
+Reclassification adjustments for amounts transferred
+11
+(2)
+13
+(3)
+1
+(57)
+(4)
+(57)
+(7)
+(472)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+6,805
+4,298
+4,298
+(3,792)
+(4,376)
+313
+(3,792)
+(4,689)
+45
+45
+1,053
+(24)
+(7)
+(17)
+(57)
+(57)
+Other comprehensive income
+Foreign currency translation differences
+associates and joint ventures
+Share of other comprehensive profit of
+in other comprehensive income
+Net movement during the year recognised
+(24)
+(17)
+amount of hedged items
+1,053
+652
+2016
+20,582
+2017
+RMB million
+Final cash dividends in respect of the previous financial year, approved and paid during the year of
+RMB 0.17 per share (2016: RMB 0.06 per share)
+Pursuant to a resolution passed at the director's meeting on 23 March 2018, final dividends in respect of the year ended 31 December 2017 of
+RMB 0.40 (2016: RMB 0.17) per share totaling RMB 48,428 million (2016: RMB 20,582 million) were proposed for shareholders' approval at the
+Annual General Meeting. Final cash dividend proposed after the balance sheet date has not been recognised as a liability at the balance sheet date.
+Dividends payable to shareholders of the Company attributable to the previous financial year, approved during the year represent:
+Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 25 August 2017, the directors authorised to
+declare the interim dividends for the year ending 31 December 2017 of RMB 0.10 (2016: RMB 0.079) per share totaling RMB 12,107 million (2016:
+RMB 9,565 million). Dividends were paid on 20 September 2017.
+30,147
+9,565
+20,582
+60,535
+12,107
+48,428
+RMB million
+RMB million
+2016
+2017
+Dividends declared and paid during the year of RMB 0.10 per share (2016: RMB 0.079 per share)
+Dividends declared after the balance sheet date of RMB 0.40 per share (2016: RMB 0.17 per share)
+Dividends payable to shareholders of the Company attributable to the year represent:
+For the year ended 31 December 2017, the five highest paid individuals in the Company included one director and four senior management. The
+emolument paid to each of one director and four senior management was below RMB 1,000 thousand. The total salaries, wages and other benefits
+was RMB 3,996 thousand, and the total amount of their retirement scheme contributions was RMB 360 thousand. For the year ended 31 December
+2016, the five highest paid individuals in the Company included one director and four senior management.
+12 SENIOR MANAGEMENT'S EMOLUMENTS
+for the year ended 31 December 2017
+Financial Statements (International)
+(3,161)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+RMB million
+7,264
+13 DIVIDENDS
+Pursuant to the shareholders' approval at the Annual General Meeting on 18 May 2016, a final dividend of RMB 0.06 per share totaling RMB 7,264
+million according to total shares of 23 June 2016 was approved. All dividends have been paid in the year ended 31 December 2016.
+(3,813)
+(1,074)
+240
+Pursuant to the shareholders' approval at the Annual General Meeting on 28 June 2017, a final dividend of RMB 0.17 per share totaling RMB
+20,582 million according to total shares of 18 July 2017 was approved. All dividends have been paid in the year ended 31 December 2017.
+instruments recognised during the year
+Amounts transferred to initial carrying
+Effective portion of changes in fair value of hedging
+Cash flow hedges:
+amount
+RMB million
+effect
+RMB million
+Net of tax
+Tax
+Before tax
+amount
+RMB million
+(1,314)
+RMB million RMB million
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+172
+14 OTHER COMPREHENSIVE INCOME
+2017
+Net of tax
+amount
+RMB million
+Before tax
+amount
+Tax
+effect
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2016
+for the year ended 31 December 2017
+Financial Statements (International)
+33 SHARE CAPITAL (Continued)
+Financial Statements (International)
+186
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2017
+There were no changes in the management's approach to capital management of the Group during the year. Neither the Company nor any of its
+subsidiaries is subject to externally imposed capital requirements.
+Management optimises the structure of the Group's capital, which comprises of equity and debts. In order to maintain or adjust the capital structure
+of the Group, management may cause the Group to issue new shares, adjust the capital expenditure plan, sell assets to reduce debt, or adjust the
+proportion of short-term and long-term loans. Management monitors capital on the basis of the debt-to-capital ratio, which is calculated by dividing
+long-term loans (excluding current portion), including long-term debts and loans from Sinopec Group Company and fellow subsidiaries, by the total
+of equity attributable to shareholders of the Company and long-term loans (excluding current portion), and liability-to-asset ratio, which is calculated
+by dividing total liabilities by total assets. Management's strategy is to make appropriate adjustments according to the Group's operating and
+investment needs and the changes of market conditions, and to maintain the debt-to-capital ratio and the liability-to-asset ratio of the Group at a
+range considered reasonable. As at 31 December 2017, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 12.0% (2016: 14.2
+%) and 46.5% (2016: 44.5 %), respectively.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 29 and 34, respectively.
+185
+34 COMMITMENTS AND CONTINGENT LIABILITIES
+Operating lease commitments
+The Group leases land and buildings, service stations and other equipment through non-cancellable operating leases. These operating leases do not
+contain provisions for contingent lease rentals. None of the rental agreements contains escalation provisions that may require higher future rental
+payments.
+At 31 December 2017 and 2016, the future minimum lease payments under operating leases are as follows:
+Within one year
+Between one and two years
+Between two and three years
+Capital management
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+During the year ended 31 December 2013, the Company issued 114,076 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2015, the Company issued 2,790,814,006 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+2016
+Between three and four years
+31 December
+2017
+RMB million
+RMB million
+95,558
+25,513
+95,558
+25,513
+121,071
+121,071
+The Company was established on 25 February 2000 with a registered capital of 68.8 billion domestic state-owned shares with a par value of RMB
+1.00 each. Such shares were issued to Sinopec Group Company in consideration for the assets and liabilities transferred to the Company (Note 1).
+Pursuant to the resolutions passed at an Extraordinary General Meeting held on 25 July 2000 and approvals from relevant government authorities,
+the Company is authorised to increase its share capital to a maximum of 88.3 billion shares with a par value of RMB 1.00 each and offer not more
+than 19.5 billion shares with a par value of RMB 1.00 each to investors outside the PRC. Sinopec Group Company is authorised to offer not more
+than 3.5 billion shares of its shareholdings in the Company to investors outside the PRC. The shares sold by Sinopec Group Company to investors
+outside the PRC would be converted into H shares.
+In October 2000, the Company issued 15,102,439,000 H shares with a par value of RMB 1.00 each, representing 12,521,864,000 H shares and
+25,805,750 American Depositary Shares ("ADSS", each representing 100 H shares), at prices of HKD 1.59 per H share and USD 20.645 per ADS,
+respectively, by way of a global initial public offering to Hong Kong and overseas investors. As part of the global initial public offering, 1,678,049,000
+state-owned ordinary shares of RMB 1.00 each owned by Sinopec Group Company were converted into H shares and sold to Hong Kong and
+overseas investors.
+In July 2001, the Company issued 2.8 billion listed A shares with a par value of RMB 1.00 each at RMB 4.22 by way of a public offering to natural
+persons and institutional investors in the PRC.
+During the year ended 31 December 2010, the Company issued 88,774 listed A shares with a par value of RMB 1.00 each, as a result of exercise of
+188,292 warrants entitled to the Bonds with Warrants.
+During the year ended 31 December 2011, the Company issued 34,662 listed A shares with a par value of RMB 1.00 each, as a result of conversion
+by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2012, the Company issued 117,724,450 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+On 14 February 2013, the Company issued 2,845,234,000 listed H shares ("the Placing") with a par value of RMB 1.00 each at the Placing Price
+of HKD 8.45 per share. The aggregate gross proceeds from the Placing amounted to approximately HKD 24,042,227,300.00 and the aggregate net
+proceeds (after deduction of the commissions and estimated expenses) amounted to approximately HKD 23,970,100,618.00.
+In June 2013, the Company issued 21,011,962,225 listed A shares and 5,887,716,600 listed H shares as a result of bonus issues of 2 shares
+converted from the retained earnings, and 1 share transferred from the share premium for every 10 existing shares.
+During the year ended 31 December 2014, the Company issued 1,715,081,853 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+All A shares and H shares rank pari passu in all material aspects.
+Between four and five years
+Thereafter
+31 December
+2016
+RMB million
+At 31 December 2017 and 2016, capital commitments are as follows:
+178,383
+148,099
+These capital commitments relate to oil and gas exploration and development, refining and petrochemical production capacity expansion projects,
+the construction of service stations and oil depots and investment commitments.
+Note:
+(i) The investment commitments of the Group is RMB 3,364 million (2016: RMB 4,173 million).
+Commitments to joint ventures
+Pursuant to certain of the joint venture agreements entered into by the Group, the Group is obliged to purchase products from the joint ventures
+based on market prices.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+116,379
+31,720
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+34 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+Exploration and production licenses
+Exploration licenses for exploration activities are registered with the Ministry of Land and Resources. The maximum term of the Group's exploration
+licenses is 7 years, and may be renewed twice within 30 days prior to expiration of the original term with each renewal being for a two-year term.
+The Group is obligated to make progressive annual exploration investment relating to the exploration blocks in respect of which the license is
+issued. The Ministry of Land and Resources also issues production licenses to the Group on the basis of the reserve reports approved by relevant
+authorities. The maximum term of a full production license is 30 years unless a special dispensation is given by the State Council. The maximum
+term of production licenses issued to the Group is 80 years as a special dispensation was given to the Group by the State Council. The Group's
+production license is renewable upon application by the Group 30 days prior to expiration.
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Land and Resources annually
+which are expensed. Payments incurred were approximately RMB 308 million for the year ended 31 December 2017 (2016: RMB 333 million).
+Estimated future annual payments are as follows:
+Within one year
+31 December
+Between one and two years
+Between two and three years
+Between three and four years
+for the year ended 31 December 2017
+120,386
+57,997
+31 December
+2017
+RMB million
+344,878
+Authorised and contracted for (i)
+Authorised but not contracted for
+31 December
+2017
+31 December
+RMB million
+2016
+RMB million
+11,114
+14,917
+11,492
+14,228
+10,730
+13,966
+10,552
+13,217
+10,428
+12,980
+202,806
+275,570
+257,122
+Capital commitments
+95,557,771,046 listed A shares (2016: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 listed H shares (2016: 25,513,438,600) of RMB 1.00 each
+Receipts in advance
+33 SHARE CAPITAL
+5,828
+180,129
+31 December
+2017
+RMB million
+31 December
+2016
+Within 1 month or on demand
+Over 6 months
+31 ACCRUED EXPENSES AND OTHER PAYABLES
+Salaries and welfare payable
+174,301
+Interest payable
+Other payables
+Financial liabilities carried at amortised costs
+Taxes other than income tax
+Derivative financial instruments
+32 PROVISIONS
+RMB million
+195,189
+159,953
+Payables for constructions
+6,251
+177,224
+13,350
+9,499
+200,073
+6,462
+206,535
+13,168
+Between four and five years
+Thereafter
+(ii) These corporate bonds are carried at amotised cost. At 31 December 2017, RMB 17,902 million (USD denominated corporate bonds) are guaranteed by Sinopec
+Group Company.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+183
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+30 TRADE ACCOUNTS AND BILLS PAYABLES
+Amounts due to third parties
+Amounts due to Sinopec Group Company and fellow subsidiaries
+Amounts due to associates and joint ventures
+Bills payable
+Trade accounts and bills payables measured at amortised cost
+The ageing analysis of trade accounts and bills payables are as follows:
+31 December
+2017
+RMB million
+31 December
+2016
+RMB million
+154,882
+8,076
+Registered, issued and fully paid
+12,693
+7,483
+Accretion expenses
+Utilised for the year
+Exchange adjustments
+Balance at 31 December
+184 Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+2017
+RMB million
+36,918
+2016
+RMB million
+33,115
+1,627
+3,420
+Balance at 1 January
+Provision for the year
+1,501
+(467)
+(843)
+(172)
+169
+39,407
+36,918
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+1,057
+Provisions primarily represent provision for future dismantlement costs of oil and gas properties. The Group has mainly committed to the PRC
+government to establish certain standardised measures for the dismantlement of its oil and gas properties by making reference to the industry
+practices and is thereafter constructively obligated to take dismantlement measures of its oil and gas properties.
+Movement of provision of the Group's obligations for the dismantlement of its oil and gas properties is as follow:
+224,544
+279,247
+180,129
+31 December
+2017
+RMB million
+31 December
+2016
+RMB million
+7,162
+723
+1,618
+1,396
+60,010
+52,827
+29,022
+21,468
+96,917
+77,309
+58,925
+46,835
+120,734
+95,928
+2,671
+4,472
+3,270
+206,535
+31 December
+2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2016
+The Group is part of a larger group of companies under Sinopec Group Company, which is controlled by the PRC government, and has significant
+transactions and relationships with Sinopec Group Company and fellow subsidiaries. Because of these relationships, it is possible that the terms
+of these transactions are not the same as those that would result from transactions among wholly unrelated parties.
+The principal related party transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures, which were carried
+out in the ordinary course of business are as follows:
+Sales of goods
+Purchases
+Transportation and storage
+Exploration and development services
+Production related services
+Ancillary and social services
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+Operating lease charges for land
+Other operating lease charges
+Agency commission income
+Interest income
+Interest expense
+Net deposits placed with from related parties
+Net loans obtained from/(repaid to) related parties
+Note
+2017
+Operating lease charges for buildings
+Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control or jointly control the party or exercise
+significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to
+control or common control. Related parties may be individuals (being members of key management personnel, significant shareholders and/or their
+close family members) or other entities and include entities which are under the significant influence of related parties of the Group where those
+parties are individuals, and post-employment benefit plans which are for the benefit of employees of the Group or of any entity that is a related
+party of the Group.
+36 RELATED PARTY TRANSACTIONS
+At the completion date, the non-controlling interests amount to RMB 2,137 million was recognized in relation to SAMC's 45% interest in Gaoqiao
+Branch of the Company.
+(2,115)
+(383)
+(96)
+(1,438)
+(4,032)
+(1,786)
+17,729
+2,541
+The goodwill is attributable to the high profitability of the acquired business and synergy to be achieved post the Transaction among Shanghai
+SECCO and the Group's existing petrochemical operations located in eastern China.
+As of Acquisition Date, a gain of RMB 3,941 million was recognised as a result of remeasuring the 50% equity interest held before the
+Transaction to its fair value, which is included in other operating (expense)/income in the Group's consolidated income statement for the year
+ended 31 December 2017.
+Shanghai SECCO contributed revenue of RMB 5,222 million and net profit of RMB 726 million to the Group for the period from the Acquisition
+Date to 31 December 2017.
+If the acquisition had occurred on 1 January 2017, consolidated pro-forma revenue and profit for the year ended 31 December 2017 would
+have been RMB 2,365,632 million and RMB 74,930 million respectively. These amounts have been calculated using the subsidiary's results and
+adjusting them for the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to property,
+plant and equipment and intangible assets had applied from 1 January 2017, together with the consequential tax effects.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+(i) The Company issued 182-day corporate bonds of face value RMB 6 billion to corporate investors in the PRC debenture market on 12 September 2016 at par value of
+RMB 100. The effective cost of the 182-day corporate bonds is 2.54% per annum. The short-term bonds were due on 14 March 2017 and have been fully paid by the
+Group at maturity.
+for the year ended 31 December 2017
+35 BUSINESS COMBINATION (Continued)
+(b) Acquisition of Gaoqiao Branch of SAMC
+Pursuant to the resolution passed at the Directors' meeting on 29 October 2015, the Company entered into the JV Agreement with Sinopec
+Assets Management Corporation ("SAMC") in relation to the formation of the Gaoqiao Petrochemical Co., Ltd. According to the JV Agreement,
+the Company and SAMC jointly set up Gaoqiao Petrochemical Co., Ltd. for RMB 100 million in cash in 2016. Subsequently, the Company
+subscribed capital contribution with the net assets of Gaoqiao Branch of the Company and SAMC subscribed capital contribution with the net
+assets of Gaoqiao Branch of SAMC. The capital contribution was completed on 1 June 2016, after which the Company held 55% of Gaoqiao
+Petrochemical Co., Ltd.'s voting rights and became the parent company of Gaoqiao Petrochemical Co., Ltd.
+As Sinopec Group Company controls both the Group and SAMC, the non-cash transaction described above between Sinopec and SAMC has been
+accounted as business combination under the common control and it has been reflected in the accompanying consolidated financial statements
+as combination of entities under common control in a manner of predecessor value accounting. Accordingly, the assets and liabilities of Gaoqiao
+Branch of SAMC have been accounted for at historical cost, and the consolidated financial statements of the Group prior to these acquisitions
+have been restated to include the results of operation and the assets and liabilities of Gaoqiao Branch of SAMC on a combined basis.
+2016
+23,547
+RMB million
+244,211
+456
+(viii)
+127
+129
+(ix)
+807
+209
+(x)
+626
+554
+(ix)
+(7,441)
+(21,770)
+(xi)
+5,279
+(24,877)
+The amounts set out in the table above in respect of the year ended 31 December 2017 and 2016 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+996
+(vii)
+449
+510
+(ii)
+165,993
+RMB million
+194,179
+118,242
+(iii)
+7,716
+1,333
+(iv)
+21,210
+27,201
+(v)
+20,824
+10,816
+(vi)
+6,653
+6,584
+(vii)
+8,015
+10,474
+(vii)
+(i)
+12,883
+11
+117
+9,732
+658
+11,545
+10,669
+24,192
+22,872
+Management monitors the conditions that are subject to the guarantees to identify whether it is probable that a loss will occurr, and recognises any
+such losses under guarantees when those losses are estimable. At 31 December 2017 and 2016, it was not probable that the Group will be required
+to make payments under the guarantees. Thus no liability has been accrued for a loss related to the Group's obligation under these guarantee
+arrangements.
+Note:
+(ii) The Group provided a guarantee in respect to standby credit facilities granted to Zhongtian Synergetic Energy by banks amount to RMB 17,050 million. As at 31
+December 2017, the amount withdrawn by Zhongtian Synergetic Energy and guaranteed by the Group was RMB 13,520 million.
+Environmental contingencies
+13,520
+Under existing legislation, management believes that there are no probable liabilities that will have a material adverse effect on the financial
+position or operating results of the Group. The PRC government, however, has moved, and may move further towards more rigorous enforcement
+of applicable laws, and towards the adoption of more stringent environmental standards. Environmental liabilities are subject to considerable
+uncertainties which affect management's ability to estimate the ultimate cost of remediation efforts. These uncertainties include (i) the exact nature
+and extent of the contamination at various sites including, but not limited to refineries, oil fields, service stations, terminals and land development
+areas, whether operating, closed or sold, (ii) the extent of required cleanup efforts, (iii) varying costs of alternative remediation strategies, (iv)
+changes in environmental remediation requirements, and (v) the identification of new remediation sites. The amount of such future cost is
+indeterminable due to such factors as the unknown magnitude of possible contamination and the unknown timing and extent of the corrective
+actions that may be required. Accordingly, the outcome of environmental liabilities under proposed or future environmental legislation cannot
+reasonably be estimated at present, and could be material.
+Legal contingencies
+The Group is defendant in certain lawsuits as well as the named party in other proceedings arising in the ordinary course of business. Management
+has assessed the likelihood of an unfavourable outcome of such contingencies, lawsuits or other proceedings and believes that any resulting
+liabilities will not have a material adverse effect on the financial position, operating results or cash flows of the Group.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+187
+Financial Statements (International)
+188
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+The Group paid normal routine pollutant discharge fees of approximately RMB 7,851 million in the consolidated financial statements for the year
+ended 31 December 2017 (2016: RMB 6,358 million).
+940
+Joint ventures
+Associates(ii)
+Others
+31 December
+2016
+RMB million
+RMB million
+RMB million
+205
+263
+83
+123
+32
+25
+28
+24
+28
+25
+882
+867
+1,258
+1,327
+Contingent liabilities
+At 31 December 2017 and 2016, guarantees by the group in respect of facilities granted to the parties below are as follows:
+31 December
+2017
+RMB million
+for the year ended 31 December 2017
+35 BUSINESS COMBINATION
+(a) Acquisition of Shanghai SECCO
+On 26 October 2017, a subsidiary of the Company, Gaoqiao Petrochemical Co., Ltd., purchased 50% equity interest in Shanghai SECCO from
+BP Chemicals East China Investment Limited with a cash consideration of RMB 10,135 million ("the Transaction"). Before the Transaction, the
+Company and one of its subsidiaries held 30% and 20% equity interest in Shanghai SECCO, respectively. After the Transaction, the Company,
+together with its subsidiaries, hold 100% equity interest of Shanghai SECCO, which became a subsidiary of the Company.
+Deferred tax assets
+Total non-current assets
+Total assets
+Trade and other payables
+Advances received
+Employee benefits payable
+Tax payable
+Total current liabilities
+Deferred tax liabilities (Note 28)
+Net assets acquired
+Goodwill
+RMB million
+5,653
+641
+1,702
+558
+1,349
+761
+10,664
+9,587
+1,920
+1,017
+231
+Long-term prepaid expenses
+31 December
+Construction in progress
+Lease prepayments
+Shanghai SECCO is principally engaged in the production and sale of petrochemical products including acrylonitrile, polystyrene, polyethylene,
+etc.
+Based on the purchase price allocation performed, details of the purchase consideration, the net assets acquired and goodwill are as follows:
+Purchase consideration :
+Acquisition Date (26 October 2017)
+- Cash consideration for the purchase of 50% equity interest acquired
+- Acquisition-date fair value of the 50% equity interest held before the acquisition
+Total purchase consideration
+RMB million
+10,135
+10,135
+20,270
+Fair value
+The assets and liabilities recognised as a result of the acquisition are as follows:
+Cash and cash equivalents
+Bills receivable
+Inventories
+Trade and other receivables
+Prepayments
+Other current assets
+Total current assets
+Property, plant and equipment, net
+Intangible assets
+Note:
+RMB denominated
+117,446
+Available-for-sale securities
+Intangible assets
+Deferred tax assets
+31 December
+2017
+RMB million
+381
+1,925
+31 December
+2016
+RMB million
+Deferred tax liabilities
+31 December
+2017
+RMB million
+31 December
+2016
+RMB million
+87
+391
+Tax losses carried forward
+165
+14,150
+11,264
+(50)
+(9,928)
+(242)
+(14,615)
+2,325
+2,477
+117
+227
+260
+(563)
+27
+Others
+Property, plant and equipment
+Accruals
+Other receivables
+Advances to suppliers
+Value-added input tax to be deducted
+Prepaid income tax
+Derivative financial instruments
+28 DEFERRED TAX ASSETS AND LIABILITIES
+31 December
+2017
+RMB million
+17,704
+31 December
+Cash flow hedges
+2016
+RMB million
+4,901
+17,926
+18,055
+398
+1,145
+526
+41,455
+762
+49,767
+Deferred tax assets and deferred tax liabilities before offset are attributable to the items detailed in the table below:
+Receivables and inventories
+26,056
+3,749
+27 PREPAID EXPENSES AND OTHER CURRENT ASSETS
+Deferred tax assets/(liabilities)
+19,470
+in other
+income comprehensive
+Balance at
+31 December
+statement
+RMB million
+income
+Others
+2016
+RMB million
+RMB million
+consolidated
+RMB million
+6
+34
+87
+413
+(22)
+391
+250
+(465)
+(215)
+(9,131)
+(1,505)
+180
+Balance at
+01 January
+2016
+RMB million
+1,552
+Others
+133
+14,639
+(264)
+(10,805)
+(229)
+(15,086)
+At 31 December 2017, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 20,821 million
+(2016: RMB 19,194 million), of which RMB 5,938 million (2016: RMB 3,833 million) was incurred for the year ended 31 December 2017, because
+it was not probable that the future taxable profits will be realised. These deductible losses carried forward of RMB 2,508 million, RMB 4,462 million,
+RMB 4,080 million, RMB 3,833 million and RMB 5,938 million will expire in 2018, 2019, 2020, 2021, 2022 and after, respectively.
+Periodically, management performed assessment on the probability that future taxable profit will be available over the period which the deferred tax
+assets can be realised or utilised. In assessing the probability, both positive and negative evidence was considered, including whether it is probable
+that the operations will have sufficient future taxable profits over the periods which the deferred tax assets are deductible or utilised and whether the
+tax losses result from identifiable causes which are unlikely to recur. During the year ended 31 December 2017, write-down of deferred tax assets
+amounted to RMB 26 million (2016: RMB 811 million) (Note 10).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017 181
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Net deferred tax (liabilities)/assets
+for the year ended 31 December 2017
+Movements in the deferred tax assets and liabilities are as follows:
+Recognised in
+Recognised
+Receivables and inventories
+Accruals
+Cash flow hedges
+Property, plant and equipment
+Tax losses carried forward
+Available-for-sale securities
+Intangible assets
+28 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+The cost of inventories recognised as an expense in the consolidated income statement amounted to RMB 1,854,629 million for the year ended
+31 December 2017 (2016: RMB 1,461,285 million). It includes the write-down of inventories of RMB 436 million (2016: RMB 430 million) and the
+reversal of write-down of inventories made in prior years of RMB 13 million (2016: RMB 10 million), which were recorded in purchased crude oil,
+products and operating supplies and expenses in the consolidated income statement. The write-down of inventories of RMB 190 million for the year
+ended 31 December 2017 (2016: RMB 4,021 million) was realised primarily with the sales of inventories. The write-down of inventories is mainly
+related to the spare parts and consumables in refining segment and chemical segment.
+(920)
+156,511
+(1,155)
+186,693
+39,994
+7,941
+6,398
+4,962
+4,580
+69,106
+50,972
+(612)
+(683)
+68,494
+56,203
+50,289
+13,197
+84,701
+63,486
+The ageing analysis of trade accounts and bills receivables (net of impairment losses for bad and doubtful debts) is as follows:
+31 December
+2017
+RMB million
+31 December
+2016
+RMB million
+Within one year
+Between one and two years
+Between two and three years
+16,207
+Over three years
+Trade accounts receivable, net
+Bills receivable
+Amounts due from associates and joint ventures
+180
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+24 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
+31 December
+2017
+31 December
+2016
+RMB million
+Current assets
+Structured deposit
+Less: Impairment losses for bad and doubtful debts
+RMB million
+The financial assets are the structured deposit with financial institutions and cannot be readily convertible to known amounts of cash, which are
+presented as current assets since they are expected to be expired within 12 months from the end of the reporting period.
+The changes in the financial assets at fair value through profit or loss for the year ended 31 December 2017 amounted to RMB 196 million (2016: nil),
+which has been recorded in other operating (expense)/income, net.
+25 TRADE ACCOUNTS RECEIVABLE AND BILLS RECEIVABLE
+31 December
+2017
+31 December
+2016
+RMB million
+RMB million
+Amounts due from third parties
+Amounts due from Sinopec Group Company and fellow subsidiaries
+51,196
+51,196
+83,984
+573
+63,051
+233
+for the year ended 31 December 2017
+26 INVENTORIES
+Crude oil and other raw materials
+Work in progress
+Finished goods
+Spare parts and consumables
+Less: Allowance for diminution in value of inventories
+31 December
+2017
+RMB million
+31 December
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2016
+85,975
+75,680
+14,774
+14,141
+84,448
+65,772
+2,651
+1,838
+187,848
+157,431
+RMB million
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Trade accounts receivable and bills receivables (net of impairment losses for bad and doubtful debts) primarily represent receivables that are
+neither past due nor impaired. These receivables relate to a wide range of customers for whom there is no recent history of default.
+Sales are generally on a cash term. Credit is generally only available for major customers with well-established trading records. Amounts due from
+Sinopec Group Company and fellow subsidiaries are repayable under the same terms.
+43
+177
+101
+84,701
+25
+63,486
+Impairment losses for bad and doubtful debts are analysed as follows:
+Balance at 1 January
+Provision for the year
+Written back for the year
+Written off for the year
+Others
+Balance at 31 December
+2017
+RMB million
+2016
+RMB million
+683
+525
+49
+238
+(100)
+(8)
+(21)
+(72)
+1
+612
+683
+6,063
+(392)
+109
+(3,351)
+2,858
+USD denominated
+Hong Kong Dollar ("HKD") denominated
+EUR denominated
+Singapore Dollar ("SGD") denominated
+Current portion of long-term loans
+RMB denominated
+19,668
+13,577
+1,903
+1,706
+1,969
+20
+21
+2,014
+150
+2,014
+150
+25,311
+18,580
+80,649
+74,819
+5
+The Group's weighted average interest rates on short-term loans were 2.72% (2016: 2.42 %) at 31 December 2017. The above borrowings are
+unsecured.
+18,430
+56,239
+31,105
+23,685
+11.944
+10,931
+7,420
+1,013
+299
+299
+1,402
+8,795
+1,379
+23,297
+8,753
+42
+22,532
+29,500
+16,000
+29,500
+6,532
+23,934
+38,295
+6,000
+55,338
+23
+182
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+4.25% per annum at 31 December 2017
+with maturities through 2043
+Total third parties' long-term debts
+Less: Current portion
+Long-term loans from Sinopec Group Company
+and fellow subsidiaries
+RMB denominated
+Less: Current portion
+Interest rates ranging from interest free to
+4.99% per annum at 31 December 2017
+with maturities through 2022
+53,902
+84,485
+79,738
+18,985
+110,969
+(38,295)
+55,804
+72,674
+45,334
+44,922
+(2,014)
+43,320
+99,124
+(150)
+44,772
+(23,934)
+17,902
+Fixed interest rates ranging from 1.88% to
+USD denominated
+for the year ended 31 December 2017
+29 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+Long-term debts represent:
+Third parties' debts
+Long-term bank loans
+RMB denominated
+Interest rate and final maturity
+USD denominated
+Interest rates ranging from 1.08% to
+4.66% per annum at 31 December 2017
+with maturities through 2030
+Interest rates ranging from 1.55% to
+4.29% per annum at 31 December 2017
+with maturities through 2031
+31 December
+2017
+RMB million
+25,644
+31 December
+2016
+RMB million
+26,058
+192
+426
+25,836
+26,484
+Corporate bonds (ii)
+RMB denominated
+Fixed interest rates ranging from 3.30% to
+36,000
+65,500
+5.68% per annum at 31 December 2017
+with maturity through 2022
+Short-term loans
+Short-term and long-term bank loans, short-term other loans and loans from Sinopec Group Company and fellow subsidiaries are primarily
+unsecured and carried at amortised cost.
+Loans from Sinopec Group Company and fellow subsidiaries
+USD denominated
+statement
+income
+Others
+Acquisition of
+Shanghai
+SECCO
+Balance at
+31 December
+2017
+RMB million
+RMB million
+RMB million
+income comprehensive
+RMB million
+RMB million
+Receivables and inventories
+87
+300
+(5)
+(1)
+381
+Accruals
+391
+1,534
+RMB million
+1,925
+1 January
+2017
+consolidated
+5,883
+(3,426)
+20
+2,477
+(139)
+(7)
+146
+203
+(1)
+58
+in other
+260
+(136)
+(96)
+(790)
+834
+(838)
+347
+(447)
+Recognised in
+Recoginsed
+Balance at
+40
+Cash flow hedges
+Property, plant and equipment
+Tax losses carried forward
+10,317
+4
+582
+(1)
+(36)
+(1,786)
+(84)
+8,665
+29 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES
+Short-term debts represent:
+Third parties' debts
+31 December
+44
+2017
+RMB million
+Short-term bank loans
+RMB denominated
+US Dollar ("USD") denominated
+Short-term other loans
+RMB denominated
+Current portion of long-term bank loans
+RMB denominated
+USD denominated
+Current portion of long-term corporate bonds
+RMB denominated
+31 December
+2016
+RMB million
+(96)
+(447)
+(336)
+(569)
+(215)
+9
+313
+8
+115
+(3,351)
+8,475
+287
+(8)
+(1,181)
+4,222
+2,477
+(135)
+(17)
+2,325
+Available-for-sale securities
+Intangible assets
+Others
+Net deferred tax (liabilities)/assets
+117
+117
+260
+(27)
+Corporate bonds(i)
+Between 1 month and 6 months
+Financial Statements (International)
+189
+2017
+2016
+Region
+China
+Gross
+Net
+Gross
+Net
+4,800
+4,762
+4,966
+4,932
+Consolidated subsidiaries
+4,800
+4,762
+4,966
+4,932
+Puguang
+Fuling
+4,622
+4,656
+4,439
+4,762
+4,477
+4,800
+Others
+Total
+Natural gas productive wells (as of 31 December)
+253
+266
+266
+57
+57
+57
+57
+253
+4,966
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+14
+49,921
+49,921
+32,105
+32,105
+32,019
+32,019
+Others
+18,016
+18,016
+17,902
+17,902
+Overseas
+7,350
+3,968
+7,432
+3,614
+Consolidated subsidiaries
+Business Review and Prospects
+13
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+3,600
+53,535
+7,404
+57,353
+3,954
+54,089
+Business Review and Prospects
+57,471
+7,322
+Equity accounted entities
+14
+28
+14
+28
+Total
+4,932
+Acreage with exploration licenses
+China
+238.50
+235.53
+236.49
+1.3
+150.67
+149.17
+148.38
+1.0
+57.03
+56.36
+53.98
+1.2
+66.76
+67.34
+70.05
+(0.9)
+26.88
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+In 2017, the total sales volume of oil
+products was 199 million tonnes, of
+which domestic sales accounted for
+178 million tonnes, up by 2.9% year on
+year. We strengthened self-owned brand
+development and marketing, and non-fuel
+business maintained its rapid growth with
+increased scale and profits.
+total sales volume and retail scale. We
+innovated operational models, optimised
+layout of service stations, and expedited
+revamping of storage and transportation
+facilities of refined oil products to further
+improve our distribution network. In
+addition, we proactively promoted and
+cultivated vehicle natural gas business.
+76.50 (0.48) percentage points
+94.75 0.18 percentage points
+76.33
+94.70
+94.88
+Change from
+2016 to 2017 (%)
+75.85
+38.81
+38.54
+38.60
+5.5
+24.35
+25.47
+0.2
+2015
+2016
+2017
+4,869
+28,436
+33,305
+742,588
+2016
+742,588
+5,106
+(2) Refining
+31,498
+621,529
+2017
+621,529
+Area under license (as of 31 December)
+Unit: Square kilometers
+China
+Overseas
+Acreage with development licenses
+36,604
+50,121
+In 2017, with the market-oriented
+approach, we optimised product mix
+to produce more gasoline and jet fuel,
+and the production volume of high-
+value-added products have been further
+increased, with the diesel-to-gasoline
+ratio further declined to 1.17. The
+Company actively promoted refined
+Summary of Operations for the Refining Segment
+In 2017, confronted with stronger
+competition, the Company brought
+our advantages in integrated business
+and distribution network into full
+play, optimised internal and external
+resources, intensified market efforts
+and achieved sustained growth in both
+(3) Marketing and Distribution
+Note: Includes 100% of the production of domestic joint ventures.
+Refinery yield (%)
+Light product yield (%)
+Light chemical feedstock production
+oil products quality upgrading, the GB
+Kerosene
+Gasoline
+Gasoline, diesel and kerosene production
+Refinery throughput
+and Analysis
+centralised marketing took full play, and
+profitability of LPG, asphalt and other
+products were further improved. In 2017,
+the Company processed 239 million
+tonnes of crude, up by 1.3% from the
+previous year, and produced 151 million
+tonnes of refined oil products, with
+gasoline up by 1.2% and kerosene up by
+5.5% from the previous year.
+V standard diesel quality upgrading
+completed, and advanced the refined.
+oil products quality upgrading of GB
+VI standard. We adapted to market
+changes by taking full advantages of
+our integrated business, and moderately
+increasing export volume of refined oil
+products. We comprehensively optimised
+our production plans to ensure safe and
+reliable operations. The advantages of
+Diesel
+50,121
+Shengli
+Consolidated subsidiaries
+0
+0
+0
+0
+0
+Equity accounted entities
+2
+1
+119
+0
+2
+1
+99
+0
+Total
+268
+150
+Exploratory Development Exploratory Development Exploratory Development
+Net
+Gross
+Net
+Gross
+2016
+0
+2017
+6
+900
+150
+268
+9
+1,561
+Wells drilling (as of 31 December)
+0
+0
+Consolidated subsidiaries
+5
+462
+73
+166
+1
+845
+Others
+71
+Shengli
+6
+801
+149
+266
+9
+151
+Exploratory Development
+115
+597
+0
+99
+1
+2
+0
+119
+78
+1
+Overseas
+1
+339
+76
+100
+8
+2
+Summary of Operations for the Marketing and Distribution Segment
+China
+Consolidated subsidiaries
+78
+138
+78
+138
+28
+21
+50
+117
+0
+2
+0
+0
+0
+2
+62
+152
+78
+49,921
+49,921
+Net
+Gross
+Net
+50,121
+50,121
+80 80 17202
+China
+2016
+2017
+Oil productive wells (as of 31 December)
+140
+78
+140
+Gross
+0
+0
+0
+19
+0
+19
+Shengli
+138
+78
+Others
+147
+138
+78
+147
+62
+147
+147
+62
+62
+62
+43
+43
+505
+117
+50
+147
+28
+0
+147
+113000N
+2000
+62
+Total
+Equity accounted entities
+Consolidated subsidiaries
+Overseas
+5052
+Change from
+2017
+2016
+59,444
+(21.4)
+18.5
+Attributable to:
+Owners of the Company
+51,244
+46,672
+9.8
+Non-controlling interests
+19,174
+12,772
+50.1
+(1) Turnover and other operating revenues
+In 2017, the Company's turnover was RMB 2,300.5 billion, representing an increase of 22.4% over 2016. This was mainly attributed to the
+increase in crude oil prices. Meanwhile, major petroleum and petrochemical products prices and sales volume also increased as a result of the
+Company's efforts in seizing opportunities to expand the market and sales volume.
+The following table sets forth the external sales volume, average realised prices and respective rates of change of the Company's major products
+in 2017 and 2016:
+Sales volume (thousand tonnes)
+Year ended 31 December
+Average realised price
+(RMB/tonne, RMB/thousand cubic meters
+Year ended 31 December
+2017
+22,529
+Natural gas (million cubic meters)
+46.8
+1,628
+2,390
+(3.5)
+70,418
+6,808
+Crude oil
+Change (%)
+2016
+2017
+Change (%)
+2016
+6,567
+Profit for the year
+(20,707)
+(16,279)
+(16,554)
+Other operating (expense)/income, net
+1.4
+(232,006)
+(235,292)
+Taxes other than income tax
+5,686
+17.2
+(74,854)
+Personnel expenses
+0.5
+(11,035)
+(11,089)
+Exploration expenses, including dry holes
+(63,887)
+19,008
+Operating profit
+77,193
+Tax expense
+8.2
+80,151
+86,697
+Profit before taxation
+75.4
+71,470
+9,569
+Investment income and share of profits less losses from associates and joint ventures
+(76.4)
+(6,611)
+(1,560)
+Net finance costs
+(7.4)
+16,787
+6.4
+18.5
+1,258
+Synthetic resin
+13,199
+12,223
+8.0
+8,155
+7,488
+8.9
+Synthetic fibre
+1,304
+1,369
+(4.7)
+8,556
+7,113
+20.3
+Synthetic rubber
+1,128
+1,098
+Management's Discussion
+19
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+24.7
+1,612
+2,010
+13.4
+(2.2)
+698
+Chemical fertiliser
+24.0
+9,608
+11,913
+2.7
+714
+5,325
+6,038
+43.7
+4,482
+5,038
+(2.9)
+91,492
+88,848
+Diesel
+12.4
+8.7
+6,941
+8.3
+77,480
+83,933
+Gasoline
+2.5
+6,386
+1,290
+Kerosene
+25,164
+7,146
+10,267
+Monomer and polymer for synthetic fibre.
+19.8
+4,054
+4,855
+25,557
+11.5
+35,964
+Basic chemical feedstock
+25.8
+2,807
+3,531
+1.6
+32,248
+1,442
+(108,425)
+Depreciation, depletion and amortisation
+31 December
+31 December
+2016
+2015
+30,633
+30,627
+30,603
+30,597
+30,560
+30,547
+and intensified dynamic modelling
+and monitoring of profit to increase
+profitability. Ethylene output was 11.61
+million tonnes, up by 5.0% from the
+previous year. The Company intensified
+its efforts to enhance research and
+development, production, marketing and
+sales of new high-value-added products.
+Our differential ratio of synthetic fibre
+reached 89.0% and the specialty
+(%)
+0.1
+0.1
+and new products as a percentage
+of synthetic resin reached 63%. By
+fully exerting our network advantage,
+implementing precision marketing and
+further expanding the market, our full-
+year chemical sales volume increased by
+12.2% from the previous year to 78.5
+million tonnes, marking a historic record.
+Unit: thousand tonnes
+Ethylene
+Synthetic resin
+Synthetic rubber
+15,201
+15,938
+5.0
+11,118
+Change from
+2016 to 2017 (%)
+2015
+31 December
+2017
+2016
+11,059
+2017
+In 2017, the Company pushed ahead
+with its innovation-driven strategy,
+deepened reform of R&D mechanism, and
+accomplished notable results driven by
+R&D progresses. In upstream business,
+further breakthroughs in geological
+evaluation and exploration technologies
+of deep carbonate and deep shale gas
+reservoirs underpinned the growing
+resources base of Shunbei oilfield and
+south Sichuan as well as discoveries of
+new formations in Sichuan Basin. We
+improved development technologies for
+(5) Research and Development
+Note: Includes 100% of the production of domestic joint ventures.
+Synthetic fiber
+Synthetic fiber monomer and polymer
+11,610
+Summary of Operations for the Chemicals Segment
+demand. We optimised production and
+operation based on market conditions.
+In 2017, the Company continued the
+"basic and high-end" chemical business
+development concept to promote effective
+supply. We fine-tuned chemical feedstock
+mix to lower costs, optimised product mix
+and increased high-value-added products
+production based on the customer
+121.56
+Retail sales (million tonnes)
+2.9
+171.37
+172.70
+177.76
+120.14
+Total domestic sales volume of oil products (million tonnes)
+189.33
+194.84
+198.75
+Total sales volume of oil products (million tonnes)
+2016 to 2017 (%)
+2015
+2.0
+15,065
+119.03
+56.20
+(4) Chemicals
+Total number of service stations under the Sinopec brand
+Number of company-operated stations
+previous year to
+the end of the
+reporting period
+the end of the
+Change from
+1.1
+Direct sales and distribution (million tonnes)
+6.9
+3,896
+3,926
+3,969
+Annual average throughput per station (tonne/station)
+52.34
+52.56
+1.2
+(115,310)
+4.8
+857
+Business Review and Prospects
+MANAGEMENT'S DISCUSSION AND ANALYSIS
+THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
+COMPANY'S AUDITED FINANCIAL STATEMENTS AND THE ACCOMPANYING NOTES. PARTS OF THE
+FOLLOWING FINANCIAL DATA WERE ABSTRACTED FROM THE COMPANY'S AUDITED FINANCIAL
+STATEMENTS THAT HAVE BEEN PREPARED ACCORDING TO THE IFRS, UNLESS OTHERWISE STATED.
+THE PRICES IN THE FOLLOWING DISCUSSION DO NOT INCLUDE VALUE-ADDED TAX.
+1 CONSOLIDATED RESULTS OF OPERATIONS
+In 2017, the Company's turnover and other operating revenues were RMB 2,360.2 billion, increased by 22.2% compared with that of 2016. The
+profit before taxation was RMB 86.7 billion, representing a year on year increase of 8.2%.
+The following table sets forth the main revenue and expenses from the Company's consolidated financial statements:
+Year ended 31 December
+2017
+RMB million
+Turnover and other operating revenues
+2,360,193
+2016
+RMB million
+1,930,911
+Change (%)
+22.2
+Turnover
+Other operating revenues
+Operating expenses
+Purchased crude oil, product and operating supplies and expenses
+1.0
+(64,360)
+(64,973)
+28.3
+(1,379,691)
+23.5
+17
+(1,853,718)
+50,721
+22.4
+1,880,190
+2,300,470
+59,723
+(2,288,723)
+(1,770,651)
+Selling, general and administrative expenses
+17.7
+Annual Report 2017
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Capital Expenditures: In 2018, we
+will devote attention to the quality
+and profitability of investments, and
+constantly optimise our investment
+projects. Capital expenditures for the
+year are budgeted at RMB 117 billion.
