diff --git "a/China/15.Sinopec_$104.55 B_Energy/2018/results.txt" "b/China/15.Sinopec_$104.55 B_Energy/2018/results.txt"
new file mode 100644--- /dev/null
+++ "b/China/15.Sinopec_$104.55 B_Energy/2018/results.txt"
@@ -0,0 +1,73691 @@
+0
+points
+percentage
+8.14
+1.61
+5.07
+6.68
+0.370
+2.5
+0.239
+0.245
+Basic earnings per share (excluding extraordinary gains and losses)
+Weighted average return on net assets (%)
+0.406
+43.4
+0.267
+0.383
+Weighted average return (excluding extraordinary gains and losses)
+on net assets (%)
+4.33
+4.52
+(0.19)
+%
+2014
+Change
+2015
+RMB
+RMB
+Items
+2016
+Diluted earnings per share
+As of 31 December
+29.2
+1.371
+1.772
+Net cash flow from operating activities per share
+points
+percentage
+7.42
+1.267
+0.407
+43.4
+0.267
+531
+121,071,210
+121,071,210
+677,538
+712,232
+657,703
+1,447,268
+15
+1,498,609
+666,084
+%
+RMB million
+RMB million
+Change
+2015
+As of 31 December
+2016
+214,543
+2014
+RMB million
+RMB
+3.5
+1.3
+0.383
+Basic earnings per share
+RMB
+%
+RMB
+RMB
+Items
+1,455,594
+2014
+2015
+2016
+For the year ended 31 December
+118,280,396
+596,697
+5.1
+804,473
+Change
+Net assets attributable to equity shareholders of the Company per share
+Liabilities to assets ratio (%)
+5.883
+5.606
+(86)
+419
+331
+1,328
+(20,562)
+(4,680)
+(943)
+(134)
+(518)
+(5,002)
+(3,987)
+125
+112
+133
+1,622
+721
+(3,165)
+1,528
+(314)
+(4,915)
+403
+261
+Beginning of
+the year
+(208)
+(475)
+117
+(4,365)
+(22,164)
+(3,380)
+(4,573)
+(3,855)
+(16,586)
+1,420
+1,060
+5,578
+(5,993)
+(16,703)
+82,843
+RMB million
+RMB million
+Items
+(3) Extraordinary items and corresponding amounts
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+Principal Financial Data and Indicators
+4
+Principal Financial Data and Indicators
+3
+Net loss on disposal of non-current assets
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+percentage
+55.27
+(0.99)
+45.44
+44.45
+5.108
+4.9
+points
+RMB million
+Donations
+Gain on holding and disposal of various investments
+2014
+2015
+2016
+For the year ended 31 December
+(Income)/expenses
+(5) Significant changes of items in the financial statements
+Derivative financial instruments
+Cash flow hedging
+Total
+Available-for-sale financial assets
+Government grants
+Items
+Attributable to: Equity shareholders of the Company
+Minority interests
+Total
+Tax effect
+Subtotal
+Gain on business combination under the same control
+Other non-operating expenses, net
+Investment income in Sichuan-to-East China Pipeline Co. recalculated after losing control
+(4) Items measured by fair values
+55,588
+41,827
+34,285
+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 2017 and unless
+required by regulatory authorities, the Company undertakes no obligation
+to update these statements.
+Documents for Inspection
+210
+Corporate Information
+209
+Financial Statements
+75
+Company Profile
+Controlled Subsidiaries
+74
+Management and Employees
+Directors, Supervisors, Senior
+60
+Report of the Board of Supervisors
+58
+Report of the Board of Directors
+Principal Wholly-owned and
+50
+COMPANY PROFILE
+THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 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.
+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;
+Sichuan-to-East China Pipeline Co.: Sinopec Sichuan-to-East China Natural Gas Pipeline Co., Ltd;
+Sinopec group: China Petrochemical Corporation and its subsidiaries;
+China Petrochemical Corporation: our controlling shareholder, China Petrochemical Corporation;
+Company: Sinopec Corp. and its subsidiaries;
+IMPORTANT NOTICE: THE BOARD OF DIRECTORS, THE BOARD OF SUPERVISORS, DIRECTORS, SUPERVISORS AND SENIOR
+MANAGEMENT OF SINOPEC CORP. WARRANT THAT THERE ARE NO FALSE REPRESENTATIONS, MISLEADING STATEMENTS OR MATERIAL
+OMISSIONS IN THIS ANNUAL REPORT, AND JOINTLY AND SEVERALLY ACCEPT FULL RESPONSIBILITY FOR THE AUTHENTICITY,
+ACCURACY AND COMPLETENESS OF THE INFORMATION CONTAINED IN THIS ANNUAL REPORT. THERE IS NO OCCUPANCY OF NON-
+OPERATING FUNDS BY THE CONTROLLING SHAREHOLDERS OF SINOPEC CORP.. MR. WANG YUPU, CHAIRMAN OF THE BOARD OF
+DIRECTORS, 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 2016.
+In this report, unless the context otherwise requires, the following terms shall have the meaning set out below:
+Sinopec Corp.: China Petroleum & Chemical Corporation;
+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
+Chemicals
+Marketing and Distribution
+Refining
+Exploration and Production
+AS APPROVED BY THE 12TH MEETING OF THE SIXTH SESSION OF THE BOARD OF DIRECTORS OF SINOPEC CORP., THE BOARD
+PROPOSED A FINAL CASH DIVIDEND OF RMB 0.17 (TAX INCLUSIVE) PER SHARE FOR 2016, COMBINING WITH THE INTERIM CASH
+DIVIDEND OF RMB 0.079 (TAX INCLUSIVE) PER SHARE, THE TOTAL CASH DIVIDEND FOR 2016 WILL BE RMB 0.249 (TAX INCLUSIVE)
+PER SHARE. THE DIVIDEND PROPOSAL IS SUBJECT TO THE SHAREHOLDERS' APPROVAL AT THE ANNUAL GENERAL MEETING FOR THE
+YEAR 2016.
+DEFINITIONS:
+Hong Kong Listing Rules: Listing Rules of the Hong Kong Stock Exchange
+Corporate Governance
+Connected Transactions
+OPEC
+中国石化
+中国石化
+中国石化
+OPEC
+中国石化
+中国石化
+SINOPEC CORP. 2016 ANNUAL REPORT AND ACCOUNTS
+中国石化
+中国石化
+中国石化
+L L L L L
+中国石化
+中国石化
+中国石化
+中国石化
+中国石化
+43
+(Stock Code A Share: 600028; H Share: 00386; ADR : SNP)
+中国石化
+39
+Significant Events
+29
+19
+11
+8
+Management's Discussion and Analysis
+OPEC
+Business Review and Prospects
+of Principal Shareholders
+Changes in Share Capital and Shareholdings
+Principal Financial Data and Indicators
+Company Profile
+236
+CONTENTS
+Πορεά
+Chairman's Statement
+End of
+the year
+262
+314
+Conversion:
+For overseas production of crude oil: 2016, 1 tonne = 7.20 barrels; 2015, 1 tonne = 7.21 barrels; 2014, 1 tonne = 7.22 barrels;
+For production of natural gas, 1 cubic meter = 35.31 cubic feet;
+Quarter
+Fourth
+Third
+Second
+Quarter
+RMB million
+First
+Quarter
+RMB million
+For the year of 2016
+148,019
+Quarter
+29.4
+214,543
+43,238
+2.8
+28,901
+29,713
+47,603
+43.8
+165,740
+32,281
+Total
+RMB million
+29,713
+1,376
+10,047
+11,887
+6,403
+46,416
+17,250
+RMB million
+9,916
+6,190
+1,930,911
+566,966
+484,725
+465,159
+414,061
+RMB million
+13,060
+For domestic production of crude oil, 1 tonne = 7.1 barrels;
+46,416
+42.4
+Items
+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
+Operating income
+Items
+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
+Profit before taxation
+Total assets
+Operating profit
+Items
+(1) Principal financial data
+1 FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH ASBE
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+2
+Refinery throughput is converted at 1 tonne = 7.35 barrels.
+Operating income
+66,795
+Total liabilities
+(2) Principal financial indicators
+56,093
+79,877
+65,798
+51.0
+52,246
+78,876
+2,827,566
+Total equity attributable to equity shareholders of the Company
+Total number of shares (1,000 shares)
+(4.4)
+1,930,911
+RMB million
+%
+2014
+Change
+RMB million
+For the year ended 31 December
+2016
+2015
+RMB million
+2,020,375
+Changes
+1
+(89)
+3 MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER ASBE AND IFRS PLEASE REFER TO PAGE 202 OF
+THE REPORT.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+5
+Principal Financial Data and Indicators
+Shareholdings Share Capital and
+of Principal Shareholders
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
+5.846
+1
+There is no change on the number and nature of shares of Sinopec Corp. during the reporting period
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+As of 31 December 2016, the total number of shareholders of Sinopec Corp. was 609,380 including 603,151 holders of domestic A shares and 6,229
+holders of overseas H shares. As of 28 February 2017, the total number of shareholders of Sinopec Corp. was 579,998. Sinopec Corp. has complied
+with requirement for minimum public float under the Hong Kong Listing Rules.
+(1) Shareholdings of top ten shareholders
+The shareholdings of top ten shareholders as of 31 December 2016 are listed as below:
+Unit: Share
+Number of
+Nature of
+CHANGES IN THE SHARE CAPITAL
+Name of shareholders
+5.912
+39,086
+513,315
+146,743
+181,831
+196,275
+201,540
+189,485
+196,617
+120,241
+4.899
+4.860
+111,964
+54,691
+710,994
+676,197
+5.873
+5.808
+5.585
+5.517
+595,255
+5.033
+4.969
+571,087
+54,348
+197,440
+China Petrochemical Corporation
+中國證券金融股份有限公司
+361,151,404
+284,218,172
+0
+A Share
+0.27
+322,037,900
+0
+0.30
+工銀瑞信基金・工商銀行・特定客戶資産管理
+0.12
+139,961,578
+139,961,578
+國泰君安證券股份有限公司
+A Share
+0.11
+131,135,206
+A Share
+HKSCC Nominees Limited²
+A Share
+Unknown
+HKSCC Nominees Limited
+中央匯金資產管理有限責任公司
+Shareholders
+Percentage of
+shareholdings %
+State-owned Share
+70.86
+Total number of
+shares held
+85,792,671,101
+0
+62.8 Mainly due to significant increase in profit from refineries as well as the
+impact of timing of the taxes submitted by enterprises
+(80.0) Mainly due to the maturity of RMB 30 billion super short term financing
+papers, and issuance of RMB 12 billion super short term papers in
+2016, with the year-end balance of RMB 6 billion
+H Share
+20.96
+25,379,653,053
+A Share
+1.54
+1,861,425,318
+5,311,433
+96,593,005
+Changes shares subject to
+of shareholding¹ pledges or lock-up
+0
+(3,402,700)
+242,892
+73,282
+91,012
+Profit attributable to owners of the Company
+46,672
+32,512
+46,639
+66,348
+64,082
+95,444
+Basic earnings per share (RMB)
+0.269
+0.399
+0.571
+0.568
+Diluted earnings per share (RMB)
+0.385
+0.269
+0.385
+0.399
+65,818
+80,151
+Unit: RMB million
+Items
+2016
+Turnover and other operating revenues
+1,930,911
+For the year ended 31 December
+2015
+2,020,375
+2014
+2,827,566
+56,411
+2013
+2,881,928
+Operating profit
+77,193
+56,822
+73,439
+96,763
+98,604
+Profit before taxation
+2012
+2,787,684
+129,175
+0.536
+Return on capital employed (%)
+Net current liabilities
+Non-current liabilities
+Non-controlling interests
+Total equity attributable to owners of the Company
+Net assets per share (RMB)
+Adjusted net assets per share (RMB)
+2016
+Non-current assets
+2015
+2013
+2012
+1,086,348
+1,113,611
+1,094,035
+1,012,703
+895,761
+As of 31 December
+2014
+0.546
+Items
+1.264
+7.30
+5.23
+6.06
+8.03
+9.10
+Return on net assets (%)
+6.56
+Unit: RMB million
+4.81
+11.62
+12.48
+Net cash generated from operating activities per share (RMB)
+1.772
+1.371
+1.267
+1.305
+7.84
+中国石化
+交通銀行股份有限公司-滙豐晉信雙核策略混合型
+A Share
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Significant Improvement on operating cash flow and decreased
+investment as compared with 2015, resulted in surplus cash
+38.6 Mainly due to sale of equity in Sichuan-to-East China Pipeline Co.,
+resulted in RMB 22.8 billion increase in long term equity in associates.
+(59.4) Mainly due to increase in profits and decrease in demand for external
+funds, and the repayment of part of the short-term borrowings
+63.4 The Company optimised its operating funds, and based on its trust
+worthy creditability, increased its credit line in using the notes
+33.5 Mainly due to the increase in trading volume of the trading business,
+resulted in an increase of RMB 30.5 billion in the accounts payable to
+the third parties.
+Reasons for change
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+21,903
+8.876
+30,779
+Chairman's Statement
+Income of investment
+30,000
+6,000
+Short term bonds payable
+20,394
+32,492
+52,886
+Tax payable
+(24,000)
+43,743
+Over the past year, in its efforts to implement
+supply-side structural reform, the Company
+benefited from its integrated value chain, which
+allows our businesses to complement each
+other well. As we increased the effective supply
+of petroleum and petrochemical products and
+related services to the community, we reaped
+economic benefits and improved our asset
+utilisation. To cope with harsh conditions in the
+upstream sector, we strengthened measures
+to rein in costs and address our weaknesses.
+At the same time, we gave priority to high-
+efficiency exploration activities and made a
+number of important new discoveries. In line
+with our emphasis on profitability, we made
+continuous improvements in our oil production
+and trimmed production of high-cost oilfields,
+thereby effectively controlling our production
+costs. The Company also continuously improves
+its energy structure by increasing production of
+shale gas. As a result, domestic gas production
+for the year reached 21.6 billion cubic meters,
+while we further developed Fuling shale gas
+field, China's first large-scale shale gas project,
+to an annual capacity of 7 billion cubic meters.
+Our energy structure improved steadily as
+our gas supply in the Yangtze River Economic
+Belt and the Beijing-Tianjin-Hebei region
+continued to grow. In downstream operations,
+the Company achieved robust results by taking
+advantage of market opportunities to expand
+the effective supply of mid-range and high-
+end products. We optimised the structure of
+our refinery products according to market
+demand and vigorously promoted applications
+of new technologies, leading to a lower diesel-
+to-gasoline ratio. Moreover, we pressed ahead
+with upgrading of our oil product specification
+to ensure implementation of GB V standards for
+automobile gasoline and diesel fuels and the GB
+VI standards for Beijing. At the same time, we
+eliminated obsolete and low-efficiency production
+other hand, in view of the difficulties that low
+oil prices created for our upstream operations,
+along with slower growth in downstream
+demand and structural changes in the external
+environment, we intensified our reform initiatives
+and implemented stricter controls over our
+investment plans in tandem with a series of
+major reforms on the supply side. Over the past
+year, our focus on transformation of growth
+mode and structural adjustments allowed us
+to improve the quality and efficiency of our
+assets as well as upgrade our operations. Under
+the management's leadership, the entire staff
+united to advance these goals. We achieved
+significant improvement in our operating results
+through unrelenting joint efforts to explore new
+markets, optimise our operations, reduce costs
+and improve risk management. Together, these
+achievements represented an exceptional start
+to our 13th Five-Year Plan.
+(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 2016
+In 2016, in accordance with the IFRS, the
+Company recorded a turnover and other
+operating revenue of RMB 1,930.9 billion.
+Profit before taxation was RMB80.2 billion,
+represented a 42.1% increase year on year,
+of which profit attributable to owners of the
+Company amounted to RMB46.7 billion,
+represented a 43.6% increase year on year.
+Taking into account the Company's profitability,
+shareholders return and the need for future
+development, the Board of Directors proposed
+a final dividend of RMB 0.17 per share, which,
+combined with the interim dividend of RMB
+0.079 per share, brought the full-year dividend
+to RMB 0.249 per share. The dividend payout
+ratio reaches 64.6%.
+7
+of Principal S
+8
+CHAIRMAN'S STATEMENT
+Mr. Wang Yupu, Chairman
+Dear Shareholders and Friends:
+On behalf of the Board of Directors, the
+management and all the staff of Sinopec Corp.,
+I would like to express my sincere gratitude to
+our shareholders and the wider community for
+your interest and support.
+In 2016, as a result of low oil prices, the
+Company faced a challenging and complex
+operating environment. Given those conditions,
+on one hand, in light of the government's new
+thinking about the country's development,
+the Company took a visionary approach to
+the future. Guided by our strategies of value-
+oriented growth, innovation-driven development,
+integrated resource allocation, openness
+to cooperation, and green, low-carbon
+development, we formulated our 13th Five-Year
+Plan and has been continuously creating new
+and sustainable competitive advantages. On the
+Shareholes in Share Capital anders
+China Petrochemical Corporation is the
+de facto controller of Sinopec Corp.
+130,558
+Accounts payable
+Items
+As of 31 December
+2016
+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:
+(5,770)
+(5,975)
+195
+10
+RMB million
+of the year
+Influence
+Unit: RMB million
+(8,834)
+(8,746)
+(4,024)
+(3,448)
+5,386
+4,722
+on the profit
+174,301
+2015
+RMB million
+Cash at bank and on hand
+2,262
+3,566
+5,828
+Notes payable
+(44,355)
+74,729
+30,374
+Increase/(decrease)
+Amount Percentage
+Short-term borrowings
+84.293
+116,812
+(%)
+104.5
+RMB million
+72,831
+69,666
+142,497
+Long term equity investment
+32,519
+券投基金
+(3) Basic information of the de facto
+controller
+908,006,153(L)
+1,275,857,318(L)
+(2) Information disclosed by the shareholders of H shares in accordance with the Securities and Futures Ordinance (SFO)
+Name of shareholders
+BlackRock, Inc.
+JPMorgan Chase & Co.
+Schroders Plc
+Status of shareholders
+Interest of corporation controlled by the
+substantial shareholder
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Beneficial owner
+Trustee (exclusive of passive trustee)
+Custodian corporation/approved lending agent
+Investment manager
+(L) Long position, (S): Short position
+3 ISSUANCE AND LISTING OF SECURITIES
+(1) Issuance of securities in reporting
+period
+There is no issuance of shares of Sinopec
+Corp. during the reporting period
+(2) Existing employee shares
+Investment manager
+As at the end of the reporting period,
+there were no employee shares.
+6
+We are not aware of any connected relationship or acting in concert among or between the above-mentioned shareholders.
+0.08
+91,545,992
+68,870,234
+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
+0.06
+長江證券股份有限公司
+CO
+A Share
+77,858,630
+71,197,295
+1,220,850
+23,928,471
+0000 000
+Note 1: As compared with the number of shares held as of 31 December 2015.
+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:
+0.06
+(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.
+4 CHANGES IN THE CONTROLLING
+SHAREHOLDERS AND THE DE FACTO
+CONTROLLER
+(1) Controlling shareholder
+(H Share)
+2,278,374,418(L)
+1,558,000(S)
+492,573,324(L)
+Approximate
+percentage of Sinopec
+Corp.'s issued share capital
+(H Share) (%)
+8.93(L)
+0.01(S)
+17.23%
+1.93(L)
+0.62(S)
+31,602,000(L)
+0.12(L)
+20,400(L)
+0.00(L)
+3.56(L)
+5.00(L)
+158,634,692(S)
+There was no change in the controlling
+shareholder and the de facto controller of
+Sinopec Corp. during the reporting period.
+912,886,426
+China Merchants Energy
+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
+Number of
+shares interests held
+or regarded as held
+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, utility services including
+water and power and social services.
+Shares of other listed companies directly
+held by China Petrochemical Corporation
+Name of Company
+Sinopec Engineering
+(Group) Co. Ltd
+Numberof
+Shares Held
+Shareholding
+Percentage
+2,907,856,000
+Shipping Co., Ltd
+65.67%
+Service Corporation
+9,224,327,662
+65.22%
+Sinopec Oilfield
+Equipment Corporation
+351,351,000
+58.74%
+Sinopec Oilfield
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS
+246.8 Mainly due to increased income from reorganisation of pipeline assets
+(5) Long-term equity investments
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+92 Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Useful lives, residual values and depreciation methods are reviewed at least each year end.
+3%
+3%
+33
+4.30 years
+Equipment, machinery and others
+12-50 years
+Plants and buildings
+Estimated rate
+of residual value
+Estimated
+useful life
+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.
+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.
+(6) Fixed assets and construction in progress
+The impairment assessment and provision accrual on investments in subsidiaries, associates and joint ventures entities are stated in Note
+3(12).
+(c) The impairment assessment method and provision accrual on investment
+The Group adjusts the carrying amount of the long-term equity investment for changes in owners' equity of the investee other than those
+arising from net profits or losses and other comprehensive income, and recognises the corresponding adjustment in capital reserve.
+The Group 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 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 joint
+venture entity, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not
+recognised.
+(b) Investment in joint ventures entities and associates (Continued)
+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 entities are eliminated to the extent of the Group's interest in the associates or joint ventures entities. Unrealised losses resulting
+from transactions between the Group and its associates or joint ventures entities are fully recognised in the event that there is an evidence of
+impairment.
+(7) Oil and gas properties
+Oil and gas properties include the mineral interests in properties, wells and related support equipment arising from oil and gas exploration and
+production activities.
+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.
+A financial asset or financial liability is classified as at fair value through profit or loss if it is acquired or incurred principally for the
+purpose of selling or repurchasing in the near term or if it is a derivative, unless the derivative is a designated and effective hedging
+instrument, or a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity
+instrument (without a quoted price from an active market) whose fair value cannot be reliably measured. These financial instruments
+are initially measured at fair value with subsequently changes in fair value recognised in profit or loss. Subsequent to initial recognition,
+financial assets and financial liabilities at fair value through profit or loss are measured at fair value, and changes therein are recognised
+in profit or loss.
+Financial asset or financial liability with change in fair value recognised through profit or loss
+Financial assets and financial liabilities are initially recognised at fair value. For financial asset or financial liability of which the change in its
+fair value is recognised in profit or loss, the relevant transaction cost is recognised in profit or loss. The transaction costs for other financial
+assets or financial liabilities are included in the initially recognised amount. Subsequent to initial recognition financial assets and liabilities
+are measured as follows:
+The Group classifies financial assets and liabilities into different categories at initial recognition based on the purpose of acquiring assets
+and assuming liabilities: financial assets and financial liabilities at fair value through profit or loss, loans and receivables, held-to-maturity
+investments, available-for-sale financial assets and other financial liabilities.
+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.
+(a) Classification, recognition and measurement of 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.
+(11) Financial Instruments
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+(5) Long-term equity investments (Continued)
+93
+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.
+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, and are presented separately in the consolidated balance sheet.
+Non-current assets, except for financial assets and deferred tax assets that satisfy the cognition criteria for assets held for sale are stated at 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.
+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.
+(10) Held for sale and discontinued operation
+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.
+(9) Goodwill
+Useful lives and amortisation methods are reviewed at least each year end.
+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.
+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)).
+(8) Intangible assets
+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 2016
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(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.
+(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 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+89
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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.
+(c) Method for preparation of consolidated financial statements
+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.
+(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
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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.
+Loans and Receivables
+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) Cash and cash equivalents
+Financial Statements (PRC)
+Financial Statements (PRC)
+91
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Where the initial investment cost of a long-term equity investment exceeds the Group's interest in the fair value of the investee's identifiable
+net assets at the date of acquisition, the investment is initially recognised at the initial investment cost. Where the initial investment cost is
+less than the Group's interest in the fair value of the investee's identifiable net assets at the time of acquisition, the investment is initially
+recognised at the investor's share of the fair value of the investee's identifiable net assets, and the difference is charged to profit or loss.
+After the acquisition of the investment, the Group recognises its share of the investee's net profits or losses and other comprehensive income
+as investment income or losses and other comprehensive income, and adjusts the carrying amount of the investment accordingly. Once the
+investee declares any cash dividends or profits distributions, the carrying amount of the investment is reduced by that attributable to the
+Group.
+The Group's accounting treatments when adopting the equity method include:
+The initial cost of investment in joint ventures 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. 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 entity or an associate is accounted for using the equity method, unless the investment is classified as held
+for sale (see Note 3(10)).
+An associate is the investee that the Group has significant influence on their financial and operating policies. Significant influence represents
+the right to participate in the financial and operating policy decisions of the investee but is not control or joint control over the establishment
+of these policies. The Group generally considers the following circumstances in determining whether it can exercise significant influence
+over the investee: whether there is representative appointed to the board of directors or equivalent governing body of the investee; whether
+to participate in the investee's policy-making process; whether there are significant transactions with the investees; whether there is
+management personnel sent to the investee; whether to provide critical technical information to the investee.
+A joint venture is an incorporated entity over which the Group, based on legal form, contractual terms and other facts and circumstances,
+has joint control with the other parties to the joint venture and rights to the net assets of the joint venture. Joint control is the contractually
+agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of
+the Group and the parties sharing control.
+(b) Investment in joint ventures entities and associates
+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 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 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.
+(a) Investment in subsidiaries
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+90
+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. 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 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.
+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:
+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
+for the year ended 31 December 2016
+Available-for-sale financial assets
+(vi) a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
+(v) significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; and the cost of
+investment may not be recoverable; and
+(iv) due to the significant financial difficulty of the debtor, financial assets is unable to be traded in active market;
+(iii) it becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
+(ii) a breach of contract, such as a default or delinquency in interest or principal payments;
+(i) significant financial difficulty of the debtor;
+Objective evidences of impairment include but not limited to:
+The carrying amount of financial assets (except those financial assets stated at fair value with changes in the fair values charged to profit or
+loss) are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. If any such evidence exists,
+impairment loss is provided.
+(a) Impairment of financial assets
+Where the obligations for financial liabilities are completely or partially discharged, the entire or parts of financial liabilities are derecognised.
+(12) Impairment of financial assets and non-financial long-term assets
+the sum of the consideration received and any cumulative gain or loss that had been recognised directly in equity.
+the carrying amounts; and
+On derecognition of a financial asset, the difference between the following amounts is recognised in profit or loss:
+(f) Derecognition of financial assets and financial liabilities
+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.
+(11) Financial Instruments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+96
+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.
+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.
+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.
+Receivables and held-to-maturity investments
+Convertible bonds issued with a cash settlement option and other embedded derivative features are split into liability and derivative
+components.
+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.
+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.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+98
+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.
+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.
+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 joint
+ventures may be impaired.
+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.
+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.
+(a) Impairment of financial assets (Continued)
+(12) Impairment of financial assets and non-financial long-term assets (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+97
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Available-for-sale financial assets are assessed for impairment on an individual basis. Objective evidence of impairment for equity
+instruments classified as available-for-sale includes information about significant but not temporary decline in the fair value of the equity
+investment instrument below its cost. The Group assesses equity instruments classified as available-for-sale separately at the end of
+each reporting period, it will be considered as impaired if the fair value of the equity instrument at reporting date is less than its initial
+investment cost over 50% (including 50%) or the duration of the fair value below its initial investment cost is more than one (including
+one) year, if the fair value of the equity instrument at reporting date is less than its initial investment cost over 20% (including 20%) but
+below 50%, other related factors such as price volatility will be taken into consideration to assess if it is impaired.
+Available-for-sale financial assets
+Where impairment is assessed on an individual basis, an impairment loss in respect of a receivable or held-to-maturity investment is
+calculated as the excess of its carrying amount over the present value of the estimated future cash flows (exclusive of future credit losses
+that have not been incurred) discounted at the original effective interest rate. All impairment losses are recognised in profit or loss.
+Other convertible bonds
+(b) Impairment of other non-financial long-term assets
+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
+remeasured subsequent to initial recognition.
+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).
+(d) Hedge accounting
+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
+(11) Financial Instruments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+94
+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.
+Financial liabilities other than the financial liabilities at fair value through profit or loss are classified as other financial liabilities.
+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)).
+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(17) (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.
+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.
+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.
+Cash flow hedges
+94
+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.
+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
+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.
+Hedge of net investment in foreign operation
+When a hedging instrument expires or is sold, terminated or exercised, or no longer meets the criteria for hedge accounting, the Group
+discontinues prospectively the hedge accounting treatments. If the hedged item is a financial instrument measured at amortised cost, any
+adjustment to the carrying amount of the hedged item is amortised to profit or loss from the adjustment date to the maturity date using
+the recalculated effective interest rate at the adjustment date.
+The gain or loss from remeasuring the hedging instrument at fair value is recognised in profit or loss. The gain or loss on the hedged
+item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised in profit or loss.
+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)
+(11) Financial Instruments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Fair value hedges
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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 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.
+for the year ended 31 December 2016
+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.
+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.
+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.
+95
+Financial Statements (PRC)
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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):
+6,398
+18,672
+At 31 December
+2015
+RMB million
+24,222
+33,142
+RMB million
+2015
+At 31 December
+At 31 December
+2016
+RMB million
+Percentage
+At 31 December
+2016
+The Company
+The Group
+Total
+Over three years
+Between one and two years
+Between two and three years
+Within one year
+Total
+Over three years
+RMB million
+1,662
+683
+50,289
+3,734
+of allowance
+Between two and three years
+Percentage
+At 31 December 2016
+The Group
+138
+29,512
+2,771
+29,650
+228
+38,332
+56,142
+525
+38,560
+56,667
+50,972
+1,720
+34,261
+39,994
+1,980
+677
+2,036
+4,580
+Between one and two years
+78
+Ageing analysis on accounts receivable is as follows:
+6.4936
+9,168
+0.8378
+80
+75
+69
+102,424
+51,363
+21,843
+14,290
+2,619
+6.9370
+18,181
+609
+6.4936
+3,962
+49
+51
+to total
+1,412
+96
+40,073
+142,497
+18,303
+69,666
+Total
+Less: Allowance for doubtful accounts
+Amounts due from others
+Amounts due from associates and joint ventures
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from subsidiaries
+ACCOUNTS RECEIVABLE
+7
+for the year ended 31 December 2016
+Within one year
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+103
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+At 31 December 2016, the Group's outstanding endorsed or discounted bills (with recourse) amounted to RMB 7,523 million (2015: RMB 5,352
+million).
+Bills receivable represents mainly the bills of acceptance issued by banks for sales of goods and products.
+6 BILLS RECEIVABLE
+At 31 December 2016, structured deposits with financial institutions of the Group amounted to RMB 75,000 million (2015: RMB 25,380 million).
+At 31 December 2016, time deposits with financial institutions of the Group amounted to RMB 18,029 million (2015: RMB 733 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.
+Financial Statements (PRC)
+to accounts
+Zhou Mingchun
+accounts
+receivable
+receivable
+Amount
+RMB million
+%
+% RMB million
+to total
+accounts
+receivable
+balance
+Allowance
+accounts
+receivable
+Amount
+RMB million
+to accounts
+to total
+Percentage
+At 31 December 2015
+of allowance
+Percentage
+Percentage
+At 31 December 2016
+The Company
+525
+%
+97.3
+Allowance
+RMB million
+10,406
+138
+29,650
+228
+100.0
+38,560
+79.4
+104
+0.3
+131
+2,125
+20.4
+10
+0.1
+49
+24,578
+2,809
+31.9
+114
+0.9
+357
+98.7
+38,023
+460
+4.7
+39.0
+35
+0.4
+225
+0.9
+464
+97.8
+49,854
+receivable
+balance
+to accounts
+Percentage
+of allowance
+Allowance
+% RMB million
+Percentage
+At 31 December 2015
+to total
+accounts
+receivable
+Amount
+RMB million
+%
+% RMB million
+RMB million
+receivable
+balance
+Allowance
+429
+0.9
+50,972
+100.0
+7
+%
+83180
+3262
+100.0
+0.8
+473
+56,667
+683
+94.2
+Amount
+404
+59
+3,800
+48
+1.3
+97.8
+55,385
+750
+49.8
+231
+2490
+0.1
+6.9370
+0.8945
+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.
+42,030
+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.
+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.
+(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.
+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.
+(15) Income tax (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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.
+Financial Statements (PRC)
+29960
+(c) Interest income
+(23) Operating leases
+Research costs and development costs that cannot meet the capitalisation crateria 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.
+(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
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+100 Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Interest income is recognised on a time proportion basis with reference to the principal outstanding and the applicable effective interest rate.
+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.
+Operating lease payments are charged as expenses on a straight-line basis over the period of the respective leases.
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+29.00%
+Limited ("China Aviation Oil")
+distribution of
+refined petroleum
+products
+Caspian Investments Resources Ltd.
+("CIR") (ii)
+The Republic of
+Kazakhstan
+British Virgin
+Islands
+ΝΑ
+Crude oil and natural
+gas extraction
+10,000 USD
+50.00%
+All the joint ventures and associates above are limited companies.
+Note:
+(i) On 12 December 2016, the Group entered into the Capital Injection Agreement in relation to Sinopec Sichuan To East China Gas Pipeline Co., Ltd. ("Pipeline Ltd"),
+a wholly-owned subsidiary of the Group, with China Life Insurance Company Limited ("China Life") and SDIC Communications Holding Co., Ltd. ("SDIC Holding") (the
+"Capital Injection Agreement"). According to the provisions of the Capital Injection Agreement, China Life and SDIC Holding made cash contribution to the Pipeline
+Ltd amounting to RMB 20 billion and RMB 2.8 billion, respectively, in exchange for 43.86% and 6.14% equity interest, respectively, in the Pipeline Ltd. Thereafter,
+the Group's equity interest in the Pipeline Ltd was diluted from 100% to 50%. Based on the composition and decision making mechanism of the Board of
+Directors of the Pipeline Ltd, the Group determines that it has only retained the power to participate in the financial and operating policy decisions of the Pipeline
+Ltd, and was no longer exclusively possessing the power to govern policy decisions of the Pipeline Ltd.
+Consequently, the Group has deconsolidated the Pipeline Ltd and started accounting for its 50% equity interest in the Pipeline Ltd as an investment in associate
+company. In this connection, the Group recognized an amount of RMB 20.562 billion investment income, which was resulted from the loss of control and the re-
+measurement of the remaining 50% equity interest in the Pipeline Ltd (Note 45, 58).
+Management is in the process of allocating the fair value to identifiable assets and liabilities of Pipeline Ltd. The accompanying summarized financial information
+of Pipeline Ltd (Note 12(c)) is based on management's preliminary fair value allocation which may be subjected to further change.
+(ii) In August 2015, one of the subsidiaries of Sinopec Group Company completed the acquisition from LUKOIL OVERSEAS WEST PROJECT Ltd. a 50% equity interests
+in CIR and revised CIR's Articles of Association subsequently. According to the revised CIR's Articles of Association, the Group retained significant influences over
+CIR. As a result, the Group reclassified the investment interest in CIR from joint ventures to associates.
+108
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Marketing and
+99
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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.
+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).
+(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 charged 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 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
+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.
+(13) Long-term deferred expenses
+for the year ended 31 December 2016
+(24) 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.
+(25) Related parties
+Cash on hand
+The Group
+5 CASH AT BANK AND ON HAND
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+102
+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%, while the business tax was from 3% to 5% before then.
+Value added tax rate for liquefied petroleum gas, natural gas and certain agricultural products is 13% and that for other products is 17%.
+1,495.20
+1,370.60
+Jet fuel oil
+1,218.00
+1,116.50
+1,711.52
+1,576.40
+1,948.64
+1,794.80
+2,105.20
+Renminbi
+1,939.00
+Cash at bank
+US Dollars
+91,855
+16
+10
+RMB
+million
+Exchange
+rates
+currency
+million
+RMB
+million
+Exchange
+rates
+million
+Original
+Original
+currency
+At 31 December 2016
+At 31 December 2015
+Total
+US Dollars
+Other
+Renminbi
+Deposits at related parities
+Others
+Hong Kong Dollars
+Renminbi
+1,411.20
+1,293.60
+2,109.76
+(j) key management personnel of the Company's holding company;
+(i) key management personnel of the Group, and close family members of such individuals;
+(25) Related parties (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+101
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(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. 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:
+(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.
+(26) 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:
+1,943.20
+Fuel oil
+Lubricant oil
+Solvent oil
+Naphtha
+Diesel
+Gasoline
+2015
+(RMB/Ton)
+(RMB/Ton)
+1,499
+87
+Products
+Effective from
+Effective from
+13 December
+2014
+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
+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;
+13 January
+82.8
+21.3
+7.2
+Equity securities, listed and at quoted market price
+Other investment, unlisted and at cost
+Less: Impairment loss for investments
+Total
+At 31 December
+2016
+RMB million
+At 31 December
+11 AVAILABLE-FOR-SALE FINANCIAL ASSETS
+2015
+262
+261
+11,175
+10,732
+11,437
+10,993
+RMB million
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+59,376
+14,141
+22,762
+65,772
+66,320
+1,838
+1,552
+Less: Provision for diminution in value of inventories
+Total
+157,431
+920
+156,511
+150,010
+4,402
+145,608
+Provision for diminution in value of inventories is mainly against finished goods and raw materials. For the year ended 31 December 2016, the
+provision for diminution in value of inventories of the Group was primarily due to the costs of finished goods and raw materials of the refining
+segment and chemical segment were higher than their net realizable value.
+106
+29
+29
+10,964
+11,408
+Disposals for the year
+Investments transferred to subsidiaries
+Balance at 31 December 2016
+Investments
+in joint ventures
+RMB million
+Investments
+in associates
+RMB million
+43,581
+995
+7,422
+41,389
+Provision for
+impairment
+losses
+RMB million
+(677)
+Total
+RMB million
+24,817
+1,884
+184
+Dividends declared
+75,680
+Change of other comprehensive loss under the equity method
+Additions for the year
+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 2016 amounted to nil (2015: nil).
+12 LONG-TERM EQUITY INVESTMENTS
+The Group
+Balance at 1 January 2016
+Additions for the year
+Share of profits less losses under the equity method
+Change of other comprehensive income/(loss) under
+the equity method
+Other equity movement under the equity method
+Dividends declared
+Disposals for the year
+Reclassification
+Other movements
+Movement of provision for impairment
+Balance at 31 December 2016
+The Company
+Balance at 1 January 2016
+Share of profits less losses under the equity method
+Spare parts and consumables
+Finished goods
+Work in progress
+%
+RMB million
+Within one year
+Between one and two years
+3,306
+95.4
+1,072
+81.7
+62
+1.8
+Between two and three years
+Over three years
+Total
+11
+11
+At 31 December 2016 and 2015, the total amounts of the top five prepayments of the Group are set out below:
+RMB million
+13
+%
+RMB million
+Percentage
+of allowance
+Percentage
+of allowance
+Percentage
+to total
+to
+Percentage
+to
+Amount prepayments
+Allowance
+prepayments
+balance
+to total
+Amount
+prepayments
+Allowance
+prepayments
+balance
+% RMB million
+(139)
+0.4
+2.4
+Percentage to the total balance of prepayments
+10 INVENTORIES
+The Group
+At 31 December
+At 31 December
+2016
+2015
+1,354
+35.8%
+1,202
+40.8%
+At 31 December
+2016
+RMB million
+At 31 December
+2015
+RMB million
+Raw materials
+Total amount (RMB million)
+84
+16
+1,312
+3,465
+100.0
+8440
+141
+10.7
+-
+43
+3.3
+1
+2.3
+13.1
+56
+4.3
+15
+26.8
+100.0
+At 31 December 2015
+2
+84,293
+25,812
+("Mansarovar")
+gas extraction
+Taihu Limited ("Taihu")
+Russia
+Cyprus
+ΝΑ
+50.00%
+Crude oil and natural
+49.00%
+gas extraction
+Yanbu Aramco Sinopec Refining Company
+Ltd. ("YASREF")
+Saudi Arabia
+Saudi Arabia
+ΝΑ
+25,000 USD
+12,000 USD
+Crude oil and natural
+ΝΑ
+oil products
+BASF-YPC Company Limited
+PRC
+PRC
+Wang Jingyi
+Manufacturing and
+12,547
+40.00%
+9.5
+distribution of
+petrochemical
+products
+Mansarovar Energy Colombia Ltd.
+Colombia
+British Bermuda
+Petroleum refining
+1,560 million
+37.50%
+and processing
+("Sinopec Finance")
+banking financial
+services
+Zhongtian Synergetic Energy Company
+PRC
+PRC
+Peng Yi
+Manufacturing of coal-
+16,000
+38.75%
+Limited ("Zhongtian Synergetic Energy")
+chemical products
+China Aviation Oil Supply Company
+PRC
+PRC
+49.00%
+Limited ("FREP")
+10,000
+Liu Yun
+USD
+2.Associates
+Sinopec Sichuan to East China Gas
+PRC
+PRC
+Quan Kai
+Operation of natural
+200
+50.00%
+Pipeline Co., Ltd. ("Pipeline Ltd") (i)
+gas pipelines and
+auxiliary facilities
+Sinopec Finance Company Limited
+PRC
+PRC
+Provision of non-
+50.00%
+14,758
+Manufacturing refining
+Investments in
+subsidiaries
+RMB million
+199,060
+46,695
+in joint Investments in
+ventures
+RMB million
+13,840
+942
+associates
+RMB million
+Provision for
+impairment
+losses
+13,987
+RMB million
+(7,657)
+Total
+RMB million
+219,230
+139
+47,776
+2,883
+866
+Investments
+3,749
+(45)
+116,812
+66,838
+9,306
+45
+18
+(3,106)
+(1,447)
+(1)
+(70)
+96
+(96)
+1,523
+484
+(4,553)
+(71)
+2,007
+(45)
+50,696
+(722)
+16
+(149)
+(152)
+Name of investees
+Principal place
+of business
+Register location
+Legal
+representative
+Principal activities
+RMB million
+Registered
+Capital
+Percentage of
+equity/voting
+right directly
+or indirectly
+held by the
+Company
+1.Joint ventures
+Fujian Refining & Petrochemical Company
+PRC
+PRC
+Gu Yuefeng
+(a) Principal joint ventures and associates
+(1,993)
+Principal joint ventures and associates of the Group are as follows:
+for the year ended 31 December 2016
+(10)
+176
+245,921
+(176)
+15,496
+(149)
+(2,145)
+(10)
+14,691
+(7,657)
+268,451
+For the year 2016, 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 53.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+107
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+At 31 December 2016
+("BASF-YPC")
+23
+Percentage
+Percentage
+of allowance
+Amount
+to total
+other
+receivables
+Allowance
+RMB million
+% RMB million
+to other
+receivables
+balance
+to total
+other
+to other
+receivables
+%
+Amount
+RMB million
+receivables
+%
+Allowance
+RMB million
+balance
+34,217
+73.1
+-
+43,852
+66.6
+of allowance
+Percentage
+At 31 December 2015
+Percentage
+13
+1,247
+67.0
+659
+210
+6.2
+484
+5.1
+1,349
+211
+2,083
+22,845
+100.0
+12000
+2,740
+9691O
+2.1
+9
+1.9
+0.9
+14
+6.6
+9.1
+1,367
+1,392
+65.6
+The Company
+At 31 December 2016
+2
+5.9
+1
+5,341
+At 31 December
+2015
+8,095
+Within one year
+35.4%
+Allowance for doubtful accounts
+During the year ended 31 December 2016 and 2015, 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 2016 and 2015, the Group and the Company had no individually significant write-off or recovery of doubtful
+debts which had been fully or substantially provided in prior years.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+105
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+9 PREPAYMENTS
+2016
+11,226
+Within one year
+41.7%
+Amounts to subsidiaries
+Amounts to associates and joint ventures
+Amounts to others
+Less: Allowance for doubtful accounts
+Total
+Ageing analysis of prepayments is as follows:
+The Group
+The Company
+At 31 December
+2016
+RMB million
+At 31 December
+2015
+RMB million
+At 31 December
+2016
+RMB million
+Amounts to Sinopec Group Company and fellow subsidiaries
+6.9
+At 31 December
+Ageing
+8.1
+1
+5,237
+11.2
+1
+14,787
+22.4
+2
+4,573
+9.8
+1.122
+Percentage to the total balance of other receivables
+24.5
+2.9
+1,260
+66.2
+46,767
+100.0
+1,124
+65,883
+100.0
+1,263
+At 31 December 2016 and 2015, the total amounts of the top five other receivables of the Group are set out below:
+Total amount (RMB million)
+1,903
+At 31 December
+32
+%
+8
+OTHER RECEIVABLES
+Amounts due from subsidiaries
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from associates and joint ventures
+Amounts due from others
+Less: Allowance for doubtful accounts
+Total
+Ageing analysis of other receivables 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
+Between two and three years
+Over three years
+Total
+The Group
+The Company
+At 31 December
+2016
+RMB million
+At 31 December
+2015
+RMB million
+At 31 December
+2016
+RMB million
+At 31 December
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+104 Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+During the year ended 31 December 2016 and 2015, the Group and the Company had no individually significant write-off or recovery of doubtful
+debts which had been fully or substantially provided in prior years.
+The Company
+0.5
+100.0
+85250
+124
+138
+22180
+At 31 December 2016 and 2015, the total amounts of the top five accounts receivable of the Group are set out below:
+Percentage
+of allowance
+to accounts
+receivable
+balance
+%
+0.4
+40,824
+0.1
+419
+Total amount (RMB million)
+Percentage to the total balance of accounts receivable
+Allowance for doubtful accounts
+At 31 December
+At 31 December
+2016
+14,967
+2015
+29.4%
+20,975
+37.0%
+During the year ended 31 December 2016 and 2015, the Group and the Company had no individually significant accounts receivable been fully or
+substantially provided allowance for doubtful accounts.
+89.9
+2015
+RMB million
+61,621
+At 31 December 2015
+Percentage
+Percentage
+of allowance
+Amount
+to total
+other
+receivables
+to other
+receivables
+RMB million
+24,316
+515
+254
+%
+90.2
+2.0
+of allowance
+0.9
+1,860
+26,945
+100.0
+82060
+10660
+57
+balance
+Amount
+% RMB million
+20,067
+to total
+other
+receivables
+to other
+receivables
+Allowance
+% RMB million
+balance
+Allowance
+RMB million
+87.9
+Percentage
+At 31 December 2016
+8,019
+2,694
+164
+2,229
+4,841
+308
+3,986
+4
+14,085
+19,843
+1,793
+Percentage
+2,029
+22,845
+46,767
+65,883
+1,349
+25,596
+1,392
+1,124
+1,263
+21,453
+45,643
+64,620
+The Group
+26,945
+2015
+0.2
+3,043
+22
+100.0
+3,780
+0.8
+1.9
+75.9
+5.6
+91.7
+32
+72
+RMB million
+3,465
+211
+Total
+Between one and two years
+Between two and three years
+Over three years
+Within one year
+%
+% RMB million
+RMB million
+prepayments
+16.7
+1
+1.0
+0.2
+RMB million
+2,826
+%
+Allowance
+RMB million
+balance
+%
+96.0
+12
+5.7
+82
+to
+1
+6
+18
+56.3
+31
+29
+2,943
+100.0
+8200
+2018
+2.8
+1.4
+6880
+15100
+Amount prepayments
+to
+At 31 December 2015
+Allowance
+prepayments
+balance
+Percentage
+to total
+Percentage
+of allowance
+At 31 December 2016
+Amount prepayments
+The Group
+16
+1,296
+11
+3,454
+23
+2,920
+3,749
+Percentage
+to total
+31
+3,465
+572
+364
+2,810
+2,943
+3,780
+3,550
+47
+24
+50
+58
+86
+206
+690
+1,312
+Percentage
+of allowance
+43,693
+- US Dollar loans
+- Renminbi loans
+2,858
+10,806
+and fellow subsidiaries
+1,957
+6.9370
+13,577
+5,063
+6.4936
+Short-term loans from Sinopec Group Company
+7,855
+7.0952
+1,107
+7.3068
+- Euro loans
+11,824
+6.4936
+1,821
+1,013
+6.9370
+146
+18,430
+- US Dollar loans
+2,202
+- HK Dollar loans
+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 2016 and 2015, the Group had no overdue unpaid bills.
+23 ACCOUNTS PAYABLE
+At 31 December 2016 and 2015, the Group had no individually significant accounts payable aged over one year.
+24 ADVANCES FROM CUSTOMERS
+At 31 December 2016 and 2015, the Group had no individually significant advances from customers aged over one year.
+25 EMPLOYEE BENEFITS PAYABLE
+At 31 December 2016 and 2015, the Group's employee benefits payable primarily represented wages payable and social insurance payables.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+22 BILLS PAYABLE
+115
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+26 TAXES PAYABLE
+The Group
+At 31 December
+2016
+RMB million
+At 31 December
+2015
+Financial Statements (PRC)
+At 31 December 2016 and 2015, the Group had no significant overdue short-term loan.
+At 31 December 2016, the Group's interest rates on short-term loans were from interest 0.68% to 6.19% (2015: from interest 0.23% to 6.16%).
+The majority of the above loans are by credit.
+74,729
+11,357
+0.8945
+1,969
+6
+0.8373
+5
+- Euro loans
+1
+7.3068
+5
+1
+7.0952
+4
+Singapore Dollar loans
+4
+4.7995
+Total
+21
+30,374
+4.5875
+32,878
+10,931
+Original
+31,036
+(72)
+683
+Other receivables
+8
+1,392
+132
+(144)
+(33)
+2
+1,349
+Prepayments
+9
+23
+14
+(1)
+(5)
+31
+1,940
+384
+(153)
+(110)
+2
+2,063
+Inventories
+Long-term equity investments
+(8)
+238
+525
+7
+At 31 December 2016, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 19,194 million
+(2015: RMB 19,338 million), of which RMB 3,833 million (2015: RMB 4,080 million) was incurred for the year ended 31 December 2016, because
+it was not probable that the related tax benefit will be realised. These deductible losses carried forward of RMB 3,777 million, RMB 2,634 million,
+RMB 4,870 million, RMB 4,080 million and RMB 3,833 million will expire in 2017, 2018, 2019, 2020, 2021 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 2016, write-down of deferred tax assets
+amounted to RMB 811 million (2015: RMB 75 million) (Note 48).
+19 OTHER NON-CURRENT ASSETS
+Other non-current assets mainly represent prepayments for construction projects and purchases of equipment.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+20 DETAILS OF IMPAIRMENT LOSSES
+At 31 December 2016, impairment losses of the Group are analysed as follows:
+Note
+Balance at
+1 January
+2016
+RMB million
+Provision
+for the year
+RMB million
+Fixed assets
+RMB million
+Written back
+for the year
+Written off
+for the year
+Other
+increase/
+(decrease)
+RMB million
+Balance at
+31 December
+2016
+RMB million
+Allowance for doubtful accounts
+Included: Accounts receivable
+RMB million
+- Renminbi loans
+Construction in progress
+Goodwill
+43
+56,138
+43
+17,239
+(163)
+(4,721)
+227
+68,720
+The reasons for recognising impairment losses are set out in the respective notes of respective assets.
+21 SHORT-TERM LOANS
+The Group's short-term loans represent:
+At 31 December 2016
+At 31 December 2015
+RMB million
+currency
+million
+Exchange
+rates
+RMB
+million
+Original
+currency
+million
+Exchange
+RMB
+rates
+million
+Short-term bank loans
+11,944
+Total
+Others
+7,663
+6
+023456
+4,402
+430
+(10)
+(4,021)
+677
+1
+(1)
+40,368
+14,921
+(584)
+145
+Intangible assets
+119
+57
+220
+1,486
+831
+11
+125562
+920
+722
+54,762
+(8)
+1,693
+854
+7,657
+45
+8,668
+5,559
+29,682
+and fellow subsidiaries
+Long-term loans from Sinopec Group Company
+Less: Current portion
+186
+6.4936
+29
+6.9370
+No loans at 31 December 2016
+- US Dollar loans
+44,350
+(5,613)
+12,193
+44,922
+(8,795)
+17,689
+Interest rates ranging from interest
+free to 5.75% per annum at 31
+December 2016 with maturities
+through 2021
+- Renminbi loans
+and fellow subsidiaries
+Long-term loans from Sinopec Group Company
+Long-term bank loans
+Less: Current portion
+Total
+The maturity analysis of the Group's long-term loans is as follows:
+(150)
+(236)
+62,461
+37,038
+1,779
+10,467
+At 31 December
+2015
+RMB million
+7,469
+8,259
+56,725
+8,988
+3,957
+RMB million
+461
+2015
+At 31 December
+2016
+RMB million
+Long-term loans are primarily unsecured, and carried at amortised costs.
+Total
+After five years
+Between two and five years
+Between one and two years
+56,493
+44,300
+44,772
+62,461
+At 31 December
+6.4936
+71
+426
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+116
+At 31 December 2016 and 2015, the Group had no significant overdue long-term loans.
+Non-current liabilities due within one year
+Others
+Debentures payable due within one year
+11,277
+38,972
+560
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+527
+29,500
+5,849
+8,945
+236
+150
+186
+6.4936
+29
+6.9370
+4,868
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+29 LONG-TERM LOANS
+Interest rate and final maturity
+6.9370
+61
+Interest rates ranging from interest
+1.30% to 4.29% per annum at 31
+December 2016 with maturities
+through 2031
+- US Dollar loans
+17,345
+26,058
+million
+rates
+RMB
+The Group's long-term loans represent:
+Exchange
+RMB
+million
+Exchange
+rates
+currency
+million
+Original
+Original
+At 31 December 2015
+At 31 December 2016
+Interest rates ranging from interest
+1.08% to 4.41% per annum at 31
+December 2016 with maturities
+through 2030
+Long-term bank loans
+- Renminbi loans
+currency
+million
+56,493
+117
+Financial Statements (PRC)
+Long-term loans due within one year
+At 31 December 2016
+Original
+currency
+million
+At 31 December 2015
+Original
+Exchange
+rates
+RMB
+million
+currency
+million
+Exchange
+rates
+- US Dollar loans
+RMB
+million
+6
+6.9370
+42
+8,795
+8
+6.4936
+54
+5,613
+150
+50
+8,753
+Transferred to subsidiaries
+Renminbi loans
+Long-term loans from Sinopec Group Company
+20,491
+6,051
+1,048
+196
+213
+8,289
+52,886
+6,307
+32,492
+Value-added tax payable
+Consumption tax
+and fellow subsidiaries
+Income tax
+Other taxes
+Total
+27 OTHER PAYABLES
+At 31 December 2016 and 2015, the Group's other payables primarily represented payables for constructions.
+At 31 December 2016 and 2015, the Group had no individually significant other payables aged over three years.
+28 NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR
+The Group's non-current liabilities due within one year represent:
+Long-term bank loans
+- Renminbi loans
+- US Dollar loans
+Mineral resources compensation fee
+4,433
+36,918
+(843)
+(29,500)
+88,121
+84,485
+30,000
+6,000
+RMB million
+2015
+At 31 December
+At 31 December
+2016
+RMB million
+(4,868)
+Note:
+Less: Current portion
+- Corporate Bonds (ii)
+Debentures payable:
+Short-term corporate bonds (i)
+The Group
+30 DEBENTURES PAYABLE
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Total
+169
+54,985
+(i) The company issued 180-day corporate bonds of face value RMB 10 billion to corporate investors in the PRC debenture market on 23 September 2015 at par value of
+RMB 100. The effective cost of the 180-day corporate bonds is 2.99% per annum. The short-term bonds were due on 23 March 2016 and have been fully paid by the
+Group at maturity.
+1,057
+3,420
+33,115
+The Group
+RMB million
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+118
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+32 OTHER NON-CURRENT LIABILITIES
+Balance at 31 December 2016
+83,253
+Exchange adjustments
+Accretion expenses
+Provision for the year
+Balance at 1 January 2016
+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:
+31 PROVISIONS
+(ii) These corporate bonds are carried at amortised cost, including USD denominated corporate bonds of RMB 18,985 million, and RMB denominated corporate bonds
+of RMB 65,500 million (2015: USD denominated corporate bonds of RMB 22,621 million, and RMB denominated corporate bonds of RMB 65,500 million). At 31
+December 2016, RMB 18,985 million (2015: RMB 22,621 million) are guaranteed by Sinopec Group Company.
+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 company issued 180-day corporate bonds of face value RMB 4 billion to corporate investors in the PRC debenture market on 31 December 2015 at par value of
+RMB 100. The effective cost of the 180-day corporate bonds is 2.75% per annum. The short-term bonds were due on 30 June 2016 and have been fully paid by the
+Group at maturity.
+The company issued 182-day corporate bonds of face value RMB 16 billion to corporate investors in the PRC debenture market on 14 December 2015 at par value of
+RMB 100. The effective cost of the 182-day corporate bonds is 2.90% per annum. The short-term bonds were due on 14 June 2016 and have been fully paid by the
+Group at maturity.
+Utilised for the year
+7,214
+7,661
+138
+At 31 December
+1,670
+Reclassifications
+Additions for the year
+254,097
+302,711
+21,077
+(5,431)
+1,031,570
+443,485
+540.499
+47,586
+(5,298)
+(26)
+(107)
+(65,243)
+(40,610)
+57
+(115)
+(23,012)
+1,048,294
+3,480
+50,470
+469,966
+535
+18,835
+41,476
+23,349
+577,885
+66,495
+5
+16,971
+9,756
+1,288
+350
+Additions for the year
+Balance at 1 January 2016
+Provision for impairment losses:
+614,246
+255,451
+337,394
+21,401
+530,446
+2,939
+30,267
+Balance at 31 December 2016
+(4,257)
+(25,573)
+(17,791)
+53
+(58)
+(6,713)
+(22)
+(282)
+Decreases for the year
+(1,069)
+Transferred to subsidiaries
+(4,561)
+47,882
+6
+1,368
+58
+(1,621)
+Balance at 1 January 2016
+Accumulated depreciation:
+264
+7%
+self-financing
+Yizheng-Changling Crude Oil Pipeline
+Corporation Multiple Tracks Yizheng
+Bank loans &
+self-financing
+to Jiujiang Corporation
+3,316
+1,687
+262
+769
+74%
+102
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+15 INTANGIBLE ASSETS
+The Group
+Land use
+rights
+RMB million
+Non-patent
+2,456
+12,673
+2
+Transformation Project
+self-financing
+Bank loans &
+Guangxi LNG Project
+17,775
+7,962
+(3,059)
+4,903
+61%
+self-financing
+3,709
+576
+Tianjin LNG Project
+17,404
+3,387
+4,826
+8,213
+47%
+self-financing
+91
+Zhenhai Old Areas Structure
+Bank loans &
+Operation
+30,932
+13,444
+(13)
+412
+1,486
+220
+49,689
+116
+131,274
+(380)
+(50,470)
+(87,399)
+(6,979)
+(7,467)
+(8,806)
+(1,458)
+43,561
+81,837
+72,763
+152,545
+The Company
+RMB million
+The Group
+RMB million
+1,693
+412
+129,581
+152,325
+49,277
+72,763
+9%
+3,274
+402
+2,872
+35,240
+Zhongke Refine Integration Project
+RMB million
+%
+Accumulated
+interest
+capitalised at
+31 December
+2016
+At 31 December 2016, major construction projects of the Group are as follows:
+Source of funding
+2016
+RMB million
+Percentage of
+31 December
+Net change
+for the year
+RMB million
+Balance at
+Balance at
+1 January
+2016
+RMB million
+RMB million
+Budgeted
+amount
+Project name
+Completion
+Balance at 31 December 2015
+Balance at 31 December 2016
+Net book value:
+The additions to oil and gas properties of the Group and the Company for the year ended 31 December 2016 included RMB 3,420 million (2015:
+RMB 2,899 million) (Note 31) and RMB 2,939 million (2015: RMB 2,954 million), respectively of the estimated dismantlement costs for site
+restoration.
+439,477
+373,020
+172,080
+203,196
+210,764
+25,517
+176,378
+24,562
+(72)
+44,304
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016 111
+(57)
+15,954
+1,623
+(15)
+Balance at 31 December 2015
+Balance at 31 December 2016
+Net book value:
+Balance at 31 December 2016
+Decreases for the year
+Transferred to subsidiaries
+Reclassifications
+26,727
+3,338
+Financial Statements (PRC)
+Financial Statements (PRC)
+Balance at 31 December 2016
+Decreases for the year
+Additions for the year
+Balance at 1 January 2016
+Provision for impairment losses:
+Balance at 31 December 2016
+Exchange adjustments
+Transferred to fixed assets
+Reclassification to other assets
+Disposals for the year
+Transferred to subsidiaries
+Dry hole costs written off
+112
+Additions for the year
+Cost:
+14 CONSTRUCTION IN PROGRESS
+At 31 December 2016 and 2015, the Group and the Company had no individually significant fully depreciated fixed assets which were still in use.
+At 31 December 2016 and 2015, the Group and the Company had no individually significant fixed assets which were temporarily idle or pending for
+disposal.
+At 31 December 2016 and 2015, 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 2016 primarily represent impairment losses recognised in the exploration and
+production ("E&P") segment of RMB 10,594 million (2015: RMB 4,213 million) on fixed assets, for the chemicals segment of RMB 2,840 million
+(2015: RMB 142 million) of fixed assets and for the refining segment of RMB 1,245 million (2015: RMB 8 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% (2015: 10.80%).
+Further future downward revisions to the Group's oil price outlook by 10% or more would lead to further impairments which, in aggregate, are
+likely to be material. It is estimated that a general decrease of 10% in oil price, with all other variables held constant, would result in additional
+impairment loss in E&P segment by approximately RMB 3,010 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 in E&P segment by approximately RMB 1,193 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 E&P segment by
+approximately RMB 439 million. The assets in the chemicals segment and refining segment were written down due to the suspension of operations
+of certain production facilities.
+13 FIXED ASSETS (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Balance at 1 January 2016
+Patents
+RMB million
+technology
+RMB million
+for the year ended 31 December 2016
+18 DEFERRED TAX ASSETS AND LIABILITIES
+Deferred tax assets and liabilities before the consolidated elimination adjustments are as follows:
+Deferred tax assets
+At
+At
+Net balance
+At
+At
+31 December 31 December 31 December 31 December 31 December 31 December
+2016
+2015
+2016
+2015
+Deferred tax liabilities
+At
+At
+RMB million
+RMB million
+RMB million
+RMB million
+2016
+RMB million
+2015
+RMB million
+Current
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+114
+Financial Statements (PRC)
+At 31 December
+RMB million
+2015
+RMB million
+1,157
+1,157
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+Trading of petrochemical
+products
+4,043
+4,043
+941
+Receivables and inventories
+853
+218
+6,353
+6,271
+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 10.4% to 11.0% (2015: 10.7% to
+11.3%). Cash flows beyond the one-year period are maintained constant.
+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.
+17 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 2016
+113
+212
+Accruals
+347
+1,755
+(9,131)
+5,883
+Others
+Deferred tax assets/(liabilities)
+133
+14,639
+98
+(229)
+16,706
+(15,086)
+(58)
+(17,496)
+2,477
+(96)
+(447)
+(790)
+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
+2016
+RMB million
+7,425
+7,425
+At 31 December
+2015
+RMB million
+9,237
+9,237
+Deferred tax assets
+Deferred tax liabilities
+40
+At 31 December
+2016
+5,883
+Tax value of losses carried forward
+347
+1,755
+391
+413
+391
+413
+Non-current
+Cash flow hedges
+Fixed assets
+2,477
+27
+(242)
+(98)
+(215)
+250
+11,264
+8,209
+(14,615)
+(17,340)
+(3,351)
+348
+Other units without individual significant goodwill
+Total
+Sinopec (Hong Kong) Limited.
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+68,467
+4,378
+4,134
+36,908
+4,013
+117,900
+Accumulated amortisation:
+Balance at 1 January 2016
+12,081
+Balance at 31 December 2016
+3,123
+8,196
+2,155
+27,530
+Additions for the year
+2,029
+284
+1,771
+463
+4,685
+1,975
+Decreases for the year
+(845)
+(169)
+rights
+RMB million
+Others
+RMB million
+Total
+RMB million
+Cost:
+Balance at 1 January 2016
+63,324
+4,210
+Additions for the year
+(25)
+5,794
+3,931
+203
+34,407
+3,575
+109,447
+2,670
+463
+9,298
+Decreases for the year
+(651)
+168
+2016
+RMB million
+(95)
+(22)
+24
+120
+16
+854
+Net book value:
+Balance at 31 December 2016
+Balance at 31 December 2015
+54,241
+51,049
+634
+604
+483
+1,851
+1,932
+1,401
+1,404
+85,023
+81,086
+Amortisation of the intangible assets of the Group charged for the year ended 31 December 2016 is RMB 4,299 million (2015: RMB 3,923 million).
+16 GOODWILL
+Goodwill is allocated to the following Group's cash-generating units:
+Name of investees
+Principal activities
+Sinopec Beijing Yanshan Petrochemical Branch ("Sinopec Yanshan")
+Sinopec Zhenhai Refining and Chemical Branch ("Sinopec Zhenhai")
+26,896
+26,097
+(75)
+211
+Decreases for the year
+(192)
+Balance at 31 December 2016
+14,015
+3,261
+2,259
+9,892
+2,596
+32,023
+Provision for impairment losses:
+Balance at 31 December 2016
+Balance at 1 January 2016
+483
+24
+114
+16
+831
+Additions for the year
+17
+6
+23
+194
+(6,900)
+Decreases for the year
+3,576
+19
+1,821
+31,823
+41,286
+10,725
+9,658
+1,876
+1,363
+15,430
+17,323
+48,758
+33
+130
+41,764
+Interest income
+Turnover
+29
+RMB million
+174
+40
+(119)
+(113)
+(15)
+(192)
+(239)
+(173)
+(1,130)
+(929)
+Profit/(loss) for the year
+Tax expense
+Profit/(loss) before taxation
+Interest expense
+64
+13
+33
+9
+2015
+2015
+CIR (vi)
+2,251
+4,021
+2,184
+1,812
+5,526
+6,154
+4,391
+6,842
+Carrying Amounts
+729
+743
+Others (v)
+4,771
+5,045
+1,522
+5,045
+4,771
+Summarised income statement
+Year ended 31 December
+YASREF
+2016
+RMB million RMB million
+RMB million
+RMB million
+RMB million
+2015
+2016
+2015
+(1,216)
+2016
+RMB million
+2015
+Taihu
+Mansarovar
+BASF-YPC
+2016
+2015
+2016
+FREP
+RMB million RMB million RMB million RMB million
+3,278
+(721)
+6,476
+470
+155
+Dividends from joint ventures
+(2,661)
+492
+731
+89
+3,744
+(1,890)
+(743)
+158
+2,939
+4,902
+Total comprehensive income/(loss)
+(3,164)
+Share of net profit/(loss) from joint ventures
+738
+2,451
+783
+243
+(1,245)
+875
+145
+134
+from joint ventures
+Share of other comprehensive income/(loss)
+252
+(92)
+31
+1,287
+895
+(1,090)
+(506)
+63
+1,470
+647
+(2,633)
+1,851
+303
+(56)
+(648)
+(918)
+(1,574)
+870
+(259)
+28
+3,455
+2,411
+(1,847)
+(1,316)
+214
+2,606
+3,857
+(333)
+(518)
+(733)
+56
+290
+270
+Other comprehensive income/(loss)
+503
+(246)
+84
+2,722
+(20)
+1,893
+(1,013)
+158
+1,958
+2,939
+4,902
+(367)
+13
+(2,180)
+2,184
+1,812
+5,526
+10.136
+8,085
+2,321
+2,781
+1,021
+1,068
+5,253
+6,246
+9,913
+18,441
+Total current assets
+5,965
+6,826
+2,243
+1,616
+Non-current assets
+759
+21,903
+13,530
+(4,643) (3,116)
+Other current liabilities
+(2,005)
+(783)
+(1,424)
+(1,781)
+Current financial liabilities (iii)
+Current liabilities
+54,027
+57,054
+5.662
+8,279
+7,433
+4,050
+15.543
+25,585
+569
+4,765
+4,852
+YASREF
+Taihu
+At 31
+At 31
+December December
+2015
+2016
+RMB million RMB million
+Mansarovar
+At 31
+At 31
+December December
+2015
+2016
+RMB million RMB million
+RMB million RMB million RMB million
+At 31
+December
+2016
+At 31
+December
+2015
+2016
+BASF-YPC
+FREP
+At 31
+December
+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
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Balance at 31 December 2016
+At 31
+December
+2015
+RMB million RMB million
+At 31
+December
+2016
+At 31
+December
+2015
+7,396
+10,269
+Other current assets
+4,171
+1,259
+78
+1,165
+(2,107)
+262
+488
+1,394
+2,517
+8,172
+Cash and cash equivalents
+Current assets
+RMB million
+499
+(1,864)
+(599)
+(767)
+13,454
+3,217
+6,931
+4,367
+3,624
+13,814
+15,384
+8,781
+13,683
+Net assets
+(40,192)
+(44,032)
+(1,363)
+(2,179)
+(3,320)
+12,723
+Net assets attributable to owners
+of the company
+13,683
+6,154
+4,391
+6,842
+Share of net assets from joint ventures
+111
+241
+Net assets attributable to minority interests
+(895)
+12,723
+3.106
+6,690
+4,367
+3,624
+13,814
+15,384
+8,781
+13,454
+277 (1,582)
+(3,113)
+(22,177)
+Non-current financial liabilities(iv)
+Non-current liabilities
+(11,248)
+(7,653)
+(3,403)
+(1,950)
+(767)
+(599)
+(3,869)
+(2,890)
+(4,540)
+(6,424)
+Total current liabilities
+(334) (2,315) (1,187) (3,362)
+(1,088) (6,466) (7,886)
+(1,616)
+(19,985)
+(21,906)
+(1,492)
+(3,113)
+(20,237)
+Total non-current liabilities
+(978)
+(1,004)
+(1,337)
+(2,130)
+(3,320)
+(1,502)
+(895)
+(271)
+(252)
+Other non-current liabilities
+(39,214)
+(43,028)
+(26)
+(49)
+(10)
+The share of profit and other comprehensive loss for the year ended 31 December 2016 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was RMB 3,768 million (2015: RMB 2,897 million) and RMB 1,068 million (2015: RMB 324 million)
+respectively. As at 31 December 2016, the carrying amount of all individually immaterial joint ventures accounted for using equity method in
+aggregate was RMB 26,822 million (2015: RMB 24,458 million).
+1,958
+(iii) Excluding accounts payable, other payables.
+880,711
+626
+Equipment,
+machinery
+and others
+RMB million
+and gas
+properties
+RMB million
+Oil
+613,134
+3,420
+277
+107,873
+Balance at 1 January 2016
+Accumulated depreciation:
+Balance at 31 December 2016
+Exchange adjustments
+Decreases for the year
+Reclassifications
+Transferred from construction in progress
+Additions for the year
+Total
+RMB million
+Balance at 1 January 2016
+5,901
+50,025
+41,569
+1,658,541
+3,069
+187
+892,936
+650,685
+114,920
+(37,968)
+1,601,718
+4,323
+87,399
+(37,302)
+(27)
+2,800
+82
+(639)
+(1,311)
+(115)
+1,426
+31,473
+Cost:
+Plants and
+buildings
+RMB million
+The Group
+23
+(4,107)
+(2,856)
+2,248
+3,630
+3,512
+1,351
+51
+(4,017)
+662
+28
+(175)
+Other comprehensive (loss)/income
+Total comprehensive income/(loss)
+Dividends declared by associates
+Share of profit/(loss) from associates
+Share of other comprehensive
+(90)
+(3,518)
+336
+26
+748
+1,707
+13 FIXED ASSETS
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Note:
+(vii) The summarized income statement of Pipeline Ltd presents the operating results from the date when the Group lost control to 31 December 2016 (Note 12(i)).
+(viii) The main asset of Zhongtian Synergetic Energy was under construction during the year ended 31 December 2016.
+Note:
+354,181
+The share of profit and other comprehensive loss for the year ended 31 December 2016 in all individually immaterial associates accounted for
+using equity method in aggregate was RMB 1,977 million (2015: RMB 1,418 million) and RMB 384 million (2015: RMB 632 million) respectively.
+As at 31 December 2016, the carrying amount of all individually immaterial associates for using equity method in aggregate was RMB 18,395
+million (2015: RMB 16,596 million).
+14
+(86)
+(loss)/income from associates
+(45)
+(1,759)
+495
+892
+(2,009)
+432,151
+Additions for the year
+3,815
+690,594
+409,122
+215,124
+66,348
+Balance at 31 December 2016
+Net book value:
+54,762
+20,791
+30,642
+3,329
+Balance at 31 December 2016
+57
+5
+52
+Exchange adjustments
+Balance at 31 December 2015
+63,404
+238,943
+431,102
+Reclassifications
+Transferred from construction in progress
+Additions for the year
+Balance at 1 January 2016
+Cost:
+Total
+RMB million
+RMB million
+(584)
+and others
+Equipment
+and gas
+properties
+RMB million
+RMB million
+Plants and
+buildings
+Oil
+The Company
+733,449
+machinery
+2,248
+(561)
+Decreases for the year
+79
+1,813
+27
+Exchange adjustments
+(16,822)
+(22)
+(525)
+Decreases for the year
+(299)
+(58)
+357
+Reclassifications
+827,901
+100,734
+47,914
+49,005
+(17,369)
+1,919
+Balance at 31 December 2016
+45,243
+404,919
+(12)
+12
+Reclassifications
+14,921
+3,901
+10,580
+440
+(23)
+Additions for the year
+17,458
+20,010
+2,900
+Balance at 1 January 2016
+Provision for impairment losses:
+913,185
+463,023
+40,368
+3,630
+(ix) The summarized income statement of CIR for the year 2015 represents the operating result for the period from the date when the Group reclassified the
+investment interest in CIR from joint ventures to associates to 31 December 2015 (Note 12(ii)).
+1,526
+5,671
+37,571
+50,301
+15,739
+16,478
+25,395
+4,826
+5,120
+8,240
+13,115
+10,168
+3,484
+154,437
+149,457
+11,835
+5,220
+Current assets
+Non-current assets
+3,842
+Current liabilities
+(15,407)
+(32,137)
+(114)
+(88)
+(4)
+Non-current liabilities
+(1,305)
+(928)
+(4,717)
+(6,297)
+(16,536)
+(8,078)
+(147,952)
+(142,386)
+(5,009)
+7,768
+RMB million
+RMB million
+RMB million
+Sinopec Finance
+At 31
+Pipeline Ltd (i)
+At 31
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal associates:
+(c) Major financial information of principal associates
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+110
+Financial Statements (PRC)
+109
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(vi) The summarized income statement represents the operating result for the period from 1 January 2015 to the date when the Group reclassified the investment in
+joint venture to interest in associates (Note 12 (ii)).
+(v) 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 acquisition date.
+(iv) Excluding provisions.
+December
+2016
+December
+2016
+RMB million
+2015
+2016
+2015
+At 31
+December
+At 31
+December
+At 31
+December
+CIR
+(417)
+HP
+RMB million
+RMB million
+2015
+At 31
+December
+Zhongtian Synergetic
+Energy
+At 31
+December
+2016
+At 31
+December
+2015
+RMB million
+RMB million
+China Aviation Oil
+At 31
+December
+2016
+RMB million
+(321)
+7,292
+(1,282)
+2015
+RMB million
+RMB million
+RMB million
+Sinopec Finance
+2016
+Pipeline Ltd (i, vii)
+2016
+Year ended 31 December
+Zhongtian Synergetic
+Summarised income statement
+5,004
+3,576
+2,157
+3,115
+6,121
+6,734
+10,834
+Energy (viii)
+2016
+RMB million
+2015
+RMB million
+China Aviation Oil
+2016
+RMB million
+CIR (ix)
+51
+687
+2,205
+78,623
+(883)
+2,533
+2,442
+11,496
+191
+Turnover
+RMB million
+RMB million
+RMB million
+2015
+2016
+2015
+Profit/(loss) for the year
+22,800
+74,622
+6,691
+17,378
+22,110
+23,461
+32,217
+of the Company
+Net assets attributable to owners
+10,007
+15,796
+7,151
+12,072
+15,796
+17,378
+22,110
+32,217
+Net assets
+Carrying Amounts
+8,422
+10,743
+23,461
+7.151
+7,438
+5,004
+3.115
+6,121
+6,734
+10,834
+11,496
+2,157
+Share of net assets from associates
+10,007
+16,109
+Net assets attributable to minority
+Others (v)
+1,329
+984
+interests
+The amounts set out in the table above in respect of the year ended 31 December 2016 and 2015 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+207
+(x)
+996
+1,194
+(ix)
+(xi)
+Net deposits placed with related parties
+(24,877)
+(14,082)
+(57,881)
+Included in the transactions disclosed above, for the year ended 31 December 2016 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 114,526 million (2015: RMB 112,089 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 96,023
+million (2015: RMB 93,061 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 6,584
+million (2015: RMB 6,754 million), operating lease charges for land and buildings paid by the Group of RMB 10,474 million and 449 million
+(2015: RMB 10,618 million and RMB 462 million), respectively and interest expenses of RMB 996 million (2015: RMB 1,194 million); and
+b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 56,251 million (2015: RMB 77,747 million),
+comprising RMB 56,010 million (2015: RMB 77,513 million) for sales of goods, RMB 209 million (2015: RMB 207 million) for interest income
+and RMB 32 million (2015: RMB 27 million) for agency commission income.
+209
+(21,770)
+Net loans repaid to related parties
+(vii)
+116
+129
+(viii)
+302
+456
+462
+449
+(vii)
+10,618
+10,474
+(vii)
+6,754
+As at 31 December 2016 and 2015, 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 55(b). Guarantees given to banks by the
+Group in respect of banking facilities to associates and joint ventures are disclosed in Note 55(b).
+6,584
+(ix)
+Note:
+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 2016.
+The terms of these agreements are summarised as follows:
+(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.
+(vi)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(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.
+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:
+(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)
+51 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+(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.
+(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 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.
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+(x) Interest expense represents interest charges on the loans and advances obtained from Sinopec Group Company and fellow subsidiaries.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+127
+Financial Statements (PRC)
+128
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+(xi) The Group obtained or repaid loans from or to Sinopec Group Company and fellow subsidiaries.
+10,880
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+(v)
+(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;
+The PRC Company Law and Articles of Association of the company have set out the following profit appropriation plans:
+79,640
+79,640
+Balance at 31 December 2016
+Appropriation
+Balance at 1 January 2016
+196,640
+196,640
+117,000
+Total
+RMB million
+surplus reserves
+RMB million
+117,000
+The Group
+Discretionary
+Statutory
+surplus reserve
+RMB million
+612
+3,345
+(3,192)
+765
+The Group
+RMB million
+Movements in surplus reserves are as follows:
+(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.
+37 SURPLUS RESERVES
+Pursuant to the Articles of Association of the Company and a resolution passed at the Directors' meeting on 24 March 2017, the directors proposed
+to transfer RMB 2,359 million to the statutory surplus reserve.
+121
+The Company
+2016
+RMB million
+RMB million
+2015
+RMB million
+2015
+1,930,911
+1,492,165
+50,721
+RMB million
+1,880,190
+The Group
+2016
+Operating costs
+Total
+Income from other operations
+Income from principal operations
+38 OPERATING INCOME AND OPERATING COSTS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+Financial Statements (PRC)
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Balance at 31 December 2016
+Utilisation for the year
+Provision for the year
+(838)
+114
+(6,557)
+137
+860
+RMB Million
+(9,290)
+(2,029)
+(7,261)
+(723)
+1,630
+3,219
+17
+(5,589)
+(2,333)
+(4,057)
+97
+(968)
+RMB Million
+(703)
+(7,984)
+(1,169)
+(9,153)
+Balance at 1 January 2016
+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:
+36 SPECIFIC RESERVE
+(2,820)
+(1,888)
+(932)
+2,000
+1,132
+1,977,877
+97
+31 December 2016
+6,333
+(719)
+7,052
+2,703
+1,970
+(17)
+2,396
+(4,161)
+696,211
+42,498
+29,967
+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:
+41 CLASSIFICATION OF EXPENSES BY NATURE
+The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2016 by the Group ranged from 2.65%
+to 4.82% (2015: 2.6% to 5.9%).
+8,980
+3,857
+610
+6,611
+Total
+Net foreign exchange loss
+(3,010)
+(3,218)
+1,081
+1,057
+7,052
+8,162
+1,221
+8,273
+Personnel expenses
+Depreciation, depletion and amortization
+Exploration expenses (including dry holes)
+Other expenses
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+1,723,644
+1,626,905
+66,060
+63,867
+10,459
+11,035
+96,460
+9,021
+859
+108,425
+63,887
+2015
+RMB million
+1,494,046
+2016
+RMB million
+1,379,691
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+122
+Exploration expenses include geological and geophysical expenses and written-off of unsuccessful dry hole costs.
+42 EXPLORATION EXPENSES
+Total
+56,619
+Subtotal
+RMB Million
+Interest income
+Net interest expenses
+Education surcharge
+Resources tax
+City construction tax
+Consumption tax
+2015
+RMB million
+RMB million
+2016
+The Group
+39 TAXES AND SURCHARGES
+The income from principal operations mainly represents revenue from sales of crude oil, natural gas, refined petroleum products and chemical
+products. The income from other operations mainly represents revenue from sale of materials, service, rental income and others. Operating costs
+primarily represent the products cost related to the principal operations. The Group's segmental information is set out in Note 56.
+609,596
+845,285
+25,692
+819,593
+513,514
+726,178
+1,594,070
+2,020,375
+Other taxes
+Total
+193,836
+198,754
+Less: Capitalised interest expenses
+Interest expenses incurred
+2015
+RMB million
+RMB million
+2016
+The Group
+40 FINANCIAL EXPENSES
+The applicable tax rate of the taxes and surcharges are set out in Note 4.
+Accretion expenses (Note 31)
+236,349
+861
+2,449
+4,853
+3,871
+13,686
+13,695
+18,195
+18,155
+232,006
+43 IMPAIRMENT LOSSES
+statements
+RMB Million
+RMB Million
+Effective portion of changes in fair value of hedging instruments
+recognised during the year
+Cash flow hedges:
+(a) Each item of other comprehensive income and the influence of the income tax and the process of change to profit or loss
+THE GROUP
+35 OTHER COMPREHENSIVE INCOME
+Capital reserve represents mainly: (a) the difference between the total amount of the par value of shares issued and the amount of the net assets
+transferred from Sinopec Group Company in connection with the Reorganisation; (b) share premiums derived from issuances of H shares and
+A shares by the Company and excess of cash paid by investors over their proportionate shares in share capital, the proportionate shares of
+unexercised portion of the Bond with Warrants at the expiration date, and the amount transferred from the proportionate liability component and
+the derivative component of the converted portion of the 2011 Convertible Bonds; (c) difference between consideration paid for the combination of
+entities under common control and the transactions with minority interests over the carrying amount of the net assets acquired.
+119,525
+Balance at 31 December 2016
+Others
+116
+(30)
+(2,137)
+121,576
+RMB million
+Transaction with minority interests
+Adjustment for the combination of entities under common control
+Balance at 1 January 2016
+Less: Adjustments of amounts transferred to initial carrying amount of hedged items
+Total amounts transferred to profit or loss from
+The movements in capital reserve of the Group are as follows:
+other comprehensive income during the year
+Changes in fair value of available-for-sale financial assets recongnised during the year
+Less: Total amounts transferred to profit or loss from
+1,115
+(6,279)
+(3,161)
+(11)
+2
+(13)
+652
+(3,813)
+Net-of-tax
+amount
+RMB million
+Tax effect
+RMB million
+RMB million
+Before-tax
+amount
+2016
+Other comprehensive income
+Subtotal
+Translation difference in foreign currency statements
+Share of other comprehensive loss in associates and joint ventures
+Subtotal
+other comprehensive income during the year
+Subtotal
+Subtotal
+34 CAPITAL RESERVE
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+121,071
+121,071
+25,513
+25,513
+95,558
+95,558
+RMB million
+RMB million
+2015
+At 31 December
+At 31 December
+2016
+Total
+95,557,771,046 domestic listed A shares (2015: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 overseas listed H shares (2015: 25,513,438,600) of RMB 1.00 each
+Registered, issued and fully paid:
+The Group
+10,816
+33 SHARE CAPITAL
+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.
+120
+Financial Statements (PRC)
+Financial Statements (PRC)
+119
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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 29 and 54, respectively.
+Management optimises the structure of the Group's capital, which comprises of equity and debts and bonds. In order to maintain or adjust the
+capital structure of the Group, management may cause the Group to issue new shares, adjust the capital expenditure plan, sell assets to reduce
+debt, or adjust the proportion of short-term and long-term loans and bonds. Management monitors capital on the basis of the debt-to-capital ratio,
+which is calculated by dividing long-term loans (excluding current portion) and debentures payable, by the total of equity attributable to owners of
+the Company and long-term loans (excluding current portion) and debentures payable, and liability-to-asset ratio, which is calculated by dividing
+total liabilities by total assets. Management's strategy is to make appropriate adjustments according to the Group's operating and investment needs
+and the changes of market conditions, and to maintain the debt-to-capital ratio and the liability-to-asset ratio of the Group at a range considered
+reasonable. As at 31 December 2016, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 14.2% (2015: 17.1%) and 44.5%
+(2015: 45.4%), respectively.
+(5,164)
+Capital management
+During the year ended 31 December 2015, the Company issued 2,790,814,006 listed A shares with a par value of RMB 1.00 each, as a result of
+conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2014, the Company issued 1,715,081,853 listed A shares with a par value of RMB 1.00 each, as a result of
+exercise of conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2013, the Company issued 114,076 listed A shares with a par value of RMB 1.00 each, as a result of exercise
+of conversion by the holders of the 2011 Convertible Bonds.
+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.
+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.
+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.
+All A shares and H shares rank pari passu in all material aspects.
+2,479
+(465)
+2,014
+2,268
+(5,356)
+(5,356)
+(5,356)
+(5,356)
+62
+(4)
+66
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Other comprehensive income
+Subtotal
+Translation difference in foreign currency statements
+Share of other comprehensive loss in associates and joint ventures
+Subtotal
+Subtotal
+other comprehensive income during the year
+62
+(4)
+2,268
+2,268
+2,268
+778
+RMB Million
+Cash flow hedges
+value of
+available-for-sale
+financial assets
+Changes in fair
+The share of other
+comprehensive
+income which
+being reclassified
+to profit and
+loss in the future
+under equity
+method
+RMB Million
+31 December 2015
+Changes in 2016
+31 December 2014
+Changes in 2015
+income
+66
+Total other
+comprehensive
+Equity Attributable to shareholders of the company
+(b) Reconciliation of other comprehensive income
+THE GROUP (Continued)
+35 OTHER COMPREHENSIVE INCOME (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+137
+(641)
+Minority interests
+Translation
+difference in
+foreign currency
+Changes in fair value of available-for-sale financial assets recongnised during the year
+Less: Total amounts transferred to profit or loss from
+(637)
+2015
+6,333
+(472)
+4,298
+4,298
+4,298
+4,298
+45
+45
+45
+45
+(24)
+(7)
+(17)
+(24)
+(7)
+(17)
+Before-tax
+amount
+RMB million
+Tax effect
+RMB million
+3,800
+Subtotal
+(1,818)
+455
+(2,273)
+other comprehensive income during the year
+1,131
+(223)
+3,163
+1,354
+2,476
+(405)
+2,881
+recognised during the year
+Effective portion of changes in fair value of hedging instruments
+Cash flow hedges:
+RMB million
+Net-of-tax
+amount
+Less: Adjustments of amounts transferred to initial carrying amount of hedged items
+Total amounts transferred to profit or loss from
+The Group
+6,805
+Long-term equity investment (Note 12)
+6,099
+7,467
+9.386
+8,833
+87,074
+99,592
+8,767
+17,076
+43,480
+59,170
+RMB million
+RMB million
+2015
+2016
+Cash at the end of the year
+- Demand deposits
+- Cash on hand
+1,528
+748
+216
+(735)
+165,740
+214,543
+(69,825)
+81,691
+40,910
+(22,549)
+191
+160
+Cash at bank and on hand
+39,136
+639
+(2,553)
+(1,982)
+1,719
+(8,876)
+(30,779)
+10,728
+4,336
+(11,364)
+2016
+(c) The analysis of cash held by the Group is as follows:
+Less: Cash at the beginning of the year
+Pursuant to the Company's Articles of Association and a resolution passed at the Directors' meeting on 26 August 2015, the directors authorised
+to declare the interim dividends for the year ended 31 December 2015 of RMB 0.09 per share totaling RMB 10,896 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.
+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.
+(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 24 March 2017, the directors authorised
+to declare the final dividends during the year ended 31 December 2016 of RMB 0.17 per share totaling RMB 20,582 million.
+(a) Dividends of ordinary shares declared after the balance sheet date
+49 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 2020.
+12,613
+20,707
+279
+228
+Note:
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+75
+811
+Write-down of deferred tax assets
+Pursuant to the shareholders' approval at the Annual General Meeting on 27 May 2015, a final dividend of RMB 0.11 per share totaling RMB
+13,318 million of the year ended 31 December 2014 was declared.
+124
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Cash balance at the end of the year
+(b) Net change in cash:
+(Increase)/decrease in operating receivables
+Increase/(decrease) in operating payables
+Net cash flow from operating activities
+Safety fund reserve
+Decrease/(increase) in deferred tax assets
+(Decrease)/increase in deferred tax liabilities
+(Increase)/decrease in inventories
+Investment income
+Financial expenses
+Fair value loss/(gain)
+Net increase of cash
+Net loss on disposal of non-current assets
+Amortisation of intangible assets and long-term deferred expenses
+Depreciation of fixed assets
+Impairment losses on assets
+Net profit
+Add:
+(a) Reconciliation of net profit to cash flows from operating activities:
+The Group
+50 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT
+for the year ended 31 December 2016
+Dry hole costs written off
+828
+2015
+124,468
+68,933
+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:
+51 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+126
+Note: Sinopec Finance is under common control of a parent company with the Company and is also the associate of the Group.
+YASREF
+Taihu
+Mansarovar
+BASF-YPC
+FREP
+Operating lease charges for land
+Operating lease charges for buildings
+Other operating lease charges
+Agency commission income
+37,444
+27,201
+Receivables (Note 7,8,9)
+Inventories (Note 10)
+(iv)
+1,299
+1,333
+(iii)
+92,627
+Joint ventures of the Group:
+118,242
+2015
+RMB million
+211,197
+194,179
+(i)
+RMB million
+The Group
+2016
+Note
+Interest expense
+Interest income
+(ii)
+RMB million
+CIR
+Zhongtian Synergetic Energy
+(1) Related parties having the ability to exercise control over the Group
+51 RELATED PARTIES AND RELATED PARTY TRANSACTIONS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+Financial Statements (PRC)
+Financial Statements (PRC)
+125
+16
+68,917
+68,933
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+2015
+RMB million
+58,407
+10
+124,458
+124,468
+RMB million
+2016
+55,535
+10,526
+68,933
+RMB million
+The name of the company
+Organisation code
+Registered address
+Principal activities
+Relationship with the Group
+Sinopec Finance
+Pipeline Ltd
+Associates of the Group:
+Sinopec Century Bright Capital Investment Limited
+Sinopec Petroleum Storage and Reserve Limited
+Sinopec Engineering Incorporation
+Sinopec Zhongyuan Petroleum Exploration Bureau
+Sinopec Assets Management Corporation
+Sinopec Shengli Petroleum Administration Bureau
+Sinopec Finance (Note)
+China Aviation Oil
+(2) Related parties not having the ability to exercise control over the Group
+RMB 274,867 million
+Wang Yupu
+State-owned
+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
+China Petrochemical Corporation
+10169286-X
+Registered capital
+Authorised representative
+Types of legal entity
+Sinopec Group Company is an enterprise controlled by the PRC government. Sinopec Group Company directly and indirectly holds 71.32%
+shareholding of the Company.
+958
+Related parties under common control of a parent company with the Company:
+(235)
+17,769
+3,749
+8,362
+9,306
+available-for-sale financial assets
+Investment income from holding/disposal of
+long-term equity investments
+Investment income/(loss) from disposal of
+Income from investment accounted for under equity method
+under cost method
+Income from investment of subsidiaries accounted for
+RMB million
+RMB million
+2015
+2016
+2015
+RMB million
+RMB million
+The Company
+25,779
+3,371
+11
+324
+(6)
+79
+Others
+20,562
+Investment income on loss of control and remeasuring interests in
+the Pipeline Ltd (Note 12(i))
+(760)
+(135)
+(344)
+293
+The Group
+2016
+Gains/(losses) from ineffective portion of cash flow hedge
+392
+355
+and liabilities at fair value through profit or loss
+Investment income from holding/disposal of financial assets
+4
+82
+173
+1,010
+7
+60
+735
+(67)
+(216)
+RMB million
+RMB million
+231
+2015
+2016
+45 INVESTMENT INCOME
+Total
+Others
+Fair value loss on the embedded derivative component of the convertible bonds
+Changes in fair value of financial assets and financial liabilities at fair value through (loss)/profit, net
+Unrealised gains from ineffective portion cash flow hedges, net
+The Group
+44 GAIN FROM CHANGES IN FAIR VALUE
+Total
+Others
+Fixed assets (Note 13)
+Tax effect of tax losses not recognised
+Intangible assets (Note 15)
+Construction in Progress (Note 14)
+(32)
+420
+3,653
+1
+(259)
+509
+11
+478
+(160)
+RMB million
+RMB million
+2015
+7
+2016
+17,076
+7
+11
+111
+1,486
+4,375
+14,921
+653
+8,767
+30,779
+6
+20,562
+1,576
+43,519
+2016
+Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows:
+12,613
+20,707
+279
+228
+(1,343)
+13,677
+21,313
+(834)
+RMB million
+RMB million
+2015
+2016
+Total
+Under-provision for income tax in respect of preceding year
+Deferred taxation
+Provision for income tax for the year
+2015
+RMB million
+RMB million
+Profit before taxation
+391
+299
+Effect of difference between income taxes at foreign operations tax rate and the PRC statutory tax rate
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+(453)
+8,876
+(1,033)
+83
+(2,551)
+3,100
+(2,757)
+14,023
+1,569
+19,969
+Expected income tax expense at a tax rate of 25%
+56,093
+79,877
+Tax effect of preferential tax rate (i)
+Tax effect of non-deductible expenses
+836
+3,963
+Tax effect of non-taxable income
+1,894
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+6,947
+1,679
+721
+4,964
+5,004
+264
+RMB million
+256
+3,987
+2015
+123
+2016
+Others
+Government grants
+1,175
+30,582
+1,886
+Total
+Gain on disposal of non-current assets
+46 NON-OPERATING INCOME
+The Group
+Total
+Financial Statements (PRC)
+RMB million
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+RMB million
+152
+Financial Statements (PRC)
+90
+RMB million
+1,784
+2015
+1,012
+The Group
+48 INCOME TAX EXPENSE
+2016
+Total
+133
+112
+Others
+Loss on disposal of non-current assets
+Fines, penalties and compensation
+Donations
+47 NON-OPERATING EXPENSES
+The Group
+738,469
+345,454
+276,640
+436,749
+322,903
+418,102
+38,614
+43,814
+320,454
+320,367
+782,203
+9,542
+(1,264,305)
+1,880,190
+1,977,877
+9,894
+5,486
+5,004
+22,004
+1,671
+284,289
+17,512
+1,478
+12,211
+8,417
+(1,168,732)
+1,089,154
+47,443
+3,480
+1,030,853
+Elimination of inter-segment sales
+Consolidated income from principal operations
+Income from other operations
+50,721
+Inter-segment sales
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Consolidated income from other operations
+Consolidated operating income
+2016
+RMB million
+2015
+RMB million
+57,740
+58,954
+71,019
+106,397
+128,759
+102,983
+120,650
+747,317
+800,962
+850,300
+921,612
+1,027,373
+1,086,098
+3,056
+42,498
+Corporate and others
+2,020,375
+Assets
+Segment assets
+Exploration and production
+Refining
+Marketing and distribution
+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
+2016
+RMB million
+2015
+RMB million
+(58,531)
+(18,511)
+55,808
+19,423
+20,769
+External sales
+32,385
+27,299
+Less: Non-operating expenses
+Profit before taxation
+1,930,911
+Add: Non-operating income
+(Loss)/gain from changes in fair value
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+135
+Financial Statements (PRC)
+136
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+56 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Operating (loss)/profit
+By segment
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Elimination
+Total segment operating profit
+Investment income/(loss)
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Elimination
+Total segment investment income
+Financial expenses
+Operating profit
+Corporate and others
+Within one year
+External sales
+Exploration and production licenses
+Exploration licenses for exploration activities are registered with the Ministry of Land and Resources. The maximum term of the Group's exploration
+licenses is 7 years, and may be renewed twice within 30 days prior to expiration of the original term with each renewal being for a two-year term.
+The Group is obligated to make progressive annual 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.
+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 333 million for the year ended 31 December 2016 (2015: RMB 372
+million).
+Estimated future annual payments of the Group are as follows:
+At 31 December
+2016
+At 31 December
+2015
+RMB million
+RMB million
+Between one and two years
+263
+283
+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.
+123
+Between two and three years
+25
+32
+Between three and four years
+Between four and five years
+After five years
+Total
+24
+22
+25
+21
+867
+1,327
+834
+125
+Commitments to joint ventures
+(i) The investment commitments of the Group is RMB 4,173 million (2015: RMB 4,089 million).
+Note:
+14,228
+13,265
+19,516
+13,966
+13,199
+13,217
+13,091
+12,980
+12,430
+275,570
+284,300
+344,878
+350,022
+Capital commitments
+At 31 December 2016 and 2015, the capital commitments of the Group are as follows:
+At 31 December
+2016
+RMB million
+Authorised and contracted for (i)
+116,379
+31,720
+Authorised but not contracted for
+Total
+148,099
+At 31 December
+2015
+RMB million
+113,017
+47,043
+160,060
+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.
+1,317
+The implementation of commitments in previous year and the Group's commitments did not have material discrepancy.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+133
+=
+(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.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+56 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:
+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
+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.
+Inter-segment sales
+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.
+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.
+Financial Statements (PRC)
+134
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+55 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 2016 and 2015, guarantees by the Group in respect of facilities granted to the parties below are as follows:
+At 31 December
+2015
+Joint ventures
+Associates (i)
+Others
+Total
+At 31 December
+2016
+RMB million
+RMB million
+658
+11,545
+10,669
+703
+6,010
+22,872
+6,713
+(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 2016, the amount withdrawn by Zhongtian Synergetic Energy from banks and guaranteed by the group
+was RMB 11,545 million.
+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 reliably estimable. At 31 December 2016 and 2015, 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 6,358 million for the year ended 31
+December 2016 (2015: RMB 5,813 million).
+Legal contingencies
+56 SEGMENT REPORTING
+2,912
+1,000,209
+1,581
+External sales
+Mainland China
+Others
+Non-current assets
+Mainland China
+Others
+2016
+RMB million
+2015
+RMB million
+1,488,117
+442,794
+1,930,911
+At 31 December
+2016
+RMB million
+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.
+45,887
+1,046,096
+At 31 December
+2015
+RMB million
+1,029,318
+56,081
+1,085,399
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+137
+Financial Statements (PRC)
+138
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+57 FINANCIAL INSTRUMENTS
+1,580,856
+439,519
+2,020,375
+5,146
+16,425
+112
+22,115
+8,849
+17, 634
+2,580
+2,821
+76,456
+112,412
+61,929
+52,155
+17,209
+16,557
+14,540
+14,075
+12,654
+12,088
+2,093
+1,585
+108,425
+96,460
+11,605
+4,864
+1,655
+9
+267
+19
+2,898
+142
+Overview
+18,493
+Financial assets of the Group include cash at bank, 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:
+liquidity risk;
+62,461
+64,566
+900
+Debentures payable
+54,985
+65,503
+1,932
+4,652
+24,717
+57,262
+16,069
+1,752
+22,785
+Bills payable
+5,828
+Long-term loans
+5,828
+Accounts payable
+174,301
+174,301
+174,301
+Other payables and employee benefits payable
+Total
+81,254
+454,175
+81,254
+468,124
+81,254
+340,887
+29,369
+13,737
+73,331
+5,828
+6.030
+6,030
+6,000
+⚫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 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 2016,
+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 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 2016, the Group has standby credit facilities with several PRC financial institutions which provide the Group to borrow up to RMB
+256,375 million (2015: RMB 297,997 million) on an unsecured basis, at a weighted average interest rate of 3.57% (2015: 2.50%). At 31 December
+2016, the Group's outstanding borrowings under these facilities were RMB 36,933 million (2015: RMB 32,991 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 current
+at the balance sheet date) and the earliest date the Group would be required to repay:
+Total
+contractual
+Carrying undiscounted
+amount
+cash flow
+RMB million RMB million
+Within 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
+five years
+RMB million
+More than
+five years
+RMB million
+Short-term loans
+Non-current liabilities due within one year
+30,374
+30,708
+30,708
+38,972
+39,934
+39,934
+Short-term debentures payable
+⚫ credit risk;
+(678)
+15,132
+54,710
+2015
+RMB million
+402,476
+260,903
+264,573
+292,328
+283,416
+144,371
+151,646
+95,263
+108,921
+1,195,341
+At 31 December
+1,255,863
+69,666
+116,812
+84,293
+7,214
+36,745
+1,498,609
+7,469
+29,977
+1,447,268
+95,883
+96,725
+82,170
+58,578
+132,922
+142,497
+RMB million
+At 31 December
+2016
+56,093
+4,566
+54,924
+51,615
+19,248
+708
+1,071
+754
+2,928
+1,910
+5,815
+3,384
+1,717
+2,942
+(822)
+30,779
+8,876
+(6,611)
+(8,980)
+(216)
+735
+78,876
+52,246
+4,964
+6,947
+3,963
+3,100
+79,877
+118,476
+14,347
+31,989
+Corporate and others
+for the year ended 31 December 2016
+56 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
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Depreciation, depletion and amortisation
+Exploration and production
+Refining
+Marketing and distribution
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Chemicals
+Impairment losses on long-lived assets
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+(2) Geographical information
+2016
+2015
+RMB million
+RMB million
+32,187
+Corporate and others
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+657,703
+666,084
+97,078
+104,193
+Total segment liabilities
+440,042
+405,132
+Short-term loans
+30,374
+74,729
+Non-current liabilities due within one year
+38,972
+11,277
+Long-term loans
+62,461
+56,493
+Debentures payable
+54,985
+83,253
+Deferred tax liabilities
+7,661
+8,259
+Other non-current liabilities
+16,136
+13,673
+Other unallocated liabilities
+15,453
+4,887
+Total liabilities
+27,160
+14,917
+194
+RMB million
+Production and sale of refined petroleum products,
+lubricant base oil, and petrochemical materials
+Production and sale of polyester chips
+RMB 3,374
+RMB 3,374
+100.00
+49
+RMB 4,000
+RMB 6,713
+100.00
+and polyester fibres
+RMB 28,403
+RMB 20,000
+70.42
+100.00
+63,555
+HKD 3,952
+60.34
+3,398
+Manufacturing of synthetic fibres, resin and plastics,
+intermediate petrochemical products and
+RMB 10,800
+RMB 5,820
+50.56
+12,518
+petroleum products
+Manufacturing of plastics, intermediate petrochemical
+products and petroleum products
+RMB 5,745
+RMB 2,873
+HKD 248
+RMB 12,000
+RMB 12,000
+100.00
+Sinopec Lubricant Company Limited
+Sinopec Yizheng Chemical Fibre
+Limited Liability Company
+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)
+(b) Subsidiaries established by the Group:
+Sinopec International Petroleum Exploration
+and Production Limited ("SIPL")
+Marketing and distribution of
+refined petroleum products
+Trading of crude oil and petroleum products
+Sinopec Overseas Investment Holding Limited ("SOIH") Investment holding
+Sinopec Chemical Sales Company Limited
+Sinopec Great Wall Energy & Chemical
+Sinopec Beihai Refining and Chemical
+Sinopec Qingdao Refining and
+Chemical Company Limited
+Production and sale of catalyst products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Pipeline storage and transportation of crude oil
+RMB 1,500
+RMB 1,562
+100.00
+RMB 13,203
+RMB 15,651
+50.00
+Sinopec Pipeline Storage & Transportation
+Company Limited
+3,619
+RMB 8,000
+65.00
+3,029
+ethylene and downstream byproducts
+Company Limited (Note 1)
+(c) Subsidiaries acquired through business combination under common control:
+Sinopec Hainan Refining and
+Chemical Company Limited
+Sinopec Qingdao Petrochemical
+Company Limited
+Gaoqiao Petrochemical
+(d) Subsidiaries acquired through business combination not under common control:
+Sinopec Zhanjiang Dongxing Petrochemical
+Manufacturing of intermediate petrochemical products
+and petroleum products
+RMB 4,076
+RMB 3,986
+75.00
+1,941
+Manufacturing of intermediate petrochemical products
+and petroleum products
+RMB 1,595
+RMB 7,233
+100.00
+Manufacturing of intermediate petrochemical products
+and petroleum products
+RMB 10,000
+RMB 4,804
+55.00
+4,211
+Company Limited
+RMB 2,990
+RMB 6,270
+Production, sale, research and development of
+Sinopec-SK(Wuhan) Petrochemical Company Limited
+("Zhonghan Wuhan")
+RMB 8,000
+100.00
+15,253
+USD 1,638
+USD 1,638
+100.00
+52
+Marketing and distribution of petrochemical products
+Coal chemical industry investment management,
+RMB 1,000
+RMB 1,165
+100.00
+64
+RMB 20,739
+RMB 20,773
+100.00
+201
+production and sale of coal chemical products
+Import and processing of crude oil, production,
+storage and sale of petroleum products
+and petrochemical products
+RMB 5,294
+RMB 5,240
+98.98
+81
+Manufacturing of intermediate petrochemical
+RMB 5,000
+RMB 4,250
+85.00
+1,066
+products and petroleum products
+Investment in exploration, production and sale of
+petroleum and natural gas
+Limited Liability Company
+Company Limited
+Sinopec Yangzi Petrochemical Company Limited
+22,392
+34
+13,397
+9,050
+20,385
+17,760
+5
+19,416
+13,190
+20
+1,969
+1,792
+10,953
+29
+18,616
+9,998
+8,226
+18,430
+43,693
+44,922
+44,536
+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.
+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 21 and Note 29.
+As at and for the year ended 31 December 2016 and 2015, 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
+19,430
+1
+18,303
+40,073
+24,537
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+51 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+(4) Balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+The balances with the Group's related parties at 31 December 2016 and 2015 are as follows:
+The ultimate holding company
+At 31 December At 31 December
+2016
+2015
+RMB million
+RMB million
+Other related companies
+At 31 December
+At 31 December
+Cash and cash equivalents
+Accounts receivable
+Prepayments and other current assets
+Other non-current assets
+Accounts payable
+Advances from customers
+Other payables
+Other non-current liabilities
+Short-term loans
+Long-term loans (including current portion) (Note)
+25
+33
+338
+13
+178
+2016
+2015
+RMB million
+RMB million
+Retirement scheme contributions
+Total
+2016
+RMB thousand
+5,648
+499
+6,147
+Registered
+capital/paid-
+Actual
+investment at
+31 December
+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 petrochemical products
+Principal activities
+up capital
+million
+2016
+million
+Percentage
+of equity
+interest/
+voting right
+held by
+the Group
+Minority
+Interests at
+31 December
+2016
+%
+RMB million
+RMB 1,400
+RMB 1,856
+100.00
+26
+Trading of crude oil and petrochemical products
+RMB 3,000
+RMB 4,585
+100.00
+3,790
+The Company's principal subsidiaries have been consolidated into the Group's financial statements for the year ended 31 December 2016. The
+following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the Group:
+Manufacturing of intermediate petrochemical products
+and petroleum products
+53 PRINCIPAL SUBSIDIARIES
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+2015
+RMB thousand
+5,225
+510
+5,735
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+129
+Financial Statements (PRC)
+130
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+52 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, 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 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.
+(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 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 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
+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.
+(d) Allowances for doubtful accounts
+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.
+(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.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+for the year ended 31 December 2016
+RMB million
+RMB 4,397
+75.00
+1,050,294
+1,103,934
+4,016
+6,557
+77,894
+80,803
+4,968
+5,532
+1,642
+11,703
+14,077
+Profit/(loss) for the year
+Turnover
+26,461
+(4,604)
+(222)
+5,969
+3,282
+2,513
+1,456
+825
+1,558
+1,738
+Total comprehensive income/(loss)
+27,385
+24,391
+23,684
+RMB Million
+RMB million
+RMB million
+7,124
+4,656
+9,641
+14.686
+15,815
+Summarised consolidated statement of comprehensive income and cash flow
+Year ended 31 December
+Marketing Company
+2016
+SIPL
+2015
+2016
+2015
+Shanghai Petrochemical
+2016
+2015
+Fujian Petrochemical
+2016
+2015
+Sinopec Kantons (ii)
+2015
+Zhonghan Wuhan
+2016
+2015
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+(2,481)
+19.718
+(4,257)
+3,282
+7,211
+5,143
+617
+(179)
+1.185
+3.636
+4,223
+Note:
+(ii) This listed company will announce its financial information for the year ended 31 December later than the Company, therefore its 2016 financial information is not
+currently disclosed.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+4,059
+54 COMMITMENTS
+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.
+At 31 December 2016 and 2015, the future minimum lease payments of the Group under operating leases are as follows:
+Within one year
+Between one and two years
+Between two and three years
+Between three and four years
+Between four and five years
+After five years
+Total
+At 31 December
+2016
+At 31 December
+2015
+Operating lease commitments
+2,576
+33,196
+50,840
+2,513
+1,456
+302
+1,558
+1,738
+Comprehensive income/(loss)
+attributable to minority interests
+9,028
+7,755
+Dividends paid to minority interests
+4,932
+7,356
+335
+(3,279)
+(1,218)
+2,966
+1,641
+1,256
+728
+120
+545
+608
+563
+10
+40
+Net cash generated from/
+(used in) operating activities
+5,988
+19,098
+5.755
+745
+At 31
+December
+December
+December
+December
+2016
+2015
+2016
+2015
+2016
+2015
+2016
+Zhonghan Wuhan
+At 31
+2015
+2016
+2015
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2015
+Sinopec Kantons (ii)
+At 31
+At 31
+Fujian Petrochemical
+At 31
+December
+825
+*
+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, respectively, all of the above principal subsidiaries are
+incorporated and operate their businesses principally in the PRC.
+Note:
+(i) The Group consolidated the financial statements of the entity because it is exposed to, or has rights to, variable returns from its involvement with the entity and has
+the ability to affect those return through its power over the entity.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016 131
+Financial Statements (PRC)
+132
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+53 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 that has minority
+interests that are material to the Group.
+Summarised consolidated balance sheet
+Marketing Company
+At 31
+At 31
+SIPL
+At 31
+At 31
+December
+December
+December
+December
+Shanghai Petrochemical
+At 31
+December
+At 31
+December
+RMB million
+Current assets
+121,260
+102,948
+(6,032)
+(8,499)
+Non-current assets
+246,514
+240,312
+40,067
+40,075
+19,248
+19,878
+7,845
+5,487
+13,025
+14,686
+15,815
+Non-current liabilities
+(1,460)
+(1,628)
+(39,322)
+(34,320)
+(150)
+(160)
+(721)
+(831)
+(3,384)
+Net non-current assets
+245,054
+238.684
+(1,756)
+RMB 3,225
+67
+418
+18,116
+20,231
+14,876
+8,144
+926
+140
+1,732
+1,489
+1,386
+Current liabilities
+(168,366)
+(156,028)
+(824)
+(5,468)
+(8,942)
+(7,726)
+(812)
+(73)
+(3,488)
+(7,521)
+(9,885)
+Net current (liabilities)/assets
+(47,106)
+(53,080)
+17.292
+14.763
+5,934
+114
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+447,307
+137
+Low crude oil prices gave rise to possible indication that the carrying
+amount of oil and gas properties as at 31 December 2016 might
+be impaired. The Group has adopted values in use as the respective
+recoverable amounts of the oil and gas properties, which involved
+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 oil and gas
+properties as at 31 December 2016, together with the use of
+estimations or assumptions in determining their respective values in
+use, we had placed our audit emphasis on this matter.
+Accounting for gain of capital injection by external investors into
+Pipeline Ltd
+Refer to note 8 "OTHER OPERATING INCOME/(EXPENSE), NET" to the
+consolidated financial statements.
+A gain of RMB 20.562 billion arose as a result of the derecognition
+of the assets and liabilities of a former subsidiary (Pipeline Ltd) from
+the consolidated financial position of the Group when the control over
+Pipeline Ltd was lost. The Group continues to retain a 50% equity
+interest in the Pipeline Ltd, and hence its significant influence over
+the Pipeline Ltd. As a result, the Group deconsolidated the assets and
+liabilities of Pipeline Ltd when the control was lost, and accounts for its
+50% equity interest in the Pipeline Ltd as an associate company.
+Because of the significance of such gain in the year ended 31 December
+2016, we had placed our audit emphasis on this matter.
+How our audit addressed the Key Audit Matter
+In auditing the respective values in use calculations of the relevant oil and
+gas properties, we have performed the following key procedures on the
+relevant discounted cash flow projections prepared by management:
+•
+•
+Evaluated and tested the key controls, relating to the preparation of the
+discounted cash flow projections of oil and gas properties.
+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 Group's reserve management
+committee. 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.
+As at 31 December 2016, the carrying amount of oil and gas properties
+amounted to RMB 215,124 million.
+•
+Refer to note 16 “PROPERTY, PLANT AND EQUIPMENT" to the
+consolidated financial statements.
+Accounting for gain of capital injection by external investors into Sinopec Sichuan to East China Gas Pipeline Co., Ltd ("Pipeline Ltd").
+Key Audit Matter
+We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAS") issued by the Hong Kong Instituted 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 2016
+143
+Financial Statements (International)
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+Key audit matters identified in our audit are summarised as follows:
+•
+•
+Recoverability of the carrying amount of oil and gas properties; and
+Recoverability of the carrying amount of oil and gas properties
+BASIS FOR OPINION
+•
+Tested selected other key data inputs, such as nature gas prices and
+production profiles in the projections by reference to historical data
+and/or relevant budgets of the Group.
+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.
+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:
+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.
+•
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+145
+Financial Statements (International)
+Financial Statements (International)
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+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.
+Independently estimated a range of discount rates, and found that the
+discount rates adopted by management were within the range.
+RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion
+thereon.
+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.
+In auditing the gain of capital injection by external investors into Pipeline
+Ltd, we have performed the following procedures:
+Evaluated the effective date on which the Group lost control over the
+Pipeline Ltd, taking into consideration of factors including when the
+composition of the board of directors was changed.
+Tested the consideration to the Group as compensation for the loss
+of control over the Pipeline Ltd by checking against the relevant bank
+receipt notices. Corroborated the detail of the transaction by inspecting
+the relevant documents, agreements and contracts.
+• Recomputed the gain arising from the capital injection by external
+investors into Pipeline Ltd of RMB 20.562 billion, and agreed to
+management's computation.
+Based on our work, we found that the gain of capital injection by external
+investors into Pipeline Ltd of RMB 20.562 billion was supported by the
+evidence we gathered.
+Financial Statements (International)
+144
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+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 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.
+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.
+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
+2016, 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.
+the notes to the consolidated financial statements, which include a summary of significant accounting policies.
+120,853
+120,853
+60 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:
+2016
+2015
+Weighted
+average return
+on net assets
+Basic
+earnings
+Diluted
+Weighted
+earnings average return
+Basic
+earnings
+Diluted
+earnings
+(%)
+per share
+(RMB/Share)
+per share on net assets
+(RMB/Share)
+121,071
+121,071
+(%)
+2015
+32,279
+120,853
+0.267
+Weighted average number of outstanding ordinary shares of the Company at 31 December (million)
+(ii) Diluted earnings per share
+2016
+121,071
+2015
+118,280
+2,573
+121,071
+120,853
+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:
+The 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)
+2016
+46,413
+2015
+121,071
+0.383
+2016
+Our opinion
+per share
+(RMB/Share)
+Net profit attributable to the Company's ordinary
+equity shareholders
+REPORT OF THE INTERNATIONAL AUDITOR
+pwc
+Independent Auditor's Report
+To the shareholders of China Petroleum & Chemical Corporation
+(incorporated in 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
+147 to 201, which comprise:
+•
+the consolidated balance sheet as at 31 December 2016;
+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
+.•
+per share
+(RMB/Share)
+•
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+6.68
+0.383
+0.383
+5.07
+0.267
+0.267
+Net profit deducted extraordinary gains and losses
+attributable to the Company's ordinary
+equity shareholders
+4.33
+0.245
+0.245
+4.52
+0.239
+0.239
+61 EVENTS AFTER THE BALANCE SHEET DATE
+According to the purchase and sale agreement signed between SOIHL Hong Kong Holding Limited ("SOIHL HK"), a wholly owned subsidiary of
+the Group, and Chevron Global Energy Inc. ("CGEI”) on 21 March 2017, SOIHL HK is going to acquire the equity shares of and related interest in
+Chevron South Africa (Proprietary) Limited and the equity shares of Chevron Botswana (Proprietary) Limited ("the Targets") held by CGEI, in a total
+consideration approximate to USD 900 million ("the Transaction"). The consideration is subject to adjustment according to the circumstances of the
+Targets, such as the changes in working capital, at the completion. The Transaction has been approved by the Board of Directors of the Company,
+and is still subject to the satisfaction of the certain conditions to completion. The Targets' principle activities are to manufacture and market refined
+oil products in South Africa and market refined oil products in Botswana. According to the purchase and sale agreement signed between SOIHL Hong
+Kong Holding Limited ("SOIHL HK"), a wholly owned subsidiary of the Group, and Chevron Global Energy Inc. ("CGEI") on 21 March 2017, SOIHL
+HK is going to acquire the equity shares of and related interest in Chevron South Africa (Pty) Limited and the equity shares of Chevron Botswana
+(Pty) Limited ("the Targets") held by CGEI, in a total consideration approximate to USD 900 million, which is subject to adjustment according to
+the circumstances of the Targets at the completion day ("the Transaction"). The Transaction has been approved by the Board of Directors of the
+Company, and is still subject to the governments' approval where the Targets operates. The Targets' principle activities are to manufacture and
+market refined oil products in South Africa and market refined oil products in Botswana.
+•
+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.
+0.385
+0.269
+The notes on pages 154 to 201 form part of these consolidated financial statements. Details of dividends payable to owners of the Company
+attributable to the profit for the year are set out in Note 13
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+147
+Financial Statements (International)
+Financial Statements (International)
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+for the year ended 31 December 2016
+(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
+0.269
+Share of other comprehensive income/(loss) of associates and joint ventures
+0.385
+43,798
+Owners of the Company
+Non-controlling interests
+Profit for the year
+Earnings per share:
+Basic
+Diluted
+10
+(20,707)
+(12,613)
+59,444
+43,798
+46,672
+32,512
+12,772
+11,286
+59,444
+15
+Attributable to:
+Foreign currency translation differences
+Total other comprehensive income
+45
+(5,356)
+4,298
+2,268
+6,333
+6,333
+137
+65,777
+43,935
+53,724
+31,789
+12,053
+12,146
+65,777
+43,935
+62
+Total items that may be reclassified subsequently to profit or loss
+3,163
+14
+Total comprehensive income for the year
+Attributable to:
+Owners of the Company
+Non-controlling interests
+Total comprehensive income for the year
+The notes on pages 154 to 201 form part of these consolidated financial statements.
+148 Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Note
+Year ended 31 December
+2016
+2015
+RMB
+RMB
+59,444
+43,798
+2,014
+(24)
+Profit for the year
+Tax expense
+8,362
+56,411
+Purchased crude oil, products and operating supplies and expenses
+(1,379,691)
+(1,494,046)
+Selling, general and administrative expenses
+5
+(64,360)
+(69,491)
+Depreciation, depletion and amortisation
+(108,425)
+(96,460)
+Exploration expenses, including dry holes.
+(11,035)
+(10,459)
+Personnel expenses
+Taxes other than income tax
+Operating expenses
+6
+42,498
+2,020,375
+1,880,190
+50,721
+1,930,911
+PricewaterhouseCoopers
+Certified Public Accountants
+Hong Kong, 24 March 2017
+146
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(B) FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
+CONSOLIDATED INCOME STATEMENT
+for the year ended 31 December 2016
+(Amounts in million, except per share data)
+Note
+Year ended 31 December
+2016
+RMB
+2015
+RMB
+Turnover and other operating revenues
+Turnover
+3
+Other operating revenues
+4
+1,977,877
+(63,887)
+(56,619)
+7
+9
+(9,219)
+(8,133)
+3,218
+3,010
+(259)
+(610)
+(3,857)
+(6,611)
+(9,239)
+263
+466
+19, 20
+9,306
+80,151
+Profit before taxation
+Share of profits less losses from associates and joint ventures
+Investment income
+Net finance costs
+(232,006)
+(236,349)
+Other operating income/(expense), net
+Total operating expenses
+8
+5,686
+(129)
+Weighted average number of outstanding ordinary shares of the Company at 1 January (million)
+Conversion of the 2011 Convertible Bonds (million)
+(1,853,718)
+Operating profit
+Finance costs
+77,193
+56,822
+Interest expense
+Interest income
+Loss on embedded derivative component of the convertible bonds
+Foreign currency exchange losses, net
+(1,963,553)
+The calculation of the weighted average number of ordinary shares is as follows:
+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.
+32,281
+2016
+million
+At 31 December
+Singapore Dollars
+Euro
+US Dollars
+The Group
+A 5 percent strengthening/weakening of Renminbi against the following currencies at 31 December 2016 and 2015 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 2015.
+HKD 6
+USD 1,181
+EUR 1,108
+At 31 December
+2015
+million
+EUR 1
+HKD 6
+SGD 4
+USD 126
+2016
+million
+At 31 December
+Hong Kong Dollars
+Singapore Dollars
+Euro
+US Dollars
+Gross exposure arising from loans and borrowings
+The Group
+Included in short-term and long-term debts denominated 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 US Dollars, Euro, Hong Kong Dollars and
+Singapore Dollars, and the Group enters into foreign exchange contracts to manage 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
+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.
+59,678
+50,432
+33
+1
+At 31 December
+2015
+At 31 December 2016
+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
+Fair values
+At 31 December 2016, 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 634 million (2015: decrease/increase RMB 1,951 million), and decrease/increase the Group's other
+comprehensive income by approximately RMB 4,007 million (2015: decrease/increase RMB 3,052 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 2015.
+At 31 December 2016, 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 2016, the net fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB 312 million (2015: RMB 7,875 million) recognised in other receivables and derivative financial liabilities of
+RMB 4,336 million (2015: RMB 2,750 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.
+41,640
+(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 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 21 and Note 29, respectively.
+(b) Interest rate risk
+Market risk (Continued)
+57 FINANCIAL INSTRUMENTS (Continued)
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+139
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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.
+295
+288
+million
+At 31 December 2016, it is estimated that a general increase/decrease of 100 basis points in variable interest rates, with all other variables
+held constant, would increase/decrease the Group's net profit for the year by approximately RMB 44 million (2015: decrease/increase RMB 91
+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, which in part be eliminated by
+cash holdings on a variable interest rate basis. The analysis is performed on the same basis for 2015.
+342,868
+494,618
+87,522
+five years
+less than
+two years but
+More than
+two years
+RMB million
+one year
+but less than
+Within one
+year or on
+demand
+RMB million
+cash flow
+RMB million
+RMB million
+undiscounted
+contractual
+Carrying
+amount
+More than
+RMB million
+At 31 December 2015
+Total
+Other payables and employee benefits payable
+Accounts payable
+Bills payable
+Debentures payable
+Long-term loans
+Short-term debentures payable
+Non-current liabilities due within one year
+Short-term loans
+Liquidity risk (Continued)
+57 FINANCIAL INSTRUMENTS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+120,853
+0.267
+Total
+The Group
+More than
+RMB million
+87,522
+87,522
+477,398
+130,558
+130,558
+130,558
+3,566
+3,566
+3,566
+22,521
+39,502
+32,274
+3,314
+83,253
+five years
+37,157
+9,366
+703
+58,156
+56,493
+30,486
+30,486
+30,000
+11,405
+11,405
+11,277
+75,314
+75,314
+74,729
+10,930
+Financial Statements (PRC)
+97,611
+Available-for-sale financial assets:
+RMB million
+2015
+2016
+Minority interests
+Equity shareholders of the Company
+Attributable to:
+Total
+Tax effect
+Net gains of combination under common control from 1 January 2016 to the consolidation date
+Investment income on loss of control remeasuring interests in the Pipeline Ltd (Note 12(i))
+Other non-operating loss
+Gain on holding and disposal of various investments
+Government grants
+Donations
+RMB million
+Net loss on disposal of non-current assets
+Pursuant to "Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public- Extraordinary
+Gainand Loss" (2008), the extraordinary gains and losses of the Group are as follows:
+58 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 2016 and 2015.
+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.
+2015
+RMB million
+105,927
+103,482
+At 31 December
+110,969
+109,308
+RMB million
+2016
+Fair value
+Carrying amount
+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 1.06% to 4.90% (2015: 1.08% to 4.90%). 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 2016 and 2015:
+At 31 December
+Extraordinary (gains)/losses for the year:
+(ii) Fair values of financial instruments carried at other than fair value
+1,528
+133
+(3,987)
+112
+2015
+Assets
+2016
+46,416
+121,071
+0.383
+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)
+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
+59 BASIC AND DILUTED EARNINGS PER SHARE
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+142
+Financial Statements (PRC)
+721
+141
+(3,380)
+(475)
+(16,703)
+117
+(3,855)
+1,060
+5,578
+(16,586)
+(4,915)
+(22,164)
+331
+(134)
+(86)
+1,328
+(20,562)
+(518)
+(5,002)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+During the years ended 31 December 2016 and 2015, there was no transfer between instruments in Level 1 and Level 2.
+(943)
+2,750
+for the year ended 31 December 2016
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+140 Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+4,472
+1,886
+2,586
+4,472
+1,886
+2,586
+- Derivative financial liabilities
+Derivative financial instruments:
+Liabilities
+1,024
+57 FINANCIAL INSTRUMENTS (Continued)
+762
+291
+733
+29
+262
+Total
+RMB million
+Level 3
+RMB million
+Level 2
+RMB million
+RMB million
+Level 1
+- Derivative financial assets
+2,750
+Derivative financial instruments:
+- Listed
+733
+Fair values (Continued)
+262
+At 31 December 2015
+261
+(i) Financial instruments carried at fair value (Continued)
+2,445
+2,445
+8,136
+305
+305
+3,640
+7,875
+3,640
+4,235
+261
+RMB million
+Total
+4,496
+RMB million
+Assets
+Level 3
+RMB million
+Available-for-sale financial assets:
+- Listed
+- Derivative financial assets
+Liabilities
+Derivative financial instruments:
+- Derivative financial liabilities
+Level 1
+Level 2
+RMB million
+Derivative financial instruments:
+The Group
+Profit distribution to SAMC (Note 1)
+Share
+Capital
+Statutory Discretionary
+surplus
+surplus
+Share
+to owners
+Total equity
+attributable
+Transactions with owners, recorded directly in equity:
+Interim dividend for 2016 (Note 13)
+Appropriation (Note (a))
+Final dividend for 2015 (Note 13)
+Contributions by and distributions to owners:
+Total comprehensive income for the year
+Balance at 1 January 2016
+Other comprehensive income (Note 14)
+Profit for the year
+Distributions to non-controlling interests
+Non-
+reserves
+Retained
+RMB
+(Amounts in million)
+RMB
+equity
+interests
+Company
+earnings
+reserve
+reserve
+RMB
+premium
+RMB
+RMB
+RMB
+121.071
+reserve
+capital
+Total
+controlling
+of the
+Other
+for the year ended 31 December 2016
+326
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+14.026
+56,550
+2,791
+Total transactions with owners
+(326)
+326
+result in a loss of control
+3.088
+Total changes in ownership interests in subsidiaries that do not
+326
+326
+Transaction with non-controlling interests
+subsidiaries that do not result in a loss of control:
+Total contributions by and distributions to owners
+RMB
+Changes in ownership interests in
+(326)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+Others
+446
+121
+The notes on pages 154 to 201 form part of these consolidated financial statements.
+788,161
+67
+(7)
+111,964
+74
+676,197
+(121)
+281,076
+(6,781)
+74
+79,640 117,000
+28,341
+121,071
+Balance at 31 December 2015
+94,557
+45.032
+49.525
+(27,376)
+55,850
+RMB
+263
+RMB
+(30)
+(23,061)
+(4,048)
+(19,013)
+(16,876)
+2.137
+(2,137)
+263
+(86)
+(47)
+(47)
+(6,146)
+(6,146)
+(9,565)
+(9,565) (9,565)
+(7,264)
+(39)
+(7,264)
+233
+233
+424
+Profit distribution to SAMC (Note 1)
+117,000
+79,640
+55,850
+125
+9
+(30)
+116
+153
+116
+26,290
+121,071
+(22,828)
+(3,785)
+(19,043)
+(16,876)
+(153)
+RMB
+(7,264)
+Balance at 31 December 2016
+(719)
+7,052
+7.052
+59,444
+12,772
+46,672
+46,672
+6,333
+788,161
+676,197
+281,076
+(6,781)
+117,000
+79,640
+55,850
+28,341
+111,964
+Note:
+7,052
+53,724
+Others
+36
+(30)
+(2,167)
+Total transactions with owners
+result in a loss of control
+Total changes in ownership interests in subsidiaries that do not
+(30)
+46,672
+Transaction with non-controlling interests
+Changes in ownership interests in
+(2,137)
+(2,137)
+Total contributions by and distributions to owners
+SAMC (Note 1)
+Distribution to SAMC in the Acquisition of Gaoqiao Branch of
+65,777
+12,053
+subsidiaries that do not result in a loss of control:
+94,557
+Total equity attributable to owners of the Company
+49.199
+Retained
+Other
+Non-
+to owners
+Statutory Discretionary
+surplus
+surplus
+7,661
+8,259
+of the
+Provisions
+39,298
+33,186
+Other long-term liabilities
+17,426
+15,084
+Total non-current liabilities
+Share
+31
+Equity
+controlling
+capital
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+Total
+equity
+Company
+earnings
+reserves
+reserve
+reserve
+premium
+reserve
+interests
+RMB
+181,831
+831,235
+Chairman
+Vice Chairman, President
+Chief Financial Officer
+(Legal representative)
+The notes on pages 154 to 201 form part of these consolidated financial statements.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+149
+Wang Dehua
+Financial Statements (International)
+150
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+for the year ended 31 December 2016
+(Amounts in million)
+Total equity
+attributable
+Share
+Capital
+310,719
+Financial Statements (International)
+196,275
+Dai Houliang
+Approved and authorised for issue by the board of directors on 24 March 2017.
+788,161
+Share capital
+Reserves
+Non-controlling interests
+Total equity
+32
+121,071
+Wang Yupu
+121,071
+555,126
+710,994
+676,197
+120,241
+111,964
+831,235
+788,161
+589,923
+45,358
+RMB
+Balance at 31 December 2014
+(10,896)
+(10,896)
+(13,318)
+(13,318) (13,318)
+16,817
+16,817
+14,026
+(10,896)
+2,791
+Contributions to subsidiaries from non-controlling interests
+Appropriation (Note (a))
+Interim dividend for 2015 (Note 13)
+Final dividend for 2014 (Note 13)
+Conversion of the 2011 Convertible Bonds
+Contributions by and distributions to owners:
+Total comprehensive income for the year
+Transactions with owners, recorded directly in equity:
+Distributions to non-controlling interests
+43,935
+3,088
+56,224
+(27,376)
+446
+3,088
+14,026
+56,224
+2,791
+(134)
+(3,088)
+(60)
+(74)
+(3,389)
+(3,389)
+105,477
+48,807
+56,670
+446
+(74)
+RMB
+12,592
+32,512
+4,025
+1,811
+2,214
+2,214
+of Gaoqiao Branch of SAMC (Note 1)
+Contribution from SAMC in the Acquisition
+645,577
+Balance at 1 January 2015
+52,536
+276,061
+(6,179)
+117,000
+76,552
+41,824
+(30,497)
+118,280
+593,041
+31,343
+118,280
+76,552
+(1,169)
+137
+(1,169) 1,306
+(1,169)
+Other comprehensive income (Note 14)
+43,798
+11,286
+(28,283) 41,824
+32,512
+Profit for the year
+649,602
+54,347
+595,255
+276,061
+(6,179)
+117,000
+32,512
+710,994
+333,657
+831,235
+658,910
+Total liabilities
+462,832
+(35)
+225
+462,642
+Current liabilities
+232
+1,447,268
+4,174
+1,443,129
+Total assets
+(35)
+1,287
+332,405
+Current assets
+(35)
+Summarised consolidated balance sheet as at 31 December 2015:
+(35)
+674,029
+32
+1
+(79)
+201
+9,310
+58,176
+(116,952)
+165,818
+*
+659,107
+for the year ended 31 December 2015:
+Net cash generated from/(used in) operating activities
+Net cash (used in)/generated from investing activities
+Net cash generated from/(used in) financing activities
+Net increase/(decrease) in cash and cash equivalents
+Total equity attributable to owners of the Company
+Non-controlling interests
+111,964
+1,774
+110,190
+676,197
+(1,774)
+3,942
+Summarised consolidated statement of cash flows
+165,740
+(116,719)
+0.269
+0.268
+and
+Adjustment*
+RMB million
+Elimination
+Gaoqiao
+Branch
+of SAMC
+RMB million
+The Group,
+as previously
+reported
+RMB million
+The financial condition as at 31 December 2015 and the results of operation for the year ended 31 December 2015 previously reported by the
+Group have been restated to include the results of operations and the assets and liabilities of Gaoqiao Branch of SAMC on a combined basis as set
+out below:
+Basis of preparation (Continued)
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION (Continued)
+The Group,
+for the year ended 31 December 2016
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+154
+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.
+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.
+Basis of preparation
+As part of the Reorganisation, certain of Sinopec Group Company's core oil and gas and chemical operations and businesses together with the
+related assets and liabilities were transferred to the Company. On 25 February 2000, in consideration for Sinopec Group Company transferring such
+oil and gas and chemical operations and businesses and the related assets and liabilities to the Company, the Company issued 68.8 billion domestic
+state-owned ordinary shares with a par value of RMB 1.00 each to Sinopec Group Company. The shares issued to Sinopec Group Company on 25
+February 2000 represented the entire registered and issued share capital of the Company on that date. The oil and gas and chemical operations and
+businesses transferred to the Company were related to (i) the exploration, development and production of crude oil and natural gas, (ii) the refining,
+transportation, storage and marketing of crude oil and petroleum products, and (iii) the production and sales of chemicals.
+The Company was established in the PRC on 25 February 2000 as a joint stock limited company as part of the reorganisation (the "Reorganisation")
+of China Petrochemical Corporation ("Sinopec Group Company"), the ultimate holding company of the Group and a ministry-level enterprise under
+the direct supervision of the State Council of the PRC. Prior to the incorporation of the Company, the oil and gas and chemical operations of the
+Group were carried on by oil administration bureaux, petrochemical and refining production enterprises and sales and marketing companies of
+Sinopec Group Company.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+0.001
+as restated
+RMB million
+for the year ended 31 December 2015:
+Diluted earnings per share (RMB)
+0.269
+0.001
+0.268
+Basic earnings per share (RMB)
+11,286
+60
+Summarised consolidated income statement
+11,226
+32,512
+2,020,375
+(1,071)
+(60)
+2,563
+134
+2,018,883
+32,438
+Profit attributable to owners of the Company
+Turnover and other operating revenues
+Profit attributable to non-controlling interests
+Organisation
+(32)
+(185)
+Financial Statements (International)
+157
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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
+In the Company's balance sheet, investments in associates and joint ventures are stated at carrying amount (Note 2(o)).
+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)).
+158
+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.
+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 37.
+In the Company's balance sheet, investments in subsidiaries are stated at cost less impairment losses (Note 2(o)).
+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)).
+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.
+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 (o)).
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+(e) Inventories
+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.
+(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.
+for the year ended 31 December 2016
+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.
+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
+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
+(a) Basis of consolidation (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.
+1
+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.
+(i) Subsidiaries and non-controlling interests
+(b) New and amended standards and interpretations not yet adopted by the Group
+Basis of preparation (Continued)
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016 155
+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 2017 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.
+Amendment to IAS 27, 'Method to measure investments in subsidiaries, joint ventures and associates', allows entities to use equity method to
+measure investments in subsidiaries, joint ventures and associates in their separate financial statements. Previousely, IAS 27 allows entities
+to measure their investments in subsidiaries, joint ventures and associates either at cost or as a financial asset in their separate financial
+statements. The amendments introduce the equity method as a third option. The election can be made independently for each category of
+investment (subsidiaries, joint ventures and associates). Entities wishing to change to the equity method must do so retrospectively. The
+amendment is effective for annual period beginning on or after 1 January 2016.
+(a) New and amended standards and interpretations adopted by the Group
+The accompanying consolidated financial statements have been prepared in accordance with all applicable IFRSS 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.
+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.
+Gaoqiao Branch of SAMC sold its chemical products and steam to the Group. The transactions between the Group and the Gaoqiao Branch of SAMC have been
+eliminated on combination. All other significant balances and transactions between the Group and Gaoqiao Branch of SAMC have been eliminated on combination.
+58,407
+9,093
+(63)
+The following is the Amendment to IAS 27 that has been adopted by the Group. The Group has changed from cost method to equity method
+to measure investments in joint ventures and associates in the separate financial statements from 1 January 2016 and accordingly made
+retrospective adjustments.
+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.
+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. IFRS 9 is
+effective for annual periods beginning on or after 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 or after 1 January 2018, with earlier application permitted.
+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 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+156
+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.
+Financial Statements (International)
+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.
+27
+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 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 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)), derivative financial instruments (Note 2(1) and (n)) and derivative component of the
+convertible bonds (Note 2(r)) to their fair values.
+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 or after 1 January 2017.
+Amendments to IAS 7, 'Statement of cash flows', the IASB has issued an amendment to IAS 7 introducing an additional disclosure that will
+enable users of financial statements to evaluate changes in liabilities arising from financing activities. The amendment is part of the IASB's
+Disclosure Initiative, which continues to explore how financial statement disclosure can be improved. Amendments to IAS 7 are effective for
+annual periods beginning on or after 1 January 2017.
+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'. An entity shall apply IFRS 16 for annual reporting periods beginning on or after 1 January 2019. Earlier
+application is permitted if IFRS 15 is also applied.
+Key assumptions and estimation made by management in the application of IFRSS that have significant effect on the consolidated financial
+statements and the major sources of estimation uncertainty are disclosed in Note 39.
+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
+427
+440
+Effect of foreign currency exchange rate changes
+Cash and cash equivalents at 31 December
+Cash and cash equivalents at 1 January
+Net increase in cash and cash equivalents
+Net cash (used in)/generated from financing activities
+Interest paid
+(17,296)
+Distributions by subsidiaries to non-controlling interests
+Contributions to subsidiaries from non-controlling interests
+Repayments of bank and other loans
+Proceeds from bank and other loans
+Financing activities
+Net cash used in investing activities
+Investment and dividend income received
+Interest received
+Dividends paid by the Company
+(Increase)/decrease in time deposits with maturities over three months
+12
+2,228
+(8,145)
+(6,967)
+(1,481)
+(6,553)
+(24,214)
+(16,876)
+105,529
+2,331
+343
+(569,091)
+1,090,241
+506,097
+(116,719)
+(66,217)
+3,399
+4,028
+(1,152,837)
+(93,047)
+non-current assets
+(23,440)
+3,353
+Note
+(Amounts in million)
+for the year ended 31 December 2016
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Financial Statements (International)
+Financial Statements (International)
+151
+Year ended 31 December
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(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; 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 2016, the amount of retained earnings available for distribution was RMB 182,440 million (2015: RMB 175,679 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 owners 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").
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+reserve.
+Pursuant to the Articles of Association of the Company and the resolution passed at the Directors' meeting on 24 March 2017, the directors proposed to transfer RMB 2,359
+million 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
+(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.
+The notes on pages 154 to 201 form part of these consolidated financial statements.
+Proceeds from disposal of property, plant, equipment and other
+2016
+RMB
+33,516
+(16,389)
+19, 20
+Purchase of investments, investments in associates and investments in joint ventures
+Proceeds from disposal of investments and investments in associates
+(7,203)
+(7,380)
+Exploratory wells expenditure
+2015
+(95,495)
+Capital expenditure
+Investing activities
+165,740
+214,543
+(a)
+Net cash generated from operating activities
+RMB
+(65,467)
+9,093
+55,279
+58,114
+Accounts payable and other current liabilities
+Inventories
+Accounts receivable and other current assets
+Net charges from:
+168,124
+190,603
+259
+Income tax paid
+Loss on embedded derivative component of the convertible bonds
+17,076
+748
+1,528
+3,085
+86
+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
+8,133
+8,767
+9,219
+Net cash generated from operating activities
+40,910
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2016
+Financial Statements (International)
+Financial Statements (International)
+153
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+The notes on pages 154 to 201 form part of these consolidated financial statements.
+165,740
+(22,549)
+214,543
+(23,236)
+179,739
+237,779
+(68,431)
+81,089
+39,136
+(11,364)
+(13,999)
+Interest expense
+(3,010)
+(3,218)
+2015
+2016
+Year ended 31 December
+(a) Reconciliation from profit before taxation to net cash generated from operating activities
+(Amounts in million)
+for the year ended 31 December 2016
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+RMB
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+The notes on pages 154 to 201 form part of these consolidated financial statements.
+68,933
+124,468
+293
+256
+10,526
+68,933
+152
+RMB
+Operating activities
+Profit before taxation
+Interest income
+(466)
+(263)
+(20,562)
+Gain on dilution and remeasurement of interests in the Pipeline Ltd (8(i))
+(8,362)
+(9,306)
+6,099
+7,467
+96,460
+108,425
+56,411
+80,151
+Investment income
+Share of profits from associates and joint ventures
+Dry hole costs written off
+Depreciation, depletion and amortisation
+Adjustments for:
+120,241
+Deferred tax liabilities
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+44,772
+20
+50,696
+43,581
+Available-for-sale financial assets
+Deferred tax assets
+Lease prepayments
+Long-term prepayments and other assets
+Total non-current assets
+Current assets
+Cash and cash equivalents
+Time deposits with financial institutions
+Trade accounts receivable
+Bills receivable
+Inventories
+Prepaid expenses and other current assets
+Total current assets
+Current liabilities
+Short-term debts
+21
+11,408
+10,964
+27
+7,214
+7,469
+22
+40,712
+54,241
+66,116
+Interest in associates
+44,300
+Financial Statements (International)
+CONSOLIDATED BALANCE SHEET
+As at 31 December 2016
+(Amounts in million)
+Note
+31 December
+31 December
+2016
+RMB
+2015
+RMB
+Non-current assets
+Property, plant and equipment, net
+Construction in progress
+Goodwill
+16
+690,594
+733,449
+17
+129,581
+152,325
+18
+6,353
+6,271
+19
+51,049
+Interest in joint ventures
+70,145
+71,517
+18,580
+43,929
+174,301
+130,558
+5,828
+224,544
+212,214
+3,566
+Income tax payable
+6,051
+1,048
+Total current liabilities
+462,832
+Net current liabilities
+Total assets less current liabilities
+73,282
+1,013,066
+129.175
+984,436
+Non-current liabilities
+Long-term debts
+28
+72,674
+95,446
+23
+28
+56,239
+22222
+485,543
+Bills payable
+67,791
+1,086,348
+Accrued expenses and other payables
+1,113,611
+124,468
+68,933
+18,029
+733
+24
+26
+2222
+24
+50,289
+56,142
+Loans from Sinopec Group Company and fellow subsidiaries
+13,197
+Trade accounts payable
+Loans from Sinopec Group Company and fellow subsidiaries
+28
+333,657
+412,261
+28
+49,767
+145,608
+156,511
+10,964
+51,277
+Li Chunguang(i)
+Zhang Jianhua(i)
+Independent directors
+Jiang Xiaoming
+Andrew Y. Yan
+Tang Min
+Fan Gang
+Liu Yun
+Liu Zhongyun
+Zhou Hengyou
+Jiao Fangzheng
+Ma Yongsheng(i)
+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,
+Supervisors
+Wang Yupu
+Dai Houliang
+Wang Zhigang
+Zhang Haichao
+for the year ended 31 December 2016
+Name
+The emoluments of every director and supervisor is set out below:
+(a) Directors' and supervisors' emoluments
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+allowances and
+benefits in kind
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+811
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+166
+12,613
+20,707
+228
+75
+Directors
+279
+520
+Emoluments paid
+(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.
