diff --git "a/China/15.Sinopec_$104.55 B_Energy/2022/results.txt" "b/China/15.Sinopec_$104.55 B_Energy/2022/results.txt"
new file mode 100644--- /dev/null
+++ "b/China/15.Sinopec_$104.55 B_Energy/2022/results.txt"
@@ -0,0 +1,121723 @@
+(2,862)
+RMB millions
+RMB millions
+RMB millions
+Items
+Reasons for change
+Percentage
+Amount
+2013
+Increase/(decrease)
+At 31 December
+2014
+(5) Significant changes of items in the financial statements
+The table below sets forth reasons for those changes where the fluctuation was more than 30% during the reporting period, or such changes
+which constituted 5% or more of total assets at the balance sheet date or more than 10% of profit before taxation:
+4,684
+(12,929)
+(9,473)
+3,456
+(%)
+(4,611)
+Cash at bank and on hand
+15,101
+16,086
+13,165
+29,251
+Other receivables
+22,365
+68,466
+90,831
+Accounts receivable
+(51.5) Mainly due to the decrease in selling price of chemical products, resulting in
+(14,808)
+28,771
+13,963
+Bills receivable
+(33.1) Mainly due to the use of cash to make up monetary gap
+(5,001)
+10,100
+Available-for-sale financial assets
+(2,740)
+(548)
+(31)
+(67)
+(1,574)
+(521)
+(4,192)
+(1,674)
+(552)
+(4,259)
+558
+184
+1,420
+(2,232)
+(736)
+(5,679)
+553
+(100)
+(3,288)
+Unit: RMB millions
+Items
+6,978
+(8,408)
+(6,368)
+2,040
+2,317
+(1,781)
+of the year
+Changes
+on the profit
+End of
+the year
+183
+1,964
+Beginning of
+the year
+Embedded derivative component of the convertible bonds
+Total
+Derivative financial instruments
+Available-for-sale financial assets
+The influence
+771
+868
+Intangible assets
+17,571
+Income tax expense
+1,229
+3,481
+4,710
+Non-operating income
+5.627
+2,510
+8,137
+Investment income
+2,795
+(6,318)
+2,167
+(4,151)
+(Loss)/Gain from changes in fair value
+4,044
+25,605
+6,839
+(8,034)
+1,480
+224.2 Please refer to Note 44 to the financial statements prepared in accordance with ASBE
+35.3 Please refer to Note 45 to the financial statements prepared in accordance with ASBE
+(31.4) Please refer to Note 47 to the financial statements prepared in accordance with ASBE
+(64.7) Mainly due to the decrease in profits of holding subsidiaries
+69.1 Please refer to Note 42 to the financial statements prepared in accordance with ASBE
+(291.6) Mainly due to fair value changes of derivatives embedded in RMB 23 billion convertible
+bonds of the Company
+Limited etc., and foreign currency translation differences of SIPL's joint venture companies
+(68.4) Please refer to Note 35 to the financial statements prepared in accordance with ASBE
+53.3 Mainly due to change of foreign exchange gain or loss resulting from the fluctuation of
+RMB exchange rate
+(1,884.0) Mainly due to cash flow hedging losses of Unipec and Sinopec (Hong Kong)
+31.8 Mainly due to the partial conversion of Sinopec CB
+54.2 Please refer to Note 20 to the financial statements prepared in accordance with ASBE
+(74.0) Mainly due to the repayment of RMB 3.5 billion corporate bond, RMB 30 billion bonds
+with warrants and HKD 11.7 billion convertible bonds. And parts of the long-term
+debentures reclassified to the non-current liabilities due within one year
+45.2 Please refer to Note 28 to the financial statements prepared in accordance with ASBE
+41.1 Mainly due to the increase of loan principal under the long-term loan agreement
+between Sinopec International Petroleum Exploration and Production Limited's ("SIPL")
+subsidiary and the Sinopec Group
+30.6 Please refer to Note 14 to the financial statements prepared in accordance with ASBE
+68.5 Mainly due to the increase of tax losses carried forward in Yangzi and other
+subsidiaries and the losses from hedging
+(76.7) Mainly due to the disposal of China Gas stock
+122.2 Mainly due to the increase in hedging volume of Unipec
+32.7 Mainly due to the increase of accounts receivable balance from Unipec and
+other subsidiaries' trade transaction
+the decrease of bills receivable, and the increase in endorsement and discount of bills of
+Chemical Sales Company
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+4
+(2,718)
+4.198
+Minority interests
+3,730
+Impairment losses
+6.274
+within one year
+58,567
+(33,859)
+45,749
+11,890
+Non-current liabilities due
+108,121
+166,688
+Short-term loans
+2.838
+4,141
+6,979
+Deferred tax assets
+18,418
+60,263
+78,681
+Long-term loans
+(1,065)
+3,344
+67,426
+Other non-current liabilities
+9,618
+Financial expenses
+1,556
+491
+Specific reserve
+11,756
+(7,668)
+407
+(7,261)
+Other comprehensive income
+36.947
+48,703
+Capital reserve
+20,974
+3,362
+8.187
+11,549
+46,452
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS
+419
+(210)
+Basic earnings per share
+Items
+2012
+Change
+2013
+2014
+For the years ended 31 December
+513,374
+86,820,287
+1.5
+116,565,314
+118,280,396
+4.2
+570,346
+594,483
+687,921
+RMB
+1,238,522
+RMB
+RMB
+Weighted average return on net assets (%)
+Basic earnings per share (excluding extraordinary gain and loss)
+(30.1)
+0.578
+0.404
+Basic earnings per share based on latest total shares*
+0.542
+(25.2)
+0.543
+0.406
+Diluted earnings per share
+0.562
+(29.9)
+0.579
+0.406
+%
+0.370
+5.9
+804,273
+(29.4)
+67,179
+47,430
+90,107
+(31.5)
+96,982
+66,481
+87,926
+(32.1)
+96,453
+65,481
+2,786,045
+(1.9)
+2,880,311
+2,825,914
+63,496
+759,656
+43,238
+(35.1)
+4.9
+1,382,916
+1,451,368
+% RMB millions
+RMB millions RMB millions
+2012
+Change
+2013
+2014
+At 31 December
+143,462
+(2.3)
+151,893
+148,347
+61,922
+66,658
+(69)
+0.574
+0.548
+Subtotal
+Other non-operating expenses, net
+Gain on holding and disposal of various investments
+Government grants
+(Gain)/loss on disposal of non-current assets
+Donations
+Items
+(3) Extraordinary items and corresponding amounts
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+and Indicators
+Principal Financial Data
+and Indicators
+Principal Financial Data
+3
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+points
+Tax effect
+percentage
+Total
+(4) Items measured by fair values
+(4,680)
+(133)
+231
+(2,814)
+(2,368)
+(3,165)
+245
+125
+826
+1,622
+RMB millions
+RMB millions
+RMB millions
+2012
+2013
+2014
+For the years ended 31 December
+(Income)/expenses
+Equity shareholders of the Company
+Minority interests
+(35.5)
+55.54
+54.93
+*.
+Net cash flow from operating activities per share
+points
+percentage
+12.48
+(4.73)
+12.15
+7.42
+Weighted average return (excluding extraordinary gain and loss) on net assets (%)
+points
+percentage
+12.80
+(4.10)
+12.24
+8.14
+Calculated based on the total shares on 13 March 2015.
+0.48
+1.270
+(2.9)
+55.41
+4.548
+3.6
+4.912
+5.089
+Net assets attributable to equity shareholders of the Company per share
+Liabilities to assets ratio (%)
+RMB
+%
+2012
+Change
+At 31 December
+2013
+RMB
+RMB
+Items
+2014
+1.272
+1.308
+Unit: RMB millions
+Overseas listed foreign shares
+2014
+Others
+Sub-total
+Number
+78.11
+1,715,081,853
+1,715,081,853*
+92,766,957,040
+Percentage (%)
+78.43
+25,513,438,600
+21.57
+100
+1,715,081,853
+1,715,081,853 118,280,395,640
+100
+*. During the reporting period, a total number of 84,420,170 units Sinopec CB had been converted into A shares of Sinopec Corp, resulting in a total increase of
+1,715,081,853 shares.
+After change
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+Increase/(decrease)
+Bonus Conversion from
+shares issued reserve
+116,565,313,787
+0.534
+0.397
+Diluted earnings per share (RMB)
+0.637
+0.650
+0.566
+0.570
+0.398
+Basic earnings per share (RMB)
+71,782
+73,225
+63,879
+21.89
+Others
+Total Shares
+Percentage (%) New shares issued
+0.545
+As at 31 December 2014, the total number of shareholders of Sinopec Corp. was 695,385 including 688,972 holders of domestic A shares and 6,413
+holders of overseas H shares. As at 13 March 2015, the total number of shareholders of Sinopec Corp. was 851,381. Sinopec Corp. has complied
+with requirement for minimum public float under the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited ("the
+Hong Kong Listing Rules"). From the end of the reporting period to Redemption Record Date (11 February 2015), a total of 2,790,814,006 A shares
+were converted from the Sinopec CB.
+The shareholdings of top ten shareholders as at 31 December 2014 are listed as below:
+57,722,243
+30,154,650
+0
+Unknown
+A share
+0.25
+292,891,836
+(45,486,499)
+0
+A share
+0.23
+268,156,856
+(22,699,951)
+0
+A share
+0.08
+25,402,335,709
+(1) Shareholdings of top ten shareholders
+21.48
+卡塔爾控股有限責任公司-自有資金
+Name of shareholders
+China Petrochemical Corporation
+Nature of
+Shareholders
+Percentage of
+shareholdings
+Total
+number of
+%
+shares held
+Changes of
+shareholding¹
+Unit: Share
+Number of
+shares subject
+to pledges or
+lock-up
+State-owned share
+72.47
+85,720,671,101
+HKSCC Nominees Limited²
+國泰君安證券股份有限公司
+中國證券金融股份有限公司
+H share/A share
+89,996,185
+0.625
+Return on capital employed (%)
+510,914
+4.527
+4.476
+4.880
+4.841
+5.014
+4.950
+Adjusted net assets per share (RMB)
+Net assets per share (RMB)
+568,803
+593,041
+Total equity attributable to equity shareholders of the Company
+35,016
+37,122
+52,823
+52,536
+Minority interests
+76,177
+200,429
+185,594
+472,328
+4.191
+4.172
+196,535
+31,432
+419,604
+3.723
+3 MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER ASBE AND IFRS PLEASE REFER TO PAGE 196 OF
+THE REPORT.
+Domestically listed foreign shares
+91,051,875,187
+RMB ordinary shares
+Numbers
+Items
+Before change
+Unit: Share
+1 CHANGES IN THE SHARE CAPITAL
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
+Changes in Share Capital and
+Shareholdings of Principal Shareholders
+and Indicators
+Principal Financial Data
+LO
+5
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+3.722
+0.631
+189,468
+Non-current liabilities
+1.262
+1.308
+1.270
+Net cash generated from operating activities per share (RMB)
+17.11
+15.50
+12.50
+11.63
+7.84
+Return on net assets (%)
+12.95
+11.49
+9.09
+8.02
+6.05
+1.336
+201,534
+1.512
+Items
+101,485
+148,358
+198,812
+244,113
+Net current liabilities
+727,642
+794,423
+892,929
+1,009,906
+1,091,224
+Non-current assets
+2010
+2011
+As at 31 December
+2013
+2012
+2014
+Unit: RMB millions
+0
+0
+中國建設銀行-鵬華價值優勢股票型證券投資基金
+中國建設銀行股份有限公司-���時裕富滬深300指數證券投資基金
+中國工商銀行-上證50交易型開放式指數證券投資基金
+Company
+Limited
+Kingdream
+Public Limited
+Company
+China
+9,224,327,662
+72.01%
+270,270,000
+67.50%
+*:
+Merchants
+Energy Shipping
+Co., Ltd
+911,886,426
+19.32%
+China Petrochemical
+Corporation
+72.94%*
+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 2014
+7
+Chemical Fibre
+Sharanges in Share Capital anders
+Sinopec Yizheng
+2,907,856,000
+(3) 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
+There was no change in the controlling
+shareholders and the de facto controller of
+Sinopec Corp. during the reporting period.
+(1) Controlling shareholder
+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. Its registered
+capital is RMB 274,866,534,000,
+and the legal representative is Mr. Fu
+Chengyu. The organisation code of China
+Petrochemical Corporation is 10169286.
+X. Through re-organisation in 2000,
+China Petrochemical Corporation injected
+its principal petroleum and petrochemical
+businesses into Sinopec Corp. and
+retained certain petrochemical facilities
+and small-scale refineries. 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.
+Shares of other listed companies directly
+held by China Petrochemical Corporation
+(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
+China Petrochemical Corporation is the
+de facto controller of Sinopec Corp.
+(4) Diagram of the equity and controlling
+relationship between Sinopec Corp. and
+its de facto controller
+Name of
+Company
+Number
+of Shares
+(shares)
+Percentage
+Sinopec
+Engineering
+(Group) Co. Ltd
+65.67%
+As of 31 December 2014, a total of 93,001,030 units of Sinopec CB had been converted into A shares of Sinopec Corp., and a total of
+1,832,955,041 A shares has been converted from Sinopec CB. As at the end of the reporting period, there were 136,998,970 units of Sinopec
+CB which had not been converted into shares yet, accounting for 59.57% of the total number of issued Sinopec CB. The above-mentioned
+changes in total number of shares had no material impact on the asset-liabilities structure of the Company.
+of Principal S
+CHAIRMAN'S STATEMENT
+104,974
+105,530
+98,662
+96,785
+73,487
+Operating profit
+1,913,182
+2,505,683
+2,786,045
+2,880,311
+2,825,914
+Turnover and other operating revenues
+2010
+2011
+For the years ended 31 December
+2013
+2012
+Profit before taxation
+8
+65,504
+90,642
+Mr. Fu Chengyu, Chairman
+Dear shareholders,
+On behalf of the Board of Directors, I would first
+like to express my sincerest gratitude to all of
+our shareholders and the wider community for
+your interest and support.
+In 2014, Sinopec Corp. made significant
+progress toward fulfilling the Board's core
+commitment to improve development quality
+and returns through launching our initiatives to
+deepen reform, accelerate the transition to new
+sources of growth, as well as enhance internal
+management and maintained a favorable growth
+momentum. We are delighted to see that, with
+regard to reforms, Sinopec's marketing business
+has established mixed-ownership operations by
+restructuring and introducing private capital.
+This move not only enhanced our enterprise
+value but also advanced the transition of the
+business from an oil products supplier to an
+integrated services provider. With regard to
+growth mode transformation, commercial
+operations at the Fuling shale gas field
+commenced ahead of plan with a production
+capacity of 2 billion cubic meters per year,
+making China the first country outside North
+America to develop shale gas for commercial
+use. We have also fully upgraded our refined
+oil products and raised the production volume
+of our premium gasoline, for which growth in
+demand has been strong. Revenues for our
+non-fuel business in the marketing segment
+increased 28%. With regard to internal
+management, Sinopec effectively controlled
+costs for each business segment and conducted
+its operations safely. Our chemical feedstock
+and product mix also continued to improve due
+to the scheme of the optimisation of resources.
+The continued efforts of Sinopec management
+and employees have helped us tackle the huge
+challenge presented by the tumbling price of
+international crude in the fourth quarter of
+2014. Sinopec maintained stable production and
+improved its ability to withstand risks, further
+enhancing its level of sustainable development.
+In 2014, according to International Financial
+Reporting Standards, the Company had
+total revenues and other operating income
+of RMB 2.83 trillion, down by 1.9% from
+the previous year. Profits attributable to
+shareholders dropped by 29.7% to RMB 46.47
+billion. Taking into account the Company's
+profitability, shareholder returns and future
+development needs, the Board proposed a
+final dividend of RMB 0.11 per share, which,
+combined with the interim dividend of RMB
+0.09 per share, brings our total annual
+dividend to RMB 0.2 per share.
+During the Board's three-year term, the global
+economy has seen a marginal recovery, while
+China has entered a period of adjustment
+after growing at a very high rate for more than
+30 years. The country is now phasing into a
+New Normal of slower growth, an improved
+economic structure and a shift among the
+drivers of growth. The Board has addressed
+the quality of development and returns, and it
+has focused on top-down design to implement
+strategies for resources, markets, integration,
+internationalization, differentiation, and green
+and low-carbon development. The Board's aim is
+to realize its vision of building a people-oriented,
+world-leading energy and chemical company.
+In the past three years, the Company has
+further enhanced its corporate governance and
+has attached great importance to increase its
+enterprise value. We return our shareholders
+and protected investor interests through an
+improved dividend policy; we set up the Social
+Responsibility Management Committee to guide
+the Company on sustainable development,
+established regulations such as Policy for
+Composition and Diversity of Board Members,
+and emphasized the roles played by Board
+committees and independent Board members;
+we continued to improve internal control
+mechanisms and our ability to execute internal
+control; and we increased corporate transparency
+by improving information disclosure and investor
+relations. Sinopec was also keen to make use of
+the capital markets for corporate development.
+With support from investors and the public, the
+Company raised a total of RMB 150 billion in
+equity through an H share private placement,
+a conversion of domestic A share convertible
+bonds, equity financing of Sinopec Canton, and
+private capital raising in the marketing segment.
+At the same time, Sinopec financed its capital
+needs through the issuance of bonds based on
+market conditions, which effectively improved its
+capital and debt structure, enhanced enterprise
+value and supported the rapid development of
+the Company.
+In the past three years, we have deepened
+reforms throughout the company. We led mixed-
+ownership reform in China with our marketing
+business, aiming to transform the segment
+into a market orientated business through joint
+efforts with private investors. The initiative
+laid the foundations for invigorating Sinopec,
+further increase our competitiveness, advancing
+the transition to a new model of business and
+ensuring sustainable growth. We have completed
+the capital restructuring of the Yizheng
+Chemical Fiber Company, which accelerated the
+listing plan for Sinopec Group's oilfield service
+business, and we mitigated the negative impacts
+on Yizheng's shareholders by preventing the
+company from being delisted potentially due
+to three years of consecutive losses. We have
+also successfully completed the A share reform
+of the Shanghai Petrochemical Company and
+Yizheng Chemical Fiber Company, and we
+have supported Shanghai Petrochemical's
+stock option incentive plan. In addition, we
+have continuously improved our investment
+management mechanism with a focus on
+returns, establishing market-oriented operation
+mechanisms that will let each segment become
+more specialised and market-based, an initiative
+that has shown early progress.
+Chairman's Statement
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+66,132
+46,466
+Profit attributable to equity shareholders of the Company
+103,663
+104,565
+95,052
+2,845,234,000 shares
+14,007,974,817 shares
+3,925,144,400 shares
+Amount approved for listing
+(2) Changes in total number of shares and equity structure and the consequent changes in asset-liabilities structure
+(26,378,536)
+0
+中國銀行股份有限公司嘉實滬深300交易型開放式指數證券投資基金
+A share
+0.03
+30,426,070
+751,787
+0
+Note 1 As compared with the number of shares as at 31 December 2013.
+Note 2 Sinopec Century Bright Capital Investment Limited, overseas wholly-owned subsidiary of China Petrochemical Corporation, holds 553,150,000 H shares,
+accounting for 0.47% of the total share capital of Sinopec Corp. which is included in the total number of the shares held by HKSCC Nominees Limited.
+Statement on the connected relationship or acting in concert among the above-mentioned shareholders:
+We are not aware of any connected relationship or acting in concert among or between the above-mentioned shareholders.
+CO
+6
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+(2) Information disclosed by the shareholders of H shares according to the Securities and Futures Ordinance ("SFO")
+35,516,572
+Name of shareholders
+0.03
+南方東英資產管理有限公司-南方富時中國A50ETF
+A share
+0.04
+44,999,949
+9,714,546
+0
+A share
+0.04
+41,897,694
+34,897,694
+0
+A share
+0.03
+37,487,694
+(15,712,129)
+0
+A share
+JPMorgan Chase & Co.
+Status of shareholders
+Beneficial owner
+0.00(L)
+5.31(L)
+7.92(L)
+0.12(S)
+5.99 (L)
+derivative securities
+New H shares
+Bonus A shares
+Bonus H shares
+Issuing date
+Issuing price
+HKD8.45/share
+14 February 2013
+20 June 2013
+25 June 2013
+Issued amount
+2,845,234,000 shares
+14,007,974,817 shares
+3,925,144,400 shares
+Listing date
+14 February 2013
+20 June 2013
+26 June 2013
+1.42(L)
+1.41(S)
+2.57(L)
+Approximate
+percentage of Sinopec
+Corp.'s issued share capital
+(H Share) (%)
+Investment manager
+Trustee (other than a bare trustee)
+Custodian corporation/approved
+lending agent
+Interest of corporation controlled by
+the substantial shareholder
+Investment manager
+BlackRock, Inc.
+Schroders Plc
+*: (L): Long position, (S): Short position
+3 ISSUANCE AND LISTING OF SECURITIES
+% RMB millions
+(1) Issuance of securities in last three years
+Number of
+shares interests held
+or regarded as held *
+656,026,310(L)
+360,358,429(S)
+364,641,100(L)
+32,200(L)
+1,357,077,571(L)
+2,020,880,233(L)
+31,124,000(S)
+1,528,199,922(L)
+Types of shares and
+2012
+Items
+For the years ended 31 December
+2014
+2013
+RMB millions
+Management's Discussion and Analysis
+Significant Events
+39
+Connected Transactions
+43
+Corporate Governance
+51
+Report of the Board of Directors
+Business Review and Prospects
+56
+58
+Directors, Supervisors, Senior Management and Employees
+71
+Principal Wholly-owned and Controlled Subsidiaries
+72
+Financial Statements
+200
+Corporate Information
+Report of the Board of Supervisors
+201
+Chairman's Statement
+Changes in Share Capital and Shareholdings
+Change
+2014 ANNUAL REPORT AND ACCOUNTS
+(Stock Code A Share
+600028%;
+H Share 0386; ADR SNP)
+中国石化
+lopec SINOPEC CORP.
+FORM
+of Principal Shareholders
+TRANSFORMATION
+8
+11
+19
+31
+236
+CONTENTS
+Company Profile
+Principal Financial Data and Indicators
+MANAGEMENT
+Documents for Inspection
+25,513,438,600
+Confirmation from the Directors and Senior Management
+Refinery throughput is converted at 1 tonne = 7.35 barrels.
+2
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+1 FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH ASBE
+(1) Principal financial data
+Items
+Operating income
+Operating profit
+For domestic production of crude oil, 1 tonne = 7.1 barrels, for overseas production of crude oil. 1 tonne = 7.22 barrels;
+For production of natural gas, 1 cubic meter = 35.31 cubic feet;
+Profit before taxation
+Net cash flow from operating activities
+Items
+Total liabilities
+Total equity attributable to equity shareholders of the Company
+Total shares (1,000 shares)
+(2) Principal financial indicators
+202
+RMB millions
+Net profit attributable to equity shareholders of the Company
+Net profit attributable to equity shareholders of the Company
+excluding extraordinary gain and loss
+Conversion of crude oil, natural gas and refinery throughput
+Total assets
+Sinopec CB: RMB23 billion A share convertible bond issued by Sinopec Corp. in 2011;
+CSRC: China Securities Regulatory Commission.
+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 20 March 2015 and unless required
+by regulatory authorities, the Company undertakes no obligation to update these statements.
+Company Profile
+COMPANY PROFILE
+THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 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 23RD MEETING OF THE FIFTH SESSION OF THE BOARD OF DIRECTORS OF SINOPEC CORP. (THE "BOARD"), THE
+BOARD RECOMMENDED A FINAL CASH DIVIDEND OF RMB 0.11 (TAX INCLUSIVE) PER SHARE FOR 2014, COMBINING WITH THE INTERIM
+CASH DIVIDEND OF RMB 0.09 (TAX INCLUSIVE) PER SHARE, THE TOTAL CASH DIVIDEND FOR 2014 WILL BE RMB 0.20 (TAX INCLUSIVE)
+PER SHARE. THE DIVIDEND PROPOSAL IS SUBJECT TO THE SHAREHOLDERS' APPROVAL AT THE ANNUAL GENERAL MEETING FOR THE
+YEAR 2014 (THE "ANNUAL GENERAL MEETING").
+Exploration and Production
+Refining
+Marketing and Distribution
+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 SUBSTANTIAL SHAREHOLDERS OF SINOPEC CORP.. MR. WANG ZHIGANG, DIRECTOR, DID NOT ATTEND THE TWENTY-THIRD MEETING
+OF THE FIFTH SESSION OF THE BOARD DUE TO OFFICIAL DUTIES. MR. WANG ZHIGANG AUTHORISED MR. LI CHUNGUANG, DIRECTOR
+AND PRESIDENT, TO VOTE ON HIS BEHALVES IN RESPECT OF THE RESOLUTIONS PUT FORWARD AT THE MEETING. MR. FU CHENGYU,
+CHAIRMAN OF THE BOARD OF DIRECTORS, MR. LI CHUNGUANG, DIRECTOR AND PRESIDENT, MR. WANG XINHUA, CHIEF FINANCIAL
+OFFICER AND MR. WANG DEHUA, HEAD OF THE CORPORATE FINANCIAL 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 2014.
+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 sale, storage and transportation of petroleum products, petrochemical products, coal
+chemical products, synthetic fibre, fertiliser 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.
+Sinopec sets 'fueling beautiful life' as its corporate mission, puts 'people, responsibility, integrity, precision, innovation and win-win' as its corporate
+core values, pursues strategies of resources, markets, integration, internationalization, differentiation, and green and low-carbon development, and
+strives to achieve its corporate vision of building a world leading energy and chemical company.
+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;
+"The Company": Sinopec Corp. and its subsidiaries;
+"China Petrochemical Corporation": our controlling shareholder, China Petrochemical Corporation;
+"Sinopec group”: China Petrochemical Corporation and its subsidiaries;
+Chemicals
+RMC: Oil and Natural Gas Reserves Management Committee of the Company;
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(15) Income tax
+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).
+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 realise the asset and settle the liability simultaneously.
+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 including unused tax losses and
+unused tax credits able to be utilised in subsequent years. 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.
+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.
+the taxable entity has a legally enforceable right to offset current tax assets and current tax liabilities; and
+they relate to income taxes levied by the same tax authority on either:
+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.
+At the balance sheet date, deferred tax assets and liabilities are offset if all the following conditions are met:
+the same taxable entity; or
+for the year ended 31 December 2014
+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.
+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.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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.
+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 charged to the cost of an asset or to
+profit or loss in the same period.
+Basic pension insurance
+The Group classifies post-empoyment 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 DB. 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 charged 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
+(14) Employee benefits
+Long-term deferred expenses are amortised on a straight-line basis over their beneficial periods.
+(13) Long-term deferred expenses
+Impairment losses for assets are not reversed.
+(16) Provisions
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+Environmental expenditures that relate to current ongoing operations or to conditions caused by past operations is expensed as incurred.
+(21) Environmental expenditures
+Repairs and maintenance (including overhauling expenses) expenses are recognised in profit or loss when incurred.
+(20) 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.
+(19) 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.
+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.
+Interest income is recognised on a time proportion basis with reference to the principal outstanding and the applicable effective interest rate.
+(18) Government grants
+(c) Interest income
+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.
+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.
+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.
+Revenue from the sales of goods is measured at fair value of the considerations received or receivable under the sales contract or agreement.
+(b) Revenues from rendering services
+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.
+the significant risks and rewards of ownership and title have been transferred to buyers; and
+Revenue from the sales of goods is recognised when all of the general conditions stated above and following conditions are satisfied:
+(a) Revenues from sales of goods
+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
+(17) Revenue recognition
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (RPC)
+Financial Statements (RPC)
+93
+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.
+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.
+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.
+(12) Impairment of financial assets and non-financial long-term assets (Continued)
+643
+70
+0.7889
+55
+145
+0.0514
+7
+1,073
+155
+2
+7.4556
+15
+6350
+6.0969
+6.1190
+280
+844
+0.0578
+9
+8.4189
+81
+65
+28
+5,879
+8,561
+2,247
+3,948
+321
+1
+6.1190
+0.7862
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(12) Impairment of financial assets and non-financial long-term assets
+(a) Impairment of financial assets
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (RPC)
+92
+Financial Statements (RPC)
+91
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+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, oil and gas properties, construction in progress, goodwill, intangible assets and investments in subsidiaries, associates and jointly
+controlled entities may be impaired.
+(b) Impairment of other non-financial long-term assets
+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 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.
+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
+(22) Research and development costs
+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
+(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
+(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.
+(b) Impairment of other non-financial long-term assets (Continued)
+Research and development costs are recognised in profit or loss when incurred.
+(k) close family members of key management personnel of the Company's holding company; and
+Operating lease payments are charged as expenses on a straight-line basis over the period of the respective leases.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+96
+In accordance with PRC new rules and regulations, the threshold above which special oil income levy will be imposed (with the five-level progressive
+tax rates varying from 20% to 40% remaining) will be raised from USD 55 per barrel to USD 65 per barrel from 1 January 2015.
+Value added tax rate for liquefied petroleum gas, natural gas and certain agricultural products is 13% and that for other products is 17%.
+The resources tax rate was raised from 5% to 6% from 1 December 2014, the mineral resources compensation fee of crude oil and natural gas was
+decreased from 1% to zero at the same time.
+1,370.60
+1,171.24
+996.80
+1,116.50
+954.10
+812.00
+1,576.40
+1,261.12
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+1,126.00
+1,435.84
+1,282.00
+1,939.00
+1,551.20
+1,385.00
+1,293.60
+1,105.44
+940.80
+1,943.20
+1,554.56
+1,388.00
+(RMB/Ton)
+(RMB/Ton)
+1,794.80
+for the year ended 31 December 2014
+5 CASH AT BANK AND ON HAND
+The Group
+105
+7,283
+5,064
+36
+30
+million
+RMB
+Exchange
+rates
+At 31 December 2013
+currency
+million
+RMB
+million
+Exchange
+rates
+million
+Original
+Original
+currency
+At 31 December 2014
+Total
+US Dollars
+Euro
+Renminbi
+Deposits at related parities
+Others
+Euro
+Japanese Yen
+Hong Kong Dollars
+US Dollars
+Renminbi
+Cash at bank
+Renminbi
+Cash on hand
+(RMB/Ton)
+Jet fuel oil
+Fuel oil
+Lubricant oil
+95
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+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:
+(26) Segment reporting
+(I) an entity which is under control, joint control of principle individual investor, key management personnel or close family members of such
+individuals.
+1,968
+(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) jointly controlled entities of the Group, including subsidiaries of the jointly controlled entities;
+(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;
+(a) the holding company of the Company;
+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:
+(25) Related parties
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+94
+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.
+(24) Dividends
+Financial Statements (RPC)
+(23) Operating leases
+Financial Statements (RPC)
+for the year ended 31 December 2014
+Solvent oil
+Naphtha
+Diesel
+Gasoline
+1 January 2009 29 November 2014 13 December 2014
+Effective from
+Effective from
+Effective from
+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, special oil income levy, city construction
+tax, education surcharge and local education surcharge.
+Not Applicable
+(2,059)
+Translation differences in foreign currency statements
+Not Applicable
+(407)
+2,466
+1,760
+(1,760)
+31 December 2013
+The amounts
+(RMB million)
+Other comprehensive income
+Capital reserve
+Affected financial statement line items
+Long-term investments
+Available-for-sale financial assets
+4 TAXATION
+Contents and reasons of the changes in accounting policies
+ASBE No. 2-Long-Term Equity Investments has amended
+the scope of long-term equity investments.
+The Group reclassified equity investments accordingly and
+the comparative financial information has been adjusted.
+Several financial statement line items have been presented,
+and the financial information for the comparative period
+have been presented in accordance with the above standards.
+Certain disclosed information related to the Group's interest
+in other entities has been prepared based on ASBE No.
+41-Disclosure of Interests in Other Entities. Except for the
+disclosure of structured body that is not included in the
+consolidated financial statements, the comparative financial
+statement information has been presented accordingly.
+The Group has adopted the standards mentioned above for the preparation of financial statements of 2014. The impacts of these standards on
+the Group's financial statements are as follows:
+In 2014, the MOF promulgated ASBE No. 39 through 41 regarding Fair Value Measurement, Joint Arrangement and Disclosure of Interests in
+Other Entities, and amended ASBE No. 2, No. 9, No. 30, No. 33 and No. 37 regarding Long-Term Equity Investments, Employee Compensation,
+Presentation of Financial Statements, Consolidated Financial Statements and Presentation of Financial Instruments. The above accounting
+standards became effective from 1 July 2014 except for No. 37 Presentation of Financial Instruments which shall be implemented for the 2014
+annual consolidated financial statements.
+(27) Significant changes in accounting policies
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+425
+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.
+2,591
+32,455
+98.4
+2,668
+10.6
+3
+0.1
+118
+0.4
+8
+6.8
+45
+0.2
+8
+17.8
+48
+0.1
+4
+8.3
+120
+25,159
+0.5
+117
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Where the obligations for financial liabilities are completely or partially discharged, the entire or parts of financial liabilities are derecognised.
+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.
+88.7
+(f) Derecognition of financial assets and financial liabilities
+22,326
+receivable
+balance
+The Company
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+Total
+At 31 December 2014
+At 31 December 2013
+Percentage
+Percentage
+of allowance
+Percentage
+Percentage
+of allowance
+Amount
+RMB
+to total
+accounts
+receivable
+to accounts
+Allowance
+receivable
+RMB
+balance
+million
+%
+million
+%
+Amount
+RMB
+million
+to total
+accounts
+receivable
+to accounts
+%
+Allowance
+RMB
+million
+%
+97.6
+If the convertible bonds are converted, the carrying amounts of the derivative and liability components are transferred to share capital
+and share premium as consideration for the shares issued. If the convertible bonds are redeemed, any difference between the amount
+paid and the carrying amount of both components is recognised in profit or loss.
+At initial recognition, the derivative component of the convertible bonds is measured at fair value. Any excess of proceeds over the amount
+initially recognised as the derivative component is recognised as the liability component. Transaction costs that relate to the issue of the
+convertible bonds are allocated to the liability and derivative components in proportion to the allocation of proceeds. The portion of the
+transaction costs relating to the liability component is recognised initially as part of the liability. The portion relating to the derivative
+component is recognised immediately as an expense in profit or loss.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+97.5
+6.0969
+1.1
+366
+97.1
+831
+100.0
+128
+32,998
+100.0
+378
+At 31 December 2014 and 2013, the total amounts of the top five accounts receivable of the Group are set out below:
+Total amount (RMB million)
+Percentage to the total balance of accounts receivable
+Allowance for doubtful accounts
+At 31 December
+At 31 December
+2014
+34,363
+37.6%
+2013
+19,896
+28.8%
+During the year ended 31 December 2014 and 2013, the Group and the Company had no individually significant accounts receivable been fully or
+substantially provided allowance for doubtful accounts.
+During the year ended 31 December 2014 and 2013, 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.
+At 31 December 2014 and 2013, the Group and the Company had no individually significant accounts receivable that aged over three years.
+98
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+(11) Financial Instruments (Continued)
+The derivative component is subsequently remeasured at each balance sheet date and any gains or losses arising from change in the
+fair value are recognised in profit or loss. The liability component is subsequently carried at amortised cost using the effective interest
+method until extinguished on conversion or redemption. Both the liability and the related derivative components are presented together
+for financial statements reporting purposes.
+(d) Hedge accounting (Continued)
+Cash flow hedges
+Convertible bonds issued with a cash settlement option and other embedded derivative features are split into liability and derivative
+components.
+- Other convertible bonds
+If the convertible corporate bond is converted, the liability component, together with the equity component, is transferred to share capital
+and capital reserve (share premium). If the convertible corporate bond is redeemed, the consideration paid for the redemption, together
+with the transaction costs that relate to the redemption, are allocated to the liability and equity components. The difference between the
+allocated and carrying amounts is charged to profit or loss if it relates to the liability component or is directly recognised in equity if it
+relates to the equity component.
+Subsequent to initial recognition, the liability component of a convertible corporate bond is measured at amortised cost using the effective
+interest method, unless it is designated at fair value through profit or loss. The equity component of a convertible corporate bond is not
+re-measured subsequent to initial recognition.
+At initial recognition, the liability component of the convertible bonds is measured as the present value of the future interest and principal
+payments, discounted at the market rate of interest applicable at the time of initial recognition to similar liabilities that do not have a
+conversion option. Any excess of proceeds over the amount initially recognised as the liability component is recognised as the equity
+component. Transaction costs that relate to the issue of the convertible bonds are allocated to the liability and equity components in
+proportion to the allocation of proceeds.
+Convertible bonds that can be converted to equity share capital at the option of the holder, where the number of shares that would be
+issued on conversion and the value of the consideration that would be received at that time do not vary, are accounted for as compound
+financial instruments which contain both a liability component and an equity component.
+Convertible bonds that contain an equity component
+(e) Convertible bonds
+(11) Financial Instruments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (RPC)
+90
+Financial Statements (RPC)
+89
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+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. The Group
+had no hedge of a net investment in a foreign operation during this year.
+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 re-measuring 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.
+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.
+Fair value hedges
+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 or non-financial liability, the associated
+gain or loss is removed from shareholders' equity, included in the initial cost of the non-financial asset or liability, and recognised in profit
+or loss in the same year 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 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):
+-
+20.7
+377
+12287
+million
+million
+Amounts due from subsidiaries
+19,917
+25,068
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from associates and jointly controlled entities
+Amounts due from others
+20,188
+9,311
+1,587
+2,742
+5,290
+9,091
+2,161
+2,766
+65,883
+50,638
+1,494
+2,422
+91,361
+69,040
+25,159
+32,998
+Less: Allowance for doubtful accounts
+Total
+Ageing analysis on accounts receivable is as follows:
+530
+90,831
+574
+68,466
+128
+25,031
+million
+378
+32,620
+million
+RMB
+7.4556
+6
+16.4
+8.4189
+1
+10,100
+15,101
+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.
+At 31 December 2014, time deposits with financial institutions of the Group amounted to RMB 745 million (2013: RMB 55 million).
+6
+BILLS RECEIVABLE
+Bills receivable represents mainly the bills of acceptance issued by banks for sales of goods and products.
+At 31 December 2014, the Group's outstanding endorsed or discounted bills (with recourse) amounted to RMB 4,427 million (2013: RMB 5,314
+million), all of which are due before 30 June 2015.
+97
+Financial Statements (RPC)
+Financial Statements (RPC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+7
+ACCOUNTS RECEIVABLE
+The Group
+The Company
+At 31 December
+2014
+At 31 December
+2013
+At 31 December
+2014
+At 31 December
+2013
+RMB
+RMB
+RMB
+The Group
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+Percentage
+3.1
+68,296
+134
+98.9
+Between two and three years
+78
+0.1
+Over three years
+471
+0.5
+Total
+91,361
+100.0
+150
+25
+32.1
+58
+469
+99.6
+530
+552
+69,040
+100.0
+9218O
+1
+0.2
+0.1
+At 31 December 2014
+574
+0.8
+539
+23
+0.8
+80000
+Between one and two years
+to total
+accounts
+receivable
+RMB
+743
+Amount
+of allowance
+to accounts
+At 31 December 2013
+Percentage
+of allowance
+Allowance
+RMB
+receivable
+balance
+million
+%
+million
+%
+Percentage
+to total
+accounts
+receivable
+Amount
+RMB
+million
+Within one year
+98.6
+90,069
+million
+%
+%
+balance
+receivable
+Allowance
+RMB
+Percentage
+to accounts
+13
+1,097
+2,027
+170
+Dividends declared by associates
+309
+444
+Share of profit from associates
+801
+1,236
+100
+318
+513
+GES
+11
+65
+681828
+1,005
+948
+2,014
+163
+66
+690
+Total comprehensive income
+111,023
+(508)
+million
+RMB
+million
+163
+2013
+RMB
+2014
+2013
+RMB
+RMB
+million
+million
+million
+(608)
+Turnover
+2,893
+115,725
+1
+Profit for the year
+2,522
+1,409
+1,097
+2,027
+170
+100
+Other comprehensive loss
+2,706
+66
+96,787
+40
+6,164
+36
+768,102
+579
+73,857
+1,380,590
+3,928
+130,151
+Acquisitions (Note 52(iii))
+Reclassifications
+Decreases for the year
+Exchange adjustments
+Balance at 31 December 2014
+Accumulated depreciation:
+Balance at 1 January 2014
+440
+2,984
+3,424
+390
+(6)
+(2,737)
+(82)
+(384)
+(31,968)
+(34,787)
+6
+120
+million
+8
+515,701
+3,309
+50,130
+17
+Transferred from construction in progress
+Balance at 1 January 2014
+60
+38
+49
+20
+Share of other comprehensive loss
+from associates
+(249)
+(298)
+Note:
+(vii) Zhongtian Synergetic Energy was under construction during the year ended 31 December 2014.
+The share of profit and other comprehensive loss for the year ended 31 December 2014 in all individually immaterial associates accounted for
+using equity method in aggregate was RMB 1,180 million (2013: RMB 760 million) and RMB 57 million (2013: other comprehensive income
+RMB 1 million) respectively. As at 31 December 2014, the carrying amount of all individually immaterial associates accounted for using equity
+method in aggregate was RMB 13,843 million (2013: RMB 12,393 million).
+104
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+12 FIXED ASSETS
+The Group
+Plants and
+buildings
+RMB million
+Oil
+and gas
+properties
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+Total
+RMB million
+Cost:
+Additions for the year
+RMB
+3,272
+RMB
+million
+(233)
+(2,348)
+(1,330)
+(1,043)
+(1,102)
+(370)
+(354)
+Net assets
+18,598
+16,584
+7,534
+7,758
+12,796
+9,796
+4,046
+3,878
+3,315
+Net assets attributable to
+minority interests
+877
+899
+Net assets attributable to owners
+of the Company
+(227)
+18,598
+(3,271)
+Non-current liabilities
+101,090
+Non-current assets
+14,992
+17,490
+4,996
+4,830
+15,849
+6,987
+3,263
+3,069
+1,126
+1,058
+Current liabilities
+(105,289)
+(102,112)
+(11,051)
+(12,249)
+(7,538)
+(335)
+(640)
+(1,183)
+(224)
+(281)
+(104)
+RMB
+16,584
+6,859
+1,158
+995
+982
+Zhongtian Synergetic
+Year ended 31 December
+Sinopec Finance
+China Aviation Oil
+Energy(vii)
+Shanghai Chemical
+Shanghai Petroleum
+2014
+2013
+2014
+2013
+2014
+2013
+2014
+RMB
+RMB
+RMB
+million
+million
+million
+1,212
+6,657
+3,796
+1,989
+12,796
+9,796
+4,046
+3,878
+3,315
+3,272
+Share of net assets
+from associates
+9,113
+8,126
+1,998
+1,989
+4,958
+3,796
+1,212
+1,158
+995
+982
+Carrying Amounts
+Summarised income statement
+9,113
+8,126
+1,998
+4,958
+569,172
+(202)
+12,768
+134
+1,483,440
+Provision for impairment losses:
+23,613
+1,825
+6,566
+1,688
+3,009
+10,525
+Balance at 31 December 2014
+(230)
+(23)
+(17)
+(2)
+Balance at 1 January 2014
+(188)
+7,908
+367
+4,407
+240
+131
+2,763
+Additions for the year
+15,935
+1,481
+2,176
+1,450
+2,878
+Decreases for the year
+197
+304
+24
+627
+567
+Amortisation of the intangible assets of the Group charged for the year ended 31 December 2014 is RMB 3,035 million (2013: RMB 2,505 million).
+60,263
+49,136
+43,270
+Balance at 31 December 2013
+Balance at 31 December 2014
+Net book value:
+832
+18
+107
+24
+483
+200
+Balance at 31 December 2014
+(20)
+(20)
+Decreases for the year
+274
+2
+70
+179
+23
+Additions for the year
+578
+16
+37
+7,950
+Balance at 1 January 2014
+Accumulated amortisation:
+103,126
+RMB million
+technology
+Patents
+RMB million
+Operation
+Non-patent
+Land use
+rights
+RMB million
+The Group
+14 INTANGIBLE ASSETS
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+106 Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+71
+financing
+66%
+4,406
+2,990
+1,416
+7,094
+Upgrading Project
+Bank loans & self-
+Jiujiang sour Crude Oil Quality
+130
+financing
+26%
+4,533
+2,000
+2,533
+rights
+RMB million
+1,525
+1,665
+Others
+RMB million
+RMB million
+3,221
+32,748
+3,237
+4,059
+59,861
+Balance at 31 December 2014
+(1,740)
+(37)
+(130)
+(2)
+(1,571)
+Decreases for the year
+28,090
+687
+17,038
+100
+250
+10,015
+Additions for the year
+76,776
+2,571
+15,840
+3,139
+3,809
+51,417
+Balance at 1 January 2014
+Cost:
+Total
+17,775
+26,075
+13,627
+78,681
+7
+Available-for-sale securities
+(870)
+282
+(870)
+282
+of the convertible bonds
+Embedded derivative component
+2,261
+(8,390)
+(8,635)
+3,474
+2,261
+(4)
+3,474
+(15,590)
+(16,387)
+7,200
+7,752
+Fixed assets
+Non-current
+(86)
+887
+(120)
+34
+887
+Cash flow hedges
+Tax value of losses carried forward
+(436)
+3
+(436)
+Other non-current assets mainly represent prepayments for construction projects and purchases of equipment.
+18 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 2014, write-down of deferred tax assets
+amounted to RMB 114 million (2013: RMB 926 million).
+At 31 December 2014, certain subsidiaries of the Company did not recognise deferred tax of deductable loss carried forward of RMB17,085 million
+(2013: RMB 10,809 million), of which RMB 6,996 million (2013: RMB 2,638 million) was incurred for the year ended 31 December 2014, because
+it was not probable that the related tax benefit will be realised. These deductable losses carried forward of RMB 325 million, RMB 3,344 million,
+RMB 3,786 million, RMB 2,634 million and RMB 6,996 million will expire in 2015, 2016, 2017, 2018, 2019 and after, respectively.
+4,141
+7,977
+At 31 December
+2013
+RMB million
+2014
+RMB million
+6,979
+7,820
+At 31 December
+Deferred tax assets
+Deferred tax liabilities
+9,125
+9,125
+At 31 December
+2013
+RMB million
+At 31 December
+2014
+RMB million
+8,650
+8,650
+Deferred tax assets and liabilities after the consolidated elimination adjustments are as follows:
+Deferred tax assets
+Deferred tax liabilities
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+(3,836)
+(841)
+(17,102)
+(16,470)
+13
+7
+(86)
+(79)
+99
+13,266
+86
+15,629
+Deferred tax assets/(liabilities)
+Others
+357
+258
+3,315
+2,883
+Long-term deferred expenses primarily represent prepaid rental expenses over one year and catalysts expenditures.
+16 LONG-TERM DEFERRED EXPENSES
+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 10.0% to 10.9% (2013: 11.5%
+to 12.7%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no impairment loss was
+recognised.
+6,255
+6,281
+202
+228
+853
+853
+4,043
+4,043
+1,157
+1,157
+2013
+RMB million
+RMB million
+2014
+At 31 December
+At 31 December
+Total
+Multiple units without individual significant goodwill
+Sinopec Zhenhai Refining and Chemical Branch (“Sinopec Zhenhai”)
+Sinopec (Hong Kong) Limited
+Sinopec Beijing Yanshan Branch ("Sinopec Yanshan")
+Name of investees
+Goodwill is allocated to the following Group's cash-generating units:
+15 GOODWILL
+1,074
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+1,378
+107
+Financial Statements (RPC)
+3,315
+357
+258
+Accruals
+2,883
+Receivables and inventories
+Current
+2013
+RMB million
+2014
+RMB million
+At
+Net balance
+At
+Deferred tax liabilities
+At
+31 December 31 December 31 December 31 December 31 December 31 December
+2013
+RMB million
+At
+RMB million
+RMB million
+RMB million
+2014
+2013
+2014
+At
+At
+Deferred tax assets
+Deferred tax assets and liabilities before the consolidated elimination adjustments are as follows:
+17 DEFERRED TAX ASSETS AND LIABILITIES
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (RPC)
+813,178
+Bank loans & self-
+92
+497,163
+47,345
+Balance at 31 December 2014
+(8,887)
+(117,813)
+(566)
+(78)
+(457)
+(26,413)
+(556)
+(6)
+2,969
+79,942
+1,094,191
+478,380
+572,298
+132
+33,206
+71,261
+3
+2,389
+562
+Decreases for the year
+Transferred from/to subsidiaries (i)
+Transferred from construction in progress
+Reclassifications
+Additions for the year
+Balance at 1 January 2014
+Cost:
+RMB million
+Total
+Equipment,
+machinery
+and others
+RMB million
+and gas
+properties
+RMB million
+450,632
+2,834
+44,347
+(144,792)
+(9,422)
+1,022,888
+Accumulated depreciation:
+Balance at 1 January 2014
+Provision for impairment losses:
+542,198
+250,381
+272,040
+19,777
+Balance at 31 December 2014
+(7,337)
+(6,970)
+(60)
+(307)
+Decreases for the year
+(43,950)
+(106)
+(36,176)
+(309)
+(7,465)
+Transferred from/to subsidiaries (i)
+(2)
+108
+Reclassifications
+533,002
+60,483
+25,078
+33,642
+1,763
+Additions for the year
+268,555
+238,769
+25,678
+Oil
+RMB million
+Plants and
+buildings
+The Company
+2,850
+Balance at 1 January 2014
+Provision for impairment losses:
+74
+743,645
+392,949
+313,308
+37,388
+Balance at 31 December 2014
+3
+69
+2
+Exchange adjustments
+(16,958)
+(128)
+(15,940)
+(63)
+(2)
+130
+(955)
+Decreases for the year
+Reclassifications
+677,400
+83,129
+41,513
+38,235
+3,381
+Additions for the year
+367,501
+275,069
+34,830
+13,525
+Balance at 1 January 2014
+Additions for the year
+2,436
+669,595
+383,381
+227,107
+59,107
+Balance at 31 December 2013
+703,485
+402,655
+239,905
+60,925
+Balance at 31 December 2014
+Net book value:
+36,310
+17,574
+15.959
+2,777
+Balance at 31 December 2014
+1
+1
+Exchange adjustments
+(714)
+(618)
+(2)
+(94)
+Decreases for the year
+3,428
+33,595
+17,220
+971
+21
+Guangxi LNG Project
+Additions for the year
+Decreases for the year
+Percentage
+Balance at
+31 December
+2014
+RMB million
+Net change
+for the year
+RMB million
+Balance at
+1 January
+2014
+RMB million
+RMB million
+Budgeted
+amount
+Project name
+100,543
+123,059
+177,667
+160,630
+221
+(184)
+of Completion
+%
+(11)
+184
+222
+100,543
+177,888
+5
+(1,340)
+(10,154)
+(79,942)
+(130,151)
+(5,587)
+(5,587)
+(33,627)
+10
+Accumulated
+interest
+capitalised at
+31 December
+Source of funding
+2014
+financing
+64%
+1,757
+(2,629)
+4,386
+10,716
+Bank loans & self-
+Shandong LNG Project
+295
+financing
+99%
+172
+(4,859)
+5,031
+6,776
+Crude Oil Reconstruction Project
+Bank loans & self-
+339
+financing
+98%
+23
+(5,633)
+5,656
+7,865
+Bank loans & self-
+Yangzi Oil Quality and Inferior Crude
+Oil Reconstruction Project
+Shijiazhuang Oil Quality and Inferior
+RMB million
+(1,069)
+14,162
+123,243
+97,796
+149,830
+Balance at 31 December 2013
+452,361
+533,297
+289,488
+215,231
+211,228
+200,412
+25,902
+43,397
+Balance at 31 December 2014
+Net book value:
+28.329
+(238)
+13,895
+1,666
+(2)
+(34)
+(1,844)
+(1,357)
+10
+(497)
+2,519
+72
+2,436
+11
+27,892
+14,255
+11,451
+2,186
+Balance at 31 December 2014
+Note:
+Transferred from/to subsidiaries (i)
+(i) Mainly due to the restructuring of Marketing Company (Note 11(i)).
+105
+160,852
+The Company
+RMB million
+The Group
+RMB million
+At 31 December 2014, major construction projects of the Group are as follows:
+Balance at 31 December 2013
+Balance at 31 December 2014
+Net book value:
+Balance at 31 December 2014
+Decreases for the year
+Additions for the year
+Balance at 1 January 2014
+Balance at 31 December 2014
+Provision for impairment losses:
+Transferred to fixed assets
+Reclassification to other assets
+Exchange adjustments
+Transferred to subsidiaries (Note 11(i))
+Dry hole costs written off
+Acquisitions (Note 52(iii))
+Disposals for the year
+Balance at 1 January 2014
+Additions for the year
+Cost:
+13 CONSTRUCTION IN PROGRESS
+At 31 December 2014 and 2013, the Group and the Company had no individually significant fully depreciated fixed assets which were still in use.
+At 31 December 2014 and 2013, the Group and the Company had no individually significant fixed assets which were temporarily idle or pending for
+disposal.
+Impairment losses on fixed assets for the year ended 31 December 2014 primarily represent impairment losses recognised in the exploration and
+production ("E&P") segment of RMB 2,436 million (2013: RMB 2,523 million) on fixed assets and for the chemicals segment of RMB 917 million
+(2013: RMB 0 million) of fixed assets. The primary factor resulting in the E&P segment impairment losses was unsuccessful development drilling
+and high operating and development costs 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 10.13%
+(2013: 10.70%). The assets in the chemicals segment were written down 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 2014 included RMB 3,309 million (2013:
+RMB 4,188 million) (Note 30) and RMB 2,834 million (2013: RMB 3,345 million), respectively of the estimated dismantlement costs for site
+restoration.
+12 FIXED ASSETS (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (RPC)
+Financial Statements (RPC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+At 31 December 2014 and 2013, the Group and the Company had no individually significant fixed assets which were pledged.
+receivable
+2,783
+The Company
+At 31 December 2014
+At 31 December 2013
+Percentage
+of allowance
+Percentage
+of allowance
+Amount
+RMB
+million
+Percentage
+to total
+prepayments
+Allowance
+RMB prepayments
+million
+balance
+to
+Amount Percentage
+RMB
+to total
+million prepayments
+46
+Allowance
+RMB
+prepayments
+million
+balance
+1,821
+92.2
+4,455
+84.4
+80
+4.0
+65
+3.3
+to
+10
+100.0
+49
+3,983
+93.5
+1.8
+1
+1.4
+154
+3.6
+3
+1.9
+3.8
+5
+4,262
+3.4
+1.6
+1
+1.4
+2.7
+42
+41.2
+55
+1.3
+42
+76.4
+100.0
+70
+1
+0.5
+100.0
+757
+19.8%
+695
+16.3%
+At 31 December
+2014
+At 31 December
+2013
+RMB million
+RMB million
+Raw materials
+Work in progress
+Finished goods
+Spare parts and consumables
+2013
+95,298
+22,728
+21,181
+71,959
+76,289
+1,841
+1,989
+Less: Provision for diminution in value of inventories
+Total
+191,826
+3,603
+188,223
+223,657
+1,751
+221,906
+124,198
+1,976
+2014
+At 31 December
+10350
+748
+14.2
+3
+0.4
+5
+7.7
+5
+0.1
+9
+90.0
+At 31 December
+69
+37
+53.6
+14
+5,277
+100.0
+40
+At 31 December 2014 and 2013, the total amounts of the top five prepayments of the Group are set out below:
+Total amount (RMB million)
+Percentage to the total balance of prepayments
+10 INVENTORIES
+The Group
+1.3
+Provision for diminution in value of inventories is mainly against raw materials and finished goods. For the year ended 31 December 2014, the
+provision for diminution in value of inventories of the Group was primarily due to the costs of raw materials and finished goods of the refining,
+chemicals and marketing segments were higher than their net realisable value.
+91.7
+3,829
+During the year ended 31 December 2014 and 2013, the Group and the Company had no individually significant other receivables been fully or
+substantially provided allowance for doubtful accounts.
+During the year ended 31 December 2014 and 2013, 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.
+At 31 December 2014 and 2013, the Group and the Company had no individually significant other receivables that aged over three years.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+99
+Financial Statements (RPC)
+Financial Statements (RPC)
+100
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+9 PREPAYMENTS
+Amounts to subsidiaries
+307
+Amounts to Sinopec Group Company and fellow subsidiaries
+Amounts to others
+Less: Allowance for doubtful accounts
+Total
+Ageing analysis of prepayments is as follows:
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+Total
+Within one year
+Between one and two years
+Amounts to associates and jointly controlled entities
+Between two and three years
+13.4%
+40.8%
+0.6
+286
+1
+11
+1.1
+18
+5.8
+1,828
+3.4
+1,657
+90.6
+At 31 December
+2013
+1,977
+From within
+one year to over
+three years
+186
+1,316
+54,339
+100.0
+1,687
+At 31 December 2014 and 2013, the total amounts of the top five other receivables of the Group are set out below:
+Total amount (RMB million)
+Ageing
+Percentage to the total balance of other receivables
+Allowance for doubtful accounts
+At 31 December
+2014
+12,522
+Within one year
+100.0
+1132g
+Over three years
+The Group
+1,962
+40
+5,237
+The Group
+At 31 December 2014
+At 31 December 2013
+Percentage
+of allowance
+Percentage
+of allowance
+Amount
+RMB
+million
+Percentage
+to total
+prepayments
+Allowance
+RMB
+14
+to
+prepayments
+balance
+Amount Percentage
+RMB
+to total
+million prepayments
+Allowance
+RMB
+to
+prepayments
+million
+balance
+3,511
+69
+147
+102
+million
+Total
+46
+4,216
+49
+The Company
+At 31 December
+2014
+RMB million
+At 31 December
+2013
+RMB million
+At 31 December
+2014
+RMB million
+At 31 December
+2013
+RMB million
+1,091
+2,048
+66
+262
+3,780
+19
+105
+11
+1
+11
+3,658
+3,829
+3,989
+4,262
+865
+3,063
+1,976
+5,277
+155
+311
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+for the year ended 31 December 2014
+Crude oil and natural
+10,000 USD
+50%
+Islands
+gas extraction
+Taihu Limited ("Taihu") (iii)
+Russia
+Cyprus
+NA
+Crude oil and natural
+25,000 USD
+NA
+49%
+Colombia
+British Bermuda
+ΝΑ
+("Mansarovar ") (iii)
+gas extraction
+Crude oil and natural
+gas extraction
+12,000 USD
+50%
+2. Associates
+Sinopec Finance Company Limited
+PRC
+Beijing
+Mansarovar Energy Colombia Ltd.
+Liu Yun
+British Virgin
+Caspian Investments Resources Ltd.
+("CIR") (iii)
+Principal place
+of business
+Register
+location
+Legal
+representative
+Principal
+activities
+Saudi Arabia
+Saudi Arabia
+ΝΑ
+Petroleum refining
+and processing
+business
+Manufacturing
+Registered
+capital
+RMB million
+Kazakhstan
+Percentage
+of equity/
+voting right
+directly or
+indirectly
+held by the
+Company
+37.5%
+12,343
+40%
+BASF-YPC Company Limited
+("BASF-YPC")
+PRC
+Jiangsu Province
+Wang Jingyi
+and distribution
+of petrochemical
+products
+1,560
+million USD
+1. Jointly controlled entities
+Yanbu Aramco Sinopec Refining
+Company Ltd. ("YASREF ") (ii)
+("Sinopec Finance")
+10,000
+Xu Guobao
+("Shanghai Petroleum")
+Planning, development
+and operation of the
+Chemical Industry Park
+in Shanghai, the PRC
+Exploration and
+production of crude oil
+and natural gas
+2,372
+38.26%
+900
+30%
+All the jointly controlled entities and associates above are limited companies.
+Note:
+(ii) Pursuant to the resolution passed at the Directors' meeting held on 31 October 2014 and the purchase agreement entered into with relevant vendors, the
+Group completed the acquisition from the Sinopec Group Company a 37.5% equity interests in YASREF for a consideration of approximately USD 562 million
+(approximately RMB 3,439 million) and also injected capital of approximately USD 199 million (approximately RMB 1,216 million) to YASREF on 31 December
+2014.
+Shanghai
+As the purchase price allocation has not been completed, the summarised financial information for YASREF is not disclosed.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+11 LONG-TERM EQUITY INVESTMENTS (Continued)
+(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:
+BASF-YPC
+At 31
+December
+At 31
+2014
+RMB
+December
+2013
+RMB
+(iii) The Group acquired from the Sinopec Group Company 50% of equity interests of Mansarovar in November 2013, 50% of equity interests of CIR and 49% of equity
+interests of Taihu in December 2013. Therefore the summarised income statement information of CIR and Taihu for the year ended 31 December 2013 is not
+included in the major financial information.
+Provision of non-
+banking financial
+services
+PRC
+("Shanghai Chemical")
+49%
+China Aviation Oil Supply Company
+PRC
+Beijing
+Sun Li
+Marketing and
+3,800
+29%
+Limited ("China Aviation Oil")
+distribution of refined
+Zhongtian Synergetic Energy
+Shanghai Petroleum Company Limited
+PRC
+Li Fuyou
+Company Limited ("Zhongtian
+petroleum products
+Manufacturing of coal-
+chemical products
+16,000
+38.75%
+Synergetic Energy")
+Shanghai Chemical Industry Park
+PRC
+Shanghai
+Rong Guangdao
+Development Company Limited
+Inner Mongolia
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Name of investees
+Principal jointly controlled entities and associates are as follows:
+losses
+Total
+RMB million
+RMB million
+(15)
+75,318
+10,619
+782
+2,848
+3.630
+(2,736)
+Provision for
+impairment
+(306)
+2
+2
+(1,011)
+(1,073)
+(2,084)
+(358)
+(168)
+(526)
+(3,292)
+(26)
+(3,318)
+(3,042)
+(6)
+Investments
+in associates
+RMB million
+28,457
+2,408
+RMB million
+11 LONG-TERM EQUITY INVESTMENTS
+The Group
+Balance at 1 January 2014
+Additions for the year
+Share of profits less losses under the equity method
+Change of other comprehensive income under the equity method
+Other equity movement under the equity method
+Dividends declared
+Disposals for the year
+Other movements (Note 52(iii))
+Movement of provision for impairment
+46,876
+8,211
+Balance at 31 December 2014
+Balance at 1 January 2014
+Additions for the year (i)
+Share of profits less losses under the equity method
+Change of other comprehensive income under the equity method
+Dividends declared
+Disposals for the year
+Transferred to subsidiaries (i)
+Other movements
+Balance at 31 December 2014
+Note:
+Investments
+in jointly
+controlled
+entities
+The Company
+(a) Principal jointly controlled entities and associates
+(6)
+32,140
+(25,480)
+(113)
+(6,376)
+79
+(31,890)
+102
+102
+172,056
+13,319
+11,913
+(7,657)
+(4,438)
+189,631
+On 12 September 2014, Marketing Company entered into the "Capital Injection Agreement relating to Marketing Company" with a number of domestic and foreign
+investors, pursuant to which the investors shall subscribe for equity interest in Marketing Company in cash. Upon the relevant approvals for this capital injection being
+obtained, an aggregate capital contribution of RMB 105.044 billion was made to the Marketing Company by 25 investors, representing 29.58% equity interest in the
+Marketing Company as of 6 March 2015.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+101
+Financial Statements (RPC)
+102
+Financial Statements (RPC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+11 LONG-TERM EQUITY INVESTMENTS (Continued)
+For the year 2014, 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 52.
+Significant restriction of long-term equity investments of the Group's cash does not exist.
+(i) Pursuant to the resolution of the Company's Meeting of Board of Directors held on 19 February 2014, the Company's business under its marketing and distribution
+segment of the Group was injected to Sinopec Marketing Co., Ltd. ("Marketing Company"), a wholly-owned subsidiary of the Group on 1 April 2014. The summarised
+financial statements of Marketing Company for the year ended 31 December 2013 set out in Note 52 also include these marketing and distribution business.
+48,474
+(380)
+(1,226)
+(21)
+80,593
+Investments
+in
+subsidiaries
+RMB million
+142,803
+58,791
+Investments
+in jointly
+controlled
+entities
+RMB million
+Investments
+in associates
+RMB million
+12,588
+1,713
+(4,058)
+16,890
+398
+Provision for
+impairment
+losses
+Total
+RMB million
+164,545
+60,902
+401
+1,598
+1,999
+(363)
+(363)
+(890)
+(336)
+RMB million
+(7,736)
+2,849
+54
+1,311
+9,058
+9,004
+6,340
+5,851
+Carrying Amounts
+3
+85
+1,455
+814
+579
+616
+2,209
+Other (vi)
+3,044
+2,893
+1,395
+8,479
+8,388
+6,340
+5,851
+Share of net assets from joint ventures
+6,320
+6,088
+5,905
+3,160
+2,846
+4,348
+3,163
+Taihu(iii)
+2014
+CIR(iii)
+2014
+2013
+RMB million
+RMB million
+2014
+BASF-YPC
+from joint ventures
+Share of other comprehensive income/(loss)
+Share of net profit/(loss) from joint ventures
+Dividends from joint ventures
+Total comprehensive income/(loss)
+3,129
+Other comprehensive income/(loss)
+Tax expense
+Profit before taxation
+Interest expense
+Interest income
+Turnover
+Year ended 31 December
+Summarised income statement
+(vi) Other reflects the excess of consideration transferred over the net fair value of identifiable assets acquired and liabilities assumed as of the acquisition date.
+(v) Excluding provisions.
+(iv) Excluding accounts payable, other payables.
+Note:
+Profit/(loss) for the year
+Mansarovar(iii)
+16,958
+15,851
+(1,253)
+(1)
+Other non-current liabilities
+(2,905)
+(956)
+(680)
+(4,904)
+(4,019)
+Non-current financial liabilities (v)
+Non-current liabilities
+(1,630)
+(1,545)
+(860)
+(2,970)
+(2,042)
+(1,123)
+(5,017)
+(5,553)
+Total current liabilities
+(776)
+(860)
+(2,065)
+(1,742)
+(1,764)
+(8,968)
+16,776
+(2,175)
+(3,662)
+14,628
+Net assets attributable to owners of the Company
+211
+102
+Net assets attributable to minority interests
+6,320
+6,088
+6,116
+2,948
+16,958
+16,776
+(3,354)
+15,851
+Net assets
+(4,120)
+(3,662)
+(3,354)
+(5,080)
+(2,501)
+(1,933)
+(4,905)
+(4,019)
+Total non-current liabilities
+(4,120)
+14,628
+(851)
+22,191
+26
+RMB million
+8,366
+RMB
+2013
+2014
+2013
+December
+At 31
+Shanghai Petroleum
+At 31
+December
+December
+At 31
+Shanghai Chemical
+At 31
+December
+2014
+RMB
+At 31
+December
+2013
+2013
+Zhongtian
+Synergetic Energy
+At 31
+December
+At 31
+December
+China Aviation Oil
+At 31
+December
+2014
+2013
+2014
+December
+December
+At 31
+Sinopec Finance
+At 31
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal associates:
+2014
+(c) Major financial information of principal associates
+RMB
+RMB
+3,094
+2,466
+4,474
+6,833
+15,410
+13,816
+104,477
+108,999
+Current assets
+million
+million
+RMB
+million
+million
+million
+million
+million
+million
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+23,176
+20
+11 LONG-TERM EQUITY INVESTMENTS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(245)
+781
+279
+(50)
+(897)
+(809)
+(252)
+(279)
+(94)
+130
+641
+2,205
+3,014
+1,060
+373
+(7)
+(54)
+(319)
+(356)
+360
+2013
+RMB million
+2014
+RMB million
+3,781
+31
+8
+RMB million
+18,183
+7
+for the year ended 31 December 2014
+(256)
+63
+Financial Statements (RPC)
+Financial Statements (RPC)
+103
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+The share of loss and other comprehensive loss for the year ended 31 December 2014 in all individually immaterial joint ventures accounted for
+using equity method in aggregate was RMB 122 million (2013: RMB 14 million) and RMB 239 million (2013: RMB 0 million) respectively. As at
+31 December 2014, the carrying amount of all individually immaterial joint ventures accounted for using equity method in aggregate was RMB
+28,281 million (2013: RMB 23,965 million).
+12
+(2,541)
+32
+40
+(128)
+1,043
+80
+(123)
+112
+933
+80
+(232)
+(3,168)
+(182)
+781
+279
+24
+(5,373)
+-
+312
+79.4
+(2,027)
+Other current liabilities
+514
+1.7
+17
+3.3
+1,010
+6.9
+109
+10.8
+Between two and three years
+525
+1.7
+Between one and two years
+55
+314
+2.1
+30
+9.6
+Over three years
+1,968
+6.4
+1,401
+71.2
+1,838
+12.5
+10.5
+1,437
+78.5
+90.2
+At 31 December 2013
+Percentage
+of allowance
+Amount
+RMB
+to total
+accounts
+receivable
+to accounts
+Allowance
+RMB
+receivable
+balance
+Amount
+RMB
+to total
+accounts
+receivable
+11,579
+to accounts
+receivable
+balance
+million
+%
+million
+%
+million
+%
+million
+%
+Within one year
+27,717
+Allowance
+RMB
+Percentage
+78.2
+30,724
+Allowance
+RMB
+million
+108
+balance
+%
+Within one year
+Between one and two years
+185,534
+91.6
+51,203
+94.2
+14,792
+%
+7.3
+997
+1.8
+Between two and three years
+Over three years
+Total
+573
+0.3
+3
+0.5
+1,651
+202,550
+0.8
+2
+Total
+to accounts
+Amount
+RMB
+million
+100.0
+1,473
+14,741
+100.0
+1,576
+The Company
+At 31 December 2014
+Percentage
+Percentage
+of allowance
+At 31 December 2013
+to total
+accounts
+receivable
+Percentage
+of allowance
+Amount
+RMB
+to total
+accounts
+receivable
+Allowance
+to accounts
+receivable
+million
+%
+RMB
+million
+balance
+%
+Percentage
+(2,235)
+of allowance
+Percentage
+328
+3,476
+2,886
+2,437
+1,881
+6,727
+5,879
+Other current assets
+346
+580
+166
+985
+117
+4,873
+550
+1,112
+Cash and cash equivalents
+Current assets
+million
+million
+million
+million
+million
+million
+4,820
+million
+Total current assets
+7,277
+(854)
+(6,903)
+(1,228)
+(278)
+(272)
+(2,990)
+(3,318)
+Current financial liabilities (iv)
+Current liabilities
+10,739
+9,702
+6,991
+14,796
+14,244
+13,078
+18,496
+17,209
+Non-current assets
+1,331
+908
+3,642
+3,003
+7,257
+6,754
+7,995
+Percentage
+million
+RMB
+million
+million
+million
+million
+199,783
+48,771
+2,671
+725
+27,328
+30,724
+1,779
+225
+12,737
+14,741
+RMB
+978
+94
+202
+1,695
+202.550
+4,746
+54,339
+1,473
+29,251
+1,576
+13,165
+1,316
+201,234
+1,687
+52,652
+The Group
+At 31 December 2014
+620
+RMB
+RMB
+At 31 December
+RMB
+2013
+2014
+At 31
+December
+At 31
+December
+December
+2013
+At 31
+Mansarovar(iii)
+Taihu(iii)
+At 31
+December
+2014
+RMB
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+2013
+8
+Amounts due from subsidiaries
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from associates and jointly controlled entities
+Amounts due from others
+Less: Allowance for doubtful accounts
+Total
+Ageing analysis of other receivables is as follows:
+The Group
+The Company
+At 31 December
+2014
+RMB
+At 31 December
+2013
+RMB
+At 31 December
+2014
+OTHER RECEIVABLES
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31
+December
+2013
+RMB
+CIR(iii)
+At 31
+December
+2014
+RMB
+Total
+1,103
+6.1190
+180
+561
+0.0578
+9,711
+445
+0.0514
+8,662
+7,712
+23,001
+million
+RMB
+Exchange
+rates
+currency
+million
+RMB
+million
+Exchange
+rates
+currency
+million
+Original
+Original
+At 31 December 2013
+At 31 December 2014
+Total
+150
+and fellow subsidiaries
+6.0969
+916
+(1,093)
+8,096
+Total
+After five years
+Between two and five years
+Between one and two years
+At 31 December
+The maturity analysis of the Group's long-term loans is as follows:
+28 LONG-TERM LOANS (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (RPC)
+112
+(268)
+24,281
+Financial Statements (RPC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+38.356
+46,452
+43,145
+67,426
+28
+(583)
+6.0969
+5
+112
+(192)
+6.1190
+18
+38,911
+43,225
+111
+Long-term loans are primarily unsecured, and carried at amortised costs.
+Long-term loans from Sinopec Group Company
+31 December 2014 with maturities
+through 2020
+192
+28
+6.0969
+5
+112
+6.1190
+18
+555
+80
+1,093
+268
+583
+662
+0.0578
+6.0969
+1,039
+109
+51
+6.1190
+8
+54
+0.0514
+1,051
+371
+163
+RMB
+million
+60
+Interest rates ranging from 0.74% to
+1.85% per annum at 31 December
+2014 with maturities in 2015
+460
+11,000
+430
+11,890
+Interest rates ranging from interest
+free to 6.46% per annum at
+Less: Current portion
+- US Dollar loans
+Renminbi loans
+and fellow subsidiaries
+Long-term loans from Sinopec Group Company
+Long-term bank loans
+Less: Current portion
+December 2014 with maturities
+through 2031
+Interest rates ranging from interest
+free to 4.29% per annum at 31
+- US Dollar loans
+1,676
+31 December 2014 with maturities in
+2023
+31 December 2014 with maturities
+through 2025
+Interest rates ranging from interest
+free to 7.40% per annum at
+and final maturity
+- Renminbi loans
+Long-term bank loans
+Interest rate
+The Group's long-term loans represent:
+28 LONG-TERM LOANS
+At 31 December 2014 and 2013, the Group had no significant overdue long-term loans.
+45,749
+44,073
+- Japanese Yen loans Interest rate at 2.60% per annum at
+Exchange
+rates
+29 DEBENTURES PAYABLE
+At 31 December
+3,309
+26,004
+Balance at 31 December 2014
+Exchange adjustments
+Utilised for the year
+Accretion expenses
+Provision for the year
+Balance at 1 January 2014
+The Group
+RMB million
+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:
+30 PROVISIONS
+1,008
+As at 17 February 2015, the company has redeemed and fully paid the unconverted portion at RMB 101.261 per convertible bonds (including the accrued interest and
+interest tax accrued thereon).
+As at 26 January 2015, the terms of conditional redemption of 2011 Convertible Bonds of the Company have been triggered for the first time. On the 22nd meeting
+of the fifth session of the board of the Company (the "Board"), the Board has reviewed and approved the proposal for the redemption of 2011 Convertible Bonds, and
+decided to exercise the right of redemption and to redeem all of the outstanding 2011 Convertible Bonds registered on 11 February 2015.
+The initial carrying amount of the liability component of the 2011 Convertible Bonds is the residual amount, which is after deducting the allocated issuance cost of the
+2011 Convertible Bonds relating to the liability component and the fair value of the derivative component on 1 March 2011. Interest expense is calculated using the
+effective interest method by applying the effective interest rate of 5.10% to the adjusted liability component.
+Any change in the major inputs into the Binomial Model will result in changes in the fair value of the derivative component. The changes in the fair value of the
+derivative component from 31 December 2013 to 31 December 2014 resulted in an realised loss of RMB 1,613 million and unrealised loss of RMB 2,997 million (2013:
+unrealised gain of RMB 1,914 million), which has been recorded in the "gain from changes in fair value" section of the consolidated income statement for the year
+ended 31 December 2014.
+95 basis points
+5.23%
+2013
+RMB 4.48
+RMB 5.13
+At 31 December
+133 basis points
+3.40%
+RMB 6.49
+RMB 4.89
+At 31 December
+2014
+RMB onshore swap rate
+Credit spread
+From 1 January 2015 to 11 February 2015, the 2011 Convertible Bonds with a total value of RMB 13,647 million were converted into 2,790,814,006 A shares of
+the Company. As of 11 February 2015, the total share capital of the Company has been increased to 121,071,209,646 shares. The unconverted convertible bonds
+amounted to RMB 52.78 million (527,760 convertible bonds).
+Conversion price
+(714)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+The Company was established on 25 February 2000 with a registered capital of 68.8 billion state-owned domestic shares with a par value of RMB 1.00
+each, which were all held by Sinopec Group Company (Note 1).
+Total
+116,565
+25,513
+91,052
+RMB million
+2013
+118,280
+25,513
+92,767
+RMB million
+6
+29,613
+At 31 December
+92,766,957,040 domestic listed A shares (2013: 91,051,875,187) of RMB 1.00 each
+25,513,438,600 overseas listed H shares (2013: 25,513,438,600) of RMB 1.00 each
+Registered, issued and fully paid:
+The Group
+24 EMPLOYEE BENEFITS PAYABLE
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+31 OTHER NON-CURRENT LIABILITIES
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (RPC)
+Financial Statements (RPC)
+113
+At 31 December
+2014
+The Group
+Stock price of A shares.
+During the year ended 31 December 2014, RMB 8,442 million of the 2011 Convertible Bonds were converted into 1,715,081,853 A shares of the Company.
+77,785
+10,000
+RMB million
+At 31 December
+2013
+At 31 December
+2014
+RMB million
+Note:
+Total
+- 2011 Convertible Bonds (v)
+Less: Current portion
+- Bonds with Warrants (iv)
+- 2007 Convertible Bonds (iii)
+- Corporate Bonds (ii)
+81,177
+Short-term corporate bonds (i)
+Debentures payable:
+67,426
+36,196
+45,508
+9,742
+12,969
+514
+8,949
+RMB million
+RMB million
+2013
+2014
+46,452
+At 31 December 2014 and 2013, the fair value of the derivative component of the 2011 Convertible Bonds was calculated using the Binomial Model. The following are
+the major inputs used in the Binomial Model:
+10,948
+16,721
+During the year ended 31 December 2014, the conversion price of the 2011 Convertible Bonds was adjusted to RMB 4.89 per share as a result of cash dividends,
+bonus issues and transfer of capital reserve to share capital.
+As at 31 December 2014, the carrying amounts of the liability component and the derivative component were RMB 13,433 million (2013: RMB 20,913 million) and
+RMB 3,288 million (2013: RMB 548 million), respectively.
+During the term of the 2011 Convertible Bonds, if the closing price of the A Shares of the Company is not lower than 130% of the conversion price in at least fifteen
+trading days out of any thirty consecutive trading days, the Company has the right to redeem all or part of the 2011 Convertible Bonds based on the nominal value
+plus the accrued interest ("the terms of conditional redemption").
+During the term of the 2011 Convertible Bonds, the conversion price may be subject to downward adjustment that if the closing prices of the Company's A Shares in
+any fifteen trading days out of any thirty consecutive trading days are lower than 80% of the prevailing conversion price, the board of directors may propose downward
+adjustment to the conversion price subject to the shareholders' approval. The adjusted conversion price shall be not less than (a) the average trading price of the
+Company's A Shares for the twenty trading days prior to the shareholders' approval, (b) the average trading price of the Company's A Shares on the day immediately
+before the shareholders' approval, (c) the net asset value per share based on the latest audited financial statements prepared under ASBE, and (d) the nominal value
+per share.
+(v) On 1 March 2011, the Company issued convertible bonds due 2017 with an aggregate principal amount of RMB 23 billion in the PRC (the "2011 Convertible Bonds").
+The 2011 Convertible Bonds were issued at par value of RMB 100 and bear a fixed interest rate of 0.5% per annum for the first year, 0.7% for the second year, 1.0%
+for the third year, 1.3% for the fourth year, 1.8% for the fifth year and 2.0% for the sixth year, payable annually. The holders can convert the 2011 Convertible Bonds
+into shares of the Company from 24 August 2011 onwards at an initial conversion price of RMB 9.73 per share, subject to adjustment for, amongst other things,
+cash dividends, subdivision or consolidation of shares, bonus issues, issue of new shares, rights issues, capital distribution, change of control and other events which
+have an effect on the issued share capital of the Company (the "Conversion Option"). Unless previously redeemed, converted or purchased and cancelled, the 2011
+Convertible Bonds will be redeemed within 5 trading days after maturity at 107% of the principal amount, including interest for the sixth year. The initial carrying
+amounts of the liability component and the derivative component, representing the Conversion Option of the 2011 Convertible Bonds, were RMB 19,279 million and
+RMB 3,610 million, respectively.
+Note: (Continued)
+29 DEBENTURES PAYABLE (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+The initial recognition of the liability component of the Bond with Warrants is measured at the present value of the future interest and principal payments, discounted
+at the market rate of interest applicable at the time of initial recognition to similar liabilities that do not have a conversion option. Interest expense is calculated using
+the effective interest method by applying the market interest rate of 5.40% to the liability component. On 4 March 2010, warrants of the bonds have already expired.
+The Bonds with Warrants were due on 20 February 2014 and have been fully paid by the Group at maturity.
+29,625
+(iv) On 26 February 2008, the Company issued bonds with stock warrants due 2014 with an aggregate principal amount of RMB 30 billion in the PRC (the "Bonds with
+Warrants"). The Bonds with Warrants, which bear a fixed interest rate of 0.80% per annum payable annually, were issued at par value of RMB 100. The Bonds with
+Warrants are guaranteed by Sinopec Group Company.
+The changes in the fair value of the derivative component from 31 December 2013 to 24 April 2014 resulted in realised loss of RMB 1 million (2013: an unrealised
+gain of RMB 114 million), which has been recorded under "gain from changes in fair value" in the consolidated income statement for the year ended 31 December
+2014.
+The Company redeemed some of the 2007 Convertible Bonds in 2011 at an early redemption amount of the principal amount of HKD 39 million.
+The 2007 Convertible Bonds were due on 24 April 2014 and have been fully paid by the Group at maturity.
+(iii) On 24 April 2007, the Company issued zero coupon convertible bonds due 2014 with an aggregate principal amount of HKD 11.7 billion (the "2007 Convertible
+Bonds"). The 2007 Convertible Bonds are convertible into shares of the Company from 4 June 2007 onwards at a price of HKD 10.76 per share, subject to adjustment
+for subdivision or consolidation of shares, bonus issues, rights issues, capital distribution, change of control and other events, which have a dilutive effect on the
+issued share capital of the Company ("the Conversion Option"). Unless previously redeemed, converted or purchased and cancelled, the 2007 Convertible Bonds will be
+redeemed on the maturity date at 121.069% of the principal amount. The Company has an early redemption option at any time after 24 April 2011 (subject to certain
+criteria) ("the Early Redemption Option") and a cash settlement option when the holders exercise their conversion right ("the Cash Settlement Option").
+(ii) These corporate bonds are guaranteed by Sinopec Group Company and carried at amortised cost.
+The Company issued 270-day corporate bonds of face value RMB 10 billion to corporate investors in the PRC debenture market on 15 August 2013 at par value of
+RMB 100. The effective yield of the 270-day corporate bonds is 4.49% per annum. The short-term bonds were due on 13 May 2014 and have been fully paid by the
+Group at maturity.
+(i) The Company issued 180-day corporate bonds of face value RMB 10 billion to corporate investors in the PRC debenture market on 19 May 2014 at par value of RMB
+100. The effective yield of the 180-day corporate bonds is 4.40% per annum. The short-term bonds were due on 16 November 2014 and have been fully paid by the
+Group at maturity.
+99,138
+83,506
+(44,073)
+(11,000)
+21,461
+The initial carrying amount of the liability component of the 2007 Convertible Bonds is the residual amount, which is after deducting the allocated issuance cost of the
+2007 Convertible Bonds relating to the liability component and the fair value of the derivative component as at 24 April 2007. Interest expense is calculated using the
+effective interest method by applying the effective interest rate of 4.19% to the adjusted liability component.
+Pursuant to the resolutions passed at an Extraordinary General Meeting of the Company held on 25 July 2000 and the approval from relevant
+authorities, the Company issued 15,102,439,000 H shares with a par value of RMB 1.00 each in its initial global offering in October 2000. The
+shares include 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 and USD 20.645 respectively. As part of the offering, 1,678,049,000 shares were offered in placing 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.
+Original
+currency
+million
+rates
+46,087
+7,054
+(215)
+(2,153)
+(34)
+50,739
+The reasons for recognising impairment losses are set out in the respective notes of respective assets.
+20 SHORT-TERM LOANS
+The Group's short-term loans represent:
+At 31 December 2014
+At 31 December 2013
+43
+Original
+million
+Exchange
+rates
+RMB
+million
+Original
+currency
+million
+Exchange
+RMB
+rates
+million
+Short-term bank loans
+63,915
+currency
+54,640
+(30)
+25 TAXES PAYABLE
+33,595
+3,428
+(649)
+(64)
+36,310
+Construction in progress
+13
+222
+10
+(10)
+(1)
+73
+221
+14
+578
+179
+(3)
+78
+832
+Goodwill
+15
+7,657
+7,657
+Others
+Intangible assets
+12
+- Renminbi loans
+19,983
+6.0969
+46,225
+0.7862
+5
+14
+8.4189
+Total
+166,688
+108,121
+At 31 December 2014, the Group's interest rates on short-term loans were from 0.00% to 6.89% (2013: from 0.06% to 6.60%). The majority of the
+above loans are by credit.
+At 31 December 2014 and 2013, the Group had no significant overdue short-term loan.
+7,582
+6
+21 BILLS PAYABLE
+22 ACCOUNTS PAYABLE
+At 31 December 2014 and 2013, the Group had no individually significant accounts payable aged over one year.
+23 ADVANCES FROM CUSTOMERS
+At 31 December 2014 and 2013, the Group had no individually significant advances from customers aged over one year.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+109
+Financial Statements (RPC)
+110
+Financial Statements (RPC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+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 2014 and 2013, the Group had no overdue unpaid bills.
+22,805
+5
+6.1190
+0.7889
+7.4556
+- US Dollar loans
+6,649
+6.1190
+40,685
+5,684
+6.0969
+34,657
+- Euro loans
+57
+7.4556
+425
+93,126
+8.4189
+and fellow subsidiaries
+102,773
+53,481
+- Renminbi loans
+9,628
+7,251
+- US Dollar loans
+15,219
+- HK Dollar loans
+Euro loans
+292
+6
+Short-term loans from Sinopec Group Company
+million
+Fixed assets
+7
+5,837
+5,243
+974
+515
+6,728
+3,417
+3,096
+1,091
+15,425
+16,392
+3,828
+28,677
+RMB million
+Other taxes
+Total
+Mineral resources compensation fee (Note)
+Special oil income levy
+Income tax
+Consumption tax
+Value-added tax
+At 31 December
+2013
+At 31 December
+2014
+The Group
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+RMB million
+2,019
+19 DETAILS OF IMPAIRMENT LOSSES
+35,888
+26 OTHER PAYABLES
+RMB
+Exchange
+Original
+currency
+million
+At 31 December 2013
+At 31 December 2014
+Non-current liabilities due within one year
+Others
+Debentures payable due within one year
+Long-term loans due within one year
+US Dollar loans
+- Renminbi loans
+Note: The mineral resources compensation fee of crude oil and natural gas was decreased from 1% to zero from 1 December 2014.
+and fellow subsidiaries
+- US Dollar loans
+- Japanese Yen loans
+- Renminbi loans
+Long-term bank loans
+The Group's non-current liabilities due within one year represent:
+27 NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December 2014 and 2013, the Group had no individually significant other payables aged over three years.
+At 31 December 2014 and 2013, the Group's other payables primarily represented payables for constructions.
+Long-term loans from Sinopec Group Company
+21
+At 31 December 2014, impairment losses of the Group are analysed as follows:
+Balance at
+1 January
+2014
+RMB million
+Prepayments
+9
+46
+3
+49
+2,196
+108
+(79)
+(161)
+(12)
+2,052
+1,473
+Inventories
+1,751
+3,327
+(136)
+(1,327)
+(12)
+3,603
+Long-term equity investments
+11
+15
+2
+(3)
+10
+Note
+4
+(64)
+Provision
+for the year
+RMB million
+Written back
+for the year
+Written off
+for the year
+Other
+(decrease)/ 31 December
+Balance at
+RMB million
+RMB million
+increase
+RMB million
+2014
+RMB million
+(104)
+Allowance for doubtful accounts
+7
+574
+44
+(15)
+(57)
+(16)
+530
+Other receivables
+8
+1,576
+61
+Included: Accounts receivable
+During the year ended 31 December 2013, the Company issued 114,076 (2012:117,724,450) 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.
+32 SHARE CAPITAL
+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 (Note 48), and 1 share transferred from capital reserves for every 10 existing shares.
+Total
+Net foreign exchange loss/(gain)
+877
+1,008
+9,725
+10,210
+1,710
+1,719
+11,435
+11,929
+Interest income
+Net interest expenses
+(1,779)
+179
+9,618
+Less: Capitalised interest expenses
+Accretion expenses (Note 30)
+2013
+RMB million
+RMB million
+2014
+190,672
+191,202
+1,142
+1,089
+7,329
+7,245
+10,065
+10,210
+Interest expenses incurred
+13,283
+(1,568)
+6,274
+117
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+2,587,545
+2,556,760
+66,496
+64,062
+12,573
+10,969
+81,265
+90,097
+55,353
+57,233
+(2,760)
+RMB million
+2,371,858
+2014
+RMB million
+2,334,399
+Exploration expenses include geological and geophysical expenses and written-off of unsuccessful dry hole costs.
+41 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:
+40 CLASSIFICATION OF EXPENSES BY NATURE
+The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2014 by the Group ranged from 0.7%
+to 7.1% (2013: 0.9% to 6.4%).
+2013
+13,753
+25,541
+22,187
+2,880,311
+47,064
+2,429,017
+2,825,914
+2,833,247
+RMB million
+2013
+2,781,641
+44,273
+RMB million
+The Group
+2014
+Operating cost
+Total
+2,457,041
+Income from other operations
+37 OPERATING INCOME AND OPERATING COSTS
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+(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.
+(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;
+193,552
+190,337
+3,215
+Total
+RMB million
+The Articles of Association of the Company and the PRC Company Law have set out the following profit appropriation plans:
+117,000
+The Group
+Discretionary
+surplus reserves
+RMB million
+117,000
+Income from principal operations
+The Company
+2014
+RMB million
+1,186,548
+133,312
+136,718
+2013
+RMB million
+RMB million
+2014
+The Group
+39 FINANCIAL EXPENSES
+The applicable tax rate of the sales taxes and surcharges are set out in Note 4.
+Total
+Other taxes
+Resources tax
+Education surcharge
+City construction tax
+Special oil income levy
+Consumption tax
+The Group
+38 SALES TAXES AND SURCHARGES
+The income from principal operations represents revenue from sales of crude oil, natural gas, petroleum and chemical products. Operating costs
+primarily represents the products cost related to the principal operations. The Group's segmental information is set out in Note 55.
+1,305,891
+1,627,613
+47,869
+1,579,744
+RMB million
+2013
+972,685
+1,222,323
+35,775
+Financial Statements (RPC)
+76,552
+118
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Others
+Gain on disposal of non-current assets
+Government grants
+The Group
+45 NON-OPERATING INCOME
+335
+15,216
+463
+13,417
+2,510
+8,137
+Total
+37
+247
+Others
+Total
+(29)
+Gains/(losses) from ineffective portion of cash flow hedge
+26
+liabilities at fair value through profit or loss
+Investment income from disposal of financial assets and
+80
+2,322
+96
+2,391
+available-for-sale financial assets
+Investment income from holding/disposal of
+18
+2,794
+1,891
+21
+46 NON-OPERATING EXPENSES
+2014
+2,952
+3,710
+1,558
+1,572
+245
+125
+47
+110
+1,102
+1,903
+2013
+RMB million
+2014
+The Group
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Others
+Total
+Loss on disposal of non-current assets
+Fines, penalties and compensation
+Donations
+3,481
+4,710
+837
+1,264
+2,368
+3,165
+276
+281
+2013
+RMB million
+RMB million
+RMB million
+(22)
+long-term equity investments
+Investment (loss)/income from disposal of
+4,044
+6,839
+17
+12
+179
+2,644
+3,428
+1,452
+3,191
+(69)
+29
+RMB million
+Changes in fair value of financial assets and financial liabilities at fair value through profit or loss
+Fair value (loss)/gain on the embedded derivative component of the convertible bonds (Note 29(iii) and (v))
+Unrealised gains/(losses) from ineffective portion cash flow hedges
+RMB million
+2014
+The Group
+43 GAIN FROM CHANGES IN FAIR VALUE
+Total
+Others
+Intangible assets (Note 14)
+Fixed assets (Note 12)
+Inventories (Note 10)
+Receivables
+The Group
+42 IMPAIRMENT LOSSES
+for the year ended 31 December 2014
+2013
+Others
+Total
+44 INVESTMENT INCOME
+12,916
+1,867
+1,999
+2,359
+3,630
+Income from investment accounted for under equity method
+5,839
+Income from investment of subsidiaries accounted
+for under cost method
+RMB million
+RMB million
+2013
+The Company
+2014
+2013
+RMB million
+RMB million
+The Group
+2014
+2,167
+114
+84
+(4,151)
+(5)
+369
+2,028
+(4,611)
+30
+7
+RMB million
+2013
+2014
+RMB million
+Financial Statements (RPC)
+73,337
+3,215
+Statutory
+surplus reserve
+RMB million
+Balance at 31 December 2014
+(210)
+1
+(9)
+Less: Adjustments of amounts transferred to initial carrying amount of hedged items
+Total amounts transferred to profit or loss from other
+1,271
+Effective portion of changes in fair value of hedging instruments
+recognised during the year
+Cash flow hedges:
+RMB million
+amount
+Tax effect
+RMB million
+Net-of-tax
+Before-tax
+amount
+RMB million
+2013
+1,061
+(8)
+(i) The Group sold its shares of China Gas Holdings Limited in August 2014, which was accounted for as available-for-sale financial assets prior to the transaction
+and the accumulated unrealised gain in other comprehensive income of RMB 2,317 million was reclassified to the investment income at the completion of this
+transaction.
+(9,266)
+1,406
+(514)
+(514)
+(10,672)
+Other comprehensive income
+Subtotal
+(514)
+(514)
+Translation difference in foreign currency statements
+(3,042)
+(3,042)
+(3,042)
+Note:
+(3,042)
+comprehensive income during the year
+89
+1,485
+(689)
+(689)
+(689)
+(689)
+Other comprehensive income
+Subtotal
+Translation difference in foreign currency statements
+(297)
+(297)
+Subtotal
+(297)
+(538)
+(297)
+1,314
+(433)
+1,747
+1,314
+(433)
+1,747
+Changes in fair value of available-for-sale financial assets recongnised during the year
+Subtotal
+604
+(120)
+724
+Subtotal
+(449)
+Share of other comprehensive loss in associates
+Share of other comprehensive loss in associates and jointly controlled entities
+Subtotal
+(1,225)
+433
+2014
+Cash flow hedges:
+(a) Each item of other comprehensive income and the influence of the income tax and the process of change to or loss
+The Group
+34 OTHER COMPREHENSIVE INCOME
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+114
+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 over the carrying amount of the net assets acquired.
+63
+48,703
+3,216
+Before-tax
+amount
+8,477
+RMB million
+Balance at 31 December 2014
+Exercise of conversion of the 2011 Convertible Bonds
+Transactions with minority interests of subsidiaries
+Others
+Balance at 1 January 2014
+The movements in capital reserve of the Group are as follows:
+33 CAPITAL RESERVE
+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 28 and 53, respectively.
+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 owners 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 2014, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 20.2% (2013:
+20.3%) and 55.4% (2013: 54.9%), respectively.
+Capital management
+All A shares and H shares rank pari passu in all material aspects.
+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.
+36,947
+RMB million
+Tax effect
+RMB million
+Net-of-tax
+(1,658)
+Subtotal
+(1,738)
+579
+(2,317)
+comprehensive income during the year (i)
+513
+(146)
+659
+Changes in fair value of available-for-sale financial assets recongnised during the year
+Less: Total amounts transferred to profit or loss from other
+(4,485)
+973
+(5,458)
+Subtotal
+(3,871)
+839
+(4,710)
+(832)
+181
+(1,013)
+Less: Adjustments of amounts transferred to initial carrying amount of hedged items
+Total amounts transferred to profit or loss from other
+comprehensive income during the year
+218
+(47)
+265
+recognised during the year
+Effective portion of changes in fair value of hedging instruments
+amount
+RMB million
+(553)
+932
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+115
+(2,059)
+428
+932
+(248)
+1,180
+(440)
+604
+(956)
+(183)
+407
+(773)
+(176)
+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:
+35 SPECIFIC RESERVE
+31 December 2014
+31 December 2013
+Changes in 2014
+Changes in 2013
+31 December 2012
+(1,225)
+97
+(1,684)
+(968)
+(1,619)
+(431)
+(24)
+(4,485)
+Appropriation
+Balance at 1 January 2014
+491
+4,665
+(5,730)
+1,556
+The Group
+RMB million
+Movements in surplus reserves are as follows:
+36 SURPLUS RESERVES
+Balance at 31 December 2014
+Utilisation for the year
+Provision for the year
+Balance at 1 January 2014
+(9,290)
+(2,029)
+(7,261)
+(2,333)
+(4,057)
+(9,266)
+(1,598)
+(7,668)
+(274)
+1,322
+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 and the aggregate net
+proceeds (after deduction of the commissions and estimated expenses) amounted to approximately HKD 23,970,100,618.
+At 31 December 2014 and 2013, the Group's employee benefits payable primarily represented wages payable and social insurance payables.
+income
+financial
+equity method
+assets
+RMB Million
+1,014
+716
+RMB Million
+in foreign
+Cash flow
+hedges
+RMB Million
+Subtotal
+RMB Million
+RMB Million
+RMB Million
+RMB Million
+8
+currency
+statements
+Translation
+difference
+1,314
+Total other
+comprehensive
+Financial Statements (RPC)
+116
+Financial Statements (RPC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+34 OTHER COMPREHENSIVE INCOME (Continued)
+The Group (Continued)
+(b) Reconciliation of other comprehensive income
+Changes in
+fair value of
+to profit and loss in
+the future under
+available.
+for-sale
+The share of other
+comprehensive
+income which
+being reclassified
+Equity Attributable to shareholders of the company
+Minority
+interests
+(298)
+38
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+128
+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 408 million for the year ended 31 December 2014 (2013: RMB 404
+million).
+Estimated future annual payments of the Group are as follows:
+At 31 December
+2014
+22
+RMB million
+RMB million
+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.
+Within one year
+312
+318
+160
+140
+Between two and three years
+32
+Between one and two years
+Between three and four years
+Exploration and production licenses
+Commitments to joint ventures
+1,374
+1,356
+Total
+835
+811
+19
+Pursuant to certain of the joint venture agreements entered into by the Group, the Group is obliged to purchase products from the joint ventures at
+market prices.
+19
+24
+241,181
+292,597
+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 4,030 million (2013: RMB 4,993 million).
+Between four and five years
+After five years
+At 31 December
+2013
+5,481
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Investment in exploration, production and sale
+RMB 8,000
+RMB 8,000
+100.00
+19,020
+of petroleum and natural gas
+Marketing and distribution of refined petroleum
+products
+RMB 2,200
+RMB 2,771
+100.00
+56
+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
+RMB 18,863
+RMB 18,873
+100.00
+383
+RMB5,294
+RMB5,240
+98.98
+54
+36
+100.00
+RMB 1,165
+RMB 1,000
+438
+products
+Marketing and distribution of refined petroleum
+RMB 800
+RMB 480
+60.00
+441
+products
+Manufacturing of intermediate petrochemical products
+and petroleum products
+Production, sale, research and development of
+ethyleneand downstream byproducts
+RMB 5,000
+85.00
+469
+Marketing and distribution of refined petroleum
+RMB 1,840
+RMB 1,012
+55.00
+1,432
+products
+Marketing and distribution of petrochemical products
+RMB 4,250
+RMB6,270
+RMB4,076
+65.00
+Except for Sinopec Kantons and Sinopec (Hong Kong) Limited, which are incorporated in Bermuda and Hong Kong, respectively, all of the above
+principal subsidiaries are incorporated in the PRC.
+126
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+52 PRINCIPAL SUBSIDIARIES (Continued)
+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 returns through its power over the entity.
+(ii) Pursuant to the Share Repurchase Agreement and Disposal Agreement entered into between the Company and Yizheng Chemical Fibre Co., Ltd. on 12 September
+2014, Yizheng Chemical Fibre Co., Ltd. repurchased and cancelled the 40.25% of its equity interests held by the Company in exchange for the transfer of its outgoing
+business to the Company, pursuant to which this business was injected into Sinopec Yizheng Chemical Fibre Limited Liability Company.
+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.
+Pursuant to the Acquisition Agreement between Sinopec Group Company and Yizheng Chemical Fibre Co., Ltd. on the same date, Yizheng Chemical Fibre Co., Ltd.
+issued shares to Sinopec Group Company for the acquisition of a 100% equity interest of Sinopec Oilfield Service Corporation (a wholly-owned subsidiary of Sinopec
+Group Company). The above transactions were inter-conditional and were completed in December 2014.
+(iii) During the year ended 31 December 2014, the Company increased its investment in GWEC by RMB 5,712 million. Further, on 1 August 2014, GWEC acquired an
+additional 45% of the equity interest in shares in Ningxia Nenghua (GWEC previously held a 50% equity interest) and obtained control of Ningxia Nenghua (a coal
+chemical producer) which the Group accounted for as a subsidiary of GWEC thereafter. The cash consideration was RMB 2,593 million. The fair value of the 50%
+equity interest held before the business combination is RMB 2,881 million. The fair value of the assets and liabilities of Ningxia Nenghua primarily include construction
+in progress (RMB 14,094million), fixed assets (RMB 3,293 million) and borrowings (RMB11,862 million) and no goodwill has arisen from the business combination.
+Summarised financial information on subsidiaries with material minority interests
+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.
+Fujian Petrochemical
+Shanghai Petrochemical
+At
+At
+Sinopec
+Kantons (iv)
+At
+SIPL
+At
+At
+The Group accounted for the transaction pursuant to the Share Repurchase Agreement as a transaction with minority interests since the control of business had not
+been lost, which resulted in an increase in capital reserve of the Group's consolidated financial statement amounting to RMB 3,227 million and decrease of minority
+interests amounting to RMB 2,867 million.
+60.00
+*
+75.00
+1,952
+Manufacturing of intermediate petrochemical products
+and petroleum products
+RMB 3,986
+RMB 2,990
+75.00
+1,480
+Manufacturing of intermediate petrochemical products
+and petroleum products
+RMB 1,595
+RMB 6,840
+391
+100.00
+RMB 5,130
+RMB5,830
+95.00
+383
+(Ningxia) Company Limited ("Ningxia Nenghua") (iii)
+Sinopec Zhanjiang Dongxing Petrochemical
+Company Limited
+Manufacturing of intermediate petrochemical products
+and petroleum products
+RMB 4,397
+RMB 4,397
+Production and sale of electricity, cement and coal
+Marketing Company
+At
+RMB 498
+Marketing and distribution of refined petroleum
+Interests at
+31 December
+the Group
+2014
+million
+million
+%
+RMB million
+RMB 1,400
+RMB 1,856
+100.00
+23
+Marketing and distribution of refined petroleum
+products
+RMB 20,000
+RMB 39,141
+100.00
+6,126
+Manufacturing of intermediate petrochemical products
+and petroleum products
+RMB 13,203
+RMB 15,651
+held by
+Minority
+Percentage of
+equity interest/
+voting right
+Actual
+investment at
+31 December
+2014
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+125
+Financial Statements (RPC)
+Financial Statements (RPC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+52 PRINCIPAL SUBSIDIARIES
+The Company's principal subsidiaries have been consolidated into the Group's financial statements for the year ended 31 December 2014. The
+following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the Group:
+100.00
+Registered
+capital/paid-up
+(a) Subsidiaries acquired through group restructuring:
+China Petrochemical International Company Limited
+Marketing Company (Note 11(i))
+Sinopec Yangzi Petrochemical Company Limited
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical") (i)
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+Trading of petrochemical products
+Sinopec Kantons Holdings Limited ("Sinopec Kantons") Trading of crude oil and petroleum products
+Sinopec Yizheng Chemical Fibre Limited
+Liability Company (ii)
+Principal activities
+capital
+Full name of enterprise
+120
+Manufacturing of plastics, intermediate petrochemical
+products and petroleum products
+RMB 5,745
+(b) Subsidiaries established by the Group:
+Sinopec Shell (Jiangsu) Petroleum Marketing
+Company Limited
+BP Sinopec (Zhejiang) Petroleum Company Limited
+Sinopec Qingdao Refining and Chemical
+Company Limited
+Sinopec Senmei (Fujian) Petroleum Limited
+Sinopec Chemical Sales Company Limited
+Sinopec International Petroleum Exploration and
+Production Limited ("SIPL")
+Sinopec Fuel Oil Sales Company Limited
+Sinopec Great Wall Energy & Chemical
+Sinopec (Hong Kong) Limited
+Company Limited (“GWEC”) (iii)
+Sinopec-SK(Wuhan) Petrochemical Company Limited
+("Zhonghan Wuhan")
+(c) Subsidiaries acquired through business combination under common control:
+Sinopec Hainan Refining and Chemical
+Company Limited
+Sinopec Qingdao Petrochemical Company Limited
+(d) Subsidiaries acquired through business combination not under common control:
+Sinopec Great Wall Energy & Chemical
+Trading of petrochemical products
+HKD 13,277
+HKD 13,311
+100.00
+Sinopec Beihai Refining and Chemical
+Limited Liability Company
+RMB 830
+3,291
+RMB 4,585
+RMB 2,873
+50.00
+1,633
+Manufacturing of synthetic fibres, resin and plastics,
+intermediate petrochemical products and petroleum
+products
+RMB 7,200
+RMB 4,000
+50.56
+8,359
+HKD 248
+100.00
+HKD 3,952
+3,269
+Production and sale of polyester chips and
+RMB 4,000
+RMB 6,491
+100.00
+polyester fibres
+China International United Petroleum and Chemical
+Company Limited
+Trading of crude oil and petrochemical products
+RMB 3,000
+60.34
+(e) Allowance for diminution in value of inventories
+At
+At
+18
+1,774
+930
+889
+48
+ထု
+(15)
+Dividends paid to minority interests
+271
+196
+69
+Net cash generated from
+operating activities
+197
+523
+111,169
+181,428
+138,795
+102,386
+Total
+155
+901
+(338)
+(358)
+4,250
+22,914
+25,945
+137
+(43)
+Total comprehensive (loss)/income
+(750)
+(714)
+(700)
+Authorised and contracted for (i)
+Authorised but not contracted for
+2,014
+(106)
+3,814
+22,934
+25,744
+137
+(43)
+Comprehensive (loss)/profit attributable
+to minority interests
+(375)
+389
+At 31 December
+2013
+RMB million
+2014
+RMB million
+At 31 December
+Between one and two years
+Within one year
+At 31 December 2014 and 2013, the future minimum lease payments of the Group under operating leases are as follows:
+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.
+Operating lease commitments
+53 COMMITMENTS
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (RPC)
+Between two and three years
+Financial Statements (RPC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+(iv) This listed company will announce its financial information for the year ended 31 December 2014 later than the Company, therefore its 2014 financial information is
+not currently disclosed.
+Note:
+1,467
+48,471
+44,337
+7,006
+5,383
+324
+127
+3,046
+Between three and four years
+Total
+At 31 December 2014 and 2013, the capital commitments of the Group are as follows:
+372,087
+363,974
+307,268
+297,425
+12,656
+13,063
+12,742
+12,984
+Between four and five years
+After five years
+12,850
+13,064
+13,480
+13,507
+13,909
+RMB million
+RMB million
+At 31 December
+2013
+At 31 December
+2014
+Capital commitments
+13,113
+Zhonghan Wuhan
+At
+389
+(700)
+(197)
+(12,485)
+(18,017)
+(972)
+(2,387)
+(2,414)
+(280,010)
+(274,111)
+(13,023)
+Net current assets/(liabilities)
+212
+84
+(2,975)
+(3,531)
+915
+13,029
+11,569
+(148,998) (159,952)
+(11,299)
+(224)
+Current liabilities
+2013
+RMB million
+2014
+RMB million
+1,724
+At
+At
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2014
+2013
+2014
+2013
+2013
+2014
+RMB million RMB million
+Current assets
+436
+281
+Non-current assets
+RMB million
+9,510
+14,486
+RMB million
+1,887
+RMB million
+15,416
+13,983
+2013
+2014
+RMB million RMB million
+131,012
+2013
+RMB million
+114,159
+RMB million
+4,050
+4,596
+21,636
+11,746
+13,312
+227,825
+215,798
+16,874
+4,033
+Turnover
+7,322
+5,379
+6,834
+102,183
+18,500
+9.038
+13,652
+1,472,232
+1,498,628
+18,365
+(Loss)/profit for the year
+(745)
+(716)
+115,540
+2,014
+21,622
+3,800
+22,430
+6,911
+47,623
+46,143
+229,281
+217,274
+16,874
+4,033
+Non-current liabilities
+19,817
+(996)
+(1,819)
+(808)
+(77)
+(35,877)
+(32,831)
+(1,456)
+(1,476)
+Net non-current assets
+3,054
+(796)
+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.
+8,596
+8,100
+(6,246)
+(2,513)
+(1,510)
+1,864
+(282)
+698
+28,540
+(5,096)
+(1,093)
+(2,049)
+(28,654)
+(7,515)
+(8,210)
+(2,540)
+148,347
+151,893
+2014
+(2,167)
+4,151
+826
+1,622
+(c) The analysis of cash held by the Group is as follows:
+Cash at bank and on hand
+- Cash on hand
+- Demand deposits
+Cash at the end of the year
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+2014
+2013
+RMB million
+2013
+RMB million
+71,377
+6,839
+4,044
+82,156
+74,853
+7,941
+6,412
+5,587
+5,599
+48,910
+RMB million
+RMB million
+9,355
+No. 22, Chaoyangmen North Street, Chaoyang District, Beijing
+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
+State-owned
+Fu Chengyu
+RMB 274,867million
+Sinopec Group Company is an enterprise controlled by the PRC government. Sinopec Group Company directly and indirectly holds 72.94%
+shareholding of the Company.
+(2) Related parties not having the ability to exercise control over the Group
+Related parties under common control of a parent company with the Company:
+Sinopec Finance (Note)
+Sinopec Shengli Petroleum Administration Bureau
+China Petrochemical Corporation
+10169286-X
+Sinopec Zhongyuan Petroleum Exploration Bureau
+Sinopec Engineering Incorporation
+Sinopec Century Bright Capital Investment Limited
+Sinopec Petroleum Storage and Reserve Limited
+Sinopec International Petroleum Exploration and Production Limited
+Associates of the Group:
+Sinopec Finance
+China Aviation Oil
+Zhongtian Synergetic Energy
+Shanghai Chemical
+Sinopec Assets Management Corporation
+Less: Cash at the beginning of the year
+Net (decrease)/increase of cash
+Registered capital
+Types of legal entity
+15,046
+10,456
+(5,691)
+4,590
+2014
+RMB million
+30
+9,325
+9,355
+Authorised representative
+2013
+RMB million
+15,046
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+50 RELATED PARTIES AND RELATED PARTY TRANSACTIONS
+(1) Related parties having the ability to exercise control over the Group
+The name of the company
+Organisation code
+Registered address
+Principal activities
+Relationship with the Group
+36
+15,010
+Shanghai Petroleum
+Cash balance at the end of the year
+Net cash flow from operating activities
+Tax effect of preferential tax rate (i)
+Effect of difference between income taxes at foreign operations tax rate
+and the PRC statutory tax rate (ii)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of tax losses not recognised
+Write-down of deferred tax assets
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+2014
+2013
+RMB million
+RMB million
+66,481
+96,982
+16,620
+24,246
+444
+805
+(1,097)
+(1,297)
+(1,722)
+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
+for the year ended 31 December 2014
+47 INCOME TAX EXPENSE
+The Group
+2014
+2013
+RMB million
+RMB million
+Provision for income tax for the year
+Deferred taxation
+(1,962)
+18,341
+(1,792)
+2,562
+Under-provision for income tax in respect of preceding year
+1,022
+302
+Total
+17,571
+25,605
+Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows:
+22,741
+622
+2,171
+(27)
+120
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+49 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT
+The Group
+(a) Reconciliation of net profit to cash flows from operating activities:
+Net profit
+Add:
+Impairment losses on assets
+Depreciation of fixed assets
+Amortisation of intangible assets and long-term deferred expenses
+Financial Statements (RPC)
+Dry hole costs written off
+Fair value loss/(gain)
+Financial expenses
+Investment income
+(Increase)/decrease in deferred tax assets
+(Decrease)/increase in deferred tax liabilities
+Decrease/(increase) in inventories
+Safety fund reserve
+Increase in operating receivables
+Decrease in operating payables
+Net loss on disposal of non-current assets
+(b) Net change in cash:
+Financial Statements (RPC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+(246)
+1,595
+660
+114
+926
+1,022
+302
+17,571
+25,605
+119
+Note:
+(ii) It is mainly due to the foreign operation in the Republic of Angola ("Angola") that is taxed at 50% of the assessable income as determined in accordance with the
+relevant income tax rules and regulations of Angola.
+48 DIVIDENDS
+(a) Dividends of ordinary shares declared after the balance sheet date
+Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 20 March 2015, the directors authorised
+to declare the final dividends during the year ended 31 December 2014 of RMB 0.11 per share totaling RMB 13,318 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 22 August 2014, the directors authorised
+to declare the interim dividends for the year ended 31 December 2014 of RMB 0.09 per share totaling RMB 10,512 million.
+Pursuant to the shareholders' approval at the Annual General Meeting on 9 May 2014, a final dividend of RMB 0.15 per share totaling RMB
+17,519 million of the year ended 31 December 2013 was declared.
+Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 23 August 2013, the directors authorised
+to declare the interim dividends for the year ended 31 December 2013 of RMB 0.09 per share totaling RMB 10,491 million.
+Pursuant to the shareholders' approval at the Annual General Meeting on 29 May 2013, a final dividend of RMB 0.20 per share totaling RMB
+17,933 million and with bonus issues of 2 shares converted from the retained earnings for every 10 existing shares in respect of the year ended
+31 December 2012 was declared (Note 32).
+(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.
+Jointly controlled entities of the Group:
+YASREF
+BASF-YPC
+Advances from customers
+Other payables
+Other non-current liabilities
+Short-term loans
+40
+201525
+At 31 December
+2013
+RMB million
+At 31 December
+Other related companies
+At 31 December
+2014
+RMB million
+2013
+RMB million
+4,221
+6,540
+21
+25,476
+18,381
+57
+Accounts payable
+Other non-current assets
+Prepayments and other receivables
+Accounts receivable
+where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+⋅
+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.
+(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.
+(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.
+Pursuant to the resolutions passed at the Directors' meeting held on 31 October 2014, the Group acquired the equity interests of YASREF
+from Sinopec Group Company. The acquisition has been completed in 2014 (Note 11).
+Pursuant to the Share Repurchase Agreement and Disposal Agreement by the Company and Sinopec Yizheng Chemical Fibre Company
+Limited (Yizheng Chemical Fibre Co., Ltd.) on 12 September 2014, Yizheng Chemical Fibre Co., Ltd. repurchased and cancelled the 40.25%
+of its equity interests held by the Company in exchange for the transfer of its outgoing business to the Company and issued shares to
+Sinopec Group Company for the acquisition of 100% equity interest of Sinopec Oilfield Service Corporation (a wholly-owned subsidiary of the
+Sinopec Group Company). These transactions were completed in December 2014 (Note 52).
+3,524
+Pursuant to the resolutions passed at the Directors' meeting held on 22 March 2013, the Group acquired the equity interests of CIR, Taihu
+and Mansarovar from Sinopec Group Company. The acquisition was completed in 2013 (Note 11).
+123
+Financial Statements (RPC)
+Financial Statements (RPC)
+124
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+50 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+(4) Balances with Sinopec Group Company and fellow subsidiaries, associates and jointly controlled entities
+The balances with the Group's related parties at 31 December 2014 and 2013 are as follows:
+The ultimate holding company
+At 31 December
+2014
+RMB million
+Cash and cash equivalents
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+2,219
+14,935
+11,378
+2014
+RMB thousands
+8,009
+501
+2013
+RMB thousands
+8,152
+480
+8,510
+8,632
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+51 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+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.
+(a) Oil and gas properties and reserves
+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.
+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.
+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.
+Despite the inherent imprecision in these engineering estimates, these estimates are used in determining depreciation expense, impairment
+expense and future dismantlement costs. Depreciation rates are determined based on estimated proved developed reserve quantities (the
+denominator) and capitalised costs of producing properties (the numerator). Producing properties' capitalised costs are amortised based on the
+unit-of-production method.
+(b) Impairment for assets
+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 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
+sales volume, selling price and amount of operating costs. 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 and amount of operating costs.
+(c) Depreciation
+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.
+•
+Total
+Short-term employee benefits
+16,842
+10,642
+79
+2,687
+2,987
+47
+21,989
+19,256
+6,470
+Retirement scheme contributions
+4,102
+53,481
+43,337
+38,939
+Long-term loans (including current portion) (Note)
+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 (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 20 and Note 28.
+As at and for the year ended 31 December 2014 and 2013, 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 jointly controlled entities.
+(5) Key management personnel emoluments
+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:
+102,773
+where there is no government-prescribed price, the government-guidance price;
+•
+the government-prescribed price;
+Interest paid
+(i)
+RMB million
+305,044
+2013
+RMB million
+318,092
+(ii)
+134,424
+141,316
+(iii)
+1,606
+Interest received
+1,639
+49,399
+52,814
+(v)
+10,306
+13,235
+(vi)
+6,753
+6,755
+(vii)
+(iv)
+10,531
+Agency commission income
+Operating lease charges for buildings
+CIR
+Taihu
+Mansarovar
+Note: Sinopec Finance is under common control of a parent company with the Company and is also the associate of the Group.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+121
+Financial Statements (RPC)
+Financial Statements (RPC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+Other operating lease charges
+50 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+Note
+The Group
+2014
+Sales of goods
+Purchases
+Transportation and storage
+Exploration and development services
+Production related services
+Ancillary and social services
+Operating lease charges for land
+(3) The principal related party transactions with Sinopec Group Company and fellow subsidiaries, associates and jointly controlled entities, which
+were carried out in the ordinary course of business, are as follows:
+4,040
+10,373
+497
+Note:
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+(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.
+(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 of crude oil such as geophysical, drilling, well testing and
+well measurement 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 which includes the construction of oilfield ground facilities, refineries and chemical plants, manufacture of replacement parts and machinery,
+installation, project management and environmental protection.
+(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.
+(vii) Operating lease charges represent the rental paid to Sinopec Group Company for operating leases in respect of land, buildings and equipment.
+(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.
+(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.
+As at 31 December 2014 and 2013, there was no guarantee given to banks by the Group in respect of banking facilities to Sinopec Group
+Company and fellow subsidiaries, associates and jointly controlled entities, except for the disclosure set out in Note 54(b). Guarantees given to
+banks by the Group in respect of banking facilities to associates and jointly controlled entities are disclosed in Note 54(b).
+(x) Interest expense represents interest charges on the loans and advances obtained from Sinopec Group Company and fellow subsidiaries.
+122
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+50 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+(3) The principal related party transactions with Sinopec Group Company and fellow subsidiaries, associates and jointly controlled entities, which
+were carried out in the ordinary course of business, are as follows: (Continued)
+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 2014.
+The terms of these agreements are summarised as follows:
+(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:
+•
+(xi) The Group obtained or repaid loans from or to Sinopec Group Company and fellow subsidiaries. The calculated periodic balance of average loan for the year ended
+31 December 2014, which is based on monthly average balances, was RMB126,017 million (2013: RMB 96,341 million).
+(vii)
+Included in the transactions disclosed above, for the year ended 31 December 2014 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 138.170 billion (2013: RMB 163.398 billion) comprising purchases of products and services
+(i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 118.968 billion
+(2013: RMB144.095 billion), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 6.753 billion (2013:
+RMB 6.755 billion), operating lease charges for land and buildings paid by the Group of RMB 10.531 billion and 497 million (2013: RMB 10.373
+billion and RMB 491 million), respectively and interest expenses of RMB1.421 billion (2013: RMB 1.684 billion); and b) sales by the Group to
+Sinopec Group Company and fellow subsidiaries amounting to RMB 98.620 billion (2013: RMB 93.825 billion), comprising RMB 98.479 billion
+(2013: RMB 93.684 billion) for sales of goods, RMB 135 million (2013: RMB 84 million) for interest income and RMB 6 million (2013: RMB 57
+million) for agency commission income.
+11,903
+491
+(vii)
+274
+252
+(viii)
+132
+185
+(ix)
+135
+The amounts set out in the table above in respect of the year ended 31 December 2014 and 2013 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+89
+1,421
+1,802
+Net deposits withdrawn from/(placed with) related parties
+Net loans obtained from related parties
+(ix)
+(xi)
+2,319
+(2,528)
+53,690
+(x)
+15,046
+The implementation of commitments in previous year and the Group's commitments did not have material discrepancy.
+Weighted average number of outstanding ordinary shares of the Company
+after retrospective adjustment (million)
+less than
+More than
+two years but
+Within
+one year or
+on demand
+RMB million
+109,067
+109,067
+108,121
+More than
+one year but
+less than
+At 31 December 2013
+contractual
+undiscounted
+cash flow
+RMB million
+Total
+RMB million
+Carrying
+amount
+Long-term loans
+Short-term debentures payable
+Non-current liabilities due within one year
+More than
+Short-term loans
+56 FINANCIAL INSTRUMENTS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+Financial Statements (RPC)
+Financial Statements (RPC)
+133
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+81,800
+69,855
+17,712
+104,141
+491,111
+660,478
+636,594
+Total
+104,141
+Liquidity risk (Continued)
+two years
+RMB million
+five years
+five years
+55 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 income
+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:
+2014
+2013
+RMB million
+RMB million
+Income from principal operations
+Exploration and production
+External sales
+Inter-segment sales
+Refining
+External sales
+Inter-segment sales
+Marketing and distribution
+RMB million
+RMB million
+45,749
+46,754
+46,754
+10,000
+104,141
+10,164
+46,452
+Inter-segment sales
+External sales
+Chemicals
+Inter-segment sales
+External sales
+10,164
+Other payables and employee benefits payable
+198,366
+198,366
+amount
+Carrying
+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 2014, the Group has standby credit facilities with several PRC financial institutions which provide the Group to borrow up to RMB
+302,570 million (2013: RMB 289,106 million) on an unsecured basis, at a weighted average interest rate of 3.51% (2013: 3.12%). At 31 December
+2014, the Group's outstanding borrowings under these facilities were RMB 78,983 million (2013: RMB 44,966 million) and were included in loans.
+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.
+Liquidity risk
+The carrying amounts of cash at bank, trade accounts and bills receivables, derivative financial instruments 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 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. 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.
+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 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.
+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.
+• equity price risk.
+⚫market risk; and
+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 at bank, equity investments, 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.
+2,062,775
+763,139
+2,825,914
+At 31 December
+2014
+RMB million
+1,003,521
+64,589
+1,068,110
+2,107,202
+773,109
+2,880,311
+RMB million
+At 31 December
+941,046
+51,181
+992,227
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+56 FINANCIAL INSTRUMENTS
+Overview
+2013
+RMB million
+for the year ended 31 December 2014
+Total
+contractual
+undiscounted
+cash flow
+RMB million
+five years
+198,366
+Accounts payable
+4,577
+4,577
+4,577
+Bills payable
+50,292
+31,508
+15,226
+54,629
+10,240
+7,472
+2,865
+96,474
+83,506
+Debentures payable
+1,725
+77,483
+67,426
+Long-term loans
+More than
+Within
+one year or
+on demand
+RMB million
+More than
+one year but two years but
+less than
+less than
+two years
+five years
+RMB million
+More than
+RMB million
+At 31 December 2014
+RMB million
+166,688
+167,488
+Non-current liabilities due within one year
+11,890
+11,949
+167,488
+11,949
+Short-term loans
+2013
+RMB million
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+129
+Certain comparative figures have been reclassified, as necessary, in order to conform to the current year's presentation (Note 3(27)).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+137
+Financial Statements (RPC)
+Financial Statements (International)
+REPORT OF THE INTERNATIONAL AUDITOR
+pwc
+To the Shareholders of China Petroleum & Chemical Corporation
+(incorporated in People's Republic of China with limited liability)
+羅兵咸永道
+We have audited the consolidated financial statements of China Petroleum & Chemical Corporation ("the Company") and its subsidiaries (together, the
+"Group") set out on pages 139 to 195, which comprise the consolidated and company balance sheet as at 31 December 2014, and the consolidated
+income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated
+statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
+DIRECTORS' RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+The directors of the Company are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with
+International Financial Reporting Standards as issued by the International Accounting Standards Board 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.
+AUDITOR'S RESPONSIBILITY
+Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to 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.
+60 COMPARATIVE FIGURES
+We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants.
+Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the
+consolidated financial statements are free from material misstatement.
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
+OPINION
+In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31
+December 2014, and of the Group's profit and cash flows for the year then ended in accordance with International Financial Reporting Standards as
+issued by the International Accounting Standards Board and have been properly prepared in accordance with the disclosure requirements of the Hong
+Kong Companies Ordinance.
+PricewaterhouseCoopers
+Certified Public Accountants
+Hong Kong, 20 March 2015
+PricewaterhouseCoopers, 22/F, Prince's Building, Central, Hong Kong
+T: +852 2289 8888, F: +852 2810 9888, www.pwchk.com
+138
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+USD 8,382
+EUR 57
+At 31 December
+2014
+million
+Hong Kong Dollars
+Japanese Yen
+Euro
+An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The
+procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial
+statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation
+of consolidated financial statements that give a true and fair view 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 entity's internal control. An audit also includes evaluating the appropriateness
+of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the
+consolidated financial statements.
+0.538
+0.574
+12.15
+420
+117,242
+5,756
+121,859
+59 RETURN ON NET ASSETS AND EARNINGS PER SHARE
+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:
+Weighted
+average
+return on
+net assets
+2014
+Basic
+earnings
+per share
+per share
+(%) (RMB/Share) (RMB/Share)
+2013
+Diluted
+earnings
+Weighted
+average
+return on
+net assets
+(%)
+0.406
+12.24
+0.579
+Basic
+0.370
+0.370
+7.42
+ordinary equity shareholders
+attributable to the Company's
+Net profit deducted extraordinary gains and losses
+US Dollars
+0.406
+Net profit attributable to the Company's ordinary
+equity shareholders
+0.543
+per share
+(RMB/Share)
+Diluted
+earnings
+per share
+(RMB/Share)
+earnings
+8.14
+Gross exposure arising from loans and borrowings
+The Group
+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 convertible bonds denominated in US Dollars,
+Japanese Yen and Hong Kong Dollars, and the Group enters into foreign exchange contracts to manage currency risk exposure.
+Included in short-term and long-term debts and convertible bonds denominated are the following amounts denominated in a currency other than
+the functional currency of the entity to which they relate:
+(b) At 31 December 2014 and 2013, guarantees by the Group in respect of facilities granted to the parties below are as follows:
+At 31 December
+At 31 December
+2014
+2013
+RMB million
+RMB million
+438
+Financial Statements (RPC)
+Jointly controlled entities
+Others
+Total
+168
+5,552
+5,720
+5,425
+5,863
+The Group monitors the conditions that are subject to the guarantees to identify whether it is probable that a loss has occurred, and recognises any
+such losses under guarantees when those losses are estimable. At 31 December 2014 and 2013, 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+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.
+(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.
+(iv) Chemicals which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products 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, 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.
+(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.
+(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.
+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.
+55 SEGMENT REPORTING
+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.
+Legal 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 RMB5,352 million for the year ended 31
+December 2014 (2013: RMB 5,154 million).
+Environmental contingencies
+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.
+Financial Statements (RPC)
+54 CONTINGENT LIABILITIES
+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
+Market risk
+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 working capital requirements and repay its short-term debts and obligations when they
+become due.
+68,896
+84,939
+15,283
+83,735
+461,053
+83,735
+630,171
+83,735
+600,445
+202,724
+202,724
+202,724
+4,526
+4,526
+4,526
+32,531
+70,047
+53,048
+723
+1,068
+14,892
+36,365
+Debentures payable
+for the year ended 31 December 2014
+Bills payable
+Other payables and employee benefits payable
+Total
+99,138
+120,153
+3,360
+14,215
+Accounts payable
+2014
+RMB million
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+132
+Total segment liabilities
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Segment liabilities
+Liabilities
+Total assets
+Other unallocated assets
+Deferred tax assets
+Long-term equity investments
+Cash at bank and on hand
+Total segment assets
+Short-term loans
+Corporate and others
+Exploration and production
+Refining
+Segment assets
+Assets
+Less: Non-operating expenses
+Profit before taxation
+Add: Non-operating income
+Operating profit
+(Loss)/gain from changes in fair value
+Financial expenses
+Total segment investment income
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Marketing and distribution
+Chemicals
+Short-term debentures payable
+Non-current liabilities due within one year
+Long-term loans
+5,770
+418
+811
+863
+1,292
+(475)
+(854)
+366
+1,118
+98,050
+71,113
+1,251
+2,179
+(3,686)
+(2,982)
+631
+(2,164)
+Debentures payable
+Deferred tax liabilities
+Other non-current liabilities
+Other unallocated liabilities
+Total liabilities
+2014
+Investment income/(loss)
+RMB million
+46,309
+54,476
+(1,982)
+9,745
+29,753
+35,633
+2013
+RMB million
+Total segment operating profit
+Elimination
+Corporate and others
+1,358,020
+1,308,837
+640,224
+587,663
+717,796
+721,174
+430,096
+419,201
+55,999
+62,208
+374,097
+356,993
+1,492,367
+Corporate and others
+External sales
+Inter-segment sales
+Elimination of inter-segment sales
+1,486,037
+1,458,390
+1,305,473
+1,267,778
+1,111,004
+1,092,244
+(1,889,105)
+194,469
+219,466
+211,094
+60,848
+158,618
+141,544
+69,550
+Consolidated income from principal operations
+175,534
+1,338
+(1,972.175)
+2,833,247
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+By segment
+Operating profit/(loss)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+55 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+2,880,311
+2,825,914
+47,064
+44,273
+1,089
+1,399
+7,491
+Income from other operations
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Consolidated income from other operations
+Consolidated operating income
+2,781,641
+130 Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+22,641
+5,317
+5,796
+12,770
+10,047
+8,284
+16,503
+8,137
+2,510
+(9,618)
+26,989
+26,064
+27,957
+105,311
+80,196
+RMB million
+RMB million
+2013
+2014
+(2) Geographical information
+Corporate and others
+Chemicals
+Marketing and distribution
+Exploration and production
+Refining
+Impairment losses on long-lived assets
+Corporate and others
+Chemicals
+Financial Statements (RPC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+55 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one
+year.
+Capital expenditure
+29,486
+Exploration and production
+Refining
+Chemicals
+Corporate and others
+Depreciation, depletion and amortisation
+Exploration and production
+Refining
+Marketing and distribution
+Marketing and distribution
+Financial Statements (RPC)
+15,850
+3,648
+Non-current assets
+Mainland China
+Others
+5,446
+1,463,836
+Mainland China
+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.
+2,661
+3,619
+15
+8
+1,106
+35
+40
+88
+29
+2,523
+2,436
+81,265
+5,076
+154,640
+185,126
+48,902
+44,126
+15,015
+19,189
+13,859
+11,127
+12,130
+10,757
+1,559
+1,396
+90,097
+12,491
+2013
+116,103
+131
+Weighted average number of outstanding ordinary shares of the Company
+before retrospective adjustment (million)
+80,593
+15,101
+10,100
+1,272,915
+1,336,942
+107,197
+147,015
+156,373
+162,685
+273,872
+276,298
+329,236
+297,884
+406,237
+453,060
+RMB million
+2013
+(6,274)
+(4.151)
+2,167
+65,481
+96,453
+4,710
+75,318
+3,481
+2,952
+66,481
+96,982
+At 31 December
+2014
+RMB million
+At 31 December
+3,710
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+6,979
+16,754
+759,656
+5,720
+2,990
+804,273
+8,187
+11,549
+7,977
+7,820
+99,138
+83,506
+46,452
+67,426
+45,749
+11,890
+10,000
+108,121
+166,688
+428,312
+15,441
+1,451,368
+1,382,916
+100,548
+104,233
+67,328
+4,141
+69,029
+101,564
+27,439
+23,670
+138,928
+129,816
+452,404
+118,161
+2014
+116,822
+Others
+The weighted average number of the ordinary shares issued at 31 December (million)
+Effect of the convertible bonds (million)
+3,068
+9,737
+2,885
+183
+- Derivative financial assets
+Derivative financial instruments:
+Total
+RMB million
+Level 3
+RMB million
+9,737
+Level 2
+RMB million
+Level 1
+- Listed
+Available-for-sale financial assets:
+Assets
+The Group
+At 31 December 2014
+Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
+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.
+RMB million
+•
+Liabilities
+- Embedded derivative component of the Convertible bonds
+56 FINANCIAL INSTRUMENTS (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (RPC)
+Financial Statements (RPC)
+135
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+22,278
+Derivative financial instruments:
+18,990
+12,805
+12,622
+183
+17,070
+20,358
+1,920
+1,920
+- Other derivative financial liabilities
+3,288
+3,288
+Fair values (Continued)
+•
+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:
+17
+16
+million
+941
+1,923
+million
+2013
+2014
+At 31 December
+21
+At 31 December
+Euro
+US Dollars
+The Group
+A 5 percent strengthening of Renminbi against the following currencies at 31 December 2014 and 2013 would have increased 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 2013.
+JPY 9,711
+HKD 13,931
+USD 4,118
+At 31 December
+2013
+million
+JPY 8,662
+HKD 6
+Japanese Yen
+• Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+Hong Kong Dollars
+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.
+(i) Financial instruments carried at fair value
+Fair values
+As at 31 December 2014, it is estimated that an increase of 20% in the Company's own share price would decrease the Group's profit for the year
+by approximately RMB 2,730 million (2013: RMB 1,333 million); a decrease of 20% in the Company's own share price would increase the Group's
+profit for the year by approximately RMB 2,702 million (2013: RMB 737 million). The sensitivity analysis has been determined assuming that the
+changes in the Company's own share price had occurred at the balance sheet date and that all other variables remain constant. The analysis is
+performed on the same basis for 2013.
+The Group is exposed to equity price risk arising from changes in the Company's own share price to the extent that the Company's own equity
+instruments underlie the fair values of derivatives of the Group. As at 31 December 2014, the Group's exposure to equity price risk is the derivatives
+embedded in the 2011 Convertible Bonds and the 2011 Convertible Bonds issued by the Company as disclosed in Note 29 (v).
+Equity price risk
+At 31 December 2014, it is estimated that a general increase/decrease of USD 10 per barrel in crude oil and refined oil products, with all other
+variables held constant, would decrease/increase the Group's profit for the year by approximately RMB 1,167 million (2013: increase/decrease
+RMB 18 million), and increase/decrease the Group's capital reserve by approximately RMB 2,206 million (2013: increase/decrease RMB 2,806
+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 2013.
+At 31 December 2014, 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 2014, the net fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB 12,622 million (2013: RMB 4,577 million) recognised in other receivables and derivative financial liabilities of
+RMB 18,990 million (2013: RMB 2,476 million) recognised in other payables.
+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.
+411
+(c) Commodity price risk
+The Group's interest rate risk exposure arises primarily from its short-term and long-term loans. Loans carrying 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 and terms of
+repayment of short-term and long-term loans of the Group are disclosed in Note 20 and Note 28, respectively.
+(b) Interest rate risk
+Market risk (Continued)
+56 FINANCIAL INSTRUMENTS (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+134
+At 31 December 2014 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 1,199 million (2013: RMB 411 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 2013.
+Effect of the bonus shares issuance and capital reserve converted into
+(i) Financial instruments carried at fair value (Continued)
+The Group
+826
+1,622
+125
+(3,165)
+RMB millions
+RMB millions
+2013
+2014
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+136
+245
+(2,368)
+Minority interests
+Attributable to:
+Total
+Tax effect
+Other non-operating income, net
+Gain on holding and disposal of various investments
+Government grants
+Donations
+Net loss on disposal of non-current assets
+Equity shareholders of the Company
+Extraordinary (gains)/losses for the year:
+(4,680)
+(5,679)
+The calculation of the weighted average number of ordinary shares is as follows:
+Net profit attributable of equity shareholders of the Company (RMB million)
+Weighted average number of outstanding ordinary shares of the Company (million)
+Basic earnings per share (RMB/share)
+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:
+(i) Basic earnings per share
+58 BASIC AND DILUTED EARNINGS PER SHARE
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(31)
+419
+(67)
+(4,192)
+(552)
+(4,259)
+184
+1,420
+(736)
+(210)
+771
+(521)
+At 31 December 2013
+Extraordinary
+57 EXTRAORDINARY GAINS AND LOSSES
+4,316
+4,316
+348
+2,312
+1,964
+RMB million
+Total
+Level 3
+RMB million
+Level 2
+RMB million
+RMB million
+|
+Level 1
+- Embedded derivative component of the Convertible bonds
+Derivative financial instruments:
+Liabilities
+- Derivative financial assets
+Derivative financial instruments:
+- Listed
+Available-for-sale financial assets:
+Assets
+- Other derivative financial liabilities
+Pursuant to "Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public -
+Gainand Loss" (2008), the extraordinary gains and losses of the Group are as follows:
+339
+339
+2,285
+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 2014 and 2013.
+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.
+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.
+RMB million
+151,852
+149,694
+2013
+At 31 December
+115,767
+112,362
+RMB million
+548
+Fair value
+The fair values of the Group's financial instruments carried at other than fair value (other than long-term debts and unquoted security
+investments) approximate their carrying amounts due to the short-term maturity of these instruments. The fair values of long-term debts
+are estimated by discounting future cash flows using current market interest rates offered to the Group for debt with substantially the same
+characteristics and maturities ranging 0.33% to 6.15% (2013: 0.37% to 7.03%). The following table presents the carrying amount and fair value
+of the Group's long-term debts other than loans from Sinopec Group Company and fellow subsidiaries at 31 December 2014 and 2013:
+At 31 December
+2014
+(ii) Fair values of financial instruments carried at other than fair value
+During the years ended 31 December 2014 and 2013, there were no transfers between instruments in Level 1 and Level 2.
+3,172
+548
+2,624
+4,664
+1,964
+2,833
+Carrying amount
+Weighted average number of the ordinary shares issued at 31 December (diluted) (million)
+6,330
+67,179
+2014
+47,430
+2013
+116,822
+0.406
+116,103
+0.579
+2014
+2013
+116,565
+86,820
+112,866
+3,237
+257
+116,822
+116,103
+116,565
+Conversion of the 2011 Convertible Bonds (million)
+The calculation of the weighted average number of ordinary shares (diluted) is as follows:
+0.543
+share capital on the H shares issuance (million)
+121,859
+66,134
+Weighted average number of outstanding ordinary shares of the Company (diluted) (million)
+Diluted earnings per share (RMB/share)
+47,564
+117,242
+0.406
+2013
+2014
+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):
+(ii) Diluted earnings per share
+Weighted average number of outstanding ordinary shares of the Company at 31 December (million)
+Net profit attributable to equity shareholders of the Company (diluted) (RMB million)
+(1,346)
+(21)
+(8,323)
+(9,789)
+(1,674)
+1,142,890
+(1,105,457)
+19,406
+(28,031)
+12,696
+4,128
+(49)
+(28,298)
+(21,421)
+745
+(5,707)
+15,046
+4,672
+10,456
+16
+9,355
+(82)
+15,046
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+145
+Financial Statements (International)
+Financial Statements (International)
+1,128,447
+(1,114,481)
+31,519
+(178,740)
+21 and 22
+2,136
+2014
+2013
+RMB
+RMB
+(a)
+148,347
+151,893
+(113,047)
+(144,972)
+(11,334)
+(9,974)
+(132,633)
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+(16,387)
+(33,487)
+3,874
+4,198
+1,020
+1,550
+(690)
+353
+1,619
+1,456
+2,312
+40(iv)
+for the year ended 31 December 2014
+Inventories
+(a) Reconciliation of Profit before Taxation to Net Cash Generated from Operating Activities
+5,599
+(3,630)
+(2,359)
+(2,616)
+(154)
+(1,779)
+(1,568)
+11,218
+(662)
+10,602
+(934)
+1,622
+826
+6,839
+4,044
+4,611
+(2,028)
+176,791
+190,345
+(28,654)
+(7,515)
+28,540
+(5,096)
+5,587
+81,265
+90,097
+95,052
+Operating activities
+Profit before taxation
+Adjustments for:
+Depreciation, depletion and amortisation
+Dry hole costs written off
+Share of profits from associates and joint ventures
+Investment income
+Interest income
+Interest expense
+Gain 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
+Loss/(gain) on embedded derivative component of the convertible bonds
+(Amounts in million)
+Accounts receivable and other current assets
+Accounts payable and other current liabilities
+Income tax paid
+Net cash generated from operating activities
+The notes on pages 147 to 195 form part of these financial statements.
+146
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Year ended 31 December
+2014
+2013
+RMB
+RMB
+65,504
+Year ended 31 December
+Note
+Financing activities
+Cash and cash equivalents at 31 December
+2,610
+(15,229)
+Changes in ownership interests in subsidiaries
+that do not result in a loss of control:
+Transaction with non-controlling interests (Note 40 (iii)
+Total changes in ownership interests in subsidiaries that
+do not result in a loss of control
+Total transactions with owners
+Others (Note (f))
+Balance at 31 December 2014
+3,216
+3,216
+(2,877)
+339
+3.216
+3.216
+(2.877)
+339
+1,715
+3,216
+8,477
+3,215
+(31,246)
+(17,839)
+(31,246)
+3.215
+8,477
+Transactions with owners, recorded directly in equity:
+Contributions by and distributions to owners:
+Conversion of the 2011 Convertible Bonds (Note 30)
+1,715
+8,477
+Final dividend for 2013 (Note 14)
+Interim dividend for 2014 (Note 14)
+Appropriation (Note (a))
+Contributions to subsidiaries from non-controlling interests
+Distributions to non-controlling interests
+Total contributions by and distributions to owners
+(14,623)
+1.715
+10,192
+(17,519) (17,519)
+(17,519)
+(10,512) (10,512)
+(10,512)
+3,215
+(3,215)
+4,155
+4,155
+(1,545)
+(1,545)
+10,192
+(267)
+(14,890)
+(1,002)
+Investing activities
+Capital expenditure
+Exploratory wells expenditure
+Purchase of investments, acquisition of subsidiaries, investments in associates
+and investments in joint ventures
+Proceeds from disposal of investments and investments in associates
+Proceeds from disposal of property, plant, equipment and other non-current assets
+Interest received
+(Increase)/decrease in time deposits with maturities over three months
+Investment and dividend income received
+Net cash used in investing activities
+Net cash generated from operating activities
+(6,777)
+Repayments of bank and other loans
+Proceeds from issuing shares
+Contributions to subsidiaries from non-controlling interests
+Dividends paid by the Company
+Distributions by subsidiaries to non-controlling interests
+Interest paid
+Transaction with non-controlling interests
+Net cash generated from financing activities
+Net (decrease)/increase in cash and cash equivalents
+Cash and cash equivalents at 1 January
+Effect of foreign currency exchange rate changes
+Proceeds from bank and other loans
+The notes on pages 147 to 195 form part of these financial statements.
+(Amounts in million)
+CONSOLIDATED STATEMENT OF CASH FLOWS
+1,065
+63
+111
+174
+118,280
+(30,497)
+41,824
+76,552
+117,000
+(6,179)
+276,061
+for the year ended 31 December 2014
+593,041
+645,577
+Note:
+(a) According to the Company's Articles of Association, 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.
+During the year ended 31 December 2014, the Company transferred RMB 3,215 million (2013: RMB 5,734 million), being 10% of the current year's net profit determined
+in accordance with the accounting policies complying with ASBE to this reserve.
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+(c) According to the Company's Articles of Association, the amount of retained earnings available for distribution to owners of the Company is the 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") as issued by the International Accounting Standards Board. At 31 December 2014, the amount of retained earnings
+available for distribution was RMB 166,481 million (2013: RMB 164,698 million), being the amount determined in accordance with the accounting policies complying
+with IFRS. Final dividend for the year ended 31 December 2014 of RMB 13,318 million (2013: RMB 17,519 million) proposed after the balance sheet date has not been
+recognised as a liability at the balance sheet date.
+(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; and (ii) the difference between the considerations paid over the amount of the net assets of entities and related
+operations acquired from Sinopec Group Company and non-controlling interests.
+(e) The application of the share premium account is governed by Sections 167 and 168 of the PRC Company Law.
+(f) According to relevant PRC regulations, the Group is required to transfer an amount to other reserves 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. During the year ended 31 December 2014, the Group transferred RMB 1,065
+million from other reserves to retained earnings for the net use of safety production fund (2013: RMB 1,994 million).
+The notes on pages 147 to 195 form part of these financial statements.
+144
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+52,536
+151
+Basis of preparation
+177,885
+29,715
+26,080
+Other long-term liabilities
+13,067
+Total non-current liabilities
+Equity
+201,534
+9,821
+189,468
+645,577
+621,626
+Share capital
+Reserves
+Total equity attributable to owners of the Company
+Non-controlling interests
+Total equity
+34
+118,280
+116,565
+474,761
+452,238
+593,041
+568,803
+52,536
+33
+Provisions
+7,977
+7,820
+222,075
+197,606
+Income tax payable
+1,091
+3,096
+Total current liabilities
+604,257
+Net current liabilities
+(244,113)
+571,822
+(198,812)
+Total assets less current liabilities
+52,823
+847,111
+Non-current liabilities
+Long-term debts
+30
+107,787
+107,234
+Loans from Sinopec Group Company and fellow subsidiaries
+30
+43,145
+38,356
+Deferred tax liabilities
+29
+811,094
+645,577
+621,626
+Approved and authorised for issue by the board of directors on 20 March 2015.
+100,543
+123,059
+Investment in subsidiaries
+Interest in associates
+Interest in joint ventures
+Available-for-sale financial assets
+Lease prepayments
+Long-term prepayments and other assets
+Total non-current assets
+Current assets
+Cash and cash equivalents
+18
+Time deposits with financial institutions
+Bills receivable
+Inventories
+20
+164,399
+135,081
+5,453
+9,776
+13,346
+12,072
+23
+25
+Trade accounts receivable
+32
+Construction in progress
+452,361
+Fu Chengyu
+Chairman
+(Legal representative)
+Li Chunguang
+President
+The notes on pages 147 to 195 form part of these financial statements.
+Wang Xinhua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+141
+Financial Statements (International)
+142
+533,297
+Financial Statements (International)
+As at 31 December 2014
+(Amounts in million)
+Note
+31 December
+2014
+31 December
+2013
+RMB
+RMB
+Non-current assets
+Property, plant and equipment, net
+17
+BALANCE SHEET
+169,900
+Accrued expenses and other payables
+4,577
+Financial Statements (International)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION (Continued)
+Total operating expenses
+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.
+Amendment to IFRS 11 on accounting for acquisitions of interests in joint operations. The amendment requires an investor to apply the
+principles of business combination accounting when it acquires an interest in a joint operation that constitutes a 'business' (as defined in IFRS 3,
+Business combinations). Specifically, an investor will need to: (1) measure identifiable assets and liabilities at fair value; (2) expense acquisition-
+related costs; (3) recognise deferred tax; and (4) recognise the residual as goodwill. All other principles of business combination accounting
+apply unless they conflict with IFRS 11. The amendment is applicable to both the acquisition of the initial interest and a further interest in a
+joint operation. The previously held interest is not remeasured when the acquisition of an additional interest in the same joint operation with
+joint control maintained.
+IFRS 15, 'Revenue from contracts with customers'. IFRS 15 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'.
+(c) New Hong Kong Companies Ordinance
+In addition, the requirements of Part 9 "Accounts and Audit" of the new Hong Kong Companies Ordinance (Cap. 622) come into operation as
+from the Company's first financial year commencing on or after 3 March 2014 in accordance with section 358 of that Ordinance. The Group is in
+the process of making an assessment of expected impact of the changes in the Companies Ordinance on the consolidated financial statements
+in the period of initial application of Part 9 of the new Hong Kong Companies Ordinance (Cap. 622). So far it has concluded that the impact is
+unlikely to be significant and only the presentation and the disclosure of information in the consolidated financial statements will be affected.
+The accompanying 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)), derivative financial instruments (Note 2(1) and (m)) and derivative component of the
+convertible bonds (Note 2(q)) to their fair values.
+The preparation of the 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 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 financial statements and the
+major sources of estimation uncertainty are disclosed in Note 42.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Other operating expense, net
+Taxes other than income tax
+Personnel expenses
+(12,573)
+(10,969)
+Exploration expenses, including dry holes.
+(81,265)
+(90,097)
+Depreciation, depletion and amortisation
+148
+Financial Statements (International)
+147
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+(21,553)
+(25,992)
+148,347
+151,893
+NOTES TO THE FINANCIAL STATEMENTS
+for the year ended 31 December 2014
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION
+Principal activities
+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.
+Organisation
+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.
+(69,928)
+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 accompanying financial statements have been prepared in accordance with IFRSS as issued by the International Accounting Standards Board.
+IFRS includes International Accounting Standards ("IAS") and related interpretations ("IFRIC"). These 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. The consolidated
+financial statements are prepared in accordance with the applicable requirements of the predecessor Companies Ordinance (Cap. 32) for this
+financial year and the comparative period. A summary of the significant accounting policies adopted by the Group are set out in Note 2.
+(a) New and amended standards and interpretations adopted by the Group
+The following relevant IFRSS, amendments to existing IFRSS and interpretation of IFRS have been published and are mandatory for the year
+beginning on or after 1 January 2014 or later periods and have been adopted by the Group in current accounting period:
+Amendment to IAS 32, 'Financial instruments: Presentation', regarding the asset and liability offsetting. The main changes are to the application
+guidance in IAS 32, 'Financial instruments: Presentation', and clarify some of the requirements for offsetting financial assets and financial
+liabilities on the balance sheet.
+Amendment to IAS 36, 'Impairment of assets' regarding recoverable amount disclosures. The main change addresses the disclosure of
+information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal.
+Amendment to IAS 39, 'Financial instruments: Recognition and measurement ‘. This amendment provides relief from discontinuing hedge
+accounting when novation of a hedging instrument to a central counterparty meets specified criteria.
+Adoption of IFRIC 21, 'Levies'. IFRIC 21 addresses the accounting for a liability to pay a levy if that liability is within the scope of IAS 37
+'Provisions, contingent liabilities and contingent assets'. The interpretation addresses what the obligating event is that gives rise to pay a levy,
+and when should a liability be recognised. The accounting treatment of levy of the Group conforms to the requirement of IFRIC 21. The adoption
+of the interpretation has had no significant effect on the financial statements for earlier periods and on the financial statements for the year
+ended 31 December 2014.
+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.
+(b) New and amended standards and interpretations not yet adopted by the Group
+The following relevant IFRSS, amendments to existing IFRSS and interpretation of IFRS have been published and are mandatory for accounting
+periods beginning on or after 1 January 2015 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 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 (ECL) 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.
+Total comprehensive income for the year
+Bills receivable
+5
+Selling, general and administrative expenses
+188,223
+221,906
+Prepaid expenses and other current assets
+28
+57,027
+38,766
+Total current assets
+360,144
+373,010
+Current liabilities
+Short-term debts
+27
+30
+109,806
+Loans from Sinopec Group Company and fellow subsidiaries
+30
+102,965
+54,064
+Trade accounts payable
+31
+198,366
+202,724
+Bills payable
+31
+75,183
+4,526
+Inventories
+13,963
+(2,371,858)
+(2,334,399)
+Purchased crude oil, products and operating supplies and expenses
+Operating expenses
+47,064
+2,880,311
+2,833,247
+2,781,641
+44,273
+2,825,914
+4
+Other operating revenues
+3
+Turnover
+28,771
+Turnover and other operating revenues
+RMB
+2013
+Year ended 31 December
+2014
+Note
+for the year ended 31 December 2014
+(B) FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
+CONSOLIDATED INCOME STATEMENT
+(Amounts in million, except per share data)
+26
+90,831
+68,466
+26
+RMB
+38,667
+(131)
+38,798
+30(iii) and (v)
+(Loss)/gain on embedded derivative component of the convertible bonds
+Foreign currency exchange (loss)/gains, net
+1,568
+1,779
+Interest income
+(10,602)
+(11,218)
+9
+96,785
+73,487
+(2,783,526)
+(2,752,427)
+(1,877)
+(153)
+8
+(190,672)
+(191,202)
+7
+(55,353)
+(57,233)
+6
+Interest expense
+Finance costs
+Operating profit
+222
+(4,611)
+2,028
+(179)
+2,760
+47,933
+(24,763)
+(17,571)
+10
+Diluted
+Earnings per share:
+Basic
+Profit for the year
+Non-controlling interests
+Owners of the Company
+Attributable to:
+Profit for the year
+Tax expense
+91
+95,052
+Profit before taxation
+2,359
+3,630
+21 and 22
+Share of profits less losses from associates and joint ventures
+154
+2,616
+15(i)
+Investment income
+(4,246)
+(14,229)
+Net finance costs
+65,504
+70,289
+2,844
+6,930
+102,399
+152,007
+Bills payable
+31
+Accrued expenses and other payables
+32
+2,933
+221,715
+2,443
+234,507
+Income tax payable
+552
+1,628
+Total current liabilities
+396,428
+Net current liabilities
+(72,380)
+Total assets less current liabilities
+677,961
+468,179
+(210,104)
+668,426
+Non-current liabilities
+Long-term debts
+30
+75,493
+85,079
+Loans from Sinopec Group Company and fellow subsidiaries
+30
+31
+Trade accounts payable
+77,523
+71
+6,750
+34,309
+7,218
+28,092
+750,341
+878,530
+1,804
+6,731
+Prepaid expenses and other current assets
+2222
+1
+25,031
+1
+176
+24
+32,620
+2,064
+138,882
+222,382
+77,777
+Total current assets
+324,048
+258,075
+Current liabilities
+Short-term debts.
+30
+62,079
+Loans from Sinopec Group Company and fellow subsidiaries
+30
+74,654
+41,930
+46,466
+1,467
+Lease prepayments
+29
+Deferred tax assets
+Available-for-sale financial assets
+Interest in joint ventures
+21
+19
+Interest in associates
+Goodwill
+18
+Construction in progress
+17
+Property, plant and equipment, net
+Non-current assets
+RMB
+RMB
+2013
+31 December
+31 December
+2014
+Note
+(Amounts in million)
+As at 31 December 2014
+CONSOLIDATED BALANCE SHEET
+71,221
+38,667
+24
+Long-term prepayments and other assets
+25
+780-23222
+Time deposits with financial institutions
+15,046
+9,355
+1,009,906
+1,091,224
+Cash and cash equivalents
+Current assets
+Total non-current assets
+46,967
+66,215
+43,270
+49,136
+3,909
+4,141
+3,730
+868
+46,874
+48,474
+28,444
+32,119
+6,255
+6,281
+160,630
+177,667
+669,595
+703,485
+6,979
+66,132
+(131)
+38,798
+Total items that may be reclassified subsequently to profit or loss
+Total other comprehensive income
+Foreign currency translation differences
+Share of other comprehensive loss of associates and joint ventures
+Available-for-sale securities
+Cash flow hedges
+(after tax and reclassification adjustments):
+Items that may be reclassified subsequently to profit or loss
+Other comprehensive income:
+Profit for the year
+(Amounts in million)
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+for the year ended 31 December 2014
+Financial Statements (International)
+140
+Financial Statements (International)
+139
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+The notes on pages 147 to 195 form part of these financial statements. Details of dividends payable to owners of the Company attributable to the profit
+for the year are set out in Note 14.
+0.534
+0.397
+0.570
+0.398
+16
+70,289
+47,933
+4,157
+Total comprehensive income for the year
+Attributable to:
+Owners of the Company
+Non-controlling interests
+Total comprehensive income for the year
+71,221
+38,667
+932
+(9,266)
+932
+(9,266)
+(689)
+(514)
+(297)
+(3,042)
+1,314
+(1,225)
+67,312
+604
+слі
+15
+70,289
+47,933
+RMB
+RMB
+2013
+2014
+Year ended 31 December
+Note
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+The notes on pages 147 to 195 form part of these financial statements.
+(4,485)
+37,574
+Deferred tax liabilities
+29
+(20)
+(29)
+(49)
+(1.006)
+(1,006)
+957
+(49)
+29.745
+(406)
+7,595
+5.734
+(52,091) (9,423)
+11,792
+2,369
+(1,994)
+1,994
+116,565
+(33,713)
+33,347
+73,337
+117,000
+2,491
+259,776 568,803
+52,823
+621,626
+(20)
+986
+Trade accounts receivable
+(986)
+(1,261)
+(1,261)
+Total contributions by and distributions to owners
+2,845
+600
+16,562
+5,734
+(34,158)
+(8,417)
+10,835
+2,418
+Bonus issues (Note 34)
+The notes on pages 147 to 195 form part of these financial statements.
+17,933
+Capitalisation (Note 34)
+8,967
+(8,967)
+Changes in ownership interests in subsidiaries
+that do not result in a loss of control:
+Non-tradable shares reform
+Acquisitions of non-controlling interests of subsidiaries
+Total changes in ownership interests in subsidiaries
+that do not result in a loss of control
+Total transactions with owners
+Others (Note (f)
+Balance at 31 December 2013
+(17,933)
+Distributions to non-controlling interests
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+Financial Statements (International)
+earnings
+RMB
+Company
+interests
+equity
+RMB
+RMB
+RMB
+(33,713)
+33,347
+73,337
+117,000
+2,491
+259,776
+568,803
+52,823
+621,626
+46,466
+46,466
+1,467
+47,933
+(7,668)
+(7,668) (1,598)
+(9,266)
+(7,668)
+46,466
+RMB
+RMB
+RMB
+RMB
+Financial Statements (International)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+for the year ended 31 December 2014
+(Amounts in million)
+Balance at 1 January 2014
+Profit for the year
+Other comprehensive income (Note 15)
+Total equity
+attributable
+Share
+capital
+Capital
+Share
+Statutory Discretionary
+surplus
+surplus
+143
+to owners
+Other
+Retained
+of the
+controlling
+Total
+reserve
+premium
+reserve
+reserve
+reserves
+RMB
+116,565
+RMB
+Non-
+12,696
+12,096
+600
+The notes on pages 147 to 195 form part of these financial statements.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Wang Xinhua
+Chief Financial Officer
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+for the year ended 31 December 2014
+(Amounts in million)
+Balance at 1 January 2013
+Profit for the year
+Other comprehensive income (Note 15)
+Total equity
+attributable
+Share
+capital
+Capital
+Share
+Statutory Discretionary
+surplus surplus
+to owners
+Non-
+Other
+Retained
+of the
+controlling
+Total
+reserve
+RMB
+RMB
+Li Chunguang
+President
+(Legal representative)
+Chairman
+Fu Chengyu
+600
+1,105
+Provisions
+33
+25,830
+22,729
+Other long-term liabilities
+3,104
+3,257
+Total non-current liabilities
+Equity
+146.957
+premium
+RMB
+149,744
+518,682
+Share capital
+34
+118,280
+116,565
+Reserves
+Total equity
+Approved and authorised for issue by the board of directors on 20 March 2015.
+35
+412,724
+402,117
+531,004
+518,682
+531,004
+reserve
+RMB
+reserve
+reserves
+71,221
+Total comprehensive income for the year
+Transactions with owners, recorded directly in equity:
+Contributions by and distributions to owners:
+Conversion of the 2011 Convertible Bonds (Note 30)
+1
+1
+1
+Final dividend for 2012 (Note 14)
+(17,933)
+(17,933)
+(17,933)
+3,909
+Interim dividend for 2013 (Note 14)
+(10,491)
+(10,491)
+Appropriation (Note (a))
+5.734
+(5,734)
+Rights issue of H shares, net of issuance costs (Note 34)
+2.845
+16,561
+19,406
+19,406
+Contributions to subsidiaries from non-controlling interests
+600
+(10,491)
+55
+67,312
+1,180
+earnings
+Company
+interests
+equity
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+86.820
+(33,307)
+66,132
+25,752 67,603 117,000
+3,305
+243,741
+510,914
+37,122
+548,036
+66,132
+66,132
+4,157
+70,289
+1.180
+(248)
+932
+----1,180
+(986)
+(68,374)
+(b) New and amended standards and interpretations not yet adopted by the Group (Continued)
+Ma Weihua
+Chen Xiaojin
+Independent non-executive directors
+Liu Yun
+Dai Houliang
+Cao Yaofeng
+Cai Xiyou (i)
+Fu Chengyu
+Wang Tianpu
+Zhang Yaocang
+Li Chunguang
+Zhang Jianhua
+Wang Zhigang
+Directors
+Name
+Directors' and supervisors' emoluments are as follows:
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+(ii) It is mainly due to the foreign operation in the Republic of Angola ("Angola") that is taxed at 50% of the assessable income as determined in accordance with the
+relevant income tax rules and regulations of Angola.
+(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.
+Note:
+Actual income tax expense
+Adjustment of prior years
+622
+2,171
+(27)
+(575)
+Tax effect of tax losses not recognised
+1,595
+Jiang Xiaoming
+660
+926
+1,022
+302
+17,571
+24,763
+Write-down of deferred tax assets
+114
+Effect of difference between income taxes at foreign operations tax rate and the PRC statutory tax rate (ii)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Andrew Y. Yan
+Supervisors
+366
+975
+61
+548
+366
+973
+61
+546
+366
+300
+300
+300
+300
+300
+2014 total
+RMB'000
+Retirement
+scheme
+contributions
+RMB'000
+Bonuses
+RMB'000
+Xu Bin
+Geng Limin
+Li Xinjian
+Zou Huiping
+Zhou Shiliang
+Chen Mingzheng
+Bao Guoming
+Jiang Zhenying
+Independent supervisors
+Kang Mingde
+Total
+Note:
+Directors'
+Salaries,
+allowances and
+supervisors' fee benefits in kind
+RMB'000
+RMB'000
+Yu Renming
+548
+(1,962)
+Tax effect of preferential tax rate (i)
+11,435
+(1,710)
+9,725
+2013
+RMB million
+0.7% to 7.1%
+11,218
+1,008
+10,210
+(1,719)
+11,929
+The Group
+2014
+RMB million
+Tax expense in the consolidated income statement represents:
+10 TAX EXPENSE
+* Interest rates per annum at which borrowing costs were capitalised for construction in progress
+Interest expense
+Accretion expenses (Note 33)
+Less: Interest expense capitalised*
+Interest expense incurred
+9 INTEREST EXPENSE
+56
+(125)
+(245)
+(110)
+(47)
+(3,619)
+877
+(2,661)
+(607)
+(153)
+(1,877)
+Note:
+(i) Government grants for the years ended 31 December 2014 and 2013 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 these grants.
+(ii) Impairment losses on long-lived assets for the year ended 31 December 2014 primarily represent impairment losses recognised in the
+exploration and production ("E&P") segment of RMB 2,436 million (2013: RMB 2,523 million) on property, plant and equipment and for the
+chemicals segment of RMB 1,106 million (2013: RMB 0 million) of property, plant and equipment and other assets (Note 17). The primary
+factor resulting in the E&P segment impairment losses was unsuccessful development drilling and high operating and development costs 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 10.13% (2013: 10.70%). The assets in the chemicals
+segment were written down mainly due to the suspension of operations of certain production facilities.
+(225)
+(1,722)
+10,602
+Current tax
+(1,327)
+(1,126)
+Tax effect of non-taxable income
+805
+717
+Tax effect of non-deductible expenses
+23,763
+16,376
+Expected PRC income tax expense at a statutory tax rate of 25%
+95,052
+65,504
+Profit before taxation
+2013
+RMB million
+RMB million
+The Group
+2014
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+10 TAX EXPENSE (Continued)
+- Provision for the year
+- Adjustment of prior years
+Deferred taxation (Note 29)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+The Group
+2014
+RMB million
+2013
+RMB million
+0.9% to 6.4%
+18,341
+22,741
+302
+(1,792)
+17,571
+1,720
+24,763
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+1,022
+7
+61
+274
+359
+993
+57
+573
+363
+993
+573
+363
+993
+57
+573
+363
+993
+57
+573
+363
+RMB'000
+Salaries,
+Directors'
+allowances and
+supervisors' fee benefits in kind
+RMB'000
+RMB'000
+300
+300
+573
+300
+300
+Retirement
+Bonuses
+RMB'000
+scheme
+contributions
+2013 total
+RMB'000
+300
+Note:
+57
+300
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+158
+The consolidated profit attributable to equity shareholders of the Company includes a profit of RMB 26,196 million (2013: RMB 42,078 million)
+which has been dealt with in the financial statements of the Company.
+For the years ended 31 December 2014 and 2013, all the five highest paid individuals were directors whose emoluments were disclosed in Note 11.
+13 PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE COMPANY
+12 SENIOR MANAGEMENT'S EMOLUMENTS
+(ii) Mr. Wang Tianpu tendered his resignation as the president and was re-designated as a non-executive director of the Company, and Mr. Li Chunguang was appointed as
+the president and re-designated as an executive director of the Company from 29 May 2013.
+8,632
+480
+4,034
+2,618
+1,500
+541
+52
+279
+210
+528
+52
+300
+300
+300
+300
+210
+284
+989
+52
+190
+327
+39
+556
+197
+279
+546
+975
+Total
+Independent supervisors
+2,553
+1,500
+598
+57
+540
+57
+55
+329
+212
+284
+199
+560
+41
+327
+192
+553
+57
+548
+45
+867
+366
+542
+61
+3,956
+969
+300
+300
+300
+300
+212
+284
+300
+Kang Mingde
+501
+(i) Due to new working arrangement, Mr. Cai Xiyou has tendered his resignation as the director, member of the Strategy Committee of the Board and Senior Vice
+President of the Company from 24 October 2014.
+Yu Renming
+Jiang Zhenying
+Chen Mingzheng
+Zhou Shiliang
+Zou Huiping
+Li Xinjian
+Geng Limin
+Xu Bin
+Supervisors
+Bao Guoming
+Andrew Y. Yan
+Jiang Xiaoming
+Ma Weihua
+Chen Xiaojin
+Independent non-executive directors
+Liu Yun
+Dai Houliang
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+157
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)
+8,510
+Directors' and supervisors' emoluments are as follows: (Continued)
+Directors
+Fu Chengyu
+Wang Tianpu (ii)
+Zhang Yaocang
+Li Chunguang (ii)
+Zhang Jianhua
+Wang Zhigang
+Cai Xiyou
+Cao Yaofeng
+Name
+(34)
+57
+(826)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+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.
+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 sell, or value in use, if determinable.
+The recoverable amount is the greater of the fair value less costs to sell 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).
+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.
+(ii) Impairment of other long-lived assets is accounted as follows:
+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(n) (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(n) (ii).
+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.
+(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.
+(n) Impairment of assets
+The portion of the gain or loss on re-measurement 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.
+(ii) Hedge of net investments in foreign operations
+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.
+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.
+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).
+If a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, 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 or liability.
+(I) Derivative financial instruments
+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 the consolidated income statement, 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(m)).
+(m) 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 re-
+measurement 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+151
+152
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(m) Hedging (Continued)
+(i) Cash flow hedges (Continued)
+Financial Statements (International)
+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.
+for the year ended 31 December 2014
+(o) Trade, bills and other payables
+(u) Repairs and maintenance expenditure
+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.
+(t) Borrowing costs
+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.
+Interest income is recognised on a time apportioned basis that takes into account the effective yield on the asset.
+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.
+(s) Revenue recognition
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+154
+Financial Statements (International)
+153
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+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.
+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.
+(r) Provisions and contingent liability
+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.
+(p) 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.
+(q) Convertible bonds
+(i) Convertible bonds that contain an equity component
+Convertible bonds that can be converted to equity share capital at the option of the holder, where the number of shares that would be issued
+on conversion and the value of the consideration that would be received at that time do not vary, are accounted for as compound financial
+instruments that contain both a liability component and an equity component.
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+At initial recognition, the liability component of the convertible bonds is measured as the present value of the future interest and principal
+payments, discounted at the market rate of interest applicable at the time of initial recognition to similar liabilities that do not have a
+conversion option. Any excess of proceeds over the amount initially recognised as the liability component is recognised as the equity
+component. Transaction costs that relate to the issuance of the convertible bonds are allocated to the liability and equity components in
+proportion to the allocation of proceeds.
+If the bond is converted, the capital reserve, together with the carrying amount of the liability component at the time of conversion, is
+transferred to share capital and share premium as consideration for the shares issued. If the bond is redeemed, the capital reserve is
+transferred to share premium.
+(ii) Other convertible bonds
+Convertible bonds issued with a cash settlement option and other embedded derivative features are accounted for as compound financial
+instruments that contain a liability component and a derivative component.
+At initial recognition, the derivative component of the convertible bonds is measured at fair value. Any excess of proceeds over the amount
+initially recognised as the derivative component is recognised as the liability component. Transaction costs that relate to the issuance of
+the convertible bonds are allocated to the liability and derivative components in proportion to the allocation of proceeds. The portion of
+the transaction costs relating to the liability component is recognised initially as part of the liability. The portion relating to the derivative
+component is recognised immediately as an expense in the consolidated income statement.
+The derivative component is subsequently remeasured at each balance sheet date and any gains or losses arising from change in the
+fair value are recognised in the consolidated income statement. The liability component is subsequently carried at amortised cost until
+extinguished on conversion or redemption. The interest expense recognised in the consolidated income statement on the liability component
+is calculated using the effective interest method. Both the liability and the related derivative components are presented together for financial
+statements reporting purposes.
+If the convertible bonds are converted, the carrying amounts of the derivative and liability components are transferred to share capital and
+share premium as consideration for the shares issued. If the convertible bonds are redeemed, any difference between the amount paid and
+the carrying amounts of both components is recognised in the consolidated income statement.
+The liability component is subsequently carried at amortised cost. The interest expense on the liability component is calculated using the
+effective interest method. The equity component is recognised in the capital reserve until the bond is converted or redeemed.
+Repairs and maintenance expenditure is expensed as incurred.
+Investment 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(n)).
+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(n)). 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(n)).
+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 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.
+(b) Translation of foreign currencies
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+149
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+In the Company's balance sheet, investments in associates and joint ventures are stated at cost less impairment losses (Note 2(n)).
+(iii)Transactions eliminated on consolidation
+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)).
+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.
+Investments in associates and joint ventures are accounted for in the consolidated 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 (n)).
+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.
+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.
+(ii) Associates and joint ventures
+2,260
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+2 SIGNIFICANT ACCOUNTING POLICIES
+(a) Basis of consolidation
+The consolidated financial statements comprise the Company and its subsidiaries, and interest in associates and joint ventures.
+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 resulting exchange differences are recognised in other comprehensive income and accumulated in
+equity in the other reserves.
+(i) Subsidiaries and non-controlling interests
+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 owners 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 owners 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.
+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)).
+In the Company's balance sheet, investments in subsidiaries are stated at cost less impairment losses (Note 2(n)).
+The particulars of the Group's principal subsidiaries are set out in Note 40.
+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.
+(k) Available-for-sale financial assets
+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.
+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.
+Prior to 1 January 2008, the acquisition of the non-controlling interests of a consolidated subsidiary was accounted 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 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.
+(j) Goodwill
+No depreciation is provided in respect of construction in progress.
+Construction in progress is transferred to property, plant and equipment when the asset is substantially ready for its intended use.
+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(n)). 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.
+(i) Construction in progress
+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(n)). The cost of lease prepayments is charged to expense on a straight-line basis
+over the respective periods of the rights.
+(h) Lease prepayments
+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.
+(g) Oil and gas properties (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+150
+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 relating to proved properties are amortised at the field level on a unit-of-production method.
+The amortisation rates are determined based on oil and gas reserves estimated to be recoverable from existing facilities over the shorter of the
+economic lives of crude oil and natural gas reservoirs and the terms of the relevant production licenses.
+(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(n)). 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, other than spare parts and consumables, 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.
+Spare parts and consumables are stated at cost less any provision for obsolescence.
+(f) Property, plant and equipment
+(c) Cash and cash equivalents
+An item of property, plant and equipment is initially recorded at cost, less accumulated depreciation and impairment losses (Note 2(n)). 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.
+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:
+Buildings
+Equipment, machinery and others.
+12 to 50 years
+4 to 30 years
+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
+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.
+(v) Environmental expenditures
+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.
+(w) Research and development expense
+1,385.00
+1,293.60
+1,105.44
+940.80
+Solvent oil
+Lubricant oil
+Fuel oil
+Naphtha
+Diesel
+1,943.20
+1,554.56
+1,388.00
+Effective from
+13 December 2014
+RMB/Ton
+RMB/Ton
+29 November 2014
+1 January 2009
+RMB/Ton
+Gasoline
+Products
+Effective from
+133,312
+22,187
+25,541
+13,753
+13,283
+10,210
+1,551.20
+10,065
+7,329
+1,089
+191,202
+1,142
+190,672
+(i) Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Effective from
+7,245
+136,718
+1,939.00
+1,435.84
+(1,622)
+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
+reasonably 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.
+2,487
+3,281
+RMB million
+RMB million
+2013
+The Group
+2014
+Others
+Impairment losses on long-lived assets (ii)
+Fines, penalties and compensations
+Net realised and unrealised gain on derivative financial instruments not qualified as hedging
+Donations
+Government grant (i)
+8 OTHER OPERATING EXPENSE, NET
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+156
+1,794.80
+1,126.00
+1,261.12
+1,576.40
+Jet fuel oil
+812.00
+996.80
+1,282.00
+954.10
+1,171.24
+1,370.60
+(ii) In accordance with PRC new rules and regulations, the threshold above which special oil income levy will be imposed (with the five-level
+progressive tax rates varying from 20% to 40% remaining) will be raised from USD 55 per barrel to USD 65 per barrel from 1 January 2015.
+(iii) City construction tax is levied on an entity based on its total paid amount of value-added tax, consumption tax and business tax.
+(iv) The resources tax rate was raised from 5% to 6% from 1 December 2014.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+155
+Financial Statements (International)
+Financial Statements (International)
+1,116.50
+RMB million
+Loss on disposal of property, plant, equipment and other non-currents assets, net
+Ineffective portion of change in fair value of cash flow hedges
+2013
+The Group
+2014
+PERSONNEL EXPENSES
+6
+- other receivables
+- trade accounts receivable
+Impairment losses:
+Auditors' remuneration
+Operating lease charges
+The following items are included in selling, general and administrative expenses:
+5 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
+Sale of materials, service and others
+Rental income
+OTHER OPERATING REVENUES
+4
+Turnover primarily represents revenue from the sales of crude oil, natural gas, petroleum and chemical products.
+3 TURNOVER
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(x) Operating leases
+RMB million
+Research and development expenditures are expensed in the period in which they are incurred. Research and development expense amounted to
+RMB 5,623 million for the year ended 31 December 2014 (2013: RMB 6,335 million).
+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 38.
+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.
+RMB million
+(z) Income tax
+(aa) Dividends
+Dividends are recognised as a liability in the period in which they are declared.
+(bb)Segment reporting
+Operating segments, and the amounts of each segment item reported in the 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.
+Financial Statements (International)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+43,611
+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.
+2013
+RMB million
+49,599
+7,634
+57,233
+2013
+RMB million
+48,094
+7,259
+55,353
+7 TAXES OTHER THAN INCOME TAX
+RMB million
+Consumption tax (i)
+Education surcharge
+Resources tax (iv)
+The Group
+2014
+662
+44,273
+Other
+Note:
+City construction tax (iii)
+The Group
+2014
+Special oil income levy (ii)
+Salaries, wages and other benefits
+The Group
+Contributions to retirement schemes (Note 38)
+RMB million
+2013
+RMB million
+14,052
+14,171
+87
+2014
+44
+25
+46,452
+612
+47,064
+61
+36
+67
+66,215
+31 December
+31 December
+2013
+RMB million
+RMB million
+The Company
+The Group
+Balance at 31 December
+2014
+46,967
+31 December
+2014
+26 TRADE ACCOUNTS RECEIVABLE AND BILLS RECEIVABLE
+65,883
+RMB million
+RMB million
+Amounts due from third parties
+Amounts due from subsidiaries
+50,638
+1,494
+2,422
+19,917
+9,311
+17,198
+25,068
+20,188
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from associates and joint ventures
+31 December
+2013
+20,261
+(13)
+4,764
+15,840
+11,851
+17,038
+1,587
+4,136
+(130)
+(147)
+32,748
+15,840
+2,213
+1,396
+4,477
+Others
+830
+(17)
+Balance at 31 December
+6,673
+2,213
+Net book value at 31 December
+26,075
+13,627
+Other assets
+Long-term receivables from and prepayment to Sinopec Group Company and fellow subsidiaries
+Prepayments for construction projects to third parties
+14,935
+11,378
+4,944
+Decreases
+2,742
+The Company
+9,091
+2014
+RMB million
+31 December
+2013
+RMB million
+Within one year
+Between one and two years
+Between two and three years
+104,019
+720
+97,066
+112
+53
+46
+Over three years
+31 December
+2
+22,502
+2,665
+37
+3
+34,519
+110
+44
+104,794
+97,237
+25,207
+11
+34,684
+Impairment losses for bad and doubtful debts are analysed as follows:
+Additions
+Balance at 1 January
+Provision for the year
+13
+5,290
+31 December
+2013
+RMB million
+31 December
+2,161
+2,766
+91,361
+69,040
+25,159
+32,998
+Less: Impairment losses for bad and doubtful debts
+Trade accounts receivable, net
+(530)
+(574)
+(128)
+(378)
+2014
+RMB million
+90,831
+25,031
+32,620
+Bills receivable
+13,963
+104,794
+28,771
+176
+2,064
+97,237
+25,207
+34,684
+The ageing analysis of trade accounts and bills receivables (net of impairment losses for bad and doubtful debts) is as follows:
+The Group
+68,466
+Balance at 1 January
+Exchange adjustments
+Balance at 31 December
+of the 2007 Convertible Bonds and the 2011 Convertible Bonds
+Profit attributable to ordinary owners of the Company (diluted)
+After tax effect of net loss/(gain) on embedded derivative components
+After tax effect of interest expenses (net of exchange gain) of the 2007 Convertible Bonds
+and the 2011 Convertible Bonds
+Profit attributable to ordinary owners of the Company
+(i) Profit attributable to ordinary owners of the Company (diluted)
+640
+1,096
+The calculation of diluted earnings per share for the year ended 31 December 2014 is based on the profit attributable to ordinary owners of
+the Company of RMB 46,600 million (2013: RMB 65,087 million) and the weighted average number of shares of 117,242,396,710 (2013:
+121,858,818,276) calculated as follows:
+Reclassification to other assets
+(1,324)
+(34)
+(25)
+(ii) Weighted average number of shares (diluted)
+(21)
+(32,938)
+(159)
+Disposals
+(247)
+(86)
+(68)
+(48)
+10
+(93)
+Others (Note 17 (i))
+Balance at 31 December
+59,861
+Transferred to subsidiaries (Note 40 (i))
+51,417
+Weighted average number of shares at 31 December
+Effect of conversion of the 2007 Convertible Bonds
+Effect of conversion of the 2011 Convertible Bonds
+Weighted average number of shares (diluted) at 31 December
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+86,215
+100
+10,385
+Written back for the year
+Transferred from construction in progress
+Additions
+Balance at 1 January 2013
+Cost:
+RMB million
+The Group
+17 PROPERTY, PLANT AND EQUIPMENT
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+117,242,396,710 121,858,818,276
+160
+1,439,688,889
+4,316,219,014
+Number of shares Number of shares
+116,822,487,451 116,102,910,373
+2013
+2014
+65,087
+46,600
+(1,521)
+1
+476
+133
+2013
+RMB million
+66,132
+RMB million
+46,466
+2014
+419,909,259
+Accumulated amortisation:
+8,112
+Accumulated amortisation:
+(20)
+Others (Note 17 (i))
+(303)
+Balance at 31 December
+Net book value:
+10,725
+8,147
+1,182
+5,548
+49,136
+43,270
+6,930
+3
+34,309
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+25 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+The Group
+2014
+RMB million
+2013
+RMB million
+Operating rights of service stations
+Cost:
+Balance at 1 January
+Additions
+Decreases
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+(3,202)
+39,857
+Exchange adjustments
+(3)
+Balance at 1 January
+8,147
+6,762
+5,548
+4,811
+Amortisation charge for the year
+1,504
+1,288
+367
+924
+Transferred from other long-term assets
+1,279
+(17)
+155
+148
+Reclassification to other assets
+(186)
+(5)
+(5)
+(4)
+Transferred to subsidiaries (Note 40(i)).
+(4,836)
+(11)
+Written back on disposals
+(22)
+(33)
+111
+Written off for the year
+Before-tax
+amount
+RMB million
+Others
+RMB million
+2013
+17,519
+RMB million
+Final cash dividends in respect of the previous financial year, approved and paid during the year of
+RMB 0.15 per share (2013: RMB 0.20 per share)
+2014
+Pursuant to a resolution passed at the director's meeting on 20 March 2015, final dividends in respect of the year ended 31 December 2014 of
+RMB 0.11 (2013: RMB 0.15) per share totaling RMB 13,318 million (2013: RMB 17,519 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 owners 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 22 August 2014, the directors authorised to
+declare the interim dividends for the year ending 31 December 2014 of RMB 0.09 (2013: RMB 0.09) per share totaling RMB 10,512 million (2013:
+RMB 10,491 million). Dividends were paid on 24 September 2014.
+28,010
+23,830
+17,519
+13,318
+10,491
+10,512
+RMB million
+RMB million
+2013
+2014
+Dividends declared and paid during the year of RMB 0.09 per share (2013: RMB 0.09 per share)
+Dividends declared after the balance sheet date of RMB 0.11 per share (2013: RMB 0.15 per share)
+Dividends payable to owners of the Company attributable to the year represent:
+14 DIVIDENDS
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+The calculation of basic earnings per share for the year ended 31 December 2014 is based on the profit attributable to ordinary owners of
+the Company of RMB 46,466 million (2013: RMB 66,132 million) and the weighted average number of shares of 116,822,487,451 (2013:
+116,102,910,373) during the year.
+16 BASIC AND DILUTED EARNINGS PER SHARE
+17,933
+Pursuant to the shareholders' approval at the Annual General Meeting on 9 May 2014, a final dividend of RMB 0.15 per share totaling RMB 17,519
+million in respect of the year ended 31 December 2013 was declared and paid on 19 June 2014.
+Pursuant to the shareholders' approval at the Annual General Meeting on 29 May 2013, a final dividend of RMB 0.20 per share totaling RMB
+17,933 million, and with bonus issues of 2 shares converted from the retained earnings for every 10 existing shares in respect of the year ended 31
+December 2012 was declared and cash dividends were paid on 25 June 2013 (Note 34).
+15 OTHER COMPREHENSIVE INCOME
+(832)
+181
+(1,013)
+amount of hedged items
+Amounts transferred to initial carrying
+1,061
+(210)
+1,271
+218
+(47)
+265
+instruments recognisd during the year
+for the year ended 31 December 2014
+RMB million
+Net-of-tax
+Tax
+effect
+RMB million
+amount
+RMB million
+Net-of-tax
+Tax
+effect
+RMB million
+RMB million
+Before-tax
+amount
+2013
+2014
+The Group
+Effective portion of changes in fair value of hedging
+Cash flow hedges:
+amount
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+(5,458)
+973
+(4,485)
+724
+(120)
+604
+Available-for-sale securities:
+Changes in fair value recognised during the year
+659
+(146)
+513
+1,747
+in other comprehensive income
+(433)
+Amounts transferred to the consolidated
+income statement (i)
+(2,317)
+579
+(1,738)
+Net movement during the year recognised
+in other comprehensive income
+(1,658)
+433
+(1,225)
+1,747
+451,288
+4,188
+61,144
+1,314
+(9)
+Net movement during the year recognised
+89
+159
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+(i) The Group sold its shares of China Gas Holdings Limited in August 2014, which was accounted for as available-for-sale financial assets prior to the transaction and the
+accumulated unrealised gain in other comprehensive income of RMB 2,317 million was reclassified to the investment income at the completion of this transaction.
+Note:
+932
+(553)
+1,485
+(9,266)
+1,406
+(689)
+(689)
+(514)
+(449)
+(514)
+(10,672)
+Foreign currency translation differences
+(297)
+(297)
+(3,042)
+(3,042)
+and joint ventures
+Share of other comprehensive loss of associates
+to the consolidated income statement
+(4,710)
+839
+(3,871)
+(538)
+Other comprehensive income
+1
+(8)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+378
+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.
+Trade accounts 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+167
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+27 INVENTORIES
+Crude oil and other raw materials
+Work in progress
+128
+Finished goods
+Less: Allowance for diminution in value of inventories
+The Group
+31 December
+2014
+31 December
+2013
+The Company
+31 December
+31 December
+2014
+2013
+RMB million
+RMB million
+RMB million
+Spare parts and consumables
+RMB million
+574
+(54)
+Balance at 31 December
+The Group
+2014
+2013
+The Company
+2014
+RMB million
+RMB million
+RMB million
+2013
+RMB million
+574
+699
+378
+546
+530
+44
+4
+16
+(15)
+(38)
+(11)
+(17)
+(57)
+(123)
+(11)
+(113)
+(232)
+(16)
+36
+Transferred to subsidiaries (Note 40 (i))
+95,298
+51,385
+The Group
+31 December
+2014
+RMB million
+31 December
+2013
+RMB million
+The Company
+31 December
+2014
+RMB million
+31 December
+2013
+RMB million
+17,941
+10,130
+3,780
+Note:
+4,216
+54,172
+5,237
+22,684
+19,756
+18,797
+18,368
+12,622
+57,027
+4,664
+38,766
+222,382
+77,777
+(i) The increase in the Company's receivables at 31 December 2014 as compared to 31 December 2013 was mainly due to the restructuring of Sinopec Marketing Co.,
+Ltd. (Note40(i)).
+168
+201,623
+1,962
+124,198
+Derivative financial instruments
+Advances to suppliers
+82,991
+22,728
+21,181
+15,766
+14,910
+71,959
+76,289
+6.614
+41,036
+1,841
+1,989
+1,225
+Value-added input tax to be deducted
+1,079
+223,657
+74,990
+140,016
+(1,751)
+(336)
+(1,134)
+221,906
+74,654
+138,882
+The cost of inventories recognised as an expense in the consolidated income statement amounted to RMB 2,404,093 million for the year ended
+31 December 2014 (2013: RMB 2,433,886 million), which mainly includes the write-down of inventories of RMB 3,327 million (2013: RMB 1,453
+million) that related to the materials and finished goods in refining, chemicals and marketing segments and the reversal of write-down of inventories
+made in prior years of RMB 136 million (2013: RMB 1 million). The write-down of inventories and the reversal of write-down of inventories were
+recorded in purchased crude oil, products and operating supplies and expenses in the consolidated income statement. The write-down of inventories
+of RMB 1,327 million for the year ended 31 December 2014 (2013: RMB 192 million) was realized primarily with the sales of inventories. The write.
+down of inventories in 2014 was mainly due to decline of crude oil price in the end of the year.
+28 PREPAID EXPENSES AND OTHER CURRENT ASSETS
+Receivables (i)
+191,826
+(3,603)
+188,223
+Plants and
+buildings
+(356)
+properties
+RMB million
+6,657
+6,859
+12,796
+9,796
+3,602
+3,410
+3,315
+3,272
+Share of net assets from associates
+9,113
+8,126
+1,998
+1,989
+16,584
+4,958
+1,043
+980
+995
+982
+Carrying Amounts
+9,113
+8,126
+1.998
+1,989
+4,958
+3,796
+1,043
+980
+3,796
+995
+18,598
+899
+(1,183)
+(224)
+(281)
+Non-current liabilities
+(104)
+(3,271)
+(227)
+(233)
+(2,348)
+(1,330)
+(1,043)
+(1,102)
+(370)
+Net assets attributable to owners of the Company
+(354)
+assets
+18,598
+16,584
+7,534
+7,758
+12,796
+9,796
+3,602
+3,410
+3,315
+3,272
+Net assets attributable to non-controlling interests
+877
+Net
+982
+Summarised statement of comprehensive income
+Year ended 31 December
+(608)
+Total comprehensive income
+2,014
+801
+1,097
+2,027
+222
+124
+163
+Dividends declared by associates
+309
+444
+11
+(508)
+17
+Share of profit from associates
+1,236
+690
+318
+513
+85
+47
+49
+8 8 8 1 8 6
+Share of other comprehensive loss from associates
+(249)
+(298)
+Note:
+36
+163
+948
+1,005
+Sinopec Finance
+2014
+China Aviation Oil
+2013
+2014
+2013
+Zhongtian Synergetic Energy (i)
+2014
+2013
+Shanghai Chemical
+2014
+2013
+Shanghai Petroleum
+2014
+2013
+RMB million RMB million
+RMB million RMB million RMB million RMB million RMB million
+RMB million RMB million RMB million
+Turnover
+Profit for the year
+Other comprehensive loss
+2,706
+2,893
+115,725
+111,023
+1
+2,522
+1,409
+1,097
+2,027
+222
+124
+62
+(640)
+(335)
+(7,538)
+(12,249)
+202
+6,281
+6,255
+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 10.0% to 10.9% (2013: 11.5%
+to12.7%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no impairment loss was
+recognised.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+163
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+20 INVESTMENTS IN SUBSIDIARIES
+Investments in subsidiaries, at cost
+228
+Details of the Company's principal subsidiaries at 31 December 2014 are set out in Note 40.
+RMB million
+164,399
+2013
+RMB million
+135,081
+21 INTEREST IN ASSOCIATES
+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.
+The Group's principal associates, all of which are unlisted companies incorporated and operating their business principally in the PRC, are as
+follows:
+% of
+Name of company
+ownership interests
+Principal activities
+Measurement
+method
+Sinopec Finance Company Limited ("Sinopec Finance")
+China Aviation Oil Supply Company Limited
+The Company
+2014
+853
+853
+4,043
+97,796
+125,897
+(5,587)
+(5,599)
+(79,942)
+(137,481)
+(33,627)
+(1,070)
+(1,156)
+(10,872)
+(15)
+100,543
+123,059
+The Group
+31 December
+2014
+31 December
+2013
+RMB million
+RMB million
+13,938
+13,912
+(7,657)
+6,281
+(7,657)
+6,255
+31 December
+2014
+RMB million
+31 December
+2013
+RMB million
+1,157
+1,157
+4,043
+49.00
+(i) Zhongtian Synergetic Energy was under construction during the year ended 31 December 2014.
+Provision of non-banking financial services
+29.00
+15,410
+4,474
+2,466
+31 December 31 December 31 December 31 December 31 December 31 December
+2014
+RMB million
+6,833
+2013
+RMB million
+2014
+2013
+RMB million
+RMB million
+3,094
+2,783
+2,849
+Non-current assets
+13,816
+14,992
+4,996
+4,830
+15,849
+6,987
+2,819
+2,601
+1,126
+1,058
+Current liabilities
+(105,289)
+Reclassification adjustments for amounts transferred
+(102,112)
+(11,051)
+17,490
+2014
+RMB million
+2013
+RMB million
+2013
+RMB million
+Marketing and distribution
+Equity method
+("China Aviation Oil")
+of refined petroleum products
+Zhongtian Synergetic Energy Company Limited
+38.75
+Manufacturing of coal-chemical products
+Equity method
+("Zhongtian Synergetic Energy")
+Shanghai Chemical Industry Park Development
+Company Limited ("Shanghai Chemical")
+38.26
+Planning, development and operation
+Equity method
+of the Chemical Industry Park in Shanghai,
+the PRC
+Shanghai Petroleum Company Limited
+("Shanghai Petroleum")
+30.00
+Exploration and production of crude oil
+and natural gas
+Equity method
+Sinopec Finance
+Summarised financial information and reconciliation to their carrying amounts in respect of the Group's principal associates:
+Zhongtian Synergetic Energy
+Shanghai Chemical
+China Aviation Oil
+Shanghai Petroleum
+Current assets
+104,477
+31 December 31 December 31 December 31 December
+2014
+2013
+2014
+RMB million RMB million RMB million
+108,999
+Equity method
+2013
+RMB million
+152,199
+The share of profit and other comprehensive loss for the year ended 31 December 2014 in all individually immaterial associates accounted for using
+equity method in aggregate was RMB 1,160 million (2013: RMB 751 million) and RMB 57 million (2013: other comprehensive income of RMB 1
+million) respectively. As at 31 December 2014, the carrying amount of all individually immaterial associates accounted for using equity method in
+aggregate was RMB 14,012 million (2013: RMB 12,571 million).
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+to non-controlling interests
+102
+211
+Net assets attributable to owners
+of the company
+14,628
+15,851
+16,776
+16,958
+2,846
+5,905
+6,088
+6,320
+Net assets attributable
+Share of net assets from joint ventures
+Other (v)
+6,340
+8,388
+8,479
+1,395
+2,893
+3,044
+3,160
+616
+579
+814
+1,455
+85
+3
+5,851
+Carrying Amounts
+6,320
+6,116
+(4,019)
+(4,904)
+(680)
+(956)
+(2,905)
+Other non-current liabilities
+(1)
+(1,253)
+(1,545)
+(2,175)
+(3,354)
+(3,662)
+(4,120)
+6,088
+Total non-current liabilities
+(4,905)
+(1,933)
+(2,501)
+(5,080)
+(3,354)
+(3,662)
+(4,120)
+Net assets
+14,628
+15,851
+16,776
+16,958
+2,948
+(4,019)
+5,851
+6,340
+9,004
+Share of other comprehensive income/(loss)
+from joint ventures
+BASF-YPC
+CIR (ii)
+Taihu (ii)
+Mansarovar (ii)
+2014
+2013
+RMB million
+22,191
+(15,649)
+RMB million
+23,176
+(2,147)
+2014
+RMB million
+8,366
+2014
+Share of net profit/(loss) from joint ventures
+RMB million
+2013
+RMB million
+18,183
+3,781
+360
+(2,632)
+(1,501)
+(1,870)
+(88)
+26
+20
+8
+31
+2014
+RMB million
+Dividends declared by joint ventures
+Total comprehensive income/(loss)
+Other comprehensive income/(loss)
+9,058
+2,209
+4,348
+3,129
+3,163
+Note:
+(i) Pursuant to the resolution passed at the Directors' meeting held on 31 October 2014 and the purchase agreement entered into with relevant vendors, the Group
+completed the acquisition from the Sinopec Group Company a 37.5% equity interests in YASREF for a consideration of approximately USD 562 million (approximately
+RMB 3,439 million) and also injected capital of approximately USD 199 million (approximately RMB 1,216 million) to YASREF on 31 December 2014.
+As the purchase price allocation has not been completed, the summarised financial Information for YASREF is not disclosed.
+(ii) The Group acquired from the Sinopec Group Company 50% of equity interests of Mansarovar in November 2013, 50% of equity interests of CIR and 49% of equity
+interests of Taihu in December 2013. Therefore the comprehensive income of CIR and Taihu for the year ended 31 December 2013 is not included in the summarised
+statement of comprehensive income.
+(iii) Excluding trade accounts payable and other payables.
+(iv) Excluding provisions.
+(v) Other reflects the excess of consideration transferred over the net fair value of identifiable assets acquired and liabilities assumed as of the acquisition date.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+165
+Financial Statements (International)
+Financial Statements (International)
+166
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+22 INTEREST IN JOINT VENTURES (Continued)
+Summarised statement of comprehensive income
+Year ended 31 December
+Turnover
+Depreciation, depletion and amortisation
+Interest income
+Interest expense
+Profit before taxation
+Tax expense
+Profit/(loss) for the year
+Non-current financial liabilities (iv)
+Non-current liabilities
+(1,630)
+(860)
+gas extraction
+Taihu Limited ("Taihu") (ii)
+49.00
+Crude oil and natural
+Equity method
+Islands
+Cyprus
+Russia
+gas extraction
+Mansarovar Energy Colombia Ltd.
+50.00
+("Mansarovar") (ii)
+Crude oil and natural
+gas extraction
+Equity method
+("CIR") (ii)
+British Bermuda
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+BASF-YPC
+CIR (ii)
+Taihu (ii)
+Mansarovar (ii)
+2014
+RMB million
+31 December 31 December 31 December
+2013
+RMB million
+2014
+RMB million
+2014
+RMB million
+31 December 31 December 31 December 31 December 31 December
+2013
+RMB million
+2013
+RMB million
+2014
+Colombia
+Kazakhstan
+British Virgin
+Equity method
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+22 INTEREST IN JOINT VENTURES
+The Group's principal interests in joint ventures are as follows:
+% of ownership
+Name of entity
+Yanbu Aramco Sinopec Refining
+interests
+37.50
+Company Ltd. ("YASREF") (i)
+Principal activities
+Petroleum refining and
+processing business
+Equity method
+Measurement
+method
+Country of
+incorporation
+Saudi Arabia
+Principal
+place of
+business
+Saudi Arabia
+BASF-YPC Company Limited
+40.00
+Manufacturing and
+Equity method
+PRC
+PRC
+("BASF-YPC")
+distribution of
+petrochemical products
+Caspian Investments Resources Ltd.
+50.00
+Crude oil and natural
+2013
+164
+RMB million
+Current assets
+14,796
+9,702
+10,739
+Current liabilities
+Current financial liabilities (iii)
+(3,318)
+(2,990)
+(272)
+(278)
+(1,228)
+(6,903)
+(854)
+Other current liabilities
+7,995
+(2,235)
+(851)
+(1,764)
+(1,742)
+(2,065)
+(860)
+(776)
+Total current liabilities
+(5,553)
+(5,017)
+(1,123)
+(2,042)
+(2,970)
+(8,968)
+(2,027)
+14,244
+13,078
+18,496
+Cash and cash equivalents
+1,112
+550
+4,873
+4,820
+117
+166
+580
+346
+Other current assets
+5,879
+6,727
+1,881
+2,437
+2,886
+3,476
+328
+985
+Total current assets
+6,991
+7,277
+6,754
+7,257
+3,003
+3,642
+908
+1,331
+Non-current assets
+17,209
+RMB million
+(319)
+2014
+RMB million
+123,059
+Sinopec Zhenhai Refining and Chemical Branch ("Sinopec Zhenhai")
+Sinopec (Hong Kong) Limited
+Balance at 31 December 2013
+59,107
+227,107
+383,381
+588,969
+669,595
+Balance at 31 December 2014
+60,925
+239,905
+402,655
+703,485
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+161
+Financial Statements (International)
+338,170
+162
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+17 PROPERTY, PLANT AND EQUIPMENT (Continued)
+The Company
+Plants and
+buildings
+RMB million
+Oil and gas,
+properties
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+Total
+RMB million
+Cost:
+Balance at 1 January 2013
+1,214
+4,408
+6,314
+Financial Statements (International)
+576
+199,074
+Balance at 1 January 2013
+21
+2,436
+971
+3,428
+Reclassifications
+130
+(2)
+(128)
+Reclassification to lease prepayments and other long-term assets
+(317)
+(8)
+(5,117)
+(5,442)
+51,725
+Written back on disposals
+(57)
+(11,441)
+(12,230)
+Exchange adjustments
+2
+69
+4
+Balance at 31 December 2014
+40,165
+329,267
+410,523
+75
+779,955
+Net book value:
+(732)
+6,697
+4,693
+542
+897
+1,834
+714
+1,964
+183
+Equity securities, listed and at quoted market price (Note 15(i))
+Other investment, unlisted and at cost
+31 December
+2013
+RMB million
+31 December
+2014
+RMB million
+RMB million
+RMB million
+31 December
+2013
+2014
+31 December
+3,798
+The Company
+23 AVAILABLE-FOR-SALE FINANCIAL ASSETS
+The share of loss and other comprehensive loss for the year ended 31 December 2014 in all individually immaterial joint ventures accounted for
+using equity method in aggregate was RMB 122 million (2013: RMB 14 million) and RMB 239 million (2013: RMB 0 million) respectively. As at 31
+December 2014, the carrying amount of all individually immaterial joint ventures accounted for using equity method in aggregate was RMB 28,281
+million (2013: RMB 23,965 million).
+12
+(2,541)
+32
+40
+(128)
+1,043
+(123)
+312
+112
+933
+80
+The Group
+Less: Impairment loss for investments
+(29)
+(68)
+70
+35,335
+39,857
+43,002
+717
+51,417
+904
+Transferred from construction in progress
+Transferred from other long-term assets
+Additions
+Balance at 1 January
+Cost:
+RMB million
+RMB million
+2013
+The Company
+2014
+2013
+RMB million
+RMB million
+The Group
+2014
+24 LEASE PREPAYMENTS
+The impairment losses relating to investments for the year ended 31 December 2014 amounted to RMB 0 million (2013: RMB 2 million).
+Other investment unlisted and at cost represent the Group's interests in PRC privately owned enterprises which are mainly engaged in non-oil and
+gas activities and operations.
+2,844
+(35)
+2,879
+91
+997
+91
+1,882
+91
+3,730
+868
+Impairment losses for the year
+83,129
+41,513
+38,235
+Additions
+40
+3,309
+579
+3,928
+Transferred from construction in progress
+6,164
+50,130
+73,857
+130,151
+Acquisitions (Note 40 (iv))
+440
+2,984
+1,380,590
+3,424
+390
+(6)
+(384)
+Contribution to a joint venture
+(52)
+(190)
+(242)
+Reclassification to lease prepayments and other long-term assets
+(1,822)
+(13)
+(18,854)
+(20,689)
+Disposals
+Reclassifications
+768,102
+515,701
+96,787
+Equipment,
+machinery
+and others
+RMB million
+Total
+RMB million
+1,231,086
+5,346
+159,102
+693,583
+1,058
+87,573
+Reclassifications
+1,010
+10
+(1,020)
+Contribution to joint ventures
+(2)
+(53)
+Reclassification to lease prepayments and other long-term assets
+(252)
+(3,329)
+Disposals
+(619)
+(9,645)
+(55)
+(3,581)
+(10,264)
+Exchange adjustments
+(50)
+(929)
+(65)
+(1,044)
+Balance at 31 December 2013
+96,787
+515,701
+768,102
+1,380,590
+Balance at 1 January 2014
+(863)
+(232)
+(69)
+(13,856)
+Contribution to joint ventures
+(1)
+(34)
+(35)
+Reclassification to lease prepayments and other long-term assets
+(40)
+(394)
+(434)
+Written back on disposals
+(483)
+(8,312)
+(8,795)
+Exchange adjustments
+(90)
+(17)
+(28)
+Balance at 31 December 2013
+37,680
+288,594
+384,721
+(539)
+710,995
+Balance at 1 January 2014
+37,680
+288,594
+384,721
+710,995
+Depreciation for the year
+3,381
+(494)
+7
+83
+Reclassifications
+Exchange adjustments
+6
+120
+8
+134
+Balance at 31 December 2014
+101,090
+569,172
+813,178
+1,483,440
+Accumulated depreciation:
+Balance at 1 January 2013
+34,490
+252,214
+355,413
+Depreciation for the year
+3,109
+34,347
+38,065
+Impairment losses for the year
+23
+2,520
+Transferred from construction in progress
+516
+-
+101
+642,117
+75,521
+2,644
+516
+(12,924)
+Multiple units without individually significant goodwill
+(3,168)
+781
+72
+2,519
+Reclassifications
+108
+(2)
+(106)
+Transferred from/to subsidiaries (ii)
+(7,962)
+(299)
+(37,533)
+(45,794)
+Reclassification to lease prepayments and other long-term assets
+(2)
+2,436
+(7)
+(132)
+Written back on disposals
+(339)
+(55)
+(7,049)
+(7,443)
+Balance at 31 December 2014
+21,443
+285,935
+263,149
+570,527
+Net book value:
+Balance at 1 January 2013
+(123)
+Balance at 31 December 2013
+11
+60,483
+(35)
+Reclassification to lease prepayments and other long-term assets
+(17)
+(386)
+(403)
+Written back on disposals
+(433)
+(6,785)
+(7,218)
+Others (i)
+(1,233)
+6,725
+(6,988)
+Impairment losses for the year
+(1,496)
+27,864
+250,220
+282,810
+560,894
+Balance at 1 January 2014
+27,864
+250,220
+282,810
+560,894
+Depreciation for the year
+1,763
+33,642
+25,078
+Balance at 31 December 2013
+Balance at 31 December 2014
+41,290
+175,463
+149,830
+167,605
+14,162
+(5,587)
+(130,151)
+(5,599)
+(158,586)
+(10,154)
+(11,718)
+(10)
+(15)
+(1,058)
+5
+(34)
+177,667
+168,977
+160,630
+The Company
+Balance at 1 January
+Additions
+Dry hole costs written off
+Transferred to property, plant and equipment
+Transferred to subsidiaries (Note 40 (i))
+Reclassification to lease prepayments and other long-term assets
+Impairment losses for the year
+Balance at 31 December
+19 GOODWILL
+Cost
+Less: Accumulated impairment losses
+Impairment tests for cash-generating units containing goodwill
+Goodwill is allocated to the following Group's cash-generating units:
+Sinopec Beijing Yanshan Branch ("Sinopec Yanshan")
+As at 31 December 2014, the amount of capitalised cost of exploratory wells included in construction in progress related to the exploration and
+production segment was RMB 19,286 million (2013: RMB 19,152 million). The geological and geophysical costs paid during the year ended 31
+December 2014 were RMB 5,028 million (2013: RMB 6,735 million).
+RMB million
+RMB million
+160,630
+2013
+258,664
+475,417
+43,397
+200,412
+289,488
+533,297
+25,902
+211,228
+215,231
+452,361
+Note:
+(i) During the year ended 31 December 2013, the Company adjusted the financial statements of the Company of the preceding year to exclude certain insignificant
+subsidiaries that were included in the company financial statements. This adjustment, which does not related to the consolidated financial statements of the Group,
+related mainly to the long-term equity investments, fixed assets and retained earnings. Total assets was reduced by RMB 3,836 million (comprising 0.37% of total
+assets as at 31 December 2012). Total liabilities was reduced by RMB 12,274 million (comprising 2.12% of total liabilities as at 31 December 2012). Net assets was
+increased by RMB 8,438 million (comprising 1.82% of net assets as at 31 December 2012). The adjustment did not result in any material impact on the Company
+financial statements.
+(ii) Mainly due to the restructuring of Sinopec Marketing Co., Ltd. (Note 40(i)).
+The additions to oil and gas properties of the Group and the Company for the year ended 31 December 2014 included RMB 3,309 million (2013:
+RMB 4,188 million) and RMB 2,834 million (2013: RMB 3,345 million) of estimated dismantlement costs for site restoration (Note 33).
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+18 CONSTRUCTION IN PROGRESS
+The Group
+Balance at 1 January
+Additions
+Acquisitions (Note 40 (iv))
+Dry hole costs written off
+Transferred to property, plant and equipment
+Reclassification to lease prepayments and other long-term assets
+Impairment losses for the year
+Disposals
+Exchange adjustments
+Balance at 31 December
+2014
+(34)
+(1)
+Contribution to joint ventures
+(2,901)
+8
+(899)
+Transferred to subsidiaries
+(610)
+(8,287)
+(8,897)
+Contribution to joint ventures
+(2)
+(53)
+(55)
+Reclassification to lease prepayments and other long-term assets
+(143)
+(3,181)
+137,997
+(3,324)
+(558)
+(7,875)
+(8,433)
+Others (i)
+(4,338)
+Balance at 31 December 2013
+71,261
+4,784
+450,632
+(12,448)
+(12,002)
+572,298
+1,094,191
+Balance at 1 January 2014
+Disposals
+74,582
+985,145
+3,760
+530,077
+382
+279
+24
+(5,373)
+63
+80
+(256)
+2,205
+(245)
+781
+279
+(50)
+(897)
+(809)
+(252)
+(279)
+(94)
+130
+641
+3,014
+7
+1,060
+373
+(7)
+(54)
+Additions
+Transferred from construction in progress
+Reclassifications
+68,009
+33
+7,979
+891
+387,059
+3,345
+55,436
+71,261
+(182)
+450,632
+1,094,191
+Balance at 31 December 2014
+47,345
+497,163
+478,380
+1,022,888
+Accumulated depreciation:
+Balance at 1 January 2013
+26,719
+211,596
+271,413
+Depreciation for the year
+2,262
+Impairment losses for the year
+(8,212)
+22
+28,468
+509,728
+60,104
+57
+2,599
+Transferred from construction in progress
+516
+516
+Reclassifications
+182
+5
+Transferred to subsidiaries
+(153)
+(187)
+(2,748)
+29,374
+2,520
+(7,753)
+(65)
+(394)
+Additions
+3
+2,834
+132
+2,969
+Transferred from construction in progress
+2,389
+44,347
+33,206
+79,942
+Reclassifications
+562
+(6)
+(556)
+Transferred from/to subsidiaries (ii)
+(26,413)
+(566)
+(117,813)
+(144,792)
+Contribution to a joint venture
+(52)
+(190)
+(242)
+Reclassification to lease prepayments and other long-term assets
+(11)
+(13)
+(944)
+(968)
+Disposals
+572,298
+Oil and gas,
+1,314
+(433)
+12,742
+80
+RMB denominated
+583
+192
+Current portion of long-term loans
+14
+Euro denominated
+5
+5
+Hong Kong Dollar denominated
+46,225
+93,126
+US Dollar denominated
+71
+71
+6,750
+6,750
+555
+US Dollar denominated
+112
+28
+RMB million
+31 December
+2013
+2014
+RMB million
+31 December
+Interest rate and final maturity
+The Group
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+Long-term debts comprise:
+for the year ended 31 December 2014
+7,251
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+172
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014 171
+The Group's and the Company's weighted average interest rates on short-term loans were 1.9% (2013: 2.2%) and 3.2% (2013: 4.0%) at 31
+December 2014, respectively.
+71
+77,594
+6,750
+68,829
+54,064
+163,870
+102,965
+178,148
+Financial Statements (International)
+The Company
+9,628
+53,481
+3,500
+11,000
+24
+23
+662
+51
+58
+54
+60
+54
+224
+3
+371
+163
+306
+80
+1,093
+11,000
+3,500
+11,000
+3.500
+102,773
+Short-term loans
+Loans from Sinopec Group Company and fellow subsidiaries
+77,523
+62,079
+109,806
+75,183
+10,000
+RMB denominated
+10,000
+44,379
+11,080
+45,166
+11,268
+40,573
+40,573
+3,500
+11,000
+Corporate bonds (i)
+31 December
+2014
+RMB million
+31 December
+Between three and four years
+Between four and five years
+Thereafter
+The Group
+The Company
+31 December
+2014
+31 December
+2013
+31 December
+2014
+31 December
+2013
+RMB million
+RMB million
+RMB million
+RMB million
+13,909
+13,507
+11,780
+Between one and two years
+Between two and three years
+13,082
+Within one year
+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.
+Distribution to owners (Note 14)
+(28,031)
+(28,424)
+Appropriation
+(3,215)
+(5,734)
+Special reserve
+994
+1,778
+Others
+Balance at 31 December
+166,481
+7,133
+164,698
+412,724
+402,117
+36 COMMITMENTS AND CONTINGENT LIABILITIES
+Operating lease commitments
+At 31 December 2014 and 2013, the future minimum lease payments under operating leases are as follows:
+13,480
+13,064
+11,563
+178
+916
+1,103
+24,549
+561
+445
+561
+445
+6,657
+12,729
+7,712
+23,001
+Interest rates ranging from interest free to
+7.40% per annum at 31 December 2014
+with maturities through 2025
+Interest rates at 2.60% per annum at 31
+December 2014 with maturities in 2023
+Interest rates ranging from interest free to
+4.29% per annum at 31 December 2014
+with maturities through 2031
+US Dollar denominated
+Japanese Yen denominated
+Third parties' debts
+Long-term bank loans
+Renminbi denominated
+RMB million
+2013
+206
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+371,255
+348,162
+12,777
+13,113
+12,850
+11,558
+12,772
+12,984
+11,526
+12,725
+268
+13,063
+11,527
+12,644
+297,425
+307,268
+290,208
+307,255
+363,974
+372,087
+12,656
+(17,933)
+425
+30.516
+Transferred
+income
+RMB million
+in other
+comprehensive
+Recognised
+income
+statement
+RMB million
+consolidated
+Recognised in
+RMB million
+Balance at
+1 January
+2013
+Net deferred tax liabilities
+Others
+Available-for-sale securities
+Embedded derivative component of the convertible bonds
+Property, plant and equipment
+Non-current
+Cash flow hedges
+Accruals
+to subsidiaries
+Receivables and inventories
+Balance at
+2013
+(3)
+(870)
+(506)
+(364)
+(3,044)
+(7)
+(994)
+(2,043)
+306
+(24)
+330
+2,883
+(17)
+159
+2,741
+RMB million
+RMB million
+31 December
+Current
+Net deferred tax assets/(liabilities)
+Others
+6
+(436)
+282
+1,152
+(870)
+Net deferred tax liabilities
+Others
+of the convertible bonds
+Available-for-sale securities
+Embedded derivative component
+3,474
+1,213
+2,261
+Tax losses carried forward
+(8,635)
+(182)
+(21)
+(42)
+433
+3
+13
+(6)
+Embedded derivative component of the convertible bonds
+Available-for-sale securities
+Property, plant and equipment
+Non-current
+Accruals
+Receivables and inventories
+Current
+The Company
+29 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+(433)
+for the year ended 31 December 2014
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+170
+(841)
+(182)
+1,385
+1,792
+(3,836)
+7
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(436)
+(4)
+60
+63,915
+RMB denominated
+Short-term bank loans
+Third parties' debts
+31 December
+2013
+RMB million
+RMB million
+2014
+31 December
+The Group
+Short-term debts represent:
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES
+43
+(600)
+(816)
+655
+666
+(1,105)
+4
+54,640
+50,999
+22,805
+19,983
+34,657
+40,685
+Current portion of convertible bonds
+RMB denominated
+Current portion of long-term corporate bonds
+US Dollar denominated
+Japanese Yen denominated
+RMB denominated
+(17)
+Current portion of long-term bank loans
+US Dollar denominated
+23.144
+14,000
+2013
+RMB million
+31 December
+2014
+RMB million
+31 December
+The Company
+20,483
+Euro denominated
+9.144
+56
+436
+Transferred
+to subsidiaries
+income
+RMB million
+RMB million
+RMB million
+Balance at
+in other
+comprehensive
+income
+statement
+1 January
+2014
+Recognised
+Recognised in
+consolidated
+Balance at
+(1,105)
+(24)
+(433)
+(1,305)
+657
+56
+31 December
+2014
+RMB million
+RMB million
+5
+(436)
+(3,306)
+282
+1,152
+(870)
+(508)
+246
+(3,044)
+5
+219
+110
+(60)
+(136)
+306
+2,047
+(252)
+(584)
+2,883
+219
+(8,390)
+Bonus issues (Note 34)
+32,035
+At 31 December
+2013
+RMB 4.48
+RMB 5.13
+95 basis points
+5.23%
+Any change in the major inputs into the Binomial Model will result in changes in the fair value of the derivative component. The changes in the fair value of the
+derivative component from 31 December 2013 to 31 December 2014 resulted in an realised loss of RMB 1,613 million and unrealised loss of RMB 2,997 million (2013:
+unrealised gain of RMB 1,914 million), which has been recorded in the "finance costs" section of the consolidated income statement for the year ended 31 December
+2014.
+The initial carrying amount of the liability component of the 2011 Convertible Bonds is the residual amount, after deducting the allocated issuance cost of the 2011
+Convertible Bonds relating to the liability component and the fair value of the derivative component as at 1 March 2011. Interest expense is calculated using the
+effective interest method by applying the effective interest rate of 5.10% to the adjusted liability component.
+As at 26 January 2015, the terms of conditional redemption of 2011 Convertible Bonds of the Company have been triggered for the first time. At the 22nd meeting
+of the fifth session of the board of the Company (the "Board"), the Board has reviewed and approved the proposal for the redemption of 2011 Convertible Bonds, and
+decided to exercise the right of redemption and to redeem all of the outstanding 2011 Convertible Bonds registered on 11 February 2015.
+From 1 January 2015 to 11 February 2015, the 2011 Convertible Bonds with a total value of RMB 13,647 million were converted into 2,790,814,006 A shares of
+the Company. As of 11 February 2015, the total share capital of the Company has been increased to 121,071,209,646 shares. The unconverted convertible bonds
+amounted to RMB 52.78 million (527,760 convertible bonds).
+As at 17 February 2015, the Company has redeemed and fully paid the unconverted portion at RMB 101.261 per convertible bond (including the accrued interest and
+interest tax accrued thereon).
+31 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
+Amounts due to subsidiaries
+2014
+RMB million
+Bills payable
+Trade accounts and bills payables measured at amortised cost
+The ageing analysis of trade accounts and bills payables are as follows:
+Within 1 month or on demand
+Between 1 month and 6 months
+Over 6 months
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+133 basis points
+3.40%
+The Group
+9,189
+At 31 December
+During the year ended 31 December 2014, the conversion price of the 2011 Convertible Bonds was adjusted to RMB 4.89 per share as a result of cash dividends,
+bonus issues and capitalisation.
+During the year ended 31 December 2014, RMB 8,442 million of the 2011 Convertible Bonds were converted into 1,715,081,853 A shares of the Company.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+173
+Financial Statements (International)
+Financial Statements (International)
+174
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+Note: (Continued)
+(v) (Continued)
+As at 31 December 2014 and 2013, the fair value of the derivative component of the 2011 Convertible Bonds was calculated using the Binomial Model. The followings
+are the major inputs used in the Binomial Model:
+Stock price of A shares
+Conversion price
+Credit spread
+RMB onshore swap rate
+2014
+RMB 6.49
+RMB 4.89
+31 December
+31 December
+2013
+RMB million
+73,803
+18,821
+31 December
+2013
+RMB million
+133,374
+12,876
+12,708
+8,200
+105,332
+154,450
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+32 ACCRUED EXPENSES AND OTHER PAYABLES
+Salaries and welfare payable
+Interest payable
+Other payables
+Financial liabilities carried at amortised costs
+194,108
+8,548
+4,594
+207,250
+184,697
+13,138
+5,108
+202,943
+RMB million
+31 December
+2014
+181,519
+13,575
+3,272
+192,082
+8,114
+2,528
+44,351
+8,345
+393
+The Company
+31 December
+2014
+RMB million
+31 December
+2013
+RMB million
+As at 31 December 2014, the carrying amounts of the liability component and the derivative component were RMB 13,433 million (2013: RMB 20,913 million) and
+RMB 3,288 million (2013: RMB 548 million), respectively.
+57,309
+4,463
+198,366
+4,577
+202,943
+202,724
+4,526
+207,250
+49,310
+102,399
+2,933
+105,332
+89,460
+152,007
+2,443
+154,450
+The Group
+31 December
+2014
+RMB million
+31 December
+2013
+RMB million
+The Company
+775
+During the term of the 2011 Convertible Bonds, if the closing price of the A Shares of the Company is not lower than 130% of the conversion price in at least fifteen
+trading days out of any thirty consecutive trading days, the Company has the right to redeem all or part of the 2011 Convertible Bonds based on the nominal value
+plus the accrued interest ("the terms of conditional redemption").
+During the term of the 2011 Convertible Bonds, the conversion price may be subject to downward adjustment that if the closing prices of the Company's A Shares in
+any fifteen trading days out of any thirty consecutive trading days are lower than 80% of the prevailing conversion price, the board of directors may propose downward
+adjustment to the conversion price subject to the shareholders' approval. The adjusted conversion price shall be not less than (a) the average trading price of the
+Company's A Shares for the twenty trading days prior to the shareholders' approval, (b) the average trading price of the Company's A Shares on the day immediately
+before the shareholders' approval, (c) the net asset value per share based on the latest audited financial statements prepared under ASBE, and (d) the nominal value
+per share.
+(v) On 1 March 2011, the Company issued convertible bonds due 2017 with an aggregate principal amount of RMB 23 billion in the PRC (the “2011 Convertible Bonds").
+The 2011 Convertible Bonds were issued at par value of RMB 100 and bear a fixed interest rate of 0.5% per annum for the first year, 0.7% for the second year, 1.0%
+for the third year, 1.3% for the fourth year, 1.8% for the fifth year and 2.0% for the sixth year, payable annually. The holders can convert the 2011 Convertible Bonds
+into shares of the Company from 24 August 2011 onwards at an initial conversion price of RMB 9.73 per share, subject to adjustment for, amongst other things,
+cash dividends, subdivision or consolidation of shares, bonus issues, issue of new shares, rights issues, capital distribution, change of control and other events which
+have an effect on the issued share capital of the Company (the "Conversion Option"). Unless previously redeemed, converted or purchased and cancelled, the 2011
+Convertible Bonds will be redeemed within 5 trading days after maturity at 107% of the principal amount, including interest for the sixth year. The initial carrying
+amounts of the liability component and the derivative component, representing the Conversion Option of the 2011 Convertible Bonds, were RMB 19,279 million and
+RMB 3,610 million, respectively.
+US Dollar denominated
+37,574
+41,930
+38,911
+43,225
+Interest rates ranging from interest free to
+6.46% per annum at 31 December 2014
+with maturities through 2020
+Renminbi denominated
+85,079
+75,493
+107,234
+107,787
+(44,379)
+(11,080)
+(45,166)
+(11,268)
+129,458
+86,573
+Interest rates ranging from 0.74% to 1.85%
+per annum at 31 December 2014 with
+maturities in 2015
+Less: Current portion
+112
+(192)
+28
+During the year ended 31 December 2011, the Company redeemed part of the 2007 Convertible Bonds upon certain holders' request, with the principal amount of
+HKD 39 million.
+(iii) On 24 April 2007, the Company issued zero coupon convertible bonds due 2014 with an aggregate principal amount of HKD 11,700 million (the "2007 Convertible
+Bonds"). The holders can convert the 2007 Convertible Bonds into shares of the Company from 4 June 2007 onwards at a price of HKD 10.76 per share, subject to
+adjustment for, amongst other things, subdivision or consolidation of shares, bonus issues, rights issues, capital distribution, change of control and other events, which
+have a dilutive effect on the issued share capital of the Company (the "Conversion Option"). Unless previously redeemed, converted or purchased and cancelled, the
+2007 Convertible Bonds will be redeemed on the maturity date at 121.069% of the principal amount. The Company has an early redemption option at any time after
+24 April 2011 (subject to certain criteria) (the "Early Redemption Option") and a cash settlement option when the holders exercise their conversion right (the "Cash
+Settlement Option").
+(ii) These corporate bonds are guaranteed by Sinopec Group Company and carried at amotised cost.
+The Company issued 270-day corporate bonds of face value RMB 10 billion to corporate investors in the PRC debenture market on 15 August 2013 at par value of
+RMB 100. The effective yield of the 270-day corporate bonds is 4.49% per annum. The short-term bonds were due on 13 May 2014 and were fully paid by the Group
+at maturity.
+(i) The Company issued 180-day corporate bonds of face value RMB 10 billion to corporate investors in the PRC debenture market on 19 May 2014 at par value of RMB
+100. The effective yield of the 180-day corporate bonds is 4.40% per annum. The short-term bonds were due on 16 November 2014 and were fully paid by the Group
+at maturity.
+Note:
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+for the year ended 31 December 2014
+152,400
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Short-term and long-term bank loans, long-term other loans and loans from Sinopec Group Company and fellow subsidiaries are primarily
+unsecured.
+122,653
+37,574
+41,930
+117,423
+145,590
+38,356
+43,145
+150,932
+(583)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Taxes other than income tax
+119,055
+Total third parties' long-term debts
+Less: Current portion
+77,785
+21,177
+21,285
+Fixed interest rates ranging from 1.25% to
+4.25% per annum at 31 December 2014
+with maturities through 2043
+US Dollar denominated
+60,000
+56,500
+60,000
+56,500
+Fixed interest rates ranging from 3.75% to
+5.68% per annum at 31 December 2014
+with maturity through 2022 (ii)
+Renminbi denominated
+Corporate bonds
+7,424
+13,352
+The initial carrying amount of the liability component of the 2007 Convertible Bonds is the residual amount, which is after deducting the allocated issuance cost of the
+2007 Convertible Bonds relating to the liability component and the fair value of the derivative component as at 24 April 2007. Interest expense is calculated using the
+effective interest method by applying the effective interest rate of 4.19% to the adjusted liability component.
+(iv) On 26 February 2008, the Company issued bonds with stock warrants due 2014 with an aggregate principal amount of RMB 30 billion in the PRC (the "Bonds with
+Warrants"). The Bonds with Warrants, which bear a fixed interest rate of 0.80% per annum payable annually, were issued at par value of RMB 100. The Bonds with
+Warrants are guaranteed by Sinopec Group Company.
+The initial recognition of the liability component of the Bond with Warrants is measured at the present value of the future interest and principal payments, discounted
+at the market rate of interest applicable at the time of initial recognition to similar liabilities that do not have a conversion option. Interest expense is calculated using
+the effective interest method by applying the market interest rate of 5.40% to the liability component. On 4 March 2010, warrants of the bonds have already expired.
+The Bonds with Warrants were due on 20 February 2014 and have been fully paid by the Group at maturity.
+81,177
+56,500
+60,000
+Convertible bonds
+62,034
+16,721
+62,034
+16,721
+21,461
+16,721
+21,461
+16,721
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+29,625
+10,948
+10,948
+Convertible bonds with maturity
+in 2017 (v)
+Bonds with Warrants with maturity
+in 2014 (iv)
+in 2014 (iii)
+Convertible bonds with maturity
+Renminbi denominated
+Hong Kong Dollar denominated
+29,625
+54,966
+Receipts in advance
+33 PROVISIONS
+Balance at 1 January
+Balance at 31 December
+Share premium
+9,122
+9,122
+9,122
+9,122
+Balance at 1 January
+33,347
+25,752
+Rights issue of H shares, net of issuance costs
+16,561
+Capitalisation (Note 34)
+Conversion of the 2011 Convertible Bonds (Note 30(v))
+(8,967)
+8,477
+1
+Capital reserve
+Balance at 31 December
+2013
+RMB million
+The Company
+2014
+for the year ended 31 December 2014
+34 SHARE CAPITAL (Continued)
+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.
+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 and the aggregate net
+proceeds (after deduction of the commissions and estimated expenses) amounted to approximately HKD 23,970,100,618.
+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 (note 14), 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.
+Capital management
+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 owners 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 2014, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 20.3% (2013:
+20.4%) and 55.5% (2013: 55.1%), respectively.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 30 and 36, respectively.
+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.
+176
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+35 RESERVES
+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:
+RMB million
+Statutory surplus reserve
+Balance at 1 January
+Appropriation
+Change in fair value of available-for-sale financial assets, net of deferred tax
+(1,309)
+1,306
+Special reserve
+(994)
+(1,778)
+Others
+92
+1,293
+Balance at 31 December
+1,745
+4,613
+Retained earnings
+Balance at 1 January
+164,698
+152,912
+Profit for the year
+(657)
+Cash flow hedges, net of deferred tax
+3,792
+4,613
+Balance at 31 December
+Discretionary surplus reserve
+Balance at 1 January
+Balance at 31 December
+41,824
+33,347
+73,337
+67,603
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+3,215
+76,552
+73,337
+117,000
+117,000
+117,000
+117,000
+Other reserves
+Balance at 1 January
+5,734
+Financial Statements (International)
+Financial Statements (International)
+175
+18,990
+222,075
+81,079
+2,624
+2,111
+130,329
+132,929
+27,663
+73,909
+6
+197,606
+221,715
+234,507
+19,331
+3,926
+Provisions primarily represent provision for future dismantlement costs of oil and gas properties. The Group has mainly committed to the PRC
+government to established 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 and the Company's obligations for the dismantlement of its oil and gas properties is as follow:
+The Company
+2014
+Balance at 1 January
+Provision for the year
+Accretion expenses
+Utilised
+Exchange adjustments
+Others (Note 17)
+Balance at 31 December
+89,918
+78,003
+81,111
+32,792
+85,581
+27,586
+1444
+The Group
+31 December
+2014
+RMB million
+839
+1,695
+83,047
+31 December
+2013
+RMB million
+34 SHARE CAPITAL
+818
+The Company
+31 December
+2014
+RMB million
+310
+1,519
+196,629
+198,458
+31 December
+2013
+RMB million
+489
+2,290
+Derivative financial instruments
+The Group
+2014
+RMB million
+26,004
+3,309
+92,766,957,040 listed A shares (2013: 91,051,875,187) of RMB 1.00 each
+25,513,438,600 listed H shares (2013: 25,513,438,600) of RMB 1.00 each
+The Group and the Company
+31 December
+2014
+RMB million
+92,767
+25,513
+118,280
+31 December
+2013
+RMB million
+91,052
+25,513
+116,565
+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 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+Registered, issued and fully paid
+22,729
+25,830
+26,004
+RMB million
+21,525
+4,188
+RMB million
+22,729
+2,834
+2013
+RMB million
+19,598
+3,345
+1,008
+877
+2013
+888
+(714)
+(561)
+(621)
+(544)
+6
+(25)
+(451)
+29,613
+781
+The 2007 Convertible Bonds were due on 24 April 2014 and have been fully paid by the Group at maturity.
+Property, plant and equipment
+258
+Accruals
+Cash flow hedges
+Non-current
+Property, plant and equipment
+Tax losses carried forward
+Embedded derivative component of the
+Receivables and inventories
+convertible bonds
+Others
+Deferred tax assets/(liabilities)
+The Company
+Current
+Receivables and inventories
+Accruals
+Available-for-sale securities
+Current
+The Group
+Deferred tax assets and deferred tax liabilities before offset are attributable to the items detailed in the table below:
+31 December
+The Group
+Authorised but not contracted for
+Authorised and contracted for (i)
+At 31 December 2014 and 2013, capital commitments are as follows:
+Capital commitments
+36 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+178
+Financial Statements (International)
+Financial Statements (International)
+177
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+29 DEFERRED TAX ASSETS AND LIABILITIES
+Cash flow hedges
+Non-current
+Property, plant and equipment
+Embedded derivative component
+of the convertible bonds
+258
+357
+887
+34
+(120)
+887
+(86)
+7,752
+7,200
+(16,387)
+(15,590)
+(8,635)
+(8,390)
+3,474
+2,261
+357
+2014
+258
+2,883
+Available-for-sale securities
+Others
+Deferred tax assets/(liabilities)
+Deferred tax assets
+31 December
+2014
+RMB million
+Deferred tax liabilities
+31 December 31 December
+2013
+2014
+RMB million RMB million
+Net balance
+31 December 31 December
+2013
+31 December
+RMB million
+2014
+RMB million
+2013
+RMB million
+2,883
+3,315
+3,315
+3,474
+RMB million
+102,386
+241,181
+38
+32
+140
+160
+318
+312
+22
+RMB million
+2014
+31 December
+2013
+The Group and the Company
+31 December
+438
+168
+Others
+RMB million
+24
+19
+19
+887
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Management monitors the conditions that are subject to the guarantees to identify whether it is probable that a loss has occurred, and recognises
+any such losses under guarantees when those losses are estimable. At 31 December 2014 and 2013, it was not probable that the Group will
+be required to make payments under the guarantees. Thus no liability has been accrued for the Group's obligation under these guarantee
+arrangements.
+5,863
+5,425
+5,552
+5,720
+21,543
+21,646
+31 December
+2013
+RMB million
+21,339
+204
+2014
+RMB million
+21,488
+158
+31 December
+The Company
+1,374
+835
+811
+1,356
+Subsidiaries
+Joint ventures
+RMB million
+31 December
+2013
+2014
+RMB million
+120,842
+38,217
+RMB million
+131,298
+2013
+29,514
+91,328
+RMB million
+111,169
+292,597
+181,428
+RMB million
+2014
+31 December
+31 December
+2013
+The Company
+31 December
+169,515
+138,795
+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.
+(i) The investment commitments of the Group is RMB 4,030 million (2013: RMB 4,993 million). The investment commitments of the Company is RMB 3,027 million (2013:
+RMB 4,374 million).
+31 December
+The Group
+At 31 December 2014 and 2013, guarantees in respect of facilities granted to the parties below were as follows:
+Contingent liabilities
+Thereafter
+Between three and four years
+Between four and five years
+Between two and three years
+Between one and two years
+Within one year
+Estimated future annual payments are as follows:
+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 408 million for the year ended 31 December 2014 (2013: RMB 404 million).
+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.
+Exploration and production licenses
+Pursuant to certain of the joint venture agreements entered into by the Group, the Group is obliged to purchase products from the joint ventures at
+market prices.
+Commitments to joint ventures
+Note:
+2,261
+The changes in the fair value of the derivative component from 31 December 2013 to 24 April 2014 resulted in realised loss of RMB 1 million (2013: an unrealised
+gain of RMB 114 million), which has been recorded under "finance costs" in the consolidated income statement for the year ended 31 December 2014.
+(870)
+3,315
+357
+36
+(2)
+(120)
+(86)
+(8,194)
+(64)
+(388)
+(8,390)
+3,051
+(790)
+2,261
+(364)
+(506)
+192
+421
+23
+3,292
+Recognised in
+consolidated
+income
+statement
+Recognised
+in other
+comprehensive
+RMB million
+income
+RMB million
+Balance at
+31 December 2013
+RMB million
+Current
+Receivables and inventories
+Accruals
+Cash flow hedges
+Non-current
+Property, plant and equipment
+Tax losses carried forward
+Embedded derivative component of the convertible bonds
+(870)
+Available-for-sale securities
+Others
+(3)
+Others
+RMB million
+31 December 2014
+RMB million
+Current
+Receivables and inventories
+Accruals
+Cash flow hedges
+Non-current
+3,315
+(432)
+357
+(99)
+(86)
+973
+2,883
+282
+income
+RMB million
+1 January 2013
+RMB million
+Balance at
+income
+statement
+RMB million
+(433)
+(436)
+6
+7
+13
+Net deferred tax liabilities
+(1,755)
+(361)
+(3,836)
+Recognised in
+Recognised
+Balance at
+1 January 2014
+RMB million
+consolidated
+in other
+comprehensive
+Balance at
+(1,720)
+Movements in the deferred tax assets and liabilities are as follows:
+31 December
+2014
+RMB million
+31 December
+2013
+RMB million
+Deferred tax liabilities
+31 December 31 December 31 December
+Net balance
+2014
+RMB million
+2013
+RMB million
+2014
+RMB million
+31 December
+2013
+RMB million
+2,047
+110
+2,883
+306
+Deferred tax assets
+2,047
+(3,836)
+(17,102)
+(870)
+282
+The Group
+7
+(4)
+(436)
+3
+(436)
+86
+15,629
+99
+13,266
+(79)
+(86)
+7
+13
+(841)
+110
+(16,470)
+219
+(8,914)
+(5)
+43
+56
+(10,216)
+(600)
+(1,105)
+for the year ended 31 December 2014
+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 2014, write-down of deferred tax assets
+amounted to RMB 114 million (2013: RMB 926 million).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+169
+Financial Statements (International)
+Financial Statements (International)
+2,883
+306
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(3)
+61
+9,111
+At 31 December 2014, certain subsidiaries of the Company did not recognise deferred tax of deductable loss carried forward of RMB 17,085 million
+(2013: RMB 10,809 million), of which RMB 6,996 million (2013: RMB 2,638 million) was incurred for the year ended 31 December 2014, because
+it was not probable that the future taxable profits will be realised. These deductable losses carried forward of RMB 325 million, RMB 3,344 million,
+RMB 3,786 million, RMB 2,634 million and RMB 6,996 million will expire in 2015, 2016, 2017, 2018, 2019 and after, respectively.
+(436)
+5,605
+46
+8,314
+5,861
+(8,911)
+(3,306)
+(3,044)
+29 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+(8,905)
+(870)
+5
+282
+(436)
+219
+(870)
+282
+5
+RMB
+million
+RMB
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+2013
+RMB
+RMB
+RMB
+2013
+2014
+2014
+2013
+2014
+2013
+RMB
+million
+(Loss)/profit for the year
+million
+(750)
+2013
+Total comprehensive (loss)/income
+389
+2,066
+(676)
+(716)
+(745)
+18,500
+million
+115,490
+5,379
+7,322
+Turnover
+million
+million
+million
+million
+million
+million
+102,126
+2014
+72,701
+2014
+9,593
+8,429
+1,942
+1.633
+Attributable to non-controlling interests
+2,621
+3,624
+49,930
+7,494
+3.057
+7,370
+8,399
+8,342
+1,942
+1,633
+Attributable to owners of the Company
+4,033
+5,575
+55,846
+(714)
+4,692
+17,405
+17,387
+6,126
+Zhonghan Wuhan
+Marketing Company
+SIPL
+Kantons
+Shanghai Petrochemical
+Fujian Petrochemical
+Year ended 31 December
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Sinopec
+Summarised statement of comprehensive income
+40 PRINCIPAL SUBSIDIARIES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+Financial Statements (International)
+Financial Statements (International)
+187
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+(v) This listed company will announce its financial information for the year ended 31 December 2014 later than the Company, therefore its 2014 financial information is
+not currently disclosed.
+Note:
+1,412
+1,951
+5,916
+2013
+(676)
+rate changes
+389
+2,509
+2,878
+824
+2,468
+1,950
+161
+133
+28
+222
+Effect of foreign currency exchange
+Cash and cash equivalents at 1 January
+2013
+2014
+2013
+2014
+2013
+2014
+2013
+2013
+2014
+RMB
+2013
+78,827
+23
+188
+337
+2,878
+2,682
+2,468
+1,327
+1,331
+133
+279
+|
+222
+380
+at 31 December
+Cash and cash equivalents
+90
+96
+223
+23
+(100)
+18
+22
+2014
+Zhonghan Wuhan
+Marketing Company
+Comprehensive (loss)/profit attributable
+(43)
+(43)
+633
+137
+25,744
+22,934
+3,814
+(106)
+to non-controlling interests
+137
+22,914
+4,250
+3,046
+18,365
+1,498,628
+1,472,232
+13,652
+9,038
+88g
+25,945
+(375)
+(358)
+(326)
+SIPL
+Kantons
+Shanghai Petrochemical
+Fujian Petrochemical
+Year ended 31 December
+Sinopec
+Summarised statement of cash flows
+69
+60
+196
+271
+non-controlling interests
+Dividends paid to
+(15)
+48
+889
+930
+1,774
+18
+155
+924
+2,066
+24,881
+million
+7,749
+million
+million
+million
+million
+million
+million
+million
+million
+RMB
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+RMB
+36 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+million
+Net cash generated from operating
+activities
+(44,027)
+(46,140)
+(36,924)
+(8,282)
+(3,000)
+(630)
+(910)
+(698)
+(303)
+million
+Net cash used in investing activities
+48,471
+44,337
+7,006
+5,383
+324
+5,099
+3,662
+523
+197
+1,467
+(2,643)
+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 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. The Group paid normal routine pollutant discharge fees of approximately RMB 5,352
+million for the year ended 31 December 2014 (2013: RMB 5,154 million).
+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.
+134,424
+318,092
+141,316
+(iii)
+1,606
+1,639
+(iv)
+49,399
+52,814
+(v)
+(ii)
+10,306
+(vi)
+6,753
+6,755
+(vii)
+10,531
+10,373
+(vii)
+497
+491
+13,235
+Legal contingencies
+2013
+RMB million
+(i)
+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.
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+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
+RMB million
+305,044
+Ancillary and social services
+Operating lease charges for buildings
+Other operating lease charges
+Agency commission income
+Interest income
+Interest expense
+Net deposits withdrawn from/(placed with) related parties
+Net loans obtained from related parties
+Note
+2014
+Operating lease charges for land
+Net cash generated from/(used in)
+financing activities
+264
+(796)
+(996)
+Non-current liabilities
+4,033
+16,874
+217,274
+229,281
+46,143
+47,623
+(1,649)
+6.911
+21,395
+4,596
+4,050
+Non-current assets
+(159,952) (11,299)
+(148,998)
+11,569
+13,029
+915
+22,151
+(3,531)
+(628)
+(35,877)
+17,992
+16,771
+3,884
+3,266
+Net assets
+4,033
+16,874
+215,798
+227,825
+(77)
+13,312
+6,834
+21,523
+19,746
+3,800
+3,054
+Net non-current assets
+(1,476)
+(1,456)
+(32,831)
+11,746
+(2,975)
+84
+212
+273
+(219)
+1,744
+(1,159)
+(642)
+(28)
+146
+194
+158
+337
+cash equivalents
+1,513
+(4,171)
+1,584
+31,662
+1,740
+2,034
+(4,497)
+(2,606)
+369
+Net increase/(decrease) in cash and
+million
+million
+million
+Net current assets/(liabilities)
+(13,023)
+(280,010) (274,111)
+(2,414)
+(972) (2,387)
+(18,017)
+(197) (12,485)
+(224)
+Current liabilities
+1,724
+114,159
+131,012
+13,983
+15,416
+1,887
+14,486
+9,510
+281
+436
+Current assets
+million
+24,775
+37 RELATED PARTY TRANSACTIONS
+75,318
+million
+(c) Contributions to defined contribution retirement plans
+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 38. As at 31 December 2014 and 2013, the accrual for the contribution to
+post-employment benefit plans was not material.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+181
+Financial Statements (International)
+182
+Financial Statements (International)
+8,632
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+(d) Transactions with other state-controlled entities in the PRC
+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").
+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:
+•
+sales and purchases of goods and ancillary materials;
+•
+rendering and receiving services;
+37 RELATED PARTY TRANSACTIONS (Continued)
+• lease of assets;
+8,510
+8,152
+102,965
+54,064
+43,145
+38,356
+194,138
+129,533
+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 30.
+480
+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.
+(b) Key management personnel emoluments
+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:
+Short-term employee benefits
+Retirement scheme contributions
+2014
+RMB'000
+8,009
+501
+2013
+RMB'000
+As at and for the year ended 31 December 2014, and as at and for the year ended 31 December 2013, 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.
+•
+depositing and borrowing money; and
+. uses of public utilities.
+2014
+RMB million
+2013
+RMB million
+Turnover
+Exploration and production
+External sales
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Information of the Group's reportable segments is as follows:
+Inter-segment sales
+External sales
+Inter-segment sales
+Marketing and distribution
+External sales
+Inter-segment sales
+Chemicals
+External sales
+Inter-segment sales
+Refining
+39 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+These transactions are conducted in the ordinary course of the Group's business on terms comparable to those with other entities that are not
+state-controlled.
+38 EMPLOYEE BENEFITS PLAN
+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 18.0% to 23.0% 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 2014 were RMB 7,634 million (2013: RMB
+7,259 million).
+39 SEGMENT REPORTING
+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.
+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, 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.
+(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 mainly to
+external customers.
+(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.
+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.
+(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 income
+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 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.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+4,102
+6,470
+22,369
+24,711
+Financial Statements (International)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+37 RELATED PARTY TRANSACTIONS (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+Note:
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+Financial Statements (International)
+(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.
+(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.
+(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.
+(vii) Operating lease charges represent the rental paid to Sinopec Group Company for operating leases in respect of land, buildings and equipment.
+(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.
+(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 2014 was RMB 4,221 million (2013: RMB 6,540 million).
+(x) Interest expense represents interest charges on the loans and advances obtained from Sinopec Group Company and fellow subsidiaries.
+(xi) The Group obtained or repaid loans from or to Sinopec Group Company and fellow subsidiaries.
+(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.
+179
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+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.
+(viii)
+132
+185
+(ix)
+135
+89
+(x)
+1,421
+1,802
+(ix)
+2,319
+(xi)
+53,690
+(2,528)
+11,903
+The amounts set out in the table above in respect of the year ended 31 December 2014 and 2013 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+Included in the transactions disclosed above, for the year ended 31 December 2014 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 138.170 billion (2013: RMB 163.398 billion) comprising purchases of products and services
+(i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 118.968 billion
+(2013: RMB 144.095 billion), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 6.753 billion
+(2013: RMB 6.755 billion), operating lease charges for land and buildings paid by the Group of RMB 10.531 billion and RMB 497 million (2013:
+RMB 10.373 billion and RMB 491 million), respectively and interest expenses of RMB 1.421 billion (2013: RMB 1.684 billion); and b) sales by
+the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 98.620 billion (2013: RMB 93.825 billion), comprising RMB
+98.479 billion (2013: RMB 93.684 billion) for sales of goods, RMB 135 million (2013: RMB 84 million) for interest income and RMB 6 million
+(2013: RMB 57 million) for agency commission income.
+At 31 December 2014 and 2013, 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 36.
+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 2014.
+The terms of these agreements are summarised as follows:
+Corporate and others
+•
+(1) the government-prescribed price;
+Other long-term liabilities
+Short-term loans and current portion of long-term loans
+from Sinopec Group Company and fellow subsidiaries
+Long-term loans excluding current portion from Sinopec Group Company and fellow subsidiaries
+Total
+31 December
+2014
+RMB million
+31 December
+2013
+RMB million
+25,478
+Accrued expenses and other payables
+18,402
+2,276
+14,935
+11,378
+43,977
+32,056
+16,847
+10,642
+3,564
+Trade accounts payable
+Total
+Prepaid expenses and other current assets
+Long-term prepayments and other assets
+(2) where there is no government-prescribed price, the government-guidance price;
+(3) where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+(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%.
+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.
+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 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 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.
+180
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+37 RELATED PARTY TRANSACTIONS (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+Pursuant to the resolutions passed at the Directors' meeting held on 31 October 2014, the Group acquired the equity interests of YASREF from
+Sinopec Group Company. The acquisition has been completed in 2014 (Note 22).
+Pursuant to the Share Repurchase Agreement and Disposal Agreement by the Company and Sinopec Yizheng Chemical Fibre Company Limited
+(Yizheng Chemical Fibre Co., Ltd.) on 12 September 2014, Yizheng Chemical Fibre Co., Ltd repurchased and cancelled the 40.25% of its
+equity interests held by the Company in exchange for the transfer of its outgoing business to the Company and issued shares to Sinopec Group
+Company for the acquisition of 100% equity Interest of Sinopec Oilfield Service Corporation (a wholly-owned subsidiary of the Sinopec Group
+Company). These transactions were completed in December 2014 (Note 40).
+Pursuant to the resolutions passed at the Directors' meeting held on 22 March 2013, the Group acquired the equity interests of CIR, Taihu and
+Mansarovar from Sinopec Group Company. The acquisition was completed in 2013 (Note 22).
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures included in the following accounts captions
+are summarised as follows:
+Trade accounts receivable
+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:
+252
+69,550
+141,544
+794
+603
+418
+- Corporate and others
+1,818
+1,275
+Aggregate share of profits from associates and joint ventures
+Investment income
+963
+3,630
+- Exploration and production
+1
+8
+- Refining
+- Marketing and distribution
+- Chemicals
+- Corporate and others
+2,359
+Aggregate investment income
+Net finance costs
+(486)
+- Chemicals
+35,143
+(2,181)
+868
+(1,063)
+(3,412)
+2,179
+794
+(871)
+Total segment operating profit
+million
+Share of profits/(losses) from associates and joint ventures
+- Exploration and production
+1,117
+358
+- Refining
+- Marketing and distribution
+73,487
+Profit before taxation
+17
+11
+- Corporate and others
+Total segment assets
+453,060
+406,237
+297,884
+329,236
+276,298
+- Chemicals
+273,872
+156,373
+147,015
+107,197
+1,336,942
+1,272,915
+Interest in associates and joint ventures
+80,593
+162,685
+- Marketing and distribution
+- Refining
+- Exploration and production
+71
+93
+208
+2,319
+2,616
+(14,229)
+65,504
+At 31 December
+2014
+RMB million
+154
+➖➖➖➖---------
+(4,246)
+95,052
+At 31 December
+2013
+RMB million
+42
+Assets
+Segment assets
+29,449
+8,599
+(1,954)
+54,793
+721,174
+717,796
+Inter-segment sales
+587,663
+640,224
+1,308,837
+1,358,020
+External sales
+Elimination of inter-segment sales
+(1,972,175)
+Turnover
+2,781,641
+2,833,247
+Other operating revenues
+Exploration and production
+16,503
+(1,889,105)
+430,096
+419,201
+55,999
+158,618
+211,094
+219,466
+175,534
+194,469
+1,092,244
+1,111,004
+1,267,778
+1,305,473
+1,458,390
+1,486,037
+5,446
+1,463,836
+6,330
+1,492,367
+356,993
+374,097
+62,208
+22,641
+60,848
+Refining
+5,796
+for the year ended 31 December 2014
+39 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+2014
+RMB million
+2013
+RMB million
+Result
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Operating profit/(loss)
+- Exploration and production
+- Refining
+- Marketing and distribution
+- Chemicals
+- Corporate and others.
+- Elimination
+47,057
+By segment
+Financial Statements (International)
+184
+Financial Statements (International)
+Marketing and distribution
+12,770
+10,047
+Chemicals
+8,284
+7,491
+Corporate and others
+Other operating revenues
+Turnover and other operating revenues
+1,399
+1,089
+44,273
+47,064
+2,825,914
+2,880,311
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+183
+5,317
+274
+96,785
+Available-for-sale financial assets
+50.00
+RMB 5,745
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical") (ii)
+petroleum products
+petrochemical products and
+Manufacturing of intermediate
+petroleum products
+Trading of petrochemical products
+Marketing and distribution of refined
+100.00
+RMB 13,203
+100.00
+100.00
+Principal activities
+50.00
+Interests
+held by
+by the non-controlling
+Company % interests %
+Interests held
+Particulars of
+issued capital
+Sinopec Yangzi Petrochemical Company Limited
+China Petrochemical International Company Limited
+Sinopec Marketing Co., Ltd. ("Marketing Company") (i)
+Name of company
+At 31 December 2014, the following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the
+Group.
+40 PRINCIPAL SUBSIDIARIES
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+185
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+(million)
+RMB 1,400
+RMB 20,000
+51,181
+992,227
+Manufacturing of plastics,
+RMB 830
+50.56
+RMB 7,200
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+25.00
+100.00
+75.00
+RMB 3,986
+Sinopec Hainan Refining and Chemical Company
+Limited
+HKD 13,277
+Sinopec (Hong Kong) Limited
+45.00
+55.00
+RMB 1,840
+Sinopec Senmei (Fujian) Petroleum Limited
+Sinopec Shell (Jiangsu) Petroleum Marketing
+Chemical Company Limited
+RMB 3,000
+China International United Petroleum and
+15.00
+85.00
+RMB 5,000
+Sinopec Qingdao Refining and Chemical Company
+Limited
+40.00
+60.00
+RMB 800
+BP Sinopec (Zhejiang) Petroleum Company Limited
+Company Limited
+40.00
+60.00
+100.00
+49.44
+1,003,521
+64,589
+1,068,110
+2013
+RMB million
+10,757
+12,130
+11,127
+12,491
+13,859
+15,015
+44,126
+48,902
+185,126
+154,640
+5,076
+3,648
+19,189
+1,559
+15,850
+26,989
+26,064
+27,957
+105,311
+80,196
+RMB million
+RMB million
+2013
+2014
+(2) Geographical information
+Corporate and others
+Chemicals
+Marketing and distribution
+29,486
+941,046
+1,396
+81,265
+31 December
+773,109
+2,880,311
+RMB million
+2014
+31 December
+2,062,775
+763,139
+2,825,914
+2,107,202
+RMB million
+2013
+2014
+RMB million
+Others
+Mainland China
+Non-current assets
+90,097
+Others
+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.
+2,661
+3,619
+15
+8
+1,106
+35
+40
+88
+29
+2,523
+2,436
+Mainland China
+Refining
+Sinopec Kantons Holdings Limited ("Sinopec
+Kantons")
+60.34
+Sinopec
+Kantons (v)
+At
+At
+(vii)
+Shanghai Petrochemical
+At
+At
+At
+Fujian Petrochemical
+Summarised balance sheet
+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
+(iv) During the year ended 31 December 2014, the Company increased its investment in GWEC by RMB 5,712 million. Further, on 1 August 2014, GWEC acquired an
+additional 45% of the equity interest in shares in Ningxia Nenghua (GWEC previously held a 50% equity interest) and obtained control of Ningxia Nenghua (a coal
+chemical producer) which the Group accounted for as a subsidiary of GWEC thereafter. The cash consideration was RMB 2,593 million. The fair value of the 50%
+equity interest held before the business combination is RMB 2,881 million. The fair value of the assets and liabilities of Ningxia Nenghua primarily include construction
+in progress (RMB 14,094 million), property, plant and equipment (RMB 3,293 million) and borrowings (RMB 11,862 million) and no goodwill has arisen from the
+business combination.
+The Group accounted for the transaction pursuant to the Share Repurchase Agreement as a transaction with non-controlling interests since the control of business had
+not been lost, which resulted in an increase in capital reserve of the Group's consolidated financial statement amounting to RMB 3,227 million and decrease of non-
+controlling interests amounting to RMB 2,867 million.
+Pursuant to the Acquisition Agreement between Sinopec Group Company and Yizheng Chemical Fibre Co., Ltd. on the same date, Yizheng Chemical Fibre Co., Ltd.
+issued shares to Sinopec Group Company for the acquisition of a 100% equity interest of Sinopec Oilfield Service Corporation (a wholly-owned subsidiary of Sinopec
+Group Company). The above transactions were inter-conditional and were completed in December 2014.
+SIPL
+At
+(iii) Pursuant to the Share Repurchase Agreement and Disposal Agreement entered into between the Company and Yizheng Chemical Fibre Co., Ltd. on 12 September
+2014, Yizheng Chemical Fibre Co., Ltd. repurchased and cancelled the 40.25% of its equity interests held by the Company in exchange for the transfer of its outgoing
+business to the Company, pursuant to which this business was injected into Sinopec Yizheng Chemical Fibre Limited Liability Company.
+On 12 September 2014, Marketing Company entered into the "Capital Injection Agreement relating to Marketing Company" with a number of domestic and foreign
+investors, pursuant to which the investors shall subscribe for equity interest in Marketing Company in cash upon the relevant approvals for this capital injection being
+obtained, an aggregate capital contribution of RMB 105.044 billion was made to the Marketing Company by 25 investors, representing 29.58% equity interest in the
+Marketing Company on 6 March 2015.
+(i) Pursuant to the resolution of the Company's Meeting of Board of Directors held on 19 February 2014, the Company's business under its marketing and distribution
+segment of the Group was injected to Marketing Company, a wholly-owned subsidiary of the Group on 1 April 2014. The summarised financial statements of Marketing
+Company for the year ended 31 December 2013 set out below also include these marketing and distribution business.
+Note:
+40 PRINCIPAL SUBSIDIARIES (Continued)
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+186
+Except for Sinopec Kantons and Sinopec (Hong Kong) Limited, 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.
+petrochemical products and
+petroleum products
+Manufacturing of intermediate
+25.00
+75.00
+(ii) 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.
+RMB 4,397
+At
+At
+million
+million
+million
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+Marketing Company
+At
+RMB
+2013
+2014
+2013
+2014
+2013
+2014
+2013
+2013
+2014
+2014
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+At
+Zhonghan Wuhan
+At
+RMB
+HKD 248
+Sinopec Zhanjiang Dongxing Petrochemical Company
+Limited
+development of ethylene and
+products and petroleum products
+Marketing and distribution of
+refined petroleum products
+Marketing and distribution of
+refined petroleum products
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+Trading of crude oil and
+intermediate petrochemical
+(Ningxia) Company Limited ("Ningxia Nenghua") (iv)
+Sinopec Beihai Refining and Chemical Limited Liability
+Company
+5.00
+95.00
+RMB 5,130
+Sinopec Great Wall Energy & Chemical
+Company Limited ("GWEC") (iv)
+100.00
+RMB 18,863
+100.00
+RMB 2,200
+Sinopec Great Wall Energy & Chemical
+petrochemical products
+Sinopec Fuel Oil Sales Company Limited
+RMB 8,000
+Sinopec International Petroleum Exploration and
+Production Limited ("SIPL")
+100.00
+RMB 1,000
+Sinopec Chemical Sales Company Limited
+100.00
+RMB 1,595
+Sinopec Qingdao Petrochemical Company Limited
+Company (iii)
+100.00
+RMB 4,000
+Sinopec Yizheng Chemical Fibre Limited Liability
+39.66
+100.00
+downstream by products
+Marketing and distribution of
+Trading of petrochemical products
+Manufacturing of intermediate
+Production, sale, research and
+35.00
+65.00
+RMB 6,270
+Sinopec-SK(Wuhan) Petrochemical Company Limited
+("Zhonghan Wuhan")
+petrochemical products
+petroleum products and
+production, storage and sale of
+Import and processing of crude oil,
+1.02
+98.98
+RMB 5,294
+cement and coal
+refined petroleum products
+Marketing and distribution of
+refined petroleum products
+Coal chemical industry investment
+management, production and
+sale of coal chemical products
+Production and sale of electricity,
+petrochemical products
+Investment in exploration,
+Marketing and distribution of
+petroleum products
+petrochemical products and
+chips and polyester fibres
+Manufacturing of intermediate
+Production and sale of polyester
+petroleum products
+Trading of crude oil and
+petroleum products
+petrochemical products and
+Manufacturing of synthetic fibres,
+resin and plastics, intermediate
+petroleum products
+petrochemical products and
+production and sale of petroleum
+and natural gas
+Exploration and production
+2013
+4,141
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+39 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one
+year.
+Capital expenditure
+761,290
+Marketing and distribution
+Corporate and others
+Depreciation, depletion and amortisation
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Chemicals
+Corporate and others
+805,791
+12,445
+109,806
+Income tax payable
+1,091
+3,096
+Long-term debts
+107,787
+Total liabilities
+107,234
+146,110
+92,420
+7,820
+7,977
+Other unallocated liabilities
+14,966
+Loans from Sinopec Group Company and fellow subsidiaries
+Deferred tax liabilities
+Impairment losses on long-lived assets
+Exploration and production
+Refining
+129,816
+Total assets
+1,451,368
+Liabilities
+Segment liabilities
+- Exploration and production
+- Refining
+100,552
+104,233
+67,327
+69,029
+- Marketing and distribution
+11,711
+118,493
+- Chemicals
+27,532
+23,670
+- Corporate and others.
+138,930
+868
+Total segment liabilities
+452,834
+428,312
+Short-term debts
+75,183
+101.564
+15,886
+1,382,916
+10,100
+Cash and cash equivalents and time deposits with financial institutions
+Other unallocated assets
+6,979
+15,101
+Deferred tax assets
+3,730
+Proved Undeveloped Reserves
+Overseas
+Total, China
+Others
+Reserves of Natural Gas
+(bcf)
+2014
+Total, China
+6,741
+6,011
+2,663
+3,324
+5,987
+31 December
+Overseas
+31 December
+Reserves of Crude Oil
+(mmbbls)
+2014
+3,048
+2,782
+1,917
+548
+2,465
+317
+266
+105
+130
+235
+24
+31
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+730
+2
+2
+1
+3
+Total
+Overseas
+174
+174
+246
+247
+93
+93
+63
+63
+267
+267
+728
+309
+Others
+Shengli
+Total, China
+net
+Puguang
+0
+gross
+net
+gross
+Wells drilling
+2013
+2014
+As of 31 December
+Exploration & Production Activities
+310
+Proved Developed Reserves
+716.35
+Overseas
+(1) Crude oil and natural gas
+In 2014, international crude oil prices
+fluctuated at a high level in the first half
+of the year and plunged in the second
+half, with a precipitous drop in the fourth
+quarter. The average spot price of Platts
+Brent for the year was USD 99.45 per
+barrel, 8.5% lower than the previous
+year. China's demand for natural gas
+continued to increase in 2014. Chinese
+Government made further adjustments
+to the price of existing supplies of non-
+residential natural gas, thus gradually
+aligning domestic gas prices with those
+of alternative energy sources.
+(2) Oil products market
+In 2014, Chinese government timely
+adjusted domestic oil product prices
+in response to changes in international
+crude oil prices. In the second half
+of 2014, domestic oil product prices
+experienced 11 consecutive cuts as
+international crude prices plummeted.
+Affected by slowing economic growth,
+domestic demand for oil products grew
+at a lower rate, with diesel demand
+decreased despite a continued increase
+in gasoline demand. Statistics show that
+domestic apparent consumption of oil
+products (including gasoline, diesel and
+kerosene) was 269 million tonnes in
+2014, up by 2.0% from the
+previous year.
+Mr. Li Chunguang, Board Director and President
+US$/barrel
+125
+115
+105
+56
+1 Market Review
+95
+75
+65
+55
+WTI - NYMEX
+Brent ICE
+Brent spot price
+Dubai
+Trend of International Crude Oil Prices
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+11
+85
+Business Review and Prospects
+In 2014, the global economic recovery
+remained weak, and China's GDP grew by
+7.4%. The Company, focusing on growth quality
+and efficiency, further deepened reforms,
+transformed its growth model and strengthened
+its management. Through intensified analysis
+and forecasting of macroeconomy and market
+trends, we actively responded to the significant
+change of international crude oil prices while
+expediting structural adjustments, expanding our
+markets and enhancing fine management and
+cost controls. All of these efforts contributed to
+stable operations of the Company.
+BUSINESS REVIEW AND PROSPECTS
+193
+Over the past three years, we have been
+undertaking an overall transition in our
+business. We have focused on the quality of
+our development and returns by executing six
+major strategies with total capital expenditures
+RMB498.5 billion in the past three years. We
+increased our upstream reserve and production,
+upgraded the quality of our refined oil products,
+strengthened the performance of the marketing
+segment, realized fast growth in our non-
+fuel business, and continued to improve our
+chemical feedstock and product mix. Since
+2011, crude oil output has increased by 12.1%
+and natural gas output has increased by 38.5%,
+with significant breakthroughs in shale gas
+development creating favourable prospects for
+the future. We fully upgraded the quality of
+our refined oil and were the first to make all of
+our gasoline and automobile diesel products
+meet the GB IV national standard; some
+regions have upgraded product to the GB V. We
+continued expanding the marketing business.
+The percentage of our domestic retail sales
+increased to 68.9%, and the non-fuel business
+recorded rapid growth, with revenues soaring
+by 107% as a result of our optimized platform.
+In order to improve our chemical feedstock
+and product mix, we raised the proportion of
+high-value-added products and enhanced our
+capabilities in risk management. We established
+the Energy Management and Environmental
+Protection Department inside the Company, and
+we plan to invest more than USD5 billion to
+implement the Clear Water, Blue Sky Scheme
+and the Energy Efficiency Doubling plan. The
+level of emissions and energy consumption
+continued to drop even as the overall level of
+business activities expanded. Since 2011, the
+average overall energy intensity has decreased
+by 5.2%; chemical oxygen demand (COD) in
+waste water discharged has decreased
+by 8.1%; and emissions of NHx, sulphur
+dioxide and NOx have decreased by 9.6%,
+20% and 7.4%, respectively.
+Over the past three years, we have also
+strengthened corporate management. We
+designed and implemented more rigid
+management regulations after the Qingdao
+11/22 incident to ensure continuous
+improvement of our process flow, production
+organization, risk controls, security and stability
+management. Our production and operational
+costs in different business segments grew more
+slowly than those of our peers, which enabled us
+to effectively prevent and withstand sector risks.
+In the past three years, we have been promoting
+technology innovation throughout the Company.
+Taking a forward-looking perspective, we
+explored technology system reform and placed
+a great emphasis on the role of technology in
+productivity. We strengthened our research in
+core technologies as well as our fundamental
+and forward-looking research. We continued our
+strategy of integrating production, marketing
+and research processes and sped up the
+application of scientific research discoveries.
+We further enhanced our capabilities in
+innovation and achieved a series of strategic
+research advances with practical applications.
+The breakthroughs in our research into shale
+gas development, new type of coal-to-chemical
+conversion, new materials, energy conservation
+and environmental protection have helped
+us to further improve our industry structure
+and product mix. During the past three years,
+we have won seven National Awards for
+Technological Invention, including one first-place
+award; 12 National Awards for Science and
+Technology Progress, including one special prize
+and three first-place awards; and two National
+Gold Patent Awards. We have obtained a total
+of 6,850 domestic and foreign patents. These
+achievements demonstrate the effectiveness with
+which the Company has embraced technology to
+further its development.
+In the past three years, we have continued to
+fulfil our social responsibilities in all aspects
+of our business. We have joined the Global
+Compact LEAD and the Caring for Climate
+initiatives. We conscientiously followed the ten
+principles of the Global Compact, and made ten
+voluntary commitments at the Rio+20 Summit.
+Sinopec supported the United Nations Global
+Compact China network, hosting two sessions
+of the China Summit on Caring for Climate.
+We took the lead in publishing a corporate
+environment conservation white paper and an
+Environmental, Social and Governance report
+for shale gas development, setting an example
+for Chinese enterprises to collectively cope with
+climate change. The Company sincerely cares
+for its staff, actively participating in public
+welfare initiatives and promoting development
+that benefits both the business and its
+various stakeholders.
+According to International Financial Reporting
+Standards, the Company's operating revenue in
+2014 was up by 12.8% from 2011, and total
+assets and shareholder equity at the end of 2014
+were up by 27.2% and 25.2%, respectively, from
+their levels at the end of 2011. The Company's
+announced cash dividends over the three-year period
+totalled RMB 82.4 billion, while both share price
+and market capitalization increased. Sinopec Group,
+with Sinopec Corp. as its core asset, ranked third
+on the Fortune Global 500 list for 2014. We could
+not have recorded these achievements without the
+joint efforts of Sinopec's Board, management team
+and employees, as well as the great support of our
+shareholders and the wider community.
+In 2015, the Company continues to face a
+difficult operating environment, given the
+compounding effects of the "new normal"
+growth rate for China's economy and low
+international oil prices. We remain determined
+to meet these challenges proactively. We will
+continue to encourage innovations, deepen
+reform and drive the transition of the business,
+strengthen our business fundamentals with a
+focus on quality and efficiency, and raise the
+level of our production and operations based on
+market conditions. We plan to restrict capital
+expenditures to RMB 135.9 billion in 2015,
+which we will use mainly for improving the
+efficiency of upstream exploration, in particular
+through the development of unconventional oil
+and gas exploration and the construction of
+liquefied natural gas facilities; for revamping
+refineries and upgrading refined oil products; for
+developing the new business of coal-to-chemical
+conversion and the research and production of
+higher-value-added products; for accelerating the
+upgrade of service stations; and for continuing
+to carry out the Clear Water, Blue Sky Scheme
+and the Energy Efficiency Doubling plan.
+Looking forward, Sinopec will vigorously pursue
+the opportunities to meet its challenges. We
+are committed to development through the
+improvement of internal quality and efficiency,
+and we will maintain our core strategy of driving
+growth by innovation, in order to transform
+Sinopec into a scientific and services based
+company. We hope to gradually shift the industry
+structure from "petroleum and chemicals" to
+"energy and materials," changing the value
+creation model from a focus on manufacturing
+to a focus on innovation and services.
+BUSINESS REVIEW
+As the current term of the Board approaches
+its end, on behalf of the Board, I would like
+to express my heartfelt gratitude to our
+shareholders, our other stakeholders and the
+community at large for your support and care;
+and to the Board of Supervisors, management
+team and all of our employees for your diligent
+work and devoted cooperation over the years.
+The current Board of Directors has already
+nominated candidates for the new boards.
+The candidates are all outstanding managers
+and experts in macroeconomics, finance and
+securities, corporate management as well as the
+oil and gas industry. I believe their solid industry
+backgrounds and professional experience will
+bring vitality and new perspectives to the boards
+while strengthening the decision-making and
+supervisory standards of these two bodies.
+I do believe that under the leadership of both
+the current and the new Board of Directors,
+together with the dedication of every one of
+our employees and the sustained support of
+all our stakeholders, we will continue to make
+significant progress in deepening reform across
+all parts of our business and realising our
+vision for Sinopec Corp., for China and for
+a better world.
+傅成玉
+Fu Chengyu
+Chairman
+Beijing, China
+20 March 2015
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2014
+Chairman's Statement
+Reflection
+The current term of the Board of Directors and
+the Board of Supervisors will expire in May
+2015. Due to regulatory requirements and
+adjustments in their duties, Mr. Zhang Yaocang,
+Mr. Cao Yaofeng, Mr. Chen Xiaojin, Mr. Ma
+Weihua will not renew their terms. They have all
+been very dedicated members who adhered to
+their responsibilities as they actively participated
+in Sinopec Corp.'s decision-making processes.
+They were crucial in enabling the Board of
+Directors to make informed decisions and carry
+out effective oversight. I would like to thank
+them for their hard work and great contributions
+to the Company.
+Proved Reserves
+12
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+306.60
+0.01
+Overseas
+49.86
+21.70
+Natural gas production (bcf)
+313
+660.18
+21.68
+598.01
+129.77
+310.84
+8.51
+Proved Reserves
+Proved Developed Reserves
+Shengli
+Others
+Total, China
+Overseas
+Proved Undeveloped Reserves
+Shengli
+Others
+Total, China
+Summary of Reserves of Crude Oil and Natural Gas
+Business Review and Prospects
+310.87
+328.28
+(3) Chemicals
+In 2014, chemical prices declined
+continuously. The second half of the year
+saw a bigger decrease in feedstock costs
+than in chemical prices, thus improving
+chemical margins. According to the
+Company's statistics, domestic apparent
+consumption of synthetic resin and
+synthetic fiber rose by 8.7% and 7.0%,
+respectively, from the previous year,
+while apparent consumption of synthetic
+rubber fell by 1.9% and that of ethylene
+equivalent grew by 4.9%.
+2 Operations Review
+(1) Exploration and production
+In 2014, driven by management and
+technology innovation, we implemented
+exploration and development programs
+efficiently and made a number of new
+findings, some of which are commercial
+discoveries. With 106.75 billion cubic
+meters of reserves added to the Fuling
+shale gas project, China's first sizable
+shale gas field came into being. In 2014,
+newly added proved oil and gas reserves
+amounted to 431 million barrels. In
+crude oil development, we focused on
+improvements to economics through
+optimal development of new blocks,
+further development of mature fields and
+enhancing recovery rates continuously. In
+natural gas development, we accelerated
+the capacity construction of major
+projects, strengthened management of
+the Puguang gas field and other mature
+fields, adjusted marketing strategies,
+expanded sales volume and achieved
+better economic returns. In shale gas
+development, the Fuling project's Phase
+I construction, with capacity of 5 billion
+cubic meters per year, progressed
+smoothly, and daily output of all
+producing wells exceeded design targets,
+laying a good foundation for future
+development. In 2014, production of oil
+& gas rose by 8.4% to 480.22 million
+barrels of oil equivalent, among which
+domestic crude oil production remained
+flat, while overseas production increased
+significantly as a result of overseas
+acquisition at the end of 2013. Natural
+gas production rose by 8.5% to 716.4
+billion cubic feet. Average unit all-in-cost
+has been well under control.
+Summary of Operations for the Exploration and Production Segment
+Change from
+2014
+8.48
+2013
+2013 to 2014(%)
+Oil and gas production (mmboe)
+480.22
+442.84
+427.95
+8.44
+Crude oil production (mmbbls)
+China
+360.73
+332.54
+2012
+310
+3
+267
+Light chemical feedstock
+19.05
+15.01
+17.43
+20.75
+(4.06)
+77.39
+77.40
+74.26
+Kerosene
+Diesel
+12.42
+39.17
+40.55
+51.22
+Gasoline
+4.15
+132.96
+140.40
+146.23
+1.48
+221.31
+231.95
+235.38
+Gasoline, diesel and kerosene production
+Refinery throughput
+45.56
+2013 to 2014 (%)
+37.97
+3.16
+Total sales volume of oil products (million tonnes)
+2012 2013 to 2014 (%)
+2013
+2014
+Change from
+Summary of Operations for Marketing and Distribution Segment
+time, we further developed our non-
+fuel businesses, improved the customer
+experience and provided one-stop
+services through our online fuel-card
+services and self-service mobile apps and
+equipment. Non-fuel business transaction
+increased by 28% over 2013 to RMB
+17.1 billion. In 2014, total sales volume
+of refined oil products was 189 million
+tonnes, up by 5.1% from the previous
+year, with domestic sales rising by 3.4%
+to 171 million tonnes and retail rising
+by 3.6%.
+In 2014, in light of the slower growth of
+domestic demand for oil products and
+the particularly weak demand for diesel,
+we adjusted our marketing strategies,
+enhancing marketing efforts on high-
+octane gasoline and jet fuel to increase
+total sales volume. We expanded our
+retail volume by using our network and
+brand advantages, enhancing customer
+service at service stations. At the same
+our marketing business with the aim of
+development through innovations.
+In 2014, the Company initiated business
+restructuring in the marketing segment
+and has launched mixed-ownership
+reform by introducing private capital.
+Sinopec Corp. entered into capital
+increase agreements with 25 investors,
+established a mechanism aiming to
+transform the segment into a market
+orientated business through joint efforts
+with private investors. The initiative laid
+the foundations for further reform on the
+operational systems and mechanisms of
+(3) Marketing and distribution
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+36.33
+Business Review and Prospects
+Business Review and Prospects
+13
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+Note: Includes 100% of production of joint ventures.
+0.33 percentage points
+95.15 (0.16) percentage points
+94.82
+94.66
+Refinery yield (%)
+76.75
+76.19
+76.52
+Light products yield (%)
+14
+2012
+2013
+2014
+4,513
+- Dry
+Development - Productive
+256
+96
+352
+- Dry
+238
+112
+Exploratory - Productive
+For the year ended December 31, 2013
+26
+83
+30
+- Dry
+317
+6
+1,614
+2,027
+3,964
+Development Productive
+123
+64
+269
+187
+- Dry
+56
+2,490
+39
+2,016
+5
+Change from
+Unit: million tonnes
+in specialisation, margins of lubricants,
+liquefied petroleum gas (LPG) and
+asphalt further improved, delivering good
+economic returns. In 2014, we processed
+235 million tonnes of crude oil, up
+by 1.5% from the previous year, and
+produced 146 million tonnes of refined
+oil products, up by 4.2%.
+upgrade of oil products, increasing
+production of GB IV automotive diesel,
+with some regions gasoline and diesel
+upgraded to GB V standard. We effectively
+controlled costs through improvements
+in resource allocation, optimising
+selection of oil to be processed, as well
+as inventory management. Through
+tapping our well established advantages
+Summary of Operations for the Refining Segment
+In 2014, the Company adjusted its
+product mix in response to the market,
+increasing production of oil products
+and high-value-added products for which
+demand was strong, such as gasoline
+(especially high-octane gasoline) and
+jet fuel, further decreasing the diesel to
+gasoline ratio. We accelerated the quality
+(2) Refining
+4,102
+5,009
+22,563
+22,912
+26,665
+27,921
+983,680
+960,981
+983,680
+960,981
+2013
+2014
+As of 31 December
+Unit: Square Kilometers
+Acreage with development license
+China
+Overseas
+China
+Acreage with exploration license
+-
+44
+2
+189.17
+179.99
+350
+5.10
+(1) Market analysis
+BUSINESS PROSPECTS
+at subsidiary level then review to
+ensure the qualitative and quantitative
+compliance with technical guidance
+and accuracy and reasonableness
+of the reserves estimation. The
+RMC is primarily responsible for the
+management and coordination of the
+reserves estimation process, review and
+approval of annual changes and results
+in reserves estimation and disclosure
+of our proved reserves. We also engage
+outside consultants who assist us to be
+in compliance with the U.S. Securities
+and Exchange Commission rules and
+regulations. Our reserves estimation
+process is further facilitated by a
+specialised reserves database which is
+improved and updated periodically.
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+16
+15
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+Our reserves estimation is guided by
+procedural manuals and technical
+guidance. Initial collection and
+compilation of reserves information are
+conducted by different working divisions,
+including exploration, development,
+financial and legal divisions, at
+production bureau level. Exploration and
+development divisions collectively prepare
+the initial report on reserves estimation.
+Together with technical experts,
+reserves management committees
+and economics.
+Our RMC is chaired by Mr. Wang Zhigang,
+one of our senior vice presidents, and is
+co-led by our deputy chief geologist and
+our director general of our exploration
+and production segment. Mr. Wang holds
+a Ph.D. degree in geology from Geology
+and Geo-physics Research Institute of
+the China Academy of Science and has
+over 30 years of experience in oil and
+gas industry. Our RMC also consists
+of 31 other members who are senior
+management members in charge of
+exploration and development activities
+at production bureau level. A majority
+of our RMC members hold doctor's or
+master's degrees and our RMC members
+have an average of 20 years of technical
+experience in relevant industry fields,
+such as geology, engineering
+(8) 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 the RMC,
+at our 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 reserves estimation
+report at the branches level.
+The 2015 world economy is expected to
+continue its slow recovery while China's
+economy will enter a New Normal state
+of slower growth. The international crude
+oil price is projected to remain anaemic.
+Domestic demand for refined oil products
+is to grow steadily with product mix further
+adjusted, quality gradually upgraded.
+Domestic demand for major chemicals is to
+grow step by step.
+plant at Sinopec Great Wall Energy and
+Chemical Industry (Ningxia) Company
+Ltd. and the Qilu acrylonitrile project.
+We added ethylene capacity of 190,000
+tonnes per year and synthetic resin
+capacity of 600,000 tonnes per year.
+Capital expenditures for corporate and
+others were RMB 3.648 billion, mainly for
+R&D facilities and IT application projects.
+(7) Capital expenditures
+In 2014, the Company improved its
+work safety and accountability scheme,
+conducted safety checks, focused on
+identification and elimination of potential
+hazards, stepped up the construction
+of its emergency response capabilities
+and its IT applications for safety
+management, standardised worker
+protection, and safeguarded the health
+of its employees. For more detailed
+information, please refer to our corporate
+report, Communication on Progress for
+Sustainable Development.
+2.5%, NHx emissions were down by 4.2%,
+sulfur dioxide emissions were down by
+8.1%, NOx emissions were down by
+3.9%, and all hazardous chemicals,
+discharged water, gas, and solid waste
+were properly treated.
+(6) Health, safety and the environment
+In 2014, the Company vigorously
+implemented its green and low-
+carbon development strategy and its
+Clear Water, Blue Sky environmental
+protection plan, advanced its carbon
+assets management activities, and
+officially kicked off the Energy Efficiency
+Doubling initiative. By further integrating
+efforts in energy conservation, emissions
+control and carbon reduction, the
+effectiveness of our energy saving and
+environmental protection activities
+improved continuously. Compared with
+last year, energy intensity was down by
+0.6%, industrial water consumption was
+down by 1.1%, chemical oxygen demand
+of waste water discharge was down by
+In 2014, the Company fully tapped the
+functions of research and development
+in supporting and leading its business
+operations, stepping up its R&D efforts
+with remarkable results. In upstream,
+we successfully completed the well pad
+drilling test for shale gas development,
+achieving substantial improvements
+in efficiency of construction. We
+developed offshore well safety control
+technologies to enhance the safety and
+efficiency of production in offshore
+oilfields. In refining, we commercialised
+technologies for high-aromatics.
+content catalytic diesel hydrogenation,
+countercurrent continuous reforming
+and diesel ultra-deep hydrogenation
+for desulfurizationt. In chemicals, we
+brought online a demonstration plant
+for converting syngas to ethylene
+glycol, marking a breakthrough in coal
+chemical technologies. We successfully
+commissioned a demonstration plant for
+super-imitation-cotton fiber technologies.
+We also developed bacteria-resistant
+polypropylene and polypropylene for low-
+temperature packaging. We applied for
+a total of 4,968 patents at home and
+abroad, and 3,011 patents were granted
+in 2014. During the year, we won one
+National Patent Gold Award and five
+Awards of Excellence, two first-place
+awards and three second-place awards
+for National Science and Technology
+Advancement, and two second-place
+awards for Technology Invention.
+(5) Research and development
+Business Review and Prospects
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Note: Includes 100% production of joint ventures.
+(5.53)
+1,339
+1,392
+In 2014, the Company optimised its
+asset portfolio and investment activities.
+Total capital expenditures were RMB
+154.640 billion, down by 4.2% from the
+plan made at the beginning of the year.
+Capital expenditures for exploration and
+production segment were RMB 80.196
+billion, mainly for exploration and
+production in Jiyang trough, Sichuan
+Basin, Tahe oilfield, and Ordos Basin,
+liquefied natural gas (LNG) projects in
+Shandong and Guangxi, construction
+of long-distance oil and gas pipeline
+projects, and the oversea projects.
+We added crude oil capacity of 4.36
+million tonnes per year and natural gas
+capacity of 5.9 billion cubic meters per
+year. Capital expenditures for refining
+segment were RMB 27.957 billion,
+mainly for refinery revamping and
+gasoline and diesel quality upgrading
+projects by subsidiaries in Shijiazhuang,
+Yangtze, Tahe and Jiujiang. We added
+refining capacity of 9.5 million tonnes
+per year, and acquired 37.5% shares of
+Yanbu Refinery. Capital expenditures for
+marketing and distribution segment were
+RMB 26.989 billion, mainly for developing.
+and renovating service stations and for
+building oil product pipelines and oil
+depots. We added 556 service stations
+for the year. Capital expenditures for
+chemicals segment were RMB 15.850
+billion, mainly for the coal chemical
+1,315
+(2) Operations
+Exploration and production: In response to
+low oil prices, the Company will integrate
+reserves, production, investment, costs
+and earnings and will seek to optimise its
+exploration activities, lower its development
+costs, and increase commercial yields
+for oil and gas. In exploration, we will
+focus on making commercial discoveries,
+exploiting reserve potential in frontier
+areas and other key promising regions, and
+improving the success rate of exploration.
+In development, we will select projects and
+production targets based on oil price level.
+We will also further develop mature fields
+and put technologies that significantly
+enhance recovery into wide operation. In
+addition, we will facilitate development of
+shale gas to fast-track shale gas projects
+and expedite capacity-building projects for
+natural gas. In 2015, we plan to produce
+300 million barrels of crude oil in China,
+48 million barrels from our oversea assets,
+and 886.3 billion cubic feet of natural gas.
+Oversea
+Equity-accounted
+173.15
+China
+Wells drilled
+Total
+Shengli
+Other
+Subsidiaries
+investments
+Exploratory - Productive
+337
+In 2015, the Company will focus on
+improving the quality and efficiency of growth
+while deepening reforms, transforming its
+development model, and implementing
+rigorous management programs. We will put
+more emphasis on restructuring, resource
+optimisation, innovation and risk control. Key
+measures are as follows:
+141
+17
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+In 2015, the Company will proactively
+adapt to the "new normal" situation of
+macroeconomy, building up new drivers
+for development, continuously improving
+its overall strength and competitiveness in
+the global arena, as well as capabilities to
+maintan sustainable growth and striving to
+achieve remarkable results.
+and Ordos Basin as well as Guangxi and
+Tianjin LNG projects; gas pipelines; and
+overseas projects. Refining segment accounts
+for expenditures of RMB 24.0 billion, mainly
+for revamping Qilu and Jiujiang refineries,
+as well as product quality projects such as
+gasoline adsorbent desulfurization and diesel
+hydrogenation. Marketing and distribution
+segment accounts for expenditures of RMB
+22.6 billion, mainly for revamping service
+stations, constructing the product pipeline
+networks, optimising the distribution of tank
+farms, and improving facilities for service
+stations and non-fuel businesses to develop
+integrated service with an aim to support
+new businesses. Chemicals segment accounts
+for expenditures of RMB15.1 billion, mainly
+for the Jinling propylene oxide and LPG
+utilisation projects and the Hainan PX phase
+Il project. Corporate and others segment
+accounts for expenditures of RMB 6.0 billion,
+mainly for R&D facilities and IT projects.
+Capital expenditures: In 2015, the Company
+will look to improve its project portfolio and
+investment plan based on market conditions.
+Our capital expenditure budget for the year
+is RMB 135.9 billion, of which exploration
+and production segment accounts for
+RMB 68.2 billion, mainly for Fuling shale
+gas project construction, exploration and
+development projects in Shengli oilfield,
+Sichuan Basin, Tahe oilfield, Junggar Basin,
+R&D: We will continue to implement
+the strategies of development driven
+by innovations. Areas of focus for R&D
+include shale oil and gas exploration
+and development, oil and gas recovery
+enhancement technologies aiming to
+increase production and reserve, biofuels,
+heavy oil refining, clean fuels for quality
+upgrading, new catalytic materials, high-
+performance synthetic chemicals and fine
+chemicals to promote restructuring of
+product mix. In addition, we will develop
+and apply technologies that are greener
+and less carbon-intensive, thus conserving
+energy while preserving the environment.