+The exploration and production segment
+will account for expenditures of RMB
+48.5 billion, mainly for the shale gas
+development in southwest China, the
+natural gas project in north China and
+crude capacity building in northwest
+China, as well as natural gas pipelines
+and storage projects, and overseas oil
+and gas projects. The refining segment
+will account for RMB 28.8 billion, mainly
+for Zhongke Refining and Petrochemical
+Project, the structural adjustments of
+refining business in Zhenhai, Maoming
+and Tianjin subsidiaries, and the quality
+upgrading of GB VI standard gasoline and
+diesel. The marketing and distribution
+segment will account for RMB 18.5
+billion, mainly for construction of depots
+and storage facilities, pipelines and
+service stations. The chemicals segment
+will account for RMB 17.7 billion, mainly
+for Zhongke Refining and Petrochemical
+Project, the high-efficiency and phase II of
+Hainan high-efficiency and environmental-
+friendly aromatics project, the integrated
+refining and petrochemical project in
+Gulei and the resource utilisation and
+structural adjustment projects in Zhenhai,
+Yangzi, Jinling, Maoming and Wuhan
+subsidiaries. The corporate and others
+segment will account for RMB 3.5 billion,
+mainly for R&D facilities and information
+technology projects.
+16
+Business Review and Prospects
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017 15
+on-line trading platform developed
+rapidly, as a result of the integration of
+IT application and industrialisation. In
+2017, the Company filed 5,876 patent
+applications at home and abroad, 3,640
+patents granted. The Company also won
+two first prizes and one second prize in
+the National Scientific and Technological
+Progress Awards, two second prizes in
+the National Technology and Innovation
+Awards, and eight excellent patent awards
+in China's Patent Award competition.
+Tahe fractured-vuggy carbonate reservoir,
+bringing down the natural decline rate.
+In refining, our demonstration unit of
+fluidised bed residue hydro-treating
+achieved long-cycle operation at its
+full capacity, and we completed the
+industrial test of super solid-acid C5
+and C6 isomerisation technology. In
+chemicals, the syngas to ethylene glycol
+demonstration unit ran smoothly, and
+we accomplished commercial production
+of low-volatility polypropylene for
+automobile use and high-transparency
+& low-extraction polypropylene. Our
+1.8
+(1.8)
+Business Review and Prospects
+1,282
+1,220
+8,994
+9,275
+9,439
+(1.1)
+843
+1,242
+848
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+(7) Capital Expenditures
+Research and Development: We will
+continue to deeply implement our
+strategy of development driven by
+innovation and reform of mechanisms
+for technological innovation.
+We will accelerate key technical
+breakthroughs, reinforce research on
+leading technologies, and step up the
+commercial application of technological
+achievements to highlight the prominent
+role of technologies. In key technical
+breakthroughs, focus will be given to
+new discoveries of oil and gas resources,
+low-cost development of oil and gas
+resources, high-efficiency conversion of
+heavy crude, refined oil products quality
+upgrading, cost reduction and efficiency
+enhancement of chemical business, new
+products development of high-value-
+added materials, energy conservation
+and environmental protection. In leading
+technologies, priorities lie in the basic
+and prospective research of ultra-deep
+and deepwater oil and gas exploration
+and production, molecular-level
+intelligent refining and new energies. In
+innovative development, the Company
+plans to establish a joint R&D centre for
+cutting-edge technologies to facilitate
+the innovation from basic research
+to commercialisation. Meanwhile, the
+integration of information technologies
+and industrialisation will carry on
+by further enhancing integration of
+information systems and the application
+of intelligent pipeline management
+systems.
+Chemicals: We will further optimise
+feedstock mix and product slate. The
+constant feedstock optimisation would
+further lower feedstock costs. We will put
+more efforts on optimising product mix,
+enhancing the dynamic evaluation and
+monitoring of profitability of facilities and
+product chains, increasing more popular
+and profitable products production and
+advancing the R&D, production and sales
+of high-end chemicals. We will step up
+research on the industrial chain and
+optimise the rapid response mechanism
+combining production, marketing
+and research. Internal and external
+resources will be fully tapped to actively
+expand sales volume and market share.
+Meanwhile, refined marketing and tailor-
+made services will be adopted to provide
+our customers with full process solutions
+and value-added services. In 2018, we
+plan to produce 11.6 million tonnes of
+ethylene.
+We will accelerate the construction of
+oil products export infrastructure and
+amplify the profitability of overseas oil
+products marketing. We will deepen the
+integration of fuel and non-fuel business,
+so to create a new mode of coordinating
+oil products retailing, non-fuel products
+marketing and third-party vendors
+cooperation, and thus step up the growth
+of non-fuel business. In 2018, we plan to
+sell 179 million tonnes of oil products in
+the domestic market.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Marketing and Distribution: We will
+intensify our marketing strategy of
+balancing profits and volume by
+optimising resources allocation and
+operational efficiency. We will put effort to
+expand markets and our business scale.
+We will further improve our marketing
+network to reinforce existing advantages.
+Refining: We will comprehensively
+optimise our production plans along
+with market changes to consolidate
+the competitive advantage of refining
+business. We will continue to adjust
+our product structure by further
+lowering the diesel-to-gasoline ratio and
+increasing the production of naphtha
+and jet fuel. The quality upgrading of
+GB VI standard refined oil products will
+complete on time with strengthened
+coordination. We will fine-tune crude oil
+procurement and resource allocation
+to reduce procurement cost. We will
+optimise our marketing mechanism
+to enlarge the trading volume of other
+refined oil products. In 2018, we plan to
+process 239 million tonnes of crude and
+produce 152 million tonnes of refined oil
+products.
+(6) Health, Safety and the Environment
+In 2017, the Company pressed ahead the
+formation of a long-term safe production
+scheme, strengthened safety measures at
+basic levels to control risks and remove
+potential hazards in all aspects. We
+promoted on-site safety supervision and
+management to continuously improve our
+safety management level. The Company
+actively implemented its green and low-
+carbon strategy to integrate energy
+conservation, emissions cutting and
+carbon reduction. We comprehensively
+strengthened environmental risk and
+air pollution control, steadily pushed
+forward our "Efficiency Doubling Plan",
+continuously consolidated our carbon
+asset management, and accomplished
+all emissions reduction targets. For
+more detailed information, please refer
+to our Communication on Progress for
+Sustainable Development.
+Exploration and Production: We will
+maintain high-efficiency exploration
+and profitable production activities to
+continually increase proved reserve and
+expand resource base. In oil development,
+we will enhance refined reservoir
+characterisation, deepen the structural
+adjustments of mature fields, control
+natural decline rate, lower operational
+cost and improve economic recovery
+rate. In natural gas development, we will
+keep advancing key projects for capacity
+construction, optimise production and
+marketing operations, and promote the
+coordinated development along the value
+chain. In 2018, we plan to produce 290
+million barrels of crude oil, of which
+overseas production will account for 41
+million barrels. We plan to produce 974.1
+billion cubic feet of natural gas.
+(2) Operations
+Looking ahead to 2018, we expect
+world economy continuing to recover,
+and China's economy would maintain
+steady growth. Meanwhile, the constant
+stream of reform measures by Chinese
+government to revitalise its substantial
+economy, the further development of the
+Belt and Road Initiative, the synergic
+development of Beijing-Tianjin-Hebei and
+the growth along Yangtze River Economic
+Belt will bring up demand for refined oil
+products and petrochemicals. Natural gas
+as clean energy will see rapid growth with
+structural adjustment of domestic energy
+mix. International oil price in 2018 is
+expected to maintain its stabilising
+momentum.
+(1) Market Outlook
+BUSINESS PROSPECTS
+the chemicals segment were RMB 23.028
+billion, mainly for Zhongke Refining
+and Petrochemical project, phase II of
+Hainan high-efficiency and environment.
+friendly aromatics project, Gulei and
+Zhong'an projects, acquisition of interest
+in Shanghai SECCO, as well as projects
+regarding resource comprehensive
+utilisation and product structure
+adjustments. Capital expenditures for the
+corporate and others segment were RMB
+2.398 billion, mainly for R&D facilities
+and information technology application
+projects.
+In 2017, focusing on quality and
+profitability of investment, the Company
+continuously optimised its investment
+projects. Total capital expenditures were
+RMB 99.384 billion. Capital expenditures
+for the exploration and production
+segment were RMB 31.344 billion, mainly
+for Fuling shale gas and Hangjinqi natural
+gas field development projects, Shengli
+and Northwest crude development
+projects, LNG terminals in Tianjin, Wen-
+23 gas storage and phase I of Xinjiang
+gas pipeline, as well as overseas projects.
+Capital expenditures for the refining
+segment were RMB 21.075 billion, mainly
+for Zhongke Refining and Petrochemical
+project, adjustments in the product mix
+of Zhenhai and Maoming refineries,
+and gasoline and diesel GB VI quality
+upgrading projects. Capital expenditures
+for the marketing and distribution
+segment were RMB 21.539 billion, mainly
+for construction of service stations and
+refined oil product pipelines, depots and
+storage facilities. Capital expenditures for
+In 2018, the Company will persist with
+our objective of progressing at a steady
+pace to continually focus on growth
+stabilisation, adhere to the principle of
+quality first and profitability prioritised.
+The Company will deepen the supply-
+side structural reform as main direction
+to further implement the operation
+objectives of reform, management,
+innovation and development, to fully
+improve operational performance. We will
+undertake the following work during the
+year:
+149
+Unit: million tonnes
+1,599
+Proved developed reserves
+China
+Consolidated subsidiaries
+Puguang
+Fuling
+Others
+Overseas
+Consolidated subsidiaries
+Equity accounted entities
+Proved developed reserves
+China
+Consolidated subsidiaries
+Fuling
+Others
+Exploration and Production Activities
+Natural gas reserves (bcf)
+31 December 2017 31 December 2016
+Wells drilled (as of 31 December)
+6,997
+7,178
+6,012
+6,454
+6,000
+6,436
+Proved reserves
+Items
+23
+33
+811
+801
+313
+279
+305
+313
+32
+40
+273
+273
+170
+6,000
+159
+136
+137
+136
+49
+37
+88
+33
+830
+99
+23
+0
+137
+1,080
+6,436
+2,330
+Dry
+Productive
+Dry
+Productive
+Dry
+China
+266
+149
+1,442
+9
+266
+149
+801
+6
+Consolidated subsidiaries
+266
+40
+50
+60
+70
+80
+90
+00
+Dry Productive
+Productive
+Development
+Exploratory
+1,121
+1,226
+2,752
+2,880
+12
+1200
+18
+0
+12
+18
+985
+2,127
+724
+724
+985
+724
+187
+0
+798
+724
+2017
+2016
+Exploratory
+Development
+985
+US$/barrel
+1,124
+1,124
+12/2017
+1/2018
+2/2018
+Trend of International Crude Oil Prices
+1 MARKET REVIEW
+(1) Crude Oil & Natural Gas Market
+In 2017, international crude oil prices.
+fluctuated at low level among the first
+three quarters, and rapidly went up in
+the 4th quarter. The average spot price
+of Platt's Brent for the year was USD
+54.19 per barrel, up by 23.9% from the
+previous year. Along with the adjustments
+of China's energy structure, domestic
+demand for natural gas became robust.
+Domestic apparent consumption of
+natural gas reached 237.3 billion cubic
+meters, up by 15.3% year on year.
+(2) Refined Oil Products Market
+In 2017, domestic demand for refined
+oil products maintained its growth while
+market supply was in surplus. According
+to the statistics, apparent consumption
+of refined oil products (including
+gasoline, diesel and kerosene) was 306
+million tonnes, up by 6.6% from the
+previous year, with gasoline up by 10.1%
+and kerosene up by 11.7%, and diesel
+made a turnaround, up by 2.9%. Prices
+for domestic refined oil products were
+adjusted in line with international oil
+prices trend. In 2017, the government
+made 17 times of price adjustments with
+11 increases and 6 decreases.
+(3) Chemical Products Market
+In 2017, domestic demand for chemicals
+grew fast. According to our statistics,
+domestic consumption of ethylene
+equivalent was up by 11.3% from
+the previous year, and the apparent
+consumption of synthetic resin, synthetic
+fibre and synthetic rubber rose by
+8.6%, 5.0% and 6.4%, respectively.
+Domestic average chemical product
+prices increased compared with the
+previous year, in line with movements of
+international chemical product prices.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+11
+Business Review and Prospects
+12
+Business Review and Prospects
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+2 PRODUCTION & OPERATIONS REVIEW
+(1) Exploration and Production
+In 2017, faced with low oil prices, we
+constantly strengthened measures
+to increase proved reserves and rein
+in development costs, which helped
+achieving better results. We gave priority
+to high-efficiency exploration activities
+and made new discoveries in the Xinjiang
+Tahe Basin and the Sichuan Basin.
+The Company's newly added proved
+reserve reached 462.73 million barrels
+of oil equivalent, with crude oil reserve
+replacement ratio reaching 116.0%. In
+crude oil development, we constantly
+adopted a profit-oriented approach,
+deepened structural adjustment, focused
+on cost control, reduced natural decline
+rate and ensured steady production. In
+natural gas development, we actively
+pushed forward capacity building in
+Summary of Operations for the Exploration and Production Segment
+Hangjinqi of Nei Mongol and Dongpo
+of west Sichuan, and completed 10
+bcm(billion cubic meter) per year shale
+gas capacity building in Fuling. The
+Company's production of oil and gas was
+448.79 million barrels of oil equivalent,
+with domestic crude production down by
+3.2% from the previous year and natural
+gas production up by 19.1%.
+11/2017
+DUBAI
+DTD BRENT
+ICE BRENT
+20
+1/2016
+2/2016
+3/2016
+4/2016
+5/2016
+6/2016
+7/2016
+8/2016
+9/2016
+10/2016
+Oil and gas production (mmboe)
+11/2016
+1/2017
+2/2017
+3/2017
+4/2017
+5/2017
+6/2017
+7/2017
+8/2017
+9/2017
+10/2017
+WTH-NYMEX
+12/2016
+1,080
+Crude oil production (mmbls)
+Overseas
+4.1
+293.66
+303.51
+349.47
+(3.2)
+248.88
+253.15
+296.34
+(1.7)
+44.78
+50.36
+53.13
+(11.1)
+912.50
+766.12
+734.79
+19.1
+Crude oil reserves (mmbbls)
+31 December 2017 31 December 2016
+80
+1,552
+1,429
+1,393
+471.91
+431.29
+448.79
+2016 to 2017 (%)
+Natural gas production (bcf)
+Summary of Reserves of Crude Oil and Natural Gas
+Items
+Proved reserves
+Proved developed reserves
+China
+Consolidated subsidiaries
+Shengli
+Others
+Overseas
+Consolidated subsidiaries
+China
+Equity accounted entities
+China
+Consolidated subsidiaries
+Shengli
+Others
+Overseas
+Consolidated subsidiaries
+Equity accounted entities
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Change from
+2017
+2016
+2015
+Proved undeveloped reserves
+20
+In 2017, global economy recovered gradually,
+while China maintained stable and favourable
+economic growth with gross domestic product
+(GDP) up by 6.9%. International oil prices
+fluctuated and climbed from the low level, and
+domestic natural gas demand increased rapidly.
+With fast development of independent refineries,
+domestic oil products market witnessed strong
+competition. Demand for chemicals grew
+steadily, and China's environmental regulations
+became more stringent. The Company actively
+addressed market changes through a focus
+on the improvement of assets quality and
+profitability, as well as operation upgrades. We
+pressed ahead with measures for specialised
+business development, market-oriented
+operation and overall coordination. Following
+the supply-side structural reform, we focused on
+optimisation, cost reduction, market expansion,
+structural adjustment, reform promotion,
+foundation building and risk management,
+coordinating all aspects of our work, which
+helped deliver solid operating results.
+BUSINESS REVIEW AND PROSPECTS
+BUSINESS REVIEW
+ODEC
+30
+4
+exc
+EPEZCAL SINOPES
+12,504
+14,262
+15.253
+15,215
+63,555
+63,006
+non-controlling interests
+Attributable to
+5,625
+7,318
+12,496
+5,162
+5,716
+3,619
+4,930
+12,500
+14,253
+2,784
+3,468
+134,393
+132,549
+of the Company
+4,930
+3,619
+3,788
+3,426
+RMB million
+RMB million
+2016
+Zhonghan Wuhan
+2017
+2017
+2016
+SECCO (ii)
+Sinopec Kantons
+2017
+2016
+Fujian Petrochemical
+2017
+2016
+Shanghai Petrochemical
+2017
+2016
+2017
+2016
+SIPL
+Marketing Company
+2017
+Year ended 31 December
+Shanghai
+Summarised consolidated statement of comprehensive income
+3,029
+3.941
+5.989
+Attributable to owners
+8,654
+RMB million
+18,485
+(2,430)
+(721)
+(681)
+(6)
+(39,322)
+(1,460) (28,523)
+(1,774)
+Non-current liabilities
+14,686
+13,598
+12,797
+13,228
+13,089
+7,845
+9,925
+19.070
+19,577
+40,067
+34,769
+246,514
+253,455
+Non-current assets
+(6,032)
+(3,101)
+Turnover
+(1,740)
+251,681
+8,588
+9,504
+7,238
+9,860
+25,004
+28,515
+18,037
+18,683
+197,948
+195,555
+Net assets
+14,686
+13,598
+11,057
+10,127
+10,659
+7,124
+9,244
+19,070
+19,571
+745
+6,246
+245,054
+Net non-current assets
+11,259
+1,050,294
+RMB million
+6,136
+Financial Statements (International)
+197
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+- 1344 563 625 - 70 51 ---
+4,932
+9,544
+non-controlling interests
+Dividends paid to
+545
+90
+Financial Statements (International)
+956
+35
+349
+433
+1,256
+1,363
+2,964
+3,052
+(3,279)
+(38)
+9,028
+235
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+39 PRINCIPAL SUBSIDIARIES (Continued)
+RMB million
+RMB million
+RMB million
+RMB million
+2016
+Zhonghan Wuhan
+2017
+2017
+2016
+SECCO (ii)
+Sinopec Kantons
+2017
+2016
+Fujian Petrochemical
+2017
+2016
+2017
+2016
+2017
+2016
+Shanghai Petrochemical
+SIPL
+Marketing Company
+2017
+Year ended 31 December
+Shanghai
+Summarised statement of cash flows
+9.033
+controlling interests
+attributable to non-
+Comprehensive income/(loss)
+1,075
+26,461
+27,520
+Profit/(loss) for the year
+11,703
+16,139
+5,222
+1,512
+1,498
+4,968
+6,068
+77,843
+91,962
+4,016
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+(4,604)
+1,221,530
+6,154
+2,726
+1,558
+2,730
+26
+726
+879
+1,146
+2,513
+2,726
+6,000
+6,153
+(2,481)
+96
+396
+27,385
+26,986
+income/(loss)
+Total comprehensive
+1,558
+2,730
+726
+860
+1,046
+2.513
+5,981
+RMB million
+RMB 3,000
+Financial Statements (International)
+717
+1,077
+5,441
+2,042
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+101
+RMB million
+(used in) operating activities
+51,038
+50,840
+2,758
+2,576
+7,061
+7,182
+(558)
+19
+617
+88
+Net cash generated from/
+289
+886
+134
+64
+7,205
+289
+343
+717
+226
+5,441
+7,504
+3,045
+3,605
+14,373
+12,921
+at 31 December
+(1)
+(25)
+(14)
+9
+(7)
+112
+(230)
+616
+(253)
+Effect of foreign currency
+exchange rate changes
+Cash and cash equivalents
+260
+34
+968
+505
+1,639
+2,976
+(1,338)
+I
+(631)
+(682)
+Net (decrease)/increase in
+cash and cash equivalents
+(1,199)
+(1,157)
+790
+g0
+891
+2,070
+4,355
+(491)
+616
+919
+68
+68
+(572)
+7,206
+(70)
+(126)
+Cash and cash equivalents
+at 1 January
+14,373
+(1,093)
+134
+(55)
+(2,637)
+3,636
+Net cash (used in)/generated
+from investing activities
+(35,738)
+(31,573)
+(2,211)
+2,729
+(2,401)
+(190)
+25
+225
+54
+54
+193
+261
+5,567
+(2,415)
+(3,080)
+Net cash (used in)/generated
+from financing activities
+(16,499)
+(20,424)
+243
+(4,414)
+(2,590)
+(158)
+(2,339)
+(ii) The summarized consolidated statement of comprehensive income and the summarized statement of cash flow of Shanghai SECCO present the results from the
+acquisition date to 31 December 2017.
+Overview
+More than
+5 years
+More than 2
+years but less
+than 5 years
+RMB million
+More than 1
+year but less
+than 2 years
+RMB million
+1 year or
+on demand
+RMB million
+cash flow
+RMB million
+RMB million
+amount
+Carrying undiscounted
+Within
+contractual
+Total
+RMB million
+31 December 2016
+Bills payable
+Trade accounts payable
+and fellow subsidiaries
+Loans from Sinopec Group Company
+Long-term debts
+Short-term debts
+17,243
+71,323
+18,916
+99,588
+390,355
+497,837
+Accrued expenses and other payables
+56,239
+57,515
+72,674
+199
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Management believes that the Group's current cash on hand, expected cash flows from operations and available standby credit facilities from
+financial institutions will be sufficient to meet the Group's short-term and long-term capital requirements.
+24,537
+73,331
+29,369
+81,781
+340,887
+81,781
+468,124
+81,781
+454,175
+5,828
+5,828
+5,828
+174,301
+174,301
+174,301
+42,796
+2,092
+18,790
+63,678
+63,352
+24,537
+30,535
+27,277
+57,515
+2,672
+85,021
+485,896
+99,588
+99,588
+Accrued expenses and other payables
+Within
+1 year or
+on demand
+RMB million
+contractual
+undiscounted
+cash flow
+RMB million
+RMB million
+Carrying
+amount
+Total
+31 December 2017
+The following table sets out the remaining contractual maturities at the balance sheet date of the Group's financial liabilities, which are based on
+contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on prevailing rates current
+at the balance sheet date) and the earliest date the Group would be required to repay:
+At 31 December 2017, the Group has standby credit facilities with several PRC financial institutions which provide borrowings up to RMB 361,852
+million (2016: RMB 256,375 million) on an unsecured basis, at a weighted average interest rate of 3.40% per annum (2016: 3.57%). At 31
+December 2017, the Group's outstanding borrowings under these facilities were RMB 56,567 million (2016: RMB 36,933 million) and were included
+in debts.
+Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach in managing
+liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
+conditions, without incurring unacceptable losses or risking damage to the Group's reputation. Management prepares monthly cash flow budget
+to ensure that the Group will always have sufficient liquidity to meet its financial obligations as they fall due. The Group arranges and negotiates
+financing with financial institutions and maintains a certain level of standby credit facilities to reduce the Group's liquidity risk.
+Liquidity risk
+40 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+198
+The carrying amounts of cash and cash equivalents, time deposits with financial institutions, trade accounts and bills receivables, derivative financial
+instruments, financial assets at fair value through profit or loss and other receivables, represent the Group's maximum exposure to credit risk in
+relation to financial assets.
+Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations,
+and arises principally from the Group's deposits placed with financial institutions (including structured deposit) and receivables from customers.
+To limit exposure to credit risk relating to deposits, the Group primarily places cash deposits only with large financial institutions in the PRC with
+acceptable credit ratings. The majority of the Group's trade accounts receivable relate to sales of petroleum and chemical products to related
+parties and third parties operating in the petroleum and chemical industries. No single customer accounted for greater than 10% of total accounts
+receivable at 31 December 2017, except the amounts due from Sinopec Group Company and fellow subsidiaries. Management performs ongoing
+credit evaluations of the Group's customers' financial condition and generally does not require collateral on trade accounts receivable. The Group
+maintains an impairment loss for doubtful accounts and actual losses have been within management's expectations.
+Credit risk
+The Group's risk management policies are established to identify and analyse the risks faced by the Group, and set appropriate risk limits and
+controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
+conditions and the Group's activities. The Group, through its training and management controls and procedures, aims to develop a disciplined and
+constructive control environment in which all employees understand their roles and obligations. Internal audit department undertakes both regular
+and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Group's audit committee.
+The Board of Directors has overall responsibility for the establishment, oversight of the Group's risk management framework, and developing and
+monitoring the Group's risk management policies.
+market risk.
+liquidity risk;
+⚫credit risk;
+The Group has exposure to the following risks from its uses of financial instruments:
+Financial assets of the Group include cash and cash equivalents, time deposits with financial institutions, investments, financial assets at fair value
+through profit or loss, trade accounts receivable, bills receivable, amounts due from Sinopec Group Company and fellow subsidiaries, amounts due
+from associates and joint ventures, available-for-sale financial assets, derivative financial instruments and other receivables. Financial liabilities of the
+Group include short-term and long-term debts, loans from Sinopec Group Company and fellow subsidiaries, trade accounts payable, bills payable,
+amounts due to Sinopec Group Company and fellow subsidiaries, derivative financial instruments and other payables.
+More than 1
+year but less
+than 2 years
+RMB million
+40 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
+More than 2
+years but less
+than 5 years
+More than
+5 years
+RMB million
+6,462
+6,462
+6,462
+Bills payable
+200,073
+200,073
+200,073
+39,007
+4,439
+25,504
+68,950
+68,631
+17,243
+32,316
+14,477
+56,562
+2,166
+66,202
+55,804
+56,562
+55,338
+Trade accounts payable
+and fellow subsidiaries
+Loans from Sinopec Group Company
+Long-term debts
+Short-term debts
+RMB million
+7,428
+(1,539)
+(1,155)
+1,581
+(1,655)
+3,212
+(4,484)
+20,623
+26,977
+32,153
+Total segment operating profit
+31,569
+65,007
+(36,641)
+(45,944)
+- Elimination
+- Corporate and others
+- Chemicals
+- Marketing and distribution
+56,265
+71,470
+77,193
+Share of profits/(losses) from associates and joint ventures
+16,525
+Aggregate share of profits from associates and joint ventures
+1,376
+1,521
+Corporate and others
+5,696
+9,621
+- Chemicals
+2,362
+2,945
+1,075
+989
+- Marketing and distribution
+- Refining
+(1,203)
+1,449
+- Exploration and production
+- Refining
+-
+– Exploration and production
+By segment
+28,333
+5,486
+5,104
+9,542
+10,533
+1,880,190
+2,300,470
+738,469
+(1,168,732)
+(1,445,955)
+973,411
+320,367
+440,303
+418,102
+533,108
+322,903
+423,429
+284,289
+38,614
+22,004
+9,306
+14,314
+1,439
+Operating (loss)/profit
+Result
+2016
+RMB million
+RMB million
+2017
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+38 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+194
+Financial Statements (International)
+193
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+1,478
+50,721
+1,930,911
+2,360,193
+59,723
+12,211
+Investment income/(losses)
+- Exploration and production
+40
+Total assets
+25,337
+27,835
+142,497
+165,004
+Cash and cash equivalents and time deposits with financial institutions
+Other unallocated assets
+7,214
+15,131
+Deferred tax assets
+11,408
+1,676
+Available-for-sale financial assets
+116,812
+131,087
+Interest in associates and joint ventures
+1,195,341
+1,254,771
+1,595,504
+95,263
+1,498,609
+Segment liabilities
+518,172
+Total segment liabilities
+97,080
+117,781
+32,072
+35,293
+133,303
+164,101
+82,170
+101,429
+Corporate and others
+- Chemicals
+- Marketing and distribution
+- Refining
+95,944
+99,568
+· Exploration and production
+Liabilities
+373,814
+49,615
+170,045
+158,472
+263
+262
+34
+18
+119
+86
+90
+90
+(4)
+28
+Profit before taxation
+Aggregate investment income
+Net finance costs
+- Corporate and others
+- Chemicals
+- Marketing and distribution
+- Refining
+24
+(1,560)
+144,371
+86,697
+RMB million
+292,328
+309,727
+260,903
+273,123
+402,476
+343,404
+Total segment assets
+Corporate and others
+- Chemicals
+- Marketing and distribution
+- Exploration and production
+- Refining
+Segment assets
+Assets
+RMB million
+2016
+At 31 December
+(6,611)
+80,151
+At 31 December
+2017
+3,480
+1,030,853
+1,027,373
+1,191,902
+3,962
+1,195,864
+22,849
+44,793
+39,262
+570
+20,385
+20,726
+189
+10,978
+12,860
+5,444
+RMB million
+RMB million
+12,903
+2016
+31 December
+31 December
+2017
+Long-term loans excluding current portion from Sinopec Group Company and fellow subsidiaries
+Total
+from Sinopec Group Company and fellow subsidiaries
+Short-term loans and current portion of long-term loans
+Other long-term liabilities
+19,419
+Accrued expenses and other payables
+20,990
+10,165
+36 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+192
+Financial Statements (International)
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017 191
+As at and for the year ended 31 December 2017, and as at and for the year ended 31 December 2016, no individually significant impairment
+losses for bad and doubtful debts were recognised in respect of amounts due from Sinopec Group Company and fellow subsidiaries, associates
+and joint ventures.
+The long-term borrowings mainly include an interest-free loan with a maturity period of 20 years amounting to RMB 35,560 million from the
+Sinopec Group Company (a state-owned enterprise) through the Sinopec Finance. This borrowing is a special arrangement to reduce financing
+costs and improve liquidity of the Company during its initial global offering in 2000.
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures, other than short-term loans and long-term
+loans, bear no interest, are unsecured and are repayable in accordance with normal commercial terms. The terms and conditions associated
+with short-term loans and long-term loans payable to Sinopec Group Company and fellow subsidiaries are set out in Note 29.
+114,359
+122,635
+44,772
+43,320
+18,580
+25,311
+9,998
+21,590
+(b) Key management personnel emoluments
+Trade accounts payable
+Long-term prepayments and other assets
+(ix) Interest income represents interest received from deposits placed with Sinopec Finance Company Limited and Sinopec Century Bright Capital Investment Limited,
+finance companies controlled by Sinopec Group Company. The applicable interest rate is determined in accordance with the prevailing saving deposit rate. The
+balance of deposits at 31 December 2017 was RMB 47,514 million (2016: RMB 40,073 million).
+(viii) Agency commission income represents commission earned for acting as an agent in respect of sales of products and purchase of materials for certain entities
+owned by Sinopec Group Company.
+(vii) Operating lease charges represent the rental paid to Sinopec Group Company for operating leases in respect of land, buildings and equipment.
+(vi) Ancillary and social services represent expenditures for social welfare and support services such as educational facilities, media communication services, sanitation,
+accommodation, canteens, property maintenance and management services.
+(v) Production related services represent ancillary services rendered in relation to the Group's operations such as equipment repair and general maintenance,
+insurance premium, technical research, communications, firefighting, security, product quality testing and analysis, information technology, design and engineering,
+construction of oilfield ground facilities, refineries and chemical plants, manufacture of replacement parts and machinery, installation, project management and
+environmental protection.
+(iii) Transportation and storage represent the cost for the use of railway, road and marine transportation services, pipelines, loading, unloading and storage facilities.
+(iv) Exploration and development services comprise direct costs incurred in the exploration and development such as geophysical, drilling, well testing and well
+measurement services.
+(ii) Purchases represent the purchase of materials and utility supplies directly related to the Group's operations such as the procurement of raw and ancillary
+materials and related services, supply of water, electricity and gas.
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+Note:
+The directors of the Company are of the opinion that the above transactions with related parties were conducted in the ordinary course of
+business and on normal commercial terms or in accordance with the agreements governing such transactions, and this has been confirmed by
+the independent non-executive directors.
+At 31 December 2017 and 2016, there was no guarantee given to banks by the Group in respect of banking facilities to related parties, except
+for the guarantees disclosed in Note 34.
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+Included in the transactions disclosed above, for the year ended 31 December 2017 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 128,350 million (2016: RMB 114,526 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 112,619
+million (2016: RMB 96,023 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 6,652
+million (2016: RMB 6,584 million), operating lease charges for land and buildings paid by the Group of RMB 8,015 million and RMB 510 million
+(2016: RMB 10,474 million and RMB 449 million), respectively and interest expenses of RMB 554 million (2016: RMB 996 million); and b) sales
+by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 60,045 million (2016: RMB 56,251 million), comprising
+RMB 59,213 million (2016: RMB 56,010 million) for sales of goods, RMB 807 million (2016: RMB 209 million) for interest income and RMB 25
+million (2016: RMB 32 million) for agency commission income.
+36 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+190
+(x) Interest expense represents interest charges on the loans and advances obtained from Sinopec Group Company and fellow subsidiaries.
+Total
+(xi) The Group obtained or repaid loans from or to Sinopec Group Company and fellow subsidiaries.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Prepaid expenses and other current assets
+Other receivables
+Trade accounts receivable
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures included in the following accounts captions
+are summarised as follows:
+The Company has entered into a service stations franchise agreement with Sinopec Group Company effective from 1 January 2000 under
+which its service stations and retail stores would exclusively sell the refined products supplied by the Group.
+The Company has entered into agreements with Sinopec Group Company effective from 1 January 2000 under which the Group has been
+granted the right to use certain trademarks, patents, technology and computer software developed by Sinopec Group Company.
+The Company has entered into a series of lease agreements with Sinopec Group Company to lease certain lands and buildings effective
+on 1 January 2000. The lease term is 40 or 50 years for lands and 20 years for buildings, respectively. The Company and Sinopec Group
+Company can renegotiate the rental amount every three years for land. The Company and Sinopec Group Company can renegotiate the rental
+amount for buildings every year. However such amount cannot exceed the market price as determined by an independent third party.
+The Company has entered into a non-exclusive "Agreement for Provision of Cultural and Educational, Health Care and Community Services"
+with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the Group with certain
+cultural, educational, health care and community services on the same pricing terms and termination conditions as described in the above
+Mutual Provision Agreement.
+(4) where none of the above is applicable, the price to be agreed between the parties, which shall be based on a reasonable cost incurred in
+providing such services plus a profit margin not exceeding 6%.
+(3) where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+(2) where there is no government-prescribed price, the government-guidance price;
+The Company has entered into a non-exclusive "Agreement for Mutual Provision of Products and Ancillary Services" ("Mutual Provision
+Agreement") with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the
+Group with certain ancillary production services, construction services, information advisory services, supply services and other services and
+products. While each of Sinopec Group Company and the Company is permitted to terminate the Mutual Provision Agreement upon at least
+six months notice, Sinopec Group Company has agreed not to terminate the agreement if the Group is unable to obtain comparable services
+from a third party. The pricing policy for these services and products provided by Sinopec Group Company to the Group is as follows:
+(1) the government-prescribed price;
+•
+In connection with the Reorganisation, the Company and Sinopec Group Company entered into a number of agreements under which 1) Sinopec
+Group Company will provide goods and products and a range of ancillary, social and supporting services to the Group and 2) the Group will sell
+certain goods to Sinopec Group Company. These agreements impacted the operating results of the Group for the year ended 31 December 2017.
+The terms of these agreements are summarised as follows:
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+36 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2017
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+440,569
+Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the
+Group, directly or indirectly, including directors and supervisors of the Group. The key management personnel compensation is as follows:
+2017
+RMB'000
+5,344
+Corporate and others
+Inter-segment sales
+External sales
+Chemicals
+Inter-segment sales
+External sales
+Marketing and distribution
+Inter-segment sales
+External sales
+Refining
+Inter-segment sales
+External sales
+Exploration and production
+Turnover
+RMB million
+RMB million
+2016
+External sales
+2017
+Inter-segment sales
+Other operating revenues
+850,300
+1,006,749
+747,317
+874,271
+102,983
+132,478
+106,397
+146,972
+58,954
+77,804
+47,443
+69,168
+Turnover and other operating revenues
+Other operating revenues
+Corporate and others
+Marketing and distribution
+Chemicals
+Exploration and production
+Refining
+Elimination of inter-segment sales
+Turnover
+Short-term employee benefits
+Retirement scheme contributions
+Information of the Group's reportable segments is as follows:
+The Group's chief operating decision maker evaluates the performance and allocates resources to its operating segments on an operating profit
+basis, without considering the effects of finance costs or investment income. Inter-segment transfer pricing is based on the market price or cost
+plus an appropriate margin, as specified by the Group's policy.
+•
+• lease of assets;
+rendering and receiving services;
+•
+sales and purchases of goods and ancillary materials;
+•
+Apart from transactions with Sinopec Group Company and fellow subsidiaries, the Group has transactions with other state-controlled entities,
+include but not limited to the followings:
+The Group is a state-controlled energy and chemical enterprise and operates in an economic regime currently dominated by entities directly
+or indirectly controlled by the PRC government through its government authorities, agencies, affiliations and other organisations (collectively
+referred as "state-controlled entities").
+(d) Transactions with other state-controlled entities in the PRC
+The Group participates in various defined contribution retirement plans organised by municipal and provincial governments for its staff. The
+details of the Group's employee benefits plan are disclosed in Note 37. As at 31 December 2017 and 2016, the accrual for the contribution to
+post-employment benefit plans was not material.
+(c) Contributions to defined contribution retirement plans
+6,147
+5,768
+5,648
+499
+424
+RMB'000
+2016
+depositing and borrowing money; and
+Assets and liabilities dedicated to a particular segment's operations are included in that segment's total assets and liabilities. Segment assets
+include all tangible and intangible assets, except for interest in associates and joint ventures, investments, deferred tax assets, cash and cash
+equivalents, time deposits with financial institutions and other unallocated assets. Segment liabilities exclude short-term, income tax payable,
+long-term debts, loans from Sinopec Group Company and fellow subsidiaries, deferred tax liabilities and other unallocated liabilities.
+•
+These transactions are conducted in the ordinary course of the Group's business on terms comparable to those with other entities that are not
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+The segments were determined primarily because the Group manages its exploration and production, refining, marketing and distribution,
+chemicals, and corporate and others businesses separately. The reportable segments are each managed separately because they manufacture and/
+or distribute distinct products with different production processes and due to their distinct operating and gross margin characteristics.
+38 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+(v) Corporate and others, which largely comprises the trading activities of the import and export companies of the Group and research and
+development undertaken by other subsidiaries.
+(iv) Chemicals, which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products mainly to
+external customers.
+(iii) Marketing and distribution, which owns and operates oil depots and service stations in the PRC, and distributes and sells refined petroleum
+products (mainly gasoline and diesel) in the PRC through wholesale and retail sales networks.
+(ii) Refining, which processes and purifies crude oil, that is sourced from the exploration and production segment of the Group and external
+suppliers, and manufactures and sells petroleum products to the chemicals and marketing and distribution segments of the Group and external
+customers.
+(i) Exploration and production, which explores and develops oil fields, produces crude oil and natural gas and sells such products to the refining
+segment of the Group and external customers.
+In a manner consistent with the way in which information is reported internally to the Group's chief operating decision maker for the purposes of
+resource allocation and performance assessment, the Group has identified the following five reportable segments. No operating segments have been
+aggregated to form the following reportable segments.
+Segment information is presented in respect of the Group's business segments. The format is based on the Group's management and internal
+reporting structure.
+38 SEGMENT REPORTING
+As stipulated by the regulations of the PRC, the Group participates in various defined contribution retirement plans organised by municipal and
+provincial governments for its staff. The Group is required to make contributions to the retirement plans at rates ranging from 15.0% to 20.0% of
+the salaries, bonuses and certain allowances of its staff. In addition, the Group provides a supplementary retirement plan for its staff at rates not
+exceeding 5% of the salaries. The Group has no other material obligation for the payment of pension benefits associated with these plans beyond
+the annual contributions described above. The Group's contributions for the year ended 31 December 2017 were RMB 8,981 million (2016: RMB
+8,385 million).
+37 EMPLOYEE BENEFITS PLAN
+state-controlled.
+uses of public utilities.
+14,914
+Short-term debts
+RMB 1,595
+Fujian Petrochemical Company Limited
+49.51
+50.49
+RMB 10,814
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+45.00
+55.00
+RMB 10,000
+Gaoqiao Petrochemical Company Limited (Note 35)
+39.66
+60.34
+HKD 248
+Sinopec Kantons Holdings Limited ("Sinopec Kantons")
+35.00
+65.00
+RMB 6,270
+Sinopec-SK(Wuhan) Petrochemical Company Limited
+("Zhonghan Wuhan")
+RMB 6,898
+products
+50.00
+("Fujian Petrochemical") (i)
+Set out below are the summarised financial information which the amount before inter-company eliminations for each subsidiary that has non-
+controlling interests that are material to the Group.
+Summarised financial information on subsidiaries with material non-controlling interests
+(i) The Group consolidated the financial statements of the entity because it is exposed to, or has rights to, variable returns from its involvement with the entity and has
+the ability to affect those returns through its power over the entity.
+Note:
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong respectively, all of the above principal subsidiaries are
+incorporated and operate their businesses principally in the PRC. All of the above principal subsidiaries are limited companies.
+39 PRINCIPAL SUBSIDIARIES (Continued)
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+products and petroleum products
+Manufacturing of plastics, intermediate
+petrochemical products and petroleum
+products
+Manufacturing of synthetic fibres, resin
+and plastics, intermediate petrochemical
+petrochemical products and petroleum
+products
+Manufacturing of intermediate
+Trading of crude oil and petroleum
+products
+development of ethylene and downstream
+byproducts
+Production, sale, research and
+Production and sale of petrochemical
+50.00
+Summarised consolidated balance sheet
+32.40
+RMB 7,801
+15.00
+85.00
+RMB 5,000
+Sinopec Qingdao Refining and Chemical
+1.02
+98.98
+RMB 5,294
+Sinopec Beihai Refining and Chemical Limited
+Liability Company
+100.00
+RMB 1,000
+Sinopec Chemical Sales Company Limited
+100.00
+RMB 1,400
+China Petrochemical International Company Limited
+100.00
+RMB 1,500
+Sinopec Catalyst Company Limited
+Company Limited
+67.60
+Sinopec Zhanjiang Dongxing Petrochemical
+Company Limited
+75.00
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO") (Note 35)
+Marketing and distribution of refined
+petroleum products
+("Marketing Company")
+29.58
+70.42
+RMB 28,403
+Sinopec Marketing Company Limited
+petrochemical products and petroleum
+products
+Company Limited
+Manufacturing of intermediate
+25.00
+75.00
+RMB 3,986
+Sinopec Hainan Refining and Chemical
+products
+petrochemical products and petroleum
+25.00
+RMB 4,397
+100.00
+Shanghai
+At 31
+(168,366)
+(212,620)
+Current liabilities
+1,489
+1,636
+11,602
+1.352
+1,196
+926
+992
+14,876
+19,866
+18,116
+19.555
+121,260
+156,494
+Current assets
+(7,118)
+RMB million
+(824)
+(8,942)
+114
+616
+5,934
+8,944
+17,292
+12,437
+(47,106)
+(56,126)
+(liabilities)/assets
+Net current
+(7,521)
+(3,975)
+(4,174)
+(2,891)
+(2,351)
+(812)
+(376)
+(10,922)
+Marketing Company
+At 31
+RMB million
+RMB million
+At 31
+Zhonghan Wuhan
+At 31
+At 31
+December
+December
+December
+December
+SECCO
+Sinopec Kantons
+At 31
+At 31
+At 31
+Fujian Petrochemical
+At 31
+December
+December
+Shanghai Petrochemical
+At 31
+At 31
+December
+At 31
+December
+SIPL
+At 31
+December
+2017
+December
+2016
+2017
+December
+December
+RMB million
+December
+2017
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2016
+2017
+2017
+2016
+2017
+2016
+2017
+2016
+2016
+55,338
+3.045
+Company Limited
+12,873
+14,540
+15,463
+17,209
+18,408
+61,929
+66,843
+76,456
+99,384
+2,580
+2,398
+8,849
+23,028
+18,493
+21,539
+14,347
+21,075
+12,654
+32,187
+1,723
+115,310
+External sales
+The following tables set out information about the geographical information of the Group's external sales and the Group's non-current assets,
+excluding financial instruments and deferred tax assets. In presenting information on the basis of geographical segments, segment revenue is
+based on the geographical location of customers, and segment assets are based on the geographical location of the assets.