+300
+300
+300
+300
+556
+699
+745
+8ייייייי 8888 יייייייי
+41
+365
+114
+47
+379
+130
+72
+431
+196
+72
+459
+214
+Total
+RMB'000
+RMB'000
+Supervisors' fee
+Directors'/
+2016
+Retirement
+scheme
+contributions
+RMB'000
+Bonuses
+RMB'000
+Company or
+its subsidiary
+undertaking
+or receivable in
+respect of a
+person's services
+as a director,
+whether of the
+RMB'000
+Note:
+8,273
+Adjustment of prior years
+Deferred taxation (Note 27)
+- Provision for the year
+Adjustment of prior years
+Current tax
+RMB million
+RMB million
+2015
+2016
+Tax expense in the consolidated income statement represents:
+10 TAX EXPENSE
+2.6% to 5.9%
+2.65% to 4.82%
+* Interest rates per annum at which borrowing costs were capitalised for construction in progress
+8,133
+9,219
+1,081
+1,057
+7,052
+8,162
+(1,221)
+(859)
+Zou Huiping
+9,021
+Interest expense
+Accretion expenses (Note 31)
+Less: Interest expense capitalised*
+Interest expense incurred
+RMB million
+RMB million
+2015
+21,313
+228
+Actual income tax expense
+13,677
+279
+20,707
+Write-down of deferred tax assets
+828
+958
+Tax effect of tax losses not recognised
+(235)
+(453)
+391
+299
+Effect of difference between income taxes at foreign operations tax rate and the PRC statutory tax rate
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+(1,033)
+83
+Tax effect of preferential tax rate (i)
+(2,583)
+(2,786)
+Tax effect of non-taxable income
+788
+1,529
+Tax effect of non-deductible expenses
+56,411
+14,103
+20,038
+Expected PRC income tax expense at a statutory tax rate of 25%
+80,151
+Profit before taxation
+RMB million
+RMB million
+2015
+2016
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+(1,343)
+12,613
+(834)
+218
+Independent supervisors
+67
+125
+125
+175
+175
+175
+175
+300
+300
+300
+300
+486
+489
+489
+525
+67
+249
+170
+67
+252
+170
+67
+252
+170
+67
+272
+186
+Total
+RMB'000
+RMB'000
+RMB'000
+125
+Supervisors' fee
+125
+125
+(iv) Mr Xu Bin, Mr. Geng Limin, Mr. Li Xinjian, Mr. Zhou Shiliang and Mr. Chen Mingzheng ceased being supervisors from 27 May 2015; Mr. Liu Zhongyun, Mr. Zhou
+Hengyou and Mr. Wang Yajun were elected as supervisors from 27 May 2015. Mr. Liu Yun ceased being director and was elected as supervisor from 27 May 2015.
+(v) Mr. Kang Mingde ceased being independent supervisor from 27 May 2015.
+(iii) Mr. Chen Xiaojin, Mr. Ma Weihua and Ms. Bao Guoming ceased being independent directors from 27 May 2015; Mr. Tang Min and Mr. Fan Gang were elected as
+independent directors from 27 May 2015.
+(ii) Mr. Fu Chengyu, Mr. Zhang Yaocang and Mr. Cao Yaofeng ceased being directors from 27 May 2015; Mr. Wang Yupu, Mr. Zhang Haichao and Mr. Jiao Fangzheng
+were elected as directors from 27 May 2015.
+(i) 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.
+5,735
+1,325
+508
+510
+2,399
+1,501
+19
+408
+81
+257
+37
+102
+118
+552
+62
+288
+202
+552
+62
+288
+202
+552
+62
+288
+202
+125
+Directors'/
+scheme
+contributions
+Bonuses
+RMB'000
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+167
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+6,147
+1,200
+499
+2,936
+168
+1,512
+595
+66
+325
+204
+Wang Yajun
+Total
+594
+67
+309
+218
+Yu Renming
+619
+67
+334
+218
+Jiang Zhenying
+619
+(a) Directors' and supervisors' emoluments (Continued)
+The emoluments of every director and supervisor is set out below: (Continued)
+Name
+Directors
+Wang Yupu (ii)
+Li Chunguang
+Zhang Jianhua
+Wang Zhigang
+Dai Houliang
+2015
+Retirement
+or receivable in
+respect of a
+person's services
+as a director,
+whether of the
+Company or its
+subsidiary
+undertaking
+Emoluments paid
+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:
+Total
+Kang Mingde (v)
+2016
+Chen Mingzheng (iv)
+Zhou Shiliang (iv)
+Geng Limin (iv)
+Li Xinjian (iv)
+Xu Bin (iv)
+334
+Yu Renming
+Wang Yajun (iv)
+Zhou Hengyou (iv)
+Liu Zhongyun (iv)
+Liu Yun (iv)
+Chen Xiaojin (iii)
+Ma Weihua (iii)
+Bao Guoming (iii)
+Supervisors
+Fan Gang (iii)
+Tang Min (iii)
+Andrew Y. Yan
+Jiang Xiaoming
+Independent directors
+Cao Yaofeng (ii)
+Zhang Yaocang (ii)
+Fu Chengyu (ii)
+Jiao Fangzheng (ii)
+Zhang Haichao (ii)
+Zou Huiping
+Jiang Zhenying
+9 INTEREST EXPENSE
+RMB/Ton
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+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 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.
+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.
+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.
+(ii) Other convertible bonds
+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.
+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.
+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.
+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.
+(i) Convertible bonds that contain an equity component
+(r) Convertible bonds
+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) Interest-bearing borrowings
+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) Trade, bills and other payables
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+162
+Financial Statements (International)
+161
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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 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).
+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.
+(s) Provisions and contingent liability
+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.
+(cc) Segment reporting
+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)Dividends
+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.
+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.
+(aa) Income tax
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+163
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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 35.
+Operating lease payments are charged to the consolidated income statement on a straight-line basis over the period of the respective leases.
+(z) Employee benefits
+(y) Operating leases
+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 5,941 million for the year ended 31 December 2016 (2015: RMB 5,654 million).
+(x) Research and development expense
+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) Environmental expenditures
+Repairs and maintenance expenditure is expensed as incurred.
+(v) 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.
+(u) 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.
+(t) Revenue recognition
+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.
+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.
+(ii) Impairment of other long-lived assets is accounted as follows:
+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.
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+159
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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.
+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.
+(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(o)). 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.
+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.
+(g) Oil and gas properties
+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.
+3%
+3%
+residuals rate
+Estimated
+usage period
+12 to 50 years
+4 to 30 years
+Equipment, machinery and others
+Buildings
+Estimated
+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.
+(f) Property, plant and equipment
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(j) Goodwill
+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).
+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.
+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)).
+(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.
+(o) Impairment of assets
+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.
+(iii)Hedge of net investments in foreign operations
+When a hedging instrument expires or is sold, terminated or exercised, or no longer meets the criteria for hedge accounting, the Group
+discontinues prospectively the hedge accounting treatments. If the hedged item is a financial instrument measured at amortised cost, any
+adjustment to the carrying amount of the hedged item is amortised to profit or loss from the adjustment date to the maturity date using the
+recalculated effective interest rate at the adjustment date.
+The gain or loss from remeasuring the hedging instrument at fair value is recognised in profit or loss. The gain or loss on the hedged item
+attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised in profit or loss.
+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.
+(ii) Fair value hedges
+(n) Hedging (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+160
+Financial Statements (International)
+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, 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.
+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.
+(i) Cash flow hedges
+(n) Hedging
+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: (1) There is a legally enforceable right to offset the recognised amounts. (2) 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.
+(m)Offsetting 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(n)).
+(I) Derivative financial instruments
+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.
+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)).
+(k) Available-for-sale financial assets
+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.
+for the year ended 31 December 2016
+3 TURNOVER
+4
+Net realised and unrealised gain on derivative financial instruments not qualified as hedging
+Impairment losses on long-lived assets (iii)
+Ineffective portion of change in fair value of cash flow hedges
+Government grant (ii)
+Gain on dilution and remeasurement of interests in the Pipeline Ltd (i)
+OTHER OPERATING INCOME/(EXPENSE), NET
+8
+(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%, while the business
+tax was from 3% to 5% before then.
+1,370.60
+1,495.20
+1,218.00
+1,116.50
+1,711.52
+1,576.40
+1,948.64
+1,794.80
+2,105.20
+1,939.00
+1,411.20
+1,293.60
+2,109.76
+1,943.20
+RMB/Ton
+Effective from
+13 January 2015
+13 December 2014
+Effective from
+Jet fuel oil
+Fuel oil
+Lubricant oil
+Solvent oil
+Loss on disposal of property, plant, equipment and other non-currents assets, net
+Fines, penalties and compensations
+Naphtha
+Donations
+2016
+Financial Statements (International)
+Financial Statements (International)
+165
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(iii) Impairment losses on long-lived assets for the year ended 31 December 2016 primarily represent impairment losses recognised in the exploration and production
+("E&P") segment of RMB 11,605 million (2015: RMB 4,864 million), the chemicals segment of RMB 2,898 million (2015: RMB 142 million) and for the refining
+segment of RMB 1,655 million (2015: RMB 9 million) (Note 36), 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% (2015: 10.80%). Further future downward revisions to the Group's oil price outlook
+by 10% or more would lead to further impairments which, in aggregate, are likely to be material. It is estimated that a general decrease of 10% in oil price, with all
+other variables held constant, would result in additional impairment loss in E&P segment by approximately RMB 3,010 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 in E&P segment by approximately RMB 1,193 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 E&P segment by
+approximately RMB 439 million. The assets in the chemicals and refining segment were written down mainly due to the suspension of operations of certain production
+facilities.
+(ii) Government grants for the years ended 31 December 2016 and 2015 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.
+(i) On 12 December 2016, the Group entered into the Capital Injection Agreement in relation to Sinopec Sichuan To East China Gas Pipeline Co., Ltd. ("Pipeline Ltd"),
+a wholly-owned subsidiary of the Group, with China Life Insurance Company Limited ("China Life") and SDIC Communications Holding Co., Ltd. ("SDIC Holding") (the
+"Capital Injection Agreement"). According to the provisions of the Capital Injection Agreement, China Life and SDIC Holding made cash contribution to the Pipeline
+Ltd amounting to RMB 20 billion and RMB 2.8 billion, respectively, in exchange for 43.86% and 6.14% equity interest, respectively, in the Pipeline Ltd. Thereafter,
+the Group's equity interest in the Pipeline Ltd was diluted from 100% to 50%. Based on the composition and decision making mechanism of the Board of Directors
+of the Pipeline Ltd, the Group determines that it has only retained the power to participate in the financial and operating policy decisions of the Pipeline Ltd, and was
+no longer exclusively possessing the power to govern policy decisions of the Pipeline Ltd. Consequently, the Group has deconsolidated the Pipeline Ltd and started
+accounting for its 50% equity interest in the Pipeline Ltd as an investment in associate company. In this connection, the Group recognized a gain of RMB 20.562
+billion, which was resulted from the dilution and the remeasurement of the remaining 50% equity interest in the Pipeline Ltd.
+Note:
+(129)
+5,686
+(199)
+(1,238)
+(112)
+(133)
+(90)
+(152)
+(748)
+(1,528)
+(5,146)
+(16,425)
+870
+195
+165
+304
+5,131
+4,101
+20,562
+2015
+RMB million
+RMB million
+Others
+Turnover primarily represents revenue from the sales of crude oil, natural gas, refined petroleum products and chemical products.
+Gasoline
+Diesel
+232,006
+230
+2
+64
+73
+14,384
+2015
+RMB million
+RMB million
+14,410
+2016
+42,498
+974
+41,524
+2015
+RMB million
+2016
+RMB million
+49,812
+909
+50,721
+164 Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Contributions to retirement schemes (Note 35)
+Salaries, wages and other benefits
+6 PERSONNEL EXPENSES
+- accounts prepayments
+- other receivables
+- trade accounts receivable
+Impairment losses:
+- others
+audit services
+Auditor's 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
+40
+236,349
+(12)
+(25)
+861
+2,449
+4,853
+3,871
+13,686
+13,695
+18,195
+18,155
+198,754
+RMB million
+RMB million
+193,836
+2015
+2016
+(i) Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Note:
+Other
+Education surcharge
+Resources tax
+City construction tax (ii)
+Consumption tax (i)
+7 TAXES OTHER THAN INCOME TAX
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+56,619
+7,878
+48,741
+2015
+RMB million
+8,385
+63,887
+55,502
+RMB million
+2016
+49
+13
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+1,426
+2.251
+5,045
+4,771
+Summarised statement of comprehensive income
+Year ended 31 December
+492
+(2,661)
+Dividends declared by joint ventures
+155
+470
+Share of net profit/(loss) from
+joint ventures
+2,451
+1,470
+783
+63
+(506)
+(1,090)
+895
+1,287
+31
+(92)
+252
+Share of other comprehensive
+income/(loss) from joint ventures
+4,021
+2,184
+1,812
+5,526
+Exchange adjustments
+(35,100)
+(27)
+(509)
+Disposals
+(2,202)
+(130)
+Reclassification to lease prepayments and other long-term assets
+(1,311)
+6,842
+4,391
+6,154
+134
+5,526
+2,184
+3,278
+1.522
+5,045
+4,771
+Other (ii)
+743
+729
+Carrying Amounts
+6,842
+4,391
+6,154
+1.812
+145
+875
+(1,245)
+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 2016 amounted to nil (2015: nil).
+22 LEASE PREPAYMENTS
+Cost:
+Balance at 1 January
+Additions
+Transferred from construction in progress
+Transferred from other long-term assets
+Reclassification to other assets
+Disposals
+Exchange adjustments
+Balance at 31 December
+10,964
+Accumulated amortisation:
+Amortisation charge for the year
+Transferred from other long-term assets
+Reclassification to other assets
+Written back on disposals
+Exchange adjustments
+Balance at 31 December
+Net book value:
+23 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+2016
+RMB million
+2015
+RMB million
+63,324
+300
+4,279
+59,866
+1,835
+Balance at 1 January
+82
+11,408
+29
+243
+277
+(1,582)
+The share of profit and other comprehensive loss for the year ended 31 December 2016 in all individually immaterial joint ventures accounted for
+using equity method in aggregate was RMB 3,768 million (2015: RMB 2,897 million) and RMB 1,068 million (2015: RMB 324 million) respectively.
+As at 31 December 2016, the carrying amount of all individually immaterial joint ventures accounted for using equity method in aggregate was RMB
+26,822 million (2015: RMB 24,458 million).
+Note:
+(i) Excluding trade accounts payable and other payables.
+(ii) Excluding provisions.
+(iii) Other reflects the excess of fair value of the consideration transferred over the Group's share of the fair value of the investee's identifiable assets and liabilities as of
+the transaction date.
+(iv) The summarized statement of comprehensive income represents the operating result for the period from 1 January 2015 to the date when the Group reclassified the
+investment interest in CIR from joint ventures to associates (Note 19 (i)).
+174
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Less: Impairment loss for investments
+for the year ended 31 December 2016
+Equity securities, listed and at quoted market price
+Other investment, unlisted and at cost
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+262
+11,175
+261
+10,732
+11,437
+10,993
+29
+21 AVAILABLE-FOR-SALE FINANCIAL ASSETS
+3,125
+2,800
+87,399
+435,561
+48,572
+Balance at 31 December 2016
+1,976
+84
+1,865
+27
+Exchange adjustments
+(17,623)
+(17,067)
+(22)
+(534)
+Written back on disposals
+(330)
+(316)
+(14)
+Reclassification to lease prepayments and other long-term assets
+(311)
+(58)
+369
+Reclassifications
+14,921
+3,901
+10,580
+440
+483,814
+967,947
+Net book value:
+Balance at 1 January 2015
+Transferred to property, plant and equipment
+Dry hole costs written off
+Balance at 1 January
+Additions
+17 CONSTRUCTION IN PROGRESS
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+172
+Financial Statements (International)
+Financial Statements (International)
+171
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+The additions to oil and gas properties of the Group for the year ended 31 December 2016 included RMB 3,420 million (2015: RMB 2,899 million)
+of estimated dismantlement costs for site restoration (Note 31).
+Impairment losses for the year
+690,594
+215,124
+66,348
+Balance at 31 December 2016
+733,449
+431,102
+238,943
+63,404
+Balance at 31 December 2015
+704,282
+403,252
+239,905
+61,125
+409,122
+100,734
+47,914
+49,005
+87
+(766)
+679
+Reclassifications
+4,375
+781,661
+87,819
+130
+4,213
+32
+Impairment losses for the year
+44,078
+40,200
+Contribution to associates and joint ventures
+3,541
+411,871
+329,267
+40,523
+Balance at 1 January 2015
+Accumulated depreciation:
+1,658,541
+892,936
+650,685
+114,920
+Balance at 31 December 2016
+3,069
+(2,332)
+(35,636)
+Depreciation for the year
+187
+(4)
+Reclassification to lease prepayments and other long-term assets
+3,815
+Depreciation for the year
+868,269
+449,609
+374,191
+44,469
+Balance at 1 January 2016
+868,269
+449,609
+374,191
+44,469
+Balance at 31 December 2015
+(4)
+1,450
+1,344
+40
+Exchange adjustments
+(6,876)
+(6,533)
+(65)
+(278)
+Written back on disposals
+(156)
+(86)
+(2)
+(68)
+66
+Reclassification to lease prepayments and other long-term assets
+994
+(229)
+25 INVENTORIES
+Crude oil and other raw materials
+Work in progress
+Finished goods
+Spare parts and consumables
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+75,680
+59,376
+14,141
+22,762
+65,772
+66,320
+1,838
+1,552
+157,431
+150,010
+(4,402)
+Less: Allowance for diminution in value of inventories
+(920)
+156,511
+145,608
+The cost of inventories recognised as an expense in the consolidated income statement amounted to RMB 1,461,285 million for the year ended 31
+December 2016 (2015: RMB 1,572,798 million). It includes the write-down of inventories of RMB 430 million (2015: RMB 3,687 million) and the
+reversal of write-down of inventories made in prior years of RMB 10 million (2015: RMB 34 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 4,021 million for the
+year ended 31 December 2016 (2015: RMB 2,931 million) was realised primarily with the sales of inventories.
+Trade accounts receivable and bills receivables (net of impairment losses for bad and doubtful debts) primarily represent receivables that are
+neither past due nor impaired. These receivables relate to a wide range of customers for whom there is no recent history of default.
+Sales are generally on a cash term. Credit is generally only available for major customers with well-established trading records. Amounts due from
+Sinopec Group Company and fellow subsidiaries are repayable under the same terms.
+525
+683
+715
+177
+36
+25
+13
+63,486
+67,106
+Impairment losses for bad and doubtful debts are analysed as follows:
+Balance at 1 January
+Provision for the year
+Written back for the year
+Written off for the year
+Others
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Balance at 31 December
+2015
+RMB million
+RMB million
+525
+530
+238
+40
+(8)
+(13)
+(72)
+(38)
+6
+2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+26 PREPAID EXPENSES AND OTHER CURRENT ASSETS
+391
+413
+391
+413
+Cash flow hedges
+Non-current
+Property, plant and equipment
+Tax losses carried forward
+27
+348
+(242)
+(98)
+1,755
+(215)
+11,264
+Others
+Deferred tax assets/(liabilities)
+2,477
+133
+8,209
+5,883
+98
+(14,615)
+(17,340)
+(3,351)
+2,477
+(9,131)
+5,883
+14,639
+16,706
+250
+233
+347
+347
+Other receivables
+Advances to suppliers
+Value-added input tax to be deducted
+Prepaid income tax
+Derivative financial instruments
+27 DEFERRED TAX ASSETS AND LIABILITIES
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+26,056
+3,749
+1,755
+18,055
+762
+49,767
+20,183
+2,920
+20,299
+7,875
+51,277
+Deferred tax assets and deferred tax liabilities before offset are attributable to the items detailed in the table below:
+Deferred tax assets
+Deferred tax liabilities
+31 December 31 December 31 December
+2016
+2015
+2016
+RMB million RMB million RMB million
+Net balance
+31 December 31 December 31 December
+2015
+2016
+2015
+RMB million RMB million RMB million
+Current
+Receivables and inventories
+Accruals
+1,145
+543
+66,342
+Over three years
+26,896
+26,097
+20,385
+17,759
+2,234
+2,989
+20,630
+20,946
+70,145
+67,791
+(i) Others mainly comprise prepaid operating lease charges over one year and catalyst expenditures.
+The cost of operating rights of service stations is charged to expense on a straight-line basis over the respective periods of the rights. The
+movement of operating rights of service stations is as follows:
+Operating rights of service stations
+Cost:
+Balance at 1 January
+Additions
+Decreases
+Balance at 31 December
+Accumulated amortisation:
+Balance at 1 January
+Additions
+Decreases
+Balance at 31 December
+Net book value at 31 December
+2016
+2015
+RMB million
+31 December
+RMB million
+2016
+(536)
+(422)
+(1,509)
+221
+68,467
+63,324
+12,275
+10,725
+1,840
+1,572
+132
+111
+2015
+(12)
+(83)
+(20)
+74
+14,226
+54,241
+12,275
+51,049
+Operating rights of service stations
+Long-term receivables from and prepayment to Sinopec Group Company and fellow subsidiaries
+Prepayments for construction projects to third parties
+Others (i)
+Balance at 31 December
+Note:
+31 December
+(113)
+RMB million
+RMB million
+34,407
+2,670
+(169)
+Less: Impairment losses for bad and doubtful debts
+Trade accounts receivable, net
+Bills receivable
+39,994
+34,261
+6,398
+18,672
+4,580
+3,734
+50,972
+56,667
+(683)
+Amounts due from associates and joint ventures
+(525)
+56,142
+13,197
+10,964
+63,486
+67,106
+The ageing analysis of trade accounts and bills receivables (net of impairment losses for bad and doubtful debts) is as follows:
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+Within one year
+Between one and two years
+Between two and three years
+50,289
+63,051
+Amounts due from Sinopec Group Company and fellow subsidiaries
+RMB million
+32,748
+1,720
+(61)
+36,908
+34,407
+8,310
+6,673
+1,777
+1,643
+(75)
+(6)
+10,012
+26,896
+Amounts due from third parties
+8,310
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+175
+Financial Statements (International)
+Financial Statements (International)
+176
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+24 TRADE ACCOUNTS RECEIVABLE AND BILLS RECEIVABLE
+31 December
+2016
+RMB million
+31 December
+2015
+26,097
+Impairment losses for the year
+Disposals
+Exchange adjustments
+Russia
+Cyprus
+Equity method
+Crude oil and natural
+49.00
+Taihu Limited ("Taihu")
+gas extraction
+("Mansarovar")
+Colombia
+British Bermuda
+Equity method
+Crude oil and natural
+50.00
+Mansarovar Energy Colombia Ltd.
+petrochemical products
+distribution of
+("BASF-YPC")
+PRC
+PRC
+PRC
+Equity method
+Manufacturing and
+40.00
+BASF-YPC Company Limited
+PRC
+gas extraction
+Yanbu Aramco Sinopec Refining
+37.50
+Company Ltd. ("YASREF")
+1,259
+78
+1,165
+262
+499
+488
+1,394
+2,517
+8,172
+Cash and cash equivalents
+Current assets
+RMB million
+Equity method
+2015
+YASREF
+Mansarovar
+FREP
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2016
+2015
+2016
+2016
+2015
+2016
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+2015
+2016
+BASF-YPC
+Taihu
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+Saudi Arabia
+Saudi Arabia
+Equity method
+Petroleum refining and
+processing business
+2015
+Manufacturing refining
+oil products
+50.00
+Principal place
+495
+892
+1,707
+748
+26
+336
+23
+(4,107)
+(2,856)
+2.248
+3,630
+3,512
+(1,759)
+1,351
+(4,017)
+662
+28
+(175)
+(90)
+(3,518)
+2,248
+3,630
+3,484
+1,526
+51
+687
+51
+4,171
+(45)
+14
+of business
+Country of
+incorporation
+Measurement
+method
+Principal activities
+interests
+% of ownership
+Company Limited ("FREP")
+Fujian Refining & Petrochemical
+Name of entity
+The Group's principal interests in joint ventures are as follows:
+20 INTEREST IN JOINT VENTURES
+for the year ended 31 December 2016
+(86)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+173
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(v) The main asset of Zhongtian Synergetic Energy was under construction during the year ended 31 December 2016.
+(iv) The summarised statement of comprehensive income of Pipeline Ltd represents the operating results of the Pipeline Ltd for the period from the date when the Group
+lost control to 31 December 2016 (Note 8(i)).
+(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.
+(ii) Management is in the process of allocating the fair value to identifiable assets and liabilities of Pipeline Ltd, therefore the summarised financial information of Pipeline
+Ltd is based on management's preliminary fair value allocation which may be subject to further change.
+(i) In August 2015, one of the subsidiaries of Sinopec Group Company completed the acquisition from LUKOIL OVERSEAS WEST PROJECT Ltd. a 50% equity interests in
+CIR and revised CIR's Articles of Association subsequently. According to the revised CIR's Articles of Association, the Group retained significant influences over CIR. As
+a result, the Group reclassified the investment interest in CIR from joint ventures to associates. The summarized statement of comprehensive income for the year 2015
+of CIR represents the operating result for the period from the date when the Group reclassified the investment interest in CIR from joint ventures to associates to 31
+December 2015.
+Note:
+The share of profit and other comprehensive loss for the year ended 31 December 2016 in all individually immaterial associates accounted for using
+equity method in aggregate was RMB 1,977 million (2015: RMB 1,418 million) and RMB 384 million (2015: RMB 632 million) respectively. As at
+31 December 2016, the carrying amount of all individually immaterial associates accounted for using equity method in aggregate was RMB 18,395
+million (2015: RMB 16,596 million).
+(2,009)
+331
+Financial Statements (International)
+2.205
+Other current assets
+7,396
+(3,113)
+(1,502)
+(22,177)
+(20,237)
+Total non-current liabilities
+(978)
+(1,004)
+(1,337)
+(2,130)
+(3,320)
+(895)
+(10)
+(271)
+(252)
+Other non-current liabilities
+(39,214)
+(43,028)
+(26)
+(49)
+(3,113)
+(1,492)
+(21,906)
+(19,985)
+Non-current financial liabilities (ii)
+Non-current liabilities
+(895)
+(3,320)
+(2,179)
+(1,363)
+241
+Net assets attributable to non-controlling interests
+12,723
+13,454
+3,106
+6,690
+4,367
+3,624
+13,814
+15,384
+8,781
+13,683
+(7,653) (11,248)
+Net assets attributable to owners of the company
+13,454
+3,217
+6.931
+4,367
+3,624
+13,814
+15,384
+8,781
+13,683
+Net assets
+(40,192)
+(44,032)
+12,723
+(3,403)
+(1,950)
+(767)
+7,433
+4.050
+15.543
+13.530
+25,585
+21,903
+Non-current assets
+10,136
+8,085
+2,321
+2,781
+1,021
+8,279
+1.068
+6.246
+9,913
+18,441
+Total current assets
+5,965
+6,826
+2,243
+1,616
+759
+569
+4,765
+4,852
+5.253
+10,269
+5,662
+54,027
+(599)
+(3,869)
+(2,890)
+(4,540)
+(6,424)
+Total current liabilities
+(6,466) (7,886)
+(1,088)
+(1,616)
+(767)
+(599)
+(1,864)
+57,054
+(2,107)
+(4,643)
+Other current liabilities
+(3,362)
+(1,187)
+(2,315)
+(334)
+(2,005)
+(783)
+(1,424)
+(1,781)
+Current financial liabilities (i)
+Current liabilities
+(3,116)
+78,623
+74,622
+2,533
+Zhongtian Synergetic Energy
+financial services
+("Sinopec Finance")
+PRC
+PRC
+Equity method
+Provision of non-banking
+49.00
+Sinopec Finance Company Limited
+pipelines and auxiliary
+facilities
+Pipeline Co., Ltd. ("Pipeline Ltd")
+of business
+PRC
+PRC
+Equity method
+Operation of natural gas
+Principal place
+Country of
+incorporation
+Measurement
+method
+Principal activities
+% of
+ownership
+interests
+50.00
+Sinopec Sichuan To East China Gas
+Name of company
+The Group's principal associates are as follows:
+The Group's investments in associates are with companies primarily engaged in the oil and gas, petrochemical, and marketing and distribution
+operations in the PRC.
+19 INTEREST IN ASSOCIATES
+38.75
+Manufacturing of
+Equity method
+PRC
+Zhongtian Synergetic Energy
+Sinopec Finance
+Pipeline Ltd (ii)
+The Republic of
+Kazakhstan
+Virgin Islands
+Summarised financial information and reconciliation to their carrying amounts in respect of the Group's principal associates:
+gas extraction
+("CIR”) (i)
+British
+Equity method
+Crude oil and natural
+50.00
+for the year ended 31 December 2016
+Caspian Investments Resources Ltd.
+("China Aviation Oil")
+of refined petroleum
+Company Limited
+PRC
+PRC
+Marketing and distribution Equity method
+29.00
+China Aviation Oil Supply
+("Zhongtian Synergetic Energy")
+coal-chemical products
+Company Limited
+PRC
+products
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+Impairment tests for cash-generating units containing goodwill
+Less: Accumulated impairment losses
+Cost
+18 GOODWILL
+As at 31 December 2016, the amount of capitalised cost of exploratory wells included in construction in progress related to the exploration and
+production segment was RMB 12,192 million (2015: RMB 16,772 million). The geological and geophysical costs paid during the year ended 31
+December 2016 were RMB 2,899 million (2015: RMB 4,347 million).
+152,325
+Balance at 31 December
+90
+116
+129,581
+(1,009)
+(1,445)
+(111)
+Goodwill is allocated to the following Group's cash-generating units:
+(1,486)
+(6,900)
+(119,471)
+(87,399)
+(6,099)
+(7,467)
+106,809
+81,837
+177,716
+RMB million
+RMB million
+152,325
+2015
+2016
+(5,600)
+RMB million
+Principal activities
+Sinopec Zhenhai Refining and Chemical Branch
+("Sinopec Zhenhai")
+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 10.4% to 11.0% (2015: 10.7% to
+11.3%). Cash flows beyond the one-year period are maintained constant.
+6,271
+6,353
+218
+212
+853
+941
+4,043
+4,043
+1,157
+1,157
+RMB million
+Sinopec Beijing Yanshan Petrochemical Branch
+("Sinopec Yanshan")
+RMB million
+2016
+31 December
+13,928
+(7,657)
+6,271
+RMB million
+31 December
+2015
+(7,663)
+6,353
+RMB million
+14,016
+31 December
+2016
+Other units without individually significant goodwill
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Trading of petrochemical products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Sinopec (Hong Kong) Limited
+31 December
+2015
+31 December 31 December
+2016
+2016
+RMB million
+31 December
+2015
+RMB million
+Current assets
+6,734
+10,834
+11,496
+22,800
+Carrying Amounts
+6,691
+Others (iii)
+5,004
+3,576
+2,157
+3,115
+6.121
+6,121
+6.734
+11,496
+16,109
+Share of net assets from associates
+984
+1,329
+non-controlling interests
+Net assets attributable to
+10,007
+7,151
+7,438
+10,743
+15,796
+10,834
+17,378
+3,115
+3,576
+2,442
+191
+RMB million
+RMB million
+2015
+2016
+2015
+RMB million
+CIR (i)
+China Aviation Oil
+2016
+RMB million
+2015
+RMB million
+Zhongtian Synergetic Energy (v)
+2016
+RMB million
+2015
+RMB million
+2,157
+RMB million
+Sinopec Finance
+2016
+Pipeline Ltd (ii, iv)
+2016
+(loss)/income from associates
+Share of other comprehensive
+Dividends declared by associates
+Share of profit/(loss) from associates
+Total comprehensive income/(loss)
+Other comprehensive (loss)/income
+Profit/(loss) for the year
+Turnover
+Year ended 31 December
+Summarised statement of comprehensive income
+5,004
+RMB million
+(229)
+(15,086)
+22,110
+32,217
+(5,009)
+Current liabilities
+7,768
+3,842
+5.220
+5,671
+37,571
+50,301
+15,739
+4,826
+5,120
+8,240
+(142,386)
+RMB million
+31 December
+2015
+31 December
+2016
+2015
+RMB million
+31 December
+CIR (i)
+China Aviation Oil
+31 December 31 December 31 December
+2016
+2015
+2016
+RMB million RMB million RMB million
+7,292
+13,115
+10,168
+154,437
+149,457
+16,478
+25,395
+Non-current assets
+11,835
+RMB million
+23,461
+(147,952)
+(16,536)
+the Company
+Net assets attributable to owners of
+10,007
+7,151
+8,422
+(12,072)
+15,796
+17,378
+22,110
+23,461
+32,217
+Net assets
+(8,078)
+(1,282)
+(321)
+(417)
+(15,407)
+(32,137)
+(114)
+(88)
+(4)
+Non-current liabilities
+(1,305)
+(928)
+(4,717)
+(6,297)
+(883)
+111
+(58)
+40
+2,881
+(3,161)
+652
+(3,813)
+instruments recognised during the year
+Amounts transferred to initial carrying
+Effective portion of changes in fair value of hedging
+Cash flow hedges:
+amount
+RMB million
+RMB million
+Net of tax
+Tax
+effect
+Before tax
+amount
+RMB million
+Net of tax
+amount
+RMB million
+RMB million RMB million
+Tax
+effect
+Before tax
+amount
+2015
+2016
+14 OTHER COMPREHENSIVE INCOME
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+(405)
+169
+2,476
+13
+Changes in fair value recognised during the year
+Available-for-sale securities:
+3,163
+(637)
+3,800
+2,014
+(465)
+2,479
+in other comprehensive income
+Net movement during the year recognised
+1,818
+(455)
+2,273
+5,164
+(1,115)
+6,279
+to the consolidated income statement
+Reclassification adjustments for amounts transferred
+(1,131)
+223
+(1,354)
+11
+(2)
+amount of hedged items
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Pursuant to the shareholders' approval at the Annual General Meeting on 27 May 2015, a final dividend of RMB 0.11 per share totaling RMB 13,318
+million according to total shares of 18 June 2015 was approved. Cash dividends have been paid on 19 June 2015.
+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.
+89
+3,744
+(1,890)
+(743)
+158
+1,958
+2,939
+4,902
+Total comprehensive income/(loss)
+(3,164)
+738
+647
+(2,633)
+1.851
+290
+270
+Other comprehensive income/(loss)
+503
+(246)
+84
+2,722
+1,893
+(2,180)
+731
+(96)
+(115)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+13,318
+7,264
+RMB million
+RMB million
+2015
+2016
+Final cash dividends in respect of the previous financial year, approved and paid during the year of
+RMB 0.06 per share (2015: RMB 0.11 per share)
+Pursuant to a resolution passed at the director's meeting on 24 March 2017, final dividends in respect of the year ended 31 December 2016 of
+RMB 0.17 (2015: RMB 0.06) per share totaling RMB 20,582 million (2015: RMB 7,264 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 26 August 2016, the directors authorised to
+declare the interim dividends for the year ending 31 December 2016 of RMB 0.079 (2015: RMB 0.09) per share totaling RMB 9,565 million (2015:
+RMB 10,896 million). Dividends were paid on 21 September 2016.
+18,160
+30,147
+(17)
+7,264
+9,565
+20,582
+RMB million
+RMB million
+2015
+2016
+Dividends declared and paid during the year of RMB 0.079 per share (2015: RMB 0.09 per share)
+Dividends declared after the balance sheet date of RMB 0.17 per share (2015: RMB 0.06 per share)
+Dividends payable to owners of the Company attributable to the year represent:
+13 DIVIDENDS
+For the year ended 31 December 2016, 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 3,244 thousand, and the total amount of their retirement scheme contributions was RMB 333 thousand. For the year ended 31 December
+2015, all the five highest paid individuals in the Company were senior management.
+12 SENIOR MANAGEMENT'S EMOLUMENTS
+for the year ended 31 December 2016
+10,896
+(1,013)
+(7)
+66
+(479)
+Disposals
+(1,550)
+(1,170)
+(380)
+Reclassification to lease prepayments and other long-term assets
+(12)
+(8)
+(4)
+Contribution to associates and joint ventures
+(772)
+(1,008)
+1,780
+Reclassifications
+1,485,943
+3,732
+119,471
+74,594
+815,123
+565
+569,172
+2,899
+39,949
+4,928
+Transferred from construction in progress
+268
+Additions
+101,648
+(79)
+Balance at 1 January 2015
+(7,778)
+Exchange adjustments
+Reclassifications
+50,025
+31,473
+5,901
+Transferred from construction in progress
+4,323
+626
+3,420
+277
+Additions
+1,601,718
+880,711
+613,134
+107,873
+Balance at 1 January 2016
+1,601,718
+2,470
+157
+880,711
+613,134
+107,873
+Balance at 31 December 2015
+2,201
+112
+(8,336)
+Cost:
+Total
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+6,805
+Other comprehensive income
+2,268
+2,268
+4,298
+4,298
+Foreign currency translation differences
+(5,356)
+(5,356)
+45
+45
+associates and joint ventures
+Share of other comprehensive profit/(loss) of
+62
+(4)
+66
+(24)
+(7)
+(17)
+in other comprehensive income
+Net movement during the year recognised
+62
+(4)
+(472)
+6,333
+778
+(641)
+Oil and gas,
+properties
+RMB million
+Plants and
+buildings
+RMB million
+16 PROPERTY, PLANT AND EQUIPMENT
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+170
+120,852,547,200
+120,852,547,200
+of shares
+2015
+Number
+121,071,209,646
+121,071,209,646
+2016
+Number
+of shares
+(24)
+Weighted average number of shares at 31 December
+Weighted average number of shares (diluted) at 31 December
+2015
+RMB million
+RMB million
+46,672
+(3)
+46,669
+2016
+(ii) Weighted average number of shares (diluted)
+After tax effect of employee share option scheme of Shanghai Petrochemical
+Profit attributable to ordinary owners of the Company (diluted)
+Profit attributable to ordinary owners of the Company
+(i) Profit attributable to ordinary owners of the Company (diluted)
+The calculation of diluted earnings per share for the year ended 31 December 2016 is based on the profit attributable to ordinary owners of the
+Company (diluted) of RMB 46,669 million (2015: RMB 32,510 million) and the weighted average number of shares of 121,071,209,646 (2015:
+120,852,547,200) calculated as follows:
+The calculation of basic earnings per share for the year ended 31 December 2016 is based on the profit attributable to ordinary owners of
+the Company of RMB 46,672 million (2015: RMB 32,512 million) and the weighted average number of shares of 121,071,209,646 (2015:
+120,852,547,200) during the year.
+15 BASIC AND DILUTED EARNINGS PER SHARE
+137
+32,512
+(2)
+32,510
+158
+Share of net assets from joint ventures
+2,939
+40
+(136)
+(96)
+(790)
+834
+(838)
+347
+(447)
+FREP
+2016
+2015
+BASF-YPC
+2016
+2015
+Mansarovar
+2016
+Taihu
+2015
+2016
+2015
+YASREF
+2016
+CIR (iv)
+2015
+2015
+RMB million RMB million
+146
+RMB million
+(7)
+2,477
+in other
+comprehensive
+Balance at
+income
+RMB million
+Others
+RMB million
+31 December 2016
+RMB million
+1,755
+413
+(1,506)
+(22)
+6
+92
+347
+391
+250
+(465)
+(215)
+(9,131)
+5,883
+6,063
+(392)
+109
+(3,351)
+(3,426)
+20
+(139)
+RMB million
+RMB million
+RMB million
+33
+19
+29
+174
+9
+40
+33
+13
+64
+(929)
+(1,130)
+(173)
+(239)
+(192)
+(15)
+(113)
+(119)
+(1,216)
+(721)
+(20)
+6,476
+Profit/(loss) before taxation
+1,958
+130
+Interest expense
+Interest income
+(1,915)
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Turnover
+Depreciation, depletion and amortisation
+41,764
+(52)
+48,758
+(53)
+17,323
+(2,275)
+income
+statement
+RMB million
+15,430
+(2,312)
+1,876
+9,658
+10,725
+41,286
+31,823
+1,821
+(996)
+(782)
+(1,043)
+(1,279)
+(2,754)
+1,363
+1 January 2016
+RMB million
+(1,248)
+(790)
+At 31 December 2016, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 19,194 million
+(2015: RMB 19,338 million), of which RMB 3,833 million (2015: RMB 4,080 million) was incurred for the year ended 31 December 2016, because
+it was not probable that the future taxable profits will be realised. These deductible losses carried forward of RMB 3,777 million, RMB 2,634 million,
+RMB 4,870 million, RMB 4,080 million and RMB 3,833 million will expire in 2017, 2018, 2019, 2020, 2021 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 2016, write-down of deferred tax assets
+amounted to RMB 811 million (2015: RMB 75 million) (Note 10).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+177
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+27 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+Movements in the deferred tax assets and liabilities are as follows:
+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
+Available-for-sale securities
+Others
+Net deferred tax liabilities
+(8,635)
+3,474
+(790)
+282
+(17,496)
+3,857
+Profit/(loss) for the year
+(367)
+Recognised
+4,902
+13
+56
+(733)
+(518)
+(333)
+303
+(56)
+(648)
+(918)
+(1,574)
+870
+(259)
+28
+3,455
+2.411
+(1,847)
+(1,316)
+214
+2,606
+(447)
+Current
+Tax expense
+Accruals
+1,755
+413
+887
+(637)
+250
+(113)
+2,398
+(383)
+11
+(9,131)
+5,883
+-
+(282)
+3
+3
+7
+33
+1,343
+Recognised in
+consolidated
+Balance at
+(282)
+(4)
+Receivables and inventories
+40
+(1,010)
+1
+(1,131)
+155
+(841)
+258
+Property, plant and equipment
+Tax losses carried forward
+Available-for-sale securities
+Non-current
+Others
+Net deferred tax liabilities
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Recognised in
+Cash flow hedges
+Recognised
+consolidated
+in other
+Balance at
+178
+2,883
+31 December 2015
+income comprehensive
+Others
+RMB million
+RMB million
+RMB million
+statement
+RMB million
+RMB million
+1 January 2015
+Balance at
+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 and
+environmental protection.
+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 directors.
+(iii) Transportation and storage represent the cost for the use of railway, road and marine transportation services, pipelines, loading, unloading and storage facilities.
+(iv) Exploration and development services comprise direct costs incurred in the exploration and development such as geophysical, drilling, well testing and well
+measurement services.
+(ii) Purchases represent the purchase of materials and utility supplies directly related to the Group's operations such as the procurement of raw and ancillary
+materials and related services, supply of water, electricity and gas.
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+Note:
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+for the year ended 31 December 2016
+(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 2016 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 114,526 million (2015: RMB 112,089 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 96,023
+million (2015: RMB 93,061 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 6,584
+million (2015: RMB 6,754 million), operating lease charges for land and buildings paid by the Group of RMB 10,474 million and RMB 449
+million (2015: RMB 10,618 million and RMB 462 million), respectively and interest expenses of RMB 996 million (2015: RMB 1,194 million);
+and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 56,251 million (2015: RMB 77,747 million),
+comprising RMB 56,010 million (2015: RMB 77,513 million) for sales of goods, RMB 209 million (2015: RMB 207 million) for interest income
+and RMB 32 million (2015: RMB 27 million) for agency commission income.
+34 RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+185
+(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.
+At 31 December 2016 and 2015, 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 33.
+(vii) Operating lease charges represent the rental paid to Sinopec Group Company for operating leases in respect of land, buildings and equipment.
+(3) where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+(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 2016 was RMB 40,073 million (2015: RMB 18,303 million).
+•
+The amounts set out in the table above in respect of the year ended 31 December 2016 and 2015 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+•
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+34 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+186
+(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%.
+•
+(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 2016.
+The terms of these agreements are summarised as follows:
+(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.
+(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.
+(57,881)
+10,618
+Net loans repaid to related parties
+10,474
+(vii)
+6,754
+6,584
+(vi)
+10,880
+10,816
+(v)
+37,444
+27,201
+(iv)
+1,299
+1,333
+(iii)
+92,627
+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.
+118,242
+(vii)
+(14,082)
+449
+(vii)
+Net deposits placed with related parties
+Interest expense
+(24,877)
+(xi)
+(21,770)
+(ix)
+1,194
+996
+(x)
+207
+209
+(ix)
+116
+129
+(viii)
+302
+456
+462
+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.
+187
+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.
+•
+sales and purchases of goods and ancillary materials;
+•
+Apart from transactions with Sinopec Group Company and fellow subsidiaries, the Group has transactions with other state-controlled entities,
+include but not limited to the followings:
+The Group is a state-controlled energy and chemical enterprise and operates in an economic regime currently dominated by entities directly
+or indirectly controlled by the PRC government through its government authorities, agencies, affiliations and other organisations (collectively
+referred as "state-controlled entities").
+(d) Transactions with other state-controlled entities in the PRC
+34 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+188
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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 35. As at 31 December 2016 and 2015, the accrual for the contribution to
+post-employment benefit plans was not material.
+(c) Contributions to defined contribution retirement plans
+5,735
+6,147
+RMB'000
+5,225
+510
+rendering and receiving services;
+2015
+•
+•
+(ii)
+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 comprises the trading activities of the import and export companies of the Group and research and
+development undertaken by other subsidiaries.
+(iv) Chemicals, which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products mainly to
+external customers.
+(iii) Marketing and distribution, which owns and operates oil depots and service stations in the PRC, and distributes and sells refined petroleum
+products (mainly gasoline and diesel) in the PRC through wholesale and retail sales networks.
+(ii) Refining, which processes and purifies crude oil, that is sourced from the exploration and production segment of the Group and external
+suppliers, and manufactures and sells petroleum products to the chemicals and marketing and distribution segments of the Group and external
+customers.
+(i) Exploration and production, which explores and develops oil fields, produces crude oil and natural gas and sells such products to the refining
+segment of the Group and external customers.
+In a manner consistent with the way in which information is reported internally to the Group's chief operating decision maker for the purposes of
+resource allocation and performance assessment, the Group has identified the following five reportable segments. No operating segments have been
+aggregated to form the following reportable segments.
+Segment information is presented in respect of the Group's business segments. The format is based on the Group's management and internal
+reporting structure.
+36 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 17.0% to 24.0% 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 2016 were RMB 8,385 million (2015: RMB
+7,878 million).
+35 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.
+•
+depositing and borrowing money; and
+lease of assets;
+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.
+2016
+RMB'000
+5,648
+499
+Short-term employee benefits
+9,084
+13,430
+22,393
+10,978
+RMB million
+31 December
+2016
+Long-term loans excluding current portion from Sinopec Group Company and fellow subsidiaries
+Total
+from Sinopec Group Company and fellow subsidiaries
+Short-term loans and current portion of long-term loans
+Other long-term liabilities
+Accrued expenses and other payables
+Trade accounts payable
+Total
+Prepaid expenses and other current assets
+Long-term prepayments and other assets
+Trade accounts receivable
+31 December
+2015
+RMB million
+Amounts due from/to Sinopec Group Company and fellow subsidiaries, associates and joint ventures included in the following accounts captions
+are summarised as follows:
+20,385
+Retirement scheme contributions
+17,760
+49,237
+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:
+(b) Key management personnel emoluments
+As at and for the year ended 31 December 2016, and as at and for the year ended 31 December 2015, 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 28.
+130,107
+114,359
+44,300
+44,772
+43,929
+18,580
+8,226
+9,998
+20,457
+21,590
+13,195
+19,419
+44,793
+RMB million
+211,197
+Exploration and development services
+(i)
+Amounts due to Sinopec Group Company and fellow subsidiaries
+Amounts due to associates and joint ventures
+Bills payable
+Trade accounts and bills payables measured at amortised cost
+The ageing analysis of trade accounts and bills payables are as follows:
+31 December
+2016
+RMB million
+154,882
+13,168
+Amounts due to third parties
+31 December
+RMB million
+117,342
+10,348
+6,251
+2,868
+174,301
+5,828
+180,129
+130,558
+31 December
+2016
+2015
+RMB million
+29 TRADE ACCOUNTS AND BILLS PAYABLES
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Less: Current portion
+No loans at 31 December 2016
+44,922
+44,350
+186
+(150)
+(236)
+44,772
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+44,300
+139,746
+Short-term and long-term bank loans, loans from Sinopec Group Company and fellow subsidiaries are primarily unsecured and carried at amortised
+cost.
+Note:
+(i) The Company issued 180-day corporate bonds of face value RMB 10 billion to corporate investors in the PRC debenture market on 23 September 2015 at par value of
+RMB 100. The effective cost of the 180-day corporate bonds is 2.99% per annum. The short-term bonds were due on 23 March 2016 and have been fully paid by the
+Group at maturity.
+The Company issued 182-day corporate bonds of face value RMB 16 billion to corporate investors in the PRC debenture market on 14 December 2015 at par value of
+RMB 100. The effective cost of the 182-day corporate bonds is 2.90% per annum. The short-term bonds were due on 14 June 2016 and have been fully paid by the
+Group at maturity.
+The Company issued 180-day corporate bonds of face value RMB 4 billion to corporate investors in the PRC debenture market on 31 December 2015 at par value of
+RMB 100. The effective cost of the 180-day corporate bonds is 2.75% per annum. The short-term bonds were due on 30 June 2016 and have been fully paid by the
+Group at maturity.
+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
+(ii) These corporate bonds are carried at amotised cost. At 31 December 2016, RMB 18,985 million (USD denominated corporate bonds) are guaranteed by Sinopec
+Group Company.
+117,446
+USD denominated
+3,566
+134,124
+Within 1 month or on demand
+1,457
+52,827
+58,778
+21,468
+23,912
+77,309
+85,332
+46,835
+1,396
+31,444
+92,688
+4,472
+2,750
+224,544
+212,214
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+181
+Financial Statements (International)
+95,928
+31 December
+2015
+1,185
+RMB million
+Between 1 month and 6 months
+Over 6 months
+30 ACCRUED EXPENSES AND OTHER PAYABLES
+Salaries and welfare payable
+Interest payable
+Payables for constructions
+Other payables
+Financial liabilities carried at amortised costs
+1,618
+Taxes other than income tax
+Derivative financial instruments
+RMB million
+159,953
+12,693
+7,483
+180,129
+115,412
+13,682
+5,030
+134,124
+31 December
+2016
+RMB million
+31 December
+2015
+Receipts in advance
+Interest rates ranging from interest free to
+5.75% per annum at 31 December 2016
+with maturities through 2021
+95,446
+72,674
+RMB denominated
+2,858
+10,806
+USD denominated
+13,577
+32,878
+HKD denominated
+EUR denominated
+43,693
+Singapore Dollar ("SGD") denominated
+5
+5
+4
+21
+Current portion of long-term loans
+RMB denominated
+USD denominated
+150
+1,969
+236
+18,430
+Loans from Sinopec Group Company and fellow subsidiaries
+7,855
+8,795
+5,613
+8,753
+5,559
+42
+54
+29,500
+Short-term loans
+4,868
+4,868
+38,295
+10,481
+Corporate bonds (i).
+6,000
+30,000
+56,239
+71,517
+29,500
+150
+50
+186
+Corporate bonds (ii)
+RMB denominated
+Fixed interest rates ranging from 3.30% to
+5.68% per annum at 31 December 2016
+with maturity through 2022
+65,500
+65,500
+USD denominated
+Fixed interest rates ranging from 1.25% to
+4.25% per annum at 31 December 2016
+with maturities through 2043
+461
+17,806
+18,985
+84,485
+88,121
+Total third parties' long-term debts
+Less: Current portion
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+RMB denominated
+110,969
+105,927
+(38,295)
+(10,481)
+22,621
+26,484
+426
+17,345
+18,580
+43,929
+74,819
+115,446
+The Group's weighted average interest rates on short-term loans were 2.42% (2015: 1.7%) at 31 December 2016. The above borrowings are
+unsecured.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+179
+Financial Statements (International)
+Financial Statements (International)
+180
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+28 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
+4.41% per annum at 31 December 2016
+with maturities through 2030
+Interest rates ranging from 1.30% to
+4.29% per annum at 31 December 2016
+with maturities through 2031
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+26,058
+Financial Statements (International)
+194,179
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+31 PROVISIONS
+31 December
+2016
+31 December
+2015
+RMB million
+RMB million
+263
+283
+123
+Contingent liabilities
+125
+32
+24
+22
+25
+21
+867
+834
+1,327
+25
+1,317
+Between two and three years
+Between three and four years
+Between four and five years
+Thereafter
+Within one year
+Authorised but not contracted for
+31 December
+2016
+RMB million
+116,379
+31,720
+31 December
+2015
+RMB million
+113,017
+47,043
+148,099
+Between one and two years
+160,060
+Note:
+(i) The investment commitments of the Group is RMB 4,173 million (2015: RMB 4,089 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 Land and Resources. The maximum term of the Group's exploration
+licenses is 7 years, and may be renewed twice within 30 days prior to expiration of the original term with each renewal being for a two-year term.
+The Group is obligated to make progressive annual exploration investment relating to the exploration blocks in respect of which the license is
+issued. The Ministry of Land and Resources also issues production licenses to the Group on the basis of the reserve reports approved by relevant
+authorities. The maximum term of a full production license is 30 years unless a special dispensation is given by the State Council. The maximum
+term of production licenses issued to the Group is 80 years as a special dispensation was given to the Group by the State Council. The Group's
+production license is renewable upon application by the Group 30 days prior to expiration.
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Land and Resources annually
+which are expensed. Payments incurred were approximately RMB 333 million for the year ended 31 December 2016 (2015: RMB 372 million).
+Estimated future annual payments are as follows:
+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.
+Authorised and contracted for (i)
+At 31 December 2016 and 2015, guarantees by the group in respect of facilities granted to the parties below are as follows:
+RMB million
+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
+Production related services
+34 RELATED PARTY TRANSACTIONS
+Ancillary and social services
+Operating lease charges for buildings
+Other operating lease charges
+Agency commission income
+Interest income
+Note
+2016
+2015
+RMB million
+Operating lease charges for land
+31 December
+2016
+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.
+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 6,358
+million in the consolidated financial statements for the year ended 31 December 2016 (2015: RMB 5,813 million).
+31 December
+2015
+RMB million
+Joint ventures
+Associates(ii)
+Others
+658
+703
+11,545
+10,669
+6,010
+22,872
+Legal contingencies
+6,713
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+33 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+Contingent liabilities (Continued)
+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 2016 and 2015, 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.
+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 2016, the amount withdrawn by Zhongtian Synergetic Energy and guaranteed by the Group was RMB 11,545 million.
+Environmental contingencies
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December 2016 and 2015, capital commitments are as follows:
+Capital commitments
+33 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+Registered, issued and fully paid
+95,557,771,046 listed A shares (2015: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 listed H shares (2015: 25,513,438,600) of RMB 1.00 each
+RMB million
+RMB million
+95,558
+25,513
+121,071
+95,558
+25,513
+121,071
+31 December
+2015
+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.
+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.
+182
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+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.
+32 SHARE CAPITAL (Continued)
+31 December
+2016
+121
+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
+Utilised for the year
+Exchange adjustments
+Balance at 31 December
+32 SHARE CAPITAL
+2016
+33,115
+2015
+RMB million
+3,420
+29,613
+2,899
+1,057
+1,081
+(843)
+(599)
+169
+36,918
+RMB million
+33,115
+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, 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.
+13,265
+13,966
+13,199
+13,217
+13,091
+12,980
+12,430
+275,570
+14,228
+284,300
+350,022
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+183
+Financial Statements (International)
+Financial Statements (International)
+184
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+344,878
+13,737
+14,917
+2015
+RMB million
+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.
+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 2016, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 14.2 % (2015:
+17.1 %) and 44.5% (2015: 45.5%), respectively.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 28 and 33, 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.
+33 COMMITMENTS AND CONTINGENT LIABILITIES
+Operating lease commitments
+The Group leases land and buildings, service stations and other equipment through non-cancellable operating leases. These operating leases do not
+contain provisions for contingent lease rentals. None of the rental agreements contains escalation provisions that may require higher future rental
+payments.
+At 31 December 2016 and 2015, the future minimum lease payments under operating leases are as follows:
+Between one and two years
+Between two and three years
+Between three and four years
+Between four and five years
+Thereafter
+31 December
+2016
+31 December
+RMB million
+for the year ended 31 December 2016
+Within one year
+Current portion of long-term bank loans
+1,013
+11,824
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+28 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES
+Short-term debts represent:
+31 December
+2016
+31 December
+2015
+RMB million
+RMB million
+Third parties' debts
+Short-term bank loans
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+US Dollar ("USD") denominated
+11,357
+10,931
+31,036
+11,944
+USD denominated
+RMB denominated
+Current portion of long-term corporate bonds
+USD denominated
+RMB denominated
+Financial Statements (International)
+Euro ("EUR") denominated
+RMB denominated
+2015
+Region
+Gross
+Net
+Gross
+China
+4,966
+4,758
+Net
+4,727
+Consolidated subsidiaries
+4,966
+2016
+4,932
+4,758
+4,727
+4,932
+Natural gas production wells (as of 31 December)
+Equity accounted entities
+6,885
+56,575
+18,115
+Overseas
+7,432
+3,614
+6,913
+3,122
+Consolidated subsidiaries
+3,107
+52,784
+28
+28
+15
+Puguang
+7,404
+Total
+57,353
+3,600
+53,535
+14
+57
+175
+55
+Unit: Square kilometers
+Regions with exploration licenses
+China
+Regions with development licenses
+China
+Overseas
+(2) Refining
+In 2016, the Company completed GB V
+automobile gasoline and diesel quality.
+upgrading program ahead of schedule
+and actively promoting VI automobile
+gasoline and diesel quality upgrading
+in Beijing. We advanced the adjustment
+of our product structure and increased
+output of gasoline (especially premium
+gasoline) and kerosene, with the diesel-
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Summary of Operations for the Refining Segment
+Area under license
+(as of 31 December)
+2016
+2015
+742,588
+857,420
+742,588
+857,420
+to-gasoline ratio further declining to
+1.19. We actively responded to the
+challenges of abundant market supply,
+and succeeded in maintaining the
+utilisation rate at a high level. Meanwhile,
+through superior feedstock optimisation
+by our international trading business, we
+further cut crude procurement costs and
+achieved moderate increases in product
+exports. We brought our centralised
+57
+Business Review and Prospects
+Business Review and Prospects
+55
+Fuling
+253
+253
+18,115
+175
+Others
+14
+Total
+4,622
+4,528
+4,932
+4,758
+4,497
+4,727
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+13
+4,656
+4,966
+17,902
+49,662
+Others
+152
+28
+50
+78
+8000008
+21
+35
+110
+117
+2
+0
+0
+0
+2
+0
+140
+75
+110
+138
+110
+21
+Others
+50
+117
+Overseas
+0
+Consolidated subsidiaries
+78
+0
+0
+Total
+78
+140
+88222020
+78
+138
+Equity accounted entities
+17,902
+155
+110
+49,921
+Net
+49,921
+Gross
+Net
+49,662
+49,662
+Consolidated subsidiaries
+Gross
+Shengli
+49,921
+49,662
+33,305
+32,019
+32,019
+31,547
+31,547
+49,921
+22223035
+China
+2015
+152
+110
+152
+35
+23
+75
+129
+Region
+0
+223010.
+0
+1
+110
+153
+Oil production wells (as of 31 December)
+2016
+0
+30,730
+Unit: million tonnes
+25,748
+of synthetic fiber reaching 86.5% and
+the specialty and new products as a
+percentage of synthetic resins reaching
+61.4%. By implementing low-inventory
+and differentiated marketing strategies,
+our full-year chemical sales volume
+increased by 11.3% from the previous
+year to 69.96 million tonnes, with all
+produced chemicals sold.
+Unit: thousand tonnes
+Change from
+2014 2015 to 2016 (%)
+Ethylene
+Synthetic resin
+Synthetic rubber
+Synthetic fiber monomer and polymer
+Synthetic fiber
+0.2
+Note: Includes 100% of the production of domestic joint ventures.
+In 2016, the Company pushed ahead
+with its innovation-driven strategy,
+continuing to advance its R&D activities
+with notable results. In our upstream
+business, our development in shale
+gas exploration technologies enabled.
+us to make breakthroughs in shale gas
+exploration in Yongchuan, Chongqing,
+the breakthrough in Ordovician oil
+and gas reservoir formation theory
+and exploration technologies led us
+to the discovery of the Shunbei field.
+In refining, we applied technologies
+such as for production of high-octane
+gasoline from FCC diesel. In chemicals,
+we commercialised the production of
+ethylene glycol from syngas, adopted
+butadiene tail-gas selective hydrogenation
+technologies, employed technologies to
+produce light olefins from coal as well
+as olefin catalytic cracking technologies,
+and developed new products including
+2016
+11,059
+2015
+11,118
+10,698
+15,201
+15,065
+(5) Research and Development
+14,639
+maximising production of high-value-
+added products tailored to market
+demands, and intensified its efforts to
+enhance research and development,
+production, marketing and sales of high
+value added new products, achieving
+good results. Ethylene output was 11.059
+million tonnes, with the differential ratio
+30,551
+Change from
+Total number of service stations under the Sinopec brand
+Number of company-operated stations
+(4) Chemicals
+In 2016, we accelerated development of
+basic and high-end chemicals to promote
+effective supply, and we optimised the
+operations of our facilities based on
+their profit margins. The Company fine-
+tuned its chemical feedstock mix to
+lower costs, optimised product mix by
+Summary of Operations for the Chemicals Segment
+2014
+the end of the
+previous year
+30,538
+to the end of
+the reporting
+period (%)
+0.1
+31 December
+31 December
+2016
+2015
+30,603
+30,597
+30,560
+30,547
+31 December
+857
+843
+939
+BUSINESS PROSPECTS
+(1) Market Outlook
+Looking ahead to 2017, we expect even
+more uncertainty in the global economy
+while China's economy maintains its
+steady growth. International oil prices are
+expected to fluctuate at a low level, with
+domestic demand for refined oil products
+continuing to grow as the consumption
+structure undergoes further adjustments.
+Domestic demand for petrochemical
+products will increase steadily as the
+consumption structure gradually shifts
+towards the high end.
+(2) Operations
+In 2017, bearing in mind structural
+reforms on the supply side, the Company
+will focus on enhancing quality and
+profitability of our assets, cost reduction,
+market expansion, structural adjustments,
+reforms, and consolidating the basis for
+further growth. We will undertake the
+following work during the year:
+Exploration and Production: We will
+maintain exploration activities, optimising
+our plans to achieve high-efficiency
+exploration. Our goal will be discovery of
+low-cost, large-scale reserves to expand
+our resources. In oil development, we
+will fine-tune development plans based
+on oil price trends and promote oilfield
+development by increasing the volume
+and profitability of both incremental and
+existing reserves. In gas development,
+we will advance key projects for capacity
+construction, refine the management of
+developed gas fields and optimise gas
+production and marketing plans. In 2017,
+we plan to produce 294 million barrels of
+crude oil, of which overseas production
+will account for 46 million barrels. We
+plan to produce 879.9 billion cubic feet
+of natural gas.
+In 2016, focusing on quality and
+profitability of investment, the Company
+continuously optimised its investment
+projects. Total capital expenditures were
+RMB 76.456 billion. Capital expenditures
+for the exploration and production
+segment were RMB 32.187 billion,
+mainly for Fuling shale gas and Yuanba
+gas field development projects and LNG
+terminal projects in Guangxi and Tianjin,
+as well as overseas projects. Capital
+expenditures for the refining segment
+were RMB 14.347 billion, mainly for
+gasoline and diesel quality upgrading
+projects, adjustments in the product
+mix and refinery revamping projects.
+Capital expenditures for the marketing
+and distribution segment were RMB
+18.493 billion, mainly for constructing
+and renovating service stations and
+building refined oil product pipelines,
+depots and storage facilities, as well as
+for rectification of safety hazards. Capital
+expenditures for the chemicals segment
+were RMB 8.849 billion, mainly for
+adjustment of the feedstock and product
+structure, the Ningdong coal chemical
+project and the Zhongtianhechuang coal
+to chemical project. Capital expenditures
+for the corporate and others segment
+were RMB 2.58 billion, mainly for R&D
+facilities and information technology
+application projects.
+Refining: We will continue with
+our market-oriented, profitability.
+driven strategy to optimise crude oil
+procurement and resource allocation and
+to lower our purchasing costs. We will
+comprehensively adjust our production
+plans to ensure safe and reliable
+operations. We will enhance our product
+structure by increasing the production of
+jet fuel and gasoline (especially premium
+gasoline) and further lowering the diesel-
+to-gasoline ratio. We will accelerate the
+quality and supply of GB VI gasoline
+and diesel in Beijing and GB V regular
+diesel in other area. In 2017, we plan
+to process 240 million tonnes of crude
+and produce 150 million tonnes of oil
+products.
+Business Review and Prospects
+Marketing and Distribution: We will
+intensify our marketing strategy of
+balancing profits and volume, with the
+priority on profits. We will undertake
+measures to fully explore markets,
+expand our retail volume and increase
+our market share. We will further improve
+our marketing network to reinforce
+our advantages. We will accelerate
+construction of gas stations to strengthen
+our presence in the CNG/LNG market.
+We will step up the promotion of key
+merchandise and self-branding and
+boost the growth of our emerging
+business. We will explore building a
+new type of customer service center,
+employ techniques of Big Data analysis
+to conduct precision marketing and
+further our transformation into a modern
+comprehensive services provider. In
+2017, we plan to sell 175 million tonnes
+of oil products in the domestic market.
+Chemicals: We will continue to adjust
+our feedstock mix to lower costs, fine-
+tune our product slate to deliver more
+popular, profitable and high-value-added
+products, optimise our facility utilisation
+rate, shut down facilities which have no
+marginal contributions. We will deepen
+the adjustment on sector structure,
+through advancing the development of
+fine chemicals and biochemicals, and
+improving operations of our coal-chemical
+projects. Meanwhile, we will enhance our
+strategies of product differentiation and
+precision marketing, and provide our
+customers with full process solutions and
+value-added services. In 2017, we plan to
+produce 11.66 million tonnes of ethylene.
+Research and Development: We will
+continue to implement our strategy
+of development driven by innovation,
+improving mechanisms for technological
+innovation and fast-tracking key technical
+breakthroughs. In exploration and
+production, we will focus on increasing
+reserves and production and pushing
+ahead with breakthroughs in enhanced oil
+recovery technologies and development
+of difficult-to-tap reserves. In refining,
+R&D initiatives will address processing
+of heavy crude oil, quality upgrading of
+oil products and optimisation of product
+slate. In chemicals we will focus on
+adjustments in our product mix along
+with further progress in R&D for basic
+chemicals, synthetic materials, coal-
+chemicals, fine chemicals and bio-
+chemicals. We also expect to make
+progress in safety, environmental and
+energy-conserving technologies as well
+as prospective and basic research to
+enhance our capabilities for innovation
+and to achieve new R&D breakthroughs.
+Capital Expenditures: In 2017, we
+will devote attention to the quality
+and profitability of investments, and
+optimise our investment projects. Capital
+expenditures for the year are budgeted
+at RMB 110.2 billion. The exploration
+and production segment will account
+for expenditures of RMB 50.5 billion,
+mainly for Phase II of Fuling shale
+gas development, Tianjin LNG project,
+and gas storage project, and overseas
+oil and gas project development. The
+refining segment will account for RMB
+22.8 billion, mainly for building of
+refining bases, structural adjustments
+in the refining business, and revamping
+of refineries as well as GB VI quality
+upgrading of oil products. The marketing
+and distribution segment will account
+for RMB 18 billion, mainly for revamping
+service stations, improving pipeline
+network, building oil tank farms and
+removing safety hazards. The chemicals
+segment will account for RMB 15.1
+billion, mainly for the integrated refining
+and chemical project in Zhanjiang of
+Guangdong Province, the integrated
+refining and chemical project in Gulei of
+Fujian Province and the high-efficiency
+and environmentally friendly aromatics
+project in Hainan refinery. The corporate
+and others segment will account for
+RMB 3.8 billion, mainly for R&D and
+Information technology projects.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+17
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(7) Capital Expenditures
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+9,275
+1,242
+8,994
+1,282
+8,383
+1,315
+environmentally friendly polypropylene
+resin with high stiffness and tenacity,
+and a specialty resin used in high-
+performance medical spun-bond non-
+woven fabrics. In 2016, the Company
+filed 5,612 patent applications at
+home and abroad, of which 3,942 were
+granted. The Company also won four
+second prizes in the National Technology
+and Innovation Awards and one golden
+award and nine excellent patent awards
+in China's Patent Award competition.
+(6) Health, Safety and the Environment
+In 2016, the Company fully followed
+its safe production and accountability
+scheme, strengthened the identification
+and control of risks, completed the
+rectification of potential hazards from oil
+and gas pipelines, further push forward.
+management on potential hazards
+from oil storage tanks, reinforced on.
+site supervision and management, and
+(0.5)
+0.9
+1.7
+3.1
+(3.1)
+achieved overall safe production and
+operations. We standardised measures
+to enhance worker protection and
+improved occupational health safeguards
+for our employees. By implementing
+its green, low-carbon strategy, the
+Company established a more stringent
+environmental protection management
+system, completed Clear Water, Blue Sky
+environmental protection project, and
+met emission reduction targets for major
+pollutants. Compared with last year,
+energy intensity was reduced by 1.59%,
+industrial water consumption was down
+by 1.1%, COD in discharged water was
+down by 3.86%, sulfur dioxide emissions
+were down by 4.84%, and all hazardous
+chemicals, discharged water, gas, and
+solid wastes were properly treated. For
+more detailed information, please refer
+to our Communication on Progress for
+Sustainable Development.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+15
+Business Review and Prospects
+16
+0.8
+28,436
+3,858
+3,926
+236.49
+235.38
+(0.4)
+149.17
+148.38
+146.23
+0.5
+235.53
+56.36
+51.22
+4.4
+67.34
+70.05
+74.26
+(3.9)
+25.47
+53.98
+24.35
+2014
+2016
+4,869
+4,982
+marketing advantages fully into play
+to further improve margins for LPG,
+asphalt and other products. In 2016, the
+company processed 236 million tonnes of
+crude and produced 149 million tonnes
+of refined oil products, up by 0.53% from
+the previous year, with gasoline up by
+4.4% and kerosene up by 4.6%.
+28
+Change from
+2015 to 2016 (%)
+Refinery throughput
+Gasoline, diesel and kerosene production
+2015
+Gasoline
+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 2016, the company actively responded
+to changes in the market environment
+to bring our advantages in integrated
+business and distribution network into full
+play, achieving solid operating results. We
+optimised internal and external resources
+and achieved growth in both total sales
+volume and retail scale. We made
+timely adjustments to our marketing
+Diesel
+20.75
+4.6
+38.54
+Total domestic sales volume of oil products (million tonnes)
+172.70
+171.37
+170.97
+0.8
+Retail sales (million tonnes)
+120.14
+2.9
+119.03
+0.9
+Direct sales and distribution (million tonnes)
+52.56
+52.34
+53.13
+0.4
+Annual average throughput per station (tonne/station)
+117.84
+189.17
+189.33
+194.84
+38.81
+39.17
+(0.7)
+76.33
+76.50
+94.70
+94.75
+strategies, promoted effective supply
+and further expanded the retail volume
+of premium gasoline. We also improved
+our marketing network by accelerating
+the planning and construction of service
+stations and refined oil product pipelines.
+We expanded natural gas retail business
+for automobiles by expediting the
+construction and operation of CNG/LNG
+stations, achieving 25% growth in sales
+volume of natural gas for automobiles.
+In 2016, the total sales volume of oil
+products was 195 million tonnes, of
+which domestic sales accounted for 173
+million tonnes. Our emerging business
+maintained its rapid growth with
+increased scale and profits. Emerging
+business transaction volume reached
+RMB 35.1 billion, up by 41.4% from the
+previous year.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Summary of Operations for the Marketing and Distribution Segment
+Change from
+2016
+2015
+2014
+2015 to 2016 (%)
+Total sales volume of oil products (million tonnes)
+3,896
+Shengli
+Exploratory Development
+78
+Others
+Overseas
+Consolidated subsidiaries
+Equity accounted entities
+Items
+Proved reserves
+Proved developed reserves
+Consolidated subsidiaries
+Shengli
+China
+Fuling
+Others
+Overseas
+Consolidated subsidiaries
+Equity accounted entities
+Proved developed reserves
+China
+Consolidated subsidiaries
+Consolidated subsidiaries
+Puguang
+Fuling
+China
+Equity accounted entities
+increased our production of natural gas.
+We also completed the mixed ownership
+reform of Sichuan-to-East China Pipeline
+Co. and improved our asset profitability.
+The Company's production of oil and
+gas declined to 431.29 million barrels
+of oil equivalent, with domestic crude
+production down by 14.6% from the
+previous year and natural gas production
+up by 4.3%.
+Oil and gas production (mmboe)
+Crude oil production (mmbbls)
+China
+Overseas
+Natural gas production (bcf)
+Summary of Reserves of Crude Oil and Natural Gas
+Proved undeveloped reserves
+Items
+Proved developed reserves
+China
+Consolidated subsidiaries
+Shengli
+Others
+Overseas
+Consolidated subsidiaries
+Proved reserves
+Summary of Operations for the Exploration and Production Segment
+Others
+Consolidated subsidiaries
+Equity accounted entities
+49.86
+(5.2)
+766.12
+734.79
+716.35
+4.3
+Crude oil reserves (mmbbls)
+53.13
+31 December 2016
+1,552
+2,243
+1,393
+2,013
+1,080
+1,701
+1,080
+31 December 2015
+Overseas
+50.36
+310.87
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Change from
+2016
+2015
+2014
+2015 to 2016 (%)
+431.29
+(14.6)
+471.91
+(8.6)
+303.51
+349.47
+360.73
+(13.2)
+253.15
+296.34
+480.22
+in the Xinjiang Tahe Basin, the Beibu
+Gulf in Guangxi and the Yin-E Basin
+in Neimongol, along with new shale
+gas findings in the Yongchuan block in
+Sichuan. In development, we adopted a
+profit-oriented approach, adjusting the
+development structure, enhancing cost
+discipline, and cutting low-efficiency oil
+production and high-cost EOR operations.
+We implemented Phase Two of Fuling
+Shale Gas development project and
+number of important new discoveries
+In 2016, faced with low oil prices and
+coped with harsh conditions in the
+upstream sector, we strengthened
+measures to rein in costs and address
+our weaknesses. At the same time,
+we gave priority to high-efficiency
+exploration activities and made a
+(1) Crude Oil Market
+In 2016, international crude oil prices
+bottomed out and fluctuated upwards,
+yet still remained at a low level. The
+average spot price of Platt's Brent for the
+year was USD 43.69 per barrel, down by
+16.7% from the previous year.
+(2) Refined Oil Products Market
+In 2016, domestic demand for refined
+oil products maintained its growth while
+the structure of consumption continued
+to change, and market supply was in
+surplus. According to our statistics,
+apparent consumption of refined oil
+products (including gasoline, diesel and
+kerosene) was 288 million tonnes, up
+by 4.3% from the previous year, with
+gasoline up by 11.9%, kerosene up by
+11.0% and diesel down by 2.2%. The
+government further improved the pricing
+mechanism for refined oil products by
+setting the floor price. In 2016, the
+government made 15 price adjustments
+with 10 increases and 5 decreases.
+(3) Chemical Products Market
+In 2016, domestic demand for chemicals
+grew steadily. According to our statistics,
+domestic apparent consumption of
+ethylene equivalent was up by 3.0%
+from the previous year, and consumption
+of synthetic resin, synthetic fiber and
+synthetic rubber rose by 5.1%, 2.6% and
+7.5%, respectively. Domestic chemical
+product prices decreased compared with
+the previous year, but experienced an
+upward trend, in line with movements of
+international chemical product prices.
+45
+MARKET REVIEW
+35
+25
+USD/barrel
+95
+85
+55
+75
+65
+55
+55
+1
+BUSINESS REVIEW
+facilities. In the chemical business, we adhered
+to development of basic and high-end chemicals.
+We further increased the proportion of high end
+products from three major synthetic materials.
+As we enhanced our efforts in new product
+development, we pressed ahead with integration
+of production, sales, research and consumption,
+striving to offer comprehensive solutions to
+customers. Meanwhile, we continuously adapted
+our marketing initiatives to reflect the latest
+market trends. With our superior network,
+we delivered more environmentally friendly
+premium gasoline products to the market. In
+addition, we complemented our marketing
+activities by growing our emerging businesses.
+We continuously expanded our business types
+and product varieties in an aim to provide one-
+stop service to our customers. Transaction value
+of our emerging business surged by 41%. These
+results mark an important milestone for us in
+our development as an comprehensive service
+provider.
+In 2016, the Company further enhanced
+cooperation with our business partners. In our
+overseas operations, we were actively involved
+in expanding projects across the Belt and Road
+region and we continued to make progress in
+developing a number of major projects, such
+as the Yanbu refinery in Saudi Arabia, which
+commenced operations during the year. In our
+domestic businesses, the Company further
+strengthened its mixed-ownership operations
+and partnered with 14 provinces and cities in
+China to drive the development of our natural
+gas business. We brought in new investors to
+Sichuan-to-East China Pipeline Co., raising RMB
+22.8 billion. Meanwhile, Sinopec Marketing Co.
+Ltd.'s shareholding reform progressed smoothly.
+While we have continued developing our refining
+and chemical production bases and shifting our
+focus towards mid-range and high-end products,
+we increased our efforts to find additional
+opportunities for cooperation in various sectors
+with the aim of enabling all participants to enjoy
+the benefits of shared development.
+In 2016, the Company continued to improve
+its management and operating efficiency. We
+diligently promoted a corporate culture of
+rigorousness, meticulousness and pragmatism,
+thus ensuring that we conducted our operations
+in compliance with applicable laws and
+regulations. At the same time, we integrated our
+internal control and risk management systems
+and further improved our controls on investment
+and financial management. We also increased
+our efforts to promote information-based,
+intelligent operations throughout the Company
+and to develop our data sharing platform. As
+a result, we achieved effective control over our
+expenses and kept inventories at reasonable
+levels. Moreover, we enjoyed abundant free cash
+flow and maintained the ratio of liabilities to
+assets at a low level.
+Over the past year, the Company actively
+fulfilled its social responsibilities and firmly
+established itself as a good corporate
+citizen. We advanced our green, low-carbon
+development initiatives as we delivered more
+environmentally friendly products. We also
+successfully concluded our Clear Water, Blue
+Sky environmental campaign, achieving further
+declines in the emissions of major pollutants.
+We stressed the importance of biodiversity and
+strove to minimise the environmental impact
+of our operations. Meanwhile, we continued
+to open up the Company to public scrutiny.
+As a people-oriented enterprise, we reinforced
+workplace safety for our employees and secured
+their legitimate rights and interests. In 2016,
+we earmarked a total of RMB 6.584 billion
+to promote social, educational, medical and
+healthcare development in the areas where we
+have operations. In addition, we stepped up
+targeted measures to combat poverty, reduce
+privation in impoverished areas in Qinghai and
+Tibet, with total donations amounted to RMB
+133 million to help local residents achieve
+sustainable development.
+Looking ahead to 2017, we expect the global
+political and economic landscape to become
+more complex, with international oil prices
+hovering at low levels. Meanwhile, we believe
+that more positive trends will emerge in China's
+economy, driving faster growth in domestic
+demand for petroleum and petrochemical
+products. The Company will adhere to its
+development strategies of value-oriented growth,
+innovation-driven development, integrated
+resource allocation, openness to cooperation,
+and green, low-carbon development. In
+accordance with our objective of progressing at a
+steady pace, we will strive to achieve safety and
+environmental friendly goals, stable production
+and operations, and steady improvements in
+operating results. On top of that, we will actively
+pursue market opportunities and further deepen
+supply-side structural reform. While redoubling
+efforts to implement structural adjustments,
+we will promote technological innovations and
+prudently implement mixed-ownership reforms.
+In addition, we will explore ways to create a
+new business model that will capitalise on our
+finance business to support development of core
+physical operations. These measures will help us
+rejuvenate our operations, enhance our operating
+efficiency and augment the profitability of our
+assets. We will take advantage of opportunities
+that arise from the government's support
+policies, including reforms in the oil and gas
+sector and in state-owned enterprises as well
+as the Belt and Road initiative, to enhance the
+quality and profitability of our business.
+In 2016, global economic recovery continued
+to be weak, while China's economy maintained
+its stable growth, with gross domestic product
+(GDP) up by 6.7%. International oil prices
+fluctuated above their lowest levels. With
+abundant supply, 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 growth
+quality, profitability and restructuring. We
+pressed ahead with measures to address market
+development, optimisation, cost reduction and
+risk control, coordinating all aspects of our
+work, which helped deliver operating results that
+were better than expected.
+In 2017, under the Company's 13th Five-Year
+Plan, our planned capital expenditures will be
+RMB 110.2 billion. We will strive to increase our
+upstream reserves and resource base. We will
+also expand natural gas, especially shale gas,
+businesses to promote gas consumption in the
+Yangtze River Economic Belt. In the refining and
+chemical businesses, we will build four world-
+class refining bases, in Mao Zhan, Zhenhai,
+Shanghai and Nanjing. We will promote further
+upgrades in oil products and improve our
+capability to deliver high-end, high-value-added
+products. At the same time, we will give full
+play of our advantages in the marketing network
+and brand name to supply the market with
+cleaner oil products and reinforce our efforts
+to tap potentials in our emerging businesses
+and transform into an comprehensive services
+provider. Through the implementation of Energy
+Efficiency Doubling Plan and Green Enterprises
+Action Plan, we will endeavor to become the
+leading green, low-carbon operators in the
+industry.
+Wang Yupu
+Chairman
+Beijing, China
+24 March 2017
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+9
+Chairman's Statement
+BUSINESS REVIEW AND PROSPECTS
+The Board of Directors and I believe that through
+the joint efforts of the Board, the management
+and all the staff, coupled with the support of our
+shareholders and the wider community, Sinopec
+Corp. will continue to make progress in its
+various businesses, growing stronger and bigger
+and delivering greater value to our shareholders
+and our society.
+55
+Mr. Dai Houliang, Vice Chairman & President
+2015.1
+WTI-NYMEX
+ICE BRENT
+-- DTD BRENT
+DUBAI
+2016.10
+2016.11
+2016.12
+Trend of International Crude Oil Prices
+2017.1
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016 11
+Business Review and Prospects
+12
+Business Review and Prospects
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+2 PRODUCTION & OPERATIONS REVIEW
+(1) Exploration and Production
+2017.2
+2016.9
+2016.8
+2016.7
+2015.2
+2015.3
+2015.4
+2015.5
+2015.6
+2015.7
+2015.8
+2015.9
+2015.10
+2015.11
+2015.12
+2016.1
+2016.2
+2016.3
+2016.4
+2016.5
+2016.6
+1,701
+138
+801
+279
+73
+1,020
+Others
+100
+76
+339
+1
+150
+223
+781
+Overseas
+2
+1
+99
+0
+0
+122
+1
+5
+73
+6
+373
+195
+1,801
+25
+Consolidated subsidiaries
+266
+462
+149
+6
+373
+195
+1,801
+25
+Shengli
+166
+801
+801
+149
+0
+144
+1,950
+26
+22171018
+Wells being drilled (as of 31 December)
+2016
+2015
+Net
+196
+Gross
+Region
+Exploratory Development Exploratory Development
+Exploratory Development
+China
+78
+138
+Consolidated subsidiaries
+Net
+Consolidated subsidiaries
+373
+900
+0
+0
+0
+0
+0
+5
+Equity accounted entities
+6
+2
+268
+150
+55
+99
+0
+0
+1
+Total
+149
+266
+China
+3
+23
+26
+Natural gas reserves (bcf)
+31 December 2016
+31 December 2015
+7,178
+0
+7,570
+6,457
+6,436
+6,439
+6,436
+6,439
+2,330
+2,470
+6,454
+1,226
+29
+85
+375
+313
+312
+40
+52
+273
+260
+23
+159
+136
+201
+136
+201
+37
+116
+99
+230
+1,016
+2,880
+2,953
+1
+Exploration and Production Activities
+Wells completed (as of 31 December)
+2016
+2015
+Exploratory
+Development
+0
+Exploratory
+Region
+Productive
+Dry Productive
+Dry
+Productive
+Dry Productive
+Dry
+Development
+0
+0
+1
+18
+18
+0
+0
+18
+18
+724
+1,113
+724
+1,112
+724
+1,112
+0
+181
+724
+931
+0
+1,326
+Gross
+76.52 (0.17) percentage points
+94.66 (0.05) percentage points
+9,542
+RMB 10,800
+Sinopec Shanghai Petrochemical Company Limited
+55.00
+RMB 10,000
+Gaoqiao Petrochemical Company Limited (Note 1)
+("Sinopec Kantons")
+60.34
+HKD 248
+Sinopec Kantons Holdings Limited
+Company Limited ("Zhonghan Wuhan")
+Sinopec-SK(Wuhan) Petrochemical
+("Marketing Company")
+Sinopec Marketing Company Limited
+75.00
+50.56
+RMB 3,986
+75.00
+RMB 4,397
+Sinopec Zhanjiang Dongxing Petrochemical
+Company Limited
+Company Limited
+Sinopec Qingdao Refining and Chemical
+Liability Company
+98.98
+RMB 5,294
+Sinopec Beihai Refining and Chemical Limited
+100.00
+RMB 1,400
+China Petrochemical International Company Limited
+100.00
+RMB 1,500
+Sinopec Hainan Refining and Chemical
+Company Limited
+("Shanghai Petrochemical")
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical") (i)
+development of ethylene and
+35.00 Production, sale, research and
+petroleum products
+29.58 Marketing and distribution of refined
+petroleum products
+petrochemical products and
+25.00 Manufacturing of intermediate
+25.00 Manufacturing of intermediate
+petrochemical products and
+petroleum products
+petroleum products
+15.00 Manufacturing of intermediate
+petrochemical products and
+petrochemical products
+Trading of petrochemical products
+1.02 Import and processing of crude oil,
+production, storage and sale of
+petroleum products and
+Production and sale of catalyst products
+Investment holding
+petrochemical products
+Trading of crude oil and
+petrochemical products
+RMB 28,403
+70.42
+RMB 6,270
+65.00
+RMB 5,745
+50.00
+Sinopec Catalyst Company Limited
+Investment in exploration, production
+Pipeline storage and transportation
+of crude oil
+Production and sale of polyester
+chips and polyester fibres
+Production and sale of refined
+petroleum products, lubricant base
+oil, and petrochemical materials
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+Marketing and distribution of
+and sale of petroleum and natural gas
+Coal chemical industry investment
+management, production and sale
+of coal chemical products
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+downstream byproducts
+100.00
+Sinopec Overseas Investment Holding Limited ("SOIH")
+(million)
+RMB 8,000
+Interests held
+At 31 December 2016, the following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the
+Group.
+37 PRINCIPAL SUBSIDIARIES
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+191
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+56,081
+1,085,399
+1,029,318
+2015
+RMB million
+31 December
+Interests
+held by
+by the non-controlling
+Company % interests %
+100.00
+439,519
+2,020,375
+1,000,209
+RMB million
+31 December
+2016
+1,488,117
+442,794
+1,930,911
+1,580,856
+RMB million
+2015
+2016
+RMB million
+Others
+Mainland China
+Non-current assets
+Others
+Mainland China
+External sales
+45,887
+1,046,096
+Principal activities
+RMB 20,739
+100.00
+Chemical Company Limited
+100.00
+RMB 3,000
+China International United Petroleum and
+100.00
+RMB 1,000
+Sinopec Chemical Sales Company Limited
+85.00
+RMB 5,000
+100.00
+RMB 1,595
+Sinopec Qingdao Petrochemical Company Limited
+Sinopec Lubricant Company Limited
+Sinopec Yizheng Chemical Fibre Limited
+Company Limited
+Sinopec Pipeline Storage & Transportation
+100.00
+Name of company
+Sinopec International Petroleum Exploration and
+Production Limited ("SIPL")
+Particulars of
+issued capital
+Sinopec Great Wall Energy & Chemical
+Company Limited
+Sinopec Yangzi Petrochemical Company Limited
+USD 1,638
+RMB 13,203
+Liability Company
+RMB 12,000
+100.00
+RMB 4,000
+100.00
+RMB 3,374
+100.00
+39.66 Trading of crude oil and petroleum
+products
+45.00 Manufacturing of intermediate
+14,763
+17,292
+(53,080)
+(47,106)
+Net current (liabilities)/assets
+(9,885)
+(7,521)
+(3,488)
+(73)
+(812)
+(7,726)
+(8,942)
+(5,468)
+(824)
+5.934
+(156,028)
+Current liabilities
+1,386
+1,489
+1,732
+140
+926
+8,144
+14,876
+20,231
+18.116
+102.948
+121,260
+Current assets
+million
+(168,366)
+418
+114
+67
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+36 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 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:
+Turnover
+Exploration and production
+External sales
+Inter-segment sales
+Refining
+External sales
+Inter-segment sales
+Marketing and distribution
+External sales
+Inter-segment sales
+(1,756)
+(6,032)
+(8,499)
+Non-current assets
+246,514
+Exploration and production
+Refining
+million
+Other operating revenues
+Inter-segment sales
+External sales
+Corporate and others
+Inter-segment sales
+External sales
+Chemicals
+Elimination of inter-segment sales
+Turnover
+million
+million
+million
+December
+December
+December
+December
+At 31
+Zhonghan Wuhan
+At 31
+Sinopec Kantons (ii)
+At 31
+At 31
+Fujian Petrochemical
+At 31
+At 31
+Shanghai Petrochemical
+At 31
+At 31
+At 31
+At 31
+SIPL
+Marketing Company
+At 31
+Summarised consolidated balance sheet
+petrochemical products and
+petroleum products
+49.44 Manufacturing of synthetic fibres,
+resin and plastics, intermediate
+petrochemical products and
+petroleum products
+50.00 Manufacturing of plastics,
+intermediate petrochemical
+products and petroleum products
+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:
+December
+(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.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+37 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.
+192
+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.
+December
+December
+million
+million
+million
+million
+million
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+December
+December
+December
+2016
+2015
+2016
+December
+2015
+2015
+2016
+2015
+2015
+2016
+2015
+2016
+5,146
+16,425
+112
+Other operating revenues
+Turnover and other operating revenues
+2016
+2015
+RMB million
+RMB million
+47,443
+57,740
+58,954
+71,019
+106,397
+128,759
+102,983
+120,650
+Corporate and others
+747,317
+850,300
+921,612
+1,027,373
+3,480
+1,030,853
+1,086,098
+3,056
+1,089,154
+284,289
+276,640
+38,614
+43,814
+322,903
+320,454
+418,102
+436,749
+320,367
+800,962
+Chemicals
+Marketing and distribution
+Aggregate share of profits from associates and joint ventures
+Investment income
+At 31 December
+RMB million
+At 31 December
+2016
+56,411
+(9,239)
+80,151
+(6,611)
+466
+263
+(822)
+350
+34
+41
+119
+70
+90
+(8)
+9.306
+8,362
+- Exploration and production
+24
+835
+- Refining
+345,454
+- Marketing and distribution
+- Corporate and others
+- Elimination
+Aggregate investment income
+Net finance costs
+Profit before taxation
+(4)
+- Chemicals
+738,469
+782,203
+(1,168,732)
+- Chemicals
+- Corporate and others
+- Elimination
+(36,641)
+(17,418)
+56,265
+20,959
+32,153
+28,855
+20,623
+19,476
+3,212
+384
+1,581
+4,566
+Total segment operating profit
+77,193
+3,343
+5,696
+1,379
+2,362
+725
+1,075
+- Marketing and distribution
+- Chemicals
+- Refining
+633
+(1,203)
+- Exploration and production
+Share of profits/(losses) from associates and joint ventures
+56.822
+- Marketing and distribution
+2015
+- Refining
+By segment
+(1,264,305)
+1,880,190
+1,977,877
+2,282
+9,894
+5,486
+5,004
+22,004
+17,512
+12,211
+8,417
+1,478
+1,671
+50,721
+42,498
+1,930,911
+2,020,375
+Operating profit/(loss)
+Result
+2015
+RMB million
+RMB million
+2016
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+- Exploration and production
+36 SEGMENT REPORTING (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+190
+Financial Statements (International)
+189
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+for the year ended 31 December 2016
+240,312
+RMB million
+Segment assets
+2016
+(2) Geographical information
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Impairment losses on long-lived assets
+Corporate and others
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Depreciation, depletion and amortisation
+2015
+Corporate and others
+Marketing and distribution
+Exploration and production
+Refining
+Capital expenditure
+(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.
+36 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+659,107
+667,374
+Total liabilities
+18,923
+20,828
+Other unallocated liabilities
+Chemicals
+RMB million
+RMB million
+32,187
+142
+2,898
+19
+267
+9
+1,655
+4,864
+11,605
+96,460
+108,425
+1,585
+2,093
+12,088
+12,654
+14,075
+14,540
+16,557
+54,710
+14,347
+15,132
+18,493
+22,115
+8,849
+8,259
+17,634
+2,821
+76,456
+112,412
+61,929
+52,155
+17,209
+2,580
+7,661
+Deferred tax liabilities
+88,229
+25,337
+69,666
+142,497
+Cash and cash equivalents and time deposits with financial institutions
+Other unallocated assets.
+7,469
+7,214
+Deferred tax assets
+10,964
+11,408
+Available-for-sale financial assets
+84,293
+116,812
+Interest in associates and joint ventures
+1,255,863
+1,195,341
+108,921
+95,263
+- Exploration and production
+- Refining
+- Marketing and distribution
+- Chemicals
+- Corporate and others
+Total segment assets
+19,013
+402,476
+260,903
+264,573
+292,328
+283,416
+144,371
+151,646
+447,307
+Assets
+Total assets
+1,447,268
+63,352
+Loans from Sinopec Group Company and fellow subsidiaries
+95,446
+72,674
+Long-term debts
+1,048
+6,051
+Income tax payable
+41,517
+56,239
+Short-term debts
+405,685
+440,569
+Total segment liabilities
+104,194
+97,080
+- Corporate and others.
+Liabilities
+Segment liabilities
+- Exploration and production
+- Refining
+95,944
+96,773
+1,498,609
+82,170
+- Marketing and distribution
+133,303
+118,897
+- Chemicals
+32,072
+27,243
+58,578
+- Corporate and others
+40,067
+19,070
+More than 1
+year but less
+than 2 years
+RMB million
+1 year or
+on demand
+RMB million
+cash flow
+RMB million
+RMB million
+amount
+Carrying undiscounted
+Within
+contractual
+Total
+31 December 2015
+Accrued expenses and other payables
+Bills payable
+Trade accounts payable
+and fellow subsidiaries
+More than 2
+years but less
+than 5 years
+RMB million
+Loans from Sinopec Group Company
+Short-term debts
+24,537
+73,331
+29,369
+81,781
+340,887
+81,781
+468,124
+454,175
+81,781
+Accrued expenses and other payables
+5,828
+5,828
+5,828
+Bills payable
+174,301
+Long-term debts
+More than
+5 years
+RMB million
+71,517
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+196
+Financial Statements (International)
+195
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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.
+59,678
+50,432
+41,640
+342,868
+88,082
+88,082
+494,618
+88,082
+477,398
+35,560
+8,795
+95,446
+72,476
+110,678
+72,476
+3,747
+41,176
+41,637
+24,118
+174,301
+88,229
+130,558
+130,558
+3,566
+3,566
+44,439
+130,558
+3,566
+464
+89,258
+38 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+174,301
+2,092
+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. No single customer accounted for greater than 10% of total accounts receivable at 31 December 2016,
+except the amounts due from Sinopec Group Company and fellow subsidiaries. Management performs ongoing credit evaluations of the Group's
+customers' financial condition and generally does not require collateral on trade accounts receivable. The Group maintains an impairment loss for
+doubtful accounts and actual losses have been within management's expectations.
+Credit risk
+The Group's risk management policies are established to identify and analyse the risks faced by the Group, and set appropriate risk limits and
+controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
+conditions and the Group's activities. The Group, through its training and management controls and procedures, aims to develop a disciplined and
+constructive control environment in which all employees understand their roles and obligations. Internal audit department undertakes both regular
+and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Group's audit committee.
+The Board of Directors has overall responsibility for the establishment, oversight of the Group's risk management framework, and developing and
+monitoring the Group's risk management policies.
+• market risk.
+liquidity risk;
+• credit risk;
+The Group has exposure to the following risks from its uses of financial instruments:
+Financial assets of the Group include cash and cash equivalents, time deposits with financial institutions, investments, 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.
+Overview
+38 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
+for the year ended 31 December 2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+194
+Financial Statements (International)
+193
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(ii) This listed company will announce its financial information for the year ended 31 December 2016 later than the Company, therefore its 2016 financial information is
+not currently disclosed.
+Note:
+260
+134
+886
+101
+717
+1,077
+5,441
+2,042
+3,045
+14,914
+Financial Statements (International)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+18,790
+63,678
+63,352
+24,537
+30,535
+27,277
+57,515
+2,672
+85,021
+72,674
+57,515
+56,239
+Trade accounts payable
+and fellow subsidiaries
+Loans from Sinopec Group Company
+Long-term debts
+Short-term debts
+More than
+5 years
+RMB million
+38 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 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.
+At 31 December 2016, the Group has standby credit facilities with several PRC financial institutions which provide borrowings up to RMB 256,375
+million (2015: RMB 297,997 million) on an unsecured basis, at a weighted average interest rate of 3.57% per annum (2015: 2.50%). At 31
+December 2016, the Group's outstanding borrowings under these facilities were RMB 36,933 million (2015: RMB 32,991 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 2016
+42,796
+Total
+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
+More than 2
+years but less
+than 5 years
+RMB million
+Carrying
+Market risk
+Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates. The objective of market risk management is
+to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
+Currency risk
+2,445
+2,445
+305
+305
+3,640
+4,496
+3,640
+4,235
+261
+Total
+RMB million
+Level 3
+RMB million
+RMB million
+RMB million
+Level 2
+261
+Level 1
+4,472
+1,024
+762
+262
+1,886
+2,586
+1,886
+2,586
+733
+733
+291
+29
+262
+RMB million
+RMB million
+4,472
+7,875
+8,136
+2,750
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+198
+Financial Statements (International)
+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 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.
+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.
+39 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 2016 and 2015.
+RMB million
+105,927
+103,482
+2015
+31 December
+110,969
+109,308
+RMB million
+2,750
+During the years ended 31 December 2016 and 2015, there was no transfer between instruments in Level 1 and Level 2.
+(ii) Fair values of financial instruments carried at other than fair value
+The disclosures of the fair value estimates, and their methods and assumptions of the Group's financial instruments, are made to comply
+with the requirements of IFRS 7 and IAS 39 and should be read in conjunction with the Group's consolidated financial statements and related
+notes. The estimated fair value amounts have been determined by the Group using market information and valuation methodologies considered
+appropriate. However, considerable judgement is required to interpret market data to develop the estimates of fair value. Accordingly, the
+estimates presented herein are not necessarily indicative of the amounts the Group could realise in a current market exchange. The use of
+different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
+The fair values of the Group's financial instruments carried at other than fair value (other than long-term indebtedness and investments in
+unquoted equity securities) approximate their carrying amounts due to the short-term maturity of these instruments. The fair values of long-term
+indebtedness are estimated by discounting future cash flows using current market interest rates offered to the Group that range from 1.06% to
+4.90% (2015: 1.08% 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 2016 and 2015:
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+197
+RMB million
+Financial Statements (International)
+for the year ended 31 December 2016
+38 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Fair values (Continued)
+(ii) Fair values of financial instruments carried at other than fair value (Continued)
+Carrying amount
+Fair value
+31 December
+2016
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+RMB million
+Total
+Level 3
+Commodity price risk
+As at 31 December 2016, it is estimated that a general increase/decrease of 100 basis points in variable interest rates, with all other variables held
+constant, would increase/decrease the Group's net profit for the year by approximately RMB 44 million (2015: decrease/increase by approximately
+RMB 91 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, which in part be eliminated by cash holdings on a variable
+interest rates basis. The analysis is performed on the same basis for 2015.
+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 28.
+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.
+SGD
+1
+295
+288
+33
+2015
+RMB million
+2016
+RMB million
+31 December
+31 December
+USD
+EUR
+A 5 percent strengthening/weakening of RMB against the following currencies at 31 December 2016 and 2015 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 2015.
+HKD
+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, EUR, SGD and HKD. The Group enters into foreign exchange contracts to manage its currency risk exposure.
+Included in short-term and long-term debts and loans from Sinopec Group Company and fellow subsidiaries of the Group are the following amounts
+denominated in a currency other than the functional currency of the entity to which they relate:
+Gross exposure arising from loans
+USD
+EUR
+31 December
+2016
+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, to manage a portion of this risk. As at 31 December 2016,
+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 2016 are set out in Notes 26 and 30.
+31 December
+USD 126
+USD 1,181
+EUR 1
+SGD 4
+HKD 6
+EUR 1,108
+HKD 6
+SGD
+2015
+million
+14,373
+As at 31 December 2016, 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 634 million (2015: decrease/increase RMB 1,951 million), and decrease/increase the Group's other
+reserves by approximately RMB 4,007 million (2015: decrease/increase RMB 3,052 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 2015.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Level 2
+Level 1
+Derivative financial liabilities
+Derivative financial instruments:
+Liabilities
+- Derivative financial assets
+Derivative financial instruments:
+- Listed
+Available-for-sale financial assets:
+Assets
+At 31 December 2015
+- Derivative financial liabilities
+Derivative financial instruments:
+Liabilities
+- Derivative financial assets
+Derivative financial instruments:
+- Listed
+for the year ended 31 December 2016
+38 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Fair values
+(i) Financial instruments carried at fair value
+The following table presents the carrying value of financial instruments measured at fair value at the balance sheet date across the three levels
+of the fair value hierarchy defined in IFRS 7, ‘Financial Instruments: Disclosures', with the fair value of each financial instrument categorised in
+its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+•
+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 2016
+Assets
+Available-for-sale financial assets:
+•
+December
+Cash and cash equivalents at 31
+(19)
+million
+million
+million
+million
+million
+million
+million
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+RMB
+RMB
+RMB
+RMB
+2015
+2016
+2015
+2015
+2016
+2015
+2016
+2015
+2016
+2015
+2016
+RMB
+million
+million
+Turnover
+2,513
+3,310
+6,000
+(4,257)
+(2,481)
+24,391
+27,385
+Total comprehensive income/(loss)
+1,738
+1,558
+825
+1,456
+2,513
+3,310
+5,981
+(222)
+(4,604)
+1,050,294
+1,103,934
+4,016
+6,557
+77,843
+80,748
+Zhonghan Wuhan
+4.968
+1.642
+11,703
+14,077
+Profit/(loss) for the year
+26,461
+23,684
+5,532
+Sinopec Kantons (ii)
+Fujian Petrochemical
+Shanghai Petrochemical
+20,518
+18,037
+185,604
+197,948
+Net assets
+15,815
+14,686
+9,641
+4,656
+7,124
+19,676
+19,070
+5,755
+745
+238,684
+245,054
+Net non-current assets
+19,676
+7,845
+5,487
+13,025
+14.686
+15,815
+25,004
+Non-current liabilities
+(1,628)
+(39,322)
+(34,320)
+(721)
+(831)
+(3,384)
+(1,460)
+1,456
+20.094
+4.723
+SIPL
+Marketing Company
+Year ended 31 December
+Summarised consolidated statement of comprehensive income
+2,561
+3.029
+3,147
+2,362
+3.619
+10,085
+12,504
+16,187
+15,253
+59,504
+63,555
+Attributable to non-controlling interests
+4,755
+7,885
+8,654
+7,316
+Attributable to owners of the Company
+134,393
+126,100
+7,238
+2,784
+12,500
+10.009
+3,619
+2,361
+4.738
+5,625
+4,331
+40,075
+302
+1,738
+(682)
+(443)
+(176)
+(55)
+(3,696)
+(2,637)
+637
+(4,414)
+(42,777)
+(20,424)
+financing activities
+Net cash (used in)/generated from
+(4,869)
+(3,080)
+588
+(504)
+54
+54
+(439)
+(190)
+(4,052)
+2,729
+21,180
+(31,573)
+investing activities
+Net cash (used in)/generated from
+4,223
+3,636
+1,185
+(179)
+76
+Net (decrease)/increase in cash
+and cash equivalents
+(1,157)
+18
+I
+9
+71
+112
+633
+616
+rate changes
+Effect of foreign currency exchange
+337
+260
+630
+380
+101
+279
+1,077
+1,327
+11,599
+891
+644
+4,355
+798
+616
+617
+(279)
+(126)
+(58)
+Cash and cash equivalents at 1 January
+14,914
+2,682
+2,042
+238
+619
+4,933
+7,182
+2015
+2016
+2015
+2016
+Zhonghan Wuhan
+Sinopec Kantons (ii)
+Fujian Petrochemical
+Shanghai Petrochemical
+SIPL
+Marketing Company
+Year ended 31 December
+Summarised statement of cash flows
+40
+10
+563
+7,356
+4,932
+Comprehensive income/(loss)
+attributable to non-controlling interests
+9,028
+7,755
+(3,279)
+(1,218)
+2016
+2,964
+1,256
+728
+120
+545
+608
+Dividends paid to non-controlling interests
+1,655
+1.558
+2015
+2015
+4,059
+2,576
+33,196
+50,840
+operating activities
+Net cash generated from/(used in)
+million
+million
+million
+million
+million
+million
+million
+million
+million
+million
+million
+2015
+2016
+2015
+RMB
+RMB
+RMB
+2016
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+1,376
+1,957
+(231,025)
+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
+2016
+Net profit under ASBE
+Adjustments:
+RMB million
+59,170
+2015
+RMB million
+43,480
+Government grants
+Safety production fund
+(i)
+(ii)
+114
+127
+160
+191
+(II) SAFETY PRODUCTION FUND
+Profit for the year under IFRS*
+43,798
+Effects of major differences between the shareholders' equity under ASBE and the total equity under IFRS are analysed as follows:
+Note
+31 December
+2016
+RMB million
+Shareholders' equity under ASBE
+832,525
+31 December
+2015
+RMB million
+789,565
+Adjustments:
+Government grants
+(i)
+Total equity under IFRS*
+(1,290)
+831,235
+(1,404)
+59,444
+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:
+1,773
+(149)
+557
+47
+80
+81
+49
+2,438
+1,950
+176,497
+23,733
+175,153
+28,727
+(16,829)
+(24,214)
+(3,088)
+(80)
+(81)
+183,321
+447,424
+176,497
+440,059
+Note:
+(i) In 2014, the International Accounting Standards Board published Amendments to International Accounting Standard 27 (IAS 27) - Separate Financial Statements.
+These amendments allowed entities to use equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial
+statements. Entities wishing to change to the equity method must do so retrospectively. The amendment is effective from 1 January 2016. In order to eliminate
+the difference regarding subsequent measurements on investments in joint ventures and associates between separate financial statements prepared in accordance
+with ASBE and IFRS, the Company changed its subsequent measurements on investments in associates and joint ventures from cost method to equity method in
+its separate financial statements prepared in accordance with IFRS from 1 January 2016. By adopting the amendments to IAS 27 - Separate Financial Statements,
+the balance of investments in associates, investments in joint ventures, retained earnings and other reserves as at 31 December 2015 would be increased by
+RMB 8,056 million, RMB 644 million, RMB 8,672 million and RMB 28 million in the separated financial statements prepared in accordance with IFRS due to the
+retrospective adjustment.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+201
+Financial Statements (International)
+Financial Statements
+(Differences Between the ASBE and IFRS)
+(Unaudited)
+(C) DIFFERENCES BETWEEN CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH
+THE ACCOUNTING POLICIES COMPLYING WITH ASBE AND IFRS (UNAUDITED)
+788,161
+1,950
+*
+202
+Total capitalised costs
+896,498
+852,279
+44,219
+888,658
+847,092
+858
+41,566
+Accumulated depreciation, depletion, amortisation
+and impairment losses
+(528,636)
+(495,538)
+(33,098)
+69,873
+Net capitalised costs
+356,741
+11,121
+(465,393)
+423,265
+(438,097)
+(27,296)
+408,995
+14,270
+Equity method investments
+Share of net capitalised costs of associates
+and joint ventures
+Total of the Group's and its equity method investments'
+net capitalised costs
+367,862
+70,731
+4
+52,931
+Annual Report 2016 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, 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 2016 and 2015, 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 | 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
+2016
+RMB million
+2015
+RMB million
+Total
+China
+Other
+countries
+Other
+Total
+China
+countries
+The Group
+Property cost, wells and related equipments
+and facilities
+Supporting equipments and facilities
+650,686
+192,877
+606,493
+44,193
+192,855
+22
+613,134
+204,793
+572,446
+204,773
+40,688
+Uncompleted wells, equipments and facilities
+52,935
+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 2015 and 2016 which have been audited by PricewaterhouseCoopers.
+117,000
+117,000
+117,000
+Share capital
+Reserves
+Total equity
+2,761
+1,852
+148,997
+112,999
+280,822
+267,854
+14,987
+40,594
+696,903
+Equity
+713,683
+75,926
+44,772
+44,100
+505
+177
+29,767
+28,968
+3,688
+3,382
+128,408
+152,553
+568,495
+49,676
+Total non-current liabilities
+Other long-term liabilities
+Provisions
+46,942
+46,029
+Prepaid expenses and other current assets
+81,840
+104,726
+Total current assets
+265,835
+227,260
+Current liabilities
+Short-term debts
+50,574
+49,131
+Loans from Sinopec Group Company and fellow subsidiaries
+2,703
+18,690
+Trade accounts payable
+75,787
+85,182
+Accrued expenses and other payables
+Bills payable
+Total current liabilities
+Net current liabilities
+Total assets less current liabilities
+Non-current liabilities
+Long-term debts
+Loans from Sinopec Group Company and fellow subsidiaries
+Deferred tax liabilities
+561,130
+121,071
+121,071
+(a)
+Others
+Balance at 31 December
+Retained earnings
+Balance at 1 January (i)
+Profit for the year
+Distribution to owners (Note 13)
+Appropriation
+Special reserve
+Balance at 31 December
+The Company
+2016
+RMB million
+2015
+RMB million
+9,122
+53
+9,122
+9,175
+9,122
+55,850
+41,824
+14,026
+55,850
+55,850
+79,640
+76,552
+3,088
+79,640
+79,640
+117,000
+Special reserve
+9,337
+Cash flow hedges, net of deferred tax
+Balance at 1 January (i)
+447,424
+440,059
+568,495
+561,130
+200
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+42 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:
+Capital reserve
+Balance at 1 January
+Others
+Balance at 31 December
+Share premium
+Balance at 1 January
+Conversion of the 2011 Convertible Bonds
+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
+Share of other comprehensive loss of associates and joint ventures, net of deferred tax
+540
+9,337
+11,296
+6,352
+7,207
+6,352
+7,207
+(2,205)
+(1,165)
+(4)
+(2,752)
+(2,157)
+(2,570)
+(3,036)
+(1,175)
+(1,370)
+845
+(418)
+(1,370)
+427
+7,207
+7,207
+(1,165)
+(4)
+| | | | | | |
+(2,157)
+(3,036)
+845
+(418)
+427
+Total of the Group's and its equity
+method investments' results of operations
+for producing activities
+(195)
+associates and joint ventures
+Share of profit for producing activities of
+(195)
+(1,205)
+(210)
+(995)
+Results of operation from producing activities
+(38,729)
+(35,582)
+(3,147)
+678
+629
+49
+Equity method investments
+Revenues
+Sales
+6,352
+6,352
+Production costs excluding taxes
+(2,205)
+Exploration expenses
+Depreciation, depletion, amortisation and
+impairment losses
+(2,752)
+Taxes other than income tax
+(2,570)
+Profit before taxation
+(1,175)
+| | | | | |
+Income tax expense
+(40,099)
+(798)
+(35,582)
+1,105
+(19)
+(253)
+(272)
+Production
+41
+41
+41
+41
+Extensions and discoveries
+99
+99
+35
+(317)
+35
+3
+(641)
+(638)
+4
+(509)
+(505)
+Revisions of previous estimates
+72
+2,700
+2,772
+55
+1,902
+Improved recovery
+(297)
+(20)
+End of year
+629
+476
+The results of operations for producing activities for the years ended 31 December 2016 and 2015 are shown above. Revenues include sales to
+unaffiliated parties and transfers (essentially at third-party sales prices) to other segments of the Group. Income taxes are based on statutory tax
+rates, reflecting allowable deductions and tax credits. General corporate overhead and interest income and expense are excluded from the results of
+operations.
+Table IV: Reserve quantities information
+The Group's and its equity method investments' estimated net proved underground oil and gas reserves and changes thereto for the years ended 31
+December 2016 and 2015 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.
+"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 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table IV: Reserve quantities information (Continued)
+2016
+2015
+Total
+China
+Other
+countries
+Total
+China
+Other
+countries
+The Group
+Proved developed and undeveloped reserves
+(oil) (million barrels)
+1,902
+1,957
+40
+1,216
+1,256
+(4,517)
+(798)
+Income tax expense
+1,044
+52,229
+49,605
+2,624
+43,222
+42,860
+362
+63,801
+61,177
+2,624
+719
+719
+1,218
+362
+1,218
+42,860
+1,081
+65,019
+61,177
+3,842
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+203
+Supplemental Information on Oil and
+Financial Statements
+Gas Producing Activities (Unaudited)
+204
+Financial Statements
+43,941
+31,918
+32,280
+11,572
+377,199
+356,741
+20,458
+434,561
+408,995
+25,566
+Table II: Costs incurred in oil and gas exploration and development
+The Group
+Exploration
+Development
+Total costs incurred
+Equity method investments
+Share of costs of exploration and development
+of associates and joint ventures
+Total of the Group's and its equity method investments'
+exploration and development costs
+2016
+RMB million
+2015
+RMB million
+Total
+China
+Other
+countries
+Total
+China
+Other
+countries
+10,942
+10,942
+11,572
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table III: Results of operations related to oil and gas producing activities
+(48,315)
+(46,883)
+(1,432)
+Exploration expenses
+(11,035)
+(11,035)
+(10,459)
+(10,459)
+Depreciation, depletion, amortisation and
+impairment losses
+(73,534)
+(68,594)
+(4,940)
+(56,293)
+(52,216)
+(4,077)
+Taxes other than income tax
+(4,576)
+(4,576)
+(6,083)
+(6,083)
+Profit before taxation
+(37,931)
+(35,582)
+(2,349)
+1,883
+839
+(1,425)
+11,296
+(42,652)
+Production costs excluding taxes
+2016
+RMB million
+Total
+China
+Other
+countries
+Total
+China
+2015
+RMB million
+Other
+countries
+The Group
+Revenues
+Sales
+Transfers
+36,720
+36,720
+52,580
+52,580
+58,571
+54,555
+4,016
+70,453
+63,900
+6,553
+95,291
+91,275
+4,016
+123,033
+116,480
+6,553
+(44,077)
+Beginning of year
+471
+38,332
+912,898
+931,637
+11,396
+592,389
+(266,549)
+603,785
+(271,650)
+(20,241)
+of cash flows
+10% annual discount for estimated timing
+Undiscounted future net cash flows
+Future income tax expenses
+Future development costs
+Future production costs
+Future cash flows
+18,739
+The Group
+China
+Total
+2015
+RMB million
+2016
+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
+2016 and 2015 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.
+Table V: Standardised measure of discounted future net cash flows
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+19
+Other
+countries
+(5,101)
+(440,079)
+(430,695)
+207,893
+208,147
+net cash flows
+Standardised measure of discounted future
+(1,176)
+(150,855)
+(152,031)
+(10)
+(102,332)
+(102,342)
+3,418
+438,332
+441,750
+264
+310,225
+310,489
+(1,360)
+(9,779)
+(11,139)
+(1,405)
+(1,405)
+(4,577)
+(34,092)
+(38,669)
+(4,626)
+(15,615)
+(9,384)
+7,551
+254
+7,570
+7,160
+1
+18
+18
+18
+24
+24
+18
+19
+19
+18
+(4)
+(4)
+2
+(4)
+(3)
+3
+26
+26
+19
+26
+26
+23
+23
+23
+26
+260
+(3)
+1
+2
+1
+7,178
+End of year
+26
+6,715
+6,741
+19
+7,551
+7,570
+Beginning of year
+(billion cubic feet)
+Proved developed and undeveloped reserves (gas)
+341
+1,902
+2,243
+336
+1,216
+1,552
+End of year
+347
+2,700
+3,047
+341
+1,902
+2,243
+Beginning of year
+(million barrels)
+Proved developed and undeveloped reserves (oil)
+18
+289,719
+287,477
+2,242
+6,073
+(68,635)
+(281,975)
+(53,715)
+(46,637)
+2015
+RMB million
+RMB million
+2016
+Annual Report 2016 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
+(6,873)
+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
+15,113
+(48,479)
+44,838
+(68,875)
+(83,746)
+(7,285)
+(2,174)
+1,736
+464
+2,681
+1,308
+1,163
+322
+1,520
+(92)
+611
+1,887
+997
+(534)
+(12,987)
+(3,952)
+(3,006)
+(1,577)
+(223,740)
+(81,572)
+79,281
+6,363
+60,005
+30,340
+18,494
+9,370
+Table VI: Changes in the standardised measure of discounted cash flows
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+Financial Statements
+(4,159)
+(4,159)
+(3,303)
+(3,303)
+Future income tax expenses
+(2,996)
+(2,996)
+(3,444)
+(3,444)
+Future development costs
+(11,665)
+(11,665)
+(10,783)
+(10,783)
+Future production costs
+41,013
+41,013
+35,690
+35,690
+Future cash flows
+Equity method investments
+1,356
+1,356
+114
+114
+non-controlling interests
+Discounted future net cash flows attributable to
+Undiscounted future net cash flows
+260
+18,160
+22,193
+208
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+207
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+14,607
+287,477
+302,084
+10,445
+207,893
+218.338
+investments' results of standardised measure
+of discounted future net cash flows
+Total of the Group's and its equity method
+12,365
+12,365
+10,191
+10,191
+net cash flows
+Standardised measure of discounted future
+(9,828)
+(9,828)
+(7,969)
+(7,969)
+of cash flows
+10% annual discount for estimated timing
+22,193
+18,160
+29,512
+273
+252
+64
+65
+1,701
+1,753
+40
+1,080
+1,120
+End of year
+2,465
+2,529
+52
+1,701
+52
+1,753
+Proved developed reserves
+25
+25
+18
+18
+undeveloped reserves at the end of year
+Non-controlling interest in proved developed and
+55
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+39 ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+Impairment for long-lived assets
+Beginning of year
+Proved undeveloped reserves
+Beginning of year
+204
+70
+66
+66
+Improved recovery
+(252)
+(252)
+(170)
+(170)
+Revisions of previous estimates
+6,715
+6,715
+7,551
+7,551
+Beginning of year
+(billion cubic feet)
+Proved developed and undeveloped reserves (gas)
+3
+201
+204
+136
+136
+End of year
+8
+235
+243
+3
+201
+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.
+70
+Depreciation
+Impairment for bad and doubtful debts
+Cash and cash equivalents
+Time deposits with financial institutions
+Trade accounts receivable
+Bills receivable
+Inventories
+373,020
+439,477
+49,277
+72,763
+238,264
+191,403
+14,691
+Current assets
+13,987
+13,840
+297
+297
+6,114
+6,492
+14,731
+16,018
+711,890
+754,277
+88,120
+46,453
+10,130
+15,496
+Total non-current assets
+Long-term prepayments and other assets
+Lease prepayments
+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.
+40 EVENTS AFTER THE BALANCE SHEET DATE
+According to the purchase and sale agreement signed between SOIHL Hong Kong Holding Limited ("SOIHL HK"), a wholly owned subsidiary of
+the Group, and Chevron Global Energy Inc. ("CGEI") on 21 March 2017, SOIHL HK is going to acquire the equity shares of and related interest in
+Chevron South Africa (Proprietary) Limited and the equity shares of Chevron Botswana (Proprietary) Limited ("the Targets") held by CGEI, in a total
+consideration approximate to USD 900 million ("the Transaction"). The consideration is subject to adjustment according to the circumstances of the
+Targets, such as the changes in working capital, at the completion. The Transaction has been approved by the Board of Directors of the Company,
+and is still subject to the satisfaction of the certain conditions to completion. The Targets' principle activities are to manufacture and market refined
+oil products in South Africa and market refined oil products in Botswana.
+41 PARENT AND ULTIMATE HOLDING COMPANY
+The directors consider the parent and ultimate holding company of the Group as at 31 December 2016 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 2016
+199
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2016
+42 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY
+BALANCE SHEET OF THE COMPANY (Amounts in million)
+Note
+31 December
+2016
+RMB
+31 December
+2015
+RMB
+Non-current assets
+Property, plant and equipment, net
+Construction in progress
+Investment in subsidiaries
+Interest in associates
+Interest in joint ventures
+Available-for-sale financial assets
+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.
+Extensions and discoveries
+475
+475
+Proved undeveloped reserves
+End of year
+Beginning of year
+Proved developed reserves
+End of year
+Production
+Extensions and discoveries
+Improved recovery
+Revisions of previous estimates
+Beginning of year
+(billion cubic feet)
+associates and joint ventures (gas)
+Beginning of year
+Proved developed and undeveloped reserves of
+23
+26
+Beginning of year
+273
+Proved undeveloped reserves
+End of year
+260
+Beginning of year
+(32)
+296
+3
+41
+Proved developed reserves
+End of year
+End of year
+End of year
+Total of the Group and its equity method investments
+|| | || | || | ||
+260
+286
+(33)
+9
+1
+34
+275
+| | || | ||
+286
+296
+(33)
+(32)
+9
+41
+1
+3
+34
+275
+286
+1
+18
+18
+93 400
+18
+(4)
+|| | || | || | ||
+19
+Production
+Extensions and discoveries
+Improved recovery
+(2)
+1,112
+1,112
+Beginning of year
+Proved undeveloped reserves
+6,439
+6,439
+6,436
+6,436
+End of year
+5,987
+5,987
+6,439
+6,439
+Beginning of year
+Proved developed reserves
+7,551
+7,551
+7,160
+7,160
+End of year
+(731)
+(731)
+(762)
+(762)
+Production
+1,749
+1,749
+728
+252
+728
+724
+Revisions of previous estimates
+286
+Beginning of year
+associates and joint ventures (oil) (million barrels)
+Proved developed and undeveloped reserves of
+Equity method investments
+Other
+countries
+China
+Total
+Other
+countries
+China
+Total
+2015
+2016
+Table IV: Reserve quantities information (Continued)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+206
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+Financial Statements
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+205
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+1,112
+1,112
+724
+End of year
+20
+(2)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+A Shares:
+China Securities Registration and Clearing
+Company Limited Shanghai Branch Company
+36th Floor, China Insurance Building
+166 Lujiazui East Road
+Shanghai, PRC
+H Shares:
+Hong Kong Registrars Limited
+R1712 1716, 17th Floor, Hopewell Centre
+183 Queen's Road East
+Hong Kong
+DEPOSITARY FOR ADRS
+Citibank, N.A.
+388 Greenwich St., 14th Floor
+New York NY 10013
+United States of America
+COPIES OF THIS ANNUAL REPORT ARE
+AVAILABLE AT
+The PRC:
+China Petroleum & Chemical Corporation
+PLACES OF LISTING OF SHARES, STOCK
+NAMES AND STOCK CODES
+A Shares:
+Stock name
+New York Stock Exchange
+ADRs:
+: 00386
+Stock code
+: Sinopec Corp
+REGISTRARS
+Stock name
+H Shares:
+: 600028
+Stock code
+: SINOPEC CORP
+Stock name
+Shanghai Stock Exchange
+Hong Kong Stock Exchange
+Stock code
+15 Queen's Road, Central, Hong Kong
+U.S.A.
+中国石油化工股份有限公司
+ENGLISH NAME
+China Petroleum & Chemical Corporation
+CHINESE ABBREVIATION
+中国石化
+ENGLISH ABBREVIATION
+Sinopec Corp.
+LEGAL REPRESENTATIVE
+Mr. Wang Yupu
+AUTHORISED REPRESENTATIVES
+Mr. Dai Houliang
+Mr. Huang Wensheng
+SECRETARY TO THE BOARD
+Mr. Huang Wensheng
+REPRESENTATIVE ON SECURITIES MATTERS
+Mr. Zheng Baomin
+REGISTERED ADDRESS AND PLACE OF
+BUSINESS
+No.22 Chaoyangmen North Street,
+Chaoyang District
+Central, Hong Kong
+15 Queen's Road
+23rd Floor, Gloucester Tower
+Herbert Smith Freehills
+Hong Kong:
+E-mail addresses
+Skadden, Arps, Slate, Meagher & Flom LLP
+42/F, Edinburgh Tower, The Landmark
+Website
+Fax
+: 86-10-59960028
+Tel.
+Postcode
+Beijing, PRC
+: 100728
+: 86-10-59960386
+SINOPEC CORP
+: SNP
+London Stock Exchange
+Stock name
+Chaoyang District
+Beijing, PRC
+The US:
+Citibank, N.A.
+388 Greenwich St., 14th Floor
+New York NY 10013
+United States of America
+The UK:
+Citibank, N.A.
+Citigroup Centre
+Canada Square, Canary Wharf
+London E14 5LB, U.K.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+209
+Corporate Information
+Documents for Inspection
+DOCUMENTS FOR INSPECTION
+210
+Printed on environmentally friendly paper
+OPEC Beijing 100728 PRC
+Chaoyang District
+No. 22 Chaoyangmen North Street
+China Petroleum & Chemical Corporation (Sinopec Corp.)
+中国石化
+No.22 Chaoyangmen North Street,
+Beijing, PRC, 24 March 2017
+By Order of the Board
+Wang Yupu
+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 2016 prepared under IFRS
+and ABSE, signed by Mr.Wang Yupu, the
+Chairman, Mr. Dai Houliang, Vice Chairman
+and President, Mr. Wang Dehua, the Chief
+Financial Officer and head of the financial
+department of Sinopec Corp.;
+a) The original copies of the 2016 annual
+reports signed by Mr. Wang Yupu, the
+Chairman;
+The following documents will be available
+for inspection during normal business hours
+after 24 March 2017 (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:
+Chairman
+Board Secretariat
+Postcode: 100020
+Beijing PRC
+Prince's Building,
+: 22nd Floor,
+: PricewaterhouseCoopers
+Shanghai, PRC 200021
+Huangpu District,
+2 Corporate Avenue,
+202 Hu Bin Road,
+Central, Hong Kong
+PricewaterhouseCoopers,
+Overseas Auditors
+Address
+Address
+Domestic Auditors : PricewaterhouseCoopers
+Zhong Tian LLP
+NAMES AND ADDRESSES OF AUDITORS OF
+SINOPEC CORP.
+: SINOPEC CORP
+: SNP
+Stock code
+11th Floor
+STATUTORY NAME
+http://www.sinopec.com
+PLACE OF BUSINESS IN HONG KONG
+Chaoyang District
+No. 5, Dong San Huan Central Road
+20th Floor, Fortune Financial Centre
+Haiwen & Partners
+People's Republic of China:
+LEGAL ADVISORS
+:ir@sinopec.com
+No change during the reporting period
+INFORMATION DISCLOSURE AND PLACES FOR
+Hong Kong
+Wanchai
+1 Harbour Road
+Convention Plaza
+20th Floor, Office Tower
+COPIES OF RELATIVE REPORTS
+CORPORATE INFORMATION
+The US:
+Marketing and Distribution
+Gasoline
+Diesel
+Kerosene
+Chemical feedstock
+Other refined petroleum products
+In 2016, sales revenues of gasoline
+were RMB 309.7 billion, representing a
+decrease of 1.8% over 2015.
+The sales revenues of diesel were RMB
+264.6 billion, representing a decrease of
+12.9% over 2015.
+The sales revenues of kerosene were RMB
+40.9 billion, representing a decrease of
+11.6% over 2015.
+The sales revenues of chemical feedstock
+were RMB 94.1 billion, representing a
+decrease of 12.3% over 2015.
+The sales revenues of refined petroleum
+products other than gasoline, diesel,
+Average realised price (RMB/tonne)
+Year ended 31 December
+Sales Volume (thousand tonnes)
+Year ended 31 December
+2016
+Change (%)
+2016
+2015
+52,461
+50,921
+3.0
+5,904
+6,191
+(4.6)
+58,734
+63,359
+2015
+(7.3)
+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 2016 and 2015.
+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.
+736.5
+4,566
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+21
+Management's Discussion
+and Analysis
+Management's
+Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+(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
+operations. Most of the natural gas and
+a small portion of crude oil were sold
+externally to other customers.
+In 2016, the operating revenues of
+this segment were RMB 855.8 billion,
+representing a decrease of 7.6% over
+2015. This was mainly attributable to the
+decreased in refined oil products prices.
+In 2016, the operating revenues of
+this segment were RMB 115.9 billion,
+representing a decrease of 16.4% over
+2015. This was mainly attributable to the
+decline of realised price of crude oil and
+natural gas as well as decrease in sales
+volume of crude oil.
+In 2016, the operating expenses of
+this segment were RMB 152.6 billion,
+representing a decrease of 2.2% over
+2015. That was mainly due to the
+following:
+•
+.
+•
+Depreciation, depletion and
+amortisation increased by RMB 9.8
+billion year on year.
+Impairment loss on oil and gas
+related assets increased by RMB 6.7
+billion year on year;
+The Company with the restructuring
+of Sichuan-to-East China Pipeline Co.,
+other expenses (net) decreased by
+RMB 20.6 billion.
+In 2016, the oil and gas lifting cost was
+RMB 786 per tonne, representing a
+moderate year-on-year increase of 0.8%,
+under the backdrop of a 13.2% decrease
+in crude oil production.
+In 2016, the segment made every effort
+to optimise resource mix, attached great
+emphasis on cash flow contributions, and
+proactively controlled costs. Due to the
+drop in crude oil and natural gas prices,
+the operating loss of the exploration
+and production segment were RMB 36.6
+billion, representing an expanded losses
+as compared with 2015.
+(2) Refining Segment
+In 2016, the segment sold 36.38 million
+tonnes of crude oil, representing a
+decrease of 13.8% over 2015. Natural
+gas sales volume was 20.56 billion cubic
+meters, representing an increase of 3.7%
+over 2015. Average realised prices of
+crude oil and natural gas were RMB 1,734
+per tonne and RMB 1,267 per thousand
+cubic meters, representing decreases
+of 13.9% and 17.5% respectively over
+2015.
+384
+4,505
+(6.1)
+management in crude oil procurement,
+adjusted product mix based on market
+needs, increased export volume, made
+great efforts to improve the profitability
+of by-products, and as a result, realised
+significant increase in operating profit.
+In 2016, the operating profit of the
+segment totaled RMB 56.3 billion,
+representing an increase of RMB 35.3
+billion as compared with 2015.
+(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
+The Company's total liabilities were RMB
+667.4 billion, representing an increase
+of RMB 8.3 billion compared with that of
+the end of 2015, of which:
+end of 2015. This was mainly due to the
+fact that property, plant and equipment
+(net) decreased by RMB 42.9 billion,
+construction in progress decreased by
+RMB 22.7 billion, equity of associates
+and joint ventures increased by RMB 32.5
+billion (the Company sold 50% equity in
+Sichuan-to-East China Pipeline Co., with
+the remaining 50% equity corresponding
+to RMB 22.8 billion switched to item of
+interests in associates);
+(2) Cash Flow
+Non-current assets were RMB 1,086.3
+billion, representing a decrease of RMB
+27.3 billion as compared with that of the
+Current assets were RMB 412.3 billion,
+representing an increase of RMB 78.6
+billion compared with that of the end of
+2015, of which, cash and cash equivalent,
+and time deposit in financial institutions
+increased by RMB 72.8 billion, mainly
+due to significant increase in cash flow
+from operating activities, decrease in
+investment, abundant surplus in cash,
+as well as increase in inventory by RMB
+10.9 billion.
+As of 31 December 2016, the Company's
+total assets were RMB 1,498.6 billion,
+representing an increase of RMB 51.3
+billion compared with that of the end of
+2015, of which:
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+24
+In 2016, the segment seized the
+favorable opportunities of the bottoming
+out of crude oil prices, enforced
+24
+788,161
+831,235
+Total equity
+8,277
+111,964
+120,241
+Non-controlling interests
+34,797
+555,126
+589,923
+Reserves
+43,074
+4,797
+In 2016, 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 165.7
+per tonne, a decrease of RMB 1.9 per
+tonne against 2015, mainly because the
+segment enforced control over costs,
+improved efficiency of operations, and
+decreased operational costs in fuel,
+power, and other auxiliaries facilities.
+22
+14,529
+13,518
+7.5
+2,814
+3,420
+(17.7)
+36,408
+35,945
+1.3
+2,584
+2,984
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(13.4)
+52,418
+6.3
+2,529
+2,842
+(11.0)
+kerosene and chemical feedstock were
+RMB 141.0 billion, representing a
+decrease of 5.4% over 2015.
+In 2016, the segment's operating
+expenses were RMB 799.5 billion,
+representing a decrease of 11.7% over
+2015, mainly attributable to the decline
+in procurement cost of crude oil.
+In 2016, the average processing cost
+for crude oil was RMB 2,194 per tonne,
+representing a decrease of 18.5% over
+2015. Total crude oil processed was
+220.98 million tonnes (excluding volume
+processed for third parties), representing
+a decrease of 1.1% over 2015. The total
+cost of crude oil processed was RMB
+484.8 billion, representing a decrease of
+19.4% over 2015.
+In 2016, refining gross margin was
+RMB 471.9 per tonne, representing
+an increase of RMB 153.8 per tonne
+compared with 2015. This is mainly
+due to widened price spread between
+product and feedstocks as a result of
+the Company's effort in product mix
+optimisation, upward movement of crude
+oil price during the period as well as floor
+price policy announced by the Chinese
+government.
+22
+55,742
+3,212
+1,581
+(6.0)
+783,490
+10.5
+Operating revenues
+739,947
+783,874
+23.8
+23.8
+Operating revenue before elimination of
+inter-segment sales
+3,099,643
+Elimination of inter-segment sales
+Consolidated operating revenue
+10.3
+(1,168,732)
+1,930,911
+100.0
+100.0
+100.0
+100.0
+* Other operating revenues are included.
+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 2016 compared to 2015.
+Year ended 31 December
+2016
+RMB million
+2015
+RMB million
+Change
+(%)
+Exploration and Production Segment
+3,284,680
+(1,264,305)
+2,020,375
+Operating revenues
+345,454
+Inter-segment sales
+Inter-segment sales
+Operating revenues
+296,500
+285,057
+9.6
+8.7
+15.4
+14.2
+38,614
+43,814
+1.2
+320,367
+1.3
+328,871
+10.8
+10.0
+Corporate and Others
+External sales*
+419,580
+438,420
+13.5
+13.3
+21.7
+21.7
+335,114
+115,939
+138,653
+(16.4)
+Operating expenses
+Operating profit/(loss)
+Corporate and Others
+1,020,704
+32,153
+1,077,811
+(5.3)
+28,855
+11.4
+335,114
+328,871
+1.9
+Operating revenues
+314,491
+1.6
+20,623
+19,476
+5.9
+Operating revenues
+739,947
+783,874
+(5.6)
+Operating expenses
+Operating profit/(loss)
+Elimination of inter-segment profit
+736,735
+309,395
+Chemicals Segment
+Operating profit
+Operating expenses
+Operating expenses
+Operating (loss)/profit
+Refining Segment
+152,580
+156,071
+(2.2)
+(36,641)
+(17,418)
+Operating revenues
+855,786
+926,616
+(7.6)
+Operating expenses
+799,521
+905,657
+(11.7)
+Operating profit/(loss)
+56,265
+20,959
+168.5
+Marketing and Distribution Segment
+Operating revenues
+1,052,857
+1,106,666
+(4.9)
+121,071
+External sales*
+121,071
+34,797
+Diesel
+(12.5)
+5,498
+4,812
+19.5
+11,630
+13,895
+Direct sales and wholesale
+(3.9)
+6,996
+6,722
+91,998
+9.5
+63,718
+(5.4)
+6,747
+6,380
+11.1
+69,842
+77,613
+Gasoline
+Retail
+Change (%)
+2015
+2016
+58,211
+Change (%)
+95,907
+4,478
+Fuel
+(17.1)
+3,387
+2,807
+9.3
+23,028
+25,164
+Kerosene
+(10.7)
+4,314
+3,851
+(4.1)
+0.4
+45,342
+Direct sales and wholesale
+(7.3)
+5,490
+5,088
+(8.1)
+50,756
+46,656
+Retail
+(9.3)
+4,936
+45,150
+22,034
+2015
+Average realised price (RMB/tonne)
+Year ended 31 December
+N/A
+N/A
+N/A
+1,930,911
+1,492,165
+10.7
+(4.4)
+(6.5)
+1.3
+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
+In 2014, the International Accounting
+Standards Board published Amendments
+to International Accounting Standard 27
+(IAS 27) Separate Financial Statements.
+These amendments allowed entities to use
+equity method to account for investments in
+subsidiaries, joint ventures and associates in
+their separate financial statements. Entities
+wishing to change to the equity method must
+do so retrospectively. The amendment is
+effective from 1 January 2016.
+N/A
+In order to eliminate the difference
+regarding subsequent measurements on
+investments in joint ventures and associates
+By adopting the amendments to IAS
+27-Separate Financial Statements, the
+balance of investments in associates,
+investments in joint ventures, retained
+earnings and other reserves as of 31
+December 2015 would be increased by RMB
+8,056 million, RMB 644 million, RMB 8,672
+million and RMB 28 million in the separated
+financial statements prepared in accordance
+with IFRS due to the retrospective
+adjustment.
+The change in accounting policy carries no
+impact on financial statements prepared
+in accordance with the ASBE as well as
+consolidated financial statements prepared
+in accordance with the IFRS.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+27
+Management's Discussion
+and Analysis
+BD0028
+BD0068
+1,052,857
+between separate financial statements
+prepared in accordance with ASBE and
+IFRS, the Company changed its subsequent
+measurements on investments in associates
+and joint ventures from cost method to
+equity method in its separate financial
+statements prepared in accordance with
+IFRS from 1 January 2016.
+2016
+(1,170,313)
+Total
+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 2016 and 2015, including breakdown in retail, direct sales and wholesale of gasoline and diesel:
+In 2016, the operating revenues of this
+segment were RMB 1,052.9 billion, a
+decrease of 4.9% over 2015, of which:
+the sales revenues of gasoline totaled
+RMB 495.2 billion, a increase of 5.1%
+compared with 2015; the sales revenues
+of diesel were RMB 412.0 billion, a
+decrease of 13.0% over 2015, and the
+sales revenues of kerosene were RMB
+70.6 billion, a decrease of 9.5% over
+2015.
+domestic customers and distributing oil
+products through the segment's retail
+and distribution network, as well as
+providing related services.
+961,907
+8.4
+(4.9)
+(5.9)
+1.0
+Chemicals
+335,114
+(1,168,732)
+289,572
+1.9
+(0.2)
+1.7
+Corporate and Others
+739,947
+726,449
+1.8
+(5.6)
+(6.2)
+0.7
+Elimination of inter-segment sales
+13.0
+24,980
+(11.8)
+1,703
+Total assets
+Unit: RMB million
+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
+In 2016, the operating profit from
+corporate and others was RMB 3.2
+billion, among which the operating profit
+realised by trading companies was RMB
+8.2 billion.
+In 2016, the operating expenses of
+corporate and others were RMB 736.7
+billion, among which operating expenses
+realised by trading companies were RMB
+728.0 billion, representing a decrease of
+6.0% over 2015.
+The business activities of corporate
+and others mainly consist of import
+and export business activities of the
+Company's subsidiaries, research and
+development activities of the Company,
+and managerial activities of headquarters.
+In 2016, the operating revenues
+generated from corporate and others
+were RMB 739.9 billion among which
+the sales revenues realised by trading
+companies were RMB 736.2 billion,
+representing a decrease of 5.6% over
+2015 mainly attributed to the drop of
+international crude oil prices as well
+as less revenue from crude oil trading
+business as compared with 2015.
+(5) Corporate and Others
+In 2016, the operating profit of
+this segment was RMB 20.6 billion,
+representing an increase of RMB 1.1
+billion as compared with 2015.
+In 2016, the segment seized the
+favorable opportunities of the low feed
+stock price, further adjust feed stock
+and product mix, coordinated production
+with sales, strictly controlled costs and
+expenses, thus, resulting in remarkable
+profits.
+Current assets
+In 2016, the operating expenses of the
+chemicals segment were RMB 314.5
+billion, representing an increase of 1.6%
+over 2015.
+Synthetic rubber
+(11.6)
+1,823
+1,612
+193.8
+243
+714
+9.6
+8,769
+9,609
+(0.7)
+Chemical fertiliser
+1,107
+As of 31
+December 2016
+As of 31
+December 2015
+676,197
+710,994
+Total equity attributable to owners of the Company
+(14,444)
+196,275
+181,831
+Non-current liabilities
+22,711
+462,832
+485,543
+Current liabilities
+1,498,609
+412,261
+8,267
+667,374
+Total liabilities
+(27,263)
+1,113,611
+1,086,348
+Non-current assets
+78,604
+333,657
+51,341
+1,447,268
+Change
+659,107
+1,099
+(8.1)
+7,739
+Change (%)
+2015
+2016
+Average realised price (RMB/tonne)
+Year ended 31 December
+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 2016 and 2015.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Discussion
+Management's
+Management's Discussion
+and Analysis
+2016
+23
+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 316.2 billion, representing
+an increase of 2.1% as compared with
+2015, and accounting for 94.3% of the
+operating revenues of the segment.
+In 2016, the operating revenues of the
+chemicals segment were RMB 335.1
+billion, representing an increase of 1.9%
+as compared with that of 2015, This was
+mainly due to increase in sales volume
+of chemical products as compared with
+2015.
+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.
+(4) Chemicals Segment
+In 2016, the operating profit of
+this segment was RMB 32.2 billion,
+representing an increase of 11.4%
+compared with 2015.
+the gasoline market, increased the
+sales volume of high octane number
+gasoline, made efforts to improve total
+sales volume, coordinate internal and
+external resources, increased the spread
+between sales and procurement prices as
+compared with 2015, and achieved better
+performance.
+In 2016, facing abundant domestic
+supply of refined oil products and strong
+market competition, the segment made
+full use of the advantages of end user
+marketing network, actively expanded
+In 2016, 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 197.3 per
+tonne, representing an increase of 4.3%
+compared with that of 2015.
+In 2016, the operating expenses of the
+segment were RMB 1,020.7 billion,
+representing a decrease of RMB 57.1
+billion or 5.3% as compared with that of
+2015. This was mainly due to decreased
+procurement volume and prices of diesel
+and fuel oil.
+(23.1)
+2,215
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+2015
+Change (%)
+Basic organic chemicals
+7,113
+(0.8)
+1,380
+1,369
+(3.7)
+7,771
+7,482
+2.1
+11,993
+12,250
+Synthetic fibre
+Synthetic resin
+(8.1)
+5,797
+5,328
+17.9
+6,083
+7,169
+(3.8)
+4,121
+3,963
+6.9
+38,903
+41,605
+Synthetic fibre monomer and polymer
+Share capital
+Chemicals Segment
+Change (%)
+34.0
+and Analysis
+Discussion
+Management's
+26
+and Analysis
+Management's Discussion
+25
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Environmental expenditures refer to
+the normal routine pollutant discharge
+fees paid by the Company, excluding
+capitalised cost of pollutant treatment
+properties. In 2016, the Company paid
+environmental expenditures of RMB 6.36
+billion.
+Research & development expenses
+refer to the expenses recognised as
+expenditures when they occur. In
+2016, the expenditure for research &
+development was RMB 5.94 billion.
+(5) Research & development expenses and
+environmental expenditures
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+Please refer to "Capital Expenditures"
+in the "Business Review and Prospects"
+section of this report.
+"Significant Events" section of this report.
+Please refer to "Material Guarantee
+Contracts and Their Performances" in the
+(3) Contingent Liabilities
+At the end of 2016, the cash and cash
+equivalents were RMB 124.5 billion.
+In 2016, the net cash used in the
+Company's financing activities was RMB
+93.0 billion, representing an increase of
+RMB 102.1 billion over 2015. This was
+mainly due to the impact of RMB 105.0
+billion from the capital introduction of
+Sinopec Marketing Co., Ltd. in 2015; the
+significant reduction in interest bearing
+debts for two consecutive years, of which,
+the Company repaid RMB 62.6 billion
+and RMB 63.0 billion in 2015 and 2016,
+respectively.
+received as proceeds from the sale of
+equity in Sinopec Sichuan-to-East China
+Pipeline Co., Ltd.