+We will continue to emphasise fundamental
+and forward-looking R&D activities to
+improve the Company's innovation for
+the purpose of supporting and driving its
+transformative growth.
+Business Review and Prospects
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+In 2015, we plan to produce 10.9 million
+tonnes of ethylene.
+Chemicals: The Company will further adjust
+its feedstock structure, lower feedstock
+costs, accelerate improvements in its
+product mix, and strengthen the integration
+of manufacturing, marketing and R&D. We
+will increase the production of higher-value.
+added products which are well received
+by markets, enhance the development,
+production and promotion of new products,
+fine-tune facilities operations and utilisation
+rates according to profit margins, take
+advantage of our strengths in marketing
+network and improve our sales performance.
+Marketing and distribution: The Company
+will proactively explore to innovate on
+operational systems and mechanisms
+with an aim to transform Sinopec from an
+oil products supplier into an integrated
+services provider. To ensure maximum
+profits, the Company will improve its
+market analysis based on fundamental
+changes in the market and operate with
+low inventory levels to mitigate risks and
+facilitate adjustments to its marketing
+structure. We will expand our retail sales
+volume and increase per station pumped
+volume. We will accelerate the planning
+and construction of our oil product
+pipelines to optimise our marketing
+network, carry out differentiated marketing
+strategies and increase customer loyalty
+by providing tailor-made services. We will
+also develop our non-fuel businesses on
+the basis of specialisation and market
+orientation to increase both scale and
+profits of the business. In 2015, we plan to
+sell 173 million tonnes of oil products in
+the domestic market.
+Refining: The Company will optimise crude
+procurement and resource allocation to
+reduce costs, take better advantage of our
+economies of scale to control unit costs, and
+upgrade oil product quality to increase the
+supply of clean fuels. We will also strengthen
+the integration of production and sales,
+adjust our product slate and utilisation
+rates, and increase the output of higher-
+value-added products which are well received
+by market. In addition, we will seek to
+unlock the potential value of specialisation,
+improve our sales networks, and enhance the
+marketing of lubricants, LPG, asphalt and
+other products. In 2015, we plan to refine
+243 million tonnes of crude oil and produce
+152 million tonnes of oil products.
+S-Zorb Plant inSinopec Anqing Company
+Synthetic fiber
+For the year ended December 31, 2014
+8,950
+31 December
+2012
+31 December
+2013
+2014
+31 December
+Summary of Operations for Chemicals Segment
+In 2014, confronted by severe market
+conditions that saw prices of chemicals
+remaining at anemic levels, the Company
+cut its feedstock costs by increasing the
+light feedstock ratio, adjusted its product
+mix and intensified efforts in R&D,
+production, and sales of new products.
+Sales of new polyolefin products and
+(4) Chemicals
+Total number of service stations under Sinopec brand
+Number of company-operated stations
+4.07
+3,498
+3,707
+3,858
+Annual average throughput per station (tonne/station)
+2.79
+51.14
+51.69
+53.13
+Direct sales & Distribution (million tonnes)
+3.61
+113.73
+117.84
+3.36
+Total domestic sales volume of oil products (million tonnes)
+Retail sales (million tonnes)
+170.97
+158.99
+(9.15)
+165.42
+30,551
+30,538
+107.85
+30,836
+30,823
+30,536
+30,523
+Synthetic fiber monomer and polymer
+(2.19)
+936
+8,383
+939
+Synthetic rubber
+6.65
+13,343
+9,227
+13,726
+14,639
+7.19
+9,452
+960
+2013
+9,980
+specialty materials accounted for
+57.4% of total sales, and high-value-
+added rubber accounted for 17.4%.
+The synthetic fiber differentiation rate
+was 76.7%. In addition, we optimised
+operations of our manufacturing facilities,
+adjusted utilisation rates, and shut down
+facilities with unsatisfactory marginal
+costs. Ethylene output was up by 7.2%
+2012 2013 to 2014 (%)
+0.05
+0.05
+from 2013 to 10.7 million tonnes.
+Meanwhile, by keeping inventories at low
+levels and implementing a differentiated
+marketing strategy, our full-year chemical
+sales volume increased by 4.4% to 60.79
+million tonnes, with all manufactured
+chemicals sold.
+Unit: thousand tonnes
+Change from
+Change from
+the end of the
+previous year
+to the end of
+the reporting
+period (%)
+2014
+Ethylene
+Synthetic resin
+10,698
+•
+its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:
+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
+(i) Financial instruments carried at fair value
+Fair values
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+192
+As at 31 December 2014, it is estimated that an increase of 20% in the Company's own share price would decrease the Group's profit for the year
+by approximately RMB 2,730 million (2013: RMB 1,333 million); a decrease of 20% in the Company's own share price would increase the Group's
+profit for the year by approximately RMB 2,702 million (2013: RMB 737 million). This sensitivity analysis has been determined assuming that the
+changes in the Company's own share price had occurred at the balance sheet date and that all other variables remain constant. The analysis is
+performed on the same basis for 2013.
+The Group is exposed to equity price risk arising from changes in the Company's own share price to the extent that the Company's own equity
+instruments underlie the fair values of derivatives of the Group. At 31 December 2014, the Group's exposure to equity price risk is the derivatives
+embedded in the 2011 Convertible Bonds issued by the Company as disclosed in Note 30(v).
+411
+Equity price risk
+As at 31 December 2014, it is estimated that a general increase/decrease of USD 10 per barrel in crude oil and refined oil products, with all
+other variables held constant, would decrease/Increase the Group's profit by approximately RMB 1,167 million (2013: increase/decrease RMB 18
+million), and increase/decrease the Group's other reserves by approximately RMB 2,206 million (2013: increase/decrease RMB 2,806 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
+2013.
+21
+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 2014,
+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 2014 are set out in Notes 28 and 32.
+Commodity price risk
+As at 31 December 2014, 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 profit for the year by approximately RMB 1,199 million (2013: RMB 411 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 2013.
+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 30.
+Interest rate risk
+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.
+17
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+million
+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.
+Assets
+RMB
+million
+million
+16
+million
+RMB
+RMB
+RMB
+million
+Total
+Level 3
+•
+The Company
+Level 2
+Total
+RMB
+million
+RMB
+RMB
+million
+Level 3
+Level 2
+Level 1
+RMB
+million
+The Group
+At 31 December 2014
+Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
+•
+Level 1
+941
+Japanese Yen
+31 December
+2013
+RMB million
+The Group
+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:
+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 US Dollars, Japanese Yen and Hong Kong Dollars. The Group enters into foreign exchange contracts to manage its currency risk
+exposure.
+Currency risk
+Market risk (Continued)
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+Financial Statements (International)
+Financial Statements (International)
+191
+Gross exposure arising from loans and borrowings
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+Market risk
+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 working capital requirements and repay its short-term debts and obligations when they
+become due.
+54,046
+66,831
+14,180
+132,935
+370,131
+505,188
+Available-for-sale financial assets:
+- Listed
+487,632
+132,935
+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.
+US Dollars
+Euro
+Hong Kong Dollars
+2014
+RMB million
+31 December
+The Group
+Hong Kong Dollars
+Euro
+Japanese Yen
+US Dollars
+A 5 percent strengthening of Renminbi against the following currencies at 31 December 2014 and 2013 would have increased 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 2013.
+HKD 13,925
+JPY 9,711
+USD 1,534
+EUR -
+JPY 8,662
+HKD -
+USD 29
+EUR-
+USD 4,118
+EUR-
+JPY 9,711
+HKD 13,931
+2013
+million
+2014
+million
+31 December
+31 December
+31 December
+2013
+million
+The Company
+JPY 8,662
+HKD 6
+USD 8,382
+EUR 57
+2014
+million
+31 December
+1,923
+Derivative financial instruments:
+348
+2,312
+183
+6
+548
+548
+1,882
+1,882
+3,172
+548
+2,624
+2,833
+339
+548
+2,285
+6
+339
+- Embedded derivative components of
+the convertible bonds
+Derivative financial instruments:
+Liabilities
+- Derivative financial assets
+1,882
+6,628
+4,316
+4,664
+4,316
+1,882
+- Other derivative financial liabilities
+554
+554
+During the years ended 31 December 2014 and 2013, there were no transfers between instruments in Level 1 and Level 2.
+Oil and gas properties and reserves
+132,935
+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 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.
+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. 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.
+42 ACCOUNTING ESTIMATES AND JUDGEMENTS
+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 2014 and 2013.
+RMB million
+151,852
+149,694
+115,767
+112,362
+2013
+31 December
+31 December
+2014
+RMB million
+Carrying amount
+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 that range from 0.33% to
+6.15% (2013: 0.37% to 7.03%). 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 2014 and 2013:
+(ii) Fair values of financial instruments carried at other than fair value (Continued)
+Fair values (Continued)
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+194
+Financial Statements (International)
+193
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+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.
+(ii) Fair values of financial instruments carried at other than fair value
+1,964
+- Derivative financial assets
+1,964
+million
+3,288
+22,278
+20,358
+1,920
+18,990
+17,070
+1,920
+- Other derivative financial liabilities
+3,288
+3,288
+3,288
+3,288
+- Embedded derivative components of
+the convertible bonds
+Derivative financial instruments:
+Liabilities
+12,805
+9.737
+3,068
+12,622
+9,737
+2,885
+183
+3,288
+At 31 December 2013
+Assets
+Available-for-sale financial assets:
+million
+RMB
+RMB
+RMB
+RMB
+million
+million
+million
+million
+million
+Total
+Level 3
+The Company
+Level 2
+Level 1
+Total
+RMB
+RMB
+RMB
+RMB
+Level 3
+Level 2
+Level 1
+The Group
+Derivative financial instruments:
+- Listed
+million
+Accrued expenses and other payables
+134,403
+2,443
+31 December 2013
+81,800
+69,855
+17,712
+491,111
+660,478
+636,594
+104,571
+104,571
+104,571
+Total
+4,577
+4,577
+198,366
+198,366
+198,366
+35,911
+6,634
+1,301
+103,475
+147,321
+146,110
+4,577
+45,889
+contractual
+Carrying undiscounted
+54,373
+93,030
+92,420
+fellow subsidiaries
+Loans from Sinopec Group Company and
+33,336
+82,326
+14,799
+111,753
+3,942
+107,234
+Within
+Long-term debts
+109,806
+Short-term debts
+RMB million
+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
+111,753
+63,221
+16,411
+75,794
+4,328
+Financial Statements (International)
+189
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+At 31 December 2014, the Group has standby credit facilities with several PRC financial institutions which provide borrowings up to RMB 302,570
+million (2013: RMB 289,106 million) on an unsecured basis, at a weighted average interest rate of 3.51% per annum (2013: 3.12%). At 31
+December 2014, the Group's outstanding borrowings under these facilities were RMB 78,983 million (2013: RMB 44,966 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
+The carrying amounts of cash and cash equivalents, time deposits with financial institutions, trade accounts and bills receivables, derivative financial
+instruments 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 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. The Group performs ongoing credit evaluations of its 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 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.
+Financial Statements (International)
+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.
+market risk; and
+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, trade 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 debts, loans from Sinopec Group Company and fellow subsidiaries, salaries and welfare payable, interest payable, trade
+accounts payable, bills payable, derivative financial instruments and other payables.
+Overview
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
+for the year ended 31 December 2014
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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.
+equity price risk.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Liquidity risk (Continued)
+129,849
+107,787
+75,794
+75,183
+5
+years
+RMB million
+More than
+More than 2
+years but less
+than 5 years
+RMB million
+More than 1
+year but less
+than 2 years
+RMB million
+31 December 2014
+Total
+contractual
+undiscounted
+Carrying
+amount
+Within
+1 year or
+on demand
+RMB million
+cash flow
+RMB million
+RMB million
+Accrued expenses and other payables
+Bills payable
+Trade accounts payable
+fellow subsidiaries
+Loans from Sinopec Group Company and
+Long-term debts
+Short-term debts
+The Group
+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:
+484
+2,613
+35,560
+Trade accounts payable
+Total
+79,350
+100,505
+85,079
+Long-term debts
+77,523
+Short-term debts
+RMB million
+Carrying
+amount
+67,962
+67,595
+contractual
+14,303
+527,016
+490,042
+198,458
+198,458
+198,458
+Accrued expenses and other payables
+2,933
+2,933
+2,933
+Bills payable
+377,156
+undiscounted
+cash flow
+RMB million
+31 December 2013
+2,443
+Bills payable
+35,560
+2,193
+62
+133
+152,007
+152,007
+152,007
+Trade accounts payable
+37,948
+37,645
+subsidiaries
+Loans from Sinopec Group Company and fellow
+18,486
+64,638
+14,118
+More than
+5 years
+RMB million
+More than 2
+years but less
+than 5 years
+RMB million
+More than 1
+year but less
+than 2 years
+RMB million
+79,350
+3,263
+RMB million
+1 year or
+on demand
+Within
+35,911
+2,443
+6,495
+7,090
+102,399
+contractual
+Total
+The Company
+Liquidity risk (Continued)
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+190
+68,896
+84,939
+Carrying undiscounted
+15,283
+630,171
+600,445
+4,526
+83,735
+83,735
+Accrued expenses and other payables
+4,526
+Bills payable
+202,724
+202,724
+202,724
+4,526
+83,735
+461,053
+Within
+amount
+RMB million
+102,399
+102,399
+Trade accounts payable
+49,687
+48,680
+subsidiaries
+Loans from Sinopec Group Company and fellow
+32,051
+61,100
+14,112
+62,653
+3,623
+62,653
+110,886
+75,493
+Long-term debts
+62,079
+Short-term debts
+More than
+5 years
+RMB million
+More than 2
+years but less
+than 5 years
+RMB million
+More than 1
+year but less
+than 2 years
+RMB million
+31 December 2014
+RMB million
+1 year or
+on demand
+cash flow
+RMB million
+191
+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.
+Proved developed and undeveloped reserves (gas) (billion cubic feet)
+Despite the inherent imprecision in these engineering estimates, these estimates are used in determining depreciation expense, impairment loss
+and future dismantlement costs. Depreciation rates are determined based on estimated proved developed reserve quantities (the denominator) and
+capitalised costs of producing properties (the numerator). Producing properties' capitalised costs are amortised based on the units of oil or gas
+produced.
+Proved developed and undeveloped reserves (oil) (million barrels)
+Beginning of year
+2,841
+Revisions of previous estimates
+(38)
+2,843
+(10)
+Improved recovery
+154
+166
+141
+175
+Extensions and discoveries
+Production
+2013
+(326)
+End of year
+2,772
+2,841
+Non-controlling interest in proved developed and undeveloped reserves at the end of year
+Proved developed reserves
+32
+31
+Beginning of year
+2,562
+2,577
+End of year
+2,529
+2,562
+Proved undeveloped reserves
+(333)
+Beginning of year
+2014
+"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.
+(10,969)
+(12,573)
+(51,338)
+(46,649)
+(31,995)
+(35,391)
+65,875
+72,157
+(17,454)
+48,421
+(20,113)
+52,044
+792
+40
+The Group
+49,213
+The results of operations for producing activities for the years ended 31 December 2014 and 2013 are shown above. Revenues include sales to
+unaffiliated parties and transfers (essentially at third-party sales prices) to other segments of the Group. All revenues reported in this table do not
+include royalties to others as there were none. 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014 197
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+198
+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
+The Group's and equity method investments' estimated net proved underground oil and gas reserves and changes thereto for the years ended 31
+December 2014 and 2013 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.
+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.
+52,084
+279
+266
+End of year
+5,439
+5,987
+5,781
+712
+1,291
+728
+712
+289
+275
+289
+22
+27
+26
+5,781
+27
+Beginning of year
+End of year
+Proved developed and undeveloped reserves (gas) (billion cubic feet)
+Beginning of year
+End of year
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+3,130
+2,843
+3,047
+3,130
+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.
+6,730
+6,741
+6,520
+Proved developed and undeveloped reserves (oil) (million barrels)
+6,493
+6,715
+(660)
+243
+279
+6,493
+6,730
+Beginning of year
+175
+Revisions of previous estimates
+(326)
+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
+Equity method investments
+Share of proved developed and undeveloped reserves of joint ventures (oil) (million barrels)
+Beginning of year
+End of year
+Share of proved developed and undeveloped reserves of joint ventures (gas) (billion cubic feet)
+Beginning of year
+End of year
+The Group and share of joint ventures
+48
+35
+711
+714
+(712)
+(52,163)
+(50,567)
+6,520
+210,744
+(i)
+(ii)
+Profit for the year under IFRS*
+116
+(1,093)
+47,933
+119
+(1,207)
+70,289
+Effects of major differences between the shareholders' equity under ASBE and the total equity under IFRS are analysed as follows:
+Note
+Shareholders' equity under ASBE
+Adjustments:
+Government grants
+Safety production fund
+Total equity under IFRS*
+(i)
+(!!)
+Safety production fund
+31 December
+2014
+(1,518)
+31 December
+2013
+RMB million
+623,260
+(1,634)
+645,577
+621,626
+*
+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 2013 and 2014 which have been audited by PricewaterhouseCoopers.
+196 Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
+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, this section provides supplemental information
+on oil and gas exploration and producing activities of the Group at 31 December 2014 and 2013, and for the years then ended in the following six
+separate tables. Tables | 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 estimated net proved reserve quantities; standardised measure of discounted future net cash flows; and
+changes in the standardised measure of discounted cash flows.
+Tables | to VI of supplemental information on oil and gas producing activities of the Group set out below represent information of the Company and its
+consolidated subsidiaries and equity method investments. The oil and gas producing activities of the equity method investee of the Group are relatively
+small and therefore the information are presented with total amount of both internal and external.
+Table 1: Capitalised costs related to oil and gas producing activities
+2014
+RMB million
+647,095
+2013
+Government grants
+RMB million
+48,910
+218,933
+Financial Statements (International)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+42 ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+Impairment for long-lived assets
+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
+and amount of operating costs. 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 and
+amount of operating costs.
+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.
+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.
+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.
+2013
+RMB million
+71,377
+43 PARENT AND ULTIMATE HOLDING COMPANY
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+195
+Financial Statements (International)
+Financial Statements
+(Differences Between the ASBE and IFRS)
+(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 net profit under ASBE and the profit for the year under IFRS are analysed as follows:
+Note
+2014
+Net profit under ASBE
+Adjustments:
+The directors consider the parent and ultimate holding company of the Group as at 31 December 2014 is Sinopec Group Company, a state-owned
+enterprise established in the PRC. This entity does not produce financial statements available for public use.
+RMB million
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+The Group
+Production costs excluding taxes
+Exploration expenses
+Depreciation, depletion, amortisation and impairment losses
+Taxes other than income tax
+Profit before taxation
+Income tax expense
+Results of operation from producing activities
+Equity method investments
+Share of profit for producing activities of joint ventures
+Total of the Group and equity method investments results
+of operations for producing activities
+2014
+RMB million
+Transfers
+2013
+RMB million
+19,158
+73,923
+81,969
+90,627
+101,127
+1,381
+35
+2014
+RMB million
+2013
+RMB million
+69,223
+60,616
+RMB million
+16,704
+Sales
+141,521
+The Group
+Property cost, wells and related equipment and facilities
+Revenues
+569,172
+Supporting equipment and facilities
+191,003
+515,701
+176,883
+Uncompleted wells, equipment and facilities
+78,971
+64,569
+Total capitalised costs
+839,146
+757,153
+Accumulated depreciation, depletion, amortisation and impairment losses
+Net capitalised costs
+(411,450)
+158,317
+427,696
+(361,859)
+Share of costs of exploration and development of joint ventures
+Equity method investments
+Total costs incurred
+Development
+Exploration
+Table III: Results of operations related to oil and gas producing activities
+Table II: Costs incurred in oil and gas exploration and development
+14,528
+15,277
+Share of net capitalised costs of joint ventures
+Equity method investments
+395,294
+The Group
+CONFIRMATION FROM THE DIRECTORS AND SENIOR MANAGEMENT
+Senior Management
+Confirmation from the Directors and
+Documents for Inspection
+Table VI: Changes in the standardised measure of discounted cash flows
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+The Group
+Sales and transfers of oil and gas produced, net of production costs
+Net changes in prices and production costs
+Net change due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+201
+According to the relevant provisions and requirements of the PRC Securities Law and Management
+Rules for Information Disclosure by Listed Companies promulgated by the CSRC, as the Board
+directors and senior management of Sinopec Corp., we have carefully reviewed the 2014 annual
+report of Sinopec Corp. and concluded that this annual report truly and objectively represents
+Sinopec Corp.'s business performance in 2014, it contains no false representations, misleading
+statements or material omissions and complies with the requirements of the CSRC and other
+relevant regulatory authorities.
+焙
+转光
+傅成玉
+Fu Chengyu
+Previously estimated development costs incurred during the year
+Accretion of discount
+Zhang Yaocang
+Li Chunguang
+建华 王志刚
+Zhang Jianhua
+Wang Zhigang
+Cao Yaofeng
+Dai Houiang
+姬
+蠢吧
+Signatures of the Directors and Senior Management:
+Wang Tianpu
+(128,182)
+(25,427)
+Others
+China Petroleum & Chemical Corporation
+Liu Yun
+ENGLISH NAME
+中国石油化工股份有限公司
+STATUTORY NAME
+CORPORATE INFORMATION
+Corporate Information
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+199
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+(3,765)
+Net change in income taxes
+2,058
+6,262
+62,380
+17,831
+22,286
+(10,478)
+(1,453)
+75,336
+(131,379)
+(33,245)
+68,147
+2013
+RMB million
+RMB million
+2014
+Net change for the year
+15,790
+60,425
+Equity method investments
+Ma Weihua
+513,459
+Standardised measure of discounted future net cash flows
+(288,341)
+(288,393)
+799,742
+801,852
+(145,198)
+(46,784)
+(902,692)
+1,894,416
+1,807,330
+(823,575)
+(46,684)
+(135,219)
+10% annual discount for estimated timing of cash flows
+Undiscounted future net cash flows
+Future income tax expenses
+Future development costs
+Future production costs
+Future cash flows
+The Group
+RMB million
+RMB million
+2013
+2014
+The information provided does not represent management's estimate of the Group's 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 2014 and 2013 and should not be
+relied upon as an indication of the Group's future cash flows or value of its oil and gas reserves.
+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. 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% midperiod 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.
+Table V: Standardised measure of discounted future net cash flows
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+CHINESE ABBREVIATION
+511,401
+Discounted future net cash flows attributable to non-controlling interests
+4,815
+5,149
+Jiang Xiaoming
+焦方正
+Andrew Y. Yan
+Bao Guoming
+Zhang Haichao
+Jiao Fangzheng
+28
+紫色蝴
+江正洪
+Wang Xinhua
+Lei Dianwu
+Ling Yiqun
+Jiang Zhenghong
+Chen Xiaojin
+Chang Zhenyong
+20 March 2015
+202 Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+This annual report is published in both English
+and Chinese. Should any conflict regarding
+the meaning arises, the Chinese version shall
+prevail.
+中国石化
+China Petroleum & Chemical Corporation (Sinopec Corp.)
+No. 22 Chaoyangmen North Street
+Chaoyang District
+OPEC
+Beijing 100728 PRC
+Printed on environmentally friendly paper
+23,261
+19,650
+Standardised measure of discounted future net cash flows
+Huang Wensheng
+中国石化
+No.22 Chaoyangmen North Street,
+Sinopec Corp.
+Address
+SINOPEC CORP.
+Domestic Auditors
+NAMES AND ADDRESSES OF AUDITORS OF
+Stock name : SINOPEC CORP
+Stock code : SNP
+London Stock Exchange
+New York Stock Exchange
+Stock name : SINOPEC CORP
+Stock code
+: SNP
+: Sinopec Corp
+: 0386
+ADRs:
+Stock code
+Stock name
+Hong Kong Stock Exchange
+H Shares:
+Stock code : 600028
+: SINOPEC CORP
+Stock name
+Shanghai Stock Exchange
+A Shares:
+PLACES OF LISTING OF SHARES, STOCK
+NAMES AND STOCK CODES
+London E14 5LB, U.K.
+Canada Square, Canary Wharf
+Citigroup Centre
+Citibank, N.A.
+The UK:
+United States of America
+New York NY 10013
+388 Greenwich St., 14th Floor
+Citibank, N.A.
+: PricewaterhouseCoopers
+Zhong Tian LLP
+11th Floor
+The US:
+PricewaterhouseCoopers,
+Huangpu District,
+Beijing, PRC, 20 March 2015
+Chairman
+Fu Chengyu
+By Order of the Board
+d) All the original 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
+b) The original copies of financial statements
+and consolidated financial statements as
+of 31 December 2014 prepared under
+IFRS and ABSE, signed by Mr.Fu Chengyu,
+the Chairman, Mr. Li Chunguang, director
+and President, Mr. Wang Xinhua, the Chief
+Financial Officer and head of the financial
+department of Sinopec Corp.;
+a) The original copies of annual reports signed
+by Mr.Fu Chengyu, the Chairman;
+The following documents will be available
+for inspection during normal business hours
+after 20 March 2015 (Friday) 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:
+DOCUMENTS FOR INSPECTION
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+200
+Since Sinopec Corp. listed, no changes have
+occurred in the controlling shareholder.
+4 Changes of controlling shareholders since
+its listing
+No changes in main business of the
+Company since listing.
+3 Changes in the Sinopec Corp.'s main
+business since its listing
+Please refer to the 2013 annual report of
+Sinopec Corp.
+2 Inquiry for the first registration of Sinopec
+Corp.
+In the year of 2014, the registration of
+Sinopec Corp. altered twice. On 31 July 2014
+Sinopec Corp. changed business scope and
+registered capital; On 2 September 2014
+added the expiration date of the business
+scope. Registered capital of Sinopec Corp.
+changed to RMB 116,721,086,804.
+Alteration of registration during the report
+period
+1
+ALTERATION OF REGISTRATION OF SINOPEC
+CORP. DURING THE REPORTING PERIOD
+Prince's Building,
+Central, Hong Kong
+: 22nd Floor,
+: PricewaterhouseCoopers
+Overseas Auditors
+Address
+Shanghai, PRC
+2 Corporate Avenue,
+202 Hu Bin Road,
+Beijing, PRC
+Chaoyang District
+Board Secretariat
+Hong Kong
+Wanchai
+1 Harbour Road
+Convention Plaza
+20th Floor, Office Tower
+PLACE OF BUSINESS IN HONG KONG
+:ir@sinopec.com
+http://www.sinopec.com
+E-mail addresses
+Website
+: 86-10-59960386
+Fax
+: 86-10-59960028
+Tel.
+Postcode
+: 100728
+Beijing, PRC
+No.22 Chaoyangmen North Street,
+Chaoyang District
+REGISTERED ADDRESS AND PLACE OF
+BUSINESS
+REPRESENTATIVE ON SECURITIES MATTERS
+Mr. Zheng Baomin
+Mr. Huang Wensheng
+SECRETARY TO THE BOARD
+Mr. Huang Wensheng
+Mr. Li Chunguang
+AUTHORISED REPRESENTATIVES
+Mr. Fu Chengyu
+LEGAL REPRESENTATIVE
+INFORMATION DISCLOSURE AND PLACES
+FOR COPIES OF RELATIVE REPORTS
+No change during the reporting period
+LEGAL ADVISORS
+China Petroleum & Chemical Corporation
+The PRC:
+COPIES OF THIS ANNUAL REPORT
+ARE AVAILABLE AT
+United States of America
+New York NY 10013
+Citibank, N.A.
+DEPOSITARY FOR ADRS
+The US:
+R1712 1716, 17th Floor, Hopewell Centre
+183 Queen's Road East
+Hong Kong
+Hong Kong Registrars Limited
+H Shares:
+Shanghai, PRC
+China Securities Registration and Clearing
+Company Limited Shanghai Branch Company
+36th Floor, China Insurance Building
+166 Lujiazui East Road
+A Shares:
+ENGLISH ABBREVIATION
+REGISTRARS
+Skadden, Arps, Slate, Meagher & Flom LLP
+42/F, Edinburgh Tower, The Landmark
+U.S.A.
+Central, Hong Kong
+15 Queen's Road
+23rd Floor, Gloucester Tower
+Herbert Smith Freehills
+Hong Kong:
+Postcode: 100020
+Beijing PRC
+Chaoyang District
+No. 5, Dong San Huan Central Road
+20th Floor, Fortune Financial Centre
+People's Republic of China:
+Haiwen & Partners
+15 Queen's Road, Central, Hong Kong
+388 Greenwich St., 14th Floor
+(1.7)
+52,823
+9,745
+29,753
+35,633
+(2,164)
+631
+(2,982)
+(3,686)
+2,179
+1,251
+(5,632)
+(1,597)
+65,481
+96,453
+47,430
+67,179
+Operating profit: In 2014, the operating profit of the Company was RMB 65.5 billion, representing a decrease of RMB 31.0 billion as compared
+with 2013. This was mainly because of sharp drop of crude oil price, along with the weakness of petrochemical market resulted in decline in
+prices of company's major products.
+Net profit: In 2014, the net profit attributable to the equity shareholders of the Company was RMB 47.4 billion, representing a decrease of RMB
+19.7 billion or 29.4% comparing with 2013.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+27
+Management's Discussion
+and Analysis
+Management's Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+(2) Financial data prepared under ASBE
+(1,982)
+Total assets
+54,476
+2,880,311
+Marketing and Distribution Segment
+Chemicals Segment
+Corporate and Others
+Elimination of inter-segment sales
+Consolidated operating income
+Operating profit/(loss)
+Exploration and Production Segment
+Refining Segment
+Marketing and Distribution Segment
+Chemicals Segment
+Corporate and Others
+Elimination of inter-segment sales
+Financial expenses, investment income and loss from changes in fair value
+Consolidated operating profit
+Net profit attributable to equity shareholders of the Company
+227,597
+1,273,095
+242,107
+1,311,269
+1,502,414
+1,476,606
+427,485
+437,587
+1,310,236
+1,359,109
+(1,889,105)
+(1,927,175)
+2,825,914
+46,309
+Refining Segment
+Long-term liabilities
+As at 31
+Turnover and other operating revenues
+Other operating revenues
+2,825,914
+2,880,311
+(1.9)
+2,781,641
+44,273
+2,833,247
+(1.8)
+47,064
+(5.9)
+Operating expenses
+Purchased crude oil, products, and operating supplies and expenses
+Selling, general and administrative expenses
+(2,752,427)
+(2,783,526)
+(1.1)
+(2,334,399)
+(2,371,858)
+(1.6)
+(68,374)
+(69,928)
+(2.2)
+Depreciation, depletion and amortisation
+(90,097)
+(81,265)
+Turnover
+Shareholders' equity
+(%)
+Years ended 31 December
+2014
+2013
+(RMB millions)
+December of 2014
+RMB millions
+As at 31
+December of 2013
+RMB millions
+Change
+1,451,368
+200,016
+647,095
+1,382,916
+68,452
+12,182
+23,835
+187,834
+623,260
+Total assets: at the end of 2014, the Company's total assets were RMB 1,451.4 billion, representing an increase of RMB 68.5 billion compared
+with that at the end of 2013. This was mainly due to: a) inventory decreased by RMB 33.7 billion because of the decrease in crude oil and
+refined oil product prices; b) bills receivable decreased by RMB 14.8 billion; c) accounts receivable increased by RMB 22.4 billion; d) other
+account receivable (net) increased by RMB 16.1 billion caused by increased receivables under derivative financial instruments yet to be due;
+e) implementation of planned investment activities; of which, property, plant and equipment (net) increased by RMB 33.9 billion, intangible
+assets increased by RMB 18.4 billion, construction in progress increased by RMB 17.0 billion, and long-term equity investments increased by
+RMB 5.3 billion.
+Long-term liabilities: at the end of 2014, the Company's long-term liabilities were RMB 200.0 billion, representing an increase of
+RMB 12.2 billion compared with that at the end of 2013. This was mainly attributable to: a) long-term borrowings increased by
+RMB 21.0 billion; b) Provisions increased by RMB 3.6 billion due to the provision for future dismantling costs of oil and gas properties;
+c) debentures payable decreased by RMB 15.6 billion.
+Shareholders' equity: at the end of 2014, the shareholders' equity of Sinopec Corp. was RMB 647.1 billion, representing an increase of RMB
+23.8 billion as compared with that at the end of 2013. This was mainly attributable to: a) capital reserves increased by RMB 11.8 billion due
+to partial execution of convertible bonds issued in 2011; b) retained earnings increased by RMB 16.2 billion; c) other comprehensive income
+attributable to shareholders of the Company and minority interests decreased by RMB 9.3 billion.
+(3) The results of the principal operations by segments
+Operation
+income
+Operation
+cost
+Segment
+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 2014, the Company's turnover and other operating revenues were RMB 2,825.9 billion, decreased by 1.9% compared with that of 2013. The
+operating profit was RMB 73.5 billion, representing a year on year decrease of 24.1%.
+The following table sets forth the main revenue and expenses from the Company's consolidated financial statements:
+(RMB millions)
+Change
+10.9
+Exploration and Production Segment
+2013
+RMB millions
+(5) Research & development expenses
+and expenditures on environmental
+protection
+Research & development expenses
+refer to the expenses recognised as
+expenditures when they occur. In
+2014, the expenditure for research &
+development was RMB 5.62 billion.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+25
+Management's Discussion
+and Analysis
+Management's
+Discussion
+and Analysis
+26
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+(6) Measurement of fair values of derivatives and relevant system
+Items relevant to measurement of fair values
+Items
+Financial assets
+1. Derivative financial assets
+2. Available-for-sale financial assets
+3. Cash flow hedging
+Subtotal of financial assets
+Financial liabilities
+Totals
+Beginning
+of the year
+87
+1,964
+4,577
+Please refer to "Capital Expenditures"
+in the "Business Review and Prospects"
+section of this report.
+6,628
+(4) Capital Expenditures
+(3) Contingent Liabilities
+Non-current assets were RMB 1,091.2
+billion, representing an increase of RMB
+81.3 billion as compared with that at the
+(2) Cash Flow
+end of 2013. This was mainly due to the
+implementation of planned investment
+activities; of which, property, plant and
+equipment (net) increased by RMB 33.9
+billion, construction in progress increased
+by RMB 17.0 billion, and long-term
+prepayments and other assets increased
+by RMB 19.2 billion caused by newly
+added land use right and service station
+operating authorisation.
+The Company's total liabilities were RMB
+805.8 billion, representing an increase of
+RMB 44.5 billion compared with that at
+the end of 2013, of which:
+Current liabilities were RMB 604.3
+billion, representing an increase of RMB
+32.4 billion as compared with that at the
+end of 2013. This was mainly because
+short-term loans increased by RMB 14.3
+billion, accrued expenses and other
+payables increased by RMB 24.5 billion
+caused by increase in derivative financial
+instruments yet to be due, delayed
+payment of investment and other advance
+accounts.
+Non-current liabilities were RBM 201.5
+billion, representing a increase of RMB
+12.1 billion compared with that at the
+end of 2013. This was mainly because of
+the increase of long-term debts by RMB
+5.3 billion, estimated liabilities by RMB
+3.6 billion due to the provision for future
+dismantling of oil and gas assets.
+Total equity attributable to owners of
+the company was RMB 593.0 billion,
+representing an increase of RMB 24.2
+billion compared with that at the end
+of 2013, which was mainly due to the
+increase in reserves.
+The following table sets forth the major items in the consolidated cash flow statements for 2014 and 2013.
+Major items of cash flows
+Net cash generated from operating activities
+Net cash used in investing activities
+Net cash (used in)/generated from financing activities
+(Decrease)/increase of cash and cash equivalents
+In 2014, the net cash generated from
+operating activities of the company
+was RMB 148.3 billion, representing a
+decrease of RMB 3.6 billion as compared
+with 2013. This was mainly attributable
+to the decrease in profit before taxation
+and improvement on working capital.
+In 2014, the net cash used in investing
+activities was RMB 132.6 billion,
+representing a decrease of RMB 46.1
+billion over 2013. This was mainly
+attributable to the stricter control on
+investment, in which capital expenditure
+and exploration expenses decreased by
+RMB 30.6 billion, oversea acquisitions,
+investments in associates and joint
+ventures decreased by RMB 17.1 billion.
+compared with 2013.
+In 2014, the net cash outflow generated
+from the Company's financing activities
+was RMB 21.4 billion, representing a
+decrease of RMB 52.9 billion against
+2013. The year on year cash decrease
+mainly caused by proceeds from issuing
+shares, contributions to subsidiaries
+from non-controlling interests and
+interest bearing debt financing, which
+negatively affected cash from financing
+activities by RMB 19.4 billion, RMB 8.6
+billion and RMB 23.5 billion respectively.
+Unit: RMB millions
+Year ended 31 December
+2014
+148,347
+(132,633)
+2013
+151,893
+(178,740)
+(21,421)
+(5,707)
+31,519
+4,672
+Please refer to "Material Guarantee
+Contracts and Their Performances" in the
+"Significant Events" section.
+Operating income
+(3,172)
+Profits and
+losses from
+variation of fair
+values in the
+current year
+5. Cash flow hedging
+4. Held-to-maturity investments
+Subtotal of financial assets
+Financial liabilities*
+*:
+87
+53,362
+82
+4,577
+58,108
+(211,817)
+376
+376
+84
+74
+74
+(5,458)
+Unit: RMB millions
+End of the year
+1,222
+95,583
+152
+11,400
+108,357
+(302,453)
+The financial assets and liabilities held by the Company in foreign currencies were mostly those held by its overseas subsidies, which were recognised in their
+functional currencies.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+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 on page 196 of this report.
+(1) Under ASBE, the operating income and operating profit or loss by reportable segments were as follows:
+Year ended 31 December
+2014
+RMB millions
+3. Available-for-sale financial assets
+3,456
+2. Loans and receivables
+Impairment loss
+provision of the
+current year
+Accumulated
+variation of fair
+values recorded
+as equity
+Impairment loss
+provision of the
+current year
+376
+(1,658)
+376
+(1,658)
+(4,611)
+(5,458)
+(4,235)
+(7,116)
+Unit: RMB millions
+End of the year
+1,222
+183
+11,400
+12,805
+(22,278)
+(9,473)
+Information concerning financial assets and liabilities held in foreign currencies;
+Financial assets*
+Beginning
+of the year
+Profits and
+losses from
+variation of fair
+values of the
+current year
+Accumulated
+variation of fair
+values recorded
+into equity
+1. Derivative financial assets
+Exploration expenses (including dry holes)
+(10,969)
+(12,573)
+1,698
+(0.7)
+Most of crude oil and a portion of natural gas produced by the Company were internally used for refining and chemical production, with the
+remaining sold to other customers. In 2014, the turnover from crude oil, natural gas and other upstream products sold externally amounted to
+RMB 69.6 billion, an increase of 14.3% over 2013. The change was mainly due to the increase in sales volume of crude oil and increase in sales
+volume and prices of natural gas in 2014.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+19
+Management's Discussion
+and Analysis
+Management's Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+In 2014, petroleum products (mainly
+consisting of oil products and other
+refined petroleum products) sold by
+Refining Segment and Marketing and
+Distribution Segment achieved external
+sales revenues of RMB 1,633.9 billion,
+accounting for 58.7% of the Company's
+turnover and other operating revenues,
+representing a decrease of 2.8% over
+2013 mainly due to the decline of various
+refinery products prices and sales volume
+decrease of other refined petroleum
+products which offset the effect of
+increase in gasoline, diesel and kerosene
+sales volumes. The sales revenue of
+gasoline, diesel and kerosene was RMB
+1,342.0 billion, representing an increase
+of 0.7% over 2013, and accounting
+for 82.1% of the total sales revenue of
+petroleum products. Turnover of other
+refined petroleum products was RMB
+291.9 billion, representing a decrease of
+16.0% compared with 2013, accounting
+for 17.9% of the total sales revenue of
+petroleum products.
+The Company's external sales revenue
+of chemical products was RMB 357.0
+billion, representing a decrease of 4.6%
+over 2013, accounting for 12.8% of
+the Company's total turnover. This was
+mainly due to the decline of chemical
+product prices which offset the sales.
+volume increase of basic chemical
+feedstock and synthetic resin.
+(2) Operating expenses
+In 2014, the Company's operating
+expenses were RMB 2,752.4 billion,
+decreased by 1.1% compared with 2013.
+The operating expenses mainly consisted
+of the following:
+Purchased crude oil, products and
+operating supplies and expenses were
+RMB 2,334.4 billion, representing a
+decrease of 1.6% over the same period of
+2013, accounting for 84.8% of the total
+operating expenses, of which:
+Crude oil purchasing expenses were
+RMB 837.4 billion, representing a
+decrease of 4.2% over the same
+period of 2013. Throughput of crude
+oil purchased externally in 2014 was
+177.29 million tonnes (excluding the
+volume processed for third parties),
+representing a decrease of 0.6% over
+the same period of 2013. The average
+cost of crude oil purchased externally
+was RMB 4,724 per tonne, representing
+a drop of 3.6% against 2013.
+The Company's other purchasing
+expenses were RMB 1,497.0 billion,
+remains basically the same with that
+of 2013.
+Selling, general and administrative
+expenses of the Company totaled RMB
+68.4 billion, representing a decrease of
+2.2% over 2013.
+Depreciation, depletion and amortization
+expenses of the Company were RMB
+90.1 billion, representing an increase of
+10.9% as compared with 2013. This was
+mainly due to the increased investment
+in fixed assets.
+Exploration expenses were RMB 11.0
+billion, representing a decrease of 12.8%
+compared with 2013, mainly due to the
+Company's optimisation of exploration
+investment, improvement in exploration
+success rate as well as effective reduction
+in exploration expenses.
+Personnel expenses were RMB 57.2
+billion, representing an increase of 3.4%
+over 2013.
+Taxes other than income tax were RMB
+191.2 billion, representing an increase
+of 0.3% compared with 2013. This was
+mainly due to the increase of RMB 3.4
+billion in consumption tax as a result
+of increased consumption tax rate, as
+well as the RMB 0.6 billion increase in
+city construction tax and educational
+surcharge; meanwhile the special oil
+income levy decreased by RMB 3.4 billion
+as a result of decreased oil price.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+28
+Gross profit margin = (operation income - operation cost, tax and surcharges)/operation income.
+1,686
+(0.8)
+(47.0)
+598
+7,223
+8,167
+(11.6)
+Synthetic resin
+11,584
+10,696
+8.3
+9,684
+9,631
+0.6
+Synthetic fibre
+1,430
+1,488
+(3.9)
+9,436
+10,356
+(8.9)
+Synthetic rubber
+1,205
+1,346
+(10.5)
+10,554
+12,214
+(13.6)
+Chemical fertiliser
+1,129
+(5.5)
+(1.1)
+7.3
+1,476,606
+Marketing and Distribution
+(1.0)
+(2.5)
+(2.9)
+1.3
+1,100,853
+1,273,095
+(2.4)
+(0.1)
+(6.0)
+35.2
+115,575
+227,597
+Exploration and Production
+Refining
+basis (%)
+basis (%)
+basis (%)
+year-on-year
+Increase/
+(decrease) of
+gross profit
+margin on a
+Increase of
+operation
+cost on a
+year-on-year
+year-on-year
+Increase/
+(decrease) of
+operation
+income on a
+Gross profit
+margin
+(%)*
+(RMB millions) (RMB millions)
+1,391,258
+(1.9)
+5.6
+(1.6)
+2,429,017
+2,825,914
+Total
+N/A
+N/A
+N/A
+N/A
+(1,891,283)
+(1,889,105)
+Elimination of inter-segment sales
+0.1
+(3.7)
+(3.6)
+0.5
+1,303,137
+1,310,236
+Corporate and Others
+(0.2)
+(2.1)
+(2.3)
+4.0
+409,477
+427,485
+Chemicals
+(0.1)
+(1.7)
+6,856
+6,479
+Monomer and polymer for synthetic fibre
+(31.1)
+Income tax expense
+(17,571)
+(24,763)
+(29.0)
+Profit for the year
+47,933
+70,289
+(31.8)
+Attributable to:
+Non-controlling interests
+Equity shareholders of the Company
+46,466
+1,467
+66,132
+(29.7)
+4,157
+(64.7)
+(1) Turnover and other operating revenues
+In 2014, the Company's turnover was RMB 2,781.6 billion, representing a decrease of 1.8% over 2013. This was mainly attributable to the
+decline of crude oil and petrochemical products prices.
+The following table sets forth the external sales volume, average realised prices and respective rates of change of the Company's major products
+in 2014 and 2013:
+Sales volume
+(thousand tonnes)
+Years ended 31 December
+Change (%)
+Average realised price
+(RMB/tonne, RMB/thousand cubic meters)
+Years ended 31 December Change (%)
+2014
+95,052
+2013
+65,504
+148.5
+(12.8)
+Personnel expenses
+(57,233)
+(55,353)
+3.4
+Taxes other than income tax
+(191,202)
+(190,672)
+0.3
+Other operating expense, net
+(153)
+(1,877)
+(91.8)
+Operating profit
+73,487
+96,785
+(24.1)
+Net finance costs
+(14,229)
+(4,246)
+235.1
+Investment income and share of profits less losses from associates
+and jointly controlled entities
+6,246
+2,513
+Profit before taxation
+2014
+2013
+Crude oil
+7.7
+8,339
+8,498
+(1.9)
+Diesel
+102,724
+99,855
+2.9
+6,647
+7,050
+(5.7)
+Kerosene
+21,845
+20,162
+8.3
+5,710
+6,116
+(6.6)
+Basic chemical feedstock
+27,277
+25,838
+5.6
+6,151
+6,870
+(10.5)
+59,482
+64,083
+Gasoline
+18.9
+8,864
+7,604
+16.6
+4,008
+4,253
+(5.8)
+Domestic
+8,780
+7,582
+15.8
+4,001
+4,252
+Current assets were RMB 360.1 billion,
+representing a decrease of RMB 12.9
+billion compared with that at the end of
+2013. The major changes came from the
+amount decrease in inventories by RMB
+33.7 billion, bill receivable by RMB 14.8
+billion, and increase in account receivable
+by RMB 22.4 billion, prepaid expenses
+and other current assets by RMB 18.3
+billion caused by increased receivables
+under derivative financial instruments yet
+to be due.
+(5.9)
+84
+22
+281.8
+4,691
+4,678
+0.3
+Natural gas (million cubic meters)
+16,661
+15,907
+4.7
+1,589
+1,336
+Oversea
+As at 31 December 2014, the Company's
+total assets were RMB 1,451.4 billion,
+representing an increase of RMB 68.5
+billion compared with that at the end of
+last year, of which:
+Items
+23,951
+Chemicals Segment
+Operating revenues
+Operating expenses
+Operating (loss)/profit
+Corporate and others
+Operating revenues
+Operating expenses
+Operating loss
+Elimination of inter-segment profit
+29,449
+35,143
+(16.2)
+427,485
+429,666
+(2,181)
+437,587
+436,719
+(2.3)
+(1.6)
+868
+-
+1,310,236
+1,311,299
+1,359,109
+1,362,521
+(3.6)
+(3.8)
+(1,063)
+2,179
+(3,412)
+794
+(68.8)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+21
+Management's Discussion
+and Analysis
+Operating profit
+(1.4)
+1,467,271
+1,447,157
+2014
+of inter-segment sales
+Year ended 31 December
+after elimination
+operating revenue
+of consolidated
+As a percentage
+(%)
+2013
+(%)
+2014
+of inter-segment sales
+Year ended 31 December
+operating revenue
+before elimination
+of consolidated
+As a percentage
+Management's Discussion
+RMB millions
+Operating revenues
+Year ended 31 December
+2014
+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.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+20
+20
+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.
+(8) Profit attributable to equity shareholders
+of Sinopec Corp. was RMB 46.5 billion,
+representing a decrease of 29.7%
+compared with 2013.
+interests of the Company was RMB 1.5
+billion, representing a decrease of RMB
+2.7 billion comparing with 2013.
+(7) Profit attributable to non-controlling
+(6) Tax expense was RMB 17.6 billion,
+representing a decrease of RMB 7.2
+billion as compared with 2013.
+(5) Profit before taxation was RMB 65.5
+billion, representing a decrease of 31.1%
+as compared with 2013.
+(4) Net finance costs were RMB 14.2 billion,
+representing an increase of 235.1%
+over 2013. Of which: the net interest
+expense of the Company was RMB 9.4
+billion, representing an increase of RMB
+0.4 billion over 2013; gains from foreign
+exchange decreased by RMB 2.9 billion
+as compared with 2013 due to the RMB
+appreciation slower than that in 2013;
+for the convertible bonds issued by the
+Company, unrealised loss from fair value
+change of the period was RMB 4.6 billion,
+compared with unrealised gains of RMB
+2 billion in the same period of 2013.
+(3) Operating profit was RMB 73.5 billion,
+representing a decrease of 24.1%
+compared with 2013.
+Other operating expense (net amount)
+were RMB 0.2 billion.
+2013
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+(1) Exploration and Production Segment
+Almost all of the 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 operations. Most of the natural
+gas and a small portion of crude oil were
+sold externally to other customers.
+7,784
+7,879
+(1.2)
+67,945
+72,402
+(6.2)
+6,288
+6,571
+(4.3)
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+11,944
+3.9
+5,705
+6,116
+11.8
+(6.7)
+36,353
+3.7
+5,333
+5,722
+(6.8)
+49,901
+51,207
+(2.6)
+3,943
+4,136
+(4.7)
+The sales revenues of refined petroleum
+products other than gasoline, diesel,
+kerosene and chemical feedstock were
+RMB 196.8 billion, representing a
+decrease of 7.1% against 2013.
+In 2014, the segment's operating
+expenses were RMB 1,275.0 billion,
+representing a decrease of 2.1% against
+2013, mainly attributable to the decline.
+in procurement cost of crude oil.
+In 2014, the average processing cost
+for crude oil was RMB 4,695 per tonne,
+representing a decrease of 3.3 % over
+2013. Total crude oil processed was
+37,690
+(%)
+42,759
+(%)
+Operating expenses
+In 2014, the operating revenues of
+this segment were RMB 227.6 billion,
+representing a decrease of 6.0% over
+2013. This was mainly attributable to
+the decrease in crude oil price and
+sales volume.
+In 2014, the segment sold 43.37 million
+tonnes of crude oil, representing a
+decrease of 2.0% over 2013. Natural
+gas sales volume was 17.98 billion cubic
+meters, representing an increase of 5.8%
+over 2013. Average realised price of
+crude oil and natural gas were RMB 3,944
+per tonne and RMB 1,599 per thousand
+cubic meters, representing a decrease
+of 6.0% and an increase of 17.6%
+respectively over 2013.
+In 2014, the operating expenses of
+this segment were RMB 180.5 billion,
+representing a decrease of 3.6% over
+2013. The decrease was mainly due to
+the following:
+•
+Exploration expenses decreased
+by RMB 1.6 billion owing to
+the optimisation of exploration
+investment;
+Special oil income levy and resources
+tax dropped by RMB 3.4 billion owing
+to decline of crude oil price;
+Other operation expenses decreased
+by 6.1 billion due to the decrease of
+raw material sales expenses which is
+related to the drop of sales revenue.
+Depreciation, depletion and amortization
+increased by RMB 4.8 billion.
+In 2014, the oil and gas lifting cost was
+RMB 804 per tonne, representing a
+year-on-year increase of 0.5%, and the
+deceleration in cost increase is mainly
+attributable to the strict control over costs.
+In 2014, the operating profit of the
+exploration and production segment were
+RMB 47.1 billion, representing a decrease
+of 14.1% as compared with 2013 which
+is mainly attributable to decrease of
+crude oil price.
+(2) Refining Segment
+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 to
+both domestic and overseas customers.
+In 2014, the operating revenues of this
+segment totaled RMB 1,273.1 billion,
+representing a decrease of 2.9% against
+2013. This was mainly attributable to the
+decreased price of refined oil products.
+47,786
+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 2014 and 2013.
+Diesel
+Kerosene
+Chemical feedstock
+Other refined petroleum products
+In 2014, sales revenues of gasoline
+was RMB 372.0 billion, representing an
+increase of 10.4% against 2013.
+The sales revenues of diesel were RMB
+427.2 billion, representing a decrease of
+10.2% against 2013.
+The sales revenues of kerosene were RMB
+70.8 billion, representing a decrease of
+3.1% against 2013.
+The sales revenues of chemical feedstock
+were RMB 201.0 billion, representing a
+decrease of 3.4% compared with 2013.
+Sales Volume (thousand tonnes)
+Year ended 31 December
+2014
+2013
+Average realised price (RMB/tonne)
+Change Year ended 31 December
+(%)
+2014
+Change
+2013
+Gasoline
+223.88 million tonnes (excluding volume
+processed for third parties), representing
+an increase of 0.3% over 2013. The total
+cost of crude oil processed was RMB
+1,051.2 billion, representing a decrease
+of 3.0% against 2013.
+2013
+Operating revenues
+*: Other operating revenues are included.
+100.0
+100.0
+100.0
+100.0
+4,715,019 4,852,486
+(1,889,105) (1,972,175)
+2,825,914 2,880,311
+Consolidated operating revenues
+Elimination of inter-segment sales
+of inter-segment sales
+Operating revenue before elimination
+28.0
+27.8
+1,359,109
+1,310,236
+Operating revenues
+13.2
+12.5
+640,224
+587,663
+Inter-segment sales
+25.0
+25.6
+14.8
+15.3
+718,885
+722,573
+External sales*
+9.1
+9.0
+The following table sets forth the operating revenues, operating expenses and operating profit/(loss) by each segment before elimination of the inter-
+segment transactions for the periods indicated, and the percentage change of 2014 compared to 2013.
+Year ended 31 December
+2014
+RMB millions
+2013
+Change
+1,502,414
+1,476,606
+Operating revenues
+Marketing and Distribution Segment
+8,599
+(1,954)
+Operating (loss)/profit
+(2.1)
+1,302,670
+1,275,049
+Operating expenses
+(2.9)
+1,311,269
+1,273,095
+437,587
+Operating revenues
+54,793
+47,057
+(3.6)
+187,314
+180,540
+Refining Segment
+Operating profit
+Operating expenses
+(6.0)
+242,107
+227,597
+Operating revenues
+Exploration and Production Segment
+(%)
+(14.1)
+427,485
+1.2
+1.3
+22.9
+23.3
+1,111,004
+1,092,244
+Inter-segment sales
+7.0
+6.4
+4.1
+3.8
+200,265
+180,851
+External sales*
+5.0
+4.8
+Operating revenues
+242,107
+3.3
+3.0
+158,618
+141,544
+2.9
+3.0
+1.7
+1.8
+83,489
+86,053
+Refining Segment
+Inter-segment sales
+External sales*
+Exploration and Production Segment
+227,597
+(%)
+1,273,095
+27.1
+55,999
+62,208
+13.2
+12.9
+7.9
+7.7
+381,588
+365,277
+Corporate and Others
+Inter-segment sales
+Operating revenues
+External sales*
+Chemicals Segment
+30.9
+31.3
+1,311,269
+1,502,414
+0.1
+6,330
+5,446
+1,476,606
+Operating revenues
+Inter-segment sales
+51.9
+52.1
+30.8
+31.2
+1,496,084
+1,471,160
+External sales*
+Marketing and Distribution Segment
+27.0
+0.1
+In 2014, refining gross margin was RMB
+213.0 per tonne, representing a decrease
+of RMB 48.1 per tonne compared with
+2013. This was mainly attributable
+to continuous decline of international
+crude oil price, as well as relatively long
+time cycle from purchased feedstock
+to products for sale which resulted in
+narrowed spread between prices of
+feedstock and products.
+12,410
+and Analysis
+(22.8)
+4,016
+4,333
+(7.3)
+In 2014, the operating expenses of the
+segment were RMB 1,447.2 billion,
+representing a decrease of RMB 20.1
+billion or 1.4% as compared with that in
+2013. This was mainly due to decreased
+procurement costs resulting from the
+decrease of oil products price.
+In 2014, 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) were RMB 192.8 per
+tonne, representing a decrease of 1.7%
+compared with that of 2013.
+In 2014, the operating profit of
+this segment was RMB 29.4 billion,
+representing a decrease of 16.2%
+compared with 2013, mainly attributable.
+to eleven downward adjustments on
+domestic oil product prices in second half
+year of 2014, which imposed impacts via
+digesting high cost inventory.
+(4) Chemicals Segment
+The business activities of the chemicals
+segment include purchasing chemical
+feedstock from refining segment and
+third parties, producing, marketing and
+distributing petrochemical and inorganic
+chemical products.
+In 2014, the operating revenues of the
+chemicals segment were RMB 427.5
+billion, representing a decrease of 2.3%
+as compared with that of 2013, which
+was mainly attributable to the drop of
+chemical product prices.
+Sales revenue generated by the segment's
+six major categories of chemical products
+(namely basic organic chemicals,
+synthetic resin, synthetic rubber,
+synthetic fibre monomer and polymer,
+synthetic fibre and chemical fertiliser)
+totaled RMB 405.4 billion, representing
+a decrease of 2.6% as compared with
+2013, and accounting for 94.8% of the
+operating revenues of the segment.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+23
+33,100
+Management's Discussion
+24
+Management's Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+The following table sets forth the sales volume, average realised prices and respective percentage changes of each of the segment's six
+categories of chemical products in 2014 and 2013.
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+2014
+Change
+Average realised price (RMB/tonne)
+Year ended 31 December
+Change
+2013
+(%)
+2014
+2013
+805,791
+(%)
+25,537
+(6.6)
+(4.8)
+Diesel
+103,255
+100,477
+2.8
+6,648
+7,049
+(5.7)
+Retail
+55,934
+58,148
+(3.8)
+7,029
+Fuel oil
+7,325
+Direct sales and wholesale
+47,322
+42,328
+11.8
+6,196
+6,671
+(7.1)
+Kerosene
+21,845
+20,232
+8.0
+5,710
+6,116
+(4.0)
+Basic organic chemicals
+Synthetic fibre monomer and polymer
+Synthetic resin
+1,129
+(47.0)
+1,686
+1,698
+(0.7)
+In 2014, the operating expenses of the
+chemicals segment were RMB 429.7
+billion, representing a decrease of 1.6%
+over 2013. This was mainly attributable
+to the decline of chemical feedstock
+prices, and as a result, decreased the
+relative cost by RMB 12.1 billion or 3.3%
+over 2013.
+In 2014, the operating loss of this
+segment was RMB 2.2 billion, compared
+with an operating profit of RMB 0.9
+billion in 2013.
+(5) Corporate and Others
+The business activities of corporate
+and others mainly consists of import
+3 ASSETS, LIABILITIES, EQUITY AND CASH FLOWS
+and export business activities of the
+Company's subsidiaries, research and
+development activities of the Company,
+and managerial activities of headquarters.
+In 2014, the operating revenues
+generated from corporate and others
+were RMB 1,310.2 billion (among
+which the sales revenue of specialised
+companies, such as trading companies,
+account for RMB 1,306.1 billion),
+representing a decrease of 3.6% against
+2013 mainly attributed to the decline
+in trading price of crude oil and refined
+oil products caused by price drop of
+international crude oil.
+598
+In 2014, the operating expense of
+corporate and others was RMB 1,311.3
+billion, representing a decrease of
+3.8% against 2013, among which, RMB
+1,304.3 billion was from specialised
+companies, such as trading companies.
+In 2014, the operating loss from
+corporate and others was RMB 1.1
+billion, in which the specialised trading
+companies realised operating profit of
+RMB 1.8 billion.
+(1) Assets, liabilities and equity
+Unit: RMB millions
+At 31 December
+2014
+At 31 December
+2013
+Amount of
+Change
+Total assets
+Current assets
+Non-current assets
+1,451,368
+360,144
+1,091,224
+1,382,916
+373,010
+68,452
+(12,866)
+The major funding source of the Company is its operating activities and short-term and long-term loans. The major use of funds includes operating
+expense, capital expenditures, and repayment of the short-term and long-term debts.
+(13.6)
+12,203
+10,549
+Synthetic fibre
+Synthetic rubber
+Chemical fertiliser
+35,788
+32,971
+8.5
+6,118
+6,764
+(9.6)
+6,496
+6,883
+(5.6)
+7,220
+8,161
+(11.5)
+11,603
+Total liabilities
+10,700
+8.4
+9,679
+9,631
+0.5
+1,430
+1,488
+(3.9)
+9,436
+10,356
+(8.9)
+1,207
+1,349
+(10.5)
+7,524
+7,166
+14.3
+9,791
+761,290
+44,501
+Current liabilities
+604,257
+571,822
+32,435
+Non-current liabilities
+201,534
+189,468
+12,066
+Total equity attributable to equity shareholders of the Company
+Share capital
+593,041
+568,803
+22
+24,238
+116,565
+1,715
+Reserves
+474,761
+452,238
+22,523
+Non-controlling interests
+52,536
+(287)
+Total equity
+645,577
+621,626
+1,009,906
+118,280
+22
+81,318
+In 2014, 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 165.9
+per tonne, representing a decrease
+of 1.5% over 2013. This was mainly
+attributed to enhancement of internal
+management and reduction on all sorts
+of expenses.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+11,187
+Direct sales and wholesale
+(1.2)
+8,690
+8,585
+6.6
+49,733
+(1.9)
+8,498
+8,338
+7.8
+59,523
+64,190
+53,003
+(%)
+2013
+Change
+Average realised price (RMB/tonne)
+Year ended 31 December
+2014
+(%)
+2013
+In 2014, the operating loss of the
+segment totaled RMB 2.0 billion,
+representing a decrease of RMB 10.6
+billion as compared with 2013.
+2014
+Change
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+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 2014 and 2013, including detailed information about retail, direct sales and wholesale of gasoline and diesel:
+In 2014, the operating revenues of this
+segment were RMB 1,476.6 billion, a
+decrease of 1.7% over 2013. Of which:
+the sales revenues of gasoline totaled
+RMB 535.2 billion, which increased by
+5.8% compared with 2013; The sales
+revenues of diesel were RMB 686.4
+billion, a decrease of 3.1% over 2013,
+and the sales revenues of kerosene were
+RMB 124.7 billion, an increase of 0.8%
+over 2013.
+distribution network, as well as providing
+related services.
+Gasoline
+Retail
+(3) Marketing and Distribution Segment
+The business of the marketing and
+distribution segment includes 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
+Joint obligations
+New Bright International
+No
+5,552
+No
+The Company
+itself
+No
+subsidiary
+Development Ltd./Sonangol E.P.
+Sinopec Corp.
+Yanbu Aramco Sinopec Refining
+Company (YASREF) Limited
+Controlled
+Yes
+Industry (Ningxia)
+SSI
+Туре
+No
+18 April 2014
+Period of guarantee
+10 December 2003
+-10 December 2017
+18 April 2014
+-17 April 2026
+no specific 31 December 2014
+amount
+or not
+or not guarantee guaranteed
+or not¹
+No
+Joint obligations
+No
+No
+No
+Joint obligations
+No
+No
+No
+30 years from the date Joint obligations
+Yanbu project company
+The amount of guarantees in excess of 50% of the net assets(E)
+requires supply of
+Sinopec Corp. issued A share convertible bonds of RMB 23 billion on February 23, 2011 (bond code: 110015). The par value and issuance price
+of Sinopec CB are both RMB 100/bond. Sinopec CB was issued with a term of six years, with annual coupon rate at 0.5%, 0.7%, 1.0%, 1.3%,
+1.8% and 2.0%, respectively. The initial conversion price was RMB 9.73 per share. It was listed on the Shanghai Stock Exchange on March 7,
+2011. For further details, please refer to the Announcement of Issuance of A Share Convertible Bonds by Sinopec Corp. and the Announcement
+of the Listing of A Share Convertible Bonds by Sinopec Corp. published on the websites of the Shanghai Stock Exchange and Sinopec Corp.
+The Company has used all of the proceeds in the following projects: the Wuhan Ethylene project, the Anqing Refinery Revamping Project, the
+Shijiazhuang Refinery Revamping Project, the Yulin-Jinan Natural Gas Pipeline Project and the Rizhao-Yizheng Crude Oil Pipeline Project.
+Conversion and adjustment of conversion price of Sinopec CB
+36
+Significant Events
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+2: The amount of guarantees provided during the reporting period and the amount of guarantees outstanding 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 by multiplying the
+guarantees provided by Sinopec Corp.'s subsidiaries by the percentage of shares held by Sinopec Corp. in such subsidiaries.
+None
+2,137
+None
+2,137
+None
+4.17%
+24,709
+72
+21,488
+10
+3,221
+No No No No
+Note 1: As defined in the Listing Rules of the Shanghai Stock Exchange.
+Statement of guarantee undue that might be involved in any joint and several liability
+Total amount of the above three grarantee items(C+D+E)
+Amount of debt guarantees provided directly or indirectly to the companies with liabilities to assets ratio over 70% (D)
+Guarantees provided for shareholders, de facto controller and connected persons(C)
+The portion of the total amount of guarantees to Sinopec Corp.'s net assets
+Total amount of guarantees(A+B)
+Total amount of guarantees of the Company(including those provided for controlled subsidiaries)
+Total amount of guarantee for controlled subsidiaries outstanding at the end of the reporting period(B)
+Total amount of guarantee provided to controlled subsidiaries during the reporting period
+Guarantees by the Company to controlled subsidiaries
+Total amount of guarantees outstanding at the end of the reporting period² (A)
+Total amount of guarantees provided during the reporting period²
+Liquedi Arabia LLC.
+hydrogen from Air
+Statement of guarantee status
+35
+Ningbo Gaotou
+Ningbo Gaotou
+0.3
+0.2
+0.1
+Term
+4 years
+5 years
+5 years
+Interest Rate
+6.40%
+Amount
+6.40%
+Purpose
+Working capital loan
+Working capital loan
+Project construction
+Mortgage or guarantor
+None
+None
+None
+Whether overdue or not
+6.20%
+No
+Maoming-BASF, Ltd.
+Petroleum Development, Ltd.
+Unit: RMB billions
+(2) Entrusted loans
+(1) Except as disclosed by Sinopec Corp., Sinopec has performed no entrusted asset management during the reporting period.
+17 TRUSTEESHIP, CONTRACTING AND LEASES
+During the reporting period, Sinopec Corp.
+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.
+16 OTHER MATERIAL CONTRACTS
+Except as disclosed by Sinopec Corp.,
+the Company entered into no significant
+contracts during the reporting period.
+15 INSOLVENCY AND RESTRUCTURING
+During the reporting period, the Company
+was not involved in any insolvency or
+restructuring matters.
+14 SIGNIFICANT LITIGATION, ARBITRATION
+OR MATTERS DRAWING NEGATIVE MEDIA
+ATTENTION RELATING TO SINOPEC CORP.
+No significant litigation, arbitration or
+matters drawing negative media attention
+relating to Sinopec Corp. occurred during the
+reporting period.
+Please refer to items 3, 4 and 6 under
+"Significant Events".
+13 ASSET TRANSACTIONS
+Petroleum Development, Ltd.
+day after the relevant general meetings
+and on the website of the Hong Kong Stock
+Exchange.
+12 GENERAL MEETINGS OF SHAREHOLDERS
+During the reporting period, Sinopec Corp.
+held two general meetings of shareholders
+in strict compliance with the procedures
+of notification, convening and holding
+of general meetings of shareholders as
+stipulated by relevant laws, regulations
+and the Articles of Association of Sinopec
+Corp. ("Articles of Association"), namely (i)
+the 2013 annual general meeting and (ii)
+the first extraordinary general meeting for
+the year 2014 held in Beijing on May 9,
+2014 and December 23, 2014, respectively.
+Please refer to the announcements of the
+poll results published in the China Securities
+Journal, the Shanghai Securities News and
+the Securities Times on the next working
+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.
+The external guarantees prior to 2014 had
+been disclosed in the 2013 annual report
+of Sinopec Corp. The aggregate balance of
+external guarantees provided by Sinopec
+Corp. for the year 2014 was RMB 24.709
+billion, accounting for approximately 4.17%
+of the Company's net assets.
+For the purpose of acquiring the interest
+in the Yanbu Aramco Sinopec Refining
+Company Limited (hereinafter refer to as
+"Yanbu Company") held by subsidiaries
+of China Petrochemical Corporation,
+the resolution on guarantees, which was
+provided by the Company for the obligation
+of Sinopec Century Bright Capital Investment
+(Amsterdam) B.V. Company to make capital
+contributions to Yanbu Company, was
+approved at the 21st meeting of the fifth
+session of the Board. At the end of 2014, the
+total amount of guarantees was equivalent
+to RMB 72 million. The resolutions on the
+provision of guarantees for the performance
+obligations of China International United
+Petroleum & Chemicals Co., Ltd. and Yanbu
+Company with no specific amount were
+also approved at the meeting. The above-
+mentioned guarantees were considered and
+approved at the first extraordinary meeting
+of 2014 of Sinopec Corp..
+We, as independent non-executive directors
+of Sinopec Corp., hereby make the following
+statements after conducting a thorough
+check of external guarantees provided by
+Sinopec Corp. accumulated up to and during
+2014 in accordance with the requirements of
+the domestic regulatory authorities:
+Specific statements and independent
+opinions from independent non-executive
+directors regarding external guarantees
+provided by Sinopec Corp. during and by
+the end of 2014:
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+Borrower
+18 ENTRUSTED ASSET MANAGEMENT AND ENTRUSTED LOANS
+No
+No
+Whether connected transaction or not
+Gain
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+19 DEPOSITS AT SINOPEC FINANCE CO., LTD.
+AND SINOPEC CENTURY BRIGHT CAPITAL
+INVESTMENT, LTD.
+In order to regulate connected transactions
+between Sinopec Corp. 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
+Sinopec Corp. in the Finance Company,
+Sinopec Corp. and the Finance Company
+formulated the Risk Control System on
+Connected Transactions of 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
+making payments, China Petrochemical
+Corporation will increase the capital of the
+Finance Company in accordance with the
+actual need for the purpose of permitting
+payments to be made.
+In order to regulate connected transactions
+between Sinopec Corp. and Sinopec
+Century Bright Capital Investment, Ltd.
+(Sinopec Corp.'s overseas settlement center,
+hereinafter referred to as "Century Bright
+Company"), Century Bright Company ensures
+the safety of the deposits of Sinopec Corp.
+in Century Bright Company by strengthening
+internal risk controls and obtaining support
+from China Petrochemical Corporation.
+China Petrochemical Corporation has issued
+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
+Bright Company in 2013, under which China
+Petrochemical Corporation undertakes that
+when Century Bright Company has difficulty
+making payments, China Petrochemical
+Corporation will ensure that Century Bright
+Company will fulfill its repayment obligation
+through various channels.
+The deposits of Sinopec Corp. in the Finance
+Company and Century Bright Company
+during the reporting period did not exceed
+the annual caps as approved at the general
+meeting of shareholders. During daily
+operations, the deposits of Sinopec Corp.
+in the Finance Company and Century Bright
+Company can be fully withdrawn for the
+Company's use.
+20 ASSETS MORTGAGE
+None.
+21 APPROPRIATION OF NONOPERATIONAL
+FUNDS BY THE CONTROLLING
+SHAREHOLDER AND ITS AFFILIATED
+PARTIES
+Gain
+Not applicable.
+Sinopec Corp. did not implement any share
+incentive scheme during the reporting period.
+23 WHETHER THE COMPANY IS INCLUDED
+IN THE LIST OF ENTERPRISES CAUSING
+SERIOUS POLLUTION ANNOUNCED BY
+THE ENVIRONMENTAL PROTECTION
+AUTHORITY
+Sinopec Corp. was not included on the list of
+enterprises causing serious pollution.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+37
+Significant Events
+Yujiahai Service Station by
+the Beautiful Dian Lake, Yunnan Province
+22 DETAILED IMPLEMENTATION OF THE
+SHARE INCENTIVE SCHEME DURING THE
+REPORTING PERIOD
+6.20%
+6.40%
+6.40%
+Gain
+No
+No
+No
+Whether roll-over or not
+No
+No
+No
+Whether involved in lawsuit or not
+No
+No
+No
+Major funding source
+Connected relationship
+Self-owned fund, non-raising fund
+Joint venture
+Self-owned fund, non-raising fund
+Self-owned fund, non-raising fund
+Joint venture
+Joint venture
+Expected return
+Gain or loss
+10
+Zhong An United Coal Chemical
+Company Ltd.
+Date of adjustment
+Shell Coal Gasification Corporation
+Given that the majority of China Petrochemical Corporation's
+refining business had been injected into Sinopec Corp., China
+Petrochemical Corporation made a commitment to dispose of its
+minor remaining refining business within five years to eliminate
+competition with Sinopec Corp.
+China Petrochemical
+Corporation
+China Petrochemical
+Corporation
+Other
+Other undertakings
+Other
+Other undertakings
+Yes
+Yes
+Within five years, commencing
+October 27, 2010
+China Petrochemical
+Corporation
+Other
+Other undertakings
+Abandonment of business competition and conflicts of
+interest with Sinopec Corp.
+vi
+Avoiding competition within the same industry; and
+V
+Term for performance
+deadline or not
+performed or not
+Initial Public Offering
+(IPO)
+China Petrochemical
+Corporation
+!!
+China Petrochemical Corporation would dispose of its minor.
+remaining chemicals business within five years in order to avoid
+competition with Sinopec Corp. in the chemicals business
+Given that China Petrochemical Corporation engages in the s
+ame 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.
+i Compliance with the connected transaction agreements;
+Solving the issues regarding the legality of land-use rights
+certificates and property ownership rights certificates within
+a specified period of time;
+No
+Yes
+Implementation of the Reorganization Agreement (please
+refer to the definition of "Reorganization Agreement" in the
+H share prospectus of Sinopec Corp.);
+iv
+Granting licenses for intellectual property rights;
+From June 22, 2001
+Contents
+Within five years, commencing
+March 15, 2012
+Yes
+20,000
+14.29%
+20,000
+Beijing International Trust Co., Ltd.
+1
+period
+(RMB 10,000)
+(RMB 10,000)
+(%)
+(RMB 10,000) (10,000 shares)
+Entities
+No.
+the reporting
+period reporting period
+Shareholding
+shareholders'
+interests during
+during the
+Yes
+Yes
+As of the end of the reporting period, 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.
+34
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+10 SHAREHOLDINGS AND SECURITIES INVESTMENTS OF SINOPEC CORP. IN OTHER LISTED COMPANIES, COMMERCIAL BANKS, SECURITIES
+COMPANIES, INSURANCE COMPANIES, TRUST COMPANIES AND FUTURES COMPANIES
+10 years after 29 April 2014
+or the date when Sinopec Group
+acquires the assets
+(1) Sinopec Corp. did not have any direct shareholdings in other listed companies (not including the listed subsidiary of Sinopec Corp. shown in
+the consolidated statement)
+Book value
+at the end of
+Changes in
+Gain/loss
+Initial
+investment
+Number of
+shares held
+the reporting
+(2) Direct shareholdings in non-listed financial institutions and companies contemplated to be listed
+Financial assets
+Party
+bears
+Sponsor representatives: JIN Lei, ZHANG Yi
+Suite 1807-1819, 18th Floor, Winland International Center, 7 Finance Street, Xicheng District, Beijing
+Goldman Sachs Gao Hua Securities Company Limited
+As of December 31, 2014, a total of 1,832,955,041 shares had been converted from Sinopec CB, and the outstanding balance of Sinopec CB
+was RMB 13,699,897,000. On January 26, 2015, the terms of conditional redemption of Sinopec CB were triggered. On the 22nd meeting of the
+fifth session of the board of the Company (the "Board"), the Board reviewed and approved the proposal for the redemption of Sinopec CB, and
+decided to exercise the right of redemption of Sinopec CB. As of the Redemption Record Date (February 11, 2015), a total of 4,623,769,047
+A shares had been converted from Sinopec CB, and the total outstanding value of Sinopec CB registered at the China Securities Depository
+and Clearing Corporation Limited Shanghai Branch was RMB 52,776,000. On February 17, 2015, the total value of redemption payments and
+interest accrued that were paid by the Company was RMB 53,348,948.28, and Sinopec CB was delisted from the Shanghai Stock Exchange.
+Continuous Supervision by Financial Advisor
+Dividend distribution
+Dividend distribution
+4.89
+4.98
+Dividend distribution
+5.13
+Dividend distribution, the bonus issue of shares and
+capitalisation of share premium
+5.22
+Dividend distribution
+6.98
+Dividend distribution
+7.08
+7.28
+(RMB per share) Reason for adjustment
+9.60 Dividend distribution
+9.50 Dividend distribution
+Downward adjustment
+STATEMENTS PREPARED UNDER NEW
+5 INFLUENCE ON CONSOLIDATED FINANCIAL
+subsidiary
+June 20, 2011
+September 19, 2011
+December 27, 2011
+Ongoing supervision period: March 7, 2011 to February 17, 2015
+May 28, 2012
+June 19, 2013
+September 12, 2013
+June 3, 2014
+September 24, 2014
+Conversion price
+after adjustment
+September 17, 2012
+strictly
+(2) Expiration and payment of HKD 11.7 billion share convertible bonds
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Type of
+Undertaking
+Background
+Undertakings related to Initial
+Public Offerings (IPOs)
+Whether
+Whether
+9 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION, WHICH HOLDS OVER 5% EQUITY INTEREST
+IN SINOPEC CORP.
+and the aggregate amount of the increased
+A shares of the Company by China
+Petrochemical Corporation and its concerting
+parties represented 0.16% of the total issued
+share capital of Sinopec Corp. After the
+Shareholding Increase, China Petrochemical
+Corporation directly and indirectly held
+approximately 73.867% of the total issued.
+share capital of Sinopec Corp. During
+the Increase Period, China Petrochemical
+Corporation had not reduced its shareholding
+in Sinopec Corp. in its own name or through
+other concerting parties.
+of such acquisitions would not exceed
+2% (inclusive of the shares acquired on
+November 5, 2013) of the total issued share
+capital of Sinopec Corp. (the "Shareholding
+Increase"). Before the Shareholding Increase,
+China Petrochemical Corporation directly
+and indirectly held 86,089,416,000 shares
+of Sinopec Corp., representing approximately
+73.855% of the total issued share capital of
+Sinopec Corp. at that time. On November
+4, 2014, Sinopec Corp. was informed by
+China Petrochemical Corporation that the
+Shareholding Increase had been completed
+On November 5, 2013, Sinopec Corp.
+was informed by the China Petrochemical
+Corporation that China Petrochemical
+Corporation proposed to increase its
+shareholding in Sinopec Corp. through
+acquisitions of Sinopec Corp.'s shares on
+the secondary market in its own name or
+through other concerting parties within 12
+months commencing on November 5, 2013
+(the "Increase Period"). The aggregate
+8 INCREASED SHAREHOLDINGS OF
+SINOPEC CORP.'S A SHARES BY CHINA
+PETROCHEMICAL CORPORATION
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+Significant Events
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014 33
+On April 18, 2013, Sinopec Capital Limited
+(2013), 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 principal of the
+3-year notes totaled USD 0.75 billion, with an
+annual interest rate of 1.250%; the principal
+of the 5-year notes totaled USD 1 billion,
+with an annual interest rate of 1.875%; the
+principal of the 10-year notes totaled USD.
+1.25 billion, with an annual interest rate of
+3.125%; and the principal of the 30-year
+notes totaled USD 0.5 billion, with an annual
+interest rate of 4.250%. These notes were
+listed on the Hong Kong Stock Exchange on
+April 25, 2013, with interest payable semi-
+annually, beginning on October 24, 2013.
+During the reporting period, Sinopec Corp.
+paid in full the current-period interest.
+On June 1, 2012, Sinopec Corp. issued
+5-year and 10-year domestic corporate
+bonds in the amount of RMB 13 billion
+and RMB 7 billion, respectively, and with
+a fixed annual interest rate of 4.26% and
+4.90%, respectively. On June 13, 2012,
+the above-mentioned corporate bonds were
+listed on the Shanghai Stock Exchange. For
+further details, please refer to the relevant
+announcements published in the China
+Securities Journal, the Shanghai Securities
+News and the Securities Times on May 30,
+2012. On June 3, 2014, Sinopec Corp. paid
+in full the interest for the second interest
+payment year.
+bonds in the amount of RMB 11 billion
+and RMB 9 billion, respectively, and with
+a fixed annual interest rate of 3.75% and
+4.05%, respectively. On June 9, 2010, the
+above-mentioned corporate bonds were
+listed on the Shanghai Stock Exchange. For
+further details, please refer to the relevant
+announcements published in the China
+Securities Journal, the Shanghai Securities
+News and the Securities Times on May 19,
+2010. On May 21, 2014, Sinopec Corp. paid
+in full the interest accrued for the fourth
+interest payment year.
+On May 21, 2010, Sinopec Corp. issued
+5-year and 10-year domestic corporate
+3 RESTRUCTURING OF MARKETING
+SEGMENT
+On February 19, 2014, the 14th meeting
+of the fifth session of the Board considered
+and approved the proposal to begin the
+restructuring of Sinopec Corp.'s marketing
+segment. On September 12, 2014, Sinopec
+Marketing Co., Ltd. (hereinafter referred to
+as "Marketing Co.") entered into a Capital
+Injection Agreement with 25 domestic
+and foreign investors, pursuant to which
+investors will subscribe for equity interest
+in Marketing Co. in cash. As of March 6,
+2015, the above-mentioned 25 investors had
+made an aggregate capital contribution of
+RMB 105.044 billion (including amounts in
+U.S. dollar equivalent) to Marketing Co. and
+subscribed for a 29.5849% shareholding
+interest in Marketing Co.
+For further details, please refer to the
+announcements published in the China
+Securities Journal, the Shanghai Securities
+News and the Securities Times by Sinopec
+Corp. on February 20, 2014, March
+26, 2014, April 2, 2014, July 1, 2014,
+September 15, 2014, January 6, 2015
+and March 7, 2015. For the relevant
+details, please also refer to the disclosures
+made on the website of the Hong Kong
+Stock Exchange.
+4 ASSET REORGANIZATION OF YIZHENG
+CHEMICAL
+Please refer to item 4 under Connected
+Transactions.
+HKD 11.7 billion in H share convertible bonds issued by Sinopec Corp. in 2007 expired on April 24, 2014. Sinopec Corp. has paid in full the
+principal and the interest accrued.
+5 SHANGHAI PETROCHEMICAL A SHARE
+OPTION INCENTIVE
+the Board and the first extraordinary general
+meeting for 2014 of Sinopec Corp.
+For further details, please refer to the
+announcements published in the China
+Securities Journal, the Shanghai Securities
+News and the Securities Times by Sinopec
+Corp. on November 8, 2014 and December
+24, 2014. For the relevant details, please
+also refer to the disclosures made on the
+website of the Hong Kong Stock Exchange.
+6 ACQUISITION OF THE EQUITY IN YANBU
+COMPANY
+Please refer to item 4 under Connected
+Transactions.
+7 CORPORATE BONDS ISSUED AND
+INTEREST PAYMENTS
+On February 24, 2004, Sinopec Corp. issued
+domestic corporate bonds of RMB 3.5 billion
+with a term of 10 years. The credit rating
+of the bonds was AAA, with a fixed annual
+interest rate of 4.61%. On September 28,
+2004, the bonds were listed on the Shanghai
+Stock Exchange. For further details, please
+refer to the relevant announcements
+published in China mainland newspapers,
+namely the China Securities Journal, the
+Shanghai Securities News and the Securities
+Times, and, in Hong Kong, the South
+China Morning Post and the Hong Kong
+Economic Times on February 24, 2004 and
+September 28, 2004. On February 24, 2014,
+Sinopec Corp. paid in full the principal and
+the interest accrued for the tenth interest
+payment year.
+On February 20, 2008, Sinopec Corp. issued
+domestic bonds with warrants of RMB 30
+billion. The term of the bonds is six years,
+with a fixed annual interest rate of 0.8%. On
+March 4, 2008, the bonds were listed on the
+Shanghai Stock Exchange. For further details,
+please refer to the relevant announcements
+published in the China Securities Journal,
+the Shanghai Securities News and the
+Securities Times on February 18, 2008. On
+February 20, 2014, Sinopec Corp. paid in
+full the principal and interest accrued for the
+sixth interest payment year.
+At the second meeting of the eighth session
+of the board of directors of Sinopec Shanghai
+Petrochemical Company Limited ("Shanghai
+Petrochemical"), a listed subsidiary of
+Sinopec Corp., the resolution relating
+to the Shanghai Petrochemical A Share
+Option Incentive Scheme (Draft) (the "Share
+Option Incentive Scheme") was approved.
+Pursuant to the requirements of the Listing
+Rules of the Hong Kong Stock Exchange,
+the resolution relating to the Shanghai
+Petrochemical A Share Option Incentive
+Scheme (Draft) was considered and passed
+at the 18th meeting of the fifth session of
+Accounting item Shares origin
+Investment
+Yes
+(1) Issuance and delisting of convertible bonds
+SIGNIFICANT EVENTS (CONTINUED)
+overdue overdue Counter-
+completed
+Transaction date
+(date of signing)
+10 December 2003
+158
+Amount
+Name of the guaranteed company
+Yueyang Sinopec Corp.
+The Company
+Relationship
+to the company
+Sinopec Great Wall
+Energy and Chemical
+Guarantor
+Sinopec Corp.
+for connected
+Whether Amount of
+Whether
+Significant Events
+Whether
+guaranteed
+11 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
+150
+21,000
+21,000
+Total
+Debt to
+shares
+available for sale
+Financial assets
+available for sale
+150
+1,000
+0.25%
+1,000
+1,000
+Bank of Zhengzhou Co., Ltd.
+2
+Major external guarantees (excluding guarantees for the controlled subsidiaries)
+32
+Unit: RMB millions
+Significant Events
+32
+itself
+Wholly owned
+persons
+ASBE
+In 2014, the MOF promulgated ASBE
+No. 39 through 41 regarding Fair Value
+Measurement, Joint Arrangement and
+Disclosure of Interests in Other Entities, and
+amended ASBE No. 2, No. 9, No. 30, No.
+33 and No. 37 regarding Long-Term Equity
+Investments, Employee Compensation,
+Presentation of Financial Statements,
+Consolidated Financial Statements and
+Presentation of Financial Instruments.
+The above accounting standards became
+effective from 1 July 2014 except for No. 37
+Presentation of Financial Instruments which
+shall be implemented for the 2014 annual
+consolidated financial statements. There
+are no material influences to company's
+consolidated financial statement except
+following factors:
+(i) Influences of revised "Accounting
+Standards for Business Enterprises No.2
+- long term equity investment"
+The scope of long term equity
+investment was amended in revised
+"Accounting Standards for Business
+Enterprises No.2 - long term equity
+investment". The amended long term
+equity investment only includes equity
+investments which enterprises are
+able to exercise control or significant
+influence over the investees as well as
+equity investments in joint ventures. For
+equity investments where enterprises
+do not have control, joint control or
+significant influence over the investees
+and for which these equity investments
+whose prices are not quoted in an
+actively traded market and their fair
+value cannot be reliably measured,
+"Accounting Standards for Business
+Enterprises No. 22 -the recognition and
+measurement of financial instruments"
+shall be applied to all enterprises using
+ASBE since July 1st, 2014. According to
+the accounting standard, the company
+reclassified the above mentioned long-
+term equity investments into available.
+for-sale financial instruments. At 31
+December of 2014, the amount of
+related equity investment was RMB
+0.685 billion (as at 31 December
+2013: RMB 1.76 billion), which are
+stated in the balance sheet at cost less
+impairment losses.
+(ii) Influences of revised "Accounting
+Standards for Business Enterprises
+No. 30 presentation of financial
+statements"
+"Accounting Standards for Business
+Enterprises No. 30 - presentation
+of financial statements" and the
+corresponding application guidance
+clarified the presentation requirement
+of other comprehensive incomes in
+Balance Sheet and Income Statement.
+According to the revised stipulations,
+enterprises shall seperate other
+comprehensive income into items which
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+29
+Management's Discussion
+and Analysis
+Wuhan 800,000 tpa Ethylene Facility
+SIGNIFICANT EVENTS
+can't be reclassified and stated in
+Income Statement and items which will
+be reclassified and stated in Income
+Statement in subsequent accounting
+periods when specific conditions are
+met. Since July 1st, 2014 all enterprises
+applying ASBE should state other
+comprehensive income in Balance Sheet
+as a separated individual item. The
+company amended the presentation of
+other comprehensive income according
+to the standard, and added it in
+Balance sheet. All the company's other
+comprehensive incomes happened in
+2014 and previous year are items which
+will be reclassified and stated gain
+or loss in the subsequent accounting
+periods when specific conditions are met.
+From January to December of 2014, the
+company's other comprehensive income
+occurred was RMB -9.266 billion (as
+of 2013 from January to December:
+RMB 0.932 billion). At the end of 2014,
+balance amount of the company's other
+comprehensive income was RMB -7.261
+billion (at the end of 2013: RMB 0.407
+billion). This was mainly due to the
+deduction of capital reserve amounted to
+RMB 2.466 billion and the deduction of
+foreign currency translation differences
+amounted to RMB -2.059 billion. In
+addition, the company made some
+reclassifications which have no significant
+influences on the company's consolidated
+financial statements.
+(5) Tianjin LNG project
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+At the end of the reporting period, the
+liability-to-asset ratio of Sinopec Corp. was
+55.52%, representing an increase of 0.47
+percentage points from the previous year.
+There was no material change in the debt
+structure. The credit rating of Sinopec
+Corp. by Moody's remained at Aa3 in 2014.
+Standard & Poor's raised its rating from A+
+to Sovereign rating of AA-. The domestic
+long-term credit rating of Sinopec Corp.
+remained at AAA.
+The Tianjin LNG project consists mainly
+of the construction of one wharf and
+one terminal designated for LNG with
+a loading and unloading capacity of 3
+million tonnes per year and auxiliary
+transportation pipelines for natural gas.
+It is expected to be completed in 2016.
+2 ISSUANCE OF CONVERTIBLE BONDS
+The credit rating of China Petrochemical
+Corporation, the guarantor of Sinopec CB,
+by Moody's remained at Aa3. Standard
+& Poor's raised its rating from A+ to
+Sovereign rating of AA-.
+The Guangxi LNG project consists mainly
+of the construction of one wharf and
+one terminal designated for LNG with
+a loading and unloading capacity of 3
+million tonnes per year and auxiliary
+transportation pipelines for natural gas.
+It is expected to be completed and
+operational in 2015.
+(4) Guangxi LNG project
+1 MAJOR PROJECTS
+and auxiliary transportation pipelines for
+natural gas. It was completed and put
+into operation in 2014.
+capacity of 3 million tonnes per year
+The Shandong Liquefied Natural
+Gas (LNG) project consists mainly
+of the construction of one wharf
+and one terminal designated for
+LNG with a loading and unloading
+(3) Shandong LNG project
+The project consists mainly of the
+construction of one purification
+plant and auxiliary facilities. The
+natural gas purification capacity
+of the plant is 1.7 billion cubic
+meters per year. It was completed
+and put into operation in 2014.
+(2) Yuanba Gas Field Test Production
+Project
+(1) Fuling Shale Gas Project
+Based on a significant
+breakthrough in the Fuling shale
+gas exploration project, after trial
+development and appraisal of
+production capacity, the Company
+has set an overall production
+capacity target of 10 billion cubic
+meters for the Fuling shale gas
+field, with a planned capacity of
+5 billion cubic meters per year
+for the first phase. In accordance
+with the guidance for overall
+deployment and step-by-step
+development, we shall continue
+the capacity-building project for
+the first phase in 2015. This
+project consists mainly of drilling
+117 new wells and constructing
+shale gas gathering and
+transmission facilities. The new
+production capacity will be 2.5
+billion cubic meters per year.
+31
+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 non-
+executive 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 should give
+their independent opinions on the
+nomination in advance. Fourteen
+directors of the Board were
+elected at the annual general
+meeting of shareholders for the
+year 2011.
+did not establish a Nomination
+Committee, the Board will perform
+the duties of the Nomination
+Committee prescribed in the
+Corporate Governance Code. The
+nomination of directors has been
+b. The Board establishes the Policy
+Concerning Diversity of Board
+Members which stipulates that the
+members of the Board shall be
+nominated and appointed basing
+on the skills and experience
+required by the Board as well as
+the principles on diversity of the
+Board, and when deciding the
+composition of the Board, the
+company shall consider the factors
+in relation to the diversity of the
+Board, including (but not limited
+to) gender, age, background of
+education and culture, profession
+and experience, skills, knowledge
+and service term.
+Corporate Governance
+A.6 Responsibility of directors
+A.5 Nomination Committee
+a. Considering that the Board
+a. All non-executive directors have
+the same duties and powers as the
+executive directors. In addition,
+the non-executive directors,
+especially the independent non-
+executive directors, are entitled
+to certain specific powers. The
+Articles of Association and the
+"Rules of Procedure for Meetings
+of Boards of Directors" 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.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+c. Each of the directors confirmed
+that he or she 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 Sinopec
+employees.
+d. Sinopec Corp. arranged training
+sessions for directors and paid
+the related fees. The directors
+diligently performed their
+responsibilities and actively
+participated in the continuing
+professional development program.
+A.7 Provision for 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 discuss the proposals
+comprehensively at meetings. Each
+director can obtain all related
+information in a comprehensive
+and timely manner, and may
+seek advices from professional
+consultants if necessary.
+b. The secretary to the Board is
+responsible for organizing and
+preparing the materials for
+the Board meetings, including
+preparation of explanations for
+each proposal to ensure thorough
+understanding of the directors.
+Management is responsible for
+providing the directors with
+necessary information and
+materials. The director may ask the
+President, or ask, via the President,
+relevant departments to provide
+necessary information about
+Sinopec Corp. and related matters.
+46
+B Remuneration of directors and senior
+management
+c. Sinopec Corp. engages
+professional consultants to
+prepare detailed materials for
+newly appointed directors, to
+notify them of the regulations of
+each listing place of Sinopec Corp.
+and to remind them of their rights,
+obligations and responsibilities as
+directors.
+b. In 2014, each of the directors was
+able to devote sufficient time and
+effort to handling the matters of
+Sinopec Corp.
+b. All directors of Sinopec Corp.
+have been elected at the general
+meeting of shareholders. The
+Board has no power to appoint
+temporary directors.
+1 AGREEMENTS CONCERNING
+CONTINUING CONNECTED
+TRANSACTIONS BETWEEN
+THE COMPANY 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:
+a.
+Petrochemical Corporation will
+mutually supply ancillary services
+for products, production and
+construction services (Mutual
+Supply Agreement)
+a. The Board has established a
+(1) The Company and China.
+CONNECTED TRANSACTIONS
+b. The Chairman of the Board places
+great emphasis on communication
+with the independent non-executive
+directors. The Chairman holds
+meetings with the independent
+non-executive directors at least
+once every year at which no
+executive director is presented.
+c. The Chairman encourages open
+and active discussions. Directors
+may speak freely at the Board
+meetings and actively participate
+in the discussions of the proposals
+in the Board meetings.
+A.3 Board composition
+The term of each session of the
+directors (including non-executive
+directors) of Sinopec Corp. is
+three years, and the consecutive
+term of office of an independent
+non-executive director cannot
+exceed six years.
+a. The Board consists of 14 members
+with extensive professional and
+corporate governance experience,
+one of whom is female.
+(Please refer to the "Directors,
+Supervisors, Other Senior
+Management and Employees" in
+this annual report for detailed
+information). Of the 14 members,
+four are executive directors, five
+are non-executive directors and
+five are independent non-executive
+directors. The independent non-
+executive directors represent one.
+third of the Board. The executive
+directors and non-executive
+directors of Sinopec Corp. have
+extensive management experience
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+45
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+international capital market
+investment. The independent non-
+executive directors have working
+backgrounds as leaders of large-
+scale enterprises, well-known
+financiers and financial experts,
+and have rich experience in
+international capital management
+and investment. The composition
+of the Board is balanced and
+diversified.
+b. Sinopec Corp. has received from
+each of the independent non-
+executive directors a letter of
+confirmation for 2014 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
+in large-scale enterprises,
+petrochemical companies and
+Remuneration and Appraisal
+Committee (the "Remuneration
+Committee") and formulated
+relevant terms of reference. The
+Remuneration Committee consists of
+independent non-executive director
+Mr. Chen Xiaojin, who serves as
+the chairman, and vice president
+and non-executive director Mr. Wang
+Tianpu and independent non-
+executive director Ms. Bao Guoming,
+who serve as the members of the
+Remuneration Committee. The terms
+of reference of the Remuneration
+Committee are available on the
+websites of Sinopec Corp. and
+the Hong Kong Stock Exchange.
+The Remuneration Committee is
+responsible for proposing to the
+Board the remuneration plans for
+directors, supervisors and other
+senior management and submitting
+the proposal to the general meeting
+of shareholders for approval
+after the proposal passed at the
+Board meeting.
+b. During the reporting period, separate
+resolution was proposed for each
+substantially separate issue at the
+general meeting. All resolutions
+were voted by poll to safeguard the
+interests of all shareholders. Notices
+of the general meeting of shareholders
+were delivered to shareholders 45
+days (excluding the date of the
+general meeting) in advance.
+c. The members of the Remuneration
+Committee may engage independent
+professionals. Reasonable costs
+arising from or in connection with
+such consultations are borne by
+Sinopec Corp. 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. In addition,
+according to the policies of Sinopec
+Corp., the senior management and
+relevant departments of Sinopec
+Corp. must actively cooperate with
+the Remuneration Committee.
+CORPORATE GOVERNANCE (CONTINUED)
+c. During the reporting period,
+the Audit Committee held six
+meetings. (For details, 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 the meetings 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
+divergent opinions.
+d. Audit Committee members may
+engage independent professionals.
+Reasonable costs arising from
+or in connection with such
+consultations are borne by Sinopec
+Corp. The Audit Committee also
+appoints 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.
+must actively cooperate with the
+Audit Committee.
+e. In the absence of Sinopec Corp.'s
+management, the Audit Committee
+held two meetings with auditors
+to discuss the auditing of financial
+reports and the auditing fee for
+the year. The Audit Committee
+has considered the adequacy
+of the resources for accounting
+and financial reporting and the
+experience of the employees as
+well as the sufficiency of the
+training courses provided to
+employees and the related budget.
+Audit Committee recognise the
+Sinopec's management has
+fulfilled the duties of establishment
+of effective internal control
+system. Sinopec Corp. established
+a reporting and complaint system,
+providing online reporting, letter
+reporting, receipt of appeals and
+a complaint mailbox to employees
+to report behavior that violates
+the internal control system. The
+Audit Committee has reviewed and
+approved the system.
+D Delegation of power by the Board
+a. The Board, the management and each
+Board committee have clear terms of
+reference. The Articles of Association
+and the "Rules of Procedure for the
+General Meetings of Shareholders"
+and the "Rules of Procedure for
+Meetings of Boards of Directors"
+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 addition to the Audit Committee
+and the Remuneration Committee,
+the Board established the
+Strategy Committee and the
+Social Responsibility Management
+Committee. The Strategy Committee
+consists of 9 directors, including
+Chairman of the Board Mr. Fu
+Chengyu, who serves as chairman,
+Vice Chairman of the Board Mr. Wang
+Tianpu, director and President Mr.
+Li Chunguang and independent non-
+executive director Mr. Ma Weihua,
+who serve as vice chairmen, as
+well as three executive directors
+and two independent non-executive
+directors, who serve as members. The
+Strategy Committee is responsible
+for overseeing long-term development
+strategies and significant investment
+decisions of the Company. The
+Social Responsibility Management
+Committee consists of five directors,
+including Chairman of the Board Mr.
+Fu Chengyu, who serves as chairman,
+Vice Chairman of the Board Mr. Wang
+Tianpu, director and President Mr.
+Li Chunguang and two independent
+non-executive directors, who serve as
+members. The Social Responsibility
+Management is responsible for
+preparing policies, governance,
+strategies and plans for social
+responsibility management of
+Sinopec Corp..
+Corporate Governance
+c. Each Board committee has clear
+terms of reference. According to
+each terms of reference of the Board
+committees, the committees are
+required to report their decisions and
+recommendations to the Board.
+(2) China Petrochemical Corporation
+will provide trademarks, patents
+and computer software to the
+Company for use free of charge
+c. The Chairman of the Board hosted the
+general meeting as chairman of the
+meeting, and arranged the members
+of the Board and senior management
+to attend the meeting and answer
+questions raised by shareholders.
+d. During the reporting period, Sinopec
+Corp. amended its Articles of
+Association, including Sinopec Corp.'s
+share capital structure and registered
+capital based on the actual situation
+of the Company.
+F Company secretary
+a. The Hong Kong Stock Exchange
+recognised the secretary to the Board
+as having the relevant qualifications
+for company secretary. Nominated
+by the Chairman of the Board
+and appointed by the Board, the
+secretary to the Board is the senior
+management officer reporting to
+Sinopec Corp. and the Board. The
+secretary gives opinions on corporate
+governance to the Board and arranges
+orientation training and professional
+development for the directors.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+by the Board. The duties and
+responsibilities of the Chairman
+and the President are clearly
+distinguished from each other,
+and the scope of their respective
+duties and responsibilities is set
+out in the Articles of Association.
+E Communication with shareholders
+a. Sinopec Corp. pays close attention
+to investor relations. The Chairman,
+President and Chief Financial Officer
+conduct a road show for investors
+every year 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 to
+be responsible for communicating
+with investors. In compliance with
+regulatory provisions, Sinopec
+Corp. enhanced communication
+with investors by holding meetings
+with institutional investors, inviting
+investors on site visits and setting
+up an investor hotline, among
+other measures.
+48
+47
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+C Accountability and auditing
+C.1 Financial reporting
+a. Directors are responsible for
+supervising 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 cash flow of
+the Company during the period.
+The Board approved the Financial
+Report for 2014 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 integrity
+of the content.
+b. Sinopec Corp. provides directors
+with information about the financial
+condition, its production and
+operating status 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.2Internal control
+a. In 2003, according to the relevant
+regulatory requirements for
+internal control of the listing
+places, 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 all management
+policies currently in effect, as well
+as in accordance with relevant
+domestic and overseas applicable
+regulations, Sinopec Corp.
+formulated the "Internal Control
+Manual", which established
+controls at both the corporate and
+business levels, thereby ensuring
+all-round internal control. The
+Board reviewed the self-evaluation
+report on internal control and
+self-assessment together with the
+annual report every year since
+2006. In 2014, according to the
+seventeen basic principles of
+COSO framework to review internal
+control system, Sinopec's internal
+control system can satisfies
+the requirements of new COSO
+framework.
+b. The management of Sinopec Corp.
+has implemented the measures
+for internal control. With sufficient
+resources in accounting and
+financial reporting, Sinopec Corp.
+has well-qualified and experienced
+employees in this function and a
+sufficient budget for the training
+of relevant employees.
+For detailed information about
+the internal control system during
+the reporting period, please refer
+to the self-evaluation report on
+internal control and self-assessment
+prepared by Sinopec Corp.
+c. Sinopec Corp. has established its
+internal audit department, staffed
+by well-qualified professional
+personnel, to ensure that the
+internal auditing functions of
+Sinopec Corp. are sound.
+C.3 Audit Committee
+a. The Audit Committee consists of
+independent non-executive director
+Ms. Bao Guoming, who serves as
+the chairman, and independent
+non-executive director Mr. Jiang
+Xiaoming and independent non-
+executive director Mr. Andrew Y.
+Yan, who serve as members. As
+verified, none of them has served
+as a partner or former partner in
+our current auditing firm.
+b. Sinopec Corp. has published the
+terms of reference of the Audit
+Committee. The terms of reference
+are available for inspection on the
+websites of Sinopec Corp. and the
+Hong Kong Stock Exchange.
+b. The Remuneration Committee
+always consults the Chairman
+and the President about proposed
+remuneration for other executive
+directors. After the Remuneration
+Committee's review, it is of the
+view that the executive directors of
+Sinopec Corp. fulfilled their duties in
+2014 and executed all duty clauses
+stated in the service contracts of the
+directors with honesty and diligence
+and in good faith.
+(3) China Petrochemical Corporation
+will provide cultural and
+educational, hygienic and
+community services to the
+a. Mr. Fu Chengyu serves as
+Chairman of the Board and Mr. Li
+Chunguang serves as President of
+Sinopec Corp. The Chairman of the
+Board is elected by a majority vote
+of all directors, and the President
+is nominated and appointed
+(4) China Petrochemical Corporation
+will provide leasing services for
+lands and certain properties to
+the Company
+During the reporting period, Sinopec Corp.,
+in compliance with the Company Law of
+the People's Republic of China ("PRC")
+and other domestic and overseas laws and
+regulations on securities, continuously
+enhanced its corporate governance. Sinopec
+Corp. strictly followed the principles of
+public, fair, impartial and transparency in
+the restructuring and capital injection of
+its Marketing and Distribution business,
+and the independent and non-executive
+directors and the independent supervisor
+participated in the relative review and
+evaluation to protect the shareholders'
+interests. Sinopec Corp. fulfilled the
+undertakings to advance the subsidiary
+Sinopec Shanghai Petrochemical Company
+Limited to implement A-share stock option
+incentive plan, and the subsidiary Sinopec
+Yizheng Chemical Fibre Company Limited
+to complete its reorganisation. Sinopec
+Corp. revised the Articles of Association,
+established the Policy Concerning Diversity
+of Board Members, and improved and
+implemented the Insiders' Registration
+Rules for the Company and the internal
+control system. Sinopec Corp. provided
+the directors the related information
+in a more comprehensive and timely
+manner, strengthened the volunteered
+information disclosure to increase the
+Company's transparency. Sinopec Corp.
+focused on the investors' interests
+protection and strengthened the two-
+way communication with the investors
+which were well recognised by the capital
+markets. Meanwhile, Sinopec Corp.
+actively fulfilled the social responsibilities,
+launching Energy Conservation Campaign,
+continuously implementing Clean Water
+& Blue Sky Campaign, disclosing the first
+Shale Gas ESG Report. As the unit holding
+the rotating presidency of the Global
+Compact Network China, Sinopec Corp. has
+urged the corporate community to support
+sustainable development and actively tackle
+the climate change.
+During the reporting period, Sinopec Corp.'s
+corporate governance complied with the
+PRC Company Law and all regulations
+on securities of the 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 punished
+administratively or criticised publicly by the
+CSRC, the Hong Kong Securities and Futures
+Commission, the Securities and Exchange
+Commission of the United States, Shanghai
+Stock Exchange, the Hong Kong Stock
+Exchange, the New York Stock Exchange or
+the London Stock Exchange.
+2 EQUITY INTERESTS OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+As of 31 December 2014, 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.
+Save as disclosed above, in 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 the 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 the SFO or
+which was recorded in the register required
+to be kept under section 352 of the 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.
+1 IMPROVEMENTS IN CORPORATE
+GOVERNANCE DURING THE REPORTING
+PERIOD
+3 CONFIRMATION OF INDEPENDENCE OF
+THE INDEPENDENT NON-EXECUTIVE
+DIRECTORS AND OVERVIEW OF THEIR
+PERFORMANCE
+4
+During the reporting period, the
+independent non-executive directors
+of Sinopec Corp. strictly implemented
+the working rules for independent non.
+executive directors, fulfilled their duties,
+acted honestly, diligently and in good
+faith as required by laws and regulations
+and the Articles of Association. They
+actively attended the general meeting
+of shareholders, meetings of the Board
+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 at meetings), reviewed
+the relevant documents with due care and
+exercised their profession advantages to
+contribute to Sinopec Corp.'s operations
+and reform.
+They gave their independent opinions on
+matters such as connected transactions,
+guarantees, dividend distributions and
+appointments of senior management, kept
+close watch on corporate governance,
+operations and reform and development
+of the Company, actively participated in
+the on-site research and evaluation of the
+subsidiaries, and maintained timely and
+effective communications with the executive
+directors, management, external auditors
+and the internal auditing department.
+The independent non-executive directors
+independently and objectively protected the
+legitimate interests of the shareholders,
+especially the minority shareholders,
+when performing their duties. They gave
+constructive advice and suggestions about
+the reform and development of the Company,
+return on investment, capital operations,
+Health, Safety, and the Environment, and all
+of which were accepted by Sinopec Corp..
+COMPANY'S INDEPENDENCE FROM
+CONTROLLING SHAREHOLDERS
+The Company is independent from its
+controlling shareholders in terms of,
+among other matters, business, assets and
+finances. The Company has a well-integrated
+independent business and independent
+operational capabilities.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+As required by the Hong Kong Stock
+Exchange, with regard to the independence
+of its independent non-executive directors,
+Sinopec Corp. confirms that it has received
+and accepted the annual confirmation letters
+from all independent non-executive directors
+acknowledging full compliance with the
+relevant requirements in respect of their
+independence pursuant to Rule 3.13 of the
+Hong Kong Listing Rules. Sinopec Corp.
+considers that all independent non-executive
+directors are independent.
+CORPORATE GOVERNANCE
+Shandong LNG Terminal
+Connected Transactions
+28,450
+Fund from Sinopec Corp. to the controlling shareholder and
+its subsidiaries in the reporting period
+Balance of fund from Sinopec Corp. to the controlling shareholder and its subsidiaries
+Reason for provision of funds between related parties
+Settlement of funds provided between related parties
+Related undertakings in accordance with the funds
+Impacts on operating results and financial position
+As a result of normal business activities
+Implemented according to the contract, without any overdue
+None
+No material negative impact
+5,229
+15,095
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+41
+43
+348
+Corporate Governance
+Corporate Governance
+7 CORPORATE GOVERNANCE REPORT (IN
+ACCORDANCE WITH HONG KONG LISTING
+RULES)
+(1) Compliance with the Corporate
+Governance Code
+Based on its actual circumstances,
+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. believed that the
+nomination and election of director
+candidates by all members of the Board
+would be better suited to its operations;
+the Board would perform the duties of
+the Nomination Committee prescribed in
+the Corporate Governance Code.
+Saved as disclosed above, Sinopec Corp.
+complied with all code provisions set out
+in the Corporate Governance Code.
+A Board of Directors
+Sinopec Corp. has established and is
+continuously improving the fairness and
+transparency of its performance appraisal
+standards, its incentive schemes and
+requirements for directors, supervisors and
+other senior management. Sinopec Corp. has
+implemented a number of incentive schemes,
+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
+Department for the Management of
+Performance Evaluation".
+A.1 Board of Directors
+b. The Board meets at least once a
+quarter. The Board will usually
+communicate the time and
+proposals of the Board meeting 14
+days before the scheduled meeting
+time. The relevant documents and
+materials for Board meetings are
+usually sent to each director 10
+days in advance. In 2014, Sinopec
+Corp. held nine 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.
+d. The Board has reviewed and
+evaluated its performance in 2014
+and is of the view that the Board
+composition is appropriate and
+balanced; that the Board made
+decisions in compliance with
+domestic and overseas laws and
+regulations and the Company's
+internal rules; that the Board
+listened to the report of the Board
+of Supervisors carefully; and that
+the Board safeguarded the rights
+and interests of Sinopec Corp. and
+its shareholders.
+A.2 Chairman and President
+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 as
+Iwell as the Articles of Association
+etc. when performing their duties
+and responsibilities. Sinopec Corp.
+has purchased liability insurance
+for all directors to minimise their
+risks arising from the performance
+of their duties.
+Company (Cultural and
+Educational Hygienic and
+Community Services Agreement)
+a. The Board is the decision-making
+body of Sinopec Corp., and all
+decisions made by the Board are
+implemented by the management
+of Sinopec Corp. The Board abides
+by good corporate governance
+practices and procedures.
+6 SENIOR MANAGEMENT APPRAISAL AND
+INCENTIVE SCHEMES
+Corporate Governance
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+CORPORATE GOVERNANCE (CONTINUED)
+5 IMPROVEMENT AND IMPLEMENTATION OF THE INTERNAL CONTROL SYSTEM
+Overall scheme of internal control
+Working plans for establishment and improvement
+of the internal control system
+and their implementation
+Set-up of the department of internal
+control examination and supervision
+Implementation of self-evaluation relating
+to internal supervision and internal control
+Arrangements for internal control by the Board
+Improvement of the internal control system
+related to financial statements
+Defects in the internal control system
+and their correction
+Thoroughly implementing the "Comprehensive Risk Management Guidance for Central Enterprises",
+"Basic Standards for Enterprise Internal Control", "Application Guidance for Enterprise Internal Control"
+and the "Evaluation Guidance of Enterprise Internal Control" and its related guidelines, the Company
+revised and improved its internal control system in a comprehensive and systematic manner and
+established total-factor internal control. First, the Company identified the various internal and external
+risk factors that it faced. After further risk recognition, recording and evaluation, the Company extended
+the list and subdivided these risks into second-class and third-class risks categorized under five types of
+first-class risk: strategic risk, financial risk, market risk, operational risk and compliance risk. Moreover,
+after the Company compiled the risk lists, it improved relevant internal controls to effectively treat all
+kinds of risks. Second, the Company continued to supplement and improve its internal control at the
+corporate level, including the internal environment, risk assessment, information and communication
+and internal supervision, to satisfy the relevant requirements for corporate internal governance and
+social responsibility. In addition, the Company established and enhanced the internal control procedure,
+strengthened the control measures, defined control responsibility, and enhance controls at the
+operational level. Third, in accordance with the management principals of institutionalized management,
+standardised and process-oriented systems and informed processes, the Company researched,
+developed, promoted and applied the information system for internal control management to fulfill its
+internal control responsibilities, improve the efficiency and effectiveness of internal control and establish
+a permanent mechanism for internal control.
+Every year, the Company sets goals and makes working plans for internal control, dynamically
+modifies its internal control system, widely organizes trainings on internal control, enhances daily
+supervision and management of internal control, and conducts standard internal control evaluations.
+All the branches and subsidiaries of the Company, under the unified direction of Company
+headquarters, revised and improved their detailed rules for the implementation of internal control
+and carried out requirements of internal control. In order to form a self-supervision and evaluation
+mechanism for internal control, the Company established three lines of defense: regular testing
+of responsible departments and units, daily supervision of the internal control department, and
+comprehensive monitoring and assessment for audits.
+The Business Reform Administration Department, which administers the supervision of internal
+controls in the Company, is responsible for daily supervision of internal controls, special inspections,
+comprehensive evaluation and assessment of internal controls and other relevant functions. The Audit
+Department is in charge of carrying out independent inspection and evaluation of the effectiveness of
+internal control design and its execution in the Company.
+In 2014, the Company carried out an overall inspection and evaluation of the effectiveness of internal
+control design and operation. For details, please refer to the "Sinopec Assessment Report on Internal
+Control for 2014". The Business Reform Administration Department has taken effective measures to
+rectify the various problems that discovered in the internal control assessment.
+There was no significant defect discovered in the internal control system in this year. For common faults
+discovered during internal control inspections, the management team made the relevant correction plan
+and communicated with external auditors. After follow-up checks, all the internal control defects relating
+to financial statements were corrected by 31 December 2014. For other management deficiencies, the
+Company either rectified the problems or prepared relevant corrective measures. All corrective activities
+satisfied the appropriate requirements.
+44
+28,102
+The Board reviews the amended Internal Control Manual and the Annual Report on Internal Control
+Self-Evaluation submitted by the management team, takes charge of the communication, supervision
+and inspection of internal and external auditors through the Audit Committee under its command, and
+inspects and supervises the effective execution and self-evaluation of internal control on a yearly basis.
+The Internal Control Manual covers all of the internal control requirements related to the financial
+statements and establishes the connection with the professional management system. Fund and
+asset management, cost and expense accounting and management, invoice management, financial
+analysis and budgeting, associated transactions and the preparation of financial statements, etc. are
+implemented through the relevant processes, control procedures and control points. In addition, the
+Company has established a planning matrix for financial statements to relate items and activities in
+the accounting statements with control measures so that it can reasonably ensure through its internal
+controls that the financial statements disclosed are authentic and reliable.
+23,353
+Related party transactions with the Sinopec
+Group that occurred during the year, as set
+out in Note 37 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 Sinopec Corp. and China
+Petrochemical Corporation in 2014 were
+approved at the 23rd meeting of the fifth
+session of the Board and complied with the
+disclosure requirements under Chapter 14A
+of the Hong Kong Listing Rules.
+The 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 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:
+(a) The transactions have been conducted
+in the ordinary course of the Company's
+business
+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 Sinopec
+Corp. and its shareholders. The Company,
+according to internal control procedures,
+adjusts the scope and amount of continuing
+connected transactions and the caps for
+the amount exempted from disclosure
+every three years, and will be announced
+and implemented upon the approval of the
+Board and/or independent shareholders.
+For the other connected transactions, the
+Company, in strict compliance with domestic
+and overseas regulatory rules, published
+the announcement and implemented the
+transactions only after submitting the
+relevant proposals of connected transactions
+to the Board and/or the general meeting of
+shareholders for consideration according to
+internal control procedures.
+(b) The transactions have been entered into
+based on either of the following terms:
+ii
+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.
+(c) The transactions were conducted
+pursuant to the terms of the relevant
+agreements, and the terms were fair
+and reasonable and in the interests of
+Sinopec Corp. and its shareholders as a
+whole.
+5
+4 OTHER SIGNIFICANT CONNECTED
+TRANSACTIONS OCCURRING THIS YEAR
+On September 12, 2014, Sinopec Corp.
+entered into the Disposal Agreement and
+Share Repurchase Agreement with Sinopec
+Yizheng Chemical Fiber Company, Ltd.
+("Yizheng Chemical"). Pursuant to the
+agreements, Sinopec Corp. has agreed to
+accept the transfer of all the assets and
+liabilities owned by Yizheng Chemical
+("Outgoing Business"), the consideration of
+which is around RMB 6.491 billion, and the
+shares of Yizheng Chemical held by Sinopec
+Corp. ("Target Shares") will be repurchased
+and cancelled by Yizheng Chemical, the
+consideration of which is around RMB
+6.303 billion. The difference between the
+consideration of the Outgoing Business and
+that of the Target Shares has been offset by
+a cash consideration paid by Sinopec Corp.
+within 20 business days after the completion
+date. All the profit and loss arising from
+or incurred during the period from June
+30, 2014 to the completion date, which
+i normal commercial terms
+(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 above 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.
+Decision-making procedures:
+Principle of pricing for connected transactions:
+CONNECTED TRANSACTIONS (CONTINUED)
+(5) China Petrochemical Corporation
+will provide comprehensive
+insurance to the Company
+(6) China Petrochemical Corporation
+will provide shareholders' loans to
+the Company and
+(7) The Company will provide
+4,806
+291
+5,097
+franchise licenses for service
+stations to China Petrochemical
+Corporation.
+On August 24, 2012, Sinopec Corp. and
+China Petrochemical Corporation entered into
+a supplementary agreement of connected
+transactions, whereby the terms of the
+Mutual Supply Agreement and the Cultural
+and Educational, Hygienic and Community
+Services Agreement were extended from
+January 1, 2013 to December 31, 2015. The
+resolution relating to continuing connected
+transactions for the three years from 2013 to
+2015 was approved at the first extraordinary
+general meeting for 2012 held on October
+16, 2012. For details of the above continuing
+connected transactions, please refer to
+relevant announcements published on August
+27, 2012 in the China Securities Journal, the
+Shanghai Securities News and the Securities
+Times and on the websites of the Shanghai
+Stock Exchange (http://www.sse.com.cn)
+and the Hong Kong Stock Exchange (dated
+August 24, 2012) (http://www.hkex.com.hk).
+2 COMPLIANCE OF DISCLOSURES AND
+APPROVALS OF CONTINUING CONNECTED
+TRANSACTIONS BETWEEN THE
+COMPANY AND CHINA PETROCHEMICAL
+CORPORATION WITH THE LISTING RULES
+OF THE HONG KONG STOCK EXCHANGE
+AND THE SHANGHAI STOCK EXCHANGE
+Pursuant to the Hong Kong Listing Rules and
+the Rules Governing the Listing of Stocks
+on the Shanghai Stock Exchange ("Shanghai
+Listing Rules"), the continuing connected
+transactions between the Company and
+the China Petrochemical Corporation
+are generally subject to full disclosure in
+accordance with their nature and the value
+of the transactions, and are also subject to
+approvals from 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 listing
+rules regarding the above continuing
+connected transactions and conditionally
+exempted Sinopec Corp. from complying
+with the obligations of continuous disclosure.
+There was no change to the above-mentioned
+supplementary agreements on continuing
+connected transactions during the reporting
+period. The aggregated amount of the
+connected transactions for 2014 of Sinopec
+Corp. 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
+Pursuant to the above-mentioned agreements
+on continuing connected transactions,
+the aggregate amount of the connected
+transactions of the Company during the
+year was RMB 236.790 billion. Among the
+expenses, purchases amounted to RMB
+138.170 billion including purchases of
+products and services (procurement, storage,
+exploration and development services, and
+production-related services amounted to
+RMB 118.968 billion, representing 4.32% of
+the total amount of this type of transaction
+for 2014. Auxiliary and community services
+amounted to RMB 6.753 billion, representing
+0.25% of the total amount of this type of
+transaction for the year. In 2014, housing
+rent paid by the Company amounted to RMB
+497 million, representing 0.02% of the total
+amount of this type of transaction. The rent
+for use of land was RMB 10.531 billion,
+representing 0.38% of the total amount of
+this type of transaction for 2014. Interest
+expenses amounted to RMB 1.421 billion.
+In 2014, sales amounted to RMB 98.620
+billion, including RMB 98.479 billion for
+sales of products and services, representing
+3.48% of the total amount of this type
+of transaction, RMB 6 million for agency
+commission income, and RMB 135 million
+for interest income.
+The amounts of the above continuing
+connected transactions between the
+Company and Sinopec Group did not exceed
+the caps for the continuing connected
+transactions approved by the general
+meeting of shareholders and the Board.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+Connected Transactions
+Connected Transactions
+40
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+shall be determined by the net asset value
+according to the final asset appraisal, shall
+belong to or be borne by Yizheng Chemical.
+As of December 31, 2014, the transfer of
+the Outgoing Business had been completed
+in accordance with the relevant agreements
+and Yizheng Chemical had repurchased the
+Target Shares for cancellation. For further
+details, please refer to the announcements
+published in the China Securities Journal, the
+Shanghai Securities News and the Securities
+Times by Sinopec Corp. on September 13,
+2014, December 24, 2014 and December
+31, 2014. For the relevant details, please
+also refer to the disclosure made on the
+website of the Hong Kong Stock Exchange.
+39
+and Chemical Commercial Hong Kong
+shall acquire 99% and 1% interest in
+Sinopec Century Bright Capital Investment
+(Netherlands) Coöperatief U.A. ("COOP"),
+respectively ("Acquisition"). The purpose
+of the Acquisition was to acquire 37.5% of
+the interest of the Yanbu Aramco Sinopec
+Refining Company, Ltd. ("Yanbu Company")
+by way of acquisition of the entire interest in
+COOP. According to the related arrangements
+for the Acquisition and normal business
+practices, Sinopec Corp. has assumed from
+China Petrochemical Corp. the obligation
+in relation to the provision of guarantees to
+the related companies. As of December 31,
+2014, the Acquisition under the agreements
+had been completed. For further details,
+please refer to the announcements published
+in the China Securities Journal, the Shanghai
+Securities News and the Securities Times
+by Sinopec Corp. on October 31, 2014
+and January 6, 2015. For the relevant
+details, please also refer to the disclosure
+made on the website of the Hong Kong
+Stock Exchange.
+the year
+Other related parties
+Total
+Parent company and affiliated companies
+Associates and joint ventures
+9,866
+5,229
+15,095
+2,319
+(135)
+2,184
+17,279
+On October 30, 2014, Sinopec Overseas
+Investment Holding, Ltd. ("Overseas
+Holding"), and Sinopec Chemical
+Commercial Holding (Hong Kong) Company,
+Ltd. ("Chemical Commercial Hong Kong"),
+two wholly owned subsidiaries of Sinopec
+Corp., entered into two agreements with
+subsidiaries of China Petrochemical Corp.,
+pursuant to which Overseas Holding
+57
+5,094
+12,185
+Balance at
+the end of
+Amount
+incurred
+23,296
+the year
+beginning of
+the year
+Unit: RMB millions
+Funds from related parties
+Balance at
+Related Parties
+China Petrochemical Corp.
+Balance
+at the
+beginning of
+the year
+FUNDS PROVIDED BETWEEN RELATED PARTIES
+Relations
+the
+Funds to related parties
+Amount
+incurred
+Balance at
+the end of
+2
+7
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+100%
+1
+Bao Guoming
+Cai Xiyou²
+1
+7
+0
+50%
+50%
+88.9%
+1
+Note 1: No directors were absent from the meeting of the Board for two successive meetings.
+2: In October 2014, Mr. Cai Xiyou has tendered his resignation as the director due to new working arrangement.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+51
+Report of the Board of Directors
+Report of the Board of Directors
+0
+52
+62
+1
+0
+100%
+0
+0
+100%
+4 MEETINGS HELD BY THE BOARD
+2
+100%
+2
+7
+0
+100%
+1
+50%
+2
+7
+0
+0
+0
+2
+7
+0
+100%
+1
+50%
+Andrew Y.Yan
+2
+7
+100%
+COMMITTEES
+is a country which has entered into a tax
+treaty with the PRC stipulating a dividend
+tax rate of lower than 10%, those 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 paid amount in excess
+of the tax payable based on the tax rate
+according to such tax treaty will be refunded.
+(1) Meetings by the Audit Committee
+Hong Kong Stock Connect, 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 themselves.
+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, 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 and whose country of domicile
+The dividend distribution or capital reserves capitalisation and bonus shares declared by Sinopec Corp. in the previous three years are as follows:
+Cash dividends (RMB/share)
+Net profits attributed to the shareholders of the listed company shown
+in the consolidated statement for the dividend year (RMB million).
+Ratio between the dividends and the net profit attributed to the shareholders
+of the listed company in the consolidated statement (%)
+Number of bonus shares per 10 shares (share)
+Year 2013
+Year 2012
+Year 2011
+0.24
+0.30
+0.30
+28,010
+26,615
+26,034
+67,179
+63,496
+71,697
+41.69
+7
+41.92
+Shares of Sinopec Corp. through Shanghai-
+For domestic investors investing in the H
+Shanghai-Hong Kong Stock Connect (E
+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):
+Related to the Pilot Program of the
+a. The 8th meeting of the fifth session of
+the Audit Committee was held by way
+of written resolution on 26 January
+2014, whereby the internal control
+system of Sinopec Corp. (2014)
+was reviewed and a review opinion
+was issued.
+b. The 9th meeting of the fifth session
+of the Audit Committee was held in
+the headquarter of Sinopec Corp.
+on 19 March 2014, whereby the
+Company's annual results of the year
+2013, 20F, financial reports of 2013
+and related explanations, the internal
+control self-assessment report(2013),
+the reports on auditing work of 2013,
+and performance report of Audit
+Committee of the year 2013 were
+reviewed. The reports on the auditing
+of the financial statements for the
+first half of 2013 delivered by the
+domestic and overseas auditors were
+heard in this meeting and a review
+opinion was issued.
+c. The 10th meeting of the fifth session
+of the Audit Committee was held by
+way of written resolution on 25 April
+2014, whereby the quarterly report of
+the first quarter of the year 2014 and
+the internal control system of Sinopec
+Corp. were reviewed and a review
+opinion was issued.
+d. The 11th meeting of the fifth session
+of the Audit Committee was held in
+the headquarter of Sinopec Corp. on
+20 August 2014, whereby the interim.
+report for the first half of 2014, the
+financial reports for the first half year
+of 2014, the reports on auditing
+work for the first half of 2014
+were reviewed and a review opinion
+was issued.
+e. The 12th meeting of the fifth
+session of the Audit Committee was
+held by way of written resolution
+on 12 September 2014, whereby
+the material asset restructuring of
+Sinopec Yizheng Chemical Fiber
+Company Limited was reviewed and a
+review opinion was issued.
+f. The 13th meeting of the fifth session
+of the Audit Committee was held
+by way of written resolution on 30
+October 2014, whereby the quarterly
+report of the third quarter of 2014, the
+report of equity interests acquisition
+in Yanbu project and provide External
+Guarantees were reviewed and a
+review opinion was issued.
+(2) Meeting by the Strategy Committee
+The 2nd meeting of the fifth session
+of the Strategy Committee was held in
+Beijing on 19 March 2014, whereby the
+plan of investments of 2014 and the
+scheme to realise a production capacity
+of 10 billion cubic meters for Fuling shale
+gas fields were reviewed, and a review.
+opinion was issued.
+(3) Meeting by the Remuneration Committee
+The 2nd meeting of the fifth session of
+the Remuneration Committee was held
+on 19 March 2014, whereby the reports
+on implementation of the rules of the
+remuneration of directors, supervisors
+and other senior management for 2013
+was reviewed, and a review opinion
+was issued.
+(4) Meeting by the Social Responsibility
+Management Committee
+The 2nd meeting of the fifth session of
+the Social Responsibility Management
+Committee was held on 19 March
+2014, whereby "Sinopec Corp. 2013
+Sustainable Development Progress
+Report" was reviewed, and a review
+opinion was issued.
+During the reporting period, the Audit
+Committee held six (6) meetings. Each of
+the Strategy Committee, the Remuneration
+Committee and the Social Responsibility
+Management Committee held one (1)
+meeting respectively. All members of each
+committee had attended the meetings.
+Details of those meetings are as follows:
+5 PERFORMANCE
+6
+DIVIDEND
+The profit distribution policy of Sinopec
+Corp. maintains continuity and stability,
+and moreover gives consideration to the
+long-term interests of the Company, overall
+interests of all the shareholders and the
+sustainable development of the Company.
+Sinopec Corp. will have priority to adopt
+cash dividends for profit distribution, and
+can perform the interim profit distribution.
+When the net profits and retained earnings
+of Sinopec Corp. 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 Sinopec Corp. 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 as per the Articles of Association,
+whereby the advices of minority shareholders
+must be heard and the independent directors
+will issue independent opinions.
+Proposals for dividend distribution
+At the 23rd meeting of the fifth session of
+the Board, the Board approved the proposal
+to distribute a final cash dividend of
+RMBO.11 (tax included) per share combining
+with an interim distributed dividend of RMB
+0.09 (tax included) per share, the total
+dividend for the whole year is RMBO.20 (tax
+included) per share.
+The final cash dividend will be distributed
+on or before 30 June 2015 (Tuesday) to
+all shareholders whose names appear
+on the register of members of Sinopec
+Corp. on the record date of 18 June 2015
+(Thursday). The H shares register of
+members of Sinopec Corp. will be closed
+from 12 June 2015 (Friday) to 18 June
+2015 (Thursday) (both dates are inclusive).
+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 before 4:30 p.m. on 11
+June 2015 (Thursday) for registration.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+In accordance with the Enterprise Income
+Tax Law of the People's Republic of China
+and its implementation regulations which
+came into effect on 1 January 2008, 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 the cash dividends
+to them. Any H Shares of the Sinopec
+Corp. registered not under the name of an
+individual shareholder, including 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 and
+withhold and pay enterprise income tax on
+behalf of the relevant shareholders based
+on the register 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 to them 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 (the "Extra Amount") due
+to the application of 10% tax rate, Sinopec
+Corp. can 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. within
+the timeline set out above. 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
+The financial results of the Company for the
+year ended 31 December 2014, which is
+prepared in accordance with IFRS and its
+financial position as at that date and the
+accompanying analysis are set out from
+page 138 to page 195 in this annual report.
+2
+meetings
+2
+(1) The 13th meeting of the fifth session of
+the Board was held by way of written
+resolution on 27 January 2014, whereby
+the proposals in relation to the internal
+control system of Sinopec Corp. (2014)
+was approved in this meeting.
+(2) The 14th meeting of the fifth session of
+the Board was held by way of written
+resolution on 19 February 2014, whereby
+the proposal in relation to the Proposal
+to Start the Restructuring of Sinopec's
+Marketing Segment and to Introduce
+Social and Private Capital to Realise
+Diversified Ownership of this Segment
+which was approved in this meeting.
+(3) The 15th meeting of the fifth session of
+the Board was held in the headquarter of
+Sinopec Corp on 21 March 2014, whereby
+the proposals in relation to the business
+performance of 2013 and work plan of
+2014, the dividend distribution plan for
+the year of 2013, the Company's annual
+report of the year 2013, the plan to realise
+a production capacity of 10 billion cubic
+meters for Fuling shale gas fields, the
+amendments to the Articles of Association
+and the Rules of Audit Committee,
+sustainable development progress report,
+internal control self-assessment report
+and the appointment for external auditors
+for 2014, etc. were approved.
+3 ATTENDANCE TO THE BOARD MEETINGS
+(4) The 16th meeting of the fifth session of
+the Board was held by way of written
+resolution on 28 April 2014, whereby
+the proposal in relation to the first
+quarter results of the year 2014, the
+internal control system of Sinopec
+Corp., the announcement in relation to
+further avoiding China Petrochemical
+Corporations' competition with Sinopec
+Corp. were approved in the meeting.
+(5) The 17th meeting of the fifth session of
+the Board was held by way of written
+resolution on 28 May 2014, whereby the
+proposals in relation to the appointment
+of Mr. Chang Zhenyong and Huang
+Wensheng as Vice President of Sinopec
+Corp. was approved in the meeting.
+(6) The 18th meeting of the fifth session
+of the Board was held by way of
+written resolution on 15 August 2014,
+whereby the proposal in relation to
+the implementation of share option
+incentive scheme of Sinopec Shanghai
+Petrochemical Company Limited
+was approved.
+(7) The 19th meeting of the fifth session of
+the Board was held in the headquarter
+of Sinopec Corp. on 22 August 2014,
+whereby the proposals in relation to the
+Company's interim result of the year
+2014, the interim dividend distribution
+plan of the first half of 2014, the
+Company's interim report of the year
+2014, the establishment of the policy
+Concerning Diversity of Board Members
+and the amendments to the Insiders'
+Registration Rules were approved.
+(8) The 20th meeting of the fifth session of
+the Board was held by way of written
+resolution on 12 September 2014,
+whereby the proposal in relation to the
+material asset restructuring of Yizheng
+Chemical was approved in the meeting.
+(9) The 21th meeting of the fifth session
+of the Board was held by way of
+written resolution on 30 October 2014,
+whereby the proposals in relation to the
+third quarter report of the year 2014,
+the acquisition of equity interests in
+Yanbu project and provision of External
+Guarantees, the notice of the first
+extraordinary general meeting for the
+year 2014 were approved in the meeting.
+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.'s website.
+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 shareholders, and have completed the
+various tasks delegated to them at the
+general meetings of shareholders.
+Name
+During this reporting period, Sinopec Corp. held
+nine Board meetings. The details are as follows:
+Site
+Written
+resolution
+General meetings of the
+shareholders
+Attendance
+Attendance
+Attendance
+Attendance
+by proxy
+rate
+times
+rate
+Fu Chengyu
+Wang Tianpu
+Board meetings¹ (times)
+1
+1 MEETINGS OF THE BOARD
+REPORT OF THE BOARD OF DIRECTORS
+36.32
+Corporate Governance
+b. The secretary to the Board actively
+participated in career development
+training, with more than 15 training
+hours during the reporting period.
+G Shareholders' rights
+a. Shareholders who individually or
+collectively hold 10% of the total
+voting shares issued by Sinopec Corp.
+may request the Board in writing
+to convene the general meeting of
+shareholders. If the Board fails to
+grant the request to call the meeting
+according to the "Rules of Procedure
+for Meetings of Boards of Directors",
+the shareholders may call and hold
+the meeting at their discretion
+according to applicable laws, and
+reasonable expenses arising as a
+result are to 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.
+b. When Sinopec Corp. holds the general
+meeting of shareholders, shareholders
+who individually or collectively hold
+3% of the total voting shares issued
+by Sinopec Corp. may propose a
+temporary proposal 10 days before
+the date of the general meeting.
+c. The eligibility for attending the general
+meeting, the rights of shareholders,
+the meeting agenda and the voting
+procedures are clearly stated in the
+notice of the general meeting of the
+shareholders of Sinopec Corp.
+d. According to Sinopec Corp.'s rules,
+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 the Sinopec
+Corp.'s website.
+(2) Auditors
+The appointment of
+The Board is pleased to present the report
+for the year ended 31 December 2014 for
+shareholders' review.
+PricewaterhouseCoopers Zhong Tian LLP
+and PricewaterhouseCoopers as Sinopec
+Corp.'s external auditors for 2014 and the
+authorisation of the Board to determine
+their remuneration were approved at
+Sinopec Corp.'s annual general meeting
+for the year 2013 on 9 May 2014. The
+audit fee for 2014 is RMB 51.68 million
+(including audit fee of internal control),
+which was approved by the 23rd meeting
+of the fifth session of the Board. The
+annual financial reports have been audited
+by PricewaterhouseCoopers Zhong Tian
+LLP and PricewaterhouseCoopers; the
+Chinese certified accountants signing
+the report are Li Dan and Chen Na from
+PricewaterhouseCoopers Zhong Tian LLP.
+PricewaterhouseCoopers Zhong Tian
+LLP and PricewaterhouseCoopers have
+provided audit services to Sinopec since
+2013. The first letter of engagement was
+signed in May 2013.
+8
+(3) Other information about Sinopec Corp.'s
+corporate governance
+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 résumé and annual
+remuneration of directors, supervisors
+and other senior management, please
+refer to page 58 to page 70.
+COMPARISON OF NEW YORK STOCK
+EXCHANGE CORPORATE GOVERNANCE
+RULES AND CHINA CORPORATE
+GOVERNANCE RULES FOR LISTED
+COMPANIES
+For details, please refer to the content on
+the website of Sinopec Corp. at http://
+english.sinopec.com/investor_center/
+corporate governance/fact-sheet/20120315/
+download/2012031503.pdf.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+49
+Daniudi Gas Field in North Ordos Basin
+During the reporting period, neither
+PricewaterhouseCoopers Zhong Tian LLP
+nor PricewaterhouseCoopers provided any
+non-audit service to Sinopec Corp.
+100%
+7
+88.9%
+100%
+Wang Zhigang
+2
+7
+0
+100%
+2
+100%
+Cao Yaofeng
+1
+7
+2
+1
+0
+0
+Dai Houliang
+Liu Yun
+Chen Xiaojin
+Ma Weihua
+Jiang Xiaoming
+1
+7
+1
+88.9%
+88.9%
+1
+100%
+7
+1
+50%
+2
+7
+0
+100%
+0
+0
+Zhang Yaocang
+2
+7
+0
+0
+1
+50%
+Li Chunguang
+2
+7
+0
+100%
+1
+50%
+Zhang Jianhua
+2
+100%
+0
+0
+Total amount of cash dividends (RMB million, including taxes)
+0
+On 22 August 2014, the 10th meeting of the
+fifth session of the Board of Supervisors was
+held, and the "Interim Financial Statements of
+Sinopec Corp. for 2014" and the "Interim Report
+of Sinopec Corp. for 2014" were considered and
+passed at the meeting.
+and the First Quarterly Report of Sinopec
+Corp. for 2014 was considered and passed
+at the meeting.
+On 28 April 2014, the 9th meeting of the fifth
+session of the Board of Supervisors was held,
+On 21 March 2014, the 8th meeting of the
+fifth session of the Board of Supervisors was
+held, and the Financial Statements of Sinopec
+Corp. for 2013, Annual Report of Sinopec
+Corp. for 2013, Communication on Progress
+for Sustainable Development Report of Sinopec
+Corp. for 2013, Internal Control Assessment
+Report of Sinopec Corp. for 2013, Special Report
+on the Storage and Actual Use of Company.
+raising Funds, and Report on the Work of Board
+of Supervisors of Sinopec Corp. for 2013 were
+considered and passed at the meeting.
+development report and proposal of asset
+acquisition, etc.
+The Board of Supervisors and each supervisor
+of Sinopec Corp. diligently performed their
+supervision responsibilities, actively participated
+in the process supervision, carefully reviewed
+decisions made such as major assets
+restructuring, share repurchase and guarantee
+provision, 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 meetings in total, and
+mainly reviewed and passed the Sinopec
+Corp.'s annual report, financial statement,
+internal control assessment report, sustainable
+Dear Shareholders:
+Mr. Xu Bin, Chairman of the Board of Supervisors
+REPORT OF THE BOARD OF SUPERVISORS
+Report of the Board of Supervisors
+Report of the Board of Directors
+55
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+Beijing, China, 20 March 2015
+By order of the Board
+Fu Chengyu
+Chairman
+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 RMB.
+As the Company purchases a significant
+portion of crude oil in foreign currency
+which is based on US dollar-denominated
+prices and the company had issued some
+foreign currency bonds, 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 and the cost
+of foreign currency bond redemption.
+Investment risks: Petroleum and chemical
+sector is a capital intensive industry.
+Although the Company adopted a prudent
+investment strategy and conducted rigorous
+feasibility study on each investment project,
+some certain investment risks may exist
+in the sense that 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 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
+of 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 have been insured. However,
+such measures may not shield the Company
+from financial losses or adverse impact
+resulting from such contingencies.
+Risks with regard to the external purchase
+of crude oil: A significant amount of crude
+oil as need by the Company is satisfied
+through the 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 crude oil prices are subject
+to a significant fluctuation. Additionally, the
+supply of crude oil may even be interrupted
+due to some extreme major incidents.
+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 disruption
+of supply of crude oil.
+Risks with regard to the changes from
+environmental legislation requirements:
+Our production activities generate waste
+water, gases and solids. But the Company
+has built up the supporting effluent
+treatment systems to prevent and reduce
+the pollution to the environment. And the
+relevant government authorities may issue
+and implement much stricter environmental
+protection laws and regulations, adopt
+much stricter environment protection
+standards. For this reason, the Company
+may increase more expenses in relation to
+the environment protection accordingly.
+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
+acquiring activities, and the Company has
+to invest a large amount of money with
+no guarantee of certainty. The proved
+reserves are subject to crude oil and gas
+prices fluctuation. If the Company fails to
+acquire additional resources though further
+exploration, development and acquisition or
+crude oil and gas prices fell sharply, the oil
+and natural gas reserves and production of
+the Company will decline over time which
+will adversely affect the Company's financial
+situation and operation performance.
+exploration and development sector, further
+improvement in pricing mechanism of refined
+oil products, reforming and improvement
+in pricing mechanism of natural gas, and
+reforming in resource tax and environmental
+tax. Such regulations may have material
+effect on the operations and profitability of
+the Company.
+Risks from the macroeconomic policies
+and government regulation: Although the
+government of China is gradually liberalising
+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 prospection, exploration and
+development of crude oil and natural gas
+, setting the upper limit 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;
+meanwhile, the changes in macroeconomic
+and industry policies such as: the change of
+crude oil and refined products import policy,
+and admit private assets into the oil and gas
+Risks with regard to the cyclical effects
+from the industry: The majority of the
+operational income of the Company comes
+from the sales of refined oil products and
+petrochemical products, and part of the
+business 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 the integration of upstream,
+midstream and downstream businesses, it
+can only counteract the adverse influences of
+periodicity of the industry to some extent.
+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.
+Although, China's economic growth has
+entered the new normal, and the various
+countries have adopted different kinds of
+macroeconomic policies to eliminate negative
+effects caused by lower economic growth, the
+strength and process of economic recovery
+still remains uncertain. The business of the
+Company may be adversely affected by such
+factors as the impact on export due to trade
+protectionism of some countries, impact on
+import which is likely caused by regional
+trade agreements and etc.
+In the course of its production and
+operations, Sinopec Corp. 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 below.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+The Company always attaches great
+importance to fulfilling social responsibilities
+as an enterprise, and carries out the green
+& low carbon development strategy to
+pursue a sustainable pattern of development.
+Moreover, the Company enjoys an
+outstanding brand name, plays an important
+role in the economy and is a renowned and
+reputable company in China.
+The Company has formulated a well-
+established technology system and
+mechanism, and owns competent teams
+specialised in technology covering a wide
+range of subjects; the four platforms for
+technology advancement is taking shape,
+which includes exploration and development
+of oil & gas, refining, chemicals and
+commonly applied 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
+strong capability for technical innovations.
+The Company owns a team of
+professionals and expertise engaged in
+the production of oil & 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 favorable operational cost advantage in
+its downstream businesses.
+On 12 September 2014, the 11th meeting of
+the fifth session of the Board of Supervisors
+was held, and the "Proposal of Major Assets
+Restructuring of Sinopec Yizheng Chemical Fiber
+Company Limited" was considered and passed.
+On 30 October 2014, the 12th meeting of the
+fifth session of the Board of Supervisors was
+held, and the "Third Quarterly Report of Sinopec
+Corp. for 2013" and the "Proposal of Acquisition
+of Yanbu Refinery Project Equity and Provision
+of Guarantees as well as Relevant Issues" were
+considered and passed.
+The Company enjoys a favorable location
+which is close to the consumer markets.
+Along with the steady growth in the
+Chinese economy, sales volume of both
+oil products and chemical products by
+the Company has been increasing steadily
+I over the years; through continuous and
+specialised marketing efforts, its capability
+in international operations and market
+expansion has been further enhanced.
+During this reporting period, the Board of
+Supervisors organised supervisors to attend
+the trainings for directors and supervisors of
+listed companies organised by CSRC and to be
+present at the general meeting of shareholders
+and meeting of the Board, and organised some
+supervisors to visit companies such as Sinopec
+Hainan Petrochemical Co., Ltd., Sinopec Hainan
+Petroleum Company, Sinopec Neimongol
+Petroleum Company and Sinopec Gansu
+Petroleum Company for research and inspection.
+These activities have further improved their
+capabilities in performing supervisory duties.
+Through process supervision on significant
+decision-makings as well as supervision and
+inspection on the production and operation
+management conditions, the Board of
+Supervisors hold the view that: facing the severe
+operating situations such as the tumbling
+decrease of crude oil price in the second half
+of the year and the 11 consecutived cuts of
+domestic refined oil retail price, Sinopec Corp.
+actively responded, closely traced the market,
+optimised the production and operation and fully
+exploit the advantages of resources integration.
+In addition, Sinopec Corp. actively boosted
+industrial restructuring and transformation
+development, sturdily developed strict
+management year activities, and fully exploited
+potentials from existing asset to obtain a hard-
+won operation result. The Board of Supervisors
+had no objection to the supervised issues during
+this reporting period.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+2
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+58
+Senior Management and E
+Zhang Yaocang, aged 61, Vice
+Chairman of the Board of
+Sinopec Corp.. Mr. Zhang is a
+professor level senior engineer
+with a graduate degree from
+graduate school. In November
+1990, he was appointed as
+Deputy Director General of
+Bureau of Petroleum Geology
+and Marine Geology, Ministry of
+Geology and Mineral Resources
+("MGMR"); in February 1994,
+he was appointed as Secretary
+of CPC Committee and Deputy
+Director General of Bureau
+of Petroleum Geology and
+Marine Geology, MGMR; in
+June 1997, he was appointed
+as Deputy Secretary of CPC
+Leading Group and Executive
+Vice President of Sinopec Star
+Petroleum Co. Ltd; in April
+2000, he was appointed as
+Assistant to President of China
+Petrochemical Corporation and
+concurrently as President of
+Sinopec Star Petroleum Co.,
+Ltd.; in August 2000, he was
+appointed concurrently as
+Secretary of CPC Committee
+of Sinopec Star Petroleum
+Co. Ltd; in July 2001, he was
+appointed as Vice President
+of China Petrochemical
+Corporation; in December
+2003, he was appointed
+concurrently as Chairman of
+Sinopec International Petroleum
+Service Corporation; in January
+2007, he was appointed
+concurrently as Chairman of
+Sinopec International Petroleum
+Exploration and Production
+Corporation; in May 2009, he
+I was elected as Vice Chairman
+of the Board of Sinopec Corp..
+Wang Tianpu, aged 52, Vice
+Chairman of Board of Directors
+of Sinopec Corp., Board
+Director and President of China
+Petrochemical Corporation.
+Mr. Wang is a professor
+level senior engineer with a
+PhD degree. In March 1999,
+he was appointed as Vice
+President of Qilu Petrochemical
+Company, China Petrochemical
+Corporation; in February
+2000, he was appointed as
+Vice President of Sinopec Qilu
+Company; in September 2000,
+he was appointed as President
+of Sinopec Qilu Company; in
+August 2001, he was appointed
+as Vice President of Sinopec
+Corp.; in April 2003, he was
+appointed as Senior Vice
+President of Sinopec Corp.; in
+March 2005, he was appointed
+as President of Sinopec Corp.;
+in May 2006, he was elected as
+Board Director and appointed
+as President of Sinopec Corp.;
+in May 2009, he was elected
+as Vice Chairman of Board
+of Directors and President
+of Sinopec Corp. in August
+2011, he was elected as Board
+Director and President of China
+Petrochemical Corporation; in
+May 2013, he was elected as
+Vice Chairman of the Board of
+Sinopec Corp..
+1999, he was appointed as
+Executive Director, Executive
+Vice President and Chief
+Operating Officer of China
+National Offshore Oil Co., Ltd; in
+October 2000, he was appointed
+as Deputy General Manager of
+CNOOC; in December 2000,
+he concurrently served as
+President of China National
+Offshore Oil Co., Ltd; in August
+2002, he served as Chairman
+and CEO of China Oilfield
+Services Co., Ltd., a subsidiary
+of CNOOC; in October 2003,
+he served as General Manager
+of CNOOC, and concurrently
+as Chairman and CEO of China
+National Offshore Oil Co.,
+Ltd; in September 2010, Mr.
+Fu resigned the post of CEO
+of China National Offshore
+Oil Co., Ltd and continued to
+serve as Chairman; in April
+2011, he served as Chairman
+and Secretary of CPC Leading
+Group of China Petrochemical
+Corporation; in May 2011, he
+was appointed as Chairman
+of Board of Directors of
+Sinopec Corp..
+Fu Chengyu, aged 63, Chairman
+of Board of Directors of Sinopec
+Corp., President and Secretary
+of Communist Party of China
+("CPC") Leading Group of China
+Petrochemical Corporation.
+Mr. Fu is a professor level
+senior engineer and obtained a
+master's degree. In 1983, he
+successively served as Chairman
+of the Joint Management
+Committee of the joint venture
+projects established between
+China National Offshore Oil
+Corporation ("CNOOC") and
+foreign oil giants such as
+Amoco, Chevron, Texaco,
+Phillips, Shell and Agip, etc;
+from 1994 to 1995, he served
+as Deputy General Manager of
+China Offshore Oil Nanhai East
+Corporation; in December 1995,
+he served as vice president
+of USA Phillips International
+Petroleum Company (Asia),
+and concurrently as General
+Manager of the Xijiang
+Development Project; in April
+1999, he was appointed as
+General Manager of China
+National Offshore Oil Nanhai
+East Corporation; in September
+(1) Directors
+DIRECTORS, SUPERVISORS
+AND OTHER SENIOR
+MANAGEMENT
+1 INTRODUCTION OF
+Zhang Yaocang
+Wang Tianpu
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
+Fu Chengyu
+ployees
+Report of the Board of Supervisors
+57
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+Chairman of the Board of Supervisors
+Beijing, China, 20 March 2015
+Xu Bin
+In 2015, the Board of Supervisors will continue
+to follow the principle of diligence and integrity,
+earnestly perform the duties of supervision,
+actively participate in the process supervision
+of significant decision makings, increase
+the strength of inspection and supervision
+and protect Sinopec Corp's. benefit and its
+shareholders' interests.
+Seventhly, Sinopec Corp. actively fulfilled
+its social responsibilities and promoted the
+sustainable development of social economy.
+Information stated in the sustainable
+development report was true, accurate and
+complete, and in compliance with requirements
+made by Shanghai Stock Exchange for listed
+companies with regard to the publication of
+social responsibility report.
+Sixthly, Sinopec Corp. has a sound and effective
+internal control system. The internal control
+evaluation report was comprehensive, true and
+objective. There was no significant defect on the
+internal control system.
+Fifthly, a detailed description with adequate
+causes for large gap between actual profit and
+budget number in 2014 was made by Sinopec
+Corp. board of directors. A real, accurate and
+complete profit amount was realised by Sinopec
+Corp. in 2014.
+Fourthly, all connected transactions between
+Sinopec Corp. and China Petrochemical
+Corporation were in compliance with the relevant
+rules and regulations of listed places. All the
+connected transactions were conducted on the
+basis of "fairness and justice". Nothing in these
+transactions was found to be detrimental to the
+interests of Sinopec Corp. or its shareholders.
+Thirdly, transaction prices for share repurchase
+and asset sales under Sinopec in 2014 were
+based on "equality, fairness and justice". In
+these transactions, neither insider trading nor
+actions detrimental to the interests of Sinopec
+Corp. or its shareholders causing losses of
+assets and benefits of Sinopec Corp. were found.
+Secondly, the reports prepared by Sinopec Corp.
+in 2014 complied with the relevant regulation
+of domestic and overseas securities regulators,
+and the annual financial statement of Sinopec
+Corp. was prepared in accordance with ASBE
+and IFRS respectively, truly and fairly reflecting
+Sinopec Corp.'s financial status and operation
+performance. The dividend distribution plan
+was made after comprehensively considering
+the equity interests of shareholders and the
+long-term interests of Sinopec Corp. The
+information disclosed in the annual report was
+true, accurate and complete. No violation of
+confidential provisions of persons who prepared
+and reviewed the report was found.
+Firstly, the Board diligently fulfilled its
+obligations and exercised its rights under
+the PRC Company Law and the Articles of
+Association, and made scientific decisions
+on major issues concerning production and
+operation, reforms and development, etc.; and
+the senior management diligently implemented
+the resolutions passed by the Board; continued
+to deepen the reform, accelerated structure
+adjustment, intensified strict management and
+strived to lower the costs and enhance efficiency.
+As a result, all works made remarkable
+achievements. The Board of Supervisors did not
+discover any behaviors of any director or senior
+management which violated laws, regulations,
+and the Articles of Association, or were
+detrimental to the interests of Sinopec Corp. or
+its shareholders.
+56
+The integrated business structure of
+the Company carries strong advantages
+in synergy among its various business
+segments, enabling the Company to
+continuously tap potentials in attaining an
+efficient and comprehensive utilisation of
+its resources, and endowed the Company
+strong resistance against risks, as well
+as remarkable capabilities in delivering
+stable profitability.
+16 RISK FACTORS
+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.
+10 FIXED ASSETS
+9 BANK LOANS AND OTHER BORROWINGS
+Details of bank loans and other borrowings
+of Sinopec Corp. as of 31 December 2014
+are set out in Note 30 to the financial
+statements prepared in accordance with
+IFRS in this annual report.
+During this reporting period, other than the
+connected transactions with the controlling
+shareholder China Petrochemical
+Corporation and its subsidiaries, as disclosed
+in "Connected Transaction" of this annual
+report, none of the directors, supervisors
+of Sinopec Corp. and their associates or
+any shareholders holding 5% or more of
+the share capital of Sinopec Corp. had any
+interest in any of the above-mentioned major
+suppliers and customers.
+The total sales to the five largest customers
+of the Company accounted for 8% of the
+total sales of the Company, of which sales
+to the largest customer accounted for 3%
+of the total sales.
+8 MAJOR SUPPLIERS AND CUSTOMERS
+During this reporting period, the total
+purchases from the top five crude oil
+suppliers of the Company accounted for
+68.0% of the total purchases of crude oil
+by the Company, of which the purchases
+from the largest supplier accounted for
+20.4% of the total purchases of crude oil
+by the Company.
+The "2014 Annual Internal Control
+Assessment Report of Sinopec Corp." was
+reviewed and approved on the 23rd meeting
+of the fifth Session of the Board on 20
+March 2015, and all members of the Board
+warranted that the contents of the report are
+true, accurate and complete, and without any
+false representation, misleading statements
+or material omissions.
+INTERNAL CONTROL
+7 RESPONSIBILITIES FOR THE COMPANY'S
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+54
+Report of the Board of Directors
+53
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+The aggregate cash dividend declared by Sinopec Corp. during three years from 2011 to 2013 is RMB 0.84 per share, and the dividend from 2011
+to 2013 as a percentage of average net profits in the three years is 119.57%. It fulfilled the refinancing conditions in the domestic securities market
+provided by the “Decisions on Modifying Provisions Concerning Cash Dividends of Listed Companies" issued by CSRC.
+Capitalisation per 10 shares (share)
+0
+During this reporting period, changes to
+the fixed assets of Sinopec Corp. are set
+out in Note 17 to the financial statements
+prepared in accordance with IFRS in this
+annual report.
+11 RESERVES
+The Board is fully responsible for establishing
+and maintaining the internal control system
+related to the financial reporting as well as
+ensuring its effective implementation. In
+2014, 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 "Estimation
+Guidelines for Enterprise Internal Control".
+There were no significant defects as of 31
+December 2014. Therefore the internal
+control system of Sinopec Corp. related to
+the financial reporting is sound and effective.
+12 DONATIONS
+During this reporting period, the amount of
+charity donations made by Sinopec Corp.
+amounted to RMB 102 million.
+13 PRE-EMPTIVE RIGHTS
+14 REPURCHASE, SALES AND REDEMPTION
+OF SHARES
+During this reporting period, the changes
+to the reserves of Sinopec Corp. 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.
+During this reporting period, Yizheng
+Chemical repurchased and cancelled its
+shares held by Sinopec Corp. pursuant to
+the Share Repurchase Agreement. Saved as
+disclosed above, neither Sinopec Corp. nor
+any of its subsidiaries repurchased, sold
+or redeemed any listed shares of Sinopec
+Corp. or its subsidiaries. For details of the
+transaction, please refer to item 4 of the
+"Connected Transactions".
+15 CORE COMPETITIVENESS ANALYSIS
+The Company is a large scale vertically
+integrated energy & petrochemical company
+with upstream, mid-stream and downstream
+operations. The Company ranks first among
+all enterprises in China in terms of revenue;
+It is the second largest supplier of oil and
+gas in China; In respect of refining capacity,
+it ranks first in China and second globally;
+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 the 4th in the world,
+and has a well-established marketing network
+for chemical products.
+1
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Zhang Haichao
+(3) Other Members of Senior
+Management
+Zhang Haichao, aged 57, Vice
+President of Sinopec Corp,
+Chairman of Board of Directors
+and President of Sinopec
+Sales Co., Ltd., Vice President
+of China Petrochemical
+Corporation. 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
+2004, he served as Chairman of
+Board of Directors of Sinopec-
+BP Zhejiang Petroleum Sales
+Co., Ltd.; in April 2003, he
+was elected as Employee's
+Representative Supervisor of
+Sinopec Corp.; 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 Secretary of CPC
+Committee, 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.; and in November 2005, he
+was appointed as Vice President
+of Sinopec Corp..
+Wang Xinhua
+Jiao Fangzheng, aged 52, Vice
+President of Sinopec Corp., Vice
+President of China Petrochemical
+Corporation, Director General
+of Sinopec Exploration and
+Production Department. Mr.
+Jiao is a professor level senior
+engineer with a PhD 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 July 2010,
+he was appointed as the Director
+General of Sinopec Exploration &
+Production Department; in July
+2014, he was appointed as Vice
+President of China Petrochemical
+Corporation; in September 2014,
+he was elected concurrently as
+Chairman of Board of Directors
+of Sinopec Oilfield Service
+Co. Ltd and Vice Chairman of
+Board of Directors of Sinopec
+International Petroleum
+Exploration and Production
+Corporation; in February 2015,
+he was elected as Chairman of
+Board of Directors of Sinopec
+Yizheng Chemical Fiber
+Company (YCF) and in October
+2006, he was appointed as Vice
+President of Sinopec Corp..
+66
+Wang Xinhua, aged 59, Chief
+Financial Officer of Sinopec
+Corp.. Mr. Wang is a professor
+level senior accountant with a
+university diploma. In January
+2001, he was appointed as
+Deputy Director General of
+Finance & Assets Department
+of China Petrochemical
+Corporation; in December 2001,
+he was appointed as Deputy
+Director General of Finance &
+Planning Department of China
+Petrochemical Corporation; in
+October 2004, he was appointed
+as Director General of Finance
+& Planning Department of China
+Petrochemical Corporation; in
+May 2008, he was appointed
+as Director General of
+Finance Department of China
+Petrochemical Corporation; in
+March 2009, he was appointed
+as Director General of Finance
+Department of Sinopec Corp.; in
+May 2009, he was appointed as
+CFO of Sinopec Corp..
+Lei Dianwu
+Lei Dianwu, aged 52, 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
+Jiao Fangzheng
+lo
+0
+lo
+|0
+I
+Yu Renming
+Male
+51
+Representative
+Supervisor
+Employee's
+Representative
+Supervisor
+2012.05-2015.05
+59.82
+& Planning Department of
+Sinopec Corp.; in March 2001,
+he was appointed as Director
+General of Development
+No
+0
+0
+& 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;
+and in May 2009, he was
+appointed as Vice President
+Jiang Zhenghong, aged 53, Vice
+President of Sinopec Corp.,
+Director General of Department
+of Corporate Reform of Sinopec
+Corp.. Mr. Jiang is a professor
+level senior economist with a
+doctor degree. In September
+2000, he became Vice
+President of Shanghai Gaoqiao
+Petrochemical Co., Ltd. and
+Sinopec Shanghai Gaoqiao
+Company; in September
+2001, he was appointed
+as President of Shanghai
+Gaoqiao Petrochemical Co.,
+Ltd.; from April 2006, he was
+appointed as Secretary of CPC
+Committee and Vice President
+of Sinopec Zhenhai Refining
+& Chemical Company; from
+September 2006, he was
+appointed as Secretary of CPC
+Committee and Vice President
+of Zhenhai subsidiary of China
+Petrochemical Corporation; in
+March 2008, he was promoted
+to President and Secretary of
+CPC Committee of Sinopec
+Zhenhai Refining & Chemical
+Company; from July 2010, he
+was appointed as President
+and Deputy Secretary of CPC
+Committee of Sinopec Zhenhai
+Refining & Chemical Company;
+Since August 2013, he was
+appointed as the Director
+General of Sinopec Corporate
+Reform Dept.; since September
+2013, he was appointed as Vice
+President of Sinopec Corp..
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+Cao Yaofeng, aged 61, Board
+Director of Sinopec Corp.
+Mr. Cao is a professor level
+senior engineer with a master
+degree. In April 1997, he was
+appointed as Deputy Director
+General of Shengli Petroleum
+Administration; in May 2000, he
+served as concurrently as Vice
+Chairman of Board of Directors
+of Sinopec Shengli Oilfield Co.,
+Ltd.; in December 2001, he
+served as Board Director and
+President of Sinopec Shengli
+Oilfield Co., Ltd.; in December
+2002, he served as Director
+Genaral of Shengli Petroleum
+Administration of China
+Petrochemical Corporation and
+Chairman of Board of Directors
+of Sinopec Shengli Oilfield
+Company Limited; from April
+2003 to May 2006, he served as
+Employee Representative Board
+Director of Sinopec Corp.; in
+October 2004, he was appointed
+as Assistant to President
+of China Petrochemical
+Corporation; in June 2012, he
+was appointed concurrently as
+Chairman of Sinopec Oilfield
+Service Corporation; in 2013, he
+was appointed as academician
+of Chinese Academy of
+Engineering; and in May 2009,
+he was elected as Board
+Director of Sinopec Corp..
+Wang Zhigang, aged 57,
+Board Director and Senior Vice
+President of Sinopec Corp..
+Mr. Wang is a professor level
+senior engineer with a PhD
+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 temporally
+as Deputy Director General
+and Deputy Secretary of CPC
+Leading 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 as
+Director General of Exploration
+and Production Department of
+Sinopec Corp.; 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
+Board Director and appointed
+as Senior Vice President of
+Sinopec Corp..
+Petrochemical Corporation;
+in February 2000, he was
+appointed as Vice President
+of Sinopec Shanghai Gaoqiao
+Company; in September
+2000, he was appointed as
+President of Sinopec Shanghai
+Gaoqiao Company; in April
+2003, he was appointed as
+Vice President of Sinopec
+Corp.; in November 2003, he
+was appointed concurrently as
+Director General of Production
+and Operation Management
+Department of Sinopec Corp.; in
+March 2005, he was appointed
+as Senior Vice President of
+Sinopec Corp.; in June 2007,
+he was appointed concurrently
+as Chairman of Sinopec (Hong
+Kong) Co., Ltd; in October
+2014, he was appointed
+concurrently as Chairman of
+Sinopec Engineering (Group)
+Co., Ltd.; and in May 2006, he
+I was elected as Board Director
+and appointed as Senior Vice
+President of Sinopec Corp..
+Zhang Jianhua, aged 50,
+Board Director and Senior Vice
+President of Sinopec Corp.. Mr.
+Zhang is a professor level senior
+engineer with a PhD degree. In
+April 1999, he was appointed
+as Vice President of Shanghai
+Gaoqiao Petrochemical
+Company of China
+Li Chunguang, aged 59,
+Board Director and President
+of Sinopec Corp. and
+Vice President of China
+Petrochemical Corporation.
+Mr. Li is a professor level
+senior engineer and with a
+university diploma. In August
+1991, he was appointed as
+Vice President of Sinopec Sales
+Company North China Branch;
+in October 1995, he was
+appointed as Vice President
+of Sinopec Sales Company; in
+June 2001, he was appointed
+as President of Sinopec Sales
+Co., Ltd.; in December 2001,
+he was appointed as Director
+General of Oil Product Sales
+Department of Sinopec Corp.;
+in April 2002 he was elected as
+Chairman of Board of Directors
+and President of Sinopec Sales
+Co., Ltd.; in April 2003, he was
+appointed as Vice President of
+Sinopec Corp.; in November
+2005, he was appointed
+as Vice President of China
+Petrochemical Corporation;
+in May 2009, he was elected
+as Board Director of Sinopec
+Corp.; in May 2013, he was
+elected as Board Director and
+President of Sinopec Corp..
+Cao Yaofeng
+Wang Zhigang
+Zhang Jianhua
+Li Chunguang
+Jiang Zhenying, aged 50,
+Employee's Representative
+Supervisor of Sinopec Corp.,
+General Director, Executive
+Director and Deputy Secretary
+of CPC Committee of Sinopec
+Procurement Management
+Department, and President
+of China Petrochemical
+International Co., Ltd. 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, Executive
+Director and Secretary of the
+CPC Committee of Sinopec
+Procurement Management
+Department, President of China
+Petrochemical International
+Co., Ltd.; in April 2010, he
+was appointed as the Director
+General, Executive Director
+and Deputy Secretary of the
+CPC Committee of Sinopec
+Procurement Management
+Department and President
+of China Petrochemical
+International Co., Ltd.; in
+November 2014, he was
+appointed as Director General
+of Security Management
+Department of Sinopec
+61
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+of Sinopec Corp..
+68
+Chang Zhenyong, aged 56, Vice
+President of Sinopec Corp.,
+Director General of Chemical
+Department of Sinopec Corp.,
+Executive Director and President
+of Sinopec Chemical Products
+Sales Co., Ltd.. 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, Vice President and
+President of Sinopec Tianjin
+Company; from February
+2004 to November 2005, he
+was appointed temporally as
+Member, Standing Committee
+of CPC Committee and 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
+President and Deputy Secretary
+of CPC Committee of Qilu
+Petrochemical Company and
+President of Sinopec Qilu
+Company; from April 2010
+to December 2010, he was
+appointed as Employee-
+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 Board Director
+of Sinopec Xinjiang Energy
+Chemical Industry Co., Ltd., Vice
+Chairman of Board of Directors
+of Sinopec Great Wall Energy
+& Chemical Co., Ltd. and Vice
+Chairman of Board of Directors
+of Zhongtian Hechuang Energy
+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..
+No
+Ling Yiqun, aged 52, Vice
+President of Sinopec Corp.
+and President of Sinopec
+Qilu Company. Mr. Ling is a
+professor level senior engineer
+with a master 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 General Director of
+Refining Department of Sinopec
+Corp.; in June 2003, he was
+appointed as the Director
+General of Refining Department
+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 July 2010, he was
+appointed as Vice President of
+Sinopec Corp..
+Huang Wensheng
+Chang Zhenyong
+Jiang Zhenghong
+Ling Yiqun
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Directors, Super Employees
+Senior Management and E
+Senior Management and Employees
+Directors, Supervisors,
+67
+Huang Wensheng, aged 48,
+Vice President of Sinopec
+Corp., Secretary to the Board of
+Directors and Director General
+of the Board Secretariat of
+Sinopec Corp.. 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.
+53.95
+2012.05-2015.05
+Employee's
+December)
+2014
+Xu Bin
+Male
+58
+Chairman, the Board
+2012.05-2015.05
+Yes
+Company
+0
+0
+of Supervisors
+Geng Limin
+Male
+Li Xinjian
+Male
+Zou Huiping
+Male
+2013
+Kang Mingde
+the holding
+paid by
+Corp.;and in December 2010, he
+was elected as the Employee's
+Representative Supervisor of
+Sinopec Corp.
+Yu Renming, aged 51,
+Employee's Representative
+Supervisor of Sinopec Corp.,
+Director General of Sinopec
+Production Management
+Department. Mr. Yu is a
+professor level senior engineer
+with a university degree. In
+June 2000, he was appointed
+as the Vice President of Sinopec
+Zhenhai Refining & Chemical
+Co., Ltd.; in June 2003, he was
+appointed as the Board Director
+and Vice President 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
+May 2014, he was elected
+as Director General of the
+Production Dispatch Center
+of Sinopec Corp.; and in
+December 2010, he was elected
+as Employee's Representative
+Supervisor of Sinopec Corp..
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+65
+Directors, Supervisors,
+Senior Management and Employees
+Directors, Supervisors,
+Senior Management and Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Shares held at Sinopec (as of 31
+The Members of the Fifth Session of the Board of Supervisors
+Gender
+Age
+Position in
+Sinopec Corp.
+Tenure
+Remuneration
+paid by
+Sinopec Corp
+. in 2014
+(RMB10,000,
+before tax)
+Whether
+Name
+Male
+Zhou Shiliang
+Male
+ooooo
+Representative
+Supervisor
+Chen Mingzheng
+Male
+57
+|
+Employee's
+0
+2012.05-2015.05
+No
+0
+0
+Representative
+Supervisor
+Jiang Zhenying
+Male
+50
+55.90
+00000
+Yes
+Yes
+42228
+60
+Supervisor
+2012.05-2015.05
+Yes
+61
+Supervisor
+2012.05.2015.05
+Yes
+54
+Supervisor
+2012.05.2015.05
+55.27
+No
+64
+Independent Supervisor
+57
+Employee's
+2012.05-2015.05
+2012.05-2015.05
+59
+Directors, Supervisors,
+Directors, Supervisors,
+Senior Management and E
+Board Director 2012.05.2015.05
+61
+Male
+Cao Yaofeng
+0
+No
+97.49
+Board Director, 2012.05.2015.05
+Senior Vice President
+Yes
+57
+Wang Zhigang
+0
+No
+97.49
+0
+No
+97.29
+59 Board Director, President 2012.05.2015.05
+Board Director, 2012.05.2015.05
+Senior Vice President
+Male
+0
+Dai Houliang
+Male
+Executive Director
+No
+30.00
+2012.05.2015.05
+Independent Non
+70
+Male
+Chen Xiaojin
+Yes
+Board Director 2012.05.2015.05
+58
+Male
+Liu Yun
+Senior Management and Employees
+0
+No
+96.91
+Board Director, 2012.05.2015.05
+51
+50
+Ma Weihua
+Male
+Male
+the holding
+paid by
+Whether
+before tax)
+Tenure
+(RMB 10,000,
+in 2014
+Sinopec Corp.
+Shares held at Sinopec Corp.
+Remuneration
+paid by
+Position in
+Sinopec Corp.
+Age
+Gender
+Name
+The Members of the Fifth Session of the Board
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Directors, Supervisors,
+Senior Management and Employees
+Senior Management and Employees
+Company
+(as at 31 December)
+2014
+2013
+Li Chunguang
+0
+Yes
+0
+Yes
+Vice Chairman 2012.05.2015.05
+Vice Chairman 2012.05.2015.05
+61
+Male
+Zhang Yaocang
+52
+Male
+Wang Tianpu
+0
+Yes
+2012.05-2015.05
+Chairman
+63
+Male
+Fu Chengyu
+Zhang Jianhua
+Male
+Senior Vice President
+Independent Non . 2012.05-2015.05
+Jiang Zhenying
+Chen Mingzheng
+66
+64
+Zhou Shiliang, aged 57,
+Employee's Representative
+Supervisor of Sinopec Corp.. Mr.
+Zhou is a professor level senior
+engineer with a master degree.
+In February 2000, he was
+appointed as Deputy Director
+General of Yunnan-Guizhou-
+Guangxi Petroleum Exploration
+Bureau; in September 2000,
+he was appointed as President
+of Sinopec Yunnan-Guizhou-
+Guangxi Oilfield Company; in
+April 2002, he was appointed
+as Secretary of CPC Committee
+and Vice President in Sinopec
+South Exploration & Production
+Company; in April 2006, he was
+appointed as Secretary of CPC
+Committee and Deputy Director
+General in Sinopec Henan
+Petroleum Exploration Bureau;
+in November 2007, he was
+appointed as Director General
+of HR Department of Sinopec
+Corp.; since June 2012, he has
+acted as the Secretary of CPC
+Committee and Supervisory
+Committee, Chairman of the
+Labour Union and Supervisory
+Board of Sinopec Oilfield
+Service Corporation; in
+September 2014, he was
+appointed as the Secretary of
+CPC Committee, Board Director
+and Vice President of Sinopec
+Oilfield Service Co. Ltd; and
+in May 2009, he was elected
+as Employee's Representative
+Supervisor of Sinopec Corp.
+Kang Mingde, aged 64,
+Independent Supervisor of
+Sinopec Corp., Mr. Kang
+obtained a college diploma.
+Since January 1992, he
+worked in the 6th Discipline
+Inspection Office of CPC Central
+Commission for Discipline
+Inspection and Ministry of
+Supervision, and was appointed
+as officer (deputy director
+level) Deputy Director, director,
+Inspector (Deputy Director
+General level), and Supervision
+Commissioner; since January
+2005, he was appointed as the
+Discipline Inspector (Deputy
+Director General level) and
+Supervision Commissioner of
+the first Discipline Inspection
+Office of CPC Central
+Commission for Discipline
+Inspection and Ministry of
+Supervision; between November
+2010 and July 2011, he was
+appointed as the Discipline
+Inspector (Director level) and
+Supervision Commissioner of
+the first Discipline Inspection
+Office of CPC Central
+Commission for Discipline
+Inspection and Ministry of
+Supervision; and in May 2012,
+he was elected as Supervisor
+of Sinopec Corp.
+Sinopec Corp.
+Zou Huiping, aged 54,
+Supervisor of Sinopec Corp. and
+Director General of Auditing
+Department 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
+Director General of Finance &
+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 2006, he was appointed
+as Director General of Auditing
+Department of Sinopec Corp.;
+and in May 2006, he was
+elected as Supervisor of
+Zhou Shiliang
+Kang Mingde
+Zou Huiping
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Senior Management and E
+Senior Management and Employees
+Directors, Supervisors,
+63
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+Yu Renming
+Chen Mingzheng, aged 57,
+Employee's Representative
+Supervisor of Sinopec Corp.,
+Vice President of Sinopec
+Northwest Oilfield Company.
+Mr. Chen is a senior engineer
+with a graduate degree from
+graduate school. In November
+2000, he was appointed as
+Deputy Director General of
+North China Petroleum Bureau
+under Sinopec Star Petroleum
+Co. Ltd.; in June 2003, he
+was appointed as Deputy
+Director General of North China
+Petroleum Bureau under China
+Petrochemical Corporation;
+in October 2004, he was
+appointed as Secretary of CPC
+Committee in North China
+Petroleum Bureau under China
+Petrochemical Corporation; in
+March 2008, he was appointed
+as Secretary of CPC Committee
+of Sinopec Northwest Bureau
+and Vice President of Sinopec
+Northwest Oilfield Company; in
+March 2014, he was appointed
+concurrently as Chairman of the
+Board of Supervisors of Xinjiang
+Energy Chemical Industry Co.
+Ltd; in September 2014, he
+was appointd as President, Vice
+Secretary of CPC Committee of
+Sinopec Northwest Bureau and
+President of Sinopec Northwest
+Oilfield Company; in May 2009,
+he was elected as Employee's
+Representative Supervisor of
+Sinopec Corp..
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+Bao Guoming, aged 63,
+Independent Non-executive
+Director of Sinopec Corp..
+Ms. Bao is a Professor,, an
+international registered internal
+auditor and Certified Public
+Accountant of China with a
+master degree. Since December
+of 1992, she acted as associate
+professor of Accounting Dept.
+of International Business
+School of Nankai University,
+and since December of 1995,
+as Professor of Accounting
+Dept. of International Business
+School of Nankai University;
+since November of 1997, as
+the Vice Director of Accounting
+Dept. of International Business
+School of Nankai University;
+since April of 1999, as the Vice
+Director of the Audit Cadre
+Training Center of National
+Audit Office; Since February of
+2003, as the Director of the
+Audit Cadre Training Center
+of National Audit Office; since
+July of 2004, as the Director
+of the Administrative Audit
+Department of National Audit
+Office; since February of 2010,
+as the Director-Level Auditor
+of the Laws and Regulations
+Department of National Audit
+Office; since July of 2010,
+as the Vice-Chairman and
+Secretary General of China
+Internal Audit Association. From
+May 2012 to the present, she
+has acted as Independent Non-
+executive Director of Sinopec
+Corp.. Ms. Bao is an expert
+who enjoys the State Council
+Special Allowance.
+Directors, Supervisors ployees
+60
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Dai Houliang
+Liu Yun
+Chen Xiaojin
+Ma Weihua
+Dai Houliang, aged 51,
+Board Director and Senior
+Vice President of Sinopec
+Corp.. Mr. Dai is a professor
+level senior engineer with a
+PhD degree. In December
+1997, he was appointed as
+Vice President of Yangzi
+Petrochemical Corporation; in
+April 1998, he served as Board
+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
+Board 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 Directorsof 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 Board Director, Senior Vice
+President and CFO of Sinopec
+Corp.; in August 2008, he was
+concurrently appointed as the
+Chairman of Petro-Cyberworks
+Information Technology Co.,
+Ltd. (PCITC) and Sinopec
+Technology Development
+Company; 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
+Board Director and appointed
+as Senior Vice President of
+Sinopec Corp..
+Li Xinjian, aged 61, Supervisor
+of Sinopec Corp. Mr. Li is a
+senior administration engineer
+with a university diploma.
+In February 2001, he was
+appointed as Director of General
+Office and Assistant Inspector
+of Leading Group of Promotion
+of Cultural and Ideological
+Progress Central Office of the
+CPC Central Committee; in
+June 2004, he was appointed
+as Deputy Secretary of
+Central Office of CPC Central
+Committee and Director of
+General Office of Leading Group
+of Promotion of Cultural and
+Ideological Progress Central
+Office of the CPC Central
+Committee; in January 2006, he
+was appointed concurrently as
+Deputy Director General of HR
+Dept. of the Central Office of the
+CPC Central Committee; and in
+March 2008, he was appointed
+as Deputy Director General
+of the General Office of China
+Petrochemical Corporation
+and Deputy Director General
+of President Office of Sinopec
+Corp. (Director General Level).
+In May 2012, he was elected as
+Supervisor of Sinopec Corp.
+Liu Yun, aged 58, Board
+Director of Sinopec Corp.,
+Chief Accountant of China
+Petrochemical Corporation.
+Mr. Liu is a professor level
+senior accountant with a
+master degree. In December
+1998, he was appointed as
+Deputy Director General of
+Finance Department of China
+Petrochemical Corporation;
+in February 2000, he was
+appointed as Deputy Director
+General of Finance Department
+of Sinopec Corp.; in January
+2001, he was appointed as
+Director General of Finance
+Department of Sinopec
+Corp.; in June 2006, he was
+appointed as Deputy CFO of
+Sinopec Corp.; in February
+2009, he was appointed as
+Chief Accountant of China
+Petrochemical Corporation; and
+in May 2012, he was appointed
+concurrently as the Chairman
+of Sinopec Finance Co., Ltd.;
+in September 2013, he was
+appointed concurrently as
+Chairman of Sinopec Insurance
+Co., Ltd.; and in May 2009, he
+was elected as Board Director
+of Sinopec Corp..
+Ma Weihua, aged 66,
+Independent Non-executive
+Director of Sinopec Corp..
+Mr. Ma is a senior economist
+with a PhD degree. Mr. Ma is
+the Chairman of the Board of
+Directors of Wing Lung Bank
+Ltd., Independent Non-executive
+Director of Winox Holdings
+Ltd., Independent Director of
+the Guotai Junan Securities
+Co., Ltd. (GTJA), Independent
+Director of China Eastern
+Airlines Corporation Limited,
+Independent Director of
+China Resource Land Limited,
+Independent Director of Huabao
+Investment Co., Ltd., and
+Independent Director of China
+World Trade Co., Ltd.. In May
+1988, he was appointed as the
+Deputy Director of the General
+Affairs Office of the People's
+Bank of China ("PBOC"); in
+March 1990, he was appointed
+as the Deputy Director of
+Fund Planning Department of
+PBOC; in October 1992, he was
+appointed as the President and
+Secretary of the CPC Leading
+Group of the Hainan Branch
+of PBOC; in January 1999, he
+was appointed as the Director,
+Governor and Secretary of
+the CPC Committee of China
+Merchants Bank; and in May
+2010, he was elected as
+Independent Non-executive
+Director of Sinopec Corp..
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Jiang Xiaoming
+Andrew Y. Yan
+Bao Guoming
+Jiang Xiaoming, aged 61,
+Independent Non-executive
+Director of Sinopec Corp..
+Mr. Jiang has a doctorate
+in economics. Presently, he
+acts as the member of the
+national committee of CPPCC,
+director of China Foundation
+for Disabled Persons, 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 and SPG Land
+(Holdings) Ltd., 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
+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 Co., Ltd.. From
+May 2012 to the present, he
+has acted as Independent
+Non-executive Director of
+Sinopec Corp..
+Andrew Y. Yan, aged 57,
+Independent Non-executive
+Director of Sinopec Corp.. Mr.
+Yan is the founding Managing
+Partner of SAIF Partners and
+has a master degree. Presently,
+he acts as the Independent
+Non-executive Director of China
+Resources Land Limited, CPMC
+Holdings Limited and Cogobuy
+Group, the Non-executive
+Director of Digital China
+Holdings Limited, 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 the Director of ATA
+Co., Ltd. From 1989 to 1994,
+he acted as the Economist of
+the World Bank headquarters
+in Washington, Senior 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
+(Emerging Markets Partnership)
+and Director of Hong Kong
+Office of AIG Asia Infrastructural
+Investment Fund. And from May
+2012 to the present, he has
+acted as Independent
+Non-executive Director of
+Sinopec Corp..
+Chen Xiaojin, aged 70,
+Independent Non-executive
+Director of Sinopec Corp..
+Mr. Chen is a senior engineer
+(research fellow level) with
+a university diploma. In
+December 1982, he was
+appointed as President of
+Tianjin Shipbuilding Industry
+Corporation; in January 1985,
+he was appointed successively
+as Vice President and President
+of CNOOC Platform Corporation;
+in February 1987, he was
+appointed successively as
+Director General of Operation
+Department, Director General of
+Foreign Affairs Bureau, Director
+General of International Affairs
+Department in China State
+Shipbuilding Corporation and
+Deputy President of China State
+Shipbuilding Trading Company;
+in December 1988, he was
+appointed as Vice President
+of China State Shipbuilding
+Corporation; in January 1989,
+he was appointed concurrently
+as President of China State
+Shipbuilding Trading Company;
+in October 1996, he was
+elected as concurrently as
+Chairman of Board of Directors
+of China State Shipbuilding
+Trading Company; from June
+1999 to July 2008, he served
+as President and Secretary of
+CPC Leading Group of China
+State Shipbuilding Corporation;
+in May 2009, he was elected
+as Independent Non-executive
+Director of Sinopec Corp..
+in January 2007, he was
+appointed as Deputy Secretary
+of CPC Committee, Secretary of
+Discipline Inspection Committee
+as well as Labour Union
+Chairman of Sinopec Chemical
+Products Sales Company;
+in August 2008, he was
+appointed as Director General
+of Supervision Department of
+Sinopec Corp. and Vice Leader
+of Discipline Inspection Group
+for CPC Leading Group of China
+Petrochemical Corporation and
+Director General of Supervision
+Bureau of China Petrochemical
+Corporation; and in May 2009,
+he was elected as Supervisor of
+Sinopec Corp.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Xu Bin, aged 58, Chairman
+of the Board of Supervisors
+of Sinopec Corp.. Mr. Xu
+is a professor level senior
+administration engineer with
+a university diploma. Since
+June 1999, he acted as Deputy
+Director of the 6th Discipline
+Inspection and Monitoring Office
+of the Central Commission for
+Discipline Inspection of CPC;
+since April 2000, as Deputy
+Director of the 3rd Discipline
+Inspection and Monitoring
+Office of CCDI of CPC; since
+November 2004, as the Bureau
+Level Inspector, Supervisory
+Attaché and Deputy Director of
+the 3rd Discipline Inspection
+and Monitoring Office of
+the Central Commission for
+Discipline Inspection of CPC;
+since November 2006, as the
+Director of the Petition Letters
+and Visits Office of Central
+Commission for Discipline
+Inspection of CPC; since May
+2011, as the Member of the
+CPC Leading Group of China
+Petrochemical Corporation
+and the Team Leader of the
+Discipline Inspection Group for
+CPC Leading Group of China
+Petrochemical Corporation;
+and since October 2011, as
+the Board Director of China
+Petrochemical Corporation. And
+since May 2012, he has acted
+as the Chairman of the Board of
+Supervisors of Sinopec Corp..
+Male
+Andrew Y. Yan
+Executive Director
+0
+0
+이이이이이이이이이이
+0
+0
+57
+00
+30.00
+Geng Limin, aged 60,
+Supervisor of Sinopec Corp.,
+Director General of Supervision
+Department of Sinopec Corp.
+Mr. Geng is a professor
+level senior administration
+engineer with a college
+diploma. In February 2000,
+he was appointed as Deputy
+Director General of Supervision
+Department of Sinopec Corp.
+and Deputy Director General
+of Supervision Bureau of China
+Petrochemical Corporation;
+61
+Male
+Jiang Xiaoming
+Executive Director
+No
+30.00
+No
+Independent Non- 2012.05.2015.05
+Executive Director
+Independent Non 2012.05.2015.05
+Xu Bin
+(2) Supervisors
+Li Xinjian
+Geng Limin
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+62
+lo
+0
+No
+30.00
+0
+63
+Female
+Bao Guoming
+lo
+0
+0
+No
+Independent Non 2012.05.2015.05
+Executive Director
+30.00
+73,909
+1,144,222
+3,926
+2,443
+152,007
+310
+23,215
+57,749
+2,933
+102,399
+Provisions
+886,147
+756,774
+3,518
+2,767
+489
+9,602
+2,547
+1,080,822
+19,883
+396,428
+Other payables
+Deferred tax liabilities
+49,282
+Non-current assets
+Debentures payable
+Long-term loans
+Non-current liabilities
+468,179
+Total current liabilities
+44,379
+11,084
+Non-current liabilities due within one year
+10,000
+Short-term debentures payable
+132,446
+198,144
+29,291
+8,834
+7,977
+100,543
+177,667
+669,595
+703,485
+75,318
+80,593
+12345678
+18
+17
+16
+15
+14
+13
+12
+11
+3,730
+868
+373,010
+360,144
+21,385
+23,996
+221,906
+188,223
+10
+4,216
+3,780
+160,630
+78,681
+60,263
+6,281
+45,749
+11,890
+27
+10,000
+82,917
+103,302
+26
+35,888
+818
+4,526
+202,724
+81,079
+89,918
+839
+28,677
+25
+13,165
+24
+108,121
+166,688
+4,577
+198,366
+20
+222222222
+29
+1,382,916
+18,013
+1,009,906
+4,141
+6,979
+22,512
+1,091,224
+1,451,368
+11,961
+14,158
+6,255
+23
+604,257
+29,251
+90,831
+Non-current liabilities
+Total current liabilities
+Non-current liabilities due within one year
+Short-term debentures payable
+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
+Other non-current assets
+Deferred tax assets
+Long-term deferred expenses
+Goodwill
+Intangible assets
+Construction in progress
+Fixed assets
+Long-term equity investments
+Available-for-sale financial assets
+Other non-current liabilities
+Long-term loans
+Debentures payable
+Provisions
+Deferred tax liabilities
+7
+28,771
+13,963
+15,101
+10,100
+569892
+RMB million
+2013
+At 31 December
+At 31 December
+2014
+RMB million
+Note
+These financial statements have been approved by the board of directors on 20 March 2015.
+68,466
+Total liabilities and shareholders' equity
+Total shareholders' equity
+Minority interests
+Retained earnings
+Surplus reserves
+Specific reserve
+Other comprehensive income
+Capital reserve
+Share capital
+Shareholders' equity
+Total liabilities
+Total non-current liabilities
+Other non-current liabilities
+Total equity attributable to shareholders of the Company
+571,822
+29
+2283
+Employee benefits payable
+Advances from customers
+Accounts payable
+Bills payable
+Short-term loans
+Liabilities and shareholders' equity
+Current liabilities
+Total non-current assets
+Total assets
+Other non-current assets
+Long-term deferred expenses
+Intangible assets
+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
+Other receivables
+Accounts receivable
+Bills receivable
+Cash at bank and on hand
+Current assets
+Assets
+Taxes payable
+1,805
+6,732
+176
+533,297
+164,545
+189,631
+452,361
+123
+13
+12
+11
+HA
+2,844
+91
+258,075
+324,048
+RMB million
+19,888
+138,882
+74,654
+5,237
+1,962
+9
+52,652
+201,234
+8
+32,620
+25,031
+7
+2,064
+19,186
+2013
+At 31 December
+RMB million
+1,556
+491
+35
+407
+(7,261)
+34
+36,947
+48,703
+33
+116,565
+118,280
+32
+36
+759,656
+187,834
+200,016
+8,187
+11,549
+7,820
+17
+26,080
+29,715
+99,138
+83,506
+46,452
+67,426
+804,273
+123,059
+193,552
+240,718
+At 31 December
+2014
+Note
+as at 31 December 2014
+BALANCE SHEET
+Financial Statements (RPC)
+Financial Statements (RPC)
+73
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Head of accounting department
+Chief Financial Officer
+190,337
+Wang Dehua
+Li Chunguang
+President
+Chairman
+Fu Chengyu
+1,382,916
+1,451,368
+623,260
+647,095
+52,914
+52,612
+570,346
+594,483
+224,534
+Wang Xinhua
+Total non-current liabilities
+Net cash flow from investing activities
+Shareholders' equity
+151,893
+148,347
+49(a)
+(43,090)
+(3,087,212)
+(88,286)
+(3,026,590)
+(296,896)
+(292,259)
+(55,731)
+(56,396)
+(2,691,495)
+(2,589,649)
+22,396
+3,239,105
+3,174,937
+44,214
+3,214,962
+1,747
+RMB million
+3,129,123
+1,600
+2013
+2014
+RMB million
+Note
+These financial statements have been approved by the board of directors on 20 March 2015.
+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
+3,874
+4,198
+2,312
+1,496
+1,174,992
+1,132,575
+1,142,890
+1,128,447
+12,696
+32,102
+4,128
+4,120
+(178,740)
+(132,633)
+(188,483)
+(141,905)
+(2,532)
+Other cash paid relating to financing activities
+52(iii)
+(1,137)
+(33,487)
+(13,855)
+11
+(154,946)
+(124,381)
+9,743
+9,272
+2,499
+2,066
+1,550
+1,020
+(50)
+to minority shareholders
+Including: Subsidiaries' cash payments for distribution of dividends or profits
+Cash paid for dividends, profits distribution or interest
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Head of accounting department
+Chief Financial Officer
+Wang Dehua
+Wang Xinhua
+Li Chunguang
+President
+Fu Chengyu
+Chairman
+58,344
+1,009
+(2,329)
+CONSOLIDATED CASH FLOW STATEMENT
+(297)
+1,306
+(1,309)
+(657)
+29,816
+These financial statements have been approved by the board of directors on 20 March 2015.
+Total comprehensive income
+Total other comprehensive income
+Share of other comprehensive loss of associates
+Available-for-sale financial assets
+Cash flow hedges
+(after tax and reclassification adjustments):
+Items that may be reclassified subsequently to profit or loss
+(363)
+(1,114,481)
+for the year ended 31 December 2014
+Cash received from sale of goods and rendering of services
+Cash repayments of borrowings
+Sub-total of cash inflows
+Cash received from borrowings
+Including: Cash received from minority shareholders' capital contributions to subsidiaries
+Cash flows from financing activities:
+Cash received from capital contributions
+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
+Cash flows from operating activities:
+Sub-total of cash inflows
+Cash received from returns on investments
+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
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+57,335
+(1,105,457)
+(37,967)
+(117,836)
+(149,463)
+(142,194)
+Sub-total of cash outflows
+Cash repayments of borrowings
+Sub-total of cash inflows
+Cash received from borrowings
+Cash received from capital contributions
+Cash flows from financing activities:
+Sub-total of cash outflows
+(30,092)
+(42,226)
+(119,371)
+(99,968)
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+21,943
+24,358
+Sub-total of cash inflows
+127
+214
+3,093
+2,254
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+14,157
+5,899
+(127,520)
+19,406
+250,706
+232,085
+Total current assets
+Head of accounting department
+Chief Financial Officer
+Wang Dehua
+Wang Xinhua
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Li Chunguang
+President
+Chairman
+Fu Chengyu
+These financial statements have been approved by the board of directors on 20 March 2015.
+Cash received from returns on investments
+(20,173)
+1,264
+(46,298)
+(271,664)
+(297,004)
+(34,760)
+(36,519)
+Net (decrease)/increase in cash and cash equivalents
+Net cash flow from financing activities
+Cash paid for dividends, profits distribution or interest
+(236,904)
+(260,485)
+251,491
+250,706
+(4,927)
+4,566
+15,991
+Cash received from disposal of investments
+2013
+2014
+Note
+for the year ended 31 December 2014
+CASH FLOW STATEMENT
+Financial Statements (RPC)
+78
+Financial Statements (RPC)
+77
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+The accompanying notes form part of these financial statements.
+(Legal representative)
+RMB million
+Head of accounting department
+Wang Dehua
+Wang Xinhua
+Li Chunguang
+President
+Chairman
+Fu Chengyu
+4,590
+(82)
+31,519
+(1,346)
+(49)
+(1,143,473)
+(21)
+(1,153,996)
+(21,421)
+16
+(5,691)
+49(b)
+(1,674)
+Chief Financial Officer
+(39,494)
+Cash flows from operating activities:
+Cash received from sale of goods and rendering of services
+148,957
+(1,690,816)
+(1,335,246)
+159,207
+(51,511)
+(70,981)
+(225,218)
+(204,807)
+(46,489)
+(39,024)
+(1,367,598)
+(1,020,434)
+38,215
+1,839,773
+Other cash received relating to operating activities
+1,494,453
+1,800,264
+1,294
+RMB million
+1,396,976
+1,151
+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
+Refund of taxes and levies
+96,326
+Total liabilities
+32,145
+6,822
+These financial statements have been approved by the board of directors on 20 March 2015.
+Minority interests
+Equity shareholders of the Company
+Attributable to:
+Total comprehensive income
+Total other comprehensive income
+Share of other comprehensive loss of associates and jointly controlled entities
+Foreign currency translation differences
+Available-for-sale financial assets
+Cash flow hedges
+(after tax and 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
+Attributable to:
+Net profit
+Less: Income tax expense
+Profit before taxation
+Less: Non-operating expenses
+Add: Non-operating income
+Operating profit
+Investment income
+Note
+2014
+2013
+RMB million
+4,044
+6,839
+12,573
+10,969
+1234
+44
+43
+42
+41
+6,274
+9,618
+39
+Add: (Loss)/gain from changes in fair value
+73,572
+44,359
+46,274
+190,672
+191,202
+38
+2,457,041
+2,429,017
+37
+2,880,311
+2,825,914
+37
+RMB million
+70,500
+Impairment losses
+Exploration expenses, including dry holes
+Financial expenses
+1,226
+232
+2,123
+(206)
+46,121
+54,690
+116,565
+118,280
+616,648
+542,173
+148,469
+145,745
+Surplus reserves
+1,982
+1,105
+600
+22,729
+25,830
+77,961
+62,221
+44,692
+55,202
+Specific reserve
+Other comprehensive income
+Capital reserve
+Share capital
+1,892
+(4,151)
+Retained earnings
+190,337
+Selling and distribution expenses
+General and administrative expenses
+Sales taxes and surcharges
+Less: Operating costs
+Operating income
+for the year ended 31 December 2014
+CONSOLIDATED INCOME STATEMENT
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+74
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Head of accounting department
+Chief Financial Officer
+193,552
+Wang Dehua
+Li Chunguang
+President
+Chairman
+Fu Chengyu
+1,144,222
+1,080,822
+527,574
+538,649
+These financial statements have been approved by the board of directors on 20 March 2015.
+Total liabilities and shareholders' equity
+Total shareholders' equity
+171,202
+172,101
+Wang Xinhua
+12,541
+2,167
+2,510
+37
+NN
+33
+RMB million
+RMB million
+2013
+2014
+Note
+Other comprehensive income
+Net profit
+Less: Income tax expense
+Less: Non-operating expenses
+Profit before taxation
+Add: Non-operating income
+Operating profit
+Investment income
+Add: (Loss)/gain from changes in fair value
+Exploration expenses, including dry holes
+Impairment losses
+Financial expenses
+General and administrative expenses
+Selling and distribution expenses
+Sales taxes and surcharges
+Less: Operating costs
+Operating income
+for the year ended 31 December 2014
+INCOME STATEMENT
+37
+1,222,323
+972,685
+1,627,613
+1,305,891
+69,876
+38,967
+2,582
+1,766
+2,801
+5,092
+69,657
+35,641
+15,216
+13,417
+44
+1
+Financial Statements (RPC)
+2,058
+3,693
+2,737
+12,532
+10,926
+7,857
+9,144
+60,553
+46,314
+34,942
+10,848
+149,762
+142,840
+(4,605)
+76
+Financial Statements (RPC)
+75
+58
+0.579
+0.406
+58
+இன
+4,198
+1,480
+67,179
+47,430
+71,377
+48,910
+25,605
+0.406
+17,571
+96,982
+66,481
+2,952
+3,710
+46
+3,481
+4,710
+45
+||
+56
+96,453
+65,481
+47
+8,137
+0.543
+71,377
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Head of accounting department
+Chief Financial Officer
+Wang Dehua
+Wang Xinhua
+Li Chunguang
+President
+Chairman
+Fu Chengyu
+68,359
+3,950
+(118)
+48,910
+39,762
+39,644
+932
+(9,266)
+(689)
+(514)
+(297)
+(3,042)
+1,314
+(1,225)
+604
+(4,485)
+34
+72,309
+Other current assets
+6 THE COMPANY'S EMPLOYEES
+As at 31 December 2014,
+the Company has a total of
+358,571 employees.
+Prepayments
+Marketing and Distribution
+57,256
+16%
+R&D and Other Segments
+11,470
+3%
+EMPLOYEES' PROFESSIONAL STRUCTURE AS FOLLOWS:
+(including production, sales, technology, finance, administration and other professions)
+Sales
+49,670
+14%
+Technology
+53,066 15%
+Finance
+Administration
+Others
+9,628
+2,868
+64,464 18%
+2%
+1%
+Production
+67,017 19%
+178,875 50%
+Chemicals
+Refining
+in 2014
+Remuneration
+paid by
+Sinopec Corp.
+Position with
+Sinopec Corp.
+Age
+Gender
+Name
+Other Members of Senior Management
+Inventories
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+69
+Directors, Supervisors,
+Senior Management and Employees
+Directors, Super Employees
+Senior Management and E
+70
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+THE BREAKDOWN ACCORDING TO THE MEMBERS OF EACH OPERATION SEGMENT AS FOLLOWS
+(including exploration and Production, refining, marketing and distribution, chemicals, R&D and other segments)
+Exploration and Production
+144,103 40%
+78,725 22%
+EDUCATIONAL BACKGROUND STRUCTURE FOR EMPLOYEES AS FOLLOWS:
+(including master degree or above, university, junior college, technical secondary school, senior high school and technical school degree or below)
+Junior college
+Net Assets
+(%)
+RMB
+millions
+RMB
+millions
+(Net Loss) Principal Activities
+RMB
+millions
+13,203
+100
+28,993
+16,074
+Sinopec Yangzi Petrochemical
+Company Limited
+Sinopec (Hong Kong) Limited
+(HK Dollar,
+100
+24,833
+13,337
+millions)
+(2,427) Manufacturing of intermediate
+petrochemical products and
+petroleum products
+Total Assets
+Registered Capital by Sinopec Corp.
+RMB
+millions
+Net Profit/
+Percentage of
+shares held
+79,615 22%
+Technical secondary school
+27,399
+8%
+Senior high school and
+technical school degrees or below
+144,968
+40%
+Master's degree or above
+13,919 4%
+(RMB 10,000,
+before tax)
+University
+7
+CHANGES OF CORE TECHNICAL TEAM OR KEY TECHNICIANS
+During the reporting period, there are no significance changes of core technical team and key technicians.
+8 EMPLOYEE BENEFITS SCHEME
+Details of the Company's employee benefits scheme are set out in Note 38 of the financial statements prepared under IFRS of this annual report. As
+at 31 December 2014, the Company has a total of 205,386 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.
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+Name of Company
+On 31 December, 2014, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+92,670 26%
+Whether
+paid by
+the holding
+Company
+Shares held at Sinopec Corp
+No
+56.05
+Vice President
+Board Secretary/
+48
+Male
+Huang Wensheng
+0
+0
+No
+29.50¹
+Vice President
+56
+Male
+Chang Zhenyong
+0
+0
+No
+64.50
+0
+0
+Note1: Salary of Mr. Chang Zhenyong were the amount they received after being appointed as Vice President of Sinopec Corp.
+2 INFORMATION ON
+During this reporting period, the
+number of directors, supervisors
+and other senior management
+5 REMUNERATION OF
+DIRECTORS, SUPERVISORS,
+AND THE SENIOR
+MANAGEMENT
+As of 31 December 2014 or as
+at any time of this year, none
+of the directors or supervisors
+had any beneficial interest in
+any material contract to which
+Sinopec Corp., its holding
+company or any its subsidiary
+or fellow subsidiary was a party.
+SUPERVISOR'S INTEREST IN
+CONTRACT
+DIRECTOR'S AND
+During the reporting period,
+there are no changes in the
+shareholdings of the directors,
+supervisors and other senior
+management of Sinopec Corp.
+OF DIRECTORS, SUPERVISORS
+AND OTHER SENIOR
+MANAGEMENT
+CHANGES IN SHAREHOLDING
+Committee, Board Director
+and Vice President of Sinopec
+Oilfield Service Co. Ltd;
+Vice President
+4
+In September 2014, Mr.
+Zhou Shiliang, an Employee's
+Representative Supervisor of
+Sinopec Corp., was appointed
+as the Secretary of CPC
+Ms. Bao Guoming, an
+Independent Non-executive
+Director of Sinopec Corp., was
+no longer External Supervisor of
+Bank of China and Independent
+Non-executive Director of Hebei
+Chengde Lulu Co., Limited.
+Mr. Andrew Y. Yan, an
+Independent Non-executive
+Director of Sinopec Corp., has
+been appointed as Independent
+Non-executive Director of
+CPMC Holdings Limited since
+March 2014, Independent Non-
+executive Director of Cogobuy
+Group since July 2014, and
+Independent Director of Beijing
+BlueFocus Brand Management
+Consulting Co, Ltd. since March
+2014. And he was no longer
+Independent Non-executive
+Director of China Mengniu Dairy
+Co. and Fosun International
+Ltd., the Independent Director
+of Giant Network Co. Ltd.
+and Director of Acorn
+International Co., Ltd.
+Mr. Jiang Xiaoming, an
+Independent Non-executive
+Director of Sinopec Crop., was
+no longer the independent Non-
+executive Director of Greennland
+Hong Kong Holdings Limited
+since 4 June 2014.
+Mr. Ma Weihua, an
+Independent Non-executive
+Director of Sinopec Corp.,
+has been appointed as
+Independent Director of China
+World Trade Center Co., Ltd.
+since August 2014.
+In May 2014, in accordance
+with Board Resolution of the
+17th meeting of the Fifth
+Session of the Board of
+Directors of Sinopec Corp.,
+the Board nominated and
+appointed Mr. Chang Zhenyong
+and Mr. Huang Wensheng as
+the Vice President of Sinopec
+Corp.. In August 2014, Mr.
+Wang Yongjian has tendered
+his resignation as the Vice.
+President of the Sinopec Corp.,
+due to work-related reasons.
+In October 2014, Mr. Cai Xiyou
+has tendered his resignation
+as the director, member of
+the Strategy Committee of the
+Board and Senior Vice President
+of Sinopec Corp., due to new
+working arrangement.
+In October 2014, Mr. Zhang
+Jianhua, an Director and Senior
+Vice President of Sinopec Corp.,
+was appointed concurrently
+as Chairman of Sinopec
+Engineering (Group) Co., Ltd..
+APPOINTMENT OR
+TERMINATION OF DIRECTORS,
+SUPERVISORS AND SENIOR
+MANAGEMENT
+3
+(611) Trading of crude oil and
+petrochemical products
+53
+Jiang Zhenghong
+0
+0
+No
+68.51
+Vice President
+52
+Male
+Jiao Fangzheng
+0
+0
+No
+68.51
+Vice President
+57
+Male
+Zhang Haichao
+2013
+2014
+(as at 31 December)
+Wang Xinhua
+Male
+59
+CFO
+13,000
+13,000
+No
+63.38
+Vice President
+52
+Male
+Ling Yiqun
+0
+Male
+0
+63.38
+Vice President
+52
+Male
+Lei Dianwu
+0
+0
+No
+64.08
+No
+13,277
+paid by Sinopec Corp. is 31 in
+total, and their annual amount
+of remuneration is RMB20.3874
+million in total.
+8,000
+Principal
+71
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+2: The above indicated total assets and net profit has been prepared in accordance with ASBE. Except for Sinopec Kantons Holdings Limited and Sinopec (Hong Kong)
+Limited, 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.
+Note 1: The auditor for all of the above subsidiaries except Fujian Petrochemical Company Limited and Sinopec Shandong Taishan Petroleum Co., Ltd are audited by
+PricewaterhouseCoopers Zhong Tian LLP or PricewaterhouseCoopers. KPMG Huazhen LLP & Shandong Hexin LLP served the two exceptions.
+(605) Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of electricity, cement,
+coal exploration and sales
+Marketing & distribution of
+petroleum products
+management, chemical products production
+and sales
+Coal chemical industry investment
+(65) Marketing & distribution of petroleum
+products
+Results have not
+been announced
+Results have not
+been announced
+Results have not
+been announced
+Co., Ltd.
+24.57
+481
+Sinopec Shandong Taishan Petroleum
+Industry(Ningxia) Company Limited
+54
+5,967
+Wholly-owned
+and Controlled Subsidiaries
+72
+Financial Statements (RPC)
+Chen Na
+Li Dan
+Registered in the People's Republic of China
+Certified Public Accountants
+Shanghai, the People's Republic of China
+PricewaterhouseCoopers Zhong Tian LLP
+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 2014, and their financial performance and cash flows for the year then ended in accordance with the requirements of
+Accounting Standards for Business Enterprises.
+OPINION
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
+20,159
+An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
+selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due
+to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation
+of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the
+appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
+presentation of the financial statements.
+AUDITOR'S RESPONSIBILITY
+Management of Sinopec Corp. is responsible for the preparation and fair presentation of these financial statements in accordance with the requirements
+of Accounting Standards for Business Enterprises, 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.
+MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
+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 2014, and the consolidated and company income statements, the consolidated and
+company statements of changes in shareholders' equity and the consolidated and company cash flow statements for the year then ended, and the notes
+to the financial statements.
+To the Shareholders of China Petroleum & Chemical Corporation,
+PwC ZT Shen Zi (2015) No. 10001
+普华永道
+pwc
+REPORT OF THE PRC AUDITOR
+Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with China
+Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
+assurance about whether the financial statements are free from material misstatement.
+20 March 2015
+95
+Sinopec Great Wall Energy and Chemical
+Sinopec SenMei (Fujian) Petroleum
+Company Limited (YCF)
+9,187
+100
+4,000
+Sinopec Yizheng Chemical Fiber
+3.266
+4,486
+50
+5,745
+Fujian Petrochemical Company Limited
+Company Limited
+16,842
+31,146
+50.56
+7,200
+Sinopec Shanghai Petrochemical
+Marketing & distribution of petroleum
+products
+Sinopec International Petroleum
+1,840
+55
+7,372
+3,181
+Company Limited
+542
+5,158
+100
+1,595
+Sinopec Qingdao Petrochemical
+Industry Company Limite
+257
+19,489
+5,130
+33,534
+18,863
+Sinopec Great Wall Energy and Chemical
+2,325
+10.088
+100
+2,200
+Sinopec Fuel Oil Sales Co., Ltd
+Company Limited
+892
+100
+PricewaterhouseCoopers Zhongtian LLP
+5,890
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+1,400
+100
+10,226
+2,478
+213
+Trading of petrochemical products
+Sinopec Chemical Sales Co., Ltd
+1,000
+100
+15,222
+1,664
+27
+Trading of petrochemical products
+Sinopec Qingdao Refining & Chemical
+5,000
+85
+14,128
+3,000
+(134)
+Sinopec International Company Limited
+products
+Marketing and distribution of petroleum
+22,914
+11/F PricewaterhouseCoopers Center, 2 Corporate Avenue, 202 Hu Bin Road, Huangpu District, Shanghai 200021, PRC
+Tel: +86 (21) 2323 8888, Fax: +86 (21) 2323 8800, www.pwccn.com
+100
+63,039
+24,775
+3,046
+Investment in exploration, production,
+Exploration and Production Corporation
+China International United Petroleum &
+3,000
+Company Limited
+100
+4,069
+sales, etc. of petroleum & natural gas
+Trading of crude oil and petrochemical
+Chemical Co., Ltd. (UNIPEC)
+products
+Sinopec Marketing Company Limited
+20,000
+100
+360,293
+78,827
+17,589
+Sinopec Hainan Refining & Chemical
+248,443
+75
+1,046
+74
+Marketing Company Limited
+Marketing & distribution of petroleum
+products
+BP Sinopec (Zhejiang) Petroleum
+800
+60
+1,170
+1,102
+79
+Company Limited
+Other receivables
+Accounts receivable
+Cash at bank and on hand
+Current assets
+Assets
+as at 31 December 2014
+3,986
+CONSOLIDATED BALANCE SHEET
+1,360
+Sinopec Shell (Jiangsu) Petroleum
+Bills receivable
+Production& sales of polyester chips &
+polyester fibres
+Marketing & distribution of petroleum
+products
+15,595
+Company Limited
+Sinopec Kantons Holdings Limited
+(HK Dollar,
+5,761
+Results have not
+Results have not
+Results have not
+Manufacturing of intermediate petrochemical
+products and petroleum products
+60.34
+(700) Manufacturing of petroleum products,
+synthetic fibre & resin & intermediate
+(745) Manufacturing of plastics & intermediate
+petroleum products
+Trading of crude oil and petroleum products
+millions)
+been announced
+been announced
+been announced
+248
+830
+(830) Manufacturing of intermediate petrochemical
+products and petroleum products
+60
+172,101
+193,552
+Head of accounting department
+538,649
+54,690
+232
+(206)
+Wang Xinhua
+Fu Chengyu
+Chairman
+Li Chunguang
+President
+Wang Dehua
+(Legal representative)
+Chief Financial Officer
+These financial statements have been approved by the board of directors on 20 March 2015.
+118,280
+(31,246)
+92
+1,715
+8,477
+The accompanying notes form part of these financial statements.
+10,192
+Total transactions with owners, recorded directly
+in shareholders' equity
+1,715
+Balance at 31 December 2014
+8,477
+(17,839)
+5.
+Net decrease in specific reserve for the year
+(994)
+(994)
+6. Other movement
+92
+3,215
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+· Available-for-sale financial assets (see Note 3(11))
+for the year ended 31 December 2014
+Derivative financial instruments (see Note 3(11))
+(4) Functional currency and presentation currency
+The functional currency of the Company's and most of its subsidiaries is Renminbi. The Group's consolidated financial statements are presented
+in Renminbi. 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+81
+Financial Statements (RPC)
+Financial Statements (RPC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+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(12)), valuation of inventories (Note 3(4)), depreciation of fixed
+assets and oil and gas properties (Note 3(6), (7)), measurement of provisions (Note 3(16)), ie.
+Principal accounting estimates and judgements of the Group are set out in Note 51.
+(1) Accounting treatment of business combination involving entities under common control and not under common control
+4. Conversion of the 2011 Convertible Bonds (Note 32)
+(a) Business combination involving entities under common control
+Convertible bonds (see Note 3(11))
+NOTES TO THE FINANCIAL STATEMENTS
+The financial statements of the Group have been prepared under the historical cost convention, except for the assets and liabilities set out below:
+Financial assets and financial liability with change in fair value recognized through profit or loss (see Note 3(11))
+The accounting year of the Group is from 1 January to 31 December.
+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 20 March 2015.
+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").
+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.
+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.
+The Company and its subsidiaries (the "Group") engage in the oil and gas and chemical operations and businesses, including:
+(1) the exploration, development and production of crude oil and natural gas;
+(2) the refining, transportation, storage and marketing of crude oil and petroleum product; and
+(3) the production and sale of chemicals.
+Details of the Company's principal subsidiaries are set out in Note 52, and there are no significant changes related to the consolidation scope
+during the current year.
+2 BASIS OF PREPARATION
+(1) Statement of compliance of China Accounting Standards for Business Enterprises ("ASBE")
+The financial statements have been prepared in accordance with the requirements of Accounting Standards for Business Enterprises - Basic
+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 are prepared on a basis of going concern.
+(2) Accounting period
+(3) Measurement basis
+(28,031)
+7. Net decrease in specific reserve for the year
+- Distributions to shareholders (Note 48)
+6. Rights issue of H shares, (net of issuance cost) (Note 32)
+2.845
+16,561
+19,406
+Total transactions with owners, recorded directly
+in shareholders' equity
+29,745
+7,595
+5,734
+(52,091)
+(9,017)
+8. Government grants
+9. Other movement
+Balance at 31 December 2013
+Balance at 1 January 2014
+(8,967)
+Change for the year
+8,967
+1
+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.
+1,009
+1,009
+57,335
+58,344
+- Distributions to shareholders (Note 48)
+- Bonus issues (Note 48)
+17,933
+4. Conversion of the 2011 Convertible Bonds (Note 32)
+1
+5,734
+(5,734)
+(28,424)
+(28,424)
+(17,933)
+5. Capitalisation (Note 32)
+1. Net profit
+2. Other comprehensive income
+Total comprehensive income
+2,123
+1,226
+190,337
+171,202
+527,574
+32,145
+32,145
+(2,329)
+(2,329)
+(2,329)
+32.145
+29,816
+- Appropriation for surplus reserves
+---- 3,215 (3
+(3,215)
+46.121
+116,565
+527,574
+171,202
+Transactions with owners, recorded directly
+in shareholders' equity:
+3. Appropriations of profits:
+(1,778)
+(1,778)
+30
+30
+(28,031)
+464
+7,857
+8,308
+116,565
+46,121
+2,123
+1,226
+190,337
+(13)
+(b) Business combination involving entities not under common control
+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(12)). 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
+(see Note 3(10)).
+(c) Method for preparation of consolidated financial statements
+for the year ended 31 December 2014
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(9) Goodwill
+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.
+Goodwill is not amortised and is stated at cost less accumulated impairment losses (see Note 3(12)). 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.
+(10) Held for sale and discontinued operation
+Non-current assets or disposal group that meet the following conditions will be classified as held for sale. (i) for the non-current assets or the
+disposal group, they can only be sold immediately in current condition, according to the usual terms of selling the assets or disposal group;
+(ii) the Group has made the resolution and obtain the appropriate approval on disposal of the non-current assets or the disposal group; (iii) the
+Group has signed an irrevocable transfer agreement with the transferee; (iv) the transfer will be completed within one year.
+Non-current assets, except for financial assets and deferred tax assets that satisfy there cognition criteria for assets held for sale are stated at to
+the lower of carrying amount and the fair value less costs to sell. Any excess of the original carrying amount over the fair value less costs to sell
+is recognised as asset impairment loss.
+The assets and liabilities in the non-current asset or disposal groups which have been classified as assets held for sale are classified as current
+assets and current liabilities.
+A discontinued operation is a component of the Group that either has been disposed of, or is classified as held for sale, can be clearly
+distinguished operationally and for financial reporting purposes from the rest of the Group and (i) represents a separate major line of business
+or geographical area of operations, (ii) is part of a single coordinated plan to dispose of a separate major line of business or geographical area
+of operations, or (iii) is a subsidiary acquired exclusively with a view to resale.
+(11) Financial Instruments
+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, etc.
+(a) Classification, recognition and measurement of 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 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.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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:
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+Useful lives and amortisation methods are reviewed at least each year end.
+Equipment, machinery and others
+Useful lives, residual values and depreciation methods are reviewed at least each year end.
+(7) Oil and gas properties
+Estimated
+useful life
+12.50 years
+4-30 years
+Estimated rate of
+residual value
+33
+3%
+3%
+Oil and gas properties include the mineral interests in properties, wells and related support equipment arising from oil and gas exploration and
+production activities.
+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.
+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.
+Capitalised costs relating to proved properties are amortised on a unit-of-production method.
+(8) Intangible assets
+1,009
+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.
+86
+Plants and buildings
+Financial asset or financial liability with change in fair value recognised through profit or loss
+Receivables
+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.
+(b) Disclosure of financial assets and financial liabilities
+In the balance sheet, financial assets and liabilities are not offset unless all the following conditions are met:
+the Group has a legally enforceable right to set off financial assets against financial liabilities; and
+the Group intends to settle the financial assets and liabilities on a net basis, or to realise the assets and settle the liabilities
+simultaneously.
+(c) Determination of fair value
+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.
+(d) Hedge accounting
+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).
+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.
+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. For a hedge of foreign currency risk, a non-derivative financial asset or non-derivative financial liability may
+also be used as a hedging instrument.
+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.
+88
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+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(16)).
+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 liabilities other than the financial liabilities at fair value through profit or loss are classified as 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 financial assets calculated using the effective interest rate method is recognised in
+profit or loss (see Note 3(17) (c)).
+Receivables are non-derivative financial assets with fixed or determinable recoverable amount and with no quoted price in active market.
+After the initial recognition, receivables are measured at amortised cost using the effective interest rate method.
+Held-to-maturity investment
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2014
+87
+Financial Statements (RPC)
+Financial Statements (RPC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(11) Financial Instruments (Continued)
+(a) Classification, recognition and measurement of financial instruments (Continued)
+Available-for-sale financial assets
+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.
+Other financial liabilities
+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 (see Note 3(10)). The estimated useful
+lives and the estimated rate of residual values adopted for respective classes of fixed assets are as follows:
+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.
+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.
+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 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.
+(4) Inventories
+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.
+At the balance sheet date, inventories are stated at the lower of cost and net realisable value.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+83
+Financial Statements (RPC)
+Financial Statements (RPC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+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.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+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.
+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 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.
+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.
+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.
+82
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+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)
+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 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.
+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.
+(2) Transactions in foreign currencies and translation of financial statements in foreign currencies
+(5) Long-term equity investments
+(a) Investment in subsidiaries
+In the Group's consolidated financial statements, investment in subsidiaries are accounted for in accordance with the principles described in
+Note 3(1)(c).
+(c) The impairment assessment method and provision accrual on investment
+The impairment assessment and provision accrual on investments in subsidiaries, associates and jointly controlled enterprises are stated in
+Note 3(12).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+85
+Financial Statements (RPC)
+Financial Statements (RPC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(6) Fixed assets and construction in progress
+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.
+Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment losses (see Note 3(12)). Construction in
+progress is stated in the balance sheet at cost less impairment losses (see Note 3(12)).
+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(19)), and any other costs directly attributable to bringing the asset to working condition for its intended use. 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.
+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.
+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 equity.
+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 jointly controlled entity 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 jointly
+controlled entity, 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 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
+jointly controlled entities are eliminated to the extent of the Group's interest in the associates or jointly controlled entities. Unrealised losses
+resulting from transactions between the Group and its associates or jointly controlled entities 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.
+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(12)) 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.
+(b) Investment in jointly controlled entities and associates
+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.
+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 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, including equity interest of the acquiree held before the acquisition date, 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.
+An investment in a jointly controlled entity or an associate is accounted for using the equity method, unless the investment is classified as
+held for sale (see Note 3(10)).
+84
+Annual Report 2014 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2014
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(5) Long-term equity investments (Continued)
+(b) Investment in jointly controlled entities and associates (Continued)
+The Group's accounting treatments when adopting the equity method include:
+The initial cost of investment in jointly controlled entities 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, or at the fair value of the non-monetary assets exchanged for the investment. The difference between the fair
+value of the non-monetary assets being exchanged and its carrying amount is charged to profit or loss.
+57,335
+Other
+471,687
+4.
+Conversion of the 2011 Convertible Bonds (Note 32)
+5.
+Capitalisation (Note 32)
+8,967
+(8,967)
+6.
+Rights issue of H shares, (net of issuance cost)
+(Note 32)
+2,845
+16,561
+19,406
+19,406
+7.
+Non-tradable shares reform of subsidiaries
+17,933
+(986)
+57,335
+- Appropriation for surplus reserves
+1,180
+1,180
+(248)
+932
+67,179
+68,359
+3,950
+72,309
+-- 5,734 (5,7
+(5,734)
+(28,424)
+(28,424)
+(28,424)
+(17,933)
+1
+- Distributions to shareholders (Note 48)
+(986)
+986
+8.
+(9,423)
+11,792
+2,369
+11. Net decrease in specific reserve for the year
+(1,994)
+(1,994)
+(55)
+(2,049)
+12. Government grants
+30
+30
+30
+Balance at 31 December 2013
+116,565
+36,947
+(52,091)
+5,734
+☐
+7,189
+Acquisition of minority interests in subsidiaries
+(20)
+(20)
+(29)
+(49)
+9. Contributions to subsidiaries from minority interests
+600
+1,180
+600
+12,696
+10. Distributions to minority interests
+(1,261)
+(1,261)
+Total transactions with owners, recorded directly
+in shareholders' equity
+29,745
+12,096
+407
+71,377
+67,179
+foreign
+to equity
+Share
+Capital
+comprehensive
+Specific
+Surplus
+Retained
+currency
+shareholders of
+Minority
+Total
+shareholders'
+capital
+reserve
+income
+Other
+reserve
+equity
+attributable
+Translation
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+for the year ended 31 December 2014
+Balance at 31 December 2012
+Changes in accounting policies (Note 3(27))
+Balance at 1 January 2013
+Change for the year
+1.
+Net profit
+2. Other comprehensive income (Note 34)
+Total comprehensive income
+Transactions with owners, recorded directly in
+shareholders' equity:
+3. Appropriations of profits:
+Total
+shareholders'
+difference in
+reserves
+earnings
+statements
+37,227
+550,601
+(846)
+(773)
+1,619
+86,820
+29,728
+(773)
+3,550
+184,603
+209,446
+513,374
+37,227
+550,601
+67,179
+513,374
+(1,619)
+209,446
+184,603
+the Company
+interests
+equity
+RMB million
+RMB million
+RMB million
+RMB million
+4,198
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+86,820
+30,574
+3,550
+RMB million
+1,556
+- Bonus issues (Note 48)
+224,534
+Chief Financial Officer
+Head of accounting department
+(Legal representative)
+The accompanying notes form part of these financial statements.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2014
+79
+Financial Statements (RPC)
+80
+Financial Statements (RPC)
+STATEMENT OF CHANGES IN EQUITY
+for the year ended 31 December 2014
+Balance at 31 December 2012
+Changes in accounting policies (Note 3(27))
+Balance at 1 January 2013
+Change for the year
+Wang Dehua
+1. Net profit
+Wang Xinhua
+Chairman
+63
+111
+174
+Balance at 31 December 2014
+118,280
+48,703
+(7,261)
+491
+193,552
+240,718
+594,483
+52,612
+647,095
+These financial statements have been approved by the board of directors on 20 March 2015.
+Fu Chengyu
+Li Chunguang
+President
+2. Other comprehensive income
+Total comprehensive income
+Transactions with owners, recorded directly
+RMB million
+86,820
+39,146
+3,017
+184,603
+158,101
+471,687
+(1,114)
+1,114
+86,820
+38,032
+1,114
+3,017
+184,603
+158,101
+equity
+Total
+shareholders'
+190,337
+RMB million
+in shareholders' equity:
+3. Appropriations of profits:
+- Appropriation for surplus reserves
+Share
+Capital comprehensive
+Specific
+Surplus
+63
+Retained
+RMB million
+reserve
+RMB million
+income
+reserve
+reserves
+RMB million
+RMB million
+capital
+9. Other movement
+earnings
+RMB million
+(28)
+48,910
+2.
+Other comprehensive income (Note 34)
+Total comprehensive income
+(7,668)
+(7,668)
+(7,668)
+(1,598)
+(9,266)
+47,430
+39,762
+(118)
+39,644
+Transactions with owners, recorded directly
+in shareholders' equity:
+3. Appropriations of profits:
+1,480
+- Appropriation for surplus reserves (Note 36)
+47,430
+Net profit
+(1,093)
+570,346
+52,914
+623,260
+Balance at 1 January 2014
+116,565
+36.947
+407
+1,556
+190,337
+570,346
+52.914
+623,260
+Change for the year
+1.
+47,430
+3,215
+224,534
+- Distributions to shareholders (Note 48)
+Distributions to minority interests
+(1,545)
+(1,545)
+Total transactions with owners, recorded directly
+in shareholders' equity
+1,715
+11,693
+7.
+3,215
+(267)
+(14,890)
+8.
+Net decrease in specific reserve for the year (Note 35)
+(1,065)
+(3,215)
+(1,065)
+(31,246)
+4,155
+(14,623)
+Contributions to subsidiaries from minority interests
+(28,031)
+4,155
+(28,031)
+(28,031)
+Conversion of the 2011 Convertible Bonds (Note 32)
+1,715
+8,477
+10,192
+4.
+6.
+5. Transaction with minority interests (Note 52(ii))
+3,216
+3,216
+(2,877)
+10,192
+339
+Custodian corporation/approved lending agent
+Investment manager
+8.94(L)
+Approximate percentage
+of Sinopec Corp.'s issued
+share capital (H Share) (%)
+984,349,338(L)
+1,278,173,372(L)
+20,400(L)
+226,733,320(S)
+2,280,210,944(L)
+4,080,000(S)
+463,731,470(L)
+Number of shares
+interests held or
+regarded as held (H Share)
+0.02(S)
+(L): Long position, (S): Short position
+17,001,962(L)
+1.82(L)
+6
+0.07(L)
+0.00(L)
+3.86(L)
+5.01(L)
+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
+As at the end of the reporting period,
+there were no employee shares.
+Trustee (exclusive of passive trustee)
+(2) Existing employee shares
+0.89(S)
+Investment manager
+全國社保基金一一五組合
+Interest of corporation controlled by the
+substantial shareholder
+2,693,300
+4 CHANGES IN THE CONTROLLING
+SHAREHOLDERS AND THE DE FACTO
+CONTROLLER
+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
+國泰君安證券股份有限公司
+A Share
+0.05
+A Share
+Beneficial owner
+0.04
+(76,251,129)
+54,190,722
+200 000
+0
+Note 1: As compared with the number of shares held as of 31 December 2016.
+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.
+Statement on the connected relationship or acting in concert among the above-mentioned shareholders:
+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
+54,884,077
+54,190,722
+There was no change in the controlling
+shareholder and the de facto controller of
+Sinopec Corp. during the reporting period.
+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
+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.
+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.
+Board's Statement
+8
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+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.
+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.
+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 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.
+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.
+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.
+Dai Houliang
+Vice Chairman & President
+Beijing, China
+23 March 2018
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2017
+9
+Board's Statement
+80,551,930
+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.
+(1) Controlling shareholder
+Dear Shareholders and Friends:
+BOARD'S STATEMENT
+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.
+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
+Mr. Dai Houliang, Vice Chairman & President
+912,886,426
+(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
+China Petrochemical Corporation is the
+de facto controller of Sinopec Corp.
+(4) Diagram of the equity and controlling
+relationship between Sinopec Corp. and
+its de facto controller
+*.
+China Petrochemical
+Corporation
+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
+17.23%
+0.07
+5
+中國工商銀行-上證50交易型開放式指數證券投資基金
+53.5
+0.245
+0.376
+Basic earnings per share (excluding extraordinary gains and losses)
+Weighted average return on net assets (%)
+0.267
+10.2
+0.239
+0.383
+Diluted earnings per share
+0.267
+10.2
+0.383
+0.422
+Basic earnings per share
+0.422
+2015
+RMB
+7.14
+0.46
+(11.0)
+1.772
+1.577
+Net cash flow from operating activities per share
+points
+percentage
+6.68
+4.52
+4.33
+6.37
+Weighted average return (excluding extraordinary gains and losses)
+on net assets (%)
+points
+percentage
+5.07
+2.04
+1.371
+%
+RMB
+6.5
+1,498,609
+RMB million
+%
+2015
+Change
+1,447,268
+2016
+RMB million
+1,595,504
+RMB million
+Total liabilities
+Total assets
+Items
+As of 31 December
+2017
+741,434
+RMB
+666,084
+657,703
+Items
+A Share
+2016
+2017
+For the year ended 31 December
+(2) Principal financial indicators
+11.3
+121,071,210
+121,071,210
+677,538
+2.1
+712,232
+727,244
+Total equity attributable to equity shareholders of the Company
+Total number of shares (1,000 shares)
+121,071,210
+As of 31 December
+2017
+Items
+(6,512)
+976
+(5,536)
+1,367
+(86)
+(3,941)
+690
+(943)
+(518)
+(20,562)
+(5,002)
+(22,164)
+(3,987)
+665
+RMB million
+2015
+2016
+RMB million
+1,489
+133
+1,518
+152
+(4,783)
+(148)
+RMB million
+112
+2017
+5,578
+(134)
+(4,915)
+1,060
+End of
+the year
+Beginning of
+the year
+(5) Significant changes of items in the financial statements
+Financial assets at fair value through profit and loss
+Total
+Cash flow hedging
+Derivative financial instruments
+387
+Available-for-sale financial assets
+(475)
+(3,380)
+(16,703)
+117
+(5,537)
+1
+(3,855)
+(16,586)
+Items
+For the year ended 31 December
+(Income)/expenses
+(4) Items measured by fair values
+Attributable to: Equity shareholders of the Company
+Minority interests
+2.02
+percentage
+44.45
+46.47
+5.606
+2.1
+5.883
+45.44
+6.007
+RMB
+%
+2015
+Change
+2016
+RMB
+RMB
+Net assets attributable to equity shareholders of the Company per share
+Liabilities to assets ratio (%)
+points
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+3
+Total
+Tax effect
+Gain on business combination under the same control
+Subtotal
+Other non-operating expenses, net
+Gain on remeasurement of interests in Shanghai SECCO
+Investment income on loss of control and remeasuring interests in pipeline company
+Gain on holding and disposal of various investments
+Government grants
+Net loss on disposal of non-current assets
+Donations
+Items
+(3) Extraordinary items and corresponding amounts
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+Principal Financial Data and Indicators
+4
+Principal Financial Data and Indicators
+190,935
+79,742
+50,346
+47,571
+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.
+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.
+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.
+COMPANY PROFILE
+Company Profile
+2
+COMPANY PROFILE
+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.
+214
+Corporate Information
+213
+Financial Statements
+79
+Controlled Subsidiaries
+Documents for Inspection
+Principal Wholly-owned and
+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.
+In this report, unless the context otherwise requires, the following terms shall have the meaning set out below:
+Sinopec Corp.: China Petroleum & Chemical Corporation;
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Refinery throughput is converted at 1 tonne = 7.35 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;
+For domestic production of crude oil, 1 tonne = 7.1 barrels;
+CONVERSION:
+Hong Kong Listing Rules: Listing Rules of the Hong Kong Stock Exchange
+DEFINITIONS:
+Hong Kong Stock Exchange: The Stock Exchange of Hong Kong Limited
+RMC: Oil and Natural Gas Reserves Management Committee of the Company;
+Sichuan-to-East China Pipeline Co.: Sinopec Sichuan-to-East China Natural Gas Pipeline Co., Ltd;
+Shanghai SECCO: Shanghai SECCO Petrochemical Company Limited;
+Sinopec group: China Petrochemical Corporation and its subsidiaries;
+China Petrochemical Corporation: our controlling shareholder, China Petrochemical Corporation;
+Company: Sinopec Corp. and its subsidiaries;
+CSRC: China Securities Regulatory Commission.
+78
+Management and Employees
+Directors, Supervisors, Senior
+Principal Financial Data and Indicators
+Company Profile
+6
+23
+CONTENTS
+SINOPEC CORP.
+Changes in Share Capital and Shareholdings
+中国石油化工股份有限公司
+(STOCK CODE
+Annual Report and Accounts
+2017
+Slope SINOPEC
+中国石化
+中国石化
+A Share: 600028; H Share: 00386; ADR : SNP)
+of Principal Shareholders
+8
+Board's Statement
+62
+Report of the Board of Supervisors
+60
+Report of the Board of Directors
+50
+Corporate Governance
+43
+Connected Transactions
+40
+Significant Events
+29
+Management's Discussion and Analysis
+19
+Business Review and Prospects
+11
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+Changes
+1 FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH ASBE
+For the year ended 31 December
+2017
+RMB million
+RMB million
+RMB million
+Total
+Quarter
+Quarter
+RMB million
+Quarter
+Third
+Second
+First
+Quarter
+RMB million
+Operating income
+Items
+For the year of 2017
+Fourth
+165,740
+582,185
+16,633
+45,582
+8,864
+10,619
+9,559
+16,540
+13,276
+Net cash flow from operating activities
+Net profit attributable to equity shareholders of the Company
+Net profit attributable to equity shareholders of the Company
+excluding extraordinary gains and losses
+12,746
+11,281
+2,360,193
+615,238
+579,118
+583,652
+10,459
+51,119
+(11.0)
+214,543
+190,935
+2,360,193
+RMB million
+%
+2015
+Change
+2016
+RMB million
+1,930,911
+RMB million
+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
+Operating profit
+Operating income
+Items
+Net cash flow from operating activities
+22.2
+2,020,375
+86,965
+28,901
+53.4
+29,713
+45,582
+32,281
+10.1
+46,416
+51,119
+56,093
+8.4
+79,877
+86,573
+51,553
+12.4
+77,389
+(1) Principal financial data
+262
+Change
+(84)
+1,066,455
+2016
+1,086,348
+2015
+2014
+1,113,611
+1,094,035
+2013
+1,012,703
+50,397
+73,282
+129,175
+242,892
+197,440
+163,168
+181,831
+196,275
+201,540
+189,485
+126,770
+120,241
+111,964
+726,120
+710,994
+676,197
+54,348
+595,255
+54,691
+571,087
+2017
+As of 31 December
+Adjusted net assets per share (RMB)
+Net assets per share (RMB)
+0.536
+Return on capital employed (%)
+8.26
+7.30
+5.23
+6.06
+8.03
+Return on net assets (%)
+7.06
+6.56
+4.81
+7.84
+5.997
+5.868
+11.62
+1.577
+1.772
+1.371
+1.267
+1.305
+Unit: RMB million
+Items
+Non-current assets
+Net current liabilities
+Non-current liabilities
+Non-controlling interests
+Total equity attributable to owners of the Company
+Net cash generated from operating activities per share (RMB)
+0.399
+5.873
+5.808
+5.033
+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
+153,819
+1,470,304,825
+Unknown
+0
+HKSCC Nominees Limited
+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
+H Share
+0
+0
+70.86
+4.899
+4.969
+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
+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
+5.585
+5.517
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+(1) Shareholdings of top ten shareholders
+The shareholdings of top ten shareholders as of 31 December 2017 are listed as below:
+Unit: Share
+Number of
+Nature of
+Name of shareholders
+HKSCC Nominees Limited²
+China Petrochemical Corporation
+State-owned Share
+Percentage of
+Shareholders shareholdings %
+178
+Changes of shares subject to
+shareholding pledges or lock-up
+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.
+0.269
+Total number of
+shares held
+85,792,671,101
+51,196
+19,060
+Income of investment
+(76.4) Mainly due to increase in profit, sufficient capital reserve and increase
+in interest revenue
+(42.9) Parts of debentures payable are converted to non-current liabilities due
+within one year.
+Mainly due to increase in profit as well as the impact of timing of tax
+payment.
+(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.
+(5,051)
+6,611
+1,560
+Financial expenses
+(23,615)
+54,985
+31,370
+Debentures payable
+36.0
+19,054
+52,886
+30,779
+71,940
+(11,719)
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS
+86,697
+96,763
+73,439
+56,822
+77,193
+71,470
+2013
+2,881,928
+2014
+2,827,566
+2015
+2,020,375
+For the year ended 31 December
+2016
+1,930,911
+2,360,193
+2017
+Profit before taxation
+Operating profit
+Turnover and other operating revenues
+Items
+Unit: RMB million
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Taxes payable
+(85.3)
+(9,732)
+(1,105)
+(1,486)
+41
+of the year
+on the profit
+Influence
+Unit: RMB million
+The table below sets forth reasons for those changes where the fluctuation was more than 30% during the reporting period:
+52,683
+49,235
+(3,448)
+51,196
+2,407
+(1,617)
+(4,024)
+(836)
+(522)
+314
+196
+(2,354)
+As of 31 December
+2017
+Items
+11,408
+1,676
+Available-for-sale financial assets
+(9,129)
+25,596
+16,467
+Other receivables
+Mainly due to the increase in crude oil price and refined oil products
+export.
+80,151
+36.2
+Reasons for change
+(%)
+RMB million
+Increase/(decrease)
+Amount Percentage
+2016
+RMB million
+50,289
+68,494
+Accounts receivable
+RMB million
+18,205
+56,411
+(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.
+95,444
+0.385
+0.423
+Diluted earnings per share (RMB)
+0.571
+0.399
+0.269
+0.385
+65,818
+Basic earnings per share (RMB)
+66,348
+46,639
+32,512
+46,672
+51,244
+Profit attributable to owners of the Company
+0.423
+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.
+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.
+(10) Financial Instruments
+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.
+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 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 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.
+(9) Goodwill
+Financial asset or financial liability with change in fair value recognised through profit or loss
+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.
+(a) Classification, recognition and measurement of financial instruments
+Useful lives and amortisation methods are reviewed at least each year end.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+(4) Inventories
+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.
+At the balance sheet date, inventories are stated at the lower of cost and net realisable value.
+Loans and Receivables
+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.
+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
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+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
+(a) Classification, recognition and measurement of financial instruments (Continued)
+Available-for-sale financial assets
+96
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+97
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+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.
+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.
+(c) Determination of fair value
+the Group intends to settle the financial assets and liabilities on a net basis, or to realise the assets and settle the liabilities
+simultaneously.
+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) Investment in subsidiaries
+(10) Financial Instruments (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
+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.
+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:
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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.
+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.
+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.
+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.
+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.
+(8) Intangible assets
+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:
+Plants and buildings
+Equipment, machinery and others
+Useful lives, residual values and depreciation methods are reviewed at least each year end.
+(7) Oil and gas properties
+Estimated Estimated rate
+useful life of residual value
+12.50 years
+3%
+4.30 years
+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.
+3%
+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.
+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.
+Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes produced and reserves.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+95
+for the year ended 31 December 2017
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Oil and gas properties include the mineral interests in properties, wells and related support equipment arising from oil and gas exploration and
+production activities.
+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
+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
+93
+Financial Statements (PRC)
+Financial Statements (PRC)
+for the year ended 31 December 2017
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(5) Long-term equity investments (Continued)
+(b) Investment in joint ventures and associates
+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.
+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.
+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.
+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.
+The Group's accounting treatments when adopting the equity method include:
+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 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.
+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.
+(c) The impairment assessment method and provision accrual on investment
+The impairment assessment and provision accrual on investments in subsidiaries, associates and joint ventures are stated in Note 3(11).
+94
+94
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+(d) Hedge accounting
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+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
+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.
+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.
+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 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.
+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)
+(10) Financial Instruments (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+(c) Method for preparation of consolidated financial statements
+(4) Functional currency and presentation currency
+Derivative financial instruments (see Note 3(10))
+Available-for-sale financial assets (see Note 3(10))
+90
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS
+for the year ended 31 December 2017
+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.
+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").
+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.
+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.
+The Company and its subsidiaries (the "Group") engage in the oil and gas and chemical operations and businesses, including:
+(1) the exploration, development and production of crude oil and natural gas;
+(2) the refining, transportation, storage and marketing of crude oil and petroleum product; and
+(3) the production and sale of chemical.
+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
+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.
+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.
+(3) Measurement basis
+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 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(1) Accounting treatment of business combination involving entities under common control and not under common control (Continued)
+Financial Statements (PRC)
+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.
+Hedge of net investment in foreign operation
+(c) Method for preparation of consolidated financial statements (Continued)
+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.
+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.
+(d) Hedge accounting (Continued)
+Fair value hedges
+(10) Financial Instruments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(3) Cash and cash equivalents
+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.
+98
+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.
+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.
+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).
+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.
+(e) Derecognition of financial assets and financial liabilities
+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.
+On derecognition of a financial asset, the difference between the following amounts is recognised in profit or loss:
+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 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.
+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.
+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.
+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.
+Financial Statements (PRC)
+99
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+92
+(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
+(vi) a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
+the sum of the consideration received and any cumulative gain or loss that had been recognised directly in equity.
+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
+(a) Impairment of financial assets
+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.
+the carrying amounts; and
+(i) significant financial difficulty of the debtor;
+(ii) a breach of contract, such as a default or delinquency in interest or principal payments;
+(iii) it becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
+(iv) due to the significant financial difficulty of the debtor, financial assets is unable to be traded in active market;
+Objective evidences of impairment include but not limited to:
+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.
+12
+16980
+100.0
+3,780
+25
+0.8
+32
+11.1
+Amount prepayments
+7
+4,433
+80
+0.4
+13
+-
+0.6
+25
+1.8
+62
+1.0
+1
+2.3
+101
+95.4
+3,306
+95.3
+4,227
+Allowance
+balance
+to total
+Amount prepayments
+Percentage of
+allowance to
+prepayments
+Allowance
+balance
+1.8
+100.0
+RMB million
+RMB million
+% RMB million
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+Total
+At 31 December 2017 and 2016, the total amounts of the top five prepayments of the Group are set out below:
+% RMB million
+3
+3.8
+84
+to total
+Percentage
+Percentage of
+allowance to
+At 31 December 2016
+Percentage
+At 31 December 2017
+Financial Statements (PRC)
+The Company
+56.3
+1.4
+5.7
+516
+18
+1
+31
+prepayments
+109
+2016
+1,354
+2.4
+11
+13.1
+4
+3,465
+100.0
+35.8%
+11
+Percentage to the total balance of prepayments
+At 31 December
+At 31 December
+2017
+1,472
+29.9%
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Total amount (RMB million)
+:30
+0.9
+4,926
+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
+47,514
+165,004
+15
+34
+7.3068
+18,181
+6.9370
+2,619
+5
+At 31 December
+RMB million
+51,196
+51,196
+2016
+RMB million
+RMB
+RMB
+RMB
+2016
+At 31 December
+At 31 December
+2017
+At 31 December
+2016
+At 31 December
+2017
+126
+15
+The Company
+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.
+The Group
+RMB
+7.8023
+6.5342
+million
+RMB
+Exchange
+rates
+currency
+million
+RMB
+million
+Exchange
+rates
+million
+Original
+Original
+currency
+At 31 December 2017
+At 31 December 2016
+Total
+Others
+US Dollars
+EUR
+Renminbi
+Deposits at related parities
+Others
+14
+10
+92,711
+91,855
+2,336
+16
+21,843
+32,117
+102,424
+117,490
+75
+122
+78
+15,256
+0.8945
+6.9370
+1,499
+87
+82
+0.8359
+98
+24,561
+6.5342
+3,760
+10,406
+million
+million
+million
+67,777
+accounts
+receivable
+Amount
+RMB million
+%
+% RMB million
+RMB million
+receivable
+balance
+Allowance
+accounts
+receivable
+Amount
+to total
+to accounts
+to total
+Percentage
+of allowance
+Percentage
+At 31 December 2016
+of allowance
+98.1
+49,854
+97.8
+715
+69,106
+0.9
+429
+80.8
+426
+0.8
+527
+0.4
+Percentage
+225
+44
+0.1
+87
+0.9
+464
+19.9
+142
+1.0
+50.6
+Percentage
+At 31 December 2017
+The Group
+56,203
+Ageing analysis on accounts receivable is as follows:
+Total
+Less: Allowance for doubtful accounts
+Amounts due from others
+2,036
+2,051
+4,580
+39,994
+4,962
+1,417
+6,398
+7,941
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from associates and joint ventures
+33,142
+30,905
+Amounts due from subsidiaries
+million
+1,662
+Hong Kong Dollars
+3,383
+69,106
+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
+1,720
+Between one and two years
+228
+38,332
+147
+37,609
+50,289
+683
+612
+68,494
+38,560
+37,756
+50,972
+Within one year
+US Dollars
+Renminbi
+Renminbi
+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:
+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.
+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.
+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)
+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.
+(15) Provisions
+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.
+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.
+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.
+Interest income is recognised on a time proportion basis with reference to the principal outstanding and the applicable effective interest rate.
+(17) Government grants
+(c) Interest income
+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.
+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.
+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)
+102
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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
+(a) Revenues from sales of goods
+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.
+(16) Revenue recognition
+for the year ended 31 December 2017
+Financial Statements (PRC)
+101
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+100 Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+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 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.
+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
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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 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
+100.0
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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.
+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.
+(11) Impairment of financial assets and non-financial long-term assets (Continued)
+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.
+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
+(b) Impairment of other non-financial long-term assets
+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.
+Long-term deferred expenses are amortised on a straight-line basis over their beneficial periods.
+(12) Long-term deferred expenses
+Impairment losses for assets are not reversed.
+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.
+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.
+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.
+(13) Employee benefits
+100.0
+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.
+Borrowing costs incurred on borrowings for the acquisition, construction or production of qualified assets are capitalised into the cost of the
+related assets.
+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
+Subject
+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.
+The reason of change
+Jet fuel oil
+Effective from
+13 January 2015
+(RMB/Ton)
+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)
+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:
+105
+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
+1,711.52
+1,948.64
+2,105.20
+1,411.20
+2,109.76
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+(26) Changes in significant accounting policies
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2017
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+(24) Related parties
+(23) Dividends
+(22) Operating leases
+Research costs and development costs that cannot meet the capitalisation crateria are recognised in profit or loss when incurred.
+(21) Research and development costs
+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.
+Operating lease payments are charged as expenses on a straight-line basis over the period of the respective leases.
+(18) Borrowing costs
+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:
+(b) the subsidiaries of the Company;
+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:
+(25) Segment reporting
+(a) the holding company 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.
+(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;
+(k) close family members of key management personnel of the Company's holding company; and
+612
+Cash at bank
+100.0
+5.3
+2,570
+1
+6.6
+2,740
+1
+26.6
+12,920
+69.6
+28,763
+-
+49.2
+23,946
+to other
+receivables
+balance
+of allowance
+Percentage
+At 31 December 2016
+2
+0.1
+5,237
+12.7
+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
+41,313
+1,162
+Allowance
+RMB million
+100.0
+1,122
+11.1
+4,573
+12.6
+1,159
+18.9
+9,219
+48,655
+1
+24.5
+2017
+7,672
+Within one year
+42.7%
+%
+Amount
+RMB million
+%
+1,247
+13
+32
+57
+26990
+100.0
+6.9
+2.0
+90.2
+22060
+26,945
+1,486
+1,860
+74.7
+1,360
+254
+1656
+0.2
+6.2
+5.1
+%
+% RMB million
+RMB million
+to total
+other
+balance
+to other
+receivables
+Allowance
+to total
+other
+receivables
+receivables
+Amount
+of allowance
+Percentage
+Percentage
+At 31 December 2017
+The Company
+1,349
+2210
+67.0
+Percentage
+At 31 December
+2016
+11,226
+Within one year
+41.7%
+Allowance for doubtful accounts
+Within one year
+%
+% RMB million
+RMB million
+%
+% RMB million
+RMB million
+balance
+Allowance
+Amount prepayments
+balance
+Allowance
+Amount prepayments
+allowance to
+prepayments
+Percentage
+to total
+prepayments
+to total
+Between one and two years
+Between two and three years
+Over three years
+Total
+4,605
+1.3
+63
+1.9
+50,972
+72
+4.7
+4
+1.7
+Percentage of
+85
+211
+8.1
+14
+3.5
+173
+91.7
+3,465
+93.5
+5.6
+Percentage of
+allowance to
+At 31 December 2016
+Percentage
+At 31 December
+2016
+RMB million
+RMB million
+At 31 December
+2017
+The Company
+The Group
+Ageing analysis of prepayments is as follows:
+Total
+Less: Allowance for doubtful accounts
+126
+Amounts to others
+Amounts to Sinopec Group Company and fellow subsidiaries
+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.
+Amounts to associates and joint ventures
+10.2
+206
+At 31 December
+At 31 December 2017
+The Group
+11
+3,454
+4,429
+3,749
+4
+31
+25
+4,901
+At 31 December
+2017
+RMB million
+3,766
+99
+3,465
+568
+4,433
+3,550
+3,780
+4,926
+4,737
+24
+63
+58
+2016
+RMB million
+3,043
+364
+44
+At 31 December
+12.7
+73.7
+101
+0.4
+137
+20.4
+10
+0.1
+49
+18.8
+29
+0.4
+154
+31.9
+114
+0.9
+357
+17
+131
+0.3
+104
+79.4
+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%
+0.4
+At 31 December
+Percentage to the total balance of accounts receivable
+Total amount (RMB million)
+At 31 December 2017 and 2016, the total amounts of the top five accounts receivable of the Group are set out below:
+228
+100.0
+38.560
+100.0
+37,756
+Allowance for doubtful accounts
+134
+%
+receivable
+balance
+At 31 December 2016
+of allowance
+Percentage
+Percentage
+At 31 December 2017
+The Company
+683
+94.2
+Percentage
+404
+48
+49.8
+231
+24,316
+515
+%
+to accounts
+receivable
+balance
+68640
+Allowance
+% RMB million
+21.3
+Financial Statements (PRC)
+Percentage
+to total
+Allowance
+RMB million
+%
+98.7
+38,023
+98.8
+37,331
+% RMB million
+% RMB million
+RMB million
+of allowance
+accounts
+receivable
+receivable
+balance
+Allowance
+receivable
+Amount
+accounts
+to accounts
+to total
+to accounts
+Amount
+Financial Statements (PRC)
+147
+Allowance
+balance
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+to total
+other
+to other
+receivables
+to total
+other
+receivables
+Amount
+of allowance
+Percentage
+RMB million
+15,191
+509
+Percentage
+The Group
+Total
+Over three years
+Between one and two years
+Within one year
+Total
+Over three years
+Between two and three years
+At 31 December 2017
+Between one and two years
+% RMB million
+84.7
+Amount
+RMB million
+82
+2.4
+16.1
+2.8
+8410
+220
+100.0
+17,953
+%
+10.1
+433
+to other
+receivables
+balance
+Percentage
+of allowance
+Percentage
+At 31 December 2016
+Allowance
+RMB million
+%
+receivables
+1,820
+Within one year
+Between two and three years
+147
+12,509
+4,841
+459
+164
+RMB million
+8,019
+4,985
+35,370
+2016
+RMB million
+The Company
+At 31 December
+2017
+RMB million
+At 31 December
+46,900
+At 31 December
+2016
+RMB million
+2017
+for the year ended 31 December 2017
+At 31 December
+The Group
+14,085
+1,608
+3,986
+17,953
+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
+1,793
+25,596
+47,493
+1,162
+1,349
+1,486
+16,467
+41,313
+48,655
+26,945
+1,124
+9 OTHER RECEIVABLES
+2017
+Sinopec SABIC Tianjin
+2016
+RMB million
+RMB million
+2016
+RMB million
+Turnover
+41,286
+41,764
+21,020
+17,323
+12,520
+9,658
+61,587
+22,286
+YASREF
+2017
+RMB million
+49,356
+RMB million
+5,064
+RMB million
+16,337
+5,045
+4,021
+6,279
+5,749
+Summarised income statement
+Year ended 31 December
+FREP
+BASF-YPC
+Taihu
+2017
+2016
+2017
+2016
+2017
+2016
+RMB million
+RMB million
+RMB million
+RMB million
+Interest income
+(6,424)
+130
+2,606
+1,697
+2,411
+548
+28
+5,113
+3,184
+Tax expense
+4,565
+(1,699)
+(1,151)
+(648)
+(553)
+(518)
+57
+3,831
+56
+(1,279)
+(1,574)
+6,476
+6,977
+Profit before taxation
+36
+19
+142
+40
+45
+33
+104
+30
+Interest expense
+(857)
+(929)
+(71)
+(173)
+(142)
+(113)
+(1,382)
+(1,216)
+(223)
+(245)
+208
+6,154
+(17,271)
+6,842
+(252)
+(19)
+(10)
+(2,686)
+(2,130)
+(890)
+(1,004)
+(41)
+(236)
+(32)
+(13,890)
+(20,237)
+(974)
+(1,502)
+(2,758)
+(2,179)
+(36,509)
+(44,032)
+Total non-current liabilities
+(4,142)
+Other non-current liabilities
+(4,101)
+(2,215)
+(783)
+(2,890)
+(1,934)
+(1,950)
+(7,653)
+(5,782)
+(2,657)
+(5,337)
+Non-current liabilities
+(13,654)
+(19,985)
+(955)
+(1,492)
+(72)
+(49)
+(35,619)
+(43,028)
+Non-current financial liabilities(ii)
+6,409
+(5,369)
+16,451
+minority interests
+282
+241
+Share of net assets from joint ventures
+8,226
+6,842
+6,409
+6,154
+Net assets attributable to
+3,831
+5.064
+5,045
+6,279
+5,749
+Others (iii)
+743
+Carrying Amounts
+8,226
+3,278
+Net assets
+11,497
+13,454
+13,683
+16,021
+15,384
+8,100
+6,931
+13,505
+13,454
+12,557
+12,557
+11,497
+of the company
+16,451
+13,683
+16,021
+15,384
+7,818
+6,690
+13,505
+Net assets attributable to owners
+Profit for the year
+3,576
+4,902
+(8,078)
+(908)
+(928)
+Non-current liabilities
+(3,176)
+(3,350)
+(6)
+(61,771)
+(10,668)
+(31,494)
+(170)
+(883)
+Net assets
+48,180
+45,600
+24,751
+23,461
+97,332
+(32,137)
+17,623
+(20,554)
+(154,212)
+149,457
+20,719
+8,232
+7,292
+5,612
+5,120
+40,972
+42,124
+(142,386)
+17,782
+158,938
+51,553
+50,301
+1,673
+3,842
+Current liabilities
+(933)
+(5,009)
+16,478
+161,187
+17,378
+7,151
+3,104
+3,576
+Carrying Amounts
+24,090
+22,800
+12,128
+11,496
+9,676
+6,734
+6,829
+3,104
+Summarised income statement
+Year ended 31 December
+Turnover
+Pipeline Ltd (vi)
+2017
+Sinopec Finance
+2016
+(6,184)
+6,734
+6,207
+6,829
+11,496
+Net assets attributable to owners
+of the Company
+48,180
+45,600
+24,751
+23,461
+96,761
+17,623
+9,676
+17,378
+7,151
+Net assets attributable to
+minority interests
+571
+Share of net assets from associates
+24,090
+22,800
+12.128
+6,207
+11,835
+11,317
+Current assets
+Non-current assets
+3,834
+2,401
+Dividends from joint ventures
+1,250
+1,109
+155
+1,375
+300
+731
+Share of net profit from
+2,639
+2,451
+1,366
+783
+541
+895
+227
+31
+joint ventures
+1,917
+51
+1,169
+3,414
+1,958
+1,144
+1,893
+605
+84
+3,834
+2,401
+3,744
+Other comprehensive income/(loss)
+1,851
+(554)
+647
+Total comprehensive income
+5,278
+4,902
+3,414
+1,958
+25
+1,201
+Share of other comprehensive
+income/(loss) from joint ventures (iv)
+2016
+RMB million
+Sinopec Finance
+At 31
+December
+2017
+RMB million
+At 31
+December
+2016
+RMB million
+SIBUR (v)
+At 31
+December
+2017
+RMB million
+Zhongtian Synergetic Energy
+At 31
+December
+At 31
+December
+CIR
+At 31
+December
+RMB million
+HP
+2016
+2017
+2017
+2016
+RMB million
+RMB million
+RMB million
+RMB million
+At 31
+December
+2017
+At 31
+December
+Pipeline Ltd
+At 31
+December
+12
+875
+(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 accounts payable, other payables.
+(ii) Excluding provisions.
+(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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+113
+Financial Statements (PRC)
+114
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+13 LONG-TERM EQUITY INVESTMENTS (Continued)
+(c) Major financial information of principal associates
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal associates:
+5,278
+Total current liabilities
+Less: Provision for diminution in value of inventories
+Total
+(4,546)
+subsidiaries joint ventures
+RMB million
+Investments in Investments in Investments in
+Provision for
+impairment
+losses
+RMB million
+associates
+RMB million
+245,921
+15,496
+131,087
+14,691
+Total
+RMB million
+268,451
+3,743
+434
+183
+4,360
+4,804
+970
+RMB million
+(7,657)
+5,774
+(892)
+80,429
+255
+1,053
+(6)
+6
+(5,199)
+(2,755)
+(7,954)
+(607)
+(892)
+(1,614)
+(607)
+(387)
+(1,289)
+(6,195)
+(6,195)
+28
+40
+68
+52,272
+(902)
+(120)
+(120)
+(2,190)
+place of
+Name of investees
+business
+Register
+location
+Legal
+representative
+Principal
+activities
+Registered
+Capital RMB
+million
+Percentage of
+equity/voting
+right directly
+or indirectly
+held by the
+Company
+Principal
+1.Joint ventures
+PRC
+Gu Yuefeng
+Manufacturing
+14,758
+50.00%
+refining oil
+products
+BASF-YPC Company Limited ("BASF-YPC") PRC
+Fujian Refining & Petrochemical Company PRC
+Limited ("FREP")
+(a) Principal joint ventures and associates
+Principal joint ventures and associates of the Group are as fllows:
+13 LONG-TERM EQUITY INVESTMENTS (Continued)
+(145)
+(2,335)
+(375)
+(375)
+3,722
+(3,722)
+253,011
+14,822
+15,579
+(198)
+(7,855)
+(198)
+275,557
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+111
+Financial Statements (PRC)
+112
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+798
+PRC
+16,525
+10,615
+1,838
+187,848
+1,155
+186,693
+157,431
+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.
+12 AVAILABLE-FOR-SALE FINANCIAL ASSETS
+At 31 December
+2017
+RMB million
+2,651
+At 31 December
+2016
+RMB million
+178
+1,544
+1,722
+Less: Impairment loss for investments
+46
+262
+11,175
+11,437
+29
+Total
+Equity securities, listed and at quoted market price
+Other investment, unlisted and at cost
+1,676
+65,772
+14,141
+2017
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+11 INVENTORIES
+The Group
+Raw materials
+Work in progress
+84,448
+Finished goods
+At 31 December
+2017
+RMB million
+At 31 December
+2016
+RMB million
+85,975
+75,680
+14,774
+Spare parts and consumables
+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 17 million (2016: nil).
+Dividends declared
+Disposals for the year
+Investments transferred to subsidiaries
+Movement of provision for impairment
+Balance at 31 December 2017
+Investments in
+joint ventures
+RMB million
+50,696
+2,437
+Change of other comprehensive loss under the equity method
+Investments in
+Provision for
+impairment
+losses
+RMB million
+(722)
+Total
+RMB million
+66,838
+116,812
+11,129
+13,566
+associates
+RMB million
+Share of profits less losses under the equity method
+Additions for the year
+Balance at 1 January 2017
+110
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+13 LONG-TERM EQUITY INVESTMENTS
+The Group
+Balance at 1 January 2017
+Additions for the year
+Share of profits less losses under the equity method
+Change of other comprehensive income under the equity method
+Other equity movement under the equity method
+Dividends declared
+Disposals for the year
+Reclassification
+Investments transferred to subsidiaries
+Other movements
+Movement of provision for impairment
+Balance at 31 December 2017
+The Company
+5,910
+(2,657)
+Wang Jingyi
+12,547
+5,772
+8,172
+1,800
+1,394
+2,352
+1,165
+4,916
+1,259
+Cash and cash equivalents
+6,524
+Other current assets
+11,013
+10,269
+5,335
+4,852
+2,462
+1,616
+10,816
+3,634
+6,826
+Current assets
+RMB million
+2016
+2017
+2016
+At 31
+December
+2017
+At 31
+December
+At 31
+December
+At 31
+December
+2016
+RMB million
+2017
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2016
+2,709
+1,886
+Total current assets
+(1,135)
+(1,781)
+(233)
+(783)
+(20)
+(334)
+(5,407)
+(1,187)
+Current financial liabilities (i)
+(1,236)
+(5,049)
+(4,643)
+(1,982)
+(2,107)
+(1,914)
+(1,616)
+(11,864)
+(6,466)
+Other current liabilities
+Current liabilities
+14,003
+13,248
+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
+2017
+Manufacturing
+2016
+At 31
+December
+USD
+9,796
+50.00%
+Company Limited ("Sinopec SABIC
+Tianjin")
+UWAIDH AL-
+HARETHI
+and distribution
+of petrochemical
+products
+2.Associates
+Sinopec Sichuan to East China Gas
+Pipeline Co., Ltd. ("Pipeline Ltd")
+and processing
+Manufacturing
+PRC
+Quan Kai
+Sinopec Finance Company Limited
+("Sinopec Finance")
+PRC
+PRC
+Zhao Dong
+Operation of natural
+gas pipelines and
+auxiliary facilities
+Provision of non-
+banking financial
+services
+200
+50.00%
+PRC
+18,000
+PRC
+37.50%
+40.00%
+and distribution
+of petrochemical
+products
+Taihu Limited ("Taihu")
+Russia
+Cyprus
+NA
+PRC
+Crude oil and natural 25,000 USD
+gas extraction
+Yanbu Aramco Sinopec Refining
+Company Ltd. ("YASREF”)
+Sinopec SABIC Tianjin Petrochemical
+Saudi Arabia
+Saudi Arabia
+NA
+Petroleum refining
+1,560 million
+49.00%
+49.00%
+PAO SIBUR Holding ("SIBUR")
+Russia
+Crude oil and natural 10,000 USD
+50.00%
+gas extraction
+Except that SIBUR is a public joint stock company, other joint ventures and associates above are limited companies.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+13 LONG-TERM EQUITY INVESTMENTS (CONTINUED)
+NA
+(b) Major financial information of principal joint ventures
+FREP
+At 31
+December
+At 31
+December
+BASF-YPC
+At 31
+December
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+At 31
+December
+At 31
+December
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+The Republic of British Virgin
+Kazakhstan Islands
+Ltd. ("CIR")
+Caspian Investments Resources
+Russia
+NA
+Proccessing
+21,784 million
+10.00%
+natural gas and
+RUB
+manufacturing
+petrochemical
+products
+Zhongtian Synergetic Energy
+PRC
+PRC
+Peng Yi
+Mining coal and
+17,516
+38.75%
+Company Limited ("Zhongtian
+Synergetic Energy")
+manufacturing
+of coal-chemical
+products
+2017
+2016
+(88)
+Zhongtian Synergetic Energy
+1,004
+1,157
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+Production and sale of
+4,043
+4,043
+petrochemical products
+Trading of petrochemical
+products
+2,541
+Other units without individual significant goodwill
+Total
+879
+167
+212
+8,634
+6,353
+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.
+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.
+18 LONG-TERM DEFERRED EXPENSES
+Long-term deferred expenses primarily represent prepaid rental expenses over one year and catalysts expenditures.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+941
+117
+Sinopec (Hong Kong) Limited
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+Balance at 31 December 2016
+58,526
+54,241
+1,047
+1,851
+34,268
+26,896
+1,775
+1,401
+1,510
+634
+97,126
+85,023
+Shanghai SECCO Petrochemical Company Limited ("Shanghai SECCO")
+(Note 53)
+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).
+Goodwill is allocated to the following Group's cash-generating units:
+Name of investees
+Principal activities
+At 31 December
+At 31 December
+2017
+RMB million
+2016
+RMB million
+Sinopec Beijing Yanshan Petrochemical Branch ("Sinopec Yanshan")
+Sinopec Zhenhai Refining and Chemical Branch ("Sinopec Zhenhai")
+17 GOODWILL
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+2,325
+2.477
+Available-for-sale securities
+Intangible assets
+117
+227
+260
+(563)
+Others
+(242)
+(14,615)
+180
+Deferred tax assets/(liabilities)
+19,470
+14,639
+(264)
+(10,805)
+(229)
+(15,086)
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+Deferred tax assets
+Deferred tax liabilities
+Deferred tax assets and liabilities after the consolidated elimination adjustments are as follows:
+133
+(50)
+(9,928)
+11,264
+14,150
+for the year ended 31 December 2017
+19 DEFERRED TAX ASSETS AND LIABILITIES
+Deferred tax assets and liabilities before the consolidated elimination adjustments are as follows:
+Receivables and inventories
+Accruals
+Deferred tax assets
+At 31 December
+2017
+RMB million
+381
+At 31 December
+2016
+RMB million
+Deferred tax liabilities
+At 31 December At 31 December
+2017
+RMB million
+2016
+RMB million
+87
+1,925
+391
+Cash flow hedges
+Fixed assets
+Tax value of losses carried forward
+165
+27
+Balance at 31 December 2017
+Net book value:
+886
+17
+190
+11,837
+898
+24,752
+Decreases for the year
+(3,491)
+(293)
+(479)
+(132)
+1,075
+(249)
+Balance at 31 December 2017
+75,728
+5,160
+3,845
+48,613
+4,662
+138,008
+Accumulated amortisation:
+Balance at 1 January 2017
+(4,644)
+10,752
+Additions for the year
+117,900
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+16 INTANGIBLE ASSETS
+The Group
+Land use
+rights
+RMB million
+Non-patent
+Operation
+Patents
+technology
+RMB million
+RMB million
+rights
+RMB million
+Others
+RMB million
+Total
+RMB million
+Cost:
+Balance at 1 January 2017
+68,467
+4,378
+4,134
+36,908
+4,013
+14,015
+At 31 December
+3,261
+9,892
+483
+24
+120
+16
+854
+Additions for the year
+21
+23
+1
+211
+45
+(8)
+(1)
+(4)
+(13)
+Balance at 31 December 2017
+224
+482
+24
+139
+Decreases for the year
+Balance at 1 January 2017
+Provision for impairment losses:
+39,996
+2,596
+32,023
+Additions for the year
+4,082
+162
+515
+4,338
+448
+9,545
+Decreases for the year
+(1,119)
+(255)
+(24)
+(174)
+(1,572)
+Balance at 31 December 2017
+16,978
+3,168
+2,774
+14,206
+2,870
+2,259
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+2017
+RMB million
+4,339
+4,339
+RMB million
+fellow subsidiaries
+-Renminbi loans
+-US Dollar loans
+-HK Dollar loans
+-Euro loans
+-Singapore Dollar loans
+Total
+At 31 December 2017
+At 31 December 2016
+Short-term loans from Sinopec Group Company and
+Original
+million
+Exchange
+rates
+RMB
+million
+Original
+currency
+million
+Exchange
+rates
+RMB
+million
+31,105
+currency
+11,944
+-Renminbi loans
+-US Dollar loans
+17
+7,663
+198
+7,861
+Others
+Total
+43
+68,720
+17
+(11)
+Short-term other loans
+49
+(187)
+(664)
+(244)
+89,603
+The reasons for recognising impairment losses are set out in the respective notes of respective assets.
+22 SHORT-TERM LOANS
+The Group's short-term loans represent:
+Short-term bank loans
+-Renminbi loans
+21,978
+23,685
+10,931
+1,136
+5
+4
+4.8831
+20
+54,701
+4
+4.7995
+21
+30,374
+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.
+7.3068
+At 31 December 2017 and 2016, the Group had no significant overdue short-term loan.
+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.
+24 ACCOUNTS PAYABLE
+At 31 December 2017 and 2016, the Group had no individually significant accounts payable aged over one year.
+25 ADVANCES FROM CUSTOMERS
+At 31 December 2017 and 2016, the Group had no individually significant advances from customers aged over one year.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+119
+Financial Statements (PRC)
+SIBUR (v)
+2017
+23 BILLS PAYABLE
+1
+7.8023
+1,969
+6.5342
+7,420
+146
+6.9370
+1,013
+299
+299
+23,297
+18,430
+1,706
+2,858
+3,010
+6.5342
+19,668
+2,277
+0.8359
+1,903
+1,957
+2,202
+6.9370
+13,577
+0.8945
+Goodwill
+886
+14
+(1)
+for the year
+(decrease)
+2017
+RMB million
+RMB million
+RMB million
+RMB million
+Allowance for doubtful accounts
+Included: Accounts receivable
+31 December
+8
+49
+(100)
+(21)
+1
+612
+Other receivables
+9
+1,349
+233
+683
+Balance at
+increase/
+Other
+7,425
+7,425
+Deferred tax assets
+Deferred tax liabilities
+At 31 December
+2017
+RMB million
+15,131
+6,466
+At 31 December
+2016
+RMB million
+7,214
+7,661
+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.
+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).
+20 OTHER NON-CURRENT ASSETS
+Other non-current assets mainly represent prepayments for construction projects and purchases of equipment.
+118 Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+21 DETAILS OF IMPAIRMENT LOSSES
+At 31 December 2017, impairment losses of the Group are analysed as follows:
+Note
+Balance at
+1 January
+2017
+RMB million
+Provision for
+the year
+RMB million
+Written back
+for the year
+Written off
+(74)
+At 31 December
+2016
+(18)
+1,486
+(42)
+1,614
+Fixed assets
+14
+54,762
+19,836
+(372)
+(91)
+74,135
+(2)
+Construction in progress
+1,693
+252
+(60)
+(105)
+1,780
+Intangible assets
+16
+854
+19
+15
+936
+722
+13
+Prepayments
+10
+31
+2
+(8)
+25
+2,063
+284
+(174)
+(39)
+(11)
+2,123
+Inventories
+11
+920
+436
+(13)
+(190)
+2
+1,155
+Long-term equity investments
+(4)
+construction project (first-stage)
+(334)
+gas (SNG) export pipeline
+Decreases for the year
+(771)
+(1,488)
+(11,466)
+Exchange adjustments
+(57)
+(1,952)
+(95)
+Balance at 31 December 2017
+199
+48,368
+498,246
+(13,725)
+(2,104)
+1,003,073
+Provision for impairment losses:
+Balance at 1 January 2017
+3,329
+30,642
+20,791
+54,762
+Additions for the year
+456,459
+554
+(77)
+Reclassifications
+11,983
+54,605
+723
+(19,736)
+(140)
+(2,573)
+(199)
+(2,912)
+120,013
+(122)
+667,657
+1,727,982
+45,243
+404,919
+463,023
+Additions for the year
+4,075
+55,057
+46,585
+913,185
+105,717
+940,312
+8,832
+10,450
+19,836
+690,594
+The company
+Plants and
+buildings
+Oil
+and gas
+properties
+Equipment
+RMB million
+RMB million
+machinery
+and others
+RMB million
+Total
+RMB million
+409,122
+Cost:
+Additions for the year
+Transferred from construction in progress
+Reclassifications
+Transferred from subsidiaries
+Transferred to subsidiaries
+47,586
+46
+2,260
+206
+58
+540,499
+982
+15,609
+443,485
+400
+1,031,570
+1,428
+Balance at 1 January 2017
+215,124
+66,348
+Balance at 31 December 2016
+Reclassifications
+Decreases for the year
+(51)
+(12)
+(295)
+(358)
+Exchange adjustments
+(104)
+(1)
+(105)
+Balance at 31 December 2017
+3,832
+39,358
+30,945
+74,135
+Net book value:
+Balance at 31 December 2017
+67,813
+171,840
+411,121
+650,774
+892,936
+(23,386)
+81,275
+1,658,541
+14,464
+1,536
+1.526
+9,601
+123
+(610)
+(3,518)
+(246)
+(175)
+(260)
+51
+662
+51
+1,290
+1,351
+9,341
+123
+(944)
+(2,856)
+23
+221
+2,543
+2,543
+Total comprehensive income/(loss)
+Dividends declared by associates
+Other comprehensive (loss)/income
+self-financing
+CIR
+2017
+RMB million
+RMB million
+RMB million
+RMB million
+5,644
+191
+3,542
+2,442
+52,496
+RMB million
+3,569
+2016
+RMB million
+2017
+2016
+RMB million
+RMB million
+2,563
+2,205
+Profit/(loss) for the year
+Share of profit/(loss) from associates
+19,636
+1,272
+753
+Additions for the year
+Transferred from construction in progress
+Reclassifications
+Decreases for the year
+Exchange adjustments
+Balance at 31 December 2017
+Accumulated depreciation:
+Balance at 1 January 2017
+114,920
+854
+Balance at 1 January 2017
+650,685
+1,627
+19,881
+(673)
+(50)
+(1,737)
+(1,913)
+Oil
+and gas
+properties
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+Total
+RMB million
+6,789
+Cost:
+Plants and
+buildings
+RMB million
+The Group
+748
+960
+48
+(305)
+(1,759)
+Share of other comprehensive
+(loss)/income from associates (iv)
+(121)
+(86)
+(26)
+(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 for using equity method in
+aggregate was RMB 23,899 million (2016: RMB 21,510 million).
+Note:
+(iv) Including foreign currency translation differences.
+(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.
+(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.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+14 FIXED ASSETS
+26
+37,505
+RMB million
+(160)
+809
+(101)
+120,425
+50,459
+1,693
+252
+412
+47
+(165)
+(46)
+1,780
+(859)
+413
+50,046
+49,277
+Accumulated
+interest
+capitalised at
+Project name
+Budgeted
+amount
+Balance at
+1 January
+RMB million
+2017
+RMB million
+Net change
+for the year
+RMB million
+118,645
+129,581
+(7,773)
+(37,505)
+(81,275)
+Reclassification to other assets
+Exchange adjustments
+Balance at 31 December 2017
+Provision for impairment losses:
+Balance at 1 January 2017
+Additions for the year
+Decreases for the year
+Balance at 31 December 2017
+Net book value:
+Balance at 31 December 2017
+Balance at 31 December 2016
+At 31 December 2017, major construction projects of the Group are as follows:
+The Group
+RMB million
+The Company
+RMB million
+131,274
+49,689
+85,552
+45,701
+(376)
+(6,876)
+(6,567)
+31 December
+2017
+RMB million
+Transferred to fixed assets
+Balance at
+Source of
+funding
+10%
+Bank loans &
+1
+self-financing
+Tianjin LNG Project
+13,639
+8,213
+(5,059)
+3,154
+1,329
+78%
+148
+self-financing
+Xinjiang coal-based substitute natural
+11,589
+1,041
+1,692
+15%
+(46)
+Bank loans &
+Bank loans &
+1,205
+124
+13,865
+31 December
+2017
+RMB million
+Zhongke Refine Integration Project
+34,667
+3,274
+3,716
+6,990
+20%
+Bank loans &
+25
+self-financing
+Guangxi LNG Project
+15,475
+4,903
+(2,538)
+2,365
+68%
+Bank loans &
+670
+self-financing
+Wen 23 gas storage project (first-stage)
+Percentage of
+Completion
+Dry hole costs written off
+651
+Additions for the year
+23
+Transferred from subsidiaries
+31
+688
+(470)
+(282)
+614,246
+66,320
+719
+(752)
+Decreases for the year
+21,397
+(230)
+22,402
+(1,487)
+379,137
+(5,428)
+271,849
+(7,145)
+673,388
+Provision for impairment losses:
+Balance at 1 January 2017
+1,623
+Additions for the year
+Balance at 31 December 2017
+43,305
+(75)
+52
+1,618
+867
+(503)
+Disposals for the year
+(652)
+Decreases for the year
+(482)
+(1,911)
+Balance at 31 December 2017
+49,022
+555,133
+(6,728)
+456,939
+(9,121)
+1,061,094
+Accumulated depreciation:
+Balance at 1 January 2017
+Additions for the year
+Reclassifications
+Transferred to subsidiaries
+21,401
+337,394
+255,451
+361
+26,727
+7,556
+(1,155)
+44,304
+163,266
+329,814
+172,080
+373,020
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+115
+Financial Statements (PRC)
+116
+Financial Statements (PRC)
+141,725
+176,378
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+14 FIXED ASSETS (Continued)
+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.
+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.
+At 31 December 2017 and 2016, the Group and the Company had no individually significant fixed assets which were pledged.
+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.
+15 CONSTRUCTION IN PROGRESS
+Balance at 1 January 2017
+Cost:
+15,954
+for the year ended 31 December 2017
+24,562
+At 31 December 2017 and 2016, the Group and the Company had no individually significant fully depreciated fixed assets which were still in use.
+24,823
+Balance at 31 December 2016
+13,959
+6,042
+Transferred from subsidiaries
+16
+19
+35
+Transferred to subsidiaries
+(165)
+(27)
+Reclassifications
+Decreases for the year
+(192)
+Net book value:
+(214)
+(164)
+21,824
+57,892
+1,797
+Balance at 31 December 2017
+(38)
+(12)
+34,271
+Balance at 31 December 2017
+6,611
+1,560
+Depreciation, depletion and amortization
+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%).
+42 CLASSIFICATION OF EXPENSES BY NATURE
+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:
+Purchased crude oil, products and operating supplies and expenses
+Personnel expenses
+Exploration expenses include geological and geophysical expenses and written-off of unsuccessful dry hole costs.
+Other expenses
+Total
+43 EXPLORATION EXPENSES
+126
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+2017
+RMB million
+1,770,651
+74,854
+2016
+RMB million
+1,379,691
+63,887
+Exploration expenses (including dry holes)
+Total
+9,021
+(332)
+232,006
+The applicable tax rate of the taxes and surcharges are set out in Note 4.
+The Group
+2017
+Interest expenses incurred
+Less: Capitalised interest expenses
+Net interest expenses
+Accretion expenses (Note 32)
+Interest income
+RMB million
+6,368
+723
+2016
+RMB million
+859
+5,645
+8,162
+1,501
+1,057
+(5,254)
+(3,218)
+Net foreign exchange (gain)/loss
+610
+115,310
+2017
+11,089
+423
+420
+936
+1
+19,836
+14,921
+252
+1,486
+19
+231
+11
+6
+21,791
+17,076
+2017
+RMB million
+2016
+RMB million
+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
+(157)
+(160)
+215
+108,425
+110
+RMB million
+11.035
+64,566
+63,867
+2,036,470
+1,626,905
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+44 IMPAIRMENT LOSSES
+The Group
+RMB million
+Receivables (Note 8,9,10)
+Long-term equity investment (Note 13)
+Fixed assets (Note 14)
+Construction in Progress (Note 15)
+Intangible assets (Note 16)
+Others
+Total
+45 GAIN FROM CHANGES IN FAIR VALUE
+The Group
+2016
+Inventories (Note 11)
+235,292
+Total
+5,459
+765
+3,280
+(3,157)
+888
+Statutory
+surplus reserve
+RMB million
+The Group
+Discretionary
+Balance at 1 January 2017
+Appropriation
+Balance at 31 December 2017
+79,640
+3,042
+82,682
+surplus reserves
+RMB million
+117,000
+Total
+RMB million
+196,640
+3,042
+117,000
+199,682
+The PRC Company Law and Articles of Association of the Company have set out the following profit appropriation plans:
+(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;
+(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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+125
+Financial Statements (PRC)
+The Group
+RMB million
+Movements in surplus reserves are as follows:
+38 SURPLUS RESERVES
+Balance at 31 December 2017
+(932)
+103
+(1,888)
+(2,820)
+680
+(3,481)
+(40)
+57
+(1,642)
+(510)
+(2,479)
+Financial Statements (PRC)
+(3,481)
+(4,376)
+(479)
+(4,413)
+(2,783)
+(7,196)
+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:
+Balance at 1 January 2017
+Provision for the year
+Utilisation for the year
+(895)
+2,449
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+Income from principal operations
+513,514
+633,114
+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.
+40 TAXES AND SURCHARGES
+The Group
+2017
+Consumption tax
+City construction tax
+Education surcharge
+Resources tax
+Other taxes
+Total
+RMB million
+192,907
+2016
+RMB million
+193,836
+18,274
+18,155
+13,811
+13,695
+4,841
+3,871
+726,178
+29,967
+696,211
+857,478
+Income from other operations
+Operating costs
+2016
+The Company
+2017
+RMB million
+2016
+RMB million
+The Group
+2017
+RMB million
+39 OPERATING INCOME AND OPERATING COSTS
+2,300,470
+1,880,190
+59,723
+2,360,193
+1,890,398
+50,721
+1,930,911
+1,492,165
+824,100
+33,378
+RMB million
+11
+Tax effect of preferential tax rate (i)
+Total
+(834)
+228
+20,707
+2017
+2016
+RMB million
+RMB million
+86,573
+79,877
+21,643
+19,969
+1,936
+1,569
+(5,939)
+(2,757)
+(793)
+83
+(1,394)
+299
+(613)
+(72)
+16,279
+(10,317)
+21,313
+26,668
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of tax losses not recognised
+Write-down of deferred tax assets
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+Note:
+2017
+RMB million
+RMB million
+89
+(453)
+152
+133
+1,468
+1,933
+1,709
+2,218
+2017
+2016
+RMB million
+RMB million
+152
+Effect of income taxes at foreign operations (ii)
+1,485
+26
+Amortisation of intangible assets and long-term deferred expenses
+Dry hole costs written off
+Net loss on disposal of non-current assets
+Fair value loss
+Financial expenses
+Investment income
+(Increase)/decrease in deferred tax assets
+Decrease in deferred tax liabilities
+Increase in inventories
+Safety fund reserve
+Increase in operating receivables
+Increase in operating payables
+Net cash flow from operating activities
+(b) Net change in cash:
+Cash balance at the end of the year
+Less: Cash at the beginning of the year
+Net (decrease)/increase of cash
+(c) The analysis of cash held by the Group is as follows:
+2,000
+Depreciation of fixed assets
+Impairment losses on assets
+Net profit
+Add:
+(a) Reconciliation of net profit to cash flows from operating activities:
+811
+(72)
+228
+16,279
+20,707
+(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.
+(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.
+51 DIVIDENDS
+(a) Dividends of ordinary shares declared after the balance sheet date
+958
+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.
+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.
+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 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 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.
+128
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+52 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT
+The Group
+(b) Dividends of ordinary shares declared during the year
+Tax effect of non-taxable income
+Tax effect of non-deductible expenses
+Expected income tax expense at a tax rate of 25%
+(26)
+11
+(21)
+(6)
+Investment income from holding/disposal of
+available-for-sale financial assets
+199
+173
+13
+4
+Investment income from holding/disposal of financial assets and
+liabilities and derivative financial instruments at fair value through
+profit or loss
+(752)
+355
+(Losses)/gains from ineffective portion of cash flow hedge
+Investment income on loss of control and remeasuring
+(916)
+293
+(88)
+(135)
+interests in the Pipeline Ltd (Note 13(vi)).
+equity investments
+3,749
+17,769
+31,118
+5,774
+46 INVESTMENT INCOME
+41
+(67)
+(13)
+(216)
+The Group
+2017
+The Company
+2016
+2017
+20,562
+2016
+RMB million
+RMB million
+RMB million
+Income from investment of subsidiaries accounted for
+under cost method
+Income from investment accounted for under equity method
+Investment (loss)/income from disposal of long-term
+16,525
+9,306
+RMB million
+20,562
+Gain on remeasurement of interests in Shanghai SECCO (Note53)
+3,941
+719
+4,706
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+127
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+49 NON-OPERATING EXPENSES
+The Group
+1,317
+Fines, penalties and compensation
+Donations
+Total
+50 INCOME TAX EXPENSE
+The Group
+Provision for income tax for the year
+Deferred taxation
+Under-provision for income tax in respect of preceding year
+Total
+Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows:
+Profit before taxation
+Others
+Others
+890
+427
+Others
+89
+79
+Total
+19,060
+30,779
+1,262
+38,058
+1,576
+43,519
+3,987
+47 OTHER INCOME
+48 NON-OPERATING INCOME
+The Group
+Government grants
+Others
+Total
+2017
+2016
+RMB million
+RMB million
+Other income are mainly the government grants related to the business activities.