+21,258
+16,425
+211
+2,898
+267
+(2) Geographical information
+Corporate and others
+Marketing and distribution
+Chemicals
+Refining
+Exploration and production
+11,605
+1.655
+4,922
+675
+13,556
+1,894
+108,425
+2,093
+Mainland China
+31,344
+RMB million
+742,614
+Total liabilities
+20,828
+25,188
+Other unallocated liabilities
+7,661
+6,466
+63,352
+68,631
+Loans from Sinopec Group Company and fellow subsidiaries
+Deferred tax liabilities
+72,674
+55,804
+Long-term debts
+6,051
+13,015
+Income tax payable
+56,239
+667,374
+RMB million
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+for the year ended 31 December 2017
+2016
+2017
+Impairment losses on long-lived assets
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Depreciation, depletion and amortisation
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Capital expenditure
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+38 SEGMENT REPORTING (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Sinopec Qingdao Petrochemical Company Limited
+Singapore
+Non-current assets
+Mainland China
+Investment holding
+Pipeline storage and transportation of
+crude oil
+petrochemical products and petroleum
+products
+Manufacturing of intermediate
+Coal chemical industry investment
+management, production and sale of coal
+chemical products
+Principal activities
+100.00
+RMB 3,374
+100.00
+RMB 4,000
+Sinopec Lubricant Company Limited
+Liability Company
+Sinopec Yizheng Chemical Fibre Limited
+Production Limited ("SIPL")
+100.00
+RMB 8,000
+Sinopec International Petroleum Exploration and
+Investment in exploration,
+100.00
+production and sale of petroleum and
+natural gas
+Production and sale of refined petroleum
+100.00
+China International United Petroleum and Chemical
+Manufacturing of intermediate
+petrochemical products and petroleum
+products
+Manufacturing of intermediate
+petroleum products and petrochemical
+products
+oil, production, storage and sale of
+Import and processing of crude
+petrochemical products
+Marketing and distribution of
+Trading of petrochemical products
+Production and sale of catalyst products
+petrochemical products and petroleum
+products
+Manufacturing of intermediate
+Trading of crude oil and petrochemical
+products
+petrochemical materials
+products, lubricant base oil, and
+Production and sale of polyester chips
+and polyester fibres
+Others
+USD 1,638
+Company Limited
+Financial Statements (International)
+195
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+45,887
+1,046,096
+1,000,209
+2016
+RMB million
+979,329
+48,572
+1,027,901
+RMB million
+31 December
+1,758,365
+269,349
+332,479
+2,360,193
+2017
+1,930,911
+31 December
+290,726
+1,488,117
+152,068
+2016
+RMB million
+2017
+RMB million
+Others
+196
+Sinopec Overseas Investment Holding Limited ("SOIH")
+Financial Statements (International)
+for the year ended 31 December 2017
+100.00
+RMB 12,000
+Sinopec Pipeline Storage & Transportation
+100.00
+RMB 13,203
+Sinopec Yangzi Petrochemical Company Limited
+Company Limited
+by the non-controlling
+Company % interests %
+100.00
+RMB 22,761
+(million)
+Interests held
+Interests
+held by
+Particulars of
+issued capital
+Sinopec Great Wall Energy & Chemical
+Name of company
+At 31 December 2017, the following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the
+Group.
+39 PRINCIPAL SUBSIDIARIES
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+During the years ended 31 December 2017 and 2016, there was no transfer among instruments in Level 1, Level 2, Level 3.
+Management of the Group evaluates the fair value of Level 3 financial assets using discounted cash flow model based on the interest rate and
+commodity index which were influenced by historical fluctuation and the probability of market fluctuation as input value for evaluating the fair
+value of the structural deposits.
+Financial Statements (International)
+China
+2016
+RMB million
+Other
+countries
+The Group
+Sales
+Transfers
+43,644
+43,644
+36,720
+36,720
+Total
+73,447
+6,136
+58,571
+54,555
+4,016
+117,091
+110,955
+6,136
+95,291
+91,275
+67,311
+Other
+countries
+China
+Total
+719
+Total of the Group's and its equity method
+investments' exploration and development costs
+43,157
+42,299
+858
+43,941
+42,860
+1,081
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+207
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+208
+Financial Statements
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table III: Results of operations related to oil and gas producing activities
+2017
+RMB million
+4,016
+Production costs excluding taxes
+(46,311)
+(44,977)
+(741)
+(37,931)
+(35,582)
+(2,349)
+Income tax expense
+1,188
+1,188
+(798)
+(798)
+Results of operation from producing activities
+(28,246)
+(28,693)
+447
+(38,729)
+(35,582)
+(3,147)
+Equity method investments
+Revenues
+Sales
+8,080
+8,080
+(28,693)
+719
+(29,434)
+(4,576)
+(1,334)
+(44,077)
+(42,652)
+(1,425)
+Exploration expenses
+(11,089)
+(11,089)
+(11,035)
+(11,035)
+Depreciation, depletion, amortisation and
+impairment losses
+(80,399)
+(74,856)
+(5,543)
+(73,534)
+(68,594)
+(4,940)
+Taxes other than income tax
+(8,726)
+(8,726)
+(4,576)
+Profit before taxation
+Production costs excluding taxes
+724
+of associates and joint ventures
+8
+52,935
+52,931
+4
+Total capitalised costs
+919,765
+877,704
+42,061
+896,498
+41,389
+852,279
+Accumulated depreciation, depletion, amortisation
+and impairment losses
+(601,318)
+(565,651)
+Net capitalised costs
+318,447
+312,053
+(35,667)
+6,394
+(528,636)
+44,219
+41,397
+Uncompleted wells, equipments and facilities
+22
+Table I: Capitalised costs related to oil and gas producing activities
+2017
+RMB million
+Total
+China
+Other
+countries
+2016
+RMB million
+Other
+Total
+China
+countries
+The Group
+Property cost, wells and related equipments
+and facilities
+667,657
+Supporting equipments and facilities
+210,711
+625,621
+210,694
+42,036
+17
+650,686
+192,877
+606,493
+192,855
+44,193
+(495,538)
+(33,098)
+367,862
+356,741
+Exploration
+11,589
+11,589
+10,942
+10,942
+Development
+30,844
+30,710
+134
+32,280
+31,918
+362
+Total costs incurred
+42,433
+42,299
+134
+43,222
+42,860
+362
+Equity method investments
+Share of costs of exploration and development
+The Group
+724
+2016
+RMB million
+Other
+countries
+Total
+11,121
+Equity method investments
+Share of net capitalised costs of associates and
+joint ventures
+6,357
+6,357
+9,337
+9,337
+Total of the Group's and its equity method
+investments' net capitalised costs
+324,804
+312,053
+12,751
+377,199
+356,741
+20,458
+Table II: Costs incurred in oil and gas exploration and development
+2017
+RMB million
+Total
+China
+Other
+countries
+China
+(2,748)
+8,080
+6,352
+136
+204
+201
+3
+End of year
+137
+137
+136
+136
+136
+Proved developed and undeveloped
+Beginning of year
+7,160
+7,160
+Revisions of previous estimates
+(107)
+(107)
+Improved recovery
+72
+72
+reserves (gas) (billion cubic feet)
+Beginning of year
+Proved undeveloped reserves
+40
+40
+Non-controlling interest in proved developed and
+undeveloped reserves at the end of year
+14
+14
+18
+18
+Proved developed reserves
+Beginning of year
+1,120
+1,080
+40
+1,753
+1,701
+52
+End of year
+1,156
+1,124
+32
+1,120
+1,080
+Extensions and discoveries
+769
+769
+Production
+66
+475
+475
+(762)
+(762)
+7,160
+7,160
+6,439
+6,439
+6,436
+6,436
+1,112
+1,112
+724
+724
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+209
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+200
+66
+1,216
+(170)
+7,551
+(909)
+(909)
+End of year
+6,985
+6,985
+|| | | | | | |
+Proved developed reserves
+Beginning of year
+6,436
+6,436
+End of year
+6,000
+6,000
+Proved undeveloped reserves
+Beginning of year
+724
+724
+End of year
+985
+985
+7,551
+(170)
+1,256
+32
+1,261
+(2,752)
+(2,752)
+(3,628)
+(2,570)
+(2,570)
+461
+(347)
+(1,175)
+(1,175)
+(195)
+(195)
+114
+(1,370)
+561
+(40,099)
+(1,370)
+(35,582)
+(4,517)
+The results of operations for producing activities for the years ended 31 December 2017 and 2016 are shown above. Revenues include sales to
+unaffiliated parties and transfers (essentially at third-party sales prices) to other segments of the Group. Income taxes are based on statutory tax
+rates, reflecting allowable deductions and tax credits. General corporate overhead and interest income and expense are excluded from the results of
+operations.
+Table IV: Reserve quantities information
+The Group's and its equity method investments' estimated net proved underground oil and gas reserves and changes thereto for the years ended 31
+December 2017 and 2016 are shown in the following table.
+Proved oil and gas reserves are those quantities of oil and gas, which by analysis of geoscience and engineering data, can be estimated with reasonable
+certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods,
+and government regulation before contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain,
+regardless of whether the estimate is a deterministic estimate or probabilistic estimate. Due to the inherent uncertainties and the limited nature of
+reservoir data, estimates of underground reserves are subject to change as additional information becomes available.
+(1,243)
+Proved developed oil and gas reserves are proved reserves that can be expected to be recovered through existing wells with existing equipment and
+operating methods or in which the cost of the required equipment is relatively minor compared with the cost of a new well.
+(28,693)
+results of operations for producing activities
+8,080
+6,352
+(2,748)
+(2,205)
+6,352
+6,352
+(2,205)
+Exploration expenses
+Depreciation, depletion, amortisation and
+impairment losses
+(1,243)
+Taxes other than income tax
+(3,628)
+Profit before taxation
+Income tax expense
+Share of profit for producing activities of
+associates and joint ventures
+461
+(347)
+114
+|||||
+Total of the Group's and its equity method investments'
+(28,132)
+Tables | to VI of supplemental information on oil and gas producing activities set out below represent information of the Company and its consolidated
+subsidiaries and equity method investments.
+"Net" reserves exclude royalties and interests owned by others and reflect contractual arrangements and obligation of rental fee in effect at the time of
+the estimate.
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+1,902
+55
+(505)
+(509)
+4
+35
+35
+Extensions and discoveries
+60
+60
+41
+41
+Production
+(264)
+(249)
+(15)
+(272)
+(253)
+(19)
+End of year
+1,293
+1,957
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+234
+90
+Table IV: Reserve quantities information (Continued)
+2017
+2016
+Other
+Total
+China
+countries
+Total
+China
+Other
+countries
+The Group
+Proved developed and undeveloped reserves
+(oil) (million barrels)
+Beginning of year
+1,256
+1,216
+40
+Revisions of previous estimates
+151
+148
+Improved recovery
+86
+In accordance with the Accounting Standards Update 2010-03, “Extractive Activities - Oil and Gas (Topic 932): Oil and Gas Reserve Estimation and
+Disclosures" ("ASU 2010-03"), issued by the Financial Accounting Standards Board of the United States, and in accordance with “Industrial Information
+Disclosure Guidelines for Public Company - No.8 Oil and Gas Exploitation", issued by Shanghai Stock Exchange, this section provides supplemental
+information on oil and gas exploration and producing activities of the Group and its equity method investments at 31 December 2017 and 2016, and
+for the years then ended in the following six separate tables. Tables I through III provide historical cost information under IFRS pertaining to capitalised
+costs related to oil and gas producing activities; costs incurred in oil and gas exploration and development; and results of operation related to oil and
+gas producing activities. Tables IV through VI present information on the Group's and its equity method investments' estimated net proved reserve
+quantities; standardised measure of discounted future net cash flows; and changes in the standardised measure of discounted cash flows.
+Revenues
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+The Group's financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that underlie the
+preparation of the consolidated financial statements. Management bases the assumptions and estimates on historical experience and on
+various other assumptions that it believes to be reasonable and which form the basis for making judgements about matters that are not readily
+apparent from other sources. On an ongoing basis, management evaluates its estimates. Actual results may differ from those estimates as facts,
+circumstances and conditions change.
+The selection of critical accounting policies, the judgements and other uncertainties affecting application of such policies and the sensitivity of
+reported results to changes in conditions and assumptions are factors to be considered when reviewing the consolidated financial statements. The
+significant accounting policies are set forth in Note 2. Management believes the following critical accounting policies involve the most significant
+judgements and estimates used in the preparation of the consolidated financial statements.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+41 ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+Oil and gas properties and reserves
+The accounting for the exploration and production's oil and gas activities is subject to accounting rules that are unique to the oil and gas industry.
+There are two methods to account for oil and gas business activities, the successful efforts method and the full cost method. The Group has elected
+to use the successful efforts method. The successful efforts method reflects the volatility that is inherent in exploring for mineral resources in that
+costs of unsuccessful exploratory efforts are charged to expense as they are incurred. These costs primarily include dry hole costs, seismic costs
+and other exploratory costs. Under the full cost method, these costs are capitalised and written-off or depreciated over time.
+Engineering estimates of the Group's oil and gas reserves are inherently imprecise and represent only approximate amounts because of the
+subjective judgements involved in developing such information. There are authoritative guidelines regarding the engineering criteria that have to be
+met before estimated oil and gas reserves can be designated as "proved". Proved and proved developed reserves estimates are updated at least
+annually and take into account recent production and technical information about each field. In addition, as prices and cost levels change from
+year to year, the estimate of proved and proved developed reserves also changes. This change is considered a change in estimate for accounting
+purposes and is reflected on a prospective basis in relation to depreciation rates. Oil and gas reserves have a direct impact on the assessment of
+the recoverability of the carrying amounts of oil and gas properties reported in the financial statements. If proved reserves estimates are revised
+downwards, earnings could be affected by changes in depreciation expense or an immediate write-down of the property's carrying amount.
+Future dismantlement costs for oil and gas properties are estimated with reference to engineering estimates after taking into consideration the
+anticipated method of dismantlement required in accordance with industry practices in similar geographic area, including estimation of economic
+life of oil and gas properties, technology and price level. The present values of these estimated future dismantlement costs are capitalised as oil and
+gas properties with equivalent amounts recognised as provisions for dismantlement costs.
+41 ACCOUNTING ESTIMATES AND JUDGEMENTS
+Despite the inherent imprecision in these engineering estimates, these estimates are used in determining depreciation expense, impairment loss
+and future dismantlement costs. Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes
+produced and reserves.
+If circumstances indicate that the net book value of a long-lived asset may not be recoverable, the asset may be considered “impaired", and an
+impairment loss may be recognised in accordance with IAS 36 "Impairment of Assets". The carrying amounts of long-lived assets are reviewed
+periodically in order to assess whether the recoverable amounts have declined below the carrying amounts. These assets are tested for impairment
+whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. When such a decline has
+occurred, the carrying amount is reduced to recoverable amount. For goodwill, the recoverable amount is estimated annually. The recoverable
+amount is the greater of the net selling price and the value in use. It is difficult to precisely estimate selling price because quoted market prices for
+the Group's assets or cash-generating units are not readily available. In determining the value in use, expected cash flows generated by the asset
+or the cash-generating unit are discounted to their present value, which requires significant judgement relating to level of sale volume, selling price,
+amount of operating costs and discount rate. Management uses all readily available information in determining an amount that is a reasonable
+approximation of recoverable amount, including estimates based on reasonable and supportable assumptions and projections of sale volume, selling
+price, amount of operating costs and discount rate.
+Depreciation
+Property, plant and equipment, other than oil and gas properties, are depreciated on a straight-line basis over the estimated useful lives of the
+assets, after taking into account the estimated residual value. Management reviews the estimated useful lives of the assets at least annually in order
+to determine the amount of depreciation expense to be recorded during any reporting period. The useful lives are based on the Group's historical
+experience with similar assets and take into account anticipated technological changes. The depreciation expense for future periods is adjusted if
+there are significant changes from previous estimates.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+203
+Financial Statements (International)
+204
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Impairment for long-lived assets
+The Group has not developed an internal valuation model necessary to estimate the fair values of loans from Sinopec Group Company and
+fellow subsidiaries as it is not considered practicable to estimate their fair values because the cost of obtaining discount and borrowing rates for
+comparable borrowings would be excessive based on the Reorganisation, the Group's existing capital structure and the terms of the borrowings.
+Investments in unquoted equity securities are individually and in the aggregate not material to the Group's financial condition or results of
+operations. There are no listed market prices for such interests in the PRC and, accordingly, a reasonable estimate of fair value could not be
+made without incurring excessive costs. The Group intends to hold these unquoted other investments in equity securities for long term purpose.
+Except for the above items, the financial assets and liabilities of the Group are carried at amounts not materially different from their fair values at
+31 December 2017 and 2016.
+31 December
+2016
+RMB million
+110,969
+109,308
+79,738
+78,040
+2,586
+2,586
+1,886
+1,886
+262
+762
+1,024
+4,472
+4,472
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+201
+Financial Statements (International)
+202
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+40 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Fair values (Continued)
+(ii) Fair values of financial instruments carried at other than fair value
+The disclosures of the fair value estimates, and their methods and assumptions of the Group's financial instruments, are made to comply
+with the requirements of IFRS 7 and IAS 39 and should be read in conjunction with the Group's consolidated financial statements and related
+notes. The estimated fair value amounts have been determined by the Group using market information and valuation methodologies considered
+appropriate. However, considerable judgement is required to interpret market data to develop the estimates of fair value. Accordingly, the
+estimates presented herein are not necessarily indicative of the amounts the Group could realise in a current market exchange. The use of
+different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
+The fair values of the Group's financial instruments carried at other than fair value (other than long-term indebtedness and investments in
+unquoted equity securities) approximate their carrying amounts due to the short-term maturity of these instruments. The fair values of long-term
+indebtedness are estimated by discounting future cash flows using current market interest rates offered to the Group that range from 1.79% to
+4.90% (2016: 1.06% to 4.90%). The following table presents the carrying amount and fair value of the Group's long-term indebtedness other
+than loans from Sinopec Group Company and fellow subsidiaries at 31 December 2017 and 2016:
+Carrying amount
+Fair value
+31 December
+2017
+RMB million
+for the year ended 31 December 2017
+41 ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+Impairment for bad and doubtful debts
+Management estimates impairment losses for bad and doubtful debts resulting from the inability of the Group's customers to make the required
+payments. Management bases the estimates on the ageing of the accounts receivable balance, customer credit-worthiness, and historical write-off
+experience. If the financial condition of the customers were to deteriorate, actual write-offs would be higher than estimated.
+49,277
+245,156
+238,264
+15,579
+14,691
+14,822
+15,496
+395
+297
+6,834
+6,916
+6,114
+14,072
+14,731
+683,634
+711,890
+Cash and cash equivalents
+72,309
+88,120
+Time deposits with financial institutions
+20,236
+50,046
+733
+373,020
+Current assets
+Allowance for diminution in value of inventories
+If the costs of inventories become higher than their net realisable values, an allowance for diminution in value of inventories is recognised. Net
+realisable value represents the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated
+costs necessary to make the sale. Management bases the estimates on all available information, including the current market prices of the finished
+goods and raw materials, and historical operating costs. If the actual selling prices were to be lower or the costs of completion were to be higher
+than estimated, the actual allowance for diminution in value of inventories could be higher than estimated.
+42 PARENT AND ULTIMATE HOLDING COMPANY
+The directors consider the parent and ultimate holding company of the Group as at 31 December 2017 is Sinopec Group Company, a state-owned
+enterprise established in the PRC. This entity does not produce financial statements available for public use.
+43 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY
+BALANCE SHEET OF THE COMPANY (Amounts in million)
+Note
+31 December
+2017
+RMB
+31 December
+2016
+RMB
+Non-current assets
+Property, plant and equipment, net
+Construction in progress
+Investment in subsidiaries
+Interest in associates
+Interest in joint ventures
+Available-for-sale financial assets
+Deferred tax assets
+Lease prepayments
+Long-term prepayments and other assets
+Total non-current assets
+329,814
+291
+733
+29
+Interest rate risk
+The Group's interest rate risk exposure arises primarily from its short-term and long-term debts. Debts bearing interest at variable rates and at fixed
+rates expose the Group to cash flow interest rate risk and fair value interest rate risk respectively. The interest rates of short-term and long-term
+debts, and loans from Sinopec Group Company and fellow subsidiaries of the Group are disclosed in Note 29.
+As at 31 December 2017, it is estimated that a general increase/decrease of 100 basis points in variable interest rates, with all other variables held
+constant, would decrease/increase the Group's net profit for the year by approximately RMB 450 million (2016: decrease/increase by approximately
+RMB 327 million). This sensitivity analysis has been determined assuming that the change of interest rates was applied to the Group's debts
+outstanding at the balance sheet date with exposure to cash flow interest rate risk. The analysis is performed on the same basis for 2016.
+Commodity price risk
+The Group engages in oil and gas operations and is exposed to commodity price risk related to price volatility of crude oil, refined oil products and
+chemical products. The fluctuations in prices of crude oil, refined oil products and chemical products could have significant impact on the Group.
+The Group uses derivative financial instruments, including commodity futures and swaps, to manage a portion of this risk. As at 31 December 2017,
+the Group had certain commodity contracts of crude oil, refined oil products and chemical products designated as qualified cash flow hedges and
+economic hedges. The fair values of these derivative financial instruments as at 31 December 2017 are set out in Notes 27 and 31.
+As at 31 December 2017, it is estimated that a general increase/decrease of USD 10 per barrel in basic price of derivative financial instruments,
+with all other variables held constant, would impact the fair value of derivative financial instruments, which would decrease/increase the Group's
+profit for the period by approximately RMB 4,049 million (2016: decrease/increase RMB 634 million), and decrease/increase the Group's other
+reserves by approximately RMB 701 million (2016: decrease/increase RMB 4,007 million). This sensitivity analysis has been determined assuming
+that the change in prices had occurred at the balance sheet date and the change was applied to the Group's derivative financial instruments at that
+date with exposure to commodity price risk. The analysis is performed on the same basis for 2016.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+40 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Fair values
+(i) Financial instruments carried at fair value
+The following table presents the carrying value of financial instruments measured at fair value at the balance sheet date across the three levels
+of the fair value hierarchy defined in IFRS 7, 'Financial Instruments: Disclosures', with the fair value of each financial instrument categorised in
+its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:
+•
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+•
+Level 2: fair values measured using quoted prices in active markets for similar financial instruments, or using valuation techniques in which
+all significant inputs are directly or indirectly based on observable market data.
+•
+Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
+At 31 December 2017
+USD
+Other than the amounts as disclosed above, the amounts of other financial assets and liabilities of the Group are substantially denominated in the
+functional currency of respective entity within the Group.
+Assets
+33
+million
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+40 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Market risk
+Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates. The objective of market risk management is
+to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
+Currency risk
+Currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured. The
+Group's currency risk exposure primarily relates to short-term and long-term debts and loans from Sinopec Group Company and fellow subsidiaries
+denominated in USD. The Group enters into foreign exchange contracts to manage its currency risk exposure.
+Included in short-term and long-term debts and loans from Sinopec Group Company and fellow subsidiaries of the Group are the following amounts
+denominated in a currency other than the functional currency of the entity to which they relate:
+Gross exposure arising from loans
+USD
+31 December
+31 December
+2017
+million
+2016
+million
+USD 204
+USD 126
+A 5 percent strengthening/weakening of RMB against the following currencies at 31 December 2017 and 2016 would have increased/decreased net
+profit for the year of the Group by the amounts shown below. This analysis has been determined assuming that the change in foreign exchange rates
+had occurred at the balance sheet date and had been applied to the foreign currency balances to which the Group has significant exposure as stated
+above, and that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2016.
+31 December
+31 December
+2017
+2016
+million
+50
+10,130
+Financial assets at fair value through profit and loss:
+Available-for-sale financial assets:
+178
+343
+183
+526
+521
+183
+51,196
+51,900
+1,277
+1,388
+1,277
+1,388
+2,665
+2,665
+Level 1
+Level 2
+RMB million
+RMB million
+Level 3
+RMB million
+Total
+RMB million
+262
+178
+- Structured deposit
+51,196
+Total
+RMB million
+- Listed
+Derivative financial instruments:
+Derivative financial assets
+Liabilities
+Derivative financial instruments:
+- Derivative financial liabilities
+At 31 December 2016
+Assets
+Available-for-sale financial assets:
+- Listed
+Derivative financial instruments:
+Derivative financial assets
+Liabilities
+Derivative financial instruments:
+- Derivative financial liabilities
+Level 1
+Level 2
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
+RMB million
+RMB million
+RMB million
+51,196
+Financial assets at fair value through profit or loss
+Level 3
+Trade accounts receivable
+89
+80
+Balance at 31 December
+2,460
+2,438
+Retained earnings
+Balance at 1 January
+183,321
+176,497
+Others
+Profit for the year
+Appropriation
+Others
+Balance at 31 December
+30,488
+23,733
+(32,689)
+(16,829)
+(3,042)
+(89)
+Distribution to owners (Note 13)
+557
+53
+Cash flow hedges, net of deferred tax
+79,640
+79,640
+Appropriation
+3,042
+Balance at 31 December
+82,682
+79,640
+Discretionary surplus reserve
+Balance at 1 January
+117,000
+117,000
+Balance at 31 December
+117,000
+117,000
+Other reserves
+Balance at 1 January
+2,438
+1,950
+Share of other comprehensive loss of associates and joint ventures, net of deferred tax
+(120)
+(149)
+177,989
+(80)
+183,321
+445,176
+447,424
+Note
+2017
+Net profit under ASBE
+RMB million
+70,294
+2016
+RMB million
+59,170
+Adjustments:
+Government grants
+Safety production fund
+Others
+(i)
+(ii)
+110
+114
+126
+160
+(112)
+Profit for the year under IFRS*
+70,418
+59,444
+*
+The figures are extracted from the consolidated financial statements prepared in accordance with the accounting policies complying with IFRS during the year ended
+31 December 2016 and 2017 which have been audited by PricewaterhouseCoopers.
+48,179
+206
+Effects of major differences between the net profit under ASBE and the profit for the year under IFRS are analysed as follows:
+55,850
+(1,290)
+831,235
+Total equity under IFRS*
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+205
+Financial Statements (International)
+Financial Statements
+(Differences Between the ASBE and IFRS)
+(Unaudited)
+(C) DIFFERENCES BETWEEN CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH
+THE ACCOUNTING POLICIES COMPLYING WITH ASBE AND IFRS (UNAUDITED)
+Other than the differences in the classifications of certain financial statements captions and the accounting for the items described below, there are no
+material differences between the Group's consolidated financial statements prepared in accordance with the accounting policies complying with ASBE
+and IFRS. The reconciliation presented below is included as supplemental information, is not required as part of the basic financial statements and
+does not include differences related to classification, presentation or disclosures. Such information has not been subject to independent audit or review.
+The major differences are:
+(I) GOVERNMENT GRANTS
+Under ASBE, grants from the government are credited to capital reserve if required by relevant governmental regulations. Under IFRS, government
+grants relating to the purchase of fixed assets are recognised as deferred income and are transferred to the income statement over the useful life of
+these assets.
+(II) SAFETY PRODUCTION FUND
+Under ASBE, safety production fund should be recognised in profit or loss with a corresponding increase in reserve according to PRC regulations.
+Such reserve is reduced for expenses incurred for safety production purposes or, when safety production related fixed assets are purchased, is
+reduced by the purchased cost with a corresponding increase in the accumulated depreciation. Such fixed assets are not depreciated thereafter.
+Under IFRS, payments are expensed as incurred, or capitalised as fixed assets and depreciated according to applicable depreciation methods.
+Effects of major differences between the shareholders' equity under ASBE and the total equity under IFRS are analysed as follows:
+31 December
+2017
+RMB million
+854,070
+31 December
+2016
+RMB million
+Shareholders' equity under ASBE
+Adjustments:
+832,525
+Government grants
+(i)
+(1,180)
+852,890
+55,850
+Note
+55,850
+Accrued expenses and other payables
+Net current assets/(liabilities)
+Bills payable
+Total current liabilities
+.............
+Total assets less current liabilities
+Non-current liabilities
+Long-term debts
+Loans from Sinopec Group Company and fellow subsidiaries
+Deferred tax liabilities
+Provisions
+Other long-term liabilities
+Total non-current liabilities
+Equity
+Share capital
+Reserves
+Total equity
+3,155
+2,761
+194,291
+148,997
+75,787
+317,563
+83,449
+3,214
+37,609
+38,332
+55,850
+Bills receivable
+157
+471
+Dividends receivable
+16,327
+5,454
+Inventories
+44,933
+46,942
+Prepaid expenses and other current assets
+Total current assets
+79,111
+76,386
+318,861
+265,835
+Current liabilities
+Short-term debts
+50,574
+Loans from Sinopec Group Company and fellow subsidiaries
+Trade accounts payable
+2,703
+280,822
+33,454
+(14,987)
+for the year ended 31 December 2017
+43 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY (Continued)
+(a) RESERVES MOVEMENT OF THE COMPANY
+The reconciliation between the opening and closing balances of each component of the Group's consolidated reserves is set out in the
+consolidated statement of changes in equity. Details of the change in the Company's individual component of reserves between the beginning
+and the end of the year are as follows:
+The Company
+2017
+RMB million
+2016
+RMB million
+Capital reserve
+Balance at 1 January
+9,195
+Balance at 31 December
+Share premium
+Balance at 1 January
+Balance at 31 December
+Statutory surplus reserve
+Balance at 1 January
+9,175
+20
+9,122
+9,175
+1,298
+53
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Others
+566,247
+684,932
+696,903
+40,442
+568,495
+49,676
+43,225
+44,772
+31,405
+29,767
+3,613
+3,688
+505
+118,685
+128,408
+566,247
+568,495
+447,424
+121,071
+121,071
+445,176
+(a)
+(4,685)
+(20,314)
+(24,999)
+Future development costs
+(266,549)
+(5,101)
+603,785
+(271,650)
+11,396
+592,389
+(4,875)
+(20,241)
+(287,914)
+(15,615)
+215
+Future income tax expenses
+(1,374)
+(1,374)
+Undiscounted future net cash flows
+320,174
+319,959
+(1,405)
+310,489
+(1,405)
+310,225
+264
+(97,115)
+(97,082)
+10% annual discount for estimated timing of
+cash flows
+(4,626)
+11,149
+6,985
+639,336
+(292,789)
+Beginning of year
+(gas) (billion cubic feet)
+33
+7,178
+7,160
+18
+7,570
+7,551
+19
+End of year
+6,997
+12
+7,178
+7,160
+628,187
+18
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table V: Standardised measure of discounted future net cash flows
+The standardised measure of discounted future net cash flows, related to the above proved oil and gas reserves, is calculated in accordance with the
+requirements of ASU 2010-03 and “Industrial Information Disclosure Guidelines for Public Company - No.8 Oil and Gas Exploitation". Estimated future
+cash inflows from production are computed by applying the average, first-day-of-the-month price for oil and gas during the twelve-month period before
+the ending date of the period covered by the report to year-end quantities of estimated net proved reserves. Future price changes are limited to those
+provided by contractual arrangements in existence at the end of each reporting year. Future development and production costs are those estimated
+future expenditures necessary to develop and produce year-end estimated proved reserves based on year-end cost indices, assuming continuation of
+year-end economic conditions. Estimated future income taxes are calculated by applying appropriate year-end statutory tax rates to estimated future
+pre-tax net cash flows, less the tax basis of related assets. Discounted future net cash flows are calculated using 10% discount factors. This discounting
+requires a year-by-year estimate of when the future expenditure will be incurred and when the reserves will be produced.
+The information provided does not represent management's estimate of the Group's and its equity method investments' expected future cash flows or
+value of proved oil and gas reserves. Estimates of proved reserve quantities are imprecise and change over time as new information becomes available.
+Moreover, probable and possible reserves, which may become proved in the future, are excluded from the calculations. The arbitrary valuation requires
+assumptions as to the timing and amount of future development and production costs. The calculations are made for the years ended 31 December
+2017 and 2016 and should not be relied upon as an indication of the Group's and its equity method investments' future cash flows or value of its oil
+and gas reserves.
+Total
+China
+2017
+RMB million
+Other
+countries
+2016
+RMB million
+Total
+China
+Other
+countries
+The Group
+Future cash flows
+Future production costs
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+(102,342)
+(7,969)
+(10)
+(3,303)
+(3,303)
+Undiscounted future net cash flows
+22,358
+22,358
+18,160
+18,160
+10% annual discount for estimated timing of
+cash flows
+(9,803)
+(9,803)
+(7,969)
+Standardised measure of discounted future
+net cash flows
+(4,406)
+12,555
+10,191
+10,191
+Total of the Group's and its equity method
+investments' results of standardised measure of
+discounted future net cash flows
+235,647
+222,844
+12,803
+218,338
+207,893
+10,445
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Proved developed and undeveloped reserves
+211
+12,555
+(4,406)
+Future income tax expenses
+(3,444)
+Standardised measure of discounted
+future net cash flows
+223,092
+222,844
+248
+208,147
+207,893
+254
+Discounted future net cash flows attributable to
+non-controlling interests
+112
+112
+114
+114
+Equity method investments
+Future cash flows
+43,587
+43,587
+35,690
+35,690
+Future production costs
+(12,131)
+(12,131)
+(10,783)
+(10,783)
+Future development costs
+(4,692)
+(4,692)
+(3,444)
+(102,332)
+336
+273
+1,552
+210
+Beginning of year
+End of year
+Proved developed and undeveloped reserves of
+associates and joint ventures (gas)
+(billion cubic feet)
+Beginning of year
+Revisions of previous estimates
+Improved recovery
+Extensions and discoveries
+Production
+End of year
+Proved developed reserves
+Beginning of year
+End of year
+Proved undeveloped reserves
+Beginning of year
+End of year
+Total of the Group and its equity method investments
+23
+33
+18
+(2)
+(4)
+12
+18
+12
+82
+|||||||||||||
+| | |
+273
+296
+306
+End of year
+Financial Statements
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table IV: Reserve quantities information (Continued)
+2017
+2016
+Total
+China
+Other
+countries
+Total
+China
+Other
+countries
+Equity method investments
+Proved developed and undeveloped reserves of
+associates and joint ventures (oil) (million barrels)
+Beginning of year
+296
+Revisions of previous estimates
+12
+Improved recovery
+Extensions and discoveries
+Production
+End of year
+Proved developed reserves
+8
+20
+(30)
+Beginning of year
+Proved undeveloped reserves
+1,216
+286
+(2)
+3
+(4)
+(4)
+(4)
+12
+18
+18
+18
+12
+82
+18
+18
+18
+18
+1
+1
+Proved developed and undeveloped reserves
+(oil) (million barrels)
+Beginning of year
+1,552
+1,216
+336
+2,243
+1,902
+341
+End of year
+1,599
+1,261
+338
+19
+12
+23
+273
+8
+3
+20
+41
+(30)
+(32)
+306
+296
+273
+260
+273
+273
+23
+26
+33
+23
+18
+19
+(2)
+3
+ནྭསྱེ|||€ས
+|||||||||||||
+|| || |||||||||||||
+286
+(2)
+3
+41
+(32)
+296
+260
+26
+Supplemental Information on Oil and
+1,887
+212
+New York NY 10013
+388 Greenwich St., 14th Floor
+Citibank, N.A.
+The US:
+DEPOSITARY FOR ADRS
+Hong Kong
+R1712 1716, 17th Floor, Hopewell Centre
+183 Queen's Road East
+Hong Kong Registrars Limited
+H Shares:
+Shanghai, PRC
+United States of America
+China Securities Registration and Clearing
+Company Limited Shanghai Branch Company
+36th Floor, China Insurance Building
+166 Lujiazui East Road
+REGISTRARS
+Beijing, PRC
+No. 1, Jian Guo Men Wai Avenue,
+30/F, China World Office 2
+Skadden, Arps, Slate, Meagher & Flom LLP
+U.S.A.:
+Central, Hong Kong
+15 Queen's Road
+23rd Floor, Gloucester Tower
+Herbert Smith Freehills
+A Shares:
+Hong Kong:
+COPIES OF THIS ANNUAL REPORT ARE
+AVAILABLE AT
+China Petroleum & Chemical Corporation
+: SINOPEC CORP
+H Shares:
+Stock code
+Stock name
+Shanghai Stock Exchange
+A Shares:
+NAMES AND STOCK CODES
+PLACES OF LISTING OF SHARES, STOCK
+London E14 5LB, U.K.
+Canada Square, Canary Wharf
+The PRC:
+Citigroup Centre
+The UK:
+USA
+New York NY 10013
+388 Greenwich St., 14th Floor
+Citibank, N.A.
+The US:
+Beijing, PRC
+Chaoyang District
+No.22 Chaoyangmen North Street,
+Board Secretariat
+Citibank, N.A.
+: 600028
+Postcode: 100020
+20th Floor, Fortune Financial Centre
+No. 5, Dong San Huan Central Road
+Chaoyang District
+SECRETARY TO THE BOARD
+Mr. Huang Wensheng
+Mr. Dai Houliang
+AUTHORISED REPRESENTATIVES
+Mr. Wang Yupu
+LEGAL REPRESENTATIVE
+Sinopec Corp.
+ENGLISH ABBREVIATION
+中国石化
+CHINESE ABBREVIATION
+Mr. Huang Wensheng
+China Petroleum & Chemical Corporation
+中国石油化工股份有限公司
+STATUTORY NAME
+CORPORATE INFORMATION
+(83,746)
+17,309
+(2,174)
+2,364
+464
+Gas Producing Activities (Unaudited)
+(621)
+ENGLISH NAME
+Beijing PRC
+REPRESENTATIVE ON SECURITIES MATTERS
+REGISTERED ADDRESS AND PLACE OF
+BUSINESS
+Haiwen & Partners
+People's Republic of China:
+LEGAL ADVISORS
+No change during the reporting period
+COPIES OF RELATIVE REPORTS
+INFORMATION DISCLOSURE AND PLACES FOR
+Hong Kong
+Wanchai
+1 Harbour Road
+Convention Plaza
+Mr. Zheng Baomin
+20th Floor, Office Tower
+http://www.sinopec.com
+ir@sinopec.com
+: 86-10-59960386
+: 86-10-59960028
+: 100728
+E-mail addresses
+Website
+Tel.
+Postcode
+Beijing, PRC
+No.22 Chaoyangmen North Street,
+Chaoyang District
+PLACE OF BUSINESS IN HONG KONG
+Hong Kong Stock Exchange
+Stock code
+Fax
+: 00386
+2016
+RMB million
+(62,054)
+(46,637)
+7,487
+(53,715)
+(7,320)
+6,073
+29,799
+15,113
+20,608
+RMB million
+(48,479)
+9,370
+20,909
+30,340
+(231)
+6,363
+14,945
+(81,572)
+(1,704)
+(1,577)
+2,479
+5,747
+(3,952)
+2017
+Total of the Group's and its equity method investments' results of net changes for the year
+Supplemental Information on Oil and
+ADRs:
+Gas Producing Activities (Unaudited)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table VI: Changes in the standardised measure of discounted cash flows
+The Group
+Sales and transfers of oil and gas produced, net of production costs
+Net changes in prices and production costs
+Net changes in estimated future development cost
+Net changes due to extensions, discoveries and improved recoveries
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Revisions of previous quantity estimates
+Net changes in income taxes
+Net changes for the year
+Equity method investments
+Financial Statements
+Net changes in estimated future development cost
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+Previously estimated development costs incurred during the year
+Accretion of discount
+Net changes in income taxes
+Net changes for the year
+Previously estimated development costs incurred during the year
+Accretion of discount
+(856)
+Sales and transfers of oil and gas produced, net of production costs
+Net changes in prices and production costs
+1,205
+DOCUMENTS FOR INSPECTION
+Documents for Inspection
+Corporate Information
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017 213
+Prince's Building,
+Central, Hong Kong
+: 22nd Floor,
+: PricewaterhouseCoopers
+Shanghai, PRC 200021
+Huangpu District,
+2 Corporate Avenue,
+202 Hu Bin Road,
+214
+PricewaterhouseCoopers,
+: PricewaterhouseCoopers
+Address
+Domestic Auditors
+SINOPEC CORP.
+NAMES AND ADDRESSES OF AUDITORS OF
+: SNP
+London Stock Exchange
+Stock code
+(534)
+: SNP
+New York Stock Exchange
+Stock code
+Zhong Tian LLP
+11th Floor
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Overseas Auditors
+Address
+a) The original copies of the 2017 annual
+206
+(92)
+The following documents will be available for
+inspection during normal business hours after
+23 March 2018 at the registered address of
+Sinopec Corp. upon requests by the relevant
+regulatory authorities and shareholders in
+accordance with the Articles of Association and
+the laws and regulations of PRC:
+688
+322
+967
+Printed on environmentally friendly paper
+www.sinopec.com
+Beijing, China
+22 Chaoyangmen North Street, Chaoyang District,
+中國北京市朝陽區朝陽門北大街22號
+1,308
+中国石油化工股份有限公司
+If there is any inconsistency between the Chinese
+and English versions of this annual report, the
+Chinese version shall prevail.
+Beijing, PRC, 23 March 2018
+Vice Chairman and President
+Dai Houliang
+By Order of the Board
+report signed by Mr. Dai Houliang, the Vice
+Chairman and President;
+b) The original copies of financial statements
+and consolidated financial statements as of
+31 December 2017 prepared under IFRS
+and ABSE, signed by Mr. Dai Houliang, Vice
+Chairman and President, Mr. Wang Dehua,
+the Chief Financial Officer and head of the
+financial department of Sinopec Corp.;
+SINOPEC CORP.
+d) Copies of the documents and announcements
+that Sinopec Corp. has published in the
+newspapers stipulated by the CSRC during
+the reporting period.
+c) The original auditors' report signed by the
+auditors; and
+Accumulated
+variation of fair
+values recorded
+as equity
+Impairment
+loss provision
+of the
+current year
+Funding source
+51,196
+196
+196
+51,196
+262
+178
+(9)
+262
+Profits and
+losses from
+variation of fair
+values in the
+current year
+Self-owned fund
+Self-owned fund
+End of the year
+The Company has established sound decision-making mechanism, business process and internal control systems relevant to financial instrument
+accounting and information disclosure.
+Derivative financial instruments
+Cash flow hedges
+Total
+Please refer to "Material Guarantee
+Contracts and Their Performances" in the
+"Significant Events" section of this report.
+178
+(4) Capital Expenditures
+Please refer to "Capital Expenditures"
+in the "Business Review and Prospects"
+section of this report.
+(5) Research & development expenses and
+environmental expenditures
+Research & development expenses
+refer to the expenses recognised as
+expenditures when they occur. In
+2017, the expenditure for research &
+development was RMB 6.423 billion.
+(6) Measurement of fair values of derivatives and relevant system
+Environmental expenditures refer to
+the normal routine pollutant discharge
+fees paid by the Company, excluding
+capitalised cost of pollutant treatment
+properties. In 2017, the Company paid
+environmental expenditures of RMB 7.851
+billion.
+Items relevant to measurement of fair values
+Unit: RMB million
+Items
+Financial assets at fair value through
+profit or loss of the reporting period
+Structured Deposit
+available for sale financial assets
+Stock
+Beginning
+of the year
+(9)
+Chemicals Segment
+(522)
+Marketing and Distribution Segment
+Corporate and Others
+1,011,853
+855,786
+1,224,197
+1,052,857
+Refining Segment
+437,743
+974,850
+739,947
+Elimination of inter-segment sales
+Consolidated operating income
+Operating (loss)/profit
+(1,445,955)
+(1,168,732)
+335,114
+115,939
+157,505
+Exploration and Production Segment
+(353)
+Self-owned fund
+(4,024)
+(3,448)
+(1,617)
+49,235
+103
+(1,314)
+Self-owned fund
+(54)
+(1,323)
+4 ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER ASBE
+The major differences between the Company's financial statements prepared under ASBE and IFRS are set out in Section C of the financial
+statements of the Company from page 206 of this report.