+In 2016, the net cash used in investing
+activities was RMB 66.2 billion,
+representing a decrease of RMB 50.5
+billion over 2015. This was mainly due
+to the decrease of RMB 30.0 billion in
+capital expenditure over the same period
+of 2015 as well as RMB 13.2 billion
+In 2016, the net cash generated from
+operating activities of the company
+was RMB 214.5 billion, representing
+an increase of RMB 48.8 billion as
+compared with 2015. This was mainly
+due to the increase in profit before tax by
+RMB 23.7 billion, depreciation, depletion
+and amortization increased by RMB 12.0
+billion, and asset impairment increased
+by RMB 8.3 billion over the same period
+of 2015. Meanwhile, due to strict control
+on occupation of funds, occupation of
+working capital decreased significantly
+compared with 2015.
+2015
+165,740
+(116,719)
+9,093
+(93,047)
+(66,217)
+(4) Capital Expenditures
+Year ended 31 December
+2016
+214,543
+(6) Measurement of fair values of derivatives and relevant system
+Items relevant to measurement of fair values
+262
+261
+Self-owned fund
+source
+Funding
+of the
+current year
+as equity
+56
+262
+261
+values recorded
+values in the
+current year
+The Company has established sound decision-making mechanism, business process and internal control systems relevant to financial instrument
+accounting and information disclosure.
+the year
+End of
+Beginning
+Impairment
+loss provision
+Accumulated
+variation of fair
+Profits and
+losses from
+variation of fair
+Cash flow hedging instruments
+Total
+Derivative financial instruments
+Stock
+Available-for-sale financial assets
+Items
+Unit: RMB million
+of the year
+56
+Unit: RMB million
+Net cash used in investing activities
+19.3
+(1,963,553)
+(5.6)
+(1,494,046)
+(7.7)
+(64,360)
+(69,491)
+(7.4)
+Depreciation, depletion and amortisation
+(108,425)
+(96,460)
+42,498
+12.4
+(11,035)
+(10,459)
+5.5
+Personnel expenses
+(63,887)
+(56,619)
+12.8
+Taxes other than income tax
+(232,006)
+(236,349)
+(1.8)
+Exploration expenses, including dry holes
+Net cash generated from/(used in) financing activities
+(4.9)
+(4.4)
+Net cash generated from operating activities
+Major items of cash flows
+The following table sets forth the major items in the consolidated cash flow statements for 2016 and 2015.
+Total equity attributable to owners of
+the Company was RMB 711.0 billion,
+representing an increase of RMB 34.8
+billion compared with that of the end
+of 2015, which was mainly due to the
+increase in reserves by RMB 34.8 billion.
+in accounts payable by RMB 43.7
+billion, short-term debts and borrowings
+from China Petrochemical Corp and its
+subsidiaries decreased by RMB 40.6
+billion, other accounts payable and taxes
+payable increased by RMB 17.3 billion.
+Non-current liabilities were RMB 181.8
+billion, representing a decrease of RMB
+14.4 billion compared with that of the
+end of 2015. This was mainly due to
+long-term debts decreased by RMB 22.8
+billion, estimated liabilities increased by
+RMB 6.1 billion.
+Current liabilities were RMB 485.5 billion,
+representing an increase of RMB 22.7
+billion as compared with that of the end
+of 2015. This was mainly due to increase
+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 2016, the Company's turnover and other operating revenues were RMB 1,930.9 billion, decreased by 4.4% compared with that of 2015. The
+operating profit was RMB 77.2 billion, representing a year on year increase of 35.9%.
+The following table sets forth the main revenue and expenses from the Company's consolidated financial statements:
+1,977,877
+Year ended 31 December
+2016
+Turnover
+Other operating revenues
+Operating expenses
+Purchased crude oil, product and operating supplies and expenses
+Selling, general and administrative expenses
+RMB million
+1,930,911
+1,880,190
+50,721
+(1,853,718)
+(1,379,691)
+2015
+RMB million
+Change (%)
+2,020,375
+Turnover and other operating revenues
+403
+314
+(160)
+At the end of 2016, the Company's long-term liabilities were RMB 180.5 billion, representing a decrease of RMB 14.3 billion compared with that
+of the end of 2015. This was mainly due to the following factors: a) bonds payable decreased by RMB 28.3 billion; b) long-term loans increased
+by RMB 6.0 billion; c) provision increased by RMB 6.1 billion; d) other non-current liabilities increased by RMB 2.5 billion.
+At the end of 2016, the Company's total assets were RMB 1,498.6 billion, representing an increase of RMB 51.3 billion compared with that of
+the end of 2015. This was mainly due to the following factors: a) cash and cash equivalents increased by RMB 72.8 billion; b) long term equity
+investment increased by RMB 32.5 billion; c) intangible assets and other non-current assets increased by RMB 5.9 billion; d) fixed assets and
+construction in progress decreased by RMB 65.6 billion.
+42,960
+789,565
+51,341
+(14,330)
+194,871
+1,447,268
+RMB million
+Change
+As of 31
+December 2015
+832,525
+At the end of 2016, the shareholders' equity of the Company was RMB 832.5 billion, representing an increase of RMB 43.0 billion compared
+with that of the end of 2015. This was mainly due to the undistributed profit increased by RMB 29.5 billion, other comprehensive income
+increased by RMB 7.1 billion, capital reserve decreased by RMB 2.1 billion for this period.
+180,541
+RMB million
+As of 31
+December 2016
+Shareholders' equity
+Long-term liabilities
+Total assets
+(2) Financial data prepared under ASBE
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Net profit: In 2016, the net profit attributable to the equity shareholders of the Company was RMB 46.4 billion, representing an increase of RMB
+14.1 billion or 43.8% comparing with 2015.
+Operating profit: In 2016, the operating profit of the Company was RMB 78.9 billion, representing an increase of RMB 26.6 billion as compared
+with 2015.
+32,281
+46,416
+1,498,609
+52,246
+(3) The results of the principal operations by segments
+Operation
+income
+RMB million
+4.6
+(15.5)
+(7.6)
+9.1
+556,081
+855,786
+9.8
+(26.5)
+basis (%)
+a year-on-year
+Increase/
+(decrease) of
+gross profit
+margin on
+Segments
+a year-on-year
+basis (%)
+basis (%)
+a year-on-year
+Increase/
+(decrease) of
+operation
+income on
+(16.4)
+(15.3)
+128,469
+115,939
+Exploration and Production
+Refining
+Gross profit
+margin* (%)
+RMB million
+Operation
+cost
+Increase/
+(decrease) of
+operation
+cost on
+78,876
+631
+23,952
+Corporate and Others
+Chemicals Segment
+Marketing and Distribution Segment
+Refining Segment
+Exploration and Production Segment
+Operating profit/(loss)
+Consolidated operating income
+Elimination of inter-segment sales
+Corporate and Others
+Chemicals Segment
+Marketing and Distribution Segment
+Elimination of inter-segment sales
+Refining Segment
+Operating income
+(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 202 of this report.
+4 ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER ASBE
+Self-owned fund
+(3,813)
+(3,757)
+(149)
+11
+(4,024)
+(3,448)
+4,722
+5,386
+Self-owned fund
+Exploration and Production Segment
+Financial expenses, investment income and loss from changes in fair value
+Consolidated operating profit
+Net profit attributable to equity shareholders of the Company
+Year ended 31 December
+2016
+RMB million
+4,566
+1,581
+(678)
+2,912
+19,516
+20,769
+27,299
+32,385
+33.7
+55,808
+(18,511)
+(58,531)
+2,020,375
+1,930,911
+(1,264,305)
+(1,168,732)
+783,874
+328,871
+335,114
+739,947
+1,106,666
+1,052,857
+926,616
+138,653
+115,939
+855,786
+2015
+RMB million
+Other operating income/(expense), net
+5,686
+19,423
+Operating profit
+Taxes other than income tax were RMB
+232.0 billion, representing a decrease of
+1.8% compared with 2015. Mainly due
+to the decrease in consumption tax by
+RMB 4.9 billion as a result of decreased
+production of diesel, and decrease in
+resource tax by RMB 1.0 billion as a
+result of drop in crude prices over the
+same period of 2015.
+Other operating income/(expense),
+net were RMB 5.7 billion, decreasing
+5.8 billion over the same period of
+2015. That was mainly due to the non-
+operating income from reorganisation
+and capital injection of Sichuan-to-East
+China Pipeline Co., and the increase of
+impairment of assets.
+(3) Operating profit was RMB 77.2 billion,
+representing an increase of 35.9%
+compared with 2015. This is mainly
+due to outstanding performance of the
+Company's downstream business as we
+fully tapped potential from our integrated
+business. It effectively offset the negative
+impact of low oil prices.
+(4) Net finance costs were RMB 6.6 billion,
+representing a decrease of 28.4%
+over 2015, of which: interest expense
+increased by RMB 1.1 billion over
+2015 as a result of the replacement
+of debt denominated in US dollars by
+debt denominated in RMB (inclusive of
+replacing borrowings in US dollars and
+decrease exposure to US dollars); net
+losses from foreign exchange was RMB
+600 million, decreased by RMB 3.2
+billion as compared with 2015; interest
+income increased by RMB 200 million
+as a result of increased interest income
+compared with the same period of 2015.
+(5) Profit before taxation was RMB 80.2
+billion, representing an increase of 42.1%
+year on year.
+(6) Tax expense was RMB 20.7 billion,
+representing an increase of 64.2%
+year on year. That was mainly due to a
+substantial increase in profit over the
+same period of 2015.
+(7) Profit attributable to non-controlling
+interests was RMB 12.8 billion,
+representing an increase of RMB 1.5
+billion comparing with 2015.
+(8) Profit attributable to owners of the
+Company was RMB 46.7 billion,
+representing an increase of 43.6% year
+on year.
+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.
+20
+20
+Personnel expenses were RMB 63.9
+billion, representing an increase of 12.8%
+over 2015. That was mainly due to that
+that the Company promoted the reform
+of employment system since 2016.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+As a percentage of
+consolidated operating
+revenue before elimination
+of inter-segment sales
+Year ended 31 December
+As a percentage of
+consolidated operating
+revenue after elimination
+of inter-segment sales
+Year ended 31 December
+Operating revenues
+Year ended 31 December
+2016
+RMB million
+2015
+RMB million
+2016
+2015
+(%)
+(%)
+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.
+Exploration and Production Segment
+Exploration expenses were RMB 11.0
+billion, representing an increase of 5.5%
+year on year. That was mainly due to that
+the Company maintained its exploration
+intensity in low oil price environment.
+Selling, general and administrative
+expenses were RMB 64.4 billion,
+representing an decrease of 7.4% over
+2015. That was mainly due to that
+the Company promoted the reform of
+employment system, adjusted the cost
+and tax accounting, and continuously
+enhanced cost control.
+Chemical fertiliser
+714
+243
+193.8
+1,612
+1,823
+(11.6)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+19
+Management's Discussion
+and Analysis
+Depreciation, depletion and amortisation
+were RMB 108.4 billion, representing
+an increase of 12.4% as compared
+with 2015. That was mainly due to the
+significant increase in depreciation and
+depletion rate as a result of oil and gas
+reserve revision in the exploration and
+production segment corresponding to
+decreased oil price.
+Management's
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+Most crude oil and a small portion of
+natural gas produced by the Company
+were internally used for refining and
+chemical production, with the remaining
+sold to external customers. In 2016,
+the turnover from crude oil, natural
+gas and other upstream products sold
+externally amounted to RMB 47.4 billion,
+a decrease of 17.8% over 2015. The
+change was mainly due to the decrease
+of crude oil prices and sales volume in
+2016.
+In 2016, 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 1,130.4 billion,
+accounting for 58.5% of the Company's
+turnover and other operating revenues,
+representing a decrease of 6.3% over
+2015 mainly due to the decline of various
+refined oil products prices. The sales
+revenue of gasoline, diesel and kerosene
+was RMB 975.6 billion, representing
+a decrease of 4.4% over 2015, and
+accounting for 86.3% of the total sales
+revenue of petroleum products. Turnover
+of other refined petroleum products
+was RMB 154.8 billion, representing a
+decrease of 17.0% compared with 2015,
+accounting for 13.7% of the total sales
+revenue of petroleum products.
+The Company's external sales revenue
+of chemical products was RMB 284.3
+billion, representing an increase of 2.8%
+over 2015, accounting for 14.7% of
+the Company's total turnover and other
+operating revenues. This was mainly due
+to the increase of chemical products
+sales volume.
+(2) Operating expenses
+In 2016, the Company's operating
+expenses were RMB 1,853.7 billion,
+decreased by 5.6% compared with 2015.
+The operating expenses mainly consisted
+of the following:
+Purchased crude oil, products and
+operating supplies and expenses were
+RMB 1,379.7 billion, representing a
+decrease of 7.7% over the same period of
+2015, accounting for 74.4% of the total
+operating expenses, of which:
+Crude oil purchasing expenses were RMB
+373.7 billion, representing a decrease
+of 20.4% over the same period of 2015.
+Throughput of crude oil purchased
+externally in 2016 was 202.40 million
+tonnes (excluding the volume processed
+for third parties), representing a decrease
+of 1.9% over the same period of 2015.
+The average cost of crude oil purchased
+externally was RMB 2,084 per tonne,
+representing a drop of 19.6% over 2015.
+The Company's other purchasing
+expenses were RMB 1,006.0 billion,
+representing a decrease of 1.8% over the
+same period of 2015. This was mainly
+due to the decline in prices of externally
+purchased raw materials.
+Discussion
+9.5
+External sales*
+56,985
+800,962
+24.2
+24.4
+Operating revenues
+855,786
+926,616
+27.7
+28.2
+Marketing and Distribution Segment
+External sales*
+1,049,377
+747,317
+1,103,610
+33.6
+54.3
+54.6
+Inter-segment sales
+Operating revenues
+3,480
+1,052,857
+3,056
+0.1
+0.1
+(129)
+1,106,666
+33.9
+Inter-segment sales
+Inter-segment sales
+5.6
+67,634
+1.8
+58,954
+71,019
+1.9
+Operating revenues
+115,939
+138,653
+3.7
+123
+224
+6.2
+2.1
+2015
+(%)
+3.0
+3.3
+2.2
+4.3
+External sales*
+108,469
+125,654
+3.5
+3.8
+2016
+(%)
+8,778
+Refining Segment
+(12,613)
+43.6
+11,286
+13.2
+(1) Turnover and other operating revenues
+In 2016, the Company's turnover was RMB 1,880.2 billion, representing a decrease of 4.9% over 2015. 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 2016 and 2015:
+Sales volume (thousand tonnes)
+Year ended 31 December
+Average realised price
+(RMB/tonne, RMB/thousand cubic meters
+Year ended 31 December
+2015
+Change (%)
+32,512
+2016
+Change (%)
+Crude oil
+6,808
+9,674
+(29.6)
+1,628
+2,019
+(19.4)
+Natural gas (million cubic meters)
+Gasoline
+19,008
+18,440
+2015
+3.1
+46,672
+12,772
+Owners of the Company
+56,822
+9,608
+77,193
+35.9
+Net finance costs
+(6,611)
+(9,239)
+(28.4)
+Investment income and share of profits less losses from associates and joint ventures
+9,569
+8,828
+Non-controlling interests
+8.4
+80,151
+56,411
+42.1
+Tax expense
+(20,707)
+64.2
+Profit for the year
+59,444
+43,798
+35.7
+Attributable to:
+Profit before taxation
+1,258
+2016
+(17.2)
+Monomer and polymer for synthetic fibre
+7,146
+6,071
+17.7
+5,325
+5,796
+(8.1)
+Synthetic resin
+12,223
+11,989
+2.0
+7,488
+7,771
+1,519
+Synthetic fibre
+1,369
+1,380
+(0.8)
+7,113
+7,740
+(8.1)
+Synthetic rubber
+1,098
+1,104
+(0.5)
+(2.9)
+4,175
+(3.6)
+8.9
+69,749
+77,480
+11.1
+4,054
+6,386
+6,749
+(5.4)
+91,492
+95,472
+(4.2)
+4,482
+4,937
+(9.2)
+Diesel
+25,164
+23,028
+9.3
+2,807
+3,387
+29,608
+32,248
+Kerosene
+Basic chemical feedstock
+(17.1)
+owned
+Coal Chemical
+17 April 2026
+and Chemical
+subsidiary
+Co., LTD
+Industry
+SSI
+No
+Controlled
+New Bright
+Wall Energy
+Joint obligations
+10,669
+Co., Ltd.
+No
+Liquedie Arabia LLC.
+No
+30 years from the date Joint obligations
+No
+No - Yes No
+No
+31 December 2014
+No
+No
+YASRFE requires supply
+of hydrogen from Air
+Sinopec Great
+Wholly
+Zhong An United
+performance
+590
+18 April 2014
+18 April 2014 -
+Joint obligations
+No
+No
+subsidiary
+Yes
+Development Ltd./
+18,985
+37,056
+5.20%
+2,248
+2,534
+None
+4,782
+None
+None
+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 from multiplying
+the guarantees provided by Sinopec Corp.'s subsidiaries by the percentage of shareholding of Sinopec Corp. in such subsidiaries.
+34
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+7 SPECIFIC STATEMENTS AND INDEPENDENT
+OPINIONS FROM INDEPENDENT NON-
+EXECUTIVE DIRECTORS REGARDING
+EXTERNAL GUARANTEES PROVIDED BY
+SINOPEC CORP. DURING AND BY THE END
+OF 2016:
+no specific
+amount agreed,
+gurarantee
+on contract
+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 2016 in
+accordance with the requirements of the
+domestic regulatory authorities:
+The external guarantees prior to 2016 had
+been disclosed in previous annual report.
+The aggregate balance of external guarantees
+provided by Sinopec Corp. for the year 2016
+was RMB 37.056 billion, accounting for
+approximately 5.20% of the Company's net
+assets.
+None
+International
+18,071
+*2:
+Sonangol E.P.
+Total amount of guarantees provided during the reporting period”²
+Total amount of guarantees outstanding at the end of reporting period¹² (A)
+Guarantees by the Company to the controlled subsidiaries
+Total amount of guarantee provided to controlled subsidiaries during the reporting period
+Total amount of guarantee for controlled subsidiaries outstanding at the end of the reporting period (B)
+Total amount of guarantees for the Company (including those provided for controlled subsidiaries)
+Total amount of guarantees(A+B)
+The proportion of the total amount of guarantees to the Sinopec Corp.'s net assets
+Guarantees provided for shareholder, de facto controller and its related parties (C)
+Amount of debt guarantees provided directly or indirectly to the companies with liabilities to assets ratio over 70% (D)
+The amount of guarantees in excess of 50% of the net assets (E)
+Total amount of the above three guarantee items (C+D+E)
+Statement of guarantee undue that might be involved in any joint and several liabilities
+Statement of guarantee status
+*1:
+As defined in the Listing Rules of the Shanghai Stock Exchange.
+14,108
+Limited
+Whether
+guaranteed
+company
+itself
+Significant Events
+Significant Events
+SIGNIFICANT EVENTST (CONTINUED)
+6 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
+Major external guarantees (excluding guarantees for controlled subsidiaries)
+Unit: RMB million
+for
+33
+Amount
+Relationship
+with the
+Guarantor
+Sinopec Corp.
+Company
+Name of
+guaranteed
+company
+Whether
+Whether
+Amount
+connected
+The listed
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+5 SIGNIFICANT ASSETS AND EQUITY SALE
+On 2 August 2016, the 7th meeting of
+sixth session of the board of directors of
+Sinopec Corp. considered and approved
+the proposal to introduce capital to invest
+in Sichuan-to-East China natural gas
+pipeline project, and agreed to take the
+Sichuan-to-East China Pipeline Co. as the
+platform to introduce capital publicly.
+On 12 December 2016, Sinopec Natural
+Gas Co., Ltd. ("Natural Gas Company"),
+a wholly-owned subsidiary of Sinopec
+Corp., entered into the capital injection
+agreement in relation to Sichuan-to-
+East China Pipeline Co. with China Life
+Insurance Company Limited ("China Life")
+and SDIC Communications Holding Co.,
+Ltd. ("SDIC Communications"). China life
+and SDIC Communications subscribed a
+total of 50% equity interest in Sichuan-to-
+East China Pipeline Co., a wholly-owned
+Within five years, commencing
+from 15 March 2012
+We hereby present the following opinions:
+Yes
+Other undertakings
+Other
+China Petrochemical
+Corporation
+in order to avoid competition with Sinopec Corp. in the
+chemicals business.
+subsidiary of Natural Gas Company, in cash
+with an aggregate amount of RMB 22.8
+billion, among which China Life paid RMB 20
+billion and SDIC Communications paid RMB
+2.8 billion. Upon the completion of capital
+injection, the registered capital of Sichuan-to-
+East China Pipeline Co. increased from RMB
+100 million to RMB 200 million, and each of
+Natural Gas Company, China Life and SDIC
+Communication will hold 50%, 43.86% and
+6.14% equity interest in Sichuan-to-East
+China Pipeline Co., respectively. 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 13
+December 2016 and the announcement
+published on the website of the Hong Kong
+Stock Exchange on 12 December 2016.
+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
+Within 10 years after
+29 April 2014 or the date
+when China Petrochemical
+Corporation acquires the assets
+32
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Yes
+Yes
+Since 2012, China Petrochemical
+Corporation has earnestly fulfilled its
+undertaking in eliminating competitions
+in chemical business with Sinopec Corp.
+through: (1) subscribing capital contribution
+of joint ventures controlled by Sinopec
+Corp., by way of injecting net assets of
+certain chemical business and cash; (2)
+authorising Sinopec Corp. to be in charge
+of production plan, management and sales
+of the remaining chemical business. The
+competition in chemical business between
+China Petrochemical Corporation and
+Sinopec Corp. has been eliminated.
+As of the date of this report, Sinopec Corp.
+had no undertakings in respect of profits,
+asset injections or asset restructuring that
+had not been fulfilled, nor did Sinopec Corp.
+make any profit forecast in relation to any
+asset or project.
+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.
+Sinopec Refining
+Company(YASREF)
+Yueyang Sinopec
+Transaction date
+(date of signing)
+10 December 2003
+Sinopec Corp.
+The listed
+company
+itself
+Zhongtian Hechuang
+Energy Co., Ltd
+11,545
+25 May 2016
+25 May 2016-
+Corporation
+Joint obligations
+31 December 2023
+(the mature date
+is estimated)
+10 December 2017
+Sinopec Corp.
+The listed
+Yanbu Aramco
+No No - No Yes
+68
+Gasification
+- No
+completed
+overdue
+of
+overdue
+parties
+Counter-
+(yes
+company
+itself
+No
+Corp. Shell Coal
+Туре
+or not
+or not
+guarantee guaranteed
+or no)*1
+Joint obligations
+No No
+Period of guarantee
+10 December 2003 -
+10 December 2017
+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.
+2.27
+No significant litigation, arbitration relating
+to the Company occurred during the
+reporting period.
+☐ Poverty alleviation through tourism development
+☑ Poverty alleviation through e-commerce
+☑ Poverty alleviation through assets income
+☑ Poverty alleviation through science and technology development
+☐ Others
+208
+38.42
+12,269
+2,733
+☑ Poverty alleviation through agriculture and forestry development
+1,589
+1.21
+3.15
+2,797
+2.48
+5.1 Investment in medical and health care resources in proverty.
+striken areas
+6. Poverty alleviation through ecological protection
+6.1 Items
+94
+6.2 Investment in ecological protection
+27,775
+100.56
+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 Investment 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 Investment in professional skill training
+2.2 Participants of professional skill trainings (person time)
+2.3 Number of people employed
+4.89
+3. Poverty elimination through relocation
+3.2 Investment in poverty alleviation projects through relocation
+4. Poverty elimination through education
+4.1 Investment in students funding
+4.2 Number of students who received funding assistance
+4.3 Investment in education resources in poverty-stricken areas
+5. Poverty alleviation through healthcare
+Data
+3.1 Number of relocated people provided with employment
+7. Guarantee basic living standard
+7.1 Investment in left-behind children, women and senior people
+7.2 Number of left-behind children, women and senior people
+assisted
+7.3 Investment in assisting the disabled
+7.09
+0.06
+220
+44.97
+15,506
+Other investments include external fund raised by the employee
+from our subsidiaries who participated in the poverty elimination plans
+(4) 2017 Targeted Poverty Alleviation Plan
+0.02
+In 2017, we will continue to enhance our efforts on targeted poverty alleviation and efficiency improvements. We will implement our Targeted
+Poverty Alleviation program to eradicate poverty by production development, relocation, ecological compensation, education, as well as by
+guaranteeing basic living standards to ensure the effectiveness of the program.
+37
+Significant Events
+e
+MODEC
+中国石化 SINOPEC
+1345
+Granting licenses for intellectual property rights;
+Avoiding competition within the same industry;
+Abandonment of business competition and
+conflicts of interest with Sinopec Corp.
+China Petrochemical China Petrochemical Corporation would dispose of its
+Corporation
+minor remaining chemicals business within five years
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+424
+0.44
+829
+7.4 Number of the disabled helped
+8. Poverty alleviation through social projects
+8.1 Investment in coordinated poverty alleviation
+in East and West China
+8.2 Investment in targeted poverty alleviation programs
+8.3 Public Welfare funds for poverty alleviation
+9. Other projects
+9.1 Number of projects
+9.2 Total investment
+9.3 Number of people lifted out of poverty
+9.4 Other projects overview
+☑Conduct ecological protection and construction
+☐ Develop ways for ecological protection and compensation
+☑Set up ecological public welfare positions
+☐ Others
+6.24
+1.79
+1.46
+II. Investment breakdowns
+8 SIGNIFICANT LITIGATION, ARBITRATION
+RELATING TO SINOPEC CORP.
+3. Number of people lifted out of poverty
+1. Funds
+Interest
+Rate
+6.00%
+or
+Development, Ltd.
+Maoming-BASF, Ltd.
+0.6
+5 years
+4.75%
+Term
+5 years
+Purpose guarantor
+Working
+None
+capital loan
+Project
+construction
+Whether
+involved
+roll-over
+in lawsuit
+or not
+or not
+Connected
+relationship
+Whether connected
+overdue transaction
+or not or not
+No
+Gain
+0.2
+billion)
+9 INSOLVENCY AND RESTRUCTURING
+During the reporting period, the Company
+was not involved in any insolvency or
+restructuring matters.
+10 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.
+11 CREDIBILITY FOR THE COMPANY,
+CONTROLLING SHAREHOLDERS AND DE
+FACTO CONTROLLER
+During the reporting period, the Company
+and its controlling shareholder did not have
+any court's effective judgments which should
+be performed or any large amount of debt
+which should be repaid.
+12 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.
+Ningbo Gaotou Petroleum
+13 ENTRUSTED ASSET MANAGEMENT AND ENTRUSTED LOANS
+During the reporting period, the Company has no entrusted asset management subject to disclosure obligation.
+(2) Entrusted loans
+Whether
+Whether
+Amount
+(RMB
+Mortgage
+Borrower
+(1) Entrusted Asset Management
+or loss
+No
+No
+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.
+15 APPROPRIATION OF NONOPERATIONAL
+FUNDS BY THE CONTROLLING
+SHAREHOLDER AND ITS RELATED PARTIES
+AND THE PROGRESS FOR CLEARING UP
+Not applicable
+16 STRUCTURED ENTITY CONTROLLED BY
+THE COMPANY
+None
+17 DETAILED IMPLEMENTATION OF THE
+SHARE INCENTIVE SCHEME DURING THE
+REPORTING PERIOD
+Sinopec Corp. did not implement any share
+incentive scheme during the reporting period.
+18 ENVIROMENTAL PROTECTION BY SINOPEC
+CORP AND ITS SUBSIDIARIES
+Some branches and subsidiaries of
+Sinopec Corp. are major pollutant
+discharging companies stipulated by
+China's environmental protection agencies.
+Pursuant to relevant regulations and specific
+requirements of local related authorities,
+environmental information of these
+companies has been disclosed publicly. For
+more details, please refer to the website of
+local government.
+19 POVERTY ALLEVIATION PROGRAM
+LAUNCHED BY SINOPEC CORP
+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 making payments, China Petrochemical
+Corporation will ensure that Century Bright
+Company will fulfill its repayment obligation
+through various channels.
+(1) Targeted Poverty Alleviation Plan
+The Company has strictly followed the
+nation's poverty elimination program
+under the thirteenth five-year plan,
+persisted in targeted objects, targeted
+project planning, targeted utilisation
+of funds, targeted measures based on
+households, targeted personnel based on
+village and targeted poverty elimination
+effect, and uphold the principle of "blood-
+making style" and "blood-transfusion
+style" poverty alleviation. We also
+increased our investment, enhanced fund
+management, aimed at work innovation,
+emphasised supervision protocols and
+guaranteed work efficiency to ensure
+the effectiveness of the targeted poverty
+alleviation plan.
+In 2016, the Company focused on poor
+villages and households, implemented
+targeted poverty elimination plans in
+infrastructure construction, labor output
+trainings, rural industry development,
+poverty relief and education assistance.
+We invested RMB 105.45 million in
+targeted poverty alleviation, helped
+27,775 registered people out of poverty
+and funded the education of 2,797
+students.
+Significant Events
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(3) 2016 Targeted Poverty Alleviation Work Statistics
+Unit: RMB million
+Index
+I. Overview
+(2) Overview on 2016 Targeted Poverty
+Alleviations
+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
+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 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
+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.
+14 DEPOSITS AT SINOPEC FINANCE CO., LTD.
+AND SINOPEC CENTURY BRIGHT CAPITAL
+INVESTMENT, LTD.
+No
+Joint Venture
+Gain
+None
+No
+No
+No
+No
+Joint Venture
+Gain
+(3) Other asset management and derivative investment
+During the reporting period, the Company has no other asset management and derivative investment subject to disclosure obligation.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+35
+Significant Events
+36
+SIGNIFICANT EVENTST (CONTINUED)
+2. Value of goods and materials
+Other
+98
+6
+30
+Significant Events
+29
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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)
+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, 1201, 102, 15
+01 and 1502and reaffirmed AAA credit rating. The long term credit rating and outlook of Sinopec Corp. remained at AAA and stable
+respectively.
+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.
+Significant Events
+(010) 6505 1166
+27th-28th Floor, China World Office 2, 1 Jianguomenwai Avenue, Chaoyang District, Beijing
+China International Capital Corporation Limited
+Shanghai Stock Exchange
+1501 and 1502 were publicly offered to qualified investors in accordance with Administration of the Issuance and Trading of
+Corporate Bonds
+Sinopec Corp. had paid in full the interest accrued for the current period interest payment year.
+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
+Credit rating agency
+Use of proceeds
+Credit rating agency
+Corporate bonds trustee
+Huang Xu, Zhai Ying
+SIGNIFICANT EVENTS
+Principal data
+2016
+EBITDA to total debt ratio
+(0.99)
+percentage
+points
+45.44
+0.12
+0.41
+0.13
+0.72
+Change
+23.09%
+2015
+159,605
+Mainly due to improvement of
+cash flow from operating activities
+cash at bank and on hand
+Mainly due to the significant increase of
+Mainly due to the significant increase of
+cash at bank and on hand
+earnings compared with last year
+Mainly due to the increase of
+Reasons for change
+Principal accounting data and financial indicators for the two years ended 31 December 2016
+44.45
+Liability-to-asset ratio (%)
+0.53
+Quick ratio
+0.85
+Current ratio
+196,464
+EBITDA (RMB million)
+Listing place
+Investor Qualification Arrangement
+Payment of interests
+Principal and interest repayment
+136039
+15石化01
+2016 Corporate bond (first issue)
+Sinopec Corp.
+The 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 is expected to be completed
+and operational in December 2017. The
+Company's self-owned fund accounts
+for 40% of the project investment and
+bank loan is the main source of the other
+60%. By the end of 2016, the cumulative
+investment was RMB 8.2 billion.
+(4) Tianjin LNG project
+fund accounts for 40% of the project
+investment and bank loan is the main
+source of the other 60%. By the end of
+2016, the cumulative investment was
+RMB 9.7 billion.
+Amount issued (RMB billion)
+Maturity date
+Issuance date
+Code
+Abbreviation
+Bond name
+Basic information of corporate bonds
+2 CORPORATE BONDS ISSUED AND INTEREST PAYMENTS
+The Guangxi 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 put into operation in
+April 2016. The Company's self-owned
+(3) Guangxi LNG project
+The production capacity building of
+Yuanba marine facies gas field with total
+production capacity of 3.4 billion cubic
+meters per year has been completed by
+the end of 2016. The Company's self-
+owned fund accounts for 50% of the
+project investment and bank loan is the
+main source of the other 50%. By the
+end of 2016, the cumulative realised
+investment was RMB 12.8 billion.
+(2) Yuanba gas field project
+In accordance with the guidance of
+"overall deployment and stage-wise
+implementation", the second phase
+of production capacity building was
+promoted comprehensively in 2016. The
+Company's self-owned fund accounts
+for 50% of the project investment and
+bank loan is the main source of the other
+50%. By the end of 2016, the cumulative
+realised investment was RMB 29.3 billion
+and total production capacity was 7
+billion cubic meters per year. According
+to the plan, by the end of 2017, the total
+production capacity will be 10 billion
+cubic meters per year.
+(1) Fuling shale gas project
+1 MAJOR PROJECTS
+SIGNIFICANT EVENTS
+中国心
+Other undertakings
+Sinopec Corp.
+2010 Corporate bond
+10石化02
+122052
+21 May 2010
+0.99
+Sinopec Corp.
+12石化02
+122150
+Outstanding balance (RMB billion)
+Interest rate (%)
+3.7
+3.3
+4.90
+4
+16
+7
+4
+16
+7
+4.26
+13
+13
+9
+4.05
+9
+2020
+2018
+21 May 2020
+19 November
+19 November
+1 June 2022
+1 June 2017
+19 November 2015
+1 June 2012
+15石化02
+136040
+2012 Corporate bond
+12石化01
+122149
+0.62
+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.
+Mainly due to the increase of
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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 became
+invalid.
+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.
+commencing from the grant date, but
+(v) Validity Period and Exercise
+Arrangement under the Initial Grant
+The validity period of the share
+options shall be five years
+dividends, capitalisation of capital
+reserves, distribution of bonus shares,
+subdivision of shares or reduction
+of shares, and rights issue, an
+adjustment to the exercise price shall
+be made in accordance with Scheme.
+On 15 June 2016, The 2015 profit
+distribution plan of Shanghai Petro
+has been approved at its 2015 annual
+general meeting. Cash dividend was
+decided to be RMB 1 per 10 shares
+and the excerise price of the share
+option was adjusted to RMB 4.10 per
+share.
+determination on exercise price of
+share options disclosed by Shanghai
+Petro, the exercise price under the
+initial grant is RMB 4.20 per share
+(until the expiration of the validity
+period of the Share Options, in the
+case of, among others, payment of
+According to the basis of
+(iv) Exercise Price under the Initial Grant
+As at the end of reporting period,
+Shanghai Petro granted 35,970,000
+A share options to key business
+personnel.
+(iii) Share options granted to employees
+of Shanghai Petro in addition to
+persons mentioned in item (ii) during
+the reporting period
+Mr. Ye Guohua resigned as the executive director, vice president and chief financial officer of Shanghai Petro on 26 January 2017. According to the Scheme,
+his granted share options become invalid.
+*
+(L): Long position;
+Beneficial owner
+0.002
+250,000(L)
+Beneficial owner
+0.004
+430,000(L)
+Director and Vice President
+Vice President
+Beneficial owner
+0.004
+430,000(L)
+Director and Vice President
+31
+Chief Financial Officer
+Significant Events
+32
+5
+4
+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.);
+3
+Solving the issues regarding the legality of land-
+use rights certificates and property ownership
+2
+0.37
+performed or not
+Yes
+No
+From 22 June 2001
+Compliance with the connected transaction
+agreements;
+China Petrochemical 1
+Corporation
+Offerings (IPOs)
+Public Offerings (IPOs)
+deadline or not
+Term for performance
+Contents
+Party
+Type of
+Undertaking
+Initial Public
+Undertakings related to Initial
+Background
+Whether strictly
+Whether bears
+4 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
+SIGNIFICANT EVENTST (CONTINUED)
+Significant Events
+Beneficial owner
+(IPOs)
+430,000(L)
+3 SHARE OPTION INCENTIVE SCHEME OF
+SINOPEC CORP.'S SUBSIDIARY, SINOPEC
+SHANGHAI PETROCHEMICAL COMPANY
+LIMITED ("SHANGHAI PETRO"), DURING
+THE REPORTING PERIOD
+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 on 24
+October 2013. During the reporting period,
+the Company has paid in full the interest and
+principal of notes with maturity of 3 years
+and the current-period interests of all notes
+with maturity of 5 years, 10 years and 30
+years.
+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%; 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
+During the reporting period, the Company
+paid in full the interest accrued for the other
+bonds and debt financing instruments. As
+at 31 December 2016, the standby credit
+line provided by several domestic financial
+institutions to the Company was RMB 256.4
+billion in total, facilitating the Company to
+get such amount of unsecured loans. During
+the reporting period, Sinopec Corp. fulfilled
+relevant undertakings in the prospectus
+of corporate bonds. During the reporting
+period, Sinopec Corp. had no significant
+matters which could influence the Company's
+operation and debt paying ability.
+Loan repayment rate (%)
+Interest payment rate (%)
+100
+100
+100
+100
+Mainly due to the increase of earnings
+from operating activities
+Mainly due to the improvement of the cash flow
+Mainly due to the increase of earnings
+2.49
+19.29
+21.78
+EBITDA-to-interest coverage ratio
+12.06
+23.07
+35.13
+Cash flow interest coverage ratio
+2.07
+9.85
+Interest coverage ratio
+earnings and decrease of debts
+0.004
+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 Petro (10,800 million shares) nor
+exceed 10% of the total A share capital
+of Shanghai Petro (7,305 million shares).
+As of 31 December 2016, the number of
+the underlying shares of the share options
+to be granted by Shanghai Petro to the
+participants represents 0.35% of the total
+share capital of Shanghai Petro (10,800
+million shares). The vesting period for each
+grant under the Scheme shall be no less
+than two years.
+7.78
+For the details of the purpose of the
+Scheme, eligible participants and
+maximum entitlement of each participant,
+underlying shares and incentive
+instrument, validity period, please refer
+to page 31-33 of Sinopec Corp's 2015
+Annual Report published on 29 March
+2016.
+0.005
+(1) Summary of the Scheme
+500,000(L)
+Jin Qiang
+Guo Xiaojun
+Jin Wenmin
+Ye Guohua*
+Gao Jinping
+0.005
+500,000(L)
+Chairman and President
+Wang Zhiqing
+capital
+(%)
+Percentage of
+total H share
+Vice Chairman and Vice President
+Director, Vice President and
+period
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(2) Information on the Initial Grant of the Share Option
+Percentage of
+total share
+capital
+(%)
+(i) Initial Grant of the Share Option:
+Grant Date: 6 January 2015
+Number of Participants: 214 persons
+Status
+Beneficial owner
+Beneficial owner
+Number of Share Options Granted: 38,760,000
+Position
+(ii) Unexercised share options granted to Directors, senior management and substantial shareholders of Shanghai Petro as of 31 December 2016
+No. of share
+options held
+at the end of
+the reporting
+Name
+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
+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
+did not establish a Nomination
+Committee, the Board will perform
+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. Nine out
+of total ten Directors of the Board
+were elected at the annual general
+meeting of shareholders for the
+year 2014; one was elected at the
+first extraordinary general meeting
+of shareholders for the year 2016.
+a. Considering that the Board
+A.5 Nomination Committee
+newly appointed 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.
+c. Sinopec Corp. engages
+professional consultants to
+prepare detailed materials for
+b. All Directors of Sinopec Corp.
+have been elected at the general
+meeting of shareholders. The
+Board has no power to appoint
+temporary Directors.
+a. The term of each session of the
+Directors of Sinopec Corp. is three
+years, and the consecutive term
+of office of an Independent Non-
+executive Director cannot exceed
+six years.
+b. Sinopec Corp. has received from
+each of the Independent Directors
+a letter of confirmation for 2016
+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.
+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.
+Chairman and Executive Directors
+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.
+members (please refer to the
+Directors, Supervisors, Other
+Senior Management and
+Employees in this annual report),
+of which, five are Executive
+Directors; five are Non-executive
+Directors (including 4 Independent
+Non-executive Directors, which
+represent more than one-third
+of the Board). The Board has
+a fairly good diversity. The
+a. The Board consists of ten
+Corporate Governance
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+b. The Chairman of the Board places
+great emphasis on communication
+with the Independent Directors.
+The Chairman independently
+held two meetings with the
+Independent Directors in respect
+of development strategy, corporate
+governance and operational
+management, etc. of Sinopec
+Corp.
+a. Mr. Wang Yupu serves as
+Chairman of the Board and Mr.
+Dai Houliang serves as Vice
+Chairman of the Board and
+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.
+A.6 Responsibility of Directors
+A.2 Chairman and President
+A.4 Appointment, re-election and
+dismissal
+A.3 Board composition
+B Remuneration and Appraisal Committee
+a. Remuneration and Appraisal
+b. Each of the Directors was able to
+devote sufficient time and effort to
+handling the matters of Sinopec
+Corp.
+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.
+e. The Secretary to the Board assists the
+Directors in handling the daily work of
+the Board, continuously informs the
+C.2 Internal Control and Risk
+Management
+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. 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
+status 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, its performance and the
+cash flow of the Company during
+the period. The Board approved
+the Financial Report for 2016 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 Accountability and Auditing
+C.1 Financial reporting
+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.
+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 2016.
+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 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.
+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.
+Committee (Remuneration
+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. Each Director can obtain
+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.
+A.7 Provision of and access to
+information
+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.
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+45
+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.
+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
+d. The Board has reviewed and
+evaluated its performance in 2016
+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.
+4 PERFORMANCE OF THE INDEPENDENT
+DIRECTORS
+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 2016, Sinopec Corp. held six
+Board meetings. For details about the
+attendance of each Director, please
+refer to the Report of the Board of
+Directors in this annual report.
+*: affiliated companies include subsidiaries, associates and joint ventures.
+174
+26,843
+Loans and other accounts receivable and accounts payable
+No material negative impact
+2,872
+29,541
+(119)
+55
+2,753
+29,596
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+41
+Reason for provision of funds between related parties
+Impacts on the Company
+Connected Transactions
+Corporate Governance
+1 IMPROVEMENTS IN CORPORATE
+GOVERNANCE DURING THE REPORTING
+PERIOD
+During the reporting period, Sinopec Corp.
+was in full compliance with domestic
+and overseas laws and regulations as
+well as the Articles of Association of the
+Company, and operates in line with all legal
+requirements and its corporate governance
+has been further improved. The Board and
+Board committees' members and senior
+management staff were adjusted in time,
+based on personnel changes. Shareholders'
+meetings, Board meetings and meetings
+of Board of Supervisors were organised
+in a standardised and efficient manner.
+Independent directors have played their
+roles dutifully by offering suggestions
+to the Company for its planning, reform
+and development plan for the "Thirteenth
+Five-Year" Period. Oriented at investors'
+demand, bilateral communication has been
+strengthened, high-quality information
+disclosure conducted, and green low-
+carbon development actively promoted and
+practiced, winning the recognition of the
+capital market and the society as a whole.
+During the reporting period, there are no
+significant differences in Sinopec Corp.'s
+corporate governance and the requirements
+from the PRC Company Law and related
+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 criticized 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.
+2 ANNUAL GENERAL MEETING
+During the reporting period, Sinopec Corp.
+convened the 1st extraordinary general
+meeting for 2016 and 2015 annual general
+meeting in Beijing, China on 25 February
+2016 and 18 May 2016 respectively in
+accordance with relevant laws and regulations
+and procedures of noticing, convening
+and holding pursuant to 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 each meeting.
+3 EQUITY INTERESTS OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+As of 31 December 2016, 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, 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.
+46
+CORPORATE GOVERNANCE
+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.
+Associates and joint ventures
+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, 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), 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, dividend
+distributions and appointments of senior
+management 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
+independently and objectively protected the
+legitimate interests of the Company and
+the shareholders, especially the minority
+shareholders, when performing their duties.
+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.
+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 in view of its actual situation.
+The board of directors of Sinopec Corp.
+(Board) would perform the duties of the
+Nomination Committee prescribed in the
+Corporate Governance Code.
+Based on its actual circumstances,
+Sinopec Corp. did not establish
+Governance Code
+(1) Compliance with the Corporate
+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, 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.
+5
+SENIOR MANAGEMENT APPRAISAL AND
+INCENTIVE SCHEMES
+8
+7 IMPROVEMENT AND IMPLEMENTATION OF
+THE INTERNAL CONTROL SYSTEM
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+44
+43
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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.
+COMPANY'S INDEPENDENCE FROM
+CONTROLLING SHAREHOLDER
+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 published
+by the Company on the same day of this
+annual report.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+b. In terms of internal control,
+(b) when there is no government-prescribed
+price but there is a government-guidance
+price, the government-guidance price will
+apply;
+(c) when there is neither a government-
+prescribed price nor a government-
+guidance price, the market price will
+apply; or
+(d) when none of the above is applicable, the
+price for the provision of the products
+or services is to be agreed upon by
+the relevant parties, and shall be the
+reasonable cost incurred in providing the
+products or services plus 6% or less of
+such cost.
+For details of the pricing principle, please
+refer to relevant announcements published
+on 27 August 2015 in the China Securities
+Journal, the Shanghai Securities News and
+the Securities Times and on the websites of
+the Shanghai Stock Exchange and the Hong
+Kong Stock Exchange.
+Decision-making procedures:
+The major continuing connected transaction
+agreements were entered into in the ordinary
+course of the Company's business and in
+accordance with normal commercial terms
+that are fair and reasonable to the Company
+and its shareholders. The Company,
+according to internal control procedures,
+adjusts the scope and 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,
+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 34 to the financial statements
+prepared under the IFRS in this annual
+report, also fall under the definition of
+connected transactions under Chapter 14A of
+the Hong Kong Listing Rules.
+The above-mentioned connected transactions
+between the Company and Sinopec Group
+in 2016 were approved at the 12th meeting
+of the sixth session of the Board and has
+complied with the disclosure 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
+(a) The government-prescribed price will
+apply;
+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.
+(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.
+(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.
+40
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+4 OTHER SIGNIFICANT CONNECTED TRANSACTIONS OCCURED THIS YEAR
+There are no other significant connected transactions during the reporting period.
+5 FUNDS PROVIDED BETWEEN RELATED PARTIES
+After reviewing the above-mentioned
+connected transactions, the independent
+non-executive directors of Sinopec Corp.
+have confirmed the following:
+Principle of pricing for the continuing
+connected transactions:
+CONNECTED TRANSACTIONS (CONTINUED)
+Corporate Governance
+CONNECTED TRANSACTIONS
+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:
+(1) The Company and China Petrochemical
+Corporation will mutually supply ancillary
+services for products, production and
+construction services (Mutual Supply
+Agreement)
+(2) China Petrochemical Corporation
+will provide trademarks, patents and
+computer software to the Company for
+use free of charge
+(3) China Petrochemical Corporation will
+provide cultural and educational, hygienic
+and community services to the Company
+(Cultural and Educational Hygienic and
+Community Services Agreement)
+(4) China Petrochemical Corporation will
+provide leasing services for lands and
+certain properties to the Company
+(5) China Petrochemical Corporation will
+provide comprehensive insurance to the
+Company
+(6) China Petrochemical Corporation will
+provide shareholders' loans to the
+Company and
+(7) The Company will provide franchise
+licenses for service stations to China
+Petrochemical Corporation.
+On 26 August 2015, Sinopec Corp. and
+China Petrochemical Corporation entered
+into a supplementary agreement of the
+continuing connected transactions, whereby
+the terms of the Mutual Supply Agreement
+and the Cultural and Educational, Hygienic
+and Community Services Agreement were
+extended from 1 January 2016 to 31
+December 2018. The resolution relating to
+continuing connected transactions for the
+three years from 2016 to 2018 was approved
+at the first extraordinary general meeting
+for 2015 held on 23 October 2015. For
+details of the above continuing connected
+transactions, please refer to relevant
+announcements published on 27 August
+2015 in the China Securities Journal, the
+Shanghai Securities News and the Securities
+Times and on the websites of the Shanghai
+Stock Exchange and the Hong Kong Stock
+Exchange (dated 26 August 2015). The
+capitalised terms used in this section shall
+have the same meaning as that used in the
+above-mentioned announcements.
+2 COMPLIANCE OF DISCLOSURES AND
+APPROVALS OF CONTINUING CONNECTED
+TRANSACTIONS BETWEEN THE COMPANY
+AND SINOPEC GROUP WITH HONG KONG
+LISTING RULES AND THE SHANGHAI
+LISTING RULES
+Pursuant to the Hong Kong Listing Rules and
+the Shanghai Listing Rules, the continuing
+connected transactions between the
+Company and Sinopec Group are generally
+subject to full disclosure based on the nature
+and the value of the transactions, and are
+also subject to approvals of independent
+non-executive directors and/or independent
+shareholders. The Hong Kong Stock
+Exchange and Shanghai Stock Exchange
+exempted Sinopec Corp. from full compliance
+with the relevant listing rules regarding the
+above continuing connected transactions and
+conditionally exempted Sinopec Corp. from
+complying with the continuous disclosure
+obligations.
+There was no change to the above-mentioned
+supplementary agreements on continuing
+connected transactions during the reporting
+period. The aggregated amount of the
+continuing connected transactions for 2016
+of the Company is in compliance with the
+relevant requirements of the Hong Kong
+Listing Rules and the Shanghai Listing
+Rules. For performance details of connected
+transaction agreements, please refer to Item
+3 below.
+3 ACTUAL CONTINUING CONNECTED
+TRANSACTIONS ENTERED INTO BY THE
+COMPANY DURING THE YEAR
+Sinopec Corp. and China Petrochemical
+Corporation have implemented the relevant
+framework agreements in relation to the
+continuing connected transactions, including
+Mutual Supply Agreement, Cultural,
+Educational, Hygiene and Community
+Services Agreement, Land Use Rights Leasing
+Agreement, Properties Leasing Agreement,
+Intellectual Property Licence Agreements and
+SPI Fund Document.
+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 260.704 billion.
+Among the transaction amount, purchases
+expenses amounted to RMB 179.82 billion,
+representing 9.32% of the total amount of
+this type of transaction for the reporting
+period, including purchases of products and
+services (procurement, storage, exploration
+and development services, and production-
+related services) of RMB 161.317 billion,
+purchases of auxiliary and community
+services of RMB 6.584 billion. The housing
+rent paid by the Company amounted to
+RMB 449 million. The rent for use of land
+was RMB 10.474 billion. Interest expenses
+amounted to RMB 996 million. The sales
+income amounted to RMB 80.884 billion,
+representing 4.04% of the total amount of
+this type of transaction for the reporting.
+period, including RMB 80.634 billion for
+sales of products and services, RMB 41
+million for agency commission income, and
+RMB 209 million for interest income.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+39
+Connected Transactions
+Connected Transactions
+In accordance with the disclosure requirement of the Shanghai Stock Exchange, where there are funds or guarantees provided between the Company
+and related parties, disclosure shall be made as to the reasons, the opening balance, the amount incurred in the current period and the ending
+balance of the funds provided, and their impacts on the Company.
+Unit: RMB million
+Funds from related parties
+Balance
+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.
+Sinopec Group
+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
+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.
+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 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 disagreement.
+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.
+must actively cooperate with the
+Audit Committee.
+d. The Audit Committee held two
+meetings with auditors without
+the presence of Sinopec Corp.'s
+Management to discuss the
+auditing of financial reports and
+the auditing fee for the year. 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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+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 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 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
+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 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.
+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.
+Related Parties
+E Investor Relations
+48
+Sinopec Corp. adopted the internal
+control framework prescribed
+in the internationally accepted
+Committee of Sponsoring
+Organizations 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
+47
+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 ensure the interests
+of all shareholders. Notices of the
+general meeting of shareholders were
+dispatched to shareholders 45 days
+(excluding the date of the general
+meeting) in advance.
+Parent company and affiliated
+companies*
+a. Sinopec Corp. pays close attention
+to investor relations. The Chairman
+of the Board, President and Chief
+Financial Officer 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.
+Relations
+Funds to related parties
+Balance
+at the
+beginning
+of the year
+20,485
+Amount
+incurred
+5,979
+Balance
+at the end
+of the year
+26,464
+26,669
+5,472
+25,957
+536
+6,515
+6,008
+at the
+beginning
+of the year
+G Shareholders' rights
+Balance at
+the end
+Amount
+incurred of the year
+Other related parties
+Total
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+F Company Secretary
+a. The Hong Kong Stock Exchange
+b. During the reporting period, the
+Secretary to the Board actively
+participated in career development
+training with more than 15 training
+hours.
+c. During the reporting period, the
+Chairman of the Board did not attend
+the annual general meeting for the
+year 2015 due to other business
+arrangement. As recommended by
+more than half number of Directors,
+the then Director & President Mr. Li
+Chunguang hosted the annual general
+meeting for the year 2015 and
+arranged the members of the Board
+and senior Management to attend the
+meeting and communicate with the
+investors extensively.
+32,472
+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 the 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.
+0
+6
+0
+Jiang Xiaoming
+6
+0
+4
+1
+Andrew Y. Yan
+4
+5
+6
+6
+0
+0
+4
+6
+6
+0
+0
+4
+6
+0
+0
+4
+6
+6
+5
+Actual Attended By
+Attendence communication
+0
+0
+0
+0
+Absent
+Attended
+by proxy
+4
+1
+6
+2. Mr. Zhang Jianhua has resigned as director of the Board on 13 Jul 2016.
+1. Mr. Li Chunguang has resigned as director of the Board on 26 Aug 2016.
+2
+meeting held
+4
+Li Chunguang
+Zhang Jianhua
+Former Director
+0
+Former Director
+Board Meetings*1
+Names
+0
+4
+6
+6
+Fan Gang
+0
+0
+4
+6
+6
+Tang Min
+No. of
+6
+meeting held
+0
+(6) The 10th meeting of the six session of
+the Board was held by written resolution
+on 27 October 2016, whereby the
+proposal in relation to the third quarterly
+results of Sinopec Corp. for the nine
+months ended 30 September 2016 was
+approved in the meeting.
+(5) The 9th meeting of the six session of
+the Board was held by written resolution
+on 28 September 2016, whereby the
+proposal in relation to the appointment of
+Mr. Wang Dehua to be the chief financial
+officer of Sinopec Corp. was approved.
+of Sinopec Corp. for the year 2016. (vii)
+Interim Report of Sinopec Corp. for the
+year 2016. (viii) the thirteenth five years
+plan summary of Sinopec corp.
+(4) The 8th meeting of the sixth session of
+the Board was held by on site meeting on
+26 August 2016, whereby the proposals
+in relation to the following matters were
+approved: (i) Nomitating and Appointing
+Mr.Dai Houliang as President of Sinopec
+Corp. (ii) Elected Mr.Dai Houliang as
+the Vice Chairman of the Board, (iii)
+The adjustment of members of the
+Board committees including Strategy
+Committee, Remuneration Committee
+and Social Responsibility Management
+Committee, (iv) Business performance
+of the first half year of 2016 and work
+plan of the latter half year of 2016
+(v) Business performance, financial
+information and other related matters
+of Sinopec Corp. for the first half year
+2016, (vi) Interim Financial statements
+(3) The 7th meeting of the six session of
+the Board was held by written resolution
+on 28 April 2016, whereby the proposal
+in relation to the capital injection into
+Sichuan-to-East China Pipeline Co. was
+approved.
+(2) The 6th meeting of the six session of
+the Board was held by written resolution
+on 28 April 2016, whereby the proposal
+in relation to the first quarterly results
+of Sinopec Corp. for the three months
+ended 31 March 2016 was approved in
+the meeting.
+listed foreign shares of Sinopec Corp.,
+(xiii) Convening the annual general
+meeting of Sinopec Corp. for the year
+2015 and to dispatch the notice of the
+annual general meeting.
+of Sinopec Corp. for the year 2015, (vii)
+Internal control assessment report of
+Sinopec Corp. for the year 2015, (viii)
+Re-appointment of external auditors of
+Sinopec Corp. for the year of 2016 and
+to authorise the Board to determine
+their remunerations, (ix) Elected Mr
+Ma Yongsheng as member of Strategy
+Committee, (x) Authorising the Board to
+determine the interim profit distribution
+plan of Sinopec Corp. for the year 2016,
+(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.
+of the Board was held by on site and
+video conference on 29 March 2016,
+whereby the proposals in relation to
+the following matters were approved: (i)
+Work Report of the Board, (ii) Business
+performance of 2015 and work plan of
+2016, (iii) Financial results and business
+performance of Sinopec Corp. for the
+year 2015, (iv) 2015 Communication on
+Progress for Sustainable Development
+Report of Sinopec Corp., (v) Financial
+Statements of Sinopec Corp. for the year
+2015, (vi) Annual Report and form 20F
+(1) The 5th meeting of the six session
+During this reporting period, Sinopec Corp.
+held six(6) Board meetings. The details are
+as follows:
+1 MEETINGS OF THE BOARD
+The Board is pleased to present the directors'
+report for the year ended 31 December 2016 for
+shareholders' review.
+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.
+REPORT OF THE BOARD OF DIRECTORS
+49
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+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 60 to
+page 71.
+(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.
+approved at Sinopec Corp.'s annual
+general meeting for the year 2015 on
+18 May 2016. The audit fee for 2016
+is RMB 51.58 million (including audit
+fee of internal control), which was
+approved at the 12th meeting of the
+sixth session of the Board. The annual
+financial statements have been audited
+by PricewaterhouseCoopers Zhong Tian
+LLP and PricewaterhouseCoopers. The
+Chinese certified accountants signing the
+report are Zhao Jianrong and Gao Peng
+from PricewaterhouseCoopers Zhong Tian
+LLP.
+The appointment of
+PricewaterhouseCoopers Zhong Tian
+LLP and PricewaterhouseCoopers as
+Sinopec Corp.'s external auditors for
+2016 and the authorisation of the Board
+to determine their remuneration were
+(2) Auditors
+d. 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.
+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.
+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.
+b. When Sinopec Corp. holds the
+Corporate Governance
+Report of the Board of Directors
+0
+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
+4
+6
+6
+Dai Houliang
+Wang Zhigang
+Zhang Haichao
+Jiao Fangzheng
+Ma Yongsheng
+Director Titles
+Independent Director
+Independent Director
+Independent Director
+Independent Director
+Director
+Director
+Director
+Director
+Vice Chairman
+0
+4
+50
+6
+Wang Yupu
+Chairman
+Absent
+by proxy
+Attended
+Board Meetings
+Actual Attended By
+Attendence communication
+1
+No. of
+Names
+Director Titles
+The sixth session of the Board Directors' attendance to the Board Meeting and the General Meetings.
+3 ATTENDANCE TO THE BOARD MEETINGS
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+6
+oo
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+0
+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. Wang Zhigang, the
+chairman of RMC holds a Ph.D. in geology
+from the Geology and Geophysics Research
+Institute of the Chinese Academy of Sciences
+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
+doctorates 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.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Our reserves estimates are guided by
+procedural manuals and technical experts. A
+number of working divisions at the production
+bureau level, including the exploration,
+development, financial and legal divisions,
+are responsible for initial collection and
+compilation of information about reserves.
+Exploration and development division
+collectively 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 of annual
+changes and results in the reserves estimate,
+and disclosure of our proved reserves.
+We also engage outside consultants to
+assist in our compliance with the rules
+and regulations of the U.S. Securities
+and Exchange Commission. Our reserves
+estimation process is further facilitated by
+a specialised reserves database, which is
+improved and updated periodically.
+24 CORE COMPETITIVENESS ANALYSIS
+The Company is a large scale integrated
+energy and petrochemical company with
+upstream, mid-stream and downstream
+operations. The Company is a large scaled
+oil and gas producer in China; in respect
+of refining capacity, it ranks first in China;
+equipped with a well-developed refined oil
+products sales network, the Company is the
+largest supplier of refined oil products in
+China; and in terms of ethylene production
+capacity, the Company takes the first
+position in China, and has a well-established
+marketing network for chemical products.
+The integrated business structure of
+the Company carries strong advantages
+in synergy among its various business
+segments, enabling the Company to
+continuously tap onto potentials in attaining
+an efficient and comprehensive utilization
+of its resources, and endowed the Company
+with strong resistance against risks, as well
+as remarkable capabilities in sustaining
+profitability.
+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.
+The Company enjoys a favorable 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
+specialized 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 favorable
+operational cost advantage in its downstream
+businesses.
+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 brand name, plays
+an important role in the economy and is a
+renowned and reputable company in China.
+25 RISK FACTORS
+In the course of its production and
+operations, the Company will actively take
+various measures to circumvent operational
+risks. However, in practice, it may not be
+possible to prevent the occurrence of all
+risks and uncertainties described below.
+Risks with regard to the variations from
+macroeconomic situation: The business
+results of the Company are closely related
+to China's and global economic situation.
+The development of Chinese economy has
+entered New Normal. Although various
+countries have adopted different kinds
+of macroeconomic policies to eliminate
+negative effects caused by lower growth of
+global economy, the turnaround of economic
+recovery still remains uncertain. The
+Company's business could also be adversely
+affected by such factors as the impact on
+export due to trade protectionism from some
+countries, and impact on import which is
+likely caused by regional trade agreements
+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 the 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 some extent.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+The Company has formulated a well-
+established technology system and
+mechanism, and owns competent teams
+specialised in scientific research 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, chemicals 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
+strong capability for technical innovations.
+23 OIL & GAS RESERVE APPRAISAL
+PRINCIPLES
+For the reporting period, the Company has
+not entered into any equity-linked agreement.
+22 EQUITY-LINKED AGREEMENTS
+14 RESERVES
+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.
+15 DONATIONS
+During this reporting period, the amount of
+charity donations made by Sinopec Corp.
+amounted to RMB 133 million.
+16 PRE-EMPTIVE RIGHTS
+Pursuant to the Articles of Association
+and the laws of the PRC, the shareholders
+of Sinopec Corp. are not entitled to any
+pre-emptive rights; therefore the existing
+shareholders cannot request Sinopec Corp.
+for the right of first refusal in proportion to
+their shareholdings.
+17 REPURCHASE, SALES AND REDEMPTION
+OF SHARES
+During this reporting period, neither
+Sinopec Corp. nor any of its subsidiaries
+repurchased, sold or redeemed any listed
+shares of Sinopec Corp. or its subsidiaries.
+18 DIRECTORS' INTERESTS IN COMPETING
+BUSINESS
+During the reporting period, the competing
+businesses in chemicals segment between
+Sinopec Group and the Company were
+solved. For details for the positions held by
+the directors of Sinopec Corp. (excluding
+independent non-executive directors), please
+refer to the chapter Directors, Supervisors,
+Senior Management and Employees of this
+annual report.
+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.
+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.
+21PERMITTED 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 provided
+in such directors liability insurance in respect
+of potential liability and costs associated
+with legal proceedings that may be brought
+against such directors.
+55
+Report of the Board of Directors
+56
+Report of the Board of Directors
+58
+58
+Report of the Board of Supervisors
+REPORT OF THE BOARD OF SUPERVISORS
+Dear Shareholders:
+In 2016, 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 (4) meetings in total,
+and mainly reviewed and approved Sinopec
+Corp.'s annual report, financial statement,
+communication on progress report for
+sustainable development, internal control
+assessment report and working report of the
+board of supervisors etc.
+On 28 March 2016, the 4th meeting of the
+sixth session of the Board of Supervisors was
+held, and Financial Statements of Sinopec Corp.
+for 2015, Annual Report of Sinopec Corp. for
+2015, 2015 Communication on Progress for
+Sustainable Development Report of Sinopec
+Corp., Internal Control Assessment Report of
+Sinopec Corp. for 2015, Report on the Work of
+Board of Supervisors of Sinopec Corp. for 2015
+were reviewed and approved at the meeting.
+On 28 April 2016, the 5th meeting of the sixth
+session of the Board of Supervisors was held,
+and the First Quarterly Report of Sinopec Corp.
+for 2016 was approved at the meeting.
+On 26 August 2016, the 6th meeting of the sixth
+session of the Board of Supervisors was held,
+and the Interim Financial Statements of Sinopec
+Corp. for 2016 as well as Interim Report of
+Sinopec Corp. for 2016 were reviewed and
+approved at the meeting.
+On 27 October 2016, the 7th meeting of the
+sixth session of the Board of Supervisors was
+held, and Third Quarterly Report of Sinopec
+Corp. for 2016 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. And these
+activities 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 oil products in domestic
+market and fluctuation of international crude
+oil prices at low level, 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.
+Make 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.
+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
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Report of the Board of Directors
+During this reporting period, changes to the
+fixed assets of Sinopec Corp. are set out in
+Note 16 to the financial statements prepared
+in accordance with IFRS in this annual
+report.
+57
+Beijing, China, 24 March 2017
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Risks from the macroeconomic policies
+and government regulation: Although the
+Chinese government is gradually liberalizing
+the market entry regulations on petroleum
+and petrochemicals sector, the petroleum
+and petrochemical industries in China are
+still subject to entry regulations to a certain
+degree, which include: issuing licenses in
+relation to exploration and development
+of crude oil and natural gas, issuing
+business licenses for trading crude oil and
+refined oil, setting caps for retail prices of
+gasoline, diesel and other oil products, the
+imposing of the special oil income levy,
+formulation of import and export quotas and
+procedures, formulation of safety, quality
+and environmental protection standards
+and formulation of energy conservation
+policies. In addition, the changes which have
+occurred or might occur in macroeconomic
+and industry policies such as the opening
+up of crude oil import licenses, and further
+improvement in pricing mechanism of refined
+oil products, reforming and improvement
+in pricing mechanism of natural gas, cost
+supervision of gas pipeline and access to
+third party, and reforming in resource tax
+and environmental tax, will cause effects
+on our business operations. Such changes
+might further intensify market competition
+and have certain effect on the operations and
+profitability of the Company.
+Risks 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 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 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 community,
+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 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 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 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 complicacy of
+geopolitics, economic and other conditions,
+including sanctions, barriers to entry,
+instability in the financial and taxation.
+policies, contract defaults, the Company's
+risks with regard to overseas business
+development and management could be
+increased.
+Currency risks: At present, China
+implements an administered floating
+exchange rate regime based on market
+supply and demand which is regulated with
+reference to a basket of currencies in terms
+of the exchange rate of Renminbi. As the
+Company purchases a significant portion of
+crude oil in foreign currency which is based
+on US dollar-denominated prices, fluctuations
+in the exchange rate of Renminbi against US
+dollars and certain other foreign currencies
+may affect the Company's purchasing
+costs of crude oil. Meanwhile, according to
+domestic pricing mechanism of refined oil
+products, the prices of domestic refined oil
+products fluctuate with Renminbi exchange
+rate, and the prices of other domestic
+refined and chemical products would also be
+influenced by import price.
+By order of the Board.
+Wang Yupu
+Chairman
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+0
+13 FIXED ASSETS
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+The profit distribution policy of Sinopec Corp.
+maintains consistency and steadiness, and
+gives further consideration to the long-term
+interests of the Company, overall interests
+of all the shareholders and the sustainable
+development of the Company. Sinopec Corp.
+gives priority to adopting cash dividends
+for profit distribution, and is able to deliver
+an interim profit distribution. When the net
+profits and retained earnings of the Company
+are positive in current year, and in the event
+that the cash flow of Sinopec Corp. can
+satisfy the normal operation and sustainable
+development, Sinopec Corp. should adopt
+cash dividends, and the distribution profits
+in cash every year are no less than 30% of
+the net profits of the Company in current
+year.
+The profit distribution plan of Sinopec Corp.
+for the current year will be carried out in
+accordance with the policy and procedures
+stipulated as per 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 12th meeting of the sixth session of
+the Board, the Board approved the proposal
+to distribute a final cash dividend of RMB
+0.17 (tax inclusive) per share, combining
+with an interim distributed dividend of
+RMB0.079 (tax inclusive) per share, the total
+dividend for the whole year is RMB 0.249 (tax
+included) per share.
+The dividend will be denominated and
+declared in RMB, and distributed to the
+domestic shareholders and investors
+participating in the Shanghai-Hong Kong
+Stock Connect Program in RMB and to
+the overseas shareholders in Hong Kong
+Dollar. The exchange rate for the dividend
+calculation in Hong Kong Dollar is based
+on the average benchmark exchange rate of
+RMB against Hong Kong Dollar as published
+by the People's Bank of China one week
+preceding the date of the declaration of such
+dividend. The arrangement of the payment
+of the final dividend will be published in due
+course.
+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 organizations or
+groups, shall be deemed as shares held
+by nonresident 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,
+7 DIVIDEND
+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.
+Pursuant to the Notice on the Tax Policies
+Related to the Pilot Program of the
+Shanghai Hong Kong Stock Connect (
+港股票市場交易互聯互通機制試點有關稅收政策
+)(Caishui [2014] No. 81):
+For domestic investors investing in the H
+Shares of Sinopec Corp. through Shanghai-
+Hong Kong Stock Connect Program, the
+company shall withhold and pay income tax
+at the rate of 20% on behalf of individual
+investors and securities investment funds.
+The company will not withhold or pay
+the income tax of dividends for domestic
+enterprise investors and those domestic
+enterprise investors shall report and pay the
+relevant tax by themselves.
+52
+42
+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%
+The financial results of the Company for the year
+ended 31 December 2016, which is prepared in
+accordance with IFRS and the financial position
+as at that date and the accompanying analysis
+are set out from page 143 to page 201 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 Statement, 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.
+6 BUSINESS PERFORMANCE
+5 BOARD COMMITTEES ISSUED REVIEW
+OPINIONS TO THE BOARD WHEN
+PERFORMING THEIR DUTIES DURING THE
+REPORT PERIOD, WITHOUT OBJECTION.
+No directors were absent from two consecutive meetings of the Board. No Independent Non-executive Directors had attended the general
+meetings of shareholders in person.
+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 meetings.
+Details of those meetings are as follows:
+(1) The 3rd Audit Committee meeting of the
+sixth session of the Board was held by on
+site meeting on 25 March 2016, whereby
+the proposal in relation to the following
+matters were approved in the meeting:
+(i) 2015 Annual Report; (ii) 20F of
+2015 (iii) Financial results and business
+performance of Sinopec Corp. for the year
+2015 (iv) Internal control assessment
+report of Sinopec Corp. for the year 2015
+and the internal control manual (2016)
+(v) Work report on the internal auditing
+work for the year 2015, (vi) Performance
+report of Audit Committee for the year
+2015, (vii) Reports on the auditing of the
+financial statements for the year 2015
+delivered by the domestic and overseas
+auditors.
+(2) The 4th meeting of the sixth session of
+the Board was held by written resolution
+on 27 April 2016, whereby the first
+quarterly report for three months ended
+31 March 2016 was approved in the
+meeting.
+(3) The 5th meeting of the sixth session of
+the Audit Committee was held by on site
+meeting on 22 August 2016, whereby (i)
+Interim report for the first half of 2016,
+(ii) Financial statements for the first half
+year of 2016, (iii) Reports on internal
+auditing work for the first half of 2016
+were approved in the meeting.
+(4) The 6th meeting of the sixth session of
+the Audit Committee was held by written
+resolution on 26 October 2016, whereby
+the third quarterly report for nine months
+ended 30 September 2016 was approved
+in the meeting.
+(5) The 1st meeting of the sixth session of
+the Strategy Committee was held by
+written resolution on 25 March 2016,
+whereby the proposal in relation to
+the plan of investments of 2016 was
+approved in the meeting.
+(6) The 2nd meeting of the sixth session
+of the Strategy Committee was held by
+written resolution on 24 August 2016,
+whereby the thirteenth five years plan
+summary of Sinopec corp. was approved
+in the meeting.
+(7) The 1st meeting of the sixth session
+of the remuneration Committee was
+held by written resolution on 25 March
+2016, whereby the proposal in relation
+to implementation of the rules of the
+remuneration of directors, supervisors
+and other senior management for 2015
+was reviewed and approved.
+(8) The 1st meeting of the sixth session of
+the Social Responsibility Management
+Committee was held by on site meeting
+on 25 March 2016, whereby the 2015
+Communication on Progress for the
+Sustainable Development Report of
+Sinopec Corp. was approved in the
+meeting.
+51
+Report of the Board of Directors
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+12 BANK LOANS AND OTHER BORROWINGS
+Details of bank loans and other borrowings
+of Sinopec Corp. as of 31 December 2016
+are set out in Note 28 to the financial
+statements prepared in accordance with
+IFRS in this annual report.
+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.
+2015
+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
+2016, 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 in relation
+to the internal control system related to
+the financial statements as of 31 December
+2016. Therefore the internal control system
+of Sinopec Corp. related to the financial
+statements is sound and effective.
+The 2016 Annual Internal Control
+Assessment Report of Sinopec Corp. was
+reviewed and approved on the 12th meeting
+of the sixth Session of the Board on 24
+March 2017, and all members of the Board
+undertook that the contents of the report are
+true, accurate and complete, and without any
+false representation, misleading statements
+or material omissions.
+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 key performance indicators
+and policies, are provided in the Chapters of
+Chairman's Statement and Business Review
+and Prospects in this annual report as well
+as the 2016 Communication on Progress
+for the Sustainable Development Report of
+Sinopec Corp. All these discussions in regard
+to environmental policies constitute part of
+the Report of the Board of Directors.
+10 DURING THIS REPORTING PERIOD, THE
+COMPANY DID NOT VIOLATE LAWS AND
+REGULATIONS WHICH HAVE A SIGNIFICANT
+IMPACT ON THE COMPANY
+11 MAJOR SUPPLIERS AND CUSTOMERS
+During this reporting period, the total
+purchases from the top five crude oil
+suppliers of the Company accounted for
+56.6% of the total purchases of crude oil by
+the Company, of which the purchases from
+the largest supplier accounted for 18.7%
+of the total purchases of crude oil by the
+Company.
+The total sales to the five largest customers
+of the Company accounted for 7.4% of
+the total sales of the Company, of which
+sales to the largest customer accounted for
+3.0% of the total sales. Sinopec Group, the
+controlling shareholder of Sinopec Crop., is
+one of the five largest customers.
+During the reporting period, other than
+disclosed above, all the top five crude oil
+suppliers and the other largest customers of
+the Company were independent third parties.
+There were no supplier, customer, employee
+and others that have a significant impact on
+the Company and on which the Company's
+success depends.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+53
+Report of the Board of Directors
+54
+Report of the Board of Directors
+The aggregate cash dividend declared by
+Sinopec Corp. during three years from 2014
+to 2016 is RMB 0.599 per share, and the
+total dividend payment from 2014 to 2016
+as a percentage of average net profits in the
+three years is 171.35%.
+The dividend distribution and bonus shares declared by Sinopec Corp. in the past three years are as follows:
+The final cash dividend for 2016 is subject to approval at the 2016 annual general meeting.
+50.06
+2014
+Cash dividends (RMB/Share, tax inclusive)
+0.249
+Total amount of cash dividends (RMB million, tax inclusive)
+30,147
+0.15
+18,160
+*.
+0.20
+23,830
+the consolidated statement for the dividend year (RMB million)
+46,416
+32,281
+47,603
+Ratio between the dividends and the net profit attributed to the shareholders of the
+listed company in the consolidated statement (%)
+64.95
+56.26
+Net profits attributed to the shareholders of the listed company shown in
+2016*
+Supervisor
+53
+Yes
+62
+62
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Jiang Xiaoming
+Andrew Y. Yan
+Jiang Xiaoming, aged 63,
+Independent 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, 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
+Director of Sinopec Corp.
+Andrew Y. Yan, aged 59,
+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
+and Cogobuy Group, 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, TCL Group and Sky
+Solar Holdings Ltd.; 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. And from May 2012 to
+the present, he has acted as
+Independent Director of
+Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+63
+Directors, Supervisors,
+Senior Management and Employees
+19
+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 February
+2016, he was elected as Board
+Director of Sinopec Corp., and
+in December 2015, he served
+as Vice President of China
+Petrochemical Corporation
+and appointed as Senior Vice
+President of Sinopec Corp. In
+February 2016, he was elected
+as Board Director of Sinopec
+Corp.
+Construction Project
+Ma Yongsheng, aged 55,
+Board 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. 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 Sinopec Southern Exploration
+and Production Company; in
+March 2007, he served as
+General Manager and Deputy
+Party Secretary of Sinopec
+Exploration Company; in May
+2007, he was appointed as
+Deputy Commander of Sichuan-
+East China Gas Transmission
+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 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
+Board Director and appointed
+as Senior Vice President of
+Sinopec Corp.
+Zhang Haichao
+Wang Zhigang, aged 59,
+Board 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
+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.
+Zhang Haichao, aged 59,
+Board Director and Senior
+Vice President of Sinopec
+Corp. Mr. Zhang is a professor
+level senior economist with a
+master degree. In March 1998,
+he was appointed as Vice
+President of Zhejiang Petroleum
+Corporation; in September
+1999, he was appointed as
+President of Zhejiang Petroleum
+Corporation; in February 2000,
+he was appointed as President
+of Sinopec Zhejiang Petroleum
+Co., Ltd.; in April 2003, he
+was elected as Employee's
+Representative Supervisor of
+Sinopec Corp.; in April 2004,
+he served as Chairman of Board
+of Directors of Sinopec-BP
+Zhejiang Petroleum Sales Co.,
+Ltd.; in October 2004, he served
+as Secretary of CPC Committee,
+Vice Chairman of Board of
+Directors, and Vice President
+of Sinopec Sales Co., Ltd.; in
+November 2005 he served as
+Vice President of Sinopec Corp.,
+Secretary of 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.; in
+July 2014, he was appointed
+as 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+61
+Senior
+Directors, Supervisors,
+Supervisors,
+Management and Employees
+Senior
+Jiao Fangzheng
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Ma Yongsheng
+Jiao Fangzheng, aged 54,
+Board Director and Senior Vice
+President of Sinopec Corp. Mr.
+Jiao is a professor level senior
+engineer with a Ph.D. degree.
+In January 1999, he was
+appointed as Chief Geologist
+in Zhongyuan Petroleum
+Exploration Bureau of China
+Petrochemical Corporation;
+in February 2000, he was
+appointed as Vice President
+and Chief Geologist of Sinopec
+Zhongyuan Oilfield Company;
+in July 2000, he was appointed
+as Deputy Director General of
+Sinopec Petroleum Exploration
+& Development Research
+Institute; in March 2001, he was
+appointed as Deputy Director
+General of Sinopec Exploration
+& Production Department; in
+June 2004, he was appointed
+as President of Sinopec
+Senior Management and Employees
+Supervisors,
+Management and Employees
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+(as at 31 December)
+Company
+2016
+2015
+Wang Yupu
+Male
+60
+by the holding
+Chairman
+Male
+53
+Vice Chairman,
+2015.05-2018.05
+2009.05.2018.05
+Liu Zhongyun
+0
+0
+Dai Houliang
+Wang Zhigang
+Equity interests in Sinopec Corp.
+in 2016
+(RMB 1,000,
+before tax)
+Fan Gang
+Tang Min, aged 63,
+Independent Director of Sinopec
+Corp. Mr. Tang has a doctorate
+in economics. He presently
+acts as a Counsellor of the
+State Council of the PRC and
+the Executive Vice Chairman
+of YouChange China Social
+Entrepreneur Foundation,
+Independent Director of
+Minmetals Development Co.,
+Ltd, Origin Agritech Limited
+and Baoshang Bank Co., Ltd.
+He has served as economist
+and senior economist at the
+Economic Research Centre of
+the Asian Development Bank
+between 1989 and 2000; chief
+economist at the Representative
+office of the Asian Development
+Bank in China between 2000
+and 2004; deputy representative
+at the Representative Office of
+the Asian Development Bank in
+China between 2004 and 2007
+and the deputy secretary-general
+of the China Development
+Research Foundation between
+2007 and 2010. From May
+2015 to the present, he has
+acted as Independent Director
+of Sinopec Corp.
+Fan Gang, aged 62, Independent
+Director of Sinopec Corp.
+Mr. Fan has a doctorate in
+economics. He presently acts as
+Vice President of China Society
+of Economic Reform, President
+of China Reform Foundation,
+Head of the National Economic
+Research Institution, President
+of China Development Institute
+(Shenzhen) and an economics
+professor at Peking University.
+He began to work for Chinese
+Academy of Social Sciences
+in 1988, and subsequently
+served as Director of Editorial
+Department for the Economic
+Research Journal between 1992
+and 1993 and as Deputy Head
+of the Institute of Economics
+of Chinese Academy of Social
+Sciences between 1994
+and 1995. In 1996, he was
+redesignated to work for China
+Society of Economic Reform,
+and subsequently founded the
+National Economic Research
+Institution. From 2006 to 2010,
+and from 2015 to the present,
+he has served as a member of
+the Monetary Policy Committee
+of People's Bank of China. Mr.
+Fan is recognised as one of the
+National Young and Middle-
+Aged Experts with Outstanding
+Contributions. From May 2015
+to the present, he has acted
+as Independent Director of
+Sinopec Corp.
+64
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Whether paid
+List of Members of the Board
+Sinopec Corp.
+Position in
+Name
+Gender
+Age
+Sinopec Corp.
+Tenure
+Remuneration
+paid by
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+60
+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 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. in May 2016, he
+was appointed as the President
+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.
+0
+No
+594.1
+2010.12 2018.05
+Employee's
+53
+Male
+0
+Yu Renming
+Representative
+Joooo
+0000
+No
+618.2
+2010.12.2018.05
+Employee's
+Supervisor
+52
+Representative
+Wang Yajun
+0
+Male
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+68
+Mr. Liu Yun resigned as the Chairman of the Board of Supervisors and supervisor of Sinopec Corp. on 16 March 2017.
+Note:
+Supervisor
+Supervisor
+Representative
+0
+No
+596.6
+2015.05-2018.05
+Employee's
+60
+Male
+0
+2015
+Male
+No
+59
+Report of the Board of Supervisors
+Supervisors,
+Management and Employees
+Senior
+Wang Yupu
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Dai Houliang
+DIRECTORS, SUPERVISORS
+AND OTHER SENIOR
+MANAGEMENT
+(1) Directors
+Wang Yupu, aged 60, Chairman
+of Board of Directors of
+Sinopec Corp. Mr. Wang is a
+professor level senior engineer
+with a Ph.D. degree and an
+academician of the Chinese
+Academy of Engineering. In
+October 2000, he was appointed
+as Director, Deputy General
+Manager of Daqing Oilfield
+Company Limited; in December
+2003, he was appointed as
+Chairman and General Manager
+of Daqing Oilfield Company
+Limited; in March 2008, he
+was appointed as Chairman
+and General Manager (Director-
+General) of Daqing Oilfield
+Company Limited (Daqing
+Petroleum Administration
+Bureau); in August 2009, he
+was appointed as Vice Governor
+of the People's Government
+of Heilongjiang Province. In
+July 2010, he was elected
+as Secretary of the Leading
+Party Member Group, Vice
+Chairman, and First Secretary
+of the Secretariat of All China
+Federation of Trade Unions; in
+March 2013, he was appointed
+as Deputy Secretary of the
+Leading Party Member Group
+(Minister Level) of the Chinese
+Academy of Engineering; in
+June 2014, he was appointed
+as Deputy Secretary of the
+Leading Party Member Group
+and Vice President (Minister
+Level) of the Chinese Academy
+of Engineering. In April 2015,
+Mr. Wang acts as Chairman
+and Secretary of the Leading
+Party Member Group of China
+Petrochemical Corporation. Mr.
+Wang is an Alternate Member
+of the 17th CPC Central
+Committee and a Member
+of the 18th CPC Central
+Committee. In May 2015,
+Mr. Wang was appointed as
+Chairman of Board of Directors
+of Sinopec Corp.
+Dai Houliang, aged 53, Vice
+Chairman of the Board and
+the President of Sinopec
+Corp. Mr. Dai is a professor
+level senior engineer with a
+Ph.D. 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 Directors of Yangzi
+Petrochemical Corporation;
+in December 2004, he served
+concurrently as Chairman of
+Board of Directors of BASF.
+YPC Company Limited; in
+1 INTRODUCTION OF
+Jiang Zhenying
+In 2017, 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.
+Thirdly, Sinopec Corp.'s internal control system
+is robust and effective, no material defects of
+internal control were found. In the meantime,
+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.
+618.2
+2006.05-2018.05
+Supervisor
+56
+Male
+Zou Huiping
+Yes
+Fourthly, 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 found.
+2015.05.2018.05
+53
+Male
+Zhou Hengyou
+Yes
+2015.05-2018.05
+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 behaviors of any other 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.
+Secondly, the reports and financial statements
+prepared by Sinopec Corp. in 2016 complied
+with the relevant regulation of domestic and
+overseas securities regulators, the disclosed
+information truly, accurately, completely
+and fairly reflected Sinopec Corp.'s financial
+status 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.
+Supervisor
+2016
+Tang Min
+Equity interests in Sinopec Corp.
+Tang Min
+0
+No
+300.0
+2012.05.2018.05
+Independent Director
+59
+Male
+Male
+lo
+0
+0
+No
+300.0
+2012.05-2018.05
+Independent Director
+Andrew Y. Yan
+(as of 31 December)
+63
+2015.05-2018.05
+Gender
+Name
+lo
+0
+0
+No
+300.0
+Independent Director
+2015.05-2018.05
+62
+Male
+Fan Gang
+0
+0
+No
+300.0
+Independent Director
+Male
+Jiang Xiaoming
+0
+Zhang Haichao
+lo
+0
+0
+No
+698.8
+2006.05-2018.05
+Male
+Board Director,
+Senior Vice President
+Male
+Wang Zhigang
+President
+0
+No
+745.3
+0
+59
+59
+Jiao Fangzheng
+Male
+0
+Yes
+2016.02-2018.05
+0
+0
+Yes
+2015.05-2018.05
+이
+0
+Yes
+2015.05-2018.05
+Board Director,
+Senior Vice President
+Board Director,
+Senior Vice President
+Board Director,
+Senior Vice President
+59
+55
+Male
+Ma Yongsheng
+54
+Li Chunguang
+Male
+63
+Position in
+Sinopec Corp.
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Management and Employees
+Supervisors,
+Senior Management and Employees
+Directors, Supervisors,
+67
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+List of Members of the Board of Supervisors
+Wang Yajun, aged 60,
+Empolyee's Representative
+Supervisor of Sinopec Corp.
+Mr. Wang is a professor level
+senior administration engineer
+with a university diploma.
+In December 2004, he was
+appointed as Vice Secretary of
+CPC committee, Secretary of
+Discipline Inspection Committee
+and Labour Union Chairman
+of Zhongyuan Petroleum
+Exploration Bureau of China
+Petrochemical Corporation.
+In November 2010, he was
+appointed as Party Secretary of
+CPC committee, of Zhongyuan
+Petroleum Exploration Bureau.
+In March 2015, Mr. Wang was
+appointed as Secretary of CPC
+of China Sinopec International
+Petroleum Exploration and
+Development Co., Ltd; and in
+May 2015, he was elected as
+Employee's Representative
+Supervisor of Sinopec Corp.
+Management Department
+(Sinopec International Co.
+Ltd); in November 2014, he
+was appointed as Director
+General of Safety Supervisory
+Department of Sinopec Corp.;
+and since December 2010, he
+was elected as the Employee's
+Representative Supervisor of
+Sinopec Corp.
+General (General Manager),
+Executive Director and Deputy
+Secretary of the CPC Committee
+of Sinopec Procurement
+Jiang Zhenying, aged 52,
+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
+Zou Huiping, aged 56,
+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 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 Sinopec
+Corp.
+Wang Yajun
+Yu Renming
+Jiang Zhenying
+Yu Renming, aged 53,
+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;
+and in December 2010, he
+was elected as Employee's
+Representative Supervisor of
+Sinopec Corp.
+Zou Huiping
+Remuneration
+paid by
+Sinopec Corp.
+Name
+Yes
+Age
+61
+Company
+by the holding
+(RMB 1,000,
+before tax)
+Tenure
+Whether paid
+in 2016
+2015.05-2017.03
+Former Chairman
+of the Board
+of Supervisors
+60
+60
+Male
+Liu Yun
+Age
+Gender
+Position in
+Sinopec Corp.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Senior
+Former Board Director,
+2006.05-2016.07
+Former Board Director,
+Senior Vice President
+52
+Male
+Zhang Jianhua
+0
+0
+519.7
+2015
+Company
+No
+Equity interests in Sinopec Corp.
+(as at 31 December)
+Whether paid
+by the holding
+Remuneration
+paid by
+Sinopec Corp.
+in 2016
+(RMB 1,000,
+before tax)
+556.3
+2009.05-2016.08
+66
+Tenure
+2016
+No
+President
+0
+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 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.
+0
+Zhou Hengyou, aged 53,
+Supervisor of Sinopec Corp. Mr.
+Zhou is a professor level senior
+administration engineer and
+Liu Zhongyun, aged 53,
+Supervisor of Sinopec Corp.
+Mr. Liu is a professor level
+senior engineer with a doctorate
+in engineering. In December
+2002, he was appointed as a
+standing committee member of
+CPC Committee and Director
+of Organisation Department
+of Shengli Petroleum
+Administration Bureau; in
+November 2004, he was
+appointed as Deputy Secretary
+of CPC Committee of Shengli
+Petroleum Administration
+Bureau; in December
+2005, he was appointed as
+Manager of Sinopec Shengli
+Oilfield Branch; in December
+2008, he was appointed as
+Secretary of CPC Committee
+of Sinopec International
+Petroleum Exploration and
+Production Corporation; in July
+2010, he was appointed as
+General Manager of Sinopec
+Northwest Oilfield Company,
+Director General of Northwest
+Petroleum Bureau under China
+Petrochemical Corporation.
+Since August 2014, Mr. Liu
+has acted as Assistant to
+President and Director General
+of HR Department of China
+Petrochemical Corporation, and
+in May 2015, he was elected as
+Supervisor of Sinopec Corp.
+Liu Yun, aged 60, former
+Chairman of the Board of
+Supervisors of Sinopec Corp.
+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; in May 2009,
+he was elected as a Board
+Director of Sinopec Corp.; 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 2015, he
+was elected as Chairman of the
+Board of Supervisors of Sinopec
+Corp. On 16 March 2017, he
+resigned as the Chairman of
+the Board of Supervisors and
+Supervisor of Sinopec Corp.
+(2) Supervisors
+Zhou Hengyou
+Liu Zhongyun
+a postgraduate. 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 Committee of
+Jiangsu Petroleum Exploration
+Bureau; in August 2005, he was
+appointed as Secretary of CPC
+Liu Yun
+Directors, Supervisors,
+Senior Management and Employees
+Senior Management and Employees
+Directors, Supervisors,
+65
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Age
+Gender
+Name
+List of Members of the Senior Management
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+70
+Senior
+Danagement and Employees
+& Development Department
+in China Eastern United
+Petrochemical (Group) Co., Ltd.;
+in May 1998, he was appointed
+as Vice President of Yangzi
+Petrochemical Corporation; in
+August 1998 he was appointed
+as Vice President of Yangzi
+Petrochemical Co., Ltd.; in
+March 1999, he was appointed
+temporarily as Deputy Director
+General of Development &
+Planning Department of China
+Petrochemical Corporation;
+in February 2000, he was
+appointed as Deputy Director
+General of Development
+& Planning Department of
+Sinopec Corp.; in March 2001,
+he was appointed as Director
+General of Development
+& Planning Department of
+Sinopec Corp.; in March
+2009, he was appointed as
+Assistant to President of China
+Petrochemical Corporation; in
+August 2013, he was appointed
+as the Chief Economist of China
+Petrochemical Corporation; in
+October 2015, he was appointed
+as Secretary to the Board of
+Directors of China Petrochemical
+Corporation; and in May 2009,
+he was appointed as Vice
+President of Sinopec Corp.
+Lei Dianwu, aged 54, 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
+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 50,
+Vice President of Sinopec
+Corp., Secretary to the Board
+of Directors. Mr. Huang is a
+professor level senior economist
+with a university diploma. In
+March 2003, he was appointed
+as Deputy Director General
+of the Board Secretariat
+of Sinopec Corp.; in May
+2006, he was appointed as
+Representative on Securities
+Matters of Sinopec Corp.; since
+August 2009, He has served as
+the Deputy Director General of
+President's office of Sinopec
+Corp. In September 2009,
+he was appointed as Director
+General of the Board Secretariat
+of Sinopec Corp.; in May 2012,
+he was appointed as Secretary
+to the Board of Directors of
+Sinopec Corp.; and in May
+2014, he was appointed as Vice
+President of Sinopec Corp.
+Chang Zhenyong, aged 58,
+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 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
+Lei Dianwu
+Position in
+Sinopec Corp.
+Supervisors,
+Remuneration paid
+Male
+Wang Dehua
+50
+Chang Zhenyong
+Huang Wensheng
+Vice President
+54
+Male
+Ling Yiqun
+by Sinopec Corp.
+in 2016
+(RMB 1,000,
+before tax)
+704.2
+55
+Male
+Jiang Zhenghong
+133.8
+CFO
+50
+Male
+Vice President
+Huang Wensheng
+24 March 2017
+Senior Management and Employees
+77
+Financial Statements (PRC)
+Financial Statements (PRC)
+REPORT OF THE PRC AUDITOR (CONTINUED)
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+PricewaterhouseCoopers Zhong Tian LLP
+78
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+Certified Public Accountants
+Registered in the People's Republic of China
+Zhao Jianrong (Engagement Partner)
+Gao Peng
+Vice President,
+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.
+Shanghai, the People's Republic of China
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Sinopec Corp. to
+express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit.
+We remain solely responsible for our audit opinion.
+Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements
+represent the underlying transactions and events in a manner that achieves fair presentation.
+Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether
+a material uncertainty exists related to events or conditions that may cast significant doubt on Sinopec Corp.'s ability to continue as a going
+concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in
+these financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
+up to the date of our auditor's report. However, future events or conditions may cause Sinopec Corp. to cease to continue as a going concern.
+Directors, Supervisors,
+69
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Ling Yiqun, aged 54, Vice
+President of Sinopec Corp. 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
+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 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.
+Jiang Zhenghong, aged 55, Vice
+President 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.; in
+April 2006, he was appointed
+as Secretary of CPC Committee
+and Vice President of Sinopec
+Zhenhai Refining & Chemical
+Company; in 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; in July
+2010, he was appointed as
+President and Deputy Secretary
+of CPC Committee of Sinopec
+Zhenhai Refining & Chemical
+Company; in August 2013, he
+was appointed as the Director
+General of Sinopec Corporate
+Reform Dept.; in September
+2013, he was appointed as Vice
+President of Sinopec Corp.
+Wang Dehua, aged 50, 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 Chairman of Sinopec Century
+Bright Capital Investment
+Limited and Sinopec Insurance
+Co., Ltd., and Board Director of
+Sinopec Qingdao Petrochemical
+Company Limited. He also
+serves as Supervisor of
+Sinopec Catalyst Co., Ltd., and
+Vice Chairman of Taiping &
+Sinopec Financial Leasing Co.,
+in September 2016, he was
+appointed as Chief Financial
+Officer of Sinopec Corp.
+(3) Other Members of Senior
+Management
+Ling Yiqun
+Jiang Zhenghong
+Wang Dehua
+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.
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+702.0
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
+Chang Zhenyong
+3,298
+7,266
+75
+4,397
+Sinopec Zhanjiang Dongxing
+products and petroleum products
+Company Limited
+Manufacturing of intermediate petrochemical
+2,977
+7105
+12,266
+85
+5,000
+Sinopec Qingdao Refining and Chemical
+production, storage and sale of petroleum
+products and petrochemical products
+Limited Liability Company
+Import and processing of crude oil,
+2,157
+7,989
+13,496
+98.98
+1,455
+Manufacturing of intermediate petrochemical
+Petrochemical Company Limited
+products and petroleum products
+Sinopec Kantons Holdings Limited
+Company Limited
+1,558
+8,654
+16,175
+65
+6,270
+Sinopec-SK(Wuhan) Petrochemical
+26,461
+197,948
+5,294
+367,774
+28,403
+Sinopec Marketing Co. Limited
+Company Limited
+Manufacturing of intermediate petrochemical
+1,764
+7765
+11,428
+75
+3,986
+Sinopec Hainan Refining and Chemical
+70.42
+HKD 248
+Sinopec Beihai Refining and Chemical
+Trading of petrochemical products
+141,018
+100
+3,000
+China International United Petroleum
+Trading of petrochemical products
+1,134
+2,032
+17,410
+100
+1,000
+Sinopec Chemical Sales Company Limited
+products and petroleum products
+Company Limited
+Manufacturing of intermediate petrochemical
+and petrochemical materials
+470
+464
+3,987
+100
+1,595
+Sinopec Qingdao Petrochemical
+31,019
+6,170
+Trading of crude oil and
+and Chemical Company Limited
+278
+3,228
+9,761
+100
+1,400
+China Petrochemical International
+Production and sale of catalyst products
+435
+3,785
+7,668
+Company Limited
+100
+Sinopec Catalyst Company Limited
+million
+Holding Limited
+(245) Overseas investment holding
+petrochemical products
+11,129
+16,067
+100
+USD 1,638
+Sinopec Overseas Investment
+1,500
+products, lubricant base oil,
+60.34
+Sinopec Shanghai Petrochemical
+Evaluated and tested the key controls, relating to the preparation of the
+discounted cash flow projections of oil and gas properties.
+In auditing the respective discounted cash flow of the relevant oil and gas
+properties, we have 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 such investment income in the year
+ended 31 December 2016, we had placed our audit emphasis on this
+matter.
+Accounting for investment income of capital injection by external
+investors into Sinopec Sichuan to East China Gas Pipeline Co., Ltd
+Refer to note 12 "LONG-TERM EQUITY INVESTMENTS" to the
+consolidated financial statements, an amount of RMB 20.562 billion
+investment income was arisen as a result of the derecognition of the
+assets and liabilities of a former subsidiary (Sinopec Sichuan to East
+China Gas Pipeline Co., Ltd, the "Pipeline Ltd") from the consolidated
+financial position of the Group when the control over Pipeline Ltd was
+lost. The Group continues to retain a 50% equity interest in the Pipeline
+Ltd, and hence its significant influence over the Pipeline Ltd. As a
+result, the Group deconsolidated the Pipeline Ltd when the control was
+lost, and accounts for its 50% equity interest in the Pipeline Ltd as an
+associate company.
+Because of the significance of the carrying amount of oil and gas
+properties as at 31 December 2016, together with the use of
+estimations or assumptions in determining their respective discounted
+cash flow, we had placed our audit emphasis on this matter.
+Future cost profiles; and
+Discount rates.
+Future production profiles;
+Future crude oil prices;
+Low crude oil prices gave rise to possible indication that the carrying
+amount of oil and gas properties as at 31 December 2016 might
+be impaired. The Group has adopted discounted cash flow as the
+respective recoverable amounts of the oil and gas properties, which
+involved estimations or assumptions including:
+As at 31 December 2016, the carrying amount of oil and gas properties
+amounted to RMB 215,124 million.
+Refer to note 13 "FIXED ASSETS" to the consolidated financial
+statements.
+Recoverability of the carrying amount of oil and gas properties
+• Accounting for investment income of capital injection by external investors into Sinopec Sichuan to East China Gas Pipeline Co., Ltd.
+Key Audit Matter
+Recoverability of the carrying amount of oil and gas properties;
+•
+Key audit matters identified in our audit are summarised as follows:
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Financial Statements (PRC)
+76
+Financial Statements (PRC)
+• 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 Group's reserve management
+committee. 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.
+•
+•
+Those charged with governance are responsible for overseeing Sinopec Corp.'s financial reporting process.
+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 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 is responsible for the other information. The other information comprises all of the information included in 2016 annual report of Sinopec
+Corp. other than the financial statements and our auditor's report thereon.
+OTHER INFORMATION
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+75
+Based on our work, we found that the investment income of capital injection
+by external investors into Pipeline Ltd of RMB 20.562 billion was supported
+by the evidence we gathered.
+Tested the consideration to the Group as compensation for the loss
+of control over the Pipeline Ltd by checking against the relevant bank
+receipt notices. Corroborated the detail of the transaction by inspecting
+the relevant documents, agreements and contracts.
+Evaluated the effective date on which the Group lost control over the
+Pipeline Ltd, taking into consideration of factors including when the
+composition of the board of directors was changed.
+In auditing the investment income of capital injection by external investors
+into Pipeline Ltd, we have performed the following procedures:
+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.
+Evaluated the sensitivity analyses prepared by the Group, and assessed
+the potential impacts of a range of possible outcomes.
+Assessed the methodology adopted in, and tested mathematical
+accuracy of the discounted cash flow projections.
+Tested selected other key data inputs, such as nature 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 the future cost profiles against historical costs or relevant
+budgets of the Group.
+•
+Recomputed the investment income arising from the capital injection by
+external investors into Pipeline Ltd of RMB 20.562 billion, and agreed to
+management's computation.
+million
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+PricewaterhouseCoopers Zhongtian LLP
+Petroleum and Chemical Limited
+Sinopec Shanghai Gaoqiao
+petroleum products
+petrochemical products and
+Manufacturing of synthetic fibres, resin
+and plastics, intermediate petrochemical
+products and petroleum products
+Manufacturing of plastics, intermediate
+Production, sale, research and development
+of ethylene and downstream by-products
+Trading of crude oil and petroleum products
+petroleum products
+products and petroleum products
+Marketing and distribution of refined
+Results have not
+been announced
+2,513
+7,238
+8,771
+50
+5,745
+Fujian Petrochemical Company Limited
+Company Limited
+5,969
+Results have not
+been announced
+25,032
+Results have not
+been announced
+34,124
+50.56
+10,800
+10,000
+55
+17,146
+9,359
+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 2016, 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 2016, the consolidated and company income statements, the consolidated and company
+cash flow statements and the consolidated and company statements of changes in shareholders' equity for the year then ended, and the notes to the
+financial statements.
+What we have audited
+OPINION
+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
+To the Shareholders of China Petroleum & Chemical Corporation,
+普华永道
+pwc
+REPORT OF THE PRC AUDITOR
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+74
+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.
+Note 1: All above subsidiaries except Fujian Petrochemical Company Limited are audited by PricewaterhouseCoopers Zhong Tian LLP or PricewaterhouseCoopers in 2016.
+KPMG Huazhen LLP served the exception.
+petrochemical products and
+petroleum products
+Manufacturing of intermediate
+238
+PwC ZT Shen Zi (2017) No. 10001
+Production and sale of refined petroleum
+586
+3,541
+149,803
+Exploration and Production
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+72
+EDUCATIONAL BACKGROUND STRUCTURE FOR EMPLOYEES AS FOLLOWS:
+EMPLOYEES' PROFESSIONAL STRUCTURE AS FOLLOWS:
+THE BREAKDOWN ACCORDING TO THE MEMBERS OF EACH OPERATION SEGMENT AS FOLLOWS
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Senior
+33%
+Management and Employees
+Senior Management and Employees
+Directors, Supervisors,
+71
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+6 THE COMPANY'S EMPLOYEES
+As at 31 December 2016, the
+Company has a total of 451,611
+employees. There is a total
+of 225,418 retired employees
+to be reimbursed by Sinopec
+Corp. Sinopec Marketing Co.
+Limited and China International
+United Petroleum and Chemical
+Company Limited, both
+principal subsidiaries of Sinopec
+Corp., have a total of 153,924
+employees and 276 employees
+respectively.
+During this reporting period,
+there is a total of 19 directors,
+supervisors and other senior
+management received
+remuneration from Sinopec
+Corp. with a total amount of
+RMB 10.3588 million.
+5 REMUNERATION OF
+DIRECTORS, SUPERVISORS,
+AND THE SENIOR
+MANAGEMENT
+As of 31 December 2016 or
+any time during the reporting
+period, there is no Director
+or Supervisor of the Company
+entered into any agreement
+with any of Sinopec Corp., its
+controlling shareholder, any
+subsidiary or related subsidiary
+which shall significantly benefit
+such Director or Supervisor.
+4 CONTRACTRAL INTERESTS
+OF DIRECTORS AND
+SUPERVISORS
+Supervisors,
+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.
+Refining
+16%
+77,531
+Technology
+31%
+Board Secretary
+Sales
+38%
+173,105
+Production
+Other Segments
+72,473
+1%
+2%
+5,822
+R&D
+34%
+153,924
+Marketing and Distribution
+14%
+64,227
+Chemicals
+5,362
+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
+For details, please refer to the
+(as of 31 December)
+Note: The members of senior management in office are in order of the number of strokes of their surname in Chinese.
+Equity interests in Sinopec Corp.
+2222 222
+No
+Company
+by the holding
+Whether paid
+542.9
+2016
+709.6
+52
+54
+Male
+Female
+Wen Dongfen
+Lei Dianwu
+709.6
+Vice President
+58
+Male
+Vice President
+Former CFO
+2015
+0
+0
+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.
+On 28 September 2016, Mr.
+Wang Dehua was appointed as
+CFO of Sinopec Corp.
+On 26 August 2016, Mr. Dai
+Houliang was elected as Vice
+Chairman and was appointed as
+President of Sinopec Corp.
+On 26 August 2016 Mr.
+Li Chunguang resigned as
+President and Director of the
+Board of Sinopec Corp. due to
+his age.
+On 13 July 2016, Mr. Zhang
+Jianhua resigned as Director of
+the Board, member of Strategic
+committee as well as Senior
+Vice President of Sinopec Corp.
+due to working arrangement.
+On 29 July 2016, Ms. Wen
+Dongfen resigned as CFO of
+Sinopec Corp. due to working
+arrangement.
+On 25 February 2016, Sinopec
+Corp. convened the first
+extraordinary shareholder
+meeting for the year 2016, and
+elected Mr. Ma Yongsheng as
+Director of the sixth session of
+Board of Directors.
+TERMINATION OF DIRECTORS,
+SUPERVISORS AND SENIOR
+MANAGEMENT
+APPOINTMENT OR
+2 INFORMATION ON
+0
+0
+0
+0
+0
+0
+0
+0
+13.000
+13,000
+0
+0
+17%
+Finance
+139,079
+4%
+26,248
+100
+13,203
+Sinopec Yangzi Petrochemical
+(1,912)
+19,264
+36,182
+100
+20,739
+Sinopec Great Wall Energy & Chemical
+Company Limited
+Exploration and Production Limited
+(Net Loss) Principal Activities
+RMB million
+(4,604)
+18,037
+58,183
+100
+8,000
+Sinopec International Petroleum
+Net Assets
+RMB million
+RMB million
+(%)
+RMB million
+Total Assets
+Sinopec Corp.
+17,369
+Registered Capital
+3,955
+Sinopec Pipeline Storage & Transportation
+8,048
+100
+3,374
+Sinopec Lubricant Company Limited
+chips and polyester fibres
+(585) Production and sale of polyester
+Pipeline storage and transportation
+of crude oil
+products and petroleum products
+Manufacturing of intermediate petrochemical
+management, production and sale
+of coal chemical products
+Investment in exploration, production
+and sale of petroleum and natural gas
+Coal chemical industry investment
+Liability Company
+5,206
+8,273
+100
+4,000
+Sinopec Yizheng Chemical Fibre Limited
+Company Limited
+2,179
+20,618
+36,580
+100
+12,000
+Company Limited
+16,555
+Name of Company
+Percentage of
+shares held by
+15,210
+Master's degree or above
+42%
+Net Profit/
+188,239
+Senior high school and
+technical school degrees or below
+9%
+41,079
+3%
+Technical secondary school
+99,957
+Junior college
+4%
+18,803
+Others
+6%
+26,538
+Administration
+22%
+University
+709.6
+24%
+On 31 December, 2016, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+Principal Widiaries
+and 
+Controlled
+y-owned
+Senior Management and Employees
+Directors, Supervisors,
+33
+73
+Annual Report 2016
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Centering on enterprise development
+strategy and key work of the year, the
+Company organised training programs at
+headquarters level which were attended by
+4,505 high-level personnel. With an aim to
+enhance the comprehensive capabilities and
+capacities to fulfill their duties, the Company
+launched a series of training programs for
+new management personnel, and organised
+seminars with topics such as Innovation &
+Development for 1,514 senior management.
+The Company organised online classes titled
+"Five Major development Methodologies" for
+management personnel for 1,922 persons.
+With an aim to solve key problems related
+to scientific research and production, the
+Company organised workshops for leading
+experts in the field of oil & gas exploration
+and refining technology as well as seminars
+titled "customer value orientation" which
+focused on discussion of marketing
+capabilities for 905 high-level professional
+and technical personnel. With roles of
+positions, heritage and improvement of skills
+as the focus, the Company launched the first
+chief technician training classes and training
+programs for five types of work such as oil
+and gas gathering and transferring, catalytic
+cracking for top skilled talents covering
+164 people. The branch companies and
+subsidiaries according to their conditions,
+adopted various ways to carry out different
+kinds of personnel training, and organized
+off-job training for a total of 898,000 people,
+as well as basic training for a total of 1.086
+million persons.
+10 TRAINNING PROGRAMMS
+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.
+107,126
+9 REMUNERATION POLICY
+Details of the Company's employee
+benefits scheme are set out in Note35 of
+the financial statements prepared under
+IFRS of this annual report. As at 31
+December 2016, the Company has a total
+of 225,418 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.
+8 EMPLOYEE BENEFITS SCHEME
+During the reporting period, there are no
+significant changes of core technical team
+and key technicians.
+7 CHANGES OF CORE TECHNICAL TEAM OR
+KEY TECHNICIANS
+(326)
+446
+56,670
+48,807
+105,477
+(74)
+(74)
+(60)
+(134)
+326
+8. Distributions to minority interests
+(35,061)
+16,817
+(21,826)
+(267,932)
+(192,828)
+285,281
+153,790
+285,281
+153,790
+(30,382)
+68,215
+(106,649)
+(93,400)
+(10,130)
+41,667
+These financial statements have been approved by the board of directors on 24 March 2017.
+Net increase in cash and cash equivalents
+Net cash flow from financing activities
+(36,765)
+(214,654)
+(298,314)
+(60,864)
+Other
+equity
+attributable
+Total
+shareholders'
+for the year ended 31 December 2016
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Chief Financial Officer
+Vice Chairman, President
+Wang Dehua
+Dai Houliang
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+84
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Chairman
+Wang Yupu
+44,649
+(13,033)
+Cash repayments of borrowings
+Cash paid for dividends or interest
+Sub-total of cash outflows
+to equity
+Sub-total of cash inflows
+Net cash flow from investing activities
+Cash flows from financing activities:
+(10,533)
+139,296
+(1,058,489)
+(779,537)
+(165,867)
+(50,638)
+(213,949)
+29,002
+(189,557)
+(35,190)
+(643,612)
+(504,152)
+------
+1,047,956
+918,833
+975,387
+2,954
+69,615
+(3,389)
+146,685
+Cash received from returns on investments
+22,233
+Sub-total of cash outflows
+Other cash paid relating to investing activities
+(29,246)
+(39,505)
+(77,403)
+(43,765)
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+174,864
+56,635
+2,027
+Net cash received from disposal of subsidiaries and other business entities
+Sub-total of cash inflows
+967
+1,488
+4,390
+1,885
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+22,822
+Cash received from borrowings
+326
+56,224
+Share
+capital
+Specific
+31,112
+32,281
+137
+1,306
+(1,169)
+(1,169)
+(1,169)
+2. Other comprehensive income (Note 35)
+12,505
+43,480
+32,281
+32,281
+1. Net profit
+Change for the period
+651,120
+54,423
+240,718
+11,199
+43,617
+Total comprehensive income
+Transactions with owners, recorded directly
+16,817
+14,026 ----
+2,791
+(24,214)
+(24,214)
+(24,214)
+(6fe 49) ====3,088 (2,088)
+combination of entities under common control
+7. Distributions to the original shareholders in the
+6. Contributions to subsidiaries from minority interests
+5. Transaction with minority interests
+4. Conversion of the 2011 Convertible Bonds
+- Distributions to shareholders (Note 49)
+(Note 33)
+- Appropriation for surplus reserves
+3. Appropriations of profits:
+in shareholders' equity:
+193,552
+Capital comprehensive
+491
+50,917
+reserves
+reserve
+RMB million
+491
+(7,261)
+48,703
+118,280
+Balance at 31 December 2014
+RMB million
+earnings
+RMB million
+income
+reserve
+Total
+shareholders'
+Minority
+shareholders of
+Retained
+Surplus
+RMB million
+the Company
+RMB million
+RMB million
+118,280
+Balance at 1 January 2015
+4,025
+1,811
+2,214
+2,214
+common control (Note 1)
+Adjustment for the combination of entities under
+647,095
+52,612
+594,483
+240,718
+193,552
+RMB million
+equity
+interests
+RMB million
+RMB million
+(7,261)
+(3,389)
+under ₤2137)(2137)
+directly in shareholders' equity
+Vice Chairman, President
+Wang Dehua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+85
+Financial Statements (PRC)
+86
+Financial Statements (PRC)
+STATEMENT OF CHANGES IN EQUITY
+Dai Houliang
+for the year ended 31 December 2016
+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:
+- Appropriation for surplus reserves
+Balance at 1 January 2015
+- Distributions to shareholders (Note 49)
+The accompanying notes form part of these financial statements.
+Chairman
+153
+153
+7
+160
+121,071
+116
+119,525
+116
+9
+(Legal representative)
+125
+765
+196,640
+275,163
+712,232
+120,293
+832,525
+These financial statements have been approved by the board of directors on 24 March 2017.
+Wang Yupu
+(932)
+4. Conversion of the 2011 Convertible Bonds (Note 33)
+Total transactions with owners, recorded directly
+in shareholders' equity
+118.280
+54.690
+income
+RMB million
+(206)
+Specific
+reserve
+RMB million
+Surplus
+Retained
+Total
+shareholders'
+232
+reserve
+RMB million
+reserves
+RMB million
+193.552
+equity
+RMB million
+538,649
+172,101
+61 ¯¯ 30,880
+61
+30,880
+30,880
+earnings
+RMB million
+capital
+RMB million
+Capital comprehensive
+Share
+5. Net decrease in specific reserve for the year.
+Balance at 31 December 2015
+Balance at 1 January 2016
+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:
+- Appropriation for surplus reserves
+- Distributions to shareholders (Note 49)
+Total transactions with owners, recorded directly
+in shareholders' equity
+4.
+Net increase in specific reserve for the year
+5. Others
+Balance at 31 December 2016
+Other
+Balance at 31 December 2016
+9. Others
+8. Net increase in specific reserve for the year
+(Note 36)
+(22,828)
+196,640
+245,623
+677,538
+112,027
+789,565
+Balance at 1 January 2016
+121,071
+121,576
+612
+(7,984)
+196,640
+245,623
+677,538
+112,027
+789,565
+Change for the year
+1. Net profit
+2. Other comprehensive income (Note 35)
+612
+(7,984)
+121,576
+121,071
+2,791
+70,576
+446
+3,088
+(27,376)
+49,525
+45,032
+94,557
+9. Net decrease in specific reserve for the year
+121
+121
+70
+191
+10. Others
+83
+83
+(3)
+80
+Balance at 31 December 2015
+- 7,052 = 46,416
+Total transactions with owners, recorded
+46,416
+59,170
+233
+combination of entities under common control
+··· (47) (4
+(
+47)
+(39)
+(86)
+6.
+Distributions to minority interests
+(6,146)
+263
+(6,146)
+2015
+RMB million
+2,137
+Total transactions with owners, recorded directly
+in shareholders' equity
+(2,167)
+(16,876)
+(19,043)
+(3,785)
+7. Adjustment for the combination of entities under
+common control (Note 1)
+(30)
+(16,829)
+(16,829)
+7,052
+(719)
+6,333
+7,052
+46,416
+53,468
+12,035
+65,503
+Total comprehensive income
+Transactions with owners, recorded directly
+in shareholders' equity:
+3. Appropriations of profits:
+4.
+- Appropriation for surplus reserves (Note 37)
+- Distributions to shareholders (Note 49)
+Transaction with minority interests
+5. Distributions to the original shareholders in the
+(30)
+| | | | | |
+(16,829)
+12,754
+85,932
+59,170
+Cash received from disposal of investments
+36,559
+32,743
+46,029
+46,942
+1,296
+3,454
+9
+64,620
+45,643
+8
+29,512
+38,332
+7
+540
+471
+46,453
+98,250
+265,835
+Advances from customers
+225,009
+13
+754,277
+711,890
+11,959
+10,952
+2,154
+1,980
+8,397
+7,913
+72,763
+49,277
+439,477
+373,020
+219,230
+297
+297
+268,451
+234
+14
+12
+977,725
+Accounts payable
+Liabilities and shareholders' equity
+Current liabilities
+At 31 December
+RMB million
+At 31 December
+2016
+Note
+as at 31 December 2016
+BALANCE SHEET
+Financial Statements (PRC)
+Financial Statements (PRC)
+79
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Wang Dehua
+Chief Financial Officer
+Vice Chairman, President
+Dai Houliang
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Chairman
+Wang Yupu
+2015
+Short-term loans
+Bills payable
+RMB million
+Current assets
+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
+Assets
+1,447,268
+979,286
+32,517
+Surplus reserves
+313
+393
+(145)
+263
+68,716
+68,769
+121,071
+121,071
+417,012
+408,149
+151,409
+127,327
+2,238
+2,607
+177
+505
+Retained earnings
+28,968
+196,640
+182,440
+Vice Chairman, President
+Wang Dehua
+Dai Houliang
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+80
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Chairman
+Wang Yupu
+979,286
+977,725
+562,274
+569,576
+These financial statements have been approved by the board of directors on 24 March 2017.
+Total liabilities and shareholders' equity
+Total shareholders' equity
+175,679
+196,640
+9,256
+29,767
+36,000
+30,000
+6,000
+Short-term debentures payable
+86,427
+113,841
+Other payables
+20,832
+32,423
+290
+312
+Employee benefits payable
+Taxes payable
+3,151
+2,360
+85,182
+75,787
+1,852
+2,761
+Non-current liabilities due within one year
+65,500
+ties due within one year
+5,352
+54,526
+58,448
+Specific reserve
+Other comprehensive income
+Capital reserve
+Share capital
+Shareholders' equity
+Total liabilities
+Total non-current liabilities
+Other non-current liabilities
+Deferred tax liabilities
+Provisions
+Long-term loans
+Debentures payable
+Non-current liabilities
+265,603
+280,822
+Total current liabilities
+38,082
+Chief Financial Officer
+1,498,609
+Total liabilities and shareholders' equity
+116,812
+10,964
+11,408
+123456789
+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
+84,293
+Construction in progress
+690,594
+129,581
+Non-current liabilities due within one year
+Short-term debentures payable
+Other payables
+Taxes payable
+Employee benefits payable
+1,447,268
+1,113,611
+23,835
+7,469
+7,214
+25,826
+1,086,348
+1,498,609
+13,919
+13,537
+6,271
+6,353
+81,086
+85,023
+152,325
+733,449
+222222202
+Fixed assets
+11
+69,666
+142,497
+569801
+Prepayments
+Other receivables
+Accounts receivable
+Bills receivable
+Cash at bank and on hand
+Current assets
+Assets
+At 31 December
+2015
+RMB million
+2016
+RMB million
+At 31 December
+Note
+as at 31 December 2016
+FINANCIAL STATEMENTS PREPARED UNDER CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
+CONSOLIDATED BALANCE SHEET
+(A)
+13,197
+Long-term equity investments
+10,964
+50,289
+Available-for-sale financial assets
+Non-current assets
+333,657
+412,261
+Total current assets
+26,904
+20,422
+Other current assets
+145,608
+156,511
+10
+Inventories
+2,920
+3,749
+21,453
+25,596
+56,142
+7
+These financial statements have been approved by the board of directors on 24 March 2017.
+23
+1234
+36
+33333
+Total shareholders' equity
+Minority interests
+Retained earnings
+Surplus reserves
+Other comprehensive income
+657,703
+666,084
+194,871
+180,541
+13,680
+16,136
+32
+8,259
+7,661
+18
+37
+33,186
+34569
+121,071
+789,565
+832,525
+112,027
+120,293
+677,538
+712,232
+Total equity attributable to shareholders of the Company
+245,623
+275,163
+196,640
+196,640
+612
+765
+(7,984)
+(932)
+121,576
+119,525
+121,071
+24
+39,298
+83,253
+38,972
+28
+30,000
+6,000
+30
+86,337
+79,636
+32,492
+52,886
+26
+1,185
+1,618
+92,688
+95,928
+3,566
+130,558
+74,729
+30,374
+5,828
+174,301
+11,277
+31
+Total current liabilities
+462,832
+54,985
+30
+56,493
+62,461
+29
+Specific reserve
+Capital reserve
+Share capital
+Shareholders' equity
+Total liabilities
+Total non-current liabilities
+Other non-current liabilities
+Deferred tax liabilities
+Provisions
+Debentures payable
+Long-term loans
+Non-current liabilities
+485,543
+CONSOLIDATED INCOME STATEMENT
+for the year ended 31 December 2016
+Operating income
+Other cash paid relating to operating activities
+Payments of taxes and levies
+Cash paid to and for employees
+(1,731,441)
+(1,547,868)
+2,395,361
+_________
+2,243,565
+85,692
+2,306,162
+3,507
+2015
+RMB million
+77,436
+2,163,695
+2.434
+Cash paid for goods and services
+Other cash received relating to operating activities
+Refund of taxes and levies
+Sub-total of cash inflows
+Sub-total of cash outflows
+Cash received from sale of goods and rendering of services
+Net cash flow from operating activities
+Cash received from disposal of investments
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+3,399
+4,028
+Cash received from returns on investments
+3,353
+31,489
+165,740
+214,543
+50(a)
+(2,229,621)
+(2,029,022)
+(115,287)
+(102,490)
+(327,421)
+(316,062)
+(55,472)
+(62,602)
+Cash flows from investing activities:
+440
+Cash flows from operating activities:
+Note
+2,539
+30,701
+26,129
+1,482
+1,813
+4,361
+3,095
+27,822
+24,847
+30,582
+43,519
+5
+45
+(292)
+33
+5,052
+14,044
+(179)
+2016
+RMB million
+23,590
+557
+for the year ended 31 December 2016
+CONSOLIDATED CASH FLOW STATEMENT
+Chief Financial Officer
+Wang Dehua
+Vice Chairman, President
+Dai Houliang
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Chairman
+Wang Yupu
+23,998
+61
+30,941
+408
+14
+(149)
+47
+30,880
+10,430
+2,914
+Net cash received from disposal of subsidiaries and other business entities
+Sub-total of cash inflows
+Chief Financial Officer
+Vice Chairman, President
+Wang Dehua
+Dai Houliang
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Chairman
+Wang Yupu
+58,407
+55,535
+50(b)
+293
+9,093
+(93,047)
+256
+(1,481)
+(1,186,677)
+(6,553)
+(599,487)
+(33,840)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+(1,152,837)
+83
+Financial Statements (PRC)
+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:
+RMB million
+2016
+Note
+for the year ended 31 December 2016
+CASH FLOW STATEMENT
+Financial Statements (PRC)
+427
+6,158
+1,195,770
+506,097
+506,440
+(569,091)
+(30,396)
+(130,056)
+(107,115)
+Sub-total of cash outflows
+(89)
+Net cash paid for the acquisition of subsidiaries and other business entities
+(3,918)
+(17,879)
+Other cash paid relating to investing activities
+(23,351)
+(16,389)
+11,12
+(102,698)
+(72,847)
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+13,337
+40,898
+2,027
+Net cash flow from investing activities
+1,090,241
+(66,217)
+Cash received from capital contributions
+These financial statements have been approved by the board of directors on 24 March 2017.
+Net increase in cash and cash equivalents
+Effects of changes in foreign exchange rate
+Net cash flow from financing activities
+Sub-total of cash outflows
+profits to minority shareholders
+Cash paid for dividends, profits distribution or interest
+Including: Subsidiaries' cash payments for distribution of dividends or
+Cash repayments of borrowings
+Sub-total of cash inflows
+Cash received from borrowings
+105,529
+343
+105,529
+343
+Including: Cash received from minority shareholders' capital contributions to subsidiaries
+Cash flows from financing activities:
+(116,719)
+11,012
+6,152
+3,851
+8,980
+6,611
+40
+72,194
+74,155
+41
+46,921
+49,550
+41
+236,349
+232,006
+39
+1,594,070
+1,492,165
+38/41
+2,020,375
+1,930,911
+41/42
+38
+11,035
+43
+79,877
+3,100
+3,963
+47
+6,947
+4,964
+46
+52,246
+78,876
+8,876
+30,779
+45
+735
+(216)
+44
+8,767
+17,076
+10,459
+56,093
+RMB million
+2015
+Equity shareholders of the Company
+Including: net profit of acquiree before the consolidation under common control
+Attributable to:
+Net profit
+Less: Income tax expense
+Profit before taxation
+Less: Non-operating expenses
+Add: Non-operating income
+Operating profit
+Investment income
+Add: (Loss)/gain from changes in fair value
+Impairment losses
+Exploration expenses, including dry holes
+Financial expenses
+General and administrative expenses
+Selling and distribution expenses
+Taxes and surcharges
+Less: Operating costs
+Minority interests
+RMB million
+Basic earnings per share
+Net profit
+2016
+Note
+The accompanying notes form part of these financial statements.
+(Legal representative)
+Chairman
+Wang Yupu
+These financial statements have been approved by the board of directors on 24 March 2017.
+Equity shareholders of the Company
+Minority interests
+Attributable to:
+Total comprehensive income
+Total other comprehensive income
+Share of other comprehensive income/(loss) of associates and joint ventures entities
+Foreign currency translation differences
+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
+Other comprehensive income
+Diluted earnings per share
+48
+20,707
+12,613
+Cash flow hedges
+(net of tax and after reclassification adjustments):
+Items that may be reclassified subsequently to profit or loss
+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: Gain/(loss) from changes in fair value
+Impairment losses
+Exploration expenses, including dry holes
+Financial expenses
+General and administrative expenses
+Selling and distribution expenses
+Taxes and surcharges
+Share of other comprehensive (loss)/income of associates
+Less: Operating costs
+Total other comprehensive income
+These financial statements have been approved by the board of directors on 24 March 2017.
+41,327
+41,724
+2,628
+2,365
+172,568
+158,373
+609,596
+513,514
+38
+845,285
+726,178
+38
+RMB million
+RMB million
+2015
+2016
+Note
+Total comprehensive income
+Operating income
+for the year ended 31 December 2016
+INCOME STATEMENT
+2,014
+(24)
+35
+43,480
+61
+30.941
+0.267
+0.383
+59
+0.267
+0.383
+59
+11,199
+12,754
+32,281
+46,416
+134
+43,480
+59,170
+86
+3,163
+62
+45
+4,298
+Financial Statements (PRC)
+82
+Financial Statements (PRC)
+81
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+Chief Financial Officer
+Vice Chairman, President
+Wang Dehua
+831,578
+1,323
+Dai Houliang
+12,035
+31,558
+53,468
+43,617
+65,503
+137
+6,333
+(5,356)
+2,268
+12,059
+3,088
+596,697
+(24,214)
+The consolidation
+date is the date on
+which the Company
+effectively obtains
+control of the
+acquiree.
+916
+86
+2,563
+134
+Consolidation cost (RMB million)
+34
+(399)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2016
+2,137
+87
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(85)
+(2) The consolidation cost is as follow:
+not transitory.
+and the control is
+flow of the
+acquiree from
+1 Janurary
+2016 to the
+consolidation
+flow of the
+acquiree from
+1 Janurary
+2016 to the
+consolidation
+date
+RMB Million
+date
+RMB Million
+2015
+RMB Million
+2015
+RMB Million
+date
+RMB Million
+date
+RMB Million
+The acquiree and
+Gaoqiao Branch
+of SAMC
+the company are
+controlled by
+Sinopec
+55% Group Company
+1 June 2016
+both before and
+after combination,
+for the year ended 31 December 2016
+(3) The carrying value of the assets and liabilities of the acquiree are as follows:
+At Consolidation
+date
+3,942
+(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 present truly and completely the consolidated and company financial position as at 31 December 2016,
+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(11))
+· Available-for-sale financial assets (see Note 3(11))
+Convertible bonds (see Note 3(11))
+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 are 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.
+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 depletion of oil and gas properties (Note 3(6), (7)), measurement of provisions (Note 3(16)), etc.
+Principal accounting estimates and judgements of the Group are set out in Note 52.
+88
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+(3,088)
+232
+31 December
+203
+3,927
+203
+Book Value
+Current assets
+Total assets
+Current liabilities
+Total liabilities
+Total shareholders' equity
+Details of the Company's principal subsidiaries are set out in Note 53.
+2 BASIS OF PREPARATION
+At 31 December
+2015
+Book Value
+RMB million
+RMB million
+937
+1,287
+4,130
+4,174
+225
+31 December
+1 STATUS OF THE COMPANY (Continued)
+Operating cash
+313
+175,679
+562,274
+23,590
+23,590
+408
+408
+408
+23,590
+23,998
+=== (16,829) (1
+----- (16,829)
+(16,829)
+(16,829)
+80
+80
+121,071
+53
+68,769
+(145)
+53
+68,716
+562,274
+2.791
+Net cash
+14,026
+(24,214)
+16,817
+2,791
+14,026
+3,088
+(27,302)
+(7,397)
+81
+81
+121,071
+68,716
+(145)
+313
+196,640
+175,679
+121,071
+263
+196,640
+Revenue
+of the
+acquiree from
+1 Janurary
+2015 to
+(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.
+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 become the parent company of Gaoqiao Petrochemical Co.Ltd..
+As Sinopec Group Company controls both the Group and SAMC, the non-cash transaction described above between Sinopec and SAMC has been
+accounted as business combination under common control. 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.
+The basis for
+the business
+combination
+Obtain under the
+The acquiree
+Proportion common control
+Consolidation
+date
+Determination
+basis of
+consolidation
+date
+Revenue of
+the acquiree
+from 1 January
+2016 to the
+consolidation
+Net profit
+of the
+acquiree from
+1 January
+2016 to the
+consolidation
+393
+Net profit
+of the
+acquiree from
+1 Janurary
+2015 to
+The company and its subsidiaries (the "Group") engage in the oil and gas and chemical operations and businesses, including:
+Pursuant to the notice Guo Jing Mao Qi Gai [2000] No. 154 “Reply on the Formation of China Petroleum and Chemical Corporation", the Company
+obtained the approval from the State Economic and Trade Commission on 21 February 2000 for the formation of a joint stock limited company.
+The Company took over the exploration, development and production of crude oil and natural gas, refining, chemicals and related sales and
+marketing business of Sinopec Group Company after the establishment of the Company.
+(1) The financial information disclosed in the consolidated scope changes are as follows:
+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").
+196,640
+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.
+569,576
+These financial statements have been approved by the board of directors on 24 March 2017.
+Wang Yupu
+Chairman
+(Legal representative)
+The accompanying notes form part of these financial statements.
+Annual Report 2016 CHINA PETROLEUM & CHEMICAL CORPORATION
+182,440
+Vice Chairman, President
+Wang Dehua
+Chief Financial Officer
+NOTES TO THE FINANCIAL STATEMENTS
+for the year ended 31 December 2016
+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 24 March 2017.
+Dai Houliang
+Net current liabilities
+Non-current liabilities
+Non-controlling interests
+Total equity attributable to shareholders of the Company
+60,978
+Net assets per share (RMB)
+Adjusted net assets per share (RMB)
+As of 31 December
+2016
+1,088,188
+2017
+1,066,455
+2015
+1,086,348
+1,113,611
+2014
+1,094,035
+Non-current assets
+2018
+Items
+Return on capital employed (%)
+1.267
+50,397
+9.25
+8.26
+7.30
+5.23
+6.06
+Return on net assets (%)
+8.59
+7.06
+6.56
+4.81
+7.84
+Net cash generated from operating activities per share (RMB)
+1.453
+1.577
+1.772
+1.371
+Unit: RMB million
+73,282
+The shareholdings of top ten shareholders as of 31 December 2018 are listed as below:
+242,892
+4.969
+MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER CASS AND IFRS PLEASE REFER TO PAGE 212 OF
+THE REPORT.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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
+State-owned Share
+1
+CHANGES IN THE SHARE CAPITAL
+There is no change in the number and nature of shares of Sinopec Corp. during the reporting period
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+As of 31 December 2018, the total number of shareholders of Sinopec Corp. was 490,808 including 484,996 holders of domestic A shares and 5,812
+holders of overseas H shares. As of 28 February 2019, the total number of shareholders of Sinopec Corp. was 464,131. Sinopec Corp. has complied
+with requirement for minimum public float under the Hong Kong Listing Rules.
+(1) Shareholdings of top ten shareholders
+0.399
+5.517
+5.033
+5.585
+5.873
+5.808
+170,675
+163,168
+181,831
+196,275
+201,540
+139,251
+126,770
+120,241
+129,175
+111,964
+717,284
+726,120
+710,994
+676,197
+595,255
+5.924
+5.741
+5.997
+5.868
+54,348
+0.269
+Optimisation of capital operation and increase of interest income
+0.423
+78.0
+1,095.7
+Retirement of underground oil tanks in service station and other assets
+Receipt of the structured deposits at maturity
+of investments
+Other cash paid relating to
+87,696
+52,304
+35,392
+67.7
+Receipt of time deposits at maturity
+investing activities
+Cash paid for acquisition of fixed
+(103,014)
+(70,948)
+(32,066)
+45.2
+Increase of capital expenditure
+assets, intangible assets and
+other long-term assets
+51,817
+Cash paid for dividends, profit
+distribution or interest
+4,729
+Cash received from disposal
+(164.2)
+Name of shareholders
+Impairment losses
+11,605
+21,791
+(10,186)
+(46.7) Decrease of impairment losses in current year
+Non-operating income
+2,070
+1,317
+753
+57.2
+Relocation compensation entitled by susidiaries
+Non-operating expenses
+3,042
+1,709
+1,333
+56,546
+(87,483)
+(45,763)
+(41,720)
+80,151
+56,411
+65,818
+Profit attributable to shareholders of the Company
+61,618
+51,244
+46,672
+32,512
+46,639
+Basic earnings per share (RMB)
+0.509
+0.423
+0.385
+0.269
+0.399
+Diluted earnings per share (RMB)
+0.509
+86,697
+99,110
+Profit before taxation
+73,439
+91.2
+Increase of dividend declared
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+3
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS
+Unit: RMB million
+Items
+2018
+0.385
+Turnover and other operating revenues
+For the year ended 31 December
+2017
+2016
+2,360,193 1,930,911
+2015
+2,020,375
+2014
+2,827,566
+Operating profit
+82,264
+71,470
+77,193
+56,822
+2,891,179
+China Petrochemical Corporation
+(L): Long position, (S): Short position
+Total number of
+shares held
+82,709,227,393
+1.88(L)
+157,452,151(S)
+0.62(S)
+103,077,862(L)
+0.40(L)
+1,006,400(L)
+956,876,795(L)
+1,516,334,573(L)
+0.00(L)
+3.75(L)
+5.94(L)
+production equipment, engineering
+construction, and utility services
+including water and power and social
+services. On 20 August 2018, China
+Petrochemical Corporation completed the
+industrial and commercial registration
+and changed from enterprise owned by
+the whole people into limited liability
+company (solely State-owned company)
+and changed its Chinese name.
+Shares of other listed companies directly
+held by China Petrochemical Corporation
+Name of Company
+Number of Shareholding
+Shares Held Percentage
+Sinopec Engineering (Group)
+Co. Ltd
+Sinopec Oilfield Service
+Corporation
+Sinopec Oilfield Equipment
+Corporation
+2,907,856,000
+65.67%
+478,700,855(L)
+10,727,896,364
+6.80(L)
+0.40(S)
+(2) Existing employee shares
+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.
+(1) Controlling shareholder
+The controlling shareholder of
+Sinopec Corp. is China Petrochemical
+Corporation. Established in July 1998,
+China Petrochemical Corporation is a
+state-authorized investment organisation
+and a state-owned enterprise. The legal
+representative is Mr. Dai Houliang.
+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
+Number of shares interested
+% of Sinopec Corp.'s issued
+voting shares (H Share)
+2,320,644,807(L)
+9.10(L)
+1,244,000(S)
+0.00(S)
+618,800(L)
+0.00(L)
+152,698,359(L)
+0.60(L)
+101,037,238(S)
+1,736,184,160(L)
+56.51%
+351,351,000
+58.74%
+Dear Shareholders and Friends:
+On behalf of the Board of Directors, the
+management and the entire staff, I would like to
+express my sincere gratitude to our shareholders
+and the community for your interest and
+support.
+In the face of complicated international
+situation, daunting challenges brought by the
+international oil prices fluctuating in a wide
+range, increasing demand for refined oil and
+petrochemical products and fierce market
+competition, adhering to the general principle
+of making progress while maintaining stability,
+following the new development philosophy and
+requirements for high-quality development, we
+fully exerted the advantages of the integrated
+value chain, initiated and implemented the
+phased goals for year 2020 and through
+year 2050, made great efforts in optimising
+operation, expanding market, reducing costs,
+controlling risks, deepening reforms, reinforcing
+management, and launching the Talent
+Empowering Enterprise Scheme. We successfully
+dealt with various risks and challenges, made
+progress in many aspects and pushed forward
+the sustainable development in an all-round way.
+Over the past year, the Company's profitability
+increased significantly. In accordance with the
+International Financial Reporting Standards, our
+turnover and other operating revenues reached
+RMB 2.89 trillion. Profit attributable to equity
+shareholders of the Company grew by 20.2%
+year on year to RMB 61.6 billion, while the
+year-end liability-to-asset ratio was 46.21%.
+Taking into account the Company's profitability,
+shareholder returns and the future development,
+the Board of Directors proposed a final dividend
+of RMB 0.26 per share. Combined with the
+interim dividend of RMB 0.16 per share, the
+total dividend for the year is RMB 0.42 per
+share with a dividend payout ratio of 82.5%.
+Over the past year, we constantly improved
+the Company's development quality by
+optimising production and operation, actively
+expanding markets, accelerating structural
+adjustment, and further promoting scientific
+and technological innovations, which
+strengthened our competitiveness. In upstream,
+we made great efforts to enhance oil and
+gas exploration and production and achieved
+domestic crude oil reserves replacement ratio
+of 131.7%. Meanwhile, we pushed ahead with
+the construction of natural gas production,
+supply, storage and marketing system, rapidly
+increasing natural gas production and sales
+volume. In refining, we optimised resources
+allocation, adjusted product slate to further
+lower diesel-to-gasoline ratio and successfully
+accomplished the quality upgrading of GB VI
+standard. In marketing, we gave full play to
+the advantages of integrated value chain and
+distribution network, actively responded to
+the fierce market competition and achieved
+continuous growth in both total domestic sales
+volume and retail scale. Moreover, the non-fuel
+business maintained rapid growth. In chemicals,
+we made great efforts in adjusting structure
+and pushing ahead with the integration of
+production, marketing, research and application.
+The share of high value-added products of
+three principal synthetic materials increased
+continuously and the total sales volume of
+chemicals soared. Moreover, a number of key
+projects supporting our long-term development
+progressed smoothly, which consolidated the
+development foundation. Several significant
+breakthroughs were made in the development of
+core technologies. Both patents applications and
+patents granted hit record highs. Meanwhile,
+we made solid progress in the integration of
+informatisation and industrialisation by actively
+advancing the development of smart factories,
+smart oil and gas fields, and smart service
+stations as well as e-commerce platforms such
+as Epec, ChemEmall and EasyJoy.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Over the past year, we consistently enhanced our
+corporate governance. The Company reelected
+the Board of Directors and the Board of
+Supervisors, appointed the senior management,
+and established the Nomination Committee.
+Independent directors played a better role. The
+Company improved the corporate governance
+structure. The regulation for the participation
+by the Party Organisation in corporate
+governance was improved, thus facilitating
+scientific decision-making. We made long-term
+development strategy and relevant execution
+plans and drew the road-map of building the
+company into a world-class enterprise in the
+new era. The continuing connected transactions
+for the next three years have been approved by
+shareholders, which safeguarded the Company's
+stable operation.
+Over the past year, we were determined to
+fulfilling our social responsibilities. Committed
+to mitigating climate change and keeping our
+skies blue, our waters clear, and our land
+pollution-free, we launched the Green Enterprise
+Campaign so as to vigorously develop clean
+energy and improve energy efficiency. We
+stepped up efforts to control greenhouse gas
+emissions and formulated a three-year plan for
+pollution prevention and control. Meanwhile, we
+reinforced our HSSE management system and
+the accountability system for safe operation
+and production, enhanced employees' health
+and public security management. We achieved.
+fruitful results by reinforcing targeted poverty
+alleviation, actively participated in various social
+and charity activities, disaster relief, the work
+related to the United Nations Global Compact
+and we were widely acclaimed by society.
+Looking ahead, we face both opportunities
+and challenges. Global politics and economy
+are facing increasing uncertainties. China will
+still be in an important period of strategic
+opportunity for development. Energy production
+and consumption revolution will be accelerated,
+domestic oil and gas industrial reform will be
+further deepened, and demand for energy and
+petrochemical products will increase. Adhering
+to the general principle of making progress
+while maintaining stability and the requirements
+for high-quality development, we will accelerate
+the strategic plan of our phased goals for year
+2020 through year 2050. Guided by "reform,
+management, innovation and development", we
+stick to the operating principles of "specialised
+development, market-based operation,
+international layout and overall coordination". By
+expediting the upgrading of traditional business,
+strengthening extensive business, fostering new
+business, and building new green advantages,
+we will fully exert the specialised and integrated
+advantages and improved product and service
+quality with an emphasis on high-quality
+development. Meanwhile, we will make sure that
+staff develop together with the Company and the
+Company achieve harmonious development with
+society, which will help us achieve sustainable
+development in an all round way.
+In 2019, the Company will adhere to the overall
+strategy of pursuing progress while maintaining
+stability, fulfill our due responsibilities and make
+more efforts in implementing our plans so as to
+lay solid foundation for sustainable development.
+Meticulous planning will be made to secure
+stable operation and to boost operational
+quality and profitability. Besides, we will strive
+to implement reform and to improve motivation
+and incentive mechanisms. Foundation will be
+consolidated, risk control will be strengthened,
+and operation and management standards
+will be further enhanced. In addition, we will
+strongly promote technological innovations to
+drive our future growth. We advance structural
+reform by building a solid resource foundation
+for sustainable development, strengthening
+the overall competitiveness of the value chain
+of refining and marketing businesses, and
+enhancing our capability in high-end production
+and value creation of chemical business. With
+an aim to build the Company into a green
+enterprise with high quality, we will make
+vigorous efforts in pollution prevention and
+environmental protection to raise the level
+of our green development. Moreover, we will
+explore and capture strategic emerging business
+opportunities through financial investments,
+thereby cultivating new growth drivers. The
+Company's capital expenditure for 2019 will be
+RMB 136.3 billion, increasing 15.5% year-on-
+year.
+Great aspiration and strong persistence will
+create remarkable accomplishments. I believe
+that with the joint efforts of the Board of
+Directors, the management and the entire staff,
+as well as the support from our shareholders
+and the community. Sinopec Corp. will surely
+stride ahead and create greater value for
+shareholders and the community.
+Dai Houliang
+Chairman
+Beijing, China
+22 March 2019
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Chairman Dai Houliang
+CHAIRMAN'S ADDRESS
+Chairman's Address
+8
+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.
+(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
+Not Applicable.
+China Petrochemical
+Corporation
+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 2018
+7
+Changes in
+Shareholdings of Principal S
+ʼn Share Capital anders
+68.77%*
+Nature of
+Shareholders
+(1) Issuance of securities in reporting
+period
+3 ISSUANCE AND LISTING OF SECURITIES
+1,253,177,754
+0
+香港中央結算有限公司
+A Share
+0.84
+1,021,782,160
+620,799,215
+北京誠通金控投資有限公司
+A Share
+0.78
+947,604,254
+947,604,254
+招商銀行股份有限公司-博時中證央企結構調整交易型
+開放式指數證券投資基金3
+A Share
+0.33
+397,446,193
+1,253,177,754
+397,446,193
+1.04
+國新投資有限公司
+Percentage of
+shareholdings %
+68.31
+Changes of
+shareholding
+(3,083,443,708)
+Number of
+shares subject to
+pledges or lock-up
+0
+HKSCC Nominees Limited²
+中國證券金融股份有限公司
+H Share
+20.97
+25,390,660,438
+10,853,566
+Unknown
+A Share
+2.16
+2,609,312,057
+(722,418,086)
+0
+A Share
+中央匯金資產管理有限責任公司
+A Share
+0.27
+Name of shareholders
+BlackRock, Inc.
+Citigroup Inc.