+1,132
+Balance at 31 December 2017
+6,333
+45,334
+44,922
+December 2017 with maturities
+through 2022
+Less: Current portion
+Long-term loans from Sinopec Group Company
+and fellow subsidiaries
+Total
+(2,014)
+43,320
+67,754
+The maturity analysis of the Group's long-term loans is as follows:
+Between one and two years
+Between two and five years
+After five years
+Total
+Long-term loans are primarily unsecured, and carried at amortised costs.
+(150)
+44,772
+62,461
+At 31 December
+2017
+Interest rates ranging from interest
+free to 4.99% per annum at 31
+- Renminbi loans
+and fellow subsidiaries
+17,689
+currency
+million
+Exchange
+rates
+RMB
+million
+25,644
+26,058
+- US Dollar loans
+Interest rates ranging from interest
+1.55% to 4.29% per annum at 31
+December 2017 with maturities
+through 2031
+29
+At 31 December
+6.5342
+61
+6.9370
+426
+Less: Current portion
+Long-term bank loans
+Long-term loans from Sinopec Group Company
+(1,402)
+24,434
+(8,795)
+192
+RMB
+million
+2016
+RMB million
+Total
+Note:
+6,000
+53,902
+84,485
+(22,532)
+31,370
+(29,500)
+54,985
+(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.
+(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.
+32 PROVISIONS
+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:
+Balance at 1 January 2017
+Provision for the year
+Accretion expenses
+Utilised for the year
+Exchange adjustments
+Cash at bank and on hand
+33 OTHER NON-CURRENT LIABILITIES
+Less: Current portion
+- Corporate Bonds (ii)
+Short-term corporate bonds (i)
+Debentures payable:
+RMB million
+16,822
+3,957
+48,238
+56,725
+2,694
+1,779
+67,754
+62,461
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+RMB million
+121
+122
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+31 DEBENTURES PAYABLE
+The Group
+At 31 December
+2017
+RMB million
+At 31 December
+2016
+Financial Statements (PRC)
+Exchange
+rates
+currency
+million
+Original
+Income tax
+Mineral resources compensation fee
+Other taxes
+Total
+28 OTHER PAYABLES
+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.
+29 NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR
+The Group's non-current liabilities due within one year represent:
+Long-term bank loans
+- Renminbi loans
+At 31 December 2017
+Original
+currency
+million
+At 31 December 2016
+Original
+Exchange
+rates
+RMB
+million
+currency
+million
+Exchange
+rates
+RMB
+million
+Value-added tax payable
+Consumption tax
+52,886
+8,289
+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
+4
+At 31 December
+2016
+RMB million
+8,899
+8,668
+39,623
+29,682
+13,015
+6,051
+175
+196
+RMB million
+6.5342
+1,379
+23
+8,753
+6.9370
+22,532
+29,500
+Others
+733
+527
+Non-current liabilities due within one year
+26,681
+38,972
+6,532
+At 31 December 2017 and 2016, the Group had no significant overdue long-term loan.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+30 LONG-TERM LOANS
+The Group's long-term loans represent:
+Interest rate and final maturity
+Long-term bank loans
+- Renminbi loans
+Interest rates ranging from interest
+1.08% to 4.66% per annum at 31
+December 2017 with maturities
+through 2030
+At 31 December 2017
+At 31 December 2016
+Original
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+6.5342
+29,500
+6
+6.9370
+42
+1,402
+8,795
+- US Dollar loans
+Long-term loans from Sinopec Group Company and
+fellow subsidiaries
+- Renminbi loans
+1,000
+Long-term loans due within one year
+Renminbi debentures
+- US Dollar debentures
+2,014
+150
+2,014
+150
+3,416
+8,945
+16,000
+Debentures payable due within one year
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+The Group
+RMB million
+36,918
+Subtotal
+2,479
+(465)
+2,014
+Changes in fair value of available-for-sale financial assets recongnised during the year
+Less: Total amounts transferred to profit or loss from
+(17)
+(7)
+(24)
+other comprehensive income during the year
+Subtotal
+Share of other comprehensive loss in associates and joint ventures
+Subtotal
+Translation difference in foreign currency statements
+Subtotal
+Other comprehensive income
+(17)
+(7)
+(24)
+45
+(5,164)
+1,115
+(6,279)
+other comprehensive income during the year
+1,053
+(3,792)
+(3,792)
+(3,792)
+(3,792)
+(4,689)
+313
+(4,376)
+2016
+45
+Before-tax
+amount
+Tax effect
+RMB million
+Net-of-tax
+amount
+RMB million
+Cash flow hedges:
+Effective portion of changes in fair value of hedging instruments
+recognised during the year
+(Add)/Less: Adjustments of amounts transferred to initial carrying amount of hedged items
+Total amounts transferred to profit or loss from
+(3,813)
+(13)
+652
+2
+(3,161)
+(11)
+RMB million
+45
+45
+4,298
+Changes in fair
+value of
+available-for-sale
+financial assets
+Translation
+difference in
+foreign currency
+Cash flow hedges
+RMB Million
+RMB Million
+statements
+RMB Million
+Subtotal
+RMB Million
+RMB Million
+RMB Million
+income
+114
+(703)
+(7,984)
+(1,169)
+(9,153)
+(17)
+1,970
+2,703
+7,052
+(719)
+(838)
+1,053
+Total other
+comprehensive
+Equity Attributable to shareholders of the company
+4,298
+4,298
+4,298
+6,805
+(472)
+6,333
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+Minority interests
+36 OTHER COMPREHENSIVE INCOME (Continued)
+(b) Reconciliation of other comprehensive income
+31 December 2015
+Changes in 2016
+31 December 2016
+Changes in 2017
+The share of other
+comprehensive
+income which
+being reclassified
+to profit and
+loss in the future
+under equity
+method
+RMB Million
+(6,557)
+2,396
+(4,161)
+31 December 2017
+37 SPECIFIC RESERVE
+The Group (Continued)
+97
+1,053
+(57)
+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 capital reserves for every 10 existing shares.
+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.
+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 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.
+All A shares and H shares rank pari passu in all material aspects.
+Capital management
+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.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 30 and 57, respectively.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+123
+Financial Statements (PRC)
+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
+1,627
+1,501
+(467)
+(172)
+39,407
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+34 SHARE CAPITAL
+The Group
+124
+Registered, issued and fully paid:
+Total
+At 31 December
+2017
+At 31 December
+2016
+RMB million
+RMB million
+95,558
+95,558
+25,513
+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
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+240
+4
+(1)
+(1,074)
+3
+other comprehensive income during the year
+Subtotal
+575
+(72)
+503
+(1,893)
+(1,314)
+313
+Changes in fair value of available-for-sale financial assets recongnised during the year
+Less: Total amounts transferred to profit or loss from
+(57)
+(57)
+other comprehensive income during the year
+Subtotal
+Share of other comprehensive income in associates and joint ventures
+Subtotal
+Translation difference in foreign currency statements
+Subtotal
+Other comprehensive income
+(57)
+(1,580)
+1,053
+Less/(Add): Adjustments of amounts transferred to initial carrying amount of hedged items
+Total amounts transferred to profit or loss from
+Cash flow hedges:
+35 CAPITAL RESERVE
+The movements in capital reserve of the Group are as follows:
+RMB million
+Balance at 1 January 2017
+Transaction with minority interests
+Others
+Balance at 31 December 2017
+119,525
+(13)
+Effective portion of changes in fair value of hedging instruments recognised
+during the year
+45
+119,557
+36 OTHER COMPREHENSIVE INCOME
+The Group
+(a) Each item of other comprehensive income and the influence of the income tax and the process of change to profit or loss
+2017
+Before-tax
+amount
+Net-of-tax
+RMB million
+Tax effect
+RMB million
+amount
+RMB million
+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.
+- Cash on hand
+41 FINANCIAL EXPENSES
+Cash at the end of the year
+(31,151)
+(22,549)
+63,762
+81,691
+190,935
+214,543
+2017
+2016
+RMB million
+113,218
+RMB million
+160
+124,468
+(11,250)
+68,933
+55,535
+2017
+RMB million
+2016
+RMB million
+14
+113,204
+113,218
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+10
+124,458
+124,468
+129
+Financial Statements (PRC)
+- Demand deposits
+124,468
+(11,364)
+2016
+(2,553)
+(28,903)
+126
+2017
+2016
+RMB million
+RMB million
+70,294
+59,170
+17,076
+106,149
+99,592
+9,161
+8,833
+21,791
+7,467
+1,719
+6,876
+(4,707)
+(30,779)
+(5,610)
+4,336
+(19,060)
+216
+13
+1,528
+1,518
+676
+662
+613
+Long-term deferred expenses
+117
+117
+12
+Deferred tax assets
+11
+19
+2,937
+168
+Intangible assets
+10,664
+229
+231
+Construction in progress
+5,665
+4,860
+9,587
+Fixed assets
+5,598
+10,550
+Other non-current assets
+Total current assets
+117
+7
+23,547
+12,883
+(1,438)
+(1,438)
+(99)
+(376)
+(383)
+(96)
+(96)
+(383)
+(35)
+(936)
+(2,115)
+(2,115)
+Total non-current assets
+12,180
+386
+Deferred tax liabilities
+Total current liabilities
+Taxes payable
+Employee benefits payable
+Advances from customers
+Bills payable
+Accounts and other payables
+Total assets
+6,582
+5,887
+16,437
+791
+641
+354
+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
+Purchase consideration
+Details of combination cost and goodwill are as follows:
+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
+Cash
+Acquisition
+method
+Share of
+acquired
+equity
+50%
+Cost of
+acquisition
+RMB 10,135
+million
+SECCO
+Time of
+acquisition
+26/10/2017
+Shanghai
+Acquiree
+Details of the net assets acquired are as follows:
+761
+Shanghai SECCO
+RMB million
+10,135
+1,349
+1,349
+1,643
+1,558
+1,702
+251
+558
+558
+621
+(538)
+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
+Inventories
+Accounts and other receivables
+Bills receivable
+Cash and cash equivalents
+2,541
+17,729
+20,270
+10,135
+(4,032)
+for the year ended 31 December 2017
+(1,984)
+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
+Operating lease charges for land
+Ancillary and social services
+Production related services
+Exploration and development services
+Transportation and storage
+Purchases
+Sales of goods
+(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)
+118,242
+Financial Statements (PRC)
+(iii)
+1,333
+(x)
+209
+807
+(ix)
+129
+127
+(viii)
+456
+626
+(vii)
+449
+510
+(vii)
+10,474
+8,015
+(vii)
+6,584
+6,653
+(vi)
+10,816
+20,824
+(v)
+27,201
+21,210
+(iv)
+7,716
+(4,032)
+132
+131
+Authorised representative
+Types of legal entity
+Relationship with the Group
+Principal activities
+Registered address
+China Petrochemical Corporation
+9111000010169286X1
+:
+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)
+flow of
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+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.
+10,196
+12,405
+17,729
+Net assets acquired
+(1,786)
+Registered capital
+Financial Statements (PRC)
+No. 22, Chaoyangmen North Street, Chaoyang District, Beijing
+State-owned
+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
+YASREF
+Taihu
+BASF-YPC
+FREP
+Joint ventures of the Group:
+Zhongtian Synergetic Energy
+CIR
+SIBUR
+Sinopec Finance
+Pipeline Ltd
+Associates of the Group:
+Sinopec Petroleum Storage and Reserve Limited
+Sinopec Century Bright Capital Investment Limited
+Sinopec Engineering Incorporation
+Sinopec Assets Management Corporation
+Sinopec Zhongyuan Petroleum Exploration Bureau
+Sinopec Shengli Petroleum Administration Bureau
+Sinopec Finance (Note)
+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
+Sinopec Group Company is an enterprise controlled by the PRC government. Sinopec Group Company directly and indirectly holds 71.32%
+shareholding of the Company.
+RMB 274,867 million
+Wang Yupu
+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
+Net cash
+RMB million
+Net profits
+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
+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
+Capital commitments
+At 31 December
+2017
+At 31 December
+2016
+RMB million
+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
+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
+At 31 December 2017 and 2016, the future minimum lease payments of the Group under operating leases are as follows:
+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
+Operating
+cash flow
+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.
+57 COMMITMENTS
+16,139
+11,703
+Profit/(loss) for the year
+27,517
+26.461
+1,075
+(4,604)
+6,152
+5,969
+2,757
+2,513
+5,222
+1,046
+726
+2,733
+1,558
+Total comprehensive
+income/(loss)
+26,983
+27,385
+396
+(2,481)
+6.152
+5,988
+860
+1,512
+1,498
+4,968
+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
+554
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Turnover
+1,221,530
+1,050,294
+6,136
+4,016
+92,014
+77,894
+6,068
+2,757
+2.513
+1,146
+879
+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
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+625
+Operating lease commitments
+25
+1,344
+20
+726
+2,733
+1,558
+Comprehensive income/
+(loss) attributable to
+minority interests
+9,033
+9,028
+(38)
+(3,279)
+3,081
+2.966
+1,378
+1,256
+433
+349
+449
+235
+957
+545
+Dividends paid to minority
+interests
+9,544
+4,932
+563
+996
+Total
+(7,441)
+Fujian Petrochemical
+Shanghai Petrochemical
+At 31
+At 31
+December
+December
+At 31
+SIPL
+At 31
+December
+2017
+2016
+2017
+December
+December
+At 31
+At 31
+Marketing Company
+At 31
+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)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+136
+(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.
+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.
+Shanghai
+At 31
+December
+December
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2016
+2017
+2017
+2016
+2017
+2016
+2017
+2016
+2017
+2016
+December
+December
+At 31
+Zhonghan Wuhan
+At 31
+At 31
+December
+December
+At 31
+SECCO
+Sinopec Kantons
+At 31
+December
+December
+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
+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
+RMB 22,761
+68
+100.00
+RMB 1,165
+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
+ethylene and downstream byproducts
+RMB million
+under common control:
+RMB 3,986
+67.60
+RMB 7,801
+RMB 7,801
+1,297
+75.00
+RMB 3,225
+RMB 4,397
+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 7,233
+RMB 1,595
+Manufacturing of intermediate petrochemical
+products and petroleum products
+2,153
+75.00
+RMB 2,990
+Manufacturing of intermediate petrochemical
+RMB million
+RMB million
+RMB million
+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)
+(39,322)
+(1,460) (28,523)
+(1,774)
+Non-current liabilities
+14,686
+13,598
+12,797
+11.057
+13,228
+13,598
+Summarised consolidated statement of comprehensive income and cash flow
+(ix)
+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
+2016
+2017
+2016
+SIPL
+Marketing Company
+2017
+Year ended 31 December
+Shanghai
+14,686
+100.00
+13,089
+9,925
+(8,942)
+(10,922)
+(824)
+(7,118)
+(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
+RMB million
+RMB million
+RMB million
+RMB million
+(376)
+7,845
+(812)
+(2,891)
+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
+(47,106)
+(56,126)
+(liabilities)/assets
+Net current
+(7,521)
+(3,975)
+(4,174)
+(2,351)
+USD 1,638
+137
+15,215
+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
+33
+19
+RMB million
+2016
+2017
+Long-term loans (including current portion) (Note)
+Short-term loans
+Other non-current liabilities
+19,416
+Other payables
+12
+104
+2,763
+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
+23,297
+9,998
+10,165
+19,430
+18,111
+178
+1,969
+13
+6,147
+Advances from customers
+Other non-current assets
+54 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+(xi) The Group obtained or repaid loans from or to Sinopec Group Company and fellow subsidiaries.
+(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).
+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)
+Net loans obtained from/(repaid to) related parties
+Net deposits placed with related parties
+5,279
+USD 1,638
+(xi)
+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:
+Accounts payable
+(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:
+the government-prescribed price;
+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.
+(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.
+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%.
+•
+where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+⋅
+where there is no government-prescribed price, the government-guidance price;
+•
+•
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(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)
+55 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+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 12,000
+100.00
+RMB 15,651
+RMB 13,203
+225
+100.00
+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
+RMB 4,585
+RMB 3,000
+Trading of crude oil and petrochemical products
+27
+100.00
+RMB 1,856
+RMB 1,400
+Trading of petrochemical products
+RMB million
+%
+RMB 3,374
+2017
+100.00
+RMB 4,000
+RMB 8,000
+100.00
+for the year ended 31 December 2017
+RMB 8,000
+Investment in exploration, production and sale of
+petroleum and natural gas
+Investment holding
+4,930
+50.00
+RMB 3,737
+RMB 6,898
+Manufacturing of plastics, intermediate petrochemical
+products and petroleum products
+14,275
+50.49
+RMB 5,820
+RMB 10,814
+3,788
+60.34
+HKD 3,952
+HKD 248
+63,006
+70.42
+RMB 20,000
+RMB 28,403
+Marketing and distribution of refined petroleum
+products
+100.00
+RMB 6,713
+56
+the Group
+Manufacturing of synthetic fibres, resin and plastics,
+intermediate petrochemical products and petroleum
+products
+million
+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.
+Percentage
+of equity
+interest/
+voting right
+held by
+(e) Allowance for diminution in value of inventories
+(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
+(b) Impairment for assets
+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.
+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.
+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.
+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.
+2017
+million
+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.
+(a) Oil and gas properties and reserves
+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.
+Minority
+Interests at
+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.
+Full name of enterprise
+up capital
+Principal activities
+(d) Subsidiaries acquired through business combination not under common control:
+Sinopec Zhanjiang Dongxing Petrochemical
+31 December
+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")
+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.
+(b) Subsidiaries established by the Group:
+(a) Subsidiaries acquired through group restructuring:
+China Petrochemical International Company Limited
+China International United Petroleum and Chemical
+Company Limited
+Sinopec Catalyst Company Limited
+Sinopec Yangzi Petrochemical Company Limited
+Sinopec Lubricant Company Limited
+Sinopec Yizheng Chemical Fibre Limited
+Sinopec Pipeline Storage & Transportation
+Company Limited
+Sinopec Marketing Company Limited
+("Marketing Company")
+Sinopec Kantons Holdings Limited ("Sinopec Kantons")
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical") (i)
+Liability Company
+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
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+Other
+Retained
+of the
+Non-
+controlling
+Total
+capital
+reserve
+RMB
+RMB
+shareholders
+premium
+RMB
+reserve
+reserves
+earnings
+Company
+interests
+equity
+RMB
+RMB
+RMB
+reserve
+RMB
+Statutory Discretionary
+surplus
+Share
+Contributions by and distributions to owners:
+Final dividend for 2016 (Note 13).
+Interim dividend for 2017 (Note 13)
+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
+surplus
+Total changes in ownership interests in subsidiaries
+Total transactions with owners
+Others
+Balance at 31 December 2017
+Note:
+Total equity
+attributable
+to
+Share
+Capital
+that do not result in a loss of control
+Transactions with owners, recorded directly in equity:
+RMB
+RMB
+(20,582)
+(20,582)
+(12,107)
+(12,107)
+(12,107)
+3,042
+(3,042)
+(12,501)
+(12,501)
+(20,582)
+3,042
+(32,689)
+(12,501)
+(45,190)
+(13)
+(13)
+724
+711
+(13)
+(13)
+(35,731)
+RMB
+66,042
+47,763
+121,071
+26,290
+55,850
+79,640
+117,000
+424
+310,719
+710,994
+120,241
+18,279
+831,235
+51,244
+19,174
+70,418
+-- (3,481)
+(3,481)
+(895)
+(4,376)
+(3,481)
+51.244
+51,244
+724
+Total comprehensive income for the year
+Balance at 1 January 2017
+Profit distribution to SAMC (Note 35)
+Distribution to SAMC in the Acquisition of Gaoqiao
+Branch of SAMC (Note 35)
+Total contributions by and distributions to owners
+(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
+Distributions to non-controlling interests
+that do not result in a loss of control
+Others
+Balance at 31 December 2016
+(7,264)
+(7,264)
+(7,264)
+(9,565)
+(9,565)
+(9,565)
+(6,146)
+Total transactions with owners
+(6,146)
+Interim dividend for 2016 (Note 13)
+Appropriation (Note (a))
+Contributions by and distributions to owners:
+79.640 117,000
+(6,781)
+281,076
+676,197
+111,964
+788,161
+46,672
+46.672
+12,772
+Final dividend for 2015 (Note 13).
+59,444
+7,052
+(719)
+6,333
+7,052
+46,672
+53,724
+12.053
+65,777
+Transactions with owners, recorded directly in equity:
+-7.052
+Other comprehensive income (Note 14)
+(47)
+(39)
+9
+125
+121,071
+26,290
+55,850
+79,640 117,000
+424
+310,719
+710,994
+116
+120,241
+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)
+156
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+for the year ended 31 December 2017
+(Amounts in million)
+831,235
+(47)
+(153)
+116
+(86)
+(2,137)
+2,137
+(16,876)
+(19,013)
+(4,048)
+(23,061)
+(30)
+(30)
+153
+263
+(30)
+(30)
+263
+233
+(2,167)
+(16,876)
+(19,043)
+(3,785)
+(22,828)
+233
+55,850
+711
+3,042
+Gain on dilution and remeasurement of interests in the Pipeline Ltd
+86,697
+80,151
+115,310
+108,425
+6,876
+7,467
+(16,525)
+(9,306)
+Investment income
+(262)
+(20,562)
+Gain on remeasurement of interests in the Shanghai SECCO (Note 35)
+(3,941)
+Interest income
+(5,254)
+(3,218)
+Interest expense
+7,146
+9,219
+(263)
+(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
+Share of profits from associates and joint ventures
+Depreciation, depletion and amortisation
+55,279
+124,468
+68,933
+(353)
+113,218
+256
+124,468
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+157
+Financial Statements (International)
+Dry hole costs written off
+Financial Statements (International)
+(Amounts in million)
+(a) Reconciliation from profit before taxation to net cash generated from operating activities
+Year ended 31 December
+2017
+2016
+RMB
+RMB
+Operating activities
+Profit before taxation
+Adjustments for:
+for the year ended 31 December 2017
+(10,897)
+(1,547)
+1,518
+158
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2017
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION
+Principal activities
+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.
+Organisation
+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.
+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 notes on pages 159 to 205 form part of these consolidated financial statements.
+Basis of preparation
+(a) New and amended standards and interpretations adopted by the Group
+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:
+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.
+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.
+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.
+The Group has not early adopted any new standard or interpretation that is not yet effective for the current accounting period.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+159
+Financial Statements (International)
+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.
+86
+214,543
+(23,236)
+1,528
+21,791
+17,076
+211,809
+190,603
+Net charges from:
+Accounts receivable and other current assets
+Inventories
+Accounts payable and other current liabilities
+190,935
+Income tax paid
+(31,151)
+(22,549)
+(28,903)
+(11,364)
+59,210
+81,089
+210,965
+237,779
+(20,030)
+Net cash generated from operating activities
+(13)
+(93,047)
+(155)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+CONSOLIDATED STATEMENT OF CASH FLOWS
+for the year ended 31 December 2017
+(Amounts in million)
+Net cash generated from operating activities
+Investing activities
+Capital expenditure
+Exploratory wells expenditure
+Purchase of investments, investments in associates and investments in joint ventures
+Payment for acquisition of subsidiary, net of cash acquired
+The notes on pages 159 to 205 form part of these consolidated financial statements.
+Proceeds from disposal of investments and investments in associates
+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
+Repayments of bank and other loans
+Contributions to subsidiaries from non-controlling interests
+Dividends paid by the Company
+Proceeds from disposal of property, plant, equipment and other non-current assets
+Distributions by subsidiaries to non-controlling interests
+Interest paid
+(e) The application of the share premium account is governed by Sections 167 and 168 of the PRC Company Law.
+(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”).
+(35,731)
+(32,702)
+(11,777)
+(44,479)
+121,071
+49
+26,326
+(107)
+27
+92
+(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.
+55,850
+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.
+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.
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+82,682
+(56,509)
+Finance lease payment
+Net (decrease)/increase in cash and cash equivalents
+(82,577)
+(17,896)
+48,820
+600
+3,669
+2,331
+8,506
+4,028
+(145,323)
+440
+(66,217)
+506,097
+(569,091)
+946
+343
+(32,689)
+(16,876)
+(7,539)
+(6,553)
+(5,535)
+(6,967)
+524,843
+(536,380)
+Net cash used in financing activities
+1,313
+4,809
+Cash and cash equivalents at 1 January
+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
+RMB
+33,516
+RMB
+190,935
+214,543
+(63,541)
+(65,467)
+(7,407)
+(7,380)
+(57,627)
+(16,389)
+(1,288)
+(a)
+28,341
+Profit for the year
+RMB
+(20,707)
+Profit for the year
+70,418
+59,444
+Attributable to:
+Shareholders of the Company
+51,244
+46,672
+Non-controlling interests
+(16,279)
+19,174
+Profit for the year
+70,418
+59,444
+Earnings per share:
+15
+Basic
+Diluted
+0.423
+0.385
+12,772
+0.423
+10
+80,151
+9
+(7,146)
+(9,219)
+Interest income
+5,254
+3,218
+Foreign currency exchange gains/(losses), net
+332
+(610)
+Tax expense
+Net finance costs
+(1,560)
+262
+(6,611)
+263
+Share of profits less losses from associates and joint ventures
+19, 20
+16,525
+9,306
+Profit before taxation
+86,697
+Investment income
+77,193
+0.385
+152
+RMB
+70,418
+59,444
+14
+(1,580)
+(57)
+2,014
+(24)
+1,053
+45
+RMB
+(3,792)
+(4,376)
+6,333
+(4,376)
+6,333
+66,042
+65,777
+47,763
+53,724
+18,279
+4,298
+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.
+2016
+Year ended 31 December
+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
+Other comprehensive income:
+Items that may be reclassified subsequently to profit or loss
+(net of tax and after reclassification adjustments):
+Cash flow hedges
+Available-for-sale securities
+2017
+Share of other comprehensive income of associates and joint ventures
+Total items that may be reclassified subsequently to profit or loss
+Total other comprehensive income
+Attributable to:
+Shareholders of the Company
+Non-controlling interests
+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
+Foreign currency translation differences
+121,071
+(2,288,723)
+71,470
+5,686
+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.
+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.
+As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
+•
+RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+•
+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.
+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.
+The engagement partner on the audit resulting in this independent auditor's report is HON CHONG HENG.
+PricewaterhouseCoopers
+Certified Public Accountants
+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.
+Hong Kong, 23 March 2018
+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.
+Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion
+thereon.
+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
+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.
+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:
+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.
+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.
+How our audit addressed the Key Audit Matter
+• 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.
+• 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.
+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.
+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:
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+151
+Financial Statements (International)
+(115,310)
+(108,425)
+Exploration expenses, including dry holes.
+(11,089)
+(11,035)
+Personnel expenses
+Taxes other than income tax
+Other operating (expense)/income, net
+Total operating expenses
+Depreciation, depletion and amortisation
+Operating profit
+Interest expense
+819
+6
+(74,854)
+(63,887)
+7
+(235,292)
+(232,006)
+(16,554)
+Finance costs
+(64,360)
+(64,973)
+5
+Financial Statements (International)
+(B) FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
+CONSOLIDATED INCOME STATEMENT
+for the year ended 31 December 2017
+(Amounts in million, except per share data)
+Note
+Year ended 31 December
+2017
+RMB
+2016
+RMB
+Turnover and other operating revenues
+Turnover
+3
+Other operating revenues
+4
+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)
+(1,379,691)
+Selling, general and administrative expenses
+12,053
+66,042
+(1,853,718)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+485,543
+73,282
+1,013,066
+2222
+55,804
+43,320
+72,674
+44,772
+6,466
+7,661
+39,958
+39,298
+6,051
+17,620
+163,168
+181,831
+852,890
+831,235
+33
+121,071
+121,071
+605,049
+589,923
+17,426
+726,120
+224,544
+Approved and authorised for issue by the board of directors on 23 March 2018.
+5,828
+Accrued expenses and other payables
+31
+Income tax payable
+Total current liabilities
+-------
+Net current liabilities
+Total assets less current liabilities
+Non-current liabilities
+279,247
+13,015
+579,446
+50,397
+1,016,058
+Long-term debts
+Provisions
+Other long-term liabilities
+Total non-current liabilities
+Equity
+Share capital
+Reserves
+Total equity attributable to shareholders of the Company
+Non-controlling interests
+Total equity
+Loans from Sinopec Group Company and fellow subsidiaries
+Deferred tax liabilities
+6,462
+710,994
+120,241
+reserve
+premium
+reserve
+reserve
+Other
+reserves
+Retained
+earnings
+of the
+Company
+controlling
+interests
+capital
+Total
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+65,777
+equity
+126,770
+Non-
+Statutory Discretionary
+surplus
+852,890
+831,235
+Dai Houliang
+Vice Chairman, President
+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
+shareholders
+for the year ended 31 December 2017
+(Amounts in million)
+Profit for the year
+Other comprehensive income (Note 14)
+Total comprehensive income for the year
+Total equity
+attributable
+to
+Share
+Capital
+Share
+surplus
+Balance at 1 January 2016
+30
+RMB
+Bills payable
+17
+18
+19
+20
+21
+23
+678222222
+650,774
+690,594
+16
+118,645
+8,634
+6,353
+79,726
+66,116
+51,361
+50,696
+1,676
+11,408
+15,131
+129,581
+7,214
+Current assets
+Long-term prepayments and other assets
+Financial Statements (International)
+Financial Statements (International)
+CONSOLIDATED BALANCE SHEET
+As at 31 December 2017
+(Amounts in million)
+Note
+31 December
+2017
+31 December
+RMB
+Total non-current assets
+2016
+Non-current assets
+Property, plant and equipment, net
+Construction in progress
+Goodwill
+Interest in associates
+Interest in joint ventures
+Available-for-sale financial assets
+Deferred tax assets
+Lease prepayments
+RMB
+58,526
+153
+81,982
+156,511
+27
+41,455
+49,767
+Total current assets
+529,049
+412,261
+Current liabilities
+Short-term debts.
+186,693
+29
+56,239
+Loans from Sinopec Group Company and fellow subsidiaries
+29
+25,311
+18,580
+Trade accounts payable
+30
+200,073
+54,241
+55,338
+26
+174,301
+16,207
+13,197
+1,066,455
+1,086,348
+Cash and cash equivalents
+113,218
+124,468
+Time deposits with financial institutions
+18,029
+Financial assets at fair value through profit or loss
+Trade accounts receivable
+51,786
+Bills receivable
+50,289
+70,145
+25
+51,196
+68,494
+22222
+Prepaid expenses and other current assets
+Inventories
+24
+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).
+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.
+(iii)Hedge of net investments in foreign operations
+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.
+(ii) Impairment of other long-lived assets is accounted as follows:
+for the year ended 31 December 2017
+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).
+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.
+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)
+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.
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+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.
+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).
+(n) Hedging (Continued)
+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)).
+(p) Trade, bills and other payables
+(k) Available-for-sale financial assets
+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)).
+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.
+(I) Derivative financial instruments
+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.
+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.
+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.
+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)
+(ii) Fair value hedges
+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.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+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.
+(aa) Dividends
+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.
+(bb) Segment reporting
+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.
+3 TURNOVER
+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
+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.
+5 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
+Operating lease charges
+Auditor's remuneration:
+- audit services
+others
+Impairment losses:
+- trade accounts receivable
+- other receivables
+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.
+- accounts prepayments
+The following items are included in selling, general and administrative expenses:
+(z) Income tax
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2017
+(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.
+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.
+(t) Borrowing costs
+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.
+(u) Repairs and maintenance expenditure
+Repairs and maintenance expenditure is expensed as incurred.
+(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.
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(q) Interest-bearing borrowings
+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.
+(iv) Merger accounting for common control combination
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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)).
+In the Company's balance sheet, investments in subsidiaries are stated at cost less impairment losses (Note 2(o)).
+The particulars of the Group's principal subsidiaries are set out in Note 39.
+(ii) Associates and joint ventures
+(i) Subsidiaries and non-controlling interests
+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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+161
+Financial Statements (International)
+162
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+The consolidated financial statements comprise the Company and its subsidiaries, and interest in associates and joint ventures.
+2 SIGNIFICANT ACCOUNTING POLICIES
+Financial Statements (International)
+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.
+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.
+(a) Basis of consolidation
+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.
+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
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+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.
+for the year ended 31 December 2017
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(a) Basis of consolidation (Continued)
+Buildings
+Equipment, machinery and others
+Estimated
+usage period
+12 to 50 years
+4 to 30 years
+residuals rate
+3%
+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.
+Estimated
+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.
+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
+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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+163
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+(h) Lease prepayments
+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:
+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.
+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.
+6 PERSONNEL EXPENSES
+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)
+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)
+(f) Property, plant and equipment
+(j) Goodwill
+Salaries, wages and other benefits
+Contributions to retirement schemes (Note 37)
+21,674
+2016
+RMB million
+RMB million
+9,021
+(723)
+(859)
+5,645
+8,162
+1,501
+1,057
+7,146
+RMB million
+6,368
+9,219
+2.65% to 4.82%
+Current tax
+- Provision for the year
+- Adjustment of prior years
+Deferred taxation (Note 28)
+2017
+2016
+RMB million
+RMB million
+2.37% to 4.41%
+26,668
+(72)
+2016
+Tax expense in the consolidated income statement represents:
+(89)
+(152)
+Others
+(649)
+(1,277)
+(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.
+2017
+(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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+9 INTEREST EXPENSE
+Interest expense incurred
+Less: Interest expense capitalised*
+Accretion expenses (Note 32)
+Interest expense
+* Interest rates per annum at which borrowing costs were capitalised for construction in progress
+10 TAX EXPENSE
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Fines, penalties and compensations
+(10,317)
+228
+(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
+Note:
+299
+(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.
+26
+811
+(72)
+228
+16,279
+20,707
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+169
+2017
+RMB million
+58,930
+(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.
+21,313
+(1,394)
+(793)
+(834)
+16,279
+20,707
+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
+83
+Tax effect of preferential tax rate (i)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+RMB million
+86,697
+RMB million
+80,151
+20,038
+1,905
+1,529
+(5,939)
+(2,786)
+Effect of income taxes at foreign operations (ii)
+(133)
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+Donations
+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)
+for the year ended 31 December 2017
+65,873
+8,981
+74,854
+7 TAXES OTHER THAN INCOME TAX
+City construction tax (ii)
+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
+2017
+2016
+RMB million
+192,907
+Consumption tax (i)
+RMB million
+RMB million
+2017
+49,812
+(152)
+793
+59,723
+909
+50,721
+2017
+2016
+RMB million
+12,104
+RMB million
+2016
+14,410
+73
+5
+2
+(51)
+230
+159
+(12)
+2
+13
+72
+193,836
+RMB million
+18,155
+(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
+2017
+Government grant (i)
+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
+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
+(1,518)
+(1,489)
+Net realised and unrealised gain on derivative financial instruments not qualified as hedging
+Ineffective portion of change in fair value of cash flow hedges
+(909)
+195
+18,274
+(813)
+304
+1,495.20
+1,218.00
+2016
+RMB million
+4,101
+232,006
+3,871
+5,459
+2,449
+235,292
+13,695
+Effective from
+13 January 2015
+RMB/Ton
+Gasoline
+1,711.52
+Naphtha
+Diesel
+Solvent oil
+Lubricant oil
+Fuel oil
+13,811
+Jet fuel oil
+2,109.76
+1,411.20
+2,105.20
+1,948.64
+4,841
+3,278
+3,831
+5,064
+5,064
+6,409
+6,842
+5,045
+8,226
+Share of net assets from joint ventures
+6,154
+6,279
+3,831
+Other (iii)
+743
+Carrying Amounts
+8,226
+6,842
+6,409
+6,154
+4,021
+6,279
+241
+5,045
+5,749
+282
+15,384
+Net assets attributable to
+Net assets
+16,451
+5,749
+13,683
+16,021
+8,100
+6,931
+13,505
+13,454
+12,557
+11,497
+non-controlling interests
+Net assets attributable to owners
+16,451
+13,683
+16,021
+15,384
+7,818
+6,690
+13,505
+13,454
+12,557
+11,497
+104
+of the Company
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+208
+Financial Statements (International)
+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)
+9,658
+(1,043)
+(2,754)
+(36)
+(33)
+130
+36
+19
+142
+40
+45
+33
+(5,369)
+(2,763)
+177
+12,520
+21,020
+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
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+17,323
+2017
+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
+2016
+(4,142)
+10,269
+(36,509)
+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)
+(1,781)
+(233)
+(783)
+6,246
+7,135
+18,441
+16,785
+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
+(20)
+6,524
+Other current assets
+11,013
+5,335
+4,852
+2,462
+1,616
+10,816
+6,826
+2,709
+1,886
+Total current assets
+3,634
+(334)
+(5,407)
+(1,187)
+(72)
+(49)
+(35,619)
+(43,028)
+(4,101)
+(5,337)
+Other non-current liabilities
+(236)
+(252)
+(19)
+(10)
+(1,492)
+(2,686)
+(890)
+(1,004)
+(41)
+(32)
+Total non-current liabilities
+(13,890)
+(20,237)
+(974)
+(1,502)
+(2,758)
+(2,179)
+(2,130)
+(44,032)
+(955)
+(13,654)
+(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)
+(19,985)
+Total current liabilities
+(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)
+(6,184)
+30
+12 SENIOR MANAGEMENT'S EMOLUMENTS
+(857)
+(422)
+(357)
+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
+(531)
+(229)
+(2,603)
+994
+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
+Others (i)
+Net book value:
+2017
+2016
+RMB million
+RMB million
+68,467
+63,324
+2,614
+300
+4,151
+4,279
+3,987
+23 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+Balance at 31 December
+Note:
+31 December
+2017
+RMB million
+2016
+RMB million
+36,908
+11,837
+34,407
+2,670
+(132)
+(169)
+48,613
+36,908
+10,012
+Net book value at 31 December
+8,310
+1,777
+(28)
+(75)
+14,345
+10,012
+34,268
+26,896
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+179
+Financial Statements (International)
+Sinopec SABIC Tianjin
+4,361
+Reclassification to other assets
+Balance at 31 December
+Additions
+2017
+RMB million
+31 December
+2016
+RMB million
+34,268
+26,896
+20,726
+20,385
+4,999
+2,234
+21,989
+Decreases
+20,630
+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
+81,982
+Transferred from construction in progress
+Transferred from other long-term assets
+Additions
+Balance at 1 January
+56
+(1,279)
+(783)
+Profit/(loss) for the year
+5,278
+4,902
+3,414
+1,958
+1,144
+1,893
+605
+57
+84
+2,401
+Other comprehensive income/(loss)
+25
+1,851
+(554)
+647
+Total comprehensive income/(loss)
+5,278
+4,902
+3,414
+1,958
+3,834
+1,169
+(518)
+(648)
+(929)
+(71)
+(173)
+(142)
+(113)
+(1,382)
+(1,216)
+(223)
+(245)
+Profit/(loss) before taxation
+6,977
+(553)
+6,476
+2,606
+1,697
+2,411
+548
+28
+5,113
+3,184
+Tax expense
+(1,699)
+(1,574)
+(1,151)
+4,565
+Interest expense
+3,744
+731
+(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
+Note:
+262
+11,175
+11,437
+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
+Cost:
+Less: Impairment loss for investments
+51
+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)
+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
+243
+2,451
+783
+541
+895
+227
+31
+1,917
+1,201
+Share of other comprehensive
+income/(loss) from joint ventures (iv)
+12
+875
+1,366
+YASREF
+Sinopec Zhenhai Refining and Chemical Branch
+("Sinopec Zhenhai")
+BASF-YPC
+3,069
+187
+2,800
+82
+Exchange adjustments
+(35,636)
+(35,100)
+(27)
+(509)
+Disposals
+(2,332)
+(2,202)
+Balance at 31 December 2016
+(130)
+(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
+880,711
+Reclassification to lease prepayments and other long-term assets
+114,920
+650,685
+892,936
+(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
+114,920
+Balance at 1 January 2017
+613,134
+3,420
+Balance at 31 December 2017
+277
+107,873
+6,805
+4,298
+4,298
+(3,792)
+(4,376)
+313
+(3,792)
+(4,689)
+45
+45
+1,053
+1,053
+(24)
+(7)
+(472)
+(17)
+(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)
+(7)
+(17)
+(57)
+(57)
+(57)
+6,333
+15 BASIC AND DILUTED EARNINGS PER SHARE
+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.
+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)
+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
+Changes in fair value recognised during the year
+120,013
+723
+(8,751)
+(10,985)
+(199)
+940,312
+733,449
+431,102
+238,943
+63,404
+Balance at 1 January 2016
+Net book value:
+1,077,208
+(2,209)
+(96)
+529,191
+495,817
+52,200
+Balance at 31 December 2017
+Balance at 31 December 2016
+(2,056)
+Exchange adjustments
+(9,858)
+(9,079)
+(195)
+(584)
+Written back on disposals
+(4,225)
+(2,682)
+(1,305)
+(238)
+Reclassification to lease prepayments and other long-term assets
+199
+(57)
+66,348
+215,124
+409,122
+(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
+411,121
+171,840
+67,813
+Balance at 31 December 2017
+690,594
+(77)
+667,657
+(122)
+19,836
+(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
+(316)
+47,914
+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)
+(12,074)
+(11,312)
+49,005
+(330)
+Written back on disposals
+(534)
+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
+(17,623)
+(17,067)
+(22)
+Reclassifications
+Available-for-sale securities:
+2,014
+(465)
+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
+respect of a
+person's services
+as a director,
+whether of the
+Company or
+its subsidiary
+undertaking
+Name
+Directors
+Wang Yupu
+Dai Houliang
+Wang Zhigang
+Zhang Haichao
+Jiao Fangzheng
+Ma Yongsheng(iv)
+Li Chunguang(iv)
+for the year ended 31 December 2017
+Zhang Jianhua(iv)
+Jiang Xiaoming
+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
+Independent non-executive directors
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+5,768
+1,200
+480
+122
+103
+51
+349
+1,228
+2,916
+424
+|||| ||1=2
+300
+300
+300
+300
+300
+300
+300
+300
+71
+758
+71
+758
+71
+758
+42
+267
+17
+417
+Bonuses
+RMB'000
+207
+scheme
+contributions
+Directors'/
+Supervisors' fee
+RMB'000
+619
+218
+309
+67
+594
+204
+325
+66
+595
+1,512
+2,936
+499
+67
+1,200
+Yu Renming
+Wang Yajun
+Total
+Notes:
+(i) Mr. Wang Yupu ceased being chairman and independent director from 22 September 2017.
+(ii) Mr Yu Xizhi were elected to be supervisor from 28 June 2017; Mr Wang Yajun ceased being supervisor from 28 June 2017.
+(iii) Mr Liu Yun ceased being supervisor and chairman of board of supervisor from 16 March 2017.
+(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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+171
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+6,147
+334
+218
+619
+Total
+RMB'000
+214
+459
+196
+431
+12211177
+745
+699
+130
+379
+47
+556
+114
+365
+41
+520
+300
+300
+300
+300
+300
+300
+300
+300
+218
+334
+67
+RMB'000
+480
+207
+480
+effect
+RMB million
+Net of tax
+Tax
+Before tax
+amount
+RMB million
+Net of tax
+amount
+RMB million
+RMB million RMB million
+Tax
+effect
+amount
+Before tax
+2016
+2017
+14 OTHER COMPREHENSIVE INCOME
+amount
+RMB million
+for the year ended 31 December 2017
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+172
+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.
+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.
+7,264
+RMB million
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Cash flow hedges:
+Effective portion of changes in fair value of hedging
+instruments recognised during the year
+Amounts transferred to initial carrying
+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
+(4)
+amount of hedged items
+(3,161)
+652
+(3,813)
+(1,074)
+240
+(1,314)
+30,147
+9,565
+20,582
+60,535
+12,107
+48,428
+Yu Xizhi (ii)
+Liu Yun (iii)
+Wang Yajun (ii)
+Total
+170
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+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
+Salaries,
+allowances and
+benefits in kind
+RMB'000
+Emoluments paid
+or receivable in
+respect of a
+person's services
+as a director,
+whether of the
+Company or
+its subsidiary
+undertaking
+Bonuses
+RMB'000
+2017
+Retirement
+scheme
+contributions
+Directors'/
+RMB'000
+Supervisors' fee
+RMB'000
+Total
+RMB'000
+227
+537
+76
+-
+207
+487
+76
+840
+770
+207
+Zou Huiping
+Jiang Zhenying
+Yu Renming
+(7,467)
+Liu Zhongyun
+Zhou Hengyou
+Fan Gang
+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:
+13 DIVIDENDS
+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.
+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
+Supervisors
+Zhao Dong
+Taihu
+(81,229)
+(7,773)
+6,829
+9,676
+11,496
+12,128
+22,800
+24,090
+Amounts
+Carrying
+3,576
+3,104
+6,734
+6,734
+9,676
+11,496
+12,128
+22,800
+24,090
+Share of net assets from associates
+571
+Net assets attributable to non-controlling interests
+7,151
+6,207
+6,829
+3,104
+3,576
+Summarised statement of comprehensive income
+Total comprehensive income/(loss)
+Dividends declared by associates
+Other comprehensive (loss)/income
+Profit/(loss) for the year
+Turnover
+RMB million
+RMB million
+2016
+2017
+2016
+RMB million
+RMB million
+RMB million
+2017
+CIR
+Zhongtian Synergetic Energy
+SIBUR(i)
+2017
+2016
+RMB million
+2017
+RMB million
+RMB million
+RMB million
+2016
+Sinopec Finance
+Pipeline Ltd (ii)
+2017
+Year ended 31 December
+17,378
+5,644
+17,623
+23,461
+(10,668)
+(20,554)
+(142,386)
+(154,212)
+(5,009)
+(933)
+Current liabilities
+3,842
+1,673
+50,301
+(8,078)
+51,553
+16,478
+17,782
+42,124
+40,972
+Non-current assets
+5,120
+5,612
+7,292
+8,232
+20,719
+158,938
+(908)
+(928)
+Non-current liabilities
+24,751
+45,600
+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)
+(170)
+(32,137)
+(31,494)
+(61,771)
+(88)
+(6)
+(3,350)
+(3,176)
+96,761
+191
+3,542
+2,442
+petrochemical products
+distribution of
+("BASF-YPC")
+PRC
+PRC
+Equity method
+Manufacturing and
+40.00
+BASF-YPC Company Limited
+PRC
+Taihu Limited ("Taihu")
+PRC
+Manufacturing refining
+oil products
+50.00
+Principal place
+of business
+Country of
+incorporation
+Measurement
+method
+Principal activities
+interests
+% of ownership
+Company Limited ("FREP")
+Equity method
+49.00
+Crude oil and natural
+Equity method
+FREP
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+petrochemical products
+("Sinopec SABIC Tianjin")
+distribution of
+Petrochemical Company Limited
+PRC
+PRC
+Equity method
+Manufacturing and
+50.00
+Sinopec SABIC Tianjin
+processing business
+Company Ltd. ("YASREF")
+Saudi Arabia
+Saudi Arabia
+Equity method
+Petroleum refining and
+37.50
+Yanbu Aramco Sinopec Refining
+gas extraction
+Russia
+Cyprus
+Fujian Refining & Petrochemical
+Name of entity
+The Group's principal interests in joint ventures are as follows:
+20 INTEREST IN JOINT VENTURES
+9,341
+1,351
+1.290
+51
+2,543
+662
+(334)
+(260)
+(175)
+(246)
+-
+(3,518)
+(610)
+123
+9,601
+1,526
+1,536
+51
+2,543
+2,205
+2,563
+3,569
+52,496
+123
+149,457
+(944)
+23
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+176
+(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.
+(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.
+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 accounted for using equity method
+in aggregate was RMB 23,899 million (2016: RMB 21,510 million).
+331
+(167)
+(1,759)
+(305)
+48
+960
+(26)
+(86)
+(121)
+Share of other comprehensive (loss)/income from associates (iii)
+748
+753
+26
+1,272
+Share of profit/(loss) from associates
+221
+(2,856)
+(87,399)
+for the year ended 31 December 2017
+Pipeline Co., Ltd. ("Pipeline Ltd")
+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
+of business
+PRC
+PRC
+Equity method
+PRC
+PRC
+50.00
+manufacturing of
+coal-chemical products
+Crude oil and natural
+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
+Principal place
+CIR
+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
+Equity method
+Zhongtian Synergetic Energy
+31 December
+Country of
+incorporation
+Operation of natural gas
+Principal activities
+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
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Impairment tests for cash-generating units containing goodwill
+Goodwill is allocated to the following Group's cash-generating units:
+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)
+(1,445)
+(315)
+(1,486)
+(252)
+(6,900)
+Less: Accumulated impairment losses
+Measurement
+method
+1,004
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO") (Note 35)
+% 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
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+6,353
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of petrochemical products
+4,043
+4,043
+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.
+Sinopec (Hong Kong) Limited
+Trading of petrochemical products
+2,541
+941
+Other units without individually significant goodwill
+167
+8,634
+212
+879
+Financial Statements (International)
+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.
+187
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+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.
+Purchases
+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).
+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.
+Environmental contingencies
+(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.
+188
+Legal contingencies
+Sales of goods
+Financial Statements (International)
+for the year ended 31 December 2017
+10,474
+(vii)
+510
+449
+(vii)
+626
+456
+(viii)
+127
+129
+(ix)
+807
+209
+(x)
+8,015
+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
+189
+Financial Statements (International)
+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.
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+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
+996
+(vii)
+6,584
+6,653
+Transportation and storage
+Exploration and development services
+Production related services
+Ancillary and social services
+Operating lease charges for land
+Operating lease charges for buildings
+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
+2016
+RMB million
+(i)
+(vi)
+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:
+20,824
+(v)
+27,201
+21,210
+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.
+(iv)
+7,716
+(iii)
+RMB million
+194,179
+118,242
+165,993
+(ii)
+244,211
+1,333
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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.
+(b) Acquisition of Gaoqiao Branch of SAMC
+Trade and other payables
+Total assets
+Total non-current assets
+Deferred tax assets
+Long-term prepaid expenses
+Construction in progress
+Intangible assets
+Lease prepayments
+Property, plant and equipment, net
+Total current assets
+Other current assets
+Prepayments
+Trade and other receivables
+Inventories
+Advances received
+Bills receivable
+The assets and liabilities recognised as a result of the acquisition are as follows:
+Fair value
+20,270
+10,135
+10,135
+RMB million
+- 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
+Acquisition Date (26 October 2017)
+Purchase consideration :
+Based on the purchase price allocation performed, details of the purchase consideration, the net assets acquired and goodwill are as follows:
+Shanghai SECCO is principally engaged in the production and sale of petrochemical products including acrylonitrile, polystyrene, polyethylene,
+etc.
+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.
+(a) Acquisition of Shanghai SECCO
+35 BUSINESS COMBINATION
+Cash and cash equivalents
+Employee benefits payable
+Tax payable
+Total current liabilities
+35 BUSINESS COMBINATION (Continued)
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+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.
+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.
+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.
+2,541
+17,729
+(1,786)
+(4,032)
+(1,438)
+(96)
+(383)
+(2,115)
+23,547
+Deferred tax liabilities (Note 28)
+Net assets acquired
+Goodwill
+RMB million
+5,653
+641
+1,702
+558
+1,349
+761
+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.
+10,664
+1,920
+1,017
+231
+117
+11
+12,883
+9,587
+10,816
+Note:
+50,972
+Others
+income
+statement
+income comprehensive
+1 January
+2017
+in other
+consolidated
+Balance at
+Recoginsed
+Recognised in
+(447)
+347
+(838)
+834
+(790)
+(96)
+(136)
+Acquisition of
+Shanghai
+SECCO
+Balance at
+31 December
+2017
+Property, plant and equipment
+Cash flow hedges
+1,925
+1,534
+391
+Accruals
+381
+(1)
+40
+(5)
+87
+Receivables and inventories
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+300
+260
+58
+(1)
+(1,505)
+RMB million
+RMB million
+RMB million
+2016
+Others
+income
+statement
+RMB million
+6
+31 December
+income comprehensive
+in other
+consolidated
+Balance at
+01 January
+2016
+RMB million
+1,552
+Net deferred tax (liabilities)/assets
+Others
+Intangible assets
+Available-for-sale securities
+Balance at
+Tax losses carried forward
+34
+413
+203
+146
+(7)
+(139)
+2,477
+20
+(3,426)
+5,883
+87
+(3,351)
+(392)
+6,063
+(9,131)
+(215)
+(465)
+250
+391
+(22)
+109
+Tax losses carried forward
+(215)
+313
+8,753
+1,379
+8,795
+1,402
+299
+299
+1,013
+7,420
+11.944
+10,931
+23,685
+31,105
+Short-term loans
+Loans from Sinopec Group Company and fellow subsidiaries
+Corporate bonds(i)
+USD denominated
+RMB denominated
+Current portion of long-term corporate bonds
+23
+42
+22,532
+29,500
+Current portion of long-term loans
+Singapore Dollar ("SGD") denominated
+EUR denominated
+Hong Kong Dollar ("HKD") denominated
+USD denominated
+2,858
+1,706
+RMB denominated
+USD denominated
+18,430
+56,239
+55,338
+6,000
+38,295
+23,934
+6,532
+29,500
+16,000
+23,297
+RMB denominated
+Current portion of long-term bank loans
+RMB denominated
+117
+117
+Net deferred tax (liabilities)/assets
+Others
+Intangible assets
+Available-for-sale securities
+2,325
+(17)
+260
+(135)
+4,222
+(1,181)
+(8)
+287
+8,475
+(3,351)
+115
+8
+2,477
+9
+(27)
+(336)
+Short-term other loans
+US Dollar ("USD") denominated
+RMB denominated
+Short-term bank loans
+31 December
+2016
+RMB million
+2017
+RMB million
+31 December
+Third parties' debts
+(569)
+Short-term debts represent:
+8,665
+(84)
+(36)
+(1,786)
+(1)
+4
+582
+10,317
+44
+(96)
+(447)
+29 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES
+Property, plant and equipment
+Cash flow hedges
+Accruals
+Balance at 31 December
+Written back for the year
+Written off for the year
+Others
+Provision for the year
+Balance at 1 January
+Impairment losses for bad and doubtful debts are analysed as follows:
+63,486
+25
+101
+84,701
+177
+43
+233
+63,051
+83,984
+573
+Over three years
+Between two and three years
+Between one and two years
+Within one year
+2017
+RMB million
+2016
+RMB million
+683
+Finished goods
+Work in progress
+Crude oil and other raw materials
+26 INVENTORIES
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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.
+RMB million
+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.
+1
+612
+(72)
+(21)
+(8)
+(100)
+238
+49
+525
+683
+31 December
+2016
+31 December
+2017
+RMB million
+The ageing analysis of trade accounts and bills receivables (net of impairment losses for bad and doubtful debts) is as follows:
+2016
+31 December
+31 December
+2017
+25 TRADE ACCOUNTS RECEIVABLE AND 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 other operating (expense)/income, net.
+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.
+51,196
+51,196
+RMB million
+RMB million
+Current assets
+Structured deposit
+2016
+31 December
+31 December
+2017
+24 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+180
+RMB million
+Spare parts and consumables
+RMB million
+Amounts due from Sinopec Group Company and fellow subsidiaries
+63,486
+84,701
+13,197
+16,207
+50,289
+68,494
+(683)
+(612)
+Amounts due from third parties
+69,106
+4,962
+6,398
+7,941
+39,994
+56,203
+Trade accounts receivable, net
+Bills receivable
+Less: Impairment losses for bad and doubtful debts
+Amounts due from associates and joint ventures
+4,580
+Less: Allowance for diminution in value of inventories
+31 December
+2017
+31 December
+227
+117
+2,477
+2,325
+(242)
+(14,615)
+(50)
+(9,928)
+11,264
+14,150
+260
+27
+391
+87
+RMB million
+31 December
+2016
+Deferred tax liabilities
+31 December
+2017
+RMB million
+RMB million
+31 December
+2016
+Deferred tax assets
+31 December
+2017
+RMB million
+381
+1,925
+165
+Intangible assets
+(563)
+Deferred tax assets/(liabilities)
+Receivables and inventories
+Recognised
+Recognised in
+Movements in the deferred tax assets and liabilities are as follows:
+28 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Others
+Financial Statements (International)
+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).
+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.
+(229)
+(15,086)
+(10,805)
+(264)
+133
+14,639
+19,470
+180
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017 181
+RMB denominated
+Available-for-sale securities
+Property, plant and equipment
+Advances to suppliers
+Other receivables
+27 PREPAID EXPENSES AND OTHER CURRENT ASSETS
+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
+157,431
+187,848
+Value-added input tax to be deducted
+1,838
+65,772
+84,448
+14,141
+14,774
+75,680
+85,975
+RMB million
+2016
+2,651
+Tax losses carried forward
+Prepaid income tax
+28 DEFERRED TAX ASSETS AND LIABILITIES
+Cash flow hedges
+Accruals
+Receivables and inventories
+Deferred tax assets and deferred tax liabilities before offset are attributable to the items detailed in the table below:
+49,767
+762
+526
+41,455
+1,145
+Derivative financial instruments
+398
+17,926
+4,901
+26,056
+3,749
+2016
+RMB million
+31 December
+17,704
+RMB million
+31 December
+2017
+18,055
+19,668
+RMB million
+1,903
+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 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 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.
+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.
+All A shares and H shares rank pari passu in all material aspects.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+185
+Financial Statements (International)
+Financial Statements (International)
+186
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2017
+33 SHARE CAPITAL (Continued)
+Capital management
+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.
+2017
+31 December
+Authorised and contracted for (i)
+Authorised but not contracted for
+At 31 December 2017 and 2016, capital commitments are as follows:
+Capital commitments
+Between four and five years
+Thereafter
+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.
+Between three and four years
+Within one year
+At 31 December 2017 and 2016, the future minimum lease payments under operating leases are as follows:
+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.
+Operating lease commitments
+34 COMMITMENTS AND CONTINGENT LIABILITIES
+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.
+Between one and two years
+31 December
+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.
+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.
+2017
+RMB million
+36,918
+2016
+RMB million
+33,115
+1,627
+3,420
+1,501
+1,057
+(467)
+(843)
+(172)
+169
+39,407
+36,918
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+33 SHARE CAPITAL
+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.
+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.
+121,071
+121,071
+25,513
+95,558
+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.
+95,558
+25,513
+RMB million
+2016
+31 December
+2017
+31 December
+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
+Registered, issued and fully paid
+RMB million
+184 Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+RMB million
+11,114
+31 December
+2017
+31 December
+2016
+RMB million
+RMB million
+205
+263
+83
+123
+32
+25
+28
+24
+28
+25
+882
+867
+13,577
+22,872
+24,192
+658
+11,545
+10,669
+9,732
+13,520
+Between four and five years
+Thereafter
+940
+31 December
+2016
+RMB million
+31 December
+2017
+RMB million
+At 31 December 2017 and 2016, guarantees by the group in respect of facilities granted to the parties below are as follows:
+Contingent liabilities
+1,327
+1,258
+Joint ventures
+Associates(ii)
+Others
+2016
+RMB million
+Between one and two years
+Between two and three years
+Between three and four years
+Estimated future annual payments are as follows:
+14,917
+11,492
+14,228
+10,730
+13,966
+10,552
+13,217
+10,428
+12,980
+202,806
+275,570
+257,122
+344,878
+31 December
+2017
+RMB million
+31 December
+2016
+RMB million
+120,386
+57,997
+116,379
+31,720
+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).
+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.
+Exploration and production licenses
+34 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Within one year
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Commitments to joint ventures
+(i) The investment commitments of the Group is RMB 3,364 million (2016: RMB 4,173 million).
+Note:
+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.
+148,099
+178,383
+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.
+Accretion expenses
+Utilised for the year
+Exchange adjustments
+Balance at 31 December
+Between two and three years
+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:
+177,224
+13,350
+9,499
+200,073
+6,462
+206,535
+13,168
+154,882
+RMB million
+2016
+31 December
+RMB million
+31 December
+2017
+The ageing analysis of trade accounts and bills payables are as follows:
+Trade accounts and bills payables measured at amortised cost
+Bills payable
+Amounts due to Sinopec Group Company and fellow subsidiaries
+Amounts due to associates and joint ventures
+Amounts due to third parties
+30 TRADE ACCOUNTS AND BILLS PAYABLES
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+Financial Statements (International)
+Financial Statements (International)
+183
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+(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.
+(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.
+Note:
+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.
+117,446
+44,772
+(150)
+99,124
+6,251
+43,320
+174,301
+31 December
+2017
+7,162
+723
+RMB million
+31 December
+2016
+31 December
+2017
+RMB million
+180,129
+7,483
+3,270
+206,535
+12,693
+8,076
+159,953
+195,189
+RMB million
+32 PROVISIONS
+Derivative financial instruments
+Receipts in advance
+Taxes other than income tax
+Financial liabilities carried at amortised costs
+Other payables
+Payables for constructions
+Interest payable
+Salaries and welfare payable
+31 ACCRUED EXPENSES AND OTHER PAYABLES
+Over 6 months
+Between 1 month and 6 months
+Within 1 month or on demand
+31 December
+2016
+RMB million
+5,828
+180,129
+1,618
+(2,014)
+45,334
+2016
+RMB million
+31 December
+25,644
+RMB million
+31 December
+2017
+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
+USD denominated
+Interest rate and final maturity
+Third parties' debts
+Long-term bank loans
+RMB denominated
+29 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+Long-term debts represent:
+for the year ended 31 December 2017
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+182
+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.
+74,819
+80,649
+18,580
+Balance at 1 January
+Provision for the year
+150
+2,014
+150
+2,014
+21
+20
+5
+1,969
+26,058
+44,922
+192
+25,836
+72,674
+55,804
+(38,295)
+(23,934)
+110,969
+79,738
+84,485
+53,902
+Interest rates ranging from interest free to
+4.99% per annum at 31 December 2017
+with maturities through 2022
+Less: Current portion
+RMB denominated
+Long-term loans from Sinopec Group Company
+and fellow subsidiaries
+Less: Current portion
+Total third parties' long-term debts
+4.25% per annum at 31 December 2017
+with maturities through 2043
+18,985
+17,902
+Fixed interest rates ranging from 1.88% to
+USD denominated
+with maturity through 2022
+5.68% per annum at 31 December 2017
+65,500
+36,000
+Fixed interest rates ranging from 3.30% to
+RMB denominated
+Corporate bonds (ii)
+26,484
+426
+1,396
+25,311
+29,022
+60,010
+52,827
+21,468
+96,917
+77,309
+46,835
+58,925
+95,928
+2,671
+4,472
+224,544
+279,247
+120,734
+Puguang
+Fuling
+4,762
+4,800
+4,966
+4,932
+57
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017 15
+57
+57
+266
+Consolidated subsidiaries
+266
+57
+4,932
+4,966
+4,762
+28
+14
+Equity accounted entities
+7,322
+Total
+57,471
+3,954
+54,089
+7,404
+57,353
+3,600
+53,535
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+13
+253
+Business Review and Prospects
+Business Review and Prospects
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Natural gas productive wells (as of 31 December)
+2017
+2016
+Region
+China
+Gross
+Net
+Gross
+Net
+4,800
+14
+14
+253
+Others
+Refinery throughput
+Gasoline, diesel and kerosene production
+Gasoline
+Diesel
+Kerosene
+Light chemical feedstock production
+Light product yield (%)
+Refinery yield (%)
+Note: Includes 100% of the production of domestic joint ventures.
+(3) Marketing and Distribution
+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
+Unit: million tonnes
+2017
+2015
+Change from
+2016 to 2017 (%)
+238.50
+235.53
+236.49
+1.3
+150.67
+149.17
+148.38
+1.0
+57.03
+2016
+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
+Summary of Operations for the Refining Segment
+4,477
+4,800
+4,439
+4,762
+4,656
+4,622
+4,966
+4,932
+Acreage with exploration licenses
+China
+Acreage with development licenses
+China
+Overseas
+Unit: Square kilometers
+Area under license (as of 31 December)
+2017
+621,529
+621,529
+36,604
+31,498
+5,106
+2016
+742,588
+742,588
+33,305
+28,436
+4,869
+(2) Refining
+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
+oil products quality upgrading, the GB
+Total
+28
+Consolidated subsidiaries
+3,614
+78
+138
+62
+147
+78
+138
+Shengli
+19
+0
+19
+Others
+147
+43
+43
+Overseas
+Consolidated subsidiaries
+Equity accounted entities
+Total
+62
+2000
+5052
+113000N
+0
+28
+147
+62
+147
+147
+62
+2
+1
+99
+0
+Total
+268
+150
+1,561
+9
+268
+150
+900
+6
+Wells drilling (as of 31 December)
+2017
+2016
+Gross
+Net
+Gross
+Net
+Exploratory Development Exploratory Development Exploratory Development
+Exploratory Development
+China
+62
+Consolidated subsidiaries
+147
+50
+117
+505
+50,121
+Net
+50,121
+Gross
+Net
+49,921
+49,921
+Consolidated subsidiaries
+Shengli
+50,121
+50,121
+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
+China
+56.36
+Gross
+2017
+0
+0
+0
+80 80 17202
+78
+138
+78
+138
+28
+21
+50
+117
+0
+2
+0
+0
+0
+2
+62
+152
+78
+140
+78
+140
+Oil productive wells (as of 31 December)
+2016
+53.98
+25.47
+66.76
+2,360,193
+Turnover and other operating revenues
+RMB million
+Year ended 31 December
+2017
+The following table sets forth the main revenue and expenses from the Company's consolidated financial statements:
+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%.
+1 CONSOLIDATED RESULTS OF OPERATIONS
+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.
+MANAGEMENT'S DISCUSSION AND ANALYSIS
+Business Review and Prospects
+17
+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.
+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.
+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.
+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:
+(2) Operations
+2016
+RMB million
+1,930,911
+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.
+Change (%)
+Turnover
+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:
+(64,973)
+28.3
+(1,379,691)
+23.5
+(1,853,718)
+17.7
+50,721
+0
+22.4
+1,880,190
+2,300,470
+59,723
+(2,288,723)
+(1,770,651)
+Selling, general and administrative expenses
+Purchased crude oil, product and operating supplies and expenses
+Operating expenses
+Other operating revenues
+22.2
+9.8
+(1) Market Outlook
+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.
+11,610
+2016
+11,059
+2015
+Change from
+2016 to 2017 (%)
+11,118
+5.0
+15,938
+15,201
+15,065
+4.8
+848
+857
+843
+(1.1)
+9,439
+9,275
+8,994
+1,220
+1,242
+1,282
+1.8
+(1.8)
+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
+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.
+2017
+BUSINESS PROSPECTS
+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
+Note: Includes 100% of the production of domestic joint ventures.
+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
+(7) Capital Expenditures
+(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.
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+16
+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
+Synthetic fiber monomer and polymer
+Synthetic fiber
+(5) Research and Development
+46,672
+51,244
+Owners of the Company
+189.33
+2.0
+Total domestic sales volume of oil products (million tonnes)
+177.76
+172.70
+171.37
+2.9
+Retail sales (million tonnes)
+121.56
+120.14
+119.03
+Direct sales and distribution (million tonnes)
+56.20
+52.56
+52.34
+Annual average throughput per station (tonne/station)
+3,969
+3,926
+3,896
+1.2
+6.9
+1.1
+Change from
+194.84
+the end of the
+198.75
+2016 to 2017 (%)
+67.34
+70.05
+(0.9)
+26.88
+Business Review and Prospects
+24.35
+5.5
+38.60
+38.54
+38.81
+0.2
+75.85
+94.88
+76.33
+94.70
+76.50 (0.48) percentage points
+94.75 0.18 percentage points
+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.
+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.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Summary of Operations for the Marketing and Distribution Segment
+Change from
+2017
+2016
+2015
+Total sales volume of oil products (million tonnes)
+previous year to
+the end of the
+reporting period
+Total number of service stations under the Sinopec brand
+Number of company-operated stations
+(4) Chemicals
+71,470
+77,193
+(7.4)
+Net finance costs
+(1,560)
+(6,611)
+(76.4)
+Investment income and share of profits less losses from associates and joint ventures
+16,787
+9,569
+75.4
+Profit before taxation
+86,697
+80,151
+8.2
+Tax expense
+(16,279)
+(20,707)
+Profit for the year
+70,418
+59,444
+(21.4)
+18.5
+Attributable to:
+Operating profit
+5,686
+(16,554)
+Other operating (expense)/income, net
+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
+demand. We optimised production and
+operation based on market conditions.
+Summary of Operations for the Chemicals Segment
+31 December
+2017
+31 December
+(64,360)
+1.0
+Depreciation, depletion and amortisation
+(115,310)
+31 December
+(108,425)
+1.2
+6.4
+(11,089)
+(11,035)
+0.5
+Personnel expenses
+(74,854)
+(63,887)
+17.2
+Taxes other than income tax
+(235,292)
+(232,006)
+1.4
+Exploration expenses, including dry holes
+119
+Average realised price
+(RMB/tonne, RMB/thousand cubic meters
+Year ended 31 December
+2
+80
+40
+50
+60
+305
+313
+32
+40
+30
+273
+170
+159
+137
+136
+137
+136
+49
+37
+273
+20
+20
+1/2016
+8/2017
+7/2017
+6/2017
+5/2017
+4/2017
+3/2017
+2/2017
+1/2017
+12/2016
+11/2016
+10/2016
+9/2016
+8/2016
+7/2016
+6/2016
+5/2016
+4/2016
+3/2016
+2/2016
+88
+9/2017
+33
+99
+2,010
+313
+714
+698
+Chemical fertiliser
+24.0
+9,608
+11,913
+1,612
+2.7
+1,128
+Synthetic rubber
+20.3
+7,113
+8,556
+(4.7)
+1,369
+1,304
+1,098
+24.7
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+19
+23
+0
+33
+23
+Items
+Proved reserves
+Proved developed reserves
+China
+Consolidated subsidiaries
+Puguang
+Fuling
+Others
+Overseas
+Consolidated subsidiaries
+Equity accounted entities
+Proved developed reserves
+China
+1
+and Analysis
+Management's Discussion
+830
+10/2017
+WTH-NYMEX
+ICE BRENT
+248.88
+(3.2)
+349.47
+303.51
+293.66
+4.1
+471.91
+431.29
+253.15
+448.79
+2015
+2016
+2017
+Change from
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Equity accounted entities
+Consolidated subsidiaries
+Overseas
+2016 to 2017 (%)
+296.34
+(1.7)
+44.78
+801
+811
+1,080
+1,124
+1,080
+1,124
+1,393
+1,429
+1,552
+1,599
+31 December 2017 31 December 2016
+Crude oil reserves (mmbbls)
+19.1
+734.79
+766.12
+912.50
+(11.1)
+53.13
+50.36
+Others
+Consolidated subsidiaries
+Shengli
+China
+Proved undeveloped reserves
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+12
+Business Review and Prospects
+11
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+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.
+(3) Chemical 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.
+(2) Refined Oil Products Market
+(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.
+1 MARKET REVIEW
+Trend of International Crude Oil Prices
+2/2018
+1/2018
+12/2017
+11/2017
+DUBAI
+DTD BRENT
+2 PRODUCTION & OPERATIONS REVIEW
+Synthetic fibre
+(1) Exploration and Production
+and made new discoveries in the Xinjiang
+Tahe Basin and the Sichuan Basin.
+Equity accounted entities
+Consolidated subsidiaries
+Overseas
+Others
+Shengli
+Consolidated subsidiaries
+China
+Proved developed reserves
+Proved reserves
+Items
+Summary of Reserves of Crude Oil and Natural Gas
+Natural gas production (bcf)
+Overseas
+China
+Crude oil production (mmbls)
+Oil and gas production (mmboe)
+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%.
+Summary of Operations for the Exploration and Production Segment
+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
+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
+8.9
+(2.2)
+8,155
+Development
+Exploratory
+Development
+Productive
+Dry Productive
+Dry
+Productive
+Dry
+Productive
+Dry
+China
+266
+149
+1,442
+9
+266
+149
+801
+6
+Consolidated subsidiaries
+266
+149
+1,442
+Exploratory
+9
+2016
+724
+6,000
+6,436
+2,127
+2,330
+1,121
+1,226
+2,752
+2,880
+12
+1200
+18
+0
+12
+18
+985
+724
+985
+724
+985
+724
+187
+0
+798
+2017
+6,436
+266
+801
+0
+Consolidated subsidiaries
+0
+0
+0
+0
+0
+0
+70
+80
+90
+00
+US$/barrel
+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
+BUSINESS REVIEW AND PROSPECTS
+exc
+EPEZCAL SINOPES
+4
+ODEC
+0
+0
+Equity accounted entities
+99
+149
+1
+0
+6
+Shengli
+151
+71
+845
+1
+166
+73
+462
+5
+Others
+115
+78
+597
+8
+100
+76
+339
+1
+Overseas
+2
+1
+119
+2
+6,000
+6,454
+6,012
+25.8
+2,807
+3,531
+1.6
+25,164
+25,557
+Basic chemical feedstock
+7,488
+4,482
+5,038
+(2.9)
+91,492
+88,848
+Diesel
+12.4
+8.7
+35,964
+11.5
+8.0
+12,223
+13,199
+Synthetic resin
+13.4
+5,325
+32,248
+6,038
+7,146
+10,267
+Monomer and polymer for synthetic fibre.
+19.8
+4,054
+4,855
+43.7
+6,386
+Kerosene
+8.3
+46.8
+1,628
+2,390
+(3.5)
+6,808
+6,567
+Crude oil
+Change (%)
+2016
+2017
+Change (%)
+2016
+2017
+Sales volume (thousand tonnes)
+Year ended 31 December
+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
+Natural gas (million cubic meters)
+6,941
+279
+77,480
+83,933
+Gasoline
+2.5
+1,258
+1,290
+18.5
+19,008
+22,529
+6,462
+4,439
+25,504
+68,950
+68,631
+66,202
+32,316
+14,477
+56,562
+2,166
+39,007
+55,804
+17,243
+6,462
+200,073
+200,073
+Accrued expenses and other payables
+99,588
+99,588
+485,896
+497,837
+99,588
+390,355
+18,916
+6,462
+17,243
+Short-term debts
+Long-term debts
+Loans from Sinopec Group Company
+and fellow subsidiaries
+Trade accounts payable
+Bills payable
+Accrued expenses and other payables
+31 December 2016
+Total
+Bills payable
+200,073
+71,323
+7,205
+55,338
+12,921
+14,373
+3,605
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+7,504
+5,441
+at 31 December
+226
+343
+289
+64
+134
+(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.
+56,562
+717
+40 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
+(1)
+(14)
+717
+101
+289
+886
+134
+34
+(25)
+260
+(253)
+616
+(230)
+112
+(7)
+9
+Effect of foreign currency
+exchange rate changes
+Cash and cash equivalents
+contractual
+Overview
+The Group has exposure to the following risks from its uses of financial instruments:
+Total
+Carrying
+amount
+RMB million
+contractual
+undiscounted
+cash flow
+RMB million
+Within
+1 year or
+on demand
+RMB million
+More than 1
+year but less
+than 2 years
+RMB million
+31 December 2017
+More than 2
+years but less
+than 5 years
+More than
+5 years
+RMB million
+Short-term debts
+Long-term debts
+Loans from Sinopec Group Company
+and fellow subsidiaries
+Trade accounts payable
+RMB million
+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.
+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:
+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.
+⚫credit risk;
+liquidity risk;
+market risk.
+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.
+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.
+Credit risk
+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.
+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.
+198
+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)
+Liquidity risk
+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.
+Within
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+amount
+(3) where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+(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%.
+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.
+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 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 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.
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures included in the following accounts captions
+are summarised as follows:
+Trade accounts receivable
+Other receivables
+Prepaid expenses and other current assets
+Long-term prepayments and other assets
+Total
+Trade accounts payable
+Accrued expenses and other payables
+Other long-term liabilities
+Short-term loans and current portion of long-term loans
+from Sinopec Group Company and fellow subsidiaries
+Long-term loans excluding current portion from Sinopec Group Company and fellow subsidiaries
+Total
+31 December
+2017
+31 December
+2016
+RMB million
+12,903
+RMB million
+(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:
+190
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+36 RELATED PARTY TRANSACTIONS (Continued)
+(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.
+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.
+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.
+Note:
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+(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.
+5,444
+(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.
+(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.
+(vii) Operating lease charges represent the rental paid to Sinopec Group Company for operating leases in respect of land, buildings and equipment.
+(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.
+(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).
+(x) Interest expense represents interest charges on the loans and advances obtained from Sinopec Group Company and fellow subsidiaries.
+(xi) The Group obtained or repaid loans from or to Sinopec Group Company and fellow subsidiaries.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+36 RELATED PARTY TRANSACTIONS (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+(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.
+Carrying undiscounted
+10,978
+12,860
+20,726
+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
+72,674
+57,515
+56,239
+RMB million
+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
+5,828
+5,828
+5,828
+81,781
+454,175
+570
+20,385
+39,262
+44,793
+22,849
+19,419
+20,990
+21,590
+10,165
+9,998
+25,311
+18,580
+189
+43,320
+122,635
+1,077
+Financial Statements (International)
+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
+44,772
+5,441
+3,045
+3.045
+income/(loss)
+26,986
+27,385
+396
+96
+(2,481)
+6,153
+6,000
+2,726
+2,513
+1,146
+879
+726
+26
+2,730
+1,558
+Comprehensive income/(loss)
+Total comprehensive
+1,558
+2,730
+726
+6,068
+4,968
+1,498
+1,512
+5,222
+16,139
+11,703
+Profit/(loss) for the year
+attributable to non-
+27,520
+1,075
+(4,604)
+6,154
+5,981
+2,726
+2.513
+1,046
+860
+26,461
+controlling interests
+9.033
+9,028
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+742,614
+Total liabilities
+20,828
+25,188
+Other unallocated liabilities
+7,661
+6,466
+Financial Statements (International)
+63,352
+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
+68,631
+77,843
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+(38)
+(3,279)
+3,052
+2,964
+1,363
+1,256
+433
+349
+197
+35
+956
+90
+545
+Dividends paid to
+non-controlling interests
+9,544
+4,932
+- 1344 563 625 - 70 51 ---
+235
+55,338
+91,962
+RMB million
+132,549
+134,393
+667,374
+2,784
+14,253
+12,500
+4,930
+3,619
+5,716
+5,162
+12,496
+7,318
+5,625
+Attributable to
+non-controlling interests
+63,006
+63,555
+of the Company
+Attributable to owners
+8,654
+11,259
+7,124
+10,659
+10,127
+11,057
+13,598
+14,686
+Net assets
+195,555
+15,215
+197,948
+18,037
+28,515
+25,004
+9,860
+7,238
+9,504
+8,588
+18,485
+18,683
+15.253
+14,262
+12,504
+2017
+Zhonghan Wuhan
+2017
+2016
+RMB million
+RMB million
+Turnover
+1,221,530
+1,050,294
+2016
+RMB million
+6,136
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+4,016
+SECCO (ii)
+2016
+4,930
+3,619
+3,788
+3,426
+5.989
+3.941
+3,029
+Summarised consolidated statement of comprehensive income
+Sinopec Kantons
+2017
+Shanghai
+Marketing Company
+2017
+SIPL
+2016
+2017
+2016
+Shanghai Petrochemical
+2017
+2016
+Fujian Petrochemical
+2017
+Year ended 31 December
+Short-term debts
+440,569
+518,172
+32,153
+31,569
+56,265
+65,007
+(36,641)
+(45,944)
+- Elimination
+- Corporate and others
+- Chemicals
+- Marketing and distribution
+- Refining
+-
+– Exploration and production
+By segment
+Operating (loss)/profit
+Result
+2016
+RMB million
+26,977
+20,623
+(4,484)
+3,212
+5,696
+9,621
+- Chemicals
+2,362
+2,945
+1,075
+989
+- Marketing and distribution
+RMB million
+- Refining
+1,449
+- Exploration and production
+Share of profits/(losses) from associates and joint ventures
+77,193
+71,470
+Total segment operating profit
+1,581
+(1,655)
+(1,203)
+2017
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+38 SEGMENT REPORTING (Continued)
+(1,445,955)
+973,411
+320,367
+440,303
+418,102
+533,108
+322,903
+423,429
+738,469
+(1,168,732)
+284,289
+38,614
+3,480
+1,030,853
+1,027,373
+1,191,902
+3,962
+1,195,864
+850,300
+1,006,749
+747,317
+874,271
+102,983
+373,814
+49,615
+Corporate and others
+2,300,470
+10,533
+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
+1,880,190
+2,360,193
+1,439
+12,211
+14,314
+22,004
+28,333
+5,486
+5,104
+9,542
+59,723
+1,521
+1,376
+Aggregate share of profits from associates and joint ventures
+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
+25,337
+1,676
+116,812
+131,087
+Interest in associates and joint ventures
+1,195,341
+1,254,771
+95,263
+170,045
+144,371
+Available-for-sale financial assets
+158,472
+Total assets
+1,498,609
+Total segment liabilities
+97,080
+117,781
+32,072
+35,293
+133,303
+164,101
+82,170
+1,595,504
+101,429
+- Chemicals
+- Marketing and distribution
+- Refining
+95,944
+99,568
+· Exploration and production
+Segment liabilities
+Liabilities
+Corporate and others
+9,244
+292,328
+260,903
+119
+86
+90
+90
+(4)
+28
+Profit before taxation
+Aggregate investment income
+Net finance costs
+18
+- Corporate and others
+- Marketing and distribution
+- Refining
+24
+40
+- Exploration and production
+Investment income/(losses)
+9,306
+16,525
+- Chemicals
+309,727
+34
+263
+273,123
+402,476
+343,404
+Total segment assets
+Corporate and others
+- Chemicals
+- Marketing and distribution
+- Exploration and production
+- Refining
+262
+Segment assets
+RMB million
+2016
+At 31 December
+(6,611)
+80,151
+RMB million
+At 31 December
+2017
+86,697
+(1,560)
+Assets
+19,070
+19,571
+745
+Sinopec Yizheng Chemical Fibre Limited
+Liability Company
+Sinopec Lubricant Company Limited
+RMB 4,000
+100.00
+RMB 3,374
+100.00
+Principal activities
+Coal chemical industry investment
+management, production and sale of coal
+chemical products
+Manufacturing of intermediate
+petrochemical products and petroleum
+products
+Pipeline storage and transportation of
+crude oil
+Investment holding
+Investment in exploration,
+production and sale of petroleum and
+natural gas
+Production and sale of polyester chips
+and polyester fibres
+Production and sale of refined petroleum
+Production Limited ("SIPL")
+100.00
+RMB 8,000
+Sinopec International Petroleum Exploration and
+Sinopec Great Wall Energy & Chemical
+Particulars of
+issued capital
+Interests
+held by
+Interests held
+(million)
+RMB 22,761
+by the non-controlling
+Company % interests %
+100.00
+Company Limited
+products, lubricant base oil, and
+Sinopec Yangzi Petrochemical Company Limited
+100.00
+Sinopec Pipeline Storage & Transportation
+RMB 12,000
+100.00
+Company Limited
+Sinopec Overseas Investment Holding Limited ("SOIH")
+USD 1,638
+100.00
+RMB 13,203
+petrochemical materials
+Trading of crude oil and petrochemical
+products
+Manufacturing of intermediate
+RMB 1,400
+100.00
+Sinopec Chemical Sales Company Limited
+RMB 1,000
+100.00
+Sinopec Beihai Refining and Chemical Limited
+Liability Company
+RMB 5,294
+98.98
+China Petrochemical International Company Limited
+1.02
+RMB 5,000
+85.00
+15.00
+Company Limited
+Sinopec Zhanjiang Dongxing Petrochemical
+Company Limited
+RMB 4,397
+75.00
+25.00
+Sinopec Qingdao Refining and Chemical
+Name of company
+100.00
+Sinopec Catalyst Company Limited
+petrochemical products and petroleum
+products
+Production and sale of catalyst products
+Trading of petrochemical products
+Marketing and distribution of
+petrochemical products
+Import and processing of crude
+oil, production, storage and sale of
+petroleum products and petrochemical
+products
+RMB 1,500
+Manufacturing of intermediate
+Manufacturing of intermediate
+China International United Petroleum and Chemical
+RMB 3,000
+100.00
+Company Limited
+Sinopec Qingdao Petrochemical Company Limited
+RMB 1,595
+100.00
+petrochemical products and petroleum
+products
+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
+for the year ended 31 December 2017
+21,075
+14,347
+21,539
+18,493
+23,028
+8,849
+2,398
+2,580
+32,187
+99,384
+66,843
+61,929
+18,408
+17,209
+15,463
+14,540
+12,873
+12,654
+76,456
+1,723
+31,344
+RMB million
+for the year ended 31 December 2017
+38 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
+RMB million
+Corporate and others
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Impairment losses on long-lived assets
+2017
+2016
+Depreciation, depletion and amortisation
+petrochemical products and petroleum
+2,093
+108,425
+2016
+RMB million
+1,488,117
+152,068
+290,726
+1,930,911
+31 December
+2017
+1,758,365
+269,349
+332,479
+2,360,193
+31 December
+RMB million
+2017
+RMB million
+979,329
+48,572
+1,027,901
+1,000,209
+45,887
+1,046,096
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+195
+Financial Statements (International)
+196
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2016
+RMB million
+115,310
+Others
+Others
+13,556
+1,894
+675
+4,922
+11,605
+1.655
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Non-current assets
+Mainland China
+(2) Geographical information
+2,898
+211
+16,425
+21,258
+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.
+External sales
+Mainland China
+Singapore
+267
+132,478
+products
+RMB 3,986
+1.352
+11,602
+1,636
+1,489
+Current liabilities
+(212,620)
+(168,366)
+(7,118)
+(824)
+(10,922)
+(8,942)
+(376)
+(812)
+(2,351)
+(2,891)
+(4,174)
+(3,975)
+1,196
+926
+992
+14,876
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+(7,521)
+RMB million
+RMB million
+RMB million
+Current assets
+156,494
+121,260
+19.555
+18,116
+19,866
+RMB million
+Net current
+(liabilities)/assets
+(56,126)
+13,228
+12,797
+13,598
+14,686
+Non-current liabilities
+(1,774)
+(1,460) (28,523)
+(39,322)
+13,089
+(6)
+(721)
+(2,430)
+(3,101)
+(1,740)
+Net non-current assets
+251,681
+245,054
+6,246
+(681)
+RMB million
+7,845
+19.070
+(47,106)
+12,437
+17,292
+8,944
+5,934
+616
+114
+(1,155)
+9,925
+(1,539)
+(2,339)
+(6,032)
+Non-current assets
+253,455
+246,514
+34,769
+40,067
+19,577
+7,428
+2016
+2017
+2017
+60.34
+39.66
+Gaoqiao Petrochemical Company Limited (Note 35)
+RMB 10,000
+55.00
+45.00
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+RMB 10,814
+HKD 248
+50.49
+Fujian Petrochemical Company Limited
+RMB 6,898
+50.00
+50.00
+("Fujian Petrochemical") (i)
+Production and sale of petrochemical
+Production, sale, research and
+development of ethylene and downstream
+byproducts
+49.51
+Trading of crude oil and petroleum
+products
+Sinopec Kantons Holdings Limited ("Sinopec Kantons")
+65.00
+75.00
+25.00
+Manufacturing of intermediate
+Company Limited
+petrochemical products and petroleum
+products
+Sinopec Marketing Company Limited
+RMB 28,403
+70.42
+35.00
+29.58
+Marketing and distribution of refined
+petroleum products
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO") (Note 35)
+RMB 7,801
+67.60
+32.40
+products
+Sinopec-SK(Wuhan) Petrochemical Company Limited
+("Zhonghan Wuhan")
+RMB 6,270
+("Marketing Company")
+Sinopec Hainan Refining and Chemical
+Manufacturing of intermediate
+Manufacturing of synthetic fibres, resin
+and plastics, intermediate petrochemical
+At 31
+Sinopec Kantons
+At 31
+At 31
+SECCO
+December
+December
+December
+At 31
+December
+Zhonghan Wuhan
+At 31
+Fujian Petrochemical
+At 31
+December
+At 31
+December
+2016
+2017
+2016
+2017
+2016
+2017
+2016
+December
+petrochemical products and petroleum
+products
+December
+At 31
+December
+products and petroleum products
+Manufacturing of plastics, intermediate
+petrochemical products and petroleum
+products
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2017
+39 PRINCIPAL SUBSIDIARIES (Continued)
+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.
+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 returns through its power over the entity.
+Shanghai Petrochemical
+At 31
+At 31
+December
+Summarised financial information on subsidiaries with material non-controlling interests
+Summarised consolidated balance sheet
+Shanghai
+Marketing Company
+At 31
+At 31
+December
+2017
+December
+2016
+SIPL
+At 31
+December
+2017
+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.
+2,042
+3,468
+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:
+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
+•
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+sales and purchases of goods and ancillary materials;
+rendering and receiving services;
+• lease of assets;
+106,397
+146,972
+58,954
+77,804
+47,443
+69,168
+Turnover and other operating revenues
+•
+Other operating revenues
+for the year ended 31 December 2017
+(b) Key management personnel emoluments
+SIPL
+Marketing Company
+2017
+Year ended 31 December
+Shanghai
+Summarised statement of cash flows
+39 PRINCIPAL SUBSIDIARIES (Continued)
+for the year ended 31 December 2017
+(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.
+36 RELATED PARTY TRANSACTIONS (Continued)
+(c) Contributions to defined contribution retirement plans
+5,768
+5,648
+499
+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").
+424
+RMB'000
+2016
+2017
+RMB'000
+5,344
+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 compensation is as follows:
+6,147
+Corporate and others
+Marketing and distribution
+Chemicals
+Exploration and production
+Refining
+(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.
+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.
+(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.
+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.
+These transactions are conducted in the ordinary course of the Group's business on terms comparable to those with other entities that are not
+uses of public utilities.
+•
+(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.
+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.
+Information of the Group's reportable segments is as follows:
+2017
+Other operating revenues
+Elimination of inter-segment sales
+Turnover
+Inter-segment sales
+External sales
+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
+Shanghai Petrochemical
+2016
+2017
+2016
+(1,338)
+(1,093)
+(55)
+(158)
+(2,637)
+(2,590)
+(4,414)
+243
+(20,424)
+I
+(16,499)
+Net cash (used in)/generated
+(3,080)
+(2,415)
+5,567
+261
+193
+54
+54
+225
+from financing activities
+(631)
+(682)
+Net (decrease)/increase in
+14,914
+14,373
+at 1 January
+Cash and cash equivalents
+(126)
+(70)
+7,206
+(572)
+68
+68
+919
+616
+(491)
+4,355
+2,070
+891
+g0
+790
+(1,157)
+(1,199)
+cash and cash equivalents
+25
+depositing and borrowing money; and
+(190)
+2,729
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Zhonghan Wuhan
+2017
+2017
+2016
+SECCO (ii)
+Sinopec Kantons
+2017
+2016
+Fujian Petrochemical
+2017
+2016
+2017
+2016
+RMB million
+RMB million
+Net cash generated from/
+(2,211)
+(31,573)
+(35,738)
+from investing activities
+Net cash (used in)/generated
+3,636
+2,976
+1,639
+505
+968
+88
+617
+19
+(558)
+7,182
+7,061
+2,576
+2,758
+50,840
+51,038
+(used in) operating activities
+(2,401)
+•
+Level 1
+Total of the Group's and its equity method
+2016
+RMB million
+Other
+countries
+The Group
+Exploration
+11,589
+11,589
+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
+of associates and joint ventures
+724
+724
+719
+719
+investments' exploration and development costs
+10,942
+110,955
+42,299
+(4,576)
+(4,576)
+(8,726)
+(8,726)
+Taxes other than income tax
+(4,940)
+(68,594)
+(73,534)
+(5,543)
+(74,856)
+(80,399)
+impairment losses
+Depreciation, depletion, amortisation and
+(11,035)
+(11,035)
+(11,089)
+(11,089)
+Exploration expenses
+(1,425)
+Profit before taxation
+(29,434)
+(28,693)
+(741)
+8,080
+8,080
+Sales
+Revenues
+Equity method investments
+(3,147)
+(35,582)
+(38,729)
+447
+(42,652)
+(28,693)
+Results of operation from producing activities
+(798)
+(798)
+1,188
+1,188
+Income tax expense
+(2,349)
+(35,582)
+(37,931)
+(28,246)
+(44,077)
+(1,334)
+(44,977)
+Total
+Other
+countries
+China
+Total
+2017
+RMB million
+Table III: Results of operations related to oil and gas producing activities
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+China
+Financial Statements
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+207
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+1,081
+42,860
+43,941
+858
+208
+43,157
+2016
+RMB million
+Other
+countries
+Revenues
+(46,311)
+Production costs excluding taxes
+4,016
+91,275
+95,291
+6,136
+China
+117,091
+4,016
+The Group
+54,555
+6,136
+67,311
+73,447
+36,720
+36,720
+43,644
+43,644
+Transfers
+Sales
+58,571
+Total
+17
+China
+Retained earnings
+2,438
+2,460
+Balance at 31 December
+80
+89
+Others
+557
+53
+Cash flow hedges, net of deferred tax
+(149)
+(120)
+Share of other comprehensive loss of associates and joint ventures, net of deferred tax
+1,950
+2,438
+Balance at 1 January
+Other reserves
+117,000
+117,000
+Balance at 31 December
+117,000
+117,000
+Balance at 1 January
+Balance at 1 January
+Discretionary surplus reserve
+183,321
+Profit for the year
+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.
+(I) GOVERNMENT GRANTS
+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:
+(C) DIFFERENCES BETWEEN CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH
+THE ACCOUNTING POLICIES COMPLYING WITH ASBE AND IFRS (UNAUDITED)
+(Unaudited)
+Financial Statements
+(Differences Between the ASBE and IFRS)
+Financial Statements (International)
+205
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+447,424
+445,176
+(80)
+183,321
+177,989
+(89)
+(3,042)
+(16,829)
+(32,689)
+23,733
+30,488
+Balance at 31 December
+Others
+Appropriation
+Distribution to owners (Note 13)
+176,497
+(II) SAFETY PRODUCTION FUND
+79,640
+Balance at 31 December
+568,495
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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
+Others
+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
+53
+9,195
+566,247
+82,682
+447,424
+(a)
+3,042
+Appropriation
+79,640
+79,640
+55,850
+55,850
+55,850
+55,850
+9,175
+49,676
+43,225
+44,772
+505
+31,405
+29,767
+3,613
+3,688
+118,685
+128,408
+566,247
+568,495
+121,071
+121,071
+445,176
+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:
+Note
+31 December
+Net capitalised costs
+(565,651)
+(601,318)
+and impairment losses
+Accumulated depreciation, depletion, amortisation
+44,219
+852,279
+896,498
+42,061
+877,704
+919,765
+Total capitalised costs
+4
+52,931
+52,935
+8
+41,389
+41,397
+Uncompleted wells, equipments and facilities
+22
+44,193
+606,493
+192,855
+650,686
+192,877
+318,447
+Production costs excluding taxes
+312,053
+(528,636)
+Total
+RMB million
+2017
+Table II: Costs incurred in oil and gas exploration and development
+20,458
+356,741
+377,199
+12,751
+312,053
+324,804
+investments' net capitalised costs
+Total of the Group's and its equity method
+9,337
+9,337
+6,357
+6,357
+Share of net capitalised costs of associates and
+joint ventures
+Equity method investments
+11,121
+356,741
+367,862
+(33,098)
+(495,538)
+(35,667)
+6,394
+42,036
+625,621
+210,694
+210,711
+110
+(i)
+(ii)
+Government grants
+Safety production fund
+Others
+Adjustments:
+59,170
+2016
+RMB million
+RMB million
+70,294
+Net profit under ASBE
+2017
+Note
+Effects of major differences between the net profit under ASBE and the profit for the year under IFRS are analysed as follows:
+(1,290)
+831,235
+852,890
+Total equity under IFRS*
+(1,180)
+(i)
+Government grants
+832,525
+Shareholders' equity under ASBE
+Adjustments:
+RMB million
+2016
+31 December
+2017
+RMB million
+854,070
+114
+126
+160
+(112)
+Supporting equipments and facilities
+667,657
+and facilities
+Property cost, wells and related equipments
+The Group
+countries
+China
+Total
+2016
+RMB million
+Other
+Other
+countries
+China
+Other
+countries
+Total
+Table I: Capitalised costs related to oil and gas producing activities
+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.
+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.
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+206
+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.
+*
+59,444
+70,418
+Profit for the year under IFRS*
+2017
+RMB million
+(2,748)
+280,822
+6,352
+"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.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Derivative financial instruments:
+Table IV: Reserve quantities information (Continued)
+2017
+2016
+Other
+Total
+China
+countries
+Total
+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.
+China
+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
+Other
+countries
+90
+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.
+Table IV: Reserve quantities information
+238,264
+15,579
+14,691
+14,822
+15,496
+395
+297
+6,834
+6,916
+6,114
+14,072
+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.
+14,731
+711,890
+Cash and cash equivalents
+72,309
+88,120
+Time deposits with financial institutions
+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.
+683,634
+245,156
+86
+1,957
+14
+14
+18
+18
+Proved developed reserves
+Beginning of year
+1,120
+1,080
+40
+1,753
+1,701
+undeveloped reserves at the end of year
+52
+1,156
+1,124
+32
+1,120
+1,080
+40
+Proved undeveloped reserves
+Beginning of year
+136
+136
+204
+End of year
+234
+Non-controlling interest in proved developed and
+1,216
+1,902
+55
+(505)
+(509)
+4
+35
+35
+Extensions and discoveries
+60
+60
+41
+40
+41
+(264)
+(249)
+(15)
+(272)
+(253)
+(19)
+End of year
+1,293
+1,261
+32
+1,256
+Production
+201
+49,277
+373,020
+Total
+RMB million
+262
+29
+733
+291
+733
+2,586
+2,586
+1,886
+1,886
+262
+762
+1,024
+Level 3
+RMB million
+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 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.
+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)
+4,472
+(ii) Fair values of financial instruments carried at other than fair value
+RMB million
+Level 2
+Level 2
+Level 3
+RMB million
+RMB million
+RMB million
+Total
+RMB million
+51,196
+51,196
+178
+178
+343
+RMB million
+183
+521
+183
+51,196
+51,900
+1,277
+1,388
+1,277
+1,388
+2,665
+2,665
+Level 1
+526
+50,046
+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.
+Carrying amount
+Fair value
+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.
+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
+Impairment for bad and doubtful debts
+Non-current assets
+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
+Current assets
+329,814
+Property, plant and equipment, net
+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:
+41 ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+31 December
+2017
+RMB million
+79,738
+78,040
+31 December
+2016
+RMB million
+110,969
+109,308
+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.
+41 ACCOUNTING ESTIMATES AND JUDGEMENTS
+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)
+for the year ended 31 December 2017
+Oil and gas properties and reserves
+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.
+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.
+Impairment for long-lived assets
+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)
+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.
+3
+End of year
+137
+46,942
+Prepaid expenses and other current assets
+Total current assets
+79,111
+76,386
+318,861
+265,835
+Current liabilities
+Short-term debts
+33,454
+50,574
+Loans from Sinopec Group Company and fellow subsidiaries
+Trade accounts payable
+44,933
+3,214
+83,449
+75,787
+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
+2,703
+Deferred tax liabilities
+Inventories
+16,327
+2016
+million
+2017
+million
+31 December
+31 December
+Gross exposure arising from loans
+USD
+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:
+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.
+Currency 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.
+Market risk
+40 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+5,454
+for the year ended 31 December 2017
+Financial Statements (International)
+200
+Financial assets at fair value through profit or loss
+48,179
+Trade accounts receivable
+37,609
+38,332
+Bills receivable
+157
+471
+Dividends receivable
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+USD 204
+Provisions
+Total non-current liabilities
+(28,693)
+(28,132)
+results of operations for producing activities
+Total of the Group's and its equity method investments'
+|||||
+114
+461
+(347)
+associates and joint ventures
+Share of profit for producing activities of
+Income tax expense
+Profit before taxation
+(1,243)
+(3,628)
+(1,243)
+impairment losses
+Depreciation, depletion, amortisation and
+Exploration expenses
+(2,205)
+6,352
+6,352
+(2,205)
+(2,748)
+6,352
+8,080
+Taxes other than income tax
+Other long-term liabilities
+(2,752)
+(3,628)
+Equity
+Share capital
+Reserves
+Total equity
+3,155
+2,761
+194,291
+148,997
+317,563
+- Derivative financial liabilities
+1,298
+(2,752)
+(14,987)
+696,903
+40,442
+(1,370)
+114
+(195)
+(195)
+(1,175)
+(1,175)
+461
+(347)
+(2,570)
+(2,570)
+684,932
+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
+End of year
+6,000
+6,000
+Proved undeveloped reserves
+Beginning of year
+724
+724
+End of year
+985
+985
+7,551
+6,436
+7,551
+(170)
+66
+66
+475
+475
+(762)
+(762)
+7,160
+7,160
+6,439
+6,439
+(170)
+6,436
+6,436
+Proved developed reserves
+137
+136
+136
+Proved developed and undeveloped
+reserves (gas) (billion cubic feet)
+Beginning of year
+7,160
+7,160
+Revisions of previous estimates
+(107)
+(107)
+Beginning of year
+Improved recovery
+72
+Extensions and discoveries
+769
+769
+Production
+(909)
+(909)
+End of year
+6,985
+6,985
+|| | | | | | |
+72
+6,436
+1,112
+1,112
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+•
+its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:
+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
+(i) Financial instruments carried at fair value
+Fair values
+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
+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.
+•
+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 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.
+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.
+Interest rate risk
+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.
+33
+50
+million
+million
+2016
+2017
+31 December
+Commodity price risk
+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.
+724
+724
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+209
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+Liabilities
+Derivative financial assets
+Derivative financial instruments:
+- Listed
+Available-for-sale financial assets:
+Assets
+At 31 December 2016
+- Derivative financial liabilities
+Derivative financial instruments:
+Liabilities
+Derivative financial assets
+Derivative financial instruments:
+- Listed
+Available-for-sale financial assets:
+- Structured deposit
+Financial assets at fair value through profit and loss:
+Assets
+At 31 December 2017
+8,080
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+10,130
+20,236
+2 Corporate Avenue,
+202 Hu Bin Road,
+PricewaterhouseCoopers,
+Zhong Tian LLP
+11th Floor
+: PricewaterhouseCoopers
+Overseas Auditors
+Address
+Address
+Domestic Auditors
+SINOPEC CORP.
+NAMES AND ADDRESSES OF AUDITORS OF
+: SNP
+London Stock Exchange
+Stock code
+: SNP
+New York Stock Exchange
+Stock code
+: 00386
+ADRs:
+Hong Kong Stock Exchange
+Stock code
+: 600028
+: SINOPEC CORP
+H Shares:
+Stock code
+Stock name
+Shanghai Stock Exchange
+A Shares:
+NAMES AND STOCK CODES
+PLACES OF LISTING OF SHARES, STOCK
+Huangpu District,
+London E14 5LB, U.K.
+Shanghai, PRC 200021
+: 22nd Floor,
+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
+SINOPEC CORP.
+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
+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
+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.;
+report signed by Mr. Dai Houliang, the Vice
+Chairman and President;
+a) The original copies of the 2017 annual
+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:
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+214
+DOCUMENTS FOR INSPECTION
+Documents for Inspection
+Corporate Information
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017 213
+Prince's Building,
+Central, Hong Kong
+: PricewaterhouseCoopers
+Beginning of year
+Canada Square, Canary Wharf
+Citibank, N.A.
+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
+Hong Kong:
+Postcode: 100020
+Beijing PRC
+20th Floor, Fortune Financial Centre
+No. 5, Dong San Huan Central Road
+Chaoyang District
+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
+20th Floor, Office Tower
+PLACE OF BUSINESS IN HONG KONG
+http://www.sinopec.com
+ir@sinopec.com
+: 86-10-59960386
+No. 1, Jian Guo Men Wai Avenue,
+Citigroup Centre
+Beijing, PRC
+A Shares:
+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
+China Petroleum & Chemical Corporation
+The PRC:
+COPIES OF THIS ANNUAL REPORT ARE
+AVAILABLE AT
+United States of America
+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
+China Securities Registration and Clearing
+Company Limited Shanghai Branch Company
+36th Floor, China Insurance Building
+166 Lujiazui East Road
+REGISTRARS
+(oil) (million barrels)
+Proved developed and undeveloped reserves
+1
+306
+273
+273
+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
+Proved undeveloped reserves
+(2)
+End of year
+(30)
+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
+Beginning of year
+(4)
+12
+18
+12
+286
+(2)
+3
+41
+(32)
+296
+260
+273
+26
+23
+19
+3
+(4)
+(4)
+336
+12
+18
+18
+18
+12
+82
+18
+18
+18
+18
+1
+|| || |||||||||||||
+|||||||||||||
+ནྭསྱེ|||€ས
+3
+82
+|||||||||||||
+| | |
+296
+286
+12
+(2)
+8
+3
+20
+41
+(30)
+: 86-10-59960028
+(32)
+296
+273
+260
+273
+273
+23
+26
+33
+23
+18
+19
+(2)
+306
+: 100728
+206
+Website
+254
+207,893
+208,147
+248
+222,844
+223,092
+future net cash flows
+Standardised measure of discounted
+(10)
+(102,332)
+(102,342)
+33
+(97,115)
+(97,082)
+10% annual discount for estimated timing of
+cash flows
+264
+310,225
+(1,405)
+(1,405)
+310,489
+215
+319,959
+320,174
+Undiscounted future net cash flows
+(1,374)
+(1,374)
+Discounted future net cash flows attributable to
+Future income tax expenses
+non-controlling interests
+112
+22,358
+Undiscounted future net cash flows
+(3,303)
+(3,303)
+(4,406)
+(4,406)
+Future income tax expenses
+(3,444)
+(3,444)
+(4,692)
+(4,692)
+Future development costs
+(10,783)
+(10,783)
+(12,131)
+(12,131)
+Future production costs
+35,690
+35,690
+43,587
+43,587
+Future cash flows
+Equity method investments
+114
+114
+112
+(4,626)
+(15,615)
+(20,241)
+7,160
+7,178
+12
+6,985
+6,997
+End of year
+19
+7,551
+7,570
+18
+7,160
+7,178
+Beginning of year
+(gas) (billion cubic feet)
+Proved developed and undeveloped reserves
+336
+1,216
+1,552
+338
+1,261
+1,599
+End of year
+341
+1,902
+2,243
+18
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table V: Standardised measure of discounted future net cash flows
+(4,685)
+(20,314)
+(24,999)
+Future development costs
+(5,101)
+(266,549)
+11,396
+592,389
+603,785
+(271,650)
+(4,875)
+(287,914)
+11,149
+22,358
+628,187
+Future production costs
+Future cash flows
+The Group
+Other
+countries
+China
+Total
+2016
+RMB million
+2017
+RMB million
+Other
+countries
+China
+Total
+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.
+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.
+639,336
+(292,789)
+Financial Statements
+18,160
+10% annual discount for estimated timing of
+cash flows
+(621)
+1,308
+967
+322
+1,552
+(92)
+688
+1,887
+1,205
+(534)
+(856)
+(3,952)
+2,479
+(1,577)
+(1,704)
+(81,572)
+14,945
+6,363
+(231)
+30,340
+20,909
+9,370
+5,747
+(48,479)
+20,608
+464
+15,113
+2,364
+17,309
+Fax
+Tel.
+Postcode
+Beijing, PRC
+No.22 Chaoyangmen North Street,
+Chaoyang District
+REGISTERED ADDRESS AND PLACE OF
+BUSINESS
+Mr. Zheng Baomin
+REPRESENTATIVE ON SECURITIES MATTERS
+Mr. Huang Wensheng
+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
+China Petroleum & Chemical Corporation
+ENGLISH NAME
+中国石油化工股份有限公司
+STATUTORY NAME
+CORPORATE INFORMATION
+(83,746)
+(2,174)
+29,799
+6,073
+(7,320)
+Financial Statements
+212
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+211
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+10,445
+207,893
+218,338
+12,803
+222,844
+235,647
+investments' results of standardised measure of
+discounted future net cash flows
+Total of the Group's and its equity method
+10,191
+10,191
+12,555
+12,555
+net cash flows
+Standardised measure of discounted future
+(7,969)
+(7,969)
+(9,803)
+(9,803)
+Supplemental Information on Oil and
+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
+(53,715)
+7,487
+(46,637)
+(62,054)
+2016
+RMB million
+RMB million
+2017
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Total of the Group's and its equity method investments' results of net changes for the year
+Net changes for the year
+Net changes in income taxes
+Accretion of discount
+18,160
+Previously estimated development costs incurred during the year
+Net changes in estimated future development cost
+Sales and transfers of oil and gas produced, net of production costs
+Net changes in prices and production costs
+Equity method investments
+Net changes for the year
+Net changes in income taxes
+Previously estimated development costs incurred during the year
+Accretion of discount
+Revisions of previous quantity estimates
+Net changes due to extensions, discoveries and improved recoveries
+Net changes in estimated future development cost
+Net changes in prices and production costs
+Sales and transfers of oil and gas produced, net of production costs
+The Group
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+E-mail addresses
+(4)
+1,216
+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
+SIGNIFICANT EVENTS
+1 MAJOR PROJECTS
+(1) Fuling shale gas project
+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.
+(2) Tianjin LNG project
+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:
+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.
+Gross profit margin = (operation income - operation cost, tax and surcharges)/operation income.
+26.7
+Corporate and Others
+974,850
+963,246
+1.2
+31.7
+32.6
+(0.6)
+Elimination of inter-segment sales
+(1,445,955)
+(1,444,300)
+N/A
+N/A
+N/A
+N/A
+Total
+2,360,193
+1,890,398
+9.9
+22.2
+(0.8)
+(1.8)
+(3) Zhongke integrated refining and
+chemical project
+(4) Xinqi pipeline project
+974,850
+30.8
+20,623
+26,977
+30.6
+314,491
+410,766
+30.6
+335,114
+437,743
+(1.8)
+32,153
+16.8
+1,020,704
+16.3
+1,052,857
+1,224,197
+1,192,628
+31,569
+Operating expenses
+Operating revenues
+739,947
+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.
+31.7
+736,735
+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.
+(5) E-An-Cang gas pipeline project
+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.
+(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
+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.
+(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.
+Elimination of inter-segment (loss)/profit
+Operating (loss)/profit
+Operating expenses
+Operating revenues
+Operating revenues
+Operating expenses
+Operating profit
+Corporate and Others
+Operating profit
+Chemicals Segment
+3,212
+1,581
+32.9
+979,334
+33.3
+30.6
+11.2
+77,389
+Net profit attributable to equity shareholders of the Company
+51,119
+46,416
+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.
+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.
+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
+RMB million
+1,595,504
+161,988
+854,070
+As of 31
+December 2016
+Change
+RMB million
+1,498,609
+86,965
+96,895
+Consolidated operating profit
+In 2017, the operating losses from
+corporate and others was RMB 4.48
+billion.
+(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)
+1,581
+Financial expenses, investment income, loss from changes in fair value, asset disposal income and
+other income
+20,325
+22,465
+852,890
+(18,553)
+21,545
+180,541
+(3.5)
+35.9
+20.0
+11.8
+703,743
+8.7
+18.2
+26.6
+(0.4)
+Marketing and Distribution
+1,224,197
+1,127,374
+7.6
+16.3
+17.2
+(0.8)
+Chemicals
+437,743
+386,111
+154,224
+157,505
+1,011,853
+Refining
+Exploration and Production
+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
+RMB million
+Marketing and Distribution Segment
+Gross profit
+margin* (%)
+a year-on-year
+basis (%)
+Increase/
+(decrease)
+of operation
+cost on
+a year-on-year
+basis (%)
+Increase/
+(decrease)
+of gross profit
+margin on
+a year-on-year
+basis (%)
+Increase/
+(decrease) of
+operation
+income on
+15.5
+56,265
+65,007
+External sales*
+3.0
+3.4
+(%)
+2016
+2017
+(%)
+817
+3.7
+4.1
+115,939
+157,505
+1.9
+2.0
+58,954
+77,804
+1.8
+2.1
+56,985
+79,701
+137,582
+Refining Segment
+108,469
+3.5
+51.7
+33.9
+32.1
+1,049,377
+1,220,235
+External sales*
+Marketing and Distribution Segment
+27.7
+26.6
+855,786
+1,011,853
+Operating revenues
+24.2
+23.0
+747,317
+874,271
+Inter-segment sales
+5.6
+5.8
+3.6
+Inter-segment sales
+External sales*
+Exploration and Production Segment
+Exploration expenses were RMB 11.1
+billion, representing an increase of 0.5%
+year on year.
+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.
+Selling, general and administrative
+expenses were RMB 65.0 billion,
+representing an increase of 1.0% over
+2016.
+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.
+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 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.
+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.
+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:
+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:
+(2) Operating expenses
+In 2017, the operating expenses of
+corporate and others were RMB 979.3
+billion, representing an increase of 32.9%
+over 2016.
+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.
+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.
+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.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+20
+20
+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.
+Operating revenues
+(%)
+2016
+2017
+(%)
+2016
+RMB million
+RMB million
+Operating revenues
+Year ended 31 December
+2017
+As a percentage of
+consolidated operating
+revenue after elimination
+of inter-segment sales
+Year ended 31 December
+of inter-segment sales
+Year ended 31 December
+54.3
+As a percentage of
+consolidated operating
+revenue before elimination
+revenues.
+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
+2 RESULTS OF SEGMENT OPERATIONS
+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.
+(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.
+(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.
+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.
+(47,399)
+Inter-segment sales
+3,962
+1,224,197
+2016
+RMB million
+Year ended 31 December
+2017
+RMB million
+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.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+and Analysis
+Management's Discussion
+21
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Other operating revenues are included.
+*.
+100.0
+100.0
+1,930,911
+2,360,193
+(1,445,955) (1,168,732)
+100.0
+100.0
+Change
+3,099,643
+(%)
+Operating revenues
+Operating profit
+18.4
+799,521
+946,846
+Operating expenses
+18.2
+855,786
+1,011,853
+(36,641)
+(45,944)
+33.3
+152,580
+203,449
+35.9
+115,939
+157,505
+Operating revenues
+Refining Segment
+Operating expenses
+Operating loss
+Exploration and Production Segment
+3,806,148
+23.8
+25.6
+10.2
+296,500
+388,128
+Consolidated operating revenue
+Elimination of inter-segment sales
+inter-segment sales
+Operating revenue before elimination of
+Operating revenues
+Inter-segment sales
+Corporate and Others
+External sales*
+Inter-segment sales
+Operating revenues
+External sales*
+Chemicals Segment
+34.0
+32.2
+1,052,857
+0.1
+0.1
+3,480
+9.6
+49,615
+38,614
+1.3
+739,947
+974,850
+10.3
+11.6
+320,367
+440,303
+21.7
+22.6
+13.5
+Operating revenues
+14.0
+534,547
+15.4
+16.5
+6200
+10.8
+11.5
+335,114
+437,743
+1.2
+419,580
+Exploration and Production Segment
+120,241
+2,360,193
+Synthetic fibre monomer and polymer
+18.2
+3,963
+4,684
+11.4
+41,605
+46,351
+Basic organic chemicals
+Change (%)
+2016
+2017
+Change (%)
+2016
+2017
+Average realised price (RMB/tonne)
+Year ended 31 December
+2016
+RMB million
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+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.
+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.
+10,332
+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.
+7,169
+6,047
+3.5
+1,099
+1,138
+20.3
+7,113
+8,556
+(4.7)
+1,369
+1,304
+Synthetic fibre
+9.0
+7,482
+8,153
+7.9
+12,250
+13,215
+Synthetic resin
+13.5
+5,328
+44.1
+11,957
+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 profit of
+this segment was RMB 31.6 billion,
+representing a decrease of 1.8%
+compared with 2016.
+Direct sales and wholesale
+9.8
+5,088
+5,588
+(4.1)
+46,656
+44,736
+Retail
+12.5
+4,478
+5,039
+(3.1)
+91,998
+89,146
+Diesel
+12.5
+4,812
+5,412
+26.8
+44,410
+(4) Chemicals Segment
+45,342
+4,486
+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 revenues of non-
+fuel business was RMB 27.6 billion,
+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 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.
+Fuel
+Kerosene
+32.2
+1,703
+2,251
+5.7
+22,034
+23,299
+25.8
+3,531
+1.6
+25,164
+25,555
+16.5
+3,851
+(2.1)
+9,609
+24.4
+700
+196
+51,196
+Self-owned fund
+196
+51,196
+Funding source
+Impairment
+loss provision
+of the
+current year
+Accumulated
+variation of fair
+values recorded
+as equity
+Profits and
+losses from
+variation of fair
+values in the
+current year
+End of the year
+Beginning
+of the year
+Derivative financial instruments
+Cash flow hedges
+Total
+Stock
+available for sale financial assets
+profit or loss of the reporting period
+Structured Deposit
+Financial assets at fair value through
+Items
+Unit: RMB million
+Items relevant to measurement of fair values
+262
+The Company has established sound decision-making mechanism, business process and internal control systems relevant to financial instrument
+accounting and information disclosure.
+178
+Self-owned fund
+1,930,911
+Year ended 31 December
+2017
+RMB million
+(1) Under ASBE, the operating income and operating profit or loss by reportable segments were as follows:
+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.
+4 ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER ASBE
+(1,323)
+(54)
+Self-owned fund
+(1,314)
+103
+(1,617)
+49,235
+(4,024)
+(3,448)
+Self-owned fund
+(353)
+(522)
+314
+(9)
+178
+262
+(9)
+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.
+(6) Measurement of fair values of derivatives and relevant system
+(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.
+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.
+6,529
+21,655
+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
+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:
+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.
+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 revenues
+generated from corporate and others
+were RMB 974.9 billion, representing
+an increase of 31.8% over 2016. This
+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.
+(5) Corporate and Others
+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.
+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 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.
+Chemical fertiliser
+Synthetic rubber
+24.6
+1,612
+2,008
+(2.0)
+714
+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.
+The following table sets forth the major items in the consolidated cash flow statements for 2017 and 2016.
+Unit: RMB million
+Major items of cash flows
+in the "Business Review and Prospects"
+section of this report.
+Please refer to "Capital Expenditures"
+(4) Capital Expenditures
+Please refer to "Material Guarantee
+Contracts and Their Performances" in the
+"Significant Events" section of this report.
+(3) Contingent Liabilities
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+26
+13,895
+and Analysis
+25
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+At the end of 2017, the cash and cash
+equivalents were RMB 113.2 billion.
+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.
+2016
+214,543
+(66,217)
+(93,047)
+Year ended 31 December
+2017
+190,935
+(145,323)
+(56,509)
+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.
+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.
+Net cash generated from operating activities
+Net cash used in investing activities
+Net cash generated used financing activities
+Management's Discussion
+17,616
+2,807
+9.3
+Total assets
+Current assets
+Non-current assets
+Total liabilities
+Current liabilities
+Direct sales and wholesale
+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
+Unit: RMB million
+As of
+31 December
+As of
+31 December
+(1) Assets, liabilities and equity
+2017
+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.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+(2) Refining Segment
+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.
+(4,484)
+(1,655)
+In 2017, the oil and gas lifting cost was
+RMB 788.3 per tonne, representing a
+year on year increase of 0.3%.
+With the restructuring of Sichuan-
+to-East China Pipeline Co. in 2016,
+other expenses (net) increased by
+RMB 20.6 billion.
+Procurement cost increased by RMB
+15.1 billion year on year, as a result
+of expansion of LNG business;
+Resource Tax increased by RMB 1.0
+billion year on year, as a result of
+increase in crude oil price;
+Personnel expenses increased by 1.7
+billion year on year;
+Impairment loss increased by RMB
+2.0 billion year on year;
+Depreciation, depletion and
+amortisation increased by RMB 4.9
+billion year on year;
+.
+•
+.
+.
+•
+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:
+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.
+24
+24
+3 ASSETS, LIABILITIES, EQUITY AND CASH FLOWS
+1,595,504
+529,049
+2016
+1,498,609
+412,261
+Change
+Exploration and Production Segment
+157,505
+115,939
+Refining Segment
+Marketing and Distribution Segment
+Chemicals Segment
+Corporate and Others
+1,011,853
+855,786
+1,224,197
+1,052,857
+437,743
+974,850
+335,114
+739,947
+Elimination of inter-segment sales
+Consolidated operating income
+Operating (loss)/profit
+(1,445,955)
+(1,168,732)
+126,770
+15,126
+589,923
+605,049
+96,895
+116,788
+1,066,455
+1,086,348
+(19,893)
+742,614
+667,374
+75,240
+579,446
+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.
+485,543
+163,168
+181,831
+(18,663)
+726,120
+710,994
+15,126
+121,071
+121,071
+0
+93,903
+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.
+Non-current liabilities
+22
+Management's Discussion
+and Analysis
+Management's Discussion
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017 23
+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.
+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.
+(3) Marketing and Distribution Segment
+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.
+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 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
+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.
+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, the average processing cost
+for crude oil was RMB 2,774 per tonne,
+representing an increase of 26.4% over
+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.
+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.
+The sales revenues of chemical feedstock
+were RMB 118.4 billion, representing an
+increase of 25.8% over 2016.
+The sales revenues of kerosene were RMB
+60.2 billion, representing an increase of
+47.3% over 2016.
+The sales revenues of diesel were RMB
+301.1 billion, representing an increase of
+13.8% over 2016.
+In 2017, sales revenues of gasoline
+were RMB 354.8 billion, representing an
+increase of 14.6% over 2016.
+and Analysis
+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.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+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:
+6,722
+7,346
+4.2
+63,718
+66,364
+8.8
+6,380
+6,941
+8.2
+77,613
+83,980
+Operating income
+Gasoline
+Retail
+22
+2016
+2017
+Change (%)
+2016
+Average realised price (RMB/tonne)
+Year ended 31 December
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+2017
+Other refined petroleum products
+Change (%)
+Kerosene
+3.3
+58,734
+60,680
+10.7
+5,904
+6,538
+3.5
+52,461
+54,273
+4,962
+Change (%)
+2017
+2016
+2017
+831,235
+Average realised price (RMB/tonne)
+Year ended 31 December
+Sales Volume (thousand tonnes)
+Year ended 31 December
+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.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Chemical feedstock
+2016
+4,505
+Change (%)
+17,080
+Diesel
+Gasoline
+10.1
+15.8
+2,529
+5.5
+55,742
+58,801
+24.0
+2,584
+2,929
+1.5
+36,408
+36,951
+14,529
+25.3
+2,814
+3,204
+17.6
+3,527
+2020
+2018
+19 November
+19 November
+1 June 2022
+21 May 2020
+19 November 2015
+1 June 2012
+21 May 2010
+9
+136039
+15石化02
+136040
+1 June 2017
+9
+4.05
+7
+16
+4
+7
+16
+4
+4.26
+4.90
+3.30
+3.70
+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.
+15石化01
+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.
+13
+0
+12石化02
+122150
+Amount issued (RMB billion)
+12石化01
+1501 and 15102 were publicly offered to qualified investors in accordance with Administration of the Issuance
+and Trading of Corporate Bonds
+30
+Significant Events
+SIGNIFICANT EVENTS (CONTINUED)
+2 CORPORATE BONDS ISSUED AND INTEREST PAYMENTS
+Basic information of corporate bonds
+Bond name
+Code
+Abbreviation
+Issuance date
+Maturity date
+Outstanding balance (RMB billion)
+Interest rate (%)
+Principal and interest repayment
+122149
+Payment of interests
+Listing place
+Corporate bonds trustee
+Credit rating agency
+Use of proceeds
+Credit rating agency
+Credit addition mechanism, repayment scheme and other
+relative events for corporate bonds
+during the reporting period
+Convening of corporate bond holders' meeting
+Performance of corporate bonds trustee
+Sinopec Corp.
+2010 Corporate bond
+10石化02
+122052
+Sinopec Corp.
+2012 Corporate bond
+Sinopec Corp.
+2015 Corporate bond (first issue)
+Investor Qualification Arrangement
+Shanghai Stock Exchange
+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)
+27th-28th Floor, China World Office 2, 1 Jianguomenwai Avenue, Chaoyang District, Beijing
+9 SIGNIFICANT LITIGATION, ARBITRATION
+RELATING TO SINOPEC CORP.
+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.
+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, 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:
+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:
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+*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.
+None
+None
+4,285
+None
+2,491
+1.794
+5.99%
+43,596
+23,783
+5,881
+19,813
+2,325
+*1: As defined in the Listing Rules of the Shanghai Stock Exchange.
+Statement of guarantee status
+No significant litigation, arbitration relating
+to the Company occurred during the
+reporting period.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+During the reporting period, the Company has no other asset management or derivative investment subject to disclosure obligation.
+(3) Other asset management and derivative investment
+balance
+0.6
+0.215
+0.215
+0.6
+Amount
+Outstanding
+Source of fund
+Self-owned fund
+Self-owned fund
+Used for working capital
+Statement of guarantee undue that might be involved in any joint and several liabilities
+Used for project construction.
+Unit:RMB billion
+(2) Entrusted loans
+During the reporting period, the Company has no entrusted asset management subject to disclosure obligation.
+(1) Entrusted Asset Management
+14 ENTRUSTED ASSET MANAGEMENT AND ENTRUSTED LOANS
+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.
+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.
+FACTO CONTROLLER
+CONTROLLING SHAREHOLDERS AND DE
+12 CREDIBILITY FOR THE COMPANY,
+Categories
+Total amount of the above three guarantee items (C+D+E)
+The amount of guarantees in excess of 50% of the net assets (E)
+Amount of debt guarantees provided directly or indirectly to the companies with liabilities to assets ratio over 70% (D)
+Joint liability
+guarantee
+17 April 2026
+18 April 2014 -
+18 April 2014
+performance
+940
+Zhong An United Coal
+Chemical Co., Ltd.
+Wholly owned
+subsidiary
+Energy and
+Sinopec Great Wall
+Liquedie Arabia LLC.
+No
+of hydrogen from Air
+No
+No
+No
+30 years from the date Joint liability
+YASRFE requires supply guarantee
+amount agreed,
+gurarantee
+on contract
+Limited
+Company(YASREF)
+Sinopec Refining
+company itself
+31 December 2014
+No
+Overdue and
+uncollected
+No
+No
+Guarantees provided for shareholder, de facto controller and its related parties (C)
+The proportion of the total amount of guarantees to the Sinopec Corp.'s net assets
+Total amount of guarantees(A+B)
+Total amount of guarantees for the Company (including those provided for controlled subsidiaries)
+Total amount of guarantee for controlled subsidiaries outstanding at the end of the reporting period (B)
+Total amount of guarantee provided to controlled subsidiaries during the reporting period
+Guarantees by the Company to the controlled subsidiaries
+Total amount of guarantees outstanding at the end of reporting period*2 (A)
+Total amount of guarantees provided during the reporting period *2
+Sonangol E.P./SSI15
+No
+No
+No
+No
+Joint liability
+guarantee
+Development Ltd./
+subsidiary
+New Bright International 9,732
+Controlled
+SSI
+Industry Co., LTD
+Chemical
+Yes
+no specific
+amount
+None
+☑ 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
+8.1 Input in coordinated poverty alleviation
+8. Poverty alleviation through social projects
+7.4 Number of the disabled helped
+7.3 Input in assisting the disabled
+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
+275
+32.02
+13,907
+0.62
+4,316
+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
+4.3 Input in education resources in poverty-stricken areas
+0.01
+0.48
+386
+0.27
+1.05
+8.65
+5.96
+3,146
+3.05
+4,275
+1,669
+513
+4.2 Number of students who received funding assistance
+4.1 Input in students funding
+4. Poverty elimination through education
+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
+(3) 2017 Targeted Poverty Alleviation Work Statistics
+17 STRUCTURED ENTITY CONTROLLED BY
+THE COMPANY
+None
+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.
+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.
+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
+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.
+15 DEPOSITS AT SINOPEC FINANCE CO., LTD.
+AND SINOPEC CENTURY BRIGHT CAPITAL
+INVESTMENT, LTD.
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+38
+Significant Events
+37
+16 APPROPRIATION OF NONOPERATIONAL
+FUNDS BY THE CONTROLLING
+SHAREHOLDER AND ITS RELATED PARTIES
+AND THE PROGRESS FOR CLEARING UP
+Not applicable
+None
+Unit: RMB million
+Index
+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
+1.4 Number of people lifted out of poverty
+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
+I.
+☑ Poverty alleviation through tourism development
+27,759
+3.69
+124.53
+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.
+☑ Poverty alleviation through agriculture and forestry development
+China International Capital Corporation Limited
+Yanbu Aramco
+Sinopec Corp.
+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.
+(1) Summary of the Scheme
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+32
+32
+Significant Events
+31
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+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.
+(2) Information on the Initial Grant of the
+Share Option
+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
+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.
+3
+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
+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.
+100
+100
+100
+100
+Loan repayment rate (%)
+Interest payment rate (%)
+Mainly due to the increase of earnings
+Mainly due to the decrease of interest expense in
+cash.
+SHARE OPTION INCENTIVE SCHEME OF
+SINOPEC CORP.'S SUBSIDIARY, SINOPEC
+SHANGHAI PETROCHEMICAL COMPANY
+LIMITED (SHANGHAI PETRO), DURING THE
+REPORTING PERIOD
+10.81
+(i) Initial Grant of the Share Option:
+(ii) The exercise condition of the first
+grant of first exercise schedule of
+share option
+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.
+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.
+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,
+(vii) The progress of share option incentive
+up to the date of Shanghai Petro's
+2017 annual report
+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.
+(vi) Validity of and exercise arrangements
+for the initial grant
+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.
+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
+Grant Date: 6 January 2015
+Number of Participants: 214 persons
+Number of Share Options Granted:
+38,760,000
+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.
+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.
+(iv) Outstanding share options granted
+to employees other than the persons
+mentioned in item (iii)
+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".
+(iii) Outstanding share options of
+Directors, chief executive and
+substantial shareholder as at the end
+of the Reporting Period
+Exercise price: RMB3.85/share
+Number of participants who exercised
+the option: 199
+Date of completing registration for
+newly increased shares:
+27 September 2017
+Number of exercised share option:
+14,176,600 options
+Number of lapsed share option:
+5,228,900 options
+Exercise date: 29 August 2017
+Number of exercisable share option:
+14,212,500 options
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+21.78
+EBITDA-to-interest coverage ratio
+0.59
+Quick ratio
+0.06
+0.85
+0.91
+Current ratio
+Change
+5.63%
+2016
+196,464
+207,528
+EBITDA (RMB million)
+0.53
+2017
+Principal accounting data and financial indicators for the two years ended 31 December 2017
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+During the reporting period, the bondholders' meeting has not been convened.
+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, 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.
+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.
+12th Floor, PICC building, No.2 Jianguomenwai Avenue, Chaoyang District, Beijing
+United Credit ratings Co., Ltd.
+(010) 6505 1166
+Huang Xu, Zhai Ying
+Principal data
+32.59
+0.06
+46.47
+3.99
+35.13
+39.11
+Cash flow interest coverage ratio
+Mainly due to the increase of non-interest-bearing
+debts compared with last year
+4.74
+9.85
+14.60
+Interest coverage ratio
+Mainly due to the increase of earnings
+Liability-to-asset ratio (%)
+Mainly due to the increase of non-interest-bearing
+debts 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 earnings compared
+with last year
+Reasons for change
+0.12
+0.99
+1.11
+EBITDA to total debt ratio
+points
+2.02
+percentage
+44.45
+Mainly due to the increase of cash at bank and on
+hand and structured deposit compared with last
+year
+The listed
+33
+Significant Events
+Company
+Guarantor
+Name of
+parties
+Amount of
+Whether
+Whether
+Relationship
+with the
+connected
+for
+Whether
+guaranteed
+Unit: RMB million
+Major external guarantees (excluding guarantees for controlled subsidiaries)
+7 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+36
+Significant Events
+35
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+6 SIGNIFICANT ASSETS AND EQUITY SALE
+During the reporting period, there is no
+significant assets or equity sale of the
+Company.
+Sinopec Corp.
+The listed
+company
+itself
+guaranteed company
+Zhongtian Hechuang
+Energy Co., Ltd
+is estimated)
+(the mature date
+guarantee
+31 December 2023
+Yes
+No
+No
+No
+Joint liability
+25 May 2016.
+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.
+no)*1
+or not
+or not
+Туре
+Period of guarantee
+(yes or
+overdue Counter-
+overdue
+completed
+Transaction date
+(date of signing)
+Amount
+13,520
+guarantee guaranteed
+Significant Events
+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
+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.
+No
+performed or not
+deadline or not
+Term for performance
+From 22 June 2001
+Whether strictly
+Whether bears
+Other
+Other undertakings
+Other
+Other undertakings
+Yes
+(IPOs)
+Offerings (IPOs)
+Public Offerings (IPOs)
+Initial Public
+Undertakings related to Initial
+Contents
+Party
+Type of
+Undertaking
+Background
+4 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
+SIGNIFICANT EVENTS (CONTINUED)
+China Petrochemical 1
+Corporation
+(2) Significant equity investment
+Within five years, commencing from Yes
+15 March 2012
+Within 10 years after 29 April
+2014 or the date when China
+Petrochemical Corporation acquires
+the assets
+(1) General analysis of external equity
+investment
+5 ANALYSIS OF INVESTMENT
+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.
+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.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+34
+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.
+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
+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.
+6
+Avoiding competition within the same industry;
+5
+4
+Granting licenses for intellectual property rights;
+3 Implementation of the Reorganisation Agreement
+(please refer to the definition of Reorganisation
+Agreement in the H share prospectus of Sinopec
+Corp.);
+2 Solving the issues regarding the legality of land-
+use rights certificates and property ownership rights
+certificates within a specified period of time;
+Compliance with the connected transaction
+agreements;
+Yes
+Yes
+Yes
+25 May 2016
+Chairman's Statement
+49
+45
+will provide trademarks, patents and
+computer software to the Company for
+use free of charge
+(2) China Petrochemical Corporation
+(1) The Company and China Petrochemical
+Corporation will mutually supply ancillary
+services for products, production and
+construction services (Mutual Supply
+Agreement)
+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:
+BETWEEN SINOPEC CORP. AND CHINA
+PETROCHEMICAL CORPORATION
+1 AGREEMENTS CONCERNING CONTINUING
+CONNECTED TRANSACTIONS
+CONNECTED TRANSACTIONS
+Connected Transactions
+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.
+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 Accountability and Auditing
+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.
+(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
+(6) China Petrochemical Corporation will
+provide shareholders' loans to the
+Company and
+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
+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.
+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 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.
+terms that are fair and reasonable to
+in accordance with normal commercial
+The major continuing connected transaction
+agreements were entered into in the ordinary
+course of the Company's business and
+Decision-making procedures:
+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.
+(c) when there is neither a government.
+prescribed price nor a government.
+guidance price, the market price will
+apply; or
+(b) when there is no government-prescribed
+price but there is a government-guidance
+price, the government-guidance price will
+apply;
+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.
+(a) The government-prescribed price will
+apply;
+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.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+40
+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.
+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.
+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.
+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.
+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
+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.
+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
+(7) The Company will provide franchise
+licenses for service stations to China
+Petrochemical Corporation.
+Principle of pricing for the continuing
+connected transactions:
+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.
+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.
+C.2 Internal Control and Risk
+Management
+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.
+b. Sinopec Corp. pays close attention to
+investor relations. The management
+conduct road shows every year
+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.
+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.
+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.
+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.
+F Company Secretary
+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.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+CORPORATE GOVERNANCE
+b. During the reporting period, the
+Secretary to the Board actively
+participated in career development
+training with more than 15 training
+hours.
+G Shareholders' rights
+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.
+b. When Sinopec Corp. holds the
+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.
+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.
+(2) Auditors
+The appointment of
+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.
+During the reporting period, neither
+PricewaterhouseCoopers Zhong Tian LLP
+nor PricewaterhouseCoopers provided any
+non-audit service to the Company.
+(3) Other information about Sinopec Corp.'s
+corporate governance
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+E Investor Relations
+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.
+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.
+com.
+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
+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
+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.
+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.
+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.
+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.
+C.3 Audit Committee
+d. The external auditors of Sinopec
+Corp. made a statement about
+their reporting responsibilities in
+the auditor's report contained in
+the financial report.
+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. Audit Committee members may
+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
+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.
+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.
+to employees to report behavior
+that violates the internal control
+system of the Company. The Audit
+Committee has reviewed and
+approved such policy.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+47
+48
+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.
+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.
+After reviewing the above-mentioned
+connected transactions, the independent
+non-executive directors of Sinopec Corp.
+have confirmed the following:
+(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.
+(b) The transactions have been entered into
+based on either of the following terms:
+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.
+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.
+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.
+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.
+A.1 Board of Directors
+A Board of Directors
+Save as disclosed above, Sinopec Corp.
+complied with all code provisions set out
+in the Corporate Governance Code during
+the reporting period.
+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
+8 SENIOR MANAGEMENT APPRAISAL AND
+(a) The transactions have been conducted
+in the ordinary course of the Company's
+business.
+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.
+COMPANY'S INDEPENDENCE FROM
+CONTROLLING SHAREHOLDER
+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.
+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
+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.
+b. Each of the Directors was able to
+devote sufficient time and efforts
+to handling the matters of Sinopec
+Corp.
+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.
+A.6 Responsibility of Directors
+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.
+b. The Board establishes the Policy
+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.
+a. Considering that the Board
+A.5 Nomination Committee
+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.
+b. All Directors of Sinopec Corp.
+have been elected at the general
+meeting of shareholders. The
+Board has no power to appoint
+temporary Directors.
+6
+six years.
+A.4 Appointment, re-election and
+dismissal
+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. 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.
+A.3 Board composition
+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.
+Chairman's Statement
+CORPORATE GOVERNANCE
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+44
+44
+Corp.
+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
+5
+CORPORATE GOVERNANCE
+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.
+Balance at
+the end of
+the year
+28,268
+Funds from related parties
+Balance
+Unit: RMB million
+Amount
+incurred
+of the year
+29,541
+24,038
+at the
+beginning
+Balance
+Amount at the end
+incurred of the year
+(2,426)
+4 PERFORMANCE OF THE INDEPENDENT
+DIRECTORS
+Funds to related parties
+Balance
+at the
+beginning
+affiliated companies*
+Associates and joint ventures
+Parent company and
+Relations
+Total
+Other related parties
+Sinopec Group
+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.
+ii
+¡ normal commercial terms; or
+(1,273)
+6,008
+32,472
+of the year
+26,464
+1,678
+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.
+(4,330)
+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.
+2 GENERAL MEETINGS
+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.
+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, 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.
+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
+3 EQUITY INTERESTS OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+41
+Connected Transactions
+(6,756)
+25,716
+55
+29,596
+(17)
+(1,290)
+38
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Reason for provision of funds between related parties
+Impacts on the Company
+*: affiliated companies include subsidiaries, associates and joint ventures.
+Loans and other accounts receivable and payable
+No material negative impact
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+28,306
+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.
+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
+Vice Chairman & President
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2017
+59
+Report of the Board of Directors
+Attended
+by proxy
+58
+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.
+Beijing, China, 23 March 2018
+Absent
+57
+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.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+3 DIRECTORS' ATTENDANCE TO THE SIXTH SESSION OF THE BOARD MEETINGS AND THE INDEPENDENT DIRECTOR 'S ATTENDANCE TO THE
+GENERAL MEETINGS.
+(1) ATTENDANCE TO THE BOARD MEETINGS
+Director Titles
+Names
+No. of
+meeting held
+Actual
+Attendance
+Board Meetings
+Attended By
+communication
+Attended
+by proxy
+Absent
+Vice Chairman
+(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.
+Director
+Director
+Director
+Dai Houliang
+Li Yunpeng
+Wang Zhigang
+Zhang Haichao
+Jiao Fangzheng
+5
+2
+3
+0
+0
+2
+1
+1
+Director
+(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).
+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.
+(3) The 13th meeting of the six session of
+Report of the Board of Directors
+Report of the Board of Directors
+51
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+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.
+(2) Independent Non-executive Directors' attendance to the General Meetings.
+4. Pursuant to Hong Kong Listing Rules, attended by proxy was not counted as attendance by the director himself.
+3. Mr. Wang Yupu resigned as chairman and the director of the Board on 22 September 2017.
+2. Mr Wang Zhigang, Mr Zhang Haichao resigned as directors of the Board on 29 January 2018.
+1. No directors were absent from two consecutive Board meetings.
+0
+2
+2
+0
+4
+Wang Yupu
+Former Chairman
+50
+50
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS
+The Board is pleased to present the directors'
+report for the year ended 31 December 2017 for
+shareholders' review.
+1 MEETINGS OF THE BOARD
+During this reporting period, Sinopec Corp.
+held five (5) Board meetings. The details are
+as follows:
+(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.
+(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
+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.
+0
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+0
+2
+3
+0
+0
+Independent Director
+Tang Min
+5
+2
+3
+0
+0
+Independent Director
+Fan Gang
+2
+5
+3
+0
+0
+Director Titles
+Names
+Board Meetings*
+No. of
+Actual
+Attended By
+meeting held
+Attendance
+communication
+2
+5
+Andrew Y. Yan
+0
+3
+0
+0
+5
+2
+3
+0
+0
+5
+2
+3
+0
+0
+Director
+Ma Yongsheng
+5
+2
+3
+0
+0
+Independent Director
+Independent Director
+Jiang Xiaoming
+5
+2
+3
+0
+5
+4 MEETINGS HELD BY THE BOARD
+COMMITTEES
+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:
+(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.
+20 MANAGEMENT CONTRACTS
+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.
+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.
+18 DIRECTORS' INTERESTS IN COMPETING
+BUSINESS
+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.
+17 REPURCHASE, SALES AND REDEMPTION
+OF SHARES
+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.
+16 PRE-EMPTIVE RIGHTS
+During this reporting period, the amount
+of charity donations made by the Company
+amounted to RMB 152 million.
+15 DONATIONS
+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.
+14 RESERVES
+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.
+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.
+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.
+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.
+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.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+10 DURING THIS REPORTING PERIOD, THE
+COMPANY DID NOT VIOLATE LAWS OR
+REGULATIONS WHICH HAVE A MATERIAL
+IMPACT ON THE COMPANY
+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.
+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.
+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.
+INTERNAL CONTROL
+8 RESPONSIBILITIES FOR THE COMPANY'S
+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%.
+13 FIXED ASSETS
+Note: The final cash dividend for 2017 is subject to the approval at the 2017 annual general meeting.
+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.
+As of 31 December 2017, the Company has
+not entered into any equity-linked agreement.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+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.
+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.
+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.
+I can only counteract the adverse influences of
+industry cycle to some extent.
+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
+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.
+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.
+25 RISK FACTORS
+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.
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+22 EQUITY-LINKED AGREEMENTS
+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.
+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.
+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.
+Our reserves estimates are guided by
+procedural manuals and technical guidance
+formulated by the company. A number
+of working divisions at the production
+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.
+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.
+23 OIL & GAS RESERVE APPRAISAL
+PRINCIPLES
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+56
+Report of the Board of Directors
+55
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+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.
+Report of the Board of Directors
+of the listed company in the consolidated statement (%)
+the consolidated statement for the dividend year (RMB billion)
+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%-
+Sinopec Corp. as at the record date.
+the registration of members for H shares of
+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
+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.
+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).
+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)
+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.
+Proposals for dividend distribution
+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.
+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.
+7 DIVIDEND
+Pursuant to the Notice on the Tax Policies
+Related to the Pilot Program of the
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+52
+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.
+6 BUSINESS PERFORMANCE
+BOARD COMMITTEES HAVE ISSUED REVIEW
+OPINIONS WITHOUT ANY OBJECTION TO
+THE BOARD WHEN PERFORMING THEIR
+DUTIES DURING THE REPORT PERIOD.
+(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.
+(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.
+5
+(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) 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.
+(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.
+(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.
+(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.
+42
+Ratio between the dividends and the net profit attributed to the shareholders
+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):
+Shares of Sinopec Corp. through Shanghai-
+Net profits attributed to the shareholders of the listed company shown in
+Total amount of cash dividends (RMB billion, tax inclusive)
+56.26
+64.95
+118.42
+32.28
+46.42
+51.12
+18.16
+30.15
+60.54
+0.15
+0.249
+0.50
+2015
+2016
+2017
+The dividend distribution and bonus shares declared by Sinopec Corp. in the past three years are as follows:
+Cash dividends (RMB/Share, tax inclusive)
+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.
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+54
+Report of the Board of Directors
+53
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+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.
+For domestic investors investing in the H
+Report of the Board of Directors
+Tang Min
+Fan Gang
+Senior Vice President
+Former Board Director,
+Senior Vice President
+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.
+0
+0
+No
+769.9
+0
+0
+Zhang Haichao
+Yes
+Former Board Director,
+60
+Director
+0
+0
+No
+2017.06-2018.05
+2006.05-2018.01
+Male
+60
+60
+Yes
+2015.05-2018.05
+Board Director,
+Senior Vice President
+Board Director,
+Senior Vice President
+|g|
+56
+Male
+Ma Yongsheng
+55
+Male
+Jiao Fangzheng
+0
+0
+Yes
+2015.05-2018.01
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+843.8
+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
+2009.05.2018.05
+2017
+54
+Male
+Dai Houliang
+Age
+Gender
+Name
+Li Yunpeng
+List of Members of the Board
+66
+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.
+of the Institute of Economics
+in 1988, and subsequently
+served as Director of
+Editorial Department for
+the Economic Research
+Journal between 1992 and
+1993 and as Deputy Head
+of China Development
+Institute (Shenzhen) and
+an economics professor
+at Peking University. He
+began to work for Chinese
+Academy of Social Sciences
+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
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Male
+58
+Wang Zhigang
+Company
+before tax)
+Tenure
+(as at 31 December)
+Equity interests in Sinopec Corp.
+paid by
+the holding
+Whether
+in 2017
+paid by
+Sinopec Corp.
+Remuneration
+(RMB 1,000,
+Position in
+Sinopec Corp.
+Vice Chairman, President
+2%
+Male
+2016
+Directors, Supervisors,
+Senior Management and Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Directors, Supervisors,
+Zhao Dong
+Chairman of the Board of Supervisors
+Beijing, China, 23 March 2018
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+61
+Report of the Board of Supervisors
+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.
+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.
+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.
+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.
+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.
+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.
+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
+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 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.
+Thirdly, Sinopec Corp.'s internal control system
+is robust and effective, no material defects of
+internal control were found. In the meantime,
+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.
+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.
+Senior Management and E
+Directors, Sup Employees
+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
+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
+Jiang Xiaoming
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+65
+Andrew Y. Yan
+Senior Management and Employees
+Ma Yongsheng
+0
+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.
+Jiao Fangzheng
+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
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+63
+Directors, Supervisors,
+Senior Management and Employees
+19
+Directors, Sup Employees
+Senior Management and E
+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.
+2016.02-2018.05
+0
+0
+Zhao Dong
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Senior Management and E
+Directors, Super Employees
+Directors, Supervisors,
+Senior Management and Employees
+67
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+0
+Yes
+2015.05-2017.09
+2017
+Equity interests in Sinopec Corp.
+(as at 31 December)
+the holding
+Company
+Whether
+paid by
+in 2017
+(RMB 1,000,
+before tax)
+Tenure
+0
+Liu Zhongyun
+(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
+Yes
+Senior Management and Employees
+Directors, Supervisors,
+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
+Director General of Finance
+2016
+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.
+Zou Huiping
+Zhou Hengyou
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+68
+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.
+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
+Supervisors of Sinopec Corp.
+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
+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
+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.
+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
+Position in
+Sinopec Corp.
+Former Chairman
+Independent Director
+60
+No
+300.0
+2012.05-2018.05
+Independent Director
+64
+2222
+Male
+Fan Gang
+Male
+Tang Min
+Andrew Y. Yan
+Male
+Jiang Xiaoming
+Wang Yupu
+0
+2012.05-2018.05
+300.0
+Male
+64
+No
+Age
+61
+Name
+paid by
+Sinopec Corp.
+0
+0
+0
+0
+Remuneration
+No
+Independent Director
+0000
+2015.05-2018.05
+300.0
+No
+Gender
+Male
+64
+Independent Director 2015.05.2018.05
+300.0
+27,517
+12,176
+8,613
+1,627
+Manufacturing of intermediate petrochemical
+Company Limited
+Marketing and distribution of refined
+75
+Sinopec Marketing Co. Limited
+28,403
+70.42
+195,555
+products and petroleum products
+409,949
+75
+Sinopec Hainan Refining and Chemical
+10,181
+petroleum products
+3,780
+Manufacturing of intermediate petrochemical
+Company Limited
+products and petroleum products
+3,986
+Sinopec Zhanjiang Dongxing
+7,974
+5,188
+2,161
+Manufacturing of intermediate petrochemical
+Petrochemical Company Limited
+products and petroleum products
+4,397
+Sinopec Shanghai SECCO
+14,285
+67.60
+1,046
+Trading of crude oil and petroleum products
+million
+Sinopec Shanghai Gaoqiao
+10,000
+55
+9,504
+25,434
+2,642
+Manufacturing of intermediate
+Petroleum and Chemical Limited
+Sinopec Shanghai Petrochemical
+10,814
+18,522
+12,000
+7,801
+60.34
+Sinopec Kantons Holdings Limited
+24,399
+18,485
+726
+Production and sale of petrochemical products
+Petrochemical Company Limited
+Sinopec SK(Wuhan) Petrochemical
+HKD 248
+6,270
+15,234
+11,259
+2,733
+Production, sale, research and development
+Company Limited
+of ethylene and downstream by-products
+65
+85
+173,035
+Sinopec Qingdao Refining and Chemical
+Trading of crude oil and
+3,853
+31,994
+50.49
+100
+3,000
+China International United Petroleum
+of petrochemical products
+Marketing and distribution
+products and petroleum products
+Manufacturing of intermediate petrochemical
+and petrochemical materials
+1,383
+2,758
+20,037
+100
+1,000
+100
+8,552
+3,725
+595
+Production and sale of refined petroleum
+products, lubricant base oil,
+and Chemical Company Limited
+Sinopec Qingdao Petrochemical
+100
+3,918
+486
+183
+Company Limited
+Sinopec Chemical Sales Company Limited
+1,595
+5,000
+Sinopec Overseas Investment
+100
+products and petrochemical products
+production, storage and sale of petroleum
+Limited Liability Company
+Import and processing of crude oil,
+2,649
+9,601
+16,811
+98.98
+5,294
+Sinopec Beihai Refining and Chemical
+Company Limited
+Trading of petrochemical products
+317
+3,604
+13,947
+100
+1,400
+24,173
+11,916
+1.082
+petrochemical products
+Overseas investment holding
+Holding Limited
+million
+USD 1,638
+Sinopec Catalyst Company Limited
+100
+8,652
+4,141
+607
+Production and sale of catalyst products
+China Petrochemical International
+1,500
+39,609
+Mr. Liu Zhongyun resigned as Supervisor of Sinopec Corp. in February 2018.
+6,152
+54
+Zhou Hengyou
+Male
+Zou Huiping
+Male
+57
+Jiang Zhenying
+Male
+3|ཐ|
+Chairman of the Board
+of Supervisors
+Former Supervisor
+2017.06.2018.05
+Yes
+2017
+0
+2016
+0
+2015.05-2018.02
+No
+758.2
+2006.05-2018.05
+Yes
+Supervisor 2015.05-2018.05
+Supervisor
+Employee's Representative
+Supervisor
+Employee's Representative
+Supervisor
+Employee's Representative
+Supervisor
+55
+Male
+Male
+54
+Male
+Yu Renming
+53
+54
+Yes
+Yu Xizhi
+2010.12.2018.05
+Liu Zhongyun
+Male
+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
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+List of Members of the Board of Supervisors
+Position in
+Name
+Gender
+Age
+Zhao Dong
+Company
+(as of 31 December)
+Equity interests in Sinopec Corp.
+the holding
+paid by
+47
+Whether
+Sinopec Corp.
+paid by
+Remuneration
+(RMB 1,000,
+before tax)
+Tenure
+Sinopec Corp.
+in 2017
+758.2
+No
+0000
+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.
+KEY AUDIT MATTERS
+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.
+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.
+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").
+Our opinion
+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.
+What we have audited
+OPINION
+To the Shareholders of China Petroleum & Chemical Corporation,
+PwC ZT Shen Zi (2018) No. 10001
+普华永道
+pwc
+REPORT OF THE PRC AUDITOR
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+78
+petrochemical products and
+petroleum products
+Manufacturing of synthetic fibres, resin
+Company Limited
+and plastics, intermediate petrochemical
+Fujian Petrochemical Company Limited
+PricewaterhouseCoopers Zhongtian LLP
+6,898
+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.
+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.
+50
+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
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+79
+Wang Yajun
+Liu Yun
+Name
+0
+lo
+oooo o
+Note:
+0
+265.9
+2017.06-2018.05
+0
+No
+758.2
+2010.12 2018.05
+No
+28,541
+Position in
+Age
+61
+Financial Statements (PRC)
+paid by
+Remuneration
+3,374
+Representative Supervisor
+2015.05-2017.06
+Gender
+Male
+Former Employee's
+Male
+the Board of Supervisors
+2015.05-2017.03
+Former Chairman of
+Tenure
+Sinopec Corp.
+61
+Sinopec Lubricant Company Limited
+Sinopec International Petroleum
+Liability Company
+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 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 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 7 February 2018, Mr. Liu
+Zhongyun resigned as the
+supervisor of Sinopec Corp.
+due to change of working
+arrangement.
+On 8 February 2018, Mr. Lin
+Yiqun was appointed as Senior
+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. Zhao
+Rifeng was appointed as Vice
+President of Sinopec Corp.
+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.
+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.
+4 CONTRACTRAL INTERESTS
+OF DIRECTORS AND
+SUPERVISORS
+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.
+5
+REMUNERATION OF
+DIRECTORS, SUPERVISORS,
+AND THE SENIOR
+MANAGEMENT
+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.
+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.
+Directors, Super Employees
+Senior 
+Management and E
+148,069 33.2%
+Exploration and Production
+1.2%
+5,353
+Other Segments
+1.3%
+On 12 September 2017, Mr.
+Jiang Zhenghong resigned
+as Vice President of Sinopec
+Corp. due to change of working
+arrangement.
+5,819
+34.5%
+153,804
+Marketing and Distribution
+THE BREAKDOWN ACCORDING TO THE MEMBERS OF EACH OPERATION SEGMENT AS FOLLOWS
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+74
+R&D
+Refining
+On 28 June 2017, Mr. Wang
+Yajun resigned as the supervisor
+of Sinopec Corp. due to his age.
+On 28 June 2017, Mr. Zhao
+Dong was elected as Chairman
+of the Board of Supervisors of
+Sinopec Corp.
+Vice President
+892.9
+No
+0
+0
+Remuneration
+paid by
+Sinopec Corp.
+in 2017
+Whether
+paid by
+Name
+Jiang Zhenghong
+Gender
+Male
+Age
+56
+(RMB 1,000,
+before tax)
+755.4
+the holding
+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
+APPOINTMENT OR
+2 INFORMATION ON
+2: The members of senior management are in order of the number of strokes of their surname in Chinese.
+On 28 June 2017, Mr. Yu
+Xizhi was elected as employee
+representative supervisor of the
+Sixth Session of the Board of
+Supervisors.
+Note 1: Mr. Lin Yiqun was appointed as Senior Vice President of Sinopec Corp. in February 2018
+Position in
+Sinopec Corp.
+0
+0
+2016
+Equity interests in Sinopec Corp.
+(as of 31 December)
+2017
+Company
+No
+Former Vice President
+70,128
+15.7%
+Chemicals
+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
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+10 TRAINNING PROGRAMS
+Net Profit/
+Percentage of
+shares held by
+Sinopec Corp.
+Registered Capital
+Name of Company
+On 31 December, 2017, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+9%
+Principal Wholly-Owned
+and Controlled Subsidiaries
+77
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+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.
+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
+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
+Centring on enterprise
+Directors, Supervisors,
+Senior Management and Employees
+40,272
+Technical secondary school
+22.2%
+2.2%
+9,617
+Others
+8%
+35,698
+Administration
+EDUCATIONAL BACKGROUND STRUCTURE FOR EMPLOYEES AS FOLLOWS:
+2.4%
+Finance
+83,816 18.8%
+Technology
+EMPLOYEES' PROFESSIONAL STRUCTURE AS FOLLOWS:
+14.1%
+63,052
+10,951
+55
+Production
+36.6%
+98,983
+Junior college
+24.5%
+109,274
+Undergraduate
+3.5%
+163,319
+15,707
+40.8%
+181,989
+Senior high school and
+technical school degrees or below
+32%
+142,824
+Sales
+Master's degree or above
+chips and polyester fibres
+Male
+0
+Net Assets
+RMB million
+18,683
+54,324
+100
+8,000
+RMB million
+(%)
+RMB million
+Total Assets
+Sinopec Corp.
+in 2017
+Whether
+paid by
+(RMB 1,000,
+before tax)
+the holding
+Company
+Equity interests in Sinopec Corp.
+(as of 31 December)
+2017
+Directors, Sup Employees
+Senior Management and E
+Senior Management and Employees
+Directors, Supervisors,
+71
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+(Net Loss) Principal Activities
+RMB million
+0
+No
+417.3
+0
+0
+Yes
+2016
+0
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+1,075
+Sinopec Great Wall Energy & Chemical
+Production and sale of polyester
+6
+5,264
+8,303
+100
+4,000
+Sinopec Yizheng Chemical Fibre Limited
+of crude oil
+Pipeline storage and transportation
+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
+2,724
+21,642
+38,752
+100
+22,761
+100
+35,303
+16,549
+Company Limited
+Sinopec Yangzi Petrochemical
+Exploration and Production Limited
+13,203
+28,786
+17,748
+2,277
+Company Limited
+Sinopec Pipeline Storage & Transportation
+12,000
+100
+Wang Dehua
+Ling Yiqun
+Huang Wensheng
+the holding
+(as of 31 December)
+Company
+2017
+2016
+866.3
+No
+0
+0
+Ling Yiqun
+Male
+55
+Former Vice President
+Yes
+13,000
+13,000
+Huang Wensheng
+0
+No
+892.9
+Vice President
+59
+Male
+Equity interests in Sinopec Corp.
+Chang Zhenyong
+0
+No
+892.9
+Vice President, Board Secretary
+51
+Male
+0
+paid by
+Whether
+Remuneration
+paid by
+Sinopec Corp.
+in 2017
+(RMB 1,000,
+before tax)
+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
+Lei Dianwu
+Chang Zhenyong
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+72
+Corp.
+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.
+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
+as Executive Director,
+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
+Ling Yiqun, aged 55, former
+Vice President of Sinopec
+Corp. Mr. Ling is a professor
+level senior engineer with
+2016, he was appointed as
+Chief Financial Officer of
+Sinopec Corp.
+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
+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.
+Lei Dianwu
+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
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+CFO
+Sinopec Corp.
+Position in
+51
+Male
+Wang Dehua
+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.
+Age
+Name
+List of Members of the Senior Management
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Senior Management and Employees
+Directors, Supervisors,
+73
+Gender
+Senior Management and E
+44,982
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Payments of taxes and levies
+Other cash paid relating to operating activities
+Sub-total of cash outflows
+Net cash flow from operating activities
+Cash flows from investing activities:
+Cash received from disposal of investments
+1,000,467
+1,304
+831,578
+1,323
+42,913
+85,932
+1,044,684
+918,833
+--------------
+(653,412)
+(504,152)
+(37,054)
+(35,190)
+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
+Cash paid to and for employees
+139,296
+(779,537)
+(926,963)
+(50,638)
+(35,502)
+(189,557)
+(200,995)
+117,721
+Cash paid for goods and services
+Sub-total of cash inflows
+Refund of taxes and levies
+(30,396)
+(45,763)
+(569,091)
+(536,380)
+506,440
+525,789
+(7,539)
+(155)
+506,097
+343
+946
+343
+946
+(66,217)
+(145,323)
+524,843
+252
+(6,553)
+(56,509)
+Cash received from sale of goods and rendering of services.
+Other cash received relating to operating activities
+Cash flows from operating activities:
+2016
+RMB million
+RMB million
+2017
+(582,298)
+Note
+CASH FLOW STATEMENT
+256
+55,535
+(11,250)
+52(b)
+(353)
+(599,487)
+(93,047)
+for the year ended 31 December 2017
+(107,115)
+1,885
+1,488
+(172,055)
+(214,654)
+(65,648)
+(60,864)
+(15,811)
+41,667
+Dai Houliang
+Vice Chairman, President
+The accompanying notes form part of these financial statements.
+Wang Dehua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+87
+Financial Statements (PRC)
+Financial Statements (PRC)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+for the year ended 31 December 2017
+Transaction with minority interests
+- Distributions to shareholders (Note 51)
+- Appropriation for surplus reserves
+5.
+4.
+3. Appropriations of profits:
+(21,826)
+Transactions with owners, recorded directly in
+shareholders' equity:
+2. Other comprehensive income (Note 36)
+1. Net profit
+Change for the period
+Balance at 1 January 2016
+equity
+attributable
+Total
+shareholders'
+Total comprehensive income
+(38,392)
+(192,828)
+(133,663)
+Cash flows from financing activities:
+Net cash flow from investing activities
+Sub-total of cash outflows
+Other cash paid relating to investing activities
+(39,505)
+(66,913)
+Cash received from borrowings
+(43,765)
+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
+(37,139)
+23,270
+Sub-total of cash inflows
+Cash paid for dividends or interest
+153,790
+106,407
+153,790
+106,407
+(36,765)
+(67,884)
+Cash repayments of borrowings
+(93,400)
+(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
+(134,168)
+(212,255)
+(1,288)
+(17,879)
+(928)
+2,539
+30,415
+23,590
+30,415
+23,590
+53
+557
+(120)
+(149)
+(67)
+408
+30,348
+23,998
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+85
+Financial Statements (PRC)
+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
+26,129
+Other cash received relating to operating activities
+Cash received from sale of goods and rendering of services.
+Cash flows from operating activities:
+for the year ended 31 December 2017
+CONSOLIDATED CASH FLOW STATEMENT
+86
+Financial Statements (PRC)
+Refund of taxes and levies
+29,487
+1,117
+725
+41,724
+2,365
+2,670
+158,373
+158,480
+513,514
+2,642
+633,114
+857,478
+66
+33
+39
+39
+RMB million
+726,178
+Net cash flow from operating activities
+3,851
+11,012
+2,812
+474
+24,434
+29,738
+1,784
+(413)
+10,614
+(887)
+38,058
+46
+33
+179
+14,044
+14,372
+43,519
+Cash flows from investing activities:
+Cash received from disposal of investments
+Cash received from returns on investments
+190,935
+52(a)
+(2,029,022)
+(102,490)
+(74,095)
+(2,512,636)
+(316,062)
+214,543
+(62,602)
+-----------
+2,243,565
+77,436
+2,163,695
+2,434
+2016
+RMB million
+(328,304)
+(1,547,868)
+(68,260)
+4,729
+8,506
+(82,392)
+(16,389)
+(57,627)
+(72,847)
+(70,948)
+40,898
+31,489
+66,932
+80
+2,914
+52,304
+440
+1,313
+4,028
+2,027
+Distributions to the original shareholders in the
+(2,041,977)
+2,703,571
+Cash paid for dividends, profits distribution or interest
+Cash repayments of borrowings
+Sub-total of cash inflows
+Including: Cash received from minority shareholders' capital contributions to subsidiaries
+Cash received from borrowings
+Cash received from capital contributions
+Cash flows from financing activities:
+Including: Subsidiaries' cash payments for distribution of
+Net cash flow from investing activities
+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 outflows
+-------------
+dividends or profits to minority shareholders
+Sub-total of cash outflows
+57,287
+2,644,126
+2,158
+2017
+RMB million
+Note
+Chief Financial Officer
+Wang Dehua
+Other cash paid relating to financing activities
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+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
+The accompanying notes form part of these financial statements.
+6. Distributions to minority interests
+Other
+to equity
+Total comprehensive income
+Transactions with owners, recorded directly
+in shareholders' equity:
+3. Appropriations of profits:
+- Appropriation for surplus reserves
+- Distributions to shareholders (Note 49)
+Other
+Share
+Capital comprehensive
+Specific
+Surplus
+Retained
+Total
+shareholders'
+capital
+RMB million
+121,071
+reserve
+RMB million
+68.716
+income
+RMB million
+(145)
+reserve
+RMB million
+313
+(16,829)
+(16,829)
+23,998
+23,590
+408
+408
+408
+2. Other comprehensive income
+23,590
+562,274
+175,679
+RMB million
+equity
+earnings
+RMB million
+reserves
+RMB million
+196.640
+23,590
+1. Net profit
+Change for the year
+Balance at 1 January 2016
+(47)
+(92)
+126
+3
+123
+123
+27
+(44,479)
+(32,702)
+(35,731)
+3,042
+(32,689)
+711
+(12,501)
+724
+(12,501)
+(13)
+(11,777)
+Total transactions with owners, recorded directly
+(20)
+199,682
+for the year ended 31 December 2017
+STATEMENT OF CHANGES IN EQUITY
+Chief Financial Officer
+Wang Dehua
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+88
+888
+The accompanying notes form part of these financial statements.
+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
+Vice Chairman, President
+in shareholders' equity
+----- (16,829)
+(16,829)
+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)
+(35,731)
+89
+3,042
+Total transactions with owners, recorded directly
+(32,689)
+(32,689)
+- Distributions to shareholders (Note 49)
+(3,042)
+- Appropriation for surplus reserves ----- 3,042
+in shareholders' equity
+3. Appropriations of profits:
+20
+121,071
+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.
+(75)
+Vice Chairman, President
+(55)
+567,269
+177,049
+199,682
+482
+196
+68,789
+Dai Houliang
+(32,689)
+in shareholders' equity:
+30.348
+182,440
+196,640
+393
+263
+68,769
+121,071
+121,071
+569,576
+Balance at 1 January 2017
+53
+53
+5. Others
+80
+80
+4. Net increase in specific reserve for the year
+Balance at 31 December 2016
+Transactions with owners, recorded directly
+68,769
+393
+30,415
+(67)
+(67)
+(67)
+66
+Total comprehensive income
+263
+2. Other comprehensive income
+30,415
+1. Net profit
+Change for the year
+569,576
+182,440
+196,640
+30,415
+RMB million
+(32,689)
+3,042
+7,052
+(719)
+6,333
+7,052
+46,416
+53,468
+12,035
+65,503
+combination of entities under common control
+-----(16,829)
+(30)
+··· (47) (4
+(16,829)
+(16,829)
+(30)
+263
+233
+(16,876)
+(2,167)
+in shareholders' equity
+Total transactions with owners, recorded directly
+2.137
+(2,137)
+- 7.052 40,410
+(2,137)
+7. Adjustment for the combination of entities under
+(6,146)
+(6,146)
+(86)
+(39)
+(47)
+common control (Note 53)
+59.170
+12,754
+46,416
+Minority
+shareholders of
+Retained
+reserves
+Surplus
+reserve
+RMB million
+Total
+shareholders'
+income
+RMB million
+121,071
+RMB million
+reserve
+Specific
+Capital comprehensive
+Share
+capital
+RMB million
+121,576
+(19,043)
+earnings
+interests
+46,416
+789,565
+112,027
+677,538
+245,623
+196.640
+the Company
+612
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+equity
+(7,984)
+(3,785)
+(22,828)
+8.
+3. Appropriations of profits:
+in shareholders' equity:
+Transactions with owners, recorded directly
+Total comprehensive income
+2. Other comprehensive income (Note 36)
+1. Net profit
+4.
+65,918
+47,638
+51,119
+(4,376)
+(895)
+(3,481)
+(3,481)
+18,280
+(3,481)
+- Appropriation for surplus reserves (Note 38)
+Transaction with minority interests
+(4,413)
+119,557
+45
+(13)
+(13)
+121,071
+- Distributions to shareholders(Note 51)
+Balance at 31 December 2017
+Net increase in specific reserve for the year
+6.
+| | |
+in shareholders' equity
+Total transactions with owners, recorded directly
+5. Distributions to minority interests
+7. Others
+(3,042)
+70,294
+51,119
+(932)
+119,525
+121,071
+Balance at 31 December 2016
+125
+9
+765
+116
+9. Others
+160
+7
+153
+153
+Net increase in specific reserve for the year
+116
+19,175
+196,640
+712,232
+51,119
+Change for the year
+832,525
+120,293
+712,232
+275,163
+275,163
+196,640
+(932)
+119,525
+121,071
+Balance at 1 January 2017
+832,525
+120,293
+765
+2016
+2017
+Note
+25
+120,734
+95,928
+26
+27
+7,162
+71,940
+1,618
+52,886
+232
+819
+28
+6,843
+84,850
+2,006
+77,630
+6,000
+29
+26,681
+579,446
+161,988
+16,136
+16,440
+7,661
+6,466
+39,298
+5,828
+174,301
+39,958
+31,370
+62,461
+67,754
+01203
+485,543
+38,972
+54,985
+6,462
+200,073
+30,374
+54,701
+17
+85,023
+97,126
+16
+129,581
+118,645
+8,634
+15
+650,774
+14
+116,812
+131,087
+13
+11,408
+690,594
+180,541
+6,353
+14,720
+234
+24
+23
+222222
+1,498,609
+1,086,348
+18
+1,066,455
+1,595,504
+28,662
+20
+7,214
+15,131
+19
+13,537
+25,826
+741,434
+666,084
+34
+Current liabilities
+Liabilities and shareholders' equity
+Total assets
+Total non-current assets
+Other non-current assets
+Deferred tax assets
+Short-term loans.
+Long-term deferred expenses
+Construction in progress
+Fixed assets
+Long-term equity investments
+Available-for-sale financial assets
+Non-current assets
+Total current assets
+Intangible assets
+Other current assets
+Bills payable
+Advances from customers
+9
+471
+38,332
+37,609
+88
+98,250
+92,545
+48,179
+157
+Accounts payable
+RMB million
+At 31 December
+At 31 December
+2017
+RMB million
+Note
+Other payables
+Taxes payable
+Employee benefits payable
+2016
+1,676
+Inventories
+Dividends receivable
+196,640
+199,682
+38
+765
+888
+37
+290,459
+(932)
+36
+119,525
+119,557
+35
+121,071
+121,071
+(4,413)
+Prepayments
+275,163
+712,232
+Other receivables
+Accounts receivable
+Financial assets at fair value through profit and loss
+Bills receivable
+Cash at bank and on hand
+Current assets
+Assets
+727,244
+as at 31 December 2017
+1,498,609
+1,595,504
+832.525
+854,070
+120,293
+126,826
+BALANCE SHEET
+47,493
+12
+529,049
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
+management.
+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 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.
+• 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.
+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.
+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.
+PricewaterhouseCoopers Zhong Tian LLP
+Shanghai, the People's Republic of China
+23 March 2018
+Signing CPA
+Zhao Jianrong
+(Engagement Partner)
+Signing CPA
+Gao Peng
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+81
+Financial Statements (PRC)
+Financial Statements (PRC)
+Total current assets
+Other current assets
+Inventories
+Prepayments
+Other receivables
+Accounts receivable
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
+Bills receivable
+Cash at bank and on hand
+Current assets
+Assets
+as at 31 December 2017
+FINANCIAL STATEMENTS PREPARED UNDER CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
+CONSOLIDATED BALANCE SHEET
+(A)
+Financial assets at fair value through profit and loss
+•
+•
+•
+• Assessed the methodology adopted in, and tested mathematical
+accuracy of the discounted cash flow projections.
+• 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.
+Independently estimated a range of discount rates, and found that the
+discount rates adopted by management were within the range.
+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.
+•
+• 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.
+• Evaluated the sensitivity analyses prepared by the Group, and assessed
+the potential impacts of a range of possible outcomes.
+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:
+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.
+Future crude oil prices;
+Future production profiles;
+Future cost profiles; and
+Discount rates.
+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:
+Refer to note 14 "FIXED ASSETS", note 44 “IMPAIRMENT LOSSES", and
+note 55 "PRINCIPAL ACCOOUNTING ESTIMATES AND JUDGEMENTS"
+to the consolidated financial statements.
+Recoverability of the carrying amount of fixed assets related to oil and
+gas producing activities
+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
+How our audit addressed the Key Audit Matter
+Non-current assets
+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
+•
+• 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.
+As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
+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.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Financial Statements (PRC)
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+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.
+RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
+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.
+Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
+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.
+Those charged with governance are responsible for overseeing Sinopec Corp.'s financial reporting process.
+Available-for-sale financial assets
+Long-term equity investments
+Fixed assets
+At 31 December
+2016
+RMB million
+At 31 December
+2017
+RMB million
+Note
+Chief Financial Officer
+Wang Dehua
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+5698901
+82
+Vice Chairman, President
+Dai Houliang
+These financial statements have been approved by the board of directors on 23 March 2018.
+Total liabilities and shareholders' equity
+Total shareholders' equity
+Total equity attributable to shareholders of the Company
+The accompanying notes form part of these financial statements.
+Minority interests
+165,004
+51,196
+20,422
+20,087
+156,511
+186,693
+11
+3,749
+142,497
+4,901
+16,467
+50,289
+68,494
+13,197
+16,207
+7
+25,596
+412,261
+Retained earnings
+Specific reserve
+Employee benefits payable
+Advances from customers
+Accounts payable
+Bills payable
+Short-term loans
+Liabilities and shareholders' equity
+Current liabilities
+Taxes payable
+Total assets
+Other non-current assets
+Deferred tax assets
+Long-term deferred expenses
+Goodwill
+Intangible assets
+Construction in progress
+Total non-current assets
+Surplus reserves
+Dividends payable
+Short-term debentures payable
+Other comprehensive income
+Capital reserve
+Share capital
+Shareholders' equity
+Total liabilities
+Total non-current liabilities
+Other payables
+Other non-current liabilities
+Provisions
+Debentures payable
+Long-term loans
+Non-current liabilities
+Total current liabilities
+Non-current liabilities due within one year
+Deferred tax liabilities
+80
+40,189
+5,454
+20,707
+Net profit
+70,294
+59,170
+Including: net profit of acquiree before the consolidation under common control
+86
+Classification by going concern:
+Continuous operating net profit
+70,294
+59,170
+Termination of net profit.
+Classification by ownership:
+Equity shareholders of the Company
+Minority interests
+Basic earnings per share
+Diluted earnings per share
+Net profit
+Other comprehensive income
+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:
+16,279
+Total comprehensive income
+Foreign currency translation differences
+Share of other comprehensive income of associates and joint ventures
+Changes in fair value of available-for-sale financial assets
+Cash flow hedges
+(net of tax and after reclassification adjustments):
+Items that may be reclassified subsequently to profit or loss
+Total other comprehensive income
+50
+Less: Income tax expense
+79,877
+Add: Non-operating income
+Operating profit
+Other income
+Asset disposal income
+Investment income
+(216)
+Less: Non-operating expenses
+(13)
+Add: Loss from changes in fair value
+17,076
+21,791
+44
+Impairment losses
+11,035
+45
+84
+Profit before taxation
+19,060
+86,573
+2,218
+1,709
+49
+4,706
+1,317
+46
+48
+86,965
+4,356
+47
+(1,487)
+(1,518)
+30,779
+77,389
+Annual Report 2017 CHINA PETROLEUM & CHEMICAL CORPORATION
+Wang Dehua
+Chief Financial Officer
+Profit before taxation
+Less: Non-operating expenses
+Add: Non-operating income
+Operating profit
+Other income
+Asset disposal income
+Less: Income tax expense
+Investment income
+Impairment losses
+Exploration expenses, including dry holes
+Financial expenses
+General and administrative expenses
+Selling and distribution expenses
+Taxes and surcharges
+Add: Gain from changes in fair value
+Less: Operating costs
+Net profit
+Continuous operating net profit
+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.
+Classification by going concern:
+Total 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
+Total other comprehensive income
+11,089
+Operating income
+INCOME STATEMENT
+0.383
+0.422
+0.383
+0.422
+12,754
+19,175
+70,294
+46,416
+16
+36
+22
+62
+62
+66
+51,119
+for the year ended 31 December 2017
+59,170
+2,014
+12,035
+18,280
+53,468
+47,638
+65,503
+65,918
+(1,580)
+6,333
+4,298
+(3,792)
+45
+1,053
+(24)
+(57)
+(4,376)
+16,327
+42/43
+6,611
+83,449
+75,787
+3,413
+2,360
+4,854
+312
+42,549
+32,423
+143,274
+113,841
+Short-term debentures payable
+6,000
+Non-current liabilities due within one year
+19,539
+38,082
+Total current liabilities
+317,563
+Specific reserve
+Other comprehensive income
+Capital reserve
+Share capital
+Shareholders' equity
+Total liabilities
+2,761
+Total non-current liabilities
+Deferred tax liabilities
+Provisions
+Debentures payable
+Long-term loans
+Non-current liabilities
+280,822
+Other non-current liabilities
+3,155
+9,256
+17,330
+345
+15
+14
+13
+777
+265,835
+395
+275,557
+318,861
+27,189
+46,942
+44,933
+3,454
+4,429
+10
+32,743
+63,667
+297
+329,814
+977,725
+1,002,495
+711,890
+683,634
+10,952
+10,690
+268,451
+6,834
+1.958
+7,913
+8,340
+49,277
+50,046
+373,020
+1,980
+58,448
+20,000
+36,000
+2,360,193
+39
+Taxes and surcharges
+Less: Operating costs
+Operating income
+RMB million
+1,930,911
+RMB million
+2017
+Note
+for the year ended 31 December 2017
+CONSOLIDATED INCOME STATEMENT
+Financial Statements (PRC)
+Financial Statements (PRC)
+2016
+83
+39/42
+1,492,165
+1,560
+41
+Financial expenses
+74,155
+78,928
+42
+1,890,398
+General and administrative expenses
+56,055
+42
+Selling and distribution expenses
+232,006
+235,292
+40
+49,550
+Exploration expenses, including dry holes
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2017
+Wang Dehua
+196
+68,769
+68,789
+121,071
+121,071
+408,149
+263
+435,226
+117,663
+2,607
+2,591
+505
+29,767
+31,405
+127,327
+Chief Financial Officer
+482
+Surplus reserves
+The accompanying notes form part of these financial statements.
+Vice Chairman, President
+Dai Houliang
+977,725
+569,576
+567,269
+1,002,495
+393
+These financial statements have been approved by the board of directors on 23 March 2018.
+Total shareholders' equity
+182,440
+177,049
+196,640
+199,682
+Retained earnings
+Total liabilities and shareholders' equity
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+1.371
+9
+(436)
+(16,751)
+3,842.0
+financing activities
+Short-term loans
+31,196
+44,692
+Non-current liabilities due
+69,490
+17,450
+(13,496)
+52,040
+(17,187)
+(30.2) Short-term loans repayment at maturity
+298.2
+Long-term loans
+39,625
+61,576
+Debentures payable
+19,157
+31,951
+Impairment losses
+(1,789)
+Cash received from disposal of
+35,996
+(11,605)
+56,546
+within one year
+Other cash paid relating to
+(1,095.7) The impact of New Lease Standard
+10,968
+(6,010)
+The table below sets forth reasons for those changes where the fluctuation was more than 30% during the reporting period:
+As of 31 December
+2019
+Increase/(decrease)
+Items
+Financial assets held for trading
+RMB million
+3,319
+2018
+RMB million
+Amount
+Percentage
+25,732
+Bills receivable
+7,886
+RMB million
+(22,413)
+(7,886)
+(%) Reasons for change
+(87.1) Structured deposit withdrawal at maturity of RMB 22.8 billion
+(100.0) According to the accounting standard, bills receivable held by the
+Company at the end of last year are presented in receivables financing
+Long-term deferred expenses
+8,930
+15,659
+(6,729)
+(43.0)
+Financial expenses
+9,967
+(1,001)
+(21,951)
+(12,794)
+9,816
+(20,550)
+Reclassification of items as some of the long-term loans
+(35.6) and debentures are about to due
+(40.0)
+(84.6) Decrease of impairment losses in current year
+(36.3) Decrease of structured deposit
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS
+Unit: RMB million
+Operating profit
+Items
+Turnover and other operating revenues
+Profit before taxation
+2019
+2,966,193
+For the year ended 31 December
+2018
+2,891,179
+2017
+2,360,193
+2016
+1,930,911
+2015
+2,020,375
+86,198
+82,264
+71,470
+77,193
+56,822
+89,927
+99,110
+86,697
+80,151
+56,411
+Profit attributable to shareholders of the Company
+57,465
+61,618
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+(18,550)
+4
+(32.0) Decrease of dividend declared
+investments
+Net cash received from disposal of
+703
+9,666
+(8,963)
+fixed assets, intangible assets and
+other long-term assets
+Cash paid for acquisition of fixed
+(141,142)
+(103,014)
+(38,128)
+assets, intangible assets and other
+(92.7) Relocation compensation entitled by subsidiaries last year not occurred
+in current year
+37.0 Increase of capital expenditure in natural gas pipelines and product
+structure adjustment project
+long-term assets
+Cash paid for acquisition of
+(16,334)
+(39,666)
+23,332
+(58.8) Decrease of structured deposit
+investments
+Cash paid for dividends, profits
+(59,523)
+(87,483)
+27,960
+distribution or interest
+215
+(22,413)
+3,319
+2,948
+3.90
+46.47
+percentage
+points
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+3
+Principal Financial Data and Indicators
+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
+Gain on holding and disposal of various investments
+Gain on remeasurement of interests in Shanghai SECCO
+Other non-operating expenses, net
+Subtotal
+Tax effect
+Total
+Attributable to: Equity shareholders of the Company
+Minority interests
+(4) Items measured by fair values
+For the year ended 31 December
+(Income)/expenses
+2019
+2018
+RMB million
+46.14
+RMB million
+50.04
+2.9
+points
+Weighted average return (excluding extraordinary gains and losses)
+on net assets (%)
+7.45
+8.20
+(0.75)
+6.37
+percentage
+points
+Net cash flow from operating activities per share
+1.267
+1.453
+(12.8)
+1.577
+As of 31 December
+2019
+Items
+RMB
+2018
+RMB
+Change
+2017
+%
+RMB
+Net assets attributable to equity shareholders of the Company per share
+Liabilities to assets ratio (%)
+6.105
+5.933
+6.007
+51,244
+1,318
+2017
+RMB million
+1,518
+Cash flow hedging
+Financial assets held for trading
+Total
+(5) Significant changes of items in the financial statements
+Beginning
+End
+of the year
+1,450
+of the year
+1,521
+Changes
+71
+Unit: RMB million
+Influence
+on the profit
+of the year
+492
+1,584
+48
+(1,536)
+(4,384)
+(7,268)
+(1,940)
+5,328
+(2,333)
+25,732
+21,498
+Derivative financial instruments
+742
+Other equity instruments
+1
+209
+180
+152
+(6,857)
+(7,482)
+(4,783)
+(410)
+(1,023)
+(148)
+(3,941)
+729
+(5,011)
+1,613
+(5,970)
+690
+(6,512)
+1,597
+2,312
+976
+(3,414)
+(3,658)
+(5,536)
+(3,320)
+(3,459)
+(5,537)
+(94)
+(199)
+Items
+percentage
+46,672
+Basic earnings per share (RMB)
+21,596,954
+0
+110,000,000
+0
+Note 1: As compared with the number of shares held as of 31 December 2018.
+Note 2: Sinopec Century Bright Capital Investment Limited, an overseas wholly-owned subsidiary of China Petrochemical Corporation, held 553,150,000 H shares,
+accounting for 0.46% of the total issued share capital of Sinopec Corp. Those shareholdings are included in the total number of the shares held by HKSCC
+Nominees Limited.
+Statement on the connected relationship or acting in concert among the above-mentioned shareholders:
+Apart from 中國人壽保險股份有限公司-分红-個人分紅-005L-FH002滬and 中國人壽保險股份有限公司 - 傳統 -普通保險產品-005L-CTO01滬
+which were both managed by +\, Sinopec Corp. is not aware of any connected relationship or acting in concert among or
+between the above-mentioned shareholders.
+6
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+(2) Information disclosed by the shareholders of H shares in accordance with the Securities and Futures Ordinance (SFO) as of 31 December
+2019
+171,333,093
+110,000,000
+Name of shareholders
+Citigroup Inc.
+GIC Private Limited
+(L): Long position, (S): Short position
+Status of shareholders
+Interest of corporation controlled by
+the substantial shareholder
+Interest of corporation controlled by
+the substantial shareholder
+Approved lending agent
+Investment manager
+3 ISSUANCE AND LISTING OF SECURITIES
+4
+(1) Issuance of securities during the
+reporting period
+BlackRock, Inc.
+0.09
+A Share
+0.14
+1,252,427,354
+(750,400)
+0
+A Share
+0.86
+1,038,859,102
+91,254,848
+0
+A Share
+0.47
+571,844,320
+(449,937,840)
+0
+A Share
+0.27
+322,037,900
+0
+0
+中國人壽保險股份有限公司分紅一個人分紅-005L-FH002滬
+中國人壽保險股份有限公司 - 傳統 - 普通保險產品 -005L-CT001滬
+匯添富基金管理股份有限公司-社保基金1103組合
+A Share
+0.17
+209,777,480
+27,819,820
+0
+A Share
+Not Applicable.
+(2) Existing employee shares
+Not Applicable.
+CHANGES IN THE CONTROLLING
+SHAREHOLDERS AND THE DE FACTO
+CONTROLLER
+51,630,422 (S)
+0.20 (S)
+2,547,370,819 (L)
+9.98 (L)
+1,532,082,422 (L)
+6.01 (L)
+(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
+China Petrochemical Corporation is the
+de facto controller of Sinopec Corp.
+(4) Diagram of the equity and controlling
+relationship between Sinopec Corp. and
+its de facto controller
+China Petrochemical
+Corporation
+68.77%
+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 2019
+7
+I and
+Changes phareholders
+Shareholdings of Principal S
+8
+CHAIRMAN'S ADDRESS
+Dear Shareholders and Friends:
+First, I would like to extend my sincere thanks
+for the trust of our shareholders and support
+of our directors, and for appointing me as
+the Chairman of the Company. On behalf
+of the Board of Directors, management and
+our entire staff, I would like to express my
+sincere gratitude to our shareholders and the
+community for your interest and support.
+Chairman's Address
+0.30 (L)
+1.03
+75,490,996 (L)
+7.91 (L)
+There was no change in the controlling
+shareholder and the de facto controller of
+Sinopec Corp. during the reporting period.
+(1) Controlling shareholder
+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. Zhang Yuzhuo.
+Through re-organization in 2000, China
+Petrochemical Corporation injected its
+principal petroleum and petrochemical
+businesses into Sinopec Corp. and
+Number of shares interested
+2,019,237,567 (L)
+retained certain petrochemical facilities.
+It provides well-drilling services,
+well-logging services, downhole operation
+services, services in connection with
+manufacturing and maintenance of
+production equipment, engineering
+construction, and utility services including
+water and power and social services.
+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
+2,907,856,000
+65.67%
+Sinopec Oilfield Service
+Corporation
+10,727,896,364
+56.51%
+Sinopec Oilfield Equipment
+Corporation
+351,351,000
+58.74%
+China Merchants Energy
+Shipping Co., Ltd
+912,886,426
+15.05%
+Note: China Petrochemical Corporation holds
+2,595,786,987 H shares of Sinopec Oilfield
+Service Corporation (the "SSC") through
+Sinopec Century Bright Capital Investment
+Ltd., a wholly-owned overseas subsidiary
+of China Petrochemical Corporation,
+accounting for 13.67% of the total share
+capital of SSC. Such shareholdings are
+excluded from the total shares of SSC
+directly held by China Petrochemical
+Corporation indicated above.
+1,128,000 (S)
+% of Sinopec Corp.'s issued
+voting shares (H Share)
+0.00 (S)
+A Share
+香港中央結算有限公司
+北京誠通金控投資有限公司
+Items
+Non-current assets
+Net current liabilities
+Non-current liabilities
+Non-controlling interests
+Total equity attributable to shareholders of the Company
+Net assets per share (RMB)
+Adjusted net assets per share (RMB)
+2019
+1,309,215
+As of 31 December
+2018
+2017
+1,088,188 1,066,455
+2016
+2015
+1,086,348
+1,113,611
+130,518
+60,978
+50,397
+73,282
+129,175
+302,862
+170,675
+163,168
+181,831
+196,275
+Unit: RMB million
+137,685
+1.772
+1.453
+0.475
+0.509
+0.423
+0.385
+0.269
+Diluted earnings per share (RMB)
+0.475
+0.509
+0.423
+0.385
+0.269
+Return on capital employed (%)
+8.99
+9.25
+8.26
+7.30
+5.23
+Return on net assets (%)
+7.79
+8.59
+7.06
+6.56
+4.81
+Net cash generated from operating activities per share (RMB)
+1.267
+1.577
+32,512
+139,251
+120,241
+Number of
+shares subject
+Name of shareholders
+China Petrochemical Corporation
+HKSCC Nominees Limited²
+中國證券金融股份有限公司
+Nature of Percentage of
+Shareholders shareholdings %
+Total number of
+State-owned Share
+68.31
+shares held
+82,709,227,393
+Changes of
+shareholding¹
+to pledges or
+lock-up
+0
+0
+H Share
+20.97
+25,387,409,005
+(3,251,433)
+Unknown
+A Share
+2.16
+2,609,312,057
+0
+0
+國新投資有限公司
+The shareholdings of top ten shareholders as of 31 December 2019 are listed as below:
+126,770
+(1) Shareholdings of top ten shareholders
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+111,964
+738,150
+717,284
+726,120
+710,994
+676,197
+6.097
+5.947
+5.924
+5.741
+5.997
+5.873
+5.585
+5.868
+5.808
+5.517
+3 MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER CASS AND IFRS PLEASE REFER TO PAGE 204 OF
+THE REPORT.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+5
+LO
+Principal Financial Data and Indicators
+of Principal Shareholders
+Shareholdings Share Capital and
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
+1
+CHANGES IN THE SHARE CAPITAL
+There is no change in the number and nature of shares of Sinopec Corp. during the reporting period
+As of 31 December 2019, the total number of shareholders of Sinopec Corp. was 478,617 including 472,818 holders of A shares and 5,799 holders
+of H shares. As of 29 February 2020, the total number of shareholders of Sinopec Corp. was 503,142. Sinopec Corp. has complied with requirement
+for minimum public float under the Hong Kong Listing Rules.
+7.14
+中央匯金資產管理有限責任公司
+8.67
+DEFINITIONS:
+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.
+COMPANY PROFILE
+AS APPROVED AT THE 12TH MEETING OF THE SEVENTH SESSION OF THE BOARD OF DIRECTORS OF SINOPEC CORP., THE BOARD PROPOSED A
+FINAL CASH DIVIDEND OF RMB 0.19 (TAX INCLUSIVE) PER SHARE FOR 2019, COMBINING WITH THE INTERIM CASH DIVIDEND OF RMB 0.12 (TAX
+INCLUSIVE) PER SHARE, THE TOTAL CASH DIVIDEND FOR 2019 WILL BE RMB 0.31 (TAX INCLUSIVE) PER SHARE. THE DIVIDEND PROPOSAL IS
+SUBJECT TO THE SHAREHOLDERS' APPROVAL AT THE ANNUAL GENERAL MEETING FOR THE YEAR 2019.
+THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 OF THE COMPANY PREPARED IN ACCORDANCE WITH THE PRC
+ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES (CASS) 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.
+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. ALL THE DIRECTORS OF SINOPEC CORP. ATTENDED THE 12TH MEETING OF THE SEVENTH SESSION OF
+THE BOARD. MR. ZHANG YUZHUO, CHAIRMAN OF THE BOARD, MR. MA YONGSHENG, PRESIDENT, MS. SHOU DONGHUA, CHIEF FINANCIAL
+OFFICER AND HEAD OF THE FINANCIAL 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
+REPORT OF SINOPEC CORP. FOR THE YEAR ENDED 31 DECEMBER 2019.
+COMPANY PROFILE
+Company Profile
+2
+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 27 March 2020 and unless
+required by regulatory authorities, the Company undertakes no obligation
+to update these statements.
+In this report, unless the context otherwise requires, the following terms shall have the meaning as set out below:
+Sinopec Corp.: China Petroleum & Chemical Corporation;
+Documents for Inspection
+Corporate Information
+211
+Financial Statements
+77
+Controlled Subsidiaries
+Principal Wholly-owned and
+76
+Senior Management and Employees
+Directors, Supervisors,
+60
+212
+Company: Sinopec Corp. and its subsidiaries;
+China Petrochemical Corporation: The controlling shareholder of Sinopec Corp., China Petrochemical Corporation;
+Sinopec Group: China Petrochemical Corporation and its subsidiaries;
+NDRC: China National Development and Reform Commission
+RMB million
+%
+RMB million
+RMB million
+Profit before taxation
+Operating profit
+Operating income
+Items
+2017
+Change
+2018
+For the year ended 31 December
+2019
+(1) Principal financial data
+1 FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH CASS
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+For domestic production of crude oil, 1 tonne = 7.1 barrels;
+For overseas production of crude oil: 1 tonne = 7.21 barrels;
+For production of natural gas, 1 cubic meter = 35.31 cubic feet;
+Refinery throughput is converted at 1 tonne = 7.35 barrels.
+CONVERSION:
+New Lease Standard: IFRS 16, 'Leases'; No. 21 Accounting Standards for Business Enterprises- Leases which was revised and released by the Ministry
+of Finance in 2018.
+Hong Kong Listing Rules: Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
+Hong Kong Stock Exchange: The Stock Exchange of Hong Kong Limited
+CSRC: China Securities Regulatory Commission.
+RMC: Oil and Natural Gas Reserves Management Committee of the Company;
+Report of the Board of Supervisors
+58
+Report of the Board of Directors
+Corporate Governance
+(0.77)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+27 March 2020
+Beijing, China
+Zhang Yuzhuo
+Chairman
+Only with great courage, ambition and
+momentum can a company strive and thrive.
+Sinopec Corp. is endowed with a complete
+industrial chain, and its integrated competitive
+advantages are clear, especially in the
+Company's strong market presence, branding,
+capital resources, and human talent. I firmly
+believe that with the concerted efforts of our
+Board of Directors, management and entire
+staff, as well as support from our shareholders
+and the community, Sinopec Corp. will surely
+develop in distinct ways that are more efficient
+and of higher quality, which in turn will
+create greater value for shareholders and the
+community.
+business, the Company will closely monitor
+market demand, optimize the system, promote
+construction of advanced production capacity,
+and fully develop the potential of the marketing
+network and improve the quality of operations.
+In terms of the chemicals business, the
+Company will accelerate the supply of high-end
+synthetic materials, develop a more competitive
+and advantageous basic chemical product
+chain and improve marketing services and
+efficiency, by ways of focusing on technological
+progress and extending the production chain,
+etc.Additionally, the Company will accelerate
+key research on core technologies, enhance the
+capability of proprietary innovation, speed up
+low-carbon transformation, and improve the
+efficiency of energy conversion to reduce carbon
+emissions, which we expect will give rise to a
+core competency in green development. In 2020,
+the planned capital expenditure of the Company
+amounts to RMB 143.4 billion.
+The Company will focus on promoting structural
+adjustment and continuously improving its
+core competence. In the upstream business,
+the Company will implement the action plan of
+vigorously enhancing oil and gas exploration
+and development, focusing on high-quality
+exploration and profit-driven production, and
+further consolidating the oil and gas resource
+base. In the meantime, the Company will adopt
+an integrated approach to the clean and efficient
+use of new energy, renewable energy and coal
+resources, and promote diversification of the
+energy mix. As for the refining and marketing
+The Company will continue to deepen the
+reform of its systems and mechanisms,
+further improve its corporate governance
+system and enhance governance capabilities.
+With headquarters acting as the center of
+restructuring, the Company will further advance
+reforms of its management system and
+market-oriented operation mechanism. It will
+strengthen construction of its systems, improve
+management, and better mobilize initiatives in
+every aspect so as to constantly increase the
+ability to create synergies, raise efficiency and
+mitigate risks.
+Challenges always arise with opportunities. The
+Company will continue to adhere to the overall
+strategy of "making progress while maintaining
+stability," and to that end will implement new
+development philosophies and energy security
+strategies, as well as further strengthen
+corporate governance. The Company will also
+continue to focus on supply-side structural
+reform. Exercising comprehensive and strict
+governance over the Party, coupled with the
+strategy of the Talent Empowering Enterprise
+Scheme, the Company will continue to leverage
+its advantages of integration, aiming to realize
+a development pattern with energy resources
+as the backbone, clean energy and synthetic
+materials as two development wings, and new
+energy, new economies, and new fields as
+important growth points.
+Looking forward, the global economy will face
+more instability and uncertainty brought by the
+outbreak. Although the virus may temporarily
+impact the Chinese economy, we firmly believe
+that China's solid economic fundamentals
+will remain unchanged and the country's
+potential and momentum will remain strong.
+A combination of preferential policies and
+measures oriented to enterprises set out by the
+Chinese government is supporting the rapid
+recovery of the economy while reducing the
+impact brought by the virus. We believe that as
+the control and prevention of outbreak continues
+to improve domestically, the domestic demand
+for petroleum and petrochemical products that
+was suppressed and frozen will rebound quickly.
+At the beginning of 2020, the sudden outbreak
+of coronavirus struck China and impacted
+the global economy. Confronted with the
+outbreak, President Xi Jinping attached great
+importance to deploying relief actions by giving
+overall instructions directly. In response to the
+outbreak, the Company acted promptly and
+proactively. While maintaining stable production
+and operation, the Company gave full play to
+its industrial advantages, exerted full force to
+produce raw materials for medical and health
+supplies, and cooperated with related enterprises
+to produce medical supplies in urgent need,
+including masks and protective suits for affected
+areas. Moreover, with the advantages of our
+sales network, the Company spared no effort
+to guarantee the market supply of oil and gas,
+innovate service models, and enable the public
+to purchase articles for daily use conveniently,
+thereby making our contribution to win the
+battle against the virus.
+The hard-won achievements in 2019 were
+attributed to the arduous efforts and altruistic
+dedication of the Company's Board of Directors,
+the Board of Supervisors, the management
+and the entire staff. Due to reassignment
+and retirement, Mr. Dai Houliang, Mr. Li
+Yunpeng, and Mr. Liu Zhongyun no longer hold
+positions in the Company. During their tenure,
+they worked diligently, fulfilled their duties
+and contributed greatly to the Company. In
+particular, Mr. Dai Houliang, former Chairman of
+the Board, made outstanding contributions and
+played an essential role in improving corporate
+governance, advancing reforms and innovation,
+and achieving sustainable growth. On behalf of
+the Board of Directors, I would like to extend my
+sincere gratitude to all of them!
+strived to develop clean energy. Green enterprise
+and energy efficiency upgrading campaigns were
+undertaken to reduce greenhouse gas emissions
+and protect the ecological environment
+and biodiversity. We also took great care in
+implementing our HSSE management system
+that ensures safe production and occupational
+health, and protects the physical and mental
+health of all employees. We made greater
+efforts to implement targeted poverty alleviation
+and achieved fruitful results, including poverty
+alleviation programs focused on industry,
+education and consumption. To benefit as many
+people as possible, we actively and consistently
+participated in various social welfare initiatives.
+In addition, we honored the traditional and
+cultural characteristics of the communities where
+we operate, and regularly promoted economic
+development and environmental protection in the
+communities around our projects. In so doing,
+we fully demonstrated our commitment to being
+a responsible global corporate citizen, which
+received high recognition at home and abroad.
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Chairman's Address
+Corporate social responsibilities effectively
+fulfilled. We took proactive measures to combat
+climate change and implement green and
+low-carbon development strategies, as well as
+Quality improved in stable operation. We
+maintained safe and stable production
+operations, continued to deepen supply-side
+structural reforms and sped up the construction
+of key projects to ensure stable growth and
+improve the quality of the industry chain. As
+for the upstream business, greater efforts were
+made in oil and gas exploration, achieving
+satisfactory results in increasing reserves,
+stabilizing oil production, increasing gas output,
+and reducing costs. The domestic oil and gas
+reserve replacement ratio reached 138.7%, and
+market share of natural gas further increased.
+The refining and marketing businesses navigated
+through fierce market competition with product
+portfolio better adapted to market demand.
+Simultaneously, production and sales volume
+increased, and the pace of construction of
+comprehensive services and the application
+of artificial intelligence at service stations was
+accelerated. Underpinned by rapid growth of
+the overall volume and strengthening structural
+adjustment of the chemicals business,
+development of high value-added synthetic
+materials achieved remarkable progress. In
+addition, we actively nurtured new businesses
+and operations and provided new impetus for
+transformation and upgrading. Furthermore,
+we implemented innovation-driven development
+strategies, built joint innovation platforms, and
+achieved breakthroughs in major technologies
+and a series of R&D projects. The evaluation of
+the comprehensive advantages of our patents
+also continued to be at the forefront of our
+domestic enterprises' efforts.
+their duties and functions professionally,
+making great contributions to our sustainable
+development. The Company also revised and
+improved its Articles of Association and other
+governing documents, as well as implemented
+effective risk control measures. Additionally, the
+Company launched the Integrity Compliance
+Management Manual in its continued effort to
+further strengthen its compliance management
+system. Further, the Company deepened
+management system reforms and adjusted
+internal departments in an orderly manner so
+as to continuously improve our professional
+management. We attached great importance to
+shareholder returns, enhanced communications
+with stakeholders, and protected investors'
+interests in an effort to consistently increase
+corporate transparency. Meanwhile, we strived
+to transform the advantage of Party building
+into our competitive business advantage through
+effective integration of these two efforts.
+The Company was awarded "Best Corporate
+Governance for a Publicly Listed Company" by
+the Golden Bauhinia Awards.
+Corporate governance continuously improved.
+The Board of Directors enhanced its scientific
+approach to decision-making and optimised
+development strategies and implementation
+plans. The independent directors performed
+Progress achieved and stability ensured. In
+accordance with International Financial Reporting
+Standards, our turnover and other operating
+revenues grew by 2.6% year-on-year to RMB
+2.97 trillion while operating profit grew by 4.8%
+year-on-year to RMB 86.2 billion, and profit
+attributable to shareholders of the Company
+amounted to RMB 57.5 billion. The Company
+remained in a solid financial position with stable
+cash flow. In view of the Company's funding
+requirements, return on equity, profitability and
+cash flow for future development, the Board of
+Directors recommended the payment of a final
+dividend of RMB 0.19 per share. Taking into
+account the interim dividend of RMB 0.12 per
+share, the total dividend for the year was RMB
+0.31 per share, with a dividend payout ratio of
+65.3%.
+manner. Significantly, the Company achieved
+better than expected operating results and made
+new progress in all fronts as we continuously
+deepened reform, exercised effective risk
+management, stabilised growth, and adjusted
+the operating structure while guaranteeing
+safety.
+In 2019, global economy slowdown while
+China's economy remained overall stable. With
+international oil prices fluctuating within a
+wide range and new production capacity for
+refinery and petrochemicals being excessively
+released, market competition increased
+dramatically. As a result, the internal and
+external risks and challenges faced by the
+Company have increased significantly. In such
+a complicated and difficult market, with focus
+on both short and long-term goals in mind, the
+Board of Directors adhered to the guideline of
+pursuing progress while maintaining stability.
+Furthermore, it concentrated on modernizing the
+company's corporate governance systems and
+capabilities, and deepening reforms to sustain
+continuous growth and development. Under
+the management's leadership, our employees
+demonstrated dedication and a conscientious
+and responsible work spirit, and implemented
+all practices with discipline and in a professional
+中国石化
+2,966,193
+中国石化
+|lopec
+43
+Connected Transactions
+40
+Significant Events
+31
+19
+11
+8
+Management's Discussion and Analysis
+Business Review and Prospects
+Chairman's Address
+of Principal Shareholders
+Changes in Share Capital and Shareholdings
+Principal Financial Data and Indicators
+Company Profile
+CONTENTS
+236
+中国石化 SINOPEC
+SINOPEC CORP.
+中国石油化工股份有限公司
+AND ACCOUNTS
+ANNUAL REPORT
+2019
+ODEC SINOPEC
+2,891,179
+50
+2,360,193
+121,071,210
+727,244
+2.9
+718,355
+739,169
+741,434
+1,595,504
+19.5
+734,649
+10.2
+1,592,308
+1,755,071
+878,166
+2017
+RMB million
+%
+Change
+2018
+RMB million
+2019
+RMB million
+As of 31 December
+153,420
+72,022
+48,480
+47,527
+54,271
+121,071,210
+7.90
+For the year ended 31 December
+2018
+2.6
+0.376
+(9.1)
+0.493
+0.448
+Basic earnings per share (excluding extraordinary gains and losses)
+Weighted average return on net assets (%)
+0.422
+(8.7)
+0.521
+0.476
+Diluted earnings per share
+0.422
+(8.7)
+0.521
+0.476
+Basic earnings per share
+RMB
+%
+RMB
+RMB
+Items
+2017
+Change
+2019
+12,725
+121,071,210
+16,081
+Operating income
+Items
+190,935
+(12.8)
+175,868
+45,582
+(9.0)
+59,630
+54,271
+153,420
+51,119
+(8.7)
+63,089
+57,591
+Net profit attributable to equity shareholders of the Company
+86,573
+(10.4)
+100,502
+90,016
+86,965
+(11.3)
+101,474
+11,095
+90,025
+Net profit attributable to equity shareholders of the Company
+Net profit attributable to equity shareholders of the Company
+excluding extraordinary gains and losses
+Net cash flow from operating activities
+Net profit attributable to equity shareholders of the Company excluding
+extraordinary gains and losses
+Net cash flow from operating activities
+57,591
+14,370
+(14,609)
+Items
+14,310
+11,943
+16,575
+2,966,193
+732,888
+781,417
+717,579
+14,763
+RMB million
+RMB million
+Total
+734,309
+Total liabilities
+Quarter
+RMB million
+Fourth
+Third
+Second
+Quarter
+RMB million
+First
+Quarter
+RMB million
+For the year of 2019
+(2) Principal financial indicators
+Total equity attributable to equity shareholders of the Company
+Total number of shares (1,000 shares)
+Quarter
+Total assets
+(c) The impairment assessment method and provision accrual on investment
+The impairment assessment and provision accrual on investments in subsidiaries, associates and joint ventures are stated in Note 3(12).
+(6) Leases
+A lease is a contract that a lessor transfers the right to use an identified asset for a period of time to a lessee in exchange for consideration.
+(a) As Lessee
+The Group recognises a right-of-use asset at the commencement date, and recognises the lease liability at the present value of the lease
+payments that are not paid at that date. The lease payments include fixed payments, the exercise price of a purchase option if the Group is
+reasonably certain to exercise that option, and payments of penalties for terminating the lease if the lease term reflects the Group exercising
+that option, etc. Variable payments that are based on a percentage of sales are not included in the lease payments, and should be recognised
+in profit or loss when incurred. Lease liabilities to be paid within one year (including one year) from balance sheet date is presented in non-
+current liabilities due within one year.
+Right-of-use assets of the Group mainly comprise land. Right-of-use assets are measured at cost which comprises the amount of the initial
+measurement of the lease liability, any lease payments made at or before the commencement date, any initial direct costs incurred by the
+lessee, less any lease incentives received. The Group depreciates the right-of-use assets over the shorter of the asset's useful life and the
+lease term on a straight-line basis. When the recoverable amount of a right-of-use asset is less than its carrying amount, the carrying amount
+is reduced to the recoverable amount.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+(b) As Lessor
+A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating lease is a
+lease other than a finance lease.
+When the Group leases self-owned plants and buildings, equipment and machinery, lease income from an operating lease is recognised on a
+straight-line basis over the period of the lease. The Group recognises variable lease income which is based on a certain percentage of sales
+as rental income when occurred.
+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 venture 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.
+Payments associated with short-term leases with lease terms within 12 months and leases for which the underlying assets are individually
+of low value when it is new are recognised on a straight-line basis over the lease term as an expense in profit or loss or as cost of relevant
+assets, instead of recognising right-of-use assets and lease liabilities.
+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.
+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.
+(b) Investment in joint ventures and associates (Continued)
+(5) Long-term equity investments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+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.
+93
+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.
+Financial Statements (PRC)
+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.
+For the year ended 31 December 2019
+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.
+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(12)). 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.
+Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes produced and reserves.
+(9) Intangible assets
+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.
+(8) 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
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Estimated Estimated rate
+useful life of residual value
+12.50 years
+3%
+4-30 years
+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:
+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.
+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.
+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.
+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.
+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(19)), 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.
+Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment losses (see Note 3(12)). Construction in
+progress is stated in the balance sheet at cost less impairment losses (see Note 3(12)).
+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.
+(7) Fixed assets and construction in progress
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+3%
+(b) Investment in joint ventures and associates
+For the year ended 31 December 2019
+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.
+(c) Method for preparation of consolidated financial statements (Continued)
+(1) Accounting treatment of business combination involving entities under common control and not under common control (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+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 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.
+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 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 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 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 original subsidiary shall be converted into the current investment income in the event of loss
+of control.
+(c) Method for preparation of consolidated financial statements
+(b) Business combination involving entities not 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.
+(a) Business combination involving entities under common control
+(1) Accounting treatment of business combination involving entities under common control and not under common control
+Principal accounting estimates and judgements of the Group are set out in Note 56.
+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 financial assets (Note 3(11)), valuation of inventories (Note 3(4)), depreciation of fixed assets
+and depletion of oil and gas properties (Note 3(7), (8)), measurement of provisions (Note 3(16)), etc.
+3 SIGNIFICANT ACCOUNTING POLICIES
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+90
+94
+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(10)) 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.
+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 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.
+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.
+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.
+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(12)) in the balance sheet. At initial recognition, such investments are
+measured as follows:
+(a) Investment in subsidiaries
+(5) Long-term equity investments
+Inventories are recorded by perpetual method.
+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.
+(4) Inventories (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+92
+Financial Statements (PRC)
+91
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+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.
+At the balance sheet date, inventories are stated at the lower of cost and net realisable value.
+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 mainly 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.
+(4) Inventories
+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.
+(3) Cash and cash equivalents
+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.
+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 other equity
+instrument investments; or charged to the income statement if it is measured at fair value through profit or loss.
+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.
+(2) Transactions in foreign currencies and translation of financial statements in foreign currencies
+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.
+94
+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.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(15) Income tax
+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.
+Long-term deferred expenses are amortised on a straight-line basis over their beneficial periods.
+(14) Employee benefits
+(13) Long-term deferred expenses
+Impairment losses for assets are not reversed.
+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.
+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).
+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.
+(12) Impairment of other non-financial long-term assets (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+Financial Statements (PRC)
+98
+Financial Statements (PRC)
+97
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+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, right-of-use assets, goodwill, intangible assets and investments in subsidiaries, associates and joint ventures
+may be impaired.
+(12) Impairment of other non-financial long-term assets
+When the hedging relationship no longer meets the risk management objective on the basis of which it qualified for hedge accounting (ie
+the entity no longer pursues that risk management objective), or when a hedging instrument expires or is sold, terminated, exercised,
+or there is no longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk starts
+to dominate the value changes that result from that economic relationship or no longer meets the criteria for hedge accounting, the
+Group discontinues prospectively the hedge accounting treatments. If the hedged future cash flows are still expected to occur, that
+amount shall remain in the cash flow hedge reserve and shall be accounted for as cash flow hedges. If the hedged future cash flows
+are no longer expected to occur, that amount shall be immediately reclassified from the cash flow hedge reserve to profit or loss as a
+reclassification adjustment. A hedged future cash flow that is no longer highly probable to occur may still be expected to occur, if the
+hedged future cash flows are still expected to occur, that amount shall remain in the cash flow hedge reserve and shall be accounted
+for as cash flow hedges.
+If the amount that has been accumulated in the cash flow hedge reserve is a loss and the Group expects that all or a portion of that
+loss will not be recovered in one or more future periods, the Group immediately reclassify the amount that is not expected to be
+recovered into profit or loss.
+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).
+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.
+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 realise the asset and settle the liability simultaneously.
+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.
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (PRC)
+99
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+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 in the capitalisable period.
+(19) 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.
+(18) Government grants
+Sales are recognised when control of the goods have transferred, being when the products are delivered to the customer. Advance from
+customers but goods not yet delivered is recorded as contract liabilities and is recognised as revenues when a customer obtains control over the
+relevant goods.
+Sales of goods
+The Group sells crude oil, natural gas, petroleum and chemical products, etc. Revenue is recognised according to the expected consideration
+amount, when a customer obtains control over the relevant goods or services. To determine whether a customer obtains control of a promised
+asset, the Group shall consider indicators of the transfer of control, which include, but are not limited to, the Group has a present right to
+payment for the asset; the Group has transferred physical possession of the asset to the customer; the customer has the significant risks and
+rewards of ownership of the asset; the customer has accepted the asset.
+Revenue arises in the course of the Group's ordinary activities, and increases in economic benefits in the form of inflows that result in an
+increase in equity, other than those relating to contributions from equity participants.
+(17) 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.
+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.
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+For cash flow hedges, other than those covered by the preceding two policy statements, that amount shall be reclassified from the
+cash flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods during which the hedged.
+expected future cash flows affect profit or loss.
+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.
+the taxable entity has a legally enforceable right to offset current tax assets and current tax liabilities; and
+they relate to income taxes levied by the same tax authority on either:
+the same taxable entity; or
+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.
+(16) Provisions
+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.
+At the balance sheet date, deferred tax assets and liabilities are offset if all the following conditions are met:
+The cumulative change in present value of the expected future cash flows on the hedged item from inception of the hedge.
+The gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income.
+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 hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged
+forecast transaction for a non-financial asset or a non-financial liability becomes a firm commitment for which fair value hedge
+accounting is applied, the entity shall remove that amount from the cash flow hedge reserve and include it directly in the initial cost
+or other carrying amount of the asset or the liability. This is not a reclassification adjustment and hence it does not affect other
+comprehensive income.
+(15) Income tax (Continued)
+-
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+96
+Financial Statements (PRC)
+95
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+The Group measures the expected credit losses of financial instruments on different stages at each balance sheet date. For financial
+instruments that have no significant increase in credit risk since the initial recognition, on first stage, the Group measures the loss
+allowance at an amount equal to 12-month expected credit losses. If there has been a significant increase in credit risk since the initial
+recognition of a financial instrument but credit impairment has not occurred, on second stage, the Group recognises a loss allowance
+at an amount equal to lifetime expected credit losses. If credit impairment has occurred since the initial recognition of a financial
+instrument, on third stage, the Group recognises a loss allowance at an amount equal to lifetime expected credit losses.
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past
+events, current conditions and forecasts of future economic conditions.
+The Group recognises a loss allowance for expected credit losses on financial assets measured at amortised cost and receivables
+financing measured at fair value through other comprehensive income.
+(ii) Impairment
+In addition, the Group designates some equity instruments that are not held for trading as financial assets at fair value through other
+comprehensive income, and presented in other equity instrument investments. The relevant dividends of these financial assets are
+recognised in profit or loss. When derecognised, the cumulative gain or loss previously recognised in other comprehensive income is
+transferred to retained earnings.
+Equity instruments that the Group has no power to control, jointly control or exercise significant influence over, are measured at fair value
+through profit or loss and presented as financial assets held for trading.
+Equity instruments
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+The business model for managing such financial assets by the Group are held for collection of contractual cash flows and for
+selling the financial assets, the contractual cash flow characteristics of such financial assets are consistent with the basic lending
+arrangements. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of
+impairment gains or losses, foreign exchange gains and losses and interest income calculated using the effective interest rate method,
+which are recognised in profit or loss. The financial assets include receivables financing.
+Measured at amortised cost:
+The debt instruments held by the Group refer to the instruments that meet the definition of financial liabilities from the perspective of the
+issuer, and are measured in the following ways:
+Debt instruments
+Financial assets are initially recognised at fair value. For financial assets measured at fair value through profit or loss, the relevant
+transaction costs are recognised in profit or loss. The transaction costs for other financial assets are included in the initially recognised
+amount. However, accounts receivable or bills receivable arising from sales of goods or rendering services, without significant financing
+component, are initially recognised based on the transaction price expected to be entitled by the Group.
+The Group classifies financial assets into different categories depending on the business model for managing the financial assets and the
+contractual terms of cash flows of the financial assets: (1) financial assets measured at amortised cost, (2) financial assets measured at
+fair value through other comprehensive income, (3) financial assets measured at fair value through profit or loss. A contractual cash flow
+characteristic which could have only a de minimis effect, or could have an effect that is more than de minimis but is not genuine, does
+not affect the classification of the financial asset.
+(i) Classification and measurement
+(a) Financial assets
+Financial instruments, refer to the contracts that form one party's financial assets and form the financial liabilities or equity instruments of the
+other party. The Group recognises a financial asset or a financial liability when the Group enters into and becomes a party to the underlining
+contract of the financial instrument.
+(11) Financial Instruments
+Goodwill is not amortised and is stated at cost less accumulated impairment losses (see Note 3(12)). 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.
+(10) Goodwill
+The cumulative gain or loss on the hedging instrument from inception of the hedge;
+For the year ended 31 December 2019
+Measured at fair value through other comprehensive income:
+(11) Financial Instruments (Continued)
+The business model for managing such financial assets by the Group are held for collection of contractual cash flows. The contractual
+cash flow characteristics are to give rise on specified dates to cash flows that are solely payments of principal and interest on the
+principal amount outstanding. Interest income from these financial assets is recognised using the effective interest rate method. The
+financial assets include cash at bank and on hand and receivables.
+(ii) Impairment (Continued)
+A hedging instrument is a designated derivative whose changes in cash flows are expected to offset changes in the cash flows of the hedged
+item.
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(11) Financial Instruments (Continued)
+Hedged items are the items that expose the Group to risks of changes in future cash flows and that are designated as being hedged and that
+must be reliably measurable. The Group's hedged items include a forecast transaction that is settled with an undetermined future market
+price and exposes the Group to risk of variability in cash flows, etc.
+(d) Derivative financial instruments and hedge accounting (Continued)
+(1) There is an economic relationship between the hedged item and the hedging instrument, which share a risk and that gives rise to opposite
+changes in fair value that tend to offset each other.
+(2) The effect of credit risk does not dominate the value changes that result from that economic relationship.
+(3) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually
+hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. However, that
+designation shall not reflect an imbalance between the weightings of the hedged item and the hedging instrument.
+(a) Financial assets (Continued)
+Cash flow hedges
+Cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a
+component of, a recognised asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable
+forecast transaction, and could affect profit or loss. As long as a cash flow hedge meets the qualifying criteria for hedge accounting,
+the hedging relationship shall be accounted for as follows:
+The hedging relationship meets all of the following hedge effectiveness requirements:
+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, to represent the effect of risk management activities.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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 profit or loss, except where the derivatives qualify for hedge accounting.
+For financial instruments that have low credit risk at the balance sheet date, the Group assumes that there is no significant increase in
+credit risk since the initial recognition, and measures the loss allowance at an amount equal to 12-month expected credit losses.
+(d) Derivative financial instruments and hedge accounting
+If there is an active market for financial instruments, the quoted price in the active market is used to measure fair values of the financial
+instruments. If no active market exists for financial instruments, valuation techniques are used to measure fair values. In valuation, the Group
+adopts valuation techniques that are applicable in the current situation and have sufficient available data and other information to support it,
+and selects input values that are consistent with the asset or liability characteristics considered by market participants in the transaction of
+relevant assets or liabilities, and gives priority to relevant observable input values. Use of unobservable input values where relevant observable
+input values cannot be obtained or are not practicable.
+(c) Determination of fair value
+Where the present obligations of financial liabilities are completely or partially discharged, the Group derecognises these financial liabilities
+or discharged parts of obligations. The differences between the carrying amounts and the consideration received are recognised in profit or
+loss.
+The Group's financial liabilities are mainly financial liabilities measured at amortised cost, including bills payable, accounts payable, other
+payables, loans and debentures payable, etc. These financial liabilities are initially measured at the amount of their fair value after deducting
+transaction costs and use the effective interest rate method for subsequent measurement.
+The Group, at initial recognition, classifies financial liabilities as either financial liabilities subsequently measured at amortised cost or
+financial liabilities at fair value through profit or loss.
+(b) Financial liabilities
+On derecognition of other equity instrument investments, the difference between the carrying amounts and the sum of the consideration
+received and any cumulative gain or loss previously recognised in other comprehensive income, is recognised in retained earnings. While
+on derecognition of other financial assets, this difference is recognised in profit or loss.
+For financial instruments on the first stage and the second stage, and that have low credit risk, the Group calculates interest income
+according to carrying amount without deducting the impairment allowance and effective interest rate. For financial instruments on the
+third stage, interest income is calculated according to the carrying amount minus amortised cost after the provision of impairment
+allowance and effective interest rate.
+The Group derecognises a financial asset when a) the contractual right to receive cash flows from the financial asset expires; b) the Group
+transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset; c) the financial assets have
+been transferred and the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, but
+the Group has not retained control.
+The Group recognises the loss allowance accrued or written back in profit or loss.
+(iii) Derecognition
+For accounts receivable, bills receivable and receivables financing related to revenue, the Group measures the loss allowance at an
+amount equal to lifetime expected credit losses.
+Current assets
+Cash and cash equivalents
+1,154
+7,388
+RMB million
+1,582
+5,603
+2018
+At
+At
+At
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2019
+2018
+2019
+2018
+2019
+2018
+2019
+2019
+RMB million RMB million RMB million
+RMB million RMB million
+At
+Sinopec SABIC Tianjin
+At
+4,485
+YASREF
+At
+Taihu
+At
+At
+2018
+RMB million RMB million
+7,377
+11,977
+733
+BASF-YPC
+At
+6,091
+16,636
+17,580
+Total current assets
+4,007
+10,267
+11,311
+3,406
+3,689
+5,795
+4,937
+9,248
+6,821
+Other current assets
+5,110
+3,242
+930
+2,336
+4,501
+manufacturing
+RMB million RMB million
+Peng Yi
+PRC
+PRC
+Zhongtian Synergetic Energy Company Limited
+("Zhongtian Synergetic Energy")
+petrochemical products
+RUB
+10.00%
+21,784 million
+Processing natural gas and
+ΝΑ
+Russia
+Russia
+PAO SIBUR Holding ("SIBUR") (i)
+financial services
+49.00%
+18,000
+7,095
+Zhao Dong
+Provision of non-banking
+Mining coal and
+At
+17,516
+manufacturing of
+FREP
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+(b) Major financial information of principal joint ventures
+13 LONG-TERM EQUITY INVESTMENTS (Continued)
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+107
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Except that SIBUR is a public joint stock company, other joint ventures and associates above are limited companies.
+50.00%
+10,000 USD
+Crude oil and natural gas
+extraction
+ΝΑ
+British Virgin
+Islands
+The Republic of
+Kazakhstan
+Caspian Investments Resources Ltd. ("CIR")
+coal-chemical products
+38.75%
+12,044
+(1,963)
+7,743
+PRC
+(2,271)
+(1,984)
+(17)
+(35)
+(279)
+(290)
+Other non-current liabilities
+(3,651)
+(4,592)
+(32,364)
+(29,445)
+(72)
+(125)
+(218)
+(12,454)
+(11,185)
+Non-current financial liabilities
+Non-current liabilities
+(937)
+(3,007)
+(368)
+Total non-current liabilities
+12,746
+11,235
+11,785
+13,293
+15,681
+14,509
+17,035
+15,002
+Net assets
+(3,982)
+(4,960)
+(33,301)
+(31,408)
+(2,343)
+(2,109)
+(235)
+(35)
+(12,733)
+(11,475)
+(331)
+11,197
+(3,396)
+(19,949)
+(57)
+(725)
+(237)
+(1,200)
+(1,280)
+Current financial liabilities
+Current liabilities
+13,990
+14,878
+51,873
+50,548
+9,216
+10,453
+11,086
+10,498
+19,271
+17,267
+Non-current assets
+9,117
+(59)
+(17,023)
+(7,445)
+(500)
+(2,183)
+(1,872)
+(2,547)
+(2,045)
+(6,139)
+(8,370)
+Total current liabilities
+(2,507)
+(2,896)
+(12,217)
+(12,504)
+(2,124)
+(1,815)
+(1,822)
+(1,808)
+(4,939)
+(7,090)
+Other current liabilities
+(500)
+(4,806)
+PRC
+For the year ended 31 December 2019
+facilities
+(3,695)
+(6,494)
+93
+(810)
+12,777
+145,721
+4,581
+(8)
+101
+(10,189)
+(22)
+8,392
+4,385
+1,697
+2,884
+Total
+RMB million
+losses
+RMB million
+(1,686)
+Provision for
+impairment
+in associates
+RMB million
+90,273
+(788)
+(68)
+(398)
+(466)
+16,093
+362
+259,934
+15,272
+losses
+associates
+RMB million
+RMB million
+Provision for
+impairment
+Investments in Investments in Investments in
+subsidiaries joint ventures
+RMB million
+152,204
+(1,710)
+96,481
+57,433
+3
+3
+(25)
+(25)
+519
+(27)
+267
+279
+57,134
+joint ventures
+RMB million
+Investments
+Investments in
+For the year ended 31 December 2019, the provision for diminution in value of inventories of the Group was primarily due to the costs of finished
+goods were higher than net realisable value.
+184,584
+6,376
+2,582
+192,442
+Total
+Less: Provision for diminution in value of inventories
+190,960
+195,024
+2,872
+2,576
+88,929
+91,368
+13,690
+12,615
+85,469
+88,465
+RMB million
+14,265
+2018
+13 LONG-TERM EQUITY INVESTMENTS
+2,069
+The Group
+Additions for the year
+Balance at 31 December 2019
+Movement of provision for impairment
+Disposals for the year
+Dividends declared
+Other equity movements under the equity method
+Change of other comprehensive income under the equity method
+Share of profits less losses under the equity method
+Additions for the year
+Balance at 1 January 2019
+The Company
+Balance at 31 December 2019
+Movement of provision for impairment
+Other movements
+Foreign currency translation differences
+Disposals for the year
+Dividends declared
+Other equity movements under the equity method
+Change of other comprehensive loss under the equity method
+Share of profits less losses under the equity method
+Balance at 1 January 2019
+Sinopec Finance Company Limited
+("Sinopec Finance")
+21,163
+39
+1,510
+Total
+RMB million
+1,560 million
+Petroleum refining and
+ΝΑ
+Saudi Arabia
+Saudi Arabia
+Yanbu Aramco Sinopec Refining
+49.00%
+25,000 USD
+37.50%
+Crude oil and natural gas
+extraction
+Cyprus
+Russia
+Taihu Limited ("Taihu")
+petrochemical products
+and distribution of
+40.00%
+12,704
+Manufacturing
+ΝΑ
+Company Ltd. ("YASREF")
+processing
+USD
+pipelines and auxiliary
+50.00%
+200
+Operation of natural gas
+Quan Kai
+PRC
+PRC
+Sinopec Sichuan to East China Gas
+Pipeline Co., Ltd. ("Pipeline Ltd")
+2. Associates
+petrochemical products
+distribution of
+HARETHI
+Limited ("Sinopec SABIC Tianjin")
+50.00%
+9,796
+Manufacturing and
+UWAIDH AL⚫
+PRC
+Sinopec SABIC Tianjin Petrochemical Company PRC
+Hong Jianqiao
+PRC
+PRC
+BASF YPC Company Limited ("BASF-YPC")
+304,687
+104
+104
+(7,879)
+22,816
+15,530
+274,220
+(1,030)
+(44)
+(986)
+(3,088)
+(54)
+41
+201
+1
+40
+(3,034)
+201
+3,579
+15,673
+289,207
+For the year ended 31 December 2019, the Group and the Company had no individually significant long-term investment impairment.
+RMB million
+(7,983)
+Details of the Company's principal subsidiaries are set out in Note 57.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+50.00%
+14,758
+Manufacturing refining oil
+products
+Gu Yuefeng
+PRC
+PRC
+Fujian Refining & Petrochemical Company
+Limited ("FREP")
+1. Joint ventures
+Percentage of
+equity/voting
+right directly or
+indirectly held
+by the Company
+Registered Capital
+RMB million
+Principal
+activities
+representative
+Legal
+Register
+location
+Principal place
+of business
+Name of investees
+(a) Principal joint ventures and associates
+Principal joint ventures and associates of the Group are as follows:
+13 LONG-TERM EQUITY INVESTMENTS (Continued)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+16,118
+(26,227)
+shareholders of the company
+7,481
+18,750
+20,529
+110,860
+111,250
+25,462
+28,106
+47,772
+6.906
+47,456
+shareholders of
+Net assets attributable to
+6,906
+7,481
+18,750
+20,529
+(673)
+(166)
+the Company
+Net assets attributable
+to minority interests
+446
+11,086
+11,125
+12,476
+13,772
+23,886
+23,728
+Carrying Amounts
+3,453
+3,741
+7,266
+7,955
+11,086
+11,125
+12,476
+13,772
+23,886
+23,728
+Share of net assets from associates
+517
+(31,436)
+(71,289) (58,628)
+111,696 111,377
+25,462
+28,106
+182,646
+16,359
+18,926
+39,320
+37,842
+Non-current assets
+6,712
+RMB million
+2018
+2018
+2019
+RMB million RMB million
+7,612
+7,477
+RMB million
+4,219
+2019
+2018
+RMB million
+22,502
+31,634
+209,837
+RMB million
+RMB million
+RMB million
+180,383
+170,796
+7,955
+56,424
+971
+47,772
+47,456
+Net assets
+(332)
+(582)
+(3,026)
+(2,910)
+Non-current liabilities
+(961)
+(936)
+(7,252)
+(23,293) (13,887)
+(31,295)
+(200,402)
+(170,621)
+(1,020)
+(721)
+Current liabilities
+1,828
+49,961
+12,498
+7,266
+3,453
+1,095
+1,011
+1,096
+Share of profit from associates
+219
+271
+468
+490
+915
+1,207
+Dividends declared by associates
+699
+575
+1,142
+1,994
+16,810
+5,078
+1,711
+1,259
+651
+1,040
+773
+At 31 December
+Financial Statements (PRC)
+109
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+(ii) Including foreign currency translation differences.
+(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.
+Notes:
+The share of profit and other comprehensive loss for the year ended 31 December 2019 in all individually immaterial associates accounted for
+using equity method in aggregate was RMB 4,565 million (2018: RMB 3,550 million) and RMB 155 million (2018: RMB 844 million) respectively.
+As at 31 December 2019, the carrying amount of all individually immaterial associates accounted for using equity method in aggregate was RMB
+35,416 million (31 December 2018: RMB 31,370 million).
+58
+76
+641
+(144)
+(77)
+201
+income/(loss) from associates (ii)
+Share of other comprehensive
+292
+212
+443
+2,645
+2,022
+2,191
+Total comprehensive income
+2018
+2019
+2018
+2019
+CIR
+Zhongtian Synergetic Energy
+SIBUR
+2019
+2018
+RMB million RMB million
+59,927
+56,706
+4,536
+4,966
+4,746
+5,008
+Turnover
+RMB million RMB million RMB million RMB million
+2018
+Sinopec Finance
+2019
+2018
+Pipeline Ltd
+2019
+Summarised income statement
+RMB million RMB million RMB million RMB million
+3,741
+13,329
+2,334
+116
+151
+6,410
+(1,435)
+(157)
+411
+Other comprehensive income/(loss)
+583
+424
+1,142
+1,994
+10,400
+6,513
+1,868
+2,234
+2,022
+2,191
+Profit for the year
+2,856
+12,235
+Net assets attributable to
+13,245
+RMB million
+20,541
+77,561
+75,940
+58
+141
+94
+41
+32
+157
+23,501
+2019
+2018
+RMB million RMB million
+YASREF
+2019
+2018
+RMB million RMB million
+2018
+2019
+RMB million RMB million
+14,944
+15,222
+2019
+2018
+RMB million RMB million
+21,574
+19,590
+52,469
+57,047
+124
+Sinopec SABIC Tianjin
+101
+171
+169
+(1,292)
+3,493
+3,320
+3,625
+2,314
+3.920
+964
+Profit/(loss) before taxation
+(167)
+(134)
+(1,382)
+(1,470)
+(151)
+(265)
+(43)
+(26)
+(647)
+(597)
+Interest expense
+Interest income
+Turnover
+RMB million RMB million
+2018
+5,804
+8,518
+7,501
+joint ventures
+Share of net assets from
+412
+464
+minority interests
+Net assets attributable to
+16,118
+14,265
+12,746
+11,235
+11,373
+12,829
+15,681
+14,509
+17,035
+15,002
+6,272
+(1,569)
+6,286
+4,213
+2019
+Taihu
+BASF-YPC
+FREP
+Summarised income statement
+8,059
+7,133
+4,780
+4,213
+5,573
+6,286
+6,272
+5,804
+8,518
+7,501
+Carrying Amounts
+8,059
+7,133
+4,780
+5,573
+Current assets
+2,178
+Tax expense
+The share of profit and other comprehensive loss for the year ended 31 December 2019 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was RMB 1,737 million (2018: RMB 2,052 million) and RMB 168 million (2018: RMB 839 million)
+respectively. As at 31 December 2019, the carrying amount of all individually immaterial joint ventures accounted for using equity method in
+aggregate was RMB 25,530 million (31 December 2018: RMB 22,982 million).
+397
+(98)
+435
+(522)
+ventures (ii)
+loss/(income) from joint
+Share of other comprehensive
+108
+1,462
+(682)
+(488)
+1,307
+1,235
+1,091
+694
+1,493
+384
+823
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+RMB million
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2019
+2019
+2018
+2019
+2018
+At
+At
+CIR
+Zhongtian Synergetic Energy
+At
+At
+At
+SIBUR
+At
+At
+Sinopec Finance
+At
+At
+Pipeline Ltd
+At
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal associates:
+(c) Major financial information of principal associates
+13 LONG-TERM EQUITY INVESTMENTS (Continued)
+from joint ventures
+Share of net profit/(loss)
+1,750
+1,226
+(1,818)
+(1,300)
+2,764
+2,612
+2,728
+1,735
+2,985
+767
+Profit/(loss) for the year
+(993)
+(533)
+(249)
+(8)
+(729)
+(708)
+(897)
+(579)
+(935)
+(197)
+1,645
+3,916
+2,923
+(1,105)
+1,224
+1,200
+1,400
+Dividends from joint ventures
+2,923
+1,645
+(759)
+(1,561)
+3,685
+1,507
+2,728
+1,735
+2,985
+767
+income/(loss)
+Total comprehensive
+1,059
+(261)
+921
+Other comprehensive loss/(income)
+RMB million
+3.5
+Spare parts and consumables
+29,989
+131
+30,120
+21,675
+131
+21,544
+57,599
+606
+56,993
+56,713
+1,848
+54,865
+At 31 December
+2018
+RMB million
+At 31 December
+2019
+RMB million
+The Group
+At 31 December
+2018
+RMB million
+2019
+At 31 December
+The Company
+The Group
+Ageing analysis on accounts receivable is as follows:
+Total
+Less: Allowance for doubtful accounts
+Accounts receivable
+RMB million
+At 31 December 2019
+Percentage
+Percentage
+RMB million
+%
+receivable
+Amount
+balance
+Allowance
+RMB million
+%
+RMB million
+to accounts
+receivable
+to total
+accounts
+receivable
+to accounts
+to total
+accounts
+receivable
+Amount
+of allowance
+Percentage
+Percentage
+At 31 December 2018
+of allowance
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and swaps contracts. See Note 61.
+8 ACCOUNTS RECEIVABLE
+7 DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+The financial assets are primarily the structured deposits with financial institutions, which are presented as current assets since they are expected
+to be expired within 12 months from the end of the reporting period.
+25,732
+33
+24,625
+16,374
+2,389 6.8632
+7.8473
+4
+17,862
+106
+55
+35,707
+127,927
+6.9762
+7.8155
+2,560
+14
+17,684
+125,958
+92,220
+79
+85
+11
+7.8473
+1
+8
+35
+0.8762
+39
+25
+%
+41,057
+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.
+182
+25,550
+RMB million
+2018
+At 31 December
+3,319
+1
+3,318
+At 31 December
+2019
+RMB million
+Total
+Equity investments, listed and at quoted market price
+Structured deposits
+6 FINANCIAL ASSETS HELD FOR TRADING
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+102
+At 31 December 2019, structured deposits included in cash at bank and on hand with financial institutions of the Group amounted to RMB 19,210
+million (2018: RMB 77,909 million).
+At 31 December 2019, time deposits with financial institutions of the Group amounted to RMB 67,614 million (2018: RMB 55,093 million).
+167,015
+15
+Allowance
+RMB million
+%
+receivable
+Amount
+to accounts
+to total
+accounts
+receivable
+to accounts
+accounts
+to total
+Allowance
+Total
+Between two and three years
+Between one and two years
+Within one year
+Percentage
+of allowance
+Percentage
+At 31 December 2018
+of allowance
+Over three years
+balance
+Amount
+receivable
+16.2
+17
+0.5
+105
+98.9
+29,797
+98.6
+21,368
+07
+balance
+receivable
+Allowance
+RMB million
+%
+RMB million
+%
+RMB million
+70
+%
+RMB million
+Percentage
+Percentage
+At 31 December 2019
+The Company
+50.4
+65
+0.2
+129
+Between two and three years
+0.8
+436
+26.9
+70
+0.5
+260
+97.9
+56,431
+2.2
+1,204
+98.2
+55,721
+Between one and two years
+Within one year
+289
+balance
+0.5
+603
+606
+100.0
+57,599
+1,848
+100.0
+56,713
+Total
+80.8
+358
+57.1
+165
+19.0
+83
+8858
+0.8
+443
+84.4
+509
+1.1
+Over three years
+125
+23,179
+3,377
+The minimum future operating lease payments disclosed on 31 December 2018
+(ii) On 1 January 2019, the Group reconciled the unpaid minimum operating lease payment that disclosed under the original lease standard
+to the lease liabilities recognised under the new lease standard as follows:
+On 1 January 2019, the Group and the Company use the same discount rate for lease contracts with similar characteristics when
+measuring lease liabilities. The incremental borrowing interest rates range from 4.35% to 4.90%.
+7,454
+119,776
+112,322
+The Company
+(766)
+(8,125)
+The present value of the above-mentioned minimum operating lease payments discounted
+at the incremental borrowing rate
+13,894
+207,455
+The Group
+Prepayments
+Long-term deferred expenses
+Current portion of non-current liabilities
+Lease liabilities
+Right-of-use assets
+The affected financial statement line item
+184,670
+Deduct: Present value of payments with terms of 12 months or less and leases for
+which the underlying assets are individually of low value when it is new
+Lease liabilities recognised on 1 January 2019 (including Non-current liabilities
+due within one year) (Note 33)
+(b) The revision of general enterprise financial statements format
+(i) The impact to the Group's financial statements is as follows:
+16,207
+68,494
+56,993
+7,886
+(64,879)
+1 January
+2018
+RMB million
+RMB million
+31 December
+2018
+198,564
+(2,303)
+200,867
+352,794
+The Group
+(RMB million)
+Bills payable and accounts payable
+Bills payable
+Bills receivable and accounts receivable
+Accounts payable
+Bills receivable
+Accounts receivable
+Item
+and accounts receivable into bills
+receivable and accounts receivable
+The Group separately presents bills
+and accounts payable into bills
+payable and accounts payable
+Contents and reasons of the changes
+The Group separately presents bills
+(RMB million)
+Affected amount on January 1 2019
+If the remaining lease period is 12 months or less, or leases for which the underlying assets are individually of low value when it is new,
+the Group and the Company adopt the simplified method that do not recognise the right-of-use assets and lease liabilities, which has no
+significant impact on the financial statements.
+If the remaining lease term is more than one year, the Group and the Company recognise the lease liabilities based on the remaining
+lease payment and the incremental borrowing interest rate on 1 January 2019. Right-of-use assets are measured at the amount equivalent
+to lease liabilities and adjusted as necessary depending on prepaid rent.
+(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;
+(a) the holding company of the Company;
+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, except for the two parties significantly
+influenced by a party. 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:
+(24) Related parties
+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
+Research costs and development costs that cannot meet the capitalisation criteria are recognised in profit or loss when incurred.
+(22) Research and development costs
+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.
+(21) Environmental expenditures
+Repairs and maintenance (including overhauling expenses) expenses are recognised in profit or loss when incurred.
+(20) Repairs and maintenance expenses
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+(f) joint ventures of the Group, including subsidiaries of the joint ventures;
+(84,701)
+(g) associates of the Group, including subsidiaries of the associates;
+(i) key management personnel of the Group, and close family members of such individuals;
+(i) For operating lease contracts that already exist before the first implementation of the new lease standard, the Group and the Company
+apply different methods based on the remaining lease period:
+According to the provisions of new lease standard, the Group and the Company would not reassess the contracts that have already existed
+prior to the date of initial application. The Group and the Company adjust the cumulative impact of first implementation of the standards into
+relevant items in the financial statements of 2019, and the comparative financial statements of 2018 have not been restated.
+(a) Lease
+Ministry of Finance (MOF) issued revised "No. 21 Accounting Standards for Business Enterprises - Lease" ("New Lease Standard") in 2018,
+then also issued Cai Kuai [2019] No. 6 “Announcement of the revision of general enterprise financial statements format for 2019" and the
+revised Accounting Standards for Business Enterprises No. 7 - Exchange of Non-monetary Assets (hereinafter referred to as "revised standards
+for exchange of non-monetary assets) and Accounting Standards for Business Enterprises No. 12 - Debt Restructuring (hereinafter referred to
+as "revised standards for debt restructuring). The Group has adopted the above standards and guidelines to prepare the financial statements
+of 2019. The revised standards for exchange of non-monetary assets and debt restructuring have no significant impacts on the Group and the
+Company, the impact of other revises to the Group and the Company's financial statements is as follows:
+(26) Changes in significant accounting policies
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+100
+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:
+(25) Segment reporting
+(I) an entity which is under control, joint control of principle individual investor, key management personnel or close family members of such
+individuals.
+(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;
+(h) principle individual investors of the Group and close family members of such individuals;
+6.8632
+186,341
+6,416
+(192,757)
+(RMB/Ton)
+13 January 2015
+Effective from
+Total
+Others
+US Dollar
+EUR
+Renminbi
+Deposits at related parities
+2,109.76
+Others
+Hong Kong Dollar
+US Dollar
+Renminbi
+Cash at bank
+Renminbi
+Cash on hand
+The Group
+5 CASH AT BANK AND ON HAND
+EUR
+1,411.20
+2,105.20
+1,948.64
+102,572
+78,924
+13,174
+1,889 6.9762
+0.8958
+7.8155
+1
+17
+82
+14
+RMB
+million
+Exchange
+rates
+currency
+million
+RMB
+million
+rates
+Original
+Original
+currency Exchange
+million
+At 31 December 2018
+At 31 December 2019
+1,495.20
+1,218.00
+1,711.52
+Jet fuel oil
+oil
+Fuel
+Solvent oil
+Lubricant oil
+Bills receivable
+Accounts receivable
+Item
+and accounts payable into bills payable
+and accounts payable
+The Company separately presents bills
+The Company separately presents bills and
+accounts receivable into bills receivable and
+accounts receivable
+Contents and reasons of the changes
+4 TAXATION
+(ii) The impact to the Company's financial statements is as follows:
+(b) The revision of general enterprise financial statements format (Continued)
+(26) Changes in significant accounting policies (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+At 31 December
+2019
+Financial Statements (PRC)
+101
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+6,462
+(206,535)
+Bills receivable and accounts receivable
+Accounts payable
+200,073
+Bills payable
+31 December
+2018
+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.
+(86,604)
+3,155
+83,449
+2,075
+(84,418)
+(37,766)
+37,609
+157
+82,343
+(30,145)
+29,989
+156
+RMB million
+2018
+1 January
+RMB million
+Bills payable and accounts payable
+0.4
+Financial Statements (PRC)
+12.0
+90.7
+24,301
+0.4
+87
+86.5
+22,115
+Within one year
+RMB million
+Between one and two years
+%
+Percentage
+of allowance
+At 31 December 2018
+Allowance
+receivables
+Amount
+RMB million
+%
+RMB million
+%
+to other
+receivables
+balance
+1,554
+6.1
+52
+73.4
+1,246
+6.6
+1,698
+Over three years
+6.6
+21
+1.2
+320
+35.9
+71
+0.8
+198
+Between two and three years
+16.1
+53
+1.2
+329
+3.3
+RMB million
+balance
+Allowance
+receivables
+RMB million
+At 31 December
+2019
+The Group
+Ageing analysis of other receivables is as follows:
+Total
+Less: Allowance for doubtful accounts
+Other receivables
+11 OTHER RECEIVABLES
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+33.5%
+37.7%
+2,009
+1,940
+2018
+2019
+At 31 December
+At 31 December
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+25,565
+1,843
+1,456
+24,109
+At 31 December
+2018
+RMB million
+Amount
+Percentage
+to total other
+to other
+receivables
+Percentage
+to total other
+of allowance
+Percentage
+At 31 December 2019
+1,117
+57,432
+955
+78,872
+79,827
+1,481
+25,312
+The Group
+58,549
+26,793
+RMB million
+2018
+2019
+RMB million
+At 31 December
+At 31 December
+The Company
+Percentage to the total balance of prepayments
+6.9
+76.3
+1,117
+100.0
+58,549
+955
+100.0
+13.2
+1,116
+14.5
+At 31 December 2019 and at 31 December 2018, the total amounts of the top five other receivables of the Group are set out below:
+8,481
+951
+18.4
+14,666
+79,827
+Total
+Over three years
+16.6
+9,747
+1
+6.5
+Total amount (RMB million)
+Ageing
+Percentage to the total balance of other receivables
+Allowance for doubtful accounts
+Finished goods
+15
+Work in progress
+Raw materials
+The Group
+12 INVENTORIES
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+106
+Financial Statements (PRC)
+105
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+During the year ended 31 December 2019 and 2018, 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 2019 and 2018, the Group and the Company had no individually significant other receivables been fully or
+substantially provided allowance for doubtful accounts.
+2018
+6,837
+Within one year
+25.5%
+2019
+10,561
+Within one year
+41.3%
+At 31 December
+At 31 December
+8.7
+6,933
+Between two and three years
+1
+Amount
+to other
+receivables
+Percentage
+to total other
+to other
+receivables
+Percentage
+to total other
+of allowance
+of allowance
+Percentage
+Percentage
+At 31 December 2018
+At 31 December 2019
+The Company
+1,481
+100.0
+26,793
+1,456
+100.0
+25,565
+Total
+receivables
+1,407
+Allowance
+RMB million
+22.6
+13,233
+3
+17.3
+Between one and two years
+46.3
+27,088
+55.6
+44,402
+Within one year
+RMB million
+%
+balance
+Allowance
+receivables
+Amount
+RMB million
+%
+RMB million
+%
+balance
+Total amount (RMB million)
+13,826
+5
+The Group
+5
+2,488
+2,665
+2,493
+At 31 December
+2018
+RMB million
+At 31 December
+2019
+RMB million
+2,671
+6
+2018
+RMB million
+5,990
+53
+5,937
+5,146
+80
+5,066
+At 31 December 2019
+RMB million
+At 31 December
+At 31 December
+The Company
+The Group
+Ageing analysis of prepayments is as follows:
+Total
+Less: Allowance for doubtful accounts
+Prepayments
+2019
+Amount
+Percentage
+to total
+prepayments
+Percentage of
+allowance to
+prepayments
+589
+Between one and two years
+85.6
+4,405
+Within one year
+01
+70
+balance
+Allowance
+RMB million
+%
+Percentage of
+allowance to
+prepayments
+At 31 December 2018
+Percentage
+to total
+prepayments
+Amount
+RMB million
+%
+RMB million
+70
+RMB million
+balance
+Allowance
+10 PREPAYMENTS
+At 31 December 2019, the Group considers that its bills of acceptance issued by banks do not pose a significant credit risk and will not cause any
+significant loss due to the default of drawers.
+At 31 December 2019, the Group's derecognised but outstanding bills due to endorsement or discount amounted to RMB 31,004 million.
+Receivables financing represents mainly the bills of acceptance issued by banks for sales of goods and products.
+131
+100.0
+73.6
+106
+0.5
+144
+65.6
+99
+0.7
+151
+21,675
+18.5
+10
+0.2
+54
+29.4
+15
+At 31 December 2019 and 31 December 2018, the total amounts of the top five prepayments of the Group are set out below:
+51
+0.2
+30,120
+11.5
+100.0
+At 31 December 2019 and 31 December 2018, the total amounts of the top five accounts receivable of the Group are set out below:
+9 RECEIVABLES FINANCING
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+104
+Financial Statements (PRC)
+103
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+During 2019 and 2018, 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 2019 and 2018, the Group and the Company had no individually significant accounts receivable been fully or substantially provided
+allowance for doubtful accounts.
+Accounts receivable (net of allowance for doubtful accounts) 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. Information about the impairment of accounts
+receivable and the Group exposure to credit risk can be found in Note 61.
+Sales are generally on a cash term. Credit is generally only available for major customers with well-established trading records. Amounts due from
+China Petrochemical Corporation ("Sinopec Group Company") and fellow subsidiaries are repayable under the same terms.
+27.3%
+2018
+15,699
+9,878
+17.4%
+2019
+At 31 December
+Percentage to the total balance of accounts receivable
+Allowance for doubtful accounts
+Total amount (RMB million)
+131
+26
+At 31 December
+5,683
+169
+1
+2.8
+70
+0.8
+1
+4.6
+123
+92.6
+2,306
+90.7
+2,424
+Between two and three years
+Between one and two years
+Within one year
+0%
+RMB million
+%
+balance
+Allowance
+1.4
+Percentage of
+allowance to
+prepayments
+39
+2
+2,493
+6
+100.0
+4.4
+100.0
+2,671
+3.7
+3
+3.2
+81
+3
+3.2
+85
+Total
+Over three years
+1
+1.4
+36
+5.1
+1.5
+to total
+prepayments
+2.8
+%
+80
+100.0
+1.3
+78
+41.2
+49
+2.3
+119
+Over three years
+Total
+1.0
+60
+15.2
+5
+0.6
+94.9
+33
+Between two and three years
+2.8
+Amount
+RMB million
+5,990
+100.0
+5,146
+8503
+RMB million
+%%
+70
+RMB million
+balance
+Allowance
+prepayments
+Percentage
+8030
+Percentage
+to total
+prepayments
+Amount
+Percentage of
+allowance to
+At 31 December 2019
+The Company
+15380
+12.8
+22.5
+10
+8.3
+At 31 December 2018
+Balance at 31 December 2019
+Balance at 31 December 2018
+Change in accounting policy
+Balance at 1 January 2019
+RMB million
+Balance at 31 December 2019
+Decreases for the year
+Land
+Net book value:
+Provision for impairment losses:
+Balance at 31 December 2018
+The Company
+Additions for the year
+Balance at 31 December 2019
+The Group
+Additions for the year
+Balance at 1 January 2019
+Change in accounting policy
+Balance at 31 December 2018
+Accumulated depreciation:
+Balance at 31 December 2019
+Decreases for the year
+Additions for the year
+Balance at 31 December 2018
+Change in accounting policy
+Balance at 1 January 2019
+Cost:
+Others
+RMB million
+16 RIGHT-OF-USE ASSETS
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Decreases for the year
+Total
+RMB million
+(37)
+27,381
+Change in accounting policy
+Balance at 1 January 2019
+Balance at 31 December 2018
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Cost:
+RMB million
+Total
+Others
+RMB million
+Land
+198,051
+28,486
+169,565
+12,269
+5,702
+6,567
+180,074
+180,074
+(26)
+12,306
+5,728
+6,578
+210,320
+34,188
+176,132
+(5,762)
+(748)
+(5,014)
+8,627
+7,555
+1,072
+207,455
+207,455
+27,381
+(11)
+112
+2019
+Bank loans & self-financing
+87%
+28,582
+10,803
+17,779
+34,667
+RMB million
+Source of funding
+31 December
+Accumulated
+interest
+capitalised at
+of project
+investment
+to budgeted
+amount
+Percentage
+Balance at
+31 December
+2019
+RMB million
+Net change
+for the year
+RMB million
+Bank loans & self-financing
+Balance at
+1 January
+2019
+RMB million
+Budgeted
+amount
+Zhongke Refine Integration Project
+Project name
+51,598
+60,493
+173,482
+136,963
+413
+1,844
+16
+413
+60,906
+175,326
+Additions for the year
+1,854
+135
+(161)
+RMB million
+6
+720
+13,865
+10%
+1,024
+973
+51
+9,961
+Western Sichuan Gas Field Leikoupo Formation
+Gas Reservoir Development and Construction
+Project
+Self-financing
+12%
+1,808
+1,499
+309
+26,787
+expansion project
+Zhenhai Refining and Chemical ethylene
+Wen 23 Gas Storage Project (First-stage)
+204
+68%
+7,930
+2,248
+5,682
+11,589
+Project (First-stage)
+Gas (SNG) Export Pipeline Construction
+Xinjiang Coal-based Substitute Natural
+267
+Bank loans & self-financing
+87%
+12,120
+8,692
+3,428
+Bank loans & self-financing
+Decreases for the year
+162,151
+Accumulated depreciation:
+204
+2,655
+Additions for the year
+46,717
+3,200
+17,137
+2,997
+3,397
+19,986
+Balance at 1 January 2019
+Accumulated amortisation:
+5,667
+53,549
+5,031
+5,344
+92,560
+Balance at 31 December 2019
+(825)
+(241)
+(161)
+(423)
+Decreases for the year
+11,505
+643
+1,494
+1,002
+114
+8,252
+Additions for the year
+278
+2,357
+448
+5,942
+228
+17
+Balance at 31 December 2019
+Net book value:
+(15)
+(15)
+Decreases for the year
+15
+3
+12
+Additions for the year
+899
+17
+145
+24
+151,471
+482
+Balance at 1 January 2019
+Provision for impairment losses:
+52,296
+3,506
+19,391
+3,275
+3,601
+22,523
+Balance at 31 December 2019
+(363)
+(142)
+(103)
+(118)
+Decreases for the year
+231
+5,265
+52,216
+4,029
+117,194
+1,121
+116,073
+(3,235)
+(137)
+(3,098)
+653
+624
+29
+119,776
+634
+119,142
+119,776
+634
+3,801
+Balance at 31 December 2019
+Balance at 31 December 2018
+Decreases for the year
+Additions for the year
+Balance at 1 January 2019
+Change in accounting policy
+Balance at 31 December 2018
+Provision for impairment losses:
+Balance at 31 December 2019
+Decreases for the year
+Additions for the year
+Balance at 1 January 2019
+119,142
+RMB million
+Change in accounting policy
+Balance at 31 December 2018
+Balance at 31 December 2019
+Net book value:
+Balance at 31 December 2019
+584
+(5)
+5,230
+84,731
+Balance at 1 January 2019
+Cost:
+Total
+RMB million
+Others
+RMB million
+rights
+RMB million
+RMB million
+RMB million
+technology
+Patents
+Operation
+Non-patent
+Land use
+rights
+RMB million
+4,385
+The Group
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+113
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+112,832
+555
+112,277
+4,362
+566
+3,796
+(23)
+(18)
+17 INTANGIBLE ASSETS
+(1,130)
+43,563
+(44,915)
+Balance at 31 December 2018
+412,349
+140,360
+69,700
+Balance at 31 December 2019
+Net book value:
+(1,766)
+47
+77,540
+30,188
+3,789
+Balance at 31 December 2019
+(1,615)
+1
+46
+Exchange adjustments
+(151)
+Decreases for the year
+Reclassifications
+79,063
+196
+31,617
+185
+11
+Additions for the year
+43,517
+3,929
+Balance at 1 January 2019
+Provision for impairment losses:
+(10,764)
+681
+1,164,319
+39
+565,686
+621
+543,629
+55,004
+Balance at 31 December 2019
+66,907
+145,436
+405,419
+622,409
+617,762
+Balance at 31 December 2019
+Decreases for the year
+Transferred to subsidiaries (i)
+Transferred from subsidiaries
+Reclassifications
+Transferred from construction in progress
+Additions for the year
+Balance at 1 January 2019
+Cost:
+Total
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+Oil and gas
+properties
+RMB million
+Plants and
+buildings
+RMB million
+21
+(a) Fixed assets
+14 FIXED ASSETS (Continued)
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+302,082
+34
+At 31 December
+2018
+RMB million
+302,048
+291,547
+3
+291,544
+At 31 December
+2019
+RMB million
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Fixed assets pending for disposal
+Total
+Fixed assets (a)
+The Company
+The Company (Continued)
+48,827
+66
+Exchange adjustments
+(46)
+(6)
+Accumulated depreciation:
+Balance at 31 December 2019
+Exchange adjustments
+Decreases for the year
+Reclassifications
+Transferred from construction in progress
+Additions for the year
+Balance at 1 January 2019
+Cost:
+617,812
+617,762
+50
+622,423
+14
+RMB million
+2018
+At 31 December
+622,409
+At 31 December
+2019
+RMB million
+(a) Fixed assets
+Total
+Fixed assets pending for disposal
+Fixed assets (a)
+The Group
+14 FIXED ASSETS
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+110
+482
+122,041
+160
+6,192
+31,378
+Plants and
+buildings
+(609)
+Decreases for the year
+292
+1,086,435
+87,967
+47,583
+36,289
+4,095
+528,459
+506,771
+51,205
+Reclassifications
+Additions for the year
+Balance at 1 January 2019
+(17,041)
+780
+1,864,268
+(246)
+(10,149)
+1,008,223
+(76)
+(1,549)
+667
+727,552
+128,493
+42
+(993)
+1,051
+54,275
+965,495
+3,856
+91,845
+1,783,260
+5,424
+Total
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+695,724
+1,408
+Oil and gas
+properties
+RMB million
+RMB million
+(975)
+(14,499)
+71
+946
+574,937
+1,131
+23,780
+467,357
+656
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019 111
+At 31 December 2019 and 31 December 2018, the Group and the Company had no individually significant fully depreciated fixed assets which
+were still in use.
+At 31 December 2019 and 31 December 2018, the Group and the Company had no individually significant fixed assets which were temporarily
+idle or pending for disposal.
+At 31 December 2019 and 31 December 2018, 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 2019 primarily represent impairment losses recognised in the refining
+segment of RMB 140 million (2018: RMB 353 million), the marketing and distribution segment of RMB 52 million (2018: RMB 254 million), the
+chemicals segment of RMB 4 million (2018: RMB 1,252 million) and the exploration and production ("E&P") segment of RMB 0 million (2018:
+RMB 4,274 million). The primary factor resulting in the E&P segment impairment loss in the prior year was downward revision of oil and gas
+reserve in certain fields. Exploration and production ("E&P") segment determines recoverable amounts of fixed assets relating to oil and gas
+producing activities include significant judgments and assumptions. The recoverable amounts were determined based on the present values of
+the expected future cash flows of the assets using a pre-tax discount rate 10.47% (2018: 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 184 million (2018: RMB 312 million). It is estimated that a general increase of 5% in operating
+cost, with all other variables held constant, would result additional impairment loss in Group's fixed assets relating to oil and gas producing
+activities by approximately RMB 180 million (2018: RMB 315 million). It is estimated that a general increase of 5% in discount rate, with all
+other variables held constant, would result additional impairment loss in Group's fixed assets relating to oil and gas producing activities by
+approximately RMB 7 million (2018: less RMB 5 million).
+The additions to oil and gas properties of the Group and the Company for the year ended 31 December 2019 included RMB 1,408 million (2018:
+RMB 1,567 million) (Note 34) and RMB 1,131 million (2018: RMB 1,292 million), respectively of the estimated dismantlement costs for site
+restoration.
+(i) In 2019, the total amount transferred to subsidiaries is RMB 10,838 million, which is mainly caused by Sinopec Wuhan Petrochemical
+Branch transferring its fixed assets related to refining production to its subsidiary Sinopec-SK (Wuhan) Petrochemical Company Limited
+("Sinopec-SK"). The original cost of transferred fixed assets is RMB 9,122 million, the depreciation is RMB 5,537 million, the impairment is
+RMB 22 million, and the total net book value of transferred fixed assets is RMB 3,563 million.
+302,048
+291,544
+153,726
+159,203
+114,845
+119,067
+22,973
+23,778
+Balance at 31 December 2018
+60,020
+(1,510)
+(1,381)
+20,842
+37,383
+1,795
+(129)
+(1,132)
+(194)
+(914)
+(24)
+240
+174
+66
+129
+127
+2
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+15 CONSTRUCTION IN PROGRESS
+(91,845)
+(5,432)
+(5,831)
+(903)
+(163)
+(115)
+61,438
+144,369
+52,011
+138,817
+RMB million
+RMB million
+The Company
+The Group
+Balance at 31 December 2019
+At 31 December 2019, major construction projects of the Group are as follows:
+Balance at 31 December 2019
+Net book value:
+Balance at 31 December 2019
+Exchange adjustments
+Decreases for the year
+Additions for the year
+Balance at 1 January 2019
+Provision for impairment losses:
+Balance at 31 December 2019
+Exchange adjustments
+Disposals for the year
+Transferred to subsidiaries
+Dry hole costs written off
+Transferred to fixed assets
+Reclassification to other assets
+Additions for the year
+Balance at 1 January 2019
+Cost:
+Balance at 31 December 2018
+Net book value:
+Balance at 31 December 2019
+Decreases for the year
+20,904
+29,069
+1,527
+Additions for the year
+286,038
+417,573
+23,169
+Balance at 1 January 2019
+Accumulated depreciation:
+1,119,554
+472,250
+598,304
+49,000
+(9,536)
+726,780
+51,500
+(8,341)
+(1,187)
+2,039
+(10,838)
+(8,751)
+(1,458)
+(629)
+1,777
+262
+(637)
+(78)
+715
+44,915
+20,189
+1,853
+1,091,121
+(8)
+(10,086)
+Reclassifications
+(43)
+Transferred to subsidiaries (i)
+Transferred from subsidiaries
+Reclassifications
+Additions for the year
+62,293
+22,116
+38,297
+1,880
+Balance at 1 January 2019
+Provision for impairment losses:
+767,990
+297,682
+446,076
+24,232
+240
+Balance at 31 December 2019
+(5,323)
+(2)
+(491)
+Decreases for the year
+(6,116)
+(5,270)
+(521)
+(325)
+Transferred to subsidiaries (i)
+1,642
+1,530
+112
+Transferred from subsidiaries
+(197)
+(5,816)
+27
+1,678
+17
+Value-added tax payable
+Consumption tax payable
+Income tax payable
+Mineral resources compensation fee payable
+Other taxes
+Total
+29 OTHER PAYABLES
+At 31 December
+2019
+At 31 December
+2018
+RMB million
+RMB million
+4,932
+52,863
+9,810
+59,944
+The Group
+3,264
+28 TAXES PAYABLE
+27 EMPLOYEE BENEFITS PAYABLE
+3
+7.8473
+22
+44,692
+At 31 December 2019, the Group's interest rates on short-term loans were from interest 0.80% to 6.53% (At 31 December 2018: from interest 0.80%
+to 5.22%) per annum. The majority of the above loans are by credit.
+At 31 December 2019 and 31 December 2018, the Group had no significant overdue short-term loans.
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+24 BILLS 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 2019 and 31 December 2018, the Group had no overdue unpaid bills.
+25 ACCOUNTS PAYABLE
+At 31 December 2019 and 31 December 2018, the Group had no individually significant accounts payable aged over one year.
+26 CONTRACT LIABILITIES
+As at 31 December 2019, the Group's contract liabilities primarily represent advances from customers. Related performance obligations are satisfied
+and revenue is recognised within one year.
+At 31 December 2019 and 31 December 2018, the Group's employee benefits payable primarily represented wages payable and social insurance
+payables.
+25
+31,196
+6,699
+138
+1,765
+25
+12,039
+5
+6.8632
+35
+- US Dollar loans
+Long-term loans from Sinopec Group Company and
+fellow subsidiaries
+- Renminbi loans
+Long-term loans due within one year
+Debentures payable due within one year
+- Renminbi debentures
+Debentures payable due within one year
+Lease liabilities due within one year
+Others
+6.9762
+136
+4
+Long-term bank loans
+8,144
+10,469
+69,339
+87,060
+At 31 December 2019 and 31 December 2018, other payables of the Group over one year primarily represented payables for constructions.
+30 NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR
+The Group's non-current liabilities due within one year represent:
+At 31 December 2019
+Original
+currency
+million
+At 31 December 2018
+Original
+Exchange
+rates
+RMB
+million
+currency
+million
+Exchange
+rates
+RMB
+million
+- Renminbi loans
+1,441
+0.8762
+1,645
+95,826
+The reasons for recognising impairment losses are set out in the respective notes of respective assets.
+23 SHORT-TERM LOANS
+The Group's short-term loans represent:
+Short-term bank loans
+Renminbi loans
+- US Dollar loans
+Short-term other loans
+- Renminbi loans
+Short-term loans from Sinopec Group Company and
+fellow subsidiaries
+- Renminbi loans
+- US Dollar loans
+- Hong Kong Dollar loans.
+- Euro loans
+(23)
+At 31 December 2019
+(7,185)
+3,714
+899
+899
+Goodwill
+18
+7,861
+7,861
+Others
+Total
+102
+1
+(17)
+(81)
+1
+6
+99,981
+(661)
+Original
+At 31 December 2018
+Original
+currency
+22
+300
+5,465
+27,304
+2,709
+3,061
+321
+6.9762
+2,236
+3,319
+6.8632
+22,780
+553
+3
+0.8958
+7.8155
+495
+300
+22
+3,887
+6.8632
+Exchange
+million
+rates
+RMB
+million
+currency
+million
+Exchange
+rates
+Non-current liabilities due within one year
+RMB
+million
+17,088
+25,619
+13,201
+13
+6.9762
+90
+566
+25,709
+17
+37,824
+13,000
+For the year ended 31 December 2019
+33 LEASE LIABILITY
+The Group
+Lease liabilities
+Deduct: Current portion of lease liabilities (Note 30)
+Total
+At 31 December
+2019
+RMB million
+At 31 December
+2018
+RMB million
+192,872
+15,198
+177,674
+34 PROVISIONS
+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:
+Balance at 1 January 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Provision for the year
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+31,951
+RMB million
+5,089
+40,004
+12,123
+11,999
+22,413
+9,573
+39,625
+61,576
+At 31 December
+2019
+RMB million
+32,157
+(13,000)
+19,157
+At 31 December
+2018
+RMB million
+31,951
+(i) These corporate bonds are carried at amortised cost, including USD denominated corporate bonds of RMB 12,157 million, and RMB denominated corporate bonds
+of RMB 20,000 million (2018: USD denominated corporate bonds of RMB 11,951 million, and RMB denominated corporate bonds of RMB 20,000 million). At 31
+December 2019, corporate bonds of RMB 12,157 million (2018: RMB 11,951 million) are guaranteed by Sinopec Group Company.
+RMB million
+Accretion expenses
+Exchange adjustments
+95,558
+25,513
+121,071
+95,558
+25,513
+121,071
+Total
+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 SAR 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 SAR 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+119
+Financial Statements (PRC)
+2018
+RMB million
+Decrease for the year
+At 31 December
+2019
+Balance at 31 December 2019
+35 OTHER NON-CURRENT LIABILITIES
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+36 SHARE CAPITAL
+The Group
+Registered, issued and fully paid:
+95,557,771,046 listed A shares (2018: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 listed H shares (2018: 25,513,438,600) of RMB 1.00 each
+The Group
+RMB million
+42,007
+1,408
+1,418
+(2,439)
+44
+42,438
+At 31 December
+RMB million
+2018
+At 31 December
+At 31 December
+2019
+31 December 2019 with maturities
+through 2034
+Interest rates ranging from interest
+1.55% to 4.29% per annum at
+31 December 2019 with maturities
+through 2031
+At 31 December 2019
+At 31 December 2018
+Original
+Original
+currency
+million
+Exchange
+RMB
+rates
+million
+currency
+million
+Exchange
+rates
+RMB
+million
+31,714
+Interest rates ranging from interest
+1.08% to 5.23% per annum at
+31,025
+- US Dollar loans
+Long-term bank loans
+13,000
+15,198
+69,490
+At 31 December 2019 and 31 December 2018, the Group had no significant overdue long-term loans.
+4,361
+16,435
+1,015
+17,450
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+117
+Financial Statements (PRC)
+Financial Statements (PRC)
+118
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+31 LONG-TERM LOANS
+The Group's long-term loans represent:
+Interest rate and final maturity
+- Renminbi loans
+11
+6.9762
+75
+After five years
+Total
+Long-term loans are primarily unsecured, and carried at amortised costs.
+32 DEBENTURES PAYABLE
+The Group
+Debentures payable:
+- Corporate Bonds (i)
+Less: Current portion
+Total
+Note:
+(12,074)
+19,060
+46,877
+(4,361)
+42,516
+61,576
+Between two and five years
+Between one and two years
+39,625
+9,626
+16
+6.8632
+109
+Less: Current portion
+Long-term bank loans
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+- Renminbi loans
+39,614
+Interest rates ranging from interest
+free to 5.50% per annum at
+29,999
+47,450
+31 December 2019 with maturities
+through 2034
+Less: Current portion
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+Total
+The maturity analysis of the Group's long-term loans is as follows:
+(37,824)
+(1,790)
+145
+Total
+116
+1,616
+(189)
+(5,233)
+12
+2,582
+1,686
+(1)
+25
+1,710
+79,063
+196
+(1,692)
+(27)
+77,540
+1,854
+135
+(110)
+(35)
+1,844
+6,376
+At 31 December
+2345
+1
+Intangible assets
+10
+53
+35
+(5)
+(3)
+-
+80
+11
+1,481
+165
+(167)
+(24)
+1
+1,456
+2,140
+1,766
+(455)
+(68)
+3,384
+Construction in progress
+Deferred tax assets
+20 DEFERRED TAX ASSETS AND LIABILITIES
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of petrochemical products
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO")
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Sinopec Zhenhai Refining and Chemical Branch
+("Sinopec Zhenhai")
+Principal activities
+Name of investees
+Goodwill is allocated to the following Group's cash-generating units:
+18 GOODWILL
+2,048
+108,956
+2,144
+34,013
+34,934
+1,729
+1,008
+1,261
+1,351
+Amortisation of the intangible assets of the Group charged for the year ended 31 December 2019 is RMB 5,695 million (2018: RMB 5,414 million).
+103,855
+Balance at 31 December 2019
+Balance at 31 December 2018
+69,809
+64,514
+Sinopec Beijing Yanshan Petrochemical Branch
+("Sinopec Yanshan")
+Deferred tax assets and liabilities before the consolidated elimination adjustments are as follows:
+Other units without individual significant goodwill
+Total
+RMB million
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+114
+Long-term deferred expenses primarily represent catalysts expenditures and improvement expenditures of fixed assets.
+19 LONG-TERM DEFERRED EXPENSES
+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 11.0% to 11.9% (2018: 11.7% to
+12.3%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no major impairment loss
+was recognised.
+8,676
+8,697
+1,088
+1,109
+1,004
+1,004
+2,541
+2,541
+4,043
+4,043
+At 31 December
+2018
+RMB million
+At 31 December
+2019
+Fixed assets
+Long-term equity investments
+Inventories
+3,709
+Other equity instrument investments
+Intangible assets
+131
+117
+(7)
+(1)
+595
+474
+(508)
+(535)
+Others
+318
+174
+Deferred tax assets/(liabilities)
+24,905
+25,403
+(882)
+(14,098)
+(428)
+(9,657)
+3,594
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+(27)
+(8,666)
+15,427
+RMB million
+Deferred tax liabilities
+At 31 December
+At 31 December
+RMB million
+2018
+Receivables and inventories
+Payables
+Cash flow hedges
+Fixed assets
+Tax value of losses carried forward
+2,546
+2,563
+1,142
+1,808
+116
+1,131
+(384)
+16,463
+(12,317)
+Deferred tax assets
+Deferred tax liabilities
+Deferred tax assets and liabilities after the consolidated elimination adjustments are as follows:
+Other non-current assets mainly represent long-term receivables, prepayments for construction projects and purchases of equipment.
+22 DETAILS OF IMPAIRMENT LOSSES
+At 31 December 2019, impairment losses of the Group are analysed as follows:
+Balance at
+Other
+Note
+1 January Provision for Written back
+2019 the year for the year
+RMB million RMB million RMB million
+Written off
+for the year
+RMB million
+Balance at
+increase/ 31 December
+(decrease)
+2019
+RMB million RMB million
+Allowance for doubtful accounts
+Included: Accounts receivable
+8
+606
+1,566
+(283)
+(41)
+1,848
+Prepayments
+Other receivables
+21 OTHER NON-CURRENT ASSETS
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+At 31 December
+2019
+RMB million
+7,289
+7,289
+At 31 December
+2018
+RMB million
+3,709
+3,709
+Deferred tax assets
+Deferred tax liabilities
+At 31 December
+2019
+RMB million
+17,616
+6,809
+899
+At 31 December
+RMB million
+21,694
+5,948
+At 31 December 2019, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 16,605 million
+(2018: RMB 18,308 million), of which RMB 1,992 million (2018: RMB 2,437 million) was incurred for the year ended 31 December 2019, because
+it was not probable that the related tax benefit will be realised. These deductible losses carried forward of RMB 3,163 million, RMB 3,156 million,
+RMB 5,938 million, RMB 2,356 million and RMB 1,992 million will expire in 2020, 2021, 2022, 2023, 2024 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 2019, write-down of deferred tax assets
+amounted to RMB 189 million (2018: RMB 188 million) (Note 52).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+115
+Financial Statements (PRC)
+2019
+RMB million
+2018
+2019
+At 31 December
+2018
+RMB million
+189
+The Group
+48 (LOSSES)/GAINS FROM CHANGES IN FAIR VALUE
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+124
+28,336
+742
+414
+28,062
+7
+692
+142
+1
+(1,940)
+(1,604)
+86
+11,428
+54
+12,628
+Total
+(1,467)
+587
+Gain/(loss) from ineffective portion of cash flow hedges
+Others
+14
+25,390
+4,259
+(2,768)
+Net fair value (losses)/gains on financial assets and financial liabilities at fair value through profit or loss
+Unrealised losses from ineffective portion cash flow hedges, net
+(1,543)
+53
+RMB million
+Total
+2018
+2019
+Total
+Others
+Fines, penalties and compensation
+Donations
+The Group
+51 NON-OPERATING EXPENSES
+Government grants
+Others
+Total
+The Group
+50 NON-OPERATING INCOME
+Total
+Others
+Construction in progress
+Fixed assets
+Long-term equity investment
+Inventories
+Prepayments
+The Group
+49 IMPAIRMENT LOSSES
+Others
+RMB million
+515
+13,974
+397
+Exploration expenses (including dry holes)
+Other expenses
+Depreciation, depletion and amortisation
+Personnel expenses
+Purchased crude oil, products and operating supplies and expenses
+77,721
+RMB million
+2,292,983
+2018
+2,380,907
+81,482
+2019
+RMB million
+The operating costs, selling and distribution expenses, general and administrative expenses, research and development expenses and exploration
+expenses (including dry holes) in consolidated income statement classified by nature are as follows:
+43 CLASSIFICATION OF EXPENSES BY NATURE
+The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2019 by the Group ranged from 2.92%
+to 4.66% (2018: 2.37% to 4.66%).
+(1,001)
+9,967
+Total
+(596)
+170
+Net foreign exchange loss/(gain)
+(7,726)
+Total
+25,416
+3,579
+44 RESEARCH AND DEVELOPMENT EXPENSES
+109,967
+12,777
+185
+492
+Income from investment of subsidiaries accounted for under cost method
+Income from investment accounted for under equity method
+Investment income/(loss) from disposal of long-term equity investments
+Dividend income from holding of other equity instrument investments
+Investment (loss)/income from holding/disposal of financial assets and
+liabilities and derivative financial instruments at fair value
+through profit or loss
+2018
+RMB million
+The Company
+2019
+RMB million
+2018
+RMB million
+RMB million
+The Group
+2019
+47 INVESTMENT INCOME
+Other income are mainly the government grants related to the business activities.
+46 OTHER INCOME
+Exploration expenses include geological and geophysical expenses and written-off of unsuccessful dry hole costs.
+45 EXPLORATION EXPENSES
+The research and development expenditures are mainly used for the replacement of resources in upstream, optimising structure and operation
+upgrades in refining sector, structured adjustment of materials and products in chemical segment.
+2,552,498
+2,634,385
+61,083
+52,674
+10,744
+10,510
+108,812
+(2,702)
+3,008
+(809)
+Profit before taxation
+RMB million
+RMB million
+2018
+2019
+Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows:
+20,213
+17,894
+Total
+(719)
+(467)
+Under-provision for income tax in respect of preceding year
+(6,244)
+3,385
+27,176
+14,976
+Deferred taxation
+Provision for income tax for the year
+RMB million
+90,016
+RMB million
+100,502
+22,504
+Write-down of deferred tax assets
+609
+498
+(779)
+(335)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of tax losses not recognised
+77
+(312)
+Effect of income taxes at foreign operations
+(1,259)
+(2,003)
+Tax effect of preferential tax rate (i)
+(5,019)
+(4,458)
+Tax effect of non-taxable income
+1,989
+2,278
+Tax effect of non-deductible expenses
+25,126
+Expected income tax expense at a tax rate of 25%
+2018
+2019
+The Group
+RMB million
+2018
+2019
+11,605
+1,789
+1
+28
+135
+6,149
+196
+5,421
+7
+1,427
+2018
+RMB million
+RMB million
+30
+2019
+2,656
+(3,511)
+22
+(374)
+RMB million
+884
+1,714
+788
+1,282
+52 INCOME TAX EXPENSE
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+126
+Financial Statements (PRC)
+125
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+3,042
+188
+2,607
+2,225
+209
+276
+173
+2018
+RMB million
+RMB million
+2019
+2,070
+2,598
+180
+2,586
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+Financial Statements (PRC)
+Financial Statements (PRC)
+Financial expenses
+Investment income
+Decrease/(increase) in deferred tax assets
+Increase/(decrease) in deferred tax liabilities
+Increase in inventories
+Safety fund reserve
+Increase in operating receivables
+Decrease in operating payables
+Net cash flow from operating activities
+(b) Net change in cash:
+Cash balance at the end of the year
+Less: Cash at the beginning of the year
+Net decrease of cash
+(c) The analysis of cash held by the Group is as follows:
+Cash at bank and on hand
+- Cash on hand
+- Demand deposits
+Cash at the end of the year
+(d) Other cash paid relating to financing activities:
+Repayments of lease liabilities
+Others
+Total
+2019
+2018
+RMB million
+72,122
+Fair value loss/(gain)
+RMB million
+Net loss on disposal of non-current assets
+Amortisation of intangible assets and long-term deferred expenses
+(1) Related parties having the ability to exercise control over the Group
+(467)
+(719)
+17,894
+20,213
+Note:
+(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.
+53 DIVIDENDS
+(a) Dividends of ordinary shares declared after the balance sheet date
+Pursuant to a resolution passed at the director's meeting on 27 March 2020, final dividends in respect of the year ended 31 December 2019
+of RMB 0.19 (2018: RMB 0.26) per share totaling RMB 23,004 million (2018: RMB 31,479 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.
+(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 August 2019, the directors authorized
+to declare the interim dividends for the year ending 31 December 2019 of RMB 0.12 (2018: RMB 0.16) per share totaling RMB 14,529 million
+(2018: RMB 19,371 million).
+Pursuant to the shareholders' approval at the Annual General Meeting on 9 May 2019, a final dividend of RMB 0.26 per share totaling RMB
+31,479 million according to total shares on 10 June 2019 was approved. All dividends have been paid in the year ended 31 December 2019.
+Pursuant to the shareholders' approval at the Annual General Meeting on 15 May 2018, a final dividend of RMB 0.40 per share totaling RMB
+48,428 million according to total shares on 4 June 2018 was approved. All dividends have been paid in the year ended 31 December 2018.
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+55 RELATED PARTIES AND RELATED PARTY TRANSACTIONS
+54 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT
+The Group
+(a) Reconciliation of net profit to cash flows from operating activities:
+Net profit
+Add: Impairment losses on assets
+Credit impairment losses
+Depreciation of right-of-use assets
+Depreciation of fixed assets
+Dry hole costs written off
+80,289
+1,789
+11,605
+175,868
+2019
+2018
+RMB million
+60,313
+RMB million
+111,922
+111,922
+(51,609)
+113,218
+(1,296)
+2019
+RMB million
+2018
+RMB million
+14
+60,299
+60,313
+82
+111,840
+111,922
+2019
+RMB million
+16,859
+2018
+RMB million
+328
+17,187
+436
+436
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+127
+Financial Statements (PRC)
+153,420
+(10,448)
+(21,918)
+(1,043)
+1,264
+141
+12,246
+87,612
+99,462
+8,954
+10,505
+5,831
+6,921
+1,918
+1,526
+3,511
+The name of the company
+(2,656)
+(359)
+(12,628)
+(11,428)
+3,124
+(5,079)
+261
+(1,165)
+(9,285)
+(3,312)
+69
+909
+(11,802)
+10,352
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+:
+Unified social credit identifier
+113
+116
+(viii)
+869
+(vii)
+521
+(vii)
+7,765
+(vii)
+6,664
+3,098
+(vi)
+28,472
+38,668
+(v)
+23,489
+33,310
+(iv)
+7,319
+8,206
+(iii)
+192,224
+197,308
+(ii)
+272,789
+(ix)
+295,532
+1,066
+Interest expense
+129
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+(vii) Operating lease charges represent the rental incurred for operating leases in respect of land, buildings and equipment leased from Sinopec Group Company and
+fellow subsidiaries, associates and joint ventures. No lease charges have incurred in the current year because of the adoption of the new lease standard.
+(vi) Ancillary and social services represent expenditures for social welfare and support services such as educational facilities, media communication services, sanitation,
+accommodation, canteens and property maintenance.
+(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, and management services.
+(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.
+Notes:
+As at 31 December 2019 and 31 December 2018, 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 59(b). Guarantees given to banks
+by the Group in respect of banking facilities to associates and joint ventures are disclosed in Note 59(b).
+For the year ended 31 December 2019, the amount of rental the Group paid to Sinopec Group Company and fellow subsidiaries, associates and
+joint ventures for land, buildings and others are RMB 11,333 million, RMB 518 million and RMB 468 million (2018: RMB 7,636 million, RMB
+653 million and RMB 836 million).
+For the year ended 31 December 2019, no individually significant right-of-use assets were leased from Sinopec Group Company and fellow
+subsidiaries, associates and joint ventures by the Group. The interest expense recognised for the year ended 31 December 2019 on lease
+liabilities in respect of amounts due to Sinopec Group Company and fellow subsidiaries, associates and joint ventures was RMB 8,518 million.
+Included in the transactions disclosed above, for the year ended 31 December 2019 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 159,086 million (2018: RMB 140,427 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 142,433
+million (2018: RMB 123,772 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 3,097
+million (2018: RMB 6,664 million), lease charges for land, buildings and others paid by the Group of RMB 11,330 million, RMB 509 million and
+RMB 383 million (2018: RMB 7,636 million, RMB 643 million and RMB 602 million), respectively and interest expenses of RMB 1,334 million
+(2018: RMB 1,110 million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 74,453 million
+(2018: RMB 59,472 million), comprising RMB 73,365 million (2018: RMB 58,606 million) for sales of goods, RMB 1,066 million (2018: RMB
+848 million) for interest income and RMB 22 million (2018: RMB 18 million) for agency commission income.
+The amounts set out in the table above in respect of the year ended 31 December 2019 and 2018 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+31,684
+3,438
+6,457
+5,350
+(xi)
+(ix)
+1,110
+1,334
+(x)
+Net funds obtained from related parties
+Net deposits withdrawn from related parties
+848
+(i)
+Interest income
+Agency commission income
+Pipeline Ltd
+Associates of the Group:
+Sinopec Century Bright Capital Investment Limited
+Sinopec Petroleum Storage and Reserve Limited
+Sinopec Engineering Incorporation
+Sinopec Assets Management Corporation
+Sinopec Zhongyuan Petroleum Exploration Bureau
+Sinopec Shengli Petroleum Administration Bureau
+Sinopec Finance (Note)
+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
+Sinopec Group Company is an enterprise controlled by the PRC government. Sinopec Group Company directly and indirectly holds 68.77%
+shareholding of the Company.