+(1) Under ASBE, the operating income and operating profit or loss by reportable segments were as follows:
+Year ended 31 December
+2017
+RMB million
+2016
+RMB million
+Operating income
+314
+(3) Contingent Liabilities
+116,788
+and Analysis
+2017
+1,595,504
+529,049
+2016
+1,498,609
+412,261
+Change
+96,895
+1,066,455
+31 December
+1,086,348
+742,614
+667,374
+75,240
+579,446
+485,543
+93,903
+(19,893)
+As of
+As of
+31 December
+Unit: RMB million
+2,360,193
+Current assets
+Non-current assets
+Total liabilities
+Current liabilities
+Non-current liabilities
+Total equity attributable to owners of the Company
+Share capital
+Reserves
+Non-controlling interests
+Total equity
+As of 31 December 2017, the Company's
+total assets were RMB 1,595.5 billion,
+representing an increase of RMB 96.9
+billion compared with that of the end of
+2016, of which:
+Current assets were RMB 529.0 billion,
+representing an increase of RMB 116.8
+billion compared with that of the end of
+2016, of which, inventory and accounts
+receivable increased by RMB 30.2 billion
+and RMB 18.2 billion respectively, mainly
+due to the increase in crude oil prices,
+cash flow improved further, structural
+deposit increased by RMB 51.2 billion
+and time deposit at financial institutions
+increased by RMB 33.8 billion.
+Non-current assets were RMB 1,066.5
+billion, representing a decrease of RMB
+(2) Cash Flow
+163,168
+181,831
+(18,663)
+726,120
+Unit: RMB million
+Major items of cash flows
+Net cash generated from operating activities
+Net cash used in investing activities
+Net cash generated used financing activities
+In 2017, the net cash generated from
+operating activities of the company
+was RMB 190.9 billion, representing
+a decrease of RMB 23.6 billion as
+compared with 2016. This was mainly
+due to the increase in crude oil price
+and volume of inventory, which resulted
+in increase in inventory and accounts
+receivable.
+In 2017, the net cash used in investing
+activities was RMB 145.3 billion,
+representing an increase of RMB 79.1
+billion over 2016. This was mainly
+due to the increase in time deposit
+with maturities over 3 months and the
+increase in purchase of investments,
+investments in associates and
+investments in joint ventures.
+Year ended 31 December
+2017
+190,935
+(145,323)
+(56,509)
+2016
+214,543
+(66,217)
+(93,047)
+In 2017, the net cash used in the
+Company's financing activities was RMB
+56.5 billion, representing a decrease
+of cash out flow by RMB 36.5 billion
+over 2016. This was mainly due to the
+decrease in borrowing repayment.
+At the end of 2017, the cash and cash
+equivalents were RMB 113.2 billion.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+25
+Management's Discussion
+and Analysis
+26
+Management's Discussion
+The following table sets forth the major items in the consolidated cash flow statements for 2017 and 2016.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+Total equity attributable to owners of
+the Company was RMB 726.1 billion,
+representing an increase of RMB 15.1
+billion compared with that of the end
+of 2016, which was mainly due to the
+increase in profit during the year.
+6,529
+21,655
+710,994
+15,126
+121,071
+121,071
+0
+605,049
+589,923
+15,126
+126,770
+120,241
+852,890
+831,235
+19.9 billion as compared with that of
+the end of 2016. This was mainly due
+to optimisation of investment scale,
+which decreased the property, plant and
+equipment (net) by RMB 39.8 billion,
+construction in progress decreased by
+RMB 10.9 billion. Equity of associates
+and joint ventures increased by RMB 13.6
+billion, long-term prepayment and other
+assets increased by RMB 11.8 billion.
+The Company's total liabilities were RMB
+742.6 billion, representing an increase of
+RMB 75.2 billion compared with that of
+the end of 2016, of which:
+Current liabilities were RMB 579.4
+billion, representing an increase of RMB
+93.9 billion as compared with that of
+the end of 2016. This was mainly due to
+increase in crude oil price, which resulted
+in account payable increased by RMB
+25.8 billion, accrued expenses and other
+payable increased by RMB 54.7 billion.
+Non-current liabilities were RMB 163.2
+billion, representing a decrease of RMB
+18.7 billion compared with that of the
+end of 2016. This was mainly due to
+long-term debts decreased by RMB 16.9
+billion.
+1,930,911
+(1,445,955)
+(47,399)
+31.7
+32.6
+(0.6)
+Elimination of inter-segment sales
+Total assets
+(1,444,300)
+1.2
+N/A
+N/A
+N/A
+Total
+2,360,193
+1,890,398
+9.9
+N/A
+963,246
+974,850
+Corporate and Others
+(0.4)
+Marketing and Distribution
+1,224,197
+1,127,374
+7.6
+16.3
+17.2
+(0.8)
+Chemicals
+437,743
+386,111
+11.2
+30.6
+33.3
+(1.8)
+22.2
+26.6
+26.7
+Gross profit margin = (operation income - operation cost, tax and surcharges)/operation income.
+(2) Tianjin LNG project
+The first phase of Tianjin LNG project
+with designed receiving capacity of 3
+million tonnes per year consists mainly
+of the construction of wharf, terminal and
+transportation pipelines. It was completed
+and put into operation at the end of
+January 2018. The Company's self-
+owned fund accounts for approximately
+40% of the project investment and bank
+loan is the main source of the remaining
+60%. By the end of 2017, the aggregate
+investment was RMB 10.651 billion.
+(3) Zhongke integrated refining and
+chemical project
+Zhongke integrated refining and
+petrochemical project consists mainly
+of a 10,000,000 tpa refinery, 800,000
+tpa ethylene unit, 300,000- tonne jetty
+and relevant utilities. The mechanical
+completion is expected to be achieved in
+June 2020. The Company's self-owned
+fund accounts for 30% of the project
+investment, bank loan is the main source
+for the remaining 70%. By the end of
+2017, the aggregate investment was RMB
+6.99 billion.
+(4) Xinqi pipeline project
+The first phase of Xinqi gas pipeline
+project mainly consists of pipeline
+from Qianjiang to Shaoguan with total
+length of 839.5 kilometres and designed
+transmission capacity of 6 billion cubic
+meters per year. It is expected to be
+completed and put into operation in
+July 2020. The Company's self-owned
+fund accounts for 38% of the project
+investment and bank loan is the main
+source of the remaining 62%. By the end
+of 2017, the aggregate investment was
+RMB 1.692 billion.
+In accordance with the guidance of
+"overall deployment and stage-wise
+implementation", the second phase
+of production capacity building was
+promoted comprehensively in 2017. The
+Company's self-owned fund accounts for
+30% of the project investment and bank
+loan is the main source of the remaining
+70%. By the end of 2017, the aggregate
+realised investment was RMB 33.152
+billion and total production capacity was
+10 billion cubic meters per year.
+(5) E-An-Cang gas pipeline project
+(6) Wen 23 gas storage project
+The first phase of Wen 23 gas storage
+project mainly consists of construction
+of injection and production wells and
+surface facilities with storage capacity
+of 8.431 billion cubic meters. The
+Company's self-owned fund accounts for
+30% of the project investment and bank
+loan is the main source of the remaining
+70%. By the end of 2017, the aggregate
+investment was RMB 1.329 billion.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+29
+29
+Significant Events
+The first phase of E-An-Cang gas pipeline
+project mainly consists of the main
+pipeline from Luquan to Cangzhou and
+two branch pipeline named Puyang and
+Baoding respectively. Total length of
+pipeline is 736 kilometres and designed
+transmission capacity is 9 billion cubic
+meters per year. It is expected to be
+completed and put into operation in
+December 2019. The Company's self-
+owned fund accounts for 30% of the
+project investment and bank loan is
+the main source of the remaining 70%.
+By the end of 2017, the aggregate
+investment was RMB 107 million.
+(1) Fuling shale gas project
+1 MAJOR PROJECTS
+SIGNIFICANT EVENTS
+5 THE CAUSE AND IMPACT OF THE CHANGE IN THE COMPANY'S ACCOUNTING POLICY
+Ministry of Finance issued "No.42 Accounting Standards for Business Enterprises - non-current assets held for sale, disposition and discontinuing
+operation”, revised “No.16 Accounting Standards for Business Enterprises-government grants" and Cai Kuai [2017] No. 30 “Announcement of the
+revision of general enterprise financial statements format." the Company has adopted the above guidelines to prepare financial statements of 2017
+and adjusted the 2016 and 2015 comparative financial statements retrospectively. The impact to the Company's financial statements is presented
+as below:
+Items affected
+Amount affected
+in 2016
+(RMB in millions)
+Amount affected
+in 2015
+(RMB in millions)
+Content and Reasons for Changes of Accounting Policy
+Gains and losses on disposal of fixed assets and intangible assets
+of the Company in 2017 are under the item of asset disposal.
+The 2016 and 2015 comparative financial statements have been adjusted.
+Loss of asset disposal
+Non-operating income
+Non-business expenses
+6 SIGNIFICANT CHANGES IN MAJOR ASSETS DURING THE REPORTING PERIOD
+During the reporting period, there are no significant changes in the Company's major assets.
+1,487
+Less 258
+Less 1,745
+693
+Less 264
+Less 957
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+27
+Management's Discussion
+and Analysis
+FEFEREN
+(0.8)
+18.2
+8.7
+703,743
+Consolidated operating profit
+86,965
+77,389
+Net profit attributable to equity shareholders of the Company
+51,119
+46,416
+22,465
+Operating profit: In 2017, the operating profit of the Company was RMB 87.0 billion, representing an increase of RMB 9.6 billion as compared
+with 2016.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+(2) Financial data prepared under ASBE
+Total assets
+Non-current liabilities.
+Shareholders' equity
+As of 31
+December 2017
+Net profit: In 2017, the net profit attributable to the equity shareholders of the Company was RMB 51.1 billion, representing an increase of RMB
+4.7 billion or 10.1% comparing with 2016.
+20,325
+Financial expenses, investment income, loss from changes in fair value, asset disposal income and
+other income
+1,581
+(58,531)
+Refining Segment
+64,047
+55,808
+Marketing and Distribution Segment
+32,011
+32,385
+Chemicals Segment
+22,796
+20,769
+Corporate and Others
+(3,160)
+2,912
+Elimination of inter-segment sales
+(1,655)
+RMB million
+1,595,504
+161,988
+854,070
+As of 31
+December 2016
+Increase/
+(decrease)
+of operation
+cost on
+a year-on-year
+basis (%)
+Increase/
+(decrease)
+of gross profit
+margin on
+a year-on-year
+basis (%)
+Exploration and Production
+Refining
+157,505
+1,011,853
+154,224
+(3.5)
+35.9
+11.8
+a year-on-year
+basis (%)
+Exploration and Production Segment
+Increase/
+(decrease) of
+operation
+income on
+RMB million
+Change
+RMB million
+1,498,609
+96,895
+(18,553)
+21,545
+180,541
+832,525
+At the end of 2017, the Company's total assets were RMB 1,595.5 billion, representing an increase of RMB 96.9 billion compared with that
+of the end of 2016. This was mainly due to the combined results of increase in crude oil price and improved cash flow, which resulted in an
+increase of current assets by RMB 116.8 billion.
+As the end of 2017, the Company's non-current liabilities were RMB 162.0 billion, representing a decrease of RMB 18.6 billion compared with
+that of the end of 2016. This was mainly due to the repayment of matured long term bonds payable and parts of the bond turned to non-current
+liabilities due within one year.
+At the end of 2017, the shareholders' equity of the Company was RMB 854.1 billion, representing an increase of RMB 21.5 billion compared
+with that of the end of 2016. This was mainly due to the increasing in the profit of the Company.
+(3) The results of the principal operations by segments
+Segments
+Operation
+income
+RMB million
+Operation
+cost
+Gross profit
+margin* (%)
+(1) Assets, liabilities and equity
+7,113
+3 ASSETS, LIABILITIES, EQUITY AND CASH FLOWS
+100.0
+100.0
+(1,445,955) (1,168,732)
+2,360,193
+1,930,911
+100.0
+100.0
+*.
+Other operating revenues are included.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+21
+Management's Discussion
+and Analysis
+Management's Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+The following table sets forth the operating revenues, operating expenses and operating profit by each segment before elimination of the inter-
+segment transactions for the periods indicated, and the percentage change of 2017 compared to 2016.
+Year ended 31 December
+2017
+RMB million
+2016
+RMB million
+Change
+(%)
+Exploration and Production Segment
+Operating revenues
+3,099,643
+3,806,148
+23.8
+25.6
+9.6
+49,615
+38,614
+1.3
+1.2
+437,743
+335,114
+11.5
+10.8
+6200
+16.5
+Operating expenses
+Operating loss
+15.4
+419,580
+14.0
+13.5
+22.6
+21.7
+440,303
+320,367
+11.6
+10.3
+974,850
+739,947
+534,547
+Refining Segment
+Operating revenues
+157,505
+437,743
+335,114
+30.6
+410,766
+314,491
+30.6
+26,977
+20,623
+30.8
+974,850
+739,947
+(1.8)
+31.7
+736,735
+32.9
+3,212
+1,581
+Operating profit
+Chemicals Segment
+Operating revenues
+Operating expenses
+Operating profit
+Corporate and Others
+Operating revenues
+Operating expenses
+Operating (loss)/profit
+Elimination of inter-segment (loss)/profit
+(1) Exploration and Production Segment
+Most crude oil and a small portion of the
+natural gas produced by the exploration
+and production segment were used for
+the Company's refining and chemical
+production. Most of the natural gas and
+a small portion of crude oil were sold
+externally to other customers.
+In 2017, the operating revenues of
+this segment were RMB 157.5 billion,
+representing an increase of 35.9% over
+2016. This was mainly attributed to the
+rise of realised price of crude oil and
+natural gas as well as expansion of LNG
+business.
+979,334
+10.2
+32,153
+1,020,704
+115,939
+35.9
+203,449
+152,580
+33.3
+(45,944)
+(36,641)
+1,011,853
+855,786
+18.2
+Operating expenses
+16.8
+946,846
+18.4
+Operating profit
+65,007
+56,265
+15.5
+Marketing and Distribution Segment
+Operating revenues
+Operating expenses
+1,224,197
+1,192,628
+31,569
+1,052,857
+16.3
+799,521
+In 2017, the segment sold 35.31 million
+tonnes of crude oil, representing a
+decrease of 2.9% over 2016. Natural
+gas sales volume was 24.48 bcm,
+representing an increase of 19.1% over
+2016. Regased LNG sales volume was
+4.82 bcm, representing an increase of
+118.9% over 2016. LNG sales volume
+was 2.283 million tonnes, representing
+an increase of 43.7% over 2016. Average
+realised prices of crude oil, natural gas,
+regased LNG, and LNG were RMB 2,341
+per tonne, RMB 1,296 per thousand
+cubic meters, RMB 1,742 per thousand
+cubic meters, and RMB 3,056 per tonne,
+representing increase of 35.0%, 2.3%,
+2.0%, and 24.0% respectively over 2016.
+296,500
+Consolidated operating revenue
+2 RESULTS OF SEGMENT OPERATIONS
+The Company manages its operations through four business segments, namely exploration and production segment, refining segment, marketing
+and distribution segment and chemicals segment, and corporate and others. Unless otherwise specified, the inter-segment transactions have not
+been eliminated from financial data discussed in this section. In addition, the operating revenue data of each segment include other operating
+revenues.
+The following table shows the operating revenues by each segment, the contribution of external sales and inter-segment sales as a percentage
+of operating revenues before elimination of inter-segment sales, and the contribution of external sales as a percentage of consolidated operating
+revenues (i.e. after elimination of inter-segment sales) for the periods indicated.
+As a percentage of
+consolidated operating
+revenue before elimination
+of inter-segment sales
+Year ended 31 December
+As a percentage of
+consolidated operating
+revenue after elimination
+of inter-segment sales
+Year ended 31 December
+Operating revenues
+Year ended 31 December
+2017
+RMB million
+2016
+RMB million
+2017
+(%)
+2016
+(%)
+Operating revenues
+Exploration and Production Segment
+External sales*
+Inter-segment sales
+Refining Segment
+79,701
+56,985
+2.1
+1.8
+77,804
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+(8) Profit attributable to owners of the
+Company was RMB 51.2 billion,
+representing an increase of 9.8% year on
+year.
+(7) Profit attributable to non-controlling
+interests was RMB 19.2 billion,
+representing an increase of RMB 6.4
+billion compared with 2016.
+(6) Tax expense was RMB 16.3 billion,
+representing a decrease of 21.4% year on
+year. That was mainly due to the increase
+in exempt investment income.
+20
+20
+Management's Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+Most crude oil and a small portion of
+natural gas produced by the Company
+were internally used for refining and
+chemical production, with the remaining
+sold to external customers. In 2017, the
+turnover from crude oil, natural gas and
+other upstream products sold externally
+amounted to RMB 69.2 billion, an
+increase of 45.8% over 2016. The change
+I was mainly due to the increase in crude
+oil prices and sales volume of natural gas
+in 2017.
+In 2017, petroleum products (mainly
+consisting of refined oil products and
+other refined petroleum products) sold
+by Refining Segment and Marketing and
+Distribution Segment achieved external
+sales revenues of RMB 1,324.4 billion,
+accounting for 56.1% of the Company's
+turnover and other operating revenues,
+representing an increase of 17.2%
+over 2016, mainly due to the increase
+in various refined oil products' prices.
+The sales revenue of gasoline, diesel
+and kerosene was RMB 1120.4 billion,
+representing an increase of 14.8%
+over 2016, and accounting for 84.6%
+of the total sales revenue of petroleum
+products. Turnover of other refined
+petroleum products was RMB 204.0
+billion, representing an increase of
+31.8% compared with 2016, accounting
+for 15.4% of the total sales revenue of
+petroleum products.
+Chemical products sold by Chemicals
+Segment achieved external sales revenue
+of RMB 373.8 billion, representing an
+increase of 31.5% over 2016, accounting
+for 15.8% of the Company's total
+turnover and other operating revenues.
+This was mainly due to the increase
+in price and sales volume of chemical
+products.
+(2) Operating expenses
+In 2017, the Company's operating
+expenses were RMB 2,288.7 billion,
+increased by 23.5% compared with 2016,
+and it is mainly due to the increase in
+prices of crude oil and other related
+petroleum and chemical products. The
+operating expenses mainly consisted of
+the following:
+Purchased crude oil, products and
+operating supplies and expenses were
+RMB 1,770.7 billion, representing an
+increase of 28.3% over the same period
+of 2016, accounting for 77.4% of the
+total operating expenses, of which:
+58,954
+Crude oil purchasing expenses were RMB
+497.1 billion, representing an increase
+of 33.0% over the same period of 2016.
+Throughput of crude oil purchased
+externally in 2017 was 211.03 million
+tonnes (excluding the volume processed
+for third parties), representing an
+increase of 4.3% over the same period
+of 2016. The average cost of crude oil
+purchased externally was RMB 2,655 per
+tonne, representing an increase by 27.4%
+over 2016.
+The Company's purchasing expense
+related to trading activities were RMB
+503.9 billion, representing an increase
+of 27.7% over the same period of 2016.
+This was mainly due to the increase in
+prices of externally purchased crude oil
+and refined oil products in the trading
+business.
+The Company's other purchasing
+expenses were RMB 469.2 billion,
+representing an increase of 27.6% over
+the same period of 2016. This was
+mainly due to the increase in prices of
+externally purchased oil related products
+in line with the increase in prices of
+crude oil.
+Selling, general and administrative
+expenses were RMB 65.0 billion,
+representing an increase of 1.0% over
+2016.
+Depreciation, depletion and amortisation
+were RMB 115.3 billion, representing
+an increase of RMB 6.9 billion and
+6.4% as compared with 2016. That was
+mainly due to the depreciation, depletion
+and amortisation of the Exploration &
+Development Segment, which increased
+by RMB 4.9 billion over 2016.
+Exploration expenses were RMB 11.1
+billion, representing an increase of 0.5%
+year on year.
+Personnel expenses were RMB 74.9
+billion, representing an increase of 17.2%
+over 2016. That was mainly because
+the Company promoted the reform of
+employment system, transferred some
+labours into contracted employees, which
+increased salary and other expenses. To
+implement the requirement of deepening
+the reform as required by the Central
+government, the Company handed over
+parts of its subsidiaries' social insurance
+to local government, and paid relevant
+fees according to the local government's
+requirements. As the Company improved
+its profit in 2017, income of employee
+was increased accordingly in line with its
+incentive mechanism.
+Taxes other than income tax were RMB
+235.3 billion, representing an increase of
+1.4% compared with 2016.
+Other operating (expense)/income, net
+were RMB 16.6 billion, increased by
+RMB 22.2 billion over the same period of
+2016. That was mainly due to the non-
+operating income from capital injection of
+Sichuan-to-East China Pipeline Co.
+(3) Operating profit was RMB 71.5 billion,
+representing a decrease of 7.4%
+compared with 2016. After eliminating
+the impact of capital injection of Sichuan-
+to-East China Pipeline Co. in 2016 and
+acquisition of interest in Shanghai SECCO
+in 2017, operating profit increased by
+19.2% year on year.
+(4) Net finance costs were RMB 1.6 billion,
+representing a decrease of 76.4%
+over 2016, of which: interest expense
+decreased by RMB 2.1 billion over
+2016 as a result of significant reduction
+in interest bearing debt; net income
+from foreign exchange was RMB 0.3
+billion, increased by RMB 0.9 billion as
+compared with 2016; interest income
+increased by RMB 2.0 billion as a result
+of increased cash reserve as compared
+with the same period of 2016.
+(5) Profit before taxation was RMB 86.7
+billion, after eliminating the impact
+of capital injection of the Sichuan-to-
+East China Pipeline Co. in 2016 and
+acquisition of interest in Shanghai SECCO
+in 2017, it represents an increase of
+38.9% compared with 2016.
+The Company's purchasing expenses of
+refined oil products were RMB 300.5
+billion, representing an increase of 23.3%
+over the same period of 2016. This was
+mainly due to the increase in prices of
+externally purchased refined oil products,
+which were in line with the increase in
+prices of crude oil.
+2.0
+1.9
+157,505
+1,220,235
+1,049,377
+32.1
+33.9
+51.7
+54.3
+Inter-segment sales
+Operating revenues
+3,962
+1,224,197
+3,480
+0.1
+External sales*
+0.1
+32.2
+34.0
+Chemicals Segment
+External sales*
+External sales*
+Inter-segment sales
+Operating revenues
+Corporate and Others
+Inter-segment sales
+Operating revenues
+Operating revenue before elimination of
+inter-segment sales
+Elimination of inter-segment sales
+1,052,857
+388,128
+Marketing and Distribution Segment
+26.6
+115,939
+4.1
+3.7
+817
+2017
+(%)
+2016
+(%)
+3.4
+3.0
+External sales*
+137,582
+27.7
+108,469
+3.5
+5.8
+5.6
+Inter-segment sales
+874,271
+747,317
+23.0
+24.2
+Operating revenues
+1,011,853
+855,786
+3.6
+The major funding sources of the Company are its operating activities and short-term and long-term loans. The major use of funds includes
+operating expenses, capital expenditures, and repayment of the short-term and long-term debts.
+In 2017, the operating expenses of
+this segment were RMB 203.4 billion,
+representing an increase of 33.3%
+over 2016. That was mainly due to the
+following:
+.
+23,299
+22,034
+5.7
+2,251
+1,703
+32.2
+Kerosene
+Fuel
+In 2017, the operating expenses of the
+segment were RMB 1,192.6 billion,
+representing an increase of RMB 171.9
+billion or 16.8% as compared with
+that of 2016. This was mainly due to
+increased procurement prices of refined
+oil products and volume of gasoline.
+In 2017, the segment's marketing cash
+operating cost (defined as the operating
+expenses less purchase costs, taxes
+other than income tax, depreciation
+and amortisation, and then divided by
+the sales volume) was RMB 198.7 per
+tonne, representing an increase of 0.7%
+compared with that of 2016.
+In 2017, the operating revenues of non-
+fuel business was RMB 27.6 billion,
+representing an increase of RMB 6.2
+billion compared with 2016; the profit of
+non-fuel business was RMB 2.2 billion,
+representing an increase of RMB 0.7
+billion compared with 2016.
+In 2017, the operating profit of
+this segment was RMB 31.6 billion,
+representing a decrease of 1.8%
+compared with 2016.
+(4) Chemicals Segment
+The business activities of the chemicals
+segment include purchasing chemical
+feedstock from the refining segment and
+third parties, producing, marketing and
+distributing petrochemical and inorganic
+chemical products.
+In 2017, the operating revenues of the
+chemicals segment were RMB 437.7
+billion, representing an increase of
+30.6% as compared with that of 2016,
+This was mainly due to increase in sales
+volume and price of chemical products
+as compared with 2016.
+The sales revenues generated by the
+segment's six major categories of
+chemical products (namely basic organic
+chemicals, synthetic resin, synthetic fibre
+monomer and polymer, synthetic fibre,
+synthetic rubber, and chemical fertiliser)
+totaled RMB 413.5 billion, representing
+an increase of 30.8% as compared with
+2016, and accounted for 94.5% of the
+operating revenues of the segment.
+The following table sets forth the sales volume, average realised prices and respective percentage changes of each of the segment's six major
+categories of chemical products in 2017 and 2016.
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+Average realised price (RMB/tonne)
+Year ended 31 December
+2017
+2016
+Change (%)
+25.8
+2,807
+3,531
+1.6
+12.5
+Diesel
+89,146
+91,998
+(3.1)
+5,039
+4,478
+12.5
+Retail
+44,736
+46,656
+2017
+(4.1)
+5,088
+9.8
+Direct sales and wholesale
+44,410
+45,342
+(2.1)
+4,486
+3,851
+16.5
+25,555
+25,164
+5,588
+2016
+Change (%)
+Basic organic chemicals
+3.5
+11,957
+9,609
+24.4
+700
+714
+(2.0)
+2,008
+1,612
+24.6
+Synthetic rubber
+1,099
+Chemical fertiliser
+In 2017, the segment seized the
+opportunities of the improving market
+conditions, coordinated production with
+sales, intensified structural adjustment,
+increased the production of synthetic
+resin, rubber and some organic products
+which were more profitable, positively
+expanded the market, strictly controlled
+costs and expenses, thus, resulting in
+remarkable profits.
+In 2017, the operating profit of
+this segment was RMB 27.0 billion,
+representing an increase of RMB 6.4
+billion or 30.8% as compared with 2016.
+(5) Corporate and Others
+The business activities of corporate
+and others mainly consist of import
+and export business activities of the
+Company's subsidiaries, research and
+development activities of the Company,
+and managerial activities of headquarters.
+In 2017, the operating revenues
+generated from corporate and others
+were RMB 974.9 billion, representing
+an increase of 31.8% over 2016. This
+was mainly attributed to the increase in
+international crude oil prices as well as
+increased revenue from crude oil trading
+business as compared with 2016.
+In 2017, the operating expenses of
+corporate and others were RMB 979.3
+billion, representing an increase of 32.9%
+over 2016.
+In 2017, the operating losses from
+corporate and others was RMB 4.48
+billion.
+24
+24
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+In 2017, the operating expenses of the
+chemicals segment were RMB 410.8
+billion, representing an increase of
+30.6% over 2016, mainly because of
+the significant increase in the price of
+externally procured raw materials.
+4,812
+1,138
+8,556
+46,351
+41,605
+11.4
+4,684
+3,963
+18.2
+Synthetic fibre monomer and polymer
+10,332
+7,169
+44.1
+6,047
+20.3
+5,328
+Synthetic resin
+13,215
+12,250
+7.9
+8,153
+7,482
+9.0
+Synthetic fibre
+1,304
+1,369
+(4.7)
+13.5
+•
+5,412
+13,895
+52,461
+3.5
+6,538
+5,904
+10.7
+60,680
+58,734
+3.3
+4,962
+4,505
+10.1
+17,080
+14,529
+17.6
+3,527
+2,814
+25.3
+36,951
+36,408
+1.5
+3,204
+2,584
+24.0
+54,273
+Change (%)
+2016
+2017
+.
+•
+.
+Depreciation, depletion and
+amortisation increased by RMB 4.9
+billion year on year;
+Impairment loss increased by RMB
+2.0 billion year on year;
+Personnel expenses increased by 1.7
+billion year on year;
+Resource Tax increased by RMB 1.0
+billion year on year, as a result of
+increase in crude oil price;
+Procurement cost increased by RMB
+15.1 billion year on year, as a result
+of expansion of LNG business;
+With the restructuring of Sichuan-
+to-East China Pipeline Co. in 2016,
+other expenses (net) increased by
+RMB 20.6 billion.
+In 2017, the oil and gas lifting cost was
+RMB 788.3 per tonne, representing a
+year on year increase of 0.3%.
+(4,484)
+(1,655)
+58,801
+In 2017, the operating loss of the
+exploration and production segment
+were RMB 45.9 billion, representing
+an expanded loss by RMB 9.3 billion.
+as compared with 2016. By deducting
+the non-operating income from capital
+injection of Sichuan-to-East China
+Pipeline Co. in 2016, the Company
+realized a significant reduction in loss by
+RMB 11.3 billion in 2017.
+Business activities of the refining
+segment include purchasing crude oil
+from third parties and the exploration
+and production segment of the Company,
+as well as processing crude oil into
+refined petroleum products. Gasoline,
+diesel and kerosene are sold internally to
+the marketing and distribution segment
+of the Company; part of the chemical
+feedstock is sold to the chemicals
+segment of the Company; and other
+refined petroleum products are sold
+externally to both domestic and overseas
+customers.
+In 2017, the operating revenues of this
+segment were RMB 1,011.9 billion,
+representing an increase of 18.2% over
+2016. This was mainly attributed to the
+increase in products prices.
+22
+22
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+The following table sets forth the sales volumes, average realised prices and the respective changes of the Company's major refined oil products
+of the segment in 2017 and 2016.
+Sales Volume (thousand tonnes)
+Year ended 31 December
+Average realised price (RMB/tonne)
+Year ended 31 December
+2017
+2016
+Change (%)
+(2) Refining Segment
+55,742
+5.5
+2,929
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+2017
+The following table sets forth the sales volumes, average realised prices, and the respective percentage changes of the segment's four major
+refined oil products in 2017 and 2016, including breakdown in retail, direct sales and wholesale of gasoline and diesel:
+Average realised price (RMB/tonne)
+Year ended 31 December
+2016
+Change (%)
+2017
+2016
+Change (%)
+Gasoline
+Retail
+83,980
+and Analysis
+77,613
+6,941
+6,380
+8.8
+66,364
+63,718
+4.2
+7,346
+6,722
+9.3
+Direct sales and wholesale
+17,616
+8.2
+26.8
+Management's Discussion
+Management's Discussion
+2,529
+15.8
+Gasoline
+Diesel
+Kerosene
+Chemical feedstock
+Other refined petroleum products
+In 2017, domestic gasoline and diesel
+prices were adjusted 17 times with 11
+increases and 6 decreases. The aggregate
+price increased (tax inclusive) of 90#
+gasoline and 0# diesel in 2017 were
+RMB 435 per tonne and 420 per tonne
+respectively.
+In 2017, sales revenues of gasoline
+were RMB 354.8 billion, representing an
+increase of 14.6% over 2016.
+The sales revenues of diesel were RMB
+301.1 billion, representing an increase of
+13.8% over 2016.
+The sales revenues of kerosene were RMB
+60.2 billion, representing an increase of
+47.3% over 2016.
+and Analysis
+The sales revenues of chemical feedstock
+were RMB 118.4 billion, representing an
+increase of 25.8% over 2016.
+In 2017, the segment's operating
+expenses were RMB 946.8 billion,
+representing an increase of 18.4% over
+2016. This is mainly attributed to the
+increase in procurement cost of crude oil.
+In 2017, the average processing cost
+for crude oil was RMB 2,774 per tonne,
+representing an increase of 26.4% over
+2016. Total crude oil processed was
+230.30 million tonnes (excluding volume
+processed for third parties), representing
+an increase of 4.2% over 2016. The total
+cost of crude oil processed was RMB
+638.8 billion, representing an increase of
+31.8% over 2016.
+In 2017, refining gross margin was
+RMB 510.7 per tonne, representing
+an increase of RMB 38.8 per tonne
+compared with 2016. This is mainly
+due to the increased proportion of high
+value added products (volume of gasoline
+with high octane number and jet fuel
+increased by 0.7% and 5.6% over 2016
+and diesel to gasoline ratio down to 1.17),
+the promotion of quality upgrading of
+refined oil products (output of gasoline
+and diesel with GB V standard or above
+increased by 58% over 2016), enlarged
+total refinery throughput by increasing
+the export volume, and further improved
+margins for LPG, asphalt and other
+refined oil products by our centralized
+marketing advantages brought fully into
+play.
+In 2017, the unit refining cash operating
+cost (defined as operating expenses
+less the processing cost of crude oil
+and refining feedstock, depreciation and
+amortisation, taxes other than income
+tax and other operating expenses, then
+divided by the throughput of crude oil
+and refining feedstock) was RMB 175.2
+per tonne, an increase of RMB 9.5 per
+tonne over 2016, mainly because of
+increased operating expenses resulting
+from newly operated facilities related to
+quality upgrading of refined oil products
+as well as safety enhancement and
+environment protection.
+In 2017, the operating profit of the
+segment totaled RMB 65.0 billion,
+representing an increase of RMB 8.7
+billion or 15.5% as compared with 2016.
+(3) Marketing and Distribution Segment
+The business activities of the marketing
+and distribution segment include
+purchasing refined oil products from
+the refining segment and third parties,
+conducting wholesale and direct sales to
+domestic customers and distributing oil
+products through the segment's retail
+and distribution network, as well as
+providing related services.
+In 2017, the operating revenues of this
+segment were RMB 1,224.2 billion,
+representing an increase of 16.3% over
+2016, of which: the sales revenues of
+gasoline totaled RMB 582.9 billion,
+representing an increase of 17.7%
+compared with 2016; the sales revenues
+of diesel were RMB 449.2 billion,
+representing an increase of 9.0% over
+2016, and the sales revenues of kerosene
+were RMB 90.2 billion, representing an
+increase of 27.8% over 2016.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017 23
+The sales revenues of refined petroleum
+products other than gasoline, diesel,
+kerosene and chemical feedstock were
+RMB 172.2 billion, representing an
+increase of 22.2% over 2016.
+20.0
+0.59
+1.4 Number of people lifted out of poverty
+4.74
+Mainly due to the increase of non-interest-bearing
+debts compared with last year
+Cash flow interest coverage ratio
+39.11
+35.13
+3.99
+EBITDA-to-interest coverage ratio
+32.59
+21.78
+10.81
+Mainly due to the decrease of interest expense in
+cash.
+Mainly due to the increase of earnings
+Loan repayment rate (%)
+Interest payment rate (%)
+100
+100
+100
+100
+During the reporting period, the Company
+paid in full the interest accrued for the other
+bonds and debt financing instruments. As
+at 31 December 2017, the standby credit
+line provided by several domestic financial
+institutions to the Company was RMB 361.9
+billion in total, facilitating the Company to
+get such amount of unsecured loans. During
+the reporting period, the Company fulfilled
+relevant undertakings in the offering circular
+of corporate bonds. During the reporting
+period, Sinopec Corp. had no significant
+matters which could influence the Company's
+operation and debt paying ability.
+On 18 April 2013, Sinopec Capital (2013)
+Limited, a wholly-owned overseas subsidiary
+of Sinopec Corp., issued senior notes
+guaranteed by Sinopec Corp. with four
+different maturities, 3 years, 5 years,
+10 years and 30 years. The 3-year notes
+principal totaled USD 750 million, with an
+annual interest rate of 1.250% and had
+been repaid and delisted; the 5-year notes
+principal totaled USD 1 billion, with an
+annual interest rate of 1.875%; the 10-year
+notes principal totaled USD 1.25 billion,
+with an annual interest rate of 3.125%; and
+the 30-year notes principal totaled USD
+3
+500 million, with an annual interest rate
+of 4.250%. These notes were listed on the
+Hong Kong Stock Exchange on 25 April
+2013, with interest payable semi-annually.
+The first payment of interest was on 24
+October 2013. During the reporting period,
+the Company has paid in full the current-
+period interests of all notes with maturity of
+5 years, 10 years and 30 years.
+SHARE OPTION INCENTIVE SCHEME OF
+SINOPEC CORP.'S SUBSIDIARY, SINOPEC
+SHANGHAI PETROCHEMICAL COMPANY
+LIMITED (SHANGHAI PETRO), DURING THE
+REPORTING PERIOD
+9.85
+Pursuant to the requirements of the Hong
+Kong Listing Rules, the resolution relating to
+the Shanghai Petro A Share Option Incentive
+Scheme (Draft) was considered and passed
+at the 18th meeting of the fifth session of
+the Board and the first extraordinary general
+meeting of Sinopec Corp. for 2014. The
+Share Option Incentive Scheme (Scheme)
+came into effect on 23 December 2014 with
+a validity period of 10 years. The expiry date
+of the Scheme is 22 December 2024. Under
+the Scheme, the total number of underlying
+shares to be granted shall neither exceed
+10% of the total share capital of Shanghai
+14.60
+Mainly due to the increase of earnings
+0.91
+0.85
+0.06
+Quick ratio
+Bright Company in 2013, in which China
+Petrochemical Corporation undertakes that
+when Century Bright Company has difficulty
+in making payments, China Petrochemical
+Corporation will ensure that Century Bright
+Company will fulfill its repayment obligation
+through various channels.
+0.53
+0.06
+Liability-to-asset ratio (%)
+46.47
+44.45
+2.02
+percentage
+points
+EBITDA to total debt ratio
+1.11
+0.99
+0.12
+Reasons for change
+Mainly due to the increase of earnings compared
+with last year
+Mainly due to the increase of cash at bank and on
+hand, structured deposit and inventories compared
+with last year
+Mainly due to the increase of cash at bank and on
+hand and structured deposit compared with last
+year
+Mainly due to the increase of non-interest-bearing
+debts compared with last year
+Interest coverage ratio
+Petro (10,800 million shares) nor exceed
+10% of the total A share capital of Shanghai
+Petro (7,305 million shares). As of the
+date of the 2017 annual report of Shanghai
+Petro, the number of the underlying shares
+of the share options to be exercised by
+Shanghai Petro to the participants was
+8,946,900 A shares, which represents 0.08%
+of the total share capital of Shanghai Petro
+(10,823,813,500 shares). As of the date of
+the 2017 annual report of Shanghai Petro,
+the number of the underlying shares of the
+share options to be granted by Shanghai
+Petro to the participants was 691,740,000
+A shares, which represents 6.4% of the
+total share capital of Shanghai Petro
+(10,823,813,500 shares). The vesting period
+for each grant under the Scheme shall be no
+less than two years.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+31
+or allotment of shares during the
+validity period, the exercise price
+shall be adjusted according to the
+Share Option Incentive Scheme). On
+15 June 2016, the 2015 annual profit
+distribution plan was considered and
+passed at Shanghai Petro's 2015
+annual general meeting, whereby cash
+dividend of RMB1.00 was paid for
+each 10 shares. On 15 June 2017,
+the 2016 annual profit distribution
+plan was considered and passed at
+Shanghai Petro's 2016 annual general
+meeting, whereby cash dividend of
+RMB2.50 was paid for each 10 shares
+and the exercise price was adjusted
+to RMB3.85 per share accordingly.
+(vi) Validity of and exercise arrangements
+for the initial grant
+The validity period of the share
+options shall be five years
+commencing from the grant date, but
+is subject to exercise arrangement
+of the Scheme. Please refer to the
+section "Validity Period" on Page 32
+of Sinopec Corp.'s 2015 annual report
+published on 29 March 2016.
+(vii) The progress of share option incentive
+up to the date of Shanghai Petro's
+2017 annual report
+On 8 January, 2018, Shanghai Petro
+deliberated and approved proposal
+on Adjustment of the Participants
+List and Numbers of Share option
+for A-share Share option Incentive
+Scheme of Shanghai Petro and the
+proposal on the Satisfaction of the
+Conditions of the Second Exercise
+Period of Share option Granted
+under First Grant and Determination
+of the Exercise Arrangement (e.g.
+Exercise Date., etc) for A-share
+Share option Incentive Scheme of
+Shanghai Petro on the 9th meeting
+of the sixth session of the board of
+Shanghai Petro. The non-exercised
+share options which were granted to
+4 participants shall be lapsed and
+cancelled due to their resignations;
+The non-exercised share options for
+the second exercising period which
+were granted to 2 participants shall
+be cancelled due to their failing in
+the performance appraisals in 2016;
+and the share options granted to 8
+participants has been adjusted and
+cancelled by resolutions on the third
+meeting of the ninth session of the
+board of Shanghai Petro held on on
+23 August 2017 due to their changes
+of internal positions. After adjustment,
+the total amount of share option for
+cancellation shall be 820,700 and the
+total amount of granted non-exercised
+share options shall be 18,583,800.
+185 participants can exercise the
+share option in second exercising
+period; and the number of exercisable.
+share options in the second exercising
+period is 9,636,900. On 14 February
+2018, Shanghai Petro completed
+registration for newly increased
+9,636,900 A shares and the total
+issued shares Shanghai Petro were
+increased to 10,823,813,500. As of
+the date of Shanghai Petro's 2017
+annual report, the total number of
+issued shares of Shanghai Petro is
+10,823,813,500 shares.
+Save as disclosed above, during
+the reporting period, Shanghai
+Petro granted no A share option in
+accordance with the Scheme, none of
+the share options was exercised by
+the Participant and none of the share
+option was cancelled or lapsed.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+33
+Significant Events
+Significant Events
+SIGNIFICANT EVENTS (CONTINUED)
+4 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
+Background
+Type of
+Undertaking
+Party
+Contents
+Undertakings related to Initial
+Initial Public
+Public Offerings (IPOs)
+Offerings (IPOs)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+According to the principle
+disclosed by Shanghai Petro on the
+determination of exercise price, the
+exercise price of the initial grant was
+RMB4.20 per share (in the event of
+dividends payment, capitalisation
+of capital reserves, bonus issue,
+subdivision or reduction of shares
+(v) Exercise price of the initial grant and
+exercise price adjustment
+During the reporting period, a total
+of 4,498,900 A shares share options
+granted to Shanghai Petro's key
+business personnel had been lapsed
+due to their resignations and etc,.
+At the end of the Reporting Period,
+the number of outstanding A shares
+share options held by Shanghai
+Petro's key business personnel was
+18,138,500.
+Significant Events
+32
+32
+Significant Events
+SIGNIFICANT EVENTS (CONTINUED)
+(1) Summary of the Scheme
+For the details of the purpose of the
+Scheme, eligible participants and
+maximum entitlement of each participant,
+underlying shares and incentive
+instrument, validity period and the basis
+for the exercise price, please refer to
+page 31.33 of Sinopec Corp's 2015
+Annual Report published on 29 March
+2016.
+(2) Information on the Initial Grant of the
+Share Option
+(i) Initial Grant of the Share Option:
+Grant Date: 6 January 2015
+Number of Participants: 214 persons
+Number of Share Options Granted:
+38,760,000
+Current ratio
+(ii) The exercise condition of the first
+grant of first exercise schedule of
+share option
+Number of lapsed share option:
+5,228,900 options
+Number of exercised share option:
+14,176,600 options
+Date of completing registration for
+newly increased shares:
+27 September 2017
+Number of participants who exercised
+the option: 199
+Exercise price: RMB3.85/share
+(iii) Outstanding share options of
+Directors, chief executive and
+substantial shareholder as at the end
+of the Reporting Period
+As at the end of the Reporting Period,
+the total number of outstanding A
+shares share options held by the
+following 4 persons, Vice Chairman
+and Vice President of Shanghai Petro
+Mr. Gao Jinping, Director and Vice
+President of Shanghai Petro Mr. Jin
+Qiang, Director, Vice President and
+Secretary to the Board of Shanghai
+Petro Mr. Guo Xiaojun and Vice
+President of Shanghai Petro Mr.
+Jin Wenmin were 966,000 options.
+Former Director, Vice President and
+Chief Financial Officer of Shanghai
+Petro Mr. Ye Guohua resigned on
+26 January 2017. Pursuant to the
+Share Option Incentive Scheme,
+430,000 outstanding A share options
+granted to him have lapsed. Former
+Chairman and President of Shanghai
+Petro Mr. Wang Zhiqing resigned
+on 4 Decemeber 2017. Pursuant to
+the Share Option Incentive Scheme,
+300,000 outstanding A share options
+granted to him have lapsed. Please
+refer to Shanghai Petro's Annual
+Report for details of "Share options
+held by the Directors, Supervisors
+and senior management during the
+Reporting Period".
+(iv) Outstanding share options granted
+to employees other than the persons
+mentioned in item (iii)
+At the beginning of the report period,
+a total number of 35,970,000
+outstanding A shares share options
+were held by Shanghai Petro's key
+business personnel.
+During the reporting period, a total
+number of 13,332,600 share options
+had been exercised by Shanghai
+Petro's key business personnel during
+the first exercise period.