+JPMorgan Chase & Co.
+Schroders Plc.
+Status of shareholders
+Interest of corporation controlled
+by the substantial shareholder
+Person having a security interest in shares
+Interest of corporation controlled by the
+substantial shareholder
+Approved lending agent
+Beneficial owner
+Investment manager
+Trustee (exclusive of passive trustee)
+Approved lending agent
+(2,561)
+Investment manager
+(2) Information disclosed by the shareholders of H shares in accordance with the Securities and Futures Ordinance (SFO) as of 31 December 2018
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+6
+We are not aware of any connected relationship or acting in concert among or between the above-mentioned shareholders.
+322,037,900
+0
+中國人壽保險股份有限公司分紅.個人分紅-
+005L-FH002
+A Share
+0.15
+181,957,660
+128,785,037
+4
+ooo oo o
+A Share
+0.13
+154,958,200
+154,958,200
+Note 1: As compared with the number of shares held as of 31 December 2017.
+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 Crop. Those shareholdings are included in the total number of the shares held by HKSCC
+Nominees Limited.
+Note 3: China Petrochemical Corporation subscribed for the shares of 博時中證央企結構調整交易型開放式指數證券投資基金 and 華夏中證央企結構調整交易型開放式指數證券
+with 600 million A shares of Sinopec Corp. in October 2018.
+Statement on the connected relationship or acting in concert among the above-mentioned shareholders:
+中國農業銀行股份有限公司-華夏中證央企結構調整交易型
+開放式指數證券投資基金 3
+1,560
+Investment income on loss of control and remeasuring interests in pipeline company
+Gain on remeasurement of interests in Shanghai SECCO
+Financial expenses
+Items
+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
+Profit before taxation
+Operating profit
+Operating income
+Items
+(1) Principal financial data
+1 FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH CASS
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Refinery throughput is converted at 1 tonne = 7.35 barrels.
+For overseas production of crude oil: 2018, 1 tonne = 7.21 barrels; 2017, 1 tonne = 7.21 barrels; 2016, 1 tonne = 7.20 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
+Hong Kong Stock Exchange: The Stock Exchange of Hong Kong Limited
+CSRC: China Securities Regulatory Commission.
+Operating income
+RMC: Oil and Natural Gas Reserves Management Committee of the Company;
+Net profit attributable to equity shareholders of the Company
+Net profit attributable to equity shareholders of the Company
+Net cash flow from operating activities
+101,474
+1,930,911
+22.5
+2,360,193
+RMB million
+%
+2016
+Change
+2017
+RMB million
+2,891,179
+RMB million
+For the year ended 31 December
+2018
+(2) Principal financial indicators
+Total equity attributable to equity shareholders of the Company
+Total number of shares (1,000 shares)
+Total liabilities
+Total assets
+Items
+excluding extraordinary gains and losses
+NDRC: China National Development and Reform Commission
+Sinopec group: China Petrochemical Corporation and its subsidiaries;
+China Petrochemical Corporation: our controlling shareholder, China Petrochemical Corporation;
+Directors, Supervisors, Senior
+64
+Report of the Board of Supervisors
+62
+Report of the Board of Directors
+52
+Corporate Governance
+45
+Connected Transactions
+42
+Significant Events
+31
+Management's Discussion and Analysis
+Business Review and Prospects
+Chairman's Address
+of Principal Shareholders
+Changes in Share Capital and Shareholdings
+Management and Employees
+80
+Principal Wholly-owned and
+Controlled 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. 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 5TH MEETING OF THE SEVENTH SESSION OF THE BOARD OF DIRECTORS OF SINOPEC CORP., THE BOARD PROPOSED A
+FINAL CASH DIVIDEND OF RMB 0.26 (TAX INCLUSIVE) PER SHARE FOR 2018, COMBINING WITH THE INTERIM CASH DIVIDEND OF RMB 0.16 (TAX
+INCLUSIVE) PER SHARE, THE TOTAL CASH DIVIDEND FOR 2018 WILL BE RMB 0.42 (TAX INCLUSIVE) PER SHARE. THE DIVIDEND PROPOSAL IS
+SUBJECT TO THE SHAREHOLDERS' APPROVAL AT THE ANNUAL GENERAL MEETING FOR THE YEAR 2018.
+THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 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. MR. LI YONG, DIRECTOR, DID NOT ATTEND THE 5TH MEETING OF THE SEVENTH SESSION OF THE BOARD
+DUE TO OFFICIAL DUITES. MR. LI YONG AUTHORISED MR. LI YUNPENG TO VOTE ON HIS BEHALF IN RESPECT OF THE RESOLUTIONS PROPOSED
+AT THE MEETING. MR. DAI HOULIANG, CHAIRMAN OF THE BOARD, MR. MA YONGSHENG, 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 FINANCIAL ANNUAL
+RESULTS OF SINOPEC CORP. FOR THE YEAR ENDED 31 DECEMBER 2018.
+86,965
+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 22 March 2019 and unless
+required by regulatory authorities, the Company undertakes no obligation
+to update these statements.
+Documents for Inspection
+220
+Corporate Information
+219
+Financial Statements
+81
+Company Profile
+Principal Financial Data and Indicators
+16.7
+100,502
+718,355
+666,084
+(0.9)
+741,434
+1,498,609
+(0.2)
+1,595,504
+2016
+RMB million
+%
+Change
+2017
+RMB million
+1,592,308
+734,649
+RMB million
+As of 31 December
+2018
+175,868
+37,949
+66,299
+727,244
+59,568
+(1.2)
+121,071,210
+0.383
+23.4
+0.422
+0.521
+Basic earnings per share
+RMB
+%
+RMB
+RMB
+Items
+2016
+Change
+2017
+2018
+For the year ended 31 December
+121,071,210
+121,071,210
+712,232
+59,630
+2,480
+17,359
+First
+Quarter
+RMB million
+For the year of 2018
+214,543
+(7.9)
+190,935
+175,868
+29,713
+30.8
+45,582
+59,630
+46,416
+23.4
+51,119
+63,089
+79,877
+16.1
+86,573
+Second
+Third
+Fourth
+Quarter
+21,809
+17,982
+12,052
+63,089
+2,891,179
+818,209
+3,109
+18,380
+22,830
+18,770
+77,389
+772,718
+621,251
+RMB million
+RMB million
+RMB million
+RMB million
+Total
+Quarter
+Quarter
+679,001
+Company Profile
+19
+11
+(16,703)
+(199)
+1
+117
+Unit: RMB million
+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
+Influence
+Beginning
+of the year
+1,676
+End
+of the year
+on the profit
+Changes
+(5,537)
+of the year
+(3,459)
+(5,536)
+(518)
+9
+(20,562)
+Other non-operating expenses, net
+1,613
+(3,941)
+690
+1,367
+Net gain of business combination under common control from beginning of the year
+to the consolidation date
+Subtotal
+(5,970)
+Tax effect
+Total
+Attributable to: Equity shareholders of the Company
+Minority interests
+(4) Items measured by fair values
+2,312
+(6,512)
+976
+(3,658)
+(86)
+(22,164)
+5,578
+(16,586)
+1,450
+(226)
+515
+Amount
+RMB million
+Percentage
+(%)
+Reasons for change
+Financial assets held for trading
+25,732
+51,196
+(25,464)
+(49.7)
+Decrease of structured deposit
+Non-current liabilities due
+17,450
+26,681
+(9,231)
+(34.6)
+Bond repayment at maturity
+within one year
+2017
+RMB million
+RMB million
+Items
+Increase/(decrease)
+(522)
+1,584
+2,106
+191
+(1,617)
+(7,268)
+(5,651)
+(9,069)
+(3,987)
+51,196
+(25,464)
+878
+50,733
+21,498
+(29,235)
+(7,485)
+The table below sets forth reasons for those changes where the fluctuation was more than 30% during the reporting period:
+As of 31 December
+2018
+25,732
+(4,783)
+(148)
+(1,023)
+(7,482)
+7.14
+1.53
+6.68
+percentage
+points
+Weighted average return (excluding extraordinary gains and losses)
+on net assets (%)
+8.20
+6.37
+1.83
+percentage
+points
+4.33
+Net cash flow from operating activities per share
+1.453
+1.577
+(7.9)
+1.772
+As of 31 December
+2018
+8.67
+0.245
+31.1
+0.376
+∞
+8
+236
+CONTENTS
+SINOPEC CORP.
+中国石油化工股份有限公司
+A Share : 600028 ; H Share : 00386 ; ADR : SNP)
+(STOCK CODE
+Items
+Annual Report and Accounts
+SlopEC SINOPEC
+中国石化
+中国石化
+0.422
+23.4
+0.383
+Basic earnings per share (excluding extraordinary gains and losses)
+Weighted average return on net assets (%)
+0.493
+2018
+(1,001)
+RMB
+Change
+2018
+2017
+2016
+Items
+Net loss on disposal of non-current assets
+Donations
+RMB million
+RMB million
+RMB million
+742
+1,518
+1,489
+180
+152
+133
+Government grants
+Gain on holding and disposal of various investments
+For the year ended 31 December
+(Income)/expenses
+(3) Extraordinary items and corresponding amounts
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+Principal Financial Data and Indicators
+2016
+%
+RMB
+Net assets attributable to equity shareholders of the Company per share
+Liabilities to assets ratio (%)
+5.933
+6.007
+(1.2)
+5.883
+2017
+RMB
+46.14
+(0.33)
+44.45
+percentage
+points
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+3
+Principal Financial Data and Indicators
+4
+46.47
+Chairman's Address
+0
+0.521
+Diluted earnings per share
+Amounts transferred to cash flow hedge reserves
+initially recognised by hedged items
+Transactions with owners, recorded directly in
+shareholders' equity:
+3. Appropriations of profits:
+- Appropriations for surplus reserves
+(7,618)
+(7,618)
+5,269
+(7,618)
+994
+(6,624)
+63,089
+55,471
+18.194
+73,665
+5,269
+5,269
+- Distributions to shareholders (Note 49)
+4. Transaction with minority interests
+5. Contributions to subsidiaries from non-controlling
+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 2018
+121,071
+Total comprehensive income
+(12)
+2. Other comprehensive income (Note 34)
+17,200
+854,070
+Balance at 31 December 2017.
+121,071
+119,557
+(4,413)
+888
+199,682
+290,459
+727,244
+126,826
+854,070
+Change in accounting policy (Note 3(26))
+(12)
+80,289
+12
+121,071
+119,557
+(4,425)
+888
+199,682
+290,471
+727.244
+126.826
+854,070
+Change for the year
+1. Net profit
+63,089
+63,089
+Balance at 1 January 2018
+(12)
+(353)
+119,192
+Chairman
+(Legal representative)
+Ma Yongsheng
+President
+The accompanying notes form part of these financial statements.
+Wang Dehua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+91
+Financial Statements (PRC)
+92
+Financial Statements (PRC)
+STATEMENT OF CHANGES IN EQUITY
+For the year ended 31 December 2018
+Dai Houliang
+Balance at 1 January 2017
+1. Net profit
+2. Other comprehensive income
+Total comprehensive income
+Transactions with owners, recorded directly
+in shareholders' equity:
+3. Appropriations of profits:
+- Appropriation for surplus reserves
+-Distributions to shareholders (Note 49)
+Share
+Other
+Capital comprehensive
+Specific
+Surplus
+Change for the year
+126,826
+These financial statements have been approved by the board of directors on 22 March 2019.
+909
+(2,728)
+(6,774)
+3,996
+(3,996)
+(67,799)
+(67,799)
+(67,799)
+2,060
+2,060
+(12)
+(299)
+(311)
+(7,476)
+(7,476)
+857,659
+3,996
+(5,715)
+(73,526)
+818
+818
+91
+(2,283)
+(2,636)
+(92)
+1,706
+203,678
+279,482
+718,355
+139,304
+(71,795)
+727,244
+290,459
+199,682
+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:
+4.
+- Appropriations for surplus reserves
+- Distributions to shareholders (Note 49)
+Transaction with minority interests
+5. Distributions to minority interests
+Total transactions with owners, recorded directly in
+shareholders' equity
+Balance at 1 January 2017
+Other
+Share
+Capital comprehensive
+capital
+reserve
+RMB million
+RMB million
+income
+RMB million
+121,071
+119,525
+(932)
+Specific
+reserve
+RMB million
+765
+Surplus
+Retained
+to equity
+shareholders of
+equity
+attributable
+For the year ended 31 December 2018
+(28,759)
+(30,116)
+(123,720)
+(134,168)
+17,465
+(67,884)
+109,915
+106,407
+109,915
+106,407
+(176,757)
+(133,663)
+(71,944)
+Total
+shareholders'
+(38,392)
+(172,055)
+(138,786)
+(65,648)
+(13,189)
+(15,811)
+Dai Houliang
+Chairman
+(Legal representative)
+Ma Yongsheng
+President
+The accompanying notes form part of these financial statements.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Wang Dehua
+Chief Financial Officer
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+(248,701)
+Retained
+Minority
+reserves
+(13)
+724
+(32,689)
+711
+(12,501)
+(12,501)
+(13)
+3,042
+(35,731)
+(32,702)
+(11,777)
+(44,479)
+6.
+Net increase in specific reserve for the year
+(13)
+123
+3
+126
+7. Others
+45
+(92)
+(47)
+27
+(20)
+Balance at 31 December 2017
+121,071
+119,557
+(4,413)
+888
+123
+Total
+shareholders'
+(32,689)
+(3,042)
+earnings
+the Company
+RMB million
+RMB million
+RMB million
+interests
+RMB million
+equity
+RMB million
+196.640
+275,163
+712,232
+120,293
+832,525
+(32,689)
+51,119
+19,175
+70,294
+- (3,481) --
+(3,481)
+(895)
+(4,376)
+(3,481)
+51,119
+47,638
+18,280
+65,918
+| | | | |
+3,042
+51,119
+Total
+shareholders'
+capital
+RMB million
+121,071
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+95
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(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.
+(5) Long-term equity investments
+(a) Investment in subsidiaries
+In the Company's separate financial statements, long-term equity investments in subsidiaries are accounted for using the cost method.
+Except for cash dividends or profits distributions declared but not yet distributed that have been included in the price or consideration paid
+in obtaining the investments, the Company recognises its share of the cash dividends or profit distributions declared by the investee as
+investment income irrespective of whether these represent the net profit realised by the investee before or after the investment. Investments
+in subsidiaries are stated at cost less impairment losses (see Note 3(11)) in the balance sheet. At initial recognition, such investments are
+measured as follows:
+The initial investment cost of a long-term equity investment obtained through a business combination involving entities under common
+control is the Company's share of the carrying amount of the subsidiary's equity at the combination date. The difference between the initial
+investment cost and the carrying amounts of the consideration given is adjusted to share premium in capital reserve. If the balance of the
+share premium is insufficient, any excess is adjusted to retained earnings.
+For a long-term equity investment obtained through a business combination not involving enterprises under common control, the initial
+investment cost comprises the aggregate of the fair values of assets transferred, liabilities incurred or assumed, and equity securities issued
+by the Company, in exchange for control of the acquiree. For a long-term equity investment obtained through a business combination not
+involving enterprises under common control, if it is achieved in stages, the initial cost comprises the carrying value of previously-held equity
+investment in the acquiree immediately before the acquisition date, and the additional investment cost at the acquisition date.
+An investment in a subsidiary acquired otherwise than through a business combination is initially recognised at actual purchase cost if the
+Group acquires the investment by cash, or at the fair value of the equity securities issued if an investment is acquired by issuing equity
+securities, or at the value stipulated in the investment contract or agreement if an investment is contributed by investors.
+96
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(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.
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+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 financial assets (Note 3(10)), 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)), etc.
+Principal accounting estimates and judgements of the Group are set out in Note 53.
+(1) Accounting treatment of business combination involving entities under common control and not under common control
+(a) Business combination involving entities under common control
+A business combination involving entities or businesses under common control is a business combination in which all of the combining
+entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that
+control is not transitory. The assets and liabilities that the acquirer receives in the acquisition are accounted for at the acquiree's carrying
+amount on the acquisition date. The difference between the carrying amount of the acquired net assets and the carrying amount of the
+consideration paid for the acquisition (or the total nominal value of shares issued) is recognised in the share premium of capital reserve, or
+the retained earnings in case of any shortfall in the share premium of capital reserve. Any costs directly attributable to the combination shall
+be recognised in profit or loss for the current period when occurred. The expense incurred for equity securities and debt securities issued as
+the consideration of the combination is recognised in the initial cost of the securities. The combination date is the date on which the acquirer
+effectively obtains control of the acquiree.
+(b) Business combination involving entities not under common control
+A business combination involving entities or businesses not under common control is a business combination in which all of the combining
+entities or businesses are not ultimately controlled by the same party or parties both before and after the business combination. Difference
+between the consideration paid by the Group as the acquirer, comprises of the aggregate of the fair value at the acquisition date of assets
+given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree, and the Group's
+interest in the fair value of the identifiable net assets of the acquiree, is recognised as goodwill (Note 3(9)) if it is an excess, otherwise in the
+profit or loss. The expense incurred for equity securities and debt securities issued as the consideration of the combination is recognised
+in the initial cost of the securities. Any other expense directly attributable to the business combination is recognised in the profit or loss
+for the year. The difference between the fair value and the book value of the assets given is recognised in profit or loss. The acquiree's
+identifiable assets, liabilities and contingent liabilities, if satisfying the recognition criteria, are recognised by the Group at their fair value at
+the acquisition date. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree.
+(c) Method for preparation of consolidated financial statements
+For the year ended 31 December 2018
+The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Company and its
+subsidiaries. Control means an entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability
+to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial
+statements from the date that control commences until the date that control ceases.
+Where the Company acquires a subsidiary during the reporting year through a business combination involving entities not under common
+control, the identifiable assets, liabilities and results of operations of the subsidiaries are consolidated into consolidated financial statements
+from the date that control commences, based on the fair value of those identifiable assets and liabilities at the acquisition date.
+Where the Company acquired a minority interest from a subsidiary's minority shareholders, the difference between the investment cost and
+the newly acquired interest into the subsidiary's identifiable net assets at the acquisition date is adjusted to the capital reserve (capital
+surplus) in the consolidated balance sheet. Where the Company partially disposed an investment of a subsidiary that do not result in a loss
+of control, the difference between the proceeds and the corresponding share of the interest into the subsidiary is adjusted to the capital
+reserve (capital surplus) in the consolidated balance sheet. If the credit balance of capital reserve (capital surplus) is insufficient, any excess
+is adjusted to retained profits.
+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.
+94
+94
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(1) Accounting treatment of business combination involving entities under common control and not under common control (Continued)
+(c) Method for preparation of consolidated financial statements (Continued)
+Where 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.
+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 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.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(5) Long-term equity investments (Continued)
+(b) Investment in joint ventures and associates
+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.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(8) 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(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.
+Useful lives and amortisation methods are reviewed at least each year end.
+(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(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.
+Oil and gas properties include the mineral interests in properties, wells and related support equipment arising from oil and gas exploration and
+production activities.
+(10) Financial Instruments
+(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. Bills receivable and 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
+Debt instruments held by the Group mainly include cash at bank and on hand, and receivables, etc. These financial assets are 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.
+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.
+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 transfer
+to retained earnings.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+99
+Financial Statements (PRC)
+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.
+93
+Estimated Estimated rate
+useful life of residual value
+12.50 years
+3%
+4.30 years
+3%
+Useful lives, residual values and depreciation methods are reviewed at least each year end.
+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 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(11).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+97
+Financial Statements (PRC)
+98
+(7) Oil and gas properties
+Financial Statements (PRC)
+For the year ended 31 December 2018
+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(11)). Construction in
+progress is stated in the balance sheet at cost less impairment losses (see Note 3(11)).
+The cost of a purchased fixed asset comprises the purchase price, related taxes, and any directly attributable expenditure for bringing the asset
+to working condition for its intended use. The cost of self-constructed assets includes the cost of materials, direct labour, capitalised borrowing
+costs (see Note 3(18)), and any other costs directly attributable to bringing the asset to working condition for its intended use. According to legal
+or contractual obligations, costs of dismantling and removing the items and restoring the site on which the related assets located are included in
+the initial cost.
+Construction in progress is transferred to fixed assets when the asset is ready for its intended use. No depreciation is provided against
+construction in progress.
+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
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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
+121,071
+68,789
+196
+482
+199,682
+177,049
+567,269
+Balance at 31 December 2017
+121,071
+68,789
+196
+482
+199,682
+Balance at 31 December 2017
+177,049
+Change in accounting policy (Note 3(26))
+Balance at 1 January 2018
+121,071
+68,789
+196
+482
+199,682
+177,049
+567,269
+1. Net profit
+Change for the year
+2. Other comprehensive income
+Total comprehensive income
+567,269
+Transactions with owners, recorded directly
+(55)
+20
+reserve
+RMB million
+68,769
+income
+RMB million
+reserve
+RMB million
+393
+reserves
+RMB million
+196,640
+earnings
+RMB million
+182,440
+equity
+RMB million
+569,576
+263
+----30,415
+(67)
+(67)
+30,415
+(67)
+(75)
+30,415
+== 3,042
+(3,042)
+(32,689)
+(32,689)
+Total transactions with owners, recorded directly
+in shareholders' equity
+- - 3,042 (3.
+(35,731)
+(32,689)
+4. Net increase in specific reserve for the year
+89
+89
+5. Others
+30,348
+These financial statements have been approved by the board of directors on 22 March 2019.
+in shareholders' equity:
+- Appropriation for surplus reserves
+Chairman
+(Legal representative)
+Ma Yongsheng
+President
+The accompanying notes form part of these financial statements.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Wang Dehua
+Chief Financial Officer
+NOTES TO THE FINANCIAL STATEMENTS
+For the year ended 31 December 2018
+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 22 March 2019.
+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.
+Dai Houliang
+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.
+(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 54, and there are no significant changes related to the consolidation scope
+during current period.
+2 BASIS OF PREPARATION
+(1) Statement of compliance of China Accounting Standards for Business Enterprises ("CASS")
+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 2018,
+and the consolidated and company financial performance and the consolidated and company cash flows for the year ended 31 December 2018.
+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 assets held for trading (see Note 3(10))
+Other equity instrument investments (see Note 3(10))
+Derivative financial instruments (see Note 3(10))
+The Company and its subsidiaries (the "Group") engage in the oil and gas and chemical operations and businesses, including:
+3. Appropriations of profits:
+These financial statements have been approved by the board of directors on 22 March 2019.
+143,148
+- Distributions to shareholders (Note 49)
+Total transactions with owners, recorded directly
+in shareholders' equity
+4. Net increase in specific reserve for the year
+5. Others
+39,957
+39,957
+(681)
+(681)
+(681)
+39,957
+39,276
+Balance at 31 December 2018
+121,071
+537,196
+3,996
+(67,799)
+(67,799)
+--- 3,996 (7
+(71,795)
+(67,799)
+507
+507
+6
+68,795
+(2,063)
+(2,057)
+(485)
+989
+203,678
+(3,996)
+Net decrease in cash and cash equivalents
+(67,811)
+Cash repayments of borrowings
+Cash paid for dividends or interest
+Sub-total of cash outflows
+(41,770)
+(653,412)
+1,044,684
+1,249,677
+(867,259)
+42,913
+1,000,467
+1,304
+2017
+RMB million
+1,228,816
+1,481
+19,380
+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
+(37,054)
+Payments of taxes and levies
+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
+2018
+Note
+CASH FLOW STATEMENT
+Financial Statements (PRC)
+90
+Net cash flow from financing activities
+Cash paid to and for employees
+(206,305)
+for the year ended 31 December 2018
+(26,211)
+(200,995)
+Sub-total of cash inflows
+Cash received from borrowings
+Net cash flow from investing activities
+Cash flows from financing activities:
+Other cash paid relating to investing activities
+(66,913)
+(40,169)
+(37,139)
+(54,792)
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+66,284
+141,185
+1
+Net cash received from disposal of subsidiaries and other business entities
+Sub-total of cash inflows
+Sub-total of cash outflows
+28,724
+23,270
+(1,141,545)
+(926,963)
+117,721
+65,930
+18,919
+108,132
+43,693
+252
+Cash received from returns on investments
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+2,838
+23,842
+(35,502)
+The cumulative change in present value of the expected future cash flows on the hedged item from inception of the hedge.
+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:
+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 nonfinancial 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.
+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 shares 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:
+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.
+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.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+(d) 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.
+(10) Financial Instruments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+100
+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.
+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 Group's financial liabilities are mainly financial liabilities measured at amortised cost, including bills payable and 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.
+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.
+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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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.
+(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.
+(13) Employee benefits
+(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.
+The recoverable amount is the greater of the fair value less costs to sell and the present value of expected future cash flows generated by the
+asset (or asset unit, set of asset units).
+An asset unit is the smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or
+groups of assets. An asset unit comprises related assets that generate associated cash inflows. In identifying an asset unit, the Group primarily
+considers whether the asset unit is able to generate cash inflows independently as well as the management style of production and operational
+activities, and the decision for the use or disposal of asset.
+Assets are tested for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The
+recoverable amounts of goodwill and intangible assets with uncertain useful lives are estimated annually no matter there are any indications of
+impairment. Goodwill is tested for impairment together with related asset units or groups of asset units.
+Internal and external sources of information are reviewed at each balance sheet date for indications that the following assets, including fixed
+assets, construction in progress, goodwill, intangible assets and investments in subsidiaries, associates and joint ventures may be impaired.
+(11) Impairment of other non-financial long-term assets
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+102
+Financial Statements (PRC)
+101
+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.
+(b) Financial liabilities
+Research and development expenses
+General and administrative expenses
+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.
+Year of 2017
+RMB million
+6,423
+(6,423)
+Contents and reasons of the changes
+The Company combined presents bills receivable
+and accounts receivable into bills and
+accounts receivable
+The Company combined presents dividends receivable
+and other receivables into other receivables
+The Company combined presents bills payable
+and accounts payable into bills and accounts payable
+Item
+Bills receivable and accounts receivable
+Accounts receivable
+31 December
+2017
+RMB million
+37,766
+(37,609)
+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.
+1 January
+2017
+RMB million
+(157)
+(471)
+Other receivables
+16,327
+5,454
+Dividends receivable
+(16,327)
+(5,454)
+Bills payable and accounts payable
+Accounts payable
+86,604
+78,548
+38,803
+(38,332)
+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.
+Item
+The research and development expenses originally included
+in the general and administrative expenses were separately
+presented as the research and development
+expenses in income statements
+(iii) Derecognition
+For receivables 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.
+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.
+(ii) Impairment
+(a) Financial assets (Continued)
+(10) Financial Instruments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(ii) The impact to the Company's financial statements is as follows:
+For the year ended 31 December 2018
+Financial Statements (PRC)
+Bills payable
+(6,462)
+(5,828)
+6,843
+2,006
+(6,843)
+(2,006)
+Other non-current assets
+Other payables
+Dividends payable
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+106
+Financial Statements (PRC)
+105
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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
+⋅
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+•
+•
+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;
+(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;
+engage in business activities from which it may earn revenues and incur expenses;
+(d) investors that have joint control or exercise significant influence over the Group;
+(26) Changes in significant accounting policies
+(i) The impact to the Group's financial statements is as follows:
+180,129
+206,535
+Bills payable and accounts payable
+Accounts payable
+(146)
+146
+(13,197)
+(16,207)
+(50,289)
+63,486
+84,701
+(68,494)
+RMB million
+(a) MOF issued Cai Kuai [2018] No. 15 “Announcement of the revision of general enterprise financial statements format for 2018". The Group
+has adopted the above guidelines to prepare the financial statements of 2018. The comparative financial statements of 2017 have been
+adjusted.
+Fixed assets
+Bills receivable and accounts receivable
+Accounts receivable
+Item
+Contents and reasons of the changes
+The Group combined presents interests payable,
+dividends payable and other payables
+into other payables
+and accounts payable into bills and accounts payable
+and fixed assets pending for disposal into fixed assets
+The Group combined presents bills payable
+The Group combined presents fixed assets
+The Group combined presents bills receivable
+and accounts receivable into bills
+and accounts receivable
+Contents and reasons of the changes
+1 January
+2017
+RMB million
+31 December
+2017
+Bills receivable
+(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;
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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 recogniesd 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.
+(16) Revenue recognition
+Provisions for future dismantlement costs are initially recognised based on the present value of the future costs expected to be incurred in
+respect of the Group's expected dismantlement and abandonment costs at the end of related oil and gas exploration and development activities.
+Any subsequent change in the present value of the estimated costs, other than the change due to passage of time which is regarded as interest
+costs, is reflected as an adjustment to the provision of oil and gas properties.
+Provisions are recognised when the Group has a present obligation as a result of a contingent event, it is probable that an outflow of economic
+benefits will be required to settle the obligations and a reliable estimate can be made. Where the effect of time value of money is material,
+provisions are determined by discounting the expected future cash flows.
+(15) Provisions
+different taxable entities which either to intend to settle the current tax liabilities and assets on a net basis, or to realise the assets and
+settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to
+be settled or recovered.
+the same taxable entity; or
+103
+-
+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 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).
+(14) Income tax
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+they relate to income taxes levied by the same tax authority on either:
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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:
+(24) Related parties
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+104
+Dividends and distributions of profits proposed in the profit appropriation plan which will be authorised and declared after the balance sheet
+date, are not recognised as a liability at the balance sheet date and are separately disclosed in the notes to the financial statements. Dividends
+are recognised as a liability in the period in which they are declared.
+(23) Dividends
+Operating lease payments are charged as expenses on a straight-line basis over the period of the respective leases.
+Research costs and development costs that cannot meet the capitalisation criteria are recognised in profit or loss when incurred.
+(22) Operating leases
+(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.
+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.
+(18) Borrowing costs
+Government grants received in relation to assets are recorded as deferred income, and recognised evenly in profit or loss over the assets'
+useful lives. Government grants received in relation to revenue are recorded as deferred income, and recognised as income in future periods as
+compensation when the associated future expenses or losses arise; or directly recognised as income in the current period as compensation for
+past expenses or losses.
+Government grants are recognised when there is reasonable assurance that the grants will be received and the Group is able to comply with
+the conditions attaching to them. Government grants in the form of monetary assets are recorded based on the amount received or receivable,
+whereas non-monetary assets are measured at fair value.
+Government grants are the gratuitous monetary assets or non-monetary assets that the Group receives from the government, excluding capital
+injection by the government as an investor. Special funds such as investment grants allocated by the government, if clearly defined in official
+documents as part of "capital reserve" are dealt with as capital contributions, and not regarded as government grants.
+(17) Government grants
+(83,449)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(75,787)
+(200,073)
+(2,761)
+Deposits at related parities
+Renminbi
+US Dollars
+EUR
+Others
+Total
+Effective from
+13 January 2015
+(RMB/Ton)
+2,109.76
+1,411.20
+2,105.20
+Others
+1,948.64
+1,218.00
+1,495.20
+At 31 December 2018
+Original
+currency
+million
+At 31 December 2017
+Original
+Exchange
+rates
+RMB
+million
+currency
+million
+Exchange
+rates
+RMB
+million
+82
+1,711.52
+14
+EUR
+US Dollars
+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 Group has set up a project team which has reviewed all of the Group's leasing arrangements over the last year in light of the new lease
+accounting rules in the New Leases Standard. The standard will affect primarily the accounting for the Group's operating leases.
+The Group expects to recognise right-of-use assets of approximately RMB 207.5 billion on 1 January 2019, lease liabilities of RMB 198.6
+billion (after adjustments for prepayments and accrued lease payments recognised as at 31 December 2018).
+108
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+4 TAXATION
+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.
+Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Products
+Gasoline
+Hong Kong Dollars
+Diesel
+Solvent oil
+Lubricant oil
+Fuel oil
+Jet fuel oil
+5
+CASH AT BANK AND ON HAND
+The Group
+Cash on hand
+Renminbi
+Cash at bank
+Renminbi
+Naphtha
+.
+102,572
+3,377
+25
+126
+7.8023
+15,256
+6.5342
+2,336
+16
+33
+16,374
+6.8632
+7.8473
+2,389
+4
+32,117
+15
+24,625
+125,958
+79
+10
+7.8023
+1
+11
+7.8473
+1
+82
+0.8359
+98
+112
+117,490
+92,711
+41,057
+167,015
+165,004
+6.8632
+23,179
+3,760
+6.5342
+24,561
+35
+39
+(3,155)
+Financial Statements (PRC)
+109
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+47,514
+The financial assets are primarily the structured deposit 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.
+2017
+RMB million
+51,196
+25,550
+182
+25,732
+At 31 December
+At 31 December
+2018
+RMB million
+Total
+Equity investments, listed and at quoted market price
+Structured deposit
+6 FINANCIAL ASSETS HELD FOR TRADING
+At 31 December 2018, structured deposits included in cash at bank and on hand with financial institutions of the Group amounted to RMB 77,909
+million (2017: RMB 65,250 million).
+At 31 December 2018, time deposits with financial institutions of the Group amounted to RMB 55,093 million (2017: RMB 51,786 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.
+51,196
+the use of a single discount rate to a portfolio of leases with reasonably similar characteristics
+0.8762
+MoF issued revised "No. 21 Accounting Standard for Business Enterprises - Leases" ("New Leases Standard") in December 2018 and the
+New Leases Standard will be effective on 1 January 2019. It will result in almost all leases being recognised on the balance sheet by lessees,
+as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and
+a financial liability to pay rentals are recognised. Leases to explore for or use oil and natural gas are not applied to the New Leases Standard.
+The Group will apply the standard from its mandatory adoption date of 1 January 2019. The Group intends to apply the simplified transition
+approach and will not restate comparative amounts for the year prior to first adoption. All right-of-use assets will be measured at the amount
+of the lease liabilities on adoption (adjusted for any prepaid or accrued lease expenses). In applying the New Leases Standard for the first
+time, the Group has used the following practical expedients permitted by the standard:
+Advances from customers were reclassified as contract liabilities
+by implementation of the New Revenue Standard
+Item
+Contents and reasons of the changes
+The New Revenue Standard has no significant impact on the shareholder's equity in the consolidated balance sheet. Other financial statement
+items that affected by the initial implementation of the standard is as follows:
+(b) MOF issued revised "No.14 Accounting Standard for Business Enterprises ⚫ Revenue" ("New Revenue Standard") in 2017 and the New
+Revenue Standard was effective on 1 January 2018. In accordance with the New Revenue Standard, the Group adjusted the first year's
+retained earnings and other related items of the financial statements according to the cumulative impact of the New Revenue Standard for
+the first time, while the comparative financial statements have not been restated. The Group has adopted the above standard to prepare the
+financial statements of 2018, while the comparative financial statements of 2017 have not been restated.
+(26) Changes in significant accounting policies (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+5,445
+(5,445)
+RMB million
+Contract liabilities
+Year of 2017
+Research and development expenses
+General and administrative expenses
+Item
+The research and development expenses originally included
+in the general and administrative expenses were separately
+presented as the research and development expenses
+in income statements
+Contents and reasons of the changes
+Financial assets
+Bills payable
+Bills receivable
+held for trading
+New Financial Instruments Standards
+Measurement
+Measured at fair value
+through profit or loss
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+RMB million
+Advances from customers
+120,734
+RMB million
+51,196
+Measured at fair value
+.
+through profit or loss
+Available-for-sale financial assets
+Financial assets at fair value through profit or loss
+Measurement
+Item
+before revision
+Financial Instruments Standards
+(i) At 1 January 2018, the comparatives of classification and measurement in the Group's financial statements between the New Financial
+Instruments Standards and the Financial Instruments Standards before revision are as below:
+At 1 January 2018 (RMB million)
+The Group
+The New Financial Instruments Standards have no significant impact on the shareholder's equity. The impact to the Group's financial
+statements is presented as below:
+4,230
+(4,230)
+124,793
+(124,793)
+At 31 December 2018 (RMB million)
+The Group
+The Company
+Advances from customers
+Contract liabilities
+Item
+Item
+(3,413)
+3,413
+The Company
+(120,734)
+(c) MOF issued revised "No.22 Accounting Standards for Business Enterprises Financial instruments: recognition and measurement", revised
+"No.23 Accounting Standards for Business Enterprises Transfer of financial assets", revised “No.24 Accounting Standards for Business
+Enterprises Hedging" and revised "No.37 Accounting Standards for Business Enterprises Presentation of financial instruments" (collectively
+referred to as "New Financial Instruments Standards"). The New Financial Instruments Standards were effective on 1 January 2018. In
+accordance with the New Financial Instruments Standards, the Group classified and measured financial instruments (including impairment),
+involving comparative financial statements which are not consistent with the requirements of this standard and need not be adjusted. The
+difference between the original book value of the financial instrument and the new book value on the date of execution of the New Financial
+Instruments Standards shall be included in the retained earnings or other comprehensive income at the beginning financial statements. The
+Group has adopted the above guidelines to prepare financial statements of the year ended 31 December 2018, while the comparative figures
+for 2017 have not been restated.
+51,196
+Financial statement items as at 31 December 2018 that affected by the implementation of New Revenue Standard compared to the original
+revenue standard is as follows:
+178
+or loss
+Measured at cost
+RMB million
+48,179
+Item
+Measurement
+RMB million
+Financial assets held Measured at fair
+for trading
+48,179
+395
+(equity instruments)
+Other equity
+instrument
+investments
+Measurement
+Measured at fair
+value through profit
+value through profit
+or loss
+Measured at fair
+As a consequence:
+income
+• any adjustments to carrying amounts of financial assets or liabilities are recognised at the beginning of the current reporting period,
+with the difference recognised in opening retained earnings
+• financial assets are not reclassified in the balance sheet for the comparative period
+•
+provisions for impairment have not been restated in the comparative period
+(ii) The Group has adopted the simplified expected credit loss model for its receivables and contract assets, and the general expected credit
+loss model for receivables and contract assets carried at amortised. The Group assessed the loss allowance for receivables under the
+expected credit loss model on 1 January 2018, no significant difference compared with the loss allowance under accounting policies
+applied until 31 December 2017.
+Measured at fair
+(d) New and amended standards and interpretations not yet adopted by the Group
+The Group has applied the hedging accounting prospectively to the derivatives held for hedging purpose.
+(iii) Hedging
+value through other
+comprehensive
+financial assets
+395
+profit or loss
+value through other
+comprehensive income
+1,676
+Available-for-sale
+Measured at fair
+Other equity
+instrument
+investments
+value through other
+comprehensive income
+1,498
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+107
+Financial Statements (PRC)
+(equity instruments)
+Measured at cost
+(equity instruments)
+(174,301)
+Item
+Financial Statements (PRC)
+fair value through
+Financial Instruments Standards before revision
+At 1 January 2018, the comparatives of classification and measurement in the Company's financial statements between the New Financial
+Instruments Standards and the Financial Instruments Standards before revision are as below:
+New Financial Instruments Standards
+(26) Changes in significant accounting policies (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial assets at
+Amount
+prepayments
+Percentage of
+allowance to
+Percentage
+to total
+prepayments
+RMB million
+7
+The Company
+25
+4.7
+11.1
+%
+At 31 December 2018
+Allowance
+RMB million
+2,306
+Amount
+1.4
+4
+1
+2.8
+70
+4,227
+92.6
+%
+balance
+Percentage of
+allowance to
+prepayments
+At 31 December 2017
+Allowance
+RMB million
+%
+RMB million
+Percentage
+to total
+prepayments
+balance
+%
+8.1
+22.5
+-
+1.0
+60
+4,605
+173
+38
+2.8
+169
+78
+94.9
+balance
+%
+Allowance
+RMB million
+%
+110
+Financial Statements (PRC)
+101
+5,683
+1.3
+13
+5
+55539
+100.0
+1.3
+1.7
+3.5
+93.5
+33118
+63
+4,926
+53
+100.0
+5,990
+12.8
+10
+85
+8.3
+14
+36
+Financial Statements (PRC)
+1
+Between one and two years
+Within one year
+RMB million
+balance
+Allowance
+receivables
+Amount
+to other
+receivables
+to total other
+Percentage
+to other
+receivables
+to total other
+Percentage
+Percentage
+of allowance
+At 31 December 2017
+of allowance
+Percentage
+At 31 December 2018
+The Group
+1,162
+63,820
+57,432
+1,117
+64,982
+58,549
+17,427
+1,486
+15,941
+Over three years
+Total
+26,793
+1,481
+25,312
+24,301
+RMB million
+6.6
+21
+16.1
+82
+2.9
+509
+16.1
+53
+222
+6.9
+1,843
+1.2
+320
+1.2
+329
+84.2
+14.665
+01
+RMB million
+%
+balance
+Allowance
+receivables
+Amount
+RMB million
+%
+%
+90.7
+1.4
+RMB million
+At 31 December
+4
+3.8
+3
+1.8
+-
+0.6
+1.0
+1
+2.3
+52010
+33680
+100.0
+95.3
+21283
+4,433
+5
+100.0
+2,493
+3.7
+2.8
+187
+123
+3
+3.2
+81
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+2017
+111
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+At 31 December
+2018
+RMB million
+At 31 December
+2017
+RMB million
+RMB million
+2018
+At 31 December
+The Company
+The Group
+29.9%
+33.5%
+1,472
+2017
+2018
+2,009
+At 31 December
+At 31 December
+Ageing analysis of other receivables is as follows:
+Total
+Less: Allowance for doubtful accounts
+Other receivables
+10 OTHER RECEIVABLES
+Percentage to the total balance of prepayments
+Total amount (RMB million)
+At 31 December 2018 and 31 December 2017, the total amounts of the top five prepayments of the Group are set out below:
+PREPAYMENTS (Continued)
+9
+For the year ended 31 December 2018
+Financial Statements (PRC)
+Between two and three years
+to accounts
+receivable
+balance
+Percentage
+to total
+prepayments
+436
+98.1
+67,777
+-
+97.9
+56,431
+%
+balance
+Allowance
+RMB million
+%
+RMB million
+%
+receivable
+accounts
+receivable
+Amount
+to accounts
+to total
+to accounts
+receivable
+balance
+Allowance
+% RMB million
+accounts
+receivable
+Amount
+RMB million
+of allowance
+Percentage
+Percentage
+At 31 December 2017
+0.8
+of allowance
+83
+715
+612
+100.0
+69,106
+606
+100.0
+57,599
+80.8
+426
+0.8
+527
+80.8
+358
+0.8
+443
+50.6
+44
+0.1
+87
+57.1
+165
+0.5
+289
+19.9
+142
+1.0
+19.0
+The Company
+Percentage
+to total
+84,701
+64,879
+68,494
+56,993
+2017
+RMB million
+At 31 December
+At 31 December
+2018
+RMB million
+156
+16,207
+7,886
+RMB million
+RMB million
+At 31 December
+2017
+2018
+At 31 December
+The Company
+The Group
+(a) Bills receivable
+Total
+Accounts receivable (b)
+Bills receivable (a)
+BILLS RECEIVABLE AND ACCOUNTS RECEIVABLE
+8
+Derivative financal assets and derivative financial liabilities of the Group are primarily commodity futures and swaps. See Note 58.
+7
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+29,989
+30,145
+The Group
+157
+37,609
+Bills receivable represents mainly the bills of acceptance issued by banks for sales of goods and products.
+Percentage
+At 31 December 2018
+37,756
+147
+37,609
+At 31 December
+2017
+RMB million
+30,120
+131
+29,989
+69,106
+612
+68,494
+At 31 December
+2018
+RMB million
+RMB million
+RMB million
+57,599
+606
+56,993
+At 31 December
+2017
+2018
+At 31 December
+The Company
+The Group
+Total
+Over three years
+Between two and three years
+Between one and two years
+Within one year
+Ageing analysis on accounts receivable is as follows:
+Less: Allowance for doubtful accounts
+Total
+Accounts receivable
+(b) Accounts receivable
+At 31 December 2018, 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 2018, the Group's derecognised but outstanding bills due to endorsement or discount amounted to RMB 4,385 million (2017:
+RMB 12,190 million).
+37,766
+Percentage of
+allowance to
+prepayments
+At 31 December 2018
+Percentage
+Between one and two years
+Between two and three years
+Within one year
+Total
+Over three years
+Between two and three years
+Between one and two years
+Within one year
+Ageing analysis of prepayments is as follows:
+Total
+Less: Allowance for doubtful accounts
+Prepayments
+PREPAYMENTS
+9
+During 2018 and 2017, 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 2018 and 2017, the Group and the Company had no individually significant accounts receivable been fully or substantially provided
+allowance for doubtful accounts.
+Bills receivables and 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. Information about
+the impairment of trade accounts receivable and the Group exposure to credit risk can be found in Note 58.
+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.
+25.9%
+At 31 December
+2017
+17,920
+2018
+15,699
+27.3%
+Percentage to the total balance of accounts receivable
+Allowance for doubtful accounts
+Total amount (RMB million)
+At 31 December
+At 31 December 2018 and 31 December 2017, the total amounts of the top five accounts receivable of the Group are set out below:
+(b) Accounts receivable (Continued)
+Over three years
+BILLS RECEIVABLE AND ACCOUNTS RECEIVABLE (Continued)
+Total
+The Company
+Amount
+RMB million
+%
+RMB million
+%
+balance
+Allowance
+prepayments
+to total
+prepayments
+Amount
+RMB million
+Percentage of
+allowance to
+Percentage
+At 31 December 2017
+The Group
+At 31 December 2018
+4
+4,429
+4,433
+2017
+RMB million
+At 31 December
+At 31 December
+2018
+RMB million
+2,493
+5
+2,488
+4,926
+25
+4,901
+5,990
+53
+5,937
+At 31 December
+2017
+RMB million
+RMB million
+2018
+At 31 December
+The Group
+Percentage
+8
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+94250
+100.0
+30,120
+0.5
+144
+Over three years
+Total
+0.2
+54
+0.4
+98.9
+29,797
+125
+Between one and two years
+Between two and three years
+Within one year
+Allowance
+% RMB million
+RMB million
+accounts
+receivable
+Amount
+to total
+to accounts
+to total
+of allowance
+of allowance
+Percentage
+Percentage
+At 31 December 2017
+receivable
+balance
+Amount
+% RMB million
+37,331
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+accounts
+receivable
+%
+73.7
+101
+18.8
+29
+201
+147
+100.0
+0.4
+0.4
+12.7
+17
+0.4
+98.8
+80008
+37,756
+131
+137
+73.6
+106
+154
+18.5
+10
+134
+12.0
+15
+Allowance
+% RMB million
+DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+433
+At 31 December
+2018
+RMB million
+Equipment,
+146
+650,920
+650,774
+RMB million
+2017
+At 31 December
+617,812
+Plants
+617,762
+50
+Total
+Fixed assets pending for disposal
+Fixed assets (a)
+The Group
+13 FIXED ASSETS
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(a) Fixed assets
+Oil and
+machinery
+and buildings
+RMB million
+Exchange adjustments
+Decreases for the year
+Reclassifications
+1,727,982
+5,644
+73,210
+45,103
+940,312
+3,856
+667,657
+1,567
+24,366
+3,741
+221
+120,013
+Transferred from construction in progress
+Additions for the year
+Balance at 1 January 2018
+Cost:
+Total
+RMB million
+and others
+RMB million
+gas properties
+RMB million
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+(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.
+Note:
+271
+490
+1,207
+Dividends declared by associates
+(944)
+699
+123
+1,142
+9,341
+16,810
+1,290
+1,711
+2,543
+2,022
+(334)
+116
+(260)
+221
+Balance at 31 December 2018
+Share of profit/(loss) from associates
+1,272
+The share of profit and other comprehensive loss for the year ended 31 December 2018 in all individually immaterial associates accounted for
+using equity method in aggregate was RMB 3,550 million (2017: RMB 3,182 million) and RMB 844 million (2017 other comprehensive income:
+RMB 569 million) respectively. As at 31 December 2018, the carrying amount of all individually immaterial associates accounted for using equity
+method in aggregate was RMB 31,370 million (31 December 2017: RMB 23,899 million).
+(167)
+58
+(26)
+641
+(121)
+(loss)/income from associates (ii)
+Share of other comprehensive
+(305)
+292
+119
+48
+443
+960
+1,040
+753
+915
+1,011
+Accumulated depreciation:
+1,634
+138
+2.5
+43,517
+3,929
+Balance at 31 December 2018
+2
+133
+Exchange adjustments
+6,149
+(1,356)
+1,848
+(1,178)
+(1)
+(177)
+Decreases for the year
+4,027
+274
+Additions for the year
+74,135
+30,945
+31,617
+39,358
+135
+79,063
+Balance at 31 December 2018
+At 31 December
+2017
+RMB million
+329,814
+302,082
+34
+302,048
+At 31 December
+2018
+RMB million
+Total
+Fixed assets pending for disposal
+Fixed assets (a)
+The Company
+617,762
+650,774
+411,121
+171,840
+67,813
+Balance at 31 December 2017
+405,419
+145,436
+66,907
+Net book value:
+6,410
+3,832
+Provision for impairment losses:
+498,246
+456,459
+48,368
+Additions for the year
+Balance at 1 January 2018
+2,387
+1,783,260
+965,495
+695,724
+122,041
+147
+2,142
+98
+(25,963)
+(22,151)
+(146)
+(3,666)
+(1,772)
+1,003,073
+Balance at 1 January 2018
+4,038
+47,250
+1,863
+1,086,435
+528,459
+506,771
+51,205
+Balance at 31 December 2018
+76
+1,744
+43
+Exchange adjustments
+(18,405)
+(570)
+(16,543)
+(124)
+76
+494
+(1,738)
+Decreases for the year
+Reclassifications
+99,904
+48,616
+329,814
+(246)
+(610)
+(3,176)
+(3,026)
+Non-current liabilities
+(908)
+(961)
+(10,668)
+(7,252)
+(332)
+(20,554)
+(154,212)
+(200,402)
+(933)
+(1,020)
+Current liabilities
+1.673
+1,828
+(23,293)
+(6)
+(58,628)
+(61,771)
+of the Company
+Net assets attributable to owners
+6,207
+6,906
+17,623
+18,750
+97,332
+111,377
+24,751
+25,462
+48,180
+47,772
+Net assets
+(170)
+(673)
+(31,494)
+(31,436)
+51,553
+49.961
+158,938
+170,796
+2017
+2018
+2017
+At 31
+December
+CIR
+At 31
+December
+At 31
+December
+At 31
+December
+At 31
+December
+Zhongtian Synergetic Energy
+SIBUR (i)
+At 31
+December
+2018
+RMB million
+2017
+RMB million
+At 31
+December
+Sinopec Finance
+At 31
+December
+2018
+RMB million
+RMB million
+RMB million
+2017
+2018
+2018
+47,772
+2017
+RMB million
+17.782
+5,612
+6,712
+8,232
+7,477
+20,719
+22,502
+161,187
+209,837
+16,359
+40.972
+39,320
+11,317
+12,498
+Current assets
+Non-current assets
+RMB million
+RMB million
+RMB million
+RMB million
+48,180
+25,462
+24,751
+Profit/(loss) for the year
+Turnover
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2017
+2018
+2017
+2018
+2017
+Other comprehensive (loss)/income
+CIR
+Total comprehensive income/(loss)
+5,644
+583
+123
+1,142
+9,601
+10,400
+1,536
+1,868
+2,543
+2,022
+2,563
+2,856
+3,569
+12,235
+52,496
+59,927
+3,542
+4,536
+4,746
+(157)
+Zhongtian Synergetic Energy
+2017
+9,676
+11,086
+12,128
+12,476
+24,090
+23,886
+Share of net assets from associates
+571
+517
+minority interests
+Net assets attributable to
+6,207
+6,906
+17,623
+18,750
+96,761
+110,860
+7,266
+SIBUR (i)
+2018
+6,829
+3,104
+2018
+2017
+Sinopec Finance
+Pipeline Ltd
+2018
+Year ended 31 December
+Summarised income statement
+3,104
+3,453
+6,829
+7,266
+9,676
+11,086
+12,128
+12,476
+24,090
+23,886
+Carrying Amounts
+3,453
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+117
+Financial Statements (PRC)
+2,594
+1,800
+794
+3,680
+Construction Project (First-stage)
+Hainan Refine Paraxylene plant and
+supporting project
+self-financing
+Natural Gas (SNG) Export Pipeline
+70%
+50
+49%
+5,682
+3,990
+1,692
+11,589
+Xinjiang Coal-based Substitute
+self-financing
+Bank loans &
+Bank loans &
+self-financing
+6
+15 INTANGIBLE ASSETS
+Additions for the year
+48,613
+3,845
+5,160
+75,728
+Balance at 1 January 2018
+Cost:
+RMB million
+Total
+Others
+RMB million
+Operation
+rights
+RMB million
+RMB million
+Non-patent
+technology
+Patents
+RMB million
+RMB million
+Land use
+rights
+The Group
+180
+Bank loans &
+86%
+2,038
+Zhongke Refine Integration Project
+RMB million
+2018
+capitalised at
+31 December
+Accumulated
+interest
+Source of
+funding
+amount
+2018
+RMB million
+RMB million
+RMB million
+RMB million
+Percentage
+of project
+investment
+to budgeted
+Balance at
+31 December
+Net change
+for the year
+2018
+Balance at
+1 January
+34,667
+9,699
+6,990
+17,779
+(1,116)
+3,154
+13,639
+Tianjin LNG Project
+self-financing
+(First-stage)
+51
+Bank loans &
+25%
+3,428
+2,099
+1,329
+13,865
+Wen 23 Gas Storage Project
+184
+Bank loans &
+self-financing
+51%
+10,789
+88
+228
+3,948
+(2)
+Decreases for the year
+18
+9
+9
+Additions for the year
+886
+17
+139
+24
+482
+224
+Balance at 1 January 2018
+Provision for impairment losses:
+46,717
+(404)
+(96)
+3,200
+(3)
+17,137
+(5)
+Net book value:
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Amortisation of the intangible assets of the Group charged for the year ended 31 December 2018 is RMB 5,414 million (2017: RMB 4,468 million).
+97,126
+103,855
+2,048
+1,775
+34,934
+34,268
+1,008
+1,047
+1,351
+1,510
+64,514
+58,526
+Balance at 31 December 2017
+Balance at 31 December 2018
+899
+17
+145
+24
+482
+231
+Balance at 31 December 2018
+Budgeted
+amount
+2,997
+19,986
+151,471
+5,265
+52,216
+4,029
+5,230
+84,731
+Balance at 31 December 2018
+(1,210)
+(107)
+(345)
+(44)
+(18)
+(696)
+Decreases for the year
+14,673
+138,008
+4,662
+710
+Accumulated amortisation:
+3,397
+Balance at 1 January 2018
+3,168
+Balance at 31 December 2018
+(79)
+(45)
+(1)
+(183)
+Decreases for the year
+7,125
+426
+3,010
+268
+230
+3,191
+Additions for the year
+39,996
+2,870
+14,206
+2,774
+16,978
+Project name
+50,046
+51,598
+38,728
+1,624
+271,849
+379,137
+22,402
+1,091,121
+467,357
+574,937
+48,827
+(10,862)
+(8,655)
+(223)
+(1,984)
+Transferred to subsidiaries
+Reclassifications
+Additions for the year
+Balance at 1 January 2018
+21,391
+Accumulated depreciation:
+673,388
+61,743
+(2)
+417,573
+23,169
+Balance at 31 December 2018
+(8,432)
+(7,278)
+(156)
+(998)
+Decreases for the year
+(336)
+(23)
+(249)
+(64)
+417
+299
+115
+3
+(200)
+202
+286,038
+Balance at 31 December 2018
+Transferred from subsidiaries
+Additions for the year
+Balance at 1 January 2018
+Cost:
+Total
+RMB million
+and others
+RMB million
+Equipment,
+machinery
+Oil and
+gas properties
+RMB million
+RMB million
+and buildings
+Plants
+(a) Fixed assets
+The Company (Continued)
+13 FIXED ASSETS (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+118
+Transferred from construction in progress
+Decreases for the year
+Reclassifications
+Transferred to subsidiaries
+(1,080)
+(71)
+(876)
+(133)
+679
+542
+132
+5
+(1,089)
+(3)
+1,092
+1,061,094
+1,639
+39,651
+19,344
+456,939
+347
+555,133
+1,292
+19,482
+825
+49,022
+Transferred from subsidiaries
+At 31
+December
+726,780
+Balance at 1 January 2018
+120,425
+108,555
+(20)
+RMB million
+RMB million
+The Company
+The Group
+At 31 December 2018, major construction projects of the Group are as follows:
+Balance at 31 December 2017
+Balance at 31 December 2018
+Net book value:
+Balance at 31 December 2018
+Exchange adjustments
+Decreases for the year
+Additions for the year
+Balance at 1 January 2018
+Provision for impairment losses:
+Balance at 31 December 2018
+Exchange adjustments
+50,459
+Transferred to fixed assets
+Reclassification to other assets
+49,426
+(378)
+136,963
+118,645
+413
+1,854
+47
+(1)
+28
+413
+1,780
+52,011
+138,817
+54
+(1,314)
+(10,066)
+(39,651)
+(73,210)
+(6,527)
+(6,921)
+(4)
+Provision for impairment losses:
+Disposals for the year
+Transferred to subsidiaries
+Dry hole costs written off
+Cost:
+23,778
+24,823
+(339)
+62,293
+22,116
+38,297
+(314)
+(1)
+(24)
+1,880
+31
+31
+57,892
+4,709
+575
+4,027
+107
+Additions for the year
+21,824
+34,271
+1,797
+119,067
+141,725
+Balance at 1 January 2018
+Additions for the year
+159,203
+Reclassifications
+14 CONSTRUCTION IN PROGRESS
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December 2018 and 31 December 2017, the Group and the Company had no individually significant fully depreciated fixed assets which
+were still in use.
+At 31 December 2018 and 31 December 2017, the Group and the Company had no individually significant fixed assets which were temporarily
+idle or pending for disposal.
+At 31 December 2018 and 31 December 2017, 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 2018 primarily represent impairment losses recognised in the exploration
+and production ("E&P") segment of RMB 4,274 million (2017: RMB 12,611 million) on fixed assets, for the chemicals segment of RMB 1,252
+million (2017: RMB 4,779 million) of fixed assets and for the refining segment of RMB 353 million (2017: RMB 1,836 million) of fixed assets.
+The primary factor resulting in the E&P segment impairment loss was downward revision of oil and gas reserve in certain 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% (2017: 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 312 million (2017: 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 315 million (2017: 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 less impairment loss on the Group's properties, plant and equipment relating to oil and gas producing activities by
+approximately RMB 5 million (2017: additional RMB 461 million). The assets in the refining segment were written down due to the suspension
+of operations of certain production facilities, while the assets in the chemical segment were written down because of evidence indicates the
+economic performance of certain production facilities are worse than expected and due to the suspension of operations of certain production
+facilities.
+The additions to oil and gas properties of the Group and the Company for the year ended 31 December 2018 included RMB 1,567 million (2017:
+RMB 1,627 million) (Note 30) and RMB 1,292 million (2017: RMB 982 million), respectively of the estimated dismantlement costs for site
+restoration.
+329,814
+163,266
+Balance at 31 December 2017
+Balance at 31 December 2018
+Net book value:
+Balance at 31 December 2018
+Decreases for the year
+Transferred from subsidiaries
+302,048
+Pipeline Ltd
+At 31
+December
+Financial Statements (PRC)
+(c) Major financial information of principal associates
+40.00%
+and distribution
+of petrochemical
+products
+Company Ltd. ("YASREF”)
+Taihu Limited ("Taihu")
+Yanbu Aramco Sinopec Refining
+12,547
+Sinopec SABIC Tianjin Petrochemical
+Russia
+Cyprus
+NA
+Saudi Arabia
+Saudi Arabia
+NA
+Crude oil and natural
+gas extraction
+Petroleum refining
+Company Limited ("Sinopec SABIC
+Tianjin")
+Manufacturing
+Wang Jingyi
+PRC
+Principal
+place of
+business
+Register
+location
+Legal
+representative
+Principal
+activities
+Registered
+Capital RMB
+million
+Percentage of
+equity/voting
+right directly
+or indirectly
+held by the
+Company
+1.Joint ventures
+Fujian Refining & Petrochemical Company
+Limited ("FREP")
+PRC
+PRC
+Gu Yuefeng
+Manufacturing
+14,758
+50.00%
+refining oil
+products
+BASF-YPC Company Limited ("BASF-YPC") PRC
+25,000 USD
+49.00%
+1,560 million
+37.50%
+PRC
+PRC
+Zhao Dong
+Provision of non-
+18,000
+49.00%
+banking financial
+services
+PAO SIBUR Holding ("SIBUR")
+Russia
+Russia
+NA
+Processing
+21,784 million
+10.00%
+natural gas and
+RUB
+Sinopec Finance Company Limited
+("Sinopec Finance")
+Name of investees
+auxiliary facilities
+Pipeline Co., Ltd. ("Pipeline Ltd")
+PRC
+PRC
+UWAIDH AL⚫
+HARETHI
+and processing
+Manufacturing
+and distribution
+of petrochemical
+products
+USD
+9,796
+50.00%
+2.Associates
+Sinopec Sichuan to East China Gas
+PRC
+PRC
+Quan Kai
+Operation of natural
+200
+50.00%
+gas pipelines and
+(a) Principal joint ventures and associates
+Principal joint ventures and associates of the Group are as follows:
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+(4,108)
+(2)
+(9,272)
+(444)
+(247)
+(691)
+805
+757
+(78)
+1,484
+51
+51
+6
+6
+57,134
+90,273
+(1,686)
+145,721
+(5,164)
+Investments in Investments in Investments in
+(2)
+(222)
+Movement of provision for impairment
+Balance at 31 December 2018
+Investments in
+joint ventures
+RMB million
+Investments in
+associates
+RMB million
+Provision for
+impairment
+52,272
+80,429
+losses
+RMB million
+(1,614)
+Total
+RMB million
+131,087
+2,900
+6,413
+9,313
+6,723
+13,974
+(7)
+(229)
+manufacturing
+subsidiaries Joint ventures
+RMB million
+RMB million
+(637)
+58
+(2,841)
+(1,759)
+118
+259,934
+16,093
+21,163
+(128)
+(7,983)
+(128)
+289,207
+For the year ended 31 December 2018, 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 54.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+113
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+(2,204)
+(327)
+56
+Provision for
+impairment
+4
+1
+associates
+RMB million
+losses
+253,011
+8,351
+14,822
+15,579
+RMB million
+(7,855)
+Total
+RMB million
+275,557
+699
+5,014
+14,064
+3,047
+1,212
+4,259
+(64)
+1
+(64)
+(1,432)
+Other movements
+petrochemical
+PRC
+(1,135)
+(725)
+(233)
+(59)
+(20)
+(4,806)
+(5,407)
+(1,200)
+(500)
+Other current liabilities
+(4,939)
+(5,049)
+(1,822)
+(1,982)
+(2,124)
+(1,914)
+(1,236)
+Current financial liabilities
+Current liabilities
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal associates:
+7,095
+4,814
+11,197
+15,732
+9,117
+9,233
+Non-current assets
+19,271
+19,740
+11,086
+12,075
+9,216
+7,978
+51,873
+51,553
+13,990
+13,248
+(12,217)
+(11,864)
+(2,507)
+(4,546)
+(3,651)
+(4,101)
+Other non-current liabilities
+(279)
+(236)
+(17)
+(19)
+(2,271)
+(2,686)
+(937)
+(890)
+(331)
+(41)
+Total non-current liabilities
+(12,733)
+(13,890)
+(235)
+(35,619)
+7,135
+(32,364)
+(72)
+Total current liabilities
+(6,139)
+(6,184)
+(2,547)
+(2,215)
+(2,183)
+(1,934)
+(17,023)
+(17,271)
+(3,007)
+(5,782)
+Non-current liabilities
+Non-current financial liabilities
+(12,454)
+(13,654)
+(218)
+(955)
+(72)
+7,377
+16,785
+16,636
+12 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:
+FREP
+At 31
+December
+At 31
+December
+BASF-YPC
+At 31
+December
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+At 31
+December
+2018
+2017
+2018
+2017
+At 31
+December
+2018
+At 31
+December
+For the year ended 31 December 2018
+2017
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+114
+PRC
+Peng Yi
+Company Limited ("Zhongtian
+Synergetic Energy")
+products
+Mining coal and
+manufacturing
+17,516
+38.75%
+of coal-chemical
+products
+Caspian Investments Resources Ltd.
+("CIR")
+The Republic of
+Kazakhstan
+British Virgin
+Islands
+NA
+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 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Zhongtian Synergetic Energy
+At 31
+December
+2018
+At 31
+December
+2,352
+930
+4,916
+5,110
+6,524
+Other current assets
+9,248
+11,013
+5,795
+5,335
+3,689
+2,462
+10,267
+10,816
+4,007
+2,709
+Total current assets
+3,406
+At 31
+December
+1,800
+5,772
+At 31
+December
+2017
+2018
+2017
+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
+7,388
+1,582
+Disposals for the year
+7,251
+Other equity movements under the equity method
+23,501
+RMB million
+RMB million
+2017
+2018
+2017
+RMB million
+61,587
+77,561
+12,520
+14,944
+21,020
+21,574
+49,356
+52,469
+Turnover
+2018
+RMB million
+RMB million
+RMB million
+22,286
+RMB million
+Interest income
+208
+(1,382)
+(1,382)
+(142)
+(151)
+(71)
+(43)
+(857)
+(647)
+Interest expense
+104
+169
+45
+101
+142
+141
+36
+41
+157
+(167)
+RMB million
+RMB million
+8,226
+Dividends declared
+Carrying Amounts
+6,279
+8,059
+5,064
+4,780
+3,831
+5,573
+6,409
+6,272
+8,226
+8,518
+Share of net assets from joint ventures
+282
+412
+minority interests
+6,272
+RMB million
+6,409
+3,831
+2017
+2018
+2017
+2018
+2017
+2018
+Sinopec SABIC Tianjin
+YASREF
+Taihu
+BASF-YPC
+FREP
+Year ended 31 December
+Summarised income statement
+6,279
+8,059
+5,064
+4,780
+5,573
+Net assets attributable to
+(223)
+3,920
+1,366
+1,091
+2,639
+1,493
+joint ventures
+Share of net profit/(loss) from
+1,375
+1,109
+1,226
+1,250
+1,200
+Dividends from joint ventures
+3,834
+2,923
+51
+(759)
+1,169
+1,307
+3,685
+541
+227
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+116
+Financial Statements (PRC)
+115
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+The share of profit and other comprehensive loss for the year ended 31 December 2018 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was RMB 2,052 million (2017: RMB 3,925 million) and RMB 839 million (2017: other comprehensive
+income RMB 994 million) respectively. As at 31 December 2018, the carrying amount of all individually immaterial joint ventures accounted for
+using equity method in aggregate was RMB 22,982 million (31 December 2017: RMB 21,552 million).
+(208)
+397
+12
+435
+income/(loss) from joint ventures (ii)
+Share of other comprehensive
+1,917
+1,462
+(682)
+Profit/(loss) before taxation
+3,414
+5,278
+(249)
+(553)
+(729)
+(1,151)
+(897)
+(1,699)
+(935)
+Tax expense
+5,113
+3,916
+548
+(1,569)
+1,697
+3,493
+4,565
+3,625
+6,977
+57
+2,728
+(993)
+Profit/(loss) for the year
+2,985
+Total comprehensive income/(loss)
+(554)
+1,059
+25
+921
+Other comprehensive income/(loss)
+3,834
+2,923
+605
+(1,818)
+1,144
+2,764
+3,414
+2,728
+5,278
+2,985
+(1,279)
+12,557
+8,518
+13,505
+At 31 December 2018 and 2017, the total amounts of the top five other receivables of the Group are set out below:
+At 31 December
+At 31 December
+Total amount (RMB million)
+Ageing
+Percentage to the total balance of other receivables
+2018
+6,837
+Within one year
+25.5%
+1,162
+2017
+5,947
+Allowance for doubtful accounts
+During the year ended 31 December 2018 and 2017, 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 2018 and 2017, 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.
+112
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+Within one year
+34.1%
+100.0
+(974)
+64,982
+2,570
+4.0
+2
+0.1
+Over three years
+8,481
+14.5
+1,116
+13.2
+9,219
+14.2
+1,159
+12.6
+Total
+58,549
+16,118
+1,117
+11 INVENTORIES
+The Group
+Raw materials
+Work in progress
+The Group
+Balance at 1 January 2018
+Additions for the year
+Share of profits less losses under the equity method
+Change of other comprehensive loss under the equity method
+Other equity movements under the equity method
+Dividends declared
+Disposals for the year
+Foreign currency translation differences
+Other movements
+Movement of provision for impairment
+Balance at 31 December 2018
+The Company
+Balance at 1 January 2018
+Additions for the year
+Share of profits less losses under the equity method
+Change of other comprehensive loss under the equity method
+12 LONG-TERM EQUITY INVESTMENTS
+16.6
+For the year ended 31 December 2018, the provision for diminution in value of inventories of the Group amounted to RMB 5,535 million mainly
+related to crude oil, finished goods and work in progress of refined oil products and chemical products (2017: RMB 436 million mainly related to
+the spare parts and consumables in refining segment and chemical segment).
+187,848
+1,155
+Finished goods
+Spare parts and consumables
+Less: Provision for diminution in value of inventories
+Total
+At 31 December
+2018
+At 31 December
+2017
+RMB million
+RMB million
+85,469
+85,975
+13,690
+14,774
+88,929
+84,448
+2,872
+2,651
+190,960
+6,376
+184,584
+186,693
+9,747
+100.0
+1
+(3,982)
+Between two and three years
+(33,301)
+(2,758)
+(2,343)
+44
+10.2
+1,407
+76.3
+1,820
+10.4
+1,360
+74.7
+26,793
+100.0
+1,481
+17,427
+(4,142)
+100.0
+Net assets
+16,451
+12,746
+7,818
+11,373
+16,021
+15,681
+16,451
+17,035
+of the company
+Net assets attributable to owners
+12,557
+16.118
+13.505
+12,746
+8,100
+11,785
+16,021
+15,681
+17,035
+1,486
+(36,509)
+At 31 December 2018
+Allowance
+RMB million
+to other
+receivables
+balance
+%
+Within one year
+Between one and two years
+27,088
+46.3
+40,273
+61.9
+-
+13,233
+22.6
+The Company
+12,920
+19.9
+%
+RMB million
+1
+0%
+%
+Percentage
+At 31 December 2017
+Percentage of
+allowance
+Percentage
+to total other
+to other
+receivables
+Percentage
+to total other
+Amount
+of allowance
+Allowance
+balance
+Amount
+receivables
+RMB million
+%
+receivables
+RMB million
+Financial Statements (PRC)
+124
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+28 LONG-TERM LOANS
+The Group's long-term loans represent:
+Interest rate and final maturity
+Interest rates ranging from interest
+1.08% to 4.66% per annum at 31
+December 2018 with maturities
+through 2033
+- Renminbi loans
+At 31 December 2018
+At 31 December 2017
+Original
+Original
+currency
+million
+Financial Statements (PRC)
+Long-term bank loans
+123
+6.5342
+At 31 December 2018 and 31 December 2017, the Group had no significant overdue long-term loans.
+Exchange
+4,361
+4,361
+16,435
+2,014
+2,014
+3,416
+16,000
+1,000
+6,532
+22,532
+1,015
+733
+17,450
+26,681
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+rates
+Total
+currency
+million
+33,378
+824,100
+1,022,195
+36,298
+65,566
+2,300,470
+2017
+RMB million
+RMB million
+The Company
+2018
+2017
+RMB million
+The Group
+2018
+RMB million
+2,825,613
+Operating costs
+Total
+Income from other operations
+Income from principal operations
+36 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.
+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;
+203,678
+3,996
+199,682
+RMB million
+Total
+117,000
+86,678
+The Group
+Discretionary
+surplus reserves
+RMB million
+117,000
+3,996
+82,682
+2,891,179
+857,478
+2,401,012
+59,723
+600,113
+711,236
+421,585
+519,910
+2,300,470
+RMB million
+2017
+2018
+RMB million
+2,825,613
+(i) Others are primarily liquefied petroleum gas and other refinery and chemical by-products and joint products.
+Total
+Rental income
+Sale of materials and others
+Income from other operations
+surplus reserve
+RMB million
+Synthetic fiber monomers and polymers
+Natural gas
+Synthetic resin
+Kerosene
+Basic chemical feedstock
+Diesel
+Gasoline
+Crude oil
+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 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 57.
+633,114
+1,058,493
+812,355
+2,360,193
+1,890,398
+Others (i)
+Statutory
+Balance at 31 December 2018
+Appropriation
+(12)
+45
+(57)
+Change in accounting policy
+(7,196)
+(2,783)
+(4,413)
+(479)
+(510)
+57
+(3,481)
+31 December 2017
+(4,376)
+(12)
+(895)
+(2,479)
+(1,642)
+(40)
+680
+(2,820)
+(1,888)
+(932)
+2,000
+1,132
+97
+(4,161)
+RMB million
+RMB million
+(3,481)
+594,008
+1 January 2018
+45
+Balance at 1 January 2018
+Movements in surplus reserves are as follows:
+35 SURPLUS RESERVES
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+127
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+As at 31 December 2018, cash flow hedge reserve amounted to a loss of RMB 4,932 million (31 December 2017: a loss of RMB 460 million), of
+which a loss of RMB 4,917 million was attribute to shareholders of the Company (31 December 2017: a loss of RMB 510 million).
+(8,563)
+(1,789)
+(6,774)
+(3,481)
+(1,355)
+(2,349)
+2,282
+1,803
+(4,407)
+(4,917)
+4
+(41)
+(183)
+(3,664)
+31 December 2018
+Changes in 2018
+(7,208)
+(2,783)
+(4,425)
+(479)
+(510)
+994
+RMB million
+503,406
+205,722
+2,552,498
+64,566
+61,083
+11,089
+10,744
+115,310
+109,967
+74,854
+77,721
+2017
+RMB million
+1,770,651
+2,292,983
+2018
+RMB million
+40 RESEARCH AND DEVELOPMENT EXPENSES
+Total
+Other expenses
+Exploration expenses (including dry holes)
+Depreciation, depletion and amortisation
+Personnel expenses
+Purchased crude oil, products and operating supplies and expenses
+The operation 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:
+39 CLASSIFICATION OF EXPENSES BY NATURE
+The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2018 by the Group ranged from 2.37%
+to 4.66% (2017: 2.37% to 4.41%).
+1,560
+(1,001)
+Total
+(332)
+(596)
+2,036,470
+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.
+41 EXPLORATION EXPENSES
+Exploration expenses include geological and geophysical expenses and written-off of unsuccessful dry hole costs.
+Financial Statements (PRC)
+129
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+21,791
+11,605
+215
+19
+252
+19,836
+936
+423
+5,421
+7
+6,149
+28
+110
+Net foreign exchange gain
+2017
+RMB million
+2018
+Other income are mainly the government grants related to the business activities.
+43 OTHER INCOME
+Total
+Others
+Intangible assets
+Construciton in Progress
+Fixed assets
+Long-term equity investment
+Inventories
+Receivables
+The Group
+42 IMPAIRMENT LOSSES
+RMB million
+(5,254)
+(7,726)
+1,501
+18,237
+192,907
+201,901
+Education surcharge
+City construction tax
+Consumption tax
+2017
+RMB million
+RMB million
+2018
+The Group
+37 TAXES AND SURCHARGES
+1,063
+2,891,179
+2,360,193
+18,274
+793
+64,503
+59,723
+65,566
+249,997
+335,357
+61,998
+77,572
+34,277
+43,205
+107,633
+124,618
+115,739
+168,823
+58,930
+250,884
+13,187
+Resources tax
+1,438
+5,645
+5,883
+723
+493
+6,368
+RMB million
+RMB million
+6,376
+Accretion expenses (Note 30)
+Interest income
+Net interest expenses
+Less: Capitalised interest expenses
+Interest expenses incurred
+2017
+13,811
+The Group
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+128
+The applicable tax rate of the taxes and surcharges are set out in Note 4.
+235,292
+246,498
+Total
+5,459
+7,152
+Others
+4,841
+6,021
+38 FINANCIAL EXPENSES
+RMB million
+RMB million
+RMB million
+RMB million
+2017
+At 31 December
+2018
+At 31 December
+193
+42,007
+(598)
+1,438
+1,567
+39,407
+The Group
+RMB million
+95,557,771,046 domestic listed A shares (2017: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 overseas listed H shares (2017: 25,513,438,600) of RMB 1.00 each
+Registered, issued and fully paid:
+The Group
+32 SHARE CAPITAL
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+31 OTHER NON-CURRENT LIABILITIES
+Balance at 31 December 2018
+Exchange adjustments
+Utilised for the year
+Accretion expenses
+Provision for the year
+Balance at 1 January 2018
+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
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+RMB million
+95,558
+95,558
+25,513
+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 55, respectively.
+Management optimises the structure of the Group's capital, which comprises of equity and debts and bonds. In order to maintain or adjust the
+capital structure of the Group, management may cause the Group to issue new shares, adjust the capital expenditure plan, sell assets to reduce
+debt, or adjust the proportion of short-term and long-term loans and bonds. Management monitors capital on the basis of the debt-to-capital ratio,
+which is calculated by dividing long-term loans (excluding current portion) and debentures payable, by the total of equity attributable to owners of
+the Company and long-term loans (excluding current portion) and debentures payable, and liability-to-asset ratio, which is calculated by dividing
+total liabilities by total assets. Management's strategy is to make appropriate adjustments according to the Group's operating and investment needs
+and the changes of market conditions, and to maintain the debt-to-capital ratio and the liability-to-asset ratio of the Group at a range considered
+reasonable. As at 31 December 2018, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 11.5% (2017: 12.0%) and 46.1%
+(2017: 46.5%), respectively.
+Capital management
+32 SHARE CAPITAL (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+126
+Financial Statements (PRC)
+125
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+(i) These corporate bonds are carried at amortised cost, including USD denominated corporate bonds of RMB 11,951 million, and RMB denominated corporate bonds
+of RMB 20,000 million (2017: USD denominated corporate bonds of RMB 17,902 million, and RMB denominated corporate bonds of RMB 36,000 million). At 31
+December 2018, corporate bonds of RMB 11,951 million (2017: RMB 17,902 million) are guaranteed by Sinopec Group Company.
+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.
+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.
+During the year ended 31 December 2010, the Company issued 88,774 listed A shares with a par value of RMB 1.00 each, as a result of exercise of
+188,292 warrants entitled to the Bonds with Warrants.
+In July 2001, the Company issued 2.8 billion listed A shares with a par value of RMB 1.00 each at RMB 4.22 by way of a public offering to natural
+persons and institutional investors in the PRC.
+In October 2000, the Company issued 15,102,439,000 H shares with a par value of RMB 1.00 each, representing 12,521,864,000 H shares and
+25,805,750 American Depositary Shares ("ADSS", each representing 100 H shares), at prices of HKD 1.59 per H share and USD 20.645 per ADS,
+respectively, by way of a global initial public offering to Hong Kong and overseas investors. As part of the global initial public offering, 1,678,049,000
+state-owned ordinary shares of RMB 1.00 each owned by Sinopec Group Company were converted into H shares and sold to Hong Kong and
+overseas investors.
+Pursuant to the resolutions passed at an Extraordinary General Meeting held on 25 July 2000 and approvals from relevant government authorities,
+the Company is authorised to increase its share capital to a maximum of 88.3 billion shares with a par value of RMB 1.00 each and offer not more
+than 19.5 billion shares with a par value of RMB 1.00 each to investors outside the PRC. Sinopec Group Company is authorised to offer not more
+than 3.5 billion shares of its shareholdings in the Company to investors outside the PRC. The shares sold by Sinopec Group Company to investors
+outside the PRC would be converted into H shares.
+The Company was established on 25 February 2000 with a registered capital of 68.8 billion domestic state-owned shares with a par value of RMB 1.00
+each. Such shares were issued to Sinopec Group Company in consideration for the assets and liabilities transferred to the Company (Note 1).
+121,071
+25,513
+121,071
+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.
+31,370
+31,951
+53,902
+(22,532)
+Total
+Long-term loans from Sinopec Group Company and fellow
+subsidiaries
+(4,361)
+Less: Current portion
+December 2018 with maturities
+through 2030
+free to 4.99% per annum at 31
+45,334
+46,877
+Interest rates ranging from interest
+- Renminbi loans
+(1,402)
+24,434
+(12,074)
+19,060
+Long-term loans from Sinopec Group Company and fellow
+subsidiaries
+42,516
+Long-term bank loans
+192
+6.5342
+29
+109
+6.8632
+16
+Interest rates ranging from interest
+1.55% to 4.29% per annum at 31
+December 2018 with maturities
+through 2031
+- US Dollar loans
+25,644
+31,025
+RMB
+million
+rates
+Exchange
+Less: Current portion
+The movements in capital reserve of the Group are as follows:
+61,576
+Between one and two years
+RMB million
+At 31 December
+2017
+31,951
+At 31 December
+2018
+RMB million
+67,754
+2,694
+9,573
+61,576
+48,238
+11,999
+16,822
+40,004
+RMB million
+At 31 December
+2017
+The maturity analysis of the Group's long-term loans is as follows:
+At 31 December
+2018
+RMB million
+43,320
+(2,014)
+Note:
+Total
+Less: Current portion
+- Corporate Bonds (i)
+Debentures payable:
+The Group
+29 DEBENTURES PAYABLE
+Long-term loans are primarily unsecured, and carried at amortised costs.
+Total
+After five years
+Between two and five years
+67,754
+Balance at 1 January 2018
+Transaction with minority interests
+Others
+Balance at 31 December 2018
+1,053
+1,053
+1,053
+Share of other comprehensive loss in associates and joint ventures
+Subtotal
+(57)
+(57)
+(57)
+(57)
+Changes in fair value of available-for-sale financial assets recognised during the year
+Subtotal
+503
+(1,580)
+313
+(1,893)
+Subtotal
+1,053
+(72)
+consolidated income statement
+Reclassification adjustments for amounts transferred to the
+3
+(1)
+4
+Less/(Add): Adjustments of amounts transferred to initial carrying amount of
+hedged items
+(1,074)
+240
+(1,314)
+recognised during the year
+Net-of-tax
+amount
+RMB million
+Tax effect
+RMB million
+RMB million
+575
+Before-tax
+amount
+Foreign currency translation differences
+Other comprehensive income
+RMB million
+RMB million
+Subtotal
+differences
+investments Cash flow hedges
+translation
+Foreign currency
+equity method financial assets
+instrument
+other equity
+fair value of
+Changes in
+fair value of
+available-for-sale
+Changes in
+Subtotal
+Other
+comprehensive
+income that can
+be converted
+into profit or
+loss under the
+31 December 2016
+income
+Total other
+comprehensive
+Minority
+interests
+Equity Attributable to shareholders of the company
+(4,376)
+313
+(4,689)
+(3,792)
+(3,792)
+(3,792)
+(3,792)
+(b) The change of each item in other comprehensive income
+Changes in 2017
+RMB
+million
+Year ended 31 December 2017
+Cash flow hedges:
+(9,741)
+2,029
+(11,770)
+Subtotal
+(600)
+130
+(730)
+(Less)/Add: Reclassification adjustments for amounts transferred to the
+consolidated income statement
+(10,341)
+2,159
+(12,500)
+recognised during the year
+Effective portion of changes in fair value of hedging instruments
+Changes in fair value of other equity instrument investments
+Subtotal
+Cash flow hedges:
+RMB million
+RMB million
+Tax
+effect
+Year ended 31 December 2018
+Before-tax
+amount
+(a) The changes of other comprehensive income in consolidated income statement
+The Group
+34 OTHER COMPREHENSIVE INCOME
+Capital reserve represents mainly: (a) the difference between the total amount of the par value of shares issued and the amount of the net assets
+transferred from Sinopec Group Company in connection with the Reorganisation; (b) share premiums derived from issuances of H shares and
+A shares by the Company and excess of cash paid by investors over their proportionate shares in share capital, the proportionate shares of
+unexercised portion of the Bond with Warrants at the expiration date, and the amount transferred from the proportionate liability component and
+the derivative component of the converted portion of the 2011 Convertible Bonds; (c) difference between consideration paid for the combination of
+entities under common control and the transactions with minority interests over the carrying amount of the net assets acquired.
+119,192
+(353)
+(12)
+119,557
+RMB million
+Net-of-tax
+amount
+RMB million
+Effective portion of changes in fair value of hedging instruments
+(41)
+(53)
+(a) The changes of other comprehensive income in consolidated income statement (Continued)
+The Group (Continued)
+34 OTHER COMPREHENSIVE INCOME (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+(6,624)
+2,028
+(8,652)
+Other comprehensive income
+3,399
+3,399
+Subtotal
+(12)
+3,399
+Foreign currency translation differencess
+(229)
+11
+1
+(240)
+Subtotal
+(229)
+11
+(240)
+Other comprehensive income that can be converted into profit or loss
+under the equity method
+(53)
+(12)
+(41)
+3,399
+2018
+14,150
+53
+At 31 December 2018, impairment losses of the Group are analysed as follows:
+Other non-current assets mainly represent long-term receivables, prepayments for construction projects and purchases of equipment.
+20 DETAILS OF IMPAIRMENT LOSSES
+19 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 2018, write-down of deferred tax assets
+amounted to RMB 188 million (2017: RMB 26 million) (Note 48).
+At 31 December 2018, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 18,308 million
+(2017: RMB 20,821 million), of which RMB 2,437 million (2017: RMB 5,938 million) was incurred for the year ended 31 December 2018, because
+it was not probable that the related tax benefit will be realised. These deductible losses carried forward of RMB 2,373 million, RMB 3,887 million,
+RMB 3,673 million, RMB 5,938 million and RMB 2,437 million will expire in 2019, 2020, 2021, 2022, 2023 and after, respectively.
+6,466
+RMB million
+15,131
+2017
+At 31 December
+21,694
+5,948
+RMB million
+Deferred tax assets
+Deferred tax liabilities
+2018
+At 31 December
+Changes in
+Deferred tax assets and liabilities after the consolidated elimination adjustments are as follows:
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+4,339
+3,709
+4,339
+3,709
+At 31 December
+2017
+RMB million
+At 31 December
+2018
+RMB million
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Deferred tax liabilities
+Deferred tax assets
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+(563)
+(264)
+(10,805)
+(428)
+(9,657)
+18 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+19,470
+significant
+Balance at
+31 December
+2017
+RMB million
+2,277
+(1)
+(2)
+31
+25
+25
+9
+Prepayments
+606
+7
+(19)
+(77)
+83
+612
+Note
+612
+Included: Bills receivable and accounts receivable
+Allowance for doubtful accounts
+2018
+RMB million
+Balance at
+31 December
+Other
+increase/
+(decrease)
+RMB million
+RMB million
+Written off
+for the year
+Provision for Written back for
+the year
+the year
+RMB million
+RMB million
+RMB million
+RMB million
+Balance at
+1 January
+2018
+policies
+(Note 3(26))
+accounting
+8
+Other receivables
+25,403
+180
+18 DEFERRED TAX ASSETS AND LIABILITIES
+Long-term deferred expenses primarily represent prepaid rental expenses and catalysts expenditures.
+17 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 11.7% to 12.3% (2017: 10.8% to
+11.4%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no major impairment loss
+was recognised.
+8,634
+8,676
+167
+167
+879
+921
+2,541
+2,541
+Trading of petrochemical
+products
+Deferred tax assets and liabilities before the consolidated elimination adjustments are as follows:
+petrochemical products
+4,043
+4,043
+petroleum products
+petrochemical products and
+Manufacturing of intermediate
+1,004
+1,004
+2017
+RMB million
+At 31 December
+RMB million
+2018
+At 31 December
+Other units without individual significant goodwill
+Total
+Sinopec (Hong Kong) Limited
+Production and sale of
+Deferred tax assets/(liabilities)
+Deferred tax assets
+At 31 December
+2018
+RMB million
+Deferred tax liabilities
+At 31 December
+174
+Others
+(1)
+(535)
+227
+474
+Intangible assets
+117
+Other equity instrument investments
+117
+Available-for-sale securities
+2,325
+3,709
+Tax value of losses carried forward
+(50)
+(9,928)
+At 31 December
+2017
+RMB million
+(27)
+(8,666)
+15,427
+165
+1,131
+381
+1,925
+1,808
+2,563
+Fixed assets
+Cash flow hedges
+Payables
+Receivables and inventories
+2017
+RMB million
+At 31 December
+RMB million
+2018
+0.8359
+10
+1,486
+1,486
+Exchange
+Original
+Original
+currency
+At 31 December 2017
+At 31 December 2018
+Total
+-Euro loans
+-Singapore Dollar loans
+-HK Dollar loans
+-US Dollar loans
+-Renminbi loans
+and fellow subsidiaries
+Short-term loans from Sinopec Group Company
+-Renminbi loans
+RMB
+Short-term other loans
+-Renminbi loans
+Short-term bank loans
+The Group's short-term loans represent:
+21 SHORT-TERM LOANS
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+122
+Financial Statements (PRC)
+121
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+The reasons for recognising impairment losses are set out in the respective notes of respective assets.
+102
+99,981
+(28)
+114
+-US Dollar loans
+(1,466)
+currency
+RMB
+6.5342
+3,010
+22,780
+6.8632
+0.8762
+1,645
+3,319
+1,706
+3,061
+23,297
+27,304
+299
+300
+299
+300
+Exchange
+7,420
+1,136
+3,887
+6.8632
+566
+23,685
+13,201
+31,105
+17,088
+million
+rates
+million
+million
+rates
+million
+6.5342
+(262)
+12,008
+89,587
+Fixed assets
+1,686
+78
+(13)
+7
+1,614
+1,614
+12
+Long-term equity investments
+6,376
+17
+(217)
+(114)
+5,535
+13
+1,155
+11
+Inventories
+2,140
+11
+(38)
+(148)
+192
+2,123
+2,123
+1,481
+4
+(18)
+(69)
+78
+1,155
+74,135
+74,135
+6,149
+97
+33
+(16)
+(16)
+89,603
+Total
+49
+Others
+7,861
+-
+7,861
+7,861
+16
+Goodwill
+899
+15
+(2)
+886
+(1,195)
+(26)
+79,063
+Construction in progress
+14
+1,780
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO") (Note 51)
+1,780
+(1)
+47
+1,854
+Intangible assets
+15
+886
+28
+19,668
+Manufacturing of intermediate
+petrochemical products and
+petroleum products
+Sinopec Beijing Yanshan Petrochemical Branch ("Sinopec Yanshan")
+RMB
+million
+rates
+Exchange
+At 31 December 2017
+Original
+Original
+currency
+million
+At 31 December 2018
+The Group's non-current liabilities due within one year represent:
+27 NON-CURRENT LIABILITIES DUE WITHIN ONE YEAR
+At 31 December 2018 and 31 December 2017, other payables of the Group over one year primarily represented payables for constructions.
+71,940
+87,060
+10,228
+10,469
+175
+138
+13,015
+6,699
+39,623
+59,944
+8,899
+9,810
+RMB million
+2017
+currency
+million
+At 31 December
+Exchange
+rates
+Sinopec Zhenhai Refining and Chemical Branch ("Sinopec Zhenhai")
+Non-current liabilities due within one year
+Others
+US Dollar debentures
+- Renminbi debentures
+Debentures payable due within one year
+Long-term loans due within one year
+Renminbi loans
+fellow subsidiaries
+Long-term loans from Sinopec Group Company and
+- US Dollar loans
+1,402
+23
+6.5342
+4
+35
+12,074
+6.8632
+5
+1,379
+12,039
+- Renminbi loans
+Long-term bank loans
+million
+RMB
+RMB million
+1,441
+26 OTHER PAYABLES
+Total
+Accounts payable (b)
+Bills payable (a)
+The Group
+22 BILLS PAYABLE AND ACCOUNTS PAYABLE
+At 31 December 2018 and 31 December 2017, the Group had no significant overdue short-term loans.
+At 31 December 2018, the Group's interest rates on short-term loans were from interest 0.80% to 5.22% (At 31 December 2017: from interest 0.70%
+to 6.09%). The majority of the above loans are by credit.
+54,701
+44,692
+7.8023
+22
+7.8473
+3
+20
+4.8831
+4
+120
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+16 GOODWILL
+Goodwill is allocated to the following Group's cash-generating units:
+Name of investees
+At 31 December
+2018
+Principal activities
+(a) Bills payable
+At 31 December
+1,903
+RMB million
+6,416
+186,341
+192,757
+Other taxes
+2018
+Total
+Mineral resources compensation fee payable
+Income tax payable
+Consumption tax payable
+The Group
+25 TAXES PAYABLE
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December 2018 and 31 December 2017, the Group's employee benefits payable primarily represented wages payable and social insurance
+payables.
+Value-added tax payable
+24 EMPLOYEE BENEFITS PAYABLE
+200,073
+206,535
+(b) Accounts payable
+At 31 December
+2017
+RMB million
+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 2018 and 31 December 2017, the Group had no overdue unpaid bills.
+23 CONTRACT LIABILITIES
+As at 31 December 2018, the Group's contract liabilities primarily present advances from customers. Related performance obligations are satisfied
+and revenue is recognised within one year.
+As at 1 January 2018, the Group's contract liabilities was RMB 120,734 million, of which RMB 119,138 million was recognised as revenue in 2018.
+At 31 December 2018 and 31 December 2017, the Group had no individually significant accounts payable aged over one year.
+6,462
+RMB 22,761
+RMB 5,240
+RMB 22,795
+100.00
+(28)
+production and sale of coal chemical products
+Import and processing of crude oil, production,
+storage and sale of petroleum products and
+RMB 5,294
+petrochemical products
+119
+1,810
+Manufacturing of intermediate petrochemical
+RMB 5,000
+RMB 4,250
+70
+85.00
+98.98
+100.00
+RMB 8,000
+RMB 1,000
+petroleum products
+products and petroleum products
+Manufacturing of plastics, intermediate
+RMB 8,140
+RMB 4,070
+50.00
+5,761
+petrochemical products and petroleum products
+RMB 1,165
+Investment in exploration, production and
+100.00
+17,952
+sale of petroleum and natural gas
+Investment holding of overseas business
+USD 1,662
+USD 1,662
+100.00
+Marketing and distribution of petrochemical products
+RMB 8,000
+Production, sale, research and development of
+5,802
+RMB 4,076
+intermediate petrochemical products and
+("Shanghai SECCO") (note 51)
+*
+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, respectively, all of the above principal subsidiaries are
+incorporated and operate their businesses principally in the PRC.
+Note:
+(i) The Group consolidated the financial statements of the entity because it is exposed to, or has rights to, variable returns from its involvement with the entity and has
+the ability to affect those return through its power over the entity.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 139
+Financial Statements (PRC)
+The Company's principal subsidiaries have been consolidated into the Group's financial statements for the year ended 31 December 2018. The
+following list contains the particulars of subsidiaries which principally affected the results, assets and liabilities of the Group:
+(96)
+(376)
+(383)
+(383)
+(35)
+(936)
+(2,115)
+67.60
+RMB 7,801
+RMB 7,801
+Production and sale of petrochemical products
+65.00
+4,560
+ethylene and downstream byproducts
+Manufacturing of intermediate petrochemical
+RMB 3,986
+RMB 2,990
+75.00
+2,582
+RMB 6,270
+Gaoqiao Petrochemical Company Limited
+RMB 1,595
+RMB 7,233
+100.00
+RMB 10,000
+RMB 4,804
+55.00
+6,851
+(d) Subsidiaries acquired through business combination not under common control:
+Shanghai SECCO Petrochemical Company Limited
+products and petroleum products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+15,168
+Production Limited ("SIPL")
+RMB 5,820
+RMB 1,400
+RMB 1,856
+100.00
+27
+RMB 3,000
+RMB 4,585
+100.00
+4,355
+RMB 1,500
+RMB 1,562
+271
+RMB 15,651
+RMB 15,651
+100.00
+RMB 12,000
+RMB 12,000
+100.00
+Production and sale of catalyst products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Pipeline storage and transportation of crude oil
+Production and sale of refined petroleum products,
+Trading of crude oil and petrochemical products
+Sinopec Lubricant Company Limited
+Financial Statements (PRC)
+Actual Percentage of
+investment equity interest/
+Minority
+Interests
+Full name of enterprise
+Principal activities
+Registered
+capital/
+paid-up capital
+million
+at 31
+December
+2018
+million
+voting right
+held by the
+Group
+at 31
+December
+2018
+%
+RMB million
+(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 Pipeline Storage & Transportation
+Company Limited
+Trading of petrochemical products
+50.44
+RMB 3,374
+100.00
+("Zhonghan Wuhan")
+(c) Subsidiaries acquired through business combination under common control:
+Sinopec Hainan Refining and Chemical Company Limited
+Sinopec Qingdao Petrochemical Company Limited
+polyester fibres
+Marketing and distribution of refined
+RMB 28,403
+RMB 20,000
+70.42
+66,827
+petroleum products
+Provision of crude oil jetty services and natural gas
+pipeline transmission services
+HKD 248
+HKD 3,952
+60.33
+4,085
+Manufacturing of synthetic fibres, resin and plastics,
+RMB 10,824
+Sinopec-SK (Wuhan) Petrochemical Company Limited
+RMB 3,374
+Sinopec Qingdao Refining and Chemical
+Sinopec Great Wall Energy & Chemical Company Limited Coal chemical industry investment management,
+65
+Sinopec Yizheng Chemical Fibre Limited
+lubricant base oil, and petrochemical materials
+Production and sale of polyester chips and
+RMB 4,000
+RMB 6,713
+100.00
+Company 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
+Sinopec Overseas Investment Holding Limited ("SOIH")
+Sinopec Chemical Sales Company Limited
+Sinopec Beihai Refining and Chemical Limited Liability
+Company
+100.00
+130
+(96)
+For the year ended 31 December 2018
+52 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+(4) Balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+The balances with the Group's related parties at 31 December 2018 and 31 December 2017 are as follows:
+The ultimate holding company
+At 31 December At 31 December
+2018
+2017
+Cash and cash equivalents
+Bills receivable and accounts receivable
+Other receivables
+Prepayments and other current assets
+Other non-current assets
+Bills payable and accounts payable
+Advances from customers
+Contract liabilities
+Other payables
+Other non-current liabilities
+Short-term loans
+Long-term loans (including current portion) (Note)
+RMB million
+At 31 December
+Other related companies
+At 31 December
+RMB million
+2018
+RMB million
+2017
+RMB million
+-
+41,057
+47,514
+11
+33
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+19
+Annual Report 2018 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 August 24, 2018,
+which took effect on January 1, 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.,. The memorandum was effective since January 1, 2019. Sinopec Group Company agreed to lease 410 million square
+meters of land to the Company, and to adjust the total fee of land to about RMB 14 billion, according to the newly confirmed area of leasing
+land and the situation of land market.
+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) 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.
+(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 to Sinopec Group Company and fellow subsidiaries.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+135
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+52 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: (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 2018.
+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:
+•
+the government-prescribed price;
+•
+where there is no government-prescribed price, the government-guidance price;
+⋅
+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.
+136
+7,544
+13,155
+33
+RMB thousand
+5,344
+424
+5,768
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+137
+Financial Statements (PRC)
+138
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+53 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+(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, 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 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.
+(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 "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
+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.
+(d) 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.
+(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.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+RMB thousand
+5,745
+351
+6,096
+2017
+2018
+53 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+6,901
+5,411
+731
+189
+23,482
+20,726
+19
+43
+17,511
+24,061
+12
+2,763
+25
+3,248
+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.
+2
+18,158
+18,111
+12,470
+10,165
+27,304
+23,297
+46,877
+45,334
+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.
+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 21 and Note 28.
+As at and for the year ended 31 December 2018, and as at and for the year ended 31 December 2017, 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
+104
+Transportation and storage represent the cost for the use of railway, road and marine transportation services, pipelines, loading, unloading and storage facilities.
+Exploration and development services comprise direct costs incurred in the exploration and development such as geophysical, drilling, well testing and well
+measurement services.
+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.
+(vi)
+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:
+Pipeline Ltd
+Sinopec Finance
+SIBUR
+Zhongtian Synergetic Energy
+CIR
+Joint ventures of the Group:
+FREP
+BASF-YPC
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+Note: Sinopec Finance is under common control of a parent company with the Company and is also the associate of the Group.
+134
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+52 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
+RMB 274,900 million
+Dai Houliang
+State-owned
+Exploration, production, storage and transportation (including pipeline transportation), sales
+and utilisation of crude oil and natural gas; refining; wholesale and retail of gasoline, kerosene
+and diesel; production, sales, storage and transportation of petrochemical and other chemical
+products; industrial investment and investment management; exploration, construction, installation
+and maintenance of petroleum and petrochemical constructions and equipments; manufacturing
+electrical equipment; research, development, application and consulting services of information
+technology and alternative energy products; import & export of goods and technology.
+Ultimate holding company
+(99)
+(1,438)
+(1,438)
+(538)
+(4,032)
+(4,032)
+(1,984)
+(1,786)
+17,729
+12,405
+10,196
+The goodwill is attributable to the high profitability of the acquired business and synergy to be achieved post the Transaction among Shanghai
+SECCO and the Group's existing petrochemical operations located in eastern China.
+As of Acquisition Date, a gain of RMB 3,941 million was recognised as a result of remeasuring the 50% equity interest held before the Transaction
+to its fair value, which is included in investment income (Note 44) in the Group's consolidated income statement for the year ended 31 December
+2017.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Exploration and development services
+133
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+52 RELATED PARTIES AND RELATED PARTY TRANSACTIONS
+(1) Related parties having the ability to exercise control over the Group
+The name of the company
+Unified social credit identifier
+Registered address
+Principal activities
+Relationship with the Group
+Types of legal entity
+Authorised representative
+Registered capital
+China Petrochemical Corporation
+9111000010169286X1
+No. 22, Chaoyangmen North Street, Chaoyang District, Beijing
+Financial Statements (PRC)
+(2,115)
+Production related services
+Operating lease charges for land
+869
+626
+(viii)
+113
+127
+(ix)
+848
+807
+(x)
+1,110
+554
+(ix)
+6,457
+(7,441)
+(xi)
+31,684
+Net deposits withdrawn from/(placed with) related parties
+Net funds obtained from related parties
+19,661
+The amounts set out in the table above in respect of the year ended 31 December 2018 and 2017 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 2018 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 140,570 million (2017: RMB 128,863 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 123,772
+million (2017: RMB 112,619 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 6,664
+million (2017: RMB 6,652 million), operating lease charges for land, buildings and others paid by the Group of RMB 7,765 million, RMB 521
+million and RMB 738 million (2017: RMB 8,015 million, RMB 510 million and RMB 513 million), respectively and interest expenses of RMB
+1,110 million (2017: RMB 554 million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 59,472
+million (2017: RMB 60,045 million), comprising RMB 58,606 million (2017: RMB 59,213 million) for sales of goods, RMB 848 million (2017:
+RMB 807 million) for interest income and RMB 18 million (2017: RMB 25 million) for agency commission income.
+As at 31 December 2018 and 31 December 2017 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 56(b). Guarantees given to banks
+by the Group in respect of banking facilities to associates and joint ventures are disclosed in Note 56(b).
+Notes:
+(i)
+Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+(ii)
+(iii)
+(iv)
+(v)
+(vii)
+510
+521
+(vii)
+Operating lease charges for buildings
+Other operating lease charges
+Agency commission income
+Interest income
+Interest expense
+Note
+The Group
+2018
+RMB million
+2017
+RMB million
+(i)
+272,789
+244,211
+(ii)
+192,224
+Ancillary and social services
+165,993
+7,319
+7,716
+(iv)
+23,489
+21,210
+(v)
+28,472
+20,824
+(vi)
+6,664
+6,653
+(vii)
+7,765
+8,015
+(iii)
+12,180
+54 PRINCIPAL SUBSIDIARIES
+Investment (loss)/income from disposal of financial assets and
+liabilities and derivative financial instruments at fair value
+through profit or loss
+Increase in deferred tax assets
+Decrease in deferred tax liabilities
+Increase in inventories
+Safety fund reserve
+Increase in operating receivables
+(Decrease)/increase in operating payables
+Net cash flow from operating activities
+2018
+RMB million
+80,289
+11,605
+2017
+RMB million
+70,294
+21,791
+141
+99,462
+106,149
+10,505
+9,161
+6,921
+6,876
+1,526
+(2,656)
+13
+(359)
+676
+(11,428)
+(19,060)
+(5,079)
+(4,707)
+(1,165)
+Investment income
+(5,610)
+Financial expenses
+Net loss on disposal of non-current assets
+Write-down of deferred tax assets
+188
+26
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+(719)
+(72)
+20,213
+16,279
+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.
+49 DIVIDENDS
+(a) Dividends of ordinary shares declared after the balance sheet date
+Pursuant to a resolution passed at the director's meeting on 22 March 2019, final dividends in respect of the year ended 31 December 2018
+of RMB 0.26 (2017: RMB 0.40) per share totaling RMB 31,479 million (2017: RMB 48,428 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 24 August 2018, the directors authorised
+to declare the interim dividends for the year ending 31 December 2018 of RMB 0.16 (2017: RMB 0.10) per share totaling RMB 19,371 million
+(2017: RMB 12,107 million).
+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 of 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 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.
+50 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 fixed assets
+Amortisation of intangible assets and long-term deferred expenses
+Dry hole costs written off
+Fair value (gain)/loss
+(3,312)
+(28,903)
+909
+(1,043)
+(10,448)
+175,868
+Business combination involving entities not under common control
+For the year ended 31 December 2018, significant business combination didn't occur in the Group.
+82
+111,840
+111,922
+14
+113,204
+113,218
+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.
+Shanghai SECCO is principally engaged in the production and sale of petrochemical products including acrylonitrile, polystyrene, polyethylene, etc.
+Operating
+cash flow of
+the acquiree
+from
+acquisition
+date to
+Net cash
+flow of
+the acquiree
+from
+acquisition
+date to
+Income of
+the acquiree
+Acquiree
+Shanghai
+Time of
+acquisition
+26/10/2017
+Cost
+of acquisition
+Share of
+acquired
+equity
+SECCO
+RMB 10,135
+million
+50%
+Acquisition
+method
+Cash
+Acquisition date
+26/10/2017
+Basis of
+determination
+on acquisition date
+Acquirer gaining
+actual control
+from
+acquisition
+date to
+end of year
+51 BUSINESS COMBAINATION
+Cash at the end of the year
+- Demand deposits
+- Cash on hand
+126
+(31,151)
+63,762
+190,935
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+131
+Financial Statements (PRC)
+Financial Statements (PRC)
+132
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+50 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT (Continued)
+The Group (Continued)
+(b) Net change in cash:
+Cash balance at the end of the year
+1,485
+Less: Cash at the beginning of the year
+(c) The analysis of cash held by the Group is as follows:
+2018
+2017
+RMB million
+113,218
+RMB million
+111,922
+113,218
+(1,296)
+2018
+RMB million
+124,468
+(11,250)
+2017
+RMB million
+Cash at bank and on hand
+Net decrease of cash
+609
+(613)
+(779)
+1,262
+38,058
+2018
+2017
+RMB million
+RMB million
+Changes in fair value of financial assets and financial liabilities at fair value through gain/(loss), net
+Unrealised (losses)/gains from ineffective portion cash flow hedges, net
+3,008
+(157)
+(374)
+103
+22
+41
+2,656
+(13)
+Others
+Total
+46 NON-OPERATING INCOME
+The Group
+Government grants
+Others
+Total
+47 NON-OPERATING EXPENSES
+The Group
+Fines, penalties and compensation
+Donations
+Others
+Total
+48 INCOME TAX EXPENSE
+28,336
+742
+89
+19,060
+11,428
+16,525
+25,390
+4,259
+31,118
+5,774
+397
+(26)
+515
+(2,768)
+14
+(21)
+199
+13
+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
+The Group
+Dividend income from holding of other equity instruments
+Investment income from holding/disposal of available-for
+(Loss)/gain from ineffective portion of cash flow hedges
+Gain on remeasurement of interests in Shanghai SECCO
+Others
+Total
+45 GAIN FROM CHANGES IN FAIR VALUE
+RMB million
+The Group
+(1,940)
+(1,604)
+(752)
+692
+(916)
+7
+(88)
+3,941
+86
+sale financial assets
+RMB 5,222
+Provision for income tax for the year
+Under-provision for income tax in respect of preceding year
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+48 INCOME TAX EXPENSE (Continued)
+The Group (Continued)
+Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows:
+2018
+2017
+Profit before taxation
+RMB million
+100,502
+RMB million
+86,573
+Expected income tax expense at a tax rate of 25%
+25,126
+21,643
+Tax effect of non-deductible expenses
+1,989
+1,936
+Tax effect of non-taxable income
+(5,019)
+(5,939)
+Tax effect of preferential tax rate (i)
+(1,259)
+(793)
+Effect of income taxes at foreign operations
+77
+(1,394)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of tax losses not recognised
+16,279
+20,213
+(72)
+(719)
+Total
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+2018
+RMB million
+2017
+RMB million
+788
+427
+1,282
+890
+2,070
+1,317
+2018
+RMB million
+2017
+RMB million
+Deferred taxation
+276
+180
+152
+2,586
+1,468
+3,042
+1,709
+2018
+2017
+RMB million
+RMB million
+27,176
+(6,244)
+26,668
+(10,317)
+89
+million
+1,518
+RMB 1,639
+5,665
+9,587
+5,598
+10,550
+10,664
+386
+791
+761
+354
+1,349
+1,349
+1,643
+1,558
+1,702
+251
+558
+558
+621
+641
+641
+2,343
+2016
+Book value
+At December 31
+Book value
+at the
+Acquisition Date
+5,653
+Acquisition Date
+5,653
+231
+229
+117
+2,937
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+44 INVESTMENT INCOME
+The Group
+2018
+The Company
+2017
+RMB million
+2018
+RMB million
+2017
+RMB million
+13,974
+Net profits of
+the acquiree
+from
+acquisition
+date to
+end of year
+RMB 726
+million
+Fair value
+at the
+16,437
+6,582
+5,887
+12,883
+7
+19
+12
+11
+168
+117
+117
+613
+662
+23,547
+Net assets acquired
+4,860
+Total current liabilities
+- Cash consideration for the purchase of 50% equity interest acquired
+Prepayments
+Inventories
+Accounts and other receivables
+Bills receivable
+Cash and cash equivalents
+Details of the net assets acquired are as follows:
+Business combination involving entities not under common control (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+2,541
+17,729
+20,270
+10,135
+10,135
+Shanghai SECCO
+RMB million
+over acquiree
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+- Acquisition-date fair value of the 50% equity interest held before the acquisition
+Total purchase consideration
+Less: Net assets acquired
+Deferred tax liabilities
+Goodwill (Note 16)
+Purchase consideration
+Details of combination cost and goodwill are as follows:
+51 BUSINESS COMBAINATION (Continued)
+end of year
+end of year
+Advances from customers
+Bills payable
+Accounts and other payables
+Total assets
+Total non-current assets
+Other non-current assets
+Deferred tax assets
+Employee benefits payable
+Intangible assets
+Construction in progress
+Long-term deferred expenses
+Total current assets
+million
+Fixed assets
+RMB 7,205
+million
+Other current assets
+Taxes payable
+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 2018
+The Group
+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
+Fair values
+58 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2018
+At 31 December 2018, 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 424 million (at 31 December 2017: decrease/
+increase RMB 450 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 2017.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December 2018, 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 197 million (2017: decrease/increase RMB 4,049 million), and increase/decrease the Group's other
+comprehensive income by approximately RMB 6,850 million (2017: decrease/increase RMB 701 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 2017.
+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 21 and Note 28, respectively.
+At 31 December 2018, 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 2018, the net fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB 7,844 million (2017: RMB 515 million) recognised in other receivables and derivative financial liabilities of
+RMB 13,568 million (2017: RMB 2,624 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.
+(c) Commodity price risk
+Assets
+two years
+RMB million
+less than
+five years
+RMB million
+five years
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial assets held for trading
+Liabilities
+- Structured deposits
+Total
+RMB million
+25,550
+25,550
+35,069
+More than
+182
+26,873
+Level 3
+RMB million
+7,013
+1,450
+1,323
+127
+7.887
+7,013
+874
+182
+1,183
+RMB million
+RMB million
+Level 2
+Derivative financial assets:
+- Derivative financial assets
+Other equity security investments:
+- Other Investments
+Liabilities
+Derivative financial liabilities:
+- Derivative financial liabilities
+At 31 December 2017
+The Group
+Assets
+Financial assets held for trading
+- Structured deposits
+Derivative financial assets:
+- Derivative financial assets
+Available-for-sale financial assets:
+- Listed
+Derivative financial liabilities:
+- Derivative financial liabilities
+Level 1
+– Equity investments, listed and at quoted market price
+two years but
+61,576
+More than
+one year but
+less than
+More than
+five years
+RMB million
+Short-term loans
+Non-current liabilities due within one year
+Long-term loans
+Debentures payable
+Derivative financial liabilties
+RMB million
+44,692
+45,040
+17,450
+18,053
+18,053
+5,500
+66,387
+792
+45,040
+More than
+two years but
+less than
+five years
+At 31 December 2018
+More than
+one year but
+less than
+Total
+contractual
+To measure the expected credit losses, trade accounts receivables 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 month before 31 December 2018 or 1 Janurary 2018,
+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 receivables, based on which the Group generated its payment profile is listed in note 8.
+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.
+146
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+58 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 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 2018, the Group has standby credit facilities with several PRC financial institutions which provide the Group to borrow up to RMB
+387,748 million (2017: RMB 361,852 million) on an unsecured basis, at a weighted average interest rate of 3.87% (2017: 3.40 %). At 31 December
+2018, the Group's outstanding borrowings under these facilities were RMB 21,236 million (2017: RMB 56,567 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:
+Carrying undiscounted
+amount
+RMB million
+cash flow
+RMB million
+Within
+one year or
+on demand
+RMB million
+two years
+RMB million
+31,951
+38,674
+1,269
+40,885
+14,030
+Short-term loans
+Non-current liabilities due within one year
+Long-term loans
+Debentures payable
+Derivative financial liabilties
+Bills payable and accounts payable
+Other payables and employee benefits payable
+Total
+Carrying
+amount
+RMB million
+RMB million
+Total
+contractual
+undiscounted
+cash flow
+At 31 December 2017
+Within
+one year or
+on demand
+RMB million
+17,154
+More than
+30,931
+356,257
+13,807
+10,903
+17,124
+6,251
+13,571
+13,571
+13,571
+Bills payable and accounts payable
+192,757
+192,757
+192,757
+Other payables and employee benefits payable
+Total
+84,775
+84,775
+84,775
+446,772
+459,257
+54,915
+8,071
+RMB million
+8,071
+A 5 percent strengthening/weakening of Renminbi against the following currencies at 31 December 2018 and 31 December 2017 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 2017.
+204
+668
+Gross exposure arising from loans and borrowings
+US Dollars
+million
+million
+2017
+The Group
+2018
+At 31 December
+The Group
+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:
+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.
+(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
+At 31 December
+US Dollars
+At 31 December
+At 31 December
+SIPL
+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
+54 PRINCIPAL SUBSIDIARIES (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+149
+Financial Statements (PRC)
+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.
+50
+2017
+million
+2018
+million
+172
+58 FINANCIAL INSTRUMENTS (Continued)
+At 31
+For the year ended 31 December 2018
+Financial Statements (PRC)
+1,250
+1,250
+39,122
+31,370
+For trade accounts receivables, 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
+trade accounts receivables.
+RMB million
+54,701
+49,038
+22,285
+55,451
+26,681
+27,261
+27,261
+67,754
+70,613
+1,003
+17,666
+55,451
+2,906
+14,337
+2,665
+148
+Financial Statements (PRC)
+147
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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.
+17,243
+71,323
+18,916
+96,190
+390,355
+497,837
+96,190
+96,190
+485,896
+206,535
+206,535
+206,535
+2,665
+2,665
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+December
+December
+December
+2,665
+During the year ended 31 December 2018, 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 classified as Level 3 financial assets.
+(181,766)
+Current liabilities
+1,636
+2,750
+2,665
+11,602
+1,196
+1,209
+992
+816
+19,866
+25,299
+19,555
+9,537
+1,388
+1,388
+1,277
+1,277
+51,900
+13,571
+13,571
+Level 1
+RMB million
+Level 2
+RMB million
+Level 3
+RMB million
+Total
+RMB million
+51,196
+51,196
+343
+183
+526
+178
+178
+521
+183
+51,196
+16,731
+156,494
+130,861
+Current assets
+2017
+2018
+2017
+Sinopec Kantons
+At 31
+At 31
+December
+December
+At 31
+At 31
+December
+December
+At 31
+Fujian Petrochemical
+Shanghai Petrochemical
+At 31
+December
+2018
+2017
+2018
+RMB million
+RMB million
+RMB million
+2017
+2018
+2018
+5,500
+December
+2017
+December
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2017
+2018
+2017
+2018
+December
+At 31
+Zhonghan Wuhan
+At 31
+December
+Shanghai SECCO
+At 31
+At 31
+December
+-
+December
+The Group's primary type of financial assets that are subject to the expected credit loss model is trade accounts receivables and other
+receivables.
+13,734
+10,730
+13,986
+11,492
+14,668
+11,114
+15,625
+10,552
+RMB million
+At 31 December
+Total
+Between four and five years
+Thereafter
+Between one and two years
+Between two and three years
+Between three and four years
+Within one year
+2017
+2018
+RMB million
+13,494
+10,428
+281,287
+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.
+178,383
+195,437
+Authorised and contracted for (i)
+Authorised but not contracted for
+Total
+57,997
+RMB million
+120,386
+141,045
+54,392
+2017
+2018
+RMB million
+At 31 December
+At 31 December
+At 31 December 2018 and 31 December 2017, the capital commitments of the Group are as follows:
+Capital commitments
+257,122
+352,794
+202,806
+At 31 December
+At 31 December 2018 and 31 December 2017, 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
+399
+88
+38
+(558)
+38
+7,078
+6,695
+2,758
+3.467
+51,038
+(used in) operating activities 24,825
+Net cash generated from/
+104
+99
+625
+600
+0
+433
+(i) The investment commitments of the Group is RMB 5,553 million (2017: RMB 3,364 million).
+1,004
+658
+55 COMMITMENTS
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+140
+(ii) 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. Therefore summarised consolidated statement of comprehensive income and cash flow of Shanghai SECCO presents the results from the
+acquisition date to 31 December 2017.
+Note:
+2.976
+3,308
+1,639
+3,766
+968
+738
+1,191
+70
+104
+957
+235
+1,344
+Commitments to joint ventures
+Exploration and production licenses
+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.
+57 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 paid normal routine pollutant discharge fees of approximately RMB 7,940 million in the consolidated financial statements for the year
+ended 31 December 2018 (2017: RMB 7,851 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
+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.
+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 reliably estimable. At 31 December 2018 and 31 December 2017, 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.
+Total
+Others
+24,192
+24,398
+9,732
+7,197
+940
+13,520
+(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 2018, the amount withdrawn by Zhongtian Synergetic Energy and guaranteed by the Group was RMB 12,168
+million (2017: RMB 13,520 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.
+Refining
+Inter-segment sales
+External sales
+Exploration and production
+Income from principal operations
+Reportable information on the Group's operating segments is as follows:
+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.
+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.
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+57 SEGMENT REPORTING (Continued)
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+142
+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) 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.
+12,168
+5,033
+At 31 December
+2017
+RMB million
+2018
+RMB million
+Between three and four years
+32
+33
+Between two and three years
+83
+79
+205
+380
+Between one and two years
+Within one year
+RMB million
+RMB million
+At 31 December
+2017
+At 31 December
+2018
+Estimated future annual payments of the Group 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
+and recognised in profit and loss. Expenses recognised were approximately RMB 231 million for the year ended 31 December 2018 (2017: RMB
+308 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 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.
+Between four and five years
+Thereafter
+Total
+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.
+28
+28
+At 31 December
+Joint ventures
+Associates (i)
+(b) At 31 December 2018 and 31 December 2017, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+(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.
+56 CONTINGENT LIABILITIES
+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 the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+141
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+The implementation of commitments in previous year and the Group's commitments did not have material discrepancy.
+1,258
+882
+852
+1,400
+28
+28
+External sales
+1,616
+3,964
+6,246
+6,970
+258.976 251,681
+Net non-current assets
+(1,740)
+(1,698)
+(2,430)
+19,101
+(132)
+(688)
+(146)
+(140)
+(28,523)
+(2,086) (1,774) (31,050)
+Non-current liabilities
+13,598
+(681)
+19,597
+10,756
+9,244
+Fujian Petrochemical
+2018
+2017
+2018
+2017
+2018
+2017
+Shanghai Petrochemical
+SIPL
+Marketing Company
+2018
+Year ended 31 December
+Summarised consolidated statement of comprehensive income and cash flow
+13,598
+12,612
+11.057
+10,603
+10,659
+12,763
+12,612
+12,797
+12,301
+13,089
+16,248
+(56,126)
+(50,905)
+Net current (liabilities)/assets
+(3,975)
+(2,333)
+(4,174)
+(2,233)
+(2,351)
+(3,722)
+(376)
+(50)
+(10,922)
+(13,913)
+(7,118)
+(483)
+(212,620)
+12,437
+Sinopec Kantons
+11,386
+766
+12,895
+9,925
+11,444
+19,743
+19,241
+34,769
+38,020
+253,455
+261,062
+Non-current assets
+(2,339)
+417
+7.428
+7,304
+(1,155)
+(2,513)
+616
+8.944
+9,544
+Shanghai SECCO (ii)
+2017
+1,595
+6,152
+5,270
+396
+4,536
+26,983
+22,538
+2,757
+Total comprehensive income
+1,879
+726
+3,099
+1,046
+1,065
+2,757
+1,595
+2,733
+1,067
+1,146
+3,099
+interests
+Dividends paid to minority
+1,378
+98
+798
+3,081
+2,612
+(38)
+2,737
+9.033
+7,780
+interests
+(loss) attributable to minority
+Comprehensive income/
+2,733
+1,879
+726
+6,152
+5,277
+1,075
+3,272
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2017
+2018
+2017
+2018
+2017
+2018
+RMB million
+Zhonghan Wuhan
+RMB million
+Turnover
+27,517
+21,995
+Profit for the year
+16,139
+17,134
+5,222
+26,320
+1,498
+1,398
+6,068
+5,261
+92,014
+107,765
+6,136
+5,037
+1,221,530
+1,443,698
+RMB million
+Inter-segment sales
+(b) Interest rate risk
+External sales
+6,694
+1,560
+(1,001)
+19.060
+11.428
+43
+(1,177)
+13,648
+6,905
+2,951
+2,676
+1,017
+429
+1,401
+4,356
+2,595
+80,437
+(1,655)
+(3,634)
+(3,160)
+(8,151)
+22,796
+25,970
+32,011
+24,106
+64,047
+53,703
+(47,399)
+(11,557)
+2017
+RMB million
+66,640
+RMB million
+2,656
+(742)
+21,694
+131,087
+145,721
+165,004
+167,015
+1,254,771
+1,220,347
+170,045
+152,799
+158,472
+156,865
+309,727
+317,641
+273,123
+(13)
+271,356
+321,686
+RMB million
+2017
+At 31 December
+RMB million
+At 31 December
+2018
+3,042
+100,502
+86,573
+1,709
+1,317
+2,070
+86,965
+101,474
+(1,518)
+343,404
+2018
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Total liabilities
+Marketing and distribution
+Refining
+Exploration and production
+Investment income
+Total segment operating profit
+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)
+Chemicals
+57 SEGMENT REPORTING (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+144
+Financial Statements (PRC)
+143
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+2,360,193
+2,891,179
+1,439
+59,723
+65,566
+1,523
+14,314
+15,492
+28,333
+For the year ended 31 December 2018
+Corporate and others
+Total segment investment income
+Less: Financial expenses
+Other unallocated liabilities
+Other non-current liabilities
+Deferred tax liabilities
+Debentures payable
+Long-term loans
+Non-current liabilities due within one year
+Short-term loans
+Total segment liabilities
+Corporate and others
+Chemicals
+Marketing and distribution
+Exploration and production
+Refining
+Segment liabilities
+Liabilities
+Total assets
+Other unallocated assets
+Deferred tax assets.
+Add: Other income
+Gain/(loss) from changes in fair value
+Loss from asset disposal
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+15,131
+Assets
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Total segment assets
+Cash at bank and on hand
+Long-term equity investments
+Segment assets
+37,531
+29,511
+1,592,308
+2018
+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 instruments and deferred tax assets. In presenting information on the basis of geographical segments, segment revenue is
+based on the geographical location of customers, and segment assets are based on the geographical location of the assets.
+21,258
+6,281
+211
+16
+4,922
+1,374
+2017
+675
+1,894
+353
+13,556
+4,274
+115,310
+109,967
+1,723
+1,797
+12,873
+13,379
+15,463
+16,296
+18,408
+18,164
+264
+RMB million
+RMB million
+2,119,580
+395,129
+(ii) Impairment of financial assets
+The carrying amounts of cash at bank and on hand, financial assets held for trading, derivative financial assets, bills receivable and accounts
+receivable and other receivables, represent the Group's maximum exposure to credit risk in relation to financial assets.
+Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
+obligations, and arises principally from the Group's deposits placed with financial institutions (including structured deposit) and receivables
+from customers. To limit exposure to credit risk relating to deposits, the Group primarily places cash deposits only with large financial
+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 2018, 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
+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.
+⚫ 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 at bank and on hand, financial assets held for trading, derivative financial assets, bills receivable and
+accounts receivable, other equity instrument investments and other receivables. Financial liabilities of the Group include short-term, derivative
+financial liabilities, bills payable and accounts payable, debentures payable, employee benefits payable, other payables and long-term loans.
+Overview
+58 FINANCIAL INSTRUMENTS
+For the year ended 31 December 2018
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+1,758,365
+269,349
+376,470
+2,891,179
+At 31 December
+2018
+RMB million
+989,668
+50,892
+1,040,560
+66,843
+332,479
+2,360,193
+2017
+RMB million
+979,329
+48,572
+1,027,901
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+145
+Financial Statements (PRC)
+At 31 December
+32,424
+60,331
+117,976
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+741,434
+734,649
+20,583
+7,627
+16,440
+27,276
+6,466
+5,948
+31,370
+31,951
+67,754
+61,576
+26,681
+For the year ended 31 December 2018
+17,450
+44,692
+517,439
+538,129
+117,756
+144,138
+35,207
+37,380
+163,680
+159,028
+101,429
+103,709
+99,367
+93,874
+1,595,504
+54,701
+57 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Capital expenditure
+2,398
+6,906
+23,028
+19,578
+21,539
+21,429
+21,075
+27,908
+31,344
+42,155
+RMB million
+RMB million
+2017
+2018
+(2) Geographical information
+Corporate and others
+Marketing and distribution
+Chemicals
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Depreciation, depletion and amortisation
+99,384
+Exploration and production
+Marketing and distribution
+Chemicals
+Corporate and others
+Impairment losses on long-lived assets
+Exploration and production
+Refining
+Refining
+Marketing and distribution
+5,104
+10,533
+189,453
+146,972
+148,930
+132,478
+1,109,088
+874,271
+1,258,018
+1,006,749
+1,408,989
+5,224
+1,414,213
+1,191,902
+3,962
+77,804
+1,195,864
+373,814
+73,835
+49,615
+531,241
+716,789
+533,108
+650,271
+440,303
+1,367,060
+5,389
+973,411
+457,406
+95,954
+423,429
+93,499
+10,738
+69,168
+2,300,470
+2,825,613
+(1,445,955)
+Inter-segment sales
+Chemicals
+External sales
+Inter-segment sales
+Corporate and others
+External sales
+Inter-segment sales
+(1,934,372)
+Consolidated income from principal operations
+Elimination of inter-segment sales
+2017
+2018
+Corporate and others
+Chemicals
+Consolidated income from other operations
+Consolidated operating income
+Marketing and distribution
+Refining
+Exploration and production
+Income from other operations
+RMB million
+RMB million
+(229)
+RMB
+(53)
+(53)
+14
+70,418
+78,897
+Note
+2017
+2018
+Year ended 31 December
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+The notes on pages 162 to 211 form part of these consolidated financial statements.
+Total comprehensive income for the year
+(57)
+Non-controlling interests
+RMB
+(9,741)
+18,279
+3,399
+Shareholders of the Company
+31 December
+Notes
+(Amounts in million)
+As at 31 December 2018
+CONSOLIDATED BALANCE SHEET
+66,042
+72,273
+(1,580)
+18,273
+54,000
+66,042
+72,273
+(4,376)
+(6,624)
+(4,376)
+(6,571)
+(3,792)
+47,763
+Attributable to:
+Basic
+Total other comprehensive income
+Diluted
+31 December
+Earnings per share:
+70,418
+78,897
+Profit for the year
+19,174
+17,279
+15
+Non-controlling interests
+61,618
+Shareholders of the Company
+Attributable to:
+70,418
+78,897
+Profit for the year
+(16,279)
+(20,213)
+51,244
+0.509
+0.423
+0.509
+Total items that may be reclassified subsequently to profit or loss
+Foreign currency translation differences
+Cash flow hedges
+Share of other comprehensive (income)/loss of associates and joint ventures
+Available-for-sale securities
+Items that may be reclassified subsequently to profit or loss
+Total items that maynot be reclassified subsequently to profit or loss
+Equity investments at fair value through other comprehensive income
+Items that maynot 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 2018
+Financial Statements (International)
+156
+Financial Statements (International)
+155
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+The notes on pages 162 to 211 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.
+0.423
+Total comprehensive income for the year
+2018
+Non-current assets
+RMB
+6,699
+Total assets less current liabilities
+Net current liabilities
+Total current liabilities
+Income tax payable
+276,582
+166,151
+32,1(a)
+Other payables
+124,793
+31,1(a)
+Contract liabilities
+206,535
+192,757
+13,015
+30
+2,665
+13,571
+24
+Derivatives financial liabilities
+25,311
+31,665
+29
+Loans from Sinopec Group Company and fellow subsidiaries
+55,338
+29,462
+29
+Short-term debts
+Current liabilities
+0.422
+Trade accounts payable and bills payable
+504,120
+565,098
+60,978
+Reserves
+Share capital
+852,890
+856,535
+163,168
+170,675
+Equity
+Total non-current liabilities
+17,620
+28,400
+Other long-term liabilities
+39,958
+42,800
+33
+579,446
+6,466
+28
+55,804
+43,320
+51,011
+42,516
+2223
+Provisions
+10
+29
+Loans from Sinopec Group Company and fellow subsidiaries
+Deferred tax liabilities
+29
+Long-term debts
+Non-current liabilities
+1,016,058
+1,027,210
+50,397
+5,948
+2017
+Total current assets
+54,023
+21,694
+28
+Deferred tax assets
+1,450
+1(a)
+Financial assets at fair value through other comprehensive income
+1,676
+1(a)
+Available-for-sale financial assets
+51,361
+56,184
+20
+Interest in joint ventures
+79,726
+15,131
+89,537
+Interest in associates
+8,634
+8,676
+18
+118,645
+136,963
+17
+650,774
+617,762
+16
+Goodwill
+Construction in progress
+Property, plant and equipment, net
+RMB
+19
+40,929
+Lease prepayments
+64,514
+186,693
+184,584
+84,701
+64,879
+526
+7,887
+51,196
+25,732
+22222
+Prepaid expenses and other current assets
+Inventories
+Trade accounts receivable and bills receivable
+Derivatives financial assets
+Financial assets at fair value through profit or loss
+21
+51,786
+Time deposits with financial institutions
+113,218
+111,922
+Cash and cash equivalents
+Current assets
+-------
+1,066,455
+1,088,188
+Total non-current assets
+81,982
+91,408
+22
+Long-term prepayments and other assets
+58,526
+55,093
+1,053
+7.14
+121,071
+326,125
+726,120
+126,770
+852,890
+Change in accounting policy (Note 1(a))
+(12)
+12
+Balance at 1 January 2018
+Profit for the year
+121,071
+26,326
+55,850
+82,682
+117,000
+(2,946)
+326,137
+726,120
+126,770
+54,000
+61,618
+(7,618)
+Total comprehensive income for the year
+(6,624)
+994
+(2,934)
+(7,618)
+Other comprehensive income (Note 14)
+78,897
+17,279
+61,618
+61.618
+852,890
+(7,618)
+117,000
+82.682
+55,850
+Retained
+earnings
+reserves
+reserve
+reserve
+premium
+reserve
+shareholders
+of the
+capital
+Statutory Discretionary
+surplus
+surplus
+Share
+Capital
+Share
+to
+Other
+18,273
+Company
+Total
+26,326
+121,071
+Balance at 31 December 2017
+RMB
+RMB
+RMB
+Non-
+controlling
+interests
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+equity
+RMB
+72,273
+Amounts transferred to cash flow hedge
+----- 5,269
+55,850
+(371)
+(77)
+(294)
+(851)
+818
+86,678
+(73,526)
+(67,811)
+(71,795)
+3.996
+(12)
+(261)
+26,053
+121,071
+(311)
+(5,715)
+(299)
+117,000
+315,109
+Income tax expense
+Financial Statements (International)
+159
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+The notes on pages 162 to 211 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.
+(4,477)
+(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.
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+During the year ended 31 December 2018, the Company transferred RMB 3,996 million (2017: RMB 3,042 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 to this reserve.
+(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.
+856,535
+139,251
+717,284
+(c) As at 31 December 2018, the amount of retained earnings available for distribution was RMB 143,148 million (2017: RMB 177,049 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").
+attributable
+(12)
+(73,215)
+Total transactions with owners
+Transaction with non-controlling interests
+Total contributions by and distributions to owners
+non-controlling interests
+Contributions to subsidiaries from
+Distributions to non-controlling interests
+Others
+Appropriation (Note (a))
+Final dividend for 2017 (Note 13)
+Contributions by and distributions to owners:
+Transactions with owners, recorded directly in equity:
+reserves initially recognised by hedged items
+5,269
+5,269
+Interim dividend for 2018 (Note 13)
+(12)
+Balance at 31 December 2018
+(48,428) (48,428)
+(5,416)
+(67,799)
+(71,795)
+3,996
+2,060
+2,060
+Note:
+(7,476)
+(3,996)
+3,996
+(19,371)
+(19,371)
+(19,371)
+(48,428)
+(7,476)
+Total equity
+for the year ended 31 December 2018
+(Amounts in million)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+reserve
+reserve
+premium
+reserve
+capital
+controlling
+reserves
+of the
+Other
+Non-
+shareholders
+Statutory Discretionary
+surplus
+surplus
+Share
+Retained
+Capital
+earnings
+interests
+55,850
+26,290
+121,071
+RMB
+RMB
+RMB
+Company
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+Total equity
+RMB
+79.640
+Share
+attributable
+Dai Houliang
+Approved and authorised for issue by the board of directors on 22 March 2019.
+852,890
+856,535
+126,770
+139,251
+Chairman
+Total equity
+726,120
+717,284
+Total equity attributable to shareholders of the Company
+605,049
+596,213
+121,071
+Non-controlling interests
+to
+(Legal representative)
+Wang Dehua
+Total equity
+Total comprehensive income for the year
+Other comprehensive income (Note 14)
+Profit for the year
+Balance at 1 January 2017
+for the year ended 31 December 2017
+(Amounts in million)
+Ma Yongsheng
+President
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Financial Statements (International)
+Financial Statements (International)
+157
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+The notes on pages 162 to 211 form part of these consolidated financial statements.
+Chief Financial Officer
+158
+34
+117,000
+310,719
+(35,731)
+3,042
+711
+724
+(13)
+(13)
+(32,702)
+(13)
+(12,501)
+(32,689)
+(35,731)
+3,042
+(12,501)
+(12,501)
+(45,190)
+(3,042)
+(11,777)
+121,071
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+The notes on pages 162 to 211 form part of these consolidated financial statements.
+92
+852,890
+27
+126,770
+65
+726,120
+(44,479)
+326,125
+117,000
+82,682
+55,850
+(107)
+123
+49
+26,326
+(2,934)
+424
+3,042
+(12,107)
+47,763
+51,244
+(3,481)
+(4,376)
+(895)
+(3,481)
+18,279
+-----(3,481)
+19,174
+51,244
+51,244
+831,235
+120,241
+710,994
+70,418
+(12,107)
+66,042
+Contributions by and distributions to owners:
+(12,107)
+(20,582)
+(20,582)
+(20,582)
+|||||
+Balance at 31 December 2017
+Transactions with owners, recorded directly in equity:
+Others
+Transaction with non-controlling interests
+Total contributions by and distributions to owners
+Distributions to non-controlling interests
+Appropriation (Note (a))
+Interim dividend for 2017 (Note 13)
+Final dividend for 2016 (Note 13).
+Total transactions with owners
+86,697
+529,049
+Operating expenses
+262
+Share of profits less losses from associates and joint ventures
+19, 20
+13.974
+16,525
+Profit before taxation
+99,110
+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.
+Auditor's Responsibilities for the Audit of the Consolidated Financial Statements (cont'd)
+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 relating 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.
+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.
+• Evaluated and tested the key controls relating to the preparation of the
+NRV models of crude oil, finished goods and work in progress of refined
+oil products.
+• Assessed the methodology adopted in, and tested mathematical
+accuracy of the NRV models.
+• On a sampling basis, compared the estimated selling prices of
+inventories used in the NRV models against the recently realised selling
+prices, and the prices available on domestic and international markets.
+On a sampling basis, compared the costs to completion, other necessary
+costs of sales and related taxes against historical data of the Group.
+Based on the work, we found that the key assumptions and data adopted in
+the NRV models were supported by the evidence we obtained.
+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.
+1,871
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider
+whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise
+appears to be materially misstated.
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that
+fact. We have nothing to report in this regard.
+RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance
+with IFRSS and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is
+necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
+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 relating 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.
+153
+In auditing the NRVS of crude oil, finished goods and work in progress of
+refined oil products, we performed the following key procedures on the
+inventory NRV models prepared by the management.
+Investment income
+1,001
+(115,310)
+Exploration expenses, including dry holes.
+(10,744)
+(11,089)
+Personnel expenses
+Taxes other than income tax
+Other operating expense, net
+Total operating expenses
+Operating profit
+Finance costs
+Interest expense
+819
+6
+(77,721)
+(74,854)
+7
+(246,498)
+Net finance costs
+596
+Foreign currency exchange gains, net
+7,726
+Interest income
+(7,146)
+5,254
+332
+(1,560)
+(7,321)
+71,470
+(2,288,723)
+(2,808,915)
+82,264
+(16,554)
+(5,360)
+(235,292)
+9
+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.
+• Independently estimated a range of relevant discount rates, and found
+that the discount rates adopted by management were within the range.
+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
+2018, 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.
+Our opinion
+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
+•
+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 2018;
+•
+The consolidated financial statements of China Petroleum & Chemical Corporation (the "Company") and its subsidiaries (the "Group") set out on pages
+155 to 211, which comprise:
+羅兵咸永道
+Purchased crude oil, products and operating supplies and expenses
+59,723
+2,360,193
+0.376
+0.376
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+151
+Independence
+Financial Statements (PRC)
+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
+Financial Statements (International)
+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.
+Refer to note 2(e) "Inventories", note 26 "Inventories" and note 42
+"Accounting estimates and judgements" to the consolidated financial
+statements.
+Decrease in prices of international crude oil along with its highly.
+correlated products, such as refined oil products, in the fourth quarter
+of the year ended 31 December 2018 gave rise to the risk that net
+realisable values of crude oil, finished goods and work in progress of
+refined oil products were lower than their respective book values as at
+31 December 2018.
+Management has determined the NRVs of crude oil, finished goods
+and work in progress of refined oil products based on the respective
+estimated selling prices less the estimated costs to completion, other
+necessary costs of sales and the related taxes, which involved key
+estimations or assumptions including:
+Estimated selling prices;
+Estimated costs to completion, other necessary costs of sales and
+related taxes.
+Because of the significance of the book value of crude oil, finished
+goods and work in progress of refined oil products as at 31 December
+2018, together with the use of significant estimations or assumptions in
+determining their respective NRVs, we had placed our audit emphasis
+on this matter.
+Net realisable value (NRV) of crude oil, finished goods and work in
+progress of refined oil products
+OTHER INFORMATION
+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.
+Assessed the methodology adopted in, and tested mathematical
+accuracy of the discounted cash flow projections.
+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 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.
+How our audit addressed the Key Audit Matter
+(109,967)
+Because of the significance of the carrying amount of property, plant
+and equipment relating to oil and gas producing activities as at 31
+December 2018, 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.
+Future crude oil prices;
+Future production profiles;
+Future cost profiles; and
+Key audit matters identified in our audit are summarised as follows:
+•
+•
+Recoverability of the carrying amount of property, plant and equipment relating to oil and gas producing activities
+Net realisable value (NRV) of crude oil, finished goods and work in progress of refined oil products
+PricewaterhouseCoopers, 22/F, Prince's Building, Central, Hong Kong
+Discount rates.
+T: +852 2289 8888, F: +852 2810 9888, www.pwchk.com
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+Key Audit Matter
+Recoverability of the carrying amount of property, plant and equipment
+relating to oil and gas producing activities
+Refer to note 8 "Other operating expense, net", note 16 "Property, plant
+and equipment” and note 42 "Accounting estimates and judgements" to
+the consolidated financial statements.
+Decrease in prices of international crude oil in the fourth quarter of the
+year ended 31 December 2018 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 2018 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:
+152
+Depreciation, depletion and amortisation
+Financial Statements (International)
+(65,642)
+(ii) Diluted earnings per share
+121,071
+121,071
+121,071
+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)
+2017
+2018
+The calculation of the weighted average number of ordinary shares is as follows:
+0.422
+121,071
+51,119
+2017
+2018
+63,089
+121,071
+0.521
+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
+60 BASIC AND DILUTED EARNINGS PER SHARE
+(3,941)
+1,613
+690
+(5,970)
+(6,512)
+2,312
+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):
+976
+(5,536)
+(3,459)
+(199)
+(5,537)
+1
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+(3,658)
+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
+Weighted
+average
+return on
+Basic
+Diluted
+per share
+(RMB/Share)
+(64,973)
+Basic
+earnings
+per share
+(RMB/Share)
+earnings
+per share
+(%)
+(RMB/Share)
+per share
+(RMB/Share)
+8.67
+0.521
+0.521
+earnings
+(148)
+(%)
+Weighted
+average
+return on
+2018
+63,089
+121,071
+0.521
+2017
+51,117
+121,071
+0.422
+2018
+net assets
+2017
+121,071
+121,071
+61 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:
+2018
+2017
+121,071
+121,071
+1,518
+152
+(4,783)
+net assets
+742
+180
+losses attributable to the Company's ordinary
+equity shareholders
+8.20
+0.493
+0.493
+2,300,470
+2,825,613
+65,566
+2,891,179
+4
+Other operating revenues
+3
+Turnover
+Turnover and other operating revenues
+2017
+RMB
+RMB
+Year ended 31 December
+2018
+Note
+(Amounts in million, except per share data)
+Selling, general and administrative expenses
+5
+(7,482)
+(1,023)
+(1,770,651)
+(2,292,983)
+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.
+Net profit deducted extraordinary gains and
+The engagement partner on the audit resulting in this independent auditor's report is CHAN KWONG TAK.
+PricewaterhouseCoopers
+Certified Public Accountants
+Hong Kong, 22 March 2019
+154 Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+(B) FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS”)
+CONSOLIDATED INCOME STATEMENT
+for the year ended 31 December 2018
+6.37
+Financial Statements (International)
+ordinary equity shareholders
+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.
+0.422
+Net profit attributable to the Company's
+RMB million
+2017
+RMB million
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Attributable to:
+Total
+Tax effect
+Other non-operating loss, net
+Gain on remeasurement of interests in the Shanghai SECCO (Note 51)
+Gain on holding and disposal of various investments
+Government grants
+Donations
+Net loss 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:
+Equity shareholders of the Company
+Minority interests
+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 2018 and 31 December 2017.
+150
+59 EXTRAORDINARY GAINS AND LOSSES
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2018
+58 FINANCIAL INSTRUMENTS (Continued)
+Fair values (Continued)
+2018
+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.
+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 2.76% to 4.90% (2017: 1.79% 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
+2018 and 31 December 2017:
+(ii) Fair values of financial instruments carried at other than fair value
+Carrying amount
+Fair value
+At 31 December
+2018
+RMB million
+63,085
+62,656
+At 31 December
+2017
+RMB million
+79,738
+78,040
+(111,260)
+(56,509)
+(1,814)
+113,218
+(10,897)
+Distributions by subsidiaries to non-controlling interests
+518
+(155)
+111,922
+113,218
+The notes on pages 162 to 211 form part of these consolidated financial statements.