+: RMB 326,547 million
+Zhang Yuzhuo
+State-owned
+Ultimate holding company
+No. 22, Chaoyangmen North Street, Chaoyang District, Beijing
+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.
+Registered capital
+Authorised representative
+Types of legal entity
+Relationship with the Group
+:
+Principal activities
+Registered address
+9111000010169286X1
+:
+Sinopec Finance
+SIBUR
+Zhongtian Synergetic Energy
+CIR
+Joint ventures of the Group:
+Other operating lease charges
+Operating lease charges for buildings
+Operating lease charges for land
+Ancillary and social services
+Production related services
+Exploration and development services
+Transportation and storage
+Purchases
+Sales of goods
+2018
+RMB million
+RMB million
+The Group
+2019
+China Petrochemical Corporation
+Note
+55 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+128
+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
+YASREF
+Taihu
+BASF-YPC
+(7,206)
+FREP
+(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:
+1,438
+For the year ended 31 December 2019
+5,883
+(12)
+(41)
+Changes in fair value of other equity instrument investments
+Subtotal
+(9,741)
+2,029
+(11,770)
+Subtotal
+(600)
+130
+(730)
+(53)
+(Less)/Add: Reclassification adjustments for amounts transferred to the
+consolidated income statement
+2,159
+(12,500)
+recognised during the year
+Effective portion of changes in fair value of hedging instruments
+Cash flow hedges:
+amount
+RMB million
+RMB million
+RMB million
+Net-of-tax
+Tax
+effect
+(10,341)
+Before-tax
+amount
+(41)
+(53)
+Financial Statements (PRC)
+121
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+(6,624)
+2,028
+(8,652)
+Other comprehensive income
+3,399
+3,399
+Subtotal
+(12)
+3,399
+Foreign currency translation differences
+(229)
+11
+(229)
+11
+EE
+(240)
+Subtotal
+(240)
+Other comprehensive income that can be converted into profit or loss under
+the equity method
+3,399
+2018
+5,580
+(1,162)
+(853)
+Less: Reclassification adjustments for amounts transferred to the consolidated
+income statement
+4,284
+(974)
+5,258
+recognised during the year
+Effective portion of changes in fair value of hedging instruments
+amount
+RMB million
+RMB million
+RMB million
+196
+Net-of-tax
+amount
+Before-tax
+2019
+Cash flow hedges:
+(a) The changes of other comprehensive income in consolidated income statement
+The Group
+38 OTHER COMPREHENSIVE INCOME
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Tax
+effect
+(657)
+Subtotal
+6,111
+6,742
+1,480
+1,480
+1,480
+1,480
+Foreign currency translation differences
+(810)
+(810)
+Other comprehensive income
+Subtotal
+Subtotal
+(810)
+(810)
+Other comprehensive income that can be converted into profit or loss under
+the equity method
+(31)
+8
+(39)
+(31)
+8
+(39)
+Changes in fair value of other equity instrument investments
+Subtotal
+4,941
+(1,170)
+Financial Statements (PRC)
+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.
+122
+For the year ended 31 December 2019
+6,453
+943
+5,954
+(20)
+(424)
+(4,088)
+(8,563)
+(1,789)
+(6,774)
+1,803
+(4,917)
+220
+4
+(8,563)
+(1,789)
+(6,774)
+1,803
+(4,917)
+4
+(3,664)
+(1,355)
+994
+(2,349)
+(3,664)
+2,282
+6,673
+1,037
+1,418
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+(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;
+207,423
+RMB million
+203,678
+3,745
+Total
+The PRC Company Law and Articles of Association of the Company have set out the following profit appropriation plans:
+117,000
+90,423
+Balance at 31 December 2019
+(16)
+86,678
+3,745
+Balance at 1 January 2019
+The Group
+Discretionary
+surplus reserves
+RMB million
+117,000
+Statutory
+surplus reserve
+RMB million
+Movements in surplus reserves are as follows:
+39 SURPLUS RESERVES
+As at 31 December 2019, cash flow hedge reserve amounted to a gain of RMB 1,102 million (31 December 2018: a loss of RMB 4,932 million),
+of which a gain of RMB 1,037 million was attribute to shareholders of the Company (31 December 2018: a loss of RMB 4,917 million).
+(1,890)
+(1,569)
+(321)
+2,746
+Appropriation
+(4,407)
+(41)
+(183)
+translation
+Cash flow
+hedges
+RMB million
+instrument
+investments
+RMB million
+RMB million
+currency
+Foreign
+Changes in
+fair value of
+other equity
+Changes in
+fair value of
+available-for-sale
+financial assets
+be converted
+into profit or
+loss under the
+equity method
+RMB million
+Other
+comprehensive
+income that can
+Minority
+31 December 2019
+1 January 2019
+31 December 2018
+Changes in 2018
+1 January 2018
+Change in accounting policy
+31 December 2017
+Equity Attributable to shareholders of the company
+(b) The change of each item in other comprehensive income
+The Group (Continued)
+38 OTHER COMPREHENSIVE INCOME (Continued)
+Changes in 2019
+Total other
+comprehensive
+differences
+Subtotal
+(7,208)
+(2,783)
+(4,425)
+(479)
+(510)
+45
+(3,481)
+(12)
+(12)
+45
+(7,196)
+(2,783)
+(4,413)
+(479)
+(510)
+57
+(57)
+(3,481)
+RMB million
+RMB million
+RMB million
+RMB million
+income
+interests
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+122,127
+(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.
+119,192
+2,933
+2
+124,618
+80,100
+77,572
+53,839
+43,205
+367,339
+335,357
+65,705
+65,566
+64,489
+124,271
+64,503
+1,063
+2,891,179
+Income from principal operations
+Gasoline
+Diesel
+Crude oil
+Basic chemical feedstock
+Kerosene
+Synthetic resin
+Synthetic fiber monomers and polymers
+Natural gas
+1,216
+2,966,193
+Others (i)
+168,823
+250,884
+37,087
+2018
+RMB million
+1,022,195
+1,021,272
+799,566
+36,298
+1,058,493
+812,355
+The income from principal operations mainly represents revenue from the sales of refined petroleum products, chemical products, crude oil and
+natural gas. 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 60.
+The detailed information about the Group's operating income is as follows:
+191,636
+2019
+RMB million
+RMB million
+2,900,488
+2,825,613
+699,202
+711,236
+615,342
+594,008
+553,848
+519,910
+214,911
+2018
+Income from other operations
+Sale of materials and others
+Rental income
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+42 FINANCIAL EXPENSES
+2019
+RMB million
+2018
+RMB million
+Interest expenses incurred
+123
+Less: Capitalised interest expenses
+Net interest expenses
+Accretion expenses (Note 34)
+Interest income
+6,954
+6,376
+1,015
+493
+9,646
+Balance at 31 December 2019
+15,585
+Add: Interest expense on lease liabilities
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+The applicable tax rate of the taxes and surcharges are set out in Note 4.
+246,498
+Total
+Note:
+(i) Others are primarily liquefied petroleum gas and other refinery and chemical by-products and joint products.
+41 TAXES AND SURCHARGES
+The Group
+2019
+2018
+RMB million
+RMB million
+Consumption tax
+City construction tax
+Education surcharge
+Resources tax
+Others
+Total
+202,671
+201,901
+16,247
+18,237
+12,011
+13,187
+5,883
+6,021
+5,723
+242,535
+7,152
+984,185
+RMB million
+The Group
+The Company
+Others
+Transaction with minority interests
+Balance at 1 January 2019
+The movements in capital reserve of the Group are as follows:
+RMB million
+Financial Statements (PRC)
+37 CAPITAL RESERVE
+120
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+36 SHARE CAPITAL (Continued)
+The Group (Continued)
+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.
+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.
+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 capital reserve for every 10 existing shares.
+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.
+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 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.
+All A shares and H shares rank pari passu in all material aspects.
+Capital management
+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 shareholders
+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 2019, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 7.4% (2018: 11.5%) and 50.0% (2018:
+46.1%), respectively.
+2019
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 31 and 58, respectively.
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+40 OPERATING INCOME AND OPERATING COSTS
+Income from principal operations
+Income from other operations
+Total
+The Group
+2019
+RMB million
+Operating costs
+RMB million
+2,900,488
+2,825,613
+65,705
+65,566
+2,966,193
+2,488,852
+2,891,179
+2,401,012
+2018
+Inter-segment sales
+External sales
+Inter-segment sales
+Corporate and others
+Financial Statements (PRC)
+External sales
+Elimination of inter-segment sales
+59 CONTINGENT LIABILITIES (Continued)
+Income from other operations
+Exploration and production
+Refining
+135
+Marketing and distribution
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Chemicals
+Consolidated income from principal operations
+For the year ended 31 December 2019
+Inter-segment sales
+Marketing and distribution
+(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.
+(iv) Chemicals which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products 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.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(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.
+(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.
+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.
+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.
+60 SEGMENT REPORTING
+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.
+Legal contingencies
+The Group recognised normal routine pollutant discharge fees of approximately RMB 9,235 million in the consolidated financial statements for the
+year ended 31 December 2019 (2018: RMB 7,940 million).
+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.
+Environmental contingencies
+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.
+External sales
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+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, non-current liabilities due within one year, long-term loans, debentures payable,
+deferred tax liabilities, other non-current liabilities and other unallocated liabilities.
+Inter-segment sales
+External sales
+Refining
+Inter-segment sales
+External sales
+Exploration and production
+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.
+Income from principal operations
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+60 SEGMENT REPORTING (Continued)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+136
+Reportable information on the Group's operating segments is as follows:
+For the year ended 31 December 2019
+Corporate and others
+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 2019 and 31 December 2018, the Group estimates
+that there is no need to pay for the guarantees. Thus no liabilities have been accrued for a loss related to the Group's obligation under these
+guarantee arrangements.
+1,367,060
+(1,879,694)
+(1,934,372)
+2,900,488
+2,825,613
+10,283
+10,738
+5,464
+5,389
+33,247
+32,424
+14,861
+15,492
+1,850
+1,523
+65,705
+65,566
+2,966,193
+2,891,179
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+137
+Financial Statements (PRC)
+138
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+60 SEGMENT REPORTING (Continued)
+1,482,972
+650,271
+654,337
+716,789
+Consolidated income from other operations
+Consolidated operating income
+2019
+2018
+RMB million
+RMB million
+111,114
+93,499
+89,315
+95,954
+200,429
+189,453
+141,674
+148,930
+Chemicals
+1,077,018
+1,218,692
+1,258,018
+1,393,557
+1,408,989
+4,159
+1,397,716
+5,224
+1,414,213
+425,508
+457,406
+54,865
+73,835
+480,373
+531,241
+828,635
+1,109,088
+(ii) The Group provided a guarantee in respect to the loan of New Bright International Development Limited borrowed from Sinopec Overseas Oil & Gas Limited. As at
+31 December 2019, the loan agreement was terminated, in consequence, the guarantee agreement was terminated.
+845
+24,398
+50
+650
+1,616
+1,344
+10,926
+3,964
+4,830
+minority interests
+Dividends paid to
+658
+232
+1,004
+600
+1,016
+433
+798
+238
+2,612
+1,112
+2,737
+1,651
+7.780
+interests
+attributable to minority
+Comprehensive income
+1,879
+399
+664
+00
+14
+Authorised but not contracted for
+Authorised and contracted for (i)
+At 31 December 2019 and 31 December 2018, the capital commitments of the Group are as follows:
+Capital commitments
+58 COMMITMENTS
+3,308
+5.532
+3,766
+4,601
+738
+716
+38
+159
+38
+6.695
+5,121
+3,467
+2,128
+24.825
+40,260
+(used in) operating activities
+Net cash generated from/
+1,191
+822
+22
+104
+622
+(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. At 31
+December 2019, the amount withdrawn by Zhongtian Synergetic Energy from banks and guaranteed by the Group was RMB 10,140 million (31 December 2018:
+RMB 12,168 million).
+3,099
+1,067
+380
+69
+79
+34
+33
+30
+28
+29
+28
+852
+1,309
+1,400
+302
+The implementation of commitments in previous year and the Group's commitments did not have material discrepancy.
+(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 2019 and 31 December 2018, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+At 31 December At 31 December
+Joint ventures
+Associates (i)
+Others (ii)
+Total
+Notes:
+2019
+RMB million
+7,100
+10,140
+2018
+RMB million
+5,033
+12,168
+7,197
+17,240
+59 CONTINGENT LIABILITIES
+3,137
+Between one and two years
+Between two and three years
+Between three and four years
+Between four and five years
+Thereafter
+Total
+RMB million
+1,140
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Total
+At 31 December
+2019
+RMB million
+At 31 December
+2018
+RMB million
+138,088
+63,967
+202,055
+141,045
+54,392
+195,437
+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:
+Within one year
+(i) The investment commitments of the Group is RMB 6,100 million (2018: RMB 5,553 million).
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+58 COMMITMENTS (Continued)
+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
+Exploration licenses for exploration activities are registered with the Ministry of Natural 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 Natural 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.
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Natural Resources annually
+which are expensed. Expenses recognised were approximately RMB 179 million for the year ended 31 December 2019 (2018: RMB 231 million).
+Estimated future annual payments are as follows:
+At 31 December
+2019
+At 31 December
+2018
+RMB million
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Operating profit/(loss)
+2,656
+Exploration and production
+Capital expenditure
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Depreciation, depletion and amortisation
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Impairment losses on long-lived assets
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+(2) Geographical information
+2019
+2018
+RMB million
+RMB million
+61,739
+1.595
+Financial Statements (PRC)
+Exploration and production
+139
+60 SEGMENT REPORTING (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+538,129
+Short-term loans
+31,196
+44,692
+Non-current liabilities due within one year
+69,490
+17,450
+Long-term loans
+39,625
+61,576
+Debentures payable
+19,157
+For the year ended 31 December 2019
+31,951
+6,809
+5,948
+Other non-current liabilities
+15,364
+27,276
+Other unallocated liabilities
+4,330
+7,627
+Total liabilities
+878,166
+734,649
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Deferred tax liabilities
+692,195
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+RMB million
+245
+4,274
+3
+109,967
+108,812
+1,797
+2,866
+13,379
+13,966
+16,296
+21,572
+18,164
+353
+19,676
+50,732
+117,976
+147,094
+6,906
+1,979
+19,578
+22,438
+21,429
+29,566
+27,908
+31,372
+42,155
+60,331
+989,668
+50,892
+1,040,560
+80
+17
+2018
+At 31 December
+376,470
+2,891,179
+395,129
+52,705
+1,288,381
+1,235,676
+RMB million
+2019
+At 31 December
+329,443
+2,966,193
+2,119,580
+2,131,078
+505,672
+264
+RMB million
+2019
+RMB million
+Others
+Non-current assets
+Mainland China
+Others
+Singapore
+Mainland China
+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 assets 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.
+6,281
+345
+16
+1,374
+2018
+By segment
+Total segment liabilities
+136,420
+Total assets
+Liabilities
+Segment liabilities
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+2019
+2018
+RMB million
+RMB million
+6,289
+(11,557)
+Other unallocated assets
+30,074
+29,781
+24,106
+16,586
+25,970
+3,530
+(8,151)
+(40)
+(3,634)
+86,220
+80,437
+3,148
+2,595
+53,703
+(580)
+Deferred tax assets
+Cash at bank and on hand
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Elimination
+Total segment operating profit
+Investment income
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Long-term equity investments
+Total segment investment income
+Add: Other income
+(Losses)/gains from changes in fair value
+Asset disposal losses
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+Assets
+Segment assets
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Total segment assets
+Less: Financial expenses
+144,138
+429
+2,676
+317,641
+175,884
+156,865
+131,686
+152,799
+1,438,842
+1,220,347
+127,927
+167,015
+152,204
+145,721
+17,616
+399,242
+21,694
+37,531
+1,755,071
+1,592,308
+162,262
+93,874
+120,617
+103,709
+219,381
+159,028
+53,515
+37,380
+Corporate and others
+18,482
+3,499
+271,356
+321,686
+5,178
+6,905
+1,383
+(1,177)
+12,628
+11,428
+9,967
+(1,001)
+5,973
+6,694
+(3,511)
+(1,318)
+321,080
+(742)
+101,474
+2,598
+2,070
+2,607
+3,042
+90,016
+At 31 December
+2019
+RMB million
+100,502
+At 31 December
+2018
+RMB million
+410,950
+90,025
+477
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2019
+2018
+2,233
+Actual
+investment at
+31 December
+million
+2019
+million
+equity
+interest/voting
+right held by
+the Group
+Minority
+Interests at
+31 December
+2019
+%
+RMB million
+RMB 1,400
+RMB 1,856
+100.00
+24
+Trading of crude oil and petrochemical products
+RMB 5,000
+RMB 6,585
+100.00
+4,593
+Production and sale of catalyst products
+RMB 1,500
+RMB 2,424
+100.00
+298
+Manufacturing of intermediate petrochemical products and
+petroleum products
+RMB 15,651
+Registered
+capital/
+paid-up capital
+Principal activities
+(c) Subsidiaries acquired through business combination under common control:
+Sinopec Hainan Refining and Chemical Company
+Limited
+Trading of petrochemical products
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past events,
+current conditions and forecasts of future economic conditions. The Group regularly monitors and reviews the assumptions used for estimating
+expected credit losses.
+(e) 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 would be higher than estimated.
+132
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+57 PRINCIPAL SUBSIDIARIES
+The Company's principal subsidiaries have been consolidated into the Group's financial statements for the year ended 31 December 2019. The
+following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the Group:
+Percentage of
+Full name of enterprise
+(a) Subsidiaries acquired through group restructuring:
+China Petrochemical International Company Limited
+China International United Petroleum and Chemical
+Company Limited
+RMB 15,651
+Sinopec Catalyst Company Limited
+Sinopec Pipeline Storage & Transportation
+Company Limited
+Sinopec Lubricant Company Limited
+Sinopec Yizheng Chemical Fibre Limited Liability
+Company
+Sinopec Marketing Co. Limited ("Marketing Company")
+Sinopec Kantons Holdings Limited
+("Sinopec Kantons")
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical") (i)
+(b) Subsidiaries established by the Group:
+Sinopec International Petroleum Exploration and
+Production Limited ("SIPL")
+Sinopec Overseas Investment Holding Limited ("SOIH")
+Sinopec Chemical Sales Company Limited
+Sinopec Great Wall Energy & Chemical Company
+Limited
+Sinopec Beihai Refining and Chemical Limited
+Liability Company
+Sinopec Qingdao Refining and Chemical
+Company Limited
+Sinopec-SK
+Sinopec Yangzi Petrochemical Company Limited
+100.00
+Pipeline storage and transportation of crude oil
+RMB 12,000
+Investment in exploration, production and sale of petroleum
+RMB 8,000
+RMB 8,000
+100.00
+8,669
+and natural gas
+Investment holding of overseas business
+USD 1,662
+USD 1,662
+100.00
+Marketing and distribution of petrochemical products
+Coal chemical industry investment management, production
+and sale of coal chemical products
+RMB 1,000
+products and petroleum products
+RMB 1,165
+74
+RMB 22,761
+RMB 22,795
+100.00
+(88)
+Import and processing of crude oil, production, storage and
+sale of petroleum products and petrochemical products
+Manufacturing of intermediate petrochemical products and
+petroleum products
+RMB 5,294
+RMB 5,240
+98.98
+133
+RMB 5,000
+RMB 4,250
+100.00
+(d) Measurement of expected credit losses
+5,927
+RMB 4,646
+RMB 12,000
+100.00
+Production and sale of refined petroleum products, lubricant
+base oil, and petrochemical materials
+Production and sale of polyester chips and polyester fibres
+RMB 3,374
+RMB 3,374
+100.00
+70
+RMB 4,000
+RMB 6,713
+100.00
+Marketing and distribution of refined petroleum products
+Provision of crude oil jetty services and natural gas pipeline
+transmission services
+RMB 28,403
+50.00
+RMB 20,000
+70,528
+HKD 248
+HKD 3,952
+60.33
+4,359
+Manufacturing of synthetic fibres, resin and plastics,
+intermediate petrochemical products and petroleum
+products
+RMB 10,824
+RMB 5,820
+50.44
+14,942
+Manufacturing of plastics, intermediate petrochemical
+RMB 8,140
+70.42
+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 period. 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 periods is adjusted if there are significant changes from previous
+estimates.
+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 "CASS 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.
+(c) Depreciation
+(b) Impairment for assets
+The ultimate holding company
+The balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures at 31 December 2019 and 31 December 2018
+are as follows:
+(4) Balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+55 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+(f) On the basis of a series of continuing connected transaction agreements signed in 2000, the Company and Sinopec Group Company have
+signed the Fifth Supplementary Agreement and the Fourth Revised Memorandum of land use rights leasing contract on 24 August 2018,
+which took effect on 1 January 2019 and made adjustment to "Mutual Supply Agreement”, “Agreement for Provision of Cultural and
+Educational, Health Care and Community Services", "Buildings Leasing Contract", "Intellectual Property Contract" and "Land Use Rights
+Leasing Contract", etc.
+(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.
+(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.
+(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.
+(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.
+At 31 December
+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%.
+.
+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 2019.
+The terms of these agreements are summarised as follows:
+(xi) The Group obtained loans, discounted bills and others from Sinopec Group Company and fellow subsidiaries.
+(x) Interest expense represents interest charges on the loans 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.
+Notes (Continued):
+where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+(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):
+2019
+At 31 December
+2018
+RMB million
+806
+-
+7,470
+12,916
+11
+52
+74
+41,057
+35,707
+RMB million
+Long-term loans (including current portion) (Note)
+Short-term loans
+RMB million
+Other non-current liabilities
+Contract liabilities.
+Accounts payable
+Bills payable
+Other non-current assets
+Prepayments and other current assets
+Other receivables
+Receivables financing
+Accounts receivable
+Bills receivable
+Cash at bank and on hand
+At 31 December At 31 December
+2019
+2018
+RMB million
+Other related companies
+Other payables
+85.00
+55 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+Financial Statements (PRC)
+Note: As at 31 December 2019, the long-term borrowings (including current portion) mainly include an interest-free loan with a maturity period of 20 years amounting
+to RMB 35,560 million from Sinopec Group Company through 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 23 and Note 31.
+As at and for the year ended 31 December 2019, and as at and for the year ended 31 December 2018, 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.
+(5) Key management personnel emoluments
+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:
+Short-term employee benefits
+Retirement scheme contributions
+Total
+2019
+RMB thousand
+9,209
+536
+9,745
+2018
+RMB thousand
+5,745
+351
+6,096
+Lease liabilities (including current portion)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+56 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+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.
+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.
+(a) Oil and gas properties and reserves
+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.
+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, the Group's earnings could be affected by changes in depreciation expense or an immediate write-down of the
+carrying amount of oil and properties.
+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.
+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.
+131
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+89,147
+46,877
+130
+33
+407
+11,424
+1,285
+6,901
+731
+-
+734
+23,482
+17
+16
+94
+51
+82,255
+64
+3,801
+1,991
+21,384
+15,520
+4,413
+3,248
+16,077
+18,158
+12,470
+5,465
+27,304
+47,450
+6352
+5,270
+1,543
+RMB 7,193
+(1,698)
+(7)
+Net non-current assets/
+(liabilities)
+281,624 258,976
+(3,718)
+6,970
+23,186
+19,101
+10,870
+10.756
+12,619
+12,763
+9,846
+10,603
+21,560
+12,612
+Summarised consolidated statement of comprehensive income and cash flow
+Year ended 31 December
+Marketing Company
+2019
+SIPL
+2018
+2019
+2018
+Shanghai Petrochemical
+2019
+(1,627)
+(132)
+(158)
+(688)
+8,662
+7,304
+(9,700)
+417
+Non-current assets
+340,356
+261,062
+13,234
+38,020
+23,327
+19,241
+11,558
+2018
+11.444
+12,895
+11,473
+12,301
+21,567
+12,612
+Non-current liabilities
+(58,732) (2,086)
+(16,952)
+(31,050)
+(141)
+(140)
+(688)
+12,777
+Fujian Petrochemical
+2019
+Sinopec Kantons
+Shanghai SECCO
+1,274
+1,398
+28,341
+26,320
+31,016
+17,134
+Profit for the year
+22,984
+21,995
+2.831
+3,272
+2,225
+5,261
+5,277
+1,595
+1,131
+1,065
+3,137
+3,099
+664
+1,879
+Total comprehensive income
+23,354
+22,538
+2,693
+4,536
+477
+(2,513)
+5,535
+100,346
+Sinopec-SK
+2018
+2019
+2018
+2019
+2018
+2019
+2018
+RMB million RMB million
+RMB million
+RMB million
+RMB million
+107,765
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Turnover
+1,427,705
+1,443,698
+3,282
+5,037
+RMB million
+(1,677)
+766
+984
+Financial Statements (PRC)
+134
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+57 PRINCIPAL SUBSIDIARIES (Continued)
+Summarised financial information on subsidiaries with material minority interests
+Set out below are the summarised financial information which the amount before inter-company eliminations for each subsidiary whose minority
+interests that are material to the Group.
+Summarised consolidated balance sheet
+Marketing Company
+At
+At
+133
+SIPL
+At
+Shanghai Petrochemical
+At
+At
+Fujian Petrochemical
+At
+At
+Sinopec Kantons
+At
+At
+Shanghai SECCO
+At
+At
+Sinopec-SK
+At
+At
+2019
+2018
+At
+2019
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Note:
+RMB 7,193
+59.00
+4,863
+Manufacturing of intermediate petrochemical products and
+petroleum products
+RMB 9,628
+RMB 7,205
+75.00
+4,479
+Sinopec Qingdao Petrochemical Company Limited
+Manufacturing of intermediate petrochemical products and
+petroleum products
+RMB 1,595
+RMB 7,233
+(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
+Manufacturing of intermediate petrochemical products and
+petroleum products
+RMB 10,000
+RMB 4,804
+55.00
+8,006
+(d) Subsidiaries acquired through business combination not under common control:
+Shanghai SECCO
+Production and sale of petrochemical products
+RMB 7,801
+RMB 7,801
+67.60
+5.997
+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.
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong SAR, respectively, all of the above principal subsidiaries
+are incorporated and operate their businesses principally in the PRC.
+Gaoqiao Petrochemical Company Limited
+Production, sale, research and development of ethylene and
+downstream byproducts
+2018
+2018
+11,858
+9,537
+5,337
+2,750
+Current liabilities
+(192,106)
+(181,766)
+(456)
+(483)
+(15,479)
+(13,913)
+(804)
+1,209
+(50)
+(3,722)
+(3,196)
+(2,233)
+(15,037)
+(2,333)
+Net current (liabilities)/assets
+(62,840)
+(50,905)
+18,695
+16,248
+6,830
+11,386
+(2,961)
+2019
+1,284
+1,788
+2019
+2018
+2019
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+816
+RMB million
+2018
+RMB million
+2019
+2018
+RMB million
+RMB million
+Current assets
+129,266
+130,861
+19,151
+16,731
+22,309
+25,299
+RMB million
+8,285
+Extraordinary (gains)/losses for the year:
+149
+Other equity instrument investments:
+- Other Investments
+Liabilities
+Derivative financial liabilities:
+- Derivative financial liabilities
+At 31 December 2018
+Receivables financing:
+The Group
+Financial assets held for trading:
+- Structured deposits
+– Equity investments (listed and at quoted market price)
+Derivative financial assets:
+- Derivative financial assets
+Other equity instrument investments:
+Assets
+- Other Investments
+- Derivative financial assets
+– Equity investments, listed and at quoted market price
+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.
+•
+Derivative financial assets:
+•
+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 2019
+The Group
+Assets
+Financial assets held for trading:
+- Structured deposits
+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.
+Liabilities
+Level 1
+RMB million
+Level 2
+RMB million
+1,209
+1,520
+2,729
+2,729
+Level 1
+RMB million
+1,520
+Level 2
+RMB million
+Total
+RMB million
+25,550
+25,550
+182
+182
+874
+Level 3
+RMB million
+1,209
+14,299
+13,371
+Level 3
+RMB million
+Total
+RMB million
+3,318
+3,318
+1
+1
+128
+709
+837
+8,622
+8,622
+90
+219
+1,431
+1,521
+709
+61 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2019
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+142 Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+14,030
+17,124
+6,251
+Total
+446,772
+459,257
+1,269
+356,257
+30,931
+17,154
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+141
+Financial Statements (PRC)
+54,915
+38,674
+31,951
+Debentures payable
+Other payables and employee benefits payable
+84,775
+84,775
+84,775
+Non-current liabilities due within one year
+17,450
+18,053
+18,053
+Long-term loans
+61,576
+66,387
+792
+40,885
+13,807
+10,903
+Financial Statements (PRC)
+7,013
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+61 FINANCIAL INSTRUMENTS (Continued)
+2018
+RMB million
+RMB million
+27
+172
+1
+At 31 December
+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.
+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 23 and Note 31, respectively.
+At 31 December 2019, 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 352 million (2018: decrease/increase RMB 424
+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 2018.
+(c) 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 contracts, to manage a portion of such risk.
+At 31 December 2019, 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 2019, the fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB 788 million (2018: RMB 7,844 million) and derivative financial liabilities of RMB 2,728 million (2018: RMB
+13,568 million).
+At 31 December 2019, 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 increase/decrease the Group's
+net profit for the year by approximately RMB 3,134 million (2018: decrease/increase RMB 197 million), and decrease/increase the Group's other
+comprehensive income by approximately RMB 4,289 million (2018: increase/decrease RMB 6,850 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 2018.
+(b) Interest rate risk
+At 31 December
+2019
+Singapore Dollar
+US Dollar
+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.
+(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 USD and lease liabilities denominated in
+SGD. The Group enters into foreign exchange contracts to manage currency risk exposure.
+Included primarily in short-term and long-term debts and lease liabilities are the following amounts denominated in a currency other than the
+functional currency of the entity to which they relate:
+The Group
+At 31 December
+At 31 December
+2019
+million
+2018
+million
+Gross exposure arising from loans and lease liabilities
+US Dollar
+Singapore Dollar
+103
+4
+668
+A 5 percent strengthening/weakening of Renminbi against the following currencies at 31 December 2019 and 31 December 2018 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 2018.
+The Group
+For the year ended 31 December 2019
+186,341
+7,887
+1,183
+121,071
+121,071
+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:
+2019
+2018
+2018
+Weighted
+average
+return on
+net assets
+Diluted
+earnings earnings
+per share
+per share
+(%) (RMB/Share) (RMB/Share)
+Weighted
+average
+return on
+net assets
+Diluted
+earnings
+Basic
+earnings
+per share
+per share
+(%) (RMB/Share) (RMB/Share)
+7.90
+Basic
+0.476
+2019
+121,071
+63,089
+121,071
+0.521
+2019
+121,071
+121,071
+2018
+121,071
+121,071
+0.521
+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):
+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)
+64 RETURN ON NET ASSETS AND EARNINGS PER SHARE
+2019
+57,591
+121,071
+0.476
+2018
+63,089
+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)
+0.476
+8.67
+0.521
+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
+羅兵咸永道
+The consolidated financial statements of China Petroleum & Chemical Corporation (the "Company") and its subsidiaries (the "Group") set out on pages
+149 to 203, which comprise:
+pwc
+• the consolidated balance sheet as at 31 December 2019;
+•
+the consolidated statement of comprehensive income for the year then ended;
+•
+the consolidated statement of changes in equity for the year then ended;
+•
+Financial Statements (International)
+• the consolidated income statement for the year then ended;
+REPORT OF THE INTERNATIONAL AUDITOR
+Financial Statements (International)
+Financial Statements (PRC)
+Net profit attributable to the Company's ordinary equity
+shareholders
+Net profit deducted extraordinary gains and losses
+attributable to the Company's ordinary equity
+shareholders
+65 EVENTS AFTER THE BALANCE SHEET DATE
+0.521
+7.45
+0.448
+0.448
+8.20
+0.493
+0.493
+In early 2020, the outbreak of Coronavirus Disease 2019 ("COVID-19") has significant impacts on the consumption of refined oil products and sales
+of chemical products of the Group. The Group has taken a series of strong and effective measures, and has coordinated the prevention and control
+of the COVID-19 and the resumption of work and production with all-out efforts to minimize its impact.
+International crude oil prices dropped significantly in March 2020 under the impact of the outbreak of the COVID-19 and the breakdown of OPEC's
+production reduction negotiation, which has a significant impact on the Group's operation.
+The COVID-19 and international crude oil prices drop in March 2020 are events arose after the balance sheet date, which are non-adjusting events
+after the balance sheet date. The Group will keep continuous attention on the situation of the COVID-19 and future fluctuation in oil prices, take
+responsive tackling measures, and assess the impact on the financial position and operating results of the Group after the balance sheet date. Up to
+the date of the issuance of this report, the assessment is still in progress.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+145
+2018
+2019
+57,591
+121,071
+0.476
+(ii) Diluted earnings per share
+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)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+61 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 2.37% to 4.90% (2018: from 2.76% 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 2019 and 31 December 2018:
+Financial Statements (PRC)
+Carrying amount
+Fair value
+At 31 December
+2018
+RMB million
+63,085
+62,656
+The Group has not developed an internal valuation model necessary to estimate 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.
+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 2019 and 31 December 2018.
+62 EXTRAORDINARY GAINS AND LOSSES
+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:
+Net loss on disposal of non-current assets
+At 31 December
+2019
+RMB million
+63,946
+62,594
+144
+Financial Statements (PRC)
+143
+7,013
+1,323
+26,873
+1,450
+35,069
+Derivative financial liabilities:
+- Derivative financial liabilities
+5,500
+8,071
+5,500
+8,071
+During the year ended 31 December 2019, there was no transfer between instruments in Level 1 and Level 2.
+13,571
+13,571
+Management of the Group 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 structured deposits and receivables financing classified as
+Level 3 financial assets.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Donations
+127
+Government grants
+Other non-operating loss, net
+(3,414)
+(3,658)
+(3,320)
+(3,459)
+(94)
+(199)
+2,312
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+63 BASIC AND DILUTED EARNINGS PER SHARE
+(i) Basic earnings per share
+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:
+Net profit attributable to equity shareholders of the Company (RMB million)
+Weighted average number of outstanding ordinary shares of the Company (million)
+Basic earnings per share (RMB/share)
+The calculation of the weighted average number of ordinary shares is as follows:
+For the year ended 31 December 2019
+1,597
+1,613
+(5,970)
+(5,011)
+Tax effect
+Total
+Attributable to:
+Equity shareholders of the Company
+Minority interests
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+2019
+RMB million
+2018
+RMB million
+1,318
+209
+(6,857)
+742
+180
+(7,482)
+(410)
+(1,023)
+729
+Gain on holding and disposal of various investments
+186,341
+- Receivables financing
+Accounts payable
+RMB
+Year ended 31 December
+2019
+Notes
+(Amounts in million, except per share data)
+for the year ended 31 December 2019
+(B) FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
+CONSOLIDATED INCOME STATEMENT
+2018
+RMB
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Hong Kong, 27 March 2020
+PricewaterhouseCoopers
+Certified Public Accountants
+Financial Statements (International)
+The engagement partner on the audit resulting in this independent auditor's report is CHAN KWONG TAK.
+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.
+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.
+148
+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.
+Turnover and other operating revenues
+3
+Depreciation, depletion and amortisation
+(65,642)
+(55,313)
+5
+Selling, general and administrative expenses
+(2,292,983)
+Turnover
+(2,380,907)
+Operating expenses
+65,566
+2,891,179
+2,825,613
+2,900,488
+65,705
+2,966,193
+4
+Other operating revenues
+Purchased crude oil, products and operating supplies and expenses
+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.
+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.
+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.
+Evaluated the sensitivity analyses prepared by the Group, and assessed
+the potential impacts of a range of possible outcomes.
+Used professionals with specialized skill and knowledge to assist in
+the evaluation of the appropriateness of discount rates adopted by the
+management.
+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.
+Compared the future cost profiles against historical costs and relevant
+budgets of the Group.
+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 relevant
+external data.
+Compared estimates of future crude oil prices adopted by the Group
+against a range of published crude oil price forecasts.
+Based on our work, we found the key assumptions and input data adopted
+were supported by the evidence we obtained.
+Assessed the methodology adopted in the discounted cash flow
+projections, tested mathematical accuracy of the projections, and the
+completeness, accuracy, and relevance of underlying data used in the
+projections.
+•
+•
+•
+.
+•
+In auditing the respective value in use calculations of property, plant and
+equipment relating to oil and gas producing activities, we performed the
+following key procedures on the relevant discounted cash flow projections
+prepared by management:
+Evaluated and tested the key controls in respect of the preparation of
+the discounted cash flow projections of property, plant and equipment
+relating to oil and gas producing activities.
+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.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
+directors.
+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.
+As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
+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.
+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.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
+Those charged with governance are responsible for overseeing the Group's financial reporting process.
+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.
+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.
+RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+Financial Statements (International)
+147
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+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.
+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.
+(108,812)
+(109,967)
+Exploration expenses, including dry holes.
+(10,510)
+Shareholders of the Company
+Attributable to:
+78,897
+72,033
+Profit for the year
+(20,213)
+57,465
+(17,894)
+Income tax expense
+99,110
+89,927
+Profit before taxation
+13,974
+12.777
+10
+61,618
+Non-controlling interests
+14,568
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+The notes on pages 156 to 203 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.
+0.509
+0.475
+0.509
+0.475
+15
+15
+Diluted
+Basic
+Earnings per share:
+78,897
+72,033
+Profit for the year
+17,279
+20, 21
+How our audit addressed the Key Audit Matter
+Share of profits less losses from associates and joint ventures
+919
+(246,498)
+(242,535)
+7
+(77,721)
+(81,482)
+6
+8
+Interest expense
+Operating profit
+Total operating expenses
+Other operating expense, net
+Taxes other than income tax
+Personnel expenses
+(10,744)
+Finance costs
+(436)
+(5,360)
+(2,879,995)
+Investment income
+1,001
+(9,967)
+Net finance costs
+596
+(170)
+Foreign currency exchange (losses)/gains, net
+7,726
+7,206
+Interest income
+(7,321)
+(2,808,915)
+82,264
+(17,003)
+9
+186,341
+1,871
+Because of the significance of the carrying amount of property, plant and
+equipment relating to oil and gas producing activities as at 31 December
+2019, together with the use of significant estimations or assumptions
+in determining their respective value in use, we had placed our audit
+emphasis on this matter.
+86,198
+Future cost profiles; and
+Independence
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 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.
+BASIS FOR 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
+2019, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial
+Reporting Standards ("IFRSS") issued by the International Accounting Standard Board and have been properly prepared in compliance with the
+disclosure requirements of the Hong Kong Companies Ordinance.
+Our opinion
+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.
+the notes to the consolidated financial statements, which include a summary of significant accounting policies.
+the consolidated statement of cash flows for the year then ended; and
+27,098
+Debentures payable
+19,157
+24,400
+764
+•
+PricewaterhouseCoopers, 22/F, Prince's Building, Central, Hong Kong
+T: +852 2289 8888, F: +852 2810 9888, www.pwchk.com
+146
+39,625
+49,604
+404
+6,492
+15,610
+Future crude oil prices;
+Low crude oil prices gave rise to possible indication that the carrying
+amount of property, plant and equipment relating to oil and gas producing
+activities as at 31 December 2019 might be impaired. The Group has
+adopted value in use as the respective recoverable amounts of property,
+plant and equipment relating to oil and gas producing activities, which
+involved key estimations or assumptions including:
+Refer to note 8 “Other operating expense, net", note 16 "Property, plant
+and equipment" and note 43 "Accounting estimates and judgements" to
+the consolidated financial statements.
+Recoverability of the carrying amount of property, plant and equipment
+relating to oil and gas producing activities
+Key Audit Matter
+The key audit matter identified in our audit is "Recoverability of the carrying amount of property, plant and equipment relating to oil and gas producing
+activities".
+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.
+KEY AUDIT MATTERS
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+764
+Long-term loans
+16,667
+177,674
+More than
+five years
+RMB million
+Short-term loans
+44,692
+45,040
+Derivative financial liabilities
+RMB million
+13,571
+45,040
+13,571
+Bills payable
+6,416
+6,416
+Discount rates.
+6,416
+13,571
+two years
+but less than
+five years
+More than
+At 31 December 2018
+More than
+one year but
+less than
+two years
+RMB million
+351,223
+Total
+616,756
+808,654
+384,595
+15,676
+22,932
+6,205
+290,539
+77,285
+323,842
+Total
+contractual
+Carrying undiscounted
+amount
+cash flow
+RMB million RMB million
+Within one
+year or
+on demand
+RMB million
+Lease liabilities
+72,180
+45,008
+69,490
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+-
+For accounts receivable, bills receivable and receivables financing, the Group applies the "No. 22 Accounting Standards for Business Enterprises
+Financial instruments: recognition and measurement" simplified approach to measuring expected credit losses which uses a lifetime expected
+loss allowance for all accounts receivable, bills receivable and receivables financing.
+To measure the expected credit losses, accounts receivable, bills receivable and receivables financing have been grouped based on shared credit
+risk characteristics and the days past due.
+The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 December 2019 or 1 January 2019,
+respectively, and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current
+and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the accounts receivable, bills receivable
+and receivables financing.
+The detailed analysis of accounts receivable and receivables financing is listed in note 8 and note 9.
+The Group's primary type of financial assets that are subject to the expected credit loss model is accounts receivable, bills receivable, receivables
+financing and other receivables.
+The Group's other receivables are considered to have low credit risk, and the loss allowance recognised during the year was therefore limited to
+12 months expected credit losses. The Group considers "low credit risk" for other receivables when they have a low risk of default and the issuer
+has a strong capacity to meet its contractual cash flow obligations in the near term.
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+61 FINANCIAL INSTRUMENTS (Continued)
+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 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 liquidity risk.
+140
+The carrying amounts of cash at bank and on hand, financial assets held for trading, derivative financial assets, accounts receivable, bills
+receivable, receivables financing and other receivables, represent the Group's maximum exposure to credit risk in relation to financial assets.
+(ii) Impairment of 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 deposits) 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 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 2019, 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.
+(i) Risk management
+Future production profiles;
+Financial Statements (PRC)
+72,180
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2019
+61 FINANCIAL INSTRUMENTS
+Overview
+Financial assets of the Group include cash at bank and on hand, financial assets held for trading, derivative financial assets, accounts receivable,
+bills receivable, receivables financing, other receivables and other equity instrument investments. Financial liabilities of the Group include short-term
+loans, derivative financial liabilities, bills payable, accounts payable, employee benefits payable, other payables, long-term loans, debentures payable
+and lease liabilities.
+The Group has exposure to the following risks from its uses of financial instruments:
+•
+credit risk;
+• liquidity risk; and
+• 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 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 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.
+At 31 December 2019, the Group has standby credit facilities with several PRC financial institutions which provide the Group to borrow up to RMB
+379,649 million (2018: RMB 387,748 million) on an unsecured basis, at a weighted average interest rate of 3.57% per annum (2018: 3.87%). At 31
+December 2019, the Group's outstanding borrowings under these facilities were RMB 2,947 million (2018: RMB 21,236 million) and were included
+in loans.
+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:
+Credit risk
+contractual
+2,729
+2,729
+Bills payable
+11.834
+11,834
+Accounts payable
+2,729
+187,958
+187,958
+Other payables and employee benefits payable
+77,093
+Total
+Non-current liabilities due within one year
+77,093
+187,958
+Derivative financial liabilities
+11,834
+77,093
+At 31 December 2019
+More than
+Within one one year
+year or but less than
+on demand
+two years
+RMB million RMB million
+amount
+RMB million RMB million
+31,633
+More than
+two years
+but less than
+More than
+five years
+Carrying undiscounted
+cash flow
+five years
+RMB million
+RMB million
+Short-term loans
+31,196
+31,633
+Lease accounting policy applied until 31 December 2018 is disclosed in Note 2(x)(iii).
+Financial Statements (International)
+In applying IFRS 16 Leases for the first time, the Group has used the following practical expedients permitted by the standard:
+(i) Practical expedients applied
+On adoption of IFRS 16 Leases, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating
+leases'. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental
+borrowing rate as of 1 January 2019. The lessee's incremental borrowing rates applied to the lease liabilities on 1 January 2019 ranged from
+4.35% to 4.90%.
+the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases.
+the use of a single discount rate to a portfolio of leases with reasonably similar characteristics,
+•
+Organisation
+IFRS 16 Leases - Impact of adoption
+A number of new or amended standards became applicable for the current reporting period and the Group had changed its accounting policies
+as a result of adopting IFRS 16 Leases.
+(a) New and amended standards and interpretations adopted by the Group
+The accounting policies adopted are consistent with those of the previous financial year, except for the adoption of new and amended standards as
+set out below.
+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.
+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.
+The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application.
+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 adopted IFRS 16 Leases from 1 January 2019, but has not restated comparative amounts for the 2018 reporting period, as
+permitted under the specific transition provision in the standard. The reclassifications and the adjustments arising from IFRS 16 Leases are
+therefore recognised in the opening balance sheet on 1 January 2019.
+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.
+352,794
+200,867
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease
+payments relating to that lease recognised in the balance sheet as at 31 December 2018.
+The recognised right-of-use assets relate to the following types of assets:
+Principal activities
+(iii)Measurement of right-of-use assets
+198,564
+184,670
+13,894
+198,564
+(2,303)
+RMB million
+Non-current lease liabilities
+Current lease liabilities
+Of which are:
+Discounted using the lessee's incremental borrowing rate of at the date of initial application
+(Less): short-term leases and low-value leases recognised on a straight-line basis as expense
+Lease liabilities recognised as at 1 January 2019
+Operating lease commitments disclosed as at 31 December 2018
+(ii) Measurement of lease liabilities
+(a) New and amended standards and interpretations adopted by the Group (Continued)
+Basis of preparation (Continued)
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION (Continued)
+for the year ended 31 December 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+156
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION
+Loss on disposal of property, plant, equipment and other non-current assets, net
+Financial Statements (International)
+Inventories
+Accounts receivable and other current assets
+Net changes from:
+Credit impairment losses
+Impairment losses on assets
+1,526
+1,918
+(1,835)
+3,624
+Accounts payable and other current liabilities
+Loss/(gain) on foreign currency exchange rate changes and derivative financial instruments
+17,003
+Interest expense
+(7,726)
+(7,206)
+Interest income
+(1,871)
+(919)
+Land
+Others
+Investment income
+7,321
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2019
+Income tax paid
+1,789
+155
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+The notes on pages 156 to 203 form part of these consolidated financial statements.
+175,868
+153,420
+(33,073)
+(19,523)
+208,941
+172,943
+Net cash generated from operating activities
+2,111
+(3,312)
+(9,285)
+(1,043)
+(11,802)
+211,185
+209,266
+141
+1,264
+11,605
+(15,236)
+Total right-of-use assets
+for the year ended 31 December 2019
+The change in accounting policy affected the following items in the balance sheet on 1 January 2019:
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+158
+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.
+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.
+(ii) Associates and joint ventures
+The particulars of the Group's principal subsidiaries are set out in Note 41.
+In the Company's balance sheet, investments in subsidiaries are stated at cost less impairment losses (Note 2(n)).
+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(j)) or, when appropriate, the cost on
+initial recognition of an investment in an associate or joint venture (Note 2(a)(ii)).
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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.
+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.
+(i) Subsidiaries and non-controlling interests
+The consolidated financial statements comprise the Company and its subsidiaries, and interest in associates and joint ventures.
+(a) Basis of consolidation
+2 SIGNIFICANT ACCOUNTING POLICIES
+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 43.
+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.
+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.
+Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2019 reporting periods and
+have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future
+reporting periods and on foreseeable future transactions.
+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.
+(b) New and amended standards and interpretations not yet adopted by the Group
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(ii) Associates and joint ventures (Continued)
+(13,974)
+Financial Statements (International)
+159
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+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.
+(c) Cash and cash equivalents
+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.
+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 approximates 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.
+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.
+(a) Basis of consolidation (Continued)
+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.
+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.
+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.
+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.
+(iv) Merger accounting for common control combination
+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.
+(iii)Transactions eliminated on consolidation
+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(j)) or, when appropriate, the cost on initial recognition of an investment in an associate.
+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.
+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 (Notes 2(i) and (n)).
+(b) Translation of foreign currencies
+(iv) Adjustments recognised in the balance sheet on 1 January 2019
+Basis of preparation (Continued)
+for the year ended 31 December 2019
+Marketing and distribution
+Refining
+Exploration and production
+Segment assets and segment liabilities for 31 December 2019 all increased as a result of the changes in accounting policy. The following
+segments were affected by the changes in accounting policy:
+(v) Impact on segment disclosures
+271,969
+27,381
+244,588
+1 January
+2019
+RMB million
+Chemicals
+267,860
+RMB million
+31 December
+2019
+lease liabilities - increase by RMB 198,564 million
+•
+• long-term prepayments and other assets - decrease by RMB 8,125 million
+• prepaid expenses and other current assets - decrease by RMB 766 million
+lease prepayments - decrease by RMB 64,514 million
+•
+⚫ right-of-use assets - increase by RMB 271,969 million
+239,374
+28,486
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION (Continued)
+Corporate and others
+Segment assets Segment liabilities
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+157
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Comparative segment information has not been restated. As a consequence, the segment information disclosure for the items noted above is
+not entirely comparable to the information disclosed for the prior year.
+192,872
+267,860
+14,248
+Increase in
+15,651
+19,124
+62,237
+120,983
+26,094
+32,839
+78,041
+79,263
+RMB million
+RMB million
+12,252
+(12,777)
+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.
+6,921
+Total equity attributable to shareholders of the Company
+Reserves
+Share capital
+856,535
+875,835
+170,675
+Non-controlling interests
+302,862
+Total non-current liabilities
+28,400
+16,434
+42,800
+43,163
+35
+Equity
+Total equity
+36
+121,071
+Chief Financial Officer
+Shou Donghua
+The notes on pages 156 to 203 form part of these consolidated financial statements.
+Ma Yongsheng
+President
+Zhang Yuzhuo
+Chairman
+Approved and authorised for issue by the board of directors on 27 March 2020.
+856,535
+875,835
+139,251
+137,685
+717,284
+738,150
+596,213
+617,079
+121,071
+Other long-term liabilities
+Provisions
+5,948
+6,809
+6,699
+3,264
+166,151
+144,846
+34
+124,793
+126,735
+33
+192,757
+199,792
+32
+13,571
+2,729
+24
+15,198
+576,374
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+565,098
+60,978
+29
+177,674
+31, 1(a)
+42,516
+9,626
+30
+51,011
+49,156
+30
+Deferred tax liabilities
+Lease liabilities
+Loans from Sinopec Group Company and fellow subsidiaries
+Long-term debts
+Non-current liabilities
+1,027,210
+130,518
+1,178,697
+151
+Financial Statements (International)
+Financial Statements (International)
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+equity
+Total
+Non-
+controlling
+interests
+of the
+Company
+Retained
+earnings
+reserves
+reserve
+RMB
+reserve
+RMB
+26,326
+117,000
+82,682
+55,850
+26,326
+121,071
+12
+(12)
+852,890
+126,770
+726,120
+326,125
+(2,934)
+117,000
+82,682
+55,850
+121,071
+31, 1(a)
+premium
+capital
+Interim dividend for 2018 (Note 13)
+Final dividend for 2017 (Note 13)
+Contributions by and distributions to owners:
+Transactions with owners, recorded directly in equity:
+hedged items
+Amounts transferred to initial carrying amount of
+Total comprehensive income for the year
+Other comprehensive income (Note 14)
+Profit for the year
+Balance at 1 January 2018
+Balance at 31 December 2017
+Change in accounting policy
+(Amounts in million)
+for the year ended 31 December 2018
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+152
+Appropriation (Note (a))
+reserve
+Distributions to non-controlling interests
+interests
+Other
+shareholders
+Statutory Discretionary
+surplus
+surplus
+Share
+Capital
+Share
+to
+attributable
+Total equity
+Balance at 31 December 2018
+Others
+Total transactions with owners
+Transaction with non-controlling interests
+Total contributions by and distributions to owners
+Contributions to subsidiaries from non-controlling
+(2,946)
+31,665
+30
+Non-current assets
+(Amounts in million)
+As at 31 December 2019
+CONSOLIDATED BALANCE SHEET
+72,273
+77,613
+Notes
+18,273
+54,000
+62,880
+72,273
+77,613
+(6,624)
+5,580
+14,733
+31 December
+31 December
+2019
+Goodwill
+267,860
+18, 1(a)
+Right-of-use assets
+136,963
+173,482
+17
+Construction in progress
+617,762
+622,409
+16
+Property, plant and equipment, net
+RMB
+Share of profits from associates and joint ventures
+2018
+(6,571)
+5,611
+3,399
+1,480
+Total comprehensive income for the year
+Non-controlling interests
+Shareholders of the Company
+Attributable to:
+Total comprehensive income for the year
+Total items that may be reclassified subsequently to profit or loss
+Total other comprehensive income
+Foreign currency translation differences
+Total items that may not be reclassified subsequently to profit or loss
+Items that may be reclassified subsequently to profit or loss
+Share of other comprehensive loss of associates and joint ventures
+Cash flow hedges
+Items that may not be reclassified subsequently to profit or loss
+Equity investments at fair value through other comprehensive income
+Other comprehensive income:
+Profit for the year
+(Amounts in million)
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+for the year ended 31 December 2019
+Financial Statements (International)
+150
+The notes on pages 156 to 203 form part of these consolidated financial statements.
+19
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Year ended 31 December
+(9,741)
+4,941
+(229)
+(810)
+(53)
+(31)
+(53)
+(31)
+14
+78,897
+72,033
+RMB
+RMB
+2018
+2019
+Notes
+8,697
+8,676
+Interest in associates
+57,844
+184,584
+192,442
+27
+8,622
+26
+64,879
+54,865
+25
+7,887
+837
+25,732
+3,319
+2222280
+Prepaid expenses and other current assets
+54,023
+Financial assets at fair value through other comprehensive income
+Inventories
+Total current assets
+Short-term debts
+Loans from Sinopec Group Company and fellow subsidiaries
+29,462
+40,521
+30
+504,120
+445,856
+Total assets less current liabilities
+Net current liabilities
+Total current liabilities
+Income tax payable
+Other payables
+Contract liabilities
+Trade accounts payable and bills payable
+Derivative financial liabilities
+Lease liabilities
+Current liabilities
+43,289
+Trade accounts receivable and bills receivable
+Derivative financial assets
+21,694
+17,616
+29
+Deferred tax assets
+1,450
+1,521
+26
+Financial assets at fair value through other comprehensive income
+56,184
+56,467
+21
+Interest in joint ventures
+89,537
+95,737
+20
+Lease prepayments
+24
+64,514
+22
+23
+Financial assets at fair value through profit or loss
+55,093
+67,614
+Time deposits with financial institutions
+111,922
+60,313
+Cash and cash equivalents
+1,088,188
+1,309,215
+Current assets
+Total non-current assets
+-------
+91,408
+65,426
+Long-term prepayments and other assets
+326,137
+RMB
+126,770
+(129,645)
+Capital expenditure
+Investing activities
+175,868
+153,420
+(a)
+(94,753)
+Net cash generated from operating activities
+RMB
+2018
+2019
+Year ended 31 December
+Notes
+(Amounts in million)
+RMB
+Exploratory wells expenditure
+(11,497)
+(8,261)
+Proceeds from disposal of property, plant, equipment and other non-current assets
+1,557
+704
+Proceeds from disposal of investments and investments in associates
+(3,188)
+(1,031)
+Payment for acquisition of subsidiary, net of cash acquired
+55,000
+35,292
+Proceeds from sale of financial assets at fair value through profit or loss
+(29,550)
+(12,851)
+(10,116)
+(3,483)
+Purchase of investments, investments in associates and investments in joint ventures
+Payment for financial assets at fair value through profit or loss
+for the year ended 31 December 2019
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Financial Statements (International)
+Financial Statements (International)
+73
+(35)
+(59,502)
+(16,427)
+(43,075)
+(49,753)
+3,745
+(2.933)
+2.933
+2.933
+2.933
+(59,502)
+(46,008) (13,494)
+(49,753)
+3,745
+5,495
+121,071
+703
+28,993
+90.423
+153
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+The notes on pages 156 to 203 form part of these consolidated financial statements.
+(e) The application of the share premium account is governed by Sections 167 and 168 of the PRC Company Law.
+(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 (Note 1); 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.
+(c) As at 31 December 2019, the amount of retained earnings available for distribution was RMB 130,645 million (2018: RMB 143,148 million), being the amount
+determined in accordance with CASS. 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 CASS and the amount determined in accordance with the
+accounting policies complying with International Financial Reporting Standards ("IFRS”).
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+During the year ended 31 December 2019, the Company transferred RMB 3,745 million (2018: RMB 3,996 million) to the statutory surplus reserve, being 10% of the
+current year's net profit determined in accordance with the accounting policies complying with CASS.
+(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 ("CASS"), 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.
+875,835
+137,685
+738,150
+322,872
+1,941
+117,000
+55,850
+9,666
+Increase in time deposits with maturities over three months
+(103,231)
+154
+The notes on pages 156 to 203 form part of these consolidated financial statements.
+111,922
+60,313
+518
+147
+(1,814)
+113,218
+111,922
+(51,756)
+(111,260)
+(320)
+Cash and cash equivalents at 31 December
+Effect of foreign currency exchange rate changes
+Net cash used in financing activities
+Net decrease in cash and cash equivalents
+Cash and cash equivalents at 1 January
+Repayments of other financing activities
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+320
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+(Amounts in million)
+726,120
+109,967
+108,812
+5,831
+99,110
+89,927
+Dry hole costs written off
+Depreciation, depletion and amortisation
+Adjustments for:
+Profit before taxation
+Operating activities
+RMB
+RMB
+2018
+Year ended 31 December
+2019
+(a) Reconciliation from profit before taxation to net cash generated from operating activities
+for the year ended 31 December 2019
+5,495
+Proceeds from other financing activities
+(16,859)
+(3,500)
+10,720
+10,272
+5,810
+7,094
+78,401
+90,710
+Dividends paid by the Company
+Repayments of bank and other loans
+Proceeds from bank and other loans
+Net cash used in investing activities
+Financing activities
+Repayments of other investing activities
+Investment and dividend income received
+Decrease in time deposits with maturities over three months
+Interest received
+(81,708)
+(120,463)
+(86)
+(66,422)
+(612,108)
+Repayments of lease liabilities (2018: Finance lease payment)
+(160)
+(8)
+Payments made to acquire non-controlling interests
+(5,984)
+(6,161)
+(13,700)
+(7,354)
+Distributions by subsidiaries to non-controlling interests
+Interest paid
+(67,799)
+(46,008)
+1,886
+3,919
+Contributions to subsidiaries from non-controlling interests
+746,655
+(772,072)
+599,866
+(18,989)
+(84,713)
+(3,745)
+86,678
+55,850
+26,053
+121,071
+(371)
+(77)
+(294)
+(851)
+818
+(261)
+(73,526)
+(5,715)
+(67,811)
+(71,795)
+3,996
+117,000
+(12)
+(4,477)
+717,284
+Contributions by and distributions to owners:
+Transactions with owners, recorded directly in equity:
+hedged items
+Amounts transferred to initial carrying amount of
+Total comprehensive income for the year
+Other comprehensive income (Note 14)
+Profit for the year
+Balance at 1 January 2019
+(Amounts in million)
+for the year ended 31 December 2019
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+The notes on pages 156 to 203 form part of these consolidated financial statements.
+856,535
+139,251
+315,109
+Final dividend for 2018 (Note 13)
+(311)
+(12)
+72,273
+18,273
+54,000
+61,618
+(7,618)
+(6,624)
+994
+(7,618)
+(7,618)
+78,897
+17,279
+61,618
+61,618
+(18,989)
+852,890
+5,269
+(299)
+5,269
+(48,428)
+(12)
+(73,215)
+(5,416)
+(67,799)
+(71,795)
+3,996
+2,060
+2,060
+(7,476)
+(7,476)
+(3,996)
+3,996
+(19,371)
+(19,371)
+(19,371)
+(48,428) (48,428)
+Interim dividend for 2019 (Note 13)
+Appropriation (Note (a))
+5,269
+Contributions to subsidiaries from
+5,415
+5,415
+72,033
+14,568
+57,465
+57,465
+856,535
+139,251
+717.284
+315,109
+(4,477)
+117.000
+86.678
+55,850
+26.053
+165
+121,071
+5,580
+57,465
+(14,529)
+3,745
+Distributions to non-controlling interests
+(14,529)
+(14,529)
+(31,479)
+(31,479)
+(31,479)
+1,093
+55
+1,038
+1,038
+77,613
+14,733
+62,880
+5,415
+RMB
+55
+RMB
+shareholders
+Statutory Discretionary
+surplus
+surplus
+Share
+Capital
+Share
+capital
+to
+Total equity
+attributable
+Balance at 31 December 2019
+Others
+Total transactions with owners
+non-controlling interests
+RMB
+Transaction with non-controlling interests
+Total contributions by and distributions to owners
+Other
+Retained
+Notes:
+premium
+RMB
+reserve
+RMB
+RMB
+RMB
+equity
+Total
+RMB
+Non-
+controlling
+interests
+reserve
+RMB
+reserve
+RMB
+reserves
+earnings
+of the
+Company
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+(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 39.
+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.
+166
+(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.
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Turnover primarily represents revenue from the sales of refined petroleum products, chemical products, crude oil and natural gas.
+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.
+(bb) Segment reporting
+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.
+3 TURNOVER
+2019
+RMB million
+2018
+RMB million
+Gasoline
+699,202
+Crude oil
+Financial Statements (International)
+711,236
+Diesel
+(aa) Dividends
+165
+(w) Research and development expense
+Operating lease payments are charged to the consolidated income statement on a straight-line basis over the period of the respective leases.
+Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them with the costs
+that they are intended to compensate.
+Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are
+credited to profit or loss on a straight-line basis over the expected lives of the related assets.
+Basic chemical feedstock
+164 Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(t) Borrowing costs
+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.
+(u) Repairs and maintenance expenditure
+Repairs and maintenance expenditure is expensed as incurred.
+(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.
+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 9,395 million for the year ended 31 December 2019 (2018: RMB 7,956 million).
+(x) Leases
+A lease is a contract that a lessor transfers the right to use an identified asset for a period of time to a lessee in exchange for consideration.
+(i) As lessee
+The Group recognises a right-of-use asset at the date at which the leased asset is available for use by the Group, and recognises a lease
+liability measured at the present value of the remaining lease payments. The lease payments include fixed payments, the exercise price of
+a purchase option if the Group is reasonably certain to exercise that option, and payments of penalties for terminating the lease if the lease
+term reflects the Group exercising that option, etc. Variable payments that are based on a percentage of sales are not included in the lease
+payments, and should be recognised in profit or loss when incurred. Lease liabilities to be paid within one year (including one year) from
+balance sheet date is presented in current liabilities.
+Right-of-use assets of the Group mainly comprise land. Right-of-use assets are measured at cost which comprises the amount of the initial
+measurement of the lease liability, any lease payments made at or before the commencement date, any initial direct costs incurred by the
+lessee, less any lease incentives received. The Group depreciates the right-of-use assets over the shorter of the asset's useful life and the
+lease term on a straight-line basis. When the recoverable amount of a right-of-use asset is less than its carrying amount, the carrying amount
+is reduced to the recoverable amount.
+Payments associated with short-term leases with lease terms within 12 months and all leases of low-value assets are recognised on a
+straight-line basis over the lease term as an expense in profit or loss or as cost of relevant assets, instead of recognising right-of-use assets
+and lease liabilities.
+(ii) As lessor
+A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating lease is a
+lease other than a finance lease.
+When the Group leases self-owned plants and buildings, equipment and machinery, lease income from an operating lease is recognised on a
+straight-line basis over the period of the lease. The Group recognises variable lease income which is based on a certain percentage of sales
+as rental income when occurred.
+(iii) Accounting policy applied until 31 December 2018
+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. The cost of lease prepayments is charged to expense on a straight-line
+basis over the respective periods of the rights.
+Operating leases
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Kerosene
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+594,008
+65,705
+65,566
+for the year ended 31 December 2019
+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
+6 PERSONNEL EXPENSES
+2019
+RMB million
+1,856
+2018
+RMB million
+12,297
+70
+94
+6
+9
+1,283
+(2)
+9
+607
+2019
+Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the
+Group will comply with all attached conditions.
+2018
+RMB million
+1,063
+615,342
+1,216
+64,489
+553,848
+519,910
+214,911
+250,884
+191,636
+168,823
+Synthetic resin
+Synthetic fiber monomers and polymers
+124,271
+124,618
+80,100
+77,572
+Natural gas
+Others (i)
+53,839
+43,205
+367,339
+335,357
+2,900,488
+2,825,613
+(i) Others are primarily liquefied petroleum gas and other refinery and chemical by-products and joint products.
+4 OTHER OPERATING REVENUES
+Sale of materials and others
+Rental income
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+2019
+RMB million
+2018
+RMB million
+64,503
+(s) Government grants
+(ii) Impairment
+Sales of goods
+(i) 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(n)). 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(n)).
+(j) Financial assets
+(i) Classification and measurement
+The Group classifies financial assets into different categories depending on the business model for managing the financial assets and the
+contractual terms of cash flows of the financial assets: a) financial assets measured at amortised cost, b) financial assets measured at fair
+value through other comprehensive income ("FVOCI"), c) financial assets measured at fair value through profit or loss. A contractual cash flow
+characteristic which could have only a de minimis effect, or could have an effect that is more than de minimis but is not genuine, does not
+affect the classification of the financial asset.
+Financial assets are initially recognised at fair value. For financial assets measured at fair value through profit or loss, the relevant
+transaction costs are recognised in profit or loss. The transaction costs for other financial assets are included in the initially recognised
+amount. However, trade accounts receivable and bills receivable arising from sale of goods or rendering services, without significant financing
+component, are initially recognised based on the transaction price expected to be entitled by the Group.
+Debt instruments
+Debt instruments held by the Group mainly includes cash and cash equivalents, time deposits with financial institutions, receivables. These
+financial assets are measured at amortised cost and FVOCI.
+•
+Amortised cost: The business model for managing such financial assets by the Group are held for collection of contractual cash flows. The
+contractual cash flow characteristics are to give rise on specified dates to cash flows that are solely payments of principal and interest on
+the principal amount outstanding. Interest income from these financial assets is recognised using the effective interest rate method.
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+• FVOCI: The business model for managing such financial assets by the Group are held for collection of contractual cash flows and for
+selling the financial assets, where the assets' cash flows represent solely payments of principal and interest on the principal amount
+outstanding. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment
+gains or losses, foreign exchange gains and losses and interest income calculated using the effective interest rate method, which are
+recognised in profit or loss.
+Equity instruments that the Group has no power to control, jointly control or exercise significant influence over, are measured at fair value
+through profit or loss and presented in financial assets at fair value through profit or loss.
+In addition, the Group designates some equity instruments that are not held for trading as financial assets at FVOCI, are presented in
+financial assets at FVOCI. The relevant dividends of these financial assets are recognised in profit or loss. When derecognised, the cumulative
+gain or loss previously recognised in other comprehensive income is transferred to retained earnings.
+The Group recognises a loss allowance for expected credit losses on a financial asset that is measured at amortised cost and a debt
+instrument that is measured at FVOCI.
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past
+events, current conditions and forecasts of future economic conditions.
+The Group measures the expected credit losses of financial instruments on different stages at each balance sheet date. For financial
+instruments that have no significant increase in credit risk since the initial recognition, on first stage, the Group measures the loss allowance
+at an amount equal to 12-month expected credit losses. If there has been a significant increase in credit risk since the initial recognition of
+a financial instrument but credit impairment has not occurred, on second stage, the Group recognises a loss allowance at an amount equal
+to lifetime expected credit losses. If credit impairment has occurred since the initial recognition of a financial instrument, on third stage, the
+Group recognises a loss allowance at an amount equal to lifetime expected credit losses.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+161
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(j) Financial assets (Continued)
+Equity instruments
+for the year ended 31 December 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+68,425
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(d) Trade, bills and other receivables
+Trade, bills and other receivables are recognised initially at their transaction price, unless they contain significant financing components when
+they are recognised at fair value. They are subsequently measured at amortised cost using the effective interest method, less impairment losses
+for bad and doubtful debts (Note 2(j)). 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 mainly 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.
+(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(n)). 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:
+Buildings
+Equipment, machinery and others
+Estimated
+usage period
+12 to 50 years
+4 to 30 years
+Estimated
+residuals rate
+3%
+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 to explore for or use oil and natural gas, 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) Construction in progress
+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(n)). 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.
+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.
+160
+(ii) Impairment (Continued)
+Sales are recognised when control of the goods have transferred, being when the products are delivered to the customer. Advance from
+customers but goods not yet delivered is recorded as contract liabilities and is recognised as revenues when a customer obtains control over the
+relevant goods.
+For financial instruments that have low credit risk at the balance sheet date, the Group assumes that there is no significant increase in credit
+risk since the initial recognition, and measures the loss allowance at an amount equal to 12-month expected credit losses.
+For trade accounts receivable and bills receivable and financial assets at FVOCI related to revenue, the Group measures the loss allowance at
+an amount equal to lifetime expected credit losses.
+For cash flow hedges, other than those covered by the preceding policy statements, that amount is reclassified from the cash flow hedge reserve
+to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit
+or loss.
+If the amount that has been accumulated in the cash flow hedge reserve is a loss and the Group expects that all or a portion of that loss will not
+be recovered in one or more future periods, the Group immediately reclassifies the amount that is not expected to be recovered into profit or
+loss.
+When the hedging relationship no longer meets the risk management objective on the basis of which it qualified for hedge accounting (ie the
+entity no longer pursues that risk management objective), or when a hedging instrument expires or is sold, terminated, exercised, or there is no
+longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk starts to dominate the value
+changes that result from that economic relationship or no longer meets the criteria for hedge accounting, the Group discontinues prospectively
+the hedge accounting treatments. If the hedged future cash flows are still expected to occur, that amount remains in the cash flow hedge
+reserve and is accounted for as cash flow hedges. If the hedged future cash flows are no longer expected to occur, that amount is immediately
+reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment. A hedged future cash flow that is no longer highly
+probable to occur may still be expected to occur, if the hedged future cash flows are still expected to occur, that amount remains in the cash
+flow hedge reserve and is accounted for as cash flow hedges.
+(n) Impairment of assets
+The carrying amounts of assets, including property, plant and equipment, construction in progress, right-of-use assets 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.
+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).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+163
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast
+transaction for a non-financial asset or a non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, the
+entity removes that amount from the cash flow hedge reserve and include it directly in the initial cost or other carrying amount of the asset or
+the liability. This is not a reclassification adjustment and hence it does not affect other comprehensive income.
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+Management assesses at each balance sheet date whether there is any indication that an impairment loss recognised for an 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.
+(o) Trade, bills and other payables
+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.
+(p) 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.
+(q) 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.
+(r) Revenue recognition
+Revenue arises in the course of the Group's ordinary activities, and increases in economic benefits in the form of inflows that result in an
+increase in equity, other than those relating to contributions from equity participants.
+The Group sells crude oil, natural gas, petroleum and chemical products, etc. Revenue is recognised according to the expected consideration
+amount, when a customer obtains control over the relevant goods or services. To determine whether a customer obtains control of a promised
+asset, the Group shall consider indicators of the transfer of control, which include, but are not limited to, the Group has a present right to
+payment for the asset; the Group has transferred physical possession of the asset to the customer; the customer has the significant risks and
+rewards of ownership of the asset; the customer has accepted the asset.
+(n) Impairment of assets (Continued)
+The gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income.
+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.
+(ii) The cumulative change in fair value (present value) of the hedged item (i.e. the present value of the cumulative change in the hedged
+expected future cash flows) from inception of the hedge.
+(i) The cumulative gain or loss on the hedging instrument from inception of the hedge; and
+The Group recognises the loss allowance accrued or written back in profit or loss.
+(iii) Derecognition
+The Group derecognises a financial asset when: a) the contractual right to receive cash flows from the financial asset expires; b) the Group
+transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset; c) the financial asset has been
+transferred and the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, but the
+Group has not retained control.
+On derecognition of equity instruments at FVOCI, the difference between the carrying amounts and the sum of the consideration received
+and any accumulated gain or loss previously recognised in other comprehensive income, is recognised in retained earnings. While on
+derecognition of other financial assets, this difference is recognised in profit or loss.
+(k) Financial liabilities
+The Group, at initial recognition, classifies financial liabilities as either financial liabilities subsequently measured at amortised cost or financial
+liabilities at fair value through profit or loss.
+The Group's financial liabilities are mainly financial liabilities measured at amortised cost, including trade accounts payable and bills payable,
+other payables, and loans, etc. These financial liabilities are initially measured at the amount of their fair value after deducting transaction costs
+and use the effective interest rate method for subsequent measurement.
+Where the present obligations of financial liabilities are completely or partially discharged, the Group derecognises these financial liabilities or
+discharged parts of obligations. The differences between the carrying amounts and the consideration received are recognised in profit or loss.
+(I) Determination of fair value for financial instruments
+If there is an active market for financial instruments, the quoted price in the active market is used to measure fair values of the financial
+instruments. If no active market exists for financial instruments, valuation techniques are used to measure fair values. In valuation, the Group
+adopts valuation techniques that are applicable in the current situation and have sufficient available data and other information to support it,
+and selects input values that are consistent with the asset or liability characteristics considered by market participants in the transaction of
+relevant assets or liabilities, and gives priority to relevant observable input values. Use of unobservable input values where relevant observable
+input values cannot be obtained or are not practicable.
+(m)Derivative financial instruments and hedge accounting
+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 profit or loss, except where the derivatives qualify for hedge accounting.
+Hedge accounting is a method which recognises the offsetting effects on profit or loss (or other comprehensive income) of changes in the fair
+values of the hedging instrument and the hedged item in the same accounting period, to represent the effect of risk management activities.
+Hedged items are the items that expose the Group to risks of changes in future cash flows and that are designated as being hedged and that
+must be reliably measurable. The Group's hedged items include a forecast transaction that is settled with an undetermined future market price
+and exposes the Group to risk of variability in cash flows, etc.
+A hedging instrument is a designated derivative whose changes in cash flows are expected to offset changes in cash flows of the hedged item.
+Financial Statements (International)
+162 Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(m)Derivative financial instruments and hedge accounting (Continued)
+The hedging relationship meets all of the following hedge effectiveness requirements:
+(i) There is an economic relationship between the hedged item and the hedging instrument, which shares a risk and that gives rise to opposite
+changes in fair value that tend to offset each other.
+(ii) The effect of credit risk does not dominate the value changes that result from that economic relationship.
+(iii) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges
+and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. However, that designation
+does not reflect an imbalance between the weightings of the hedged item and the hedging instrument.
+Cash flow hedges
+Cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a component
+of, a recognised asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable forecast transaction,
+and could affect profit or loss. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective
+effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.
+As long as a cash flow hedge meets the qualifying criteria for hedge accounting, the separate component of equity associated with the hedged
+item (cash flow hedge reserve) is adjusted to the lower of the following (in absolute amounts):
+For financial instruments on the first stage and the second stage, and that have low credit risk, the Group calculates interest income
+according to carrying amount without deducting the impairment allowance and effective interest rate. For financial instruments on the third
+stage, interest income is calculated according to the carrying amount minus amortised cost after the provision of impairment allowance and
+effective interest rate.
+Salaries, wages and other benefits
+(312)
+RMB million
+609
+Write-down of deferred tax assets
+189
+188
+Adjustment of prior years
+Actual income tax expense
+(467)
+(719)
+17,894
+20,213
+Note:
+(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.
+498
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+The emoluments of every director and supervisor is set out below:
+Name
+Directors
+Dai Houliang
+Ma Yongsheng
+Li Yunpeng
+Yu Baocai
+Ling Yiqun
+Liu Zhongyun (i)
+Li Yong
+Independent non-executive directors
+Tang Min
+(a) Directors' and supervisors' emoluments
+Tax effect of tax losses not recognised
+(779)
+(335)
+17,894
+20,213
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+10 INCOME TAX EXPENSE (Continued)
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+2019
+2018
+Profit before taxation
+RMB million
+89,927
+RMB million
+99,110
+Expected PRC income tax expense at a statutory tax rate of 25%
+22,482
+24,778
+Tax effect of non-deductible expenses
+2,300
+2,351
+Tax effect of non-taxable income
+(4,458)
+(5,033)
+Tax effect of preferential tax rate (i)
+(2,003)
+(1,259)
+Effect of income taxes at foreign operations
+77
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Fan Gang
+(6,244)
+Cai Hongbin
+Supervisors
+350
+1,322
+369
+989
+88
+1,446
+369
+880
+88
+1,337
+369
+874
+350
+88
+369
+889
+88
+1,346
+2,139
+5,670
+536
+1,400
+9,745
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+169
+Financial Statements (International)
+1,331
+350
+350
+350
+Zhao Dong
+Jiang Zhenying
+Yang Changjiang
+Zhang Baolong
+Zou Huiping
+Yu Xizhi
+Zhou Hengyou
+Yu Renming
+Total
+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
+2019
+Retirement
+scheme
+contributions
+RMB'000
+Salaries,
+allowances and
+benefits in kind
+RMB'000
+Bonuses
+RMB'000
+Emoluments paid
+or receivable
+in respect of a
+person's services
+as a director,
+whether of the
+Company or
+its subsidiary
+undertaking
+Directors'/
+Supervisors' fee
+RMB'000
+Total
+RMB'000
+294
+1,173
+96
+369
+865
+88
+1,563
+350
+350
+350
+Johnny Karling Ng
+3,385
+(719)
+27,176
+5,883
+6,021
+5,723
+7,152
+242,535
+246,498
+Effective from
+13 January 2015
+RMB/Ton
+2,109.76
+1,411.20
+2,105.20
+13,187
+1,948.64
+1,218.00
+1,495.20
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+167
+Financial Statements (International)
+168
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+8 OTHER OPERATING EXPENSE, NET
+Government grants (i)
+Ineffective portion of change in fair value of cash flow hedges
+1,711.52
+12,011
+18,237
+16,247
+69,817
+11,665
+81,482
+7 TAXES OTHER THAN INCOME TAX
+City construction tax (ii)
+Consumption tax (i)
+Education surcharge
+Resources tax
+Others
+Notes:
+(i) Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Products
+Gasoline
+Diesel
+Naphtha
+Solvent oil
+Lubricant oil
+Fuel oil
+Jet fuel oil
+(ii) City construction tax is levied on an entity based on its total paid amount of value-added tax and consumption tax.
+9,296
+77,721
+2019
+RMB million
+2018
+RMB million
+202,671
+201,901
+Net realised and unrealised (loss)/gain on derivative financial instruments not qualified as hedging
+Impairment losses on long-lived assets (ii)
+Loss on disposal of property, plant, equipment and other non-current assets, net
+Fines, penalties and compensations
+Donations
+6,954
+6,376
+(1,015)
+(493)
+5,939
+5,883
+9,646
+Accretion expenses (Note 35)
+1,418
+1,438
+Interest expense
+17,003
+7,321
+* Interest rates per annum at which borrowing costs were capitalised for construction in progress
+2.92% to 4.66%
+2.37% to 4.66%
+10 INCOME TAX EXPENSE
+Income tax expense in the consolidated income statement represents:
+Current tax
+Provision for the year
+- Adjustment of prior years
+Deferred taxation (Note 29)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+2019
+2018
+RMB million
+RMB million
+14,976
+(467)
+Interest expense on lease liabilities
+Contributions to retirement schemes (Note 39)
+Less: Interest expense capitalised*
+RMB million
+Others
+2019
+RMB million
+6,911
+2018
+RMB million
+7,539
+(222)
+(1,978)
+(4,384)
+191
+(345)
+(6,281)
+(1,918)
+(1,526)
+(173)
+(276)
+(209)
+(180)
+(96)
+(2,849)
+(436)
+(5,360)
+Notes:
+(i) Government grants for the years ended 31 December 2019 and 2018 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 2019 primarily represent impairment losses recognised in the refining segment of RMB 245
+million (2018: RMB 353 million), the marketing and distribution segment of RMB 80 million (2018: RMB 264 million), the chemicals segment of RMB 17 million (2018:
+RMB 1,374 million) and the exploration and production ("E&P") segment of RMB 3 million (2018: RMB 4,274 million). The primary factor resulting in the E&P segment
+impairment loss in the prior year was downward revision of oil and gas reserve in certain fields. E&P segment determines recoverable amounts of properties, plant and
+equipment relating to oil and gas producing activities, which include significant judgments and assumptions. The recoverable amounts were determined based on the
+present values of the expected future cash flows of the assets using a pre-tax discount rate 10.47% (2018: 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 184 million (2018: RMB 312 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 180 million (2018:
+RMB 315 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 7 million (2018: less RMB 5 million).
+9 INTEREST EXPENSE
+2019
+RMB million
+2018
+Interest expense incurred
+Balance at 1 January 2019
+Increase
+233
+Jiang Xiaoming (iv)
+Johnny Karling Ng
+Cai Hongbin
+Fan Gang
+Tang Min
+Independent non-executive directors
+Jiao Fangzheng (iii)
+Andrew Y. Yan (iv)
+Supervisors
+Zhang Haichao (ii)
+Li Yong
+Liu Zhongyun (i)
+Ling Yiqun
+Ma Yongsheng
+Yu Baocai
+Li Yunpeng
+Dai Houliang
+Wang Zhigang (ii)
+Directors
+Zhao Dong
+Zou Huiping
+179
+RMB'000
+RMB'000
+Total
+Supervisors' fee
+Directors'/
+2018
+Retirement
+scheme
+contributions
+RMB'000
+Jiang Zhenying
+Yang Changjiang
+Zhang Baolong
+Bonuses
+RMB'000
+224
+RMB'000
+Salaries,
+allowances and
+benefits in kind
+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
+Notes:
+Yu Renming
+Yu Xizhi
+Total
+Zhou Hengyou
+Emoluments paid
+or receivable
+in respect of a
+person's services
+as a director,
+whether of the
+Company or
+its subsidiary
+undertaking
+65
+Name
+(a) Directors' and supervisors' emoluments (Continued)
+31 December
+RMB million
+2019
+31 December
+Prepaid income tax
+Value-added input tax to be deducted
+Advances to suppliers
+2018
+Other receivables
+The cost of inventories recognised as an expense in the consolidated income statement amounted to RMB 2,450,911 million for the year ended 31
+December 2019 (2018: RMB 2,366,199 million). It includes the write-down of inventories of RMB 1,616 million mainly related to finished goods
+(2018: RMB 5,535 million mainly related to crude oil, finished goods and work in progress of refined oil products and chemical products).
+184,584
+192,442
+(6,376)
+(2,582)
+190,960
+195,024
+28 PREPAID EXPENSES AND OTHER CURRENT ASSETS
+The emoluments of every director and supervisor is set out below: (Continued)
+RMB million
+26,455
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)
+for the year ended 31 December 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+170
+Financial Statements (International)
+Financial Statements (International)
+179
+25,586
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+57,844
+300
+1,879
+21,331
+25,313
+5,937
+5,066
+54,023
+2,872
+468
+3
+14,529
+RMB million
+2018
+2019
+RMB million
+Dividends declared and paid during the year of RMB 0.12 per share (2018: RMB 0.16 per share)
+Dividends declared after the balance sheet date of RMB 0.19 per share (2018: RMB 0.26 per share)
+Dividends payable to shareholders of the Company attributable to the year represent:
+19,371
+13 DIVIDENDS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+For the year ended 31 December 2019, 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 above RMB 1,000 thousand. The total salaries, wages and other benefits
+was RMB 7,294 thousand, and the total amount of their retirement scheme contributions was RMB 448 thousand. For the year ended 31 December
+2018, the five highest paid individuals in the Company included two supervisors and three senior management.
+12 SENIOR MANAGEMENT'S EMOLUMENTS
+(iv) Mr. Jiang Xiaoming ceased being independent non-executive director from 15 May 2018; Mr. Andrew Y. Yan ceased being independent non-executive director from
+15 May 2018.
+(iii) Mr. Jiao Fangzheng ceased being director from 7 June 2018.
+(ii) Mr. Wang Zhigang ceased being director from 29 January 2018; Mr. Zhang Haichao ceased being director from 29 January 2018.
+for the year ended 31 December 2019
+(i) Mr. Liu Zhongyun was elected to be director from 15 May 2018. Due to change of working arrangement, Mr. Liu Zhongyun has tendered his resignation as
+executive director, member of Strategy Committee of the Board and Senior Vice President of the Company from 9 December 2019.
+23,004
+37,533
+Before tax
+amount
+RMB million
+2018
+2019
+14 OTHER COMPREHENSIVE INCOME
+Pursuant to the shareholders' approval at the Annual General Meeting on 15 May 2018, a final dividend of RMB 0.40 per share totaling RMB 48,428
+million according to total shares on 4 June 2018 was approved. All dividends have been paid in the year ended 31 December 2018.
+Pursuant to the shareholders' approval at the Annual General Meeting on 9 May 2019, a final dividend of RMB 0.26 per share totaling RMB 31,479
+million according to total shares on 10 June 2019 was approved. All dividends have been paid in the year ended 31 December 2019.
+48,428
+31,479
+31,479
+RMB million
+2018
+2019
+Final cash dividends in respect of the previous financial year, approved during the year of
+RMB 0.26 per share (2018: RMB 0.40 per share)
+Pursuant to a resolution passed at the director's meeting on 27 March 2020, final dividends in respect of the year ended 31 December 2019 of
+RMB 0.19 (2018: RMB 0.26) per share totaling RMB 23,004 million (2018: RMB 31,479 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 23 August 2019, the directors authorised to
+declare the interim dividends for the year ending 31 December 2019 of RMB 0.12 (2018: RMB 0.16) per share totaling RMB 14,529 million (2018:
+RMB 19,371 million). Dividends were paid on 17 September 2019.
+50,850
+RMB million
+53
+6,096
+351
+125
+125
+233
+233
+233
+333
+333
+125
+333
+483
+395
+6
+456
+21
+14
+328
+333
+1,382
+125
+663
+2,997
+1,366
+1,008
+74
+636
+298
+985
+298
+74
+298
+340
+44
+122
+174
+1,035
+74
+613
+2,576
+88,929
+91,368
+178
+Financial Statements (International)
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019 177
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and swaps contracts. See Note 42.
+24 DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+The financial assets are the structured deposits with financial institutions, which are presented as current assets since they are expected to be
+expired within 12 months from the end of the reporting period.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+182
+25,732
+3,318
+1
+3,319
+31 December
+2018
+RMB million
+31 December
+2019
+RMB million
+34,934
+34,013
+17,282
+19,536
+25,550
+(82)
+for the year ended 31 December 2019
+31 December
+2019
+Less: Impairment losses for bad and doubtful debts
+57,599
+56,713
+4,321
+6,415
+Amounts due from associates and joint ventures
+3,170
+25 TRADE ACCOUNTS RECEIVABLE AND BILLS RECEIVABLE
+6,570
+43,728
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from third parties
+RMB million
+2018
+31 December
+RMB million
+50,108
+Trade accounts receivable, net
+Bills receivable
+(103)
+2,357
+Additions
+Balance at 1 January
+Accumulated amortisation:
+Balance at 31 December
+Decreases
+Additions
+Balance at 1 January
+Decreases
+Cost:
+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:
+91,408
+65,426
+24,459
+25,925
+5,502
+3,926
+Operating rights of service stations
+3,019
+Balance at 31 December
+23 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
+14,345
+17,282
+52,216
+53,549
+(345)
+(161)
+3,948
+Net book value at 31 December
+1,494
+52,216
+RMB million
+RMB million
+2018
+2019
+Equity investments, listed and at quoted market price
+Structured deposits
+48,613
+(1,848)
+(606)
+54,865
+RMB million
+2018
+31 December
+31 December
+2019
+RMB million
+Trade accounts receivable and bills receivable (i)
+Current assets
+Listed equity instruments
+1,431
+90
+Unlisted equity instruments
+26 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
+for the year ended 31 December 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Information about the impairment of trade accounts receivable and bills receivable and the Group's exposure to credit risk can be found in Note 42.
+Trade accounts receivable and bills receivable (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.
+606
+Non-current assets
+1,848
+1,323
+127
+1,450
+13,690
+12,615
+85,469
+88,465
+2018
+RMB million
+RMB million
+31 December
+8,622
+10,143
+31 December
+2019
+Spare parts and consumables
+Finished goods
+Work in progress
+Crude oil and other raw materials
+27 INVENTORIES
+(i) As at 31 December 2019, bills receivable and certain trade accounts receivable were classified as financial assets at FVOCI, as the Group's business model is achieved
+both by collecting contractual cash flows and selling of these assets.
+Note:
+Less: Allowance for diminution in value of inventories
+7
+(19)
+(41)
+124
+64
+Between two and three years
+353
+190
+64,317
+54,517
+Over three years
+Between one and two years
+31 December
+2018
+RMB million
+31 December
+2019
+RMB million
+The ageing analysis of trade accounts receivable and bills receivable (net of impairment losses for bad and doubtful debts) is as follows:
+64,879
+54,865
+7,886
+56,993
+Within one year
+94
+85
+54,865
+(77)
+(283)
+83
+1,566
+612
+606
+RMB million
+RMB million
+2018
+2019
+Balance at 31 December
+Written off for the year
+Others
+Written back for the year
+Provision for the year
+Balance at 1 January
+Impairment losses for bad and doubtful debts are analysed as follows:
+64,879
+Tax
+effect
+RMB million
+26.513
+Net of tax
+amount
+RMB million
+Tax
+effect
+RMB million
+(763)
+(91)
+(94)
+3
+Balance at 31 December 2019
+Exchange adjustments
+Written back on disposals
+21
+Reclassification to other long-term assets
+(216)
+Invest into the joint ventures and associated companies
+(246)
+(46)
+292
+Reclassifications
+87,967
+196
+(216)
+185
+58,793
+(11,454)
+140,360
+69,700
+617,762
+405,419
+145,436
+66,907
+650,774
+(6)
+667
+587,192
+411,121
+67,813
+Balance at 31 December 2019
+Balance at 31 December 2018
+Balance at 1 January 2018
+Net book value:
+(12,223)
+728
+1,241,859
+40
+595,874
+171,840
+412,349
+11
+47,583
+Reclassification to other long-term assets
+76
+494
+Reclassifications
+6,149
+1,848
+4,027
+(120)
+274
+99,904
+47,250
+48,616
+4,038
+Depreciation for the year
+1,077,208
+529,191
+Impairment losses for the year
+Impairment losses for the year
+Written back on disposals
+(125)
+36,289
+4,095
+Depreciation for the year
+1,165,498
+560,076
+550,288
+55,134
+(1,795)
+Balance at 1 January 2019
+(570)
+(1,390)
+(16,331)
+78
+560,076
+550,288
+55,134
+Balance at 31 December 2018
+1,877
+43
+Exchange adjustments
+(1,510)
+(18,251)
+1,998
+1,165,498
+495,817
+622,409
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+27,381
+244,588
+27,381
+244,588
+Total
+RMB million
+RMB million
+RMB million
+271,969
+271,969
+Others
+Decrease
+Increase
+Balance at 1 January 2019
+Accumulated depreciation:
+Balance at 31 December 2019
+Decrease
+Increase
+Land
+Balance at 1 January 2019
+8,650
+16,205
+Impairment loss:
+Balance at 31 December 2019
+(155)
+14,806
+5,702
+9,104
+(26)
+(129)
+7,555
+14,961
+9,233
+282,666
+34,188
+248,478
+(5,508)
+(748)
+(4,760)
+5,728
+172
+Change in accounting policy (Note 1(a))
+18 RIGHT-OF-USE ASSETS
+144,369
+118,645
+2018
+RMB million
+2019
+RMB million
+136,963
+Transferred to property, plant and equipment
+Dry hole costs written off
+Additions
+108,555
+Balance at 1 January
+At December 31, 2019 and December 31, 2018, the Group had no individual significant fully depreciated property, plant and equipment which were
+still in use.
+At December 31, 2019 and December 31, 2018, the Group had no individual significant property, plant and equipment which were temporarily idle
+or pending for disposal.
+At December 31, 2019 and December 31, 2018, the Group had no individual substantial property, plant and equipment which have been pledged.
+The additions to oil and gas properties of the Group for the year ended 31 December 2019 included RMB 1,408 million (2018: RMB 1,567 million)
+of estimated dismantlement costs for site restoration (Note 35).
+16 PROPERTY, PLANT AND EQUIPMENT (Continued)
+for the year ended 31 December 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+17 CONSTRUCTION IN PROGRESS
+Cost:
+(5,831)
+(91,845)
+As at 31 December 2019, the amount of capitalised cost of exploratory wells included in construction in progress related to the exploration and
+production segment was RMB 8,961 million (2018: RMB 7,296 million). The geological and geophysical costs paid during the year ended 31
+December 2019 were RMB 4,024 million (2018: RMB 3,511 million).
+136,963
+173,482
+Balance at 31 December
+7
+1
+(19)
+(6,921)
+46
+Disposals and others
+(28)
+(135)
+(10,066)
+(10,086)
+Reclassification to other long-term assets
+Impairment losses for the year
+(73,210)
+Exchange adjustments
+52,200
+Balance at 1 January 2018
+Accumulated depreciation:
+(i) As at 31 December 2019, cash flow hedge reserve amounted to a gain of RMB 1,102 million (31 December 2018: a loss of RMB 4,932 million), of which a gain of
+RMB 1,037 million was attribute to shareholders of the Company (31 December 2018: a loss of RMB 4,917 million).
+Note:
+(6,624)
+2,028
+(8,652)
+5,580
+(1,162)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019 171
+6,742
+3,399
+3,399
+1,480
+1,480
+Foreign currency translation differences
+(229)
+11
+Other comprehensive income
+(240)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2019
+61,618
+61,618
+2018
+RMB million
+RMB million
+57,465
+57,465
+2019
+Cost:
+16 PROPERTY, PLANT AND EQUIPMENT
+Financial Statements (International)
+Weighted average number of shares (diluted) at 31 December
+(ii) Weighted average number of shares (diluted)
+Profit attributable to ordinary shareholders of the Company
+Profit attributable to ordinary shareholders of the Company (diluted)
+(i) Profit attributable to ordinary shareholders of the Company (diluted)
+The calculation of diluted earnings per share for the year ended 31 December 2019 is based on the profit attributable to ordinary shareholders of
+the Company (diluted) of RMB 57,465 million (2018: RMB 61,618 million) and the weighted average number of shares of 121,071,209,646 (2018:
+121,071,209,646) calculated as follows:
+The calculation of basic earnings per share for the year ended 31 December 2019 is based on the profit attributable to ordinary shareholders
+of the Company of RMB 57,465 million (2018: RMB 61,618 million) and the weighted average number of shares of 121,071,209,646 (2018:
+121,071,209,646) during the year.
+15 BASIC AND DILUTED EARNINGS PER SHARE
+for the year ended 31 December 2019
+Weighted average number of shares at 31 December
+2018
+(810)
+Share of other comprehensive loss of associates and
+joint ventures
+6,111
+600
+(130)
+730
+657
+(196)
+853
+(1,170)
+(10,341)
+(12,500)
+4,284
+(974)
+5,258
+Effective portion of changes in fair value of hedging
+instruments recognised during the year
+Reclassification adjustments for amounts transferred
+to the consolidated income statement
+Net movement during the year recognised in other
+comprehensive income (i)
+Cash flow hedges:
+Net of tax
+amount
+RMB million
+2,159
+(810)
+4,941
+2,029
+(53)
+(12)
+(41)
+(31)
+8
+(39)
+comprehensive income
+(11,770)
+Net movement during the year recognised in other
+(12)
+(41)
+(31)
+8
+(39)
+Changes in the fair value of instruments at fair value
+through other comprehensive income
+(9,741)
+(53)
+Number of shares Number of shares
+121,071,209,646
+121,071,209,646
+121,071,209,646
+121,071,209,646
+(975)
+(76)
+1,051
+Reclassifications
+5,424
+91,845
+54,275
+31,378
+Invest into the joint ventures and associated companies
+6,192
+3,856
+1,408
+160
+Additions
+1,783,260
+965,495
+695,724
+Transferred from construction in progress
+122,041
+(8)
+(311)
+1,864,268
+1,008,223
+780
+(15,253)
+(13,467)
+71
+(1,549)
+667
+727,552
+128,493
+(303)
+Balance at 31 December 2019
+Exchange adjustments
+(237)
+Disposals
+(1,477)
+(729)
+(748)
+Reclassification to other long-term assets
+42
+Balance at 1 January 2019
+1,783,260
+2,387
+24,366
+3,741
+Reclassifications
+Transferred from construction in progress
+1,727,982
+5,644
+940,312
+3,856
+120,013
+221
+45,103
+Additions
+RMB million
+Total
+Equipment,
+machinery
+and others
+RMB million
+667,657
+1,567
+Oil and gas,
+properties
+RMB million
+RMB million
+Plants and
+buildings
+Balance at 1 January 2018
+73,210
+1,634
+138
+147
+965,495
+695,724
+122,041
+2,142
+98
+(21,652)
+(18,323)
+(146)
+(3,183)
+(4,311)
+(3,828)
+(483)
+Balance at 31 December 2018
+Exchange adjustments
+Disposals
+Reclassification to other long-term assets
+(1,772)
+Before tax
+amount
+RMB million
+1,562
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+34,013
+RMB million
+2018
+2019
+2018
+RMB million
+CIR
+Zhongtian Synergetic Energy
+2019
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2018
+SIBUR
+2019
+2018
+2019
+RMB million
+2018
+Turnover
+4,746
+1,994
+10,400
+6,513
+1,868
+2,234
+2,022
+2,191
+5,008
+Profit for the year
+2,334
+12,235
+13,329
+59,927
+56,706
+4,536
+4,966
+2,856
+1,142
+2019
+Pipeline Ltd
+13,772
+23,886
+23,728
+Share of net assets from associates
+517
+446
+non-controlling interests
+12,476
+Net assets attributable to
+7,481
+18,750
+20,529
+110,860
+111,250
+25,462
+28.106
+6,906
+Sinopec Finance
+11,125
+7,955
+Year ended 31 December
+Summarised statement of comprehensive income
+3,453
+34,934
+7,266
+7,955
+11,086
+11,086
+11,125
+13,772
+23,886
+23,728
+Carrying Amounts
+3,453
+3,741
+7,266
+12,476
+424
+583
+Other comprehensive income/(loss)
+40.00 Manufacturing and
+distribution of
+petrochemical products
+49.00 Crude oil and natural gas
+extraction
+50.00 Manufacturing refining
+oil products
+ownership Principal activities
+interests
+% of
+("Sinopec SABIC Tianjin”)
+Yanbu Aramco Sinopec Refining
+Company Ltd. ("YASREF")
+Sinopec SABIC Tianjin Petrochemical
+Company Limited
+Taihu Limited ("Taihu")
+37.50 Petroleum refining and
+processing business
+50.00 Manufacturing and
+Fujian Refining & Petrochemical
+Company Limited ("FREP")
+BASF-YPC Company Limited
+("BASF-YPC")
+The Group's principal interests in joint ventures are as follows:
+21 INTEREST IN JOINT VENTURES
+(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) Including foreign currency translation differences.
+Notes:
+The share of profit and other comprehensive loss for the year ended 31 December 2019 in all individually immaterial associates accounted for using
+equity method in aggregate was RMB 4,565 million (2018: RMB 3,550 million) and RMB 155 million (2018: RMB 844 million) respectively. As at
+31 December 2019, the carrying amount of all individually immaterial associates accounted for using equity method in aggregate was RMB 35,416
+million (2018: RMB 31,370 million).
+58
+76
+Name of entity
+641
+distribution of
+petrochemical products
+Country of
+incorporation
+Financial Statements (International)
+175
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+PRC
+PRC
+Equity method
+Saudi Arabia
+Measurement
+method
+Equity method
+Saudi Arabia
+Cyprus
+Equity method
+Equity method
+PRC
+PRC
+Equity method
+Principal place
+of business
+PRC
+PRC
+Russia
+(144)
+(77)
+201
+575
+1,142
+1,994
+16,810
+5,078
+1,711
+2,645
+699
+2,022
+Total comprehensive income
+116
+151
+6,410
+(1,435)
+(157)
+411
+2,191
+Dividends declared by associates
+1,259
+1,207
+from associates (ii)
+Share of other comprehensive income/(loss)
+292
+212
+443
+773
+1,040
+651
+915
+1,095
+1,011
+1,096
+Share of profit from associates
+219
+271
+468
+490
+47,772
+47,456
+of the Company
+Net assets attributable to owners
+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.
+20 INTEREST IN ASSOCIATES
+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 11.0% to 11.9% (2018: 11.7% to
+12.3%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no major impairment loss
+was recognised.
+8,676
+8,697
+% of
+1,088
+1,004
+1,004
+2,541
+2,541
+4,043
+4,043
+RMB million
+1,109
+RMB million
+Name of company
+Pipeline Co., Ltd. ("Pipeline Ltd")
+Sinopec Finance Company Limited
+("Sinopec Finance")
+Russia
+Russia
+Equity method
+PRC
+PRC
+Equity method
+49.00 Provision of non-banking financial
+services
+Sinopec Sichuan To East China Gas
+Principal place
+of business
+PRC
+Country of
+incorporation
+Measurement
+method
+Equity method
+50.00 Operation of natural gas pipelines
+and auxiliary facilities
+manufacturing petrochemical
+products
+10.00 Processing natural gas and
+ownership Principal activities
+interests
+PAO SIBUR Holding ("SIBUR") (i)
+PRC
+31 December
+2018
+2019
+31 December
+19 GOODWILL
+for the year ended 31 December 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+174
+Financial Statements (International)
+Financial Statements (International)
+173
+Cost
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+27,381
+28,486
+244,588
+239,374
+Balance at 31 December 2019
+Balance at 1 January 2019
+Net book value:
+Balance at 31 December 2019
+Decrease
+271,969
+267,860
+Less: Accumulated impairment losses
+Impairment tests for cash-generating units containing goodwill
+Goodwill is allocated to the following Group's cash-generating units:
+(7,861)
+8,676
+8,697
+(7,861)
+16,537
+16,558
+RMB million
+2018
+31 December
+RMB million
+31 December
+2019
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of petrochemical products
+Other units without individually significant goodwill
+Sinopec Beijing Yanshan Petrochemical Branch
+("Sinopec Yanshan")
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO")
+Sinopec Zhenhai Refining and Chemical Branch
+("Sinopec Zhenhai")
+Principal activities
+Zhongtian Synergetic Energy Company
+Limited ("Zhongtian Synergetic Energy")
+Caspian Investments Resources Ltd.
+("CIR")
+Financial Statements (International)
+50.00 Crude oil and natural gas
+extraction
+Equity method
+(2,910)
+Non-current liabilities
+(961)
+(936)
+(7,252)
+(13,887)
+(23,293)
+(3,026)
+(31,295)
+(170,621)
+(1,020)
+(721)
+Current liabilities
+1,828
+971
+49,961
+(200,402)
+56,424
+(582)
+(71,289)
+6,906
+7,481
+18,750
+20,529
+111,377
+111,696
+25,462
+(332)
+28,106
+47,456
+Net assets
+(673)
+(166)
+(31,436)
+(26,227)
+(58,628)
+47,772
+170,796
+182,646
+16,359
+31 December
+CIR
+SIBUR
+Sinopec Finance
+Pipeline Ltd
+Zhongtian Synergetic Energy
+Summarised financial information and reconciliation to their carrying amounts in respect of the Group's principal associates:
+2019
+20 INTEREST IN ASSOCIATES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+The Republic of
+Kazakhstan
+British Virgin
+Islands
+Equity method
+PRC
+PRC
+for the year ended 31 December 2019
+RMB million
+RMB million
+31 December 31 December
+2018
+2019
+RMB million
+18,926
+39,320
+37,842
+6,712
+7,612
+RMB million
+2018
+2019
+RMB million
+31 December 31 December 31 December 31 December
+2019
+2018
+RMB million RMB million
+4,219
+7,477
+22,502
+31,634
+209,837
+180,383
+12,498
+13,245
+Current assets
+Non-current assets
+31 December 31 December 31 December
+2018
+2019
+2018
+RMB million RMB million RMB million
+38.75 Mining coal and manufacturing of
+coal-chemical products
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+3,741
+21 INTEREST IN JOINT VENTURES (Continued)
+101
+58
+141
+94
+41
+32
+157
+171
+124
+(1,104)
+(1,094)
+(2,823)
+(3,048)
+(664)
+(629)
+(1,521)
+Interest income
+(1,474)
+169
+(597)
+3,493
+3,320
+3,625
+2,314
+3,920
+964
+Profit/(loss) before taxation
+Interest expense
+(167)
+(1,382)
+(1,470)
+(151)
+(265)
+(43)
+(26)
+(647)
+(134)
+(1,292)
+(2,250)
+Depreciation, depletion and amortisation
+2018
+2019
+2018
+Taihu
+BASF-YPC
+2019
+RMB million RMB million
+RMB million RMB million
+2018
+YASREF
+2019
+2019
+Year ended 31 December
+Summarised statement of comprehensive income
+8,059
+7,133
+4,780
+4,213
+5,573
+FREP
+(2,541)
+Sinopec SABIC Tianjin
+2019
+23,501
+20,541
+77,561
+75,940
+14,944
+15,222
+21,574
+2018
+19,590
+57,047
+Turnover
+RMB million
+RMB million
+RMB million RMB million
+RMB million RMB million
+2018
+52,469
+(1,569)
+2,178
+3,916
+(522)
+from joint ventures (i)
+Share of other comprehensive (loss)/income
+1,462
+823
+(682)
+(488)
+435
+1,307
+1,091
+694
+1,493
+384
+for the year ended 31 December 2019
+1,226
+1,224
+1,235
+1,200
+(98)
+The share of profit and other comprehensive loss for the year ended 31 December 2019 in all individually immaterial joint ventures accounted for
+using equity method in aggregate was RMB 1,737 million (2018: RMB 2,052 million) and RMB 168 million (2018: RMB 839 million) respectively.
+As at 31 December 2019, the carrying amount of all individually immaterial joint ventures accounted for using equity method in aggregate was RMB
+25,530 million (2018: RMB 22,982 million).
+RMB million
+RMB million
+2018
+31 December
+31 December
+2019
+(i) Others mainly comprise catalyst expenditures and improvement expenditures of property, plant and equipment.
+Note:
+397
+Long-term receivables from and prepayment to Sinopec Group Company and fellow subsidiaries
+Prepayments for construction projects to third parties
+Others (i)
+22 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+for the year ended 31 December 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+176
+(i) Including foreign currency translation differences.
+Note:
+Operating rights of service stations
+1,400
+Dividends declared by joint ventures
+Share of net profit/(loss) from joint ventures
+2,923
+2,985
+767
+(993)
+(533)
+(249)
+(8)
+(729)
+1,735
+(708)
+(579)
+(935)
+(197)
+Total comprehensive income/(loss)
+Other comprehensive (loss)/income
+Profit/(loss) for the year
+Tax expense
+(897)
+2,728
+2,612
+2,764
+1,645
+(759)
+(1,561)
+3,685
+1,507
+2,728
+1,735
+2,985
+767
+1.059
+(261)
+921
+(1,105)
+2,923
+1,645
+(1,818)
+(1,300)
+6,286
+6,272
+1,750
+8,518
+(237)
+(1,200)
+(1,280)
+Current financial liabilities
+Current liabilities
+13,990
+14,878
+(725)
+51,873
+9,216
+10,453
+11,086
+10,498
+19,271
+17,267
+Non-current assets
+50,548
+9,117
+(57)
+(7,445)
+(8,370)
+Total current liabilities
+(2,507)
+(2,896)
+(12,217)
+(12,504)
+(2,124)
+(59)
+(1,815)
+(1,808)
+(4,939)
+(7,090)
+Other current liabilities
+(500)
+(500)
+(4,806)
+(1,822)
+(6,139) (2,045)
+7,743
+12,044
+733
+3,406
+4,485
+1,582
+1,154
+7,388
+5,603
+930
+Cash and cash equivalents
+Sinopec SABIC Tianjin
+31 December 31 December
+2018
+2019
+2018
+RMB million RMB million RMB million
+YASREF
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2019
+2018
+2019
+2018
+2019
+2018
+2019
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+Taihu
+BASF-YPC
+FREP
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+5,804
+Current assets
+11,197
+3,242
+11,977
+7,095
+6,821
+7,377
+6,091
+16,636
+17,580
+Total current assets
+Other current assets
+4,007
+10,267
+11,311
+3,689
+2,336
+5,795
+4,937
+9.248
+4,501
+(2,547)
+5,110
+(2,183)
+11,373
+12,829
+15,681
+14,509
+17,035
+15,002
+Net assets attributable to owners of the company
+11,235
+16,118
+12,746
+11,235
+11,785
+13,293
+15,681
+14,509
+17,035
+14,265
+15,002
+12,746
+16,118
+7,501
+Carrying Amounts
+(1,872)
+8,059
+7,133
+4,780
+4,213
+14,265
+5,573
+6,272
+5,804
+7,501
+Share of net assets from joint ventures
+412
+464
+Net assets attributable to non-controlling interests
+6,286
+Net assets
+8,518
+(4,960)
+(3,651)
+(4,592)
+(32,364)
+(29,445)
+(72)
+(125)
+(218)
+(290)
+(11,185)
+Other non-current liabilities
+Non-current liabilities
+(3,007)
+(19,949)
+(3,982)
+(17,023)
+(3,396)
+Non-current financial liabilities
+(279)
+(12,454)
+(17)
+(31,408)
+(2,109)
+(35)
+(235)
+(12,733)
+(11,475)
+Total non-current liabilities
+(33,301)
+(35)
+(368)
+(1,984)
+(2,271)
+(331)
+(1,963)
+(2,343)
+(937)
+Between 1 month and 6 months
+Over 6 months
+186,341
+11,834
+199,792
+10,108
+31 December
+2019
+RMB million
+6,381
+31 December
+2018
+Within 1 month or on demand
+9,142
+187,958
+6,416
+192,757
+5,607
+185,377
+182,763
+8,808
+6,670
+3,324
+199,792
+192,757
+33 CONTRACT LIABILITIES
+Payables for constructions
+Interest payable
+11,370
+As at 31 December 2019, the Group's contract liabilities primarily represent advances from customers. Related performance obligations are satisfied
+and revenue is recognised within one year.
+34 OTHER PAYABLES
+Salaries and welfare payable
+RMB million
+170,818
+198,564
+The ageing analysis of trade accounts payable and bills payable is as follows:
+31 LEASE LIABILITIES
+Lease liabilities
+Current
+Non-current
+(i) These corporate bonds are carried at amortised cost. As at 31 December 2019, RMB 12,157 million (2018: RMB 11,951 million) (USD denominated corporate bonds)
+are guaranteed by Sinopec Group Company.
+Other payables
+182
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+31 December
+2019
+RMB million
+1 January
+2019
+RMB million
+15,198
+177,674
+13,894
+184,670
+192,872
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+32 TRADE ACCOUNTS PAYABLE AND BILLS PAYABLE
+31 December
+2019
+RMB million
+31 December
+2018
+RMB million
+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 payable and bills payable measured at amortised cost
+166,480
+Financial liabilities carried at amortised costs
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+31 December
+2019
+RMB million
+4,769
+612
+42,007
+183
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+36 SHARE CAPITAL
+Registered, issued and fully paid
+95,557,771,046 listed A shares (2018: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 listed H shares (2018: 25,513,438,600) of RMB 1.00 each
+31 December
+2019
+RMB million
+31 December
+2018
+42,438
+RMB million
+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.
+Note:
+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.
+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 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.
+95,558
+Taxes other than income tax
+193
+(598)
+31 December
+2018
+RMB million
+7,312
+634
+50,612
+54,992
+22,778
+22,852
+78,771
+85,790
+66,075
+80,361
+44
+144,846
+35 PROVISIONS
+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:
+Balance at 1 January
+Provision for the year
+Accretion expenses
+Decrease for the year
+Exchange adjustments
+Balance at 31 December
+2019
+RMB million
+42,007
+1,408
+1,418
+2018
+RMB million
+39,407
+1,567
+1,438
+(2,439)
+166,151
+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.
+40,521
+42,516
+25,619
+13,201
+90
+3,887
+22
+300
+22
+300
+1,790
+12,074
+1,765
+12,039
+25
+17,088
+35
+13,000
+14,790
+12,074
+29,462
+Loans from Sinopec Group Company and fellow subsidiaries
+Short-term loans
+5,465
+27,304
+RMB denominated
+2,709
+3,061
+USD denominated
+Hong Kong Dollar ("HKD") denominated
+13,000
+25,709
+RMB denominated
+Current portion of long-term corporate 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.
+15,746
+(196)
+(3,385)
+(49)
+(65)
+(564)
+(1,237)
+(67)
+(250)
+10,807
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES
+Short-term debts represent:
+31 December
+2019
+RMB million
+31 December
+2018
+RMB million
+Third parties' debts
+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
+EUR denominated
+93,527
+Current portion of long-term loans
+2,236
+31,789
+31,134
+Corporate bonds (i)
+RMB denominated
+USD denominated
+Fixed interest rates ranging from 3.70% to
+4.90% per annum at 31 December 2019
+with maturities through 2022
+Fixed interest rates ranging from 3.13% to
+4.25% per annum at 31 December 2019
+with maturities through 2043
+20,000
+20,000
+12,157
+11,951
+Total third parties' long-term debts
+Less: Current portion
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+RMB denominated
+Less: Current portion
+109
+Interest rates ranging from interest free to
+5.50% per annum at 31 December 2019
+with maturities through 2034
+31,951
+63,946
+63,085
+(14,790)
+(12,074)
+49,156
+51,011
+47,450
+46,877
+(37,824)
+9,626
+58,782
+(4,361)
+32,157
+75
+31,025
+31,714
+22,780
+495
+1,441
+25
+22
+37,824
+4,361
+37,824
+4,361
+43,289
+31,665
+83,810
+61,127
+The Group's weighted average interest rates on short-term loans were 3.11% (2018: 3.37%) per annum at 31 December 2019. The above
+borrowings are unsecured.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+181
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+Long-term debts represent:
+Interest rate and final maturity
+Third parties' debts
+Long-term bank loans
+RMB denominated
+USD denominated
+Interest rates ranging from 1.08% to
+5.23% per annum at 31 December 2019
+with maturities through 2034
+Interest rates ranging from 1.55% to
+4.29% per annum at 31 December 2019
+with maturities through 2031
+31 December
+2019
+RMB million
+31 December
+2018
+RMB million
+RMB denominated
+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.
+174
+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.
+187
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+38 RELATED PARTY TRANSACTIONS (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+Notes:
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+(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.
+(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.
+(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,
+environmental protection and management services.
+(vi) Ancillary and social services represent expenditures for social welfare and support services such as educational facilities, media communication services, sanitation,
+accommodation, canteens, and property maintenance.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+(vii) Operating lease charges represent the rental incurred for operating leases in respect of land, buildings and equipment leased from Sinopec Group Company and
+fellow subsidiaries, associates and joint ventures. No lease charges have incurred during the current year because of the adoption of IFRS 16 Leases.
+(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. The balance of deposits at
+31 December 2019 was RMB 35,707 million (2018: RMB 41,057 million).
+(x) Interest expense represents interest charges on the loans obtained from Sinopec Group Company and fellow subsidiaries.
+(xi) The Group obtained loans, discounted bills and others from Sinopec Group Company and fellow subsidiaries.
+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 2019.
+The terms of these agreements are summarised as follows:
+• 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;
+(2) where there is no government-prescribed price, the government-guidance price;
+(3) where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+(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%.
+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.
+• 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.
+•
+(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.
+•
+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.
+For the year ended 31 December 2019, the amount of rental the Group paid to Sinopec Group Company and fellow subsidiaries, associates and
+joint ventures for land, buildings and others are RMB 11,333 million, RMB 518 million and RMB 468 million (2018: RMB 7,636 million, RMB
+653 million and RMB 836 million).
+28,472
+(vi)
+3,098
+6,664
+(vii)
+7,765
+(vii)
+521
+(vii)
+869
+(viii)
+116
+113
+As at 31 December 2019 and 2018, 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 guarantees disclosed in Note 37. Guarantees given to banks by
+the Group in respect of banking facilities to associates and joint ventures are disclosed in Note 37.
+(ix)
+848
+(x)
+1,334
+1,110
+(ix)
+(xi)
+5,350
+6,457
+3,438
+31,684
+The amounts set out in the table above in respect of the year ended 31 December 2019 and 2018 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+Included in the transactions disclosed above, for the year ended 31 December 2019 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 159,086 million (2018: RMB 140,427 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 142,433
+million (2018: RMB 123,772 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 3,097
+million (2018: RMB 6,664 million), lease charges for land, buildings and others paid by the Group of RMB 11,330 million, RMB 509 million and
+RMB 383 million (2018: RMB 7,636 million, RMB 643 million and RMB 602 million), respectively and interest expenses of RMB 1,334 million
+(2018: RMB 1,110 million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 74,453 million
+(2018: RMB 59,472 million), comprising RMB 73,365 million (2018: RMB 58,606 million) for sales of goods, RMB 1,066 million (2018: RMB
+848 million) for interest income and RMB 22 million (2018: RMB 18 million) for agency commission income.
+For the year ended 31 December 2019, no individually significant right-of-use assets were leased from Sinopec Group Company and fellow
+subsidiaries, associates and joint ventures by the Group. The interest expense recognised for the year ended 31 December 2019 on lease
+liabilities in respect of amounts due to Sinopec Group Company and fellow subsidiaries, associates and joint ventures was RMB 8,518 million.
+1,066
+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 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.
+188
+16,141
+18,160
+12,470
+43,289
+31,665
+9,626
+42,516
+171,402
+270,218
+125,614
+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 30.
+As at 31 December 2019, the current portion of long-term loans mainly include an interest-free loan with a maturity period of 20 years
+amounting to RMB 35,560 million from Sinopec Group Company (a state-owned enterprise) through 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.
+As at and for the year ended 31 December 2019, and as at and for the year ended 31 December 2018, 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.
+3,273
+(b) Key management personnel emoluments
+Short-term employee benefits
+Retirement scheme contributions
+2019
+RMB'000
+9,209
+536
+2018
+RMB'000
+5,745
+351
+9,745
+6,096
+(c) Contributions to defined contribution retirement plans
+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 39. As at 31 December 2019 and 2018, the accrual for the contribution to
+post-employment benefit plans was not material.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+189
+Financial Statements (International)
+Net deferred tax assets/(liabilities)
+318
+24,905
+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:
+4,464
+17,530
+25,296
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+38 RELATED PARTY TRANSACTIONS (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+•
+On the basis of a series of continuing connected transaction agreements signed in 2000, the Company and Sinopec Group Company have
+signed the Fifth Supplementary Agreement and the Fourth Revised Memorandum of land use rights leasing contract on 24 August 2018,
+which took effect on 1 January 2019 and made adjustment to "Mutual Supply Agreement”, “Agreement for Provision of Cultural and
+Educational, Health Care and Community Services", "Buildings Leasing Contract", "Intellectual Property Contract" and "Land Use Rights
+Leasing Contract", etc.
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures included in the following accounts captions
+are summarised as follows:
+Trade accounts receivable and bills receivable
+Financial assets at fair value through other comprehensive income
+Prepaid expenses and other current assets
+Long-term prepayments and other assets
+Total
+Trade accounts payable and bills payable
+Contract liabilities
+Other payables
+Other long-term liabilities
+Short-term loans and current portion of long-term loans from Sinopec Group Company
+and fellow subsidiaries
+Long-term loans excluding current portion from Sinopec Group Company and fellow subsidiaries
+Lease liabilities (including to be paid within one year)
+Total
+31 December
+2019
+RMB million
+31 December
+2018
+RMB million
+12,968
+407
+7,555
+12,723
+7,665
+734
+23,482
+26,832
+38,702
+38,668
+(v)
+23,489
+33,310
+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 6,100 million (2018: RMB 5,553 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
+Exploration licenses for exploration activities are registered with the Ministry of Natural 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 Natural 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 Natural Resources annually
+which are expensed. Expenses recognised were approximately RMB 179 million for the year ended 31 December 2019 (2018: RMB 231 million).
+Estimated future annual payments 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
+Thereafter
+31 December
+2019
+195,437
+31 December
+2018
+RMB million
+302
+380
+69
+79
+34
+33
+30
+28
+29
+28
+845
+1,309
+852
+RMB million
+202,055
+141,045
+54,392
+138,088
+63,967
+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
+exercise of conversion by the holders of the 2011 Convertible Bonds.
+All A shares and H shares rank pari passu in all material aspects.
+Capital management
+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 2019, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 7.4% (2018:
+11.5%) and 50.1% (2018: 46.2%), respectively.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 30 and 37, respectively.
+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.
+184 Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+37 COMMITMENTS AND CONTINGENT LIABILITIES
+Operating lease commitments
+The Group leases land and other assets under non-cancellable operating leases expiring within three months to thirty years. 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.
+From 1 January 2019, the Group has recognised right-of-use assets for these leases, except for short-term and low-value leases, see Note 1(a) and
+Note 18 for further information.
+As at 31 December 2019 and 2018, the future minimum lease payments under operating leases are as follows:
+Within one year
+Later than one year but not later than five years
+Later than five years
+Capital commitments
+31 December
+2019
+RMB million
+31 December
+2018
+RMB million
+15,625
+55,882
+281,287
+352,794
+At 31 December 2019 and 2018, capital commitments of the Group are as follows:
+31 December
+2019
+RMB million
+31 December
+2018
+RMB million
+Authorised and contracted for (i)
+Authorised but not contracted for
+1,400
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Financial Statements (International)
+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
+Operating lease charges for land
+Operating lease charges for buildings
+Other operating lease charges
+Agency commission income
+Interest income
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+Interest expense
+Net funds obtained from related parties
+Note
+2019
+(i)
+RMB million
+295,532
+2018
+RMB million
+272,789
+(ii)
+197,308
+192,224
+(iii)
+8,206
+7,319
+(iv)
+Net deposits withdrawn from related parties
+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.
+38 RELATED PARTY TRANSACTIONS
+for the year ended 31 December 2019
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+37 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+Contingent liabilities
+At 31 December 2019 and 2018, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+Joint ventures
+Associates (ii)
+Others (iii)
+31 December
+2019
+31 December
+2018
+RMB million
+7,100
+RMB million
+5,033
+10,140
+12,168
+7,197
+24,398
+17,240
+Management 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 2019 and 2018, the Group estimates that there is no need
+to pay for the guarantees. Thus no liability has been accrued for a loss related to the Group's obligation under these guarantee arrangements.
+Notes:
+(ii) The Group provided a guarantee in respect to standby credit facilities granted to Zhongtian Synergetic Energy Company Limited ("Zhongtian Synergetic Energy")
+by banks amount to RMB 17,050 million. As at 31 December 2019, the amount withdrawn by Zhongtian Synergetic Energy and guaranteed by the Group was RMB
+10,140 million (2018: RMB 12,168 million).
+(iii) The Group provided a guarantee in respect to the loan of New Bright International Development Limited borrowed from Sinopec Overseas Oil & Gas Limited. As at 31
+December 2019, the loan agreement was terminated, in consequence, the guarantee agreement was terminated.
+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 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.
+The Group paid normal routine pollutant discharge fees of approximately RMB 9,235 million in the consolidated financial statements for the year
+ended 31 December 2019 (2018: RMB 7,940 million).
+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.
+186
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+185
+(254)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+87
+Receivables and inventories
+2018
+RMB million
+Balance at
+31 December
+Transferred
+from
+reserve
+RMB million
+Others
+RMB million
+RMB million
+RMB million
+RMB million
+income
+income comprehensive
+statement
+Recognised
+in other
+Recognised in
+consolidated
+Balance at
+1 January
+2018
+Movements in the deferred tax assets and liabilities are as follows:
+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 2019, write-down of deferred tax assets
+amounted to RMB 189 million (2018: RMB 188 million) (Note 10).
+As at 31 December 2019, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 16,605
+million (2018: RMB 18,308 million), of which RMB 1,992 million (2018: RMB 2,437 million) was incurred for the year ended 31 December 2019,
+because it was not probable that the future taxable profits will be realised. These deductible losses carried forward of RMB 3,163 million, RMB 3,156
+million, RMB 5,938 million, RMB 2,356 million and RMB 1,992 million will expire in 2020, 2021, 2022, 2023,2024 and after, respectively.
+(9,657)
+Payables
+Cash flow hedges
+Property, plant and equipment
+Tax losses carried forward
+2,650
+4,222
+1,104
+(1,031)
+1
+2,029
+(10)
+115
+(428)
+1,808
+-
+(117)
+1,925
+2,563
+3
+3
+2,176
+381
+-
+(882)
+(14,098)
+25,403
+180
+16,463
+15,427
+(384)
+(12,317)
+(27)
+(8,666)
+Tax losses carried forward
+3,594
+3,709
+Financial assets at fair value through other comprehensive income
+Intangible assets
+Property, plant and equipment
+131
+(7)
+(1)
+595
+474
+(508)
+(535)
+Others
+Deferred tax assets/(liabilities)
+117
+(130)
+1,131
+Cash flow hedges
+Financial Statements (International)
+for the year ended 31 December 2019
+29 DEFERRED TAX ASSETS AND LIABILITIES
+Deferred tax assets and deferred tax liabilities before offset are attributable to the items detailed in the table below:
+31 December
+Deferred tax liabilities
+31 December
+2019
+RMB million
+2018
+RMB million
+Deferred tax assets
+116
+31 December
+2019
+RMB million
+RMB million
+Receivables and inventories
+2,546
+2,563
+Payables
+1,142
+1,808
+31 December
+2018
+19
+Others
+2,325
+-
+(1,195)
+73
+1,104
+Cash flow hedges
+1,142
+1
+2,546
+(17)
+(667)
+1,808
+Payables
+2,563
+Receivables and inventories
+RMB million
+RMB million
+2019
+reserve
+(250)
+(268)
+6,761
+(2,575)
+6,761
+148
+(61)
+Intangible assets
+124
+8
+116
+comprehensive income
+Others
+RMB million
+Financial assets at fair value through other
+(2)
+38
+(151)
+3,709
+Tax losses carried forward
+4,146
+(1)
+(39)
+3,594
+RMB million
+Property, plant and equipment
+RMB million
+(84)
+116
+(61)
+2
+273
+(336)
+117
+Others
+Intangible assets
+(142)
+comprehensive income
+117
+Financial assets at fair value through other
+Available-for-sale financial assets
+3,709
+(36)
+56
+RMB million
+1,414
+(117)
+(2)
+(1)
+in other
+(26)
+from 31 December
+income comprehensive
+statement
+1 January
+2019
+Balance at
+Transferred
+consolidated
+Balance at
+Recognised in
+Recognised
+15,746
+(1,031)
+(37)
+1,905
+6,244
+8,665
+Net deferred tax assets/(liabilities)
+(254)
+income
+Gross
+Net
+Gross
+353
+Exploratory Development Exploratory Development Exploratory Development
+Exploratory Development
+2018
+China
+Net
+2019
+175
+6
+2,011
+131
+286
+5
+2,197
+Total
+117
+Wells drilling (as of 31 December)
+177
+0
+176
+117
+0
+Total
+Equity accounted entities
+0
+Consolidated subsidiaries
+0
+Overseas
+157
+57
+Others
+20
+60
+Shengli
+177
+117
+Consolidated subsidiaries
+277
+69
+277
+69
+117
+70
+195
+0
+60
+137
+1
+930
+93
+155
+Others
+5
+1,201
+71
+149
+4
+1,168
+81
+177
+Shengli
+6
+1,941
+131
+286
+5
+740
+0
+1
+3
+0
+99
+1
+3
+Equity accounted entities
+0
+0
+0
+0
+0
+0
+0
+0
+Consolidated subsidiaries
+0
+70
+0
+0
+0
+99
+1
+Overseas
+165
+Consolidated subsidiaries
+10007
+2,855
+7,248
+18,225
+18,225
+18,293
+18,293
+32,805
+32,805
+33,819
+7,293
+33,819
+51,030
+52,112
+52,112
+51,030
+51,030
+52,112
+52,112
+Net
+Gross
+51,030
+3,939
+28
+14
+6,420
+Net
+Gross
+Net
+Gross
+Region
+China
+2018
+2019
+Natural gas productive wells (as of 31 December)
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+14
+2,098
+13
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+3,925
+54,969
+7,265
+58,323
+2,841
+54,967
+7,220
+59,360
+14
+28
+Net
+Gross
+2018
+Oil productive wells (as of 31 December)
+2019
+10
+0
+0
+205
+44
+205
+44
+156
+57
+72
+25
+72
+25
+20
+60
+277
+69
+277
+69
+176
+117
+0
+ONOOON
+10
+0
+Total
+Equity accounted entities
+Consolidated subsidiaries
+Overseas
+Others
+Shengli
+China
+287
+69
+287
+69
+176
+117
+10
+0
+10
+0
+0
+0
+0
+0
+0
+Business Review and Prospects
+96
+Consolidated subsidiaries
+Crude oil reserves (mmbbls)
+0.2
+(12.1)
+7.2
+912.50
+977.32
+1,047.78
+44.78
+39.58
+34.79
+248.88
+Items
+248.93
+(1.5)
+293.66
+288.51
+284.22
+1.7
+2018 to 2019(%)
+2017
+448.79
+451.46
+458.92
+249.43
+31 December 19
+31 December 18
+Proved reserves
+Consolidated subsidiaries
+Shengli
+China
+Proved undeveloped reserves
+Equity accounted entities
+Consolidated subsidiaries
+Overseas
+Others
+910
+982
+1,244
+1,326
+1,244
+1,326
+Shengli
+Consolidated subsidiaries
+China
+1,533
+1,588
+1,666
+1,741
+Proved developed reserves
+2018
+2019
+Change from
+Summary of Reserves of Crude Oil and Natural Gas
+DTD BRENT
+DUBAI
+ICE BRENT
+WTI-NYMEX
+Trend of International Crude Oil Prices
+10/2019
+07/2019
+04/2019
+01/2019
+0
+20
+20
+40
+40
+60
+80
+100
+US$/barrel
+In 2019, the global economy slowed down
+while China maintained an overall stable with
+its gross domestic product (GDP) up by 6.1%.
+International oil prices fluctuated in a wide
+range while domestic market saw rapid growth
+demand for natural gas and fierce competition
+in oil products due to abundant supply, and
+chemicals prices decreased. The Company
+actively addressed market changes by pursuing
+innovative, coordinated, green, open and shared
+development. Through implementing specialised
+development, market-oriented operation,
+internalisation and overall coordination, we
+pushed forward all aspects of our work, and
+achieved solid operating results.
+BUSINESS REVIEW
+BUSINESS REVIEW AND PROSPECTS
+A
+01/2020
+Others
+1 MARKET REVIEW
+(2) Refined Oil Products Market
+Natural gas production (bcf)
+Overseas
+China
+Crude oil production (mmbbls)
+Oil and gas production (mmboe)
+breakthrough and application, and
+ensured steady production. In natural
+gas development, we constantly pushed
+forward capacity building in Fuling,
+Weirong, and West Sichuan gas fields,
+expanded the market and sales, and
+promoted coordinated development
+along the value chain. The Company's
+production of oil and gas reached 458.92
+million barrels of oil equivalent, with
+domestic crude production reaching
+249.43 million barrels and natural gas
+production totaling 1,047.78 billion cubic
+feet, up by 7.2% year on year.
+Summary of Operations for the Exploration and Production Segment
+oil production, increasing gas output
+and cutting cost. We reinforced venture
+exploration and preliminary exploration in
+new areas which led to new discoveries
+in Tarim, Sichuan and Erdos basins. The
+Company's newly added proved reserves
+in China reached 587 million barrels
+of oil equivalent, with domestic reserve
+replacement ratio at 138.7%. In crude
+oil development, we proceeded with the
+capacity building in Shunbei oilfield,
+strengthened profitable production
+capacity of hard-to-recover reserves in
+mature fields, intensified EOR technology
+achieved tangible results in maintaining
+In 2019, we implemented the action
+plan of redoubling efforts in oil and gas
+exploration and production, actively
+pressed ahead with high-efficiency
+exploration and profit-oriented
+development, accelerated the
+systematic integration of natural
+gas production, supply, storage and
+marketing, continuously reduced cost
+and expenditure on all fronts, and
+(1) Exploration and Production
+2 PRODUCTION & OPERATIONS REVIEW
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+12
+Business Review and Prospects
+11
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Domestic demand for chemicals kept
+stable growth in 2019. Based on our
+statistics, domestic consumption of
+ethylene equivalent was 52.71 million
+tonnes, up by 11.8% from the previous
+year, and the apparent consumption
+of synthetic resin, synthetic fibre and
+synthetic rubber rose by 10.1%, 12.5%
+and 3.6%, respectively. Average prices of
+domestic chemical products decreased
+by 12.6% year on year, and the average
+margin of chemical products narrowed.
+(3) Chemical Products Market
+In 2019, domestic demand for refined
+oil products maintained its growth while
+market supply was in surplus. According
+to statistics released by the NDRC, the
+apparent consumption of refined oil
+products (including gasoline, diesel and
+kerosene) was 330 million tonnes, up
+by 1.4% from the previous year, with
+gasoline up by 2.3%, kerosene up by
+6.2% and diesel down by 0.5%. There
+were 21 price adjustments for domestic
+refined oil products throughout the year
+with 15 increases and 6 decreases.
+(1) Crude Oil & Natural Gas Market
+In 2019, international oil prices
+fluctuated with a wide range. The
+spot price of Platt's Brent for the year
+averaged USD 64.21 per barrel, down by
+10.0%. Along with the changes in China's
+energy mix, domestic demand for natural
+gas remained strong. Based on statistics
+released by the NDRC, domestic apparent
+consumption of natural gas reached
+306.7 billion cubic meters, up by 9.4%
+year on year.
+174
+Overseas
+344
+195
+65
+972
+1,190
+972
+1,190
+972
+1,190
+13
+1,125
+9
+0
+13
+9
+2,769
+2,897
+1,149
+1,315
+1,904
+1,814
+0
+777
+Wells drilled (as of 31 December)
+2019
+6
+1,941
+131
+286
+5
+2,098
+174
+350
+China
+Dry
+Productive
+Dry
+Productive
+Dry
+Dry Productive
+Productive
+Development
+Exploratory
+Development
+Exploratory
+2018
+5,822
+6,026
+5,822
+6,026
+0
+0
+38
+46
+80
+95
+16
+12
+6,378
+107
+96
+107
+134
+153
+261
+245
+27
+17
+289
+262
+334
+Equity accounted entities
+Consolidated subsidiaries
+46
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+5,835
+6,035
+6,807
+7,225
+31 December 18
+31 December 19
+Natural gas reserves (bcf)
+Exploration and Production Activities
+Others
+Consolidated subsidiaries
+Fuling
+China
+Proved undeveloped reserves
+Consolidated subsidiaries
+Equity accounted entities
+Overseas
+Others
+Puguang
+Fuling
+Consolidated subsidiaries
+China
+Proved developed reserves
+Proved reserves
+Items
+38
+5,068
+350
+Consolidated subsidiaries
+(91.9)
+(5,360)
+(436)
+Other operating expense, net
+(1.6)
+(246,498)
+(242,535)
+Taxes other than income tax
+4.8
+Operating profit
+(77,721)
+Personnel expenses
+(2.2)
+(10,744)
+(10,510)
+Exploration expenses, including dry holes
+(1.1)
+(109,967)
+(108,812)
+Depreciation, depletion and amortisation
+(81,482)
+86,198
+82,264
+4.8
+Shareholders of the Company
+Attributable to:
+(8.7)
+78,897
+72,033
+Profit for the year
+(11.5)
+(20,213)
+(17,894)
+Income tax expense
+(9.3)
+99,110
+89,927
+Profit before taxation
+(13.6)
+15,845
+13,696
+Investment income and share of profits less losses from associates and joint ventures
+1,001
+(9,967)
+Net finance costs
+(15.7)
+(65,642)
+(55,313)
+Selling, general and administrative expenses
+In 2019, the Company's turnover and other operating revenues was RMB 2,966.2 billion, increased by 2.6% compared with that of 2018. The
+operating profit was RMB 86.2 billion, representing a year on year increase of 4.8%.
+1 CONSOLIDATED RESULTS OF OPERATIONS
+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.
+MANAGEMENT'S DISCUSSION AND ANALYSIS
+N
+RA
+17
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+with focuses on the production capacity
+building of Shengli and Northwest
+crude oil development projects, Fuling
+and Weirong shale gas field, and the
+construction of natural gas pipelines and
+storage facilities as well as overseas oil
+and gas projects. The refining segment
+will account for RMB 22.4 billion, mainly
+on the construction and commissioning
+of the Zhongke project, and structural
+adjustment projects of Zhenhai, Tianjin,
+Maoming, Luoyang. RMB 22.0 billion is
+budgeted for marketing and distribution
+with emphasis on service stations,
+depots and storage facilities for refined
+oil products, pipelines and non-fuel
+business. The share for chemicals will
+be RMB 32.3 billion which will be used
+on the construction of Zhongke, Zhenhai
+and Gulei projects, ethylene revamping of
+Sinopec SK and Sinopec-SABIC projects,
+Sinopec SABIC polycarbonate project,
+Jiujiang aromatics project and Zhong
+An coal chemical project. The capital
+expenditure for corporate and others
+will be RMB 5.6 billion, mainly for R&D
+facilities and information technology
+projects.
+Capital Expenditures, Preliminary
+capital expenditures for the year 2020
+are budgeted at RMB 143.4 billion.
+We will dynamically optimise capital
+projects based on future market trends.
+Preliminarily, RMB 61.1 billion will be
+invested in exploration and production
+Research and Development, we
+will continue to implement the
+innovation-driven development strategy,
+deepen mechanism reform, accelerate
+key technology breakthrough, improve
+innovation capabilities to strive for
+quality development. In oil and gas
+exploration and development, we will
+strive to make technology breakthrough
+in ultra-deep oil and gas, tight oil and
+gas, shale oil and gas, etc. In refining,
+we will accelerate the research of heavy
+oil processing, oil quality upgrading, and
+promote the application of technologies
+such as needle coke. In chemicals,
+we will continuously improve the
+package technologies of ethylene and
+aromatics, strengthen the research and
+development of photoelectric materials
+and degradable materials, and accelerate
+the industrialization of large-tow
+high-performance carbon fibers. At the
+same time, we will focus on advancing
+research on cutting-edge technologies
+and new areas to achieve future business
+development through technology
+innovation.
+production, marketing, research and
+application, and redouble our efforts in
+developing new products and increase
+the production of high value-added
+products. Meanwhile, we will improve
+targeted marketing and services, enhance
+e-commerce platforms, actively explore
+overseas markets and continuously
+expand market share.
+Chemicals, the Company will focus on
+the "basic high-end" development
+concept, speed up advanced capacity
+building, continuously deepen
+structural adjustment, and improve
+our competitiveness and profitability.
+We will optimize facilities and product
+chain, and improve utilization rate and
+production scheduling based on market
+demand. Efforts will be made in adjusting
+feedstock slate to improve product yield
+and reduce cost. We will coordinate
+Marketing and Distribution, balancing
+volume and profit, and leveraging the
+advantages of integration of production
+and sales, the Company will continuously
+improve the quality of its operations. We
+will vigorously carry out targeted and
+differentiated marketing to continuously
+improve our services with focus on
+customer need. We will accelerate the
+construction of smart service stations,
+coordinate the layout of natural gas and
+hydrogen stations, and consolidate and
+expand network advantages. More efforts
+will be made in boosting innovation in
+non-fuel business models, vigorously
+developing proprietary brands, creating
+differentiated competitive advantages,
+so as to drive rapid growth in non-fuel
+business.
+scheduling, and promote efficient
+operation of its refining business chain.
+We will optimize the allocation of crude
+oil, coordinate crude oil supply chain, and
+reduce procurement costs. More efforts
+I will be made in restructuring product
+slate, increasing products tailoring for
+market demand and changes. We will
+accelerate low-sulfur bunker fuel projects
+and the revamping of storage and
+transportation facilities to rapidly expand
+market share.
+Business Review and Prospects
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Refining, under low oil price
+circumstance, with the coordination of
+production and sales, domestic and
+overseas markets, the Company will
+optimize utilization rate and production
+Exploration and Production, under
+the low oil price circumstance, we will
+optimise projects implementation,
+enhance high-quality exploration, and
+reduce cost and expenditure to expand
+resource base and realize sustainable
+development. In crude oil development,
+more efforts will be made in promoting
+capacity building of Shunbei Oilfield,
+Tahe Oilfield, and the Oilfield at the
+western margin of the Junggar Basin,
+and we will strengthen profit-oriented
+development of mature fields. In natural
+gas development, we will accelerate
+capacity construction of key projects,
+and promote integration of production,
+supply, storage and marketing so as
+to maximize the value of the business
+chain. Preliminarily, we plan to keep a
+stable production volume of curde oil and
+realise a positive growth for nature gas.
+Due to the outbreak, the adjustment of
+the Company's production plan for 2020
+is currently underway. We will confirm the
+production plan according to the market
+trends in the future.
+In 2020, adhering to the principles of
+"reform, management, innovation, and
+development", the Company will focus on
+optimisation of the entire business value
+chain, as well as market expansion, risk
+prevention, and seizing opportunities so
+as to do our best to reduce the negative
+impact of the coronavirus outbreak and
+the slump of crude oil price, and strive to
+achieve healthy business performance.
+The following table sets forth the main revenue and expenses from the Company's consolidated financial statements:
+57,465
+Year ended 31 December
+2019
+2018
+RMB million
+3.8
+(2,292,983)
+(2,380,907)
+Purchased crude oil, products and operating supplies and expenses
+2.5
+(2,808,915)
+(2,879,995)
+Operating expenses
+0.2
+65,566
+65,705
+Other operating revenues
+2.6
+2,825,613
+2,900,488
+Turnover
+2.6
+2,891,179
+2,966,193
+Turnover and other operating revenues
+Change (%)
+RMB million
+(2) Operations
+61,618
+Non-controlling interests
+Synthetic fibre
+(10.6)
+8,634
+7,717
+11.6
+14,433
+16,103
+Synthetic resin
+(18.0)
+1,370
+6,971
+26.0
+11,127
+14,019
+Monomer and polymer for synthetic fibre
+(16.6)
+5,488
+4,578
+1.2
+40,520
+5,714
+1,314
+4.3
+8,438
+5,028
+and Analysis
+Management's Discussion
+19
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+0.7
+2,096
+2,110
+16.4
+794
+924
+Chemical fertiliser
+(9.8)
+10,619
+9,583
+14.9
+1,114
+1,280
+Synthetic rubber
+(13.1)
+9,712
+41,022
+Basic chemical feedstock
+(5.8)
+4,562
+(3.2)
+3,100
+3,000
+(8.5)
+2018 Change (%)
+2019
+Change (%)
+2018
+6,595
+6,034
+Crude oil
+2019
+(RMB/tonne, RMB/thousand cubic meters
+Year ended 31 December
+Average realised price
+Year ended 31 December
+Sales volume (thousand tonnes)
+The following table sets forth the external sales volume, average realised prices and respective rates of change of the Company's major products
+in 2019 and 2018:
+In 2019, the Company's turnover was RMB 2,900.5 billion, representing an increase of 2.6% over 2018. This was mainly attributed to expansion
+of business scale and trading volume.
+(1) Turnover and other operating revenues
+(15.7)
+17,279
+14,568
+Natural gas (million cubic meters)
+(6.7)
+27,073
+11.9
+4,298
+4.9
+25,787
+27,041
+Kerosene
+(3.1)
+5,811
+2.9
+84,630
+87,083
+Diesel
+(6.1)
+7,870
+7,387
+4.7
+88,057
+92,233
+Gasoline
+11.6
+1,400
+1,562
+24,197
+In 2020, despite the increasing instability
+and uncertainty of the international
+political and economic situation, and the
+inevitable impact on China's economy by
+coronavirus outbreak in the short term,
+we expect the fundamentals sustaining
+sound economic growth in China
+remain unchanged. Domestic demand
+for energy and chemical products will
+be relatively weak in the first half, but
+the accumulated demand is expected
+to be released rapidly after outbreak.
+Considering oil-producing countries'
+abundant supply capacity, global demand
+growth, inventory levels, and geopolitics,
+we expect that the international oil prices
+will fluctuate at a low level.
+5,996
+BUSINESS PROSPECTS
+150.67
+154.79
+159.99
+1.8
+238.50
+244.01
+248.52
+2018 to 2019 (%)
+2017
+3.4
+2018
+In 2019, confronted with fierce market
+competition, the Company brought our
+advantages of integrated production
+and marketing network into full play,
+adhered to the guideline of "achieving
+gains in both sales volume and profits”,
+coordinated allocation of resources,
+expanded sales and increased profit, and
+achieved sustained growth in both total
+sales volume and retail scale. With focus
+(3) Marketing and Distribution
+Note: Includes 100% of the production from domestic joint ventures.
+Refinery yield (%)
+Light product yield (%)
+Light chemical feedstock production
+Kerosene
+Diesel
+Gasoline
+2019
+62.77
+61.16
+57.03
+on customer need, we adopted a flexible
+and targeted marketing strategy, and
+improved our services. We upgraded our
+distribution network to further strengthen
+our existing advantages. We accelerated
+the construction and operation of CNG
+stations and explored the development
+of hydrogen fueling stations. Total sales
+volume of refined oil products for the
+year was 255 million tonnes, up by
+7.3% year on year, of which domestic
+0.38 percentage points
+0.05 percentage points
+94.88
+94.93
+94.98
+75.85
+76.00
+76.38
+3.3
+38.60
+38.52
+39.78
+7.8
+26.88
+28.91
+31.16
+2.1
+66.76
+64.72
+66.06
+2.6
+Gasoline, diesel and kerosene production
+Refinery throughput
+Change from
+Unit: million tonnes
+4,602
+4,642
+5,835
+5,877
+6.420
+368
+368
+482
+482
+Others
+Fuling
+Total
+58
+58
+61
+61
+Puguang
+5,028
+5,068
+6,378
+(1) Market Outlook
+6,420
+6,378
+sales volume accounted for 184 million
+tonnes, up by 2.3%. Meanwhile, we
+strengthened development and marketing
+of company-owned brands, and promoted
+the innovation of non-fuel business model
+and its market-oriented reform, to speed
+up the development of non-fuel business.
+5,068
+Unit: Square kilometers
+realised a growth momentum in high
+grade lubricants and grease, LPG, asphalt
+and sulphur. In 2019, the Company
+processed 249 million tonnes of crude
+oil, and produced 160 million tonnes of
+refined oil products, up by 3.4%, with
+gasoline and kerosene up by 2.6% and
+7.8% respectively year on year.
+5,106
+31,643
+36,748
+525,269
+525,269
+2018
+5,230
+33,467
+38,697
+472,017
+472,017
+2019
+production and sales, and moderately
+increased export of oil products to keep
+a relatively high utilization rate. We
+promoted quality upgrading projects
+and made structural adjustments,
+comprehensively optimized production
+and ensured safety and reliability of
+the refining facilities. We improved the
+marketing and distribution systems and
+Summary of Operations for the Refining Segment
+In 2019, with market-oriented approach,
+we optimised product mix to produce
+more gasoline and jet fuel, increased
+production of high value-added products,
+and lowered diesel-to-gasoline ratio
+to 1.05. We optimised the production
+plan for low sulfur fuel oil and reduced
+cost. We leveraged our advantage in
+(2) Refining
+China
+Overseas
+China
+Acreage with exploration licenses
+Area under license (as of 31 December)
+5,028
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Acreage with development licenses
+Change from
+15,938
+15,923
+17,244
+8.5
+11,610
+11,512
+12,493
+2017 2018 to 2019 (%)
+2018
+2019
+In 2019, with the emphasis on
+innovation-driven strategy, the Company
+accomplished notable results in
+deepening reform of R&D mechanism,
+promoting innovation platforms such as
+joint R&D centers and incubators, and
+making breakthrough in key and frontier
+technologies. In upstream, research in
+gas enrichment theory and exploration
+technologies of marine phase medium
+and large gas fields in Sichuan Basin
+made headway, leading to breakthrough
+in gas reserve. Our proprietary rotary
+steering drilling system was successfully
+(5) Research and Development
+Note: Includes 100% of the production of domestic joint ventures.
+Synthetic fiber
+Synthetic fiber monomer and polymer
+Synthetic rubber
+Synthetic resin
+Ethylene
+Change from
+Unit: thousand tonnes
+Ethylene production in 2019 reached
+12.49 million tonnes, up by 8.5% year
+on year. The differential ratio of synthetic
+fiber reached 90%, and the ratio of
+new and specialty products in synthetic
+resin reached 65.3%. We also promoted
+targeted marketing and service to further
+expand our business, with total chemical
+sales volume increased by 3.3% to 89.50
+million tonnes, realising full sales.
+8.3
+among production, marketing, R&D and
+application, vigorously promoted the
+development and application of new
+products, and raised the proportion of
+new and specialty products. We further
+adjusted facility structures to enhance
+the dynamic optimisation of facilities
+and product chain, and improved the
+utilisation based on market demand.
+1,047
+848
+Qingdao-Nanjing gas pipeline, Wen 23
+and Jintan gas storage projects, as well
+as overseas projects. Capital expenditure
+for the refining segment was RMB 31.4
+billion, mainly for Zhongke Refining
+and Petrochemical project, Zhenhai,
+Tianjin, Maoming and Luoyang refining
+upgrading projects. Capital expenditure
+for the marketing and distribution
+segment was RMB 29.6 billion, mainly
+for construction of service stations, oil
+products depots, pipelines and non-fuel
+business. Capital expenditure for the
+chemicals segment was RMB 22.4 billion,
+mainly for Zhongke, Zhenhai, Gulei and
+Hainan projects, ethylene revamping for
+Sinopec SK and Sinopec-SABIC projects,
+phase II of Hainan high-efficiency and
+environment-friendly aromatics project,
+Sinopec SABIC polycarbonate project and
+Zhongan coal chemical project. Capital
+expenditure for corporate and others was
+RMB 2 billion, mainly for R&D facilities
+and information technology projects.
+In 2019, focusing on quality and
+profitability of investment, the Company
+continuously optimised its capital
+projects, with total capital expenditures
+of RMB 147.1 billion. Capital expenditure
+for the exploration and production
+segment was RMB 61.7 billion, mainly
+for Shengli and Northwest crude oil
+development projects, Fuling and
+Weirong shale gas projects, phase
+I of Xinqi gas pipeline, phase I of
+Erdos-Anping-Cangzhou gas pipeline,
+Summary of Operations for the Marketing and Distribution Segment
+(7) Capital Expenditures
+(6) Health, Safety, Security and Environment
+In 2019, the Company constantly
+promoted and fully implemented the
+HSSE management system. We enhanced
+overall health management, and
+established safeguarding mechanism for
+occupational, physical and psychological
+health. We surveyed and rectified safety
+hazards, took stringent measures to
+control risks and supervise safety and
+operations of contractors, and achieved
+sound results. We upgraded our capacity
+in all-dimension risk prevention and
+control as well as emergency response,
+further enhancing security management.
+In 2019, we actively practiced green
+and low-carbon growth strategy, further
+promoted the green enterprise campaign
+and ecological conservation, and
+accomplished all emission reduction
+targets. Compared with 2018, energy
+consumption per 10,000 yuan of output
+I was down by 0.4%, industrial fresh
+water usage was down by 1.1%, COD
+of discharged water down by 2.1%,
+and SO2 emissions down by 3.9%.
+All solid waste was properly treated.
+For more detailed information, please
+refer to "Communication on Progress
+for Sustainable Development 2019 of
+Sinopec Corp."
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+16
+Business Review and Prospects
+15
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+In addition, the framework type code
+of a novel structured zeolite SCM-15
+synthesised by us has been approved by
+the Structure Commission of International
+Zeolite Association. In 2019, the
+Company had 6,160 patent applications
+at home and abroad, among which 4,076
+were granted. We also won six second
+prizes of National Sci-Tech Progress and
+one second prize of National Technology
+Invention, and one gold, three silver and
+three excellent prizes of National Patent
+Awards.
+in fluidised-bed reactor and PPTA
+technology realised industrialization.
+applied in Shengli oilfield. In refining,
+we developed various formulations
+for low sulphur fuel oil and passed
+engine tests and endurance tests. Our
+high-grade gasoline and diesel engine oil
+met the latest international standards
+and realised industrial production
+and commercialization. In chemicals,
+the start-up of the second generation
+high-efficiency and environment-friendly
+aromatics facilities was successfully
+started up. The anthraquinone method
+of producing hydrogen peroxide
+5.8
+1,220
+7.3
+9,439
+9,343
+10,029
+1,289
+16.9
+896
+Summary of Operations for the Chemicals Segment
+1,218
+(4) Chemicals
+58.61
+61.91
+Direct sales and distribution (million tonnes)
+Annual average throughput per station (tonne/station)
+0.7
+121.56
+121.64
+122.54
+Retail sales (million tonnes)
+2.3
+177.76
+180.24
+Total domestic sales volume of oil products (million tonnes)
+7.3
+231.21
+237.69
+254.95
+Total sales volume of oil products (million tonnes)*
+In 2019, the Company followed the
+development philosophy of "basic plus
+high-end", sped up advanced capacity
+building, and optimised business portfolio
+layout. We persistently fine-tuned
+chemical feedstock mix to increase
+the yield and lower cost. We optimised
+products slate, enhanced integration
+2019
+2018
+2017 2018 to 2019 (%)
+56.20
+5.6
+184.45
+3,979
+30,627
+30,696
+3,992
+Note: The total sales volume of refined oil products includes the amount of refined oil marketing and trading sales volume.
+30,655
+0.1
+30,661
+30,702
+(%)
+the end of the
+reporting period
+30,633
+2018
+3,969
+0.3
+Change from
+the end of the
+previous year to
+31 December
+2017
+Total number of service stations under the Sinopec brand
+Number of company-operated stations
+0.1
+2019
+31 December
+31 December
+100.00
+USD 1,662
+100.00
+("SOIH")
+Sinopec International Petroleum Exploration and
+RMB 8,000
+Liability Company
+100.00
+Sinopec Lubricant Company Limited
+Sinopec Yizheng Chemical Fibre Limited
+RMB 4,000
+Sinopec Overseas Investment Holding Limited
+RMB 3,374
+Production Limited ("SIPL")
+Sinopec Great Wall Energy & Chemical
+Company Limited
+100.00
+Particulars
+of issued
+capital
+(million)
+100.00
+Name of company
+Interests
+Interests
+held by
+Company Limited
+RMB 22,761
+Principal activities
+Sinopec Yangzi Petrochemical Company Limited
+RMB 15,651
+100.00
+Sinopec Pipeline Storage & Transportation
+RMB 12,000
+held by the non-controlling
+Company % interests %
+100.00
+China International United Petroleum and Chemical
+Company Limited
+15.00
+100.00
+Company Limited
+products and petroleum products
+Sinopec Hainan Refining and Chemical
+RMB 9,628
+75.00
+25.00
+85.00
+Company Limited
+Pipeline storage and transportation of
+crude oil
+Investment holding of overseas business
+Investment in exploration, production and
+sale of petroleum and natural gas
+Production and sale of polyester chips
+and polyester fibres
+As at 31 December 2019, the following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the
+Group.
+Production and sale of refined petroleum
+products, lubricant base oil, and
+petrochemical materials
+Trading of crude oil and petrochemical
+products
+Coal chemical industry investment
+management, production and sale
+of coal chemical products
+Manufacturing of intermediate
+petrochemical products and petroleum
+products
+RMB 5,000
+Sinopec Qingdao Refining and Chemical
+1.02
+Sinopec Qingdao Petrochemical Company Limited
+RMB 1,595
+100.00
+Sinopec Catalyst Company Limited
+RMB 1,500
+100.00
+China Petrochemical International Company Limited
+RMB 1,400
+100.00
+Sinopec Chemical Sales Company Limited
+RMB 1,000
+100.00
+Sinopec Beihai Refining and Chemical Limited
+Liability Company
+RMB 5,294
+98.98
+RMB 5,000
+41 PRINCIPAL SUBSIDIARIES
+16,296
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+117,976
+50,732
+60,331
+19,676
+18,164
+21,572
+147,094
+13,966
+2,866
+1,797
+108,812
+109,967
+3
+4,274
+13,379
+245
+6,906
+19,578
+Corporate and others
+Manufacturing of intermediate
+(2) Geographical information
+2019
+2018
+RMB million
+1,979
+RMB million
+42,155
+31,372
+27,908
+29,566
+21,429
+22,438
+61,739
+for the year ended 31 December 2019
+353
+264
+31 December
+2019
+RMB million
+376,470
+2,891,179
+31 December
+2018
+505,672
+329,443
+2,966,193
+RMB million
+1,235,676
+52,705
+1,288,381
+50,892
+1,040,560
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+193
+Financial Statements (International)
+Financial Statements (International)
+989,668
+80
+2,119,580
+395,129
+RMB million
+17
+1,374
+16
+345
+6,281
+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.
+2,131,078
+External sales
+Singapore
+Others
+Non-current assets
+Mainland China
+Others
+2019
+RMB million
+2018
+Mainland China
+petrochemical products and petroleum
+products
+RMB million
+Trading of petrochemical products
+22,309
+16,731
+19,151
+RMB million
+RMB million
+2018
+2019
+2018
+2019
+RMB million RMB million
+RMB million
+RMB million RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million RMB million
+130,861
+(181,766)
+(192,106)
+Sinopec-SK
+At
+At
+2019
+2018
+2019
+2018
+25,299
+2019
+2018
+2019
+2018
+Current assets
+129,266
+Current liabilities
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2019
+2018
+1,788
+816
+1,284
+(liabilities)/assets
+(62,840) (50,905) 18,695
+16,248
+6,830
+11,386
+984
+Net current
+766
+(2,513)
+8,662
+7,304
+(9,700)
+417
+Chemicals
+(1,677)
+At
+(2,333)
+(2,233)
+1,209
+11,858
+9,537
+5,337
+2,750
+(456)
+(15,037)
+(483)
+(13,913)
+(804)
+(50)
+(2,961)
+(3,722)
+(3,196)
+(15,479)
+Shanghai SECCO
+At
+At
+Sinopec Kantons
+At
+32.40
+Production and sale of petrochemical
+Sinopec SK (Wuhan) Petrochemical Company
+Non-current assets
+RMB 7,193
+Limited ("Sinopec-SK")
+67.60
+Sinopec Kantons Holdings Limited
+("Sinopec Kantons")
+Gaoqiao Petrochemical Company Limited
+RMB 10,000
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+RMB 10,824
+Fujian Petrochemical Company Limited
+HKD 248
+("Fujian Petrochemical") (i)
+RMB 7,801
+petroleum products
+Marketing and distribution of
+petrochemical products
+Import and processing of crude oil,
+production, storage and sale of petroleum
+products and petrochemical products
+Manufacturing of intermediate petrochemical
+Shanghai SECCO
+Manufacturing of intermediate petrochemical
+Sinopec Marketing Company Limited
+RMB 28,403
+70.42
+29.58
+Marketing and distribution of refined
+("Marketing Company")
+products and petroleum products
+Production and sale of catalyst products
+products
+Provision of crude oil jetty services and
+for the year ended 31 December 2019
+41 PRINCIPAL SUBSIDIARIES (Continued)
+Summarised financial information on subsidiaries with material non-controlling interests
+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 consolidated balance sheet
+Marketing Company
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+At
+SIPL
+At
+At
+Shanghai Petrochemical
+At
+At
+Fujian Petrochemical
+At
+At
+At
+Production, sale, research and development
+of petrochemical products, ethylene and
+downstream byproducts
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+50.00
+natural gas pipeline transmission services
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Manufacturing of synthetic fibres, resin and
+plastics, intermediate petrochemical
+products and petroleum products
+Manufacturing of plastics, intermediate
+petrochemical products and petroleum
+products
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong SAR 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.
+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 returns through its power over the entity.
+59.00
+41.00
+194
+60.33
+55.00
+45.00
+50.44
+49.56
+RMB 8,140
+50.00
+39.67
+Marketing and distribution
+14,861
+Exploration and production
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+2,900,488
+Turnover and other operating revenues
+Other operating revenues
+Corporate and others
+Marketing and distribution
+Chemicals
+Exploration and production
+Refining
+Other operating revenues
+Turnover
+Elimination of inter-segment sales
+1,523
+65,566
+2,891,179
+2,966,193
+65,705
+1,850
+15,492
+32,424
+33,247
+73,835
+531,241
+828,635
+716,789
+654,337
+650,271
+1,482,972
+191
+1,367,060
+(1,934,372)
+2,825,613
+10,283
+10,738
+5,464
+5,389
+(1,879,694)
+Financial Statements (International)
+Financial Statements (International)
+192
+(10,107)
+30,632
+54,827
+29,107
+23,464
+17,151
+9,284
+27,007
+(9,293)
+(40)
+(3,634)
+Total segment operating profit
+86,198
+82,264
+64
+480,373
+- Elimination
+- Chemicals
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+40 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+2019
+RMB million
+- Corporate and others
+2018
+Result
+Operating profit/(loss)
+By segment
+- Exploration and production
+- Refining
+- Marketing and distribution
+RMB million
+457,406
+425,508
+54,865
+5,224
+1,414,213
+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 13.0% 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 8% 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 2019 were RMB 11,665 million (2018: RMB
+9,296 million).
+40 SEGMENT REPORTING
+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.
+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, 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.
+39 EMPLOYEE BENEFITS PLAN
+(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.
+(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.
+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.
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+40 SEGMENT REPORTING (Continued)
+(iv) Chemicals, which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products mainly to
+external customers.
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+state-controlled.
+• uses of public utilities.
+190
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+38 RELATED PARTY TRANSACTIONS (Continued)
+(d) Transactions with other state-controlled entities in the PRC
+These transactions are conducted in the ordinary course of the Group's business on terms comparable to those with other entities that are not
+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").
+•
+sales and purchases of goods and ancillary materials;
+• rendering and receiving services;
+•
+lease of assets;
+• depositing and borrowing money; and
+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:
+Share of profits/(losses) from associates and joint ventures
+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.
+Turnover
+111,114
+89,315
+93,499
+95,954
+200,429
+189,453
+141,674
+2018
+RMB million
+148,930
+1,109,088
+1,218,692
+1,258,018
+1,393,557
+1,408,989
+4,159
+1,397,716
+1,077,018
+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 debts, income tax
+payable, long-term debts, loans from Sinopec Group Company and fellow subsidiaries, deferred tax liabilities and other unallocated liabilities.
+Information of the Group's reportable segments is as follows:
+RMB million
+Inter-segment sales
+Exploration and production
+External sales
+Inter-segment sales
+Refining
+External sales
+Inter-segment sales
+2019
+Marketing and distribution
+Inter-segment sales
+Chemicals
+External sales
+Inter-segment sales
+Corporate and others
+External sales
+External sales
+Refining
+- Exploration and production
+2,598
+29,462
+40,521
+Short-term debts
+539,144
+709,071
+Total segment liabilities
+144,216
+137,881
+37,413
+54,462
+159,536
+226,531
+103,809
+122,264
+94,170
+167,933
+- Corporate and others.
+Cash and cash equivalents, time deposits with financial institutions
+Other unallocated assets
+127,927
+167,015
+16,961
+36,081
+1,755,071
+Income tax payable
+1,592,308
+Liabilities
+Segment liabilities
+· Exploration and production
+- Refining
+- Marketing and distribution
+- Chemicals
+Total assets
+3.264
+6,699
+Long-term debts
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Capital expenditure
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+40 SEGMENT REPORTING (Continued)
+Corporate and others
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Impairment losses on long-lived assets
+Depreciation, depletion and amortisation
+21,694
+for the year ended 31 December 2019
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+49,156
+51,011
+Loans from Sinopec Group Company and fellow subsidiaries
+52,915
+74,181
+Deferred tax liabilities
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+6,809
+Other unallocated liabilities
+17,500
+29,328
+Total liabilities
+879,236
+735,773
+5,948
+17,616
+1,450
+1,521
+(19)
+(3)
+- Refining
+59
+315
+- Marketing and distribution
+- Exploration and production
+- Chemicals
+Aggregate investment income
+Net finance costs
+Profit before taxation
+73
+43
+578
+596
+- Corporate and others.
+228
+Investment (losses)/income
+12,777
+- Chemicals
+- Refining
+- Marketing and distribution
+- Corporate and others
+(640)
+109
+13,974
+3,309
+4,611
+6,298
+2,330
+1,814
+Aggregate
+share of profits from associates and joint ventures
+3,155
+3,167
+920
+1,871
+271,356
+399,242
+317,641
+175,884
+156,865
+131,686
+321,080
+152,799
+1,438,842
+1,220,347
+Interest in associates and joint ventures
+152,204
+145,721
+Financial assets at fair value through other comprehensive income
+Deferred tax assets
+Total segment assets
+919
+321,686
+Corporate and others
+(9,967)
+1,001
+89,927
+99,110
+31 December
+2019
+31 December
+410,950
+2018
+RMB million
+- Chemicals
+Assets
+Segment assets
+- Exploration and production
+- Refining
+- Marketing and distribution
+RMB million
+340,356
+Turnover
+13,234
+2,729
+2,729
+2,729
+Trade accounts payable and bills payable
+199,792
+199,792
+Derivative financial liabilities
+199,792
+78,771
+78,771
+78,771
+616,756
+808,654
+384,595
+Other payables
+2,812
+290,539
+7,088
+45,008
+985
+15,676
+49,156
+62,903
+42,240
+952
+6,271
+25,189
+30,491
+Loans from Sinopec Group Company and
+fellow subsidiaries
+52,915
+54,508
+43,623
+Lease liabilities
+192,872
+367,711
+16,488
+22,932
+77,285
+323,842
+Total
+61,809
+30,123
+1,889
+16,938
+27,190
+15,792
+Loans from Sinopec Group Company and
+fellow subsidiaries
+74,181
+75,207
+32,127
+37,977
+3,741
+1,362
+Derivative financial liabilities
+13,571
+51.011
+Long-term debts
+Long-term debts
+29,462
+31 December 2018
+Carrying
+amount
+RMB million
+RMB million
+contractual
+undiscounted
+cash flow
+Within
+1 year or
+on demand
+RMB million
+More than 1
+year but less
+than 2 years
+RMB million
+More than 2
+years but less
+More than
+than 5 years
+RMB million
+5 years
+RMB million
+Short-term debts
+30,123
+13,571
+42,240
+Short-term debts
+198
+98
+9.278
+6.817
+1,593
+798
+117
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+42 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
+Overview
+195
+92
+92
+79
+11
+14
+14
+20
+20
+1
+2
+Cash and cash equivalents
+at 31 December
+6,901
+14,142
+8,833
+5,993
+7,450
+8,742
+Financial assets of the Group include cash and cash equivalents, time deposits with financial institutions, financial assets at fair value through
+profit or loss, derivative financial assets, trade accounts receivable and bills receivable, amounts due from Sinopec Group Company and fellow
+subsidiaries, amounts due from associates and joint ventures, financial assets at FVOCI and other receivables. Financial liabilities of the Group
+include short-term debts, loans from Sinopec Group Company and fellow subsidiaries, derivative financial liabilities, trade accounts payable and bills
+payable, amounts due to Sinopec Group Company and fellow subsidiaries, amounts due to associates and joint ventures, other payables, long-term
+debts and lease liabilities.
+The Group has exposure to the following risks from its uses of financial instruments:
+⚫credit risk;
+liquidity risk; and
+42 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Liquidity risk
+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 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
+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.
+As at 31 December 2019, the Group has standby credit facilities with several PRC financial institutions which provide borrowings up to RMB
+379,649 million (2018: RMB 387,748 million) on an unsecured basis, at a weighted average interest rate of 3.57% per annum (2018: 3.87%). As
+at 31 December 2019, the Group's outstanding borrowings under these facilities were RMB 2,947 million (2018: RMB 21,236 million) and were
+included in debts.
+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:
+31 December 2019
+Carrying
+amount
+Total
+contractual
+undiscounted
+RMB million
+cash flow
+RMB million
+Within
+1 year or
+on demand
+RMB million
+More than 1
+year but less
+than 2 years
+RMB million
+More than 2
+years but less
+than 5 years
+RMB million
+More than
+5 years
+RMB million
+for the year ended 31 December 2019
+40,521
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+196
+• market risk.
+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.
+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 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.
+Credit risk
+(i) Risk management
+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 deposits) 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 trade accounts receivable at 31 December 2019, 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.
+The carrying amounts of cash and cash equivalents, time deposits with financial institutions, financial assets at fair value through profit or loss,
+derivative financial assets, trade accounts receivable and bills receivable, financial assets at FVOCI and other receivables, represent the Group's
+maximum exposure to credit risk in relation to financial assets.
+(ii) Impairment of financial assets
+The Group's primary type of financial assets that are subject to the expected credit loss model is trade accounts receivable and bills receivable,
+financial assets at FVOCI and other receivables.
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+For trade accounts receivable and bills receivable and financial assets at FVOCI, the Group applies the IFRS 9 simplified approach to measuring
+expected credit losses which uses a lifetime expected loss allowance for all trade accounts receivable and bills receivable and financial assets at
+FVOCI.
+To measure the expected credit losses, trade accounts receivable and bills receivable and financial assets at FVOCI have been grouped based on
+shared credit risk characteristics and the days past due.
+The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 December 2019 or 1 January 2019,
+respectively, and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current
+and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
+The detailed analysis of trade accounts receivable and bills receivable and financial assets at FVOCI, based on which the Group generated its
+payment profile is listed in Notes 25 and 26.
+All of the entity's other receivables (Note 28) are considered to have low credit risk, and the loss allowance recognised during the period was
+therefore limited to 12 months expected losses. The Group considers 'low credit risk' for other receivables when they have a low risk of default
+and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+244
+13,571
+192,757
+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
+(i) Financial instruments carried at fair value
+Fair values
+42 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+for the year ended 31 December 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:
+As at 31 December 2019, 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 increase/decrease the Group's
+profit for the year by approximately RMB 3,134 million (2018: decrease/increase RMB 197 million), and decrease/increase the Group's other
+reserves by approximately RMB 4,289 million (2018: increase/decrease RMB 6,850 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 2018.
+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 contracts, to manage a portion of this risk.
+Commodity price risk
+As at 31 December 2019, 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 profit for the year by approximately RMB 352 million (2018: decrease/increase by approximately
+RMB 424 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 2018.
+The Group's interest rate risk exposure arises primarily from its short-term and long-term debts and loans from Sinopec Group Company and fellow
+subsidiaries. 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 and terms of repayment of short-term and long-term debts, and loans from Sinopec Group Company and fellow
+subsidiaries of the Group are disclosed in Note 30.
+Interest rate risk
+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.
+As at 31 December 2019, the Group had certain commodity contracts of crude oil, refined oil products and chemical products designated as
+qualified cash flow hedges and economic hedges. As at 31 December 2019, the fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB 788 million (2018: RMB 7,844 million) and derivative financial liabilities of RMB 2,728 million (2018: RMB
+13,568 million).
+•
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+•
+3,318
+Structured deposits
+Total
+RMB million
+RMB million
+RMB million
+RMB million
+Level 3
+Level 2
+Level 1
+Financial assets at fair value through profit or loss:
+Assets
+At 31 December 2019
+Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
+•
+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.
+SGD
+1
+172
+27
+Currency risk
+42 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+for the year ended 31 December 2019
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+198
+Financial Statements (International)
+197
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+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.
+Market risk
+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.
+17,154
+30,931
+261,062
+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 and lease liabilities denominated in Singapore Dollar ("SGD"). The Group enters into foreign exchange contracts to manage its
+currency risk exposure.
+3,318
+Included primarily in short-term and long-term debts and loans from Sinopec Group Company and fellow subsidiaries of the Group and lease
+liabilities are the following amounts denominated in a currency other than the functional currency of the entity to which they relate:
+31 December
+RMB million
+RMB million
+2018
+2019
+31 December
+31 December
+USD
+A 5 percent strengthening/weakening of RMB against the following currencies at 31 December 2019 and 2018 would have increased/decreased
+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 2018.
+668
+103
+4
+SGD
+USD
+2018
+million
+2019
+million
+31 December
+Gross exposure arising from loans and lease liabilities
+Trade accounts payable and bills payable
+- Equity investments, listed and at quoted market price
+1
+Derivative financial liabilities
+Liabilities
+35,069
+26,873
+7,013
+1,183
+- Derivative financial liabilities
+1,450
+127
+Financial assets at fair value through other comprehensive income:
+- Equity instruments
+7,887
+7,013
+874
+- Derivative financial assets
+1,323
+5,500
+5,500
+8,071
+8,071
+13,571
+13,571
+192,757
+192,757
+Other payables
+85,790
+85,790
+85,790
+446,772
+459,257
+356,257
+54,915
+Financial Statements (International)
+199
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Management of the Group 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 structured deposits and trade accounts receivable and bills
+receivable classified as Level 3 financial assets.
+During the years ended 31 December 2019 and 2018, there was no transfer between instruments in Level 1 and Level 2.
+Derivative financial assets:
+182
+182
+– Equity investments, listed and at quoted market price
+13,371
+709
+219
+8,622
+8,622
+Trade accounts receivable and bills receivable
+1,521
+1,431
+90
+Financial assets at fair value through other comprehensive income:
+- Equity instruments
+837
+709
+128
+- Derivative financial assets
+Derivative financial assets:
+14,299
+1
+Liabilities
+- Derivative financial liabilities
+25,550
+25,550
+- Structured deposits
+Financial assets at fair value through profit or loss:
+Total
+RMB million
+Level 3
+RMB million
+Level 2
+RMB million
+Level 1
+RMB million
+2,729
+2,729
+1,520
+1,209
+1,520
+1,209
+Assets
+At 31 December 2018
+Derivative financial liabilities
+150
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+(43)
+Sinopec Kantons
+Shanghai SECCO
+2018
+2019
+2018
+RMB million RMB million RMB million
+Fujian Petrochemical
+2019
+RMB million RMB million
+2019
+2018
+2019
+2018
+2019
+2018
+2018
+Shanghai Petrochemical
+SIPL
+Marketing Company
+2019
+66,827
+8,669
+17,952
+14,996
+15,168
+5,927
+5,761
+4,359
+4,085
+5,997
+5,802
+4,863
+4,560
+Summarised consolidated statement of comprehensive income
+Year ended 31 December
+Sinopec-SK
+2019
+2018
+RMB million
+RMB million
+22,992
+22,046
+2,831
+3,272
+38,020
+2,227
+5,336
+477
+1,576
+1,131
+1,065
+3,137
+3,099
+701
+1,879
+Profit for the year
+70,528
+17,134
+26,320
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million RMB million
+1,427,705 1,443,698
+3,282
+5,037
+100,270
+107,689
+5,535
+5,261
+1,274
+1,398
+28,341
+31,016
+Total comprehensive income
+non-controlling interests
+8,469
+(688)
+(158)
+(132)
+(1,627)
+(1,698)
+(7)
+(688)
+Net non-current
+281,624
+258,976
+(3,718)
+6,970
+23,164
+19,077
+assets/(liabilities)
+(10)
+(21)
+(31,050)
+141
+23,185
+19,087
+11,558
+11,444
+12,777
+12,895
+11,473
+12,301
+21,567
+12,612
+Non-current liabilities
+(58,732)
+(2,086)
+(16,952)
+10,870
+10,756
+12,619
+12,763
+Attributable to owners of
+the Company
+148,256
+141,244
+6,308
+5,266
+14,998
+15.295
+5.927
+5,761
+6,583
+6,165
+12,511
+12,105
+6,997
+13,029
+Attributable to
+11,860
+18,508
+9,846
+10,603
+21,560
+12,612
+Net assets
+218,784
+208,071
+14,977
+23,218
+29,994
+30,463
+11.854
+11,522
+10,942
+10,250
+17,907
+23,362
+RMB million
+2,693
+Marketing Company
+2019
+2018
+SIPL
+2019
+2018
+Shanghai Petrochemical
+2019
+2018
+RMB million RMB million RMB million RMB million RMB million RMB million
+Fujian Petrochemical
+2019
+2018
+RMB million RMB million
+Sinopec Kantons
+2019
+RMB million RMB million
+2018
+Shanghai SECCO
+2019
+2018
+Sinopec-SK
+2019
+Year ended 31 December
+2018
+RMB million RMB million
+Net cash generated from
+operating activities
+40,260 24,825
+2,128
+3,467
+5,057
+6,659
+622
+38
+716
+738
+4,601
+3,766
+5,532
+RMB million RMB million
+Summarised statement of cash flows
+1.191
+822
+attributable to
+non-controlling interests
+8,289
+7,794
+1,651
+2,737
+1,113
+2,645
+238
+788
+33
+433
+Dividends paid to
+non-controlling interests
+4,830
+3,964
+10,926
+104
+658
+245
+1,004
+1,016
+399
+3,308
+14
+600
+600
+650
+650
+1.616
+1,344
+159
+Comprehensive income
+Net cash (used in)/generated
+from investing activities
+8.339
+1,224
+(13)
+139
+22,589
+(95)
+(165) 2,460
+(390)
+795
+734
+Cash and cash equivalents
+at 1 January
+14.142
+12,921
+5,993
+(1,303)
+3.605
+7,504
+92
+92
+226
+198
+18
+343
+6,817
+7,205
+78
+798
+64
+Effect of foreign currency
+exchange rate changes
+8,742
+2.144
+2,690
+1.080
+678
+4,096
+(4,623)
+(1,928)
+(472)
+(215)
+397
+648
+(91)
+(480)
+(4,987)
+(3,099)
+Net cash (used in)/generated
+from financing activities
+(21,535)
+(32,084)
+(116)
+(7,198)
+cash and cash equivalents
+Net (decrease)/increase in
+525
+250
+(3,676)
+(25,923)
+(2,050)
+(1,208)
+43
+(163)
+(3,507)
+(1,737)
+(5,419)
+(1,551)
+1,879
+(134)
+1,067
+3,137
+1.140
+1,576
+477
+5,336
+2,235
+4,536
+3,099
+701
+(4,075)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+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 2019 and 2018 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.
+(4,068)
+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.
+"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.
+2019
+2018
+Total
+China
+Other
+countries
+Taxes other than income tax
+(1,163)
+(1,163)
+(1,124)
+(1,124)
+Other
+impairment losses
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+The results of operations for producing activities for the years ended 31 December 2019 and 2018 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.
+3,687
+13,418
+Profit before taxation
+1,617
+1,617
+1,837
+1,837
+Income tax expense
+(486)
+(486)
+(667)
+(4,075)
+(667)
+1,131
+1,131
+1,170
+1,170
+Total of the Group's and its equity method investments'
+results of operations for producing activities
+(4,068)
+25,693
+2,457
+17,105
+Share of profit for producing activities of associates
+and joint ventures
+28,150
+971
+Total
+98
+98
+79
+79
+Production
+(256)
+(249)
+(7)
+(260)
+Extensions and discoveries
+(249)
+End of year
+1,450
+1,433
+17
+1,367
+1,339
+28
+Non-controlling interest in proved developed
+and undeveloped reserves at the end of year
+(11)
+125
+90
+95
+China
+countries
+The Group
+Proved developed and undeveloped reserves (oil)
+(million barrels)
+Beginning of year
+1,367
+1,339
+28
+1,293
+1,261
+32
+Revisions of previous estimates
+81
+85
+(4)
+160
+158
+Improved recovery
+160
+160
+Depreciation, depletion, amortisation and
+Exploration expenses
+(2,455)
+9,530
+Transfers
+59,552
+59,262
+290
+57,860
+57,860
+83,633
+80,641
+2,992
+89,569
+Revenues
+Sales
+84,532
+143,185
+139,903
+3,282
+147,429
+142,392
+5,037
+Production costs excluding taxes
+(47,969)
+(46,725)
+(1,244)
+5,037
+The Group
+Other
+countries
+China
+investments' exploration and development costs
+54,454
+53,540
+914
+40,354
+39,437
+917
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+205
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+206
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table III: Results of operations related to oil and gas producing activities
+2019
+RMB million
+Other
+2018
+RMB million
+Total
+China
+countries
+Total
+(47,227)
+(45,953)
+(1,274)
+Exploration expenses
+709
+709
+Results of operation from producing activities
+27,019
+25,693
+1,326
+15,935
+13,418
+2,517
+Equity method investments
+Revenues
+Sales
+9,325
+9,325
+Production costs excluding taxes
+(2,516)
+9,325
+9,530
+9,325
+9,530
+(2,516)
+(2,455)
+9,530
+338
+8
+338
+1,808
+(10,510)
+(10,510)
+(10,744)
+(10,744)
+Depreciation, depletion, amortisation and
+impairment losses
+(48,630)
+(47,580)
+(1,050)
+(62,832)
+(60,877)
+(1,955)
+Taxes other than income tax
+(9,395)
+(9,395)
+(11,400)
+(11,400)
+Profit before taxation
+26,681
+25,693
+988
+15,226
+13,418
+Income tax expense
+8
+1,271
+12
+4
+4
+2
+2
+Proved developed reserves
+End of year
+Production
+Extensions and discoveries
+Improved recovery
+Total of the Group's and its equity method
+306
+12
+12
+(8)
+(8)
+Revisions of previous estimates
+306
+299
+299
+Beginning of year
+associates and joint ventures (oil) (million barrels)
+Proved developed and undeveloped reserves of
+25
+25
+5
+5
+Revisions of previous estimates
+Beginning of year
+(billion cubic feet)
+of associates and joint ventures (gas)
+Proved developed and undeveloped reserves
+End of year
+Proved undeveloped reserves
+End of year
+Beginning of year
+273
+Equity method investments
+273
+261
+Beginning of year
+299
+299
+290
+290
+(28)
+(28)
+(28)
+(28)
+261
+Improved recovery
+Other
+countries
+Total
+(974)
+(974)
+End of year
+7,216
+7,216
+6,793
+6,793
+Proved developed reserves
+Beginning of year
+5,822
+5,822
+6,000
+6,000
+End of year
+6,026
+6,026
+5,822
+5,822
+Proved undeveloped reserves
+Beginning of year
+985
+(1,044)
+(1,044)
+680
+680
+Other
+countries
+China
+2018
+2019
+Total
+Table IV: Reserve quantities information (Continued)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+Financial Statements
+208
+China
+Gas Producing Activities (Unaudited)
+Financial Statements
+207
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+971
+971
+1,190
+1,190
+End of year
+875
+875
+Supplemental Information on Oil and
+12
+Extensions and discoveries
+End of year
+95
+1
+Proved developed and undeveloped reserves
+(gas) (billion cubic feet)
+Beginning of year
+6,793
+6,793
+6,985
+6,985
+Revisions of previous estimates
+123
+123
+(40)
+(40)
+Improved recovery
+Extensions and discoveries
+Production
+469
+469
+142
+327
+96
+107
+107
+End of year
+Proved developed reserves
+Beginning of year
+985
+1,244
+27
+1,156
+1,124
+32
+End of year
+1,343
+1,339
+1,326
+1,271
+1,244
+27
+Proved undeveloped reserves
+Beginning of year
+96
+95
+1
+137
+137
+17
+Production
+1,666
+(oil) (million barrels)
+Beginning of year
+Proved developed reserves
+(1)
+(1)
+13
+142
+31
+13
+38
+38
+45
+33
+33
+38
+85
+45
+38
+261
+261
+245
+245
+End of year
+Proved undeveloped reserves
+Beginning of year
+End of year
+Proved developed and undeveloped reserves
+Total of the Group and its equity method investments
+2
+12
+222
+13
+13
+9
+9
+12
+Beginning of year
+12
+13
+13
+13
+9
+9
+(3)
+(3)
+(3)
+(3)
+2
+13
+793
+Differences between Consolidated Financial Statements
+Prepared in Accordance with the Accounting Policies
+747
+80,118
+84,418
+Contract liabilities
+Other payables
+Total current liabilities
+Net current liabilities
+Total assets less current liabilities
+less cu
+Non-current liabilities
+Long-term debts
+Loans from Sinopec Group Company and fellow subsidiaries
+Lease liabilities
+Provisions
+Other long-term liabilities.
+Total non-current liabilities
+Equity
+Share capital
+Reserves
+Total equity
+5,112
+4,230
+162,852
+Trade accounts payable and bills payable
+967
+157
+Derivative financial liabilities
+Financial assets at fair value through other comprehensive income
+Dividends receivable
+207
+41
+2,313
+Inventories
+49,116
+45,825
+Prepaid expenses and other current assets.
+106,645
+73,442
+178,936
+Total current assets
+257,104
+Current liabilities
+Short-term debts
+32,329
+14,511
+Loans from Sinopec Group Company and fellow subsidiaries
+39,439
+5,815
+Lease liabilities
+7,198
+232,565
+30,145
+327,205
+94,640
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+46 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
+2019
+RMB million
+2018
+RMB million
+Capital reserve
+Balance at 1 January
+Others
+Balance at 31 December
+Share premium
+Balance at 1 January
+Balance at 31 December
+Statutory surplus reserve
+Balance at 1 January
+Appropriation
+9,201
+46
+9,195
+6
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+536,218
+529,177
+31,773
+696,558
+1,599
+642,726
+12,999
+27,200
+6,681
+40,904
+107,783
+34,514
+288,877
+33,094
+5,310
+167,381
+106,508
+529,177
+536,218
+121,071
+121,071
+(a)
+408,106
+415,147
+5,404
+9,247
+21,544
+940
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+43 ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+Impairment for long-lived assets
+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 units 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.
+Measurement of expected credit losses
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past events,
+current conditions and forecasts of future economic conditions. The Group regularly monitors and reviews the assumptions used for estimating
+expected credit losses.
+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.
+44 EVENTS AFTER THE BALANCE SHEET DATE
+In early 2020, the outbreak of Coronavirus Disease 2019 ("COVID-19") has significant impacts on the consumption of refined oil products and sales
+of chemical products of the Group. The Group has taken a series of strong and effective measures, and has coordinated the prevention and control
+of the COVID-19 and the resumption of work and production with all-out efforts to minimize its impact.
+International crude oil prices dropped significantly in March 2020 under the impact of the outbreak of the COVID-19 and the breakdown of OPEC's
+production reduction negotiation, which has a significant impact on the Group's operation.
+The COVID-19 and international crude oil prices drop in March 2020 are events arose after the balance sheet date, which are non-adjusting events
+after the balance sheet date. The Group will keep continuous attention on the situation of the COVID-19 and future fluctuation in oil prices, take
+responsive tackling measures, and assess the impact on the financial position and operating results of the Group after the balance sheet date. Up to
+the date of the issuance of the consolidated financial statements, the assessment is still in progress.
+45 PARENT AND ULTIMATE HOLDING COMPANY
+The directors consider the parent and ultimate holding company of the Group as at 31 December 2019 is Sinopec Group Company, a state-owned
+enterprise established in the PRC. This entity does not produce financial statements available for public use.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+201
+Financial Statements (International)
+202
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+200
+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.
+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.
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2019
+42 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 IFRS 9 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 for debt with substantially
+the same characteristic and maturities range from 2.37% to 4.90% (2018: 2.76% 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
+2019 and 2018:
+Carrying amount
+Fair value
+31 December
+2019
+RMB million
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+31 December
+2018
+RMB million
+63,085
+62,656
+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 of the Group, the Group's existing capital structure and the terms of the
+borrowings.
+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 2019 and 2018.
+43 ACCOUNTING ESTIMATES AND JUDGEMENTS
+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.
+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 estimates of proved and proved developed reserves also change. 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.
+63,946
+62,594
+Trade accounts receivable and bills receivable
+for the year ended 31 December 2019
+BALANCE SHEET OF THE COMPANY (Amounts in million)
+Deferred tax assets
+7,315
+11,021
+Lease prepayments
+Total non-current assets
+Current assets
+7,101
+Long-term prepayments and other assets
+6,727
+13,129
+791,198
+674,499
+Cash and cash equivalents
+15,984
+59,120
+Time deposits with financial institutions
+38,088
+23,759
+Financial assets at fair value through profit or loss
+22,500
+Derivative financial assets
+395
+395
+Financial assets at fair value through other comprehensive income
+16,094
+Note
+31 December
+2019
+RMB
+31 December
+2018
+RMB
+Non-current assets
+Property, plant and equipment, net
+Construction in progress
+Right-of-use assets
+291,544
+46 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY
+302,048
+51,598
+120,037
+Investment in subsidiaries
+266,359
+251,970
+Interest in associates
+22,798
+21,143
+Interest in joint ventures
+15,530
+60,493
+9,201
+55,850
+55,850
+17
+40,770
+Total capitalised costs
+976,472
+932,964
+43,508
+935,823
+891,605
+8
+44,218
+Accumulated depreciation, depletion, amortisation
+and impairment losses
+(702,392)
+(661,177)
+Net capitalised costs
+274,080
+271,787
+(41,215)
+2,293
+(658,093)
+(618,593)
+(39,500)
+277,730
+44,193
+651,531
+199,304
+695,724
+199,321
+40,778
+186
+Table I: Capitalised costs related to oil and gas producing activities
+2019
+RMB million
+Other
+2018
+RMB million
+Other
+Total
+China
+countries
+Total
+China
+countries
+273,012
+The Group
+and facilities
+727,552
+Supporting equipments and facilities
+202,208
+684,246
+202,192
+43,306
+16
+Uncompleted wells, equipments and facilities
+46,712
+46,526
+Property cost, wells and related equipments
+Tables I 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.
+4,718
+Share of net capitalised costs of associates
+16,295
+12,108
+12,108
+Development
+37,412
+37,245
+167
+27,453
+27,329
+124
+Total costs incurred
+53,707
+53,540
+167
+39,561
+39,437
+124
+Equity method investments
+Share of costs of exploration and development
+of associates and joint ventures
+747
+16,295
+Exploration
+The Group
+Other
+countries
+and joint ventures
+Total of the Group's and its equity method
+investments' net capitalised costs
+5,743
+5,743
+6,304
+6,304
+279,823
+271,787
+8,036
+Equity method investments
+284,034
+11,022
+Table II: Costs incurred in oil and gas exploration and development
+2019
+RMB million
+2018
+RMB million
+Total
+China
+Other
+countries
+Total
+China
+273,012
+In accordance with "Accounting Standards Codification (ASC) Topic 932 Extractive Activities - Oil and Gas", issued by the Financial Accounting
+Standards Board of the United States, “Rule 4-10 of Regulation S-X", issued by Securities and Exchange Commission (SEC), 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
+2019 and 2018, 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.
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Special reserve
+Balance at 31 December
+(40)
+3,912
+507
+2,286
+Retained earnings
+Balance at 1 January
+Profit for the year
+Distribution to owners (Note 13)
+Appropriation
+Special reserve
+Others
+Balance at 31 December
+144,132
+177,989
+37,256
+(46,008)
+(3,745)
+40
+(1)
+38,460
+(67,799)
+(617)
+1,465
+Cash flow hedges, net of deferred tax
+(64)
+55,850
+55,850
+86,678
+82,682
+3,745
+3,996
+Balance at 31 December
+90,423
+86,678
+Discretionary surplus reserve
+(3,996)
+(507)
+Balance at 1 January
+117,000
+Balance at 31 December
+117,000
+117,000
+Other reserves
+Balance at 1 January
+2,286
+2,460
+Share of other comprehensive income/(loss) of associates and joint ventures, net of deferred tax
+201
+117,000
+(15)
+131,674
+144,132
+Effects of major differences between the net profit under CASS and the profit for the year under IFRS are analysed as follows:
+Note
+2019
+Net profit under CASS
+RMB million
+72,122
+2018
+RMB million
+80,289
+Adjustments:
+Government grants
+Safety production fund
+Others
+(1,124)
+856,535
+(i)
+(ii)
+56
+69
+909
+Profit for the year under IFRS*
+(212)
+72,033
+(2,357)
+78,897
+*
+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 2018 and 2019 which have been audited by PricewaterhouseCoopers.
+204
+54
+793
+875,835
+(1,070)
+408,106
+415,147
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+203
+Financial Statements (International)
+Complying with CASS and IFRS (Unaudited)
+(C) DIFFERENCES BETWEEN CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH
+THE ACCOUNTING POLICIES COMPLYING WITH CASS 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 CASS
+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 CASs, 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.
+Total equity under IFRS*
+(ii) SAFETY PRODUCTION FUND
+Note
+31 December
+2019
+RMB million
+876,905
+31 December
+2018
+RMB million
+Shareholders' equity under CASS
+Adjustments:
+857,659
+Government grants
+(i)
+Under CASS, 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 CASS and the total equity under IFRS are analysed as follows:
+1,261
+971
+End of year
+(4,433)
+(4,433)
+(5,603)
+(5,603)
+Future development costs
+(12,462)
+(12,462)
+48,778
+48,778
+41,796
+(13,141)
+(13,141)
+Future production costs
+41,796
+Future cash flows
+Equity method investments
+1,239
+1,239
+(126,617)
+(293)
+Standardised measure of discounted future
+net cash flows
+290,997
+290,320
+Future income tax expenses
+677
+291,463
+2,754
+Discounted future net cash flows attributable
+to non-controlling interests
+305
+305
+294,217
+(126,910)
+(3,995)
+(5,632)
+338
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+209
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+15,993
+291,463
+307,456
+10,882
+290,320
+301,202
+investments' results of standardised measure
+of discounted future net cash flows
+Total of the Group's and its equity method
+13,239
+13,239
+10,205
+Undiscounted future net cash flows
+19,057
+19,057
+26,251
+26,251
+10% annual discount for estimated timing
+(3,995)
+of cash flows
+(8,852)
+(13,012)
+(13,012)
+Standardised measure of discounted future
+net cash flows
+10,205
+(8,852)
+(28)
+(5,632)
+(126,203)
+Total
+2019
+RMB million
+Other
+countries
+China
+Total
+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
+2019 and 2018 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.
+The standardized measure of discounted future net cash flows, related to the above proved oil and gas reserves, is calculated in accordance with
+the requirements of "ASC Topic 932 Extractive Activities - Oil and Gas", "SEC Rule 4-10 of Regulation S-X", 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 adjusted for differential 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.
+Table V: Standardised measure of discounted future net cash flows
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+13
+6,793
+6,806
+9
+7,216
+End of year
+12
+6,985
+1,740
+(126,175)
+1,433
+307
+1,666
+1,339
+China
+327
+(gas) (billion cubic feet)
+Beginning of year
+6,806
+6,793
+13
+6,997
+Proved developed and undeveloped reserves
+2018
+RMB million
+Other
+countries
+7,225
+Future cash flows
+(40,720)
+(39,634)
+(1,086)
+(42,728)
+(40,651)
+Undiscounted future net cash flows
+Future income tax expenses
+417,200
+705
+421,127
+418,080
+3,047
+The Group
+10% annual discount for estimated timing
+416,495
+(3,010)
+(2,077)
+(19,300)
+Future production costs
+of cash flows
+869,402
+(384,417)
+856,037
+(377,692)
+13,365
+(6,725)
+854,563
+13,495
+868,058
+(381,893)
+(5,361)
+Future development costs
+(27,065)
+(22,216)
+(4,849)
+(22,310)
+(376,532)
+(196)
+(2,741)
+(881)
+1,620
+(2,804)
+(3,001)
+71,125
+Stock code
+(28,894)
+Shanghai Stock Exchange
+Stock name
+: SINOPEC CORP
+Hong Kong Stock Exchange
+Stock code
+: 600028
+1,321
+(3,220)
+341
+ENGLISH NAME
+818
+中国石化
+ADRs:
+CHINESE ABBREVIATION
+China Petroleum & Chemical Corporation
+中国石油化工股份有限公司
+STATUTORY NAME
+CORPORATE INFORMATION
+(423)
+71,809
+(3,034)
+(6,254)
+(366)
+701
+1,196
+1,438
+272
+355
+684
+: 00386
+中国石油化工股份有限公司
+: SNP
+The following documents will be available for
+inspection during normal business hours after
+27 March 2020 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:
+a) The original copies of the 2019 annual report
+signed by Mr. Zhang Yuzhuo, the Chairman;
+b) The original copies of financial statements
+and consolidated financial statements as of
+31 December 2019 prepared under IFRS
+and CASS, signed by Mr. Zhang Yuzhuo, the
+Chairman, Mr. Ma Yongsheng, the President,
+Ms. Shou Donghua, the Chief Financial
+Officer and head of the financial department
+of Sinopec Corp.;
+c) The original auditors' reports signed by the
+auditors; and
+d) Copies of the documents and announcements
+that Sinopec Corp. has published in the
+newspapers designated by the CSRC during
+the reporting period.
+By Order of the Board
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Zhang Yuzhuo
+Beijing, PRC, 27 March 2020
+If there is any inconsistency between the Chinese
+and English versions of this annual report, the
+Chinese version shall prevail.
+SINOPEC CORP.
+中國北京市朝陽區朝陽門北大街22號
+22 Chaoyangmen North Street, Chaoyang District,
+Beijing, China
+ENGLISH ABBREVIATION
+Chairman
+New York Stock Exchange
+Stock code
+212
+Documents for Inspection
+London Stock Exchange
+Stock code
+: SNP
+NAMES AND ADDRESSES OF AUDITORS OF
+SINOPEC CORP.
+Domestic Auditors
+Address
+Overseas Auditors
+Address
+: PricewaterhouseCoopers
+DOCUMENTS FOR INSPECTION
+Zhong Tian LLP
+PricewaterhouseCoopers,
+2 Corporate Avenue,
+202 Hu Bin Road,
+Huangpu District,
+Shanghai, PRC 200021
+: PricewaterhouseCoopers
+: 22nd Floor,
+Prince's Building,
+Central, Hong Kong
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019 211
+Corporate Information
+: 11th Floor
+Sinopec Corp.
+New York NY 10013
+Mr. Ma Yongsheng
+United States of America
+New York NY 10013
+388 Greenwich St., 14th Floor
+Citibank, N.A.
+DEPOSITARY FOR ADRS
+The US:
+Hong Kong
+183 Queen's Road East
+COPIES OF THIS ANNUAL REPORT ARE
+AVAILABLE AT
+R1712·1716, 17th Floor, Hopewell Centre
+H Shares:
+China Securities Registration and Clearing
+Company Limited Shanghai Branch Company
+36th Floor, China Insurance Building
+166 Lujiazui East Road
+Shanghai, PRC
+A Shares:
+REGISTRARS
+No. 1, Jian Guo Men Wai Avenue,
+Beijing, PRC
+Skadden, Arps, Slate, Meagher & Flom LLP
+30/F, China World Office 2
+U.S.A.:
+Hong Kong Registrars Limited
+Central, Hong Kong
+The PRC:
+Board Secretariat
+A Shares:
+NAMES AND STOCK CODES
+PLACES OF LISTING OF SHARES, STOCK
+London E14 5LB, U.K.
+Canada Square, Canary Wharf
+Citigroup Centre
+Citibank, N.A.
+China Petroleum & Chemical Corporation
+The UK:
+www.sinopec.com
+388 Greenwich St., 14th Floor
+Citibank, N.A.
+The US:
+Beijing, PRC
+Chaoyang District
+No.22 Chaoyangmen North Street,
+USA
+AUTHORISED REPRESENTATIVES
+15 Queen's Road
+Herbert Smith Freehills
+: 86-10-59960386
+: 86-10-59960028
+: 100728
+E-mail addresses
+Website
+Fax
+Tel.
+: http://www.sinopec.com/
+Postcode
+No.22 Chaoyangmen North Street,
+Chaoyang District
+REGISTERED ADDRESS AND PLACE OF
+BUSINESS
+Mr. Zhang Zheng
+REPRESENTATIVE ON SECURITIES MATTERS
+Mr. Huang Wensheng
+SECRETARY TO THE BOARD
+Mr. Huang Wensheng
+Beijing, PRC
+23rd Floor, Gloucester Tower
+listco/
+PLACE OF BUSINESS IN HONG KONG
+Hong Kong:
+Postcode: 100020
+Beijing PRC
+No. 5, Dong San Huan Central Road
+Chaoyang District
+20th Floor, Fortune Financial Centre
+Haiwen & Partners
+People's Republic of China:
+:ir@sinopec.com
+LEGAL ADVISORS
+COPIES OF RELATIVE REPORTS
+INFORMATION DISCLOSURE AND PLACES FOR
+Hong Kong
+Wanchai
+1 Harbour Road
+Convention Plaza
+20th Floor, Office Tower
+No change during the reporting period
+Printed on environmentally friendly paper
+H Shares:
+1,547
+210
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+2019
+RMB million
+2018
+RMB million
+(85,821)
+(88,802)
+(25,442)
+Total of the Group's and its equity method investments' results of net changes for the year
+(10,108)
+61,465
+41,385
+12,995
+22,040
+9,737
+9,507
+32,407
+22,405
+(5,468)
+Net changes for the year
+98,952
+Previously estimated development costs incurred during the year
+Accretion of discount
+Net changes in income taxes
+Financial Statements
+Supplemental Information on Oil and
+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
+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
+The Group
+Net changes in estimated future development cost
+Previously estimated development costs incurred during the year
+Accretion of discount
+Net changes in income taxes
+Net changes for the year
+Equity method investments
+Sales and transfers of oil and gas produced, net of production costs
+Net changes in prices and production costs
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+2018 Change (%)
+60,750
+59,746
+22,418
+62,676
+23,890
+2019
+63,509
+2018 Change (%)
+Chemical feedstock
+Average realised price (RMB/tonne)
+Year ended 31 December
+In 2019, the segment's operating
+expenses was RMB 1,193.5 billion,
+representing a decrease of 1.2% over
+2018. This was mainly attributed to the
+decrease in procurement cost of crude
+oil.
+The sales revenues of refined petroleum
+products other than gasoline, diesel,
+kerosene and chemical feedstock was
+RMB 200.3 billion, representing a
+decrease of 1.6% over 2018.
+The sales revenues of chemical feedstock
+was RMB 140.2 billion, representing a
+decrease of 6.9% over 2018.
+The sales revenues of kerosene was RMB
+101.6 billion, representing an increase of
+0.4% over 2018.
+The sales revenues of diesel was RMB
+347.8 billion, representing a decrease of
+3.7% over 2018.
+In 2019, sales revenues of gasoline
+was RMB 428.7 billion, representing a
+decrease of 2.9% over 2018.
+Other refined petroleum products
+39,720
+2019
+38,524
+1,441,413
+61,439
+Kerosene
+3,910
+3,531
+(5.8)
+4,515
+4,252
+(5.0)
+5,766
+5,477
+(4.5)
+7,386
+7,057
+73617
+0.7
+3.1
+6.6
+1.3
+1.7
+19630
+61,890
+Diesel
+In 2019, the operating expenses of
+this segment was RMB 201.4 billion,
+representing a decrease of 4.2% over
+2018. That was mainly due to the
+following:
+Sales Volume (thousand tonnes)
+Year ended 31 December
+Elimination of inter-segment (loss)/profit
+Operating loss
+Operating expenses
+Operating revenues
+Operating revenues
+Operating expenses
+Operating profit
+Corporate and Others
+Operating profit
+Chemicals Segment
+7.8
+1,377,876
+(1) Exploration and Production Segment
+8.5
+1,484,822
+1,484,758
+(36.5)
+27,007
+17,151
+(8.0)
+519,726
+478,083
+(9.4)
+1,368,583
+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 2019, the operating revenues of
+this segment was RMB 210.7 billion,
+representing an increase of 5.3% over
+2018. This was mainly attributed to the
+rise of realised price and sales volume in
+natural gas as a result of the expansion
+of natural gas business.
+In 2019, the segment sold 34.35 million
+tonnes of crude oil, representing a
+decrease of 1.3% over 2018. Natural
+gas sales volume was 28.78 billion cubic
+meters (bcm), representing an increase
+of 9.7% over 2018. Regasified LNG sales
+volume was 11.16 bcm, representing
+an increase of 33.9% over 2018. LNG
+sales volume was 4.74 million tonnes,
+representing an increase of 65.9% over
+2018. Average realised prices of crude
+oil, natural gas, Regasified LNG, and LNG
+were RMB 2,862 per tonne, RMB 1,566
+per thousand cubic meters, RMB 2,040
+per thousand cubic meters, and RMB
+3,305 per tonne, representing decrease
+of 6.0%, increase of 11.1%, 5.5%, and
+decrease of 12.6% respectively over
+2018.
+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 2019 and 2018.
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+22
+22
+In 2019, the operating revenues of
+this segment was RMB 1,224.2 billion,
+representing a decrease of 3.1% over
+2018. This was mainly attributed to the
+decrease in products prices compared
+with the same period of last year.
+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.
+(2) Refining Segment
+In 2019, the operating profit of the
+exploration and production segment
+was RMB 9.3 billion, representing an
+increase of RMB 19.4 billion compared
+with 2018. The segment reinforced
+efficient exploration and profit-oriented
+development, enhanced stable production
+of crude oil, accelerated construction of
+natural gas production-supply-storage-sale
+system and actively expanding market and
+promoting sales, strengthened cost control,
+and effectively improved profitability.
+(9,293)
+(3,634)
+64
+(40)
+In 2019, the oil and gas lifting cost was
+RMB 782 per tonne, representing a year
+on year decrease of 1.8%.
+Personnel expenses increased by RMB
+1.7 billion year on year.
+Procurement cost increased by RMB
+10.6 billion year on year, as a result
+of expansion of LNG business scale;
+Resource Tax and special oil income
+levy decreased by RMB 2.0 billion
+year on year;
+Impairment losses on long-lived
+assets decreased by RMB 4.3 billion
+year on year;
+Payment of land use right and
+community services expenses
+decreased by RMB 5.7 billion year on
+year;
+Depreciation, depletion and
+amortisation decreased by RMB 9.6
+billion year on year;
+•
+(9.7)
+Gasoline
+3,237
+(6.1)
+(2.3)
+23,372
+21,772
+Fuel
+(5.8)
+4,562
+4,297
+5.0
+25,787
+(6.8)
+27,068
+(2.6)
+5,541
+5,399
+5.5
+41,537
+43,832
+Direct sales and wholesale
+(3.2)
+Kerosene
+3,072
+2,974
+3.3
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+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 2019 and 2018.
+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 465.9 billion, representing
+a decrease of 9.7% as compared with
+2018, and accounted for 94.1% of the
+operating revenues of the segment.
+as well as the change of supply-demand
+structure.
+In 2019, the operating revenue of the
+chemicals segment was RMB 495.2
+billion, representing a decrease of 9.4%
+as compared with that of 2018. This was
+mainly due to sharp decrease in prices
+of chemical products as a result of the
+concentrated release of new capacity,
+distributing petrochemical and inorganic
+chemical products.
+The business activities of the chemicals
+segment include purchasing chemical
+feedstock from the refining segment and
+third parties, producing, marketing and
+(4) Chemicals Segment
+In 2019, the operating profit of
+this segment was RMB 29.1 billion,
+representing an increase of 24%
+compared with 2018.
+In 2019, the segment exerted advantages
+of integrated business and distribution
+network into full play, reinforced the
+coordination of internal and external
+resources, promoted targeted marketing
+and differentiated marketing to improve
+service quality, and constantly increased
+profits and sales volume. Meanwhile, we
+enhanced the development and sales of
+company-owned brand and put efforts
+to expand non-fuel business scale and
+profitability.
+In 2019, 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 183 per
+tonne, representing a decrease of 11.9%
+compared with that of 2018. This was
+mainly due to the adjusted accounting of
+some of the gas station, land and other
+right of use assets as required by the
+New Leasing Rules.
+In 2019, the operating expenses of
+the segment was RMB 1,401.9 billion,
+representing a decrease of RMB 21.3
+billion or 1.5% as compared with that
+of 2018. This was mainly due to the
+decrease in refined oil products procured
+price which resulting in the decrease of
+procurement cost for RMB 22 billion.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+and Analysis
+Management's Discussion
+23
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+6,435
+3,312
+6,227
+43,327
+2018 Change (%)
+7,870
+7,387
+4.8
+88,076
+92,261
+Gasoline
+Retail
+2019
+Change (%)
+546,733
+2019
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+2018
+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 2019 and 2018, including breakdown in retail, direct sales and wholesale of gasoline and diesel:
+In 2019, the operating revenues of
+this segment was RMB 1,431 billion,
+representing a decrease of 1.1% over
+2018, of which: the sales revenues of
+gasoline totaled RMB 681.5 billion,
+representing a decrease of 1.7%
+compared with 2018; the sales revenues
+of diesel was RMB 507.5 billion,
+representing a decrease of 0.3% over
+2018, and the sales revenues of kerosene
+was RMB 116.3 billion, representing a
+decrease of 1.1% over 2018.
+(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 2019, the operating profit of the
+segment totaled RMB 30.6 billion,
+representing a decline of RMB 24.2
+billion compared with 2018.
+In 2019, 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 178 per
+tonne, a decrease of 1.4% over 2018.
+In 2019, refining gross margin was RMB
+366 per tonne, decreased by RMB 96 per
+tonne representing a reduction of 20.8%
+compared with 2018. This is mainly due
+to the fluctuation of price spread between
+heavy and light crude oil, increase of
+freight and insurance costs for overseas
+shipments, as well as the narrowed gross
+margin of refined petroleum products
+other than gasoline, diesel and kerosene.
+In 2019, the average processing cost
+for crude oil was RMB 3,403 per tonne,
+representing a decrease of 4.1% over
+2018. Total crude oil processed was
+252.5 million tonnes (excluding volume
+processed for third parties), representing
+an increase of 1.7% over 2018. The total
+cost of crude oil processed was RMB
+859.3 billion, representing a decrease of
+2.4% over 2018.
+Average realised price (RMB/tonne)
+Year ended 31 December
+66,440
+66,855
+(0.6)
+43,503
+Retail
+(3.1)
+5,998
+5,812
+2.9
+84,865
+87,335
+Diesel
+(9.7)
+6,524
+5,892
+21.7
+21,221
+25,820
+Direct sales and wholesale
+(4.0)
+8,296
+7,968
+0.4
+495,234
+(10,107)
+23,464
+0.1
+1,446,637
+29.5
+30.0
+Chemicals Segment
+External sales*
+Inter-segment sales
+Operating revenues
+0.1
+Corporate and Others
+472,898
+54,856
+73,835
+495,234
+546,733
+216
+9.1
+9.8
+440,369
+5,224
+4,159
+1,430,963
+Operating revenues
+5.0
+5.3
+Inter-segment sales
+1,077,018 1,109,088
+22.4
+22.9
+Operating revenues
+1,224,156 1,263,407
+25.4
+26.1
+Marketing and Distribution Segment
+External sales*
+1,426,804
+Refining Segment
+29.4
+29.9
+48.1
+49.9
+Inter-segment sales
+14.8
+3.2
+16.4
+1.5
+100.0
+100.0
+100.0
+*. Other operating revenues are included.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+21
+Management's Discussion
+and Analysis
+100.0
+Management's Discussion
+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 2019 compared to 2018.
+Year ended 31 December
+2019
+RMB million
+2018
+RMB million
+Change
+(%)
+Exploration and Production Segment
+and Analysis
+4,845,887 4,825,551
+(1,879,694) (1,934,372)
+2,966,193 2,891,179
+Turnover and other operating revenues
+Elimination of inter-segment sales
+10.2
+11.3
+External sales*
+830,485
+718,312
+17.1
+14.9
+28.0
+24.8
+Inter-segment sales
+654,337
+650,271
+13.5
+13.5
+Operating revenues
+1,484,822 1,368,583
+30.6
+28.4
+Operating revenue before elimination of inter-segment sales
+1.1
+3.0
+154,319
+147,138
+201,428
+5.3
+200,191
+210,712
+Operating revenues
+Management's Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+210,298
+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 2019,
+the turnover from crude oil, natural
+gas and other upstream products sold
+externally amounted to RMB 111.1
+billion, an increase of 18.8% over 2018.
+The change was mainly due to increases
+in natural gas sales volume and prices
+as the result of promoting natural gas
+production-supply-storage-sale system,
+and actively expanding market share.
+The Company's external sales revenue
+of chemical products was RMB 425.5
+billion, representing a decrease of 7%
+over 2018, accounting for 14.3% of
+the Company's total turnover and other
+operating revenues. This was mainly
+due to the decrease in price of chemical
+products, which resulting from the
+increase of supply in chemical market.
+(2) Operating expenses
+In 2019, the Company's operating
+expenses was RMB 2,880 billion,
+increased by 2.5% compared with 2018.
+The operating expenses mainly consisted
+of the following:
+Purchased crude oil, products and
+operating supplies and expenses was
+RMB 2,380.9 billion, representing an
+increase of 3.8% over the same period of
+2018, accounting for 82.7% of the total
+operating expenses, of which:
+Crude oil purchasing expenses was RMB
+681.2 billion, representing a decrease
+of 2.9% over the same period of 2018.
+Throughput of crude oil purchased
+externally in 2019 was 228.74 million
+tonnes (excluding the volume processed
+for third parties), representing an
+increase of 0.7% over the same period
+of 2018. The average cost of crude oil
+purchased externally was RMB 3,326 per
+tonne, representing a decrease by 3.6%
+over 2018.
+The Company's purchasing expenses
+of refined oil products was RMB 364.9
+billion, representing an increase of 2.6%
+over the same period of 2018.
+The Company's purchasing expense
+related to trading activities was RMB
+738.3 billion, representing an increase of
+12.6% over the same period of 2018.
+The Company's other purchasing
+expenses was RMB 596.5 billion,
+representing an increase of 2.7% over
+the same period of 2018.
+In 2019, 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 1,535.2 billion
+(accounting for 51.8% of the Company's
+turnover and other operating revenues),
+representing a decrease of 1.5% over
+2018, mainly due to the decrease in
+petroleum products' prices. The sales
+revenue of gasoline, diesel and kerosene
+was RMB 1,303.6 billion, representing
+a decrease of 1.1% over 2018, and
+accounting for 85% of the total sales
+revenue of petroleum products. Turnover
+of other refined petroleum products
+was RMB 231.6 billion, representing a
+decrease of 3.4% compared with 2018,
+accounting for 15% of the total sales
+revenue of petroleum products.
+(4.2)
+9,284
+Basic organic chemicals
+(1.5)
+1,423,173
+(1.1)
+1,446,637
+1,430,963
+1,401,856
+29,107
+Operating expenses
+Operating revenues
+Marketing and Distribution Segment
+(44.1)
+54,827
+30,632
+Operating profit
+(1.2)
+1,208,580
+1,193,524
+Operating expenses
+(3.1)
+1,263,407
+1,224,156
+Selling, general and administrative
+expenses was RMB 55.3 billion,
+representing a decrease of 15.7%
+over 2018. This was mainly because
+the company significantly reduced
+non-operating costs, and adjusted
+accounting of some of the gas station,
+land and other rental expenses to
+depreciation and interests expense as
+required by the New Leasing Rules.
+Depreciation, depletion and amortisation
+was RMB 108.8 billion, representing a
+decrease of 1.1% compared with 2018.
+That was mainly due to the depletion of
+oil and gas assets decreased as a result
+of the Company's proved reserves of
+crude oil and natural gas increased.
+Exploration expenses was RMB 10.5
+billion, representing a decrease of 2.2%
+year on year.
+Personnel expenses was RMB 81.5
+billion, representing an increase of 4.8%
+over 2018.
+Exploration and Production Segment
+External sales*
+Inter-segment sales
+Operating revenues
+Refining Segment
+121,379
+89,315
+104,237
+2.5
+2.2
+4.1
+3.6
+95,954
+1.8
+2.0
+210,712
+200,191
+4.3
+4.2
+External sales*
+(%)
+24.0
+(%)
+(%)
+Taxes other than income tax was RMB
+242.5 billion, representing a decrease
+of 1.6% compared with 2018. That
+was mainly due to the decrease of
+RMB 3.2 billion in urban maintenance
+and construction tax and education
+surcharges resulting from the decrease of
+value added tax rate.
+Other operating expense, net was RMB
+440 million.
+(3) Operating profit was RMB 86.2 billion,
+representing an increase of 4.8%
+compared with 2018. That was mainly
+due to a significant increase of profit in
+upstream business.
+(4) Profit before taxation was RMB 89.9
+billion, representing a decrease of 9.3%
+compared with 2018. That was mainly
+because the margin of major refining
+products shrank.
+(5) Income tax expense was RMB 17.9
+billion, representing a decrease of 11.5%
+year on year.
+(6) Profit attributable to non-controlling
+interests was RMB 14.6 billion,
+representing a decrease of RMB 2.7
+billion compared with 2018.
+(7) Profit attributable to shareholders of
+the Company was RMB 57.5 billion,
+representing a decrease of 6.7% year on
+year.
+20
+20
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+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
+2019
+2018
+As a percentage of
+consolidated operating
+revenue after elimination
+of inter-segment sales
+Year ended 31 December
+2018
+Operating revenues
+Year ended 31 December
+2019
+2018
+RMB million RMB million
+2019
+(%)
+Synthetic fibre monomer and polymer
+5.3
+Synthetic fibre
+Chemicals Segment
+24,106
+29,781
+Marketing and Distribution Segment
+53,703
+30,074
+Refining Segment
+(11,557)
+16,586
+6,289
+2,966,193
+(1,934,372)
+(1,879,694)
+1,368,583
+546,733
+1,446,637
+495,234
+1,430,963
+2,891,179
+25,970
+Corporate and Others
+3,530
+28
+Management's Discussion
+and Analysis
+27
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Net profit: In 2019, the net profit attributable to the equity shareholders of the Company was RMB 57.6 billion, representing a decrease of RMB
+5.5 billion or 8.7% compared with 2018.
+Operating profit: In 2019, the operating profit of the Company was RMB 90.0 billion, representing a decrease of RMB 11.4 billion as compared
+with 2018.
+63,089
+57,591
+Net profit attributable to equity shareholders of the Company
+101,474
+90,025
+Consolidated operating profit
+21,037
+3,805
+Financial expenses, investment income, gains/(losses) from changes in fair value, asset disposal
+expense and other income
+(3,634)
+(40)
+Elimination of inter-segment sales
+(8,151)
+1,484,822
+Management's Discussion
+Exploration and Production Segment
+Consolidated operating income
+5,258
+(222)
+(1,940)
+(7,268)
+1,450
+Total
+Other equity instruments investment
+Cash flow hedges
+0
+0
+(4,384)
+1,584
+Self-owned fund
+0
+0
+28
+1
+182
+Self-owned fund
+48
+1,521
+0
+(38)
+Elimination of inter-segment sales
+Corporate and Others
+Chemicals Segment
+200,191
+1,263,407
+2018
+RMB million
+210,712
+1,224,156
+Marketing and Distribution Segment
+Refining Segment
+Exploration and Production Segment
+Operating income
+Year ended 31 December
+2019
+RMB million
+(1) Under CASs, the operating income and operating profit or loss by reportable segments were as follows:
+The major differences between the Company's financial statements prepared under CASS and IFRS are set out in Section C of the financial
+statements of the Company on page 204 of this report.
+4 ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER CASS
+5,220
+(4,391)
+2,948
+21,498
+0
+Operating profit/(loss)
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+(2) Financial data prepared under CASS
+7.6
+8.5
+1.1
+1,468,851
+1,484,822
+(1.4)
+(7.9)
+(9.4)
+0.9
+8.0
+495,234
+0.5
+(1.6)
+(1.1)
+6.6
+1,333,672
+1,430,963
+(2.1)
+453,951
+(1,879,694)
+2,966,193
+(1,879,654)
+N/A
+and Analysis
+Management's Discussion
+29
+29
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+During the reporting period, there are no significant changes in the Company's major assets.
+6 SIGNIFICANT CHANGES IN MAJOR ASSETS DURING THE REPORTING PERIOD
+Please refer to the note 3(26) in the financial statement complying with the PRC Accounting Standards for Business Enterprises (CASS) and the note
+1 in the financial statement complying with the IFRS.
+5 THE CAUSE AND IMPACT OF THE CHANGE IN THE COMPANY'S ACCOUNTING POLICY
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+*: Gross profit margin = (operation income operation cost, tax and surcharges)/operation income.
+(0.5)
+3.7
+2.6
+7.9
+2,488,852
+N/A
+N/A
+N/A
+(1.0)
+(3.1)
+4.3
+943,484
+Segments
+(3) The results of the principal operations by segments
+At the end of 2019, the shareholders' equity of the Company was RMB 876.9 billion, representing an increase of RMB 19.2 billion compared
+with that of the end of 2018.
+At the end of 2019, the Company's non-current liabilities was RMB 301.8 billion, representing an increase of RMB 132.2 billion compared with
+that of the end of 2018.
+At the end of 2019, the Company's total assets was RMB 1,755.1 billion, representing an increase of RMB 162.8 billion compared with that of
+the end of 2018.
+857,659
+169,551
+19,246
+162,763
+132,241
+Change
+As of 31
+December 2018
+RMB million
+1,592,308
+301,792
+876,905
+1,755,071
+RMB million
+December 2019
+As of 31
+Shareholders' equity
+Non-current liabilities
+Total assets
+Exploration and Production
+Refining
+0
+Marketing and Distribution
+Chemicals
+Elimination of inter-segment sales
+1.9
+5.3
+15.5
+168,548
+210,712
+1,224,156
+basis (%) year basis (%)
+margin* (%)
+3.9
+basis (%)
+year-on-year
+margin on a
+gross profit
+Increase/
+(decrease) of
+operation (decrease) of
+income on operation cost
+Gross profit a year-on-year on a year-on-
+Increase
+Increase/
+(decrease) of
+income Operation cost
+RMB million RMB million
+Operation
+Total
+Corporate and Others
+Synthetic resin
+0
+3,318
+Total equity attributable to shareholders of the Company
+Non-current liabilities
+Current liabilities
+Total liabilities
+Non-current assets
+Current assets
+Total assets
+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.
+Share capital
+3 ASSETS, LIABILITIES, EQUITY AND CASH FLOWS
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+24
+In 2019, the operating profit from
+corporate and others was RMB 0.1
+billion.
+In 2019, the operating expenses of
+corporate and others was RMB 1,484.7
+billion, representing an increase of 7.8%
+over 2018.
+an increase of 8.5% over 2018. This
+was mainly attributed to the increase
+in value of trade from crude oil and
+overseas refined oil products, as well as
+the rapid growth of the equipment and
+petrochemicals business transaction
+scale through Epec platform.
+In 2019, the operating revenues
+generated from corporate and others
+was RMB 1,484.8 billion, representing
+The business activities of corporate
+and others mainly consist of import
+and export business activities of the
+Company's subsidiaries, R&D activities of
+the Company, and managerial activities
+of headquarters.
+(5) Corporate and Others
+(1) Assets, liabilities and equity
+Reserves
+Non-controlling interests
+Total equity
+735,773
+879,236
+221,027
+1,088,188
+1,309,215
+(58,264)
+504,120
+162,763
+Change
+2018
+1,592,308
+1,755,071
+445,856
+2019
+31 December
+As of
+As of
+31 December
+Unit: RMB million
+Non-current assets was RMB 1,309.2
+billion, representing an increase of RMB
+221.0 billion as compared with that of
+the end of 2018. This was mainly due to
+the right-of-use assets increased by 267.9
+Current assets was RMB 445.9 billion,
+representing a decrease of RMB 58.3
+billion compared with that of the end
+of 2018, mainly because the cash and
+cash equivalents decreased by RMB
+51.6 billion, financial assets at fair value
+through profit or loss decreased by
+RMB 20.8 billion, accounts receivable
+and bills receivable decreased by RMB
+10.0 billion, and the time deposits with
+financial institution increased by RMB
+12.5 billion, inventories and other current
+assets increased by RMB 11.7 billion.
+As of 31 December 2019, the Company's
+total assets was RMB 1,755.1 billion,
+representing an increase of RMB 162.8
+billion compared with that of the end of
+2018, of which:
+allocation of resources, pushed ahead
+with targeted marketing and precise
+service strategy, and achieved steadily
+growing sales volume of petrochemicals.
+The operating profit of this segment was
+RMB 17.2 billion
+143,463
+In 2019, confronted with the business
+cycle correction and decreased
+chemical margin, the Company
+strengthened the coordination among
+research, development, production and
+marketing, continuously reinforced the
+profit prediction based on the market,
+optimised the structures of feedstock,
+product and facilities, intensified
+Synthetic rubber
+Chemical fertiliser
+16,131
+(18.0)
+6,978
+5,722
+25.2
+11,252
+14,089
+(14.4)
+15,325
+5,281
+(0.8)
+52,450
+52,007
+2018 Change (%)
+2019
+2018 Change (%)
+2019
+Average realised price (RMB/tonne)
+Year ended 31 December
+4,518
+Operating revenues
+7,718
+8,646
+0.8
+2,093
+2,109
+16.2
+796
+925
+(10.7)
+10,750
+9,595
+0.5
+1,278
+1,284
+(13.1)
+9,712
+8,438
+4.3
+1,314
+1,370
+(10.7)
+In 2019, the operating expenses of the
+chemicals segment was RMB 478.1
+billion, representing a decrease of
+8.0% over 2018, mainly because of
+the decrease in the price of externally
+procured raw materials as compared with
+the same period in 2018.
+576,374
+565,098
+11,276
+variation of
+fair values
+Accumulated
+losses from
+Profits and
+Unit: RMB million
+Items relevant to measurement of main fair values
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+26
+variation of
+26
+(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 2019, the Company paid
+environmental expenditures of RMB 9.235
+billion.
+R&D expenditures occurred in the period
+including R&D expenses, expenditures
+for wildcat exploration, seismic data
+interpretation, and pilot demonstration
+project in upstream, expenditures for
+pilot test and relevant utilities of initial
+commercial trial in refining segment,
+as well as expenditures for research
+equipment. In 2019, the expenditures for
+R&D was RMB 15.539 billion, of which
+expense was RMB 9.395 billion, and
+capitalised cost was RMB 6.144 billion.
+(5) Research & development and
+environmental expenditures
+in the "Business Review and Prospects"
+section of this report.
+Please refer to "Capital Expenditures"
+(4) Capital Expenditures
+(111,260)
+The Company has established sound
+decision-making mechanism, business
+process and internal control systems
+relevant to financial instrument
+accounting and information disclosure.
+Beginning
+End of
+Items
+Self-owned fund
+0
+0
+215
+3,319
+source
+Funding
+current year
+as equity
+loss
+provision
+of the
+Impairment
+fair values
+recorded
+in the
+current year
+the year
+of the year
+25,732
+25,550
+Derivative financial instruments
+Stock
+Structured Deposit
+Available for sale financial assets
+(66,422)
+2018
+175,868
+Year ended 31 December
+2019
+153,420
+(120,463)
+(84,713)
+Please refer to "Material Guarantee
+Contracts and Their Performances" in the
+"Significant Events" section of this report.
+and the lease prepayments decreased
+by RMB 64.5 billion in accordance with
+New Leasing Rules, construction in
+progress and net value of property, plant
+and equipment increased by RMB 41.2
+billion, equity of associates and joint
+ventures increased by RMB 6.2 billion,
+and deferred tax assets decreased by
+RMB 4.1 billion.
+19,300
+856,535
+875,835
+(1,566)
+139,251
+137,685
+20,866
+596,213
+617,079
+0
+121,071
+121,071
+20,866
+717,284
+738,150
+132,187
+170,675
+302,862
+The Company's total liabilities was RMB
+879.2 billion, representing an increase of
+RMB 143.5 billion compared with that of
+the end of 2018, of which:
+187
+Current liabilities was RMB 576.4 billion,
+representing an increase of RMB 11.3
+billion as compared with that of the end
+of 2018. This was mainly due to the
+short-term debts and borrowings from
+Sinopec Group increased by RMB 22.7
+billion, lease liabilities increased by
+RMB 15.2 billion, accounts payable, bills
+payable and liabilities from contracts
+Non-current liabilities was RMB 302.9
+billion, representing an increase of RMB
+132.2 billion compared with that of the
+end of 2018. This was mainly due to
+lease liabilities increased by RMB 177.7
+billion in accordance with New Leasing
+Rules, long-term debts and borrowings
+from Sinopec Group decreased by RMB
+34.7 billion, and other non-current assets
+decreased by RMB 12.0 billion.
+(3) Contingent Liabilities
+At the end of 2019, the cash and cash
+equivalents was RMB 60.3 billion.
+In 2019, the net cash used in the
+Company's financing activities was RMB
+84.7 billion, representing a decrease
+of cash outflow by RMB 26.5 billion
+over 2018. This was mainly due to the
+cash out flow from the changes of loans
+increased to RMB 13.2 billion, cash paid
+for dividends decrease the expenditure by
+RMB 21.8 billion, subsidiary companies
+allocated to non-controlling shareholders
+reduced expenses by 6.3 billion yuan,
+investments from non-controlling
+shareholders increased by RMB 2.0
+billion, and repayment for lease liabilities
+increased by RMB 16.8 billion.
+decreased by RMB 6.6 billion, cash
+inflow from changes of financial assets
+which are measured at fair value through
+profit or loss decreased by RMB 3.0
+billion, outcome from time deposit with
+maturities over three months increased
+by RMB 9.2 billion.
+In 2019, the net cash used in investing
+activities was RMB 120.5 billion,
+representing an increase of cash outflow
+of RMB 54.0 billion over 2018. Of
+which: capital expenditure and wildcat
+expenditure increased by RMB 38.1
+billion, purchasing investment and
+associates and joint ventures investments
+In 2019, the net cash generated from
+operating activities of the company
+was RMB 153.4 billion, representing
+a decrease of RMB 22.4 billion as
+compared with 2018. Of which: profit
+before taxation decreased by RMB 9.2
+billion, loss from assets impairment
+decreased by RMB 9.8 billion,
+depreciation, depletion & amortization
+and amortization for dry wells write-off
+decreased by RMB 2.2 billion, interest
+expenses increased by RMB 9.7 billion,
+exchange rate and derivatives financial
+instruments loss/(gain) increased by 5.5
+billion, net change of accounts receivable
+and other current assets decreased
+by RMB 10.8 billion, net change of
+inventory decreased by RMB 60.0 billion,
+net change of accounts payable and
+other current liabilities decreased by
+RMB 17.3 billion, and the paid income
+tax decreased by RMB 13.6 billion as
+compared with 2018.
+Net cash generated from operating activities
+Net cash used in investing activities
+Net cash used in financing activities
+Major items of cash flows
+Unit: RMB million
+The following table sets forth the major items in the consolidated cash flow statements for 2019 and 2018.
+(2) Cash Flow
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+and Analysis
+Management's Discussion
+25
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Total equity attributable to owners of
+the Company was RMB 738.2 billion,
+representing an increase of RMB 20.9
+billion compared with that of the end
+of 2018, which was mainly due to the
+capital reserve increased by RMB 20.9
+billion.
+increased by RMB 9.0 billion, and
+derivative financial liabilities decreased
+by RMB 10.8 billion, other payables
+decreased by RMB 21.3 billion.
+Operating expenses
+Operating loss
+On 29 April 2019, Sinopec Corp. entered into
+the Sinopec-SK Capital Increase Agreement
+with Sinopec Group Asset Management Co.,
+Ltd. (Sinopec Asset), SK GLOBAL CHEMICAL
+CO., LTD. (SKGC) and Sinopec-SK, jointly,
+to agree upon the Capital Increase in
+Sinopec-SK. Pursuant to the Sinopec-SK
+Capital Increase Agreement, (i) Sinopec
+Corp. shall contribute the Capital Increase
+Assets of Sinopec equivalent to RMB 549.0
+million to Sinopec-SK, of which to subscribe
+for the newly increased registered capital
+of Sinopec-SK of RMB 168.37 million and
+the remaining part shall be included in the
+capital reserve of Sinopec-SK, (ii) Sinopec
+Asset shall contribute the Capital Increase
+Assets of Sinopec Asset equivalent to RMB
+1.5022 billion to Sinopec-SK, of which to
+subscribe for the newly increased registered
+capital of Sinopec-SK of RMB 431.58 million
+and the remaining part shall be included in
+the capital reserve of Sinopec-SK, and (iii)
+SKGC shall contribute cash in RMB 1.1045
+billion or equivalent USD to Sinopec-SK, of
+which to subscribe for the newly increased
+SIGNIFICANT EQUITY INVESTMENT
+overdue
+completed
+Transaction date
+(date of signing)
+Amount
+10,140
+Zhongtian Hechuang
+The listed
+company
+Company
+Guarantor
+Sinopec Corp.
+guaranteed
+connected
+Amount of
+Whether
+Whether
+Name of
+Relationship
+with the
+for
+guaranteed
+Whether
+Unit: RMB million
+Major external guarantees (excluding guarantees for controlled subsidiaries)
+8 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+36
+Significant Events
+35
+overdue
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Counter-
+Period of guarantee
+Chemical Co., Ltd.
+company itself
+No
+No
+No
+No
+Joint liability
+18 April 2018-31
+18-Apr-18
+7,100
+Zhong An United Coal
+The listed
+Sinopec Corp.
+Yes
+No
+No
+No
+Joint liability
+guarantee
+25 May 2016-31
+December 2023 (the
+mature date is estimated)
+Energy Co., Ltd
+company itself
+25-May-16
+or no)"¹
+guarantee guaranteed
+or not
+or not
+Туре
+parties yes
+December 2031
+During the reporting period, there is no
+significant assets or equity sale of the
+Company.
+During the reporting period, there is no
+significant equity investment made by the
+Company.
+No
+From 22 June 2001
+performed or not
+deadline or not
+Term for performance
+Whether strictly
+Whether bears
+Contents
+Other
+Other undertakings
+Corporation
+Public Offerings (IPOs)
+Party
+Type of
+Undertaking
+IPOs
+Undertakings related to Initial
+Background
+4 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+Significant Events
+33
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+During the reporting period, Shanghai Petro
+did not grant A-share share options under
+the Share Option Incentive Scheme, nor
+did the grantees exercise any A-share share
+options, and no A-share share options were
+cancelled or lapsed.
+10 years until 22 December 2024. The first
+grant of Shanghai Petro's A-share share
+options under the Share Option Incentive
+Scheme was on 6 January 2015. For details,
+please refer to the relevant announcements
+uploaded on the websites of Shanghai Stock
+Exchange, Hong Kong Stock Exchange and
+Shanghai Petro on 6 January 2015. All
+the exercise periods of the first grant have
+ended on 28 December 2018. For details,
+please refer to the relevant announcements
+uploaded on the websites of Shanghai Stock
+Exchange, Hong Kong Stock Exchange and
+Shanghai Petro on 28 December 2018.
+At present, Shanghai Petro has no other
+granting scheme.
+The Share Option Incentive Scheme
+of Shanghai Petro took effect from 23
+December 2014, with a validity period of
+3 SHARE OPTION INCENTIVE SCHEME OF
+SINOPEC CORP.'S SUBSIDIARY, SINOPEC
+SHANGHAI PETROCHEMICAL COMPANY
+LIMITED (SHANGHAI PETRO), DURING THE
+REPORTING PERIOD
+annual interest rate of 1.875% and had
+been repaid and delisted; 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 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 made on 24 October
+2013. During the reporting period, the
+Company has paid in full the current-period
+interests of all notes with maturity of 10
+years and 30 years.
+Yes
+7 SIGNIFICANT ASSETS AND EQUITY SALE
+China Petrochemical 1 Compliance with the connected transaction
+agreements;
+7.3 Input in assisting the disabled
+For details, please refer to the
+announcements published by Sinopec
+Corp. in China Securities Journal, Shanghai
+Securities News and, Securities Times, and
+on the website of Shanghai Stock Exchange
+on 30 April 2019 and 9 July 2019, and on
+the website of Hong Kong Stock Exchange on
+29 April 2019 and on 8 July 2019.
+Rules. As the highest applicable percentage
+ratio in respect of the Capital Increase
+exceeds 0.1% but is less than 5%, the
+Capital Increase is subject to the reporting
+and announcement requirements, but
+exempt from the independent shareholders'
+approval requirement under Chapter
+14A of the Hong Kong Listing Rules. As
+Sinopec-SK is a subsidiary of Sinopec
+Corp., the Asset Transfer did not constitute
+a connected transaction of Sinopec Corp.
+under Chapter 14A of the Hong Kong
+Listing Rules. In addition, as the highest
+applicable percentage ratio in respect of
+the Asset Transfer was less than 5%, it did
+not constitute a notifiable transaction under
+Chapter 14 of the Hong Kong Listing Rules.
+6
+As Sinopec Asset is a subsidiary of the
+controlling shareholder of Sinopec Corp.,
+China Petrochemical Corporation, pursuant
+to Chapter 14A of the Hong Kong Listing
+Rules, Sinopec Asset is an associate of
+China Petrochemical Corporation and thus
+constitutes a connected person of Sinopec
+Corp. As the Capital Increase constitutes
+deemed disposal of Sinopec Corp. under
+Rule 14.29 of the Hong Kong Listing Rules,
+accordingly, the Capital Increase constitutes
+a connected transaction of Sinopec Corp.
+under Chapter 14A of the Hong Kong Listing
+registered capital of Sinopec SK of RMB
+323.05 million and the remaining part
+shall be included in the capital reserve of
+Sinopec-SK. Upon completion of the Capital
+Increase, Sinopec Corp.'s shareholding in
+Sinopec-SK reduced from 65% to 59%,
+Sinopec Asset's shareholding increased
+from 0% to 6% and SKGC's shareholding
+remained unchanged at 35%. On the same
+date, Sinopec Corp. entered into the Asset
+Transfer Agreement with Sinopec-SK.
+The Capital Increase will help reduce the
+connected transactions between Sinopec
+Corp. and China Petrochemical Corporation
+and further improve the integrated operation
+level of Sinopec Corp., so as to enhance the
+comprehensive competitiveness of Sinopec
+Corp. in its business locations, the overall
+capability of risk resistance and expand its
+regional influence. The Sinopec-SK Capital
+Increase and the Asset Transfer were
+completed on 8 July 2019.
+7.4 Number of the disabled helped
+TRANSFER TO SINOPEC-SK (WUHAN)
+PETROCHEMICAL CO., LTD. (SINOPEC-SK)
+5 CAPITAL INCREASE AND ASSETS
+As of the date of this report, Sinopec Corp.
+had no undertakings in respect of financial
+performance, 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.
+Yes
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+34
+or the date when China Petrochemical
+Corporation acquires the assets
+Within 10 years after 29 April 2014 Yes
+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.
+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
+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 interest with Sinopec Corp.
+Granting licenses for intellectual property rights;
+Avoiding competition within the same industry;
+Abandonment of business competition and conflicts
+certificates within a specified period of time;
+Implementation of the Reorganisation Agreement
+(please refer to the definition of Reorganisation
+Agreement in the H share prospectus of Sinopec
+Corp.);
+use rights certificates and property ownership rights
+6
+5
+4
+3
+2 Solving the issues regarding the legality of land-
+China Petrochemical
+Corporation
+On 18 April 2013, Sinopec Capital
+(2013) Limited, a wholly-owned overseas
+subsidiary of Sinopec Corp., issued senior
+notes guaranteed by the Company 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
+guarantee
+17,240
+3.2 Input in relocation
+3.1 Number of relocated people provided with employment
+3. Poverty elimination through relocation
+2.3 Number of people employed
+2.2 Participants of professional skill trainings (person time)
+2.1 Input in professional skill training
+2. Poverty elimination through provision of employment
+1.4 Number of people lifted out of poverty
+1.3 Input in poverty alleviation projects through
+industrial development
+1.2 Number of poverty alleviation programs
+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
+1. Funds
+Overview
+I.
+Index
+Unit: RMB million
+(3) 2019 Targeted Poverty Alleviation Work Statistics
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+38
+38
+In 2019, the Company invested nearly
+RMB 0.19 billion in Targeted Poverty
+Alleviation, including RMB 0.12
+billion invested in 53 targeted poverty
+alleviation 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.
+(2) Overview on 2019 Targeted Poverty
+Alleviations
+(1) Targeted Poverty Alleviation Plan
+The Company actively fulfilled our social
+responsibilities and strictly followed.
+the fundamental principles of poverty
+alleviation and elimination. Combining
+with practical situation, we focused
+on poverty alleviation in terms of
+industry, consumption, employment and
+education, so as to ensure to stably lift
+poor household out of poverty, increase
+income of poor household and orderly
+carry out rural revival strategy.
+20 POVERTY ALLEVIATION PROGRAM
+LAUNCHED BY THE COMPANY
+4. Poverty elimination through education
+According to the national pollution permit
+and self-monitoring technology guidelines in
+relevant industries, we acquired discharge
+permit and modified the self-monitoring plan,
+implemented new national requirements of
+sewage, flue gas and noise monitory, and
+disclosed the environmental results. For other
+subsidiaries that are not listed as major
+pollutant discharge units, the Company also
+completed relevant environmental protection
+formalities in accordance with the national
+and local requirements, and implemented
+relevant environmental protection
+measures. According to the requirements of
+national and local ecological environment
+departments, these companies do not need
+to disclose relevant information.
+4.1 Input in students funding
+4.3Input in education resources in poverty-stricken areas
+7. Guarantee basic living standard
+6.2 Input in ecological protection
+☑ Set up ecological public welfare positions
+✓ Others
+☐ Develop ways for ecological protection and compensation
+☑ Conduct ecological protection and construction
+2.76
+23.48
+1,955
+2.19
+4.35
+243
+2.65
+3,015
+10,990
+96.20
+41,698
+274
+☐ Poverty alleviation through science and technology development
+☑Others
+☑ Poverty alleviation through assets income
+☑ Poverty alleviation through e-commerce
+☑ Poverty alleviation through tourism development
+☑ Poverty alleviation through agriculture and forestry development
+31,003
+1.76
+187.44
+Data
+6.1 Items
+6. Poverty alleviation through ecological protection
+5.1 Input in medical and health care resources in poverty-stricken areas
+5. Poverty alleviation through healthcare
+4.2 Number of students who received funding assistance
+None
+construction projects, enhanced assessment,
+and implemented “three-simultaneity"
+management (environmental facilities shall
+be designed, constructed and put into
+operation simultaneously with the main
+construction). All of the newly-built projects
+have been obtained approvals from the
+environment authorities. Sinopec Corp.
+strictly complies with relevant national
+requirements on environment emergency
+plan management and continuously improves
+the emergency plans for environmental
+emergencies and heavy pollution weather.
+DEPARTMENTS
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+*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.
+None
+None
+None
+None
+None
+None
+3.98%
+29,397
+12,157
+None
+*1: As defined in the Rules Governing the Listing of Stocks on Shanghai Stock Exchange.
+Statement of guarantee status
+Statement of guarantee undue that might be involved in any joint and several liabilities
+Total amount of the above three guarantee items (C+D+E)
+The amount of guarantees in excess of 50% of the net assets (E)
+Amount of debt guarantees provided directly or indirectly to the companies with liabilities to assets ratio over 70% (D)
+Guarantees provided for shareholder, de facto controller and its related parties (C)
+The proportion of the total amount of guarantees to the Sinopec Corp.'s net assets
+Total amount of guarantees(A+B)
+Total amount of guarantees for the Company (including those provided for controlled subsidiaries)
+Total amount of guarantee for controlled subsidiaries outstanding at the end of the reporting period (B)
+Total amount of guarantee provided to controlled subsidiaries during the reporting period
+Guarantees by the Company to the controlled subsidiaries
+Total amount of guarantees outstanding at the end of reporting period² (A)
+Total amount of guarantees provided during the reporting period"²
+9 SPECIFIC STATEMENTS AND
+In 2019, certain subsidiaries of Sinopec
+Corp. which are listed as major pollutant
+discharge units have disclosed environmental
+information as required by the relevant
+authorities and local government. The
+details of such information was published
+on national pollutant discharge license
+management information platform (http://
+permit.mee.gov.cn/permitExt/defaults/
+default-index!getInformation.action) and the
+local government website. Sinopec Corp. built
+prevention and control facilities for sewage,
+flue gas, solid waste and noise in accordance
+with the requirements of the national and
+local pollution prevention and environmental
+protection standards, kept effective and
+stable operation of pollution prevention and
+control facilities, and realised standardised
+discharges and emissions of sewage, flue
+gas, solid waste and factory noise. For
+details, please refer to the Company's
+Communication on Progress for Sustainable
+Development. The Company further
+regulated environmental management of
+INDEPENDENT OPINIONS FROM
+INDEPENDENT NON-EXECUTIVE
+DIRECTORS REGARDING EXTERNAL
+GUARANTEES PROVIDED BY THE COMPANY
+DURING AND BY THE END OF 2019:
+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 2019 in
+accordance with the requirements of the
+domestic regulatory authorities:
+We hereby present the following opinions:
+BY ENVIRONMENTAL PROTECTION
+19 ENVIRONMENTAL PROTECTION
+SOLUTIONS OF COMPANIES AND THEIR
+SUBSIDIARIES AS MAJOR POLLUTANT
+DISCHARGING COMPANIES RECOGNISED
+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
+17 STRUCTURED ENTITY CONTROLLED BY
+THE COMPANY
+None
+16 APPROPRIATION OF NON-OPERATIONAL
+FUNDS BY THE CONTROLLING
+SHAREHOLDER AND ITS RELATED PARTIES
+AND THE PROGRESS FOR CLEARING UP
+Not applicable
+The deposits of the Company at the Finance
+Company and Century Bright Company
+during the reporting period did not exceed
+the relevant caps as approved at the general
+meeting of Sinopec Corp. During daily
+operations, the Company can withdraw the
+full amount of its deposits at the Finance
+Company and Century Bright Company.
+in making payments, China Petrochemical
+Corporation will ensure that Century Bright
+Company will fulfill its repayment obligation
+through various channels.
+In order to regulate connected transactions
+between the Company and Sinopec Century
+Bright Capital Investment, Ltd. (Sinopec
+Corp.'s overseas settlement center,
+hereinafter referred at the Century Bright
+Company), Century Bright Company ensures
+the safety of the deposits of the Company at
+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
+Bright Company in 2013, in which China
+Petrochemical Corporation undertakes that
+when Century Bright Company has difficulty
+In order to regulate connected transactions
+between the Company and Sinopec Finance
+Co., Ltd. (Sinopec Corp.'s domestic
+settlement center, hereinafter referred as
+the Finance Company) and to ensure the
+safety and liquidity of the deposits of the
+Company at 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 at
+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
+when 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.
+15 DEPOSITS AT SINOPEC FINANCE CO., LTD.
+AND SINOPEC CENTURY BRIGHT CAPITAL
+INVESTMENT, LTD.
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+Significant Events
+37
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+14 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.
+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.
+FACTO CONTROLLER
+CONTROLLING SHAREHOLDERS AND DE
+13 CREDIBILITY FOR THE COMPANY,
+Saved as disclosed by Sinopec Corp., the
+Company did not enter into any material
+contracts subject to disclosure obligations
+during the reporting period.
+12 OTHER MATERIAL CONTRACTS
+11 INSOLVENCY AND RESTRUCTURING
+During the reporting period, the Company
+was not involved in any insolvency or
+restructuring matters.
+No significant litigation, arbitration relating
+to the Company occurred during the
+reporting period.
+10 SIGNIFICANT LITIGATION, ARBITRATION
+RELATING TO THE COMPANY
+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.
+The external guarantees prior to 2019 had
+been disclosed in previous annual report.
+The aggregate balance of external guarantees
+provided by Sinopec Corp. for the year
+2019 was RMB 29.4 billion, accounting for
+approximately 3.98% of the Company's net
+assets.
+7.1 Input in left-behind children, women and senior people
+During the reporting period, the Company
+paid in full the interest accrued for the other
+bonds and debt financing instruments. As
+at 31 December 2019, the standby credit
+line provided by several domestic financial
+institutions to the Company was RMB 379.6
+billion in total, facilitating the Company
+to get such amount of unsecured loans.
+The Company has fulfilled all the relevant
+undertakings in the offering circular of
+corporate bonds and had no significant
+matters which could influence the Company's
+operation and debt paying ability.
+Due to the impact of New Lease Standard
+Due to the impact of New Lease Standard
+Due to the increase of interest expense as a result of
+New Lease Standard
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+storage project mainly consists of the
+construction of injection and production
+wells and surface facilities with storage
+capacity of 8.431 billion cubic meters.
+The gas storage is expected to be
+officially put into operation in July 2020.
+The Company's self-owned fund accounts
+for 30% of the project investment and
+bank loan is the main source of the
+remaining 70%. As of 31 December
+2019, the aggregate investment was RMB
+12.1 billion.
+The first phase of Wen 23 gas
+(8) Wen 23 gas storage project
+The first phase of E-An-Cang gas pipeline
+project mainly consists of the main
+pipeline from Luquan to Cangzhou
+and two branch pipelines Puyang and
+Baoding. The total length of the pipeline
+is 736 kilometers with a designed
+transmission capacity of 9 billion cubic
+meters per year. It was completed and
+put into operation in September 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%. As of 31 December
+2019, the aggregate investment was RMB
+6.4 billion.
+project
+(7) Erdos-Anping-Cangzhou gas pipeline
+a 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%. As
+of 31 December 2019, the aggregate
+investment was RMB 8.0 billion.
+The main project of the first phase
+of Xinqi pipeline project was the
+construction of the pipeline from
+Qianjiang to Shaoguan. The total length
+of the pipeline is 839.5 kilometers with
+(6) Xinqi pipeline project
+Under the guidance of "overall
+deployment, stage-wise implementation
+and fully consideration", the building of
+first phase of production capacity, which
+is 1 billion cubic meters per year, was
+promoted comprehensively since August
+2018. It is expected to be completed and
+put into operation in December 2020.
+The Company's self-owned fund accounts
+for 30% of the project investment and
+bank loan is the main source of the
+remaining 70%. As of 31 December
+2019, the aggregate investment was RMB
+2.3 billion.
+(5) Weirong shale gas project
+Wuhan de-bottleneck project mainly
+consists of an 800,000 tpa-to-1,100,000
+tpa ethylene capacity expansion project.
+The project started at the end of October
+2018 and is expected to achieve the
+mechanical completion in December
+2020. The Company's self-owned fund
+accounts for approximately 30% of the
+project investment and bank loan is the
+main source of the remaining 70%. As
+of 31 December 2019, the aggregate
+investment was RMB 2.5 billion.
+(4) Wuhan de-bottleneck project
+2019. The Company's self-owned fund
+accounts for approximately 30% of the
+project investment and bank loan is the
+main source of the remaining 70%. As
+of 31 December 2019, the aggregate
+investment was RMB 5.6 billion.
+31
+Significant Events
+32
+32
+Listing exchange
+Investor Qualification Arrangement
+Payment of interests
+Principal and interest repayment
+Interest rate (%)
+Outstanding balance (RMB billion)
+Amount issued (RMB billion)
+Hainan Refining and Chemical expansion
+project consists of 5,000,000 tpa refinery
+project and 1,000,000 tpa ethylene
+project, among which second set of
+high-efficiency and environment-friendly
+aromatics project started in August 2017
+and was put into operation in September
+Maturity date
+Code
+Abbreviation
+Bond name
+Basic information of corporate bonds
+2 CORPORATE BONDS ISSUED AND INTEREST PAYMENTS
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+Issuance date
+(3) Hainan Refining and Chemical expansion
+project
+Zhenhai Refining & Chemical expansion
+project consists of 15,000,000 tpa
+refinery project and 1,200,000 tpa
+ethylene project. The project was
+approved in June 2018, ethylene and
+relevant projects started at the end
+of October 2018 and is expected to
+achieve the mechanical completion
+in December 2021. The Company's
+self-owned fund accounts for 30% of
+the project investment, bank loan is the
+main source of the remaining 70%. As
+of 31 December 2019, the aggregate
+investment was RMB 3.1 billion.
+(2) Zhenhai Refining & Chemical expansion
+project
+0.59
+433
+0.50
+141
+123.59
+0.60
+137
+0.23
+54.49
+In 2020, the Company will further strengthen poverty alleviation key-problem tackling work, continue to carry on targeted poverty alleviation
+and targeted lifting of poor people out of poverty. The Company will focus on poverty alleviation in terms of consumption, education, industry,
+employment to overcome the bastion of deep poverty and maintain a stable achievement. The Company will strengthen the supervision of
+projects and funds, enhance risks and source management, and constantly improve the level of work, to ensure that the actual results of winning
+the fight against poverty.
+21 OTHER EVENTS
+Sinopec Corp. published voluntary announcement and progress update announcements in relation to China International United Petroleum and
+Chemical Company Limited. For details, please refer to the announcements published in China Securities Journal, Shanghai Securities News,
+Securities Times and the website of the Shanghai Stock Exchange on 28 December 2018, 5 January 2019 and 26 January 2019 and on the website
+of Hong Kong Stock Exchange on 27 December 2018, 4 January 2019 and 25 January 2019.
+Sinopec Corp. published indicative announcement on the restructuring of oil and gas pipeline network assets. For details, please refer to the
+announcements published in China Securities Journal, Shanghai Securities News, Securities Times and the website of the Shanghai Stock Exchange
+on 11 December 2019 and on the website of Hong Kong Stock Exchange on 10 December 2019.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+39
+Significant Events
+7,152
+Corporate bonds trustee
+(4) Subsequent targeted poverty alleviation plan
+9.2 Total input
+Zhongke integrated refining and
+petrochemical project mainly consists
+of a 10,000,000 tpa refinery project,
+800,000 tpa ethylene unit, 300,000
+tonne capacity jetty and relevant
+utilities project. It achieved mechanical
+completion on 28 December 2019. The
+Company's self-owned fund accounts for
+30% of the project investment, bank loan
+is the main source of the remaining 70%.
+As of 31 December 2019, the aggregate
+investment was RMB 30.3 billion.
+(1) Zhongke integrated refining and
+chemical project
+1 MAJOR PROJECTS
+Loan repayment rate (%)
+Interest payment rate (%)
+N
+中国石化
+tape
+9.3 Number of people lifted out of poverty
+9.4 Other
+SINOPEC
+35
+8. Poverty alleviation through social projects
+8.1 Input in coordinated poverty alleviation
+8.2 Input in targeted poverty alleviation programs
+8.3 Public Welfare funds for poverty alleviation
+9. Other projects
+9.1 Number of projects
+Living
+Credit rating agency
+SIGNIFICANT EVENTS
+Credit rating
+EBITDA to total debt ratio
+percentage
+points
+(0.12)
+(0.13)
+3.9
+46.14
+50.04
+Liability-to-asset ratio (%)
+0.89
+0.57
+1.25
+0.44
+0.77
+Current ratio
+Change
+(1,939)
+2018
+216,352
+214,413
+EBITDA (RMB million)
+2019
+Quick ratio
+Principal data
+1.33
+6.42
+Use of proceeds
+(0.08) Due to the decrease of EBITDA
+(10.34)
+(6.85)
+(21.01)
+Due to the impact of New Lease Standard
+Mainly due to the decrease of current asset
+Mainly due to the increase of inventories
+Mainly due to the decrease of earnings compared
+with last year
+Reasons for change
+100
+100
+Interest coverage ratio
+100
+33.93
+12.92
+EBITDA-to-interest coverage ratio
+35.92
+29.07
+Cash flow interest coverage ratio
+16.76
+100
+Principal accounting data and financial indicators for the two years ended 31 December 2019
+7.2 Number of left-behind children, women and senior people assisted
+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 fulfil obligations as described in the corporate bond prospectus and exercised
+its duty to protect the bondholders' legitimate rights and interests. The bond trustee will disclose the Trustee
+Management Affairs Report after the announcement of annual report. The full disclosure is available on the website
+of Shanghai Stock Exchange (http://www.sse.com.cn).
+19 November 2015
+15石化02
+136040
+2015 Corporate bond (first issue)
+Sinopec Corp
+7
+4.90
+7
+1 June 2022
+19 November 2020
+2012 Corporate bond
+12石化02
+122150
+9
+21 May 2020
+21 May 2010
+Sinopec Corp.
+2010 Corporate bond
+10石化02
+122052
+Convening of corporate bond holders' meeting
+Performance of corporate bonds trustee
+Credit addition mechanism, repayment scheme and
+other relative events for corporate bonds during the
+reporting period
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Sinopec Corp.
+9
+1 June 2012
+4
+The guarantee of 1002 and 1202 is China Petrochemical Corporation. For more information of the
+guarantor, please refer to the annual report of corporate bonds which will be published in April 2020 on website of
+Shanghai Stock Exchange by China Petrochemical Corporation.
+4.05
+During the reporting period, the bondholders' meeting was not convened.
+During the reporting period, there is no arrangement to credit addition mechanism and change of the repayment
+for the above-mentioned corporate bonds. Sinopec Corp. strictly followed the provisions in the corporate bond
+prospectus to repay interests of the corporate bonds to bondholders.
+During the reporting period, United Credit Ratings Co., Ltd. provided credit rating for 10102, 1202 and 15
+102 and reaffirmed AAA credit rating in the continuing credit rating report. The long term credit rating of Sinopec
+Corp. remained AAA with its outlook being stable. Pursuant to relevant regulations, Sinopec Corp. has published
+latest credit rating results through media designated by regulators within six months commencing from the end date
+of the reporting period.
+Proceeds from the above-mentioned corporate bonds have been used for their designated purpose as disclosed. All
+the proceeds have been completely used.
+United Credit Ratings Co., Ltd.
+(010) 6505 1166
+Huang Xu, Zhai Ying
+12th Floor, PICC building, No.2 Jianguomenwai Avenue, Chaoyang District, Beijing
+27th-28th Floor, China World Office 2, 1 Jianguomenwai Avenue, Chaoyang District, Beijing
+China International Capital Corporation Limited
+Shanghai Stock Exchange
+15102 was 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.
+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
+of the year
+30,232
+59
+(14,437)
+333
+30,565
+the end
+of the year
+15,736
+Balance at
+Amount
+incurred
+(14,496)
+392
+16,128
+at the
+beginning
+Amount
+incurred
+(18,648)
+Unit: RMB million
+1,738
+12,505
+307
+(18,341)
+30,846
+1,431
+Balance
+at the end
+of the year
+10,767
+at the
+beginning
+of the year
+29,415
+Funds to related parties
+Balance
+Reason for provision of funds between related parties
+Impacts on the Company
+Funds from related parties
+Balance
+*. affiliated companies include subsidiaries, associates and joint ventures.
+43
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Corporate Governance
+44
+Corporate Governance
+affiliated companies*
+Associates and joint ventures
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Pursuant to requirements of securities
+regulatory authority of China, Independent
+Non-Executive Directors of Sinopec Corp.
+reviewed the performance of the senior
+managers of Sinopec Corp. who held
+concurrent positions as senior managers
+in China Petrochemical Corporation and
+published independent opinions as follows:
+"The President Mr. Ma Yongsheng, Senior
+Vice President Mr. Ling Yiqun and Mr. Liu
+Zhongyun, each of whom concurrently held
+position as senior management of China
+Petrochemical Corporation, have obtained
+the exemptions for holding concurrent
+position from CSRC. During the reporting
+period, Mr. Ma Yongsheng, Mr. Ling Yiqun
+and Mr. Liu Zhongyun devoted sufficient
+time and energy to fulfil their duties with
+diligence and due care. They protected
+the interests of the Company and minority
+shareholders effectively and didn't harm
+the legitimate interests of Sinopec Corp.
+and minority shareholders due to holding
+concurrent position in China Petrochemical
+Corporation."
+During the reporting period, the Independent
+Non-Executive Directors of Sinopec Corp.
+fulfilled their duties in good faith as
+required by Terms of Reference of the
+Independent Non-Executive Directors, and
+actively contributed to the development
+of the Company. They actively attended
+Board meetings and meetings of the Board
+Committees (please refer to the section
+"Report of the Board of Directors" in this
+annual report for details of their attendance),
+exercised their profession advantages to
+offer advice and suggestions to Sinopec
+Corp.'s development strategy, operations
+and reform, and promoted the company's
+scientific decision-making. The independent
+non-executive directors maintained
+timely and effective communications with
+management, external auditors and the
+internal auditing department, gave their
+independent opinions on matters such
+as connected transactions and dividend
+distribution, and protected the legitimate
+interests of the minority shareholders'
+interests.
+4 PERFORMANCE OF THE INDEPENDENT
+NON-EXECUTIVE DIRECTORS
+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 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
+should notify Sinopec Corp. or 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 2019, apart from 13,000
+A shares of Sinopec Corp. held by Director,
+Senior 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 2018 annual general
+meeting on 9 May 2019 in Beijing, China in
+accordance with the required procedures of
+noticing, convening and holding procedures
+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 on 10 May 2019 and on the
+websites of Hong Kong Stock Exchange on 9
+May 2019.
+2 GENERAL MEETINGS
+During the reporting period, there is no
+material inconsistency between Sinopec
+Corp.'s corporate governance and the
+requirements of the PRC Company Law and
+relevant regulations of the 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.
+During the reporting period, Sinopec
+Corp. committed itself to comply with the
+Articles of Association as well as domestic
+and overseas laws and regulations, and
+continuously improving its corporate
+governance. It timely amended the Articles
+of Association and the internal control
+procedures, and implemented the campaign
+of promoting the execution effectiveness
+of internal control with good results.
+The role of independent directors is well
+played. It also completed the information
+disclosure with high quality and further
+strengthened investor relations work to
+promote enterprise value. Its sustainable
+development achieved positive results and
+earned social recognition. It carried out
+campaign themed "staying true to our
+founding mission", completed related work in
+exercising full and rigorous governance over
+the Party and implemented the campaign
+of "talents strengthening enterprise". All the
+aforesaid work has promoted the company's
+high-quality development.
+1 IMPROVEMENTS IN CORPORATE
+GOVERNANCE DURING THE REPORTING
+PERIOD
+CORPORATE GOVERNANCE
+Connected Transactions
+41
+Loans and other accounts receivable and payable
+No material negative impact
+Parent company and
+The 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 its internal control procedures,
+adjusts the scope and the relevant caps
+Total
+(a) The government-prescribed price will
+apply;
+Principle of pricing for the continuing
+connected transactions:
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+40
+The amounts of the above continuing
+connected transactions between the
+Company and Sinopec Group did not
+exceed the relevant caps for the continuing
+connected transactions as approved by the
+general meeting of shareholders and the
+Board.
+3 ACTUAL CONTINUING CONNECTED
+TRANSACTIONS ENTERED INTO BY THE
+COMPANY DURING THE YEAR
+Pursuant to the above-mentioned agreements
+on continuing connected transactions,
+the aggregate amount of the continuing
+connected transactions of the Company
+during the reporting period was RMB
+447.608 billion. Among which, purchases
+expenses amounted to RMB 286.769 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 270.499 billion, purchases of auxiliary
+and community services of RMB 3.097
+billion, payment of property rent of RMB 509
+million, payment of land use right of RMB
+11.330 billion, and the interest expenses
+amounted to RMB 1.334 billion. The sales
+income amounted to RMB 160.839 billion,
+representing 5.17% of the total amount of
+this type of transaction for the reporting
+period, including RMB 159.681 billion for
+sales of products and services, RMB 92
+million for agency commission income, and
+RMB 1,066 million for interest income.
+The aggregated amount of the continuing
+connected transactions for 2019 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.
+Pursuant to the Hong Kong Listing Rules and
+the Shanghai Listing Rules, the continuing
+connected transactions between the
+Company and Sinopec Group are subject
+to disclosure, independent non-executive
+directors' approval and/or independent
+shareholders' approval (if needed) based on
+the nature and the value of the transactions.
+Sinopec Corp. has fully complied with
+the above requirements in relation to the
+continuing connected transaction between
+the Company and Sinopec Group.
+2 COMPLIANCE OF DISCLOSURE AND
+APPROVALS OF CONTINUING CONNECTED
+TRANSACTIONS BETWEEN THE COMPANY
+AND SINOPEC GROUP WITH HONG KONG
+LISTING RULES AND THE SHANGHAI
+LISTING RULES
+Memo, pursuant to which the scope of
+services of the Mutual Supply Agreement
+and the Cultural, Educational, Hygienic
+and Auxiliary Services Agreement were
+adjusted and the term of the Mutual Supply
+Agreement and the Cultural, Educational,
+Hygienic and Auxiliary Services Agreement
+was extended from 1 January 2019 to 31
+December 2021; the term of the Properties
+Leasing Agreement was extended to 31
+December 2021 and the term of Intellectual
+Property Licensing Agreements was extended
+to 31 December 2029. The area and rent
+in the Land Use Rights Leasing Agreement
+were also adjusted. The resolution relating
+to continuing connected transactions for
+the three years from 2019 to 2021 was
+approved at the first extraordinary general
+meeting of Sinopec Corp. for 2018 held on
+23 October 2018. For details of the above
+continuing connected transactions, please
+refer to relevant announcements published
+on 27 August 2018 in the China Securities
+Journal, the Shanghai Securities News and
+the Securities Times and on the website of
+the Shanghai Stock Exchange and on the
+website of the Hong Kong Stock Exchange
+dated 26 August 2018. The capitalised terms
+used in this section shall have the same
+meaning as that used in the above-mentioned
+announcements.
+On 24 August 2018, Sinopec Corp. and
+China Petrochemical Corporation entered into
+a supplemental agreement of the continuing
+connected transactions and the Land Use
+Rights Leasing Agreement Amendment
+(7) The Company will provide franchise
+licenses for service stations to China
+Petrochemical Corporation.
+(6) China Petrochemical Corporation will
+provide shareholders' loans to the
+Company; and
+(4) China Petrochemical Corporation will
+provide leasing services for lands and
+certain properties to the Company
+(3) China Petrochemical Corporation will
+provide cultural and educational, hygienic
+and auxiliary services to the Company
+(Cultural, Educational, Hygiene and
+Auxiliary Services Agreement)
+(2) China Petrochemical Corporation
+will provide trademarks, patents and
+computer software to the Company for
+use free of charge
+(1) The Company and China Petrochemical
+Corporation will mutually supply ancillary
+services for products, production and
+construction services (Mutual Supply
+Agreement)
+1 AGREEMENTS CONCERNING CONTINUING
+CONNECTED TRANSACTIONS
+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:
+CONNECTED TRANSACTIONS
+(b) where there is no government-prescribed
+price but where there is a
+government-guidance price, the
+government-guidance price will apply;
+Relations
+(c) where there is neither a
+(d) where none of the above is applicable,
+the price for the provision of the products
+or services is to be agreed between
+the relevant parties, which shall be the
+reasonable cost incurred in providing the
+same plus 6% or less of such cost.
+Other related parties
+Sinopec Group
+Related Parties
+5 FUNDS PROVIDED BETWEEN RELATED PARTIES
+4 OTHER SIGNIFICANT CONNECTED
+TRANSACTIONS OCCURED THIS YEAR
+For details, please refer to item 5
+"Capital Increase and Assets Transfer to
+SIONOPEC-SK (Wuhan) Petrochemical Co.,
+Ltd. (SINOPEC-SK)" in section "Significant
+Events".
+(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.
+ii 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; and
+normal commercial terms; or
+i
+(b) The transactions have been entered into
+based on either of the following terms:
+(a) The transactions have been conducted
+in the ordinary course of the Company's
+business;
+After reviewing the above-mentioned
+connected transactions, the independent
+non-executive directors of Sinopec Corp.
+have confirmed the following:
+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.
+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
+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
+The above-mentioned connected transactions
+between the Company and Sinopec Group
+in 2019 were approved at the 12th meeting
+of the seventh session of the Board and
+have complied with the requirements under
+Chapter 14A of the Hong Kong Listing Rules.
+Related party transactions with the Sinopec
+Group that occurred during the year, as set
+out in Note 38 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.
+of continuing connected transactions
+every three years, and will announce and
+implement 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.
+Decision-making procedures:
+For details of the pricing principle, please
+refer to relevant announcements published
+on 27 August 2018 in the China Securities
+Journal, the Shanghai Securities News and
+the Securities Times and on the website of
+the Shanghai Stock Exchange and on the
+website of the Hong Kong Stock Exchange on
+26 August 2018.
+government-prescribed price nor a
+government-guidance price, the market
+price will apply; or
+(5) China Petrochemical Corporation will
+provide comprehensive insurance to the
+Company
+49
+Connected Transactions
+Corporate Governance
+47
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+d. The Audit Committee has reviewed
+the adequacy and sufficiency
+of the resources for accounting
+and financial reporting and the
+qualifications and experience of
+the relevant 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. to employees to
+report behavior that violates the
+internal control system of the
+Company. The Audit Committee
+has reviewed and approved such
+policy.
+c. Audit Committee members can
+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
+appointed consultants members
+and can request such member
+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.
+b. During the reporting period,
+the Audit Committee held four
+meetings (please refer to the
+"Meetings held by the special
+committees of the Board" under
+the section of "Report of the
+Board of Directors" in this annual
+report). The review opinions
+were issued at each meeting and
+submitted to the Board. 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. Ng, Kar Ling Johnny,
+who serves as the Chairman,
+and Independent Non-executive
+Director Mr. Tang Min and
+Independent Non-executive
+Director Mr. Cai Hongbin, 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.
+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.
+Sinopec Corp. has formulated
+and implemented its information
+disclosure policy and insider
+information registration policy.
+The Company regularly evaluates
+the policy implementation and
+makes disclosure in accordance
+with relevant regulations. Please
+refer to the website of Sinopec
+Corp. (http://www.sinopec.com/)
+for the details of the information
+disclosure policy.
+internal control, and conducted
+comprehensive and multi-level
+inspections including regular
+test, enterprise self-examination
+and auditing check, and included
+headquarters, branches and
+subsidiaries into the scope of
+internal control evaluation, with
+an internal control evaluation
+report being produced. The
+Board annually reviews the
+internal control evaluation report.
+For detailed information about
+the internal control during the
+reporting period, please refer
+to the report on internal control
+evaluation prepared by Sinopec
+Corp.
+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 assessment,
+control activities, information
+and communication, and internal
+supervision. At the same time,
+Sinopec Corp. has constantly
+supervised and evaluated its
+Corporate Governance
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+46
+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.
+C.2 Internal Control and Risk
+Management
+d. The external auditors of Sinopec
+Corp. made a statement on their
+reporting responsibilities in the
+auditor's report contained in the
+financial report.
+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.
+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.
+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, the performance and the
+cash flow of the Company during
+the period. The Board approved
+the Financial Report for 2019 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.
+C.1 Financial reporting
+C Accountability and Auditing
+d. During the reporting period, the
+Remuneration Committee held one
+meeting (please refer to "Meetings
+held by the special committees of the
+Board" under the section of "Report
+of the Board of Directors" in this
+annual report).
+CORPORATE GOVERNANCE (CONTINUED)
+D Delegation of power by the Board
+a. The Board and the Management
+have clear duties and responsibilities
+in written rules. The Articles of
+Association and the Rules of
+Procedure for the General Meetings
+of Shareholders and the Rules of
+Procedure of 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 addition to the Audit Committee,
+the Remuneration Committee
+and Nomination 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 7th session of
+Strategy Committee consists of five
+directors, including Chairman of the
+Board Mr. Zhang Yuzhuo, who serves
+as Chairman, as well as Executive
+Directors Mr. Ma Yongsheng, Mr. Ling
+Yiqun and Independent Non-executive
+Directors Mr. Fan Gang and Mr. Cai
+Hongbin, 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 Chairman of the Board
+Mr. Zhang Yuzhuo, who serves as
+Chairman, Independent Non-executive
+Directors Mr. Tang Min and Mr. Fan
+Gang, who serve as members.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+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 50;
+for information about meetings held
+by Board Committees, please refer to
+page 52; for information about tenure
+of non-executive directors, please refer
+to page 64; 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 60 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
+2019 and the authorisation of the Board
+to determine their remuneration were
+approved at Sinopec Corp.'s annual
+general meeting for the year 2018 on
+9 May 2019. The audit fee for 2019
+is RMB 47.48 million (including audit
+fee of internal control), which was
+approved at the 12th meeting of the
+seventh 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
+special organisation in charge of
+communication with shareholders and
+published relevant contact details
+to facilitate shareholders to make
+enquiries pursuant to Articles of
+Association.
+d. Sinopec Corp. established
+c. The eligibility for attending the general
+meeting, the rights of shareholders,
+the resolutions 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 general
+meeting of shareholders, shareholders
+who individually or collectively
+hold 3% of the total voting shares
+of Sinopec Corp. may propose a
+supplemental proposal 10 days before
+the date of the general meeting.
+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
+approve the request to convene the
+meeting according to the Rules of
+Procedure for General Meetings
+of Shareholders, 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.
+c. The members of the Remuneration
+Committee can 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 member and
+can require such member 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.
+G Shareholders' rights
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+48
+b. During the reporting period, the
+Secretary to the Board actively
+participated in career development
+training with more than 15 training
+hours.
+a. The Hong Kong Stock Exchange
+recognised 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 Secretary to the Board
+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.
+d. The Chairman of the Board hosted the
+annual general meeting for the year
+2018. Some members of the Board
+of Directors and Board of Supervisors
+and senior Management attended the
+meeting and communicated with the
+investors extensively.
+c. During the reporting period, separate
+resolution was proposed for each
+substantially separate issue at the
+general meetings. 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.
+b. Sinopec Corp. pays high attention
+to investor relations. The team
+led by management conduct
+road shows every year to answer
+questions on subjects of concern to
+investors, such as introduction of
+the 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.
+a. According to the actual situation
+of Sinopec Corp., as approved
+at the annual general meeting of
+shareholders for the year 2018,
+Sinopec Corp. amended the Articles of
+Association. 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. as
+well as on the website of Shanghai
+Stock Exchange on 10 May 2019
+and the announcement published on
+the website of the Hong Kong Stock
+Exchange on 9 May 2019.
+E Investor Relations
+c. Each Board Committee is required
+to report its decisions and
+recommendations to the Board
+and has formulated its terms of
+references. The terms of reference
+of the Audit Committee, the
+Remuneration Committee and the
+Nomination Committee are published
+on the website of Sinopec Corp. at
+http://www.sinopec.com/.
+Corporate Governance
+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 their service contracts in
+2019.
+b. The Remuneration Committee
+Committee (Remuneration Committee)
+consists of Independent Non-executive
+Director Mr. Fan Gang, who serves
+as the Chairman, and Executive
+Director Mr. Ma Yongsheng and
+Independent Non-executive Director
+Mr. Ng, Kar Ling Johnny, 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.
+Management and Employees" of
+this annual report.
+a. For details of the composition of
+the Board of Directors, please
+refer to the section "Directors,
+Supervisors, Other Senior
+A.3 Board composition
+Corporate Governance
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+c. The Chairman encourages open
+and active discussions. Directors
+actively and deeply participated
+in the discussions of significant
+decisions made by the Board in
+the Board meetings.
+b. The Chairman of the Board places
+great emphasis on communication
+with the Independent
+Non-executive Directors. The
+Chairman independently held two
+meetings with the Independent
+Non-executive Directors in respect
+of development strategy, corporate
+governance and operational
+management, etc. of the Company.
+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. Zhang Yuzhuo serves as
+Chairman of the Board and Mr.
+Ma Yongsheng serves as President
+of Sinopec Corp.
+a. The Chairman of the Board is
+A.2 Chairman and President
+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 authorities 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 from the
+performance of their duties.
+d. The Board has reviewed and
+evaluated its performance in 2018
+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 considered
+the suggestions from the Party
+organisation, 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.
+b. Sinopec Corp. has received
+c. Each Director of the Board can
+submit proposals to be included
+in the agenda of Board meetings,
+and each Director is entitled to
+request other related information.
+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.
+A.1 Board of Directors
+A Board of Directors
+Sinopec Corp. complied with all code
+provisions set out in the Corporate
+Governance Code during the reporting
+period.
+(1) Compliance with the Corporate
+Governance Code
+9 CORPORATE GOVERNANCE REPORT (IN
+ACCORDANCE WITH HONG KONG LISTING
+RULES)
+Sinopec Corp. has established and is
+continuously improving the fairness and
+transparency of its performance appraisal
+standards, incentive schemes and
+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 and the Measures
+of Sinopec Corp. for the Management of
+Performance Evaluations.
+8 SENIOR MANAGEMENT APPRAISAL AND
+INCENTIVE SCHEMES
+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 date of this
+annual report.
+7 IMPROVEMENT AND IMPLEMENTATION OF
+THE INTERNAL CONTROL SYSTEM
+6 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.
+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 2019, Sinopec Corp. held four
+Board meetings. For details about
+each Director's attendance at the
+Board meetings and the general
+meetings, please refer to the
+section "Report of the Board of
+Directors" in this annual report.
+5 COMPANY'S INDEPENDENCE FROM
+CONTROLLING SHAREHOLDER
+from each of the Independent
+Non-executive directors a letter of
+confirmation for 2019 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. During the reporting period,
+the Board of Directors has not
+nominated any new director
+according to the actual situation of
+Sinopec Corp., and no re-election
+and dismissal of directors
+occurred. For details about the
+tenure of each director, please
+refer to the section "Directors,
+Supervisors, Other Senior
+B Remuneration and Appraisal Committee
+a. Remuneration and Appraisal
+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 require the
+Management, or require, via
+the Management, relevant
+departments to provide necessary
+information or explanations. The
+Directors may seek advices from
+professional consultants when
+necessary.
+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.
+information
+A.7 Provision of and access to
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+45
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+to ensure that their contribution to
+the Board remains informed and
+relevant.
+d. Sinopec Corp. organised and
+arranged training sessions for
+Directors and paid the relevant
+fees as well as making relevant
+records. The Directors actively
+participated in the trainings and
+paid more attention on continuing
+professional development program
+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.4 Appointment, re-election and
+dismissal
+b. Each of the Directors was able to
+devote sufficient time and efforts
+to handling the matters of Sinopec
+Corp.
+A.6 Responsibility of Directors
+require such member to provide
+advice. The working expenses of
+the Remuneration Committee are
+included in the budget of Sinopec
+Corp.
+Committee has also appointed
+consultants member and can
+c. The members of the Nomination
+Committee can engage
+professions when performing
+its duties. Reasonable costs
+arising from such consultations
+are borne by Sinopec Corp. In
+the meantime, the Nomination
+b. The Board establishes the
+Board Diversity Policy which
+stipulates that the members of
+the Board shall be nominated
+and appointed based on the skills
+and experience for the overall
+optimum operation of the Board,
+while taking into account the
+targets and requirements of the
+board diversity. 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 profession experience, skills,
+knowledge, length of service,
+regions, cultural and educational
+backgrounds, gender and age.
+Pursuant to Articles of Association,
+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, which help to
+ensure that the Board of Directors
+has a proper balance between
+continuous experience and new
+thinking, and enhance the level of
+diversity. Sinopec Corp. focuses on
+the implementation of the Board
+Diversity Policy. The Directors
+come from different industries at
+home and abroad, and have rich
+work experience. Professional
+backgrounds of Directors include
+petroleum and petrochemical, as
+well as economics, accounting and
+finance, which are conductive to
+scientific decision-making.
+provide suggestion on Board's size
+and composition, as well as the
+selecting standards, procedures
+and candidates for directors and
+senior management. Procedures
+to Propose a Person for Election
+as a Director of Sinopec Corp. is
+published on the Sinopec Corp.'s
+website at http://www.sinopec.
+com/.
+Nomination Committee are to
+a. The Board of Sinopec Corp.
+established Nomination
+Committee, consisting of
+Chairman of the Board, Mr.
+Zhang Yuzhuo, who serves as
+the Chairman, and Independent
+Non-Executive Directors Mr.
+Tang Min and Mr. Ng, Kar Ling
+Johnny, who serve as members.
+The major responsibilities of
+A.5 Nomination Committee
+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.
+b. All Directors of Sinopec Corp.
+have been elected at the general
+meeting of shareholders. The
+Board has no power to appoint
+temporary Directors.
+Management and Employees"
+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 of Board Meetings
+clearly prescribe the duties and
+powers of Directors, Non-executive
+Directors including Independent
+Non-executive Directors, which are
+published on the Sinopec Corp.'s
+website at http://www.sinopec.
+com/
+CORPORATE GOVERNANCE (CONTINUED)
+0
+(7) The 1st meeting of the seventh session
+of the Remuneration Committee was
+held by written resolution on 20 March
+2019 whereby the proposal in relation
+to implementation of the rules of the
+remuneration of directors, supervisors
+and other senior management for 2018.
+118.42
+82.52
+65.31
+Ratio between the dividends and the net profit attributed to the shareholders of the
+listed company in the consolidated statement (%)
+51.12
+61.62
+57.47
+Net profits attributed to the shareholders of the listed company shown in the
+consolidated statement for the dividend year (RMB billion)
+60.54
+50.85
+37.53
+Total amount of cash dividends (RMB billion, tax inclusive)
+0.50
+0.42
+0.31
+Note: The final cash dividend for 2019 is subject to the approval at the 2019 annual general meeting.
+The aggregate cash dividend declared by
+Sinopec Corp. during three years from 2017
+to 2019 is RMB 1.23 per share, and the total
+dividend payment from 2017 to 2019 as a
+percentage of average net profit attributed
+to the shareholders of the listed company in
+the three years is 262.5%.
+8 RESPONSIBILITIES FOR THE COMPANY'S
+INTERNAL CONTROL
+amounted to RMB 0.209 billion.
+During this reporting period, the amount
+of charity donations made by the Company
+15 DONATIONS
+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.
+14 RESERVES
+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.
+13 FIXED ASSETS
+Cash dividends (RMB/Share, tax inclusive)
+12 BANK LOANS AND OTHER BORROWINGS
+Details of bank loans and other borrowings
+of the Company as of 31 December 2019
+are set out in Note 30 to the financial
+statements prepared in accordance with
+IFRS in this annual report.
+The total sales value to the five largest
+customers of the Company in 2019 was
+RMB 261,811 million, accounted for 8.8%
+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 111,110 million,
+accounted for 3.7% of the total sales value
+for the year.
+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 49.1% 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 19.3% of the
+total value of the crude oil purchasing by the
+Company.
+10 DURING THIS REPORTING PERIOD, THE
+COMPANY DID NOT VIOLATE LAWS OR
+REGULATIONS WHICH HAVE A MATERIAL
+IMPACT ON THE COMPANY
+9 DURING THIS REPORTING PERIOD, THE
+IMPLEMENTATION OF ENVIRONMENTAL
+POLICIES BY THE COMPANY
+Details with regard to the Company's
+performance in relation to environmental
+and social-related policies and performances
+are provided in the Chairman's Address and
+Business Review and Prospects in this annual
+report as well as the 2019 Communication
+on Progress for the Sustainable Development
+of Sinopec Corp. Those disclosures in
+relation to the environmental policies
+constitute part of the Report of the Board of
+Directors.
+2019 Internal Control Assessment Report of
+Sinopec Corp. was reviewed and approved
+at the 12th meeting of the seventh Session
+of the Board on 27 March 2020, 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.
+as ensuring its effective implementation. In
+2019, 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 2019.
+The internal control system of Sinopec Corp.
+related to the financial statements is sound
+and effective.
+The Board is fully responsible for establishing
+and maintaining the internal control system
+related to the financial statements as well
+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.
+54
+2017
+2019
+The final cash dividend will be distributed
+on or before 19 June 2020 (Friday) to all
+shareholders whose names appear on the
+register of members of Sinopec Corp. on
+the record date of 9 June 2020 (Tuesday).
+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 2 June 2020 (Tuesday)
+for registration. The H shares register of
+members of Sinopec Corp. will be closed
+from 3 June 2020 (Wednesday) to 9 June
+2020 (Tuesday) (both dates inclusive).
+At the 12th meeting of the seventh session of
+the Board, the Board approved the proposal
+to distribute a final cash dividend of RMB
+0.19 (tax inclusive) per share, combining
+with an interim distributed dividend of RMB
+0.12 (tax inclusive) per share, the total
+dividend for the whole year is RMB 0.31 (tax
+included) per share.
+Proposals for dividend distribution
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+42
+52
+The profit distribution plan of Sinopec Corp.
+for the corresponding 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.
+The profit distribution policy of Sinopec
+Corp. maintains consistency and steadiness,
+and considers 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 realised
+during the corresponding year.
+7 DIVIDEND
+The financial results of the Company for
+the year ended 31 December 2019, which
+is prepared in accordance with IFRS and
+the financial position as at that date and
+the accompanying analysis are set out from
+page 146 to page 203 in this annual report.
+A fair review of the Company's business,
+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 discussed throughout this annual report
+included in the chapters of Chairman's
+Address, Business Review and Prospects,
+Management's Discussion and Analysis and
+Significant Events. All above discussions
+constitute parts of the report of the Board of
+Directors.
+BUSINESS PERFORMANCE
+6
+5
+(8) The 1st meeting of the seventh session
+of the Social Responsibility Management
+Committee was held by written resolution
+on 20 March 2019, whereby the 2018
+Communication on Progress for the
+Sustainable Development Report of
+Sinopec Corp. was approved at the
+meeting.