+Exercise date: 29 August 2017
+Number of exercisable share option:
+14,212,500 options
+The deposits of the Company in the Finance.
+Company and Century Bright Company
+during the reporting period did not exceed
+the cap as approved at the general meeting
+of shareholders. During daily operations,
+Sinopec Corp. can withdraw the full amount
+of its deposits in the Finance Company and
+Century Bright Company.
+16 APPROPRIATION OF NONOPERATIONAL
+FUNDS BY THE CONTROLLING
+SHAREHOLDER AND ITS RELATED PARTIES
+AND THE PROGRESS FOR CLEARING UP
+Not applicable
+17 STRUCTURED ENTITY CONTROLLED BY
+THE COMPANY
+None
+0.27
+1.05
+8.65
+5.96
+3,146
+3.05
+4,275
+1,669
+4,316
+0.62
+32.02
+13,907
+275
+☑ Develop ways for ecological protection and compensation
+☑ Set up ecological public welfare positions
+✓ Others
+☑ Conduct ecological protection and construction
+✓ Others
+9.3 Number of people lifted out of poverty
+9.2 Total input
+9.1 Number of projects
+9. Other projects
+8.2 Input in targeted poverty alleviation programs
+8.3 Public Welfare funds for poverty alleviation
+in East and West China
+386
+0.48
+513
+0.01
+During the reporting period, there is no credit addition mechanism and change of the repayment arrangement for the
+above-mentioned corporate bonds Sinopec Corp. strictly followed the provisions in the corporate bond prospectus to
+repay principals and interests of the corporate bonds.
+During the reporting period, the bondholders' meeting has not been convened.
+During the durations of the above-mentioned bonds, the bond trustee, China International Capital Corporation
+Limited, has strictly followed the Bond Trustee Management Agreement and continuously tracked the Company's
+credit status, utilisation of bond proceeds and repayment of principals and interests of the bond. The bond trustee
+has also advised the company to satisfy obligations as described in the corporate bond prospectus and exercised its
+duty to protect the bondholders' legitimate rights and interests. The bond trustee is expected to disclose the Trustee
+Management Affairs Report after disclosure of the Company's annual report. The full disclosure will be available on
+the website of Shanghai Stock Exchange (http://www.sse.com.cn)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Principal accounting data and financial indicators for the two years ended 31 December 2017
+Principal data
+2017
+EBITDA (RMB million)
+207,528
+2016
+196,464
+8.1 Input in coordinated poverty alleviation
+Change
+5.63%
+Significant Events
+39
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+In 2018, we will further enhance our efforts on targeted poverty alleviation and elimination, continual focusing on poverty alleviation in extreme
+poverty areas, targeted assistance for special people in poverty, and solving the most urgent problems of the people in poverty. We will optimise
+the measures of poverty alleviation by strengthening education and training, industrial development and expanding local products trade through
+EasyJoy convenience stores etc., to eliminate poverty and enhance people's sense of satisfaction.
+(4) 2018 Targeted Poverty Alleviation Plan
+13,852
+21.57
+261
+1.58
+49.26
+In order to regulate connected transactions
+between the Company and Sinopec Finance
+Co., Ltd. (Sinopec Corp.'s domestic
+settlement center, hereinafter referred to
+as the Finance Company) and to ensure the
+safety and liquidity of the deposits of the
+Company in the Finance Company, Sinopec
+Corp. and the Finance Company formulated
+the Risk Control System on Connected
+Transactions between China Petroleum &
+Chemical Corporation and Sinopec Finance
+Co., Ltd., which covers the risk control
+system and the risk management plan of the
+Company to prevent financial risks and to
+ensure that the deposits of the Company in
+the Finance Company can be utilised at the
+Company's discretion. At the same time, as
+the controlling shareholder of the Finance
+Company, China Petrochemical Corporation
+undertakes that in case of an emergency
+where the Finance Company has difficulty
+in making payments, China Petrochemical
+Corporation will increase the capital of
+the Finance Company in accordance with
+the actual need for the purpose of making
+payment.
+China Petrochemical 1
+Corporation
+8. Poverty alleviation through social projects
+7.3 Input in assisting the disabled
+Data
+1. Poverty elimination through industrial development
+1.1 Categories of poverty alleviation programs through
+industrial development
+II. Input breakdowns
+3. Number of people lifted out of poverty
+2. Value of goods and materials
+Funds
+Overview
+1.
+Index
+I.
+Unit: RMB million
+(3) 2017 Targeted Poverty Alleviation Work Statistics
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+In 2017, the Company implemented 44
+targeted poverty elimination programs
+in Yingshang county, Yuexi county,
+Fenghuang county, Luxi county, Yuepuhu
+county and Dongxiang county, mainly
+including rural industry development,
+village tourism development, labor output
+trainings and education assistance. We
+input RMB 128.22 million in targeted
+poverty alleviation, helped 27,759
+registered people out of poverty and
+funded the education of 3,146 students.
+(2) Overview on 2017 Targeted Poverty
+Alleviations
+(1) Targeted Poverty Alleviation Plan
+The Company has strictly followed the
+nation's poverty elimination program
+under the thirteenth five-year plan,
+and the fundamental principles of
+poverty alleviation and elimination. The
+Company focused on increasing fund
+input, enhancing fund management,
+targeted poverty alleviation, innovation,
+supervision, guaranteeing work efficiency
+to ensure the effectiveness of the targeted
+poverty alleviation plan.
+20 POVERTY ALLEVIATION PROGRAM
+LAUNCHED BY SINOPEC CORP.
+technology of relevant industries, promoted
+relevant work in accordance with new
+requirements for monitoring effluents,
+and disclosed environmental monitoring
+information publicly in accordance
+with relevant requirements; revised the
+contingency schemes in respects of
+environmental emergencies and severe
+pollution weather and others in accordance
+with requirements of national environmental
+emergencies contingency schemes. For
+more detailed information, please refer
+to our Communication on Progress for
+Sustainable Development. Certain branches
+and subsidiaries of Sinopec Corp. are
+major pollutant discharging companies as
+stipulated by China's environment protection
+authorities. Pursuant to relevant regulations
+and specific requirements of local related
+authorities, environmental information of
+those companies has been disclosed publicly.
+For more details, please refer to the website
+of local government.
+In 2017, the Company further improved
+environment protection management of
+projects construction, enhanced evaluation
+and examination of projects environment
+protection, as well as ensuring the
+environment protection facilities to be
+designed, built and put into operation with
+the main project simultaneously. All of
+the new projects of the Company obtained
+environmental evaluation approvals by
+governments. The Company, pursuant to
+new standards in respect of oil refining and
+petrochemicals, completed the treatment
+of effluents, actively pushed forward the
+comprehensive treatment of volatile organic
+compounds, and ensured all of pollution
+prevention and control facilities operated
+effectively and stably. The Company revised
+the self-monitoring scheme in accordance
+with the national pollutants discharge
+license and guidance for self-monitoring
+19 ENVIROMENTAL PROTECTION BY SINOPEC
+CORP AND ITS SUBSIDIARIES
+Sinopec Corp. did not implement any share
+incentive scheme during the reporting period.
+18 DETAILED IMPLEMENTATION OF THE
+SHARE INCENTIVE SCHEME DURING THE
+REPORTING PERIOD
+124.53
+3.69
+27,759
+☑ Poverty alleviation through agriculture and forestry development
+7.1 Input in left-behind children, women and senior people
+7.2 Number of left-behind children, women and senior people
+assisted
+7. Guarantee basic living standard
+6.2 Input in ecological protection
+6.1 Items
+6. Poverty alleviation through ecological protection
+areas
+5.1 Input in medical and health care resources in proverty-striken
+5. Poverty alleviation through healthcare
+4.3 Input in education resources in poverty-stricken areas
+4.2 Number of students who received funding assistance
+7.4 Number of the disabled helped
+4.1 Input in students funding
+3.1 Number of relocated people provided with employment
+3. Poverty elimination through relocation
+2.2 Participants of professional skill trainings (person time)
+2.3 Number of people employed
+2.1 Input in professional skill training
+2. Poverty elimination through provision of employment
+1.3 Input in poverty alleviation projects through
+industrial development
+1.2 Number of poverty alleviation programs
+☑ Poverty alleviation through science and technology development
+☑ Poverty alleviation through e-commerce
+☑Poverty alleviation through assets income
+☑ Poverty alleviation through tourism development
+4. Poverty elimination through education
+During the reporting period, United Credit ratings Co., Ltd. provided continuing credit rating for 1002, 12
+01, 1202, 1501 and 1502and reaffirmed AAA credit rating. The long term credit rating and outlook of
+the. remained at AAA and stable respectively. Pursuant to relevant regulations, the Company will publish latest credit
+rating results through medias designated by regulators within two months commencing from the announcement date
+of annual report.
+(IPOs)
+Other
+No
+Sonangol E.P./SSI15
+Total amount of guarantees provided during the reporting period *2
+Total amount of guarantees outstanding at the end of reporting period*2 (A)
+Guarantees by the Company to the controlled subsidiaries
+Total amount of guarantee provided to controlled subsidiaries during the reporting period
+Total amount of guarantee for controlled subsidiaries outstanding at the end of the reporting period (B)
+Total amount of guarantees for the Company (including those provided for controlled subsidiaries)
+Total amount of guarantees(A+B)
+The proportion of the total amount of guarantees to the Sinopec Corp.'s net assets
+Guarantees provided for shareholder, de facto controller and its related parties (C)
+Amount of debt guarantees provided directly or indirectly to the companies with liabilities to assets ratio over 70% (D)
+The amount of guarantees in excess of 50% of the net assets (E)
+Total amount of the above three guarantee items (C+D+E)
+Statement of guarantee undue that might be involved in any joint and several liabilities
+Statement of guarantee status
+*1: As defined in the Listing Rules of the Shanghai Stock Exchange.
+2,325
+19,813
+5,881
+23,783
+Yes
+43,596
+No
+Joint liability
+guarantee
+Liquedie Arabia LLC.
+Sinopec Great Wall
+Energy and
+Wholly owned
+subsidiary
+Zhong An United Coal
+Chemical Co., Ltd.
+performance
+940
+18 April 2014
+18 April 2014 -
+17 April 2026
+Joint liability
+guarantee
+No
+No
+No
+No
+Chemical
+Industry Co., LTD
+SSI
+Controlled
+New Bright International 9,732
+subsidiary
+Development Ltd./
+No
+5.99%
+1.794
+2,491
+Used for project construction.
+Used for working capital
+Source of fund
+Self-owned fund
+Self-owned fund
+Outstanding
+Amount
+0.6
+0.215
+balance
+0.6
+0.215
+(3) Other asset management and derivative investment
+During the reporting period, the Company has no other asset management or derivative investment subject to disclosure obligation.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Overdue and
+uncollected
+amount
+None
+None
+37
+Significant Events
+38
+Significant Events
+SIGNIFICANT EVENTS (CONTINUED)
+15 DEPOSITS AT SINOPEC FINANCE CO., LTD.
+AND SINOPEC CENTURY BRIGHT CAPITAL
+INVESTMENT, LTD.
+Categories
+Unit:RMB billion
+(2) Entrusted loans
+During the reporting period, the Company has no entrusted asset management subject to disclosure obligation.
+None
+4,285
+None
+None
+*2: The amount of guarantees provided during the reporting period and the outstanding balance of guarantees amount at the end of the reporting period include the
+guarantees provided by the controlled subsidiaries to external parties. The amount of the guarantees provided by these subsidiaries is derived from multiplying the
+guarantees provided by Sinopec Corp.'s subsidiaries by the percentage of shareholding of Sinopec Corp. in such subsidiaries.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+8 SPECIFIC STATEMENTS AND INDEPENDENT
+OPINIONS FROM INDEPENDENT NON-
+EXECUTIVE DIRECTORS REGARDING
+EXTERNAL GUARANTEES PROVIDED BY
+SINOPEC CORP. DURING AND BY THE END
+OF 2017:
+We, as independent directors of Sinopec
+Corp., hereby make the following statements
+after conducting a thorough check of external
+guarantees provided by the Company
+accumulated up to and during 2017 in
+accordance with the requirements of the
+domestic regulatory authorities:
+The external guarantees prior to 2017 had
+been disclosed in previous annual report.
+The aggregate balance of external guarantees
+provided by Sinopec Corp. for the year 2017
+was RMB 43.596 billion, accounting for
+approximately 5.99% of the Company's net
+assets.
+We hereby present the following opinions:
+Sinopec Corp. shall continue to strengthen
+its management and actively monitor
+guarantee risks. It shall strictly follow the
+approval and disclosure procedures in
+relation to guarantee businesses for any new
+external guarantees provided thereafter.
+of hydrogen from Air
+9 SIGNIFICANT LITIGATION, ARBITRATION
+RELATING TO SINOPEC CORP.
+10 INSOLVENCY AND RESTRUCTURING
+During the reporting period, the Company
+was not involved in any insolvency or
+restructuring matters.
+11 OTHER MATERIAL CONTRACTS
+Saved as disclosed by Sinopec Corp., the
+Company did not enter into any significant
+contracts subject to disclosure obligations
+during the reporting period.
+12 CREDIBILITY FOR THE COMPANY,
+CONTROLLING SHAREHOLDERS AND DE
+FACTO CONTROLLER
+During the reporting period, the Company
+and its controlling shareholder did not have
+any unperformed court's effective judgments
+which should be performed or any large
+amount of debt which should be repaid.
+13 TRUSTEESHIP, CONTRACTING AND LEASES
+During the reporting period, the Company
+was not involved in any events relating to
+significant trusteeship, contracting or leases
+for the assets of any other company, nor has
+it placed its assets with any other company
+under a trusteeship, contracting or lease
+agreement subject to disclosure obligations.
+14 ENTRUSTED ASSET MANAGEMENT AND ENTRUSTED LOANS
+(1) Entrusted Asset Management
+No significant litigation, arbitration relating
+to the Company occurred during the
+reporting period.
+No
+No
+No
+Given that China Petrochemical Corporation engages in
+the same or similar businesses as Sinopec Corp. with
+regard to the exploration and production of overseas
+petroleum and natural gas, China Petrochemical
+Corporation hereby grants a 10-year option to Sinopec
+Corp. with the following provisions: (i) after a thorough
+analysis from political, economic and other perspectives,
+Sinopec Corp. is entitled to require China Petrochemical
+Corporation to sell its overseas oil and gas assets
+owned as of the date of the undertaking and still in its
+possession upon Sinopec Corp.'s exercise of the option
+to Sinopec Corp.; (ii) in relation to the overseas oil and
+gas assets acquired by China Petrochemical Corporation
+after the issuance of the undertaking, within 10 years
+of the completion of such acquisition, after a thorough
+analysis from political, economic and other perspectives,
+Sinopec Corp. is entitled to require China Petrochemical
+Corporation to sell these assets to Sinopec Corp. China
+Petrochemical Corporation undertakes to transfer the
+assets as required by Sinopec Corp. under aforesaid
+items (i) and (ii) to Sinopec Corp., provided that the
+exercise of such option complies with applicable laws and
+regulations, contractual obligations and other procedural
+requirements.
+34
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Since 2012, China Petrochemical
+Corporation has earnestly fulfilled its
+undertaking in eliminating competitions
+in chemical business with Sinopec Corp.
+through: (1) subscribing capital contribution
+of joint ventures controlled by Sinopec
+Corp., by way of injecting net assets of
+certain chemical business and cash; (2)
+authorising Sinopec Corp. to be in charge
+of production plan, management and sales
+of the remaining chemical business. The
+competition in chemical business between
+China Petrochemical Corporation and
+Sinopec Corp. has been eliminated.
+As of the date of this report, Sinopec Corp.
+had no undertakings in respect of profits,
+asset injections or asset restructuring that
+had not been fulfilled, nor did Sinopec Corp.
+make any profit forecast in relation to any
+asset or project.
+5 ANALYSIS OF INVESTMENT
+(1) General analysis of external equity
+investment
+In 2017, the external equity investment
+of the Company totalled RMB 10.369
+billion, mainly for acquisition of interest
+in Shanghai SECCO and subscribing
+for shareholding interest in China Boqi
+Environmental (Holding) Co., Ltd, by way
+of capital injection.
+(2) Significant equity investment
+On 27 April 2017, Sinopec Corp.,
+Sinopec Shanghai Gaoqiao Petrochemical
+Co., Ltd. (Gaoqiao Petrochemical) and
+BP Chemicals East China Investments
+Limited (BP Chemicals) entered
+into an equity interest purchase
+agreement. Pursuant to which,
+Gaoqiao Petrochemical aquired 50%
+shareholdings of Shanghai SECCO from
+BP Chemicals (Acquisition). Upon the
+completion of the acquisition, Shanghai
+SECCO is held as to 50% by Gaoqiao
+Petrochemical, 30% by Sinopec Corp.
+and 20% by Shanghai Petro. For more
+details, please refer to the announcement
+published in China Securities Journal,
+Shanghai Securities News and Securities
+Times by Sinopec Corp. on 28 April 2017
+and the announcement on the website of
+Hong Kong Stock Exchange on 27 April
+2017.
+6 SIGNIFICANT ASSETS AND EQUITY SALE
+During the reporting period, there is no
+significant assets or equity sale of the
+Company.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+35
+Significant Events
+36
+Significant Events
+SIGNIFICANT EVENTS (CONTINUED)
+7 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
+Major external guarantees (excluding guarantees for controlled subsidiaries)
+in order to avoid competition with Sinopec Corp. in the
+chemicals business.
+China Petrochemical
+Corporation
+China Petrochemical China Petrochemical Corporation would dispose of its
+Corporation minor remaining chemicals business within five years
+Abandonment of business competition and conflicts
+of interest with Sinopec Corp.
+Other undertakings
+Other
+Whether bears
+Whether strictly
+Term for performance
+From 22 June 2001
+deadline or not
+performed or not
+No
+Yes
+Within five years, commencing from Yes
+15 March 2012
+Unit: RMB million
+Yes
+Yes
+Yes
+Compliance with the connected transaction
+agreements;
+2 Solving the issues regarding the legality of land-
+use rights certificates and property ownership rights
+certificates within a specified period of time;
+3 Implementation of the Reorganisation Agreement
+(please refer to the definition of Reorganisation
+Agreement in the H share prospectus of Sinopec
+Corp.);
+Granting licenses for intellectual property rights;
+4
+5
+Avoiding competition within the same industry;
+6
+Within 10 years after 29 April
+2014 or the date when China
+Petrochemical Corporation acquires
+the assets
+Other undertakings
+Whether
+guaranteed
+connected
+Joint liability
+No
+No
+No
+Yes
+31 December 2023
+guarantee
+(the mature date
+is estimated)
+Sinopec Corp.
+The listed
+Yanbu Aramco
+no specific
+31 December 2014
+company itself
+Sinopec Refining
+Company(YASREF)
+Limited
+amount agreed,
+gurarantee
+on contract
+30 years from the date Joint liability
+YASRFE requires supply guarantee
+No
+25 May 2016.
+25 May 2016
+no)*1
+guarantee guaranteed
+Relationship
+with the
+Whether
+Whether
+Amount of
+parties
+Name of
+Guarantor
+Company
+Sinopec Corp.
+The listed
+for
+company
+itself
+Amount
+13,520
+Transaction date
+(date of signing)
+completed
+overdue
+overdue Counter-
+(yes or
+Period of guarantee
+Туре
+or not
+or not
+guaranteed company
+Zhongtian Hechuang
+Energy Co., Ltd
+Proceeds from the above-mentioned corporate bonds have been used for their designated purpose disclosed in the
+relevant announcements. All the proceeds have been completely used.
+In order to regulate connected transactions
+between the Company and Sinopec Century
+Bright Capital Investment, Ltd. (Sinopec
+Corp.'s overseas settlement center,
+hereinafter referred to as the Century Bright
+Company), Century Bright Company ensures
+the safety of the deposits of the Company in
+Century Bright Company by strengthening
+internal risk controls and obtaining support
+from China Petrochemical Corporation.
+China Petrochemical Corporation has
+formulated a number of internal rules,
+including the Rules for the Internal Control
+System, the Rules for Implementation of
+Overseas Capital Management Methods, and
+the Provisional Methods for Overseas Fund
+Platform Management, to impose strict rules
+on Century Bright Company for providing
+overseas financial services. Century Bright
+Company has also established the Rules for
+the Implementation of the Internal Control
+System, which ensures the standardisation
+and safety of its corporate deposits business.
+At the same time, as the wholly controlling
+shareholder of Century Bright Company,
+China Petrochemical Corporation entered
+into a keep-well agreement with Century
+United Credit ratings Co., Ltd.
+Convening of corporate bond holders' meeting
+Performance of corporate bonds trustee
+during the reporting period
+Credit addition mechanism, repayment scheme and other
+relative events for corporate bonds
+Credit rating agency
+Use of proceeds
+Credit rating agency
+Corporate bonds trustee
+Listing place
+Investor Qualification Arrangement
+Payment of interests
+Principal and interest repayment
+Interest rate (%)
+Outstanding balance (RMB billion)
+Amount issued (RMB billion)
+Maturity date
+Issuance date
+Abbreviation
+Code
+Bond name
+Basic information of corporate bonds
+2 CORPORATE BONDS ISSUED AND INTEREST PAYMENTS
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+30
+12th Floor, PICC building, No.2 Jianguomenwai Avenue, Chaoyang District, Beijing
+Sinopec Corp.
+2010 Corporate bond
+10石化02
+122052
+Sinopec Corp.
+2012 Corporate bond
+2018
+2020
+9
+9
+13
+0
+7
+16
+4
+7
+16
+4
+4.05
+19 November
+1 June 2022
+21 May 2020
+19 November 2015
+1 June 2012
+21 May 2010
+15石化02
+136040
+136039
+15石化01
+12石化02
+122150
+122149
+12石化01
+2015 Corporate bond (first issue)
+Sinopec Corp.
+1 June 2017
+4.26
+19 November
+3.30
+(010) 6505 1166
+Huang Xu, Zhai Ying
+27th-28th Floor, China World Office 2, 1 Jianguomenwai Avenue, Chaoyang District, Beijing
+China International Capital Corporation Limited
+Shanghai Stock Exchange
+1501 and 15102 were publicly offered to qualified investors in accordance with Administration of the Issuance
+and Trading of Corporate Bonds
+Sinopec Corp. had paid in full the interest accrued for the current period interest payment year and [1201]
+had been repaid and delisted from the Shanghai Stock Exchange.
+Simple interest is calculated and paid on an annual basis without compounding interests. The principal will be paid
+at maturity with last installment of interest.
+3.70
+4.90
+Chairman's Statement
+CORPORATE GOVERNANCE
+D Delegation of power by the Board
+a. The Board and the Management have
+clear terms of reference in writing.
+The Articles of Association and the
+Rules of Procedure for the General
+Meetings of Shareholders and the
+Rules of Procedure for the Board
+Meetings clearly set forth the scope
+of duties, powers and delegation of
+power of the Board and Management,
+which are published on the website of
+Sinopec Corp. at http://www.sinopec.
+com.
+b. In terms of internal control,
+Sinopec Corp. adopted the internal
+control framework prescribed
+in the internationally accepted
+Committee of Sponsoring
+Organisations of the Treadway
+Commission Report (COSO).
+Based upon the Articles of
+Association and the applicable
+management policies currently in
+effect, as well as in accordance
+with relevant domestic and
+overseas applicable regulations,
+Sinopec Corp. formulated and
+continuously improves the Internal
+Control Manual to achieve internal
+control of all factors of internal
+environment, risk evaluation,
+control activities, information
+and communication, and internal
+supervision. At the same time,
+Sinopec Corp. has constantly
+supervised and evaluate its
+internal control, and conducted
+comprehensive and multi-level
+checks including regular test,
+enterprise self-examination and
+auditing check, and subsumed
+headquarters, branches and
+c. Each Board Committee is required
+to report its decisions and
+recommendations to the Board.
+The terms of reference of the Audit
+Committee and the Remuneration
+Committee are published on the
+website of Sinopec Corp. at http://
+www.sinopec.com.
+E Investor Relations
+a. In order to further enhance corporate
+governance and satisfy business
+expansion needs of the Company,
+as being approved at the annual
+general meeting of shareholders for
+the year 2016, Sinopec Corp. amends
+the Articles of Association and its
+appendix Rules and Procedures for
+Board Meetings. For more details,
+please refer to the announcement
+published in the China Securities
+Journal, the Shanghai Securities
+News and the Securities Times by
+Sinopec Corp. on 29 June 2017 and
+the announcement published on
+the website of the Hong Kong Stock
+Exchange on 28 June 2017.
+48
+b. In addition to the Audit Committee
+and the Remuneration Committee,
+the Board had established the
+Strategy Committee and the
+Social Responsibility Management
+Committee. The Strategy Committee
+is responsible for overseeing long-term
+development strategies and significant
+investment decisions of the Company.
+The Strategy Committee consists
+of eight directors, including former
+Chairman of the Board Mr. Wang
+Yupu, who serves as Chairman, as
+well as Vice Chairman of the Board &
+President Mr. Dai Houliang, Executive
+Director Mr. Wang Zhigang, Mr.
+Zhang Haichao, Mr. Jiao Fangzheng,
+Mr. Ma Yongsheng and Independent
+Non-executive Directors Mr. Andrew Y.
+Yan and Mr. Fan Gang, who serve as
+members. The Social Responsibility
+Management is responsible for
+preparing policies, governance,
+strategies and plans for social
+responsibility management of the
+Company. The Social Responsibility
+Management Committee consists
+of three Directors, including former
+Chairman of the Board Mr. Wang
+Yupu, who serves as Chairman, Vice
+Chairman of the Board & President
+Mr. Dai Houliang and Independent
+Non-executive Director Mr. Tang Min,
+who serve as members.
+47
+c. Audit Committee members may
+to employees to report behavior
+that violates the internal control
+system of the Company. The Audit
+Committee has reviewed and
+approved such policy.
+d. The Audit Committee has reviewed
+the adequacy of the resources
+for accounting and financial
+reporting and the qualifications
+and experience of the employees
+as well as the sufficiency of
+the training courses provided
+to relevant employees. Audit
+Committee is of the view that
+the Management has fulfilled the
+duties to establish an effective
+internal control system. The
+Company established a whistle-
+blowing policy in its internal
+control system, providing several
+channels as online reporting,
+letter reporting, receipt of appeals
+and a complaint mailbox, etc.
+appointed consultants to provide
+advices. The working expenses
+of the Audit Committee are
+included in the budget of Sinopec
+Corp. In accordance with the
+policies of Sinopec Corp., the
+senior Management and relevant
+departments of Sinopec Corp.
+shall actively cooperate with the
+Audit Committee.
+engage independent professionals
+when performing its duties.
+Reasonable costs arising from
+such consultations are borne by
+Sinopec Corp. In the meantime,
+the Audit Committee has
+b. Sinopec Corp. pays close attention to
+investor relations. The management
+conduct road shows every year
+b. During the reporting period,
+the Audit Committee held four
+meetings (please refer to the
+section Meetings held by the
+special committees of the Board
+under the Report of the Board of
+Directors in this annual report).
+The review opinions were issued
+at each meeting and submitted
+to the Board after signed by the
+members of the Audit Committee.
+During the reporting period, the
+Board and the Audit Committee
+had no disagreement.
+a. The Board has established
+an Audit Committee. The
+Audit Committee consists of
+Independent Non-executive
+Director Mr. Andrew Y. Yan,
+who serves as the Chairman,
+and Independent Non-executive
+Director Mr. Jiang Xiaoming
+and Independent Non-executive
+Director Mr. Tang Min, who serve
+as members. As verified, none of
+them has served as a partner or
+a former partner in our current
+auditing firm.
+C.3 Audit Committee
+d. Based upon the review and
+evaluation of internal control and
+risk management of the reporting
+period, the Board is of the view
+that the internal control and risk
+management of the Company are
+effective.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+to answer questions on subjects
+of concern to investors, such as
+development strategies and the
+production and business performance
+of the Company. Sinopec Corp.
+established a department responsible
+for communicating with investors.
+In compliance with regulatory
+provisions, Sinopec Corp. enhanced
+communication with investors by
+holding meetings with institutional
+investors, setting up an investor
+hotline and communicating through
+internet platform.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+d. The Chairman of the Board hosted the
+annual general meeting for the year
+2016. Some members of the Board
+and senior Management attended the
+meeting and communicated with the
+investors extensively.
+Chairman's Statement
+49
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Except for their working relationships
+with Sinopec Corp., none of the
+Directors, Supervisors or other Senior
+Management has any financial, business
+or family relationship or any relationship
+in other material aspects with one
+another. For information about changes
+in share capital and shareholdings of
+substantial shareholders, please refer to
+page 6 to page 7; for information about
+meetings of the Board, please refer to
+page 51; for information about equity
+interests of Directors, Supervisors and
+other senior Management, please refer
+to page 43; for information about the
+biographies and annual remuneration of
+Directors, Supervisors and other senior
+Management, please refer to page 62 to
+page 74.
+(3) Other information about Sinopec Corp.'s
+corporate governance
+During the reporting period, neither
+PricewaterhouseCoopers Zhong Tian LLP
+nor PricewaterhouseCoopers provided any
+non-audit service to the Company.
+PricewaterhouseCoopers Zhong Tian
+LLP and PricewaterhouseCoopers as
+Sinopec Corp.'s external auditors for
+2017 and the authorisation of the Board
+to determine their remuneration were
+approved at Sinopec Corp.'s annual
+general meeting for the year 2016 on
+28 June 2017. The audit fee for 2017
+is RMB 51.58 million (including audit
+fee of internal control), which was
+approved at the 17th meeting of the
+sixth session of the Board. The annual
+financial statements have been audited
+by PricewaterhouseCoopers Zhong Tian
+LLP and PricewaterhouseCoopers. The
+Chinese certified accountants signing the
+report are Zhao Jianrong and Gao Peng
+from PricewaterhouseCoopers Zhong Tian
+LLP.
+The appointment of
+(2) Auditors
+c. During the reporting period, separate
+resolution was proposed for each
+substantially separate issue at the
+general meeting. All resolutions were
+voted by poll to ensure the interests
+of all shareholders. Notices of the
+general meeting were dispatched
+to shareholders 45 days (excluding
+the date of the general meeting) in
+advance.
+c. The eligibility for attending the general
+meeting, the rights of shareholders,
+the proposals at the meeting and the
+voting procedures are clearly stated
+in the notice of the general meeting
+of Sinopec Corp. dispatched to the
+shareholders.
+b. When Sinopec Corp. holds the
+a. Shareholders who individually or
+collectively hold 10% of the total
+voting shares of Sinopec Corp.
+may request the Board in writing
+to convene the general meeting of
+shareholders. If the Board fails to
+grant the request to convene the
+meeting according to the Rules of
+Procedure for Meetings of Boards
+of Directors, the shareholders may
+convene and hold the meeting at their
+discretion according to applicable
+laws, and reasonable expenses
+incurred will be borne by Sinopec
+Corp. These provisions are subject
+to the following conditions: the
+proposals at the general meeting
+of shareholders must fall within
+the responsibilities of the general
+meeting of shareholders, with specific
+proposals and resolutions and in
+compliance with relevant laws,
+administrative regulations and the
+Articles of Association.
+G Shareholders' rights
+b. During the reporting period, the
+Secretary to the Board actively
+participated in career development
+training with more than 15 training
+hours.
+CORPORATE GOVERNANCE
+A.1 Board of Directors
+a. The Hong Kong Stock Exchange
+recognized the Secretary to the Board
+as having the relevant qualifications
+as company Secretary. Nominated
+by the Chairman of the Board and
+appointed by the Board, the Secretary
+to the Board is a Senior Management
+Officer of Sinopec Corp. and
+responsible for the Company and the
+Board. The Secretary gives opinions
+on corporate governance to the Board
+and arranges orientation training
+and professional development for the
+Directors.
+F Company Secretary
+e. According to relevant rules of
+Sinopec Corp., the Board Secretary
+is responsible for establishing an
+effective communication channel
+between Sinopec Corp. and its
+shareholders, for setting up special
+departments to communicate with
+the shareholders and for passing
+the opinions and proposals of the
+shareholders to the Board and
+Management in a timely manner.
+Contact details of Sinopec Corp. can
+be found on the Investor Center page
+on Sinopec Corp's website.
+general meeting of shareholders,
+shareholders who individually or
+collectively hold 3% of the total
+voting shares of Sinopec Corp. may
+propose a supplementary proposal 10
+days before the date of the general
+meeting.
+a. The Board is the decision-making
+body of Sinopec Corp. and abides
+by good corporate governance
+practices and procedures. All
+decisions made by the Board are
+implemented by the Management
+of Sinopec Corp.
+b. The meeting of the Board is held
+at least once a quarter. The Board
+will usually communicate the
+time and proposals of the Board
+meeting 14 days before convening
+of the meeting. The relevant
+documents and materials for
+Board meetings are usually sent to
+each Director 10 days in advance.
+In 2017, Sinopec Corp. held five
+Board meetings. For details about
+the attendance of each Director,
+please refer to the Report of the
+Board of Directors in this annual
+report.
+c. Each Director of the Board may
+submit proposals to be included
+in the agenda of Board meetings,
+and each Director is entitled to
+request other related information.
+45
+Chairman's Statement
+CORPORATE GOVERNANCE
+d. Sinopec Corp. organised and
+arranged training sessions for
+Directors and paid the relevant
+fees. The Directors actively
+participated in the trainings
+and continuing professional
+development program.
+A.7 Provision of and access to
+information
+a. The agenda and other reference
+documents for meetings of the
+Board and Board committees
+will be distributed prior to the
+meetings to give each Director
+sufficient time to review the
+materials so that Directors can
+make informed decisions.
+b. Each Director can obtain
+all related information in a
+comprehensive and timely
+manner. The Secretary to the
+Board is responsible for organising
+and preparing the materials for
+the Board meetings, including
+preparation of explanations for
+each proposal to ensure fully
+understanding by the Directors.
+The Management is responsible
+for providing the Directors with
+necessary information and
+materials. The Director may
+ask the Management, or ask,
+via the Management, relevant
+departments to provide necessary
+information or explanations. The
+Directors may seek advices from
+professional consultants when
+necessary.
+B Remuneration and Appraisal Committee
+a. Remuneration and Appraisal
+Committee (Remuneration
+Committee) consists of Independent
+Non-executive Director Mr. Fan
+Gang, who serves as the Chairman,
+and the Vice Chairman of the Board
+& President Mr. Dai Houliang and
+Independent Non-executive Director
+Mr. Jiang Xiaoming, who serve as
+the members of the Remuneration
+Committee. The Remuneration
+Committee is responsible for reviewing
+the implementation of the annual
+remuneration plans for Directors,
+Supervisors and other senior
+Management as approved at the
+general meeting of the shareholders,
+and report to the Board.
+b. The Remuneration Committee
+always consults the Chairman of the
+Board and the President about the
+remuneration plans for other Executive
+Directors. After the Remuneration
+Committee's review, it is of the view
+that all the Executive Directors of
+Sinopec Corp. have fulfilled the duty
+clauses in the service contracts of the
+Directors in 2017.
+Sinopec Corp. has formulated
+and implemented its information
+disclosure policy and insider
+information registration policy. The
+corporation regularly evaluates the
+policy implementation and makes
+disclosure in accordance with
+relevant regulations. Please refer
+to the website of Sinopec Corp.
+for the details of the information
+disclosure policy.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+c. The members of the Remuneration
+Committee may engage independent
+professionals when performing its
+duties. Reasonable costs arising
+from such consultations are borne
+by Sinopec Corp. In the meantime,
+the Remuneration Committee has
+also appointed consultants to provide
+advices. The working expenses of the
+Remuneration Committee are included
+in the budget of Sinopec Corp.
+According to the policies of Sinopec
+Corp., the senior Management and
+relevant departments of Sinopec
+Corp. must actively cooperate with
+the Remuneration Committee.
+C.1 Financial reporting
+a.
+Directors are responsible for
+supervising the preparation of
+accounts for each fiscal period to
+ensure that the accounts truly and
+fairly reflect the condition of the
+business, its performance and the
+Icash flow of the Company during
+the period. The Board approved
+the Financial Report for 2017 and
+warranted that the annual report
+contained no false representations,
+no material omissions or
+misleading statements and
+jointly and severally accepted full
+responsibility for the authenticity,
+accuracy and completeness of the
+content.
+b. Sinopec Corp. provides Directors
+with information about the
+financial, production and operating
+data of the Company every month
+to ensure that the Directors
+can learn about the latest
+developments of the Company in a
+timely manner.
+c. Sinopec Corp. has adopted an
+internal control mechanism to
+ensure that the Management
+and relevant departments have
+provided the Board and the Audit
+Committee with sufficient financial
+data and related explanations and
+materials.
+d. The external auditors of Sinopec
+Corp. made a statement about
+their reporting responsibilities in
+the auditor's report contained in
+the financial report.
+C.2 Internal Control and Risk
+Management
+a. Sinopec Corp. has formulated
+and implemented its internal
+control and risk management
+system. The Board as a decision-
+making body is responsible
+for evaluating and review the
+effectiveness of its internal
+control and risk management.
+The Board and Audit Committee
+periodically (at least annually)
+receive reports of the Company
+regarding internal control and risk
+management information from the
+Management. All major internal
+control and risk management
+issues are reported to the Board
+and Audit Committee. Sinopec
+Corp. has set up its internal
+control and risk management
+department and internal auditing
+departments, which are equipped
+with sufficient staff, and these
+departments periodically (at least
+twice per year) report to the Audit
+Committee. The internal control
+and risk management system
+of the Company are designed to
+manage rather than eliminate all
+the risks of the Company.
+46
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+CORPORATE GOVERNANCE
+Chairman's Statement
+C Accountability and Auditing
+subsidiaries into the scope of
+internal control evaluation, with
+an internal control evaluation
+report being produced. The Board
+annually review the internal control
+evaluation report. For detailed
+information about the internal
+control during the reporting
+period, please refer to the report
+on internal control prepared by
+Sinopec Corp.
+c. Each of the Directors confirmed
+that he has complied with the
+Model Code for Securities and
+Transactions by Directors of
+Listed Companies during the
+reporting period. In addition,
+Sinopec Corp. formulated the
+Rules Governing Shares Held by
+Company Directors, Supervisors
+and Senior Managers and Changes
+in Shares and the Model Code
+of Securities Transactions by
+Company Employees to regulate
+the purchase and sale of Sinopec
+Corp.'s securities by relevant
+personnel.
+a. All Non-executive Directors have
+the same duties and powers as the
+Executive Directors. In addition,
+the Independent Non-executive
+Directors are entitled to certain
+specific powers. The Articles
+of Association and the Rules of
+Procedure for Boards Meetings
+clearly prescribe the duties and
+powers of Directors, Non-executive
+Directors including Independent
+Non-executive Directors. The above
+duties and powers are published
+on the Sinopec Corp.'s website at
+http://www.sinopec.com.
+d. The Board has reviewed and
+evaluated its performance in
+2017 and is of the view that
+the Board made decisions in
+compliance with domestic and
+overseas regulatory authorities'
+requirements and the Company's
+internal rules; that the Board have
+received the suggestions from
+the Board of Supervisors and
+Management during its decision
+making process; and that the
+Board safeguarded the rights and
+interests of Sinopec Corp. and its
+shareholders.
+e. The Secretary to the Board
+assists the Directors in handling
+the daily work of the Board,
+continuously informs the Directors
+of any regulations, policies or
+other requirements of domestic
+or overseas regulatory bodies in
+relation to corporate governance
+and ensures that the Directors
+comply with domestic and
+overseas laws and regulations
+when performing their duties and
+responsibilities. Sinopec Corp.
+has purchased liability insurance
+for all Directors to minimise their
+risks that might incur, arising
+from the performance of their
+duties.
+A.2 Chairman and President
+a. The Chairman of the Board is
+elected by a majority vote of all
+Directors, and the President is
+nominated and appointed by
+the Board. The main duties and
+responsibilities of the Chairman
+and the President are clearly
+distinguished from each other, and
+the scope of their respective duties
+and responsibilities are set out
+in the Articles of Association. Mr.
+Wang Yupu serves as Chairman
+of the Board and tendered his
+resignation on 22 September
+2017. Mr. Dai Houliang serves as
+Vice Chairman of the Board and
+President of Sinopec Corp. and
+performs duties as Chairman upon
+Mr. Wang Yupu's resignation.
+b. The Chairman of the Board places
+great emphasis on communication
+with the Independent Directors.
+The Chairman independently
+held two meetings with the
+Independent Directors in respect
+of development strategy, corporate
+governance and operational
+management, etc. of Sinopec
+Corp.
+44
+44
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+CORPORATE GOVERNANCE
+Chairman's Statement
+c. The Chairman encourages open
+and active discussions. Directors
+have spoken freely at the Board
+meetings and actively and deeply
+participated in the discussions of
+significant decision made by the
+Board in the Board meetings.
+c. In terms of risk management,
+Sinopec Corp. adopted the
+enterprise risk management
+framework provided by COSO, and
+established its risk management
+policy and risk management
+organisation system. The
+Company annually conducts risk
+evaluation to identify major and
+important risks and perform
+risk management duties. It has
+designed major and important
+risks tackling measures combined
+with its internal control system
+and periodically monitor their
+implementation to ensure
+adequate care, monitor and
+tackling of major risks.
+A.3 Board composition
+b. Sinopec Corp. has received from
+each of the Independent Directors
+a letter of confirmation for 2017
+regarding their compliance
+with relevant independence
+requirements set out in Rule 3.13
+of the Hong Kong Listing Rules.
+Sinopec Corp. considers that each
+of the Independent Non-executive
+Directors is independent.
+A.4 Appointment, re-election and
+dismissal
+a. The term of each session of the
+Directors of Sinopec Corp. is three
+years, and the consecutive term
+of office of an Independent Non-
+executive Director cannot exceed
+six years.
+b. All Directors of Sinopec Corp.
+have been elected at the general
+meeting of shareholders. The
+Board has no power to appoint
+temporary Directors.
+c. Sinopec Corp. engages
+professional consultants to
+prepare detailed materials for
+newly elected Directors, to notify
+them of the regulations of each
+listing place of Sinopec Corp. and
+to remind them of their rights,
+responsibilities and obligations as
+Directors.
+A.5 Nomination Committee
+a. Considering that the Board
+did not establish a Nomination
+Committee, the Board performs
+the duties of the Nomination
+Committee prescribed in the
+Corporate Governance Code.
+The rules in relation to the
+nomination of Directors has been
+prescribed clearly in the Articles
+of Association and Rules of
+Procedure for the Shareholders'
+Meeting. Nomination of Directors
+may be proposed by shareholders
+who individually or collectively
+hold 3% of the total voting
+shares of Sinopec Corp. (1% for
+the nomination of Independent
+Directors), by the Board or by
+the Board of Supervisors for
+approval at the general meeting
+of shareholders. When the
+Board nominates a candidate
+for Director, Independent Non-
+executive Directors shall give
+their independent opinions on the
+nomination in advance. Eleven out
+of total thirteen Directors of the
+Board were elected at the annual
+general meeting for the year
+2014; one was elected at the first
+extraordinary general meeting for
+the year 2016; one was elected at
+the annual general meeting for the
+year 2016.
+b. The Board establishes the Policy
+Concerning Diversity of Board
+Members which stipulates that
+the members of the Board shall
+be nominated and appointed
+based on the skills and experience
+required by the Board as well
+as the principles on diversity of
+the Board. When deciding the
+composition of the Board, Sinopec
+Corp. shall consider several
+factors in relation to the diversity
+of the Board, including but not
+limited to, gender, age, culture
+and background of education,
+locations, profession and
+experience, skills, knowledge and
+service term.
+A.6 Responsibility of Directors
+a. For details of the composition of
+the Board of Directors, please
+refer to the section "Directors,
+Supervisors, Other Senior
+Management and Employees"
+of this annual report. The Board
+has a fairly good diversity. The
+Chairman, Executive Directors
+and Non-executive Director of
+Sinopec Corp. have petroleum
+and petrochemical technical
+background and/or extensive
+management experience in large.
+scale enterprises. The Independent
+Non-executive Directors have rich
+experience in economics, capital
+management and investment.
+b. Each of the Directors was able to
+devote sufficient time and efforts
+to handling the matters of Sinopec
+Corp.