+160
+124,468
+(353)
+(5,535)
+(160)
+(5,984)
+Effect of foreign currency exchange rate changes
+Cash and cash equivalents at 31 December
+Cash and cash equivalents at 1 January
+Net cash used in financing activities
+Finance lease payment
+Payments made to acquire non-controlling interests
+Interest paid
+(7,539)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+(13,700)
+(86)
+Net decrease in cash and cash equivalents
+Investment income
+for the year ended 31 December 2018
+(5,254)
+(32,689)
+(7,726)
+(3,941)
+(262)
+(1,871)
+(16,525)
+(13,974)
+6,876
+115,310
+109,967
+6,921
+86,697
+99,110
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+Interest expense
+Gain on remeasurement of interests in the Shanghai SECCO (Note 36)
+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
+2017
+Year ended 31 December
+2018
+(a) Reconciliation from profit before taxation to net cash generated from operating activities
+(Amounts in million)
+Interest income
+(67,799)
+55,000
+1,886
+(6,431)
+(10,116)
+(7,407)
+(8,261)
+(63,541)
+(94,753)
+190,935
+175,868
+(a)
+Proceeds from disposal of investments and investments in associates
+Payment for acquisition of subsidiary, net of cash acquired
+Proceeds from sale of financial assets at fair value through profit or loss
+Purchase of investments, investments in associates and investments in joint ventures
+Payment for financial assets at fair value through profit or loss
+Exploratory wells expenditure
+Capital expenditure
+Investing activities
+Net cash generated from operating activities
+RMB
+RMB
+2017
+Year ended 31 December
+2018
+Note
+(Amounts in million)
+for the year ended 31 December 2018
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Financial Statements (International)
+7,321
+(29,550)
+(51,196)
+(3,188)
+(1,288)
+Contributions to subsidiaries from non-controlling interests
+Dividends paid by the Company
+(536,380)
+(772,072)
+Repayments of bank and other loans
+524,843
+746,655
+(145,323)
+(66,422)
+8,506
+10,720
+Proceeds from bank and other loans
+Financing activities
+Net cash used in investing activities
+946
+Investment and dividend income received
+5,810
+48,820
+78,401
+Decrease in time deposits with maturities over three months
+Interest received
+(82,577)
+(81,708)
+1,313
+9,666
+Increase in time deposits with maturities over three months
+non-current assets
+Proceeds from disposal of property, plant, equipment and other
+4,809
+1,557
+3,669
+7,146
+(a) any adjustments to carrying amounts of financial assets or liabilities are recognised at the beginning of the current reporting period, with the
+difference recognised in opening retained earnings
+(1,835)
+Estimated
+usage period
+12 to 50 years
+4 to 30 years
+Equipment, machinery and others
+Buildings
+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.
+Estimated
+(f) Property, plant and equipment
+(e) Inventories
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+166
+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)
+residuals rate
+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
+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
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+3%
+3%
+No depreciation is provided in respect of 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.
+(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(o)). 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.
+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.
+Construction in progress is transferred to property, plant and equipment when the asset is substantially ready for its intended use.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 165
+(d) Trade, bills and other receivables
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+164 Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+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 (Note 2(j) and (o)).
+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.
+for the year ended 31 December 2018
+(ii) Associates and joint ventures
+In the Company's balance sheet, investments in subsidiaries are stated at cost less impairment losses (Note 2(o)).
+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)).
+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.
+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.
+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.
+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.
+The particulars of the Group's principal subsidiaries are set out in Note 40.
+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.
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(ii) Associates and joint ventures (Continued)
+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) Basis of consolidation (Continued)
+(b) Translation of foreign currencies
+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(k)) or, when appropriate, the cost on initial recognition of an investment in an associate (see Note
+2(a) (ii)).
+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.
+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.
+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)).
+(i) Classification and measurement
+(n) 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.
+(m)Determination of fair value for financial instruments
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (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.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+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, trade accounts 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.
+(I) Financial liabilities
+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.
+Trade accounts receivables, 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.
+Financial Statements (International)
+Impairment
+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.
+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:
+Financial Statements (International)
+169
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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 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 nonfinancial 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.
+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.
+(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.
+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.
+(i) The cumulative gain or loss on the hedging instrument from inception of the hedge; and
+(k) Financial assets
+When securities classified as available-for-sale were derecognised or impaired, the accumulated gains or losses recognised in other
+comprehensive income were reclassified to the consolidated income statement.
+Subsequent to the initial recognition, loans and receivables and held-to-maturity investments were carried at amortised cost using the
+effective interest method.
+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.
+(ii) Impairment
+For receivables 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.
+In addition, the Group designates some equity instruments that are not held for trading as financial assets at fair value through other
+comprehensive income, are presented in financial assets at fair value through other comprehensive income. 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
+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
+out-standing. Interest income from these financial assets is recognised using the effective interest rate method.
+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.
+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. 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, 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.
+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.
+Available-for-sale financial assets and financial assets at fair value through profit or loss were subsequently carried at fair value. Gains or
+losses arising from changes in the fair value were recognised as follows: for financial assets at fair value through profit or loss in profit or
+loss within other gains/(losses), for available-for-sale financial assets in other comprehensive income.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Financial Statements (International)
+The measurement at initial recognition did not change on adoption of IFRS 9.
+Subsequent measurement
+The classification depended on the purpose for which the investments were acquired. Management determined the classification of its
+investments at initial recognition.
+Until 31 December 2017, the group classified its financial assets in the following categories: financial assets at fair value through profit or
+loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets.
+Classification
+(iv) Accounting policy applied until 31 December 2017
+167
+On derecognition of financial assets at fair value through other comprehensive income, 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.
+(iii)Derecognition
+(k) Financial assets (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+168
+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.
+(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
+The adoption of IFRS 9 'Financial Instruments' ('IFRS 9') and IFRS 15 ‘Revenue from Contracts with Customers' ('IFRS 15') from 1 January 2018
+by the Group resulted in changes in accounting policies and adjustments to the amounts recognised in the financial statements.
+IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers'- Impact of adoption
+IFRS 15 'Revenue from Contracts with Customers'
+•
+IFRS 9 'Financial Instruments', and
+•
+Transition options of IFRS 9 'Financial Instruments'
+A number of new or amended standards became applicable for the current reporting period and the Group had to change its accounting policies
+as a result of adopting the following standards:
+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.
+The accompanying consolidated financial statements have been prepared in accordance with all applicable IFRS as issued by the International
+Accounting Standards Board ("IASB"). IFRS includes International Accounting Standards ("IAS") and related interpretations ("IFRIC"). These
+consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Stock
+Exchange of Hong Kong Limited. A summary of the significant accounting policies adopted by the Group are set out in Note 2.
+Basis of preparation
+As part of the Reorganisation, certain of Sinopec Group Company's core oil and gas and chemical operations and businesses together with the
+related assets and liabilities were transferred to the Company. On 25 February 2000, in consideration for Sinopec Group Company transferring such
+oil and gas and chemical operations and businesses and the related assets and liabilities to the Company, the Company issued 68.8 billion domestic
+state-owned ordinary shares with a par value of RMB 1.00 each to Sinopec Group Company. The shares issued to Sinopec Group Company on 25
+February 2000 represented the entire registered and issued share capital of the Company on that date. The oil and gas and chemical operations and
+businesses transferred to the Company were related to (i) the exploration, development and production of crude oil and natural gas, (ii) the refining,
+transportation, storage and marketing of crude oil and petroleum products, and (iii) the production and sales of chemicals.
+The Company was established in the PRC on 25 February 2000 as a joint stock limited company as part of the reorganisation (the "Reorganisation")
+of China Petrochemical Corporation ("Sinopec Group Company"), the ultimate holding company of the Group and a ministry-level enterprise under
+the direct supervision of the State Council of the PRC. Prior to the incorporation of the Company, the oil and gas and chemical operations of the
+Group were carried on by oil administration bureaux, petrochemical and refining production enterprises and sales and marketing companies of
+Sinopec Group Company.
+Organisation
+(a) New and amended standards and interpretations adopted by the Group
+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.
+Classification and measurement
+(c) provisions for impairment have not been restated in the comparative period
+The Group has decided to reclassify contract assets and contract liabilities and present them as a separate line item in the balance sheet based
+on the significance of the item.
+Presentation and description of contract assets and contract liabilities
+The Group has elected to apply the simplified transition method, retrospectively with the cumulative effect of initially applying IFRS 15 as an
+adjustment to the balance on 1 January 2018.
+Transition options of IFRS 15 'Revenue from Contracts with Customers'
+The Group has applied the hedging accounting prospectively to the derivatives held for hedging purpose.
+Financial instruments accounting policy applied until 31 December 2017 is disclosed in Note 2 (k) (iv).
+Hedging
+The Group has elected to apply the limited exemption in IFRS 9 relating to transition for classification and measurement and impairment, and
+accordingly has not restated comparative periods in the year of initial application:
+(a) New and amended standards and interpretations adopted by the Group (Continued)
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+162 Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+The Group has adopted the simplified expected credit loss model for its trade receivables and contract assets, as required by IFRS 9, and
+the general expected credit loss model for receivables and contract assets carried at amortised. The Group assessed the loss allowance
+for receivables under the expected credit loss model on 1 January 2018, no significant difference compared with the loss allowance under
+accounting policies applied until 31 December 2017.
+Impairment
+Basis of preparation (Continued)
+The adjustments arising from the new accounting policies are therefore recognised in the opening balance sheet on 1 January 2018, comparative
+figures have not been restated. The new accounting policies are disclosed in Note 2. The adoption of IFRS 9 and IFRS 15 has no significant
+impact on the Group's financial statements.
+Principal activities
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2018
+Inventories
+(31,151)
+(1,043)
+Accounts receivable and other current assets
+Net changes from:
+211,809
+(3,312)
+211,185
+Credit impairment losses
+21,791
+11,605
+1,518
+1,526
+(1,547)
+141
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION
+(28,903)
+2,111
+Financial Statements (International)
+Financial Statements (International)
+161
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+The notes on pages 162 to 211 form part of these consolidated financial statements.
+190,935
+Accounts payable and other current liabilities
+175,868
+(33,073)
+Net cash generated from operating activities
+Income tax paid
+210,965
+208,941
+59,210
+(20,030)
+The following tables show the adjustments recognised for each individual line item. Line items that were not affected by the changes have not
+been included. As a result, the sub-totals and totals disclosed cannot be recalculated from the numbers provided.
+Consolidated balance sheet (extract)
+31 December
+2017
+•
+In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
+The Group will apply the standard from its mandatory adoption date of 1 January 2019. The Group intends to apply the simplified transition
+approach and will not restate comparative amounts for the year prior to first adoption. All right-of-use assets will be measured at the amount of
+the lease liability on adoption (adjusted for any prepaid or accrued lease expenses).
+IFRS 16, 'Leases', was issued in January 2016. It will result in almost all leases being recognised on the balance sheet by lessees, as the
+distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial
+liability to pay rentals are recognised. Leases to explore for or use oil and natural gas are not applied to IFRS 16.
+(i) Advances from customers were reclassified as contract liabilities by implementation of IFRS 15 'Revenue from Contracts with Customers'.
+(b) New and amended standards and interpretations not yet adopted by the Group
+852,890
+the use of a single discount rate to a portfolio of leases with reasonably similar characteristics
+(2,946)
+326,137
+163,168
+579,446
+155,848
+(120,734)
+120,734
+120,734
+852,890
+529,049
+•
+The Group has set up a project team which has reviewed all of the Group's leasing arrangements over the last year in light of the new lease
+accounting rules in IFRS 16. The standard will affect primarily the accounting for the Group's operating leases.
+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 42.
+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.
+(b) New and amended standards and interpretations not yet adopted by the Group (Continued)
+Basis of preparation (Continued)
+the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION (Continued)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+163
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+The Group expects to recognise right-of-use assets of approximately RMB 207.5 billion on 1 January 2019, lease liabilities of RMB 198.6 billion
+(after adjustments for prepayments and accrued lease payments recognised as at 31 December 2018).
+for the year ended 31 December 2018
+1,066,455
+1,676
+(12)
+12
+Contract liabilities(i)
+Current liabilities
+Total current assets
+Current assets
+Total non-current assets
+other comprehensive income
+Available-for-sale financial assets
+Other payables(i)
+Financial assets at fair value through
+1 January
+2018
+RMB million
+of IFRS 15
+RMB million
+Adjustment
+from Adoption
+of IFRS 9
+RMB million
+Adjustment
+from Adoption
+RMB million
+Non-current assets
+Total current liabilities
+Non-current liabilities
+Total non-current liabilities
+22
+852,890
+326,125
+(2,934)
+852,890
+163,168
+579,446
+276,582
+529,049
+1,676
+(1,676)
+1,676
+1,066,455
+Total equity
+Retained earnings
+Other reserves
+Equity
+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
+(b) financial assets are not reclassified in the balance sheet for the comparative period
+Johnny Karling Ng (iii)
+Cai Hongbin (iii)
+233
+191
+(p) Trade, bills and other payables
+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.
+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, 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.
+(o) Impairment of 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 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.
+Cash flow hedges (Continued)
+(n) Derivative financial instruments and hedge accounting (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+170
+Before tax
+amount
+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.
+2017
+(q) Interest-bearing borrowings
+Financial Statements (International)
+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.
+The Group has applied IFRS 15 retrospectively, but has elected not to restate comparative information. As a result, the comparative
+information provided continues to be accounted for in accordance with the Group's previous accounting policy.
+(ii) Accounting policy applied until 31 December 2017
+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.
+(i) Sales of goods
+The Group sells crude oil, natural gas, petroleum and chemical products, etc. Revenue is recogniesd 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.
+(s) 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
+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
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 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.
+2018
+Cash flow hedges:
+14 OTHER COMPREHENSIVE INCOME
+RMB million
+2017
+2018
+Dividends declared and paid during the year of RMB 0.16 per share (2017: RMB 0.10 per share)
+Dividends declared after the balance sheet date of RMB 0.26 per share (2017: RMB 0.40 per share)
+Dividends payable to shareholders of the Company attributable to the year represent:
+13 DIVIDENDS
+For the year ended 31 December 2018, the five highest paid individuals in the Company included two supervisors and three senior management.
+The emolument paid to each of two supervisors and three senior management was above RMB 1,000 thousand. The total salaries, wages and other
+benefits was RMB 5,089 thousand, and the total amount of their retirement scheme contributions was RMB 370 thousand. For the year ended 31
+December 2017, the five highest paid individuals in the Company included one director and four senior management.
+12 SENIOR MANAGEMENT'S EMOLUMENTS
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+177
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+(vii) Mr. Wang Yupu ceased being chairman and independent director from 22 September 2017; Mr. Liu Yun ceased being supervisor and chairman of board of
+supervisor from 16 March 2017; Mr. Wang Yajun ceased being supervisor from 28 June 2017.
+RMB million
+19,371
+31,479
+12,107
+48,428
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+178
+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.
+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 of 4 June 2018 was approved. All dividends have been paid in the year ended 31 December 2018.
+20,582
+(t) Government grants
+RMB million
+48,428
+2018
+RMB million
+Final cash dividends in respect of the previous financial year, approved during the year of
+RMB 0.40 per share (2017: RMB 0.17 per share)
+Pursuant to a resolution passed at the director's meeting on 22 March 2019, final dividends in respect of the year ended 31 December 2018 of
+RMB 0.26 (2017: RMB 0.40) per share totaling RMB 31,479 million (2017: RMB 48,428 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 24 August 2018, the directors authorised to
+declare the interim dividends for the year ending 31 December 2018 of RMB 0.16 (2017: RMB 0.10) per share totaling RMB 19,371 million (2017:
+RMB 12,107 million). Dividends were paid on 12 September 2018.
+60,535
+50,850
+2017
+(vi) 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.
+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 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.
+205,722
+250,884
+Others(i)
+Synthetic fiber monomers and polymers
+Synthetic resin
+Basic chemical feedstock
+Natural gas
+Kerosene
+503,406
+594,008
+600,113
+711,236
+Diesel
+Gasoline
+421,585
+168,823
+519,910
+115,739
+107,633
+Operating lease charges
+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 by-products and joint products.
+2,300,470
+2,825,613
+249,997
+335,357
+61,998
+77,572
+34,277
+43,205
+124,618
+Crude oil
+RMB million
+RMB million
+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 7,956 million for the year ended 31 December 2018 (2017: RMB 6,423 million).
+(x) 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.
+(w) Environmental expenditures
+Repairs and maintenance expenditure is expensed as incurred.
+(v) 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.
+(u) Borrowing costs
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+171
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+(y) Operating leases
+Operating lease payments are charged to the consolidated income statement on a straight-line basis over the period of the respective leases.
+(z) 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.
+2017
+2018
+Turnover primarily represents revenue from the sales of crude oil, refined petroleum products, chemical products and natural gas.
+3 TURNOVER
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+172
+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.
+(cc) Segment reporting
+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) Dividends
+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.
+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.
+(aa) Income tax
+Financial Statements (International)
+Auditor's remuneration:
+(v) Mr. Jiao Fangzheng ceased being director from 7 June 2018.
+(iii) Mr. Ling Yiqun was elected to be director from 15 May 2018; Mr. Liu Zhongyun was elected to be director from 15 May 2018; Mr. Li Yong was elected to be
+director from 15 May 2018; Mr. Cai Hongbin was elected to be independent non-executive director from 15 May 2018; Mr. Johnny Karling Ng was elected to be
+independent non-executive director from 15 May 2018; Mr. Yang Changjiang was elected to be supervisor from 15 May 2018; Mr. Zhang Baolong was elected to be
+supervisor from 15 May 2018;
+298
+340
+44
+122
+174
+1,035
+74
+663
+298
+125
+125
+125
+125
+Fan Gang
+233
+613
+233
+74
+298
+Directors
+Name
+The emoluments of every director and supervisor is set out below: (Continued)
+(a) Directors' and supervisors' emoluments (Continued)
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+6,096
+1,382
+351
+2,997
+1,366
+1,008
+74
+636
+985
+233
+333
+333
+Bonuses
+RMB'000
+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
+2018
+Retirement
+scheme
+contributions
+RMB'000
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+176
+Total
+Yu Renming
+Yu Xizhi
+Zhou Hengyou
+Zou Huiping
+Zhang Baolong (iii)
+Yang Changjiang (iii)
+Zhao Dong
+Jiang Zhenying
+Supervisors
+Andrew Y. Yan (vi)
+224
+179
+65
+Emoluments paid
+or receivable
+in respect of a
+person's services
+as a director,
+whether of the
+333
+333
+483
+395
+|||||||||||||
+456
+21
+Wang Yupu(vii)
+14
+53
+468
+Total
+RMB'000
+RMB'000
+Supervisors' fee
+Directors'/
+Company or
+its subsidiary
+undertaking
+328
+(iv) Mr. Wang Zhigang ceased being director from 29 January 2018; Mr. Zhang Haichao ceased being director from 29 January 2018.
+Dai Houliang
+Zhang Haichao
+480
+207
+71
+480
+207
+71
+480
+207
+300
+300
+300
+300
+300
+300
+300
+71
+300
+122
+42
+(ii) Mr. Yu Baocai was elected to be director from 23 October 2018.
+(i) Mr. Ma Yongsheng was appointed as president from 30 October 2018. Mr. Dai Houliang ceased being president and executive director and was elected as non-
+executive director from 30 October 2018.
+5,768
+417
+267
+758
+758
+758
+1,200
+424
+2,916
+1,228
+17
+349
+51
+103
+770
+840
+76
+Total
+Wang Yajun(vii)
+Liu Yun(vii)
+Yu Xizhi
+Yu Renming
+Jiang Zhenying
+Liu Zhongyun
+Zhou Hengyou
+Zou Huiping
+Supervisors
+Zhao Dong
+Fan Gang
+Tang Min
+Andrew Y. Yan
+Jiang Xiaoming
+Independent non-executive directors
+Ma Yongsheng
+Jiao Fangzheng
+Notes:
+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
+2017
+Salaries,
+allowances
+and benefits
+in kind
+RMB'000
+487
+207
+-
+76
+537
+227
+RMB'000
+Li Yunpeng
+Wang Zhigang
+Total
+RMB'000
+Directors'/
+Retirement
+scheme
+contributions
+Bonuses
+RMB'000
+Company or
+its subsidiary
+undertaking
+as a director,
+whether of the
+Emoluments paid
+or receivable
+in respect of a
+person's services
+Supervisors' fee
+RMB'000
+- audit services
+- others
+Impairment losses:
+Liu Zhongyun (iii)
+Ling Yiqun (iii)
+Ma Yongsheng (i)
+Yu Baocai (ii)
+Li Yunpeng
+Dai Houliang (i)
+Directors
+Name
+The emoluments of every director and supervisor is set out below:
+(a) Directors' and supervisors' emoluments
+11 DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+Li Yong (iii)
+175
+Wang Zhigang (iv)
+Jiao Fangzheng (V)
+(ii) Weighted average number of shares (diluted)
+Weighted average number of shares at 31 December
+Weighted average number of shares (diluted) at 31 December
+2018
+RMB million
+61,618
+2017
+RMB million
+51,244
+61,618
+(2)
+51,242
+2018
+2017
+Number of shares Number of shares
+121,071,209,646
+121,071,209,646
+121,071,209,646
+121,071,209,646
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 179
+Financial Statements (International)
+Tang Min
+Independent non-executive directors
+Zhang Haichao (iv)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+(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:
+Tax effect of preferential tax rate (i)
+(5,939)
+(5,033)
+Tax effect of non-taxable income
+1,905
+2,351
+Tax effect of non-deductible expenses
+21,674
+24,778
+Expected PRC income tax expense at a statutory tax rate of 25%
+RMB million
+86,697
+RMB million
+99,110
+Profit before taxation
+2017
+2018
+(1,259)
+(793)
+Effect of income taxes at foreign operations
+77
+16,279
+20,213
+(72)
+(719)
+Actual income tax expense
+Adjustment of prior years
+26
+After tax effect of employee share option scheme of Shanghai Petrochemical
+Profit attributable to ordinary shareholders of the Company (diluted)
+188
+1,485
+609
+Tax effect of tax losses not recognised
+(613)
+(779)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+(1,394)
+Write-down of deferred tax assets
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+Profit attributable to ordinary shareholders of the Company
+The calculation of diluted earnings per share for the year ended 31 December 2018 is based on the profit attributable to ordinary shareholders of
+the Company (diluted) of RMB 61,618 million (2017: RMB 51,242 million) and the weighted average number of shares of 121,071,209,646 (2017:
+121,071,209,646) calculated as follows:
+transferred to the consolidated income statement
+730
+(130)
+600
+(575)
+72
+(503)
+Net movement during the year
+recognised in other comprehensive income(i)
+(11,770)
+2,029
+(9,741)
+(1,893)
+313
+(1,580)
+Reclassification adjustments for amounts
+Available-for-sale financial assets:
+(3)
+(4)
+Before tax
+amount
+RMB million
+Tax
+Net of tax
+effect
+RMB million
+amount
+RMB million
+Effective portion of changes in fair value
+of hedging instruments recognised during the year
+(12,500)
+2,159
+(10,341)
+(1,314)
+240
+(1,074)
+Amounts transferred to initial carrying
+amount of hedged items
+1
+Changes in fair value recognised
+during the year
+(57)
+3,399
+(3,792)
+Other comprehensive income
+(8,652)
+2,028
+(6,624)
+(4,689)
+313
+(57)
+1,053
+(3,792)
+(4,376)
+(i) As at 31 December 2018, cash flow hedge reserve amounted to a loss of RMB 4,932 million (31 December 2017: a loss of RMB 460 million), of
+which a loss of RMB 4,917 million was attribute to shareholders of the Company (31 December 2017: a loss of RMB 510 million).
+15 BASIC AND DILUTED EARNINGS PER SHARE
+The calculation of basic earnings per share for the year ended 31 December 2018 is based on the profit attributable to ordinary shareholders
+of the Company of RMB 61,618 million (2017: RMB 51,244 million) and the weighted average number of shares of 121,071,209,646 (2017:
+121,071,209,646) during the year.
+3,399
+Foreign currency translation differences
+1,053
+(229)
+(57)
+Changes in the fair value of instruments at fair value
+through other comprehensive income
+(41)
+(12)
+(53)
+Net movement during the year
+(i) Profit attributable to ordinary shareholders of the Company (diluted)
+recognised in other comprehensive income
+(12)
+(53)
+(57)
+Share of other comprehensive profit
+of associates and joint ventures
+(240)
+11
+(41)
+16,279
+20,213
+(10,317)
+Solvent oil
+Naphtha
+Diesel
+Gasoline
+Products
+(i) Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Note:
+Others
+Education surcharge
+Resources tax
+City construction tax (ii)
+Consumption tax (i)
+7 TAXES OTHER THAN INCOME TAX
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+174
+Lubricant oil
+Financial Statements (International)
+Fuel oil
+(ii) City construction tax is levied on an entity based on its total paid amount of value-added tax and consumption tax.
+18,237
+192,907
+RMB million
+RMB million
+201,901
+2017
+2018
+Others
+Gain on remeasurement of interests in the Shanghai SECCO (Note 36)
+Donations
+Fines, penalties and compensations
+Loss on disposal of property, plant, equipment and other non-currents assets, net
+Net realised and unrealised gain/(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 grant (i)
+8 OTHER OPERATING EXPENSE, NET
+Jet fuel oil
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 173
+74,854
+RMB million
+12,297
+2018
+59,723
+65,566
+793
+58,930
+64,503
+1,063
+RMB million
+RMB million
+2017
+2018
+6 PERSONNEL EXPENSES
+- accounts prepayments
+- other receivables
+- trade accounts receivable
+2017
+RMB million
+12,104
+94
+72
+8,981
+65,873
+68,425
+9,296
+77,721
+RMB million
+2017
+2018
+RMB million
+18,274
+Salaries, wages and other benefits
+Contributions to retirement schemes (Note 38)
+159
+9
+(51)
+642
+29
+25
+9
+2
+13,187
+13,811
+6,021
+6,368
+RMB million
+RMB million
+6,376
+2017
+2018
+Income tax expense in the consolidated income statement represents:
+10 INCOME 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
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(493)
+(723)
+5,883
+5,645
+(6,244)
+26,668
+(72)
+27,176
+(719)
+Deferred taxation (Note 28)
+- Adjustment of prior years
+- Provision for the year
+Current tax
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+RMB million
+2018
+RMB million
+2.37% to 4.41%
+2.37% to 4.66%
+7,146
+7,321
+1,501
+1,438
+2017
+Jiang Xiaoming (vi)
+(ii) Impairment losses on long-lived assets for the year ended 31 December 2018 primarily represent impairment losses recognised in the exploration and production
+("E&P") segment of RMB 4,274 million (2017: RMB 13,556 million), the chemicals segment of RMB 1,374 million (2017: RMB 4,922 million) and for the refining
+segment of RMB 353 million (2017: RMB 1,894 million), most of which are impairment losses on property, plant and equipment. The primary factor resulting in
+the E&P segment impairment loss was downward revision of oil and gas reserve in certain 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% (2017:
+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 312 million (2017: 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 315 million (2017: 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 less impairment loss on the Group's properties, plant and equipment relating to oil and gas producing activities by
+approximately RMB 5 million (2017: additional 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.
+Note:
+2017
+2018
+1,495.20
+1,218.00
+1,711.52
+1,948.64
+2,105.20
+1,411.20
+2,109.76
+Effective from
+13 January 2015
+RMB/Ton
+235,292
+246,498
+5,459
+7,152
+4,841
+RMB million
+RMB million
+7,539
+(1,978)
+4,893
+(16,554)
+(5,360)
+(649)
+(2,849)
+3,941
+(152)
+(180)
+(i) Government grants for the years ended 31 December 2018 and 2017 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.
+(89)
+(1,518)
+(1,526)
+(21,258)
+(6,281)
+(909)
+Tax
+effect
+(813)
+(276)
+Net of tax
+amount
+RMB million
+RMB million RMB million
+(935)
+(27)
+(569)
+(336)
+(96)
+44
+4
+(36)
+(84)
+(447)
+10,317
+582
+(1)
+(1,786)
+8,665
+Recognised in
+260
+Recognised
+117
+2,325
+1,925
+(215)
+9
+313
+8
+115
+(3,351)
+8,475
+287
+(8)
+(1,181)
+4,222
+2,477
+(135)
+(17)
+117
+Balance at
+consolidated
+in other
+Property, plant and equipment
+4,222
+2,650
+(130)
+19
+Tax losses carried forward
+2,325
+1,414
+6
+(36)
+Transferred
+from
+reserve
+RMB million
+31 December
+2018
+RMB million
+3
+2,029
+(10)
+115
+Cash flow hedges
+1 January
+2018
+income comprehensive
+statement
+income
+RMB million
+RMB million
+RMB million
+1,534
+Others
+RMB million
+381
+2,176
+3
+Payables
+1,925
+(117)
+-
+Receivables and inventories
+2,563
+391
+(1)
+474
+227
+(535)
+(563)
+Others
+174
+Deferred tax assets/(liabilities)
+25,403
+180
+19,470
+(428)
+(264)
+(9,657)
+(10,805)
+At 31 December 2018, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB 18,308 million
+(2017: RMB 20,821 million), of which RMB 2,437 million (2017: RMB 5,938 million) was incurred for the year ended 31 December 2018, because
+it was not probable that the future taxable profits will be realised. These deductible losses carried forward of RMB 2,373 million, RMB 3,887 million,
+RMB 3,673 million, RMB 5,938 million and RMB 2,437 will expire in 2019, 2020, 2021, 2022,2023 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 2018, write-down of deferred tax assets
+amounted to RMB 188 million (2017: RMB 26 million) (Note 10).
+(1)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+117
+117
+Deferred tax liabilities
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+Cash flow hedges
+1,131
+165
+Property, plant and equipment
+15,427
+14,150
+(27)
+(8,666)
+(50)
+(9,928)
+Tax losses carried forward
+3,709
+2,325
+Available-for-sale financial assets
+Financial assets at fair value through other comprehensive income
+Intangible assets
+187
+Financial Statements (International)
+Financial Statements (International)
+31 December
+statement
+income
+Others
+SECCO
+2017
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+87
+300
+(5)
+Balance at
+Acquisition of
+Shanghai
+income comprehensive
+in other
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+28 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+Movements in the deferred tax assets and liabilities are as follows:
+Receivables and inventories
+Payables
+Cash flow hedges
+381
+Property, plant and equipment
+Available-for-sale financial assets
+Intangible assets
+Others
+Net deferred tax (liabilities)/assets
+Recognised in
+Recognised
+Balance at
+1 January
+2017
+consolidated
+Tax losses carried forward
+1,808
+1
+(1,031)
+RMB denominated
+Interest rate and final maturity
+USD denominated
+Interest rates ranging from 1.08% to
+4.66% per annum at 31 December 2018
+with maturities through 2033
+Interest rates ranging from 1.55% to
+31 December
+2018
+RMB million
+31,025
+31 December
+2017
+RMB million
+25,644
+109
+192
+4.29% per annum at 31 December 2018
+with maturities through 2031
+31,134
+Third parties' debts
+Long-term bank loans
+25,836
+Long-term debts represent:
+for the year ended 31 December 2018
+22,780
+1,441
+22
+1,706
+19,668
+1,903
+4,361
+RMB denominated
+4,361
+20
+2,014
+2,014
+31,665
+25,311
+61,127
+80,649
+The Group's weighted average interest rates on short-term loans were 3.37% (2017: 2.72 %) at 31 December 2018. The above borrowings are
+unsecured.
+188
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+29 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+Corporate bonds (i)
+RMB denominated
+Fixed interest rates ranging from 3.70% to
+(23,934)
+51,011
+55,804
+46,877
+45,334
+(4,361)
+42,516
+93,527
+(2,014)
+43,320
+99,124
+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.
+Note:
+(i) These corporate bonds are carried at amortised cost. At 31 December 2018, RMB 11,951 million (2017: RMB 17,902 million) (USD denominated corporate bonds) are
+guaranteed by Sinopec Group Company.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+(12,074)
+79,738
+63,085
+53,902
+20,000
+36,000
+4.90% per annum at 31 December 2018
+with maturity through 2022
+USD denominated
+Fixed interest rates ranging from 3.13% to
+11,951
+Current portion of long-term loans
+17,902
+Total third parties' long-term debts
+Less: Current portion
+Long-term loans from Sinopec Group Company
+and fellow subsidiaries
+RMB denominated
+Less: Current portion
+Interest rates ranging from interest free to
+4.99% per annum at 31 December 2018
+with maturities through 2030
+31,951
+4.25% per annum at 31 December 2018
+with maturities through 2043
+Singapore Dollar ("SGD") denominated
+EUR denominated
+Hong Kong Dollar ("HKD") denominated
+(142)
+6,244
+(2)
+(26)
+(254)
+1,905
+(37)
+(1,031)
+15,746
+Short-term debts represent:
+29 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES
+31 December
+2018
+RMB million
+Third parties' debts
+Short-term bank loans
+RMB denominated
+8,665
+Net deferred tax assets/(liabilities)
+(84)
+Others
+1,104
+6,761
+3,709
+Balance at
+Available-for-sale financial assets
+117
+(117)
+US Dollar ("USD") denominated
+Financial assets at fair value through
+(1)
+Intangible assets
+(336)
+273
+117
+2
+116
+(61)
+other comprehensive income
+31 December
+2017
+RMB million
+381
+1,925
+Short-term other loans
+Current portion of long-term bank loans
+23
+22,532
+16,000
+6,532
+12,074
+23,934
+29,462
+55,338
+Loans from Sinopec Group Company and fellow subsidiaries
+Short-term loans
+27,304
+23,297
+RMB denominated
+3,061
+USD denominated
+35
+1,379
+12,039
+1,402
+RMB denominated
+USD denominated
+Current portion of long-term corporate bonds
+RMB denominated
+USD denominated
+17,088
+13,201
+RMB denominated
+31 December
+2017
+RMB million
+3,887
+7,420
+300
+299
+300
+299
+12,074
+31,105
+23,685
+Tax expense
+1,808
+2,563
+219
+(357)
+84,731
+75,728
+17,202
+14,226
+2,519
+2,076
+617
+2,027
+(154)
+(770)
+(31)
+(266)
+3,916
+(531)
+64
+(152)
+(544)
+Balance at 31 December
+Net book value:
+184
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+2018
+RMB million
+2017
+RMB million
+75,728
+68,467
+249
+2,614
+7,829
+4,151
+1,402
+3,987
+(2,603)
+(91)
+20,217
+17,202
+24,459
+21,989
+91,408
+81,982
+(i) Others mainly comprise prepaid operating lease charges and catalyst expenditures.
+The cost of operating rights of service stations is charged to expense on a straight-line basis over the respective periods of the rights. The movement
+of operating rights of service stations is as follows:
+Operating rights of service stations
+Cost:
+Balance at 1 January
+Additions
+Decreases
+Balance at 31 December
+Accumulated amortisation:
+Balance at 1 January
+Additions
+4,999
+5,502
+20,726
+26,513
+64,514
+58,526
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+22 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+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
+Exchange adjustments
+Others (i)
+Note:
+31 December
+2018
+RMB million
+34,934
+31 December
+2017
+RMB million
+34,268
+Balance at 31 December
+Decreases
+Disposals
+Transferred from other long-term assets
+605
+2,923
+3,834
+921
+25
+1,059
+(554)
+2,985
+5,278
+2,728
+3,414
+3,685
+1,169
+(759)
+51
+(1,818)
+2,923
+1,144
+3,414
+(1,699)
+(897)
+(1,151)
+(729)
+(553)
+(249)
+57
+(993)
+(1,279)
+Profit/(loss) for the year
+Other comprehensive income/(loss)
+Total comprehensive income/(loss)
+2,985
+5,278
+2,728
+2,764
+3,834
+Dividends declared by joint ventures
+1,200
+(208)
+The share of profit and other comprehensive loss for the year ended 31 December 2018 in all individually immaterial joint ventures accounted for
+using equity method in aggregate was RMB 2,052 million (2017: RMB 3,925 million) and RMB 839 million (2017: other comprehensive income
+RMB 994 million) respectively. As at 31 December 2018, the carrying amount of all individually immaterial joint ventures accounted for using equity
+method in aggregate was RMB 22,982 million (2017: RMB 21,552 million).
+21 LEASE PREPAYMENTS
+Cost:
+Balance at 1 January
+Additions
+Transferred from construction in progress
+Transferred from other long-term assets
+Reclassification to other assets
+Disposals
+Exchange adjustments
+Balance at 31 December
+Accumulated amortisation:
+Balance at 1 January
+Amortisation charge for the year
+397
+12
+435
+(loss) from joint ventures
+1,250
+1,226
+1,109
+1,375
+Share of net profit/(loss) from joint ventures
+1,493
+2,639
+Reclassification to other assets
+1,091
+1,307
+541
+(682)
+227
+1,462
+1,917
+Share of other comprehensive income/
+1,366
+Balance at 31 December
+Net book value at 31 December
+23 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
+7
+1
+Balance at 31 December
+606
+612
+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 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.
+Information about the impairment of trade accounts receivable and the Group's exposure to credit risk can be found in Note 41.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+26 INVENTORIES
+Crude oil and other raw materials
+Work in progress
+Finished goods
+Spare parts and consumables
+(21)
+Less: Allowance for diminution in value of inventories
+(19)
+(77)
+101
+64,879
+84,701
+Impairment losses for bad and doubtful debts are analysed as follows:
+2018
+RMB million
+2017
+RMB million
+Balance at 1 January
+Provision for the year
+Written back for the year
+Written off for the year
+Others
+612
+683
+83
+49
+(100)
+31 December
+2018
+RMB million
+31 December
+Value-added input tax to be deducted
+Prepaid income tax
+28 DEFERRED TAX ASSETS AND LIABILITIES
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+26,455
+5,937
+21,331
+300
+54,023
+17,704
+4,901
+17,926
+398
+40,929
+Deferred tax assets and deferred tax liabilities before offset are attributable to the items detailed in the table below:
+Deferred tax assets
+31 December
+2018
+RMB million
+Receivables and inventories
+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 2,366,199 million for the year ended
+31 December 2018 (2017: RMB 1,854,629 million). It includes the write-down of inventories of RMB 5,535 million mainly related to crude oil,
+finished goods and work in progress of refined oil products and chemical products (2017: RMB 436 million mainly related to the spare parts and
+consumables in refining segment and chemical segment).
+2017
+RMB million
+85,469
+85,975
+13,690
+14,774
+88,929
+85
+84,448
+2,651
+190,960
+187,848
+(6,376)
+(1,155)
+184,584
+186,693
+2,872
+43
+124
+573
+Structured deposit
+Equity investments, listed and at quoted market price
+31 December
+2018
+RMB million
+25,550
+182
+25,732
+31 December
+2017
+RMB million
+51,196
+51,196
+The financial assets are the structured deposit 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.
+24 DERIVATIVES FINANCIAL ASSETS AND DERIVATIVES FINANCIAL LIABILITIES
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and swaps. See Note 41.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+185
+Financial Statements (International)
+186
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+14,345
+34,268
+17,282
+34,934
+(28)
+(82)
+2018
+2017
+RMB million
+RMB million
+48,613
+36,908
+3,948
+25 TRADE ACCOUNTS RECEIVABLE AND BILLS RECEIVABLE
+11,837
+(132)
+52,216
+48,613
+14,345
+10,012
+3,019
+4,361
+(345)
+Payables
+31 December
+2018
+31 December
+7,886
+16,207
+64,879
+84,701
+The ageing analysis of trade accounts and bills receivables (net of impairment losses for bad and doubtful debts) is as follows:
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+Within one year
+Between one and two years
+Between two and three years
+Over three years
+64,317
+83,984
+353
+68,494
+56,993
+(612)
+(606)
+2017
+RMB million
+Amounts due from third parties
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from associates and joint ventures
+Less: Impairment losses for bad and doubtful debts
+Trade accounts receivable, net
+RMB million
+Bills receivable
+56,203
+3,170
+7,941
+4,321
+4,962
+57,599
+69,106
+50,108
+5,113
+Reclassification to lease prepayments and other long-term assets
+180
+British Virgin Islands The Republic of
+Kazakhstan
+Equity method
+Crude oil and natural gas
+extraction
+50.00
+coal-chemical products
+manufacturing of
+PRC
+PRC
+Equity method
+Mining coal and
+38.75
+("CIR") extraction
+Caspian Investments Resources Ltd.
+("Zhongtian Synergetic Energy")
+Company Limited
+Zhongtian Synergetic Energy
+petrochemical products
+Russia
+Russia
+Equity method
+Processing natural gas
+and manufacturing
+Pipeline Ltd
+10.00
+31 December
+RMB million
+20,719
+22,502
+161,187
+RMB million
+31 December
+2017
+31 December 31 December
+2017
+2018
+RMB million RMB million
+2018
+RMB million
+RMB million
+2017
+2018
+RMB million
+31 December
+31 December 31 December
+2017
+RMB million
+CIR
+SIBUR(i)
+Sinopec Finance
+Zhongtian Synergetic Energy
+31 December
+Summarised financial information and reconciliation to their carrying amounts in respect of the Group's principal associates:
+31 December 31 December
+2017
+2018
+RMB million RMB million
+209,837
+11,317
+12,498
+Current assets
+Non-current assets
+2018
+PAO SIBUR Holding ("SIBUR")
+PRC
+PRC
+181
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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 11.7% to 12.3% (2017: 10.8% to
+11.4%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no major impairment loss
+was recognised.
+8,634
+Other units without individually significant goodwill
+Sinopec (Hong Kong) Limited
+("Shanghai SECCO") (Note36)
+Sinopec Zhenhai Refining and Chemical Branch
+("Sinopec Zhenhai")
+8,676
+167
+167
+879
+921
+Trading of petrochemical products
+2,541
+2,541
+4,043
+4,043
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of petrochemical products
+Shanghai SECCO Petrochemical Company Limited
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+Equity method
+Provision of non-banking
+financial services
+("Sinopec Finance")
+49.00
+Sinopec Finance Company Limited
+pipelines and auxiliary
+facilities
+Pipeline Co., Ltd. ("Pipeline Ltd")
+of business
+PRC
+PRC
+Equity method
+7,477
+Operation of natural gas
+Sinopec Sichuan To East China Gas
+Principal place
+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.
+19 INTEREST IN ASSOCIATES
+50.00
+8,232
+6,712
+5,612
+23,886
+Carrying Amounts
+3,104
+3,453
+6,829
+7,266
+9,676
+11,086
+12,128
+12,476
+24,090
+23,886
+Share of net assets from associates
+571
+517
+non-controlling interests
+Net assets attributable to
+6,207
+6,906
+17,623
+18,750
+24,090
+12,476
+12,128
+11,086
+2017
+RMB million
+RMB million
+CIR
+Zhongtian Synergetic Energy
+SIBUR(i)
+2018
+2017
+RMB million
+Sinopec Finance
+2018
+RMB million
+RMB million
+RMB million
+2017
+96,761
+Pipeline Ltd
+2018
+Other comprehensive (loss)/income
+Total comprehensive income/(loss)
+Dividends declared by associates
+Share of profit/(loss) from associates
+Share of other comprehensive (loss) /
+Profit/(loss) for the year
+Turnover
+Year ended 31 December
+Summarised statement of comprehensive income
+3,104
+3,453
+6.829
+7,266
+9,676
+income from associates (ii)
+1,004
+110,860
+25,462
+(908)
+(961)
+(10,668)
+(7,252)
+(20,554)
+(23,293)
+(154,212)
+(200,402)
+(933)
+(1,020)
+Current liabilities
+1,673
+1,828
+51,553
+49,961
+158,938
+170,796
+17,782
+16,359
+40,972
+39,320
+Non-current liabilities
+(3,026)
+(3,176)
+(332)
+48,180
+47,772
+owners of the Company
+Net assets attributable to
+6,207
+6,906
+17,623
+18,750
+97,332
+111,377
+24,751
+24,751
+48,180
+47,772
+Net assets
+(170)
+(673)
+(31,494)
+(31,436)
+(61,771)
+(58,628)
+(6)
+25,462
+1,004
+Manufacturing of intermediate petrochemical
+products and petroleum products
+31 December
+2017
+RMB million
+Reclassifications
+19,836
+10,450
+8,832
+554
+Impairment losses for the year
+105,717
+46,585
+55,057
+4,075
+Depreciation for the year
+967,947
+483,814
+435,561
+48,572
+Balance at 1 January 2017
+Accumulated depreciation:
+1,783,260
+965,495
+695,724
+122,041
+(122)
+(77)
+199
+Reclassification to lease prepayments and other long-term assets
+495,817
+52,200
+Balance at 1 January 2018
+1,077,208
+529,191
+495,817
+52,200
+Balance at 31 December 2017
+(2,209)
+(96)
+Balance at 31 December 2018
+(2,056)
+Exchange adjustments
+(9,858)
+(9,079)
+(195)
+(584)
+Disposals
+(4,225)
+(2,682)
+(1,305)
+(238)
+(57)
+529,191
+2,387
+2,142
+940,312
+667,657
+120,013
+Balance at 1 January 2018
+1,727,982
+(2,912)
+(199)
+940,312
+667,657
+120,013
+Balance at 31 December 2017
+(2,573)
+(140)
+Exchange adjustments
+(12,074)
+(11,312)
+(8,751)
+(10,985)
+(211)
+(878)
+Disposals
+(1,702)
+(859)
+1,727,982
+Additions
+221
+1,567
+98
+Exchange adjustments
+(21,652)
+(18,323)
+(146)
+(3,183)
+Disposals
+(4,311)
+(3,828)
+(483)
+147
+Reclassification to lease prepayments and other long-term assets
+138
+1,634
+Reclassifications
+73,210
+45,103
+24,366
+3,741
+Transferred from construction in progress
+5,644
+3,856
+(1,772)
+2018
+RMB million
+1,077,208
+4,038
+(7,773)
+(10,066)
+(81,229)
+(73,210)
+(6,876)
+(6,921)
+85,552
+108,555
+129,581
+RMB million
+RMB million
+118,645
+2017
+2018
+Balance at 31 December
+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
+(28)
+(252)
+(19)
+(315)
+RMB million
+2018
+31 December
+Principal activities
+Sinopec Beijing Yanshan Petrochemical Branch
+("Sinopec Yanshan")
+8,634
+(7,861)
+16,495
+31 December
+2017
+RMB million
+(7,861)
+8,676
+Balance at 1 January
+RMB million
+16,537
+Goodwill is allocated to the following Group's cash-generating units:
+Impairment tests for cash-generating units containing goodwill
+Less: Accumulated impairment losses
+Cost
+18 GOODWILL
+As at 31 December 2018, the amount of capitalised cost of exploratory wells included in construction in progress related to the exploration and
+production segment was RMB 7,296 million (2017: RMB 9,737 million). The geological and geophysical costs paid during the year ended 31
+December 2018 were RMB 3,511 million (2017: RMB 3,710 million).
+118,645
+136,963
+(43)
+7
+31 December
+2018
+Depreciation for the year
+17 CONSTRUCTION IN PROGRESS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Balance at 31 December 2018
+78
+1,877
+43
+Exchange adjustments
+(570)
+(1,390)
+(16,331)
+(125)
+(1,795)
+Disposals
+(120)
+Reclassification to lease prepayments and other long-term assets
+76
+494
+Reclassifications
+1,848
+4,027
+274
+Impairment losses for the year
+99,904
+47,250
+48,616
+55,134
+550,288
+560,076
+6,149
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December 2018 and 31 December 2017, the Group had no individually significant fully depreciated fixed assets which were still in use.
+At 31 December 2018 and 31 December 2017, the Group had no individually significant fixed assets which were temporarily idle or pending for
+disposal.
+At 31 December 2018 and 31 December 2017, the Group had no individually significant fixed assets which were pledged.
+The additions to oil and gas properties of the Group for the year ended 31 December 2018 included RMB 1,567 million (2017: RMB 1,627 million)
+of estimated dismantlement costs for site restoration (Note 33).
+617,762
+405,419
+145,436
+66,907
+Balance at 31 December 2018
+for the year ended 31 December 2018
+650,774
+171,840
+67,813
+Balance at 31 December 2017
+690,594
+409,122
+215,124
+66,348
+Balance at 1 January 2017
+Net book value:
+(1,510)
+(18,251)
+1,998
+1,165,498
+411,121
+2017
+RMB million
+2018
+2017
+6,272
+8,226
+8,518
+Share of net assets from joint ventures
+282
+412
+(50)
+Net assets attributable to
+12,557
+16,118
+13,505
+12,746
+7,818
+11,373
+16,021
+15,681
+16,451
+17,035
+of the company
+Net assets attributable to owners
+12,557
+6,409
+5,573
+3,831
+4,780
+Summarised statement of comprehensive income
+20 INTEREST IN JOINT VENTURES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+183
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+6,279
+8,059
+16,118
+5,064
+3,831
+5,573
+6,409
+6,272
+8,226
+8,518
+Carrying Amounts
+6,279
+8,059
+5,064
+4,780
+Year ended 31 December
+13,505
+8,100
+(279)
+Other non-current liabilities
+(4,101)
+(3,651)
+(35,619)
+(32,364)
+(72)
+(72)
+(955)
+(218)
+(13,654)
+(12,454)
+Non-current financial liabilities
+Non-current liabilities
+(5,782)
+(3,007)
+(17,271)
+(17,023)
+(1,934)
+(2,183)
+(2,215)
+(236)
+(17)
+(19)
+(2,271)
+11,785
+16,021
+15,681
+16,451
+17,035
+Net assets
+(4,142)
+(3,982)
+(36,509)
+(33,301)
+12,746
+(2,758)
+(974)
+(235)
+(13,890)
+(12,733)
+Total non-current liabilities
+(41)
+(331)
+(890)
+(937)
+(2,686)
+(2,343)
+(2,547)
+FREP
+Taihu
+3,493
+4,565
+3,625
+6,977
+3,920
+Profit/(loss) before taxation
+(223)
+(167)
+(1,382)
+(1,382)
+(142)
+(151)
+(71)
+(43)
+(857)
+(647)
+Interest expense
+104
+169
+45
+101
+1,697
+(1,569)
+548
+(673)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+16 PROPERTY, PLANT AND EQUIPMENT
+Plants and
+buildings
+RMB million
+Oil and gas,
+properties
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+Cost:
+Balance at 1 January 2017
+114,920
+142
+Additions
+650,685
+1,627
+892,936
+11,983
+Transferred from construction in progress
+6,789
+19,881
+54,605
+Total
+RMB million
+1,658,541
+14,464
+81,275
+Reclassifications
+854
+BASF-YPC
+141
+41
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2017
+2018
+2017
+2018
+2017
+2018
+2017
+2018
+2017
+2018
+Sinopec SABIC Tianjin
+YASREF
+RMB million
+Turnover
+52,469
+49,356
+208
+157
+Interest income
+(36)
+(1,104)
+(2,763)
+(2,823)
+(715)
+(664)
+(1,793)
+36
+(1,521)
+(2,250)
+Depreciation, depletion and amortisation
+22,286
+23,501
+61,587
+77,561
+12,520
+14,944
+21,020
+21,574
+(16)
+723
+(6,184)
+Total current liabilities
+Principal activities
+interests
+Fujian Refining & Petrochemical
+Name of entity
+% of
+ownership
+The Group's principal interests in joint ventures are as follows:
+20 INTEREST IN JOINT VENTURES
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+182
+(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 2018 in all individually immaterial associates accounted for using
+equity method in aggregate was RMB 3,550 million (2017: RMB 3,182 million) and RMB 844 million (2017: other comprehensive income RMB 569
+million) respectively. As at 31 December 2018, the carrying amount of all individually immaterial associates accounted for using equity method in
+aggregate was RMB 31,370 million (2017: RMB 23,899 million).
+(167)
+- - 58
+(26)
+641
+(121)
+(77)
+(305)
+Measurement
+method
+Country of
+incorporation
+of business
+Principal place
+37.50
+Yanbu Aramco Sinopec Refining
+Russia
+Cyprus
+Equity method
+petrochemical products
+Crude oil and natural gas
+extraction
+49.00
+Taihu Limited ("Taihu")
+and distribution of
+PRC
+292
+PRC
+Manufacturing
+40.00
+BASF-YPC Company Limited
+("BASF-YPC")
+oil products
+Company Limited ("FREP")
+PRC
+PRC
+Equity method
+Manufacturing refining
+50.00
+Equity method
+Petroleum refining and
+48
+960
+583
+123
+1,142
+9,601
+10,400
+1,536
+1,868
+2,543
+2,022
+2,563
+2,856
+3,569
+12,235
+52,496
+59,927
+3,542
+4,536
+5,644
+4,746
+RMB million
+RMB million
+(610)
+(157)
+(246)
+6,410
+1,040
+753
+915
+1,272
+1,011
+221
+271
+490
+1,207
+(944)
+443
+699
+1,142
+9,341
+16,810
+1,290
+1,711
+2,543
+2,022
+(334)
+116
+(260)
+123
+(6,139)
+Equity method
+Saudi Arabia
+51,873
+7,978
+9,216
+12,075
+11,086
+19,740
+19,271
+Non-current assets
+9,233
+9,117
+15,732
+11,197
+4,814
+7,095
+7,135
+7,377
+16,785
+16,636
+Total current assets
+2,709
+4,007
+51,553
+13,990
+13,248
+Current liabilities
+(4,546)
+(2,507)
+(11,864)
+(12,217)
+(1,914)
+(2,124)
+(1,982)
+(1,822)
+(5,049)
+(4,939)
+10,816
+Other current liabilities
+(500)
+(5,407)
+(4,806)
+(20)
+(59)
+(233)
+(725)
+(1,135)
+(1,200)
+Current financial liabilities
+(1,236)
+Saudi Arabia
+10,267
+3,689
+31 December 31 December
+2017
+2018
+RMB million RMB million
+RMB million
+2018
+31 December
+Sinopec SABIC Tianjin
+YASREF
+Taihu
+BASF-YPC
+FREP
+PRC
+PRC
+Equity method
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+and distribution of
+petrochemical products
+Manufacturing
+("Sinopec SABIC Tianjin")
+Company Limited
+50.00
+Sinopec SABIC Tianjin Petrochemical
+processing business
+Company Ltd. ("YASREF")
+31 December 31 December
+2017
+2018
+RMB million RMB million
+31 December 31 December 31 December
+2017
+2018
+RMB million RMB million
+31 December
+31 December
+5,335
+5,795
+11,013
+9,248
+Other current assets
+6,524
+5,110
+4,916
+930
+2,352
+2,462
+3,406
+1,582
+5,772
+7,388
+Cash and cash equivalents
+Current assets
+RMB million
+RMB million
+2017
+2018
+2017
+RMB million
+1,800
+non-controlling interests
+Financial Statements (International)
+189
+7.4
+Consolidated subsidiaries
+9
+1,442
+149
+266
+6
+1,941
+131
+286
+China
+Dry
+Dry Productive
+Productive
+Dry
+Productive
+Development
+Exploratory
+Development
+Exploratory
+2017
+286
+131
+1,941
+6
+78
+115
+1
+740
+60
+137
+Others
+1
+845
+2018
+71
+5
+1,201
+71
+149
+Shengli
+9
+1,442
+149
+266
+151
+Wells drilled (as of 31 December)
+798
+777
+5,835
+6,997
+6,807
+31 December 17
+31 December 18
+Natural gas reserves (bcf)
+Exploration and Production Activities
+Others
+Fuling
+6,012
+Consolidated subsidiaries
+Proved undeveloped reserves
+Consolidated subsidiaries
+Equity accounted entities
+Overseas
+Others
+Puguang
+Fuling
+Consolidated subsidiaries
+China
+Proved developed reserves
+Proved reserves
+China
+5,822
+6,000
+5,822
+187
+195
+985
+972
+985
+972
+985
+972
+12
+13
+0
+0
+12
+13
+2,752
+2,769
+1,121
+1,149
+2,127
+1,904
+6,000
+597
+8
+Overseas
+0
+Others
+19
+0
+19
+72
+25
+72
+25
+Shengli
+44
+147
+147
+147
+62
+277
+69
+277
+69
+Consolidated subsidiaries
+62
+147
+62
+205
+44
+205
+69
+Total
+10
+0
+10
+0
+Equity accounted entities
+0
+0
+0
+0
+Consolidated subsidiaries
+0
+10
+0
+10
+0
+Overseas
+43
+147
+43
+62
+Items
+277
+277
+70
+0
+0
+Equity accounted entities.
+0
+0
+0
+0
+0
+0
+0
+0
+Consolidated subsidiaries
+0
+119
+1
+2
+0
+70
+0
+0
+2
+1
+119
+69
+China
+Exploratory Development
+Exploratory Development Exploratory Development Exploratory Development
+Net
+Gross
+Net
+Gross
+2017
+2018
+Wells drilling (as of 31 December)
+9
+1,561
+150
+268
+6
+2,011
+131
+286
+Total
+0
+69
+198303
+33
+38
+8.5
+Gasoline
+88,057
+83,933
+4.9
+7,870
+6,941
+13.4
+Diesel
+1,290
+84,630
+(4.7)
+5,996
+5,038
+19.0
+Kerosene
+25,787
+25,557
+0.9
+4,562
+88,848
+1,400
+LOKE
+BUSINESS REVIEW AND PROSPECTS
+1 MARKET REVIEW
+DTD BRENT
+DUBAI
+ICE BRENT
+WTH-NYMEX
+Trend of International Crude Oil Prices
+0
+10
+20
+30
+40
+40
+50
+60
+60
+70
+80
+90
+100
+US$/barrel
+In 2018, the global economic recovery was
+slow while China maintained an overall stable
+economic performance with its gross domestic
+product (GDP) up by 6.6%. International oil
+prices fluctuated in a wide range. Domestic
+demand for natural gas grew rapidly. Domestic
+oil products market saw fierce competition
+because of oversupply, and demand for
+chemicals increased steadily. Meanwhile,
+China's environmental regulations became
+more stringent. The Company actively coped
+with market changes by focusing on reform,
+management, innovation and development. We
+coordinated all aspects of our work by pressing
+ahead measures for optimised operation, market
+expansion, cost reduction, risk control, reform
+promotion, and management enforcement, which
+helped the company achieve solid operating
+results.
+BUSINESS REVIEW
+3,531
+(1) Crude Oil & Natural Gas Market
+In 2018, international crude oil prices
+fluctuated upward in the first three
+quarters, but slided rapidly in the fourth
+quarter. The spot price of Platt's Brent
+for the year averaged USD 71.03 per
+barrel, up by 31.1%. Along with the
+changes in China's energy mix, domestic
+demand for natural gas remained strong.
+Domestic apparent consumption of
+natural gas reached 280.3 billion cubic
+meters, up by 18.1% year on year.
+29.2
+40,520
+13.5
+Synthetic rubber
+1,114
+1,128
+(1.2)
+10,619
+11,913
+(10.9)
+Chemical fertiliser
+8,556
+794
+13.8
+2,096
+2,010
+4.3
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+19
+Management's Discussion
+and Analysis
+22,529
+698
+9,712
+0.8
+1,304
+35,964
+12.7
+5,488
+4,855
+13.0
+Monomer and polymer for synthetic fibre.
+11,127
+10,267
+8.4
+6,971
+6,038
+15.5
+Synthetic resin
+14,433
+13,199
+9.3
+8,634
+8,155
+5.9
+Synthetic fibre
+1,314
+Basic chemical feedstock
+287
+(2) Refined Oil Products Market
+(3) Chemical Products Market
+Domestic demand for chemicals kept
+strong momentum in 2018. Based on
+our statistics, domestic consumption
+of ethylene equivalent was up by 9.2%
+from the previous year, and the apparent
+consumption of synthetic resin, synthetic
+fibre and synthetic rubber rose by 7.7%,
+7.6% and 0.6%, respectively. Domestic
+chemical product prices followed the
+same trend with international chemical
+product prices.
+1,124
+1,244
+1,429
+1,533
+1,599
+1,666
+31 December 17
+31 December 18
+Crude oil reserves (mmbbls)
+1,244
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Consolidated subsidiaries
+Overseas
+Others
+Consolidated subsidiaries
+Shengli
+China
+Proved undeveloped reserves
+Equity accounted entities
+Consolidated subsidiaries
+Overseas
+Equity accounted entities
+1,124
+910
+811
+0
+33
+38
+88
+80
+49
+16
+137
+96
+137
+96
+170
+134
+273
+261
+32
+27
+305
+289
+313
+334
+Others
+In 2018, domestic demand for refined
+oil products maintained its growth while
+market supply was in surplus, which
+led to intense competition. According
+to statistics released by the NDRC, the
+apparent consumption of refined oil
+products (including gasoline, diesel and
+kerosene) was 325 million tonnes, up
+by 6.0% from the previous year, with
+gasoline up by 7.8%, kerosene up by
+8.4% and diesel up by 4.1%. Prices
+for domestic refined oil products were
+adjusted timely with the international oil
+prices. There were 24 price adjustments
+throughout the year with 13 increases
+and 11 decreases.
+Shengli
+China
+Overseas
+China
+Crude oil production (mmbbls)
+Oil and gas production (mmboe)
+Change from
+2017 to 2018(%)
+2016
+2017
+2018
+gas development, we constantly pushed
+forward capacity building in Hangjinqi
+of Neimongol, the eastern slope of west
+Sichuan Depression and Weirong shale
+gas fields. We optimised production
+and distribution and promoted a
+coordinated growth along the value
+chain. The Company's production of oil
+and gas reached 451.46 million barrels
+of oil equivalent, with domestic crude
+production registering 248.93 million
+barrels and natural gas production
+totaling 977.32 billion cubic feet, up by
+7.1%.
+451.46
+Summary of Operations for the Exploration and Production Segment
+In 2018, we pressed ahead with high-
+efficiency exploration and profit-oriented
+development. Measures were taken to
+accelerate the formation of an integrated
+value chain of natural gas business
+including production, supply, storage and
+marketing and continuously reduce cost
+and expenditure on all fronts. Tangible
+results were achieved in maintaining
+oil production, increasing gas output
+and reducing cost. We reinforced
+(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 2018
+preliminary exploration in new areas
+and strengthened integrated detailed
+evaluation in mature fields, which led
+to new discoveries in Tarim, Yin'e and
+Sichuan basins. The Company's newly
+added proved reserves in China reached
+458.2 million barrels of oil equivalent,
+with crude oil reserve replacement ratio
+at 131.7%. In crude oil development,
+we made a full-fledged push to build
+profitable production capacity, deepen
+the structural adjustment of mature
+fields, reduce natural decline rate and
+ensure steady production. In natural
+448.79
+431.29
+0.6
+Proved developed reserves
+Proved reserves
+Items
+Summary of Reserves of Crude Oil and Natural Gas
+7.1
+766.12
+912.50
+977.32
+Natural gas production (bcf)
+(11.6)
+50.36
+44.78
+39.58
+0.02
+253.15
+248.88
+248.93
+(1.8)
+303.51
+293.66
+288.51
+Consolidated subsidiaries
+69
+Dry Productive
+62
+(7) Capital Expenditures
+In 2018, the Company constantly
+promoted the HSSE management.
+We implemented the concept of
+"Comprehensive Health" by integrating
+the management of occupational,
+physical and mental health of our
+employees. The Company took stringent
+measures to control risks and supervise
+the safety and operations of contractors.
+We also strengthened safety measures
+at all levels, removing potential hazards
+and enhancing our emergency response
+capability, all acheived sound and reliable
+production and operation. Public security
+management capability was strengthened
+with improvement in risk evaluation,
+monitoring and early warning and
+emergency response mechanism. The
+green and low-carbon growth strategy
+was further carried out by promoting
+clean energy and green development,
+such as steadily pushing forward our
+Green Enterprise Campaign and Efficiency
+Doubling Plan. We accomplished all
+emission reduction targets by pursuing
+clean production and preventing
+pollutions. For more detailed information,
+please refer to "Communication on
+Progress for Sustainable Development
+2018 of Sinopec Crop".
+(6) Health, Safety, Security and Environment
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+16
+Business Review and Prospects
+15
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+In 2018, focusing on quality and
+profitability of investment, the Company
+continuously optimised its capital
+projects, with total capital expenditures
+of RMB 118 billion. Capital expenditure
+for the exploration and production
+segment was RMB 42.2 billion, mainly
+for Fuling and Weirong shale gas
+development projects, Hangjingi natural
+gas development project, Shengli and
+Northwest crude oil development projects,
+phase I of Xinjiang gas pipeline, phase I
+of Erdos-Anping-Cangzhou gas pipeline,
+Wen 23 and Jintan gas storages, as well
+as overseas projects. Capital expenditure
+zeolite synthesized by us, has been
+approved by the Structure Commission of
+International Zeolite Association, making
+us the first Chinese company to achieve
+a breakthrough in this area. In 2018, the
+Company had 6,074 patent applications
+at home and abroad, among which 4,434
+were granted. The Company also won
+one second prize of National Technology
+Invention and three second prizes of
+National Sci-tech Progress, four silver
+and four excellent prizes of National
+Patent Awards.
+(0.2)
+1,242
+(1.0)
+9,275
+9,439
+1,220
+1,218
+9,343
+5.7
+857
+well as the discovery of Weirong deep
+shale gas field. The pilot test of 185°C
+high temperature measurement while
+drilling was successfully conducted
+in the ultra-deep well in Shunbei. In
+refining, we realised the industrialisation
+of technologies including new sulfuric
+acid alkylation and hydro-isomerisation
+dewaxing for producing high grade
+base oil. In chemicals, the industrial
+demonstration unit of HPPO achieved
+stable operation and new products
+like PE film turned into commercial
+production. In addition, SOR, the
+framework type code of a novel structured
+for the refining segment was RMB 27.9
+billion, mainly for Zhongke Refining
+and Petrochemical project, Zhenhai,
+Tianjin, Maoming and Luoyang refineries,
+the gasoline and diesel GB VI quality
+upgrading projects and the construction
+of Rizhao-Puyang-Luoyang crude pipeline.
+Capital expenditure for the marketing
+and distribution segment was RMB
+21.4 billion, mainly for construction of
+oil products depots, pipelines, service
+stations, non-fuel business and the
+renovation of underground oil tanks to
+remove potential safety hazards. Capital
+expenditure for the chemicals segment
+was RMB 19.6 billion, mainly for ethylene
+projects in Zhongke, Zhenhai and Gulei,
+Phase II of Hainan high-efficiency and
+environmentally-friendly aromatics
+project, Sinopec-SABIC Polycarbonate
+project and Zhongan coal chemical
+project. Capital expenditure for corporate
+and others was RMB 6.9 billion, mainly
+for setting up the joint-venture of Sinopec
+Capital Company with Sinopec Group,
+R&D facilities and information technology
+projects.
+BUSINESS PROSPECTS
+(1) Market Outlook
+Year ended 31 December
+2018
+RMB million
+The following table sets forth the main revenue and expenses from the Company's consolidated financial statements:
+In 2018, the Company's turnover and other operating revenues was RMB 2,891.2 billion, increased by 22.5% compared with that of 2017. The
+operating profit was RMB 82.3 billion, representing a year on year increase of 15.1%.
+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
+17
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+In 2019, adhering to the concept of
+innovative, coordinated, green, open and
+share development, we will continue to
+consolidate development foundation,
+focus on long term strategies and push
+forward high-quality development in an
+all-round way to achieve sound results.
+Capital Expenditures, in 2019, we will
+further focus on investment quality and
+profitability through constantly optimising
+capital projects. Capital expenditures
+for the year are budgeted at RMB 136.3
+billion. Of which RMB 59.6 billion will be
+invested in exploration and production
+with focuses on the production capacity
+building of Shengli Oilfield, Northwest
+Oilfield, Leikou Slope in western Sichuan,
+Fuling Shale Gas Filed and Weirong Shale
+Gas Field, and the construction of natural
+gas pipelines and storage facilities as
+well as overseas oil and gas projects.
+The capital expenditure for refining will
+amount to RMB 27.9 billion which will
+be spent on the construction of Zhongke
+and Zhenhai Projects, and the refining
+structural adjustment projects of Tianjin,
+Maoming, Luoyang, Wuhan, Beihai and
+Yangzi. RMB 21.8 billion are budgeted for
+marketing and distribution with emphases
+on the construction of depots and storage
+facilities for refined oil products, pipelines
+and service stations, non-fuel business
+development, as well as renovation of
+underground oil storage tanks. The share
+for chemicals will be RMB 23.3 billion
+which will be used on Zhongke, Zhenhai,
+Gulei, Hainan and Wuhan, coal chemical
+projects of Bijie and Zhongan, and
+comprehensive resource utilisation and
+structural adjustment projects of Yangzi
+and SSTPC. The capital expenditure for
+corporate and others will reach RMB
+3.7 billion, mainly for R&D facilities and
+information technology projects.
+Research and Development, we
+I will continue to fully implement the
+innovation-driven development strategy,
+deepen the reform of scientific and
+technological systems, accelerate key
+technological breakthroughs, push
+ahead with frontier research on leading
+technologies, and step up the commercial
+application of technological achievement
+so as to strive for sustainable
+development in an all-round way. With
+the emphasis on constantly advancing
+oil and gas exploration and production
+technologies, we will focus on achieving
+breakthroughs in oil and gas exploration
+and production and resource evaluation
+technologies. In refining, more efforts will
+be made in making progress in refined oil
+product quality upgrading technologies,
+enhancing the technology development
+of self-owned refined oil product, and
+reinforcing the research on refinery total
+process optimisation technology. In
+chemicals, we will continue to improve
+the technological system for chemical
+products and strengthen development
+of high-value-added new materials.
+Technological breakthrough in safety and
+environmental protection will be stepped
+up. At the same time, prospective and
+basic research will be carried out on
+such leading and new areas including
+new energy, new materials, artificial
+intelligence and low-carbon so as to
+boost innovation.
+facilities and product chain, and improve
+the utilisation and production scheduling
+based on market demand. We will
+strengthen market analysis to actively
+expand market, thus increasing market
+shares. Meanwhile, advantages cultivation
+and production capacity building will be
+accelerated to produce high-end products
+and create more value. In 2019, we
+plan to produce 12.12 million tonnes of
+ethylene.
+Chemicals, we will further adjust
+feedstock mix, product slate and facilities
+structure to constantly strengthen
+competitiveness. The continuous
+feedstock mix optimisation will diversify
+feedstock procurement channels and
+reduce costs. More efforts will be
+made in adjusting product slate and
+coordinating production, marketing,
+research and application to raise the
+proportion of high-end products. We will
+enhance the dynamic optimisation of
+Marketing and Distribution, insisting the
+marketing strategy of balancing profits
+and sales volume, we will continue to
+optimise resources allocation, expand
+market, and increase operation profit.
+We will carry out targeted and differential
+marketing with customers at its core so
+as to constantly improve service quality.
+The marketing and distribution network
+will be further improved to amplify the
+existing advantages. We will accelerate
+the construction and operation of natural
+gas stations and expand natural gas
+market for automobiles. Substantial
+progress will be made in hydrogen
+refueling stations and charging and
+battery swap stations. We will explore
+the new business mode of "Internet +
+service stations + convenience stores +
+comprehensive services" to advance the
+development and marketing of self-owned
+brands and to advance the growth of non-
+fuel business. In 2019, we plan to sell
+182 million tonnes of refined oil products
+in the domestic market.
+The quality upgrading plan for new spec
+marine fuel oil will be implemented to
+raise capacity utilisation ratio. Marketing
+mechanisms will be improved to push up
+the total trading volume of other refined
+oil products. In 2019, we plan to process
+246 million tonnes of crude oil and
+produce 157 million tonnes of refined oil
+products.
+Business Review and Prospects
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Refining, with integrated planning, we will
+optimise crude oil allocation, reinforce
+inventory management, and push forward
+the high-efficiency operation of the
+refining value chain. Maintenance will be
+arranged according to market changes
+so as to achieve maximum overall profit.
+We will further optimise product mix
+by lowering diesel-to-gasoline ratio and
+increasing the production of gasoline,
+jet fuel and light chemical feedstock.
+In 2019, adhering to the general principle
+of seeking progress while maintaining
+stability, the new development philosophy
+and the operating guidelines of
+"specialised development, market-based
+operation, internationalisation and overall
+coordination". The following activities will
+be prioritized during the year.
+Exploration and Production, by
+fully implementing the action plan
+of redoubling efforts in oil and gas
+exploration and production, we will
+advance high-efficiency exploration,
+continuously increase proved reserves
+and expand resource base. In crude oil
+development, more efforts will be made
+in promoting the capacity building of
+the Tahe Oilfield, making technological
+breakthrough for undeveloped oil-bearing
+reservoirs, improving refined reservoir
+characterization of mature fields in order
+to increase reserve development rate and
+recovery rate. In natural gas development,
+we will accelerate the capacity
+construction of key projects, optimise the
+system of natural gas production, supply,
+storage and marketing as well as the
+market layout so as to foster coordinated
+development of the whole business value
+chain. In 2019, we plan to produce 288
+million barrels of crude oil, among which
+overseas production will be 39 million
+barrels, and 1,019.1 billion cubic feet of
+natural gas.
+(2) Operations
+Looking ahead to 2019, the international
+economy is expected to show a slower
+growth rate in the midst of a complex
+and uncertain global political and
+economic environment. Meanwhile,
+continued growth of China's economy
+will further drive up domestic demand
+for high-end refined oil products and
+petrochemicals. As the adjustment of
+China's energy mix deepens, demand
+for natural gas will continue to grow at
+a rapid pace. Considering uncertainties
+of supply capacity of major oil producing
+countries, global oil demand and
+geopolitical issues, etc., the international
+oil price is expected to fluctuate within a
+wide range.
+848
+2017
+RMB million
+896
+15,201
+30,633
+30,661
+30,655
+2016
+31 December
+31 December
+2017
+2018
+31 December
+Summary of Operations for the Chemicals Segment
+In 2018, the Company sticked to the
+development philosophy of "basic plus
+high-end" to enhance effective supply. We
+persistently fine-tuned chemical feedstock
+mix to lower cost. We optimised products
+slate and increased high-end products
+output. The ratio of new and specialty
+products in synthetic resin reached
+30,603
+(4) Chemicals
+previous year to
+the end of the
+reporting period
+the end of the
+Change from
+0.3
+3,926
+3,969
+3,979
+4.3
+52.56
+Total number of service stations under the Sinopec brand
+Number of company-operated stations
+30,627
+30,597
+64.3%, the ratio of high-value-added
+products in synthetic rubber amounted
+to 26.3%, and our differential ratio
+of synthetic fibre reached 90.4%. By
+optimising utilisation rate and production
+plan based on market demand, we
+improved the operation of chemical
+units. To reinforce the capacity structural
+adjustment, we actively promoted
+15,938
+15,923
+(0.8)
+Change from
+2017 to 2018 (%)
+2016
+11,059
+2017
+11,610
+11,512
+2018
+In 2018, with the emphasis on reinforcing
+innovation-driven strategy, the Company
+accomplished notable results in R&D,
+deepened reform of R&D mechanism
+and pushed ahead with efforts in key
+and frontier technologies. In upstream
+segment, further advancement in
+evaluation technology of buried hill
+bedrock and deep carbonate reservoir
+and fracturing technology of deep shale
+gas field brought the breakthroughs in
+the exploration of Guaizihu Depression
+in Yin'e Basin and new series of strata
+in Maokou Formation in Yuanba area as
+(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
+Unit: thousand tonnes
+several key projects. Annual ethylene
+production was 11.51 million tonnes. The
+Company also intensified its efforts to
+enhance the efficiency of the integration
+among production, marketing, R&D, and
+application as well as promoted targeted
+marketing and servicing to further
+expand our business, with total chemical
+sales volume increased by 10.3% to 86.6
+million tonnes, hitting a record high.
+0.1
+0.1
+(%)
+(0.1)
+Change (%)
+Turnover and other operating revenues
+2,891,179
+51,244
+61,618
+Shareholders of the Company
+Attributable to:
+12.0
+70,418
+78,897
+Profit for the year
+24.2
+20.2
+(16,279)
+Income tax expense
+14.3
+86,697
+99,110
+Profit before taxation
+(5.6)
+16,787
+15,845
+Investment income and share of profits less losses from associates and joint ventures
+(20,213)
+Non-controlling interests
+17,279
+19,174
+24,197
+Natural gas (million cubic meters)
+29.7
+2,390
+3,100
+0.4
+6,567
+6,595
+Crude oil
+Change (%)
+2017
+2018
+Change (%)
+2017
+2018
+Average realised price
+(RMB/tonne, RMB/thousand cubic meters
+Year ended 31 December
+Sales volume (thousand tonnes)
+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 2018 and 2017:
+In 2018, the Company's turnover was RMB 2,825.6 billion, representing an increase of 22.8% over 2017. This was mainly attributed to the
+prices increase of major products. Meanwhile, sales volume also increased as a result of the Company's efforts in bringing our advantages
+in distribution network into full play, constantly promoting targeted marketing, optimising allocation of internal and external resources and
+reinforcing market expansion.
+(1) Turnover and other operating revenues
+(9.9)
+(164.2)
+(1,560)
+1,001
+Net finance costs
+(64,973)
+(65,642)
+Selling, general and administrative expenses
+29.5
+(1,770,651)
+(2,292,983)
+Purchased crude oil, product and operating supplies and expenses
+22.7
+(2,288,723)
+(2,808,915)
+Operating expenses
+9.8
+59,723
+65,566
+Other operating revenues
+22.8
+2,300,470
+2,825,613
+Turnover
+22.5
+2,360,193
+1.0
+56.20
+Depreciation, depletion and amortisation
+(115,310)
+15.1
+71,470
+82,264
+Operating profit
+(67.6)
+(16,554)
+(5,360)
+287
+4.8
+(235,292)
+(246,498)
+Taxes other than income tax
+3.8
+(74,854)
+(77,721)
+Personnel expenses
+(3.1)
+(11,089)
+(10,744)
+Exploration expenses, including dry holes
+(4.6)
+(109,967)
+58.61
+Other operating expense, net
+0.1
+5,068
+Net
+Gross
+Net
+Gross
+Region
+China
+2017
+2018
+Natural gas productive wells (as of 31 December)
+5,028
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+14
+Business Review and Prospects
+13
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+54,089
+3,954
+7,322
+57,471
+3,925
+54,969
+58,323
+Business Review and Prospects
+4,800
+4,762
+Consolidated subsidiaries
+5,068
+Total
+4,439
+4,477
+4,602
+4,642
+Others
+266
+266
+368
+368
+Fuling
+57
+57
+58
+58
+Puguang
+4,762
+4,800
+5,028
+5,068
+Total
+5,028
+7,265
+14
+51,030
+51,030
+China
+Net
+Gross
+Net
+Gross
+2017
+Oil productive wells (as of 31 December)
+2018
+50,121
+152
+0
+5
+147
+0
+230002
+62
+5052
+2000
+Direct sales and distribution (million tonnes).
+Annual average throughput per station (tonne/station)
+5
+50,121
+Consolidated subsidiaries
+51,030
+28
+14
+28
+Consolidated subsidiaries
+3,968
+7,350
+3,939
+7,293
+Overseas
+18,016
+18,016
+18,225
+18,225
+Others
+32,105
+32,105
+32,805
+Shengli
+50,121
+50,121
+51,030
+Equity accounted entities
+4,800
+32,805
+Acreage with exploration licenses
+94.88
+94.93
+76.33
+75.85
+76.00
+(0.2)
+38.54
+38.60
+38.52
+94.70
+7.6
+26.88
+28.91
+(3.1)
+67.34
+66.76
+64.72
+7.2
+56.36
+57.03
+25.47
+0.15 percentage points
+0.05 percentage points
+achieved sustained growth in both total
+domestic sales volume and retail scale.
+We adopted a flexible and targeted
+marketing strategy and upgraded our
+distribution network to further strengthen
+our existing advantages. We proactively
+promoted vehicle natural gas business
+and accelerated the construction and
+operation of CNG stations. Total sales
+volume of refined oil products for the
+year was 198 million tonnes, of which
+domestic sales volume accounted for
+180 million tonnes. Meanwhile, we
+strengthened development and marketing
+of self-owned brands to speed up the
+growth of non-fuel business.
+120.14
+4,762
+121.56
+121.64
+Retail sales (million tonnes)
+1.4
+172.70
+177.76
+180.24
+Total domestic sales volume of oil products (million tonnes)
+(0.2)
+194.84
+198.75
+198.32
+Total sales volume of oil products (million tonnes)
+2017 to 2018 (%)
+2017
+2018
+Change from
+Summary of Operations for the Marketing and Distribution Segment
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+61.16
+2.7
+2016
+150.67
+We proactively promoted structural
+adjustment and quality upgrading
+projects, the GB VI standard upgrading
+is completed successfully. We moderately
+increased the export of oil products to
+keep a relatively high utilisation rate.
+Optimisation of resources allocation
+Summary of Operations for the Refining Segment
+In 2018, with market-oriented approach,
+we optimised product mix to produce
+more gasoline, jet fuel and chemical
+feedstock, production of high value-
+added products further increased, and
+diesel-to-gasoline ratio declined to 1.06.
+(2) Refining
+5,106
+31,498
+36,604
+621,529
+621,529
+2017
+5,106
+36,748
+525,269
+525,269
+2018
+Area under license (as of 31 December)
+Unit: Square kilometers
+China
+Overseas
+149.17
+Acreage with development licenses
+China
+were carried out to reduce crude oil
+cost. In 2018, the Company processed
+244 million tonnes of crude oil, up by
+2.3% and produced 155 million tonnes
+of refined oil products, up by 2.7%, with
+gasoline up by 7.2% and kerosene up by
+7.6% year on year.
+Unit: million tonnes
+31,643
+Refinery throughput
+235.53
+2.3
+Change from
+154.79
+238.50
+244.01
+2017 to 2018 (%)
+2017
+2018
+competition, the Company aimed
+to achieve a balance between sales
+volume and profits. We brought our
+advantages of integrated business
+and distribution network into full play,
+and increased marketing efforts, thus,
+In 2018, confronted with fierce market
+2016
+Note: Includes 100% of the production from domestic joint ventures.
+Gasoline, diesel and kerosene production
+Gasoline
+Diesel
+(3) Marketing and Distribution
+Light chemical feedstock production
+Kerosene
+Light product yield (%)
+Refinery yield (%)
+205
+RMB million
+79
+83
+852
+33
+32
+28
+28
+28
+380
+28
+RMB million
+882
+Others
+1,258
+12,168
+5,033
+2017
+7,197
+RMB million
+RMB million
+1,400
+31 December
+2017
+Joint ventures
+Associates(ii)
+At 31 December 2018 and 2017, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+Contingent liabilities
+35 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+31 December
+2018
+31 December
+257,122
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+31 December
+352,794
+202,806
+281,287
+10,428
+13,494
+2018
+RMB million
+10,552
+10,730
+13,986
+11,492
+940
+13,520
+9,732
+14,668
+11,114
+13,734
+31 December
+2018
+141,045
+54,392
+195,437
+Between four and five years
+Thereafter
+Between three and four years
+Between two and three years
+Between one and two years
+Within one year
+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 2018 (2017: RMB 308 million).
+Estimated future annual payments are as follows:
+31 December
+2017
+RMB million
+120,386
+57,997
+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.
+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 RMB 5,553 million (2017: RMB 3,364 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.
+178,383
+Exploration and production licenses
+24,398
+and other payables
+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 reliabily estimable. At 31 December 2018 and 2017, 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.
+Property, plant and equipment, net
+Lease prepayments
+Intangible assets
+Construction in progress
+Long-term prepaid expenses
+Deferred tax assets
+Total non-current assets
+Total assets
+Trade
+Advances received
+Employee benefits payable
+Tax payable
+Total current liabilities
+Deferred tax liabilities (Note 28)
+Net assets acquired
+Goodwill
+5,653
+641
+23,547
+15,625
+12,883
+11
+117
+231
+Total current assets
+1,017
+9,587
+10,664
+761
+1,349
+558
+1,702
+1,920
+24,192
+Other current assets
+Trade and other receivables
+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. At 31
+December 2018, the amount withdrawn by Zhongtian Synergetic Energy and guaranteed by the Group was RMB 12,168 million (2017: RMB 13,520 million).
+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 7,940 million in the consolidated financial statements for the year
+ended 31 December 2018 (2017: RMB 7,851 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+193
+Financial Statements (International)
+194
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+36 BUSINESS COMBINATION
+For the year ended 31 December 2018, significant business combination didn't occur in the Group.
+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.
+Inventories
+Bills receivable
+Cash and cash equivalents
+The assets and liabilities recognised as a result of the acquisition are as follows:
+Acquisition Date
+RMB million
+Fair value at the
+Prepayments
+20,270
+10,135
+RMB million
+- Cash consideration for the purchase of 50% equity interest acquired
+Acquisition-date fair value of the 50% equity interest held before the acquisition
+Total purchase consideration
+Acquisition Date (26 October 2017)
+Purchase consideration:
+Shanghai SECCO is principally engaged in the production and sale of petrochemical products including acrylonitrile, polystyrene, polyethylene, etc.
+Based on the purchase price allocation performed, details of the purchase consideration, the net assets acquired and goodwill are as follows:
+10,135
+RMB million
+Salaries and welfare payable
+31 December
+2017
+3,270
+192,757
+206,535
+31 CONTRACT LIABILITIES
+As at 31 December 2018, the Group's contract liabilities primarily represent advances from customers. Related performance obligations are
+satisfied and revenue is recognised within one year.
+As at 1 January 2018, the Group's contract liabilities was RMB 120,734 million, of which RMB 119,138 million was recognised as revenue in 2018.
+32 OTHER PAYABLES
+Interest payable
+Payables for constructions
+Other payables
+Taxes other than income tax
+Financial liabilities carried at amortised costs
+Receipts in advance (Note 1 (a))
+33 PROVISIONS
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+276,582
+166,151
+120,734
+58,925
+80,361
+96,923
+3,324
+85,790
+22,852
+60,010
+54,992
+723
+7,162
+7,312
+634
+29,028
+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:
+8,076
+182,763
+6,670
+(2,115)
+Financial Statements (International)
+190
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+30 TRADE ACCOUNTS PAYABLE AND BILLS PAYABLE
+Amounts due to third parties
+Amounts due to Sinopec Group Company and fellow subsidiaries
+Amounts due to associates and joint ventures
+Bills payable
+Trade accounts and bills payables measured at amortised cost
+The ageing analysis of trade accounts and bills payables are as follows:
+31 December
+2018
+RMB million
+170,818
+31 December
+2017
+RMB million
+RMB million
+Between 1 month and 6 months
+Over 6 months
+Within 1 month or on demand
+31 December
+2017
+6,462
+206,535
+RMB million
+195,189
+31 December
+2018
+186,341
+6,416
+192,757
+9,499
+6,381
+9,142
+13,350
+177,224
+200,073
+RMB million
+Balance at 1 January
+Accretion expenses
+Utilised for the year
+Exchange adjustments
+Balance at 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.
+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
+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.
+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 2018, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 11.5% (2017: 12.0
+%) and 46.2% (2017: 46.5 %), respectively.
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 29 and 35, 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 2018
+191
+Financial Statements (International)
+Financial Statements (International)
+192
+31 December
+2018
+Authorised and contracted for (i)
+Authorised but not contracted for
+At 31 December 2018 and 2017, the capital commitments of the Group are as follows:
+Capital commitments
+Between four and five years
+Thereafter
+Between three and four years
+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.
+Between one and two years
+Between two and three years
+At 31 December 2018 and 2017, the future minimum lease payments of the Group 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
+35 COMMITMENTS AND CONTINGENT LIABILITIES
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Within one year
+Provision for the year
+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.
+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.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+2018
+2017
+RMB million
+39,407
+1,567
+RMB million
+36,918
+1,627
+1,438
+1,501
+(598)
+(467)
+193
+(172)
+42,007
+39,407
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+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
+25,513
+121,071
+25,513
+95,558
+95,558
+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.
+RMB million
+2017
+31 December
+31 December
+2018
+95,557,771,046 listed A shares (2017: 95,557,771,046) of RMB 1.00 each
+25,513,438,600 listed H shares (2017: 25,513,438,600) of RMB 1.00 each
+Registered, issued and fully paid
+34 SHARE CAPITAL
+RMB million
+(383)
+Short-term loans and current portion of long-term loans from Sinopec Group Company
+(1,438)
+sales and purchases of goods and ancillary materials;
+• rendering and receiving services;
+•
+lease of assets;
+• depositing and borrowing money; and
+•
+uses of public utilities.
+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 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 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 2018 were RMB 9,296 million (2017: RMB
+8,981 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.
+2017
+RMB million
+RMB million
+2018
+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, long-term debts,
+loans from Sinopec Group Company and fellow subsidiaries, income tax payable, deferred tax liabilities and other unallocated liabilities.
+Information of the Group's reportable segments is as follows:
+The Group's chief operating decision maker evaluates the performance and allocates resources to its operating segments on an operating profit
+basis, without considering the effects of finance costs or investment income. Inter-segment transfer pricing is based on the market price or cost
+plus an appropriate margin, as specified by the Group's policy.
+(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 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.
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+198
+(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.
+39 SEGMENT REPORTING (Continued)
+Turnover
+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:
+(d) Transactions with other state-controlled entities in the PRC
+20,990
+12,470
+10,165
+31,665
+25,311
+42,516
+43,320
+125,614
+123,890
+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.
+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.
+As at and for the year ended 31 December 2018, and as at and for the year ended 31 December 2017, 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
+2018
+RMB'000
+5,745
+351
+2017
+37 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+197
+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").
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+(c) Contributions to defined contribution retirement plans
+5,768
+6,096
+424
+5,344
+RMB'000
+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 2018 and 2017, the accrual for the contribution to
+post-employment benefit plans was not material.
+18,160
+Exploration and production
+Inter-segment sales
+440,303
+1,367,060
+Elimination of inter-segment sales
+(1,934,372)
+973,411
+(1,445,955)
+Turnover
+2,825,613
+2,300,470
+Other operating revenues
+Exploration and production
+10,738
+10,533
+Refining
+5,389
+5,104
+Marketing and distribution
+32,424
+(96)
+Financial Statements (International)
+199
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+1,439
+59,723
+2,360,193
+2,891,179
+650,271
+1,523
+Other operating revenues
+Corporate and others
+14,314
+15,492
+Chemicals
+28,333
+Turnover and other operating revenues
+External sales
+Inter-segment sales
+716,789
+Refining
+External sales
+Inter-segment sales
+Marketing and distribution
+External sales
+Inter-segment sales
+Chemicals
+External sales
+Inter-segment sales
+Corporate and others
+93,499
+69,168
+95,954
+77,804
+189,453
+146,972
+148,930
+External sales
+423,429
+531,241
+49,615
+373,814
+457,406
+73,835
+533,108
+3,962
+1,195,864
+1,408,989
+5,224
+1,414,213
+1,006,749
+1,258,018
+874,271
+1,109,088
+132,478
+1,191,902
+3,273
+65,566
+17,530
+192,224
+2017
+RMB million
+244,211
+165,993
+(iii)
+7,319
+7,716
+(iv)
+23,489
+21,210
+(v)
+28,472
+20,824
+(vi)
+6,664
+6,653
+(vii)
+7,765
+8,015
+1,110
+(x)
+807
+848
+(ix)
+127
+(ii)
+113
+626
+869
+(vii)
+510
+521
+(vii)
+(viii)
+554
+RMB million
+272,789
+2018
+(4,032)
+24,104
+(1,786)
+17,729
+The goodwill is attributable to the high profitability of the acquired business and synergy to be achieved post the Transaction among Shanghai
+SECCO and the Group's existing petrochemical operations located in eastern China.
+As of Acquisition Date, a gain of RMB 3,941 million was recognised as a result of remeasuring the 50% equity interest held before the Transaction
+to its fair value, which is included in other operating (expense)/income in the Group's consolidated income statement for the year ended 31
+December 2017.
+Shanghai SECCO contributed revenue of RMB 5,222 million and net profit of RMB 726 million to the Group for the period from the Acquisition Date
+to 31 December 2017.
+If the acquisition had occurred on 1 January 2017, consolidated pro-forma revenue and profit for the year ended 31 December 2017 would have
+been RMB 2,365,632 million and RMB 74,930 million respectively. These amounts have been calculated using the subsidiary's results and adjusting
+them for the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to property, plant and
+equipment and intangible assets had applied from 1 January 2017, together with the consequential tax effects.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+37 RELATED PARTY TRANSACTIONS
+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
+Note
+Net funds obtained from related parties
+Net deposits withdrawn from/(placed with) related parties
+Interest expense
+Interest income
+Agency commission income
+(i)
+Other operating lease charges
+Operating lease charges for land
+Ancillary and social services
+Production related services
+Exploration and development services
+Transportation and storage
+Purchases
+Operating lease charges for buildings
+(ix)
+2,541
+6,457
+(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.
+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 August 24, 2018,
+which took effect on January 1, 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.,. The memorandum was effective since January 1, 2019. Sinopec Group Company agreed to lease 410 million square
+meters of land to the Company, and to adjust the total fee of land to about RMB 14 billion, according to the newly confirmed area of leasing
+land and the situation of land market.
+Financial Statements (International)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+37 RELATED PARTY TRANSACTIONS (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+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
+Prepaid expenses and other current assets
+Long-term prepayments and other assets
+Total
+(3) where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+Trade accounts payable and bills payable
+Contract liabilities
+Other long-term liabilities
+39,533
+and fellow subsidiaries
+Long-term loans excluding current portion from Sinopec Group Company and fellow subsidiaries
+Total
+31 December
+2018
+31 December
+2017
+RMB million
+RMB million
+7,555
+13,174
+7,665
+5,633
+20,726
+(xi)
+Other payables
+(2) where there is no government-prescribed price, the government-guidance price;
+23,482
+•
+(7,441)
+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;
+31.684
+19,661
+The amounts set out in the table above in respect of the year ended 31 December 2018 and 2017 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 2018 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB 140,570 million (2017: RMB 128,863 million) comprising purchases of products and
+services (i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB 123,772
+million (2017: RMB 112,619 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB 6,664
+million (2017: RMB 6,652 million), operating lease charges for land, buildings and others paid by the Group of RMB 7,765 million, RMB 521
+million and RMB 738 million (2017: RMB 8,015 million, RMB 510 million and RMB 513 million), respectively and interest expenses of RMB
+1,110 million (2017: RMB 554 million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB 59,472
+million (2017: RMB 60,045 million), comprising RMB 58,606 million (2017: RMB 59,213 million) for sales of goods, RMB 848 million (2017:
+RMB 807 million) for interest income and RMB 18 million (2017: RMB 25 million) for agency commission income.
+At 31 December 2018 and 2017, 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 35.
+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.
+(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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+195
+38,702
+196
+Financial Statements (International)
+•
+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 2018.
+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.
+•
+•
+(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 2018 was RMB 41,057 million (2017: RMB 47,514 million).
+(x) Interest expense represents interest charges on the loans obtained from Sinopec Group Company and fellow subsidiaries.
+(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, and property maintenance.
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+37 RELATED PARTY TRANSACTIONS (Continued)
+for the year ended 31 December 2018
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(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.
+(1,093)
+(1,551)
+(158)
+43
+(16,499)
+(3,507)
+243
+(5,419)
+(3,676)
+(32,084)
+financing activities
+(2,590)
+525
+1,224
+Net increase/(decrease) in cash and cash
+equivalents
+1,080
+(1,199) 2,144
+790
+2,070
+(134)
+(491)
+(165)
+68
+(390)
+7,206
+734
+(70)
+(631)
+Net cash (used in)/generated from
+(215)
+(3,099)
+Net cash generated from/ (used in)
+operating activities
+Cash and cash equivalents at 1 January
+24,825
+51,038
+3,467
+2.758
+6,659
+7,061
+38
+(558)
+738
+38
+968
+(2,415)
+88
+1,639
+3,308
+Net cash generated from/(used in)
+investing activities
+8,339 (35,738)
+4,096
+(2,211)
+(1,928)
+(2,401)
+225
+648
+193
+(480)
+5,567
+3.766
+2.976
+8,742
+14,373
+6,817
+7,205
+798
+64
+(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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 203
+Financial Statements (International)
+204
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
+Overview
+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, derivative financial assets, bills receivable, trade accounts receivable, amounts due from Sinopec Group Company
+and fellow subsidiaries, amounts due from associates and joint ventures, financial assets at fair value through other comprehensive income and
+other receivables. Financial liabilities of the Group include short-term debts, loans from Sinopec Group Company and fellow subsidiaries, derivative
+financial liabilities, bills payable, trade accounts payable, amounts due to Sinopec Group Company and fellow subsidiaries, other payables and long-
+term debts.
+The Group has exposure to the following risks from its uses of financial instruments:
+343
+credit 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
+(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 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 2018, 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, 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.
+(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 receivables 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 receivables, the group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
+expected loss allowance for all trade accounts receivables.
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+To measure the expected credit losses, trade accounts receivables 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 month before 31 December 2018 or 1 January 2018,
+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.
+⚫ liquidity risk; and
+12,921
+198
+92
+3,605
+3,045
+7,504
+5,441
+226
+717
+343
+289
+7,205
+64
+134
+Effect of foreign currency exchange rate changes
+141
+(253)
+226
+244
+14
+(7)
+-
+20
+(14)
+2
+(1)
+-
+Cash and cash equivalents at 31 December
+14,142
+12.921
+5,993
+3,605
+7,504
+(230)
+RMB million RMB million RMB million RMB million RMB million RMB million
+22,589
+2018
+RMB million
+RMB million
+RMB million
+RMB million RMB million
+RMB million
+RMB million
+Turnover
+1,443,698
+1,221,530
+5,037
+6,136
+107,689
+91,962
+5.261
+6,068
+1,398
+1,498
+26,320
+5,222
+Profit for the year
+22,046
+27,520
+3,272
+1,075
+5,336
+6,154
+1,576
+2,726
+1,065
+RMB million
+RMB million
+RMB million
+RMB million RMB million RMB million
+4.930
+The detailed analysis of trade accounts receivables, based on which the Group generated its payment profile is listed in note 25.
+4,085
+3,788
+5,802
+5.989
+4,560
+3,941
+Summarised consolidated statement of comprehensive income
+Year ended 31 December
+Marketing Company
+2018
+SIPL
+2017
+2018
+1,046
+2017
+Fujian Petrochemical
+Sinopec Kantons
+Shanghai SECCO (ii)
+Zhonghan Wuhan
+2017
+2018
+2017
+2018
+2017
+2018
+2017
+2018
+2017
+RMB million
+Shanghai Petrochemical
+2018
+3,099
+Total comprehensive income
+26,986
+Dividends paid to non-controlling interests
+3.964
+9,544
+1,616
+1.344
+600
+625
+104
+70
+1.191
+Summarised statement of cash flows
+Year ended 31 December
+Marketing Company
+2018
+956
+2017
+Shanghai Petrochemical
+Fujian Petrochemical
+2018
+2017
+2018
+2017
+2018
+2017
+Sinopec Kantons
+2018
+2017
+Shanghai SECCO (ii)
+2018
+2017
+Zhonghan Wuhan
+SIPL
+2017
+658
+1,004
+4.536
+396
+5.336
+6,153
+1,576
+2,726
+1,067
+1.146
+3,099
+222
+17,134
+16,139
+726
+1.879
+235
+2,730
+1,879
+2,730
+Comprehensive income/(loss) attributable to
+non-controlling interests
+7,794
+9,033
+2,737
+(38)
+2.645
+3,052
+788
+1,363
+399
+433
+726
+All of the entity's other receivables (Note 25) 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.
+As at 31 December 2018, 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 424 million (2017: decrease/increase by approximately
+RMB 450 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 2017.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+- Derivative financial assets
+874
+7,013
+7,887
+Financial assets at fair value through other comprehensive income:
+Equity investments
+127
+1,183
+7,013
+1,323
+26,873
+1,450
+35,069
+Liabilities
+Derivative financial liabilities:
+-
+- Derivative financial liabilities
+5,500
+8,071
+5,500
+8,071
+13,571
+13,571
+At 31 December 2017
+Assets
+Financial assets at fair value through profit or loss:
+- Structured deposit
+Available-for-sale financial assets:
+- Listed
+Derivative financial assets:
+- Derivative financial assets
+Derivative financial assets:
+182
+182
+Equity investments, listed and at quoted market price
+Commodity price risk
+The Group engages in oil and gas operations and is exposed to commodity price risk related to price volatility of crude oil, refined oil products and
+chemical products. The fluctuations in prices of crude oil, refined oil products and chemical products could have significant impact on the Group.
+The Group uses derivative financial instruments, including commodity futures and swaps, to manage a portion of this risk.
+As at 31 December 2018, 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 2018, the fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB 7,844 million (2017: RMB 515 million) and derivative financial liabilities of RMB 13,568 million (2017: RMB 2,624
+million).
+As at 31 December 2018, 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 197 million (2017: decrease/increase RMB 4,049 million), and increase/decrease the Group's other
+reserves by approximately RMB 6,850 million (2017: decrease/increase RMB 701 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 2017.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Fair values
+(i) Financial instruments carried at fair value
+The following table presents the carrying value of financial instruments measured at fair value at the balance sheet date across the three levels
+of the fair value hierarchy defined in IFRS 7, ‘Financial Instruments: Disclosures', with the fair value of each financial instrument categorised in
+its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined as follows:
+•
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+Liabilities
+.
+•
+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 2018
+Assets
+Financial assets at fair value through profit or loss:
+Level 1
+Level 2
+Level 3
+RMB million
+RMB million
+RMB million
+Total
+RMB million
+- Structured deposit
+25,550
+25,550
+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.
+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.
+Derivative financial liabilities:
+Level 1
+Fair value
+31 December
+2018
+RMB million
+63,085
+62,656
+31 December
+2017
+RMB million
+79,738
+78,040
+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.
+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 2018 and 2017.
+42 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 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+42 ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+Oil and gas properties and reserves
+The accounting for the exploration and production's oil and gas activities is subject to accounting rules that are unique to the oil and gas industry.
+There are two methods to account for oil and gas business activities, the successful efforts method and the full cost method. The Group has elected
+to use the successful efforts method. The successful efforts method reflects the volatility that is inherent in exploring for mineral resources in that
+costs of unsuccessful exploratory efforts are charged to expense as they are incurred. These costs primarily include dry hole costs, seismic costs
+and other exploratory costs. Under the full cost method, these costs are capitalised and written-off or depreciated over time.
+Engineering estimates of the Group's oil and gas reserves are inherently imprecise and represent only approximate amounts because of the
+subjective judgements involved in developing such information. There are authoritative guidelines regarding the engineering criteria that have to be
+met before estimated oil and gas reserves can be designated as "proved". Proved and proved developed reserves estimates are updated at least
+annually and take into account recent production and technical information about each field. In addition, as prices and cost levels change from
+year to year, the estimate of proved and proved developed reserves also changes. This change is considered a change in estimate for accounting
+purposes and is reflected on a prospective basis in relation to depreciation rates. Oil and gas reserves have a direct impact on the assessment of
+the recoverability of the carrying amounts of oil and gas properties reported in the financial statements. If proved reserves estimates are revised
+downwards, earnings could be affected by changes in depreciation expense or an immediate write-down of the property's carrying amount.
+Future dismantlement costs for oil and gas properties are estimated with reference to engineering estimates after taking into consideration the
+anticipated method of dismantlement required in accordance with industry practices in similar geographic area, including estimation of economic
+life of oil and gas properties, technology and price level. The present values of these estimated future dismantlement costs are capitalised as oil and
+gas properties with equivalent amounts recognised as provisions for dismantlement costs.
+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.
+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.
+43 PARENT AND ULTIMATE HOLDING COMPANY
+The directors consider the parent and ultimate holding company of the Group as at 31 December 2018 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 2018 209
+Financial Statements (International)
+5,761
+Carrying amount
+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 2.76% to
+4.90% (2017: 1.79% 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 2018 and 2017:
+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.
+(ii) Fair values of financial instruments carried at other than fair value
+Level 2
+RMB million
+RMB million
+Level 3
+RMB million
+Total
+RMB million
+51,196
+51,196
+178
+178
+343
+183
+526
+521
+183
+· Derivative financial liabilities
+51,196
+1,277
+1,277
+1,388
+1,388
+2,665
+2,665
+During the years ended 31 December 2018 and 2017, 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 structural deposits classified as Level 3 financial assets.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+207
+Financial Statements (International)
+208
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Fair values (Continued)
+51,900
+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.
+50
+13,571
+13,571
+Trade accounts payable and bills payable
+192,757
+192,757
+192,757
+Other payables
+85,790
+85,790
+85,790
+446,772
+459,257
+356,257
+54,915
+30,931
+17,154
+31 December 2017
+Total
+contractual
+Carrying
+amount
+undiscounted
+1
+Within
+year or
+More than 1
+RMB million
+RMB million
+cash flow
+on demand
+RMB million
+year but less
+than 2 years
+RMB million
+13,571
+Derivatives financial liabilities
+1,362
+3,741
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+41 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 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.
+At 31 December 2018, the Group has standby credit facilities with several PRC financial institutions which provide borrowings up to RMB 387,748
+million (2017: RMB 361,852 million) on an unsecured basis, at a weighted average interest rate of 3.87% per annum (2017: 3.40%). At 31
+December 2018, the Group's outstanding borrowings under these facilities were RMB 21,236 million (2017: RMB 56,567 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:
+Total
+contractual
+31 December 2018
+Carrying undiscounted
+amount cash flow
+RMB million RMB million
+Short-term debts
+Long-term debts
+Loans from Sinopec Group Company and
+More than 2
+years but less
+than 5 years
+RMB million
+fellow subsidiaries
+30,123
+51,011
+61,809
+Within
+1 year or
+on demand
+RMB million
+30,123
+1,889
+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
+16,938
+27,190
+15,792
+74,181
+75,207
+32,127
+37,977
+29,462
+More than
+5 years
+RMB million
+Short-term debts
+205
+Financial Statements (International)
+Financial Statements (International)
+206
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+41 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Market risk
+Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates. The objective of market risk management is
+to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
+Currency risk
+Currency risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured. The
+Group's currency risk exposure primarily relates to short-term and long-term debts and loans from Sinopec Group Company and fellow subsidiaries
+denominated in USD. The Group enters into foreign exchange contracts to manage its currency risk exposure.
+Included in short-term and long-term debts and loans from Sinopec Group Company and fellow subsidiaries of the Group are the following amounts
+denominated in a currency other than the functional currency of the entity to which they relate:
+Gross exposure arising from loans
+USD
+31 December
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+2018
+668
+31 December
+2017
+million
+204
+A 5 percent strengthening/weakening of RMB against the following currencies at 31 December 2018 and 2017 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 2017.
+USD
+31 December
+2018
+million
+172
+31 December
+2017
+million
+million
+Financial Statements (International)
+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.
+71,323
+55,338
+56,562
+Long-term debts
+55,804
+66,202
+56,562
+2,166
+14,477
+32,316
+17,243
+Loans from Sinopec Group Company and fellow
+subsidiaries
+68,631
+68,950
+25,504
+4,439
+17,243
+39,007
+2,665
+2,665
+2,665
+Trade accounts payable and bills payable
+206,535
+206,535
+206,535
+Other payables
+96,923
+485,896
+96,923
+96,923
+497,837
+390,355
+18,916
+Derivatives financial liabilities
+14,262
+RMB million
+15,215
+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
+(2) Geographical information
+2018
+2017
+RMB million
+RMB million
+42,155
+31,344
+27,908
+21,075
+21,429
+21,539
+19,578
+23,028
+6,906
+2,398
+117,976
+Chemicals
+Marketing and distribution
+Refining
+Exploration and production
+Total segment liabilities
+539,144
+518,172
+Short-term debts
+29,462
+55,338
+Income tax payable
+6,699
+13,015
+Long-term debts
+51,011
+55,804
+Loans from Sinopec Group Company and fellow subsidiaries
+Deferred tax liabilities
+74,181
+99,384
+68,631
+6,466
+Other unallocated liabilities
+29,328
+25,188
+Total liabilities
+735,773
+742,614
+200
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+39 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Capital expenditure
+5,948
+117,781
+60,331
+18,164
+RMB million
+989,668
+50,892
+1,040,560
+332,479
+2,360,193
+31 December
+2017
+RMB million
+979,329
+48,572
+1,027,901
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+201
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+40 PRINCIPAL SUBSIDIARIES
+At 31 December 2018, 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
+Interests
+held by the
+(million)
+RMB 22,761
+Company %
+100.00
+Sinopec Yangzi Petrochemical Company
+RMB 15,651
+100.00
+Limited
+Sinopec Pipeline Storage & Transportation
+RMB 12,000
+100.00
+Company Limited
+Sinopec Overseas Investment Holding
+2018
+31 December
+2,119,580
+395,129
+376,470
+2,891,179
+1,758,365
+269,349
+18,408
+16,296
+15,463
+13,379
+12,873
+1,797
+1,723
+109,967
+115,310
+4,274
+13,556
+353
+1,894
+264
+66,843
+675
+4,922
+16
+6,281
+211
+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
+Others
+Non-current assets
+Mainland China
+Others
+2018
+RMB million
+2017
+RMB million
+1,374
+144,216
+35,293
+37,413
+(1,655)
+82,264
+71,470
+2,598
+1,449
+109
+989
+3,155
+2,945
+- Chemicals
+6,298
+9,621
+Corporate and others
+1,814
+1,521
+Aggregate share of profits from associates and joint ventures
+13,974
+16,525
+Investment (losses)/income
+- Exploration and production
+(3)
+40
+- Refining
+- Marketing and distribution
+- Chemicals
+Corporate and others
+Aggregate investment income
+Net finance costs
+Profit before taxation
+(3,634)
+(4,484)
+(9,293)
+26,977
+15,168
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+39 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+2018
+RMB million
+2017
+RMB million
+Result
+Operating (loss)/profit
+By segment
+- Exploration and production
+- Refining
+315
+- Marketing and distribution
+- Corporate and others
+Elimination
+Total segment operating profit
+Share of profits from associates and joint ventures
+- Exploration and production
+- Refining
+- Marketing and distribution
+(10,107)
+(45,944)
+54,827
+65,007
+23,464
+31,569
+27,007
+- Chemicals
+28
+43
+90
+1,254,771
+Interest in associates and joint ventures
+145,721
+131,087
+Available-for-sale financial assets
+1,676
+Financial assets at fair value through other comprehensive income
+1,450
+Deferred tax assets
+21,694
+15,131
+Cash and cash equivalents, time deposits with financial institutions
+Other unallocated assets
+167,015
+165,004
+1,220,347
+36,081
+Total assets
+1,592,308
+1,595,504
+Liabilities
+Segment liabilities
+- Exploration and production
+- Refining
+94,170
+103,809
+99,568
+101,429
+- Marketing and distribution
+159,536
+164,101
+- Chemicals
+27,835
+USD 1,662
+170,045
+158,472
+596
+86
+920
+18
+1,871
+262
+1,001
+99,110
+(1,560)
+86,697
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+152,799
+Assets
+-
+- Exploration and production
+- Refining
+- Marketing and distribution
+- Chemicals
+- Corporate and others
+Total segment assets
+321,686
+343,404
+271,356
+273,123
+317,641
+309,727
+156,865
+Segment assets
+100.00
+- Corporate and others
+Sinopec International Petroleum Exploration
+(13,913)
+(10,922)
+(50)
+(376)
+(3,722)
+(2,351) (2,233) (4,174)
+(2,333)
+(3,975)
+Net current (liabilities)/ assets
+(50,905) (56,126) 16,248
+12,437
+11,386
+8,944
+766
+616
+(2,513)
+(1,155)
+13
+7,304
+7,428
+417
+(2,339)
+Non-current assets
+261,062
+253,455
+38,020
+34,769
+19,577
+11,444
+(7,118)
+(483)
+(212,620)
+(181,766)
+2017
+2018
+2017
+RMB million
+Current assets
+130,861
+RMB million
+156,494
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+9.925
+16,731
+25,299
+19,866
+816
+992
+1,209
+1,196
+RMB million
+9,537
+RMB million
+RMB million
+RMB million
+11,602
+2,750
+1,636
+Current liabilities
+19,555
+2018
+12,895
+12,301 12,797
+28,515
+11,522
+9,860
+10,250
+9,504
+17,907
+18,485
+13,029
+11,259
+Attributable to owners of the Company
+141,244
+132,549
+5,266
+3,468
+15.295
+14,253
+5,761
+4,930
+6,165
+5,716
+12,105
+12,496
+8,469
+7,318
+Attributable to non-controlling interests
+66,827
+Limited ("SOIH")
+17,952
+63,006
+30,463
+18,683
+23.218
+195.555
+12.612
+13.598
+Non-current liabilities
+(2,086) (1,774)
+(31,050)
+(28,523)
+(10)
+(6)
+(688)
+(681)
+(132)
+(2,430)
+(1,698)
+(1,740)
+13,089
+Net non-current assets
+6.970
+6,246
+19,077
+19,571
+10,756
+9,244
+12,763
+10,659
+10,603
+11,057
+12.612
+13,598
+Net assets
+208,071
+258,976 251,681
+2017
+19,087
+RMB 3,986
+15.00
+Sinopec Hainan Refining and Chemical
+75.00
+25.00
+Company Limited
+Interests held
+by non-
+controlling
+interests %
+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 of overseas business
+Investment in exploration, production
+and sale of petroleum and natural gas
+Production and sale of polyester
+85.00
+chips and polyester fibres
+Production and sale of refined
+oil, and petrochemical materials
+Trading of crude oil and
+Manufacturing of intermediate 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
+Manufacturing of intermediate petrochemical
+products and petroleum products
+products and petroleum products
+Manufacturing of intermediate petrochemical
+Sinopec Marketing Co. Limited
+RMB 28,403
+70.42
+petroleum products, lubricant base
+29.58
+RMB 5,000
+Limited Liability Company
+RMB 8,000
+100.00
+and Production Limited ("SIPL")
+2018
+Sinopec Yizheng Chemical Fibre Limited
+RMB 4,000
+100.00
+Liability Company
+Sinopec Lubricant Company Limited
+RMB 3,374
+100.00
+China International United Petroleum and
+Chemical Company Limited
+RMB 3,000
+100.00
+Sinopec Qingdao Refining and Chemical
+Company Limited
+Sinopec Qingdao Petrochemical Company
+Limited
+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
+RMB 5,294
+98.98
+1.02
+RMB 1,595
+("Marketing Company")
+petrochemical products
+Shanghai SECCO Petrochemical Company
+202
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+40 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
+At
+At
+SIPL
+At
+Marketing and distribution of refined petroleum
+products
+Shanghai Petrochemical
+At
+At
+Fujian Petrochemical
+At
+At
+2017
+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
+2018
+2018
+2017
+2018
+2017
+Financial Statements (International)
+2018
+At
+Zhonghan Wuhan
+At
+At
+Shanghai SECCO
+At
+At
+Sinopec Kantons
+At
+2017
+50.00
+At
+45.00
+RMB 7,801
+67.60
+49.56
+32.40
+Production and sale of petrochemical products
+Limited ("Shanghai SECCO") (Note 36)
+Sinopec-SK (Wuhan) Petrochemical
+RMB 6,270
+65.00
+Company Limited ("Zhonghan Wuhan")
+Sinopec Kantons Holdings Limited
+("Sinopec Kantons")
+HKD 248
+Gaoqiao Petrochemical Company Limited
+RMB 10,000
+55.00
+Sinopec Shanghai Petrochemical Company
+Limited ("Shanghai Petrochemical")
+60.33
+50.44
+39.67
+RMB 10,824
+(i) The Group consolidated the financial statements of the entity because it is exposed to, or has rights to, variable returns from its involvement with the entity and has
+the ability to affect those returns through its power over the entity.
+Note:
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong respectively, all of the above principal subsidiaries are
+incorporated and operate their businesses principally in the PRC. All of the above principal subsidiaries are limited companies.
+products and petroleum products
+intermediate petrochemical
+35.00
+Production, sale, research and development
+of ethylene and downstream byproducts
+Provision of crude oil jetty services and
+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
+50.00
+RMB 8,140
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical") (i)
+Manufacturing of plastics,
+13
+(3)
+=
+12
+2223m
+│| || | || | || || ||
+23
+(3)
+18
+-
+(2)
+222 33
+33
+13
+23
+273
+13
+23
+12
+13
+|| | || | || | || | ||
+296
+12
+8
+20
+(30)
+306
+33
+12
+273
+12
+33
+11,149
+23
+Extensions and discoveries
+Production
+23
+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
+|||||||||||||
+| | |
+306
+38
+296
+12
+4
+8
+5
+20
+(28)
+(30)
+299
+306
+273
+273
+261
+273
+33
+12
+| | |
+639,336
+(292,789)
+(2)
+End of year
+6,806
+6,793
+13
+6,997
+6,985
+12
+216
+Annual Report 2018 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
+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 for oil and gas during the twelve-month period before the ending date of the period covered by the report to year-end
+quantities of estimated net proved reserves. Future price changes are limited to those provided by contractual arrangements in existence at the end
+of each reporting year. Future development and production costs are those estimated future expenditures necessary to develop and produce year-end
+estimated proved reserves based on year-end cost indices, assuming continuation of year-end economic conditions. Estimated future income taxes
+are calculated by applying appropriate year-end statutory tax rates to estimated future pre-tax net cash flows, less the tax basis of related assets.
+Discounted future net cash flows are calculated using 10% discount factors. This discounting requires a year-by-year estimate of when the future
+expenditure will be incurred and when the reserves will be produced.
+The information provided does not represent management's estimate of the Group's and its equity method investments' expected future cash flows or
+value of proved oil and gas reserves. Estimates of proved reserve quantities are imprecise and change over time as new information becomes available.
+Moreover, probable and possible reserves, which may become proved in the future, are excluded from the calculations. The arbitrary valuation requires
+assumptions as to the timing and amount of future development and production costs. The calculations are made for the years ended 31 December
+2018 and 2017 and should not be relied upon as an indication of the Group's and its equity method investments' future cash flows or value of its oil
+and gas reserves.
+Total
+China
+2018
+RMB million
+Other
+countries
+Total
+China
+2017
+RMB million
+Other
+countries
+The Group
+Future cash flows
+Future production costs
+868,058
+(381,893)
+854,563
+13,495
+(376,532)
+(5,361)
+Improved recovery
+628,187
+18
+7,160
+7,178
+12
+(4)
+(4)
+12
+12
+18
+12
+82
+18
+12
+Proved developed and undeveloped reserves
+(oil) (million barrels)
+Beginning of year
+1,599
+1,261
+18
+338
+1,216
+336
+End of year
+1,666
+1,339
+327
+1,599
+1,261
+338
+Proved developed and undeveloped reserves
+(gas) (billion cubic feet)
+Beginning of year
+6,997
+6,985
+1,552
+Revisions of previous estimates
+Non-controlling interest in proved developed and
+(billion cubic feet)
+137
+Proved developed and undeveloped
+reserves (gas) (billion cubic feet)
+Beginning of year
+6,985
+6,985
+7,160
+7,160
+Revisions of previous estimates
+(40)
+(40)
+(107)
+(107)
+Improved recovery
+137
+142
+72
+72
+Extensions and discoveries
+680
+680
+769
+769
+Production
+(974)
+(974)
+(909)
+(909)
+End of year
+6,793
+142
+1
+95
+96
+(287,914)
+1,293
+1,261
+32
+undeveloped reserves at the end of year
+12
+12
+14
+14
+Proved developed reserves
+Beginning of year
+1,156
+1,124
+32
+1,120
+1,080
+40
+End of year
+136
+136
+137
+137
+Beginning of year
+6,793
+Proved undeveloped reserves
+1,124
+1,156
+27
+1,244
+1,271
+End of year
+32
+Beginning of year
+6,985
+Proved developed reserves
+Total
+China
+countries
+Equity method investments
+Proved developed and undeveloped reserves of
+associates and joint ventures (oil) (million barrels)
+Beginning of year
+306
+Revisions of previous estimates
+12
+Beginning of year
+Improved recovery
+Extensions and discoveries
+Production
+Other
+End of year
+End of year
+Proved undeveloped reserves
+4
+5
+(28)
+299
+273
+261
+Beginning of year
+33
+38
+End of year
+Proved developed and undeveloped reserves of
+associates and joint ventures (gas)
+Proved developed reserves
+Other
+countries
+China
+Total
+Beginning of year
+6,000
+6,000
+6,436
+6,436
+End of year
+5,822
+5,822
+6,000
+6,000
+Proved undeveloped reserves
+Beginning of year
+985
+985
+724
+End of year
+971
+2017
+2018
+Table IV: Reserve quantities information (Continued)
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+Financial Statements
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+6,985
+Gas Producing Activities (Unaudited)
+Financial Statements
+215
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+724
+985
+985
+971
+Supplemental Information on Oil and
+(4,875)
+Postcode: 100020
+(22,310)
+REPRESENTATIVE ON SECURITIES MATTERS
+Mr. Zheng Baomin
+REGISTERED ADDRESS AND PLACE OF
+BUSINESS
+No.22 Chaoyangmen North Street,
+Chaoyang District
+Beijing, PRC
+Postcode
+Tel.
+Fax
+Website
+E-mail addresses
+: 100728
+: 86-10-59960028
+: 86-10-59960386
+: http://www.sinopec.com/
+listco/
+Mr. Huang Wensheng
+:ir@sinopec.com
+20th Floor, Office Tower
+Convention Plaza
+1 Harbour Road
+Wanchai
+Hong Kong
+INFORMATION DISCLOSURE AND PLACES FOR
+COPIES OF RELATIVE REPORTS
+No change during the reporting period
+Hong Kong:
+Herbert Smith Freehills
+23rd Floor, Gloucester Tower
+15 Queen's Road
+Central, Hong Kong
+U.S.A.:
+PLACE OF BUSINESS IN HONG KONG
+Skadden, Arps, Slate, Meagher & Flom LLP
+SECRETARY TO THE BOARD
+Mr. Ma Yongsheng
+1,620
+2,479
+(196)
+(856)
+341
+1,205
+818
+688
+272
+206
+1,196
+967
+(366)
+(621)
+Mr. Huang Wensheng
+684
+71,809
+17,309
+CORPORATE INFORMATION
+STATUTORY NAME
+中国石油化工股份有限公司
+ENGLISH NAME
+China Petroleum & Chemical Corporation
+CHINESE ABBREVIATION
+中国石化
+ENGLISH ABBREVIATION
+Sinopec Corp.
+LEGAL REPRESENTATIVE
+Mr. Dai Houliang
+AUTHORISED REPRESENTATIVES
+2,364
+30/F, China World Office 2
+No. 1, Jian Guo Men Wai Avenue,
+Beijing, PRC
+Hong Kong Stock Exchange
+Stock code
+ADRs:
+: 00386
+New York Stock Exchange
+Stock code : SNP
+London Stock Exchange
+Stock code
+: SNP
+NAMES AND ADDRESSES OF AUDITORS OF
+SINOPEC CORP.
+Domestic Auditors: PricewaterhouseCoopers
+Address
+Overseas Auditors
+Address
+Zhong Tian LLP
+11th Floor
+PricewaterhouseCoopers,
+2 Corporate Avenue,
+202 Hu Bin Road,
+Huangpu District,
+H Shares:
+Shanghai, PRC 200021
+PricewaterhouseCoopers
+Prince's Building,
+Central, Hong Kong
+LEGAL ADVISORS
+People's Republic of China:
+Haiwen & Partners
+20th Floor, Fortune Financial Centre
+No. 5, Dong San Huan Central Road
+Chaoyang District
+Beijing PRC
+28
+The UK:
+Citibank, N.A.
+Citigroup Centre
+Canada Square, Canary Wharf
+London E14 5LB, U.K.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+: 22nd Floor,
+: 600028
+Stock code
+SINOPEC CORP
+REGISTRARS
+A Shares:
+China Securities Registration and Clearing
+Company Limited Shanghai Branch Company
+36th Floor, China Insurance Building
+166 Lujiazui East Road
+Shanghai, PRC
+H Shares:
+Hong Kong Registrars Limited
+R1712 1716, 17th Floor, Hopewell Centre
+183 Queen's Road East
+Hong Kong
+DEPOSITARY FOR ADRS
+The US:
+Citibank, N.A.
+388 Greenwich St., 14th Floor
+New York NY 10013
+United States of America
+COPIES OF THIS ANNUAL REPORT ARE
+AVAILABLE AT
+The PRC:
+China Petroleum & Chemical Corporation
+Stock name
+Shanghai Stock Exchange
+A Shares:
+NAMES AND STOCK CODES
+PLACES OF LISTING OF SHARES, STOCK
+USA
+(1,704)
+New York NY 10013
+Citibank, N.A.
+The US:
+Beijing, PRC
+Chaoyang District
+No.22 Chaoyangmen North Street,
+Board Secretariat
+388 Greenwich St., 14th Floor
+Future development costs
+(3,001)
+71,125
+Discounted future net cash flows attributable
+to non-controlling interests
+1,239
+1,239
+112
+112
+Equity method investments
+Future cash flows
+48,778
+Future production costs
+(12,462)
+48,778
+(12,462)
+43,587
+43,587
+248
+(12,131)
+Future development costs
+(4,433)
+(4,433)
+(4,692)
+(4,692)
+Future income tax expenses
+(5,632)
+(5,632)
+(4,406)
+(4,406)
+Undiscounted future net cash flows
+26,251
+26,251
+22,358
+(12,131)
+22,358
+222,844
+2,754
+(19,300)
+(3,010)
+(24,999)
+(20,314)
+(4,685)
+Future income tax expenses
+(42,728)
+(40,651)
+(2,077)
+(1,374)
+(1,374)
+Undiscounted future net cash flows
+421,127
+418,080
+223,092
+3,047
+319,959
+215
+10% annual discount for estimated timing
+of cash flows
+(126,910)
+(126,617)
+(293)
+(97,082)
+(97,115)
+33
+Standardised measure of
+discounted future net cash flows
+294,217
+291,463
+320,174
+10% annual discount for estimated timing
+of cash flows
+(13,012)
+Equity method investments
+Sales and transfers of oil and gas produced, net of production costs
+Net changes in prices and production costs
+Net changes in estimated future development cost
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+Previously estimated development costs incurred during the year
+Accretion of discount
+Net changes in income taxes
+Net changes for the year
+Total of the Group's and its equity method investments' results of net changes for the year
+218
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+2018
+RMB million
+2017
+RMB million
+Net changes for the year
+(88,802)
+98,952
+7,487
+(5,468)
+(7,320)
+41,385
+29,799
+22,040
+20,608
+9,507
+5,747
+22,405
+20,909
+(28,894)
+(231)
+(62,054)
+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
+(13,012)
+(9,803)
+(9,803)
+Standardised measure of
+discounted future net cash flows
+13,239
+13,239
+12,555
+12,555
+Total of the Group's and its equity method
+investments' results of standardised measure
+of discounted future net cash flows
+307,456
+291,463
+15,993
+235,647
+222,844
+12,803
+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)
+14,945
+Gas Producing Activities (Unaudited)
+Financial Statements
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+217
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Supplemental Information on Oil and
+1,339
+8
+End of year
+Cash flow hedges, net of deferred tax
+(617)
+53
+Special reserve
+507
+89
+Balance at 31 December
+2,286
+2,460
+Retained earnings
+Balance at 1 January
+Profit for the year
+Distribution to owners (Note 13)
+Appropriation
+(120)
+Special reserve
+Balance at 31 December
+177,989
+183,321
+38,460
+(67,799)
+30,488
+(32,689)
+(3,996)
+(3,042)
+(507)
+(89)
+(15)
+144,132
+177,989
+415,147
+Others
+445,176
+(64)
+2,438
+Balance at 31 December
+Statutory surplus reserve
+Balance at 1 January
+Appropriation
+9,195
+6
+9,175
+20
+9,201
+9,195
+55,850
+55,850
+55,850
+55,850
+82,682
+Share of other comprehensive loss of associates and joint ventures, net of deferred tax
+79,640
+3,042
+Balance at 31 December
+86,678
+82,682
+Discretionary surplus reserve
+Balance at 1 January
+117,000
+117,000
+Balance at 31 December
+117,000
+117,000
+Other reserves
+Balance at 1 January
+2,460
+3,996
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+211
+Financial Statements (International)
+909
+126
+(2,357)
+Profit for the year under IFRS*
+78,897
+70,418
+*
+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 2017 and 2018 which have been audited by PricewaterhouseCoopers.
+212
+Annual Report 2018 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
+2018 and 2017, 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 | 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
+110
+2018
+RMB million
+Other
+Total
+China
+countries
+Total
+China
+Other
+countries
+The Group
+Property cost, wells and related equipments
+and facilities
+695,724
+651,531
+44,193
+667,657
+Supporting equipments and facilities
+199,321
+2017
+RMB million
+56
+(i)
+(ii)
+Government grants
+Safety production fund
+Others
+Financial Statements
+(Differences Between the 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
+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:
+Note
+31 December
+2018
+RMB million
+857,659
+31 December
+2017
+RMB million
+Shareholders' equity under CASS
+Adjustments:
+854,070
+Government grants
+Adjustments:
+70,294
+2017
+RMB million
+RMB million
+80,289
+Net profit under CASS
+2018
+Balance at 1 January
+Note
+852,890
+856,535
+Total equity under IFRS*
+(1,180)
+(1,124)
+(i)
+Effects of major differences between the net profit under CASs and the profit for the year under IFRS are analysed as follows:
+199,304
+Share premium
+Others
+Lease prepayments
+Total non-current assets
+Current assets
+Cash and cash equivalents
+Time deposits with financial institutions
+7,101
+6,916
+Long-term prepayments and other assets
+13.129
+14,072
+674,499
+683,634
+59,120
+72,309
+6,834
+23,759
+Financial assets at fair value through profit or loss
+22,500
+48,179
+Trade accounts receivable and bills receivable
+30,145
+37,766
+Dividends receivable
+2,313
+16,327
+Inventories
+45,825
+44,933
+Prepaid expenses and other current assets.
+73,442
+20,236
+79,111
+11,021
+395
+219
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+44 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY
+BALANCE SHEET OF THE COMPANY (Amounts in million)
+Note
+31 December
+2018
+31 December
+2017
+RMB
+RMB
+Non-current assets
+Property, plant and equipment, net
+302,048
+Deferred tax assets
+329,814
+51,598
+50,046
+Investment in subsidiaries
+251,970
+245,156
+Interest in associates
+21,143
+15,579
+Interest in joint ventures
+16,094
+14,822
+Available-for-sale financial assets
+395
+Financial assets at fair value through other comprehensive income
+Construction in progress
+Total current assets
+257,104
+318,861
+40,904
+43,225
+33,094
+31,405
+5,310
+3,613
+106,508
+118,685
+536,218
+566,247
+121,071
+121,071
+(a)
+415,147
+40,442
+445,176
+566,247
+Financial Statements (International)
+210
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2018
+44 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
+2018
+RMB million
+2017
+RMB million
+Capital reserve
+Balance at 1 January
+536,218
+27,200
+684,932
+642,726
+Current liabilities
+Short-term debts
+14,511
+Loans from Sinopec Group Company and fellow subsidiaries
+Derivative financial liabilities
+5,815
+33,454
+3,214
+967
+Trade accounts payable and bills payable
+84,418
+86,604
+Contract liabilities
+Other payables
+Total current liabilities
+Net current (liabilities)/assets
+Total assets less current liabilities
+------------
+Non-current liabilities
+1,298
+(31,773)
+317,563
+288,877
+194,291
+178,936
+Balance at 31 December
+4,230
+Share capital
+Reserves
+Equity
+Total non-current liabilities
+Other long-term liabilities
+Loans from Sinopec Group Company and fellow subsidiaries
+Provisions
+Long-term debts
+Total equity
+1,367
+17
+625,621
+210,694
+Depreciation, depletion, amortisation
+and impairment losses
+Taxes other than income tax
+Profit before taxation
+Income tax expense
+Share of profit for producing activities of
+associates and joint ventures
+Total of the Group's and its equity method investments'
+results of operations for producing activities
+9,530
+9,530
+(2,455)
+9,530
+8,080
+Exploration expenses
+9,530
+(2,455)
+(2,748)
+8,080
+8,080
+(2,748)
+(1,163)
+(1,163)
+(1,243)
+(1,243)
+(4,075)
+(4,075)
+(3,628)
+(3,628)
+1,837
+8,080
+1,837
+Production costs excluding taxes
+Revenues
+(11,089)
+(11,089)
+(62,832)
+(60,877)
+(1,955)
+(80,399)
+(74,856)
+(5,543)
+(11,400)
+(11,400)
+(8,726)
+(8,726)
+15,226
+13,418
+Sales
+1,808
+(28,693)
+(741)
+Income tax expense
+709
+709
+Results of operation from producing activities
+15,935
+13,418
+2,517
+1,188
+(28,246)
+1,188
+(28,693)
+447
+Equity method investments
+(29,434)
+461
+461
+(667)
+1,293
+1,261
+Revisions of previous estimates
+160
+158
+Improved recovery
+95
+90
+225
+1,256
+1,216
+40
+151
+148
+Beginning of year
+3
+86
+4
+Extensions and discoveries
+79
+79
+60
+60
+Production
+(260)
+(249)
+(11)
+(264)
+(249)
+(15)
+90
+(oil) (million barrels)
+Proved developed and undeveloped reserves
+The Group
+(667)
+(347)
+(347)
+1,170
+1,170
+114
+114
+17,105
+13,418
+3,687
+(28,132)
+(28,693)
+561
+The results of operations for producing activities for the years ended 31 December 2018 and 2017 are shown above. Revenues include sales to
+unaffiliated parties and transfers (essentially at third-party sales prices) to other segments of the Group. Income taxes are based on statutory tax
+rates, reflecting allowable deductions and tax credits. General corporate overhead and interest income and expense are excluded from the results of
+operations.
+Table IV: Reserve quantities information
+The Group's and its equity method investments' estimated net proved underground oil and gas reserves and changes thereto for the years ended 31
+December 2018 and 2017 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.
+Other
+countries
+China
+Total
+countries
+China
+Total
+(10,744)
+Other
+2018
+Table IV: Reserve quantities information (Continued)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+"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.
+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.
+2017
+210,711
+(10,744)
+Taxes other than income tax
+6,357
+6,357
+284,034
+273,012
+11,022
+324,804
+312,053
+12,751
+Table II: Costs incurred in oil and gas exploration and development
+The Group
+Exploration
+Development
+Total costs incurred
+Equity method investments
+6,304
+Share of costs of exploration and development
+Total of the Group's and its equity method investments'
+exploration and development costs
+2018
+RMB million
+2017
+RMB million
+Total
+China
+Other
+countries
+Total
+China
+Other
+countries
+12,108
+12,108
+11,589
+11,589
+of associates and joint ventures
+27,453
+6,304
+Total of the Group's and its equity method
+42,036
+17
+Uncompleted wells, equipments and facilities
+40,778
+40,770
+41,397
+41,389
+Total capitalised costs
+935,823
+891,605
+44,218
+919,765
+877,704
+8
+42,061
+investments' net capitalised costs
+Accumulated depreciation, depletion,
+(658,093)
+(618,593)
+Net capitalised costs
+277,730
+273,012
+(39,500)
+4,718
+(601,318)
+318,447
+(565,651)
+(35,667)
+312,053
+6,394
+Equity method investments
+Share of net capitalised costs of associates
+and joint ventures
+amortisation and impairment losses
+27,329
+124
+30,844
+Total
+China
+2017
+RMB million
+Other
+countries
+57,860
+57,860
+43,644
+43,644
+Transfers
+89,569
+84,532
+5,037
+73,447
+67,311
+6,136
+2018
+RMB million
+Other
+countries
+147,429
+5,037
+117,091
+110,955
+6,136
+Production costs excluding taxes
+(47,227)
+(45,953)
+(1,274)
+(46,311)
+(44,977)
+(1,334)
+Exploration expenses
+Depreciation, depletion, amortisation
+and impairment losses
+142,392
+China
+Total
+Sales
+30,710
+134
+39,561
+39,437
+124
+42,433
+42,299
+134
+793
+793
+724
+724
+40,354
+39,437
+917
+43,157
+42,299
+Revenues
+The Group
+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)
+Profit before taxation
+Financial Statements
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+213
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+858
+214
+Corporate Information
+(112)
+d) Copies of the documents and announcements
+that Sinopec Corp. has published in the
+newspapers designated by the CSRC during
+the reporting period.
+DOCUMENTS FOR INSPECTION
+220
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+The following documents will be available for
+inspection during normal business hours after
+22 March 2019 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 2018 annual report
+signed by Mr. Dai Houliang, the Chairman;
+b) The original copies of financial statements
+and consolidated financial statements as of
+31 December 2018 prepared under IFRS
+and CASS, signed by Mr. Dai Houliang,
+the Chairman, Mr. Wang Dehua, the Chief
+Financial Officer and head of the financial
+department of Sinopec Corp.;
+c) The original auditors' reports signed by the
+auditors; and
+By Order of the Board
+Dai Houliang
+Chairman
+Beijing, PRC, 22 March 2019
+Documents for Inspection
+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
+www.sinopec.com
+Printed on environmentally friendly paper
+中国石油化工股份有限公司
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+In 2018, the operating expenses of
+the segment was RMB 1,423.2 billion,
+representing an increase of RMB 230.5
+billion or 19.3% as compared with
+that of 2017. This was mainly due to
+the increase in refined oil products
+procurement price.
+In 2018, 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 207 per
+tonne, representing an increase of 4.2%
+compared with that of 2017.
+In 2018, the segment actively coped
+with the fierce market competition by
+taking advantages of integrated business.
+and distribution network into full play,
+reinforcing the coordination of internal
+and external resources, constantly
+intensifying the market strategy of
+balancing profits and sales volume,
+and putting efforts to expand non-fuel
+business scale and profitability.
+In 2018, the operating profit of
+this segment was RMB 23.5 billion,
+representing a decrease of 25.7%
+compared with 2017.
+and Analysis
+Turnover and other operating revenues
+Management's
+(4) Chemicals Segment
+24
+and Analysis
+Management's Discussion
+23
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Discussion
+32.1
+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.
+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 516.2 billion, representing
+an increase of 24.8% as compared with
+2017, and accounted for 94.4% of the
+operating revenues of the segment.
+6,978
+6,047
+15.4
+Synthetic resin
+15,325
+13,215
+16.0
+8,646
+8,153
+6.0
+Synthetic fibre
+1,314
+1,304
+0.8
+9,712
+8.9
+10,332
+11,252
+Synthetic fibre monomer and polymer
+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 2018 and 2017.
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+Average realised price (RMB/tonne)
+Year ended 31 December
+2018
+2017
+Change (%)
+2018
+In 2018, the operating revenue of the
+chemicals segment was RMB 546.7
+billion, representing an increase of 24.9%
+as compared with that of 2017, This was
+mainly due to increase in sales volume.
+and price of chemical products as a
+result of the Company's effort in actively
+expanding sales volume and market
+share, optimising product mix.
+2017
+Basic organic chemicals
+52,450
+46,351
+13.2
+5,281
+4,684
+12.7
+Change (%)
+2,251
+2,974
+0.3
+Change (%)
+2018
+2017
+Change (%)
+Gasoline
+Retail
+88,076
+83,980
+4.9
+7,870
+6,941
+13.4
+66,855
+66,364
+0.7
+8,296
+2017
+2018
+Average realised price (RMB/tonne)
+Year ended 31 December
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+Kerosene
+Chemical feedstock
+Other refined petroleum products
+In 2018, sales revenues of gasoline
+was RMB 441.3 billion, representing an
+increase of 24.4% over 2017.
+The sales revenues of diesel was RMB
+361.4 billion, representing an increase of
+20.0% over 2017.
+The sales revenues of kerosene was RMB
+101.2 billion, representing an increase of
+68.0% over 2017.
+The sales revenues of chemical feedstock
+was RMB 150.6 billion, representing an
+increase of 27.2% over 2017.
+7,346
+The sales revenues of refined petroleum
+products other than gasoline, diesel,
+kerosene and chemical feedstock was
+RMB 203.5 billion, representing an
+increase of 18.2% over 2017.
+In 2018, the average processing cost
+for crude oil was RMB 3,548 per tonne,
+representing an increase of 27.9% over
+2017. Total crude oil processed was
+248.29 million tonnes (excluding volume
+processed for third parties), representing
+an increase of 7.8% over 2017. The total
+cost of crude oil processed was RMB
+880.8 billion, representing an increase of
+37.9% over 2017.
+In 2018, refining gross margin was RMB
+461 per tonne, representing a reduction
+of RMB 49 per tonne compared with
+2017. This is mainly due to the increased
+procurement cost of crude oil, as well
+as the narrowed gross margin of refined
+petroleum products other than gasoline,
+diesel, kerosene and chemical feedstock.
+In 2018, 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 180.2 per
+tonne, an increase of RMB 5.1 per tonne
+over 2017, mainly because of increased
+operating expenses resulted from quality
+upgrading of refined oil products as well
+as product mix optimisation.
+In 2018, the operating profit of the
+segment totaled RMB 54.8 billion,
+representing a decline of RMB 10.2
+billion compared with 2017.
+(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 2018, the operating revenues of
+this segment was RMB 1,446.6 billion,
+representing an increase of 18.2% over
+2017, of which: the sales revenues of
+gasoline totaled RMB 693.1 billion,
+representing an increase of 18.9%
+compared with 2017; the sales revenues
+of diesel was RMB 509.0 billion,
+representing an increase of 13.3% over
+2017, and the sales revenues of kerosene
+was RMB 117.6 billion, representing an
+increase of 30.4% over 2017.
+The following table sets forth the sales volumes, average realised prices, and the respective percentage changes of the segment's four major
+refined oil products in 2018 and 2017, including breakdown in retail, direct sales and wholesale of gasoline and diesel:
+In 2018, the segment's operating
+expenses was RMB 1,208.6 billion,
+representing an increase of 27.6% over
+2017. This was mainly attributed to
+the increase in refinery throughput and
+procurement cost of crude oil.
+12.9
+Direct sales and wholesale
+21,221
+41,537
+44,410
+(6.5)
+5,541
+4,486
+23.5
+Kerosene
+Direct sales and wholesale
+25,787
+0.9
+4,562
+3,531
+29.2
+Fuel
+23,372
+23,299
+25,555
+8,556
+15.2
+6,435
+17,616
+20.5
+6,524
+5,412
+20.6
+Diesel
+84,865
+5,588
+89,146
+5,998
+5,039
+19.0
+Retail
+43,327
+44,736
+(3.1)
+(4.8)
+13.5
+2,008
+1,138
+(3) Contingent Liabilities
+At the end of 2018, the cash and cash
+equivalents was RMB 111.9 billion.
+In 2018, the net cash used in the
+Company's financing activities was RMB
+111.3 billion, representing an increase
+of cash out flow by RMB 54.8 billion
+over 2017. This was mainly due to the
+cash paid for dividends increased by
+RMB 35.1 billion, cash repayments
+of borrowings increased by RMB 13.9
+billion, and distributions by subsidiaries
+to non-controlling interests increased by
+RMB 6.2 billion.
+In 2018, the net cash generated from
+operating activities of the company
+was RMB 175.9 billion, representing
+a decrease of RMB 15.1 billion as
+compared with 2017. Of which: profit
+before taxation increased by RMB
+12.4 billion, depreciation, depletion &
+amortization and assets impairment
+loss decreased by RMB 15.5 billion,
+accounts receivable and net change for
+other current assets decreased by RMB
+30.1 billion, net change for inventory
+decreased by RMB 25.6 billion, accounts
+payable and net change for other current
+liabilities decreased by RMB 57.1 billion,
+and the paid income tax increased by
+RMB 13.0 billion as compared with 2017.
+In 2018, the net cash used in investing
+activities was RMB 66.4 billion,
+representing a decrease of RMB 78.9
+billion over 2017. Of which: capital
+expenditure increased by RMB 31.2
+billion, income from the change of
+structured deposit increased by RMB
+76.6 billion, outcome from in time
+deposit with maturities over three months
+decreased by RMB 30.5 billion.
+Net cash used in investing activities
+Net cash used in financing activities
+Net cash generated from operating activities
+Major items of cash flows
+Unit: RMB million
+The following table sets forth the major items in the consolidated cash flow statements for 2018 and 2017.
+(2) Cash Flow
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Discussion
+Management's
+Please refer to "Material Guarantee
+Contracts and Their Performances" in the
+"Significant Events" section of this report.
+and Analysis
+25
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Total equity attributable to owners of
+the Company was RMB 717.3 billion,
+representing a decrease of RMB 8.8
+billion compared with that of the end
+of 2017, which was mainly due to the
+capital reserve was RMB 596.2 billion,
+representing a decrease of RMB 8.8
+billion. Minority interests was RMB 139.3
+billion, representing an increase of RMB
+12.5 billion.
+Non-current liabilities was RMB 170.7
+billion, representing an increase of RMB
+7.5 billion compared with that of the end
+of 2017. This was mainly due to long-
+term debts decreased by RMB 4.8 billion,
+provisions increased by RMB 2.8 billion,
+and other non-current liabilities increased
+by RMB 10.8 billion.