+(6) The 3rd meeting of the seventh session
+of the Strategy Committee was held
+by written resolution on 21 August
+2019, whereby the three years rolling
+development plan of Sinopec corp.
+(2019-2021) was approved at the
+meeting.
+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.
+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 their 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 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. will
+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
+The dividend distribution and bonus shares declared by Sinopec Corp. in the past three years are as follows:
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+Report of the Board of Directors
+53
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+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.
+2018
+Shanghai Hong Kong and Shenzhen-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.
+For domestic investors investing in the
+港股票市場交易互聯互通機制試點有關稅收政策
+Caishui[2016] No.127):
+Shenzhen-Hong Kong Stock Connect
+Shanghai-Hong Kong Stock Connect (
+滬港股票市場交易互聯互通機制試點有關稅收政
+)(Caishui [2014] No. 81) and the
+Related to the Pilot Program of the
+Pursuant to the Notice on the Tax Policies
+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%-
+H Shares of Sinopec Corp. through
+54
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+16 PRE-EMPTIVE RIGHTS
+During this reporting period, the Board of
+Supervisors held four (4) meetings in total, and
+mainly reviewed and approved the proposals
+in relation to the Company's periodic report,
+financial statements, communication on
+progress for sustainable development, internal
+control assessment report and working report of
+the Board of Supervisors etc.
+In 2019, 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.
+Dear Shareholders:
+REPORT OF THE BOARD OF SUPERVISORS
+Report of the Board of Supervisors
+58
+Report of the Board of Directors
+57
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Beijing, China, 27 March 2020
+Chairman
+By Order of the Board
+Zhang Yuzhuo
+Cyber-security risks: the Company has a
+well-established network safety system,
+information infrastructure and operation
+system, and network safety information
+platform, 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, injuries 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.
+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, the realized price
+of crude oil is based on international crude
+oil price. Despite the fact that, the price
+of the domestic refined oil products will
+change as the exchange rate of the Renminbi
+changes according to the pricing mechanism
+for the domestic refined oil products, and
+the price of other domestic petrochemical
+products will also be influenced by the price
+of the imported products, which to a large
+extent, smooths the impact of the Renminbi
+exchange rate on the processing and sales
+of the Company's crude oil refined products.
+However, the fluctuation of the Renminbi
+exchange rate will still have an effect on the
+income of the upstream sector.
+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
+in 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.
+On 22 March 2019, the 4th meeting of the
+seventh session of the Board of Supervisors was
+held, and the proposals in relation to Annual
+Report of Sinopec Corp. for 2018, the Financial
+Statements of Sinopec Corp. for 2018, 2018
+Communication on Progress for Sustainable
+Development of Sinopec Corp., Internal Control
+Assessment Report of Sinopec Corp. for 2018,
+Work Report of the Board of Supervisors of
+Sinopec Corp. for 2018, were reviewed and
+approved at the meeting.
+On 29 April 2019, the 5th meeting of the
+seventh session of the Board of Supervisors
+was held, and the proposal in relation to the
+First Quarterly Report of Sinopec Corp. for
+2019, capital increase and assets transfer to
+Sinopec SK (Wuhan) Petrochemical Co., Ltd.,
+(SINOPEC-SK) were reviewed and approved at
+the meeting.
+On 23 August 2019, the 6th meeting of the
+seventh session of the Board of Supervisors was
+held, and the Interim Report of Sinopec Corp.
+for 2019, the Interim Financial Statements of
+Sinopec Corp. for 2019, were reviewed and
+approved at the meeting.
+On 30 October 2019, the 7th meeting of the
+seventh session of the Board of Supervisors was
+held, and the Third Quarterly Report of Sinopec
+Corp. for 2019 was reviewed and approved at
+the meeting.
+Report of the Board of Supervisors
+59
+59
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+27 March 2020
+Chairman of the Board of Supervisors
+Zhao Dong
+Investment risks: Petroleum and chemical
+sector is a capital intensive industry.
+Although the Company has 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.
+In 2020, 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.
+Fourthly, the consideration for the equity
+investment 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 effective. No material defects of internal
+control were found.
+Secondly, the reports and financial statements
+prepared by Sinopec Corp. in 2019 complied
+with the relevant regulation of domestic and
+overseas securities regulators, the disclosed
+information truly, accurately, completely
+and fairly reflected Sinopec Corp.'s financial
+results and operation performance. The
+dividend distribution plan was made after
+comprehensive consideration of the long-term
+interests of Sinopec Corp. and the interests of
+the shareholders. No violation of confidential
+provisions of persons who prepared and
+reviewed the report was found.
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Firstly, the Board and the senior 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. The
+senior management diligently executed the
+resolutions approved by the Board, continued to
+intensified refined management and strived to
+tap potentials and enhance efficiency, optimise
+business structures, committed to achieving the
+target of sustaining profit and growth set by the
+Board. During the reporting period, the Board of
+Supervisors did not discover any behavior 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.
+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 in 2019, facing the difficult conditions
+such as the complex and severe production
+and operation situation, rising internal and
+external risk challenges, slowing down of global
+economic growth, volatile international oil
+prices, increasing of domestic refining capacity,
+fall of chemical products prices, and the market
+competition is extremely fierce, the company
+conscientiously implements the decision-making
+and deployment of the board of directors,
+focuses on laying a decisive foundation for
+comprehensive and sustainable development,
+strives for progress in stability, takes on
+actions, pays close attention to implementation,
+promotes all work as a whole to maintains the
+growth of production indicators, and achieves
+better than expected business performance. The
+Board of Supervisors had no objection to the
+supervised issues during this reporting period.
+In addition, the supervisors attended the general
+meetings of shareholders and attended meetings
+of the Board. The Board of Supervisors also
+organised some of the supervisors to attend
+the trainings for directors and supervisors of
+listed companies organised by Beijing Securities
+Supervisory Bureau under CSRC, which have
+further improved the Supervisors' capabilities in
+performing supervisory duties.
+Fifthly, all connected transactions between the
+Company and Sinopec Group were in compliance
+with the relevant rules and regulations of
+domestic and overseas listing exchanges. The
+pricing of all the connected transaction was
+fair and reasonable. No behaviors which is
+detrimental to the interests of Sinopec Corp. or
+its shareholders was discovered.
+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 HSSE 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.
+Risks with regard to the operation and
+natural disasters: The process of petroleum
+chemical production is exposed to the
+high risks of inflammation, explosion and
+environmental pollution and is vulnerable
+to extreme natural disasters. Such
+contingencies may cause serious impacts
+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 fluctuate
+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
+countermeasures, 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.
+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 rank first in China,
+and has a well-established marketing network
+for chemical products.
+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
+and financial divisions are responsible
+for initial collection and compilation of
+information about reserves. Experts from
+exploration, development and economic
+divisions prepare the initial report on the
+reserves estimate which is then reviewed by
+the RMC at the subsidiary level to ensure the
+qualitative and quantitative compliance with
+technical guidance as well as its accuracy
+and reasonableness. 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.
+Our RMC is led by President of our Company,
+related departments of headquarters,
+Petroleum Exploration and Production
+Research Institute of Sinopec (PEPRIS) and
+senior managers of oilfield branches. Mr.
+Liu Hongbin, the Chairman of RMC is Senior
+Vice President of Sinopec Corp., with over 30
+years of experience in oil and gas industry. 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.
+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 including organisation, coordination,
+monitoring and major decision-making,
+and reviews the reserves estimation of
+our Company. Each of our branches has
+a reserves management committee that
+manages and coordinates the reserves
+estimation, organises the estimation process
+and reviews the reserve estimation report at
+the branch level.
+23 OIL & GAS RESERVE APPRAISAL
+PRINCIPLES
+As of 31 December 2019, the Company has
+not entered into any equity-linked agreement.
+22 EQUITY-LINKED AGREEMENTS
+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.
+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.
+20 MANAGEMENT CONTRACTS
+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
+I was a party during the reporting period.
+As at the end of the reporting period, the
+Company has resolved its competition with
+Sinopec Group in the chemical business. For
+details for the positions held by the directors
+of Sinopec Corp. in the Sinopec Group
+during the reporting period, please refer to
+the section "Directors, Supervisors, Senior
+Management and Employees" of this annual
+report.
+18 DIRECTORS' INTERESTS IN COMPETING
+BUSINESS
+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.
+17 REPURCHASE, SALES AND REDEMPTION
+OF SHARES
+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.
+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.
+(5) The 2nd meeting of the seventh session
+of the Strategy Committee was held by
+written resolution on 20 March 2019,
+whereby the proposal in relation to the
+plan of investments of 2019 of Sinopec
+Corp. was approved at the meeting.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Report of the Board of Directors
+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 over time which may adversely
+affect the Company's financial situation and
+operation performance.
+stricter environment protection standards.
+Under such situations, the Company
+may increase expenses in relation to the
+environment protection accordingly.
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+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
+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 refined oil 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 fully opening
+up of exploration and mining rights, the
+opening up of crude oil import licenses
+and the right of tenure, removing the
+restriction of share ratio of refining projects
+to foreign enterprises, further improvement
+in pricing mechanism of refined oil
+products, cancellation of wholesale right and
+decentralization of retail right of refined oil
+products, and gas stations investment are
+fully opened to foreign investment, 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 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 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 geopolitics,
+international crude oil price and etc.
+55
+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.
+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.
+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 strength.
+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 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.
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+56
+25 RISK FACTORS
+(4) The 7th meeting of the seventh session of
+the Audit Committee was held by written
+resolution on 29 October 2019, whereby
+the third quarterly report for nine months
+ended 30 September 2019 was approved
+at the meeting.
+BOARD COMMITTEES ISSUED REVIEW
+OPINIONS TO THE BOARD WHEN
+PERFORMING THEIR DUTIES DURING
+THE REPORTING PERIOD, WITHOUT
+OBJECTION.
+session of the Audit Committee was
+held by written resolution on 29 April
+2019, whereby the proposals in relation
+to the following matters were approved:
+(i)first quarterly results of Sinopec Corp.
+for the three months ended 31 March
+2019 was approved at the meeting. (ii)
+the capital increase and assets transfer
+to SINOPEC-SK.
+first half of the year 2019 (including
+a.the 2019 interim dividend distribution
+plan, b. the report of Risk Assessment
+for Capital Deposits at Finance Company
+and Century Bright Company), (iii) the
+financial statements for the first half the
+year 2019, (iv) interim report for the 6
+months ended 30 June 2019, (v) Three
+years rolling development plan of Sinopec
+Corp. (2019 to 2021).
+(4) The 8th meeting of the seventh session of
+the Board was held by written resolution
+on 30 October 2019, whereby the
+proposal in relation to the third quarterly
+results of Sinopec Corp. for the nine
+months ended 30 September 2019 was
+approved.
+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.
+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
+various tasks delegated to them at the
+general meetings
+50
+50
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+3 DIRECTORS' ATTENDANCE TO THE BOARD MEETINGS AND TO THE GENERAL MEETINGS.
+(1) Directors attendance to the board meeting and general meeting during this reporting period
+Director Titles
+Names
+No. of
+meeting held
+Actual
+Attendance
+Board Meetings
+Attended By
+communication
+(3) The 7th meeting of the seventh session
+of the Board was held by on site meeting
+and via video conference on 23 August
+2019, whereby the proposals in relation
+to the following matters were approved:
+(i) the report on the fulfillment of the
+key targets for the first half of the
+year 2019 and the work arrangements
+for the second half of the year 2019,
+(ii) Financial results and business
+performance of the Company for the
+(2) The 6th meeting of the seventh session of
+the Board was held by written resolution
+on 29 April 2019, whereby the proposals
+in relation to the following matters
+were approved: (i)first quarterly results
+of Sinopec Corp. for the three months
+ended 31 March 2019 was approved at
+the meeting. (ii) the capital increase and
+assets transfer to Sinopec-SK.
+remunerations, (ix) the amendments to
+the articles of association of Sinopec
+Corp. (x) to authorize the Board to
+determine the interim profit distribution
+plan of Sinopec Corp. for the year 2019
+(xi) Authorising 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
+2018 and to dispatch the notice of the
+annual general meeting.
+A. provision for impairment for the year
+2018; B. The connected transactions
+for the year 2018; C. Profit distribution
+plan for the year 2018; D. Audit costs
+for the year 2018; E. the report of Risk
+Assessment for Capital Deposits at
+Finance Company and Century Bright
+Company,), (iv) 2018 Communication on
+Progress for Sustainable Development
+Report of Sinopec Corp., (v) Financial
+Statements of Sinopec Corp. for the
+year 2018, (vi) Annual Report and form
+20F of the Company for the year 2018,
+(vii) Internal control assessment report
+of Sinopec Corp. for the year 2018, and
+the internal control manual (2019) (viii)
+Re-appointment of external auditors of
+Sinopec Corp. for the year of 2019 and
+to authorise the Board to determine their
+2
+2
+4
+1
+(3) The 6th meeting of the seventh session
+of the Audit Committee was held by on
+site meeting on 21 August 2019, whereby
+(i) the financial statements for the first
+half year of 2019 (ii) the interim report
+for the first half of 2019, (iii) Financial
+results and business performance of
+the Company for the first half of the
+year 2019(including a.the 2019 interim
+dividend distribution plan, b. the report
+of Risk Assessment for Capital Deposits
+at Finance Company and Century Bright
+Company) (iv) the reports on internal
+auditing work for the first half of 2019
+were approved at the meeting.
+0
+1
+General Meetings.
+2
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS
+The Board is pleased to present the directors'
+report for the year ended 31 December 2019 for
+shareholders' review.
+1
+MEETINGS OF THE BOARD
+During this reporting period, Sinopec Corp.
+held four (4) Board meetings. The details are
+as follows:
+(1) The 5th meeting of the seventh session
+of the Board was held by on site meeting
+and via video conference on 22 March
+2019, whereby the proposals in relation
+to the following matters were approved: (i)
+the Work Report of the Board for the year
+2018, (ii) the business performance of
+2018 and work plan of 2019, (iii) Financial
+results and business performance of the
+Company for the year 2018(including
+1
+Attended
+by proxy
+Absent
+No. of
+1
+4
+2
+2
+0
+0
+1
+1
+1
+2
+2
+0
+0
+1
+0
+4
+4
+0
+0
+2
+meeting held
+Actual
+Attendance
+Ma Yongsheng
+Yu Baocai
+Director
+Director
+Director
+2
+Director
+Independent Director
+Independent Director
+Independent Director
+Ling Yiqun
+Li Yong
+Tang Min
+Fan Gang
+Cai Hongbin
+Ng, Kar Ling Johnny
+(2) Former directors attendance to the board meetings during this reporting period
+4
+Independent Director
+0
+1
+0
+1
+2
+1
+0
+1
+0
+0
+2
+2
+1
+Liu Zhongyun
+Former Director
+1
+1
+0
+0
+1
+1
+1. No directors were absent from two consecutive meetings of the Board.
+(2) The 5th meeting of the seventh
+(1) The 4th meeting of the seventh session
+of the Audit Committee was held by on
+site meeting and via video conference on
+20 March 2019, whereby the following
+matters were approved in the meeting:
+(i) Annual Report and 20F of 2018;
+(ii)Financial results and business
+performance of the Company for the
+year 2018(including A. provision for
+impairment for the year 2018; B. The
+connected transactions for the year
+2018; C. Profit distribution plan for the
+year 2018; D. Audit costs for the year
+2018; E. the report of Risk Assessment
+for Capital Deposits at Finance Company
+and Century Bright Company,); (iii)
+Internal control assessment report of
+the Company for the year 2018 and the
+internal control manual (2019) (iv) Work
+report on the internal auditing work
+for the year 2018; (v) Reports on the
+auditing of the financial statements for
+the year 2018 prepared by the domestic
+and overseas auditors.
+During the reporting period, the board
+committees held eight(8) meetings,
+Audit Committee held four (4) meetings.
+Strategy Committee held two (2) meetings,
+the Remuneration Committee held one
+(1) meeting, 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:
+COMMITTEES
+4 MEETINGS HELD BY THE BOARD
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+0
+Report of the Board of Directors
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+During the reporting period, none of the Independent Non-executive Directors had attended the general meetings of shareholders in person due
+to official duties.
+(3) The Independent Director's attendance to the General Meetings.
+Mr. Li Yunpeng resigned as a director of the Board on 24 March 2020.
+4.
+3. Mr. Dai Houliang resigned as the Chairman, director of the Board on 19 January 2020.
+2. Mr. Liu Zhongyun resigned as a director of the Board on 9 December 2019.
+51
+2
+4
+4
+4
+2
+4
+0
+1
+2
+0
+2
+2
+2
+0
+1
+0
+0
+2
+2
+4
+4
+0
+0
+0
+Dai Houliang
+Li Yunpeng
+Former Chairman
+Former Director
+meeting held
+by proxy
+No. of
+Absent
+Attended
+Actual
+Attendance
+Board Meetings
+Actual Attended By
+Attendance communication
+meeting held
+No. of
+Names
+Director Titles
+0
+1
+General Meetings.
+Member of the Leading Party
+Member Group of Shenhua
+Group Corporation Limited,
+and served concurrently as
+Chairman of China Shenhua
+Coal Liquefaction Company
+Limited. In December
+2008, he was appointed as
+Director, General Manager
+and Member of the Leading
+Party Member Group of
+Shenhua Group Corporation
+Limited. In July 2009, he
+served concurrently as
+Vice Chairman of All-China
+Federation of Returned
+Overseas Chinese. In May
+2014, he was appointed as
+Chairman and Secretary of
+the Leading Party Member
+Group of Shenhua Group
+Corporation Limited,
+and served concurrently
+as Chairman of China.
+Shenhua Energy Company
+Limited. In March 2017,
+he served as a member of
+the Standing Committee of
+the CPC Tianjin Municipal
+Committee and Secretary
+of the CPC Binhai New Area
+Committee. In July 2017,
+he served concurrently as
+Chairman of Sino-Singapore
+Tianjin Eco-City Investment
+& Development Co., Ltd.
+In May 2018, he served
+concurrently as Director of
+China (Tianjin) Pilot Free
+Trade Zone Administration.
+In January 2020, he was
+appointed as Chairman and
+Secretary of the Leading
+Party Member Group
+of China Petrochemical
+Corporation; in March 2020,
+he was appointed as the
+Chairman of the Board of
+Directors of Sinopec Corp.
+of Engineering. Mr.
+Zhang is an alternate
+member of the nineteenth
+Central Committee of the
+Communist Party of China.
+In January 1997, he was
+appointed as Vice President
+of China Coal Research
+Institute. In February 1998,
+he temporarily served as
+Deputy General Manager of
+Yankuang Group Co. Ltd. In
+July 1998, he was appointed
+as Vice President of China
+Coal Research Institute,
+Director and Deputy General
+Manager of China Coal
+Technology Corporation.
+In March 1999, he served
+as President of China Coal
+Research Institute and
+Chairman of China Coal
+Technology Corporation.
+In June 1999, he was
+appointed as President and
+Deputy Secretary of CPC
+Committee of China Coal
+Research Institute, Chairman
+and Deputy Secretary of CPC
+Committee of China Coal
+Technology Corporation.
+In January 2002, he was
+appointed as Deputy
+General Manager of Shenhua
+Group Corporation Limited,
+and served concurrently
+as Chairman and General
+Manager of China Shenhua
+Coal Liquefaction Company
+Limited. In August 2003, he
+was appointed as Deputy
+General Manager and
+Zhang Yuzhuo, aged 58,
+Chairman of the Board
+of Directors of Sinopec
+Corp. Mr. Zhang is Ph.D.
+in engineering, Research
+Fellow and Academician
+of the Chinese Academy
+(1) Directors
+AND OTHER SENIOR
+MANAGEMENT
+DIRECTORS, SUPERVISORS
+Zhang Yuzhuo
+Ma Yongsheng
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
+Danagement and Employees
+Supervisors,
+Senior Management and Employees
+Ma Yongsheng, aged 58,
+Director and 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 General
+Manager and Party
+Secretary of CPC Committee
+of Sinopec Southern
+Exploration and Production
+Company; in March 2007,
+1 INTRODUCTION OF
+he served as General
+Directors, Supervisors,
+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 Pipeline 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;
+66
+Senior
+Danagement and Employees
+Supervisors,
+In May 2018, he was elected
+as Supervisor of Sinopec
+Corp.
+Co., Ltd.; since March
+2006, he has served as
+General Manager and
+Secretary of CPC Committee
+of Sinopec Finance Co.,
+Ltd. In June 2018, he
+was appointed as Deputy
+Director of Department of
+Capital Management and
+Financial Services of China
+Petrochemical Corporation.
+In December 2019, he
+was appointed as Vice
+President of Department of
+Capital Management and
+Financial Services of China
+Petrochemical Corporation.
+Zhang Baolong, aged 60,
+Supervisor of Sinopec
+Corp. Mr. Zhang is a
+professor-level senior
+economist with a Master
+degree. In July 1995, he
+served as General Manager
+of Hong Kong Century
+Bright Capital Investment
+Limited; in August 1996, he
+served as Deputy General
+Manager of Sinopec Finance
+Co., Ltd.; in December
+2001, he was appointed as
+Deputy General Manager
+and Chief Accountant of
+China International United
+Petroleum & Chemicals Co.,
+Ltd.; in August 2004, he
+was appointed concurrently
+as Secretary of Disciplinary
+Inspection Committee of
+China International United
+Petroleum & Chemicals
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Shengli Oilfield Company;
+in October 2017, he was
+appointed as Secretary of
+CPC Committee and Deputy
+General Manager of Shengli
+Petroleum Administration
+Bureau Co., Ltd., and
+Deputy General Manager
+of Sinopec Shengli Oilfield
+Company. In March 2018,
+he has served as Director
+General of Party Affairs
+and Employee Relations
+Department (Leading Party
+Member Group Office),
+Deputy Secretary of the
+CPC Committee directly
+under China Petrochemical
+Corporation, Deputy
+Director General of Working
+Committee of Trade Union,
+and Deputy Director of the
+Youth Working Committee
+of China Petrochemical
+Corporation. In December
+2019, he has served as
+Director General of Party
+Affairs and Employee
+Relations Department,
+Deputy Secretary of the
+CPC Committee directly
+under China Petrochemical
+Corporation, Deputy
+Director General of Working
+Committee of Trade Union,
+and Deputy Director of the
+Youth Working Committee
+of China Petrochemical
+Corporation. In May 2018,
+he was elected as Supervisor
+of Sinopec Corp.
+Zhang Baolong
+Yang Changjiang
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Senior Management and Employees
+Directors, Supervisors,
+59
+65
+Yang Changjiang, aged 59,
+Supervisor of Sinopec Corp.
+Mr. Yang is a professor-level
+senior administration
+engineer with a Master's
+degree. In October 2007, he
+was appointed as a standing
+committee member of
+CPC Committee of Shengli
+Petroleum Administration
+Bureau; in April 2009, he
+was appointed as Deputy
+Secretary of CPC Committee
+and Secretary of Discipline.
+Inspection Committee
+of Shengli Petroleum
+Administration Bureau,
+as well as a standing
+committee member of CPC
+Committee of Dongying
+City, Shandong Province;
+in December 2012, he was
+appointed as Secretary of
+CPC Committee and Deputy
+Director of Southwest
+Petroleum Bureau, Deputy
+General Manager of Sinopec
+Southwest Oil & Gas
+Company and a member of
+the Coordination Committee
+of Sinopec Southwest
+Petroleum Bureau, Sinopec
+Southwest Oil & Gas
+Company and Sinopec
+Southern Exploration
+Company; in December
+2016, he was appointed as
+Secretary of CPC Committee
+and Deputy Director General
+of Shengli Petroleum
+Administration Bureau, and
+Deputy General Manager of
+Zou Huiping
+Yu Xizhi
+Zou Huiping, aged 59,
+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
+Director General of Finance
+& Planning Department
+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.; Since December
+2019, he was elected as
+Chairman of Board of
+Directors and Secretary of
+CPC committee of Sinopec
+Engineering(Group) Co., Ltd.;
+and in December 2010, he
+was elected as Employee's
+Representative Supervisor of
+Sinopec Corp.
+Yu Renming, aged 56,
+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
+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 of China
+Petrochemical Corporation
+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;
+Since December 2019,
+he was appointed as the
+director of the Office of
+Leading Party Member
+Group Inspection Work
+of China Petrochemical
+Corporation. In January
+2020, he was appointed
+as Secretary of the board
+of directors of China
+Petrochemical Corporation.
+In May 2015, he was elected
+as Supervisor of Sinopec
+Corp. In May 2018, he
+was elected as Employee's
+Representative Supervisor of
+Sinopec Corp.
+Zhou Hengyou, aged 56,
+Employee's Representative
+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 Vice Chairman of
+Trade Union of Jiangsu
+Petroleum Exploration
+Bureau; in February 1999,
+he was appointed as a
+standing committee member
+of CPC Committee and
+Trade Union Chairman
+of Jiangsu Petroleum
+Exploration Bureau of China.
+Petrochemical Corporation;
+in December 2002, he
+was appointed as Deputy
+Secretary of CPC Committee
+and Trade 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
+Committee of Jiangsu
+Petroleum Exploration
+Bureau; in August 2005,
+he was appointed as
+Secretary of CPC Committee
+of Jiangsu Petroleum
+Exploration Bureau; in March
+Yu Renming
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Zhou Hengyou
+Senior
+Danagement and Employees
+Supervisors,
+Senior Management and Employees
+Directors, Supervisors,
+67
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Representative Supervisor of
+Sinopec Corp.
+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 Sinopec
+Corp. Since December
+2019, he was appointed as
+president of human resource
+department of Sinopec Corp.
+and the Director General
+of organization department
+of China Petrochemical
+Corporation. In January
+2020, he was elected as
+Employee's Representative
+Supervisor of China
+Petrochemical Corporation.
+In June 2017, he was
+elected as Employee's
+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
+2006, he was appointed as
+Director General of Auditing
+Department of Sinopec
+Corp and Director General
+of China Petrochemical
+Corporation Audit Bureau.
+In September 2018, he
+was appointed as Chief
+Representative of Sinopec
+Corp. Hong Kong Office. In
+May 2006, he was elected
+as Supervisor of Sinopec
+Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+68
+of China Petrochemical
+Corporation; since December
+2010, he was elected as the
+Employee's Representative
+Supervisor of Sinopec Corp.
+In May 2018, he was elected
+as Supervisor of Sinopec
+Corp.
+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 Office
+of Leading Party Member
+Group Inspection Work
+of China Petrochemical
+Corporation and Since
+December 2018, he was
+appointed as Director of
+Audit Bureau of China
+Petrochemical Corporation,
+and Director of Audit
+Department of Sinopec
+Corp.; Since December
+2019, he was appointed as
+president of Audit Bureau
+in 2019
+(RMB 1,000,
+before tax)
+paid by
+Remuneration
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+64
+19
+Senior Vice President
+the holding
+Former Director and 2018.05-2019.12
+2009.05-2020.01
+Tenure
+Former Director
+Former Chairman
+Position in
+Sinopec Corp.
+56
+Male
+2017.06-2020.03
+Company
+Whether
+paid by
+Equity interests in Sinopec Corp.
+(as at 31 December)
+Jiang Zhenying, aged 55,
+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
+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.
+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
+accountant of China National
+Zhao Dong, aged 49,
+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
+general 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 general
+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
+(2) Supervisors
+Jiang Zhenying
+Zhao Dong
+2000
+0
+Yes
+0
+Yes
+0
+Yes
+2019
+2018
+of Sinopec Corp. and the
+Director of the Office of
+Audit Committee of Leading
+Party Member Group
+Liu Zhongyun
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Remuneration
+Male
+Zhang Baolong
+Male
+Zou Huiping
+Male
+Yu Xizhi
+Male
+Yang Changjiang
+༐g|g| |
+1,321.6
+No
+0
+0
+59
+Supervisor 2018.05-2021.05
+Yes
+Supervisor 2018.05-2021.05
+55
+Male
+Jiang Zhenying
+Name
+Gender
+Age
+Sinopec Corp.
+Tenure
+before tax)
+Company
+2019
+2018
+Zhao Dong
+Male
+49
+Chairman of the 2017.06-2021.05
+Yes
+0
+0
+Board of Supervisors
+0
+LIST OF MEMBERS OF THE BOARD OF SUPERVISORS
+0
+Supervisor 2006.05-2021.05
+Supervisor 2006.05-2021.05
+57 Employee's Representative 2017.06.2021.05
+Supervisor
+1,346.5
+No
+0
+0
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+69
+(as of 31 December)
+0
+holding
+Position in
+Equity interests in Sinopec Corp.
+paid by the
+Whether
+in 2019
+Sinopec Corp.
+paid by
+(RMB 1,000,
+0
+No
+1,330.6
+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 Pipeline Project
+Headquarter of Sinopec
+Corp., General Manager
+Yes
+0
+0
+1,445.7
+No
+0
+0
+1,337.4
+No
+0
+0
+Zhou Hengyou
+Male
+Yu Renming
+Male
+56 Employee's Representative 2018.05-2021.05
+Supervisor
+56 Employee's Representative 2010.12.2021.05
+Supervisor
+60
+61
+Yu Xizhi, aged 57,
+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
+General Manager of Anqing
+Petrochemical General Plant
+and concurrent General
+Manager of Fertiliser Plant;
+in September 1999, he
+became a member of the
+CPC Standing Committee
+of Anqing Petrochemical
+General Plant; in February
+2000, he was appointed as
+Deputy General Manager of
+Sinopec Anqing Company
+and in September 2000, he
+was appointed as General
+Manager of Sinopec Anqing
+Company. In January
+2005, he was appointed as
+General Manager of Anqing
+Petrochemical General
+Plant and from May 2009
+to July 2010, he served
+an interim position at the
+Standing Committee of
+the CPC Anqing Municipal
+Committee. In July 2010,
+he became General Manager
+and Deputy Secretary of the
+Li Yunpeng
+Li Yong, aged 56, Director
+of Sinopec Corp. Mr. Li
+is a senior engineer with
+a master degree. In April
+2003, he was appointed as
+Deputy General Manager
+of Tianjin Branch of China
+National Offshore Oil
+Corporation (China) Limited;
+in October 2005, he was
+appointed as Executive
+Vice President of China
+Oilfield Services Limited;
+in April 2009, he was
+appointed as President
+of China Oilfield Services
+Limited; in September
+2010, he was appointed as
+Chief Executive Officer and
+President of China Oilfield
+Services Limited; in July
+2012, he was appointed as
+the Chief Executive Officer,
+President and Secretary of
+CPC Committee of China
+Oilfield Services Limited;
+in June 2016, he was
+appointed as Assistant
+Fan Gang
+Tang Min
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Li Yong
+Senior
+Danagement and Employees
+President of China National
+Offshore Oil Corporation and
+Supervisors,
+Directors, Supervisors,
+61
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+as Director of Sinopec Corp.
+2012, he was appointed
+of Sinopec Corp.; in May
+In May 2018, he was elected
+Senior Management and Employees
+Executive Vice President of
+China National Offshore Oil
+Corporation Limited, as well
+as Chief Director (General
+Manager) and Secretary of
+CPC Committee of China
+National Offshore Oil
+Corporation Bohai Petroleum
+Administration Bureau
+(China National Offshore Oil
+Corporation (China) Limited
+Tianjin Branch); in March
+2017, he was appointed
+as Vice President of China
+Petrochemical Corporation,
+and since July 2017, he
+concurrently served as Vice
+Chairman of the Board of
+Directors, President and
+Secretary of CPC Committee
+of Sinopec International
+Petroleum Exploration and
+Production Corporation, as
+well as Chairman of Board
+of Directors and President
+of Sinopec International
+Petroleum Exploration and
+Production Limited. In May
+2018, he was elected as
+Director of Sinopec Corp.
+Male
+Fan Gang, aged 66,
+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 between 2015
+and 2018, he served as a
+member of the Monetary
+Policy Committee of the
+People's Bank of China. Mr.
+Fan is recognised as one
+of the National Young and
+Middle-Aged Experts with
+Outstanding Contributions.
+In May 2015, he acted as
+Independent Director of
+Sinopec Corp.
+(RMB 1,000,
+Position in
+LIST OF MEMBERS OF THE BOARD
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Directors, Supervisors,
+Senior Management and Employees
+Senior Management and Employees
+Directors, Supervisors,
+63
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Business Administration
+from the Chinese University
+of Hong Kong in 1984 and
+1999, respectively. Mr. Ng.
+joined KPMG (Hong Kong)
+in 1984 and became a
+Partner in 1996. He acted
+as a Managing Partner from
+June 2000 to September
+2015 and the Vice Chairman
+of KPMG (China) from
+October 2015 to March
+2016. Mr. Ng currently
+serves as Independent
+Non-executive Director and
+of China Vanke Co., Ltd. and
+Fangdd Network Group Ltd.
+In May 2018, Mr. Ng acted
+as Independent Director of
+Sinopec Corp.
+Ng, Kar Ling Johnny, aged
+59, Independent Director
+of Sinopec Corp. Mr. Ng
+currently is a practicing
+certified public accountant
+in Hong Kong, a practicing
+auditor and certified public
+accountant in Macau, a
+fellow member of the Hong
+Kong Institute of Certified
+Public Accountants (FCPA),
+a fellow member of the
+Association of Chartered
+Certified Accountant (FCCA),
+and a Senior member of
+the Institute of Chartered
+Accountants in England
+and Wales (FCA). Mr. Ng
+obtained a Bachelor's degree
+and a Master's degree in
+Kong. Professor Cai Hongbin
+is a member of the 12th
+National People's Congress
+and a member of Beijing
+Municipal Committee of
+Chinese People's Political
+Consultative Conference,
+serving as member of the
+eleventh Central Committee
+of China Democratic League,
+deputy Chairman of Beijing
+Municipal Committee of
+China Democratic League,
+and a special auditor of
+the National Audit Office.
+Mr. Cai once served as
+external director of China
+Petrochemical Corporation,
+independent directors of
+China Unicom and China
+Everbright Bank, etc. Mr.
+Cai currently serves as
+independent director of CCB
+International (Holdings) Ltd.,
+Rightway Holdings Co., Ltd.
+and Ping An Bank Co., Ltd.,
+In May 2018, Mr. Cai acted
+as Independent Director of
+Sinopec Corp.
+Cai Hongbin, aged 52,
+Independent Director of
+Sinopec Corp. Mr. Cai is
+dean of Faculty of Business
+and Economics and
+Professor of Economics of
+the University of Hong Kong.
+Mr. Cai has a Ph.D. degree
+in Economics. From 1997
+to 2005, Mr. Cai taught
+at University of California,
+Los Angeles; since 2005,
+he served as a professor
+and Ph.D. supervisor
+in Applied Economics
+Department at Guanghua
+School of Management
+at Peking University, he
+once served as Director,
+Assistant to the Dean and
+Vice Dean of the Applied
+Economics Department.
+From December 2010 to
+January 2017, he served.
+as the dean of Guanghua
+School of Management at
+Peking University. In June
+2017, he joined the Faculty
+of Business and Economics
+of the University of Hong
+Ng, Kar Ling Johnny
+Cai Hongbin
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+62
+Corp.; in July 2010, he was
+appointed as Vice President
+Sinopec Corp.
+was elected as Director of
+President of Sinopec Corp.
+concurrently as Executive
+Ling Yiqun, aged 57,
+Director and Senior 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.
+Company Limited since
+been acting concurrently
+as director of Petrochina
+Party Member Group
+and the Deputy General
+Manager of China National
+Petroleum Corporation since
+September 2008 and had
+Company; He had been
+a member of the Leading
+Petroleum & Chemical
+Manager of Lanzhou
+In September 1999, Mr. Yu
+was appointed as the Deputy
+General Manager of Daqing
+Petrochemical Company;
+In December 2001, he was
+appointed as the General
+Manager and Deputy
+Secretary of CPC Committee
+and master in economics.
+Yu Baocai, aged 55,
+Director of Sinopec Corp.
+Mr. Yu is a senior engineer
+Ling Yiqun
+Yu Baocai
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+60
+Senior
+in April 2019, he was
+appointed as director,
+president and vice Secretary
+of the Leading Party
+Member Group of China
+Petrochemical Corporation;
+in October 2018, he was
+appointed as President of
+Sinopec Corp. In February
+2016, he was elected as
+Director of Sinopec Corp.
+Director, President and
+Remuneration
+paid by
+Secretary of CPC Committee
+of Sinopec Refinery Product
+Sales Company Limited;
+in August 2013, he was
+appointed concurrently as
+the President of Sinopec
+Qilu Company; in March
+2017, he was appointed
+as Vice President of China
+Petrochemical Corporation;
+of Daqing Petrochemical
+Company; In September
+2003, he was appointed as
+in February 2018, he was
+appointed as Senior Vice
+Since April 2019, he
+has been a member
+of the Leading Party
+Member Group of China
+Petrochemical Corporation;
+Department of Sinopec
+Corp.; in June 2003, he
+was appointed as the
+Director General of Refining
+Department of Sinopec
+appointed as the Deputy
+Director General of Refining
+In February 2000, he was
+In October 2018, Mr. Yu
+Petrochemical Corporation.
+the Vice President of China
+Party Member Group and
+May 2011; Since June
+2018, he has been a
+member of the Leading
+Company and the General
+of Lanzhou Petrochemical
+Secretary of CPC Committee
+he was appointed as the
+General Manager and Deputy
+Company; In June 2007,
+of Lanzhou Petrochemical
+the General Manager and
+Secretary of CPC Committee
+BEE
+in 2019
+Tang Min, aged 66,
+Independent Director of
+Sinopec Corp. Mr. Tang has
+a Ph.D. in economics. He
+presently acts as Counsellor
+of the State Council of the
+PRC and Executive Vice
+Chairman of YouChange
+China Social Entrepreneur
+Foundation, Independent
+Director of Baoshang Bank
+Co., Ltd, and Independent
+Director of China Minmetals
+Development Co., Ltd. He
+was an 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 Deputy
+Secretary-General of the
+China Development Research
+Foundation between 2007
+and 2010. In May 2015,
+he acted as Independent
+Director of Sinopec Corp.
+the holding
+66
+Male
+Tang Min
+56
+Male
+Li Yong
+13,000
+13,000
+Yes
+0
+0
+Yes
+0
+0
+No
+1,563.0
+0
+0
+No
+2020.03-2021.05
+2018
+2019
+Company
+before tax)
+Tenure
+Board Director, President 2016.02-2021.05
+Board Director 2018.10-2021.05
+Board Director, 2018.05-2021.05
+Senior Vice President
+Chairman
+Fan Gang
+Male
+66
+Cai Hongbin
+56
+Male
+Dai Houliang
+Age
+Gender
+Name
+LIST OF FORMER MEMBERS OF THE BOARD
+|이이이이이
+0
+No
+350.0
+0
+No
+Sinopec Corp.
+350.0
+No
+350.0
+0
+Whether
+350.0
+0
+Yes
+Board Director 2018.05-2021.05
+Independent Director 2015.05-2021.05
+Independent Director 2015.05-2021.05
+Independent Director 2018.05-2021.05
+Independent Director 2018.05-2021.05
+59
+Male
+Ng, Kar Ling Johnny
+52
+Male
+0
+57
+No
+Ling Yiqun
+(as at 31 December)
+Name
+Gender
+Age
+Zhang Yuzhuo
+Male
+58
+Ma Yongsheng
+Male
+paid by
+58
+Male
+Yu Baocai
+Male
+55
+Equity interests in Sinopec Corp.
+Refer to Note 14 "Fixed assets" and Note 56 "Principal accounting
+estimates and judgements" to the financial statements.
+Recoverability of the carrying amount of fixed assets relating to oil
+and gas producing activities
+Key Audit Matter
+The key audit matter identified in our audit is “Recoverability of the carrying amount of fixed assets relating to oil and gas producing activities”.
+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.
+Low crude oil prices gave rise to possible indication that the carrying
+amount of fixed assets relating to oil and gas producing activities as at
+31 December 2019 might be impaired. The Group has adopted value
+in use as the respective recoverable amounts of fixed assets relating
+to oil and gas producing activities, which involved key estimations or
+assumptions including:
+Because of the significance of the carrying amount of fixed assets
+relating to oil and gas producing activities as at 31 December 2019,
+together with the use of significant estimations or assumptions in
+determining their respective value in use, we had placed our audit
+emphasis on this matter.
+KEY AUDIT MATTERS
+OTHER INFORMATION
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Based on our work, we found the key assumptions and input data adopted
+were supported by the evidence we obtained.
+Evaluated the sensitivity analyses prepared by the Group, and assessed
+the potential impacts of a range of possible outcomes.
+Used professionals with specialized skill and knowledge to assist in
+the evaluation of the appropriateness of discount rates adopted by the
+management.
+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.
+Compared the future cost profiles against historical costs and relevant
+budgets of the Group.
+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 relevant external data.
+Compared estimates of future crude oil prices adopted by the Group
+against a range of published crude oil price forecasts.
+Assessed the methodology adopted in the discounted cash flow
+projections, tested mathematical accuracy of the projections, and the
+completeness, accuracy, and relevance of underlying data used in the
+projections.
+Evaluated and tested the key controls in respect of the preparation of
+the discounted cash flow projections of fixed assets relating to oil and
+gas producing activities.
+In auditing the respective value in use calculations of fixed assets relating to
+oil and gas producing activities, we performed the following key procedures
+on the relevant discounted cash flow projections prepared by management:
+How our audit addressed the Key Audit Matter
+•
+Future crude oil prices;
+Future production profiles;
+Future cost profiles; and
+Discount rates.
+REPORT OF THE PRC AUDITOR (CONTINUED)
+78
+Management of Sinopec Corp. is responsible for the other information. The other information comprises all of the information included in 2019 annual
+report of Sinopec Corp. other than the financial statements and our auditor's report thereon.
+What we have audited
+OPINION
+To the Shareholders of China Petroleum & Chemical Corporation,
+PwC ZT Shen Zi (2020) No. 10001
+普华永道
+pwc
+REPORT OF THE PRC AUDITOR
+We have audited the accompanying financial statements China Petroleum & Chemical Corporation (hereinafter "Sinopec Corp."), which comprise:
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+2: The above indicated total assets and net profit has been prepared in accordance with CASS. 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, Sinopec Marketing Co., 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.
+Note 1: All above subsidiaries except Fujian Petrochemical Company Limited are audited by PricewaterhouseCoopers Zhong Tian LLP or PricewaterhouseCoopers in 2019.
+KPMG Huazhen LLP served the exception.
+2,452 Manufacturing of intermediate petrochemical
+products and petroleum products
+2,225 Manufacturing of synthetic fibres, resin
+and plastics, intermediate petrochemical
+products and petroleum products
+477 Manufacturing of plastics, intermediate
+petrochemical products and
+petroleum products
+1,131 Oil jetty and nature gas pipeline
+664 Production, sale, research and development of
+petroleum, petrochemical, ethylene and
+downstream by-products
+3,137 Production and sale of petrochemical products
+1,070 Manufacturing of intermediate petrochemical
+products and petroleum products
+1,961 Manufacturing of intermediate petrochemical
+products and petroleum products
+22,984 Marketing and distribution of refined
+petroleum products
+76
+Financial Statements (PRC)
+•
+•
+Financial Statements (PRC)
+77
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+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
+PricewaterhouseCoopers Zhongtian LLP
+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.
+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.
+the consolidated and company balance sheets as at 31 December 2019;
+BASIS FOR OPINION
+Our opinion
+notes to the financial statements.
+the consolidated and company statements of changes in shareholders' equity for the year then ended; and
+•
+the consolidated and company cash flow statements for the year then ended;
+•
+the consolidated and company income statements for the year then ended;
+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 2019, and their financial performance and cash flows for the year then ended in accordance with the requirements of
+Accounting Standards for Business Enterprises ("CASS").
+Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
+•
+RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+73
+13
+Directors, Supervisors,
+Senior Management and Employees
+Directors, Supervisors,
+Senior Management and Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+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.
+4 CONTRACTUAL INTERESTS
+OF DIRECTORS AND
+SUPERVISORS
+As of 31 December 2019 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.
+5 REMUNERATION OF DIRECTORS,
+SUPERVISORS, AND THE
+SENIOR MANAGEMENT
+During this reporting period,
+there is a total of 15 directors,
+supervisors and other senior
+management received
+remuneration from Sinopec
+Corp. with a total amount of
+RMB 17.3798 million, including
+11 persons' bonus from 2016
+to 2018 of them (does not
+contain independent directors).
+THE BREAKDOWN ACCORDING TO THE MEMBERS OF EACH OPERATION SEGMENT AS FOLLOWS:
+On 25 March 2020, Mr. Liu
+Hongbin was appointed as
+Senior Vice President of Sinopec
+Corp.
+6 THE COMPANY'S EMPLOYEES
+As at 31 December 2019, the
+Company has a total of 402,206
+employees. There are a total of
+250,175 retired employees to
+be reimbursed by Sinopec Corp.
+Sinopec Marketing Co. Limited,
+principal subsidiary of Sinopec
+Corp., has 131,039 employees.
+131,039
+33%
+R&D
+5,874
+2%
+65,268
+Other Segments
+5,601
+1%
+Exploration and Production
+136,980
+34%
+Refining
+1,362 Import and processing of crude oil, production,
+storage and sale of petroleum products and
+petrochemical products
+Marketing and Distribution
+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.
+Responsibility Management
+Committee of the Board of
+Sinopec Corp.
+Chairman of each of the
+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.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
+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.
+As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
+•
+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.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
+management.
+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 overall presentation (including the disclosures), structure and content of the financial statements, and whether the 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 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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Strategy Committee, Nomination
+Committee and Social
+12
+Financial Statements (PRC)
+the holding
+Company
+No
+Equity interests in Sinopec Corp.
+(as of 31 December)
+2019
+0
+2018
+0
+2 INFORMATION ON
+APPOINTMENT OR
+TERMINATION OF DIRECTORS,
+SUPERVISORS AND SENIOR
+MANAGEMENT
+On 9 December 2019, Mr. Liu
+Zhongyun resigned as Executive
+Director, member of Strategy
+Committee of the Board and
+the Senior Vice President of
+Sinopec Corp. due to change of
+working arrangement
+On 9 December 2019, Mr.
+Wang Dehua resigned as CFO of
+Sinopec Corp. due to change of
+working arrangement.
+On 13 January 2020, Ms. Shou
+Donghua was appointed as CFO
+of Sinopec Corp.
+On 19 January 2020, Mr. Dai
+Houliang resigned as Chairman
+of the Board, Non-executive
+Director and Chairman of each
+of the Strategy Committee,
+Nomination Committee
+and Social Responsibility
+Management Committee of the
+Board of Sinopec Corp. due to
+change of working arrangement.
+On 24 March 2020, Mr.
+Li Yunpeng resigned as
+Non-executive Director and
+member of Remuneration and
+Appraisal Committee of Sinopec
+Corp.
+On 25 March 2020, Mr.
+Zhang Yuzhuo was appointed
+as Chairman of the Board,
+Non-executive Director and
+79
+763 Production and sale of catalyst products
+136 Trading of petrochemical products
+100
+29 Manufacturing of intermediate petrochemical
+products and petroleum products
+787 Marketing and distribution of
+petrochemical products
+3,129 Trading of crude oil and
+petrochemical products
+22,761
+Sinopec Great Wall Energy & Chemical
+Exploration and Production Limited
+Total Assets Net Assets
+RMB million RMB million
+14,977
+32,385
+100
+8,000
+(%)
+RMB million
+Sinopec International Petroleum
+Name of Company
+by Sinopec
+Corp.
+Registered
+Capital
+Percentage
+of
+shares held
+On 31 December, 2019, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+and Controlled Subsidiaries
+Principal Wholly-Owned
+Senior Management and Employees
+Directors, Supervisors,
+75
+33,061
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+14,219
+Sinopec Yangzi Petrochemical
+9,219
+100
+3,374
+Sinopec Lubricant Company Limited
+Limited Liability Company
+5,468
+8,372
+100
+4,000
+Sinopec Yizheng Chemical Fibre
+Transportation Company Limited
+21,767
+43,756
+100
+12,000
+Sinopec Pipeline Storage &
+Company Limited
+19,985
+30,763
+100
+15,651
+Company Limited
+innovation leading project,
+senior expert integration
+innovation project, scientific
+research team leader innovation
+and development project, and
+realised the breakthrough in
+"top" talent training mode.
+To enhance the management
+of transnational operation,
+finance, taxation, law marketing
+and trading, the company
+organised a series of training
+programs covering 780
+overseas managers. In addition,
+the Company focused on the
+inheritance of craftsman spirit
+and skills, and continuously
+enhanced the training of famous
+craftsmen, chief technicians and
+top skilled personnel.
+10 TRAINING PROGRAMS
+In 2019, the Company
+continuously improved the
+management training system.
+With an arm to cultivate a
+team with 'firm political stance,
+strong will and highly skilled',
+the Company launched training
+courses for 145 leaders,
+middle-youth-age cadres and
+young cadres. Centring on
+enterprise development strategy
+and key work of the year, the
+Company organised training
+programs at headquarters
+level which were attended
+by 3,700 Key employees. To
+highlight high-end guidance
+and demonstration drive, the
+Company held strategic expert
+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.
+36%
+146,610
+Production
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+74
+3%
+13,050
+Others
+8%
+32,176
+Administration
+2%
+8,937
+Finance
+21%
+82,341
+Technology
+EMPLOYEES' PROFESSIONAL STRUCTURE AS FOLLOWS:
+14%
+57,444
+Whether
+paid by
+Sales
+119,092
+30%
+EDUCATIONAL BACKGROUND STRUCTURE FOR EMPLOYEES AS FOLLOWS:
+pension schemes are
+responsible for the payments of
+basic pensions.
+Government-administered
+municipalities) governments.
+8 EMPLOYEE BENEFITS SCHEME
+Details of the Company's
+employee benefits scheme
+are set out in Note 39 of the
+financial statements prepared
+under IFRS of this annual
+report. As at 31 December
+2019, the Company has a total
+of 250,175 retired employees.
+All of them participated in
+the basic pension schemes
+administered by provincial
+(autonomous region or
+During the reporting period,
+there are no significant changes
+of core technical team or key
+technicians.
+TECHNICAL TEAM OR KEY
+TECHNICIANS
+7 CHANGES OF CORE
+8%
+33,405
+Technical secondary school
+4,091
+22%
+Junior college
+27%
+107,740
+Undergraduate
+5%
+18,123
+Master's degree or above
+38%
+153,296
+Senior high school and
+technical school degrees or below
+89,642
+Sinopec Qingdao Petrochemical
+1,595
+100
+million
+10,942
+14,061
+60.33
+HKD 248
+Sinopec Kantons Holdings Limited
+Company Limited
+11,860
+26,904
+59
+7,193
+Sinopec-SK(Wuhan) Petrochemical
+Company Limited
+18,508
+23,331
+67.60
+7,801
+Sinopec Shanghai SECCO Petrochemical
+218,784
+469,622
+70.42
+Sinopec Shanghai Gaoqiao Petroleum
+10,000
+55
+37,744
+478 Production and sale of refined petroleum
+products, lubricant base oil,
+and petrochemical materials
+4 Production and sale of polyester chips and
+polyester fibres
+of crude oil
+2,525 Pipeline storage and transportation
+sale of coal chemical products
+1,609 Manufacturing of intermediate petrochemical
+products and petroleum products
+management, production and
+Principal Activities
+Investment in exploration, production and
+sale of petroleum and natural gas
+(795) Coal chemical industry investment
+2,831
+Net Profit/
+(Net Loss)
+RMB million
+11,854
+28,403
+13,346
+8,140
+Fujian Petrochemical Company Limited
+Company Limited
+30,016
+45,636
+50.44
+10,824
+Sinopec Shanghai Petrochemical
+and Chemical Limited
+17,791
+50
+(139) Overseas investment holding
+Sinopec Marketing Co., Limited
+17,914
+million
+Holding Limited
+12,552
+20,985
+100
+USD 1,662
+Sinopec Overseas Investment
+and Chemical Company Limited
+32,415
+153,897
+100
+5,000
+China International United Petroleum
+3,460
+17,019
+100
+1,000
+Sinopec Chemical Sales Company
+Limited
+Company Limited
+519
+4,226
+Sinopec Catalyst Company Limited
+1,500
+100
+10,417
+30,426
+75
+9,628
+Sinopec Hainan Refining and
+Chemical Company Limited
+10,285
+18,951
+85
+5,000
+Sinopec Qingdao Refining and
+Chemical Company Limited
+Limited Liability Company
+18,063
+98.98
+5,294
+Sinopec Beihai Refining and Chemical
+Company Limited
+5,129
+4,279
+19,468
+100
+1,400
+China Petrochemical International
+13,020
+in 2019
+(RMB 1,000,
+before tax)
+1,487.0
+16%
+Remuneration
+Danagement and Employees
+Senior
+Zhao Rifeng
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Huang Wensheng
+Zhao Rifeng, aged 57, Vice
+President of Sinopec Corp.
+Mr. Zhao is a Professor
+level Senior Engineer with a
+master degree. In July 2000,
+he was appointed as Deputy
+General Manager of Sinopec
+Jinling Petrochemical Co.,
+Ltd and Deputy Manager of
+Sinopec Jinling Company;
+in October 2004, he was
+appointed as General
+Manager of Sinopec Jinling
+Company; in October
+2006, he was appointed
+as Vice Chairman and
+General Manager of Sinopec
+Jinling Petrochemical Co.,
+Ltd; in November 2010,
+he was appointed as
+Chairman, General Manger,
+Deputy Secretary of CPC
+Committee of Sinopec
+Jinling Petrochemical Co.,
+Ltd; in August 2013, he
+was appointed as Director
+General of Refining
+Department of Sinopec
+Corp.; and in December
+2017, he was appointed
+as the Director General of
+the Marketing Department
+of China Petrochemical
+Corporation and Chairman
+and Secretary of CPC
+Committee of Sinopec
+Marketing Company Limited.
+In December 2019, he was
+appointed as the president
+of the Marketing Department
+of China Petrochemical
+Corporation and Chairman
+and Secretary of CPC
+Committee of Sinopec
+Marketing Company Limited.
+In February 2018, he was
+appointed as Vice President
+of Sinopec Corp.
+Huang Wensheng, aged 53,
+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.; In June
+2018, he was appointed
+concurrently as Director
+General of Department of
+Capital Management and
+Financial Services of China
+Petrochemical Corporation.
+Since July 2018, he was
+appointed concurrently as
+Chairman, and Secretary
+of CPC Committee of
+Sinopec Capital Co.,
+Ltd.; In December 2019,
+he was appointed as
+President of Department of
+Capital Management and
+Financial Services of China
+Petrochemical Corporation.
+In May 2014, he was
+appointed as Vice President
+of Sinopec Corp.
+72
+Supervisors,
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Name
+Liu Hongbin
+Lei Dianwu
+Chen Ge
+Shou Donghua
+Zhao Rifeng
+Huang Wensheng
+Gender
+Male
+Age
+57
+LIST OF MEMBERS OF THE SENIOR MANAGEMENT
+Position in
+Sinopec Corp.
+Senior Management and Employees
+71
+paid by
+Sinopec Corp.
+Chemicals
+Supervisors,
+Danagement and Employees
+Senior
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Liu Hongbin
+Lei Dianwu
+(3) Other Members of Senior
+Management
+Liu Hongbin, aged 57. Mr.
+Liu is a senior engineer
+with a bachelor degree.
+In June 1995, he was
+appointed as the chief
+engineer of Tuha Petroleum
+Exploration & Development
+Headquarters; in July
+1999, he was appointed
+as the deputy general
+manager of PetroChina Tuha
+Oilfield Company; in July
+2000, he was appointed
+as the commander and
+Deputy Secretary of
+CPC Committee of Tuha
+Petroleum Exploration &
+Development Headquarters;
+in March 2002, he served
+as the general manager of
+the Planning Department
+of PetroChina Company
+Limited ("PetroChina");
+in September 2005, he
+served as the director of
+the Planning Department of
+China National Petroleum
+Corporation ("CNPC");
+in June 2007, he was
+appointed as the Vice
+President of PetroChina,
+and in November 2007,
+he served concurrently as
+the general manager and
+Directors, Supervisors,
+Secretary of CPC Committee
+of the Marketing Branch of
+PetroChina; in June 2009,
+he served concurrently as
+the general manager and
+Deputy Secretary of CPC
+Committee of the Marketing
+Branch of PetroChina; in
+July 2013, he was appointed
+as Member of the Leading
+Party Member Group and
+the deputy general manager
+of CNPC and in August
+2013, he served concurrently
+as an executive director and
+general manager of Daqing
+Oilfield Company Limited,
+director of Daqing Petroleum
+Administration Bureau
+and Deputy Secretary of
+CPC Committee of Daqing
+Oilfield; in May 2014, he
+served concurrently as a
+director of PetroChina; in
+November 2019, he was
+appointed as Member of
+the Leading Party Member
+Group and Vice President
+of China Petrochemical
+Corporation; in March
+2020, he was concurrently
+appointed as the Senior Vice
+President of Sinopec Corp.
+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 May 2009,
+he was appointed as Vice
+President of Sinopec
+Corp.; 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; in June
+2018, he was appointed
+concurrently as Director
+General of International
+Cooperation Department of
+Sinopec Corp. In October
+2018, he was appointed
+as Senior Vice President of
+Sinopec Corp.
+70
+70
+Chen Ge
+Shou Donghua
+Chen Ge, aged 57, Senior
+Vice President of Sinopec
+Corp. Mr. Chen is a senior
+economist with a master
+degree. In February 2000,
+he was appointed as
+Deputy Director General of
+the Board Secretariat of
+Sinopec Corp. In December
+2001, he was appointed
+as Director General of
+the Board Secretariat of
+Sinopec Corp. In April
+2003, he was appointed as
+Secretary to the Board of
+Directors of Sinopec Corp.
+From April 2005 to August
+2013, he was appointed
+concurrently as Director
+General of Corporate
+Reform & Management
+Dept. of Sinopec Corp.
+In July 2010, he was
+appointed as Assistant
+to President of China
+Petrochemical Corporation.
+From December 2013 to
+December 2015, he was
+appointed temporarily as
+Deputy Secretary-General of
+Guizhou Provincial People's
+Government and a member
+of the Leading Party
+Member Group of Guizhou
+Provincial General Office.
+In November 2015, he was
+appointed as Employee's
+Representative Director
+of China Petrochemical
+Corporation. In December
+2017, he was appointed
+concurrently as Director
+General of Corporate Reform
+& Management Dept. of
+Sinopec Corp. In October
+2018, he was appointed
+as Senior Vice President of
+Sinopec Corp.
+Shou Donghua, aged 50,
+Chief Financial Officer of
+Sinopec Corp. Ms. Shou
+is a professor level senior
+accountant with a MBA
+degree. In July 2010, she
+was appointed as the Chief
+Financial Officer of Sinopec
+Zhenhai Refining & Chemical
+Company; in October 2014,
+she was appointed as Deputy
+Director General of Human
+Resource Department of
+Sinopec Corp.; in August
+2017, she was appointed
+as the Secretary of CPC
+Committee of Sinopec
+Zhenhai Refining & Chemical
+Company and Deputy
+General Manager of Sinopec
+Zhenhai Refining & Chemical
+Company; in August 2018,
+she was appointed as the
+Director General of Finance
+Department of China
+Petrochemical Corporation
+and concurrently served as
+the Chairman of Sinopec
+Century Bright Capital
+Investment Limited; in
+December 2019, she was
+appointed as General
+Manager of Finance
+Department of Sinopec
+Corp. and concurrently
+served as the Chairman
+of Sinopec Century Bright
+Capital Investment Limited.;
+in January 2020, she was
+appointed as Chief Financial
+Officer of Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Lei Dianwu, aged 57, Senior
+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
+Remuneration
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Sinopec Corp.
+50
+CFO
+Yes
+0
+57
+Vice President
+Vice President, Board Secretary
+1,457.5
+No
+0
+1,497.3
+0
+No
+oooooo
+53
+LIST OF FORMER MEMBERS OF THE SENIOR MANAGEMENT
+Name
+Wang Dehua
+Gender
+Age
+Male
+paid by
+Position in
+Sinopec Corp.
+Former CFO
+0
+No
+0
+0
+Whether
+in 2019
+1,600.4
+paid by
+(RMB 1,000,
+before tax)
+the holding
+(as of 31 December)
+Company
+2019
+Male
+Male
+Female
+Equity interests in Sinopec Corp.
+655653
+57
+57
+Senior Vice President
+Senior Vice President
+Senior Vice President
+Yes
+0
+2018
+No
+Male
+Male
+1,592.8
+0
+Other comprehensive income
+Items that may be reclassified subsequently to profit or loss
+Notes
+2019
+2018
+1,021,272
+RMB million
+40
+1,058,493
+40
+799,566
+Termination of net profit
+812,355
+RMB million
+Continuous operating net profit
+Add: Other income
+Less: Income tax expense
+Net profit
+For the year ended 31 December 2019
+Operating income
+Less: Operating costs
+Taxes and surcharges
+Selling and distribution expenses
+General and administrative expenses
+Research and development expenses
+Financial expenses
+Exploration expenses, including dry holes
+Investment income
+Losses from changes in fair value
+Credit impairment losses
+Impairment losses
+Asset disposal gains
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+Classification by going concern:
+168,905
+(1) Statement of compliance of China Accounting Standards for Business Enterprises ("CASS")
+3,078
+Basic
+-
+2 BASIS OF PREPARATION
+Details of the Company's principal subsidiaries are set out in Note 57, and there are no significant changes related to the consolidation scope in the
+current year.
+(3) the production and sale of chemical.
+(2) the refining, transportation, storage and marketing of crude oil and petroleum product; and
+(1) the exploration, development and production of crude oil and natural gas;
+The Company and its subsidiaries (the "Group") engage in the oil and gas and chemical operations and businesses, including:
+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.
+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.
+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, 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").
+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 27 March 2020.
+1 STATUS OF THE COMPANY
+INCOME STATEMENT
+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 CASS 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 2019,
+and the consolidated and company financial performance and the consolidated and company cash flows for the year ended 31 December 2019.
+3,420
+These financial statements are prepared on a basis of going concern.
+The accounting year of the Group is from 1 January to 31 December.
+28,302
+36,169
+8,597
+7,453
+Financial Statements (PRC)
+89
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+The functional currency of the Company's and most of its subsidiaries are Renminbi. The Company and its subsidiaries determine their functional
+currency according to the main economic environment in where they operate. The Group's consolidated financial statements are presented in
+Renminbi. 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.
+(4) Functional currency and presentation currency
+Receivables financing (see Note 3(11))
+Derivative financial instruments (see Note 3(11))
+Other equity instrument investments (see Note 3(11))
+-
+The financial statements of the Group have been prepared under the historical cost convention, except for the assets and liabilities set out below:
+Financial assets held for trading (see Note 3(11))
+(3) Measurement basis
+(2) Accounting period
+Financial Statements (PRC)
+17,894
+Financial Statements (PRC)
+2,607
+3,042
+90,016
+100,502
+52
+For the year ended 31 December 2019
+20,213
+72,122
+80,289
+72,122
+80,289
+57,591
+63,089
+14,531
+17,200
+51
+63
+2,070
+50
+Classification by going concern:
+Continuous operating net profit
+Termination of net profit
+Classification by ownership:
+Equity shareholders of the Company
+Minority interests
+Basic earnings per share
+Diluted earnings per share
+Other comprehensive income
+Items that may not be reclassified subsequently to profit or loss
+Changes in fair value of other equity instrument investments
+Items that may be reclassified subsequently to profit or loss
+Other comprehensive income that can be converted into profit or loss under the equity method
+Cash flow hedges
+90,025
+101,474
+2,598
+84
+63
+338
+(6,624)
+77,702
+73,665
+63,006
+55,471
+14,696
+18,194
+These financial statements have been approved for issue by the board of directors on 27 March 2020.
+Zhang Yuzhuo
+Chairman
+Ma Yongsheng
+President
+The accompanying notes form part of these financial statements.
+Shou Donghua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+83
+5,580
+38
+3,399
+(9,741)
+0.476
+0.521
+0.476
+0.521
+Foreign currency translation differences
+Total other comprehensive income
+Total comprehensive income
+Attributable to:
+Equity shareholders of the Company
+Minority interests
+(31)
+(53)
+(810)
+(229)
+4,941
+1,480
+NOTES TO THE FINANCIAL STATEMENTS
+68,795
+Shou Donghua
+Total
+7,628
+1,029
+9,417
+9,796
+3,497
+2,777
+47
+28,062
+28,336
+(278)
+(20)
+132
+(42)
+(534)
+6,407
+comprehensive
+(6,766)
+Specific
+Retained shareholders'
+199,682
+482
+196
+68,789
+121,071
+RMB million
+RMB million
+RMB million
+RMB million
+equity
+earnings
+reserves
+reserve
+income
+RMB million
+Share capital Capital reserve
+RMB million RMB million
+Surplus
+177,049
+12
+44,005
+(681)
+Total comprehensive income
+39,037
+39,276
+These financial statements have been approved for issue by the board of directors on 27 March 2020.
+Zhang Yuzhuo
+Chairman
+Ma Yongsheng
+President
+The accompanying notes form part of these financial statements.
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Shou Donghua
+Chief Financial Officer
+CONSOLIDATED CASH FLOW STATEMENT
+For the year ended 31 December 2019
+Net profit
+1,585
+39,808
+Total other comprehensive income
+1,384
+665
+599
+1,135
+1,687
+39,338
+42,917
+1,886
+2,960
+37,452
+39,957
+37,452
+39,957
+Other comprehensive income that can be converted into profit or loss under the equity method
+Cash flow hedges
+201
+(64)
+(617)
+Chief Financial Officer
+567,269
+68,789
+4. Net increase in specific reserve for the year
+5. Others
+(46,008)
+(49,753)
+3,745
+(46,008)
+(46,008)
+(3,745)
+3,745
+81
+39,037
+37,452
+1,585
+81
+1,585
+1,585
+(40)
+37,452
+(40)
+(202)
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+The accompanying notes form part of these financial statements.
+Ma Yongsheng
+President
+Chairman
+Zhang Yuzhuo
+These financial statements have been approved for issue by the board of directors on 27 March 2020.
+530,110
+130,645
+207,423
+949
+1,181
+68,841
+121,071
+Balance at 31 December 2019
+(156)
+46
+121,071
+37,452
+143,148
+(67,799)
+(3,996)
+3,996
+39,276
+39,957
+(681)
+(681)
+(681)
+39,957
+39,957
+567,269
+177,049
+199,682
+482
+196
+(67,799)
+537,196
+3,996
+(67,799)
+203,678
+989
+(485)
+68,795
+121,071
+537,196
+143.148
+203,678
+989
+(485)
+121,071
+(2,057)
+(2,063)
+507
+507
+(71,795)
+161,820
+(2,283)
+-Appropriations for surplus reserves
+Sub-total of cash inflows
+28,724
+42,037
+2,838
+690
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+43,693
+31,385
+Cash received from returns on investments
+65,930
+23,584
+97,696
+108,132
+(26,211)
+(1,141,545)
+(1,117,102)
+(18,719)
+(206,305)
+(41,770)
+(867,259)
+(842,996)
+(45,524)
+(209,863)
+1,249,677
+------
+1,170,878
+19,380
+53,776
+6,239
+141,185
+(64,100)
+109,579
+17,465
+(36,426)
+(123,720)
+(134,122)
+(28,759)
+(53,138)
+Net decrease in cash and cash equivalents
+Net cash flow from financing activities
+Sub-total of cash outflows
+Other cash paid relating to financing activities
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+Cash paid for dividends or interest
+Sub-total of cash inflows
+Other cash received relating to financing activities
+Cash received from borrowings
+Cash flows from financing activities:
+------------
+Net cash flow from investing activities
+Sub-total of cash outflows
+Other cash paid relating to investing activities
+(40,169)
+(16,884)
+(54,792)
+Cash repayments of borrowings
+1,228,816
+1,481
+2018
+RMB million
+1,162,870
+1,769
+518
+(51,609)
+54(b)
+Net decrease in cash and cash equivalents
+147
+Effects of changes in foreign exchange rate
+(111,260)
+(859,991)
+(688,818)
+(84,713)
+Net cash flow from financing activities
+Sub-total of cash outflows
+(1,296)
+(436)
+54(d)
+Other cash paid relating to financing activities
+(13,700)
+(7,354)
+profits to minority shareholders
+Including: Subsidiaries' cash payments for distribution of dividends or
+(87,483)
+(59,523)
+Cash paid for dividends, profits distribution or interest
+(772,072)
+(612,108)
+(17,187)
+These financial statements have been approved for issue by the board of directors on 27 March 2020.
+Zhang Yuzhuo
+Chairman
+Ma Yongsheng
+President
+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
+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:
+2019
+RMB million
+Notes
+For the year ended 31 December 2019
+CASH FLOW STATEMENT
+Financial Statements (PRC)
+86
+Financial Statements (PRC)
+85
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Chief Financial Officer
+Shou Donghua
+The accompanying notes form part of these financial statements.
+109,915
+Cash repayments of borrowings
+91,865
+109,915
+the Company
+RMB million
+interests
+RMB million
+equity
+RMB million
+121.071
+119,557
+(4,413)
+888
+199,682
+290,459
+earnings
+RMB million
+727,244
+854,070
+(12)
+12
+121,071
+119,557
+(4,425)
+888
+199,682
+290,471
+727,244
+126,826
+126.826
+854,070
+RMB million
+reserves
+Contributions to subsidiaries from minority interests
+5.
+Transaction with minority interests
+6.
+Distributions to minority interests
+Total transactions with owners, recorded directly in shareholders' equity
+7. Net increase in specific reserve for the year
+8. Others
+Balance at 31 December 2019
+Total
+shareholders'
+Other
+RMB million
+Share
+reserve
+RMB million
+RMB million
+Capital comprehensive
+income
+RMB million
+Specific
+Surplus
+Retained
+equity
+attributable
+to equity
+shareholders of
+Minority
+Total
+shareholders'
+reserve
+capital
+63,089
+63,089
+4.
+Change for the year
+Balance at 1 January 2018
+Change in accounting policy
+Balance at 31 December 2017
+For the year ended 31 December 2019
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Chief Financial Officer
+Shou Donghua
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+The accompanying notes form part of these financial statements.
+Ma Yongsheng
+President
+1. Net profit
+Chairman
+These financial statements have been approved for issue by the board of directors on 27 March 2020.
+(13,189)
+(138,786)
+(60,486)
+(43,136)
+(248,701)
+(261,930)
+(104,780)
+(71,944)
+(50,230)
+(176,757)
+(106,920)
+Zhang Yuzhuo
+2. Other comprehensive income (Note 38)
+Total comprehensive income
+-----------------
+- Distributions to shareholders (Note 53)
+- Appropriations for surplus reserves
+3. Appropriations of profits:
+Transactions with owners, recorded directly in shareholders' equity:
+Amounts transferred to initial carrying amount of hedged items
+---------------
+Total comprehensive income
+2. Other comprehensive income (Note 38)
+1. Net profit
+Change for the year
+Balance at 1 January 2019
+Balance at 31 December 2018
+8. Others
+7. Net increase in specific reserve for the year
+Total transactions with owners, recorded directly in shareholders' equity
+Distributions to minority interests
+6.
+5. Transaction with minority interests
+Contributions to subsidiaries from minority interests
+4.
+- Distributions to shareholders (Note 53)
+- Appropriations for surplus reserves
+3. Appropriations of profits:
+Transactions with owners, recorded directly in shareholders' equity:
+Amounts transferred to initial carrying amount of hedged items
+201,444
+-Distributions to shareholders (Note 53)
+190
+748,731
+Sub-total of cash inflows
+(7,476)
+(73,526)
+909
+(92)
+(2,728)
+857,659
+857,659
+72,122
+5,580
+77,702
+1,093
+(311)
+121,071
+2,933
+2
+122,127
+(321)
+3,745
+(3,745)
+(46,008)
+(46,008)
+(46,008)
+5,495
+5,495
+2,933
+2,933
+(299)
+8གླུ 8g g88
+1,706
+203,678
+279,482
+718,355
+139,304
+121,071
+119,192
+(6,774)
+1,706
+203,678
+279,482
+2,060
+718,355
+57,591
+57,591
+14,531
+5,415
+5.415
+1,038
+5,415
+57,591
+63,006
+14,696
+1,038
+139,304
+(2,933)
+(18,989)
+(18,989)
+STATEMENT OF CHANGES IN EQUITY
+For the year ended 31 December 2019
+Balance at 31 December 2017
+Change in accounting policy
+Balance at 1 January 2018
+Change for the year
+1. Net profit
+2. Other comprehensive income
+Total comprehensive income
+Transactions with owners, recorded directly in shareholders' equity:
+3. Appropriations of profits:
+-Appropriations for surplus reserves
+Financial Statements (PRC)
+-Distributions to shareholders (Note 53)
+4. Net increase in specific reserve for the year
+5. Others
+Balance at 31 December 2018
+Balance at 1 January 2019
+Change for the year
+1. Net profit
+2.
+Other comprehensive income
+Total comprehensive income
+Amounts transferred to initial carrying amount of hedged items
+Transactions with owners, recorded directly in shareholders' equity:
+3. Appropriations of profits:
+Total transactions with owners, recorded directly in shareholders' equity
+88
+Financial Statements (PRC)
+87
+3,745
+(49,753)
+(43,075)
+(16,427)
+(59,502)
+35
+35
+34
+69
+1,741
+207,423
+(192)
+287,128
+(190)
+74
+(116)
+739,169
+137,736
+876.905
+These financial statements have been approved for issue by the board of directors on 27 March 2020.
+Zhang Yuzhuo
+Chairman
+Ma Yongsheng
+President
+The accompanying notes form part of these financial statements.
+Shou Donghua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+(6,774)
+604,105
+119,192
+(2,636)
+144,775
+11
+Net cash received from disposal of subsidiaries and other business entities
+Sub-total of cash inflows
+87,696
+97,804
+Other cash received relating to investing activities
+9,666
+703
+10,720
+10,272
+56,546
+164,639
+35,996
+153,420
+54(a)
+(3,105,442)
+(3,121,796)
+(133,615)
+(124,416)
+(329,387)
+(315,668)
+(77,048)
+(83,082)
+(2,565,392)
+175,868
+(2,598,630)
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+(103,014)
+320
+Other cash received relating to financing activities
+746,655
+599,866
+1,886
+3,919
+Including: Cash received from minority shareholders' capital contributions to subsidiaries
+Cash received from borrowings
+1,886
+3,919
+Cash received from capital contributions
+Cash flows from financing activities:
+(141,142)
+(66,422)
+Net cash flow from investing activities
+(231,061)
+(265,238)
+(3,188)
+(1,031)
+Net cash paid for the acquisition of subsidiaries and other business entities
+Sub-total of cash outflows
+(85,193)
+(106,731)
+Other cash paid relating to investing activities
+(39,666)
+(16,334)
+(120,463)
+3,281,310
+3,275,216
+and other long-term assets
+(6,624)
+63.089
+55,471
+18.194
+73.665
+5,269
+5,269
+3,996
+(3,996)
+(67,799)
+(67,799)
+994
+(67,799)
+(12)
+(12)
+(7,476)
+(12)
+3,996
+(71,795)
+(67,811)
+(5,715)
+818
+818
+(353)
+2,060
+(7,618)
+5.269
+(7,618)
+Net cash received from disposal of fixed assets, intangible assets
+Cash received from returns on investments
+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
+90,625
+98,327
+3,189,004
+1.681
+2018
+RMB million
+3,174,862
+2,027
+Other cash received relating to operating activities
+Refund of taxes and levies
+Cash received from sale of goods and rendering of services
+Cash flows from operating activities:
+2019
+RMB million
+Notes
+17,200
+80,289
+(7,618)
+121,071
+Less: Income tax expense
+Other
+Less: Non-operating expenses
+Specific reserve
+Other comprehensive income
+119,192
+122,127
+37
+121,071
+121,071
+36
+734,649
+878,166
+169,551
+301,792
+27,276
+15,364
+35
+5,948
+6,809
+20
+42,800
+43,163
+34
+177,674
+33
+Surplus reserves
+31,951
+Retained earnings
+Minority interests
+Chairman
+Zhang Yuzhuo
+Profit before taxation
+These financial statements have been approved for issue by the board of directors on 27 March 2020.
+1,592,308
+857,659
+876,905
+1,755,071
+139,304
+137,736
+718,355
+739,169
+279,482
+287,128
+203,678
+207,423
+39
+1,706
+1,741
+(6,774)
+(321)
+38
+Total liabilities and shareholders' equity
+Total shareholders' equity
+Total equity attributable to shareholders of the Company
+Ma Yongsheng
+President
+19,157
+61,576
+126,735
+26
+186,341
+187,958
+6,416
+11,834
+24
+13,571
+2,729
+44,692
+31,196
+23
+272222222
+Non-current liabilities due within one year
+Other payables
+Taxes payable
+Employee benefits payable
+Contract liabilities
+25
+Accounts payable
+Bills payable
+Derivative financial liabilities
+1,592,308
+124,793
+32
+4,769
+28
+39,625
+Capital reserve
+Share capital
+Shareholders' equity
+Total liabilities
+Total non-current liabilities
+Other non-current liabilities
+Deferred tax liabilities
+Provisions
+Debentures payable
+Lease liabilities
+Long-term loans
+Non-current liabilities
+565,098
+576,374
+Total current liabilities
+17,450
+69,490
+30
+77,463
+72,324
+29
+87,060
+69,339
+7,312
+The accompanying notes form part of these financial statements.
+Shou Donghua
+Chief Financial Officer
+11,021
+7,315
+2,480
+2,630
+8,571
+8,809
+51,598
+60,493
+112,832
+302,082
+291,547
+456
+395
+395
+289,207
+304,687
+3
+13
+257,104
+232,565
+15,835
+25,149
+45,825
+49,116
+2,490
+57,432
+9,145
+674,499
+Total current liabilities
+16,729
+59,596
+Non-current liabilities due within one year
+119,514
+118,064
+Other payables
+54,764
+43,025
+Taxes payable
+4,294
+1,214
+Employee benefits payable
+4,230
+5,112
+82,343
+75,352
+2,075
+4,766
+3,961
+967
+19,919
+157
+931,603
+1,023,763
+791,198
+78,872
+11
+2,488
+Fixed assets
+Other equity instrument investments
+Long-term equity investments
+Non-current assets
+Total current assets
+Other current assets
+Inventories
+Other receivables
+Prepayments
+Receivables financing
+Accounts receivable
+Bills receivable
+Derivative financial assets
+Financial assets held for trading
+Cash at bank and on hand
+Current assets
+Assets
+As at 31 December 2019
+BALANCE SHEET
+Financial Statements (PRC)
+Financial Statements (PRC)
+81
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2019
+Construction in progress
+Right-of-use assets
+Intangible assets
+Long-term deferred expenses
+2,665
+10
+207
+156
+29,989
+21,544
+8
+940
+82,879
+22,500
+54,072
+RMB million
+2018
+1,088,188
+At 31 December
+At 31 December
+2019
+Notes
+Contract liabilities
+Accounts payable
+Bills payable
+Derivative financial liabilities
+Short-term loans
+Liabilities and shareholders' equity
+Current liabilities
+Total assets
+Other non-current assets
+Total non-current assets
+Deferred tax assets
+RMB million
+1,309,215
+1,755,071
+31
+17,335
+9,967
+42
+Financial expenses
+Lease liabilities
+7,956
+9,395
+43/44
+Research and development expenses
+73,390
+62,112
+Provisions
+(1,001)
+Other non-current liabilities
+Total liabilities
+Shareholders' equity
+Share capital
+Capital reserve
+Other comprehensive income
+Specific reserve
+12,680
+48,104
+7,000
+20,000
+107,783
+Total non-current liabilities
+Exploration expenses, including dry holes
+43/45
+10,510
+Operating profit
+(742)
+(1,318)
+Asset disposal losses
+(11,605)
+(1,789)
+49
+Impairment losses
+(141)
+(1,264)
+Credit impairment losses
+2,656
+(3,511)
+48
+(Losses)/gains from changes in fair value
+11,428
+12,628
+47
+Investment income
+6,694
+5,973
+46
+Add: Other income
+10,744
+36,358
+34,514
+Add: Non-operating income
+33,094
+4,332
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+Shou Donghua
+Chief Financial Officer
+CONSOLIDATED INCOME STATEMENT
+For the year ended 31 December 2019
+Notes
+2019
+RMB million
+2018
+RMB million
+Operating income
+Less: Operating costs
+82
+Taxes and surcharges
+2,966,193
+2,891,179
+2,488,852
+2,401,012
+41
+242,535
+246,498
+Selling and distribution expenses
+43
+63,516
+59,396
+40
+40/43
+The accompanying notes form part of these financial statements.
+Ma Yongsheng
+President
+Chairman
+166,448
+105,530
+493,653
+394,407
+121,071
+121,071
+68,841
+68,795
+1,181
+(485)
+949
+989
+Surplus reserves
+Retained earnings
+207,423
+203,678
+130,645
+143,148
+Total shareholders' equity
+Total liabilities and shareholders' equity
+These financial statements have been approved for issue by the board of directors on 27 March 2020.
+530,110
+1,023,763
+537,196
+931,603
+Zhang Yuzhuo
+4,471
+General and administrative expenses
+43
+167,015
+25,732
+8162
+11
+10
+9
+7,886
+7,887
+16
+3,319
+837
+127,927
+567
+Inventories
+Other receivables
+Prepayments
+Receivables financing
+Accounts receivable
+Bills receivable
+Derivative financial assets
+Financial assets held for trading
+Cash at bank and on hand
+Current assets
+Assets
+54,865
+56,993
+8,622
+5,066
+14
+Fixed assets
+1,450
+1,521
+Other equity instrument investments
+145,721
+152,204
+13
+Long-term equity investments
+Non-current assets
+At 31 December
+2018
+RMB million
+504,120
+Total current assets
+22,774
+28,669
+Other current assets
+184,584
+Right-of-use assets
+192,442
+25,312
+24,109
+5,937
+445,856
+Construction in progress
+At 31 December
+2019
+RMB million
+As at 31 December 2019
+Liabilities and shareholders' equity
+Current liabilities
+Short-term loans
+17
+18
+19
+20
+45678222
+622,423
+617,812
+173,482
+136,963
+198,051
+108,956
+103,855
+8,697
+8,676
+8,930
+15,659
+17,616
+21,694
+Total assets
+Other non-current assets
+Deferred tax assets
+Long-term deferred expenses
+(A) FINANCIAL STATEMENTS PREPARED UNDER CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
+CONSOLIDATED BALANCE SHEET
+Signing CPA Gao Peng
+(Engagement Partner)
+Signing CPA Zhao Jianrong
+Annual Report 2019 CHINA PETROLEUM & CHEMICAL CORPORATION
+80
+27 March 2020
+PricewaterhouseCoopers Zhong Tian LLP
+Shanghai, the People's Republic of China.
+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.
+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.
+Notes
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS (Cont'd)
+Financial Statements (PRC)
+Total transactions with owners, recorded directly in shareholders' equity
+327,205
+288,877
+Non-current liabilities
+Long-term loans
+Debentures payable
+Total non-current assets
+Intangible assets
+Goodwill
+REPORT OF THE PRC AUDITOR (CONTINUED)
+15
+0.47 (S)
+2,167,641,996 (L)
+119,342,984 (S)
+0.47 (L)
+0.03 (L)
+voting shares (H Share)
+121,092,483 (L)
+Note: China Petrochemical Corporation holds
+2,595,786,987 H shares of Sinopec Oilfield
+Service Corporation (the "SSC") through
+Sinopec Century Bright Capital Investment
+Ltd., a wholly-owned overseas subsidiary
+of China Petrochemical Corporation,
+accounting for 13.67% of the total share
+capital of SSC. Such shareholdings are
+excluded from the total shares of SSC
+directly held by China Petrochemical
+Corporation indicated above.
+13.54%
+912,886,426
+8.50 (L)
+58.74%
+456,756,300
+Corporation
+Sinopec Oilfield Equipment
+(3) Basic information of the de facto
+controller
+56.51%
+Corporation
+Sinopec Oilfield Service
+65.67%
+2,907,856,000
+1,531,058,022 (L)
+6.00 (L)
+1,510,306,390 (L)
+5.92 (L)
+1,709,000 (S)
+0.01 (S)
+5.06 (L)
+1,291,515,302 (L)
+(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.
+10,727,896,364
+China Merchants Energy
+Shipping Co., Ltd.
+(2) Existing employee shares
+Sinopec Engineering (Group)
+99,590,176
+(3,491,593)
+0
+全國社保基金一一六組合
+A Share
+0.07
+0.08
+85,968,400
+0
+滙添富基金管理股份有限公司-社保基金1103組合
+A Share
+0.06
+70,000,000
+(40,000,000)
+85,968,400
+0
+A Share
+0
+China Petrochemical Corporation is the
+de facto controller of Sinopec Corp.
+(4) Diagram of the equity and controlling
+relationship between Sinopec Corp. and
+its de facto controller
+815,670,168
+605,892,688
+0
+中國人壽保險股份有限公司-傳統-普通保險產品 -005L-CT001滬
+中央金資產管理有限責任公司
+A Share
+中國工商銀行 - 上證50交易型開放式指數證券投資基金
+0.67
+643,272,938
+0
+A Share
+0.27
+322,037,900
+0
+814,606,031
+Co. Ltd.
+Note 1: As compared with the number of shares held as of 31 December 2019.
+Statement on the connected relationship or acting in concert among the above-mentioned shareholders:
+(1) Issuance of securities during the
+reporting period
+Not Applicable.
+Not Applicable.
+CHANGES IN THE CONTROLLING
+SHAREHOLDERS AND THE DE FACTO
+CONTROLLER
+There was no change in the controlling
+shareholder and the de facto controller of
+Sinopec Corp. during the reporting period.
+4
+(1) Controlling shareholder
+Number of shares interested
+7,810,000 (L)
+Shares of other listed companies directly
+held by China Petrochemical Corporation
+Name of Company
+Number of
+Shares Held
+Shareholding
+Percentage
+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. Zhang Yuzhuo.
+Through re-organization in 2000, China
+Petrochemical Corporation injected its
+principal petroleum and petrochemical
+businesses into Sinopec Corp. and
+retained certain petrochemical facilities.
+It provides well-drilling services, well-
+Note 2: Sinopec Century Bright Capital Investment Limited, an overseas wholly-owned subsidiary of China Petrochemical Corporation, held 553,150,000 H shares,
+accounting for 0.46% of the total issued share capital of Sinopec Corp. Those shareholdings are included in the total number of the shares held by HKSCC
+Nominees Limited.
+3 ISSUANCE AND LISTING OF SECURITIES
+Interest of corporation controlled by
+the substantial shareholder
+Investment manager
+Apart from 中國人壽保險股份有限公司-分红-個人分紅-005L-FH002滬 and 中國人壽保險股份有限公司- 傳統-普通保險產品-005L-CTO01滬
+which were both managed by \#$$$$$®, Sinopec Corp. is not aware of any connected relationship or acting in concert among or
+between the above-mentioned shareholders.
+6
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+(2) Information disclosed by the shareholders of H shares in accordance with the Securities and Futures Ordinance (SFO) as of 31 December
+2020
+% of Sinopec Corp.'s issued
+Name of shareholders
+Citigroup Inc.
+Note: (L): Long position, (S): Short position
+OGIC Private Limited
+BlackRock, Inc.
+Status of shareholders
+Person having a security interest in shares
+Interest of corporation controlled by
+the substantial shareholder
+Approved lending agent
+Investment manager
+Schroders Plc
+China Petrochemical
+Corporation
+OPEC
+Sinopec Corp.
+Business Review and Prospects
+Management's Discussion and Analysis
+8
+11
+19
+31
+Significant Events
+40
+Connected Transactions
+43
+Corporate Governance
+51
+Report of the Board of Directors
+58
+Report of the Board of Supervisors
+60
+Directors, Supervisors,
+Senior Management and Employees
+76
+Principal Wholly-owned and
+Controlled Subsidiaries
+77
+Financial Statements
+Chairman's Address
+211
+of Principal Shareholders
+Principal Financial Data and Indicators
+中国産化
+0.67
+BEIJING 2022.
+中国石化
+SINOPEC
+Official Partner of the Olympic Winter Games Beijing 2022
+加氢 H
+便利店
+易捷
+He
+中国石油化工股份有限公司
+SINOPEC CORP.
+中国石化 SMOPEC
+2020
+ANNUAL REPORT
+AND ACCOUNTS
+中国石化 |
+SINOPEC
+中国石化
+SINOPEC
+236
+CONTENTS
+Company Profile
+Changes in Share Capital and Shareholdings
+68.77%*
+Corporate Information
+Documents for Inspection
+Looking back on these three years, the Company
+fulfilled its corporate citizenship responsibilities.
+The Company proactively responded to global
+climate change, vigorously developed clean
+energy, and implemented an energy efficiency
+improvement campaign and a green enterprise
+action plan, meanwhile, comprehensive
+Looking back on these three years, the
+Company continues to improve efficiency. The
+all-in cost of oil saw a decrease of USD 13.24
+per barrel of oil equivalent, and natural gas
+reserves experienced an accumulative growth of
+17.1%. The refining and marketing businesses
+coordinated to respond to the increasingly
+fierce market competition, as a result the
+market share remained stable and the ability
+to drive profitability continued to increase, thus
+demonstrating the advantages of integration.
+The chemicals business deepened structural
+adjustments in raw materials, products and
+plants. Moreover, the proportion of high
+value-added products continued to increase.
+E-commerce platforms such as Epec, Chememall
+and Easy Joy also developed rapidly, and the
+non-fuel business is also developing well. Overall,
+the Company's operating profit has maintained
+relatively a rapid growth. In the past three
+years, the Company has declared a dividend
+of RMB 112.6 billion, with an average dividend
+payout ratio of 73.9%, sharing the Company's
+development performance with shareholders.
+Looking back on these three years, the quality
+of the Company's development continues to
+improve. Oil and natural gas reserves have seen
+growth, which strengthen the upstream resource
+base. The company accelerated the construction
+of world-class refining and chemical base. The
+refining and polyolefin capacities have reached
+the world top position while the production
+and sales volumes are still expanding. The
+Company's resource coordination and allocation
+capabilities are continuously enhanced. The
+comprehensive competitive advantages in
+its oil products sales network are robust,
+and the Company's total number of service
+stations ranks the second in the world.
+Taken together, these demonstrate how the
+Company's comprehensive capabilities have
+been steadily improving. Further, an innovation-
+driven strategy was implemented, which helped
+foster a collection of outstanding and strategic
+technological innovations. With breakthrough and
+the accelerated implementation of technological
+researches in frontier in areas such as new
+energy, the Company managed to significantly
+upgrade its technological capabilities.
+The term of the 7th Session of Board of
+Directors and Board of Supervisors is due to
+expire in 2021. Over the 3 years, and in the face
+of severe and complicated external conditions,
+the Company navigated deep industrial
+transformation and intense competition to
+achieve major targets handed down in the
+"13th Five-Year Plan". As a result, the Company
+experienced gains in the effectiveness of its
+corporate governance model and witnessed
+developmental outcomes that are inspiring and
+encouraging.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+8
+Chairman's Address
+Over the past year, the Company has
+proactively assumed social responsibility with
+new contributions. Facing the outbreak of the
+COVID-19 pandemic, the Company donated
+funds and goods to support the frontline fight
+against the pandemic as well as adjusted its
+production to provide pandemic-countering
+items by leveraging its industrial advantages.
+Notably, the world's largest melt-blown cloth
+production facility was built up from scratch
+within a short time, a stable supply in the oil
+and gas market was ensured, thus promoting
+production resumption along the industrial
+chain from upstream to downstream operations.
+These achievements received wide community
+recognition. Additionally, to fulfill our social
+responsibilities, the Company focused its
+efforts on targeted poverty alleviation, with
+implementation of poverty alleviation measures
+in terms of industry, education and consumption,
+objectives to help poverty alleviation have been
+achieved on all fronts. Finally, the Company put
+forth great effort to provide clean energy for
+society, such as commissioning strategic studies
+on carbon emissions peak and carbon neutrality
+and adhering to a development path that is
+green, low carbon, and sustainable.
+Over the past year, the Company has improved
+its corporate governance. On the basis of
+efficient decision-making, the Board of Directors
+strengthened strategic planning and conducted
+an in-depth study of mid-term and long-term
+development strategies, contributing to a clear
+vision and development goal of the Company.
+All independent directors stayed true to their
+duties and offered advice and suggestions for
+reforms and development, which served to
+promote the standardized operation and efficient
+decision-making of the Board. The Company
+also continued to strengthen its information
+disclosure and investor relations management to
+further enhance transparency. To continuously
+upgrade management, the Company has
+implemented a three-year reform campaign
+that is fully benchmarked against world-class
+standards.
+adjustments, increased the proportion of three
+major synthetic raw materials products with high
+added value, and maintained a stable market
+share for major products as well as a steady and
+upward business development. To accelerate
+transformation and upgrading, major oil and
+gas engineering projects were introduced, and
+the construction of refining and chemical bases
+also rapidly progressed. Further, the Company
+proactively expanded new energy business and
+pushed forward the application of hydrogen
+and the deployment of battery charging and
+swapping stations. At the same time, the sales
+of oil and gas pipelines were completed. Under
+these steps, solid progress was made in overall
+business readjustment. The Company also
+made positive progress in the research and
+development of key technologies and equipment.
+Of note, the Company's comprehensive patent
+advantages continued to rank at the top among
+domestic enterprises, which underlines the
+role of technological innovation in supporting
+development.
+Over the past year, the Company's has achieved
+new progress across all business segments.
+The upstream business promoted high-quality
+exploration and profitable development.
+As natural gas reserves steadily increased,
+production and sales hit a record high. Further,
+as the oil and gas break-even point steadily
+declined, stabilizing oil output while increasing
+gas output has led to marked achievements
+with cost reduction. The refining and marketing
+businesses leveraged efforts to tackle tough
+problems and increased the production of
+marketable and value-added products. With low-
+sulfur fuel oil as a market leader, advantages
+in domestic refined oil market continued to be
+strengthened. Meanwhile, the Company sped up
+the construction of integrated service stations,
+innovated marketing models, and continued to
+develop the non-fuel business on a sound basis.
+The chemical business deepened structural
+billion with a year-on-year increase of 9.0%,
+while the liabilities to assets ratio at the end of
+the period was 49.08%. The Company remained
+in a solid financial position with a strong cash
+flow and robust capability to strengthen anti-risk
+capability. In view of the Company's profitability,
+return to shareholders, and needs for future
+development, the Board of Directors proposed
+the payment of a final dividend of RMB 0.13 per
+share. Taking into account the interim special
+dividend of RMB 0.07 per share, the total
+dividend for the year was RMB 0.20 per share,
+with a dividend payout ratio of 73.2% ensuring
+a stable dividend payout level.
+In accordance with International Financial
+Reporting Standards, our turnover and other
+operating revenues reached RMB 2.1 trillion,
+while profit attributable to shareholders of the
+Company amounted to RMB 33.096 billion.
+The Company also enjoyed a cash flow from
+operating activities totalling RMB 167.518
+2020 was truly an unprecedented year.
+Faced with the global COVID-19 pandemic
+and a severe economic recession worldwide,
+international oil prices endured a historic slide
+as market demand sharply contracted. Under a
+complex web of risks and problems, instability
+and unpredictability were evidently growing.
+In the wake of this extraordinary and severe
+impact, the Company's Board of Directors
+maintained a steady grip on all developments,
+while management worked closely with all staff
+to focus on major issues and areas such as
+system optimization, baseline risk prevention
+and control and turning risks into opportunities,
+as well as to stabilize basic production and
+operations, go all out to carry out a series of
+campaigns to tide over difficulties, and promote
+the company's reform, thus achieving industry-
+leading results.
+On behalf of the Board of Directors, the
+management, and our entire staff, I would like to
+express my sincere gratitude to our shareholders
+and the community for your interest and
+support.
+Dear Shareholders and Friends:
+CHAIRMAN'S ADDRESS
+ʼn Share Capital anders
+Shareholdings of Principal S
+Changes in
+7
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+*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.
+energy consumption and the discharge of
+major pollutants continued to decline. This
+demonstrated new contributions made to the
+development of an ecological civilization. The
+Company also worked on targeted poverty
+alleviation and took the lead to make great
+changes in poverty-stricken areas. At the same
+time, the Company continued to carry out
+public welfare projects such as the “Lifeline
+Health Express" and promote the coordinated
+development of the economy, environment, and
+society in areas where the Company's domestic
+and overseas operations are situated. Providing
+additional benefits to the people, the Company's
+achievements in development demonstrate its
+commitment to social responsibility.
+212
+These achievements were due to the concerted
+efforts of the Board of Directors, the
+management and all staff, and is inseparable
+from the strong support of shareholders and
+the community. In accordance with regulatory
+requirements, Mr. Tang Min ceased to serve as
+a director for a new term. During his tenure,
+he was fully devoted to his duties, diligent,
+responsible, and played an important role in
+the scientific decision-making, standardized
+operation, reform and development of the
+Company. On behalf of our Board, I would like to
+express my sincere gratitude to all shareholders
+and the community for their support, and for
+the hard work and contributions made by the
+Independent Directors and Supervisors over the
+years.
+We shall strive to excel in and inspire
+technological innovation. With enhanced R&D
+investment, the Company will strengthen
+proprietary and original innovations, and
+cultivate more innovative talents to become
+a technology-leading Company. Furthermore,
+we seek to optimize industry deployment to
+accelerate the transformation and upgrading.
+This is in effort to position the Company as
+a comprehensive energy service provider of
+oil, natural gas, hydrogen, electricity, and
+non-fuel business. The Company will stick to
+its commitment to high-quality exploration
+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 26 March 2021 and unless
+required by regulatory authorities, the Company undertakes no obligation
+to update these statements.
+2
+Company Profile
+COMPANY PROFILE
+IMPORTANT NOTICE: THE BOARD OF DIRECTORS, DIRECTORS, THE BOARD OF SUPERVISORS, 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. YU BAOCAI, A DIRECTOR OF SINOPEC CORP., WAS ON LEAVE FOR BUSINESS REASONS AND COULD
+NOT ATTEND THE 21ST MEETING OF THE SEVENTH SESSION OF THE BOARD, MR. YU BAOCAI HAS AUTHORISED MR. LING YIQUN TO VOTE
+ON HIS BEHALF FOR THE RESOLUTIONS AT THIS BOARD MEETING. MR. ZHANG YUZHUO, CHAIRMAN OF THE BOARD, MR. MA YONGSHENG,
+PRESIDENT, MS. SHOU DONGHUA, CHIEF FINANCIAL OFFICER AND HEAD OF THE FINANCIAL 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 REPORT OF SINOPEC CORP. FOR THE YEAR ENDED 31 DECEMBER 2020.
+THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 OF THE COMPANY PREPARED IN ACCORDANCE WITH THE PRC
+ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES (CASS) 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 AT THE 21ST MEETING OF THE SEVENTH SESSION OF THE BOARD OF DIRECTORS OF SINOPEC CORP., THE BOARD PROPOSED
+A FINAL CASH DIVIDEND OF RMB 0.13 (TAX INCLUSIVE) PER SHARE FOR 2020, COMBINING WITH THE SPECIAL DIVIDEND OF RMB 0.07 (TAX
+INCLUSIVE) PER SHARE, THE TOTAL CASH DIVIDEND FOR 2020 WILL BE RMB 0.20 (TAX INCLUSIVE) PER SHARE. THE DIVIDEND PROPOSAL IS
+SUBJECT TO THE SHAREHOLDERS' APPROVAL AT THE ANNUAL GENERAL MEETING FOR THE YEAR 2020.
+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 as set out below:
+Sinopec Corp.: China Petroleum & Chemical Corporation
+Company: Sinopec Corp. and its subsidiaries
+China Petrochemical Corporation: The controlling shareholder of Sinopec Corp., China Petrochemical Corporation
+Sinopec Group: China Petrochemical Corporation and its subsidiaries
+NDRC: China National Development and Reform Commission
+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
+Chairman's Address
+9
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Greatness can be achieved through joint efforts,
+and nothing is impossible through collective
+wisdom. Striving toward a world-leading position,
+we need not only ambitious goals, but also a
+sustained willingness to continue to work hard
+and march forward. I cherish the strong belief
+that under the leadership of the new Board of
+Directors, and with the concerted efforts of the
+management and staff, as well as the strong
+support of shareholders and all members of
+society, Sinopec Corp. will surely be able to
+write a new chapter in quality development
+that creates greater value for shareholders and
+society.
+Considering the corporate development strategy,
+production and operation arrangements, cash
+flow and other factors, the Company plans to
+spend RMB 167.2 billion on capital expenditures
+in 2021, mainly in the areas of large-scale
+development of natural gas, construction and
+transformation upgrading of advanced refining
+and chemical production capacity, among other
+aspects.
+and effective development and to promoting
+breakthrough developments in natural gas.
+The Company will work to further deploy its
+hydrogen business from a leading perspective
+and lay a strong foundation for building China's
+largest hydrogen energy company. Moreover, the
+Company seeks to accelerate its construction
+of world-class advanced refining and chemical
+capacities and to promote further adjustments
+in business structures. The Company will also
+work hard to develop the digital and platform
+economies and to ascend to the mid-to-
+high end of the industrial and value chains.
+We will continue to work hard to overcome
+difficulties and create value, and to improve
+quality and efficiency in order to drive stable
+growth. Maximizing the advantages of upstream
+and downstream integration, the Company
+will coordinate procurement, transportation,
+production, storage, and marketing while
+exploiting the potential of system optimization.
+In turn, these efforts will fulfill market demand,
+consolidate market advantages, and maximize
+the overall benefits along the industrial chain.
+We will persist in our pursuit of green and
+clean development and creating low-carbon
+competitiveness. We will also coordinate the
+transformation and carbon reduction process,
+structural optimization and carbon emission
+control, and deepening of the green enterprise
+action plan. These efforts will allow green and
+clean energy to become the bright backdrop for
+the Company's high quality development.
+The year of 2021 marked the commencement
+of China's "14th Five-Year Plan". Upon entering
+a new phase of development, the Company
+vows to implement new development concepts
+and world-leading development strategies.
+The Company will work hard to implement the
+following six major development strategies:
+value creation, market orientation, innovation-
+driven, green and clean, open cooperation
+and talent-cultivation. The Company will also
+implement the "One Foundation of energy
+and resources, Two Wings of clean fuels and
+advanced chemicals, and Three Growth Engines
+in new energy, new materials and new economy"
+industrial deployment pattern. The new pattern
+will enhance the development quality, efficiency,
+and core competitiveness of all industrial chains
+and the overall industrial system. Focusing on
+high-quality development, the Company strives
+to build a world-leading clean energy and
+chemical corporation.
+A Share
+logging services, downhole operation
+services, services in connection with
+manufacturing and maintenance of
+production equipment, engineering
+construction, and utility services including
+water and power and social services.
+0
+(12.4)
+65,705
+77,023
+2,891,179
+RMB million
+2018 (before
+adjustment)
+2018
+2,882,077
+(28.8)
+2,966,193
+2,959,799
+2,105,984
+67,501
+RMB million
+(%)
+RMB million
+RMB million
+(adjusted)
+Change
+adjustment)
+2019 (before
+2019
+(adjusted)
+2020
+RMB million
+Profit before taxation
+Operating profit
+Operating income from principal activities
+Operating income other than principal activities
+Operating income
+Items
+For the year ended 31 December
+78,152
+(1) Principal financial data
+65,566
+2,882,776
+(102.9)
+54,271
+54,280
+(1,565)
+Net profit attributable to equity shareholders of the Company excluding
+extraordinary gains and losses
+63,089
+中國人壽保險股份有限公司-分红-個人分紅-005L-FH002滬
+63,179
+(42.9)
+57,591
+57,619
+32,924
+Net profit attributable to equity shareholders of the Company
+100,502
+100,731
+(46.8)
+90,016
+90,111
+47,969
+101,474
+101,625
+(44.2)
+90,025
+90.134
+50,331
+2,825,613
+2,803,925
+(29.3)
+2,900,488
+2,038,483
+59,633
+1 FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH CASS
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+(%)
+RMB
+RMB
+Net assets attributable to equity shareholders of the Company per share
+Liabilities to assets ratio (%)
+6.132
+6.112
+6.105
+0.3
+5.940
+5.933
+49.02
+50.1
+50.04
+(1.08)
+46.22
+46.14
+percentage
+points
+Note: Liabilities to assets ratio= total liabilities/total assets
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+3
+4
+Principal Financial Data and Indicators
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+(3) Extraordinary items and corresponding amounts
+Items
+Net (gain)/loss on disposal of non-current assets
+Donations
+Government grants
+Gain on holding and disposal of business and various investments
+Other non-operating expenses, net
+RMB
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+RMB
+Items
+Refinery throughput is converted at 1 tonne = 7.35 barrels
+For overseas production of crude oil: 1 tonne = 7.20 barrels in 2020, 1 tonne = 7.21 barrels in 2019, 1 tonne = 7.21 barrels in 2018
+For production of natural gas, 1 cubic meter = 35.31 cubic feet
+For domestic production of crude oil, 1 tonne = 7.1 barrels
+CONVERSION:
+Hong Kong Listing Rules: Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
+7.44
+7.45
+(7.65)
+8.18
+8.20
+percentage
+points
+Net cash flow from operating activities per share
+1.384
+1.269
+1.267
+9.1
+1.453
+1.453
+2019
+As of 31 December
+2019 (before
+2018
+2018 (before
+2020
+(adjusted)
+adjustment)
+Change
+(adjusted)
+adjustment)
+RMB
+Subtotal
+59,630
+167,518
+RMB
+(%)
+RMB
+RMB
+RMB
+Items
+adjustment)
+(adjusted)
+Change
+adjustment)
+2018 (before
+2018
+2019 (before
+2019
+(adjusted)
+2020
+For the year ended 31 December
+(2) Principal financial indicators
+121,071,210
+121,071,210
+121,071,210
+121,071,210
+121,071,210
+718,355
+719,148
+0.3
+739,169
+739,965
+742,463
+Total equity attributable to equity shareholders of the Company
+Total number of shares (1,000 shares)
+RMB
+1,592,308
+734,649
+Basic earnings per share
+0.476
+(0.21)
+Weighted average return (excluding extraordinary gains and losses)
+on net assets (%)
+points
+percentage
+8.67
+8.67
+(3.46)
+7.90
+7.90
+4.44
+Weighted average return on net assets (%)
+0.493
+0.492
+(102.9)
+0.448
+0.448
+(0.013)
+Basic earnings per share (excluding extraordinary gains and losses)
+0.521
+0.522
+(42.9)
+0.476
+0.476
+0.272
+Diluted earnings per share
+0.521
+0.522
+(42.9)
+0.476
+0.272
+Net cash flow from operating activities
+RMB million
+738,280
+Net cash flow from operating activities
+32,924
+2,105,984
+553,583
+9,490
+46,435
+519,337
+478,582
+(3,135)
+(19,866)
+554,482
+RMB million
+RMB million
+RMB million
+Total
+Quarter
+Quarter
+Fourth
+Third
+Second
+Quarter
+RMB million
+RMB million
+Net profit attributable to equity shareholders of the Company
+Net profit attributable to equity shareholders of the Company
+excluding extraordinary gains and losses
+Operating income
+Items
+First
+Quarter
+For the year of 2020
+175,868
+175,937
+9.0
+153,420
+153,619
+(20,444)
+(67,970)
+adjustment)
+(3,960)
+8,692
+(3.6)
+878,166
+881,912
+849,929
+Total liabilities
+1,597,402
+(1.5)
+1,755,071
+1,760,286
+1,733,805
+Total assets
+RMB million
+(%)
+(adjusted)
+Change
+adjustment)
+RMB million
+2018 (before
+2018
+2019 (before
+2019
+(adjusted)
+RMB million
+RMB million
+Items
+2020
+As of 31 December
+167,518
+83,329
+43,824
+108,335
+(1,565)
+14,147
+Tax effect
+Principal Financial Data and Indicators
+Attributable to: Equity shareholders of the Company
+Minority interests
+Net cash generated from operating activities per share (RMB)
+1.384
+1.269
+1.453
+1.579
+1.770
+Unit: RMB million
+Items
+Non-current assets
+Net current liabilities
+Non-current liabilities
+Non-controlling interests
+Total equity attributable to shareholders of the Company
+Net assets per share (RMB)
+Adjusted net assets per share (RMB)
+2020
+1,278,410
+1,312,976
+As of 31 December
+2019
+2018
+1,091,930
+2017
+2016
+1,069,984
+1,089,911
+66,795
+132,668
+63,140
+52,101
+74,970
+328,757
+6.59
+303,004
+7.07
+7.78
+99,339
+86,964
+80,544
+Profit attributable to shareholders of the Company
+33,096
+57,493
+61,708
+51,384
+Total
+Basic earnings per share (RMB)
+0.273
+0.475
+0.51
+0.424
+0.387
+Diluted earnings per share (RMB)
+0.273
+0.475
+0.51
+0.424
+0.387
+Return on capital employed (%)
+6.22
+8.98
+9.24
+8.27
+7.32
+Return on net assets (%)
+4.46
+8.59
+90,022
+170,792
+181,941
+Name of shareholders
+China Petrochemical Corporation
+HKSCC Nominees Limited²
+中國證券金融股份有限公司
+Nature of Percentage of
+Shareholders shareholdings %
+Total number of
+State-owned Share
+68.31
+shares held
+82,709,227,393
+Changes of
+shareholding¹
+Unit: share
+Number of
+shares subject
+to pledges or
+lock-up
+0
+0
+H Share
+20.97
+25,385,280,408
+(2,128,597)
+unknown
+A Share
+2.16
+2,609,312,057
+0
+0
+香港中央結算有限公司
+A Share
+0.69
+841,072,282
+269,227,962
+The shareholdings of top ten shareholders as of 31 December 2020 are listed as below:
+163,374
+(1) Shareholdings of top ten shareholders
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+141,364
+138,358
+139,921
+127,509
+121,046
+741,494
+738,946
+718,077
+727,000
+711,954
+6.124
+5.914
+6.103
+5.931
+6.005
+5.880
+5.953
+5.748
+5.875
+5.816
+3 MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER CASS AND IFRS PLEASE REFER TO PAGE 204 OF
+THE REPORT.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+5
+LO
+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 in the number and nature of issued shares of Sinopec Corp. during the reporting period.
+As of 31 December 2020, the total number of shareholders of Sinopec Corp. was 533,319 including 527,573 holders of A shares and 5,746 holders
+of H shares. As of 28 February 2021, the total number of shareholders of Sinopec Corp. was 508,489. Sinopec Corp. has complied with requirement
+for minimum public float under the Hong Kong Listing Rules.
+48,143
+46,884
+71,817
+(125)
+(277)
+Items
+Other equity instruments
+Derivative financial instruments
+Cash flow hedging
+Financial assets held for trading
+Total
+(5) Significant changes of items in the financial statements
+Beginning
+of the year
+1,521
+48
+(1,940)
+3,319
+2,948
+End
+of the year
+Changes
+Unit: RMB million
+Influence
+on the profit
+of the year
+77,664
+4
+156
+109
+(1,252)
+9,485
+2,886
+1
+9,228
+(3,318)
+6,280
+(2,705)
+114
+(3,546)
+(34,489)
+(4) Items measured by fair values
+For the year ended 31 December
+(Income)/expenses
+2020
+RMB million
+2019
+RMB million
+2018
+RMB million
+(973)
+301
+1,318
+209
+742
+180
+(8,605)
+(6,857)
+(7,482)
+(37,520)
+(410)
+(1,023)
+2,992
+634
+(43,805)
+(5,106)
+1,383
+(6,200)
+6,611
+1,642
+2,377
+(37,194)
+(3,464)
+(3,823)
+(3,339)
+1,904
+1,525
+157
+7,545
+As of 31 December
+2020
+(33.47) Short-term loans repayment at maturity.
+(67.63) Mainly due to the repayment of non-interest maturity loan of shareholder.
+100.22 Mainly due to mid-term notes with a total amount of RMB 20 billion in
+the first half of 2020.
+Cash paid for goods and services
+(1,754,016)
+Cash received from disposal of investments
+Net cash received from disposal of
+11,651
+49,869
+(2,591,739)
+35.996
+The table below sets forth the reasons for those changes of items in the financial statements where the fluctuation was more than 30% during
+the reporting period:
+(32.32) Mainly due to decrease in crude oil price and business scale.
+(67.63) Decrease in received structured deposit.
+Cash received from selling the pipeline business.
+subsidiaries and other business entities
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS
+Unit: RMB million
+Operating profit
+Items
+Turnover and other operating revenues
+Profit before taxation
+2020
+2,105,984
+For the year ended 31 December
+2019
+2,959,799
+2018
+2,882,077
+2017
+2,348,931
+2016
+1,923,273
+13,193
+86,374
+82,564
+product selling price.
+(99.97) Structured deposit withdrawal at maturity of RMB 3.3 billion.
+1,396.77 Mainly due to increased floating earning from crude oil hedging.
+(34.55) Mainly due to strengthened cash flow management and decreased
+837,723
+(24,345)
+49,869
+19,157
+Increase/(decrease)
+Items
+RMB million
+Cash at bank and on hand
+(10,440)
+(46,997)
+19,199
+2019
+RMB million
+128,052
+Amount
+Percentage
+RMB million
+(%) Reasons for change
+56,360
+44.01 Cash received from pipeline business transaction and the impact of
+decrease in inventory and accounts receivable.
+Financial assets held for trading
+1
+184,412
+12,528
+Derivative financial assets
+38,356
+Debentures payable
+22,493
+Non-current liabilities due within one year
+31,196
+20,756
+69,490
+(3,318)
+11,691
+(18,788)
+54,375
+35,587
+Accounts receivable
+3,319
+837
+Short-term loans
+For the year ended 31 December 2020
+(c) Method for preparation of consolidated financial statements
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+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 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.
+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 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 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.
+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(10)) 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.
+For the year ended 31 December 2020
+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.
+(a) Business combination involving entities under common control
+(1) Accounting treatment of business combination involving entities under common control and not under common control
+Principal accounting estimates and judgements of the Group are set out in Note 56.
+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 financial assets (Note 3(11)), valuation of inventories (Note 3(4)), depreciation of fixed assets
+and depletion of oil and gas properties (Note 3(7), (8)), measurement of provisions (Note 3(16)), etc.
+3 SIGNIFICANT ACCOUNTING POLICIES
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+90
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(b) Business combination involving entities not under common control
+(1) Accounting treatment of business combination involving entities under common control and not under common control (Continued)
+If the amount that has been accumulated in the cash flow hedge reserve is a loss and the Group expects that all or a portion of that
+loss will not be recovered in one or more future periods, the Group immediately reclassify the amount that is not expected to be
+recovered into profit or loss.
+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 original subsidiary shall be converted into the current investment income in the event of loss
+of control.
+Hedged items are the items that expose the Group to risks of changes in future cash flows and that are designated as being hedged and that
+must be reliably measurable. The Group's hedged items include a forecast transaction that is settled with an undetermined future market
+price and exposes the Group to risk of variability in cash flows, etc.
+A hedging instrument is a designated derivative whose changes in cash flows are expected to offset changes in the cash flows of the hedged
+item.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(11) Financial Instruments (Continued)
+(d) Derivative financial instruments and hedge accounting (Continued)
+The hedging relationship meets all of the following hedge effectiveness requirements:
+(1) There is an economic relationship between the hedged item and the hedging instrument, which share a risk and that gives rise to opposite
+changes in fair value that tend to offset each other.
+(2) The effect of credit risk does not dominate the value changes that result from that economic relationship.
+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, to represent the effect of risk management activities.
+(3) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually
+hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. However, that
+designation shall not reflect an imbalance between the weightings of the hedged item and the hedging instrument.
+Cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a
+component of, a recognised asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable
+forecast transaction, and could affect profit or loss. As long as a cash flow hedge meets the qualifying criteria for hedge accounting,
+the hedging relationship shall be accounted for as follows:
+The cumulative gain or loss on the hedging instrument from inception of the hedge;
+The cumulative change in present value of the expected future cash flows on the hedged item from inception of the hedge.
+The gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income.
+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 hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged
+forecast transaction for a non-financial asset or a non-financial liability becomes a firm commitment for which fair value hedge
+accounting is applied, the entity shall remove that amount from the cash flow hedge reserve and include it directly in the initial cost
+or other carrying amount of the asset or the liability. This is not a reclassification adjustment and hence it does not affect other
+comprehensive income.
+For cash flow hedges, other than those covered by the preceding two policy statements, that amount shall be reclassified from the
+cash flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods during which the hedged
+expected future cash flows affect profit or loss.
+When the hedging relationship no longer meets the risk management objective on the basis of which it qualified for hedge accounting (ie
+the entity no longer pursues that risk management objective), or when a hedging instrument expires or is sold, terminated, exercised,
+or there is no longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk starts
+to dominate the value changes that result from that economic relationship or no longer meets the criteria for hedge accounting, the
+Group discontinues prospectively the hedge accounting treatments. If the hedged future cash flows are still expected to occur, that
+amount shall remain in the cash flow hedge reserve and shall be accounted for as cash flow hedges. If the hedged future cash flows
+are no longer expected to occur, that amount shall be immediately reclassified from the cash flow hedge reserve to profit or loss as a
+reclassification adjustment. A hedged future cash flow that is no longer highly probable to occur may still be expected to occur, if the
+hedged future cash flows are still expected to occur, that amount shall remain in the cash flow hedge reserve and shall be accounted
+for as cash flow hedges.
+(12) Impairment of other non-financial long-term assets
+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, right-of-use assets, goodwill, intangible assets and investments in subsidiaries, associates and joint ventures
+may be impaired.
+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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+97
+Cash flow hedges
+Financial Statements (PRC)
+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 profit or loss, except where the derivatives qualify for hedge accounting.
+If there is an active market for financial instruments, the quoted price in the active market is used to measure fair values of the financial
+instruments. If no active market exists for financial instruments, valuation techniques are used to measure fair values. In valuation, the Group
+adopts valuation techniques that are applicable in the current situation and have sufficient available data and other information to support it,
+and selects input values that are consistent with the asset or liability characteristics considered by market participants in the transaction of
+relevant assets or liabilities, and gives priority to relevant observable input values. Use of unobservable input values where relevant observable
+input values cannot be obtained or are not practicable.
+The Group recognises a loss allowance for expected credit losses on financial assets measured at amortised cost and receivables
+financing measured at fair value through other comprehensive income.
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past
+events, current conditions and forecasts of future economic conditions.
+The Group measures the expected credit losses of financial instruments on different stages at each balance sheet date. For financial
+instruments that have no significant increase in credit risk since the initial recognition, on first stage, the Group measures the loss
+allowance at an amount equal to 12-month expected credit losses. If there has been a significant increase in credit risk since the initial
+recognition of a financial instrument but credit impairment has not occurred, on second stage, the Group recognises a loss allowance
+at an amount equal to lifetime expected credit losses. If credit impairment has occurred since the initial recognition of a financial
+instrument, on third stage, the Group recognises a loss allowance at an amount equal to lifetime expected credit losses.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+95
+Financial Statements (PRC)
+96
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(11) Financial Instruments (Continued)
+(d) Derivative financial instruments and hedge accounting
+(a) Financial assets (Continued)
+For financial instruments that have low credit risk at the balance sheet date, the Group assumes that there is no significant increase in
+credit risk since the initial recognition, and measures the loss allowance at an amount equal to 12-month expected credit losses.
+For financial instruments on the first stage and the second stage, and that have low credit risk, the Group calculates interest income
+according to carrying amount without deducting the impairment allowance and effective interest rate. For financial instruments on the
+third stage, interest income is calculated according to the carrying amount minus amortised cost after the provision of impairment
+allowance and effective interest rate.
+For accounts receivable and receivables financing related to revenue, the Group measures the loss allowance at an amount equal to
+lifetime expected credit losses.
+The Group recognises the loss allowance accrued or written back in profit or loss.
+(iii) Derecognition
+The Group derecognises a financial asset when a) the contractual right to receive cash flows from the financial asset expires; b) the Group
+transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset; c) the financial assets have
+been transferred and the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, but
+the Group has not retained control.
+On derecognition of other equity instrument investments, the difference between the carrying amounts and the sum of the consideration
+received and any cumulative gain or loss previously recognised in other comprehensive income, is recognised in retained earnings. While
+on derecognition of other financial assets, this difference is recognised in profit or loss.
+(b) Financial liabilities
+The Group, at initial recognition, classifies financial liabilities as either financial liabilities subsequently measured at amortised cost or
+financial liabilities at fair value through profit or loss.
+The Group's financial liabilities are mainly financial liabilities measured at amortised cost, including bills payable, accounts payable, other
+payables, loans and debentures payable, etc. These financial liabilities are initially measured at the amount of their fair value after deducting
+transaction costs and use the effective interest rate method for subsequent measurement.
+Where the present obligations of financial liabilities are completely or partially discharged, the Group derecognises these financial liabilities
+or discharged parts of obligations. The differences between the carrying amounts and the consideration received are recognised in profit or
+loss.
+(c) Determination of fair value
+(ii) Impairment (Continued)
+98
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+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.
+At the balance sheet date, deferred tax assets and liabilities are offset if all the following conditions are met:
+the taxable entity has a legally enforceable right to offset current tax assets and current tax liabilities; and
+they relate to income taxes levied by the same tax authority on either:
+the same taxable entity; or
+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.
+(16) Provisions
+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.
+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.
+(17) Revenue recognition
+Revenue arises in the course of the Group's ordinary activities, and increases in economic benefits in the form of inflows that result in an
+increase in equity, other than those relating to contributions from equity participants.
+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.
+The Group sells crude oil, natural gas, petroleum and chemical products, etc. Revenue is recognised according to the expected consideration
+amount, when a customer obtains control over the relevant goods or services. To determine whether a customer obtains control of a promised
+asset, the Group shall consider indicators of the transfer of control, which include, but are not limited to, the Group has a present right to
+payment for the asset; the Group has transferred physical possession of the asset to the customer; the customer has the significant risks and
+rewards of ownership of the asset; the customer has accepted the asset.
+Sales are recognised when control of the goods have transferred, being when the products are delivered to the customer. Advance from
+customers but goods not yet delivered is recorded as contract liabilities and is recognised as revenues when a customer obtains control over the
+relevant goods.
+(18) Government grants
+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.
+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 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.
+(19) Borrowing costs
+Borrowing costs incurred on borrowings for the acquisition, construction or production of qualified assets are capitalised into the cost of the
+related assets in the capitalisable period.
+Except for the above, other borrowing costs are recognised as financial expenses in the income statement when incurred.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+99
+Financial Statements (PRC)
+Sales of goods
+(15) Income tax (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2020
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(12) Impairment of other non-financial long-term assets (Continued)
+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).
+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.
+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.
+(13) Long-term deferred expenses
+Long-term deferred expenses are amortised on a straight-line basis over their beneficial periods.
+(14) Employee benefits
+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.
+(a) Short term compensation
+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.
+(b) Post-employment benefits
+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.
+Basic pension insurance
+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.
+(c) Termination benefits
+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.
+(15) Income tax
+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).
+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.
+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 realise the asset and settle the liability simultaneously.
+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.
+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.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(ii) Impairment
+In addition, the Group designates some equity instruments that are not held for trading as financial assets at fair value through other
+comprehensive income, and presented in other equity instrument investments. The relevant dividends of these financial assets are
+recognised in profit or loss. When derecognised, the cumulative gain or loss previously recognised in other comprehensive income is
+transferred to retained earnings.
+Equity instruments that the Group has no power to control, jointly control or exercise significant influence over, are measured at fair value
+through profit or loss and presented as financial assets held for trading.
+Equity instruments
+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.
+(b) Investment in joint ventures and associates
+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.
+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.
+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.
+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.
+The Group's accounting treatments when adopting the equity method include:
+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.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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 the year ended 31 December 2020
+(5) Long-term equity investments (Continued)
+(b) Investment in joint ventures and associates (Continued)
+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 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.
+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 venture 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.
+(c) The impairment assessment method and provision accrual on investment
+The impairment assessment and provision accrual on investments in subsidiaries, associates and joint ventures are stated in Note 3(12).
+(6) Leases
+A lease is a contract that a lessor transfers the right to use an identified asset for a period of time to a lessee in exchange for consideration.
+(a) As Lessee
+The Group recognises a right-of-use asset at the commencement date, and recognises the lease liability at the present value of the lease
+payments that are not paid at that date. The lease payments include fixed payments, the exercise price of a purchase option if the Group is
+reasonably certain to exercise that option, and payments of penalties for terminating the lease if the lease term reflects the Group exercising
+that option, etc. Variable payments that are based on a percentage of sales are not included in the lease payments, and should be recognised
+in profit or loss when incurred. Lease liabilities to be paid within one year (including one year) from balance sheet date is presented in non-
+current liabilities due within one year.
+Right-of-use assets of the Group mainly comprise land. Right-of-use assets are measured at cost which comprises the amount of the initial
+measurement of the lease liability, any lease payments made at or before the commencement date, any initial direct costs incurred by the
+lessee, less any lease incentives received. The Group depreciates the right-of-use assets over the shorter of the asset's useful life and the
+lease term on a straight-line basis. When the recoverable amount of a right-of-use asset is less than its carrying amount, the carrying amount
+is reduced to the recoverable amount.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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(12)) in the balance sheet. At initial recognition, such investments are
+measured as follows:
+(a) Investment in subsidiaries
+(5) Long-term equity investments
+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 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.
+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.
+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 other equity
+instrument investments; 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.
+(4) Inventories
+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 mainly 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.
+At the balance sheet date, inventories are stated at the lower of cost and net realisable value.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+91
+Financial Statements (PRC)
+92
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(4) Inventories (Continued)
+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.
+Payments associated with short-term leases with lease terms within 12 months and leases for which the underlying assets are individually
+of low value when it is new are recognised on a straight-line basis over the lease term as an expense in profit or loss or as cost of relevant
+assets, instead of recognising right-of-use assets and lease liabilities.
+(c) Method for preparation of consolidated financial statements (Continued)
+A lessee shall account for a lease modification as a separate lease if both: (1) the modification increases the scope of the lease by adding
+the right to use one or more underlying assets; and (2) the consideration for the lease increases by an amount commensurate with the stand-
+alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular
+contract.
+(b) As Lessor
+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.
+Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes produced and reserves.
+(9) Intangible assets
+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(12)). 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.
+Useful lives and amortisation methods are reviewed at least each year end.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(10) Goodwill
+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.
+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.
+Goodwill is not amortised and is stated at cost less accumulated impairment losses (see Note 3(12)). 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.
+Financial instruments, refer to the contracts that form one party's financial assets and form the financial liabilities or equity instruments of the
+other party. The Group recognises a financial asset or a financial liability when the Group enters into and becomes a party to the underlining
+contract of the financial instrument.
+(a) Financial assets
+(i) Classification and measurement
+The Group classifies financial assets into different categories depending on the business model for managing the financial assets and the
+contractual terms of cash flows of the financial assets: (1) financial assets measured at amortised cost, (2) financial assets measured at
+fair value through other comprehensive income, (3) financial assets measured at fair value through profit or loss. A contractual cash flow
+characteristic which could have only a de minimis effect, or could have an effect that is more than de minimis but is not genuine, does
+not affect the classification of the financial asset.
+Financial assets are initially recognised at fair value. For financial assets measured at fair value through profit or loss, the relevant
+transaction costs are recognised in profit or loss. The transaction costs for other financial assets are included in the initially recognised
+amount. However, accounts receivable arising from sales of goods or rendering services, without significant financing component, are
+initially recognised based on the transaction price expected to be entitled by the Group.
+Debt instruments
+The debt instruments held by the Group refer to the instruments that meet the definition of financial liabilities from the perspective of the
+issuer, and are measured in the following ways:
+Measured at amortised cost:
+The business model for managing such financial assets by the Group are held for collection of contractual cash flows. The contractual
+cash flow characteristics are to give rise on specified dates to cash flows that are solely payments of principal and interest on the
+principal amount outstanding. Interest income from these financial assets is recognised using the effective interest rate method. The
+financial assets include cash at bank and on hand and receivables.
+Measured at fair value through other comprehensive income:
+The business model for managing such financial assets by the Group are held for collection of contractual cash flows and for
+selling the financial assets, the contractual cash flow characteristics of such financial assets are consistent with the basic lending
+arrangements. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of
+impairment gains or losses, foreign exchange gains and losses and interest income calculated using the effective interest rate method,
+which are recognised in profit or loss. The financial assets include receivables financing.
+(11) Financial Instruments
+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 rate
+of residual value
+3%
+A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating lease is a
+lease other than a finance lease.
+When the Group leases self-owned plants and buildings, equipment and machinery, lease income from an operating lease is recognised on a
+straight-line basis over the period of the lease. The Group recognises variable lease income which is based on a certain percentage of sales
+as rental income when occurred.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+93
+Financial Statements (PRC)
+Financial Statements (PRC)
+94
+54
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(7) Fixed assets and construction in progress
+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.
+Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment losses (see Note 3(12)). Construction in
+progress is stated in the balance sheet at cost less impairment losses (see Note 3(12)).
+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(19)), 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.
+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.
+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.
+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.
+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:
+Plants and buildings
+Equipment, machinery and others
+Useful lives, residual values and depreciation methods are reviewed at least each year end.
+(8) Oil and gas properties
+Estimated
+useful life
+12.50 years
+4.30 years
+For a lease modification that is not accounted for as a separate lease, except for the practical expedient which applies only to rent
+concessions occurring as a direct consequence of the COVID-19 pandemic, the group determine the lease term of the modified lease at the
+effective date of the modification, and remeasure the lease liability by discounting the revised lease payments using a revised discount rate.
+The group decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications
+that decrease the scope or shorten the term of the lease, and shall recognise in profit or loss any gain or loss relating to the partial or full
+termination of the lease. The group make a corresponding adjustment to the right-of-use asset for all other lease modifications.
+564
+Sinopec SABIC Tianjin Petrochemical
+PipeChina
+At
+2,334
+1,252
+13,329
+11,707
+56,706
+49,793
+4,966
+4,742
+22,766
+Total comprehensive income/(loss)
+Other comprehensive (loss)/income
+Profit/(loss) for the year
+Turnover
+RMB million
+RMB million
+2019
+2020
+2019
+RMB million
+CIR
+6,444
+2,027
+2,234
+(1,936)
+575
+(127)
+1,994
+551
+5,078
+(21,116)
+2,645
+1,655
+6,444
+Zhongtian Synergetic Energy
+2020
+RMB million
+151
+(1,435)
+(19,180)
+411
+(372)
+424
+181
+1,994
+551
+6,513
+(308)
+Dividends declared by associates
+RMB million
+RMB million
+11,125
+8,728
+13,772
+14,583
+70,747
+Share of net assets from associates
+446
+440
+64,946
+interests
+Net assets attributable to minority
+7,481
+2,320
+20,529
+20,108
+111,250
+87,280
+28,106
+29,761
+7,792
+7,955
+1,160
+3,741
+RMB million
+RMB million
+2019
+2020
+2019
+SIBUR
+Sinopec Finance
+2020
+2020
+PipeChina (iv)
+RMB million
+Summarised income statement
+1,160
+7,955
+7,792
+11,125
+8,728
+13,772
+14,583
+70,747
+Carrying Amounts
+3,741
+285
+468
+284
+1,443
+141,157
+1,874,580
+7,100
+Total
+RMB million
+98,095
+32,214
+1,016,794
+5,147
+727,552
+1,563
+130,234
+390
+10,848
+Balance at 1 January 2020
+Accumulated depreciation:
+Balance at 31 December 2020
+Exchange adjustments
+Decreases for the year (i)
+Reclassifications
+Transferred from construction in progress
+Additions for the year
+Balance at 1 January 2020
+Cost:
+(125)
+(1,318)
+(6,329)
+(806)
+(98)
+393
+Reclassifications
+85,062
+48,380
+32,054
+4,628
+Additions for the year
+1,170,169
+Equipment,
+machinery
+and others
+RMB million
+570,658
+55,882
+(3,173)
+1,880,131
+(226)
+986,094
+757,592
+136,445
+(2,806)
+(141)
+(139,533)
+(132,398)
+543,629
+Oil and gas
+properties
+RMB million
+Plants and
+buildings
+RMB million
+625,706
+76
+(154)
+(144)
+(1,918)
+201
+(182)
+(loss)/income from associates (iii)
+Share of other comprehensive
+212
+The share of profit and other comprehensive income for the year ended 31 December 2020 in all individually immaterial associates accounted
+for using equity method in aggregate was RMB 4,264 million (2019: RMB 5,661 million) and RMB 817 million (2019: other comprehensive loss
+RMB 155 million) respectively. As at 31 December 2020, the carrying amount of all individually immaterial associates accounted for using equity
+method in aggregate was RMB 33,153 million (2019: RMB 59,144 million).
+91
+214
+651
+(194)
+1,095
+993
+709
+Share of profit/(loss) from associates
+2,517
+219
+773
+505,336
+Note:
+Disposals for the year mainly due to that the Group entered into the Agreements on transferring equity interests in the relevant oil and pipeline companies with
+PipeChina. Details of investment income are set out in Note 47.
+14
+625,692
+RMB million
+2019
+At 31 December
+589,285
+589,247
+38
+At 31 December
+2020
+RMB million
+(a) Fixed assets
+(i) Additions for the year mainly arise from the Company and Sinopec Natural Gas Limited Company acquiring 14% of PipeChina in total. The Group has a member
+stationed on the board of directors of PipeChina. According to the structure and the resolution mechanism of the board of directors, the Group can exercise
+significant influence on PipeChina.
+Total
+Fixed assets (a)
+The Group
+13 FIXED ASSETS
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+(iv) The summarised income statement for the year 2020 presents the operating results from the date when the Group can exercise significant influence on PipeChina
+to 31 December 2020.
+(iii) Including foreign currency translation differences.
+(ii) Sinopec is able to exercise significant influence in SIBUR since Sinopec has a member in SIBUR's Board of Directors and has a member in SIBUR's Management
+Board.
+Fixed assets pending for disposal
+(295)
+of the Company
+7,481
+(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;
+(a) the holding company of the Company;
+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, except for the two parties significantly
+influenced by a party. 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:
+(24) Related parties
+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
+Research costs and development costs that cannot meet the capitalisation criteria are recognised in profit or loss when incurred.
+(22) Research and development costs
+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.
+(21) Environmental expenditures
+Repairs and maintenance (including overhauling expenses) expenses are recognised in profit or loss when incurred.
+(20) Repairs and maintenance expenses
+(j) key management personnel of the Company's holding company;
+(k) close family members of key management personnel of the Company's holding company; and
+(I) an entity which is under control, joint control of principle individual investor, key management personnel or close family members of such
+individuals.
+(m) the Company and the Joint ventures or associates of other members of the Company's holding company (including the holding company and
+the subsidiaries); and
+Products
+Gasoline
+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
+In 2020, Ministry of Finance (MOF) issued “For the release of Announcement of the accounting treatment for the reduction of lease payment
+related with COVID-19 epidemic" (Cai Kuai [2020] No.10) and “Q&A of implementation of ASBE" (released in December 11, 2020), both of which
+have no significant impact on the Group's and the Company's financial statements for the year 2020.
+(26) Changes in significant accounting policies
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Annual Report 2020 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:
+(25) Segment reporting
+(n) Joint ventures of the Company and other joint ventures or associates of the Company.
+100
+Diesel
+For the year ended 31 December 2020
+Financial Statements (PRC)
+911
+694
+456
+384
+217
+joint ventures
+Share of net profit/(loss) from
+1,750
+1,224
+691
+1,400
+300
+Dividends from joint ventures
+1,645
+718
+(1,561)
+(6,720)
+1,507
+(1,442)
+1,235
+(2,301)
+(488)
+359
+(RMB/Ton)
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal associates:
+Sinopec Finance
+At
+(c) Major financial information of principal associates
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+108
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+The share of profit and other comprehensive income for the year ended 31 December 2020 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was RMB 993 million (2019: RMB 1,737 million) and RMB 808 million (2019: other comprehensive loss
+RMB 168 million) respectively. As at 31 December 2020, the carrying amount of all individually immaterial joint ventures accounted for using
+equity method in aggregate was RMB 26,099 million (2019: RMB 25,530 million).
+(98)
+(219)
+(522)
+(1,593)
+from joint ventures (iii)
+Share of other comprehensive loss
+823
+107
+Naphtha
+Solvent oil
+Lubricant oil
+(31,157)
+(170,621)
+(197,872)
+(55,562)
+Current liabilities
+971
+903
+56,424
+53,124
+182,646
+147,140
+18,926
+53,008
+655,982
+7,612
+2,402
+4,219
+3,721
+31,634
+(31,295)
+(8,315)
+(13,887)
+(699)
+2,320
+20,529
+20,108
+111,696
+87,720
+28,106
+29,761
+570,282
+Net assets
+30,678
+(166)
+(26,227)
+(28,422)
+(71,289)
+(58,941)
+(582)
+(514)
+(104,150)
+Non-current liabilities
+(936)
+(286)
+180,383
+175,139
+74,012
+At
+Effective from
+Total
+Others
+US Dollar
+EUR
+Renminbi
+Deposits at related parities
+Others
+EUR
+SIBUR
+At
+Hong Kong Dollar
+Renminbi
+Cash at bank
+Renminbi
+Cash on hand
+The Group
+CASH AT BANK AND ON HAND
+5
+Jet fuel oil
+Fuel oil
+US Dollar
+Net assets attributable to shareholders
+At
+CIR
+Current assets
+Non-current assets
+RMB million
+RMB million
+RMB million
+2019
+2020
+31 December
+31 December
+31 December
+2019
+Zhongtian Synergetic Energy
+At
+31 December
+2020
+RMB million
+31 December
+2020
+RMB million
+31 December
+2019
+RMB million
+31 December
+2020
+RMB million
+RMB million
+2020
+31 December
+At
+At
+At
+31 December
+2019
+RMB million
+Decreases for the year (i)
+(2,370)
+(462)
+4,062
+10.3
+3,131
+77.1
+260
+0.5
+Between two and three years
+149
+0.4
+85
+57.0
+129
+0.2
+Over three years
+610
+1.5
+527
+86.4
+603
+Between one and two years
+98.2
+55,231
+0.3
+Percentage
+Percentage
+of allowance
+Amount
+to total
+accounts
+receivable
+to accounts
+receivable
+Allowance
+balance
+1.1
+Amount
+RMB million
+%
+RMB million
+%
+RMB million
+Within one year
+34,626
+87.8
+117
+to total
+accounts
+receivable
+At 31 December 2020
+Total
+100.0
+Percentage
+of allowance
+Percentage
+to total
+to accounts
+to total
+Amount
+accounts
+receivable
+receivable
+accounts
+Allowance
+balance
+Amount
+receivable
+Allowance
+At 31 December 2019
+Percentage
+of allowance
+to accounts
+Percentage
+At 31 December 2020
+The Company
+1,848
+3,860
+56,223
+100.0
+62521O
+%
+Allowance
+RMB million
+At 31 December 2019
+Percentage
+Percentage
+of allowance
+39,447
+to accounts
+%
+1,204
+2.2
+70
+26.9
+65
+50.4
+509
+84.4
+receivable
+balance
+The Group
+131
+21,544
+21,675
+1,889
+6.9762
+13,174
+1,377
+0.8416
+1,159
+17
+0.8958
+15
+1
+8.0250
+8
+1
+7.8155
+8
+2,403
+85
+130,995
+92,220
+6,875
+6.5249
+1,054
+78,924
+2,109.76
+1,411.20
+2,105.20
+1,948.64
+1,711.52
+1,218.00
+1,495.20
+At 31 December 2020
+At 31 December 2019
+23,737
+Original
+currency
+million
+Exchange
+rates
+RMB
+million
+currency
+million
+Exchange
+rates
+RMB
+million
+8
+14
+120,542
+Original
+17,809
+4,443
+49
+6.5249
+8.0250
+ACCOUNTS RECEIVABLE
+Accounts receivable
+Less: Allowance for doubtful accounts
+Total
+Ageing analysis on accounts receivable is as follows:
+The Group
+The Company
+At 31 December
+2020
+RMB million
+7
+At 31 December
+2019
+RMB million
+At 31 December
+2020
+RMB million
+2019
+RMB million
+39,447
+56,223
+3,860
+35,587
+1,848
+54,375
+21,871
+108
+21,763
+At 31 December
+receivable
+balance
+For the year ended 31 December 2020
+Financial Statements (PRC)
+28,993
+394
+2,560
+14
+6.9762
+17,862
+7.8155
+106
+293
+55
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+53,417
+184,412
+128,052
+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.
+At 31 December 2020, time deposits with financial institutions of the Group amounted to RMB 96,853 million (2019: RMB 67,614 million).
+6 DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and swaps contracts. See Note 62.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+101
+Financial Statements (PRC)
+102
+35,832
+RMB million
+% RMB million
+%
+2.9
+8
+Over three years
+90
+1.8
+Financial Statements (PRC)
+109
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+291,547
+283,695
+3
+4
+At 31 December
+2019
+RMB million
+291,544
+283,691
+RMB million
+At 31 December
+2020
+Total
+Fixed assets pending for disposal
+Fixed assets (a)
+142
+Between two and three years
+20
+5.4
+Allowance
+RMB million
+%
+RMB million
+prepayments
+balance
+%
+Amount
+RMB million
+to total
+prepayments
+allowance to
+prepayments
+Allowance
+The Company
+balance
+RMB million
+%
+Within one year
+4,440
+89.9
+4,402
+85.6
+Between one and two years
+267
+%
+589,247
+625,692
+414,957
+140,360
+4,739
+683
+Additions for the year
+78,719
+31,179
+43,563
+3,977
+Balance at 1 January 2020
+Provision for impairment losses:
+6,292
+(2,705)
+1,202,632
+572,603
+58,484
+Balance at 31 December 2020
+(136)
+(2,520)
+(49)
+Exchange adjustments
+(49,894)
+(47,062)
+571,545
+to total
+prepayments
+11,714
+Decreases for the year (i)
+70,375
+Balance at 31 December 2019
+378,227
+136,872
+74,148
+Balance at 31 December 2020
+Net book value:
+88,252
+36,322
+Reclassifications
+48,117
+Balance at 31 December 2020
+(185)
+(2)
+(183)
+Exchange adjustments
+(1,996)
+(1,147)
+(2)
+(847)
+3,813
+1,735
+Amount
+Percentage
+51
+0.2
+15
+29.4
+Over three years
+99
+0.5
+87
+87.9
+151
+0.7
+99
+65.6
+Total
+21,871
+100.0
+108
+21,675
+100.0
+26.5
+13
+0.2
+49
+RMB million
+%
+RMB million
+%
+Within one year
+21,647
+99.0
+1
+21,368
+131
+98.6
+76
+0.3
+7
+9.2
+105
+0.5
+17
+16.2
+Between two and three years
+Between one and two years
+At 31 December 2020 and 31 December 2019, the total amounts of the top five accounts receivable of the Group are set out below:
+Total amount (RMB million)
+Percentage to the total balance of accounts receivable
+Allowance for doubtful accounts
+Total
+Ageing analysis of prepayments is as follows:
+The Group
+The Company
+At 31 December
+2020
+RMB million
+At 31 December
+2019
+RMB million
+4,939
+77
+4,862
+Less: Allowance for doubtful accounts
+5,143
+80
+5,063
+At 31 December
+2019
+RMB million
+2,671
+6
+2,665
+The Group
+At 31 December 2020
+Percentage
+Percentage of
+allowance to
+At 31 December 2019
+At 31 December
+2020
+RMB million
+2,637
+11
+2,626
+Percentage of
+Prepayments
+At 31 December 2020, the Group considers that its bills of acceptance issued by banks do not pose a significant credit risk and will not cause any
+significant loss due to the default of drawers.
+At 31 December
+At 31 December
+2020
+2019
+15,628
+9,878
+39.6%
+17.6%
+2,057
+9 PREPAYMENTS
+732
+Accounts receivable (net of allowance for doubtful accounts) 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. Information about the impairment of accounts
+receivable and the Group exposure to credit risk can be found in Note 62.
+During 2020 and 2019, the Group and the Company had no individually significant accounts receivable been fully or substantially provided
+allowance for doubtful accounts.
+During 2020 and 2019, 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.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+8 RECEIVABLES FINANCING
+Receivables financing represents mainly the bills of acceptance issued by banks for sales of goods and products.
+At 31 December 2020, the Group's derecognised but outstanding bills due to endorsement or discount amounted to RMB 25,740 million (2019:
+RMB 31,584 million).
+Sales are generally on a cash term. Credit is generally only available for major customers with well-established trading records. Amounts due from
+China Petrochemical Corporation ("Sinopec Group Company") and fellow subsidiaries are repayable under the same terms.
+1,139
+13 January 2015
+433
+304,687
+Total
+RMB million
+losses
+RMB million
+(7,879)
+22,816
+15,530
+362
+274,220
+29,008
+Provision for
+impairment
+Investments in
+associates
+RMB million
+Investments in
+joint ventures
+RMB million
+Investments in
+subsidiaries
+RMB million
+188,342
+(22)
+(1,949)
+(1,949)
+(3,548)
+48,060
+136,872
+24
+(46)
+(1,757)
+111
+(913)
+(955)
+(26,976)
+(30)
+(11,933)
+(2,441)
+(9,135)
+(26,490)
+(486)
+(2,798)
+28
+55,018
+1,346
+2,291
+77,430
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+106
+Financial Statements (PRC)
+105
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Details of the Company's principal subsidiaries are set out in Note 57.
+For the year ended 31 December 2020, the Group and the Company had no individually significant long-term investment impairment.
+343,356
+(7,885)
+(6)
+(6)
+(40,703)
+(1,542)
+35
+(182)
+69,540
+14,762
+266,939
+(3,155)
+(1,259)
+(36,289)
+(325)
+(1,217)
+35
+(182)
+3,637
+(1,437)
+(1,004)
+(58)
+6,712
+152,204
+74,534
+194,142
+3,100
+151,895
+Total
+Less: Provision for diminution in value of inventories
+2,585
+196,727
+154,995
+2,578
+3,372
+91,554
+78,415
+12,687
+13,053
+89,908
+60,155
+RMB million
+RMB million
+2019
+At 31 December
+At 31 December
+2020
+Spare parts and consumables
+Finished goods
+Work in progress
+Raw materials
+The Group
+11 INVENTORIES
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December 2020, the provision for diminution in value of inventories of the Group was primarily due to the costs of finished goods were higher
+than net realisable value.
+Principal joint ventures and associates of the Group are as follows:
+12 LONG-TERM EQUITY INVESTMENTS
+Balance at 1 January 2020
+Total
+RMB million
+Provision for
+impairment
+losses
+RMB million
+(1,710)
+6,077
+in associates
+RMB million
+96,481
+72,237
+57,433
+2,297
+635
+RMB million
+joint ventures
+Investments
+Investments in
+Balance at 31 December 2020
+Movement of provision for impairment
+Disposals for the year (i)
+Dividends declared
+Other equity movements under the equity method
+Change of other comprehensive loss under the equity method
+Share of profits less losses under the equity method
+Additions for the year (i)
+Balance at 1 January 2020
+The Company
+Balance at 31 December 2020
+Movement of provision for impairment
+Other movements
+Foreign currency translation differences
+Disposals for the year (i)
+Dividends declared
+Other equity movements under the equity method
+Change of other comprehensive loss under the equity method
+Share of profits less losses under the equity method
+Additions for the year (i)
+The Group
+104
+(a) Principal joint ventures and associates
+Percentage of
+equity/voting
+right directly or
+indirectly held
+(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:
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Except that SIBUR is a public joint stock company, other joint ventures and associates above are limited companies.
+50.00%
+10,002 USD
+Crude oil and natural gas extraction
+ΝΑ
+British Virgin
+Islands
+The Republic of
+Kazakhstan
+38.75%
+17,516
+FREP
+Mining coal and manufacturing of
+coal-chemical products
+Peng Yi
+PRC
+PRC
+Zhongtian Synergetic Energy Company
+products
+RUB
+manufacturing petrochemical
+10.00%
+21,784 million
+Processing natural gas and
+NA
+Russia
+Russia
+Limited ("Zhongtian Synergetic Energy")
+Caspian Investments Resources Ltd.
+("CIR")
+RMB million
+RMB million RMB million
+At
+4,777
+11,977
+7,492
+Other current assets
+3,242
+5,259
+733
+1,408
+4,485
+1,280
+1,154
+1,838
+5,603
+7,448
+Cash and cash equivalents
+Current assets
+RMB million
+2019
+2019
+RMB million RMB million
+At
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2020
+2019
+2020
+2019
+2020
+2019
+2020
+2020
+RMB million RMB million
+RMB million RMB million
+At
+Sinopec SABIC Tianjin
+At
+At
+At
+YASREF
+At
+Taihu
+At
+At
+BASF-YPC
+At
+PAO SIBUR Holding ("SIBUR") (ii)
+49.00%
+18,000
+pipelines and auxiliary facilities
+Provision of non-banking financial
+services
+ΝΑ
+Cyprus
+Russia
+Taihu Limited ("Taihu")
+petrochemical products
+40.00%
+12,704
+Manufacturing and distribution of
+Hong Jianqiao
+PRC
+PRC
+BASF YPC Company Limited ("BASF-YPC")
+oil products
+50.00%
+14,758
+Manufacturing refining
+Gu Yuefeng
+PRC
+PRC
+Fujian Refining & Petrochemical Company
+Limited ("FREP")
+1. Joint ventures
+by the Company
+RMB million
+Principal activities
+Capital
+Legal
+representative
+Register
+location
+Principal place
+of business
+Name of investees
+Crude oil and natural gas
+Registered
+25,000 USD
+extraction
+Zhao Dong
+PRC
+PRC
+14.00%
+500,000
+Operation of oil and natural gas
+Zhang Wei
+PRC
+PRC
+China Oil & Gas Pipeline Network
+Corporation ("PipeChina”) (i)
+Sinopec Finance Company Limited
+("Sinopec Finance")
+2. Associates
+("Sinopec SABIC Tianjin")
+50.00%
+10,520
+Manufacturing and distribution of
+petrochemical products
+AL-SHAIKH
+Company Limited
+AHMED
+PRC
+PRC
+49
+USD
+37.50%
+1,560 million
+Petroleum refining and processing
+��
+Saudi Arabia
+Saudi Arabia
+Yanbu Aramco Sinopec Refining
+Company Ltd. ("YASREF")
+49.00%
+4,937
+During the year ended 31 December 2020 and 2019, 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.
+Within one year
+41.2%
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+103
+1,940
+37.7%
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+1,131
+22.9%
+2019
+2020
+At 31 December
+At 31 December
+Percentage to the total balance of prepayments
+10 OTHER RECEIVABLES
+Total amount (RMB million)
+100.0
+2,671
+11
+180 15
+3.5
+5.1
+0.8
+053
+3
+3.2
+85
+3.9
+4
+6
+Other receivables
+Less: Allowance for doubtful accounts
+Total
+RMB million
+Percentage
+to total other
+to other
+receivables
+balance
+Allowance
+receivables
+Amount
+to total other
+Percentage
+of allowance
+Percentage
+At 31 December 2020
+The Group
+955
+78,872
+79,827
+2019
+RMB million
+897
+37,938
+1,456
+24,190
+38,835
+25,646
+At 31 December
+At 31 December
+2020
+RMB million
+At 31 December
+2019
+RMB million
+The Company
+1,531
+33,602
+35,133
+RMB million
+At 31 December
+2020
+The Group
+Ageing analysis of other receivables is as follows:
+At 31 December 2020 and 31 December 2019, the total amounts of the top five prepayments of the Group are set out below:
+Total
+Over three years
+100.0
+Percentage of
+allowance to
+prepayments
+to total
+prepayments
+Amount
+At 31 December 2019
+Percentage
+At 31 December 2020
+The Company
+80
+41.2
+49
+15.2
+5
+4.4
+26
+5630
+100.0
+2.3
+119
+5,143
+77
+100.0
+4,939
+Total
+0.6
+33
+5.6
+11.5
+589
+7.5
+54
+Allowance
+%
+balance
+%
+3.9
+102
+2,637
+2
+1.5
+-
+39
+1.5
+39
+1
+4.6
+123
+4.4
+7
+6.0
+159
+Between one and two years
+Between two and three years
+90.7
+2,424
+88.6
+2,337
+Within one year
+Percentage of
+allowance to
+prepayments
+balance
+%
+RMB million
+%
+Allowance
+Percentage
+to total
+prepayments
+Amount
+RMB million
+%
+RMB million
+RMB million
+During the year ended 31 December 2020 and 2019, the Group and the Company had no individually significant other receivables been fully or
+substantially provided allowance for doubtful accounts.
+RMB million
+23,888
+17.3
+13,826
+1
+5.5
+2,123
+Total
+Over three years
+Between two and three years
+Between one and two years
+55.6
+44,402
+55.0
+21,378
+3
+Within one year
+RMB million
+%
+to other
+receivables
+balance
+of allowance
+Percentage
+Allowance
+receivables
+Amount
+RMB million
+%
+RMB million
+%
+RMB million
+to total other
+%
+1,618
+4.2
+5
+two to three
+years and over
+three years
+64.3%
+2019
+10,561
+At 31 December
+Percentage to the total balance of other receivables
+Allowance for doubtful accounts
+Ageing
+Within one year,
+one to two years,
+2020
+22,581
+At 31 December
+Total amount (RMB million)
+At 31 December 2020 and at 31 December 2019, the total amounts of the top five other receivables of the Group are set out below:
+955
+100.0
+79,827
+897
+54.4
+100.0
+38,835
+6.5
+951
+18.4
+14,666
+6.5
+891
+35.3
+13,716
+1
+8.7
+6,933
+0.3
+Percentage
+to other
+receivables
+balance
+Allowance
+receivables
+198
+6.1
+86.5
+22,196
+1,554
+Allowance
+RMB million
+%
+receivables
+Amount
+RMB million
+%
+22328
+76.8
+7.2
+2.3
+0.2
+0276
+1,200
+4.4
+1,563
+Over three years
+84
+3.3
+1,169
+Between two and three years
+196
+24.2
+8,513
+Between one and two years
+51
+68.1
+0.8
+Within one year
+Total
+100.0
+Amount
+to total other
+Percentage
+of allowance
+Percentage
+At 31 December 2019
+At 31 December 2020
+The Company
+1,456
+3.3
+0333
+4304
+73.4
+35.9
+1,246
+71
+52
+87
+0.4
+%
+to other
+receivables
+balance
+Percentage
+of allowance
+851860
+8606
+At 31 December 2019
+100.0
+6.6
+1,698
+25,646
+1,531
+35,133
+767
+1,223
+7,516
+2020
+2019
+2020
+2019
+RMB million
+RMB million
+RMB million RMB million
+RMB million
+RMB million
+2020
+RMB million
+2019
+RMB million
+2020
+2019
+RMB million RMB million
+Turnover
+38,691
+57,047
+Interest income
+118
+124
+15,701
+27
+19,590
+9,528
+32
+291
+2019
+15,222
+94
+2020
+YASREF
+Share of net assets from
+joint ventures
+7,416
+7,501
+5,568
+5,804
+5,605
+6,286
+4,213
+7,491
+7,133
+Carrying Amounts
+7,416
+7,501
+5,568
+5,804
+5,605
+6,286
+4,213
+7,491
+7,133
+Summarised income statement
+FREP
+BASF-YPC
+Taihu
+Sinopec SABIC Tianjin
+464
+37,337
+17
+14,881
+(236)
+(8)
+1,057
+(708)
+(378)
+(579)
+(379)
+(197)
+(87)
+Tax expense
+2,178
+954
+(1,292)
+(7,193)
+3,320
+2,304
+2,314
+1,518
+964
+520
+Profit/(loss) before taxation
+(134)
+(131)
+2,336
+(1,470)
+(533)
+75,940
+58
+Profit/(loss) for the year
+767
+183
+171
+Interest expense
+(535)
+(597)
+(16)
+(26)
+(20)
+(265)
+(1,136)
+income/(loss)
+Total comprehensive
+(261)
+(584)
+(1,105)
+(3,368)
+Other comprehensive loss
+1,645
+718
+(1,300)
+(6,136)
+2,612
+1,926
+1,735
+1,139
+433
+412
+20,541
+Net assets attributable to
+(456)
+(237)
+(38)
+(57)
+(9,520)
+(7,445)
+(998)
+(500)
+Other current liabilities
+(5,147)
+(7,090)
+(2,190)
+(1,808)
+(1,043)
+(1,815)
+(8,644)
+(12,504)
+(3,052)
+(2,896)
+Total current liabilities
+(6,350)
+(8,370)
+(2,646)
+(2,045)
+(1,081)
+(1,280)
+(1,872)
+Current financial liabilities
+14,878
+2,665
+11,311
+minority interests
+4,501
+Total current assets
+14,940
+17,580
+6,615
+6,091
+2,503
+6,821
+8.924
+12,044
+7,924
+7,743
+Non-current assets
+15,237
+17,267
+9,993
+10,498
+12,531
+10,453
+45,413
+50,548
+18,258
+Current liabilities
+(18,164) (19,949)
+(1,203)
+(3,396)
+(31,408)
+(7,151)
+(4,960)
+Net assets
+14,831
+15,002
+13,920
+14,509
+11,851
+13,293
+14,265
+11,235
+(31,658)
+14,981
+Net assets attributable to
+shareholders of the company
+14,831
+15,002
+13,920
+14,509
+11,439
+12,829
+4,515
+(4,050)
+11,235
+14,981
+14,265
+(2,109)
+4,515
+(2,102)
+Non-current liabilities
+Non-current financial liabilities
+(8,761)
+(11,185)
+(85)
+(125)
+(29,650)
+(6,773)
+(4,592)
+Other non-current liabilities
+(235)
+(290)
+(29,445)
+(35)
+(42)
+(42)
+(11,475)
+(8,996)
+(35)
+(368)
+Total non-current liabilities
+(1,963)
+(2,008)
+(1,984)
+(2,017)
+(378)
+52,338
+Additions for the year
+2,759
+187
+Decreases for the year
+2,318
+513
+6,002
+(336)
+3,535
+225
+19,391
+101,968
+3,601
+22,534
+Balance at 1 January 2020
+Accumulated amortisation:
+172,639
+6,150
+53,567
+5,577
+(475)
+5,377
+(204)
+Balance at 31 December 2020
+(2,341)
+3,277
+(41)
+47
+(144)
+(29)
+(187)
+(3)
+(24)
+71
+24
+899
+17
+145
+27
+2222
+482
+226
+(187)
+Balance at 31 December 2020
+Decreases for the year
+Additions for the year
+482
+228
+Balance at 1 January 2020
+57,632
+3,904
+21,522
+3.461
+3,788
+24,957
+Balance at 31 December 2020
+(708)
+(2)
+(1,475)
+602
+12,704
+Balance at 31 December 2019
+8,582
+1,088
+7,494
+(154)
+(101)
+(53)
+4,374
+623
+3,751
+4,362
+566
+3,796
+117,319
+2,272
+115.047
+(1,754)
+(126)
+(1,628)
+1,879
+1,277
+117,194
+1,121
+116,073
+RMB million
+RMB million
+27
+107,553
+112,277
+1,184
+555
+108,737
+112,832
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+654
+493
+729
+33
+10,795
+162,276
+5,700
+53,549
+5,035
+5,344
+92,648
+Additions for the year
+Balance at 1 January 2020
+Decreases for the year
+Cost:
+Total
+Others
+RMB million
+rights
+RMB million
+RMB million
+technology
+Patents
+RMB million
+RMB million
+Operation
+Non-patent
+Land use
+rights
+The Group
+16 INTANGIBLE ASSETS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+RMB million
+189
+(676)
+(19,039)
+941
+At 31 December 2020, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 17,718 million
+(2019: RMB 16,605 million), of which RMB 4,349 million (2019: RMB 1,992 million) was incurred for the year ended 31 December 2020, because
+it was not probable that the related tax benefit will be realised. These deductible losses carried forward of RMB 3,089 million, RMB 5,938 million,
+RMB 2,356 million, RMB 1,986 million and RMB 4,349 million will expire in 2021, 2022, 2023, 2024, 2025 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 2020, write-down of deferred tax assets
+amounted to RMB 75 million (2019: RMB 189 million) (Note 52).
+20 OTHER NON-CURRENT ASSETS
+Other non-current assets mainly represent time deposits with terms of three years, prepayments for construction projects and purchases of
+equipment.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+21 DETAILS OF IMPAIRMENT LOSSES
+At 31 December 2020, impairment losses of the Group are analysed as follows:
+Note
+Balance at
+1 January
+2020
+RMB million
+Other
+Balance at
+Provision
+for the year
+RMB million
+Written back
+for the year
+RMB million
+Written off
+for the year
+At 31 December
+2019
+RMB million
+17,616
+6,809
+increase
+(decrease)
+2020
+RMB million
+25,054
+8,124
+Deferred tax assets
+Deferred tax liabilities.
+(508)
+371
+318
+Deferred tax assets/(liabilities)
+35,969
+24,905
+(882)
+(14,098)
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+Deferred tax assets
+Deferred tax liabilities
+Deferred tax assets and liabilities after the consolidated elimination adjustments are as follows:
+At 31 December
+2020
+RMB million
+10,915
+10,915
+At 31 December
+2019
+RMB million
+7,289
+7,289
+At 31 December
+(517)
+31 December
+RMB million
+195
+(220)
+(18)
+118
+1,531
+3,384
+2,549
+(372)
+(41)
+(52)
+5,468
+Inventories
+11
+2,585
+11,689
+(328)
+(10,795)
+1,456
+2020
+10
+77
+RMB million
+RMB million
+Allowance for doubtful accounts
+Included: Accounts receivable
+7
+1,848
+2,173
+(68)
+(23)
+(70)
+3,860
+Prepayments
+9
+80
+181
+(84)
+(100)
+Other receivables
+595
+869
+(7)
+Other units without individual significant goodwill
+Total
+At 31 December
+At 31 December
+2020
+RMB million
+2019
+RMB million
+4,043
+4,043
+2,541
+2,541
+1,004
+1,004
+1,032
+1,109
+8,620
+8,697
+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 11.4% to 13.4% (2019: 11.0% to
+11.9%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no major impairment loss
+was recognised.
+Sinopec Beijing Yanshan Petrochemical Branch
+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.
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO")
+Net book value:
+Balance at 31 December 2020
+Balance at 31 December 2019
+76,785
+69,886
+1,107
+1,261
+2,089
+1,731
+31,856
+34,013
+2,229
+114,066
+2,148
+109,039
+Amortisation of the intangible assets of the Group charged for the year ended 31 December 2020 is RMB 5,907 million (2019: RMB 5,703 million).
+17 GOODWILL
+Goodwill is allocated to the following Group's cash-generating units:
+Name of investees
+Principal activities
+Sinopec Zhenhai Refining and Chemical Branch
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of petrochemical products
+18 LONG-TERM DEFERRED EXPENSES
+Long-term deferred expenses primarily represent catalysts expenditures and improvement expenditures of fixed assets.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Other equity instrument investments
+Intangible assets
+Others
+2,411
+2,546
+1,286
+1,142
+1,790
+116
+15,793
+16,463
+(4,420)
+(13,415)
+(384)
+(12,317)
+13,322
+3,594
+127
+131
+(11)
+Tax value of losses carried forward
+Fixed assets
+Cash flow hedges
+Payables
+113
+Financial Statements (PRC)
+114
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+19 DEFERRED TAX ASSETS AND LIABILITIES
+Deferred tax assets and liabilities before the consolidated elimination adjustments are as follows:
+17
+Deferred tax assets
+RMB million
+At 31 December At 31 December
+2020
+2019
+RMB million
+At 31 December
+At 31 December
+2020
+RMB million
+2019
+RMB million
+Receivables and inventories
+Deferred tax liabilities
+Provision for impairment losses:
+3
+3,100
+9,626
+(37,824)
+47,450
+(1,790)
+30,051
+(622)
+11,778
+45,459
+The Group
+32 DEBENTURES PAYABLE
+Long-term loans are primarily unsecured, and carried at amortised costs.
+39,677
+Total
+Between two and five years
+Between one and two years
+The maturity analysis of the Group's long-term loans is as follows:
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+Total
+Less: Current portion
+6.9762
+1,387
+6.5249
+After five years
+At 31 December
+2020
+RMB million
+3,520
+At 31 December
+2019
+(i) The Company issued corporate bonds with a maturity of three years on 31 March 2020 at par value of RMB 100. The total issued amount of the corporate bonds is
+RMB 10 billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 2.70% per annum and the interest is paid once a year.
+19,157
+38,356
+32,157
+(13,000)
+At 31 December
+2019
+RMB million
+38,356
+At 31 December
+2020
+RMB million
+Note:
+Total
+Less: Current portion
+- Corporate Bonds (i)
+Debentures payable:
+39,677
+22,450
+2,435
+45,459
+12,138
+39,504
+5,089
+RMB million
+213
+Interest rates at 1.60% per annum at
+31 December 2020 with maturities
+in 2027
+- US Dollar loans
+11,013
+Interest rates ranging from interest
+- Renminbi loans
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+Long-term bank loans
+Less: Current portion
+Interest rates at 1.55% per annum at
+31 December 2020 with maturities
+through 2039
+31 December 2020 with maturities
+through 2030
+Interest rates ranging from interest
+1.08% to 5.23% per annum at
+- US Dollar loans
+- Renminbi loans
+Long-term bank loans
+Interest rate and final maturity
+The Group's long-term loans represent:
+31 LONG-TERM LOANS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+116
+The Company issued Super & Short-term Commercial Paper on 20 August 2020 at par value of RMB 100, and the interest will be paid at its
+maturity. The total issued amount of the 169-day corporate bonds is RMB 3 billion with a fixed rate at 1.70% per annum.
+1,678
+69,490
+1.08% to 5.23% per annum at
+The Company issued corporate bonds with a maturity of three years on 27 May 2020 at par value of RMB 100. The total issued amount of the corporate bonds is
+RMB 10 billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 2.20% per annum and the interest is paid once a year.
+These corporate bonds are carried at amortised cost, including USD denominated corporate bonds of RMB 11,379 million, and RMB denominated corporate bonds of
+RMB 26,977 million (2019: USD denominated corporate bonds of RMB 12,157 million, and RMB denominated corporate bonds of RMB 20,000 million).
+31 December 2020 with maturities
+through 2036
+At 31 December 2019
+33,681
+(4,637)
+127
+6.9762
+18
+92
+6.5249
+14
+31,714
+38,226
+million
+RMB
+Exchange
+rates
+currency
+million
+RMB
+million
+Exchange
+rates
+currency
+million
+Original
+Original
+At 31 December 2020
+15,198
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Financial Statements (PRC)
+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.
+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 reserve for every 10 existing shares.
+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.
+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.
+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.
+The Group (Continued)
+36 SHARE CAPITAL (Continued)
+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.
+For the year ended 31 December 2020
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+118
+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 SAR 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 SAR 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).
+Total
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+All A shares and H shares rank pari passu in all material aspects.
+Capital management
+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 shareholders
+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 2020, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 10.1% (2019: 7.4%) and 49.0% (2019:
+50.1%), respectively.
+Financial Statements (PRC)
+119
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+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.
+122,558
+804
+(138)
+(972)
+122,864
+RMB million
+Balance at 31 December 2020
+Others
+Transaction with minority interests
+Adjustment for business combination of entities under common control
+Balance at 1 January 2020
+The movements in capital reserve of the Group are as follows:
+37 CAPITAL RESERVE
+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 31 and 59, respectively.
+121,071
+25,513
+95,558
+RMB million
+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:
+34 PROVISIONS
+177,674
+15,198
+192,872
+RMB million
+2019
+At 31 December
+172,306
+15,292
+187,598
+RMB million
+At 31 December
+2020
+Deduct Current portion of lease liabilities (Note 29)
+Total
+Lease liabilities
+The Group
+33 LEASE LIABILITY
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+Financial Statements (PRC)
+Balance at 1 January 2020
+117
+Provision for the year
+Decrease for the year
+At 31 December
+2019
+(141)
+43,713
+(1,490)
+1,343
+1,563
+42,438
+The Group
+RMB million
+121,071
+95,558
+25,513
+RMB million
+At 31 December
+2020
+95,557,771,046 listed A shares (2019: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 listed H shares (2019: 25,513,438,600) of RMB 1.00 each
+Registered, issued and fully paid:
+The Group
+36 SHARE CAPITAL
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+35 OTHER NON-CURRENT LIABILITIES
+Balance at 31 December 2020
+Exchange adjustments
+Accretion expenses
+(51)
+13,000
+39,614
+Original
+currency
+Exchange
+currency
+Original
+At 31 December 2019
+At 31 December 2020
+Total
+Euro loans
+Exchange
+- Hong Kong Dollar loans
+-Renminbi loans
+fellow subsidiaries
+Short-term loans from Sinopec Group Company and
+-Renminbi loans
+Short-term other loans
+- US Dollar loans
+-Renminbi loans
+Short-term bank loans
+- US Dollar loans
+million
+rates RMB million
+million
+3,298
+6.5249
+505
+2,709
+1,141
+5,465
+4,642
+22
+3
+22
+RMB million
+90
+6.9762
+13
+-
+6.5249
+25,709
+25,619
+16,111
+16,111
+rates RMB million
+The Group's short-term loans represent:
+22 SHORT-TERM LOANS
+The reasons for recognising impairment losses are set out in the respective notes of respective assets.
+111,223
+(171)
+844
+1,844
+14
+Construction in progress
+88,252
+214
+(2,395)
+11,714
+78,719
+13
+Fixed assets
+3,548
+(113)
+(4)
+1,955
+1,710
+12
+Long-term equity investments
+(470)
+321
+2,047
+16
+(458)
+(13,411)
+(714)
+28,798
+97,008
+6
+14
+(14)
+6
+Total
+Others
+7,861
+7,861
+17
+Goodwill
+941
+(5)
+47
+899
+Intangible assets
+13,000
+37
+31
+Exchange
+At 31 December 2019
+Original
+Original
+currency
+million
+At 31 December 2020
+Debentures payable due within one year
+- Renminbi debentures
+Debentures payable due within one year
+Long-term loans due within one year
+rates
+- Renminbi loans
+Long-term loans from Sinopec Group Company and
+- US Dollar loans
+- 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 2020 and 31 December 2019, other payables of the Group over one year primarily represented payables for constructions.
+28 OTHER PAYABLES
+fellow subsidiaries
+RMB million
+currency
+million
+Exchange
+37,824
+As at 31 December 2020, other current liabilities mainly represent output VAT to be transferred and short-term corporate bonds.
+30 OTHER CURRENT LIABILITIES
+At 31 December 2020 and 31 December 2019, the Group had no significant overdue long-term loans.
+22,493
+Non-current liabilities due within one year
+1,942
+Others
+15,292
+Lease liabilities due within one year
+622
+5,259
+1,765
+25
+6.9762
+4
+4,613
+24
+6.5249
+4
+RMB million
+rates
+Total
+69,524
+76,843
+8,170
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+115
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+At 31 December 2020 and 31 December 2019, the Group had no significant overdue short-term loans.
+At 31 December 2020, the Group's interest rates on short-term loans were from interest 0.63% to 4.55% (At 31 December 2019: from interest 0.80%
+to 6.53%) per annum. The majority of the above loans are by credit.
+31,196
+25
+7.8155
+3
+172
+20,756
+8.0250
+21
+495
+2,236
+6.9762
+0.8958
+553
+23 BILLS PAYABLE
+0.8416
+Bills payable primarily represented bank accepted bills for the purchase of material, goods and products. Bills payable were due within one year.
+24 ACCOUNTS PAYABLE
+8,278
+136
+132
+3,267
+6,586
+53,007
+4,944
+At 31 December
+2019
+RMB million
+RMB million
+5,085
+56,762
+At 31 December
+2020
+Mineral resources compensation fee payable
+Other taxes
+Value-added tax payable
+Consumption tax payable
+Income tax payable
+The Group
+27 TAXES PAYABLE
+At 31 December 2020 and 31 December 2019, the Group's employee benefits payable primarily represented wages payable and social insurance
+payables.
+26 EMPLOYEE BENEFITS PAYABLE
+As at 31 December 2020 and 31 December 2019, the Group's contract liabilities primarily represent advances from customers. Related performance
+obligations are satisfied and revenue is recognised within one year.
+25 CONTRACT LIABILITIES
+At 31 December 2020 and 31 December 2019, the Group had no individually significant accounts payable aged over one year.
+At 31 December 2020 and 31 December 2019, the Group had no overdue unpaid bills.
+Total
+(3,037)
+Land
+(2,288)
+(2,593)
+(101)
+1,917
+41,406
+(803)
+21,428
+(305)
+(904)
+22,250
+22,973
+108,359
+114,845
+153,082
+153,726
+283,691
+291,544
+64,751
+Balance at 31 December 2019
+Balance at 31 December 2020
+Net book value:
+Provision for impairment losses:
+Balance at 1 January 2020
+1,795
+37,383
+20,842
+60,020
+528
+4,023
+3,677
+8,228
+Additions for the year
+Reclassifications
+Transferred from subsidiaries
+Transferred to subsidiaries
+Decreases for the year
+Balance at 31 December 2020
+(i) Disposals for the year ended 31 December 2020 mainly due to the Company and its subsidiaries disposed their oil and gas pipeline and
+ancillary facilities to PipeChina.
+803,748
+The additions to oil and gas properties of the Group and the Company for the year ended 31 December 2020 included RMB 1,563 million (2019:
+RMB 1,408 million) (Note 34) and RMB 1,256 million (2019: RMB 1,131 million), respectively of the estimated dismantlement costs for site
+restoration.
+At 31 December 2020 and 31 December 2019, the Group and the Company had no individually significant fixed assets which were pledged.
+Balance at 31 December 2020
+Balance at 31 December 2019
+At 31 December 2020, major construction projects of the Group are as follows:
+The Group
+The Company
+RMB million
+Net book value:
+RMB million
+60,906
+130,283
+62,427
+(20,520)
+(4,771)
+(2,120)
+175,716
+Balance at 31 December 2020
+Exchange adjustments
+Decreases for the year
+At 31 December 2020 and 31 December 2019, the Group and the Company had no individually significant fixed assets which were temporarily
+idle or pending for disposal.
+At 31 December 2020 and 31 December 2019, the Group and the Company had no individually significant fully depreciated fixed assets which
+were still in use.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+14 CONSTRUCTION IN PROGRESS
+Cost:
+Balance at 1 January 2020
+Additions for the year
+Disposals for the year
+Transferred to subsidiaries
+Dry hole costs written off
+Transferred to fixed assets
+Reclassification to other assets
+Exchange adjustments
+Balance at 31 December 2020
+Provision for impairment losses:
+Balance at 1 January 2020
+Additions for the year
+Impairment losses on fixed assets for the year ended 31 December 2020 primarily represent impairment losses recognised in the exploration
+and production ("E&P") segment of RMB 8,435 million (2019: RMB 0 million), the chemicals segment of RMB 2,611 million (2019:
+RMB 4 million), marketing and distribution segment of RMB 442 million (2019: RMB 52 million) and the refining segment of RMB 226 million
+(2019: RMB 140 million). The impairment losses in the E&P segment were mainly the impairment losses of fixed assets relating to oil and gas
+producing activities. The primary factors resulting in the E&P segment impairment loss were low oil price outlook and downward revision of oil
+and gas reserve in certain fields. E&P segment determines recoverable amounts of fixed assets relating to oil and gas producing activities, which
+include significant judgments and assumptions. The recoverable amounts were determined based on the present values of the expected future
+cash flows of the assets using a pre-tax discount rate 10.47% (2019: 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 fixed assets relating to oil and gas producing
+activities by approximately RMB 4,548 million (2019: RMB 184 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 fixed assets relating to oil and gas producing activities
+by approximately RMB 2,836 million (2019: RMB 180 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 fixed assets relating to oil and gas producing activities by
+approximately RMB 287 million (2019: RMB 7 million). The assets in the chemicals segment were written down because evidence indicates the
+economic performance of certain production facilities are worse than expected.
+(5,928)
+309,841
+25,189
+49,000
+177
+1,377
+598,304
+1,256
+22,527
+472,250
+1,636
+26,490
+1,119,554
+3,069
+50,394
+384
+71
+Transferred to subsidiaries
+(86)
+928
+999
+(1,060)
+(481)
+(6,673)
+(8,214)
+(298)
+Transferred from subsidiaries
+Reclassifications
+Transferred from construction in progress
+Others
+110
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+13 FIXED ASSETS (Continued)
+The Company (Continued)
+(a) Fixed assets
+Cost:
+Plants and
+buildings
+RMB million
+Oil and gas
+properties
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+Total
+RMB million
+Balance at 1 January 2020
+Additions for the year
+Transferred from subsidiaries
+468,718
+Decreases for the year
+Accumulated depreciation:
+(123)
+32
+372
+404
+(514)
+(250)
+(64)
+(3,546)
+Decreases for the year
+(292)
+(1,251)
+(5,575)
+(7,118)
+Balance at 31 December 2020
+(4,310)
+187
+767,990
+46,782
+21,031
+Balance at 1 January 2020
+Additions for the year
+Reclassifications
+Transferred to subsidiaries
+(593)
+(13,612)
+49,356
+618,483
+484,351
+1,152,190
+24,232
+446,076
+297,682
+1,544
+24,207
+Balance at 31 December 2020
+(5,160)
+(9,982)
+(50,394)
+Balance at 31 December 2020
+Net book value:
+Balance at 31 December 2020
+Balance at 31 December 2019
+The Company
+Cost:
+Balance at 1 January 2020
+Additions for the year
+Decreases for the year
+Decreases for the year
+Balance at 31 December 2020
+Accumulated depreciation:
+Balance at 1 January 2020
+Decreases for the year
+Balance at 31 December 2020
+Provision for impairment losses:
+Balance at 1 January 2020
+Additions for the year
+Decreases for the year
+Additions for the year
+Additions for the year
+Balance at 1 January 2020
+Provision for impairment losses:
+Financial Statements (PRC)
+Financial Statements (PRC)
+112
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+15 RIGHT-OF-USE ASSETS
+The Group
+Cost:
+Balance at 1 January 2020
+Additions for the year
+Decreases for the year
+Balance at 31 December 2020
+Accumulated depreciation:
+Balance at 1 January 2020
+Additions for the year
+Decreases for the year
+Balance at 31 December 2020
+Balance at 31 December 2020
+111
+Net book value:
+Land
+6,488
+6,354
+12,842
+(463)
+(1,575)
+(2,038)
+12,269
+12,592
+23,073
+158,796
+169,565
+30,787
+28,486
+(141,157)
+189,583
+198,051
+10,481
+5,702
+6,567
+212,656
+RMB million
+Others
+Total
+RMB million
+RMB million
+176,132
+34,188
+210,320
+3,186
+10,222
+(7,930)
+(3,142)
+(11,072)
+171,388
+41,268
+Balance at 31 December 2020
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+13,408
+Bank loans & self-financing
+Balance at
+Percentage
+of project
+investment
+to budgeted
+amount
+Accumulated
+interest
+capitalised at
+31 December
+Source of funding
+2020
+RMB million
+Zhenhai Refining and Chemical ethylene
+expansion project
+26,680
+1,688
+5,944
+7,632
+34%
+31 December
+2020
+RMB million
+Bank loans & self-financing
+Net change
+for the year
+RMB million
+RMB million
+(706)
+6
+(11,464)
+(118)
+126,812
+60,182
+1,844
+844
+(576)
+413
+293
+(404)
+(65)
+2,047
+302
+124,765
+173,872
+59,880
+60,493
+Budgeted
+amount
+Balance at
+1 January
+2020
+RMB million
+17
+Project name
+oil refinery expansion project
+upgrading transformation development
+project
+13,950
+1,000
+1,000
+7%
+5
+Weirong field Longmaxi Formation Shale Gas
+Production Capacity Construction Project
+(Second-stage)
+6,747
+865
+Hainan Refining and Chemical ethylene and
+15%
+865
+Caprolactam industry chain relocation and
+43
+Bank loans
+14%
+28,085
+502
+4,500
+Bank loans & self-financing
+18%
+Self-financing
+Western Sichuan Gas Field Leikoupo
+5,002
+Construction Project
+10,423
+1,427
+1,024
+403
+Formation Gas Reservoir Development and
+220
+6,453
+943
+5,954
+(20)
+(424)
+(8,563)
+(1,789)
+(6,774)
+1,803
+4
+RMB million
+(3,664)
+RMB million
+income
+Total other
+comprehensive
+Minority
+interests
+RMB million
+RMB million
+translation
+differences
+Subtotal
+(4,917)
+6,673
+(4)
+(16)
+81
+7,805
+(20)
+Cash flow
+hedges
+RMB million
+(6,089)
+328
+(1,031)
+(3,485)
+6,768
+81
+(2,001)
+(1,890)
+(1,569)
+(321)
+2,746
+1,037
+(16)
+(4,088)
+(1,890)
+(1,569)
+(321)
+2,746
+1,037
+(4,088)
+Fair value
+hedges
+RMB million
+(810)
+currency
+Other comprehensive income
+Subtotal
+Subtotal
+Foreign currency translation differences
+(810)
+Other comprehensive loss that can be converted into profit or loss
+under the equity method
+(31)
+8
+(39)
+(31)
+(b) The change of each item in other comprehensive income
+8
+Changes in fair value of other equity instrument investments
+Subtotal
+4,941
+(1,170)
+6,111
+Subtotal
+(657)
+196
+(739)
+(853)
+Less: Reclassification adjustments for amounts transferred to the consolidated
+income statement
+(39)
+Equity Attributable to shareholders of the company
+(810)
+(810)
+Foreign
+investments
+other equity
+instrument
+fair value of
+RMB million
+into profit or
+loss under
+the equity
+method
+Changes in
+be converted
+income that can
+comprehensive
+Other
+31 December 2020
+Changes in 2020
+1 January 2020
+31 December 2019
+1 January 2019
+Changes in 2019
+5,580
+(1,162)
+6,742
+1,480
+1,480
+1,480
+1,480
+RMB million
+1,038
+422,569
+(1,562)
+122,313
+215,773
+155,687
+549,720
+351,707
+615,342
+699,202
+557,605
+2019
+RMB million
+2,899,682
+2020
+RMB million
+2,049,456
+125,658
+The applicable tax rate of the taxes and surcharges are set out in Note 4.
+City construction tax
+Consumption tax
+The Group
+41 TAXES AND SURCHARGES
+(i) Others are primarily liquefied petroleum gas and other refinery and chemical byproducts and joint products.
+Note:
+Total
+Rental income
+Sale of materials and others
+Income from other operations
+Education surcharge
+Resources tax
+Others
+Total
+72,385
+191,636
+48,121
+4,284
+4,572
+12,111
+11,670
+16,387
+15,699
+204,388
+2019
+RMB million
+RMB million
+197,542
+2020
+2,959,799
+2,105,984
+1,231
+1,087
+58,886
+55,441
+60,117
+56,528
+368,412
+277,429
+80,100
+41,640
+53,839
+Others (i)
+(2,600)
+Synthetic fiber monomers and polymers
+Kerosene
+(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;
+209,280
+207,423
+1,857
+RMB million
+Total
+The PRC Company Law and Articles of Association of the Company have set out the following profit appropriation plans:
+117,000
+92,280
+Balance at 31 December 2020
+90,423
+1,857
+(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.
+Appropriation
+The Group
+Discretionary
+surplus reserves
+RMB million
+117,000
+surplus reserve
+RMB million
+Statutory
+Movements in surplus reserves are as follows:
+39 SURPLUS RESERVES
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+120
+As at 31 December 2020, cash flow hedge reserve amounted to a gain of RMB 8,176 million (31 December 2019: a gain of RMB 1,102 million),
+of which a gain of RMB 7,805 million was attribute to shareholders of the Company (31 December 2019: a gain of RMB 1,037 million).
+Balance at 1 January 2020
+40 OPERATING INCOME AND OPERATING COSTS
+Income from principal operations
+Income from other operations
+Total
+Synthetic resin
+Basic chemical feedstock
+Crude oil
+Diesel
+Gasoline
+Income from principal operations
+The detailed information about the Group's operating income is as follows:
+The income from principal operations mainly represents revenue from the sales of refined petroleum products, chemical products, crude oil and
+natural gas, which are recognised at a point in time. The income from other operations mainly represents revenue from sale of materials, 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 61.
+799,566
+2,479,356
+584,315
+37,087
+1,021,272
+770,321
+2,959,799
+2,105,984
+1,688,398
+27,133
+984,185
+2019
+RMB million
+The Company
+2020
+RMB million
+743,188
+RMB million
+2,899,682
+60,117
+2019
+The Group
+2020
+RMB million
+2,049,456
+56,528
+Operating costs
+Natural gas
+(974)
+Cash at bank and on hand
+Effective portion of changes in fair value of hedging instruments recognised
+during the year
+Other non-current liabilities
+Other payables
+Contract liabilities
+Accounts payable
+Bills payable
+Other non-current assets
+Prepayments and other current assets
+Other receivables
+Receivables financing
+Accounts receivable
+Short-term loans
+5,883
+The balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures at 31 December 2020 and 31 December 2019
+are as follows:
+(4) Balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+55 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+(f) On the basis of a series of continuing connected transaction agreements signed in 2000, the Company and Sinopec Group Company have
+signed the Fifth Supplementary Agreement and the Fourth Revised Memorandum of land use rights leasing contract on 24 August 2018,
+which took effect on 1 January 2019 and made adjustment to “Mutual Supply Agreement”, “Agreement for Provision of Cultural and
+Educational, Health Care and Community Services", "Buildings Leasing Contract", "Intellectual Property Contract" and "Land Use Rights
+Leasing Contract", etc.
+(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.
+(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.
+(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.
+(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.
+Other related companies
+Long-term loans (including current portion)
+Lease liabilities (including current portion)
+The ultimate holding company
+At 31 December
+1,282
+1,236
+6
+7
+11,423
+18,062
+60
+-
+407
+760
+12,418
+16,854
+52
+42
+35,832
+53,417
+At 31 December
+2019
+RMB million
+RMB million
+RMB million
+2020
+At 31 December
+At 31 December
+2019
+2020
+RMB million
+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%.
+6,435
+where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+•
+Included in the transactions disclosed above, for the year ended 31 December 2020 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 150,239 million (2019: RMB 151,851 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 134,359
+million (2019: RMB 135,198 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 3,099
+million (2019: RMB 3,097 million), lease charges for land, buildings and others paid by the Group of RMB 11,086 million, RMB 565 million and
+RMB 211 million (2019: RMB 11,330 million, RMB 509 million and RMB 383 million), respectively and interest expenses of RMB 919 million
+(2019: RMB 1,334 million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 71,862 million
+(2019: RMB 64,774 million), comprising RMB 71,075 million (2019: RMB 63,686 million) for sales of goods, RMB 704 million (2019: RMB 1,066
+million) for interest income and RMB 83 million (2019: RMB 22 million) for agency commission income.
+The amounts set out in the table above in respect of the year ended 31 December 2020 and 2019 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+3,438
+(31,144)
+(x)
+5,230
+(17,585)
+(viii)
+1,334
+919
+For the year ended 31 December 2020, no individually significant right-of-use assets were leased from Sinopec Group Company and fellow
+subsidiaries, associates and joint ventures by the Group. The interest expense recognised for the year ended 31 December 2020 on lease
+liabilities in respect of amounts due to Sinopec Group Company and fellow subsidiaries, associates and joint ventures was RMB 8,160 million
+(2019: RMB 8,518 million).
+(ix)
+704
+(viii)
+116
+160
+(vii)
+3,098
+3,099
+(vi)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+1,066
+For the year ended 31 December 2020, the amount of rental the Group paid to Sinopec Group Company and fellow subsidiaries, associates
+and joint ventures for land, buildings and others are RMB 11,090 million, RMB 571 million and RMB 330 million (2019: RMB 11,333 million,
+RMB 518 million and RMB 468 million).
+As at 31 December 2020 and 31 December 2019, 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 60(b). Guarantees given to banks
+by the Group in respect of banking facilities to associates and joint ventures are disclosed in Note 60(b).
+Notes:
+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 2020.
+The terms of these agreements are summarised as follows:
+(x) The Group obtained loans, discounted bills and others from Sinopec Group Company and fellow subsidiaries.
+(ix) Interest expense represents interest charges on the loans obtained from Sinopec Group Company and fellow subsidiaries.
+(viii) 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.
+Notes: (Continued)
+(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):
+55 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+Financial Statements (PRC)
+128
+Financial Statements (PRC)
+127
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+(vii) 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.
+(vi) Ancillary and social services represent expenditures for social welfare and support services such as educational facilities, media communication services, sanitation,
+accommodation, canteens and property maintenance.
+(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, and management services.
+(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.
+•
+734
+8
+17
+Other comprehensive loss that can be converted into profit or loss under the
+equity method
+Subtotal
+Fair value hedges
+(22)
+(4)
+(18)
+12
+12
+(10)
+(4)
+Subtotal
+(6)
+(2,332)
+9,405
+(161)
+37
+(198)
+6,912
+(2,295)
+9,207
+Subtotal
+Less: subtotal of amounts previously recognized in other comprehensive income
+transferred to retained earnings for the year
+7,073
+Foreign currency translation differences
+Subtotal
+Other comprehensive income
+Cash flow hedges:
+RMB million
+RMB million
+RMB million
+amount
+Net-of-tax
+Tax
+effect
+Before-tax
+amount
+2019
+315
+(2,336)
+2,651
+(4,457)
+(4,457)
+(4,457)
+(4,457)
+(2,441)
+(2,441)
+(2,441)
+(2,441)
+162
+162
+162
+162
+Changes in fair value of other equity instrument investments
+Subtotal
+Less: Reclassification adjustments for amounts transferred to the consolidated
+income statement
+recognised during the year
+89,147
+87,870
+82,255
+74,178
+47,450
+12,400
+5,465
+4,642
+3,010
+18,729
+12,078
+64
+38
+4,405
+5,899
+51
+41
+21,265
+19,004
+94
+122
+3,801
+3,671
+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 31.
+As at and for the year ended 31 December 2020, and as at and for the year ended 31 December 2019, 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.
+5,258
+(5) Key management personnel emoluments
+Short-term employee benefits
+Effective portion of changes in fair value of hedging instruments
+Cash flow hedges:
+amount
+RMB million
+RMB million
+RMB million
+Net-of-tax
+Tax
+effect
+amount
+Before-tax
+2020
+(a) The changes of other comprehensive income in consolidated income statement
+The Group
+38 OTHER COMPREHENSIVE INCOME
+For the year ended 31 December 2020
+Financial Statements (PRC)
+129
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+9,745
+2019
+RMB thousand
+9,209
+536
+RMB thousand
+5,753
+342
+6,095
+2020
+Total
+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:
+5,464
+234,947
+1,359
+244,517
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+52 INCOME TAX EXPENSE
+The Group
+2020
+2019
+RMB million
+RMB million
+Provision for income tax for the year
+124
+14,209
+Deferred taxation
+(7,873)
+3,385
+Under-provision for income tax in respect of preceding year
+(117)
+(467)
+Total
+6,219
+17,939
+Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows:
+15,021
+Financial Statements (PRC)
+123
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+844
+135
+47
+26,018
+1
+1,779
+2020
+RMB million
+2019
+RMB million
+1,210
+884
+1,160
+1,717
+2,370
+2,601
+2020
+RMB million
+2019
+RMB million
+43
+173
+301
+210
+4,388
+4,732
+2,241
+2,624
+2020
+196
+2019
+RMB million
+(117)
+(467)
+6,219
+17,939
+Note:
+(i) In 2020, the tax effect of non-taxable income includes the tax exempt investment income of joint ventures and associates and the tax exempt part of the gain related
+to the disposal of oil and gas pipeline and ancillary facilities.
+(ii) 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. According to Announcement [2020] No.23 of the MOF "Announcement of the MOF, the State Taxation Administration and the National
+Development and Reform Commission on continuation of the income tax policy of western development enterprises", the preferential income tax rate of 15% extends
+from 1 January 2021 to 31 December 2030.
+53 DIVIDENDS
+(a) Dividends of ordinary shares declared after the balance sheet date
+Pursuant to a resolution passed at the director's meeting on 26 March 2021, final dividends in respect of the year ended 31 December 2020
+of RMB 0.13 (2019: RMB 0.19) per share totaling RMB 15,739 million (2019: RMB 23,004 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.
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+(b) Dividends of ordinary shares declared during the year
+Pursuant to the shareholders' approval at the Annual General Meeting on 19 May 2020, a final dividend of RMB 0.19 per share totaling
+RMB 23,004 million according to total shares on 9 June 2020 was approved. All dividends have been paid in the year ended 31 December 2020.
+Pursuant to the shareholders' approval at the Annual General Meeting on 9 May 2019, a final dividend of RMB 0.26 per share totaling
+RMB 31,479 million according to total shares on 10 June 2019 was approved. All dividends have been paid in the year ended 31 December
+2019.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+54 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT
+The Group
+(a) Reconciliation of net profit to cash flows from operating activities:
+Net profit
+Add: Impairment losses on assets
+Credit impairment losses
+Depreciation of right-of-use assets
+Pursuant to the shareholders' approval at the General Meeting on 28 September 2020, the interim dividends for the year ending 31 December
+2020 of RMB 0.07 (2019: RMB 0.12) per share totaling RMB 8,475 million (2019: RMB 14,529 million) were approved. Dividends were paid on
+23 October 2020.
+189
+75
+Write-down of deferred tax assets
+Profit before taxation
+47,969
+90,111
+Expected income tax expense at a tax rate of 25%
+11,992
+22,528
+Tax effect of non-deductible expenses
+3,333
+2,299
+Tax effect of non-taxable income (i)
+(8,345)
+(4,458)
+Tax effect of preferential tax rate (ii)
+(1,011)
+(2,003)
+Effect of income taxes at foreign operations
+(730)
+(312)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of tax losses not recognised
+(65)
+(335)
+1,087
+498
+RMB million
+Depreciation of fixed assets
+11,714
+11,361
+1,955
+52,816
+10,510
+9,716
+42,112
+109,172
+44 RESEARCH AND DEVELOPMENT EXPENSES
+Total
+Exploration expenses (including dry holes)
+Other expenses
+Depreciation, depletion and amortisation
+Personnel expenses
+122
+2,625,940
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+2,475
+(69)
+47,486
+(1,467)
+587
+54
+12,628
+(1,013)
+84
+257
+43,356
+142
+1
+414
+28,062
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+47 INVESTMENT INCOME (Continued)
+687
+1,838,929
+The research and development expenditures are mainly used for the replacement of resources in upstream, optimising structure and operation
+upgrades in refining sector, structured adjustment of materials and products in chemical segment.
+45 EXPLORATION EXPENSES
+5,748
+Gain from ineffective portion of cash flow hedges
+Others
+(1,543)
+53
+21,079
+16
+492
+156
+Dividend income from holding of other equity instrument investments
+Investment income/(loss) from holding/disposal of financial assets and
+liabilities and derivative financial instruments at fair value
+through profit or loss
+185
+37,525
+equity investments (i)
+25,416
+3,579
+2019
+RMB million
+The Company
+2020
+RMB million
+19,296
+3,637
+12,777
+6,712
+Income from investment of subsidiaries accounted for under cost method
+Income from investment accounted for under equity method
+Investment income/(loss) from disposal of business and long-term
+2019
+RMB million
+RMB million
+The Group
+2020
+47 INVESTMENT INCOME
+Other income are mainly the government grants related to the business activities.
+46 OTHER INCOME
+Exploration expenses include geological and geophysical expenses and written-off of unsuccessful dry hole costs.
+(i) The Company and Sinomart KTS Development Limited, Sinopec Natural Gas Limited Company and Sinopec Marketing Company Limited("Marketing Company"), the
+subsidiaries of the Company entered into the Agreement on Cash Payment to Purchase Equity in Sinopec Yu Ji Pipeline Company Limited, the Agreement on Additional
+Issuance of Equity and Cash Payment to Purchase Assets, the Agreement on Cash Payment to Purchase Assets and the Agreement on Additional Issuance of Equity to
+Purchase Assets with PipeChina, on 21 July 2020 and on 23 July 2020 respectively, pursuant to which the Company and its subsidiaries proposed to dispose target
+business, including equity interests in the relevant companies, oil and gas pipeline and ancillary facilities, to PipeChina. The above transactions were considered and
+approved by the 15th Session of 7th Directorate Meeting on 23 July 2020 and the second Extraordinary General Meeting on 28 September 2020. The transaction
+consideration was mainly additional issuance of equity and/or cash payment by PipeChina and the gain on above transactions was RMB 37,731 million. Main assets
+and liabilities of disposed target business are as follows:
+1,417
+30 September
+Inventories
+Total
+Total
+8,191
+26,412
+83,510
+19,843
+(41,800)
+(9,035)
+87,121
+2020
+2019
+Fines, penalties and compensation
+Donations
+RMB million
+(1,824)
+576
+(2,702)
+(809)
+(5)
+(1,253)
+(3,511)
+2020
+RMB million
+97
+2019
+RMB million
+30
+RMB million
+The Group
+51 NON-OPERATING EXPENSES
+Total
+Long-term equity investments
+Fixed assets
+Construction in progress
+Long-term loans
+Other financial statement items
+Net Assets
+48 LOSSES FROM CHANGES IN FAIR VALUE
+The Group
+Net fair value losses on financial assets and financial liabilities at fair value through profit or loss
+Unrealised gains/(losses) from ineffective portion cash flow hedges, net
+Others
+Total
+49 IMPAIRMENT LOSSES
+The Group
+Prepayments
+Inventories
+Long-term equity investment
+Fixed assets
+Construction in progress
+Others
+Total
+50 NON-OPERATING INCOME
+The Group
+Government grants
+Others
+2020
+RMB million
+Amortisation of intangible assets and long-term deferred expenses
+Others
+Net (gain)/loss on disposal of non-current assets
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+55 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+(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:
+Sales of goods
+Purchases
+Transportation and storage
+Exploration and development services
+Production related services
+Ancillary and social services
+Agency commission income
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Interest income
+Net deposits (placed with)/withdrawn from related parties
+Net funds (repaid to)/obtained from related parties
+Note
+The Group
+2020
+(i)
+RMB million
+233,283
+2019
+RMB million
+285,853
+(ii)
+158,963
+Interest expense
+126
+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
+State-owned
+Zhang Yuzhuo
+: RMB 326,547 million
+Sinopec Group Company is an enterprise controlled by the PRC government. Sinopec Group Company directly and indirectly holds 68.77%
+shareholding of the Company.
+(2) Related parties not having the ability to exercise control over the Group
+Related parties under common control of a parent company with the Company:
+Sinopec Finance (Note)
+Sinopec Shengli Petroleum Administration Bureau
+Sinopec Zhongyuan Petroleum Exploration Bureau
+Sinopec Assets Management Corporation
+Sinopec Engineering Incorporation
+Sinopec Century Bright Capital Investment Limited
+Sinopec Petroleum Storage and Reserve Limited
+Associates of the Group:
+PipeChina
+Sinopec Finance
+SIBUR
+Zhongtian Synergetic Energy
+CIR
+Joint ventures of the Group:
+FREP
+BASF-YPC
+Taihu
+YASREF
+189,914
+Ultimate holding company
+(iii)
+8,206
+2,011
+7,039
+6,513
+Interest income
+Accretion expenses (Note 34)
+Net interest expenses
+Add: Interest expense on lease liabilities
+Less: Capitalised interest expenses
+Interest expenses incurred
+RMB million
+1,015
+RMB million
+2020
+The Group
+42 FINANCIAL EXPENSES
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+121
+Dry hole costs written off
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+2019
+9,349
+9,646
+13,851
+(iv)
+31,444
+33,310
+(v)
+32,106
+38,827
+Purchased crude oil, products and operating supplies and expenses
+82,743
+2019
+RMB million
+2,370,699
+2020
+RMB million
+The operating costs, selling and distribution expenses, general and administrative expenses, research and development expenses and exploration
+expenses (including dry holes) in consolidated income statement classified by nature are as follows:
+43 CLASSIFICATION OF EXPENSES BY NATURE
+The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2020 by the Group ranged from 2.60%
+to 4.66% (2019: 2.92% to 4.66%).
+10,048
+170
+(885)
+9,506
+Total
+Net foreign exchange (gains)/losses
+(7,210)
+(4,803)
+1,418
+1,343
+15,670
+8,848
+No. 22, Chaoyangmen North Street, Chaoyang District, Beijing
+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.
+1,594,130
+86,006
+106,965
+Authorised representative
+1,264
+12,813
+12,246
+85,046
+87,960
+9,106
+8,966
+5.928
+5,831
+(398)
+2,066
+1,829
+3,511
+11,765
+10,433
+(47,486)
+(12,628)
+(10,143)
+3,124
+2,270
+22,703
+261
+(9,748)
+237
+(17,623)
+1,253
+1,779
+26,018
+72,172
+Fair value loss
+Financial expenses
+Registered capital
+Investment income
+(Increase)/decrease in deferred tax assets
+Increase in deferred tax liabilities
+Decrease/(increase) in inventories
+Safety fund reserve
+Increase in operating receivables
+Increase/(decrease) in operating payables
+Net cash flow from operating activities
+(b) Net change in cash:
+Cash balance at the end of the year
+Less: Cash at the beginning of the year
+Net increase/(decrease) of cash
+(c) The analysis of cash held by the Group is as follows:
+Cash at bank and on hand
+- Cash on hand
+- Demand deposits
+Cash at the end of the year
+(d) Net cash received from disposal of subsidiaries and other business entities:
+2020
+2019
+RMB million
+41,750
+69
+(11,915)
+RMB million
+(21,535)
+2019
+RMB million
+2020
+RMB million
+15,327
+1,882
+17,209
+2019
+RMB million
+16,859
+328
+17,187
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+125
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+55 RELATED PARTIES AND RELATED PARTY TRANSACTIONS
+The name of the company
+:
+China Petrochemical Corporation
+Unified social credit identifier
+:
+9111000010169286X1
+Registered address
+Principal activities
+22,213
+Types of legal entity
+:
+Relationship with the Group
+60,424
+60,438
+14
+(1) Related parties having the ability to exercise control over the Group
+Others
+2020
+2019
+Total
+167,518
+RMB million
+RMB million
+87,559
+27,121
+60,438
+111,927
+(51,489)
+2020
+RMB million
+2019
+RMB million
+60,438
+153,619
+87,551
+87,559
+2020
+Cash received from disposal of equity interests in the relevant companies, oil and gas pipeline
+and ancillary facilities.
+Others
+Total
+(e) Other cash paid relating to financing activities:
+RMB million
+8
+Repayments of lease liabilities
+49,832
+37
+49,869
+RMB million
+RMB million
+RMB million
+RMB million
+3,282
+RMB million
+74,705
+Turnover
+1,427,705
+RMB million
+2,017
+RMB million
+1,099,680
+Sinopec-SK
+2019
+2020
+2019
+2020
+2019
+2020
+2019
+Shanghai SECCO
+Sinopec Kantons
+Fujian Petrochemical
+2020
+2019
+RMB million
+100,346
+2020
+RMB million RMB million
+RMB million
+4,871
+Total comprehensive
+1,064
+628
+RMB million
+4,955
+2,693
+20
+(720)
+23,354
+21,149
+income/(loss)
+664
+(920)
+3,137
+2.132
+1,131
+2.047
+477
+243
+2,225
+639
+2,831
+1,160
+22.984
+22,415
+Profit/(loss) for the year
+31,016
+28,702
+28,341
+21,626
+1,274
+5,535
+RMB million RMB million
+13,234
+2020
+(18,270)
+(58,732)
+(59,554)
+Non-current liabilities
+21,567
+22,187
+11,473
+12,177
+12,777
+9,106
+11,558
+12,568
+23,327
+27,444
+8.951
+340,356
+323,571
+Non-current assets
+(9,700)
+(2,738)
+8,662
+7,648
+(1,677)
+3,449
+984
+1,124
+6,830
+2,073
+2.233
+(16,952)
+2019
+(162)
+(693)
+2019
+Shanghai Petrochemical
+SIPL
+Marketing Company
+2020
+Year ended 31 December
+Summarised consolidated statement of comprehensive income and cash flow
+21,560
+13.678
+9,846
+10,624
+12.619
+8.936
+10.870
+11.875
+23,186
+27.282
+(3,718)
+(9,319)
+281,624
+264,017
+(liabilities)
+Net non-current assets/
+(7)
+(8,509)
+(1,627)
+(1,553)
+(158)
+(170)
+(688)
+(141)
+243
+controlled by Sinopec
+1,814
+2019 to
+of the acquiree
+acquiree from
+Net cash flow
+activities of the
+the acquiree
+from 1 January
+Income of the
+acquiree from
+1 January 2019
+to 31 December
+2019
+1 January 2020
+to the
+acquisition date
+RMB Million
+119
+10,973
+1 November 2020 According to the
+agreement
+the company are
+55% The acquiree and
+Baling Branch of SAMC
+1 January 2020
+from operating
+Net profits of
+the acquiree
+from
+Income of the
+acquiree from
+1 January 2020
+to the
+acquisition date
+RMB Million
+Basis of
+Determination on
+the acquisition date
+Date of
+acquisition
+business combination
+under the common
+control
+Share of
+acquired equity
+Acquiree
+The basis for the
+Net cash flow
+(1) The relevant financial information disclosed for changes in the scope of consolidation are as follows:
+Business combination under common control in 2020 (Continued)
+Business combination under common control (Continued)
+58 CHANGE IN THE SCOPE OF CONSOLIDATION (Continued)
+Net profits of
+from 1 January
+RMB Million
+16,906
+31 December
+2019
+RMB Million
+50
+4,247
+4,892
+5,858
+6,633
+2,097
+2,634
+RMB Million
+December 31 2019
+the Acquisition Date
+RMB Million
+Book value at
+Book value at
+972
+Capital commitments
+59 COMMITMENTS
+The principal subsidiaries included in the scope of consolidation this year are disclosed in Note 57.
+Total shareholders' equity
+Total liabilities
+Total current liabilities
+Total assets
+Total current assets
+(3) Details of the assets and liabilities acquired are as follows:
+Cost of acquisition (RMB Million)
+(2) Cost of acquisition:
+combination, and
+the control is not
+transitory
+both before and after
+Group Company
+7,205
+2020 to the
+acquisition date
+RMB Million
+to the
+acquisition date
+RMB Million
+1,639
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Baling Petrochemical is mainly engaged in the production and sales of petrochemicals, chemical fibers, fertilizers, fine chemical products and other
+chemical products.
+4,830
+2,766
+interests
+Dividends paid to minority
+232
+(377)
+1.016
+169
+691
+433
+707
+707
+238
+121
+1.112
+317
+1,651
+(287)
+8.285
+7.205
+interests
+(loss) attributable to minority
+Comprehensive income/
+664
+20
+(920)
+3,137
+2,132
+1.140
+316
+477
+10,926
+1,344
+As Sinopec Group Company controls both the Company and SAMC, the transaction described above between Sinopec and SAMC has been
+accounted as business combination under common control. Accordingly, the assets and liabilities of which SAMC subscribed 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 Baling Branch of SAMC on a combined basis.
+Pursuant to the resolution passed at the Directors' meeting on 28 October 2020, the Company entered into an Agreement with Sinopec Assets
+Management Corporation ("SAMC") in relation to the formation of the Baling Petrochemical. According to the Agreement, the Company and SAMC
+subscribed capital contribution with the business of Baling area respectively and some cash. After the capital injection the Company remained to
+hold 55% of Baling Petrochemical's voting rights and was still able to control Baling Petrochemical.
+Business combination under common control in 2020
+Business combination under common control
+58 CHANGE IN THE SCOPE OF CONSOLIDATION
+5,532
+(363)
+4,601
+3.119
+716
+586
+622
+(244)
+5.121
+1.751
+2,128
+281
+40,260
+(used in) operating activities 54,139
+Net cash generated from/
+822
+767
+59
+159
+175
+50
+650
+150
+150
+649
+18,695
+Group
+(62,840)
+RMB 10,492
+Manufacturing of plastics, intermediate petrochemical products
+and petroleum products
+14,617
+50.44
+RMB 5,820
+RMB 10,824
+Manufacturing of synthetic fibres, resin and plastics, intermediate
+petrochemical products and petroleum products
+4,931
+60.33
+HKD 3,952
+HKD 248
+75,486
+70.42
+RMB 5,246
+RMB 20,000
+100.00
+RMB 6,713
+RMB 4,000
+84
+100.00
+RMB 3,374
+RMB 3,374
+Production and sale of refined petroleum products,
+100.00
+RMB 15,651
+RMB 15,651
+267
+100.00
+RMB 28,403
+50.00
+6,500
+Investment in exploration, production and sale of petroleum and
+natural gas
+RMB 5,000
+Manufacturing of intermediate petrochemical products and
+petroleum products
+1,909
+90.30
+RMB 5,776
+RMB 6,397
+117
+98.98
+RMB 5,240
+RMB 5,294
+Import and processing of crude oil, production, storage and sale
+of petroleum products and petrochemical products
+Crude oil processing and petroleum products manufacturing
+(258)
+100.00
+RMB 22,795
+RMB 22,761
+Coal chemical industry investment management, production and
+sale of coal chemical products
+91
+100.00
+RMB 1,165
+RMB 1,000
+Marketing and distribution of petrochemical products
+100.00
+USD 1,959
+USD 1,662
+Investment holding of overseas business
+6,950
+100.00
+RMB 8,250
+RMB 8,250
+RMB 2,424
+RMB 1,500
+Production and sale of catalyst products
+Manufacturing of intermediate petrochemical products
+and petroleum products
+5,171
+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
+Percentage of
+The Company's principal subsidiaries have been consolidated into the Group's financial statements for the year ended 31 December 2020. The
+following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the Group:
+57 PRINCIPAL SUBSIDIARIES
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+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
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past events,
+current conditions and forecasts of future economic conditions. The Group regularly monitors and reviews the assumptions used for estimating
+expected credit losses.
+(d) Measurement of expected credit losses
+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 period. 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 periods is adjusted if there are significant changes from previous
+estimates.
+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 "CASS 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.
+(c) Depreciation
+(b) Impairment for assets
+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.
+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.
+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, the Group's earnings could be affected by changes in depreciation expense or an immediate write-down of the
+carrying amount of oil and properties.
+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.
+(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.
+56 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+130
+Sinopec Lubricant Company Limited
+RMB 4,250
+Sinopec Yizheng Chemical Fibre Limited Liability Company
+Marketing Company
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+100.00
+RMB 6,585
+RMB 5,000
+17
+100.00
+RMB 1,856
+RMB 1,400
+RMB million
+%
+2020
+2020
+million
+million
+Interests at
+31 December
+Minority
+equity
+interest/
+voting right
+held by the
+Actual
+investment at
+31 December
+Registered
+capital/
+paid-up capital
+Principal activities
+lubricant base oil, and petrochemical materials
+Production and sale of polyester chips and polyester fibres
+Marketing and distribution of refined petroleum products
+Provision of crude oil jetty services and natural gas pipeline
+transmission services
+Trading of crude oil and petrochemical products
+Trading of petrochemical products
+Sinopec Qingdao Refining and Chemical
+Company Limited
+ZhongKe (Guangdong) Refinery & Petrochemical
+Company Limited
+Sinopec Beihai Refining and Chemical Limited
+Liability Company
+Sinopec Great Wall Energy & Chemical Company Limited
+Sinopec Overseas Investment Holding Limited ("SOIH")
+Sinopec Chemical Sales 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")
+85.00
+1,518
+Sinopec-SK
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2019
+2020
+2019
+2020
+2019
+2020
+2019
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2020
+2019
+2020
+2019
+2020
+2019
+2020
+At
+Sinopec-SK
+At
+At
+Shanghai SECCO
+At
+RMB million
+At
+RMB million
+172,352
+Net current (liabilities)/assets
+(15,037)
+(6,377)
+(3,196)
+(2,783)
+(2,961)
+(924)
+(804)
+(458)
+(15,479)
+(15,232)
+(456)
+(475)
+(192,106)
+(201,678)
+Current liabilities
+5,337
+3,639
+11,858
+10,431
+1,284
+4,373
+1,788
+1,582
+22,309
+17,305
+19,151
+22,620
+129,266
+Current assets
+22,145
+Sinopec Kantons
+At
+Fujian Petrochemical
+At
+RMB 3,000
+RMB 3,000
+Crude oil processing and petroleum products manufacturing
+Sinopec Baling Petrochemical Co. Ltd.
+6,829
+55.00
+RMB 4,804
+RMB 10,000
+Manufacturing of intermediate petrochemical products and
+petroleum products
+Gaoqiao Petrochemical Company Limited
+100.00
+RMB 7,233
+RMB 1,595
+Manufacturing of intermediate petrochemical products and
+petroleum products
+Limited
+4,885
+75.00
+RMB 7,205
+RMB 9,606
+Manufacturing of intermediate petrochemical products and
+petroleum products
+Sinopec Qingdao Petrochemical Company
+Limited
+Sinopec Hainan Refining and Chemical Company
+(c) Subsidiaries acquired through business combination under common control:
+4,485
+59.00
+RMB 7,193
+RMB 7,193
+Production, sale, research and development of ethylene and
+downstream byproducts
+55.00
+At
+2,133
+(d) Subsidiaries acquired through business combination not under common control:
+Shanghai SECCO
+At
+Shanghai Petrochemical
+At
+At
+SIPL
+At
+At
+At
+Marketing Company
+Summarised consolidated balance sheet
+Set out below are the summarised financial information which the amount before inter-company eliminations for each subsidiary whose minority
+interests that are material to the Group.
+Summarised financial information on subsidiaries with material minority interests
+57 PRINCIPAL SUBSIDIARIES (Continued)
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+132
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020 131
+(ii) See Note 58.
+(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.
+Notes:
+The Group entered into an Agreement on transferring equity interests in the relevant oil and pipeline companies with PipeChina, which included
+100% equity of Sinopec Pipeline Storage & Transportation Company Limited. See Note 47.
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong SAR, 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.
+*
+5,920
+67.60
+RMB 7,801
+RMB 7,801
+Production and sale of petrochemical products
+("Baling Petrochemical") (ii)
+4,389
+(29,326)
+1,469
+Short-term loans
+695,799
+671,486
+Total segment liabilities
+136,420
+117,684
+Corporate and others
+57,119
+47,871
+Chemicals
+219,381
+213,455
+120,617
+135,046
+162,262
+157,430
+1,760,286
+1,733,805
+18,482
+29,976
+17,616
+25,054
+152,204
+20,756
+31,196
+Non-current liabilities due within one year
+22,493
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+137
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+881,912
+849,929
+Total liabilities
+4,330
+25,313
+Other unallocated liabilities
+188,342
+15,454
+Other non-current liabilities
+6,809
+8,124
+Deferred tax liabilities
+19,157
+38,356
+Debentures payable
+39,677
+45,459
+Long-term loans
+69,490
+17,942
+For the year ended 31 December 2020
+128,052
+1,443,932
+7,513
+10,048
+9,506
+12,628
+47,486
+1,383
+6,672
+5,178
+1,662
+3,499
+12,230
+(580)
+13,085
+3,148
+13,837
+86,299
+4.024
+(40)
+4,417
+3,530
+(2,048)
+16,665
+9,147
+5,995
+(1,253)
+(3,511)
+2,067
+1,306,021
+131,686
+118,458
+180,974
+189,678
+399,242
+373,430
+321,080
+270,431
+410,950
+354,024
+184,412
+2019
+RMB million
+RMB million
+At 31 December
+2020
+90,111
+47,969
+2,624
+4,732
+2,601
+2,370
+90,134
+50,331
+(1,229)
+At 31 December
+61 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Capital expenditure
+1,239,437
+52,705
+RMB million
+2019
+At 31 December
+329,443
+2,959,799
+1,211,441
+36,782
+1,248,223
+RMB million
+2020
+At 31 December
+168,183
+2,105,984
+2,124,684
+505,672
+1,721,955
+215,846
+2019
+RMB million
+RMB million
+2020
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+138
+Mainland China
+Others
+Non-current assets
+Others
+Singapore
+Mainland China
+External sales
+1,292,142
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2020
+62 FINANCIAL INSTRUMENTS
+1,678
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020 139
+The Group's other receivables are considered to have low credit risk (Note10), and the loss allowance recognised during the year was therefore
+limited to 12 months expected credit losses. The Group considers "low credit risk” for other receivables when they have a low risk of default and
+the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
+The detailed analysis of accounts receivable and receivables financing is listed in note 7 and note 8.
+The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 December 2020 or 31 December 2019,
+respectively, and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current
+and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the accounts receivable and receivables
+financing.
+To measure the expected credit losses, accounts receivable and receivables financing have been grouped based on shared credit risk
+characteristics and the days past due.
+For accounts receivable and receivables financing, the Group applies the "No.22 Accounting Standards for Business Enterprises - Financial
+instruments: recognition and measurement" simplified approach to measuring expected credit losses which uses a lifetime expected loss
+allowance for all accounts receivable and receivables financing.
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+The Group's primary type of financial assets that are subject to the expected credit loss model is accounts receivable, receivables financing and
+other receivables.
+(ii) Impairment of financial assets
+The carrying amounts of cash at bank and on hand, financial assets held for trading, derivative financial assets, accounts receivable, receivables
+financing and other receivables, represent the Group's maximum exposure to credit risk in relation to financial assets.
+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 assets 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.
+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 deposits) 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 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 2020, 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.
+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 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.
+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.
+⚫ market risk.
+• liquidity risk; and
+Financial Statements (PRC)
+credit risk;
+•
+The Group has exposure to the following risks from its uses of financial instruments:
+Financial assets of the Group include cash at bank and on hand, financial assets held for trading, derivative financial assets, accounts receivable,
+receivables financing, other receivables and other equity instrument investments. Financial liabilities of the Group include short-term loans, derivative
+financial liabilities, bills payable, accounts payable, employee benefits payable, other payables, long-term loans, debentures payable and lease
+liabilities.
+Overview
+(i) Risk management
+345
+14,560
+17
+24,722
+61,739
+56,416
+RMB million
+RMB million
+2019
+2020
+(2) Geographical information
+Corporate and others
+Chemicals
+Marketing and distribution
+31,372
+Exploration and production
+Refining
+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
+Impairment losses on long-lived assets
+29,781
+25,403
+26,202
+3,606
+80
+536
+245
+1,923
+3
+8,495
+109,172
+106,965
+2,866
+3,072
+29,566
+14,326
+21,572
+23,196
+19,676
+20,048
+50,732
+46,273
+147,094
+135,055
+1,979
+2,312
+22,438
+14,376
+19,634
+322,121
+(6,556)
+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 operating segments. The format is based on the Group's management and internal
+reporting structure.
+61 SEGMENT REPORTING
+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.
+Legal contingencies
+The Group recognised normal routine pollutant discharge fees of approximately RMB 11,362 million in the consolidated financial statements for the
+year ended 31 December 2020 (2019: RMB 9,271 million).
+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.
+Environmental contingencies
+60 CONTINGENT LIABILITIES (Continued)
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+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 2020 and 31 December 2019, the Group estimates that
+there is no need to pay for the guarantees. Thus no liabilities have been accrued for a loss related to the Group's obligation under these guarantee
+arrangements.
+(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. At 31
+December 2020, the amount withdrawn by Zhongtian Synergetic Energy from banks and guaranteed by the Group was RMB 8,450 million (31 December 2019:
+RMB 10,140 million).
+Note:
+Total
+17,240
+14,840
+10,140
+8,450
+7,100
+6,390
+2019
+RMB million
+(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.
+External sales
+Refining
+Inter-segment sales
+External sales
+Exploration and production
+Income from principal operations
+RMB million
+RMB million
+2019
+2020
+Reportable information on the Group's operating segments is as follows:
+2020
+RMB million
+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, non-current liabilities due within one year, long-term loans, debentures payable,
+deferred tax liabilities, other non-current liabilities and other unallocated liabilities.
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+61 SEGMENT REPORTING (Continued)
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+136
+Financial Statements (PRC)
+135
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+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.
+(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 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.
+Inter-segment sales
+Joint ventures
+Associates (i)
+(b) At 31 December 2020 and 31 December 2019, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+59 COMMITMENTS (Continued)
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+134
+Financial Statements (PRC)
+133
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+(i) The investment commitments of the Group is RMB 13,172 million (2019: RMB 6,100 million).
+Note:
+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.
+202,055
+205,277
+Total
+138,088
+63,967
+171,335
+33,942
+Authorised but not contracted for
+Authorised and contracted for (i)
+At 31 December
+2019
+RMB million
+2020
+RMB million
+At 31 December
+30,074
+At 31 December 2020 and 31 December 2019, capital commitments of the Group are as follows:
+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
+Exploration licenses for exploration activities are registered with the Ministry of Natural 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 Natural 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.
+(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.
+60 CONTINGENT LIABILITIES
+The implementation of commitments in previous year and the Group's commitments did not have material discrepancy.
+1,309
+845
+824
+1,498
+29
+56
+30
+63
+34
+At 31 December At 31 December
+66
+99
+302
+390
+Total
+Between one and two years
+Within one year
+RMB million
+RMB million
+At 31 December
+2019
+At 31 December
+2020
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Natural Resources annually
+which are expensed. Expenses recognised were approximately RMB 231 million for the year ended 31 December 2020 (2019: RMB 179 million).
+Estimated future annual payments are as follows:
+69
+Marketing and distribution
+Between two and three years
+Between three and four years
+Between four and five years
+Thereafter
+Inter-segment sales
+Total segment investment income
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Total segment operating profit
+Investment income
+Elimination
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+By segment
+Operating (loss)/profit
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+61 SEGMENT REPORTING (Continued)
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+2,959,799
+2,105,984
+60,117
+56,528
+Less: Financial expenses
+Add: Other income
+(Losses)/gains from changes in fair value
+Asset disposal gains/(losses).
+External sales
+6,289
+(20,570)
+2019
+RMB million
+RMB million
+2020
+Marketing and distribution
+Exploration and production
+Refining
+Segment liabilities
+Liabilities
+Total assets
+1,850
+Other unallocated assets
+Long-term equity investments
+Cash at bank and on hand
+Total segment assets
+Corporate and others
+Marketing and distribution
+Chemicals
+Segment assets
+Assets
+Profit before taxation
+Less: Non-operating expenses
+Add: Non-operating income
+Operating profit
+Deferred tax assets
+2,056
+Exploration and production
+Refining
+9,215
+4,159
+1,397,716
+4,854
+1,067,301
+1,393,557
+1,062,447
+1,218,692
+939,876
+1,077,018
+825,812
+141,674
+114,064
+200,429
+428,830
+162,037
+104,524
+57,513
+Income from other operations
+Consolidated income from principal operations
+Elimination of inter-segment sales
+Inter-segment sales
+External sales
+Corporate and others
+Inter-segment sales
+External sales
+9,273
+Chemicals
+89,315
+40,518
+111,114
+362,639
+33,247
+34,905
+78,165
+5,464
+4,634
+10,283
+5,718
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Consolidated income from other operations
+Consolidated operating income
+2,049,456
+2,899,682
+458,154
+430,073
+654,337
+824,507
+888,227
+506,995
+1,478,844
+(1,370,624)
+(1,902,994)
+Receivables financing:
+- Derivative financial assets
+Other equity instrument investments:
+Derivative financial assets:
+Receivables financing
+– Equity investments, listed and at quoted market price
+Assets
+Financial assets held for trading:
+The Group
+At 31 December 2019
+Liabilities
+Derivative financial liabilities:
+Other Investments
+- Derivative financial liabilities
+- Structured deposits
+Liabilities
+12,528
+- Derivative financial liabilities
+9,778
+1,525
+Other Investments
+1,376
+149
+8,735
+8,735
+Derivative financial liabilities:
+2,900
+1
+1
+RMB million
+Total
+Level 3
+RMB million
+Level 2
+RMB million
+Level 1
+RMB million
+9,628
+Other equity instrument investments:
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Receivables financing:
+142
+Financial Statements (PRC)
+Financial Statements (PRC)
+141
+At 31 December 2020, 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 increase/decrease the Group's
+net profit for the year by approximately RMB 3,592 million (2019: increase/decrease RMB 3,134 million), and increase/decrease the Group's
+other comprehensive income by approximately RMB 10,379 million (2019: decrease/increase RMB 4,289 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 2019.
+At 31 December 2020, 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 2020, the fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB 12,353 million (2019: RMB 788 million) and derivative financial liabilities of RMB 4,808 million (2019:
+RMB 2,728 million).
+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 contracts, to manage a portion of such risk.
+(c) Commodity price risk
+At 31 December 2020, 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 245 million (2019: decrease/increase RMB 352
+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 2019.
+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 31, respectively.
+(b) Interest rate risk
+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.
+1
+2,900
+27
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+- Receivables financing
+For the year ended 31 December 2020
+Fair values
+- Derivative financial assets
+Derivative financial assets:
+– Equity investments, listed and at quoted market price
+Financial assets held for trading:
+Assets
+The Group
+At 31 December 2020
+Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
+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 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+•
+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:
+(i) Financial instruments carried at fair value
+62 FINANCIAL INSTRUMENTS (Continued)
+10,111
+Minority interests
+2,471
+RMB million
+2020
+Equity shareholders of the Company
+Attributable to:
+Total
+Tax effect
+Other non-operating losses, net
+Gain on holding and disposal of business and various investments
+Government grants
+Donations
+Net (gains)/losses on disposal of non-current assets
+Extraordinary (gains)/losses for the year:
+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:
+63 EXTRAORDINARY GAINS AND LOSSES
+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 2020 and 31 December 2019.
+2019
+RMB million
+The Group has not developed an internal valuation model necessary to estimate 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.
+(973)
+301
+1,318
+209
+(6,857)
+2019
+RMB million
+Financial Statements (PRC)
+144
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020 143
+(3,339)
+(125)
+(34,489)
+(2,705)
+(3,464)
+1,642
+6,611
+(37,194)
+(5,106)
+(410)
+634
+(43,805)
+2,992
+(37,520)
+(8,605)
+63,998
+62,646
+At 31 December
+2019
+RMB million
+At 31 December
+2020
+RMB million
+76,674
+74,282
+8,661
+8,661
+837
+709
+128
+3,318
+1
+3,318
+Total
+RMB million
+Level 3
+RMB million
+Level 2
+RMB million
+Level 1
+RMB million
+4,826
+4,826
+2,355
+2,471
+2,355
+90
+219
+1,431
+1,521
+709
+Carrying amount
+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 0.77% to 4.65% (2019: from 2.37% 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 2020 and 31 December 2019:
+(ii) Fair values of financial instruments carried at other than fair value
+Fair values (Continued)
+62 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+22,789
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+During the year ended 31 December 2020 and 2019, there was no transfer between instruments in Level 1 and Level 2.
+2,729
+2,729
+1,520
+1,520
+1,209
+1,209
+14,338
+13,410
+Management of the Group 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 structured deposits and receivables financing classified as
+Level 3 financial assets.
+RMB million
+5
+3,018
+At 31 December
+2020
+Total
+Lease liabilities
+Debentures payable
+2,491
+41,009
+4,638
+936
+49,074
+45,459
+3,024
+3,024
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Debentures payable due within one year
+Long-term loans
+23,880
+23,880
+38,356
+22,493
+44,791
+8,044
+amount
+Carrying undiscounted
+Total
+contractual
+262,641
+114,036
+254,157
+43,513
+15,456
+28,138
+308,193
+713,008
+560,551
+313,126
+172,306
+5,993
+29,514
+1,240
+Non-current liabilities due within one year
+91,681
+91,681
+two years
+but less than
+More than
+At 31 December 2020
+More than
+one year
+but less than
+two years
+RMB million
+contractual
+20,950
+Within one
+year or on
+demand
+RMB million
+Carrying undiscounted
+amount cash flow
+RMB million RMB million
+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:
+At 31 December 2020, the Group has standby credit facilities with several PRC financial institutions which provide the Group to borrow up to
+RMB 443,966 million (2019: RMB 379,649 million) on an unsecured basis, at a weighted average interest rate of 2.85% per annum (2019: 3.57%).
+At 31 December 2020, the Group's outstanding borrowings under these facilities were RMB 4,041 million (2019: RMB 2,947 million) and were
+included in loans.
+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 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 liquidity risk.
+Liquidity risk
+62 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+five years
+RMB million
+More than
+five years
+RMB million
+91,681
+Other payables and employee benefits payable
+151,262
+151,262
+151,262
+Accounts payable
+10,394
+RMB million
+10,394
+4,826
+4,826
+4,826
+Derivative financial liabilities
+Bills payable
+20,950
+20,756
+Short-term loans
+10,394
+At 31 December
+cash flow
+RMB million
+At 31 December 2019
+More than
+one year
+but less than
+two years
+RMB million
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+140
+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.
+323,894
+290,539
+45,008
+77,285
+22,932
+387,916
+812,027
+620,129
+Total
+15,676
+351,223
+62 FINANCIAL INSTRUMENTS (Continued)
+177,674
+Market risk
+(a) Currency risk
+Singapore Dollar
+US Dollar
+The Group
+A 5 percent strengthening/weakening of Renminbi against the following currencies at 31 December 2020 and 31 December 2019 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 2019.
+4
+103
+22
+Gross exposure arising from loans and lease liabilities
+US Dollar
+Singapore Dollar
+2019
+million
+At 31 December
+2020
+million
+At 31 December
+The Group
+Included primarily in short-term and long-term debts and lease liabilities are the following amounts denominated in a currency other than the
+functional currency of the entity to which they relate:
+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 USD and lease liabilities denominated in
+SGD. The Group enters into foreign exchange contracts to manage currency risk exposure.
+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.
+Lease liabilities
+6,205
+27,150
+188,189
+188,189
+Accounts payable
+31,633
+2,729
+11,834
+11,834
+11,834
+Bills payable
+2,729
+31,633
+31,196
+2,729
+Derivative financial liabilities
+Short-term loans.
+More than
+five years
+RMB million
+five years
+RMB million
+More than
+two years
+but less than
+188, 189
+Other payables and employee benefits payable
+80,183
+80,183
+15,610
+16,667
+764
+764
+24,400
+19,157
+Debentures payable
+6,492
+Within one
+year or on
+demand
+RMB million
+404
+39,677
+Long-term loans
+72,180
+72,180
+69,490
+Non-current liabilities due within one year
+80,183
+49,656
+For the year ended 31 December 2020
+Total
+(i) Basic earnings per share
+(17,088)
+7,210
+4,803
+(15,194)
+9
+86,374
+13,193
+(2,873,425)
+(2,092,791)
+(346)
+(5,712)
+8
+(244,517)
+(234,947)
+7
+(82,743)
+Foreign currency exchange gains/(losses), net
+(86,006)
+885
+(9,506)
+(6,219)
+11
+Income tax expense
+90,022
+48,143
+Profit before taxation
+12.777
+6,712
+21,22
+Share of profits less losses from associates and joint ventures
+919
+37,744
+10
+Investment income
+(170)
+(10,048)
+Net finance costs
+6
+Interest income
+Interest expense
+60,117
+2,959,799
+2,899,682
+2,049,456
+56,528
+2,105,984
+4
+Other operating revenues
+3
+Turnover
+Turnover and other operating revenues
+2019
+RMB
+RMB
+Year ended 31 December
+2020
+Note
+(Amounts in million, except per share data)
+for the year ended 31 December 2020
+(B) FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
+CONSOLIDATED INCOME STATEMENT
+Operating expenses
+Purchased crude oil, products and operating supplies and expenses
+(1,594,130)
+(2,370,699)
+Finance costs
+Operating profit
+Total operating expenses
+Other operating expense, net
+Taxes other than income tax
+Personnel expenses
+(10,510)
+(17,939)
+(9,716)
+(109,172)
+(106,965)
+Depreciation, depletion and amortisation
+(55,438)
+(55,315)
+5
+Selling, general and administrative expenses
+Exploration expenses, including dry holes.
+Financial Statements (International)
+Profit for the year
+72,083
+7,073
+(810)
+(2,441)
+162
+(31)
+(22)
+(31)
+(22)
+15
+72,083
+41,924
+RMB
+RMB
+2019
+2020
+4,941
+Year ended 31 December
+(4,457)
+337
+64 BASIC AND DILUTED EARNINGS PER SHARE
+42,239
+77,663
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+149
+14,755
+7,749
+62,908
+34,490
+77,663
+Financial Statements (International)
+42,239
+5,580
+315
+5,611
+1,480
+Note
+The notes on pages 155 to 203 form part of these consolidated financial statements.
+Total comprehensive income for the year
+16
+16
+ངང་
+Diluted
+Basic
+Earnings per share:
+41,924
+Profit for the year
+14,590
+8,828
+Non-controlling interests
+57,493
+33,096
+Shareholders of the Company
+Attributable to:
+66
+0.273
+0.273
+0.475
+0.475
+Non-controlling interests
+Shareholders of the Company
+Attributable to:
+Total comprehensive income for the year
+Total items that may be reclassified subsequently to profit or loss
+Total other comprehensive income
+Foreign currency translation differences
+Share of other comprehensive loss of associates and joint ventures
+Cash flow hedges
+41,924
+Total items that may not be reclassified subsequently to profit or loss
+Items that may be reclassified subsequently to profit or loss
+Fair value hedges
+Other comprehensive income:
+Profit for the year
+(Amounts in million)
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+for the year ended 31 December 2020
+attributable to the profit for the year are set out in Note 14.
+The notes on pages 155 to 203 form part of these consolidated financial statements. Details of dividends payable to shareholders of the Company
+148 Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Items that may not be reclassified subsequently to profit or loss
+Equity investments at fair value through other comprehensive income
+Financial Statements (International)
+72,083
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+7.44
+(0.013)
+(0.013)
+(0.21)
+Net profit deducted extraordinary gains and losses
+attributable to the Company's ordinary equity
+shareholders
+0.476
+0.476
+7.90
+0.272
+0.272
+4.44
+Net profit attributable to the Company's ordinary
+equity shareholders
+per share
+(RMB/Share) (RMB/Share)
+(%)
+earnings
+0.448
+earnings
+per share
+0.448
+REPORT OF THE INTERNATIONAL AUDITOR
+the consolidated statement of cash flows for the year then ended; and
+•
+the consolidated statement of changes in equity for the year then ended;
+•
+the consolidated statement of comprehensive income for the year then ended;
+•
+the consolidated income statement for the year then ended;
+• the consolidated balance sheet as at 31 December 2020;
+The consolidated financial statements of China Petroleum & Chemical Corporation (the "Company") and its subsidiaries (the "Group") set out on pages
+148 to 203, which comprise:
+羅兵咸永道
+What we have audited
+OPINION
+To the Shareholders of China Petroleum & Chemical Corporation
+(incorporated in the People's Republic of China with limited liability)
+Independent Auditor's Report
+pwc
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Diluted
+Basic
+Weighted
+average
+return on
+net assets
+121,071
+121,071
+2019
+2020
+121,071
+121,071
+121,071
+0.476
+0.272
+57,619
+2019
+2020
+32,924
+121,071
+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
+The calculation of the weighted average number of ordinary shares is as follows:
+Weighted average number of outstanding ordinary shares of the Company (million)
+Basic earnings per share (RMB/share)
+Net profit attributable to equity shareholders of the Company (RMB million)
+147
+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:
+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)
+Diluted
+earnings earnings
+per share
+per share
+(%) (RMB/Share) (RMB/Share)
+Weighted
+average
+return on
+net assets
+2019
+2020
+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:
+121,071
+121,071
+•
+121,071
+121,071
+2020
+0.476
+121,071
+57,619
+2019
+2020
+32,924
+121,071
+0.272
+65 RETURN ON NET ASSETS AND EARNINGS PER SHARE
+2019
+the notes to the consolidated financial statements, which include a summary of significant accounting policies.
+Basic
+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
+2020, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial
+Reporting Standards ("IFRSS") issued by the International Accounting Standard Board and have been properly prepared in compliance with the
+disclosure requirements of the Hong Kong Companies Ordinance.
+Those charged with governance are responsible for overseeing the Group's financial reporting process.
+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.
+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.
+RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+146
+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.
+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.
+Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion
+thereon.
+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.
+OTHER INFORMATION
+Financial Statements (International)
+Based on our work, we found the key assumptions and input data adopted
+were supported by the evidence we obtained.
+Evaluated the sensitivity analyses prepared by the Group, and assessed
+the potential impacts of a range of possible outcomes.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
+As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
+•
+•
+Hong Kong, 26 March 2021
+PricewaterhouseCoopers
+Certified Public Accountants
+Our opinion
+The engagement partner on the audit resulting in this independent auditor's report is CHAN KWONG TAK.
+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.
+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,
+actions taken to eliminate threats or safeguards applied.
+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.
+Used professionals with specialized skill and knowledge to assist in
+the evaluation of the appropriateness of discount rates adopted by the
+management.
+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.
+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 appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
+directors.
+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.
+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.
+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.
+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.
+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.
+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 relevant
+external data.
+Key Audit Matter
+The key audit matter identified in our audit is "Recoverability of the carrying amount of property, plant and equipment relating to oil and gas producing
+activities".
+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.
+KEY AUDIT MATTERS
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+Financial Statements (International)
+145
+Refer to note 8 “Other operating expense, net", note 17 "Property, plant
+and equipment” and note 44 “Accounting estimates and judgements" to
+the consolidated financial statements.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+PricewaterhouseCoopers, 22/F, Prince's Building, Central, Hong Kong
+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.
+Independence
+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.
+Compared the future cost profiles against historical costs and relevant
+budgets of the Group.
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+T: +852 2289 8888, F: +852 2810 9888, www.pwchk.com
+Low crude oil prices gave rise to possible indication that the carrying
+amount of property, plant and equipment relating to oil and gas producing
+activities as at 31 December 2020 might be impaired. The Group has
+adopted value in use as the respective recoverable amounts of property,
+plant and equipment relating to oil and gas producing activities, which
+involved key estimations or assumptions including:
+Recoverability of the carrying amount of property, plant and equipment
+relating to oil and gas producing activities
+Future crude oil prices;
+Compared estimates of future crude oil prices adopted by the Group
+against a range of published crude oil price forecasts.
+Assessed the methodology adopted in the discounted cash flow
+projections, tested mathematical accuracy of the projections, and the
+completeness, accuracy, and relevance of underlying data used in the
+projections.
+Evaluated and tested the key controls in respect of the preparation of
+the discounted cash flow projections of property, plant and equipment
+relating to oil and gas producing activities.
+Obtained an understanding of the management's internal control and
+assessment process of impairment of property, plant and equipment
+relating to oil and gas producing activities and assessed the inherent
+risk of material misstatement by considering the degree of estimation
+uncertainty and level of other inherent risk factors such as complexity,
+subjectivity, changes and susceptibility to management bias or fraud.
+•
+•
+•
+•
+•
+In auditing the respective value in use calculations of property, plant and
+equipment relating to oil and gas producing activities, we performed the
+following key procedures on the relevant discounted cash flow projections
+prepared by management:
+How our audit addressed the Key Audit Matter
+Because of the significance of the carrying amount of property, plant and
+equipment relating to oil and gas producing activities as at 31 December
+2020, together with the use of significant estimations or assumptions
+in determining their respective value in use, we had placed our audit
+emphasis on this matter.
+Discount rates.
+Future cost profiles; and
+Future production profiles;
+•
+Total comprehensive income for the year
+5,415
+5,580
+57,493
+5,415
+165
+5,415
+Other comprehensive income (Note 15)
+718,077
+14,590
+57,493
+57,493
+Profit for the year
+857,998
+139.921
+62,908
+315,167
+(4,477)
+72,083
+14,755
+Contributions to subsidiaries from non-controlling
+Amounts transferred to initial carrying amount of
+Total transactions with owners
+117,000
+Others
+Transaction with non-controlling interests
+Total contributions by and distributions to owners
+interests
+Distributions to non-controlling interests
+Appropriation (Note (a))
+77,663
+Interim dividend for 2019 (Note 14)
+Contributions by and distributions to owners:
+Transactions with owners, recorded directly in equity:
+hedged items
+1,093
+55
+55
+1,038
+1,038
+Final dividend for 2018 (Note 14)
+86,678
+RMB
+26.788
+equity
+Total
+Non-
+controlling
+interests
+of the
+Company
+Retained
+earnings
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+reserves
+reserve
+reserve
+premium
+reserve
+capital
+Balance at 31 December 2019
+Other
+RMB
+RMB
+RMB
+Balance at 31 December 2018
+121,071
+Balance at 1 January 2019
+1,463
+670
+793
+58
+735
+of Baling Branch of SAMC (Note 38)
+Contribution from SAMC in the Acquisition
+856,535
+139,251
+717,284
+315,109
+(4,477)
+117,000
+86.678
+55,850
+26,053
+121,071
+55,850
+(31,479) (31,479)
+121,071
+(14,529)
+RMB
+equity
+Total
+Non-
+controlling
+interests
+shareholders
+of the
+Company
+Retained
+earnings
+reserves
+reserve
+RMB
+reserve
+reserve
+Other
+Statutory Discretionary
+surplus
+surplus
+Share
+Capital
+Share
+capital
+to
+premium
+RMB
+RMB
+RMB
+shareholders
+41.924
+8,828
+33,096
+33,096
+877,304
+138.358
+738,946
+322,931
+1,941
+117,000
+90.423
+55,850
+29.730
+RMB
+RMB
+RMB
+RMB
+RMB
+Total equity
+attributable
+Final dividend for 2019 (Note 14)
+Contributions by and distributions to owners:
+Transactions with owners, recorded directly in equity:
+55,850
+29,730
+121,071
+(35)
+(43,075)
+(49,753)
+3,745
+(2.933)
+(13,494) (59,502)
+(46,008)
+2.933
+2,933
+2,933
+(49,753)
+3,745
+5,495
+5,495
+(18,989) (18,989)
+(3,745)
+3,745
+(31,479)
+(14,529)
+90,423
+(14,529)
+117,000
+24
+322,931
+hedged items
+Amounts transferred to initial carrying amount of
+Total comprehensive income for the year
+Other comprehensive income (Note 15)
+Profit for the year
+Balance at 1 January 2020
+(Amounts in million)
+for the year ended 31 December 2020
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+151
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+The notes on pages 155 to 203 form part of these consolidated financial statements.
+877,304
+138,358
+(59,502)
+(16,427)
+54
+(2)
+738,946
+1,941
+Statutory Discretionary
+surplus
+782222222
+Share
+Other payables
+Contract liabilities
+Trade accounts payable and bills payable
+Derivative financial liabilities
+Lease liabilities
+Loans from Sinopec Group Company and fellow subsidiaries
+Short-term debts
+Current liabilities
+Income tax payable
+-----------
+Prepaid expenses and other current assets
+Financial assets at fair value through other comprehensive income
+Inventories
+Trade accounts receivable
+Derivative financial assets
+Financial assets at fair value through profit or loss
+Time deposits with financial institutions
+Cash and cash equivalents
+Current assets
+Total current assets
+Total current liabilities
+Net current liabilities
+74,489
+1,278,410
+23,769
+30
+447,310
+57,924
+58,592
+455,395
+194,142
+8,661
+8,735
+151,895
+54,375
+837
+12,528
+35,587
+22222
+3,319
+1
+67,614
+60,438
+87,559
+100,498
+1,312,976
+65,437
+Total non-current assets
+40,521
+17,616
+1,521
+20
+Goodwill
+19
+Right-of-use assets
+Construction in progress
+17
+Property, plant and equipment, net
+Non-current assets
+Interest in associates
+RMB
+2019
+31 December
+31 December
+2020
+Note
+(Amounts in million)
+As at 31 December 2020
+CONSOLIDATED BALANCE SHEET
+Financial Statements (International)
+RMB
+21
+Interest in joint ventures
+Financial assets at fair value through other comprehensive income
+Deferred tax assets
+1,525
+56,467
+52,179
+95,737
+136,163
+8,697
+8,620
+267,937
+266,368
+173,872
+124,765
+18
+625,692
+589,247
+1,406
+23
+Long-term prepayments and other assets
+29
+26
+25,054
+30
+5,264
+43,289
+Non-controlling interests
+738,946
+741,494
+617,875
+620,423
+121,071
+121,071
+36
+Total equity
+877,304
+303,004
+328,757
+16,524
+18,960
+43,163
+45,552
+35
+Total equity attributable to shareholders of the Company
+882,858
+141,364
+138,358
+882,858
+Capital
+Share
+to
+attributable
+Total equity
+(Amounts in million)
+for the year ended 31 December 2019
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+150
+The notes on pages 155 to 203 form part of these consolidated financial statements.
+(Legal representative)
+Chief Financial Officer
+Shou Donghua
+Ma Yongsheng
+President
+Chairman
+Zhang Yuzhuo
+Approved and authorised for issue by the board of directors on 26 March 2021.
+877,304
+Reserves
+Share capital
+Equity
+Total non-current liabilities
+579,978
+522,190
+3,267
+6,586
+148,118
+178,637
+34
+126,833
+126,160
+33
+200,023
+161,656
+32
+2,729
+4,826
+24
+15,198
+15,292
+31
+66,795
+surplus
+132,668
+1,211,615
+Other long-term liabilities
+Provisions
+6,809
+8,124
+29
+Deferred tax liabilities
+177,674
+172,306
+31
+9,626
+11,778
+30
+Loans from Sinopec Group Company and fellow subsidiaries
+Lease liabilities
+49,208
+72,037
+30
+Long-term debts
+Non-current liabilities
+1,180,308
+Total assets less current liabilities
+(12)
+Payment for acquisition of subsidiary, net of cash acquired
+(1,079)
+Organisation
+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.
+Principal activities
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2020
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+154
+The notes on pages 155 to 203 form part of these consolidated financial statements.
+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.
+153,619
+(19,523)
+(9,022)
+173,142
+176,540
+(14,898)
+14,175
+Net cash generated from operating activities
+Income tax paid
+167,518
+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.
+Basis of preparation
+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.
+(i) Subsidiaries and non-controlling interests
+The consolidated financial statements comprise the Company and its subsidiaries, and interest in associates and joint ventures.
+(a) Basis of consolidation
+2 SIGNIFICANT ACCOUNTING POLICIES
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+156
+Financial Statements (International)
+155
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+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 44.
+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.
+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.
+Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2020 reporting periods and
+have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future
+reporting periods and on foreseeable future transactions.
+(b) New and amended standards and interpretations not yet adopted by the Group
+A number of new or amended standards became applicable for the current reporting period. The Group did not have to change its accounting
+policies or make retrospective adjustments as a result of adopting these standards.
+On 28 May 2020, the IASB published IFRS 16 COVID-19-Related Rent Concessions Amendment, which has no material impact on the Group for
+31 December 2020 reporting periods.
+(a) New and amended standards and interpretations adopted by the Group
+The accounting policies adopted are consistent with those of the previous financial year, except for the adoption of new and amended standards as
+set out below.
+Accounts payable and other current liabilities
+(9,748)
+22,703
+(11,915)
+(6,712)
+5,831
+5,928
+109,172
+106,965
+90,022
+48,143
+Interest expense
+Interest income
+Investment income
+Share of profits from associates and joint ventures
+Dry hole costs written off
+Depreciation, depletion and amortisation
+Adjustments for:
+Profit before taxation
+Operating activities
+RMB
+RMB
+2019
+(12,777)
+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.
+(37,744)
+(3,433)
+1,394
+Inventories
+Accounts receivable and other current assets
+209,703
+157,285
+1,264
+2,066
+Net changes from:
+Credit impairment losses
+1,779
+26,018
+1,829
+(398)
+3,624
+2,003
+Loss on foreign currency exchange rate changes and derivative financial instruments
+(Gain)/loss on disposal of property, plant, equipment and other non-current assets, net
+Impairment losses on assets
+17,088
+14,449
+(7,210)
+(919)
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+158
+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(n)). 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(n)).
+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 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.
+(i) Goodwill
+No depreciation is provided in respect of construction in progress.
+Construction in progress is transferred to property, plant and equipment when the asset is substantially ready for its intended use.
+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(n)). 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.
+(h) Construction in progress
+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.
+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 to
+explore for or use oil and natural gas, 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.
+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
+3%
+3%
+residuals rate
+Estimated
+Estimated usage
+period
+12 to 50 years
+4 to 30 years
+for the year ended 31 December 2020
+Equipment, machinery and others
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(i) Classification and measurement
+Financial Statements (International)
+159
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+The Group recognises the loss allowance accrued or written back in profit or loss.
+For trade accounts receivable and bills receivable and financial assets at FVOCI related to revenue, the Group measures the loss allowance at
+an amount equal to lifetime expected credit losses.
+For financial instruments on the first stage and the second stage, and that have low credit risk, the Group calculates interest income
+according to carrying amount without deducting the impairment allowance and effective interest rate. For financial instruments on the third
+stage, interest income is calculated according to the carrying amount minus amortised cost after the provision of impairment allowance and
+effective interest rate.
+For financial instruments that have low credit risk at the balance sheet date, the Group assumes that there is no significant increase in credit
+risk since the initial recognition, and measures the loss allowance at an amount equal to 12-month expected credit losses.
+The Group measures the expected credit losses of financial instruments on different stages at each balance sheet date. For financial
+instruments that have no significant increase in credit risk since the initial recognition, on first stage, the Group measures the loss allowance
+at an amount equal to 12-month expected credit losses. If there has been a significant increase in credit risk since the initial recognition of
+a financial instrument but credit impairment has not occurred, on second stage, the Group recognises a loss allowance at an amount equal
+to lifetime expected credit losses. If credit impairment has occurred since the initial recognition of a financial instrument, on third stage, the
+Group recognises a loss allowance at an amount equal to lifetime expected credit losses.
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past
+events, current conditions and forecasts of future economic conditions.
+The Group recognises a loss allowance for expected credit losses on a financial asset that is measured at amortised cost and a debt
+instrument that is measured at FVOCI.
+(ii) Impairment
+In addition, the Group designates some equity instruments that are not held for trading as financial assets at FVOCI, are presented in
+financial assets at FVOCI. The relevant dividends of these financial assets are recognised in profit or loss. When derecognised, the cumulative
+gain or loss previously recognised in other comprehensive income is transferred to retained earnings.
+Equity instruments that the Group has no power to control, jointly control or exercise significant influence over, are measured at fair value
+through profit or loss and presented in financial assets at fair value through profit or loss.
+Equity instruments
+Amortised cost: The business model for managing such financial assets by the Group are held for collection of contractual cash flows. The
+contractual cash flow characteristics are to give rise on specified dates to cash flows that are solely payments of principal and interest on
+the principal amount outstanding. Interest income from these financial assets is recognised using the effective interest rate method.
+FVOCI: The business model for managing such financial assets by the Group are held for collection of contractual cash flows and for
+selling the financial assets, where the assets' cash flows represent solely payments of principal and interest on the principal amount
+outstanding. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment
+gains or losses, foreign exchange gains and losses and interest income calculated using the effective interest rate method, which are
+recognised in profit or loss.
+Debt instruments held by the Group mainly includes cash and cash equivalents, time deposits with financial institutions, receivables. These
+financial assets are measured at amortised cost and FVOCI.
+Debt instruments
+Financial assets are initially recognised at fair value. For financial assets measured at fair value through profit or loss, the relevant
+transaction costs are recognised in profit or loss. The transaction costs for other financial assets are included in the initially recognised
+amount. However, trade accounts receivable and bills receivable arising from sale of goods or rendering services, without significant financing
+component, are initially recognised based on the transaction price expected to be entitled by the Group.
+The Group classifies financial assets into different categories depending on the business model for managing the financial assets and the
+contractual terms of cash flows of the financial assets: a) financial assets measured at amortised cost, b) financial assets measured at fair
+value through other comprehensive income ("FVOCI"), c) financial assets measured at fair value through profit or loss. A contractual cash flow
+characteristic which could have only a de minimis effect, or could have an effect that is more than de minimis but is not genuine, does not
+affect the classification of the financial asset.
+(j) Financial assets
+Year ended 31 December
+2020
+Buildings
+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.
+(iv) Merger accounting for common control combination
+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.
+(iii)Transactions eliminated on consolidation
+(a) Basis of consolidation (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+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(j)) or, when appropriate, the cost on initial recognition of an investment in an associate.
+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.
+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 (Notes 2(i) and (n)).
+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.
+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.
+(ii) Associates and joint ventures
+The particulars of the Group's principal subsidiaries are set out in Note 42.
+In the Company's balance sheet, investments in subsidiaries are stated at cost less impairment losses (Note 2(n)).
+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(j)) or, when appropriate, the cost on
+initial recognition of an investment in an associate or joint venture (Note 2(a)(ii)).
+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.
+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.
+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:
+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.
+(b) Translation of foreign currencies
+An item of property, plant and equipment is initially recorded at cost, less accumulated depreciation and impairment losses (Note 2(n)). 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.
+(f) Property, plant and equipment
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+157
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Inventories are stated at the lower of cost and net realisable value. Cost mainly 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.
+(e) Inventories
+Trade, bills and other receivables are recognised initially at their transaction price, unless they contain significant financing components when
+they are recognised at fair value. They are subsequently measured at amortised cost using the effective interest method, less impairment losses
+for bad and doubtful debts (Note 2(j)). 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.
+(d) Trade, bills and other receivables
+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.
+(c) Cash and cash equivalents
+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.
+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 approximates 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.
+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 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.
+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.
+(a) Reconciliation from profit before taxation to net cash generated from operating activities
+(17,623)
+for the year ended 31 December 2020
+3,500
+117,000
+92,280
+55,850
+(1.681)
+(2,375)
+694
+(318)
+322,361
+200
+121,071
+Balance at 31 December 2020
+Others
+(35,005)
+(2,416)
+(32,589)
+(33,336)
+(Amounts in million)
+812
+29,432
+741,494
+141,364
+882,858
+RMB
+RMB
+2019
+2020
+Year ended 31 December
+Note
+(Amounts in million)
+for the year ended 31 December 2020
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+152
+The notes on pages 155 to 203 form part of these consolidated financial statements.
+(e) The application of the share premium account is governed by Sections 167 and 168 of the PRC Company Law.
+(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 (Note 1); 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.
+(c) As at 31 December 2020, the amount of retained earnings available for distribution was RMB 115,849 million (2019: RMB 130,645 million), being the amount
+determined in accordance with CASS. 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 CASS and the amount determined in accordance with the
+accounting policies complying with International Financial Reporting Standards ("IFRS").
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+During the year ended 31 December 2020, the Company transferred RMB 1,857 million (2019: RMB 3,745 million) to the statutory surplus reserve, being 10% of the
+current year's net profit determined in accordance with the accounting policies complying with CASS.
+(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 ("CASS"), 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.
+Notes:
+(1,110)
+Total transactions with owners
+(125)
+13
+1,857
+Appropriation (Note (a))
+(8,475)
+(8,475)
+(8,475)
+Interim dividend for 2020 (Note 14)
+(23,004)
+(23,004)
+(23,004)
+1
+48
+(47)
+(47)
+42,239
+7,749
+34,490
+33,084
+1,406
+315
+(1,857)
+Net cash generated from operating activities
+Distributions to non-controlling interests
+(6,726)
+(138)
+(138)
+Transaction with non-controlling interests
+(34,880)
+(2,429)
+(32,451)
+(33,336)
+1.857
+(972)
+Total contributions by and distributions to owners
+972
+(972)
+(972)
+Baling Branch of SAMC (Note 38)
+Distribution to SAMC in the Acquisition of
+3,325
+3,325
+non-controlling interests
+Contributions to subsidiaries from
+(6,726)
+(a)
+1,857
+153,619
+(1,121)
+(7,508)
+(7,357)
+(4,157)
+(46,008)
+(31,479)
+3,919
+4,219
+602,467
+(614,108)
+558,680
+(540,015)
+The notes on pages 155 to 203 form part of these consolidated financial statements.
+Cash and cash equivalents at 31 December
+Effect of foreign currency exchange rate changes
+Cash and cash equivalents at 1 January
+Net increase/(decrease) in cash and cash equivalents
+Net cash used in financing activities
+Repayments of other financing activities
+Proceeds from other financing activities
+Payments made to acquire non-controlling interests
+Repayments of lease liabilities
+(8)
+Interest paid
+(15,327)
+514
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+167,518
+Financial Statements (International)
+Financial Statements (International)
+153
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+60,438
+87,559
+147
+(1,239)
+111,927
+60,438
+(51,636)
+28,360
+(84,204)
+(36,955)
+(320)
+(761)
+320
+(16,859)
+Distributions by subsidiaries to non-controlling interests
+(6,250)
+Contributions to subsidiaries from non-controlling interests
+51,520
+Proceeds from disposal of investments and investments in associates
+(1,031)
+(340)
+35,292
+10,000
+Proceeds from sale of financial assets at fair value through profit or loss
+(12,851)
+(6,700)
+(3,483)
+(6,040)
+Purchase of investments, investments in associates and investments in joint ventures
+Payment for financial assets at fair value through profit or loss
+(11,497)
+(13,315)
+Exploratory wells expenditure
+(130,057)
+(117,874)
+Dividends paid by the Company
+Investing activities
+704
+Proceeds from disposal of property, plant, equipment and other non-current assets
+Capital expenditure
+709
+Repayments of bank and other loans
+Proceeds from bank and other loans
+Net cash used in investing activities
+Financing activities
+Repayments of other investing activities
+Investment and dividend income received
+Decrease in time deposits with maturities over three months
+Interest received
+2,656
+(102,203)
+(3,682)
+(6,186)
+(121,051)
+11,510
+7,094
+2,305
+90,710
+54,950
+(103,231)
+(84,689)
+10,272
+Increase in time deposits with maturities over three months
+350
+Johnny Karling Ng
+Cai Hongbin
+Name
+Tang Min
+Li Yong (vi)
+Fan Gang (vii)
+350
+Jiang Zhenying
+350
+350
+350
+350
+350
+Supervisors
+Zhao Dong
+Liu Zhongyun (xi)
+369
+350
+1,563
+RMB'000
+1,173
+865
+Directors
+Dai Houliang (iv)
+Ma Yongsheng
+Li Yunpeng (v)
+Yu Baocai
+Ling Yiqun
+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
+96
+Emoluments paid
+or receivable
+in respect of a
+person's services
+as a director,
+whether of the
+Company or
+its subsidiary
+undertaking
+benefits in kind
+Bonuses
+RMB'000
+2019
+Retirement
+scheme
+contributions
+RMB'000
+Directors'/
+Supervisors' fee
+RMB'000
+Total
+RMB'000
+294
+Salaries,
+allowances and
+88
+Financial Statements (International)
+Yang Changjiang (x)
+5,670
+536
+1,400
+9,745
+Notes:
+(i) Mr. Zhang Yuzhuo was elected to be chairman and non-executive director from 25 March 2020.
+(ii) Mr. Liu Hongbin was elected to be executive director from 19 May 2020.
+(iii) Mr. Zhang Shaofeng was elected to be non-executive director from 28 September 2020.
+2,139
+(iv) Mr. Dai Houliang ceased being chairman and non-executive director from 19 January 2020.
+(vi) Mr. Li Yong ceased being non-executive director from 22 September 2020.
+(vii) Mr. Fan Gang ceased being independent non-executive director from 28 August 2020.
+(viii) Mr. Sun Huanquan was elected to be supervisor from 18 May 2020; Mr. Li Defang was elected to be supervisor from 18 May 2020.
+(ix) Mr. Yu Xizhi ceased being supervisor from 18 May 2020; Mr. Zhou Hengyou ceased being supervisor from 18 May 2020.
+(x) Mr. Yang Changjiang ceased being supervisor from 9 September 2020; Mr. Zhang Baolong ceased being supervisor from 9 September 2020.
+(xi) Due to change of working arrangement, Mr. Liu Zhongyun has tendered his resignation as executive director, member of Strategy Committee of the Board and
+Senior Vice President of the Company from 9 December 2019.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+169
+(v) Mr. Li Yunpeng ceased being non-executive director from 24 March 2020.
+Total
+1,346
+88
+Zhang Baolong (x)
+Zou Huiping
+369
+989
+88
+1,446
+Yu Xizhi (ix)
+369
+880
+88
+1,337
+Zhou Hengyou (ix)
+369
+874
+88
+1,331
+Yu Renming
+369
+889
+1,322
+The emoluments of every director and supervisor is set out below: (Continued)
+Independent non-executive directors
+12 DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)
+1,231
+60,117
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+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
+6 PERSONNEL EXPENSES
+2020
+RMB million
+2,685
+2019
+RMB million
+1,858
+73
+70
+8
+6
+2,105
+1,283
+(25)
+(2)
+58,886
+Salaries, wages and other benefits
+2019
+RMB million
+2020
+Kerosene
+Crude oil
+Synthetic resin
+Natural gas
+Synthetic fiber monomers and polymers
+351,707
+549,720
+155,687
+215,773
+122,313
+125,658
+72,385
+191,636
+48,121
+53,839
+41,640
+80,100
+Others (i)
+277,429
+2,049,456
+368,412
+2,899,682
+(i) Others are primarily liquefied petroleum gas and other refinery and chemical byproducts and joint products.
+4 OTHER OPERATING REVENUES
+Sale of materials and others
+Rental income
+164 Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+RMB million
+55,441
+1,087
+56,528
+Basic chemical feedstock
+Contributions to retirement schemes (Note 40)
+77,202
+8,804
+15,699
+16,387
+11,670
+12,111
+4,572
+5,883
+5,464
+5,748
+234,947
+244,517
+Effective from
+13 January 2015
+RMB/Ton
+2,109.76
+1,411.20
+2,105.20
+1,948.64
+1,711.52
+1,218.00
+1,495.20
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+165
+(a) Directors' and supervisors' emoluments (Continued)
+Financial Statements (International)
+Financial Statements (International)
+204,388
+RMB million
+197,542
+RMB million
+7 TAXES OTHER THAN INCOME TAX
+Consumption tax (i)
+City construction tax (ii)
+Education surcharge
+Resources tax
+Others
+Notes:
+(i) Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Products
+Gasoline
+Diesel
+Naphtha
+Solvent oil
+Lubricant oil
+Fuel oil
+Jet fuel oil
+(ii) City construction tax is levied on an entity based on its total paid amount of value-added tax and consumption tax.
+2020
+2019
+RMB million
+70,921
+11,822
+86,006
+82,743
+2020
+2019
+RMB million
+615,342
+422,569
+699,202
+As long as a cash flow hedge meets the qualifying criteria for hedge accounting, the separate component of equity associated with the hedged
+item (cash flow hedge reserve) is adjusted to the lower of the following (in absolute amounts):
+(i) The cumulative gain or loss on the hedging instrument from inception of the hedge; and
+(ii) The cumulative change in fair value (present value) of the hedged item (i.e. the present value of the cumulative change in the hedged
+expected future cash flows) from inception of the hedge.
+The gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income.
+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 hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast
+transaction for a non-financial asset or a non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, the
+entity removes that amount from the cash flow hedge reserve and include it directly in the initial cost or other carrying amount of the asset or
+the liability. This is not a reclassification adjustment and hence it does not affect other comprehensive income.
+For cash flow hedges, other than those covered by the preceding policy statements, that amount is reclassified from the cash flow hedge reserve
+to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit
+or loss.
+If the amount that has been accumulated in the cash flow hedge reserve is a loss and the Group expects that all or a portion of that loss will not
+be recovered in one or more future periods, the Group immediately reclassifies the amount that is not expected to be recovered into profit or
+loss.
+When the hedging relationship no longer meets the risk management objective on the basis of which it qualified for hedge accounting (ie the
+entity no longer pursues that risk management objective), or when a hedging instrument expires or is sold, terminated, exercised, or there is no
+longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk starts to dominate the value
+changes that result from that economic relationship or no longer meets the criteria for hedge accounting, the Group discontinues prospectively
+the hedge accounting treatments. If the hedged future cash flows are still expected to occur, that amount remains in the cash flow hedge
+reserve and is accounted for as cash flow hedges. If the hedged future cash flows are no longer expected to occur, that amount is immediately
+reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment. A hedged future cash flow that is no longer highly
+probable to occur may still be expected to occur, if the hedged future cash flows are still expected to occur, that amount remains in the cash
+flow hedge reserve and is accounted for as cash flow hedges.
+(n) Impairment of assets
+The carrying amounts of assets, including property, plant and equipment, construction in progress, right-of-use assets 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.
+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).
+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.
+Management assesses at each balance sheet date whether there is any indication that an impairment loss recognised for an 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 2020
+161
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(o) Trade, bills and other payables
+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.
+(p) 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.
+(q) 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.
+Cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a component
+of, a recognised asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable forecast transaction,
+and could affect profit or loss. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective
+effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.
+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.
+Cash flow hedges
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(j) Financial assets (Continued)
+(iii)Derecognition
+The Group derecognises a financial asset when: a) the contractual right to receive cash flows from the financial asset expires; b) the Group
+transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset; c) the financial asset has been
+transferred and the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, but the
+Group has not retained control.
+On derecognition of equity instruments at FVOCI, the difference between the carrying amounts and the sum of the consideration received
+and any accumulated gain or loss previously recognised in other comprehensive income, is recognised in retained earnings. While on
+derecognition of other financial assets, this difference is recognised in profit or loss.
+(k) Financial liabilities
+The Group, at initial recognition, classifies financial liabilities as either financial liabilities subsequently measured at amortised cost or financial
+liabilities at fair value through profit or loss.
+The Group's financial liabilities are mainly financial liabilities measured at amortised cost, including trade accounts payable and bills payable,
+other payables, and loans, etc. These financial liabilities are initially measured at the amount of their fair value after deducting transaction costs
+and use the effective interest rate method for subsequent measurement.
+Where the present obligations of financial liabilities are completely or partially discharged, the Group derecognises these financial liabilities or
+discharged parts of obligations. The differences between the carrying amounts and the consideration received are recognised in profit or loss.
+(I) Determination of fair value for financial instruments
+If there is an active market for financial instruments, the quoted price in the active market is used to measure fair values of the financial
+instruments. If no active market exists for financial instruments, valuation techniques are used to measure fair values. In valuation, the Group
+adopts valuation techniques that are applicable in the current situation and have sufficient available data and other information to support it,
+and selects input values that are consistent with the asset or liability characteristics considered by market participants in the transaction of
+relevant assets or liabilities, and gives priority to relevant observable input values. Use of unobservable input values where relevant observable
+input values cannot be obtained or are not practicable.
+(m)Derivative financial instruments and hedge accounting
+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 profit or loss, except where the derivatives qualify for hedge accounting.
+Hedge accounting is a method which recognises the offsetting effects on profit or loss (or other comprehensive income) of changes in the fair
+values of the hedging instrument and the hedged item in the same accounting period, to represent the effect of risk management activities.
+Hedged items are the items that expose the Group to risks of changes in future cash flows and that are designated as being hedged and that
+must be reliably measurable. The Group's hedged items include a forecast transaction that is settled with an undetermined future market price
+and exposes the Group to risk of variability in cash flows, etc.
+A hedging instrument is a designated derivative whose changes in cash flows are expected to offset changes in cash flows of the hedged item.
+The hedging relationship meets all of the following hedge effectiveness requirements:
+(i) There is an economic relationship between the hedged item and the hedging instrument, which shares a risk and that gives rise to opposite
+changes in fair value that tend to offset each other.
+(ii) The effect of credit risk does not dominate the value changes that result from that economic relationship.
+(iii) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges
+and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. However, that designation
+does not reflect an imbalance between the weightings of the hedged item and the hedging instrument.
+Financial Statements (International)
+160
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+(m)Derivative financial instruments and hedge accounting (Continued)
+(r) Revenue recognition
+Revenue arises in the course of the Group's ordinary activities, and increases in economic benefits in the form of inflows that result in an
+increase in equity, other than those relating to contributions from equity participants.
+The Group sells crude oil, natural gas, petroleum and chemical products, etc. Revenue is recognised according to the expected consideration
+amount, when a customer obtains control over the relevant goods or services. To determine whether a customer obtains control of a promised
+asset, the Group shall consider indicators of the transfer of control, which include, but are not limited to, the Group has a present right to
+payment for the asset; the Group has transferred physical possession of the asset to the customer; the customer has the significant risks and
+rewards of ownership of the asset; the customer has accepted the asset.
+(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 40.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+163
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+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.
+(aa) Dividends
+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.
+(bb) Segment reporting
+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.
+3 TURNOVER
+Turnover primarily represents revenue from the sales of refined petroleum products, chemical products, crude oil and natural gas, which are
+recognised at a point in time.
+2020
+RMB million
+2019
+RMB million
+Gasoline
+Diesel
+557,605
+When the Group leases self-owned plants and buildings, equipment and machinery, lease income from an operating lease is recognised on a
+straight-line basis over the period of the lease. The Group recognises variable lease income which is based on a certain percentage of sales
+as rental income when occurred.
+A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating lease is a
+lease other than a finance lease.
+(ii) As lessor
+For a lease modification that is not accounted for as a separate lease, except for the practical expedient which applies only to rent
+concessions occurring as a direct consequence of the COVID-19 pandemic, the group determine the lease term of the modified lease at the
+effective date of the modification, and remeasure the lease liability by discounting the revised lease payments using a revised discount rate.
+The group decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications
+that decrease the scope or shorten the term of the lease, and shall recognise in profit or loss any gain or loss relating to the partial or full
+termination of the lease. The group make a corresponding adjustment to the right-of-use asset for all other lease modifications.
+Sales of goods
+Sales are recognised when control of the goods have transferred, being when the products are delivered to the customer. Advance from
+customers but goods not yet delivered is recorded as contract liabilities and is recognised as revenues when a customer obtains control over the
+relevant goods.
+(s) Government grants
+Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the
+Group will comply with all attached conditions.
+Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them with the costs
+that they are intended to compensate.
+Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are
+credited to profit or loss on a straight-line basis over the expected lives of the related assets.
+(t) Borrowing costs
+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.
+(u) Repairs and maintenance expenditure
+Repairs and maintenance expenditure is expensed as incurred.
+Financial Statements (International)
+162 Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+166
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(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 10,086 million for the year ended 31 December 2020 (2019: RMB 9,450 million).
+(x) Leases
+A lease is a contract that a lessor transfers the right to use an identified asset for a period of time to a lessee in exchange for consideration.
+(i) As lessee
+The Group recognises a right-of-use asset at the date at which the leased asset is available for use by the Group, and recognises a lease
+liability measured at the present value of the remaining lease payments. The lease payments include fixed payments, the exercise price of
+a purchase option if the Group is reasonably certain to exercise that option, and payments of penalties for terminating the lease if the lease
+term reflects the Group exercising that option, etc. Variable payments that are based on a percentage of sales are not included in the lease
+payments, and should be recognised in profit or loss when incurred. Lease liabilities to be paid within one year (including one year) from
+balance sheet date is presented in current liabilities.
+Right-of-use assets of the Group mainly comprise land. Right-of-use assets are measured at cost which comprises the amount of the initial
+measurement of the lease liability, any lease payments made at or before the commencement date, any initial direct costs incurred by the
+lessee, less any lease incentives received. The Group depreciates the right-of-use assets over the shorter of the asset's useful life and the
+lease term on a straight-line basis. When the recoverable amount of a right-of-use asset is less than its carrying amount, the carrying amount
+is reduced to the recoverable amount.
+Payments associated with short-term leases with lease terms within 12 months and all leases of low-value assets are recognised on a
+straight-line basis over the lease term as an expense in profit or loss or as cost of relevant assets, instead of recognising right-of-use assets
+and lease liabilities.
+A lessee shall account for a lease modification as a separate lease if both: (1) the modification increases the scope of the lease by adding
+the right to use one or more underlying assets; and (2) the consideration for the lease increases by an amount commensurate with the stand-
+alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the articular
+contract.
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+12 DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+8 OTHER OPERATING EXPENSE, NET
+Income tax expense in the consolidated income statement represents:
+11 INCOME TAX EXPENSE
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+87,121
+(9,035)
+(41,800)
+8,191
+26,412
+19,843
+83,510
+30 September 2020
+RMB million
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Net Assets
+Long-term debts and Loans from Sinopec Group Company and fellow subsidiaries
+Other financial statement items
+Inventories
+Interest in associates
+Construction in progress
+Property, plant and equipment, net
+(i) The Company and Sinomart KTS Development Limited, Sinopec Natural Gas Limited Company and Sinopec Marketing Company Limited ("Marketing Company"), the
+subsidiaries of the Company entered into the Agreement on Cash Payment to Purchase Equity in Sinopec Yu Ji Pipeline Company Limited, the Agreement on Additional
+Issuance of Equity and Cash Payment to Purchase Assets, the Agreement on Cash Payment to Purchase Assets and the Agreement on Additional Issuance of Equity to
+Purchase Assets with China Oil & Gas Pipeline Network Corporation ("PipeChina"), on 21 July 2020 and on 23 July 2020 respectively, pursuant to which the Company
+and its subsidiaries proposed to dispose target business, including equity interests in the relevant companies, oil and gas pipeline and ancillary facilities, to PipeChina.
+The above transactions were considered and approved by the 15th Session of 7th Directorate Meeting on 23 July 2020 and the second Extraordinary General Meeting
+on 28 September 2020. The transaction consideration was mainly additional issuance of equity and/or cash payment by PipeChina and the gain on above transactions
+was RMB 37,731 million. Main assets and liabilities of disposed target business are as follows:
+Note:
+919
+37,744
+242
+63
+2020
+492
+RMB million
+Current tax
+Tax effect of non-taxable income (i)
+2,321
+3,274
+Tax effect of non-deductible expenses
+22,506
+12,036
+Expected PRC income tax expense at a statutory tax rate of 25%
+90,022
+48,143
+Profit before taxation
+RMB million
+RMB million
+2019
+2020
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+17,939
+6,219
+3,385
+(7,873)
+(467)
+(117)
+15,021
+14,209
+- Adjustment of prior years
+Deferred taxation (Note 29)
+- Provision for the year
+2019
+RMB million
+(8,330)
+185
+RMB million
+(116)
+(1,781)
+(210)
+(301)
+(173)
+(43)
+(1,829)
+398
+(345)
+(14,560)
+(4,384)
+(1,252)
+(222)
+3,052
+6,933
+8,775
+RMB million
+RMB million
+2019
+2020
+Others
+Donations
+Gain/(loss) on disposal of property, plant, equipment and other non-current assets, net
+Fines, penalties and compensations
+for the year ended 31 December 2020
+Net realised and unrealised loss on derivative financial instruments not qualified as hedging
+Impairment losses on long-lived assets (ii)
+(5,712)
+37,525
+156
+(346)
+(i) Government grants for the years ended 31 December 2020 and 2019 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.
+2020
+RMB million
+Investment income from disposal of business and long-term equity investments (i)
+Dividend income from holding of other equity instrument investments
+Others
+2.92% to 4.66%
+2.60% to 4.66%
+* Interest rates per annum at which borrowing costs were capitalised for construction in progress
+10 INVESTMENT INCOME
+17,088
+15,194
+Interest expense
+1,418
+1,343
+Accretion expenses (Note 35)
+9,646
+9,349
+6,024
+4,502
+(1,015)
+7,039
+2019
+RMB million
+2020
+RMB million
+6,513
+(2,011)
+Interest expense on lease liabilities
+Less: Interest expense capitalised*
+Interest expense incurred
+INTEREST EXPENSE
+9
+(ii) Impairment losses on long-lived assets for the year ended 31 December 2020 primarily represent impairment losses recognised in the exploration and production
+("E&P") segment of RMB 8,495 million (2019: RMB 3 million), the chemicals segment of RMB 3,606 million (2019: RMB 17 million), the refining segment of RMB 1,923
+million (2019: RMB 245 million), and the marketing and distribution segment of RMB 536 million (2019: RMB 80 million). The impairment losses in the E&P segment
+were mainly the impairment losses of properties, plant and equipment relating to oil and gas producing activities. The primary factors resulting in the E&P segment
+impairment loss were low oil price outlook and downward revision of oil and gas reserve in certain fields. E&P segment determines recoverable amounts of properties,
+plant and equipment relating to oil and gas producing activities, which include significant judgments and assumptions. The recoverable amounts were determined
+based on the present values of the expected future cash flows of the assets using a pre-tax discount rate 10.47% (2019: 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 4,548 million (2019: RMB 184 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
+2,836 million (2019: RMB 180 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 287 million (2019: RMB 7 million).
+The assets in the chemicals segment were written down because evidence indicates the economic performance of certain production facilities are worse than expected.
+Notes:
+(4,458)
+2019
+(1,011)
+Yu Renming
+467
+886
+1,159
+60
+160
+247
+Sun Huanquan (viii)
+59
+555
+272
+Zou Huiping
+83
+710
+366
+Jiang Zhenying
+Zhao Dong
+Supervisors
+Fan Gang (vii)
+350
+350
+350
+350
+350
+350
+-
+Johnny Karling Ng
+-
+125
+Ineffective portion of change in fair value of cash flow hedges
+Government grants (i)
+Tax effect of preferential tax rate (ii)
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+168
+6,095
+1,050
+342
+3,269
+1,434
+Total
+Zhang Baolong (x)
+Yang Changjiang (x)
+759
+761
+22
+33
+23
+611
+125
+Zhou Hengyou (ix)
+23
+613
+Yu Xizhi (ix)
+Cai Hongbin
+Li Defang (viii)
+94
+Financial Statements (International)
+Financial Statements (International)
+167
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+(ii) 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. According to Announcement [2020] No. 23 of the MOF "Announcement of the MOF, the State Taxation Administration and the National
+Development and Reform Commission on continuation of the income tax policy of western development enterprises", the preferential tax rate of 15% extends from 1
+January 2021 to 31 December 2030.
+(i) For the year ended 31 December 2020, the tax effect of non-taxable income includes the tax exempt investment income of joint ventures and associates and the tax
+exempt part of the gain related to the disposal of oil and gas pipeline and ancillary facilities.
+Notes:
+17,939
+6,219
+(467)
+Actual income tax expense
+Adjustment of prior years
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+189
+Write-down of deferred tax assets
+498
+1,087
+Tax effect of tax losses not recognised
+(335)
+(65)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+(312)
+1,013
+(730)
+Effect of income taxes at foreign operations
+(2,003)
+75
+for the year ended 31 December 2020
+(117)
+Total
+RMB'000
+620
+299
+(a) Directors' and supervisors' emoluments
+RMB'000
+Supervisors' fee
+Directors'/
+2020
+Retirement
+scheme
+contributions
+RMB'000
+Bonuses
+RMB'000
+Salaries,
+allowances and
+Emoluments paid
+or receivable
+in respect of a
+person's services
+as a director,
+whether of the
+Company or
+its subsidiary
+undertaking
+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
+Tang Min
+Independent non-executive directors
+benefits in kind
+RMB'000
+Directors
+Li Yong (vi)
+The emoluments of every director and supervisor is set out below:
+Zhang Yuzhuo (i)
+Name
+Yu Baocai
+Ma Yongsheng
+Ling Yiqun
+Zhang Shaofeng (iii)
+Dai Houliang (iv)
+Li Yunpeng (v)
+Liu Hongbin (ii)
+(92,323)
+(11,464)
+(10,086)
+(844)
+(135)
+As at 31 December 2020, the amount of capitalised cost of exploratory wells included in construction in progress related to the exploration and
+production segment was RMB 11,129 million (2019: RMB 8,961 million). The geological and geophysical costs paid during the year ended 31
+December 2020 were RMB 3,166 million (2019: RMB 4,024 million).
+46
+(53)
+124,765
+1
+173,872
+(141,157)
+(19,944)
+(5,831)
+Dry hole costs written off
+144,751
+130,283
+137,449
+RMB million
+RMB million
+173,872
+Balance at 1 January
+Additions
+Balance at 31 December
+Exchange adjustments
+Disposals and others
+Reclassification to other long-term assets
+Impairment losses for the year
+Transferred to property, plant and equipment
+19 RIGHT-OF-USE ASSETS
+(5,928)
+Land
+282,754
+RMB million
+24,205
+2019
+10,222
+13,983
+34,188
+248,566
+282,754
+34,188
+248,566
+(5,514)
+(748)
+(4,766)
+16,292
+7,555
+8,737
+271,976
+27,381
+244,595
+Additions
+Balance at 1 January 2020
+Balance at 31 December 2019
+Decreases
+Additions
+Balance at 1 January 2019
+Cost
+Total
+RMB million
+RMB million
+Others
+2020
+Depreciation for the year
+for the year ended 31 December 2020
+Exchange adjustments
+(3,209)
+Written back on disposals (i)
+(169)
+(161)
+(8)
+Reclassification to other long-term assets
+(54)
+(295)
+(54)
+Invest into the joint ventures and associated companies
+(98)
+393
+Reclassifications
+(49)
+11,714
+4,739
+683
+Impairment losses for the year
+85,062
+48,380
+32,054
+4,628
+1,248,888
+601,837
+587,192
+59,859
+Balance at 1 January 2020
+Decreases
+6,292
+18 CONSTRUCTION IN PROGRESS
+(464)
+(2,703)
+(51,667)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December 2020 and 31 December 2019, the Group had no individual significant fully depreciated property, plant and equipment which were
+still in use.
+At 31 December 2020 and 31 December 2019, the Group had no individual significant property, plant and equipment which were temporarily idle
+or pending for disposal.
+At 31 December 2020 and 31 December 2019, the Group had no individual substantial property, plant and equipment which had been pledged.
+The additions to oil and gas properties of the Group for the year ended 31 December 2020 included RMB 1,563 million (2019: RMB 1,408 million)
+of estimated dismantlement costs for site restoration (Note 35).
+(i) Disposals for the year ended 31 December 2020 mainly due to the Company and its subsidiaries disposed their oil and gas pipeline and ancillary facilities to
+PipeChina.
+589,247
+378,227
+136,872
+74,148
+625,692
+414,957
+(47,994)
+(138)
+140,360
+Balance at 31 December 2019
+Balance at 31 December 2020
+620,998
+407,858
+145,436
+67,704
+Balance at 1 January 2019
+Net book value:
+1,290,884
+607,867
+620,720
+62,297
+Balance at 31 December 2020
+(2,890)
+70,375
+(9,405)
+The cost of inventories recognised as an expense in the consolidated income statement amounted to RMB 1,659,355 million for the year ended 31
+December 2020 (2019: RMB 2,441,380 million). It includes the write-down of inventories of RMB 11,689 million mainly related to crude oil and
+finished goods (2019: RMB 1,616 million mainly related to finished goods).
+(12,547)
+1,032
+1,004
+1,004
+2,541
+2,541
+4,043
+4,043
+RMB million
+RMB million
+2020
+31 December
+31 December
+2019
+(7,861)
+8,697
+16,558
+(7,861)
+8,620
+16,481
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of petrochemical products
+Principal activities
+Other units without individually significant goodwill
+Sinopec Beijing Yanshan Petrochemical Branch
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO")
+Sinopec Zhenhai Refining and Chemical Branch
+Goodwill is allocated to the following Group's cash-generating units:
+Impairment tests for cash-generating units containing goodwill
+Less: Accumulated impairment losses
+Cost
+1,109
+8,620
+8,697
+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 11.4% to 13.4% (2019: 11.0% to
+11.9%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no major impairment loss
+was recognised.
+78,415
+91,554
+3,372
+2,578
+154,995
+196,727
+(3,100)
+(2,585)
+151,895
+194,142
+728
+1,248,888
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+179
+RMB million
+Financial Statements (International)
+49.00
+Sinopec Finance Company Limited
+("Sinopec Finance")
+14.00
+PipeChina (i)
+Country of
+incorporation
+Measurement
+method
+Principal activities
+% of
+ownership
+interests
+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.
+21 INTEREST IN ASSOCIATES
+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.