+2 GENERAL MEETINGS
+CONNECTED TRANSACTIONS
+4 PERFORMANCE OF THE INDEPENDENT
+DIRECTORS
+ii
+Save as disclosed above, during the reporting
+period, none of the directors, supervisors
+and senior management of Sinopec Corp.
+and their associates had any interests or
+short positions (including any interest or
+short position that is regarded or treated as
+being held in accordance with the Securities
+and Futures Ordinance (SFO)) in the shares,
+debentures and underlying shares of Sinopec
+Corp. or any associated corporations (as
+defined in Part XV of SFO) would fall to
+be disclosed to the Sinopec Corp. and
+the Hong Kong Stock Exchange under the
+Division 7 and 8 of Part XV of SFO or which
+was recorded in the register required to be
+kept under section 352 of SFO or otherwise
+notified to Sinopec Corp. and the Hong Kong
+Stock Exchange pursuant to the Model Code
+for Securities Transactions by Directors of
+Listed Company under the Hong Kong Listing
+Rules.
+As of 31 December 2017, apart from
+13,000 A shares of Sinopec Corp. held
+by Vice President Mr. Ling Yiqun, none of
+the directors, supervisors or other senior
+management of Sinopec Corp. held any
+shares of Sinopec Corp.
+3 EQUITY INTERESTS OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+During the reporting period, Sinopec Corp.
+convened the 2016 annual general meeting,
+2017 first A shareholders class meeting and
+2017 first H shareholder class meeting on 28
+June 2017 in Beijing, China in accordance
+with the required procedures of noticing,
+convening and holding pursuant to the
+relevant laws and regulations and the Articles
+of Association. For meeting details, please
+refer to the poll results announcements
+published in China Securities Journal,
+Shanghai Securities News and Securities
+Times and on the websites of Hong Kong
+Stock Exchange after the general meeting.
+5
+During the reporting period, there are no
+material inconsistency between Sinopec
+Corp.'s corporate governance and the
+requirements in the PRC Company Law and
+relevant regulations on securities of the
+During the Reporting Period, Sinopec Corp.
+was in full compliance with the Articles of
+Association as well as domestic and overseas
+laws and regulations and has not received
+any regulatory sanction imposed by securities
+regulatory authorities. There is no insider
+trading of the Company's shares discovered
+in the Company. Taking into account the
+actual situation, Sinopec Corp. amended
+the Articles of Association and Rules and
+Procedures for the Board Meetings. With
+the amendments, corporate governance
+mechanism in scientific decision-making,
+efficient implementation and supervision
+was promoted. When making decisions on
+significant matters such as directions for
+reform and development, key targets and
+projects arrangements, and nominations and
+employment of executives of the Company,
+the Board would seek advice from the Party
+organisation, which further strengthened
+the Company's democratic and scientific
+decision-making process. In respect of
+resolutions made by the Board, the Party
+organisations motivate party members to
+actively play an exemplary and leading
+role on implementations based on their
+responsibilities and inspires the initiative and
+enthusiasm of employees, which has helped
+the effective implementation of the Board's
+decisions by the management. In addition,
+the Party organisations have strengthened
+the supervision and accountability on
+anti-corruption and self-discipline of the
+Party members which promote the clean
+governance and risk-management level.
+GOVERNANCE DURING THE REPORTING
+PERIOD
+1 IMPROVEMENTS IN CORPORATE
+Chairman's Statement
+CORPORATE GOVERNANCE
+Connected Transactions
+During the Reporting Period, the composition
+of the Board, the Board of Supervisors,
+and the Board Committees have been
+adjusted and optimised in a timely manner.
+The independent directors have played an
+active and good role with diligence. The
+internal control system has been further
+improved and effectively implemented. The
+work concerning investor relations has been
+further refined, and the required information
+has been disclosed in time. With the internal
+management and the transparency of
+operation improved, the capital market has
+positively recognised the Company. The
+Company's active performance of its social
+responsibilities has earned the appreciation
+from the whole society.
+41
+6
+COMPANY'S INDEPENDENCE FROM
+CONTROLLING SHAREHOLDER
+Sinopec Corp. did not establish
+a Nomination Committee of the
+Board according to section A.5 of
+the Corporate Governance Code and
+Corporate Governance Report (Corporate
+Governance Code) as set out in Appendix
+14 of the Hong Kong Listing Rules.
+Sinopec Corp. is of the view that the
+nomination of Director Candidates by
+all members of the Board would be
+better suited the actual situation of the
+Company. The board of directors of
+Sinopec Corp. (Board) performed the
+duties of the Nomination Committee
+prescribed in the Corporate Governance
+Code.
+(1) Compliance with the Corporate
+Governance Code
+9 CORPORATE GOVERNANCE REPORT (IN
+ACCORDANCE WITH HONG KONG LISTING
+RULES)
+requirements for directors, supervisors and
+other senior management. Sinopec Corp. has
+implemented a number of incentive policies,
+including the Measures of Sinopec Corp.
+for the Implementation of Remuneration
+for Senior Managers, the Measures of
+Sinopec Corp. for the Management of Annual
+Performance Evaluations and the Measures
+of the Leadership of Companies Directly
+under Sinopec Corp. and the Headquarters
+Departments for the Management of
+Performance Evaluation.
+Sinopec Corp. has established and is
+continuously improving the fairness and
+transparency of its performance appraisal
+standards, incentive schemes and
+INCENTIVE SCHEMES
+During the reporting period, the independent
+non-executive directors of Sinopec Corp.
+fulfilled their duties in good faith as required
+by laws and regulations and the Articles
+of Association, and actively contributed
+to the development of the Company.
+They actively attended Board meetings
+and meetings of the Board committees
+(please refer to the Report of the Board
+of Directors in this annual report for
+details of their attendance), reviewed the
+relevant documents with due care and
+exercised their profession advantages to
+offer advice and suggestions to Sinopec
+Corp.'s development strategy, operations
+and reform. The independent non-executive
+directors gave their independent opinions
+on matters such as connected transactions,
+external guarantee, dividend distributions
+and appointments of senior management of
+the Company as required by relevant rules
+and regulations, and maintained timely and
+effective communications with the executive
+directors, management, external auditors
+and the internal auditing department.
+The independent non-executive directors
+strengthened the communications with
+the shareholders and independently and
+objectively protected the legitimate interests
+of the Company and the shareholders,
+especially the minority shareholders, when
+performing their duties.
+8 SENIOR MANAGEMENT APPRAISAL AND
+Chairman's Statement
+43
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+7 IMPROVEMENT AND IMPLEMENTATION OF
+THE INTERNAL CONTROL SYSTEM
+For details of internal control self-assessment
+and internal control auditing, please refer to
+the internal control assessment report and
+the internal control auditing report disclosed
+by the Company on the same day of this
+annual report.
+COMPETITION BETWEEN SINOPEC CORP
+AND ITS CONTROLLING SHAREHOLDER
+Please refer to "Performance of Undertaking
+by China Petrochemical Corporation" under
+the section "Significant Events" in this
+annual report for details.
+The Company is independent from its
+controlling shareholder in terms of, among
+other matters, business, assets and
+finances. The Company has a well-integrated
+independent business and independent
+operational capabilities.
+CORPORATE GOVERNANCE
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Loans and other accounts receivable and payable
+No material negative impact
+*: affiliated companies include subsidiaries, associates and joint ventures.
+of the year
+26,464
+Funds to related parties
+Balance
+at the
+beginning
+affiliated companies*
+Associates and joint ventures
+Parent company and
+Relations
+Total
+Balance
+Amount at the end
+incurred of the year
+(2,426)
+Other related parties
+Related Parties
+5 FUNDS PROVIDED BETWEEN RELATED PARTIES
+4 OTHER SIGNIFICANT CONNECTED
+TRANSACTIONS OCCURED THIS YEAR
+There are no other significant connected
+transactions during the reporting period.
+(c) The transactions were conducted
+pursuant to the terms of relevant
+agreements, and the terms were fair
+and reasonable and in the interests of
+Sinopec Corp. and its shareholders as a
+whole.
+terms not less favorable than those
+available from or to independent third
+parties, where there is no available
+comparison to determine whether
+such terms are on normal commercial
+terms.
+Connected Transactions
+Sinopec Group
+at the
+beginning
+24,038
+of the year
+29,541
+Reason for provision of funds between related parties
+Impacts on the Company
+28,306
+38
+(17)
+(1,290)
+55
+29,596
+25,716
+(6,756)
+1,678
+(4,330)
+6,008
+32,472
+(1,273)
+Balance at
+the end of
+the year
+28,268
+Funds from related parties
+Balance
+Unit: RMB million
+Amount
+incurred
+Save as disclosed above, Sinopec Corp.
+complied with all code provisions set out
+in the Corporate Governance Code during
+the reporting period.
+A Board of Directors
+CSRC. The Board of Supervisors of Sinopec
+Corp. agreed with all supervised matters.
+None of Sinopec Corp., the Board, directors,
+supervisors, senior management, controlling
+shareholders or de facto controllers of
+Sinopec Corp. were under the investigation
+by the CSRC or received any regulatory
+sanction or criticised publicly by the CSRC,
+the Hong Kong Securities and Futures.
+Commission, the Securities and Exchange
+Commission of the United States, or received
+any public censure from Shanghai Stock
+Exchange, the Hong Kong Stock Exchange,
+the New York Stock Exchange or the London
+Stock Exchange.
+(6) China Petrochemical Corporation will
+provide shareholders' loans to the
+Company and
+Principle of pricing for the continuing
+connected transactions:
+(a) The government-prescribed price will
+apply;
+(b) when there is no government-prescribed
+price but there is a government-guidance
+price, the government-guidance price will
+apply;
+(c) when there is neither a government.
+prescribed price nor a government.
+guidance price, the market price will
+apply; or
+(d) when none of the above is applicable, the
+price for the provision of the products
+or services is to be agreed upon by
+the relevant parties, and shall be the
+reasonable cost incurred in providing the
+products or services plus 6% or less of
+such cost.
+For details of the pricing principle, please
+refer to relevant announcements published
+on 27 August 2015 in the China Securities
+Journal, the Shanghai Securities News and
+the Securities Times and on the websites of
+the Shanghai Stock Exchange and the Hong
+Kong Stock Exchange.
+Decision-making procedures:
+The major continuing connected transaction
+agreements were entered into in the ordinary
+course of the Company's business and
+in accordance with normal commercial
+terms that are fair and reasonable to
+the Company and its shareholders. The
+Company, according to internal control
+procedures, adjusts the scope and the
+caps of continuing connected transactions
+every three years, and will be announced
+and implemented upon the approval of the
+Board and/or independent shareholders.
+For the other connected transactions,
+Sinopec Corp., in strict compliance with
+domestic and overseas regulatory rules, will
+publish the announcement and implement
+the transactions only after submitting the
+relevant proposals of connected transactions
+to the Board and/or the general meeting of
+shareholders for consideration and approval
+according to internal control procedures.
+Related party transactions with the Sinopec
+Group that occurred during the year, as set
+out in Note 36 to the financial statements
+prepared under the IFRS in this annual
+report, also fall under the definition of
+connected transactions under Chapter 14A of
+the Hong Kong Listing Rules.
+The above-mentioned connected transactions
+between the Company and Sinopec Group
+in 2017 were reviewed at the 17th meeting
+of the sixth session of the Board and have
+complied with the requirements under
+Chapter 14A of the Hong Kong Listing Rules.
+under the Hong Kong Listing Rules, issued
+by the Hong Kong Institute of Certified Public
+Accountants. The auditor has issued its
+unqualified letter containing its conclusions
+in respect of the above-mentioned continuing
+connected transactions in accordance with
+Rule 14A.56 of the Hong Kong Listing Rules.
+Sinopec Corp. has submitted a copy of the
+auditor's letter to the Hong Kong Stock
+Exchange.
+After reviewing the above-mentioned
+connected transactions, the independent
+non-executive directors of Sinopec Corp.
+have confirmed the following:
+The amounts of the above continuing
+connected transactions between the
+Company and Sinopec Group did not exceed
+the caps for the continuing connected
+transactions as approved by the general
+meeting of shareholders and the Board.
+(a) The transactions have been conducted
+in the ordinary course of the Company's
+business.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Pursuant to the above-mentioned agreements
+on continuing connected transactions,
+the aggregate amount of the continuing
+connected transactions of the Company
+during the year was RMB 340.543 billion.
+Among the transaction amount, purchases
+expenses amounted to RMB 226.600 billion,
+representing 9.45% of the total amount of
+this type of transaction for the reporting
+period, including purchases of products
+and services (procurement, storage and
+transportation, exploration and development
+services, and production-related services)
+of RMB 210.869 billion, purchases of
+auxiliary and community services of RMB
+6.652 billion. The housing rent paid by the
+Company amounted to RMB 510 million. The
+rent for use of land was RMB 8.015 billion.
+Interest expenses amounted to RMB 554
+million. The sales income amounted to RMB
+113.943 billion, representing 4.63% of the
+total amount of this type of transaction for
+the reporting period, including RMB 113.096
+billion for sales of products and services,
+RMB 41 million for agency commission
+income, and RMB 807 million for interest
+income.
+BETWEEN SINOPEC CORP. AND CHINA
+PETROCHEMICAL CORPORATION
+Prior to Sinopec Corp.'s overseas listing,
+in order to ensure the smooth continuation
+of production and business conducted by
+the Company and China Petrochemical
+Corporation, the two parties entered into
+a number of agreements on continuing
+connected transactions, details of which are
+as follows:
+(1) The Company and China Petrochemical
+Corporation will mutually supply ancillary
+services for products, production and
+construction services (Mutual Supply
+Agreement)
+(2) China Petrochemical Corporation
+will provide trademarks, patents and
+computer software to the Company for
+use free of charge
+(3) China Petrochemical Corporation will
+provide cultural and educational, hygienic
+and community services to the Company
+(Cultural and Educational Hygienic and
+Community Services Agreement)
+(4) China Petrochemical Corporation will
+provide leasing services for lands and
+certain properties to the Company
+(5) China Petrochemical Corporation will
+provide comprehensive insurance to the
+Company
+(7) The Company will provide franchise
+licenses for service stations to China
+Petrochemical Corporation.
+On 26 August 2015, Sinopec Corp. and
+China Petrochemical Corporation entered
+into a supplementary agreement of the
+continuing connected transactions, whereby
+the terms of the Mutual Supply Agreement
+and the Cultural and Educational, Hygienic
+and Community Services Agreement were
+extended from 1 January 2016 to 31
+December 2018. The resolution relating to
+continuing connected transactions for the
+three years from 2016 to 2018 was approved
+at the first extraordinary general meeting
+for 2015 held on 23 October 2015. For
+details of the above continuing connected
+transactions, please refer to relevant
+announcements published on 27 August
+2015 in the China Securities Journal, the
+Shanghai Securities News and the Securities
+Times and on the websites of the Shanghai
+Stock Exchange and the Hong Kong Stock
+Exchange (dated 26 August 2015). The
+capitalised terms used in this section shall
+have the same meaning as that used in the
+above-mentioned announcements.
+2 COMPLIANCE OF DISCLOSURES AND
+APPROVALS OF CONTINUING CONNECTED
+TRANSACTIONS BETWEEN THE COMPANY
+AND SINOPEC GROUP WITH HONG KONG
+LISTING RULES AND THE SHANGHAI
+LISTING RULES
+Pursuant to the Hong Kong Listing Rules and
+the Shanghai Listing Rules, the continuing
+connected transactions between the
+Company and Sinopec Group are generally
+subject to full disclosure based on the nature
+and the value of the transactions, and are
+also subject to approvals of independent
+non-executive directors and/or independent
+shareholders. The Hong Kong Stock
+Exchange and Shanghai Stock Exchange
+exempted Sinopec Corp. from full compliance
+with the relevant listing rules regarding the
+above continuing connected transactions and
+conditionally exempted Sinopec Corp. from
+complying with the continuous disclosure
+obligations.
+There was no change to the above-mentioned
+supplementary agreements on continuing
+connected transactions during the reporting
+period. The aggregated amount of the
+continuing connected transactions for 2017
+of the Company is in compliance with the
+relevant requirements of the Hong Kong
+Listing Rules and the Shanghai Listing
+Rules. For performance details of connected
+transaction agreements, please refer to Item
+3 below.
+3 ACTUAL CONTINUING CONNECTED
+TRANSACTIONS ENTERED INTO BY THE
+COMPANY DURING THE YEAR
+Sinopec Corp. and China Petrochemical
+Corporation have implemented the relevant
+framework agreements in relation to the
+continuing connected transactions, including
+Mutual Supply Agreement, Cultural,
+Educational, Hygiene and Community
+Services Agreement, Land Use Rights Leasing
+Agreement, Properties Leasing Agreement,
+Intellectual Property Licence Agreements and
+SPI Fund Document.
+40
+(b) The transactions have been entered into
+based on either of the following terms:
+The external auditor of Sinopec Corp.
+was engaged to report on the Company's
+continuing connected transactions in
+accordance with the Hong Kong Standard on
+Assurance Engagements 3000, Assurance
+Engagement Other Than Audits or Reviews
+of Historical Financial Information, and with
+reference to Practice Note 740, Auditor's
+Letter on Continuing Connected Transactions
+¡ normal commercial terms; or
+1 AGREEMENTS CONCERNING CONTINUING
+CONNECTED TRANSACTIONS
+0
+5
+2
+Actual
+Attendance
+3
+0
+0
+5
+2
+Board Meetings
+Attended By
+communication
+0
+0
+No. of
+meeting held
+Names
+Director Titles
+(1) ATTENDANCE TO THE BOARD MEETINGS
+3 DIRECTORS' ATTENDANCE TO THE SIXTH SESSION OF THE BOARD MEETINGS AND THE INDEPENDENT DIRECTOR 'S ATTENDANCE TO THE
+GENERAL MEETINGS.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+2 IMPLEMENTATION OF RESOLUTIONS
+APPROVED AT THE GENERAL MEETINGS
+OF SHAREHOLDERS BY THE BOARD
+During this reporting period, in accordance
+with relevant laws and regulations as well
+as the Articles of Association, all members
+of the Board diligently implemented the
+resolutions approved at the general meetings
+of Sinopec Corp., and have completed all
+the tasks delegated to them at the general
+meetings.
+(5) The 15th meeting of the six session of the
+Board was held by written resolution on
+30 October 2017, whereby the proposals
+in relation to the following matters were
+approved: (i) the third quarterly results of
+the Company for the nine months ended
+30 September 2017. (ii) Optimisation
+adjustment to the 2017 investment plan.
+For details of each meeting, please refer
+to the announcements published in China
+Securities Journal, Shanghai Securities News
+and Securities Times on the next working
+day after each meeting and on the websites
+of Shanghai Stock Exchange, Hong Kong
+Stock Exchange and Sinopec Corp.
+0
+3
+2
+5
+Attended
+by proxy
+Absent
+Vice Chairman
+(4) The 14th meeting of the sixth session of
+the Board was held by on site meeting on
+25 August 2017, whereby the proposals
+in relation to the following matters were
+approved: (i) Business performance of the
+first half year of 2017 and work plan of
+the latter half year of 2017, (ii) Financial
+results and business performance of the
+Company for the first half of 2017, (iii)
+The interim financial statements for the
+first half of 2017 (vi) The interim report
+for the first half of 2017, (v) Three years
+rolling development plan of Sinopec Corp.
+(2017 to 2019).
+Director
+Director
+Director
+Director
+Dai Houliang
+3
+Li Yunpeng
+Wang Zhigang
+Zhang Haichao
+Jiao Fangzheng
+2
+3
+0
+0
+2
+1
+1
+0
+0
+5
+the Board was held by written resolution
+on 27 April 2017, whereby the proposals
+in relation to the following matters were
+approved: (i)first quarterly results of the
+Company for the three months ended 31
+March 2017. (ii) The acquisition of equity
+interest in Shanghai SECCO by Gaoqiao
+Petrochemical (iii) Adjusting parameters
+for appraisal of project returns of
+Sinopec Corp. (iv) Proposed election of
+director of Sinopec Corp. at the general
+meeting; (v) Proposed amendments to
+the Articles of Association and the Rules
+of the Procedures of Board Meeting.
+(vi) The Overseas listing plan of Sinopec
+Marketing Co. Ltd.
+Beijing, China, 23 March 2018
+the Board to determine the proposed
+plan for issuance of debt financing
+instrument(s) (xii) Granting to the Board
+a general mandate to issue new domestic
+shares and/or overseas-listed foreign
+shares of Sinopec Corp., (xiii) Convening
+the annual general meeting of Sinopec
+Corp. for the year 2016 and to dispatch
+the notice of the annual general meeting.
+Report of the Board of Directors
+Report of the Board of Directors
+58
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Risks with regard to the external purchase
+of crude oil: A significant amount of crude
+oil as needed by the Company is satisfied
+through external purchases. In recent years,
+especially influenced by the mismatch
+between supply and demand of crude oil,
+geopolitics, global economic growth and
+other factors, the prices of crude oil fell
+sharply. Additionally, the supply of crude
+oil may even be interrupted due to some
+extreme major incidents in certain regions.
+Although the Company has taken flexible
+counter measures, it may not fully avoid risks
+associated with any significant fluctuation
+of international crude oil prices and sudden
+disruption of supply of crude oil from certain
+regions.
+Risks with regard to the operation
+and natural disasters: The process of
+petroleum chemical production is exposed
+to the risks of inflammation, explosion and
+environmental pollution and is vulnerable
+to natural disasters. Such contingencies
+may cause serious impacts to the society,
+major financial losses to the Company and
+grievous injuries to people. The Company
+has always been paying great emphasis on
+the safety production, and has implemented
+a strict HSE management system as an
+effort to avoid such risks as far as possible.
+Meanwhile, the main assets and inventories
+of the Company as well as the possibility of
+damage to a third party have been insured.
+However, such measures may not shield the
+Company from financial losses or adverse
+impact resulting from such contingencies.
+Investment risks: Petroleum and chemical
+sector is a capital intensive industry.
+Although the Company adopted a prudent
+investment strategy, and as required by
+the new procedure and management of
+investment decision-making issued in 2017,
+conducted rigorous feasibility study on
+each investment project, which consists of
+special verifications in raw material market,
+technical scheme, profitability, safety and
+environmental protection, legal compliance,
+etc., certain investment risks will still exist
+and expected returns may not be achieved
+due to major changes in factors such as
+market environment, prices of equipment
+and raw materials, and construction period
+during the implementation of the projects.
+Risks with regard to overseas business
+development and management: The
+Company engages in oil and gas exploration,
+refining and chemical, warehouse logistics
+and international trading businesses in
+some regions outside China. The Company's
+overseas businesses and assets are subject
+to the jurisdiction of the host country's laws
+and regulations. In light of the complicated
+factors such as imbalance of global economy,
+competitiveness of industry and trade
+structure, exclusiveness of regional trading
+blocs, polarisation of benefits distribution
+trade, and politicisation of economic and
+trade issues, including sanctions, barriers to
+entry, instability in the financial and taxation
+policies, contract defaults, tax dispute, the
+Company's risks with regard to overseas
+business development and management
+could be increased.
+Currency risks: At present, China
+implements an administered floating
+exchange rate regime based on market
+supply and demand which is regulated with
+reference to a basket of currencies in terms
+of the exchange rate of Renminbi. As the
+Company purchases a significant portion of
+crude oil in foreign currency which is based
+on US dollar-denominated prices, fluctuations
+in the exchange rate of Renminbi against US
+dollars and certain other foreign currencies
+may affect the Company's purchasing
+costs of crude oil. Meanwhile, according to
+domestic pricing mechanism of refined oil
+products, the prices of domestic refined oil
+products fluctuate with Renminbi exchange
+rate, and the prices of other domestic
+refined and chemical products would also be
+influenced by import price.
+Cyber-security risks: the Company devotes
+significant resources to protecting our digital
+infrastructure and data against cyber-attacks,
+if our systems against cyber-security risk
+prove to be ineffective, we could be adversely
+affected by, among other things, disruptions
+to our business operations, and loss of
+proprietary information, including intellectual
+property, financial information and employer
+and customer data, injury to people,
+property, environment and reputation. As
+cyber-security attacks continue to evolve,
+we may be required to expend additional
+resources to enhance our protective
+measures against cyber-security breaches.
+By order of the Board
+Dai Houliang
+Report of the Board of Directors
+59
+Annual Report 2017
+CHINA PETROLEUM & CHEMICAL CORPORATION
+57
+(3) The 13th meeting of the six session of
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Risks with regard to the changes from
+environmental legislation requirements:
+Our production activities generate waste
+liquids, gases and solids. The Company has
+built up the supporting effluent treatment
+systems to prevent and reduce the pollution
+to the environment. However, the relevant
+government authorities may issue and
+implement much stricter environmental
+protection laws and regulations, adopt much
+stricter environment protection standards.
+Under such situations, the Company
+may increase expenses in relation to the
+environment protection accordingly.
+(2) The 12th meeting of the six session of
+the Board was held by on site meeting
+and via video conference on 24 March
+2017, whereby the proposals in relation
+to the following matters were approved:
+(i) 2016 Work Report of the Board, (ii)
+Business performance of 2016 and work
+plan of 2017, (iii) Financial results and
+business performance of the Company for
+the year 2016, (iv) 2016 Communication
+on Progress for Sustainable Development
+Report of Sinopec Corp., (v) Financial
+Statements of Sinopec Corp. for the year
+2016, (vi) Annual Report and form 20F
+of the Company for the year 2016, (vii)
+Internal control assessment report of
+Sinopec Corp. for the year 2016, (viii)
+Re-appointment of external auditors of
+Sinopec Corp. for the year of 2017 and
+to authorise the Board to determine
+their remunerations, (ix) Resolution
+on proposed election of supervisor of
+Sinopec Corp. at the General meeting; (x)
+Authorising the Board to determine the
+interim profit distribution plan of Sinopec
+Corp. for the year 2017, (xi) Authorising
+(1) The 11th meeting of the six session of
+the Board was held by written resolution
+on 16 February 2017, whereby the
+proposals in relation to the acquisition
+of the downstream assets of Chevron
+South Africa and Botswana and provide
+shareholder performance guarantee were
+approved in the meeting.
+During this reporting period, Sinopec Corp.
+held five (5) Board meetings. The details are
+as follows:
+1 MEETINGS OF THE BOARD
+The Board is pleased to present the directors'
+report for the year ended 31 December 2017 for
+shareholders' review.
+REPORT OF THE BOARD OF DIRECTORS
+Report of the Board of Directors
+50
+50
+Vice Chairman & President
+The Company enjoys a favourable positioning
+with its operations located close to the
+consumer markets. Along with the steady
+growth in the Chinese economy, sales volume
+of both oil products and chemical products
+of the Company has been increasing steadily
+over the years; through continuous and
+specialised marketing efforts, the Company's
+capability in international operations and
+market expansion has been further enhanced.
+The Company owns a team of professionals
+and expertise engaged in the production
+of oil and gas, operation of refineries and
+chemical plants, as well as marketing
+activities. The Company applies outstanding
+fine management measures with its
+remarkable capabilities in management
+of operations, and enjoys a favourable
+operational cost advantage in its downstream
+businesses.
+The Company has formulated a well-
+established technology system and
+mechanism, and owns competent teams
+specialised in R&D covering a wide range of
+subjects; the four platforms for technology
+advancement is taking shape, which includes
+exploration and development of oil and
+gas, refining, petrochemicals and strategic
+emerging technology. With its overall
+technologies reaching state of the art level in
+the global arena, and some of them taking
+the lead globally, the Company enjoys a
+strong technical.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+The Company always attaches great
+importance to fulfilling social responsibilities,
+and carries out the green and low carbon
+development strategy to pursue a sustainable
+development. Moreover, the Company enjoys
+an outstanding "Sinopec" brand name, plays
+an important role in the national economy
+and is a renowned and reputable company in
+China.
+25 RISK FACTORS
+Director
+In the course of its production and
+operations, the Company will actively take
+various measures to circumvent operational
+risks. However, in practice, it may not be
+possible to prevent the occurrence of all
+risks and uncertainties described below.
+Risks with regard to the variations from
+macroeconomic situation: The business
+results of the Company are closely related to
+China's and global economic situation. The
+development of Chinese economy has entered
+New Normal. Although various countries have
+adopted different kinds of macroeconomic
+policies to eliminate negative effects caused
+by lower growth of global economy, the
+turnaround of economic recovery still
+remains uncertain. The Company's business
+could also be adversely affected by other
+factors such as the impact on export due to
+trade protectionism from certain countries,
+impact on import which is likely caused by
+regional trade agreements, and negative
+impact on the investment of overseas oil
+and gas exploration and development and
+refining and chemical storage projects which
+results from the uncertainty of international
+crude oil price and etc.
+Risks with regard to the cyclical effects
+from the industry: The majority of the
+Company's operating income comes
+from the sales of refined oil products and
+petrochemical products, and part of those
+businesses and their related products are
+cyclic and are sensitive to macro-economy,
+cyclic changes of regional and global
+economy, the changes of the production
+capacity and output, demand of consumers,
+prices and supply of the raw materials, as
+well as prices and supply of the alternative
+products etc. Although the Company is
+an integrated company with upstream,
+midstream and downstream operations, it
+I can only counteract the adverse influences of
+industry cycle to some extent.
+Risks from the macroeconomic policies
+and government regulation: Although the
+Chinese government is gradually liberalizing
+the market entry regulations on petroleum
+and petrochemicals sector, the petroleum
+and petrochemical industries in China are
+still subject to entry regulations to a certain
+degree, which include: issuing licenses in
+relation to exploration and development
+of crude oil and natural gas, issuing
+business licenses for trading crude oil and
+refined oil, setting caps for retail prices of
+gasoline, diesel and other oil products, the
+imposing of the special oil income levy,
+formulation of import and export quotas and
+procedures, formulation of safety, quality
+and environmental protection standards
+and formulation of energy conservation
+policies. In addition, the changes which have
+occurred or might occur in macroeconomic
+and industry policies such as the opening
+up of crude oil import licenses, and further
+improvement in pricing mechanism of refined
+oil products, reforming and improvement
+in pricing mechanism of natural gas, cost
+supervision of gas pipeline and access to
+third party, and reforming in resource tax
+and environmental tax, will cause effects
+on our business operations. Such changes
+might further intensify market competition
+and have certain effect on the operations and
+profitability of the Company.
+Risks from the uncertainties of obtaining
+additional oil and gas resources: The future
+sustainable development of the Company
+is partly dependent to a certain extent on
+our abilities in continuously discovering
+or acquiring additional oil and natural
+gas resources. To obtain additional oil
+and natural gas resources, the Company
+faces some inherent risks associated with
+exploration and development and/or with
+acquisition activities, and the Company has
+to invest a large amount of money with no
+guarantee of certainty. If the Company fails
+to acquire additional resources through
+further exploration, development and
+acquisition to increase the reserves of crude
+oil and natural gas, the oil and natural gas
+reserves and production of the Company
+may decline overtime which may adversely
+affect the Company's financial situation and
+operation performance.
+Ma Yongsheng
+5
+2
+0.249
+60.54
+30.15
+18.16
+51.12
+46.42
+32.28
+118.42
+64.95
+56.26
+Total amount of cash dividends (RMB billion, tax inclusive)
+Net profits attributed to the shareholders of the listed company shown in
+the consolidated statement for the dividend year (RMB billion)
+Ratio between the dividends and the net profit attributed to the shareholders
+of the listed company in the consolidated statement (%)
+Note: The final cash dividend for 2017 is subject to the approval at the 2017 annual general meeting.
+The aggregate cash dividend declared by
+Sinopec Corp. during three years from 2015
+to 2017 is RMB 0.899 per share, and the
+total dividend payment from 2015 to 2017
+as a percentage of average net profit in the
+three years is 251.27%.
+0.50
+8 RESPONSIBILITIES FOR THE COMPANY'S
+2015
+2017
+the registration of members for H shares of
+Sinopec Corp. as at the record date.
+If the individual holders of the H shares
+who are Hong Kong or Macau residents or
+residents of the countries which had an
+agreed tax rate of 10% for the cash dividends
+or bonus shares by way of capitalisation
+from retained earnings with China under
+the relevant tax agreement, Sinopec Corp.
+should withhold and pay individual income
+tax on behalf of the relevant shareholders
+at a rate of 10%. Should the individual
+holders of the H Shares are residents of the
+countries which had an agreed tax rate of
+less than 10% with China under the relevant
+tax agreement, Sinopec Corp. shall withhold
+and pay individual income tax on behalf
+of the relevant shareholders at a rate of
+10%. In that case, if the relevant individual
+holders of the H Shares wish to reclaim
+the extra amount withheld (Extra Amount)
+due to the application of 10% tax rate,
+Sinopec Corp. would apply for the relevant
+agreed preferential tax treatment provided
+that the relevant shareholders submit the
+evidence required by the notice of the tax
+agreement to the share register of Sinopec
+Corp. in a timely manner. Sinopec Corp. will
+assist with the tax refund after the approval
+of the competent tax authority. Should
+the individual holders of the H Shares are
+residents of the countries which had an
+agreed tax rate of over 10% but less than
+20% with China under the tax agreement,
+Sinopec Corp. shall withhold and pay the
+individual income tax at the agreed actual
+rate in accordance with the relevant tax
+agreement. In the case that the individual
+holders of the H Shares are residents of the
+countries which had an agreed tax rate of
+20% with China, or which has not entered
+into any tax agreement with China, or
+otherwise, Sinopec Corp. shall withhold and
+pay the individual income tax at a rate of
+20%-
+Pursuant to the Notice on the Tax Policies
+Related to the Pilot Program of the
+Shanghai-Hong Kong Stock Connect (
+港股票市場交易互聯互通機制試點有關稅收政策
+)(Caishui [2014] No. 81):
+For domestic investors investing in the H
+Shares of Sinopec Corp. through Shanghai-
+Hong Kong Stock Connect Program, the
+company shall withhold and pay income tax
+at the rate of 20% on behalf of individual
+investors and securities investment funds.
+The company will not withhold or pay
+the income tax of dividends for domestic
+enterprise investors and those domestic
+enterprise investors shall report and pay the
+relevant tax by themselves.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+53
+Report of the Board of Directors
+54
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+For investors of the Hong Kong Stock Exchange (including enterprises and individuals) investing in the A Shares of Sinopec Corp. through Shanghai-
+Hong Kong Stock Connect Program, the Company will withhold and pay income taxes at the rate of 10% on behalf of those investors and will
+report to the tax authorities for the withholding. For investors who are tax residents of other countries, whose country of domicile is a country
+having entered into a tax treaty with the PRC stipulating a dividend tax rate of lower than 10%, the enterprises and individuals may, or may entrust
+a withholding agent to, apply to the competent tax authorities for the entitlement of the rate under such tax treaty. Upon approval by the tax
+authorities, the amount paid in excess of the tax payable based on the tax rate according to such tax treaty will be refunded.
+Cash dividends (RMB/Share, tax inclusive)
+The dividend distribution and bonus shares declared by Sinopec Corp. in the past three years are as follows:
+2016
+In accordance with the Enterprise Income
+Tax Law of the People's Republic of China
+which came into effect on 1 January 2008
+and its implementation regulations, Sinopec
+Corp. is required to withhold and pay
+enterprise income tax at the rate of 10%
+on behalf of the non-resident enterprise
+shareholders whose names appear on the
+register of members for H Shares of Sinopec
+Corp. when distributing cash dividends or
+issuing bonus shares by way of capitalisation
+from retained earnings. Any H Shares of
+the Sinopec Corp. which is not registered
+under the name of an individual shareholder,
+including those registered under HKSCC
+Nominees Limited, other nominees, agents
+or trustees, or other organisations or groups,
+shall be deemed as shares held by non-
+resident enterprise shareholders. Therefore,
+on this basis, enterprise income tax shall
+be withheld from dividends payable to such
+shareholders. If holders of H Shares intend to
+change its shareholder status, please enquire
+about the relevant procedures with your
+agents or trustees. Sinopec Corp. will strictly
+comply with the law or the requirements
+of the relevant government authority to
+withhold and pay enterprise income tax on
+behalf of the relevant shareholders based on
+INTERNAL CONTROL
+2017 Annual Internal Control Assessment
+Report of Sinopec Corp. was reviewed and
+approved on the 17th meeting of the sixth
+Session of the Board on 23 March 2018,
+and all members of the Board warrant that
+the contents of the report are true, accurate
+and complete, and there are no false
+representations, misleading statements or
+material omissions contained in the report.
+No contracts concerning management
+or administration of the whole or any
+substantial part of the business of the
+Company were entered into or existed during
+the reporting period.
+21 PERMITTED INDEMNITY PROVISIONS
+During the reporting period, Sinopec Corp.
+has purchased liability insurance for all
+directors to minimise their risks arising
+from the performance of their duties. The
+permitted indemnity provisions are stipulated
+in such directors liability insurance in
+respect of the liabilities and costs associated
+with the potential legal proceedings that may
+be brought against such directors.
+22 EQUITY-LINKED AGREEMENTS
+As of 31 December 2017, the Company has
+not entered into any equity-linked agreement.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+55
+Report of the Board of Directors
+56
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+23 OIL & GAS RESERVE APPRAISAL
+PRINCIPLES
+We manage our reserves estimation through
+a two-tier management system. Our Oil
+and Natural Gas Reserves Management
+Committee, or RMC, at the headquarters
+level oversees the overall reserves estimation
+process and reviews the reserves estimation
+of our company. Each of our branches has
+a reserves management committee that
+manages the reserves estimation process
+and reviews the reserve estimation report at
+the branch level.
+Our RMC is led by a couple of senior vice
+presidents, as well as experts and directors
+general of Sinopec's exploration and
+production segment. Mr. Jiao Fangzheng, the
+chairman of RMC holds a Ph.D. in petroleum
+and natural gas engineering and has over
+30 years of experience in the oil and gas
+industry. Our RMC also includes other
+members who are senior managers in charge
+of exploration and development activities at
+the production bureau level. A majority of
+our RMC members hold Ph.D. or master's
+degrees, and our members have an average
+of 20 years of technical experience in
+relevant professional fields, such as geology,
+engineering and economics.
+Our reserves estimates are guided by
+procedural manuals and technical guidance
+formulated by the company. A number
+of working divisions at the production
+bureau level, including the exploration,
+development, financial and legal divisions,
+are responsible for initial collection and
+compilation of information about reserves.
+Exploration and development division
+prepares the initial report on the reserves
+estimate. Together with technical experts,
+reserves management committees at the
+subsidiary level then review the report
+to ensure qualitative and quantitative
+compliance with technical guidance and the
+accuracy and reasonableness of the reserves
+estimation. At corporate level, the RMC is
+primarily responsible for the management
+and coordination of the reserves estimation
+process, review and approval the annual
+changes and results in the reserves estimate,
+and disclose of our proved reserves. We also
+engage outside consultants to assist in our
+compliance with the rules and regulations
+of the U.S. Securities and Exchange
+Commission. Our reserves estimation
+process is further facilitated by a specialised
+reserves database, which is improved and
+updated periodically.
+24 CORE COMPETITIVENESS ANALYSIS
+The Company is a large scale integrated
+energy and petrochemical company with
+upstream, mid-stream and downstream
+operations. The Company is a large scaled
+oil and gas producer in China; in respect
+of refining capacity, it ranks first in China;
+equipped with a well-developed refined oil
+products sales network, the Company is the
+largest supplier of refined oil products in
+China; and in terms of ethylene production
+capacity, the Company takes the first
+position in China, and has a well-established
+marketing network for chemical products.
+The integrated business structure of
+the Company carries strong advantages
+in synergy among its various business
+segments, enabling the Company to
+continuously tap onto potentials in attaining
+an efficient and comprehensive utilisation
+of its resources, and endowed the Company
+with strong resistance against risks, as well
+as remarkable capabilities in sustaining
+profitability.
+20 MANAGEMENT CONTRACTS
+The Board is fully responsible for establishing
+and maintaining the internal control system
+related to the financial statements as well
+as ensuring its effective implementation. In
+2017, the Board assessed and evaluated the
+internal control of Sinopec Corp. according
+to the Basic Standard for Enterprise Internal
+Control, Application Guidelines for Enterprise
+Internal Control and Assessment Guidelines
+for Enterprise Internal Control. There were
+no material defects in relation to the internal
+control system as of 31 December 2017.
+The internal control system of Sinopec Corp.
+related to the financial statements is sound
+and effective.
+19 DIRECTORS' INTERESTS IN CONTRACTS
+No director had a material interest, either
+directly or indirectly, in any contract of
+significance to the business of the Company
+to which Sinopec Corp. or any of its holding
+companies, subsidiaries or fellow subsidiaries
+was a party during the reporting period.
+18 DIRECTORS' INTERESTS IN COMPETING
+BUSINESS
+9 DURING THIS REPORTING PERIOD,
+THE COMPANY DID NOT VIOLATE
+ENVIRONMENTAL POLICIES
+Details with regard to the Company's
+performance in relation to environmental
+and social-related policies and performances
+are provided in the Board Statement and
+Business Review and Prospects in this annual
+report as well as the 2017 Communication
+on Progress for the Sustainable Development
+Report of Sinopec Corp. Those disclosures
+in regard to the environmental policies
+constitute part of the Report of the Board of
+Directors.
+10 DURING THIS REPORTING PERIOD, THE
+COMPANY DID NOT VIOLATE LAWS OR
+REGULATIONS WHICH HAVE A MATERIAL
+IMPACT ON THE COMPANY
+11 MAJOR SUPPLIERS AND CUSTOMERS
+During this reporting period, the total value
+of the purchasing from the top five crude
+oil suppliers of the Company accounted
+for 48.8% of the total value of the crude
+oil purchasing by the Company, of which
+the total value of the purchasing from the
+largest supplier accounted for 15.5% of the
+total value of the crude oil purchasing by the
+Company.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+The total sales value to the five largest
+customers of the Company in 2017 was RMB
+159,918 million and accounted for 6.8%
+of the total sales value of the Company,
+of which the sales value to the connected
+party (Sinopec group) among the five largest
+customers was RMB 87,349 million and
+accounted for 3.7% of the total sales value
+for the year.
+During the reporting period, other than
+disclosed above, all the top five crude
+oil suppliers and the other four largest
+customers of the Company were independent
+third parties. There were no supplier,
+customer, employee or others that have a
+significant impact on the Company and on
+which the Company's success depends.
+12 BANK LOANS AND OTHER BORROWINGS
+Details of bank loans and other borrowings
+of the Company as of 31 December 2017
+are set out in Note 29 to the financial
+statements prepared in accordance with
+IFRS in this annual report.
+13 FIXED ASSETS
+During this reporting period, changes to the
+fixed assets of the Company are set out in
+Note 16 to the financial statements prepared
+in accordance with IFRS in this annual
+report.
+14 RESERVES
+During this reporting period, the changes
+to the reserves of the Company are set out
+in the consolidated statement of changes
+in shareholders' equity in the financial
+statements prepared in accordance with
+IFRS in this annual report.
+15 DONATIONS
+During this reporting period, the amount
+of charity donations made by the Company
+amounted to RMB 152 million.
+16 PRE-EMPTIVE RIGHTS
+Pursuant to the Articles of Association
+and the laws of the PRC, the shareholders
+of Sinopec Corp. are not entitled to any
+pre-emptive rights. Therefore the existing
+shareholders cannot request Sinopec Corp.
+for the right of first refusal in proportion to
+their shareholdings.
+17 REPURCHASE, SALES AND REDEMPTION
+OF SHARES
+During this reporting period, neither
+Sinopec Corp. nor any of its subsidiaries
+repurchased, sold or redeemed any listed
+shares of Sinopec Corp. or its subsidiaries.
+For details for the positions held by the
+directors of Sinopec Corp. in the Sinopec
+Group, during the reporting period please
+refer to the chapter Directors, Supervisors,
+Senior Management and Employees of this
+annual report.
+5
+The dividend will be denominated and
+declared in RMB, and distributed to the
+domestic shareholders and investors
+participating in the Shanghai-Hong Kong
+Stock Connect Program in RMB and to
+the overseas shareholders in Hong Kong
+Dollar. The exchange rate for the dividend
+calculation in Hong Kong Dollar is based
+on the average benchmark exchange rate of
+RMB against Hong Kong Dollar as published
+by the People's Bank of China one week
+preceding the date of the declaration of such
+dividend.
+The final cash dividend will be distributed
+on or before 14 June 2018 (Thursday) to all
+shareholders whose names appear on the
+register of members of Sinopec Corp. on
+the record date of 4 June 2018 (Monday).