+and RMB 14.4 billion respectively, trade
+accounts payable and bills payable and
+taxes payable decreased by RMB 13.8
+billion and RMB 6.3 billion respectively.
+856,535
+Current liabilities was RMB 565.1 billion,
+representing a decrease of RMB 14.3
+billion as compared with that of the
+end of 2017. This was mainly due to
+the short-term debts and loans from
+Sinopec Group decreased by RMB 19.5
+billion, derivative financial liabilities
+and liabilities from contracts and other
+payables increased by RMB 10.9 billion
+The Company's total liabilities was RMB
+735.8 billion, representing a decrease of
+RMB 6.8 billion compared with that of
+the end of 2017, of which:
+by RMB 33.0 billion, construction in
+progress increased by RMB 18.3 billion.
+Equity of associates and joint ventures
+increased by RMB 9.8 billion, deferred
+tax assets increased by RMB 6.6 billion,
+lease prepayments increased by RMB 6.0.
+billion, long-term prepayment and other
+assets increased by RMB 9.4 billion.
+3,645
+852,890
+12,481
+126,770
+139,251
+Management's Discussion
+(8,836)
+(4) Capital Expenditures
+Year ended 31 December
+2018
+175,868
+(66,422)
+(111,260)
+Structured Deposit
+885
+25,732
+51,196
+51,196
+profit or loss of the reporting period
+Financial assets at fair value through
+Impairment
+loss provision
+variation of fair
+values recorded
+as equity
+Accumulated
+losses from
+variation of fair
+values in the
+current year
+Profits and
+End of
+the year
+Please refer to "Capital Expenditures"
+in the "Business Review and Prospects"
+section of this report.
+of the year
+Items
+Beginning
+End of
+Unit: RMB million
+Items relevant to measurement of main fair values
+Annual Report 2018 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 2018, the Company paid
+environmental expenditures of RMB 7.94
+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 2018, the expenditures for
+R&D was RMB 12.876 billion, of which
+expense was RMB 7.96 billion (In 2017,
+the expenditures for R&D was RMB
+11.533 billion, of which expense was
+RMB 6.423 billion).
+(5) Research & development and
+environmental expenditures
+2017
+190,935
+(145,323)
+(56,509)
+last year
+1,278
+605,049
+121,071
+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
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+In 2017, the operating losses from
+corporate and others was RMB 9.3
+billion.
+In 2018, the operating expenses of
+corporate and others was RMB 1,377.9
+billion, representing an increase of 40.7%
+over 2017.
+revenues from crude oil and overseas
+refined oil products trading business,
+as well as the rapid growth of the
+petrochemicals business scale through
+Epec platform.
+In 2018, the operating revenues
+generated from corporate and others.
+was RMB 1,368.6 billion, representing
+an increase of 40.4% over 2017. This
+was mainly attributed to the increase in
+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.
+Non-current liabilities
+(5) Corporate and Others
+In 2018, the segment seized the
+opportunities of high chemical margin,
+continuously optimised the structures
+of feedstock, product and facilities,
+strengthened the coordination among
+research, development, production
+and marketing, intensified allocation of
+resources, improved targeted marketing
+strategy, and achieved remarkable
+profits with increased sales volume of
+petrochemicals.
+In 2018, the operating expenses of the
+chemicals segment was RMB 519.7
+billion, representing an increase of
+26.5% over 2017, mainly because of
+the significant increase in the price of
+externally procured raw materials as
+compared with the same period in 2017.
+Chemical fertiliser
+Synthetic rubber
+4.2
+Diesel
+2,093
+13.7
+700
+796
+(10.1)
+11,957
+10,750
+12.3
+In 2018, the operating profit of this
+segment was RMB 27.0 billion, achieving
+an increase as compared with 2017.
+596,213
+Total equity attributable to shareholders of the Company
+Reserves
+121,071
+(8,836)
+726,120
+717,284
+7,507
+163,168
+170,675
+(14,348)
+579,446
+565,098
+(6,841)
+742,614
+735,773
+21,733
+Share capital
+1,066,455
+(24,929)
+(3,196)
+Change
+2017
+1,595,504
+529,049
+1,592,308
+504,120
+2018
+31 December
+As of
+As of
+31 December
+Unit: RMB million
+Current assets was RMB 504.1 billion,
+representing a decrease of RMB 24.9
+billion compared with that of the end of
+2017, mainly becasue the financial assets
+at fair value through profit and loss
+and trade accounts receivable and bills
+receivable decreased by RMB 25.5 billion
+and RMB 19.8 billion respectively, as well
+as the prepayments and other current
+assets increased by RMB 13.1 billion.
+Non-current assets was RMB 1,088.2
+billion, representing an increase of RMB
+21.7 billion as compared with that of
+the end of 2017. This was mainly due
+to the depreciation and depletion of
+property, plant and equipment decreased
+As of 31 December 2018, the Company's
+total assets was RMB 1,592.3 billion,
+representing a decrease of RMB 3.2
+billion compared with that of the end of
+2017, of which:
+Total equity
+Non-controlling interests
+1,088,188
+Gasoline
+36,951
+2,929
+32.2
+30.0
+1,224,197
+0.1
+0.1
+3,962
+5,224
+1,446,637
+Operating revenues
+Inter-segment sales
+51.7
+49.9
+32.1
+29.9
+1,220,235
+Chemicals Segment
+1,441,413
+Marketing and Distribution Segment
+26.6
+26.1
+1,011,853
+1,263,407
+Operating revenues
+23.0
+22.9
+874,271
+1,109,088
+Inter-segment sales
+5.8
+5.3
+3.6
+External sales*
+3.2
+External sales*
+Inter-segment sales
+Operating revenues
+388,128
+25.6
+28.4
+974,850
+1,368,583
+Operating revenues
+11.6
+13.5
+440,303
+650,271
+Inter-segment sales
+22.6
+24.8
+14.0
+14.9
+472,898
+534,547
+External sales*
+Corporate and Others
+11.5
+11.3
+437,743
+546,733
+1.3
+1.5
+49,615
+73,835
+16.5
+16.4
+10.2
+9.8
+718,312
+Operating revenue before elimination of
+137,582
+External sales*
+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 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+20
+20
+(7) Profit attributable to shareholders of
+the Company was RMB 61.6 billion,
+representing an increase of 20.2% year
+on year.
+(6) Profit attributable to non-controlling
+interests was RMB 17.3 billion,
+representing an increase of RMB 1.9
+billion compared with 2017.
+(5) Income tax expense was RMB 20.2
+billion, representing an increase of 24.2%
+year on year, mainly due to the increase
+in profit and the decrease in exempt
+investment income.
+(3) Operating profit was RMB 82.3 billion,
+representing an increase of 15.1%
+compared with 2017. Loss from upstream
+business greatly reduced and downstream
+business achieved good profit under
+the fierce market competition, as the
+Company persistently centralised on
+value-oriented operation, focused on
+improving asset quality, increasing asset
+efficiency, and upgrading asset structure.
+(4) Profit before taxation was RMB 99.1
+billion, representing an increase of 14.3%
+compared with 2017.
+Other operating expense, net was RMB
+5.4 billion, decreased 67.6% over the
+same period of 2017. That was mainly
+due to the decrease in impairment during
+the year.
+Taxes other than income tax was RMB
+246.5 billion, representing an increase
+of 4.8% compared with 2017. That was
+mainly because of increased consumption
+tax as a result of the increase in the sales
+volume of refined oil products, as well
+as resource tax and special oil income
+levy increased resulting from increase in
+crude oil price.
+Personnel expenses was RMB 77.7
+billion, representing an increase of 3.8%
+over 2017.
+Exploration expenses was RMB 10.7
+billion, representing a decrease of 3.1%
+year on year. That was mainly due to
+the Company constantly reinforced the
+management of exploration investment,
+improved exploration success rate.
+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.
+Depreciation, depletion and amortisation
+was RMB 110.0 billion, representing a
+decrease of 4.6% compared with 2017.
+That was mainly due to the Company
+reinforced efficient exploration, enhanced
+profit-oriented production of refined
+reservoir with an emphasis on increasing
+proved reserves of crude oil and natural
+gas. Meanwhile, its depreciation and
+depletion decreased as a result of the
+Company's proved reserves increased in
+line with the increase in crude oil price.
+The Company's other purchasing
+expenses was RMB 580.7 billion,
+representing an increase of 23.8% over
+the same period of 2017. 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 was RMB
+655.4 billion, representing an increase
+of 30.1% over the same period of 2017.
+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 was RMB 355.5
+billion, representing an increase of 18.3%
+over the same period of 2017. 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 was RMB
+701.3 billion, representing an increase
+of 41.1% over the same period of 2017.
+Throughput of crude oil purchased
+externally in 2018 was 227.19 million
+tonnes (excluding the volume processed
+for third parties), representing an
+increase of 7.7% over the same period
+of 2017. The average cost of crude oil
+purchased externally was RMB 3,452 per
+tonne, representing an increase by 30.0%
+over 2017.
+Purchased crude oil, products and
+operating supplies and expenses was
+RMB 2,293.0 billion, representing an
+increase of 29.5% over the same period
+of 2017, accounting for 81.6% of the
+total operating expenses, of which:
+In 2018, the Company's operating
+expenses was RMB 2,808.9 billion,
+increased by 22.7% compared with 2017.
+The operating expenses mainly consisted
+of the following:
+(2) Operating expenses
+Chemical products sold by Chemicals
+Segment achieved external sales revenue
+of RMB 457.4 billion, representing an
+increase of 22.4% over 2017, 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, which
+resulting from the Company seized good
+market opportunities and strengthened
+the coordination between production and
+marketing to positively expand market
+share and trading scale.
+In 2018, 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 1,557.9 billion
+(accounting for 53.9% of the Company's
+turnover and other operating revenues),
+representing an increase of 17.6%
+over 2017, mainly due to the increase
+in petroleum products' prices, as well
+as the Company actively coped with
+market challenge caused by resources
+oversupply, optimised production and
+operation with the market-oriented
+approach and maintained high utilisation
+rate. The sales revenue of gasoline,
+diesel and kerosene was RMB 1,318.1
+billion, representing an increase of
+17.6% over 2017, and accounting for
+84.6% of the total sales revenue of
+petroleum products. Turnover of other
+refined petroleum products was RMB
+239.8 billion, representing an increase of
+17.6% compared with 2017, 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 2018, the
+turnover from crude oil, natural gas and
+other upstream products sold externally
+amounted to RMB 93.5 billion, an
+increase of 35.2% over 2017. The change
+Iwas mainly due to the company seized
+opportunities of the prices increase in
+crude oil and natural gas to maintain
+steady crude oil production and rapidly
+expanded production of natural gas.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Discussion
+Management's
+Selling, general and administrative
+expenses was RMB 65.6 billion,
+representing an increase of 1.0% over
+2017 as a result of the increase in R&D
+expenses.
+154,319
+As a percentage of
+consolidated operating
+revenue before elimination
+As a percentage of
+consolidated operating
+revenue after elimination
+4.1
+4.2
+157,505
+200,191
+2.0
+2.0
+77,804
+95,954
+3.4
+3.6
+2.1
+2.2
+79,701
+104,237
+of inter-segment sales
+Year ended 31 December
+Refining Segment
+External sales*
+Exploration and Production Segment
+Operating revenues
+(%)
+(%)
+(%)
+(%)
+2017
+2017
+2018
+2017
+RMB million
+RMB million
+Operating revenues
+Year ended 31 December
+2018
+of inter-segment sales
+Year ended 31 December
+2018
+Inter-segment sales
+13.1
+inter-segment sales
+4,825,551
+3,806,148
+(1,934,372) (1,445,955)
+2,891,179
+2,360,193
+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 2018 and 2017.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+22
+22
+In 2018, the operating revenues of
+this segment was RMB 1,263.4 billion,
+representing an increase of 24.9% over
+2017. This was mainly attributed to the
+increase in products prices, as well as
+the Company's efforts in expanding the
+refinery throughput and increasing the
+sales volumes.
+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
+with 2017. By capturing the recovery of
+crude oil price, the segment reinforced
+efficient exploration, enhanced profitable
+production of refined reservoir, promoted
+stable production of crude oil, and
+rapidly expanded production of natural
+gas. By deducting the impairment losses
+on long-lived assets, the operating loss
+was RMB 5.8 billion.
+(9,293)
+(3,634)
+In 2018, the operating loss of the
+exploration and production segment was
+RMB 10.1 billion, representing a declined
+loss by RMB 35.8 billion as compared
+In 2018, the oil and gas lifting cost was
+RMB 796 per tonne, representing a year
+on year increase of 1.0%.
+assets decreased by RMB 9.3 billion
+year on year;
+2018
+Impairment losses on long-lived
+Procurement cost increased by RMB
+16.2 billion year on year, as a result
+of expansion of LNG business and
+increase in LNG price;
+Personnel expenses increased by RMB
+2.4 billion year on year;
+Resource Tax and special oil income
+levy increased by RMB 2.8 billion
+year on year, as a result of increase
+in crude oil prices;
+.
+•
+•
+•
+In 2018, the operating expenses of
+this segment was RMB 210.3 billion,
+representing an increase of 3.4% over
+2017. That was mainly due to the
+following:
+In 2018, the segment sold 34.79 million
+tonnes of crude oil, representing a
+decrease of 1.5% over 2017. Natural
+gas sales volume was 26.25 billion cubic
+meters (bcm), representing an increase
+of 7.2% over 2017. Regasified LNG sales
+volume was 8.33 bcm, representing
+an increase of 72.9% over 2017. LNG
+sales volume was 2.856 million tonnes,
+representing an increase of 25.1% over
+2017. Average realised prices of crude
+oil, natural gas, Regasified LNG, and LNG
+were RMB 3,046 per tonne, RMB 1,410
+per thousand cubic meters, RMB 1,934
+per thousand cubic meters, and RMB
+3,779 per tonne, representing increase
+of 30.1%, 8.8%, 11.0%, and 23.7%
+respectively over 2017.
+In 2018, the operating revenues of
+this segment was RMB 200.2 billion,
+representing an increase of 27.1% over
+2017. This was mainly attributed to the
+rise of realised price of crude oil and
+natural gas as well as the expansion of
+natural gas and 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
+Operating expenses
+Depreciation, depletion and
+amortisation decreased by RMB 6.5
+billion year on year;
+Operating revenues
+2017
+2018
+3,312
+4.5
+58,801
+61,439
+22.0
+3,204
+3,910
+4.3
+51,196
+38,524
+28.0
+3,527
+4,515
+31.3
+Change (%)
+17,080
+16.2
+4,962
+5,766
+3.3
+60,680
+62,676
+13.0
+6,538
+7,386
+10.1
+54,273
+59,746
+Change (%)
+2017
+22,418
+Elimination of inter-segment sales
+Operating revenues
+Operating expenses
+Operating profit
+Corporate and Others
+(4,484)
+(1,655)
+(10,107)
+3.4
+203,449
+210,298
+27.1
+157,505
+200,191
+Operating revenues
+Refining Segment
+Operating expenses
+Operating loss
+Operating revenues
+Exploration and Production Segment
+(%)
+Change
+(45,944)
+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 2018 compared to 2017.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Discussion
+Management's
+and Analysis
+Management's Discussion
+21
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+*. Other operating revenues are included.
+100.0
+100.0
+100.0
+100.0
+Year ended 31 December
+2018
+RMB million
+Operating profit
+Chemicals Segment
+1,263,407
+24.9
+40.7
+979,334
+1,377,876
+40.4
+974,850
+1,368,583
+0.1
+26,977
+27,007
+26.5
+410,766
+519,726
+24.9
+437,743
+1,011,853
+546,733
+31,569
+18.2
+1,224,197
+1,192,628
+1,446,637
+1,423,173
+23,464
+Operating expenses
+Operating revenues
+Marketing and Distribution Segment
+(15.7)
+65,007
+27.6
+946,846
+1,208,580
+54,827
+Operating profit
+Operating expenses
+19.3
+(25.7)
+51,196
+of the
+current year
+880
+Discussion
+Management's
+Management's Discussion
+and Analysis
+27
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Net profit: In 2018, the net profit attributable to the equity shareholders of the Company was RMB 63.1 billion, representing an increase of RMB
+12.0 billion or 23.4% comparing with 2017.
+Operating profit: In 2018, the operating profit of the Company was RMB 101.5 billion, representing an increase of RMB 14.5 billion as
+compared with 2017.
+51,119
+63,089
+Net profit attributable to equity shareholders of the Company
+86,965
+101,474
+Consolidated operating profit
+20,325
+21,037
+and Analysis
+expense and other income
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+Total assets
+169,551
+857,659
+1,592,308
+3,589
+7,563
+161,988
+(3,196)
+1,595,504
+RMB million
+Change
+December 2017
+As of 31
+As of 31
+December 2018
+RMB million
+Shareholders' equity
+Non-current liabilities.
+(2) Financial data prepared under CASS
+854,070
+Financial expenses, investment income, gains/(losses) from changes in fair value, asset disposal
+(3,634)
+546,733
+Chemicals Segment
+Marketing and Distribution Segment
+Exploration and Production Segment
+Operating (loss)/profit
+Consolidated operating income
+Elimination of inter-segment sales
+Corporate and Others
+Chemicals Segment
+Refining Segment
+1,224,197
+1,446,637
+157,505
+1,011,853
+1,263,407
+Marketing and Distribution Segment
+437,743
+(1,655)
+1,368,583
+(1,934,372)
+Elimination of inter-segment sales
+(3,160)
+(8,151)
+Corporate and Others
+22,796
+25,970
+32,011
+24,106
+64,047
+53,703
+(47,399)
+(11,557)
+2,360,193
+2,891,179
+(1,445,955)
+974,850
+At the end of 2018, the Company's total assets was RMB 1,592.3 billion, representing a decrease of RMB 3.2 billion compared with that of the
+end of 2017.
+At the end of 2018, the Company's non-current liabilities was RMB 169.6 billion, representing an increase of RMB 7.6 billion compared with that
+of the end of 2017.
+At the end of 2018, the shareholders' equity of the Company was RMB 857.7 billion, representing an increase of RMB 3.6 billion compared with
+that of the end of 2017.
+Total
+N/A
+N/A
+N/A
+N/A
+(1,930,738)
+(1,934,372)
+Elimination of inter-segment sales
+(1.0)
+41.7
+40.4
+0.2
+1,365,348
+1,368,583
+Corporate and Others
+2,891,179
+(1.7)
+2,401,013
+22.5
+and Analysis
+Management's Discussion
+29
+29
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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 in the financial statement complying with the PRC Accounting Standards for Business Enterprises (CASS).
+5 THE CAUSE AND IMPACT OF THE CHANGE IN THE COMPANY'S ACCOUNTING POLICY
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+28
+Gross profit margin = (operation income - operation cost, tax and surcharges)/operation income.
+25,550
+(1.5)
+27.0
+8.4
+27.7
+24.9
+9.4
+165,444
+200,191
+Exploration and Production
+Refining
+basis (%)
+Increase/
+(decrease) of
+gross profit
+margin on a
+year-on-year
+Increase/
+(decrease) of
+operation cost
+on a year-on-
+year basis (%)
+basis (%)
+a year-on-year
+Gross profit
+margin* (%)
+Operation cost
+RMB million
+income on
+Increase/
+(decrease) of
+operation
+Operation
+income
+RMB million
+Segments
+(3) The results of the principal operations by segments
+11.6
+27.1
+7.3
+15.1
+492,991
+546,733
+Chemicals
+(1.5)
+20.2
+18.2
+6.1
+Refining Segment
+1,355,391
+Marketing and Distribution
+(2.2)
+35.4
+24.9
+6.4
+952,577
+1,263,407
+1,446,637
+2017
+RMB million
+*.
+2018
+RMB million
+(1,978)
+(7,268)
+(1,617)
+(1,617)
+Cash flow hedges
+191
+1,584
+(522)
+(522)
+178
+Stock
+178
+Available for sale financial assets
+5
+182
+Stock
+200,191
+Other equity instruments investment
+1,676
+Derivative financial instruments
+(12,500)
+(53)
+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 212 of this report.
+4 ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER CASS
+Self-owned fund
+Self-owned fund
+1,450
+Self-owned fund
+Exploration and Production Segment
+Year ended 31 December
+Total
+_ Self-owned fund
+49,235
+50,733
+21,498
+source
+Funding
+(902)
+(12,553)
+No
+or no)"¹
+company itself
+Energy Co., Ltd
+25 May 2016-31
+December 2023 (the
+No
+No
+Joint liability
+guarantee guaranteed
+or not
+or not
+Туре
+Period of guarantee
+parties yes
+overdue Counter-
+overdue
+completed
+Yes
+guarantee
+No
+Sinopec Corp.
+No specific
+Yanbu Aramco
+The listed
+Sinopec Corp.
+guarantee
+December 2031
+Chemical Co., Ltd.
+No
+Transaction date
+(date of signing)
+25-May-16
+No
+No
+Joint liability
+18 April 2018-31
+18-Apr-18
+5,033
+Zhong An United Coal
+The listed
+company itself
+mature date is estimated)
+12,168
+Unit: RMB million
+The listed
+Pursuant to Chapter 14A of the Hong
+Kong Listing Rules, China Petrochemical
+Corporation, the controlling shareholder of
+Sinopec Corp., is a connected person of the
+Company. Therefore, the transaction between
+Sinopec Corp. and China Petrochemical
+Corporation constituted a connected
+transaction under the Hong Kong Listing
+Rules.
+registered capital of Sinopec Capital. Sinopec
+Corp. and China Petrochemical Corporation
+shall pay all their respective capital
+contribution to Sinopec Capital no later than
+31 December 2020. Upon the establishment
+of Sinopec Capital, its investments will
+focus on strategic emerging industries,
+including new energy, new material, energy
+conservation and environmental protection,
+and intelligence manufacturing in relation
+to the industry chain. In respect of the
+investment projects which are related to
+Sinopec Corp.'s principal business, Sinopec
+Corp. will have the right of first refusal to
+acquire such projects. The formation of
+Sinopec Capital will speed up investments
+in emerging industries and help support
+Sinopec Corp.'s own business development
+and industrial chain upgrade. It will play an
+important role in achieving comprehensive,
+sustainable and high-quality development of
+Sinopec Corp.
+(7) Xinqi pipeline project
+On 9 July 2018, Sinopec Corp. entered
+into the Articles of Association (Sinopec
+Capital AOA) of Sinopec Capital Co., Ltd.
+(Sinopec Capital) with China Petrochemical
+Corporation. Pursuant to Sinopec Capital
+AOA, Sinopec Corp. proposed to establish
+Sinopec Capital with China Petrochemical
+Corporation with a registered capital of
+RMB 10 billion, of which, Sinopec Corp.
+will subscribe capital contribution of RMB
+4.9 billion by cash, representing 49% of
+the registered capital of Sinopec Capital;
+and China Petrochemical Corporation will
+subscribe capital contribution of RMB 5.1
+billion by cash, representing 51% of the
+5 SIGNIFICANT EQUITY INVESTMENT
+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.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+36
+Yes
+Yes
+Within 10 years after 29 April
+2014 or the date when China
+Petrochemical Corporation acquires
+the assets
+Term for performance
+performed or not
+Yes
+No
+From 22 June 2001
+deadline or not
+Whether strictly
+Whether bears
+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
+For details of the transaction, please refer
+to the announcements published in China
+Securities Journal, Shanghai Securities,
+News Securities Times and the websites of
+Shanghai Stock Exchange on 11 July 2018
+and on the website of Hong Kong Stock
+Exchange on 10 July 2018.
+6 SIGNIFICANT ASSETS AND EQUITY SALE
+During the reporting period, there is no
+significant assets or equity sale of the
+Company.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Amount
+company
+Company
+Guarantor
+Sinopec Corp.
+guaranteed
+connected
+Amount of
+Whether
+Whether
+Name of
+Zhongtian Hechuang
+Relationship
+with the
+Whether
+guaranteed
+31-Dec-14
+Major external guarantees (excluding guarantees for controlled subsidiaries)
+7 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+38
+38
+Significant Events
+37
+for
+30 years from the date
+performance
+No
+balance
+0.5744
+0.1244
+0.154
+Amount
+Outstanding
+Source of fund
+Self-owned fund
+Self-owned fund
+Used for working capital
+Used for project construction.
+Categories
+(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,
+Saved as disclosed by Sinopec Corp., the
+Company did not enter into any significant
+contracts subject to disclosure obligations
+during the reporting period.
+11 OTHER MATERIAL CONTRACTS
+10 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 report
+period.
+0.381
+Unit: RMB billion
+Overdue and
+uncollected
+amount
+Modec
+SINOPEC
+SIGNIFICANT EVENTS
+1 MAJOR PROJECTS
+(1) Tianjin LNG project
+The first phase of Tianjin LNG project
+with designed receiving capacity of 3.
+million tonnes per year consists mainly
+of the construction of wharf, terminal and
+transportation pipelines. It was completed
+and put into operation at the end of
+January 2018. The Company's self-owned
+fund accounts for approximately 40% of
+the project investment and bank loan is
+the main source of the remaining 60%.
+As of 31 December 2018, the aggregate
+investment was RMB 11.8 billion.
+(2) Hainan Refining and Chemical expansion
+project
+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 is expected to be put into operation
+in June 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 2018, the aggregate
+investment was RMB 2.6 billion.
+(3) Zhongke integrated refining and
+chemical project
+Zhongke integrated refining and
+petrochemical project mainly consists
+of a 10,000,000 tpa refinery project,
+800,000 tpa ethylene unit, 300,000
+9 SIGNIFICANT LITIGATION, ARBITRATION
+RELATING TO THE COMPANY
+tonne capacity jetty and relevant utilities
+project. 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 sourceof the remaining
+70%. As of 31 December 2018, the
+aggregate investment was RMB 10.8
+billion.
+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 be put
+into operation in 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 2018, the aggregate
+investment was RMB 1.6 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 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 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%. As
+of 31 December 2018, the aggregate
+investment was RMB 4.9 billion.
+(6) Wen 23 gas storage project
+The first phase of Wen 23 gas
+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
+2018, the aggregate investment was RMB
+3.5 billion.
+None
+None
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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
+(4) Zhenhai Refining & Chemical expansion
+project
+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.
+We hereby present the following opinions:
+The external guarantees prior to 2018 had
+been disclosed in previous annual report.
+The aggregate balance of external guarantees
+provided by Sinopec Corp. for the year
+2018 was RMB 33.11 billion, accounting for
+approximately 4.61% of the Company's net
+assets.
+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 - Yes_______No
+Joint liability
+guarantee
+Development Ltd./
+New Bright International 7,197
+Controlled
+subsidiary
+SSI
+Abandonment of business competition and conflicts
+of interest with Sinopec Corp.
+Guarantees by the Company to the controlled subsidiaries
+of hydrogen from Air
+Liquide Arabia LLC.
+Limited
+guarantee
+Company(YASREF)
+YASRFE requires supply guarantee
+amount agreed,
+Sinopec Refining
+company itself
+No
+No
+No
+on contract
+Joint liability
+Total amount of guarantee provided to controlled subsidiaries during the reporting period
+Total amount of guarantees for the Company (including those provided for controlled subsidiaries)
+INDEPENDENT OPINIONS FROM
+INDEPENDENT NON-EXECUTIVE
+DIRECTORS REGARDING EXTERNAL
+GUARANTEES PROVIDED BY THE COMPANY
+DURING AND BY THE END OF 2018:
+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 2018 in
+accordance with the requirements of the
+domestic regulatory authorities:
+8 SPECIFIC STATEMENTS AND
+Annual Report 2018 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
+2,771
+None
+2,771
+4.61%
+Total amount of guarantee for controlled subsidiaries outstanding at the end of the reporting period (B)
+33,110
+5,033
+21,159
+*1: As defined in the Listing Rules of the 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)
+11,951
+Granting licenses for intellectual property rights;
+Avoiding competition within the same industry;
+Significant Events
+5
+2018
+2020
+16
+4
+0
+4
+3.30
+3.70
+9
+9
+19 November
+4.05
+4.90
+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.
+Sinopec Corp. had paid in full the interest accrued for the current period interest payment year and 1501 had
+been repaid and delisted from the Shanghai Stock Exchange.
+1501 and 15102 were publicly offered to qualified investors in accordance with Administration of the Issuance
+and Trading of Corporate Bonds
+Shanghai Stock Exchange
+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
+7
+7
+19 November
+19 November 2015
+15石化022
+136040
+Outstanding balance (RMB billion)
+Interest rate (%)
+Principal and interest repayment
+Payment of interests
+Investor Qualification Arrangement
+Listing exchange
+Corporate bonds trustee
+Credit rating agency
+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
+2015 Corporate bond (first issue)
+Sinopec Corp
+15石化01
+136039
+United Credit Ratings Co., Ltd.
+Amount issued (RMB billion)
+12th Floor, PICC building, No.2 Jianguomenwai Avenue, Chaoyang District, Beijing
+During the reporting period, United Credit ratings Co., Ltd. provided continuing credit rating for 1002, 1202,
+1501 and 1502 and reaffirmed AAA credit rating. The long term credit rating and outlook of the Company
+remained at AAA and stable respectively. Pursuant to relevant regulations, the Company will publish its latest credit
+rating results through medias designated by regulators within two months commencing from the announcement date
+of annual report.
+(0.33)
+percentage
+points
+Mainly due to the decrease of financial leverage by
+lowering debts compared with last year
+EBITDA to total debt ratio
+1.33
+Interest coverage ratio
+16.76
+1.11
+14.60
+0.22
+Mainly due to the increase of EBITDA
+46.47
+2.16
+35.92
+39.11
+(3.19)
+EBITDA-to-interest coverage ratio
+33.93
+32.59
+1.34
+Mainly due to the increase of EBIT compared
+with last year
+Mainly due to the decrease of cash caused by the
+increase of dividend compared with last year
+Mainly due to the increase of EBITDA
+Cash flow interest coverage ratio
+46.14
+Liability-to-asset ratio (%)
+Mainly due to the decrease of account receivable,
+and cash caused by the increase of dividend
+compared with last year
+During the reporting period, there is no credit addition mechanism and change of the repayment arrangement for the
+above-mentioned corporate bonds. The Company strictly followed the provisions in the corporate bond prospectus
+to repay principals and interests of the corporate bonds. 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 will be published on website of Shanghai Stock Exchange by China Petrochemical Corporation.
+During the reporting period, the bondholders' meeting has not been convened.
+During the durations of the above-mentioned bonds, the bond trustee, China International Capital Corporation
+Limited, has strictly followed the Bond Trustee Management Agreement and continuously tracked the Company's
+credit status, the use 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 prospects 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 the publish of the Company's annual report. The details of such report will be
+available on the website of Shanghai Stock Exchange (http://www.sse.com.cn)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Principal accounting data and financial indicators for the two years ended 31 December 2018
+Principal data
+2018
+EBITDA (RMB million)
+216,352
+2017
+207,528
+Change
+8,824
+Current ratio
+0.89
+0.91
+(0.02)
+Reasons for change
+Mainly due to the increase of earnings compared
+with last year
+Mainly due to the decrease of account receivable
+and inventories compared with last year
+Quick ratio
+0.57
+0.59
+(0.02)
+Proceeds from the above-mentioned corporate bonds have been used for their designated purpose as disclosed. All
+the proceeds have been completely used.
+6
+Maturity date
+Code
+RMB4.20 per share (in the event of
+dividends payment, capitalisation
+of capital reserves, bonus issue,
+subdivision or reduction of shares
+or allotment of shares during the
+validity period, the exercise price
+shall be adjusted according to the
+Scheme). On 15 June 2016, the 2015
+annual profit distribution plan was
+considered and passed at Shanghai
+Petrol's 2015 annual general meeting,
+whereby a cash dividend of RMB1.00
+I was paid for each 10 shares. On 15
+June 2017, the 2016 annual profit
+distribution plan was considered and
+passed at Shanghai Petrol's 2016
+annual general meeting, whereby a
+cash dividend of RMB2.50 was paid
+for each 10 shares and the exercise
+price was adjusted to RMB3.85 per
+share accordingly. On 13 June 2018,
+the 2017 annual profit distribution
+plan was considered and passed
+at Shanghai Petrol's 2017 annual
+general meeting, whereby a cash
+dividend of RMB3.00 was paid for
+each 10 shares and the exercise price
+was adjusted to RMB3.55 per share
+accordingly.
+According to the pricing principle
+disclosed by Shanghai Petro on the
+determination of exercise price, the
+exercise price of the initial grant was
+(vii) Exercise price of the initial grant and
+the adjustment to the exercise price
+At the end of the Reporting Period,
+there is no outstanding Shares
+Options which were not exercisable
+held by Shanghai Petro's key business
+personnel.
+During the reporting period, a
+total of 8,984,600 Share Options
+granted to Shanghai Petro's key
+business personnel had lapsed due
+to participants' resignations and un-
+satisfaction of the exercise conditions
+for the third exercise period etc.
+During the reporting period, a total
+number of 9,153,900 outstanding
+Share Options had been exercised
+by Shanghai Petro's key business
+personnel during the second exercise
+period.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+At the beginning of the reporting
+period, a total number of 18,138,500
+outstanding Share Options which were
+not exercised were held by Shanghai
+Petro' key business personnel.
+(vi) Outstanding Share Options granted
+to employees other than the persons
+mentioned in item (v)
+(viii) Validity of and exercise arrangements
+for the initial grant
+There is no outstanding Share
+Options which were not exercised
+held by directors, chief executives and
+substantial shareholders of Shanghai
+Petro as of the end of the Reporting
+Period.
+During the reporting period, Vice
+President of Shanghai Petro Mr. Jin
+Wenmin was appointed as Director
+of Shanghai Petro on 13 June 2018.
+During the reporting period, a total
+of 483,000 Share Options had been
+exercised by Director of Shanghai
+Petro Mr. Gao Jinping, Mr. Jin Qiang,
+Mr Guo Xiaojun and Mr. Jin Wenmin
+during the second exercise period.
+At the beginning of the Reporting
+Period, a total number of 966,000
+outstanding Share Options which
+were not exercised were held by
+the directors of Shanghai Petro Mr.
+Gao Jinping, Mr. Jin Qiang, Mr.
+Guo Xiaojun and Vice President of
+Shanghai Petro Mr. Jin Wenmin.
+(v) Outstanding Share Options held
+by directors, chief executive and
+substantial shareholder of Shanghai
+Petro during the reporting period
+Since the exercise conditions were not
+satisfied, the total amount of Share
+Options that have lapsed during the
+reporting period is: 8,946,900
+(iv) The exercise condition of the third.
+exercise period of Share Option under
+the first grant
+Exercise price: RMB 3.85/share
+Number of participants who exercised
+the option: 185
+14 February 2018
+Date of completion of the registration
+for newly increased shares:
+During the reporting period, since
+Director of Shanghai Petro Mr. Gao
+Jinping resigned, the 150,000 A share
+options granted to him which were
+not exercised had lapsed. During
+the reporting period, since the third
+exercise conditions were not met, a
+total of 333,000 Share Options held
+by Director of Shanghai Petro Mr. Jin
+Qiang, Mr. Guo Xiaojun and Mr. Jin
+Wenmin had lapsed.
+The validity period of the Share
+Options shall be five years
+commencing from the grant date, but
+is subject to exercise arrangement
+for the Scheme. For the details of the
+exercise arrangement, please refer
+to the section of "Validity Period"
+on Page 32 of Sinopec Corp.'s 2015
+annual report published on 29 March
+2016.
+(ix) The progress of share option incentive
+up to the date of Shanghai Petro's
+2018 annual report
+None
+4
+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;
+China Petrochemical
+Corporation
+Other
+Other undertakings
+China Petrochemical 1
+Corporation
+Public Offerings (IPOs)
+Contents
+Party
+Undertaking
+IPOs
+Undertakings related to Initial
+Background
+Type of
+4 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+35
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Save as disclosed above and in
+previous relevant announcements,
+during the reporting period, Shanghai
+Petro granted no 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.
+Number of exercised Share Options:
+9,636,900 options
+Issuance date
+520,700 options
+Exercise date: 12 January 2018
+Number of exercisable Share Options:
+9,636,900 options
+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.
+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
+annual interest rate of 1.875% and had
+been repaid and delisted; the 10-year notes
+principal totaled USD 1.25 billion, with an
+During the reporting period, the Company
+paid in full the interest accrued for the other
+bonds and debt financing instruments. As
+at 31 December 2018, the standby credit
+line provided by several domestic financial
+institutions to the Company was RMB 392.7
+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.
+100
+100
+100
+100
+Loan repayment rate (%)
+Interest payment rate (%)
+car wash
+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
+3 SHARE OPTION INCENTIVE SCHEME OF
+SINOPEC CORP.'S SUBSIDIARY, SINOPEC
+SHANGHAI PETROCHEMICAL COMPANY
+LIMITED (SHANGHAI PETRO), DURING THE
+REPORTING PERIOD
+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 2018, the aggregate
+investment was RMB 5.8 billion.
+Significant Events
+32
+32
+Significant Events
+SIGNIFICANT EVENTS (CONTINUED)
+2 CORPORATE BONDS ISSUED AND INTEREST PAYMENTS
+Basic information of corporate bonds
+Bond name
+Abbreviation
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 31
+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 of Directors and the first
+extraordinary general meeting of Sinopec
+Corp. for 2014. The 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 Petro
+(10,800 million shares) nor exceed 10% of
+the total A share capital of Shanghai Petro
+(7,305 million shares). As of 20 March 2019,
+there is no exercisable outstanding share
+options according to the Scheme. As of 20
+March 2019, the number of the underlying
+shares of the share options to be granted
+by Shanghai Petro to the participants was
+691,740,000 A shares, which represents
+6.4% of the total share capital of Shanghai
+Petro (10,823,813,500 shares). The vesting
+period for each grant under the Scheme shall
+be no less than two years.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+(iii) The exercise condition of the second
+exercise period of Share Option under
+the first grant
+Exercise price: RMB 3.85/share
+Number of participants who exercised
+the option: 199
+Date of completion of the registration
+for newly increased shares:
+27 September 2017
+Number of exercised Share Options:
+14,176,600 options
+5,228,900 options
+Number of lapsed Share Options:
+Exercise date: 29 August 2017
+Number of exercisable Share Options:
+14,212,500 options
+(ii) The exercise condition of the first
+exercise period of share option under
+the first grant
+Number of Share Options Granted:
+38,760,000
+214 persons
+Grant Date: 6 January 2015
+Number of Participants:
+(i) Initial Grant of the Share Option:
+(2) Information on the Initial Grant of the
+Share Option of Shanghai Petro's A
+share (Share Option)
+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
+34
+Significant Events
+33
+Number of lapsed Share Options:
+G45
+Significant Events
+39
+4
+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 community 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
+Corporation will mutually supply ancillary
+services for products, production and
+construction services (Mutual Supply
+Agreement)
+(1) The Company and China Petrochemical
+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
+Connected Transactions
+Significant Events
+41
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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.
+21 OTHER EVENT
+In 2019, the Company will further strengthen poverty alleviation key-problem tackling work, continue to insist on targeted poverty alleviation
+and targeted lifting of poor people out of poverty, insist on combination of “blood transfusion” and “haematogenesis”, focus on tackling of key
+problems of poor regions, exert the advantages of the enterprise, and focus on poverty alleviation in terms of industry; attach importance to
+poverty alleviation in terms of employment, and create jobs; deepen poverty alleviation in terms of education, and strengthen support to poor
+students; strengthen cooperation with China Foundation for Poverty Alleviation, and motivate social strength to participate in poverty alleviation;
+optimize poverty alleviation in terms of medical treatment, and provide high quality medical treatment support to the people in poor regions;
+strengthen poverty alleviation in terms of consumption, cooperate with Social Participation in Poverty Alleviation and Development of China,
+promote high quality agriculture products of poor counties to the whole country and make efforts to optimize targeted poverty alleviation work.
+146
+17.7
+18.25
+6,198
+8.1
+2.31
+(4) Subsequent targeted poverty alleviation plan
+Notel: The table was prepared in accordance with the 2018 requirements of the State Council Leading Group Office of Poverty Alleviation and Development.
+Note2: Fund for Poverty Alleviation Work consists of our own funds and financing from other parties introduced by the Company.
+22.33
+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 the Company 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.
+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
+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.
+Sinopec Group
+Related Parties
+5 FUNDS PROVIDED BETWEEN RELATED PARTIES
+For details, please refer to item 5" significant
+equity investment” in section "Significant
+Events".
+OTHER SIGNIFICANT CONNECTED
+TRANSACTIONS OCCURED THIS YEAR
+(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.
+i normal commercial terms; or
+(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 2018 were approved at the 5th 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 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.
+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.
+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
+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.
+(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 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+42
+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
+417.201 billion. Among which, purchases
+expenses amounted to RMB 267.505 billion,
+representing 9.04% 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 251.444 billion, purchases of auxiliary
+and community services of RMB 6.664
+billion, payment of property rent of RMB
+522 million, payment of land use right of
+RMB 7.765 billion, and the interest expenses
+amounted to RMB 1.11 billion. The sales
+income amounted to RMB 149.697 billion,
+representing 4.91% of the total amount of
+this type of transaction for the reporting
+period, including RMB 148.779 billion for
+sales of products and services, RMB 69
+million for agency commission income, and
+RMB 848 million for interest income.
+The aggregated amount of the continuing
+connected transactions for 2018 of the
+Company is in compliance with the relevant
+requirements of the Hong Kong Listing
+Rules and the Shanghai Listing Rules. For
+performance details of connected transaction
+agreements, please refer to Item 3 below.
+3.5
+1,374
+Other related parties
+6
+3,149
+Unit: RMB million
+Significant Events
+SIGNIFICANT EVENTS (CONTINUED)
+15 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 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 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 making payments, China Petrochemical
+Corporation will ensure that Century Bright
+Company will fulfill its repayment obligation
+through various channels.
+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.
+16 APPROPRIATION OF NONOPERATIONAL
+FUNDS BY THE CONTROLLING
+SHAREHOLDER AND ITS RELATED PARTIES
+AND THE PROGRESS FOR CLEARING UP
+Not applicable
+17 STRUCTURED ENTITY CONTROLLED BY
+THE COMPANY
+None
+18 DETAILED IMPLEMENTATION OF THE
+SHARE INCENTIVE SCHEME DURING THE
+REPORTING PERIOD
+Sinopec Corp. did not implement any share
+incentive scheme during the reporting period.
+19 ENVIRONMENTAL PROTECTION
+SOLUTIONS OF COMPANIES AND THEIR
+SUBSIDIARIES AS MAJOR POLLUTANT
+DISCHARGING COMPANIES RECOGNIZED
+BY ENVIRONMENTAL PROTECTION
+DEPARTMENTS
+In 2018, some 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 the
+local government website. Sinopec Corp.
+strictly implemented the new standards
+in refining and petrochemical industry,
+completed the treatment of sewage and
+flue gas, and actively conducted the
+comprehensive treatment of VOCs. For
+details, please refer to the Company's
+Communication on Progress for Sustainable
+Development. Pollution prevention and
+control facilities remained in effective and
+stable operation. The Company further
+regulated environmental management of
+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 obtained approvals from the
+environment authorities. Sinopec Corp.
+strictly complying with relevant national
+requirements on environment emergency
+plan management and continulysly 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 modified the self-
+monitoring plan, and 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.
+20 POVERTY ALLEVIATION PROGRAM
+LAUNCHED BY THE COMPANY
+(1) Targeted Poverty Alleviation Plan
+The Company actively fulfilled our social
+responsibilities and strictly followed
+the fundamental principles of poverty
+alleviation and elimination. 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.
+(2) Overview on 2018 Targeted Poverty
+Alleviations
+In 2018, the Company invested nearly
+RMB 0.23 billion in Targeted Poverty
+Alleviation, including RMB 108.41
+million invested in 50 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. We lifted 12,250
+registered people out of poverty and
+funded the education of 206 students.
+40
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+(3) 2018 Targeted Poverty Alleviation Work Statistics
+Funds
+1.
+I.
+Overview
+Index
+Data
+545
+2. Number of people lifted out of poverty
+1. Poverty elimination through industrial development
+1.1 Categories of poverty alleviation programs through
+industrial development
+4.09
+110
+1,500
+Poverty alleviation through science and technology development
+✓ Others
+2. Assistance on sales of agriculture products from impoverish areas
+1. Procurement Agriculture products from impoverish areas
+7. Other input
+6.2 Number of people get assistance
+6.1 Input in emergency relief
+6. Emergency relief
+areas
+5.1 Input in medical and health care resources in poverty. stricken
+5. Poverty alleviation through healthcare
+4.3 Input in education resources in poverty-stricken areas
+4.2 Number of students who received funding assistance
+4.1 Input in students funding
+4. Poverty elimination through education
+3.2 Input in relocation
+3.1 Number of relocated people
+3. Poverty elimination through relocation
+2.2 Participants of professional skill trainings (person time)
+2.1 Input in professional skill training
+2. Poverty elimination through provision of employment
+1.3 Input in poverty alleviation projects through
+industrial development
+1.2 Number of poverty alleviation programs
+228.47
+32,250
+☑ Poverty alleviation through assets income
+☑ Poverty alleviation through e-commerce
+☑ Poverty alleviation through agriculture and forestry development
+☑Poverty alleviation through tourism development
+II. Input breakdowns
+Total
+III. Consumption assistance
+Parent company and
+A.7 Provision of and access to
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+47
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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
+to ensure that their contribution to
+the Board remains informed and
+relevant.
+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.
+C.
+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/listco/.
+A.6 Responsibility of Directors
+The review opinions were issued
+at each meeting and submitted to
+the Board.
+d. during the reporting period, the
+Nomination Committee held
+two meetings (please refer to
+"Meetings held by the special
+committees of the Board" under
+the section "Report of the Board of
+Directors" in this annual report).
+information
+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
+Committee has also appointed
+consultants member and can
+require such member to provide
+advice. The working expenses of
+the Remuneration Committee are
+included in the budget of Sinopec
+Corp.
+b. The Board establishes the
+of Chairman of the Board Mr.
+Dai Houliang, who served as
+the Chairman, and Independent
+Non-Executive Directors Mr.
+Tang Min and Mr. Ng, Kar Ling
+Johnny, who served as members.
+The major responsibilities of
+Nomination Committee are to
+provide suggestion on Board's size
+and composition, as well as the
+selecting standards, procedures
+and candidates for directors and
+senior management.
+a. As approved at the annual general
+meeting for the year 2017, the
+Board of Sinopec Corp. established
+Nomination Committee, consisting
+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. 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. For details about the
+tenure of each director, please
+refer to the section "Directors,
+Supervisors, Other Senior
+A.4 Appointment, re-election and
+dismissal
+b. Sinopec Corp. has received from
+each of the Independent Non-
+executive directors a letter of
+confirmation for 2018 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
+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 are with professional
+backgrounds in economics,
+accounting and finance.
+A.3 Board composition
+Corporate Governance
+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.
+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 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
+Relations
+49
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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 six 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/listco/)
+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 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+48
+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 2018 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).
+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.
+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
+2018.
+b. The Remuneration Committee
+Committee) consists of Independent
+Non-executive Director Mr. Fan Gang,
+who serves as the Chairman, and Non-
+executive Director Mr. Li Yunpeng 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.
+Annual Report 2018 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.
+Committee (Remuneration
+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. Dai Houliang serves as
+Chairman of the Board and Mr.
+Ma Yongsheng serves as President
+of Sinopec Corp.
+1 IMPROVEMENTS IN CORPORATE
+GOVERNANCE DURING THE REPORTING
+PERIOD
+CORPORATE GOVERNANCE
+Connected Transactions
+43
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+Loans and other accounts receivable and payable
+No material negative impact
+*. affiliated companies include subsidiaries, associates and joint ventures.
+Reason for provision of funds between related parties
+Impacts on the Company
+30,565
+295
+2,259
+38
+28,306
+333
+of the year
+30,232
+Amount
+incurred
+Funds from related parties
+Balance
+at the
+beginning
+of the year
+28,268
+Balance at
+the end
+Unit: RMB million
+30,846
+1,431
+(247)
+5,130
+25,716
+1,678
+Balance
+at the end
+of the year
+29,415
+Amount
+incurred
+5,377
+at the
+beginning
+of the year
+24,038
+Funds to related parties
+Balance
+Associates and joint ventures
+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. of the Company.
+affiliated companies*
+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. Sinopec
+Corp. further improved corporate governance
+structure through completion of the re-
+election of the Board of Directors, Board of
+Supervisors, and the appointment of senior
+management, as well as the appointment of
+each Board Committee and establishment of
+the Nomination Committee under the Board.
+We amended the Articles of Association,
+Rules and Procedures of the Board
+Meetings and Internal Control Procedures,
+and formulated Terms of References of
+Nomination Committee. Pursuant to Article
+of Association and other regulations, we
+further improved the regulations in relation
+to the Party's participation in the corporate
+governance of the Company, which promoted
+the scientific decision-making procedures.
+The Company actively implemented “the
+year of party building quality" event to
+drive the high-quality development of the
+Company. The independent directors have
+played an active and good role with diligence
+in performing their duties. The investor
+relations work has been further refined, and
+the required information was disclosed in
+time, which improved the transparency of
+the Company and were positively recognised
+by the capital market. The Company's active
+performance of its social responsibilities has
+achieved good results.
+During the reporting period, there are 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.
+1,964
+During the reporting period, Sinopec
+Corp. convened the 2017 annual general
+meeting on 15 May 2018, and 2018 first
+extraordinary general meeting on 23 October
+2018 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 and on the websites of Hong Kong
+Stock Exchange after the general meetings.
+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.
+2 GENERAL MEETINGS
+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.
+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.
+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 2018, Sinopec Corp.
+held seven 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 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
+(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
+Sinopec Corp. complied with all code.
+provisions set out in the Corporate
+Governance Code during the reporting
+period.
+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.
+5 COMPANY'S INDEPENDENCE FROM
+CONTROLLING SHAREHOLDER
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+46
+3 EQUITY INTERESTS OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+Corporate Governance
+45
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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 section "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 nomination of directors, connected
+transactions, dividend distributions and
+appointments of senior management of
+the Company as required by relevant rules
+and regulations, and maintained timely and
+effective communications with 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 Sinopec Corp. and the shareholders,
+especially the minority shareholders'
+interests, when performing their duties.
+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 deputy general manager 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 fulfill 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."
+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 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 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.
+As of 31 December 2018, 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.
+0
+Director
+0
+0
+Zhang Haichao
+0
+Director
+0
+0
+0
+0
+3
+Jiao Fangzheng
+0
+0
+0
+Li Yunpeng
+0
+1
+2
+Actual
+Attendance
+Director
+3
+1
+2
+0
+0
+1
+1
+Director
+Wang Zhigang
+0
+0
+0
+1
+Independent Director
+1
+Independent Director
+Andrew Y. Yan
+3
+1
+2
+0
+0
+1
+0
+Tang Min
+3
+1
+2
+General Meetings.
+0
+0
+0
+1
+0
+1
+Director
+Ma Yongsheng
+3
+0
+2
+1
+0
+1
+0
+Independent Director
+Jiang Xiaoming
+3
+1
+2
+0
+1
+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.
+0
+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 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 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.
+d. Sinopec Corp. established
+special organisation in charge of
+communication with shareholders and
+published 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
+2018 and the authorisation of the Board
+to determine their remuneration were
+approved at Sinopec Corp.'s annual
+general meeting for the year 2017 on
+15 May 2018. The audit fee for 2018
+is RMB 47.58 million (including audit
+fee of internal control), which was
+approved at the 5th 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 Xu Xia 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 52;
+for information about meeting held by
+Board Committees, please refer to page
+54; for information about tenure of
+non-executive directors, please refer to
+page 69; for information about equity
+interests of Directors, Supervisors and
+other senior Management, please refer
+to page 45; for information about the
+biographies and annual remuneration of
+Directors, Supervisors and other senior
+Management, please refer to page 64 to
+page 78.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+51
+Report of the Board of Directors
+Corporate Governance
+REPORT OF THE BOARD OF DIRECTORS
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+50
+0
+Corporate Governance
+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/
+listco/.
+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 Strategy Committee consists
+of six directors, including Chairman
+of the Board Mr. Dai Houliang, who
+serves as Chairman, as well as
+Executive Director Mr. Ma Yongsheng,
+Mr. Ling Yiqun, Mr. Liu Zhongyun
+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. Dai Houliang, who serves as
+Chairman, Independent Non-executive
+Directors Mr. Tang Min and Mr. Fan
+Gang, 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
+Remuneration Committee and the
+Nomination Committee are published
+on the website of Sinopec Corp. at
+http://www.sinopec.com/listco/.
+E Investor Relations
+a. In order to further enhance corporate
+governance and satisfy business
+expansion needs of the Company,
+as approved at the annual general
+meeting of shareholders for the
+year 2017, Sinopec Corp. amends
+the Articles of Association and its
+appendix Rules and Procedures of
+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. as well as the website
+of Shanghai Stock Exchange on 16
+May 2018 and the announcement
+published on the website of the Hong
+Kong Stock Exchange on 15 May
+2018.
+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.
+d. The Chairman of the Board hosted
+the annual general meeting for the
+year 2017 and the first extraordinary
+general meeting for the year 2018.
+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 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.
+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.
+b. During the reporting period, the
+Secretary to the Board actively
+participated in career development
+training with more than 15 training
+hours.
+50
+0
+The Board is pleased to present the directors'
+report for the year ended 31 December 2018 for
+shareholders' review.
+MEETINGS OF THE BOARD
+Director Titles
+Names
+No. of
+meeting held
+Board Meetings
+Actual Attended By
+Attendance communication
+Attended
+Absent
+No. of
+by proxy
+meeting held
+Vice Chairman
+Dai Houliang
+3
+1
+2
+(1) The Directors' attendance to the sixth session of the Board Meetings and the General Meeting.
+1
+3 DIRECTORS' ATTENDANCE TO THE BOARD MEETINGS AND TO THE GENERAL MEETINGS.
+42
+During this reporting period, Sinopec Corp.
+held seven (7) Board meetings. The details
+are as follows:
+(1) The 16th meeting of the sixth session of
+the Board was held by written resolution
+on 8 February 2018, whereby the
+proposals in relation to the appointment
+of senior management of the Company
+and the revision of the internal control
+manual (version 2018) were approved at
+the meeting.
+(2) The 17th meeting of the sixth session
+of the Board was held by on site
+meeting and via video conference on 23
+March 2018, whereby the proposals in
+relation to the following matters were
+approved: (i) the Work Report of the
+sixth session of the Board, (ii) the Work
+Report of the sixth Session of the Senior
+Management, (iii) Financial results and
+business performance of the Company
+for the year 2017(including a. provision
+for impairment for the year 2017; b.
+The connected transactions for the year
+2017; c. Profit distribution plan for the
+year 2017; d. Audit costs for the year
+2017; e. the report of Risk Assessment
+for Capital Deposits at Finance Company
+and Century Bright Company), (iv)
+2017 Communication on Progress for
+Sustainable Development of Sinopec
+Corp., (v) Financial Statements of Sinopec
+Corp. for the year 2017, (vi) Annual
+Report and form 20F of the Company
+for the year 2017, (vii) Internal control
+assessment report of Sinopec Corp. for
+the year 2017, (viii) Re-appointment of
+external auditors of Sinopec Corp. for
+the year of 2018 and to authorise the
+Board to determine their remunerations,
+(ix) Provision of Guarantee for Zhong
+An United Coal Chemical Co., Ltd.
+by Sinopec Corp. (x) the service
+contracts between Sinopec Corp. and
+the Directors of the seventh session
+of the Board (including emolument
+provisions) and service contracts between
+Sinopec Corp. and the Supervisors
+of the seventh session of the Board
+of Supervisors(including emolument
+provisions) (xi) the establishment of
+Board committees (xii) the amendments
+to the Articles of Association of Sinopec
+Corp. (xiii) the amendments to the rules
+and procedures of the Board meetings,
+(xiv)the re-election of the Board of
+Directors, (xv) the re-election of the
+Board of Supervisors, (xvi)to authorise
+the Board to determine the interim profit
+distribution plan of Sinopec Corp. for the
+year 2018, (xvii)authorising the Board to
+determine the proposed plan for issuance
+of debt financing instrument(s) (xviii)
+granting to the Board a general mandate
+to issue new domestic shares and/or
+overseas listed foreign shares of Sinopec
+Corp., (xix)Convening the annual general
+meeting of Sinopec Corp. for the year
+2017 and to dispatch the notice of the
+annual general meeting.
+(3) The 18th meeting of the sixth session of
+the Board was held by written resolution
+on 26 April 2018, whereby the proposal
+in relation to the first quarterly results of
+the Company for the three months ended
+31 March 2018 was approved.
+(4) The 1st meeting of the seventh session
+of the Board was held by on site meeting
+on 15 May 2018, whereby the proposals
+in relation to the following matters
+were approved: (i) the election of the
+Chairman of the seventh session of the
+Board, (ii) the adjustment of members
+of the Board Committees including
+Strategy Committee, Audit Committee,
+Remuneration Committee, Nomination
+Committee and Social Responsibility
+Management Committee, (iii) the
+appointment of the President of Sinopec
+Corp., (iv) the appointment of Senior
+Vice Presidents, Chief Financial Officer
+and Vice Presidents of Sinopec Corp.,
+(v) the appointment of the Secretary to
+the Board, the authorised representative
+of Sinopec Corp. to Hong Kong Stock
+Exchange and the representative on
+securities matters. And authorise the
+Secretary to the Board to handle the
+above-mentioned matters and to sign
+relevant documents.
+(5) The 2nd meeting of the seventh session
+of the Board was held by written
+resolution on 10 July 2018, whereby the
+proposal on the proposed establishment
+of Sinopec Capital by Sinopec Corp. with
+China Petrochemical Corporation was
+approved.
+(6) The 3rd meeting of the seventh session
+of the Board was held by on site
+meeting on 24 August 2018, 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 2018 and
+the work arrangements for the second
+half of the year 2018, (ii) Financial
+results and business performance of the
+Company for the first half of the year
+2018 (including a. the 2018 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 of the year 2018, (iv)
+interim report for the six months ended
+30 June 2018, (v) Three years rolling
+development plan of Sinopec Corp. (2018.
+to 2020). (vi) to propose to the general
+meeting for election of the Directors of
+the Board. (vii) the continuing connected
+transactions for three years from
+2019 to 2021 (viii) to propose to the
+general meeting for election of the first
+extraordinary general meeting of Sinopec
+Corp. for the year 2018 and to dispatch
+the notice of the meeting.
+(7) The 4th meeting of the seventh session
+of the Board was held by written
+resolution on 30 October 2018, whereby
+the proposals in relation to (i) the third
+quarterly report for three months ended
+30 September 2018, (ii) the nomination
+and appointment of the President of
+Sinopec Corp., (iii) the appointment of
+Senior Vice Presidents of Sinopec Corp.
+were 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 all
+the tasks delegated to them at the general
+meetings.
+52
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+1
+Director Titles
+Independent Director
+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.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+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 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.
+24 CORE COMPETITIVENESS ANALYSIS
+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 headquarter,
+Petroleum Exploration and Production
+Research Institute of Sinopec (PEPRIS) and
+senior managers of oilfield branches. Mr.
+Ma Yongsheng, the chairman of RMC is
+President of Sinopec Corp., an academician
+of the Chinese academy of Engineering 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 2018, the Company has
+not entered into any equity-linked agreement.
+22 EQUITY-LINKED AGREEMENTS
+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.
+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.
+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 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.
+16 PRE-EMPTIVE RIGHTS
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+58
+1
+Report of the Board of Directors
+57
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+During this reporting period, the amount
+of charity donations made by the Company
+amounted to RMB 0.18 billion.
+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.
+15 DONATIONS
+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.
+25 RISK FACTORS
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+4 MEETINGS HELD BY THE BOARD
+COMMITTEES
+During the reporting period, the Audit
+Committee held six (6) meetings. Strategy
+Committee held two (2) meetings, the
+Remuneration Committee held one
+(1) meeting, the Social Responsibility
+Management Committee held one (1)
+meeting, and the Nomination Committee
+held two (2) meetings. All members of
+each committee had attended the relevant
+meetings. Details of those meetings are as
+follows:
+(1) The 11th meeting of the sixth session of
+the Audit Committee was held by written
+resolutions on 8 February 2018, whereby
+the proposal in relation to the revision
+of the internal control manual (version
+2018) was approved at the meeting.
+(2) The 12th meeting of the sixth session of
+the Audit Committee was held by on site
+meeting on 21 March 2018, whereby the
+following matters were approved at the
+meeting: (i) Financial results, business
+performance and other related matters of
+the Company for the year 2017 (including
+a. provision for impairment for the year
+2017; b. the connected transactions
+for the year 2017; c. profit distribution
+plan for the year 2017; d. audit costs
+for the year 2017; e. the report of Risk
+Assessment for Capital Deposits at
+Finance Company and Century Bright
+Company), (ii) Annual Report and 20F for
+the year 2017; (iii) Financial Statements
+of Sinopec Corp. for the year 2017;
+(iv) Internal control assessment report
+of the Company for the year 2017; (v)
+Work report on the internal auditing for
+the year 2017. Reports on the auditing
+work of the financial statements for the
+year 2017 prepared by the domestic and
+overseas auditors were also reviewed at
+the meeting.
+(3) The 13th meeting of the sixth session
+of Audit Committee was held by written
+resolution on 26 April 2018, whereby the
+first quarterly report for three months
+ended 31 March 2018 was approved at
+the meeting.
+(4) The 1st meeting of the seventh session
+of Audit Committee was held by written
+resolution on 10 July 2018, whereby the
+proposal in relation to the the proposed
+establishment of Sinopec Capital by
+Sinopec Corp. with China Petrochemical
+Corporation was approved.
+(5) The 2nd meeting of the seventh session
+of Audit Committee was held by on site
+meeting on 22 August 2018, whereby
+(i) Financial statements for the first half
+year of 2018; (ii) Interim report for the
+first half year of 2018; (iii) Business
+performance and financial results of
+the first half year of 2018; (iv) Reports
+on internal auditing work for the first
+half year of 2018;. (v) the continuing
+connected transactions for three years
+from 2019 to 2021 were approved at the
+meeting.
+(6) The 3rd meeting of the seventh session
+of the Audit Committee was held by
+written resolution on 29 October 2018,
+whereby the third quarterly report for
+three months ended 30 September 2018
+was approved at the meeting.
+(7) The 5th meeting of the sixth session
+of the Strategy Committee was held by
+written resolution on 21 March 2018,
+whereby the proposal in relation to the
+proposed 2018 investments plan was
+approved at the meeting.
+(8) The 1st meeting of the seventh session
+of the Strategy Committee was held by
+written resolution on 22 August 2018,
+whereby the proposal in relation to three
+years rolling development plan of Sinopec
+Corp. (2018-2020) was approved at the
+meeting.
+(9) The 3rd meeting of the sixth session
+of the Remuneration Committee was
+held by written resolution on 21 March
+2018, whereby the proposals in relation
+to implementation of the remuneration
+rules for directors, supervisors and other
+senior management for 2017 and the
+report of the remuneration for directors
+of the seventh session of the Board and
+for supervisors of the seventh session of
+the Board of Supervisors were reviewed
+and approved at the meeting.
+(10) The 3rd meeting of the sixth session of
+the Social Responsibility Management
+Committee was held by written resolution
+on 21 March 2018, whereby the 2017
+Communication on Progress for the
+Sustainable Development of Sinopec
+Corp. was approved at the meeting.
+(11) The 1st meeting of the seventh session
+of the Remuneration Committee was held
+by written resolution on 22 August 2018,
+whereby the proposal in relation to the
+election of the directors of the Board for
+general meeting's approval was approved.
+(12) The 2nd meeting of the seventh session
+of the Remuneration Committee was
+held by written resolution on 29 October
+2018, whereby the proposals in relation
+to the appointment of the President and
+Senior Vice Presidents of Sinopec Corp.
+were approved.
+5 BOARD COMMITTEES HAVE ISSUED REVIEW
+OPINIONS WITHOUT ANY OBJECTION TO
+THE BOARD WHEN PERFORMING THEIR
+DUTIES DURING THE REPORT PERIOD.
+Report of the Board of Directors
+59
+59
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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 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 opening
+up of crude oil import licenses and the
+right of tenure, and further improvement in
+pricing mechanism of refined oil products,
+gas stations investment are fully opened
+overseas, 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 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.
+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.
+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.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+For domestic investors investing in the H
+Shares of Sinopec Corp. through Shanghai-
+Hong Kong Stock Connect Program, the
+company shall withhold and pay income tax
+at the rate of 20% on behalf of individual
+investors and securities investment funds.
+The company will not withhold or pay
+the income tax of dividends for domestic
+enterprise investors and those domestic
+enterprise investors shall report and pay the
+relevant tax by themselves.
+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
+Pursuant to the Notice on the Tax Policies
+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%.
+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
+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
+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 registration of members for H shares of
+Sinopec Corp. as at the record date.
+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 2018
+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,
+The dividend will be denominated and
+declared in RMB, and distributed to the
+domestic shareholders and investors
+participating in the Shanghai-Hong Kong
+Stock Connect Program in RMB and to
+the overseas shareholders in Hong Kong
+Dollar. The exchange rate for the dividend
+calculation in Hong Kong Dollar is based
+on the average benchmark exchange rate of
+RMB against Hong Kong Dollar as published
+by the People's Bank of China one week.
+preceding the date of the declaration of such
+dividend.
+The final cash dividend will be distributed
+on or before 21 June 2019 (Friday) to all
+shareholders whose names appear on the
+register of members of Sinopec Corp. on
+the record date of 10 June 2019 (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 3 June 2019 (Monday)
+for registration. The H shares register of
+members of Sinopec Corp. will be closed
+from 4 June 2019 (Tuesday) to 10 June
+2019 (Monday) (both dates inclusive).
+At the 5th meeting of the seventh session of
+the Board, the Board approved the proposal
+to distribute a final cash dividend of RMB
+0.26 (tax inclusive) per share, combining
+with an interim distributed dividend of RMB
+0.16 (tax inclusive) per share, the total
+dividend for the whole year is RMB 0.42 (tax
+included) per share.
+Proposals for dividend distribution
+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 2018, which
+is prepared in accordance with IFRS and
+the financial position as at that date and
+the accompanying analysis are set out from
+page 152 to page 211 in this annual report.
+The Company's business review, 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 prospects of
+the Company's business are disclosed in this
+annual report under the relevant sections
+of Chairman's Address, 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
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+54
+54
+The dividend distribution and bonus shares declared by Sinopec Corp. in the past three years are as follows:
+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)
+13 FIXED ASSETS
+12 BANK LOANS AND OTHER BORROWINGS
+Details of bank loans and other borrowings
+of the Company as of 31 December 2018
+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.
+64.95
+118.42
+82.52
+46.42
+51.12
+61.618
+30.15
+60.54
+50.85
+0.249
+0.50
+Report of the Board of Directors
+0.42
+2017
+2018
+The total sales value to the five largest
+customers of the Company in 2018 was
+RMB 231,305 million, accounted for 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 92,475 million,
+accounted for 3.2% 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 46.6% 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 14.8% 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
+IMPLEMTATION OF ENVIRONMENTAL
+POLICIES BY THE COMPANY
+The Company did not violate any
+environmental policy during the reporting
+period. 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 2018 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.
+2018 Internal Control Assessment Report of
+Sinopec Corp. was reviewed and approved at
+the 5th meeting of the seventh Session of the
+Board on 22 March 2019, 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
+2018, 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 2018.
+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 2016
+to 2018 is RMB 1.169 per share, and the total
+dividend payment from 2016 to 2018 as a
+percentage of average net profit in the three
+years is 266.8%.
+Note: The final cash dividend for 2018 is subject to the approval at the 2018 annual general meeting.
+listed company in the consolidated statement (%)
+Ratio between the dividends and the net profit attributed to the shareholders of the
+2016
+53
+58
+4. Independent Director Mr. Jiang Xiaoming, Mr. Andrew Y. Yan have not been directors of the board since 15 May 2018.
+5. Pursuant to the Hong Kong Listing Rules, attended by proxy was not counted as attendance by the director himself.
+0
+0
+1
+0
+Director
+Yu Baocai
+1
+0
+1
+0
+0
+0
+0
+Director
+Jiao Fangzheng
+1
+1
+0
+0
+0
+0
+0
+Director
+Ma Yongsheng
+4
+0
+2
+2
+0
+2
+1
+2
+Li Yunpeng
+Fan Gang
+3
+0
+2
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+0
+1
+0
+(2) The Directors' attendance to the seventh session of the Board Meeting and the General Meeting.
+Names
+No. of
+meeting held
+Board Meetings
+Actual Attended By
+Attendance communication
+General Meetings.
+Attended
+Absent
+No. of
+by proxy
+meeting held
+Actual
+Attendance
+Chairman
+Dai Houliang
+4
+2
+2
+0
+0
+1
+1
+Director
+4
+0
+1
+Ling Yiqun
+Independent Director
+Independent Director
+Fan Gang
+Cai Hongbin
+4
+2
+2
+0
+0
+1
+0
+4
+1
+2
+1
+0
+1
+0
+Independent Director
+Ng, Kar Ling Johnny
+4
+2
+2
+0
+0
+0
+1. No directors were absent from two consecutive Board meetings.
+2. Mr Wang Zhigang, Mr. Zhang Haichao resigned as directors of the Board on 29 January 2018.
+3. Mr. Jiao Fangzheng resigned as director of the Board on 7 June 2018.
+Director
+1
+1
+1
+1
+0
+1
+2
+0
+1
+1
+Director
+Liu Zhongyun
+4
+1
+2
+1
+0
+1
+1
+Director
+2
+0
+1
+4
+Tang Min
+Independent Director
+1
+4
+1
+Li Yong
+2
+1
+4
+0
+0
+[이이이이이이
+Remuneration
+paid by
+in 2018
+paid by
+Equity interests in Sinopec Corp.
+Name
+Gender
+Wang Zhigang
+Whether
+00000
+2018.05-2021.05
+233.3
+58 Independent Director
+Male
+Ng, Kar Ling Johnny
+233.3
+2018.05-2021.05
+Independent Director
+51
+Male
+333.3
+Male
+Cai Hongbin
+No
+No
+No
+48.29
+Zhang Haichao
+0
+0
+2015.05-2021.05
+Yes
+2015.05.2018.06
+Former Director and
+56
+Male
+Jiao Fangzheng
+0
+0
+Yes
+2015.05-2018.01
+Age
+61
+0
+No
+2006.05-2018.01
+2017
+2018
+Company
+(as at 31 December)
+the holding
+before tax)
+(RMB 1,000,
+Tenure
+Position in
+Sinopec Corp.
+Former Director and
+Senior Vice President
+Former Director and
+Senior Vice President
+61
+Male
+0
+Independent Director
+No
+Male
+Yes
+2018.10-2021.05
+2016.02-2021.05
+Board Director,
+0
+Yes
+0
+65
+Yan Yan
+Male
+61
+Senior Vice President
+Former Independent
+Director
+Former Independent
+Director
+2012.05.2018.05
+12.50
+2012.05.2018.05
+12.50
+22
+No
+No
+0
+0
+Note 1: Mr. Dai Houliang received remuneration from the Company from January 2018 to October 2018.
+2: Mr. Ma Yongsheng receives remuneration from the Company since November 2018.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+69
+Directors, Supervisors,
+Senior Management and Employees
+Male
+2017
+0
+0
+394.6
+0
+Fan Gang
+No
+333.3
+2015.05-2021.05
+65 Independent Director
+Male
+Tang Min
+Yes
+2018.05-2021.05
+0
+Yes
+2018.05-2021.05
+13,000
+65
+13,000
+2018.05-2021.05
+Board Director,
+Senior Vice President
+Board Director,
+Senior Vice President
+Board Director
+55
+Male
+Li Yong
+55
+Male
+Liu Zhongyun
+56
+Male
+Ling Yiqun
+President
+oooo
+Yes
+Jiang Xiaoming
+0
+Ma Yongsheng
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+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 fluctuation of international crude
+oil prices and severe operating environment
+of excessive supply of refined oil products in
+domestic market in 2018, the Company took
+advantage of its integrated value chain to
+accelerate the Company's transformation and
+focused on improving quality and efficiency;
+made every effort to expand the market,
+reinforce its management, strictly control
+costs, promote the deepening reform, promote
+transformation and development, all contributing
+to a hard-won business result. The Board of
+Supervisors had no objection to the supervised
+issues during this reporting period.
+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 concerning change
+in growth mode, structure adjustment, as well
+as development and profitability. The senior
+management diligently executed the resolutions
+approved by the Board, continued to deepen the
+reform, focus on innovations and compliance
+operations, 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.
+Secondly, the reports and financial statements
+prepared by Sinopec Corp. in 2018 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.
+Thirdly, Sinopec Corp.'s internal control
+system is effective. No material defects of
+internal control were found. In the meantime,
+Sinopec Corp. actively fulfilled its social
+responsibilities and promoted the sustainable
+development of social economy. Information
+disclosed in the Communication on Progress
+for Sustainable Development was in Compliance
+with requirements made by Shanghai Stock
+Exchange for listed companies with regard to
+the publication of social responsibility report.
+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.
+In 2019, 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.
+Report of the Board of Supervisors
+Zhao Dong
+22 March 2019
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+63
+Report of the Board of Supervisors
+Dai Houliang
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES
+Chairman of the Board of Supervisors
+In addition, the supervisors attended the
+general meetings of shareholders and attended
+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 the Supervisors' capabilities in
+performing supervisory duties.
+On 30 October 2018, the 3rd meeting of the
+seventh session of the Board of Supervisors was
+held, and the Third Quarterly Report of Sinopec
+Corp. for 2018 was reviewed and approved at
+the meeting.
+On 24 August 2018, the 2nd meeting of the
+seventh session of the Board of Supervisors was
+held, and the Interim Report of Sinopec Corp.
+for 2018, the Interim Financial Statements
+of Sinopec Corp. for 2018 and Proposal of
+Continuing Connected Transactions from 2019
+to 2021 were reviewed and approved at the
+meeting.
+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 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.
+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, 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
+Chairman
+Beijing, China, 22 March 2019
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+61
+Report of the Board of Directors
+62
+REPORT OF THE BOARD OF SUPERVISORS
+Dear Shareholders:
+In 2018, 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 for sustainable development, internal
+control assessment report, working report of the
+Board of Supervisors and continuing connected
+transactions etc.
+On 23 March 2018, the 13th meeting of the
+sixth session of the Board of Supervisors was
+held, and the proposals in relation to Annual
+Report of Sinopec Corp. for 2017, the Financial
+Statements of Sinopec Corp. for 2017, 2017
+Communication on Progress for Sustainable
+Development of Sinopec Corp., Internal Control
+Assessment Report of Sinopec Corp. for 2017,
+Work Report of the Board of Supervisors of
+Sinopec Corp. for 2017, Work Report of the
+Sixth Session of the Board of Supervisors of
+Sinopec Corp., were reviewed and approved at
+the meeting.
+On 26 April 2018, the 14th meeting of the
+sixth session of the Board of Supervisors was
+held, and the proposal in relation to the First
+Quarterly Report of Sinopec Corp. for 2018 was
+reviewed and approved at the meeting.
+On 15 May 2018, the 1st meeting of the seventh
+session of the Board of Supervisors was held,
+and Mr. Zhao Dong was elected as Chairman of
+the Board of Supervisors of Sinopec Corp.
+Li Yunpeng
+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.
+1 INTRODUCTION OF
+AND OTHER SENIOR
+MANAGEMENT
+Commander of Sichuan-East
+China Gas Pipeline 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 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 February 2016, he
+was elected as Director 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018 65
+Directors, Supervisors,
+Senior Management and Employees
+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,
+he served as General
+Manager and Deputy Party
+Secretary of CPC Committee
+of Sinopec Exploration
+Company; in May 2007, he
+was appointed as Deputy
+Supervisors,
+Senior
+Ling Yiqun
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Liu Zhongyun
+Ling Yiqun, aged 56,
+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 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
+Danagement and Employees
+Ma Yongsheng, aged 57,
+Director and President of
+Sinopec Corp. Mr. Ma is
+a member of the Leading
+Party Member Group
+and the Deputy General
+Manager of China National
+Petroleum Corporation since
+September 2008 and had
+been acting concurrently
+as director of Petrochina
+Company Limited since
+May 2011; Since June
+2018, he has been a
+member of the Leading
+Party Member Group and
+the Vice President of China
+Petrochemical Corporation.
+In August 2018, he was
+appointed concurrently
+as Chairman of Sinopec
+Enginnering (Group) Co.,
+Ltd. In October 2018, Mr.
+Yu was elected as Director
+of Sinopec Corp.
+Company and the General
+Manager of Lanzhou
+Petroleum & Chemical
+Company; He had been
+(1) Directors
+Dai Houliang, aged 55,
+Chairman of the Board of
+Directors 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 May 2009, he was elected
+as Director and appointed
+as Senior Vice President of
+Sinopec Corp.; in August
+2012, he was appointed
+concurrently as Chairman of
+Sinopec Great Wall Energy
+& Chemical Ltd.; in March
+2013, he was appointed
+concurrently as Chairman
+of Sinopec Catalyst Ltd.; 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; between August 2016
+and October 2018, he acted
+as President of Sinopec
+Corp.; in July 2018, he was
+appointed as the Chairman
+of the Board of Sinopec
+Petrochemical Corporation;
+in May 2018, he was
+appointed as the Chairman.
+of the Board.
+Li Yunpeng, aged 59,
+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 the Party
+Organisation Department
+of COSCO; in December
+2000, he was appointed
+as Secretary of Communist
+Youth League Committee
+of 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 the Leading Party
+Member Group of COSCO;
+in December 2011, he
+was appointed as 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.
+Supervisors,
+Danagement and Employees
+Senior
+19
+64
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Yu Baocai
+Yu Baocai, aged 53,
+Director of Sinopec Corp.
+Mr. Yu is a senior engineer
+and master in economics.
+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
+of Daqing Petrochemical
+Company; In September
+2003, he was appointed as
+the General Manager and
+Secretary of CPC Committee
+of Lanzhou Petrochemical
+Company; In June 2007,
+he was appointed as the
+General Manager and Deputy
+Secretary of CPC Committee
+of Lanzhou Petrochemical
+DIRECTORS, SUPERVISORS
+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.
+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 insider trading or asset loss
+which is detrimental to the interests of Sinopec
+Corp. or its shareholders was discovered.
+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.
+Senior Management and Employees
+Supervisors,
+Danagement and Employees
+Senior
+Cai Hongbin
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Directors, Supervisors,
+Ng, Kar Ling Johnny
+of the University of Hong
+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 Beijing Landsky
+Environmental Technology
+Co., Ltd., In May 2018, Mr.
+Cai acted as Independent
+Director of Sinopec Corp.
+Ng, Kar Ling Johnny, aged
+58, 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 member of
+the Institute of Chartered
+Accountants in England and
+Wales (AICAEW). 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 the Vice Chairman of
+KPMG (China) from October
+2015 to March 2016. Mr.
+Ng currently serves as
+Independent Non-executive
+Director and Chairman of
+the audit committee of
+China Vanke Co., Ltd. In
+May 2018, Mr. Ng acted
+as Independent Director of
+Sinopec Corp.
+68
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+LIST OF MEMBERS OF THE BOARD
+Cai Hongbin, aged 51,
+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
+67
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+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.
+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
+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. In May 2018, he
+I was elected as Director of
+Sinopec Corp.
+Liu Zhongyun, aged 55,
+Director and Senior Vice
+President 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 the Party 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 Limited; in July
+2010, he was appointed as
+General Manager of Sinopec
+Northwest Oilfield Company,
+Director General of
+Northwest Petroleum Bureau
+under China Petrochemical
+Corporation. Since August
+2014, Mr. Liu has acted
+as Assistant to President
+and Director General of
+HR Department of China
+Petrochemical Corporation,
+and in May 2015, he was
+elected as Supervisor of
+Sinopec Corp.; in March
+2017, he was appointed
+as Vice President of China
+Petrochemical Corporation;
+in February 2018, he was
+appointed as Senior Vice
+President of Sinopec Corp.
+In December 2018, he was
+appointed concurrently as
+the Chairman of Sinopec
+Oilfield Service Corporation.
+In May 2018, Mr. Liu was
+elected as Director of
+Sinopec Corp.
+66
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Li Yong
+Tang Min
+Fan Gang
+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 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.
+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.
+Tang Min, aged 65,
+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.
+Fan Gang, aged 65,
+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
+Remuneration
+paid by
+Li Yong, aged 55, 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
+President of China National
+Offshore Oil Corporation and
+Whether
+Male
+Ma Yongsheng
+Male
+5230
+Chairman
+Board Director
+Board Director
+2009.05-2021.05
+2017.06-2021.05
+467.8
+No
+60
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+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.
+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
+in 2018
+Yu Baocai
+Male
+Report of the Board of Directors
+Male
+paid by
+Li Yunpeng
+Name
+Gender
+Age
+(RMB 1,000,
+the holding
+Equity interests in Sinopec Corp.
+Position in
+Sinopec Corp.
+Tenure
+before tax)
+Company
+2018
+(as at 31 December)
+Dai Houliang
+OF DIRECTORS, SUPERVISORS,
+AND THE SENIOR
+MANAGEMENT
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+6 THE COMPANY'S EMPLOYEES
+As at 31 December 2018, the
+Company has a total of 423,543
+employees. There are a total of
+241,168 retired employees to
+be reimbursed by Sinopec Corp.
+Sinopec Marketing Co. Limited,
+principal subsidiary of Sinopec
+Corp., have 142,669 employees.
+THE BREAKDOWN ACCORDING TO THE MEMBERS OF EACH OPERATION SEGMENT AS FOLLOWS:
+5 REMUNERATION OF DIRECTORS,
+SUPERVISORS, AND THE
+SENIOR MANAGEMENT
+During this reporting period,
+there is a total of 19 directors,
+supervisors and other senior
+management received
+remuneration from Sinopec
+Corp. with a total amount of
+RMB 10.9976 million.
+4 CONTRACTRAL INTERESTS
+OF DIRECTORS AND
+SUPERVISORS
+There is no change in
+shareholdings of the Company
+by Directors, Supervisors and
+other senior managements
+during the reporting period.
+Marketing and Distribution
+3 CHANGE OF SHAREHOLDING
+As of 31 December 2018 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.
+142,669
+4%
+R&D
+5,873
+1%
+Other Segments
+14,574
+Exploration and Production
+139,873
+33%
+Directors, Supervisors,
+Senior Management and Employees
+60,492
+Refining
+34%
+Senior Management and Employees
+Board of Directors: Mr. Dai
+Houliang was elected as
+Executive Director and Chairman
+of the Board. Mr. Li Yunpeng,
+Mr. Jiao Fangzheng, Mr. Ma
+Yongsheng, Mr. Ling Yiqun,
+Mr. Liu Zhongyun and Mr. Li
+Yong were elected as Directors.
+Mr. Tang Min, Mr. Fan Gang,
+Mr. Cai Hongbin and Mr. Ng
+Kar Ling Johnny were elected
+as Independent Non-executive
+Directors. Mr. Jiang Xiaoming
+and Mr. Andrew Y. Yan were
+no longer the Independent
+Non-executive Directors of the
+77
+14%
+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.
+On 15 May 2018, the members
+of the Seventh Session of the
+Board of Directors and the
+Board of Supervisors (non-
+employee representative
+supervisors) were elected at
+the 2017 general meeting of
+shareholders. The 1st meeting
+of the Seventh Session of Board
+held at the same date elected
+Chairman of the Board and
+appointed senior management.
+The 1st meeting of the Seventh
+Session of the Board of
+Supervisors elected Chairman
+of the Board of Supervisors.
+The changes of the directors,
+supervisors and other senior
+management are as follows:
+Remuneration
+paid by
+Sinopec Corp.
+in 2018
+(RMB 1,000,
+before tax)
+749
+Whether
+paid by
+the holding
+Company
+No
+Board.
+Board of Supervisors: Mr.
+Zhao Dong was elected as
+the Chairman of Board of
+Supervisors. Mr. Jiang Zhenying,
+Mr. Yang Changjiang, Mr. Zhang
+Baolong and Mr. Zou Huiping
+were elected as Supervisors. Mr.
+Zhou Hengyou, Mr. Yu Renming
+and Mr. Yu Xizhi were elected
+as Employee Representative
+Supervisors.
+Directors, Supervisors,
+Equity interests in Sinopec Corp.
+(as of 31 December)
+0
+2017
+0
+Other Senior Management:
+Mr. Zhao Rifeng, Mr. Huang
+Wensheng and Mr. Lei Dianwu
+were elected as Vice President.
+Mr. Huang Wensheng was
+elected as Secretary to the
+Board.
+On 7 June 2018, Mr. Jiao
+Fangzheng resigned as director,
+member of Strategy Committee
+of the Board and the Senior
+Vice President of Sinopec
+Corp. due to change of working
+arrangement.
+On 23 October 2018, Mr. Yu
+Baocai was elected as Non-
+executive Director of the
+Seventh Session of the Board of
+Sinopec Corp.
+On 30 October 2018, Mr. Dai
+Houliang was re-designated as
+the Non-executive Director of
+Sinopec Corp.
+On 30 October 2018, Mr. Ma
+Yongsheng was appointed as
+president of Sinopec Corp.
+On 30 October 2018, Mr. Lei
+Dianwu was appointed as Senior
+Vice President of Sinopec Corp.
+On 30 October 2018, Mr. Chen
+Ge was appointed as Senior
+Vice President of Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+2018
+Chemicals
+2010.12-2021.05
+14%
+108,165
+25%
+Junior college
+94,162
+22%
+Technical secondary school
+37,015
+9%
+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 Note 38 of the
+financial statements prepared
+under IFRS of this annual
+report. As at 31 December
+2018, the Company has a total
+of 241,168 retired employees.
+All of them participated in
+the basic pension schemes
+Undergraduate
+administered by provincial
+(autonomous region or
+municipalities) governments.
+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.
+10 TRAINNING PROGRAMS
+Centring on enterprise
+development strategy and
+key work of the year, the
+Company organised training
+programs at headquarters
+level which were attended
+by 4,471 Key employees.
+With an aim to improve the
+Corporate Governance level,
+the Company launched a
+series of training programs
+for 1,731 senior management
+personnel. The Company
+conducted seminars with the
+topic of learning the spirit of
+the 19th CPC National Congress
+for 1,083 senior managers
+and 12,000 managers. The
+Company organised training
+programs with topics of
+Innovation Development, Green
+Development, transnational
+operation, risk prevention and
+increasing the comprehensive
+capabilities of young managers
+for 644 employees. With the
+aim to advance Professional and
+technical personnel's innovation
+capability, the Company trained
+1,085 employees from all the
+business segments. With roles
+of Craftsmanship and heritage,
+the Company focused trainings
+on top talents such as first
+chief technicians and famous
+craftsmen for 221 people.
+To enhance the management
+of transnational operation,
+finance, taxation, law and
+HSSE, the company organised
+a series of training programs
+covering 1,434 overseas project
+managers.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+79
+10
+Directors, Supervisors,
+Senior Management and Employees
+984.1
+On 8 February 2018, Mr. Lin
+Yiqun was appointed as Senior
+Vice President of Sinopec Corp.
+Government-administered
+pension schemes are
+responsible for the payments of
+basic pensions.
+60,062
+4%
+Master's degree or above
+EMPLOYEES' PROFESSIONAL STRUCTURE AS FOLLOWS:
+Technology
+81,778
+19%
+Finance
+9,479
+2%
+Administration
+33,883
+8%
+Others
+16,535
+13,356
+78
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Production
+153,867
+37%
+Sales
+31%
+EDUCATIONAL BACKGROUND STRUCTURE FOR EMPLOYEES AS FOLLOWS:
+Senior high school and
+technical school degrees or below
+167,666
+40%
+3%
+On 7 February 2018, Mr. Liu
+Zhongyun resigned as the
+supervisor of Sinopec Corp.
+due to change of working
+arrangement.
+131,180
+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.
+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.
+Zou Huiping, aged 58,
+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
+Zhou Hengyou
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Zou Huiping
+Senior
+Zhou Hengyou, aged 55,
+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
+Management and Employees
+Senior Management and Employees
+Directors, Supervisors,
+71
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+was appointed concurrently
+as Secretary of Disciplinary
+Inspection Committee of
+China International United
+Petroleum & Chemicals
+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 May 2018, he was elected
+as Supervisor of Sinopec
+Corp.
+Zhang Baolong, aged 59,
+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
+Supervisors,
+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 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;
+and 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.
+72
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Remuneration
+paid by
+Sinopec Corp.
+LIST OF MEMBERS OF THE BOARD OF SUPERVISORS
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Directors, Supervisors,
+Senior Management and Employees
+Senior Management and Employees
+Directors, Supervisors,
+173
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+a interim 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 Sinopec
+Corp. In June 2017, he
+was elected as Employee's
+Representative Supervisor of
+Sinopec Corp.
+Yu Xizhi, aged 56,
+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
+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.
+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
+Yu Renming, aged 55,
+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
+Yu Xizhi
+Yu Renming
+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
+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.
+Since 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 May 2018,
+he was elected as Supervisor
+of Sinopec Corp.
+in 2018
+Yang Changjiang, aged 58,
+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
+Yang Changjiang
+Name
+Gender
+Age
+Position in
+Sinopec Corp.
+Tenure
+Liu Zhongyun
+Supervisor
+Male
+Male
+Jiang Zhenying
+Male
+555
+Former Supervisors
+Former Supervisors
+Zhou Hengyou
+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.
+lo
+0
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+70
+70
+(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 Office
+of Leading Party Member
+Group Inspection Work
+of China Petrochemical
+Corporation and since
+December 2010, he was
+elected as the Employee's
+Representative Supervisor
+of Sinopec Corp. Since
+December 2018, he was
+appointed as Director of
+Audit Bureau of China
+Petrochemical Corporation,
+and Director of Audit
+Department of Sinopec
+Corp. In May 2018, he was
+elected as Supervisor of
+Sinopec Corp.
+Jiang Zhenying, aged 54,
+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
+accountant of China National
+Oil and Gas Exploration and
+Development Corporation;
+in October 2009, he
+was appointed as chief
+accountant of China National
+Oil and Gas Exploration and
+Development Corporation
+and chief financial officer
+of PetroChina International
+Investment Company
+Limited; in September 2012,
+he was appointed as vice
+general manager of CNPC
+Nile Company and in August
+2013, he was appointed as
+general manager of CNPC
+Nile Company; in November
+2015, he was appointed
+as chief financial officer
+of PetroChina Company
+Limited. He has been a
+member of the Leading
+Party Member Group and
+chief accountant of China
+Petrochemical Corporation
+since November 2016; in
+June 2017, he was elected
+as Chairman of Board of
+Supervisors of Sinopec Corp.
+Zhao Dong, aged 48,
+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
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Zhao Dong
+Senior
+Danagement and Employees
+Supervisors,
+No
+Zhang Baolong
+54
+Whether
+paid by the
+Name
+0
+ooooo
+No
+340.8
+No
+1,034.7
+0
+2006.05-2021.05
+2018.05-2021.05
+55
+Male
+Zhou Hengyou
+Supervisor
+58
+Male
+Employee's
+ooooo
+Representative
+Supervisor
+Supervisor
+Employee's
+55
+Male
+Yu Renming
+Representative
+0
+lo
+0
+No
+1,008.6
+2017.06-2021.05
+Employee's
+56
+Male
+Yu Xizhi
+Zou Huiping
+Equity interests in Sinopec Corp.
+BBB
+2018.05-2021.05
+Yes
+2017.06-2021.05
+2017
+2018
+(as of 31 December)
+holding
+Company
+0
+(RMB 1,000,
+before tax)
+Position in
+Sinopec Corp.
+Chairman of the
+48
+Male
+Zhao Dong
+Age
+Gender
+Tenure
+0
+Board of Supervisors
+Jiang Zhenying
+Supervisor
+59
+Male
+Zhang Baolong
+Yes
+2018.05-2021.05
+Supervisor
+58
+Male
+Yang Changjiang
+Yes
+2018.05.2021.05
+Supervisor
+54
+Male
+Yes
+2015.05.2018.02
+2015.05.2018.05
+2010.12.2018.05
+Representative
+22222
+Yes
+2017
+2018
+Company
+Equity interests in Sinopec Corp.
+(as of 31 December)
+the holding
+Whether
+paid by
+in 2018
+(RMB 1,000,
+before tax)
+Sinopec Corp.
+Remuneration
+paid by
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+74
+Note: Mr. Zhou Hengyou receives remuneration from the Company since May 2018.
+Former Employee's
+Representative
+Supervisor
+paid by
+the holding
+paid by
+Equity interests in Sinopec Corp.
+(as of 31 December)
+Name
+Gender
+Age
+Company
+2018
+Lei Dianwu
+Male
+56
+Senior Vice President
+0
+0
+Yes
+Yes
+76
+Huang Wensheng, aged 52,
+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.
+In July 2018, he was
+appointed concurrently as
+Chairman, President and
+Secretary of CPC Committee
+of Sinopec Capital Co., Ltd.;
+and in May 2014, he was
+appointed as Vice President
+of Sinopec Corp.
+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 Chairman and Secretary
+of CPC Committee of
+Sinopec Marketing Company
+Limited. In February 2018,
+he was appointed as Vice
+President of Sinopec Corp.
+1,155.6
+129.7
+Zhao Rifeng, aged 55, 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.,
+Officer of Sinopec Corp.
+Wang Dehua, aged 52, 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. in
+September 2016, he was
+appointed as Chief Financial
+Huang Wensheng
+Zhao Rifeng
+Wang Dehua
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES (CONTINUED)
+Directors, Supervisors,
+Senior Management and Employees
+Senior Management and Employees
+No
+Whether
+75
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+appointed as Senior Vice
+President of Sinopec
+Corp.
+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
+Chen Ge, aged 56, 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
+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.
+Lei Dianwu, aged 56, 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
+Department of Sinopec
+Management
+(3) Other Members of Senior
+Chen Ge
+Lei Dianwu
+0
+0
+Directors, Supervisors,
+in 2018
+(RMB 1,000,
+before tax)
+0
+Male
+Board Secretary
+ooooo
+Name
+Chang Zhenyong
+Gender
+Male
+Age
+Chen Ge
+Position in
+Sinopec Corp.
+0
+Former Vice President
+2 INFORMATION ON
+APPOINTMENT OR
+TERMINATION OF DIRECTORS,
+SUPERVISORS AND SENIOR
+MANAGEMENT
+Remuneration
+Sinopec Corp.
+Position in
+2017
+LIST OF MEMBERS OF THE SENIOR MANAGEMENT
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Note: Mr. Chen Ge receives remuneration from the Company since November 2018.
+0
+60
+606.6
+1,130.0
+No
+Senior Vice President
+No
+0
+Wang Dehua
+Male
+52
+CFO
+1,130.0
+56
+0
+No
+Vice President,
+52
+Male
+Sinopec Corp.
+Vice President
+56
+Male
+Zhao Rifeng
+Huang Wensheng
+34
+395
+302,082
+329,814
+373,020
+51,598
+50,046
+49,277
+Intangible assets
+8,340
+7,913
+Long-term deferred expenses
+1,958
+1,980
+Deferred tax assets
+11,021
+6,834
+8,571
+2,480
+1,595,504
+Other non-current assets
+Total current liabilities
+Non-current liabilities due within one year
+Short-term debentures payable
+Other payables
+Taxes payable
+Employee benefits payable
+Contract liabilities
+Advances from customers
+Bills payable and accounts payable
+Derivative financial liabilties
+Short-term loans
+Liabilities and shareholders' equity
+Current liabilities
+Total assets
+Total non-current assets
+977,725
+1,002,495
+931,603
+711,890
+683,634
+674,499
+10,952
+10,690
+9,145
+14
+Construction in progress
+63,820
+Fixed assets
+Other receivables
+Inventories
+Other current assets
+82,879
+92,545
+98,250
+22,500
+48,179
+816
+30,145
+832,525
+854,070
+857,659
+120,293
+126,826
+139,304
+712,232
+727,244
+718,355
+Total equity attributable to shareholders of the Company
+275,163
+290,459
+279,482
+Prepayments
+Bills receivable and accounts receivable
+Financial assets held for trading
+Cash at bank and on hand
+1,498,609
+These financial statements have been approved by the board of directors on 22 March 2019.
+Dai Houliang
+Chairman
+(Legal representative)
+Ma Yongsheng
+President
+The accompanying notes form part of these financial statements.
+Wang Dehua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+85
+196,640
+Financial Statements (PRC)
+BALANCE SHEET
+as at 31 December 2018
+Notes At 31 December
+2018
+RMB million
+At 31 December
+2017
+RMB million
+At 1 January
+2017
+RMB million
+Assets
+Current assets
+Financial Statements (PRC)
+13
+199,682
+35
+10
+57,432
+1,592,308
+45,643
+45,825
+44,933
+46,942
+15,835
+27,189
+32,743
+Total current assets
+257,104
+318,861
+265,835
+Non-current assets
+Available-for-sale financial assets
+Long-term equity investments
+12
+289,207
+395
+275,557
+297
+268,451
+Other equity instrument investments
+3,454
+4,429
+2,488
+9
+765
+888
+1,706
+(932)
+(4,413)
+(6,774)
+119,525
+119,557
+119,192
+121,071
+121,071
+203,678
+121,071
+34
+33
+32
+333
+Total liabilities and shareholders' equity
+Total shareholders' equity
+Minority interests
+Retained earnings
+Non-current liabilities
+37,766
+38,803
+234
+Long-term loans
+Classification by ownership:
+Provisions
+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
+Changes in fair value of available-for-sale financial assets
+Cash flow hedges
+Foreign currency translation differences
+Total other comprehensive income
+Total comprehensive income
+Attributable to:
+Equity shareholders of the Company
+Equity shareholders of the Company
+These financial statements have been approved by the board of directors on 22 March 2019.
+44
+45
+345
+6,694
+11,428
+4,356
+19,060
+2,656
+(13)
+(742)
+(1,518)
+101,474
+Minority interests
+86,965
+Surplus reserves
+Continuous operating net profit
+6,423
+Financial expenses
+38
+(1,001)
+1,560
+Exploration expenses, including dry holes
+39/41
+10,744
+11,089
+Impairment losses
+42
+11,605
+Termination of net profit
+21,791
+141
+Add: Other income
+43
+Investment income
+Gains/(losses) from changes in fair value
+Asset disposal expense
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+Less: Income tax expense
+Net profit
+Classification by going concern:
+Credit impairment losses
+7,956
+46
+69
+3,399
+(3,792)
+(6,624)
+(4,376)
+73,665
+65,918
+55,471
+47,638
+18,194
+18,280
+Dai Houliang
+Chairman
+(1,580)
+(Legal representative)
+The accompanying notes form part of these financial statements.
+Wang Dehua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+87
+Financial Statements (PRC)
+88
+Financial Statements (PRC)
+INCOME STATEMENT
+for the year ended 31 December 2018
+Operating income
+Less: Operating costs
+Ma Yongsheng
+President
+47
+(9,741)
+1,053
+2,070
+1,317
+3,042
+1,709
+100,502
+86,573
+48
+20,213
+16,279
+80,289
+70,294
+80,289
+(57)
+70,294
+51,119
+17,200
+19,175
+60
+0.521
+0.422
+60
+0.521
+0.422
+34
+(53)
+(229)
+63,089
+Debentures payable
+39/40
+72,505
+6,000
+16,729
+288,877
+19,539
+317,563
+38,082
+280,822
+48,104
+63,667
+58,448
+20,000
+20,000
+36,000
+113,841
+33,094
+29,767
+505
+4,332
+2,591
+2,607
+105,530
+117,663
+127,327
+394,407
+435,226
+408,149
+121,071
+31,405
+121,071
+143,274
+312
+32,423
+Deferred tax liabilities
+Other non-current liabilities
+Total non-current liabilities
+Total liabilities
+Shareholders' equity
+Share capital
+Capital reserve
+Other comprehensive income
+Specific reserve
+Surplus reserves
+Retained earnings
+3,961
+119,514
+17,330
+967
+84,418
+86,604
+78,548
+3(26)
+3,413
+2,360
+4,230
+4,294
+4,854
+54,764
+42,549
+9,256
+Research and development expenses
+121,071
+68,789
+Chief Financial Officer
+CONSOLIDATED INCOME STATEMENT
+for the year ended 31 December 2018
+Notes
+2018
+2017
+RMB million
+RMB million
+Operating income
+Less: Operating costs
+Taxes and surcharges
+36
+36/39
+Wang Dehua
+2,891,179
+2,401,012
+1,890,398
+37
+246,498
+235,292
+Selling and distribution expenses
+39
+59,396
+56,055
+General and administrative expenses
+39
+73,390
+2,360,193
+68,795
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+The accompanying notes form part of these financial statements.
+68,769
+(485)
+196
+263
+989
+482
+393
+203,678
+199,682
+196,640
+143,148
+177,049
+86
+182,440
+567,269
+569,576
+931,603
+1,002,495
+977,725
+Total shareholders' equity
+Total liabilities and shareholders' equity
+These financial statements have been approved by the board of directors on 22 March 2019.
+Dai Houliang
+Chairman
+(Legal representative)
+Ma Yongsheng
+President
+537,196
+Specific reserve
+Those charged with governance are responsible for overseeing Sinopec Corp.'s financial reporting process.
+666,084
+21,839
+17,908
+3,099
+Production and sale of petrochemical products
+Company Limited
+Sinopec-SK(Wuhan) Petrochemical
+6,270
+65
+15,363
+13,029
+1,879
+Production, sale, research and development of
+67.6
+Company Limited
+HKD 248
+60.33
+14,104
+10,250
+1,065
+million
+Sinopec Shanghai Gaoqiao Petroleum and
+10,000
+55
+31,710
+15,225
+3,282
+Sinopec Kantons Holdings Limited
+ethylene and downstream by-products
+7,801
+petroleum products
+Import and processing of crude oil, production,
+storage and sale of petroleum products and
+petrochemical products
+Sinopec Qingdao Refining and
+5,000
+85
+20,174
+12,066
+3,564
+Manufacturing of intermediate petrochemical
+Chemical Company Limited
+products and petroleum products
+Sinopec Hainan Refining and
+3,986
+Sinopec Shanghai SECCO Petrochemical
+75
+10,329
+2,619
+Manufacturing of intermediate petrochemical
+Chemical Company Limited
+products and petroleum products
+Sinopec Marketing Co., Limited
+28,403
+70.42
+391,923
+208,071
+21,995
+Marketing and distribution of refined
+21,239
+Limited Liability Company
+Oil jetty and nature gas pipeline
+Manufacturing of intermediate petrochemical
+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.
+KEY AUDIT MATTERS
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current
+period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
+not provide a separate opinion on these matters.
+PricewaterhouseCoopers Zhongtian LLP
+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 2018
+81
+Financial Statements (PRC)
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Key audit matters identified in our audit are summarised as follows:
+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 2018, and their financial performance and cash flows for the year then ended in accordance with the requirements of
+Accounting Standards for Business Enterprises ("CASS").
+Recoverability of the carrying amount of fixed assets relating to oil and gas producing activities
+Recoverability of the carrying amount of fixed assets relating to oil
+and gas producing activities
+Refer to Note 13 "Fixed assets", Note 42 “Impairment losses", and Note
+53 "Principal accounting estimates and judgements" to the consolidated
+financial statements.
+Decrease in prices of international crude oil in the fourth quarter of the
+year ended 31 December 2018 gave rise to possible indication that
+the carrying amount of fixed assets relating to oil and gas producing
+activities as at 31 December 2018 might be impaired. The Group
+has adopted discounted future cash flow to determine the respective
+recoverable amounts of fixed assets relating to oil and gas producing
+activities, which involved key estimations or assumptions including:
+Future crude oil prices;
+Future production profiles;
+Future cost profiles; and
+Discount rates.
+Because of the significance of the carrying amount of fixed assets
+relating to oil and gas producing activities as at 31 December 2018,
+together with the use of significant estimations or assumptions in
+determining their respective discounted cash flow, we had placed our
+audit emphasis on this matter.
+How our audit addressed the Key Audit Matter
+In auditing the respective discounted cash flow of fixed assets 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 fixed assets relating to oil and
+gas producing activities.
+• Assessed the methodology adopted in, and tested mathematical
+accuracy of the discounted cash flow projections.
+• 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 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.
+• Net realisable value (NRV) of crude oil, finished goods and work in progress of refined oil products
+Key Audit Matter
+transportation service
+Our opinion
+What we have audited
+Chemical Limited
+products and petroleum products
+Sinopec Shanghai Petrochemical
+10,824
+50.44
+44,540
+30,487
+5,277
+Manufacturing of synthetic fibres, resin
+Company Limited
+Fujian Petrochemical Company Limited
+8,140
+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 2018, 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.
+50
+11,523
+1,595
+and plastics, intermediate petrochemical
+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 2018.
+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 and, therefore, only those which have material impact on the results or assets of Sinopec Corp. are set out above.
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE PRC AUDITOR
+pwc
+普华永道
+PwC ZT Shen Zi (2019) No. 10001
+To the Shareholders of China Petroleum & Chemical Corporation,
+OPINION
+12,260
+• Independently estimated a range of relevant discount rates, and found
+that the discount rates adopted by management were within the range.
+2,433
+17,173
+18,919
+3,692
+Company Limited
+Sinopec Pipeline Storage & Transportation
+12,000
+100
+39,182
+22,648
+2,685
+Company Limited
+Investment in exploration, production and
+sale of petroleum and natural gas
+(1,574) Coal chemical industry investment
+management, production and
+sale of coal chemical products
+30,453
+Manufacturing of intermediate etrochemical
+Pipeline storage and transportation
+of crude oil
+Sinopec Yizheng Chemical Fibre
+4,000
+100
+8,041
+5,459
+101
+Production and sale of polyester chips and
+Limited Liability Company
+polyester fibres
+Sinopec Lubricant Company Limited
+products and petroleum products
+3,374
+100
+Sinopec Yangzi Petrochemical
+80
+Principal Wholly-Owned
+and Controlled Subsidiaries
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+Registered
+Capital
+Percentage of
+shares held by
+Sinopec Corp.
+On 31 December, 2018, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+Name of Company
+Principal Activities
+Total Assets
+Net Assets
+RMB million
+(%)
+15,651
+RMB million
+8,000
+100
+54,751
+RMB million
+23,218
+Net Profit/
+(Net Loss)
+RMB million
+3,272
+Exploration and Production Limited
+Sinopec Great Wall Energy & Chemical
+22,761
+100
+32,972
+14,997
+Company Limited
+Sinopec International Petroleum
+11,657
+100
+3,926
+Sinopec Catalyst Company Limited
+1,500
+100
+China Petrochemical International
+1,400
+100
+88
+9,694
+4,712
+683
+and petrochemical materials
+Manufacturing of intermediate petrochemical
+million
+products and petroleum products
+petrochemical products
+(4,024) Trading of crude oil and
+petrochemical products
+Overseas investment holding
+Production and sale of catalyst products
+14,533
+4,104
+712
+Trading of petrochemical products
+Company Limited
+Sinopec Beihai Refining and Chemical
+5,294
+98.98
+Marketing and distribution of
+9,247
+Holding Limited
+12,802
+382
+Production and sale of refined petroleum
+products, lubricant base oil,
+Sinopec Qingdao Petrochemical
+1,595
+100
+3,640
+549
+319
+Company Limited
+Sinopec Chemical Sales Company Limited
+1,000
+245
+100
+3,248
+1,279
+China International United Petroleum and
+3,000
+100
+176,748
+22,749
+Chemical Company Limited
+Sinopec Overseas Investment
+USD 1,662
+100
+26,832
+17,773
+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.
+82
+1,595,504
+1,498,609
+Other non-current assets
+Total non-current assets
+Total assets
+Liabilities and shareholders' equity
+Current liabilities
+Short-term loans
+Derivative financial liabilties
+Bills payable and accounts payable
+Advances from customers
+Contract liabilities
+1,592,308
+Employee benefits payable
+Other payables
+27222222
+21
+44,692
+54,701
+30,374
+13,571
+192,757
+3(26)
+2,665
+206,535
+120,734
+4,472
+180,129
+95,928
+23
+Taxes payable
+124,793
+25,826
+1,086,348
+1,088,188
+136,963
+118,645
+129,581
+Intangible assets
+Goodwill
+Long-term deferred expenses
+Deferred tax assets
+15
+103,855
+97,126
+85,023
+16
+1,066,455
+8,676
+6,353
+17
+15,659
+14,720
+13,537
+18
+21,694
+15,131
+7,214
+19
+36,358
+28,516
+8,634
+14
+24
+7,162
+Total non-current liabilities
+Total liabilities
+Shareholders' equity
+Share capital
+Capital reserve
+29
+31,951
+31,370
+54,985
+30
+42,800
+39,958
+Other non-current liabilities
+39,298
+5,948
+6,466
+7,661
+31
+27,276
+16,440
+16,136
+169,551
+161,988
+180,541
+734,649
+741,434
+18
+7,312
+Deferred tax liabilities
+Debentures payable
+1,618
+25
+87,060
+71,940
+52,886
+26
+77,463
+89,028
+75,164
+Short-term debentures payable
+6,000
+Non-current liabilities due within one year
+Provisions
+27
+26,681
+38,972
+Total current liabilities
+565,098
+579,446
+485,543
+Non-current liabilities
+Long-term loans
+28
+61,576
+67,754
+62,461
+17,450
+Construction in progress
+690,594
+650,920
+REPORT OF THE PRC AUDITOR (CONTINUED)
+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 relating 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.
+84
+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.
+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.
+Financial Statements (PRC)
+PricewaterhouseCoopers Zhong Tian LLP
+Shanghai, the People's Republic of China
+22 March 2019
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+Signing CPA
+Zhao Jianrong
+(Engagement Partner)
+Signing CPA
+Xu Xia
+(A)
+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.
+FINANCIAL STATEMENTS PREPARED UNDER CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
+CONSOLIDATED BALANCE SHEET
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+88
+Financial Statements (PRC)
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Key Audit Matter
+Net realisable value (NRV) of crude oil, finished goods and work in
+progress of refined oil products
+Refer to Note 3(4) "Inventories", Note 11 "Inventories" and Note 53
+"Principal accounting estimates and judgements" to the consolidated
+financial statements.
+Decrease in prices of international crude oil along with its highly-
+correlated products, such as refined oil products in the fourth quarter
+of the year ended 31 December 2018 gave rise to the risk that net
+realisable values of crude oil, finished goods and work in progress of
+refined oil products were lower than their respective book values as at
+31 December 2018.
+Management has determined the NRVs of crude oil, finished goods
+and work in progress of refined oil products based on the respective
+estimated selling prices less the estimated costs to completion, other
+necessary costs of sales and the related taxes, which involved key
+estimations or assumptions including:
+Estimated selling prices;
+Estimated costs to completion, other necessary costs of sales and
+related taxes.
+Because of the significance of the book value of crude oil, finished
+goods and work in progress of refined oil products as at 31 December
+2018, together with the use of significant estimations or assumptions in
+determining their respective NRVs, we had placed our audit emphasis
+on this matter.
+83
+OTHER INFORMATION
+In auditing the NRVs of crude oil, finished goods and work in progress of
+refined oil products, we performed the following key procedures on the
+inventory NRV models prepared by the management.
+• Evaluated and tested the key controls, relating to the preparation of the
+NRV models of crude oil, finished goods and work in progress of refined
+oil products.
+• Assessed the methodology adopted in, and tested mathematical
+accuracy of the NRV models.
+On a sampling basis, compared the estimated selling prices of
+inventories used in the NRV models against the recently realised selling
+prices, and the prices available on domestic and international markets.
+• On a sampling basis, compared the costs to completion, other necessary
+costs of sales and related taxes against historical data of the Group.
+Based on the work, we found that the key assumptions and data adopted in
+the NRV models were supported by the evidence we obtained.
+Management of Sinopec Corp. is responsible for the other information. The other information comprises all of the information included in 2018 annual
+report of Sinopec Corp. other than the financial statements and our auditor's report thereon.
+Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
+In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
+other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
+misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
+report that fact. We have nothing to report in this regard.
+RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
+Management of Sinopec Corp. is responsible for the preparation and fair presentation of these financial statements in accordance with the CASS,
+and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material
+misstatement, whether due to fraud or error.
+In preparing these financial statements, management is responsible for assessing Sinopec Corp.'s ability to continue as a going concern, disclosing, as
+applicable, matters relating 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.
+Taxes and surcharges
+How our audit addressed the Key Audit Matter
+as at 31 December 2018
+Notes
+At 31 December
+24,834
+11
+184,584
+186,693
+156,511
+22,774
+20,087
+20,422
+504,120
+529,049
+412,261
+Available-for-sale financial assets
+15,941
+1,676
+Long-term equity investments
+12
+[N]
+N
+145,721
+131,087
+116,812
+Other equity instrument investments
+1,450
+Fixed assets
+13
+617,812
+11,408
+25,312
+3,749
+4,901
+2018
+At 31 December
+2017
+RMB million
+RMB million
+At 1 January
+2017
+RMB million
+Assets
+Current assets
+Cash at bank and on hand
+Inventories
+Total current assets
+Non-current assets
+Financial assets held for trading
+Derivative financial assets
+Bills receivable and accounts receivable
+Prepayments
+Other receivables
+Other current assets
+5698901
+167,015
+7
+25,732
+7,887
+165,004
+51,196
+526
+142,497
+64,879
+84,701
+762
+63,486
+5,937
+Other comprehensive income
+Selling and distribution expenses
+General and administrative expenses
+Research and development expenses
+Minority interests
+Exploration expenses, including dry holes
+Impairment losses
+52,304
+11
+80
+164,639
+66,932
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+(103,014)
+(70,948)
+Cash paid for acquisition of investments
+(39,666)
+(57,627)
+Other cash paid relating to investing activities
+(85,193)
+(82,392)
+Net cash paid for the acquisition of subsidiaries and other business entities
+(3,188)
+(1,288)
+Sub-total of cash outflows
+(231,061)
+(212,255)
+Net cash flow from investing activities
+87,696
+1,313
+9,666
+8,506
+Cash received from disposal of investments
+Cash received from returns on investments
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+Sub-total of cash inflows
+3,281,310
+2,703,571
+(2,565,392)
+(2,041,977)
+(77,048)
+(68,260)
+(66,422)
+(329,387)
+(133,615)
+(74,095)
+(3,105,442)
+(2,512,636)
+50(a)
+175,868
+190,935
+56,546
+4,729
+10,720
+(328,304)
+(145,323)
+Cash flows from financing activities:
+Cash received from capital contributions
+(436)
+(7,539)
+(155)
+(859,991)
+(582,298)
+(111,260)
+518
+(56,509)
+(353)
+50(b)
+(1,296)
+(13,700)
+(11,250)
+Chairman
+(Legal representative)
+Ma Yongsheng
+President
+The accompanying notes form part of these financial statements.
+Wang Dehua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2018
+89
+Financial Statements (PRC)
+Financial expenses
+Dai Houliang
+Cash flows from investing activities:
+Net decrease in cash and cash equivalents
+Net cash flow from financing activities
+1,886
+946
+Including: Cash received from minority shareholders' capital contributions to subsidiaries
+Cash received from borrowings
+1,886
+946
+746,655
+524,843
+Other cash received relating to financing activities
+190
+Sub-total of cash inflows
+Effects of changes in foreign exchange rate
+748,731
+Cash repayments of borrowings
+(772,072)
+(536,380)
+Cash paid for dividends, profits distribution or interest
+(87,483)
+(45,763)
+Including: Subsidiaries' cash payments for distribution of
+dividends or profits to minority shareholders
+Other cash paid relating to financing activities
+Sub-total of cash outflows
+525,789
+Net cash flow from operating activities
+These financial statements have been approved by the board of directors on 22 March 2019.
+Other cash paid relating to operating activities
+2017
+RMB million
+RMB million
+36
+1,058,493
+857,478
+36
+812,355
+633,114
+168,905
+158,480
+3,078
+2,670
+36,169
+39,537
+7,453
+5,445
+1,029
+2,642
+9,796
+10,614
+2018
+Note
+Annual Report 2018 CHINA PETROLEUM & CHEMICAL CORPORATION
+The accompanying notes form part of these financial statements.
+Sub-total of cash outflows
+Credit impairment losses
+Add: Other income
+Investment income
+(Losses)/gains from changes in fair value
+Asset disposal income/(expense)
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+Less: Income tax expense
+Net profit
+6,766
+Classification by going concern:
+Termination of net profit
+Items that may be reclassified subsequently to profit or loss
+Other comprehensive loss that can be converted into profit or loss under the equity method
+Cash flow hedges
+Total other comprehensive income
+Total comprehensive income
+These financial statements have been approved by the board of directors on 22 March 2019.
+Dai Houliang
+Chairman
+(Legal representative)
+Ma Yongsheng
+President
+Continuous operating net profit
+14,372
+Other comprehensive income
+2,777
+(67)
+39,276
+30,348
+CONSOLIDATED CASH FLOW STATEMENT
+for the year ended 31 December 2018
+Note
+2018
+RMB million
+Cash flows from operating activities:
+Cash received from sale of goods and rendering of services
+Refund of taxes and levies
+Other cash received relating to operating activities
+3,189,004
+1,681
+2017
+RMB million
+90.625
+57,287
+Net cash received from disposal of subsidiaries and other business entities
+Sub-total of cash inflows
+Cash paid for goods and services
+42
+Cash paid to and for employees
+Payments of taxes and levies
+(681)
+(120)
+53
+2,644,126
+2,158
+(64)
+1,784
+38,058
+(617)
+44
+(20)
+12
+179
+(887)
+29,738
+599
+474
+1,687
+725
+44,005
+42,917
+Chief Financial Officer
+30,415
+39,957
+30,415
+39,957
+Wang Dehua
+28,336
+(928)
+2,960
+29,487
+Cash flow hedging
+Items
+Net (gain)/loss on disposal of non-current assets
+Donations
+Government grants
+Gain on holding and disposal of various investments
+Other non-operating expenses, net
+Net (loss)/profit acquired through business combination under common control
+during the reporting period
+(3) Extraordinary items and corresponding amounts
+Items
+Tax effect
+Total
+Attributable to: Equity shareholders of the Company
+Derivative financial instruments
+Minority interests
+(4) Items measured by fair values
+Subtotal
+Other equity instruments
+49.98
+Principal Financial Data and Indicators
+RMB Yuan
+6.402
+51.51
+Financial assets held for trading
+Receivables financing
+6.172
+48.89
+6.132
+49.02
+3.7
+6.151
+6.112
+2.62
+50.10
+percentage
+points
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2021
+3
+Principal Financial Data and Indicators
+4
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+Total
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+For the year ended 31 December
+(Income)/expenses
+Ma Yongsheng
+Chairman
+When the path ahead is tortuous, the only way
+forward is trailblazing. I cherish the strong
+belief that under the leadership of the Board of
+Directors and through the combined efforts of
+the management and staff, as well as the strong
+support of our shareholders and the community,
+Sinopec Corp. will be able to take full advantage
+of its strengths in the industry, its technologies,
+and its talents to forge a distinctive path to high.
+quality growth, creating greater value for our
+shareholders and society at large and providing
+cleaner energy for a better life.
+In 2022, the Company will continue to adhere
+to the principle of pursuing progress while
+maintaining stability. In complete, accurate
+and comprehensive implementation of China's
+new development philosophy, the Company
+will integrate the new development philosophy
+with its existing businesses by high quality
+to further enhance its corporate governance,
+production and operations, transformation
+and development, technological innovation,
+management reform, risk control, and Party
+building, making every effort to achieve its goal
+of becoming a world-leading company. In its
+upstream businesses, the Company will make
+greater efforts to increase reserves with higher
+efficiency, upgrade production in an economical
+way, and reduce costs and fees, while expanding
+its resource channels and improving its energy
+supply capacity. In refining, the Company will
+strive to adjust its structure to reduce costs
+and improve supply capacity. In the chemicals
+business, the Company will accelerate advanced
+capacity construction to extend its high-
+end industrial chain and develop new growth
+engines. In the marketing and distribution
+segment, it will further take advantage of its
+marketing network to provide customers with
+comprehensive, high-quality services. Moreover,
+the Company will actively and steadily deploy
+new energy businesses such as hydrogen
+energy and photovoltaic stations to strengthen
+its green and low-carbon competitiveness.
+Capital expenditures will be RMB198 billion
+in 2022, mainly for investments in high-
+quality exploration and production; natural gas
+systems including production, supply, storage,
+and sales; adjustments in the structure of the
+refining business; construction of refining and
+chemical production clusters; high-end materials
+projects; and integrated energy service stations
+for gasoline, natural gas, hydrogen, power, and
+services, as well as new energy businesses.
+The Company will endeavor to consolidate and
+enhance its business competitiveness to achieve
+a healthier and more sustainable growth.
+uncertainties. The international environment
+faced by the Company has grown more complex.
+Nevertheless, China's economy is expected to
+maintain steady growth, with strong resilience,
+great potential, and risk resistance capabilities.
+Domestic economic fundamentals will remain
+strong in the long term. The stable and healthy
+domestic economic environment will create
+great opportunities for the Company's future
+development.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+8
+With the challenges of the ongoing global
+pandemic, geopolitical tensions, and high
+spot prices of commodity, the recovery of the
+world economy is still subject to significant
+25 March 2022
+Focus on boosting green and low-
+carbon competitiveness. By coordinating
+its environmental goals with production
+development, the Company will base its emission
+reduction targets on scientifically achievable
+approaches, and continue to optimize its
+industrial and energy structure. It will enhance
+its energy efficiency with the aim of establishing
+an industry benchmark. The Company will
+establish its green and low-carbon initiatives and
+help advance the circular development system,
+thereby promoting resource utilization that is
+efficient, intensive, and recyclable. It will also
+accelerate research and innovation in green and
+low-carbon technologies such as carbon capture,
+utilization, and storage to take the initiative in
+innovative development.
+Focus on improving energy supply capacity. The
+Company will redouble its efforts in exploration,
+especially in shale oil and shale gas. It will
+continue to implement integrated development
+of natural gas production, supply, storage, and
+sales. It will continue to develop its hydrogen
+energy business at a reliable pace, while building
+out photovoltaic power stations according to
+local conditions, thereby expanding the scope
+of its energy and resources. In addition, the
+Company will strengthen its international trade
+capability, coordinate the allocation of global
+resources, and further explore the build-out of a
+successful multi-energy supply system.
+Focus on implementing an innovation-driven
+strategy. The Company will strive to nurture a
+wellspring of self-developed new technologies,
+promote research and development of advanced
+oil and gas exploration technologies, and
+enhance innovation and breakthroughs in
+high-end chemicals, new materials, modern
+coal chemical technology, and new energy
+products, as well as in key, generic and
+advanced technologies. The Company will
+turn those technological achievements into its
+competitive business advantages to support its
+transformation and upgrading.
+Focus on promoting corporate governance.
+Through further improvements in its corporate
+governance system and enhancements to
+governance efficiency, the Company will
+ensure that it can achieve superior operating
+standards. To fulfill the goals of strengthening
+internal controls, reducing risk, and promoting
+compliance, we will work on the integration of
+risk control, internal control, and compliance
+management, and we will minimize risk in all
+aspects of our operations, including safety
+in production, environmental protection, and
+operations management. We will deepen our
+corporate reform to maintain the vitality of
+operating systems and mechanisms. In addition,
+the Company will elevate corporate management
+performance to new levels by benchmarking
+world-class management practices. The
+Company will further improve its Party-building
+efforts to promote high-quality development.
+Looking ahead, in light of the country's carbon
+peak and carbon neutrality goals, resource
+and environmental constraints will have a
+profound impact on the development of the
+energy and chemical industries. The energy
+industry has entered a phase of transition
+requiring qualitative changes and a deepening
+structural adjustment, which will pose serious
+challenges to the Company's high-quality
+development. Considering the current stage
+of its development, as well as the existing
+opportunities and challenges, the Company
+will continue to optimize its 14th Five-Year
+Plan and Vision 2035, and will set out a clear
+path towards sustainable development through
+actionable goals and principles:
+We attribute our hard-won achievements in 2021
+to the efforts and dedication of the Company's
+Board of Directors, the Board of Supervisors,
+the management, and all staff, as well as the
+valued support of our shareholders and the
+community. On behalf of the Board of Directors,
+the management, and our staff, I thank our
+shareholders and the community for their
+continued interest in and support of Sinopec
+RMB Yuan
+Corp. Due to new working arrangements, Mr.
+Zhang Yuzhuo ended his term as the Chairman
+of the Company. During his tenure, he was
+devoted to his duties and played a vital role in
+improving corporate governance and promoting
+sustainable development of the Company. On
+behalf of the Board of Directors, I would like to
+extend my sincere gratitude to him.
+Focus on enhancing the quality and upgrading
+of the petrochemical industry. Adhering to
+the goal of excelling in the refining business
+and strengthening its chemicals business,
+the Company will speed up the development
+of initiatives to shift from oil products to
+chemicals and specialty products, upgrade the
+chemicals business to concentrate on mid-to-
+high-end products, advance construction of
+world-class, large-scale, intelligent, integrated
+refining and chemical production clusters, and
+strengthen the resilience of its industrial chain.
+Following the general trend in transportation
+energy, the Company will accelerate its
+transformation to a comprehensive provider
+of gasoline, natural gas, hydrogen, power, and
+energy services. Furthermore, the Company will
+commit to implementing the digital transition
+and intelligent manufacturing of its traditional
+businesses, and further develop e-commerce
+platforms to expand momentum of new business
+growth.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+9
+2,992
+2021
+RMB million
+2020
+RMB million
+2019
+RMB million
+(665)
+165
+Chairman's Address
+(973)
+301
+(3,085)
+(8,605)
+209
+(6,857)
+(259)
+(37,520)
+(410)
+4,720
+1,318
+(%)
+0.275
+RMB Yuan
+RMB Yuan
+RMB Yuan
+Basic earnings per share
+0.588
+0.275
+0.272
+113.8
+(%)
+0.476
+Diluted earnings per share
+0.588
+0.272
+113.8
+0.476
+0.476
+Basic earnings per share (excluding extraordinary gains and losses)
+0.476
+0.597
+RMB Yuan
+RMB Yuan
+121,071,210
+The Company also effectively fulfilled its
+corporate social responsibilities over the
+past year. As a Lead member of the United
+Nations Global Compact, the Company actively
+responded to climate change by implementing
+a green and low-carbon development strategy.
+It has been awarded the title of China Low-
+Carbon Model for eleven consecutive years. The
+Company diligently promoted the construction of
+its health, safety, and environment management
+system and carried out a three-year campaign
+to address production safety. We have also
+strengthened pollution prevention and control
+to better ensure ecological wellbeing and
+biodiversity. We implemented multiple measures
+to support the rural revitalization plan and
+proactively rendered assistance in flooded areas,
+as well as undertaking domestic disaster relief
+and post-disaster reconstruction. As a sponsor
+of the Beijing Winter Olympics and Paralympics,
+the Company was committed to providing the
+best services and disseminating the Olympic
+spirit. The Company actively and consistently
+participated in various social welfare initiatives,
+such as the Warm Stations Program and
+Drivers' Home Program. We have always valued
+the physical and psychological health of all our
+staff, strictly following all mandated measures
+for pandemic control to safeguard health
+management. Moreover, the Company has been
+well recognized for supporting the fight against
+the pandemic in its business operating locations,
+and promoting local economic development and
+environmental protection.
+121,071,210
+121,071,210
+744,738
+121,071,210
+739,965
+121,071,210
+For the year ended 31 December
+RMB Yuan
+2020
+After
+adjustment
+2020
+Before
+adjustment
+Change
+2019
+After
+adjustment
+2019
+Before
+adjustment
+Items
+2021
+(0.013)
+(0.013)
+0.448
+1.392
+1.384
+33.6
+1.275
+1.269
+Items
+Net assets attributable to equity shareholders of the Company per share
+Liabilities to assets ratio (%)
+1.860
+2021
+RMB Yuan
+2019
+2019
+After
+Before
+Change
+adjustment
+adjustment
+For the year ended 31 December
+2020
+2020
+After
+Before
+adjustment adjustment
+Net cash flow from operating activities per share
+points
+percentage
+0.448
+Weighted average return on net assets (%)
+9.35
+4.46
+4.44
+4.89
+7.85
+7.90
+percentage
+points
+Weighted average return (excluding extraordinary gains and losses)
+on net assets (%)
+9.49
+(0.21)
+(0.21)
+9.70
+7.39
+7.44
+RMB Yuan
+production and sales to increase market share,
+leading to steady growth of domestic sales of
+refined oil products. We have also achieved
+rapid development of our non-fuel businesses,
+as the Company accelerated its development
+into a comprehensive provider of gasoline,
+natural gas, hydrogen, power, and energy
+services. The Company accelerated the pace of
+its low-carbon transition, deployed projects for
+hydrogen energy, photovoltaic power stations,
+and battery charging and swapping, and actively
+developed biodegradable materials, medical and
+healthcare materials, and other new businesses.
+E-commerce platforms such as EPEC, Easy Joy
+and Chememall have also advanced rapidly.
+90,161
+Chairman's Address
+72,396
+82,884
+86,516
+13,669
+94,628
+2,347,726
+152,191
+Profit before taxation
+55,242
+Short-term loans
+27,366
+20,756
+6,610
+31.8
+Increase in loan of holding subsidiaries.
+Accounts payable
+(32.0) Improvement in fund efficiency and increase of bills turnover
+36.3 Increase in the prices of crude oil, refined oil products and the cost
+of inventory
+Other payables
+109,169
+881,912
+0.594
+Diluted earnings per share (RMB)
+0.428
+0.511
+0.475
+0.276
+0.594
+48,615
+Basic earnings per share (RMB)
+61,920
+57,517
+33,443
+71,975
+Profit attributable to shareholders of the Company
+87,544
+99,658
+51,821
+Net cash flow from operating activities
+Net cash received from disposal of
+203,919
+151,514
+(20,432)
+(37,510)
+(57,942)
+Net cash flow from financing activities
+56,654
+(44,664)
+(42,548)
+(102,650)
+(145,198)
+Increase in procurement cost due to increase in the price of crude oil
+and refined oil
+Net cash flow from investing activities
+49,869
+5,205
+168,520
+225,174
+29,689
+85,012
+114,701
+subsidiaries and other business entities
+34.9 Increase in derivative commodity margins
+33.6 Increase in cash income from net profit due to higher gross profit
+(89.6) Mainly due to the cash consideration received from the restruction
+of PipeChina in 2020
+41.4 Mainly because of the cash consideration received from the restruction
+of PipeChina in 2020
+2017
+2018
+2,879,192
+For the year ended 31 December
+2020
+2019
+2,104,724 2,957,868
+2,740,884
+2021
+Operating profit
+Items
+Revenue
+Unit: RMB million
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+Principal Financial Data and Indicators
+6
+Principal Financial Data and Indicators
+5
+LO
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+54.5 Increase in actual cash dividend paid for 2021
+0.276
+0.475
+0.511
+0.428
+5.970
+6.143
+6.164
+6.394
+6.225
+731,622
+722,806
+743,719
+5.954
+746,325
+127,510
+139,922
+138,359
+141,377
+140,892
+163,387
+170,803
+774,182
+5.993
+5.787
+6.043
+Chairman's Address
+7
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+The Company has steadily improved the overall
+quality of its development. We have strengthened
+scientific and technological innovation, optimized
+production and operations, accelerated
+transformation and development, and upgraded
+the quality and efficiency of the industrial
+chain. In upstream, we accelerated our efforts
+in oil and gas exploration, and we achieved
+major breakthroughs in continental facies shale
+oilfields exploration. The domestic oil and gas
+reserve replacement rate reached 154%, while
+natural gas production grew by 11.9% over
+the previous year, thereby increasing reserves,
+stabilizing oil production, increasing gas output,
+and improving efficiency. In refining, throughput
+and major products have seen significant growth
+as a result of the Company's ongoing structural
+adjustment, including initiatives to shift from oil
+products to chemicals and specialty products,
+as well as efforts to construct world-class
+refining and chemical production clusters. In
+the chemicals segment, we optimized our raw
+material and product mix, achieving ongoing
+increases in production of high-value-added
+products. In the marketing and distribution
+segment, we strove to integrate and coordinate
+Research and development initiatives achieved
+fruitful results. We have vigorously implemented
+an innovation-driven strategy, deepened
+reform of our R&D mechanisms, built new
+R&D institutions and technology incubators,
+and accelerated the deployment of cutting.
+edge technologies in key areas, including oil
+& gas exploration and production, chemical
+new materials, new energy, and green and low-
+carbon development. As a result, a number of
+our major R&D projects achieved breakthroughs,
+and the Company's comprehensive patent
+advantages continued to rank at the forefront of
+domestic enterprises, providing vital support for
+quality development of the Company.
+By deepening reforms and strengthening
+management, the Company put the SOE Reform
+3-year action plan into effect and implemented
+the benchmarking programme of improving
+management, enhanced the effectiveness of its
+internal controls, and upgraded its corporate
+management performance. Taking advantage
+of its Party-building activities, the Company
+further enhanced its supervision mechanisms,
+motivating staff to increase productivity and
+pursue career development. In addition, we
+placed great emphasis on shareholder returns,
+improved communications with stakeholders,
+and strengthened environmental, social, and
+governance measures and disclosures in
+an effort to consistently increase corporate
+transparency. Continuing connected transactions
+of the Company for the next three years gained
+support and approval by shareholders, ensuring
+greater production and operational stability.
+for its compliance management system.
+Corporate governance has continued to evolve.
+During the year, the Company elected new
+members to the Board of Directors and the
+Board of Supervisors and made appointments
+to senior management, enhancing diversity
+on the board level. All independent directors
+fulfilled their duties with diligence and offered
+strategic advice for reform and development.
+The Company optimized a number of corporate
+governance practices and laid a solid foundation
+reduced costs and expenses, resulting in a
+substantial increase in operating performance.
+In accordance with International Financial
+Reporting Standards, our revenue increased
+by 30.2% from the previous year to RMB2.74
+trillion, operating profit increased by 592.3%
+to RMB94.628 billion, and profits attributable
+to shareholders of the Company increased
+by 115.2% to RMB71.975 billion. Net cash
+flow from operating activities amounted to
+RMB225.174 billion, reaching a historical high.
+The ratio of liabilities to assets at the end of the
+year was 51.56%, representing a solid financial
+position. In view of the Company's profitability,
+shareholder return, and future development
+needs, the Board of Directors recommended
+the payment of a final dividend of RMBO.31 per
+share. Taking into account the interim dividend
+of RMBO.16 per share, the total dividend for the
+year was RMB0.47 per share, with a dividend
+payout ratio of 80%.
+Operating results for 2021 achieved a 10-year
+record high. Over the past year, the Company
+has taken full advantage of its integrated
+businesses, made every effort to optimize
+operations, expanded sales and markets, and
+In 2021, confronted with the impacts of the
+Covid-19 pandemic as well as the complex
+and challenging macroeconomic environment,
+the Board of Directors fully evaluated market
+conditions both domestically and internationally,
+adhered to the goal of pursuing progress while
+maintaining stability, dedicated the Company
+to vigorously implementing its world-leading
+development strategy, and focused on promoting
+high-quality development. At the same time,
+the management led the entire staff with great
+dedication in order to accomplish all of the
+Company's targets and tasks, getting off to a
+good start of the 14th Five-Year Plan.
+First, I would like to express my sincere
+gratitude to our shareholders and directors for
+their valued trust and support in nominating me
+as Chairman of the Company. I am honored to
+take on this mission and the responsibilities of
+the role. Together with the Board, we will fulfill
+our duties with diligence, promote high-quality
+development of the Company, and continuously
+improve our corporate value.
+Dear Shareholders and Friends:
+CHAIRMAN'S ADDRESS
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+3 MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER CASS AND IFRS PLEASE REFER TO PAGE 216 OF
+THE REPORT.
+5.913
+303,014
+CHAIRMAN'S ADDRESS (CONTINUED)
+328,199
+52,466
+1.275
+1.392
+1.860
+Net cash generated from operating activities per share (RMB)
+7.08
+8.57
+7.73
+1.455
+4.48
+Return on net assets (%)
+8.27
+9.21
+8.94
+6.22
+11.29
+Return on capital employed (%)
+9.30
+1.579
+Unit: RMB million
+Items
+63,514
+133,166
+67,335
+83,256
+2017
+1,074,985
+1,097,045
+1,318,258
+2018
+As of 31 December
+2020
+2019
+1,283,236
+1,331,231
+2021
+Adjusted net assets per share (RMB)
+Total equity attributable to shareholders of the Company
+Net assets per share (RMB)
+Non-controlling interests
+Non-current liabilities
+Net current liabilities
+Non-current assets
+332,901
+1,760,286
+52,405
+257
+79
+82
+of Principal Shareholders
+Bond General Information
+Principal Wholly-owned and
+Controlled Subsidiaries
+83
+77 Changes in Share Capital and Shareholdings
+Financial Statements
+Corporate Information
+224
+Documents for Inspection
+This annual report includes forward-looking statements. All statements,
+other than statements of historical facts, that address activities, events or
+developments that the Company expects or anticipates will or may occur
+in the future (including but not limited to projections, targets, reserve
+and other estimates and business plans) are forward-looking statements.
+The Company's actual results or developments may differ materially
+from those indicated by these forward-looking statements as a result
+of various factors and uncertainties. The Company makes the forward-
+looking statements referred to herein as at 25 March 2022 and unless
+required by regulatory authorities, the Company undertakes no obligation
+to update these statements.
+2
+Company Profile
+COMPANY PROFILE
+223
+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.
+Report of the Board of Supervisors
+75
+11
+19
+31
+53
+55
+62
+Company Profile
+27
+Principal Financial Data and Indicators
+Business Review and Prospects
+Management's Discussion and Analysis
+Corporate Governance
+Environment and Social Responsibilities
+Significant Events
+Connected Transactions
+65 Report of the Board of Directors
+Chairman's Address
+ALL DIRECTORS ATTENDED THE 7TH 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 2021.
+THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 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.
+AS APPROVED AT THE 7TH MEETING OF THE EIGHTH SESSION OF THE BOARD OF DIRECTORS OF SINOPEC CORP., THE BOARD PROPOSED
+A FINAL CASH DIVIDEND OF RMBO.31 (TAX INCLUSIVE) PER SHARE FOR 2021, COMBINING WITH THE INTERIM DIVIDEND OF RMBO.16 (TAX
+INCLUSIVE) PER SHARE, THE TOTAL CASH DIVIDEND FOR 2021WILL BE RMBO.47 (TAX INCLUSIVE) PER SHARE. THE DIVIDEND PROPOSAL IS
+SUBJECT TO THE SHAREHOLDERS' APPROVAL AT THE ANNUAL GENERAL MEETING FOR THE YEAR 2021.
+50,803
+61,611
+Profit before taxation
+108,348
+48,441
+59,907
+Income tax expense
+112,414
+23,318
+16,974
+31.5 Increase in procurement cost of raw materials due to the rising
+prices commodities including crude oil
+(87.3) Lump-sum income from the restruction of PipeChina was recognised
+in 2020
+Impact of changes in variable gains and losses on hedged derivatives
+(49.5) Decrease in allowance for diminution in value of inventories
+121.3 Increase in demand and gross margins of main products
+123.7 Expansion of operation and increase in the level of gross profit
+267.6 Increase in profit for the year
+Net profit
+85,030
+42,097
+42,933
+6,344
+Operating profit
+4,594
+12,922
+(26,087)
+COMPANY PROFILE
+Sinopec H shares were listed in Hong Kong, New York and London exchanges on October 18 and 19, 2000, respectively, and A shares were listed in
+the Shanghai Stock Exchange on August 8, 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 swaping, solar energy, wind energy and other new energy
+business and related services ⚫
+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
+Sinopec Finance Co.: Sinopec Finance Co., Ltd.
+882,554
+1,685,674
+(41,454)
+Gains/(Losses) from changes in fair value
+3,341
+(1,253)
+Impairment losses
+(13,165)
+237
+102.0 Increase in operating profit
+CONTENTS
+中国石油化工股份有限公司
+(2,796)
+3,891
+5,939
+21,854
+17,963
+8,735
+99
+(1)
+1
+(4,084)
+(14,873)
+10,690
+13,798
+7,545
+1,193
+1,350
+(758)
+of the year
+Changes
+6,253
+on the profit
+(5) Significant changes of items in the financial statements
+As of 31 December
+530,877
+Investment income
+6,032
+Operating costs
+30.2 A result of sharp increase in the price and sales volume of
+refining products
+636,160
+2,104,724
+The table below sets forth reasons for those changes where the fluctuation was more than 30% during the reporting period:
+(%) Reasons for change
+RMB million
+Amount Percentage
+2020
+2021
+RMB million
+2,740,884
+Operating income
+Items
+Increase/(decrease)
+RMB million
+End
+of the year
+767
+1,525
+157
+of the year
+101
+634
+中国産化
+OPEC
+BEIJING 2022
+中国石化
+SINOPEC
+(472)
+000
+为美好生活加油
+A SUT66
+【便利店
+H2
+2021
+ANNUAL REPORT
+AND ACCOUNTS
+Official Partner of the Olympic Winter Games Beijing 2022
+(139)
+977
+(44,277)
+Beginning
+Influence
+47,486
+Unit: RMB million
+(125)
+(2,705)
+(107)
+(3,363)
+(34,836)
+1,012
+(3,488)
+(37,541)
+905
+1,757
+6,736
+(72)
+(5,245)
+SINOPEC CORP.
+Cash flow hedges
+2,216,551
+7,073
+57,619
+Net profit/(loss) attributable to equity shareholders of the Company excluding
+extraordinary gains and losses
+72,220
+(1,565)
+(1,565)
+54,280
+54,280
+Net cash flow from operating activities
+225,174
+168,520
+167,518
+57,643
+33.6
+153,619
+2021
+First
+Quarter
+RMB million
+Second
+Quarter
+Third
+Quarter
+Fourth
+Quarter
+Total
+RMB million
+RMB million
+RMB million
+154,380
+114.0
+32,924
+33,271
+(%)
+RMB million
+adjustment
+RMB million
+2,740,884
+2,104,724
+2,105,984
+30.2
+2,957,868
+2,959,799
+112,414
+50,803
+50,331
+121.3
+90,273
+90,134
+Profit before taxation
+108,348
+48,441
+47,969
+123.7
+90,250
+90,111
+Net profit attributable to equity shareholders of the Company
+71,208
+RMB million
+RMB million
+Operating income
+576,559
+After
+2021
+RMB million
+adjustment
+RMB million
+adjustment
+Change
+adjustment
+Before
+adjustment
+RMB million
+(%)
+RMB million
+2019
+RMB million
+1,738,896
+973,214
+850,176
+1,733,805
+849,929
+8.6
+1,765,702
+14.5
+775,102
+747,294
+742,463
+3.7
+1,889,255
+2019
+2020
+Before
+After
+684,214
+18,160
+21,266
+740,918
+20,603
+739,193
+2,740,884
+11,179
+71,208
+Net cash flow from operating activities
+17,674
+(15,188)
+20,746
+20,300
+13,500
+72,220
+63,535
+68,397
+108,430
+225,174
+Items
+Total assets
+Total liabilities
+Total equity attributable to equity shareholders of the Company
+Total number of shares (1,000 shares)
+(2) Principal financial indicators
+For the year ended 31 December
+2020
+Net profit attributable to equity shareholders of the Company
+Net profit attributable to equity shareholders of the Company
+excluding extraordinary gains and losses
+19,018
+adjustment
+adjustment
+Derivative financial liabilities
+3,223
+4,826
+(1,603)
+(33.2)
+Receivables financing
+5,939
+(2,796)
+Inventories
+207,433
+34.6
+Century Bright: Sinopec Century Bright Capital Investment, Ltd.
+CSRC: China Securities Regulatory Commission.
+Hong Kong Stock Exchange: The Stock Exchange of Hong Kong Limited
+Hong Kong Listing Rules: Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
+CONVERSION:
+For domestic production of crude oil, 1 tonne = 7.1 barrels;
+For overseas production of crude oil: 1 tonne = 7.22 barrels in 2021, 1 tonne = 7.20 barrels in 2020, 1 tonne = 7.21 barrels in 2019;
+For production of natural gas, 1 cubic meter = 35.31 cubic feet;
+Change
+-Unrealised profit increased from crude oil hedging
+168.9 Increase in effective portion of cash flow hedges
+46.6
+8,735
+12,528
+After
+Before
+5,843
+Before
+2019
+2019
+2020
+2020
+After
+adjustment
+RMB million
+Operating profit
+Operating income
+2021
+RMB million
+For the year ended 31 December
+18,371
+Refinery throughput is converted at 1 tonne = 7.35 barrels.