+Operation of oil and natural gas
+pipeline and auxiliary facilities
+Provision of non-banking financial
+services
+(3,142)
+2019
+RMB million
+Balance at 1 January 2019
+Impairment loss
+Balance at 31 December 2020
+Decreases
+Additions
+14,817
+5,702
+9,115
+Balance at 1 January 2020
+14,817
+5,702
+9,115
+Balance at 31 December 2019
+(157)
+(26)
+(131)
+Decreases
+14,974
+5,728
+9,246
+Additions
+Balance at 1 January 2019
+Accumulated depreciation
+294,412
+41,268
+253,144
+Balance at 31 December 2020
+Additions
+Decreases
+Balance at 31 December 2019
+Balance at 1 January 2020
+Additions
+31 December
+2020
+20 GOODWILL
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+174
+Financial Statements (International)
+173
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+271,976
+267,937
+266,368
+27,381
+28,486
+30,787
+239,451
+235,581
+Balance at 31 December 2020
+31 December
+Balance at 31 December 2019
+Balance at 1 January 2019
+Net book value
+Balance at 31 December 2020
+Decreases
+28,044
+10,481
+17,563
+(2,374)
+(1,575)
+(799)
+15,601
+6,354
+9,247
+244,595
+601,837
+Oil and gas,
+properties
+RMB million
+59,859
+8
+(39)
+(22)
+(4)
+(18)
+in other comprehensive income
+Net movement during the year recognised
+(12)
+(12)
+(31)
+8
+(39)
+(10)
+(4)
+(6)
+value through other comprehensive income
+Transfer of loss on disposal of equity investments at
+fair value through other comprehensive income to
+retained earnings
+Changes in the fair value of instruments at fair
+4,941
+(1,170)
+6,111
+7,073
+(2,332)
+9,405
+in other comprehensive income (i)
+Net movement during the year recognised
+657
+(196)
+(31)
+Fair value hedges
+162
+162
+2019
+RMB million
+2020
+RMB million
+33,096
+33,096
+Weighted average number of shares at 31 December
+Weighted average number of shares (diluted) at 31 December
+(ii) Weighted average number of shares (diluted)
+Profit attributable to ordinary shareholders of the Company
+Profit attributable to ordinary shareholders of the Company (diluted)
+(i) Profit attributable to ordinary shareholders of the Company (diluted)
+The calculation of diluted earnings per share for the year ended 31 December 2020 is based on the profit attributable to ordinary shareholders of
+the Company (diluted) of RMB 33,096 million (2019: RMB 57,493 million) and the weighted average number of shares of 121,071,209,646 (2019:
+121,071,209,646) calculated as follows:
+The calculation of basic earnings per share for the year ended 31 December 2020 is based on the profit attributable to ordinary shareholders
+of the Company of RMB 33,096 million (2019: RMB 57,493 million) and the weighted average number of shares of 121,071,209,646 (2019:
+121,071,209,646) during the year.
+16 BASIC AND DILUTED EARNINGS PER SHARE
+(i) As at 31 December 2020, cash flow hedge reserve amounted to a gain of RMB 8,176 million (31 December 2019: a gain of RMB 1,102 million), of which a gain of
+RMB 7,805 million was attributable to shareholders of the Company (31 December 2019: a gain of RMB 1,037 million).
+Note:
+5,580
+(1,162)
+853
+6,742
+(2,336)
+1,480
+1,480
+(4,457)
+(4,457)
+2,651
+Other comprehensive income
+Foreign currency translation differences
+(810)
+(810)
+(2,441)
+(2,441)
+and joint ventures
+Share of other comprehensive loss of associates
+315
+57,493
+57,493
+161
+198
+2020
+Pursuant to a resolution passed at the director's meeting on 26 March 2021, final dividends in respect of the year ended 31 December 2020 of
+RMB 0.13 (2019: RMB 0.19) per share totaling RMB 15,739 million (2019: RMB 23,004 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 shareholders' approval at the General Meeting on 28 September 2020, the interim dividends for the year ending 31 December
+2020 of RMB 0.07 (2019: RMB 0.12) per share totaling RMB 8,475 million (2019: RMB 14,529 million) were approved. Dividends were paid on 23
+October 2020.
+37,533
+24,214
+2019
+RMB million
+14,529
+23,004
+8,475
+15,739
+RMB million
+2020
+Dividends declared and paid during the year of RMB 0.07 per share (2019: RMB 0.12 per share)
+Dividends declared after the balance sheet date of RMB 0.13 per share (2019: RMB 0.19 per share)
+Dividends payable to shareholders of the Company attributable to the year represent:
+14 DIVIDENDS
+During 2020 and 2019, the Company did not incur any emoluments paid or receivable in respect of a person accepting office as a director, or any
+payments to any director for loss of office.
+5
+2
+3
+HKD1,500,001 to HKD2,000,000
+HKD1,000,001 to HKD1,500,000
+Emoluments
+2019
+Number of individuals
+2020
+For the year ended 31 December 2020, the five highest paid individuals in the Company included one supervisor and four senior management.
+The emolument paid to each of one supervisor and four senior management was above RMB 1,000 thousand. The total salaries, wages and other
+benefits was RMB 6,378 thousand, and the total amount of their retirement scheme contributions was RMB 339 thousand. For the year ended 31
+December 2019, the five highest paid individuals in the Company included one director and four senior management.
+13 SENIOR MANAGEMENT'S EMOLUMENTS
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+170
+Financial Statements (International)
+Final cash dividends in respect of the previous financial year, approved during the year of
+RMB 0.19 per share (2019: RMB 0.26 per share)
+RMB million
+23,004
+2019
+transferred to the consolidated income statement
+4,284
+(974)
+5,258
+6,912
+(2,295)
+9,207
+Effective portion of changes in fair value of hedging
+instruments recognised during the year
+Reclassification adjustments for amounts
+Cash flow hedges:
+amount
+RMB million
+RMB million
+effect
+Net of tax
+(37)
+Tax
+Net of tax
+amount
+RMB million
+Tax
+effect
+RMB million
+Before tax
+amount
+RMB million
+2019
+2020
+15 OTHER COMPREHENSIVE INCOME
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Pursuant to the shareholders' approval at the Annual General Meeting on 9 May 2019, a final dividend of RMB 0.26 per share totaling RMB 31,479
+million according to total shares on 10 June 2019 was approved. All dividends have been paid in the year ended 31 December 2019.
+Pursuant to the shareholders' approval at the Annual General Meeting on 19 May 2020, a final dividend of RMB 0.19 per share totaling RMB 23,004
+million according to total shares on 9 June 2020 was approved. All dividends have been paid in the year ended 31 December 2020.
+31,479
+RMB million
+Before tax
+amount
+RMB million
+587,192
+2020
+Number of shares Number of shares
+121,071,209,646
+121,071,209,646
+56,242
+Balance at 1 January 2019
+Accumulated depreciation:
+1,880,131
+986,094
+757,592
+136,445
+Balance at 31 December 2020
+(3,173)
+(226)
+(2,806)
+(141)
+Exchange adjustments
+(138,328)
+(131,231)
+(806)
+(6,291)
+Disposals (i)
+(1,090)
+(1,052)
+(38)
+Reclassification to other long-term assets
+(115)
+(115)
+Invest into the joint ventures and associated companies
+(1,318)
+(125)
+550,288
+565,830
+1,172,360
+Depreciation for the year
+Balance at 31 December 2019
+40
+667
+(12,424)
+(11,564)
+(6)
+(854)
+21
+Exchange adjustments
+Written back on disposals
+(91)
+(94)
+3
+Reclassification to other long-term assets
+1,443
+(216)
+Invest into the joint ventures and associated companies
+(246)
+(46)
+292
+Reclassifications
+196
+185
+11
+Impairment losses for the year
+88,335
+47,902
+36,289
+4,144
+(216)
+2019
+Reclassifications
+98,095
+(975)
+(76)
+1,051
+Reclassifications
+92,323
+54,684
+1,793,358
+5,560
+973,688
+3,993
+695,724
+1,408
+31,378
+6,261
+Transferred from construction in progress
+123,946
+159
+Additions
+Balance at 1 January 2019
+Cost:
+Total
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+Plants and
+buildings
+RMB million
+17 PROPERTY, PLANT AND EQUIPMENT
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+172
+Financial Statements (International)
+171
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+121,071,209,646
+121,071,209,646
+Invest into the joint ventures and associated companies
+(8)
+(303)
+(311)
+32,214
+10,848
+Transferred from construction in progress
+7,100
+5,147
+1,563
+390
+Additions
+1,874,580
+1,874,580
+1,016,794
+1,016,794
+780
+71
+141,157
+(15,653)
+(1,549)
+667
+727,552
+727,552
+130,234
+130,234
+Balance at 31 December 2019
+42
+Balance at 1 January 2020
+Exchange adjustments
+(469)
+Disposals
+(1,477)
+(729)
+(748)
+Reclassification to other long-term assets
+(13,635)
+12,687
+60,155
+89,908
+Principal place
+of business
+50.00
+Manufacturing refining oil products
+Equity method
+PRC
+PRC
+Company Limited ("FREP")
+Country of
+incorporation
+BASF-YPC Company Limited
+Manufacturing and distribution
+Equity method
+PRC
+PRC
+("BASF-YPC")
+Taihu Limited ("Taihu")
+49.00
+of petrochemical products
+Crude oil and natural gas extraction
+40.00
+Measurement
+method
+Principal activities
+interests
+(154)
+76
+The share of profit and other comprehensive income for the year ended 31 December 2020 in all individually immaterial associates accounted for
+using equity method in aggregate was RMB 4,264 million (2019: RMB 5,661 million) and RMB 817 million (2019: other comprehensive loss RMB
+155 million) respectively. As at 31 December 2020, the carrying amount of all individually immaterial associates accounted for using equity method
+in aggregate was RMB 33,153 million (2019: RMB 59,144 million).
+Notes:
+(i) The Group has a member in the Board of Directors of PipeChina. According to the structure and the resolution mechanism of the Board of Directors, the Group can
+exercise significant influence on PipeChina.
+(ii) Sinopec is able to exercise significant influence in SIBUR since Sinopec has a member in SIBUR's Board of Directors and has a member in SIBUR's Management
+Board.
+(iii) The summarised statement of comprehensive income for the year 2020 presents the operating results from the date when the Group can exercise significant influence
+on PipeChina to 31 December 2020.
+(iv) Including foreign currency translation differences.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+175
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+22 INTEREST IN JOINT VENTURES
+The Group's principal interests in joint ventures are as follows:
+% of
+ownership
+Name of entity
+Fujian Refining & Petrochemical
+Equity method
+Cyprus
+Russia
+Yanbu Aramco Sinopec Refining
+Cash and cash equivalents
+7,448
+5,603
+1,838
+1,154
+1,280
+4,485
+1,408
+733
+5,259
+3,242
+Other current assets
+7,492
+11.977
+4,777
+4,937
+1,223
+2,336
+7,516
+Current assets
+(144)
+RMB million
+2019
+RMB million RMB million
+37.50
+Company Ltd. (“YASREF”)
+Petroleum refining and processing
+business
+Equity method
+Saudi Arabia
+Saudi Arabia
+Sinopec SABIC Tianjin Petrochemical
+Company Limited ("Sinopec SABIC
+Tianjin")
+50.00
+Manufacturing and distribution
+Equity method
+PRC
+PRC
+of 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
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2020
+2019
+2020
+2019
+2020
+2019
+2020
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+Sinopec SABIC Tianjin
+31 December 31 December
+2020
+2019
+11,311
+(1,918)
+(182)
+2020
+RMB million
+2019
+RMB million
+2020
+2019
+RMB million
+RMB million
+Turnover
+Profit/(loss) for the year
+2019
+RMB million
+22,766
+6,444
+4,966
+49,793
+56,706
+11,707
+13,329
+1,252
+2,334
+2,027
+4,742
+2020
+RMB million
+2019
+RMB million
+RMB million
+3,741
+Carrying Amounts
+70,747
+14,583
+13,772
+8,728
+11,125
+7,792
+7,955
+1,160
+3,741
+Summarised statement of comprehensive income
+Year ended 31 December
+PipeChina (iii)
+2020
+Sinopec Finance
+2020
+SIBUR
+Zhongtian Synergetic Energy
+CIR
+RMB million
+2,234
+(1,936)
+6,513
+551
+285
+468
+284
+219
+2,517
+Share of profit/(loss) from
+associates
+709
+993
+1,095
+(194)
+651
+214
+773
+91
+212
+Share of other comprehensive
+(loss)/income from associates
+(iv)
+Dividends declared by associates
+201
+575
+1,994
+1,994
+181
+424
+Other comprehensive
+(loss)/income
+(372)
+411
+(19,180)
+(1,435)
+(308)
+151
+Total comprehensive
+income/(loss)
+6,444
+1,655
+2,645
+(21,116)
+5,078
+551
+(127)
+2.665
+4,501
+Total current assets
+4,213
+7,491
+7,133
+Carrying Amounts
+7,416
+7,501
+5,568
+5,804
+6,286
+5.605
+4,213
+7,491
+7,133
+Summarised statement of comprehensive income
+Year ended 31 December
+FREP
+BASF-YPC
+Taihu
+6,286
+5,605
+5,804
+5,568
+14,981
+14,265
+Net assets attributable to owners of the company
+14,831
+15,002
+13,920
+14,509
+11,439
+12,829
+4,515
+11,235
+14,981
+14,265
+Net assets attributable to non-controlling interests
+412
+464
+Share of net assets from joint ventures
+7,416
+7,501
+2020
+2019
+2020
+2019
+20,541
+Depreciation, depletion and amortisation
+(2,222)
+(2,541)
+(1,244)
+(1,474)
+(541)
+(629)
+(3,140)
+(3,048)
+(1,085)
+(1,094)
+Interest income
+118
+124
+27
+32
+291
+94
+14,881
+11,235
+75,940
+15,222
+2020
+2019
+YASREF
+2020
+RMB million RMB million
+RMB million RMB million
+RMB million
+RMB million
+RMB million
+2019
+RMB million
+Sinopec SABIC Tianjin
+2020
+2019
+RMB million
+RMB million
+Turnover
+38,691
+57,047
+15,701
+19,590
+9.528
+37,337
+4,515
+13,293
+11,851
+(1,203)
+(1,280)
+(456)
+(237)
+(38)
+(57)
+(9,520)
+(7,445)
+(998)
+(500)
+Other current liabilities
+(5,147)
+(7,090) (2,190)
+(1,808)
+(1,043)
+(1,815)
+(8,644) (12,504)
+(3,052)
+(2,896)
+Current financial liabilities
+Total current liabilities
+Current liabilities
+18,258
+14,940
+17,580
+6,615
+6,091
+2,503
+6,821
+8,924
+12,044
+7,924
+7,743
+Non-current assets
+15,237
+17,267
+9,993
+10,498
+12,531
+10,453
+45,413
+50,548
+14,878
+1,160
+(6,350)
+(2,646)
+(1,963)
+(378)
+(368)
+Total non-current liabilities
+(8,996)
+(11,475)
+(42)
+(35)
+(2,102)
+(2,109)
+(31,658)
+(31,408)
+(7,151)
+(4,960)
+Net assets
+14.831
+15,002
+13,920
+14,509
+(2,008)
+(8,370)
+(1,984)
+(35)
+(2,045)
+(1,081)
+(1,872)
+(18,164) (19,949)
+(4,050)
+(3,396)
+Non-current liabilities
+Non-current financial liabilities
+(8,761)
+(11,185)
+(85)
+(125)
+(29,650) (29,445)
+(6,773)
+(4,592)
+Other non-current liabilities
+(235)
+(290)
+(42)
+(2,017)
+13,053
+7,955
+11,125
+53,567
+(475)
+1,494
+52,216
+53,549
+493
+24 DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+Net book value at 31 December
+Balance at 31 December
+53,549
+Decreases
+Balance at 1 January
+Accumulated amortisation:
+Balance at 31 December
+Decreases
+Additions
+Balance at 1 January
+Cost:
+Operating rights of service stations
+Additions
+19,536
+17,282
+2,365
+Amounts due from associates and joint ventures
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from third parties
+25 TRADE ACCOUNTS RECEIVABLE
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+178
+Financial Statements (International)
+Financial Statements (International)
+177
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and swaps contracts. See Note 43.
+34,013
+31,856
+19,536
+21,711
+(103)
+(190)
+2,357
+2019
+RMB million
+RMB million
+2020
+(i) Others mainly comprise time deposits with terms of three years, catalyst expenditures and improvement expenditures of property, plant and equipment.
+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:
+(i) Including foreign currency translation differences.
+Note:
+The share of profit and other comprehensive income for the year ended 31 December 2020 in all individually immaterial joint ventures accounted for
+using equity method in aggregate was RMB 993 million (2019: RMB 1,737 million) and RMB 808 million (2019: other comprehensive loss RMB 168
+million) respectively. As at 31 December 2020, the carrying amount of all individually immaterial joint ventures accounted for using equity method
+in aggregate was RMB 26,099 million (2019: RMB 25,530 million).
+(98)
+(219)
+(522)
+(1,593)
+Share of other comprehensive loss from joint ventures (i)
+823
+359
+(488)
+(2,301)
+1,235
+911
+694
+456
+384
+217
+Share of net profit/(loss) from joint ventures
+176
+Less: Impairment losses for bad and doubtful debts
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+for the year ended 31 December 2020
+Note:
+65,437
+74,489
+25,936
+33,971
+3,926
+5,861
+1,562
+2,801
+34,013
+RMB million
+2019
+31 December
+RMB million
+31,856
+31 December
+2020
+Others (i)
+Long-term receivables from and prepayment to Sinopec Group Company and fellow subsidiaries
+Prepayments for construction projects to third parties
+Operating rights of service stations
+23 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+1,750
+31 December
+2020
+31 December
+31 December
+2020
+RMB million
+Trade accounts receivable and bills receivable (i)
+Current assets
+Listed equity instruments
+Unlisted equity instruments
+Non-current assets
+26 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
+for the year ended 31 December 2020
+31 December
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Information about the impairment of trade accounts receivable and the Group's exposure to credit risk can be found in Note 43.
+Trade accounts receivable (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.
+1,848
+(70)
+3,860
+(41)
+(23)
+(283)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+RMB million
+2019
+1,376
+RMB million
+RMB million
+2019
+31 December
+31 December
+2020
+Less: Allowance for diminution in value of inventories
+Spare parts and consumables
+Finished goods
+Work in progress
+Crude oil and other raw materials
+27 INVENTORIES
+(i) As at 31 December 2020 and 2019, bills receivable and certain trade accounts receivable were classified as financial assets at FVOCI, as the Group's business model
+is achieved both by collecting contractual cash flows and selling of these assets.
+Note:
+10,182
+8,661
+8,735
+10,260
+90
+149
+1,431
+(68)
+1,566
+2,173
+606
+Between two and three years
+Between one and two years
+Within one year
+31 December
+2020
+RMB million
+The ageing analysis of trade accounts receivable (net of impairment losses for bad and doubtful debts) is as follows:
+54,375
+35,587
+(1,848)
+(3,860)
+56,223
+39,447
+6,426
+4,791
+6,062
+12,120
+43,735
+22,536
+RMB million
+2019
+Over three years
+RMB million
+Impairment losses for bad and doubtful debts are analysed as follows:
+Provision for the year
+1,848
+RMB million
+RMB million
+2019
+2020
+54,375
+35,587
+94
+83
+64
+64
+190
+931
+54,027
+34,509
+31 December
+2019
+RMB million
+Balance at 31 December
+Written off for the year
+Others
+Written back for the year
+Balance at 1 January
+1.224
+691
+1,400
+2020
+RMB million
+3,721
+31 December 31 December
+2019
+2020
+RMB million RMB million
+4,219
+2,402
+31 December
+2019
+RMB million
+7,612
+147,140
+182,646
+31,634
+53,124
+903
+971
+Current liabilities
+(55,562)
+(197,872)
+(170,621)
+(31,157)
+(31,295)
+56,424
+30,678
+180,383
+18,926
+175,139
+53,008
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+21 INTEREST IN ASSOCIATES (Continued)
+Summarised financial information and reconciliation to their carrying amounts in respect of the Group's principal associates:
+PipeChina
+Sinopec Finance
+SIBUR
+31 December
+2020
+RMB million
+31 December
+2020
+RMB million
+31 December 31 December
+2019
+RMB million
+2020
+RMB million
+31 December
+2019
+RMB million
+Zhongtian Synergetic Energy
+31 December
+CIR
+Current assets
+Non-current assets
+74,012
+655,982
+(8,315)
+(13,887)
+(699)
+(936)
+29,761
+28,106
+87,280
+111,250
+20,108
+20,529
+2,320
+7,481
+Net assets attributable to
+non-controlling interests
+64,946
+440
+446
+Share of net assets from
+associates
+70,747
+14,583
+13,772
+8,728
+505,336
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+owners of the Company
+7,481
+Non-current liabilities
+(104,150)
+(514)
+(582)
+(58,941)
+(71,289)
+(28,422)
+(26,227)
+(286)
+(166)
+Net assets
+570,282
+29,761
+28,106
+87,720
+111,696
+20,108
+20,529
+2,320
+Net assets attributable to
+The Republic of
+Kazakhstan
+British Virgin
+Islands
+Crude oil and natural gas extraction Equity method
+(1,300)
+(6,136)
+2,612
+1,926
+1,735
+1,139
+767
+433
+Profit/(loss) for the year
+(8)
+1,057
+(708)
+(378)
+(579)
+(379)
+(197)
+(87)
+Tax expense
+2,178
+27
+954
+(236)
+718
+300
+Dividends declared by joint ventures
+1,645
+718
+(1,561)
+(6,720)
+1,507
+(1,442)
+1,735
+1,139
+767
+433
+Total comprehensive income/(loss)
+(261)
+(584)
+(1,105)
+(3,368)
+Other comprehensive loss
+1,645
+(533)
+7,792
+(1,292)
+3,320
+Principal place
+of business
+PRC
+Equity method
+PRC
+PRC
+PAO SIBUR Holding ("SIBUR") (ii)
+10.00
+Processing natural gas and
+Equity method
+Russia
+Russia
+manufacturing petrochemical
+products
+Zhongtian Synergetic Energy Company
+Limited ("Zhongtian Synergetic Energy")
+Caspian Investments Resources Ltd.
+("CIR")
+38.75
+Mining coal and manufacturing of
+coal-chemical products
+Equity method
+PRC
+PRC
+50.00
+PRC
+(7,193)
+Equity method
+58
+2,304
+2,314
+1,518
+964
+520
+Profit/(loss) before taxation
+(134)
+(131)
+(1,470)
+(1,136)
+(265)
+(20)
+(26)
+(16)
+(597)
+(535)
+Interest expense
+171
+183
+17
+(161)
+189
+Financial Statements (International)
+30
+56
+29
+824
+845
+1,498
+1,309
+Contingent liabilities
+At 31 December 2020 and 2019, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+63
+31 December
+2020
+2019
+RMB million
+RMB million
+Joint ventures
+Associates (ii)
+6,390
+8,450
+14,840
+7,100
+10,140
+17,240
+31 December
+34
+66
+69
+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 13,172 million (2019: RMB 6,100 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
+Exploration licenses for exploration activities are registered with the Ministry of Natural 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 Natural 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 Natural Resources annually
+which are expensed. Expenses recognised were approximately RMB 231 million for the year ended 31 December 2020 (2019: RMB 179 million).
+Estimated future annual payments 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
+Thereafter
+31 December
+2020
+31 December
+RMB million
+2019
+RMB million
+390
+302
+99
+Management 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 2020 and 2019, the Group estimates that there is no need
+to pay for 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 2020, the amount withdrawn by Zhongtian Synergetic Energy and guaranteed by the Group was RMB 8,450 million (2019: RMB 10,140 million).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020 185
+Profit attributable to shareholders of the Company
+2,966,193
+57,465
+16,906
+50
+(23,300)
+(22)
+2,959,799
+57,493
+Profit attributable to non-controlling interests
+14,568
+22
+14,590
+Basic earnings per share (RMB)
+0.475
+0.0004
+0.475
+Diluted earnings per share (RMB)
+0.475
+0.0004
+0.475
+Summarised consolidated balance sheet as at 31 December 2019:
+Current assets
+445,856
+Turnover and other operating revenues
+202,055
+for the year ended 31 December 2019:
+RMB million
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+37 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+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 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.
+The Group paid normal routine pollutant discharge fees of approximately RMB 11,362 million in the consolidated financial statements for the year
+ended 31 December 2020 (2019: RMB 9,271 million).
+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.
+38 BUSINESS COMBINATION
+Pursuant to the resolution passed at the Directors' meeting on 28 October 2020, the Company entered into an Agreement with Sinopec Assets
+Management Corporation ("SAMC") in relation to the formation of Sinopec Baling Petrochemical Co. Ltd ("Baling Petrochemical"). According to the
+Agreement, the Company and SAMC subscribed capital contribution with the business of Baling area respectively and some cash. After the capital
+injection, the Company remained to hold 55% of Baling Petrochemical's voting rights and was still able to control Baling Petrochemical.
+As Sinopec Group Company controls both the Company and SAMC, the transaction described above between Sinopec and SAMC has been
+accounted as business combination under common control. Accordingly, the assets and liabilities of which SAMC subscribed 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 Baling Branch of SAMC on a combined basis.
+Baling Petrochemical is mainly engaged in the production and sales of petrochemicals, chemical fibers, fertilizers, fine chemical products and other
+chemical products.
+The financial condition as at 31 December 2019 and the results of operation for the year ended 31 December 2019 previously reported by the
+Group have been restated, as set out below:
+The Group, as
+previously
+reported
+RMB million
+Baling
+Branch
+of SAMC
+RMB million
+Elimination
+The Group,
+and
+as restated
+Adjustment*
+RMB million
+Summarised consolidated income statement
+205,277
+RMB million
+138,088
+63,967
+31 December
+2019
+108,380
+81,861
+70,257
+66,257
+178,637
+148,118
+35 PROVISIONS
+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:
+Balance at 1 January
+Provision for the year
+Accretion expenses
+Decrease for the year
+Exchange adjustments
+Balance at 31 December
+2020
+2019
+RMB million
+42,438
+1,563
+RMB million
+42,007
+1,408
+1,343
+1,418
+(1,490)
+25,618
+(2,439)
+58,908
+41,724
+9,665
+8,981
+5,696
+5,665
+161,656
+200,023
+33 CONTRACT LIABILITIES
+As at 31 December 2020 and 2019, the Group's contract liabilities primarily represent advances from customers. Related performance obligations
+are satisfied and revenue is recognised within one year.
+34 OTHER PAYABLES
+Salaries and welfare payable
+Interest payable
+Payables for constructions
+Other payables
+Financial liabilities carried at amortised costs
+Taxes other than income tax
+31 December
+2020
+31 December
+RMB million
+7,081
+667
+2019
+RMB million
+4,807
+612
+50,824
+2,097
+(141)
+43,713
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+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 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.
+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 2015, the Company issued 2,790,814,006 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.
+All A shares and H shares rank pari passu in all material aspects.
+Capital management
+Management optimises the structure of the Group's capital, which comprises of equity, 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, 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 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 2020, the debt-to-capital ratio and
+the liability-to-asset ratio of the Group were 10.2% (2019: 7.4%) and 49.1% (2019: 50.2%), respectively.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 30 and 37, respectively.
+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.
+184 Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+37 COMMITMENTS AND CONTINGENT LIABILITIES
+Capital commitments
+At 31 December 2020 and 2019, capital commitments of the Group are as follows:
+31 December
+2020
+RMB million
+Authorised and contracted for (i)
+Authorised but not contracted for
+171,335
+33,942
+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.
+44
+42,438
+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 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.
+183
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+36 SHARE CAPITAL
+Registered, issued and fully paid
+95,557,771,046 listed A shares (2019: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 listed H shares (2019: 25,513,438,600) of RMB 1.00 each
+31 December
+2020
+31 December
+2019
+RMB million
+RMB million
+95,558
+95,558
+25,513
+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 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.
+(643)
+447,310
+Total assets
+•
+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;
+(2) where there is no government-prescribed price, the government-guidance price;
+(3) where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+(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%.
+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.
+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 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 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.
+Financial Statements (International)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+39 RELATED PARTY TRANSACTIONS (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+•
+On the basis of a series of continuing connected transaction agreements signed in 2000, the Company and Sinopec Group Company have
+signed the Fifth Supplementary Agreement and the Fourth Revised Memorandum of land use rights leasing contract on 24 August 2018,
+which took effect on 1 January 2019 and made adjustment to "Mutual Supply Agreement”, “Agreement for Provision of Cultural and
+Educational, Health Care and Community Services", "Buildings Leasing Contract", "Intellectual Property Contract" and "Land Use Rights
+Leasing Contract", etc.
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures included in the following accounts captions
+are summarised as follows:
+31 December
+2020
+RMB million
+Trade accounts receivable
+•
+Financial assets at fair value through other comprehensive income
+⋅
+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 2020.
+The terms of these agreements are summarised as follows:
+For the year ended 31 December 2020, no individually significant right-of-use assets were leased from Sinopec Group Company and fellow
+subsidiaries, associates and joint ventures by the Group. The interest expense recognised for the year ended 31 December 2020 on lease
+liabilities in respect of amounts due to Sinopec Group Company and fellow subsidiaries, associates and joint ventures was RMB 8,160 million
+(2019: RMB 8,518 million).
+For the year ended 31 December 2020, the amount of rental the Group paid to Sinopec Group Company and fellow subsidiaries, associates and
+joint ventures for land, buildings and others are RMB 11,090 million, RMB 571 million and RMB 330 million (2019: RMB 11,333 million, RMB
+518 million and RMB 468 million).
+As at 31 December 2020 and 2019, 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 guarantees disclosed in Note 37. Guarantees given to banks by
+the Group in respect of banking facilities to associates and joint ventures are disclosed in Note 37.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020 187
+Financial Statements (International)
+188
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+39 RELATED PARTY TRANSACTIONS (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+Notes:
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+(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.
+(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.
+(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,
+environmental protection and management services.
+(vi) Ancillary and social services represent expenditures for social welfare and support services such as educational facilities, media communication services, sanitation,
+accommodation, canteens, and property maintenance.
+(vii) 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.
+(viii) 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. The balance of deposits at
+31 December 2020 was RMB 53,417 million (2019: RMB 35,832 million).
+(ix) Interest expense represents interest charges on the loans obtained from Sinopec Group Company and fellow subsidiaries.
+(x) The Group obtained loans, discounted bills and others from Sinopec Group Company and fellow subsidiaries.
+•
+Included in the transactions disclosed above, for the year ended 31 December 2020 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 150,239 million (2019: RMB 151,851 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 134,359
+million (2019: RMB 135,198 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 3,099
+million (2019: RMB 3,097 million), lease charges for land, buildings and others paid by the Group of RMB 11,086 million, RMB 565 million and
+RMB 211 million (2019: RMB 11,330 million, RMB 509 million and RMB 383 million), respectively and interest expenses of RMB 919 million
+(2019: RMB 1,334 million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 71,862 million
+(2019: RMB 64,774 million), comprising RMB 71,075 million (2019: RMB 63,686 million) for sales of goods, RMB 704 million (2019: RMB 1,066
+million) for interest income and RMB 83 million (2019: RMB 22 million) for agency commission income.
+16,896
+31 December
+2019
+RMB million
+Long-term loans excluding current portion from Sinopec Group Company and fellow subsidiaries
+Lease liabilities (including to be paid within one year)
+Total
+11,778
+9,626
+162,048
+171,402
+222,961
+272,743
+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 30.
+As at and for the year ended 31 December 2020, and as at and for the year ended 31 December 2019, 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.
+(b) Key management personnel emoluments
+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:
+Short-term employee benefits
+Retirement scheme contributions
+2020
+RMB'000
+2019
+RMB'000
+5,753
+342
+6,095
+9,209
+536
+9,745
+(c) Contributions to defined contribution retirement plans
+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 40. As at 31 December 2020 and 2019, the accrual for the contribution to
+post-employment benefit plans was not material.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+43,289
+760
+5,264
+3,010
+12,470
+407
+Prepaid expenses and other current assets
+19,305
+12,771
+Long-term prepayments and other assets
+6,435
+734
+Total
+43,396
+26,382
+Trade accounts payable and bills payable
+22,805
+25,177
+Contract liabilities
+5,940
+4,456
+Other payables
+12,116
+18,793
+Other long-term liabilities
+Short-term loans and current portion of long-term loans from Sinopec Group Company and
+fellow subsidiaries
+185,377
+The amounts set out in the table above in respect of the year ended 31 December 2020 and 2019 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+(31,144)
+for the year ended 31 December 2019:
+Net cash generated from operating activities
+Net cash used in investing activities
+Net cash (used in)/generated from financing activities
+Net (decrease)/increase in cash and cash equivalents
+153,420
+199
+(120,463)
+(588)
+(84,713)
+(51,756)
+509
+120
+153,619
+(121,051)
+(84,204)
+(51,636)
+At the completion date, the non-controlling interests amount to RMB 972 million was recognised in relation to SAMC's 45% interest in Baling
+Branch of the Company.
+186
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+Summarised consolidated statement of cash flows
+39 RELATED PARTY TRANSACTIONS
+Total equity attributable to shareholders of the Company
+652
+1,755,071
+5,858
+(643)
+1,760,286
+Current liabilities
+576,374
+4,247
+(643)
+579,978
+Total liabilities
+879,236
+4,389
+(643)
+882,982
+738,150
+1,448
+(652)
+738,946
+Non-controlling interests
+137,685
+21
+138,358
+3,438
+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.
+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.
+31,444
+33,310
+(v)
+32,106
+38,827
+(vi)
+3,099
+3,098
+(vii)
+160
+116
+(viii)
+704
+1,066
+(ix)
+919
+1,334
+(viii)
+(17,585)
+5,230
+(x)
+(iv)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+8,206
+(iii)
+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
+Agency commission income
+Interest income
+Interest expense
+Net deposits (placed with)/withdrawn from related parties
+Net funds (repaid to)/obtained from related parties
+Note
+2020
+2019
+(i)
+RMB million
+233,283
+RMB million
+285,853
+(ii)
+158,963
+189,914
+8,848
+146,295
+RMB million
+Between 1 month and 6 months
+Over 6 months
+RMB million
+2,563
+1,808
+(17)
+(667)
+2,546
+1
+1,142
+1,104
+73
+(1,195)
+-
+(250)
+(268)
+6,761
+(2,575)
+(39)
+(1)
+4,146
+3,709
+(151)
+38
+RMB million
+(2)
+RMB million
+from reserve
+Payables
+Cash flow hedges
+Property, plant and equipment
+Tax losses carried forward
+Financial assets at fair value through other
+comprehensive income
+Intangible assets
+Others
+Net deferred tax assets/(liabilities)
+Balance at
+1 January
+2019
+Recognised in
+consolidated
+income
+statement
+Recognised
+in other
+comprehensive
+Transferred
+Balance at
+31 December
+RMB million
+RMB million
+income
+RMB million
+Others
+2019
+Receivables and inventories
+3,594
+8
+(122)
+144
+income
+RMB million
+(12)
+Others
+from reserve
+31 December
+2020
+RMB million
+RMB million
+RMB million
+(1)
+2,411
+1,286
+(268)
+(42)
+(2,316)
+(4)
+(2,630)
+4,146
+(2,244)
+127
+349
+2,378
+1,142
+116
+2,546
+RMB million
+124
+(61)
+148
+87
+(254)
+15,746
+(196)
+(3,385)
+(49)
+(1,237)
+(65)
+(67)
+(564)
+(250)
+10,807
+Balance at
+1 January
+2020
+Recognised in
+consolidated
+income
+statement
+Recognised
+in other
+Balance at
+comprehensive
+Transferred
+RMB million
+3,594
+Net deferred tax assets/(liabilities)
+Intangible assets
+2020
+RMB million
+31 December
+2019
+RMB million
+31 December
+2020
+31 December
+2019
+RMB million
+RMB million
+Receivables and inventories
+2,411
+2,546
+Payables
+1,286
+1,142
+Cash flow hedges
+1,790
+116
+Property, plant and equipment
+15,793
+16,463
+(4,420)
+(13,415)
+31 December
+(384)
+(12,317)
+1,879
+57,924
+5,063
+180
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+28 PREPAID EXPENSES AND OTHER CURRENT ASSETS
+Receivables
+Advances to suppliers
+Value-added input tax to be deducted
+Prepaid income tax
+29 DEFERRED TAX ASSETS AND LIABILITIES
+Deferred tax assets and liabilities before offset are attributable to the items detailed in the table below:
+Deferred tax assets
+31 December
+2020
+RMB million
+34,974
+4,862
+18,625
+131
+58,592
+31 December
+2019
+RMB million
+Deferred tax liabilities
+25,669
+25,313
+Others
+Tax losses carried forward
+3,594
+Deferred tax liabilities.
+Deferred tax assets and liabilities after the consolidated elimination adjustments are as follows:
+Deferred tax assets.
+Deferred tax liabilities
+31 December
+2020
+RMB million
+25,054
+8,124
+31 December
+2019
+RMB million
+17,616
+6,809
+As at 31 December 2020, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 17,718
+million (2019: RMB 16,605 million), of which RMB 4,349 million (2019: RMB 1,992 million) was incurred for the year ended 31 December 2020,
+because it was not probable that the future taxable profits will be realised. These deductible losses carried forward of RMB 3,089 million, RMB 5,938
+million, RMB 2,356 million, RMB 1,986 million and RMB 4,349 million will expire in 2021, 2022, 2023, 2024, 2025 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 2020, write-down of deferred tax assets
+amounted to RMB 75 million (2019: RMB 189 million) (Note 11).
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+29 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+Movements in the deferred tax assets and liabilities are as follows:
+Receivables and inventories
+Payables
+Cash flow hedges
+Property, plant and equipment
+Tax losses carried forward
+Financial assets at fair value through other
+comprehensive income
+7,289
+7,289
+13,322
+10,915
+10,915
+31 December
+2019
+Financial assets at fair value through other comprehensive income
+Intangible assets
+127
+131
+(11)
+(7)
+869
+595
+(517)
+(508)
+Others
+371
+318
+Deferred tax assets/(liabilities)
+35,969
+24,905
+(676)
+(19,039)
+(882)
+(14,098)
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+Deferred tax assets
+31 December
+2020
+RMB million
+RMB million
+Financial Statements (International)
+9,960
+(148)
+RMB denominated
+Interest rates ranging from 1.08% to
+5.23% per annum at 31 December 2020
+with maturities through 2036
+USD denominated
+Interest rates at 1.60% per annum at 31 December
+2020 with maturities in 2027
+Less: Current portion
+38,356
+32,157
+76,674
+63,998
+(4,637)
+(14,790)
+72,037
+49,208
+11,013
+47,450
+1,387
+(622)
+11,778
+(37,824)
+9,626
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+83,815
+Less: Current portion
+with maturities through 2043
+5.23% per annum at 31 December 2020
+with maturities through 2030
+Interest rates at 1.55% per annum
+Corporate bonds (ii)
+RMB denominated
+USD denominated
+at 31 December 2020 with maturities
+through 2039
+31 December
+2020
+RMB million
+31 December
+2019
+RMB million
+38,226
+31,714
+92
+127
+38,318
+31,841
+Fixed interest rates ranging from 2.20% to
+26,977
+20,000
+4.90% per annum at 31 December 2020
+with maturity through 2023
+Fixed interest rates ranging from 3.13% to
+11,379
+12,157
+4.25% per annum at 31 December 2020
+Total third parties' long-term debts
+Interest rates ranging from 1.08% to
+58,834
+Notes:
+Amounts due to Sinopec Group Company and fellow subsidiaries
+Amounts due to associates and joint ventures
+Bills payable
+Trade accounts payable and bills payable measured at amortised cost
+The ageing analysis of trade accounts payable and bills payable is as follows:
+RMB million
+132,136
+166,830
+11,384
+11,251
+7,742
+10,108
+151,262
+188,189
+11,834
+10,394
+161,656
+200,023
+31 December
+2020
+RMB million
+31 December
+2019
+Within 1 month or on demand
+Amounts due to third parties
+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.
+RMB million
+31 December
+(i) The Company issued Super & Short-term Commercial Paper on 20 August 2020 at par value of RMB 100, and the interest will be paid at its maturity. The total issued
+amount of the 169-day corporate bonds is RMB 3 billion with a fixed rate at 1.70% per annum.
+(ii) The Company issued corporate bonds with a maturity of three years on 31 March 2020 at par value of RMB 100. The total issued amount of the corporate bonds is
+RMB 10 billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 2.70% per annum and the interest is paid once a year.
+The Company issued corporate bonds with a maturity of three years on 27 May 2020 at par value of RMB 100. The total issued amount of the corporate bonds is RMB
+10 billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 2.20% per annum and the interest is paid once a year.
+These corporate bonds are carried at amortised cost.
+31 LEASE LIABILITIES
+Lease liabilities
+Current
+Non-current
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+31 December
+31 December
+2020
+RMB million
+2019
+RMB million
+15,292
+172,306
+15,198
+177,674
+187,598
+192,872
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+32 TRADE ACCOUNTS PAYABLE AND BILLS PAYABLE
+31 December
+2020
+2019
+(84)
+USD denominated
+Interest rate and final maturity
+Third parties' debts
+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
+Corporate bonds (i)
+RMB denominated
+Loans from Sinopec Group Company and fellow subsidiaries
+Short-term loans
+16,111
+16,111
+RMB million
+25,709
+25,619
+-
+90
+4,637
+2019
+4,613
+31 December
+31 December
+13,322
+124
+(4)
+(4)
+116
+87
+19
+246
+352
+(564)
+10,807
+162
+7,873
+24
+73
+(305)
+(2,265)
+519
+(4)
+16,930
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES
+Short-term debts represent:
+2020
+RMB million
+Third parties' debts
+Long-term bank loans
+RMB denominated
+24
+22
+25
+Current portion of long-term loans
+RMB denominated
+622
+37,824
+622
+37,824
+5,264
+43,289
+29,033
+83,810
+The Group's weighted average interest rates on short-term loans were 2.53% (2019: 3.11%) per annum at 31 December 2020. The above
+borrowings are unsecured.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+181
+Financial Statements (International)
+Financial Statements (International)
+182
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+Long-term debts represent:
+172
+337341
+495
+2,236
+22
+1,790
+1,765
+25
+13,000
+13,000
+4,637
+14,790
+3,018
+3,018
+23,769
+40,521
+4,642
+5,465
+RMB denominated
+1,141
+2,709
+USD denominated
+Hong Kong Dollar ("HKD") denominated
+European Dollar ("EUR") denominated
+3,298
+31
+for the year ended 31 December 2020
+57
+2,742
+55,992
+5
+2,197
+175
+353
+3
+2,115
+136
+385
+Total
+China
+0
+1
+3
+0
+96
+0
+2
+Equity accounted entities
+0
+0
+99
+Consolidated subsidiaries
+Shengli
+Others
+Development Exploratory Development Exploratory
+Exploratory
+Net
+Gross
+Net
+Gross
+2019
+2020
+Wells drilling (as of 31 December)
+Total
+Equity accounted entities
+Consolidated subsidiaries
+Overseas
+Others
+Shengli
+Consolidated subsidiaries
+China
+Total
+Equity accounted entities
+Consolidated subsidiaries
+Overseas
+0
+Development Exploratory Development
+0
+4
+2
+1,080
+64
+204
+Shengli
+5
+2,098
+174
+350
+195
+3
+136
+383
+Consolidated subsidiaries
+Dry
+5
+2,098
+174
+350
+3
+2,015
+2,015
+81
+1,168
+4
+0
+0
+Consolidated subsidiaries
+0
+99
+1
+3
+0
+100
+0
+2
+Overseas
+1
+930
+93
+155
+1
+935
+72
+179
+Others
+0
+92
+29
+2223202
+2,752
+7,055
+18,293
+18,293
+18,668
+18,668
+33,819
+33,819
+34,572
+7,248
+34,572
+52,112
+53,240
+53,240
+52,112
+52,112
+53,240
+53,240
+Net
+Gross
+52,112
+2,855
+28
+10
+6,420
+6,928
+6,976
+Net
+Gross
+Net
+Gross
+Region
+China
+2019
+2020
+Natural gas productive wells (as of 31 December)
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+Business Review and Prospects
+13
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+2,841
+54,967
+7,220
+59.360
+7,027
+60,295
+14
+28
+Net
+Gross
+2019
+Oil productive wells (as of 31 December)
+2020
+20
+60
+177
+117
+177
+117
+222600ON
+52
+22232022
+212
+94
+212
+63
+29
+92
+92
+22200002
+160
+52
+212
+212
+57
+136
+157
+117
+176
+0
+0
+2007
+117
+177
+117
+0
+0
+0
+0
+0
+0
+0
+0
+156
+20
+60
+176
+117
+176
+1965
+6,378
+383
+Productive
+39.58
+34.79
+1,047.78
+1,072.33
+30.70
+0.0
+248.93
+249.43
+249.52
+(1.4)
+(11.8)
+288.51
+280.22
+0.02
+451.46
+458.92
+459.02
+2019 to 2020(%)
+2018
+2019
+2020
+284.22
+977.32
+2.3
+Crude oil reserves (mmbbls)
+Equity accounted entities
+Consolidated subsidiaries
+Overseas
+Others
+982
+821
+1,326
+1,130
+1,326
+1,130
+Shengli
+Consolidated subsidiaries
+China
+1,389
+1,741
+1,542
+Proved developed reserves
+Proved reserves
+31 December 2019
+31 December 2020
+Items
+Change from
+Proved undeveloped reserves
+Summary of Reserves of Crude Oil and Natural Gas
+Overseas
+01/2021
+Trend of International Crude Oil Prices
+10/2020
+07/2020
+MARKET REVIEW
+1
+04/2020
+01/2020
+0
+WTI-NYMEX
+20
+40
+60
+80
+100
+US$/barrel
+Confronted with severe challenges, the Company
+coordinated pandemic prevention and control,
+production and operation, made rapid response,
+took the initiative to launch "one-hundred day
+campaign of overcoming the difficulties and
+creating efficiency" and a follow-up campaign,
+and achieved remarkable results. On the one
+hand, we made full use of our resources and
+technological advantages to make a positive
+contribution to the pandemic prevention and
+control; on the other hand, we seized the
+favorable opportunity of domestic economic
+recovery, vigorously increased the production
+of marketable and high-profit products and
+achieved substantial improvement in production,
+operation and profitability in the second half of
+the year. Meanwhile, the Company completed
+the transaction of pipeline assets, realizing good
+appreciation in asset value.
+In 2020, the global economy suffered a serious
+recession due to the COVID-19 outbreak and
+rapid spread worldwide. China took the lead
+in controlling the spread of the pandemic in
+the world. Its economic growth has picked up
+quarter by quarter since the second quarter, with
+the annual gross domestic product (GDP) up by
+2.3% year-on-year. The international oil prices
+experienced a historic slump, the global demand
+for oil decreased significantly, the domestic
+demand for refined oil products decreased, and
+the growth rate of natural gas demand slowed
+down, while demand for chemical products still
+maintained a rapid growth.
+BUSINESS REVIEW
+BUSINESS REVIEW AND PROSPECTS
+40
+ICE BRENT
+DTD BRENT
+DUBAI
+(1) Crude Oil & Natural Gas Market
+China
+Crude oil production (mmbls)
+Oil and gas production (mmboe)
+Summary of Operations for the Exploration and Production Segment
+we constantly pushed forward capacity
+building in Weirong and West Sichuan
+gas fields, expanded the market and
+sales, and continuously improved the
+sales volume with a record high domestic
+market share. The Company's production
+of oil and gas reached 459.02 million
+barrels of oil equivalent, with domestic
+crude production reaching 249.52 million
+barrels and natural gas production
+totalled 1,072.3 billion cubic feet, up by
+2.3% year on year.
+to strengthen risk exploration in strategic
+areas, oil and gas rich zones and shale
+resources, which led to new discoveries
+in Tarim Basin, Sichuan Basin and Bohai
+Bay Basin. In crude oil development, we
+efficiently proceeded with the capacity
+building of Shunbei and other oilfields,
+strengthened fine development in mature
+fields, intensified EOR technology
+breakthrough and application, and
+consolidated the basis for steady
+production. In natural gas development,
+oil production, increasing gas output and
+cutting cost. In exploration, we continued
+In 2020, under the environment of low
+oil prices, we pressed ahead with high-
+quality exploration and profit-oriented
+development, accelerated the systematic
+integration of natural gas production,
+supply, storage and marketing, and
+achieved tangible results in maintaining
+(1) Exploration and Production
+2 PRODUCTION & OPERATIONS REVIEW
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+12
+Business Review and Prospects
+11
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+In 2020, the demand grew rapidly for
+medical raw materials and packaging
+materials. The rapid recovery of exports
+in the second half also drove the growth
+in the demand for chemical products.
+Based on our statistics, domestic
+consumption of ethylene equivalent
+increased by 12.2% from the previous
+year, and the apparent consumption
+of synthetic resin, synthetic fiber and
+synthetic rubber rose by 8.9%, 3.3% and
+8.4%, respectively. The average margin
+of chemical products narrowed.
+(3) Chemical Products Market
+In 2020, domestic refined oil products
+demand declined while supply exceeded
+the demand. According to the statistics
+released by NDRC, the apparent
+consumption of refined oil products
+(including gasoline, diesel and kerosene)
+was 331 million tonnes, down by 4.1%
+from the previous year. Among them, in
+the first half of the year, affected by the
+pandemic, the demand decreased by
+6.0%. In the second half, the demand
+improved with the steady resumption
+of work and production nationwide.
+For the whole year, gasoline, diesel
+and kerosene fell by 0.7%, 1.2% and
+30.4%, respectively. There were 13
+price adjustments for domestic refined
+oil products throughout the year with 8
+increases and 5 decreases.
+(2) Refined Oil Products Market
+In 2020, international oil prices fluctuated
+and rose after a historic slump. The
+spot price of Platt's Brent for the year
+averaged USD 41.67 per barrel, down
+by 35.2% year on year. Along with the
+changes in China's energy mix, domestic.
+demand for natural gas continued to
+grow, but the growth rate declined due to
+COVID-19. Based on statistics released
+by the NDRC, domestic apparent
+consumption of natural gas reached 324
+billion cubic meters, up by 5.6% year on
+year.
+Natural gas production (bcf)
+China
+Consolidated subsidiaries
+Shengli
+Others
+1,824
+1,190
+1,826
+9
+8
+0
+0
+9
+8
+1,190
+2,897
+1,315
+1,491
+1,814
+1,675
+6,026
+6,357
+6,026
+6,357
+6,035
+3,191
+1,824
+1,190
+119
+Dry
+Productive
+Dry
+Productive
+Dry
+Productive
+Development
+Exploratory
+Development
+Exploratory
+2019
+2020
+0
+2
+0
+0
+0
+2
+1,125
+1,705
+65
+6,365
+7,225
+8,191
+Wells drilled (as of 31 December)
+51
+95
+86
+12
+16
+107
+102
+107
+102
+153
+153
+245
+244
+17
+15
+262
+259
+344
+309
+Consolidated subsidiaries
+Overseas
+46
+China
+5
+Equity accounted entities
+31 December 2020 31 December 2019
+Natural gas reserves (bcf)
+Exploration and Production Activities
+Equity accounted entities
+Consolidated subsidiaries
+Overseas
+Consolidated subsidiaries
+Fuling
+Others
+China
+Proved undeveloped reserves
+Consolidated subsidiaries
+Equity accounted entities
+Overseas
+Others
+Puguang
+Fuling
+Consolidated subsidiaries
+China
+Proved developed reserves
+Proved reserves
+Items
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+46
+46
+0
+中国石化
+SINOPEC
+Consolidated subsidiaries
+6,928
+1,550.9
+(346)
+(5,712)
+Other operating expenses, net
+(3.9)
+(244,517)
+(234,947)
+Taxes other than income tax
+3.9
+Operating profit
+(82,743)
+Personnel expenses
+(7.6)
+(10,510)
+(9,716)
+Exploration expenses, including dry holes
+(2.0)
+(109,172)
+(106,965)
+Depreciation, depletion and amortisation
+(86,006)
+13,193
+86,374
+(84.7)
+Attributable to:
+(41.8)
+72,083
+41,924
+Profit for the year
+(65.3)
+(17,939)
+(6,219)
+Income tax expense
+(46.5)
+90,022
+48,143
+Profit before taxation
+224.6
+13,696
+44,456
+Investment income and share of profits less losses from associates and joint ventures
+(5.4)
+(10,048)
+(9,506)
+Net finance costs
+(0.2)
+Shareholders of the Company
+(55,438)
+Selling, general and administrative expenses
+1 CONSOLIDATED RESULTS OF OPERATIONS
+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.
+MANAGEMENT'S DISCUSSION AND ANALYSIS
+KARAN GAS CORONES
+FEFERE
+17
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Capital Expenditures, Capital
+expenditures for the year 2021 are
+budgeted at RMB 167.2 billion, among
+which, RMB 66.8 billion will be invested
+in exploration and production with
+focuses on the production capacity
+building of Fuling and Weirong shale
+gas fields, Shengli and Northwest
+crude oil development projects, and
+the Phase II LNG project in Tianjin and
+Phase II LNG project in Shandong. The
+refining segment will account for RMB
+20.1 billion, mainly on the structural
+adjustment projects of Yangzi and Anqing,
+as well as the expansion of Zhenhai. RMB
+26.5 billion is budgeted for marketing
+and distribution with emphasis on
+service stations, gas stations, hydrogen
+stations, depots and non-fuel business.
+The share for chemicals will be RMB
+48.6 billion, focusing on projects such
+as Zhenhai, Gulei, Hainan and Tianjin
+Nangang, Sinopec-SK and the Amur
+ethylene projects, Jiujiang aromatics,
+Baling caprolactam project, Shanghai
+large-tow carbon fiber, Yizheng PTA and
+other projects. The capital expenditure
+for corporate and others will be RMB
+5.2 billion, mainly for R&D facilities and
+information technology projects.
+cross-industry collaborative research and
+integrated innovation to consolidate our
+leading position, implement the "science
+and technology reform demonstration
+action", build new type of R&D
+institutions, and build a more efficient
+and dynamic innovation ecosystem.
+In 2020, the Company's turnover and other operating revenues was RMB 2,106.0 billion, decreased by 28.8% compared with that of 2019. That was
+mainly due to the drop of petroleum and petrochemical products price and shrink of market demand resulted from the impact of COVID-19. Facing
+severe challenges, the Company took actions proactively and implemented "100-day campaign of overcoming difficulties and creating efficiency" and
+subsequent campaigns to improve performance. As a result, the Company achieved RMB 34.7 billion operating profit in the second half and RMB
+13.2 billion in the full year when it still suffered an operating loss in the first half.
+Research and Development, we will make
+every effort to implement the innovation.
+driven development strategy, further
+deepen mechanism reform, continue to
+increase R&D investment, to accelerate
+building a technology-leading company.
+Guided by market demands, we will
+closely integrate production, marketing,
+research and application, accelerate
+the industrialization of a number of key
+technologies supporting the Company's
+high-quality development, such as oil
+and gas exploration and development,
+oil refining restructuring, high-end
+synthetic materials, energy conservation
+and environmental protection. The
+Company will focus on new energy, new
+materials and other cutting-edge areas,
+and establish strong technical reserves to
+support transformation and development.
+We will actively leverage social science
+and technology resources to carry out
+Marketing and Distribution, balancing
+volume and profit, the Company will
+expand the market and sales with
+full wings to continuously improve
+operational quality and volume. We
+will vigorously carry out differentiated
+marketing to continuously expand
+retail volume with focus on customer
+needs. We will constantly optimize the
+network layout to reach end users, and
+improve the network integrity, stability
+and competitiveness. We will deepen
+non-fuel business reform and improve
+membership system. New model of
+"internet+service station+convenience
+store+third party operation" will be
+promoted, and more hydrogen stations
+will be constructed alone or with
+conventional service stations to establish
+a new model of comprehensive energy
+supply and services, providing refined oil
+products, gas, hydrogen, power and non-
+fuel business. In 2021, we plan to sell
+183 million tonnes of refined oil products
+in domestic market.
+Refining, the Company will strengthen
+integration of production and marketing,
+promote the systematic upgrading of
+refining industry chain. We will coordinate
+domestic and overseas markets,
+constantly optimize product export
+volume and structure, and reasonably
+schedule utilization and production. We
+will adhere to the direction of "oil to
+chemical", and further adjust product
+slate based on market needs. The crude
+oil resources allocation will be optimized,
+and the whole process management of
+crude oil supply will be well coordinated
+to lower procurement cost. In addition,
+we will strengthen the production of low
+sulfur heavy bunker fuel, and constantly
+improve our market share. In 2021, we
+plan to process 250 million tonnes of
+crude oil and produce 153 million tonnes
+of refined oil products.
+Business Review and Prospects
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Exploration and Production, the Company
+will adhere to the principle of "sustainable
+development of crude oil and rapid
+growth of natural gas business", continue
+to strengthen high-quality exploration and
+profitable production, reduce cost, and
+forge the resilience against low oil prices.
+In crude oil development, more efforts
+will be made in promoting capacity
+building of Shunbei and west rim of
+Jungar oilfields, strengthening the fine
+reservoir characterization and modeling of
+mature fields, and vigorously promoting
+the application of EOR technology. In
+natural gas development, we will speed
+up the capacity construction of West
+Sichuan, Dongsheng, Weirong and other
+gas fields, give full play to the integration
+of production, supply, storage and
+marketing system to maximize the value
+of the whole business chain of natural
+gas. In 2021, we plan to produce 280.82
+million barrels of crude oil, including
+31.25 million barrels abroad, and 1,203.4
+billion cubic feet of natural gas.
+In 2021, we will implement our
+development strategy to build a world
+leading clean energy and chemical
+company. We will expedite formation
+of our development pattern of "One
+Foundation of energy and resources,
+Two Wings of clean fuels and advanced
+chemicals, and Three Growth Engines
+in new energy, new materials and new
+economy", and vigorously implement
+development strategies of value creation,
+market orientation, innovation driven,
+green and clean, open cooperation and
+talent-cultivation. Our focuses are on the
+following aspects:
+(2) Operations
+Looking into 2021, there are many
+uncertainties in COVID-19 situation
+and external environment, and the
+international economic prospect is still
+grim and complex. China's economy has
+recovered steadily and is expected to
+achieve positive growth. It is expected
+that the demand for refined oil products
+will gradually recover and the demand for
+natural gas and petrochemical products
+will continue to grow. Considering
+the supply capacity of oil producing
+countries, global demand growth,
+inventory level and other factors, the
+international oil price is expected to be
+higher than last year.
+(1) Market Outlook
+Chemicals, the Company will focus on
+the "basic plus high-end"development
+concept, speed up advanced capacity
+building, continuously deepen structural
+adjustment, and improve production scale
+in high-end and new materials, including
+medical and health care feedstock and
+degradable plastics, so as to extend our
+industry chain and foster new growth
+points. We will strengthen to measure the
+marginal benefits of the product chain,
+enhance structural adjustment of the
+three major synthetic materials and fine
+chemical products, dynamically optimize
+the feedstock mix, continuously reduce
+the cost of raw materials, and further
+schedule the facility utilization to fully
+release the effective production capacity.
+Meanwhile, we will strengthen market
+and sales expansion, improve service
+quality and efficiency, as well as the
+overall competitiveness. In 2021, we plan
+to produce 13 million tonnes of ethylene.
+The following table sets forth the main revenue and expenses from the Company's consolidated financial statements:
+RMB million
+Year ended 31 December
+2020
+2019
+RMB million
+(32.8)
+(2,370,699)
+(1,594,130)
+Purchased crude oil, products and operating supplies and expenses
+(27.2)
+(2,873,425)
+(2,092,791)
+Operating expenses
+(6.0)
+60,117
+56,528
+Other operating revenues
+(29.3)
+2,899,682
+2,049,456
+Turnover
+(28.8)
+2,959,799
+2,105,984
+Turnover and other operating revenues
+Change (%)
+(55,315)
+33,096
+57,493
+(42.4)
+(8.4)
+7,804
+7,148
+6.3
+16,103
+17,112
+Synthetic resin
+(24.8)
+5,714
+Synthetic fibre
+4,297
+14,019
+9,691
+Monomer and polymer for synthetic fibre
+(21.0)
+4,599
+3,635
+(10.6)
+41,022
+36,683
+(30.9)
+1,402
+1,370
+2.3
+and Analysis
+Management's Discussion
+19
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+(7.3)
+2,110
+1,955
+27.4
+924
+1,177
+Chemical fertiliser
+(16.7)
+9,583
+7,982
+6.3
+1,280
+1,361
+Synthetic rubber
+(24.4)
+8,438
+6,381
+Basic chemical feedstock
+(38.7)
+4,298
+2,635
+(32.4)
+3,000
+2,029
+23.0
+2019 Change (%)
+2020
+Change (%)
+2019
+6,034
+7,422
+Crude oil
+2020
+Year ended 31 December
+Sales volume (thousand tonnes)
+Average realised price
+(RMB/tonne, RMB/thousand cubic meters
+Year ended 31 December
+The following table sets forth the external sales volume, average realised prices and respective rates of change of the Company's major products
+in 2020 and 2019:
+In 2020, the Company's turnover was RMB 2,049.5 billion, representing a decrease of 29.3% over 2019. This was mainly due to decreased price
+and sales volume of refined oil products, decreased price of chemical products, and shrank international trading scale of crude oil and refined oil
+products, which was impacted by the COVID-19 outbreak and the slump in international crude oil price.
+(1) Turnover and other operating revenues
+(39.5)
+14,590
+8,828
+Non-controlling interests
+Natural gas (million cubic meters)
+BUSINESS PROSPECTS
+26,280
+(2.9)
+(23.0)
+27,041
+20,828
+Kerosene
+(17.5)
+5,811
+4,792
+(11.3)
+87,083
+77,280
+Diesel
+(14.7)
+7,387
+6,298
+(6.5)
+92,233
+86,193
+Gasoline
+(13.4)
+1,562
+1,352
+27,073
+6,976
+for Shengli and Northwest crude oil
+capacity building projects, Fuling and
+Weirong shale gas projects, phase
+II of Tianjin LNG project, and phase
+II of Shandong LNG project. Capital
+expenditure for the refining segment was
+RMB 24.7 billion, mainly for Zhongke
+Refining and Petrochemical project,
+Zhenhai, Tianjin, Maoming, Luoyang and
+Sinopec SK refining upgrading projects.
+Capital expenditure for the marketing
+and distribution segment was RMB 25.4
+billion, mainly for construction of service.
+stations, oil products depots and non-
+fuel business. Capital expenditure for the
+chemicals segment was RMB 26.2 billion,
+mainly for Zhongke, Zhenhai and Gulei
+projects, Amur gas chemical complex
+project, Sinopec-SK ethylene revamping
+projects, Jiujiang aromatics project
+and meltblown fabric capacity building.
+Capital expenditure for corporate and
+others was RMB 2.3 billion, mainly for
+R&D facilities and information technology
+projects.
+(7) Capital Expenditures
+57.91
+(11.6)
+154.79
+159.99
+141.50
+(4.7)
+244.01
+248.52
+236.91
+62.77
+2018
+2020
+In 2020, confronted with challenges
+from the pandemic impact and shrinking
+market demand, the Company brought
+our advantages of integrated production
+and marketing network into full play,
+seized the favorable opportunity of
+market recovery, coordinated allocation
+of resources, expanded market and
+increased sales, and continuously
+improved the quality of our retail. With
+(3) Marketing and Distribution
+Note: Includes 100% of the production from domestic joint ventures.
+Refinery yield (%)
+Light product yield (%)
+Light chemical feedstock production
+Kerosene
+Diesel
+2019
+61.16
+(7.7)
+63.21
+14
+Total sales volume of refined oil products
+for the year was 218 million tonnes, of
+which domestic sales volume accounted
+for 168 million tonnes. Meanwhile,
+we innovated the marketing model,
+strengthened development and marketing
+of company-owned brands, and actively
+explored emerging business models to
+speed up the development of non-fuel
+businesses.
+focus on customer needs, we adopted a
+precision and differentiated marketing
+strategy to continuously improve our
+service level. We upgraded the network
+layout to reach end users to further
+strengthen our existing advantages.
+We accelerated the construction of
+comprehensive service stations including
+oil, gas, hydrogen, power and non-
+fuel businesses, and enhanced our
+comprehensive service competitiveness.
+(2.04) percentage points
+(0.21) percentage points
+94.93
+94.98
+94.77
+76.00
+76.38
+74.34
+1.1
+38.52
+39.78
+40.22
+(34.6)
+28.91
+31.16
+20.38
+(4.3)
+64.72
+66.06
+Gasoline
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Gasoline, diesel and kerosene production
+Change from
+2019 to 2020 (%)
+6,420
+6,928
+5,835
+5,877
+6,229
+6,277
+6,976
+482
+482
+632
+6,378
+632
+Fuling
+Total
+61
+61
+67
+67
+Puguang
+6,378
+6,420
+Others
+Unit: Square kilometers
+Area under license (as of 31 December)
+Acreage with exploration licenses
+Unit: million tonnes
+became the domestic leader in low-sulfur
+fuel market. By improving the marketing
+mechanism, high-grade lubricants,
+asphalt and other products sales realized
+good growth. In 2020, the Company
+processed 237 million tonnes of crude
+oil, yielding 142 million tonnes of refined
+oil products, and 40.22 million tonnes of
+light chemical feedstock, with a year-on-
+year increase of 1.1%.
+5,230
+33,467
+38,697
+472,017
+472,017
+2019
+5,230
+33,965
+39,195
+436,864
+436,864
+2020
+output of marketable and high-profit
+products, and kept a relatively high
+utilization rate. Thanks to our flexible
+crude oil procurement strategies,
+crude sourcing costs were continuously
+reduced. We sped up the construction
+of advanced production capacity and
+promoted structural adjustment in an
+orderly manner. We organized low-sulfur
+bunker fuel production with efficiency and
+Summary of Operations for the Refining Segment
+In 2020, the Company actively responded
+to the severe situation of the sharp
+drop in crude oil prices and the decline
+in market demand, integrated and
+coordinated production and marketing,
+and maximized profits along the value
+chain. With a market-oriented approach,
+we optimized refined oil product yield
+and diesel-to-gasoline ratio, increased
+(2) Refining
+China
+Overseas
+Acreage with development licenses
+China
+Refinery throughput
+Summary of Operations for the Marketing and Distribution Segment
+Change from
+2020
+896
+1,047
+1,067
+0.7
+15,923
+17,244
+17,370
+(3.5)
+11,512
+1.9
+(%)
+2019
+12,493
+12,060
+2020
+Change from
+2019 to 2020
+Synthetic fiber
+Synthetic fiber monomer and polymer
+Synthetic rubber
+Synthetic resin
+Ethylene
+2018
+9,057
+10,029
+9,343
+I was down by 1.1%, COD of discharged
+water down by 2.3%, and SO2 emissions
+down by 4.2%. All solid waste was
+properly treated. For more detailed
+information, please refer to "Sinopec
+2020 Communication on Progress for
+Sustainable Development Report".
+In 2020, the Company constantly
+promoted the HSSE management system,
+achieving an overall stable record in
+terms of safety and environmental
+protection. We promoted health
+management of all staff, especially
+strengthened the COVID-19 prevention
+and control measures with a focus on
+occupational, physical and psychological
+health of employees at home and
+abroad. The three-year programme of
+special rectification of work safety was
+implemented to strictly supervise the
+contractors and our direct operations,
+and improve our emergency response.
+Emphasis was laid on the control of
+key areas and links to safeguard a
+stable public security situation. In
+2020, we persistently promoted the
+green enterprise action plan, focusing
+on pollution prevention and control,
+energy efficiency improvement, resource
+utilization, carbon emission reduction,
+and accomplished all targets. Compared
+with 2019, energy consumption per
+10,000 yuan of output was down by
+0.85%, industrial fresh water usage
+(6) Health, Safety, Security and Environment
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+16
+Business Review and Prospects
+15
+Annual Report 2020
+CHINA PETROLEUM & CHEMICAL CORPORATION
+a series of biodegradable materials,
+and quickly mastered the production
+technology of medical raw materials
+such as meltblown material and fabric.
+In 2020, the Company had 6,809 patent
+applications at home and abroad, among
+which 4,254 were granted.
+cracking with high slag content and
+low emission were commercialized. In
+chemicals, we developed a complete set
+of 48K large-tow carbon fiber technology,
+realized the industrial production of
+technology, and the first atmospheric
+shale gas resource block in China was
+discovered. New breakthroughs were
+also made in ultra-deep oil and gas
+exploration and development technology,
+and seismic node acquisition system had
+been developed and applied on a large
+scale. In refining, the industrial test of
+fast bed catalytic cracking technology
+for producing low-carbon olefins was
+completed, and a complete set of
+technologies such as heavy oil catalytic
+In 2020, with the emphasis on the
+support and leading role of technology
+and increasing investment in technology,
+the Company accomplished notable
+results in deepening reform of R&D
+mechanism, promoting innovation
+platforms such as joint R&D centers and
+incubators, and making breakthrough in
+key and core technologies. In upstream,
+new breakthroughs were made in shale
+oil and gas exploration theory and
+(5) Research and Development
+Note: Includes 100% of the production of domestic joint ventures.
+1.9
+1,218
+1,289
+1,313
+(9.7)
+Unit: thousand tonnes
+ratio of high value-added products of
+synthetic fiber was 32.5%, up by 0.8
+percentage point year on year. The ratio
+of high value-added products of synthetic
+rubber was 31.6%, up by 2.5 percentage
+points year on year. The ratio of new
+and specialty products in synthetic resin
+reached 67.1%, up by 1.8 percentage
+points year on year. Meanwhile, we
+innovated marketing model, deepened
+fine marketing strategy, targeted our
+tailored service, and further expanded the
+market. The total annual sales volume
+was 83 million tonnes, realizing full sales.
+0.04
+(%)
+0.04
+58.61
+61.91
+54.80
+Direct sales and distribution (million tonnes)
+Annual average throughput per station (tonne/station)
+(7.6)
+121.64
+122.54
+113.19
+Retail sales (million tonnes)
+(8.9)
+180.24
+184.45
+167.99
+Total domestic sales volume of oil products (million tonnes)
+(14.5)
+237.69
+254.95
+217.91
+Total sales volume of oil products (million tonnes)*
+2018 2019 to 2020 (%)
+2019
+(11.5)
+In 2020, focusing on quality and
+profitability of investment, the Company
+optimized its investment management
+system, with total capital expenditures of
+RMB 135.1 billion. Capital expenditure
+for the exploration and production
+segment was RMB 56.4 billion, mainly
+3,686
+3,979
+The Company seized the opportunity by
+actively responding to market changes,
+strengthened the dynamic optimization
+of the facilities and product chain, and
+realized optimal operation of the units
+and utilization. We further fine-tuned
+chemical feedstock mix to optimize
+feeding proportion and increase product
+yield. We integrated production with
+marketing to continuously increase the
+ratio of high value-added and high-
+end products. Ethylene production in
+2020 reached 12.06 million tonnes, the
+Summary of Operations for the Chemicals Segment
+In early 2020, the COVID-19 outbreak
+led to shutdown of downstream factories,
+imposing severe challenges to the
+Company. We further adjusted product
+mix and producing units, scheduled
+utilization, rapidly switched our
+production to increase the supply of
+medical and health raw materials,
+and maintained stable production and
+operation. Since the second quarter,
+with the steady resumption of work
+and production in China, the chemicals
+market witnessed a remarkable recovery.
+(4) Chemicals
+Note: The total sales volume of refined oil products includes the amount of refined oil marketing and trading sales volume.
+30,707
+30,655
+30,696
+30,661
+30,702
+30,713
+31 December
+2018
+2019
+2020
+31 December
+31 December
+Total number of service stations under the Sinopec brand
+Number of company-operated stations
+the end of the
+reporting period
+the end of the
+previous year to
+Change from
+(7.7)
+3,992
+江汉沽井上
+1,588
+175
+Sinopec Qingdao Petrochemical
+RMB 1,595
+100.00
+Company Limited
+Sinopec Catalyst Company Limited
+RMB 1,500
+Chemical Company Limited
+100.00
+RMB 1,400
+100.00
+Company Limited
+Sinopec Chemical Sales Company Limited
+RMB 1,000
+100.00
+China Petrochemical International
+100.00
+RMB 5,000
+China International United Petroleum and
+100.00
+Sinopec Overseas Investment Holding
+Limited ("SOIH")
+USD1,662
+100.00
+Sinopec International Petroleum Exploration
+RMB 8,250
+100.00
+and Production Limited ("SIPL")
+Sinopec Yizheng Chemical Fibre Limited
+RMB 4,000
+100.00
+Liability Company
+Sinopec Lubricant Company Limited
+RMB 3,374
+100.00
+Sinopec Beihai Refining and Chemical Limited
+RMB 5,294
+98.98
+1.02
+%
+Principal activities
+Coal chemical industry investment
+management, production and sale of
+coal chemical products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Investment holding of overseas business
+Investment in exploration, production and
+sale of petroleum and natural gas
+Production and sale of polyester chips and
+polyester fibres
+Production and sale of refined petroleum
+products, lubricant base oil, and
+petrochemical materials
+Trading of crude oil and petrochemical
+products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of catalyst products
+Trading of petrochemical products
+Marketing and distribution of
+petrochemical products
+Interests
+held by
+non-controlling
+interests
+RMB 15,651
+Shanghai SECCO
+Company Limited
+Liability Company
+ZhongKe (Guangdong) Refinery &
+RMB 6,397
+90.30
+9.70
+Petrochemical Company Limited
+Sinopec Qingdao Refining and Chemical
+RMB 5,000
+85.00
+15.00
+Company Limited
+Sinopec Hainan Refining and Chemical
+RMB 9,606
+75.00
+25.00
+Marketing Company
+Import and processing of crude oil,
+Sinopec Yangzi Petrochemical Company
+Limited
+%
+109,172
+8,495
+3
+1,923
+245
+536
+106,965
+80
+17
+14,560
+345
+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.
+External sales
+Mainland China
+3,606
+2,866
+3,072
+14,326
+25,403
+29,566
+26,202
+22,438
+2,312
+1,979
+135,055
+147,094
+46,273
+50,732
+15
+19,676
+23,196
+21,572
+14,376
+Singapore
+Others
+Non-current assets
+Mainland China
+Others
+193
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+42 PRINCIPAL SUBSIDIARIES
+As at 31 December 2020, the following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the
+Group.
+Name of company
+Sinopec Great Wall Energy & Chemical
+Company Limited
+Particulars of
+issued capital
+(million)
+RMB 22,761
+Interests
+held by the
+Company
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+100.00
+52,705
+1,292,142
+1,211,441
+2020
+RMB million
+2019
+RMB million
+1,721,955
+215,846
+2,124,684
+505,672
+168,183
+2,105,984
+329,443
+2,959,799
+31 December
+2020
+RMB million
+31 December
+2019
+RMB million
+1,239,437
+36,782
+1,248,223
+31,372
+production, storage and sale of petroleum
+products manufacturing
+RMB million
+2020
+RMB million
+2019
+RMB million
+1,582
+1,788
+RMB million
+4,373
+10,431
+11,858
+3,639
+5,337
+Current liabilities
+(201,678)
+1,284
+RMB million
+RMB million RMB million RMB million
+RMB million RMB million
+22,309
+2020
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2020
+2019
+2020
+2019
+2019
+2020
+2019
+2020
+2019
+Current assets
+172,352
+RMB million RMB million
+129,266
+RMB million
+RMB million
+22,620
+19,151
+17,305
+(192,106)
+(475)
+(456)
+(15,232)
+3,449
+(1,677)
+7,648
+8,662
+(2,738)
+(9,700)
+Non-current assets
+323,571
+340,356
+8,951
+13,234
+27,314
+23,185
+12,568
+11,558
+984
+2019
+1,124
+2,073
+(15,479)
+(458)
+(804)
+(924)
+(2,961)
+(2,783)
+(3,196)
+(6,377)
+(15,037)
+Net current (liabilities)/
+assets
+(29,326)
+(62,840)
+22,145
+18,695
+6,830
+products and petrochemical products
+2020
+Sinopec-SK
+At
+("Sinopec Kantons")
+Sinopec-SK (Wuhan) Petrochemical Company
+Limited ("Sinopec-SK")
+RMB 7,193
+59.00
+41.00
+Gaoqiao Petrochemical Company Limited
+Baling Petrochemical (i)
+Sinopec Kantons Holdings Limited
+RMB 10,000
+45.00
+RMB 3,000
+55.00
+45.00
+Sinopec Shanghai Petrochemical Company
+Limited ("Shanghai Petrochemical")
+RMB 10,824
+55.00
+39.67
+60.33
+HKD248
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Crude oil processing and petroleum
+RMB 28,403
+70.42
+29.58
+Marketing and distribution of refined
+petroleum products
+RMB 7,801
+67.60
+32.40
+Production and sale of petrochemical
+products
+50.44
+49.56
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical") (ii)
+RMB 10,492
+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 consolidated balance sheet
+Marketing Company
+At
+At
+SIPL
+At
+At
+Shanghai Petrochemical
+At
+At
+Fujian Petrochemical
+At
+At
+Sinopec Kantons
+At
+At
+Shanghai SECCO
+At
+At
+Summarised financial information on subsidiaries with material non-controlling interests
+At
+42 PRINCIPAL SUBSIDIARIES (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+50.00
+50.00
+Provision of crude oil jetty services
+and natural gas pipeline transmission
+services
+Production, sale, research and development
+of petrochemical products, ethylene and
+downstream byproducts
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Crude oil processing and petroleum
+products manufacturing
+Manufacturing of synthetic fibres, resin and
+plastics, intermediate petrochemical
+products and petroleum products
+Manufacturing of plastics, intermediate
+petrochemical products and petroleum
+products
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong SAR 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.
+The Group entered into an Agreement on transferring equity interests in the relevant oil and pipeline companies with PipeChina, which included
+100% equity of Sinopec Pipeline Storage & Transportation Company Limited. See Note 10.
+Notes:
+(i) See Note 38.
+(ii) 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.
+194
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+for the year ended 31 December 2020
+9,106
+24,722
+56,416
+10,283
+4,634
+5,464
+34,905
+33,247
+9,215
+5,718
+9,273
+56,528
+1,850
+60,117
+2,105,984
+2,959,799
+2,049,456
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+2,056
+2,899,682
+(1,902,994)
+(1,370,624)
+1,393,557
+4,854
+1,067,301
+4,159
+1,397,716
+322,121
+428,830
+40,518
+78,165
+362,639
+506,995
+458,154
+824,507
+430,073
+654,337
+888,227
+1,478,844
+191
+Financial Statements (International)
+Financial Statements (International)
+192
+20,828
+29,107
+10,372
+17,327
+- Corporate and others
+(393)
+64
+- Elimination
+Total seperating profit
+4,417
+(40)
+13,193
+86,374
+Share of /(loss) from associates and joint ventures
+- Exploration and production
+30,632
+1,062,447
+(5,555)
+(16,476)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+41 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+2020
+RMB million
+2019
+RMB million
+Result
+Operating (loss)/profit
+By segment
+- Exploration and production
+- Refining
+- Marketing and distribution
+- Chemicals
+9,284
+2,117
+1,218,692
+1,077,018
+41 SEGMENT REPORTING
+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.
+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, 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.
+(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.
+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 13.0% to 16.0% 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 8% 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 2020 were RMB 8,804 million (2019: RMB
+11,822 million).
+(iv) Chemicals, which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products mainly to
+external customers.
+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.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+41 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+(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.
+40 EMPLOYEE BENEFITS PLAN
+state-controlled.
+These transactions are conducted in the ordinary course of the Group's business on terms comparable to those with other entities that are not
+190
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+39 RELATED PARTY TRANSACTIONS (Continued)
+(d) Transactions with other state-controlled entities in the PRC
+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").
+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:
+•
+sales and purchases of goods and ancillary materials;
+• rendering and receiving services;
+•
+lease of assets;
+• depositing and borrowing money; and
+• uses of public utilities.
+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 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 debts, income tax
+payable, long-term debts, loans from Sinopec Group Company and fellow subsidiaries, deferred tax liabilities and other unallocated liabilities.
+Information of the Group's reportable segments is as follows:
+2020
+RMB million
+Other operating revenues
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Other operating revenues
+Turnover and other operating revenues
+104,524
+57,513
+111,114
+89,315
+162,037
+200,429
+114,064
+141,674
+825,812
+Turnover
+939,876
+Elimination of Inter-segment sales
+External sales
+2019
+RMB million
+Turnover
+Exploration and production
+External sales
+Inter-segment sales
+Refining
+External sales
+Inter-segment sales
+Marketing and distribution
+External sales
+Inter-segment sales
+Chemicals
+External sales
+Inter-segment sales
+Corporate and others
+Inter-segment sales
+61,739
+3,167
+- Refining
+Total segment liabilities
+703,478
+712,675
+Short-term debts
+23,769
+40,521
+137,881
+Income tax payable
+3,267
+Long-term debts
+72,037
+49,208
+Loans from Sinopec Group Company and fellow subsidiaries
+17,042
+6,586
+119,215
+58,066
+49,497
+1,760,286
+Total assets
+Liabilities
+Segment liabilities
+· Exploration and production
+- Refining
+- Marketing and distribution
+- Chemicals
+- Corporate and others.
+163,588
+167,933
+136,869
+122,264
+234,309
+226,531
+52,915
+Deferred tax liabilities
+8,124
+6,809
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Impairment losses on long-lived assets
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+(2) Geographical information
+2020
+2019
+RMB million
+RMB million
+Exploration and production
+1,733,805
+Depreciation, depletion and amortisation
+Chemicals
+Other unallocated liabilities
+19,911
+17,587
+Total liabilities
+850,947
+882,982
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+41 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
+Corporate and others
+- Refining
+16,961
+128,052
+2,330
+6,712
+12,777
+13,118
+14,941
+151
+(19)
+3,188
+59
+73
+(61)
+578
+766
+228
+37,744
+8,980
+4,611
+1,723
+3,309
+- Marketing and distribution
+- Chemicals
+- Corporate and others
+Aggregate
+share of profits from associates and joint ventures
+Investment income/(loss)
+- Exploration and production
+- Marketing and distribution
+- Chemicals
+- Corporate and others.
+Aggregate investment income
+Net finance costs
+Profit before taxation
+(2,516)
+(640)
+2,200
+919
+(9,506)
+(10,048)
+90,022
+48,143
+118,458
+131,686
+Total segment assets
+1,302,376
+1,443,932
+Interest in associates and joint ventures
+188,342
+152,204
+Financial assets at fair value through other comprehensive income
+Deferred tax assets
+1,525
+1,521
+25,054
+17,616
+Cash and cash equivalents, time deposits with financial institutions
+Other unallocated assets
+188,057
+180,974
+28,451
+186,033
+373,430
+31 December
+2020
+RMB million
+31 December
+2019
+RMB million
+- Chemicals
+Assets
+Segment assets
+- Exploration and production
+- Refining
+- Marketing and distribution
+Corporate and others
+354,024
+410,950
+270,431
+321,080
+399,242
+12,777
+20,048
+11,473
+4,826
+Derivative financial liabilities
+1,428
+254,157
+10,109
+43,513
+15,456
+15,957
+4,826
+329,083
+Lease liabilities
+929
+5,512
+17,978
+17,042
+and fellow subsidiaries
+187,598
+4,826
+Trade accounts payable and bills payable
+161,656
+Carrying
+amount
+31 December 2019
+Total
+262,641
+114,036
+28,138
+308,193
+713,008
+560,551
+93,623
+93,623
+93,623
+Other payables
+161,656
+161,656
+7,056
+60,414
+11,753
+25,280
+1,339
+As at 31 December 2020, the Group has standby credit facilities with several PRC financial institutions which provide borrowings up to RMB
+443,966 million (2019: RMB 379,649 million) on an unsecured basis, at a weighted average interest rate of 2.85% per annum (2019: 3.57%).
+As at 31 December 2020, the Group's outstanding borrowings under these facilities were RMB 4,041 million (2019: RMB 2,947 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 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
+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
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+196
+All of the entity's other receivables are considered to have low credit risk, and the loss allowance recognised during the period was therefore
+limited to 12 months expected losses. The Group considers 'low credit risk' for other receivables when they have a low risk of default and the
+issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
+The detailed analysis of trade accounts receivable and financial assets at FVOCI, based on which the Group generated its payment profile is
+listed in Notes 25 and 26.
+The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 December 2020 or 31 December 2019,
+respectively, and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current
+and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
+To measure the expected credit losses, trade accounts receivable and financial assets at FVOCI have been grouped based on shared credit risk
+characteristics and the days past due.
+For trade accounts receivable and financial assets at FVOCI, the Group applies the IFRS 9 simplified approach to measuring expected credit
+losses which uses a lifetime expected loss allowance for all trade accounts receivable and financial assets at FVOCI.
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+The Group's primary type of financial assets that are subject to the expected credit loss model is trade accounts receivable, financial assets at
+FVOCI and other receivables.
+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:
+contractual
+undiscounted
+31 December 2020
+Total
+contractual
+80,562
+72,037
+25,280
+23,769
+Loans from Sinopec Group Company
+Long-term debts
+Short-term debts
+More than
+5 years
+RMB million
+More than 2
+years but less
+than 5 years
+RMB million
+More than 1
+year but less
+than 2 years
+RMB million
+Within
+1 year or
+on demand
+RMB million
+RMB million
+RMB million
+cash flow
+undiscounted
+Carrying
+amount
+(ii) Impairment of financial assets
+Within
+More than 2
+197
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+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.
+323,894
+77,285
+22,932
+Financial Statements (International)
+81,861
+387,916
+81,861
+620,129
+Other payables
+200,023
+200,023
+200,023
+Trade accounts payable and bills payable
+81,861
+812,027
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+million
+2019
+31 December
+22
+2020
+million
+31 December
+SGD
+USD
+Gross exposure arising from loans and lease liabilities
+Included primarily in short-term and long-term debts and loans from Sinopec Group Company and fellow subsidiaries of the Group and lease
+liabilities are the following amounts denominated in a currency other than the functional currency of the entity to which they relate:
+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 and lease liabilities denominated in Singapore Dollar ("SGD"). The Group enters into foreign exchange contracts
+to manage its currency risk exposure.
+(a) Currency 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.
+Market risk
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+2,729
+2,729
+2,729
+Derivative financial liabilities
+49,208
+42,240
+40,521
+Long-term debts
+Short-term debts
+5 years
+RMB million
+than 5 years
+RMB million
+RMB million
+than 2 years
+More than
+years but less
+year but less
+1 year or
+on demand
+RMB million
+cash flow
+RMB million
+RMB million
+62,955
+More than 1
+42,240
+952
+25,189
+290,539
+2,812
+7,088
+45,008
+15,676
+16,488
+367,711
+192,872
+Lease liabilities
+985
+43,623
+54,508
+52,915
+and fellow subsidiaries
+Loans from Sinopec Group Company
+30,543
+6,271
+The carrying amounts of cash and cash equivalents, time deposits with financial institutions, financial assets at fair value through profit or loss,
+derivative financial assets, trade accounts receivable, financial assets at FVOCI 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 deposits) 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 trade accounts receivable at 31 December 2020, 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.
+(i) Risk management
+(4,335)
+397
+3,846
+(472)
+(649)
+(4,623)
+(91)
+(3,888)
+(25,923) (2,659)
+(40,010)
+activities
+generated from investing
+Net cash (used in)/
+5,532
+678
+(2,340)
+(4,987)
+Net cash (used in)/
+2,176
+(2,050)
+(2,879)
+(1,208)
+(163) (1,250)
+88
+882
+(1,737)
+1,682
+(116)
+1,683
+(21,535)
+(12,402)
+activities
+generated from financing
+(363)
+4,601
+3,119
+716
+Sinopec Kantons
+2020
+2019
+Shanghai Petrochemical
+2020 2019
+RMB million RMB million
+RMB million RMB million RMB million RMB million
+12,177
+2020
+2019
+SIPL
+Marketing Company
+2020
+Year ended 31 December
+Summarised statement of cash flows
+822
+767
+69
+159
+2019
+250
+Fujian Petrochemical
+2020
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+2019
+16
+586
+622
+(244)
+5,057
+1,680
+2,128
+281
+54,139 40,260
+activities
+(used in) operating
+Net cash generated from/
+2019
+2020
+Sinopec-SK
+Shanghai SECCO
+2020
+Net increase/(decrease) in
+cash and cash equivalents
+1,727
+5,181
+117
+127
+3,182
+79
+68
+7,450
+6,916
+8,833
+7,699
+6,901
+8,642
+at 31 December
+1
+(2)
+9,278
+14
+1,066
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+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 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; and
+⚫ 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, financial assets at fair value through profit
+or loss, derivative financial assets, trade accounts receivable, amounts due from Sinopec Group Company and fellow subsidiaries, amounts due from
+associates and joint ventures, financial assets at FVOCI and other receivables. Financial liabilities of the Group include short-term debts, loans from
+Sinopec Group Company and fellow subsidiaries, derivative financial liabilities, trade accounts payable and bills payable, amounts due to Sinopec
+Group Company and fellow subsidiaries, amounts due to associates and joint ventures, other payables, long-term debts and lease liabilities.
+Overview
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+195
+1,593
+103
+(117)
+(8)
+6.901
+at 1 January
+Cash and cash equivalents
+795
+(527)
+2,460
+(4,095)
+(95)
+3.182
+(13)
+(11)
+(526) (1,303)
+2,690
+(695)
+(7,198)
+14.142
+11
+8,833
+7.450
+150
+(439)
+(43)
+14
+Effect of foreign currency
+exchange rate changes
+Cash and cash equivalents
+798
+1,593
+6.817
+9.278
+198
+117
+92
+79
+12
+8.742
+5,993
+4
+2019
+USD
+SGD
+2019
+2020
+2019
+2020
+2019
+2020
+2020
+RMB million RMB million
+2019
+2019
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million RMB million
+Sinopec-SK
+2020
+RMB million
+RMB million
+RMB million RMB million
+5,920
+5,997
+4,485
+4,863
+Summarised consolidated statement of comprehensive income
+Year ended 31 December
+Marketing Company
+2020
+SIPL
+Shanghai Petrochemical
+Fujian Petrochemical
+Sinopec Kantons
+Shanghai SECCO
+2019
+2020
+2019
+RMB million RMB million
+Turnover
+1,099,680
+1,427,705
+477
+2,047
+1,131
+2,132
+3,137
+(920)
+701
+Total comprehensive
+income/(loss)
+21,149
+23,362
+(720)
+2,693
+645
+45
+243
+4,359
+2,227
+2,831
+2,017
+3,282
+74,624 100,270
+4,871
+5,535
+1,064
+1,274
+21,626
+28,341
+28,702
+31,016
+Profit/(loss) for the year
+22,415
+22,992
+1,160
+656
+2,235
+4,931
+6,500
+264,017
+281,624
+(9,319)
+(3,718)
+27,262
+23,164
+(liabilities)
+11,875
+8,936
+12,619
+10,624
+9,846
+13,678
+21,560
+10,870
+Net non-current assets/
+(7)
+(8,509)
+A 5 percent strengthening/weakening of RMB against the following currencies at 31 December 2020 and 2019 would have increased/decreased
+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 2019.
+31 December
+22,187
+21,567
+Non-current liabilities
+(59,554)
+(58,732)
+(16,952)
+(52)
+(21)
+(693)
+(688)
+(170)
+(158)
+(1,553)
+(1,627)
+Net assets
+234,691
+218,784
+12,826
+6.499
+5,927
+7,454
+6,583
+12,352
+12,511
+6,455
+6,997
+Attributable to
+non-controlling interests
+75,486 70,528
+6,950
+8,669
+14,608
+14,996
+14,998
+5,927
+14,727
+5,876
+14,977
+29,335
+29,994
+12,999
+11,854
+12,385
+10,942
+18.272
+18,508
+10,940
+11,860
+Attributable to owners of
+the Company
+159,205
+148,256
+6,308
+243
+(18,270)
+477
+- Trade accounts receivable and bills receivable
+1,525
+1,376
+149
+Financial assets at fair value through other comprehensive income:
+- Equity instruments
+12,528
+8,735
+2,900
+- Derivative financial assets
+Derivative financial assets:
+1
+· Equity investments, listed and at quoted market price
+RMB million
+RMB million
+9,628
+8,735
+9,778
+2,900
+Level 2
+RMB million
+Level 1
+RMB million
+4,826
+4,826
+2,355
+2,471
+2,355
+2,471
+Assets
+At 31 December 2019
+- Derivative financial liabilities
+Derivative financial liabilities:
+Liabilities
+22,789
+10,111
+RMB million
+RMB million
+Total
+Level 3
+198
+As at 31 December 2020, 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 increase/decrease the Group's
+profit for the year by approximately RMB 3,592 million (2019: increase/decrease RMB 3,134 million), and increase/decrease the Group's other
+reserves by approximately RMB 10,379 million (2019: decrease/increase RMB 4,289 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 2019.
+As at 31 December 2020, the Group had certain commodity contracts of crude oil, refined oil products and chemical products designated
+as qualified cash flow hedges and economic hedges. As at 31 December 2020, the fair value of such derivative hedging financial instruments
+is derivative financial assets of RMB 12,353 million (2019: RMB 788 million) and derivative financial liabilities of RMB 4,808 million (2019:
+RMB 2,728 million).
+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 contracts, to manage a portion of this risk.
+(c) Commodity price risk
+As at 31 December 2020, 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 profit for the year by approximately RMB 245 million (2019: decrease/increase by
+approximately RMB 352 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 2019.
+The Group's interest rate risk exposure arises primarily from its short-term and long-term debts and loans from Sinopec Group Company and
+fellow subsidiaries. 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 and terms of repayment of short-term and long-term debts, and loans from Sinopec Group
+Company and fellow subsidiaries of the Group are disclosed in Note 30.
+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.
+1
+27
+(b) Interest rate risk
+2019
+RMB million
+2020
+RMB million
+31 December
+27
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Level 3
+RMB million
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Level 2
+Level 1
+Financial assets at fair value through profit or loss:
+Assets
+At 31 December 2020
+Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
+•
+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 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+•
+its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:
+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
+(i) Financial instruments carried at fair value
+Fair values
+for the year ended 31 December 2020
+Total
+5
+Financial assets at fair value through profit or loss:
+Structured deposits
+691
+1,016
+(377)
+245
+Dividends paid to
+non-controlling interests
+433
+2,766
+316
+10,926
+649
+1.344
+150
+10
+4,830
+707
+238
+121
+RMB million
+1.140
+2,132
+(920)
+701
+Comprehensive income/
+(loss) attributable to
+0
+non-controlling interests
+7,205
+8.289
+(287)
+1,651
+325
+1,113
+650
+650
+3,137
+199
+1,431
+90
+- Equity instruments
+Financial assets at fair value through other comprehensive income:
+837
+709
+128
+- Derivative financial assets
+Derivative financial assets:
+1
+3,318
+1
+- Equity investments, listed and at quoted market price
+Financial Statements (International)
+3,318
+1,521
+- Trade accounts receivable and bills receivable
+1,814
+8,661
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+8,661
+Management of the Group 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 structured deposits and trade accounts receivable and bills
+receivable classified as Level 3 financial assets.
+2,729
+2,729
+1,520
+1,520
+1,209
+1,209
+During the years ended 31 December 2020 and 2019, there was no transfer between instruments in Level 1 and Level 2.
+Derivative financial liabilities:
+Liabilities
+- Derivative financial liabilities
+709
+219
+14,338
+13,410
+5
+Proved undeveloped reserves
+Beginning of year
+107
+107
+96
+95
+End of year
+107
+107
+102
+107
+17
+1
+1,326
+1,244
+15
+5
+5
+8
+8
+Proved developed reserves
+Beginning of year
+1,343
+1,326
+17
+1,271
+6,026
+27
+End of year
+1,145
+1,130
+1,343
+Proved developed and undeveloped reserves (gas)
+171
+Beginning of year
+(1,069)
+(1,069)
+(1,044)
+(1,044)
+End of year
+8,181
+Production
+8,181
+7,216
+Proved developed reserves
+Beginning of year
+undeveloped reserves at the end of year
+5,822
+6,026
+7,216
+(billion cubic feet)
+875
+1,171
+7,216
+7,216
+6,793
+6,793
+Revisions of previous estimates
+171
+875
+123
+Improved recovery
+692
+692
+469
+469
+1,171
+123
+Extensions and discoveries
+1,367
+17
+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.
+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.
+"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.
+2020
+2019
+Total
+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 2020 and 2019 are shown in the following table.
+China
+Other
+Total
+China
+countries
+The Group
+Proved developed and undeveloped reserves (oil)
+Other
+countries
+(million barrels)
+Table IV: Reserve quantities information
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+(303)
+(303)
+(486)
+(486)
+742
+1,131
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+1,131
+(3,930)
+985
+28,150
+25,693
+2,457
+The results of operations for producing activities for the years ended 31 December 2020 and 2019 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.
+(2,945)
+Beginning of year
+1,450
+1,433
+98
+Production
+(257)
+(250)
+(7)
+(256)
+98
+(249)
+End of year
+1,252
+1,232
+20
+1,450
+1,433
+(7)
+111
+111
+Extensions and discoveries
+17
+1,339
+28
+Revisions of previous estimates
+(161)
+(171)
+10
+81
+85
+(4)
+Improved recovery
+109
+109
+160
+160
+Non-controlling interest in proved developed and
+5,822
+299
+6,357
+245
+245
+45
+46
+56
+45
+244
+38
+46
+45
+45
+9
+9
+13
+38
+13
+244
+261
+11
+11
+25
+25
+(24)
+(24)
+261
+(28)
+290
+290
+290
+290
+245
+245
+(28)
+4
+4
+(1)
+9
+2
+2
+Proved developed and undeveloped reserves (oil)
+(million barrels)
+Beginning of year
+9
+1,740
+307
+1,666
+1,339
+1,617
+327
+End of year
+1,433
+13
+30
+8
+(1)
+10
+30
+(3)
+10
+30
+(3)
+(3)
+(3)
+9
+9
+9
+9
+13
+8
+-
+End of year
+2
+2
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+208
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Financial Statements
+Table IV: Reserve quantities information (Continued)
+2019
+Total
+China
+Other
+countries
+Total
+China
+2020
+Other
+countries
+207
+CHINA PETROLEUM & CHEMICAL CORPORATION
+6,357
+6,026
+6,026
+Proved undeveloped reserves
+Beginning of year
+1,190
+Annual Report 2020
+1,190
+971
+End of year
+1,824
+1,824
+1,190
+1,190
+971
+Equity method investments
+Proved developed and undeveloped reserves of
+associates and joint ventures (oil) (million barrels)
+Extensions and discoveries
+Production
+End of year
+Proved developed reserves
+Beginning of year
+End of year
+Improved recovery
+Proved undeveloped reserves
+End of year
+Total of the Group and its equity method investments
+290
+13
+299
+(8)
+-
+Beginning of year
+Revisions of previous estimates
+Beginning of year
+(billion cubic feet)
+Beginning of year
+Revisions of previous estimates
+290
+13
+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
+Proved developed and undeveloped reserves of
+associates and joint ventures (gas)
+(8)
+1,617
+16,752
+1,045
+46,712
+46,526
+Total capitalised costs
+979,675
+938,743
+40,932
+6
+976,472
+186
+43,508
+Accumulated depreciation, depletion, amortisation
+and impairment losses
+(742,195)
+(702,829)
+Net capitalised costs
+932,964
+237,480
+37,439
+Uncompleted wells, equipments and facilities
+Property cost, wells and related equipments
+and facilities
+Supporting equipments and facilities
+757,592
+184,638
+716,683
+40,909
+37,445
+727,552
+43,306
+184,621
+17
+202,208
+202,192
+16
+684,246
+The Group
+235,914
+(702,392)
+274,080
+8,036
+Table II: Costs incurred in oil and gas exploration and development
+2020
+2019
+RMB million
+RMB million
+271,787
+Total
+Other
+countries
+Total
+China
+Other
+countries
+The Group
+Exploration
+China
+(39,366)
+1,566
+279,823
+235,914
+(661,177)
+(41,215)
+271,787
+2,293
+Equity method investments
+Share of net capitalised costs of associates
+7,409
+and joint ventures
+investments' net capitalised costs
+5,843
+5,843
+5,743
+5,743
+243,323
+Total of the Group's and its equity method
+2019
+RMB million
+Other
+countries
+China
+Total
+(C) DIFFERENCES BETWEEN CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH
+THE ACCOUNTING POLICIES COMPLYING WITH CASS 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 CASS
+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 CASs, 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 CASS, 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 CASS and the total equity under IFRS are analysed as follows:
+Complying with CASS and IFRS (Unaudited)
+Note
+2020
+RMB million
+883,876
+31 December
+2019
+RMB million
+Shareholders' equity under CASS
+Adjustments:
+878,374
+31 December
+Government grants
+Differences between Consolidated Financial Statements
+Prepared in Accordance with the Accounting Policies
+203
+37,256
+1,542
+(31,479)
+(46,008)
+(1,857)
+(3,745)
+Financial Statements (International)
+(240)
+(1)
+116.919
+131,674
+400,312
+408,106
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+40
+(i)
+(1,018)
+Total equity under IFRS*
+41,924
+72,083
+*
+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 2019 and 2020 which have been audited by PricewaterhouseCoopers.
+204
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Profit for the year under IFRS*
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
+Tables I 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.
+Table I: Capitalised costs related to oil and gas producing activities
+2020
+RMB million
+Other
+Total
+China
+countries
+In accordance with "Accounting Standards Codification (ASC) Topic 932 Extractive Activities - Oil and Gas", issued by the Financial Accounting
+Standards Board of the United States, “Rule 4-10 of Regulation S-X", issued by Securities and Exchange Commission (SEC), 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
+2020 and 2019, 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.
+(212)
+(115)
+69
+882,858
+(1,070)
+877,304
+Effects of major differences between the net profit under CASS and the profit for the year under IFRS are analysed as follows:
+Note
+2020
+Net profit under CASS
+RMB million
+41,750
+2019
+RMB million
+72,172
+Adjustments:
+Government grants
+Safety production fund
+Others
+(i)
+(ii)
+52
+54
+237
+16,752
+16,295
+16,295
+Development
+(3,930)
+55
+26,681
+25,693
+988
+Income tax expense
+(3,875)
+188
+338
+338
+Results of operation from producing activities
+(3,687)
+(3,930)
+243
+188
+27,019
+Profit before taxation
+(9,395)
+(9,716)
+(10,510)
+(10,510)
+Depreciation, depletion, amortisation and
+impairment losses
+(52,608)
+(9,395)
+(51,754)
+(48,630)
+(47,580)
+(1,050)
+Taxes other than income tax
+(7,379)
+(7,379)
+(854)
+25,693
+1,326
+Equity method investments
+Profit before taxation
+Income tax expense
+Share of profit for producing activities of associates
+and joint ventures
+742
+Total of the Group's and its equity method investments'
+results of operations for producing activities
+Taxes other than income tax
+(940)
+(1,124)
+(1,124)
+(1,930)
+(1,930)
+(4,068)
+(4,068)
+(940)
+impairment losses
+Depreciation, depletion, amortisation and
+Exploration expenses
+Revenues
+Sales
+Production costs excluding taxes
+4,913
+4,913
+(998)
+4,913
+9,325
+4,913
+9,325
+(998)
+(2,516)
+9,325
+9,325
+(2,516)
+(9,716)
+1,045
+Exploration expenses
+(46,725)
+747
+Total of the Group's and its equity method
+investments' exploration and development costs
+55,093
+54,388
+705
+747
+54,454
+914
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+205
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+53,540
+206
+100
+Share of costs of exploration and development of
+associates and joint ventures
+38,241
+37,636
+605
+37,412
+37,245
+167
+100
+Total costs incurred
+54,388
+605
+53,707
+53,540
+167
+Equity method investments
+54,993
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+83,633
+80,641
+2,992
+110,423
+108,406
+2,017
+2,017
+143,185
+3,282
+Production costs excluding taxes
+(44,595)
+(43,487)
+(1,108)
+(47,969)
+139,903
+56,052
+58,069
+290
+Table III: Results of operations related to oil and gas producing activities
+Total
+China
+2020
+RMB million
+Other
+countries
+2019
+RMB million
+Total
+China
+Other
+countries
+The Group
+Revenues
+Sales
+Transfers
+52,354
+52,354
+59,552
+59,262
+(1,244)
+1,232
+144,132
+1,740
+7,190
+Lease liabilities
+39,439
+3,271
+Loans from Sinopec Group Company and fellow subsidiaries
+32,329
+21,571
+Short-term debts
+Current liabilities
+232,565
+223,080
+Total current assets
+106,645
+53,816
+Prepaid expenses and other current assets
+49,116
+39,034
+Inventories
+41
+7,198
+Derivative financial liabilities
+362
+Trade accounts payable and bills payable
+234,844
+5,112
+5,840
+Total equity
+Reserves
+Share capital
+Equity
+Total non-current liabilities
+Other long-term liabilities
+796
+Provisions
+Long-term debts
+Non-current liabilities
+Total assets less current liabilities
+Net current liabilities
+Total current liabilities
+Other payables
+Contract liabilities
+157
+80,118
+71,840
+Loans from Sinopec Group Company and fellow subsidiaries
+Lease liabilities
+Dividends receivable
+207
+707
+428
+Financial assets at fair value through other comprehensive income
+15,530
+14,761
+Interest in joint ventures
+22,798
+69,508
+Interest in associates
+266,359
+395
+259,087
+120,037
+115,992
+60,493
+59,880
+Right-of-use assets
+Construction in progress
+291,544
+283,691
+Property, plant and equipment, net
+Investment in subsidiaries
+162,852
+Deferred tax assets
+7,315
+Financial assets at fair value through other comprehensive income
+21,544
+21,763
+Trade accounts receivable
+940
+7,776
+Derivative financial assets
+38,088
+71,107
+12,661
+Time deposits with financial institutions
+28,081
+Cash and cash equivalents
+791,198
+846,863
+Current assets
+Total non-current assets
+6,727
+30,855
+Long-term prepayments and other assets
+15,984
+Non-current assets
+344,918
+121,838
+1,465
+Special reserve
+Balance at 31 December
+240
+8,881
+(40)
+3,912
+Retained earnings
+Balance at 1 January
+Profit for the year
+Distribution to owners (Note 14)
+Appropriation
+Special reserve
+Others
+Balance at 31 December
+131,674
+55,850
+9,247
+9,382
+46
+4,911
+Cash flow hedges, net of deferred tax
+201
+(182)
+55,850
+90,423
+86,678
+1,857
+3,745
+Balance at 31 December
+92,280
+90,423
+Discretionary surplus reserve
+135
+Balance at 1 January
+117,000
+Balance at 31 December
+117,000
+117,000
+Other reserves
+Balance at 1 January
+3,912
+2,286
+Share of other comprehensive (loss)/income of associates and joint ventures, net of deferred tax
+117,000
+9,201
+9,247
+Appropriation
+121,071
+121,071
+529,177
+521,383
+167,381
+203,642
+5,404
+4,472
+34,514
+(a)
+36,089
+105,691
+6,681
+8,079
+12,999
+310
+49,311
+696,558
+725,025
+94,640
+107,783
+327,205
+400,312
+521,383
+Balance at 1 January
+Statutory surplus reserve
+Balance at 31 December
+Balance at 1 January
+Share premium
+Balance at 31 December
+Others
+Balance at 1 January
+Capital reserve
+408,106
+2019
+RMB million
+The Company
+2020
+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:
+(a) RESERVES MOVEMENT OF THE COMPANY
+46 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY (Continued)
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+529,177
+RMB million
+55,850
+RMB
+2019
+(86,127)
+(87,579)
+10% annual discount for estimated timing of
+cash flows
+705
+416,495
+417,200
+(2,448)
+283,412
+280,964
+(1,086)
+(39,634)
+(40,720)
+(1,237)
+(10,521)
+(11,758)
+(4,849)
+(22,216)
+(27,065)
+(3,126)
+(1,452)
+(126,203)
+(126,175)
+(28)
+41,796
+41,796
+31,259
+31,259
+Future cash flows
+Equity method investments
+305
+305
+(1,284)
+(23,902)
+(1,284)
+Discounted future net cash flows attributable to
+677
+290,320
+290,997
+(3,900)
+197,285
+193,385
+cash flows
+Standardised measure of discounted future net
+non-controlling interests
+(27,028)
+(6,725)
+(377,692)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+9
+7,216
+7,225
+10
+8,181
+8,191
+End of year
+Table V: Standardised measure of discounted future net cash flows
+13
+6,806
+9
+7,216
+7,225
+Beginning of year
+(billion cubic feet)
+Proved developed and undeveloped reserves (gas)
+307
+1,433
+6,793
+Future production costs
+The standardized measure of discounted future net cash flows, related to the above proved oil and gas reserves, is calculated in accordance with
+the requirements of "ASC Topic 932 Extractive Activities - Oil and Gas", "SEC Rule 4-10 of Regulation S-X", 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 adjusted for differential 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.
+Total
+(384,417)
+(3,585)
+(271,824)
+13,365
+856,037
+869,402
+5,500
+589,659
+595,159
+(275,409)
+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
+2020 and 2019 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.
+Undiscounted future net cash flows
+Future production costs
+Future cash flows
+The Group
+Future development costs
+2019
+RMB million
+Other
+countries
+China
+Total
+2020
+RMB million
+Other
+countries
+China
+Future income tax expenses
+RMB
+(13,050)
+(13,141)
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+200
+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.
+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.
+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 estimates of proved and proved developed reserves also change. 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.
+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.
+Oil and gas properties and reserves
+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.
+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.
+44 ACCOUNTING ESTIMATES AND JUDGEMENTS
+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 2020 and 2019.
+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 of the Group, the Group's existing capital structure and the terms of the
+borrowings.
+63,998
+62,646
+RMB million
+76,674
+74,282
+31 December
+2019
+31 December
+2020
+RMB million
+Carrying amount
+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 0.77% to 4.65% (2019: 2.37% 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
+2020 and 2019:
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2020
+44 ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+Impairment for long-lived assets
+31 December
+31 December
+2020
+Note
+BALANCE SHEET OF THE COMPANY (Amounts in million)
+46 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+202
+Financial Statements (International)
+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 IFRS 9 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.
+201
+The directors consider the parent and ultimate holding company of the Group as at 31 December 2020 is Sinopec Group Company, a state-owned
+enterprise established in the PRC. This entity does not produce financial statements available for public use.
+45 PARENT AND ULTIMATE HOLDING COMPANY
+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.
+Allowance for diminution in value of inventories
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past events,
+current conditions and forecasts of future economic conditions. The Group regularly monitors and reviews the assumptions used for estimating
+expected credit losses.
+Measurement of expected credit losses
+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.
+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 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 units 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+(ii) Fair values of financial instruments carried at other than fair value
+Fair values (Continued)
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+(8,852)
+(4,828)
+(4,828)
+10% annual discount for estimated timing of
+cash flows
+19,057
+19,057
+10,757
+10,757
+Undiscounted future net cash flows
+(8,852)
+(3,995)
+(1,740)
+(1,740)
+Future income tax expenses
+(5,603)
+(5,603)
+(5,712)
+(5,712)
+Future development costs
+(13,141)
+(3,995)
+(13,050)
+Standardised measure of discounted future net
+5,929
+for the year ended 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+18,821
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+209
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+cash flows
+10,882
+301,202
+2,029
+197,285
+199,314
+investments' results of standardised measure of
+discounted future net cash flows
+Total of the Group's and its equity method
+10,205
+10,205
+5,929
+290,320
+55,850
+NAMES AND ADDRESSES OF AUDITORS OF
+SINOPEC CORP.
+www.sinopec.com
+中国石化
+CHINESE ABBREVIATION
+China Petroleum & Chemical Corporation
+ENGLISH NAME
+中国石油化工股份有限公司
+STATUTORY NAME
+CORPORATE INFORMATION
+(6,254)
+(101,888)
+(3,034)
+(4,276)
+701
+1,180
+1,438
+979
+355
+232
+(423)
+437
+1,321
+369
+ENGLISH ABBREVIATION
+(881)
+Sinopec Corp.
+Mr. Zhang Yuzhuo
+PLACE OF BUSINESS IN HONG KONG
+ir@sinopec.com
+: http://www.sinopec.com
+: 86-10-59960386
+: 86-10-59960028
+: 100728
+E-mail addresses
+Website
+Fax
+Tel.
+Postcode
+Beijing, PRC
+No.22 Chaoyangmen North Street,
+Chaoyang District
+REGISTERED ADDRESS AND PLACE OF
+BUSINESS
+Mr. Zhang Zheng
+REPRESENTATIVE ON SECURITIES MATTERS
+Mr. Huang Wensheng
+SECRETARY TO THE BOARD
+Mr. Huang Wensheng
+Mr. Ma Yongsheng
+AUTHORISED REPRESENTATIVES
+LEGAL REPRESENTATIVE
+(299)
+(2,804)
+(5,190)
+Net changes in income taxes
+Accretion of discount
+Previously estimated development costs incurred during the year
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+Net changes in estimated future development cost
+Sales and transfers of oil and gas produced, net of production costs
+Net changes in prices and production costs
+Equity method investments
+Net changes for the year
+Net changes in income taxes
+Previously estimated development costs incurred during the year
+Accretion of discount
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+Net changes in estimated future development cost
+Net changes in prices and production costs
+Sales and transfers of oil and gas produced, net of production costs
+The Group
+Table VI: Changes in the standardised measure of discounted cash flows
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+210
+Net changes for the year
+Total of the Group's and its equity method investments' results of net changes for the year
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+2020
+(2,741)
+(1,984)
+(3,220)
+(97,612)
+1,547
+19,375
+32,407
+31,940
+9,737
+6,684
+20th Floor, Office Tower
+12,995
+61,465
+44,602
+(10,108)
+(7,912)
+(25,442)
+(122,641)
+(85,821)
+(58,449)
+2019
+RMB million
+RMB million
+(11,211)
+Convention Plaza
+1 Harbour Road
+Wanchai
+Citigroup Centre
+Citibank, N.A.
+The UK:
+Beijing PRC
+No. 5, Dong San Huan Central Road
+Chaoyang District
+20th Floor, Fortune Financial Centre
+Haiwen & Partners
+People's Republic of China:
+LEGAL ADVISORS
+Prince's Building,
+Central, Hong Kong
+: 22nd Floor,
+Huangpu District,
+Shanghai, PRC 200021
+: PricewaterhouseCoopers
+2 Corporate Avenue,
+202 Hu Bin Road,
+PricewaterhouseCoopers,
+11th Floor
+Zhong Tian LLP
+Overseas Auditors
+Address
+Address
+Domestic Auditors : PricewaterhouseCoopers
+: SNP
+London Stock Exchange
+Stock code
+Canada Square
+Canary Wharf
+London E14 5LB, U.K.
+Postcode: 100020
+Beijing, China
+22 Chaoyangmen North Street, Chaoyang District,
+中國北京市朝陽區朝陽門北大街22號
+SINOPEC CORP.
+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, 26 March 2021
+Chairman
+Zhang Yuzhuo
+By Order of the Board
+: SNP
+d) Copies of the documents and announcements
+that Sinopec Corp. has published in the
+newspapers designated by the CSRC during
+the reporting period.
+b) The original copies of financial statements
+and consolidated financial statements as
+of 31 December 2020 prepared under
+IFRS and CASS, respectively, signed by Mr.
+Zhang Yuzhuo, the Chairman of the Board of
+Directors, Mr. Ma Yongsheng, the President,
+and Ms. Shou Donghua, the Chief Financial
+Officer and head of the Financial Department
+of Sinopec Corp.;
+a) The original copies of the 2020 annual report
+signed by Mr. Zhang Yuzhuo, the Chairman
+of the Board of Directors;
+The following documents will be available for
+inspection during normal business hours after
+26 March 2021 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:
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+212
+DOCUMENTS FOR INSPECTION
+Documents for Inspection
+Corporate Information
+Annual Report 2020 211
+CHINA PETROLEUM & CHEMICAL CORPORATION
+c) The original auditors' reports signed by the
+auditors; and
+Printed on environmentally friendly paper
+New York Stock Exchange
+Stock code
+ADRs:
+R1712 1716, 17th Floor, Hopewell Centre
+183 Queen's Road East
+Hong Kong
+Hong Kong Registrars Limited
+H Shares:
+Shanghai, PRC
+China Securities Registration and Clearing
+Company Limited Shanghai Branch Company
+36th Floor, China Insurance Building
+166 Lujiazui East Road
+A Shares:
+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
+Hong Kong:
+No change during the reporting period
+DISCLOSURE AND THE PROVISION OF
+REPORTS
+CHANGES IN THE PLACES FOR INFORMATION
+Hong Kong
+DEPOSITARY FOR ADRS
+The US:
+Citibank, N.A.
+388 Greenwich St., 14th Floor
+Hong Kong Stock Exchange Limited
+Stock code
+H Shares:
+Stock code : 600028
+: SINOPEC CORP
+Stock name
+Shanghai Stock Exchange
+A Shares:
+NAMES AND STOCK CODES
+PLACES OF LISTING OF SHARES, STOCK
+New York NY 10013
+USA
+: 00386
+388 Greenwich St., 14th Floor
+The US:
+Beijing, PRC
+Chaoyang District
+No.22 Chaoyangmen North Street,
+Board Secretariat
+China Petroleum & Chemical Corporation
+The PRC:
+COPIES OF THIS ANNUAL REPORT ARE
+AVAILABLE AT
+United States of America
+New York NY 10013
+Citibank, N.A.
+Management's Discussion
+and Analysis
+516,268
+(3.7)
+63,509
+61,167
+(17.6)
+7,057
+5,813
+(7.4)
+2019 Change (%)
+4,354
+2020
+56,259
+2020
+Average realised price (RMB/tonne)
+Year ended 31 December
+Sales Volume (thousand tonnes)
+Year ended 31 December
+In 2020, the average processing cost
+for crude oil was RMB 2,456 per tonne,
+representing a decrease of 27.8% over
+In 2020, the segment's operating
+expenses was RMB 950.1 billion,
+representing a decrease of 20.4% over
+2019. This was mainly attributed to the
+decrease in procurement cost of crude oil
+resulted from the slump of international
+crude oil price.
+The sales revenue of refined petroleum
+products other than gasoline, diesel,
+kerosene and chemical feedstock was
+RMB 196.8 billion, representing a
+decrease of 1.8% over 2019.
+The sales revenue of chemical feedstock
+was RMB 103.5 billion, representing a
+decrease of 26.2% over 2019.
+2019 Change (%)
+60,750
+The sales revenue of kerosene was RMB
+46.3 billion, representing a decrease of
+54.5% over 2019.
+5,477
+17,309
+2019. Total crude oil processed was
+245.92 million tonnes (excluding volume
+processed for third parties), representing
+a decrease of 2.6% over 2019. The total
+cost of crude oil processed was RMB
+603.9 billion, representing a decrease of
+29.7% over 2019, which was accounted
+for 63.6% of the segment's operating
+expenses, a decrease of 8.4 percentage
+points year on year.
+(7.0)
+3,237
+3.011
+5.6
+61,890
+65,353
+(26.5)
+(20.5)
+3,531
+0.4
+39,720
+39,872
+(37.2)
+4,252
+2,673
+(27.6)
+23,890
+2,596
+The sales revenue of diesel was RMB.
+266.3 billion, representing a decrease of
+23.4% over 2019.
+In 2020, sales revenue of gasoline
+was RMB 327.0 billion, representing a
+decrease of 23.7% over 2019.
+Other refined petroleum products
+(498,941)
+(28.0)
+516,268
+371,854
+(361,482)
+10,372
+(28.4)
+29,107
+20,828
+(22.9)
+(27.6)
+(1,401,856)
+1,430,963
+30,632
+(20.4)
+(1,193,524)
+(22.8)
+1,224,156
+944,510
+(950,065)
+(5,555)
+9,284
+(23.0)
+17,327
+(40.1)
+890,283
+Chemical feedstock
+Kerosene
+Diesel
+Gasoline
+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 2020 and 2019.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+22
+22
+In 2020, the operating revenues of
+this segment was RMB 944.5 billion,
+representing a decrease of 22.8% over
+2019. This was mainly attributed to
+the decrease in products prices and
+crude oil throughput compared with the
+same period of last year as a result of
+recession in market demand which was
+impacted by the COVID-19 pandemic.
+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.
+(2) Refining Segment
+In 2020, the operating loss of the
+exploration and production segment was
+RMB 16.5 billion, representing a decrease
+of RMB 25.8 billion compared with
+2019, mainly attributable to decrease of
+international oil prices.
+1,102,206
+(1,081,378)
+64
+(40)
+(393)
+4,417
+(39.8)
+(39.9)
+1,480,694
+(1,480,630)
+(890,676)
+In 2020, refining margin was RMB 240
+per tonne, decreased by RMB 126 per
+tonne compared with 2019. This was
+mainly due to the significant shrink of
+margin in kerosene and other refined
+petroleum products which was impacted
+by the COVID-19 outbreak and market
+demand recession as well as inventory
+losses of crude oil and refined products
+due to crude oil price slump.
+(16,476)
+In 2020, the 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 181.48 per tonne,
+an increase of 2.1% over 2019, which
+I was mainly because the unit cost
+In 2020, the operating loss of the
+segment totaled RMB 5.6 billion,
+representing a decline of RMB 36.2
+billion compared with 2019.
+3,072
+2,536
+7.2
+21,772
+23,331
+Fuel oil
+(38.7)
+4,297
+(17.4)
+2,634
+27,068
+20,828
+Kerosene
+(18.0)
+5,399
+4,426
+(7.0)
+43,832
+(23.1)
+40,750
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Management's Discussion
+Average Realised Price (RMB/tonne)
+Year Ended 31 December
+Sales Volume (thousand tonnes)
+Year Ended 31 December
+2020
+The following table sets forth the sales volume, average realised prices and respective changes of each of the segment's six categories of
+chemical products in 2020 and 2019.
+In 2020, the sales revenue generated by
+the segment's six major categories of
+chemical products (namely basic organic
+chemicals, synthetic resin, synthetic fiber
+monomer and polymer, synthetic fibre,
+synthetic rubber, and chemical fertiliser)
+was RMB 354.4 billion, down by 24.3%,
+accounting for 95.3% of the operating
+revenues of the segment.
+In 2020, the operating revenues of this
+segment was RMB 371.9 billion, down
+by 28.0% year-on-year. This was mainly
+due to the decrease in chemical products
+prices and sales volume of some
+products because of COVID-19 impact.
+and the third parties and producing,
+marketing and distributing petrochemical
+and inorganic chemical products.
+The business activities of the chemicals
+segment include purchasing chemical
+feedstock from the refining segment
+(4) Chemicals segment
+23
+In 2020, the segment's operating profit
+was RMB 20.8 billion, down by 28.4%
+year-on-year. This was mainly because
+sales volume decreased as a result of
+shrinking demand of refined oil product.
+In 2020, the operating revenues of non-
+fuel business was RMB 33.9 billion, up
+In 2020, the segment's marketing
+operating cash cost (defined as the
+operating expenses less the purchase
+costs, taxes other than income tax,
+depreciation and amortization, divided
+by sales volume) was RMB 189.86
+per tonne, up by 4.0% year-on-year,
+which was mainly because the unit cost
+increased as a result of the decreased
+sales volume.
+In 2020, the operating expenses of the
+segment were RMB 1,081.4 billion,
+representing a decrease of RMB 320.5
+billion year-on-year, down by 22.9%. This
+I was mainly due to the decrease of sales
+volumes and procurement costs.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+24
+and Analysis
+by RMB 1.8 billion year-on-year and the
+profit of non-fuel business was RMB 3.7
+billion, up by RMB 0.5 billion. This was
+mainly because the Company vigorously
+promoted company-owned brands and
+innovated marketing model to boost the
+increase of volume and profit of non-fuel
+business.
+Direct sales and distribution
+(14.1)
+6,227
+66,440
+61,446
+Retail
+(13.8)
+7,387
+6,370
+(6.6)
+92,261
+(7.5)
+86,216
+2019 Change (%)
+2020
+2019 Change (%)
+2020
+Average realised price (RMB/tonne)
+Year ended 31 December
+Sales volume (thousand tonnes)
+Year ended 31 December
+The following table sets forth the sales volumes, average realised prices and respective percentage changes of the segment's four major refined
+oil products in 2020 and 2019, including detailed information about retail, direct sales and distribution of gasoline and diesel:
+(3) Marketing and distribution segment
+The business activities of the marketing
+and distribution segment include
+purchasing refined oil products from the
+refining segment and the third parties,
+conducting direct sales and wholesale
+to domestic customers and retailing,
+distributing oil products through the
+segment's retail and distribution network
+as well as providing related services.
+In 2020, the operating revenues of this
+segment was RMB 1,102.2 billion, down
+by 23.0% year-on-year. This was mainly
+because demand and sales volume of
+refined oil products decreased as a
+result of COVID-19 impact and oil prices.
+plunged. The sales revenues of gasoline
+totaled RMB 549.2 billion, down by
+19.4% year-on-year; the sales revenues
+of diesel was RMB 377.0 billion, down by
+25.7% year-on-year; the sales revenues of
+kerosene was RMB 54.9 billion, down by
+52.8% year-on-year.
+Gasoline
+6,940
+7,968
+(12.9)
+5,351
+(15.5)
+43,503
+36,757
+Retail
+(16.3)
+5,812
+4,865
+(11.3)
+87,335
+77,507
+Diesel
+(15.9)
+5,892
+4,955
+(4.1)
+25,820
+24,770
+Direct sales and distribution
+increased as a result of the throughput
+decreased compared with last year.
+47,109
+(8.5)
+210,712
+(201,428)
+825,812 1,077,018
+Inter-segment sales
+5.0
+5.6
+3.0
+3.4
+147,138
+118,698
+23.7
+External sales*
+4.9
+210,712
+167,755
+1.8
+1.7
+89,315
+57,513
+4.1
+4.3
+5.2
+22.2
+944,510
+0.1
+48.2
+51.9
+29.3
+06
+0.1
+4,159
+4,854
+1,102,206
+Operating revenues
+Operating revenues
+31.6
+1,426,804
+1,097,352
+External sales*
+Marketing and Distribution Segment
+25.2
+27.1
+1,224,156
+Inter-segment sales
+2.5
+3.2
+121,397
+(3) Operating profit was RMB 13.2 billion,
+representing a decrease of 84.7% over
+the same period of 2019. That was
+mainly due to the decrease of processing
+volume, sales volume, and products
+margin affected by the COVID-19
+outbreak, slump of crude oil prices, and
+drop of market demand.
+Other operating expense, net was RMB
+5.7 billion, representing an increase of
+RMB 5.4 billion over the same period
+of 2019. That was mainly due to the
+increased impairment in fixed and long-
+term assets.
+Taxes other than income tax was RMB
+234.9 billion, representing a decrease
+of 3.9% compared with 2019. That
+was mainly due to the decrease of
+consumption tax resulting from the
+decrease of production volume in
+gasoline and diesel.
+Personnel expenses was RMB 86.0
+billion, representing an increase of 3.9%
+over 2019.
+Exploration expenses was RMB 9.7
+billion, representing a decrease of 7.6%
+compared with 2019. That was mainly
+due to optimisation of investment
+scale and structure in upstream
+and improvement of success rate in
+exploration.
+Depreciation, depletion and amortisation
+was RMB 107.0 billion, representing a
+decrease of 2.0% compared with 2019.
+That was mainly due to the depletion
+ratio of oil and gas assets decreased.
+Selling, general and administrative
+expenses was RMB 55.3 billion,
+representing a decrease of 0.2% over
+2019.
+The Company's other purchasing
+expenses was RMB 436.3 billion,
+representing a decrease of 26.1% over
+the same period of 2019.
+(4) Profit before taxation was RMB 48.1
+billion, representing a decrease of 46.5%
+compared with 2019.
+The Company's purchasing expense
+related to crude oil and refined oil
+trading activities was RMB 421.2 billion,
+representing a decrease of 42.6% over
+the same period of 2019.
+Crude oil purchasing expenses was RMB
+479.1 billion, representing a decrease
+of 29.7% over the same period of 2019.
+Throughput of crude oil purchased
+externally in 2020 was 222.79 million
+tonnes (excluding the volume processed
+for third parties), representing a decrease
+of 2.6% over the same period of 2019.
+The average cost of crude oil purchased
+externally was RMB 2,380 per tonne,
+representing a decrease by 28.4% over
+2019.
+Purchased crude oil, products and
+operating supplies and expenses was
+RMB 1,594.1 billion, representing a
+decrease of 32.8% over the same period
+of 2019, accounting for 76.2% of the
+total operating expenses, of which:
+In 2020, the Company's operating
+expenses was RMB 2,092.8 billion,
+decreased by 27.2% compared with
+2019. The operating expenses mainly
+consisted of the following:
+(2) Operating expenses
+The Company's external sales revenue
+of chemical products was RMB 322.1
+billion, representing a decrease of 24.9%
+over 2019, accounting for 15.3% of
+the Company's total turnover and other
+operating revenues. This was mainly
+due to the decrease in price of chemical
+products.
+In 2020, 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 1,164.7
+billion (accounting for 55.3% of the
+Company's turnover and other operating
+revenues), representing a decrease of
+24.1% over 2019, mainly due to the
+decrease in prices and volume of major
+products, such as gasoline, diesel and
+kerosene, resulting from the impact of
+COVID-19 and slump of international
+crude oil price. The sales revenue of
+gasoline, diesel and kerosene was RMB
+968.0 billion, representing a decrease
+of 25.7% over 2019, and accounting
+for 83.1% of the total sales revenue of
+petroleum products. Turnover of other
+refined petroleum products was RMB
+196.6 billion, representing a decrease of
+15.1% compared with 2019, accounting
+for 16.9% of the total sales revenue of
+petroleum products.
+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 2020,
+the turnover from crude oil, natural
+gas and other upstream products sold
+externally amounted to RMB 104.5
+billion, representing a decrease of 5.9%
+over 2019. The change was mainly due
+to decreases in crude oil and natural gas
+prices.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+The Company's purchasing expenses
+of refined oil products was RMB 257.6
+billion, representing a decrease of 29.4%
+over the same period of 2019.
+(5) Income tax expense was RMB 6.2 billion,
+representing a decrease of 65.3% year
+on year. That was mainly due to decrease
+of profit before taxation, resulting in a
+decrease of RMB 10.5 billion in income
+tax.
+(6) Profit attributable to non-controlling
+shareholders was RMB 8.8 billion,
+representing a decrease of RMB 5.8
+billion compared with 2019.
+(7) Profit attributable to shareholders of
+the Company was RMB 33.1 billion,
+representing a year-on-year decrease of
+42.4%.
+110,242
+(%)
+(%)
+2019
+As a percentage of
+consolidated operating
+revenue after elimination
+of inter-segment sales
+Year ended 31 December
+2020
+(%)
+27
+As a percentage of
+consolidated operating
+revenue before elimination
+of inter-segment sales
+Year ended 31 December
+2020
+2019
+(%)
+Operating revenues
+Year ended 31 December
+2020
+2019
+RMB million RMB million
+Refining Segment
+Inter-segment sales
+Exploration and Production Segment
+External sales*
+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.
+revenues.
+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
+2 RESULTS OF SEGMENT OPERATIONS
+Operating revenues
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+20
+20
+1,430,963
+(20.4)
+31.7
+Chemicals Segment
+Operating revenues
+Marketing and Distribution Segment
+Operating (loss)/profit
+Operating expenses
+Operating revenues
+Refining Segment
+Operating (loss)/profit
+Operating expenses
+Operating expenses
+Operating revenues
+Year ended 31 December
+2020
+2019
+RMB million
+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 2020 compared to 2019.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+and Analysis
+Management's Discussion
+21
+Exploration and Production Segment
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Operating profit
+Chemicals Segment
+Operating revenues
+167,755
+(184,231)
+(%)
+RMB million
+Change
+In 2020, the oil and gas lifting cost was
+RMB 729.59 per tonne, representing a
+year on year decrease of 6.7%, mainly
+attributable to the decrease in the cost
+of purchased material, fuels, and power
+since the upstream segment proactively
+reinforced the cost control to cope with
+the low oil price environment.
+Impairment losses on long-lived
+assets increased by RMB 7.9 billion
+year on year;
+Resource Tax and special oil income
+levy decreased by RMB 2.0 billion
+year on year;
+Cost of power fuel and purchased
+materials decreased by RMB 2.1
+billion year on year;
+Operating revenues
+Operating expenses
+Operating profit
+Corporate and Others
+Depreciation, depletion and
+amortisation decreased by RMB 4.5
+billion year on year;
+•
+In 2020, the operating expenses of
+this segment was RMB 184.2 billion,
+representing a decrease of 8.5% over
+2019. That was mainly due to the
+following:
+In 2020, the segment sold 34.52 million
+tonnes of crude oil, representing an
+increase of 0.5% over 2019. Natural
+gas sales volume was 27.8 billion cubic
+meters (bcm), representing a decrease
+of 3.6% over 2019. Regasified LNG sales
+volume was 15.7 bcm, representing
+an increase of 40.3% over 2019. LNG
+sales volume was 6.17 million tonnes,
+representing an increase of 30.2% over
+2019. Average realised prices of crude
+oil, natural gas, Regasified LNG, and LNG
+were RMB 1,902 per tonne, RMB 1,360
+per thousand cubic meters, RMB 1,774
+per thousand cubic meters, and RMB
+2,543 per tonne, representing decrease
+of 33.6%, 13.2%, 13.0%, and 23.1%
+respectively over 2019.
+In 2020, the operating revenues of
+this segment was RMB 167.8 billion,
+representing a decrease of 20.4% over
+2019. This was mainly attributed to the
+decrease of realised price in crude oil,
+natural gas and LNG.
+(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.
+Elimination of inter-segment profit/(loss)
+Operating (loss)/profit
+Operating expenses
+Procurement cost decreased by RMB
+12.0 billion year on year, as a result
+of decrease of LNG price;
+* Other operating revenues are included.
+100.0
+100.0
+10.6
+10.7
+516,268
+371,854
+1.6
+1.2
+78,165
+40,518
+External sales*
+14.8
+9.0
+9.5
+438,103
+331,336
+Corporate and Others
+Operating revenues
+Inter-segment sales
+External sales*
+15.4
+460,210
+826,357
+13.2
+2,105,984 2,959,799
+Turnover and other operating revenues
+(1,370,624) (1,902,994)
+Elimination of inter-segment sales
+100.0
+100.0
+30.5
+25.6
+890,283 1,480,694
+3,476,608 4,862,793
+Operating revenue before elimination of inter-segment sales
+Operating revenues
+13.5
+12.4
+654,337
+430,073
+Inter-segment sales
+27.9
+21.9
+17.0
+29.4
+2019 Change (%)
+52,007
+2020
+2019
+6,289
+(20,570)
+1,480,694
+(1,902,994)
+2,959,799
+2,105,984
+(1,370,624)
+890,283
+371,854
+1,102,206
+(6,556)
+944,510
+Consolidated operating profit
+other income and asset disposal gains/(losses)
+Financial expenses, investment income, losses from changes in fair value,
+Elimination of inter-segment sales
+Corporate and Others
+Chemicals Segment
+Marketing and Distribution Segment
+Refining Segment
+Net profit attributable to equity shareholders of the Company
+Exploration and Production Segment
+30,074
+29,781
+28
+Management's Discussion
+and Analysis
+27
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Net profit: In 2020, the net profit attributable to the equity shareholders of the Company was RMB 32.9 billion, representing a decrease of RMB
+24.7 billion or 42.9% compared with 2019.
+Operating profit: In 2020, the operating profit of the Company was RMB 50.3 billion, representing a decrease of RMB 39.8 billion as compared
+with 2019.
+57,619
+32,924
+19,634
+90,134
+3,835
+46,307
+(40)
+4,417
+3,530
+(2,048)
+16,665
+9,147
+50,331
+Operating (loss)/profit
+Consolidated operating income
+Elimination of inter-segment sales
+1,521
+Other equity instruments investment
+0
+9,207
+3,051
+7,545
+(1,940)
+Cash flow hedges
+1,525
+0
+157
+48
+Self-owned fund
+0
+0
+(19)
+1
+1
+(1,252)
+0
+(18)
+0
+Corporate and Others
+Chemicals Segment
+210,712
+1,224,156
+1,430,963
+2019
+RMB million
+167,755
+Year ended 31 December
+2020
+RMB million
+Marketing and Distribution Segment
+Refining Segment
+Exploration and Production Segment
+Operating income
+(1) Under CASs, the operating income and operating profit or loss by reportable segments were as follows:
+The major differences between the Company's financial statements prepared under CASS and IFRS are set out in Section C of the financial
+statements of the Company on page 204 of this report.
+ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER CASS
+0
+9,189
+1,913
+9,228
+2,948
+Total
+Management's Discussion
+Derivative financial instruments
+and Analysis
+(2) Financial data prepared under CASS
+(39.9)
+1.9
+873,067
+2.6
+(30.2)
+(28.0)
+10.5
+329,441
+(40.4)
+371,854
+890,283
+(24.0)
+(23.0)
+7.8
+1,013,788
+(1.7)
+(25.9)
+(22.8)
+2.6
+1.2
+698,838
+0.8
+(1,375,041)
+29
+29
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+During the reporting period, the closing of transaction of Relevant Oil and Gas Pipeline Asset has been accomplished. For details, please refer to
+item 4 in section "Significant Events".
+6 SIGNIFICANT CHANGES IN MAJOR ASSETS DURING THE REPORTING PERIOD
+5 THE CAUSE AND IMPACT OF THE CHANGE IN THE COMPANY'S ACCOUNTING POLICY, ACCOUNTING ESTIMATES AND ACCOUNTING METHODS
+None.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+*: Gross profit margin = (operation income - operation cost, tax and surcharges)/operation income.
+(1,370,624)
+0.7
+(28.8)
+8.7
+1,688,398
+2,105,984
+N/A
+N/A
+N/A
+N/A
+(31.9)
+(8.4)
+(12.0)
+(20.4)
+At the end of 2020, the Company's non-current liabilities was RMB 327.7 billion, representing an increase of RMB 25.8 billion compared with
+that of the end of 2019. That was mainly due to the increase of RMB 19.2 billion in debentures payable, and the increase of RMB 5.8 billion in
+long-term loans.
+At the end of 2020, the Company's total assets was RMB 1,733.8 billion, representing an decrease of RMB 26.5 billion compared with that of
+the end of 2019.
+5,502
+878,374
+25,805
+301,934
+(26,841)
+1,760,286
+At the end of 2020, the shareholders' equity of the Company was RMB 883.9 billion, representing an increase of RMB 5.5 billion compared with
+that of the end of 2019.
+RMB million
+As of 31
+December 2019
+327,739
+883,876
+December 2020
+RMB million
+1,733,805
+As of 31
+Change analysis:
+Shareholder's equity
+Non-current liabilities
+Total assets
+Change
+(3) The results of the principal operations by segments
+Segments
+Exploration and Production
+Refining
+7.1
+148,306
+167,755
+944,510
+1,102,206
+basis (%)
+basis (%) year basis (%)
+margin* (%)
+year-on-year
+gross profit
+margin on a
+Increase/
+(decrease) of
+Increase/
+of operation (decrease) of
+income on a operation cost
+year-on-year on a year-on-
+Gross profit
+income Operation cost
+RMB million RMB million
+Operation
+Increase/
+(decrease)
+Total
+Elimination of inter-segment sales
+Corporate and Others
+Chemicals
+Marketing and Distribution
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Stock
+0
+Non-controlling Interests
+Reserves
+Share capital
+Total equity attributable to shareholders of the Company
+Non-current liabilities
+Current liabilities.
+Total liabilities
+Non-current assets
+Total equity
+Current assets
+(1) Assets, Liabilities and Equity
+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 short-term and long-term debts.
+3 ASSETS, LIABILITIES, EQUITY AND CASH FLOWS
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+In 2020, the segment's operating loss
+was RMB 0.4 billion, of which trading
+companies realised an operating profit of
+RMB 4.1 billion.
+In 2020, the operating expenses for
+corporate and others was RMB 890.7
+billion (of which the operating expenses
+of trading companies was RMB 882.2
+billion), down by 39.8% year-on-year.
+year-on-year. This was mainly because
+sales volume and prices of crude oil and
+refined oil products plunged as a result
+of COVID-19 impact.
+In 2020, the operating revenues
+generated from corporate and others
+was RMB 890.3 billion (of which the
+operating revenues of trading companies
+was RMB 886.4 billion), down by 39.9%
+Total assets
+The business activities of corporate and
+others mainly consist of import and
+export business activities of Sinopec
+Corp.'s subsidiaries, research and
+development activities of the Company,
+and managerial activities of the
+headquarters.
+As of 31 December 2020, the Company's
+total assets were RMB 1,733.8 billion,
+representing a decrease of RMB 26.5
+billion compared with the end of 2019, of
+which:
+Non-current assets were RMB 1,278.4
+billion, representing a decrease of RMB
+328,757
+(57,788)
+579,978
+522,190
+(32,035)
+882,982
+850,947
+(34,566)
+Current assets were RMB 455.4 billion,
+representing an increase of RMB 8.1
+billion compared with that of the end
+of 2019, mainly because cash and cash
+equivalents increased by RMB 27.1
+billion, the time deposits with financial
+institutions increased by RMB 32.9
+billion, the derivative financial assets
+increased by RMB 11.7 billion, trade
+accounts receivable decreased by RMB
+18.8 billion, inventories decreased by
+RMB 42.2 billion.
+1,312,976
+change
+(26,481)
+8,085
+2019
+1,760,286
+447,310
+1,733,805
+455,395
+31 December
+31 December
+2020
+As of
+As of
+Unit RMB million
+1,278,410
+(5) Corporate and others
+In 2020, the segment's operating profit
+was RMB 10.4 billion, down by RMB
+7 billion year-on-year. This was mainly
+due to the decrease in chemical product
+prices and narrowed gross margin as a
+result of COVID-19 impact.
+In 2020, the operating expenses of the
+segment was RMB 361.5 billion, down by
+27.6% year-on-year.
+1,403
+(8.4)
+7,804
+7,150
+6.2
+16,131
+17,124
+(24.8)
+1,370
+5,722
+(30.8)
+14,089
+9,743
+(21.4)
+4,534
+3,564
+(9.4)
+Change(%)
+4,302
+2.4
+6,407
+8,438
+Chemical fertiliser
+Synthetic rubber
+Synthetic fibre
+Synthetic resin
+Synthetic fibre monomer and polymer
+Basic organic chemicals
+(7.5)
+2,109
+1,950
+27.8
+925
+1,181
+(16.8)
+9,595
+7,986
+6.3
+1,284
+1,364
+(24.1)
+303,004
+25,753
+741,494
+738,946
+End of
+Beginning
+fair values
+variation of
+variation of
+fair values
+Accumulated
+losses from
+Profits and
+in the
+Unit: RMB million
+4
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+26
+26
+The Company has established sound
+decision-making mechanism, business
+process and internal control systems
+relevant to financial instrument
+accounting and information disclosure.
+(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 2020, the Company paid
+environmental expenditures of RMB 11.4
+billion.
+expenditures for R&D was RMB 15.2
+billion, of which expense was RMB 10.1
+billion, and capitalised cost was RMB 5.1
+billion.
+Items relevant to measurement of main fair values
+recorded
+Impairment
+loss
+provision
+of the
+0
+133
+3,318
+Structured deposit
+Self-owned fund
+0
+0
+114
+1
+3,319
+Financial assets held for trading
+source
+Funding
+current year
+as equity
+current year
+the year
+of the year
+Items
+(36,955)
+Self-owned fund
+2019
+153,619
+(121,051)
+(84,204)
+Year ended 31 December
+2020
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Total equity attributable to shareholders
+of the Company were RMB 741.5 billion,
+representing an increase of RMB 2.5
+billion compared with that as of the end
+of 2019.
+Non-current liabilities were RMB 328.8
+billion, representing an increase of RMB
+25.8 billion compared with that as of the
+end of 2019, mainly because long-term
+debts increased by RMB 22.8 billion.
+and its subsidiaries decreased by RMB
+38 billion, trade accounts payable and
+bills payable decreased by RMB 38.4
+billion, other payables increased by RMB
+30.5 billion.
+Current liabilities were RMB 522.2 billion,
+representing a decrease of RMB 57.8
+billion compared with that as of the end
+of 2019, mainly because short-term debts
+decreased by RMB 16.8 billion, loans
+from China Petrochemical Corporation
+Total liabilities were RMB 850.9 billion,
+representing a decrease of RMB 32
+billion compared with that as of the end
+of 2019, of which:
+34.6 billion compared with that as of the
+end of 2019, mainly because property,
+plant and equipment net decreased by
+RMB 36.4 billion, construction in progress
+decreased by RMB 49.1 billion, interest
+in joint ventures increased by RMB 40.4
+billion and long-term prepayments and
+other non-current assets increased by
+RMB 9.1 billion.
+5,554
+25
+3,006
+882,858
+141,364
+2,548
+617,875
+620,423
+121,071
+121,071
+2,548
+138,358
+877,304
+Management's Discussion
+and Analysis
+Management's Discussion
+Unit RMB million
+R&D expenditures include expenses
+occurred in the period. In 2020 the
+(5) Research & Development and
+Environmental Expenditures
+Please refer to "Capital Expenditures"
+in the "Business Review and Prospects"
+section of this report.
+(4) Capital Expenditure
+Please refer to "Material Guarantee
+Contracts and Their Performance" in the
+"Significant Events” section of this report.
+(3) Contingent Liabilities
+At the end of 2020, the cash and cash
+equivalents was RMB 87.6 billion.
+decreased by RMB 74.1 billion, dividends
+paid by the Company decreased by RMB
+14.5 billion, distributions by subsidiaries
+to non-controlling shareholders decreased
+by RMB 3.2 billion.
+In 2020, the net cash used in financing
+activities were RMB 37.0 billion,
+representing a year on year decrease.
+of RMB 47.2 billion, mainly because
+proceeds from bank and other loans
+decreased by RMB 43.8 billion,
+repayments of bank and other loans
+In 2020, the net cash used in investing
+activities was RMB 102.2 billion,
+representing a year on year decrease of
+RMB 18.8 billion, mainly because capital
+expenditures decreased by RMB 12.2
+billion.
+In 2020, the net cash generated from
+operating activities of the Company
+was RMB 167.5 billion, representing
+an increase in cash of RMB 13.9 billion
+year on year. This was mainly due to the
+strengthened management of inventories
+and receivables and payables and sharp
+decrease of occupation of funds.
+Net cash generated from operating activities
+Net cash used in investing activities
+Net cash used in financing activities
+Major items of cash flows
+The following table set forth the major items in the consolidated cash flow statements for 2020 and 2019.
+(2) Cash Flow
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+167,518
+(102,203)
+Management's Discussion
+SIGNIFICANT EVENTS
+1 MAJOR PROJECTS
+5.1 Input in medical and health care resources in poverty-striken areas
+Undertakings related to Initial
+Type of
+Undertaking
+IPOs
+Party
+Public Offerings (IPOs)
+Corporation
+Other undertakings
+Other
+Contents
+Whether bears
+Background
+Whether strictly
+deadline or not
+performed or not
+From 22 June 2001
+No
+Yes
+China Petrochemical 1 Compliance with the connected transaction
+China Petrochemical
+Corporation
+agreements;
+2 Solving the issues regarding the legality of land-
+Term for performance
+3
+3 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
+Significant Events
+Cash flow interest coverage ratio
+24.51
+28.70
+EBITDA-to-interest coverage ratio
+10.64
+12.88
+Reasons for change
+Due to the decrease of earnings before tax
+Due to the decrease of current liability
+Due to the decrease of current liability
+Due to the decrease of total liability
+0.10
+0.14
+(1.08)
+percentage points
+(0.02) Due to the decrease of profit before tax
+(2.38) Due to the decrease of profit before tax
+(4.19) Due to the decrease of profit before tax
+(2.24) Due to the decrease of profit before tax
+SIGNIFICANT EVENTS (CONTINUED)
+Loan repayment rate (%)
+Interest payment rate (%)
+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 2020, the standby credit
+line provided by several domestic financial
+institutions to the Company was RMB 444.0
+billion in total, facilitating the Company
+to get such amount of unsecured loans.
+The Company has fulfilled all the relevant
+undertakings in the offering circular of
+corporate bonds and 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 the Company with four
+different maturities, namely 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% and had
+been repaid and delisted; 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 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 made on 24 October
+2013. During the reporting period, the
+Company has paid in full the current-period
+interests of all notes with maturity of 10
+years and 30 years.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+33
+Significant Events
+100%
+6.40
+4
+6
+SIGNIFICANT EVENTS (CONTINUED)
+5 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
+Major external guarantees (excluding guarantees for controlled subsidiaries)
+Unit: RMB million
+Whether
+Guarantor
+Sinopec Corp.
+Relationship
+with the
+Company
+Name of
+guaranteed
+company
+Significant Events
+Amount
+Zhongtian Hechuang
+8,450
+Transaction date
+(date of signing)
+25 May 2016
+Whether
+completed
+Whether
+Amount of
+guaranteed
+for
+overdue
+overdue Counter- connected
+The listed
+5
+36
+35
+use rights certificates and property ownership rights
+certificates within a specified period of time;
+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;
+Avoiding competition within the same industry;
+Abandonment of business competition and conflicts
+of interest with Sinopec Corp.
+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) within ten years
+from the issuance date of this undertaking, 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.
+Within 10 years after 29 April 2014 Yes
+or the date when China Petrochemical
+Corporation acquires the assets
+34
+Significant Events
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+As of the date of this report, Sinopec Corp.
+had no undertakings in respect of financial
+performance, 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.
+4. THE TRANSACTIONS WITH CHINA OIL &
+GAS PIPELINE NETWORK CORPORATION
+On 23 July 2020, Sinopec Corp. entered
+into the Agreement on Additional Issuance
+of Equity to Purchase Relevant Oil and
+Gas Pipeline Assets with China Oil & Gas
+Pipeline Network Corporation (“PipeChina”),
+pursuant to which Sinopec Corp. transferred
+equity interests in the relevant oil and gas
+pipeline companies to PipeChina. PipeChina
+issued additional equity to Sinopec Corp.
+to satisfy the transaction consideration. On
+the same day, Sinopec Natural Gas Limited
+Company, entered into the Agreement on
+Additional Issuance of Equity and Cash
+Payment to Purchase Relevant Oil and Gas
+Pipeline Assets with PipeChina, pursuant to
+which Sinopec Natural Gas Limited Company
+transferred equity interests in the relevant
+oil and gas pipeline companies to PipeChina.
+PipeChina issued additional equity and
+made cash payment to Sinopec Natural
+Gas to satisfy the transaction consideration.
+On the same day, Sinopec Marketing Co.,
+Limited ("Sinopec Marketing"), a subsidiary
+of Sinopec Corp., entered into the Agreement
+on Cash Payment to Purchase Relevant Oil
+and Gas Pipeline Assets with PipeChina,
+pursuant to which Sinopec Marketing
+transferred the refined oil pipelines and other
+assets held by it to PipeChina, in exchange
+for cash consideration paid by PipeChina. On
+21 July 2020, Sinomart KTS Development
+Limited, a subsidiary of Sinopec Corp.,
+entered into the Agreement on Cash Payment
+to Purchase 100% Equity in Sinopec Yu Ji
+Pipeline Company Limited with PipeChina
+(together with the Agreement on Additional
+Issuance of Equity to Purchase Relevant Oil
+and Gas Pipeline Assets with PipeChina,
+the Agreement on Additional Issuance of
+Equity and Cash Payment to Purchase
+Relevant Oil and Gas Pipeline Assets with
+PipeChina and the Agreement on Cash
+Payment to Purchase Relevant Oil and Gas
+Pipeline Assets with PipeChina, collectively,
+the "Relevant Agreements"), pursuant to
+which Sinomart KTS Development Limited
+transferred 100% equity interest in Sinopec
+Yu Ji Pipeline Company Limited, its
+subsidiary, to PipeChina, in exchange for
+cash consideration paid by PipeChina.
+On 30 September 2020, Sinopec Marketing
+and PipeChina entered into the Agreement on
+Disposal of Pipeline Inventory in relation to
+the Oil and Gas Pipeline Assets Transaction,
+pursuant to which Sinopec Marketing
+disposed of the refined oil products stored
+in the pipelines and storage facilities in the
+target assets to PipeChina. On the same day,
+all the conditions in the Relevant Agreements
+have been fulfilled. The ownership,
+obligations, responsibilities and risks of the
+target assets were transferred to PipeChina
+from 24:00 on 30 September 2020. Sinopec
+Corp. and PipeChina had entered into
+agreements for the use of relevant oil and
+gas pipeline facilities, agreeing on the terms
+and arrangements for the relevant services.
+On 28 January 2021, the Board of Directors
+of Sinopec Corp. approved the continuing
+connected transaction cap in relation to
+refined oil pipeline transportation services
+between Sinopec Marketing and PipeChina,
+within the period from 1 October 2020 to 31
+December 2021. The aggregate amount of
+the continuing related party transaction of
+the Company and PipeChina from 1 October
+2020 to 31 December 2020 was RMB 1.42
+billion.
+For details, please refer to the
+announcements published by Sinopec Corp.
+on China Securities Journal, Shanghai
+Securities News, Securities Times, and on
+the website of Shanghai Stock Exchange
+on 24 July 2020, 9 October 2020 and 29
+January 2021, and on the website of Hong
+Kong Stock Exchange on 23 July 2020, 30
+September 2020 and 28 January 2021.
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2020
+Yes
+company itself
+4.02
+1.23
+Abbreviation
+Code
+Issuance date
+Maturity date
+Amount issued (RMB billion)
+Outstanding balance (RMB billion)
+Interest rate (%)
+Principal and interest repayment
+Payment of interests
+Investor Qualification Arrangement
+Bond name
+Listing exchange
+Corporate bonds trustee
+Use of proceeds
+Credit rating
+Credit addition mechanism, repayment scheme
+and other relative events for corporate bonds
+during the reporting period
+Convening of corporate bond holders' meeting
+Performance of corporate bonds trustee
+Sinopec Corp.
+2010 Corporate bond
+10石化02
+122052
+21 May 2010
+21 May 2020
+Sinopec Corp.
+2012 Corporate bond
+12石化02
+122150
+1 June 2012
+1 June 2022
+Credit rating agency
+7
+Basic information of corporate bonds
+SIGNIFICANT EVENTS (CONTINUED)
+(2) Zhenhai refining & chemical expansion
+project (phase 1)
+Zhenhai Refining & Chemical expansion
+project (phase 1) consists of a 4,000,000
+tpa crude oil modification project for old
+refinery and a 1,200,000 tpa ethylene
+project. The project was approved in
+June 2018, the construction started at
+the end of October 2018 and is expected
+to achieve the mechanical completion
+in mid-2021. The Company's self.
+owned fund accounts for 30% of the
+project investment, and bank loan is the
+main source of the remaining 70%. As
+of 31 December 2020, the aggregate
+investment was RMB 11.4 billion.
+(3) Zhenhai refining & chemical expansion
+project (phase 2)
+Zhenhai Refining & Chemical expansion
+project (phase 2) consists of building a
+11,000,000 tpa refinery project and a
+600,000 tpa propane dehydrogenatin
+and downstream projects. The refinery
+project is expected to begin construction
+in October 2021 and to be put into
+operation in the end of 2024. The
+chemical project is expected to begin
+construction in June 2022 and to be
+put into operation in June 2025. The
+Company's self-owned fund accounts for
+30% of the project investment, and bank
+loan is the main source of the remaining
+70%.
+(4) Tianjin Nanggang ethylene and
+downstream high-end new material
+industry cluster project
+Tianjin Nanggang ethylene and
+downstream high-end new material
+industry cluster project consists of a
+1,200,000 tpa ethylene project and
+downstream processing units. The project
+is expected to begin construction in June
+2021 and be put into operation in the
+end of 2023. The Company's self-owned
+fund accounts for approximately 30% of
+the project investment and bank loan is
+the main source of the remaining 70%.
+(5) Wuhan ethylene de-bottleneck project
+Wuhan ethylene de-bottleneck project
+mainly consists of an 800,000 tpa-
+to-1,100,000 tpa ethylene capacity
+expansion project. The project started
+construction at the end of October
+2018 and is expected to achieve the
+mechanical completion in March 2021.
+The Company's self-owned fund accounts
+for approximately 30% of the project
+investment and bank loan is the main
+source of the remaining 70%. As of
+31 December 2020, the aggregate
+investment was RMB 3.3 billion.
+(6) Hainan Refining 1,000,000 tpa ethylene
+and refinery revamping and expansion
+project
+Hainan Refining 1,000,000 tpa ethylene
+and refinery revamping and expansion
+project mainly consists of the construction
+of 1,000,000 tpa ethylene and auxiliary
+2 CORPORATE BONDS ISSUED AND INTEREST PAYMENTS
+units. The project started at the end
+of December 2018 and is expected to
+achieve the mechanical completion in
+May 2022. The Company's self-owned
+fund accounts for approximately 30% of
+the project investment and bank loan is
+the main source of the remaining 70%.
+As of 31 December 2020, the aggregate
+investment was RMB 5.6 billion.
+Under the guidance of the principle
+of "overall deployment, stage-wise
+implementation and fully consideration",
+the capacity construction project started
+comprehensively in August 2018. The
+construction of phase 1 project with a
+production capacity of 1 billion cubic
+meters per year was completed and
+put into operation in December 2020.
+The phase 2 project with a production
+capacity of 2 billion cubic meters per
+year is expected to be completed and put
+into operation in December 2022. The
+Company's self-owned fund accounts for
+30% of the project investment and bank
+loan is the main source of the remaining
+70%. As of 31 December 2020, the
+aggregate investment was RMB 4.1
+billion.
+(8) Tianjin LNG project (phase 2)
+Tianjin LNG project (phase 2) mainly
+consists of a new wharf, five new
+220,000-cubic-meter storage tanks etc.
+LNG processing capacity will reach 11
+million tonnes per year after phase 2
+expansion project is completed. The
+project started in January 2019 and
+is expected to be put into operation in
+August 2023. The Company's self-owned
+fund accounts for approximately 30% of
+the project investment and bank loan is
+the main source of the remaining 70%.
+As of 31 December 2020, the aggregate
+investment was RMB 1.5 billion.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+31
+Significant Events
+32
+32
+Significant Events
+(7) Weirong shale gas project (phase 1 and
+phase 2)
+1.25
+Sinopec Corp.
+15石化02
+136040
+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 fulfil
+obligations as described in the corporate bond prospectus and exercised its duty to protect
+the bondholders' legitimate rights and interests. The bond trustee has disclosed the Trustee
+Management Affairs Report of last year. The full disclosure is available on the website of Shanghai
+Stock Exchange (http://www.sse.com.cn).
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Principal accounting data and financial indicators for the two years ended 31 December 2020
+Principal data
+2020
+2019
+EBITDA (RMB million)
+168,785
+214,953
+The guarantor of 1002 and 1202 is China Petrochemical Corporation. For more
+information of the guarantor, please refer to the annual report of corporate bonds which had been
+published on website of Shanghai Stock Exchange by China Petrochemical Corporation.
+During the reporting period, the bondholders' meeting was not convened.
+Change
+(46,168)
+0.87
+0.77
+Quick ratio
+0.58
+0.44
+Liability-to-asset ratio (%)
+49.02
+50.10
+EBITDA to total debt ratio
+Current ratio
+2015 Corporate bond (first issue)
+During the reporting period, there is no arrangement to credit addition mechanism and change
+of the repayment for the above-mentioned corporate bonds. Sinopec Corp. strictly followed
+the provisions in the corporate bond prospectus to repay interests of the corporate bonds to
+bondholders.
+Proceeds from the above-mentioned corporate bonds have been used for their designated purpose
+as disclosed. All the proceeds have been completely used.
+19 November 2015
+19 November 2020
+4
+9
+4.05
+7
+4.90
+3.70
+Simple interest is calculated and paid on an annual basis without compounding interests. Interest is
+paid once a year. The principal will be paid at maturity with last installment of interest.
+Sinopec Corp. had paid in full the interest accrued of "12102" during the reporting period and "10
+102" and "1502” had been repaid and delisted from Shanghai Stock Exchange.
+15102 was publicly offered to qualified investors in accordance with Administration of the
+Issuance and Trading of Corporate Bonds.
+Shanghai Stock Exchange
+During the reporting period, United Credit Ratings Co., Ltd. tracked and provided credit rating for
+1002, 1202 and 1502 and reaffirmed AAA credit rating in the continuing credit rating
+report. The long term credit rating of Sinopec Corp. remained AAA with its outlook being stable.
+Pursuant to relevant regulations, the latest credit rating results will be published through media
+designated by regulators within six months commencing from the date of the end of each fiscal
+year.
+Name
+Contact Person
+Telephone Number
+Name
+Address
+China International Capital Corporation Limited
+27th-28th Floor, China World Office 2, 1 Jianguomenwai Avenue,
+Chaoyang District, Beijing
+Huang Xu, Zhai Ying
+(010) 6505 1166
+United Credit Ratings Co., Ltd.
+12th Floor, PICC building, No.2 Jianguomenwai Avenue,
+Chaoyang District, Beijing
+Address
+Energy Co., Ltd.
+Period of guarantee
+25 May 2016 -31
+December 2023 (the
+mature date is estimated)
+Туре
+II. Input breakdowns
+1. Poverty elimination through industrial development
+1.1 Categories of poverty alleviation programs through
+industrial development
+1.2 Number of poverty alleviation programs
+1.3 Input in poverty alleviation projects through industrial development
+1.4 Number of people lifted out of poverty
+2. Poverty elimination through provision of employment
+2.1 Input in professional skill training
+2.2 Participants of professional skill trainings (person/time)
+2.3 Number of people employed
+3. Number of people lifted out of poverty
+3. Poverty elimination through relocation
+3.2 Input in relocation
+4. Poverty elimination through education
+4.1 Input in students funding
+4.2 Number of students who received funding assistance (person)
+4.3Input in education resources in poverty-stricken areas
+5. Poverty alleviation through healthcare
+6. Poverty alleviation through ecological protection
+6.1 Items
+Data
+186.44
+3.1 Number of relocated people provided with employment
+0.95
+2. Value of goods and materials
+I. Overview
+14 APPROPRIATION OF NON-OPERATIONAL
+FUNDS BY THE CONTROLLING
+SHAREHOLDER AND ITS RELATED PARTIES
+AND THE PROGRESS FOR CLEARING UP
+Not applicable.
+15 STRUCTURED ENTITY CONTROLLED BY
+THE COMPANY
+None.
+16 DETAILED IMPLEMENTATION OF THE
+SHARE INCENTIVE SCHEME DURING THE
+REPORTING PERIOD
+Sinopec Corp. did not implement any share
+incentive scheme during the reporting period.
+17 ENVIRONMENTAL PROTECTION
+SITUATIONS OF COMPANIES AND THEIR
+SUBSIDIARIES AS MAJOR POLLUTANT
+DISCHARGING COMPANIES RECOGNISED
+BY ENVIRONMENTAL PROTECTION
+DEPARTMENTS
+In 2020, certain subsidiaries of Sinopec
+Corp. which are listed as major pollutant
+discharge units have disclosed environmental
+information as required by the relevant
+authorities and local government. The
+details of such information were published
+on national pollutant discharge license
+management information platform (http://
+permit.mee.gov.cn/permitExt/defaults/
+default-index!getInformation.action) and the
+relevant websites of the local government.
+Sinopec Corp. built prevention and control
+facilities for sewage, flue gas, solid waste and
+noise in accordance with the requirements
+of the national and local pollution prevention
+and environmental protection standards,
+kept effective and stable operation of
+pollution prevention and control facilities,
+and realised standardised discharges and
+emissions of sewage, flue gas, solid waste
+and factory noise. For details, please refer
+to the Company's Communication on
+Progress for Sustainable Development. The
+Company further regulated and enhanced the
+environmental management of construction
+projects, and implemented "three-
+simultaneity" management (environmental
+facilities shall be designed, constructed
+and put into operation simultaneously with
+the main construction). All of the newly-
+built projects have obtained approvals from
+the environment authorities. Sinopec Corp.
+strictly complies with relevant national
+requirements on environment emergency
+plan management and continuously improves
+the emergency plans for environmental
+emergencies and heavy pollution weather.
+According to the national pollution permit
+and self-monitoring technology guidelines in
+relevant industries, we acquired discharge
+permit and modified the self-monitoring plan,
+implemented new national requirements of
+sewage, flue gas and noise monitory, and
+disclosed the environmental results. For
+other subsidiaries that are not listed as
+major pollutant discharge units, the Company
+also completed relevant environmental
+protection formalities in accordance with
+the national and local requirements, and
+implemented relevant environmental
+protection measures. According to
+the requirements of national and local
+ecological environment departments, these
+companies do not need to disclose relevant
+information. The Company was not subject
+to major administrative penalties relating to
+environment protection.
+1. Funds
+18 POVERTY ALLEVIATION PROGRAM
+LAUNCHED BY THE COMPANY
+The Company focused on poverty
+alleviation in terms of industry, improving
+the income level of the poverty-stricken
+people; focused on poverty alleviation
+in terms of consumption, widening
+the sales channels for poverty-stricken
+people; focused on poverty alleviation in
+terms of education, strengthening the
+education benefit for poverty-stricken
+people; focused on poverty alleviation in
+terms of getting jobs, increasing the job
+opportunities for poverty-stricken people;
+focused on poverty alleviation in terms of
+medical care, improving the health care
+level of poverty-stricken people.
+(2) 2020 Targeted Poverty Alleviation Work
+Statistics
+In 2020, the Company invested RMB
+140.535 million in six counties of
+Targeted Poverty Alleviation with 40
+targeted poverty alleviation programs
+implemented in Yingshang county and
+Yuexi county in Anhui, Fenghuang county
+and Luxi county in Hunan, Yuepuhu
+county in Xinjiang and Dongxiang
+county in Gansu, mainly including rural
+industry development, village tourism
+development, labor output trainings and
+education assistance. In total, 34,699
+people benefited from the programs and
+1,560 students were granted financial
+assistance.
+Significant Events
+38
+38
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Unit: RMB million
+Index
+(1) Targeted Poverty Alleviation Plan
+The year 2020 is the last year for the
+campaign of Targeted Poverty Alleviation.
+The Company invested around RMB 190
+million in Targeted Poverty Alleviation in
+2020 and in aggregate has invested over
+RMB 2.4 billion. All the eight targeted
+poverty counties have successfully got rid
+of poverty.
+The deposits of the Company at the Finance
+Company and Century Bright Company
+during the reporting period did not exceed
+the relevant caps as approved at the General
+Meeting of Sinopec Corp. During daily
+operations, the Company can withdraw the
+full amount of its deposits at the Finance
+Company and Century Bright Company.
+34,699
+☑ Poverty alleviation through tourism development
+9.1 Number of projects
+9.2 Total input
+9.3 Number of people lifted out of poverty (person)
+☑ Conduct ecological protection and construction
+☐ Develop ways for ecological protection and compensation
+☑ Set up ecological public welfare positions
+☑ Others
+0.11
+0.25
+210
+0.23
+9. Other projects
+76
+0.40
+24
+25.69
+12,659
+9.4 Other
+(3) Subsequent plan
+In 2021, in accordance with the guideline of "rural revitalization with prosperous industry, ecological friendly residential ambiance, communities
+with civilization, effective social governance and well-off rural life", the Company will further undertake its social responsibilities, helping poverty-
+alleviated counties as target of rural revitalization to prosper with strengthening the outcome of targeted poverty alleviation, developing their
+industries, improving education programs, thus promoting rural revitalization on the basis of targeted poverty alleviation.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+39
+Significant Events
+140.54
+☑ Poverty alleviation through agriculture and forestry development
+8.3 Public welfare funds for poverty alleviation
+8.1 Input in coordinated poverty alleviation
+☑ Poverty alleviation through e-commerce
+☐ Poverty alleviation through assets income
+☐ Poverty alleviation through science and technology development
+☐ Others
+16
+50.35
+32,135
+3.69
+21,699
+2,564
+0
+0
+8.2 Input in targeted poverty alleviation programs
+0.95
+52.94
+14.46
+6.2 Input in ecological protection
+7. Guarantee basic living standard
+7.1 Input in left-behind children, women and senior people
+7.2 Number of left-behind children, women and senior people assisted (person)
+7.3 Input in assisting the disabled
+7.4 Number of the disabled helped (person)
+8. Poverty alleviation through social projects
+1,560
+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.
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+December 2031
+guarantee
+None
+14,840
+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)
+Chemical Co., Ltd.
+Total amount of guarantees for the Company (including those provided for controlled subsidiaries)
+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 Rules Governing the Listing of Stocks on Shanghai Stock Exchange.
+None
+Total amount of guarantees (A+B)
+11,378
+company itself
+No
+or not
+or not
+guarantee guaranteed
+parties¹¹
+Joint liability
+guarantee
+No
+No
+None
+No
+No
+Yes
+The listed
+Zhong An United Coal
+6,390
+18 April 2018
+18 April 2018.31
+Joint liability
+No
+No
+None
+Sinopec Corp.
+26,218
+3.53%
+None
+During the reporting period, the Company
+was not involved in any entrusted
+financing which should be disclosed but
+I was not disclosed.
+(2) ENTRUSTED LOAN
+Type
+Project construction
+Current capital
+unit RMB billion
+Source
+Self-owned fund
+Self-owned fund
+Occurred amount
+2.258
+(0.717)
+Undue amount Overdue amount
+2.969
+0.384
+(1) ENTRUSTED FINANCING
+0
+(3) OTHER FINANCING AND DERIVATIVE
+INVESTMENT
+During the reporting period, the Company
+was not involved in other financing or
+derivative investment.
+13 DEPOSITS AT SINOPEC FINANCE CO., LTD.
+AND SINOPEC CENTURY BRIGHT CAPITAL
+INVESTMENT, LTD.
+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 at 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 at
+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
+when 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.
+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 at Century Bright Company
+by strengthening internal risk controls.
+and obtaining various supports 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
+Bright Company in 2013, in which China
+Petrochemical Corporation undertakes that
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+37
+0
+12 ENTRUSTED FINANCING AND LOAN
+11 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.
+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.
+6,390
+None
+6.390
+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 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+6 SPECIFIC STATEMENTS AND
+INDEPENDENT OPINIONS FROM
+INDEPENDENT NON-EXECUTIVE
+DIRECTORS REGARDING EXTERNAL
+GUARANTEES PROVIDED BY THE COMPANY
+DURING AND BY THE END OF 2020:
+We, as Independent Directors of Sinopec
+Corp., hereby make the following statements
+after conducting a thorough check of external
+guarantees provided by the Company during
+and by the end of 2020 in accordance with
+the requirements of the domestic regulatory
+authorities:
+The external guarantees prior to 2020 had
+been disclosed in previous annual reports.
+The aggregate balance of external guarantees
+provided by Sinopec Corp. for the year
+2020 was RMB 26.2 billion, accounting for
+approximately 3.53% 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.
+7 SIGNIFICANT LITIGATION, ARBITRATION
+RELATING TO THE COMPANY
+No significant litigation, arbitration relating
+to the Company occurred during the
+reporting period.
+8 INSOLVENCY AND RESTRUCTURING
+During the reporting period, the Company
+was not involved in any insolvency or
+restructuring matters.
+9
+OTHER MATERIAL CONTRACTS
+Saved as disclosed by Sinopec Corp., the
+Company did not enter into any material
+contracts subject to disclosure obligations
+during the reporting period.
+10 CREDIBILITY FOR THE COMPANY,
+CONTROLLING SHAREHOLDERS AND DE
+FACTO CONTROLLER
+Zhongke integrated refining and
+petrochemical project mainly consists
+of the construction of a 10,000,000 tpa
+refinery project, 800,000 tpa ethylene
+unit, 300,000 tonne capacity jetty and
+relevant utilities project. It was put
+into operation on 16 June 2020. The
+Company's self-owned fund accounts for
+30% of the project investment, and bank
+loan is the main source of the remaining
+70%. As of 31 December 2020, the
+aggregate investment was RMB 34.6
+billion.
+(1) Zhongke integrated refining and
+chemical project
+Interest coverage ratio
+45
+services of the Mutual Supply Agreement
+and the Cultural, Educational, Hygienic
+and Auxiliary Services Agreement were
+adjusted and the term of the Mutual Supply
+Agreement and the Cultural, Educational,
+Hygienic and Auxiliary Services Agreement
+was extended from 1 January 2019 to 31
+December 2021; the term of the Properties
+Leasing Agreement was extended to 31
+December 2021 and the term of Intellectual
+Property Licensing Agreements was extended
+to 31 December 2029. The area and rent
+in the Land Use Rights Leasing Agreement
+were also adjusted. The resolution relating
+to continuing connected transactions for
+the three years from 2019 to 2021 was
+approved at the first extraordinary general
+meeting of Sinopec Corp. for 2018 held on
+23 October 2018. For details of the above
+continuing connected transactions, please
+refer to relevant announcements published
+on 27 August 2018 on the China Securities
+Journal, the Shanghai Securities News and
+the Securities Times and on the website of
+the Shanghai Stock Exchange, and on the
+website of the Hong Kong Stock Exchange
+dated 26 August 2018. The capitalised
+terms used in this section shall have the
+same meaning as that used in the above-
+mentioned announcements.
+On 24 August 2018, Sinopec Corp. and
+China Petrochemical Corporation entered into
+a supplemental agreement of the continuing
+connected transactions and the Land Use
+Rights Leasing Agreement Amendment
+Memo, pursuant to which the scope of
+(7) The Company will provide franchise
+licenses for service stations to China
+Petrochemical Corporation.
+(6) China Petrochemical Corporation will
+provide shareholders' loans to the
+Company; and
+(5) China Petrochemical Corporation will
+provide comprehensive insurance to the
+Company;
+(4) China Petrochemical Corporation will
+provide leasing services for lands and
+certain properties to the Company;
+(3) China Petrochemical Corporation will
+provide cultural and educational, hygienic
+and auxiliary services to the Company
+(Cultural, Educational, Hygiene and
+Auxiliary Services Agreement);
+will provide trademarks, patents and
+computer software to the Company for
+use free of charge;
+(2) China Petrochemical Corporation
+(1) The Company and China Petrochemical
+Corporation will mutually supply ancillary
+services for products, production and
+construction services (Mutual Supply
+Agreement);
+1 AGREEMENTS CONCERNING CONTINUING
+CONNECTED TRANSACTIONS
+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:
+2 COMPLIANCE OF DISCLOSURE AND
+APPROVALS OF CONTINUING CONNECTED
+TRANSACTIONS BETWEEN THE COMPANY
+AND SINOPEC GROUP WITH HONG
+KONG LISTING RULES AND THE RULES
+GOVERNING THE LISTING OF STOCKS ON
+SHANGHAI STOCK EXCHANGE
+Pursuant to the Hong Kong Listing Rules
+and the Rules Governing the Listing of
+Stocks on Shanghai Stock Exchange, the
+continuing connected transactions between
+the Company and Sinopec Group are subject
+to disclosure, Independent Non-executive
+Directors' approval and/or independent
+shareholders' approval (if needed) based on
+the nature and the value of the transactions.
+Sinopec Corp. has fully complied with
+the above requirements in relation to the
+continuing connected transaction between
+the Company and Sinopec Group.
+CONNECTED TRANSACTIONS
+CORPORATE GOVERNANCE (CONTINUED)
+A.7 Provision and use of 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
+of 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 Directors may require
+the Management, or require,
+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. Tang
+Min, who serves as the Chairman,
+and Executive Director Mr. Ma
+Yongsheng and Independent Non-
+executive Director Mr. Ng, Kar Ling
+Johnny, 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 reporting 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 their service contracts in
+2020.
+c. The members of the Remuneration
+Committee can 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 member and
+can require such member 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.
+d. During the reporting period, the
+Remuneration Committee held one
+meeting (please refer to "Meetings
+Held by the Board Committees" under
+the section of "Report of the Board of
+Directors" in this annual report).
+C Accountability and Auditing
+Connected Transactions
+C.1 Financial reporting
+The aggregated amount of the continuing
+connected transactions for 2020 of the
+3 ACTUAL CONTINUING CONNECTED
+TRANSACTIONS ENTERED INTO BY THE
+COMPANY DURING THE YEAR
+Pursuant to the above-mentioned agreements
+on continuing connected transactions,
+the aggregate amount of the continuing
+connected transactions of the Company
+during the reporting period was RMB
+385.868 billion. Among which, purchase
+expenses amounted to RMB 252.381 billion,
+representing 11.38% 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 236.685 billion, purchases of auxiliary
+and community services of RMB 3.126
+billion, payment of property rent of RMB 565
+million, payment of land use right of RMB
+11.086 billion, and the interest expenses
+amounted to RMB 0.919 billion. The sales
+income amounted to RMB 133.486 billion,
+representing 5.99% of the total amount of
+this type of transaction for the reporting
+period, including RMB 132.643 billion for
+sales of products, RMB 140 million for
+agency commission income, and RMB 704
+million for interest income.
+(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.
+ii 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; and
+normal commercial terms; or
+i
+(b) The transactions have been entered into
+based on either of the following terms:
+(a) The transactions have been conducted
+in the ordinary course of the Company's
+business;
+After reviewing the above-mentioned
+connected transactions, the Independent
+Non-executive Directors of Sinopec Corp.
+have confirmed the following:
+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.
+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
+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
+The above-mentioned connected transactions
+between the Company and Sinopec Group.
+in 2020 were approved at the 21st meeting
+of the seventh session of the Board and
+have complied with the requirements under
+Chapter 14A of the Hong Kong Listing Rules.
+Connected transactions with the Sinopec
+Group that occurred during the year, as set
+out in Note 39 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.
+Company is in compliance with the relevant
+requirements of the Hong Kong Listing
+Rules and the Rules Governing the Listing
+of Stocks on Shanghai Stock Exchange. For
+performance details of connected transaction
+agreements, please refer to Item 3 below.
+of continuing connected transactions
+every three years, and will announce and
+implement 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.
+The 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 its internal control procedures,
+adjusts the scope and the relevant caps
+Decision-making procedures:
+For details of the pricing principle, please
+refer to relevant announcements published
+on 27 August 2018 in China Securities
+Journal, Shanghai Securities News and
+Securities Times and on the website of
+the Shanghai Stock Exchange, and on the
+website of the Hong Kong Stock Exchange on
+26 August 2018.
+(d) where none of the above is applicable,
+the price for the provision of the products
+or services is to be agreed between
+the relevant parties, which shall be the
+reasonable cost incurred in providing the
+same plus 6% or less of such cost.
+(c) where there is neither a government-
+prescribed price nor a government-
+guidance price, the market price will
+apply; or
+(b) where there is no government-prescribed
+price but where there is a government.
+guidance price, the government-guidance
+price will apply;
+(a) The government-prescribed price will
+apply;
+Principle of pricing for the continuing
+connected transactions:
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+40
+The amounts of the above continuing
+connected transactions between the
+Company and Sinopec Group did not
+exceed the relevant caps for the continuing
+connected transactions as approved by the
+general meeting of shareholders and the
+Board.
+5 FUNDS PROVIDED BETWEEN RELATED PARTIES
+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, the performance and the
+cash flow of the Company during
+the period. The Board approved
+the Financial Report for 2020 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. According to relevant rules of Sinopec
+Corp., the Secretary to the Board
+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"
+section on Sinopec Corp's website.
+F Company Secretary
+a. The Hong Kong Stock Exchange
+recognised 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.
+b. During the reporting period, the
+Secretary to the Board actively
+participated in career development
+training with more than 15 training
+hours.
+48
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Corporate Governance
+G Shareholders' Rights
+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
+approve the request to convene the
+meeting according to the Rules of
+Procedure for General Meetings
+of Shareholders, 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 aforementioned
+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.
+b. When Sinopec Corp. holds the general
+meeting of shareholders, shareholders
+who individually or collectively
+hold 3% of the total voting shares
+of Sinopec Corp. may propose a
+supplemental proposal 10 days before
+the date of the general meeting.
+c. The Chairman of the Board hosted the
+annual general meeting for the year
+2019 and the Second Extraordinary
+General Meeting for the year 2020.
+Some members of the Board of
+Directors and Board of Supervisors
+and senior management attended the
+meeting and communicated deeply
+with the investors.
+c. The eligibility for attending the general
+meeting, the rights of shareholders,
+the resolutions at the meeting and the
+voting procedures are clearly stated
+in the notice of the general meeting
+of shareholders of Sinopec Corp.
+dispatched to the shareholders.
+special organisation in charge of
+communication with shareholders
+and publishes relevant contact details
+to facilitate shareholders to make
+enquiries pursuant to Articles of
+Association.
+(2) Auditors
+The appointment of
+PricewaterhouseCoopers Zhong Tian
+LLP and PricewaterhouseCoopers as
+Sinopec Corp.'s external auditors for
+2020 and the authorisation of the Board
+to determine their remuneration were
+approved at Sinopec Corp.'s Annual
+General Meeting for the Year 2019 on
+19 May 2020. The audit fee for 2020
+is RMB 47.38 million (including audit
+fee of internal control), which was
+approved at the 21st Meeting of the
+Seventh Session of the Board. The annual
+financial statements of the year ended
+31 December 2020 have been audited
+by PricewaterhouseCoopers Zhong Tian
+LLP and PricewaterhouseCoopers. The
+Chinese certified accountants signing the
+report are Zhao Jianrong and Hu Yang
+from PricewaterhouseCoopers Zhong Tian
+LLP.
+During the reporting period, neither
+PricewaterhouseCoopers Zhong Tian LLP
+nor PricewaterhouseCoopers provided any
+non-audit service to the Company.
+As PricewaterhouseCoopers Zhong
+Tian LLP and PricewaterhouseCoopers
+have served as external auditors of the
+Company for eight consecutive years,
+the Company is required to replace its
+external auditors in 2021 according
+to the regulations in China. The 15th
+Meeting of the Audit Committee of the
+seventh Session of Board of Directors
+and the 21st Meeting of the seventh
+Session of Board of Directors of Sinopec
+Corp. have decided to appoint KPMG
+Huazhen Certified Public Accountants
+as the external auditors of the Company
+in 2021. The matter has yet to be
+submitted to the Company's 2020 Annual
+General Meeting of Shareholders for
+consideration.
+(3) Other information about Sinopec Corp.'s
+corporate governance
+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 shareholdings of
+substantial shareholders and changes in
+share capital, please refer to page 6 to
+page 7; for information about meetings
+of the Board, please refer to page 51;
+for information about meetings held
+by Board Committees, please refer to
+page 53; for information about tenure
+of Non-executive Directors, please refer
+to page 65; 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 60 to
+page 74.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+49
+Corporate Governance
+d. Sinopec Corp. establishes
+b. During the reporting period,
+separate resolution was proposed
+for each substantially separate
+issue at the general meeting of
+shareholders. 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.
+a. Sinopec Corp. pays high attention to
+investor relations. The Management
+attends road shows every year
+to answer questions on subjects
+of concern to investors, such
+as introducing the development
+strategies and the production
+and business performance of the
+Company. Sinopec Corp. establishes
+a department responsible for
+communicating with investors.
+In compliance with regulatory
+provisions, Sinopec Corp. enhances
+communication with investors by
+holding meetings with institutional
+investors, setting up an investor
+hotline and communicating through
+internet platform.
+E Investor Relations
+d. The external auditors of Sinopec
+Corp. made a statement on 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 reviewing
+the effectiveness of its internal
+control and risk management. The
+Board and the 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 the 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 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Corporate Governance
+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. formulates and
+continuously improves the Internal
+Control Manual to achieve internal
+control of all factors of internal
+environment, risk assessment,
+controlling activities, information
+and communication, and internal
+supervision. At the same time,
+Sinopec Corp. has constantly
+supervised and evaluated its
+internal control, and conducted
+comprehensive and multi-level
+inspections including regular
+test, enterprise self-examination
+and auditing check, and included
+headquarters, branches and
+subsidiaries into the scope of
+internal control evaluation, with
+an internal control evaluation
+report being produced. The
+Board annually reviews the
+internal control evaluation report.
+For detailed information about
+the internal control during the
+reporting period, please refer to
+the "Report on Internal Control
+Evaluation" prepared by Sinopec
+Corp.
+Sinopec Corp. has formulated
+and implemented its information
+disclosure policy and insider
+registration policy. The Company
+regularly evaluates the policy
+implementation and makes
+disclosure in accordance with
+relevant regulations. Please refer
+to the website of Sinopec Corp.
+(http://www.sinopec.com) for
+the details of the information
+disclosure policy.
+c. In terms of risk management,
+Sinopec Corp. adopts the
+enterprise risk management
+framework provided by COSO, and
+establishes 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 strategies and
+measures combined with its
+internal control system and
+periodically monitors their
+implementation to ensure
+adequate care, monitor and
+tackling of major risks.
+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.
+C.3 Audit Committee
+a. The Board has established
+an Audit Committee. The
+Audit Committee consists of
+Independent Non-executive
+Director Mr. Ng, Kar Ling Johnny,
+who serves as the Chairman,
+and Independent Non-executive
+Director Mr. Tang Min and
+Independent Non-executive
+Director Mr. Cai Hongbin, who
+serve as members. As verified,
+none of them has served as a
+partner or a former partner in our
+current auditing firm.
+b. During the reporting period, the
+Audit Committee held six meetings
+(please refer to the "Meetings
+Held by the Board Committees"
+under the section of "Report of the
+Board of Directors" in this annual
+report). The review opinions
+were issued at each meeting and
+submitted to the Board. During
+the reporting period, the Board
+and the Audit Committee had no
+disagreement.
+c. Audit Committee can 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
+appointed consultants members
+and can request such member
+to provide advice. 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.
+d. The Audit Committee has reviewed
+the adequacy and sufficiency
+of the resources for accounting
+and financial reporting and the
+qualifications and experience of
+the relevant employees as well
+as the sufficiency of the training
+courses and the budget thereof.
+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.
+to employees to report behavior
+that violates the internal control
+system of the Company. The Audit
+Committee has reviewed and
+approved such policy.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+47
+Corporate Governance
+D Delegation of power by the Board
+a. The Board and the Management
+have clear duties and responsibilities
+in written rules. The Articles of
+Association and the Rules of
+Procedure for the General Meetings
+of Shareholders and the Rules of
+Procedure of 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 addition to the Audit Committee,
+the Remuneration Committee
+and Nomination 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 seventh Session of
+Strategy Committee consists of four
+Directors, including Chairman of the
+Board Mr. Zhang Yuzhuo, who serves
+as Chairman, as well as Executive
+Directors Mr. Ma Yongsheng, Mr. Ling
+Yiqun and Independent Non-executive
+Director Mr. Cai Hongbin, 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 Chairman
+of the Board Mr. Zhang Yuzhuo, who
+serves as Chairman, Independent
+Non-executive Directors Mr. Tang Min
+and Mr. Cai Hongbin, who serve as
+members.
+c. Each Board Committee is required
+to report its decisions and
+recommendations to the Board and
+has formulated its terms of references.
+The Terms of Reference of the Audit
+Committee, The Terms of Reference
+of the Remuneration Committee
+and The Terms of Reference of the
+Nomination Committee are published
+on the website of Sinopec Corp. at
+http://www.sinopec.com.
+4 OTHER SIGNIFICANT CONNECTED
+TRANSACTIONS OCCURED THIS YEAR
+For details, please refer to item 4 "The
+transactions with China Oil & Gas Pipeline
+Network Corporation" in section "Significant
+Events".
+Related Parties
+CORPORATE GOVERNANCE (CONTINUED)
+Other related parties
+b. The meeting of the Board of the
+Company 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 delivered to each
+Director 10 days in advance. In
+2020, Sinopec Corp. held eleven
+Board meetings. For details about
+each Director's attendance at the
+Board meetings and the general
+meetings, please refer to the
+section "Report of the Board of
+Directors" in this annual report.
+A.1 Board of Directors
+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.
+A Board of Directors
+Sinopec Corp. complied with all code
+provisions set out in the Corporate
+Governance Code during the reporting
+period.
+(1) Compliance with the Corporate
+Governance Code
+9 CORPORATE GOVERNANCE REPORT (IN
+ACCORDANCE WITH HONG KONG LISTING
+RULES)
+Sinopec Corp. has established and is
+continuously improving the fairness and
+transparency of its performance appraisal
+standards, incentive schemes and
+requirements for Directors, Supervisors and
+other senior management. Sinopec Corp. has
+implemented a number of incentive policies,
+including the Measures of Sinopec Corp.
+on the Implementation of Remuneration
+for Senior Managers and the Measures
+of Sinopec Corp. on the Management of
+Performance Evaluation.
+8 SENIOR MANAGEMENT APPRAISAL AND
+INCENTIVE SCHEMES
+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 date of this
+annual report.
+7 IMPROVEMENT AND IMPLEMENTATION OF
+THE INTERNAL CONTROL SYSTEM
+6 COMPETITION BETWEEN SINOPEC CORP
+AND ITS CONTROLLING SHAREHOLDER
+Please refer to "Performance of the
+Undertakings by China Petrochemical
+Corporation" under the section "Significant
+Events" in this annual report for details.
+c. Each Director of the Board can
+submit proposals to be included
+in the agenda of Board meetings,
+and each Director is entitled to
+request other related information.
+finances. The Company has a well-integrated
+independent business and independent
+operational capabilities.
+5 COMPANY'S INDEPENDENCE FROM
+CONTROLLING SHAREHOLDER
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+44
+Corporate Governance
+43
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Pursuant to requirements of securities
+regulatory authority of China, Independent
+Non-executive Directors of Sinopec Corp.
+reviewed the performance of the senior
+management of Sinopec Corp. who held
+concurrent positions as senior management
+in China Petrochemical Corporation
+and published independent opinions as
+follows: "President Mr. Ma Yongsheng,
+Senior Vice President Mr. Yu Baocai, Mr.
+Liu Hongbin and Mr. Ling Yiqun, each of
+whom concurrently held position as senior
+management of China Petrochemical
+Corporation, have obtained the exemptions
+for holding concurrent position from
+CSRC. During the reporting period, Mr. Ma
+Yongsheng, Mr. Yu Baocai, Mr. Liu Hongbin
+and Mr. Ling Yiqun devoted sufficient time
+and energy to fulfilling their duties with
+diligence and due care. They protected
+the interests of the Company and minority
+shareholders effectively and didn't harm
+the legitimate interests of Sinopec Corp.
+and minority shareholders due to holding
+concurrent positions in China Petrochemical
+Corporation."
+During the reporting period, the Independent
+Non-executive Directors of Sinopec Corp.
+fulfilled their duties diligently as required
+by Terms of Reference of the Independent
+Non-executive Directors of the Company,
+and actively contributed to the reform and
+development of the Company. They actively
+attended Board meetings and meetings
+of the Board Committees (please refer
+to the section "Report of the Board of
+Directors" in this annual report for details
+of their attendance), reviewed the relevant
+documents with due care. They exercised
+their profession advantages to promote
+scientific decision-making by offering advice
+and suggestions to company's "14th Five-
+Year" development plan and decision-making
+on significant events, investigating on-site
+the business operations of the Company
+and its subsidiaries, and providing advice
+for the Company's development strategy,
+operations and reform. The Independent
+Non-executive Directors maintained
+timely and effective communication with
+the management, external auditors and
+internal audit department, put forward
+detailed requirements on auditing, and
+gave their independent opinions on matters
+such as connected transactions, special
+dividend distribution plan, and protected
+the legitimate interests of the minority
+shareholders' interests.
+4 PERFORMANCE OF THE INDEPENDENT
+DIRECTORS
+Save as disclosed above, during the reporting
+period, none of the Directors, Supervisors
+and senior management of Sinopec Corp.
+and their respective 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 SFO) in the shares, debentures and
+underlying shares of Sinopec Corp. or any
+associated corporations (as defined in Part
+XV of SFO) that 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 should notified
+Sinopec Corp. or the Hong Kong Stock
+Exchange pursuant to the Model Code for
+Securities Transactions by Directors of Listed
+Issuers under the Hong Kong Listing Rules.
+The Company is independent from its
+controlling shareholder in terms of, among
+other matters, business, assets and
+d. The Board has reviewed and
+evaluated its performance in
+2020 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 has
+considered the suggestions from
+the Party organisation, Board of
+Supervisors and management
+during its decision-making
+process; and that the Board
+safeguarded the legitimate rights
+and interests of Sinopec Corp. and
+its shareholders.
+e. The Secretary to the Board assists
+the Directors in handling the
+day-to-day work of the Board,
+continuously informs the Directors
+of the regulations, policies or
+other requirements of domestic or
+overseas regulatory authorities 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 from the
+performance of their duties.
+A.2 Chairman and President
+a. Mr. Zhang Yuzhuo serves as
+Chairman of the Board and Mr.
+Ma Yongsheng serves as President
+of Sinopec Corp. 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Sinopec Group
+d. Sinopec Corp. organised and
+arranged training sessions for
+Directors and paid the relevant
+fees as well as making relevant
+records. During the reporting
+period, the Directors actively
+participated in the trainings
+and attached great importance
+to continuing professional
+development to ensure that their
+contribution to the Board remains
+informed and relevant.
+c. Each of the Directors confirmed
+that he has complied with
+the Model Code for Securities
+Transactions by Directors
+of Listed Issuers 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.
+b. Each of the Directors was able to
+devote sufficient time and efforts
+to handling the matters of Sinopec
+Corp.
+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 of Board Meetings clearly
+prescribe the duties and powers of
+Directors, Non-executive Directors
+including Independent Non-executive
+Directors, which are published
+on the Sinopec Corp.'s website at
+http://www.sinopec.com.
+A.6 Responsibility of Directors
+d. During the reporting period, the
+Nomination Committee held
+five meetings (please refer to
+"Meetings Held by the Board
+Committees" under the section of
+"Report of the Board of Directors"
+in this annual report).
+require such member to provide
+advice. The working expenses of
+the Remuneration Committee are
+included in the budget of Sinopec
+Corp.
+c. The members of the Nomination
+Committee can engage
+professionals when performing
+their duties. Reasonable costs
+arising from such consultations
+are borne by Sinopec Corp. In
+the meantime, the Nomination
+Committee has also appointed
+consultant members and can
+b. The Board establishes the
+Board Diversity Policy which
+stipulates that the members of
+the Board shall be nominated
+and appointed based on the skills
+and experience for the overall
+optimum operation of the Board,
+while taking into account the
+targets and requirements of the
+board diversity. 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 professional experience, skills,
+knowledge, length of service,
+regions, cultural and educational
+backgrounds, gender and age.
+The provisions of the Articles of
+Association concerning the term
+of office of directors help to
+ensure that the Board of Directors
+has a proper balance between
+continuous experience and new
+thinking, and enhance the level of
+diversity. Sinopec Corp. focuses on
+the implementation of the Board
+Diversity Policy. The Directors
+come from different industries
+at home and abroad with rich
+work experience. Professional
+backgrounds of Directors include
+petroleum and petrochemical
+corporate management, as well
+as economics, accounting and
+finance, which are conductive to
+scientific decision-making.
+Zhang Yuzhuo, who serves as the
+Chairman, and Independent Non-
+executive Directors Mr. Tang Min
+and Mr. Ng, Kar Ling Johnny, who
+serve as members. The major
+responsibilities of Nomination
+Committee are to provide
+suggestions to the Board on Board's
+size and composition, as well as
+the selecting standards, procedures
+and candidates for Directors and
+senior management. Procedures
+to Propose a Person for Election
+as a Director of Sinopec Corp.
+are published on Sinopec Corp.'s
+website at http://www.sinopec.com.
+a. The Board of Directors established
+Nomination Committee, consisting
+of the Chairman of the Board, Mr.
+A.5 Nomination Committee
+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.
+b. All Directors of Sinopec Corp.
+have been elected at the general
+meeting of shareholders. The
+Board has no power to appoint
+temporary Directors.
+as Directors of the Company. For
+details about the tenure of each
+Director, please refer to the section
+"Directors, Supervisors, Senior
+Management and Employees".
+a. The Directors serve three-year
+terms, and the consecutive term
+of office of an Independent Non-
+executive Director cannot exceed six
+years. During the reporting period,
+Mr. Zhang Yuzhuo and Mr. Liu
+Hongbin, nominated by the Board of
+Directors, and Mr. Zhang Shaofeng,
+nominated by China Petrochemical
+Corporation, were elected by the
+general meeting of shareholders
+b. Sinopec Corp. has received from
+each of the Independent Non-
+executive Directors a letter of
+confirmation for 2020 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. The Board of Directors currently
+consists of nine members, four
+Executive Directors and five Non-
+executive Directors. Among the
+Non-executive Directors, there are
+three Independent Non-executive
+Directors, accounting for one third
+of the total number of Directors.
+For details, please refer to the
+section "Directors, Supervisors,
+Senior Management and
+Employees" of this annual report.
+A.3 Board composition
+Corporate Governance
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+c. The Chairman encourages open
+and active discussions. Directors
+fully and deeply participated in the
+discussions of significant decisions
+in the Board meetings.
+b. The Chairman of the Board places
+great emphasis on communication
+with the Independent Non-
+executive Directors. The Chairman
+independently held three meetings
+with the Independent Non-
+executive Directors in respect of
+development strategy, corporate
+governance and operational
+management, etc.
+As of December 31, 2020, Mr. Ling Yiqun,
+Director, Senior Vice President, held 13,000
+A shares of Sinopec Corp., and Mr. Li
+Defang, Supervisor, held 40,000 A shares of
+Sinopec Corp. (the actual holder of the said
+shares is the spouse of Mr. Li Defang).
+3 EQUITY INTERESTS OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+A.4 Appointment, re-election and
+dismissal
+2 GENERAL MEETINGS
+9,027
+(9,361)
+of the year
+Amount at the end
+incurred
+Balance
+at the
+beginning
+of the year
+18,388
+Funds from related parties
+Balance
+Unit: RMB million
+21,851
+9,295
+12,556
+11,328
+9,590
+1,738
+Amount
+incurred
+(295)
+10,818
+of the year
+Balance
+at the
+beginning
+Funds to related parties
+Associates and joint ventures
+affiliated companies*
+Parent company and
+During the reporting period, Sinopec Corp.
+convened the First Extraordinary General
+Meeting for the year 2020 on 25 March 2020
+in Beijing, China, Annual General Meeting for
+the year 2019 on 19 May 2020 in Beijing,
+China, and the Second Extraordinary General
+Meeting for the year 2020 on 28 September
+2020 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 on China Securities Journal,
+Shanghai Securities News, Securities Times
+and the website of Shanghai Stock Exchange
+dated 26 March 2020, 20 May 2020 and 29
+September 2020 respectively, as well as on
+the website of Hong Kong Stock Exchange
+dated 25 March 2020, 19 May 2020 and 28
+September 2020 respectively.
+Total
+Relations
+392
+18,780
+5,695
+Balance
+at the end
+of the year
+10,523
+(3,666)
+During the reporting period, there is no
+material inconsistency between Sinopec
+Corp.'s corporate governance and the
+requirements of the PRC Company Law and
+relevant regulations of the 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 investigation by the CSRC or received
+any regulatory sanction or criticised publicly
+During the reporting period, Sinopec Corp.
+complied with the Articles of Association
+as well as domestic and overseas laws
+and regulations, adhered to the standard
+operation, and further improved corporate
+governance structure through completion of
+the election of the Chairman of the Board
+of Directors, Directors and Employee's
+Representative Supervisors, the adjustment
+of special committees of the Board of
+Directors and the appointment of the
+senior management. Independent Non-
+executive Directors actively offered advice
+and suggestions to the "14th Five-Year"
+development plan and decision-making
+regarding major issues, examined the
+subsidiary's operating conditions, and
+contributed to the Company's reform and
+development. The Company continuously
+implemented the campaign of promoting the
+execution effectiveness of internal control and
+achieved positive results. The Company also
+improved its transparency by improving the
+information disclosure and investor relations
+and strengthening communications with the
+market, which were recognized by regulatory
+authorities and capital market. The Company
+actively fulfilled social responsibilities by
+promoting targeted poverty alleviation,
+implementing public welfare projects. Facing
+the COVID-19 pandemic, the Company
+dedicated to the prevention and control
+of the pandemic by ensuring the stable
+supply of oil and gas, increasing production
+and supply of medical and health raw
+materials, as well as driving the recovery
+and development of the industrial chain. The
+Company further enhanced the Party building
+to stimulate the enthusiasm of the staff to
+generate the strength for the Company to
+overcome difficulties and create efficiency,
+and promoted the high-quality development
+of the Company through facilitating the
+management to effectively implement the
+deployments of the Board of Directors.
+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.
+6,087
+1 IMPROVEMENTS IN CORPORATE
+GOVERNANCE DURING THE REPORTING
+PERIOD
+CORPORATE GOVERNANCE
+E
+CAR
+易捷
+H₂
+便利店
+中国石化 SMOPEC
+7500
+3
+MODEC
+Loans and other accounts receivable and payable
+No material negative impact
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+*. Affiliated companies include subsidiaries, associates and joint ventures.
+Reason for provision of funds between related parties
+Impacts of the provision of funds on the Company
+41
+加氢Hz
+(5m
+15,114
+Connected Transactions
+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.
+25 RISK FACTORS
+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. Impacted by COVID-19,
+with counter-globalisation emerging, aging
+population accelerating, climate change
+and environmental problem restriction etc.,
+world economy recovery remains difficult
+and tortuous. 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 geopolitics,
+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
+can only counteract the adverse influences of
+industry cycle to a certain extent.
+Risks from the macroeconomic policies
+and government regulation: Although the
+Chinese government is gradually liberalizing
+the market entry regulations on petroleum
+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
+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.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+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 imposition
+of the special oil income levy; the formulation
+of refined oil import and export quotas and
+procedures; the formulation of safety, quality
+and environmental protection standards
+and the 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 the right of
+tenure; reforming and improvement in pricing
+mechanism of natural gas, cost supervision
+of gas pipeline and access to third party;
+cancellation of qualification approval of the
+wholesale and storage of refined oil business,
+decentralisation of retail business authorisation
+of refined oil products to regional and city
+level government, further improvement in
+pricing mechanism of refined oil products,
+gas stations investment being fully opened to
+foreign investment; and reforming in resource
+tax and environmental tax, etc. Such changes
+might further intensify market competition
+and have certain effects 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 over time which may adversely
+affect the Company's financial situation and
+operation performance.
+Investment risks: Petroleum and chemical
+sector is a capital intensive industry.
+Although the Company has adopted a
+prudent investment strategy, as stipulated
+and enforced by the new investment
+decision-making procedures and rules in
+2020, 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.
+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 strength.
+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 fluctuate 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 countermeasures, 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
+high risks of inflammation, explosion and
+environmental pollution and is vulnerable
+to extreme 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 laying great
+emphasis on the safety production, and has
+implemented a strict HSSE 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.
+56
+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
+As of 31 December 2020, the Company has
+not entered into any equity-linked agreement.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+55
+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.
+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 in 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.
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+20 MANAGEMENT CONTRACTS
+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
+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 including organisation, coordination,
+monitoring and major decision-making,
+and reviews the reserves estimation of
+our Company. Each of our branches has
+a reserves management committee that
+manages and coordinates the reserves
+estimation, organises the estimation process
+and reviews the reserve estimation report at
+the branch level, being responsible to the
+RMC of the Company.
+Our RMC consists of the senior management
+of the Company, related departments of
+headquarters, Petroleum Exploration and
+Production Research Institute of Sinopec
+(PEPRIS) and senior managers of oilfield
+branches. Mr. Liu Hongbin, the Chairman
+of RMC is Senior Vice President of Sinopec
+Corp., with over 30 years of experience
+in oil and gas industry. A majority of our
+RMC members hold master's or Ph.D.
+degrees, and have an average of more
+than 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
+and financial divisions, are responsible
+for initial collection and compilation of
+information about reserves. Experts from
+exploration, development and economic
+divisions prepare the initial report on the
+reserves estimate which is then reviewed by
+the RMC at the subsidiary level to ensure the
+qualitative and quantitative compliance with
+technical guidance as well as its accuracy
+and reasonableness. We also engage external
+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 ranks first 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.
+The Company owns a team of professionals
+with expertise 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.
+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, the realized price of
+crude oil is based on international crude
+oil price. Despite the fact that, the price
+of the domestic refined oil products will
+change as the exchange rate of the Renminbi
+changes according to the pricing mechanism
+for the domestic refined oil products, and
+the price of other domestic petrochemical
+products will also be influenced by the price
+of the imported products, which to a large
+extent, smooths the impact of the Renminbi
+exchange rate on the processing and sales
+of the Company's crude oil refined products.
+However, the fluctuation of the Renminbi
+exchange rate will still have an effect on the
+income of the upstream sector.
+The Board is pleased to present the Directors'
+report for the year ended 31 December 2020 for
+shareholders' review.
+By Order of the Board
+REPORT OF THE BOARD OF DIRECTORS
+1 MEETINGS OF THE BOARD
+During this reporting period, Sinopec Corp.
+held eleven Board meetings. The details are
+as follows:
+(1) The 9th meeting of the seventh
+session of the Board was held by
+written resolution on 13 January 2020,
+whereby the proposals in relation to the
+following matters were approved: (i) the
+appointment of Chief Financial Officer, (ii)
+the representative on securities matters.
+(2) The 10th meeting of the seventh session
+of the Board was held by written
+resolution on 7 February 2020, whereby
+the proposals in relation to the following
+matters were approved: (i) nomination
+of candidates for Directors; (ii) Notice of
+2020 First Extraordinary General Meeting.
+(3) The 11th meeting of the seventh session
+of the Board was held by written
+resolution on 25 March 2020, whereby
+the proposals in relation to the following
+matters were approved: (i) the election of
+the Chairman of the Board, the member
+adjustment of Board committees; (ii) the
+appointment of Senior Vice President.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+(4) The 12th meeting of the seventh session
+of the Board was held by on-site meeting
+and via video conference on 27 March
+2020, whereby the proposals in relation
+to the following matters were approved: (i)
+the Work Report of the Board for the year
+2019; (ii) the completion of key targets
+of 2019 and work arrangements of
+2020; (iii) financial results and business
+performance of the Company for the
+year 2019; (iv) provision for impairment
+for the year 2019; (v) the connected
+transactions for the year 2019; (vi) profit
+distribution plan for the year 2019; (vii)
+audit costs for the year 2019; (viii) re-
+appointment of external auditors of
+Sinopec Corp. for the year of 2020 and
+to authorise the Board to determine
+their remunerations; (ix) to authorize the
+Board to determine the interim profit
+distribution plan of Sinopec Corp. for the
+year 2020; (x) to authorize the Board
+(5) The 13th meeting of the seventh session
+of the Board was held by written
+resolution on 14 April 2020, whereby
+the proposal on external guarantees in
+Project AMUR was approved.
+(6) The 14th meeting of the seventh session
+of the Board was held by written resolution
+on 29 April 2020, whereby the proposals
+in relation to the following matters were
+approved: (i) the first quarterly results of
+the Company for the three months ended
+31 March 2020; (ii) Reorganisation and
+integration of assets of ZhongKe Refining
+and Zhanjiang Dongxing.
+(7) The 15th meeting of the seventh session
+of the Board was held by written
+resolution on 23 July 2020, whereby the
+proposals in relation to the following
+matters were approved: (i) Disposal of Oil
+and Gas Pipelines and Related Assets;
+(ii) the appointment of Vice President of
+Sinopec Corp.
+(8) The 16th meeting of the seventh session
+of the Board was held by on-site meeting
+and via video conference on 28 August
+2020, whereby the proposals in relation
+to the following matters were approved:
+(i) the report on the fulfillment of the
+key targets for the first half of the year
+2020 and the work arrangements for
+the second half of the year 2020; (ii) the
+2020 interim special dividend distribution
+plan; (iii) the report of Risk Assessment
+for Capital Deposits at Finance Company
+As at the end of the reporting period, the
+Company has resolved its competition with
+Sinopec Group in the chemical business. For
+details for the positions held by the Directors
+(excluding Independent Non-executive
+Directors) of Sinopec Corp. in the Sinopec
+Group during the reporting period, please
+refer to the section "Directors, Supervisors,
+Senior Management and Employees" of this
+annual report.
+2
+and Century Bright Company; (iv) the
+adjustment of the 2020 investment
+plan; (v) the financial statements for the
+first half of the year 2020 reviewed by
+PricewaterhouseCoopers Zhong Tian LLP
+and PricewaterhouseCoopers; (vi) interim
+report for the six months ended 30 June
+2020; (vii) the member adjustment of
+Board committees.
+to determine the proposed plan for
+issuance of debt financing instrument(s);
+(xi) the report of Risk Assessment for
+Capital Deposits at Finance Company and
+Century Bright Company; (xii) Internal
+control assessment report of Sinopec
+Corp. for the year 2019; (xiii) Financial
+Statements of Sinopec Corp. for the
+year 2019; (xiv) Annual Report of the
+Company for the year 2019; (xv) Form
+20F of the Company for the year 2019;
+(xvi) 2019 Communication on Progress
+on Sustainable Development Report of
+Sinopec Corp.; (xvii) the proposal to the
+annual general meeting to grant to the
+Board a general mandate to issue new
+domestic shares and/or overseas-listed
+foreign shares of Sinopec Corp.
+Firstly, the Board and the senior 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. The senior
+management diligently executed the resolutions
+approved by the Board, made all-out efforts to
+tap potentials and enhance efficiency, optimise
+business structures, committed to achieving
+the target of business operations set by the
+Board. During the reporting period, the Board of
+Supervisors did not discover any behavior 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.
+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 in 2020, facing the unfavourable
+conditions such as the outbreak of COVID-19
+and a significant decline in crude oil price,
+the Company conscientiously implemented
+the decision-making and deployment of the
+Board of Directors, focused on prevention of
+COVID-19 and business operation targets,
+consecutively implemented “100-day overcoming
+difficulties and creating efficiency" campaign
+and subsequent campaigns to improve
+performance, maintaining the steadiness of
+business operations, and achieving better than
+expectation business performance. The Board of
+Supervisors had no objection to the supervised
+issues during this reporting period.
+In addition, the Supervisors attended the general
+meetings of shareholders and attended meetings
+of the Board. The Board of Supervisors also
+organised some of the Supervisors to attend
+the trainings for directors and supervisors of
+listed companies organised by Beijing Securities
+Supervisory Bureau under CSRC, which have
+further improved the Supervisors' capabilities in
+performing supervisory duties.
+Zhang Yuzhuo
+Chairman
+Beijing, China, 26 March 2021
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+57
+Report of the Board of Directors
+58
+58
+Report of the Board of Supervisors
+REPORT OF THE BOARD OF SUPERVISORS
+Dear Shareholders:
+In 2020, 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 four meetings in total, and
+mainly reviewed and approved the proposals
+in relation to the Company's periodic report,
+financial statements, Communication on
+Progress for Sustainable Development, internal
+control assessment report and working report of
+the Board of Supervisors, etc.
+On 27 March 2020, the 8th meeting of the
+seventh session of the Board of Supervisors was
+held, and the proposals in relation to Annual
+Report of Sinopec Corp. for 2019, the Financial
+Statements of Sinopec Corp. for 2019, 2019
+Communication on Progress for Sustainable
+Development of Sinopec Corp., Internal Control
+Assessment Report of Sinopec Corp. for 2019,
+Work Report of the Board of Supervisors of
+Sinopec Corp. for 2019 and Work Plan of the
+Board of Supervisors of Sinopec Corp. for 2020,
+were reviewed and approved at the meeting.
+On 29 April 2020, the 9th meeting of the
+seventh session of the Board of Supervisors was
+held, and the proposal in relation to the First
+Quarterly Report of Sinopec Corp. for 2020 and
+Proposal on Integration and Reorganisation of
+Zhongke Refining and Zhanjiang Dongxing were
+reviewed and approved at the meeting.
+On 28 August 2020, the 10th meeting of the
+seventh session of the Board of Supervisors was
+held, and the Interim Report of Sinopec Corp.
+for 2020 and the Interim Financial Statements
+of Sinopec Corp. for 2020 were reviewed and
+approved at the meeting.
+On 28 October 2020, the 11th meeting of the
+seventh session of the Board of Supervisors was
+held, and the Third Quarterly Report of Sinopec
+Corp. for 2020 and Baling Petrochemical
+Reorganization Proposal were reviewed and
+approved at the meeting.
+Cyber-security risks: the Company has
+a well-established network safety system,
+information infrastructure and operation
+system, and network safety information
+platform, devotes significant resources to
+protecting our digital infrastructure and
+data against cyber-attacks. However, if
+our systems against cyber-security risk
+are proved 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, thus
+causing harm to our personnel, 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.
+18 DIRECTORS' INTERESTS IN COMPETING
+BUSINESS
+The final cash dividend will be distributed
+on or before 28 June 2021 (Monday) to all
+shareholders whose names appear on the
+register of members of Sinopec Corp. on the
+record date of 16 June 2021 (Wednesday).
+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 9 June 2021 (Wednesday)
+for registration. The H shares register and
+transfer of members of Sinopec Corp. will
+be closed from 10 June 2021 to 16 June
+2021 (both dates inclusive). The dividend
+will be denominated and declared in RMB,
+and distributed to the domestic shareholders
+and investors participating in the Shanghai-
+Hong Kong and Shenzhen-Hong Kong
+Stock Connect Program in RMB and to
+the overseas shareholders in Hong Kong
+Dollar. The exchange rate for the dividend
+17 REPURCHASE, SALES AND REDEMPTION
+OF SHARES
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+7 DIVIDEND
+The profit distribution policy of Sinopec
+Corp. maintains consistency and steadiness,
+and considers 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 realised
+during the corresponding year.
+The profit distribution plan of Sinopec Corp.
+for the corresponding 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 21st meeting of the seventh session of
+the Board, the Board approved the proposal
+to distribute a final cash dividend of RMB
+0.13 (tax inclusive) per share for 2020.
+Taking into account the distributed special
+interim dividend of RMB 0.07 (tax inclusive)
+per share for the first half of 2020, the total
+dividend for the whole year is RMB 0.20 (tax
+included) per share.
+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. Arrangements for the distribution
+of the final dividend of A shares will be
+announced separately.
+Report of the Board of Directors
+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 are not registered
+under the name of an individual shareholder,
+including those registered under HKSCC
+Nominees Limited, other nominees, agents
+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. will
+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 《關於滬港股票市
+場交易互聯互通機制試點有關税收政策的通知》
+(Caishui [2014] No. 81) and the Notice on
+the Tax Policies Related to the Pilot Program
+of the Shenzhen-Hong Kong Stock Connect
+《關於深港股票市場交易互聯互通機制試點有關稅
+(Caishui [2016] No.127):
+For domestic investors investing in the H
+Shares of Sinopec Corp. through Shanghai-
+Hong Kong and Shenzhen-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.
+For dividends of 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 competent tax authorities
+for the withholding. For investors who are
+tax residents of other countries which have
+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.
+54
+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 their 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 the registration of
+members for H shares of Sinopec Corp. as
+at the record date.
+53
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+The financial results of the Company for
+the year ended 31 December 2020, which
+is prepared in accordance with IFRS and
+the financial position as at that date and
+the accompanying analysis are set out from
+page 145 to page 203 in this annual report.
+A fair review of the Company's business,
+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 discussed throughout this annual report
+and included in the chapters of Chairman's
+Address, Business Review and Prospects,
+Management's Discussion and Analysis and
+Significant Events. All above discussions
+constitute parts of the report of the Board of
+Directors.
+Report of the Board of Supervisors
+(9) The 17th meeting of the seventh session
+of the Board was held by written
+resolution on 11 September 2020,
+whereby the proposals in relation to the
+following matters were approved: (i) the
+appointment of Senior Vice President
+of Sinopec Corp.; (ii) the nomination of
+candidate for Director.
+59
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+26 March 2021
+Chairman of the Board of Supervisors
+Zhao Dong
+In 2021, 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.
+Fifthly, all connected transactions between the
+Company and Sinopec Group were in compliance
+with the relevant rules and regulations of
+domestic and overseas listing exchanges. The
+pricing of all the connected transaction was
+fair and reasonable. No behaviors which is
+detrimental to the interests of Sinopec Corp. or
+its shareholders was discovered.
+Fourthly, the consideration for selling assets
+made by Sinopec Corp. was fair and reasonable,
+neither insider trading, damage to shareholders'
+interest nor losses of corporate assets was
+discovered.
+(14) The fifth meeting of the seventh session
+of the Nomination Committee was held
+by written resolution on 25 March 2020,
+whereby the proposals in relation to the
+nomination of candidates for Director and
+the appointment of Senior Vice President
+were approved.
+(15) The sixth meeting of the seventh session
+of the Nomination Committee was held by
+written resolution on 22 July 2020, whereby
+the proposal in relation to the appointment
+of Vice President of Sinopec Corp. was
+approved.
+(16) The seventh meeting of the seventh session
+of the Nomination Committee was held by
+written resolution on 10 September 2020,
+whereby the proposal in relation to the
+appointment of Senior Vice President was
+approved.
+5 BOARD COMMITTEES ISSUED REVIEW
+OPINIONS TO THE BOARD WHEN
+PERFORMING THEIR DUTIES DURING
+THE REPORTING PERIOD, WITHOUT
+6
+OBJECTION.
+BUSINESS PERFORMANCE
+54
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+According to the PRC Accounting Standards, the dividend distribution and bonus shares declared by Sinopec Corp. in the past three years are as
+follows:
+Report of the Board of Directors
+2019
+2018
+0.20
+24.214
+0.31
+37.533
+0.42
+50.850
+32.924
+57.619
+63.179
+73.5
+65.1
+80.5
+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 301 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.
+to issue shares to them on a preferential
+basis in proportion to their shareholdings.
+Thirdly, Sinopec Corp.'s internal control system
+is effective. No material defects of internal
+control were found.
+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.
+2020
+13 FIXED ASSETS
+Cash dividends (RMB/Share, tax inclusive)
+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 of the dividends to the net profit attributed to the shareholders of
+the listed company in the consolidated statement (%)
+Note: The final cash dividend for 2020 is subject to the approval at the 2020 annual general meeting.
+The aggregate cash dividend declared by
+Sinopec Corp. during three years from 2018
+to 2020 is RMB 0.93 per share, and the total
+dividend payment from 2018 to 2020 as a
+percentage of average net profit attributed
+to the shareholders of the listed company in
+the three years is 220%.
+8 RESPONSIBILITIES FOR THE COMPANY'S
+INTERNAL CONTROL
+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
+2020, 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 2020.
+The internal control system of Sinopec Corp.
+related to the financial statements is sound
+and effective.
+2020 Internal Control Assessment Report of
+Sinopec Corp. was reviewed and approved
+at the 21st meeting of the seventh Session
+of the Board on 26 March 2021, 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.
+9 DURING THIS REPORTING PERIOD, THE
+IMPLEMENTATION OF ENVIRONMENTAL
+POLICIES BY THE COMPANY
+During the reporting period, the Company
+complied with the environmental policy in
+all material aspects. Details with regard to
+the Company's performance in relation to
+environmental and social-related policies
+and performances are provided in the
+Chairman's Address and Business Review
+and Prospects in this annual report as well
+as the 2020 Communication on Progress
+for the Sustainable Development of Sinopec
+Corp. Those disclosures in relation 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 45.2% 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 17.2% of the
+total value of the crude oil purchasing by the
+Company.
+The total revenue from the five largest
+customers of the Company in 2020 was RMB
+212,976 million, accounting for 10.1% of
+the total revenue of the Company, of which
+the sales value to the connected party and
+the largest customer (Sinopec Group) among
+the five largest customers was RMB 105,183
+million, accounting for 5.0% of the total
+revenue for the year.
+During the reporting period, other than
+disclosed above, to the best knowledge of the
+Board of the Directors of the Company, none
+of the Directors of the Company, their close
+associates, and shareholders holding more
+than 5% of the shares of the Company had
+any interest in the top five suppliers or the
+top five customers of the Company. There
+were no suppliers, customers, employees
+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 2020
+are set out in Note 30 to the financial
+statements prepared in accordance with
+IFRS in this annual report.
+During this reporting period, changes to the
+fixed assets of the Company are set out in
+Note 17 to the financial statements prepared
+in accordance with IFRS in this annual
+report.
+(10) The 18th meeting of the seventh session
+of the Board was held by written
+resolution on 28 October 2020, whereby
+the proposals in relation to the following
+matters were approved: (i) the third
+quarterly report for three months ended
+30 September 2020; (ii) reorganisation of
+assets in respect of Baling Petrochemical.
+(11) The 19th meeting of the seventh session
+of the Board was held by written
+resolution on 4 December 2020, whereby
+the proposal in relation to investment
+and construction of Tianjin Nangang
+1.2 million tonnes/year ethylene and
+downstream high-end new materials
+project was approved.
+The Company always attaches great
+importance to the fulfilment of 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.
+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 had completed all
+the tasks delegated to them at the general
+meetings.
+Dai Houliang
+1
+0
+1
+0
+Absent
+0
+No. of
+meetings held
+0
+Former Director
+Actual
+attendance
+2
+0
+2
+0
+0
+0
+Li Yong
+Li Yunpeng
+Former Chairman
+Former Director
+Attended
+by proxy
+General meeting
+11
+2
+2
+9
+9
+0
+0
+0
+0
+3
+3
+0
+0
+No. of
+meetings held
+Independent Director
+Independent Director
+(2) Former Directors of the seventh Session of Board of Directors' attendance to the board meetings and the general meetings during this
+reporting period
+Director titles
+Name
+Board meetings
+Meetings
+attended by
+attendance communication
+Actual
+9
+Ng, Kar Ling Johnny
+7
+0
+(2) The ninth meeting of the seventh session
+of the Audit Committee was held by written
+resolutions on 28 April 2020, whereby the
+proposals in relation to the following matters
+were approved: (i) the first quarterly report
+of the Company for the three months ended
+31 March 2020; (ii) Reorganisation and
+Integration of assets of ZhongKe Refining
+and Zhanjiang Dongxing.
+(3) The tenth meeting of the seventh session
+of the Audit Committee was held by written
+resolutions on 22 July 2020, whereby the
+Proposal in relation to Sale of Oil and Gas
+Pipelines and Related Assets was approved.
+(4) The eleventh meeting of the seventh session
+of the Audit Committee was held by on.
+site meeting and via video conference on
+26 August 2020, whereby the proposals
+in relation to the following matters were
+approved: (i) the interim financial statements
+for the first half of the year 2020; (ii)
+interim report for the six months ended 30
+June 2020; (iii) the report on the business
+performance, financial statements and
+related matters for the first half of the year
+2020 (including: a. the 2020 interim special
+dividend appropriation plan, b. the report
+of Risk Assessment for Capital Deposits
+at Finance Company and Century Bright
+Company); (iv) Report on the main audit
+work in the first half of 2020 and the overall
+arrangement of audit work in the second half
+of 2020.
+(5) The twelfth meeting of the seventh session
+of the Audit Committee was held by written
+resolutions on 28 October 2020, whereby the
+proposals in relation to the following matters
+were approved: (i) the third quarterly report
+of the Company for the three months ended
+30 September 2020; (ii) reorganisation of
+assets in respect of Baling Petrochemical.
+(6) The thirteenth meeting of the seventh
+session of the Audit Committee was held by
+on-site meeting and via video conference on
+2 November 2020, whereby the proposal in
+relation to recruitment of accounting firms in
+2021 was approved.
+(1) The eighth meeting of the seventh session
+of the Audit Committee was held by on-
+site meeting and via video conference on
+25 March 2020, whereby the proposals
+in relation to the following matters were
+approved: (i) Annual Report of the Company
+for the year 2019 and Form 20F of the
+Company for the year 2019; (ii) Financial
+results and business performance of the
+Company for the year 2019 (including a.
+provision for impairment for the year 2019;
+b. The continuing connected transactions
+for the year 2019; c. Profit appropriation
+plan for the year 2019; d. Audit costs for the
+year 2019; e. the report of Risk Assessment
+for Capital Deposits at Finance Company
+and Century Bright Company); (iii) Internal
+control assessment report of Sinopec Corp.
+for the year 2019; (iv) Report on audit
+work in 2019 and audit work arrangement
+in 2020. Reports on the auditing work of
+the financial statements for the year 2019
+prepared by the domestic and overseas
+auditors were also reviewed at the meeting.
+(7) The fourth meeting of the seventh session of
+the Strategy Committee was held by written
+resolution on 25 March 2020, whereby
+the proposal in relation to the plan of
+investments of 2020 of Sinopec Corp. was
+approved.
+(9) The sixth meeting of the seventh session of
+the Strategy Committee was held by written
+resolution on 26 August 2020, whereby the
+proposal in relation to the adjustment of the
+2020 investment plan was approved.
+(10) The second meeting of the seventh
+session of the Remuneration and Appraisal
+Committee was held by written resolution
+on 25 March 2020 whereby the proposal in
+relation to the implementation of the rules of
+the remuneration of Directors, Supervisors
+and other senior management for 2019 was
+approved.
+(11) The second meeting of the seventh session
+of the Social Responsibility Management
+Committee was held by written resolution
+on 25 March 2020, whereby the proposal in
+relation to 2019 Communication on Progress
+on Sustainable Development Report of
+Sinopec Corp. was approved.
+(12) The third meeting of the seventh session
+of the Nomination Committee was held
+by written resolution on 10 January 2020,
+whereby the proposal in relation to the
+appointment of Chief Financial Officer was
+approved.
+(13) The fourth meeting of the seventh session
+of the Nomination Committee was held
+by written resolution on 6 February 2020,
+whereby the proposal in relation to the
+nomination of candidates for Director was
+approved.
+Secondly, the reports and financial statements
+prepared by Sinopec Corp. in 2020 complied
+with the relevant regulation of domestic and
+overseas securities regulators, the disclosed
+information truly, accurately, completely
+and fairly reflected Sinopec Corp.'s financial
+results and operation performance. The
+dividend distribution plan was made after
+comprehensive consideration of the long-term
+interests of Sinopec Corp. and the interests of
+the shareholders. No violation of confidential
+provisions of persons who prepared and
+reviewed the report was found.
+For details of each meeting, please refer
+to the announcements published on China
+Securities Journal, Shanghai Securities News
+and Securities Times after each meeting and
+on the websites of Shanghai Stock Exchange,
+Hong Kong Stock Exchange and Sinopec
+Corp.
+(8) The fifth meeting of the seventh session of
+the Strategy Committee was held by written
+resolution on 14 April 2020, whereby the
+proposal in relation to Project AMUR was
+approved.
+During the reporting period, the board
+committees held sixteen meetings, Audit
+Committee held six meetings, the Strategy
+Committee held three meetings, the
+Remuneration and Appraisal Committee
+held one meeting, the Social Responsibility
+Management Committee held one meeting,
+and the Nomination Committee held five
+meetings. All members of each committee
+had attended the relevant meetings. Details
+of those meetings are as follows:
+COMMITTEES
+4 MEETINGS HELD BY THE BOARD
+Former Independent Director
+Fan Gang
+7
+1
+6
+0
+0
+22
+10000
+Note 1: No Directors were absent from two consecutive meetings of the Board.
+Note 2: Mr. Dai Houliang resigned as the Chairman, Director of the Board on 19 January 2020.
+Note 3: Mr. Li Yunpeng resigned as a Director of the Board on 24 March 2020.
+Note 4: Mr. Fan Gang resigned as an Independent Non-executive Director of the Board on 28 August 2020.
+Note 5: Mr. Li Yong resigned as a Director of the Board on 22 September 2020.
+(3) The Independent Director's attendance to the General Meetings.
+During the reporting period, none of the Independent Non-executive Directors had attended the general meetings of shareholders in person due
+to pandemic or official duties.
+52
+42
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Report of the Board of Directors
+0
+11
+2
+0
+9
+7
+0
+Absent
+0
+No.of
+meetings held
+Actual
+attendance
+2
+2
+Ma Yongsheng
+11
+2
+9
+0
+0
+3
+3
+11
+Zhang Yuzhuo
+1
+Yu Baocai
+Chairman
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Cai Hongbin
+51
+Report of the Board of Directors
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+3 DIRECTORS' ATTENDANCE TO THE BOARD MEETINGS AND INDEPENDENT DIRECTORS' ATTENDANCE TO THE GENERAL MEETINGS.
+(1) Directors of the seventh session of Board of Directors attendance to the board meetings and general meetings during this reporting period
+Director titles
+Name
+Board meeting
+General meeting
+No. of
+meetings held
+Meetings
+Actual attended by
+attendance communication
+Attended
+by proxy
+Director
+Director
+9
+2
+1
+1
+Director
+Zhang Shaofeng
+2
+0
+2
+0
+0
+0
+0
+Independent Director
+Tang Min
+11
+2
+9
+0
+3
+3
+0
+0
+9
+1
+0
+3
+2
+Director
+Liu Hongbin
+5
+4
+1
+0
+1
+1
+Director
+Ling Yiqun
+11
+1
+0
+Senior Management and Employees
+Representative Supervisor of
+Sinopec Corp.
+Directors, Supervisors,
+67
+Annual Report 2020
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Supervisors,
+under China Petrochemical
+Corporation; in June
+2012, he was appointed
+concurrently as Deputy
+Director General of Working
+Committee of Trade Union
+and Deputy Director of the
+Youth Working Committee
+of China Petrochemical
+Corporation; in March 2015,
+he was appointed as Director
+General of Corporate
+Culture Department of
+Sinopec Corp. and Director
+General of Communications
+Department (Press Office)
+of China Petrochemical
+Corporation; in December
+2019, he was appointed
+as Director General
+of Corporate Culture
+Department of Sinopec
+Corp., Director General of
+Communication Department
+and Director General of
+Press Office of China
+Petrochemical Corporation.
+In January 2021, he was
+elected as Employee's
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Lv Dapeng, aged 59,
+Employee's Representative
+Supervisor of Sinopec
+Corp. Mr. Lv is a professor
+level senior administration
+engineer with a Master's
+degree of business
+administration. In December
+2001, he was appointed as
+Deputy Director General of
+China Petrochemical News;
+in March 2003, he was
+appointed as Deputy Director
+General and Chief Editor
+of China Petrochemical
+News; in June 2004, he
+was appointed as Director
+General and Chief Editor of
+China Petrochemical News;
+in December 2004, he
+was appointed as Director
+General, Secretary of CPC
+Committee and Chief Editor
+of China Petrochemical
+News; in March 2011, he
+was appointed as Director
+General of Corporate
+Culture Department of
+Sinopec Corp., and Director
+General of the Political
+Work Department of and
+Deputy Secretary of the
+of Petro-CyberWorks
+Information Technology Co.,
+Ltd.; in January 2018, he
+was elected as Employee
+Supervisor of China
+Petrochemical Corporation;
+in March 2019, he was
+appointed as Secretary of
+CPC Committee of Sinopec
+Management Institute
+(Sinopec Communist Party
+School); in November 2020,
+he was appointed as the
+Secretary of CPC Committee
+of Sinopec Management
+Institute and Executive
+Vice Principal of Sinopec
+Communist Party School. In
+May 2020, he was elected as
+Employee's Representative
+Supervisor of Sinopec Corp.
+Li Defang, aged 59,
+Employee's Representative
+Supervisor of Sinopec Corp.
+Mr. Li is a professor level
+senior engineer with a Ph.D.
+degree. In May 2001, he
+was appointed as Deputy
+Secretary of CPC Committee
+and Trade Union Chairman
+of Sinopec Engineering
+Incorporation; in December
+2001, he was appointed
+as Director General of
+Information System
+Management Department of
+Sinopec Corp.; in September
+2013, he was appointed
+as Director General of
+Informatization Management
+Department of Sinopec
+Corp.; in October 2014, he
+was appointed as Chairman
+Lv Dapeng
+Li Defang
+Management and Employees
+66
+CPC Committee of Sinopec
+Procurement Management
+Department (Sinopec
+International Co. Ltd); in
+November 2014, he was
+appointed as Director of
+Safety Supervisory Bureau
+of China Petrochemical
+Corporation and Director
+General of Safety
+Supervisory Department of
+Sinopec Corp.; in May 2017,
+he was appointed as Deputy
+Director General (Director
+General level) of the Office
+of Leading Party Member
+Group Inspection Work
+of China Petrochemical
+Corporation; in December
+2018, he was appointed as
+Director of Audit Bureau
+of China Petrochemical
+Corporation, and Director
+of Audit Department of
+Sinopec Corp.; in December
+2019, he was appointed as
+President of Audit Bureau of
+Sinopec Corp. and Director
+of the Office of Audit
+Committee of Leading Party
+Member Group of China
+Petrochemical Corporation.
+In December 2010, he
+was elected as Employee's
+Representative Supervisor of
+Sinopec Corp.; in May 2018,
+he was elected as Supervisor
+of Sinopec Corp.
+CPC Committee directly
+Senior
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+& Equipment Co., Ltd.;
+in February 2000, he
+was appointed as Deputy
+Director General of Sinopec
+Procurement Management
+Department; in December
+2001, he was appointed as
+Director General of Sinopec
+Procurement Management
+Department; 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
+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 Director
+General (General Manager),
+Executive Director and
+Deputy Secretary of the
+Gender Age
+Sinopec Corp.
+Name
+Zhao Dong
+Position in
+Whether
+paid by the
+shareholders
+in 2020
+Sinopec Corp.
+paid by
+Remuneration
+LIST OF MEMBERS OF THE BOARD OF SUPERVISORS
+68
+Petroleum Storage and
+Reserve Limited. In January
+2021, he was elected as
+Employee's Representative
+Supervisor of Sinopec Corp.
+was appointed as General
+Manager and Chief Engineer
+of Refining Department of
+Sinopec Corp.; in December
+2019, he was appointed
+concurrently as Vice
+Chairman and Chairman of
+Audit Committee of Yanbu
+Aramco Sinopec Refining
+Company Ltd.; in August
+2020, he was appointed
+concurrently as Executive
+Director and Secretary of
+CPC Committee of Sinopec
+Petroleum Marketing
+Company Limited and
+Chairman of Sinopec
+2018, he was appointed
+as General Manager and
+Deputy Secretary of the CPC
+Committee of Guanzhou
+Branch of Sinopec Corp.
+and General Manager of
+Guangzhou Branch of
+Sinopec Assets Management
+Corporation; in July 2019,
+he was appointed as
+Deputy Director General
+(Director General Level) and
+Chief Engineer of Refining
+Department of Sinopec
+Corp.; in October 2019, he
+was appointed concurrently
+as Chairman of Sinopec
+Kantons International
+Limited and Sinopec
+Kantons Holdings Limited;
+in December 2019, he
+Committee; in June
+Chen Yaohuan, aged 57,
+Employee's Representative
+Supervisor of Sinopec Corp.
+Mr. Chen is a professor
+level senior engineer with
+a Master's degree awarded
+by Central Party School of
+the CPC. In October 2008,
+he was appointed as Deputy
+Director General of Refining
+Department of Sinopec
+Corp.; in March 2015, he
+was appointed as Executive
+Director, General Manager
+and Deputy Secretary of
+the CPC Committee of
+Sinopec Beihai Refining and
+Chemical Limited Liability
+Company; in May 2015, he
+was appointed as a member
+of the Standing Committee.
+of the CPC Beihai Municipal
+Chen Yaohuan
+Jiang Zhenying, aged 56,
+Supervisor of Sinopec Corp.
+Mr. Jiang is a professor
+level senior economist
+with a Ph.D. degree in
+management. In December
+1998, he was appointed
+as Vice President of China
+Petrochemical Supplies
+Former Director 2017.06-2020.03
+Accountant of China National
+Oil and Gas Exploration and
+Development Corporation;
+in October 2009, he
+Yes
+2019
+2020
+Company
+(as at 31 December)
+Equity interests in Sinopec Corp.
+Whether
+paid by
+the holding
+in 2020
+(RMB 1,000,
+before tax)
+paid by
+Remuneration
+Former Independent Director 2015.05-2020.08
+67
+Male
+Fan Gang
+Former Director 2018.05-2020.09
+57
+Tenure
+0
+Yes
+0
+Yes
+Zhao Dong, aged 50,
+Chairman of Board of
+Supervisors of Sinopec Corp.
+Mr. Zhao is a professor level
+senior accountant with a
+Ph.D. degree. In July 2002,
+he was appointed as Chief
+Accountant and General
+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
+General 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
+(2) Supervisors
+Jiang Zhenying
+Zhao Dong
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Senior
+Danagement and Employees
+Supervisors,
+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 Deputy
+General Manager of CNPC
+Nile Company; 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. In November
+2016, he was appointed as
+a Member of the Leading
+Party Member Group and
+Chief Accountant of China
+Petrochemical Corporation;
+in May 2020, he was
+appointed as Director
+and Deputy Secretary
+of the Leading Party
+Member Group of China
+Petrochemical Corporation.
+In June 2017, he was
+elected as Chairman of
+Board of Supervisors of
+Sinopec Corp.
+Senior Management and Employees
+65
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Note: According to regulation of the authority, Mr. Fan Gang did not get remuneration from the Company.
+0
+oooo
+0
+ΝΟ
+0
+Directors, Supervisors,
+(RMB 1,000,
+before tax)
+0
+Equity interests
+Senior Management and Employees
+Zou Huiping
+61
+Male
+Zhang Baolong
+0
+0
+Yes
+0
+0
+No
+760.0
+0
+0
+No
+761.9
+58 Employee Representative Supervisor 2017.06-2020.05
+57 Employee Representative Supervisor 2018.05-2020.05
+60
+Supervisor 2018.05-2020.09
+Directors, Supervisors,
+69
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+0
+Supervisor 2018.05-2020.09
+Supervisor 2006.05-2021.01
+Yes
+0
+Male
+885.1
+No
+0
+0
+2019
+Sun Huanquan
+Male
+Male
+56 Employee Representative Supervisor 2020.05-2021.01
+57 Employee Representative Supervisor 2010.12-2021.01
+466.3
+No
+0
+0
+Yes
+0
+Yu Renming
+of the
+Company or
+their related
+entities
+2020
+Tenure
+0
+No
+1,159.4
+Supervisor 2018.05-2021.05
+59 Employee Representative Supervisor 2020.05-2021.05
+59 Employee representative Supervisor 2021.01-2021.05
+57 Employee Representative Supervisor 2021.01-2021.05
+Male 56
+Male
+Male
+Male
+Chen Yaohuan
+Lv Dapeng
+Li Defang
+Jiang Zhenying
+0
+0
+Yes
+Chairman of the 2017.06-2021.05
+Board of Supervisors
+Male 50
+2019
+2020
+in Sinopec Corp.
+(as of 31 December)
+0
+Yes
+40,000
+40,000
+Position in
+Sinopec Corp.
+Age
+Gender
+Male
+Zhou Hengyou Male
+Yang Changjiang Male
+Yu Xizhi
+Name
+Equity interests
+in Sinopec Corp.
+(as of 31 December)
+of the
+Company or
+their related
+Whether
+paid by the
+shareholders
+entities
+in 2020
+(RMB 1,000,
+before tax)
+LIST OF FORMER MEMBERS OF THE BOARD OF SUPERVISORS
+Note: Mr. Li Defang holds 40,000 A shares of Sinopec Corp. (the actual holder of the said shares is the spouse of Mr. Li Defang).
+0
+0
+Yes
+0
+0
+Yes
+Remuneration
+paid by
+Li Yong
+Ma Yongsheng
+Male
+63
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+of Management at Peking
+University. In June 2017,
+he joined the Faculty of
+Business and Economics
+of the University of Hong
+Kong. Mr. Cai once served
+as a member of the 12th
+National People's Congress,
+a member of Beijing
+Municipal Committee of
+CPPCC, a member of the
+11th Central Committee of
+China Democratic League,
+Deputy Chairman of Beijing
+Municipal Committee of
+China Democratic League
+and a Special Auditor of
+the National Audit Office.
+He currently serves as an
+Independent Director of
+CCB International (Holdings)
+Limited and Ping An Bank
+Co., Ltd. In May 2018, he
+was elected as Independent
+Director of Sinopec Corp.
+Cai Hongbin, aged 53,
+Independent Director of
+Sinopec Corp. Mr. Cai is
+Dean of Faculty of Business
+and Economics and
+Professor of Economics of
+the University of Hong Kong.
+Mr. Cai has a Ph.D. degree
+in Economics. From 1997
+to 2005, Mr. Cai taught at
+the University of California,
+Los Angeles. Since 2005,
+he served as a professor
+and Ph.D. supervisor
+in Applied Economics
+Department at Guanghua
+School of Management at
+Peking University, and he
+once served as Director,
+Assistant to the Dean and
+Vice Dean of the Applied
+Economics Department.
+From December 2010 to
+January 2017, he served as
+Dean of Guanghua School
+of the Asian Development
+Bank in China between
+2004 and 2007 and Deputy
+Secretary-General of the
+China Development Research
+Foundation between 2007
+and 2010. In May 2015,
+he was appointed as
+Independent Director of
+Sinopec Corp.
+Tang Min, aged 67,
+Independent Director of
+Sinopec Corp. Mr. Tang
+has a Ph.D. degree in
+economics. He presently
+acts as Counsellor of the
+State Council of the PRC
+and Executive Vice Chairman
+of YouChange China Social
+Entrepreneur Foundation.
+He was an 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
+Cai Hongbin
+Tang Min
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+62
+In September 2020, he
+was elected as Director of
+Sinopec Corp.
+國石油天然氣集團有限公司)
+and served concurrently as
+General Manager of Finance
+Department of PetroChina
+Company Limited; in July
+2020, he was appointed
+as Member of the Leading
+Party Member Group and
+Chief Accountant of China
+Petrochemical Corporation.
+PetroChina Company
+Limited; in December
+2017, he was appointed as
+General Manager of Finance
+Department of CNPC (+
+Finance Department of
+as General Manager of
+Department of CNPC (+
+國石油天然氣集團公司)
+and served concurrently
+CNPC; in July 2017, he
+was appointed as General
+Manager of Finance
+Directors, Supervisors,
+Senior Management and Employees
+19
+Senior
+Equity interests in Sinopec Corp.
+the holding
+(RMB 1,000,
+Position in
+paid by
+Whether
+in 2020
+paid by
+Zhang Shaofeng, aged 49,
+Director of Sinopec Corp.,
+Mr. Zhang is a professor
+level senior accountant
+with a master's degree in
+business administration.
+In December 2008, he
+was appointed as Chief
+Accountant and Member
+of the CPC Committee of
+Trans-Asia Gas Pipeline
+Company Limited of
+Remuneration
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+64
+administration from the
+Chinese University of Hong
+Kong in 1984 and 1999,
+respectively. Mr. Ng joined
+KPMG (Hong Kong) in 1984
+and became a Partner
+in 1996. He acted as a
+Managing Partner from
+June 2000 to September
+2015 and Vice Chairman of
+KPMG China from October
+2015 to March 2016. Mr.
+Ng currently serves as
+Independent Non-executive
+Director of China Vanke
+Co., Ltd., Fangdd Network
+Group Ltd. and Metallurgical
+Corporation of China Ltd. In
+May 2018, he was elected
+as Independent Director of
+Sinopec Corp.
+Ng, Kar Ling Johnny, aged
+60, Independent Director
+of Sinopec Corp. Mr. Ng
+currently is a practicing
+Certified Public Accountant
+in Hong Kong, a practicing
+auditor and Certified Public
+Accountant in Macau, a
+Fellow of the Hong Kong
+Institute of Certified Public
+Accountants (FCPA), a
+Fellow of the Association
+of Chartered Certified
+Accountant (FCCA), and
+a Fellow of the Institute
+of Chartered Accountants
+in England and Wales
+(FCA). Mr. Ng obtained a
+bachelor's degree and a
+master's degree in business
+Ng, Kar Ling Johnny
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Management and Employees
+Supervisors,
+LIST OF MEMBERS OF THE BOARD
+(as at 31 December)
+member of the Leading Party
+Member Group of China
+Petrochemical Corporation.
+In February 2018, he was
+appointed as Senior Vice
+President of Sinopec Corp.;
+in May 2018, he was elected
+as Director of Sinopec Corp.
+Sinopec Qilu Petrochemical
+Company, and President
+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 Pipeline 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 was 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;
+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 Pipeline Project
+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 General
+Manager and Party
+Secretary of CPC Committee
+of Sinopec Southern
+Exploration and Production
+Company; in March 2007,
+he served as General
+Ma Yongsheng, aged 59,
+Director and 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 a member of the 13th
+National Committee of
+Chinese People's Political
+Consultative Conference
+("CPPCC"). In April 2002,
+he was appointed as
+Chief Geologist of Sinopec
+Southern Exploration and
+Production Company;
+General Manager and
+Member of the Leading Party
+Member Group of Shenhua
+Group Corporation Limited,
+and served concurrently as
+Chairman of China Shenhua
+Coal Liquefaction Company
+Limited; in December
+2008, he was appointed as
+Director, General Manager
+and Member of the Leading
+Party Member Group of
+Shenhua Group Corporation
+Limited; in July 2009, he
+served concurrently as
+Vice Chairman of All-China
+Federation of Returned
+Overseas Chinese; in May
+2014, he was appointed as
+Chairman and Secretary of
+the Leading Party Member
+Group of Shenhua Group
+Corporation Limited,
+and served concurrently
+as Chairman of China.
+Shenhua Energy Company
+Limited; in March 2017,
+he served as a member of
+the Standing Committee of
+the CPC Tianjin Municipal
+Committee and Secretary
+of the CPC Binhai New Area
+Committee; in July 2017,
+he served concurrently as
+Chairman of Sino-Singapore
+Tianjin Eco-City Investment
+& Development Co., Ltd.;
+in May 2018, he served
+concurrently as Director of
+China (Tianjin) Pilot Free
+Trade Zone Administration;
+in January 2020, he was
+appointed as Chairman and
+Secretary of the Leading
+Party Member Group
+of China Petrochemical
+Corporation. In March 2020,
+he was elected as Chairman
+of the Board of Directors of
+Sinopec Corp.
+Zhang Yuzhuo, aged 59,
+Chairman of the Board of
+Directors of Sinopec Corp.
+Mr. Zhang is a Research
+Fellow, Ph.D. in engineering
+and Academician of the
+Chinese Academy of
+Engineering. Mr. Zhang is
+an alternate member of the
+19th Central Committee
+of the Communist Party of
+China ("CPC"). In January
+1997, he was appointed
+as Vice President of China
+Coal Research Institute;
+in February 1998, he
+temporarily served as
+Deputy General Manager
+of Yankuang Group Co.
+Ltd.; in July 1998, he was
+appointed as Vice President
+of China Coal Research
+Institute, Director and
+Deputy General Manager
+of China Coal Technology
+Corporation; in March 1999,
+he served as President
+of China Coal Research
+Institute and Chairman
+of China Coal Technology
+Corporation; in June
+1999, he was appointed
+as President and Deputy
+Secretary of CPC Committee
+of China Coal Research
+Institute, and Chairman and
+Deputy Secretary of CPC
+Committee of China Coal
+Technology Corporation;
+in January 2002, he was
+appointed as Deputy
+General Manager of Shenhua
+Group Corporation Limited,
+and served concurrently
+as Chairman and General
+Manager of China Shenhua
+Coal Liquefaction Company
+Limited; in August 2003, he
+was appointed as Deputy
+(1) Directors
+MANAGEMENT
+AND OTHER SENIOR
+DIRECTORS, SUPERVISORS
+1 INTRODUCTION OF
+Ma Yongsheng
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
+Zhang Yuzhuo
+Supervisors,
+Danagement and Employees
+60
+in April 2019, he was
+appointed as Director,
+President and Vice Secretary
+of the Leading Party
+Member Group of China
+Petrochemical Corporation.
+In February 2016, he was
+elected as Director of
+Sinopec Corp.; in October
+2018, he was appointed as
+President of Sinopec Corp.
+Senior
+60
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+concurrently as Executive
+Director, President and
+Secretary of CPC Committee
+of Sinopec Refinery Product
+Sales Company Limited;
+in August 2013, he was
+appointed concurrently as
+President and Secretary
+of CPC Committee of
+Ling Yiqun, aged 58,
+Director and Senior 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 Deputy Director General
+of Refining Department
+of Sinopec Corp.; in June
+2003, he was appointed as
+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
+Zhang Shaofeng
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Ling Yiqun
+Senior
+Danagement and Employees
+Supervisors,
+of Sinopec Qilu Company;
+in March 2017, he was
+appointed as Vice President
+of China Petrochemical
+Corporation; since April
+2019, he has been a
+Senior Management and Employees
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020 61
+in December 2019, he was
+appointed as Vice President
+of China Petrochemical
+Corporation. In March 2020,
+he was appointed as Senior
+Vice President of Sinopec
+Corp.; in May 2020, he
+I was elected as Director of
+Sinopec Corp.
+General Manager and Deputy
+Secretary of CPC Committee
+of the Marketing Branch
+of PetroChina Company
+Limited; in July 2013, he
+was appointed as Member of
+the Leading Party Member
+Group and Deputy General
+Manager of CNPC and in
+August 2013, he served
+concurrently as an Executive
+Director and General
+Manager of Daqing Oilfield
+Company Limited, Director
+of Daqing Petroleum
+Administration Bureau
+and Deputy Secretary of
+CPC Committee of Daqing
+Oilfield; in May 2014, he
+served concurrently as
+Director of PetroChina
+Company Limited; in
+November 2019, he was
+appointed as a member
+of the Leading Party
+Member Group of China
+Petrochemical Corporation;
+Liu Hongbin, aged 58.
+Director and Senior Vice
+President of Sinopec
+Corp. Mr. Liu is a senior
+engineer with a bachelor's
+degree. In June 1995, he
+was appointed as Chief
+Engineer of Tuha Petroleum
+Exploration & Development
+Headquarters; in July
+1999, he was appointed
+as Deputy General
+Manager of PetroChina
+Tuha Oilfield Company;
+in July 2000, he was
+appointed as Commander
+and Deputy Secretary of
+CPC Committee of Tuha
+Petroleum Exploration &
+Development Headquarters;
+in March 2002, he served
+as General Manager of
+the Planning Department
+of PetroChina Company
+Limited; in September 2005,
+he served as Director of
+the Planning Department of
+CNPC; in June 2007, he was
+appointed as Vice President
+of PetroChina Company
+Limited, and in November
+2007, he served concurrently
+as General Manager and
+Secretary of CPC Committee
+of the Marketing Branch
+of PetroChina Company
+Limited; in June 2009,
+he served concurrently as
+Petrochemical Company and
+General Manager of Lanzhou
+Petroleum & Chemical
+Company; in September
+2008, he was appointed as
+a member of the Leading
+Party Member Group and
+Deputy General Manager of
+China National Petroleum
+Corporation ("CNPC") and
+since May 2011, he acted
+concurrently as Director
+of PetroChina Company
+Limited; in June 2018, he
+was appointed as a Member
+of the Leading Party Member
+Group and Vice President
+of China Petrochemical
+Corporation. In October
+2018, Mr. Yu was elected as
+Director of Sinopec Corp.;
+in September 2020, he was
+appointed as Senior Vice
+President of Sinopec Corp.
+Yu Baocai, aged 56,
+Director and Senior Vice
+President of Sinopec Corp.
+Mr. Yu is a senior engineer
+with a master's degree in
+economics. In September
+1999, Mr. Yu was appointed
+as Deputy General Manager
+of Daqing Petrochemical
+Company; in December
+2001, he was appointed as
+General Manager and Deputy
+Secretary of CPC Committee
+of Daqing Petrochemical
+Company; in September
+2003, he was appointed
+as General Manager and
+Secretary of CPC Committee
+of Lanzhou Petrochemical
+Company; in June 2007,
+he was appointed as
+General Manager and
+Deputy Secretary of CPC
+Committee of Lanzhou
+Liu Hongbin
+Yu Baocai
+Directors, Supervisors,
+62
+Name
+Age
+No
+350.0
+0
+0
+Yes
+Board Director 2020.09-2021.05
+Independent Director 2015.05.2021.05
+Independent Director 2018.05-2021.05
+Independent Director 2018.05-2021.05
+60
+Male
+Ng, Kar Ling Johnny
+53
+Male
+Cai Hongbin
+67
+49
+46
+Male
+Tang Min
+0
+0
+350.0
+No
+Li Yunpeng
+2009.05-2020.01
+Former Chairman
+Tenure
+Position in
+Sinopec Corp.
+57
+Male
+Dai Houliang
+Male
+Age
+Name
+LIST OF FORMER MEMBERS OF THE BOARD
+0
+0
+No
+350.0
+0
+0
+Gender
+Gender
+Zhang Shaofeng
+13,000
+Yes
+2020.03-2021.05
+2019
+2020
+Company
+before tax)
+Tenure
+Chairman
+Sinopec Corp.
+ཚ|8|8
+Male
+Yu Baocai
+59
+Male
+59
+Male
+Zhang Yuzhuo
+0
+56
+Board Director, President 2016.02-2021.05
+Board Director, 2018.10-2021.05
+Senior Vice President
+Yes
+Board Director, 2018.05-2021.05
+Senior Vice President
+58
+Male
+Ling Yiqun
+Senior Vice President
+0
+Yes
+13,000
+Board Director, 2020.05-2021.05
+Male
+Liu Hongbin
+ooo.
+0
+Yes
+0
+No
+1,013.1
+58
+Male
+10,000
+12,385
+2005, he was appointed as
+General Manager of Anqing
+Petrochemical General Plant
+and from May 2009 to
+July 2010, he temporarily
+served as a member of
+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.; in April 2017, Mr.
+Yu was appointed as
+Director General of Human
+Resources Department
+of Sinopec Corp.; in June
+2017, he was elected as
+Employee's Representative
+Supervisor of Sinopec Corp.;
+in December 2019, he was
+appointed as President
+of Human Resource
+Department of Sinopec
+Corp. and the Director
+General of Organization
+Department of China
+Petrochemical Corporation;
+in January 2020, he was
+elected as Director of China
+Petrochemical Corporation.
+In July 2020, he was
+appointed as Vice President
+of Sinopec Corp.
+Shou Donghua, aged 51,
+Chief Financial Officer
+of Sinopec Corp. Ms.
+Shou is a professor level
+senior accountant with a
+Master's degree of business
+administration. In July
+2010, she was appointed as
+the Chief Financial Officer
+of Sinopec Zhenhai Refining
+& Chemical Company;
+in October 2014, she
+was appointed as Deputy
+Director General of Human
+Resource Department of
+Sinopec Corp.; in August
+2017, she was appointed
+as the Secretary of CPC
+Committee of Sinopec
+Zhenhai Refining & Chemical
+Company and Deputy
+General Manager of Sinopec
+Zhenhai Refining & Chemical
+Company; in August 2018,
+she was appointed as the
+Director General of Finance
+Department of China
+Petrochemical Corporation
+and concurrently served as
+the Chairman of Sinopec
+Century Bright Capital
+Investment Limited; in
+December 2019, she was
+appointed as General
+Manager of Finance
+Department of Sinopec
+Corp. and concurrently
+served as the Chairman
+of Sinopec Century Bright
+Capital Investment Limited;
+in January 2020, she was
+appointed as Chief Financial
+Officer of Sinopec Corp.
+Supervisors,
+Danagement and Employees
+Senior
+70
+0
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Zhao Rifeng
+Yu Xizhi, aged 58, Vice
+President of Sinopec Corp.
+Mr Yu is a professor-level
+senior engineer with a Ph.D.
+degree in engineering.
+In August 1997, he was
+appointed as Deputy
+General Manager of Anqing
+Petrochemical General Plant
+and concurrently as General
+Manager of Fertiliser Plant;
+in September 1999, he
+became a member of the
+CPC Standing Committee
+of Anqing Petrochemical
+General Plant; in February
+2000, he was appointed as
+Deputy General Manager of
+Sinopec Anqing Company
+and in September 2000, he
+was appointed as General
+Manager of Sinopec Anqing
+Company; in January
+Huang Wensheng
+Ltd.; in August 2013, he
+was appointed as Director
+General of Refining
+Department of Sinopec
+Corp.; in December 2017,
+he was appointed as the
+Director General of the
+Marketing Department
+of Sinopec Corp. and
+Chairman and Secretary of
+CPC Committee of Sinopec
+Marketing Company Limited;
+in December 2019, he was
+appointed as the President
+of the Marketing Department
+of Sinopec Corp. and
+Chairman and Secretary of
+CPC Committee of Sinopec
+Marketing Company Limited.
+In February 2018, he was
+appointed as Vice President
+of Sinopec Corp.
+Huang Wensheng, aged 54,
+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.; in August
+2009, he was appointed 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.; in June
+2018, he was appointed
+concurrently as Director
+General of Department of
+Capital Management and
+Financial Services of China
+Petrochemical Corporation;
+in July 2018, he was
+appointed concurrently as
+Chairman, and Secretary
+of CPC Committee of
+Sinopec Capital Co.,
+Ltd.; in December 2019,
+he was appointed as
+President of Department of
+Capital Management and
+Financial Services of China
+Petrochemical Corporation.
+In May 2014, he was
+appointed as Vice President
+of Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+71
+Directors, Supervisors,
+Senior Management and Employees
+Directors, Supervisors,
+Senior Management and Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+LIST OF MEMBERS OF THE SENIOR MANAGEMENT
+Position in
+Zhao Rifeng, aged 58, Vice
+President of Sinopec Corp.
+Mr. Zhao is a professor
+level Senior Engineer with
+a Master's degree. In July
+2000, he was appointed
+as Deputy General
+Manager of Sinopec Jinling
+Petrochemical Co., Ltd. and
+Deputy Manager of Sinopec
+Jinling Company; in October
+2004, he was appointed as
+General Manager of Sinopec
+Jinling Company; in October
+2006, he was appointed
+as Vice Chairman and
+General Manager of Sinopec
+Jinling Petrochemical Co.,
+Ltd.; in November 2010,
+he was appointed as
+Chairman, General Manger,
+Deputy Secretary of CPC
+Committee of Sinopec
+Jinling Petrochemical Co.,
+as Senior Vice President of
+Sinopec Corp.
+Chen Ge, aged 58, Senior
+Vice President of Sinopec
+Corp. Mr. Chen is a senior
+economist with a Master's
+degree. In February 2000,
+he was appointed as
+Deputy Director General of
+the Board Secretariat of
+Sinopec Corp.; in December
+2001, he was appointed
+as Director General of
+the Board Secretariat of
+Sinopec Corp.; in April
+2003, he was appointed as
+Secretary to the Board of
+Directors of Sinopec Corp.;
+from April 2005 to August
+2013, he was appointed
+concurrently as Director
+General of Corporate Reform
+& Management Dept. of
+Sinopec Corp.; in July
+2010, he was appointed
+as Assistant to President
+of China Petrochemical
+Corporation; from December
+2013 to December 2015, he
+was appointed temporarily
+as Deputy Secretary-General
+of Guizhou Provincial
+People's Government and a
+member of the Leading Party
+Member Group of Guizhou
+Provincial General Office;
+in November 2015, he was
+appointed as Employee's
+Representative Director
+of China Petrochemical
+Corporation; in December
+2017, he was appointed
+concurrently as Director
+General of Corporate Reform
+& Management Dept. of
+Sinopec Corp.; in October
+2018, he was appointed
+Management
+Those charged with governance are responsible for overseeing Sinopec Corp.'s financial reporting process.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
+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.
+As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
+• 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.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
+management.
+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 overall presentation (including the disclosures), structure and content of the financial statements, and whether the 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 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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+12
+79
+Financial Statements (PRC)
+Sinopec Shanghai Gaoqiao Petroleum
+Chen Ge
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Yu Xizhi
+Shou Donghua
+(3) Other Members of Senior
+Name
+Chen Ge
+Gender
+Age
+Sinopec Corp.
+2019
+No
+0
+2020
+0
+0
+No
+0
+No
+0
+No
+0
+ooooo
+0
+LIST OF FORMER MEMBERS OF THE SENIOR MANAGEMENT
+Name
+Lei Dianwu
+2 INFORMATION ON
+Gender
+Male
+Age
+58
+Position in
+Sinopec Corp.
+Former Senior Vice President
+APPOINTMENT OR
+TERMINATION OF DIRECTORS,
+SUPERVISORS AND SENIOR
+MANAGEMENT
+million HKD
+On 19 January 2020, Mr. Dai
+Houliang resigned as Chairman
+of the Board, Non-executive
+Director and Chairman of each
+of the Strategy Committee,
+Nomination Committee
+and Social Responsibility
+Management Committee of the
+Board of Sinopec Corp. due to
+change of working arrangement.
+entities
+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.
+(as of 31 December)
+of the
+Company or
+their related
+Remuneration
+paid by
+Sinopec Corp.
+in 2020
+(RMB 1,000,
+before tax)
+Whether
+paid by the
+shareholders
+Male
+58
+Senior Vice President
+1,510.6
+Yu Xizhi
+Male
+58
+Vice President
+317.3
+Shou Donghua
+Female
+51
+Zhao Rifeng
+Huang Wensheng
+Male
+Male
+58
+Chief Financial Officer
+Vice President
+805.4
+1,622.1
+54 Vice President, Board Secretary
+1,252.4
+22222
+Equity interests in Sinopec Corp.
+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.
+RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
+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.
+26 Manufacturing of intermediate petrochemical
+products and petroleum products
+5 Production and sale of polyester chips and
+polyester fibres
+617 Production and sale of refined petroleum
+products, lubricant base oil, and
+petrochemical materials
+(120) Manufacturing of intermediate petrochemical
+products and petroleum products
+1,084 Marketing and distribution of
+petrochemical products
+6,671 Trading of crude oil and
+petrochemical products
+(4,338) Overseas investment holding
+664 Production and sale of catalyst products
+(617) Trading of petrochemical products
+637 Import and processing of crude oil, production,
+storage and sale of petroleum products and
+petrochemical products
+(221) Manufacturing of intermediate petrochemical
+products and petroleum products
+1,183 Manufacturing of intermediate petrochemical
+products and petroleum products
+22,415 Marketing and distribution of refined
+petroleum products
+2,132 Production and sale of petrochemical products
+(920) Production, sale, research and development of
+petroleum, petrochemical, ethylene and
+downstream by-products
+2,047 Oil jetty and nature gas pipeline
+902 Manufacturing of intermediate petrochemical
+products and petroleum products
+639 Manufacturing of synthetic fibres, resin
+and plastics, intermediate petrochemical
+products and petroleum products
+243 Manufacturing of plastics, intermediate
+petrochemical products and
+petroleum products
+423 Crude oil processing and petroleum products
+manufacturing
+257 Crude oil processing and petroleum products
+manufacturing
+Note 1: All above subsidiaries except Fujian Petrochemical Company Limited are audited by PricewaterhouseCoopers Zhong Tian LLP or PricewaterhouseCoopers in 2020.
+KPMG Huazhen LLP served the exception.
+2: The above indicated total assets and net profit has been prepared in accordance with CASS. 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, Sinopec Marketing Co., Limited and Sinopec Kantons Holdings Limited. The Board of Directors considered that it would be redundant to disclose
+the particulars of all subsidiaries of Sinopec Corp. and, therefore, only those which have material impact on the results or assets of Sinopec Corp. are set out above.
+76
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE PRC AUDITOR
+pwc
+普华永道
+PwC ZT Shen Zi (2021) No. 10001
+To the Shareholders of China Petroleum & Chemical Corporation,
+OPINION
+management, production and sale of coal
+chemical products
+What we have audited
+Principal Activities
+1,160 Investment in exploration, production and
+sale of petroleum and natural gas
+(3,777) Coal chemical industry investment
+Net Profit/
+(Net Loss)
+55
+34,277
+15,176
+and Chemical Limited
+Sinopec Shanghai Petrochemical
+10,824
+50.44
+44,749
+29,355
+Company Limited
+Fujian Petrochemical Company Limited
+10,492
+50
+14,150
+12,999
+Zhongke (Guangdong) Refining and
+6,397
+90.3
+45,315
+19,682
+Chemical Company Limited
+Sinopec Baling Petrochemical Co. Ltd.
+3,000
+55
+11,368
+4,740
+RMB million
+On 24 March 2020, Mr.
+Li Yunpeng resigned as
+Non-executive Director and
+member of Remuneration and
+Appraisal Committee of Sinopec
+Corp. due to his age.
+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 2020;
+Discount rates.
+Because of the significance of the carrying amount of fixed assets relating
+to oil and gas producing activities as at 31 December 2020, together with
+the use of significant estimations or assumptions in determining their
+respective value in use, we had placed our audit emphasis on this matter.
+How our audit addressed the Key Audit Matter
+In auditing the respective value in use calculations of fixed assets relating
+to oil and gas producing activities, we performed the following key
+procedures on the relevant discounted cash flow projections prepared by
+management:
+•
+•
+•
+Obtained an understanding of the management's internal control and
+assessment process of impairment of fixed assets relating to oil and
+gas producing activities and assessed the inherent risk of material
+misstatement by considering the degree of estimation uncertainty and
+level of other inherent risk factors such as complexity, subjectivity,
+changes and susceptibility to management bias or fraud.
+Evaluated and tested the key controls in respect of the preparation of
+the discounted cash flow projections of fixed assets relating to oil and
+gas producing activities.
+Assessed the methodology adopted in the discounted cash flow.
+projections, tested mathematical accuracy of the projections, and the
+completeness, accuracy, and relevance of underlying data used in the
+projections.
+Compared estimates of future crude oil prices adopted by the Group
+against a range of 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 relevant
+external data.
+• Compared the future cost profiles against historical costs and relevant
+budgets of the Group.
+•
+•
+•
+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.
+Used professionals with specialized skill and knowledge to assist in
+the evaluation of the appropriateness of discount rates adopted by the
+management.
+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 obtained.
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE PRC AUDITOR (CONTINUED)
+OTHER INFORMATION
+Management of Sinopec Corp. is responsible for the other information. The other information comprises all of the information included in 2020 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.
+Future cost profiles; and
+•
+Future production profiles;
+Low crude oil prices gave rise to possible indication that the carrying
+amount of fixed assets relating to oil and gas producing activities as at 31
+December 2020 might be impaired. The Group has adopted value in use
+as the respective recoverable amounts of fixed assets relating to oil and
+gas producing activities, which involved key estimations or assumptions
+including:
+•
+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
+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 2020, and their financial performance and cash flows for the year then ended in accordance with the requirements of
+Accounting Standards for Business Enterprises ("CASS").
+BASIS FOR OPINION
+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.
+PricewaterhouseCoopers Zhongtian LLP
+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
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+77
+Financial Statements (PRC)
+78
+Financial Statements (PRC)
+REPORT OF THE PRC AUDITOR (CONTINUED)
+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.
+The key audit matter identified in our audit is "Recoverability of the carrying amount of fixed assets relating to oil and gas producing activities".
+Key Audit Matter
+Recoverability of the carrying amount of fixed assets relating to oil and
+gas producing activities
+Refer to Note 13 “Fixed assets" and Note 56 "Principal accounting
+estimates and judgements" to the financial statements.
+Future crude oil prices;
+On 25 March 2020, Mr.
+Zhang Yuzhuo was appointed
+as Chairman of the Board,
+Non-executive Director and
+Chairman of each of the
+Strategy Committee, Nomination
+Committee and Social
+Responsibility Management
+Committee of the Board of
+Sinopec Corp.
+On 13 January 2020, Ms.
+Shou Donghua was appointed
+as Chief Financial Officer of
+Sinopec Corp.
+in 2020
+(RMB 1,000,
+before tax)
+1,173.3
+100
+8,483
+5,742
+Limited Liability Company
+Sinopec Lubricant Company Limited
+3,374
+100
+9,011
+4,450
+Sinopec Qingdao Petrochemical
+1,595
+100
+3,138
+567
+Company Limited
+Sinopec Chemical Sales Company
+1,000
+100
+19,065
+3,947
+Limited
+China International United Petroleum
+5,000
+100
+147,791
+4,000
+37,346
+Sinopec Yizheng Chemical Fibre
+20,843
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+Remuneration
+paid by
+Sinopec Corp.
+Percentage
+of
+shares held
+Registered
+Capital
+by Sinopec
+Corp.
+Name of Company
+Sinopec International Petroleum
+RMB million
+(%)
+Total Assets Net Assets
+RMB million RMB million
+8,250
+100
+31,571
+12,826
+Exploration and Production Limited
+Sinopec Great Wall Energy & Chemical
+Company Limited
+22,761
+100
+30,490
+10,453
+Sinopec Yangzi Petrochemical
+15,651
+100
+32,966
+Company Limited
+Principal Wholly-Owned
+and Controlled Subsidiaries
+and Chemical Company Limited
+1,662
+Sinopec Hainan Refining and
+9,606
+75
+30,651
+19,540
+Chemical Company Limited
+Sinopec Marketing Co., Limited
+28,403
+70.42
+495,923
+234,691
+Sinopec Shanghai SECCO
+7,801
+67.60
+22,608
+18,272
+Petrochemical Company Limited
+Sinopec SK (Wuhan) Petrochemical
+7,193
+59
+25,826
+10,940
+Company Limited
+Sinopec Kantons Holdings Limited
+248
+60.33
+13,479
+Chemical Company Limited
+Sinopec Overseas Investment
+10,122
+85
+100
+17,462
+8,234
+Holding Limited
+million USD
+Sinopec Catalyst Company Limited
+1,500
+100
+10,921
+5,665
+China Petrochemical International
+1,400
+100
+19,803
+3,618
+Company Limited
+Sinopec Beihai Refining and Chemical
+5,294
+98.98
+15,335
+11,474
+Limited Liability Company
+petrochemical products
+Sinopec Qingdao Refining and
+5,000
+17,565
+Senior Management and Employees
+On 31 December, 2020, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+75
+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.
+4 CONTRACTUAL INTERESTS
+OF DIRECTORS AND
+SUPERVISORS
+As of 31 December 2020
+or any time during the
+reporting period, 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+73
+Directors, Supervisors,
+Senior Management and Employees
+Directors, Supervisors,
+Senior Management and Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+5 CONTRACTS WITH DIRECTORS
+AND SUPERVISORS
+The Company has entered into
+service contracts with all the
+Directors and Supervisors.
+None of the Directors and
+Supervisors has entered into or
+will enter into service contracts
+that are not determinable
+by the Company within one
+year without payment of
+compensation (other than
+statutory compensation).
+6 REMUNERATION OF
+DIRECTORS, SUPERVISORS,
+AND THE SENIOR
+MANAGEMENT
+During this reporting period,
+there is a total of 14 Directors,
+Supervisors and other senior
+management that received
+remuneration from Sinopec
+Corp. with a total amount of
+RMB 12.7769 million.
+7 THE COMPANY'S EMPLOYEES
+As at 31 December 2020, the
+Company has a total of 384,065
+employees. There are a total
+of 259,639 retired employees
+to be reimbursed by Sinopec
+Corp. Sinopec Marketing Co.
+Limited and China International
+United Petroleum and Chemical
+Company Limited, the principal
+subsidiaries of Sinopec Corp.,
+have 1,251 and 438 employees
+respectively.
+THE BREAKDOWN ACCORDING TO THE MEMBERS OF EACH OPERATION SEGMENT AS FOLLOWS: (INCLUDING EXPLORATION AND
+PRODUCTION, REFINING, MARKETING AND DISTRIBUTION, CHEMICALS, R&D AND OTHERS)
+OTHERS)
+Marketing and Distribution
+122,490
+32%
+R&D
+6,035
+Directors, Supervisors,
+Other Segments
+3 CHANGE OF SHAREHOLDING
+5,076
+On 28 January 2021, Mr. Zou
+Huiping resigned as Supervisor
+of Sinopec Corp. due to age.
+On 11 January 2021, Mr.
+Lv Dapeng was elected as
+Employee's Representative
+Supervisor of the seventh
+session of the Board of
+Supervisors of Sinopec Corp.
+Whether
+paid by the
+shareholders
+of the
+Company or
+their related
+entities
+No
+On 25 March 2020, Mr. Liu
+Hongbin was appointed as
+Senior Vice President of Sinopec
+Corp.
+On 18 May 2020, Mr. Zhou
+Hengyou resigned as Employee's
+Representative Supervisor of
+Sinopec Corp. due to change of
+working arrangement.
+On 18 May 2020, Mr. Yu
+Xizhi resigned as Employee's
+Representative Supervisor of
+Sinopec Corp. due to change of
+working arrangement.
+Equity interests in Sinopec Corp.
+(as of 31 December)
+2020
+0
+2019
+0
+On 18 May 2020, Mr. Sun
+Huanquan was elected as
+Employee's Representative
+Supervisor of the seventh
+session of of the Board of
+Supervisors of Sinopec Corp.
+On 18 May 2020, Mr. Li Defang
+was elected as Employee's
+Representative Supervisor of the
+seventh session of of the Board
+of Supervisors of Sinopec Corp.
+On 19 May 2020, Mr. Liu
+Hongbin was elected as
+Executive Director of the
+seventh session of Board of
+Directors of Sinopec Corp.
+72
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+On 23 July 2020, Mr. Yu Xizhi
+was appointed as Vice President
+of Sinopec Corp.
+On 12 August 2020, Mr. Lei
+Dianwu resigned as Senior
+Vice President of Sinopec
+Corp. due to change of working
+arrangement.
+On 28 August 2020, Mr. Fan
+Gang resigned as Independent
+Non-Executive Director, member
+of the Strategy Committee,
+Chairman of the Remuneration
+and Review Committee
+and member of the Social
+Responsibility Management
+Committee of Sinopec Corp.
+due to need of work.
+On 9 September 2020, Mr.
+Yang Changjiang resigned as
+Supervisor of Sinopec Corp. due
+to age.
+On 9 September 2020, Mr.
+Zhang Baolong resigned as
+Supervisor of Sinopec Corp. due
+to age.
+On 11 September 2020, Mr. Yu
+Baocai was appointed as Senior
+Vice President of Sinopec Corp.
+On 22 September 2020, Mr. Li
+Yong resigned as Non-Executive
+Director of Sinopec Corp. due to
+change of working arrangement.
+On 28 September 2020, Mr.
+Zhang Shaofeng was elected
+as Non-Executive Director of
+the seventh session of Board of
+Directors of Sinopec Corp.
+On 11 January 2021, Mr.
+Yu Renming resigned as
+Employee's Representative
+Supervisor of Sinopec Corp.
+due to change of working
+arrangement.
+On 11 January 2021, Mr.
+Sun Huanquan resigned as
+Employee's Representative
+Supervisor of Sinopec Corp.
+due to change of working
+arrangement.
+On 11 January 2021, Mr.
+Chen Yaohuan was elected
+as Employee's Representative
+Supervisor of the seventh
+session of the Board of
+Supervisors of Sinopec Corp.
+1%
+2%
+130,920
+Senior high school and
+technical school degrees or below
+141,668
+Exploration and Production
+Master's degree or above
+19,606
+5%
+Undergraduate
+105,705
+28%
+Junior college
+86,083
+22%
+8 CHANGES OF CORE
+TECHNICAL TEAM OR KEY
+TECHNICIANS
+During the reporting period,
+there are no significant changes
+of core technical team or key
+technicians.
+9 EMPLOYEE BENEFITS SCHEME
+Details of the Company's
+employee benefits scheme
+are set out in Note 40 of the
+financial statements prepared
+under IFRS of this annual
+report. As at 31 December
+2020, the Company has a total
+of 259,639 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.
+10 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.
+Technical secondary school
+11 TRAINING PROGRAMS
+In 2020, the Company made
+great efforts to conduct
+training programs, continuously
+improved the training system
+for all types of employees
+and continuously improved
+the level of intelligence and
+precision of the training
+programs. To speed up training
+for strategic, industry-leading
+and innovative professional
+talents, the Company launched
+training courses such as
+advanced seminar on innovative
+development for refining
+and chemical specialists,
+training projects for experts
+on the whole-process of
+refining, training courses on
+the integration of research
+and application of high-end
+materials and training project
+on upgrading innovation.
+31,003
+8%
+competitiveness. With a focus
+on forging a team of talents
+with knowledge, skill and
+innovation, the Company lays
+emphasis on craftsman spirit
+education and launched training
+projects such as the Sinopec
+Craftsman Forging project. The
+Company made explorations
+in establishing a matrix-type
+international talent training
+system, and launched training
+projects for overseas project
+managers and international
+business talents. In 2020, the
+training has covered 3,084
+multiple types of talents.
+In addition, the Company
+strengthened online training
+which was attended by 680,000
+times and participants have
+spent 13.86 million hours on
+the online training program.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+EDUCATIONAL BACKGROUND STRUCTURE FOR EMPLOYEES AS FOLLOWS: (INCLUDING MASTER'S DEGREE OR ABOVE, UNDERGRADUATE,
+JUNIOR COLLEGE, SENIOR HIGH SCHOOL AND TECHNICAL SCHOOL DEGREES OR BELOW)
+29%
+37%
+Sales
+34%
+Refining
+56,876
+15%
+Chemicals
+62,668
+16%
+EMPLOYEES' PROFESSIONAL STRUCTURE AS FOLLOWS: (INCLUDING PRODUCTION, SALES, TECHNOLOGY, FINANCE, ADMINISTRATION AND
+74
+110,631
+Technology
+81,563
+21%
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+8,607
+37%
+Finance
+Production
+3%
+12,535
+140,004
+Others
+8%
+30,725
+Administration
+2%
+Financial Statements (PRC)
+REPORT OF THE PRC AUDITOR (CONTINUED)
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS (Cont'd)
+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.
+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.
+PricewaterhouseCoopers Zhong Tian LLP
+Shanghai, the People's Republic of China
+26 March 2021
+80
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+5,580
+(Engagement Partner)
+(60,486)
+22,512
+(261,930)
+(243,774)
+(104,780)
+(7,074)
+Effects of changes in foreign exchange rate
+(50,230)
+(106,920)
+(199,727)
+201,444
+266,286
+91,865
+70,516
+(36,973)
+(5)
+Net increase/(decrease) in cash and cash equivalents
+12,097
+common control (Note 58)
+Adjustment for business combination of entities under
+Balance at 31 December 2018
+For the year ended 31 December 2020
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Chief Financial Officer
+Shou Donghua
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+The accompanying notes form part of these financial statements.
+Ma Yongsheng
+President
+(Legal representative)
+Chairman
+Zhang Yuzhuo
+These financial statements have been approved for issue by the board of directors on 26 March 2021.
+(43,136)
+109,579
+195,770
+(36,426)
+(50,398)
+(64,100)
+(59,216)
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+97,696
+116,292
+Sub-total of cash inflows
+42,037
+78,751
+690
+6,579
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+31,385
+18,805
+Cash received from returns on investments
+23,584
+Cash paid for acquisition of investments
+Balance at 1 January 2019
+(41,066)
+Other cash paid relating to investing activities
+(134,122)
+(166,690)
+(53,138)
+(66,408)
+Net cash flow from financing activities
+Sub-total of cash outflows
+Other cash paid relating to financing activities
+Cash paid for dividends or interest
+Cash repayments of borrowings
+Other cash received relating to financing activities
+Sub-total of cash inflows
+Cash received from borrowings
+Cash flows from financing activities:
+-----------
+Net cash flow from investing activities
+Sub-total of cash outflows
+(16,884)
+Change for the year
+1.
+Net profit
+reserve
+capital
+Total
+shareholders'
+Minority
+to equity
+shareholders of
+Retained
+Surplus
+Specific
+Capital comprehensive
+Share
+Other
+equity
+attributable
+Total
+shareholders'
+Balance at 31 December 2020
+9. Others
+RMB million
+8. Net increase in specific reserve for the year
+RMB million
+reserve
+279,482
+203,678
+1,706
+(6,774)
+119,192
+121,071
+RMB million
+equity
+interests
+RMB million
+RMB million
+RMB million
+RMB million
+the Company
+earnings
+reserves
+income
+RMB million
+12,157
+Total transactions with owners, recorded directly in shareholders' equity
+Adjustment for business combination of entities under common
+8. Others
+7. Net increase in specific reserve for the year
+Total transactions with owners, recorded directly in shareholders' equity
+6. Distributions to minority interests
+5. Transaction with minority interests
+Contributions to subsidiaries from minority interests
+4.
+- Distributions to shareholders (Note 53)
+- Appropriations for surplus reserves
+3. Appropriations of profits:
+Transactions with owners, recorded directly in shareholders' equity:
+Amounts transferred to initial carrying amount of hedged items
+Total comprehensive income
+Other comprehensive income (Note 38)
+2.
+Balance at 31 December 2019
+control
+Balance at 1 January 2020
+1.
+7.
+Distributions to minority interests
+6.
+5. Transaction with minority interests
+Contributions to subsidiaries from minority interests
+4.
+- Distributions to shareholders (Note 53)
+- Appropriations for surplus reserves
+3. Appropriations of profits:
+Transactions with owners, recorded directly in shareholders' equity:
+Amounts transferred to initial carrying amount of hedged items
+Total comprehensive income
+Other comprehensive income (Note 38)
+2.
+Net profit
+Change for the year
+718,355
+53,776
+(1,117,102)
+Net cash paid for the acquisition of subsidiaries and other business entities
+(16,334)
+(12,740)
+(141,554)
+(131,189)
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+(340)
+144,781
+Sub-total of cash inflows
+97,804
+58,669
+Other cash received relating to investing activities
+49,869
+54(d)
+134,355
+(1,031)
+Other cash paid relating to investing activities
+(92,289)
+558,680
+3,919
+4,219
+Including: Cash received from minority shareholders' capital contributions to subsidiaries
+Cash received from borrowings
+3,919
+4,219
+Cash received from capital contributions
+Cash flows from financing activities:
+(121,051)
+(102,203)
+Net cash flow from investing activities
+(265,832)
+(236,558)
+Sub-total of cash outflows
+(106,913)
+709
+2,656
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Net cash received from disposal of subsidiaries and other business entities
+10,272
+Other cash paid relating to operating activities
+Payments of taxes and levies
+Cash paid to and for employees
+(2,591,739)
+--------------
+98,464
+3,272,485
+2,053
+3,171,968
+RMB million
+2019
+(1,754,016)
+--------------
+2,512,972
+212,828
+2,297,159
+2,985
+Sub-total of cash outflows
+602,467
+Net cash flow from operating activities
+(83,772)
+11,510
+Cash received from returns on investments
+35,996
+11,651
+Cash received from disposal of investments
+153,619
+167,518
+54(a)
+(3,118,866)
+(2,345,454)
+(124,753)
+(225,504)
+(318,091)
+(282,162)
+(84,283)
+Cash flows from investing activities:
+Other cash received relating to financing activities
+514
+Sub-total of cash inflows
+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 sale of goods and rendering of services
+Cash flows from operating activities:
+For the year ended 31 December 2020
+CASH FLOW STATEMENT
+Financial Statements (PRC)
+86
+Financial Statements (PRC)
+Net cash flow from operating activities
+85
+Cash flows from investing activities:
+Notes
+(834,308)
+(45,524)
+(209,863)
+(18,719)
+(842,996)
+---------
+6,239
+1,170,878
+1,162,870
+1,769
+RMB million
+(44,139)
+(164,635)
+(19,239)
+(606,295)
+874,296
+9,407
+2019
+862,093
+2,796
+RMB million
+2020
+Cash received from disposal of investments
+39,988
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Shou Donghua
+(17,209)
+54(e)
+Other cash paid relating to financing activities
+(7,357)
+(4,157)
+minority shareholders
+Including: Subsidiaries' cash payments for distribution of dividends or profits to
+(59,615)
+(43,144)
+Cash paid for dividends, profits distribution or interest
+(614,108)
+(540,015)
+Cash repayments of borrowings
+320
+606.706
+563,413
+(17,187)
+Chief Financial Officer
+Sub-total of cash outflows
+(690,910)
+The accompanying notes form part of these financial statements.
+Ma Yongsheng
+President
+(Legal representative)
+Chairman
+Zhang Yuzhuo
+These financial statements have been approved for issue by the board of directors on 26 March 2021.
+(51,489)
+27,121
+54(b)
+Net increase/(decrease) in cash and cash equivalents
+147
+(84,204)
+(36,955)
+(1,239)
+Effects of changes in foreign exchange rate
+Net cash flow from financing activities
+(600,368)
+139,304
+857,659
+735
+(46,008)
+(3,745)
+3,745
+81
+39,037
+37,452
+(46,008)
+1,585
+1,585
+1,585
+37,452
+37,452
+537,196
+143,148
+81
+3.745
+(49,753)
+(46,008)
+1.181
+68,841
+121,071
+530,110
+130,645
+207,423
+949
+1.181
+68,841
+121,071
+(156)
+(202).
+46
+(40)
+(40)
+203.678
+equity
+RMB million
+earnings
+RMB million
+reserves
+RMB million
+-Distributions to shareholders (Note 53)
+-Appropriations for surplus reserves
+Transactions with owners, recorded directly in shareholders' equity:
+3. Appropriations of profits:
+Amounts transferred to initial carrying amount of hedged items
+Total comprehensive income
+2. Other comprehensive income
+1. Net profit
+Change for the year
+Balance at 1 January 2020
+Balance at 31 December 2019
+5. Others
+4. Net increase in specific reserve for the year
+Total transactions with owners, recorded directly in shareholders' equity
+-Distributions to shareholders (Note 53)
+-Appropriations for surplus reserves
+Total transactions with owners, recorded directly in shareholders' equity
+949
+Other
+Share
+RMB million
+989
+(485)
+68,795
+121,071
+RMB million
+reserve
+income
+reserve
+RMB million
+RMB million
+capital
+shareholders'
+Retained
+Surplus
+Specific
+Capital comprehensive
+Total
+207,423
+130,645
+530,110
+(3)
+the refining, transportation, storage and marketing of crude oil and petroleum product; and
+(2)
+the exploration, development and production of crude oil and natural gas;
+(1)
+The Company and its subsidiaries (the "Group") engage in the oil and gas and chemical operations and businesses, including:
+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.