+In order to qualify for the final dividend
+for H shares, the holders of H shares must
+lodge all share certificates accompanied
+by the transfer documents with Hong Kong
+Registrars Limited located at 1712-1716
+17th Floor Hopewell Centre, 183 Queen's
+Road East, Wan Chai Hong Kong before
+4:30 p.m. on 28 May 2018 (Monday)
+0
+Independent Director
+Fan Gang
+5
+2
+3
+0
+0
+Director Titles
+Names
+Board Meetings*
+No. of
+Actual
+Attended By
+meeting held
+Attendance
+communication
+0
+Attended
+by proxy
+3
+Independent Director
+3
+0
+0
+Independent Director
+Independent Director
+Jiang Xiaoming
+5
+2
+3
+0
+0
+Andrew Y. Yan
+5
+2
+3
+0
+0
+2
+for registration. The H shares register of
+members of Sinopec Corp. will be closed
+from 29 May 2018 (Tuesday) to 4 June 2018
+(Monday) (both dates are inclusive).
+Absent
+Wang Yupu
+(4) The 10th meeting of the sixth session of
+the Audit Committee was held by written.
+resolution on 30 October 2017, whereby
+the third quarterly report for three
+months ended 30 September 2017 was
+approved in the meeting.
+(5) The 3rd meeting of the sixth session
+of the Strategy Committee was held by
+written resolution on 22 March 2017,
+whereby the proposal in relation to the
+2017 investments plan was approved in
+the meeting.
+(6) The 4th meeting of the sixth session
+of the Strategy Committee was held
+by written resolution on 23 August
+2017, whereby the three years rolling
+development plan of Sinopec corp. (2017-
+2019) was approved in the meeting.
+5
+(7) The 2nd meeting of the sixth session
+of the Remuneration Committee was
+held by written resolution on 22 March
+2017 whereby the proposal in relation to
+implementation of the remuneration rules
+for directors, supervisors and other senior
+management for 2016 was reviewed and
+approved.
+(8) The 2nd meeting of the sixth session of
+the Social Responsibility Management
+Committee was held by written resolution
+on 22 March 2017, whereby the 2016
+Communication on Progress for the
+Sustainable Development Report of
+Sinopec Corp. was approved in the
+meeting.
+BOARD COMMITTEES HAVE ISSUED REVIEW
+OPINIONS WITHOUT ANY OBJECTION TO
+THE BOARD WHEN PERFORMING THEIR
+DUTIES DURING THE REPORT PERIOD.
+6 BUSINESS PERFORMANCE
+The financial results of the Company
+for the year ended 31 December 2017,
+which is prepared in accordance with
+IFRS and the financial position as at that
+date and the accompanying analysis are
+set out from page149 to page 205 in this
+annual report. The Company's business
+review, a discussions and analysis on
+business performance using financial key
+performance indicators and the material
+factors underlying our results and financial
+position during the reporting period,
+particulars of significant events affecting the
+Company and the outlook of the Company's
+business are disclosed in this annual report
+under the relevant chapters of Chairman's
+Statement, Business Review and Prospects,
+Management's Discussion and Analysis and
+Significant Events. All the sections above
+constitute parts of this Report of the Board
+of Directors.
+52
+42
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+7 DIVIDEND
+The profit distribution policy of Sinopec Corp.
+maintains consistency and steadiness, and
+gives further consideration to the long-term
+interests of the Company, overall interests
+of all the shareholders and the sustainable
+development of the Company. Sinopec Corp.
+gives priority to adopting cash dividends
+for profit distribution, and is able to deliver
+an interim profit distribution. When the net
+profits and retained earnings of the Company
+are positive in current year, and in the event
+that the cash flow of Sinopec Corp. can
+satisfy the normal operation and sustainable
+development, Sinopec Corp. should adopt
+cash dividends, and the distribution profits
+in cash every year are no less than 30% of
+the net profits of the Company in current
+year.
+The profit distribution plan of Sinopec Corp.
+for the current year will be carried out in
+accordance with the policy and procedures
+stipulated in the Articles of Association,
+with the advice of minority shareholders
+being heard and considered, meanwhile, the
+independent directors will issue independent
+opinions.
+Proposals for dividend distribution
+At the 17th meeting of the sixth session of
+the Board, the Board approved the proposal
+to distribute a final cash dividend of RMB
+0.40 (tax inclusive) per share, combining
+with an interim distributed dividend of RMB
+0.10 (tax inclusive) per share, the total
+dividend for the whole year is RMB 0.50 (tax
+included) per share.
+(3) The 9th meeting of the sixth session of
+the Audit Committee was held by on site
+meeting on 23 August 2017, whereby (i)
+Interim report for the first half of 2017;
+(ii) Financial statements for the first half
+year of 2017; (iii) Business performance
+and financial results of the first half year
+of 2017; (iv) Reports on internal auditing
+work for the first half of 2017 were
+approved in the meeting.
+Former Chairman
+(2) The 8th meeting of the sixth session of
+Audit Committee was held by written
+resolution on 27 April 2017, whereby the
+first quarterly report for three months
+ended 31 March 2017 was approved in
+the meeting.
+During the reporting period, the Audit
+Committee held four (4) meetings. Strategy
+Committee held two (2) meetings, and each
+of the Remuneration Committee and the
+Social Responsibility Management Committee
+held one (1) meeting. All members of
+each committee had attended the relevant
+meetings. Details of those meetings are as
+follows:
+4
+0
+2
+2
+0
+1. No directors were absent from two consecutive Board meetings.
+2. Mr Wang Zhigang, Mr Zhang Haichao resigned as directors of the Board on 29 January 2018.
+3. Mr. Wang Yupu resigned as chairman and the director of the Board on 22 September 2017.
+4. Pursuant to Hong Kong Listing Rules, attended by proxy was not counted as attendance by the director himself.
+(2) Independent Non-executive Directors' attendance to the General Meetings.
+During the reporting period, Mr. Tang Min, the Independent Non-executive directors of the Company attended the 2016 annual general meeting,
+2017 first A shareholders class meeting and 2017 first H shareholder class meeting. No other Independent Non-executive Directors had attended
+the general meetings in person.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+51
+Report of the Board of Directors
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+4 MEETINGS HELD BY THE BOARD
+COMMITTEES
+(1) The 7th meeting of the sixth session of
+the Audit Committee was held by written
+resolutions on 22 March 2017, whereby
+the proposals in relation to the following
+matters were approved in the meeting:
+(i) 2016 Annual Report; (ii) 20F of
+2016; (iii) Financial results and business
+performance of the Company for the year
+2016; (iv) Internal control assessment
+report of the Company for the year 2016
+and the internal control manual (2017);
+(v) Work report on the internal auditing
+I work for the year 2016; (vi) Reports on
+the auditing of the financial statements
+for the year 2016 prepared by the
+domestic and overseas auditors.
+0.15
+Tang Min
+Senior Management and Employees
+54
+Li Yunpeng
+Male
+58
+Wang Zhigang
+Male
+2%
+Position in
+Sinopec Corp.
+Vice Chairman, President
+(RMB 1,000,
+Remuneration
+paid by
+Sinopec Corp.
+in 2017
+Whether
+the holding
+paid by
+Male
+Equity interests in Sinopec Corp.
+Dai Houliang
+Gender
+Directors, Supervisors,
+Senior Management and Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Tang Min
+Fan Gang
+Tang Min, aged 64,
+Independent Director of
+Sinopec Corp. Mr. Tang
+has a Ph.D. in economics.
+He presently acts as a
+Counsellor of the State
+Council of the PRC and the
+Executive Vice Chairman
+of YouChange China Social
+Entrepreneur Foundation,
+Independent Director of
+Minmetals Development Co.,
+Ltd, Origin Agritech Limited
+and Baoshang Bank Co., Ltd.
+He has served as economist
+and senior economist at the
+Economic Research Centre
+of the Asian Development
+Bank between 1989 and
+2000; chief economist at
+the Representative office of
+the Asian Development Bank
+in China between 2000 and
+2004; deputy representative
+at the Representative Office
+of the Asian Development
+Bank in China between 2004
+and 2007 and the deputy
+secretary-general of the
+China Development Research
+Foundation between 2007
+and 2010. From May 2015
+to the present, he has acted
+as Independent Director of
+Sinopec Corp.
+Fan Gang, aged 64,
+Independent Director of
+Sinopec Corp. Mr. Fan
+has a Ph.D. in economics.
+He presently acts as Vice
+President of China Society
+of Economic Reform,
+Head of the National
+Economic Research
+Institution of China Reform
+Foundation, President
+of China Development
+Institute (Shenzhen) and
+an economics professor
+at Peking University. He
+began to work for Chinese
+Academy of Social Sciences
+in 1988, and subsequently
+served as Director of
+Editorial Department for
+the Economic Research
+Journal between 1992 and
+1993 and as Deputy Head
+of the Institute of Economics
+of Chinese Academy of
+Social Sciences between
+1994 and 1995. In 1996,
+he was redesignated to
+work for China Society of
+Economic Reform, and
+subsequently founded the
+National Economic Research
+Institution. From 2006 to
+2010, and from 2015 to the
+present, he has served as
+a member of the Monetary
+Policy Committee of
+People's Bank of China. Mr.
+Fan is recognised as one
+of the National Young and
+Middle-Aged Experts with
+Outstanding Contributions.
+From May 2015 to the
+present, he has acted as
+Independent Director of
+Sinopec Corp.
+66
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+List of Members of the Board
+Name
+Age
+Senior Management and Employees
+(as at 31 December)
+before tax)
+Zhang Haichao
+Male
+60
+60
+Senior Vice President
+Former Board Director,
+Senior Vice President
+2015.05-2018.01
+Yes
+0
+0
+Jiao Fangzheng
+Male
+55
+Ma Yongsheng
+Male
+56
+0
+Tenure
+0
+769.9
+Company
+2017
+2016
+2009.05.2018.05
+843.8
+No
+0
+0
+Director
+60
+Former Board Director,
+2017.06-2018.05
+2006.05-2018.01
+Yes
+0
+0
+No
+|g|
+Directors, Supervisors,
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+In 2018, the Board of Supervisors and each
+supervisor will continue to follow the principle
+of due diligence and integrity, earnestly perform
+the duties of supervision as delegated by the
+shareholders, strictly review the significant
+decisions, strengthen the process control and
+supervision, increase the strength of inspection
+and supervision on subsidiaries and protect
+Sinopec Corp.'s benefit and its shareholders'
+interests.
+Zhao Dong
+Chairman of the Board of Supervisors
+Beijing, China, 23 March 2018
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+61
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
+Dai Houliang
+Li Yunpeng
+1 INTRODUCTION OF
+DIRECTORS, SUPERVISORS
+AND OTHER SENIOR
+MANAGEMENT
+(1) Directors
+Dai Houliang, aged 54, Vice
+Chairman of the Board and
+the President of Sinopec
+Corp. Mr. Dai is a professor
+level senior engineer with
+a Ph.D. degree and an
+academician of the Chinese
+Academy of Engineering.
+Mr. Dai is the alternate
+member of the nineteenth
+Central Committee of the
+Communist Party of China.
+In December 1997, he was
+appointed as Vice President
+of Yangzi Petrochemical
+Corporation; in April 1998,
+he served as Director and
+Vice President of Yangzi
+Petrochemical Co., Ltd.;
+in July 2002, he served as
+Vice Chairman of Board
+of Directors, President of
+Yangzi Petrochemical Co.,
+Ltd. and Director of Yangzi
+Petrochemical Corporation;
+in December 2003, he
+served as Chairman of
+Board of Directors and
+President of Yangzi
+Petrochemical Co., Ltd. and
+concurrently as Chairman of
+Board of Directors of Yangzi
+Petrochemical Corporation;
+in December 2004, he
+served concurrently as
+Chairman of Board of
+Directors of BASF-YPC
+Company Limited; in
+September 2005, he was
+appointed as Deputy CFO of
+Sinopec Corp.; in November
+2005, he was appointed as
+Vice President of Sinopec
+Corp.; in May 2006, he
+served as Director, Senior
+Vice President and CFO of
+Sinopec Corp.; in June 2008,
+he served as a member
+of the Leading Party
+Member Group of China
+Petrochemical Corporation;
+in August 2012, he was
+appointed concurrently as
+Chairman of Sinopec Great
+Wall Energy & Chemical
+Co., Ltd.; in March 2013, he
+was appointed concurrently
+as Chairman of Sinopec
+Catalyst Co., Ltd.; and in
+May 2009, he was elected
+as Director and appointed
+as Senior Vice President
+of Sinopec Corp. in May
+2016, he was appointed as
+the President and Deputy
+Secretary of the Leading
+Party Member Group
+of China Petrochemical
+Corporation and since
+August 2016, he was elected
+as the Vice Chairman of the
+Board and appointed as
+President of Sinopec Corp.
+Fifthly, all connected transactions between the
+Company and Sinopec Group were in compliance
+with the relevant rules and regulations of
+domestic and overseas listing places. The
+pricing of all the connected transaction was fair
+and reasonable. No insider trading or asset loss
+which is detrimental to the interests of Sinopec
+Corp. or its shareholders was discoverd.
+Li Yunpeng, aged 58,
+Director of Sinopec Corp. Mr.
+Li is a senior administration
+engineer with a master
+degree in engineering.
+In January 1998, he was
+appointed as deputy General
+Manager of Executive
+Division of China Ocean
+Shipping (Group) Company
+("COSCO"); in September
+1998, he served as Deputy
+Secretary of Discipline
+Inspection Committee,
+Director of Supervision
+Office and concurrently
+served as General Manager
+of Supervision Division
+of COSCO; in November
+1999, he was appointed
+as General Manager of
+Human Resource Division of
+COSCO; and in September
+2000, he served as Head
+of Organisation Department
+of COSCO; in December
+2000, he was appointed
+as Secretary of Communist
+Youth League Committee of
+Fourthly, the consideration for the share
+acquisition made by Sinopec Corp. was fair and
+reasonable, neither insider trading, damage to
+shareholders' interest nor losses of corporate
+assets was discovered.
+Thirdly, Sinopec Corp.'s internal control system
+is robust and effective, no material defects of
+internal control were found. In the meantime,
+60
+Report of the Board of Supervisors
+REPORT OF THE BOARD OF SUPERVISORS
+Dear Shareholders:
+In 2017, the Board of Supervisors and
+each supervisor of Sinopec Corp. diligently
+performed their supervision responsibilities,
+actively participated in the supervision process
+of decision making, carefully reviewed and
+effectively supervised the major decisions of
+the Company, and endeavored to safeguard the
+interests of shareholders and the Company in
+accordance with the PRC Company Law and the
+Articles of Association of Sinopec Corp.
+During this reporting period, the Board of
+Supervisors held five (5) meetings in total, and
+mainly reviewed and approved the proposals
+in relation to the Company's periodic report,
+financial statements, communication on progress
+report for sustainable development, internal
+control assessment report, working report of the
+board of supervisors and share acquisition etc.
+On 24 March 2017, the 8th meeting of the sixth
+session of the Board of Supervisors was held,
+and the proposals in relation to the Financial
+Statements of Sinopec Corp. for 2016, Annual
+Report of Sinopec Corp. for 2016, 2016
+Communication on Progress for Sustainable
+Development Report of Sinopec Corp., Internal
+Control Assessment Report of Sinopec Corp.
+for 2016, Report on the Work of Board of
+Supervisors of Sinopec Corp. for 2016 were
+reviewed and approved at the meeting.
+On 27 April 2017, the 9th meeting of the
+sixth session of the Board of Supervisors was
+held, and the proposals in relation to the First
+Quarterly Report of Sinopec Corp. for 2017, the
+acquisition of equity interest in Shanghai SECCO
+Petrochemical Company Limited by Sinopec
+Shanghai Gaoqiao Petroleum and Chemical
+Limited., the adjusting parameters for appraisal
+of project returns of Sinopec Corp. and the
+Overseas Listing Plan of Sinopec Marketing Co.,
+Ltd. were approved at the meeting.
+On 28 June 2017, the 10th meeting of the sixth
+session of the Board of Supervisors was held,
+and Mr. Zhao Dong was elected as Chairman of
+the Board of Supervisors of Sinopec Corp.
+On 25 August 2017, the 11th meeting of the
+sixth session of the Board of Supervisors was
+held, and the Interim Financial Statements
+of Sinopec Corp. for 2017 as well as Interim
+Report of Sinopec Corp. for 2017 were reviewed
+and approved at the meeting.
+On 30 October 2017, the 12th meeting of the
+sixth session of the Board of Supervisors was
+held, and the Third Quarterly Report of Sinopec
+Corp. for 2017 was approved at the meeting.
+In addition, the supervisors attended the general
+meetings of shareholders and presented at
+meetings of the Board. The Board of Supervisors
+also organised supervisors to attend the
+trainings for directors and supervisors of listed
+companies organised by Beijing Securities
+Supervisory Bureau under CSRC, which have
+further improved their capabilities in performing
+supervisory duties.
+Through supervision and inspection on the
+production and operation management as well
+as financial management conditions, the Board
+of Supervisors and all the supervisors conclude
+that under the severe operating environment
+of excessive supply of refined oil products in
+domestic market and fluctuation of international
+crude oil prices at low level in 2017, the
+Company focused on transformation of its
+growth mode, improve asset quality, increase
+asset efficiency and upgrade the asset structure,
+with an aim to optimise resource and structure
+adjustment; made every effort to expand the
+market, optimise structure, reduce costs, and
+control risks, all contributing to a hard-won
+business result. The Board of Supervisors had
+no objection to the supervised issues during this
+reporting period.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Firstly, the Board and the management of
+Sinopec Corp. performed their responsibilities
+pursuant to relevant laws and regulations,
+and implemented efficient management. The
+Board diligently fulfilled its obligations and
+exercised its rights under the PRC Company
+Law and the Articles of Association, and made
+informed decisions on major issues concerning
+change in growth mode, structure adjustment,
+as well as development and profitability. The
+senior management diligently implemented the
+resolutions approved by the Board, continued
+to deepen the reform, focus on innovations,
+regulate operations, intensified strict
+management and strived to tap potentials and
+enhance efficiency, optimise business structures,
+committed to achieving the aim of sustaining
+profit and growth set by the Board. During
+the reporting period, the Board of Supervisors
+did not discover any behaviour of any director
+or senior management which violated laws,
+regulations, or the Articles of Association, or was
+detrimental to the interests of Sinopec Corp. or
+its shareholders.
+Secondly, the reports and financial statements
+prepared by Sinopec Corp. in 2017 complied
+with the relevant regulation of domestic and
+overseas securities regulators, the disclosed
+information truly, accurately, completely
+and fairly reflected Sinopec Corp.'s financial
+reasults and operation performance. The
+dividend distribution plan was made after
+comprehensively consideration of the long-term
+interests of Sinopec Corp. and the interest of
+the shareholder. No violation of confidential
+provisions of persons who prepared and
+reviewed the report was found.
+Sinopec Corp. actively fulfilled its social
+responsibilities and promoted the sustainable
+development of social economy. Information
+disclosed in the sustainable development report
+was in compliance with requirements made by
+Shanghai Stock Exchange and Hong Kong Stock
+Exchange for listed companies with regard to
+the publication of social responsibility report.
+65
+COSCO; in April 2003, he
+was appointed as Assistant
+President of COSCO; in
+April 2004, he served as a
+member of the Leading Party
+Member Group and Team
+Leader of the Discipline
+Inspection Group of CPC
+Leading Group of COSCO;
+in December 2011, he was
+appointed as Executive Vice
+President and a member
+of the Leading Party
+Member Group of COSCO;
+in June 2013, he served as
+President and a member of
+the Leading Party Member
+Group of COSCO; in July
+2013, he served as Director
+of COSCO; and in February
+2017, Mr. Li was appointed
+as Deputy Secretary of
+the Leading Party Member
+Group and Vice President
+of China Petrochemical
+Corporation. In June 2017,
+he was elected as Director
+of Sinopec Corp.
+Directors, Sup Employees
+Jiao Fangzheng, aged 55,
+Director and Senior Vice
+President of Sinopec Corp.
+Mr. Jiao is a professor
+level senior engineer with
+a Ph.D. degree. In January
+1999, he was appointed
+as Chief Geologist in
+Zhongyuan Petroleum
+Exploration Bureau of China.
+Petrochemical Corporation;
+in February 2000, he was
+appointed as Vice President
+and Chief Geologist of
+Sinopec Zhongyuan Oilfield
+Company; in July 2000, he
+was appointed as Deputy
+Director General of Sinopec
+Petroleum Exploration &
+Development Research
+Institute; in March 2001, he
+was appointed as Deputy
+Director General of Sinopec
+Exploration & Production
+Department; in June
+2004, he was appointed
+as President of Sinopec
+Northwest Oilfield Company;
+in October 2006, he was
+appointed as Vice President
+of Sinopec Corp. in July
+2010, he was appointed
+as the Director General
+of Sinopec Exploration &
+Production Department; in
+July 2014, he was appointed
+as Member of the Leading
+Party Member Group and
+Vice President of China
+Petrochemical Corporation;
+in September 2014, he
+was elected concurrently
+as Chairman of Board of
+Directors of Sinopec Oilfield
+Service Corporation and
+Vice Chairman of Board
+of Directors of Sinopec
+International Petroleum
+Exploration and Production
+Corporation; and in May
+2015, he was elected as
+Director and appointed as
+Senior Vice President of
+Sinopec Corp.
+Ma Yongsheng, aged 56,
+Director and Senior Vice
+President of Sinopec Corp.
+Mr. Ma is a professor level
+senior engineer with a Ph.D.
+degree and an academician
+of the Chinese Academy of
+Engineering. Mr. Ma is the
+member of the thirteenth
+national committee of
+CPPCC. In April 2002, he
+was appointed as Chief
+Geologist of Sinopec
+Southern Exploration and
+Production Company;
+in April 2006, he was
+appointed as Executive
+Deputy Manager (in charge
+of overall management),
+Chief Geologist of Sinopec
+Southern Exploration and
+Production Company; in
+January 2007, he was
+appointed as Manager and
+Party Secretary of CPC
+Committee of Sinopec
+Southern Exploration and
+Production Company; in
+March 2007, he served
+as General Manager and
+Deputy Party Secretary of
+CPC Committee of Sinopec
+Exploration Company; in
+May 2007, he was appointed
+as Deputy Commander of
+Sichuan East China Gas
+Transmission Construction
+Project Headquarter of
+Sinopec Corp., General
+Manager and Deputy
+Secretary of CPC Committee
+of Sinopec Exploration
+Company; in May 2008,
+he was appointed as
+Deputy Director General of
+Exploration and Production
+Department of Sinopec Corp.
+(Director General Level)
+and Deputy Commander
+of Sichuan-East China Gas
+Transmission Construction
+Project Headquarter; in
+July 2010, he served as
+Deputy Chief Geologist of
+Sinopec Corp.; in August
+2013, he was appointed as
+Chief Geologist of Sinopec
+Corp.; in December 2015,
+he served as Vice President
+of China Petrochemical
+Corporation and appointed
+as Senior Vice President of
+Sinopec Corp.; in January
+2017, he was appointed
+as Member of the Leading
+Party Member Group
+of China Petrochemical
+Corporation. In February
+2016, he was elected as
+Director of Sinopec Corp.
+64
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Jiang Xiaoming
+Andrew Y. Yan
+Jiang Xiaoming, aged
+64, Independent Director
+of Sinopec Corp. Mr.
+Jiang has a Ph.D. in
+economics. Presently, he
+acts as the member of the
+United Nations Board of
+Investment, Chairman of the
+Board of Directors of Hong
+Kong Saibo International Co.
+Ltd., Independent Director of
+COSCO International, Senior
+Fellow of the University
+of Cambridge Business
+School, and trustee of
+University of Cambridge
+China Development Fund.
+Between 1992 and 1998, he
+acted as the Vice President
+of United Nations Staff
+Retirement Fund; between
+1999 and 2003, he acted as
+the Chairman of the Board
+of Directors of Frasers
+Property (China) Co., Ltd.;
+and he has previously
+acted as the member of
+the Eleventh and Twelfth
+national committee of
+CPPCC, the Board Director
+of JSW Energy Ltd., member
+of the Advisory Committee
+of American Capital Group
+and Rothschild, the British
+Investment Bank, and
+Independent Director of
+China Oilfield Services
+Limited. From May 2012 to
+the present, he has acted
+as Independent Director of
+Sinopec Corp.
+Andrew Y. Yan, aged 60,
+Independent Director of
+Sinopec Corp. Mr. Yan is
+the founding Managing
+Partner of SAIF Partners.
+He studied in Nanjing
+University of Aeronautics
+and Astronautics, Peking
+University and Princeton
+University and earned
+a master degree from
+Princeton University.
+Presently, he acts as the
+Independent Non-executive
+Director of China Resources
+Land Limited, the Non-
+executive Director of China
+Huiyuan Juice Group
+Limited, Feng Deli Holdings
+Limited and Guodian
+Technology & Environment
+Group Corporation Limited;
+the Independent Director
+of Beijing BlueFocus Brand
+Management Consulting Co.,
+Ltd and TCL Group; and the
+Director of ATA Co., Ltd and
+Ata Online(Beijing)Education
+Technology Co., Ltd.. From
+1989 to 1994, he acted
+as Economist of the World
+Bank headquarters in
+Washington, research Fellow
+of Hudson Institute, an
+American famous research
+think tank, and acted as the
+director of APAC Strategic
+Planning & Business
+Development of Sprint
+International Corporation;
+between 1994 and 2001,
+he acted as the Managing
+Director of Emerging
+Markets Partnership and
+Director of Hong Kong Office
+of AIG Asia Infrastructural
+Investment Fund. From May
+2012 to the present, he
+has acted as Independent
+Director of Sinopec Corp.
+Ma Yongsheng
+Senior Management and E
+Jiao Fangzheng
+Senior Management and E
+62
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Wang Zhigang
+Zhang Haichao
+Wang Zhigang, aged
+60, former Director and
+Senior Vice President of
+Sinopec Corp. Mr. Wang
+is a professor level senior
+engineer with a Ph.D.
+Degree. In February 2000,
+he was appointed as Vice
+President of Sinopec Shengli
+Oilfield Co., Ltd.; in June
+2000, he served as Board
+Director and President of
+Shengli Oilfield Co., Ltd.;
+in November 2001, he was
+appointed temporarily as
+Deputy Director General
+and Deputy Secretary of
+Leading Party Member
+Group of Economic and
+Trade Commission, Ningxia
+Hui Autonomous Region;
+in April 2003, he was
+appointed as Vice President
+of Sinopec Corp.; in June
+2003, he was appointed
+concurrently as Director
+General of Exploration and
+Production Department
+of Sinopec Corp.; in Feb
+2005, he was appointed
+as Member of the Leading
+Party Member Group
+of China Petrochemical
+Corporation; in March 2005,
+he was appointed as Senior
+Vice President of Sinopec
+Corp.; in January 2007, he
+was appointed concurrently
+as Vice Chairman of Sinopec
+International Petroleum
+Exploration and Production
+Corporation; in September
+2014, he was appointed
+concurrently as Chairman
+of Board of Directors of
+Sinopec International
+Petroleum Exploration and
+Production Corporation; and
+in May 2006, he was elected
+as Director and appointed
+as Senior Vice President of
+Sinopec Corp. In January
+2018, he resigned as an
+executive director, a member
+of Strategy Committee of the
+Board and the Senior Vice
+President of Sinopec Corp.
+Zhang Haichao, aged
+60, former Director and
+Senior Vice President of
+Sinopec Corp. Mr. Zhang
+is a professor level senior
+economist with a master
+degree. In March 1998,
+he was appointed as Vice
+President of Zhejiang
+Petroleum Corporation; in
+September 1999, he was
+appointed as President
+of Zhejiang Petroleum
+Corporation; in February
+2000, he was appointed
+as President of Sinopec
+Zhejiang Petroleum Co.,
+Ltd.; in April 2003, he
+was elected as Employee's
+Representative Supervisor of
+Sinopec Corp.; in April 2004,
+he served as Chairman
+of Board of Directors
+of Sinopec BP Zhejiang
+Petroleum Sales Co., Ltd.; in
+October 2004, he served as
+Secretary of CPC Committee,
+Vice Chairman of Board of
+Directors, and Vice President
+of Sinopec Sales Co., Ltd.;
+in November 2005 he
+served as Vice President of
+Sinopec Corp., Secretary of
+the Leading Party Member
+Group, Chairman of Board
+of Directors, and President
+of Sinopec Sales Co., Ltd.;
+in June 2006, he served
+as Chairman of Board of
+Directors, and President of
+Sinopec Sales Co., Ltd.; in
+July 2014, he was appointed
+as Member of the Leading
+Party Member Group and
+Vice President of China
+Petrochemical Corporation;
+and in May 2015, he was
+elected as Board Director
+and appointed as Senior
+Vice President of Sinopec
+Corp. In January 2018, he
+resigned as an executive
+director, a member of
+Strategy Committee of the
+Board and the Senior Vice
+President of Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+63
+Directors, Supervisors,
+Senior Management and Employees
+19
+Directors, Sup Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Board Director,
+Senior Vice President
+Board Director,
+Senior Vice President
+Report of the Board of Supervisors
+Name
+Independent Director
+2012.05-2018.05
+300.0
+No
+60
+Independent Director
+2012.05-2018.05
+300.0
+64
+No
+Independent Director
+2015.05-2018.05
+300.0
+No
+64
+Independent Director 2015.05.2018.05
+300.0
+No
+64
+0000
+2222
+Fan Gang
+69
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+2006, he was appointed as
+Director General of Auditing
+Department of Sinopec
+Corp.; and in May 2006, he
+was elected as Supervisor of
+Sinopec Corp.
+& Planning Department
+of China Petrochemical
+Corporation; in March
+2006, he was appointed as
+Director General of Finance
+& Assets Department of
+Assets Management Co.,
+Ltd. of China Petrochemical
+Corporation; in March
+2015.05-2018.05
+Yes
+0
+0
+Male
+2016.02-2018.05
+0
+0
+Jiang Xiaoming
+Male
+Andrew Y. Yan
+Male
+Tang Min
+Male
+Yes
+Directors, Supervisors,
+0
+0
+0
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+67
+Directors, Supervisors,
+Senior Management and Employees
+Zou Huiping
+Directors, Super Employees
+Senior Management and E
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Yes
+Zhao Dong
+(2) Supervisors
+Zhao Dong, aged 47,
+Chairman of Board of
+Supervisors of Sinopec Corp.
+Mr. Zhao is a professor-
+level senior accountant with
+a doctor's degree. In July
+2002, he was appointed
+as chief accountant and
+manager of financial
+assets department of
+CNPC International (Nile)
+Ltd.; in January 2005, he
+was appointed as deputy
+chief accountant and
+executive deputy director
+of financial and capital
+operation department
+of China National Oil
+and Gas Exploration and
+Development Corporation;
+in April 2005, he was
+appointed as deputy chief
+accountant and manager
+of financial and capital
+operation department
+of China National Oil
+and Gas Exploration and
+Development Corporation;
+in June 2008, he was
+appointed as chief
+accountant of China National
+Oil and Gas Exploration and
+Development Corporation;
+in October 2009, he
+was appointed as chief
+accountant of China National
+Oil and Gas Exploration and
+Development Corporation
+and chief financial officer
+of PetroChina International
+Investment Company
+Limited; in September 2012,
+he was appointed as vice
+general manager of CNPC
+Nile Company and in August
+2013, he was appointed as
+general manager of CNPC
+Nile Company; in November
+2015, he was appointed
+as chief financial officer
+of PetroChina Company
+Limited. He has been a
+member of the Leading
+Party Member Group and
+chief accountant of China
+Petrochemical Corporation
+since November 2016; in
+June 2017, he was elected
+as Chairman of Board of
+Supervisors of Sinopec Corp.
+Liu Zhongyun, aged 54,
+former Supervisor of
+Sinopec Corp. Mr. Liu is
+a professor level senior
+engineer with a Ph.D. in
+engineering. In December
+2002, he was appointed
+as a standing committee
+member of CPC Committee
+and Director of Organisation
+Department of Shengli
+Petroleum Administration
+Bureau; in November
+2004, he was appointed
+as Deputy Secretary of
+CPC Committee of Shengli
+Petroleum Administration
+Bureau; in December
+2005, he was appointed as
+Manager of Sinopec Shengli
+Oilfield Branch; in December
+2008, he was appointed as
+Secretary of CPC Committee
+of Sinopec International
+Petroleum Exploration and
+Production Corporation; in
+July 2010, he was appointed
+as General Manager of
+Sinopec Northwest Oilfield
+Company, Director General
+of Northwest Petroleum
+Bureau under China
+Petrochemical Corporation.
+Since August 2014, Mr.
+Liu has acted as Assistant
+to President and Director
+General of HR Department
+of China Petrochemical
+Corporation, and in May
+2015, he was elected as
+Supervisor of Sinopec Corp.;
+in March 2017, he was
+appointed as Vice President
+of China Petrochemical
+Corporation; in February
+2018, he resigned as
+Supervisor of Sinopec Corp.;
+in February 2018, he was
+appointed as Senior Vice
+President of Sinopec Corp.
+68
+Liu Zhongyun
+0
+2015.05-2017.09
+Zhou Hengyou, aged 54,
+Supervisor of Sinopec Corp.
+Mr. Zhou is a professor
+level senior administration
+engineer and with a master
+degree. In December 1998,
+Mr. Zhou was appointed
+as a standing committee
+member of CPC Committee
+and Deputy Labour Union
+Chairman of Jiangsu
+Petroleum Exploration
+Bureau; in February 1999,
+he was appointed as a
+standing committee member
+of CPC Committee and
+Labour Union Chairman
+of Jiangsu Petroleum
+Exploration Bureau of China
+Petrochemical Corporation;
+in December 2002, he
+was appointed as Deputy
+Secretary of CPC Committee
+and Labour Union Chairman
+of Jiangsu Petroleum
+Exploration Bureau; in June
+2004, he was appointed as
+Deputy Secretary of CPC
+Committee and Secretary of
+CPC Disciplinary Inspection
+0
+Remuneration
+paid by
+Sinopec Corp.
+Director General of Finance
+Gender
+Male
+Age
+61
+Position in
+Sinopec Corp.
+Former Chairman
+Wang Yupu
+2017
+Note 1: Mr Wang Zhigang resigned as a director, a member of Strategy Committee of the Board and the Senior Vice President of Sinopec Corp. in January 2018.
+2: Mr Zhang Haichao resigned as a director, a member of Strategy Committee of the Board and the Senior Vice President of Sinopec Corp. in January 2018.
+0
+Tenure
+in 2017
+(RMB 1,000,
+before tax)
+Zou Huiping, aged 57,
+Supervisor of Sinopec Corp.
+Mr. Zou is a professor
+level senior accountant
+with a university diploma.
+In November 1998, he
+was appointed as Chief
+Accountant in Guangzhou
+Petrochemical General Plant
+of China Petrochemical
+Corporation; in February
+2000, he was appointed
+as Deputy Director General
+of Finance & Assets
+Department of China
+Petrochemical Corporation;
+in December 2001, he
+was appointed as Deputy
+Committee of Jiangsu
+Petroleum Exploration
+Bureau; in August 2005,
+he was appointed as
+Secretary of CPC Committee
+of Jiangsu Petroleum
+Exploration Bureau; in March
+2011, he was appointed
+as Director General and
+Secretary of CPC Committee
+of China Petrochemical
+News. In March 2015, he
+was appointed as Director
+General of the General Office
+of China Petrochemical
+Corporation, Director
+General of Policy Research
+Department of the General
+Office and Director General
+of President's office of
+Sinopec Corp. In August
+2015, he was appointed as
+Director General of Board of
+Directors Office under China
+Petrochemical Corporation;
+and in May 2015, he was
+elected as Supervisor of
+Sinopec Corp.
+Whether
+paid by
+the holding
+Company
+Equity interests in Sinopec Corp.
+(as at 31 December)
+2016
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Zhou Hengyou
+Production and sale of refined petroleum
+seminars with topics such as
+Innovation & Development for
+1,822 employees. The Company
+strengthened the training of
+young and middle-aged reserve
+managers, and organised
+trainings for 100 employees.
+With an aim to solve key
+problems related to scientific
+research and production, the
+Company organised workshops
+for leading experts in the field
+of oil & gas exploration and
+refining technology for 1,205
+high-level professional and
+technical personnel. With roles
+of craftsmanship spirit and
+heritage of skills as the focus,
+the Company launched the first
+chief technician training classes
+and training programs for 10
+types of work such as oil and
+gas gathering and transferring,
+catalytic cracking for top skilled
+talents covering 245 people.
+To enhance the management
+of transnational operation and
+risk prevention, the company
+organised a series of training
+programs covering 920 overseas
+project managers. The branch
+companies and subsidiaries
+adopted various ways to carry
+out different kinds of personnel
+training according to their
+conditions, and organised
+off-job training for a total of
+328,000 employees, as well
+as basic training for a total of
+386,000 employees.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+77
+Directors, Supervisors,
+Senior Management and Employees
+Principal Wholly-Owned
+and Controlled Subsidiaries
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+On 31 December, 2017, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+Name of Company
+Registered Capital
+Percentage of
+shares held by
+Sinopec Corp.
+Net Profit/
+Total Assets
+RMB million
+(%)
+RMB million
+Sinopec International Petroleum
+8,000
+100
+development strategy and key
+work of the year, the Company
+organised training programs
+at headquarters level which
+were attended by 4,292 high-
+level personnel. With an aim
+to enhance the professional
+capability, the Company
+launched a series of training
+programs for new management
+personnel, and organised
+54,324
+Centring on enterprise
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+22.2%
+Technical secondary school
+40,272
+9%
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+75
+Directors, Supervisors,
+Senior Management and Employees
+Directors, Supervisors,
+Senior Management and Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+7 CHANGES OF CORE
+TECHNICAL TEAM OR KEY
+TECHNICIANS
+During the reporting period,
+there are no significant changes
+of core technical team or key
+technicians.
+8 EMPLOYEE BENEFITS SCHEME
+Details of the Company's
+employee benefits scheme
+are set out in Note37 of the
+financial statements prepared
+under IFRS of this annual
+report. As at 31 December
+2017, the Company has a total
+of 197,083 retired employees.
+All of them participated in
+the basic pension schemes
+administered by provincial
+(autonomous region or
+municipalities) governments.
+Government-administered
+pension schemes are
+responsible for the payments of
+basic pensions.
+9 REMUNERATION POLICY
+Based on a relatively united
+basic remuneration system,
+Sinopec Corp. has established
+its remuneration distribution
+system based on the value
+of positions, performance
+& contribution, with an
+aim to improve employee
+capabilities, and constantly
+improve employee performance
+evaluation and incentive &
+discipline mechanisms.
+76
+10 TRAINNING PROGRAMS
+Net Assets
+RMB million
+18,683
+(Net Loss) Principal Activities
+RMB million
+1,075
+Pipeline storage and transportation
+of crude oil
+Sinopec Yizheng Chemical Fibre Limited
+4,000
+100
+8,303
+5,264
+6
+Production and sale of polyester
+Liability Company
+chips and polyester fibres
+Sinopec Lubricant Company Limited
+3,374
+100
+8,552
+100
+1,595
+Sinopec Qingdao Petrochemical
+3,725
+products and petroleum products
+Manufacturing of intermediate petrochemical
+Investment in exploration, production
+and sale of petroleum and natural gas
+(4,821) Coal chemical industry investment
+management, production and sale
+of coal chemical products
+Company Limited
+Exploration and Production Limited
+Sinopec Great Wall Energy & Chemical
+22,761
+100
+35,303
+16,549
+Company Limited
+Sinopec Yangzi Petrochemical
+13,203
+595
+100
+17,748
+2,277
+Company Limited
+Sinopec Pipeline Storage & Transportation
+12,000
+100
+38,752
+21,642
+2,724
+28,786
+products, lubricant base oil,
+Company
+486
+products and petroleum products
+Petrochemical Company Limited
+Manufacturing of intermediate petrochemical
+2,161
+5,188
+7,974
+75
+4,397
+Sinopec Zhanjiang Dongxing
+products and petroleum products
+Sinopec Hainan Refining and Chemical
+Company Limited
+3,780
+10,181
+18,522
+85
+5,000
+Sinopec Qingdao Refining and Chemical
+products and petrochemical products
+production, storage and sale of petroleum
+Limited Liability Company
+Import and processing of crude oil,
+Manufacturing of intermediate petrochemical
+2,649
+3,986
+12,176
+Sinopec SK(Wuhan) Petrochemical
+Petrochemical Company Limited
+Production and sale of petrochemical products
+726
+18,485
+24,399
+67.60
+7,801
+Sinopec Shanghai SECCO
+petroleum products
+75
+Marketing and distribution of refined
+195,555
+409,949
+70.42
+28,403
+Sinopec Marketing Co. Limited
+products and petroleum products
+Company Limited
+Manufacturing of intermediate petrochemical
+1,627
+8,613
+27,517
+3,918
+9,601
+98.98
+and Chemical Company Limited
+Trading of crude oil and
+3,853
+31,994
+173,035
+100
+3,000
+China International United Petroleum
+of petrochemical products
+Marketing and distribution
+Sinopec Overseas Investment
+products and petroleum products
+and petrochemical materials
+1,383
+2,758
+20,037
+100
+1,000
+Sinopec Chemical Sales Company Limited
+98,983
+Company Limited
+183
+Manufacturing of intermediate petrochemical
+16,811
+USD 1,638
+24,173
+5,294
+Sinopec Beihai Refining and Chemical
+Company Limited
+Trading of petrochemical products
+317
+3,604
+13,947
+100
+1,400
+China Petrochemical International
+100
+Production and sale of catalyst products
+4,141
+8,652
+100
+1,500
+Sinopec Catalyst Company Limited
+million
+Holding Limited
+petrochemical products
+Overseas investment holding
+1.082
+11,916
+607
+Junior college
+153,804
+109,274
+Ling Yiqun, aged 55, former
+Vice President of Sinopec
+Corp. Mr. Ling is a professor
+level senior engineer with
+a Ph.D. degree. From
+1983, he worked in the
+refinery of Beijing Yanshan
+Petrochemical Company and
+the Refining Department
+of Beijing Yanshan
+Petrochemical Company Ltd.
+In February 2000, he was
+appointed as the Deputy
+Director General of Refining
+Department of Sinopec
+Corp.; in June 2003, he
+was appointed as the
+Director General of Refining
+Department of Sinopec
+Corp.; in July 2010, he was
+appointed as Vice President
+of Sinopec Corp; in May
+2012, he was appointed
+as Executive Director,
+President and Secretary of
+CPC Committee of Sinopec
+Refinery Product Sales
+Company Limited; in August
+2013, he was appointed as
+the President of Sinopec
+Qilu Company; in December
+2016, he was elected
+concurrently as Chairman
+of Board of Directors of
+Sinopec Engineering(Group)
+Co. Ltd.; in March 2017,
+he was appointed as
+Vice President of China
+Petrochemical Corporation
+and in February 2018, he
+was appointed as Senior
+Vice President of Sinopec
+Corp.
+Huang Wensheng, aged 51,
+Vice President of Sinopec
+Corp., Secretary to the Board
+of Directors. Mr. Huang
+is a professor level senior
+economist with a university
+diploma. In March 2003, he
+was appointed as Deputy
+Director General of the
+Board Secretariat of Sinopec
+Corp.; in May 2006, he was
+appointed as Representative
+on Securities Matters of
+Sinopec Corp.; since August
+2009, He has served as the
+Deputy Director General
+of President's office of
+Sinopec Corp. In September
+2009, he was appointed
+as Director General of the
+Board Secretariat of Sinopec
+Corp.; in May 2012, he was
+appointed as Secretary to
+the Board of Directors of
+Sinopec Corp.; and in May
+2014, he was appointed as
+Vice President of Sinopec
+Corp.
+72
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Chang Zhenyong
+2016, he was appointed as
+Chief Financial Officer of
+Sinopec Corp.