+Items
+Derivative financial assets
+11,945
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+1 FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH CASS
+(1) Principal financial data
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+For the year ended 31 December 2021
+Total comprehensive income
+2. Other comprehensive income
+1. Net profit
+Change for the year
+Transactions with owners, recorded directly in shareholders' equity:
+Amounts transferred to initial carrying amount of hedged items
+Balance at 1 January 2020
+STATEMENT OF CHANGES IN EQUITY
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+Shou Donghua
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+The accompanying notes form part of these financial statements.
+Yu Baocai
+President
+(Legal representative)
+Chairman
+Ma Yongsheng
+916,041
+3. Appropriations of profits:
+Chief Financial Officer
+-Appropriations for surplus reserves
+2. Other comprehensive income
+Total transactions with owners, recorded directly in shareholders' equity
+reserve
+RMB million
+68.841
+income
+RMB million
+reserve
+1,181
+RMB million
+949
+reserves
+RMB million
+earnings
+RMB million
+equity
+RMB million
+207,423
+121,071
+130.645
+18,572
+18,572
+4,766
+4,766
+(37)
+4,766
+18,572
+23,338
+(37)
+530,110
+RMB million
+capital
+shareholders'
+4. Net increase in specific reserve for the year
+5. Others
+Balance at 31 December 2020
+Balance at 1 January 2021
+Change for the year
+1. Net profit
+Total comprehensive income
+Amounts transferred to initial carrying amount of hedged items
+Transactions with owners, recorded directly in shareholders' equity:
+3. Appropriations of profits:
+-Appropriations for surplus reserves (Note 39)
+-Distributions to shareholders (Note 55)
+Total transactions with owners, recorded directly in shareholders' equity
+(5)
+Other
+Total
+Share
+Capital comprehensive
+Specific
+Surplus
+Retained
+-Distributions to shareholders (Note 55)
+92
+Other equity instrument investments (see Note 3(11))
+121,071
+121,071
+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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+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.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+Inventories include raw materials, work in progress, semi-finished goods, finished goods and reusable materials. Reusable materials include
+low-value consumables, packaging materials and other materials, which can be used repeatedly but do not meet the definition of fixed assets.
+Reusable materials are amortised in full when received for use. The amounts of the amortisation are included in the cost of the related assets or
+profit or loss.
+Inventories are recorded by perpetual method.
+(5) Long-term equity investments
+(a) Investment in subsidiaries
+(3) Cash and cash equivalents
+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)
+Principal accounting estimates and judgements of the Group are set out in Note 58.
+(1) Accounting treatment of business combination involving entities under common control and not under common control
+(a) Business combination involving entities under common control
+A business combination involving entities or businesses under common control is a business combination in which all of the combining
+entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that
+control is not transitory. The assets and liabilities that the acquirer receives in the acquisition are accounted for at the acquiree's carrying
+amount on the acquisition date. The difference between the carrying amount of the acquired net assets and the carrying amount of the
+consideration paid for the acquisition (or the total nominal value of shares issued) is recognised in the share premium of capital reserve, or
+the retained earnings in case of any shortfall in the share premium of capital reserve. Any costs directly attributable to the combination shall
+be recognised in profit or loss for the current period when occurred. The expense incurred for equity securities and debt securities issued as
+the consideration of the combination is recognised in the initial cost of the securities. The combination date is the date on which the acquirer
+effectively obtains control of the acquiree.
+(b) Business combination involving entities not under common control
+A business combination involving entities or businesses not under common control is a business combination in which all of the combining
+entities or businesses are not ultimately controlled by the same party or parties both before and after the business combination. Difference
+between the consideration paid by the Group as the acquirer, comprises of the aggregate of the fair value at the acquisition date of assets
+given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree, and the Group's
+interest in the fair value of the identifiable net assets of the acquiree, is recognised as goodwill (Note 3(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.
+(c) Method for preparation of consolidated financial statements
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+95
+Financial Statements (PRC)
+96
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(1) Accounting treatment of business combination involving entities under common control and not under common control (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:
+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.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(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.
+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.
+(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.
+(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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+99
+Financial Statements (PRC)
+Net increase in cash and cash equivalents
+For the year ended 31 December 2021
+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.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2021
+97
+Financial Statements (PRC)
+98
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+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 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).
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+135
+3 SIGNIFICANT ACCOUNTING POLICIES
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+39,444
+13,612
+13,612
+(13,498)
+13,612
+39,444
+53,056
+(13,498)
+3,944
+39,444
+(3,944)
+(35,110)
+(39,054)
+(35,110)
+4. Net increase in specific reserve for the year
+469
+469
+5. Others
+Balance at 31 December 2021
+121,071
+(35,110)
+522,275
+115,849
+209,280
+68,976
+36
+68,976
+1,857
+(1,857)
+(31,479)
+(31,479)
+1.857
+(33,336)
+(31,479)
+240
+240
+(32)
+103
+5,910
+1,189
+209,280
+115,849
+522,275
+5,910
+1,189
+(1,079)
+67,897
+201
+(878)
+6,024
+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 59.
+2 BASIS OF PREPARATION
+(1) Statement of compliance of China Accounting Standards for Business Enterprises ("CASS")
+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 2021,
+and the consolidated and company financial performance and the consolidated and company cash flows for the year ended 31 December 2021.
+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 assets held for trading (see Note 3(11))
+-
+140,939
+Derivative financial instruments (see Note 3(11))
+Receivables financing (see Note 3(11))
+(4) Functional currency and presentation currency
+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.
+94
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+For the year ended 31 December 2021
+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.
+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").
+1,658
+213,224
+116,440
+526,314
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+Ma Yongsheng
+Chairman
+(Legal representative)
+Yu Baocai
+President
+The accompanying notes form part of these financial statements.
+Shou Donghua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+93
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS
+For the year ended 31 December 2021
+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 25 March 2022.
+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.
+775,102
+1,038
+213,224
+Cash flows from financing activities:
+(102,650)
+(145,198)
+Net cash flow from investing activities
+(237,005)
+(210,035)
+Sub-total of cash outflows
+(92,289)
+(50,923)
+Other cash paid relating to investing activities
+(340)
+Cash received from capital contributions
+(1,106)
+(12,740)
+(13,085)
+(131,636)
+(144,921)
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+134,355
+64,837
+Sub-total of cash inflows
+58,669
+38,208
+Other cash received relating to investing activities
+Net cash paid for the acquisition of subsidiaries and other business entities
+49,869
+1,001
+1,001
+(57,942)
+(601,109)
+(415,535)
+Net cash flow from financing activities
+(17,282)
+(28,276)
+56(e)
+Other cash paid relating to financing activities
+(4,821)
+(8,068)
+Including: Subsidiaries' cash payments for distribution of dividends or profits to
+minority shareholders
+Including: Cash received from minority shareholders' capital contributions to subsidiaries
+Cash received from borrowings
+(43,812)
+Cash paid for dividends, profits distribution or interest
+(540,015)
+(338,232)
+Cash repayments of borrowings
+700
+563,599
+357,593
+Sub-total of cash inflows
+133
+Other cash received relating to financing activities
+4,219
+4,219
+558,680
+356,459
+(49,027)
+(37,510)
+5,205
+2,656
+158,049
+2,980,918
+4,641
+Cash paid for goods and services
+Other cash received relating to operating activities
+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:
+2020
+2021
+RMB million
+Notes
+3,143,608
+For the year ended 31 December 2021
+Financial Statements (PRC)
+90
+6,494
+12,097
+Add: Cash and cash equivalents at the beginning of the year
+28,081
+15,984
+Cash and cash equivalents at the end of the period
+34,575
+28,081
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+CONSOLIDATED CASH FLOW STATEMENT
+56(d)
+RMB million
+(2,317,629)
+1,478
+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
+11,510
+10,134
+Cash received from returns on investments
+11,651
+9,812
+Cash received from disposal of investments
+(2,343,048)
+168,520
+225,174
+56(a)
+2,295,665
+2,985
+212,918
+2,511,568
+(2,918,434)
+(179,679)
+(85,481)
+(282,390)
+(325,348)
+(95,778)
+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
+(1,749,873)
+(225,304)
+Effects of changes in foreign exchange rate
+Net increase in cash and cash equivalents
+Add: Cash and cash equivalents at the beginning of the year
+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:
+Net cash flow from investing activities
+Sub-total of cash outflows
+Other cash paid relating to investing activities
+(41,066)
+(52,212)
+Cash paid for acquisition of investments
+Cash paid for dividends or interest
+(59,216)
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+116,292
+191,798
+Sub-total of cash inflows
+78,751
+136,276
+6,579
+72
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+18,805
+22,712
+(70,578)
+Cash received from returns on investments
+Other cash paid relating to financing activities
+Net cash flow from financing activities
+8
+Effects of changes in foreign exchange rate
+22,512
+(20,588)
+(243,774)
+(479,222)
+(7,074)
+(284,979)
+(36,973)
+(42,933)
+(199,727)
+Sub-total of cash outflows
+(151,310)
+458,634
+70,516
+298,755
+195,770
+159,879
+(50,398)
+(65,001)
+(166,690)
+(256,799)
+(66,408)
+(134,009)
+266,286
+12,157
+32,738
+39,988
+2020
+2021
+RMB million
+Notes
+For the year ended 31 December 2021
+CASH FLOW STATEMENT
+Chief Financial Officer
+Shou Donghua
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+The accompanying notes form part of these financial statements.
+President
+Yu Baocai
+Cash flows from operating activities:
+(Legal representative)
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+87,559
+108,590
+60,438
+87,559
+27,121
+21,031
+56(b)
+(1,239)
+(1,003)
+Cash and cash equivalents at the end of the period
+Ma Yongsheng
+Chairman
+Other cash received relating to operating activities
+Cash received from sale of goods and rendering of services
+Refund of taxes and levies
+92,075
+(834,308)
+(1,080,268)
+(19,239)
+(25,895)
+(164,635)
+(181,187)
+(44,139)
+(49,784)
+(606,295)
+-------
+874,296
+862,093
+2,796
+9,407
+RMB million
+13,868
+1,172,343
+(823,402)
+1,155,516
+2,959
+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
+Ma Yongsheng
+318,645
+Chairman
+Yu Baocai
+(2,416)
+(35,005)
+200
+200
+37
+237
+862
+(535)
+327
+(2,400)
+(2.073)
+(32,589)
+121,071
+1,941
+209,280
+286,575
+747,294
+141,426
+888,720
+121,071
+127,389
+1,038
+1,941
+209,280
+127,389
+286,575
+(33,336)
+(1,110)
+6. Distributions to minority interests
+7. Adjustment for business combination of entities under
+common control (Note 60)
+Total transactions with owners, recorded directly in shareholders' equity
+8.
+Net increase in specific reserve for the year
+9. Others
+Balance at 31 December 2021
+1,857
+(1,857)
+(31,479)
+1,857
+(31,479)
+3,325
+3,325
+(138)
+(138)
+13
+(125)
+(6,726)
+(6,726)
+(972)
+(972)
+972
+(31,479)
+5. Transaction with minority interests
+747,294
+888,720
+(8,192)
+(8,982)
+(8,982)
+(6,124)
+(6,124)
+(6,124)
+(7,520)
+3,944
+(39,054)
+(42,630)
+(13,805)
+(6,796)
+(56,435)
+723
+52
+775
+319
+(84)
+235
+159
+394
+120,188
+(690)
+2,664
+723
+141,426
+(1,396)
+1,973
+71,208
+71,208
+13,822
+85,030
+17.574
+17,574
+(19,302)
+17,574
+(67)
+17,507
+71,208
+(1,396)
+88,782
+102,537
+(19,302)
+(648)
+(19,950)
+121,071
+3,944
+(3,944)
+(35,110)
+(35,110)
+(35,110)
+1,973
+13,755
+Contributions to subsidiaries from minority interests
+4.
+- Distributions to shareholders (Note 55)
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+interests
+RMB million
+equity
+RMB million
+Balance at 31 December 2019
+121,071
+RMB million
+122,864
+1,741
+207,423
+287,187
+739,965
+138,409
+878,374
+Adjustment for business combination of entities under
+common control (Note 60)
+4,773
+4,773
+1
+(321)
+4,774
+the Company
+reserves
+President
+The accompanying notes form part of these financial statements.
+Shou Donghua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+91
+Financial Statements (PRC)
+Financial Statements (PRC)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+For the year ended 31 December 2021
+Total
+shareholders'
+equity
+attributable
+Other
+earnings
+Share
+comprehensive
+Specific
+Surplus
+Retained
+to equity
+shareholders of
+Minority
+Total
+shareholders'
+capital
+reserve
+income
+reserve
+Capital
+Balance at 1 January 2020
+121,071
+127,637
+Transactions with owners, recorded directly in shareholders' equity:
+3. Appropriations of profits:
+4.
+- Appropriations for surplus reserves
+- Distributions to shareholders (Note 55)
+Contributions to subsidiaries from minority interests
+5. Transaction with minority interests
+6. Distributions to minority interests
+7. Adjustment for business combination of entities under
+common control
+Total transactions with owners, recorded directly in shareholders' equity
+Amounts transferred to initial carrying amount of hedged items
+8. Net increase in specific reserve for the year
+Balance at 31 December 2020
+Balance at 1 January 2021
+Change for the year
+1.
+Net profit
+2. Other comprehensive income (Note 38)
+Total comprehensive income
+---------
+Amounts transferred to initial carrying amount of hedged items
+Transactions with owners, recorded directly in shareholders' equity:
+3. Appropriations of profits:
+- Appropriations for surplus reserves (Note 39)
+9. Others
+Total comprehensive income
+48
+(47)
+(321)
+1,741
+207,423
+287,187
+744,738
+138,410
+883,148
+Change for the year
+1. Net profit
+33,271
+33,271
+8,826
+42.097
+2. Other comprehensive income (Note 38)
+1,406
+1,406
+(47)
+(12)
+1,394
+(1,079)
+315
+33,259
+34,665
+7,747
+42,412
+(Legal representative)
+Sub-total of cash outflows
+3,944
+Renminbi
+Notice of Extending the Applicable Period of 'Accounting Treatment of COVID-19 Related Rent Concessions' (Caikuai [2021] No.9)
+CAS Bulletin No.14 (Caikuai [2021] No.1) ("Bulletin No. 14")
+In 2021, the Group has adopted the following newly revised accounting standards and implementation guidance and illustrative examples issued
+by the MOF, mainly include:
+(26) Changes in significant accounting policies
+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
+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
+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.
+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.
+(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
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(a) Bulletin No.14
+For the year ended 31 December 2021
+Bulletin No.14 takes effect on 26 January 2021 (implementation date).
+Bulletin No.14, implementation Q&As and illustrative examples clarify the features and conditions of PPP arrangements, sets out the
+accounting and disclosure requirements of a private entity in PPP arrangements. The adoption of Bulletin No.14 does not have significant
+effect on the financial position and financial performance of the Group.
+Resource Tax
+Consumption Tax
+13%, 9%, 6%
+Value Added Tax (the "VAT")
+Tax rate
+Type of taxes
+Tax rate of products is presented as below:
+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.
+4 TAXATION
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+5
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (PRC)
+The Accounting Treatment of COVID-19 Related Rent Concessions (Caikuai [2020] No.10) provides practical expedient under certain
+conditions for rent concessions occurring as a direct consequence of the COVID-19 pandemic, and combining the requirements of Caikuai
+[2021] No.9, such practical expedient is only applicable to any reduction in lease payments due before 30 June 2022. The adoption of the
+above regulations does not have significant effect on the financial position and financial performance of the Group.
+(b) Caikuai [2021] No.9
+(i) "Public-private partnership" (PPP) arrangements
+6%
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+(17) Revenue recognition
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (PRC)
+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.
+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.
+108
+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.
+107
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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 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 of goods
+Corporate Income Tax
+Crude Oil Special Gain Levy
+City Maintenance and
+8.0250
+1
+20
+180
+7.2197
+3
+1,159
+0.8416
+6,875
+6.5249
+1,054
+1,377
+2,888
+0.8176
+120,542
+144,294
+12,924
+6.3757
+8
+2,027
+3,533
+160,307
+15,758
+Financial Statements (PRC)
+109
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+At 31 December 2021, time deposits with financial institutions of the Group amounted to RMB113,399 million (2020: RMB96,853 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.
+184,412
+53,417
+394
+293
+28,993
+6.5249
+8.0250
+4,443
+49
+44,266
+483
+1,175
+61,682
+221,989
+6.3757
+7.2197
+6,943
+67
+23,737
+2,403
+130,995
+8
+RMB
+million
+Exchange
+rates
+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.
+Based on the sales of domestic crude oil at prices higher
+than a specific level.
+Based on taxable income.
+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
+Tax basis and method
+2%
+3%
+1%, 5% or 7%
+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%
+The Group
+CASH AT BANK AND ON HAND
+Local Education surcharges
+Education surcharges
+Construction Tax
+Cash on hand
+Renminbi
+Cash at bank
+US Dollar
+1
+Original
+currency
+million
+RMB
+million
+Exchange
+rates
+At 31 December 2020
+million
+Original
+currency
+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.
+At 31 December 2021
+Others
+US Dollar
+EUR
+Renminbi
+Deposits at related parities
+Others
+EUR
+Hong Kong Dollar
+Total
+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.
+engage in business activities from which it may earn revenues and incur expenses;
+At the balance sheet date, current tax assets and liabilities are offset if the Group has a legally enforceable right to set them off and also intends
+either to settle on a net basis or to realise the asset and settle the liability simultaneously.
+(11) Financial Instruments (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021 101
+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
+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 fair value through other comprehensive income:
+(a) Financial assets (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)
+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.
+102
+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.
+Financial guarantee liabilities
+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.
+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.
+(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 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.
+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
+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%
+of residual value
+3%
+Estimated rate
+Estimated
+useful life
+12-50 years
+4-30 years
+(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
+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 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+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.
+(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.
+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
+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 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+For the year ended 31 December 2021
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+100
+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
+Useful lives and amortisation methods are reviewed at least each year end.
+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.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Long-term deferred expenses are amortised on a straight-line basis over their beneficial periods
+(13) Long-term deferred expenses
+Once an impairment loss is recognised, it is not reversed in a subsequent period.
+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).
+(12) Impairment of other non-financial long-term assets (Continued)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+104
+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.
+(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.
+For the year ended 31 December 2021
+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).
+(15) Income tax
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(12) Impairment of other non-financial long-term assets
+106
+105
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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
+(b) Post-employment benefits
+Financial Statements (PRC)
+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 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.
+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.
+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.
+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.
+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 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 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.
+(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
+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.
+(11) Financial Instruments (Continued)
+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.
+The hedging relationship meets all of the following hedge effectiveness requirements:
+(3) (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.
+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.
+Cash flow hedges (Continued)
+-
+Fair value hedges
+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 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.
+(d) Derivative financial instruments and hedge accounting (Continued)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+103
+(11) Financial Instruments (Continued)
+7.2
+37,254
+Total
+of allowance
+0.2
+0276
+2328
+76.8
+2.3
+100.0
+At 31 December 2020
+35,255
+100.0
+1,531
+The Company
+At 31 December 2021
+Percentage
+of allowance
+1,200
+Percentage
+1,590
+4.4
+8,513
+52.9
+68.1
+24,010
+Percentage
+51
+1.6
+112
+18.8
+24.2
+196
+Between two and three years
+7,661
+20.6
+165
+2.2
+1,169
+3.3
+84
+Over three years
+2,417
+6.5
+1,278
+1,563
+to total other
+0.1
+receivables
+2
+0.1
+2,123
+5.5
+1
+Between two and three years
+1,414
+3.0
+2
+1,618
+4.2
+5
+0.3
+Over three years
+14,497
+30.3
+894
+6.2
+13,716
+0.1
+35.3
+7.8
+Amount
+3,740
+55.0
+Allowance
+to other
+receivables
+balance
+Percentage
+to total other
+to other
+receivables
+Amount
+receivables
+Allowance
+RMB million
+%
+RMB million
+%
+RMB million
+%
+RMB million
+balance
+%
+Within one year
+28,176
+58.9
+21,378
+Between one and two years
+35
+Transferred from construction in progress
+26,579
+597
+102
+3.9
+2,637
+100.0
+60596
+7
+4.4
+4
+3.9
+3.3
+11
+Percentage to the total balance of prepayments
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+At 31 December
+At 31 December
+2021
+2,939
+2020
+1,131
+31.4%
+22.9%
+Total amount (RMB million)
+1.5
+39
+6.0
+891
+Total
+123
+4,556
+2.7
+100.0
+Over three years
+At 31 December 2021 and 31 December 2020, the total amounts of the top five prepayments of the Group are set out below:
+4
+16
+21513
+003
+%
+Amount
+RMB million
+to total
+prepayments
+prepayments
+%
+Allowance
+RMB million
+balance
+%
+0.5
+2,337
+159
+88.6
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+10 OTHER RECEIVABLES
+Other receivables
+Percentage
+to total other
+Amount
+receivables
+Allowance
+balance
+Amount
+receivables
+Allowance
+At 31 December 2020
+Percentage
+of allowance
+to other
+receivables
+balance
+RMB million
+%
+RMB million
+%
+RMB million
+%
+RMB million
+%
+Within one year
+Between one and two years
+to other
+receivables
+71.3
+to total other
+of allowance
+Less: Allowance for doubtful accounts
+Total
+Ageing analysis of other receivables is as follows:
+The Group
+At 31 December
+2021
+RMB million
+At 31 December
+2020
+RMB million
+37,254
+1,590
+35,664
+35,255
+1,531
+33,724
+The Company
+At 31 December
+2021
+RMB million
+At 31 December
+2020
+RMB million
+47,827
+38,835
+898
+46,929
+897
+37,938
+At 31 December 2021
+The Group
+Percentage
+Percentage
+6.5
+by the Company
+47,827
+(3,069)
+199
+Movement of provision for impairment
+Balance at 31 December 2021
+277,310
+17,609
+73,854
+(41)
+(7,926)
+(41)
+(8)
+199
+360,847
+Details of the Company's principal subsidiaries are set out in Note 59.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+Principal joint ventures and associates of the Group are as follows:
+(a) Principal joint ventures and associates
+Percentage of
+equity/voting right
+directly or
+indirectly held
+For the year ended 31 December 2021, the Group and the Company had no individually significant long-term investment impairment.
+Other movement
+173
+(2,406)
+12
+Investments in
+subsidiaries
+RMB million
+266,939
+12,646
+Investments in
+joint ventures
+RMB million
+Investments in
+associates
+RMB million
+Provision for
+impairment
+14,762
+812
+4,190
+69,540
+1,014
+losses
+RMB million
+(7,885)
+Total
+RMB million
+343,356
+3,961
+12
+Other equity movements under the equity method
+Dividends declared
+Disposals for the year
+(2,275)
+18
+(1,387)
+(786)
+155
+(1,019)
+14,472
+8,151
+Name of investees
+Principal place
+of business
+Register
+location
+Legal
+representative
+Yanbu Aramco Sinopec Refining Company
+Saudi Arabia
+Saudi Arabia
+ΝΑ
+Crude oil and natural gas extraction
+Petroleum refining and processing
+25,000 USD
+49.00%
+1,560 million USD
+37.50%
+Ltd. ("YASREF")
+Sinopec SABIC Tianjin Petrochemical
+PRC
+PRC
+Company Limited ("Sinopec SABIC Tianjin")
+AHMED AL-SHAIKH Manufacturing and distribution of
+petrochemical products
+10,520
+50.00%
+2. Associates
+China Oil & Gas Pipeline Network Corporation PRC
+PRC
+Zhang Wei
+ΝΑ
+Change of other comprehensive loss under the equity method
+Cyprus
+Taihu Limited ("Taihu")
+Principal activities
+RMB million
+10.1
+1. Joint ventures
+Fujian Refining & Petrochemical Company
+PRC
+PRC
+Gu Yuefeng
+Manufacturing refining oil products
+14,758
+50.00%
+Limited ("FREP")
+BASF-YPC Company Limited
+PRC
+PRC
+Gu Yuefeng
+Manufacturing and distribution of
+12,704
+40.00%
+("BASF-YPC")
+petrochemical products
+Russia
+Total
+Share of profits less losses under the equity method
+Balance at 1 January 2021
+Raw materials
+Work in progress
+Finished goods
+Spare parts and consumables
+At 31 December
+2021
+RMB million
+At 31 December
+2020
+RMB million
+109,940
+The Group
+60,379
+13,066
+84,174
+78,481
+2,515
+3,372
+212,330
+4,897
+207,433
+155,298
+Less: Provision for diminution in value of inventories
+Total
+15,701
+11 INVENTORIES
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+100.0
+898
+38,835
+100.0
+897
+At 31 December 2021 and at 31 December 2020, 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
+2021
+19,056
+At 31 December
+2020
+22,581
+Within one year,
+Within one year,
+one to two years, one to two years,
+two to three years
+two to three years
+and over three years and over three years
+64.1%
+51.2%
+74.0
+During the year ended 31 December 2021 and 2020, 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 2021 and 2020, 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 2021
+113
+Financial Statements (PRC)
+Financial Statements (PRC)
+114
+3,107
+152,191
+At 31 December 2021, 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.
+12 LONG-TERM EQUITY INVESTMENTS
+23,253
+155
+286
+441
+24
+675
+699
+(3,872)
+(7,120)
+(10,992)
+(1,176)
+(97)
+(368)
+127
+(315)
+42
+100
+(1,273)
+(641)
+227
+63,384
+149,500
+(199)
+(3,705)
+(199)
+209,179
+9,322
+Additions for the year
+188,342
+losses
+RMB million
+(3,548)
+The Group
+Balance at 1 January 2021
+Additions for the year
+Share of profits less losses under the equity method
+Change of other comprehensive loss under the equity method
+Other equity movements under the equity method
+Dividends declared
+Disposals for the year
+Foreign currency translation differences
+Other movements
+Movement of provision for impairment
+Balance at 31 December 2021
+The Company
+Investments in
+joint ventures
+RMB million
+55,018
+4,110
+9,366
+Investments
+in associates
+RMB million
+136,872
+5,212
+13,887
+Provision for
+impairment
+Total
+RMB million
+10
+Gross
+99
+Allowance
+to accounts
+receivable
+balance
+% RMB million
+%
+20,196
+95.1
+9
+946
+4.5
+accounts
+receivable
+6
+0.1
+2
+77
+21,239
+0.3
+76
+8500
+0.1
+21,647
+99.0
+20
+Amount
+RMB million
+%
+RMB million
+100.0
+3,860
+The Company
+At 31 December 2021
+Percentage
+Percentage
+of allowance
+At 31 December 2020
+Percentage
+Percentage
+of allowance
+to total
+accounts
+Amount
+receivable
+Allowance
+to accounts
+receivable
+balance
+to total
+RMB million
+%
+0.6
+76
+0.3
+10.0
+2020
+10,444
+15,628
+26.9%
+2,062
+39.8%
+2,057
+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 64.
+During 2021 and 2020, the Group and the Company had no individually significant accounts receivable been fully or substantially provided
+allowance for doubtful accounts.
+During 2021 and 2020, 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 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+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 2021
+Current and within 1 year past due
+1 to 2 years past due
+2021
+39,299
+At 31 December
+Percentage to the total balance of accounts receivable
+Allowance for doubtful accounts
+49
+0.2
+98.7
+99
+0.5
+100.0
+93
+21,871
+100.0
+03250
+1
+13
+87
+1737
+9.2
+26.5
+87.9
+1250
+108
+At 31 December 2021 and 31 December 2020, the total amounts of the top five accounts receivable of the Group are set out below:
+Total amount (RMB million)
+At 31 December
+2 to 3 years past due
+4,033
+38,894
+2021
+At 31 December
+2020
+RMB million
+RMB million
+38,894
+4,033
+34,861
+39,299
+3,860
+35,439
+At 31 December
+2021
+RMB million
+21,239
+93
+21,146
+At 31 December
+At 31 December
+2020
+RMB million
+108
+21,763
+At 31 December 2021
+Percentage
+The Group
+Percentage
+of allowance
+At 31 December 2020
+Percentage
+Percentage
+of allowance
+21,871
+The Company
+The Group
+Total
+Financial Statements (PRC)
+110
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+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 64.
+7
+ACCOUNTS RECEIVABLE
+Accounts receivable
+Less: Allowance for doubtful accounts
+Total
+Ageing analysis on accounts receivable 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
+Between two and three years
+Over three years
+Amount
+to total
+accounts
+receivable
+to accounts
+receivable
+to total
+accounts
+0.3
+181
+29.0
+4,062
+10.3
+3,131
+77.1
+3,190
+93.5
+149
+0.4
+85
+57.0
+597
+1.5
+579
+97.0
+610
+1.6
+527
+86.4
+117
+100.0
+87.7
+0.2
+to accounts
+Allowance
+balance
+Amount
+receivable
+Allowance
+receivable
+balance
+RMB million
+% RMB million
+%
+RMB million
+%
+RMB million
+%
+34,263
+623
+88.1
+1.6
+3,411
+8.8
+161
+83
+34,478
+2.2
+Over 3 years past due
+Total
+Gross
+carrying
+amount
+Amount
+RMB million
+to total
+prepayments
+prepayments
+Allowance
+%
+RMB million
+balance
+%
+Within one year
+8,541
+%
+91.3
+89.9
+Between one and two years
+444
+4.8
+7
+1.6
+267
+Between two and three years
+166
+4,435
+RMB million
+%
+RMB million
+At 31 December
+2021
+RMB million
+At 31 December
+2020
+RMB million
+4,934
+77
+4,857
+4,556
+16
+4,540
+2,637
+11
+2,626
+The Group
+At 31 December 2021
+Percentage
+Percentage of
+allowance to
+At 31 December 2020
+Percentage
+Percentage of
+allowance to
+Amount
+to total
+prepayments
+prepayments
+Allowance
+balance
+1.8
+25
+Additions for the year
+142
+Percentage
+At 31 December 2020
+Percentage of
+allowance to
+Percentage
+Percentage of
+allowance to
+Amount
+to total
+prepayments
+Allowance
+prepayments
+balance
+RMB million
+%
+RMB million
+Within one year
+3.965
+87.0
+Between one and two years
+369
+8.1
+2
+Between two and three years
+At 31 December 2021
+The Company
+The Company
+1564
+Over three years
+Total
+199
+2.1
+51
+25.8
+9,350
+100.0
+83
+90
+4,934
+100.0
+25218
+94966
+5.4
+20
+7.5
+2.9
+8
+5.6
+1.8
+49
+54.4
+77
+31 December 2020
+At 31 December
+2020
+RMB million
+83
+9,267
+3,190
+597
+38,894
+208
+8,312
+190
+100.0%
+389
+579
+3,499
+44
+534
+Impairment provision
+Current and within 1 year past due
+RMB million
+1 to 2 years past due
+2 to 3 years past due
+Over 3 years past due
+Total
+8 RECEIVABLES FINANCING
+("PipeChina") (i)
+carrying
+amount
+4,033
+50.6%
+3,146
+3,324
+RMB million
+RMB million
+Impairment
+Carrying provision on
+amount individual basis
+RMB million
+average
+loss rate
+Impairment
+provision
+Loss
+allowance
+%
+RMB million
+RMB million
+34,263
+623
+4,280
+26
+0.2%
+57
+83
+500
+137
+35.8%
+44
+181
+3,411
+RMB million
+Impairment provision on
+individual basis
+Impairment
+Carrying provision on
+amount individual basis
+RMB million
+88.0%
+345
+527
+3,341
+519
+3,860
+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 2021, the Group's derecognised but outstanding bills due to endorsement or discount amounted to RMB36,400 million (2020:
+RMB25,740 million).
+At 31 December 2021, 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 2021
+111
+Financial Statements (PRC)
+112
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+9 PREPAYMENTS
+Prepayments
+Less: Allowance for doubtful accounts
+Total
+Ageing analysis of prepayments is as follows:
+At 31 December
+2021
+RMB million
+9,350
+182
+The Group
+85
+54.9%
+on provision matrix basis
+Weighted.
+average
+loss rate
+%
+Impairment
+provision
+RMB million
+Loss
+allowance
+RMB million
+34,478
+5,023
+117
+0.0%
+117
+4,062
+3,637
+3,024
+25.2%
+107
+3,131
+149
+610
+39,299
+27
+218
+8,905
+18
+67
+Operation of oil and natural gas pipelines
+and auxiliary facilities
+15.1
+14.00%
+493
+(2,301)
+911
+1,081
+456
+2,466
+217
+832
+joint ventures
+Share of net profit/(loss) from
+500
+691
+454
+300
+128
+Dividends from joint ventures
+718
+359
+986
+Share of other comprehensive loss
+(60)
+At 31
+December
+2020
+RMB million
+Sinopec Finance
+At 31
+December
+2021
+RMB million
+2020
+RMB million
+RMB million
+2021
+December
+At 31
+PipeChina
+At 31
+December
+Summarised balance sheet and reconciliation to their carrying amounts in respect of the Group's principal associates:
+(c) Major financial information of principal associates
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+The share of profit and other comprehensive income for the year ended 31 December 2021 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was RMB4,494 million (2020: RMB993 million) and RMB215 million (2020: other comprehensive income
+RMB808 million) respectively. As at 31 December 2021, the carrying amount of all individually immaterial joint ventures accounted for using
+equity method in aggregate was RMB30,640 million (2020: RMB26,099 million).
+(219)
+(1,593)
+from joint ventures (ii)
+(6,720)
+(2,742)
+(1,442)
+(236)
+(407)
+1,057
+332
+(378)
+(601)
+(379)
+(2,054)
+(87)
+(597)
+Tax expense
+954
+1,393
+(7,193)
+(2,868)
+2,304
+2,864
+Profit/(loss) for the year
+1,664
+433
+6,164
+2,140
+1,139
+6,164
+433
+1,664
+Total comprehensive income/(loss)
+(584)
+(206)
+Sinopec Capital
+At 31
+December
+2021
+(3,368)
+Other comprehensive loss
+718
+986
+(6,136)
+(2,536)
+1,926
+2,263
+1,139
+(123)
+At 31
+December
+2020
+Zhongtian Synergetic Energy
+At 31
+December
+2021
+29,761
+30,955
+570,282
+615,103
+Net assets
+(286)
+(144)
+(28,422)
+(22,216)
+(411)
+(676)
+(514)
+(602)
+(103,243) (104,150)
+Non-current liabilities
+(699)
+(822)
+12,538
+11,548
+24,070
+20,108
+64,946
+88,862
+minority interests
+Net assets attributable to
+2,320
+480
+20,108
+24,070
+(8,315)
+11,548
+29,761
+30,955
+505,336
+526,241
+shareholders of the Company
+Net assets attributable to
+2,320
+480
+12,538
+1,518
+(8,577)
+(28)
+74,012
+86,335
+Current liabilities
+Current assets
+Non-current assets
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2020
+2021
+2020
+At 31
+December
+At 31
+December
+At 31
+December
+CIR
+194,458
+175,139
+13,140
+11,871
+(197,872)
+(217,987)
+(55,562)
+(136,150)
+903
+870
+53,124
+51,331
+(18)
+106
+53,008
+55,086
+655,982
+768,161
+2,402
+576
+3,721
+3,532
+102
+8,218
+520
+2,261
+Total non-current liabilities
+(378)
+(382)
+(2,008)
+(1,723)
+(2,017)
+(1,439)
+(42)
+(92)
+(235)
+(242)
+Other non-current liabilities
+(6,773)
+(7,599)
+(29,650)
+(30,903)
+(85)
+(7,099)
+(8,996)
+(92)
+(42)
+Net assets attributable to
+14,981
+14,967
+4,515
+1,773
+11,851
+13,991
+13,920
+(85)
+18,949
+16,239
+Net assets
+(7,151)
+(7,981)
+(31,658)
+(32,626)
+(2,102)
+(1,524)
+14,831
+shareholders of the company
+(8,761)
+Non-current financial liabilities
+Other current liabilities
+(998)
+(597)
+(9,520)
+(9,549)
+(38)
+(32)
+(456)
+(77)
+(1,203)
+(1,177)
+Current financial liabilities
+Current liabilities
+18,258
+18,835
+45,413
+41,947
+(5,008)
+(5,147)
+(2,546)
+(2,190)
+Non-current liabilities
+(4,050)
+(4,144)
+(18,164)
+(25,393)
+(1,081)
+(1,963)
+(2,646)
+(6,857)
+(2,623)
+(6,185)
+Total current liabilities
+(3,052)
+(3,547)
+(8,644)
+(15,844)
+(1,043)
+(1,931)
+(6,350)
+Share of net assets from associates
+16,239
+18,949
+147
+9,528
+15,190
+15,701
+27,499
+38,691
+47,224
+Interest income
+Turnover
+2021
+2020
+RMB million RMB million
+2021
+2020
+RMB million RMB million
+RMB million
+RMB million
+RMB million RMB million
+RMB million
+RMB million
+2020
+118
+52
+27
+451
+Profit/(loss) before taxation
+(131)
+(89)
+(1,136)
+(945)
+(20)
+(107)
+(16)
+2021
+(5)
+(411)
+Interest expense
+183
+14,881
+24,631
+209
+37,337
+17
+68,548
+6
+291
+(535)
+14,831
+2020
+2020
+5,568
+7,580
+7,416
+8,120
+joint ventures
+Share of net assets from
+412
+468
+minority interests
+Net assets attributable to
+14,981
+14,967
+4,515
+1,773
+11,439
+13,523
+13,920
+6,626
+5,605
+Carrying Amounts
+8,120
+2021
+Sinopec SABIC Tianjin
+YASREF
+Taihu
+BASF-YPC
+FREP
+31 December 2021
+For the year ended
+2021
+Summarised income statement
+7,484
+7,491
+7,484
+5,605
+6,626
+5,568
+7,580
+7,416
+7,491
+12,531
+73,674
+15,168
+29,458
+Plants and
+buildings
+RMB million
+Oil and gas
+properties
+RMB million
+618,483
+Equipment,
+machinery
+and others
+RMB million
+Total
+RMB million
+1,152,190
+14,498
+58,180
+484,351
+10,850
+27,752
+360
+(620)
+260
+33
+33
+(422)
+970
+(286)
+1,592
+Transferred to subsidiaries
+At 31 December
+2021
+RMB million
+284,618
+4
+284,622
+At 31 December
+2020
+RMB million
+283,691
+4
+283,695
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+13 FIXED ASSETS (Continued)
+(a) Fixed assets (Continued)
+The Company (Continued)
+Cost:
+Balance at 1 January 2021
+Additions for the year
+Transferred from construction in progress
+Reclassifications
+Transferred from subsidiaries
+49,356
+2,056
+(667)
+(1,375)
+Decreases for the year
+314
+Transferred from subsidiaries
+1
+1
+Transferred to subsidiaries
+(91)
+(383)
+Decreases for the year
+(428)
+(7)
+(6,793)
+(474)
+(7,228)
+Balance at 31 December 2021
+27,372
+499,833
+330,453
+857,658
+(412)
+98
+803,748
+61,611
+27,473
+(624)
+(2,607)
+(8,157)
+(11,388)
+Balance at 31 December 2021
+51,696
+646,020
+514,422
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+1,212,138
+Balance at 1 January 2021
+Additions for the year
+Reclassifications
+25,189
+468,718
+309,841
+2,604
+31,534
+Accumulated depreciation:
+Fixed assets pending for disposal
+Total
+Fixed assets (a)
+The Company
+(1,092)
+1,984,437
+Balance at 1 January 2021
+Additions for the year
+59,471
+572,603
+577,748
+4,586
+39,670
+Reclassifications
+185
+(410)
+Decreases for the year
+(734)
+(7)
+48,568
+225
+(12,987)
+1,209,822
+92,824
+(26,219)
+(29)
+(18,710)
+(95)
+1,048,227
+793,045
+143,165
+Reclassifications
+Decreases for the year
+Exchange adjustments
+Balance at 31 December 2021
+Less: Accumulated depreciation:
+138,550
+509
+757,592
+2,192
+5,487
+Exchange adjustments
+40,357
+1,892,844
+7,878
+111,026
+646
+(617)
+(1,970)
+(5,539)
+(57)
+(940)
+996,702
+5,177
+65,182
+Provision for impairment losses:
+(29)
+Balance at 31 December 2021
+(1)
+(61)
+Balance at 31 December 2021
+4,687
+49,826
+43,010
+97,523
+Net book value:
+Balance at 31 December 2021
+74,999
+132,207
+391,719
+Balance at 31 December 2020
+75,010
+136,872
+381,733
+598,925
+593,615
+(60)
+Exchange adjustments
+(1,243)
+(984)
+63,479
+611,012
+(56)
+613,498
+(13,728)
+(929)
+1,287,989
+Less: Provision for impairment losses:
+Balance at 1 January 2021
+4,069
+48,117
+(844)
+37,221
+Additions for the year
+742
+1,904
+6,774
+9,420
+Decreases for the year
+(124)
+(135)
+89,407
+Balance at 1 January 2021
+1,917
+41,406
+4,184
+1,278
+990
+2,027
+2,168
+6,444
+29,776
+Profit for the year
+1,252
+1,826
+11,707
+16,959
+2
+2
+4,742
+5,177
+22,766
+551
+461
+181
+Other comprehensive income
+Total comprehensive income
+490
+442
+Dividends declared by associates
+Share of profit from associates
+Share of other comprehensive
+income from associates (ii)
+(127)
+464
+551
+4,184
+1,278
+101,572
+990
+2,194
+6,444
+29,778
+(308)
+3
+(372)
+26
+2
+1,655
+86
+Turnover
+RMB million
+240
+7,792
+9,327
+5,659
+6,144
+14,583
+15,168
+70,747
+73,674
+Carrying Amounts
+1,160
+240
+7,792
+9,327
+5,659
+6,144
+14,583
+1,160
+Summarised income statement
+For the year ended
+31 December 2021
+RMB million
+RMB million
+RMB million
+RMB million RMB million RMB million RMB million
+RMB million
+2020
+2021
+2020
+RMB million
+2021
+2021
+2020
+CIR
+ZTHC Energy
+Sinopec Capital
+Sinopec Finance
+2021
+2020
+PipeChina
+2021
+2020
+70,747
+284
+2,517
+Balance at 31 December 2020
+22,250
+102,880
+108,359
+159,642
+153,082
+284,618
+283,691
+The additions to oil and gas properties of the Group and the Company for the year ended 31 December 2021 included RMB2, 163 million (2020:
+RMB1,563 million) and RMB1,525 million (2019: RMB1,256 million), respectively of the estimated dismantlement costs for site restoration.
+In 2021, the impairment loss on fixed assets was mainly due to the impairment loss of the chemical segment of RMB5,184 million (2020:
+RMB2,680 million), and the impairment loss of the exploration and development segment of RMB2,467 million (2020: RMB8,435 million).
+RMB894 million (2020: RMB226 million), impairment loss of the refining segment and RMB873 million (2020: RMB442 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 RMB1,904
+billion and RMB563 million respectively, which were mainly related to the decline in oil and gas reserves of individual oilfields. 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 amount is determined based on the discounted value of the reserves of the relevant asset
+group and estimated future cash flows, and the pre-tax discount rate adopted is 10.47% (2020: 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 RMB3,628 million (2020: RMB4,548 million); Other conditions remain unchanged and operating
+costs increase by 5%, the Group's impairment loss on fixed assets related to oil and gas production activities will increase by approximately
+RMB2,400 million (2020: RMB2,836 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 RMB180 million (2020: RMB287
+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 primary factors resulting in the impairment losses were due to the suspension of operations of certain
+production facilities, and evidence that indicate the economic performance of certain production facilities 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
+expected future cash flows of the assets using a pre-tax discount rates ranging from 10.50% to 13.9% (2020: 9.87% to 11.60%).
+At 31 December 2021 and 31 December 2020, the Group and the Company had no individually significant fixed assets which were pledged.
+At 31 December 2021 and 31 December 2020, the Group and the Company had no individually significant fixed assets which were temporarily
+idle or pending for disposal.
+At 31 December 2021 and 31 December 2020, the Group and the Company had no individually significant fully depreciated fixed assets which
+were still in use.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+119
+Financial Statements (PRC)
+500,000
+Balance at 1 January 2021
+Cost:
+22,096
+69,862
+24,327
+43,307
+21,428
+Additions for the year
+359
+1,901
+3,472
+64,751
+5,732
+Transferred to subsidiaries
+Decreases for the year
+Total
+RMB million
+Balance at 31 December 2021
+Balance at 31 December 2021
+(27)
+(2)
+(29)
+(21)
+(571)
+(592)
+2,228
+Net book value:
+1,152
+Equipment,
+machinery
+and others
+RMB million
+Plants and
+buildings
+RMB million
+(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.
+Notes:
+The share of profit and other comprehensive income for the year ended 31 December 2021 in all individually immaterial associates accounted
+for using equity method in aggregate was RMB7,283 million (2020: RMB3,444 million) and RMB271 million (2020: loss of RMB1,101 million)
+respectively. As at 31 December 2021, the carrying amount of all individually immaterial associates accounted for using equity method in
+aggregate was RMB44,176 million (2020: RMB36,222 million).
+(154)
+2
+(182)
+13
+91
+231
+214
+1,621
+626
+485
+993
+1,062
+709
+3,205
+(ii) Including foreign currency translation differences.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021 117
+Financial Statements (PRC)
+Financial Statements (PRC)
+593,653
+38
+593,615
+RMB million
+2020
+At 31 December
+598,932
+598,925
+7
+Oil and gas
+properties
+RMB million
+At 31 December
+2021
+RMB million
+Total
+Fixed assets pending for disposal
+Fixed assets (a)
+The Group
+13 FIXED ASSETS
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+118
+(a) Fixed assets
+14,032
+Registered Capital
+Crude oil and natural gas extraction
+4,820
+1,408
+5,441
+1,280
+1,258
+1,838
+5,375
+7,448
+6,562
+5,259
+Cash and cash equivalents
+RMB million
+Sinopec Finance Company Limited
+PRC
+PRC
+Jiang Yongfu
+Provision of non-banking financial
+18,000
+49.00%
+("Sinopec Finance")
+Current assets
+services
+Other current assets
+7,492
+Non-current assets
+7,924
+8,257
+8,924
+17,845
+2,503
+3,446
+6,615
+12,328
+9,217
+14,940
+Total current assets
+2,665
+3,437
+7,516
+12,404
+1,223
+2,188
+4,777
+6,953
+15,779
+Sinopec Capital Co.,Ltd. ("Sinopec Capital")
+PRC
+PRC
+116
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+12 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:
+FREP
+At 31
+December
+At 31
+December
+Financial Statements (PRC)
+2021
+BASF-YPC
+At 31
+December
+2020
+2021
+RMB million RMB million
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+At 31
+December
+2020
+At 31
+December
+2021
+RMB million RMB million
+At 31
+December
+At 31
+December
+2020
+2021
+RMB million RMB million
+At 31
+December
+2020
+RMB million RMB million
+RMB million
+115
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Joint ventures and associates above are limited companies.
+Sun Mingrong
+Project management, equity
+10,000
+49.00%
+management, investment consulting,
+self-owned equity management
+Zhongtian Synergetic Energy Company Limited PRC
+PRC
+Peng Yi
+("Zhongtian Synergetic Energy")
+Mining coal and manufacturing of coal-
+chemical products
+17,516
+38.75%
+Caspian Investments Resources Ltd.
+("CIR")
+The Republic of
+Kazakhstan
+British Virgin
+Islands
+ΝΑ
+2020
+10,002 USD
+50.00%
+13,744
+15,237
+9,336
+9,993
+At 31
+December
+2021
+At 31
+December
+1,006
+(9)
+(310)
+(43)
+(538)
+Balance at 31 December 2021
+28,194
+4,907
+3,800
+23,670
+4,492
+65,063
+Provision for impairment losses:
+Balance at 1 January 2021
+226
+482
+27
+189
+17
+941
+(7)
+(169)
+Decreases for the year
+7,923
+111,864
+6,533
+5,140
+53,791
+8,217
+185,545
+Accumulated amortisation:
+Balance at 1 January 2021
+24,957
+Additions for the year
+3,791
+21,522
+3,931
+57,678
+Additions for the year
+3,406
+1,123
+332
+2,458
+604
+3,477
+11
+103
+8,594
+17 GOODWILL
+Goodwill is allocated to the following Group's cash-generating units:
+At 31 December
+Name of investees
+Principal activities
+2021
+Sinopec Zhenhai Refining and Chemical Branch
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO")
+Sinopec Beijing Yanshan Petrochemical Branch
+Amortisation of the intangible assets of the Group charged for the year ended 31 December 2021 is RMB6,363 million (2020: RMB5,907 million).
+Manufacturing of intermediate petrochemical products
+and petroleum products
+At 31 December
+2020
+RMB million
+4,043
+Production and sale of petrochemical products
+2,541
+2,541
+Manufacturing of intermediate petrochemical products
+and petroleum products
+1,004
+1,004
+Other units without individual significant goodwill
+Total
+RMB million
+4,043
+1,032
+114,280
+119,210
+355
+Decreases for the year
+(1)
+(24)
+Balance at 31 December 2021
+236
+482
+130
+407
+2,231
+17
+Net book value:
+Balance at 31 December 2021
+Balance at 31 December 2020
+83,434
+76,994
+1,144
+1,110
+1,210
+2,089
+29,714
+31,856
+3,708
+1,272
+241
+(23)
+8,620
+Included: Accounts receivable
+Allowance for doubtful accounts
+RMB million
+RMB million
+RMB million
+RMB million
+2021
+31 December
+increase
+(decrease)
+for the year
+Written off
+Written back
+for the year
+Provision for
+the year
+RMB million
+Balance at
+7
+Other
+Note
+At 31 December 2021, impairment losses of the Group are analysed as follows:
+21 DETAILS OF IMPAIRMENT LOSSES
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+123
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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 2021, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB18,342 million
+(2020: RMB17,718 million), of which RMB5,564 million (2020: RMB4,349 million) was incurred for the year ended 31 December 2021, because
+it was not probable that the related tax benefit will be realised. These deductible losses carried forward of RMB4,135 million, RMB2,308 million,
+RMB1,986 million, RMB4,349 million and RMB5,564 million will expire in 2022, 2023, 2024, 2025, 2026 and after, respectively.
+25,054
+8,124
+Balance at
+1 January
+2021
+RMB million
+At 31 December
+2020
+RMB million
+3,860
+(127)
+Long-term equity investments
+11
+Inventories
+7,639
+(58)
+(42)
+(193)
+2,464
+5,468
+1,933
+2
+1,931
+Other non-current assets
+1,590
+436
+(12)
+83
+1,531
+10
+Other receivables
+83
+46
+(54)
+14
+77
+9
+Prepayments
+4,033
+(106)
+(30)
+(12)
+2021
+RMB million
+19,389
+7,910
+At 31 December
+Deferred tax assets
+Deferred tax liabilities.
+258
+1,286
+2,858
+2,411
+3,763
+Tax value of losses carried forward
+Fixed assets
+Cash flow hedges
+Payables
+Receivables and inventories
+RMB million
+2020
+RMB million
+2021
+1,790
+At 31 December At 31 December
+At 31 December
+2020
+RMB million
+RMB million
+At 31 December
+2021
+Deferred tax assets
+Deferred tax assets and liabilities before the consolidated elimination adjustments are as follows:
+19 DEFERRED TAX ASSETS AND LIABILITIES
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+122
+Long-term deferred expenses primarily represent catalysts expenditures and improvement expenditures of fixed assets.
+18 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 11.4% to 11.7% (2020: 11.4% to
+13.4%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no major impairment loss
+was recognised.
+Deferred tax liabilities
+(2,709)
+16,777
+15,793
+10,915
+10,915
+RMB million
+At 31 December
+2020
+2021
+RMB million
+11,207
+11,207
+At 31 December
+Deferred tax assets and liabilities after the consolidated elimination adjustments are as follows:
+Deferred tax liabilities
+Deferred tax assets
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+(19,039)
+(676)
+(870)
+(19,117)
+35,969
+30,596
+Deferred tax assets/(liabilities)
+371
+1,056
+(15,037)
+(4,420)
+(13,415)
+4,749
+13,322
+Other equity instrument investments
+Intangible assets
+127
+Balance at 31 December 2021
+127
+(11)
+1,008
+869
+(492)
+(517)
+Others
+(9)
+(2,616)
+(441)
+(688)
+3,700
+2,700
+1,000
+13.950
+Upgrading Transformation Development Project
+Caprolactam Industry Chain Relocation and
+305
+Bank loans & self-financing
+48%
+11,177
+2,022
+9,155
+23,055
+63
+Bank loans & self-financing
+55%
+15,602
+10,600
+5,002
+28,565
+Refining Reconstruction and Expansion Project
+Zhenhai Refinery Expansion Ethylene Project
+Hainan Refining and Chemical Ethylene and
+RMB million
+2021
+Source of funding
+27%
+capitalised at
+31 December
+Bank loans & self-financing
+Tianjin Nangang Ethylene and Downstream High-end
+Decreases for the year
+Additions for the year
+Balance at 31 December 2021
+Accumulated depreciation:
+Balance at 1 January 2021
+Decreases for the year
+Balance at 1 January 2021
+Additions for the year
+Cost:
+The Group
+15 RIGHT-OF-USE ASSETS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+120
+Self-financing
+5%
+2,128
+1,800
+328
+41,639
+High-end Synthetic New Material Project
+13
+Bank loans & self-financing
+10%
+2,999
+2,999
+29,052
+New Material Industry Cluster Project
+Zhenhai Refining and Chemical Refining and
+32
+Balance at 31 December 2021
+Accumulated
+interest
+Percentage
+of project
+investment
+60,182
+72,196
+RMB million
+127,572
+159,729
+RMB million
+The Company
+The Group
+At 31 December 2021, major construction projects of the Group are as follows:
+Balance at 31 December 2020
+Balance at 31 December 2021
+Net book value:
+Balance at 31 December 2021
+Exchange adjustments
+Decreases for the year
+Additions for the year
+Balance at 1 January 2021
+Balance at 31 December 2021
+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 2021
+Cost:
+14 CONSTRUCTION IN PROGRESS
+For the year ended 31 December 2021
+(146)
+to budgeted
+amount
+(90)
+(111,026)
+Balance at
+31 December
+2021
+RMB million
+RMB million
+RMB million
+RMB million
+Net change
+for the year
+2021
+Balance at
+1 January
+Budgeted
+amount
+Project name
+59,880
+66,146
+155,939
+125,525
+302
+2,130
+(22)
+(39)
+144
+302
+2,047
+66,448
+158,069
+(56)
+(6,733)
+(58,180)
+(927)
+(10,302)
+(7,702)
+(84)
+Net book value:
+The Company
+16 INTANGIBLE ASSETS
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+121
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+108,737
+1,184
+107,553
+Balance at 31 December 2020
+105,712
+1,427
+104,285
+12,733
+1,529
+11.204
+(491)
+12
+(50)
+4,642
+882
+3,760
+8,582
+1,088
+The Group
+7,494
+Land use rights
+RMB million
+technology Operation rights
+(832)
+(9)
+(1,003)
+Decreases for the year
+15,262
+2,122
+912
+379
+1,159
+10,690
+Additions for the year
+172,899
+6,179
+53,567
+5,593
+5,383
+102,177
+Balance at 1 January 2021
+Cost:
+RMB million
+RMB million
+RMB million
+RMB million
+Total
+Others
+Patents
+RMB million
+Balance at 31 December 2021
+Balance at 31 December 2020
+118,445
+115,489
+(2,379)
+(2,197)
+(182)
+13,358
+6,863
+6,495
+23,072
+10,481
+12,591
+219,025
+46,921
+172,104
+(5,107)
+(3,430)
+(1,677)
+12,042
+9,653
+2,389
+212,090
+40,698
+Total
+RMB million
+Others
+RMB million
+171,392
+RMB million
+Land
+18,904
+2,956
+15,147
+153,200
+(1,146)
+(935)
+(211)
+2,272
+1,619
+653
+117,319
+2,272
+115,047
+Balance at 31 December 2021
+Balance at 31 December 2021
+Balance at 31 December 2021
+Accumulated depreciation:
+Balance at 1 January 2021
+Additions for the year
+Decreases for the year
+Balance at 1 January 2021
+Additions for the year
+Decreases for the year
+Cost:
+Net book value:
+RMB million
+Total
+Others
+RMB million
+RMB million
+Land
+189,018
+30,217
+158,801
+184,974
+31,774
+34,051
+Fixed assets
+Short-term other loans
+Construction in progress
+11,013
+(4,637)
+33,681
+12,988
+35,651
+(3,293)
+- US Dollar loans
+- Renminbi loans
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+Less: Portion with one year
+Long-term bank loans
+92
+6.5249
+14
+64
+6.3757
+10
+Interest rates at 1.55% per annum at
+31 December 2020 (2020: 1.55%) with
+maturities through 2038
+- US Dollar loans
+38,226
+38,880
+Interest rates ranging from interest 1.08%
+to 4.00% per annum at 31 December 2021
+(2020: 1.08% to 5.23%) with maturities
+through 2039
+- Renminbi loans
+Long-term bank loans
+RMB
+million
+currency Exchange
+million
+rates
+RMB
+million
+Interest rates ranging from interest 1.08%
+to 5.23% per annum at 31 December 2021
+(2020: 1.08% to 5.23%) with maturities
+through 2037
+Exchange
+rates
+Interest rates at 1.65% per annum at
+31 December 2021 (2020:1.60%) with
+maturities in 2027
+6.3757
+26,633
+3,520
+18,373
+RMB million
+RMB million
+At 31 December
+2020
+At 31 December
+2021
+11,778
+45,459
+(622)
+13,690
+49,341
+(466)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+126
+Long-term loans are carried at amortised costs.
+Total
+After five years
+Between two and five years
+Between one and two years
+The maturity analysis of the Group's long-term loans is as follows:
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+Total
+Less: Portion with one year (note 29)
+1,387
+6.5249
+213
+1,168
+183
+39,504
+currency
+million
+At 31 December 2020
+Original
+currency
+million
+rates RMB million
+Exchange
+Original
+Original
+currency
+million
+At 31 December 2020
+At 31 December 2021
+Others
+Lease liabilities due within one year
+- Renminbi debentures.
+Debentures payable due within one year
+Long-term loans due within one year
+- Renminbi loans
+fellow subsidiaries
+Long-term loans from Sinopec Group Company and
+- US Dollar loans
+- 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
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Financial Statements (PRC)
+Financial Statements (PRC)
+125
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Exchange
+Interest rate and final maturity
+rates
+3,281
+Original
+At 31 December 2021
+22,494
+1,942
+15,293
+5,259
+622
+The Group's long-term loans represent:
+31 LONG-TERM LOANS
+At 31 December 2021 and 31 December 2020, other current liabilities mainly represent output VAT to be transferred.
+30 OTHER CURRENT LIABILITIES
+At 31 December 2021 and 31 December 2020, the Group had no significant overdue long-term loans.
+Non-current liabilities due within one year
+28,651
+2,719
+15,173
+7,000
+3,759
+466
+4,613
+24
+6.5249
+4
+12
+6.3757
+2
+RMB million
+At 31 December 2021 and 31 December 2020, other payables of the Group over one year primarily represented payables for constructions.
+4,335
+49,341
+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.
+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).
+121,071
+121,071
+25,513
+25,513
+95,558
+95,558
+RMB million
+RMB million
+At 31 December
+2020
+2021
+At 31 December
+Total
+95,557,771,046 listed A shares (2020: 95,557,771,046) of RMB1.00 each
+25,513,438,600 listed H shares (2020: 25,513,438,600) of RMB1.00 each
+Registered, issued and fully paid:
+The Group
+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.
+36 SHARE CAPITAL
+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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (PRC)
+129
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+120,188
+Balance at 31 December 2021
+319
+(1,396)
+(6,124)
+127,389
+RMB million
+Others
+Transaction with minority interests
+Adjustment for business combination of entities under common control
+Balance at 1 January 2021
+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 31,32 and 61, 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 2021, the debt-to-capital ratio and the liability-to-asset ratio of the Group were 10.6% (2020: 10.1%) and 51.5%
+(2020: 48.9%), respectively.
+Capital management
+The Group (Continued)
+36 SHARE CAPITAL (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+All A shares and H shares rank pari passu in all material aspects.
+2,435
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+128
+Lease liabilities
+The Group
+33 LEASE LIABILITY
+The Company issued corporate bonds with a maturity of three years on 27 December 2021 at par value of RMB100. The total issued amount of the corporate bonds is
+RMB2.55 billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 2.50% per annum and the interest is paid once a year.
+These corporate bonds are carried at amortised cost, including USD denominated corporate bonds of RMB11,127 million, and RMB denominated corporate bonds of
+RMB38,521 million (2020: USD denominated corporate bonds of RMB11,379 million, and RMB denominated corporate bonds of RMB26,977 million).
+The Company issued corporate bonds with a maturity of two years on 6 August 2021 at par value of RMB100. The total issued amount of the corporate bonds is
+RMB2 billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 2.80% per annum and the interest is paid once a year.
+The Company issued corporate bonds with a maturity of three years on 5 August 2021 at par value of RMB100. The total issued amount of the corporate bonds is
+RMB2 billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 2.59% per annum and the interest is paid once a year.
+(i) The Company issued corporate bonds with a maturity of five years on 26 July 2021 at par value of RMB100. The total issued amount of the corporate bonds is RMB5
+billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 3.20% per annum and the interest is paid once a year.
+38,356
+7,000
+42,649
+38,356
+49,649
+RMB million
+2020
+At 31 December
+At 31 December
+2021
+RMB million
+Note:
+Total
+Less: Portion with one year (Note 29)
+Corporate Bonds (i)
+Debentures payable:
+The Group
+32 DEBENTURES PAYABLE
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+45,459
+Deduct: Portion of lease liabilities with one year (Note 29)
+Total
+Financial Statements (PRC)
+At 31 December
+2021
+185,406
+15,173
+Financial Statements (PRC)
+127
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+(81)
+40,495
+1,135
+(6,435)
+2,163
+43,713
+RMB million
+The Group
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+35 OTHER NON-CURRENT LIABILITIES
+Balance at 31 December 2021
+Exchange adjustments
+Decrease for the year
+Accretion expenses
+Provision for the year
+Balance at 1 January 2021
+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
+171,740
+187,033
+15,293
+RMB million
+2020
+At 31 December
+170,233
+RMB million
+76,848
+81,267
+8,279
+37
+3,298
+6.5249
+505
+934
+6.3757
+146
+1,141
+1,320
+4,642
+2,407
+3
+3
+16,111
+24,959
+16,111
+24,959
+RMB
+million
+Exchange
+rates
+million
+rates RMB million
+currency
+Exchange
+currency
+million
+At 31 December 2020
+Original
+0.8416
+Original
+31
+7.2197
+of the year
+Balance at the
+beginning
+(2) Short-term employee benefits
+Short-term employee benefits
+Post-employment benefits
+defined contribution plans
+Total
+(1) Employee benefits payable:
+26 EMPLOYEE BENEFITS PAYABLE
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+124
+As at 31 December 2021 and 31 December 2020, 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 2021 and 31 December 2020, the Group had no individually significant accounts payable aged over one year.
+24 ACCOUNTS PAYABLE
+At 31 December 2021 and 31 December 2020, the Group had no overdue unpaid bills.
+Bills payable primarily represented bank accepted bills for the purchase of material, goods and products. Bills payable were due within one year.
+23 BILLS PAYABLE
+At 31 December 2021 and 31 December 2020, the Group had no significant overdue short-term loans.
+At 31 December 2021, the Group's interest rates on short-term loans were from interest 0.53% to 4.20% (At 31 December 2020: 0.63% to 4.55%)
+per annum. The majority of the above loans are by credit.
+20,756
+27,366
+172
+8.0250
+21
+153
+21
+Salaries, bonuses, allowances
+At 31 December 2021
+Hong Kong Dollar loans
+Euro loans
+(28)
+(33)
+144
+2,047
+97,523
+(163)
+(1,141)
+9,420
+89,407
+3,705
+(42)
+(7)
+206
+3,548
+4,897
+(40)
+(1,300)
+(18)
+3,148
+3,107
+123467
+17
+Goodwill
+Intangible assets
+14
+2,130
+Total
+941
+(24)
+- US Dollar loans
+- Renminbi loans
+fellow subsidiaries
+Short-term loans from Sinopec Group Company and
+- Renminbi loans
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+- Renminbi loans
+Short-term bank loans
+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.
+125,076
+(238)
+(2,547)
+(211)
+15,687
+112,385
+49
+43
+7,861
+7,861
+6
+Total
+Others
+1,272
+93
+262
+Staff welfare
+Social insurance
+Medical insurance
+15
+305
+8
+50
+(8,148)
+8,147
+of the year
+Balance at
+the end
+Decreased
+during the year
+Accrued
+during the year
+of the year
+51
+Balance at
+the beginning
+13,967
+(90,472)
+97,396
+47
+(2,620)
+2,637
+30
+7,043
+279
+(2,203)
+2,246
+236
+48
+(6,243)
+3,789
+6,244
+74
+(305)
+11,548
+132
+8
+6,586
+4,809
+5,089
+56,762
+56,084
+8,818
+RMB million
+RMB million
+28 OTHER PAYABLES
+Total
+Other taxes
+Mineral resources compensation fee payable
+Income tax payable
+Consumption tax payable
+Value-added tax payable
+2020
+At 31 December
+At 31 December
+2021
+69
+11
+8
+(12,246)
+(3,793)
+12,241
+47
+6
+(150)
+13,967
+of the year
+the end
+Balance at
+(12,246)
+(91)
+(102,809)
+12,241
+91
+109,728
+7,129
+12
+(90,472)
+97,396
+7,043
+74
+Decreased
+during the year
+Accrued
+during the year
+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
+69
+12
+14,048
+Balance at
+the beginning
+of the year
+151
+5
+6
+(380)
+381
+5
+265
+(5,382)
+5,423
+224
+277
+(5,912)
+13
+5,955
+2,586
+(7,684)
+7,610
+2,660
+10,730
+(65,810)
+72,704
+3,836
+of the year
+Balance at
+the end
+Decreased
+during the year
+Accrued
+during the year
+234
+Financial Statements (PRC)
+Non-patent
+87,559
+681
+50,564
+12,078
+2,779
+3,010
+2,407
+4,642
+14,156
+12,400
+72,176
+74,178
+86,585
+87,870
+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.
+85
+As at and for the year ended 31 December 2021, and as at and for the year ended 31 December 2020, 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.
+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
+58 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+2021
+2020
+RMB thousand
+4,612
+379
+4,991
+RMB thousand
+5,753
+342
+6,095
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+139
+Financial Statements (PRC)
+(5) Key management personnel emoluments
+2,370
+5,896
+41
+2021
+RMB million
+2020
+RMB million
+61,682
+53,417
+30
+42
+-
+122
+19
+2127
+8,625
+16,735
+186
+4,627
+760
+18,062
+577
+1,231
+3,116
+6.435
+5
+8
+3,798
+3,671
+228
+123
+10,139
+18,990
+50
+13,941
+At 31 December
+2021
+2020
+RMB million
+6,344
+Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows:
+2021
+2020
+RMB million
+RMB million
+Profit before taxation
+108,348
+48,441
+Expected income tax expense at a tax rate of 25%
+27,087
+12,110
+Tax effect of non-deductible expenses
+6,142
+23,318
+3,340
+(8,085)
+(8,345)
+Tax effect of preferential tax rate (i)
+(2,766)
+(1,011)
+Effect of income taxes at foreign operations
+(222)
+(730)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of tax losses not recognised and temporary differences
+(701)
+(65)
+1,391
+1,087
+Write-down of deferred tax assets
+Tax effect of non-taxable income
+RMB million
+Total
+(462)
+220
+43
+165
+301
+3,727
+1,669
+3,470
+2,719
+7,582
+4,732
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+133
+Financial Statements (PRC)
+134
+(117)
+Financial Statements (PRC)
+For the year ended 31 December 2021
+54 INCOME TAX EXPENSE
+The Group
+2021
+2020
+RMB million
+RMB million
+Provision for income tax for the year
+17,522
+14,334
+Deferred taxation
+6,258
+(7,873)
+Under-provision for income tax in respect of preceding year
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+At 31 December
+At 31 December
+2020
+RMB million
+2021
+RMB million
+Net interest expenses
+Add: Interest expense on lease liabilities
+Less: Capitalised interest expenses
+Interest expenses incurred
+RMB million
+RMB million
+2020
+2021
+235,018
+259,032
+5,516
+7,253
+4,572
+6,432
+Accretion expenses (Note 34)
+11,678
+15,710
+18,044
+197,542
+213,894
+2020
+RMB million
+RMB million
+2021
+The Group
+42 FINANCIAL EXPENSES
+The applicable tax rate of the taxes and surcharges are set out in Note 4.
+Total
+Others
+City construction tax
+Education surcharge
+Resources tax
+Consumption tax
+13,409
+The Group
+Interest income
+5,679
+996
+107,461
+115,680
+87,525
+2020
+RMB million
+1,589,821
+2,076,665
+103,492
+2021
+RMB million
+44 SELLING AND DISTRIBUTION EXPENSES
+Other expenses
+Total
+Exploration expenses (including dry holes)
+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
+Net foreign exchange gains
+The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2021 by the Group ranged from 1.84%
+to 4.35% (2020: 2.60% to 4.66%).
+9,010
+Total
+(885)
+(276)
+(4,803)
+(5,732)
+1,343
+1,135
+13,855
+13,883
+9,349
+9,200
+2,011
+6,517
+9,510
+41 TAXES AND SURCHARGES
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Financial Statements (PRC)
+Rental income
+•
+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.
+108,590
+(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.
+(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", etc.
+138
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+57 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+(4) Balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures
+The balances with Sinopec Group Company and fellow subsidiaries, associates and joint ventures at 31 December 2021 and 31 December 2020
+are as follows:
+Total
+Other related companies
+Accounts receivable
+Receivables financing
+Other receivables
+Prepayments and other current assets
+Other non-current assets
+Bills payable
+Accounts payable
+Contract liabilities
+Other payables and other current liabilities
+Other non-current liabilities
+Short-term loans
+Long-term loans (including current portion)
+Lease liabilities (including current portion)
+The ultimate holding company
+At 31 December
+Cash at bank and on hand
+Note:
+(i) Others are primarily liquefied petroleum gas and other refinery and chemical byproducts and joint products and so on.
+(ii) The above incomes, except rental income, are all income from contracts.
+2021
+RMB million
+Financial Statements (PRC)
+131
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+2,104,724
+2,740,884
+1,084
+1,394
+54,986
+59,990
+56,070
+61,384
+276,139
+363,979
+42,388
+45,464
+48,099
+68,443
+2,679,500
+2020
+RMB million
+2,048,654
+726,057
+557,605
+542,260
+422,566
+934
+429,038
+242,532
+155,397
+149,208
+122,368
+112,519
+72,385
+351,707
+12,382
+75
+(462)
+RMB million
+currency
+investments
+other equity
+instrument
+Foreign
+fair value of
+Changes in
+be converted
+into profit or
+loss under
+the equity
+method
+comprehensive
+income that can
+Other
+Equity Attributable to shareholders of the company
+31 December 2021
+Changes in 2021
+1 January 2021
+RMB million
+31 December 2020
+(b) The change of each item in other comprehensive income
+315
+(2,336)
+2,651
+Other comprehensive income
+(2,441)
+(4,457)
+(4,457)
+Foreign currency translation differences
+(2,441)
+Other comprehensive loss that can be converted into profit or loss under the
+equity method
+(22)
+(4)
+(18)
+Changes in fair value of other equity instrument investments
+1 January 2020
+Changes in 2020
+162
+fair value
+hedges
+RMB million
+translation
+differences
+(1,562)
+(2,600)
+1,038
+(739)
+7,805
+81
+(20)
+(6,089)
+328
+(1,031)
+1,359
+(3,485)
+6,768
+81
+Cash flow
+hedges
+RMB million
+(4)
+(1,890)
+(1,569)
+(321)
+2,746
+1,037
+(16)
+(4,088)
+RMB million
+income
+Total other
+comprehensive
+Minority
+interests
+RMB million
+RMB million
+RMB million
+Subtotal
+(2,001)
+(6,089)
+162
+7,073
+(220)
+(220)
+19,018
+(7,240)
+1,618
+(5,499)
+24,517
+(8,858)
+11,778
+(3,881)
+15,659
+Cost of hedging reserve
+Subtotal
+Less: Reclassification adjustments for amounts transferred to the consolidated
+income statement
+recognised during the year
+Changes in fair value of other equity instrument investments
+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
+2021
+(a) The changes of other comprehensive income in consolidated income statement
+The Group
+38 OTHER COMPREHENSIVE INCOME
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Cash flow hedges:
+Cost of hedging reserve
+(6)
+(4)
+(2,332)
+9,405
+Subtotal
+(161)
+37
+(198)
+Less: Reclassification adjustments for amounts transferred to the consolidated
+income statement
+6,912
+(2,295)
+9,207
+Effective portion of changes in fair value of hedging instruments recognised
+during the year
+Cash flow hedges:
+RMB million
+RMB million
+2
+RMB million
+Net-of-tax
+Tax
+effect
+Before-tax
+amount
+2020
+17,507
+(5,497)
+23,004
+(1,728)
+(1,728)
+Other comprehensive income
+Foreign currency translation differences
+441
+441
+Other comprehensive loss that can be converted into profit or loss under the
+equity method
+amount
+(20)
+81
+7,805
+Cash balance at the end of the year
+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
+Gain from ineffective portion of cash flow hedges
+Others
+Total
+50 INCOME FROM CHANGES IN FAIR VALUE
+RMB million
+The Group
+(17,687)
+266
+687
+2,475
+(376)
+(1,013)
+(b) Net change in cash:
+409
+84
+6,032
+(69)
+47,486
+1,203
+30,881
+257
+43,356
+2021
+Sale of materials and others
+Income from other operations
+Others (i)
+Synthetic fiber monomers and polymers
+Natural gas
+Kerosene
+Synthetic resin
+Basic chemical feedstock
+84
+Crude oil
+Increase in operating receivables
+Increase in operating payables
+Net cash flow from operating activities
+(Increase)/decrease in inventories
+(117)
+23,318
+6,344
+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 2021. 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.
+55 DIVIDENDS
+(a) Dividends of ordinary shares declared after the balance sheet date
+Pursuant to a resolution passed at the director's meeting on 25 March 2022, final dividends in respect of the year ended 31 December 2021 of
+RMBO.31 (2020: RMBO.13) per share totaling RMB37,532 million (2020: RMB15,739 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 shareholders' approval at the General Meeting on 27 August 2021, the interim dividends for the year ending 31 December
+2021 of RMBO.16 (2020: RMB0.07) per share totaling RMB19,371 million (2020: RMB8,475 million) were approved. Dividends were paid on 17
+September 2021.
+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 6 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 19 May 2020, a final dividend of RMBO.19 per share totaling
+RMB23,004 million according to total shares on 9 June 2020 was approved. All dividends have been paid in the year ended 31 December 2020.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Safety fund reserve
+56 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT
+(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
+Amortisation of intangible assets and long-term deferred expenses
+Dry hole costs written off
+Net loss/(gain) on disposal of non-current assets
+Fair value (gain)/loss
+Financial expenses
+Investment income
+Decrease/(increase) in deferred tax assets
+Increase in deferred tax liabilities
+The Group
+Diesel
+Gasoline
+Income from principal operations
+209,280
+RMB million
+Total
+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 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+130
+As at 31 December 2021, cash flow hedge reserve amounted to a gain of RMB7,244 million (31 December 2020: a gain of RMB8,176 million),
+of which a gain of RMB7,214 million was attribute to shareholders of the Company (31 December 2020: a gain of RMB7,805 million).
+(4,005)
+Balance at 1 January 2021
+(3,315)
+(2,092)
+7,214
+(2,443)
+(715)
+(1,728)
+(1,353)
+(591)
+(110)
+(29)
+2
+(18)
+324
+(5,765)
+(1,562)
+(2,600)
+1,038
+(739)
+(690)
+Appropriation
+92,280
+3,944
+Balance at 31 December 2021
+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 63.
+584,315
+770,321
+27,133
+743,188
+2020
+RMB million
+1,045,000
+808,540
+31,039
+1,013,961
+The Company
+2021
+RMB million
+1,685,674
+2,104,724
+2,740,884
+2,216,551
+56,070
+61,384
+2,048,654
+96,224
+117,000
+The PRC Company Law and Articles of Association of the Company have set out the following profit appropriation plans:
+3,944
+213,224
+(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;
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+(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.
+Income from principal operations
+Income from other operations
+Total
+Operating costs
+The Group
+2021
+RMB million
+2,679,500
+2020
+RMB million
+40 OPERATING INCOME AND OPERATING COSTS
+9,716
+(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.
+42,531
+(47,486)
+5,456
+(10,143)
+802
+(58,372)
+775
+2,270
+22,407
+(8,177)
+237
+(17,610)
+57,827
+23,956
+225,174
+168,520
+2021
+2020
+RMB million
+(6,032)
+RMB million
+10,395
+1,253
+13,165
+26,087
+2,311
+2,066
+12,972
+12,842
+92,824
+85,494
+9,884
+9,125
+7,702
+5,928
+3,062
+(398)
+(3,341)
+9,286
+• 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;
+.
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+Notes:
+As at 31 December 2021 and 31 December 2020, 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 62(b). Guarantees given to banks
+by the Group in respect of banking facilities to associates and joint ventures are disclosed in Note 62(b).
+For the year ended 31 December 2021, the amount of rental the Group paid to Sinopec Group Company and fellow subsidiaries, associates
+and joint ventures for land, buildings and others are RMB10,834 million, RMB572 million and RMB269 million (2020: RMB11,090 million,
+RMB571 million and RMB330 million). Among them, according to the continuing connected transaction agreement signed in 2000, the fifth
+supplementary agreement for continuing connected transactions signed on August 24, 2018, and the fourth revision memorandum of the land
+use right lease contract, the actual payment of land, land and land use rights between Sinopec Group and Sinopec Group The rental amount of
+houses was RMB10,831 million and RMB565 million respectively (2020: RMB11,086 million and RMB565 million).
+For the year ended 31 December 2021, 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 2021 on lease
+liabilities in respect of amounts due to Sinopec Group Company and fellow subsidiaries, associates and joint ventures was RMB7,863 million
+(2020: RMB8,160 million).
+Included in the transactions disclosed above, for the year ended 31 December 2021 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB173,718 million (2020: RMB149,560 million) comprising purchases of products and services
+(i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB160,048 million
+(2020: RMB133,827 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB1,730 million
+(2020: RMB2,952 million), lease charges for land, buildings and others paid by the Group of RMB10,831 million, RMB565 million and RMB159
+million (2020: RMB11,086 million, RMB565 million and RMB211 million), respectively and interest expenses of RMB385 million (2020: RMB919
+million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB54,453 million (2020: RMB69,470
+million), comprising RMB53,671 million (2020: RMB68,683 million) for sales of goods, RMB715 million (2020: RMB704 million) for interest
+income and RMB67 million (2020: RMB83 million) for agency commission income.
+The amounts set out in the table above in respect of the year ended 31 December 2021 and 2020 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+30,305
+Net funds obtained from/(repaid to) related parties
+Net deposits placed with related parties
+(31,144)
+(x)
+(17,585)
+(8,265)
+(viii)
+(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 and
+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 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 2021.
+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.
+(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.
+42,097
+Notes: (Continued)
+57 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Financial Statements (PRC)
+Financial Statements (PRC)
+137
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+(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.
+(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)
+919
+85,030
+2020
+3,341
+Total
+(5)
+Others
+576
+428
+(1,824)
+2,913
+Net fair value gains on financial assets and financial liabilities at fair value through profit or loss
+Unrealised gains from ineffective portion cash flow hedges, net
+Others
+2020
+RMB million
+RMB million
+52,621
+3,516
+Total
+(1,253)
+2021
+51 IMPAIRMENT LOSSES
+Prepayments
+Asset scrap, damage loss
+Fines, penalties and compensation
+Donations
+The Group
+53 NON-OPERATING EXPENSES
+Total
+Government grants
+Others
+The Group
+52 NON-OPERATING INCOME
+Total
+Others
+Construction in progress
+Intangible assets
+Fixed assets
+Long-term equity investment
+Inventories
+The Group
+RMB million
+(40)
+2020
+RMB million
+3,130
+Net increase 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:
+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 :
+Others
+Total
+2021
+RMB million
+Less: Cash at the beginning of the year
+1,160
+2,710
+1,210
+97
+11,361
+206
+1,955
+9,420
+11,783
+262
+47
+RMB million
+144
+43
+13,165
+26,087
+2021
+RMB million
+2020
+RMB million
+806
+844
+385
+Repayments of lease liabilities
+704
+4,225
+980
+5,205
+2020
+RMB million
+RMB million
+2021
+87,559
+87,551
+8
+2020
+RMB million
+27,121
+108,589
+108,590
+1
+2021
+RMB million
+21,031
+60,438
+(ix)
+49,832
+37
+49,869
+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
+2021
+RMB million
+19,412
+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 2021
+Financial Statements (PRC)
+Financial Statements (PRC)
+135
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+1,955
+17,282
+28,276
+8,864
+15,327
+RMB million
+2020
+16
+21,079
+S[8
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+132
+Other income are mainly the government grants related to the business activities.
+48 OTHER INCOME
+Exploration expenses include geological and geophysical expenses and written-off of unsuccessful dry hole costs.
+47 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.
+46 RESEARCH AND DEVELOPMENT EXPENSES
+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.
+1,837,054
+2,360,840
+49 INVESTMENT INCOME
+The Group
+2021
+The Company
+2020
+22
+156
+34
+56
+37,525
+82
+3,637
+Unified social credit identifier
+19,296
+6,712
+23,253
+RMB million
+RMB million
+RMB million
+2020
+2021
+21,416
+8,151
+:
+87,559
+Registered address
+Ancillary and social services
+Agency commission income
+Interest income
+Interest expense
+Note
+The Group
+2021
+RMB million
+2020
+RMB million
+Sinopec Petroleum Storage and Reserve Limited
+(i)
+228,307
+(ii)
+191,888
+151,300
+(iii)
+19,443
+8,734
+(iv)
+297,381
+33,930
+PipeChina
+Sinopec Capital
+9111000010169286X1
+Exploration and development services
+Production related 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:
+57 RELATED PARTIES AND RELATED PARTY TRANSACTIONS (Continued)
+Sinopec Finance
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+136
+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
+FREP
+BASF-YPC
+Joint ventures of the Group:
+Zhongtian Synergetic Energy
+CIR
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+31,444
+Associates of the Group:
+44,405
+Sinopec Assets Management Corporation
+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.
+RMB326,547 million
+:
+Ma Yongsheng
+Authorised representative
+Registered capital
+Types of legal entity
+Principal activities
+State-owned
+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
+(v)
+Relationship with the Group
+Sinopec Engineering Incorporation
+Sinopec Century Bright Capital Investment Limited
+Sinopec Zhongyuan Petroleum Exploration Bureau
+160
+31,915
+(vi)
+1,730
+2,952
+(vii)
+194
+(viii)
+715
+:
+10,035
+215,846
+1,268,814
+40,551
+1,309,365
+RMB million
+63 SEGMENT REPORTING (Continued)
+2021
+At 31 December
+2,166,040
+278,024
+296,820
+2,740,884
+1,720,695
+2020
+RMB million
+RMB million
+Mainland China
+Others
+(2) Geographical information
+Non-current assets
+168,183
+Others
+2021
+External sales
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Mainland China
+Singapore
+148
+14,629
+536
+Chemicals
+5,332
+3,675
+Corporate and others
+165
+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.
+For the year ended 31 December 2021
+• market risk.
+At 31 December
+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 2021, 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+149
+Financial Statements (PRC)
+2,145
+(i) Risk management
+(720)
+21,149
+18,439
+Total comprehensive income
+(920)
+1,606
+2,132
+1,045
+2,104,724
+628
+Credit risk
+2020
+RMB million
+1,216,267
+36,782
+1,253,049
+64 FINANCIAL INSTRUMENTS
+1,211
+Overview
+The Group has exposure to the following risks from its uses of financial instruments:
+⚫ credit risk;
+liquidity risk; and
+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.
+951
+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.
+Marketing and distribution
+46,273
+860
+100.00
+124
+Sinopec Great Wall Energy & Chemical Company Limited
+Coal chemical industry investment management, production and
+sale of coal chemical products
+RMB22,761
+27,366
+20,756
+Non-current liabilities due within one year
+28,651
+22,494
+Long-term loans
+49,341
+45,459
+Debentures payable
+42,649
+38,356
+Deferred tax liabilities
+7,910
+8,124
+Other non-current liabilities
+18,276
+RMB1,165
+RMB1,000
+Marketing and distribution of petrochemical products
+100.00
+243
+60.33
+5,011
+Manufacturing of synthetic fibres, resin and plastics, intermediate
+petrochemical products and petroleum products
+RMB10,824
+RMB5,820
+50.44
+15,132
+Manufacturing of plastics, intermediate petrochemical products
+and petroleum products
+RMB10,492
+17,950
+RMB5,246
+6,915
+Investment in exploration, production and sale of petroleum and
+RMB8,250
+RMB8,250
+100.00
+6,119
+natural gas
+Investment holding of overseas business
+USD3,009
+USD3,009
+50.00
+1,923
+HKD3,952
+Total liabilities
+137,104
+52,880
+Refining
+20,743
+20,090
+Marketing and distribution
+23,071
+23,196
+Chemicals
+16,093
+14,830
+Corporate and others
+2,893
+3,072
+115,680
+107,461
+Impairment losses on long-lived assets
+Exploration and production
+2,467
+8,495
+Refining
+167,948
+2,312
+3,786
+28,217
+37,795
+25,319
+973,214
+850,176
+2021
+2020
+RMB million
+RMB million
+Capital expenditure
+Exploration and production
+Other unallocated liabilities
+Refining
+Corporate and others
+Depreciation, depletion and amortisation
+Exploration and production
+68,148
+56,416
+22,469
+24,756
+21,897
+25,403
+51,648
+Marketing and distribution
+Chemicals
+677
+60
+2,817
+1 July 2021
+According to the
+agreement
+246
+(15)
+ET
+560
+HKD248
+1 December 2021 According to the
+agreement
+7,723
+(376)
+7.177
+242
+42
+162
+62
+(6)
+20
+385
+1 December 2021 According to the
+3,086
+102
+87
+3,234
+1,223
+20
+1 January
+2021 to the
+of the acquiree
+from 1 January
+2021 to the
+acquisition date
+RMB Million
+19
+43
+company are controlled by
+Sinopec Group Company both
+before and after combination,
+and the control is not
+transitory
+Oriental Petrochemical
+Business
+100% The acquiree and the
+Cangzhou Branch
+business
+company are controlled by
+Sinopec Group Company both
+before and after combination,
+and the control is not
+transitory
+100% The acquiree and the
+company are controlled by
+Sinopec Group Company both
+before and after combination,
+and the control is not
+transitory
+Asset company
+business
+Group Yanshan
+Business
+100% The acquiree and the
+company are controlled by
+Sinopec Group Company both
+before and after combination,
+and the control is not
+transitory
+100% The acquiree and the
+company are controlled by
+Sinopec Group Company both
+before and after combination,
+and the control is not
+transitory
+1 July 2021
+According to the
+agreement
+620
+84
+5
+392
+agreement
+4,155
+4,844
+The principal subsidiaries included in the scope of consolidation this year are disclosed in Note 59.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+143
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+61 COMMITMENTS
+Capital commitments
+At 31 December 2021 and 31 December 2020, capital commitments of the Group are as follows:
+Authorised and contracted for (i)
+Authorised but not contracted for
+Total
+At 31 December
+2021
+RMB million
+184,430
+90,227
+274,657
+At 31 December
+2020
+RMB million
+171,597
+RMB22,795
+Total shareholders' equity
+1,031
+2,557
+Total liabilities
+Total
+(2) Cost of acquisition :
+Cost of acquisition(RMB Million)
+(3) Details of the assets and liabilities acquired are as follows:
+11,688
+(200)
+12,233
+347
+1,002
+6,124
+acquiree from
+Book value at
+the Acquisition Date
+RMB Million
+RMB Million
+Total current assets
+974
+480
+Total assets
+6,712
+5,875
+Total current liabilities
+2,540
+1,020
+Book value at
+December 31 2020
+1,814
+2020 to
+RMB Million
+2,766
+90
+316
+541
+60
+649
+69
+64
+150
+1500
+164
+175
+15
+1,028
+767
+61
+Net cash generated from/
+(used in) operating activities 28,923
+54,139
+690
+281
+7,064
+4,060
+interests
+(377)
+2,132
+1,606
+(920)
+Comprehensive income
+attributable to minority
+interests
+6.822
+7.205
+579
+(287)
+1,065
+317
+476
+23
+121
+268
+707
+00
+2,390
+691
+659
+Dividends paid to minority
+1,751
+(292)
+(244)
+Income of the
+acquiree from
+1 January 2021
+Beihai petrochemical
+98.98% The acquiree and the
+1 July 2021
+business
+According to the
+agreement
+to the
+acquisition date
+RMB Million
+13
+Net profits/
+(losses) of the
+acquiree from
+1 January 2021
+to the
+acquisition date
+RMB Million
+Income of the
+acquiree from
+(losses) of the
+from operating
+acquiree from
+activities of the
+Net cash flow
+1 January
+2020 to
+1 January
+31 December
+2020
+31 December
+2020
+5
+RMB Million
+39
+Basis of
+Determination on
+the acquisition date
+Date of
+acquisition
+The basis for the
+business combination
+Share of under the common
+acquired equity control
+acquiree
+133
+586
+3,447
+3.119
+5.476
+(363)
+60 CHANGE IN THE SCOPE OF CONSOLIDATION
+Business combination under common control
+Pursuant to resolution passed at the Director's meeting on 26 March 2021, the Company entered into agreements with Sinopec Assets Management
+Corporation ("SAMC") and Beijing Orient Petrochemical Industry Co., Ltd. ("BJOPI"), and its subsidiary, Sinopec Beihai Refining and Chemical
+Limited Liability Company entered into an agreement with Beihai Petrochemical Limited Liability Company of Sinopec Group ("BHP"). According
+to the relevant agreements, the Company proposed to acquire non equity assets such as the polypropylene devices and utility business assets of
+Cangzhou Branch held by SAMC, organic plant business held by BJOPI, and the pier operation platform held by BHP.
+Pursuant to the resolution passed at the Directors' meeting on 29 November 2021, the Company entered into agreements with SAMC, and
+Sinopec Beijing Yanshan Petrochemical Co., Ltd. ("SBJYSP"), and its subsidiary, Sinopec Yizheng Chemical Fibre Company Limited entered into an
+agreement with SAMC. According to the relevant agreements, the Group proposed to acquire non equity assets such as thermal power, water and
+other business, PBT resin and other business of Yizheng Branch held by SAMC, and thermal power and other businesses held by SBJYSP.
+acquisition date
+RMB Million
+As the Company, SAMC, BJOPI, BHP and SBJYSP are all under the control of Sinopec Group Company, the transaction described above has been
+accounted as business combination under common control. Accordingly, the equity and assets acquired from Sinopec Group Company 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 Sinopec Group Company on a combined basis.
+The financial condition as at 31 December 2020 and the results of operation for the year ended 31 December 2020 previously reported by the
+Group have been restated, as set out below:
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+60 CHANGE IN THE SCOPE OF CONSOLIDATION (Continued)
+Business combination under common control (Continued)
+Business combination under common control in 2021 (Continued)
+(1) The relevant financial information disclosed for changes in the scope of consolidation are as follows:
+Net profits/
+Net cash flow
+The transactions under the after-mentioned agreements will further improve the integrated operation level of the Group, optimise the allocation of
+resources, reduce connected transactions on the whole, so as to enhance the comprehensive competitiveness of the Group in its business locations.
+75,560
+Business combination under common control in 2021
+RMB20,000
+113,214
+1,212,455
+826,219
+1,380,403
+939,433
+1,367,605
+7,075
+1,374,680
+1,062,447
+167,948
+4,854
+1,067,301
+322,169
+40,702
+495,016
+362,871
+563,147
+458,154
+732,356
+424,774
+70,242
+430,073
+162,037
+57,513
+Total segment investment income
+Less: Financial expenses
+Add: Other income
+Gains/(losses) from changes in fair value
+Asset disposal gains
+Operating profit
+Add: Non-operating income
+243.324
+Less: Non-operating expenses
+2021
+2020
+RMB million
+RMB million
+156,026
+104,524
+87,298
+Profit before taxation
+Corporate and others
+1,295,503
+(2,109,426)
+(20,570)
+65,360
+(6,526)
+23,102
+19,634
+11,361
+9,592
+613
+9,521
+(4,421)
+4,417
+105,536
+4,499
+3,023
+13,837
+547
+(2,048)
+888,227
+RMB million
+2020
+(1,371,215)
+2,679,500
+2,048,654
+6,674
+5,718
+5,161
+4,633
+RMB million
+36,864
+10,487
+8,758
+2,198
+2,056
+61,384
+2,740,884
+56,070
+2,104,724
+2021
+34,905
+13,085
+Chemicals
+Refining
+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.
+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.
+(iv) Chemicals - which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products 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.
+(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.
+146
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(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.
+For the year ended 31 December 2021
+63 SEGMENT REPORTING
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Total
+Notes:
+(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. As at 31 December 2021, the amount withdrawn (The portion corresponding to the shareholding ratio of the Group) by Zhongan United from
+banks and guaranteed by the Group was RMB5,680 million (31 December 2020: RMB6,390 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 RMB23,208 million. As at 31 December 2021,
+the amount withdrawn (The portion corresponding to the shareholding ratio of the Group) by Amur Gas from banks and guaranteed by the Group was RMB3,264
+million (31 December 2020: Nil).
+The Group provided a guarantee in respect to payment obligation under the raw material supply agreements of Amur Gas amount to RMB15,493 million. As at 31
+December 2021, Amur Gas has not yet incurred the relevant payment obligations and therefore the Group has no guarantee amount (31 December 2020: Nil).
+The Group provided a guarantee in respect engineering services agreement of Amur Gas amount to RMB3,012 million. As at 31 December 2021, the relevant
+payables for constructions of Amur Gas (The portion corresponding to the shareholding ratio of the Group) and guaranteed by the Group was RMB173 million (31
+December 2020: Nil).
+(ii) 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 (2020: RMB8,450 million).
+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 2021 and 2020, the Group
+estimates that there is no material liability has been accrued for ECLS related to the Group's obligation under these guarantee arrangements.
+For the year ended 31 December 2021
+Environmental contingencies
+The Group recognised normal routine pollutant discharge fees of approximately RMB10,968 million in the consolidated financial statements for the
+year ended 31 December 2021 (2020: RMB11,368 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+145
+Financial Statements (PRC)
+Financial Statements (PRC)
+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.
+Marketing and distribution
+63 SEGMENT REPORTING (Continued)
+Reportable information on the Group's operating segments is as follows:
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Consolidated income from other operations
+Consolidated operating income
+Operating profit/(loss)
+By segment
+Exploration and production
+Exploration and production
+Marketing and distribution
+Chemicals
+Corporate and others
+Elimination
+Total segment operating profit
+Investment income
+Exploration and production
+Refining
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Income from other operations
+Elimination of inter-segment sales
+Income from principal operations
+Exploration and production
+External sales
+Inter-segment sales
+Refining
+External sales
+Inter-segment sales
+Consolidated income from principal operations
+Marketing and distribution
+Inter-segment sales
+Chemicals
+External sales
+Inter-segment sales
+Corporate and others
+External sales
+Inter-segment sales
+External sales
+14,840
+1,796
+11,269
+11
+100.00
+RMB1,856
+RMB1,400
+RMB million
+%
+million
+RMB5,000
+2021
+2021
+Interests at
+31 December
+Minority
+equity
+interest/
+voting right
+held by the
+Actual
+investment at
+31 December
+Registered
+capital/paid-
+up capital
+million
+Principal activities
+Group
+Production and sale of catalyst products
+RMB6,585
+5,259
+210,215
+213,455
+65,103
+47,992
+197,447
+117,684
+Total segment liabilities
+100.00
+761,226
+Short-term loans
+RMB15,651
+Manufacturing of intermediate petrochemical products and
+233
+100.00
+RMB2,424
+RMB1,500
+671,718
+135,157
+Trading of crude oil and petrochemical products
+Sinopec Overseas Investment Holding Limited ("SOIH")
+Sinopec Chemical Sales Company Limited
+(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 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 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.
+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.
+(b) Impairment for assets
+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
+58 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+140
+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.
+Trading of petrochemical products
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Sinopec International Petroleum Exploration and
+Production Limited ("SIPL")
+70.42
+("Fujian Petrochemical”) (i)
+Fujian Petrochemical Company Limited
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+Sinopec Kantons Holdings Limited ("Sinopec Kantons")
+Sinopec Yizheng Chemical Fibre Limited Liability Company
+Marketing Company
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Sinopec Lubricant 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 2021. 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 2021
+Sinopec Yangzi Petrochemical Company Limited
+12,230
+129,103
+159,358
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+147
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+63 SEGMENT REPORTING (Continued)
+48,441
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+Assets
+Segment assets
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+At 31 December
+Total segment assets
+4,732
+2,370
+1,662
+(10,603)
+6,672
+6,032
+47,486
+9,010
+9,510
+7,582
+108,348
+5,850
+3,341
+(1,253)
+665
+2,067
+112,414
+50,803
+3,516
+7,514
+157,430
+Cash at bank and on hand
+Deferred tax assets
+222,803
+194,434
+133,961
+118,458
+1,410,148
+1,311,112
+221,989
+373,430
+184,412
+188,342
+19,389
+25,054
+28,550
+29,976
+1,889,255
+1,738,896
+209,179
+Long-term equity investments
+377,499
+304,785
+Other unallocated assets
+205,594
+Total assets
+Liabilities
+Segment liabilities
+Exploration and production
+Refining
+270,766
+Marketing and distribution
+Corporate and others
+2021
+RMB million
+At 31 December
+2020
+RMB million
+371,100
+354,024
+Chemicals
+14,863
+(b) Subsidiaries established by the Group:
+5,746
+(17,823)
+(59,604) (59,554)
+Non-current liabilities
+22,187
+20,650
+12,177
+11,402
+(18,270)
+9,106
+12.568
+13,208
+27,444
+26,106
+8,951
+8,954
+323,571
+8,195
+326,437
+(847)
+(700)
+11.875
+12,508
+27,282
+25,259
+(9,319)
+(8,869)
+266,833 264,017
+(162)
+(liabilities)
+(8,509)
+(7,512)
+(1,553)
+(1,418)
+(170)
+(170)
+(693)
+Net non-current assets/
+8,025
+Non-current assets
+(1,331)
+(142)
+(15,232)
+(15,796)
+(475)
+(1,430)
+(201,678)
+(193,315)
+(458)
+Current liabilities
+6,791
+10,431
+6.066
+4,373
+4,761
+1,582
+1,464
+3,639
+(2,738)
+(196)
+(5,434)
+7,648
+632
+3,449
+4,565
+1,124
+1,322
+2,073
+(924)
+5,136
+21,329
+(29,326)
+(33,716)
+Net current (liabilities)/assets
+(6,377)
+(8,122)
+(2,783)
+22,145
+17,305
+8,936
+10,624
+1.160
+1,429
+22,415
+18,582
+Profit/(loss) for the year
+28,702
+50,208
+2,004
+21,626
+1,064
+528
+4,871
+5,549
+74,705
+89,280
+2,017
+29,723
+2,166
+639
+243
+8,450
+RMB28,403
+100.00
+RMB6,713
+RMB4,000
+88
+100.00
+951
+RMB3,374
+Production and sale of refined petroleum products, 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
+petroleum products
+100.00
+RMB15,651
+2.817
+2,047
+871
+RMB3,374
+9,984
+1,099,680
+Turnover
+2020
+Sinopec-SK
+Shanghai SECCO
+Sinopec Kantons
+Fujian Petrochemical
+2021
+2020
+Shanghai Petrochemical
+2021
+2021
+2020
+2020
+SIPL
+Marketing Company
+2021
+Year ended 31 December
+Summarised consolidated statement of comprehensive income and cash flow
+13,678
+13.138
+2021
+1,408,523
+2020
+2020
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2021
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2020
+2021
+RMB million
+20,932
+33,997
+22,759
+2,288
+90.30
+RMB5,776
+RMB6,397
+137
+98.98
+RMB5,240
+Sinopec Qingdao Refining and Chemical Company Limited
+RMB5,294
+ZhongKe (Guangdong) Refinery & Petrochemical
+Company Limited
+Sinopec Beihai Refining and Chemical Limited
+Liability Company
+18
+100.00
+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 RMB3,648 million (2020: RMB13,172 million).
+Import and processing of crude oil, production, storage and sale
+of petroleum products and petrochemical products
+Crude oil processing and petroleum products manufacturing
+Commitments to joint ventures
+Manufacturing of intermediate petrochemical products and
+petroleum products
+RMB4,250
+Sinopec Baling Petrochemical Co. Ltd.
+Gaoqiao Petrochemical Company Limited
+Sinopec Qingdao Petrochemical Company Limited
+100.00
+RMB12,615
+RMB9,606
+Manufacturing of intermediate petrochemical products and
+petroleum products
+RMB5,000
+(c) Subsidiaries acquired through business combination under common control:
+Sinopec Hainan Refining and Chemical Company Limited
+59.00
+RMB7,193
+RMB7,193
+Production, sale, research and development of ethylene and
+downstream byproducts
+Sinopec-SK (Wuhan) Petrochemical Company Limited
+("Sinopec-SK")
+2,004
+85.00
+5,130
+("Baling Petrochemical")
+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 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.
+846
+824
+1,535
+1,498
+The implementation of commitments in previous year and the Group's commitments did not have material discrepancy.
+144
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+56
+For the year ended 31 December 2021
+(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 2021 and 31 December 2020, 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
+2021
+RMB million
+9,117
+At 31 December
+2020
+RMB million
+22,620
+6,390
+62 CONTINGENT LIABILITIES
+Exploration and production licenses
+64
+102
+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 RMB181 million for the year ended 31 December 2021 (2020: RMB231 million).
+Estimated future annual payments are as follows:
+At 31 December
+2021
+At 31 December
+2020
+RMB million
+RMB million
+Within one year
+63
+Between one and two years
+Total
+301
+390
+112
+99
+110
+66
+Between two and three years
+Between three and four years
+Between four and five years
+Thereafter
+(d) Subsidiaries acquired through business combination not under common control:
+Shanghai SECCO
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+RMB1,595
+2021
+2020
+2021
+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
+2021
+2020
+2021
+2020
+2020
+2021
+2021
+At
+Sinopec-SK
+At
+At
+Shanghai SECCO
+At
+At
+Sinopec Kantons
+At
+2020
+At
+2021
+RMB million
+159,599
+Manufacturing of intermediate petrochemical products and
+petroleum products
+172,352
+Current assets
+RMB million
+RMB million
+RMB million
+2020
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Fujian Petrochemical
+At
+RMB million
+Shanghai Petrochemical
+At
+RMB500
+RMB500
+Production and sale of petrochemical products
+*
+2,272
+55.00
+RMB3,000
+67.59
+RMB3,000
+8,197
+55.00
+RMB10,000
+RMB7,233
+Manufacturing of intermediate petrochemical products and
+petroleum products
+At
+100.00
+Crude oil processing and petroleum products manufacturing
+3,441
+RMB4,804
+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.
+At 31
+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.
+At
+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
+59 PRINCIPAL SUBSIDIARIES (Continued)
+For the year ended 31 December 2021
+Marketing Company
+NOTES TO THE FINANCIAL STATEMENTS (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 return through its power over the entity.
+At
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021 141
+SIPL
+At
+142
+Financial Statements (PRC)
+Financial Statements (PRC)
+Financial assets held for trading:
+Assets
+The Group
+At 31 December 2020
+- Derivative financial liabilities
+Assets
+Derivative financial liabilities:
+Liabilities
+- Other Investments
+- Receivables financing
+Receivables financing:
+- Derivative financial assets
+Financial assets held for trading:
+Other equity instrument investments:
+Other Investments
+Derivative financial assets:
+12,488
+5,883
+The Group
+Total
+RMB million
+Level 3
+RMB million
+Level 2
+RMB million
+Equity investments, listed and at quoted market price
+Level 1
+RMB million
+Derivative financial liabilities:
+Liabilities
+Other equity instrument investments:
+- Receivables financing
+Receivables financing:
+- Derivative financial assets
+- Derivative financial liabilities
+At 31 December 2021
+At 31 December 2021, 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 2021, the fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB18,359 million (2020: RMB12,353 million) and derivative financial liabilities of RMB3,214 million (2020:
+RMB4,808 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.
+15,456
+28,138
+18,371
+43,513
+253,575
+114,036
+262,059
+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.
+(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 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.
+(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 31, respectively.
+At 31 December 2021, 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 RMB254 million (2020: decrease/increase RMB245
+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 2020.
+(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 2021, 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 increase/decrease the Group's
+net profit for the year by approximately RMB2,996 million (2020: increase/decrease RMB3,592 million), and decrease/increase the Group's
+other comprehensive income by approximately RMB1,160 million (2020: increase/decrease RMB10,379 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 2020.
+•
+.
+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
+Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
+Fair values
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+151
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+64 FINANCIAL INSTRUMENTS (Continued)
+5,939
+Fair values (Continued)
+179
+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)
+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
+65 BASIC AND DILUTED EARNINGS PER SHARE
+2021
+71,208
+121,071
+0.588
+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 2021 and 31 December 2020.
+At 31 December
+2020
+RMB million
+76,674
+74,282
+88,593
+85,610
+At 31 December
+2021
+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 0.30% to 4.65% (2020: from 0.77% 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 2021 and 31 December 2020:
+(ii) Fair values of financial instruments carried at other than fair value
+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.
+64 FINANCIAL INSTRUMENTS (Continued)
+2020
+121,071
+308,905
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+Financial Statements (PRC)
+153
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+33,271
+There are no potential dilutive ordinary shares, and diluted earnings per share are equal to the basic earning per share.
+121,071
+121,071
+2020
+121,071
+121,071
+2021
+0.275
+(ii) Diluted earnings per share
+5,939
+For the year ended 31 December 2021
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+1
+1
+Total
+RMB million
+Level 3
+RMB million
+Level 2
+RMB million
+Level 1
+RMB million
+9,628
+3,223
+3,223
+2,419
+804
+804
+767
+25,077
+588
+6,527
+12,488
+6,062
+2,419
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+2,900
+8,735
+152
+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.
+During the year ended 31 December 2021 and 2020, there was no transfer between instruments in Level 1 and Level 2.
+4,826
+4,826
+2,355
+2,355
+12,528
+2,471
+2,471
+10,111
+2,900
+1,525
+1,376
+149
+9,778
+8,735
+22,789
+713,138
+10,443
+312,544
+11,721
+11,721
+11,721
+Accounts payable
+203,919
+203,919
+203,919
+Other payables and employee benefits payable
+128,749
+128,749
+128,749
+Non-current liabilities due within one year
+28,651
+29,554
+29,554
+Long-term loans
+49,341
+170,233
+Lease liabilities
+5,270
+For the year ended 31 December 2021
+30,645
+1,195
+Bills payable
+47,553
+Debentures payable
+5,338
+27,786
+19,350
+1,230
+53,704
+42,649
+3,223
+27,787
+27,787
+3,223
+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.
+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 2021 or 31 December
+2020, 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.
+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.
+-
+Liquidity risk
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+(ii) Impairment of financial assets
+Credit risk (Continued)
+64 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+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.
+280,652
+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.
+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:
+27,366
+3,223
+Derivative financial liabilities
+Short-term loans
+RMB million
+five years
+five years
+At 31 December 2021, the Group has standby credit facilities with several PRC financial institutions which provide the Group to borrow up to
+RMB441,559 million (2020: RMB443,966 million) on an unsecured basis, at a weighted average interest rate of 2.81% per annum (2020: 2.85%).
+At 31 December 2021, the Group's outstanding borrowings under these facilities were RMB11,700 million (2020: RMB4,041 million) and were
+included in loans.
+RMB million
+More than
+At 31 December 2021
+More than More than
+one year but two years but
+less than less than
+two years
+Within one
+year or on
+demand
+Carrying undiscounted
+amount cash flow
+RMB million RMB million
+contractual
+Total
+RMB million RMB million
+12,030
+35,412
+233,210
+Debentures payable due within one year
+Long-term loans
+23,880
+23,880
+22.494
+Non-current liabilities due within one year
+92,141
+3,018
+92,141
+Other payables and employee benefits payable
+151,514
+151,514
+151,514
+Accounts payable
+10,394
+92,141
+10,394
+3,024
+45,459
+171,740
+Lease liabilities
+Total
+5,993
+29,514
+8,044
+1,240
+3,024
+44,791
+Debentures payable
+2,491
+41,009
+4,638
+936
+49,074
+38,356
+560,698
+10,394
+4,826
+contractual
+Total
+Liquidity risk (Continued)
+64 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Carrying undiscounted
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+73,641
+62,025
+407,378
+786,862
+665,852
+Total
+243,818
+Bills payable
+amount
+cash flow
+RMB million
+20,950
+20,950
+4,826
+4,826
+Derivative financial liabilities
+20,756
+Short-term loans
+RMB million
+RMB million
+demand
+RMB million
+five years
+RMB million
+More than
+year or on
+Within one
+At 31 December 2020
+More than More than
+one year but two years but
+less than less than
+two years
+RMB million
+five years
+66 RETURN ON NET ASSETS AND EARNINGS PER SHARE
+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.
+Net profit attributable to the Company's ordinary
+equity shareholders
+(5,780)
+(2,091,055)
+94,628
+13,669
+9
+Interest income
+Foreign currency exchange gains, net
+Net finance costs
+(15,018)
+5,732
+276
+(9,010)
+Investment income
+10
+298
+Share of profits less losses from associates and joint ventures
+21,22
+23,253
+(15,198)
+4,803
+885
+71,975
+Shareholders of the Company
+Attributable to:
+42,271
+85,851
+Profit for the year
+(21,716)
+(2,646,256)
+(6,344)
+11
+Income tax expense
+48,615
+109,169
+Profit before taxation
+(9,510)
+37,744
+6,712
+(23,318)
+8
+(2,066)
+(2,311)
+(115,680)
+(53,668)
+(54,978)
+5
+Selling, general and administrative expenses
+(1,589,821)
+(107,461)
+(2,076,665)
+Operating expenses
+56,070
+2,104,724
+2,048,654
+2,679,500
+61,384
+2,740,884
+4
+Other operating revenues
+Purchased crude oil, products and operating supplies and expenses
+33,443
+Exploration expenses, including dry holes.
+(9,716)
+(235,018)
+(259,032)
+7
+(87,525)
+(103,492)
+6
+(12,382)
+Interest expense
+Operating profit
+Total operating expenses
+Other operating income/(expenses), net
+Impairment losses on trade and other receivables
+Taxes other than income tax
+Personnel expenses
+Finance costs
+3
+Non-controlling interests
+8,828
+RMB
+85,851
+42,271
+15
+(4)
+(4)
++བ
+(22)
+(22)
+(220)
+441
+162
+(2,441)
+19,018
+7,073
+(1,728)
+(4,457)
+17,511
+Financial Statements (International)
+159
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+42,586
+103,358
+7,749
+RMB
+13,809
+89,549
+42,586
+103,358
+315
+17,507
+337
+34,837
+2020
+2021
+Year ended 31 December
+158
+0.276
+0.594
+0.276
+0.594
+66
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+16
+Diluted
+Basic
+Earnings per share:
+42,271
+85,851
+Profit for the year
+16
+13,876
+The notes on pages 165 to 215 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.
+(Amounts in million)
+Note
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+Total comprehensive income for the year
+Non-controlling interests
+Shareholders of the Company
+Attributable to:
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+for the year ended 31 December 2021
+Total comprehensive income for the year
+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
+Total items that may be reclassified subsequently to profit or loss
+Total other comprehensive income
+Revenue from primary business
+Revenue
+2020
+RMB
+4,720
+(973)
+301
+(8,605)
+(37,520)
+2,992
+Net (loss)/profit acquired through business combination under common control during the reporting period
+101
+(472)
+977
+(44,277)
+Tax effect
+(72)
+6,736
+Total
+905
+(37,541)
+Attributable to:
+Equity shareholders of the Company
+1,012
+(34,836)
+G P 0 Box 50, Hong Kong
+Central, Hong Kong
+8th Floor, Prince's Building
+KPMG
+OPINION
+To the shareholders of China Petroleum & Chemical Corporation
+(established in the People's Republic of China with limited liability)
+Other non-operating losses, net
+Independent auditor's report
+REPORT OF THE INTERNATIONAL AUDITOR
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+154
+(2,705)
+(107)
+Minority interests
+KPMG
+(3,085)
+(259)
+Gain on holding and disposal of business and various investments
+Government grants
+0.588
+9.35
+earnings
+per share
+per share
+(RMB/Share) (RMB/Share)
+earnings
+(%)
+Diluted
+0.588
+Basic
+Basic
+Diluted
+earnings earnings
+per share
+per share
+(%) (RMB/Share) (RMB/Share)
+Weighted
+average
+return on
+net assets
+2020
+2021
+67 EXTRAORDINARY GAINS AND LOSSES
+Net profit/(loss) deducted extraordinary gains and
+losses attributable to the Company's ordinary
+equity shareholders
+Weighted
+average
+return on
+net assets
+Telephone +852 2522 6022
+4.46
+0.275
+(665)
+165
+Donations
+Net gains on disposal of non-current assets
+Extraordinary (gains)/losses for the year:
+2020
+RMB million
+RMB million
+0.275
+2021
+(0.013)
+(0.013)
+(0.21)
+0.597
+0.597
+9.49
+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:
+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
+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.
+KPMG
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+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.
+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 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.
+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.
+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.
+The engagement partner on the audit resulting in this independent auditor's report is Ho Ying Man, Simon.
+Certified Public Accountants
+RMB
+Year ended 31 December
+2021
+Note
+(Amounts in million, except per share data)
+for the year ended 31 December 2021
+(B) FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
+CONSOLIDATED INCOME STATEMENT
+KPMG
+Financial Statements (International)
+157
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+25 March 2022
+Central, Hong Kong
+10 Chater Road
+8th Floor, Prince's Building
+Financial Statements (International)
+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/(loss) per share are calculated as follows:
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
+In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern,
+disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to
+liquidate the Group or to cease operations, or have no realistic alternative but to do so.
+The following are the primary procedures we performed to address this
+key audit matter:
+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")
+598,925 million as at 31 December 2021, a portion of which related to
+oil and gas producing activities. The Company reported impairment losses
+of RMB2,467 million for the property, plant and equipment relating to oil
+and gas producing activities for the year ended 31 December 2021.
+The Key Audit Matter
+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;
+Refer to notes 2(g), 2(n), 8, 17 and 44 to the consolidated financial statements
+KEY AUDIT MATTER
+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
+2021 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 158 to 215, which comprise the consolidated statement of financial position as at 31 December 2021, 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.
++852 2845 2588
+kpmg.com/cn
+Assessment of impairment of property, plant and equipment relating to oil and gas producing activities
+The directors are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group's financial reporting process.
+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 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
+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.
+RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+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 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.
+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;
+INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+156
+Financial Statements (International)
+155
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+KPMG
+Depreciation, depletion and amortisation
+150
+(6,124)
+(50,844)
+(84,689)
+34,298
+54,950
+3,372
+2,305
+10,134
+11,510
+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
+Proceeds from/(payments of) other investing activities
+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
+Distributions by subsidiaries to non-controlling interests
+Interest paid
+2,656
+Payments made to acquire non-controlling interests
+1,478
+51,520
+Purchase of investments
+(a)
+225,174
+168,520
+(127,965)
+(118,321)
+(16,956)
+(13,315)
+(4,935)
+(6,040)
+Payment for financial assets at fair value through profit or loss
+(8,150)
+(6,700)
+Proceeds from settlement of financial assets at fair value through profit or loss
+Payment for acquisition of subsidiary, net of cash acquired
+Proceeds from disposal of investments
+8,248
+10,000
+(1,106)
+(340)
+6,769
+Proceeds from disposal of property, plant, equipment and other non-current assets
+Exploratory wells expenditure
+Repayments of lease liabilities
+Repayments of other financing activities
+(834)
+(57,942)
+(37,510)
+22,034
+28,360
+87,559
+60,438
+(1,003)
+(1,239)
+108,590
+87,559
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+163
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+for the year ended 31 December 2021
+(Amounts in million)
+(a) Reconciliation from profit before taxation to net cash generated from operating activities
+700
+Proceeds from other financing activities
+133
+(666)
+(19,412)
+Net cash used in financing activities
+Net increase in cash and cash equivalents
+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 165 to 215 form part of these consolidated financial statements.
+459
+(145,198)
+356,459
+(338,232)
+(6,186)
+(102,650)
+558,680
+(540,015)
+1,001
+4,219
+(35,110)
+(31,479)
+(8,068)
+(4,821)
+(5,849)
+(7,512)
+(8,198)
+(1,121)
+(15,327)
+Year ended 31 December
+2021
+Capital expenditure
+Net cash generated from operating activities
+(648)
+(19,950)
+3,944
+(15,739)
+(15,739)
+(15,739)
+(19,371)
+(19,371)
+(19,371)
+(3,944)
+(8,982)
+(8,982)
+1,973
+1,973
+(6,124)
+(6,124)
+(6,124)
+3,944
+(39,054)
+(19,302)
+(41,234)
+(19,302)
+13,809
+34,263
+55,850
+92,280
+117,000
+3,500
+322,361
+746,325
+141,377
+887,702
+71,975
+71,975
+13,876
+85,851
+17,574
+17,574
+(67)
+17,507
+17,574
+89,549
+103,358
+Investing activities
+(7,009)
+(1,396)
+915,074
+(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.
+During the year ended 31 December 2021, the Company transferred RMB3,944 million (2020: RMB1,857 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.
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+(c) As at 31 December 2021, the amount of retained earnings available for distribution was RMB116,440 million (2020: RMB115,849 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").
+(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.
+(e) The application of the share premium account is governed by Sections 167 and 168 of the PRC Company Law.
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+162
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+CONSOLIDATED STATEMENT OF CASH FLOWS
+for the year ended 31 December 2021
+(Amounts in million)
+Note
+Year ended 31 December
+2021
+2020
+RMB
+RMB
+140,892
+(48,243)
+774,182
+2,495
+(1.396)
+(6,796)
+(8,192)
+(7,520)
+3,944
+(39,054)
+(42,630)
+(13,805)
+(56,435)
+121,071
+319
+27,062
+723
+(802)
+240
+159
+399
+55,850
+96,224
+117,000
+354,480
+2020
+RMB
+RMB
+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.
+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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021 167
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+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:
+(b) Translation of foreign currencies
+Buildings
+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 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.
+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)).
+In the Company's statement of financial position, 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 42.
+(ii) Associates and joint ventures
+An associate is an entity, not being a subsidiary, in which the Group exercises significant influence over its management. Significant influence
+is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
+The investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and
+obligations each investor has rather than the legal structure of the joint arrangement. A joint venture is a joint arrangement whereby the
+parties that have joint control of the arrangement have rights to the net assets of the arrangement.
+Investments in associates and joint ventures are accounted for in the consolidated and separate financial statements using the equity method
+from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. Under the
+equity method, the investment is initially recorded at cost and adjusted thereafter for the post acquisition change in the Group's share of the
+investee's net assets and any impairment loss relating to the investment (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.
+Financial Statements (International)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+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 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.
+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.
+Equipment, machinery and others
+Estimated
+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.
+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
+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.
+(ii) Impairment
+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.
+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 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.
+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.
+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 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.
+The Group recognises the loss allowance accrued or written back in profit or loss.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+169
+Financial Statements (International)
+Financial Statements (International)
+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.
+Estimated usage
+period
+12 to 50 years
+4 to 30 years
+(i) Classification and measurement
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+(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)).
+Financial Statements (International)
+168
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+(j) Financial assets
+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.
+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.
+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.
+(Gain)/loss on foreign currency exchange rate changes and derivative financial instruments
+(3,723)
+2,003
+Loss/(gain) on disposal of property, plant, equipment and other non-current assets, net
+Impairment losses on assets
+3,062
+(398)
+13,165
+26,087
+Impairment losses on trade and other receivables
+2,311
+2,066
+233,101
+157,701
+Net changes from:
+Accounts receivable and other current assets
+Inventories
+Accounts payable and other current liabilities
+Income tax paid
+Net cash generated from operating activities
+15,198
+(8,177)
+15,018
+(5,732)
+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
+109,169
+48,615
+115,680
+107,461
+7,702
+5,928
+(23,253)
+(6,712)
+(298)
+(37,744)
+(4,803)
+(17,610)
+(58,372)
+22,407
+•
+Amendment to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, Interest rate benchmark reform - phase 2
+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
+Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2021 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 44.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+165
+Financial Statements (International)
+166
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+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.
+Amendment to IFRS 16, COVID-19-related rent concessions
+•
+The IASB has issued the following amendments to IFRSS that are first effective for the current accounting period of the Group:
+(a) New and amended standards and interpretations adopted by the Group
+82,408
+15,169
+248,960
+177,667
+(23,786)
+(9,147)
+225,174
+168,520
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+121,071
+164 Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2021
+RMB
+71.975
+RMB
+30
+13,690
+11,778
+Lease liabilities
+31
+170,233
+171,740
+Deferred tax liabilities.
+29
+7,910
+8,124
+Provisions
+35
+43,525
+45,552
+Other long-term liabilities
+19,243
+18,968
+Total non-current liabilities
+Loans from Sinopec Group Company and fellow subsidiaries
+Equity
+72,037
+30
+32
+215,640
+161,908
+33
+124,622
+126,241
+34
+239,688
+179,108
+4,809
+6,586
+641,280
+Net current liabilities
+Total assets less current liabilities
+83,256
+1,247,975
+522,995
+67,335
+1,215,901
+Non-current liabilities
+Long-term debts
+78,300
+332,901
+328,199
+915,074
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+RMB
+Chief Financial Officer
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+for the year ended 31 December 2020
+(Amounts in million)
+Total equity
+attributable to
+Share
+capital
+Capital
+Share
+surplus
+Statutory Discretionary
+surplus
+shareholders
+Other
+Retained
+of the
+Non-
+controlling
+Total
+reserve
+160
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+Yu Baocai
+President
+(Legal representative)
+887,702
+Share capital
+Reserves
+Total equity attributable to shareholders of the Company
+Non-controlling interests
+Total equity
+36
+121,071
+121,071
+4,826
+653,111
+774,182
+746,325
+140,892
+141,377
+915,074
+887,702
+Approved and authorised for issue by the board of directors on 25 March 2022.
+Ma Yongsheng
+Chairman
+625,254
+premium
+3,223
+15,293
+29
+Long-term prepayments and other assets
+23
+782222222
+598,925
+593,615
+18
+155,939
+125,525
+268,408
+266,012
+8,594
+148,729
+8,620
+136,163
+60,450
+767
+52,179
+1,525
+Total non-current assets
+Current assets
+26
+Cash and cash equivalents
+Financial assets at fair value through other comprehensive income
+Deferred tax assets
+21
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+As at 31 December 2021
+(Amounts in million)
+Note
+31 December
+31 December
+2021
+2020
+RMB
+RMB
+Non-current assets
+Property, plant and equipment, net
+Construction in progress
+Right-of-use assets
+17
+19
+Goodwill
+20
+Interest in associates
+Interest in joint ventures
+Time deposits with financial institutions
+Financial assets at fair value through profit or loss
+Derivative financial assets
+22222
+18,371
+12,528
+34,861
+35,439
+5,939
+207,433
+8,735
+152,191
+69,431
+558,024
+58,709
+455,660
+30
+35,252
+23,769
+30
+2,873
+5,264
+31
+15,173
+1
+100,498
+113,399
+87,559
+Trade accounts receivable
+Financial assets at fair value through other comprehensive income
+Inventories
+Prepaid expenses and other current assets
+Total current assets
+-----------
+Current liabilities
+Short-term debts
+Loans from Sinopec Group Company and fellow subsidiaries
+Lease liabilities
+24
+Derivative financial liabilities
+Contract liabilities
+Other payables
+Income tax payable
+Total current liabilities
+19,389
+70,030
+1,331,231
+25,054
+74,543
+1,283,236
+108,590
+Trade accounts payable and bills payable
+reserve
+Shou Donghua
+reserves
+55,850
+92,280
+117,000
+3,500
+322,361
+746,325
+141,377
+887,702
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+161
+Financial Statements (International)
+Financial Statements (International)
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+for the year ended 31 December 2021
+(Amounts in million)
+Balance at 1 January 2021
+Profit for the year
+Other comprehensive income (Note 15)
+34,263
+Total comprehensive income for the year
+121,071
+(2,363)
+1,857
+(33,336)
+(32,451)
+(2,429)
+(34,880)
+(138)
+(138)
+13
+(125)
+(1,110)
+1,857
+(33,336)
+(32,589)
+(2,416)
+(35,005)
+870
+200
+(665)
+reserve
+(1,958)
+(972)
+Amounts transferred to initial carrying amount of
+Transactions with owners, recorded directly in equity:
+Other
+Retained
+reserve
+RMB
+RMB
+premium
+RMB
+reserve
+reserve
+reserves
+earnings
+of the
+Company
+Non-
+controlling
+Total
+interests
+equity
+RMB
+RMB
+RMB
+RMB
+shareholders
+hedged items
+Statutory Discretionary
+surplus
+Share
+Contributions by and distributions to owners:
+Final dividend for 2020 (Note 14)
+Interim dividend for 2021 (Note 14)
+Appropriation (Note (a))
+Distributions to non-controlling interests
+Contributions to subsidiaries from
+non-controlling interests
+Distribution to sellers in the business
+combination of entities under common
+control (Note 38)
+Total contributions by and distributions to owners
+Transaction with non-controlling interests
+Total transactions with owners
+Others
+Balance at 31 December 2021
+Notes:
+Total equity
+attributable to
+Share
+capital
+Capital
+surplus
+972
+405
+(972)
+4,773
+(972)
+1
+4,774
+Balance at 1 January 2020
+121,071
+34,503
+55,850
+90,423
+117,000
+1,941
+322,931
+743,719
+138,359
+882,078
+Profit for the year
+33,443
+33,443
+8,828
+under common control (Note 38)
+42,271
+Adjustment for business combination of entities
+138,358
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+earnings
+RMB
+Company
+RMB
+interests
+RMB
+equity
+Balance at 31 December 2019
+121,071
+29,730
+55,850
+90,423
+117,000
+1,941
+322,931
+738,946
+RMB
+877,304
+Other comprehensive income (Note 15)
+4,773
+(12)
+Distribution to SAMC in the Acquisition of
+Baling Branch of SAMC
+Total contributions by and distributions to owners
+Transaction with non-controlling interests
+Total transactions with owners
+Others
+Balance at 31 December 2020
+(23,004)
+(23,004)
+(23,004)
+(8,475)
+(8,475)
+(8,475)
+1,857
+(1,857)
+(6,726)
+1,406
+3,325
+3,325
+non-controlling interests
+Contributions to subsidiaries from
+(6,726)
+Appropriation (Note (a))
+Distributions to non-controlling interests
+1,394
+315
+Total comprehensive income for the year
+1,406
+33,431
+34,837
+7,749
+42,586
+Amounts transferred to initial carrying amount of
+(1,079)
+(47)
+(47)
+48
+1
+Transactions with owners, recorded directly in equity:
+Contributions by and distributions to owners:
+Final dividend for 2019 (Note 14)
+hedged items
+Interim dividend for 2020 (Note 14)
+247
+Sun Huanquan (x)
+Jiang Zhenying
+272
+Zou Huiping (ix)
+710
+555
+160
+Zhou Hengyou (xv)
+Li Defang
+Yu Xizhi (xv)
+125
+613
+125
+611
+Zhang Baolong (xvi)
+366
+Yang Changjiang (xvi)
+Yu Renming (x)
+Zhao Dong (i)
+Directors'/
+Fan Gang (xiv)
+Total
+Tang Min (v)
+Johnny Karling Ng
+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
+Salaries,
+allowances and
+benefits in kind
+Supervisors
+RMB'000
+2020
+Retirement
+scheme
+contributions
+RMB'000
+Supervisors' fee
+RMB'000
+Total
+RMB'000
+299
+620
+94
+Cai Hongbin
+Bonuses
+RMB'000
+Notes:
+(65)
+3,269
+759
+6,095
+(i) Mr. Zhao Dong ceased being chairman of the Board of Supervisors from 25 May 2021, and was elected to be non-executive director from 25 May 2021.
+(ii) Mr. Li Yonglin was elected to be director from 25 May 2021.
+(iii) 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) Ms. Shi Dan was elected to be independent non-executive director from 25 May 2021; Mr. Bi Mingjian was elected to be independent non-executive director from
+25 May 2021.
+(v) Mr. Tang Min ceased being independent non-executive director from 25 May 2021.
+(vi) Mr. Zhang Shaofeng ceased being non-executive director from 25 May 2021, and was elected to be chairman of the Board of Supervisors from 25 May 2021.
+(vii) Mr. Zhang Zhiguo was elected to be supervisor from 25 May 2021; Mr. Yin Zhaolin was elected to be supervisor from 25 May 2021; Mr. Guo Hongjin was elected
+to be supervisor from 25 May 2021
+(viii) Mr. Lv Dapeng was elected to be supervisor from 11 January 2021; Mr. Chen Yaohuan was elected to be supervisor from 11 January 2021.
+(ix) Mr. Zou Huiping ceased being supervisor from 28 January 2021.
+761
+(x) Mr. Sun Huanquan ceased being supervisor from 11 January 2021; Mr. Yu Renming ceased being supervisor from 11 January 2021.
+(xi) Mr. Dai Houliang ceased being chairman and non-executive director from 19 January 2020.
+(xiii) Mr. Li Yong ceased being non-executive director from 22 September 2020.
+(xiv) Mr. Fan Gang ceased being independent non-executive director from 28 August 2020.
+(xv) Mr. Yu Xizhi ceased being supervisor from 18 May 2020; Mr. Zhou Hengyou ceased being supervisor from 18 May 2020.
+(xvi) Mr. Yang Changjiang ceased being supervisor from 9 September 2020; Mr. Zhang Baolong ceased being supervisor from 9 September 2020.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+179
+Financial Statements (International)
+Independent non-executive directors
+(xii) Mr. Li Yunpeng ceased being non-executive director from 24 March 2020.
+1,434
+467
+1,159
+856
+83
+59
+60
+22
+23
+23
+33
+886
+342
+1,013
+350
+350
+350
+350
+350
+350
+1,050
+הההה
+Li Yong (xiii)
+(701)
+Dai Houliang (xi)
+2021
+2020
+RMB million
+RMB million
+726,057
+557,605
+542,260
+422,566
+429,038
+351,707
+242,532
+155,397
+149,208
+122,368
+112,519
+72,385
+68,443
+48,099
+45,464
+42,388
+363,979
+2,679,500
+276,139
+2,048,654
+2021
+RMB million
+Contributions to retirement schemes (Note 40)
+2020
+RMB million
+Salaries, wages and other benefits
+6
+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.
+(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 REVENUE FROM PRIMARY BUSINESS
+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.
+Gasoline
+Diesel
+Crude oil
+Basic chemical feedstock.
+Synthetic resin
+Kerosene
+Natural gas
+Synthetic fiber monomers and polymers
+Others (i)
+Note:
+(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
+5 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
+The following items are included in selling, general and administrative expenses:
+Variable lease payments, low-value and short-term lease payment
+Auditor's remuneration:
+- Audit services
+- Others
+PERSONNEL EXPENSES
+(aa) Dividends
+59,990
+1,394
+54,986
+1,084
+56,070
+(i) Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+Products
+2021
+RMB million
+213,894
+2020
+RMB million
+197,542
+18,044
+15,710
+13,409
+11,678
+6,432
+4,572
+7,253
+5,516
+259,032
+235,018
+Gasoline
+Diesel
+Naphtha
+Solvent oil
+Lubricant oil
+Fuel oil
+Jet fuel oil
+(ii) City construction tax and education surcharge is levied on an entity based on its paid amount of value-added tax and consumption tax.
+8 OTHER OPERATING INCOME/(EXPENSES), NET
+RMB/Ton
+Notes:
+61,384
+Others
+Consumption tax (i)
+2021
+RMB million
+2,393
+2020
+RMB million
+2,683
+59
+73
+8
+8
+2021
+2020
+RMB million
+RMB million
+91,560
+78,542
+11,932
+103,492
+8,983
+87,525
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+175
+Financial Statements (International)
+Financial Statements (International)
+176
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+7 TAXES OTHER THAN INCOME TAX
+City construction tax (ii)
+Education surcharge (ii)
+Resources tax
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(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):
+(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 (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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021 171
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(m)Derivative financial instruments and hedge accounting (Continued)
+Fair value hedges
+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.
+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.
+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.
+(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 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.
+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).
+(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.
+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.
+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:
+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.
+Li Yunpeng (xii)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+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 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.
+(iv) Financial guarantees issued
+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.
+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.
+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.
+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).
+(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.
+170
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(m)Derivative financial instruments and hedge accounting
+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.
+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.
+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.
+(o) Trade, bills and other payables
+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.
+173
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(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 the
+date of the statement of financial position 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 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 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.
+(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.
+(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.
+(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 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.
+Financial Statements (International)
+174
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Research and development expenditures that cannot be capitalised are expensed in the period in which they are incurred. Research and
+development expense amounted to RMB11,481 million for the year ended 31 December 2021 (2020: RMB10,087 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.
+(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.
+Financial Statements (International)
+172
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(r) Revenue recognition
+2,109.76
+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
+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.
+(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.
+(v) Environmental expenditures
+Environmental expenditures that relate to current ongoing operations or to conditions caused by past operations are expensed as incurred.
+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.
+1,411.20
+for the year ended 31 December 2021
+1,948.64
+Tang Min (v)
+Bi Mingjian (iv)
+Shi Dan (iv)
+Johnny Karling Ng
+Cai Hongbin
+Independent non-executive directors
+Zhang Yuzhuo (iii)
+Liu Hongbin
+Li Yonglin (ii)
+Ling Yiqun
+Yu Baocai
+Zhao Dong (i)
+Ma Yongsheng
+Directors
+Name
+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 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+177
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+(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 2021. 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.
+Supervisors
+Notes:
+Zhang Shaofeng (vi)
+Zhang Zhiguo (vii)
+300
+417
+417
+417
+417
+442
+715
+9
+409
+24
+102
+322
+291
+RMB'000
+Total
+Supervisors' fee
+RMB'000
+Directors'/
+2021
+Retirement
+scheme
+contributions
+RMB'000
+Bonuses
+RMB'000
+RMB'000
+benefits in kind
+Salaries,
+allowances and
+Company or
+its subsidiary
+undertaking
+Emoluments paid
+or receivable
+in respect of a
+person's services
+as a director,
+whether of the
+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
+Jiang Zhenying
+300
+Actual income tax expense
+(117)
+6,344
+1,165
+Zou Huiping (ix)
+Sun Huanquan (x)
+Yu Renming (x)
+Total
+1,258
+1,803
+379
+1,551
+4,991
+178
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+12 DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)
+(a) Directors' and supervisors' emoluments (Continued)
+The emoluments of every director and supervisor is set out below: (Continued)
+Name
+Directors
+Zhang Yuzhuo (iii)
+Ma Yongsheng
+Yu Baocai
+Liu Hongbin
+Ling Yiqun
+Zhang Shaofeng (vi)
+2,105.20
+417
+Adjustment of prior years
+298
+102
+23,318
+(462)
+75
+934
+Write-down of deferred tax assets
+1,087
+1,391
+117
+117
+Yin Zhaolin (vii)
+Guo Hongjin (vii)
+202
+140
+61
+Li Defang
+154
+100
+44
+Lv Dapeng (viii)
+216
+140
+61
+Chen Yaohuan (viii)
+371
+692
+403
+300
+for the year ended 31 December 2021
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of tax losses not recognised and temporary differences
+(21,716)
+(5,780)
+(i) Government grants for the years ended 31 December 2021 and 2020 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 2021 primarily represent impairment losses recognised in the exploration and production
+("E&P") segment of RMB2,467 million (2020: RMB8,495 million), the chemicals segment of RMB5,332 million (2020: RMB3,675 million), the refining segment of
+RMB860 million (2020: RMB1,923 million), and the marketing and distribution segment of RMB1,211 million (2020: RMB536 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 in the long term 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% (2020:
+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 RMB3,628 million (2020: RMB4,548 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 RMB2,400 million (2020: RMB2,836 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 RMB180 million (2020: RMB287 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 10.50% to 13.9% (2020: 9.87% to 11.60%).
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+9 INTEREST EXPENSE
+Interest expense incurred
+Less: Interest expense capitalised*
+Interest expense on lease liabilities
+Accretion expenses (Note 35)
+Interest expense
+* Interest rates per annum at which borrowing costs were capitalised for construction in progress
+10 INVESTMENT INCOME
+Investment income from disposal of business and long-term equity investments (i)
+Dividend income from holding of other equity instrument investments
+Others
+2021
+2020
+RMB million
+5,679
+RMB million
+6,517
+(996)
+(2,011)
+4,683
+4,506
+(1,781)
+9,200
+(761)
+(165)
+1,711.52
+300
+1,218.00
+1,495.20
+Government grants (i)
+Ineffective portion of change in fair value of cash flow hedges
+Net realised and unrealised loss on derivative financial instruments not qualified as hedging
+Impairment losses on long-lived assets (ii)
+(Loss)/gain on disposal of property, plant, equipment and other non-current assets, net
+Fines, penalties and compensations
+Others
+Notes:
+2021
+RMB million
+2020
+RMB million
+6,706
+8,776
+694
+3,052
+(14,873)
+(1,252)
+(10,035)
+(14,629)
+(3,062)
+398
+(220)
+(43)
+(301)
+9,349
+Donations
+1,343
+(7,873)
+23,318
+6,344
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+2021
+2020
+Profit before taxation
+RMB million
+109,169
+RMB million
+48,615
+Expected PRC income tax expense at a statutory tax rate of 25%
+27,292
+12,154
+Tax effect of non-deductible expenses
+5,948
+3,281
+Tax effect of non-taxable income
+(8,096)
+(8,330)
+(2,766)
+(1,011)
+(730)
+Effect of income taxes at foreign operations
+1,135
+(222)
+6,258
+14,334
+(117)
+Tax effect of preferential tax rate (i)
+17,522
+1.84% to 4.35%
+(462)
+2.60% to 4.66%
+2021
+RMB million
+RMB million
+82
+37,525
+34
+156
+15,018
+182
+63
+2020
+37,744
+Deferred taxation (Note 29)
+- Adjustment of prior years
+298
+- Provision for the year
+Current tax
+2020
+RMB million
+15,198
+Note:
+2021
+RMB million
+Income tax expense in the consolidated income statement represents:
+11 INCOME TAX EXPENSE
+(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 RMB37,731 million in 2020.
+147
+Depreciation, depletion and amortisation
+47,224
+(2,789)
+38,691
+27,499
+15,701
+15,190
+9,528
+68,548
+37,337
+14,881
+Interest income
+(2,222)
+(1,467)
+(1,244)
+(541)
+(3,224)
+(3,140)
+(1,164)
+Revenue
+(1,085)
+24,631
+(667)
+2021
+RMB million
+7,484
+7,491
+Summarised statement of comprehensive income
+118
+Year ended 31 December
+FREP
+BASF-YPC
+Taihu
+YASREF
+Sinopec SABIC Tianjin
+2021
+2020
+2021
+2020
+2020
+2021
+2020
+2021
+2020
+RMB million RMB million
+RMB million RMB million
+RMB million RMB million
+RMB million
+RMB million RMB million
+52
+(7,193)
+451
+Other comprehensive income
+Total comprehensive income
+(597)
+(87)
+(2,054)
+(379)
+(601)
+(378)
+332
+1,057
+(407)
+Tax expense
+Profit/(loss) for the year
+(236)
+433
+6,164
+1,139
+2,263
+1,926
+(2,536) (6,136)
+986
+5,605
+718
+(123)
+1,664
+954
+1,393
+(2,868)
+291
+6
+17
+209
+183
+Interest expense
+(411)
+(535)
+(5)
+(16)
+(107)
+(20)
+(945)
+(1,136)
+(89)
+(131)
+Profit/(loss) before taxation
+2,261
+520
+8,218
+1,518
+2,864
+2,304
+27
+6,626
+Tax
+effect
+RMB million
+7,580
+Net movement during the year recognised
+161
+(37)
+198
+7,240
+(1,618)
+8,858
+transferred to the consolidated income statement
+Reclassification adjustments for amounts
+6,912
+in other comprehensive income (i)
+(2,295)
+11,778
+(3,881)
+15,659
+instruments recognised during the year
+amount
+RMB million
+effect
+RMB million
+Net of tax
+Tax
+Before tax
+amount
+RMB million
+Net of tax
+amount
+RMB million
+9,207
+Before tax
+amount
+RMB million
+24,517
+19,018
+(22)
+(3,368)
+(4)
+(18)
+(4)
+2
+(6)
+in other comprehensive income
+Net movement during the year recognised
+(12)
+(5,499)
+(12)
+(4)
+(6)
+(4)
+2
+(6)
+fair 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
+7,073
+(2,332)
+9,405
+(10)
+2020
+2021
+Effective portion of changes in fair value of hedging
+Dividends declared and paid during the year of RMBO.16 per share (2020: RMB0.07 per share)
+Dividends payable to shareholders of the Company attributable to the year represent:
+14 DIVIDENDS
+During 2021 and 2020, 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.
+2
+3
+5
+HKD1,500,001 to HKD2,000,000
+HKD1,000,001 to HKD1,500,000
+Emoluments
+Dividends declared after the date of the statement of financial position of RMBO.31 per share (2020: RMBO.13 per share)
+2020
+For the year ended 31 December 2021, the five highest paid individuals in the Company included five senior management. The emolument paid to
+each of five senior management was above RMB1,000 thousand. The total salaries, wages and other benefits was RMB7,100 thousand, and the total
+amount of their retirement scheme contributions was RMB510 thousand. For the year ended 31 December 2020, the five highest paid individuals in
+the Company included one supervisor and four senior management.
+13 SENIOR MANAGEMENT'S EMOLUMENTS
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+7,484
+7,491
+Carrying Amounts
+8,120
+7,416
+Number of individuals
+2021
+2021
+2020
+RMB million
+Cash flow hedges:
+15 OTHER COMPREHENSIVE INCOME
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+180
+Pursuant to the shareholders' approval at the Annual General Meeting on 19 May 2020, a final dividend of RMBO.19 per share totaling RMB23,004
+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 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.
+23,004
+15,739
+RMB million
+RMB million
+2020
+2021
+Final cash dividends in respect of the previous financial year, approved during the year of
+RMBO.13 per share (2020: RMBO.19 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 25 March 2022, final dividends in respect of the year ended 31 December 2021 of
+RMBO.31 (2020: RMBO.13) per share totaling RMB37,532 million (2020: RMB15,739 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 27 August 2021, the interim dividends for the year ended 31 December 2021 of
+RMBO.16 (2020: RMB0.07) per share totaling RMB19,371 million (2020: RMB8,475 million) were approved. Dividends were paid on 17 September
+2021.
+24,214
+56,903
+8,475
+15,739
+19,371
+37,532
+RMB million
+5,568
+(206)
+(3,860)
+1,664
+64
+18
+83
+34,861
+35,439
+2021
+RMB million
+2020
+RMB million
+3,860
+1,848
+221
+436
+(127)
+(68)
+(30)
+(23)
+(106)
+(70)
+4,033
+3,860
+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.
+2,173
+Information about the impairment of trade accounts receivable and the Group's exposure to credit risk can be found in Note 43.
+931
+34,361
+12,045
+6,536
+4,781
+38,894
+39,299
+(4,033)
+34,861
+35,439
+The ageing analysis of trade accounts receivable (net of loss allowance for expected credit losses) is as follows:
+31 December
+2021
+RMB million
+31 December
+2020
+442
+Within one year
+Between two and three years
+Over three years
+Loss allowance for expected credit losses are analysed as follows:
+Balance at 1 January
+Provision for the year
+Written back for the year
+Written off for the year
+Others
+Balance at 31 December
+RMB million
+34,180
+Between one and two years
+188
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+31 December
+2021
+31 December
+RMB million
+2020
+RMB million
+109,940
+60,379
+15,701
+13,066
+84,174
+78,481
+Less: Allowance for diminution in value of inventories
+2,515
+212,330
+155,298
+(4,897)
+(3,107)
+207,433
+152,191
+The cost of inventories recognised as an expense in the consolidated income statement amounted to RMB2,177,141 million for the year ended 31
+December 2021 (2020: RMB1,657,227 million). It includes the write-down of inventories of RMB3, 148 million mainly related to finished goods (2020:
+RMB11,689 million mainly related to finished goods).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+189
+Cost of hedging reserve
+3,372
+Spare parts and consumables
+Finished goods
+Work in progress
+for the year ended 31 December 2021
+26 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
+Non-current assets
+Unlisted equity instruments
+Listed equity instruments
+Current assets
+Trade accounts receivable and bills receivable (i)
+31 December
+2021
+31 December
+2020
+RMB million
+RMB million
+588
+179
+1,376
+149
+5,939
+8,735
+6,706
+10,260
+Note:
+(i) As at 31 December 2021 and 2020, 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.