+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.
+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, 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").
+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 26 March 2021.
+1 STATUS OF THE COMPANY
+For the year ended 31 December 2020
+NOTES TO THE FINANCIAL STATEMENTS
+Chief Financial Officer
+the production and sale of chemical.
+Shou Donghua
+Details of the Company's principal subsidiaries are set out in Note 57.
+(1) Statement of compliance of China Accounting Standards for Business Enterprises ("CASS")
+Signing CPA Zhao Jianrong
+Financial Statements (PRC)
+89
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+The functional currency of the Company's and most of its subsidiaries are Renminbi. The Company and its subsidiaries determine their functional
+currency according to the main economic environment in where they operate. The Group's consolidated financial statements are presented in
+Renminbi. 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.
+(4) Functional currency and presentation currency
+Receivables financing (see Note 3(11))
+Derivative financial instruments (see Note 3(11))
+Other equity instrument investments (see Note 3(11))
+The financial statements of the Group have been prepared under the historical cost convention, except for the assets and liabilities set out below:
+Financial assets held for trading (see Note 3(11))
+(3) Measurement basis
+The accounting year of the Group is from 1 January to 31 December.
+(2) Accounting period
+These financial statements are prepared on a basis of going concern.
+The financial statements have been prepared in accordance with the requirements of Accounting Standards for Business Enterprises - Basic
+Standards, specific standards and relevant regulations (hereafter referred as CASS 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 2020,
+and the consolidated and company financial performance and the consolidated and company cash flows for the year ended 31 December 2020.
+2 BASIS OF PREPARATION
+3. Appropriations of profits:
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+Ma Yongsheng
+President
+(33,336)
+1,857
+(31,479)
+(31,479)
+(1,857)
+1,857
+(37)
+23,338
+18,572
+4,766
+(37)
+4,766
+4,766
+18,572
+18,572
+(31,479)
+The accompanying notes form part of these financial statements.
+4. Net increase in specific reserve for the year
+5. Others
+240
+(Legal representative)
+Chairman
+Zhang Yuzhuo
+These financial statements have been approved for issue by the board of directors on 26 March 2021.
+522,275
+115,849
+209,280
+1,189
+5,910
+68,976
+121,071
+Balance at 31 December 2020
+103
+(32)
+135
+240
+Transactions with owners, recorded directly in shareholders' equity:
+Amounts transferred to initial carrying amount of hedged items
+Total comprehensive income
+(219)
+69
+34
+35
+35
+(59,502)
+(16,427)
+(43,075)
+(49,753)
+3,745
+(18,989)
+(18,989)
+(2,933)
+2,933
+2,933
+(215)
+2,933
+55
+121,071
+739,965
+287,187
+207,423
+1,741
+(321)
+122,864
+121,071
+878,374
+138,409
+739,965
+287,187
+207,423
+1,741
+(321)
+122,864
+(160)
+138,409
+5,495
+(46,008)
+57,619
+57,619
+859,122
+139,974
+719,148
+279,540
+203,678
+1,706
+(6,774)
+119,927
+121,071
+1,463
+670
+793
+58
+14,553
+5,495
+72,172
+5,415
+(46,008)
+(46,008)
+(3,745)
+3,745
+1,093
+55
+1,038
+77,752
+14,718
+63,034
+57,619
+5,580
+165
+5,415
+1,038
+5,415
+2020
+RMB million
+878,374
+32.924
+883,876
+141,413
+742,463
+(1,796)
+(2.412)
+616
+(188)
+286,575
+209,280
+1,941
+237
+37
+200
+200
+(35,005)
+(2,416)
+These financial statements have been approved for issue by the board of directors on 26 March 2021.
+(32,589)
+Zhang Yuzhuo
+(Legal representative)
+2. Other comprehensive income
+1. Net profit
+Change for the year
+Balance at 1 January 2019
+For the year ended 31 December 2020
+STATEMENT OF CHANGES IN EQUITY
+Financial Statements (PRC)
+88
+Financial Statements (PRC)
+87
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Chief Financial Officer
+Shou Donghua
+The accompanying notes form part of these financial statements.
+Ma Yongsheng
+President
+Chairman
+32,924
+(33,336)
+972
+48
+(47)
+42,065
+7,747
+34,318
+32,912
+315
+(1,079)
+1,394
+(12)
+(47)
+1,406
+1,406
+41,750
+8,826
+121,071
+1,857
+(138)
+804
+(972)
+(6,726)
+(6,726)
+(125)
+13
+(138)
+3,325
+3,325
+(31,479)
+(31,479)
+(31,479)
+(1,857)
+1,857
+1,038
+122,558
+(972)
+(1,110)
+Notes
+RMB million
+Sub-total of cash inflows
+Chief Financial Officer
+Shou Donghua
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Ma Yongsheng
+President
+Chairman
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Zhang Yuzhuo
+1,760,286
+1,733,805
+878,374
+883,876
+138,409
+141,413
+These financial statements have been approved for issue by the board of directors on 26 March 2021.
+81
+Financial Statements (PRC)
+Financial Statements (PRC)
+Prepayments
+Receivables financing
+Accounts receivable
+Derivative financial assets
+Cash at bank and on hand
+Current assets
+Assets
+RMB million
+2019
+At 31 December
+RMB million
+At 31 December
+2020
+Notes
+As at 31 December 2020
+BALANCE SHEET
+739,965
+742,463
+287,187
+286,575
+121,071
+121,071
+36
+881,912
+849,929
+301,934
+327,739
+15,454
+17,942
+35
+6,809
+8,124
+19
+43,163
+45,552
+37
+Other receivables
+122,558
+Other comprehensive income
+207,423
+209,280
+39
+1,741
+1,941
+(321)
+1,038
+38
+Total liabilities and shareholders' equity
+Total shareholders' equity
+Minority interests
+Total equity attributable to shareholders of the Company
+Retained earnings
+Surplus reserves
+Specific reserve
+122,864
+Inventories
+99,188
+7
+846,863
+2,490
+26,828
+7,315
+12,661
+Accounts payable
+Bills payable
+Derivative financial liabilities
+Short-term loans
+Liabilities and shareholders' equity
+Current liabilities
+Total assets
+Total non-current assets
+Other non-current assets
+Deferred tax assets
+2,630
+791,198
+2,499
+1,069,943
+20,669
+362
+Other payables
+43,025
+43,500
+Taxes payable
+1,214
+1,673
+Employee benefits payable
+5,112
+5,840
+Contract liabilities
+75,352
+65,779
+4,766
+6,061
+19,919
+157
+1,023,763
+177,674
+Long-term deferred expenses
+8,779
+14,048
+Other current assets
+49,116
+39,034
+78,872
+37,938
+2,665
+2,626
+|||
+10
+207
+707
+21,544
+54,072
+940
+7,776
+21,763
+25,149
+8,809
+Total current assets
+232,565
+Intangible assets
+112,832
+60,493
+291,547
+395
+304,687
+343,356
+428
+283,695
+59,880
+108,737
+345
+Right-of-use assets
+Construction in progress
+Fixed assets
+Other equity instrument investments
+12
+Long-term equity investments
+Non-current assets
+223,080
+172,306
+19,157
+38,356
+447,310
+455,395
+28,671
+23,773
+194,142
+151,895
+11
+24,190
+33,602
+10
+5,063
+4,862
+9
+8,661
+8,735
+12
+54,375
+2
+152,204
+17
+109,039
+114,066
+16
+198,051
+189,583
+15
+173,872
+124,765
+14
+625,706
+589,285
+13
+1,521
+1,525
+188,342
+8,620
+35,587
+12,528
+Total current assets
+Other current assets
+Cash paid for goods and services
+Other receivables
+Prepayments
+Receivables financing
+Accounts receivable
+Derivative financial assets
+Financial assets held for trading
+Cash at bank and on hand
+Current assets
+Assets
+As at 31 December 2020
+(A) FINANCIAL STATEMENTS PREPARED UNDER CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
+CONSOLIDATED BALANCE SHEET
+Signing CPA Hu Yang
+Non-current assets
+837
+Long-term equity investments
+Fixed assets
+678020
+3,319
+128,052
+184,412
+1
+5
+At 31 December
+2019
+RMB million
+2020
+RMB million
+At 31 December
+Notes
+Deferred tax assets
+Long-term deferred expenses
+Goodwill
+Intangible assets
+Right-of-use assets
+Construction in progress
+Other equity instrument investments
+188,568
+8,697
+9,535
+522,190
+Total current liabilities
+17,775
+69,490
+22,493
+75,376
+84,600
+69,524
+76,843
+4,807
+7,081
+126,833
+126,160
+188,189
+151,262
+579,978
+11,834
+Non-current liabilities
+Debentures payable
+Lease liabilities
+39,677
+45,459
+1234
+34
+33
+32
+31
+Capital reserve
+Share capital
+Shareholders' equity
+Total liabilities
+Total non-current liabilities
+Other non-current liabilities
+Deferred tax liabilities.
+Provisions
+Long-term loans
+18
+2,729
+31,196
+Current liabilities
+Liabilities and shareholders' equity
+Total assets
+Total non-current assets
+Other non-current assets
+1,760,286
+1,312,976
+1,278,410
+1,733,805
+17,335
+27,635
+20
+17,616
+25,054
+19
+8,935
+Short-term loans
+4,826
+10,394
+Derivative financial liabilities
+23
+20,756
+2622222222
+30
+Other current liabilities
+29
+Non-current liabilities due within one year
+28
+Other payables
+27
+Taxes payable
+Employee benefits payable
+25
+Contract liabilities
+24
+Accounts payable
+Bills payable
+118,064
+Inventories
+12,026
+84
+Financial Statements (PRC)
+83
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2020
+Chief Financial Officer
+Shou Donghua
+Financial Statements (PRC)
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Chairman
+Zhang Yuzhuo
+These financial statements have been approved for issue by the board of directors on 26 March 2021.
+14,718
+7,747
+Ma Yongsheng
+President
+INCOME STATEMENT
+For the year ended 31 December 2020
+Operating income
+Continuous operating net profit
+Classification by going concern:
+Less: Income tax (credit)/expense
+Net profit
+Less: Non-operating expenses
+Profit before taxation
+Add: Non-operating income
+Operating profit
+Asset disposal gains
+Gains/(losses) from changes in fair value
+Credit impairment losses
+Impairment losses
+Investment income
+Add: Other income
+Exploration expenses, including dry holes
+Financial expenses
+Selling and distribution expenses
+General and administrative expenses
+Research and development expenses
+Taxes and surcharges
+Less: Operating costs
+Minority interests
+63,034
+34,318
+Equity shareholders of the Company
+(22)
+Changes in fair value of other equity instrument investments
+38
+0.476
+0.272
+64
+0.476
+0.272
+64
+14,553
+8,826
+57,619
+32,924
+Items that may not be reclassified subsequently to profit or loss
+Other comprehensive income
+(31)
+Termination of net profit
+Items that may be reclassified subsequently to profit or loss
+(2,441)
+Attributable to:
+77,752
+42,065
+Total comprehensive income
+315
+Total other comprehensive income
+1,480
+(4,457)
+Foreign currency translation differences
+4,941
+7,073
+Cash flow hedges
+162
+Fair value hedges
+(810)
+Other comprehensive income that can be converted into profit or loss under the equity method
+Items that may be reclassified subsequently to profit or loss
+Notes
+2020
+Total other comprehensive income
+1,384
+4,948
+201
+(182)
+Other comprehensive income that can be converted into profit or loss under the equity method
+Cash flow hedges
+Other comprehensive income
+37,452
+18,572
+37,452
+18,572
+1,886
+(8,017)
+39,338
+10,555
+4,766
+1,135
+1,585
+23,338
+Other cash received relating to operating activities
+Refund of taxes and levies
+Non-current liabilities due within one year
+Cash received from sale of goods and rendering of services
+Cash flows from operating activities:
+For the year ended 31 December 2020
+CONSOLIDATED CASH FLOW STATEMENT
+Shou Donghua
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+The accompanying notes form part of these financial statements.
+Ma Yongsheng
+President
+(Legal representative)
+Zhang Yuzhuo
+Chairman
+These financial statements have been approved for issue by the board of directors on 26 March 2021.
+39,037
+Total comprehensive income
+Diluted earnings per share
+1,319
+900
+28,302
+29,868
+3,420
+3,256
+161,820
+148,350
+799,566
+584,315
+40
+1,021,272
+770,321
+40
+RMB million
+RMB million
+2019
+9,098
+665
+8,597
+7,628
+39,808
+6,407
+(534)
+(16,374)
+261
+10,974
+132
+71
+(278)
+350
+28,062
+43,356
+47
+3,497
+4,922
+9,417
+8,297
+8,749
+Basic earnings per share
+Chief Financial Officer
+Equity shareholders of the Company
+Zhang Yuzhuo
+1,023,763
+530,110
+522,275
+1,069,943
+These financial statements have been approved for issue by the board of directors on 26 March 2021.
+Total liabilities and shareholders' equity
+Total shareholders' equity
+130,645
+115,849
+207,423
+209,280
+Retained earnings
+Surplus reserves
+949
+1,189
+Chairman
+1,181
+(Legal representative)
+The accompanying notes form part of these financial statements.
+Selling and distribution expenses
+General and administrative expenses
+Research and development expenses
+Taxes and surcharges
+Less: Operating costs
+Operating income
+RMB million
+RMB million
+2019
+2020
+Notes
+For the year ended 31 December 2020
+CONSOLIDATED INCOME STATEMENT
+Chief Financial Officer
+Shou Donghua
+Annual Report 2020 CHINA PETROLEUM & CHEMICAL CORPORATION
+82
+Ma Yongsheng
+President
+Financial expenses
+5,910
+68,976
+Share capital
+Shareholders' equity
+Total liabilities
+Total non-current liabilities
+Other non-current liabilities
+Provisions
+Debentures payable
+Lease liabilities
+Long-term loans
+Non-current liabilities
+439
+344,917
+Total current liabilities
+59,596
+Other current liabilities
+Minority interests
+Capital reserve
+68,841
+Other comprehensive income
+30,413
+121,071
+121,071
+493,653
+547,668
+166,448
+202,751
+4,471
+3,581
+34,514
+36,089
+107,783
+105,691
+7,000
+26,977
+12,680
+Specific reserve
+Exploration expenses, including dry holes
+327,205
+Investment income
+51
+2,601
+2,370
+50
+||
+90,134
+4,732
+50,331
+2,067
+(1,779)
+(26,018)
+49
+(1,264)
+(2,066)
+(1,229)
+2,624
+47,969
+90,111
+Termination of net profit
+Add: Other income
+72,172
+41,750
+Classification by going concern:
+50
+119
+Including: net profit of acquiree before business combination under common control
+72,172
+41,750
+Net profit
+17,939
+6,219
+52
+Less: Income tax expense
+(3,511)
+(1,253)
+Continuous operating net profit
+47,486
+2,479,356
+1,688,398
+40
+2,959,799
+2,105,984
+40
+Profit before taxation
+Less: Non-operating expenses
+Add: Non-operating income
+Operating profit
+Asset disposal losses
+Impairment losses
+12,628
+Credit impairment losses
+Losses from changes in fair value
+41
+234,947
+Classification by ownership:
+64,438
+5,995
+244,517
+10,048
+9,506
+10,510
+9,450
+9,716
+10,086
+47
+46
+63,038
+66,291
+63,586
+7,513
+4258
+Increase in the account receivables due to the rising
+prices of crude oil and refined oil products
+(40.9) Improved efficiency in the use of capital and advanced
+turnover of bills
+Impact of changes in fair value of commodity-based hedging
+business including crude oil
+(65.1) Impact of deferred payment of tax happened in the fourth
+quarter of last year
+Increase in long-term loans due within one year and
+debentures payable
+Refunds of taxes and levies
+A result of partial amount of bonds payable reclassifying to
+non-current liabilities due within one year
+Increase in the translation difference of foreign currency
+statements due to the appreciation of US dollar against
+RMB
+VAT credit refund in this year increased significantly year-on-
+year
+prices of crudes and other commodities
+12,010
+4,641
+Increase in long-term loans to ensure investment and
+production and operation capital needs
+Expanded investment scale, increased dividend, and raised
+occupation of inventory capital resulting from increase of
+(29,652)
+(690)
+62,844
+28,651
+34,193
+119.3
+Long-term loans
+94,964
+49,341
+3,762
+45,623
+Debentures payable
+12,997
+42,649
+7,369
+(69.5)
+Other comprehensive income
+3,072
+92.5
+158.8
+(179,679)
+269,895
+5,205
+4,836
+92.9
+Impact of year-on-year decreased in structured deposits due
+this year
+Increase in dividends received from associates and joint
+ventures
+(85.7) Impact of disposal of fixed assets decreased year on year
+10,041
+Mainly due to cash consideration for equity transfer of
+Shanghai SECCO
+103,157
+170.0
+Non-current liabilities due within one year
+38,208
+64,949
+Increased time deposits with maturities of more than three
+months year-on-year
+Other cash received relating to investing activities
+(1,266)
+1,478
+212
+158,049
+111,846
+Other cash paid relating to operating activities
+(312,819)
+Cash received from disposal of investments
+1,980
+9,812
+(133,140)
+(7,832)
+70.8
+74.1
+(79.8)
+Impact of margin change of derivative business
+Cash received from returns on investments
+13,969
+3,835
+37.8
+Net cash received from disposal of fixed assets,
+intangible assets and other long-term assets
+Net cash received from disposal of subsidiaries and
+other business entities
+Other cash received relating to operating activities
+10,134
+The table below sets forth reasons for those changes where the fluctuation was more than 30% during the reporting period:
+81,267
+13,798
+13,860
+62
+0
+2
+2
+(3,188)
+21,854
+(5,593)
+Unit: RMB million
+Influence
+on the profit
+of the year
+76
+16,261
+0
+(1,838)
+(2,432)
+Cash flow hedging
+Derivative financial instruments
+Financial assets held for trading
+Total
+4
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+1,350
+Beginning
+767
+End
+of the year
+730
+Changes
+(37)
+5,939
+3,507
+of the year
+(15,535)
+12,609
+11
+34,861
+11,503
+33.0
+Receivables financing
+3,507
+5,939
+46,364
+(2,432)
+7,313
+3,223
+4,090
+126.9
+Taxes payable
+28,379
+Derivative financial liabilities
+Accounts receivable
+(34.7)
+(76,937)
+(2,839)
+(5) Significant changes of items in the financial statements
+Items
+Cash at bank and on hand
+As of 31 December
+Increase/(decrease)
+2022
+RMB million
+2021
+RMB million
+Amount
+RMB million
+Percentage
+(%)
+Reasons for change
+145,052
+221,989
+(52,888)
+Net cash paid for the acquisition of subsidiaries and
+0.547
+(1,106)
+0.962
+1.860
+1.392
+1.275
+1.455
+Unit: RMB million
+Net cash generated from operating activities per share (RMB)
+Items
+Net current liabilities
+2022
+1,425,500
+2021
+1,331,231
+As of 31 December
+2020
+1,283,236
+2019
+2018
+Non-current assets
+1,318,258
+8.57
+4.48
+0.547
+0.594
+0.276
+0.475
+0.511
+Return on capital employed (%)
+7.73
+8.66
+6.22
+8.94
+9.21
+Return on net assets (%)
+8.43
+9.30
+11.29
+1,097,045
+144,245
+83,256
+743,719
+722,806
+Adjusted net assets per share (RMB)
+5.970
+5.787
+3 FOR MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER CASS AND IFRS, PLEASE REFER TO PAGE
+204 OF THE REPORT.
+746,325
+6.545
+6.307
+6.164
+6.143
+Other equity instruments investment
+Receivables financing
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+5.954
+5.993
+6.394
+6.225
+774,182
+784,706
+Total equity attributable to shareholders of the Company
+Net assets per share (RMB)
+67,335
+133,166
+63,514
+Non-current liabilities
+345,017
+332,901
+328,199
+303,014
+170,803
+Non-controlling interests
+151,532
+140,892
+141,377
+138,359
+139,922
+Diluted earnings per share (RMB)
+0.511
+0.475
+0.276
+58.3
+Cash repayments of borrowings
+(514,275)
+(338,232)
+(176,043)
+52.0
+207,958
+Cash paid for dividends, profits distribution or interest
+Including: Subsidiaries' cash payments for distribution
+(5,249)
+(49,027)
+(8,068)
+(22,804)
+46.5
+2,819
+(34.9)
+(71,831)
+356,459
+564,417
+Cash received from borrowings
+(6,775)
+612.6
+other business entities
+Impact of payment on the purchase price of the acquisition
+happened previous year
+Other cash paid relating to investing activities
+(33,505) (50,923)
+17,418
+(34.2)
+Decrease in time deposits with maturities over more than
+three months year-on-year
+Cash received from capital contributions
+3,946
+1,001
+2,945
+294.2
+Increase in capital injection received from minority
+shareholders year-on-year
+of dividends or profits to minority shareholders
+(7,881)
+Increase in short-term financing bonds and bank loans year.
+on-year in order to supply liquidity and project funds
+Due to the increase of matured borrowings
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+13,669
+2019
+2,957,868
+86,516
+2018
+2,879,192
+82,884
+94,400
+109,169
+48,615
+94,628
+90,161
+66,153
+71,975
+33,443
+57,517
+61,920
+0.594
+99,658
+75,835
+2020
+2,104,724
+For the year ended 31 December
+2021
+2,740,884
+5
+LO
+Principal Financial Data and Indicators
+6
+Principal Financial Data and Indicators
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS
+Unit: RMB million
+Items
+Revenue
+Operating profit
+Profit before taxation
+Profit attributable to shareholders of the Company
+Basic earnings per share (RMB)
+2022
+3,318,168
+Increase in dividends year-on-year in return for shareholders
+Impact of decrease in dividends paid by some subsidiaries
+year-on-year
+Items
+20,510
+(107)
+2022
+2021
+Change
+2020
+RMB million
+RMB million
+For the year ended 31 December
+(%)
+3,318,168
+2,740,884
+21.06
+2,104,724
+96,414
+112,414
+RMB million
+(14.23)
+(2) Principal financial indicators
+Total liabilities
+9
+SINOPEC CORP.
+中国石油化工股份有限公司
+AND ACCOUNTS
+ANNUAL REPORT
+2022
+Total equity attributable to equity shareholders of the Company
+Total number of shares (1,000 shares)
+H₂
+【便利店
+为美好生活加油
+氢能
+OPEC SINOPEC
+中国石化
+中国石化
+NA SUT66
+50,803
+94,515
+108,348
+Fourth
+Quarter
+RMB million
+Quarter
+Total
+RMB million
+RMB million
+Third
+771,386
+841,196
+22,605
+20,925
+13,130
+864,846
+9,642
+3,318,168
+840,740
+Second
+Quarter
+RMB million
+RMB million
+First
+Quarter
+(12.77)
+48,441
+66,302
+71,208
+(6.89)
+33,271
+57,182
+72,220
+(20.82)
+(1,565)
+116,269
+225,174
+(48.36)
+168,520
+2022
+16
+66,302
+26
+CONTENTS
+CONVERSION:
+Hong Kong Listing Rules: Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
+Hong Kong Stock Exchange: The Stock Exchange of Hong Kong Limited
+CSRC: China Securities Regulatory Commission.
+Century Bright: Sinopec Century Bright Capital Investment, Ltd.
+Sinopec Finance Co.: Sinopec Finance Co., Ltd.
+For domestic production of crude oil, 1 tonne = 7.1 barrels;
+RMC: Oil and Natural Gas Reserves Management Committee of the Company
+China Petrochemical Corporation: the controlling shareholder of Sinopec Corp., China Petrochemical Corporation
+Sinopec Group: China Petrochemical Corporation and its subsidiaries
+Company: Sinopec Corp. and its subsidiaries
+In this report, unless the context otherwise requires, the following terms shall have the meaning as set out below:
+Sinopec Corp.: China Petroleum & Chemical Corporation
+DEFINITIONS:
+Sinopec Corp.'s H shares were listed in Hong Kong, New York and London exchanges on 18 and 19 October 2000, respectively, and A shares were
+listed in the Shanghai Stock Exchange on 8 August 2001. 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; hydrogen energy business and related
+services such as hydrogen production, storage, transportation and sales; battery charging and swapping, solar energy, wind energy and other new
+energy business and related services.
+COMPANY PROFILE
+NDRC: China National Development and Reform Commission
+AS APPROVED AT THE 15TH MEETING OF THE EIGHTH SESSION OF THE BOARD OF DIRECTORS OF SINOPEC CORP., THE BOARD PROPOSED A
+FINAL CASH DIVIDEND OF RMBO.195 (TAX INCLUSIVE) PER SHARE FOR 2022, COMBINING WITH THE INTERIM CASH DIVIDEND OF RMBO.16 (TAX
+INCLUSIVE) PER SHARE, THE TOTAL CASH DIVIDEND FOR 2022 WILL BE RMBO.355 (TAX INCLUSIVE) PER SHARE. THE DIVIDEND PROPOSAL IS
+SUBJECT TO THE SHAREHOLDERS' APPROVAL AT THE ANNUAL GENERAL MEETING FOR THE YEAR 2022.
+For overseas production of crude oil: 1 tonne = 7.26 barrels in 2022, 1 tonne = 7.22 barrels in 2021, 1 tonne = 7.20 barrels in 2020;
+For production of natural gas, 1 cubic meter = 35.31 cubic feet;
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+CHAIRMAN'S ADDRESS
+Net cash flow (used in)/generate from operating activities
+Net profit attributable to equity shareholders of the
+Company excluding extraordinary gains and losses
+Net profit attributable to equity shareholders of the Company
+Operating income
+Net profit/(loss) attributable to equity shareholders of the Company
+excluding extraordinary gains and losses
+Net cash flow from operating activities
+Refinery throughput is converted at 1 tonne = 7.35 barrels.
+Net profit attributable to equity shareholders of the Company
+Operating profit
+Operating income
+Items
+(1) Principal financial data
+1. FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH CASS
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+Profit before taxation
+THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 OF THE COMPANY PREPARED IN ACCORDANCE WITH THE PRC
+ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES (CASS) AND INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) HAVE BEEN
+AUDITED BY KPMG HUAZHEN LLP AND KPMG RESPECTIVELY. BOTH FIRMS HAVE ISSUED STANDARD UNQUALIFIED AUDITOR'S REPORT.
+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. ALL DIRECTORS ATTENDED THE 15TH MEETING OF THE EIGHTH SESSION OF THE BOARD. MR. MA
+YONGSHENG, CHAIRMAN OF THE BOARD, MR. YU BAOCAI, PRESIDENT, MS. SHOU DONGHUA, 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 REPORT OF SINOPEC CORP. FOR THE YEAR
+ENDED 31 DECEMBER 2022.
+COMPANY PROFILE
+Report of the Board of Directors
+59
+Connected Transactions
+57
+Significant Events
+50
+68
+Environment and Social Responsibilities
+Management's Discussion and Analysis
+Business Review and Prospects
+Chairman's Address
+Principal Financial Data and Indicators
+Company Profile
+237
+Corporate Governance
+Report of the Board of Supervisors
+70
+Changes in Share Capital and Shareholdings
+Company Profile
+2
+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 24 March 2023 and unless
+required by regulatory authorities, the Company undertakes no obligation
+to update these statements.
+Documents for Inspection
+212
+Corporate Information
+211
+Financial Statements
+75
+Subsidiaries
+Principal Wholly-owned and Controlled
+Bond General Information
+74
+72
+of Principal Shareholders
+48
+(2,705)
+22,450
+1,730
+Principal Financial Data and Indicators
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+(3) Extraordinary items and corresponding amounts
+For the year ended 31 December
+(Income)/expenses
+2022
+2021
+Principal Financial Data and Indicators
+2020
+Net (gain)/loss on disposal of non-current assets
+Donations
+RMB million
+RMB million
+RMB million
+(672)
+447
+Items
+(665)
+165
+3
+percentage
+points
+2022
+RMB Yuan
+6.552
+51.91
+For the year ended 31 December
+2021
+RMB Yuan
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+6.402
+51.51
+2020
+(%)
+RMB Yuan
+2.34
+0.40
+6.172
+48.89
+Change
+(973)
+301
+Government grants
+Tax effect
+2,304
+(72)
+6,736
+Total
+Attributable to: Equity shareholders of the Company
+Minority interests
+(44,277)
+(4) Items measured by fair values
+905
+(37,541)
+(9,120)
+1,012
+(34,836)
+(4,351)
+(13,471)
+977
+(15,775)
+Subtotal
+(3,826)
+(3,085)
+(8,605)
+Gain on holding and disposal of various investments
+(13,902)
+(259)
+(37,520)
+Other non-operating expenses, net
+2,178
+4,720
+2,992
+Net profit/(loss) acquired through business combination under common control
+during the reporting period
+0
+101
+(472)
+Net assets attributable to equity shareholders of the Company per share
+Liabilities to assets ratio (%)
+12,492
+Items
+(48.28)
+3.9
+1,738,896
+850,176
+785,577
+775,102
+1.4
+747,294
+973,214
+119,896,408
+(1.0)
+121,071,210
+For the year ended 31 December
+2022
+2021
+Change
+121,071,210
+Items
+1,011,487
+1,889,255
+57,182
+(46,781)
+51,728
+54,297
+57,025
+116,269
+3.1
+RMB million
+For the year ended 31 December
+2021
+Change
+(%)
+2020
+RMB million
+1,948,640
+2022
+RMB million
+RMB Yuan
+RMB Yuan
+(%)
+8.50
+9.35
+points
+4.46
+Weighted average return (excluding extraordinary gains and losses)
+on net assets (%)
+7.33
+Weighted average return on net assets (%)
+9.49
+(0.21)
+percentage
+points
+Net cash flow from operating activities per share
+0.962
+1.860
+(2.16)
+percentage
+(0.85)
+(0.013)
+2020
+RMB Yuan
+Basic earnings per share
+Diluted earnings per share
+Basic earnings per share (excluding extraordinary gains and losses)
+0.548
+0.588
+(6.80)
+0.275
+0.548
+0.588
+(6.80)
+0.275
+0.473
+0.597
+(20.77)
+1.392
+Dear Shareholders and Friends:
+Chairman's Address
+In 2022, the Company encountered complicated,
+fickle and severe conditions, including global
+economic slowdown, geopolitical conflicts and
+weak domestic market demand. We completely,
+accurately and comprehensively implemented
+new development concept, carried out the
+world's leading development strategy, and made
+relentless efforts to stabilize operations and
+to expand market reach. Remarkable results
+were achieved in all aspects of work through
+our initiatives to drive innovation, business
+development and reform in conjunction with
+enhanced management and risk control.
+In accordance with IFRS, the Company's
+turnover for the year was RMB3.32 trillion.
+Profit attributable to equity shareholders
+of the Company was RMB66.2 billion. The
+liability-to-asset ratio as of the end of the
+year was 51.95%. In view of the Company's
+profitability, shareholder returns and sustainable
+development in the future, the board of directors
+80
+40
+Movement of International Crude Oil Prices
+WTI-NYMEX
+BRENT ICE
+BRENT DTD
+DUBAI
+0
+Jan-21
+Apr-21
+Jul-21
+Oct-21
+Jan-22
+Apr-22
+120
+Jul-22
+Jan-23
+MARKET REVIEW
+(1) Crude Oil & Natural Gas
+In 2022, international crude oil prices
+fluctuated in a wide range, witnessing
+steep rise in the first half and sharp
+decline in the second half. The spot price
+of Platt's Brent for the year averaged
+USD101.2 per barrel, up by 43.1% year
+on year. Based on the statistics of NDRC,
+the domestic apparent consumption of
+natural gas reached 366.3 billion cubic
+meters, down by 1.7% year on year.
+(2) Refined Oil Products
+In 2022, the domestic demand for refined
+oil products was weak. According to
+statistics released by NDRC, the domestic
+apparent consumption of refined oil
+products (including gasoline, diesel and
+kerosene) up by 0.9% from the previous
+year, with diesel up by 11.8%, gasoline
+down by 4.6% and kerosene down by
+32.4%. Prices for domestic refined
+oil products were adjusted 23 times
+throughout the year with 13 increases
+and 10 decreases.
+(3) Chemical Products
+There was a contraction of domestic
+demand for chemicals in 2022. Based on
+our statistics, the domestic consumption
+of ethylene equivalent was down by 2.5%
+from the previous year, and the apparent
+consumption of synthetic fibre and
+synthetic rubber dropped by 2.8% and
+3.2% respectively while that of synthetic
+resin kept flat. Domestic chemical
+product prices levelled off year on year.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+9
+Business Review and Prospects
+First of all, on behalf of the board of directors,
+management and entire staff, I would like to
+express my sincere gratitude to our shareholders
+and all walks of life in the community for their
+caring and support for Sinopec Corp.
+Oct-22
+160
+Total assets
+Confronted with the severe and complex
+operating environment, the Company fully
+leveraged its integration advantages in
+coordinating all aspects of work, pressing ahead
+to stabilize operation, explore the market,
+develop through innovation, promote reform,
+strengthen management prevent risks and hold
+the bottom line, which helped yield high quality
+operating results.
+USD/Barrel
+recommended the distribution of a final dividend
+of RMBO.195 per share (tax included). Taking
+into account the interim dividend of RMBO.16
+per share (tax included), the total dividend
+for the year was RMBO.355 per share (tax
+included), which, together with the amount of
+share repurchase during the year, resulted in a
+dividend payout ratio of 71% for 2022.
+Over the past year, the Company's corporate
+governance were further enhanced. With an
+aim of strengthening strategic planning, the
+board of directors reviewed and approved of the
+Company's medium and long-term development
+plan. Our ADR were delisted in an orderly
+manner. Our debut share buyback program since
+our listing was well implemented to repurchase
+our A-shares and H-shares in order to advocate
+the Company's fair valuation. All independent
+directors executed their duties and reviewed
+all resolutions with diligence. They carried out
+thematic site surveys on technology innovation
+and offered valuable suggestions for our reform
+and development. The Company revised a
+number of governance rules to reinforce the
+corporate governance. As the internal control
+system was further improved, its implementation
+turned more effective. Meanwhile, the Company
+maintained sound information disclosure and
+investor relations management. As a result, we
+have been awarded Grade A rating of information
+disclosure by the Shanghai Stock Exchange
+for nine consecutive years. We attached great
+importance to the incorporation of Party building
+into the corporate development, resulting in
+effective implementation of the decisions and
+strategies made by the board of directors.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+7
+Chairman's Address
+Items
+CHAIRMAN'S ADDRESS (CONTINUED)
+Over the past year, the Company's production
+and operation were further improved. In the
+face of weak demand, the downward cycle of
+the chemical industry and dramatic fluctuations
+in product prices, we adhered to efficiency.
+centered, market-oriented approach and
+continuously improved the business operations.
+As for the upstream business, the Company
+strengthened cost control, and domestic oil
+and gas production hit a record high, achieving
+the best profit level since 2016. Regarding
+the refining business, we focused on trade,
+storage and transportation, and production
+coordination, closely monitored the market
+development to better coordinate resources,
+optimized operations, and reinforced the
+competitive edge of our industrial chain. As
+for the chemicals business, we optimized the
+structure of feedstocks, plants and products
+slates, promoting the integration of production,
+marketing, as well as research and application.
+The proportion of three high value-added
+synthetic material products steadily increased.
+Meanwhile, the quality and efficiency of the coal
+chemical operations were further improved. We
+gave full play to the integration advantages of
+refined oil marketing business, expanded the
+market reach with high-quality services. Non-
+fuel business maintained steady growth and its
+overall profitability realized a stable growth.
+Over the past year, the Company's science and
+technology innovation competitiveness continued
+to improve. We deepened the reform of science
+and technology mechanism to motivate the
+R&D team, stepped up the investment on R&D,
+pushed for breakthroughs in core technology
+development, and enhanced the frontier
+fundamental research. Significant achievements
+were made in technology innovation, along
+with new progress in the development of core
+technologies relating to the exploration and
+development of ultra-deep oil and gas reservoir,
+the geology and engineering integration of shale
+oil and gas fields, as well as specialty rubber
+products. In addition, major breakthroughs were
+made in a number of key technologies such
+as high-isotactic polybutene-1. The number of
+patents authorized both at home and abroad
+reached a new high during the year. The
+Company's comprehensive patent advantages
+continued to rank at the forefront of state-
+owned enterprises. Our competence to support
+and lead scientific and technological innovation
+continued to improve.
+Over the past year, our ESG efforts achieved
+solid results. The board of directors attached
+great importance to ESG, focused on
+incorporating ESG into strategic management,
+strengthened top-level design and the foundation
+of management, enhanced ESG communication
+and disclosure. As a result, the Company's
+ESG performance has been acknowledged by
+the capital market. We actively responded to
+global climate change initiative by implementing
+the plan to achieve carbon peak by 2030,
+launched the campaign to prevent and control
+pollution, vigorously developed clean energy,
+and contributed our efforts to the construction
+of ecological civilization. Relentless efforts
+were made to safeguard the energy supply and
+to maintain the stability of the industrial and
+supply chains. The Company actively explored
+the model of assisting in rural revitalization,
+such as driving industrial development through
+sales, revitalized rural areas through industrial
+development, and promoted growth through
+education. We offered full-fledged support
+to Beijing Winter Olympics and the Winter
+Paralympics, pushed forward our charity
+programs such as the "Spring Blossom Filling
+Station Project", and continued to promote the
+coordinated local development of economy,
+environment and the society in China and
+overseas so that the development results benefit
+more people.
+Over the past year, significant progress
+was made in the Company's high-quality
+development. As for the upstream business,
+we vigorously expanded the resource base
+and proactively increased our reserves and
+output. Major breakthroughs were made in
+the exploration of shale oil fields in East
+China and ultra-deep fields in West China.
+The domestic oil and gas reserve replacement
+ratio reached 165%. As for refining operation,
+we stepped up efforts in the development
+of competitive production facilities, steadily
+promoted adjustment to increase the yield of
+chemical feedstock and refining specialties.
+Development of the Zhenhai refining project, the
+Hainan ethylene project and the Gulei refining
+and chemical integrated complex progressed
+smoothly. The sales network of refined oil
+products was further optimized. We accelerated
+the transformation towards an integrated energy
+service provider of "petrol, gas, hydrogen, power
+and services". New progress was made in the
+development of "Industrial Internet+" and the
+digital and smart transformation. At the same
+time, the Company promoted the development
+of hydrogen energy, photovoltaics, and battery
+charging and swapping businesses. The first
+OCCUS project with capacity of 1 million tonnes
+in China was completed and put into operation.
+Sinopec Carbon Industry Technology Co., Ltd.,
+the first company in China with complete value
+chain for carbon industry was established.
+Positive results were achieved in the promotion
+of transition to low-carbon energy development.
+In 2023, we will seize the favorable opportunity
+arising from steady development of domestic
+economy and the recovery of demand for
+petroleum and petrochemical products, insist on
+driving growth in a stable manner, and strive to
+achieve effective quality improvement in different
+businesses and reasonable volume growth. At
+the same time, we will accelerate the process
+of building ourselves towards a world-class
+enterprise, whereby leading the Company to a
+new stage of high-quality development. We will
+pay more attention to bringing the benefits of
+our integrated operation into full play, improving
+the business operations, and enhancing the
+synergies and efficiency resulted from our
+complete industrial chain. We will attach greater
+importance to business transition and upgrading,
+the promotion of digital transformation and
+intelligentization, strive to build green and low-
+carbon competitiveness, step up efforts to drive
+science and technology innovation and inspire
+the creativity from innovation, and accelerate
+the breakthroughs in core technologies in
+exploration and development, specialty oil
+products, chemical materials and new energy
+At present, the instability and uncertainty of
+global environment are increasing significantly,
+leading to intensified market competition
+in the energy and chemical industry. But
+the fundamentals of the Chinese economy,
+characterized by strong resilience, enormous
+and long-term potential, sustainability, remain
+unchanged. The government prioritizes the task
+to resume and expand domestic consumption.
+Therefore, the Company is poised to benefit
+from valuable strategic opportunities for high-
+quality development. Setting off from a new
+development stage, Sinopec Corp. will initiate
+the high-quality development plan driven by the
+strategy of building a world-class enterprise,
+focusing on "excellent products, outstanding
+brands, leading innovation capability and
+advanced governance". We will steadily promote
+the corporate upgrading from size expansion
+to strong competitiveness and then ascending
+to excellence, striving to achieve better quality,
+higher efficiency, greater competitiveness and
+influence.
+In 2022, global economy recorded slow growth
+and China registered a GDP growth of 3.0%
+year-on-year. International oil prices fluctuated
+widely, with a sharp rise in the first half and a
+remarkable drop in the second half. Affected by
+various factors, the domestic demand for natural
+gas, petrochemical products and oil products
+was weak.
+BUSINESS REVIEW
+1
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+BUSINESS REVIEW AND PROSPECTS
+Beijing, China
+24 March 2023
+Ma Yongsheng
+Chairman
+In the new year, we will strive for excellence
+and spare no effort to forge ourselves towards a
+world class enterprise. Relentless efforts will be
+made to write a new chapter of Sinopec's high-
+quality development, whereby creating greater
+value for shareholders and the society.
+For the upstream business, we will focus on
+consolidating the resource base, make every
+effort to increase the reserves, stabilize oil
+output, boost gas production and reduce
+costs, and promote profitable exploration of
+crude oil and profitable production of natural
+gas, shift the refined oil products to chemical
+feedstock and refining specialities, expedite
+the production facility structure adjustments
+and the development of competitive production
+capacities. As for the chemicals business, we
+will adhere to the "basic + high-end" approach,
+strengthen the integrated management of
+production, marketing, research and application
+for high value-added products to enhance the
+product competitiveness, and cultivate the new
+advantage of high-quality development. For the
+marketing business, we will promote innovative
+business model, develop new energy terminals,
+and strive for new achievements in developing
+ourselves as a "petrol, gas, hydrogen, power
+and services" provider. The Company will
+continue to maintain a solid financial position,
+strengthen cash flow management, continuously
+optimize the capital structure, and improve the
+efficiency of capital fund utilization. In 2023, the
+Company's planned capital expenditure will be
+RMB165.8 billion.
+and other fields to enhance the driving force of
+science and technology innovation. We will pay
+more attention to the incorporation of ESG into
+our development strategy, deepen reform and
+improve governance, unleash the dynamism of
+our system and mechanism, consolidate our
+foundation, keep the risks under control and
+further enhance our corporate governance to a
+new level.
+8
+(d) Derivative financial instruments and hedge accounting
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+If there is an active market for financial instruments, the quoted price in the active market is used to measure fair values of the financial
+instruments. If no active market exists for financial instruments, valuation techniques are used to measure fair values. In valuation, the Group
+adopts valuation techniques that are applicable in the current situation and have sufficient available data and other information to support it,
+and selects input values that are consistent with the asset or liability characteristics considered by market participants in the transaction of
+relevant assets or liabilities, and gives priority to relevant observable input values. Use of unobservable input values where relevant observable
+input values cannot be obtained or are not practicable.
+(c) Determination of fair value
+(11) Financial Instruments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2022
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial guarantee liabilities
+94
+Financial Statements (PRC)
+Subsequent to initial recognition, the amount initially recognised as deferred income is amortised in profit or loss over the term of the
+guarantee as income from financial guarantees issued.
+Financial guarantees issued are initially recognised at fair value, which is determined by reference to fees charged in an arm's length
+transaction for similar services, when such information is obtainable, or to interest rate differentials, by comparing the actual rates charged
+by lenders when the guarantee is made available with the estimated rates that lenders would have charged, had the guarantees not been
+available, where reliable estimates of such information can be made. Where consideration is received or receivable for the issuance of the
+guarantee, the consideration is recognised in accordance with the Group's policies applicable to that category of asset. Where no such
+consideration is received or receivable, an immediate expense is recognised in profit or loss.
+Financial guarantees are contracts that requires the Group to make specified payments to reimburse the holder for a loss it incurs because a
+specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.
+Where the present obligations of financial liabilities are completely or partially discharged, the Group derecognises these financial liabilities
+or discharged parts of obligations. The differences between the carrying amounts and the consideration received are recognised in profit or
+loss.
+The Group's financial liabilities are mainly financial liabilities measured at amortised cost, including bills payable, accounts payable, other
+payables, loans and debentures payable, etc. These financial liabilities are initially measured at the amount of their fair value after deducting
+transaction costs and use the effective interest rate method for subsequent measurement.
+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 profit or loss, except where the derivatives qualify for hedge accounting.
+94
+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, to represent the effect of risk management activities.
+Financial Statements (PRC)
+A hedging instrument is a designated derivative whose changes in cash flows are expected to offset changes in the cash flows of the hedged
+item.
+(d) Derivative financial instruments and hedge accounting (Continued)
+(11) Financial Instruments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+The Group, at initial recognition, classifies financial liabilities as either financial liabilities subsequently measured at amortised cost or
+financial liabilities at fair value through profit or loss.
+95
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+The cumulative change in present value of the expected future cash flows on the hedged item from inception of the hedge.
+The gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income.
+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 hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged
+forecast transaction for a non-financial asset or a non-financial liability becomes a firm commitment for which fair value hedge
+accounting is applied, the entity shall remove that amount from the cash flow hedge reserve and include it directly in the initial cost
+or other carrying amount of the asset or the liability. This is not a reclassification adjustment and hence it does not affect other
+comprehensive income.
+The cumulative gain or loss on the hedging instrument from inception of the hedge;
+-
+Cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a
+component of, a recognised asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable
+forecast transaction, and could affect profit or loss. As long as a cash flow hedge meets the qualifying criteria for hedge accounting,
+the hedging relationship shall be accounted for as follows:
+Cash flow hedges
+(3) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually
+hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. However, that
+designation shall not reflect an imbalance between the weightings of the hedged item and the hedging instrument.
+(2) The effect of credit risk does not dominate the value changes that result from that economic relationship.
+(1) There is an economic relationship between the hedged item and the hedging instrument, which share a risk and that gives rise to opposite
+changes in fair value that tend to offset each other.
+The hedging relationship meets all of the following hedge effectiveness requirements:
+Hedged items are the items that expose the Group to risks of changes in future cash flows and that are designated as being hedged and that
+must be reliably measurable. The Group's hedged items include a forecast transaction that is settled with an undetermined future market
+price and exposes the Group to risk of variability in cash flows, etc.
+(b) Financial liabilities
+93
+The Group derecognises a financial asset when a) the contractual right to receive cash flows from the financial asset expires; b) the Group
+transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset; c) the financial assets have
+been transferred and the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, but
+the Group has not retained control.
+The business model for managing such financial assets by the Group are held for collection of contractual cash flows. The contractual
+cash flow characteristics are to give rise on specified dates to cash flows that are solely payments of principal and interest on the
+principal amount outstanding. Interest income from these financial assets is recognised using the effective interest rate method. The
+financial assets include cash at bank and on hand and receivables.
+Measured at amortised cost:
+The debt instruments held by the Group refer to the instruments that meet the definition of financial liabilities from the perspective of the
+issuer, and are measured in the following ways:
+Debt instruments
+Financial assets are initially recognised at fair value. For financial assets measured at fair value through profit or loss, the relevant
+transaction costs are recognised in profit or loss. The transaction costs for other financial assets are included in the initially recognised
+amount. However, accounts receivable arising from sales of goods or rendering services, without significant financing component, are
+initially recognised based on the transaction price expected to be entitled by the Group.
+The Group classifies financial assets into different categories depending on the business model for managing the financial assets and the
+contractual terms of cash flows of the financial assets: (1) financial assets measured at amortised cost, (2) financial assets measured at
+fair value through other comprehensive income, (3) financial assets measured at fair value through profit or loss. A contractual cash flow
+characteristic which could have only a de minimis effect, or could have an effect that is more than de minimis but is not genuine, does
+not affect the classification of the financial asset.
+(i) Classification and measurement
+(a) Financial assets
+Financial instruments, refer to the contracts that form one party's financial assets and form the financial liabilities or equity instruments of the
+other party. The Group recognises a financial asset or a financial liability when the Group enters into and becomes a party to the underlining
+contract of the financial instrument.
+(11) Financial Instruments
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Goodwill is not amortised and is stated at cost less accumulated impairment losses (see Note 3(12)). 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.
+When an enterprise sells products or by-products produced in the course of research and development, the proceeds and related cost are
+accounted for in accordance with CAS 14 - Revenue and CAS 1 - Inventories respectively, and recognised in profit or loss for the current period.
+(10) Goodwill
+Measured at fair value through other comprehensive income:
+The business model for managing such financial assets by the Group are held for collection of contractual cash flows and for
+selling the financial assets, the contractual cash flow characteristics of such financial assets are consistent with the basic lending
+arrangements. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of
+impairment gains or losses, foreign exchange gains and losses and interest income calculated using the effective interest rate method,
+which are recognised in profit or loss. The financial assets include receivables financing.
+Equity instruments
+Equity instruments that the Group has no power to control, jointly control or exercise significant influence over, are measured at fair value
+through profit or loss and presented as financial assets held for trading.
+(iii)Derecognition
+The Group recognises the loss allowance accrued or written back in profit or loss.
+For accounts receivable and receivables financing related to revenue, the Group measures the loss allowance at an amount equal to
+lifetime expected credit losses.
+For financial instruments on the first stage and the second stage, and that have low credit risk, the Group calculates interest income
+according to carrying amount without deducting the impairment allowance and effective interest rate. For financial instruments on the
+third stage, interest income is calculated according to the carrying amount minus amortised cost after the provision of impairment
+allowance and effective interest rate.
+For financial instruments that have low credit risk at the balance sheet date, the Group assumes that there is no significant increase in
+credit risk since the initial recognition, and measures the loss allowance at an amount equal to 12-month expected credit losses.
+(ii) Impairment (Continued)
+(a) Financial assets (Continued)
+(11) Financial Instruments (Continued)
+On derecognition of other equity instrument investments, the difference between the carrying amounts and the sum of the consideration
+received and any cumulative gain or loss previously recognised in other comprehensive income, is recognised in retained earnings. While
+on derecognition of other financial assets, this difference is recognised in profit or loss.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Financial Statements (PRC)
+(3) (Continued)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+The Group measures the expected credit losses of financial instruments on different stages at each balance sheet date. For financial
+instruments that have no significant increase in credit risk since the initial recognition, on first stage, the Group measures the loss
+allowance at an amount equal to 12-month expected credit losses. If there has been a significant increase in credit risk since the initial
+recognition of a financial instrument but credit impairment has not occurred, on second stage, the Group recognises a loss allowance
+at an amount equal to lifetime expected credit losses. If credit impairment has occurred since the initial recognition of a financial
+instrument, on third stage, the Group recognises a loss allowance at an amount equal to lifetime expected credit losses.
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past
+events, current conditions and forecasts of future economic conditions.
+The Group recognises a loss allowance for expected credit losses on financial assets measured at amortised cost and receivables
+financing measured at fair value through other comprehensive income.
+(ii) Impairment
+In addition, the Group designates some equity instruments that are not held for trading as financial assets at fair value through other
+comprehensive income, and presented in other equity instrument investments. The relevant dividends of these financial assets are
+recognised in profit or loss. When derecognised, the cumulative gain or loss previously recognised in other comprehensive income is
+transferred to retained earnings.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+Cash flow hedges (Continued)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+If the amount that has been accumulated in the cash flow hedge reserve is a loss and the Group expects that all or a portion of that
+loss will not be recovered in one or more future periods, the Group immediately reclassify the amount that is not expected to be
+recovered into profit or loss.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (PRC)
+An onerous contract exists when the Group has a contract under which the unavoidable costs of meeting the obligations under the contract
+exceed the economic benefits expected to be received from the contract. Provisions for onerous contracts are measured at the present value
+of the lower of the expected cost of terminating the contract and the net cost of continuing with the fulfilling the contract. The cost of fulfilling
+the contract includes both the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling that
+contract.
+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.
+(16) 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:
+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.
+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.
+(17) Revenue recognition
+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.
+Revenue arises in the course of the Group's ordinary activities, and increases in economic benefits in the form of inflows that result in an
+increase in equity, other than those relating to contributions from equity participants.
+Sales of goods
+Financial Statements (PRC)
+99
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Research costs and development costs that cannot meet the capitalisation criteria are recognised in profit or loss when incurred.
+(22) Research and development costs
+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.
+(21) Environmental expenditures
+Repairs and maintenance (including overhauling expenses) expenses are recognised in profit or loss when incurred.
+(20) 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 in the capitalisable period.
+(19) 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 non-reciprocal transfers of monetary or non-monetary assets from the government to the Group except for capital
+contributions from the government in the capacity as an investor in the Group.
+(18) Government grants
+Sales are recognised when control of the goods have transferred. Obtaining control of relevant goods means that a customer can direct the use
+of the goods and obtain almost all the economic benefits from it. Advance from customers but goods not yet delivered is recorded as contract
+liabilities and is recognised as revenues when a customer obtains control over the relevant goods.
+The Group sells crude oil, natural gas, petroleum and chemical products, etc. Revenue is recognised according to the expected consideration
+amount, when a customer obtains control over the relevant goods or services. To determine whether a customer obtains control of a promised
+asset, the Group shall consider indicators of the transfer of control, which include, but are not limited to, the Group has a present right to
+payment for the asset; the Group has transferred physical possession of the asset to the customer; the customer has the significant risks and
+rewards of ownership of the asset; the customer has accepted the asset.
+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 realise 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).
+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).
+(12) Impairment of other non-financial long-term assets (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Useful lives and amortisation methods are reviewed at least each year end.
+96
+Financial Statements (PRC)
+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, right-of-use assets, goodwill, intangible assets, long-term deferred expenses and investments in subsidiaries,
+associates and joint ventures may be impaired.
+(12) Impairment of other non-financial long-term assets
+Any adjustment to the carrying amount of a hedged item is amortised to profit or loss if the hedged item is a financial instrument (or
+a component thereof) measured at amortised cost. The amortisation is based on a recalculated effective interest rate at the date that
+amortisation begins.
+The gain or loss from remeasuring the hedging instrument 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 recognised hedged item not measured at fair value and is
+recognised in profit or loss.
+A fair value hedge is a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognised firm
+commitment, or a portion of such an asset, liability or firm commitment.
+Fair value hedges
+When the hedging relationship no longer meets the risk management objective on the basis of which it qualified for hedge accounting (ie
+the entity no longer pursues that risk management objective), or when a hedging instrument expires or is sold, terminated, exercised,
+or there is no longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk starts
+to dominate the value changes that result from that economic relationship or no longer meets the criteria for hedge accounting, the
+Group discontinues prospectively the hedge accounting treatments. If the hedged future cash flows are still expected to occur, that
+amount shall remain in the cash flow hedge reserve and shall be accounted for as cash flow hedges. If the hedged future cash flows
+are no longer expected to occur, that amount shall be immediately reclassified from the cash flow hedge reserve to profit or loss as a
+reclassification adjustment. A hedged future cash flow that is no longer highly probable to occur may still be expected to occur, if the
+hedged future cash flows are still expected to occur, that amount shall remain in the cash flow hedge reserve and shall be accounted
+for as cash flow hedges.
+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.
+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.
+Once an impairment loss is recognised, it is not reversed in a subsequent period.
+(13) Long-term deferred expenses
+(15) Income tax
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+98
+Financial Statements (PRC)
+97
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+For cash flow hedges, other than those covered by the preceding two policy statements, that amount shall be reclassified from the
+cash flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods during which the hedged.
+expected future cash flows affect profit or loss.
+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.
+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
+(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.
+(14) Employee benefits
+Long-term deferred expenses are amortised on a straight-line basis over their beneficial periods
+(c) Termination benefits
+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(12)). 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.
+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.
+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.
+Right-of-use assets of the Group mainly comprise land. Right-of-use assets are measured at cost which comprises the amount of the initial
+measurement of the lease liability, any lease payments made at or before the commencement date, any initial direct costs incurred by the
+lessee, less any lease incentives received. The Group depreciates the right-of-use assets over the shorter of the asset's useful life and the
+lease term on a straight-line basis. When the recoverable amount of a right-of-use asset is less than its carrying amount, the carrying amount
+is reduced to the recoverable amount.
+The Group recognises a right-of-use asset at the commencement date, and recognises the lease liability at the present value of the lease
+payments that are not paid at that date. The lease payments include fixed payments, the exercise price of a purchase option if the Group is
+reasonably certain to exercise that option, and payments of penalties for terminating the lease if the lease term reflects the Group exercising
+that option, etc. Variable payments that are based on a percentage of sales are not included in the lease payments, and should be recognised
+in profit or loss when incurred. Lease liabilities to be paid within one year (including one year) from balance sheet date is presented in
+non-current liabilities due within one year.
+A lease is a contract that a lessor transfers the right to use an identified asset for a period of time to a lessee in exchange for consideration.
+(a) As Lessee
+(6) Leases
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (PRC)
+The impairment assessment and provision accrual on investments in subsidiaries, associates and joint ventures are stated in Note 3(12).
+(c) The impairment assessment method and provision accrual on investment
+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 venture 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.
+Payments associated with short-term leases with lease terms within 12 months and leases for which the underlying assets are individually
+of low value when it is new are recognised on a straight-line basis over the lease term as an expense in profit or loss or as cost of relevant
+assets, instead of recognising right-of-use assets and lease liabilities.
+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.
+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.
+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)
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+90
+Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes produced and reserves.
+(9) Intangible assets
+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.
+(b) As Lessor
+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.
+When the Group leases self-owned plants and buildings, equipment and machinery, lease income from an operating lease is recognised on a
+straight-line basis over the period of the lease. The Group recognises variable lease income which is based on a certain percentage of sales
+as rental income when occurred.
+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.
+A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating lease is a
+lease other than a finance lease.
+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
+Useful lives, residual values and depreciation methods are reviewed at least each year end.
+Equipment, machinery and others
+Plants and buildings
+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:
+(7) Fixed assets and construction in progress (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(8) Oil and gas properties
+92
+Financial Statements (PRC)
+(7) Fixed assets and construction in progress
+Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment losses (see Note 3(12)). Construction in
+progress is stated in the balance sheet at cost less impairment losses (see Note 3(12)).
+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(19)), 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.
+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.
+When an enterprise sells products or by-products produced before a fixed asset is available for its intended use, the proceeds and related cost
+are accounted for in accordance with CAS 14 - Revenue and CAS 1 - Inventories respectively, and recognised in profit or loss for the current
+period.
+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.
+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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+91
+Financial Statements (PRC)
+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.
+PRC
+PRC
+Zhang Wei
+Operation of oil and natural gas
+500,000
+14.00%
+("PipeChina") (i)
+pipelines and auxiliary facilities
+18,000
+PRC
+PRC
+Jiang Yongfu
+Provision of non-banking financial
+49.00%
+("Sinopec Finance")
+services
+China Oil & Gas Pipeline Network Corporation
+Sinopec Capital Co., Ltd. ("Sinopec Capital")
+Sinopec Finance Company Limited
+2. Associates
+SAMI ALOSAIMI
+3,115
+PRC
+ΝΑ
+Crude oil and natural gas extraction
+25,000 USD
+49.00%
+Sinopec SABIC Tianjin Petrochemical
+PRC
+PRC
+Manufacturing and distribution of
+10,520
+50.00%
+Company Limited ("Sinopec SABIC Tianjin")
+petrochemical products
+Shanghai SECCO Petrochemical Co., Ltd.
+PRC
+PRC
+Wang Jingyi
+("Shanghai SECCO")
+Manufacturing and distribution of
+petrochemical products
+50.00%
+PRC
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+Project management, equity investment
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+Cyprus
+(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
+BASF-YPC
+Taihu
+At 31
+December
+At 31
+December
+2022
+2021
+RMB million
+RMB million
+At 31
+December
+2022
+RMB million
+At 31
+December
+2021
+At 31
+December
+2022
+Financial Statements (PRC)
+Sun Mingrong
+107
+Joint ventures and associates above are limited companies.
+10,000
+49.00%
+Zhongtian Synergetic Energy Company Limited
+PRC
+PRC
+Yang Dong
+("Zhongtian Synergetic Energy")
+management, investment consulting,
+self-owned equity management
+Mining coal and manufacturing of coal-
+chemical products
+17,516
+38.75%
+Caspian Investments Resources Ltd.
+("CIR")
+The Republic of
+Kazakhstan
+British Virgin
+ΝΑ
+Crude oil and natural gas extraction
+10,002 USD
+50.00%
+Islands
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Russia
+(a) Principal joint ventures and associates
+40.00%
+Investments in
+associates
+RMB million
+73,854
+35
+4,733
+Provision for
+impairment
+losses
+RMB million
+(7,926)
+Total
+RMB million
+360,847
+25,799
+4,449
+10
+10
+Other equity movements under the equity method
+5
+(1,270)
+(1,265)
+Dividends declared
+(3,263)
+(1,832)
+(5,095)
+Disposals for the year
+(2,047)
+(6)
+Investments in
+joint ventures
+RMB million
+17,609
+2,982
+(284)
+(2,053)
+277,310
+22,782
+Change of other comprehensive loss under the equity method
+(7,698)
+(14,098)
+(268)
+(444)
+(712)
+1,546
+1,755
+(183)
+3,118
+(2)
+(2)
+2
+77,846
+17
+159,985
+19
+(3,890)
+233,941
+Additions for the year
+Balance at 1 January 2022
+Share of profits less losses under the equity method
+Investments in
+subsidiaries
+RMB million
+Taihu Limited ("Taihu")
+Movement of provision for impairment
+(3)
+Principal activities
+RMB million
+by the Company
+1. Joint ventures
+Fujian Refining & Petrochemical Company
+PRC
+PRC
+Liu Xiangdong
+Manufacturing refining oil products
+14,758
+50.00%
+Limited ("FREP")
+BASF-YPC Company Limited
+PRC
+PRC
+Gu Yuefeng
+("BASF-YPC")
+Manufacturing and distribution of
+petrochemical products
+13,141
+directly or
+indirectly held
+(3)
+Registered Capital
+Register
+location
+Other movement
+Balance at 31 December 2022
+298,045
+190
+17,239
+190
+75,524
+(7,929)
+382,879
+For the year ended 31 December 2022, 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 59.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+Principal joint ventures and associates of the Group are as follows:
+At 31
+December
+Percentage of
+equity/voting right
+Name of investees
+Principal place
+of business
+Legal
+representative
+2021
+2,188
+Shanghai
+SECCO*
+minority interests
+Net assets attributable to
+21,726
+14,967
+12,266
+13,523
+21,941
+18,949
+15,883
+(6,400)
+16,239
+12,993
+shareholders of the company
+Net assets attributable to
+21,726
+14,967
+12,266
+13,991
+22,591
+650
+18,949
+468
+joint ventures
+10,863
+7,484
+6,133
+6,626
+10,751
+7,580
+6,353
+8,120
+6,497
+Carrying Amounts
+10,863
+7,484
+6,133
+6,626
+10,751
+7,580
+6,353
+8,120
+6,497
+Share of net assets from
+Summarised income statement
+15,883
+12,993
+(85)
+(157)
+(6,857)
+(3,742)
+Non-current financial liabilities
+Non-current liabilities
+(8,977)
+(4,144)
+(6,232)
+(1,963)
+(2,782)
+(2,623)
+(2,308)
+(6,185)
+(10,780)
+Total current liabilities
+(2,368)
+(3,547)
+(3,282)
+(6,393)
+16,239
+(7,599)
+(237)
+Net assets
+(944)
+(7,981)
+(7,028)
+(1,524)
+(2,009)
+(92)
+(107)
+(7,099)
+(3,979)
+Total non-current liabilities
+(944)
+(382)
+(635)
+(1,439)
+(1,852)
+(92)
+(107)
+(242)
+Other non-current liabilities
+Sinopec SABIC Tianjin
+At 31
+December
+2022
+For the year ended
+FREP
+9,217
+5,993
+6,953
+15,269
+2,554
+3.437
+3,647
+Total current assets
+15,044
+15,779
+9,054
+12,328
+16,894
+3,446
+7,060
+8,257
+4.970
+Non-current assets
+12,708
+11,311
+13,744
+Other current assets
+4,820
+At 31
+December
+At 31
+December
+2021
+2022
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Current assets
+Cash and cash equivalents
+3,733
+6,562
+3,061
+5,375
+1,625
+1,258
+4,506
+1,323
+31 December 2022
+9,244
+10,488
+(1,931)
+25,076
+47,224
+59,347
+Turnover
+RMB million
+RMB million
+RMB million
+RMB million
+2021
+Sinopec SABIC Tianjin
+2022
+2021
+2022
+2021
+RMB million
+Taihu
+BASF-YPC
+2022
+RMB million
+2021
+RMB million
+RMB million
+2022
+(2,727)
+9,336
+(2,546)
+(5,008)
+19,542
+14,032
+18,466
+18,835
+26,677
+Current liabilities
+Current financial liabilities
+(829)
+(1,177)
+(63)
+(77)
+(55)
+(32)
+(2,950)
+(597)
+27,499
+(6,609)
+Other current liabilities
+(9,951)
+(2,245)
+(1,009)
+balance
+11
+4
+3.3
+ཨ་=[ཁ
+16
+At 31 December 2022 and 31 December 2021, the total amounts of the top five prepayments of the Group are set out below:
+Total amount (RMB million)
+Percentage to the total balance of prepayments
+104
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December
+At 31 December
+2022
+2021
+2,565
+2,939
+31.8%
+31.4%
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+2.7
+10 OTHER RECEIVABLES
+10.1
+2.2
+Allowance
+Percentage of
+allowance to
+prepayments
+balance
+%
+RMB million
+%
+87.0
+99
+123
+Total
+4,473
+100.0
+12
+4,556
+100.0
+0727
+18228
+8.1
+2
+0.5
+10
+to total
+prepayments
+The Group
+At 31 December
+2022
+RMB million
+to total other
+to other
+receivables
+Percentage
+to total other
+Amount
+receivables
+Allowance
+balance
+Amount
+receivables
+Allowance
+to other
+receivables
+balance
+RMB million
+%
+RMB million
+%
+RMB million
+%
+RMB million
+%
+Percentage
+The Company
+of allowance
+At 31 December 2021
+At 31 December
+2021
+RMB million
+At 31 December
+2022
+RMB million
+37,254
+1,590
+35,664
+39,416
+899
+38,517
+At 31 December
+2021
+RMB million
+47,827
+898
+46,929
+Other receivables
+Less: Allowance for doubtful accounts
+Total
+Other receivables mainly include security deposits and deposits.
+Ageing analysis of other receivables is as follows:
+28,562
+1,553
+27,009
+At 31 December 2022
+of allowance
+The Group
+Percentage
+Percentage
+Amount
+RMB million
+3,965
+369
+619
+8.9
+The adoption of Bulletin No.15 does do not have a significant impact on the financial position and financial performance of the Group.
+Financial Statements (PRC)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+4 TAXATION
+Major types of tax applicable to the Group are value-added tax, resources tax, consumption tax, income tax, crude oil special gain levy, city
+construction tax, education surcharge and local education surcharge etc.
+Tax rate of products is presented as below:
+Type of taxes
+Tax rate
+Value Added Tax (the "VAT")
+13%, 9%, 6%
+Resource Tax
+Consumption Tax
+6%
+Corporate Income Tax
+Crude Oil Special Gain Levy
+RMB2,109.76 per tonnage for Gasoline, RMB1,411.20
+per tonnage for Diesel, RMB2,105.20 per tonnage
+for Naphtha, RMB1,948.64 per tonnage for Solvent
+oil, RMB1,711.52 per tonnage for Lubricant
+oil, RMB1,218.00 per tonnage for Fuel oil, and
+RMB1,495.20 per tonnage for Jet fuel oil.
+5% to 50%
+20% to 40%
+City Construction Tax
+In accordance with CAS Bulletin No.15, when determining whether a contract is onerous, the Group includes in its estimated cost of fulfilling
+the contract the amount of the incremental cost of fulfilling the contract and the allocation of other costs directly attributable to fulfilling the
+contract.
+1%, 5% or 7%
+The adoption of Bulletin No.15 does not have a significant impact on the financial position and financial performance of the Group.
+(b) "Determining whether a contract is onerous"
+(a) Accounting for sales before intended use
+100
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(23) Dividends
+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.
+(24) Related parties
+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, except for the two parties significantly
+influenced by a party. Related parties may be individuals or enterprises. Where enterprises are subject to state control but are otherwise
+unrelated, they are not related parties.
+In addition to the related parties stated above, the Company determines related parties based on the disclosure requirements of Administrative
+Procedures on the Information Disclosures of Listed Companies issued by the CSRC.
+(25) Segment reporting
+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:
+engage in business activities from which it may earn revenues and incur expenses;
+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
+for which financial information regarding financial position, results of operations and cash flows are available.
+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.
+(26) Changes in significant accounting policies
+In 2022, the Group has adopted the revised accounting requirements and guidance under CAS newly issued by the Ministry of Finance ("MOF"),
+mainly include:
+"Accounting for selling outputs that are produced before fixed assets are available for intended use or produced in the course of research and
+development" ("accounting for sales before intended use") in CAS Bulletin No.15 (Caikuai [2021] No.35)
+"Determining whether a contract is onerous" in CAS Bulletin No.15
+In accordance with CAS Bulletin No.15, the Group accounts for the proceeds and related cost arising from the sale of products or by-products
+produced before the fixed asset is available for its intended use and in the course of research and development in accordance with CAS 14
+- Revenue and CAS 1 - Inventories respectively, and recognises them in profit or loss for the current period. The net amount of proceeds
+from such sales before intended use less related costs is no longer offset against the cost of the fixed asset or research and development
+expenditure.
+Education surcharges
+3%
+Local Education surcharges
+Original
+currency
+million
+Original
+Exchange
+rates
+96.8
+Between one and two years
+39
+0.9
+1
+2.6
+Between two and three years
+13
+0.3
+3
+23.1
+Over three years
+90
+2.0
+8
+At 31 December 2021
+At 31 December 2022
+Total
+Others
+2%
+5
+CASH AT BANK AND ON HAND
+The Group
+Tax basis and method
+Based on taxable value added amount. Tax payable is
+calculated using the taxable sales amount multiplied by the
+applicable tax rate less current period's deductible VAT input.
+Based on the revenue from sales of crude oil and natural gas.
+Based on quantities
+Based on taxable income.
+Based on the sales of domestic crude oil at prices higher
+than a specific level.
+Based on the actual paid VAT and consumption tax.
+Based on the actual paid VAT and consumption tax.
+Based on the actual paid VAT and consumption tax.
+Within one year
+Cash on hand
+Cash at bank
+Renminbi
+US Dollar
+Hong Kong Dollar
+EUR
+Others
+Deposits at related parities
+Renminbi
+US Dollar
+EUR
+Renminbi
+(1,020)
+17,846
+25
+At 31 December
+2021
+19,056
+Within one year,
+one to two years,
+two to three years
+and over three years
+51.2%
+74.0
+During the year ended 31 December 2022 and 2021, the Group and the Company had no individually significant other receivables been fully or
+substantially provided allowance for doubtful accounts.
+During the year ended 31 December 2022 and 2021, 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+105
+Financial Statements (PRC)
+Financial Statements (PRC)
+106
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+11 INVENTORIES
+The Group
+Raw materials
+Work in progress
+Finished goods
+Within one year,
+one to two years,
+two to three years
+and over three years
+48.8%
+72.0
+Spare parts and consumables
+2022
+13,936
+Percentage to the total balance of other receivables
+Allowance for doubtful accounts
+Total
+39,416
+100.0
+899
+47,827
+100.0
+8030
+2
+2
+894
+898
+فة
+0.1
+0.1
+6.2
+||FF|'
+At 31 December 2022 and at 31 December 2021, the total amounts of the top five other receivables of the Group are set out below:
+Total amount (RMB million)
+Ageing
+At 31 December
+30.3
+At 31 December
+2022
+RMB million
+2021
+Foreign currency translation differences
+Movement of provision for impairment
+Other movements
+Balance at 31 December 2022
+The Company
+Investments in
+joint ventures
+RMB million
+63,384
+16,387
+Investments
+in associates
+RMB million
+149,500
+3,724
+Provision for
+impairment
+losses
+RMB million
+(3,705)
+Total
+RMB million
+209,179
+20,111
+138
+3,046
+14,341
+14,479
+(190)
+2,856
+Disposals for the year
+At 31 December
+Other equity movements under the equity method
+Dividends declared
+Share of profits less losses under the equity method
+RMB million
+139,307
+109,940
+14,536
+15,701
+93,994
+84,174
+2,987
+250,824
+6,583
+244,241
+2,515
+212,330
+Less: Provision for diminution in value of inventories
+Total
+4,897
+207,433
+At 31 December 2022, the provision for diminution in value of inventories of the Group was primarily due to the costs of finished goods and raw
+materials were higher than net realisable value.
+12 LONG-TERM EQUITY INVESTMENTS
+The Group
+Balance at 1 January 2022
+Additions for the year
+Change of other comprehensive loss under the equity method
+3.0
+30
+14,497
+Over three years
+9,867
+34.5
+1,345
+13.6
+2,417
+6.5
+1,278
+52.9
+18217
+Total
+28,562
+100.0
+1,553
+37,254
+100.0
+1,590
+The Company
+At 31 December 2022
+2.2
+At 31 December 2021
+165
+7,661
+0.1
+26,579
+71.3
+35
+0.1
+Between one and two years
+496
+1.7
+44
+8.9
+597
+1.6
+112
+18.8
+Between two and three years
+353
+1.2
+139
+39.4
+20.6
+Percentage
+Percentage
+of allowance
+Between one and two years
+2,847
+7.2
+5
+0.2
+28,176
+3,740
+58.9
+7.8
+Between two and three years
+3,929
+10.0
+2
+0.1
+1,414
+Over three years
+6,695
+17.0
+892
+13.3
+65.8
+25,945
+Within one year
+%
+of allowance
+Percentage
+to total other
+to other
+receivables
+Percentage
+to total other
+to other
+receivables
+Amount
+receivables
+62.6
+Allowance
+RMB million
+%
+RMB million
+%
+Amount
+RMB million
+receivables
+%
+Allowance
+RMB million
+balance
+15,190
+24,294
+3,212
+Interest income
+Interest expense
+%
+20,196
+95.1
+946
+3427
+20
+77
+100.0
+78
+21,239
+100.0
+1513
+54000
+9
+0.1
+4.5
+6
+0.6
+0.1
+receivable
+balance
+2
+Allowance
+RMB million
+to accounts
+1
+108
+0.3
+11
+191
+0.6
+1
+65
+33,919
+0.2
+65
+8050
+0.0
+10.2
+0.5
+100.0
+20250
+%
+Amount
+RMB million
+to total
+accounts
+receivable
+%
+98.9
+10.0
+76
+7 ACCOUNTS RECEIVABLE (Continued)
+Ageing started from the overdue date of accounts receivable. The Group always measured the provision for impairment of accounts receivable
+based on the amount equivalent to the expected credit loss during the entire duration. The ECLs were calculated based on historical actual credit
+loss experience. The rates were considered the differences between economic conditions during the period over which the historical data has been
+collected, current conditions and the Group's view of economic conditions over the expected lives of the receivables. The Group performed the
+calculation of ECL rates by the operating segment and geographical location.
+Impairment provision on
+individual basis
+Impairment provision
+on provision matrix basis
+Weighted-
+31 December 2022
+Current and within 1 year past due
+1 to 2 years past due
+2 to 3 years past due
+Over 3 years past due
+Total
+Gross
+carrying
+amount
+RMB million
+RMB million
+Impairment
+Carrying provision on
+amount individual basis
+RMB million
+average
+loss rate
+Impairment
+provision
+Loss
+allowance
+%
+RMB million
+For the year ended 31 December 2022
+0.3
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+During 2022 and 2021, 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.
+98.7
+1697
+93
+At 31 December 2022 and 31 December 2021, the total amounts of the top five accounts receivable of the Group are set out below:
+Total amount (RMB million)
+Percentage to the total balance of accounts receivable
+Allowance for doubtful accounts
+At 31 December
+At 31 December
+2022
+2021
+15,846
+10,444
+31.4%
+26.9%
+2,187
+2,062
+Sales are generally on a cash term. Credit is generally only available for major customers with well-established trading records. Amounts due from
+China Petrochemical Corporation ("Sinopec Group Company") and fellow subsidiaries are repayable under the same terms.
+Accounts receivable (net of allowance for doubtful accounts) 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. Information about the impairment of accounts
+receivable and the Group exposure to credit risk can be found in Note 63.
+During 2022 and 2021, the Group and the Company had no individually significant accounts receivable been fully or substantially provided
+allowance for doubtful accounts.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+RMB million
+33,555
+%
+91.4
+58
+0.1
+34,263
+88.1
+Between one and two years
+216
+0.4
+64
+29.6
+623
+Between two and three years
+269
+0.5
+181
+67.3
+3,411
+Over three years
+3,861
+46,097
+7.7
+Within one year
+to accounts
+Amount
+to total
+accounts
+receivable
+Allowance
+24,631
+RMB million
+%
+RMB million
+%
+Amount
+RMB million
+The Group
+Percentage
+of allowance
+to accounts
+receivable
+At 31 December 2021
+Percentage
+to total
+accounts
+Percentage
+of allowance
+receivable
+balance
+receivable
+RMB million
+3,776
+Total
+At 31 December 2022
+Percentage
+Percentage
+of allowance
+At 31 December 2021
+Percentage
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+Total
+Percentage
+of allowance
+to total
+accounts
+Amount
+receivable
+Allowance
+to accounts
+receivable
+balance
+RMB million
+The Company
+97.8
+4,033
+579
+50,443
+100.0
+4,079
+597
+38,894
+100.0
+896850
+∞∞
+%
+Allowance
+RMB million
+%
+83
+0.2
+1.6
+8.8
+181
+29.0
+3,190
+93.5
+1.5
+97.0
+Percentage
+46,097
+216
+2
+%
+Amount
+RMB million
+to total
+prepayments
+Allowance
+prepayments
+balance
+%
+RMB million
+%
+Within one year
+7,608
+Between one and two years
+249
+Between two and three years
+67
+Over three years
+143
+2301
+94.3
+8,541
+% RMB million
+91.3
+RMB million
+Allowance
+2022
+RMB million
+At 31 December
+2021
+RMB million
+9,267
+4,473
+12
+4,461
+4,556
+16
+4,540
+The Group
+At 31 December 2022
+At 31 December 2021
+Percentage of
+Percentage of
+Percentage
+Amount
+to total
+prepayments
+allowance to
+prepayments
+Percentage
+allowance to
+balance
+At 31 December
+3.1
+12.9
+9,350
+100.0
+83
+The Company
+At 31 December 2022
+Percentage
+At 31 December 2021
+Amount
+to total
+prepayments
+Percentage of
+allowance to
+prepayments
+Percentage
+Allowance
+balance
+RMB million
+%
+RMB million
+%
+Within one year
+4,331
+111
+32
+100.0
+Total
+444
+4.8
+7
+1.6
+0.8
+10
+14.9
+166
+1.8
+25
+15.1
+1.8
+69
+48.3
+199
+2.1
+51
+25.8
+16180
+8,067
+7,014
+At 31 December
+2021
+RMB million
+9,350
+83
+Less: Allowance for doubtful accounts
+Total
+499
+4,079
+Impairment provision
+31 December 2021
+Current and within 1 year past due
+RMB million
+1 to 2 years past due
+2 to 3 years past due
+Gross
+carrying
+amount
+RMB million
+Impairment provision on
+individual basis
+Impairment
+Carrying provision on
+amount individual basis
+RMB million
+on provision matrix basis
+Weighted.
+average
+loss rate
+3,580
+Impairment
+provision
+10,723
+3,776
+0.1%
+56
+58
+29
+25
+20.9%
+39
+64
+269
+193
+148
+43.4%
+33
+181
+3,861
+3,487
+3,405
+99.2%
+371
+50,443
+8,067
+111
+7,956
+Loss
+allowance
+RMB million
+3,499
+534
+4,033
+Over 3 years past due
+Total
+8 RECEIVABLES FINANCING
+Receivables financing represents mainly the bills of acceptance issued by banks for sales of goods and products and certain trade accounts
+receivable. The business model of financial assets is achieved both by collecting contractual cash flows and selling of these assets.
+At 31 December 2022, the Group's derecognised but outstanding bills due to endorsement or discount amounted to RMB34,978 million (2021:
+RMB36,400 million).
+At 31 December 2022, the Group considers that its bills of acceptance issued by banks do not pose a significant credit risk and will not cause any
+significant loss due to the default of drawers.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+103
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+9 PREPAYMENTS
+The Group
+The Company
+At 31 December
+2022
+RMB million
+Prepayments
+579
+%
+389
+190
+RMB million
+34,263
+623
+4,280
+26
+0.2%
+57
+83
+3,411
+500
+3,324
+137
+35.8%
+44
+181
+3,146
+50.6%
+44
+3,190
+597
+38,894
+208
+8,312
+100.0%
+At 31 December 2022
+balance
+At 31 December
+2021
+RMB million
+21,239
+212,850
+194,458
+14,444
+13.140
+3,532
+885
+576
+816,301
+768,161
+57,394
+55,086
+249
+102
+51,035
+51,331
+1.106
+870
+Current liabilities
+(236,840)
+86,335
+(217,987)
+104,889
+RMB million
+Sinopec Finance
+At 31
+December
+2022
+RMB million
+At 31
+December
+2021
+RMB million
+Sinopec Capital
+At 31
+December
+2022
+At 31
+December
+2021
+Zhongtian Synergetic Energy
+At 31
+December
+2022
+CIR
+At 31
+December
+At 31
+December
+At 31
+December
+2021
+2022
+2021
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Current assets
+Non-current assets
+RMB million
+(101)
+(3,811)
+480
+Net assets attributable to
+shareholders of the Company
+525,235
+526,241
+32,731
+30,955
+13,602
+12,538
+27,001
+24,070
+1,139
+480
+Net assets attributable to
+minority interests
+93
+21,146
+88,862
+Share of net assets from associates
+73.533
+1,139
+(28)
+24,070
+12,538
+(8,577)
+(714)
+(822)
+Non-current liabilities
+(199,675) (103,243)
+(673)
+(602)
+(990)
+(676)
+(23,435)
+(22,216)
+(138)
+(144)
+Net assets
+589,249
+615,103
+32,731
+30,955
+13,602
+27,001
+73,674
+RMB million
+2022
+(2,396)
+1,393
+Tax expense
+578
+(597)
+(885)
+(2,054)
+(201)
+(601)
+603
+(407)
+Profit/(loss) for the year
+(1,426)
+1,664
+2,657
+6,164
+1,456
+2,263
+(1,793)
+2,864
+986
+1,657
+3,542
+107
+147
+116
+52
+975
+451
+144
+209
+(338)
+(411)
+(7)
+(5)
+(274)
+(107)
+(111)
+(89)
+Profit/(loss) before taxation
+(2,004)
+2,261
+8,218
+2021
+Other comprehensive loss
+(123)
+1,081
+(897)
+493
+Share of other comprehensive loss
+from joint ventures (ii)
+3,422
+(60)
+*
+The share of profit and other comprehensive income for the period from 29 December 2022 to 31 December 2022 from Shanghai SECCO was immaterial.
+The share of profit and other comprehensive income for the year ended 31 December 2022 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was loss RMB18 million (2021: profit RMB4,494 million) and loss RMB376 million (2021: RMB215 million)
+respectively. As at 31 December 2022, the carrying amount of all individually immaterial joint ventures accounted for using equity method in
+aggregate was RMB34,194 million (2021: RMB30,640 million).
+108
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+(c) Major financial information of principal associates
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal associates:
+PipeChina
+At 31
+December
+At 31
+December
+703
+7,144
+2,466
+832
+Total comprehensive income/(loss)
+(1,426)
+1,664
+2,657
+6,164
+8,600
+2,140
+(1,793)
+986
+Dividends from joint ventures
+910
+128
+2,462
+454
+454
+500
+Share of net profit/(loss) from
+joint ventures
+(713)
+1,063
+16,038
+64,014
+6,665
+144,294
+690
+6.9646
+4,809
+5,162
+0.8933
+4,611
+2,027
+3,533
+6.3757
+12,924
+0.8176
+2,888
+1
+7.4229
+7
+3
+7.2197
+20
+1,277
+69,282
+180
+1
+RMB
+million
+287
+53
+231
+15,168
+income from associates (ii)
+44
+13
+(33)
+43
+2
+The share of profit and other comprehensive income for the year ended 31 December 2022 in all individually immaterial associates accounted
+for using equity method in aggregate was RMB6,844 million (2021: RMB7,283 million) and loss RMB244 million (2021: profit RMB271 million)
+respectively. As at 31 December 2022, the carrying amount of all individually immaterial associates accounted for using equity method in
+aggregate was RMB51,881 million (2021: RMB44,176 million).
+Notes:
+(i) Sinopec is able to exercise significant influence in PipeChina since Sinopec has a member in PipeChina's Board of Directors and has a member in PipeChina's
+Management Board.
+(ii) Including foreign currency translation differences.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022 109
+Financial Statements (PRC)
+RMB
+million
+currency
+million
+Exchange
+rates
+2
+1,621
+79,988
+12,690
+DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and swaps contracts. See Note 63 for
+commodity price risk.
+7
+ACCOUNTS RECEIVABLE
+Accounts receivable
+Less: Allowance for doubtful accounts
+Total
+Ageing analysis on accounts receivable is as follows:
+The Group
+The Company
+At 31 December
+2022
+At 31 December
+2021
+RMB million
+RMB million
+50,443
+4,079
+46,364
+38,894
+4,033
+34,861
+At 31 December
+2022
+RMB million
+33,919
+78
+33,841
+6
+160,307
+For the year ended 31 December 2022
+102
+15,758
+7,433
+56
+6.9646
+51,774
+7.4229
+413
+187
+65,064
+145,052
+6,943
+67
+6.3757
+44,266
+7.2197
+483
+1,175
+61,682
+221,989
+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.
+At 31 December 2022, time deposits with financial institutions of the Group amounted to RMB51,614 million (2021: RMB113,399 million).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+101
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+1,768
+Share of other comprehensive
+627
+112,832
+101,572
+2021
+RMB million RMB million
+5,636
+Sinopec Finance
+2022
+2021
+Sinopec Capital
+2022
+2021
+ZTHC Energy
+2022
+CIR
+2021
+2022
+2021
+RMB million RMB million
+5,177
+5
+485
+RMB million RMB million
+RMB million
+RMB million
+Turnover
+17,551
+RMB million
+PipeChina
+6,144
+10,463
+9,327
+570
+240
+Carrying Amounts
+73,533
+73,674
+16,038
+15,168
+6,665
+6,144
+10,463
+9,327
+570
+240
+Summarised income statement
+For the year ended
+31 December 2021
+2022
+16,959
+RMB million
+2
+1,826
+990
+4,562
+4,184
+2,090
+464
+Dividends declared by associates
+2,019
+442
+319
+490
+73
+632
+86
+1,152
+Share of profit from associates
+3,670
+3,205
+1,145
+1,062
+1,213
+2,194
+659
+29,778
+Profit for the year
+31,908
+29,776
+2,427
+2,168
+1,281
+990
+4,562
+4,184
+574
+2,338
+Other comprehensive income
+461
+31,908
+Total comprehensive income
+3
+(132,266) (136,150)
+(68)
+26
+89
+2
+85
+119
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+162
+43,599
+(2,438)
+1,103
+40,495
+The Group
+RMB million
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+Balance at 31 December 2022
+Exchange adjustments
+4,277
+35 OTHER NON-CURRENT LIABILITIES
+40
+Accretion expenses
+Total
+RMB million
+Others
+RMB million
+172,104
+RMB million
+Land
+Balance at 31 December 2021
+Balance at 31 December 2022
+Net book value:
+Balance at 31 December 2022
+Decreases for the year
+Additions for the year
+Balance at 31 December 2022
+Accumulated depreciation:
+Balance at 1 January 2022
+Balance at 1 January 2022
+Additions for the year
+Decreases for the year
+Cost:
+The Company
+Balance at 31 December 2021
+Balance at 31 December 2022
+Net book value:
+Balance at 31 December 2022
+Decreases for the year
+Additions for the year
+Balance at 31 December 2022
+Accumulated depreciation:
+Balance at 1 January 2022
+Decreases for the year
+Balance at 1 January 2022
+Additions for the year
+Cost:
+The Group
+15 RIGHT-OF-USE ASSETS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+46,921
+219,025
+1,527
+9,108
+RMB million
+RMB million
+Total
+Others
+Land
+184,974
+31,774
+153,200
+178,359
+30,993
+147,366
+44,991
+20,807
+24,184
+112
+(2,907)
+(1,048)
+13,847
+7,519
+6,328
+34,051
+15,147
+18,904
+223,350
+51,800
+171,550
+(6,310)
+(4,229)
+(2,081)
+10,635
+(1,859)
+43
+Bank loans & self-financing
+43%
+28,565
+Refining Reconstruction and Expansion Project
+Tianjin Nangang Ethylene and Downstream High-end
+New Material Industry Cluster Project
+Hainan Refining and Chemical Ethylene and
+RMB million
+2022
+Source of funding
+Accumulated
+interest
+capitalised at
+31 December
+Percentage
+of project
+investment
+to budgeted
+amount
+2022
+RMB million
+Balance at
+31 December
+Net change
+for the year
+RMB million
+RMB million
+RMB million
+2022
+15,602
+Balance at
+1 January
+Project name
+66,146
+81,501
+196,045
+155,939
+302
+84
+2,647
+(148)
+302
+2,130
+581
+81,803
+145
+198,692
+(63,556)
+(2,449)
+(11,492)
+(121,967)
+Budgeted
+amount
+RMB million
+(1,820)
+93%
+3,694
+1,738
+1,956
+8,591
+Self-financing
+16%
+6,332
+4,204
+2,128
+41,639
+High-end Synthetic New Material Project
+Western Sichuan Gas Field Leikoupo Formation Gas
+Reservoir Development and Construction Project
+Zhenhai Refining and Chemical Refining and
+120
+Bank loans & self-financing
+13,782
+79%
+7,300
+3,700
+13,939
+Upgrading Transformation Development Project
+Caprolactam Industry Chain Relocation and
+160
+Bank loans & self-financing
+44%
+12,854
+9,855
+2,999
+29.052
+369
+Bank loans & self-financing
+11,000
+(5,737)
+115,489
+118,445
+25,724
+4,032
+3,669
+31,054
+Balance at 31 December 2022
+(2,617)
+(194)
+(240)
+(1,455)
+(728)
+Decreases for the year
+6,911
+580
+2,294
+232
+217
+3,588
+Additions for the year
+65,063
+4,492
+23,670
+3,800
+4,907
+28,194
+Balance at 1 January 2022
+Accumulated amortisation:
+191,317
+9,252
+54,130
+4,878
+69,357
+Provision for impairment losses:
+Balance at 1 January 2022
+4,354
+28,009
+29,714
+1,245
+1,210
+589
+1,144
+86,497
+83,434
+Balance at 31 December 2021
+Balance at 31 December 2022
+Net book value:
+1,266
+20
+397
+130
+482
+237
+5,407
+Balance at 31 December 2022
+(17)
+(2)
+Decreases for the year
+13
+3
+7
+3
+Additions for the year
+1,272
+17
+407
+130
+482
+236
+(19)
+4,740
+117,788
+Balance at 31 December 2022
+Financial Statements (PRC)
+113
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+105,712
+1,427
+104,285
+91,549
+2,008
+89,541
+15,726
+2.318
+13.408
+(1,771)
+(386)
+Financial Statements (PRC)
+(1,385)
+1,175
+3,589
+12,733
+1,529
+11,204
+107,275
+4,326
+102,949
+(14,084)
+(845)
+(13,239)
+2,914
+2,215
+699
+4,764
+2,956
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+The Group
+(6,331)
+(302)
+(541)
+(1,959)
+(3,529)
+Decreases for the year
+12,103
+1,337
+880
+267
+166
+9,453
+Additions for the year
+185,545
+16 INTANGIBLE ASSETS
+8,217
+5,140
+6,533
+111,864
+Balance at 1 January 2022
+Cost:
+RMB million
+RMB million
+RMB million
+Total
+Others
+technology Operation rights
+RMB million
+Patents
+RMB million
+Land use rights
+RMB million
+Non-patent
+53,791
+120,694
+(6,416)
+(388)
+4,897
+Balance at 31 December 2022
+240
+2
+238
+Exchange adjustments
+(586)
+(476)
+(8)
+(102)
+Decreases for the year
+5,082
+2,016
+2,754
+312
+Financial Statements (PRC)
+110
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+13 FIXED ASSETS
+The Group
+Fixed assets (a)
+Fixed assets pending for disposal
+Total
+(a) Fixed assets
+At 31 December
+2022
+RMB million
+630,700
+58
+630,758
+At 31 December
+52,810
+44,552
+102,259
+Net book value:
+Total
+RMB million
+and others
+RMB million
+Equipment,
+machinery
+Oil and gas
+properties
+RMB million
+Plants and
+buildings
+RMB million
+The Company (Continued)
+(a) Fixed assets (Continued)
+13 FIXED ASSETS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+284,622
+4
+At 31 December
+2021
+RMB million
+284,618
+50
+296,530
+2021
+296,480
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Fixed assets pending for disposal
+Total
+Fixed assets (a)
+The Company
+598,925
+391,719
+132,207
+74,999
+Balance at 31 December 2021
+630,700
+407,956
+143,107
+79,637
+Balance at 31 December 2022
+At 31 December
+2022
+RMB million
+RMB million
+598,925
+7
+(20,175)
+4,296
+2,098,476
+Balance at 1 January 2022
+Additions for the year
+63,479
+611,012
+613,498
+4,736
+31,059
+50,383
+1,287,989
+86,178
+Reclassifications
+259
+Decreases for the year
+(677)
+1,105,325
+Exchange adjustments
+(209)
+(438)
+3,378
+(50)
+(11,209)
+195
+Balance at 31 December 2022
+67,898
+644,802
+652,817
+(12,324)
+3,674
+1,365,517
+Less: Provision for impairment losses:
+Balance at 1 January 2022
+4,687
+49,826
+43,010
+Financial Statements (PRC)
+101
+Cost:
+321
+152,432
+598,932
+Equipment,
+Plants and
+buildings
+RMB million
+Oil and gas
+properties
+RMB million
+machinery
+and others
+RMB million
+Total
+RMB million
+Cost:
+Balance at 1 January 2022
+Additions for the year
+Transferred from construction in progress
+Reclassifications
+Decreases for the year
+Exchange adjustments
+Balance at 31 December 2022
+3,768
+840,719
+Less: Accumulated depreciation:
+146
+793,045
+4,277
+1,048,227
+3,528
+8,832
+40,397
+72,738
+1,984,437
+7,951
+121,967
+1,042
+(289)
+(753)
+(960)
+(479)
+(18,736)
+207
+143,165
+(1,366)
+Balance at 1 January 2022
+Reclassifications
+In 2022, the impairment loss on fixed assets was mainly due to the impairment loss of the exploration and development segment of RMB2,891
+million (2021: RMB2,467 million), and the impairment loss of the chemical segment of RMB1,790 million (2021: RMB5,184 million). RMB2
+million (2021: RMB894 million), impairment loss of the refining segment and RMB398 million (2021: RMB873 million) of the marketing and
+distribution segment. The impairment losses in the exploration and development segment were mainly impairment losses on fixed assets related
+to oil and gas production activities. Among them, oil and gas properties and other fixed assets provided impairment losses of RMB2,754 million
+and RMB137 million respectively, which were mainly related to the decline in oil and gas reserves of individual oilfields and high extraction cost.
+The Exploration and Development segment allocates fixed assets related to oil and gas production activities into individually identifiable groups
+of assets and estimates their recoverable amounts. The recoverable amounts were determined based on the present values of the expected future
+cash flows of the assets using a pre-tax discount rate 8.17% to 14.86% (2021: 10.47%). If the Group's estimate of future oil prices is lowered,
+further impairment losses may be incurred and the aggregate amount of impairment losses may be significant. With other conditions remaining
+constant and a 5% drop in oil prices, the Group's impairment loss on fixed assets related to oil and gas production activities will increase by
+approximately RMB1,693 million (2021: RMB3,628 million); with other conditions remaining unchanged and operating costs increasing by 5%,
+the Group's impairment loss on fixed assets related to oil and gas production activities will increase by approximately RMB1,508 million (2021:
+RMB2,400 million); With other conditions remaining unchanged and the discount rate increasing by 5%, the Group's impairment loss on fixed
+assets related to oil and gas production activities will increase by approximately RMB126 million (2021: RMB180 million). Impairment losses
+recognised in the chemical segment and refining segment relate to certain refinery and chemical production facilities and are not individually
+significant. The impairment losses were mainly due to the suspension of operations of certain production facilities, and evidence that indicate the
+economic performance of certain production facilities continuously was lower than the expectation, thus the carrying amounts of these facilities
+were written down to their recoverable amounts, which were determined based on the present values of forecasted future cash flows of the cash
+generating units using pre-tax discount rates ranging from 7.64% to 18.68% (2021: 10.50% to 13.90%).
+The additions to oil and gas properties of the Group and the Company for the year ended 31 December 2022 included RMB4,277 million (2021:
+RMB2,163 million) and RMB3,982 million (2021: RMB1,525 million), respectively of the estimated dismantlement costs for site restoration.
+284,618
+296,480
+163,853
+159,642
+112,185
+102,880
+22,096
+Balance at 31 December 2021
+20,442
+73,675
+25,358
+45,816
+2,501
+(351)
+(306)
+(6)
+(39)
+166
+10
+151
+5
+Balance at 31 December 2022
+Net book value:
+Balance at 31 December 2022
+Decreases for the year
+Transferred to subsidiaries
+69,862
+3,998
+1,327
+2,364
+At 31 December 2022 and 31 December 2021, the Group and the Company had no individually significant fixed assets which were pledged.
+At 31 December 2022 and 31 December 2021, the Group and the Company had no individually significant fixed assets which were temporarily
+idle or pending for disposal.
+At 31 December 2022 and 31 December 2021, the Group and the Company had no individually significant fully depreciated fixed assets which
+were still in use.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+88,463
+180,741
+66,448
+158,069
+RMB million
+RMB million
+The Company
+The Group
+At 31 December 2022, major construction projects of the Group are as follows:
+Balance at 31 December 2021
+Balance at 31 December 2022
+Net book value:
+Balance at 31 December 2022
+Exchange adjustments
+307
+Decreases for the year
+Balance at 1 January 2022
+Balance at 31 December 2022
+Provision for impairment losses:
+Exchange adjustments
+Transferred to fixed assets
+Reclassification to other assets
+Dry hole costs written off
+Disposals for the year
+Additions for the year
+Balance at 1 January 2022
+Cost:
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+111
+Additions for the year
+Additions for the year
+24,327
+43,307
+(7,969)
+(6,887)
+(343)
+(739)
+Transferred to subsidiaries
+Reclassifications
+Additions for the year
+Balance at 1 January 2022
+Accumulated depreciation:
+Balance at 31 December 2022
+Decreases for the year
+Transferred from subsidiaries
+1,507
+(11,401)
+(9,032)
+51,042
+(67)
+(424)
+204
+1,286
+17
+(281)
+705
+1,212,138
+4,542
+63,556
+30,556
+514,422
+552
+646,020
+3,982
+31,343
+1,657
+Transferred from construction in progress
+51,696
+8
+Transferred to subsidiaries
+Transferred from subsidiaries
+(2,302)
+Additions for the year
+681,940
+1,262,373
+2,228
+Balance at 1 January 2022
+Provision for impairment losses:
+892,218
+340,180
+523,939
+28,099
+Balance at 31 December 2022
+(5,925)
+(5,101)
+(304)
+(520)
+Decreases for the year
+(7,524)
+529,391
+(7,097)
+1,002
+38
+957
+7
+89
+(206)
+117
+857,658
+47,007
+21,798
+23,659
+1,550
+330,453
+499,833
+27,372
+(427)
+3,708
+119,210
+Amortisation of the intangible assets of the Group charged for the year ended 31 December 2022 is RMB6,489 million (2021: RMB6,363 million).
+2
+(322)
+63
+(8,978)
+of the year
+Balance at
+the end
+Decreased
+during the year
+13,508
+69
+4,201
+11
+316
+8
+8,991
+50
+Accrued
+during the year
+of the year
+Balance at
+the beginning
+13,536
+(96,451)
+96,020
+13,967
+(2,607)
+2,600
+47
+265
+(2,302)
+2,288
+279
+(4,204)
+8
+(13,504)
+73
+Long-term loans due within one year
+-Renminbi loans
+subsidiaries
+Long-term loans from Sinopec Group Company and fellow
+-US Dollar loans
+-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
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+117
+47
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+11,548
+At 31 December 2022 and 31 December 2021, other payables of the Group over one year primarily represented payables for constructions.
+28,379
+9,676
+8
+6
+8,818
+56,084
+4,809
+4,725
+934
+13,038
+2021
+RMB million
+At 31 December
+RMB million
+2022
+At 31 December
+81,267
+(6,833)
+6,832
+48
+(96,451)
+96,020
+13,967
+69
+of the year
+the end
+Balance at
+Decreased
+during the year
+during the year
+of the year
+Accrued
+Balance at the
+beginning
+28 OTHER PAYABLES
+Total
+Other taxes
+12
+14,048
+Mineral resources compensation fee payable
+Consumption tax payable
+Value-added tax payable
+The Group
+27 TAXES PAYABLE
+Total
+Unemployment insurance
+Annuity
+Basic pension insurance
+(3) Post-employment benefits - defined contribution plans
+Total
+Other short-term employee benefits
+Labour union fee, staff and workers' education fee
+Housing fund
+Maternity insurance
+Work-related injury insurance
+Income tax payable
+Debentures payable due within one year
+13,508
+148
+109,676
+13,536
+73
+1
+(138)
+133
+6
+3
+(438)
+435
+6
+304
+(5,892)
+5,931
+265
+308
+(6,468)
+(13,504)
+(152)
+(110,107)
+6,499
+1,635
+(8,637)
+7,686
+2,586
+11,241
+(69,604)
+70,115
+10,730
+of the year
+Balance at
+the end
+Decreased
+during the year
+Accrued
+during the year
+Balance at
+the beginning
+of the year
+8
+13,617
+277
+Medical insurance
+-Renminbi debentures
+Others
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+49,341
+94,964
+4,335
+10,725
+26,633
+73,387
+18,373
+10,852
+At 31 December
+2021
+RMB million
+RMB million
+At 31 December
+2022
+49,341
+13,690
+(466)
+(440)
+22,255
+94,964
+1,168
+6.3757
+183
+6.9646
+12,988
+(3,293)
+35,651
+22,695
+(13,876)
+72,709
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+118
+Long-term loans are carried at amortised costs.
+Total
+32 DEBENTURES PAYABLE
+The Group
+Debentures payable:
+Corporate Bonds (i)
+Provision for the year
+Balance at 1 January 2022
+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:
+34 PROVISIONS
+170,233
+166,407
+185,406
+15,173
+182,411
+16,004
+RMB million
+RMB million
+2021
+At 31 December
+At 31 December
+2022
+Deduct Portion of lease liabilities with one year (Note 29)
+Total
+After five years
+Lease liabilities
+33 LEASE LIABILITY
+(i) Corporate bonds are carried at amortised cost, including USD denominated corporate bonds of RMB12,164 million, and RMB denominated corporate bonds of
+RMB31,533 million (2021: USD denominated corporate bonds of RMB11,127 million, and RMB denominated corporate bonds of RMB38,521 million).
+42,649
+12,997
+7,000
+49,649
+43,697
+30,700
+RMB million
+2021
+At 31 December
+At 31 December
+2022
+RMB million
+Note:
+Total
+Less: Portion with one year (Note 29)
+The Group
+Between two and five years
+Between one and two years
+The maturity analysis of the Group's long-term loans is as follows:
+3,759
+466
+The Group's long-term loans represent:
+31 LONG-TERM LOANS
+At 31 December 2022 and 31 December 2021, other current liabilities mainly represent output VAT to be transferred.
+30 OTHER CURRENT LIABILITIES
+At 31 December 2022 and 31 December 2021, the Group had no significant overdue long-term loans.
+62,844
+1,824
+16,004
+30,700
+14,316
+440
+3,281
+12
+7,000
+6.3757
+1
+6.9646
+13,875
+RMB million
+rates
+Exchange
+currency
+million
+rates RMB million
+Exchange
+Original
+Original
+currency
+million
+At 31 December 2021
+At 31 December 2022
+Non-current liabilities due within one year
+2
+Lease liabilities due within one year
+15.173
+28,651
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+Total
+Interest rates ranging from interest 1.08%
+to 5.23% per annum at 31 December 2022
+(2021: 1.08% to 5.23%) with maturities
+through 2037
+Less: Portion with one year (Note 29)
+- US Dollar loans
+- Renminbi loans
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+Less: Portion with one year (Note 29)
+Long-term bank loans
+64
+6.3757
+10
+53
+6.9646
+8
+Interest rates at 0.00% per annum at
+31 December 2022 (2021: 1.55%) with
+maturities through 2038
+2,719
+- US Dollar loans
+86,532
+Interest rates ranging from interest 1.00%
+to 4.66% per annum at 31 December 2022
+(2021: 1.08% to 4.00%) with maturities
+through 2039
+- Renminbi loans
+Long-term bank loans
+RMB
+million
+rates
+currency Exchange
+million
+RMB
+million
+Exchange
+rates
+currency
+million
+Interest rate and final maturity
+At 31 December 2021
+Original
+Original
+At 31 December 2022
+38,880
+Social insurance
+Staff welfare
+Salaries, bonuses, allowances
+Financial Statements (PRC)
+115
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Other non-current assets mainly represent long-term receivables, 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.
+At 31 December 2022, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB21,268 million
+(2021 RMB18,342 million), of which RMB8,972 million (2021: RMB5,564 million) was incurred for the year ended 31 December 2022, because
+it was not probable that the related tax benefit will be realised. These deductible losses carried forward of RMB1,875 million, RMB1,669 million,
+RMB3,442 million, RMB5,310 million and RMB8,972 million will expire in 2023, 2024, 2025, 2026, 2027 and after, respectively.
+At 31 December
+2021
+RMB million
+19,389
+7,910
+At 31 December
+2022
+RMB million
+19,952
+8,079
+Deferred tax liabilities
+Deferred tax assets
+Deferred tax assets and liabilities after the offsetting adjustments are as follows:
+Deferred tax liabilities
+11,207
+11,207
+RMB million
+At 31 December
+2021
+At 31 December
+2022
+RMB million
+10,445
+10,445
+Deferred tax assets
+The offsetting amount between deferred tax assets and liabilities are as follows:
+(19,117)
+(870)
+(1,161)
+(18,524)
+30,596
+30,397
+1,056
+1,395
+(492)
+(85)
+1,008
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+21 DETAILS OF IMPAIRMENT LOSSES
+10
+83
+9
+Prepayments
+4,079
+239
+(49)
+(561)
+417
+4,033
+7
+Included: Accounts receivable
+Allowance for doubtful accounts
+RMB million
+1,067
+RMB million
+RMB million
+2022
+(decrease)
+for the year
+31 December
+Balance at
+Other
+increase/
+Written off
+Written back
+for the year
+Provision for
+the year
+RMB million
+Balance at
+1 January
+2022
+RMB million
+Note
+At 31 December 2022, impairment losses of the Group are analysed as follows:
+RMB million
+(9)
+(6)
+127
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+114
+Long-term deferred expenses primarily represent catalysts expenditures and improvement expenditures of leased fixed assets.
+18 LONG-TERM DEFERRED EXPENSES
+Key assumptions used for cash flow forecasts for these cash generating units are the sales volume and gross margin. The sales volume was based
+on the production capacity and/or the sales volume in the period immediately before the budget period. The sales price was based on the future
+trend of the prices of crude oil and petrochemical products. The budgeted gross margin was based on the gross margin achieved 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. The pre-tax discount rates reflect specific risks relating to the cash generating unit. For impairment test of
+the goodwill, the pre-tax discount rates ranging 10.1% to 12.2% (2021: 11.4% to 11.7%) were used by management. Based on the estimated
+recoverable amount, no major impairment loss was recognised for the year ended 31 December, 2022.
+8,594
+6,464
+1,006
+1,417
+2,541
+1,004
+19 DEFERRED TAX ASSETS AND LIABILITIES
+1,004
+4,043
+4,043
+Manufacturing of intermediate petrochemical products
+and petroleum products
+At 31 December
+2021
+RMB million
+RMB million
+2022
+Principal activities
+At 31 December
+Other units without individual significant goodwill
+Total
+Sinopec Beijing Yanshan Petrochemical Branch
+Shanghai SECCO
+Sinopec Zhenhai Refining and Chemical Branch
+Name of investees
+Goodwill is allocated to the following Group's cash-generating units:
+17 GOODWILL
+Manufacturing of intermediate petrochemical products
+and petroleum products
+Production and sale of petrochemical products
+18
+Deferred tax assets and liabilities before the offsetting adjustments are as follows:
+Payables
+131
+4,749
+4,643
+(2,709)
+(15,037)
+(16,519)
+16,777
+15,714
+(736)
+258
+85
+2,858
+3,091
+(17)
+3,763
+Receivables and inventories
+4,271
+RMB million
+2021
+2022
+At 31 December
+At 31 December
+Deferred tax liabilities
+At 31 December
+2021
+RMB million
+Deferred tax assets
+At 31 December
+2022
+RMB million
+Deferred tax assets/(liabilities)
+Others
+Other equity instrument investments
+Intangible assets
+Tax value of losses carried forward
+Fixed assets
+Cash flow hedges
+RMB million
+111
+Other receivables
+10
+6.9646
+20
+24,959
+14,325
+24,959
+14,461
+RMB
+million
+rates
+Exchange
+currency
+million
+rates RMB million
+million
+Exchange
+currency
+136
+At 31 December 2021
+Original
+At 31 December 2022
+Total
+Euro loans
+- US Dollar loans
+- Renminbi loans
+fellow subsidiaries
+Short-term loans from Sinopec Group Company and
+Renminbi loans
+Short-term other loans
+- US Dollar loans
+Renminbi loans
+Short-term bank loans
+The Group's short-term loans represent:
+22 SHORT-TERM LOANS
+Original
+The reasons for recognising impairment losses are set out in the respective notes of respective assets.
+6.3757
+2,407
+(2) Short-term employee benefits
+Total
+Post-employment benefits- defined contribution plans
+Termination benefits
+Short-term employee benefits
+(1) Employee benefits payable:
+26 EMPLOYEE BENEFITS PAYABLE
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+116
+As at 31 December 2022 and 31 December 2021, the Group's contract liabilities primarily represent advances from customers. Related performance
+obligations are satisfied and revenue is recognised within one year.
+25 CONTRACT LIABILITIES
+At 31 December 2022 and 31 December 2021, the Group had no individually significant accounts payable aged over one year.
+24 ACCOUNTS PAYABLE
+6,852
+5,911
+At 31 December 2022 and 31 December 2021, the Group had no overdue unpaid bills.
+23 BILLS PAYABLE
+At 31 December 2022 and 31 December 2021, the Group had no significant overdue short-term loans.
+At 31 December 2022, the Group's interest rates on short-term loans were from interest 1.65% to 5.51% (At 31 December 2021: 0.53% to 4.20%)
+per annum. The majority of the above loans are by credit.
+27,366
+21,313
+153
+7.2197
+934
+6.3757
+146
+21
+906
+35
+6.9646
+7.4229
+130
+5
+1,320
+Bills payable primarily represented bank accepted bills for the purchase of material, goods and products. Bills payable were due within one year.
+Decrease for the year
+131,491
+(5,233)
+4,897
+123467
+17
+Goodwill
+Intangible assets
+14
+Construction in progress
+13
+Fixed assets
+12
+Long-term equity investments
+11
+Inventories
+6,928
+6,407
+441
+(1,656)
+582
+7,639
+1,185
+181
+(929)
+1,933
+Other non-current assets
+1,553
+3
+(29)
+(166)
+155
+1,590
+(78)
+723
+(85)
+(106)
+(1,741)
+12,666
+57
+8
+49
+125,076
+Total
+Others
+7,861
+7,861
+1,266
+(3)
+(7)
+4
+1,272
+(4,530)
+2,647
+(85)
+581
+2,130
+102,259
+186
+(532)
+5,082
+97,523
+3,890
+184
+(1)
+2
+3,705
+6,583
+21
+14 CONSTRUCTION IN PROGRESS
+Additions for the year
+97,523
+Administrative expenses mainly include salaries and salaries of administrative personnel, depreciation and amortization of office facilities, office
+systems and software, and repair costs.
+45 GENERAL AND ADMINISTRATIVE EXPENSES
+Selling expenses mainly include wages and salaries of sales staff, depreciation and amortization of sales equipment and related systems, etc.
+2,360,840
+2,958,502
+52,621
+49,664
+12,382
+10,591
+115,680
+109,906
+103,492
+103,585
+2021
+RMB million
+2,076,665
+2022
+RMB million
+2,684,756
+46 RESEARCH AND DEVELOPMENT EXPENSES
+44 SELLING AND DISTRIBUTION EXPENSES
+The research and development expenditures are mainly used for the replacement of resources in upstream, optimising structure and operation
+upgrades in refining sector, structured adjustment of materials and products in chemical segment.
+Exploration expenses include geological and geophysical expenses and written-off of unsuccessful dry hole costs.
+RMB million
+2021
+The Group
+2022
+Note:
+Total
+Others
+Gain from ineffective portion of cash flow hedges
+Income from investment of subsidiaries accounted for under cost method
+Income from investment accounted for under equity method
+Investment income from disposal of business and long-term equity investments (i)
+Dividend income from holding of other equity instrument investments
+Investment (loss)/income from holding/disposal of financial assets and
+liabilities and derivative financial instruments at fair value
+through profit or loss
+49 INVESTMENT INCOME
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+124
+Other income are mainly the government grants related to the business activities.
+48 OTHER INCOME
+47 EXPLORATION EXPENSES
+RMB million
+Total
+Exploration expenses (including dry holes)
+1,307
+5,679
+7,877
+2021
+RMB million
+RMB million
+2022
+259,032
+263,991
+5,680
+5,109
+6,432
+8,752
+13,409
+12,337
+1,573
+996
+Other expenses
+9,096
+15,666
+Depreciation, depletion and amortisation
+Personnel expenses
+Purchased crude oil, products and operating supplies and expenses
+The operating costs, selling and distribution expenses, general and administrative expenses, research and development expenses and exploration
+expenses (including dry holes) in consolidated income statement classified by nature are as follows:
+43 CLASSIFICATION OF EXPENSES BY NATURE
+The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2022 by the Group ranged from 1.89%
+to 4.25% (2021: 1.84% to 4.35%).
+9,010
+9,974
+(276)
+(529)
+(5,732)
+(6,266)
+1,135
+1,103
+13,883
+9,200
+2022
+RMB million
+20,338
+14,479
+The Group
+52 NON-OPERATING INCOME
+Total
+Others
+Construction in progress
+Intangible assets
+Fixed assets
+Long-term equity investment
+Inventories
+Prepayments
+The Group
+51 IMPAIRMENT LOSSES
+Total
+3,341
+(2)
+(1,715)
+Government grants
+Others
+Others
+Total
+The Group
+8
+12,009
+262
+144
+4
+581
+9,420
+206
+(40)
+3,130
+2
+5,082
+RMB million
+RMB million
+10
+6,322
+2021
+2022
+Total
+Others
+Asset scrap and damage loss
+Fines, penalties and compensation
+Donations
+53 NON-OPERATING EXPENSES
+428
+2021
+RMB million
+2,913
+(461)
+(1,252)
+1552
+4
+34
+76
+56
+8,151
+21,416
+RMB million
+2021
+The Company
+2,406
+82
+13,754
+4,449
+23,253
+6962
+22
+(15,063)
+997
+(17,687)
+266
+Net fair value (losses)/gains on financial assets and financial liabilities at fair value through loss or profit
+Unrealised or (losses)/gains from ineffective portion cash flow hedges, net
+RMB million
+2022
+The Group
+50 INCOME FROM CHANGES IN FAIR VALUE
+(i) The Company and Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. ("Gaoqiao Petrochemical") and INEOS Investment (Shanghai) Company Limited ("INEOS
+Shanghai") entered into an equity transfer agreement on 28 July 2022. According to the agreement, the Company and Gaoqiao Petrochemical transferred 15% and
+35% equity interests in Shanghai SECCO to INEOS Shanghai respectively at a total consideration of RMB10,863 million. The above transactions were considered and
+approved by the 10th Session of 8th Directorate Meeting of the Company. The transactions were completed on 28 December 2022 and the Company lost control over
+Shanghai SECCO. The investment income from disposal of Shanghai SECCO is RMB13,697 million. The Group accounted for its remaining 50% equity interest retained
+in Shanghai SECCO, at fair value upon initial recognition, as an interest in a joint venture from the date when control was lost.
+30,881
+13,874
+29,221
+1,203
+1,375
+84
+219
+14,462
+(376)
+409
+465
+184
+6,032
+43
+18,044
+213,894
+Operating costs
+Operating income
+Income from principal operations
+Income from other operations
+40 OPERATING INCOME AND OPERATING COSTS
+(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.
+(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;
+217,834
+The PRC Company Law and Articles of Association of the Company have set out the following profit appropriation plans:
+117,000
+96,224
+4,610
+100,834
+Balance at 31 December 2022
+Appropriation
+Balance at 1 January 2022
+213,224
+4,610
+RMB million
+The Group
+2022
+RMB million
+3,257,356
+60,812
+Total
+2021
+61,384
+Diesel
+Gasoline
+Income from principal operations
+The detailed information about the Group's operating income is as follows:
+The income from principal operations mainly represents revenue from the sales of refined petroleum products, chemical products, crude oil and
+natural gas, which are recognised at a point in time. The income from other operations mainly represents revenue from sale of materials, services
+providing, 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 62.
+808,540
+1,045,000
+31,039
+1,013,961
+2021
+RMB million
+1,302,073
+1,052,885
+The Company
+2022
+RMB million
+1,269,093
+32,980
+2,216,551
+2,740,884
+3,318,168
+2,819,363
+RMB million
+2,679,500
+Crude oil
+The Group
+Discretionary
+surplus reserves
+RMB million
+117,000
+Movements in surplus reserves are as follows:
+323
+(65)
+1,610
+(4,005)
+(3,315)
+(690)
+(2,092)
+7,214
+(29)
+(18)
+(5,765)
+(4,005)
+(3,315)
+(690)
+(2,092)
+(4,190)
+Statutory
+surplus reserve
+RMB million
+6,084
+2,264
+39 SURPLUS RESERVES
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+122
+As at 31 December 2022, cash flow hedge reserve amounted to a gain of RMB3,079 million (31 December 2021: a gain of RMB7,244 million),
+of which a gain of RMB3,024 million was attribute to shareholders of the Company (31 December 2021: a gain of RMB7,214 million).
+2,021
+(1,051)
+3,072
+3,992
+3,024
+294
+(83)
+(4,155)
+6,026
+3,762
+Chemical feedstock
+Basic organic chemicals
+Synthetic resin
+Education surcharge
+Special oil income levy
+City construction tax
+Consumption tax
+The Group
+41 TAXES AND SURCHARGES
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+123
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+2,740,884
+3,318,168
+1,394
+Resources tax
+1,222
+Others
+The applicable tax rate of the taxes and surcharges are set out in Note 4.
+206,838
+RMB million
+RMB million
+2021
+2022
+Total
+Net foreign exchange gains
+Interest income
+Accretion expenses (Note 34)
+Net interest expenses
+Add: Interest expense on lease liabilities
+Less: Capitalised interest expenses
+Interest expenses incurred
+The Group
+42 FINANCIAL EXPENSES
+Total
+59,990
+59,590
+61,384
+2,679,500
+RMB million
+2021
+2022
+RMB million
+3,257,356
+(ii) The above operating incomes, except rental income, are all income from contracts.
+(i) Others are primarily liquefied petroleum gas and other refinery and chemical byproducts and joint products and so on.
+Notes:
+Total
+Rental income
+Sale of materials and others
+Income from other operations
+Others (i)
+Synthetic fiber monomers and polymers
+Natural gas
+Kerosene
+796,667
+726,057
+743,551
+542,260
+60,812
+363,979
+491,762
+45,464
+45,335
+68,443
+83,853
+17,081
+112,519
+149,208
+144,524
+44,079
+198,453
+223,679
+42,785
+429,038
+517,183
+168,017
+13,165
+2022
+RMB million
+:
+Principal activities
+Registered address
+9111000010169286X1
+:
+Unified social credit identifier
+China Petrochemical Corporation
+:
+The name of the company
+(1) Related parties having the ability to exercise control over the Group
+57 RELATED PARTIES AND RELATED PARTY TRANSACTIONS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+Financial Statements (PRC)
+Financial Statements (PRC)
+127
+Relationship with the Group
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+No. 22, Chaoyangmen North Street, Chaoyang District, Beijing
+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
+Types of legal entity
+Sinopec Petroleum Storage and Reserve Limited
+Sinopec Century Bright Capital Investment Limited
+Sinopec Engineering Incorporation
+Sinopec Assets Management Corporation
+Sinopec Zhongyuan Petroleum Exploration Bureau
+Sinopec Shengli Petroleum Administration Bureau
+Sinopec Finance (Note)
+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
+Sinopec Group Company is an enterprise controlled by the PRC government. Sinopec Group Company directly and indirectly holds 67.84%
+shareholding of the Company.
+RMB326,547 million
+:
+Ma Yongsheng
+Authorised representative
+Registered capital
+State-owned
+Associates of the Group:
+8,864
+28,276
+19,412
+2022
+87,559
+21,031
+108,590
+(15,152)
+93,438
+108,590
+2021
+RMB million
+RMB million
+2022
+57,827
+225,174
+(43,664)
+116,269
+(8,177)
+(58,372)
+775
+179
+1,974
+802
+1,055
+(45,421)
+2021
+94
+22,945
+RMB million
+2
+RMB million
+RMB million
+18,672
+4,179
+2021
+2022
+5,205
+10.041
+4,225
+980
+RMB million
+RMB million
+10,041
+2021
+2022
+108,590
+108,589
+1
+93,436
+93,438
+RMB million
+PipeChina
+Sinopec Finance
+Sinopec Capital
+(viii)
+385
+541
+(ix)
+715
+1,203
+(viii)
+194
+173
+(vii)
+1,730
+(vi)
+44,405
+48,465
+(v)
+(x)
+33,930
+(3,382)
+36,608
+30,305
+Financial Statements (PRC)
+129
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+(vii) 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.
+(vi) Ancillary and social services represent expenditures for social welfare and support services such as educational facilities, media communication services, sanitation,
+accommodation, canteens and property maintenance. The term of the Cultural, Educational, Hygiene and Auxiliary Service Agreement expired on 31 December
+2021, and is not renewed due to the significant decrease in the service scale after the separation and transfer of assets and business such as the Three Supplies
+and One Industry Assets etc. Cultural and educational services related or similar to training and auxiliary services thereunder have been incorporated into the
+Mutual Supply Agreement.
+(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, and management services.
+(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.
+Notes:
+As at 31 December 2022 and 31 December 2021, 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 61(b). Guarantees given to banks
+by the Group in respect of banking facilities to associates and joint ventures are disclosed in Note 61(b).
+For the year ended 31 December 2022, the amount of rental the Group paid to Sinopec Group Company and fellow subsidiaries, associates and
+joint ventures for land, buildings and others are RMB11,051 million, RMB943 million and RMB352 million (2021: RMB10,834 million, RMB572
+million and RMB269 million), including pursuant to the continuing connected transaction agreements signed in 2000, the Sixth Supplementary
+Agreement on 27 August 2021, the amount of rental the Group paid to Sinopec Group Company for land and buildings are RMB11,046 million
+and RMB938 million (2021: RMB10,831 million and RMB565 million).
+For the year ended 31 December 2022, no individually significant right-of-use assets were leased from Sinopec Group Company and fellow
+subsidiaries, associates and joint ventures by the Group. The interest expense recognised for the year ended 31 December 2022 on lease
+liabilities in respect of amounts due to Sinopec Group Company and fellow subsidiaries, associates and joint ventures was RMB7,811 million
+(2021: RMB7,863 million).
+Included in the transactions disclosed above, for the year ended 31 December 2022 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB158,874 million (2021: RMB173,718 million) comprising purchases of products and services
+(i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB146,114 million
+(2021: RMB160,048 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB nil million
+(2021 RMB1,730 million), lease charges for land, buildings and others paid by the Group of RMB11,046 million, RMB938 million and RMB235
+million (2021: RMB10,831 million, RMB565 million and RMB159 million), respectively and interest expenses of RMB541 million (2021: RMB385
+million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB58,403 million (2021: RMB54,453
+million), comprising RMB57,151 million (2021: RMB53,671 million) for sales of goods, RMB1,203 million (2021: RMB715 million) for interest
+income and RMB49 million (2021: RMB67 million) for agency commission income.
+The amounts set out in the table above in respect of the year ended 31 December 2022 and 2021 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+(8,265)
+37,317
+(iv)
+19,443
+Transportation and storage
+Purchases
+Sales of goods
+(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:
+57 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+128
+Note: Sinopec Finance is under common control of a parent company with the Company and is also the associate of the Group.
+Shanghai SECCO
+Sinopec SABIC Tianjin
+Taihu
+FREP
+BASF-YPC
+Zhongtian Synergetic Energy
+CIR
+Exploration and development services
+Production related services
+Ancillary and social services
+Agency commission income
+18,291
+(iii)
+191,888
+184,986
+(ii)
+297,381
+352,691
+5,456
+(i)
+RMB million
+The Group
+2022
+Note
+Net funds obtained from related parties
+Net deposits placed with related parties
+Interest expense
+Interest income
+2021
+RMB million
+(6,032)
+(14,462)
+663
+9,286
+27,087
+23,629
+Expected income tax expense at a tax rate of 25%
+108,348
+94,515
+Profit before taxation
+RMB million
+RMB million
+2021
+2022
+Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows:
+23,318
+18,757
+Total
+(462)
+Tax effect of non-deductible expenses
+(1,757)
+4,553
+Tax effect of non-taxable income
+58
+Write-down of deferred tax assets
+1,391
+2,243
+(701)
+(850)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of tax losses not recognised and temporary differences
+(222)
+(128)
+Effect of income taxes at foreign operations
+(2,766)
+(3,091)
+Tax effect of preferential tax rate (i)
+(8,085)
+(5,900)
+6,142
+Under-provision for income tax in respect of preceding year
+6,258
+1,718
+3,727
+1,394
+165
+447
+220
+39
+2021
+RMB million
+2022
+RMB million
+3,516
+2,960
+2,710
+1,957
+806
+1,003
+2021
+RMB million
+2,979
+3,470
+4,859
+7,582
+17,522
+RMB million
+RMB million
+18,796
+Deferred taxation
+Provision for income tax for the year
+2021
+2022
+934
+The Group
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+126
+Financial Statements (PRC)
+125
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+54 INCOME TAX EXPENSE
+7,214
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+(462)
+RMB million
+2021
+RMB million
+2022
+Total
+Others
+Cash payments to purchase shares
+Repayments of lease liabilities
+(e) Other cash paid relating to financing activities :
+Total
+Others
+Cash received from disposal of 50% equity interests in Shanghai SECCO
+Cash received from disposal of equity interests in the relevant companies,
+oil and gas pipeline and ancillary facilities
+(d) Net cash received from disposal of subsidiaries and other business entities :
+Cash at the end of the year
+- Demand deposits
+75,758
+- Cash on hand
+85,030
+13,165
+10,503
+(3,341)
+1,715
+3,062
+722
+7,702
+6,416
+9,884
+9,968
+92,824
+86,178
+12,972
+13,760
+2,311
+(1,084)
+12,009
+Cash at bank and on hand
+(c) The analysis of cash held by the Group is as follows:
+Net (decrease)/increase of cash
+(a) Reconciliation of net profit to cash flows from operating activities:
+The Group
+56 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Pursuant to the shareholders' approval at the Annual General Meeting on 25 May 2021, a final dividend of RMBO.13 per share totaling
+RMB15,739 million according to total shares on 16 June 2021 was approved. All dividends have been paid in the year ended 31 December
+2021.
+Pursuant to the shareholders' approval at the Annual General Meeting on 18 May 2022, a final dividend of RMBO.31 per share totaling
+RMB37,532 million according to total shares on 9 June 2022 was approved. All dividends have been paid in the year ended 31 December 2022.
+Pursuant to the shareholders' approval at the General Meeting on 26 August 2022, the interim dividends for the year ending 31 December 2022
+of RMBO.16 (2021: RMBO.16) per share totaling RMB19,371 million (2021: RMB19,371 million) were approved. Dividends were paid on 19
+September 2022.
+(b) Dividends of ordinary shares declared during the year
+Pursuant to a resolution passed at the director's meeting on 24 March 2023, final dividends in respect of the year ended 31 December 2022 of
+RMBO.195 (2021: RMBO.31) per share totaling RMB23,380 million (2021: RMB37,532 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.
+(a) Dividends of ordinary shares declared after the balance sheet date
+55 DIVIDENDS
+(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 2022. According to Announcement [2020] No.23 of the MOF "Announcement of the MOF, the State Taxation Administration and the National
+Development and Reform Commission on continuation of the income tax policy of western development enterprises", the preferential income tax rate extends from 1
+January 2021 to 31 December 2030.
+Note:
+23,318
+Net profit
+Add: Impairment losses on assets
+Credit impairment (reversals)/loss
+Depreciation of right-of-use assets
+Less: Cash at the beginning of the year
+Cash balance at the end of the year
+(b) Net change in cash:
+(Decrease)/increase in operating payables
+Net cash flow from operating activities
+Decrease/(increase) in operating receivables
+Safety fund reserve
+Increase in inventories
+(1,757)
+18,757
+Increase in deferred tax liabilities
+Investment income
+Financial expenses
+Fair value loss/(gain)
+Net loss on disposal of non-current assets
+Dry hole costs written off
+Amortisation of intangible assets and long-term deferred expenses
+Depreciation of fixed assets
+Decrease in deferred tax assets
+(29)
+Joint ventures of the Group:
+(5,765)
+38 OTHER COMPREHENSIVE INCOME
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+121
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+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.
+118,875
+22
+(1,009)
+2,678
+(3,004)
+120,188
+RMB million
+Balance at 31 December 2022
+Other equity movements under the equity method
+Others
+Other contributions
+Purchase of own shares
+The Group
+Balance at 1 January 2022
+(a) The changes of other comprehensive income in consolidated income statement
+2022
+(6,645)
+1,482
+(3,157)
+14,794
+Subtotal
+(8,127)
+statement
+Less: Reclassification adjustments for amounts transferred to the consolidated income
+4,992
+(1,675)
+6,667
+recognised during the year
+Effective portion of changes in fair value of hedging instruments
+amount
+RMB million
+RMB million
+RMB million
+Net-of-tax
+Tax
+effect
+amount
+Before-tax
+Cash flow hedges:
+The movements in capital reserve of the Group are as follows:
+37 CAPITAL RESERVE
+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.
+95,558
+RMB million
+2021
+119,896
+24,781
+95,115
+RMB million
+2022
+Total
+95,115,471,046 listed A shares (2021: 95,557,771,046) of RMB1.00 each
+24,780,936,600 listed H shares (2021: 25,513,438,600) of RMB1.00 each
+Registered, issued and fully paid:
+At 31 December
+At 31 December
+The Group
+36 SHARE CAPITAL
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+(18)
+25,513
+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
+RMB1.00 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 RMB1.00 each and offer not more
+than 19.5 billion shares with a par value of RMB1.00 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 schedule of the contractual maturities of loans and commitments are disclosed in Notes 31, 32 and 60, 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 shareholders
+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 2022, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 12.1% (2021: 10.6%) and 51.9%
+(2021 51.5%), respectively.
+Capital management
+The Group (Continued)
+36 SHARE CAPITAL (Continued)
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+All A shares and H shares rank pari passu in all material aspects.
+11,637
+During the year ended 31 December 2022, the Company repurchased 442,300,000 listed A shares and 732,502,000 listed H shares respectively,
+which had been cancelled in the year ended 31 December 2022.
+During the year ended 31 December 2014, the Company issued 1,715,081,853 listed A shares with a par value of RMB1.00 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 RMB1.00 each, as a result of exercise
+of conversion by the holders of the 2011 Convertible Bonds.
+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 reserve for every 10 existing shares.
+On 14 February 2013, the Company issued 2,845,234,000 listed H shares ("the Placing") with a par value of RMB1.00 each at the Placing Price
+of HKD8.45 per share. The aggregate gross proceeds from the Placing amounted to approximately HKD24,042,227,300.00 and the aggregate net
+proceeds (after deduction of the commissions and estimated expenses) amounted to approximately HKD23,970,100,618.00.
+During the year ended 31 December 2012, the Company issued 117,724,450 listed A shares with a par value of RMB1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2011, the Company issued 34,662 listed A shares with a par value of RMB1.00 each, as a result of conversion
+by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2010, the Company issued 88,774 listed A shares with a par value of RMB1.00 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 RMB1.00 each at RMB4.22 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 RMB1.00 each, representing 12,521,864,000 H shares
+and 25,805,750 American Depositary Shares ("ADSS", each representing 100 H shares), at prices of HKD1.59 per H share and USD20.645 per
+ADS, respectively, by way of a global initial public offering to Hong Kong SAR and overseas investors. As part of the global initial public offering,
+1,678,049,000 state-owned ordinary shares of RMB1.00 each owned by Sinopec Group Company were converted into H shares and sold to Hong
+Kong SAR and overseas investors.
+During the year ended 31 December 2015, the Company issued 2,790,814,006 listed A shares with a par value of RMB1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+Fair value hedges
+120
+149
+RMB million
+RMB million
+fair value
+hedges
+other equity
+instrument
+investments
+Foreign
+fair value of
+Changes in
+(6,089)
+RMB million
+be converted
+into profit or
+loss under
+the equity
+method
+Other
+comprehensive
+income that can
+31 December 2022
+Changes in 2022
+1 January 2022
+31 December 2021
+1 January 2021
+Changes in 2021
+Equity Attributable to shareholders of the company
+(b) The change of each item in other comprehensive income
+441
+(1,728)
+17,507
+Cash flow
+hedges
+RMB million
+currency
+translation
+differences
+Subtotal
+RMB million
+(2,443)
+149
+(715)
+(1,728)
+(1,353)
+(591)
+(110)
+2
+324
+(5,497)
+(1,562)
+1,038
+(739)
+7,805
+81
+(20)
+RMB million
+income
+Total other
+comprehensive
+RMB million
+(2,600)
+23,004
+Minority
+interests
+RMB million
+(1,728)
+RMB million
+amount
+Net-of-tax
+Tax
+effect
+Before-tax
+amount
+2021
+21,829
+(3,145)
+24,974
+RMB million
+7,254
+Foreign currency translation differences
+2,856
+2,856
+Other comprehensive loss that can be reclassified to profit or loss under the
+equity method
+(67)
+12
+Other comprehensive income
+Changes in fair value of other equity instrument investments
+(79)
+7,254
+RMB million
+Other comprehensive income
+Effective portion of changes in fair value of hedging instruments recognised
+during the year
+441
+Other comprehensive loss that can be reclassified to profit or loss under the
+equity method
+Cash flow hedges:
+(220)
+(4)
+2
+(6)
+(220)
+Fair value hedges
+(7,240)
+19,018
+Changes in fair value of other equity instrument investments
+Foreign currency translation differences
+24,517
+Subtotal
+(8,858)
+statement
+Less: Reclassification adjustments for amounts transferred to the consolidated income
+11,778
+15,659
+1,618
+(5,499)
+(3,881)
+Sinopec-SK (Wuhan) Petrochemical Company Limited
+("Sinopec-SK")
+Production, sale, research and development of ethylene and
+downstream byproducts
+RMB7,193
+100.00
+RMB12,615
+59.00
+3,993
+Manufacturing of intermediate petrochemical products and
+petroleum products
+1,946
+RMB9,606
+RMB7,193
+(c) Subsidiaries acquired through business combination under common control:
+Sinopec Hainan Refining and Chemical Company Limited
+90.30
+RMB4,250
+RMB5,000
+Manufacturing of intermediate petrochemical products and
+petroleum products
+Sinopec Qingdao Refining and Chemical Company Limited
+2,334
+RMB5,776
+RMB6,397
+136
+RMB5,240
+25
+98.98
+85.00
+Sinopec Qingdao Petrochemical Company Limited
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong SAR, respectively, all of the above principal subsidiaries
+are incorporated and operate their businesses principally in the PRC.
+Manufacturing of intermediate petrochemical products and
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+RMB5,294
+Financial Statements (PRC)
+Financial Statements (PRC)
+133
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+(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.
+Note:
+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.
+*
+("Baling Petrochemical")
+Sinopec Baling Petrochemical Co. Ltd.
+Gaoqiao Petrochemical Company Limited
+2,542
+RMB3,340
+RMB3,000
+Crude oil processing and petroleum products manufacturing
+10,821
+55.00
+RMB4,804
+RMB10,000
+Manufacturing of intermediate petrochemical products and
+petroleum products
+petroleum products
+100.00
+RMB7,233
+RMB1,595
+55.00
+Import and processing of crude oil, production, storage and sale
+of petroleum products and petrochemical products
+Crude oil processing and petroleum products manufacturing
+RMB3,374
+Sinopec Beihai Refining and Chemical Limited
+Liability Company
+HKD3,952
+HKD248
+80,010
+70.42
+RMB20,000
+RMB28,403
+100.00
+RMB7,348
+RMB4,000
+Production and sale of polyester chips and polyester fibres
+Marketing and distribution of refined petroleum products
+Provision of crude oil jetty services and natural gas pipeline
+transmission services
+90
+100.00
+RMB3,374
+Production and sale of refined petroleum products, lubricant base
+oil, and petrochemical materials
+petroleum products
+100.00
+RMB15,651
+RMB15,651
+Manufacturing of intermediate petrochemical products and
+264
+100.00
+RMB2,424
+RMB1,500
+Production and sale of catalyst products
+For the year ended 31 December 2022
+60.33
+5,133
+Manufacturing of synthetic fibres, resin and plastics, intermediate
+petrochemical products and petroleum products
+Manufacturing of plastics, intermediate petrochemical products
+and petroleum products
+RMB10,824
+23
+100.00
+RMB22,890
+RMB22,761
+Coal chemical industry investment management, production and
+sale of coal chemical products
+Sinopec Great Wall Energy & Chemical Company Limited
+157
+100.00
+RMB1,165
+RMB1,000
+100.00
+USD3,423
+ZhongKe (Guangdong) Refinery & Petrochemical
+Company Limited
+USD3,423
+7,065
+100.00
+RMB8,250
+RMB8,250
+Investment in exploration, production and sale of petroleum and
+natural gas
+5,620
+50.00
+RMB5,246
+RMB10,492
+13,134
+50.44
+RMB5,820
+Investment holding of overseas business
+59 PRINCIPAL SUBSIDIARIES (Continued)
+(2,707)
+Set out below are the summarised financial information which the amount before inter-company eliminations for each subsidiary whose minority
+interests that are material to the Group.
+1,322
+1.732
+5,136
+1,768
+21,329
+16,209
+1,948,640
+(33,716)
+(21,896)
+Net current (liabilities)/assets
+(8,122)
+(8,488)
+(8,668)
+(10,162)
+(196)
+(209)
+(142)
+(169)
+(15,796)
+(13,998)
+(1,430)
+(9,468)
+(193,315)
+(212,593)
+Current liabilities
+5,227
+4,565
+13,829
+7,585
+(232)
+(700)
+(707)
+(847)
+(873)
+(17,823)
+(11,892)
+(57,215) (59,604)
+Non-current liabilities
+20,650
+20.251
+21,308
+6,791
+15,602
+7,902
+13.208
+10,215
+26.106
+25,477
+8,954
+12,869
+326,437
+326,095
+Non-current assets
+(1,331)
+5,508
+8,195
+5,781
+16,253
+23,991
+December
+At 31
+Sinopec-SK
+At 31
+December
+December
+Gaoqiao Petrochemical
+At 31
+At 31
+December
+Sinopec Kantons
+At 31
+At 31
+December December
+2022
+2021
+2022
+2021
+December
+At 31
+Fujian Petrochemical
+At 31
+December
+2021
+December
+Shanghai Petrochemical
+At 31
+December
+2022
+2021
+December
+At 31
+SIPL
+At 31
+December
+2022
+2021
+2022
+December
+December
+At 31
+Marketing Company
+At 31
+Summarised consolidated balance sheet
+At 31
+Summarised financial information on subsidiaries with material minority interests
+2022
+2022
+4,761
+5,436
+1,464
+1,901
+20.932
+15,766
+22,759
+25,677
+159,599
+190,697
+Current assets
+RMB million
+2021
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2021
+RMB million
+100.00
+46
+RMB5,000
+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%.
+where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+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 2022.
+The terms of these agreements are summarised as follows:
+(x) The Group obtained loans, discounted bills and issued the acceptance bills from Sinopec Group Company and fellow subsidiaries, etc.
+(ix) Interest expense represents interest charges on the loans obtained from Sinopec Group Company and fellow subsidiaries.
+(viii) 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.
+Notes (Continued):
+(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):
+57 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+1,889,255
+172,875
+159,358
+84,220
+129,103
+217,177
+210,215
+82,826
+65,103
+215,386
+197,447
+(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.
+(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.
+(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.
+2022
+The ultimate holding company
+At 31 December
+Lease liabilities (including current portion)
+Long-term loans (including current portion)
+Short-term loans
+Other non-current liabilities
+Other payables and other current liabilities
+Contract liabilities
+Accounts payable
+Bills payable
+Other non-current assets
+Prepayments and other current assets
+772,484
+Other receivables
+Accounts receivable
+Cash at bank and on hand
+Other related companies
+The balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures at 31 December 2022 and 31 December 2021
+are as follows:
+(4) Balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+57 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+130
+Financial Statements (PRC)
+(f) On the basis of a series of continuing connected transaction agreements signed in 2000, the Company and Sinopec Group Company have
+signed the Sixth Supplementary Agreement on 27 August 2021, which took effect on 1 January 2022 and made adjustment to "Mutual
+Supply Agreement" and "Buildings Leasing Contract".
+Receivables financing
+RMB million
+761,226
+139
+22,469
+22,863
+68,148
+83,300
+RMB million
+RMB million
+2021
+2022
+973,214
+1,011,487
+37,795
+24,738
+18,276
+14,068
+7,910
+8,079
+42,649
+12,997
+49,341
+94,964
+28,651
+62,844
+27,366
+21,313
+28,550
+19,140
+21,897
+58,612
+51,648
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+165
+10,035
+571
+5,669
+5,332
+1,790
+1,211
+415
+860
+2
+2,467
+2,891
+115,680
+Financial Statements (PRC)
+109,906
+2,820
+16,093
+17,716
+23,071
+23,461
+20,743
+20,588
+52,880
+45,321
+3,786
+167,948
+189,096
+5,181
+2,893
+At 31 December
+2021
+RMB million
+At 31 December
+2022
+Percentage of
+The Company's principal subsidiaries have been consolidated into the Group's financial statements for the year ended 31 December 2022. The
+following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the Group:
+59 PRINCIPAL SUBSIDIARIES
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+132
+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 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
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past events,
+current conditions and forecasts of future economic conditions. The Group regularly monitors and reviews the assumptions used for estimating
+expected credit losses.
+ECLS are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the
+difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).
+(d) Measurement of expected credit losses
+Fixed assets 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 taking into account anticipated technological changes. The depreciation expense for future periods 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 "CASS 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 in use, expected cash flows generated by the asset or the cash-generating units are discounted to their present value, which requires
+significant judgement relating to future selling prices of crude oil, natural gas, refined and chemical products, the production costs, the product
+mix, production volumes, production profiles, the oil and gas reserves 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 sales volume, selling price, amount of operating costs and discount rate.
+(b) Impairment for assets
+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.
+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, with reference to the
+standard procedures and cost estimates of dismantlement of oil and gas properties and taking into consideraion the 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.
+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, the Group's earnings could be affected by changes in depreciation expense or an immediate write-down of the
+carrying amount of oil and properties.
+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.
+(a) Oil and gas properties and reserves
+58 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+Financial Statements (PRC)
+Financial Statements (PRC)
+Full name of enterprise
+(a) Subsidiaries acquired through group restructuring:
+China Petrochemical International Company Limited
+China International United Petroleum and Chemical
+Company Limited
+Sinopec Catalyst Company Limited
+Trading of crude oil and petrochemical products
+12
+100.00
+RMB1,856
+RMB1,400
+RMB million
+%
+2022
+Group
+2022
+million
+Interests at
+31 December
+Minority
+131
+equity
+interest/
+voting right
+held by the
+Registered
+capital/paid-
+up capital
+million
+Principal activities
+Trading of petrochemical products
+Sinopec Overseas Investment Holding Limited ("SOIH")
+Sinopec Chemical Sales Company Limited
+Sinopec International Petroleum Exploration and
+Production Limited ("SIPL")
+(b) Subsidiaries established by the Group:
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical”) (i)
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+Sinopec Kantons Holdings Limited ("Sinopec Kantons")
+Sinopec Yizheng Chemical Fibre Limited Liability Company
+Marketing Company
+Sinopec Lubricant Company Limited
+Sinopec Yangzi Petrochemical Company Limited
+Actual
+investment at
+31 December
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+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.
+(170)
+15
+228
+299
+3,798
+4,689
+5
+3,116
+8,633
+577
+322
+19
+258
+4
+10,017
+32
+186
+596
+61,682
+8,625
+11,460
+30
+20
+65,064
+RMB million
+RMB million
+At 31 December
+2021
+13,941
+RMB6,585
+33,349
+50
+4,991
+379
+RMB thousand
+4,612
+RMB thousand
+9,299
+566
+9,865
+2021
+2022
+58 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+Short-term employee benefits
+Retirement scheme contributions
+Total
+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 2022, and as at and for the year ended 31 December 2021, 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 31.
+10,139
+86,585
+72,176
+70,860
+14,156
+22,695
+2,407
+6,852
+2,779
+5,180
+50,564
+38,266
+4,627
+4,721
+85,677
+(5,385)
+Marketing and distribution of petrochemical products
+(7,806)
+857
+846
+1,701
+1,535
+The implementation of commitments in previous year and the Group's commitments did not have material discrepancy.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+135
+Financial Statements (PRC)
+136
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+61 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 2022 and 31 December 2021, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+Joint ventures(i)
+Associates(ii)
+At 31 December
+2022
+RMB million
+At 31 December
+2021
+RMB million
+8,927
+8,927
+9,117
+5,746
+14,863
+64
+62
+102
+115
+184,430
+90,227
+274,657
+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 RMB1,751 million (2021: RMB3,648 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
+Exploration licenses for exploration activities are registered with the Ministry of Natural 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 Natural 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.
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Natural Resources annually
+which are expensed. Expenses recognised were approximately RMB270 million for the year ended 31 December 2022 (2021: RMB181 million).
+Estimated future annual payments are as follows:
+Total
+At 31 December
+2022
+RMB million
+2021
+RMB million
+Within one year
+Between one and two years
+Between two and three years
+Between three and four years
+Between four and five years
+Thereafter
+Total
+369
+301
+152
+112
+146
+110
+At 31 December
+RMB million
+Notes:
+The Group provided a guarantee in respect to payment obligation under the raw material supply agreement of Amur Gas amounting to RMB16,924 million (31
+December 2021: RMB15,493 million). As at 31 December 2022, Amur Gas has not yet incurred the relevant payment obligations and therefore the Group has no
+guarantee amount (31 December 2021: Nil).
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+62 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+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
+External sales
+Inter-segment sales
+Corporate and others
+External sales
+Inter-segment sales
+Elimination of inter-segment sales
+Consolidated income from principal operations
+Income from other operations
+Exploration and production
+Financial Statements (PRC)
+Financial Statements (PRC)
+137
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+The Group provided a guarantee in respect the engineering services agreement of Amur Gas. As at 31 December 2022, the engineering services agreement was
+terminated, accordingly the guarantee agreement was terminated.
+(ii) The Group provided a guarantee in respect to standby credit facilities granted to Zhongtian Synergetic Energy by banks amounting to RMB17,050 million. As at 31
+December 2021, the amount withdrawn (the portion corresponding to the shareholding ratio of the Group) by Zhongtian Synergetic Energy and guaranteed by the
+Group was RMB5,746 million. During the year ended 31 December 2022, the guarantee provided by the Group was terminated.
+Management monitors the risk that the specified debtor will default on the contract and recognises a provision when ECLs on the financial
+guarantees are determined to be higher than the carrying amount in respect of the guarantees. At 31 December 2022 and 2021, the Group
+estimates that there is no material liability has been accrued for ECLS 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 recognised normal routine pollutant discharge fees of approximately RMB16,823 million in the consolidated financial statements for the
+year ended 31 December 2022 (2021: RMB10,968 million).
+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.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+62 SEGMENT REPORTING
+(i) The Group provided a guarantee in respect to standby credit facilities granted to Zhongan United Coal Chemical Co., Ltd. ("Zhongan United") by banks amount to
+RMB7,100 million (31 December 2021: RMB7,100 million). As at 31 December 2022, the amount withdrawn (the portion corresponding to the shareholding ratio
+of the Group) by Zhongan United from banks and guaranteed by the Group was RMB5,254 million (31 December 2021: RMB5,680 million). The Group provided a
+guarantee in respect to standby credit facilities granted to Amur Gas Chemical Complex Limited Liability Company ("Amur Gas") by banks amount to RMB25,351
+million (31 December 2021: RMB23,208 million). As at 31 December 2022, the amount withdrawn (the portion corresponding to the shareholding ratio of the
+Group) by Amur Gas from banks and guaranteed by the Group was RMB3,673 million (31 December 2021: RMB3,264 million).
+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.
+(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.
+(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, non-current liabilities due within one year, long-term loans, debentures payable,
+deferred tax liabilities, other non-current liabilities and other unallocated liabilities.
+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.
+2021
+At 31 December
+261,914
+(2,868)
+2,004
+(1,925)
+951
+346
+871
+3,157
+3,536
+(1,101)
+1,606
+Total comprehensive income
+22,418
+18,439
+6,438
+1,045
+(2,690)
+2,145
+(1,925)
+951
+734
+677
+3,161
+3,677
+(1,101)
+1,606
+1,429
+2,576
+18,582
+19,902
+RMB million
+(10,679)
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Turnover
+1,710,428
+Comprehensive income
+1,408,523
+2,166
+82,518
+89,280
+4,931
+5,549
+529
+528
+69,298
+46,506
+57,857
+50,208
+Net profit/(loss) for the year
+3,308
+attributable to minority
+interests
+8.110
+Net cash flow from operating
+activities
+43,408
+28.923
+1,458
+690
+(7,337)
+4,060
+2
+(292)
+133
+133
+397
+(1,247)
+(1,538)
+5,476
+134
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+60 COMMITMENTS
+Capital commitments
+At 31 December 2022 and 31 December 2021, capital commitments of the Group are as follows:
+At 31 December
+2022
+RMB million
+Authorised and contracted for (i)
+Authorised but not contracted for
+Total
+167,507
+94,407
+(1,577)
+Refining
+256
+994
+6,822
+2,659
+579
+(1,331)
+1,065
+(962)
+476
+291
+268
+1,423
+1,655
+(451)
+984
+659
+interests
+3,453
+7,064
+548
+48
+13
+541
+333
+64
+169
+169
+164
+Dividends paid to minority
+Marketing and distribution
+Chemicals
+29,677
+Consolidated income from other operations
+Consolidated operating income
+Debentures payable
+Deferred tax liabilities
+Other non-current liabilities
+Other unallocated liabilities
+Total liabilities
+Capital expenditure
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Depreciation, depletion and amortisation
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Impairment losses on long-lived assets
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+412,543
+371,100
+327,706
+Long-term loans
+Short-term loans
+Total segment liabilities
+Corporate and others
+62 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+At 31 December
+2022
+RMB million
+At 31 December
+2021
+RMB million
+Assets
+Segment assets
+Exploration and production
+Refining
+Marketing and distribution
+304,785
+Chemicals
+Total segment assets
+Cash at bank and on hand
+Long-term equity investments
+Deferred tax assets
+Other unallocated assets
+Total assets
+Liabilities
+Segment liabilities
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+For the year ended 31 December 2022
+388,961
+242,794
+2022
+2021
+Shanghai Petrochemical
+SIPL
+Marketing Company
+2022
+Year ended 31 December
+Summarised consolidated statement of comprehensive income and cash flow
+13,138
+12,445
+10,629
+10,217
+8,025
+7,670
+12.508
+9.508
+25,259
+24.604
+(8,869)
+977
+266,833
+268,880
+(liabilities)
+Corporate and others
+Net non-current assets/
+(7,512)
+2021
+2022
+2021
+Fujian Petrochemical
+2022
+222,803
+148,014
+133,961
+1,520,018
+1,410,148
+145,052
+221,989
+233,941
+209,179
+19,952
+19,389
+RMB million
+377,499
+RMB million
+RMB million
+RMB million
+2021
+2022
+2021
+2022
+2021
+2022
+2021
+Sinopec-SK
+Gaoqiao Petrochemical
+Sinopec Kantons
+RMB million
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Non-current liabilities due within one year
+138
+(2,620,886)
+(2,109,426)
+3,257,356
+2,679,500
+5,169
+6,674
+3,875
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+39,529
+36,864
+9,913
+10,487
+1,295,503
+2,326
+60,812
+3,318,168
+61,384
+2,740,884
+2022
+2021
+RMB million
+RMB million
+Operating profit/(loss)
+By segment
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+2,198
+1,788,152
+732,356
+1,028,800
+2022
+RMB million
+2021
+RMB million
+192,330
+156,026
+121,912
+87,298
+314,242
+243,324
+194,839
+167,948
+1,376,425
+1,212,455
+1,571,264
+1,380,403
+1,660,924
+13,421
+1,674,345
+1,367,605
+7,075
+1,374,680
+449,911
+424,774
+80,328
+70,242
+530,239
+495,016
+759,352
+563,147
+Corporate and others
+Elimination
+5,161
+112,414
+1,637
+1,796
+17,624
+11,269
+(7,697)
+(10,603)
+Total segment investment income
+6,032
+Less: Financial expenses
+9,974
+9,010
+Add: Other income
+8,219
+5,850
+547
+(Losses)/gains from changes in fair value
+3,341
+Asset disposal gains
+672
+665
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+96,414
+2,960
+3,516
+4,859
+7,582
+108,348
+94,515
+(1,715)
+(375)
+14,462
+3,273
+3,023
+Total segment operating profit
+Investment income
+Exploration and production
+Refining
+Chemicals
+Corporate and others
+48,538
+11,611
+613
+65,360
+25,197
+Marketing and distribution
+(14,256)
+11,361
+15,480
+9,521
+(1,820)
+(4,421)
+84,750
+23,102
+105,536
+Tax effect
+(672)
+2,304
+Net gains on disposal of non-current assets
+(72)
+Total
+Equity shareholders of the Company
+905
+Attributable to:
+(9,120)
+Minority interests
+977
+1.012
+(13,471)
+(15,775)
+(3,826)
+we compared future selling prices for crude oil and natural gas used
+in the discounted cash flow forecasts with the Company's business
+plans and forecasts by external analysts;
+Net profit acquired through business combination under common control during the reporting period
+4,720
+2,178
+Donations
+447
+(665)
+165
+Government grants
+Other non-operating losses, net
+(3,085)
+Gain on holding and disposal of business and various investments
+(13,902)
+(4,351)
+(259)
+101
+(107)
+The following are the primary procedures we performed to address this
+key audit matter:
+145
+How the matter was addressed in our audit
+We identified assessment of impairment of property, plant and equipment
+relating to oil and gas producing activities as a key audit matter. The
+value in use amounts of these CGUS are sensitive to the changes to
+future selling prices and production costs for crude oil and natural gas,
+future production profiles, and discount rates. Therefore a higher degree
+of subjective auditor judgment was required to evaluate the Company's
+impairment assessment of property, plant and equipment relating to oil
+and gas producing activities.
+The Company groups property, plant and equipment relating to oil
+and gas producing activities into cash-generating units ("CGUS") for
+impairment assessment. The Company compares the carrying amount of
+individual CGU with its value in use, using a discounted cash flow forecast,
+which was prepared based on the future production profiles included in
+the oil and gas reserves reports, to determine the impairment loss to be
+recognised.
+The Company reported property, plant and equipment of Renminbi ("RMB")
+630,700 million as at 31 December 2022, a portion of which related to
+oil and gas producing activities. The Company reported impairment losses
+of RMB2,891 million for the property, plant and equipment relating to oil
+and gas producing activities for the year ended 31 December 2022.
+The Key Audit Matter
+Refer to notes 2(g), 2(n), 8, 17 and 43 to the consolidated financial statements
+Assessment of impairment of property, plant and equipment relating to oil and gas producing activities
+Key audit matter is the matter that, in our professional judgment, was of most significance in our audit of the consolidated financial statements of the
+current period. The matter was 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 this matter.
+KEY AUDIT MATTER
+we assessed the competence, capabilities and objectivity of the
+Company's reserves specialists and evaluated the methodology
+adopted by them in estimating the oil and gas reserves against the
+recognised industry standards;
+Extraordinary (gains)/losses for the year:
+we evaluated the design and tested the operating effectiveness
+of certain internal controls related to the process for impairment
+assessment of property, plant and equipment relating to oil and gas
+producing activities;
+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 are independent of the Group in accordance with the HKICPA's Code of Ethics for
+Professional Accountants ("the Code") together with any ethical requirements that are relevant to our audit of the consolidated financial statements in
+the People's Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code. We believe
+that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+BASIS FOR 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
+2022 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial
+Reporting Standards ("IFRSS") issued by the International Accounting Standards Board ("IASB") and have been properly prepared in compliance with
+the disclosure requirements of the Hong Kong Companies Ordinance.
+We have audited the consolidated financial statements of China Petroleum & Chemical Corporation ("the Company") and its subsidiaries ("the Group")
+set out on pages 149 to 203, which comprise the consolidated statement of financial position as at 31 December 2022, the consolidated income
+statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of
+cash flows for the year then ended and notes to the consolidated financial statements, including a summary of significant accounting policies.
+OPINION
+Financial Statements (PRC)
+REPORT OF THE INTERNATIONAL AUDITOR
+KPMG
+KPMG
+8th Floor, Prince's Building
+Central, Hong Kong
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+G P 0 Box 50, Hong Kong
+Fax +852 2845 2588
+Internet kpmg.com/cn
+畢馬威會計師事務所
+香港中環太子大廈8樓
+香港郵政總局信箱50號
++852 2522 6022
++852 2845 2588
+kpmg.com/cn
+Independent auditor's report
+to the shareholders of China Petroleum & Chemical Corporation
+(established in the People's Republic of China with limited liability)
+Telephone +852 2522 6022
+2021
+RMB million
+2021
+2022
+Weighted average number of outstanding ordinary shares of the Company at 31 December (million)
+2021
+121,071
+2022
+121,071
+(182)
+Weighted average number of outstanding ordinary shares of the Company at 1 January (million)
+Impact of repurchasing shares (million)
+0.588
+121,071
+71,208
+2021
+2022
+66,302
+120,889
+0.548
+The calculation of the weighted average number of ordinary shares is as follows:
+Net profit attributable to equity shareholders of the Company (RMB million)
+Weighted average number of outstanding ordinary shares of the Company (million)
+Basic earnings per share (RMB/share)
+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:
+(i) Basic earnings per share
+64 BASIC AND DILUTED EARNINGS PER SHARE
+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 2022 and 31 December 2021.
+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 Group's existing capital structure and the terms of the borrowings.
+88,593
+85,610
+143
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+63 FINANCIAL INSTRUMENTS (Continued)
+120,889
+(ii) Fair values of financial instruments carried at other than fair value
+At 31 December
+2022
+RMB million
+At 31 December
+we compared future production costs and future production profiles
+used in the discounted cash flow forecasts with oil and gas reserves
+reports issued by the reserves specialists; and
+RMB million
+Carrying amount
+Fair value
+130,282
+125,866
+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 2.66% to 4.35% (2021: from 0.30% to 4.65%). 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 2022 and 31 December 2021:
+121,071
+(ii) Diluted earnings per share
+There are no potential dilutive ordinary shares, and diluted earnings per share are equal to the basic earning per share.
+Basic
+earnings
+per share
+per share
+(RMB/Share) (RMB/Share)
+8.50
+0.548
+0.548
+9.35
+0.588
+earnings
+0.588
+0.473
+0.473
+9.49
+0.597
+0.597
+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:
+7.33
+RMB million
+Diluted
+Weighted
+average
+return on
+net assets
+144
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+65 RETURN ON NET ASSETS AND EARNINGS PER SHARE
+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:
+(%)
+Net profit attributable to the Company's ordinary
+equity shareholders
+66 EXTRAORDINARY GAINS AND LOSSES
+2022
+2021
+Weighted
+average
+return on
+net assets
+Basic
+Diluted
+earnings earnings
+per share
+per share
+(%) (RMB/Share) (RMB/Share)
+Net profit deducted extraordinary gains and
+losses attributable to the Company's ordinary
+equity shareholders
+we involved valuation professionals with specialised skills and
+knowledge, who assisted in assessing the discount rates applied in
+the discounted cash flow forecasts against a discount rate range that
+was independently developed using publicly available market data for
+comparable companies in the same industry.
+Profit for the year
+146
+Share of profits less losses from associates and joint ventures
+298
+14,060
+10
+Investment income
+(15,018)
+5,732
+276
+(9,010)
+(9,974)
+Net finance costs
+6,266
+529
+Foreign currency exchange gains, net
+Interest income
+(16,769)
+9
+Interest expense
+Finance costs
+94,628
+75,835
+(103,492)
+Taxes other than income tax
+7
+(263,991)
+(259,032)
+Impairment reversals/(losses) on trade and other receivables
+21,22
+Other operating income/(expenses), net
+Total operating expenses
+1,084
+(14,779)
+(3,242,333)
+(2,311)
+(21,716)
+(2,646,256)
+Operating profit
+8
+14,479
+23,253
+Profit before taxation
+85,851
+Earnings per share:
+Basic
+Diluted
+16
+16
+75,643
+66
+0.594
+0.547
+0.594
+The notes on pages 156 to 203 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 14.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+149
+0.547
+(103,585)
+Profit for the year
+9,490
+94,400
+109,169
+Income tax expense
+11
+(18,757)
+(23,318)
+13,876
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+85,851
+Attributable to:
+Shareholders of the Company
+66,153
+71,975
+Non-controlling interests
+75,643
+Financial Statements (International)
+6
+(12,382)
+From the matters communicated with the Audit Committee, 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.
+We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence and
+communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, actions
+taken to eliminate threats or safeguards applied.
+We communicate with the Audit Committee 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 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.
+KPMG
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+147
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+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.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
+directors.
+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.
+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.
+•
+As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
+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.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+KPMG
+INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
+The directors are responsible for the other information. The other information comprises all 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.
+The engagement partner on the audit resulting in this independent auditor's report is Ho Ying Man, Simon.
+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.
+RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+The directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRSS
+issued by the IASB 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.
+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.
+The directors are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group's financial reporting process.
+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. This report is made 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.
+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.
+KPMG
+Certified Public Accountants
+8th Floor, Prince's Building
+2,679,500
+61,384
+2,740,884
+Operating expenses
+Purchased crude oil, products and operating supplies and expenses
+(2,684,756)
+(2,076,665)
+Selling, general and administrative expenses
+3,257,356
+60,812
+3,318,168
+5
+(54,978)
+Depreciation, depletion and amortisation
+(109,906)
+(115,680)
+Exploration expenses, including dry holes.
+(10,591)
+(55,809)
+Personnel expenses
+4
+3
+10 Chater Road
+Central, Hong Kong
+24 March 2023
+148
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+(B) FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
+CONSOLIDATED INCOME STATEMENT
+Other operating revenues
+for the year ended 31 December 2022
+Note
+Year ended 31 December
+2022
+RMB
+2021
+RMB
+Revenue
+Revenue from primary business
+(Amounts in million, except per share data)
+Management of the Group 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 structured deposits and receivables financing classified as
+Level 3 financial assets.
+53,704
+3,223
+3,223
+166,407
+Lease liabilities
+4,948
+422
+16,657
+12,997
+Debentures payable
+12,960
+2,149
+102,939
+94,964
+Long-term loans
+64,111
+64,111
+62,844
+Non-current liabilities due within one year
+119,892
+five years
+RMB million
+More than
+five years
+RMB million
+Bills payable
+10,782
+Total
+Accounts payable
+10,782
+258,642
+10,782
+258,642
+Other payables
+119,892
+119,892
+258,642
+7,313
+755,154
+12,905
+five years
+five years
+More than
+two years but
+less than
+More than
+More than
+one year but
+less than
+At 31 December 2021
+two years
+RMB million
+Within one
+year or on
+demand
+RMB million
+cash flow
+RMB million
+RMB million
+amount
+Carrying undiscounted
+contractual
+Total
+Liquidity risk (Continued)
+63 FINANCIAL INSTRUMENTS (Continued)
+76,473
+5,669
+36,984
+11,357
+5,618
+232,588
+484,946
+30,813
+282,477
+884,448
+119,126
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+141
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2022
+249,563
+21,635
+RMB million RMB million
+At 31 December 2022
+More than More than
+one year but two years but
+less than less than
+two years
+credit risk;
+The Group has exposure to the following risks from its uses of financial instruments:
+Financial assets of the Group include cash at bank and on hand, financial assets held for trading, derivative financial assets, accounts receivable,
+receivables financing, other receivables and other equity instrument investments. Financial liabilities of the Group include short-term loans, derivative
+financial liabilities, bills payable, accounts payable, employee benefits payable, other payables, long-term loans, debentures payable and lease
+liabilities.
+Overview
+63 FINANCIAL INSTRUMENTS
+1,309,365
+40,551
+1,268,814
+RMB million
+2021
+At 31 December
+296,820
+2,740,884
+44,739
+1,398,510
+1,353,771
+RMB million
+2022
+At 31 December
+Financial Statements (International)
+2022
+RMB million
+Mainland China
+Others
+Non-current assets
+Others
+Mainland China
+Singapore
+•
+External sales
+(2) Geographical information
+62 SEGMENT REPORTING (Continued)
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+2,166,040
+278,024
+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 assets 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.
+liquidity risk; and
+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 detailed analysis of accounts receivable and receivables financing is listed in Note 7 and Note 8.
+The Group's other receivables are considered to have low credit risk (Note 10), and the loss allowance recognised during the year was therefore
+limited to 12 months expected credit losses. The Group considers "low credit risk" for other receivables when they have a low risk of default and
+the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
+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 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 liquidity risk.
+At 31 December 2022, the Group has standby credit facilities with several PRC financial institutions which provide the Group to borrow up to
+RMB454,857 million (2021: RMB441,559 million) on an unsecured basis, at a weighted average interest rate of 2.38% per annum (2021: 2.81%).
+At 31 December 2022, the Group's outstanding borrowings under these facilities were RMB21,313 million (2021: RMB11,700 million) and were
+included in loans.
+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:
+The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 December 2022 or 31 December
+2021, respectively, and the corresponding historical credit losses experienced within this period and calculate expected credit losses for the
+above financial assets using an allowance matrix The historical loss rates are adjusted to reflect current and forward-looking information on
+macroeconomic factors affecting the ability of the customers to settle the accounts receivable and receivables financing.
+Total
+Carrying undiscounted
+amount cash flow
+RMB million RMB million
+Within one
+year or on
+demand
+Short-term loans
+Derivative financial liabilities
+21,313
+7,313
+21,635
+7,313
+contractual
+RMB million
+To measure the expected credit losses, accounts receivable and receivables financing have been grouped based on shared credit risk
+characteristics and the days past due.
+Financial
+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 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
+(i) Risk management
+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 deposits) 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 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 2022, 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 and on hand, financial assets held for trading, derivative financial assets, accounts receivable, receivables
+financing and other receivables, represent the Group's maximum exposure to credit risk in relation to financial assets.
+140
+For accounts receivable and receivables financing, the Group applies the "No.22 Accounting Standards for Business Enterprises
+instruments: recognition and measurement" simplified approach to measuring expected credit losses which uses a lifetime expected loss
+allowance for all accounts receivable and receivables financing.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+For the year ended 31 December 2022
+63 FINANCIAL INSTRUMENTS (Continued)
+Credit risk (Continued)
+(ii) Impairment of financial assets
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+-
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+During the year ended 31 December 2022 and 2021, there was no transfer between instruments in Level 1 and Level 2.
+RMB million
+27,366
+- Derivative financial liabilities
+Derivative financial liabilities:
+Liabilities
+730
+23,574
+616
+4,123
+11,478
+7,973
+114
+Other equity instrument investments:
+Other Investments
+3,507
+3,507
+19,335
+11,478
+7,857
+2
+2
+- Receivables financing
+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 2022
+The Group
+Level 1
+RMB million
+Level 2
+RMB million
+Level 3
+RMB million
+1.293
+Total
+Receivables financing:
+Assets
+Financial assets held for trading:
+- Fund Investments
+Derivative financial assets:
+- Derivative financial assets
+RMB million
+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.
+6,020
+6,020
+2,419
+2,419
+804
+804
+767
+25,077
+588
+6,527
+12,488
+179
+6,062
+5,939
+5,939
+18,371
+12,488
+5,883
+RMB million
+Total
+Level 3
+RMB million
+Level 2
+RMB million
+RMB million
+Level 1
+7,313
+7,313
+At 31 December 2021
+The Group
+Assets
+Derivative financial assets:
+1,293
+- Derivative financial assets
+- Receivables financing
+Other equity instrument investments:
+Other Investments
+Liabilities
+Derivative financial liabilities:
+- Derivative financial liabilities
+Receivables financing:
+•
+•
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+47,553
+42,649
+Debentures payable
+5,338
+27,786
+19,350
+1,230
+49,341
+Long-term loans
+29,554
+29,554
+28,651
+Non-current liabilities due within one year
+114,701
+114,701
+114,701
+Other payables
+27,787
+27,787
+Derivative financial liabilities
+3,223
+3,223
+3,223
+1,195
+Bills payable
+11,721
+11,721
+Accounts payable
+203,919
+203,919
+203,919
+11,721
+30,645
+10,443
+5,270
+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 31, respectively.
+At 31 December 2022, 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 RMB524 million (2021: decrease/increase RMB254
+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 2021.
+(c) 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 contracts, to manage a portion of such risk.
+Based on the dynamic study and judging of the market, combined with the resource demand and production and operation plan, the Group
+evaluate and monitor the market risk exposure caused by transaction positions, and continuously manage and hedge the risk of commodity price
+fluctuation caused by market changes.
+At 31 December 2022, 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 2022, the fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB19,328 million (2021: RMB18,359 million) and derivative financial liabilities of RMB7,235 million (2021:
+RMB3,214 million).
+At 31 December 2022, it is estimated that a general increase/decrease of USD10 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
+net profit for the year by approximately RMB5,104 million (2021: decrease/increase RMB2,996 million), and increase/decrease the Group's
+other comprehensive income by approximately RMB192 million (2021: decrease/increase RMB1,160 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 2021.
+(b) Interest rate risk
+142 Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+For the year ended 31 December 2022
+63 FINANCIAL INSTRUMENTS (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. 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:
+•
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Short-term loans
+Currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured.
+The Group does not have significant financial instruments that are denominated in foreign currencies other than the functional currencies of
+respective entities as at 31 December, and consequently does not have significant explosure to foreign currency 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.
+Lease liabilities
+Total
+170,233
+280,652
+12,030
+35,412
+233,210
+(a) Currency risk
+651,804
+393,330
+62,025
+73,641
+243,818
+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.
+Market risk
+772,814
+The Group's primary type of financial assets that are subject to the expected credit loss model is accounts receivable, receivables financing and
+other receivables.
+2,824,140
+263,087
+230,941
+3,318,168
+2021
+RMB million
+(3,723)
+reserve
+Retained
+Other
+shareholders
+Statutory Discretionary
+surplus
+surplus
+Share
+Capital
+Share
+capital
+Total equity
+attributable to
+Balance at 31 December 2021
+Others
+Total transactions with owners
+Transaction with non-controlling interests
+Total contributions by and distributions to owners
+control
+combination of entities under common
+Distribution to sellers in the business
+non-controlling interests
+RMB
+RMB
+premium
+RMB
+reserve
+92,280
+55,850
+34,263
+121,071
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+equity
+interests
+Total
+Non-
+controlling
+of the
+Company
+earnings
+reserves
+reserve
+Contributions to subsidiaries from
+117,000
+Distributions to non-controlling interests
+Interim dividend for 2021 (Note 14)
+Approved and authorised for issue by the board of directors on 24 March 2023.
+915,074
+936,238
+140,892
+151,532
+774,182
+784,706
+653,111
+664,810
+121,071
+119,896
+36
+Total equity
+Non-controlling interests
+Total equity attributable to shareholders of the Company
+Reserves
+Share capital
+915,074
+936,238
+Ma Yongsheng
+Chairman
+(Legal representative)
+Yu Baocai
+President
+Final dividend for 2020 (Note 14)
+Contributions by and distributions to owners:
+Transactions with owners, recorded directly in equity:
+hedged items
+Amounts transferred to initial carrying amount of
+Total comprehensive income for the year
+Other comprehensive income (Note 15)
+Profit for the year
+Balance at 1 January 2021
+Appropriation (Note (a))
+(Amounts in million)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+152
+Financial Statements (International)
+Financial Statements (International)
+151
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Chief Financial Officer
+Shou Donghua
+The notes on pages 156 to 203 form part of these consolidated financial statements.
+for the year ended 31 December 2021
+3,500
+322,361
+746,325
+The notes on pages 156 to 203 form part of these consolidated financial statements.
+915,074
+140,892
+399
+159
+240
+774,182
+354,480
+2,495
+117,000
+96,224
+55,850
+27,062
+121,071
+(802)
+723
+319
+(56,435)
+(13,805)
+(42,630)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+for the year ended 31 December 2022
+(Amounts in million)
+earnings
+reserves
+reserve
+reserve
+premium
+RMB
+RMB
+RMB
+121,071
+Balance at 1 January 2022
+reserve
+(39,054)
+Total
+of the
+Retained
+Other
+shareholders
+Statutory Discretionary
+surplus surplus
+Share
+Capital
+Share
+capital
+Total equity
+attributable to
+Non-
+controlling
+332,901
+3,944
+(8.192)
+(19,950)
+(648)
+(19,302)
+(19,302)
+103,358
+13,809
+89,549
+71.975
+17,574
+17,507
+(67)
+17,574
+17,574
+85,851
+13,876
+71,975
+71,975
+887,702
+141,377
+3,944
+(15,739)
+(15,739)
+(15,739)
+(6,796)
+(1,396)
+(1.396)
+(48,243)
+(7,009)
+(41,234)
+(39,054)
+3,944
+(6,124)
+(7,520)
+(6,124)
+(6,124)
+1,973
+1,973
+(8,982)
+(8,982)
+(3,944)
+(19,371)
+(19,371)
+(19,371)
+(6,124)
+345,017
+Equity
+Total non-current liabilities
+Right-of-use assets
+Construction in progress
+Property, plant and equipment, net
+Non-current assets
+RMB
+RMB
+2021
+2022
+31 December
+31 December
+Note
+(Amounts in million)
+As at 31 December 2022
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+103,358
+97,472
+13,809
+12,193
+89,549
+17
+19
+Goodwill
+20
+74,791
+730
+148,729
+159,150
+8,594
+6,464
+268,408
+264,856
+155,939
+18
+85,279
+598,925
+782222222
+23
+Long-term prepayments and other assets
+29
+26
+Financial assets at fair value through other comprehensive income
+Deferred tax assets
+Interest in joint ventures
+21
+Interest in associates
+630,700
+60,450
+103,358
+----
+Note
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+150
+The notes on pages 156 to 203 form part of these consolidated financial statements.
+Total comprehensive income for the year
+Non-controlling interests
+Shareholders of the Company
+Attributable to:
+Total comprehensive income for the year
+Total items that may be reclassified subsequently to profit or loss
+Total other comprehensive income
+Foreign currency translation differences
+Share of other comprehensive income of associates and joint ventures
+Cash flow hedges
+Total items that may not be reclassified subsequently to profit or loss
+Items that may be reclassified subsequently to profit or loss
+Cost of hedging reserve
+Items that may not be reclassified subsequently to profit or loss
+Equity investments at fair value through other comprehensive income
+Other comprehensive income:
+Profit for the year
+(Amounts in million)
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+for the year ended 31 December 2022
+Financial Statements (International)
+Year ended 31 December
+2022
+2021
+RMB
+17,507
+21,829
+17,511
+21,896
+(1,728)
+7,254
+19,018
+11,637
+441
+97,472
+2,856
+149
+(4)
+(67)
+(4)
+(67)
+15
+85,851
+75,643
+RMB
+(220)
+Company
+Total non-current assets
+Cash and cash equivalents
+1,247,975
+641,280
+83,256
+144,245
+1,281,255
+Total assets less current liabilities
+Net current liabilities
+667,385
+4,809
+4,725
+239,688
+178,146
+34
+124,622
+125,444
+33
+215,640
+269,424
+32
+3,223
+7,313
+Non-current liabilities
+Long-term debts
+30
+85,706
+19,243
+14,983
+Other long-term liabilities
+43,525
+47,587
+35
+Provisions
+7,910
+8,079
+24
+29
+170,233
+166,407
+31
+Lease liabilities
+13,690
+22,255
+30
+Loans from Sinopec Group Company and fellow subsidiaries
+78,300
+Deferred tax liabilities.
+Current assets
+15,173
+31
+767
+19,389
+19,952
+72,812
+1,425,500
+Total current liabilities
+Income tax payable
+Other payables
+Contract liabilities
+Trade accounts payable and bills payable
+Derivative financial liabilities
+Lease liabilities
+Loans from Sinopec Group Company and fellow subsidiaries
+Short-term debts
+Current liabilities
+Total current assets
+Prepaid expenses and other current assets
+Financial assets at fair value through other comprehensive income
+Inventories
+Trade accounts receivable
+Derivative financial assets
+Financial assets at fair value through profit or loss
+Time deposits with financial institutions
+70,030
+1,331,231
+93,438
+108,590
+2,873
+7,292
+30
+3,064
+59,037
+30
+558,024
+69,431
+64,639
+523,140
+16,004
+207,433
+3,507
+244,241
+34,861
+46,364
+18,371
+19,335
+22222
+2
+113,399
+51,614
+5,939
+interests
+35,252
+RMB
+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) Construction in progress
+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(n)). 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.
+Items may be produced while bringing an item of property, plant and equipment to the location and condition necessary for it to be capable of
+operating in the manner intended by management. The proceeds from selling any such items and the related costs are recognised in profit or loss.
+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.
+(i) 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(n)). 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(n)).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+159
+Financial Statements (International)
+Loss/(gain) on foreign currency exchange rate changes and derivative financial instruments
+Loss on disposal of property, plant, equipment and other non-current assets, net
+Impairment losses on assets
+15,018
+16,769
+Interest expense
+(5,732)
+(6,266)
+Interest income
+(298)
+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 to
+explore for or use oil and natural gas, 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.
+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
+3%
+Estimated
+residuals rate
+3%
+The results of foreign operations are translated into Renminbi at the applicable rates quoted by the PBOC prevailing on the transaction dates.
+The statement of financial position items, including goodwill arising on consolidation of foreign operations are translated into Renminbi at the
+closing foreign exchange rates at the date of the statement of financial position. 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 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 recognised initially at their transaction price, unless they contain significant financing components when
+they are recognised at fair value. They are subsequently measured at amortised cost using the effective interest method, less loss allowances
+for ECLS (Note 2(j)). 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 mainly 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)
+(14,060)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+for the year ended 31 December 2022
+2 SIGNIFICANT ACCOUNTING POLICIES (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(n)). 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:
+Buildings
+Equipment, machinery and others
+Estimated usage
+period
+12 to 50 years
+4 to 30 years
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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.
+Investment income
+(14,479)
+93,438
+(1,003)
+3,288
+Effect of foreign currency exchange rate changes
+Cash and cash equivalents at 31 December
+87,559
+108,590
+Cash and cash equivalents at 1 January
+22,034
+(18,440)
+Net (decrease)/increase in cash and cash equivalents
+(57,942)
+(39,699)
+Net cash used in financing activities
+(666)
+(94)
+Repayments of other financing activities
+133
+989
+Proceeds from other financing activities
+108,590
+The notes on pages 156 to 203 form part of these consolidated financial statements.
+154
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Share of profits from associates and joint ventures
+7,702
+6,416
+115,680
+109,906
+109,169
+94,400
+Dry hole costs written off
+Depreciation, depletion and amortisation
+(23,253)
+Adjustments for:
+Operating activities
+RMB
+RMB
+2021
+Year ended 31 December
+2022
+(a) Reconciliation from profit before taxation to net cash generated from operating activities
+(Amounts in million)
+for the year ended 31 December 2022
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+Profit before taxation
+(19,412)
+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 date of the statement of financial position.
+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.
+(23,786)
+116,269
+225,174
+The notes on pages 156 to 203 form part of these consolidated financial statements.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+155
+Financial Statements (International)
+Financial Statements (International)
+156
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2022
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION
+Principal activities
+China Petroleum & Chemical Corporation (the "Company") is an energy and chemical company incorporated in the People's Republic of China (the
+"PRC") that, through its subsidiaries (hereinafter collectively referred to as the "Group"), engages in oil and gas and chemical operations. 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.
+Organisation
+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.
+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 RMB1.00 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.
+Basis of preparation
+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.
+The accounting policies adopted are consistent with those of the previous financial year, except for the adoption of new and amended standards as
+set out below.
+(17,318)
+248,960
+133,587
+82,408
+722
+3,062
+12,009
+13,165
+Impairment (reversals)/losses on trade and other receivables
+(1,084)
+2,311
+207,397
+233,101
+(a) New and amended standards and interpretations adopted by the Group
+Net changes from:
+Inventories
+equity
+Accounts payable and other current liabilities
+Income tax paid
+Net cash generated from operating activities
+1,974
+(45,421)
+(8,177)
+(58,372)
+(30,363)
+Accounts receivable and other current assets
+(b) Translation of foreign currencies
+The IASB has issued the following amendments to IFRSS that are first effective for the current accounting period of the Group:
+•
+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 (Notes 2(i) and (n)).
+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's share of losses exceeds its interest in the associate or the joint venture, the Group's interest is reduced to nil and
+recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made
+payments on behalf of the investee. For this purpose, the Group's interest is the carrying amount of the investment under the equity method,
+together with any other long-term interests that in substance form part of the Group's net investment in the associate or the joint venture,
+after applying the expected credit losses ("ECLS") model to such other long-term interests where applicable.
+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(j)) or, when appropriate, the cost on initial recognition of an investment in an associate.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+157
+Financial Statements (International)
+158
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2022
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(a) Basis of consolidation (Continued)
+(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.
+(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 beginning of the earliest period presented or when they first came under common control,
+whichever is shorter.
+(ii) Associates and joint ventures
+The particulars of the Group's principal subsidiaries are set out in Note 41.
+In the Company's statement of financial position, investments in subsidiaries are stated at cost less impairment losses (Note 2(n)).
+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(j)) or, when appropriate, the cost on
+initial recognition of an investment in an associate or joint venture (Note 2(a)(ii)).
+Amendment to IAS 16, Property, Plant and Equipment: Proceeds before Intended Use
+Amendment to IAS 37, Provisions, contingent liabilities and contingent assets: Onerous contracts - cost of fulfilling a contract
+None of these developments have had a material effect on how the Group's results and financial position for the current or prior periods have
+been prepared or presented. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting
+period.
+(b) New and amended standards and interpretations not yet adopted by the Group
+A number of new accounting standards and interpretations have been published that are not mandatory for 31 December 2022 reporting periods
+and have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future
+reporting periods and on foreseeable future transactions.
+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 43.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+•
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2 SIGNIFICANT ACCOUNTING POLICIES
+(a) Basis of consolidation
+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. When assessing
+whether the Group has power, only substantive rights (held by the Group and other parties) are considered.
+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 date of statement of financial position, 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
+statement of financial position 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.
+for the year ended 31 December 2022
+(18,672)
+196,045
+(4,179)
+2.191
+2,678
+2,678
+5,395
+5,395
+(6,691)
+(6,691)
+(4,610)
+4,610
+(19,371)
+(19,371)
+(19,371)
+(37,532)
+(37,532)
+(37,532)
+(4,179)
+(4,179)
+(3,004)
+(1,175)
+4,869
+2,678
+4,610
+(61,513)
+(1,009)
+(1,009)
+(1,009)
+Other equity movements under the equity method
+Others
+--
+(59,222)
+(818)
+(58,404)
+(61,513)
+Total contributions by and distributions to owners
+4,610
+2,678
+(1,175)
+Total transactions with owners
+(1.713)
+(1,713)
+Transaction with non-controlling interests
+(53,330)
+895
+(54,225)
+(3,004)
+Balance at 31 December 2022
+Other contributions
+Contributions to subsidiaries from
+66,153
+66,153
+Profit for the year
+915,074
+140,892
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+27,062
+55,850
+96,224
+117,000
+2,495
+354,480
+774,182
+Repayments of lease liabilities
+9,490
+75,643
+Other comprehensive income (Note 15)
+19,126
+Distributions to non-controlling interests
+Interim dividend for 2022 (Note 14)
+Appropriation (Note (a))
+Final dividend for 2021 (Note 14)
+Contributions by and distributions to owners:
+Purchase of own shares (Note 36)
+Transactions with owners, recorded directly in equity:
+(15,802)
+(15,363)
+(15,363)
+non-controlling interests
+of hedged items
+97,472
+12,193
+85,279
+66,153
+19,126
+Total comprehensive income for the year
+21,829
+2,703
+19,126
+Amounts transferred to initial carrying amount
+119,896
+(439)
+149
+Investment and dividend income received
+3,372
+6,918
+34,298
+93,455
+(50,844)
+(31,670)
+1,478
+212
+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
+6,769
+10,801
+Proceeds from disposal of investments
+(1,106)
+(7,881)
+8,248
+1,220
+Proceeds from settlement of financial assets at fair value through profit or loss
+Payment for acquisition of subsidiary, net of cash acquired
+(8,150)
+Proceeds from other investing activities
+Net cash used in investing activities
+Financing activities
+Proceeds from bank and other loans
+Repayments of bank and other loans
+Payments made to acquire non-controlling interests
+Cash payments to purchase own shares
+(8,198)
+22
+28,753
+(5,849)
+(9,679)
+(8,068)
+(5,249)
+(35,110)
+(56,903)
+(1,222)
+1,001
+459
+(145,198)
+356,459
+(338,232)
+564,417
+(514,275)
+949
+(95,010)
+10,134
+13,969
+Interest paid
+Distributions by subsidiaries to non-controlling interests
+Dividends paid by the Company
+3,946
+Payment for financial assets at fair value through profit or loss
+Contributions to subsidiaries from non-controlling interests
+(9,234)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+(150)
+The notes on pages 156 to 203 form part of these consolidated financial statements.
+(e) The application of the share premium account is governed by Sections 167 and 168 of the PRC Company Law.
+(d) The capital reserve mainly 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 (Note 1); 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.
+(c) As at 31 December 2022, the amount of retained earnings available for distribution was RMB100,947 million (2021: RMB116,440 million), being the amount determined in
+accordance with CASS. 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 CASS and the amount determined in accordance with the accounting policies
+complying with International Financial Reporting Standards ("IFRS").
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+During the year ended 31 December 2022, the Company transferred RMB4,610 million (2021: RMB3,944 million) to the statutory surplus reserve, being 10% of the
+current year's net profit determined in accordance with the accounting policies complying with CASS.
+(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 ("CASS"), 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.
+153
+Notes:
+784,706
+358,970
+6,407
+117,000
+100,834
+52,846
+(275)
+(4,935)
+(296)
+151,532
+Financial Statements (International)
+936,238
+CONSOLIDATED STATEMENT OF CASH FLOWS
+(16,956)
+(18,783)
+Financial Statements (International)
+(127,965)
+(153,744)
+225,174
+116,269
+(a)
+Purchase of investments
+Exploratory wells expenditure
+21
+Capital expenditure
+(Amounts in million)
+Note
+Year ended 31 December
+2022
+2021
+for the year ended 31 December 2022
+RMB
+Net cash generated from operating activities
+Investing activities
+RMB
+1.84% to 4.35%
+1.89% to 4.25%
+6,570
+16,769
+1,135
+2022
+RMB million
+1,103
+9,200
+9,096
+4,683
+15,018
+RMB million
+(1,307)
+5,679
+13,754
+RMB million
+7,877
+2021
+2022
+Investment income from disposal of business and long-term equity investments (i)
+Dividend income from holding of other equity instrument investments
+Others
+* Interest rates per annum at which borrowing costs were capitalised for construction in progress
+Interest expense
+Accretion expenses (Note 35)
+Interest expense on lease liabilities
+(996)
+10 INVESTMENT INCOME
+(1,757)
+230
+14,060
+2022
+Less: Interest expense capitalised*
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+23,318
+18,757
+6,258
+1,718
+(462)
+17,522
+18,796
+Deferred taxation (Note 29)
+- Adjustment of prior years
+76
+- Provision for the year
+2021
+RMB million
+2022
+RMB million
+Income tax expense in the consolidated income statement represents:
+11 INCOME TAX EXPENSE
+(i) The Company and Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. ("Gaoqiao Petrochemical") and INEOS Investment (Shanghai) Company Limited ("INEOS
+Shanghai") entered into an equity transfer agreement on 28 July 2022. According to the agreement, the Company and Gaoqiao Petrochemical transferred 15% and
+35% equity interests in Shanghai SECCO Petrochemical Co., Ltd. ("Shanghai SECCO") to INEOS Shanghai respectively at a total consideration of RMB10,863 million.
+The above transactions were considered and approved by the 10th Session of 8th Directorate Meeting of the Company. The transactions were completed on 28
+December 2022 and the Company lost control over Shanghai SECCO. The Group accounted for its remaining 50% equity interest retained in Shanghai SECCO, at
+fair value upon initial recognition, as an interest in a joint venture from the date when control was lost. The investment income from disposal of Shanghai SECCO is
+RMB13,697 million.
+Note:
+298
+182
+34
+82
+RMB million
+2021
+Current tax
+Interest expense incurred
+2,109.76
+for the year ended 31 December 2022
+Others
+Donations
+Loss on disposal of property, plant, equipment and other non-current assets, net
+Fines, penalties and compensations
+Net realised and unrealised loss on derivative financial instruments not qualified as hedging
+Impairment losses on long-lived assets (ii)
+Ineffective portion of change in fair value of cash flow hedges
+Government grants (i)
+1,495.20
+1,218.00
+1,711.52
+1,948.64
+2,105.20
+1,411.20
+RMB/Ton
+8 OTHER OPERATING INCOME/(EXPENSES), NET
+(ii) City construction tax and education surcharge is levied on an entity based on its paid amount of value-added tax and consumption tax.
+Jet fuel oil
+Fuel oil
+Lubricant oil
+Solvent oil
+Naphtha
+Diesel
+Gasoline
+Products
+259,032
+2021
+Notes:
+2022
+2021
+RMB million
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+167
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+(ii) Impairment losses on long-lived assets for the year ended 31 December 2022 primarily represent impairment losses recognised in the exploration and production
+("E&P") segment of RMB2,891 million (2021: RMB2,467 million), the chemicals segment of RMB1,790 million (2021: RMB5,332 million), the refining segment of
+RMB2 million (2021: RMB860 million), and the marketing and distribution segment of RMB415 million (2021: RMB1,211 million). The impairment losses in the E&P
+segment were mainly the impairment losses of properties, plant and equipment relating to oil and gas producing activities. The primary factors resulting in the E&P
+segment impairment loss were downward revision of oil and gas reserve in certain fields and high extraction cost. E&P segment determines recoverable amounts of
+properties, plant and equipment relating to oil and gas producing activities, which include significant judgments and assumptions. The recoverable amounts were
+determined based on the present values of the expected future cash flows of the assets using a pre-tax discount rate 8.17% to 14.86% (2021: 10.47%). Further future
+downward revisions to the Group's oil or nature gas 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 nature gas producing activities by approximately RMB1,693 million (2021: RMB3,628 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 RMB1,508 million (2021: RMB2,400 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 RMB126 million (2021: RMB180 million). Impairment losses recognised in the chemical segment and refining segment relate to certain refinery
+and chemical production facilities and are not individually significant. The impairment losses were mainly due to the suspension of operations of certain production
+facilities, and evidence that indicate the economic performance of certain production facilities continuously was lower than the expectation, thus the carrying amounts
+of these facilities were written down to their recoverable amounts, which were determined based on the present values of forecasted future cash flows of the cash
+generating units using pre-tax discount rates ranging from 7.64% to 18.68% (2021: 10.50% to 13.90%).
+(i) Government grants for the years ended 31 December 2022 and 2021 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.
+(21,716)
+(14,779)
+(761)
+(1,389)
+(165)
+9 INTEREST EXPENSE
+(447)
+(39)
+(3,062)
+(722)
+(10,035)
+(5,669)
+(14,873)
+(15,535)
+694
+(255)
+6,706
+9,277
+RMB million
+(220)
+RMB million
+858
+Profit before taxation
+140
+237
+450
+450
+450
+450
+450
+450
+450
+450
+1,416
+113
+1,005
+298
+1,705
+_298 1,291 ___________116 - 1
+RMB'000
+Yin Zhaolin
+Guo Hongjin
+Li Defang(iv)
+Zhang Zhiguo
+Wu Bo(i)
+Zhai Yalin(i)
+Lv Lianggong(iii)
+Qiu Fasen(i)
+Jiang Zhenying(ii)
+Zhang Shaofeng
+Supervisors
+Bi Mingjian
+Shi Dan
+58
+356
+1,119
+113
+Financial Statements (International)
+169
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+9,865
+1,800
+566
+5,749
+1,750
+Total
+1,684
+180
+1,057
+Johnny Karling Ng
+1,588
+113
+1,196
+375
+Chen Yaohuan
+9
+140
+31
+Lv Dapeng(iv)
+||||1110034
+44
+263,991
+155
+435
+RMB million
+Cai Hongbin
+Liu Hongbin
+934
+58
+1,391
+2,243
+Tax effect of tax losses not recognised and temporary differences
+(701)
+(850)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+(222)
+(128)
+Effect of income taxes at foreign operations
+(2,766)
+(3,091)
+Tax effect of preferential tax rate (i)
+(8,096)
+(5,827)
+Tax effect of non-taxable income
+5,948
+4,509
+Tax effect of non-deductible expenses
+27,292
+23,600
+Expected PRC income tax expense at a statutory tax rate of 25%
+109,169
+94,400
+(1,757)
+18,757
+(462)
+23,318
+Write-down of deferred tax assets
+Li Yonglin
+Ling Yiqun
+Yu Baocai
+Zhao Dong
+Ma Yongsheng
+Directors
+Name
+Total
+Supervisors' fee
+RMB'000
+Directors'/
+2022
+Retirement
+scheme
+contributions
+RMB'000
+Bonuses
+RMB'000
+Independent non-executive directors
+Salaries,
+allowances and
+benefits in kind
+RMB'000
+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
+The emoluments of every director and supervisor is set out below:
+(a) Directors' and supervisors' emoluments
+12 DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+168
+(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 2022. According to Announcement [2020] No. 23 of the MOF "Announcement of the MOF, the State Taxation Administration and the National
+Development and Reform Commission on continuation of the income tax policy of western development enterprises", the preferential tax rate of 15% extends from 1
+January 2021 to 31 December 2030.
+Note:
+Actual income tax expense
+Adjustment of prior years
+Emoluments paid
+or receivable
+in respect of a
+person's services
+as a director,
+whether of the
+Company or
+its subsidiary
+undertaking
+5,680
+Note:
+6,432
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, a separate asset is recognised
+for any expected reimbursement that would be virtually certain. The amount recognised for the reimbursement is limited to the carrying amount
+of the provision.
+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.
+(q) Provisions and contingent liability
+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.
+(p) Interest-bearing borrowings
+Trade, bills and other payables generally are financial liabilities and 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 invoice amounts.
+(o) Trade, bills and other payables
+Management assesses at each date of the statement of financial position whether there is any indication that an impairment loss recognised
+for an 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.
+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.
+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).
+The carrying amounts of assets, including property, plant and equipment, construction in progress, right-of-use assets and other assets, are
+reviewed at each date of the statement of financial position 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 date
+of the statement of financial position.
+163
+(n) Impairment of assets
+The gain or loss from remeasuring the hedging instrument 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 recognised hedged item not measured at fair value and is recognised in profit or loss.
+A fair value hedge is a hedge of the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment,
+or a portion of such an asset, liability or firm commitment.
+Fair value hedges
+(m)Derivative financial instruments and hedge accounting (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+162
+When the hedging relationship no longer meets the risk management objective on the basis of which it qualified for hedge accounting (i.e. the
+entity no longer pursues that risk management objective), or when a hedging instrument expires or is sold, terminated, exercised, or there is no
+longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk starts to dominate the value
+changes that result from that economic relationship or no longer meets the criteria for hedge accounting, the Group discontinues prospectively
+the hedge accounting treatments. If the hedged future cash flows are still expected to occur, that amount remains in the cash flow hedge
+reserve and is accounted for as cash flow hedges. If the hedged future cash flows are no longer expected to occur, that amount is immediately
+reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment. A hedged future cash flow that is no longer highly
+probable to occur may still be expected to occur, if the hedged future cash flows are still expected to occur, that amount remains in the cash
+flow hedge reserve and is accounted for as cash flow hedges.
+If the amount that has been accumulated in the cash flow hedge reserve is a loss and the Group expects that all or a portion of that loss will not
+be recovered in one or more future periods, the Group immediately reclassifies the amount that is not expected to be recovered into profit or
+loss.
+For cash flow hedges, other than those covered by the preceding policy statements, that amount is reclassified from the cash flow hedge reserve
+to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit
+or loss.
+Any adjustment to the carrying amount of a hedged item is amortised to profit or loss if the hedged item is a financial instrument (or a
+component thereof) measured at amortised cost. The amortisation is based on a recalculated effective interest rate at the date that amortisation
+begins.
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2022
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+164 Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+Research and development expenditures that cannot be capitalised are expensed in the period in which they are incurred. Research and
+development expense amounted to RMB12,773 million for the year ended 31 December 2022 (2021: RMB11,481 million).
+(w) Research and development expense
+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.
+Environmental expenditures that relate to current ongoing operations or to conditions caused by past operations are expensed as incurred.
+(v) Environmental expenditures
+Repairs and maintenance expenditure is expensed as incurred.
+(u) Repairs and maintenance expenditure
+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.
+(t) Borrowing costs
+Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are
+recognised to profit or loss on a straight-line basis over the expected lives of the related assets.
+Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them with the costs
+that they are intended to compensate.
+Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the
+Group will comply with all attached conditions.
+(s) Government grants
+Sales are recognised when control of the goods have transferred. Obtaining control of relevant goods means that a customer can direct the use
+of the goods and obtain almost all the economic benefits from it. Advance from customers but goods not yet delivered is recorded as contract
+liabilities and is recognised as revenues when a customer obtains control over the relevant goods.
+Sales of goods
+The Group sells crude oil, natural gas, petroleum and chemical products, etc. Revenue is recognised according to the expected consideration
+amount, when a customer obtains control over the relevant goods or services. To determine whether a customer obtains control of a promised
+goods or services (assets), the Group shall consider indicators of the transfer of control, which include, but are not limited to, the Group has
+a present right to payment for the assets; the Group has transferred physical possession of the assets to the customer; the customer has the
+significant risks and rewards of ownership of the assets; the customer has accepted the assets.
+Revenue arises in the course of the Group's ordinary activities, and increases in economic benefits in the form of inflows that result in an
+increase in equity, other than those relating to contributions from equity participants.
+(r) Revenue recognition
+An onerous contract exists when the Group has a contract under which the unavoidable costs of meeting the obligations under the contract
+exceed the economic benefits expected to be received from the contract. Provisions for onerous contracts are measured at the present value
+of the lower of the expected cost of terminating the contract and the net cost of continuing with the fulfilling the contract. The cost of fulfilling
+the contract includes both the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling that
+contract.
+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.
+(q) Provisions and contingent liability (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast
+transaction for a non-financial asset or a non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, the
+entity removes that amount from the cash flow hedge reserve and include it directly in the initial cost or other carrying amount of the asset or
+the liability. This is not a reclassification adjustment and hence it does not affect other comprehensive income.
+The gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income.
+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.
+(ii) The cumulative change in fair value (present value) of the hedged item (i.e. the present value of the cumulative change in the hedged
+expected future cash flows) from inception of the hedge.
+(i) The cumulative gain or loss on the hedging instrument from inception of the hedge; and
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+160
+Financial Statements (International)
+The Group recognises the loss allowance accrued or written back in profit or loss.
+For trade accounts receivable and bills receivable and financial assets at FVOCI related to revenue, the Group measures the loss allowance at
+an amount equal to lifetime ECLs.
+For financial instruments on the first stage and the second stage, and that have low credit risk, the Group calculates interest income
+according to carrying amount without deducting the impairment allowance and effective interest rate. For financial instruments on the third
+stage, interest income is calculated according to the carrying amount minus amortised cost after the provision of impairment allowance and
+effective interest rate.
+For financial instruments that have low credit risk at the date of the statement of financial position, the Group assumes that there is no
+significant increase in credit risk since the initial recognition, and measures the loss allowance at an amount equal to 12-month ECLs.
+The Group measures the ECLs of financial instruments on different stages at each the date of the statement of financial position. For
+financial instruments that have no significant increase in credit risk since the initial recognition, on first stage, the Group measures the
+loss allowance at an amount equal to 12-month ECLs. If there has been a significant increase in credit risk since the initial recognition of a
+financial instrument but credit impairment has not occurred, on second stage, the Group recognises a loss allowance at an amount equal to
+lifetime ECLs. If credit impairment has occurred since the initial recognition of a financial instrument, on third stage, the Group recognises a
+loss allowance at an amount equal to lifetime ECLs.
+The Group measures and recognises ECLs, considering reasonable and supportable information about the relevant past events, current
+conditions and forecasts of future economic conditions.
+The Group recognises a loss allowance for ECLs on a financial asset that is measured at amortised cost and a debt instrument that is
+measured at FVOCI.
+(ii) Impairment
+In addition, the Group designates some equity instruments that are not held for trading as financial assets at FVOCI, are presented in
+financial assets at FVOCI. The relevant dividends of these financial assets are recognised in profit or loss. When derecognised, the cumulative
+gain or loss previously recognised in other comprehensive income is transferred to retained earnings.
+Equity instruments that the Group has no power to control, jointly control or exercise significant influence over, are measured at fair value
+through profit or loss and presented in financial assets at fair value through profit or loss.
+Equity instruments
+Amortised cost: The business model for managing such financial assets by the Group are held for collection of contractual cash flows. The
+contractual cash flow characteristics are to give rise on specified dates to cash flows that are solely payments of principal and interest on
+the principal amount outstanding. Interest income from these financial assets is recognised using the effective interest rate method.
+FVOCI: The business model for managing such financial assets by the Group are held for collection of contractual cash flows and for
+selling the financial assets, where the assets' cash flows represent solely payments of principal and interest on the principal amount
+outstanding. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment
+gains or losses, foreign exchange gains and losses and interest income calculated using the effective interest rate method, which are
+recognised in profit or loss.
+Debt instruments held by the Group mainly includes cash and cash equivalents, time deposits with financial institutions, receivables. These
+financial assets are measured at amortised cost and FVOCI.
+Debt instruments
+Financial assets are initially recognised at fair value. For financial assets measured at fair value through profit or loss, the relevant
+transaction costs are recognised in profit or loss. The transaction costs for other financial assets are included in the initially recognised
+amount. However, trade accounts receivable and bills receivable arising from sale of goods or rendering services, without significant financing
+component, are initially recognised based on the transaction price expected to be entitled by the Group.
+The Group classifies financial assets into different categories depending on the business model for managing the financial assets and the
+contractual terms of cash flows of the financial assets: a) financial assets measured at amortised cost, b) financial assets measured at fair
+value through other comprehensive income ("FVOCI"), c) financial assets measured at fair value through profit or loss. A contractual cash
+flow characteristic which could have only a de minimis effect on the contractual cash flows of the financial assets, or could have an effect
+that is more than de minimis but is not genuine, does not affect the classification of the financial asset.
+(i) Classification and measurement
+(j) Financial assets
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(j) Financial assets (Continued)
+(x) Leases
+(iii)Derecognition
+On derecognition of equity instruments at FVOCI, the amount accumulated in the fair value reserve is transferred to retained earnings. It is
+not recycled through profit or loss. While on derecognition of other financial assets, this difference is recognised in profit or loss.
+As long as a cash flow hedge meets the qualifying criteria for hedge accounting, the separate component of equity associated with the hedged
+item (cash flow hedge reserve) is adjusted to the lower of the following (in absolute amounts):
+Cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a component
+of, a recognised asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable forecast transaction,
+and could affect profit or loss. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective
+effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.
+Cash flow hedges
+(iii) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges
+and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. However, that designation
+does not reflect an imbalance between the weightings of the hedged item and the hedging instrument.
+(ii) The effect of credit risk does not dominate the value changes that result from that economic relationship.
+(i) There is an economic relationship between the hedged item and the hedging instrument, which shares a risk and that gives rise to opposite
+changes in fair value that tend to offset each other.
+A hedging instrument is a designated derivative whose changes in cash flows are expected to offset changes in cash flows of the hedged item.
+The hedging relationship meets all of the following hedge effectiveness requirements:
+Hedged items are the items that expose the Group to risks of changes in future cash flows and that are designated as being hedged and that
+must be reliably measurable. The Group's hedged items include a forecast transaction that is settled with an undetermined future market price
+and exposes the Group to risk of variability in cash flows, etc.
+Hedge accounting is a method which recognises the offsetting effects on profit or loss (or other comprehensive income) of changes in the fair
+values of the hedging instrument and the hedged item in the same accounting period, to represent the effect of risk management activities.
+Derivative financial instruments are recognised initially at fair value. At each date of the statement of financial position, the fair value is
+remeasured. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss, except where the derivatives qualify for
+hedge accounting.
+(m)Derivative financial instruments and hedge accounting
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+161
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+If there is an active market for financial instruments, the quoted price in the active market is used to measure fair values of the financial
+instruments. If no active market exists for financial instruments, valuation techniques are used to measure fair values. In valuation, the Group
+adopts valuation techniques that are applicable in the current situation and have sufficient available data and other information to support it,
+and selects input values that are consistent with the asset or liability characteristics considered by market participants in the transaction of
+relevant assets or liabilities, and gives priority to relevant observable input values. Use of unobservable input values where relevant observable
+input values cannot be obtained or are not practicable.
+Where the present obligations of financial liabilities are completely or partially discharged, the Group derecognises these financial liabilities or
+discharged parts of obligations. The differences between the carrying amounts and the consideration received are recognised in profit or loss.
+(I) Determination of fair value for financial instruments
+The Group's financial liabilities are mainly financial liabilities measured at amortised cost, including trade accounts payable and bills payable,
+other payables, and loans, etc. These financial liabilities are initially measured at the amount of their fair value after deducting transaction costs
+and use the effective interest rate method for subsequent measurement.
+The Group, at initial recognition, classifies financial liabilities as either financial liabilities subsequently measured at amortised cost or financial
+liabilities at fair value through profit or loss.
+(k) Financial liabilities
+The Group monitors the risk that the specified debtor will default on the contract and recognises a provision when ECLs on the financial
+guarantees are determined to be higher than the carrying amount in respect of the guarantees (i.e. the amount initially recognised, less
+accumulated amortisation).
+Subsequent to initial recognition, the amount initially recognised as deferred income is amortised in profit or loss over the term of the
+guarantee as income from financial guarantees issued.
+Financial guarantees issued are initially recognised at fair value, which is determined by reference to fees charged in an arm's length
+transaction for similar services, when such information is obtainable, or to interest rate differentials, by comparing the actual rates charged
+by lenders when the guarantee is made available with the estimated rates that lenders would have charged, had the guarantees not been
+available, where reliable estimates of such information can be made. Where consideration is received or receivable for the issuance of the
+guarantee, the consideration is recognised in accordance with the Group's policies applicable to that category of asset. Where no such
+consideration is received or receivable, an immediate expense is recognised in profit or loss.
+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.
+(iv) Financial guarantees issued
+The Group derecognises a financial asset when: a) the contractual right to receive cash flows from the financial asset expires; b) the Group
+transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset; c) the financial asset has been
+transferred and the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, but the
+Group has not retained control.
+5,109
+A lease is a contract that a lessor transfers the right to use an identified asset for a period of time to a lessee in exchange for consideration.
+The Group recognises a right-of-use asset at the date at which the leased asset is available for use by the Group, and recognises a lease
+liability measured at the present value of the remaining lease payments. The lease payments include fixed payments, the exercise price of
+a purchase option if the Group is reasonably certain to exercise that option, and payments of penalties for terminating the lease if the lease
+term reflects the Group exercising that option, etc. Variable payments that are based on a percentage of sales are not included in the lease
+payments, and should be recognised in profit or loss when incurred. Lease liabilities to be paid within one year (including one year) from the
+date of the statement of financial position is presented in current liabilities.
+59
+66
+2,393
+2021
+RMB million
+RMB million
+2,205
+2022
+59,990
+1,394
+61,384
+60,812
+1,222
+59,590
+2021
+RMB million
+RMB million
+3
+2022
+363,979
+491,762
+3,257,356
+45,464
+45,335
+68,443
+83,853
+112,519
+168,017
+149,208
+144,524
+198,453
+223,679
+2,679,500
+8
+2022
+RMB million
+90,395
+8,752
+13,409
+12,337
+1,573
+13,874
+18,044
+17,081
+213,894
+RMB million
+RMB million
+206,838
+2021
+2022
+(i) Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Notes:
+Others
+Education surcharge (ii)
+Resources tax
+City construction tax (ii)
+Special oil income levy
+Consumption tax (i)
+7 TAXES OTHER THAN INCOME TAX
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+103,492
+103,585
+11,932
+91,560
+2021
+RMB million
+13,190
+44,079
+42,785
+429,038
+517,183
+Diesel
+Gasoline
+Revenue from primary business mainly represents revenue from the sales of refined petroleum products, chemical products, crude oil and natural
+gas, which are recognised at a point in time.
+3 REVENUE FROM PRIMARY BUSINESS
+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.
+(bb) Segment reporting
+Dividends and distributions of profits proposed in the profit appropriation plan which will be authorised and declared after the date of statement
+of financial position, are not recognised as a liability at the date of statement of financial position 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.
+(aa) Dividends
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+6
+Financial Statements (International)
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022 165
+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 statement of financial position 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 date of statement of financial position and is reduced to the extent that it is no
+longer probable that the related tax benefit will be realised.
+(z) Income tax
+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.
+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 39.
+(y) Employee benefits
+When the Group leases self-owned plants and buildings, equipment and machinery, lease income from an operating lease is recognised on a
+straight-line basis over the period of the lease. The Group recognises variable lease income which is based on a certain percentage of sales
+as rental income when occurred.
+A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating lease is a
+lease other than a finance lease.
+(ii) As lessor
+For a lease modification that is not accounted for as a separate lease, except for the practical expedient which applies only to rent
+concessions occurring as a direct consequence of the COVID-19 pandemic, the Group determine the lease term of the modified lease at the
+effective date of the modification, and remeasure the lease liability by discounting the revised lease payments using a revised discount rate.
+The Group decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications
+that decrease the scope or shorten the term of the lease, and shall recognise in profit or loss any gain or loss relating to the partial or full
+termination of the lease. The Group make a corresponding adjustment to the right-of-use asset for all other lease modifications.
+A lessee shall account for a lease modification as a separate lease if both: (1) the modification increases the scope of the lease by adding
+the right to use one or more underlying assets; and (2) the consideration for the lease increases by an amount commensurate with the stand-
+alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the articular
+contract.
+Payments associated with short-term leases with lease terms within 12 months and all leases of low-value assets are recognised on a
+straight-line basis over the lease term as an expense in profit or loss or as cost of relevant assets, instead of recognising right-of-use assets
+and lease liabilities.
+Right-of-use assets of the Group mainly comprise land. Right-of-use assets are measured at cost which comprises the amount of the initial
+measurement of the lease liability, any lease payments made at or before the commencement date, any initial direct costs incurred by the
+lessee, less any lease incentives received. The Group depreciates the right-of-use assets over the shorter of the asset's useful life and the
+lease term on a straight-line basis. When the recoverable amount of a right-of-use asset less than its carrying amount, the carrying amount
+is reduced to the recoverable amount.
+Crude oil
+(i) As lessee
+Chemical feedstock
+Synthetic resin
+542,260
+743,551
+726,057
+796,667
+RMB million
+RMB million
+2021
+2022
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+166
+Contributions to retirement schemes (Note 39)
+Salaries, wages and other benefits
+PERSONNEL EXPENSES
+- Others
+- Audit services
+Auditor's remuneration:
+Variable lease payments, low-value and short-term lease payment
+The following items are included in selling, general and administrative expenses:
+5 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
+Sale of materials and others
+Rental income
+OTHER OPERATING REVENUES
+4
+(i) Others are primarily liquefied petroleum gas and other refinery and chemical byproducts and joint products.
+Others (i)
+Synthetic fiber monomers and polymers
+Natural gas
+Kerosene
+Basic organic chemicals
+Financial Statements (International)
+578
+179
+185
+Reclassifications
+9,420
+6,774
+1,904
+742
+Impairment losses for the year
+(410)
+92,824
+39,670
+4,586
+Depreciation for the year
+1,299,229
+614,969
+620,720
+63,540
+48,568
+Balance at 1 January 2021
+225
+(5)
+(57)
+(904)
+(29)
+Exchange adjustments
+(14,574)
+(13,668)
+(135)
+Invest into the joint ventures and associated companies
+(771)
+(259)
+(170)
+(7)
+(82)
+Reclassification to other long-term assets
+(138)
+(133)
+Written back on disposals
+Accumulated depreciation and impairment losses:
+2,098,476
+1,105,325
+Invest into the joint ventures and associated companies
+(753)
+(289)
+1,042
+Reclassifications
+121,967
+72,738
+(64)
+40,397
+Transferred from construction in progress
+7,951
+3,528
+4,277
+146
+Additions
+1,984,437
+8,832
+(150)
+(214)
+Reclassification to other long-term assets
+840,719
+152,432
+Balance at 31 December 2022
+4,296
+321
+3,768
+207
+Exchange adjustments
+(18,428)
+(17,169)
+(429)
+(830)
+Disposals
+(1,533)
+(1,417)
+(50)
+(66)
+(990)
+1,048,227
+Balance at 31 December 2021
+660,838
+143,107
+79,637
+Balance at 31 December 2022
+598,925
+391,719
+132,207
+74,999
+407,956
+Balance at 31 December 2021
+381,733
+136,872
+75,010
+Balance at 1 January 2021
+Net book value:
+1,467,776
+697,369
+593,615
+697,612
+630,700
+The addition to oil and gas properties of the Group for the year ended 31 December 2022 included RMB4,277 million (2021: RMB2,163 million) of
+estimated dismantlement costs for site restoration.
+Exchange adjustments
+Disposals and others
+Reclassification to other long-term assets
+Impairment losses for the year
+Transferred to property, plant and equipment
+Dry hole costs written off
+Balance at 1 January
+Additions
+18 CONSTRUCTION IN PROGRESS
+The Group compares the carrying amount of individual cash-generating units which were grouped for the property, plant and equipment related
+to oil and gas producing activities with its value in use, using a discounted cash flow forecast prepared based on the future production profiles
+included in the oil and gas reserve reports, and recorded impairment losses amounting to RMB2,891 million for the year ended 31 December 2022
+(2021: RMB2,467 million).
+for the year ended 31 December 2022
+Financial Statements (International)
+Financial Statements (International)
+173
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+At 31 December 2022 and 31 December 2021, the Group had no individual significant fully depreciated property, plant and equipment which were
+still in use.
+At 31 December 2022 and 31 December 2021, the Group had no individual significant property, plant and equipment which were temporarily idle
+or pending for disposal.
+At 31 December 2022 and 31 December 2021, the Group had no individual significant property, plant and equipment which had been pledged.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+72,795
+Balance at 31 December 2022
+3,914
+86,178
+5,082
+2,016
+2,754
+312
+Impairment losses for the year
+50,383
+31,059
+Reclassifications
+4,736
+1,385,512
+656,508
+660,838
+68,166
+Balance at 1 January 2022
+1,385,512
+656,508
+Depreciation for the year
+259
+(209)
+(50)
+197
+3,616
+101
+Exchange adjustments
+(12,605)
+(225)
+(160)
+(11,465)
+(406)
+(734)
+Written back on disposals
+(40)
+(25)
+Reclassification to other long-term assets
+(80)
+(60)
+(20)
+Invest into the joint ventures and associated companies
+68,166
+793,045
+143,165
+1,984,437
+8,858
+6,645
+(1,482)
+8,127
+the consolidated income statement
+Reclassification adjustments for amounts transferred to
+11,778
+(1,618)
+(3,881)
+4,992
+(1,675)
+6,667
+instruments recognised during the year
+Effective portion of changes in fair value of hedging
+Cash flow hedges:
+RMB million
+15,659
+RMB million
+7,240
+in other comprehensive income (i)
+in other comprehensive income
+Net movement during the year recognised
+(4)
+2
+(6)
+(67)
+12
+Net movement during the year recognised
+(79)
+Changes in the fair value of instruments at
+19,018
+(5,499)
+24,517
+11,637
+(3,157)
+14,794
+fair value through other comprehensive income
+amount
+Net of tax
+Tax
+effect
+2022
+Final cash dividends in respect of the previous financial year, approved during the year of
+RMBO.31 per share (2021: RMBO.13 per share)
+Dividends payable to shareholders of the Company attributable to the previous financial year, approved during the year represent:
+Pursuant to a resolution passed at the director's meeting on 24 March 2023, final dividends in respect of the year ended 31 December 2022 of
+RMBO.195 (2021: RMBO.31) per share totaling RMB23,380 million (2021: RMB37,532 million) were proposed for shareholders' approval at the
+Annual General Meeting. Final cash dividend proposed after the date of the statement of financial position has not been recognised as a liability at
+the date of the statement of financial position.
+Pursuant to the shareholders' approval at the General Meeting on 26 August 2022, the interim dividends for the year ended 31 December 2022 of
+RMBO.16 (2021: RMBO.16) per share totaling RMB19,371 million (2021: RMB19,371 million) were approved. Dividends were paid on 19 September
+2022.
+56,903
+42,751
+2021
+19,371
+37,532
+Dividends declared after the date of the statement of financial position of RMBO.195 per share (2021: RMBO.31 per share)
+19,371
+Dividends declared and paid during the year of RMBO.16 per share (2021: RMB0.16 per share)
+2021
+RMB million
+RMB million
+2022
+Dividends payable to shareholders of the Company attributable to the year represent:
+23,380
+RMB million
+RMB million
+37,532
+amount
+RMB million
+Before tax
+Net of tax
+amount
+RMB million
+Tax
+effect
+RMB million
+RMB million
+Before tax
+amount
+2021
+2022
+15 OTHER COMPREHENSIVE INCOME
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+171
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Pursuant to the shareholders' approval at the Annual General Meeting on 18 May 2022, a final dividend of RMBO.31 per share totaling RMB37,532
+million according to total shares on 9 June 2022 was approved. All dividends have been paid in the year ended 31 December 2022.
+Pursuant to the shareholders' approval at the Annual General Meeting on 25 May 2021, a final dividend of RMBO.13 per share totaling RMB15,739
+million according to total shares on 16 June 2021 was approved. All dividends have been paid in the year ended 31 December 2021.
+15,739
+Cost of hedging reserve
+(79)
+12
+(67)
+(8)
+Invest into the joint ventures and associated companies
+(29)
+(617)
+646
+Reclassifications
+111,026
+(188)
+65,182
+5,487
+Transferred from construction in progress
+1,892,844
+7,878
+996,702
+5,177
+2,192
+757,592
+138,550
+509
+40,357
+(196)
+Reclassification to other long-term assets
+(665)
+1,048,227
+793,045
+143,165
+Balance at 31 December 2021
+(1,092)
+(95)
+(24,309)
+(17,495)
+(5,517)
+(940)
+(57)
+Balance at 1 January 2022
+Exchange adjustments
+(1,297)
+Disposals
+(1,714)
+(1,027)
+(22)
+Additions
+Balance at 31 December
+Balance at 1 January 2021
+Total
+RMB million
+7,254
+441
+441
+2,856
+2,856
+7,254
+24,974
+Other comprehensive income
+Foreign currency translation differences
+(1,728)
+and joint ventures
+(220)
+(220)
+149
+149
+(4)
+2
+(6)
+Share of other comprehensive income of associates
+(1,728)
+(3,145)
+21,829
+Equipment,
+machinery
+and others
+RMB million
+properties
+RMB million
+Oil and gas,
+Plants and
+buildings
+RMB million
+17 PROPERTY, PLANT AND EQUIPMENT
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+172
+There are no potential dilutive ordinary shares, and diluted earnings per share are equal to the basic earning per share.
+The calculation of basic earnings per share for the year ended 31 December 2022 is based on the profit attributable to ordinary shareholders
+of the Company of RMB66,153 million (2021: RMB71,975 million) and the weighted average number of shares of 120,889,248,735 (2021:
+121,071,209,646) during the year.
+16 BASIC AND DILUTED EARNINGS PER SHARE
+(i) As at 31 December 2022, cash flow hedge reserve amounted to a gain of RMB3,079 million (31 December 2021: a gain of RMB7,244 million), of which a gain of
+RMB3,024 million was attributable to shareholders of the Company (31 December 2021: a gain of RMB7,214 million).
+Note:
+17,507
+(5,497)
+23,004
+Cost:
+2022
+2021
+RMB million
+155,939
+102
+249
+55,086
+576
+885
+3,532
+3,212
+51,035
+13,140
+194,458
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2021
+14,444
+2022
+51,331
+870
+(676)
+(990)
+(602)
+(673)
+(199,675) (103,243)
+Non-current liabilities
+(822)
+1,106
+(714)
+(3,811)
+(28)
+(101)
+(217,987)
+(236,840)
+(132,266) (136,150)
+Current liabilities
+(8,577)
+31
+December
+31
+December
+31
+December
+2021
+21 INTEREST IN ASSOCIATES (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+1,281
+175
+Summarised financial information and reconciliation to their carrying amounts in respect of the Group's principal associates:
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+British Virgin
+Islands
+PRC
+PRC
+Equity method
+Equity method
+38.75 Mining coal and manufacturing of
+coal-chemical products
+50.00 Crude oil and natural gas extraction
+Zhongtian Synergetic Energy Company
+Limited ("Zhongtian Synergetic Energy")
+Caspian Investments Resources Ltd.
+("CIR")
+investment management, investment
+consulting, self-owned equity
+management
+The Republic of
+Kazakhstan
+PipeChina
+31
+Sinopec Finance
+December
+31
+December
+2022
+2021
+December
+31
+CIR
+Zhongtian Synergetic Energy
+Sinopec Capital
+31
+December
+2022
+RMB million
+December
+2021
+RMB million
+31
+31
+December
+2022
+RMB million
+212,850
+57,394
+768,161
+86,335
+104,889
+816,301
+Current assets
+Non-current assets
+31
+December
+2021
+RMB million
+RMB million
+2022
+(23,435)
+(22,216)
+(138)
+(144)
+2021
+RMB million
+Revenue
+112,832
+Profit for the year
+31,908
+RMB million
+101,572
+29,776
+PipeChina
+2022
+Sinopec Finance
+2022
+RMB million
+Sinopec Capital
+2022
+RMB million
+2021
+RMB million
+Zhongtian Synergetic Energy
+2022
+2021
+RMB million RMB million
+CIR
+2022
+2021
+RMB million
+2021
+RMB million
+Year ended 31 December
+Summarised statement of comprehensive income
+240
+15,168
+6,665
+6,144
+10,463
+9,327
+570
+240
+Carrying Amounts
+73,533
+73,674
+16,038
+15,168
+6,665
+6,144
+10,463
+9,327
+570
+RMB million
+49.00 Project and equity investment,
+5,636
+5
+32,731
+526,241
+525,235
+owners of the Company
+Net assets attributable to
+480
+1,139
+30,955
+24,070
+12,538
+13,602
+30,955
+32,731
+615,103
+589,249
+Net assets
+27,001
+13,602
+12,538
+27,001
+2
+17,551
+16,959
+2,090
+1,826
+2,338
+2,168
+73,533
+associates
+Share of net assets from
+88,862
+64,014
+non-controlling interests
+Net assets attributable to
+480
+1,139
+24,070
+5,177
+14 DIVIDENDS
+49.00 Provision of non-banking financial
+services
+PRC
+51,800
+269,127
+Balance at 31 December 2022
+(9,839)
+(4,229)
+(5,610)
+Decreases
+320,927
+20,089
+10,981
+Additions
+310,677
+46.921
+263,756
+Balance at 1 January 2022
+310,677
+9,108
+46,921
+Accumulated depreciation
+17,563
+27,122
+Balance at 1 January 2022
+42,269
+15,147
+27,122
+Balance at 31 December 2021
+(2,604)
+Balance at 1 January 2021
+(2,197)
+Decreases
+16,829
+6,863
+9,966
+Additions
+28,044
+10,481
+(407)
+263,756
+(6,292)
+(3,430)
+(34)
+61
+196,045
+(107)
+(240)
+(144)
+(581)
+(10,302)
+155,939
+(11,492)
+(121,967)
+(7,702)
+(6,416)
+159,729
+180,741
+125,525
+RMB million
+(111,026)
+As at 31 December 2022, the amount of capitalised cost of exploratory wells included in construction in progress related to the exploration and
+production segment was RMB17,062 million (2021: RMB12,255 million). The geological and geophysical costs paid during the year ended 31
+December 2022 were RMB3,478 million (2021: RMB4,174 million).
+19 RIGHT-OF-USE ASSETS
+Land
+(2,862)
+22,913
+9,650
+13,263
+294,056
+40,701
+253,355
+Balance at 31 December 2021
+Decreases
+Additions
+Balance at 1 January 2021
+Cost
+Financial Statements (International)
+Total
+RMB million
+RMB million
+RMB million
+Others
+15,147
+42,269
+Additions
+10,045
+1,006
+1,417
+2,541
+1,004
+1.004
+4,043
+4,043
+6,464
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of petrochemical products
+RMB million
+31 December
+2021
+2022
+31 December
+Other units without individually significant goodwill
+Shanghai SECCO
+Sinopec Zhenhai Refining and Chemical Branch
+Sinopec Beijing Yanshan Petrochemical Branch
+RMB million
+8,594
+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. The pre-tax discount rates reflect specific risks relating to the cash generating unit. For impairment test of
+the goodwill, the pre-tax discount rates ranged 10.1% to 12.2% (2021: 11.4% to 11.7%) were used by management. Based on the estimated
+recoverable amount, no major impairment loss was recognised for the year ended 31 December, 2022.
+Key assumptions used for cash flow forecasts for these cash generating units are the sales volume and gross margin. The sales volume was based
+on the production capacity and/or the sales volume in the period immediately before the budget period. The sales price was based on the future
+trend of the prices of crude oil and petrochemical products. The budgeted gross margin was based on the gross margin achieved in the period
+immediately before the budget period.
+Equity method
+PRC
+PRC
+Equity method
+of business
+PRC
+PRC
+Principal place
+Country of
+incorporation
+Measurement
+method
+Equity method
+14.00 Operation of oil and natural gas
+pipeline and auxiliary facilities
+interests Principal activities
+% of
+ownership
+Sinopec Finance Company Limited
+("Sinopec Finance")
+Sinopec Capital Company Limited
+("Sinopec Capital")
+Name of company
+PipeChina (i)
+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.
+21 INTEREST IN ASSOCIATES
+Principal activities
+PRC
+Impairment tests for cash-generating units containing goodwill
+Goodwill is allocated to the following Group's cash-generating units:
+(7,861)
+6,464
+Balance at 31 December 2021
+266,012
+30,220
+235,792
+Balance at 1 January 2021
+Net book value
+56,071
+236,634
+20,807
+Balance at 31 December 2022
+(3,762)
+(1,859)
+(1,903)
+Decreases
+17,564
+7,519
+35,264
+31,774
+268,408
+Balance at 31 December 2022
+16,455
+14,325
+RMB million
+2021
+31 December
+RMB million
+31 December
+2022
+Less: Accumulated impairment losses
+Cost
+20 GOODWILL
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+174
+264,856
+30,993
+233,863
+(7,861)
+8,594
+During 2022 and 2021, the Company did not incur any emoluments paid or receivable in respect of a person accepting office as a director, or any
+payments to any director for loss of office.
+55
+2021
+3,542
+8,218
+1,657
+2,864
+(2,396)
+1,393
+(597)
+2,261
+(885)
+(201)
+(601)
+603
+(407)
+(1,426)
+1,664
+2,657
+(2,054)
+6,164
+(2,004)
+(111)
+(1,270)
+(1,164)
+107
+147
+116
+52
+975
+(89)
+451
+209
+(338)
+(411)
+(7)
+(5)
+(274)
+(107)
+144
+1,456
+2,263
+(1,793)
+703
+1,081
+(897)
+493
+3,422
+(60)
+*
+2,466
+The share of profit and other comprehensive income for the period from 29 December 2022 to 31 December 2022 from Shanghai SECCO was immaterial.
+Note:
+(i) Including foreign currency translation differences.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+177
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+The share of profit and other comprehensive income for the year ended 31 December 2022 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was loss RMB18 million (2021: profit RMB4,494 million) and loss RMB376 million (2021: profit RMB215
+million) respectively. As at 31 December 2022, the carrying amount of all individually immaterial joint ventures accounted for using equity method
+in aggregate was RMB34,194 million (2021: RMB30,640 million).
+1,063
+832
+(713)
+986
+7,144
+(123)
+(1,426)
+1,664
+2,657
+6,164
+8,600
+2,140
+(1,793)
+986
+910
+128
+2,462
+454
+454
+500
+(667)
+(882)
+(1,467)
+24,631
+6,353
+7,580
+10,751
+6,626
+6,133
+7,484
+10,863
+8,120
+Carrying Amounts
+8,120
+6,353
+7,580
+10,751
+6,626
+6,133
+7,484
+6,497
+6,497
+Share of net assets from joint ventures
+468
+22,591
+13,991
+12.266
+14,967
+21,726
+Net assets attributable to owners of the company
+12,993
+16,239
+15,883
+18,949
+21,941
+13,523
+12,266
+14,967
+21.726
+Net assets attributable to non-controlling interests
+650
+10,863
+for the year ended 31 December 2022
+Summarised statement of comprehensive income
+Revenue
+2021
+Sinopec SABIC Tianjin
+2022
+2021
+RMB million
+RMB million
+RMB million
+RMB million
+2022
+59,347
+(1,822)
+(2,789)
+25,076
+(1,431)
+27,499
+19,542
+15,190
+24,294
+47,224
+2021
+RMB million
+RMB million
+RMB million
+Depreciation, depletion and amortisation
+Interest income
+Interest expense
+(Loss)/profit before taxation
+Income tax expense
+(Loss)/profit for the year
+Other comprehensive income
+Total comprehensive income
+Dividends declared by joint ventures
+Share of net (loss)/profit from joint ventures
+Share of other comprehensive income from joint ventures (i)
+FREP
+2022
+BASF-YPC
+Taihu
+2021
+2022
+RMB million
+Year ended 31 December
+18.949
+23 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+Long-term receivables from and prepayment to Sinopec Group Company and fellow subsidiaries
+Prepayments for construction projects to third parties
+Others (i)
+436
+(561)
+(127)
+(49)
+(30)
+239
+(106)
+417
+4,079
+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.
+These receivables relate to a wide range of customers for whom there is no recent history of default.
+Information about the impairment of trade accounts receivable and the Group's exposure to credit risk can be found in Note 42.
+26 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
+Non-current assets
+Unlisted equity instruments
+Listed equity instruments
+4,033
+Current assets
+Balance at 31 December
+Written back for the year
+152
+442
+88
+221
+85
+18
+46,364
+Written off for the year
+Others
+34,861
+for the year ended 31 December 2022
+25 TRADE ACCOUNTS RECEIVABLE (Continued)
+Loss allowance for expected credit losses are analysed as follows:
+2022
+RMB million
+4,033
+2021
+RMB million
+3,860
+Balance at 1 January
+Provision for the year
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Trade accounts receivable and bills receivable (i)
+31 December
+2022
+RMB million
+139,307
+14,536
+31 December
+2021
+RMB million
+109,940
+15,701
+93,994
+84,174
+31 December
+2022
+2,987
+250,824
+212,330
+(6,583)
+244,241
+(4,897)
+207,433
+The cost of inventories recognised as an expense in the consolidated income statement amounted to RMB2,774,951 million for the year ended 31
+December 2022 (2021: RMB2,177,141 million). It includes the write-down of inventories of RMB6,407 million mainly related to finished goods and
+raw materials (2021: RMB3,148 million mainly related to finished goods).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+2,515
+Less: Allowance for diminution in value of inventories
+Spare parts and consumables
+Finished goods
+31 December
+2021
+RMB million
+RMB million
+616
+588
+114
+179
+3,507
+5,939
+4,237
+6,706
+Note:
+(i) As at 31 December 2022 and 2021, bills receivable and certain trade accounts receivable were classified as financial assets at fair value through other comprehensive
+income, as relevant business model is achieved both by collecting contractual cash flows and selling of these assets.
+27 INVENTORIES
+Crude oil and other raw materials
+Work in progress
+34,180
+46,039
+RMB million
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Operating rights of service stations
+Cost:
+Balance at 1 January
+Additions
+Decreases
+Balance at 31 December
+Accumulated amortisation:
+2021
+RMB million
+Balance at 1 January
+Decreases
+Balance at 31 December
+Net book value at 31 December
+24 DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+53,791
+880
+53,567
+912
+(541)
+Additions
+RMB million
+2022
+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:
+31 December
+2022
+RMB million
+31 December
+2021
+RMB million
+28,009
+29,714
+3,235
+1,520
+7,505
+7,470
+34,063
+31,326
+72,812
+70,030
+Note:
+(i) Others mainly comprise catalyst expenditures and improvement expenditures of property, plant and equipment.
+(688)
+Operating rights of service stations
+54,130
+24,077
+2,199
+4,240
+6,536
+50,443
+38,894
+(4,079)
+46,364
+(4,033)
+7,261
+34,861
+31 December
+2022
+RMB million
+31 December
+2021
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+178
+The ageing analysis of trade accounts receivable (net of loss allowance for expected credit losses) is as follows:
+30,159
+38,942
+2021
+RMB million
+21,711
+2,301
+2,699
+(257)
+(333)
+26,121
+24,077
+28,009
+29,714
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and swaps contracts. See Note 42.
+25 TRADE ACCOUNTS RECEIVABLE
+Amounts due from third parties
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from associates and joint ventures
+Less: Loss allowance for expected credit losses
+31 December
+2022
+RMB million
+31 December
+53,791
+16,038
+15,883
+12,993
+4,184
+574
+461
+Other comprehensive income
+2
+89
+26
+4,562
+(68)
+3
+Total comprehensive income
+31,908
+29,778
+2,427
+2,194
+1,213
+85
+990
+990
+170
+Cai Hongbin
+Independent non-executive directors
+Zhang Yuzhuo(v)
+Liu Hongbin
+Li Yonglin
+Ling Yiqun
+Yu Baocai
+Financial Statements (International)
+Zhao Dong
+Directors
+Name
+The emoluments of every director and supervisor is set out below: (Continued)
+(a) Directors' and supervisors' emoluments (Continued)
+12 DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Ma Yongsheng
+4,562
+4,184
+659
+income from associates (ii)
+44
+13
+(33)
+43
+2
+The share of profit and other comprehensive income for the year ended 31 December 2022 in all individually immaterial associates accounted
+for using equity method in aggregate was RMB6,844 million (2021: RMB7,283 million) and loss RMB244 million (2021: profit RMB271 million)
+respectively. As at 31 December 2022, the carrying amount of all individually immaterial associates accounted for using equity method in aggregate
+was RMB51,881 million (2021: RMB44,176 million).
+Share of other comprehensive
+Notes:
+(ii) Including foreign currency translation differences.
+176
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2022
+22 INTEREST IN JOINT VENTURES
+The Group's principal interests in joint ventures are as follows:
+(i) The Group has a member in the Board of Directors of PipeChina. According to the structure and the resolution mechanism of the Board of Directors, the Group can
+exercise significant influence on PipeChina.
+231
+287
+1,621
+464
+Dividends declared by
+associates
+2,019
+Share of profit from associates
+3,670
+442
+3,205
+319
+1,145
+490
+73
+632
+86
+1,152
+1,062
+627
+485
+1.768
+Johnny Karling Ng
+% of
+ownership
+Shi Dan
+Tang Min(vi)
+417
+298
+403
+117
+117
+300
+300
+1,165
+300
+417
+417
+417
+417
+1,803
+1,258
+102
+300
+692
+379
+4,991
+Number of individuals
+2022
+HKD1,500,001 to HKD2,000,000
+HKD2,000,001 to HKD2,500,000
+Emoluments
+For the year ended 31 December 2022, the five highest paid individuals in the Company included one director and four senior management. The
+total salaries, wages and other benefits was RMB8,325 thousand, and the total amount of their retirement scheme contributions was RMB566
+thousand. For the year ended 31 December 2021, the five highest paid individuals in the Company included five senior management.
+13 SENIOR MANAGEMENT'S EMOLUMENTS
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+1,551
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+(vii) Mr. Zou Huiping ceased being supervisor from 28 January 2021.
+(vi) Mr. Tang Min ceased being independent non-executive director from 25 May 2021.
+(v) Due to change of working arrangement, Mr. Zhang Yuzhuo has tendered his resignation as chairman, non-executive director, chairman of Strategy Committee and
+Sustainable Development Committee of the Board, member of Nomination Committee of the Board from 2 August 2021.
+(iv) Mr. Li Defang ceased being supervisor from 18 May 2022. Mr. Lv Dapeng ceased being supervisor from 18 May 2022.
+(iii) Mr. Lv Lianggong was elected to be supervisor from 18 May 2022; Due to change of working arrangement, Mr. Lv Lianggong has tendered his resignation as
+supervisor on 17 October 2022.
+(ii) Due to change of working arrangement, Mr. Jiang Zhenying has tendered his resignation as supervisor from 18 May 2022.
+(i) Mr. Qiu Fasen was elected to be supervisor from 18 May 2022; Mr. Wu Bo was elected to be supervisor from 18 May 2022; Mr. Zhai Yalin was elected to be
+supervisor from 18 May 2022.
+(viii) Mr. Sun Huanquan ceased being supervisor from 11 January 2021; Mr. Yu Renming ceased being supervisor from 11 January 2021.
+371
+61
+140
+RMB'000
+benefits in kind
+Salaries,
+allowances and
+Emoluments paid
+or receivable
+in respect of a
+person's services
+as a director,
+whether of the
+Company or
+its subsidiary
+undertaking
+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
+Notes:
+Yu Renming(viii)
+Total
+Bonuses
+RMB'000
+Sun Huanquan(viii)
+Li Defang(iv)
+Lv Dapeng(iv)
+Chen Yaohuan
+Guo Hongjin
+Yin Zhaolin
+Zhang Zhiguo
+Jiang Zhenying(ii)
+Zhang Shaofeng
+Supervisors
+Zou Huiping(vii)
+2021
+Retirement
+scheme
+contributions
+RMB'000
+Directors'/
+Supervisors' fee
+RMB'000
+216
+44
+100
+154
+61
+140
+202
+442
+9
+409
+24
+715
+102
+322
+291
+RMB'000
+Total
+Bi Mingjian
+16,239
+Name of entity
+Principal activities
+(1,177)
+(63)
+(77)
+(55)
+(32)
+(2,950)
+(597)
+(829)
+(6,609)
+(9,951)
+(5,008)
+(2,245)
+(2,546)
+(2,727)
+(1,931)
+(3,282)
+Other current liabilities
+Current financial liabilities
+Current liabilities
+26,677
+15,779
+9,054
+12,328
+16,894
+3,446
+7,060
+8,257
+4,970
+Non-current assets
+12,708
+13,744
+9,244
+9.336
+10,488
+14,032
+18,466
+18,835
+(3,547)
+15,044
+(2,368)
+(10,780)
+(1,852)
+(1,439)
+(635)
+(382)
+(944)
+Total non-current liabilities
+(3,979)
+(92)
+(7,099)
+(92)
+(2,009)
+(1,524)
+(7,028)
+(7,981)
+(944)
+Net assets
+(107)
+(107)
+(242)
+(237)
+(6,185)
+(2,308)
+(2,623)
+(2,782)
+(1,963)
+(6,232)
+(4,144)
+(8,977)
+Non-current liabilities
+Non-current financial liabilities
+(3,742)
+(6,857)
+(157)
+(85)
+(6,393)
+(7,599)
+Other non-current liabilities
+Total current liabilities
+interests
+Total current assets
+3,437
+Russia
+Equity method PRC
+PRC
+Shanghai SECCO
+50.00
+Manufacturing and distribution of
+petrochemical products
+Equity method PRC
+Equity method Cyprus
+PRC
+31 December
+31 December
+31 December
+Summarised statement of financial position and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+BASF-YPC
+Sinopec SABIC Tianjin
+Shanghai SECCO*
+31 December
+FREP
+Crude oil and natural gas extraction
+Manufacturing and distribution of
+petrochemical products
+Company Limited ("Sinopec SABIC
+Tianjin")
+50.00
+Fujian Refining & Petrochemical
+Manufacturing refining oil products
+Measurement
+method
+Equity method
+Country of
+Principal place
+incorporation of business
+PRC
+PRC
+Company Limited ("FREP")
+50.00
+BASF-YPC Company Limited ("BASF-YPC")
+40.00
+Manufacturing and distribution of
+petrochemical products
+Equity method PRC
+PRC
+Taihu Limited ("Taihu")
+49.00
+Sinopec SABIC Tianjin Petrochemical
+Taihu
+3,647
+31 December
+31 December
+6,562
+3,061
+5,375
+1,625
+1,258
+4,506
+4,820
+3,733
+1,323
+11,311
+9,217
+5,993
+6,953
+15,269
+2,188
+2,554
+Other current assets
+31 December
+Cash and cash equivalents
+RMB million
+31 December
+2022
+2021
+2022
+2021
+2022
+2021
+RMB million
+73,674
+RMB million
+RMB million
+RMB million
+RMB million
+2022
+RMB million
+31 December
+2021
+RMB million
+2022
+RMB million
+Current assets
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 30 and 37, respectively.
+These transactions are conducted in the ordinary course of the Group's business on terms comparable to those with other entities that are not
+RMB denominated
+Current portion of long-term loans
+European Dollar ("EUR") denominated
+USD denominated
+RMB denominated
+Short-term loans
+Loans from Sinopec Group Company and fellow subsidiaries
+RMB denominated
+Current portion of long-term corporate bonds
+USD denominated
+RMB denominated
+Current portion of long-term bank loans
+USD denominated
+RMB denominated
+Short-term bank loans
+Third parties' debts
+Short-term debts represent:
+31 December
+2022
+RMB million
+31 December
+2021
+RMB million
+2,407
+6,852
+35,252
+59,037
+7,000
+30,700
+7,000
+30,700
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES
+12
+3,281
+13,875
+3,293
+13,876
+136
+24,959
+24,959
+14,325
+14,461
+1
+11,873
+4,767
+490
+(651)
+4,767
+(13)
+(3,157)
+203
+(2,451)
+3,091
+233
+1,740
+2,858
+(23)
+514
+3,763
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+4,254
+5,911
+(3,341)
+(805)
+(3,145)
+234
+(25)
+73
+(1,718)
+11,479
+186
+982
+386
+796
+80
+125
+12
+(5)
+118
+4,643
+(631)
+525
+4,749
+516
+1,320
+906
+934
+13,690
+22,255
+(466)
+(440)
+Less: Current portion
+1,168
+12,988
+22,695
+107,961
+Interest rates ranging from 1.08% to 5.23% per annum at 31
+December 2022 with maturities through 2037
+Interest rates at 1.65% per annum at 31 December 2022
+with maturities in 2027
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+RMB denominated
+78,300
+85,706
+(10,293)
+(44,576)
+88,593
+130,282
+Total third parties' long-term debts
+Less: Current portion
+USD denominated
+49,649
+91,990
+31 LEASE LIABILITIES
+31 December
+31 December
+2022
+32 TRADE ACCOUNTS PAYABLE AND BILLS PAYABLE
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+185,406
+182,411
+170,233
+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.
+166,407
+16,004
+31 December
+2021
+RMB million
+31 December
+2022
+RMB million
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+182
+Non-current
+Current
+Lease liabilities
+15,173
+RMB million
+43,697
+12,163
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+181
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+The Group's weighted average interest rates on short-term loans were 2.63% (2021: 2.72%) per annum at 31 December 2022. The above
+borrowings are unsecured.
+Long-term debts represent:
+38,125
+2,873
+7,292
+466
+440
+466
+440
+153
+35
+66,329
+11,127
+Interest rate and final maturity
+RMB million
+38,522
+31,534
+Fixed interest rates ranging from 2.20% to 3.20% per annum at
+31 December 2022 with maturities through 2026
+Fixed interest rates ranging from 3.13% to 4.25% per annum at
+31 December 2022 with maturities through 2043
+USD denominated
+RMB denominated
+Corporate bonds
+38,944
+86,585
+31 December
+2022
+64
+Interest rates at 0.00% per annum at 31 December 2022 with
+maturities through 2038
+38,880
+86,532
+Interest rates ranging from 1.00% to 4.66% per annum at 31
+December 2022 with maturities through 2040
+USD denominated
+Third parties' debts
+Long-term bank loans
+RMB denominated
+2021
+RMB million
+31 December
+53
+31 December
+2022
+from reserve
+Others
+1,395
+Others
+(9)
+(492)
+(85)
+1,008
+1,067
+(6)
+127
+1,056
+131
+4,749
+4,643
+Tax losses carried forward
+(2,709)
+(15,037)
+(16,519)
+16,777
+15,714
+Property, plant and equipment
+Financial assets at fair value through other comprehensive income
+Intangible assets
+(736)
+Deferred tax assets/(liabilities)
+30,596
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+180
+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.
+As at 31 December 2022, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB21,268
+million (2021: RMB18,342 million), of which RMB8,972 million (2021: RMB5,564 million) was incurred for the year ended 31 December 2022,
+because it was not probable that the future taxable profits will be available. These deductible losses carried forward of RMB1,875 million, RMB1,669
+million, RMB3,442 million, RMB5,310 million and RMB8,972 million will expire in 2023, 2024, 2025, 2026, 2027 and after, respectively.
+31 December
+2021
+RMB million
+19,389
+7,910
+19,952
+8,079
+31 December
+2022
+RMB million
+Deferred tax assets
+Deferred tax liabilities
+30,397
+11,207
+11,207
+RMB million
+10,445
+10,445
+31 December
+2022
+Deferred tax assets and liabilities after the offsetting adjustments are as follows:
+Deferred tax liabilities.
+Deferred tax assets
+The offsetting amount between deferred tax assets and liabilities are as follows:
+(870)
+(19,117)
+(1,161)
+(18,524)
+31 December
+2021
+RMB million
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+258
+3,091
+85
+7,956
+35,918
+27,311
+RMB million
+RMB million
+2021
+31 December
+31 December
+2022
+9,267
+Deferred tax assets
+29 DEFERRED TAX ASSETS AND LIABILITIES
+Value-added input tax to be deducted
+Prepaid income tax
+Advances to suppliers
+Receivables
+28 PREPAID EXPENSES AND OTHER CURRENT ASSETS
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Deferred tax assets and liabilities before offset are attributable to the items detailed in the table below:
+2,858
+25,355
+4,017
+64,639
+Cash flow hedges
+Payables
+(17)
+RMB million
+RMB million
+2021
+2022
+31 December
+19,137
+31 December
+31 December
+2021
+RMB million
+3,763
+4,271
+Receivables and inventories
+RMB million
+2022
+31 December
+69,431
+5,109
+Deferred tax liabilities
+2021
+for the year ended 31 December 2022
+Movements in the deferred tax assets and liabilities are as follows:
+101
+63
+352
+118
+2
+116
+4,749
+(19)
+516
+(8,554)
+1,740
+325
+41
+(1,004)
+2,378
+(2,451)
+5,881
+(5,499)
+13,322
+(203)
+(305)
+(3)
+income
+statement
+Transferred
+income comprehensive
+Balance at
+in other
+consolidated
+Balance at
+1 January
+2022
+490
+Recognised
+11,479
+5,881
+430
+(5,504)
+(6,258)
+16,930
+186
+4
+Recognised in
+29 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+(2,630)
+1,572
+Intangible assets
+comprehensive income
+Financial assets at fair value through other
+Tax losses carried forward
+Property, plant and equipment
+Cash flow hedges
+Payables
+Receivables and inventories
+Others
+Net deferred tax assets/(liabilities)
+Intangible assets
+comprehensive income
+Financial assets at fair value through other
+Tax losses carried forward
+Property, plant and equipment
+Cash flow hedges
+Payables
+Receivables and inventories
+Others
+2,858
+Net deferred tax assets/(liabilities)
+RMB million
+1,286
+3,763
+RMB million
+RMB million
+2021
+from reserve
+Others
+RMB million
+RMB million
+(26)
+Balance at
+1 January
+2021
+1,378
+income
+31 December
+Transferred
+Balance at
+Recognised
+in other
+comprehensive
+consolidated
+Recognised in
+income
+statement
+RMB million
+2,411
+RMB million
+Amounts due to third parties
+Amounts due to Sinopec Group Company and fellow subsidiaries
+(8,265)
+(3,382)
+(viii)
+385
+541
+(ix)
+715
+1,203
+(x)
+(viii)
+173
+(vii)
+1,730
+(vi)
+44,405
+48,465
+(v)
+33,930
+194
+37,317
+36,608
+The amounts set out in the table above in respect of the year ended 31 December 2022 and 2021 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+Notes: (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+38 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+188
+Financial Statements (International)
+187
+30,305
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+(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.
+Notes:
+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.
+As at 31 December 2022 and 2021, 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 guarantees disclosed in Note 37. Guarantees given to banks by
+the Group in respect of banking facilities to associates and joint ventures are disclosed in Note 37.
+For the year ended 31 December 2022, the amount of rental the Group paid to Sinopec Group Company and fellow subsidiaries, associates and
+joint ventures for land, buildings and others are RMB11,051 million, RMB943 million and RMB352 million (2021: RMB10,834 million, RMB572
+million and RMB269 million), including pursuant to the continuing connected transaction agreements signed in 2000, the Sixth Supplementary
+Agreement on 27 August 2021, the amount of rental the Group paid to Sinopec Group Company for land and buildings are RMB11,046 million
+and RMB938 million (2021: RMB10,831 million and RMB565 million).
+For the year ended 31 December 2022, no individually significant right-of-use assets were leased from Sinopec Group Company and fellow
+subsidiaries, associates and joint ventures by the Group. The interest expense recognised for the year ended 31 December 2022 on lease
+liabilities in respect of amounts due to Sinopec Group Company and fellow subsidiaries, associates and joint ventures was RMB7,811 million
+(2021: RMB7,863 million).
+Included in the transactions disclosed above, for the year ended 31 December 2022 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB158,874 million (2021: RMB173,718 million) comprising purchases of products and services
+(i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB146,114 million
+(2021: RMB160,048 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB Nil (2021:
+RMB1,730 million), lease charges for land, buildings and others paid by the Group of RMB11,046 million, RMB938 million and RMB235 million
+(2021 RMB10,831 million, RMB565 million and RMB159 million), respectively and interest expenses of RMB541 million (2021: RMB385
+million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB58,403 million (2021: RMB54,453
+million), comprising RMB57,151 million (2021: RMB53,671 million) for sales of goods, RMB1,203 million (2021: RMB715 million) for interest
+income and RMB49 million (2021: RMB67 million) for agency commission income.
+(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,
+environmental protection and management services.
+(vi) Ancillary and social services represent expenditures for social welfare and support services such as educational facilities, media communication services, sanitation,
+accommodation, canteens, and property maintenance. The term of the Cultural, Educational, Hygiene and Auxiliary Service Agreement expired on 31 December
+2021, and is not renewed due to the significant decrease in the service scale after the separation and transfer of assets and business such as the Three Supplies
+and One Industry Assets etc. Cultural and educational services related or similar to training and auxiliary services thereunder have been incorporated into the
+Mutual Supply Agreement.
+(iv)
+18,291
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+38 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+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.
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+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:
+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.
+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.
+Legal contingencies
+The Group paid normal routine pollutant discharge fees of approximately RMB16,823 million in the consolidated financial statements for the year
+ended 31 December 2022 (2021: RMB10,968 million).
+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.
+Environmental contingencies
+(iii) The Group provided a guarantee in respect to standby credit facilities granted to Zhongtian Synergetic Energy by banks amount to RMB17,050 million. As at 31
+December 2021, the amount withdrawn (the portion corresponding to the shareholding ratio of the Group) by Zhongtian Synergetic Energy and guaranteed by the
+Group was RMB5,746 million. During the year ended 31 December 2022, the guarantee provided by the Group was terminated.
+The Group provided a guarantee in respect the engineering services agreement of Amur Gas. As at 31 December 2022, the engineering services agreement was
+terminated, accordingly the guarantee agreement was terminated.
+The Group provided a guarantee in respect to payment obligation under the raw material supply agreement of Amur Gas amount to RMB16,924 million (31 December
+2021: RMB15,493 million). As at 31 December 2022, Amur Gas has not yet incurred the relevant payment obligations and therefore the Group has no guarantee
+amount (31 December 2021: Nil).
+38 RELATED PARTY TRANSACTIONS
+19,443
+Sales of goods
+Transportation and storage
+(iii)
+191,888
+184,986
+(ii)
+2021
+RMB million
+297,381
+352,691
+(i)
+RMB million
+Purchases
+2022
+Net funds obtained from related parties
+Net deposits placed with related parties
+Interest expense
+Interest income
+Agency commission income
+Ancillary and social services
+Production related services
+Exploration and development services
+Notes
+(ii) The Group provided a guarantee in respect to standby credit facilities granted to Zhongan United Coal Chemical Co., Ltd. ("Zhongan United") by banks amount to
+RMB7,100 million (31 December 2021: RMB7,100 million). As at 31 December 2022, the amount withdrawn (the portion corresponding to the shareholding ratio
+of the Group) by Zhongan United from banks and guaranteed by the Group was RMB5,254 million (31 December 2021: RMB5,680 million). The Group provided a
+guarantee in respect to standby credit facilities granted to Amur Gas Chemical Complex Limited Liability Company ("Amur Gas") by banks amount to RMB25,351
+million (31 December 2021: RMB23,208 million). As at 31 December 2022, the amount withdrawn (the portion corresponding to the shareholding ratio of the Group)
+by Amur Gas from banks and guaranteed by the Group was RMB3,673 million (31 December 2021: RMB3,264 million).
+(vii) 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.
+(ix) Interest expense represents interest charges on the loans obtained from Sinopec Group Company and fellow subsidiaries.
+(b) Key management personnel emoluments
+As at and for the year ended 31 December 2022, and as at and for the year ended 31 December 2021, no individually significant loss allowance
+for expected credit losses were recognised 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 30.
+247,599
+272,649
+158,761
+156,537
+Lease liabilities (including to be paid within one year)
+Total
+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:
+13,690
+2,873
+7,292
+Short-term loans and current portion of long-term loans from Sinopec Group Company and fellow subsidiaries
+Long-term loans excluding current portion from Sinopec Group Company and fellow subsidiaries
+2,779
+5,180
+Other long-term liabilities
+50,649
+38,312
+22,255
+Other payables
+Short-term employee benefits
+Retirement scheme contributions
+2021
+uses of public utilities.
+•
+depositing and borrowing money; and
+lease of assets;
+•
+rendering and receiving services;
+•
+sales and purchases of goods and ancillary materials;
+2022
+RMB'000
+•
+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 39. As at 31 December 2022 and 2021, the accrual for the contribution to
+post-employment benefit plans was not material.
+(c) Contributions to defined contribution retirement plans
+4,991
+4,612
+379
+9,299
+566
+9,865
+RMB'000
+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:
+(viii) 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. The balance of deposits at
+31 December 2022 was RMB65,064 million (2021: RMB61,682 million).
+4,677
+Contract liabilities
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+38 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+On the basis of a series of continuing connected transaction agreements signed in 2000, the Company and Sinopec Group Company have
+signed the Sixth Supplementary Agreement on 27 August 2021, which took effect on 1 January 2022 and made adjustment to "Mutual
+Supply Agreement" and "Buildings Leasing Contract", etc.
+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.
+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 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 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. The term of the Cultural, Educational, Hygiene and Auxiliary Service Agreement expired on 31
+December 2021, and is not renewed due to the significant decrease in the service scale after the separation and transfer of assets and
+business such as the Three Supplies and One Industry Assets etc. Cultural and educational services related or similar to training and
+auxiliary services thereunder have been incorporated into the Mutual Supply 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;
+(1) the government-prescribed 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:
+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 2022. The terms of these agreements are summarised as follows:
+(x) The Group obtained loans, discounted bills and issued the acceptance bills from Sinopec Group Company and fellow subsidiaries.
+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.
+4,736
+31 December
+2022
+RMB million
+2021
+RMB million
+14,170
+38,337
+Trade accounts payable and bills payable
+26,494
+31,084
+Total
+3,116
+8,633
+31 December
+Long-term prepayments and other assets
+10,375
+Prepaid expenses and other current assets
+186
+596
+8,655
+11,480
+Financial assets at fair value through other comprehensive income
+Trade accounts receivable
+14,537
+state-controlled.
+Notes:
+Contingent liabilities (Continued)
+1,103
+(2,438)
+4,277
+43,713
+2021
+RMB million
+RMB million
+40,495
+2022
+Decrease for the year
+Exchange adjustments
+Balance at 31 December
+Accretion expenses
+2,163
+Provision for the year
+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:
+35 PROVISIONS
+239,688
+178,146
+76,458
+23,655
+93,764
+71,833
+Balance at 1 January
+54,596
+1,135
+162
+43,599
+95,558
+95,115
+RMB million
+RMB million
+2021
+31 December
+31 December
+2022
+95,115,471,046 listed A shares (2021: 95,557,771,046) of RMB1.00 each
+24,780,936,600 listed H shares (2021: 25,513,438,600) of RMB1.00 each
+(6,435)
+Registered, issued and fully paid
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+183
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+40,495
+(81)
+36 SHARE CAPITAL
+24,781
+68,492
+549
+Within 1 month or on demand
+31 December
+2021
+RMB million
+31 December
+2022
+11,721
+215,640
+258,642
+10,782
+269,424
+203,919
+6,145
+Between 1 month and 6 months
+Over 6 months
+8,290
+193,547
+25,358
+224,994
+RMB million
+The ageing analysis of trade accounts payable and bills payable is as follows:
+Trade accounts payable and bills payable measured at amortised cost
+Bills payable
+Amounts due to associates and joint ventures
+4,227
+822
+RMB million
+138,741
+13,617
+14,048
+31 December
+2021
+RMB million
+31 December
+2022
+RMB million
+Taxes other than income tax
+Other payables
+Payables for constructions
+Interest payable
+206,325
+Salaries and welfare payable
+As at 31 December 2022 and 2021, the Group's contract liabilities primarily represent advances from customers. Related performance obligations
+are expected to be satisfied and revenue is recognised within one year.
+33 CONTRACT LIABILITIES
+215,640
+269,424
+51,619
+19,789
+25,280
+43,310
+34 OTHER PAYABLES
+Management monitors the risk that the specified debtor will default on the contract and recognises a provision when ECLs on the financial
+guarantees are determined to be higher than the carrying amount in respect of the guarantees. At 31 December 2022 and 2021, the Group
+estimates that there is no material liability has been accrued for ECLS related to the Group's obligation under these guarantee arrangements.
+25,513
+121,071
+846
+857
+64
+62
+102
+115
+110
+146
+1,701
+112
+301
+369
+RMB million
+RMB million
+2021
+31 December
+31 December
+2022
+Contingent liabilities
+152
+Between four and five years
+Thereafter
+1,535
+31 December
+2022
+37 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+186
+Financial Statements (International)
+185
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+14,863
+At 31 December 2022 and 2021, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+8,927
+Associates (iii)
+9,117
+8,927
+Joint ventures (ii)
+RMB million
+RMB million
+2021
+31 December
+5,746
+119,896
+Between three and four years
+Between one and two years
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+184 Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+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, 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, 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 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 2022, the debt-to-capital ratio and
+the liability-to-asset ratio of the Group were 12.1% (2021: 10.6%) and 52.0% (2021: 51.6%), respectively.
+All A shares and H shares rank pari passu in all material aspects.
+Capital management
+During the year ended 31 December 2022, the Company repurchased 442,300,000 listed A shares and 732,502,000 listed H shares respectively,
+which had been cancelled in the year ended 31 December 2022.
+During the year ended 31 December 2015, the Company issued 2,790,814,006 listed A shares with a par value of RMB1.00 each, as a result of
+exercise of conversion by the holders of the 2011 Convertible Bonds.
+37 COMMITMENTS AND CONTINGENT LIABILITIES
+During the year ended 31 December 2014, the Company issued 1,715,081,853 listed A shares with a par value of RMB1.00 each, as a result of
+exercise of conversion by the holders of the 2011 Convertible Bonds.
+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.
+On 14 February 2013, the Company issued 2,845,234,000 listed H shares ("the Placing") with a par value of RMB1.00 each at the Placing Price
+of HKD8.45 per share. The aggregate gross proceeds from the Placing amounted to approximately HKD24,042,227,300.00 and the aggregate net
+proceeds (after deduction of the commissions and estimated expenses) amounted to approximately HKD23,970, 100,618.00.
+During the year ended 31 December 2012, the Company issued 117,724,450 listed A shares with a par value of RMB1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2011, the Company issued 34,662 listed A shares with a par value of RMB1.00 each, as a result of conversion
+by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2010, the Company issued 88,774 listed A shares with a par value of RMB1.00 each, as a result of exercise of
+188,292 warrants entitled to the Bonds with Warrants.
+In October 2000, the Company issued 15,102,439,000 H shares with a par value of RMB1.00 each, representing 12,521,864,000 H shares and
+25,805,750 American Depositary Shares ("ADSS", each representing 100 H shares), at prices of HKD1.59 per H share and USD20.645 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 RMB1.00 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 RMB1.00 each at RMB4.22 by way of a public offering to natural
+persons and institutional investors in the PRC.
+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 RMB1.00 each and offer not more
+than 19.5 billion shares with a par value of RMB1.00 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 RMB1.00
+each. Such shares were issued to Sinopec Group Company in consideration for the assets and liabilities transferred to the Company (Note 1).
+During the year ended 31 December 2013, the Company issued 114,076 listed A shares with a par value of RMB1.00 each, as a result of exercise
+of conversion by the holders of the 2011 Convertible Bonds.
+Between two and three years
+Capital commitments
+31 December
+2022
+Within one year
+Estimated future annual payments are as follows:
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Natural Resources annually
+which are expensed. Expenses recognised were approximately RMB270 million for the year ended 31 December 2022 (2021: RMB181 million).
+Exploration licenses for exploration activities are registered with the Ministry of Natural 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 Natural 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.
+Exploration and production licenses
+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.
+Commitments to joint ventures
+(i) The investment commitments of the Group is RMB1,751 million (2021: RMB3,648 million).
+At 31 December 2022 and 2021, capital commitments of the Group are as follows:
+Note:
+274,657
+261,914
+90,227
+RMB million
+184,430
+31 December
+2021
+167,507
+94,407
+Authorised and contracted for (i)
+Authorised but not contracted for
+RMB million
+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.
+(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.
+Financial Statements (International)
+189
+Management's Discussion
+18,860
+18,860
+18,918
+18,918
+Others
+34,991
+34,991
+35,171
+35,171
+Shengli
+53,851
+53,851
+54,089
+54,089
+Consolidated companies
+53,851
+53,851
+54,089
+54,089
+China
+Net
+Gross
+Net
+Gross
+2021
+Oil productive wells (as of 31 December)
+2022
+263
+Overseas
+5,460
+2,313
+5,534
+Gross
+Net
+Gross
+China
+Region
+2021
+2022
+Natural gas productive wells (as of 31 December)
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+12
+Business Review and Prospects
+Business Review and Prospects
+11
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+2,361
+56,223
+5,504
+59,385
+2,302
+56,402
+59,549
+Total
+5,430
+Equity accounted entities
+11
+30
+11
+30
+Consolidated companies
+2,372
+108
+324
+108
+208
+201
+108
+207
+gg&s°°°g|
+103
+209
+103
+Total
+2
+0
+Equity accounted entities
+0
+0
+Consolidated companies
+2
+0
+Overseas
+146
+74
+Others
+61
+29
+Shengli
+103
+207
+103
+Consolidated companies
+108
+201
+207
+108
+61
+0
+120
+0
+1
+1
+0
+3
+0
+0
+62
+0
+123
+Net
+0
+146
+75
+146
+75
+146
+55
+33
+55
+33
+61
+201
+108
+201
+1
+7,779
+7,719
+7,539
+(6.1)
+40.22
+45.41
+42.65
+(14.8)
+20.38
+21.15
+18.01
+5.4
+63.21
+59.85
+63.09
+(9.4)
+57.91
+65.21
+59.05
+(4.1)
+141.50
+146.21
+140.15
+(5.1)
+236.91
+255.28
+242.27
+2021 to 2022 (%)
+2020
+2021
+74.06
+2022
+73.83
+94.96
+(6.5)
+113.19
+114.30
+106.91
+Retail sales (million tonnes)
+(5.1)
+167.99
+171.31
+162.55
+Total domestic sales volume of oil products (million tonnes)
+(6.4)
+217.91
+220.79
+206.74
+Total sales volume of oil products (million tonnes)*
+2021 to 2022 (%)
+2020
+2021
+2022
+Change from
+Summary of Operations for the Marketing and Distribution Segment
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+battery swapping stations, carbon-neutral
+service stations and oil product depots
+were put into operations, and the number
+of hydrogen refueling stations ranked No.
+1 in the world, making continuous efforts
+for the transition to an integrated energy
+service provider of petrol, gas, hydrogen,
+power and services. Total sales volume of
+refined oil products for the year was 207
+million tonnes, of which domestic sales
+volume accounted for 163 million tonnes.
+volume of vehicle LNG up by 9.7% year
+on year. We vigorously expanded the low-
+sulfur bunker fuel market and further
+consolidated our market position. We
+rapidly developed online business and
+client satisfaction upgraded significantly.
+The quality and profitability for the non-
+fuel business were further boosted.
+We optimised the allocation of service
+stations and stepped up the construction
+of new energy service network. Our
+0.23 percentage points
+0.31 percentage points
+94.77
+94.65
+74.34
+In 2022, facing the sluggish demand
+for refined oil products, the Company
+brought advantages in integrated business
+and distribution network into full play and
+expanded the market through high quality
+service. We reinforced market analysis
+and forecast, strengthened resources
+coordination and implemented targeted
+differentiation strategy. The sales volume
+of diesel rose by 8.6% and the retail
+(3) Marketing and Distribution
+Note: Includes 100% of the production from domestic joint ventures.
+China
+Acreage with exploration licenses
+Unit: Square kilometers
+7,489
+7,539
+6,631
+6,681
+6.751
+7,719
+6,811
+7,779
+Total
+779
+779
+886
+886
+Others
+Fuling
+79
+79
+82
+82
+Puguang
+7,489
+7,539
+7,719
+7,779
+Consolidated companies
+7,489
+Acreage with development licenses
+China
+Overseas
+Area under license
+Refinery yield (%)
+Light product yield (%)
+Light chemical feedstock production
+Kerosene
+Diesel
+Gasoline
+Gasoline, diesel and kerosene production
+Refinery throughput
+Change from
+Unit: million tonnes
+manner. We continued to increase high-
+purity hydrogen production capacity and
+have built up 9 hydrogen supply centers
+for hydrogen fuel cells. In 2022, the
+Company processed 242 million tonnes
+of crude oil and produced 140 million
+tonnes of refined oil products with diesel
+output up by 5.4% year on year.
+market demand, we flexibly adjusted the
+utilisation rate, product mix and exports
+of refined oil products. Efforts were
+made to carry forward the adjustment to
+increase the yield of chemical feedstock
+and refining specialties, and to increase
+production of marketable products
+such as low-sulfur bunker fuel, base oil
+and needle coke etc. We accelerated
+the construction of world-class refining
+bases and advanced with structural
+adjustment projects in an orderly
+Summary of Operations for the Refining Segment
+103
+In 2022, the Company actively addressed
+the challenges brought by the volatile
+fluctuation of crude oil price and
+slack market demand, strengthened
+coordination among procurement, storage
+and transportation as well as production,
+and focused on optimisation and
+integration of production and marketing.
+We enhanced global resources allocation
+and inventory management to reduce
+procurement cost. Closely following the
+5,911
+5,680
+36,480
+38,937
+42,391
+44,617
+390,023
+372,078
+390,023
+372,078
+2021
+2022
+(as of 31 December)
+(2) Refining
+207
+103
+China
+17
+125
+125
+171
+63312303
+43
+43
+112
+41
+153
+153
+196
+263
+260
+24
+17
+287
+277
+330
+384
+961
+1,105
+1,291
+1,489
+1,291
+1,489
+1,578
+108
+1,766
+46
+46
+7,135
+6,734
+7,135
+6,740
+7,138
+8,456
+8,806
+31 December 2022 31 December 2021
+Natural gas reserves (bcf)
+Wells drilled (as of 31 December)
+Exploration and Production Activities
+Equity accounted entities
+Consolidated companies
+Overseas
+Others
+Consolidated companies
+Fuling
+China
+Proved undeveloped reserves
+Consolidated companies
+Equity accounted entities
+Overseas
+Others
+Puguang
+Fuling
+Consolidated companies
+China
+Proved developed reserves
+Proved reserves
+Items
+0
+1,749
+1,962
+31 December 2021
+China
+Proved undeveloped reserves
+Equity accounted entities
+Consolidated companies
+Overseas
+Others
+Shengli
+Consolidated companies
+China
+Proved developed reserves
+Proved reserves
+Items
+Summary of Reserves of Crude Oil and Natural Gas
+Natural gas production (bcf)
+Overseas
+China
+Crude oil production (mmbbls)
+Oil and gas production (mmboe)
+Summary of Operations for the Exploration and Production Segment
+promoted the capacity building of key
+natural gas blocks in Shunbei Zone
+Two and continental facies gas in West
+Sichuan, scaled up mid-term and long.
+term LNG contracts, upgraded resources
+security and enhanced optimization, the
+profitability of whole natural gas business
+chain recorded a continuous growth. The
+Company's production of oil and gas
+equivalent in 2022 was 488.99 million
+barrels, up by 1.9%, among which,
+domestic crude oil production totaled
+250.79 million barrels, up by 0.5% and
+natural gas production reached 1,248.8
+billion cubic feet, up by 4.1%.
+launched the "Deep Earth" project,
+strengthened risk exploration and trap
+pre-exploration in new regions and areas,
+and achieved a number of oil and gas
+discoveries, including breakthroughs in
+Shunbei oil and gas in Tarim Basin, shale
+oil in Bohai Bay Basin and Subei Basin
+and shale gas in West and Southeast
+Sichuan. The Shengli Jiyang Shale Oil
+National Demonstration Zone progressed
+efficiently. In crude oil development,
+we accelerated the capacity building
+of major oilfields, such as Shunbei
+and Tahe, and strengthened fine-tuned
+development of mature oil fields. In
+natural gas development, we actively
+In 2022, the Company seized the
+favorable opportunity of high oil price,
+intensified efforts in high quality
+exploration and expanded the scale of
+profitable production capacity. Domestic
+oil and gas reserve replacement ratio
+amounted to 165% with domestic oil
+and gas equivalent production registering
+historical new high and profit reaching
+the best level in a decade. In terms of
+exploration, we focused on expanding
+resources, increasing reserve and
+obtaining more exploration licenses,
+(1) Exploration and Production
+2 PRODUCTION & OPERATIONS REVIEW
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+and Analysis
+Consolidated companies
+Shengli
+Others
+Overseas
+Consolidated companies
+Equity accounted entities
+31 December 2022
+Crude oil reserves (mmbbls)
+4.1
+1,072.33
+(0.3)
+30.70
+30.16
+1,199.44
+1,248.75
+30.07
+0.5
+249.52
+249.60
+250.79
+6,734
+0.4
+279.76
+280.86
+1.9
+459.02
+479.74
+488.99
+2021 to 2022(%)
+2020
+2021
+2022
+Change from
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+10
+280.22
+Direct sales and distribution (million tonnes)
+Annual average throughput per station (tonne/station)
+1,417
+1,632
+0
+0
+0
+0
+0
+0
+Consolidated companies
+0
+114
+1
+2
+0
+200
+1
+5
+Overseas
+2
+884
+71
+193
+1
+929
+63
+205
+Others
+2
+944
+2
+58
+0
+5
+Exploratory Development
+Exploratory Development
+Exploratory Development
+Exploratory Development
+Net
+Gross
+Net
+Gross
+2021
+2022
+Wells drilling (as of 31 December)
+4
+1,942
+130
+365
+3
+2158
+112
+369
+Total
+0
+112
+1
+2
+0
+200
+1
+Equity accounted entities
+170
+2
+1,029
+2021
+2022
+1
+1
+0
+0
+1
+1
+1,616
+1,568
+99
+99
+1,715
+1,667
+1,715
+1,667
+1,716
+1,668
+6
+3
+0
+0
+6
+3
+3,623
+4,086
+1,529
+Exploratory
+Development
+Exploratory
+Development
+48
+159
+Shengli
+1,828
+129
+363
+3
+1,958
+111
+364
+Consolidated companies
+4
+1,828
+1,582
+129
+3
+1,958
+111
+364
+China
+Dry
+Productive
+Dry
+Productive
+Dry
+Productive
+Dry
+Productive
+363
+55.65
+4
+54.80
+198,714
+External sales*
+5.2
+5.4
+249,998
+319,411
+1.8
+2.1
+87,298
+121,912
+5.9
+6.0
+3.4
+3.3
+162,700
+197,499
+Refining Segment
+Operating revenues
+Inter-segment sales
+External sales*
+Exploration and Production Segment
+(%)
+(%)
+(%)
+(%)
+2021
+2022
+173,109
+2021
+3.3
+6.0
+017
+29.1
+28.8
+1,411,544
+0.1
+0.2
+7,075
+13,421
+1,713,874
+Operating revenues
+Inter-segment sales
+29.0
+28.6
+1,404,469
+1,700,453
+External sales*
+Marketing and Distribution Segment
+28.5
+26.6
+1,385,564
+1,575,139
+Operating revenues
+24.9
+23.3
+1,212,455
+1,376,425
+Inter-segment sales
+6.3
+3.6
+2022
+2021
+RMB million
+RMB million
+(2) Operating expenses
+The Company's external sales revenue of
+chemical products was RMB449.9 billion,
+representing an increase of 5.9% over 2021,
+accounting for 13.6% of the Company's total
+revenue. This was mainly due to the increase
+in price of certain chemical products.
+In 2022, 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
+RMB1,855.8 billion (accounting for 55.9%
+of the Company's revenue), representing
+an increase of 20.9% over 2021, mainly
+due to the increase in prices of refined oil
+products, which effectively offset the impact
+of decrease in sales volume. The sales
+revenue of gasoline, diesel and kerosene was
+RMB1,499.3 billion, representing an increase
+of 20.5% over 2021, and accounting
+for 80.8% of the total sales revenue of
+petroleum products. Sales revenue of other
+refined petroleum products was RMB356.5
+billion, representing an increase of 22.3%
+compared with that of 2021, accounting
+for 19.2% of the total sales revenue of
+petroleum products.
+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 2022, the turnover
+from crude oil, natural gas and other
+upstream products sold externally amounted
+to RMB192.3 billion, representing an
+increase of 23.3% over 2021. The change
+was mainly due to increases in crude oil and
+natural gas prices and sales volume.
+CO2储罐
+2002
+1200-
+CO2
+1200-T-001
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+16
+7.4
+2,807
+3,015
+2.4
+11,099
+11,363
+6.1
+(20.2)
+976
+779
+1,286
+1,364
+Chemical fertiliser
+Synthetic rubber
+8.0
+7,521
+8,119
+In 2022, the Company's operating expenses
+was RMB3,242.3 billion, increased by 22.5%
+compared with that of 2021. The operating
+expenses mainly consisted of the following:
+Purchased crude oil, products and operating
+supplies and expenses was RMB2,684.8
+billion, representing an increase of 29.3%
+over the same period of 2021, accounting
+for 82.8% of the total operating expenses, of
+which:
+Crude oil purchasing expenses was
+RMB999.7 billion, representing an increase
+of 45.0% over the same period of 2021.
+Crude oil purchased externally used for
+processing in 2022 was 201.98 million
+tonnes (excluding the volume processed
+for third parties), representing a decrease
+of 5.0% over the same period of 2021.
+The average cost of processing crude oil
+purchased externally was RMB4,950 per
+tonne, representing an increase by 52.6%
+over 2021.
+The Company's other purchasing expenses
+was RMB1,685.0 billion, representing an
+increase of 21.5% over the same period
+of 2021. This was mainly attributable to
+the increased prices in naphtha and other
+feedstocks and traded crude oil and refined
+oil products.
+of inter-segment sales
+Year ended 31 December
+Operating revenues
+Year ended 31 December
+2022
+revenue before elimination
+As a percentage of
+consolidated operating
+revenue after elimination
+of inter-segment sales
+Year ended 31 December
+As a percentage of
+consolidated operating
+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.
+revenues.
+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
+2 RESULTS OF SEGMENT OPERATIONS
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+18
+51.2
+and Analysis
+17
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+(6) Profit attributable to non-controlling
+shareholders was RMB9.5 billion,
+representing a decrease of RMB4.4 billion
+and 31.6% over the same period of 2021.
+(7) Profit attributable to shareholders of the
+Company was RMB66.2 billion, representing
+a year-on-year decrease of 8.1%.
+(5) Income tax expense was RMB18.8 billion,
+representing a decrease of 19.6% year on
+year. That was mainly because the profit in
+2022 decreased year on year.
+(4) Profit before taxation was RMB94.4 billion,
+representing a decrease of 13.5% compared
+with 2021.
+(3) Operating profit was RMB75.8 billion,
+representing a decrease of 19.9% over
+the same period of 2021. That was mainly
+due to weak domestic demand of domestic
+petroleum and petrochemical products, and
+decreased operating margin for domestic
+refining and chemicals under high crude oil
+price circumstance.
+Other operating expenses, net was RMB14.8
+billion, representing a decrease of 31.9%
+over the same period of 2021. That was
+mainly due to the decrease of impairment in
+long-term assets.
+Impairment reversals on trade and other
+receivables was RMB1.1 billion. The
+impairment losses on trade and other
+receivables decreased by RMB3.4 billion
+over the same period of 2021, which was
+mainly due to the reversed provision in the
+impairment of entrusted loans in 2022.
+Taxes other than income tax was RMB264.0
+billion, representing an increase of 1.9%
+over the same period of 2021. That was
+mainly because that the special oil gain
+levy increased by RMB12.3 billion resulting
+from the increased crude oil price, and the
+consumption tax decreased by RMB7.1
+billion resulting from the decreased sales
+volume of domestic refined oil products in
+the refining segment.
+Personnel expenses was RMB103.6 billion,
+representing an increase of 0.1% over 2021.
+Exploration expenses was RMB10.6 billion,
+representing a decrease of 14.5% compared
+with 2021. That was mainly due to optimised
+drilling in shale gas and other unconventional
+resources, improved exploration success rate
+to effectively decrease the expenses in dry
+holes.
+Depreciation, depletion and amortisation
+was RMB109.9 billion, representing a
+decrease of 5.0% over the same period of
+2021. That was mainly because that the
+proved reserve increased resulting from the
+increase of international crude oil prices
+in 2021, thus the depletion ratio of oil and
+gas assets decreased, which led to the
+depreciation and depletion decreased by
+RMB7.6 billion.
+Selling, general and administrative
+expenses was RMB55.8 billion, representing
+an increase of 1.5% over 2021.
+Management's Discussion
+(18.1)
+51.2
+External sales*
+18.4
+(81.3)
+65,279
+1,320,285
+13.7
+1,385,564
+1,575,139
+1,562,928
+12,211
+8.3
+1,046.6
+27.8
+249,998
+245,313
+4,685
+265,695
+53,716
+319,411
+(%)
+Change
+Year ended 31 December
+2021
+RMB million
+RMB million
+2022
+In 2022, the oil and gas lifting cost was
+RMB773.1 per tonne, representing a year
+on year decrease of 0.5%.
+In 2022, the operating expenses of
+this segment was RMB265.7 billion,
+representing an increase of 8.3% over
+2021. That was mainly due to the
+reasons that: special oil income levy
+and resource tax increased by RMB15.3
+billion year on year; Procurement cost
+of LNG increased by RMB12.3 billion
+year on year; Depreciation, depletion and
+amortisation decreased by RMB7.6 billion
+year on year, as a result of the decrease
+of depletion ratio; Exploration expense
+decreased by RMB1.8 billion year on
+year.
+and LNG were RMB4,312 per tonne,
+RMB1,816 per thousand cubic meters,
+RMB3,535 per thousand cubic meters,
+and RMB5,710 per tonne, respectively,
+representing an increase of 47.1%,
+13.1%, 66.8%, and 46.1% respectively
+over 2021.
+In 2022, the segment sold 34.28 million
+tonnes of crude oil, representing an
+increase of 0.6% over 2021. Natural
+gas sales volume was 31.9 billion cubic
+meters (bcm), representing an increase
+of 3.3% over 2021. Regasified LNG sales
+volume was 21.5 bcm, representing
+an increase of 12.5% over 2021. LNG
+sales volume was 1.42 million tonnes,
+representing a decrease of 77.0% over
+2021, as a result of flexible adjustment
+of sales strategy and structure based on
+purchase prices and market conditions
+to reduce sales volume of products with
+lower margin. Average realised prices of
+crude oil, natural gas, regasified LNG,
+In 2022, the operating revenues of
+this segment was RMB319.4 billion,
+representing an increase of 27.8% over
+2021. This was mainly attributed to the
+increase of both realised price and the
+sales volume of crude oil and natural gas.
+(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.
+Elimination of inter-segment profit/(loss)
+Operating profit/(loss)
+Operating expenses
+Operating revenues
+Corporate and Others
+1,713,874
+1,689,337
+Operating (loss)/profit
+1,411,544
+1,390,340
+57.01
+19
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+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 were sold internally
+to the marketing and distribution
+segment of the Company; part of the
+chemical feedstock was sold internally to
+the chemicals segment of the Company;
+and other refined petroleum products
+were sold externally to both domestic and
+overseas customers.
+(2) Refining Segment
+In 2022, the operating profit of the
+exploration and production segment was
+RMB53.7 billion, representing an increase
+of RMB49.0 billion and 1,046.6% over
+the same period of 2021, which was
+mainly attributable to the fact that the
+segment seized the opportunity of high
+crude oil prices, improved proved reserve
+and production volume of oil and gas,
+enhanced cost control, optimized the
+operation of natural gas value chain,
+and realised in a significant rise in
+profitability.
+051
+(3,225)
+(4,421)
+1,318
+(1,820)
+37.5
+1,300,926
+1,789,160
+38.0
+1,297,701
+1,790,478
+11,106
+(14,127)
+12.1
+494,397
+554,279
+6.9
+505,503
+540,152
+15.7
+21,204
+24,537
+21.5
+21.4
+Operating expenses
+Operating revenues
+Chemicals Segment
+17.3
+732,356
+1,028,800
+Inter-segment sales
+20.6
+23.0
+11.7
+12.8
+565,345
+761,678
+External sales*
+Corporate and Others
+10.4
+9.1
+505,503
+540,152
+1.4
+1.4
+70,242
+80,328
+16.0
+13.8
+9.0
+7.7
+435,261
+459,824
+Inter-segment sales
+Operating revenues
+15.1
+Operating revenues
+1,297,701
+30.1
+Operating profit
+Operating expenses
+Operating revenues
+Marketing and Distribution Segment
+Operating profit
+Operating expenses
+Operating revenues
+Refining Segment
+Operating profit
+Operating expenses
+Operating revenues
+Exploration and Production Segment
+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 2022 compared to 2021.