+Lei Dianwu
+of Qilu Petrochemical
+Company and President
+of Sinopec Qilu Company;
+in April 2010, he was
+appointed as Employee's
+Representative Supervisor
+of Sinopec Corp.; in July
+2010, he was appointed as
+Deputy Chief Engineer and
+concurrently as Director
+General of Chemicals
+Department of Sinopec
+Corp.; in August 2012, he
+was appointed concurrently
+as Vice Chairman of Board
+of Directors of Sinopec Great
+Wall Energy & Chemical Co.,
+Ltd.; in November 2014, he
+was appointed as Executive
+Director and President
+of Sinopec Chemical
+Products Sales Co. Ltd and
+concurrently as Chairman
+of Board of Directors of
+Sinopec Chemical Products
+Sales (Hong Kong) Co. Ltd.;
+and in May 2014, he was
+appointed as Vice President
+of Sinopec Corp.
+Lei Dianwu, aged 55, Vice
+President of Sinopec Corp.
+Mr. Lei is a Professor
+level Senior Engineer with
+a university diploma. In
+October 1995, he was
+appointed as Vice President
+of Yangzi Petrochemical
+Corporation; in December
+1997, he was appointed as
+Director General of Planning
+& Development Department
+in China Eastern United
+Petrochemical (Group) Co.,
+Ltd.; in May 1998, he was
+appointed as Vice President
+of Yangzi Petrochemical
+Corporation; in August
+1998 he was appointed as
+Vice President of Yangzi
+Petrochemical Co., Ltd.;
+in March 1999, he was
+appointed temporarily
+as Deputy Director
+General of Development
+& Planning Department
+of China Petrochemical
+Corporation; in February
+2000, he was appointed as
+Deputy Director General of
+Development & Planning
+Department of Sinopec
+Corp.; in March 2001, he
+was appointed as Director
+General of Development
+& Planning Department of
+Sinopec Corp.; in March
+2009, he was appointed
+as Assistant to President
+of China Petrochemical
+Corporation; in August 2013,
+he was appointed as the
+Chief Economist of China
+Petrochemical Corporation;
+in October 2015, he was
+appointed as Secretary
+to the Board of Directors
+of China Petrochemical
+Corporation; and in May
+2009, he was appointed as
+Vice President of Sinopec
+Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+73
+Directors, Supervisors,
+Senior Management and Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+List of Members of the Senior Management
+Chang Zhenyong, aged
+59, Vice President of
+Sinopec Corp. Mr. Chang
+is a professor level senior
+engineer with a master's
+degree. In September
+1997, he was appointed as
+Vice President of Tianjin
+Petrochemical Company;
+in February 2000, he
+was appointed as Vice
+President of Sinopec Tianjin
+Company; and in September
+2000, he was promoted to
+President of Sinopec Tianjin
+Company; from February
+2004, he was appointed
+temporarily as member
+of Standing Committee of
+CPC Committee of Beihai,
+Guangxi; in March 2004, he
+was appointed temporarily
+as deputy mayor of Beihai,
+Guangxi; in November 2005,
+he was appointed as Director
+General of Production and
+Operation Management
+Department of Sinopec
+Corp.; in December 2007, he
+was appointed as President
+Wang Dehua, aged 51, Chief
+Financial Officer of Sinopec
+Corp. Mr.Wang is a senior
+accountant with university
+diploma. In January 2001,
+he was appointed as
+Deputy Director General
+of Finance Department
+of Sinopec Corp.; in May
+2014, he was appointed
+as Acting Director General
+of Finance Department of
+Sinopec Corp.; in October
+2015, he was promoted
+to Director General of
+Finance Department of
+Sinopec Corp.; in November
+2015, he was appointed
+as Director General of
+Finance Department of
+China Petrochemical
+Corporation; in August
+2016, he was appointed
+as Director General of
+Finance Department of
+Sinopec Corp.. Mr. Wang
+now concurrently acts as
+Vice Chairman of Sinopec
+Finance CO., Ltd. and
+Taiping & Sinopec Financial
+Leasing Co., in September
+(3) Other Members of Senior
+Management
+Huang Wensheng
+Company
+Equity interests in Sinopec Corp.
+(as of 31 December)
+2017
+2016
+Yes
+0
+0
+417.3
+No
+0
+0
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+71
+Directors, Supervisors,
+Senior Management and Employees
+Senior Management and E
+Directors, Sup Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Wang Dehua
+Ling Yiqun
+Name
+the holding
+Gender
+Wang Dehua
+0
+No
+892.9
+Vice President, Board Secretary
+51
+Male
+Huang Wensheng
+13,000
+13,000
+0
+Yes
+55
+Male
+Ling Yiqun
+0
+0
+No
+866.3
+2016
+2017
+Former Vice President
+Chang Zhenyong
+Male
+59
+Male
+51
+Position in
+Sinopec Corp.
+CFO
+Remuneration
+paid by
+Sinopec Corp.
+in 2017
+(RMB 1,000,
+before tax)
+Whether
+paid by
+Equity interests in Sinopec Corp.
+the holding
+No
+892.9
+Vice President
+55
+Male
+Lei Dianwu
+0
+0
+No
+892.9
+Vice President
+Age
+0
+(RMB 1,000,
+before tax)
+0
+EMPLOYEES' PROFESSIONAL STRUCTURE AS FOLLOWS:
+14.1%
+63,052
+Chemicals
+15.7%
+70,128
+Refining
+148,069 33.2%
+Exploration and Production
+Technology
+1.2%
+Other Segments
+1.3%
+5,819
+R&D
+34.5%
+(as of 31 December)
+Marketing and Distribution
+THE BREAKDOWN ACCORDING TO THE MEMBERS OF EACH OPERATION SEGMENT AS FOLLOWS
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+5,353
+83,816 18.8%
+Finance
+10,951
+Undergraduate
+3.5%
+15,707
+Master's degree or above
+40.8%
+181,989
+Senior high school and
+technical school degrees or below
+32%
+142,824
+Sales
+36.6%
+163,319
+Production
+EDUCATIONAL BACKGROUND STRUCTURE FOR EMPLOYEES AS FOLLOWS:
+2.2%
+9,617
+Others
+8%
+35,698
+Administration
+2.4%
+74
+Directors, Super Employees
+Senior 
+Management and E
+6 THE COMPANY'S EMPLOYEES
+As at 31 December 2017, the
+Company has a total of 446,225
+employees. There are a total of
+197,083 retired employees to
+be reimbursed by Sinopec Corp.
+Sinopec Marketing Co. Limited
+and Shanghai Petro, both
+principal subsidiaries of Sinopec
+Corp., have 153,804 employees
+and 10,226 employees
+respectively.
+During this reporting period,
+there is a total of 16 directors,
+supervisors and other senior
+management received
+remuneration from Sinopec
+Corp. with a total amount of
+RMB 10.0385 million.
+Former Vice President
+Position in
+Sinopec Corp.
+0
+0
+2016
+Equity interests in Sinopec Corp.
+(as of 31 December)
+2017
+Company
+No
+the holding
+(RMB 1,000,
+before tax)
+755.4
+Age
+56
+Male
+Gender
+Jiang Zhenghong
+Name
+Whether
+paid by
+in 2017
+Sinopec Corp.
+paid by
+6,270
+Whether
+paid by
+Remuneration
+Note 1: Mr. Lin Yiqun was appointed as Senior Vice President of Sinopec Corp. in February 2018
+24.5%
+2: The members of senior management are in order of the number of strokes of their surname in Chinese.
+APPOINTMENT OR
+DIRECTORS, SUPERVISORS,
+AND THE SENIOR
+MANAGEMENT
+REMUNERATION OF
+5
+As of 31 December 2017 or
+any time during the reporting
+period, there is no Director
+or Supervisor of the Company
+entered into any agreement
+with any of Sinopec Corp., its
+controlling shareholder, any
+subsidiary or related subsidiary
+which shall significantly benefit
+such Director or Supervisor.
+4 CONTRACTRAL INTERESTS
+OF DIRECTORS AND
+SUPERVISORS
+3 CHANGE OF SHAREHOLDING
+OF DIRECTORS, SUPERVISORS,
+AND THE SENIOR
+MANAGEMENT
+There is no change in
+shareholdings of the Company
+by Directors, Supervisors and
+other senior managements
+during the reporting period.
+For details, please refer to the
+announcements, published
+in China Securities Journal,
+Shanghai Securities News
+and Securities Times after
+the meetings and on websites
+of Shanghai Stock Exchange,
+Hong Kong Stock Exchange and
+Sinopec Corp.
+On 8 February 2018, Mr. Zhao
+Rifeng was appointed as Vice
+President of Sinopec Corp.
+On 8 February 2018, Mr. Liu
+Zhongyun was appointed as
+Senior Vice President of Sinopec
+Corp.
+On 8 February 2018, Mr. Lin
+Yiqun was appointed as Senior
+Vice President of Sinopec Corp.
+On 7 February 2018, Mr. Liu
+Zhongyun resigned as the
+supervisor of Sinopec Corp.
+due to change of working
+arrangement.
+On 29 January 2018, Mr. Zhang
+Haichao resigned as director,
+member of Strategy Committee
+of the Board and the Senior
+Vice President of Sinopec Corp.
+due to his age.
+On 29 January 2018, Mr. Wang
+Zhigang resigned as director,
+member of Strategy Committee
+of the Board and the Senior
+Vice President of Sinopec Corp.
+due to his age.
+On 22 September 2017,
+Mr. Wang Yupu resigned
+as Chairman of the Board,
+Director and Chairmen of
+Strategy Committee and Social
+Responsibility Management
+Committee of the Board of
+Sinopec Corp. due to change of
+working arrangement.
+On 12 September 2017, Mr.
+Jiang Zhenghong resigned
+as Vice President of Sinopec
+Corp. due to change of working
+arrangement.
+On 28 June 2017, Mr. Wang
+Yajun resigned as the supervisor
+of Sinopec Corp. due to his age.
+On 28 June 2017, Mr. Yu
+Xizhi was elected as employee
+representative supervisor of the
+Sixth Session of the Board of
+Supervisors.
+On 28 June 2017, Mr. Zhao
+Dong was elected as Chairman
+of the Board of Supervisors of
+Sinopec Corp.
+On 28 June 2017, Mr. Li
+Yunpeng was elected as director
+of the Sixth Session of the
+Board of Sinopec Corp.
+On 16 March 2017, Mr. Liu Yun
+resigned as the Chairman of
+the Board of Supervisors and
+supervisor of Sinopec Corp. due
+to his age.
+TERMINATION OF DIRECTORS,
+SUPERVISORS AND SENIOR
+MANAGEMENT
+2 INFORMATION ON
+65
+Sinopec Corp.
+11,259
+Male
+3|ཐ|
+Chairman of the Board
+of Supervisors
+Former Supervisor
+2017.06.2018.05
+Yes
+2017
+0
+0
+2015.05-2018.02
+Yes
+54
+53
+Yu Renming
+Male
+54
+Yu Xizhi
+Male
+Jiang Zhenying
+55
+57
+Zou Huiping
+paid by
+Sinopec Corp.
+in 2017
+Whether
+paid by
+the holding
+Equity interests in Sinopec Corp.
+(as of 31 December)
+Company
+Zhao Dong
+Male
+47
+Liu Zhongyun
+Male
+54
+Zhou Hengyou
+Male
+Male
+Remuneration
+Supervisor 2015.05-2018.05
+Supervisor
+Employee's Representative
+Supervisor
+Employee's Representative
+Supervisor
+Employee's Representative
+Supervisor
+2006.05-2018.05
+Note:
+Position in
+Gender
+Male
+Age
+61
+Sinopec Corp.
+Tenure
+Former Chairman of
+2015.05-2017.03
+the Board of Supervisors
+Male
+61
+Former Employee's
+2015.05-2017.06
+Representative Supervisor
+Mr. Liu Zhongyun resigned as Supervisor of Sinopec Corp. in February 2018.
+Remuneration
+15,234
+Wang Yajun
+Yes
+Liu Yun
+0
+758.2
+No
+2010.12.2018.05
+758.2
+No
+0000
+2010.12 2018.05
+758.2
+No
+0
+2017.06-2018.05
+265.9
+No
+paid by
+0
+oooo o
+lo
+Name
+(RMB 1,000,
+before tax)
+2016
+Sinopec Corp.
+50.49
+39,609
+28,541
+6,152
+petrochemical products and
+petroleum products
+Manufacturing of synthetic fibres, resin
+Company Limited
+and plastics, intermediate petrochemical
+Fujian Petrochemical Company Limited
+6,898
+50
+10,917
+9,860
+2,757
+products and petroleum products
+Manufacturing of plastics, intermediate
+petrochemical products and
+petroleum products
+Note 1: All above subsidiaries except Fujian Petrochemical Company Limited are audited by PricewaterhouseCoopers Zhong Tian LLP or PricewaterhouseCoopers in 2017.
+KPMG Huazhen LLP served the exception.
+10,814
+Sinopec Shanghai Petrochemical
+Petroleum and Chemical Limited
+Manufacturing of intermediate
+2,733
+Production, sale, research and development
+Company Limited
+of ethylene and downstream by-products
+Sinopec Kantons Holdings Limited
+HKD 248
+60.34
+14,285
+2: The above indicated total assets and net profit has been prepared in accordance with ASBE. Except for Sinopec Kantons Holdings Limited and Sinopec Overseas
+Investment Holdings Ltd, which are incorporated in Bermuda and Hong Kong SAR, respectively, all of the above wholly-owned and non-wholly-owned subsidiaries are
+incorporated in the PRC. All of the above wholly-owned and controlling subsidiaries are limited liability companies except for Sinopec Shanghai Petrochemical Company
+Limited and Sinopec Kantons Holdings Limited. The Board of Directors considered that it would be redundant to disclose the particulars of all subsidiaries and,
+therefore, only those which have material impact on the results or assets of Sinopec Corp. are set out above.
+9,504
+Tenure
+million
+Sinopec Shanghai Gaoqiao
+10,000
+55
+25,434
+12,000
+2,642
+1,046
+78
+Trading of crude oil and petroleum products
+REPORT OF THE PRC AUDITOR
+Senior Management and E
+Directors, Super Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Jiang Zhenying
+Yu Renming
+Yu Xizhi
+Jiang Zhenying, aged 53,
+Employee's Representative
+Supervisor of Sinopec Corp.
+Mr. Jiang is a professor level
+senior economist with a
+doctor degree. In December
+1998, he was appointed
+as the Vice President of
+the China Petrochemical
+Supplies & Equipment Co.,
+Ltd.; in February 2000, he
+was appointed as the Deputy
+Director General of Sinopec
+Procurement Management
+Department; in December
+2001, he was appointed
+as the Director General
+of Sinopec Procurement
+Management Department
+and in November 2005
+he concurrently held the
+positions of Chairman
+of Board of Directors,
+President and Secretary of
+CPC Committee of China
+Petrochemical International
+Co., Ltd.; in March 2006,
+he was appointed as the
+Director General (General
+Manager), Executive
+Director and Secretary
+of the CPC Committee
+of Sinopec Procurement
+Management Department
+(Sinopec International
+Co. Ltd.); in April 2010,
+he was appointed as the
+Director General (General
+Manager), Executive Director
+and Deputy Secretary
+of the CPC Committee
+of Sinopec Procurement
+Management Department
+(Sinopec International Co.
+Ltd); in November 2014,
+he was appointed as
+Director General of Safety
+Supervisory Department of
+Sinopec Corp.; in May 2017,
+he was appointed as Deputy
+Director of the Leading
+Group Office of Party
+Inspection Work of China
+Petrochemical Corporation
+and the leader of overseas
+enterprises inspection
+group; and since December
+2010, he was elected as the
+Employee's Representative
+Supervisor of Sinopec Corp.
+Yu Renming, aged 54,
+Employee's Representative
+Supervisor of Sinopec Corp.
+Mr. Yu is a professor level
+senior engineer with a
+university diploma. In June
+2000, he was appointed
+as the Deputy General
+Manager of Sinopec Zhenhai
+Refining & Chemical Co.,
+Ltd.; in June 2003, he
+was appointed as the
+Board Director and Deputy
+General Manager of Sinopec
+Zhenhai Refining & Chemical
+Co., Ltd.; in September
+2006, he was appointed
+as the Vice President of
+Sinopec Zhenhai Refining
+& Chemical Company; in
+September 2007, he was
+appointed as the President
+and the Vice Secretary of
+CPC committee of Sinopec
+Zhenhai Refining & Chemical
+Company; in January 2008,
+he was appointed as the
+Director General of Sinopec
+Production Management
+Department; in December
+2017, he was appointed
+as the Director General
+of Refining Department
+of Sinopec Corp.; and in
+December 2010, he was
+elected as Employee's
+Representative Supervisor of
+Sinopec Corp.
+Yu Xizhi, aged 55,
+Employee's Representative
+Supervisor of Sinopec Corp.
+Mr Yu is a professor-level
+senior engineer with a Ph.D.
+in engineering. In August
+1997, he was appointed as
+Deputy Manager of Anqing
+Petrochemical Complex
+and Manager of Fertiliser
+Plant; in September 1999,
+he became a member of the
+CPC Standing Committee
+of Anqing Petrochemical
+Complex; in February 2000,
+he was appointed as Deputy
+Manager of Sinopec Anqing
+Company and in September
+2000, he was appointed as
+Manager of Sinopec Anqing
+Company. In January 2005,
+he was appointed as Manager
+of Anqing Petrochemical
+Complex and from May 2009
+to July 2010, he served a
+temporary position at the
+Standing Committee of
+the CPC Anqing Municipal
+Committee. In July 2010,
+he became General Manager
+and Deputy Secretary of the
+CPC Committee of Maoming
+Petrochemical Company and
+General Manager of Sinopec
+Maoming Company; in July
+2016, Mr. Yu was appointed
+as head of Maoming.
+Zhanjiang Integration
+Leading Group; in December
+2016, he became Executive
+Director, General Manager
+and Deputy Secretary of the
+CPC Committee of Zhongke
+(Guangdong) Refining and
+Petrochemical Co., Ltd. Since
+April 2017, Mr. Yu has been
+Director General of Human
+Resources Department
+of China Petrochemical
+Corporation and Sinopec
+Corp. In June 2017, he
+was elected as Employee's
+Representative Supervisor of
+Sinopec Corp.
+70
+List of Members of the Board of Supervisors
+Position in
+Name
+Gender
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+in 2017
+Financial Statements (PRC)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+pwc
+79
+普华永道
+PwC ZT Shen Zi (2018) No. 10001
+To the Shareholders of China Petroleum & Chemical Corporation,
+OPINION
+What we have audited
+We have audited the accompanying financial statements of China Petroleum & Chemical Corporation (hereinafter "Sinopec Corp."), which comprise the
+consolidated and company balance sheets as at 31 December 2017, the consolidated and company income statements for the year then ended, the
+consolidated and company cash flow statements for the year then ended, the consolidated and company statements of changes in shareholders' equity
+for the year then ended, and notes to the financial statements.
+Our opinion
+Age
+11/F PricewaterhouseCoopers Center, Link Square 2, 202 Hu Bin Road, Huangpu District, Shanghai 200021, PRC
+Tel: +86 (21) 2323 8888, Fax: +86 (21) 2323 8800, www.pwccn.com
+BASIS FOR OPINION
+In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and company's financial position of
+Sinopec Corp. as at 31 December 2017, and their financial performance and cash flows for the year then ended in accordance with the requirements of
+Accounting Standards for Business Enterprises ("CASS").
+We conducted our audit in accordance with China Standards on Auditing ("CSAS"). Our responsibilities under those standards are further described in
+the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is
+sufficient and appropriate to provide a basis for our opinion.
+We are independent of Sinopec Corp. in accordance with the Code of Ethics for Professional Accountants of the Chinese Institute of Certified Public
+Accountants ("CICPA Code"), and we have fulfilled our other ethical responsibilities in accordance with the CICPA Code.
+KEY AUDIT MATTERS
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current
+period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
+not provide a separate opinion on these matters.
+PricewaterhouseCoopers Zhongtian LLP
+We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit
+findings, including any significant deficiencies in internal control that we identify during our audit.
+• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Sinopec Corp. to
+express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit.
+We remain solely responsible for our audit opinion.
+Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements
+represent the underlying transactions and events in a manner that achieves fair presentation.
+Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether
+a material uncertainty exists related to events or conditions that may cast significant doubt on Sinopec Corp.'s ability to continue as a going
+concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in
+these financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
+up to the date of our auditor's report. However, future events or conditions may cause Sinopec Corp. to cease to continue as a going concern.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
+management.
+•
+We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,
+and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
+related safeguards.
+•
+•
+•
+• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
+procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
+detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
+omissions, misrepresentations, or the override of internal control.
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
+From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of
+the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law
+or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
+communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
+such communication.
+Current assets
+23 March 2018
+Signing CPA
+Zhao Jianrong
+(Engagement Partner)
+Signing CPA
+Gao Peng
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+81
+Financial Statements (PRC)
+(A)
+FINANCIAL STATEMENTS PREPARED UNDER CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
+CONSOLIDATED BALANCE SHEET
+as at 31 December 2017
+Assets
+As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
+PricewaterhouseCoopers Zhong Tian LLP
+Shanghai, the People's Republic of China
+Financial Statements (PRC)
+•
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
+Cash at bank and on hand
+80
+REPORT OF THE PRC AUDITOR (CONTINUED)
+The key audit matter identified in our audit is "Recoverability of the carrying amount of fixed assets related to oil and gas producing activities".
+Key Audit Matter
+Recoverability of the carrying amount of fixed assets related to oil and
+gas producing activities
+Refer to note 14 "FIXED ASSETS", note 44 “IMPAIRMENT LOSSES", and
+note 55 "PRINCIPAL ACCOOUNTING ESTIMATES AND JUDGEMENTS"
+to the consolidated financial statements.
+Low crude oil prices gave rise to possible indication that the carrying
+amount of fixed assets related to oil and gas producing activities as
+at 31 December 2017 might be impaired. The Group has adopted
+discounted future cash flow as the respective recoverable amounts of
+fixed assets related to oil and gas producing activities, which involved
+key estimations or assumptions including:
+Future crude oil prices;
+Future production profiles;
+Future cost profiles; and
+Discount rates.
+Because of the significance of the carrying amount of fixed assets
+related to oil and gas producing activities as at 31 December 2017,
+together with the use of significant estimations or assumptions in
+determining their respective discounted cash flow, we had placed our
+audit emphasis on this matter.
+How our audit addressed the Key Audit Matter
+In auditing the respective discounted cash flow of fixed assets related
+to oil and gas producing activities, we have performed the following key
+procedures on the relevant discounted cash flow projections prepared by
+management:
+• Evaluated and tested the key controls, relating to the preparation of the
+discounted cash flow projections of fixed assets related to oil and gas
+producing activities.
+Compared estimates of future crude oil prices adopted by the Group
+against a range of reputable published crude oil price forecasts.
+Compared the future production profiles against the oil and gas
+reserve estimation report approved by the management. Evaluated
+the competence, capability and objectivity of the management's
+experts engaged in estimating the oil and gas reserves. Assessed key
+estimations or assumptions used in the reserve estimation, by reference
+to historical data, management plans and/or reputable external data.
+Compared the future cost profiles against historical costs or relevant
+budgets of the Group.
+Independently estimated a range of discount rates, and found that the
+discount rates adopted by management were within the range.
+• Tested selected other key data inputs, such as natural gas prices and
+production profiles in the projections by reference to historical data
+and/or relevant budgets of the Group.
+• Assessed the methodology adopted in, and tested mathematical
+accuracy of the discounted cash flow projections.
+• Evaluated the sensitivity analyses prepared by the Group, and assessed
+the potential impacts of a range of possible outcomes.
+Based on our work, we found the key assumptions and input data adopted
+were supported by the evidence we gathered and consistent with our
+expectations.
+Financial Statements (PRC)
+OTHER INFORMATION
+Management of Sinopec Corp. is responsible for the other information. The other information comprises all of the information included in 2017 annual
+report of Sinopec Corp. other than the financial statements and our auditor's report thereon.
+Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
+In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
+other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
+misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
+report that fact. We have nothing to report in this regard.
+RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
+Management of Sinopec Corp. is responsible for the preparation and fair presentation of these financial statements in accordance with the CASS,
+and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material
+misstatement, whether due to fraud or error.
+In preparing these financial statements, management is responsible for assessing Sinopec Corp.'s ability to continue as a going concern, disclosing,
+as applicable, matters related to going concern and using the going concern basis of accounting unless management either intend to liquidate Sinopec
+Corp. or to cease operations, or have no realistic alternative but to do so.
+Those charged with governance are responsible for overseeing Sinopec Corp.'s financial reporting process.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Our objectives are to obtain reasonable assurance about whether these financial statements as a whole are free from material misstatement, whether
+due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
+guarantee that an audit conducted in accordance with CSAS will always detect a material misstatement when it exists. Misstatements can arise from
+fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
+users taken on the basis of these financial statements.
+Financial assets at fair value through profit and loss
+Non-current liabilities
+Accounts receivable
+25,826
+1,066,455
+1,595,504
+196,640
+1,498,609
+222222
+23
+24
+28,662
+234
+30,374
+6,462
+200,073
+5,828
+174,301
+25
+120,734
+95,928
+26
+54,701
+20
+7,214
+15,131
+116,812
+14
+650,774
+690,594
+15
+118,645
+129,581
+16
+97,126
+85,023
+17
+8,634
+6,353
+18
+14,720
+13,537
+19
+27
+7,162
+71,940
+1,618
+52,886
+16,136
+161,988
+180,541
+741,434
+666,084
+34
+121,071
+121,071
+35
+119,557
+119,525
+36
+(4,413)
+(932)
+37
+888
+765
+16,440
+131,087
+7,661
+39,298
+232
+819
+28
+6,843
+84,850
+2,006
+77,630
+6,000
+29
+26,681
+579,446
+38,972
+485,543
+01203
+67,754
+62,461
+31,370
+54,985
+39,958
+6,466
+Bills receivable
+13
+1,676
+Advances from customers
+Employee benefits payable
+Taxes payable
+Dividends payable
+Other payables
+Short-term debentures payable
+Non-current liabilities due within one year
+Accounts payable
+Total current liabilities
+Debentures payable
+Provisions
+Deferred tax liabilities
+Other non-current liabilities
+Total non-current liabilities
+Total liabilities
+Shareholders' equity
+Long-term loans
+Bills payable
+Short-term loans
+Liabilities and shareholders' equity
+Current liabilities
+Other receivables
+Prepayments
+Inventories
+Other current assets
+Total current assets
+Non-current assets
+Available-for-sale financial assets
+Long-term equity investments
+Fixed assets
+Construction in progress
+Intangible assets
+Goodwill
+Long-term deferred expenses
+Deferred tax assets
+Other non-current assets
+Total non-current assets
+Total assets
+Share capital
+Capital reserve
+Other comprehensive income
+Specific reserve
+7
+16,207
+13,197
+68,494
+50,289
+16,467
+25,596
+4,901
+3,749
+11
+186,693
+156,511
+20,087
+20,422
+529,049
+412,261
+12
+51,196
+11,408
+142,497
+5698901
+Surplus reserves
+Retained earnings
+Minority interests
+Total equity attributable to shareholders of the Company
+Total shareholders' equity
+Total liabilities and shareholders' equity
+These financial statements have been approved by the board of directors on 23 March 2018.
+Dai Houliang
+Vice Chairman, President
+The accompanying notes form part of these financial statements.
+82
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Wang Dehua
+Chief Financial Officer
+Note
+At 31 December
+2017
+RMB million
+At 31 December
+2016
+RMB million
+165,004
+1,086,348
+712,232
+199,682
+Impairment losses
+Exploration expenses, including dry holes
+Financial expenses
+General and administrative expenses
+Selling and distribution expenses
+Taxes and surcharges
+Less: Operating costs
+Operating income
+for the year ended 31 December 2017
+INCOME STATEMENT
+12,035
+Add: Gain from changes in fair value
+18,280
+47,638
+65,503
+65,918
+6,333
+(4,376)
+4,298
+(3,792)
+45
+1,053
+(24)
+(57)
+53,468
+Investment income
+Asset disposal income
+Other income
+2016
+2017
+Note
+Chief Financial Officer
+Wang Dehua
+The accompanying notes form part of these financial statements.
+Vice Chairman, President
+Dai Houliang
+These financial statements have been approved by the board of directors on 23 March 2018.
+Total comprehensive income
+Total other comprehensive income
+Share of other comprehensive loss of associates
+Cash flow hedges
+(net of tax and after reclassification adjustments):
+Items that may be reclassified subsequently to profit or loss
+Other comprehensive income
+Termination of net profit
+Continuous operating net profit
+Classification by going concern:
+Net profit
+Less: Income tax expense
+Profit before taxation
+Less: Non-operating expenses
+Add: Non-operating income
+Operating profit
+2,014
+RMB million
+(1,580)
+70,294
+Cash flow hedges
+(net of tax and after reclassification adjustments):
+Items that may be reclassified subsequently to profit or loss
+Other comprehensive income
+Diluted earnings per share
+Net profit
+Basic earnings per share
+Minority interests
+Equity shareholders of the Company
+Classification by ownership:
+Termination of net profit.
+59,170
+Changes in fair value of available-for-sale financial assets
+70,294
+Classification by going concern:
+86
+Including: net profit of acquiree before the consolidation under common control
+59,170
+70,294
+Net profit
+20,707
+16,279
+50
+Less: Income tax expense
+79,877
+Continuous operating net profit
+Share of other comprehensive income of associates and joint ventures
+Foreign currency translation differences
+Total other comprehensive income
+0.383
+0.422
+0.383
+0.422
+12,754
+19,175
+46,416
+51,119
+16
+36
+22
+62
+62
+66
+Chief Financial Officer
+Wang Dehua
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+84
+The accompanying notes form part of these financial statements.
+Vice Chairman, President
+Dai Houliang
+These financial statements have been approved by the board of directors on 23 March 2018.
+Equity shareholders of the Company
+Minority interests
+Attributable to:
+Total comprehensive income
+59,170
+86,573
+RMB million
+39
+Including: Cash received from minority shareholders' capital contributions to subsidiaries
+Cash received from borrowings
+Cash received from capital contributions
+Cash flows from financing activities:
+Net cash flow from investing activities
+Sub-total of cash outflows
+Net cash paid for the acquisition of subsidiaries and other business entities
+Other cash paid relating to investing activities
+Cash paid for acquisition of investments
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Net cash received from disposal of subsidiaries and other business entities
+Sub-total of cash inflows
+Sub-total of cash inflows
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+Cash received from disposal of investments
+Cash flows from investing activities:
+Net cash flow from operating activities
+Sub-total of cash outflows
+Other cash paid relating to operating activities
+Payments of taxes and levies
+Cash paid to and for employees
+Cash paid for goods and services
+Sub-total of cash inflows
+Other cash received relating to operating activities
+Refund of taxes and levies
+Cash received from returns on investments
+Cash repayments of borrowings
+Cash paid for dividends, profits distribution or interest
+Including: Subsidiaries' cash payments for distribution of
+77,436
+2,163,695
+2,434
+2016
+RMB million
+(328,304)
+(68,260)
+(2,041,977)
+-------------
+2,703,571
+57,287
+2,644,126
+2,158
+2017
+RMB million
+Note
+Chief Financial Officer
+Wang Dehua
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+The accompanying notes form part of these financial statements.
+Vice Chairman, President
+Dai Houliang
+These financial statements have been approved by the board of directors on 23 March 2018.
+Net (decrease)/increase in cash and cash equivalents
+Effects of changes in foreign exchange rate
+Net cash flow from financing activities
+Sub-total of cash outflows
+Other cash paid relating to financing activities
+dividends or profits to minority shareholders
+Cash received from sale of goods and rendering of services.
+39
+Cash flows from operating activities:
+CONSOLIDATED CASH FLOW STATEMENT
+(887)
+43,519
+38,058
+46
+33
+179
+14,044
+14,372
+11,012
+10,614
+3,851
+(413)
+2,642
+44,982
+2,365
+2,670
+158,373
+158,480
+513,514
+633,114
+726,178
+857,478
+66
+33
+41,724
+1,784
+29,738
+24,434
+86
+Financial Statements (PRC)
+Financial Statements (PRC)
+85
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+23,998
+30,348
+408
+(67)
+(149)
+(120)
+557
+53
+23,590
+30,415
+23,590
+30,415
+2,539
+(928)
+26,129
+29,487
+1,117
+725
+2,812
+474
+for the year ended 31 December 2017
+2,218
+1,709
+49
+10,690
+6,834
+1,980
+1.958
+7,913
+8,340
+49,277
+50,046
+373,020
+329,814
+268,451
+10,952
+297
+345
+15
+14
+13
+777
+265,835
+318,861
+32,743
+27,189
+46,942
+44,933
+395
+275,557
+683,634
+711,890
+1,002,495
+Long-term loans
+Non-current liabilities
+280,822
+317,563
+Total current liabilities
+38,082
+19,539
+Non-current liabilities due within one year
+6,000
+Short-term debentures payable
+113,841
+143,274
+32,423
+42,549
+312
+4,854
+2,360
+3,413
+75,787
+83,449
+2,761
+3,155
+9,256
+17,330
+977,725
+3,454
+Debentures payable
+4,429
+5,454
+Construction in progress
+Fixed assets
+Long-term equity investments
+Available-for-sale financial assets
+Non-current assets
+Total current assets
+Other current assets
+Inventories
+Prepayments
+Dividends receivable
+Other receivables
+Intangible assets
+Accounts receivable
+Cash at bank and on hand
+Current assets
+Assets
+as at 31 December 2017
+BALANCE SHEET
+1,498,609
+1,595,504
+832.525
+854,070
+120,293
+126,826
+Financial assets at fair value through profit and loss
+Bills receivable
+Long-term deferred expenses
+Deferred tax assets
+Other non-current assets
+16,327
+40,189
+47,493
+9
+471
+38,332
+37,609
+88
+98,250
+92,545
+48,179
+157
+RMB million
+2016
+At 31 December
+At 31 December
+2017
+RMB million
+Note
+Other payables
+Taxes payable
+Employee benefits payable
+Advances from customers
+Accounts payable
+Bills payable
+Short-term loans.
+Current liabilities
+Liabilities and shareholders' equity
+Total assets
+Total non-current assets
+10
+Provisions
+Deferred tax liabilities
+Other non-current liabilities
+42/43
+Exploration expenses, including dry holes
+6,611
+1,560
+41
+Financial expenses
+74,155
+78,928
+42
+General and administrative expenses
+49,550
+11,089
+56,055
+Selling and distribution expenses
+232,006
+235,292
+40
+1,492,165
+1,890,398
+39/42
+1,930,911
+2,360,193
+39
+Taxes and surcharges
+42
+11,035
+Impairment losses
+44
+4,706
+1,317
+48
+77,389
+86,965
+4,356
+47
+(1,487)
+(1,518)
+30,779
+19,060
+46
+Profit before taxation
+Less: Non-operating expenses
+Add: Non-operating income
+Operating profit
+Other income
+Asset disposal income
+Investment income
+(216)
+(13)
+45
+Add: Loss from changes in fair value
+17,076
+21,791
+Less: Operating costs
+Operating income
+RMB million
+RMB million
+196
+68,769
+68,789
+121,071
+121,071
+408,149
+435,226
+127,327
+117,663
+2,607
+2,591
+505
+29,767
+31,405
+36,000
+20,000
+58,448
+63,667
+Specific reserve
+Other comprehensive income
+Capital reserve
+Share capital
+Shareholders' equity
+Total liabilities
+Total non-current liabilities
+263
+2,243,565
+482
+Surplus reserves
+2016
+2017
+Note
+for the year ended 31 December 2017
+CONSOLIDATED INCOME STATEMENT
+Financial Statements (PRC)
+Financial Statements (PRC)
+83
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Chief Financial Officer
+Wang Dehua
+The accompanying notes form part of these financial statements.
+Vice Chairman, President
+Dai Houliang
+977,725
+569,576
+567,269
+1,002,495
+These financial statements have been approved by the board of directors on 23 March 2018.
+Total liabilities and shareholders' equity
+Total shareholders' equity
+182,440
+177,049
+196,640
+199,682
+Retained earnings
+393
+-----------
+(1,547,868)
+(62,602)
+3,042
+(4,413)
+119,557
+45
+(13)
+(13)
+121,071
+Balance at 31 December 2017
+7. Others
+Net increase in specific reserve for the year
+6.
+(3,042)
+| | |
+Total transactions with owners, recorded directly
+5. Distributions to minority interests
+Transaction with minority interests
+- Distributions to shareholders(Note 51)
+- Appropriation for surplus reserves (Note 38)
+4.
+3. Appropriations of profits:
+in shareholders' equity:
+Transactions with owners, recorded directly
+Total comprehensive income
+2. Other comprehensive income (Note 36)
+in shareholders' equity
+(32,689)
+(32,689)
+(13)
+The accompanying notes form part of these financial statements.
+Vice Chairman, President
+Dai Houliang
+These financial statements have been approved by the board of directors on 23 March 2018.
+854,070
+126,826
+727,244
+290,459
+199,682
+888
+(20)
+27
+(47)
+(92)
+126
+3
+123
+123
+(44,479)
+(11,777)
+(32,702)
+(35,731)
+3,042
+(32,689)
+711
+(12,501)
+724
+(12,501)
+1. Net profit
+88
+65,918
+47,638
+121,071
+Balance at 31 December 2016
+125
+9
+116
+116
+9. Others
+160
+7
+153
+153
+119,525
+Net increase in specific reserve for the year
+(22,828)
+(3,785)
+(19,043)
+(16,876)
+(2,167)
+in shareholders' equity
+Total transactions with owners, recorded directly
+2.137
+(2,137)
+(2,137)
+common control (Note 53)
+8.
+(932)
+765
+196,640
+51,119
+(4,376)
+(895)
+(3,481)
+(3,481)
+(3,481)
+70,294
+19,175
+51,119
+51,119
+Change for the year
+832,525
+120,293
+712,232
+275,163
+196,640
+765
+(932)
+119,525
+121,071
+Balance at 1 January 2017
+832,525
+120,293
+712,232
+275,163
+18,280
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Wang Dehua
+Chief Financial Officer
+(32,689)
+(32,689)
+- Distributions to shareholders (Note 49)
+(3,042)
+- Appropriation for surplus reserves ----- 3,042
+3. Appropriations of profits:
+in shareholders' equity:
+Transactions with owners, recorded directly
+30.348
+30,415
+(67)
+Total transactions with owners, recorded directly
+(67)
+66
+Total comprehensive income
+2. Other comprehensive income
+30,415
+30,415
+1. Net profit
+Change for the year
+569,576
+182,440
+196,640
+393
+(67)
+in shareholders' equity
+3,042
+(35,731)
+290,459
+275,163
+Financial Statements (PRC)
+89
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Chief Financial Officer
+Wang Dehua
+The accompanying notes form part of these financial statements.
+Vice Chairman, President
+Dai Houliang
+(55)
+567,269
+177,049
+199,682
+482
+196
+68,789
+121,071
+(75)
+20
+89
+89
+These financial statements have been approved by the board of directors on 23 March 2018.
+Balance at 31 December 2017
+4. Net increase in specific reserve for the year
+5. Others
+(32,689)
+263
+68,769
+569,576
+182,440
+earnings
+RMB million
+reserves
+RMB million
+196.640
+reserve
+RMB million
+313
+income
+RMB million
+(145)
+reserve
+RMB million
+68.716
+capital
+RMB million
+121,071
+Total
+shareholders'
+Retained
+Surplus
+Specific
+Capital comprehensive
+Share
+Other
+- Distributions to shareholders (Note 49)
+- Appropriation for surplus reserves
+3. Appropriations of profits:
+in shareholders' equity:
+Transactions with owners, recorded directly
+Total comprehensive income
+2. Other comprehensive income
+1. Net profit
+Change for the year
+Balance at 1 January 2016
+for the year ended 31 December 2017
+STATEMENT OF CHANGES IN EQUITY
+equity
+7. Adjustment for the combination of entities under
+RMB million
+562,274
+196,640
+393
+263
+68,769
+121,071
+121,071
+Balance at 1 January 2017
+Balance at 31 December 2016
+53
+53
+5. Others
+80
+80
+4. Net increase in specific reserve for the year
+(16,829)
+----- (16,829)
+in shareholders' equity
+Total transactions with owners, recorded directly
+(16,829)
+(16,829)
+23,998
+23,590
+408
+408
+408
+23,590
+23,590
+175,679
+727,244
+(6,146)
+(86)
+(35,190)
+(37,054)
+(504,152)
+(653,412)
+--------------
+918,833
+1,044,684
+85,932
+42,913
+831,578
+1,323
+1,000,467
+1,304
+(200,995)
+Cash received from disposal of investments
+Net cash flow from operating activities
+Sub-total of cash outflows
+Other cash paid relating to operating activities
+Payments of taxes and levies
+Cash paid to and for employees
+Cash paid for goods and services
+Sub-total of cash inflows
+Refund of taxes and levies
+Cash received from sale of goods and rendering of services.
+Other cash received relating to operating activities
+Cash flows from operating activities:
+Cash flows from investing activities:
+(189,557)
+(35,502)
+(50,638)
+Other cash paid relating to investing activities
+(39,505)
+(66,913)
+(43,765)
+(37,139)
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+56,635
+66,284
+2,027
+1
+Net cash received from disposal of subsidiaries and other business entities
+Sub-total of cash inflows
+1,488
+23,270
+1,885
+252
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+22,233
+23,842
+Cash received from returns on investments
+29,002
+18,919
+139,296
+117,721
+(779,537)
+(926,963)
+2016
+RMB million
+Sub-total of cash outflows
+RMB million
+Note
+(82,392)
+(16,389)
+(57,627)
+(72,847)
+(70,948)
+40,898
+66,932
+2,027
+80
+2,914
+52,304
+(17,879)
+440
+4,028
+8,506
+31,489
+4,729
+214,543
+190,935
+52(a)
+(2,029,022)
+(102,490)
+(74,095)
+(2,512,636)
+(316,062)
+1,313
+(1,288)
+(212,255)
+(107,115)
+for the year ended 31 December 2017
+CASH FLOW STATEMENT
+256
+55,535
+(11,250)
+52(b)
+(353)
+(599,487)
+(93,047)
+(56,509)
+(582,298)
+(6,553)
+(7,539)
+(155)
+(30,396)
+(45,763)
+(569,091)
+(536,380)
+506,440
+525,789
+506,097
+524,843
+343
+946
+343
+946
+(66,217)
+(145,323)
+2017
+Net cash flow from investing activities
+Cash flows from financing activities:
+Cash received from borrowings
+612
+(7,984)
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+equity
+interests
+the Company
+earnings
+196.640
+Total
+shareholders'
+shareholders of
+Retained
+reserves
+Surplus
+reserve
+RMB million
+income
+RMB million
+RMB million
+121,576
+121,071
+RMB million
+reserve
+Specific
+Minority
+245,623
+677,538
+112,027
+(39)
+(47)
+233
+263
+(30)
+(16,829)
+(16,829)
+··· (47) (4
+(30)
+-----(16,829)
+combination of entities under common control
+65,503
+12,035
+53,468
+46,416
+7,052
+6,333
+(719)
+7,052
+- 7.052 40,410
+59.170
+12,754
+46,416
+46,416
+789,565
+Capital comprehensive
+Share
+capital
+to equity
+Other
+(60,864)
+(65,648)
+(214,654)
+(172,055)
+(21,826)
+(38,392)
+(192,828)
+(133,663)
+153,790
+106,407
+153,790
+106,407
+(36,765)
+(67,884)
+(93,400)
+(134,168)
+(10,130)
+(30,116)
+These financial statements have been approved by the board of directors on 23 March 2018.
+Net (decrease)/increase in cash and cash equivalents
+Net cash flow from financing activities
+Sub-total of cash outflows
+Cash paid for dividends or interest
+Cash repayments of borrowings
+Sub-total of cash inflows
+(15,811)
+(6,146)
+41,667
+Vice Chairman, President
+6. Distributions to minority interests
+Distributions to the original shareholders in the
+Transaction with minority interests
+- Distributions to shareholders (Note 51)
+- Appropriation for surplus reserves
+5.
+4.
+3. Appropriations of profits:
+Transactions with owners, recorded directly in
+shareholders' equity:
+Total comprehensive income
+2. Other comprehensive income (Note 36)
+1. Net profit
+Change for the period
+Balance at 1 January 2016
+equity
+attributable
+Total
+shareholders'
+for the year ended 31 December 2017
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Financial Statements (PRC)
+Financial Statements (PRC)
+87
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Chief Financial Officer
+Wang Dehua
+The accompanying notes form part of these financial statements.
+Dai Houliang
+38