+Chemicals Segment
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+100.0
+100.0
+2,740,884
+3,318,168
+Revenue
+100.0
+100.0
+4,850,310
+(2,620,886) (2,109,426)
+Elimination of inter-segment sales
+5,939,054
+inter-segment sales
+Operating revenue before elimination of
+26.8
+* Other operating revenues are included.
+1,457
+1,790,478
+Synthetic fibre
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Capex: The capital expenditure plan
+for 2023 is RMB165.8 billion, of which
+RMB74.4 billion will be spent in the E&P
+segment, mainly on the crude production
+capacity building in Jiyang and Tahe,
+natural gas production capacity building
+in west Sichuan and oil and gas storage
+and transportation facilities; RMB22.7
+billion will be spent in the refining
+segment, mainly on the Yangzi refining
+restructuring and the Zhenhai expansion
+project; RMB16.6 billion will be spent in
+the marketing and distribution segment,
+mainly for the development of the
+integrated energy station network, the
+renovation of the existing stations and
+non-fuel business; RMB46.6 billion will
+be spent in the chemical segment, mainly
+for the ethylene projects in Zhenhai,
+Hainan, Tianjin Nangang and Maoming,
+PTA project in Yizheng and the relocation
+of CPL project in Baling; RMB5.5 billion
+will be spent in corporate and others,
+mainly for R&D and IT.
+development of integration of refining
+and chemical technologies, refined oil
+products structure optimization, clean,
+efficient and low-carbon utilization of
+resources; key technology development
+and application for the adjustment to
+increase the yield of chemical feedstock
+and refining specialties and hydrogen
+energy. We will accelerate the core
+technological breakthroughs for chemical
+and material upgrading, as well as those
+for diverse and clean-process basic
+chemicals and high value-added synthetic
+materials production.
+Science and Technology Development:
+The Company will firmly implement the
+innovation-driven strategy, make every
+effort to make breakthroughs in core
+technologies and promote the reform
+of the science and technology system
+to accelerate its progress towards
+becoming a world-leading clean energy
+and chemical company. Specific focuses
+include technology breakthroughs in oil
+and gas exploration and production with
+the emphases on oil and gas reserves
+increase, oil production stabilization,
+gas production increase, cost reduction,
+and efficiency improvement; coordinated
+Chemicals: The Company will take
+active response to the trough of the
+chemical business cycle, press ahead
+with the "basic + high-end" strategy
+and cultivate new advantages of "cost +
+value-added + green and low-carbon".
+We will continue to diversify feedstocks
+and enhance cost advantages; adjust the
+facility utilization and product slate in a
+timely manner with market demand as
+our guide; continue to increase efforts in
+developing new materials and high value-
+added products to enhance profitability;
+accelerate the layout and development of
+large ethylene projects and the upgrading
+of the aromatics chain to continuously
+enhance market competitiveness. At the
+same time, the Company will optimize
+its marketing strategy based on demand,
+vigorously promote market development
+and enhance product value by providing
+customers with integrated solutions. The
+annual ethylene production plan is 14
+million tonnes.
+Marketing: The Company will
+give full play to its advantages in
+integrated business, strengthen digital
+empowerment and expand market share.
+We will improve the market monitoring
+system, dynamically optimize the pricing
+strategy, and continuously improve the
+retail volume and profits; accurately
+make plans for incremental network
+layout, enhance the network integrity
+and stability; consolidate and enhance
+the marketing advantages of the low-
+sulphur bunker fuel, and accelerate the
+expansion of overseas markets and end.
+user retail; strengthen the development
+of Sinopec-brand products, improve the
+non-fuel business in both operation and
+profitability; innovate the business model,
+accelerate the development of new energy
+stations, and strive to make greater
+breakthroughs in building the company
+into an integrated energy service provider
+with business covering "petrol, gas,
+hydrogen, power and non-fuel services".
+The annual domestic sales volume of
+refined oil products is planned to be 175
+million tonnes.
+Refining: Oriented by efficiency and
+profitability, the Company will coordinate
+production and marketing, and accelerate
+the optimization and upgrading of
+the business. We will deepen the
+implementation of differentiated
+procurement strategies, dynamically
+optimize the allocation of crude oil
+resources and reduce procurement costs;
+improve facility utilization, flexibly adjust
+the yield of refined oil products and the
+diesel-to-gasoline ratio; carry forward
+the adjustment to increase the yield of
+chemical feedstock in an orderly and cost
+effective manner, promote the shifting
+from refined products to specialty
+products, such as lube oil and grease,
+needle coke and other special products,
+and enhance overall profitability;
+optimize the structure and volume of
+export products. For the whole year, the
+Company plans to process 250 million
+tonnes of crude oil and produce 146
+million tonnes of refined oil products.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+14
+E&P: The Company will strengthen
+exploration in strategic areas, and
+increase high-quality reserves; strengthen
+efficient development and stabilize
+oil production while increasing gas
+production and reducing costs. In
+crude development, we will focus on
+production capacity increase, depletion
+control, recoverable reserves addition
+and costs reduction, accelerate the
+building of production capacity in Jiyang
+and Tahe, and strengthen the fine-tuned
+development of mature fields. In natural
+gas development, we will accelerate
+the building of production capacity of
+marine-face gas fields in west Sichuan
+and the northern part of Hubei, and
+improve natural gas production efficiency
+and profitability; diversify natural gas
+sourcing channels, cultivate high-loyalty
+customers, and continue to upgrade the
+natural gas production, supply, storage
+and marketing system. The planned
+annual production of crude oil is 280.23
+million barrels, of which 29.03 million
+barrels from overseas. Planned natural
+gas production is 1,291.8 billion cubic
+feet.
+In 2023, guided by the strategy of
+building a world-class enterprise, the
+Company will proactively lead the industry
+transition and development, enhance
+science and technology innovation,
+improve production and operation,
+deepen reform, polish the governance
+and corporate image, consolidate the
+foundation of safety, and put focuses on
+the following work.
+Production and Operation
+2
+Looking ahead to 2023, China is
+expected to achieve an overall upturn
+in economic performance. Domestic
+demand for natural gas, refined products
+and chemicals is expected to grow
+rapidly. International crude oil price is
+expected to fluctuate at medium and high
+price level due to the impacts of changes
+in global supply and demand, geopolitics
+and inventory.
+Market Outlook
+1
+BUSINESS OUTLOOK
+refining structural adjustment projects in
+Anqing and Yangzi and the construction
+of hydrogen supply centers. RMB19.1
+billion was spent in the marketing and
+distribution segment, mainly for the
+development of integrated energy station
+network covering petrol, gas, hydrogen,
+power and service, renovation of the
+existing stations and non-fuel business.
+The chemical segment saw a capital
+expenditure of RMB58.6 billion, mainly
+for ethylene projects in Zhenhai, Sinopec-
+SK, Hainan, and Tianjin Nangang,
+aromatics projects in Jiujiang and
+Zhenhai, large tow carbon fibre project
+in Shanghai, PTA project in Yizheng, and
+caprolactam relocation project in Baling,
+etc. Capital expenditure for the corporate
+and others segment was RMB5.2 billion,
+mainly for R&D facilities and information
+technology application projects.
+In 2022, focusing on quality and return
+of investment, the Company continuously
+optimised its investment projects, with
+total capital expenditures of RMB189.1
+billion. Capital expenditure for the
+exploration and production segment
+was RMB83.3 billion, mainly for crude
+oil production capacity construction of
+Shunbei, Tahe and Shengli offshore,
+natural gas capacity build-up of West
+Sichuan, Fuling and Weirong, the
+development and test of Shengli Jiyang
+National Demonstration Zone and the
+construction of oil and gas storage
+and transportation facilities. Capital
+expenditure for the refining segment was
+RMB22.9 billion, mainly for expansion of
+Zhenhai Refining and Chemical project,
+(7) Capital Expenditures
+In 2022, the Company spared no effort
+to promote the HSE management system
+with professional management further
+strengthened. The Company enhanced
+the employee health and public safety
+and security management, improved
+operation conditions and enhanced
+the safety equipment allocation,
+thus the occupational, physical and
+psychological health of employees were
+safeguarded both at home and abroad.
+We implemented the all-staff safety
+production responsibility mechanism and
+further advanced the three-year safety
+production harnessing campaign. Specific
+measures were taken to tackle safety
+risk especially for hazardous chemicals,
+outdated production units and oil & gas
+storage facilities.
+(6) Health and Safety
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+Business Review and Prospects
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022 13
+time optimization (RTO) of S-Zorb unit
+was put into operation successfully. In
+2022, the Company filed 8,687 patent
+applications at home and abroad with
+6,289 granted. The Company also won
+one gold award, one silver award and four
+excellent awards in China for patents.
+15
+Business Review and Prospects
+Management's Discussion
+and Analysis
+29.3
+(2,076,665)
+22.5
+(2,646,256)
+(3,242,333)
+(2,684,756)
+Selling, general and administrative expenses
+Purchased crude oil, products and operating supplies and expenses
+Operating expenses
+(0.9)
+61,384
+21.6
+2,679,500
+(18.1)
+3,257,356
+60,812
+Revenue from primary business
+21.1
+2,740,884
+3,318,168
+Revenue
+Change (%)
+Year ended 31 December
+2022
+2021
+RMB million
+RMB million
+The following table sets forth the main revenue and expenses from the Company's consolidated financial statements:
+In 2022, the Company's revenue was RMB3,318.2 billion, increased by 21.1% compared with that of 2021. That was mainly due to increased prices
+of petroleum and petrochemical products resulting from increase of international crude oil prices. The Company actively deepened optimisation of
+production, stabilised operation, expanded market, enhanced adjustment of feedstocks, products and facilities to actively respond to unfavorable
+factors of weak demand, and realised RMB75.8 billion operating profit, down by 19.9% year on year.
+1 CONSOLIDATED RESULTS OF OPERATIONS
+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. THE PRICES IN THE FOLLOWING
+DISCUSSION DO NOT INCLUDE VALUE-ADDED TAX.
+MANAGEMENT'S DISCUSSION AND ANALYSIS
+Other operating revenues
+(55,809)
+(3.4)
+(2.4)
+(%)
+advanced production capacities and
+shutting down of none competitive
+capacities. Integration of production,
+marketing, research and application
+was further cemented to develop high-
+end products and new materials and
+to increase production of high value-
+added products such as PV-grade EVA,
+metallocene polyolefin and polybutadiene
+rubber. The coal chemical business
+also witnessed improvement in both
+Summary of Operations for the Chemicals Segment
+In 2022, in the face of the downward
+business cycle and high costs for
+feedstock, the Company closely followed
+the market demand, optimised the
+structure of feedstock, facilities and
+products with a profit-driven orientation,
+maintained high utilisation rate in
+profitable facilities, and reduced products
+with no marginal contribution. We sped
+up construction of advantageous and
+(4) Chemicals
+Note: The total sales volume of refined oil products includes the amount of refined oil marketing and trading sales volume.
+30,725
+30,808
+30,808
+30,707
+30,713
+30,725
+2020
+2021
+2022
+31 December
+31 December
+31 December
+Total number of service stations under the Sinopec brand
+Number of company-operated stations
+the end of the
+reporting period
+the end of the
+previous year to
+Change from
+(6.7)
+3,686
+3,720
+1,193
+3,470
+(2.4)
+0.3
+0.3
+quality and efficiency. Annual ethylene
+production was 13.44 million tonnes.
+By strengthening strategic customer
+cooperation and tailor-made product
+service, the total chemical sales volume
+reached 81.65 million tonnes with all
+products sold, up by 0.1%.
+Unit: thousand tonnes
+0.4
+(%)
+deep and ultra-deep oil and gas as well as
+shale oil and gas. In refining, we realized
+scaled-up test production and application
+for bio-jet fuel. In chemicals, the scaled-
+up production of large tow carbon fibre.
+was achieved, and POE and polybutene-1
+pilot units were commissioned in one
+shot with on-spec products. In addition,
+the wet oxidation process for sulfur-
+containing waste alkali fluid for mega
+ethylene crackers was industrialized. The
+complete set of software for online real-
+1,313
+1,357
+1,112
+9,057
+9,201
+8,886
+1,067
+1,252
+17,370
+18,999
+2.6
+18,544
+2020
+2021
+13,380
+13,437
+2022
+In 2022, the Company continued
+increasing input in science and technology
+innovation, sought breakthroughs in key
+and core technologies, beefed up front-
+end basic research and further deepened
+the reform of the science and technology
+system and mechanism to enhance
+innovation in supporting and leading
+the business growth. In upstream,
+breakthroughs were made in the
+exploration and development theory for
+(5) Science and Technology Innovation
+Note: Includes 100% of the production of domestic joint ventures.
+Synthetic fiber
+Synthetic fiber monomer and polymer
+Synthetic rubber
+Synthetic resin
+Ethylene
+Change from
+2021 to 2022
+12,060
+(54,978)
+1,284
+Depreciation, depletion and amortisation
+78,335
+81,657
+Diesel
+20.5
+7,731
+9,319
+(11.0)
+90,836
+80,884
+Gasoline
+12.6
+1,606
+1,808
+3.0
+29,953
+30,845
+Natural gas (million cubic meters)
+45.9
+3,049
+4,449
+14.1
+7,162
+8,171
+Crude oil
+2021
+2022
+2021
+4.2
+7,738
+5,891
+31.4
+(0.6)
+8,325
+8,272
+1.5
+(2.5)
+17,923
+17,471
+Synthetic resin
+(6.4)
+6,537
+6,116
+6.6
+6,955
+2022
+7,412
+13.1
+5,486
+6,204
+(0.3)
+36,173
+36,053
+Basic chemical feedstock
+73.5
+3,772
+6,545
+(18.4)
+17,361
+Kerosene
+Monomer and polymer for synthetic fibre
+Average realised price
+(RMB/tonne, RMB/thousand cubic meters)
+Year ended 31 December
+Change (%)
+21,270
+Sales volume (thousand tonnes)
+Year ended 31 December
+(9,974)
+Net finance costs
+(19.9)
+94,628
+75,835
+Operating profit
+(31.9)
+(21,716)
+(14,779)
+Other operating income/(expenses), net
+(2,311)
+1,084
+1.9
+(9,010)
+(259,032)
+Taxes other than income tax
+0.1
+(103,492)
+(103,585)
+Personnel expenses
+(14.5)
+(12,382)
+(10,591)
+(109,906)
+Change (%)
+Exploration expenses, including dry holes
+(115,680)
+(5.0)
+(263,991)
+10.7
+Impairment reversals/(losses) on trade and other receivables
+Investment income and share of profits less losses from associates and joint ventures
+In 2022, the Company's revenue from primary business was RMB3,257.4 billion, representing an increase of 21.6% over 2021. This was mainly
+due to the increased price in petroleum and petrochemical products.
+(1) Revenue
+(31.6)
+13,876
+9,490
+Non-controlling interests
+(8.1)
+71,975
+Shareholders of the Company
+Attributable to:
+(11.9)
+85,851
+75,643
+66,153
+94,400
+(19.6)
+(23,318)
+(18,757)
+28,539
+Income tax expense
+21.2
+(13.5)
+109,169
+23,551
+Profit before taxation
+The following table sets forth the external sales volume, average realised prices and respective rates of change of the Company's major products
+in 2022 and 2021:
+Profit for the year
+products and petroleum products
+RMB10,492
+("Fujian Petrochemical") (i)
+Fujian Petrochemical Company Limited
+50.00
+50.00
+Investment in exploration, production and
+sale of petroleum and natural gas
+Production and sale of polyester chips and
+polyester fibres
+Coal chemical industry investment
+management, production and sale of coal
+chemical products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Investment holding of overseas business
+Production and sale of refined petroleum
+products, lubricant base oil, and
+petrochemical materials
+Trading of crude oil and petrochemical
+products
+Limited ("Shanghai Petrochemical")
+Manufacturing of intermediate petrochemical
+Principal activities
+("Sinopec Kantons")
+RMB10,000
+50.44
+59.00
+Production and sale of catalyst products
+Trading of petrochemical products
+Sinopec-SK (Wuhan) Petrochemical Company
+41.00
+Limited ("Sinopec-SK")
+Gaoqiao Petrochemical
+RMB7,193
+49.56
+55.00
+Sinopec Baling Petrochemical Co.Ltd.
+RMB3,000
+55.00
+45.00
+("Baling Petrochemical")
+Sinopec Shanghai Petrochemical Company
+RMB10,824
+45.00
+Marketing and distribution of petrochemical
+products
+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.
+products and petroleum products
+for the year ended 31 December 2022
+41 PRINCIPAL SUBSIDIARIES (Continued)
+Summarised financial information on subsidiaries with material non-controlling interests
+Summarised consolidated statement of financial position
+Marketing Company
+At
+At
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+SIPL*
+At
+Shanghai Petrochemical
+At
+At
+Fujian Petrochemical
+At
+39.67
+At
+At
+Sinopec Kantons
+At
+At
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+194
+(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.
+Import and processing of crude oil,
+production, storage and sale of petroleum
+products and petrochemical products
+Crude oil processing and petroleum products
+manufacturing
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Marketing and distribution of refined
+petroleum products
+Provision of crude oil jetty services and
+natural gas pipeline transmission services
+Production, sale, research and development
+of petrochemical products, ethylene and
+downstream byproducts
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Crude oil processing and petroleum products
+manufacturing
+Manufacturing of synthetic fibres, resin
+and plastics, intermediate petrochemical
+products and petroleum products
+Manufacturing of plastics, intermediate
+petrochemical products and petroleum
+products
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong SAR 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.
+Notes:
+Manufacturing of intermediate petrochemical
+60.33
+RMB15,651
+Sinopec Kantons Holdings Limited
+100.00
+Sinopec Overseas Investment Holding Limited
+("SOIH")
+USD3,423
+100.00
+Sinopec International Petroleum Exploration and
+RMB8,250
+100.00
+Sinopec Yangzi Petrochemical Company Limited
+Production Limited ("SIPL”)
+RMB4,000
+100.00
+Sinopec Lubricant Company Limited
+RMB3,374
+100.00
+non-controlling
+interests %
+Sinopec Yizheng Chemical Fibre Limited Liability
+Company
+China International United Petroleum and
+100.00
+(million)
+RMB22,761
+1,309,365
+1,268,814
+40,551
+Gaoqiao Petrochemical
+At
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+193
+Financial Statements (International)
+Financial Statements (International)
+Company %
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+41 PRINCIPAL SUBSIDIARIES
+As at 31 December 2022, the following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the
+Group.
+Name of company
+Sinopec Great Wall Energy & Chemical
+Company Limited
+Interests Interests held by
+Particulars of
+issued capital
+held by the
+for the year ended 31 December 2022
+HKD248
+RMB5,000
+Chemical Company Limited
+1.02
+Liability Company
+ZhongKe (Guangdong) Refinery & Petrochemical
+RMB6,397
+90.30
+9.70
+Company Limited
+98.98
+Sinopec Qingdao Refining and Chemical
+85.00
+15.00
+Company Limited
+Marketing Company
+RMB28,403
+70.42
+29.58
+RMB5,000
+100.00
+RMB5,294
+Company Limited
+Sinopec Qingdao Petrochemical Company Limited
+RMB1,595
+100.00
+Sinopec Catalyst Company Limited
+RMB1,500
+100.00
+China Petrochemical International
+Sinopec Beihai Refining and Chemical Limited
+RMB1,400
+Company Limited
+Sinopec Chemical Sales Company Limited
+RMB1,000
+100.00
+Sinopec Hainan Refining and Chemical
+RMB9,606
+100.00
+100.00
+At
+(8,869)
+At
+(57,215)
+(59,604)
+(11,892)
+(17,823)
+(783)
+(747)
+(707)
+(700)
+(232)
+(170)
+(5,385)
+(10,679)
+(7,806)
+(7,512)
+Net non-current
+Non-current liabilities
+20,650
+20,251
+15,602 21,308
+4,565
+13,829
+7,585
+(2,707)
+(1,331)
+Non-current assets
+326,095
+assets/(liabilities)
+326,437
+8,954
+25,370
+25,988
+10,215
+13,208
+7,902
+8,195
+12,869
+268,880
+266,833
+977
+12,590
+24,046
+18,214
+9,738 11,807
+Attributable to owners
+of the Company
+166,974
+12,897
+157,557
+6,341
+13,229
+15,254
+5,620
+6,915
+RMB million
+7,764
+10.121
+5,227
+13,830
+30,377
+24,587
+25,241
+9,508
+12,508
+7,670
+8,025
+10,217
+11.240
+10,629
+13,138
+Net assets
+246,984
+233,117
+17,186
+12,460
+26,355
+12,445
+1,322
+1,732
+5,136
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+million
+million
+million
+million
+million
+million
+million
+million
+RMB
+RMB
+2021
+2022
+2021
+2022
+2021
+2022
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2022
+RMB
+2021
+2021
+2022
+2021
+2022
+2021
+RMB
+RMB
+2022
+Sinopec-SK
+At
+million
+million
+(13,998)
+(15,796)
+(169)
+(142)
+(209)
+(196)
+(10,162)
+(1,430)
+(8,668)
+(8,122)
+Net current
+(liabilities)/assets
+(21,896)
+(33,716) 16,209
+21,329
+1,768
+(8,488)
+million
+(9,468)
+6,791
+million
+million
+Current assets
+Current liabilities
+190,697
+159,599
+25,677
+22,759
+(212,593) (193,315)
+15,766
+1,901
+1,464
+5,436
+4,761
+23,991
+16,253
+5,781
+20,932
+31 December
+2021
+3,875
+1,353,771
+44,739
+1,398,510
+12,211
+65,279
+24,537
+21,204
+(14,127)
+11,106
+- Corporate and others
+1,318
+(3,225)
+- Elimination
+Total seperating profit
+(1,820)
+(4,421)
+75,835
+94,628
+4,685
+53,716
+- Chemicals
+- Marketing and distribution
+191
+Financial Statements (International)
+Financial Statements (International)
+192
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2022
+40 SEGMENT REPORTING (Continued)
+Share of /(loss) from associates and joint ventures
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+RMB million
+2021
+RMB million
+Result
+Operating profit/(loss)
+By segment
+- Exploration and production
+- Refining
+2022
+- Exploration and production
+2,883
+2,783
+- Chemicals
+- Corporate and others.
+Aggregate investment income
+Net finance costs
+Profit before taxation
+55
+35
+(10)
+- Marketing and distribution
+31
+14,258
+(54)
+(264)
+304
+14,060
+298
+(9,974)
+3
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+- Exploration and production
+- Refining
+- Refining
+- Marketing and distribution
+- Chemicals
+- Corporate and others
+(645)
+662
+3,142
+Investment income
+3,731
+11,323
+5,734
+4,754
+Aggregate
+share of profits from associates and joint ventures
+14,479
+23,253
+3,365
+61,384
+2,740,884
+60,812
+3,318,168
+External sales
+Inter-segment sales
+Corporate and others
+External sales
+Inter-segment sales
+Elimination of Inter-segment sales
+Revenue from primary business
+Chemicals
+Other operating revenues
+Marketing and distribution
+Chemicals
+Corporate and others
+Other operating revenues
+Revenue
+2022
+RMB million
+2021
+RMB million
+192,330
+Exploration and production
+Refining
+156,026
+Inter-segment sales
+Marketing and distribution
+7,579
+190
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2022
+40 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+External sales
+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.
+Revenue from primary business
+Exploration and production
+External sales
+Inter-segment sales
+Refining
+External sales
+Inter-segment sales
+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 debts, income tax
+payable, long-term debts, loans from Sinopec Group Company and fellow subsidiaries, deferred tax liabilities and other unallocated liabilities.
+Information of the Group's reportable segments is as follows:
+94,400
+121,912
+314,242
+732,356
+1,788,152
+1,295,503
+(2,620,886)
+(2,109,426)
+3,257,356
+2,679,500
+1,028,800
+5,169
+5,161
+39,529
+36,864
+9,913
+10,487
+2,326
+2,198
+6,674
+87,298
+563,147
+495,016
+243,324
+194,839
+167,948
+1,376,425
+1,212,455
+1,571,264
+1,380,403
+759,352
+1,660,924
+13,421
+1,674,345
+7,075
+1,374,680
+449,911
+80,328
+424,774
+70,242
+530,239
+1,367,605
+31 December
+2022
+RMB million
+(9,010)
+109,169
+Chemicals
+Corporate and others
+(2) Geographical information
+2022
+2021
+RMB million
+RMB million
+Marketing and distribution
+83,300
+22,863
+22,469
+19,140
+21,897
+58,612
+51,648
+5,181
+68,148
+3,786
+Refining
+Impairment losses on long-lived assets
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2022
+40 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Capital expenditure
+Exploration and production
+Refining
+Exploration and production
+Marketing and distribution
+Corporate and others
+Depreciation, depletion and amortisation
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Chemicals
+974,181
+189,096
+45,321
+165
+10,035
+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.
+External sales
+Mainland China
+Singapore
+Others
+571
+5,669
+Non-current assets
+Mainland China
+Others
+2021
+RMB million
+2,824,140
+263,087
+230,941
+3,318,168
+31 December
+2022
+RMB million
+2022
+RMB million
+167,948
+5,332
+1,211
+52,880
+20,588
+20,743
+23,461
+23,071
+17,716
+16,093
+1,790
+2,820
+109,906
+115,680
+2,891
+2,467
+2
+860
+415
+2,893
+2,166,040
+278,024
+296,820
+2,740,884
+1,012,402
+15,838
+Total segment assets
+1,520,018
+1,410,148
+Interest in associates and joint ventures
+233,941
+209,179
+Financial assets at fair value through other comprehensive income
+133,961
+730
+19,952
+Cash and cash equivalents, time deposits with financial institutions
+Other unallocated assets
+145,052
+767
+19,389
+221,989
+28,947
+27,783
+1,948,640
+Deferred tax assets
+1,889,255
+148,014
+242,794
+31 December
+2021
+RMB million
+Assets
+Segment assets
+- Exploration and production
+- Refining
+222,803
+- Marketing and distribution
+Corporate and others
+412,543
+371,100
+327,706
+304,785
+388,961
+377,499
+- Chemicals
+20,467
+Total assets
+Segment liabilities
+84,472
+69,977
+221,885
+198,828
+809,470
+810,880
+59,037
+228,826
+35,252
+4,809
+85,706
+78,300
+29,547
+16,563
+8,079
+7,910
+4,725
+Liabilities
+237,534
+86,428
+· Exploration and production
+- Refining
+- Marketing and distribution
+- Chemicals
+- Corporate and others.
+Total segment liabilities
+Short-term debts
+146,763
+Income tax payable
+Loans from Sinopec Group Company and fellow subsidiaries
+Deferred tax liabilities
+Other unallocated liabilities
+Total liabilities
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+179,151
+166,486
+Long-term debts
+13,225
+5 years
+5,745
+190
+3,499
+100.0%
+389
+579
+534
+4,033
+All of the entity's other receivables are considered to have low credit risk, and the loss allowance recognised during the period was therefore
+limited to 12 months expected losses. The Group considers there was no significant increase in credit risk for other receivables by taking into
+account of their past history of making payments when due and current ability to pay, and thus the impairment provision recognised during the
+period was limited to 12 months expected losses.
+Liquidity risk
+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 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
+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.
+As at 31 December 2022, the Group has standby credit facilities with several PRC financial institutions which provide borrowings up to RMB454,857
+million (2021: RMB441,559 million) on an unsecured basis, at a weighted average interest rate of 2.38% per annum (2021: 2.81%). As at 31
+December 2022, the Group's outstanding borrowings under these facilities were RMB21,313 million (2021: RMB11,700 million) and were included
+in debts.
+The following table sets out the remaining contractual maturities at the date of the statement of financial position 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 date of the statement of financial position) and the earliest date the Group would be required to repay:
+31 December 2022
+Carrying
+amount
+Total
+contractual
+undiscounted
+RMB million
+208
+8,312
+597
+38,894
+3,190
+44
+2 to 3 years past due
+Over 3 years past due
+Total
+34,263
+623
+3,411
+4,280
+500
+26
+0.2%
+cash flow
+RMB million
+57
+137
+35.8%
+44
+181
+3,324
+3,146
+50.6%
+83
+Within
+1 year or
+on demand
+RMB million
+More than 1
+year but less
+More than 2
+years but less
+Lease liabilities
+182,411
+299,176
+16,699
+4,288
+12,905
+13,962
+36,984
+6,159
+232,588
+7,813
+Derivative financial liabilities
+Trade accounts payable and bills payable
+269,424
+7,313
+269,424
+Other payables
+121,716
+121,716
+755,154
+7,313
+1 to 2 years past due
+32,222
+fellow subsidiaries
+More than
+than 2 years
+RMB million
+than 5 years
+RMB million
+5 years
+RMB million
+Short-term debts
+59,037
+29,547
+59,774
+85,706
+94,823
+59,774
+2,207
+13,620
+68,180
+10,816
+Loans from Sinopec Group Company and
+Long-term debts
+Current and within 1 year past due
+RMB million
+RMB million
+RMB million
+Carrying
+amount
+RMB million
+Impairment
+provision on
+individual
+basis
+Weighted-
+average
+loss rate
+Impairment
+provision
+Loss
+allowance
+31 December 2022
+RMB million
+RMB million
+RMB million
+Current and within 1 year past due
+1 to 2 years past due
+46,097
+216
+7,014
+29
+2
+%
+0.1%
+Gross
+carrying
+amount
+individual basis
+The carrying amounts of cash and cash equivalents, time deposits with financial institutions, financial assets at fair value through profit or loss,
+derivative financial assets, trade accounts receivable, financial assets at FVOCI and other receivables, represent the Group's maximum exposure
+to credit risk in relation to financial assets.
+(ii) Impairment of financial assets
+The Group's primary type of financial assets that are subject to the expected credit loss model is trade accounts receivable, financial assets at
+FVOCI and other receivables.
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+For trade accounts receivable and financial assets at FVOCI, the Group applies the IFRS 9 simplified approach to measuring ECLs which uses a
+lifetime expected loss allowance for all trade accounts receivable and financial assets at FVOCI.
+To measure the ECLs, trade accounts receivable and financial assets at FVOCI have been grouped based on shared credit risk characteristics and
+the days past due.
+The ECLs were calculated based on historical actual credit loss experience. The rates were considered the differences between economic
+conditions during the period over which the historical data has been collected, current conditions and the Group's view of economic conditions
+over the expected lives of the receivables. The Group performed the calculation of ECL rates by the operating segment.
+Impairment provision on
+provision matrix basis
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2022
+42 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Credit risk (Continued)
+(ii) Impairment of financial assets (Continued)
+The following table provides information about the exposure to credit risk and ECLs for accounts receivable as at December 31, 2022 and 2021.
+Impairment provision on
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+884,448
+56
+25
+Impairment provision on
+individual basis
+Impairment provision on
+provision matrix basis
+Gross
+carrying
+amount
+31 December 2021
+4,079
+RMB million
+Impairment
+provision on
+individual
+basis
+Weighted.
+average
+loss rate
+Impairment
+provision
+Loss
+allowance
+RMB million
+%
+Carrying
+amount
+RMB million
+58
+499
+371
+20.9%
+39
+64
+2 to 3 years past due
+269
+193
+148
+3,776
+43.4%
+181
+Over 3 years past due
+Total
+3,861
+50,443
+3,487
+10,723
+3,405
+3,580
+99.2%
+33
+7,313
+269,424
+121,716
+484,946
+30,813
+119,126
+Financial assets at fair value through profit or loss:
+- Fund Investments
+2
+2
+Derivative financial assets:
+- Derivative financial assets
+7,857
+Assets
+11,478
+Financial assets at fair value through other comprehensive income:
+- Equity instruments
+114
+Trade accounts receivable and bills receivable
+7,973
+11,478
+616
+3,507
+4,123
+730
+3,507
+23,574
+19,335
+Liabilities
+RMB million
+RMB million
+for the year ended 31 December 2022
+42 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 date of the statement of financial position
+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:
+•
+•
+RMB million
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+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 2022
+Level 1
+Level 2
+Level 3
+Total
+RMB million
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Derivative financial liabilities:
+At 31 December 2021
+588
+- Trade accounts receivable and bills receivable
+6,062
+12,488
+5,939
+6,527
+767
+5,939
+25,077
+Liabilities
+179
+Derivative financial liabilities:
+804
+804
+2,419
+2,419
+3,223
+3,223
+During the years ended 31 December 2022 and 2021, there was no transfer between instruments in Level 1 and Level 2.
+Management of the Group 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 structured deposits and trade accounts receivable and bills
+receivable classified as Level 3 financial assets.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+- Derivative financial liabilities
+- Derivative financial liabilities
+- Equity instruments
+18,371
+1,293
+6,020
+1,293
+6,020
+7,313
+7,313
+Level 1
+RMB million
+Financial assets at fair value through other comprehensive income:
+Level 2
+RMB million
+Total
+RMB million
+Assets
+Derivative financial assets:
+- Derivative financial assets
+5,883
+12,488
+Level 3
+RMB million
+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 deposits) 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 trade accounts receivable at 31 December 2022, 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 a loss allowance for expected credit losses and actual losses have been within
+management's expectations.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+As at 31 December 2022, it is estimated that a general increase/decrease of USD10 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 RMB5,104 million (2021: decrease/increase RMB2,996 million), and increase/decrease the Group's other
+reserves by approximately RMB192 million (2021: decrease/increase RMB1,160 million). This sensitivity analysis has been determined assuming
+that the change in prices had occurred at the date of the statement of financial position 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 2021.
+RMB million
+Short-term debts.
+35,252
+35,871
+35,871
+Long-term debts
+78,300
+RMB million
+85,718
+49,390
+27,518
+6,641
+Loans from Sinopec Group Company and
+fellow subsidiaries
+16,563
+18,457
+2,169
+3,174
+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.
+More than 2
+years but less
+than 5 years
+249,563
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+197
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2022
+More than
+42 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+31 December 2021
+Total
+Carrying
+amount
+RMB million
+contractual
+undiscounted
+cash flow
+RMB million
+Within
+1 year or
+on demand
+RMB million
+More than 1
+year but less
+than 2 years
+RMB million
+Liquidity risk (Continued)
+198
+604
+3,967
+393,330
+62,025
+73,641
+243,818
+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.
+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.
+772,814
+(a) Currency risk
+(b) Interest rate risk
+The Group's interest rate risk exposure arises primarily from its short-term and long-term debts and loans from Sinopec Group Company and
+fellow subsidiaries. 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 and terms of repayment of short-term and long-term debts, and loans from Sinopec Group
+Company and fellow subsidiaries of the Group are disclosed in Note 30.
+As at 31 December 2022, 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 profit for the year by approximately RMB524 million (2021: decrease/increase
+by approximately RMB254 million). This sensitivity analysis has been determined assuming that the change of interest rates was applied to
+the Group's debts outstanding at the date of the statement of financial position with exposure to cash flow interest rate risk. The analysis is
+performed on the same basis for 2021.
+(c) 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 contracts, to manage a portion of this risk.
+Based on the dynamic study and judging of the market, combined with the resource demand and production and operation plan, the Group
+evaluate and monitor the market risk exposure caused by transaction positions, and continuously manage and hedge the risk of commodity price
+fluctuation caused by market changes.
+As at 31 December 2022, the Group had certain commodity contracts of crude oil, refined oil products and chemical products designated as
+qualified cash flow hedges and economic hedges. As at 31 December 2022, the fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB19,328 million (2021: RMB18,359 million) and derivative financial liabilities of RMB7,235 million (2021:
+RMB3,214 million).
+Currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured.
+The Group does not have significant financial instruments that are denominated in foreign currencies other than the functional currencies of
+respective entities as at 31 December, and consequently does not have significant exposure to foreign currency risk.
+10,712
+651,804
+117,420
+Lease liabilities
+185,406
+296,485
+15,833
+12,031
+35,411
+233,210
+117,420
+Derivative financial liabilities
+3,223
+3,223
+Trade accounts payable and bills payable
+Other payables
+215,640
+215,640
+215,640
+117,420
+3,223
+10,018
+(i) Risk management
+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 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.
+6,438
+1,045
+(2,665)
+2,218
+(1,925)
+951
+734
+677
+3,161
+3.677
+(1,101)
+1,606
+Comprehensive income
+attributable to non-
+controlling interests
+18,439
+22,418
+Total comprehensive income
+1,606
+57,857
+50,208
+Profit/(loss) for the year
+19,902
+18,582
+2,576
+1,429
+8.110
+(2,842)
+(1,925)
+951
+346
+871
+3,157
+3,536
+(1,101)
+2,077
+6,822
+2,659
+579
+164
+984
+256
+397
+Summarised statement of cash flows
+Year ended 31 December
+Marketing Company
+169
+SIPL*
+Fujian Petrochemical
+Sinopec Kantons
+Gaoqiao Petrochemical
+Sinopec-SK
+2022
+2021
+2022
+Shanghai Petrochemical
+46,506
+64
+541
+(1,318)
+1,101
+(962)
+16
+476
+291
+268
+333
+1,423
+(451)
+659
+Dividends paid to non-
+controlling interests
+3,453
+7,064
+548
+1.655
+69,298
+528
+529
+Shanghai Petrochemical
+Fujian Petrochemical
+Sinopec Kantons
+Gaoqiao Petrochemical
+Sinopec-SK
+2022
+2021
+SIPL*
+2022
+2022
+2021
+2022
+2021
+2022
+2021
+2022
+2021
+2021
+Marketing Company
+Summarised consolidated statement of comprehensive income
+6.966
+Attributable to
+non-controlling interests
+80,010 75,560
+7,065
+6.119
+13,126
+Year ended 31 December
+15,123
+6,915
+5.133
+5,011
+10,821
+8.196
+3.993
+4,841
+5.620
+2021
+2022
+RMB
+million
+Million
+million
+million
+million
+million
+million
+million
+Revenue
+1,408,523
+3,308
+2.166
+82,443
+89,198
+4,931
+5,549
+1,710,428
+2021
+million
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+million
+million
+RMB
+2022
+2021
+2022
+8,999
+8,642
+7,068
+7,699
+5.112
+6,916
+54
+at 1 January
+Effect of foreign currency
+exchange rate changes
+Cash and cash equivalents
+54
+271
+95
+1,059
+(164)
+15
+(2)
+at 31 December
+68
+13,204
+Cash and cash equivalents
+(1,553)
+146
+1,541
+(653)
+Net increase/(decrease) in
+cash and cash equivalents
+3,934
+262
+3,034
+11,913
+(4,238)
+(1,802)
+(27)
+(14) (1,454)
+343
+2
+1
+(467)
+(2,986)
+8,999
+7,068
+*
+The non-controlling interests of subsidiaries which the Group holds 100% of equity interests at the end of the year are the non-controlling interests of their subsidiaries.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+195
+Financial Statements (International)
+196
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+4,100
+for the year ended 31 December 2022
+Overview
+Financial assets of the Group include cash and cash equivalents, time deposits with financial institutions, financial assets at fair value through profit
+or loss, derivative financial assets, trade accounts receivable, amounts due from Sinopec Group Company and fellow subsidiaries, amounts due from
+associates and joint ventures, financial assets at FVOCI and other receivables. Financial liabilities of the Group include short-term debts, loans from
+Sinopec Group Company and fellow subsidiaries, derivative financial liabilities, trade accounts payable and bills payable, amounts due to Sinopec
+Group Company and fellow subsidiaries, amounts due to associates and joint ventures, other payables, long-term debts and lease liabilities.
+The Group has exposure to the following risks from its uses of financial instruments:
+credit risk;
+liquidity risk; and
+market risk.
+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.
+42 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
+20,040
+2,544
+3
+889
+5.112
+27
+54
+60
+54
+3,432
+1
+3,182
+4,100
+1,066
+246
+(93)
+(3)
+2,224
+3,432
+1
+Credit risk
+(434) (1,066)
+(682)
+RMB
+million
+million
+million
+million
+million
+million
+RMB
+million
+million
+Million
+million
+million
+million
+million
+Net cash generated from/
+Million
+(used in) operating
+RMB
+RMB
+2021
+2022
+2021
+2022
+2021
+2022
+2021
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+(142)
+activities
+28,923
+653
+Net cash (used in)/generated
+ ྴ
+420 (1,153)
+1,276
+4,235
+1,432
+63
+(1,556)
+from financing activities
+(15,984)
+(31,081)
+(1,369)
+(1,172)
+(1,169)
+(3,393)
+(1,789)
+43,408
+4,390 (2,359)
+11,824
+1,458
+690
+(7,459)
+3,950
+2
+(292)
+133
+15
+133
+(1,577)
+(1,538)
+5,476
+Net cash (used in)/generated
+from investing activities
+(23,490)
+2,420
+(1,247)
+(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.
+Financial Statements (International)
+(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.
+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.
+40 SEGMENT REPORTING
+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.
+39 EMPLOYEE BENEFITS PLAN
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+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 13.0% to 16.0% 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 8% 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 2022 were RMB13,190 million (2021:
+RMB11,932 million).
+199
+309
+(25)
+(25)
+303
+303
+Production
+Proved developed reserves
+Beginning of the year
+263
+263
+(25)
+309
+(25)
+Extensions and discoveries
+235,625
+10
+10
+4
+4
+244
+1
+1
+6
+6
+Improved recovery
+290
+33
+End of the year
+244
+Beginning of the year
+260
+Beginning of the year
+End of the year
+Proved developed reserves
+End of the year
+Production
+Extensions and discoveries
+Improved recovery
+Revisions of previous estimates
+Beginning of the year
+(billion cubic feet)
+associates and joint ventures (gas)
+Proved developed and undeveloped reserves of
+46
+46
+43
+43
+End of the year
+46
+46
+46
+46
+33
+Proved undeveloped reserves
+263
+263
+260
+End of the year
+9
+associates and joint ventures (oil) (million barrels)
+Revisions of previous estimates
+1,715
+1,715
+Beginning of the year
+Proved undeveloped reserves
+6,734
+6,734
+7,135
+7,135
+End of the year
+6,357
+6,357
+6,734
+6,734
+Beginning of the year
+Proved developed reserves
+8,449
+8,449
+8,802
+8,802
+End of the year
+(1,108)
+(1,108)
+(1,134)
+(1,134)
+Production
+1,824
+1,824
+End of the year
+1,667
+290
+309
+309
+Beginning of the year
+Proved undeveloped reserves
+Proved developed and undeveloped reserves of
+Equity method investments
+Other
+countries
+China
+Total
+Other
+countries
+China
+9
+Total
+2022
+Table IV: Reserve quantities information (Continued)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+on Oil and Gas Producing Activities (Unaudited)
+Financial Statements Supplemental Information
+on Oil and Gas Producing Activities (Unaudited)
+Financial Statements Supplemental Information
+207
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+1,715
+1,715
+1,667
+2021 (Revised) Note
+Beginning of the year
+1
+Total of the Group and its equity method investments
+2021
+RMB million
+2022
+RMB million
+10% annual discount for estimated timing of cash flows
+Standardised measure of discounted future net cash flows
+Total of the Group's and its equity method investments' results of
+standardised measure of discounted future net cash flows
+Undiscounted future net cash flows
+Future income tax expenses
+Future development costs
+Future production costs
+Future cash flows
+Equity method investments
+10% annual discount for estimated timing of cash flows
+Standardised measure of discounted future net cash flows
+Discounted future net cash flows attributable to
+non-controlling interests
+Undiscounted future net cash flows
+Future income tax expenses
+Future development costs
+Future production costs
+Future cash flows
+The Group
+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
+2022 and 2021 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.
+The standardized measure of discounted future net cash flows, related to the above proved oil and gas reserves, is calculated in accordance with
+the requirements of "ASC Topic 932 Extractive Activities - Oil and Gas", "SEC Rule 4-10 of Regulation S-X", 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 adjusted for differential 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.
+Table V: Standardised measure of discounted future net cash flows
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+208
+Note: The Company has revised some classifications of the changes in the net quantities of the proved reserves during the year ended 31 December 2021.
+7
+8,449
+Total
+China
+Other
+countries
+Other
+241,495
+2,070
+393,891
+395,961
+(190)
+(93,164)
+(93,354)
+(316)
+1,315
+333,534
+334,849
+2,386
+8,456
+563,701
+(169,810)
+(2,420)
+(111,178)
+(1,875)
+(77,687)
+(5,103)
+10,713
+930,302
+(407,903)
+11,851 941,015
+(4,835) (413,006)
+(1,637) (79,562)
+(2,993) (113,598)
+1,490,949 1,479,098
+(635,757) (630,922)
+(98,212) (96,575)
+(190,893) (187,900)
+countries
+China
+Total
+566,087
+(170,126)
+4
+8,802
+8,806
+2
+2
+1
+1
+6
+8
+6
+3
+3
+8
+6
+6
+1
+7
+4
+4
+(4)
+(4)
+(3)
+(3)
+1
+678
+10
+10
+7
+7
+7
+End of the year
+1
+1
+End of the year
+10
+8,181
+8,191
+7
+8,449
+8,456
+Beginning of the year
+(billion cubic feet)
+Proved developed and undeveloped reserves (gas)
+333
+1,416
+1
+1,749
+1,642
+1,962
+End of the year
+310
+1,232
+1,542
+333
+1,416
+1,749
+Beginning of the year
+(million barrels)
+Proved developed and undeveloped reserves (oil)
+320
+678
+17
+664
+31 December
+2021
+RMB million
+Shareholders' equity under CASS
+Adjustments:
+916,041
+Government grants
+(i)
+(915)
+(967)
+Total equity under IFRS*
+936,238
+915,074
+Effects of major differences between the net profit under CASS and the profit for the year under IFRS are analysed as follows:
+Note
+2022
+Net profit under CASS
+RMB million
+75,758
+2021
+RMB million
+85,030
+Adjustments:
+Government grants
+Safety production fund
+Others
+(i)
+(ii)
+52
+51
+179
+2022
+RMB million
+937,153
+31 December
+Note
+Under CASS, 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 CASS and the total equity under IFRS are analysed as follows:
+45,884
+39,950
+(56,903)
+(35,110)
+(4,610)
+(3,944)
+(87)
+(469)
+242
+102,076
+204
+117,550
+384,148
+775
+404,391
+203
+Financial Statements (International)
+204
+Differences between Consolidated Financial Statements Prepared in Accordance
+ting Policies Complying
+with the Accounting P
+with CASS and IFRS (Unaudited)
+(C) DIFFERENCES BETWEEN CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH
+THE ACCOUNTING POLICIES COMPLYING WITH CASS 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 CASS
+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 CASS, 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
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+116,919
+(346)
+75,643
+24
+188,766
+188,742
+24
+24
+43,349
+43,236
+113
+Total capitalised costs
+1,096,123
+1,051,759
+44,364
+1,025,160
+984,330
+40,830
+Accumulated depreciation, depletion, amortisation
+and impairment losses
+(832,093)
+(789,133)
+Net capitalised costs
+264,030
+262,626
+(42,960)
+1,404
+(787,623)
+(748,705)
+40,693
+752,352
+793,045
+44,316
+(5)
+85,851
+*
+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 2021 and 2022 which have been audited by KPMG.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
+In accordance with "Accounting Standards Codification (ASC) Topic 932 Extractive Activities - Oil and Gas", issued by the Financial Accounting
+Standards Board of the United States, “Rule 4-10 of Regulation S-X", issued by Securities and Exchange Commission (SEC), 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
+2022 and 2021, 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.
+Tables I 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.
+Table 1: Capitalised costs related to oil and gas producing activities
+2022
+RMB million
+2021
+RMB million
+Other
+Total
+Profit for the year under IFRS*
+China
+Total
+China
+Other
+countries
+The Group
+Property cost, wells and related equipments and
+facilities
+840,719
+Supporting equipments and facilities
+202,262
+Uncompleted wells, equipments and facilities
+53,142
+796,403
+202,238
+53,118
+countries
+117,550
+9,464
+469
+24
+15
+2
+1,291
+1,130
+1,145
+1,315
+17
+1,489
+1,506
+End of the year
+24
+1,291
+1,315
+Beginning of the year
+Proved developed reserves
+undeveloped reserves at the end of the year
+8
+8
+6
+60
+Non-controlling interest in proved developed and
+24
+1,416
+1,440
+(5)
+Proved undeveloped reserves
+Beginning of the year
+125
+125
+Extensions and discoveries
+36
+36
+240,370
+17
+Improved recovery
+662
+662
+806
+806
+Revisions of previous estimates
+8,181
+(243)
+8,181
+8,449
+Beginning of the year
+(billion cubic feet)
+Proved developed and undeveloped reserves (gas)
+125
+125
+153
+153
+End of the year
+5
+102
+107
+8,449
+(248)
+(5)
+57
+Beginning of the year
+(million barrels)
+Proved developed and undeveloped reserves (oil)
+The Group
+countries
+55,850
+55,850
+(3,004)
+52,846
+55,850
+96,224
+92,280
+1,440
+4,610
+100,834
+96,224
+117,000
+117,000
+117,000
+117,000
+9,464
+8,881
+10
+12
+(5,207)
+87
+4,354
+102
+3,944
+664
+1,416
+1,252
+17
+1,642
+1,659
+End of the year
+(243)
+(248)
+Production
+101
+101
+108
+108
+Extensions and discoveries
+24
+126
+84
+84
+Improved recovery
+9
+200
+209
+(2)
+277
+275
+Revisions of previous estimates
+20
+1,232
+126
+1,125
+49,217
+681
+280,560
+438,204
+412,890
+210,574
+137,785
+703,466
+734,894
+54,859
+56,765
+11,433
+9,015
+91,878
+104,426
+38,298
+35,271
+2,954
+3,955
+199,422
+209,432
+----
+504,044
+525,462
+119,896
+121,071
+(a)
+269,684
+7,505
+9,769
+Total equity
+673
+867
+Lease liabilities
+6,682
+7,085
+Derivative financial liabilities
+4,299
+1,121
+Trade accounts payable and bills payable
+111,143
+91,365
+Contract liabilities
+384,148
+Other payables
+Net current liabilities
+Total assets less current liabilities
+Non-current liabilities
+Long-term debts
+Loans from Sinopec Group Company and fellow subsidiaries
+Lease liabilities
+Provisions
+Other long-term liabilities
+Total non-current liabilities
+Equity
+Share capital
+Reserves
+Total current liabilities
+Loans from Sinopec Group Company and fellow subsidiaries
+404,391
+525,462
+Balance at 1 January
+Profit for the year
+Distribution to owners (Note 14)
+Appropriation
+Special reserve
+Others
+Balance at 31 December
+The Company
+2022
+RMB million
+2021
+RMB million
+8,303
+9,382
+(1,265)
+(1,079)
+7,038
+8,303
+China
+Total
+Other
+Other
+countries
+China
+Total
+2021 (Revised) Note
+2022
+"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.
+Retained earnings
+Balance at 31 December
+Special reserve
+Cash flow hedges, net of deferred tax
+202
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2022
+45 STATEMENT OF FINANCIAL POSITION 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:
+Capital reserve
+Balance at 1 January
+Other equity movements under the equity method
+Others
+Balance at 31 December
+504,044
+Share premium
+Purchase of own shares
+Balance at 31 December
+Statutory surplus reserve
+Balance at 1 January
+Appropriation
+Balance at 31 December
+Discretionary surplus reserve
+Balance at 1 January
+Balance at 31 December
+Other reserves
+Balance at 1 January
+Share of other comprehensive income of associates and joint ventures, net of deferred tax
+Balance at 1 January
+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.
+24,387
+Short-term debts
+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.
+Measurement of expected credit losses
+The Group measures and recognises ECLs using readiness matrix, considering reasonable and supportable information about the relevant past
+events, current conditions and forecasts of future economic conditions. The Group regularly monitors and reviews the assumptions used for
+estimating ECLS.
+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 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.
+44 PARENT AND ULTIMATE HOLDING COMPANY
+The directors consider the parent and ultimate holding company of the Group as at 31 December 2022 is Sinopec Group Company, a state-owned
+enterprise established in the PRC. This entity does not produce financial statements available for public use.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+201
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2022
+45 STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY
+STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Amounts in million)
+Note
+31 December
+31 December
+2022
+2021
+RMB
+RMB
+Non-current assets
+Property, plant and equipment, net
+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, including environmental protection and energy structure transition variables, 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 units are discounted to their present value, which
+requires significant judgement relating to future selling prices of crude oil, natural gas, refined and chemical products, the production costs, the
+product mix, production volumes, production profiles, the oil and gas reserves 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.
+Impairment for long-lived assets
+43 ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+for the year ended 31 December 2022
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2022
+42 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 IFRS 9 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 for debt with substantially
+the same characteristic and maturities range from 2.66% to 4.35% (2021: 0.30% to 4.65%). 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
+2022 and 2021:
+Carrying amount
+Fair value
+31 December
+2022
+RMB million
+130,282
+125,866
+31 December
+2021
+RMB million
+88,593
+85,610
+296,480
+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 Group's existing capital structure and the terms of the borrowings.
+43 ACCOUNTING ESTIMATES AND JUDGEMENTS
+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.
+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 estimates of proved and proved developed reserves also change. 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.
+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.
+Financial Statements (International)
+200
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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 2022 and 2021.
+35,954
+284,618
+Right-of-use assets
+76,116
+Financial assets at fair value through profit or loss
+2
+Derivative financial assets
+3,892
+4,503
+Trade accounts receivable
+33,841
+21,146
+Financial assets at fair value through other comprehensive income
+703
+227
+Dividends receivable
+1,977
+971
+Inventories
+70,376
+63,661
+Prepaid expenses and other current assets.
+62,261
+73,906
+Total current assets
+227,630
+275,105
+Current liabilities
+31,350
+Time deposits with financial institutions
+34,575
+23,228
+81,501
+66,146
+97,656
+113,304
+Investment in subsidiaries
+Interest in associates
+Interest in joint ventures
+Financial assets at fair value through other comprehensive income
+Deferred tax assets
+Long-term prepayments and other assets
+290,191
+269,456
+Construction in progress
+75,449
+17,239
+17,609
+201
+201
+7,737
+47,586
+8,715
+38,848
+Total non-current assets
+Current assets
+914,040
+872,679
+Cash and cash equivalents
+73,782
+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.
+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 2022 and 2021 are shown in the following table.
+Table IV: Reserve quantities information
+557
+67,352
+67,909
+76,253
+76,253
+Total costs incurred
+557
+45,590
+46,147
+52,984
+52,984
+Development
+21,762
+21,762
+23,269
+23,269
+Exploration
+The Group
+Other
+countries
+China
+Total
+countries
+China
+Total
+Other
+Equity method investments
+Share of costs of exploration and development of
+associates and joint ventures
+1,796
+1,796
+2021
+RMB million
+2022
+RMB million
+Other
+countries
+China
+Total
+Sales
+The Group
+Revenues
+Table III: Results of operations related to oil and gas producing activities
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+206
+on Oil a
+Financial Statements Supplemental Information
+and Gas Producing Activities (Unaudited)
+RMB million
+on Oil and Gas Producing Activities (Unaudited)
+Financial Statements
+205
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+999
+67,352
+68,351
+1,796
+76,253
+78,049
+Total of the Group's and its equity method investments'
+exploration and development costs
+442
+442
+Supplemental Information
+Total
+2021
+Table II: Costs incurred in oil and gas exploration and development
+(10,201)
+(13,015)
+(13,015)
+20,350
+20,350
+25,872
+25,872
+(4,513)
+(4,513)
+(5,831)
+(5,831)
+(6,328)
+(6,328)
+(7,393)
+(7,393)
+(18,026)
+(18,026)
+(18,011)
+(18,011)
+49,217
+(38,918)
+57,107
+57,107
+370
+370
+(10,201)
+12,857
+12,857
+10,149
+5,433
+235,625
+241,058
+6,127
+262,626
+268,753
+net capitalised costs
+Total of the Group's and its equity method investments'
+3,521
+3,521
+4,723
+4,723
+2022
+RMB million
+Share of net capitalised costs of associates and
+joint ventures
+1,912
+on Oil and Gas Producing Activities (Unaudited)
+Financial Statements Supplemental Information
+209
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+11,274
+240,370
+251,644
+14,927
+393,891
+408,818
+10,149
+Equity method investments
+China
+Other
+countries
+96,616
+Share of profit for producing activities of associates
+and joint ventures
+Income tax expense
+Profit before taxation
+Taxes other than income tax
+impairment losses
+Depreciation, depletion, amortisation and
+Exploration expenses
+(2,246)
+8,812
+8,812
+(2,246)
+(1,864)
+8,812
+11,170
+8,812
+11,170
+(1,864)
+Production costs excluding taxes
+יד
+11,170
+11,170
+Sales
+Revenues
+378
+23,616
+(847)
+(7,288)
+1,171
+(288)
+883
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+The results of operations for producing activities for the years ended 31 December 2022 and 2021 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.
+1,665
+23,616
+25,281
+2,047
+1,287
+1,287
+883
+(355)
+(355)
+23,994
+(288)
+1,642
+1,171
+(4,391)
+(4,391)
+(7,288)
+(533)
+(533)
+(847)
+59,008
+61,055
+results of operations for producing activities
+Total of the Group's and its equity method investments'
+1,642
+1,164
+59,008
+60,172
+(10,591)
+(10,591)
+Exploration expenses
+(975)
+(48,674)
+(49,649)
+(1,013)
+(49,372)
+(50,385)
+Production costs excluding taxes
+2,166
+157,437
+(12,382)
+159,603
+211,428
+214,736
+2,166
+84,484
+86,650
+3,308
+114,812
+118,120
+Transfers
+72,953
+72,953
+96,616
+3,308
+681
+(12,382)
+impairment losses
+Results of operation from producing activities
+Equity method investments
+(353)
+(7,872)
+(8,225)
+(682)
+(19,669)
+(20,351)
+Income tax expense
+731
+31,488
+32,219
+1,846
+Depreciation, depletion, amortisation and
+78,677
+Profit before taxation
+(11,249)
+(11,249)
+(26,466)
+(26,466)
+Taxes other than income tax
+(460)
+(53,644)
+(54,104)
+(449)
+(46,322)
+(46,771)
+80,523
+237,537
+212
+Financial Statements Supplemental Information
+on Oil and Gas Producing Activities (Unaudited)
+Auditors
+Address
+KPMG Huazhen LLP
+Certified Public Accountants in
+China
+: 8th Floor
+KPMG Tower
+Oriental Plaza
+1 East Chang An Avenue,
+Beijing, PRC
+H Shares:
+Domestic
+Hong Kong Registrars Limited
+183 Queen's Road East
+Postcode
+: 100738
+Hong Kong
+Overseas
+Auditors
+DEPOSITARY FOR ADRS
+Citibank, N.A.
+388 Greenwich St., 14th Floor
+New York NY 10013
+R1712·1716, 17th Floor, Hopewell Centre
+United States of America
+NAMES AND ADDRESSES OF AUDITORS OF
+SINOPEC CORP.
+Stock short name: SINOPEC CORP
+1 Recreation Plaza
+Central, Hong Kong
+U.S.A.:
+Skadden, Arps, Slate, Meagher & Flom LLP
+30/F, China World Office 2
+No. 1, Jian Guo Men Wai Avenue,
+Beijing, PRC
+REGISTRARS
+A Shares:
+China Securities Registration and Clearing
+Company Limited Shanghai Branch Company
+Stock code : 00386
+188 Yanggao South Road
+PLACES OF LISTING OF SHARES, STOCK
+NAMES AND STOCK CODES
+A Shares:
+Shanghai Stock Exchange
+Stock name
+: SINOPEC CORP
+Stock code
+: 600028
+H Shares:
+Hong Kong Stock Exchange
+Shanghai Pilot Free Trade Zone, PRC
+4th Floor, Jardine House
+The US:
+AVAILABLE AT
+211
+Corporate Information
+Documents for Inspection
+DOCUMENTS FOR INSPECTION
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+The Company's 2022 annual report is disclosed
+on the website of the Shanghai Stock Exchange
+(http://www.sse.com.cn) and the Company's
+designated information disclosure media
+"China Securities News", "Shanghai Securities
+News" and "Securities Times". The following
+documents will be available for inspection during
+normal business hours after 24 March 2023 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:
+a) The original copies of the 2022 annual report
+signed by Mr. Ma Yongsheng, the Chairman;
+b) The original copies of the audited financial
+statements and consolidated financial
+statements as of 31 December 2022
+prepared under IFRS and CASS, signed by
+Mr. Ma Yongsheng, the Chairman, Mr. Yu
+Baocai, the President, Ms. Shou Donghua,
+the Chief Financial Officer and head of the
+financial department of Sinopec Corp.;
+c) The original auditors' reports signed by the
+auditors; and
+d) Copies of the documents that Sinopec Corp.
+has published during the reporting period.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+By Order of the Board.
+Chairman
+Beijing, PRC, 24 March 2023
+If there is any inconsistency between the Chinese
+and English versions of this annual report, the
+Chinese version shall prevail.
+中国石油化工股份有限公司
+SINOPEC CORP.
+中國北京市朝陽區朝陽門北大街 22 號
+22 Chaoyangmen North Street, Chaoyang District,
+Beijing, China
+www.sinopec.com
+Printed on environmentally friendly paper
+Ma Yongsheng
+COPIES OF THIS ANNUAL REPORT ARE
+USA
+Beijing PRC
+The PRC:
+China Petroleum & Chemical Corporation
+Board Secretariat
+No.22 Chaoyangmen North Street,
+Chaoyang District
+Beijing, PRC
+The US:
+Citibank, N.A.
+388 Greenwich St., 14th Floor
+New York NY 10013
+Address
+Postcode: 100020
+: KPMG
+Hong Kong
+CHANGES IN THE PLACES FOR INFORMATION
+DISCLOSURE AND THE PROVISION OF
+REPORTS
+No change during the reporting period
+LEGAL ADVISORS
+Domestic China:
+Haiwen & Partners
+20th Floor, Fortune Financial Centre
+No.5, Dong San Huan Central Road
+Chaoyang District
+Public Interest Entity Auditor
+registered in accordance with
+the Accounting and Financial
+Reporting Council Ordinance
+8th Floor, Prince's Building
+10 Chater Road Central,
+Hong Kong
+Zhong Lun Law Firm
+Wanchai
+1 Harbour Road
+(72,118)
+Net changes for the year
+154,466
+68,446
+Equity method investments
+Sales and transfers of oil and gas produced, net of production costs
+(2,018)
+(2,174)
+Net changes in prices and production costs
+3,301
+(51,700)
+4,967
+(694)
+(752)
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+562
+503
+505
+1,659
+Previously estimated development costs incurred during the year
+311
+287
+Net changes in estimated future development cost
+Accretion of discount
+Net changes in income taxes
+32,342
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Hong Kong, China:
+Table VI: Changes in the standardised measure of discounted cash flows
+2022
+RMB million
+2021 (Revised) Note
+RMB million
+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
+(137,885)
+16,448
+(98,705)
+135,697
+(22,685)
+(7,413)
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+58,610
+46,425
+78,310
+Previously estimated development costs incurred during the year
+Accretion of discount
+11,885
+5,475
+185,589
+Net changes in income taxes
+42,637
+1,388
+Mr. Huang Wensheng
+REPRESENTATIVE ON SECURITIES MATTERS
+Mr. Zhang Zheng
+REGISTERED ADDRESS AND PLACE OF
+BUSINESS
+No.22 Chaoyangmen North Street,
+Chaoyang District
+Beijing, PRC
+Postcode
+Tel.
+Fax
+Website
+SECRETARY TO THE BOARD
+E-mail addresses
+: 86-10-59960386
+http://www.sinopec.com
+: ir@sinopec.com
+REGISTERED ADDRESS CHANGE
+INFORMATION
+No change during the reporting period
+PLACE OF BUSINESS IN HONG KONG
+Net changes for the year
+20th Floor, Office Tower
+Convention Plaza
+: 86-10-59960028
+Mr. Huang Wensheng
+: 100728
+AUTHORISED REPRESENTATIVES
+(1,292)
+1,022
+Mr. Yu Baocai
+2,708
+4,220
+Total of the Group's and its equity method investments' results of net changes for the year
+157,174
+(647)
+Note: As revised for the year ended 31 December 2021 due to the changes shown in Table IV.
+210
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+CORPORATE INFORMATION
+72,666
+STATUTORY NAME
+中國石油化工股份有限公司
+ENGLISH NAME
+China Petroleum & Chemical Corporation
+CHINESE ABBREVIATION
+中國石化
+ENGLISH ABBREVIATION
+Mr. Ma Yongsheng
+Sinopec Corp.
+LEGAL REPRESENTATIVE
+7,737
+26,548
+(9.7)
+7,845
+6,537
+81,932
+Diesel
+5,890
+78,566
+4.3
+31.4
+20.0
+23,968
+7,730
+20.9
+Gasoline
+Change (%)
+Retail
+80,957
+90,873
+(10.9)
+Direct sales and distribution
+9,318
+Retail
+56,989
+64,325
+(11.4)
+9,938
+8,223
+20.5
+34,481
+1.2
+2.5
+In 2022, facing the challenge of weak
+domestic demand in the refined oil
+market, the segment brought integrated
+and network advantages into full play,
+coordinated internal and external
+resources, enhanced the effort in
+expanding market, and realised an
+operating profit of RMB24.5 billion,
+representing an increase of 15.7% year
+on year.
+2021
+In 2022, the operating revenues of non-
+fuel business was RMB38.1 billion, up
+by RMB2.7 billion year-on-year and the
+profit of non-fuel business was RMB4.3
+billion, up by RMBO.2 billion.
+In 2022, the segment's marketing
+expense (defined as the operating
+expenses less the purchase costs, taxes
+other than income tax, depreciation and
+amortization, divided by sales volume)
+was RMB208.6 per tonne, up by 5.5%
+year on year. This was mainly due to the
+increase of unit fixed cost resulting from
+the weak demand in domestic refined
+oil products and decreased operating
+volume.
+In 2022, the operating expenses of the
+segment were RMB1,689.3 billion, up
+by RMB299.0 billion and 21.5% year-on-
+year. This was mainly due to the rising
+oil products procurement costs resulting
+from the increase of crude price.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+20
+40.1
+3,437
+4,817
+25,847
+26,162
+Fuel oil
+73.5
+33,644
+3,772
+(17.9)
+21,296
+17,474
+Kerosene
+37.2
+5,406
+7,419
+5.6
+44,923
+47,451
+Direct sales and distribution
+25.1
+6,537
+8,176
+6,546
+2022
+Average realised price (RMB/tonne)
+2021
+61,169
+24.4
+7,208
+8,967
+(9.8)
+Change (%)
+2021
+2022
+2021 Change (%)
+63,827
+57,562
+2022
+Year ended 31 December
+Year ended 31 December
+Sales Volume (thousand tonnes)
+58,807
+In 2022, the segment's operating
+expenses was RMB1,562.9 billion,
+representing an increase of 18.4% over
+2021. This was mainly due to the rising
+procurement cost resulting from the
+international crude oil prices increase
+year on year.
+The sales revenue of chemical feedstock
+was RMB208.0 billion, representing an
+increase of 15.3% over 2021.
+The sales revenue of kerosene was
+RMB95.6 billion, representing an increase
+of 47.9% over 2021.
+The sales revenue of diesel was
+RMB451.2 billion, representing an
+increase of 37.9% over 2021.
+In 2022, sales revenue of gasoline was
+RMB516.2 billion, representing an
+increase of 12.2% over 2021.
+Other refined petroleum products
+Chemical feedstock
+Kerosene
+Diesel
+Gasoline
+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 2022 and 2021.
+In 2022, the operating revenues of this segment was RMB1,575.1 billion, representing an increase of 13.7% over 2021. This was mainly
+attributed to the increases in prices of gasoline, diesel, kerosene, naphtha, and refining by-products.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+Management's Discussion
+and Analysis
+(4) Chemicals segment
+The sales revenue of refined petroleum
+products other than gasoline, diesel,
+kerosene and chemical feedstock was
+RMB300.2 billion, representing a
+decrease of 13.8% over 2021.
+Change (%)
+4.0
+5,563
+2022
+Average realised price (RMB/tonne)
+Year ended 31 December
+Year ended 31 December
+Sales volume (thousand tonnes)
+The following table sets forth the sales volumes, average realised prices and respective percentage changes of the segment's four major refined
+oil products in 2022 and 2021, including detailed information about retail, direct sales and distribution of gasoline and diesel:
+In 2022, the operating revenues of
+this segment was RMB1, 713.9 billion,
+up by 21.4% year-on-year. This was
+mainly attributed to the increase in
+the sales prices of refined oil products.
+The sales revenues of gasoline totalled
+RMB754.4 billion, up by 7.4% year-on-
+year; the sales revenues of diesel were
+RMB633.9 billion, up by 37.0% year-on-
+year; the sales revenues of kerosene were
+RMB114.4 billion, up by 42.4% year-on-
+year.
+(3) Marketing and Distribution Segment
+The business activities of the marketing
+and distribution segment include
+purchasing refined oil products from the
+refining segment and the third parties,
+conducting direct sales and wholesale
+to domestic customers and retailing,
+distributing oil products through the
+segment's retail and distribution network
+as well as providing related services.
+In 2022, the operating profit of the
+segment totalled RMB12.2 billion,
+representing a decrease of RMB53.1
+billion and 81.3% compared with that
+of 2021. This is mainly due to the sharp
+decrease in refining margin resulting
+from rising crude procurement cost,
+weak domestic oil products demand
+and decreased domestic gross margin
+of gasoline and diesel under high crude
+price circumstance.
+In 2022, the refining unit 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 RMB223 per
+tonne, representing an increase of 4.6%
+over 2021, which was mainly attributed
+to the increase of unit fixed cost resulting
+from significant increase in the prices
+of fuels, as well as the decrease of
+processing volume.
+In 2022, refining margin was RMB344
+per tonne, representing a decrease of
+RMB188 per tonne compared with that of
+the same period of 2021. This was mainly
+attributed to the decrease in domestic
+gasoline and diesel processing margin
+under high crude oil prices circumstance,
+and the significant increase in spread of
+imported crude and overseas freight and
+insurance cost year-on-year.
+In 2022, the average processing cost
+for crude oil was RMB4,962 per tonne,
+representing an increase of 49.0% over
+2021. Total crude oil and other feedstock
+processed was 247.57 million tonnes
+(excluding volume processed for third
+parties), representing a decrease of
+6.2% over 2021. The total cost of crude
+oil processed was RMB1,228.3 billion,
+representing an increase of 39.8% over
+2021.
+(10.0)
+5,061
+4,553
+7,376
+(4.1)
+65,945
+25.8
+3,989
+5,016
+(8.3)
+45,234
+41,470
+73.2
+3,734
+6,468
+(14.6)
+17,313
+14,782
+32.6
+68,783
+The business activities of the chemicals
+segment include purchasing chemical
+feedstock from the refining segment
+1,948,640
+In 2022, the operating revenues of this
+segment was RMB540.2 billion, up by
+6.9% year-on-year. This was mainly due
+to the increase in prices of basic organic
+chemicals, synthetic fibers, synthetic
+rubber year on year.
+1,713,874
+Marketing and Distribution
+(4.3)
+24.1
+13.7
+1.7
+1,317,846
+11.5
+4.1
+27.8
+basis (%)
+year-on-year
+1,618,973
+Increase/
+(decrease) of
+gross profit
+margin on a
+Increase of
+operation cost
+Increase of
+operation
+income on a
+year-on-year
+basis (%)
+Gross profit
+margin* (%)
+24.4
+214,834
+319,411
+1,575,139
+Refining
+Exploration and Production
+Operation
+cost
+RMB million
+RMB million
+Segments
+Operation
+income
+(3) The results of the principal operations by segments
+on a year-
+on-year
+basis (%)
+At the end of 2022, total shareholders' equity of the Company was RMB937.2 billion, representing an increase of RMB21.1 billion compared
+Iwith that of the end of 2021.
+5.4
+22.8
+and the third parties and producing,
+marketing and distributing petrochemical
+and inorganic chemical products.
+21.1
+7.1
+N/A
+N/A
+N/A
+N/A
+(2,619,066)
+2,819,363
+(2,620,886)
+3,318,168
+(0.4)
+38.5
+38.0
+21.4
+1.8
+1,790,478
+(5.7)
+13.3
+6.9
+1.2
+529,241
+540,152
+Total
+Elimination of inter-segment sales
+Corporate and Others
+Chemicals
+(1.0)
+1,757,535
+(2.6)
+At the end of 2022, the Company's non-current liabilities was RMB344.1 billion, representing an increase of RMB12.2 billion compared with
+that of the end of 2021. This was mainly due to an increase of RMB45.6 billion in the long-term loans to ensure the fund demand of investment
+projects, and bills payable decreased by RMB29.7 billion.
+21,112
+(1,820)
+9,521
+15,480
+11,361
+(14,256)
+23,102
+25,197
+65,360
+11,611
+613
+48,538
+2,740,884
+(4,421)
+3,318,168
+(2,620,886)
+1,790,478
+505,503
+1,411,544
+249,998
+1,385,564
+2021
+RMB million
+540,152
+1,713,874
+319,411
+1,575,139
+2022
+RMB million
+Elimination
+Corporate and Others
+1,297,701
+(2,109,426)
+At the end of 2022, the Company's total assets were RMB1,948.6 billion, representing an increase of RMB59.4 billion compared with that of
+the end of 2021. This was mainly due to the increased investment in transformation and upgrading, resulting in the construction in progress
+increased by RMB40.1 billion, fixed asset increased by RMB31.8 billion, and long-term equity investment increased by RMB24.8 billion. Inventory
+increased by RMB36.8 billion as a result of the crude and refined oil prices increase, and cash at bank and on hand decreased by RMB76.9
+billion.
+11,664
+96,414
+916,041
+12,168
+331,934
+59,385
+1,889,255
+RMB million
+Change
+December 2021
+344,102
+937,153
+RMB million
+December 2022
+Change analysis:
+6,878
+Non-current liabilities
+Shareholder's equity
+As of 31
+As of 31
+(2) Financial data prepared under CASS
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+24
+Net profit: In 2022, the net profit attributable to the equity shareholders of the Company was RMB66.3 billion, representing a decrease of
+RMB4.9 billion or 6.9% compared with 2021.
+Operating profit: In 2022, the operating profit of the Company was RMB96.4 billion, representing a decrease of RMB16.0 billion as compared
+with that of 2021.
+Net profit attributable to equity shareholders of the Company
+Financial expenses, investment income and losses/gains from changes in fair value
+Consolidated operating profit
+71,208
+66,302
+112,414
+Total assets
+Gross profit margin = (operation income - operation cost, tax and surcharges)/operation income.
+5 THE CAUSE AND IMPACT OF THE CHANGE IN THE COMPANY'S ACCOUNTING POLICY, ACCOUNTING ESTIMATES AND ACCOUNTING METHODS
+For details, please refer to Note 3(26) to the financial statements prepared in accordance with CASS and Note 1 to the financial statement prepared
+in accordance with IFRS.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+a. The Board of Directors established
+the Nomination Committee, consisting
+of the Independent Non-executive
+Director, Ms. Shi Dan, who serves
+as the chairman, and the Chairman
+of the Board, Mr. Ma Yongsheng,
+and the Independent Non-executive
+Director, Mr. Ng, Kar Ling Johnny,
+who serve as members. The principal
+responsibilities of the Nomination
+Committee are to provide suggestions
+to the Board on Board's size and
+composition, the selecting standards
+and procedures, and candidates for
+Directors and Senior Management.
+When recommending candidates for
+Directors, the Nomination Committee
+mainly considers the skills, knowledge,
+experience and qualifications of the
+candidates, and also evaluates the
+time and energy they can devote as
+well as the Board Diversity Policy.
+Procedures to Propose a Person for
+Election as a Director of Sinopec
+Corp. and Terms of Reference of the
+Nomination Committee are published
+on Sinopec Corp.'s website at
+http://www.sinopec.com.
+B.3Nomination Committee
+c. Each of the Directors was able to
+devote sufficient time and efforts to
+handling the affairs of Sinopec Corp.
+b. All Directors of Sinopec Corp. must
+be elected at the general meeting
+of shareholders. The Board has no
+power to appoint temporary Directors.
+B.2Appointment, re-election and removal
+a. The term of office for each Director
+is three years, and the consecutive
+terms of office of any Independent
+Non-executive Director cannot exceed
+six years. During the reporting
+period, there was no new director
+nominated by the Board of Directors
+based on the actual situation of the
+Company, nor re-election or removal
+of Directors. For details about the
+tenure of each Director, please refer
+to the item 11 under this section.
+Sinopec Corp. has always devoted
+to establishing a workplace with
+diversity and equal opportunities,
+recruited female employees actively
+to increase the diversity of the team,
+and provided equal employment
+opportunities and environment for all
+employees, so as to offer them career
+development spaces to give full play
+to their personal characteristics and
+values. In 2022, female employees in
+the Company account for 31.0% of
+the total staff number. The Company
+adhered to the doctrine of gender
+equality, ensuring female employees
+have equal labor and social security
+rights as the males. For details,
+please refer to the Report of
+Sustainable Development of Sinopec
+Corp. for the year 2022.
+of diversity. Sinopec Corp. focuses
+on and annually evaluates the
+implementation of the Board Diversity
+Policy. Currently, the Board has
+achieved diversity in terms of gender,
+culture, educational backgrounds,
+professional specialties, etc. Female
+Director accounts for 10% of the
+Board members. The Directors come
+from different industries domestically
+and abroad with rich working
+experience. Professional backgrounds
+of Directors include petroleum and
+petrochemical corporate management,
+as well as economics, accounting,
+finance, and industry and energy
+economy, which are conductive to
+strategic planning and scientific
+decision-making. In terms of the
+candidates of Directors, the Board
+and the Nomination Committee will,
+as and when necessary, look for
+potential female director candidates
+through self-regulatory organizations,
+professional recommendation and
+other channels to achieve gender
+diversity of the Board.
+d. The Board established the Board
+Diversity Policy which stipulates that
+the members of the Board shall be
+nominated and appointed based
+on the skills and experience for the
+overall optimum operation of the
+Board, while taking into account
+the targets and requirements of the
+board diversity. When deciding the
+composition of the Board, Sinopec
+Corp. shall consider factors in relation
+to the diversity of the Board, including
+but not limited to professional
+experience, skills, knowledge,
+term of office, regions, culture and
+educational backgrounds, gender, and
+age. The provisions of the Articles
+of Association concerning the term
+of office of directors help to ensure
+that the Board has a proper balance
+between continuous experience and
+new thinking, and enhance the level
+c. Sinopec Corp. has received from each
+of the Independent Non-executive
+Directors a letter of confirmation for
+2023 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.
+The composition and operational
+mechanism of the Board ensure that
+independent and objective views and
+input are available to the Board of
+Sinopec Corp. For instance, matters
+such as connected transactions, profit
+distribution, appointment of director,
+etc., are required to obtain prior
+approval or independent opinions
+from Independent Non-executive
+Directors. The Board reviews and
+evaluates the effectiveness of such
+operational mechanism on an annual
+basis.
+b. The Board of Directors currently
+consists of ten members, among
+whom are four Executive Directors
+and six Non-executive Directors.
+Among the Non-executive Directors,
+there are four Independent Non-
+executive Directors, accounting for
+two-fifths of the total number of
+Directors. For details, please refer to
+the section "Introduction of Directors,
+Supervisors, and Other Senior
+Management" of this annual report.
+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.1Board composition, succession and
+evaluation
+b. The members of the Nomination
+Committee can engage professionals
+when performing their duties.
+Reasonable costs arising from
+such consultations are borne by
+Sinopec Corp. In the meantime, the
+Nomination Committee has also
+appointed consultant members and
+can require such member to provide
+advice. The working expenses of the
+Nomination Committee are included
+in the budget of Sinopec Corp.
+B BOARD COMPOSITION AND NOMINATION
+Corporate Governance
+28
+Corporate Governance
+27
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+V
+ป
+1
+V
+1
+Independent Non-executive Director
+Independent Non-executive Director
+CORPORATE GOVERNANCE (CONTINUED)
+1
+c. During the reporting period, the
+Nomination Committee held one
+meeting (please refer to "The Board
+Committees Meetings and Directors'
+Attendance" under the section "Report
+of the Board of Directors" in this
+annual report).
+C.1 Responsibility of Directors
+29
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+d. 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 Directors can require
+the Management, or require relevant
+departments via the Management
+c. Each Director of the Board can
+submit proposals to be included in
+the agenda of Board meetings, and
+each Director is entitled to request
+other related information. The agenda
+and other documents for reference
+for meetings of the Board and Board
+committees are distributed prior to
+the meetings to allow each Director
+sufficient time to review the materials
+so that Directors can make informed
+decisions.
+b. The Board of the Company held its
+meetings at least once a quarter.
+The Board will usually communicate
+the time and proposals of the Board
+meeting 14 days before convening
+the meeting. The relevant documents
+and materials for Board meetings
+and for the Board Committees are
+usually delivered to each Director
+10 days in advance. Before the
+meetings were held, assigned persons
+were responsible for answering the
+possible questions raised by the
+Directors, ensuring the Directors
+could participate in the proceedings
+of the Board meetings effectively
+and positively, and fully understand
+the proposals to make decisions. In
+2022, Sinopec Corp. held nine Board
+meetings. For details about each
+Director's attendance at the Board
+meetings and the general meetings,
+please refer to the section "Report of
+the Board of Directors" in this annual
+report.
+a. The Articles of Association and the
+Rules of Procedure of Board Meetings
+of Sinopec Corp. clearly prescribe the
+proceedings of Board meetings, which
+are published on the website of Sinopec
+Corp. at http://www.sinopec.com.
+C.5 Board proceedings and supply of and
+access to information
+of the Remuneration and Appraisal
+Committee, Terms of Reference of the
+Sustainable Development Committee
+and Terms of Reference of the
+Nomination Committee are published
+on the website of Sinopec Corp. at
+http://www.sinopec.com.
+b. Each Board Committee shall report its
+decisions and recommendations to the
+Board and has formulated its terms of
+references. Terms of Reference of the
+Audit Committee, Terms of Reference
+a. In addition to the Audit Committee,
+the Remuneration and Appraisal
+Committee and Nomination
+Committee, the Board had
+established the Strategy Committee
+and the Sustainable Development
+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
+the Chairman of the Board, Mr. Ma
+Yongsheng, who serves as Chairman,
+Executive Directors, Mr. Yu Baocai,
+Mr. Ling Yiqun, Mr. Li Yonglin,
+Mr. Liu Hongbin, and Independent
+Non-executive Directors, Mr. Cai
+Hongbin, Ms. Shi Dan, and Mr. Bi
+Mingjian, who serve as members. The
+Sustainable Development Committee
+is responsible for preparing policies,
+governance, strategies and plans
+for sustainable development of the
+Company, which consists of four
+Directors, including the Chairman
+of the Board, Mr. Ma Yongsheng,
+who serves as Chairman, the Non-
+executive Director, Mr. Zhao Dong,
+the Executive Director, Mr. Li Yonglin,
+and the Independent Non-executive
+Director, Mr. Cai Hongbin, who serve
+as members.
+C.4Board Committees
+a. The Board and the Management
+have clear duties and responsibilities
+under written rules. The Articles
+of Association and the Rules of
+Procedure of the General Meetings
+of Shareholders and the Rules of
+Procedure of 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.
+C DIRECTORS' RESPONSIBILITIES,
+DELEGATION AND BOARD PROCEEDINGS
+C.3 Management functions
+executive Directors. The Chairman
+independently held two meetings
+with the Independent Non-executive
+Directors in respect of development
+strategy, medium-term and long-
+term development plans, corporate
+governance, and operational
+management, etc.
+c. The Chairman of the Board places
+great emphasis on communication
+with the Independent Non-
+b. The Chairman of the Board ensure
+that all the Directors could receive
+full, clear and complete information
+in time, and be informed of proposals.
+of the Board meetings.
+a. Mr. Ma Yongsheng, elected by all
+Directors, serves as Chairman of the
+Board. Mr. Yu Baocai, nominated
+and appointed by the Board, serves
+as President of Sinopec Corp.
+The respective 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.
+C.2 Chairman and President
+d. All the Independent Non-executive
+Directors and other Non-executive
+Directors of the Sinopec Corp.
+regularly attended the Board
+meetings and the meetings held by
+the Board Committees they served,
+paid attention to production and
+operational status of the Company,
+and offered constructive suggestions
+on the Company's reforms and
+development based on their skills and
+professional knowledge. For details
+about each Director's attendance at
+the Board meetings and the general
+meetings, please refer to the section
+"Report of the Board of Directors" in
+this annual report.
+c. Each of the Directors confirmed that
+he/she has complied with the Model
+Code for Securities Transactions by
+Directors of Listed Issuers (Model
+Code) during the reporting period.
+Meanwhile, Sinopec Corp. formulated
+the Rules Governing Shares Held
+by Company Directors, Supervisors
+and Senior Managers and Changes
+in Shares and the Rules on Insider
+Registration and Management, which
+is no less exacting than the Model
+Code, to further regulate the dealings
+of Sinopec Corp.'s securities by
+relevant personnel.
+Executive Directors. In addition, the
+Independent Non-executive Directors
+are entitled to certain specific powers.
+The Articles of Association and the
+Rules of Procedure of Board Meetings
+clearly prescribe the duties and
+powers of Directors, and Non-executive
+Directors including Independent Non-
+executive Directors, which are published
+on the Sinopec Corp.'s website at
+http://www.sinopec.com.
+Corporate Governance
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+b. All Non-executive Directors have
+the same duties and powers as the
+a. 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. Sinopec Corp. has
+purchased liability insurance for all
+Directors to minimize the potential
+risks that might arise from the
+adequate performance of their duties.
+d. The Chairman of the Board
+encourages open and active
+discussions. The Directors fully and
+deeply participated in the discussions
+of significant decisions in the Board
+meetings.
+Independent Non-executive Director
+ฟ
+Independent Non-executive Director
+SENIOR MANAGEMENT APPRAISAL AND
+INCENTIVE SCHEMES
+MANAGEMENT CONTROL OF SUBSIDIARIES
+The Company implements standardized
+control over different types of subsidiaries
+in accordance with laws and regulations,
+the Articles of Association and the internal
+control system. During the reporting
+period, the Company did not purchase any
+subsidiaries that met material criteria.
+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 date of this
+annual report.
+8
+7
+6 IMPROVEMENT AND IMPLEMENTATION OF
+THE INTERNAL CONTROL SYSTEM
+5 COMPETITION BETWEEN SINOPEC CORP.
+AND ITS CONTROLLING SHAREHOLDER
+Please refer to "Performance of the
+Undertaking by China Petrochemical
+Corporation" under the section "Significant
+Events" in this annual report for details.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+26
+26
+the interests of the Company or the other
+shareholders.
+The Company is independent from its
+controlling shareholder in terms of, among
+other matters, business, assets and finances.
+The controlling shareholder of the Company
+exercised shareholder's rights through the
+general meeting according to applicable
+laws and didn't overstep the authority of
+the general meeting or directly or indirectly
+interfere with the Company's operating
+decisions and operating activities. The
+Company has a well-integrated independent
+business and independent operating
+capabilities. During the reporting period,
+the Company did not identify the controlling
+shareholder taking advantage of its special
+position to misappropriate and damage
+Sinopec Corp. has established and is
+continuously improving the fairness and
+transparency of its performance appraisal
+standards, incentive and restrictive
+mechanisms for Directors, Supervisors and
+other Senior Management. Sinopec Corp.
+has implemented incentive policies including
+the Measures of Sinopec Corp. for the
+Management of Performance Evaluations.
+4 COMPANY'S INDEPENDENCE FROM
+CONTROLLING SHAREHOLDER
+As of 31 December 2022, Mr. Ling Yiqun,
+Director, Senior Vice President, held 13,000
+A shares of Sinopec Corp.
+3 EQUITY INTERESTS HELD BY DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+During the reporting period, Sinopec Corp.
+convened 2021 Annual General Meeting,
+First A Shareholders Class Meeting for 2022,
+and First H Shareholders Class Meeting
+for 2022 on 18 May 2022, in accordance
+with the required procedures of noticing,
+convening and holding the general meetings
+pursuant to the relevant laws and regulations
+and the Articles of Association. For details
+of the meetings, please refer to the poll
+results announcements published on 19 May
+2022 on China Securities Journal, Shanghai
+Securities News, Securities Times and the
+website of Shanghai Stock Exchange, as well
+as those published on 18 May 2022 on the
+website of Hong Kong Stock Exchange.
+2 GENERAL MEETINGS
+During the reporting period, there was no
+material inconsistency between Sinopec
+Corp.'s corporate governance and the
+requirements of the PRC Company Law
+and relevant regulations of the CSRC. The
+Board of Supervisors of Sinopec Corp.
+had no objection to any of the supervised
+matters. None of Sinopec Corp., the Board,
+the Directors, the Supervisors, the Senior
+Management, the controlling shareholders
+or de facto controllers of Sinopec Corp.
+were under the investigation by the CSRC
+or received any regulatory sanction or was
+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,
+Hong Kong Stock Exchange, New York Stock
+Exchange or London Stock Exchange.
+During the reporting period, the Company
+complied with the Articles of Association
+as well as domestic and overseas laws
+and regulations, adhered to the standard
+operation, continuously improved the level.
+of corporate governance. The Board of
+Directors strengthened strategic planning,
+scientifically formulated development
+strategy and approved the medium-term
+and long-term development planning of the
+Company. The Independent Non-executive
+Directors conscientiously fulfilled their
+duties, actively attended the board meetings
+and meetings of special committees of
+the Board, reviewed proposals with due
+care, conducted research on scientific and
+technological innovation, and offered advice
+and suggestions on Company's reforms and
+development. The Company followed the
+latest regulatory requirements, and revised
+governance rules and regulations of the
+Company, such as Rules on Information
+Disclosure Management, Terms of Reference
+of the Independent Non-Executive Directors,
+Terms of Reference of the Secretary to the
+Board, and Rules on Insider Registration
+and Management etc., to strengthen the
+corporate governance basis. It enhanced
+the construction of internal control system
+to promote the effectiveness of the
+implementation of internal control system
+continuously. It also improved the Company's
+transparency by focusing on high-quality
+information disclosure and investor relations
+management, and paying more attention
+to the communication and disclosure on
+ESG issues. As a result, the Company
+continuously obtained A-level rating of
+Shanghai Stock Exchange in the assessment
+of information disclosure. The Company
+bought back shares for the first time since
+listing synchronously in both domestic and
+overseas markets to maintain the Company's
+value. It boosted the staff morale and
+enhanced the discipline inspection and
+supervision through continuously improving
+the quality of Party building, which
+contributed to the effective implementation
+of the Board resolutions and the high-quality
+development of the Company.
+1 IMPROVEMENTS IN CORPORATE
+GOVERNANCE DURING THE REPORTING
+PERIOD
+CORPORATE GOVERNANCE
+Corporate Governance
+and Analysis
+Management's Discussion
+25
+Save as disclosed in this report, during the
+reporting period, none of the Directors,
+Supervisors or 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 should notified Sinopec
+Corp., or the Hong Kong Stock Exchange
+pursuant to the Model Code for Securities
+Transactions by Directors of Listed Company
+under the Hong Kong Listing Rules.
+9 CORPORATE GOVERNANCE REPORT (IN
+ACCORDANCE WITH HONG KONG LISTING
+RULES)
+(1) Compliance with the Corporate
+Governance Code
+During the reporting period, Sinopec
+Corp. complied with all code provisions
+V
+Executive Director, Senior Vice President
+Executive Director, Senior Vice President
+Executive Director, Senior Vice President
+ฟ
+Research
+Reading materials
+Accounting/finance/operational management
+Laws and regulations update
+Reading materials Training and lectures
+Positions
+Chairman, Non-executive Director
+Non-executive Director
+Executive Director, President
+Bi Mingjian
+Ng, Kar Ling Johnny
+Shi Dan
+Cai Hongbin
+Liu Hongbin
+Li Yonglin
+Ling Yiqun
+Yu Baocai
+Ma Yongsheng
+Zhao Dong
+Name
+b. The Board arranged training sessions
+for Directors, Supervisors and Senior
+Management, and made relevant
+records. During the reporting period,
+the Directors, Supervisors and Senior
+Management actively participated
+in the trainings and attached great
+importance to continuing professional
+development to ensure that their
+contribution to the Sinopec Corp.
+remains informed and relevant.
+A.2 Corporate Governance Functions
+The Board of Sinopec Corp. is
+responsible for performing duties of
+corporate governance, formulating
+and approving related corporate
+governance rules, adhering to the
+standard operation, improving the
+corporate governance, ensuring that
+the Company complies domestic and
+overseas laws and regulations, and
+disclosing the Company's compliance
+with the Code of Corporate
+Governance in the Corporate
+Governance Report.
+content is published on Sinopec
+Corp.'s website at http://www.
+sinopec.com.
+a.
+b. Sinopec Corp. attaches great
+importance to the construction
+of corporate culture. In the long
+process of reform and development,
+the Company has cultivated and
+formed its corporate culture,
+comprising the enterprise spirit of
+"loving China, strengthening the
+petrochemical industry", as well as
+such fine traditions as being hard-
+working, meticulous and rigorous. The
+Company strives to provide cutting-
+edge technologies, premium products
+and quality services. The relevant
+a. The Outline of the 14th Five-Year
+Plan (2021-2025) and Vision 2035
+of Sinopec Corp. has been approved
+by the Board on 25 March 2022,
+defining the medium-term and long-
+term development strategy and the
+long-range objectives through the year
+2035 of the Company. The Company
+has always adhered to the underlying
+principle of pursuing progress
+while ensuring stability, applied the
+new development philosophy fully,
+accurately and comprehensively,
+actively promoted the high-quality
+development, and continuously
+created value for the country, the
+society and the shareholders.
+The Directors' attendance to the trainings is as follows:
+A.1 Corporate strategy, business model and
+culture
+A CORPORATE PURPOSE, STRATEGY AND
+GOVERNANCE
+of the Corporate Governance Code set out
+in Appendix 14 of the Hong Kong Listing
+Rules.
+Chemicals Segment
+Marketing and Distribution Segment
+27.2
+Exploration and Production Segment
+1,948,640
+2022
+As of
+31 December
+As of
+31 December
+Unit: RMB million
+Current assets were RMB523.1 billion,
+representing a decrease of RMB34.9
+billion compared with that of the end
+of 2021, mainly because the cash and
+deposit decreased by RMB76.9 billion,
+and crude oil and refined oil product
+inventories increased by RMB36.8 billion
+as a result of international crude oil price
+increase.
+As of 31 December 2022, the Company's
+total assets was RMB1,948.6 billion,
+representing an increase of RMB59.4
+billion compared with that of the end of
+2021, of which:
+Total equity
+Non-controlling interests
+Reserves
+Share capital
+Total equity attributable to shareholders of the Company
+2021
+1,889,255
+Non-current liabilities
+Total liabilities
+Non-current assets.
+Current assets
+Total assets
+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.
+3 ASSETS, LIABILITIES, EQUITY AND CASH FLOWS
+(1) Assets, liabilities and equity
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+and Analysis
+Management's Discussion
+Current liabilities
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022 21
+Change
+523,140
+10,640
+140,892
+151,532
+11,699
+653,111
+664,810
+(1,175)
+121,071
+119,896
+10,524
+774,182
+784,706
+59,385
+12,116
+345,017
+26,105
+641,280
+667,385
+38,221
+974,181
+1,012,402
+94,269
+1,331,231
+1,425,500
+(34,884)
+558,024
+332,901
+In 2022, the operating profit from
+corporate and others was RMB1.3 billion,
+representing an increase of RMB4.5
+billion over the same period of 2021. This
+Iwas mainly due to the provision for bad
+debts made in 2021, which was partially
+reversed in 2022, as well as profit of the
+trading company increased resulting from
+its optimised procurement rhythm.
+In 2022, the operating expenses of
+corporate and others was RMB1,789.2
+billion, representing an increase of 37.5%
+over 2021.
+In 2022, the operating revenue
+generated from corporate and others
+was approximately RMB1,790.5 billion,
+representing an increase of 38.0% over
+2021. This was mainly attributed to the
+great increase in the trading prices of
+crude oil and refined oil products.
+6,140
+6.9
+7,010
+7,496
+16.6
+5,311
+6,192
+(2.3)
+48,059
+46,972
+Change (%)
+2021
+6,580
+2022
+2021
+2022
+Average realised price (RMB/tonne)
+Year ended 31 December
+Year ended 31 December
+Synthetic rubber
+Synthetic fibre
+Synthetic resin
+Synthetic fibre monomer and polymer
+Basic organic chemicals
+Sales Volume (Thousand tonnes)
+Refining Segment
+In 2022, the sales revenue generated by
+the segment's six major categories of
+chemical products (namely basic organic
+chemicals, synthetic resin, synthetic fiber
+monomer and polymer, synthetic fibre,
+synthetic rubber, and chemical fertiliser)
+was RMB509.1 billion, up by 6.4% year-
+on-year, accounting for 94.2% of the
+operating revenues of the segment.
+Change (%)
+(6.7)
+17,475
+17,924
+The business activities of corporate
+and others mainly consist of import
+and export business activities of the
+Company's subsidiaries, R&D activities of
+the Company, and managerial activities
+of headquarters.
+(5) Corporate and Others
+In 2022, impacted by weak demand
+in chemical products and increased
+feedstock prices, chemical margin
+slumped. The operating loss of
+this segment was RMB14.1 billion,
+representing a decrease of profit of
+RMB25.2 billion over 2021.
+In 2022, the operating expenses of
+the chemicals segment was RMB554.3
+billion, representing an increase of 12.1%
+over 2021, mainly because of the price
+increase of naphtha and other chemical
+feedstock and fuels.
+Chemical fertiliser
+6.9
+2,797
+2,988
+(17.2)
+981
+812
+2.4
+11,104
+11,369
+6.0
+1,289
+1,367
+8.0
+7,521
+8,122
+(18.1)
+1,457
+1,193
+(0.6)
+8,325
+8,272
+(2.5)
+936,238
+915,074
+The following table sets forth the sales volume, average realised prices and respective changes of each of the segment's six categories of
+chemical products in 2022 and 2021.
+The Company increased investment in
+transition, the construction in progress
+increased by RMB40.1 billion, and
+the net value of property plant and
+equipment increased by RMB31.8 billion;
+equity of associates and joint ventures
+increased by RMB24.8 billion due to the
+adjustment of Shanghai SECCO as a joint
+venture after the completion of its equity
+transaction.
+3,507
+5,939
+Receivables financing
+(320)
+(6,030)
+6,667
+12,347
+(15,535)
+(255)
+13,860
+13,798
+Cash flow hedges
+(1,838)
+Other equity instrument investments
+Total
+1,350
+(220)
+222
+2
+(1,226)
+Other
+changes
+current year
+in the
+amount
+Purchase
+Funding amount in the
+current year
+1,228
+2
+Financial assets held for trading
+Fund
+source
+Derivative financial instruments
+current year
+767
+730
+16,261
+21,164
+Consolidated operating income
+Elimination of inter-segment sales
+Corporate and Others
+Chemicals Segment
+Marketing and Distribution Segment
+Refining Segment
+Exploration and Production Segment
+Operating income
+For the year ended 31 December
+(1) Under CASs, the operating income and operating profit or loss by reportable segments were as follows:
+The major differences between the Company's financial statements prepared under CASS and IFRS are set out in Section C of the financial
+statements of the Company on page 204 of this report.
+21,854
+ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER CASS
+4
+Derivatives investment:
+(275)
+(30,038)
+33,922
+6,588
+(15,790)
+45
+(151)
+(34,978)
+32,546
+148
+(79)
+In 2022, the Company traded in commodity and currency derivatives according to the Annual Business Plan for Financial Derivatives approved by
+the Board. Such business met the regulatory requirements of financial derivatives, operated in a standardized manner, and achieved the goals of
+suppressing price fluctuation, stabilising operating profit, and preventing market risks.
+Sell and
+redemption
+Operating profit/(loss)
+Impairment
+116,269
+Please refer to "Capital Expenditures"
+in the "Business Review and Prospects"
+section of this report.
+(4) Capital Expenditure
+Please refer to "Material Guarantee
+Contracts and Their Performance" in the
+"Significant Events" section of this report
+(3) Contingent Liabilities
+At the end of 2022, the cash and cash
+equivalents were RMB93.4 billion.
+In 2022, the Company's net cash used in
+financing activities was RMB39.7 billion,
+representing a decrease of cash outflow
+of RMB18.2 billion year-on-year. This was
+mainly due to a year-on-year increase of
+RMB44.9 billion in net interest-bearing
+debt, and an increase of RMB21.8 billion
+in cash dividends distribution.
+In 2022, the Company's net cash used in
+investing activities was RMB95.0 billion,
+representing a decrease of cash outflow
+of RMB50.2 billion year-on-year. This was
+mainly due to a RMB59.2 billion year-on-
+year raise of withdrawals at maturity in
+time deposits with maturities over three
+months, an increase of RMB25.8 billion
+in capital expenditures, and a RMB19.2
+billion year-on-year decline of increase in
+time deposits with maturities over three
+months.
+In 2022, the net cash generated from
+operating activities of the Company
+was RMB116.3 billion, representing a
+decrease of RMB108.9 billion over 2021.
+This was mainly due to the payment of
+taxes deferred from the fourth quarter
+of 2021, and the decrease in operating
+profit.
+Net cash generated from operating activities
+Net cash used in investing activities
+Net cash used in financing activities
+2022
+Year ended 31 December
+(95,010)
+Unit: RMB million
+22
+22
+The following table sets forth the major
+items in the consolidated cash flow
+statements for 2022 and 2021.
+(2) Cash Flow
+Total equity attributable to owners of
+the Company was RMB784.7 billion,
+representing an increase of RMB10.5
+billion compared with that of the end of
+2021.
+Non-current liabilities were RMB345.0
+billion, representing an increase of
+RMB12.1 billion compared with that of
+the end of 2021. This was mainly due to
+an increase in long-term bank loans.
+Current liabilities were RMB667.4 billion,
+representing an increase of RMB26.1
+billion as compared with that of the
+end of 2021. This was mainly because
+facing the increased capital occupation
+resulting from weak demand of domestic
+petroleum and petrochemical products,
+and high crude oil price in 2022, the
+Company increased short-term debt to
+improve short-term liquidity.
+TOR SINOPEC
+中国石化 SINOPEC
+P
+加氢№
+loss
+provision
+of the
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+(39,699)
+Major items of cash flows
+2021
+225,174
+(145,198)
+(57,942)
+Accumulated
+variation of
+fair values
+recorded
+as equity
+(5) Research & Development and
+Environmental Expenditures
+the year
+of the year
+Items
+End of
+Beginning
+variation of
+Profits and
+losses from
+The Company's total liabilities were
+RMB1,012.4 billion, representing an
+increase of RMB38.2 billion compared
+with that of the end of 2021, of which:
+Unit: RMB million
+Items relevant to measurement of main fair values
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+fair values
+in the
+current year
+and Analysis
+Management's Discussion
+and Analysis
+(6) Measurement of fair values of derivatives
+and relevant system
+The Company has established sound
+decision-making mechanism, business
+process and internal control systems
+relevant to financial instrument
+accounting and information disclosure.
+«О
+°
+Environmental expenditures refer to
+the normal routine pollutant discharge
+fees paid by the Company, excluding
+capitalised cost of pollutant treatment
+properties. In 2022, the Company
+paid environmental expenditures of
+RMB16.823 billion.
+1
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+23
+R&D expenditures include expenses and
+capitalised cost occurred in the period.
+In 2022 the expenditures for R&D were
+RMB22.510 billion, of which expense was
+RMB12.773 billion, and capitalised cost
+was RMB9.737 billion.
+Management's Discussion
+XE
+No
+0
+0
+2018.5-2024.5
+No
+0
+0
+2018.5-2024.5
+1,416.8
+450.0
+2020.5-2024.5
+Bi Mingjian
+61
+67
+62
+223
+Male
+Female
+Shi Dan
+Male
+Ng, Kar Ling Johnny
+55
+Male
+Cai Hongbin
+450.0
+Executive Director, Senior Vice President
+Independent Non-Executive Director
+Independent Non-Executive Director
+Independent Non-Executive Director
+Independent Non-Executive Director
+No
+38
+0
+38
+60
+Zhang Zhiguo, aged 60, Supervisor of
+Sinopec Corp. Mr. Zhang is a professor
+level senior administration engineer with
+a master's degree. In September 2009,
+he was appointed as Deputy Director
+General of Corporate Office of China
+Petrochemical Corporation (Sinopec
+President's office); in March 2015, he
+was appointed as Secretary of CPC
+Committee of Sinopec Management
+Institute (Sinopec Communist Party
+School); in December 2018, he was
+appointed as Director General of the
+Office of Leading Party Member Group
+Inspection Work of China Petrochemical
+Corporation; in December 2019, he
+was appointed as Director General of
+the General Management Department
+and Director of Leading Party Member
+Group Office of China Petrochemical
+Corporation. In May 2021, he was elected
+as Supervisor of Sinopec Corp.
+Qiu Fasen, aged 57, Supervisor of
+Sinopec Corp. Mr. Qiu is a professor
+level senior auditor with a master's
+degree. In December 2001, he was
+appointed as the Deputy Director General
+of Audit Bureau of China Petrochemical
+Corporation and Deputy Director General
+of Audit Department of Sinopec Corp.;
+in January 2007, he was appointed as
+the Director General of Beijing branch
+of Audit Bureau (Department) of China
+Petrochemical Corporation; in November
+2010, he was appointed as the Deputy
+Director General of Audit Bureau of
+China Petrochemical Corporation;
+in May 2014, he was appointed as
+Secretary of CPC Committee and Deputy
+General Manager of Sinopec Xinjiang Oil
+Products Company; in March 2015, he
+was appointed as General Manager and
+Deputy Secretary of CPC Committee of
+Sinopec Xinjiang Oil Products Company;
+in December 2018, he was appointed
+as Director General of Mineral Acreage
+(Community) Management Department
+of China Petrochemical Corporation;
+in December 2019, he was appointed
+as Vice President of Audit Department
+of Sinopec Corp. and Deputy Director
+General (Director General Level) of
+the Office of Audit Committee of
+Leading Party Member Group of China.
+Petrochemical Corporation; in April 2021,
+he was appointed as President of Audit
+Department of Sinopec Corp. and Director
+General of the Office of Audit Committee
+of Leading Party Member Group of China
+Petrochemical Corporation; in July 2021,
+he was appointed as Secretary of the
+CPC Committee of the Audit Centre of
+China Petrochemical Corporation. In May
+2022, he was appointed as Chief Auditor
+of China Petrochemical Corporation. In
+May 2022, he was elected as Supervisor
+of Sinopec Corp.
+Company Limited; in July 2020, he
+was appointed as Member of the
+Leading Party Member Group and Chief
+Accountant of China Petrochemical
+Corporation. In September 2020, he was
+elected as Director of Sinopec Corp.; in
+May 2021, he was elected as Chairman
+of Board of Supervisors of Sinopec Corp.
+Finance Department of PetroChina
+he was appointed as General Manager
+of Finance Department of CNPC (+
+國石油天然氣集團有限公司) and served
+concurrently as General Manager of
+Zhang Shaofeng, aged 51, Chairman of
+Board of Supervisors of Sinopec Corp.
+Mr. Zhang is a professor level senior
+accountant with a master's degree in
+business administration. In December
+2008, he was appointed as Chief
+Accountant and Member of the CPC
+Committee of Trans-Asia Gas Pipeline
+Company Limited of China National
+Petroleum Corporation (CNPC); in July
+2017, he was appointed as General
+Manager of Finance Department of
+CNPC (中國石油天然氣集團公司) and
+served concurrently as General Manager
+of Finance Department of PetroChina
+Company Limited; in December 2017,
+(2) Supervisors
+Zhang Zhiguo
+Qiu Fasen
+Zhang Shaofeng
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+Corporate Governance
+37
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Note: Total remuneration of directors Mr. Yu Baocai and Mr. Liu Hongbin in 2022 includes incentive bonus based on the performance of 2019-2021.
+0
+0
+No
+450.0
+0
+0
+No
+450.0
+2021.5-2024.5
+2021.5-2024.5
+0
+Male
+58
+0
+0
+0
+Yes
+2016.2-2024.5
+Chairman of the Board, Non-executive Director
+61
+Male
+Ma Yongsheng
+2021
+2022
+2022
+before tax)
+Zhao Dong
+Tenure
+Age
+Gender
+Name
+(as at 31 December)
+entities in
+(RMB1,000,
+in Sinopec Corp.
+their related
+in 2022
+Equity interests
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Company or
+Position in Sinopec Corp.
+Liu Hongbin
+Male
+Yu Baocai
+0
+Yes
+2021.5-2024.5
+Executive Director, Senior Vice President
+56
+Male
+Li Yonglin
+13,000
+13,000
+Yes
+2018.5-2024.5
+Executive Director, Senior Vice President
+52
+60
+Ling Yiqun
+0
+0
+No
+1,704.8
+2018.10-2024.5
+0
+0
+Yes
+2021.5-2024.5
+Non-executive Director
+Executive Director, President
+Male
+Male
+Wu Bo
+c. 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
+approve the request to convene
+the meeting according to the Rules
+of Procedure of General Meetings
+of Shareholders, 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 aforementioned
+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. When Sinopec
+Corp. holds the general meeting
+of shareholders, shareholders who
+individually or collectively hold 3%
+of the total voting shares of Sinopec
+Corp. may propose a supplemental
+proposal 10 days before the date of
+the general meeting.
+Guo Hongjin
+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.
+D.3Audit Committee
+a. The Board has established an
+Audit Committee, formulated the
+Terms of Reference of the Audit
+Committee, and defined the scope of
+responsibility of the Audit Committee.
+The Audit Committee is responsible
+for supervising and evaluating internal
+and external audit work, reviewing
+and commenting on the financial
+reports of the Company, monitoring
+and evaluating the effectiveness of
+internal control related to financial
+reports and coordinating the
+communication between external
+auditor and management, internal
+auditor and related departments.
+The Audit Committee consists of
+Independent Non-executive Director,
+Mr. Ng, Kar Ling Johnny, who serves
+as the Chairman, and Independent
+Non-executive Directors, Mr. Cai
+Hongbin, Ms. Shi Dan, and Mr. Bi
+Mingjian, who serve as members.
+b. During the reporting period, the Audit
+Committee held five meetings (please
+refer to the "The Board Committees
+Meetings and Directors' Attendance"
+under the section of "Report of the
+Board of Directors" in this annual
+report). The review opinions were
+issued at each meeting and submitted
+to the Board. During the reporting
+period, the Board and the Audit
+Committee had no disagreement.
+c. Audit Committee can 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
+appointed consultant members and
+can request such members to provide
+advice. 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.
+d. The Audit Committee has reviewed
+the adequacy and sufficiency of the
+resources for accounting, internal
+audit, financial reporting functions
+and the qualifications and experience
+of the relevant employees as well as
+the sufficiency of the training courses
+and the budget thereof. The 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 reviewed and
+approved by the Audit Committee,
+providing several channels, including
+online reporting, reporting by letters,
+appeals and complaint mailbox, etc.,
+to employees and others who have
+dealings with the Company (such as
+suppliers and customers) to raise
+concerns on improper matters of the
+Company secretly and anonymously.
+The Audit Committee has established
+an internal procedure, which contains
+receiving, retaining and handling
+complaints or anonymous reports
+concerning accounting, internal
+control or audit matters.
+E. REMUNERATION
+E.1 The level and make-up of remuneration
+and disclosure
+a.
+The remuneration policy of the
+Director is stipulated in Director's
+service contracts approved at the
+general meeting. Remuneration of
+Executive Directors is determined
+according to the relevant regulations
+of the country and the implementation
+rules of the remuneration of senior
+management of Sinopec Corp.; Non-
+executive Directors don't receive
+remuneration in the Company.
+Remuneration of Independent Non-
+executive Directors is approved at
+the general meeting, and the level
+is determined with comprehensively
+consideration of industry conditions,
+company size and other factors. For
+details about the annual remuneration
+of Directors, Supervisors, and other
+Senior Management, please refer to
+page 37 to page 45 in this annual
+report.
+b. The Board of Directors established
+Remuneration and Appraisal
+The Board of the Company
+attaches great importance to the
+ESG management approach and
+strategy, optimises ESG mechanism,
+strengthens the Board's role in
+supervising and participation in ESG
+related issues, and integrates ESG
+considerations into the Company's
+development strategy, major decision-
+making processes and production
+and operation. The Company keeps
+strictly to the anti-corruption laws
+and regulations of China, as well as
+anti-corruption and anti-bribery laws
+applicable in the country (region)
+where the business is conducted.
+The Company fully supports the
+UN Convention against Corruption,
+the UN Global Compact and other
+relevant initiatives, abides by the
+rules and commitments of the
+Company and business partners on
+clean practices and anti-corruption,
+and strengthens the construction of
+a culture of integrity. The Company
+has continuously improved the
+organizational and institutional
+systems of anti-corruption, organized
+and carried out anti-corruption
+training, and attached importance to
+risk assessment of anti-corruption.
+The Board has reviewed and evaluated
+the adequacy of resources, staff
+qualifications and experience, training
+programmes and budget of ESG
+performance and reporting during the
+reporting period. For details, please
+refer to the Report of Sustainable
+Development of Sinopec Corp. for the
+year 2022.
+Committee, consisting of Independent
+Non-executive Director, Mr. Bi
+Mingjian, who serves as the
+Chairman, and the Chairman of
+the Board, Mr. Ma Yongsheng and
+the Independent Non-executive
+Director, Mr. Ng, Kar Ling Johnny,
+who serve as the members of
+the Remuneration and Appraisal
+Committee. The Remuneration and
+Appraisal 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 reporting to the
+Board.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+31
+32
+32
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+d. The members of the Remuneration
+and Appraisal Committee can engage
+independent professionals when
+performing its duties. Reasonable
+costs arising from such consultations
+are borne by Sinopec Corp. In
+the meantime, the Remuneration
+and Appraisal Committee has also
+appointed consultant members
+and can require such members
+to provide advice. The working
+expenses of the Remuneration and
+Appraisal 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. shall actively cooperate with
+the Remuneration and Appraisal
+Committee.
+e. During the reporting period, the
+Remuneration and Appraisal
+Committee held one meeting (please
+refer to "The Board Committees
+Meetings and Directors' Attendance"
+under the section of "Report of the
+Board of Directors" in this annual
+report).
+F. SHAREHOLDERS ENGAGEMENT
+F.1 Effective communication
+a. The policy on payment of dividends
+of Sinopec Corp. is disclosed in this
+annual report, please refer to page 62
+in this annual report.
+b. Sinopec Corp. attach considerable
+significance to investor relations. The
+Chairman of the Board attends annual
+and interim results conferences,
+and the Management attends road
+shows to answer questions on
+subjects of concern to investors,
+such as introducing the development
+strategies and the production
+and business performance of the
+Company. The Independent Directors,
+Ms. Shi Dan, and Mr. Bi Mingjian,
+attended the annual and interim
+results conferences for 2022. The
+Board Secretariat of Sinopec Corp.
+is responsible for communicating
+with investors. In compliance with
+regulatory provisions, Sinopec Corp.
+enhances communication with
+investors by holding meetings with
+institutional investors, setting up an
+investor hotline, and communicating
+through internet platform, etc.
+c. The Remuneration and Appraisal
+Committee always consults the
+Chairman of the Board and the
+President about the remuneration
+plans for other Executive Directors.
+After the Remuneration and Appraisal
+Committee's review, it is of the view
+that all the Executive Directors of
+Sinopec Corp. have fulfilled the duty
+clauses in their service contracts in
+2022.
+c. According to relevant rules of Sinopec
+Corp., the Secretary to the Board
+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 in the "Investor Centre"
+column on Sinopec Corp.'s website,
+ensuring that shareholders can get in
+touch with the Company at any time.
+c. In terms of risk management, Sinopec
+Corp. adopts the enterprise risk
+management framework provided
+by COSO, and establishes 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
+strategies and measures combined
+with its internal control system
+and periodically monitors their
+implementation to ensure adequate
+care, monitor and tackling of major
+risks.
+in accordance with relevant
+regulations. Please refer to the
+website of Sinopec Corp.
+Whether
+paid by the
+shareholders
+30
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+to provide necessary information or
+explanations. The Directors can seek
+advice from professional consultants
+when necessary.
+e. Resolutions and minutes of Board
+meetings and the meetings held by
+the Board Committees were recorded
+and archived by designated recorders,
+and were reviewed and confirmed by
+the Directors attended the relevant
+meetings. All the matters and final
+decisions were recorded fully and
+accurately in the meeting minutes.
+f. The Board has reviewed and evaluated
+its performance in 2022 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 has
+fully communicated, and considered
+the suggestions from the Party
+organisation, Board of Supervisors
+and management during its decision-
+making process; and that the Board
+safeguarded the legitimate rights and
+interests of Sinopec Corp. and its
+shareholders.
+C.6Company Secretary
+a. The Hong Kong Stock Exchange
+recognised the Secretary to the Board
+as having the relevant qualifications
+as Company Secretary. The Secretary
+to the Board, nominated by the
+Chairman of the Board and appointed
+by the Board, is a senior management
+officer of Sinopec Corp. He reports
+to the Chairman and the President
+and is responsible for the Company
+and the Board. The Secretary to the
+Board gives opinions on corporate
+governance to the Board and arranges
+orientation training and professional
+development for the Directors.
+b. The Secretary to the Board assists
+the Directors in handling the
+day-to-day work of the Board,
+continuously informs the Directors
+of the regulations, policies or other
+requirements of domestic or overseas
+regulatory authorities in relation to
+corporate governance and ensures
+that the Directors comply with
+domestic and overseas laws and
+regulations when performing their
+duties and responsibilities.
+c. During the reporting period, the
+Secretary to the Board actively
+participated in career development
+training for more than 15 training
+hours.
+D. AUDIT, INTERNAL CONTROL AND RISK
+(http://www.sinopec.com) for the
+details of the information disclosure
+policy.
+MANAGEMENT
+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, the performance, and the
+cash flow of the Company during
+the period. The Board approved
+the Financial Report for 2022 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. The Management of Sinopec Corp.
+provides Directors with information
+about the financial, production and
+operating data of the Company,
+capital market updates, and securities
+regulatory developments every month
+to ensure that the Directors can learn
+about the latest developments of the
+Company and regulatory changes 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 on their audit
+responsibilities in the auditor's report
+contained in the financial report.
+D.2Internal 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
+reviewing the effectiveness of its
+internal control and risk management.
+The Board and the 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 the 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.
+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. formulates and continuously
+improves the Internal Control Manual
+to achieve internal control of all
+factors of internal environment, risk
+assessment, controlling activities,
+information and communication, and
+internal supervision. At the same
+time, Sinopec Corp. has constantly
+supervised and evaluated its internal
+control, and conducted comprehensive
+and multi-level inspections including
+regular test, enterprise self-
+examination and auditing check, and
+included headquarters, branches and
+subsidiaries into the scope of internal
+control evaluation, with an internal
+control evaluation report being
+produced. The Board annually reviews
+the internal control evaluation report.
+For detailed information about the
+internal control during the reporting
+period, please refer to the "Report on
+Internal Control Evaluation" prepared
+by Sinopec Corp.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Corporate Governance
+Sinopec Corp. has formulated
+and implemented its information
+disclosure policy and insider
+registration policy. The Company
+regularly evaluates the policy
+implementation and makes disclosure
+D.1Financial reporting
+Zhai Yalin
+F.2 General meeting
+b. The Chairman of the Board hosted
+the Annual General Meeting for
+2021(AGM), the First A Shareholders
+Class Meeting for 2022, and the First
+H Shareholders Class Meeting for
+2022. Several members of the Board
+of Directors, the Board of Supervisors,
+and Senior Management attended
+the meetings and conducted in-depth
+communication with the investors.
+Some members of the Nomination
+Committee, the Remuneration and
+Appraisal Committee, the Strategy
+Committee, and the Sustainable
+Development Committee attended
+the AGM, and members of the Audit
+Committee didn't attend the AGM
+due to other working arrangement.
+The external auditors of the Company
+attended the AGM. During the
+AGM, specially-assigned person of
+the Company recorded questions
+raised by investors as well as the
+feedback, which were related to each
+Board Committee. On the meetings,
+investors didn't raise questions that
+need to be answered or matters that
+need to be paid attention to by each
+Board Committee. After the AGM, the
+Company communicated specially
+with investors, and then made a
+report on the situation of the AGM to
+all the Directors.
+Liu Hongbin
+Cai Hongbin
+Ng, Kar Ling Johnny
+Liu Hongbin, aged 60, Director and
+Senior Vice President of Sinopec Corp.
+Mr. Liu is a senior engineer with a
+bachelor's degree. In June 1995, he was
+appointed as Chief Engineer of Tuha
+Petroleum Exploration & Development
+Headquarters; in July 1999, he was
+appointed as Deputy General Manager
+of PetroChina Tuha Oilfield Company;
+in July 2000, he was appointed as
+Commander and Deputy Secretary of CPC
+Committee of Tuha Petroleum Exploration
+& Development Headquarters; in March
+2002, he served as General Manager of
+the Planning Department of PetroChina
+Company Limited; in September 2005,
+he served as Director of the Planning
+Department of CNPC; in June 2007,
+he was appointed as Vice President of
+PetroChina Company Limited, and in
+November 2007, he served concurrently
+as General Manager and Secretary of
+CPC Committee of the Marketing Branch
+of PetroChina Company Limited; in June
+2009, he served concurrently as General
+Manager and Deputy Secretary of CPC
+Committee of the Marketing Branch of
+PetroChina Company Limited; in July
+2013, he was appointed as Member of
+the Leading Party Member Group and
+Deputy General Manager of CNPC and
+in August 2013, he served concurrently
+as an Executive Director and General
+Manager of Daqing Oilfield Company
+Limited, Head of enterprise Coordination
+in Heilongjiang Province, Director of
+Daqing Petroleum Administration Bureau
+and Deputy Secretary of CPC Committee
+of Daqing Oilfield; in May 2014, he served
+concurrently as Director of PetroChina
+Company Limited; in November 2019,
+he was appointed as a member of the
+Leading Party Member Group of China
+Petrochemical Corporation; in December
+2019, he was appointed as Vice President
+of China Petrochemical Corporation. In
+March 2020, he was appointed as Senior
+Vice President of Sinopec Corp. In May
+2020, he was elected as Director of
+Sinopec Corp.
+Cai Hongbin, aged 55, Independent
+Director of Sinopec Corp. Mr. Cai is Dean
+of Faculty of Business and Economics
+and Professor of Economics of the
+University of Hong Kong. Mr. Cai has
+a Ph.D. degree in Economics. From
+1997 to 2005, Mr. Cai taught at the
+University of California, Los Angeles.
+Since 2005, he served as a professor and
+Ph.D. supervisor in Applied Economics
+Department at Guanghua School of
+Management at Peking University, and
+he once served as Director, Assistant to
+the Dean and Vice Dean of the Applied
+Economics Department. From December
+2010 to January 2017, he served as
+Dean of Guanghua School of Management
+at Peking University. In June 2017,
+he joined the Faculty of Business and
+Economics of the University of Hong
+Kong. Mr. Cai once served as a member
+of the 12th National People's Congress, a
+member of Beijing Municipal Committee
+of CPPCC, a member of the 11th Central
+Committee of China Democratic League,
+Deputy Chairman of Beijing Municipal
+Committee of China Democratic League
+and a Special Auditor of the National
+Audit Office. He currently serves as an
+Independent Director of CCB International
+(Holdings) Limited, China Merchants
+Finance Holdings Company Limited and
+Ping An Bank Co., Ltd. In May 2018, he
+was elected as Independent Director of
+Sinopec Corp.
+Ng, Kar Ling Johnny, aged 62,
+Independent Director of Sinopec Corp.
+Mr. Ng currently is a practicing Certified
+Public Accountant in Hong Kong, a
+practicing auditor and accountant in
+Macau, a Fellow of the Hong Kong
+Institute of Certified Public Accountants
+(FCPA), a Fellow of the Association of
+Chartered Certified Accountant (FCCA),
+and a Fellow of the Institute of Chartered
+Accountants in England and Wales (FCA).
+Mr. Ng obtained a bachelor's degree
+and a master's degree in business
+administration from the Chinese
+University of Hong Kong in 1984 and
+1999, respectively. Mr. Ng joined KPMG
+(Hong Kong) in 1984 and became a
+Partner in 1996. He acted as a Managing
+Partner from June 2000 to September
+2015 and Vice Chairman of KPMG China
+from October 2015 to March 2016. Mr.
+Ng currently serves as Independent Non-
+executive Director of China Vanke Co.,
+Ltd., Metallurgical Corporation of China
+Ltd. and China Telecom Corporation
+Limited. In May 2018, he was elected as
+Independent Director of Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+35
+Corporate Governance
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+Shi Dan
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Bi Mingjian
+Bi Mingjian, aged 67, Independent
+Director of Sinopec Corp. Mr. Bi
+obtained the certificate of diploma
+majoring in English from East China
+Normal University in 1982 and master's
+degree in business administration from
+George Mason University in the United
+States of America in 1993 respectively.
+Mr. Bi served as a cadre at Shanghai
+Subei Haifeng Farm from April 1977 to
+April 1979; he studied at the External
+Training Program of the Cadre School
+of the Ministry of State Farms and
+Land Reclamation, and subsequently
+he studied at a farm in Saskatchewan
+Province of Canada from April 1979 to
+November 1980; he served as a cadre at
+the Foreign Affairs Bureau of the Ministry
+of State Farms and Land Reclamation
+from November 1980 to December 1983;
+he served as Deputy Division Chief of
+the State Farms and Land Reclamation
+Bureau of the Ministry of Agriculture from
+January 1984 to December 1985; he
+served as Operation Officer of the World.
+Bank Representative Office in China from
+December 1985 to June 1988; he served
+as Deputy Director of the project office
+of China Rural Trust and Investment
+Corporation from June 1988 to October
+1988; he served as Project Economist
+and Advisor of the World Bank from
+October 1988 to January 1994; he served
+as a cadre at People's Construction
+Bank of China from January 1994 to
+July 1995; he served as Senior Manager,
+Deputy Chief Executive Officer, member
+and Deputy Chairman of the Management
+Committee, Co-Chief Operating Officer
+and Co-Head of the Investment Banking
+Department of China International Capital
+Corporation Limited (CICC) from August
+1995 to February 2006; he served as
+a Senior Advisor to CICC from March
+2006 to November 2012; he served as a
+Managing Partner of HOPU Investment
+Management Co., Ltd. from November
+2012 to March 2015; he served as a non-
+executive director for China Investment
+Securities Co., Ltd. (currently known
+as China CICC Wealth Management
+Securities Company Limited) from March
+2017 to January 2020; from March
+2015 to December 2019, he served as
+Chief Executive Officer and Chairman of
+Management Committee of CICC; from
+May 2015 to February 2020, he served
+as Executive Director of CICC. In May
+2021, he was elected as Independent
+Director of Sinopec Corp.
+36
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+LIST OF MEMBERS OF THE BOARD
+Remuneration
+paid by
+Sinopec Corp.
+Corporate Governance
+39
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Guo Hongjin, aged 57, Employee's
+Representative Supervisor of Sinopec
+Corp. Mr. Guo is a professor level senior
+engineer with a Ph.D. degree. In July
+2013, he was appointed as Deputy
+General Manager of Sinopec Shengli
+Oilfield Company; in March 2018, he
+was appointed as General Manager and
+Deputy Secretary of CPC Committee of
+Sinopec Shengli Petroleum Administrative
+Bureau Co., Ltd. and General Manager
+of Sinopec Shengli Oilfield Company;
+in December 2018, he was appointed
+as Executive Director, General Manager
+and Deputy Secretary of CPC Committee
+of Sinopec Jianghan Petroleum
+Administrative Bureau Co., Ltd. and
+General Manager of Sinopec Jianghan
+Oilfield Company; in July 2019, he was
+appointed as Executive Director and
+Secretary of CPC Committee of Sinopec
+Jianghan Petroleum Administrative
+Bureau Co., Ltd. and the representative
+of Sinopec Jianghan Oilfield Company; in
+April 2020, he was appointed as General
+Manager of the Petroleum Exploration
+& Development Department of Sinopec
+Corp.; in May 2021, he was elected
+as Supervisor of Sinopec Corp. In May
+2022, he was elected as Employee's
+Representative Supervisor of Sinopec
+Corp.
+Zhai Yalin, aged 59, Supervisor of
+Sinopec Corp. Mr. Zhai is a professor
+level senior economist with a bachelor's
+degree. In December 2001, he was
+appointed as Deputy Director General
+of Audit Bureau of China Petrochemical
+Corporation and Deputy Director General
+of Audit Department of Sinopec Corp.; in
+April 2018, he was appointed as Director
+General of the Inspection Team of
+Leading Party Member Group and Deputy
+Director General of Audit Bureau of China
+Petrochemical Corporation and Deputy
+Director General of Audit Department
+of Sinopec Corp; in October 2020, he
+was appointed as Executive Director
+and Secretary of the CPC Committee of
+Sinopec Baichuan Economic and Trade
+Co., Ltd.; in May 2022, he was appointed
+as General Manager of Sinopec Logistics
+Service Center. In May 2022, he was
+elected as Supervisor of Sinopec Corp.
+Wu Bo, aged 49, Supervisor of Sinopec
+Corp. Mr. Wu is a senior economist with
+a bachelor's degree. In May 2012, he
+was appointed as Chief Accountant of
+Sinopec Hainan Refining and Chemical
+Company Limited; in August 2017,
+he was appointed as Deputy General
+Manager and Chief Accountant of Sinopec
+Chemical Sales Company Limited; in
+December 2018, he was appointed
+as Deputy General Manager and Chief
+Accountant of China International United
+Petroleum and Chemical Company
+Limited; in December 2019, he was
+appointed as General Manager of Finance
+Department of China Petrochemical
+Corporation; in July 2021, he was also
+appointed as Chairman of Sinopec
+Century Bright Capital Investment
+Limited. In May 2022, he was elected as
+Supervisor of Sinopec Corp.
+Shi Dan, aged 61, Independent Director
+of Sinopec Corp. Ms. Shi is the legal
+representative and Chairman of China
+Industrial Economics Society, a member
+of Expert Advisory Committee of the
+National Energy Commission and a
+member of National Expert Committee
+on Climate Change and enjoys special
+government subsidies from the State
+Council. Ms. Shi obtained bachelor's
+degree in engineering, master's degree
+in economics, master's degree of
+development economics and Ph.D.
+degree in management from Changchun
+University of Technology, Renmin
+University of China, Australian National
+University and Huazhong University of
+Science and Technology respectively. In
+October 1993, Ms. Shi was appointed
+as Research Fellow and Assistant to
+the Dean of the Institute of Industrial
+Economics of Chinese Academy of Social
+Sciences; in August 2010, Ms. Shi was
+appointed as a Research Fellow and
+Deputy Dean of National Academy of
+Economic Strategy, Chinese Academy of
+Social Sciences; in November 2013, she
+was appointed as a Research Fellow and
+Secretary of CPC Committee (Deputy
+Dean) of the Institute of Industrial
+Economics of Chinese Academy of Social
+Sciences; from November 2017 to August
+2021, she served concurrently as External
+Director of China Energy Investment
+Corporation Limited. In March 2019, she
+was appointed as Dean of Institute of
+Industrial Economics of Chinese Academy
+of Social Sciences. In May 2021, she
+was elected as Independent Director of
+Sinopec Corp.
+a. During the reporting period, separate
+resolutions were proposed for each
+substantially separate issue at the
+general meeting of shareholders.
+All resolutions were voted by poll
+in protection of the interest of
+all shareholders. Notices of the
+general meeting were dispatched
+to shareholders 45 days (excluding
+the date of the general meeting) in
+advance.
+a member of Leading Party Member
+Group and Vice President of China
+Petrochemical Corporation.; in May 2021,
+he was elected as Director of Sinopec
+Corp. and was appointed as Senior Vice
+President of Sinopec Corp.
+Ling Yiqun, aged 60, Director and
+Senior 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 Deputy
+Director General of Refining Department
+of Sinopec Corp.; in June 2003, he
+was appointed as 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 concurrently
+as Executive Director, President and
+Secretary of CPC Committee of Sinopec
+Refinery Product Sales Company Limited;
+in August 2013, he was appointed
+concurrently as President and Secretary
+of CPC Committee of Sinopec Qilu
+Petrochemical Company, and President
+of Sinopec Qilu Company; in March 2017,
+he was appointed as Vice President of
+China Petrochemical Corporation; since
+April 2019, he has been a member of the
+Leading Party Member Group of China.
+Petrochemical Corporation. In February
+2018, he was appointed as Senior Vice
+President of Sinopec Corp.; in May 2018,
+he was elected as Director of Sinopec
+Corp.
+d. The eligibility for attending the general
+meeting, the rights of shareholders,
+the resolutions at the meeting and the
+voting procedures are clearly stated in
+the notice and circular of the general
+meeting of Sinopec Corp. dispatched
+to the shareholders.
+e. Sinopec Corp. has established a
+special department for communication
+with shareholders and publishes
+relevant contact details to facilitate
+shareholders to make enquiries
+in accordance with Articles of
+Association.
+G. AUDITORS
+The re-appointment of KPMG Huazhen
+LLP and KPMG as the external auditors of
+Sinopec Corp. for the year 2022 and the
+authorisation of the Board to determine their
+remunerations were approved at Sinopec
+Corp.'s Annual General Meeting for 2021
+on 18 May 2022. The audit fee for 2022 is
+RMB40.66 million (including audit fee of
+internal control), which was approved at the
+15th Meeting of the Eighth Session of the
+Board. The annual financial statements of the
+year ended 31 December 2022 have been
+audited by KPMG Huazhen LLP and KPMG.
+The Chinese certified public accountants
+signing the report are Yang Jie and He
+Shu from KPMG Huazhen LLP. During the
+reporting period, KPMG Huazhen LLP and
+KPMG and their affiliates firms provided non-
+audit service, such as tax consulting and due
+diligence investigation to the Company, and
+the fee charged was RMB2.98 million.
+(2) Other information about Sinopec Corp.'s
+corporate governance
+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 shareholdings of
+substantial shareholders and changes in
+share capital, please refer to page 70 to
+page 71; for information about meetings
+of the Board, please refer to page 59 to
+page 60; for information about meetings
+held by Board Committees, please refer
+to page 61; for information about tenure
+of Non-executive Directors, please refer
+to page 37; for information about equity
+interests of Directors, Supervisors and
+other senior management, please refer to
+page 37 to page 44; for biographies of
+Directors, Supervisors and other senior
+management, please refer to page 33 to
+page 43.
+10 DETAILED IMPLEMENTATION OF THE
+SHARE INCENTIVE SCHEME DURING THE
+REPORTING PERIOD
+The Company did not implement any share
+incentive scheme during the reporting period.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Ma Yongsheng
+Zhao Dong
+11 INTRODUCTION OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+Li Yonglin, aged 56, Director and Senior
+Vice President of Sinopec Corp. Mr. Li is
+a professor level senior engineer with a
+Ph.D. degree. Mr. Li is a member of the
+13th National Committee of CPPCC. He
+was appointed as Vice General Manager
+of Sinopec Maoming Company in March
+2003; in July 2009, he was appointed
+as Chief of Preparatory Group for the
+Beihai Refining Off-Site Reconstruction
+Project; in November 2011, he was
+appointed as General Manager and
+Deputy Secretary of CPC Committee of
+Sinopec Beihai Refining & Chemical Co.,
+Ltd.; in March 2015, he was appointed
+as Vice Director General of Refining
+Division of Sinopec Corp. (Director
+General Level); in December 2016 he
+was appointed as General Manager and
+Deputy Secretary of CPC Committee of
+Sinopec Tianjin Petrochemical Company,
+General Manager of Sinopec Tianjin
+Company and Vice Chairman of SINOPEC
+SABIC Tianjin Petrochemical Co., Ltd.;
+in October 2019, he was appointed as
+Secretary of CPC Committee of Sinopec
+Tianjin Petrochemical Company and
+Corporate Representative of Sinopec
+Tianjin Company; in July 2020, he was
+appointed as Assistant to the President
+of China Petrochemical Corporation,
+concurrently serving as General Manager
+of Human Resources Department and
+Head of Organizational Department of
+the Leading Party Member Group; in
+November 2020, he was appointed as
+(1) Directors
+Gas Pipeline Project Headquarter of
+Sinopec Corp.; in May 2008, he was
+appointed as Deputy Director General of
+Exploration and Production Department
+of Sinopec Corp. (Director General
+Level); 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
+was 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 October
+2018, he was appointed as President
+of Sinopec Corp; in April 2019, he was
+appointed as Director, President and
+Vice Secretary of the Leading Party
+Member Group of China Petrochemical
+Corporation; in November 2021, he was
+appointed as Chairman and Secretary
+of the Leading Party Member Group of
+China Petrochemical Corporation. Mr. Ma
+was elected as Director of Sinopec Corp.
+in February 2016, and was elected as the
+Chairman of the Board of Sinopec Corp.
+in November 2021.
+Zhao Dong, aged 52, Director of Sinopec
+Corp. Mr. Zhao is a professor level senior
+accountant with a Ph.D. degree. Mr. Zhao
+is an alternate member of the 20th Central
+Committee of the Party. In July 2002,
+he was appointed as Chief Accountant
+and General 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 General 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 Deputy General Manager
+of CNPC Nile Company; 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.
+In November 2016, he was appointed as
+a Member of the Leading Party Member
+Group and Chief Accountant of China
+Petrochemical Corporation; in May 2020,
+he was appointed as Director and Deputy
+Secretary of the Leading Party Member
+Group of China Petrochemical Corporation;
+in June 2022, he was appointed as
+Director, President and Vice Secretary of
+the Leading Party Member Group of China
+Petrochemical Corporation. In June 2017,
+he was elected as Chairman of Board of
+Supervisors of Sinopec Corp.; in May 2021,
+he was elected as Director of Sinopec
+Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+33
+Corporate Governance
+34
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+Yu Baocai
+Ling Yiqun
+Li Yonglin
+Yu Baocai, aged 58, Director and
+President of Sinopec Corp. Mr. Yu is a
+senior engineer with a master's degree
+in economics. In September 1999, Mr.
+Yu was appointed as Deputy General
+Manager of Daqing Petrochemical
+Company; in December 2001, he was
+appointed as General Manager and
+Deputy Secretary of CPC Committee
+of Daqing Petrochemical Company; in
+September 2003, he was appointed as
+General Manager and Secretary of CPC
+Committee of Lanzhou Petrochemical
+Company; in June 2007, he was
+appointed as General Manager and
+Deputy Secretary of CPC Committee of
+Lanzhou Petrochemical Company and
+General Manager of Lanzhou Petroleum &
+Chemical Company; in September 2008,
+he was appointed as a member of the
+Leading Party Member Group and Deputy
+General Manager of China National
+Petroleum Corporation (CNPC) and since
+May 2011, he acted concurrently as
+Director of PetroChina Company Limited;
+in June 2018, he was appointed as a
+Member of the Leading Party Member
+Group and Vice President of China
+Petrochemical Corporation; in September
+2020, he was appointed as Senior Vice
+President of Sinopec Corp. Mr. Yu was
+elected as Director of Sinopec Corp. in
+October 2018, and was appointed as
+President of Sinopec Corp. in November
+2021.
+Ma Yongsheng, aged 61, Chairman of
+the Board of Sinopec Corp. Mr. Ma is
+a professor level senior engineer with a
+Ph.D. degree. Mr. Ma is a member of
+the 13th and 14th National Committee
+of Chinese People's Political Consultative
+Conference (CPPCC) and an academician
+of the Chinese Academy of Engineering.
+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 General 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
+of the
+2022.5-2024.5
+2021.1-2024.5
+87,368
+technical school degrees or below
+Senior high school and
+EDUCATIONAL BACKGROUND STRUCTURE FOR EMPLOYEES AS FOLLOWS: (INCLUDING MASTER'S DEGREE AND ABOVE, UNDERGRADUATE,
+JUNIOR COLLEGE, TECHNICAL SECONDARY SCHOOL SENIOR HIGH SCHOOL AND TECHNICAL SCHOOL DEGREES OR BELOW)
+CORPORATE GOVERNANCE (CONTINUED)
+46
+Corporate Governance
+Corporate Governance
+45
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+29%
+124,802
+106,856
+37%
+140,429
+Production
+1%
+1,776
+Others
+8%
+29,983
+Administration
+2%
+Sales
+33%
+Master's degree or above
+23,780
+Master's Degree
+PHD
+0
+1,833
+2,413
+500
+1,000
+1,500
+2,000
+2,108
+2,500
+3,000
+TECHNOLOGY PERSONNEL EDUCATIONAL STRUCTURE: (INCLUDING PHD, MASTER'S DEGREE, UNDERGRADUATE AND BELOW)
+8%
+28,041
+Technical secondary school
+23%
+86,375
+Junior college
+30%
+111,793
+Undergraduate
+6%
+8,379
+Undergraduate
+Finance
+Technology
+AND SUPERVISORS
+14 CONTRACTUAL INTERESTS OF DIRECTORS
+There is no change in shareholdings of the
+Company by Directors, Supervisors and other
+Senior Managements during the reporting
+period.
+DIRECTORS, SUPERVISORS, AND THE
+SENIOR MANAGEMENT
+13 CHANGE OF SHAREHOLDING OF
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+On 9 March 2023, Mr. Yu Xizhi resigned as
+Vice President of Sinopec Corp. due to his
+age.
+On 6 January 2023, Mr. Ng, Kar Ling Johnny
+was appointed as Independent Non-Executive
+Director of China Telecom Corporation
+Limited.
+On 28 October 2022, Mr. Lv Lianggong
+was appointed as Senior Vice President of
+Sinopec Corp.
+0
+As of 31 December 2022 or any time
+during the reporting period, no Director or
+Supervisor of the Company entered into any
+agreement with Sinopec Corp., its controlling
+shareholder, any subsidiary or related
+subsidiary which shall substantially benefit
+such Director or Supervisor.
+0
+0
+0
+No
+2021
+2022
+(as at 31 December)
+Equity interests in
+Sinopec Corp.
+On 17 October 2022, Mr. Lv Lianggong
+resigned as Supervisor of Sinopec Corp. due
+to change of working arrangement.
+On 8 September 2022, Mr. Cai Hongbin was
+appointed as Independent Non-Executive
+Director of China Merchants Finance
+Holdings Company Limited.
+On 20 July 2022, Mr. Chen Ge resigned as
+Senior Vice President of Sinopec Corp. due
+to his age.
+No
+15 CONTRACTS WITH DIRECTORS AND
+SUPERVISORS
+The Company has entered into service
+contracts with all the Directors and
+Supervisors. None of the Directors and
+Supervisors has entered into or will
+enter into service contracts that are not
+terminable by the Company within one year
+without compensation (except for statutory
+compensation).
+16 REMUNERATION OF DIRECTORS,
+SUPERVISORS, AND THE SENIOR
+MANAGEMENT
+EMPLOYEES' PROFESSIONAL STRUCTURE AS FOLLOWS: (INCLUDING PRODUCTION, SALES, TECHNOLOGY, FINANCE, ADMINISTRATION AND
+OTHERS)
+18%
+67,393
+Chemicals
+15%
+55,945
+Refining
+33%
+122,813
+Exploration and Production
+1%
+4,893
+Other Segments
+2%
+6,354
+R&D
+31%
+117,393
+Marketing and Distribution
+THE BREAKDOWN OF NUMBER OF EMPLOYEES BY OPERATION SEGMENTS IS AS FOLLOWS: (INCLUDING EXPLORATION AND PRODUCTION,
+REFINING, MARKETING AND DISTRIBUTION, CHEMICALS, R&D AND OTHERS)
+As at 31 December 2022, the Company
+has a total of 374,791 employees. There
+are a total of 288,138 retired employees
+to be reimbursed by Sinopec Corp.
+Sinopec Marketing Co. Limited and China
+International United Petroleum & Chemicals
+Co. Limited (UNIPEC), the principal
+subsidiaries of Sinopec Corp., have 117,393
+and 450 employees respectively. The
+male and female ratio of all employees is
+2.2:1, and the male and female ratio of the
+members of senior management is 14.1:1.
+17 THE COMPANY'S EMPLOYEES
+During this reporting period, a total of 16
+Directors, Supervisors and other Senior
+Management received remuneration from
+Sinopec Corp. with a total amount of
+RMB18.8090 million.
+23%
+or below
+TECHNOLOGY PERSONNEL AGE STRUCTURE
+2,500
+Note 6: The actual annual average concentration of the main discharge outlets is within the corresponding disclosure range, and the public information of the
+ecological and environmental department can be consulted for details.
+Note 5: The permitted concentration limit are major industrial discharge standard limit. The limit of other standards implemented by each company can be found
+in the public information of the ecological authorities.
+Note 4: The discharge standards implemented are the major industrial discharge standards. Other standards such as local emission standards implemented by
+each company can be found in the public information of the ecological authorities.
+Note 3: Intermittent discharge from some vents.
+Note 2: Count the number of organized vents involved for this pollutant.
+Note 1: This report discloses the discharge of the Company's oilfield, refining and chemical companies and specialized companies that are included in the key
+management of emission permits. The data is calculated by self-monitoring data and is ultimately subject to the data published by the local ecological
+authorities.
+by the ecological authorities.
+19,247 tonnes The compliance rate is 99.99%,
+the details of which are
+subject to the announcement
+10-100 mg/m³
+20-240 mg/m³
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+subject to the announcement
+by the ecological authorities.
+amount Discharge compliance
+4,910 tonnes The compliance rate is 99.99%,
+Discharge Standards for Pollutants in the Petroleum Refining Industry (GB31570-2015)
+Discharge Standards for Pollutants in the Petrochemical Industry (GB31571-2015)
+Discharge Standards for Pollutants in the Synthetic Resin Industry (GB31572-2015)
+continuous Discharge Standards for Air Pollutants from Thermal Power Plants (GB 13223-2011)
+Discharge Standards for Air Pollutants from Boilers (GB13271-2014)
+Discharge Standards for Pollutants in the Petroleum Refining Industry (GB31570-2015)
+Discharge Standards for Pollutants in the Petrochemical Industry (GB31571-2015)
+Discharge Standards for Pollutants in the Synthetic Resin Industry (GB31572-2015)
+1,243
+NOX
+2
+Approved
+actual
+discharge
+Actual annual
+average
+concentration
+0.05-50 mg/m³
+Permitted
+concentration limit5
+10-200 mg/m³
+discharge Discharge standards implemented4
+continuous Discharge Standards for Air Pollutants from Thermal Power Plants (GB 13223-2011)
+Discharge Standards for Air Pollutants from Boilers (GB13271-2014)
+1,251
+the details of which are
+(b) Discharge of water pollutants¹
+Approved
+Number of
+2
+Daily average data has 100%
+compliance rate.
+4,755 tonnes
+amount Discharge compliance
+discharge
+average
+concentration³
+10-50 mg/L
+40-60mg/L
+Discharge Standards for Pollutants in the Petroleum Refining Industry (GB31570-2015)
+Discharge Standards for Pollutants in the Petrochemical Industry (GB31571-2015)
+continuous
+76
+COD
+1
+concentration limit
+discharge Discharge standards implemented³
+involved
+type
+No.
+Permitted
+Ways of
+vents
+Pollutant
+actual
+Actual annual
+Ways of
+vents
+involved²
+type
+SO₂
+1
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+During the reporting period, the Company
+strengthened coordination and the top-level
+design for training programs, improved the
+high-quality training system, and conducted
+training programs for all types of talents.
+The headquarters trained 5,732 key talents
+of various types. The training for managers
+became more systematic, resulting in
+the enhanced capabilities of leaders to
+apply the new development philosophy
+and drive the Company's high-quality
+growth. The training for technical personnel
+became more efficient, and the programs
+were conducted for experts and talent
+development in areas such as the integration
+and innovation of strategic science, the high-
+quality development of oil and gas, the green
+and low-carbon development of refining
+and chemical industry. The training for
+international talents was strengthened, and
+the programs were conducted for overseas
+project managers, international trade
+managers. The Company improved training
+policy and training quality. The Company
+enhanced the intelligent and accurate level
+of training by promoting the application
+of Sinopec Network College. The Sinopec
+Network College trained a total of 55 million
+hours. Sinopec Corp.'s "Zhaoyang (Morning
+Suns) Program" training system for young
+talents won the 2022 Enterprise Leadership
+Award of the International Association for
+Continuing Engineering Education, and the
+Overseas Project Manager Training won the
+2022 Excellence in Practice Award of the
+Association for Talent Development.
+21 TRAINING PROGRAMS
+Based on a relatively unified 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 has
+constantly improved employee performance
+evaluation and incentive & discipline
+mechanisms.
+20 REMUNERATION POLICY
+Details of the Company's employee benefits
+scheme are set out in Note 39 of the
+financial statements prepared under IFRS
+of this annual report. As at 31 December
+2022, the Company had a total of 288,138
+retired employees. All of them participated
+in the basic pension schemes administered
+by provincial governments (or those of
+autonomous regions or municipalities).
+Government-administered pension funds
+are responsible for the payments of basic
+pensions.
+19 EMPLOYEE BENEFITS SCHEME
+During the reporting period, there are no
+significant changes of core technical team or
+key technicians.
+KEY TECHNICIANS
+18 CHANGES OF CORE TECHNICAL TEAM OR
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+51-60
+41-50
+31-40
+21-30
+1,447
+1,696
+2,112
+500
+1,000
+1,099
+1,500
+2,000
+47
+On 18 July 2022, Mr. Ng, Kar Ling Johnny
+resigned as Independent Non-Executive
+Director of Fangdd Network Group Ltd.
+Corporate Governance
+Environment and Social Responsibilities
+No.
+Pollutant
+Number of
+defaults/default-index! getInformation.
+action) and the local government website.
+(http://permit.mee.gov.cn/permitExt/
+The details of such information were
+published on national pollutant discharge
+license management information platform
+(1) Pollutant discharge information
+In the reporting period, certain
+subsidiaries of Sinopec Corp. listed
+as major pollutant discharge units
+announced by national or local ecological
+and environmental authorities have
+acquired their pollutant discharge license
+in accordance with the requirements
+of the national list of fixed pollution
+source emission permit classification
+management and disclosed environmental
+information as required by the relevant
+authorities and local government.
+DEPARTMENTS
+BY ENVIRONMENTAL PROTECTION
+SOLUTIONS OF COMPANIES AND THEIR
+SUBSIDIARIES AS MAJOR POLLUTANT
+DISCHARGING COMPANIES IDENTIFIED
+ENVIRONMENTAL PROTECTION
+4
+(a) Discharge of air pollutants¹
+Discharge information summarized by category is as follows:
+During the reporting period, the Company
+has actively invested in the new energy
+industry, orderly promoted the adjustment
+and optimization of energy consumption
+structure, strengthened the development and
+application of key low-carbon technologies,
+and achieved good results in carbon emission
+reduction. In 2022, the Company decreased
+GHG emissions by 2.46 million tonnes of
+CO2 equivalent, 1.534 million tonnes of CO2
+were recycled, used 0.657 million tons of
+carbon dioxide for EOR, 834 million cubic
+meters of methane were recovered which was
+equivalent to reducing 12.50 million tonnes
+of CO2 emissions.
+3 MEASURES TAKEN TO MITIGATE CARBON
+EMISSION AND ITS EFFECT
+properly disposed.
+emissions decreased by 8.3% and 4.0%
+respectively, and the solid waste was 100%
+In the reporting period, the Company
+deepened the campaign of pollution
+prevention and the special action on ozone
+pollution prevention, focused on ecological
+and environmental protection in the Yangtze
+and Yellow River basins, promoted energy
+conservation and carbon reduction actions,
+persistently carried out Green Enterprise
+Action. The COD and sulphur dioxide
+PERFORMANCE
+2 WORK CONDUCTED IN ECOLOGICAL
+PROTECTION, POLLUTION PREVENTION
+AND ENVIRONMENTAL RESPONSIBILITIES
+1 ENVIRONMENTAL INFORMATION
+The Company established the HSE
+management system since 2001 and
+continued to improve it. During the reporting
+period, the Company has formulated or
+revised 6 environmental management
+policies, and formed the environmental
+protection system consisting of 16 core
+policies as the main body.
+ENVIRONMENT AND SOCIAL RESPONSIBILITIES
+48
+Ammonia
+On 2 June 2022, Mr. Zhao Dong
+was appointed as President of China
+Petrochemical Corporation.
+Note: Total remuneration of Mr. Chen Ge and Mr. Yu Xizhi in 2022 includes incentive bonus based on the performance of 2019-2021.
+Yin Zhaolin
+0
+0
+No
+1,588.1
+2022.5-2024.5
+Employee's Representative Supervisor
+57
+Male
+Guo Hongjin
+Male
+0
+Yes
+2022.5-2024.5
+Supervisor
+59
+Male
+Zhai Yalin
+0
+0
+Yes
+2022.5-2024.5
+0
+57
+Chen Yaohuan
+Male
+Male
+Lv Lianggong
+58
+Male
+Jiang Zhenying
+Position in Sinopec Corp
+Age
+Gender
+Name
+Whether
+paid by the
+shareholders
+Remuneration
+paid by
+Sinopec Corp.
+LIST OF FORMER MEMBERS OF THE BOARD OF SUPERVISORS
+Note: Total remuneration of employee's representative supervisors Mr. Guo Hongjin and Mr. Chen Yaohuan in 2022 includes incentive bonus based on the performance of
+2019-2021.
+0
+0
+No
+1,684.2
+0
+0
+No
+434.9
+Employee's Representative Supervisor
+Employee's Representative Supervisor
+59
+Supervisor
+57
+49
+Wu Bo
+Tenure
+Position in Sinopec Corp.
+Age
+Gender
+Name
+(as at 31 December)
+their related
+(RMB1,000,
+in Sinopec Corp.
+Equity interests
+before tax)
+Whether
+paid by the
+shareholders
+of the
+Company or
+Sinopec Corp.
+paid by
+Remuneration
+LIST OF MEMBERS OF THE BOARD OF SUPERVISORS
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Chen Yaohuan, aged 59, Employee's
+Representative Supervisor of Sinopec
+Corp. Mr. Chen is a professor level
+senior engineer with a Master's degree
+awarded by Central Party School of the
+CPC. In October 2008, he was appointed
+as Deputy Director General of Refining
+Department of Sinopec Corp.; in March
+2015, he was appointed as Executive
+Director, General Manager and Deputy
+Secretary of the CPC Committee of
+Sinopec Beihai Refining and Chemical
+Limited Liability Company; in May
+2015, he was appointed as a member
+of the Standing Committee of the CPC
+Beihai Municipal Committee; in June
+2018, he was appointed as General
+Manager and Deputy Secretary of the
+CPC Committee of Guangzhou Branch
+of Sinopec Corp. and General Manager
+of Guangzhou Branch of Sinopec Assets
+Management Corporation; in July 2019,
+he was appointed as Deputy Director
+General (Director General Level) and
+Chief Engineer of Refining Department of
+Sinopec Corp.; in October 2019, he was
+appointed concurrently as Chairman of
+Sinopec Kantons International Limited
+and Sinopec Kantons Holdings Limited;
+in December 2019, he was appointed
+concurrently as General Manager of
+Refining Department of Sinopec Corp.,
+Vice Chairman and Chairman of Audit
+Committee of Yanbu Aramco Sinopec
+Refining Company Ltd.; in August
+2020, he was appointed concurrently
+as Executive Director and Secretary of
+CPC Committee of Sinopec Petroleum
+Marketing Company Limited and
+Chairman of Sinopec Petroleum Storage
+and Reserve Limited. In January 2021, he
+was elected as Employee's Representative
+Supervisor of Sinopec Corp.
+Yin Zhaolin, aged 57, Employee's
+Representative Supervisor of Sinopec
+Corp. Mr. Yin is a professor level senior
+engineer with a master's degree in
+engineering. In April 2010, he was
+appointed as Deputy General Manager of
+Sinopec Maoming Company; in January
+2017, he was appointed as Executive
+Deputy General Manager of Sinopec
+Maoming Company (administrated as a
+General Manager of a Level-1 Largescale
+Enterprise); in April 2017, he was
+appointed as General Manager and
+Deputy Secretary of CPC Committee
+of Sinopec Maoming Petrochemical
+Company and General Manager of
+Sinopec Maoming Company; in July
+2017, he was appointed to serve a
+temporary position as a member of the
+Standing Committee of the CPC Maoming
+Municipal Committee; in October 2020,
+he was appointed as Executive Director
+and Secretary of CPC Committee of
+the Sinopec Maoming Petrochemical
+Company and the representative of the
+Sinopec Maoming Company, head of
+Maoming-Zhanjiang Integration Leading
+Group; in May 2021, he was elected
+as Supervisor of Sinopec Corp. In May
+2022, he was elected as Employee's
+Representative Supervisor of Sinopec
+Corp.
+Chen Yaohuan
+Yin Zhaolin
+CORPORATE GOVERNANCE (CONTINUED)
+in 2022
+entities in 2022
+2022
+2021
+0
+0
+Yes
+2021.5-2024.5
+Supervisor
+60
+Male
+Zhang Zhiguo
+0
+0
+Yes
+0
+0
+Yes
+2021.5-2024.5
+2022.5-2024.5
+Supervisor
+57
+Male
+Qiu Fasen
+Chairman of the Board of Supervisors
+51
+Male
+Zhang Shaofeng
+Male
+Former Supervisor
+Former Supervisor
+Tenure
+2018.5-2022.5
+2022.5-2022.10
+in 2022
+(RMB1,000,
+before tax)
+0
+Yes
+2021
+2022
+(as at 31 December)
+Sinopec Corp.
+Equity interests in
+Whether paid
+by the
+shareholders of
+the Company
+or their related
+entities in 2022
+Remuneration
+paid by Sinopec
+Corp. in 2022
+(RMB1,000,
+before tax)
+Vice President, Board Secretary
+0
+Senior Vice President
+Chief Financial Officer
+Vice President
+60
+56
+Male
+Male
+54
+Female
+57
+Male
+Age
+Gender
+Huang Wensheng
+Zhao Rifeng
+Position in Sinopec Corp
+1,785.6
+No
+0
+the Company
+or their related
+entities in 2022
+Whether paid
+by the
+shareholders of
+1,804.6
+Remuneration
+paid by Sinopec
+Corp. in 2022
+(RMB1,000,
+before tax)
+1,757.6
+Position in Sinopec Corp
+Former Senior Vice President
+Former Vice President
+60
+60
+Male
+Male
+Age
+Gender
+Yu Xizhi
+Name
+Chen Ge
+LIST OF FORMER MEMBERS OF THE SENIOR MANAGEMENT
+Note: Total remuneration of list of the above members of the senior management in 2022 includes incentive bonus based on the performance of 2019-2021.
+0
+0
+No
+1,783.8
+0
+0
+No
+1,812.3
+0
+Shou Donghua
+Lv Lianggong
+Name
+LIST OF MEMBERS OF THE SENIOR MANAGEMENT
+2020.5-2022.5
+2021.1-2022.5
+Note: Mr. Li Defang holds 40,000 A shares of Sinopec Corp. (the actual holder of the said shares is the spouse of Mr. Li Defang); Total remuneration of Mr. Li Defang in
+2022 includes incentive bonus based on the performance of 2019-2021.
+1,056.6
+179.7
+Former Employee's Representative Supervisor
+Former Employee's Representative Supervisor
+61
+Male
+Lv Dapeng
+61
+Male
+Li Defang
+0
+0
+Yes
+0
+0
+Yes
+2021
+2022
+entities in 2022
+(as at 31 December)
+in Sinopec Corp.
+Equity interests
+of the
+Company or
+their related
+No
+12 INFORMATION ON APPOINTMENT
+OR TERMINATION OF DIRECTORS,
+SUPERVISORS AND SENIOR MANAGEMENT
+On 18 May 2022, Mr. Jiang Zhenying
+resigned as Supervisor of Sinopec Corp.
+due to change of working arrangement;
+Mr. Li Defang and Mr. Lv Dapeng resigned
+as Employee's Representative Supervisors
+of Sinopec Corp. due to their age; Mr.
+Guo Hongjin and Mr. Yin Zhaolin were
+redesignated as Employee's Representative
+Supervisors from Non-employee's
+Representative Supervisors. On the same
+day, Mr. Qiu Fasen, Mr. Lv Lianggong, Mr.
+Wu Bo and Mr. Zhai Yalin were elected as
+Supervisors of Sinopec Corp.
+40,000
+No
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+44
+Corporate Governance
+43
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Huang Wensheng, aged 56, 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.; in August 2009, he was
+appointed 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 June
+2018, he was appointed concurrently as
+Director General of Department of Capital
+Management and Financial Services of
+Sinopec Corp.; in July 2018, he was
+appointed concurrently as Chairman
+and Secretary of CPC Committee of
+Sinopec Capital Co., Ltd.; in December
+2019, he was appointed as President of
+Department of Capital Management and
+Financial Services of Sinopec Corp. In
+May 2012, he was appointed as Secretary
+to the Board of Directors of Sinopec
+Corp.; in May 2014, he was appointed as
+Vice President of Sinopec Corp.
+Huang Wensheng
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+42
+Zhao Rifeng, aged 60, Vice President of
+Sinopec Corp. Mr. Zhao is a professor
+level Senior Engineer with a Master's
+degree. In July 2000, he was appointed
+as Deputy General Manager of Sinopec
+Jinling Petrochemical Co., Ltd. and
+Deputy Manager of Sinopec Jinling
+Company; in October 2004, he was
+appointed as General Manager of Sinopec
+Jinling Company; in October 2006, he was
+appointed as Vice Chairman and General
+Manager of Sinopec Jinling Petrochemical
+Co., Ltd.; in November 2010, he was
+appointed as Chairman, General Manger,
+Deputy Secretary of CPC Committee of
+Sinopec Jinling Petrochemical Co., Ltd.;
+in August 2013, he was appointed as
+Director General of Refining Department
+of Sinopec Corp.; in December 2017, he
+was appointed as the Director General
+of the Marketing Department of Sinopec
+Corp. and Chairman and Secretary of
+CPC Committee of Sinopec Marketing
+Company Limited; in December 2019,
+he was appointed as the President of
+the Marketing Department of Sinopec
+Corp. and Chairman and Secretary of
+CPC Committee of Sinopec Marketing
+Company Limited. In February 2018,
+he was appointed as Vice President of
+Sinopec Corp.
+Shou Donghua, aged 54, Chief Financial
+Officer of Sinopec Corp. Ms. Shou is
+a professor level senior accountant
+with a Master's degree of business
+administration. In July 2010, she was
+appointed as the Chief Financial Officer
+of Sinopec Zhenhai Refining & Chemical
+Company; in October 2014, she was
+appointed as Deputy Director General
+of Human Resource Department of
+Sinopec Corp.; in August 2017, she
+was appointed as the Secretary of CPC
+Committee of Sinopec Zhenhai Refining &
+Chemical Company and Deputy General
+Manager of Sinopec Zhenhai Refining
+& Chemical Company; in August 2018,
+she was appointed as the Director
+General of Finance Department of
+China Petrochemical Corporation and
+concurrently served as the Chairman
+of Sinopec Century Bright Capital
+Investment Limited; in December 2019,
+she was appointed as General Manager
+of Finance Department of Sinopec Corp.
+and concurrently served as the Chairman
+of Sinopec Century Bright Capital
+Investment Limited; in January 2020, she
+was appointed as Chief Financial Officer
+of Sinopec Corp.
+(3) Other Members of Senior Management
+Lv Lianggong, aged 57, Senior Vice
+President of Sinopec Corp. Mr. Lv is a
+professor level senior engineer with a
+master's degree. In December 2001,
+he was appointed as Deputy Manager
+of Sinopec Jinan Company; in August
+2008, he was appointed as Manager and
+Deputy Secretary of the CPC Committee
+of Sinopec Jinan Company; in December
+2008, he was appointed as General
+Manager and Deputy Secretary of the CPC
+Committee of Sinopec Jinan Company;
+in December 2016, he was appointed as
+General Manager and Deputy Secretary
+of the CPC Committee of Anqing
+Petrochemical General Plant of China
+Petrochemical Corporation and General
+Manager of Sinopec Anqing Company; in
+July 2017, he was appointed to serve a
+temporary position as a member of the
+Standing Committee of the CPC Anqing
+Municipal Committee; in September
+2018, he was appointed as the General
+Manager and Deputy Secretary of the
+CPC Committee of Sinopec Zhenhai
+Refining & Chemical Company; in
+December 2019, he was appointed as
+Representative and Secretary of the CPC
+Committee of Sinopec Zhenhai Refining
+& Chemical Company; in December
+2020, he was appointed as Deputy
+Chief Economist, Director General of
+Organization Department of Leading Party
+Member Group of China Petrochemical
+Corporation and President of Human
+Resource Department of Sinopec Corp.; in
+June 2021, he was appointed as Director
+General of the Office of the Organizational
+Structure Establishment Committee of
+Leading Party Member Group of China
+Petrochemical Corporation; in August
+2022, he was appointed as a Member
+of the Leading Party Member Group
+and Deputy General Manager of China
+Petrochemical Corporation. In May 2022,
+he was elected as Supervisor of Sinopec
+Corp., and in October 2022, he was
+appointed as Senior Vice President of
+Sinopec Corp.
+Zhao Rifeng
+Shou Donghua
+Lv Lianggong
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+Corporate Governance
+41
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+0
+0
+40,000
+Corporate Governance
+75
+Discharge Standards for Pollutants in the Synthetic Resin Industry (GB31572-2015)
+continuous Discharge Standards for Pollutants in the Petroleum Refining Industry (GB31570-2015)
+Discharge Standards for Pollutants in the Petrochemical Industry (GB31571-2015)
+Environment and Social Responsibilities
+49
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+EXPAND THE ACHIEVEMENTS IN POVERTY-
+ALLEVIATION AND RURAL REVITALIZATION
+During the reporting period, the Company
+earnestly implemented the decisions and
+plans of rural revitalization of the State,
+improved assistance working mechanism,
+and coordinated to promote the support
+of industry, education and consumption.
+In 2022, the Company provided RMB211
+million and introduced RMB231 million
+in rural development support either pro
+bono or for profit, trained 65.3 thousand
+participants, procured RMB1.156 billion of
+products from poverty areas. All of these
+data increased more than 10% year on year.
+The Company dispatched 927 cadres to be
+stationed in villages and recruited 31 internal
+volunteers to participate in the education
+and construction of targeted counties.
+During the reporting period, the Company
+implemented 226 donations with an
+expenditure of RMB398 million, including
+RMB383 million of funds and RMB15 million
+of material. For details, please refer to the
+2022 Sinopec Corp. Sustainability Report.
+6
+5 DONATION AND INVESTMENT IN PUBLIC
+WELFARE PROJECT
+In the reporting period, for subsidiaries
+not listed as major pollution units,
+the Company has acquired related
+permissions from national and local
+government, and enforced environmental
+protection measures. The above-
+mentioned subsidiaries are not obliged
+to disclose in accordance with the
+requirements of national and local
+ecological environment authorities.
+(7) Other environmental information to be
+disclosed
+In the reporting period, there was no
+significant environmental administrative
+penalty on the Company. To the
+knowledge of the Company, Sinopec
+Corp. and its subsidiaries were subject to
+the environmental administrative penalty
+of RMB2.6 million due to its imperfect
+dust control facilities, failure to install
+triple recovery facilities for oil and gas at
+service stations, etc.
+(6) Administrative penalties due to
+environmental problems in the reporting
+period
+In the reporting period, the Company
+continuously improved its self-monitoring
+scheme in accordance with the industry
+guideline, enforced the new requirements
+for sewage, flue gas and noise
+monitoring, and disclosed the monitor
+information as required.
+(5) Scheme for environmental self-
+monitoring
+and nitrogen
+In the reporting period, the Company
+complied with the requirements for
+environmental incident contingent scheme
+by the State and persistently improved
+its contingent scheme against sudden
+environmental incidents of enterprises
+and weather with severe pollution.
+40
+government.
+In the reporting period, the Company
+standardized environmental protection
+management for construction projects,
+enforced whole process environmental
+management on construction and
+operation, with measures of the
+"simultaneous three" implemented, all
+new projects have acquired approval
+for environmental evaluation from
+(3) Environmental influence evaluation
+for construction projects and other
+administrative permit for environmental
+protection
+In the reporting period, the Company
+built prevention and control facilities for
+sewage, flue gas, solid waste and noise in
+accordance with the requirements of the
+national and local pollution prevention
+and environmental protection standards,
+maintained effective and stable operation
+of pollution prevention and control
+facilities. For details, please refer to the
+2022 Sinopec Corp. Sustainability Report.
+prevention facilities
+(2) Construction and operation of pollution
+Note 5: The actual annual average concentration of the main discharge outlets is within the corresponding disclosure range, and the public information of the
+ecological and environmental department can be consulted for details.
+Note 4: The permitted concentration limit are major industrial discharge standard limit. The limit of other standards implemented by each company can be found
+in the public information of the ecological authorities.
+(4) Contingent scheme for sudden
+environmental incident
+Note 2: Intermittent discharge from some vents.
+Note 1: This report discloses the discharge of the Company's oilfield, refining and chemical companies and specialized companies that are included in the key
+management of discharge permits. The data is calculated by self-monitoring data and is ultimately subject to the data published by the local ecological
+authorities.
+Discharge Standards for Pollutants in the Synthetic Resin Industry (GB31572-2015)
+75 tonnes Daily average data has 100%
+compliance rate.
+0.05.4 mg/L
+Note 3: The discharge standards implemented are the major industrial discharge standard. Other standards such as local emission standards implemented by
+each company can be found in the public information of the ecological authorities.
+5-8mg/L
+Russian Amur Natural Gas 3,6733
+Dec-2021
+company itself
+Chemical Integrated LLC
+December 2021-December 2035
+(the mature date is estimated)
+Joint and several liability Normal
+guarantee
+performance
+Joint and several liability Normal
+guarantee
+No
+No
+No
+No
+No
+No
+The listed
+No
+performance
+409
+8,927
+Total amount of guarantees provided during the reporting period
+Total amount of guarantees outstanding at the end of reporting period" (A)
+No
+Sinopec Corp.
+guarantee guaranteed (yes or no)*2
+company itself
+Amount of
+connected
+completed
+overdue
+overdue Counter-
+parties
+Guarantor
+Sinopec Corp.
+with the Company
+company
+Chemical Co., Ltd.
+Amount*1
+Zhong An United Coal
+5,254
+(date of signing)
+Apr-2018
+Period of guarantee
+April 2018-December 2031
+Type
+condition guaranty
+or not
+or not
+Guarantees by the Company to the controlled subsidiaries
+The listed
+Total amount of guarantee provided to controlled subsidiaries during the reporting period
+The proportion of the total amount of guarantees to the Sinopec Corp.'s net assets (%)
+Total amount of guarantees for the Company (including those provided for controlled subsidiaries)
+Total amount of guarantees (A+B)
+54
+54
+SIGNIFICANT EVENTS (CONTINUED)
+8. SPECIFIC STATEMENTS AND
+INDEPENDENT OPINIONS FROM
+INDEPENDENT NON-EXECUTIVE
+DIRECTORS REGARDING OUTSTANDING
+EXTERNAL GUARANTEES PROVIDED BY
+THE COMPANY DURING AND BY THE END
+OF 2022:
+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 2022 in
+accordance with the requirements of the
+domestic regulatory authorities:
+The external guarantees prior to 2022 had
+been disclosed in previous annual report. The
+aggregate balance of outstanding external
+guarantees provided by Sinopec Corp. for the
+year 2022 was RMB22.3 billion, accounting
+for approximately 2.84% of the Company's
+net assets. The total amount of guarantees
+provided during the reporting period was
+RMB2.7 billion, accounting for approximately
+0.34% of the Company's net assets.
+In accordance with the Articles of Association
+of the Company and the relevant laws
+and regulations and securities regulatory
+authorities on external guarantees, we hereby
+present the following opinions:
+In the reporting period, Sinopec Corp. strictly
+complied with the approval requirements for
+external guarantees by regulatory authorities
+and stock exchanges at home and abroad.
+There was no violation of decision-making
+procedures for offering external guarantees,
+no misconduct impairing the company's
+and minority shareholders' interest, thus
+no awareness of possible significant risks.
+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.
+9 SIGNIFICANT LITIGATION AND
+ARBITRATION
+No significant litigation or arbitration
+relating to the Company occurred during the
+reporting period.
+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 material
+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 fail to
+perform any effective judgments of the courts
+or fail to repay any substantial amount of
+debt due.
+13 TRUSTEESHIP, CONTRACTING AND LEASES
+During the reporting period, the Company
+I did not have any significant trusteeship,
+contracting or leases for the assets of any
+other company, nor has it placed its assets
+with any other company under a trust,
+contracting or lease agreement which is
+subject to disclosure obligations but not
+disclosed.
+14 ENTRUSTED FINANCING AND LOAN
+(1) ENTRUSTED FINANCING
+Significant Events
+Significant Events
+53
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+including:
+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
+2,243
+13,400
+Total amount of guarantee for controlled subsidiaries outstanding at the end of the reporting period (B)
+22,327
+0
+5,254
+0
+5,254
+None
+None
+* 1:Guarantee amount refers to the actual amount of guarantee liability that the company may undertake during the reporting period within the approved guarantee limit.
+* 2:As defined in the Rules Governing the Listing of Stocks on Shanghai Stock Exchange.
+* 3: Excluding the interest corresponding to the loan principal agreed in the guarantee contract, export credit premium and other expenses
+* 4: 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.
+2.84
+Whether
+Transaction date
+Principal
+debt
+On 28 July 2022, Sinopec Corp. entered into
+the Promoter Agreement and the Articles of
+Association of Carbon Technology Company
+with UNIPEC, Nanjing Chemical Company,
+Sinopec OEC, Nanjing Engineering and
+Shanghai Engineering. Pursuant to the
+Promoter Agreement, the parties will jointly
+establish Carbon Technology Company by
+way of capital contribution. The registered
+capital of Carbon Technology Company
+will be RMB2.5 billion, for which, each
+of Sinopec Corp. and Nanjing Chemical
+Company shall contribute RMB1.15 billion
+and RMB850 million in cash, accounting for
+46% and 34% of the registered capital of
+Carbon Technology Company, respectively;
+and each of UNIPEC, Sinopec OEC, Nanjing
+Engineering and Shanghai Engineering shall
+contribute RMB125 million in cash, each
+accounting for 5% of the registered capital
+of Carbon Technology Company.
+For details and definitions, please refer to
+the announcements published by Sinopec
+Corp. on China Securities Journal, Shanghai
+Securities News, Securities Times, and on
+the website of Shanghai Stock Exchange on
+29 July 2022, and on the website of Hong
+Kong Stock Exchange on 28 July 2022.
+4. DELISTING AMERICAN DEPOSITARY
+SHARES FROM THE NEW YORK STOCK
+EXCHANGE AND THE LONDON STOCK
+EXCHANGE
+Based on comprehensive considerations,
+including the small volume of the underlying
+H Shares of Sinopec Corp's outstanding
+American Depositary Shares (ADSs)
+compared to the total volume of its H
+Shares, the limited trading volume of its
+ADSS relative to the worldwide trading
+volume of its H Shares and the considerable
+administrative burden of maintaining the
+listing of the ADSS on the New York Stock
+Exchange (NYSE), the registration of the
+ADSS and the underlying H Shares with
+the United States Securities and Exchange
+Commission and complying with the periodic
+reporting and related obligations of the
+U.S. Securities Exchange Act of 1934 (as
+amended) in the long term, Sinopec Corp.
+determined to apply for the voluntary
+delisting of its ADSS from the NYSE and
+notified the NYSE on 12 August 2022
+(Eastern Time in the U.S.). The delisting from
+the NYSE has taken effect on 8 September
+2022 (U.S. Eastern time).
+On 3 October 2022, Sinopec Corp. has
+applied for the cancellation of the listing of
+its ADSS as global depositary receipts on
+the standard listing segment of the Official
+List of the Financial Conduct Authority and
+of trading on the Main Market of the London
+Stock Exchange plc (the Delisting from the
+London Stock Exchange). The Delisting from
+the London Stock Exchange has taken effect
+on 1 November 2022 (London time).
+On 2 November 2022, Sinopec Corp. has
+delivered a termination letter to Citibank,
+N.A., the depositary for its ADSS, for the
+termination of the ADS programme of
+Sinopec Corp. (the ADS Programme). The
+termination of the ADS Programme has
+taken effect on 5 December 2022 (Eastern
+Time in the U.S.).
+For details, please refer to the
+announcements published by Sinopec Corp.
+on China Securities Journal, Shanghai
+Securities News, Securities Times, and on
+the website of Shanghai Stock Exchange on
+13 August, 3 October and 3 November 2022,
+and on the website of Hong Kong Stock
+Exchange on 12 August, 3 October and 2
+November 2022.
+5. THE DAILY RELATED TRANSACTIONS WITH
+CHINA OIL & GAS PIPELINE NETWORK
+CORPORATION (PIPECHINA) DURING THE
+REPORTING PERIOD
+On 27 January 2022, the Board approved
+the daily related transaction cap in relation
+to refined oil pipeline transportation services
+between the Sinopec Marketing Co. Limited
+and PipeChina for the period from 1 January
+2022 to 31 December 2022.
+3. FORMATION OF A JOINT VENTURE
+For details, please refer to the
+announcements published by Sinopec Corp.
+on China Securities Journal, Shanghai
+Securities News, Securities Times, and on
+the website of Shanghai Stock Exchange
+on 28 January 2022, and on the website of
+Hong Kong Stock Exchange on 27 January
+2022.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+51
+Significant Events
+Significant Events
+SIGNIFICANT EVENTS (CONTINUED)
+6 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
+Type of
+Whether bears
+Whether strictly
+The actual aggregate amount of the daily
+related transaction between the Sinopec
+Marketing Co. Limited and PipeChina
+regarding refined oil pipeline transportation
+services from 1 January 2022 to 31
+December 2022 was RMB4.982 billion.
+Background
+For details and definitions, please refer to
+the announcements published by Sinopec
+Corp. on China Securities Journal, Shanghai
+Securities News, Securities Times, and on
+the website of Shanghai Stock Exchange on
+29 July 2022 and 29 December 2022, and
+on the website of Hong Kong Stock Exchange
+on 28 July 2022 and 28 December 2022.
+2. ASSET TRANSACTIONS WITH INEOS
+SIGNIFICANT EVENTS
+1 MAJOR PROJECTS
+(1) Zhenhai Refining & Chemical Expansion
+Project (phase 2)
+Zhenhai Refining & Chemical Expansion
+Project (phase 2) consists of building
+11,000,000 tpa refinery project and
+600,000 tpa propane dehydrogenation
+and downstream units, etc. The project
+began in June 2022 and mechanical
+completion is expected to be finished in
+December 2024. The Company's self-
+owned fund accounts for 30% of the
+project investment and bank loan is the
+main source of the remaining funds. As
+of 31 December 2022, the accumulated
+amount invested was RMB6.7 billion.
+(2) Tianjin Nangang Ethylene and
+Downstream High-end New Material
+Industry Cluster Project
+Tianjin Nangang Ethylene and
+Downstream High-end New Material
+Industry Cluster Project consists of
+1,200,000 tpa ethylene units and
+downstream processing units, etc.
+The project began in May 2021 and
+mechanical completion is expected to
+be finished in the end of 2023. The
+Company's self-owned fund accounts
+for approximately 30% of the project
+investment and bank loan is the main
+source of the remaining funds. As of
+31 December 2022, the accumulated
+amount invested was RMB13.5 billion.
+(3) Hainan 1,000,000 tpa Ethylene and
+Refining Expansion Project
+Hainan Ethylene and Refining Expansion
+Project mainly consists of 1,000,000
+tpa ethylene and auxiliary units, etc. The
+project started at the end of December
+2018 and was achieving the mechanical
+completion since June 2022. On 20
+December 2022, the polypropylene plant
+was successfully commenced start-up
+phase and produced qualified products,
+and other plants entered the start-up
+phase successively. The Company's self-
+owned fund accounts for approximately
+30% of the project investment and bank.
+loan is the main source of the remaining
+funds. As of 31 December 2022, the
+accumulated amount invested was
+RMB26.6 billion.
+(4) Jiujiang Refining & Chemical PX Project
+Jiujiang Refining & Chemical PX Project
+mainly consists of aromatics extraction,
+xylene fractionation, disproportionation
+and transalkylation, adsorption separation
+and isomerization units, etc. Aromatics
+production capacity will increase 0.89
+million tons per year after the project
+is completed. The project started
+construction in May 2020 and was put
+into operation in June 2022. The main
+source of the investment funds is bank
+loans. As of 31 December 2022, the
+accumulated investment was RMB3.5
+billion.
+(5) Yizheng PTA Project
+On 28 July 2022, the Company entered
+into transaction documents with certain
+subsidiaries of INEOS Limited (INEOS) with
+respect to the cooperation on Shanghai
+SECCO Petrochemical Co., Ltd. (Shanghai
+SECCO) and other projects. Pursuant to
+the relevant transaction documents, the
+Company agreed to conditionally sell, and
+INEOS Investment (Shanghai) Company
+Limited agreed to conditionally purchase,
+50% equity interest in Shanghai SECCO
+(SECCO Transaction); Sinopec Corp. agreed
+to purchase, and INEOS Styrolution APAC
+Pte Limited agreed to sell, 50% equity
+interest in INEOS Styrolution Advanced
+Materials (Ningbo) Pte Ltd (Ningbo
+Styrolution) and Sinopec Corp. agreed to
+provide corresponding shareholders' loans
+to Ningbo Styrolution. Sinopec Corp. and
+INEOS Tianjin Holdings Limited also agreed
+to form the INEOS Sinopec HDPE (Tianjin)
+Limited (tentative name) as a joint venture
+on a 50:50 basis, for the construction
+of a 500,000 tonnes/year High Density
+Polyethylene (HDPE) project in Tianjin. On
+28 December 2022, SECCO Transaction
+has satisfied the conditions precedent
+to completion and was completed. Upon
+completion of the SECCO Transaction,
+Shanghai SECCO ceased to be a subsidiary
+of the Company.
+Yizheng 3 million tpa PTA Project mainly
+consists of oxidation units, purification
+units and auxiliary units, etc. The project
+started in July 2021 and the mechanical
+completion is expected to be finished
+in October 2023. The Company's self-
+owned fund accounts for 30% of the
+project investment and bank loan is the
+main source of the remaining funds. As
+of 31 December 2022, the accumulated
+amount invested was RMB2.7 billion.
+Guided by the principle of "overall
+deployment, stage-wise implementation
+and fully consideration", the building of
+first phase of production capacity was
+unfolded comprehensively since August
+2018. The phase-one 1 billion-cubic-
+meter capacity per year was built up and
+put into operation in December 2020.
+It is expected to complete phase-two 2
+billion-cubic-meter capacity per year in
+December 2023. The Company's self.
+owned fund accounts for 30% of the
+project investment and bank loan is the
+main source of the remaining funds. As
+of 31 December 2022, the accumulated
+amount invested was RMB7.5 billion.
+(7) Tianjin LNG Project (phase 2)
+Tianjin LNG Project (phase 2) mainly
+consists of a new wharf, and five new
+220,000-cubic-meter storage tanks etc.
+LNG capacity will reach 11 million tons
+per year after phase 2 is completed.
+The project started in January 2019
+and is expected to put into operation in
+November 2023. The Company's self-
+owned fund accounts for approximately
+30% of the project investment and bank
+loan is the main source of the remaining
+funds. As of 31 December 2022, the
+accumulated amount invested was
+RMB3.9 billion.
+(8) Longkou LNG Project
+Longkou LNG Project mainly consists
+of a wharf, terminal and power plant
+warm drainage and water intake. The
+designed LNG capacity in the first phase
+is 6 million tons per year. One LNG berth
+with 0.266 million cubic meter will be
+modified and four 0.22 million cubic
+meter storage tanks will be newly built
+up. The project started in November 2021
+and is expected to put into operation in
+December 2024. The Company's self.
+owned fund accounts for approximately
+30% of the project investment and bank
+loan is the main source of the remaining
+funds. As of 31 December 2022, the
+accumulated amount invested was
+RMB3.6 billion.
+Significant Events
+50
+50
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+(6) Weirong Shale Gas Project (phases 1 &
+2)
+Whether
+Undertaking
+Contents
+Other
+China Petrochemical
+Corporation
+Yes
+Yes
+Abandonment of business competition and conflicts of
+interest with Sinopec Corp.
+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) within 10 years from the date of the undertaking, 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.
+Within 10 years after 29 April 2014
+or the date when China Petrochemical
+Corporation acquires the assets
+As of the date of this report, Sinopec Corp. had no undertakings in respect of financial performance, asset injections or asset restructuring that had
+not been fulfilled, nor has Sinopec Corp. made any profit forecast in relation to any asset or project.
+Other undertakings
+52
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+7 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
+Major external guarantees (excluding guarantees for controlled subsidiaries)
+Unit: RMB million
+During the reporting period, the Company
+was not involved in any entrusted
+financing.
+guaranteed
+for
+Relationship
+Name of
+guaranteed
+42
+Party
+6
+5
+Term for performance
+deadline or not
+Undertakings related to Initial Public
+Offerings (IPOs)
+IPOs
+China Petrochemical
+1
+Corporation
+2
+Compliance with the connected transaction agreements;
+Solving the issues regarding the legality of land-
+Avoiding competition within the same industry;
+From 22 June 2001
+performed or not
+Yes
+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.);
+4
+Granting licenses for intellectual property rights;
+No
+Whether
+Class
+Working capital loan
+Connected Transactions
+CONNECTED TRANSACTIONS (CONTINUED)
+Decision-making procedures: The 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
+its internal control procedures, adjusts the
+scope and the relevant caps of continuing
+connected transactions every three
+years, and will announce and implement
+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 38 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
+were approved at the 2nd meeting of the
+eighth session of the Board and have
+complied with the requirements under
+Chapter 14A of the Hong Kong Listing Rules.
+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
+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:
+(a) The transactions have been conducted
+in the ordinary course of the Company's
+business;
+(b) The transactions have been entered into
+based on either of the following terms:
+i.
+normal commercial terms; or
+ii. 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; and
+4 OTHER SIGNIFICANT CONNECTED
+TRANSACTIONS OCCURED THIS YEAR
+For details, please refer to item 2
+"Asset transactions with INEOS", item 3
+"Formation of a joint venture" and item
+5 "The transactions with China Oil & Gas
+Pipeline Network Corporation" of the section
+"Significant Events".
+5 FUNDS PROVIDED BETWEEN RELATED PARTIES
+Funds to related parties
+Balance
+at the
+beginning
+Related Parties
+Relations
+of the year
+Amount
+incurred
+Sinopec Group
+58
+58
+57
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+In addition, relevant government departments
+also issued other policies and guidance
+related to energy work and green and low-
+carbon transformation, emphasizing the
+need to strengthen the foundation of energy
+supply security, while focusing on improving
+the elasticity and resilience of energy
+supply, promoting the development of the
+clean energy industry, and promoting the
+construction of energy infrastructure adapted
+to the green and low-carbon transformation.
+56
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+CONNECTED TRANSACTIONS
+Connected Transactions
+1 CONTINUING CONNECTED TRANSACTIONS
+AGREEMENTS 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, two parties entered into
+the continuing connected transactions
+agreements.
+On 27 August 2021, Sinopec Corp. and
+China Petrochemical Corporation entered
+into the continuing connected transactions
+sixth supplemental agreement. The
+resolution relating to continuing connected
+transactions for the three years from 2022 to
+2024 was approved at the first extraordinary
+general meeting of Sinopec Corp. for the
+year of 2021 held on 20 October 2021. For
+details of the above continuing connected
+transactions, please refer to relevant
+announcements published on 30 August
+2021 in China Securities Journal, Shanghai
+Securities News and Securities Times and on
+the website of the Shanghai Stock Exchange
+and on 29 August 2021 on the website of the
+Hong Kong Stock Exchange. The capitalised
+terms used in this section shall have the
+same meaning as that used in the above-
+mentioned announcements.
+2 COMPLIANCE OF DISCLOSURE AND
+APPROVALS OF CONTINUING CONNECTED
+TRANSACTIONS BETWEEN THE COMPANY
+AND SINOPEC GROUP WITH HONG KONG
+LISTING RULES AND THE SHANGHAI
+LISTING RULES
+3
+Other related parties
+Pursuant to the Hong Kong Listing Rules and
+the Shanghai Listing Rules, the continuing
+connected transactions between the
+Company and Sinopec Group are subject
+to disclosure, independent non-executive
+directors' approval and/or independent
+shareholders' approval (if needed) based on
+the nature and the value of the transactions.
+Sinopec Corp. has fully complied with
+the above requirements in relation to the
+continuing connected transaction between
+the Company and Sinopec Group.
+ACTUAL CONTINUING CONNECTED
+TRANSACTIONS ENTERED INTO BY THE
+COMPANY DURING THE YEAR
+In the reporting period, purchases expenses
+of the continuing connected transactions
+of the Company was RMB244.36 billion,
+representing 7.31% of the total amount of
+this type of transactions for the reporting
+period, including purchases of products
+and services (procurement, storage,
+transportation, exploration and production
+services, and production-related services) of
+RMB231.831 billion, payment of property
+rent of RMB938 million (the annual value
+of right-of-use assets relating to property
+lease of RMB2,565 million), payment of land
+rent of RMB11.046 billion (annual value of
+right-of-use assets relating to land lease of
+RMB30.222 billion), and interest expenses
+of RMB545 million. The sales income of the
+continuing connected transactions of the
+Company during the reporting period was
+RMB135.696 billion, representing 3.95% of
+the total amount of this type of transactions
+for the reporting period, including sales of
+products of RMB134.345 billion, agency.
+commission income of RMB144 million,
+and interest income of RMB1,207 million.
+Entrusted loan provided by the Company to
+the Connected Subsidiaries was RMB550
+million. For definitions, please refer to
+the announcements published by Sinopec
+Corp. on China Securities Journal, Shanghai
+Securities News, Securities Times, and on
+the website of Shanghai Stock Exchange on
+30 August 2021, and on the website of Hong
+Kong Stock Exchange on 29 August 2021
+and 3 September 2021.
+The amounts of the above continuing
+connected transactions between the
+Company and Sinopec Group did not
+exceed the relevant caps for the continuing
+connected transactions as approved by the
+general meeting of shareholders and the
+Board.
+The pricing principles for the continuing
+connected transactions are as follows:
+(a) the government-prescribed price, if any,
+will apply;
+(b) where there is no government-prescribed
+price but where there is a government-
+guidance price, the government-guidance
+price will apply;
+(c) where there is neither a government-
+prescribed price nor a government-
+guidance price, the market price will
+apply; or
+(d) where none of the above is applicable,
+the price for the provision of the products
+or services is to be agreed between
+the relevant parties, which shall be the
+reasonable cost incurred in providing the
+same plus 6% or less of such cost.
+For details of the pricing principle, please
+refer to relevant announcements published
+on 30 August 2021 in China Securities
+Journal, Shanghai Securities News and
+Securities Times and on the website of
+the Shanghai Stock Exchange, and on the
+website of the Hong Kong Stock Exchange on
+29 August 2021.
+The aggregated amount of the continuing
+connected transactions for 2022 of the
+Company was in compliance with the
+relevant requirements of the Hong Kong
+Listing Rules and the Shanghai Listing
+Rules. For performance details of continuing
+connected transaction agreements, please
+refer to Item 3 below.
+The Ministry of Industry and Information
+Technology of the People's Republic of
+China, the NDRC, and other departments
+jointly issued the Guiding Opinions on
+Promoting the High-quality Development of
+the Petrochemical and Chemical Industry
+during the "14th Five Year Plan", calling
+for accelerating the transformation and
+upgrading of traditional industries, and
+accelerating the quality, efficiency, and
+motivation changes in the petrochemical
+and chemical industry. The notice of
+the NDRC on printing and distributing
+the "Measures for the Administration of
+Natural Gas Pipeline Transportation Prices
+(Provisional)" and the "Measures for the
+Supervision and Examination of Natural
+Gas Pipeline Transportation Pricing Costs
+(Provisional)" was officially implemented
+on 1 January 2022. This provision further
+clarified and detailed the pricing principles,
+methods, procedures, cost components,
+and verification methods of trans-provincial
+natural gas pipeline transportation prices.
+Parent company and affiliated companies*
+Associates and joint ventures
+(683)
+4,464
+38,739
+Loans and other accounts receivable and payable
+No material negative impact
+REPORT OF THE BOARD OF DIRECTORS
+The Board is pleased to present the report of
+the Board of Directors for the year ended 31
+December 2022 for the shareholders' review.
+1 MEETINGS OF THE BOARD
+During this reporting period, Sinopec Corp.
+held nine (9) Board meetings. The details
+are as follows:
+(1) The 5th meeting of the eighth session of
+the Board was held by written resolution
+on 27 January 2022, whereby the
+proposals in relation to the following
+matters were approved: (i) the continuing
+related transactions with China Oil & Gas
+Pipeline Network Corporation for the year
+2022; (ii) Internal Control Manual (2022).
+(2) The 6th meeting of the eighth session of
+the Board was held by written resolution
+on 7 March 2022, whereby the proposal
+in relation to transfer of parts of shares
+of Shanghai SECCO to introduce strategic
+investors was approved.
+(3) The 7th meeting of the eighth session of
+the Board was held by on-site meeting
+and via teleconference on 25 March
+2022, whereby the proposals in relation
+to the following matters were approved:
+(i) Work Report of the Board for the year
+2021; (ii) Report on the Fulfillment of
+the Key Targets for the year 2021 and
+the Work Arrangements for the year
+2022; (iii) financial results and business
+performance of the Company for the
+year 2021; (iv) provision for impairment
+for the year 2021; (v) the connected
+transactions for the year 2021; (vi) profit
+distribution plan for the year 2021; (vii)
+audit costs for the year 2021; (viii) to
+authorize the Board to determine the
+interim profit distribution plan of Sinopec
+Corp. for the year 2022; (ix) to authorize
+the Board to determine the plan for
+issuance of debt financing instrument(s);
+(x) Continuous Risk Assessment Report
+of connected transactions between
+Sinopec Corp. and Sinopec Finance Co.
+and Century Bright; (xi) Report on the
+Implementation of Financial Derivatives
+Business for the year 2021 and the Work
+Plan for the year 2022; (xii) Internal
+Control Assessment Report of Sinopec
+Corp. for the year 2021; (xiii) Financial
+Statements of Sinopec Corp. for the
+year 2021; (xiv) Annual Report of the
+Company for the year 2021; (xv) the re-
+appointment of KPMG Huazhen (Special
+General Partnership) and KPMG as the
+external auditors of Sinopec Corp. for the
+year 2022 and the authorization of the
+Board to determine their remunerations;
+(xvi) Outline of the 14th Five-Year Plan
+(2021-2025) and Vision 2035 of Sinopec
+Corp.; (xvii) Report of Sustainable
+Development of Sinopec Corp. for the
+year 2021; (xviii) to grant to the Board a
+general mandate to issue new domestic
+shares and/or overseas-listed foreign
+shares of Sinopec Corp.; (xix) to grant
+to the Board a mandate to buy back
+domestic shares and/or overseas-listed
+foreign shares of Sinopec Corp.; (xx) to
+revise relevant governance regulations
+of the Company; (xxi) Notice of Annual
+General Meeting for 2021, First A
+Shareholders Class Meeting for 2022,
+and First H Shareholders Class Meeting
+for 2022.
+(4) The 8th meeting of the eighth session of
+the Board was held by written resolution
+on 27 April 2022, whereby the proposals
+in relation to the following matters were
+approved: (i) First Quarterly Report for
+2022; (ii) Form 20-F of the Company for
+the year 2021; (iii) to invest in building
+the Phase II Project of Fujian Gulei
+Refining and Petrochemical Integration.
+(5) The 9th meeting of the eighth session of
+the Board was held by written resolution
+on 18 July 2022, whereby the proposals
+in relation to the following matters were
+approved: (i) to participate the auction
+for exploration right of Bayan Qaidam
+Mine Field; (ii) to invest in building 1.5
+million t/a Ethylene and Refining and
+Petrochemical Integration Project (Phase
+I) in Yueyang area.
+(6) The 10th meeting of the eighth session
+of the Board was held by written
+resolution on 28 July 2022, whereby the
+proposals in relation to the following
+matters were approved: (i) the relevant
+asset transactions with INEOS; (ii)
+the establishment of Sinopec Carbon
+Technology Co., Ltd.
+(7) The 11th meeting of the eighth session of
+the Board was held by written resolution
+on 12 August 2022, whereby the proposal
+to delist the American depositary shares
+of Sinopec Corp. from the NYSE was
+approved.
+(8) The 12th meeting of the eighth session
+of the Board was held by on-site meeting
+and via video conference on 26 August
+2022, whereby the proposals in relation
+to the following matters were approved:
+(i) Report on the Fulfillment of the Key
+Targets for the first half of the year
+2022 and the Work Arrangements for
+the second half of the year 2022; (ii)
+profit distribution plan for the first half.
+of the year 2022; (iii) the Continuous
+Risk Assessment Report of Connected
+Transactions between Sinopec Corp. and
+Sinopec Finance Co. and Century Bright
+for the first half of the year 2022; (iv)
+Financial Statements for the first half
+of the year 2022; (v) Interim Report
+for 2022; (vi) the programme on share
+buy-back by centralized bidding; (vii)
+Management Rules of Authorization of
+the Board of Sinopec Corp.; (viii) Terms
+of References of the President of Sinopec
+Corp.
+(9) The 13th meeting of the eighth session
+of the Board was held by written
+resolution on 28 October 2022,
+whereby the proposals in relation to the
+following matters were approved: (i) the
+appointment of Senior Vice President of
+Sinopec Corp.; (ii) Third Quarterly Report
+for 2022.
+For details of each meeting, please refer
+to the announcements published in China
+Securities Journal, Shanghai Securities News
+and Securities Times after each meeting and
+on the websites of Shanghai Stock Exchange,
+Hong Kong Stock Exchange and Sinopec
+Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+59
+Report of the Board of Directors
+34,275
+5,963
+2,370
+3,593
+Balance
+at the end
+of the year
+9,114
+7,143
+452
+7,595
+Total
+16,940
+(231)
+16,709
+Reason for provision of funds between related parties
+Impacts on the Company
+9,797
+* affiliated companies include subsidiaries, associates and joint ventures.
+Unit: RMB million
+Funds from related parties
+Balance
+at the
+beginning
+of the year
+30,682
+Amount
+incurred
+Balance at
+the end
+of the year
+2,094
+32,776
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+(2) ENTRUSTED LOAN
+18 INFLUENCE ON THE INDUSTRY FROM
+NEWLY-ENFORCED LAWS, ADMINISTRATIVE
+RULES, REGULATIONS AND INDUSTRY
+POLICIES
+16 APPROPRIATION OF NON-OPERATIONAL
+FUNDS BY THE CONTROLLING
+SHAREHOLDER AND ITS RELATED PARTIES
+AND THE PROGRESS FOR CLEARING UP
+Not applicable
+Corporation 51%;
+Sinopec Corp. 49%
+China Petrochemical
+Corporation 100%
+unit: RMB million
+Transaction amount
+Time
+Net changes
+Balance
+Time
+deposit
+in current
+Balance
+Daily Cap
+Interest rate range
+current: 0.35% -1.725%;
+time deposit: 1.62%-7.40%
+at beginning
+deposit
+withdrawn
+deposit
+in the end
+15,708
+9,981
+19,803
+China Petrochemical
+Related party relationship
+Century Bright
+Related party
+Sinopec Finance
+(3) OTHER LOAN
+Class
+Project construction loan
+(4) OTHER FINANCING AND DERIVATIVE INVESTMENT
+unit: RMB million
+Origin
+Transaction
+amount
+(154)
+Undue
+amount
+Overdue
+0
+6,713
+0
+Origin
+Self-owned fund
+Transaction
+amount
+876
+Undue
+amount
+Overdue
+6,626
+During the reporting period, the Company was not involved in other financing or derivative investment.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+15 BUSINESS WITH SINOPEC FINANCE AND CENTURY BRIGHT
+(1) DEPOSIT
+unit: RMB million
+17 STRUCTURED ENTITY CONTROLLED BY
+THE COMPANY
+None
+12,599
+current: 0.00% 0.50%; time
+deposit: 0.01%-5.70%
+unit: RMB million
+Related party relationship
+China Petrochemical Corporation 51%;
+Sinopec Corp. 49%
+Business nature
+Credit
+Balance
+in the end
+Discounted bills
+7,838
+0
+Transaction
+amount
+18,567
+5,057
+Note: the occurred amount includes the newly issued bills and discounts in the year
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+55
+Significant Events
+Significant Events
+SIGNIFICANT EVENTS (CONTINUED)
+In order to regulate connected transactions
+between the Company and Sinopec Finance
+Co. (Sinopec Corp.'s domestic settlement
+center) and to ensure the safety and liquidity
+of the deposits of the Company at Sinopec
+Finance Co., 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, ensuring the Company's discretion to
+use and control its deposits with Sinopec
+Finance Co. At the same time, as the
+controlling shareholder of Sinopec Finance
+Co., China Petrochemical Corporation
+undertook that in case of an emergency
+when Sinopec Finance Co. has difficulty
+in making payments, China Petrochemical
+Corporation would increase the capital of
+Sinopec Finance Co. to meet the need for
+the purpose of making payment.
+In order to regulate connected transactions
+between the Company and Century Bright
+(Sinopec Corp.'s overseas settlement
+center), Century Bright ensures the
+safety of the deposits of the Company at
+Century Bright by strengthening internal
+risk control 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 restrictions
+on Century Bright regarding the provision
+of overseas financial services. Century
+Bright 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, China
+Petrochemical Corporation entered into a
+keep-well agreement with Century Bright
+in 2013, in which China Petrochemical
+Corporation undertakes that when Century
+Bright has difficulty in making payments,
+China Petrochemical Corporation will ensure
+that Century Bright will fulfill its repayment
+obligation through various channels.
+The deposits of the Company at Sinopec
+Finance Co. and Century Bright during the
+reporting period are in strict compliance
+with the relevant caps as approved at the
+general meeting of Sinopec Corp. During
+daily operations, the Company can withdraw
+the full amount of its deposits at the Sinopec
+Finance Co. and Century Bright.
+Related party
+Sinopec Finance
+(3) CREDIT OR OTHER FINANCIAL BUSINESS
+28,049
+Note: generally, the loan interest rate at Sinopec Finance and Century Bright is no higher than that of the same type of loan for the same period from major
+commercial banks.
+45,974
+273,082
+247,518
+(19,073)
+52,465
+Note: generally, the deposit interest rate at Sinopec Finance and Century Bright is no lower than that of the same type of deposits for the same period from major
+commercial banks.
+(2) LOAN
+Related party
+Century Bright
+Sinopec Finance
+unit: RMB million
+RMB80 billion by Sinopec
+Finance and Century Bright
+Related party relationship
+Daily Cap
+111,475
+Interest
+rate range
+0.60%-5.40%
+Balance at
+beginning
+3,199
+Transaction amount
+Total
+withdrawal
+187,411
+Total
+repayment
+189,112
+Balance
+in the end
+1,498
+64,391 1.08%-5.23%
+13,364
+74,239
+59,554
+China Petrochemical Corporation 100%
+China Petrochemical Corporation 51%;
+Sinopec Corp. 49%
+Self-owned fund
+(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.
+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 changes in international
+geopolitics, uncertainty of economic
+recovery, imbalance of global economy,
+competitiveness of industry and trade
+structure, exclusiveness of regional trading
+blocs, polarisation of benefits distribution
+in trade, and politicisation of economic and
+trade issues, as well as political, economic,
+social, security, legal and environmental
+risks in countries where overseas business
+and assets are located, 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.
+November
+October
+Month
+September
+Report of the Board of Directors
+203,905,495.60
+817,300,138.38
+866,958,347.63
+4.06
+December
+4.50
+4.35
+4.19
+4.36
+(RMB)
+Total Amount
+Lowest
+(RMB/share)
+4.07
+(2) Progress in the implementation of share
+repurchase of subsidiaries
+Save as disclosed above, during the
+reporting period, neither Sinopec Corp.
+nor any of its subsidiaries repurchased,
+sold or redeemed their listed shares.
+19 DIRECTORS' INTERESTS IN COMPETING
+BUSINESS
+3.06
+3.22
+63,000,000
+3.37
+3.59
+(HK$)
+(HK$/share)
+(HK$/share)
+(Share)
+54,414,000
+Total Amount
+Lowest
+Price per share
+Highest
+Repurchase Amount
+20 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.
+As at the end of the reporting period, the
+Company has resolved its competition with
+Sinopec Group in the chemical business. For
+details for the positions held by the Directors
+(excluding Independent Non-executive
+Directors) of Sinopec Corp. in the Sinopec
+Group during the reporting period, please
+refer to the section "Corporate Governance"
+of this annual report.
+Highest
+Price per share
+(RMB/share)
+203,299,943
+During the reporting period, the amount of
+charity donations made by the Company
+amounted to RMB447 million.
+16 DONATIONS
+During the 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 RESERVES
+During the reporting period, changes to the
+fixed assets of the Company are set out in
+Note 17 to the financial statements prepared
+in accordance with IFRS in this annual
+report.
+14 FIXED ASSETS
+13 BANK LOANS AND OTHER BORROWINGS
+Details of bank loans and other borrowings
+of the Company as of 31 December 2022
+are set out in Note 30 to the financial
+statements prepared in accordance with
+IFRS in this annual report.
+During the reporting period, other than
+disclosed above, to the best knowledge of the
+Board of the Directors of the Company, none
+of the Directors of the Company, their close
+associates, or shareholders holding more
+than 5% of the shares of the Company had
+any interest in the top five suppliers or the
+top five customers of the Company. There
+were no suppliers, customers, employees
+or others on which the Company's success
+depends.
+The total revenue from the top five customers
+of the Company in 2022 was RMB269,920
+million, accounting for 8.13% of the total
+revenue of the Company, among which the
+sales value to the connected party (Sinopec
+Group) among the five largest customers was
+RMB59,064 million, accounting for 1.78% of
+the total revenue for the year.
+12 MAJOR SUPPLIERS AND CUSTOMERS
+The Company maintained a stable
+cooperation relationship with major suppliers
+and customers. During the reporting period,
+the total value of the purchasing from the
+top five suppliers accounted for 2.18% of
+the total purchasing value of the Company,
+among which the total purchasing value from
+the connected party (Sinopec Group) among
+the five largest supplier was RMB19.392
+billion, accounted for 0.69% of the total
+purchasing value of the Company for the
+year.
+11 DURING THE REPORTING PERIOD, THE
+COMPANY DID NOT VIOLATE LAWS OR
+REGULATIONS WHICH HAVE A MATERIAL
+IMPACT ON THE COMPANY
+10 DURING THE REPORTING PERIOD, THE
+IMPLEMTATION OF ENVIRONMENTAL
+POLICIES BY THE COMPANY
+During the reporting period, the Company
+complied with the environmental policy in
+all material aspects. Details with regard to
+the Company's performance in relation to
+environmental policies and performances are
+provided in the section "Environment and
+Social Responsibilities" in this annual report
+as well as the 2022 Sustainability Report of
+Sinopec Corp.
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+Report of the Board of Directors
+17 PRE-EMPTIVE RIGHTS
+3.67
+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.
+to issue shares to them on a preferential
+basis in proportion to their shareholdings.
+(1) Progress in the implementation of share
+repurchase of Sinopec Corp.
+48,000,000
+191,000,057
+(Share)
+Repurchase Amount
+H Share Repurchase
+November
+September
+October
+Month
+A Share Repurchase
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+64
+19
+As of 31 December 2022, Sinopec Corp.
+has repurchased 442.30 million A shares,
+accounting for 0.37% of the Company's
+total issued shares on 31 December 2022,
+the highest and lowest repurchase prices
+were RMB4.50 and RMB4.06 per share
+respectively, and the total amount paid.
+was RMB1,888,163,981.61 (exclusive of
+transaction fees). For details, please refer
+to the Announcement on the Results of
+the Implementation of Share Repurchase
+disclosed by Sinopec Corp. on the website
+of the Shanghai Stock Exchange on 26
+November 2022. Sinopec Corp. has
+repurchased 732.502 million H Shares,
+accounting for approximately 0.61% of
+the Company's total issued shares on 31
+December 2022, and the total amount paid
+was HK$2,499,261,860.00 (exclusive of
+transaction fees).
+On 21 September 2022, Sinopec Corp.
+commenced the repurchase of A shares and
+H shares. Sinopec Corp. has finished the
+repurchase of A shares on 25 November
+2022, and completed the cancellation of
+all repurchased A shares on 30 December
+2022. For details, please refer to the related
+announcements disclosed by Sinopec
+Corp. on the website of the Shanghai Stock
+Exchange on 26 November 2022 and 30
+December 2022. Sinopec Corp. completed
+the cancellation of repurchased H shares on
+14 October 2022 and 29 December 2022
+respectively. For details, please refer to the
+related announcements disclosed by Sinopec
+Corp. on the website of the Hong Kong
+Stock Exchange on 14 October 2022 and 29
+December 2022.
+On 26 August 2022, to preserve the value
+of both Company and shareholders' equity
+interests, the twelfth meeting of the eighth
+session of the Board considered and
+approved the Plan on Repurchasing the
+Company's Shares by Centralized Bidding
+Transactions. For details, please refer to
+the announcements disclosed by Sinopec
+Corp. on the website of the Shanghai Stock
+Exchange on 29 August 2022 and 20
+September 2022.
+On 18 May 2022, the Annual General
+Meeting for 2021, the First A
+Shareholders Class Meeting for 2022 and
+the First H Shareholders Class Meeting
+for 2022 of Sinopec Corp. considered and
+approved the Resolution to Grant to the
+Board a Mandate to Buy Back Domestic
+Shares and/or Overseas-listed Foreign
+Shares of Sinopec Corp., and authorized
+the Board (or the director authorised by
+the Board) to buy back A Shares or H
+Shares not exceeding 10% of the number
+of A Shares or H Shares of the Company
+in issue.
+18 REPURCHASE, SALES AND REDEMPTION
+OF SHARES
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022 63
+3.13
+3.56
+On 27 April 2022, the 5th meeting of the
+eighth session of the Board of Supervisors
+was held, and the proposal in relation to the
+First Quarterly Report of Sinopec Corp. for
+the three months ended 31 March 2022 and
+20-F Report of Sinopec Corp. for 2021 were
+reviewed and approved at the meeting.
+On 25 March 2022, the 4th meeting of the
+eighth session of the Board of Supervisors
+was held, and the proposals in relation
+to the Financial Statements of Sinopec
+Corp. for 2021, Annual Report of Sinopec
+Corp. for 2021, Sustainable Development
+Report of Sinopec Corp. for 2021, Internal
+Control Assessment Report of Sinopec Corp.
+for 2021, Work Report of the Board of
+Supervisors of Sinopec Corp. for 2021, and
+Work Plan of the Board of Supervisors of
+Sinopec Corp. for 2022, were reviewed and
+approved at the meeting.
+During the reporting period, the Board
+of Supervisors held four (4) meetings in
+total, and mainly reviewed and approved
+the proposals in relation to the Company's
+annual report, financial statements,
+sustainable development report, internal
+control assessment report and working report
+of the Board of Supervisors etc. Details are
+as below:
+In 2022, 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.
+Dear Shareholders:
+REPORT OF THE BOARD OF SUPERVISORS
+On 26 August 2022, the 6th meeting of the
+eighth session of the Board of Supervisors
+was held, the Interim Financial Statements
+of Sinopec Corp. for 2022, and the Interim
+Report of Sinopec Corp. for 2022 were
+reviewed and approved at the meeting.
+68
+67
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Beijing, China, 24 March 2023
+By Order of the Board
+Ma Yongsheng
+Chairman
+Cyber-security risks: The Company has
+a well-established network safety system.
+We establish an emergency response
+mechanism in relation to network security
+operation and information system, build an
+information platform of network security
+risk management and control, operate by
+a professional network security team, and
+devote significant resources to protecting
+our digital infrastructure and data against
+cyber-attacks. However, continuous attention
+should be paid to the coverage and efficiency
+of these protection measures. If our systems
+against cyber-security risk are proved to
+be insufficient or ineffective, we could be
+adversely affected by, among other things,
+disruptions to our business operations, and
+loss of proprietary information, thus causing
+harm to our personnel, 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, in particular increase investment
+in new solutions and technologies such as
+data security solution, business security
+solution, cloud computing, and Internet of
+Things devices.
+currency which is based on US dollar
+denominated prices, the realized price of
+crude oil is based on international crude
+oil price. Despite the fact that, the price
+of the domestic refined oil products will
+change as the exchange rate of the Renminbi
+changes according to the pricing mechanism
+for the domestic refined oil products, and
+the price of other domestic petrochemical
+products will also be influenced by the price
+of the imported products, which to a large
+extent, smooths the impact of the Renminbi
+exchange rate on the processing and sales
+of the Company's crude oil refined products.
+However, the fluctuation of the Renminbi
+exchange rate will still have an effect on the
+income of the upstream sector.
+Report of the Board of Directors
+On 18 October 2022, the 7th meeting of the
+eighth session of the Board of Supervisors
+was held, and the Third Quarterly Report of
+Sinopec Corp. for the three months ended 31
+September 2022 was reviewed and approved
+at the meeting.
+In addition, the Company organised the
+supervisors to attend the general meetings
+of shareholders and meetings of the Board.
+The Company also organised all of the
+supervisors to attend the trainings for
+directors and supervisors of listed companies
+organised by Beijing Securities Supervisory
+Bureau, which have further improved the
+Supervisors' capabilities in performing
+supervisory duties.
+In 2022, global economic growth slowed
+down, and China's economic operation
+remained in a reasonable range. Through
+supervision and inspection on the
+production and operation management as
+well as financial management, the Board
+of Supervisors and all the supervisors
+concluded that facing the complex and
+changeable severe situation and unexpected
+changes, the company gave full play to the
+advantages of integration, made every effort
+to stabilize the operation and expanded
+the market, promoted innovation and
+development, strengthened reform and
+management, prevented risks and guarded
+the bottom line, coordinated and promoted
+all aspects of work, and achieved high-quality
+results. The Board of Supervisors had no
+objection to the supervised issues during the
+reporting period.
+Report of the Board of Supervisors
+69
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+24 March 2023
+Chairman of the Board of Supervisors
+Zhang Shaofeng
+In 2023, 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.
+Fifthly, all connected transactions of the
+Company were in compliance with the
+relevant rules and regulations of domestic
+and overseas listing exchanges. The pricing
+of all the connected transaction was fair and
+reasonable. No behavior detrimental to the
+interests of Sinopec Corp. or its shareholders
+was discovered.
+Fourthly, the consideration for assets
+transactions made by Sinopec Corp. was
+fair and reasonable, neither insider trading,
+damage to shareholders' interest nor losses
+of corporate assets were discovered.
+Thirdly, Sinopec Corp.'s internal control
+system was effective. No material defects of
+internal control were found.
+Secondly, the reports and financial
+statements prepared by Sinopec Corp. for
+2022 complied with the relevant regulation of
+domestic and overseas securities regulators,
+the disclosed information truly, accurately,
+completely and fairly reflected Sinopec
+Corp.'s financial results and operation
+performance. The dividend distribution plan
+was made after comprehensive consideration
+of the long-term interests of Sinopec Corp.
+and the interests of the shareholders. No
+violation of confidential provisions by persons
+who prepared and reviewed the report was
+found.
+management of Sinopec Corp. performed
+their responsibilities pursuant to relevant
+laws and regulations. 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. The
+senior management diligently executed the
+resolutions approved by the Board, made
+all-out efforts to tap potentials and enhance
+efficiency, optimise business structures,
+committed to achieving the annual target
+of business operations set by the Board.
+During the reporting period, the Board of
+Supervisors did not discover any behavior
+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.
+Firstly, the Board and the senior
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Report of the Board of Supervisors
+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
+Investment risks: Petroleum and chemical
+sector is a capital-intensive industry.
+Although the Company has adopted a
+prudent investment strategy, improved the
+investment decision-making rules, developed
+negative investment lists, and conducted
+rigorous feasibility study and risk evaluation
+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.
+have been insured. However, such measures
+may not shield the Company from financial
+losses or adverse impact resulting from such
+contingencies.
+Risks with regard to the operation and
+natural disasters: The process of petroleum
+chemical production is exposed to the high
+risks of inflammation, explosion, toxicity,
+harm and environmental pollution and is
+vulnerable to extreme 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 laying 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
+65
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+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
+and financial divisions, are responsible
+for initial collection and compilation of
+information about reserves. Experts from
+exploration, development and economic
+divisions prepare the initial report on the
+reserves estimate which is then reviewed by
+the RMC at the subsidiary level to ensure the
+qualitative and quantitative compliance with
+technical guidance as well as its accuracy
+and reasonableness. We also engage external
+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.
+Our RMC consists of the senior management
+of the Company, related departments of
+headquarter, Petroleum Exploration and
+Production Research Institute of Sinopec
+(PEPRIS) and senior managers of oilfield
+branches. Mr. Liu Hongbin, the Chairman
+of RMC Senior Vice President of Sinopec
+Corp., with over 30 years of experience
+in oil and gas industry. A majority of our
+RMC members hold master's or Ph.D.
+degrees, and have an average of more
+than 20 years of technical experience in
+relevant professional fields, such as geology,
+engineering and economics.
+197,662,500.00
+1,823,541,375.60
+289,276,443.80
+188,781,540.60
+We manage our reserves estimation through
+a two-tier management system. Our Oil
+and Natural Gas Reserves Management
+Committee, or RMC, at the headquarter level
+oversees the overall reserves estimation
+process including organisation, coordination,
+monitoring and major decision-making,
+and reviews the reserves estimation of
+the Company. Each of our branches has
+a reserves management committee that
+manages and coordinates the reserves
+estimation, organises the estimation process
+and reviews the reserve estimation report at
+the branch level, being responsible to the
+RMC of the Company.
+PRINCIPLES
+24 OIL & GAS RESERVE APPRAISAL
+As of 31 December 2022, the Company has
+not entered into any equity-linked agreement.
+23 EQUITY-LINKED AGREEMENTS
+22 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.
+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 MANAGEMENT CONTRACTS
+535,822,000
+79,266,000
+66
+3.75
+Report of the Board of Directors
+25 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-scale
+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 ranks first in China,
+and has a well-established marketing network
+for chemical products.
+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 fluctuate
+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
+countermeasures, 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 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 over time which may adversely
+affect the Company's financial situation and
+operation performance.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Risks with regard to the changes from
+environmental legislation requirements:
+Our production activities generate waste
+liquids, gases, solids and noises etc. The
+Company has built up the supporting
+pollution prevention and risk control facilities
+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.
+degree, which include: issuing the exploration
+and development licenses of crude oil and
+natural gas; 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 imposition of the special oil
+income levy; the formulation of refined oil
+import and export quotas and procedures;
+the formulation of safety, quality and
+environmental protection standards and the
+formulation of energy conservation policies;
+restrictions on high energy consumption
+and high pollution projects. In addition,
+the changes which have occurred or might
+occur in macroeconomic and industry
+policies such as the opening up the right of
+managing and using of imported crude oil;
+the enhancing control of refined oil export
+quotas; further reforming and improvement
+in pricing mechanism of natural gas, cost
+supervision of gas pipeline and access to
+third party; the accelerated establishment of
+unified natural gas energy measurement and
+pricing system; cancellation of qualification
+approval of the wholesale and storage of
+refined oil business, decentralisation of retail
+business authorisation of refined oil products
+to regional and city level government, further
+improvement in pricing mechanism of refined
+oil products, gas stations investment being
+fully opened to foreign investment; reforming
+in resource tax and environmental tax;
+launching a series of measures to strictly
+restrict energy efficiency and promote both
+energy conservation and carbon reduction in
+key areas; and issuing policies to promote
+transformation from the control of total
+energy consumption and energy consumption
+per unit of GDP to the control of total and
+intensity control of carbon emissions etc.
+Such changes might further intensify market
+competition and have certain effects on the
+operations and profitability of the Company.
+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
+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
+can only counteract the adverse influences of
+industry cycle to a certain extent.
+Risks with regard to the variations from
+macroeconomic situation: The business
+results of the Company are closely related
+to macroeconomic situation. The global
+economy experienced increasing inflationary
+pressure and uncertainty. The development
+of economy is increasingly constrained by
+climate change and environmental issues.
+The Company's business could also be
+adversely affected by other factors such
+as the impact on export due to carbon
+tariffs and trade protectionism from
+certain countries, 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 geopolitics,
+international crude oil price and etc.
+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.
+26 RISK FACTORS
+The Company always attaches great
+importance to the fulfilment of 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.
+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 strength.
+The Company owns a team of professionals
+with expertise 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 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 refined 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 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 utilization
+of its resources, and endowed the Company
+with strong resistance against risks, as well
+as remarkable capabilities in sustaining
+profitability.
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+2022 Internal Control Assessment Report of
+Sinopec Corp. was reviewed and approved at
+the 15th meeting of the eighth session of the
+Board on 24 March 2023, 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.
+During the reporting period, Sinopec
+Shanghai Petrochemical Company
+Limited, a subsidiary of the Company,
+repurchased its H share. For details,
+please refer to the related announcements
+disclosed by Sinopec Shanghai
+Petrochemical Company Limited on the
+website of the Shanghai Stock Exchange
+and the Hong Kong Stock Exchange.
+INTERNAL CONTROL
+0
+0
+7
+2
+9
+0
+9
+1
+1
+9
+0
+0
+7
+2
+7
+1
+7
+1
+0
+0
+7
+0
+1
+7
+0
+0
+7
+12122
+9
+9
+9
+9
+0
+9
+Note 1: No directors were absent from two consecutive meetings of the Board.
+Bi Mingjian
+Ng, Kar Ling Johnny
+Shi Dan
+On-site held by written
+meeting
+resolution
+meetings held
+Name
+Positions
+Chairman
+Director
+No. of
+Board meeting
+Meetings
+(2) Directors' attendance to the Board meetings
+Annual General Meeting for 2021, First A Shareholders Class Meeting for 2022, and First H Shareholders Class Meeting for 2022 were held on
+18 May 2022. Mr. Ma Yongsheng, as Chairman of the Board, and Mr. Yu Baocai, as Director and President, attended the meetings.
+(1) Directors' attendance to the general meetings
+3 DIRECTORS' ATTENDANCE TO THE GENERAL MEETINGS AND TO THE BOARD MEETINGS
+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 had completed all the tasks delegated to them at the
+general meetings.
+2 IMPLEMENTATION OF RESOLUTIONS APPROVED AT THE GENERAL MEETINGS OF SHAREHOLDERS BY THE BOARD
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+60
+Ma Yongsheng
+Zhao Dong
+7
+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
+2022, 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 2022.
+The internal control system of Sinopec Corp.
+related to the financial statements is sound
+and effective.
+7
+Liu Hongbin
+Cai Hongbin
+Li Yonglin
+Ling Yiqun
+Yu Baocai
+Director
+Independent Director
+Independent Director
+Independent Director
+Independent Director
+Director
+Director
+Director
+0
+0
+7
+2
+9
+0
+Absent
+Meetings
+attended by
+proxy
+0
+2
+0
+9
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+2021
+0.47
+0.355
+2022
+Cash dividends (RMB/Share, tax inclusive)
+The dividend distribution and capital reserve capitalization declared by Sinopec Corp. in the past three years are as follows:
+which have 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.
+2020
+0.2
+who are tax residents of other countries
+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. For dividends of 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
+For dividends of domestic investors investing
+in the H Shares of Sinopec Corp. through
+Shanghai Hong Kong and Shenzhen-Hong
+Kong Stock Connect Program, the Company
+Hong Kong Stock Connect (ALERET
+場交易互聯互通機制試點有關稅收政策的通知)
+(Caishui [2014] No. 81) and the Notice on
+the Tax Policies Related to the Pilot Program
+of the Shenzhen-Hong Kong Stock Connect
+(關於深港股票市場交易互聯互通機制試點有關稅
+) (Caishui [2016] No.127):
+Pursuant to the Notice on the Tax Policies
+Related to the Pilot Program of the Shanghai-
+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
+agreements. If the individual holders of H
+Shares are residents of countries which
+had an agreed tax rate of 20% with China,
+or which had 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%.
+Shares are residents of countries which had
+taxes at the rate of 10% on behalf of those
+investors and will report to the competent tax
+authorities for the withholding. For investors
+Cash dividends paid in other ways (such as repurchase of shares)
+(RMB million)
+, 0 0
+4,179
+Total amount of cash dividends (including dividends paid in other ways)
+0
+9 RESPONSIBILITIES FOR THE COMPANY'S
+The aggregate cash dividend declared by
+Sinopec Corp. during three years from 2020
+to 2022 is RMB1.025 per share, with a total
+amount of RMB123.868 billion, the total
+paid amount for repurchase of shares was
+RMB4.179 billion, and the aggregate amount
+with cash dividend was RMB128.047 billion.
+The total dividend payment from 2020 to
+2022 as a percentage of average net profit
+attributed to the shareholders of the listed
+company in the three years is 224.93%.
+Note: The final cash dividend for 2022 is subject to the approval at the 2022 annual general meeting.
+72.8
+79.9
+70.8
+Ratio of the dividends to the net profit attributed to the shareholders of
+the listed company in the consolidated statement (%)
+33,271
+66,302
+Net profits attributed to the shareholders of the listed company shown in the
+consolidated statement for the dividend year (RMB million)
+24,214
+56,903
+46,930
+(RMB million, tax inclusive)
+If the individual holders of H shares are
+residents of Hong Kong, Macau or countries
+which had an agreed tax rate of 10% for
+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%. If the
+individual holders of H Shares are residents
+of countries which had an agreed tax rate of
+less than 10% with China under 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
+H Shares wish to reclaim the extra amount
+withheld due to the application of 10% tax
+rate, Sinopec Corp. would apply for the
+relevant agreed preferential tax treatment
+pursuant to the relevant tax agreement
+provided that the relevant shareholders
+submit the evidence required by the notice of
+the tax agreement to the share register of H
+Shares of Sinopec Corp. in a timely manner.
+Sinopec Corp. will assist with the tax refund
+after the approval of the competent tax
+authority. If the individual holders of H
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+71,208
+The final cash dividend will be distributed
+on or before Friday, 30 June 2023 to all
+shareholders whose names appear on the
+register of members of Sinopec Corp. on
+the record date of Tuesday, 20 June 2023.
+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 Tuesday, 13 June 2023 for
+registration. The H shares register and
+transfer of members of Sinopec Corp. will
+be closed from Wednesday, 14 June 2023
+to Tuesday, 20 June 2023 (both dates
+inclusive). The dividend will be denominated
+and declared in RMB, and distributed to
+the domestic shareholders and investors
+participating in the Shanghai-Hong Kong
+and Shenzhen-Hong Kong Stock Connect
+Programmes in RMB and to the overseas
+shareholders in Hong Kong Dollar. The
+exchange rate for the dividend calculated 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 and distribution
+of such dividend.
+BOARD COMMITTEES ISSUED REVIEW
+OPINIONS TO THE BOARD WHEN
+PERFORMING THEIR DUTIES DURING
+THE REPORTING PERIOD, WITHOUT
+OBJECTION.
+(9) The 2nd meeting of the eighth session of
+the Nomination Committee was held by
+written resolution on 28 October 2022,
+whereby the proposal in relation to the
+appointment of Senior Vice President of
+Sinopec Corp. was approved.
+(8) The 7th meeting of the eighth board
+of the Audit Committee was held by
+written resolution on 28 October 2022,
+whereby the proposals in relation to
+the following matters were approved: (i)
+Third Quarterly Report; (ii) Report on the
+Implementation of the Internal Audit Plan
+in the third quarter of 2022.
+5
+(7) The 6th meeting of the eighth board of
+the Audit Committee was held by on-
+site meeting and via teleconference on
+24 August 2022, whereby the proposals
+in relation to the following matters were
+approved: (i) Notes on Financial Results
+and Business Performance for the first
+half of the year 2022; (ii) Financial
+Statements for the first half of the year
+2022; (iii) Interim Report for 2022; (iv)
+Continuous Risk Assessment Report
+of Connected Transactions between
+Sinopec Corp. and Sinopec Finance Co.,
+Ltd. and Sinopec Century Bright Capital
+Investment Limited for the first half of
+the year 2022; (v) Report on the Main
+Audit Work for the first half of 2022 and
+the Overall Arrangement of Audit Work
+for the second half of 2022.
+(6) The 5th meeting of the eighth board of
+the Audit Committee was held by written
+resolution on 27 April 2022, whereby
+the proposals in relation to the following
+matters were approved: (i) First Quarterly
+Report for 2022; (ii) Form 20-F of the
+Company for the year 2021.
+(5) The 1st meeting of the eighth session of
+the Sustainable Development Committee
+was held by written resolution on 23
+March 2022, whereby the proposals in
+relation to the following matters were
+approved: (i) Report of Sustainable
+Development of Sinopec Corp. for
+the year 2021; (ii) Report on the
+Environmental Protection Work of Sinopec
+Corp. for the year 2021 and the Plan of
+2022; (iii) Report on the Anti-corruption
+Compliance Work of Sinopec Corp. for
+the year 2021 and the Plan of 2022.
+(4) The 1st meeting of the eighth session
+of the Remuneration and Appraisal
+Committee was held by written resolution
+on 23 March 2022 whereby the proposal
+in relation to implementation of the
+rules of the remuneration of directors,
+supervisors and other senior management
+for 2021 was approved.
+of the Audit Committee was held by on-
+site meeting and via teleconference on
+23 March 2022, whereby the proposals
+in relation to the following matters
+were approved: (i) Financial results and
+business performance of the Company
+for the year 2021; (ii) Continuous
+Risk Assessment Report of connected
+transactions between Sinopec Corp. and
+Sinopec Finance Co., Ltd. and Sinopec
+Century Bright Capital Investment Ltd.;
+(iii) Report on the Implementation of
+Financial Derivatives Business for the
+year 2021 and the Work Plan for the
+year 2022; (iv) Financial Statements
+of Sinopec Corp. for the year 2021;
+(v) Annual Report of the Company for
+the year 2021; (vi) Internal Control
+Assessment Report of Sinopec Corp. for
+the year 2021; (vii) Report on Audit Work
+in 2021 and Audit Work Arrangement in
+2022.
+(2) The 4th meeting of the eighth session
+(1) The 3rd meeting of the eighth session of
+the Audit Committee was held by written
+resolution on 27 January 2022, whereby
+the proposal in relation to the Internal
+Control Manual (2022) was approved.
+During the reporting period, the board
+committees held nine (9) meetings, among
+which, Audit Committee held five (5)
+meetings, the Strategy Committee, the
+Remuneration and Appraisal Committee, the
+Sustainable Development Committee, and
+the Nomination Committee, each held one
+(1) meeting. All members of each committee
+had attended the relevant meetings. Details
+of those meetings are as follows:
+4 THE BOARD COMMITTEES MEETINGS AND
+DIRECTORS' ATTENDANCE
+In accordance with the Enterprise Income
+Tax Law of the People's Republic of China
+and its implementation regulations which
+came into effect on 1 January 2008, 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 the cash
+dividends or issuing bonus shares by way of
+capitalization from retained earnings. Any H
+Shares of the Sinopec Corp. which are 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
+nonresident enterprise shareholders. On such
+basis, enterprise income tax shall be withheld
+from dividends payable to such shareholders.
+If holders of H Shares intend to change their
+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 the
+registration of members for H shares of
+Sinopec Corp. as at the record date.
+Report of the Board of Directors
+6 PERFORMANCE OF THE DIRECTORS
+During the reporting period, the Board
+has reviewed and evaluated the self-
+construction and the Directors' performance
+of duties, and is of view that the Board
+diversity policy has been implemented
+effectively, as the Directors come from
+different industries at home and abroad
+with diverse professional background
+and rich management experience, which
+contributes to the Board diversity in terms
+of gender, culture, educational backgrounds,
+professional specialties, etc. The number of
+Directors is reasonable, and the structure
+and composition of the Board are fit for
+the Company's strategic planning, reforms
+and development, as well as operational
+management. The Directors of Sinopec Corp.
+fulfilled their duties diligently in accordance
+with the Articles of Association, 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 their attendance
+of the meeting), reviewed the relevant
+documents with due care. They utilised
+their professional expertise to provide
+suggestions on decision-making of significant
+events. The Directors maintained timely
+and effective communication with the
+management, external auditors and internal
+audit department, and promoted scientific
+decision-making by offering advice on the
+Company's development strategy, operations
+and reform. The Board attaches importance
+to investor relations. The Chairman of the
+Board, Directors and the Management
+communicate with shareholders smoothly
+and efficiently through multiple channels,
+including the General Meetings and results
+conferences.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+(3) The 1st meeting of the eighth session
+of the Strategy Committee was held by
+written resolution on 23 March 2022,
+whereby the proposals in relation to
+the following matters were approved: (i)
+Outline of the 14th Five-Year Plan (2021-
+2025) and Vision 2035 of Sinopec Corp.;
+(ii) the investments plan of 2022 of
+Sinopec Corp.
+Report of the Board of Directors
+61
+At the 15th meeting of the eighth session of
+the Board, the Board approved the proposal
+to distribute a final cash dividend of
+RMBO.195 (tax inclusive) per share for 2022.
+Taking into account the distributed interim
+cash dividend of RMBO.16 (tax inclusive) per
+share for the first half of 2022, the total cash
+dividend for the whole year is RMBO.355 (tax
+inclusive) per share.
+The profit distribution plan of Sinopec Corp.
+for this year will be carried out in accordance
+with the policy and procedures stipulated
+in the Articles of Association, taking into
+account the advice from the minority
+shareholders. Meanwhile, the Independent
+Directors will issue independent opinions.
+The profit distribution policy of Sinopec
+Corp. maintains consistency and steadiness
+and considers 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 allowed to declare
+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 declare
+cash dividends and the distribution of profits
+in cash every year shall be no less than 30%
+of the net profits of the Company realised
+during the corresponding year.
+Proposals for dividend distribution
+The financial results of the Company for
+the year ended 31 December 2022, which
+were prepared in accordance with IFRS and
+the financial position as at that date and
+the accompanying analysis are set out from
+page 149 to page 203 in this annual report.
+A fair review of the Company's business,
+a discussion 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 discussed throughout this annual report
+and included in the sections "Chairman's
+Address", "Business Review and Prospects",
+"Management's Discussion and Analysis" and
+"Significant Events" of this annual report. All
+of the above discussions constitute parts of
+the report of the Board of Directors.
+BUSINESS RESULTS
+8
+DIVIDEND
+7
+Pursuant to requirements of securities
+regulatory authority of China, Independent
+Directors of Sinopec Corp. reviewed the
+performance of the senior management
+of Sinopec Corp. who concurrently are
+senior management in China Petrochemical
+Corporation, and issued a special opinion as
+follows: "The President Mr. Yu Baocai, Senior
+Vice President Mr. Ling Yiqun, Mr. Li Yonglin,
+Mr. Lv Lianggong and Mr. Liu Hongbin,
+each of whom concurrently held position as
+senior management of China Petrochemical
+Corporation, have obtained the exemptions
+for holding concurrent position from CSRC
+in accordance with the applicable rules. In
+2022, Mr. Yu Baocai, Mr. Ling Yiqun, Mr.
+Li Yonglin, Mr. Lv Lianggong and Mr. Liu
+Hongbin strictly abided by the provisions
+of laws and regulations, the Articles of
+Association and the service contracts,
+conscientiously fulfilled their duties of loyalty
+and diligence, implemented the resolutions
+of the Board, and gave sufficient time
+and attention to organize production and
+operation. They protected the interests of
+the Company and its shareholders effectively
+and had not violated the legitimate interests
+of Sinopec Corp. and its shareholders due
+to holding aforesaid concurrent positions in
+China Petrochemical Corporation."
+The Independent Directors of Sinopec Corp.
+fulfilled their duties in good faith as required
+by Terms of Reference of the Independent
+Non-Executive Directors, followed up business
+operation of the company, and conducted
+research on scientific and technological
+innovation. The Independent Directors, Ms.
+Shi Dan, and Mr. Bi Mingjian, attended the
+Annual and Interim Results Conferences in
+2022. The Chairman of the Audit Committee,
+Ng Kar Ling, offered training for finance,
+audit and internal control staff in the
+Company. The professional expertise of each
+Independent Director was brought into full
+play. The Independent Directors put forward
+specific requirements on auditing, issued
+their independent opinions on matters such
+as appointment of senior management,
+connected transactions, profit distribution
+plan, re-appointment of accounting firms,
+share buy-back proposal, providing financial
+assistance, focusing on the protection
+of the minority shareholders' legitimate
+interests, which has helped the Board obtain
+independent views and input. None of the
+directors had any objection to the Company's
+resolutions, and all the suggestions of every
+Director were accepted.
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+62
+62
+Yu Baocai
+President
+(Legal representative)
+Chairman
+Ma Yongsheng
+Surplus reserves
+Total shareholders' equity.
+Total liabilities and shareholders' equity
+Retained earnings
+Minority interests
+Total equity attributable to shareholders of the Company
+These financial statements have been approved for issue by the board of directors on 24 March 2023.
+The accompanying notes form part of these financial statements.
+At 31 December
+2021
+RMB million
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Notes
+At 31 December
+2022
+RMB million
+LO
+5
+145,052
+221,989
+19,335
+Specific reserve
+2
+6182
+78
+Other comprehensive income
+Contract liabilities
+Share capital
+Deferred tax assets
+Long-term deferred expenses
+18,371
+Other non-current assets
+Total non-current assets
+Total assets
+Liabilities and shareholders' equity
+Current liabilities
+Short-term loans
+Derivative financial liabilities
+Bills payable
+Accounts payable
+Capital reserve
+Employee benefits payable
+Other payables
+Non-current liabilities due within one year
+Other current liabilities
+Total current liabilities
+Non-current liabilities
+Long-term loans
+Debentures payable
+Lease liabilities
+Provisions
+Deferred tax liabilities
+Other non-current liabilities
+Total non-current liabilities
+Total liabilities
+Shareholders' equity
+Taxes payable
+7
+178,359
+34,861
+598,932
+196,045
+155,939
+184,974
+120,694
+119,210
+6,464
+8,594
+12,034
+10,007
+19,952
+19,389
+26,523
+24,240
+1,425,500
+1,948,640
+1,331,231
+1,889,255
+25
+27
+29
+30
+27,366
+21,313
+7,313
+2622222222
+Goodwill
+630,758
+34567890
+20
+19
+3,507
+5,939
+9
+7,956
+9,267
+10
+27,009
+35,664
+11
+244,241
+207,433
+29,674
+523,140
+46,364
+24,500
+12
+2
+233,941
+209,179
+730
+767
+13
+14
+15
+16
+17
+18
+558,024
+Intangible assets
+14.80
+Construction in progress
+中國北京
+東長安街1號
+東方廣場畢馬威大樓8層
+郵政編碼:100738
++86 (10) 8508 5000
++86 (10) 8518 5111
+kpmg.com/cn
+畢馬威華振審字第2302663號
+The Shareholders of China Petroleum & Chemical Corporation:
+OPINION
+We have audited the accompanying financial statements of China Petroleum & Chemical Corporation ("the Company"), which comprise the consolidated
+and company balance sheets as at 31 December 2022, the consolidated and company income statements, the consolidated and company cash
+flow statements, the consolidated and company statements of changes in shareholders' equity for the year then ended, and notes to the financial
+statements.
+In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated and company financial position of the
+Company as at 31 December 2022, and the consolidated and company financial performance and cash flows of the Company for the year then ended
+in accordance with Accounting Standards for Business Enterprises issued by the Ministry of Finance of the People's Republic of China.
+BASIS FOR OPINION
+We conducted our audit in accordance with China Standards on Auditing for Certified Public Accountants ("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 are independent
+of the Company in accordance with the China Code of Ethics for Certified Public Accountants ("the Code"), and we have fulfilled our other ethical
+responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
+opinion.
+KEY AUDIT MATTERS
+Key audit matters are those matters that, in our professional judgement, 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.
+Assessment of impairment of fixed assets relating to oil and gas producing activities
+Refer to Note 3 (8) Oil and gas properties, (12) Impairment of other non-financial long-term assets, Note 13 Fixed assets, and Note 58 Principal
+accounting estimates and judgements to the financial statements
+The Key Audit Matter
+The Company reported fixed assets of Renminbi ("RMB") 630,758
+million as at 31 December 2022, a portion of which related to oil and
+gas producing activities. The Company reported impairment losses of
+RMB2,891 million for the fixed assets relating to oil and gas producing
+activities for the year ended 31 December 2022.
+The Company groups fixed assets relating to oil and gas producing
+activities into cash-generating units ("CGUS") for impairment assessment.
+The Company compares the carrying amount of individual CGU with its
+value in use, using a discounted cash flow forecast, which was prepared
+based on the future production profiles included in the oil and gas
+reserves reports, to determine the impairment loss to be recognised.
+We identified assessment of impairment of fixed assets relating to oil and
+gas producing activities as a key audit matter. The value in use amounts
+of these CGUS are sensitive to the changes to future selling prices and
+production costs for crude oil and natural gas, future production profiles,
+and discount rates. Therefore a higher degree of subjective auditor
+judgment was required to evaluate the Company's impairment assessment
+of fixed assets relating to oil and gas producing activities.
+How the matter was addressed in our audit
+The following are the primary procedures we performed to address this
+key audit matter:
+we evaluated the design and tested the operating effectiveness
+of certain internal controls related to the process for impairment
+assessment of fixed assets relating to oil and gas producing
+activities;
+we assessed the competence, capabilities and objectivity of the
+Company's reserves specialists and evaluated the methodology
+adopted by them in estimating the oil and gas reserves against the
+recognised industry standards;
+we compared future selling prices for crude oil and natural gas used
+in the discounted cash flow forecasts with the Company's business
+plans and forecasts by external analysts;
+(特殊普通合夥)
+畢馬威華振會計師事務所
+Telephone +86 (10) 8508 5000
+Fax
++86 (10) 8518 5111
+Internet kpmg.com/cn
+China
+Company Limited
+Fujian Petrochemical Company Limited
+3,223
+10,492
+50
+12,116
+11,240
+823 Production and sale of catalyst products
+1,175 Trading of petrochemical products
+1,747 Import and processing of crude oil, production,
+storage and sale of petroleum products and
+petrochemical products
+1,567 Manufacturing of intermediate petrochemical
+products and petroleum products
+55 Manufacturing of intermediate petrochemical
+products and petroleum products
+19,902 Marketing and distribution of refined
+we compared future production costs and future production profiles
+used in the discounted cash flow forecasts with oil and gas reserves
+reports issued by the reserves specialists; and
+petroleum products
+346 Oil jetty and nature gas pipeline
+3,157 Manufacturing of intermediate petrochemical
+products and petroleum products
+(2,868) Manufacturing of synthetic fibres, resin
+and plastics, intermediate petrochemical
+products and petroleum products
+(1,925) Manufacturing of plastics, intermediate
+petrochemical products and
+petroleum products
+Note 1: All above subsidiaries except Fujian Petrochemical Company Limited are audited by KPMG Huazhen LLP or KPMG.
+2: The above indicated total assets and net profit have been prepared in accordance with CASS. 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, Sinopec Marketing Co., Limited and Sinopec Kantons Holdings Limited. The Board of Directors considered that it would be redundant to disclose
+the particulars of all subsidiaries of Sinopec Corp. and, therefore, only those which have material impact on the results or assets of Sinopec Corp. are set out above.
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE PRC AUDITOR
+KPMG
+AUDITOR'S REPORT
+KPMG Huazhen LLP
+8th Floor, KPMG Tower
+Oriental Plaza
+1 East Chang An Avenue
+Beijing 100738
+(1,101) Production, sale, research and development of
+petroleum, petrochemical, ethylene and
+downstream by-products
+we involved valuation professionals with specialised skills and
+knowledge, who assisted in assessing the discount rates applied in
+the discounted cash flow forecasts against a discount rate range that
+was independently developed using publicly available market data for
+comparable companies in the same industry.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+75
+Certified Public Accountants
+Registered in the People's
+Republic of China
+Yang Jie (Engagement Partner)
+He Shu
+24 March 2023
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+77
+Financial Statements (PRC)
+Financial Statements (PRC)
+(A) FINANCIAL STATEMENTS PREPARED UNDER CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
+CONSOLIDATED BALANCE SHEET
+As at 31 December 2022
+Assets
+KPMG Huazhen LLP
+Beijing, China
+Current assets
+Derivative financial assets
+Accounts receivable
+Receivables financing
+Prepayments
+Other receivables
+Inventories
+Other current assets
+Total current assets
+Non-current assets
+Long-term equity investments
+Other equity instrument investments
+Fixed assets
+Cash at bank and on hand
+Financial assets held for trading
+Right-of-use assets
+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.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS (Continued)
+Financial Statements (PRC)
+REPORT OF THE PRC AUDITOR (CONTINUED)
+KPMG
+OTHER INFORMATION
+The Company's management is responsible for the other information. The other information comprises all the information included in 2022 annual
+report of the Company, 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 is responsible for the preparation and fair presentation of the financial statements in accordance with the Accounting Standards for
+Business Enterprises, and for the design, implementation and maintenance of such internal control necessary to enable that the financial statements
+are free from material misstatement, whether due to fraud or error.
+In preparing the financial statements, management is responsible for assessing the Company'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 intends to liquidate the
+Company or to cease operations, or has no realistic alternative but to do so.
+Those charged with governance are responsible for overseeing the Company's financial reporting process.
+We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and
+communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, related
+safeguards.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
+As part of an audit in accordance with CSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
+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.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
+management.
+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 the Company'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 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 Company to cease to continue as a going concern.
+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.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express
+an opinion on the 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.
+Financial Statements (PRC)
+76
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE PRC AUDITOR (CONTINUED)
+KPMG
+Our objectives are to obtain reasonable assurance about whether the 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.
+10,782
+872,679
+24
+4,010
+16,550
+4,299
+1,121
+4,038
+6,058
+Accounts payable
+107,105
+85,307
+Contract liabilities
+9,769
+7,505
+Employee benefits payable
+8,467
+8,398
+Taxes payable
+12,044
+46,333
+Other payables
+247,480
+211,179
+Non-current liabilities due within one year
+39,990
+16,737
+Other current liabilities
+1,147,784
+1,141,670
+26,372
+914,040
+227,630
+275,105
+12
+2
+382,879
+360,847
+201
+201
+13
+14
+15
+345
+1,002
+296,530
+81,501
+66,146
+91,549
+105,712
+8,095
+9,334
+4,183
+2,875
+7,737
+8,715
+41,365
+34,227
+284,622
+23,408
+13,702
+438,204
+827
+6,024
+1,745
+1,658
+Surplus reserves
+Retained earnings
+217,834
+213,224
+100,947
+116,440
+Total shareholders' equity.
+Total liabilities and shareholders' equity
+These financial statements have been approved for issue by the board of directors on 24 March 2023.
+504,877
+1,141,670
+526,314
+1,147,784
+Ma Yongsheng
+Chairman
+(Legal representative)
+Yu Baocai
+President
+The accompanying notes form part of these financial statements.
+Shou Donghua
+Chief Financial Officer
+Financial Statements (PRC)
+79
+67,897
+63,628
+121,071
+119,896
+412,890
+Non-current liabilities
+Long-term loans
+Debentures payable
+Lease liabilities
+Provisions
+Other non-current liabilities
+Total non-current liabilities
+Total liabilities
+Shareholders' equity
+Share capital
+Capital reserve
+Other comprehensive income
+Total current liabilities
+Specific reserve
+34,258
+9,537
+31,522
+91,878
+104,426
+38,298
+35,271
+2,121
+198,589
+3,103
+208,580
+636,793
+621,470
+56,755
+21,260
+63,661
+70,376
+14,068
+18,276
+344,102
+331,934
+1,011,487
+973,214
+36
+37
+38
+618
+119,896
+121,071
+118,875
+120,188
+3,072
+(690)
+2,813
+2,664
+39
+217,834
+213,224
+323,087
+318,645
+785,577
+775,102
+7,910
+8,079
+19
+43,525
+258,642
+203,919
+125,444
+124,622
+13,617
+14,048
+28,379
+81,267
+28
+119,892
+114,701
+62,844
+151,576
+28,651
+31,762
+667,385
+641,280
+333323
+94,964
+49,341
+12,997
+42,649
+166,407
+170,233
+34
+47,587
+19,159
+140,939
+937,153
+916,041
+Short-term loans
+Derivative financial liabilities
+Bills payable
+Notes
+At 31 December
+2022
+RMB million
+At 31 December
+2021
+RMB million
+54,578
+2
+3,892
+Current liabilities
+IN
+33,841
+110,691
+4,503
+21,146
+703
+227
+9
+10
+10
+4,461
+4,540
+38,517
+46,929
+7
+11,721
+Liabilities and shareholders' equity
+Total non-current assets
+1,948,640
+1,889,255
+Shou Donghua
+Chief Financial Officer
+BALANCE SHEET
+As at 31 December 2022
+Assets
+Current assets
+Cash at bank and on hand
+Financial assets held for trading
+Derivative financial assets
+Accounts receivable
+Receivables financing
+Prepayments
+Total assets
+Other receivables
+Other current assets
+Total current assets
+Non-current assets
+Long-term equity investments
+Other equity instrument investments
+Fixed assets
+Construction in progress
+Right-of-use assets
+Intangible assets
+Long-term deferred expenses
+Deferred tax assets
+Other non-current assets
+Inventories
+41,243
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+10,824
+Sinopec Corp.
+Name of Company
+Sinopec Engineering (Group)
+Co. Ltd
+China Petrochemical Corporation
+2,907,856,000
+65.67%
+67.84%*
+Sinopec Oilfield Service
+Corporation
+10,727,896,364
+56.51%
+Sinopec Oilfield Equipment
+100%
+Corporation
+48.54%
+China Merchants Energy
+Shipping Co., Ltd
+1,095,463,711
+13.48%
+China National Petroleum
+Corporation
+1,830,210,000
+1.00%
+(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.
+*Inclusive of 767,916,000 H shares held
+by Century Bright (overseas wholly-
+owned subsidiary of China Petrochemical
+Corporation) through HKSCC Nominees
+Limited.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+456,756,300
+State-owned Assets Supervision
+and Administration Commission
+of the State Council
+(4) Diagram of the equity and controlling
+relationship between Sinopec Corp. and
+its de facto controller
+China Petrochemical Corporation is the
+de facto controller of Sinopec Corp.
+Interest of corporation controlled by
+the substantial shareholder
+Interest of corporation controlled by
+the substantial shareholder
+Approved lending agent
+1,742,087,831(L)
+81,492,722(L)
+46,520,916(S)
+1,311,332,851(L)
+7.03(L)
+0.33(L)
+0.19(S)
+5.29(L)
+3 ISSUANCE AND LISTING OF SECURITIES
+(1) Issuance of securities during the
+reporting period
+There was no issuance of securities
+of Sinopec Corp. during the reporting
+period.
+(2) Existing employee shares
+There were no existing employee shares
+of Sinopec Corp. during the reporting
+period.
+4 CHANGES IN THE CONTROLLING
+SHAREHOLDERS AND THE DE FACTO
+CONTROLLER
+There was no change in the controlling
+shareholder and the de facto controller of
+Sinopec Corp. during the reporting period.
+(1) Controlling shareholder
+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. Ma Yongsheng.
+Through re-organization in 2000, China
+Petrochemical Corporation injected its
+principal petroleum and petrochemical
+businesses into Sinopec Corp. and
+retained certain petrochemical facilities.
+It provides well-drilling services, well-
+logging services, downhole operation
+services, services in connection with
+manufacturing and maintenance of
+production equipment, engineering
+construction, and utility services including
+water and power and social services.
+Shares of other listed companies directly
+held by China Petrochemical Corporation
+as of the end of the reporting period
+Number of Shareholding
+Shares Held
+Percentage
+(3) Basic information of the de facto
+controller
+71
+Changes in Share Capital and
+Shareholdings of Principal
+Shareholders
+102101480
+102101489
+2021/7/23
+2021/8/5
+2021/8/5
+2020/4/1
+2020/4/1
+2020/5/28
+2021/7/27
+2021/8/6
+2021/8/9
+2023/4/1
+2023/4/1
+2023/5/28
+2026/7/27
+2024/8/6
+2023/8/9
+5
+5
+10
+50
+2
+5
+5
+10
+102101386
+Status of shareholders
+2021/12/27
+The first green
+medium-term
+notes in 2021
+Bond General Information
+BOND GENERAL INFORMATION
+1. INTERBANK BOND MARKET DEBT FINANCING INSTRUMENT OF NON-FINANCIAL ENTERPRISES
+Bond name
+Abbreviation
+code
+Issuance date
+Interest commencement date
+Maturity date
+Amount issued (RMB billion)
+Outstanding balance (RMB billion)
+Interest rate (%)
+102000568
+102000569
+102001109
+2020/3/31
+2020/3/31
+2020/5/27
+The first
+medium-term
+notes in 2020
+The second
+medium-term
+notes in 2020
+The third
+medium-term
+notes in 2020
+The first
+medium-term
+The second
+medium-term
+notes in 2021
+notes in 2021
+The third
+medium-term
+notes in 2021
+20中石化 MTN001 20中石化 MTN002 20中石化 MTN003 21中石化 MTN001 21中石化 MTN002 21中石化 MTN003
+21中石化 GN001
+132100172
+5
+(L) Long position, (S): Short position
+% of Sinopec Corp.'s issued
+voting shares (H Share)
+20.67
+100
+(1,174,802,000)
+119,896,407,646
+100
+Note 1: During the reporting period, 442,300,000 A shares of Sinopec Corp. were repurchased and cancelled, and 732,502,000 H shares of Sinopec Corp. were
+repurchased and cancelled. During the reporting period, there was no issue of new shares, stock dividends, or conversion of provident fund into shares.
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+As of 31 December 2022, the total number of shareholders of Sinopec Corp. was 460,116 including 454,535 holders of A shares and 5,581 holders
+of H shares. As of 28 February 2023, the total number of shareholders of Sinopec Corp. was 456,042. Sinopec Corp. has complied with requirement
+for public float under the Hong Kong Listing Rules.
+(1) Shareholdings of top ten shareholders
+The shareholdings of top ten shareholders as of 31 December 2022 are listed as below:
+Nature of
+24,780,936,600
+Percentage of
+Name of shareholders
+China Petrochemical Corporation
+HKSCC Nominees Limited²
+Shareholders shareholdings %
+State-owned Share
+67.20
+shares held
+80,572,167,393
+H Share
+20.55
+24,634,899,298
+Changes of
+Shareholding¹
+(2,137,060,000)
+(751,307,861)
+Total number of
+(732,502,000)
+21.07
+79.33
+Changes
+Shareholdings
+Share Capital and
+Principal Shareholders
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
+1 CHANGES IN THE SHARE CAPITAL
+Item
+RMB ordinary shares
+Domestic listed foreign shares
+Foreign shares listed overseas
+Others
+Total number of shares.
+Before change
+Amount
+95,557,771,046
+25,513,438,600
+121,071,209,646
+Unit: share
+Changes
+After change
+percentage
+(%)
+78.93
+percentage
+Amount¹
+(442,300,000)
+Amount
+(%)
+95,115,471,046
+Unit: share
+Number of
+shares subject
+to pledges,
+marked or
+lock-up
+0
+Unknown
+235,151,924
+32,788,339
+0
+中國工商銀行 - 上證50交易型開放式指數證券投資基金
+A Share
+0.10
+114,559,876
+1,123,600
+諶賀飛
+A Share
+0.08
+93,611,700
+93,611,700
+0
+0
+Note 1: As compared with the number of shares held as of 31 December 2021.
+Note 2: Century Bright, an overseas wholly-owned subsidiary of China Petrochemical Corporation, held 767,916,000 H shares, accounting for 0.64% of the total issued
+share capital of Sinopec Corp. Those shareholdings were included in the total number of the shares held by HKSCC Nominees Limited.
+Statement on the connected relationship or acting in concert among the above-mentioned shareholders:
+Sinopec Corp. is not aware of any connected relationship or acting in concert among or between the above-mentioned shareholders.
+70
+70
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+(2) Information disclosed by the shareholders of H shares in accordance with the SFO as of 31 December 2022
+Name of shareholders
+BlackRock, Inc.
+Number of shares interested
+0.20
+Citigroup Inc.
+A Share
+0
+中國證券金融股份有限公司
+A Share
+1.94
+2,325,374,407
+0
+0
+中國石油天然氣集團有限公司
+A Share
+1.81
+香港中央結算有限公司
+A Share
+0.96
+中國人壽保險股份有限公司-傳統-普通保險產品-005L-CT001 滬
+A Share
+0.37
+中央匯金資產管理有限責任公司
+A Share
+0.26
+2,165,749,530
+1,145,800,026
+445,619,942
+315,223,600
+2,137,060,000
+0
+90,846,205
+(388,540,489)
+0
+0
+0
+國信證券股份有限公司
+2
+5
+2021/12/28
+Sinopec Lubricant Company Limited
+3,374
+100
+9,299
+4,987
+Sinopec Qingdao Petrochemical
+1,595
+100
+4,976
+2,041
+Company Limited
+Limited Liability Company
+Sinopec Chemical Sales Company
+100
+22,810
+6,344
+Limited
+China International United Petroleum
+5,000
+100
+258,399
+54,442
+and Chemical Company Limited
+Sinopec Overseas Investment
+1,000
+4,303
+11,338
+100
+by Sinopec
+Net Profit/
+Corp. Total Assets
+Net Assets
+1222
+Name of Company
+RMB million
+Sinopec International Petroleum
+8,250
+(%) RMB million RMB million
+100
+38,546
+17,186
+RMB million Principal Activities
+Exploration and Production Limited
+Sinopec Great Wall Energy & Chemical
+Company Limited
+22,761
+100
+31,986
+17,879
+Sinopec Yangzi Petrochemical
+15,651
+100
+31,129
+16,602
+Company Limited
+Sinopec Yizheng Chemical Fibre
+4,000
+3,423
+100
+31,773
+22,164
+23,256
+Chemical Company Limited
+Sinopec Marketing Co., Limited
+28,403
+70
+516,792
+246,984
+Sinopec-SK(Wuhan) Petrochemical
+Company Limited
+7,193
+59
+26,032
+9,738
+Sinopec Kantons Holdings Limited
+248
+60
+13,338
+12,897
+Million HKD
+Sinopec Shanghai Gaoqiao Petroleum
+10,000
+55
+39,593
+24,046
+and Chemical Limited
+Sinopec Shanghai Petrochemical
+45,728
+Registered
+Capital
+100
+Sinopec Hainan Refining and
+Holding Limited
+Million USD
+Sinopec Catalyst Company Limited
+1,500
+100
+13,807
+6,705
+China Petrochemical International
+1,400
+100
+23,490
+4,947
+Company Limited
+Sinopec Beihai Refining and Chemical
+5,294
+99
+16,954
+13,344
+Limited Liability Company
+Sinopec Qingdao Refining and
+5,000
+85
+22,437
+12,970
+Chemical Company Limited
+9,606
+management
+(Net Loss)
+6,439 Trading of crude oil and
+petrochemical products
+Principal accounting data and financial indicators for the two years ended 31 December 2022
+Principal data
+Current ratio
+Quick ratio
+Liability-to-asset ratio
+Loan repayment rate
+31 Dec. 2022
+31 Dec. 2021
+Change
+Reasons for change
+0.78
+72 Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+0.87
+Decrease in monetary funds
+0.42
+51.91%
+0.55
+51.51%
+(0.13)
+Ditto
+3,267 Overseas investment and equity holding
+Increase in borrowings and
+decrease in monetary funds
+100%
+100%
+(0.09)
+Note: Please refer to the website of Shanghai Stock Exchange (http://www.sse.com.cn), China Money Network (http://www.chinamoney.com.cn) and other websites for the
+name, office address, signing auditor, contact person and telephone number of the intermediary institutions providing services for the issuance of the debt financing
+instruments during the terms of the above-mentioned corporate bonds of the non-financial enterprises in the interbank market and other disclosed information in the
+offering circular.
+On 20 October 2022, the Company convened bondholders of three medium-term notes (20 Sinopec MTN001, 20 Sinopec MTN002, and 20
+Sinopec MTN003) issued in 2020 to hold a bondholders' meeting through online meeting on the reduction of registered capital caused by the
+cancellation of the Company's share repurchase. The meeting passed the proposal that the holders of the three medium-term notes do not
+require the company to repay the bonds in advance or provide corresponding guarantees. Please refer to relevant announcements for details.
+Performance of corporate bonds trustee Corporate bonds trustee has performed its duties in accordance with regulatory requirements
+No guarantee. Interest is paid as usual during the reporting period without triggering any guarantee.
+2024/12/28
+2.55
+2.55
+2.7
+2.7
+2.2
+3.2
+2.95
+2.8
+2.5
+Principal and interest repayment
+Investor Qualification Arrangement
+Applicable trading mechanism
+Risk of suspension for listed trading
+(if any), and countermeasures
+Trading market
+Use of proceeds
+Credit rating
+Special terms for Issuer or investor
+option or investor protection,
+whether triggered or executed
+Guarantee, repayment scheme and
+other related events during
+the reporting period
+Convening of corporate bond holders'
+meeting
+Interest is paid once a year. The principal will be paid at maturity with last instalment of interest.
+Nationwide inter-bank bond market institutional investors
+Circulated and transferred in nationwide inter-bank bond market
+Not applicable
+Nationwide inter-bank bond market
+Proceeds from the above-mentioned corporate bonds have been used for their designated purpose as disclosed in the corporate bond
+prospectus. All the proceeds have been completely used till now.
+During the reporting period, United Credit Ratings Co., Ltd. issued the continuing credit rating report on May 23. The long-term credit rating of
+Sinopec Corp. remained AAA with its outlook being stable.
+Not applicable
+2022
+2021
+0.4 percentage points
+Reasons for change
+100%
+100%
+Note: Liability-to-asset ratio indicates the ratio of total liabilities to total assets
+During the reporting period, the Company paid in full and on time the interest accrued for the other bonds and debt financing instruments. As at
+31 December 2022, the standby credit line provided by several domestic financial institutions to the Company was RMB454.857 billion in total,
+facilitating the Company to get such amount of unsecured loans. The Company has fulfilled all the relevant undertakings in the corporate bond
+prospectus and had no significant matters which could influence the Company's operation and debt paying ability.
+Change
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+73
+13
+Bond General Information
+74
+Principal Wholly-Owned
+and Controlled Subsidiaries
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+On 31 December 2022, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+Percentage
+of
+Shares Held
+2,576 Investment in exploration, production and
+sale of petroleum and natural gas
+3,531 Coal chemical industry investment
+management, production and
+sale of coal chemical products
+(4,558) Manufacturing of intermediate petrochemical
+products and petroleum products
+(789) Production and sale of polyester chips and
+polyester fibres
+244 Production and sale of refined petroleum
+products, lubricant base oil,
+and petrochemical materials
+687 Manufacturing of intermediate petrochemical
+products and petroleum products
+1,860 Marketing and distribution of
+petrochemical products
+Interest payment rate
+operating cash flow
+On 18 April 2013, Sinopec Capital (2013) Limited, a wholly-owned overseas subsidiary of Sinopec Corp., issued senior notes guaranteed by the
+Company with four different maturities, 3 years, 5 years, 10 years and 30 years. The 3-year notes principal totaled USD750 million, with an annual
+interest rate of 1.250% and had been repaid and delisted; the 5-year notes principal totaled USD1 billion, with an annual interest rate of 1.875%
+and had been repaid and delisted; the 10-year notes principal totaled USD1.25 billion, with an annual interest rate of 3.125%; and the 30-year notes
+principal totaled USD500 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 made on 24 October 2013. During the reporting period, the Company
+has paid in full the current-period interests of all notes with 10 years and 30 years.
+Ditto
+Net profit/(loss) attributable to equity shareholders of
+the Company excluding extraordinary gains and losses
+(RMB million)
+57,182
+72,220
+Net profit of the Company excluding extraordinary gains
+62,287
+(28.76) Year-on-year decrease in net
+(23,648)
+(15,038) As a result of high crude oil
+prices and declining demand,
+refining and chemical
+business profits decreased
+Ditto
+and losses (RMB million)
+EBITDA to total debt ratio
+1.02
+85,935
+12.16
+EBITDA to interest coverage ratio
+(1.71)
+8.28
+43.56
+Cash interest coverage ratio
+6.57
+12
+Ditto
+(2.96)
+Decrease in total profit
+(0.39)
+1.41
+15.12
+Interest coverage ratio
+4. Appropriations of profits:
+-Distributions to shareholders (Note 55)
+(4,610)
+4,610
+-Appropriations for surplus reserves (Note 39)
+(4,179)
+51,840
+(1,175)
+-Purchase of own shares (Note 36)
+3. Shareholders' decrease of capital:
+(10,933)
+46,104
+(3,004)
+63,628
+5.
+(10,933)
+49
+Investment income
+4,045
+5,908
+10,502
+9,087
+Add: Other income
+Exploration expenses, including dry holes
+2,953
+8,662
+13,602
+18,986
+10,644
+10,459
+10,102
+11,490
+30,551
+24,415
+1,774
+1,964
+156,174
+165,940
+808,540
+1,052,885
+40
+29,221
+1,045,000
+30,881
+4,449
+1,209
+45,150
+53,131
+58
+139
+(7,192)
+(6,999)
+1
+9
+Items that may be reclassified subsequently to profit or loss
+Other comprehensive income
+Net profit from discontinued operations
+Net profit from continuing operations
+Classification by continuity of operations:
+Net profit
+Less: Income tax expense
+Less: Non-operating expenses
+Profit before taxation
+Add: Non-operating income
+Operating profit
+Asset disposal gains
+Impairment losses
+Credit impairment reversal
+644
+(980)
+8,151
+Including: Income from investment in associates and joint ventures
+(Losses)/gains from changes in fair value
+1,302,073
+40
+Interest income
+441
+2,856
+17,511
+21,896
+(4)
+(67)
+(4)
+(67)
+38
+0.588
+0.548
+64
+0.588
+0.548
+64
+13,822
+9,456
+71,208
+66,302
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+80
+The accompanying notes form part of these financial statements.
+Yu Baocai
+President
+(Legal representative)
+Chairman
+149
+(220)
+11,637
+19,018
+Including: Interest expenses
+Financial expenses
+Research and development expenses
+General and administrative expenses
+Selling and distribution expenses
+Taxes and surcharges
+Less: Operating costs
+Operating income
+RMB million
+RMB million
+2021
+2022
+776
+Notes
+INCOME STATEMENT
+Chief Financial Officer
+Shou Donghua
+13,755
+88,782
+85,428
+12,159
+102,537
+97,587
+17,507
+21,829
+(1,728)
+7,254
+For the year ended 31 December 2022
+1,992
+2,209
+52,348
+Sub-total of cash inflows
+5,205
+38,208
+103,157
+Other cash received relating to investing activities
+10,041
+56(d)
+1,478
+212
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Net cash received from disposal of subsidiaries and other business entities
+10,134
+13,969
+Cash received from returns on investments
+9,812
+1,980
+Cash received from disposal of investments
+225,174
+116,269
+56(a)
+(2,918,434)
+(3,715,774)
+(179,679)
+(312,819)
+(325,348)
+(385,818)
+(95,778)
+129,359
+64,837
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+(172,527)
+989
+569,352
+Sub-total of cash inflows
+Other cash received relating to financing activities
+356,459
+564,417
+1,001
+3,946
+Including: Cash received from minority shareholders' capital contributions to subsidiaries
+Cash received from borrowings
+1,001
+3,946
+Cash received from capital contributions
+Cash flows from financing activities:
+(102,171)
+(145,198)
+Net cash flow from investing activities
+(210,035)
+(224,369)
+Sub-total of cash outflows
+(50,923)
+(33,505)
+(1,106)
+(7,881)
+Net cash paid for the acquisition of subsidiaries and other business entities
+Other cash paid relating to investing activities
+(13,085)
+(10,456)
+(144,921)
+(95,010)
+Ma Yongsheng
+Cash flows from investing activities:
+Sub-total of cash outflows
+President
+Yu Baocai
+(Legal representative)
+Ma Yongsheng
+Chairman
+These financial statements have been approved for issue by the board of directors on 24 March 2023.
+53,056
+13,612
+5,736
+51,840
+Total comprehensive income
+Total other comprehensive income
+(56,903)
+13,600
+5,726
+12
+10
+Other comprehensive income that can be reclassified to profit or loss under the equity method
+Cash flow hedges reserve
+13,612
+5,736
+39,444
+46,104
+39,444
+46,104
+4,273
+6,244
+43,717
+The accompanying notes form part of these financial statements.
+Shou Donghua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Other cash paid relating to operating activities
+Payments of taxes and levies
+Cash paid to and for employees
+(2,317,629)
+(2,914,966)
+3,143,608
+3,832,043
+4,641
+158,049
+2,980,918
+RMB million
+269,895
+3,550,138
+12,010
+Net cash flow from operating activities
+Cash paid for goods and services
+Refund of taxes and levies
+Sub-total of cash inflows
+Cash received from sale of goods and rendering of services
+Cash flows from operating activities:
+2021
+2022
+RMB million
+Notes
+For the year ended 31 December 2022
+CONSOLIDATED CASH FLOW STATEMENT
+Financial Statements (PRC)
+Financial Statements (PRC)
+81
+Other cash received relating to operating activities
+These financial statements have been approved for issue by the board of directors on 24 March 2023.
+Minority interests
+Equity shareholders of the Company
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+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 other equity
+instrument investments; or charged to the income statement if it is measured at fair value through profit or loss.
+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.
+(2) Transactions in foreign currencies and translation of financial statements in foreign currencies
+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.
+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.
+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.
+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.
+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 original subsidiary shall be converted into the current investment income in the event of loss
+of control.
+(c) Method for preparation of consolidated financial statements (Continued)
+(1) Accounting treatment of business combination involving entities under common control and not under common control (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+88
+Financial Statements (PRC)
+87
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+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 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.
+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.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(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.
+(4) Inventories
+(61,513)
+(61,082)
+5. Net increase in specific reserve for the year
+87
+87
+6. Other equity movements under the equity method
+(1,265)
+(1,265)
+7. Others
+(84)
+(84)
+Balance at 31 December 2022
+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.
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+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.
+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.
+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.
+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(12)) in the balance sheet. At initial recognition, such investments are
+measured as follows:
+(a) Investment in subsidiaries
+(5) Long-term equity investments
+Inventories are recorded by perpetual method.
+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.
+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 and included in the current period profit and loss. 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.
+At the balance sheet date, inventories are stated at the lower of cost and net realisable value.
+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 mainly 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.
+89
+4,610
+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.
+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(10)) 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.
+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.
+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 RMB1.00 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, 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 RMB98,249,084,000. 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").
+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 24 March 2023.
+1 STATUS OF THE COMPANY
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS
+Financial Statements (PRC)
+Financial Statements (PRC)
+85
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Chief Financial Officer
+Shou Donghua
+The accompanying notes form part of these financial statements.
+President
+Yu Baocai
+(Legal representative)
+Chairman
+Ma Yongsheng
+These financial statements have been approved for issue by the board of directors on 24 March 2023.
+504,877
+100,947
+217,834
+1,745
+827
+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.
+The Company and its subsidiaries (the "Group") engage in the oil and gas and chemical operations and businesses, including:
+(1) the exploration, development and production of crude oil and natural gas;
+(2) the refining, transportation, storage and marketing of crude oil and petroleum product; and
+(b) Business combination involving entities not 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.
+(a) Business combination involving entities under common control
+(1) Accounting treatment of business combination involving entities under common control and not under common control
+Principal accounting estimates and judgements of the Group are set out in Note 58.
+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 financial assets (Note 3(11)), valuation of inventories (Note 3(4)), depreciation of fixed assets
+and depletion of oil and gas properties (Notes 3(7), (8)), measurement of provisions (Note 3(16)), etc.
+3 SIGNIFICANT ACCOUNTING POLICIES
+For the year ended 31 December 2022
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+86
+The functional currency of the Company's and most of its subsidiaries are Renminbi. The Company and its subsidiaries determine their
+functional currency according to the main economic environment in where they operate. The Group's consolidated financial statements are
+presented in Renminbi. 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.
+(c) Method for preparation of consolidated financial statements
+(4) Functional currency and presentation currency
+Derivative financial instruments (see Note 3(11))
+Other equity instrument investments (see Note 3(11))
+The financial statements of the Group have been prepared under the historical cost convention, except for the assets and liabilities set out below:
+Financial assets held for trading (see Note 3(11))
+(3) Measurement basis
+The accounting year of the Group is from 1 January to 31 December.
+(2) Accounting period
+These financial statements are prepared on a basis of going concern.
+The financial statements have been prepared in accordance with the requirements of Accounting Standards for Business Enterprises - Basic
+Standards, specific standards and relevant regulations (hereafter referred as CASS 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 2022,
+and the consolidated and company financial performance and the consolidated and company cash flows for the year ended 31 December 2022.
+(1) Statement of compliance of China Accounting Standards for Business Enterprises ("CASS")
+2 BASIS OF PREPARATION
+Details of the Company's principal subsidiaries are set out in Note 59.
+(3) the production and sale of chemical.
+Receivables financing (see Note 3(11))
+133
+(3,004)
+Total transactions with owners, recorded directly in shareholders' equity
+94,515
+7,582
+4,859
+53
+3,516
+2,960
+52
+55
+23
+112,414
+665
+(13,165)
+(12,009)
+672
+96,414
+Profit before taxation
+Less: Non-operating expenses
+Add: Non-operating income
+Operating profit
+Asset disposal gains
+51
+Impairment losses
+(2,311)
+1,084
+Credit impairment reversals/(losses)
+3,341
+(1,715)
+108,348
+Less: Income tax expense
+54
+18,757
+Attributable to:
+Total comprehensive income
+Total other comprehensive income
+Foreign currency translation differences
+Cash flow hedges
+Cost of hedging reserve
+Other comprehensive income that can be reclassified to profit under the equity method
+Items that may be reclassified subsequently to profit or loss
+Changes in fair value of other equity instrument investments
+Items that may not be reclassified subsequently to profit or loss
+Other comprehensive income
+Diluted earnings per share
+50
+Basic earnings per share
+Equity shareholders of the Company
+Classification by ownership:
+Net profit from discontinued operations
+85,030
+75,758
+Net profit from continuing operations
+(200)
+Including: Net loss of acquiree before business combination under common control
+Classification by continuity of operations:
+85,030
+75,758
+Net profit
+23,318
+Minority interests
+(1,175)
+23,253
+Including: Income from investment in associates and joint ventures
+(Losses)/gains from changes in fair value
+2,740,884
+3,318,168
+ą+¥སྶ
+42
+46
+45
+44
+41
+40
+40
+Financial expenses
+Research and development expenses
+General and administrative expenses
+Selling and distribution expenses
+Taxes and surcharges
+Less: Operating costs
+Operating income
+RMB million
+RMB million
+2021
+2022
+Notes
+For the year ended 31 December 2022
+CONSOLIDATED INCOME STATEMENT
+Financial Statements (PRC)
+2,819,363
+2,216,551
+263,991
+259,032
+6,032
+14,462
+49
+Investment income
+5,850
+8,219
+48
+Add: Other income
+12,382
+10,591
+47
+Exploration expenses, including dry holes
+14,479
+5,732
+Interest income
+15,018
+16,769
+Including: Interest expenses
+9,010
+9,974
+11,481
+12,773
+62,535
+57,208
+57,891
+58,567
+6,266
+5,736
+357,593
+(514,275)
+(56,903)
+-Distributions to shareholders (Note 55)
+(4,610)
+4,610
+-Appropriations for surplus reserves (Note 39)
+4. Appropriations of profits:
+(4,179)
+(4,179)
+(3,004)
+(1,175)
+- Purchase of own shares (Note 36)
+Decrease of shareholders' capital:
+3.
+(15,802)
+(439)
+(15,363)
+97,587
+12,159
+85,428
+66,302
+21,829
+2,703
+19,126
+(15,363)
+19,126
+(56,903)
+19,126
+(56,903)
+Contributions to subsidiaries from minority interests
+149
+(59,222)
+(818)
+(58,404)
+(61,513)
+4,610
+(326)
+(1,175)
+Total transactions with owners, recorded directly in shareholders' equity
+9. Net increase in specific reserve for the year
+4,869
+2.191
+2,678
+2,678
+Other contributions
+8.
+(6,691)
+(6,691)
+Distributions to minority interests
+7.
+(1,713)
+(1,713)
+Transaction with minority interests
+6.
+5,395
+5,395
+119,896
+75,758
+9,456
+66,302
+(42,630)
+(39,054)
+3.944
+(7,520)
+(6,124)
+(6,124)
+I
+(6,124)
+(8,982)
+(8,982)
+(8,192)
+(6,796)
+(1,396)
+(1,396)
+1,973
+1,973
+(35,110)
+(35,110)
+(35,110)
+(3,944)
+3.944
+(19,950)
+(648)
+(19,302)
+102,537
+(13,805)
+(56,435)
+723
+723
+66,302
+916,041
+140,939
+775,102
+318,645
+213,224
+2,664
+(690)
+120,188
+121,071
+916,041
+140,939
+149
+775,102
+213,224
+2.664
+(690)
+120,188
+121,071
+394
+159
+235
+(84)
+319
+775
+52
+318,645
+30
+179
+10. Other equity movements under the equity method
+(13,498)
+53,056
+39,444
+13,612
+(13,498)
+13,612
+13,612
+39,444
+39,444
+522,275
+115,849
+equity
+RMB million
+RMB million
+earnings
+reserves
+RMB million
+209.280
+1,189
+5,910
+RMB million
+reserve
+income
+RMB million
+reserve
+RMB million
+68,976
+RMB million
+121,071
+capital
+shareholders'
+Retained
+3,944
+(3,944)
+(35,110)
+(35,110)
+5,736
+5,736
+46,104
+46,104
+526,314
+116,440
+213,224
+1,658
+6,024
+67,897
+121,071
+526,314
+Surplus
+116,440
+1,658
+6.024
+67,897
+121,071
+(878)
+201
+(1,079)
+469
+469
+(35,110)
+(39,054)
+3,944
+213,224
+13,755
+Specific
+Share
+Yu Baocai
+President
+(Legal representative)
+Chairman
+Ma Yongsheng
+These financial statements have been approved for issue by the board of directors on 24 March 2023.
+937,153
+151,576
+(621)
+(295)
+(326)
+785,577
+323,087
+217,834
+2,813
+3,072
+118,875
+119,896
+Balance at 31 December 2022
+(348)
+22
+1
+(1)
+11. Transfer of other comprehensive income to retained earnings
+12. Others
+(1,009)
+(1,009)
+(1,009)
+The accompanying notes form part of these financial statements.
+84
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+Shou Donghua
+Total
+Other
+Transactions with owners, recorded directly in shareholders' equity:
+Amounts transferred to initial carrying amount of hedged items
+Total comprehensive income
+2. Other comprehensive income
+1. Net profit
+Change for the year
+Balance at 1 January 2022
+Balance at 31 December 2021
+5. Others
+4. Net increase in specific reserve for the year
+Capital comprehensive
+Total transactions with owners, recorded directly in shareholders' equity
+- Appropriations for surplus reserves
+3. Appropriations of profits:
+Transactions with owners, recorded directly in shareholders' equity:
+Amounts transferred to initial carrying amount of hedged items
+Total comprehensive income
+2. Other comprehensive income
+1. Net profit
+Change for the year
+Balance at 1 January 2021
+For the year ended 31 December 2022
+STATEMENT OF CHANGES IN EQUITY
+Chief Financial Officer
+- Distributions to shareholders (Note 55)
+88,782
+71,208
+17,507
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Net cash received from disposal of subsidiaries and other business units
+22,712
+24,835
+Cash received from returns on investments
+32,738
+7,174
+Cash received from disposal of investments
+92,075
+44,389
+(1,080,268)
+(1,436,017)
+(25,895)
+(72,928)
+(181,187)
+(224,935)
+(49,784)
+(52,488)
+(823,402)
+(1,085,666)
+1,172,343
+1,480,406
+13,868
+18,597
+1,155,516
+2,959
+1,455,182
+6,627
+26
+72
+3,259
+Other cash received relating to investing activities
+Add: Cash and cash equivalents at the beginning of the year
+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
+Cash paid for dividends or interest
+Cash repayments of borrowings
+Sub-total of cash inflows
+Other cash received relating to financing activities
+Cash received from borrowings
+Cash flows from financing activities:
+Cash flows from investing activities:
+Net cash flow from investing activities
+Other cash paid relating to investing activities
+Net (decrease)/increase in cash and cash equivalents
+(52,212)
+(28,108)
+(70,578)
+(82,711)
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+191,798
+268,769
+Sub-total of cash inflows
+136,276
+233,475
+Sub-total of cash outflows
+Cash and cash equivalents at the end of the period
+Net cash flow from operating activities
+Other cash paid relating to operating activities
+21,031
+(15,152)
+56(b)
+Add: Cash and cash equivalents at the beginning of the year
+Net (decrease)/increase in cash and cash equivalents
+(1,003)
+3,288
+(57,942)
+(39,699)
+(415,535)
+(609,051)
+Effects of changes in foreign exchange rate
+Net cash flow from financing activities
+Sub-total of cash outflows
+(28,276)
+(22,945)
+56(e)
+Other cash paid relating to financing activities
+(8,068)
+(5,249)
+Including: Subsidiaries' cash payments for distribution of dividends or profits to minority
+shareholders
+(49,027)
+(71,831)
+Cash paid for dividends, profits distribution or interest
+(338,232)
+108,590
+87,559
+56(c)
+93,438
+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:
+RMB million
+2021
+2022
+RMB million
+Notes
+Sub-total of cash outflows
+For the year ended 31 December 2022
+Chief Financial Officer
+Shou Donghua
+Annual Report 2022 CHINA PETROLEUM & CHEMICAL CORPORATION
+82
+The accompanying notes form part of these financial statements.
+President
+Yu Baocai
+(Legal representative)
+Ma Yongsheng
+Chairman
+These financial statements have been approved for issue by the board of directors on 24 March 2023.
+Cash and cash equivalents at the end of the period
+108,590
+CASH FLOW STATEMENT
+Cash repayments of borrowings
+These financial statements have been approved for issue by the board of directors on 24 March 2023.
+(134,009)
+RMB million
+RMB million
+reserve
+capital
+Minority shareholders'
+shareholders of
+Retained
+Surplus
+Specific
+comprehensive
+Capital
+Share
+Total
+Other
+'equity
+attributable
+to equity
+Total
+shareholders
+Transactions with owners, recorded directly in shareholders' equity:
+Amounts transferred to initial carrying amount of hedged items
+-------------------
+Total comprehensive income
+2. Other comprehensive income (Note 38)
+1. Net profit
+Change for the year
+Balance at 1 January 2022
+Balance at 31 December 2021
+income
+RMB million
+reserve
+reserves
+earnings
+(67)
+17,574
+(19,302)
+17,574
+17,574
+85,030
+13,822
+71,208
+71,208
+888,720
+141,426
+747,294
+9. Others
+286,575
+1.941
+1,038
+127,389
+121,071
+RMB million
+equity
+interests
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+the Company
+209,280
+(178,354)
+8. Net increase in specific reserve for the year
+control
+28,081
+34,575
+23,228
+6,494
+(11,347)
+(335)
+(20,588)
+(34,997)
+(479,222)
+(645,615)
+(284,979)
+(385,406)
+(42,933)
+(65,474)
+(151,310)
+(194,735)
+458,634
+610,618
+298,755
+403,573
+159,879
+207,045
+(65,001)
+(20,404)
+(256,799)
+(289,173)
+34,575
+Ma Yongsheng
+Chairman
+(Legal representative)
+7. Adjustment for business combination of entities under common
+Distributions to minority interests
+6.
+5. Transaction with minority interests
+Contributions to subsidiaries from minority interests
+- Distributions to shareholders (Note 55)
+- Appropriations for surplus reserves
+4.
+3. Appropriations of profits:
+Transactions with owners, recorded directly in shareholders' equity:
+Amounts transferred to initial carrying amount of hedged items
+Total comprehensive income
+Total transactions with owners, recorded directly in shareholders' equity
+2. Other comprehensive income (Note 38)
+Change for the year
+Balance at 1 January 2021
+For the year ended 31 December 2022
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Financial Statements (PRC)
+Financial Statements (PRC)
+83
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2022
+Chief Financial Officer
+Shou Donghua
+The accompanying notes form part of these financial statements.
+Yu Baocai
+President
+1. Net profit
+(56,903)