+27 INVENTORIES
+Crude oil and other raw materials
+2,199
+22,473
+30,159
+RMB million
+(219)
+The share of profit and other comprehensive income for the year ended 31 December 2021 in all individually immaterial joint ventures accounted
+for using equity method in aggregate was RMB4,494 million (2020: RMB993 million) and RMB215 million (2020: RMB808 million) respectively.
+As at 31 December 2021, the carrying amount of all individually immaterial joint ventures accounted for using equity method in aggregate was
+RMB30,640 million (2020: RMB26,099 million).
+Note:
+(i) Including foreign currency translation differences.
+186
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+23 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+Operating rights of service stations
+(1,593)
+Long-term receivables from and prepayment to Sinopec Group Company and fellow subsidiaries
+Prepayments for construction projects to third parties
+Others (i)
+RMB million
+29,714
+31 December
+2020
+RMB million
+31,856
+1,520
+2,801
+7,470
+5,861
+31,326
+31 December
+2021
+(60)
+Share of other comprehensive loss from joint ventures (i)
+359
+433
+6,164
+1,139
+2,140
+(1,442)
+(2,742) (6,720)
+986
+718
+Dividends declared by joint ventures
+128
+300
+454
+691
+500
+Share of net profit/(loss) from joint ventures
+832
+217
+2,466
+456
+1,081
+911
+(2,301)
+493
+34,025
+(584)
+70,030
+Note:
+(333)
+(190)
+24,077
+21,711
+29,714
+31,856
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and swaps contracts. See Note 43.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+187
+Financial Statements (International)
+2,365
+Financial Statements (International)
+for the year ended 31 December 2021
+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
+2021
+31 December
+2020
+RMB million
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2,699
+19,536
+21,711
+(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:
+2021
+RMB million
+2020
+RMB million
+Operating rights of service stations
+Cost:
+Balance at 1 January
+Additions
+Decreases
+Balance at 31 December
+Accumulated amortisation:
+Balance at 1 January
+Additions
+Decreases
+Balance at 31 December
+Net book value at 31 December
+24 DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+53,567
+912
+53,549
+493
+(688)
+(475)
+53,791
+53,567
+74,543
+(220)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+162
+PipeChina (ii)
+2021
+RMB million
+2020
+RMB million
+Sinopec Finance
+2021
+RMB million
+Sinopec Capital
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+Year ended 31 December
+Zhongtian Synergetic Energy
+2021
+RMB million
+2020
+RMB million
+2021
+2020
+RMB million
+RMB million
+Revenue
+101,572
+22,766
+5,177
+4,742
+CIR
+2
+Summarised statement of comprehensive income
+240
+64,946
+Share of net assets from
+associates
+73,674
+70,747
+15,168
+14,583
+6,144
+5,659
+9,327
+1,160
+7,792
+1,160
+Carrying Amounts
+73,674
+70,747
+15,168
+14,583
+6,144
+5,659
+9,327
+7,792
+240
+88,862
+2
+11,707
+4,184
+551
+464
+(127)
+Dividends declared by
+associates
+Share of profit from associates
+442
+3,205
+490
+86
+284
+1,278
+1,152
+709
+1,062
+993
+485
+626
+1,621
+214
+231
+91
+Share of other comprehensive
+2,517
+16,959
+990
+2,194
+1,826
+1,252
+Profit for the year
+29,776
+6,444
+2,168
+2,027
+990
+1,278
+4,184
+1,655
+551
+181
+Other comprehensive income
+2
+26
+(372)
+3
+(308)
+Total comprehensive income
+29,778
+6,444
+461
+non-controlling interests
+Net assets attributable to
+2,320
+175,139
+Sinopec Capital
+31
+December
+2021
+RMB million
+13,140
+Zhongtian Synergetic Energy
+CIR
+31
+December
+2020
+31
+December
+2021
+31
+December
+2020
+31
+December
+194,458
+55,086
+31
+2021
+2020
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+11,871
+3,532
+3,721
+December
+576
+655,982
+74,012
+Crude oil and natural gas extraction
+Equity method
+("CIR")
+British Virgin
+Islands
+The Republic of
+Kazakhstan
+184
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+21 INTEREST IN ASSOCIATES (Continued)
+768,161
+Summarised financial information and reconciliation to their carrying amounts in respect of the Group's principal associates:
+Sinopec Finance
+December
+5,605
+RMB million
+31
+December
+2020
+RMB million
+31
+December
+2021
+RMB million
+31
+December
+2020
+RMB million
+Current assets
+Non-current assets
+86,335
+PipeChina
+31
+2,402
+53,008
+102
+Net assets
+615,103
+570,282
+30,955
+29,761
+12,538
+11,548
+24,070
+20,108
+480
+(286)
+2,320
+owners of the Company
+526,241
+505,336
+30,955
+29,761
+12,538
+11,548
+24,070
+20,108
+480
+Net assets attributable to
+(144)
+(28,422)
+(22,216)
+106
+51,331
+53,124
+870
+903
+Current liabilities
+(136,150)
+(55,562)
+(217,987)
+(197,872)
+(28)
+(18)
+(8,577)
+(8,315)
+(822)
+(699)
+Non-current liabilities
+(103,243)
+(104,150)
+(602)
+(514)
+(676)
+(411)
+income from associates (iii)
+50.00
+13
+2
+Total current liabilities
+(6,185)
+(6,350)
+(2,623)
+(2,646)
+(1,963)
+(1,081)
+(25,393)
+(18,164)
+(4,144)
+(3,052)
+(4,050)
+Non-current financial liabilities
+(6,857)
+(8,761)
+(85)
+(85)
+(30,903)
+(29,650)
+(7,599)
+(6,773)
+Other non-current liabilities
+Non-current liabilities
+(242)
+(3,547)
+(15,844)
+45,413
+18,835
+18,258
+Current liabilities
+Current financial liabilities
+(1,177)
+(1,203)
+(77)
+(456)
+(32)
+(8,644)
+(38)
+(9,520)
+(597)
+(998)
+Other current liabilities
+(5,008)
+(5,147)
+(2,546)
+(2,190)
+(1,931)
+(1,043)
+(9,549)
+41,947
+(235)
+(42)
+13,920
+18,949
+14,831
+16,239
+Net assets attributable to owners of the company
+14,981
+14,967
+4,515
+1,773
+11,851
+13,523
+13,991
+18,949
+14,831
+16,239
+Net assets
+(7,151)
+(7,981)
+(31,658)
+(32,626)
+(2,102)
+(1,524)
+13.920
+(92)
+11,439
+4,515
+(1,439)
+(2,017)
+(1,723)
+(2,008)
+(382)
+(378)
+Total non-current liabilities
+(7,099)
+(8,996)
+(92)
+1,773
+(42)
+5,568
+7,580
+7,416
+8.120
+Share of net assets from joint ventures
+412
+468
+Net assets attributable to non-controlling interests
+14,981
+14,967
+6,626
+12,531
+14,032
+9,993
+PRC
+Company Limited ("FREP")
+BASF-YPC Company Limited
+("BASF-YPC")
+40.00
+Manufacturing and distribution
+Equity method
+PRC
+PRC
+Taihu Limited ("Taihu")
+Equity method | PRC
+49.00
+37.50
+of petrochemical products
+Crude oil and natural gas extraction
+Petroleum refining and processing
+Equity method
+Equity method
+Cyprus
+Saudi Arabia
+Russia
+Saudi Arabia
+Company Ltd. ("YASREF")
+Sinopec SABIC Tianjin Petrochemical
+50.00
+Company Limited ("Sinopec SABIC
+Tianjin")
+Yanbu Aramco Sinopec Refining
+business
+Manufacturing and distribution of
+petrochemical products
+Manufacturing refining oil products
+of business
+(154)
+The share of profit and other comprehensive income for the year ended 31 December 2021 in all individually immaterial associates accounted
+for using equity method in aggregate was RMB7,283 million (2020: RMB3,444 million) and RMB271 million (2020: loss of RMB1,101 million)
+respectively. As at 31 December 2021, the carrying amount of all individually immaterial associates accounted for using equity method in aggregate
+was RMB44,176 million (2020: RMB36,222 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) 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.
+(iii) Including foreign currency translation differences.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+185
+Financial Statements (International)
+Financial Statements (International)
+50.00
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+22 INTEREST IN JOINT VENTURES
+The Group's principal interests in joint ventures are as follows:
+% of
+ownership
+Name of entity
+Fujian Refining & Petrochemical
+interests
+Principal activities
+Measurement
+method
+Country of
+incorporation
+Principal place
+for the year ended 31 December 2021
+Equity method
+PRC
+PRC
+4,777
+2,188
+1,223
+12,404
+7,516
+3,437
+2,665
+Total current assets
+15,779
+14,940
+6,953
+12,328
+3,446
+2,503
+17,845
+8,924
+8,257
+7,924
+Non-current assets
+13,744
+15,237
+9,336
+6,615
+7,492
+9,217
+Other current assets
+2021
+RMB million RMB million RMB million
+2020
+2021
+Summarised statement of financial position and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+BASF-YPC
+Taihu
+YASREF
+FREP
+Sinopec SABIC Tianjin
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+2020
+2021
+2020
+2021
+RMB million RMB million RMB million RMB million
+2020
+2021
+RMB million RMB million
+2020
+RMB million
+Current assets
+Cash and cash equivalents
+6,562
+7,448
+5,375
+1,838
+1,258
+1,280
+5,441
+1,408
+4,820
+5,259
+(182)
+of coal-chemical products
+Limited ("Zhongtian Synergetic Energy")
+Caspian Investments Resources Ltd.
+PRC
+(98)
+(295)
+Invest into the joint ventures and associated companies
+(54)
+(54)
+Reclassification to other long-term assets
+(8)
+(161)
+(169)
+Written back on disposals
+393
+(3,229)
+(49)
+(464)
+(2,703)
+(48,125)
+(51,818)
+(138)
+(2,890)
+Balance at 31 December 2020
+63,540
+620,720
+614,969
+Exchange adjustments
+1,299,229
+Reclassifications
+6,360
+(5,517)
+(940)
+Balance at 31 December 2021
+143,165
+793,045
+(17,495)
+(95)
+1,048,227
+(24,309)
+(1,092)
+1,984,437
+Accumulated depreciation and impairment losses:
+Balance at 1 January 2020
+11,783
+61,069
+608,622
+1,256,883
+Depreciation for the year
+4,680
+32,054
+48,760
+85,494
+Impairment losses for the year
+684
+4,739
+587,192
+(57)
+Balance at 1 January 2021
+620,720
+(135)
+(13,668)
+(14,574)
+Exchange adjustments
+(29)
+(904)
+(57)
+(990)
+Balance at 31 December 2021
+68,166
+(771)
+660,838
+1,385,512
+Net book value:
+Balance at 1 January 2020
+71,258
+140,360
+418,702
+630,320
+Balance at 31 December 2020
+75,010
+136,872
+656,508
+63,540
+Written back on disposals
+(170)
+614,969
+1,299,229
+Depreciation for the year
+4,586
+39,670
+48,568
+Impairment losses for the year
+742
+1,904
+6,774
+(259)
+92,824
+9,420
+185
+(410)
+225
+Invest into the joint ventures and associated companies
+(5)
+(133)
+(138)
+Reclassification to other long-term assets
+(82)
+(7)
+Reclassifications
+Exchange adjustments
+(1,297)
+Disposals
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+17 PROPERTY, PLANT AND EQUIPMENT
+Plants and
+buildings
+RMB million
+Oil and gas,
+properties
+RMB million
+Cost:
+Balance at 1 January 2020
+Additions
+132,327
+390
+182
+727,552
+1,563
+5,163
+Equipment,
+machinery
+and others
+RMB million
+Total
+RMB million
+1,887,203
+7,116
+Transferred from construction in progress
+10,965
+32,214
+98,427
+141,606
+Reclassifications
+1,027,324
+1,443
+Financial Statements (International)
+181
+162
+Share of other comprehensive income of associates
+and joint ventures
+441
+441
+Foreign currency translation differences
+Other comprehensive income
+(1,728)
+23,004
+(1,728)
+(2,441)
+(4,457)
+Financial Statements (International)
+(2,441)
+(5,497)
+17,507
+2,651
+(2,336)
+315
+Note:
+(i) As at 31 December 2021, cash flow hedge reserve amounted to a gain of RMB7,244 million (31 December 2020: a gain of RMB8,176 million), of which a gain of
+RMB7,214 million was attributable to shareholders of the Company (31 December 2020: a gain of RMB7,805 million).
+16 BASIC AND DILUTED EARNINGS PER SHARE
+The calculation of basic earnings per share for the year ended 31 December 2021 is based on the profit attributable to ordinary shareholders
+of the Company of RMB71,975 million (2020: RMB33,443 million) and the weighted average number of shares of 121,071,209,646 (2020:
+121,071,209,646) during the year.
+There are no potential dilutive ordinary shares, and diluted earnings per share are equal to the basic earning per share.
+(4,457)
+(125)
+(1,318)
+Invest into the joint ventures and associated companies
+509
+2,192
+5,177
+7,878
+Transferred from construction in progress
+5,487
+40,357
+65,182
+111,026
+Reclassifications
+Additions
+646
+(29)
+Invest into the joint ventures and associated companies
+(8)
+(188)
+(196)
+Reclassification to other long-term assets
+(665)
+(22)
+(1,027)
+(1,714)
+(617)
+1,892,844
+996,702
+757,592
+(115)
+(115)
+Reclassification to other long-term assets
+(38)
+(1,052)
+(1,090)
+Disposals
+(6,396)
+(806)
+(131,501)
+(138,703)
+Exchange adjustments
+Balance at 1 January 2021
+(141)
+(2,806)
+(226)
+(3,173)
+Balance at 31 December 2020
+138,550
+757,592
+996,702
+1,892,844
+138,550
+381,733
+593,615
+Balance at 31 December 2021
+74,999
+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 Zhenhai Refining and Chemical Branch
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO")
+Sinopec Beijing Yanshan Petrochemical Branch
+Other units without individually significant goodwill
+Principal activities
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of petrochemical products
+20 GOODWILL
+Manufacturing of intermediate petrochemical
+products and petroleum products
+RMB million
+31 December
+2020
+RMB million
+16,455
+16,481
+(7,861)
+8,594
+(7,861)
+8,620
+31 December
+2020
+31 December
+31 December
+2021
+2021
+for the year ended 31 December 2021
+Financial Statements (International)
+(2,197)
+(2,604)
+Balance at 31 December 2021
+27,122
+15,147
+42,269
+Net book value
+Balance at 1 January 2020
+239,674
+28,486
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+268,160
+235,792
+30,220
+266,012
+Balance at 31 December 2021
+236,634
+31,774
+268,408
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+183
+Financial Statements (International)
+Balance at 31 December 2020
+RMB million
+RMB million
+4,043
+49.00
+pipeline and auxiliary facilities
+Provision of non-banking financial
+Equity method
+PRC
+PRC
+("Sinopec Finance")
+services
+Sinopec Capital Company Limited
+49.00
+Project and equity investment,
+Sinopec Finance Company Limited
+Equity method
+PRC
+("Sinopec Capital")
+investment management, investment
+consulting, self-owned equity
+management
+Zhongtian Synergetic Energy Company
+38.75
+Mining coal and manufacturing
+Equity method
+PRC
+PRC
+PRC
+PRC
+Equity method
+4,043
+2,541
+2,541
+1,004
+1,004
+1,006
+1,032
+8,594
+8,620
+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 11.7% (2020: 11.4% to
+13.4%). Cash flows beyond the one-year period are maintained constant. Based on the estimated recoverable amount, no major impairment loss
+was recognized for the year ended 31 December, 2021.
+Key assumptions used for cash flow forecasts for these cash generating units 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.
+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 are as follows:
+Name of company
+% of
+ownership
+interests
+Principal activities
+Measurement
+method
+Country of
+incorporation
+Principal place
+of business
+PipeChina (i)
+14.00
+Operation of oil and natural gas
+(407)
+(220)
+Decreases
+6,863
+(7,702)
+(5,928)
+(111,026)
+(141,606)
+(10,302)
+(11,464)
+(144)
+(844)
+(107)
+(21,798)
+131,099
+(34)
+155,939
+125,525
+As at 31 December 2021, the amount of capitalised cost of exploratory wells included in construction in progress related to the exploration and
+production segment was RMB12,255 million (2020: RMB11,129 million). The geological and geophysical costs paid during the year ended 31
+December 2021 were RMB4,174 million (2020: RMB3,166 million).
+19 RIGHT-OF-USE ASSETS
+Land
+Others
+RMB million
+RMB million
+Total
+RMB million
+Cost
+(53)
+Balance at 1 January 2020
+159,729
+RMB million
+132,207
+391,719
+598,925
+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 RMB2,467 million for the year ended 31 December 2021
+(2020: RMB8,435 million).
+The addition to oil and gas properties of the Group for the year ended 31 December 2021 included RMB2,163 million (2020: RMB1,563 million) of
+estimated dismantlement costs for site restoration.
+At 31 December 2021 and 31 December 2020, the Group had no individual significant property, plant and equipment which had been pledged.
+At 31 December 2021 and 31 December 2020, the Group had no individual significant property, plant and equipment which were temporarily idle
+or pending for disposal.
+At 31 December 2021 and 31 December 2020, the Group had no individual significant fully depreciated property, plant and equipment which were
+still in use.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+176,119
+for the year ended 31 December 2021
+Balance at 1 January
+Additions
+Dry hole costs written off
+Transferred to property, plant and equipment
+Reclassification to other long-term assets
+Impairment losses for the year
+Disposals and others
+Exchange adjustments
+Balance at 31 December
+2021
+2020
+RMB million
+125,525
+18 CONSTRUCTION IN PROGRESS
+Additions
+Decreases
+Balance at 31 December 2020
+Accumulated depreciation
+Balance at 1 January 2020
+Additions
+9,101
+5,702
+14,803
+9,358
+6,354
+15,712
+Decreases
+(896)
+310,677
+(1,575)
+Balance at 31 December 2020
+17,563
+10,481
+28,044
+Balance at 1 January 2021
+17,563
+10,481
+28,044
+Additions
+9,966
+(2,471)
+46,921
+263,756
+Balance at 31 December 2021
+248,775
+34,188
+14,370
+9,653
+282,963
+24,023
+(9,790)
+(3,140)
+(12,930)
+253,355
+40,701
+294,056
+Balance at 1 January 2021
+253,355
+40,701
+294,056
+Additions
+13,263
+9,650
+22,913
+Decreases
+(2,862)
+(3,430)
+(6,292)
+16,829
+2021
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+57.01
+54.80
+61.91
+4.0
+3,720
+3,686
+3,992
+0.9
+Change from
+Direct sales and distribution (million tonnes)
+Annual average throughput per station (tonne/station)
+the end of the
+previous year to
+31 December
+31 December
+2021
+2020
+31 December
+2019
+the end of the
+reporting period
+30,725
+30,713
+30,702
+30,696
+Total number of service stations under the Sinopec brand
+Number of company-operated stations
+1.0
+122.54
+113.19
+marketing strategies, and expanded
+sales. Our network layout for end-users
+were further optimized, and an internet
+operation center was established, with
+online and offline businesses constantly
+integrated. We actively promoted the
+construction of comprehensive service
+stations including oil, gas, hydrogen,
+electricity and non-fuel businesses and
+accelerated building up new energy
+service networks. Total annual sales
+volume of refined oil products was 221
+million tonnes, of which total domestic
+sales volume amounted to 171 million
+tonnes, up by 2.0% year on year.
+14
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Summary of Operations for the Marketing and Distribution Segment
+Change from
+2021
+2020
+2019 2020 to 2021 (%)
+Total sales volume of oil products (million tonnes)*
+220.79
+217.91
+254.95
+1.3
+Total domestic sales volume of oil products (million tonnes)
+171.31
+167.99
+184.45
+2.0
+Retail sales (million tonnes)
+114.30
+(%)
+0.04
+0.06
+30,725
+30,707
+17,370
+17,244
+9.4
+1,252
+1,067
+1,047
+17.3
+9,201
+9,057
+10,029
+1.6
+1,357
+1,313
+1,289
+3.4
+first industrial test of full distillates crude
+oil catalytic cracking technology was
+completed. The industrial application of
+MFP technology, which produces more
+propylene and low-sulfur fuel, realized
+a breakthrough. We also successfully
+developed and produced needle coke
+products. In chemicals, we took the
+lead in completing the industrial test of
+direct cracking of crude oil to ethylene
+in China, and we successfully developed
+15 new lightweight products for green
+and environment-friendly vehicles, such
+as carbon fiber reinforced epoxy resin
+composites. Breakthroughs were made
+in the development of hydrogenated
+styrenic thermal-plastic elastomer. In
+2021, the Company had 8,045 patent
+applications at home and abroad, among
+which 4,868 were granted. We won 1 first
+prize and 5 second prizes of National
+Scientific and Technological Progress
+Award and 1 second prize of National
+Technological Invention Award for 2020.
+We also obtained 1 gold, 4 silver and 11
+excellence awards for Chinese patents.
+15
+Business Review and Prospects
+Business Review and Prospects
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+18,999
+(0.51) percentage points
+(0.12) percentage points
+10.9
+12,060
+Note: The total sales volume of refined oil products includes the amount of refined oil marketing and trading sales volume.
+(4) Chemicals
+In 2021, the Company adhered to
+"basic plus high-end", accelerated the
+construction of advanced production
+capacity, strengthened structural
+adjustment, extended the industrial
+chain and cultivated growth points. We
+continuously diversified raw materials,
+optimized structure and maintenance
+scheduling of facilities, and maintained
+high-profitable units' utilization rates. We
+Summary of Operations for the Chemicals Segment
+further integrated process of production,
+marketing, research and application,
+strengthened R&D efforts for high-
+end products and new materials, and
+increased output of high value-added
+products such as metallocene polyolefin
+and carbon fiber. The production ratio
+of synthetic resin, synthetic rubber,
+synthetic fiber and fine chemicals with
+added value were increased by 1.0,
+3.5, 1.6 and 3.0 percentage points
+respectively. The annual ethylene output
+was 13.38 million tonnes, representing
+a year-on-year increase of 10.9%. At
+the same time, we vigorously developed
+strategic customers and continuously
+improved the service level. The total
+operating volume of chemical products in
+2021 was 81.6 million tonnes, realizing
+full production and sales.
+Unit: thousand tonnes
+Change from
+2020 to 2021
+Ethylene
+Synthetic resin
+Synthetic rubber
+Synthetic fiber monomer and polymer
+Synthetic fiber
+Note: Includes 100% of the production of domestic joint ventures.
+(5) Research and Development
+In 2021, the Company deepened the
+reform of science and technology system
+and mechanism, increased science and
+technology investment, promoted key
+core technology research, and achieved
+fruitful results, giving full play to the
+leading role of science and technology
+in industrial development. In upstream,
+new progress was made in exploration
+theory and breakthrough was achieved
+in key technology for exploration and
+development of Sichuan Basin and
+Shunbei area. In refining, the world's
+2021
+2020
+2019
+(%)
+13,380
+12,493
+94.98
+94.77
+94.65
+6,681
+7,539
+6,631
+6,277
+6,229
+7,489
+6,976
+6,928
+Unit: Square kilometers
+Area under license (as of 31 December)
+Acreage with exploration licenses
+China
+Acreage with development licenses
+China
+Overseas
+(2) Refining
+In 2021, the Company seized the
+favorable opportunity of recovery and
+rising oil prices, insisted on integration
+and optimisation of production and
+marketing, focused on expanding scale
+and adjusting structure, and maximized
+the overall profits along the value
+chain. Guided by the market demand,
+we expedited adjustment to increase
+the yield of chemicals feedstock and
+Summary of Operations for the Refining Segment
+refining specialities. We vigorously
+increased production of gasoline and
+light chemical feedstock, continued to
+expand marketing and sales of special
+products such as low-sulfur bunker fuel,
+and maintained high utilization rate. The
+Company optimized resource allocation
+and achieved significant cost reduction
+in procurement. We accelerated building
+up advanced production capacity and
+promoted structural adjustments. Six
+2021
+390,023
+390,023
+42,391
+36,480
+Total
+5,911
+Others
+632
+Gross
+Net
+Gross
+Net
+7,539
+7,489
+6,976
+6,928
+Consolidated companies
+7,539
+7,489
+6,976
+6,928
+Puguang
+79
+79
+67
+67
+Fuling
+779
+779
+632
+(6) Health and Safety
+2020
+436,864
+39,195
+141.50
+159.99
+3.3
+65.21
+57.91
+62.77
+12.6
+59.85
+63.21
+66.06
+(5.3)
+21.15
+20.38
+31.16
+3.8
+45.41
+40.22
+39.78
+12.9
+74.34
+76.38
+146.21
+436,864
+7.8
+236.91
+33,965
+5,230
+hydrogen purification units and filling
+facilities were built throughout the year.
+In 2021, the Company processed 255
+million tonnes of crude oil, up by 7.8%,
+yielding 146 million tonnes of refined oil
+products, with a year-on-year increase
+of 3.3%. Among them, gasoline output
+was 65.21 million tonnes, increased by
+12.6%, and light chemical feedstock was
+45.41 million tonnes, up by 12.9%.
+Unit: million tonnes
+Change from
+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 from domestic joint ventures.
+(3) Marketing and Distribution
+In 2021, domestic consumption of
+refined oil products recovered. The
+company gave full play to the advantages
+of integration and marketing network to
+continuously improve quality and scale
+in operation. We innovated marketing
+approaches, implemented precision
+2021
+2020
+2019
+2020 to 2021 (%)
+255.28
+248.52
+In 2021, the Company comprehensively
+promoted HSE management system and
+continuously strengthened management.
+We focused on employees' health, safety
+and security management, enhanced
+pandemic prevention and control
+mechanism, and improved emergency
+response capacity, so as to maintain
+occupational, physical and mental health.
+of employees at home and abroad.
+We implemented production safety
+responsibility among all employees,
+popularized prevention mechanisms
+of safety risk controlling and hidden
+risks shooting. We promoted the pilot
+project of "Industrial Internet plus Safe
+Production", carried out special actions
+including a 3-year rectification program
+for production safety, and "A Hundred
+Days without Accidents" activity. The
+Company witnessed overall stable and
+safe production in 2021.
+(7) Capital Expenditures
+In 2021, focusing on investment quality
+and return, the Company continued
+to optimize investment management.
+The capital expenditures for the whole
+year were RMB167.9 billion. Capital
+expenditures of the exploration and
+production segment were RMB68.1
+billion, mainly used for crude production
+capacity construction in Shunbei
+Oilfield, natural gas production capacity
+construction in Western Sichuan, Fuling
+and Weirong, storage and transmission
+facilities of Tianjin LNG Phase II and
+Qingdao LNG Phase III, and the CCUS
+Project in Shengli Oilfield. The capital
+14.0
+1,606
+1,352
+18.8
+Gasoline
+90,836
+86,193
+5.4
+7,731
+6,300
+22.7
+Diesel
+78,335
+77,280
+1.4
+5,891
+4,789
+23.0
+Kerosene
+21,270
+20,828
+26,280
+2.1
+29,953
+50.3
+115.2
+Non-controlling interests
+13,876
+8,828
+57.2
+(1) Revenue
+In 2021, the Company's revenue from primary business was RMB2,679.5 billion, representing an increase of 30.8% over 2020. This was mainly
+due to the price and sales volume increase in refined oil products and chemical products.
+The following table sets forth the external sales volume, average realised prices and respective rates of change of the Company's major products
+in 2021 and 2020:
+Average realised price
+(RMB/tonne, RMB/thousand cubic meters)
+Year ended 31 December
+Sales volume (thousand tonnes)
+Year ended 31 December
+2021
+Crude oil
+7,162
+2020
+7,422
+Change (%)
+2021
+2020 Change (%)
+(3.5)
+3,049
+2,029
+Natural gas (million cubic meters)
+33,443
+3,772
+43.1
+7,521
+6,381
+17.9
+Synthetic rubber
+1,286
+1,361
+(5.5)
+11,099
+7,982
+39.1
+Chemical fertiliser
+976
+1,177
+(17.1)
+2,807
+1,955
+43.6
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+19
+Management's Discussion
+and Analysis
+3.9
+2,635
+1,402
+Synthetic fibre
+Basic chemical feedstock
+36,173
+36,683
+(1.4)
+5,486
+3,636
+50.9
+Monomer and polymer for synthetic fibre
+6,955
+9,691
+(28.2)
+6,537
+4,297
+52.1
+Synthetic resin
+17,923
+17,112
+4.7
+8,325
+7,148
+16.5
+1,457
+Region
+China
+71,975
+Attributable to:
+In 2021, the Company's revenue was RMB2,740.9 billion, increased by 30.2% compared with that of 2020. That was mainly due to the good
+momentum of Chinese economy, increase of international crude oil price, recovery of domestic refined oil products demand and increase of chemical
+products prices. The Company sized the opportunity of demand recovery, optimised operation and production, promoted structural adjustment and
+transition and upgrading, and realised RMB94.6 billion operating profit, up by 592.3% year on year.
+The following table sets forth the main revenue and expenses from the Company's consolidated financial statements:
+2021
+Revenue
+RMB million
+2,740,884
+Year ended 31 December
+2020
+RMB million
+Change (%)
+2,104,724
+30.2
+Revenue from primary business
+Other operating revenues
+Operating expenses
+Purchased crude oil, products and operating supplies and expenses
+Selling, general and administrative expenses
+2,679,500
+61,384
+(2,646,256)
+(2,076,665)
+2,048,654
+30.8
+56,070
+9.5
+(2,091,055)
+1 CONSOLIDATED RESULTS OF OPERATIONS
+26.6
+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.
+TK-01
+expenditures of the refining segment
+were RMB22.5 billion, mainly used
+for the expansion of Zhenhai refinery
+and structural adjustment of Anqing
+and Yangzi refineries. The capital
+expenditures of the marketing and
+distribution segment were RMB21.9
+billion, mainly used for service stations,
+integrated energy stations and logistics
+facilities. The capital expenditures of the
+chemicals segment were RMB51.6 billion,
+mainly used for Zhenhai, Sinopec-SK,
+Hainan, Tianjin Nangang, Gulei ethylene
+projects, AGCC project, Jiujiang Aromatics
+project, Shanghai large-tow carbon fiber
+project, Yizheng PTA project, Guizhou
+PGA project, and Qilu CCUS project. The
+capital expenditures for corporate and
+others were RMB3.8 billion, mainly for
+R&D facilities and information technology
+projects.
+BUSINESS PROSPECTS
+(1) Market Prospects
+Looking forward to 2022, the world
+economic growth is expected to maintain
+the recovery. China's economy is
+expected to achieve stable growth, and
+the long-term positive fundamentals will
+remain unchanged. It is expected that the
+market demand for refined oil products
+will continue to recover, and that for
+natural gas and petrochemical products
+will continue to grow. Oil prices may face
+greater volatility risks due to geopolitical
+situation, changes in global supply and
+demand, inventory levels, and carbon
+peaking and neutrality targets.
+(2) Production & Operation
+In 2022, guided by the development
+strategy of building a world-leading
+company, the Company will focus on
+optimization of production and operation,
+transition and development, technology
+innovation, reform and management,
+and risk prevention and control to march
+toward its targets firmly. The following
+are specific measures:
+Exploration and production segment:
+The Company will enhance risk
+exploration and trap pre-exploration
+efforts, strengthen profitable
+development, and speed up the
+construction of natural gas production,
+supply, storage and marketing system,
+so as to achieve better results in oil
+production stabilization, gas production
+increase, cost reduction and efficiency
+improvement. In terms of crude oil
+development, the Company will scale
+up the production in Shunbei and Tahe
+oilfields, accelerate the construction
+of the national demonstration zone of
+continental facies shale oilfields in Jiyang,
+and refine the development of mature
+oilfields, so as to achieve steady crude
+oil production growth and a significant
+decrease in the break-even point. In
+terms of natural gas development, the
+Company will accelerate the capacity
+building of Dongsheng and Western
+Sichuan gas fields, further expand and
+tap the potential of Puguang, Yuanba
+gas fields, and deepen the development
+adjustment of Fuling gas field. At the
+same time, more efforts will be made in
+taking a diversified approach to expand
+resource channels, cultivate high-quality
+and efficient end-user markets, and
+maintain the good momentum of natural
+gas development. The planned annual
+production of crude oil is 281.20 million
+barrels, of which 31.28 million barrels
+will come from overseas and that of
+natural gas is 1,256.7 billion cubic feet.
+16
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Refining segment: The Company will
+prioritize structural adjustment and cost
+reduction, speed up the construction of
+world-class refining and chemical bases,
+and promote the systemic improvement
+of the refining value chain. Oriented by
+profitability, the Company will make
+appropriate arrangement for facilities
+utilization and production scheduling,
+flexibly adjust the yield of refined oil
+products and diesel-gasoline ratio;
+dynamically optimize the allocation
+of crude oil resources to reduce
+procurement costs; accelerate the shift
+from refined oil products to chemicals,
+increase the production of chemical raw
+materials, improve the self-sufficient rate
+of chemical feedstocks; speed up the
+shift from refined oil products to special
+products, expand the market of special
+products such as low-sulfur bunker
+fuel, lubricating grease, base oil, needle
+coke, etc., and improve profitability. The
+annual plan for crude oil throughput is
+258 million tonnes and that for refined
+oil products production is 147 million
+tonnes.
+Marketing segment: Giving full play to
+integrated advantages, the Company will
+make every effort to expand the market,
+improve efficiency, and consolidate its
+position in the market. The Company
+plans to improve the market monitoring
+system, implement well-targeted
+marketing strategies, increase both
+retailing sales volume and efficiency;
+implement network development
+strategies by different regions and levels,
+continue to optimize network layout,
+enhance network integrity, stability
+and competitiveness; strengthen the
+development of Sinopec-brand products,
+improve the quality and profitability
+of non-fuel business; promote gas and
+hydrogen refueling, power charging
+and battery swapping, build integrated
+energy stations covering gasoline, diesel,
+gas, hydrogen, electricity and non-fuel
+services; and accelerate the construction
+of carbon-neutral gas stations. The
+annual domestic sales volume of refined
+oil products is planned to be 174 million.
+tonnes.
+Chemicals segment: Adhering to "basic
++high-end", the Company will promote
+the building of advanced capacity, speed
+up the deployment of large-scale ethylene
+plants, promote the upgrading and
+appropriate extension of the aromatics
+industry chain, continuously enhance
+market competitiveness; diversify raw
+materials, enhance the cost advantage;
+dynamically optimize and adjust the
+utilization, continue to promote facilities'
+operation efficiency; stay market-oriented,
+vigorously develop new materials and
+applications with high added value and
+advanced technology. Meanwhile, we will
+optimize the mechanism to respond to
+market need rapidly, strengthen refined
+management, and improve service quality
+and efficiency. The planned annual
+ethylene production is 15.25 million
+tonnes.
+Technological development: Following
+the innovation-driven strategy, the
+Company aims to make breakthroughs
+in core technologies, promote the
+mechanism reform of the technological
+system, accelerate the intelligent
+application and digital transformation
+to build a technology-leading company.
+Specific focuses include technological
+breakthroughs in oil and gas exploration
+and production with the emphases on oil
+production stabilization, gas production
+increase, cost reduction, and efficiency
+improvement, oil and gas reserves
+and production increase; coordinated
+development of integration of refining
+and chemical technologies, refined oil
+products structure optimization, clean,
+efficient and low-carbon utilization
+of resources; key raw materials and
+high-end new materials development,
+coordination of the development and
+application of technologies such as safety
+and environmental protection; energy
+conservation and emission reduction,
+and intelligent optimization; forward-
+looking and basic research on such areas
+as green and low-carbon, new energy,
+and new materials to support industrial
+transition and upgrading.
+Capital expenditures: In 2022, the
+Company's planned capital expenditures
+are RMB198 billion, of which, RMB81.5
+billion will be for the exploration and
+production segment, including the
+construction of crude oil production
+capacity in Shunbei and Tahe oilfields,
+and natural gas production capacity
+in Western Sichuan, Dongsheng and
+Zhongjiang and construction of storage
+and transmission facilities such as
+Longkou LNG. Capital expenditures for
+the refining segment will be RMB20.4
+billion, mainly for the construction
+of Anqing, Yangzi refinery structural
+adjustment projects and Zhenhai refinery
+Phase II. Capital expenditures for the
+marketing and distribution segment
+will be RMB23.7 billion, mainly used
+for the construction of service stations,
+integrated energy stations and logistics
+facilities. The capital expenditures of
+the chemicals segment will be RMB66.1
+billion, which will be mainly used for
+Hainan and Tianjin Nangang ethylene
+projects, Jiujiang Aromatics project,
+Shanghai large-tow carbon fiber project,
+Yizheng PTA project, Guizhou PGA
+project, Zhenhai Refinery Phase II. Capital
+expenditures for corporate and others
+are planned to be RMB6.3 billion, which
+will be mainly used for R&D facilities and
+information technology projects.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+17
+Business Review and Prospects
+天然
+MANAGEMENT'S DISCUSSION AND ANALYSIS
+Shareholders of the Company
+(1,589,821)
+(54,978)
+592.3
+Net finance costs
+(9,010)
+(9,510)
+(5.3)
+Investment income and share of profits less losses from associates and joint ventures
+23,551
+44,456
+(47.0)
+Profit before taxation
+109,169
+48,615
+124.6
+Income tax expense
+(23,318)
+(6,344)
+267.6
+Profit for the year
+85,851
+42,271
+103.1
+13,669
+30.6
+94,628
+275.7
+(53,668)
+2.4
+Depreciation, depletion and amortisation
+(115,680)
+(107,461)
+7.6
+Exploration expenses, including dry holes
+(12,382)
+(9,716)
+27.4
+Personnel expenses
+(103,492)
+(87,525)
+18.2
+Taxes other than income tax
+(259,032)
+(235,018)
+10.2
+Other operating expenses, net
+(21,716)
+(5,780)
+Operating profit
+2020
+73.83
+Natural gas productive wells (as of 31 December)
+Equity accounted entities
+46
+46
+12
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Items
+Proved reserves
+Proved developed reserves
+China
+Consolidated companies
+Puguang
+Fuling
+Others
+Overseas
+Consolidated companies
+Equity accounted entities
+Proved undeveloped reserves
+China
+Consolidated companies
+Fuling
+Others
+Overseas
+Consolidated companies
+Equity accounted entities
+5
+Exploration and Production Activities
+0
+46
+Others
+Overseas
+Consolidated companies
+2021
+309
+287
+259
+24
+15
+263
+244
+171
+153
+125
+102
+125
+102
+17
+16
+108
+86
+51
+Shengli
+Natural gas reserves (bcf)
+Wells drilled (as of 31 December)
+1,824
+99
+119
+1,616
+1,705
+1
+2
+0
+0
+1
+2
+2021
+2020
+Exploratory
+Development
+Exploratory
+Development
+Productive
+Dry
+Productive
+Dry
+1,715
+31 December 2021 31 December 2020
+1,824
+1,826
+8,456
+8,191
+6,740
+6,365
+6,734
+6,357
+6,734
+6,357
+1,582
+1,675
+1,529
+1,491
+3,623
+3,191
+6
+8
+0
+0
+6
+8
+1,716
+1,715
+Productive
+Consolidated companies
+Proved undeveloped reserves
+Oct-21
+Jan-22
+1 MARKET REVIEW
+(1) Crude Oil & Natural Gas Market
+In 2021, international crude oil prices
+fluctuated with upward trend. The spot
+price of Platts Brent for the year averaged
+USD70.7 per barrel, up by 69.7% year on
+year. In the context of energy transition,
+the domestic natural gas demand grew
+rapidly. Based on statistics by NDRC,
+the domestic apparent consumption of
+natural gas reached 372.6 billion cubic
+meters, up by 12.7% year on year.
+(2) Refined Oil Products Market
+In 2021, the domestic refined oil
+products market demand picked up.
+According to NDRC statistics, the
+apparent consumption of refined oil
+products (including gasoline, diesel and
+kerosene) was 340 million tonnes, up
+by 3.2% from the previous year. Among
+them, gasoline, diesel and kerosene
+increased by 5.7%, 0.5% and 5.7%,
+respectively. According to the change of
+international crude oil prices, there were
+21 price adjustments domestically for
+refined oil products throughout the year
+with 15 increases and 6 decreases.
+(3) Chemical Products Market
+In 2021, the domestic demand for
+chemicals maintained stable. Based on
+our statistics, the domestic apparent
+consumption of ethylene equivalent
+decreased by 1.7% from the previous
+year, and the apparent consumption
+of synthetic resin, synthetic fiber and
+synthetic rubber decreased by 0.3%,
+increased by 0.3% and decreased by
+4.5%, respectively. Domestic prices of
+chemical products increased year on
+year.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+11
+Business Review and Prospects
+Business Review and Prospects
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+2 PRODUCTION & OPERATION REVIEW
+(1) Exploration and Production
+In 2021, the Company seized the
+opportunity of rising oil prices to promote
+oil and gas exploration and development
+in major target basins, continuously
+scaled up profitable capacity, and made
+new breakthroughs in increasing reserves,
+maintaining oil production, increasing
+gas output, and improving efficiency.
+In exploration, we strengthened risk
+exploration and trap pre-exploration in
+new areas, and made a number of new
+oil and gas discoveries, including major
+breakthroughs in continental facies shale
+oilfields exploration in Bohai Bay Basin,
+North Jiangsu Basin and Sichuan Basin.
+In crude oil development, we accelerated
+building of production capacity in
+Shunbei and Tahe, and strengthened
+fine development in mature fields. In
+natural gas development, we sped up
+capacity building of Weirong, Yongchuan
+South and Nanchuan fields, strengthened
+fine development of Puguang, Yuanba
+and other fields, and deepened the
+development of Fuling shale gas field.
+Summary of Operations for the Exploration and Production Segment
+In the meantime, we signed medium
+and long-term LNG agreements to
+increase overseas natural gas supply.
+We developed new natural gas market
+reaching more quality end users with
+sales volume and market share rising
+constantly. The Company's production
+of oil and gas equivalent reached 479.74
+million barrels including 249.60 million
+barrels of domestic crude which kept flat
+year on year, and 1,199.4 billion cubic
+feet of natural gas which increased by
+11.9% year on year.
+Oil and gas production (mmboe)
+Crude oil production (mmbbls)
+China
+Jul-21
+Overseas
+Apr-21
+Oct-20
+12-17-1
+BUSINESS REVIEW AND PROSPECTS
+Movement of International Crude Oil Prices
+USD/Barrel
+120
+BUSINESS REVIEW
+In 2021, the COVID-19 pandemic continued
+and the world economic recovery was weak.
+China achieved remarkable results in pandemic
+prevention and control, and its economy
+continued to grow. The annual gross domestic
+product (GDP) increased by 8.1% year on year.
+International oil prices fluctuated with upward
+trend, the domestic demand for refined oil
+products recovered, the demand for natural gas
+increased rapidly, and the demand for chemical
+products remained stable.
+Following market conditions, the Company
+optimized the whole business chain, expanded
+market, increased sales volume, and significantly
+improved the profits of our core businesses. The
+net profit attributable to the shareholders of
+the company reached the best level in the same
+period for nearly a decade.
+100
+80
+60
+60
+40
+40
+20
+20
+WTI-NYMEX
+BRENT DTD
+BRENT ICE
+DUBAI
+0
+Jan-20
+Apr-20 Jul-20
+Jan-21
+China
+Natural gas production (bcf)
+Change from
+31 December 2021
+31 December 2020
+China
+Proved reserves
+Proved developed reserves
+Consolidated companies
+1,749
+1,542
+1,578
+1,389
+1,291
+1,130
+1,291
+1,130
+Shengli
+961
+821
+Others
+Overseas
+Consolidated companies
+Equity accounted entities
+Items
+Summary of Reserves of Crude Oil and Natural Gas
+Crude oil reserves (mmbbls)
+1,047.78
+2021
+2020
+2019
+2020 to 2021(%)
+479.74
+459.02
+458.92
+4.5
+279.76
+280.22
+284.22
+(0.2)
+249.60
+249.52
+249.43
+0.0
+30.16
+1,199.44
+30.70
+1,072.33
+34.79
+(1.8)
+11.9
+Dry Productive
+330
+363
+61
+Total
+108
+324
+108
+263
+༠།ལ། |
+2
+94
+212
+22200002
+92
+92
+29
+63
+94
+22232021
+212
+212
+52
+160
+0
+0
+120
+Equity accounted entities
+2226
+92
+212
+92
+212
+29
+52
+63
+160
+Overseas
+0
+123
+0
+62
+2
+Consolidated companies
+0
+3
+0
+1
+0
+0
+146
+0
+212
+34,572
+18,860
+18,860
+18,668
+18,668
+5,534
+2,372
+7,055
+2,752
+30
+11
+28
+5,504
+59,385
+2,361
+56,223
+7,027
+60,295
+10
+2,742
+55,992
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+China
+Business Review and Prospects
+Business Review and Prospects
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+34,572
+0
+34,991
+53,240
+China
+Consolidated companies
+Shengli
+Others
+Overseas
+Consolidated companies
+Equity accounted entities
+Total
+Oil productive wells (as of 31 December)
+2021
+2020
+Gross
+Net
+Gross
+Net
+53,851
+53,851
+53,240
+53,240
+53,851
+53,851
+53,240
+34,991
+75
+13
+75
+Others
+193
+71
+884
+2
+179
+72
+935
+1
+Overseas
+2
+1
+114
+0
+2
+0
+100
+0
+Consolidated companies
+0
+0
+2
+2
+1,080
+204
+146
+129
+1,828
+383
+136
+2,015
+Dry
+3
+Consolidated companies
+363
+129
+1,828
+4
+383
+136
+2,015
+3
+Shengli
+170
+58
+944
+2
+64
+0
+4
+0
+Gross
+Net
+Exploratory Development Exploratory Development Exploratory Development
+Exploratory Development
+China
+108
+201
+0
+201
+Net
+Consolidated companies
+201
+108
+201
+Shengli
+33
+55
+33
+Others
+55
+108
+Gross
+108
+2021
+4
+0
+2020
+Equity accounted entities
+2
+1
+112
+2
+0
+96
+0
+Total
+Wells drilling (as of 31 December)
+3
+0
+136
+385
+2,115
+1,942
+130
+365
+4
+64
+31 December
+2021
+56
+846
+824
+1,535
+1,498
+At 31 December 2021 and 2020, the guarantees by the Group in respect of facilities granted to the parties below are as follows:
+31 December
+14,863
+RMB million
+RMB million
+Joint ventures (ii)
+9,117
+6,390
+Associates (iii)
+5,746
+8,450
+14,840
+2020
+63
+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.
+66
+(i) The investment commitments of the Group is RMB3,648 million (2020: RMB13,172 million).
+Commitments to joint ventures
+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 RMB181 million for the year ended 31 December 2021 (2020: RMB231 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
+Contingent liabilities
+31 December
+2021
+31 December
+2020
+RMB million
+RMB million
+301
+390
+112
+99
+110
+102
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+The transactions under the after-mentioned agreements will further improve the integrated operation level of the Group, optimise the allocation of
+resources, reduce connected transactions on the whole, so as to enhance the comprehensive competitiveness of the Group in its business locations.
+Financial Statements (International)
+38 BUSINESS COMBINATION (Continued)
+The financial condition as at 31 December 2020 and the results of operation for the year ended 31 December 2020 previously reported by the
+Group have been restated, as set out below:
+The Group, as
+previously
+reported
+RMB million
+Acquired assets
+and liabilities
+of Sinopec
+Group Company
+RMB million
+Elimination and
+Adjustment
+RMB million
+The Group,
+as restated
+RMB million
+for the year ended 31 December 2021
+Summarised consolidated income statement
+Profit attributable to shareholders of the Company
+2,105,984
+12,233
+(13,493)
+2,104,724
+33,096
+33,443
+Note:
+347
+for the year ended 31 December 2020:
+Revenue
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+196
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+37 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+Contingent liabilities (Continued)
+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 2021 and 2020, the Group
+estimates that there is no material liability has been accrued for ECLS 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 Zhongan United Coal Chemical Co., Ltd. ("Zhongan United") by banks amount to
+RMB7,100 million. As at 31 December 2021, the amount withdrawn (The portion corresponding to the shareholding ratio of the Group) by Zhongan United from banks
+and guaranteed by the Group was RMB5,680 million (31 December 2020: RMB6,390 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 RMB23,208 million. As at 31 December 2021, the amount
+withdrawn (The portion corresponding to the shareholding ratio of the Group) by Amur Gas from banks and guaranteed by the Group was RMB3,264 million (31
+December 2020: Nil).
+The Group provided a guarantee in respect to payment obligation under the raw material supply agreement of Amur Gas amount to RMB15,493 million. As at 31
+December 2021, Amur Gas has not yet incurred the relevant payment obligations and therefore the Group has no guarantee amount (31 December 2020: Nil).
+The Group provided a guarantee in respect the engineering services agreement of Amur Gas amount to RMB3,012 million. As at 31 December 2021, the relevant
+payables for constructions of Amur Gas (The portion corresponding to the shareholding ratio of the Group) and guaranteed by the Group was RMB173 million (31
+December 2020: Nil).
+(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 (2020: RMB8,450 million).
+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 RMB10,968 million in the consolidated financial statements for the year
+ended 31 December 2021 (2020: RMB11,368 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 resolution passed at the Director's meeting on 26 March 2021, the Company entered into agreements with Sinopec Assets Management
+Corporation ("SAMC") and Beijing Orient Petrochemical Industry Co., Ltd. ("BJOPI"), and its subsidiary, Sinopec Beihai Refining and Chemical
+Limited Liability Company entered into an agreement with Beihai Petrochemical Limited Liability Company of Sinopec Group ("BHP"). According
+to the relevant agreements, the Company proposed to acquire non equity assets such as the polypropylene devices and utility business assets of
+Cangzhou Branch held by SAMC, organic plant business held by BJOPI, and the pier operation platform held by BHP.
+Pursuant to the resolution passed at the Directors' meeting on 29 November 2021, the Company entered into agreements with SAMC, and
+Sinopec Beijing Yanshan Petrochemical Co., Ltd. ("SBJYSP"), and its subsidiary, Sinopec Yizheng Chemical Fibre Company Limited entered into an
+agreement with SAMC. According to the relevant agreements, the Group proposed to acquire non equity assets such as thermal power, water and
+other business, PBT resin and other business of Yizheng Branch held by SAMC, and thermal power and other businesses held by SBJYSP.
+The consideration of the transaction amount to RMB6,124 million.
+As the Company, SAMC, BJOPI, BHP and SBJYSP are all under the control of Sinopec Group Company, the transaction described above has been
+accounted as business combination under common control. Accordingly, the equity and assets acquired from Sinopec Group Company 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 Sinopec Group Company on a combined basis.
+Financial Statements (International)
+195
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+274,657
+239,688
+179,108
+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
+2021
+70,262
+RMB million
+43,713
+2,163
+1,135
+42,438
+1,563
+1,343
+(6,435)
+(1,490)
+(81)
+40,495
+(141)
+43,713
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+2020
+RMB million
+76,458
+59,023
+93,764
+Profit attributable to non-controlling interests
+9,793
+51,619
+5,700
+215,640
+161,908
+33 CONTRACT LIABILITIES
+As at 31 December 2021 and 2020, 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.
+34 OTHER PAYABLES
+Salaries and welfare payable
+Interest payable
+Payables for constructions
+Other payables
+Taxes other than income tax
+31 December
+2021
+RMB million
+14,048
+31 December
+2020
+RMB million
+7,129
+822
+667
+54,596
+42,027
+193
+205,594
+Financial Statements (International)
+for the year ended 31 December 2021
+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.
+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 2021, the debt-to-capital ratio and
+the liability-to-asset ratio of the Group were 10.6% (2020: 10.1%) and 51.6% (2020: 49.0%), 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.
+194
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+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.
+37 COMMITMENTS AND CONTINGENT LIABILITIES
+At 31 December 2021 and 2020, capital commitments of the Group are as follows:
+31 December
+2021
+RMB million
+Authorised and contracted for (i)
+Authorised but not contracted for
+184,430
+90,227
+31 December
+2020
+RMB million
+171,597
+33,997
+Capital commitments
+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 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.
+36 SHARE CAPITAL
+Registered, issued and fully paid
+95,557,771,046 listed A shares (2020: 95,557,771,046) of RMB1.00 each
+25,513,438,600 listed H shares (2020: 25,513,438,600) of RMB1.00 each
+31 December
+2021
+31 December
+2020
+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 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.
+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.
+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.
+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 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.
+Financial Statements (International)
+8,828
+31 LEASE LIABILITIES
+Basic earnings per share (RMB)
+(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 2021 was RMB61,682 million (2020: RMB53,417 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 issued the acceptance bills from Sinopec Group Company and fellow subsidiaries.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+(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.
+39 RELATED PARTY TRANSACTIONS (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 2021.
+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;
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+(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:
+(x)
+30,305
+Interest expense
+Net deposits placed with related parties
+Net funds obtained from/(repaid to) related parties
+(31,144)
+The amounts set out in the table above in respect of the year ended 31 December 2021 and 2020 represent the relevant costs and income as
+determined by the corresponding contracts with the related parties.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+197
+Financial Statements (International)
+198
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+39 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 2021 are: a) purchases by the Group from Sinopec Group
+Company and fellow subsidiaries amounting to RMB173,718 million (2020: RMB149,560 million) comprising purchases of products and services
+(i.e. procurement, transportation and storage, exploration and development services and production related services) of RMB160,048 million
+(2020: RMB133,827 million), ancillary and social services provided by Sinopec Group Company and fellow subsidiaries of RMB1,730 million
+(2020: RMB2,952 million), lease charges for land, buildings and others paid by the Group of RMB10,831 million, RMB565 million and RMB159
+million (2020: RMB11,086 million, RMB565 million and RMB211 million), respectively and interest expenses of RMB385 million (2020: RMB919
+million); and b) sales by the Group to Sinopec Group Company and fellow subsidiaries amounting to RMB54,453 million (2020: RMB69,470
+million), comprising RMB53,671 million (2020: RMB68,683 million) for sales of goods, RMB715 million (2020: RMB704 million) for interest
+income and RMB67 million (2020: RMB83 million) for agency commission income.
+For the year ended 31 December 2021, 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 2021 on lease
+liabilities in respect of amounts due to Sinopec Group Company and fellow subsidiaries, associates and joint ventures was RMB7,863 million
+(2020: RMB8,160 million).
+For the year ended 31 December 2021, the amount of rental the Group paid to Sinopec Group Company and fellow subsidiaries, associates and
+joint ventures for land, buildings and others are RMB10,834 million, RMB572 million and RMB269 million (2020: RMB11,090 million, RMB571
+million and RMB330 million).
+As at 31 December 2021 and 2020, 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.
+(3) where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+919
+(17,585)
+(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 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.
+Other payables
+50,649
+12,759
+Other long-term liabilities
+2,779
+3,010
+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)
+2,873
+5,264
+5,937
+13,690
+158,761
+162,048
+Total
+247,599
+223,588
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+199
+Financial Statements (International)
+25,280
+11,778
+4,677
+Contract liabilities
+22,792
+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.
+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.
+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
+Trade accounts receivable
+Financial assets at fair value through other comprehensive income
+31 December
+2021
+RMB million
+8,655
+186
+RMB million
+16,777
+Prepaid expenses and other current assets
+14,537
+760
+19,422
+Long-term prepayments and other assets
+3,116
+6,435
+Total
+26,494
+43,394
+Trade accounts payable and bills payable
+14,170
+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.
+8,828
+(8,265)
+385
+850,947
+1,031
+(784)
+851,194
+Total equity attributable to shareholders of the Company
+741,494
+4,831
+746,325
+Non-controlling interests
+Total liabilities
+141,364
+141,377
+Summarised consolidated statement of cash flows
+for the year ended 31 December 2020:
+Net cash generated from operating activities
+Net cash used in investing activities
+Net cash used in financing activities
+Net increase in cash and cash equivalents
+167,518
+1,002
+13
+522,995
+(215)
+1,020
+0.273
+0.003
+0.276
+Diluted earnings per share (RMB)
+0.273
+0.003
+0.276
+Summarised consolidated statement of financial position
+as at 31 December 2020:
+Current assets
+455,395
+480
+(215)
+455,660
+Total assets
+1,733,805
+5,875
+(784)
+1,738,896
+Current liabilities
+522,190
+(102,203)
+(viii)
+(447)
+(555)
+228,307
+151,300
+(iii)
+19,443
+8,734
+(iv)
+33,930
+31,444
+(v)
+44,405
+191,888
+31,915
+1,730
+2,952
+(vii)
+194
+160
+(viii)
+715
+704
+(ix)
+(vi)
+(ii)
+297,381
+(i)
+168,520
+(102,650)
+(37,510)
+28,360
+39 RELATED PARTY TRANSACTIONS
+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
+Ancillary and social services
+Agency commission income
+Interest income
+Note
+2021
+RMB million
+2020
+RMB million
+(36,955)
+28,360
+146,415
+Balance at
+RMB million
+2020
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2,546
+1,142
+31 December
+(122)
+144
+(1)
+2,411
+1,286
+(268)
+(42)
+(2,316)
+(4)
+(2,630)
+4,146
+(12)
+(2,244)
+from
+reserve
+income
+other comprehensive income
+Intangible assets
+Others
+Net deferred tax assets/(liabilities)
+Receivables and inventories
+Payables
+Cash flow hedges
+Property, plant and equipment
+Tax losses carried forward
+Others
+Financial assets at fair value through
+Intangible assets
+Others
+Net deferred tax assets/(liabilities)
+Balance at
+1 January
+2020
+Recognised in
+consolidated
+income
+statement
+Recognised
+in other
+comprehensive
+Transferred
+Balance at
+other comprehensive income
+127
+349
+2,378
+Recognised
+in other
+Transferred
+Balance at
+1 January
+2021
+income comprehensive
+statement
+RMB million
+RMB million
+Recognised in
+consolidated
+2,411
+income
+RMB million
+(26)
+Others
+RMB million
+from 31 December
+reserve
+RMB million
+2021
+RMB million
+3,763
+1,286
+1,572
+2,858
+1,378
+16,930
+(4)
+519
+3,594
+9,960
+(84)
+(148)
+13,322
+124
+(4)
+87
+19
+(564)
+10,807
+162
+702
+(4)
+116
+246
+352
+24
+73
+(305)
+7,873
+(2,265)
+Financial assets at fair value through
+Tax losses carried forward
+Property, plant and equipment
+Cash flow hedges
+2021
+RMB million
+31 December
+2020
+RMB million
+31 December
+2021
+RMB million
+Deferred tax liabilities
+31 December
+2020
+RMB million
+Receivables and inventories
+31 December
+3,763
+Payables
+2,858
+1,286
+Cash flow hedges
+258
+1,790
+(2,709)
+Property, plant and equipment
+16,777
+2,411
+Deferred tax assets
+58,709
+131
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+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:
+31 December
+2021
+RMB million
+35,918
+9,267
+19,137
+5,109
+69,431
+138,741
+2020
+RMB million
+35,096
+4,857
+18,625
+15,793
+(2,630)
+(15,037)
+Tax losses carried forward
+11,207
+11,207
+31 December
+2020
+RMB million
+10,915
+10,915
+Deferred tax assets
+Deferred tax liabilities
+31 December
+2021
+RMB million
+19,389
+7,910
+31 December
+2020
+RMB million
+31 December
+2021
+RMB million
+25,054
+8,124
+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.
+190
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+29 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+Movements in the deferred tax assets and liabilities are as follows:
+Receivables and inventories
+Payables
+As at 31 December 2021, certain subsidiaries of the Company did not recognise deferred tax of deductible loss carried forward of RMB18,342
+million (2020: RMB17,718 million), of which RMB5,564 million (2020: RMB4,349 million) was incurred for the year ended 31 December 2021,
+because it was not probable that the future taxable profits will be available. These deductible losses carried forward of RMB4,135 million, RMB2,308
+million, RMB1,986 million, RMB4,349 million and RMB5,564 million will expire in 2022, 2023, 2024, 2025, 2026 and after, respectively.
+Deferred tax assets and liabilities after the consolidated elimination adjustments are as follows:
+Deferred tax liabilities.
+Deferred tax assets
+4,749
+13,322
+Financial assets at fair value through other comprehensive income
+Intangible assets
+127
+127
+(9)
+(11)
+1,008
+869
+(492)
+(517)
+Others
+1,056
+371
+Deferred tax assets/(liabilities)
+30,596
+35,969
+(870)
+(19,117)
+(676)
+(19,039)
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+(4,420)
+(13,415)
+(203)
+31 December
+5,881
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+RMB denominated
+USD denominated
+Less: Current portion
+49,649
+38,356
+88,593
+76,674
+(10,293)
+Less: Current portion
+(4,637)
+72,037
+12,988
+11,013
+Interest rates ranging from 1.08% to
+5.23% per annum at 31 December 2021
+with maturities through 2037
+Interest rates at 1.65% per annum at 31 December 2021
+with maturities in 2027
+1,168
+1,387
+78,300
+Total third parties' long-term debts
+4.25% per annum at 31 December 2021
+with maturities through 2043
+11,379
+per annum at 31 December 2021
+with maturities through 2039
+Interest rates at 1.55% per annum
+Corporate bonds (i)
+RMB denominated
+USD denominated
+at 31 December 2021 with maturities
+through 2038
+31 December
+2021
+RMB million
+38,880
+31 December
+2020
+RMB million
+38,226
+64
+92
+38,944
+38,318
+Fixed interest rates ranging from 2.20% to
+38,522
+26,977
+4.90% per annum at 31 December 2021
+with maturities through 2026
+Fixed interest rates ranging from 3.13% to
+11,127
+(466)
+Interest rates ranging from 1.08% to 4.00%
+(622)
+11,778
+Trade accounts payable and bills payable measured at amortised cost
+The ageing analysis of trade accounts payable and bills payable is as follows:
+31 December
+2021
+RMB million
+193,547
+31 December
+2020
+RMB million
+132,256
+11,512
+Bills payable
+4,227
+151,514
+10,394
+161,908
+203,919
+11,721
+215,640
+31 December
+2021
+RMB million
+31 December
+2020
+Within 1 month or on demand
+Between 1 month and 6 months
+Over 6 months
+(5,499)
+6,145
+Amounts due to associates and joint ventures
+Amounts due to Sinopec Group Company and fellow subsidiaries
+Amounts due to third parties
+91,990
+83,815
+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.
+Notes:
+(i) The Company issued corporate bonds with a maturity of five years on 26 July 2021 at par value of RMB100. The total issued amount of the corporate bonds is RMB5
+billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 3.20% per annum and the interest is paid once a year.
+The Company issued corporate bonds with a maturity of three years on 5 August 2021 at par value of RMB100. The total issued amount of the corporate bonds is
+RMB2 billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 2.95% per annum and the interest is paid once a year.
+The Company issued corporate bonds with a maturity of two years on 6 August 2021 at par value of RMB100. The total issued amount of the corporate bonds is
+RMB2 billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 2.80% per annum and the interest is paid once a year.
+The Company issued corporate bonds with a maturity of three years on 27 December 2021 at par value of RMB100. The total issued amount of the corporate bonds is
+RMB2.55 billion. The corporate bonds adopt a simple interest rate on an annual basis with a fixed rate at 2.50% per annum and the interest is paid once a year.
+These corporate bonds are carried at amortised cost.
+Lease liabilities
+Current
+Non-current
+192
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+15,173
+170,233
+15,293
+171,740
+185,406
+187,033
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+32 TRADE ACCOUNTS PAYABLE AND BILLS PAYABLE
+13,690
+USD denominated
+7,746
+Third parties' debts
+Long-term bank loans
+5,881
+11,479
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES
+Short-term debts represent:
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+Third parties' debts
+Short-term bank loans
+RMB denominated
+430
+Short-term other loans
+Current portion of long-term bank loans
+RMB denominated
+USD denominated
+Current portion of long-term corporate bonds
+RMB denominated
+Corporate bonds
+RMB denominated
+Loans from Sinopec Group Company and fellow subsidiaries
+Short-term loans
+RMB denominated
+RMB denominated
+(5,504)
+4
+(2,451)
+RMB denominated
+2,378
+(1,004)
+41
+325
+13,322
+(8,554)
+(19)
+186
+4,749
+2
+118
+352
+63
+101
+516
+(305)
+16,930
+490
+(6,258)
+(3)
+116
+USD denominated
+1,740
+European Dollar ("EUR") denominated
+153
+172
+Current portion of long-term loans
+RMB denominated
+466
+622
+466
+622
+2,873
+31
+5,264
+29,033
+The Group's weighted average interest rates on short-term loans were 2.72% (2020: 2.53%) per annum at 31 December 2021. The above
+borrowings are unsecured.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021 191
+Financial Statements (International)
+Interest rate and final maturity
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+Hong Kong Dollar ("HKD") denominated
+38,125
+3,298
+Financial Statements (International)
+1,141
+24,959
+934
+24,959
+16,111
+16,111
+3
+3
+3,293
+4,637
+3,281
+4,613
+12
+Long-term debts represent:
+24
+4,642
+2,407
+35,252
+3,018
+23,769
+7,000
+7,000
+3,018
+1,320
+RMB7,193
+Sinopec Shanghai Petrochemical Company
+Limited ("Shanghai Petrochemical")
+Sinopec-SK (Wuhan) Petrochemical Company
+Limited ("Sinopec-SK")
+Gaoqiao Petrochemical Company Limited
+RMB10,000
+Sinopec Baling Petrochemical Co.Ltd.
+RMB3,000
+("Baling Petrochemical")
+Crude oil processing and petroleum products
+manufacturing
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical") (i)
+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
+("Sinopec Kantons")
+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:
+(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.
+RMB10,824
+Marketing and distribution of petrochemical
+32.41
+Sinopec Kantons Holdings Limited
+products
+60.33
+Manufacturing of intermediate petrochemical
+products and petroleum products
+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 Company
+HKD248
+RMB28,403
+Marketing and distribution of refined
+petroleum products
+Shanghai SECCO
+RMB500
+67.59
+Trading of petrochemical products
+Production and sale of petrochemical
+products
+70.42
+29.58
+Summarised consolidated statement of financial position
+59.00
+At
+50,208
+At
+Fujian Petrochemical
+At
+At
+Sinopec Kantons
+At
+At
+Shanghai SECCO
+At
+At
+Sinopec-SK
+At
+At
+2020
+Current assets
+Current liabilities
+159,599
+(193,315)
+RMB million
+22,620
+Production and sale of catalyst products
+RMB million RMB million RMB million
+20,932
+17,305
+SIPL*
+At
+39.67
+At
+Marketing Company
+41.00
+55.00
+45.00
+55.00
+45.00
+50.44
+49.56
+RMB10,492
+50.00
+50.00
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+205
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+42 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.
+At
+products and petroleum products
+100.00
+products
+(million)
+RMB22,761
+%
+100.00
+Sinopec Yangzi Petrochemical Company Limited
+RMB15,651
+100.00
+Sinopec Overseas Investment Holding
+USD3,009
+Interests
+held by
+non-controlling
+100.00
+Sinopec International Petroleum Exploration and
+RMB8,250
+100.00
+Production Limited ("SIPL")
+Sinopec Yizheng Chemical Fibre Limited
+RMB4,000
+100.00
+Liability Company
+Limited ("SOIH")
+Interests
+held by the
+Company
+issued capital
+Particulars of
+2,166,040
+278,024
+RMB million
+1,464
+296,820
+2,740,884
+1,720,695
+215,846
+168,183
+2,104,724
+31 December
+2021
+RMB million
+1,268,814
+40,551
+1,309,365
+31 December
+2020
+RMB million
+1,216,267
+36,782
+1,253,049
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+42 PRINCIPAL SUBSIDIARIES
+As at 31 December 2021, 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
+Sinopec Lubricant Company Limited
+Manufacturing of intermediate petrochemical
+RMB3,374
+RMB5,000
+ZhongKe (Guangdong) Refinery & Petrochemical
+RMB6,397
+90.30
+9.70
+Company Limited
+Sinopec Qingdao Refining and Chemical Company
+RMB5,000
+85.00
+Liability Company
+15.00
+interests
+%
+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
+Limited
+1.02
+98.98
+RMB5,294
+100.00
+Chemical Company Limited
+Sinopec Qingdao Petrochemical Company Limited
+RMB1,595
+100.00
+Sinopec Catalyst Company Limited
+RMB1,500
+100.00
+China Petrochemical International Company Limited
+RMB1,400
+100.00
+Sinopec Chemical Sales Company Limited
+RMB1,000
+100.00
+Sinopec Hainan Refining and Chemical
+RMB9,606
+100.00
+Company Limited
+Sinopec Beihai Refining and Chemical Limited
+China International United Petroleum and
+(475)
+12,826
+(15,232)
+7,579
+7,454
+7.175
+12,352
+6.966
+6,455
+Attributable to
+non-controlling interests
+6,499
+75,560
+6,119
+6,950
+15,123
+14,608
+6,915
+6,500
+5,011
+4,931
+75,486
+6.915
+14,727
+15,254
+233,117
+234,691
+12,460
+30,377
+29,335
+13,830
+12,999
+12,590
+12,385
+10,616
+18.272
+11,807
+10,940
+Attributable to owners
+of the Company
+157,557
+159,205
+6,341
+5,876
+3,441
+Net assets
+5,920
+4,485
+2020
+RMB million
+RMB million RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Revenue
+2021
+1,408,523 1,099,680
+2,017
+89,198
+74,624
+5,549
+4,871
+528
+1,064
+2020
+2,166
+2020
+2021
+2020
+Summarised consolidated statement of comprehensive income
+Year ended 31 December
+Marketing Company
+2021
+SIPL*
+Shanghai Petrochemical
+Fujian Petrochemical
+2020
+2021
+2020
+2021
+2020
+RMB million RMB million RMB million
+RMB million
+RMB million RMB million
+2021
+RMB million
+2020
+Sinopec Kantons
+2021
+Shanghai SECCO
+Sinopec-SK
+4,841
+13,678
+13,138
+10,624
+(458)
+(196)
+(924)
+(5,434)
+(2,783)
+(8,122)
+(6,377)
+Net current
+3,639
+(liabilities)/assets
+22,145
+5,136
+2,073
+1,322
+1.124
+4,565
+3,449
+632
+(33,716) (29,326) 21,329
+6,791
+10,431
+6,066
+(142)
+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
+2021
+2020
+2021
+2021
+2020
+2021
+RMB million RMB million RMB million
+172,352 22,759
+(201,678) (1,430)
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+1,582
+4,761
+4,373
+7,648
+(1,331)
+(2,738)
+Non-current assets
+(170)
+(170)
+(1,418)
+(1,553)
+(7,512)
+(8,509)
+Net non-current
+assets/(liabilities)
+266,833
+264,017
+(8,869)
+(9,319)
+25,241
+27,262
+12,508
+11,875
+8,025
+8,936
+9,984
+(693)
+(15,796)
+(700)
+(747)
+326,437
+323,571
+8,954
+8,951
+25,988
+27,314
+13,208
+12,568
+8,195
+9,106
+11,402
+12,177
+20,650
+22,187
+Non-current liabilities
+(59,604)
+(59,554)
+(17,823)
+(18,270)
+(52)
+2021
+RMB million
+28,702
+204
+(2,109,426)
+(1,371,215)
+2,679,500
+2,048,654
+6,674
+5,718
+5,161
+4,633
+888,227
+36,864
+10,487
+8,758
+2,198
+2,056
+61,384
+2,740,884
+56,070
+2,104,724
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+34,905
+1,295,503
+430,073
+732,356
+167,948
+113,214
+1,212,455
+826,219
+1,380,403
+939,433
+1,367,605
+1,062,447
+7,075
+1,374,680
+4,854
+1,067,301
+424,774
+322,169
+70,242
+40,702
+495,016
+362,871
+563,147
+458,154
+for the year ended 31 December 2021
+162,037
+41 SEGMENT REPORTING (Continued)
+2021
+4,417
+94,628
+13,669
+Share of /(loss) from associates and joint ventures
+– Exploration and production
+2,783
+2,117
+- Refining
+(4,421)
+- Marketing and distribution
+- Corporate and others
+662
+(2,516)
+3,731
+2,200
+11,323
+1,723
+4,754
+- Chemicals
+Total seperating profit
+- Elimination
+(393)
+RMB million
+2020
+RMB million
+Result
+Operating profit/(loss)
+By segment
+- Exploration and production
+- Refining
+- Marketing and distribution
+- Chemicals
+4,685
+(16,476)
+65,279
+(5,525)
+21,204
+20,828
+11,106
+10,818
+- Corporate and others
+(3,225)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+243,324
+57,513
+87,298
+• rendering and receiving services;
+• lease of assets;
+• depositing and borrowing money; and
+⋅
+uses of public utilities.
+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.
+40 EMPLOYEE BENEFITS PLAN
+sales and purchases of goods and ancillary materials;
+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 2021 were RMB11,932 million (2020:
+RMB8,983 million).
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+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.
+200
+•
+Apart from transactions with Sinopec Group Company and fellow subsidiaries, the Group has transactions with other state-controlled entities,
+include but not limited to the followings:
+The Group is a state-controlled energy and chemical enterprise and operates in an economic regime currently dominated by entities directly
+or indirectly controlled by the PRC government through its government authorities, agencies, affiliations and other organisations (collectively
+referred as "state-controlled entities").
+29,723
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+39 RELATED PARTY TRANSACTIONS (Continued)
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+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 2021, and as at and for the year ended 31 December 2020, 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.
+(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
+2021
+RMB'000
+2020
+4,612
+379
+4,991
+RMB'000
+5,753
+342
+6,095
+(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 2021 and 2020, the accrual for the contribution to
+post-employment benefit plans was not material.
+(d) Transactions with other state-controlled entities in the PRC
+(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.
+Inter-segment sales
+Corporate and others
+External sales
+Inter-segment sales
+Elimination of Inter-segment sales
+Revenue from primary business
+Other operating revenues
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Other operating revenues
+Revenue
+202
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+2021
+RMB million
+2020
+RMB million
+156,026
+104,524
+External sales
+3,188
+Chemicals
+External sales
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2021
+201
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+41 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 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:
+Revenue from primary business
+Exploration and production
+External sales
+Inter-segment sales
+Refining
+External sales
+Inter-segment sales
+Marketing and distribution
+Inter-segment sales
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Aggregate
+23,253
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Depreciation, depletion and amortisation
+Exploration and production
+Refining
+Capital expenditure
+Marketing and distribution
+Corporate and others
+Impairment losses on long-lived assets
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+(2) Geographical information
+Chemicals
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+41 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2021
+78,300
+72,037
+Loans from Sinopec Group Company and fellow subsidiaries
+16,563
+17,042
+Deferred tax liabilities
+7,910
+8,124
+Other unallocated liabilities
+Total liabilities
+20,467
+974,181
+19,919
+851,194
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2021
+203
+Financial Statements (International)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2021
+Long-term debts
+RMB million
+68,148
+2,467
+8,495
+860
+1,923
+1,211
+536
+5,332
+3,675
+107,461
+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
+Non-current assets
+Mainland China
+Others
+14,629
+115,680
+3,072
+2,893
+56,416
+22,469
+24,756
+21,897
+25,403
+51,648
+28,217
+3,786
+2,312
+167,948
+137,104
+52,880
+46,273
+20,743
+20,090
+23,071
+23,196
+16,093
+14,830
+2020
+RMB million
+6,586
+4,809
+Income tax payable
+(9,510)
+48,615
+RMB million
+31 December
+2020
+RMB million
+- Chemicals
+Assets
+Segment assets
+- Exploration and production
+31 December
+2021
+- Refining
+Corporate and others
+371,100
+354,024
+304,785
+270,766
+377,499
+373,430
+222,803
+- Marketing and distribution
+(9,010)
+109,169
+37,744
+298
+6,712
+- Refining
+Investment income
+- Exploration and production
+- Marketing and distribution
+- Chemicals
+- Corporate and others.
+Aggregate investment income
+Net finance costs
+Profit before taxation
+55
+13,118
+(10)
+14,941
+3
+8,980
+(54)
+(61)
+304
+766
+190,789
+133,961
+118,458
+Total segment assets
+- Marketing and distribution
+- Chemicals
+- Corporate and others.
+166,486
+163,588
+146,763
+136,980
+228,826
+234,309
+69,977
+49,625
+198,828
+119,215
+Total segment liabilities
+810,880
+703,717
+Short-term debts
+35,252
+23,769
+- Refining
+share of profits from associates and joint ventures
+Exploration and production
+Liabilities
+1,410,148
+1,307,467
+Interest in associates and joint ventures
+209,179
+188,342
+Financial assets at fair value through other comprehensive income
+767
+1,525
+Deferred tax assets
+19,389
+25,054
+Cash and cash equivalents, time deposits with financial institutions
+Other unallocated assets
+221,989
+188,057
+27,783
+28,451
+1,889,255
+1,738,896
+Total assets
+Segment liabilities
+21,626
+Shanghai Petrochemical
+At
+Impairment provision on
+provision matrix basis
+(2)
+(8)
+(93)
+(117)
+(1)
+(2)
+at 31 December
+8,999
+8,642
+7,068
+7,699
+5,112
+6,916
+54
+68
+3,432
+3,182
+2,333
+5,181
+4,100
+1,066
+(439)
+*
+(164)
+95
+(2,847)
+(4,095)
+3,034
+(527)
+Cash and cash equivalents
+at 1 January
+8,642
+6,901
+7.699
+8,833
+6,916
+7,450
+88
+68
+79
+3,182
+117
+5,181
+9,278
+1,066
+1,593
+Effect of foreign currency
+exchange rate changes
+Cash and cash equivalents
+14
+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.
+206
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+for the year ended 31 December 2021
+43 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, 2021 and 2020.
+Impairment provision on
+individual basis
+Impairment provision on
+provision matrix basis
+Gross
+carrying
+amount
+31 December 2021
+RMB million
+Carrying
+amount
+RMB million
+Impairment
+provision on
+individual
+basis
+Weighted-
+average
+loss rate
+Impairment
+provision
+Loss
+allowance
+RMB million
+%
+RMB million
+RMB million
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+207
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES
+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.
+3,182
+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.
+(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 2021, 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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Credit risk
+Current and within 1 year past due
+343
+(14)
+Marketing Company
+2021
+SIPL*
+Shanghai Petrochemical
+2020
+2021
+2020
+2020
+Fujian Petrochemical
+2021
+2020
+RMB million RMB million RMB million RMB million
+2021
+RMB million RMB million RMB million RMB million RMB million RMB million
+Sinopec-SK
+2021
+2021
+2020
+RMB million RMB million RMB million RMB million
+Sinopec Kantons
+2021
+2020
+Shanghai SECCO
+2020
+Net cash generated from/
+(used in) operating
+activities
+28,923
+54.139
+690
+Year ended 31 December
+281
+Summarised statement of cash flows
+1,028
+controlling interests
+7,064
+2,766
+98
+316
+541
+69
+649
+14
+64
+15
+121
+268
+707
+2,390
+691
+659
+64
+150
+164
+175
+767
+3,950
+1,680
+(292)
+(31,081)
+(12,402)
+(1,172)
+1,683
+(3,393)
+1,682
+(142)
+882 (1,066)
+(1,250)
+(7,828)
+(2,879)
+(653)
+2.176
+Net increase/(decrease) in
+cash and cash equivalents
+262
+1,727
+(467)
+(695)
+(1,802)
+(526)
+from financing activities
+Net cash (used in)/generated
+(2,340)
+(1,789)
+(244)
+133
+586
+3,447
+3.119
+5,476
+(363)
+Net cash generated from/
+(used in) investing
+activities
+(11)
+2,420
+15
+(2,659)
+(2,359)
+(3,888)
+420
+20
+(649) 1,276
+3,846
+1,534
+(4,335)
+(40,010)
+1 to 2 years past due
+34,263
+623
+4,280
+500
+215,640
+Other payables
+131,468
+131,468
+131,468
+665,852
+786,862
+407,378
+62,025
+73,641
+243,818
+Total
+31 December 2020
+Carrying
+amount
+contractual
+undiscounted
+Within
+More than 1
+RMB million
+cash flow
+RMB million
+Short-term debts
+215,640
+23,769
+215,640
+3,223
+78,300
+85,718
+2,169
+49,390
+27,518
+6,641
+Loans from Sinopec Group Company and
+fellow subsidiaries
+16,563
+18,457
+3,174
+604
+Lease liabilities
+185,406
+296,485
+15,833
+12,031
+10,712
+35,411
+3,967
+233,210
+Derivative financial liabilities
+3,223
+3,223
+Trade accounts payable and bills payable
+25,280
+Long-term debts
+72,037
+4,826
+4,826
+4,826
+Trade accounts payable and bills payable
+161,908
+161,908
+161,908
+Other payables
+94,083
+560,698
+94,083
+94,083
+713,138
+308,905
+28,138
+114,036
+262,059
+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 2021
+209
+Financial Statements (International)
+Derivative financial liabilities
+253,575
+1,428
+10,109
+43,513
+80,562
+1 year or
+on demand
+RMB million
+25,280
+1,339
+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
+11,753
+60,414
+Long-term debts
+7,056
+and fellow subsidiaries
+17,042
+17,978
+5,512
+929
+Lease liabilities
+187,033
+328,501
+15,957
+15,456
+Loans from Sinopec Group Company
+35,871
+35,871
+35,252
+Impairment provision on
+individual basis
+Gross
+carrying
+amount
+31 December 2020
+RMB million
+Carrying
+amount
+RMB million
+Impairment
+provision on
+individual
+basis
+Weighted.
+average
+loss rate
+Impairment
+provision
+Loss
+allowance
+RMB million
+%
+RMB million
+RMB million
+Current and within 1 year past due
+1 to 2 years past due
+2 to 3 years past due
+4,033
+534
+3,499
+579
+26
+0.2%
+57
+83
+137
+35.8%
+44
+181
+2 to 3 years past due
+3,411
+Over 3 years past due
+3,324
+50.6%
+44
+3,190
+Over 3 years past due
+Total
+597
+38,894
+208
+8,312
+190
+100.0%
+389
+3,146
+Dividends paid to non-
+Total
+4,062
+debts.
+208
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Liquidity risk (Continued)
+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 2021
+Total
+Carrying
+amount
+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
+Short-term debts
+As at 31 December 2021, the Group has standby credit facilities with several PRC financial institutions which provide borrowings up to RMB441,559
+million (2020: RMB443,966 million) on an unsecured basis, at a weighted average interest rate of 2.81% per annum (2020: 2.85%). As at 31
+December 2021, the Group's outstanding borrowings under these facilities were RMB11,700 million (2020: RMB4,041 million) and were included in
+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
+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.
+149
+610
+39,299
+5,023
+117
+3,637
+3,024
+0.0%
+25.2%
+117
+27
+18
+34,478
+218
+8,905
+54.9%
+88.0%
+3,341
+107
+67
+345
+519
+3,131
+85
+527
+3,860
+182
+10
+(377)
+476
+1,045
+21,149
+18,439
+income
+Total comprehensive
+(920)
+1,606
+2,132
+2,047
+(720)
+871
+951
+656
+2,077
+1,160
+1,429
+22,415
+18,582
+Profit/(loss) for the year
+16
+243
+2,218
+2,817
+645
+45
+1,101
+(287)
+579
+7,205
+6,822
+controlling interests
+Comprehensive income
+(920)
+1,606
+attributable to non-
+325
+2,817
+1,814
+677
+40
+243
+23
+2,132
+951
+90,423
+92,280
+55,850
+56,765
+734,894
+725,025
+3,944
+121,838
+1,857
+102
+117,000
+117,000
+117,000
+117,000
+8,881
+3,912
+12
+(182)
+49,311
+4,911
+92,280
+9,015
+for the year ended 31 December 2021
+104,426
+46 STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY (Continued)
+(a) RESERVES MOVEMENT OF THE COMPANY
+469
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+214
+521,383
+525,462
+400,312
+404,391
+(a)
+121,071
+121,071
+521,383
+525,462
+203,642
+209,432
+4,472
+3,955
+36,089
+35,271
+105,691
+8,079
+240
+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:
+8,881
+Note
+31 December
+2021
+RMB million
+916,041
+31 December
+2020
+RMB million
+Shareholders' equity under CASS
+Adjustments:
+888,720
+Government grants
+(i)
+(967)
+Total equity under IFRS*
+915,074
+(1,018)
+887,702
+Effects of major differences between the net profit under CASS and the profit for the year under IFRS are analysed as follows:
+Note
+2021
+Net profit under CASS
+RMB million
+85,030
+2020
+RMB million
+42,097
+Adjustments:
+Government grants
+Safety production fund
+Others
+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:
+9,464
+(ii) SAFETY PRODUCTION FUND
+(i) GOVERNMENT GRANTS
+116,919
+131,674
+39,950
+18,821
+(35,110)
+(31,479)
+(3,944)
+(1,857)
+(469)
+204
+(240)
+117,550
+404,391
+116,919
+400,312
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+215
+Financial Statements (International)
+216
+Differences between Consolidated Financial Statements
+Prepared in Accordance with the Accounting Policies
+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)
+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:
+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.
+55,850
+Cash flow hedges, net of deferred tax
+55,850
+4,913
+8,812
+(2,246)
+Production costs excluding taxes
+Exploration expenses
+8,812
+8,812
+Sales
+Revenues
+Equity method investments
+243
+(3,930)
+(3,687)
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Market risk
+Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates. The objective of market risk management is
+to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
+(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 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.
+(b) Interest rate risk
+8,812
+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.
+4,913
+(998)
+1,642
+1,642
+(1,930)
+(1,930)
+(4,391)
+(4,391)
+(940)
+(940)
+(533)
+(533)
+Total of the Group's and its equity method investments'
+results of operations for producing activities
+1,287
+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
+(998)
+4,913
+4,913
+(2,246)
+As at 31 December 2021, 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 RMB254 million (2020: decrease/increase
+by approximately RMB245 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 2020.
+(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.
+Share of other comprehensive income of associates and joint ventures, net of deferred tax
+(i)
+(ii)
+Special reserve
+Balance at 31 December
+Retained earnings
+Balance at 1 January
+Profit for the year
+Distribution to owners (Note 14)
+Appropriation
+Special reserve
+Others
+Balance at 31 December
+The Company
+2021
+RMB million
+2020
+RMB million
+9,382
+9,247
+(1,079)
+135
+8,303
+9,382
+Balance at 1 January
+Other reserves
+Balance at 31 December
+Balance at 1 January
+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 2021, 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 2021, the fair value of such derivative hedging financial instruments is
+derivative financial assets of RMB18,359 million (2020: RMB12,353 million) and derivative financial liabilities of RMB3,214 million (2020:
+RMB4,808 million).
+As at 31 December 2021, 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 RMB2,996 million (2020: increase/decrease RMB3,592 million), and decrease/increase the Group's other
+reserves by approximately RMB1,160 million (2020: increase/decrease RMB10,379 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 2020.
+210
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Fair values
+(i) Financial instruments carried at fair value
+55,850
+Capital reserve
+Others
+Balance at 31 December
+Share premium
+Balance at 1 January
+Balance at 31 December
+Statutory surplus reserve
+Balance at 1 January
+Appropriation
+Balance at 31 December
+Discretionary surplus reserve
+Balance at 1 January
+51
+China
+775
+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
+The Group
+Revenues
+Sales
+Total
+China
+2021
+RMB million
+Other
+countries
+2020
+RMB million
+Total
+China
+Other
+countries
+72,953
+72,953
+52,354
+52,354
+Transfers
+86,650
+84,484
+2,166
+58,069
+Financial Statements
+56,052
+218
+Supplemental Information on Oil and
+67,352
+557
+54,993
+54,388
+605
+Equity method investments
+Share of costs of exploration and development of
+associates and joint ventures
+442
+442
+100
+100
+Total of the Group's and its equity method investments'
+exploration and development costs
+68,351
+67,352
+999
+55,093
+54,388
+705
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+217
+Financial Statements
+Gas Producing Activities (Unaudited)
+67,909
+2,017
+157,437
+(11,249)
+(11,249)
+(7,379)
+(7,379)
+Profit before taxation
+32,219
+31,488
+731
+(3,875)
+(3,930)
+55
+Income tax expense
+(8,225)
+(7,872)
+(353)
+188
+188
+Results of operation from producing activities
+23,994
+23,616
+1,045
+Taxes other than income tax
+159,603
+(854)
+(52,608)
+2,166
+110,423
+108,406
+2,017
+Production costs excluding taxes
+(49,649)
+(48,674)
+(975)
+(44,595)
+(43,487)
+(1,108)
+Exploration expenses
+(12,382)
+(12,382)
+(9,716)
+(9,716)
+Depreciation, depletion, amortisation and
+impairment losses
+(54,104)
+(53,644)
+(460)
+(51,754)
+Total costs incurred
+605
+37,636
+752,352
+40,693
+Supporting equipments and facilities
+188,766
+188,742
+24
+Uncompleted wells, equipments and facilities
+43,349
+43,236
+113
+757,592
+184,638
+37,445
+716,683
+184,621
+40,909
+17
+37,439
+6
+Total capitalised costs
+1,025,160
+984,330
+40,830
+979,675
+793,045
+938,743
+and facilities
+The Group
+237
+Profit for the year under IFRS*
+(5)
+85,851
+(115)
+42,271
+*
+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 2020 and 2021 which have been audited by PricewaterhouseCoopers and KPMG, respectively.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+378
+(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
+2021 and 2020, 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 I: Capitalised costs related to oil and gas producing activities
+2021
+RMB million
+2020
+RMB million
+Other
+Total
+China
+countries
+Total
+Other
+countries
+Property cost, wells and related equipments
+40,932
+Accumulated depreciation, depletion, amortisation
+and impairment losses
+2021
+2020
+RMB million
+RMB million
+Total
+China
+Other
+countries
+Total
+China
+Other
+countries
+The Group
+Exploration
+21,762
+21,762
+16,752
+16,752
+Development
+46,147
+45,590
+557
+38,241
+Table II: Costs incurred in oil and gas exploration and development
+7,409
+235,914
+243,323
+(787,623)
+(748,705)
+Net capitalised costs
+237,537
+235,625
+(38,918)
+1,912
+(742,195)
+237,480
+(702,829)
+(39,366)
+235,914
+52
+1,566
+Share of net capitalised costs of associates and
+joint ventures
+3,521
+3,521
+5,843
+5,843
+Total of the Group's and its equity method investments'
+net capitalised costs
+241,058
+235,625
+5,433
+Equity method investments
+1,045
+96,224
+(355)
+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:
+•
+•
+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 2021
+Assets
+Derivative financial assets:
+- Derivative financial assets
+Financial assets at fair value through other comprehensive income:
+- Equity instruments
+- Trade accounts receivable and bills receivable
+Liabilities
+Derivative financial liabilities:
+- Derivative financial liabilities
+At 31 December 2020
+Assets
+Level 1
+Level 2
+6,734
+Level 3
+6,734
+6,026
+692
+Extensions and discoveries
+678
+678
+1,171
+1,171
+Production
+(1,108)
+(1,108)
+(1,069)
+(1,069)
+End of year
+8,449
+8,449
+8,181
+8,181
+Proved developed reserves
+Beginning of year
+6,357
+6,357
+6,026
+End of year
+692
+RMB million
+RMB million
+- Derivative financial assets
+9,628
+2,900
+12,528
+Financial assets at fair value through other comprehensive income:
+Equity instruments
+149
+1,376
+1,525
+(355)
+8,735
+8,735
+9,778
+2,900
+10,111
+22,789
+Liabilities
+Derivative financial liabilities:
+- Derivative financial liabilities
+2,471
+2,471
+2,355
+2,355
+Derivative financial assets:
+RMB million
+1
+- Equity investments, listed and at quoted market price
+Total
+RMB million
+5,883
+12,488
+18,371
+179
+588
+5,939
+6,062
+12,488
+6,527
+767
+5,939
+25,077
+804
+2,419
+804
+2,419
+3,223
+3,223
+Level 1
+RMB million
+Level 2
+RMB million
+Level 3
+RMB million
+Total
+RMB million
+Financial assets at fair value through profit or loss:
+1
+4,826
+666
+Improved recovery
+10
+Improved recovery
+141
+141
+109
+109
+Extensions and discoveries
+101
+101
+111
+111
+Production
+(248)
+(243)
+(5)
+(257)
+(250)
+(7)
+End of year
+1,440
+1,416
+(171)
+24
+(161)
+185
+2021
+2020
+China
+Other
+countries
+Other
+Total
+China
+countries
+Total
+The Group
+Proved developed and undeveloped reserves (oil)
+(million barrels)
+Beginning of year
+1,252
+1,232
+20
+1,450
+1,433
+17
+Revisions of previous estimates
+194
+9
+666
+1,252
+20
+5
+107
+107
+End of year
+125
+125
+107
+102
+5
+Proved developed and undeveloped reserves (gas)
+(billion cubic feet)
+Beginning of year
+8,181
+8,181
+7,216
+7,216
+Revisions of previous estimates
+32
+32
+171
+171
+102
+1,232
+107
+Proved undeveloped reserves
+Non-controlling interest in proved developed and
+undeveloped reserves at the end of year
+8
+8
+5
+5
+Proved developed reserves
+Beginning of year
+1,145
+1,130
+15
+1,343
+1,326
+17
+End of year
+1,315
+1,291
+24
+1,145
+1,130
+15
+Beginning of year
+4,826
+- Trade accounts receivable and bills receivable
+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.
+867
+3,271
+Lease liabilities
+7,085
+7,190
+Derivative financial liabilities
+1,121
+362
+Trade accounts payable and bills payable
+91,365
+71,840
+Contract liabilities
+Other payables
+Total current liabilities
+Net current liabilities
+Total assets less current liabilities
+Non-current liabilities
+Long-term debts
+Loans from Sinopec Group Company and fellow subsidiaries
+Lease liabilities
+Provisions
+Loans from Sinopec Group Company and fellow subsidiaries
+Other long-term liabilities
+21,571
+Short-term debts
+4,503
+7,776
+Trade accounts receivable
+21,146
+21,763
+Financial assets at fair value through other comprehensive income
+227
+707
+Dividends receivable
+971
+796
+Inventories
+During the years ended 31 December 2021 and 2020, there was no transfer between instruments in Level 1 and Level 2.
+39,034
+Prepaid expenses and other current assets
+73,906
+53,816
+Total current assets
+275,105
+223,080
+Current liabilities
+24,387
+Derivative financial assets
+Total non-current liabilities
+Share capital
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+"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.
+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.
+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 2021 and 2020 are shown in the following table.
+Table IV: Reserve quantities information
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+The results of operations for producing activities for the years ended 31 December 2021 and 2020 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.
+985
+(3,930)
+(2,945)
+1,665
+23,616
+25,281
+742
+742
+1,287
+(303)
+(303)
+Financial Statements
+Equity
+219
+1,824
+Reserves
+Total equity
+7,505
+5,840
+280,560
+234,844
+412,890
+344,918
+137,785
+6,357
+6,357
+Proved undeveloped reserves
+Beginning of year
+1,824
+1,824
+1,190
+1,190
+End of year
+1,715
+1,715
+1,824
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+71,107
+63,661
+Time deposits with financial institutions
+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)
+212
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+76,116
+44 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, 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.
+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 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.
+45 PARENT AND ULTIMATE HOLDING COMPANY
+The directors consider the parent and ultimate holding company of the Group as at 31 December 2021 is Sinopec Group Company, a state-owned
+enterprise established in the PRC. This entity does not produce financial statements available for public use.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+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 2021 and 2020.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+211
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+43 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 0.30% to 4.65% (2020: 0.77% 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 2021 and 2020:
+Carrying amount
+Fair value
+31 December
+2021
+RMB million
+88,593
+85.610
+31 December
+2020
+RMB million
+76,674
+74,282
+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.
+44 ACCOUNTING ESTIMATES AND JUDGEMENTS
+213
+for the year ended 31 December 2021
+Financial Statements (International)
+Deferred tax assets
+Long-term prepayments and other assets
+269,456
+259,087
+73,782
+69,508
+17,609
+14,761
+201
+428
+8,715
+Financial Statements (International)
+38,848
+30,855
+Total non-current assets
+Current assets
+872,679
+846,863
+Cash and cash equivalents
+34,575
+28,081
+Financial assets at fair value through other comprehensive income
+Interest in joint ventures
+12,661
+Investment in subsidiaries
+Interest in associates
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+46 STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY
+STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Amounts in million)
+31 December
+31 December
+2021
+2020
+RMB
+Note
+Non-current assets
+115,992
+RMB
+113,304
+59,880
+Right-of-use assets
+66,146
+Construction in progress
+283,691
+284,618
+Property, plant and equipment, net
+Documents for Inspection
+224
+DOCUMENTS FOR INSPECTION
+The Company's 2021 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 25 March 2022 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 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Corporate Information
+Beijing PRC
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Postcode: 100020
+No.5, Dong San Huan Central Road
+Chaoyang District
+a) The original copies of the 2021 annual report
+signed by Mr. Ma Yongsheng, the Chairman;
+20th Floor, Fortune Financial Centre
+223
+b) The original copies of financial statements
+and consolidated financial statements as of
+31 December 2021 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.;
+22 Chaoyangmen North Street, Chaoyang District,
+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
+Ma Yongsheng
+Chairman
+Beijing, PRC, 25 March 2022
+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
+Beijing, China
+www.sinopec.com
+Printed on environmentally friendly paper
+Haiwen & Partners
+c) The original auditors' reports signed by the
+auditors; and
+People's Republic of China:
+227,207
+Canada Square, Canary Wharf
+220 Annual Report 2021 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
+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.
+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
+2021 and 2020 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 Group
+Future cash flows
+Future production costs
+Future development costs
+Future income tax expenses
+Undiscounted future net cash flows
+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
+Equity method investments
+Future cash flows
+Future production costs
+Future development costs
+Future income tax expenses
+Undiscounted future net cash flows
+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
+2021
+RMB million
+2020 (Revised) Note
+RMB million
+Total
+China
+10
+8,181
+8,191
+7
+1,232
+310
+1,740
+1,433
+307
+End of year
+1,749
+1,416
+333
+1,542
+1,232
+Other
+countries
+310
+(billion cubic feet)
+Beginning of year
+8,191
+8,181
+10
+7,225
+7,216
+9
+End of year
+8,456
+8,449
+Proved developed and undeveloped reserves (gas)
+1,542
+Other
+China
+(190)
+(54,158)
+(52,706)
+(1,452)
+241,495
+240,370
+1,125
+173,049
+176,949
+(3,900)
+370
+370
+(1,284)
+(1,284)
+49,217
+49,217
+31,259
+31,259
+(18,026)
+(18,026)
+(13,050)
+(13,050)
+(6,328)
+(93,164)
+(93,354)
+(2,448)
+229,655
+countries
+941,015
+(413,006)
+930,302
+(407,903)
+10,713
+(5,103)
+595,159
+(275,409)
+589,659
+5,500
+(271,824)
+(3,585)
+(79,562)
+(77,687)
+Total
+(1,875)
+(77,659)
+(3,126)
+(113,598)
+(111,178)
+(2,420)
+(11,758)
+(10,521)
+(1,237)
+334,849
+333,534
+1,315
+(80,785)
+(6,328)
+Beginning of year
+2
+35
+11
+Production
+End of year
+(25)
+(25)
+(24)
+309
+309
+290
+11
+(24)
+290
+Proved developed reserves
+Beginning of year
+244
+244
+245
+245
+End of year
+263
+263
+244
+244
+35
+Extensions and discoveries
+-
+-
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table IV: Reserve quantities information (Continued)
+2021
+2020
+Total
+China
+Other
+countries
+Total
+China
+Other
+countries
+Equity method investments
+Proved undeveloped reserves
+Proved developed and undeveloped reserves of
+Beginning of year
+290
+290
+Revisions of previous estimates
+8
+8
+290
+13
+290
+13
+Improved recovery
+1
+1
+associates and joint ventures (oil) (million barrels)
+Proved developed and undeveloped reserves (oil)
+(million barrels)
+Beginning of year
+46
+9
+1
+1
+4
+4
+(4)
+(4)
+(3)
+(3)
+7
+7
+10
+10
+86
+8
+9
+9
+6
+8
+8
+21
+21
+2
+9
+10
+10
+Total of the Group and its equity method investments
+45
+End of year
+46
+46
+46
+45
+46
+Proved developed and undeveloped reserves of
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+associates and joint ventures (gas)
+46
+(billion cubic feet)
+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
+London E14 5LB, U.K.
+End of year
+Beginning of year
+(5,712)
+Beginning of year
+(4,513)
+Hong Kong
+DEPOSITARY FOR ADRS
+The US:
+Citibank, N.A.
+388 Greenwich St., 14th Floor
+New York NY 10013
+United States of America
+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
+Stock code
+ADRs:
+: 00386
+New York Stock Exchange
+Stock code
+: SNP
+London Stock Exchange
+Stock code
+: SNP
+183 Queen's Road East
+R1712·1716, 17th Floor, Hopewell Centre
+Hong Kong Registrars Limited
+H Shares:
+REPRESENTATIVE ON SECURITIES MATTERS
+Mr. Zhang Zheng
+REGISTERED ADDRESS AND PLACE OF
+BUSINESS
+No.22 Chaoyangmen North Street,
+Chaoyang District
+Beijing, PRC
+Postcode
+Tel.
+: 100728
+86-10-59960028
+Hong Kong:
+NAMES AND ADDRESSES OF AUDITORS OF
+Herbert Smith Freehills
+15 Queen's Road
+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
+188 Yanggao South Road
+Shanghai Pilot Free Trade Zone, PRC
+23rd Floor, Gloucester Tower
+Mr. Huang Wensheng
+SINOPEC CORP.
+Auditors
+Wanchai
+Hong Kong
+CHANGES IN THE PLACES FOR INFORMATION
+DISCLOSURE AND THE PROVISION OF
+REPORTS
+No change during the reporting period
+LEGAL ADVISORS
+COPIES OF THIS ANNUAL REPORT ARE
+AVAILABLE AT
+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
+USA
+The UK:
+Citibank, N.A.
+Citigroup Centre
+(5,712)
+1 Harbour Road
+Convention Plaza
+20th Floor, Office Tower
+PLACE OF BUSINESS IN HONG KONG
+Address
+: KPMG Huazhen LLP
+Certified Public Accountants in
+China
+: 8th Floor
+KPMG Tower
+Oriental Plaza
+1 East Chang An Avenue,
+Beijing, PRC
+Postcode
+: 100738
+Overseas
+Domestic
+Auditors
+Public Interest Entity
+Auditor registered in accordance
+with the Financial Reporting
+Council Ordinance
+8th Floor, Prince's Building
+10 Chater Road Central,
+Hong Kong
+Fax
+Website
+E-mail addresses
+86-10-59960386
+: http://www.sinopec.com
+ir@sinopec.com
+REGISTERED ADDRESS CHANGE INFORMATION
+No change during the reporting period
+Address
+SECRETARY TO THE BOARD
+: KPMG
+Mr. Yu Baocai
+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
+2021
+RMB million
+2020 (Revised)
+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
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+Previously estimated development costs incurred during the year
+Accretion of discount
+Net changes in income taxes
+Net changes for the year
+Equity method investments
+Sales and transfers of oil and gas produced, net of production costs
+Net changes in prices and production costs
+Net changes in estimated future development cost
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+Previously estimated development costs incurred during the year
+Accretion of discount
+Net changes in income taxes
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+221
+(4,513)
+Mr. Huang Wensheng
+(1,740)
+(1,740)
+20,350
+20,350
+10,757
+10,757
+(10,201)
+(10,201)
+(4,828)
+Net changes for the year
+(4,828)
+5,929
+251,644
+240,370
+11,274
+178,978
+176,949
+10,149
+5,929
+2,029
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2021
+10,149
+(98,705)
+Note: Pursuant to Amendments to the XBRL Taxonomy, Accounting Standards Update No. 2010-03 Extractive Activities-Oil and Gas (Topic 932), the Company has revised the
+future development cost attributable to China for the year ended 31 December 2020 in Table V and Table VI to include future cash flows related to the settlement of
+asset retirement obligations.
+135,697
+232
+1,022
+979
+(1,292)
+1,180
+4,220
+(4,276)
+Total of the Group's and its equity method investments' results of net changes for the year
+72,666
+(105,604)
+222
+287
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+STATUTORY NAME
+中国石油化工股份有限公司
+ENGLISH NAME
+(58,449)
+CHINESE ABBREVIATION
+中国石化
+ENGLISH ABBREVIATION
+Sinopec Corp.
+LEGAL REPRESENTATIVE
+Mr. Ma Yongsheng
+AUTHORISED REPRESENTATIVES
+CORPORATE INFORMATION
+437
+China Petroleum & Chemical Corporation
+402
+(2,174)
+(101,328)
+68,446
+19,375
+(72,118)
+16,448
+(1,984)
+6,684
+(11,211)
+26,613
+44,602
+62,449
+(11,628)
+(7,413)
+5,475
+4,967
+31,940
+1,760
+369
+(299)
+(752)
+(5,190)
+(122,641)
+(1) Exploration and Production Segment
+36.0
+494,397
+360,811
+37.0
+11,106
+10,818
+2.7
+1,297,701
+890,283
+45.8
+1,300,926
+890,676
+46.1
+(3,225)
+Elimination of inter-segment profit/(loss)
+Operating revenues
+Operating expenses
+(393)
+4,417
+Corporate and Others
+Operating revenues
+In 2021, the oil and gas lifting cost was
+RMB776.94 per tonne, representing a
+year on year increase of 6.5%, mainly
+attributable to the increase in the cost
+of purchased material, fuels, and power
+as the international commodities prices
+increased, and the increase of personnel
+expenses.
+Operating expenses
+Operating loss
+Procurement cost of LNG increased
+by RMB45.0 billion year on year;
+Depreciation, depletion and amortisation
+increased by RMB6.6 billion year on
+year, as a result of the increase of
+depletion ratio; Resource Tax and special
+oil income levy increased by RMB3.9
+billion year on year; Exploration expense
+increased by RMB2.7 billion year on year;
+Impairment decreased by RMB6.0 billion
+year on year;
+In 2021, the operating expenses of
+this segment was RMB245.3 billion,
+representing an increase of 33.2%
+over 2020. That was mainly due to the
+following:
+In 2021, the segment sold 34.09 million
+tonnes of crude oil, representing a
+decrease of 1.2% over 2020. Natural
+gas sales volume was 30.8 billion cubic
+meters (bcm), representing an increase
+of 11.1% over 2020. Regasified LNG
+sales volume was 19.1 bcm, representing
+an increase of 22.3% over 2020. LNG
+sales volume was 6.18 million tonnes,
+representing an increase of 0.1% over
+2020. Average realised prices of crude
+oil, natural gas, Regasified LNG, and LNG
+were RMB2,932 per tonne, RMB1,605 per
+thousand cubic meters, RMB2, 119 per
+thousand cubic meters, and RMB3,909
+per tonne, respectively, representing an
+increase of 54.2%, 18.0%, 19.4%, and
+53.7% respectively over 2020.
+Operating profit
+371,629
+In 2021, the operating revenues of
+this segment was RMB250.0 billion,
+representing an increase of 49.0% over
+2020. This was mainly attributed to the
+increase of realised price in crude oil and
+natural gas, as well as the sales volume
+of natural gas increase.
+Chemicals 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.
+(4,421)
+Operating profit
+Operating revenues
+1.8
+Operating expenses
+46.8
+944,066
+1,385,564
+(16,476)
+4,685
+Operating profit/(loss)
+33.2
+245,313
+49.0
+167,755
+249,998
+Operating revenues
+In 2021, the operating profit of the
+exploration and production segment was
+RMB4.7 billion, representing an increase
+of RMB21.2 billion over the same period
+of 2020, which was mainly attributable
+to the fact that the segment promoted
+high-quality exploration and profitable
+development, focused on reducing
+cost, enhanced integrated operation of
+production, supply, storage and sales.
+184,231
+505,503
+Operating expenses
+949,591
+20,828
+28.6
+1,081,378
+1,390,340
+21,204
+Operating expenses
+28.1
+1,320,285
+1,102,206
+Refining Segment
+Marketing and Distribution Segment
+(5,525)
+65,279
+Operating profit/(loss)
+39.0
+1,411,544
+(2) Refining Segment
+5,061
+In 2021, the operating revenues of
+this segment was RMB1,385.6 billion,
+representing an increase of 46.8% over
+2020. This was mainly attributed to the
+demand recovery and the increases of
+refined oil products prices and sales
+volume.
+5.3
+65,353
+68,783
+53.7
+2,596
+3,989
+3.004
+13.5
+45,234
+39.7
+2,673
+3,734
+0.0
+17,309
+39,872
+17,313
+68.5
+In 2021, refining margin was RMB532
+per tonne, representing an increase
+of RMB292 per tonne compared with
+that of the same period of 2020. This
+was mainly attributed to the increase
+in demand for refined oil products and
+chemical raw materials, and substantial
+improvement in gross margin of refined
+oil products and naphtha, as well as the
+significant inventory gains of crude oil
+and refined products.
+2020 Change (%)
+86,216
+Operating revenues
+2021
+90,873
+Gasoline
+2021
+processed for third parties), representing
+an increase of 7.3% over 2020. The
+total cost of crude oil processed was
+RMB878.4 billion, representing an
+increase of 45.5% over 2020.
+Average realised price (RMB/tonne)
+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 2021 and 2020, including detailed information about retail, direct sales and distribution of gasoline and diesel:
+In 2021, the operating revenues of this
+segment was RMB1,411.5 billion, up
+by 28.1% year-on-year. This was mainly
+attributed to the recovery of market
+demand and thus the increase in the
+sales volume and price of refined oil
+products. The sales revenues of gasoline
+totaled RMB702.5 billion, up by 27.9%
+year-on-year; the sales revenues of diesel
+was RMB462.8 billion, up by 22.7% year-
+on-year; the sales revenues of kerosene
+was RMB80.3 billion, up by 46.4% 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.
+billion compared with that of 2020.
+This was mainly due to the fact that the
+segment seized the opportunity of market
+recovery to increase the utilisation rates
+of facilities and made efforts to optimise
+the product slate. The inventory gains of
+crude oil and refined products increased,
+and the refining margin improved
+significantly.
+In 2021, the operating revenue of
+the segment totaled RMB65.3 billion,
+representing an increase of RMB70.8
+In 2021, 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 RMB213 per
+tonne, representing an increase of 17.5%
+over 2020, which was mainly attributed
+to the increased expense of safety,
+environment protection, and maintenance
+year on year.
+Sales volume (thousand tonnes)
+Year ended 31 December
+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 to the chemicals segment of the
+Company; and other refined petroleum
+products were sold externally to both
+domestic and overseas customers.
+27.8
+5,563
+The sales revenue of kerosene was
+RMB64.6 billion, representing an increase
+of 39.7% over 2020.
+The sales revenue of diesel was
+RMB327.1 billion, representing an
+increase of 22.8% over 2020.
+In 2021, sales revenue of gasoline was
+RMB460.1 billion, representing an
+increase of 40.7% over 2020.
+Other refined petroleum products
+Chemical feedstock
+Kerosene
+The sales revenue of chemical feedstock
+was RMB180.4 billion, representing an
+increase of 74.3% over 2020.
+Diesel
+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 2021 and 2020.
+Management's Discussion
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+22
+22
+Gasoline
+4,354
+The sales revenue of refined petroleum
+products other than gasoline, diesel,
+kerosene and chemical feedstock was
+RMB348.1 billion, representing an
+increase of 77.3% over 2020.
+In 2021, the average processing cost
+for crude oil was RMB3,329 per tonne,
+representing a increase of 35.6% over
+2020. Total crude oil processed was
+263.85 million tonnes (excluding volume
+(3.9)
+61,167
+58,807
+24.0
+5,813
+7,208
+In 2021, the segment's operating
+expenses was RMB1,320.3 billion,
+representing an increase of 39.0% over
+2020. This was mainly attributed to the
+increase in procurement cost of crude oil,
+and the increase of taxes and surcharges
+related to sales revenue year on year.
+13.5
+63,827
+2020 Change (%)
+2021
+2020 Change (%)
+2021
+Average realised price (RMB/tonne)
+Year ended 31 December
+56,259
+Exploration and Production Segment
+1.2
+RMB million
+70,242
+15.2
+16.0
+9.5
+9.0
+330,927
+435,261
+Revenue
+Elimination of inter-segment sales
+Operating revenue before elimination of inter-segment sales
+Operating revenues
+Inter-segment sales
+Corporate and Others
+Inter-segment sales
+Operating revenues
+External sales*
+External sales*
+Chemicals Segment
+1,097,352
+29.0
+31.6
+51.2
+52.1
+Inter-segment sales
+40,702
+Operating revenues
+4,854
+0.1
+0.1
+1,102,206
+29.1
+31.7
+7,075
+1,411,544
+1.4
+505,503
+371,629
+Year ended 31 December
+2021
+2020
+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 2021 compared to 2020.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+and Analysis
+Change
+Management's Discussion
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Other operating revenues are included.
+*
+100.0
+100.0
+2020 Change (%)
+21
+1,404,469
+(2,109,426) (1,371,215)
+2,740,884 2,104,724
+100.0
+10.4
+10.7
+565,345
+460,210
+11.7
+13.2
+100.0
+20.6
+732,356 430,073
+1,297,701 890,283
+15.1
+12.4
+26.8
+25.6
+4,850,310 3,475,939
+21.9
+External sales*
+Marketing and Distribution Segment
+27.1
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+20
+20
+(7) Profit attributable to shareholders of
+the Company was RMB72.0 billion,
+representing a year-on-year increase of
+115.2%.
+(6) Profit attributable to non-controlling
+shareholders was RMB13.9 billion,
+representing an increase of RMB5.0
+billion and 57.2% over the same period
+of 2020. That was mainly due to the
+improvement in the profits of our non-
+wholly owned subsidiaries.
+(5) Income tax expense was RMB23.3 billion,
+representing an increase of 267.6%
+year on year. That was mainly due to
+the taxable income increase as a result
+of good profit the Company achieved in
+2021.
+2 RESULTS OF SEGMENT OPERATIONS
+(4) Profit before taxation was RMB109.2
+billion, representing an increase of
+124.6% compared with 2020.
+Other operating expense, net was
+RMB21.7 billion, representing an increase
+of RMB275.7% over the same period of
+2020. That was mainly due to impact of
+the loss on disposal of property, plant,
+equipment and other non-current assets.
+Taxes other than income tax was
+RMB259.0 billion, representing an
+increase of 10.2% over the same period
+of 2020. That was mainly due to the
+increase of consumption tax resulting
+from the increase of production volume
+in gasoline and diesel.
+Personnel expenses was RMB103.5
+billion, representing an increase of
+18.2% over 2020. That was due to the
+government's preferential policy on social
+insurance during the COVID-19 pandemic
+in 2020, which was cancelled in 2021,
+as well as a year-on-year increase in
+performance-related bonus as a reward
+for the significant improvement in
+operating profit.
+Exploration expenses was RMB12.4
+billion, representing an increase of
+27.4% compared with 2020. That was
+mainly due to increased investment in
+exploration and development to improve
+the quality of oil and gas assets.
+Depreciation, depletion and amortisation
+was RMB115.7 billion, representing an
+increase of 7.6% over the same period of
+2020. That was mainly because that the
+proved reserve decreased resulting from
+the decrease of international crude oil
+prices and appreciation of RMB exchange
+rate in 2020, thus the depletion ratio of
+oil and gas assets increased, which led to
+the depreciation and depletion increased.
+Selling, general and administrative
+expenses was RMB55.0 billion,
+representing an increase of 2.4% over
+2020.
+(3) Operating profit was RMB94.6 billion,
+representing an increase of 592.3%
+over the same period of 2020. That was
+mainly because that with the increase
+of international crude oil prices and
+steady improvement of market demand,
+the Company increased its processing
+volume and sales volumes which led to
+an increase in the gross profit margin of
+petrochemical products and significant
+improvement of the Company's operating
+results.
+The Company's other purchasing
+expenses was RMB1,387.2 billion,
+representing an increase of 24.9% over
+the same period of 2020. This was
+mainly attributable to the sharp increase
+in international bulk raw material prices
+and purchasing volume increase.
+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
+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.
+3.4
+110,242
+162,700
+(%)
+(%)
+(%)
+revenues.
+(%)
+2021
+As a percentage of
+consolidated operating
+revenue after elimination
+of inter-segment sales
+Year ended 31 December
+As a percentage of
+consolidated operating
+revenue before elimination
+of inter-segment sales
+Year ended 31 December
+2021
+2020
+Operating revenues
+Year ended 31 December
+2021
+2020
+RMB million RMB million
+Inter-segment sales
+Exploration and Production Segment
+External sales*
+2020
+(%)
+Crude oil purchasing expenses was
+RMB689.5 billion, representing an
+increase of 43.9% over the same period
+of 2020. Crude oil purchased externally
+used for processing in 2021 was 212.55
+million tonnes (excluding the volume
+processed for third parties), representing
+an increase of 7.9% over the same period
+of 2020. The average cost of crude oil
+purchased externally was RMB3,244 per
+tonne, representing an increase by 33.3%
+over 2020.
+In 2021, the Company's operating
+expenses was RMB2,646.3 billion,
+increased by 26.6% compared with that
+of 2020. The operating expenses mainly
+consisted of the following:
+117,847
+3.6
+3.4
+6.3
+5.6
+Inter-segment sales
+173,109
+1,212,455
+24.9
+23.7
+Operating revenues
+1,385,564
+944,066
+28.5
+826,219
+Purchased crude oil, products and
+operating supplies and expenses was
+RMB2,076.7 billion, representing an
+increase of 30.6% over the same period
+of 2020, accounting for 78.5% of the
+total operating expenses, of which:
+External sales*
+4.9
+(2) Operating expenses
+In 2021, 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 RMB1,535.5
+billion (accounting for 56.0% of the
+Company's revenue), representing an
+increase of 30.6% over 2020, mainly due
+to the increase in prices and volume of
+refined oil products. The sales revenue
+of gasoline, diesel and kerosene was
+RMB1,243.9 billion, representing an
+increase of 28.5% over 2020, and
+accounting for 81.0% of the total sales
+revenue of petroleum products. Turnover
+of other refined petroleum products
+was RMB291.6 billion, representing an
+increase of 49.0% compared with that of
+2020, accounting for 19.0% of the total
+sales revenue of petroleum products.
+The Company's external sales revenue
+of chemical products was RMB424.8
+billion, representing an increase of 31.8%
+over 2020, accounting for 15.5% of
+the Company's total revenue. This was
+mainly due to the increase in price and
+sales volume of chemical 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 2021,
+the turnover from crude oil, natural
+gas and other upstream products sold
+externally amounted to RMB156.0 billion,
+representing an increase of 49.3% over
+2020. The change was mainly due to
+increases in crude oil and natural gas
+prices, and the increase of natural gas
+sales volume.
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+Management's Discussion
+and Analysis
+5.2
+Refining Segment
+87,298
+1.8
+1.7
+Operating revenues
+249,998
+167,755
+5.2
+57,513
+5.4
+15,659
+(6)
+6,370
+1,350
+13,798
+767
+15,915
+1,525
+9,228
+Total
+Other equity instruments investment
+7,545
+157
+Cash flow hedges
+Derivative financial instruments
+1
+Stock
+1
+Financial assets held for trading
+variation of
+fair values
+recorded
+as equity
+variation of
+fair values
+in the
+current year
+Accumulated
+losses from
+Profits and
+the year
+of the year
+Items
+End of
+Beginning
+Items relevant to measurement of main fair values
+Annual Report 2021 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.
+(14,873)
+694
+3.2
+(14,179)
+15,653
+Consolidated operating income
+Elimination of inter-segment sales
+Corporate and Others
+Chemicals Segment
+1,102,206
+167,755
+944,066
+RMB million
+2020
+1,411,544
+1,385,564
+249,998
+Year ended 31 December
+2021
+RMB million
+Marketing and Distribution Segment
+(6) Measurement of fair values of derivatives
+and relevant system
+Refining 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 216 of this report.
+4 ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER CASS
+Self-owned fund
+Self-owned fund
+Self-owned fund
+Self-owned fund
+source
+Funding
+Unit: RMB million
+current year
+loss
+provision
+of the
+Impairment
+Exploration and Production Segment
+Environmental expenditures refer to
+the normal routine pollutant discharge
+fees paid by the Company, excluding
+capitalised cost of pollutant treatment
+properties. In 2021, the Company paid
+environmental expenditures of RMB11.0
+billion.
+R&D expenditures include expenses
+occurred in the period. In 2021 the
+expenditures for R&D was RMB21.1
+billion, of which expense was RMB11.5
+billion, and capitalised cost was RMB9.6
+billion.
+2020
+168,520
+(102,650)
+(37,510)
+887,702
+915,074
+(485)
+141,377
+140,892
+27,857
+625,254
+653,111
+121,071
+121,071
+27,857
+746,325
+774,182
+27,372
+4,702
+332,901
+118,285
+522,995
+641,280
+122,987
+851,194
+974,181
+47,995
+1,283,236
+1,331,231
+102,364
+455,660
+150,359
+328,199
+Operating profit/(loss)
+of the end of 2020. This was mainly due
+to the net value of property plant and
+equipment increased by RMB5.3 billion,
+construction in progress increased by
+RMB30.4 billion equity of associates and
+joint ventures increased by RMB20.8
+billion because of the increased profit in
+these companies.
+Current liabilities was RMB641.3 billion,
+representing an increase of RMB118.3
+billion as compared with that of the end
+of 2020. This was mainly due to the fact
+that the short-term debts increased by
+(5) Research & Development and
+Environmental Expenditures
+Year ended 31 December
+2021
+225,174
+(145,198)
+(57,942)
+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 2021, the cash and cash
+equivalents was RMB108.6 billion.
+RMB57.9 billion, representing an increase
+of cash outflow by RMB20.4 billion over
+2020. This was mainly due to an increase
+of RMB3.2 billion in investments from
+non-controlling shareholders,, increase of
+RMB3.6 billion in cash paid for dividends,
+decrease of RMB3.2 billion in dividends
+allocated to non-controlling shareholders
+by subsidiaries, and increase of RMB7.1
+billion in acquisition of non-controlling
+equity interests, and increase in
+repayment for lease liabilities of RMB4.1
+billion.
+Company's financing activities was
+In 2021, the net cash used in the
+In 2021, the net cash used in investing
+activities was RMB145.2 billion,
+representing an increase of RMB42.5
+billion over 2020, of which: income
+from sales of investment and gains from
+investing in associates and joint ventures
+decreased by RMB44.8 billion, capital
+expenditure increased by RMB9.6 billion,
+exploratory wells expenditure increased
+by RMB3.6 billion, purchasing investment
+and associates and joint ventures
+investments decreased by RMB1.1 billion,
+and cash outflow from changes in time
+deposit with maturities over three months
+decreased by RMB13.2 billion.
+In 2021, the net cash generated from
+operating activities of the Company
+was RMB225.2 billion, representing an
+increase of RMB56.7 billion over 2020.
+This was mainly due to the increase of
+RMB60.6 billion in profit before taxation.
+Net cash generated from operating activities
+Net cash used in investing activities
+Net cash used in financing activities
+The Company's total liabilities was
+RMB974.2 billion, representing an
+increase of RMB123.0 billion compared
+with that of the end of 2020, of which:
+Major items of cash flows
+The following table sets forth the major items in the consolidated cash flow statements for 2021 and 2020.
+(2) Cash Flow
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+and Analysis
+Management's Discussion
+and Analysis
+Discussion
+Management's
+25
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Total equity attributable to owners of
+the Company was RMB774.2 billion,
+representing an increase of RMB27.9
+billion compared with that of the end of
+2020.
+Non-current liabilities was RMB332.9
+billion, representing an increase of
+RMB4.7 billion compared with that of the
+end of 2020.
+RMB11.5 billion, accounts payable and
+bills payable and liabilities from contracts
+increased by RMB53.7 billion as a
+result of raw materials price escalation
+and operation scale expansion, other
+payables increased by RMB60.6 billion,
+and contract liabilities decreased RMB1.6
+billion.
+Unit: RMB million
+Change
+Exploration and Production Segment
+Marketing and Distribution Segment
+466,971
+505,503
+(0.9)
+29.4
+28.1
+6.4
+1,317,918
+1,411,544
+Corporate and Others
+Marketing and Distribution
+Chemicals
+4.0
+50.8
+46.8
+6.0
+7.0
+37.3
+49.0
+12.9
+206,332
+1,061,650
+249,998
+1,385,564
+Exploration and Production
+Refining
+basis (%)
+year-on-year
+gross profit
+margin on a
+of operation
+Increase of
+income on a operation cost
+year-on-year on a year-on-
+basis (%) year basis (%)
+margin (%)
+6.9
+36.0
+38.8
+(2.0)
+and Analysis
+Management's Discussion
+29
+29
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+*: Gross profit margin = (operation income - operation cost, tax and surcharges)/operation income.
+0.9
+31.5
+30.2
+9.7
+2,216,551
+Gross profit
+2,740,884
+N/A
+N/A
+N/A
+N/A
+(2,105,005)
+(2,109,426)
+Elimination of inter-segment sales
+0.4
+45.1
+45.8
+2.2
+1,268,685
+1,297,701
+Total
+Operation
+cost
+RMB million
+RMB million
+Segments
+Operating profit: In 2021, the operating profit of the Company was RMB112.4 billion, representing an increase of RMB62.1 billion as compared
+Iwith that of 2020.
+Net profit attributable to equity shareholders of the Company
+7,730
+71,208
+50,803
+112,414
+46,304
+6,878
+4,417
+(4,421)
+9,592
+(2,048)
+9,521
+11,361
+Net profit: In 2021, the net profit attributable to the equity shareholders of the Company was RMB71.2 billion, representing an increase of
+RMB37.9 billion or 114.02% compared with 2020.
+(20,570)
+(6,526)
+19,634
+65,360
+613
+(1,371,215)
+2,104,724
+890,283
+1,297,701
+(2,109,426)
+2,740,884
+371,629
+505,503
+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
+23,102
+Refining Segment
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Management's Discussion
+Operation
+income
+Increase/
+(decrease) of
+Increase
+(3) The results of the principal operations by segments
+At the end of 2021, the shareholders' equity of the Company was RMB916.0 billion, representing an increase of RMB27.3 billion compared with
+that of the end of 2020.
+At the end of 2021, the Company's non-current liabilities was RMB331.9 billion, representing an increase of RMB4.8 billion compared with that
+of the end of 2020.
+At the end of 2021, the Company's total assets was RMB1,889.3 billion, representing an increase of RMB150.4 billion compared with that of the
+end of 2020, mainly because inventory increased by RMB55.2 billion, cash at bank and on hand increased by RMB37.6 billion, long-term equity
+investment increased by RMB20.8 billion, and construction in progress increased by RMB30.4 billion.
+27,321
+888,720
+4,753
+327,181
+150,359
+1,738,896
+27
+Change
+331,934
+916,041
+1,889,255
+December 2021
+RMB million
+As of 31
+Change analysis:
+Shareholder's equity
+Non-current liabilities
+Total assets
+(2) Financial data prepared under CASS
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+Management's Discussion
+and Analysis
+28
+and Analysis
+As of 31
+December 2020
+RMB million
+2020
+1,738,896
+33,271
+5.9
+7,521
+6,407
+17.4
+1,289
+1,364
+(5.5)
+3.8
+11,104
+39.0
+981
+1,181
+(16.9)
+2,797
+1,950
+7,986
+1,403
+1,457
+16.4
+2.0
+5,311
+3,569
+48.8
+7,010
+9,743
+(28.1)
+6,580
+4,302
+53.0
+17,924
+17,124
+4.7
+8,325
+7,150
+43.4
+2021
+(5) Corporate and Others
+Synthetic fibre monomer and polymer
+Non-current liabilities
+Total equity attributable to shareholders of the Company
+Share capital
+Reserves
+Non-controlling interests
+Total equity
+Current liabilities
+As of 31 December 2021, the Company's
+total assets was RMB1,889.3 billion,
+representing an increase of RMB150.4
+billion compared with that of the end of
+2020, of which:
+Non-current assets was RMB1,331.2
+billion, representing an increase of
+RMB48.0 billion as compared with that
+Unit: RMB million
+As of
+31 December
+2021
+As of
+31 December
+1,889,255
+558,024
+Current assets was RMB558.0 billion,
+representing an increase of RMB102.4
+billion compared with that of the end of
+2020, mainly because the cash and cash
+equivalents and time deposit increased
+by RMB33.9 billion, and crude oil and
+refined oil product inventories increased
+by RMB55.2 billion as a result of
+international crude oil price increase.
+Total liabilities
+Non-current assets
+Current assets
+Synthetic resin
+Synthetic fibre
+Synthetic rubber
+Chemical fertiliser
+In 2021, the operating expenses of
+the chemicals segment was RMB494.4
+billion, representing an increase of
+37.0% over 2020, mainly because of
+the increase in the price of externally
+procured raw materials as a result of
+crude oil price increase.
+In 2021, the Company seized the
+favorable opportunities of economy
+recovery and high realised prices
+of chemical products, continuously
+optimised the structures of feedstock,
+product and facilities, and achieved
+growing profits with increased margins
+of petrochemicals. The operating profit
+of this segment was RMB11.1 billion,
+representing an increase of 2.7% over
+2020.
+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.
+In 2021, the operating revenue
+generated from corporate and others
+was approximately RMB1,297.7 billion,
+representing an increase of 45.8% over
+2020. This was mainly attributed to the
+great increase in the trading prices of
+crude oil and refined oil products.
+In 2021, the operating expenses of
+corporate and others was RMB1,300.9
+billion, representing an increase of 46.1%
+over 2020.
+In 2021, the operating loss from
+corporate and others was RMB3.2 billion,
+representing an increase in loss of
+RMB2.8 billion over the same period of
+2020. This was mainly attributed to the
+expansion of R&D investment scale which
+led to increase in R&D expenses and the
+increase of personnel expenses.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+(1) Assets, liabilities and equity
+3 ASSETS, LIABILITIES, EQUITY AND CASH FLOWS
+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.
+Total assets
+Basic organic chemicals
+2020 Change (%)
+47,109
+2020 Change (%)
+Average realised price (RMB/tonne)
+Year ended 31 December
+5,890
+4,865
+21.1
+Retail
+33,644
+36,757
+1.4
+(8.5)
+5,351
+22.2
+Direct sales and distribution
+44,923
+40,750
+48,059
+6,537
+77,507
+78,566
+Diesel
+21.4
+Retail
+64,325
+61,446
+4.7
+8,223
+6,940
+18.5
+Direct sales and distribution
+26,548
+24,770
+7.2
+6,537
+4,955
+31.9
+5,406
+4,426
+10.2
+Kerosene
+Management's Discussion
+and Analysis
+22.1
+In 2021, the operating expenses of the
+segment were RMB1,390.3 billion, up
+by 28.6% year-on-year. This was mainly
+due to the increase of sales volumes and
+prices of refined oil products, and thus
+the increase of procurement costs.
+In 2021, 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 RMB197.66 per tonne, up by 4.11%
+year on year.
+In 2021, the operating revenues of non-
+fuel business was RMB35.4 billion, up
+by RMB1.5 billion year-on-year and the
+profit of non-fuel business was RMB4.1
+billion, up by RMBO.4 billion. This was
+mainly because the Company vigorously
+promoted company-owned and actively
+explored emerging business models to
+maintain the increase of volume and
+profit of non-fuel business.
+24
+In 2021, the segment seized the
+favorable opportunity of market recovery,
+brought synergy advantages of industrial
+chain into full play, coordinated internal
+and external resources, expanded market
+and increased sales, and continuously
+expand business volume. Operating profit
+was RMB21.2 billion, representing an
+increase of RMB0.4 billion or 1.8% year
+on year.
+The business activities of the chemicals
+segment include purchasing chemical
+feedstock from the refining segment
+and the third parties and producing,
+marketing and distributing petrochemical
+and inorganic chemical products.
+In 2021, the operating revenues of this
+segment was RMB505.5 billion, up by
+36.0% year-on-year. This was mainly
+due to the steady growth of domestic
+economy, and the fact that the demand
+for chemical products still maintained
+a high level, and the product prices
+increased year on year.
+In 2021, 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 RMB478.6 billion, up by 34.9%,
+accounting for 94.7% of the operating
+revenues of the segment.
+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 2021 and 2020.
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+2021
+(4) Chemicals segment
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+23
+21,296
+20,828
+2.2
+23
+2,634
+43.2
+Fuel oil
+3,772
+23,331
+10.8
+3,437
+2,536
+35.6
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+25,847
+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 shareholder
+or de facto controllers of Sinopec Corp.
+were under the investigation by the CSRC or
+received any regulatory sanction or public
+condemnation by the CSRC, the Hong Kong
+Securities and Futures Commission, or 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.
+c. Each Board Committee shall 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, the
+Terms of Reference of the Nomination
+Committee and the Terms of Reference of
+the Nomination Committee are published
+on the website of Sinopec Corp. at
+http://www.sinopec.com.
+CORPORATE GOVERNANCE
+1 IMPROVEMENTS IN CORPORATE
+GOVERNANCE DURING THE REPORTING
+PERIOD
+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
+corporate governance and promoted the
+corporate quality. The Company further
+improved its corporate governance structure
+by completing the re-election of the Board
+of Directors and Board of Supervisors,
+which improved the diversity of the
+Board; adjusting the members of special
+committees of the Board, renaming the
+Social Responsibility Management Committee
+as the Sustainable Development Committee;
+and appointing the Senior Management.
+The Independent Non-executive Directors of
+Sinopec Corp. conscientiously fulfilled their
+duties, actively attended the board meetings
+and meetings of special committees
+of the Board, reviewed and considered
+proposals with due care, and offered
+advice and suggestions on the Company's
+reforms and development. The Company
+strengthened the edifice of the fundamental
+system of corporate governance and laid a
+solid foundation by revising management
+regulations of Information Disclosure and
+Investor Relations, the Terms of Reference of
+the Independent Non-Executive Directors, the
+Nomination Committee and the Sustainable
+Development Committee according to the
+latest regulatory requirements and work
+practice. The Company endeavoured to
+improve the effectiveness of internal control
+policy, and the edifice of internal control
+system had reached a new level. The
+Company continuously improve the quality
+of information disclosure and enhance
+transparency by paying more attention
+to the information disclosure about ESG,
+appointing an independent third party to
+verify the sustainable development report,
+and providing more information voluntarily.
+As a result, the Company obtained an A-level
+rating of Shanghai Stock Exchange in the
+assessment of information disclosure. The
+Company focused on communication with
+investors, maintained positive interaction
+with investors despite of the adverse impact
+of the Covid-19 pandemic, resulting in new
+enhancements of investor relations. The
+Company continuously improved the quality
+of Party building to stimulate the enthusiasm
+of the staff for work, and enhanced the
+discipline inspection and supervision to
+maintain the effective implementation of
+the deployments of the Board all of which
+achieve the high-quality development of the
+Company.
+2 GENERAL MEETINGS
+E INVESTOR RELATIONS
+3 EQUITY INTERESTS OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+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
+including online reporting, reporting
+by letters, appeals and complaint
+mailbox, etc. to employees to report
+behaviour that violates the internal
+control system of the Company. The
+Audit Committee has reviewed and
+approved such policy.
+D DELEGATION OF POWER BY THE BOARD
+a. The Board and the Management have
+clear duties and responsibilities under
+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 Sustainable
+Development Committee (formerly known
+as 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 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 (formerly known
+as Social Responsibility Management
+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.
+Corporate Governance
+39
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Li Yonglin, aged 55, 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 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 59, Director and Senior
+Vice President of Sinopec Corp. Mr. Ling is a
+professor level senior engineer with a Ph.D.
+degree. From August 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.
+Yu Baocai, aged 57, 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.
+Li Yonglin
+Ling Yiqun
+Yu Baocai
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+38
+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.
+38
+b. During the reporting period, the Audit
+Committee held five 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.3 Audit Committee
+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 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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+35
+Corporate Governance
+36
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+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.
+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 Directors,
+Mr. Cai Hongbin, Ms. Shi Dan,
+and Mr. Bi Mingjian, who serve as
+members.
+manner.
+Zhao Dong, aged 51, Director 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
+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 2017, he was elected
+as Chairman of Board of Supervisors of
+Sinopec Corp.; in May 2021, he was elected
+as Director of Sinopec Corp.
+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
+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.
+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.
+a. Shareholders who individually or
+G SHAREHOLDERS' RIGHTS
+b. During the reporting period, the Secretary
+to the Board actively participated in
+career development training for 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.
+COMPANY SECRETARY
+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.
+d. According to relevant rules of Sinopec
+F
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+c. The Chairman (or the director who
+performs the duties of Chairman) of
+the Board hosted the annual general
+meeting for the year 2020 and the First
+Extraordinary General Meeting for the
+year 2021. 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.
+b. 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. Sinopec Corp. attach considerable
+significance 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. 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.
+During the reporting period, Sinopec Corp.
+convened 2020 Annual General Meeting
+on 25 May 2021 in Beijing, China, and
+2021 First Extraordinary General Meeting
+on 20 October 2021 in Beijing, China in
+accordance with the procedures of noticing,
+convening and holding pursuant to the
+relevant laws and regulations and the
+Articles of Association. For details of the
+general meetings, please refer to the poll
+results announcements published on 26
+May and 21 October 2021 respectively on
+China Securities Journal, Shanghai Securities
+News, Securities Times and the website of
+Shanghai Stock Exchange, as well as those
+published on 25 May and 20 October 2021
+respectively on the website of Hong Kong
+Stock Exchange.
+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.
+Commander of Sichuan-East China
+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.
+d. Sinopec Corp. has established a special
+organisation for communication with
+shareholders and publishes relevant
+contact details to facilitate shareholders
+to make enquiries in accordance with
+Articles of Association.
+The appointment of KPMG Huazhen
+LLP and KPMG as Sinopec Corp.'s
+external auditors for 2021 and the
+authorisation of the Board to determine
+their remuneration were approved at
+Sinopec Corp.'s Annual General Meeting
+for the Year 2020 on 25 May 2021.
+The audit fee for 2021 is RMB41.69
+million (including audit fee of internal
+control), which was approved at the 7th
+Meeting of the Eighth Session of the
+Board. The annual financial statements
+of the year ended 31 December 2021
+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 RMB8.11
+million. PricewaterhouseCoopers and
+PricewaterhouseCoopers Zhong Tian
+LLP (collectively, the "Former Auditors")
+served respectively as the external
+auditors of the Company for the year
+2013 to 2020 and retired as the external
+auditors of the Company as resolved
+by shareholders at the annual general
+a professor level senior engineer with a
+Ph.D. degree. Mr. Ma is a member of
+the 13th National Committee of Chinese
+People's Political Consultative Conference
+("CPPCC") and an academician of
+Ma Yongsheng, aged 60, Chairman of
+the Board of Sinopec Corp. Mr. Ma is
+11 INTRODUCTION OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+Zhao Dong
+Ma Yongsheng
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+Corporate Governance
+37
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+The Company did not implement any share
+incentive scheme during the reporting period.
+10 DETAILED IMPLEMENTATION OF THE
+SHARE INCENTIVE SCHEME DURING THE
+REPORTING PERIOD
+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 77 to
+page 78; for information about meetings
+of the Board, please refer to page 65 to
+page 66; for information about meetings
+held by Board Committees, please refer
+to page 67; for information about tenure
+of Non-executive Directors, please refer
+to page 42; for information about equity
+interests of Directors, Supervisors and
+other senior management, please refer
+to page 31; for information about the
+biographies and annual remuneration of
+Directors, Supervisors and other senior
+management, please refer to page 38 to
+page 49.
+(3) Other information about Sinopec Corp.'s
+corporate governance
+meeting for the year 2020. Each of the
+Former Auditors has no objections to
+the retirement, and has confirmed that
+there are no matters in relation to their
+retirement which should be brought to
+the attention of the shareholders of the
+Company. The Board is not aware of
+any matters in relation to the change
+in Auditors that need to be brought to
+the attention of the shareholders of the
+Company.
+(2) Auditors
+b. 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
+(1) Directors
+C.1 Financial reporting
+Sinopec Corp. complied with all code
+provisions of the Corporate Governance
+Code set out in Appendix 14 of the Hong
+Kong Listing Rules during the reporting
+period.
+A Board of Directors
+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.
+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 of
+the meeting. The relevant documents
+and materials for Board meetings are
+usually delivered to each Director 10
+days in advance. In 2021, Sinopec
+Corp. held seven 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.
+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.
+d. The Board has reviewed and
+evaluated its performance in 2021
+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
+the potential risks that might arise
+from the adequate performance of
+their duties.
+A.2 Chairman and President
+a. Mr. Ma Yongsheng serves as
+Chairman of the Board and Mr.
+Yu Baocai 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 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.
+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.
+c. The Chairman encourages open and
+active discussions. The Directors
+fully and deeply participated in the
+discussions of significant decisions in
+the Board meetings.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+A.3Board composition
+a. 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 "Directors, Supervisors,
+Senior Management and Employees"
+of this annual report.
+(1) Compliance with the Corporate
+Governance Code
+b. Sinopec Corp. has received from each
+of the Independent Non-executive
+Directors a letter of confirmation for
+2022 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.
+9 CORPORATE GOVERNANCE REPORT (IN
+ACCORDANCE WITH HONG KONG LISTING
+RULES)
+7 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 subsidiaries
+that met material criteria.
+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) would fall to be disclosed to the
+Sinopec Corp. and the Hong Kong Stock
+Exchange under the Divisions 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.
+As of December 31, 2021, 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. (held as interest of spouse).
+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 2021 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.
+4 COMPANY'S INDEPENDENCE FROM
+CONTROLLING SHAREHOLDER
+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
+the interests of the Company or the other
+shareholders.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+31
+Corporate Governance
+32
+32
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+5 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.
+6 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 date of this
+annual report.
+8 SENIOR MANAGEMENT APPRAISAL AND
+INCENTIVE SCHEMES
+A.4 Appointment, re-election and dismissal
+a. The Directors serve three-year terms,
+and the consecutive terms of office
+of any Independent Non-executive
+Director cannot exceed six years. In
+May 2021, Mr. Zhang Yuzhuo, Mr. Ma
+Yongsheng, Mr. Zhao Dong, Mr. Yu
+Baocai, Mr. Ling Yiqun, Mr. Li Yonglin,
+Mr. Liu Hongbin, Mr. Cai Hongbin,
+Mr. Ng, Kar Ling Johnny, Ms. Shi
+Dan, and Mr. Bi Mingjian, nominated
+by the Board of Directors as the
+candidates for the eighth session of
+the Board based on the actual needs
+of the Company, were elected by the
+general meeting of shareholders as
+Directors of the Company; Mr. Ma
+Yongsheng was elected by the Board
+of Directors as Chairman of the Board
+of Directors of Sinopec Corp on 29
+November 2021. For details about the
+tenure of each Director, please refer
+to the section "Directors, Supervisors,
+Senior Management and Employees".
+Sinopec Corp. has established and is
+continuously improving its fair and
+transparent set of 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.
+(1) Mr. Bi was not a relationship
+holder of the Company or China
+Petrochemical Corporation in CICC
+throughout his service in CICC;
+A.6 Responsibility of Directors
+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.
+b. Each of the Directors was able to
+devote sufficient time and efforts to
+handling the affairs of Sinopec Corp.
+C.
+Each of the Directors confirmed that
+he/she has complied with the Model
+Code for Securities Transactions by
+Directors of Listed Issuers 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 Model
+Code of Securities Transactions by
+Company Employees to regulate the
+purchase and sale of Sinopec Corp.'s
+securities by relevant personnel.
+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.
+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
+advice from professional consultants
+when necessary.
+B REMUNERATION AND APPRAISAL
+COMMITTEE
+d. During the reporting period, the
+Nomination Committee held two
+meetings (please refer to "Meetings
+Held by the Board Committees" under
+the section "Report of the Board of
+Directors" in this annual report).
+a. Remuneration and Appraisal Committee
+("Remuneration Committee") consists 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 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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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 consultant
+members and can require such members
+to provide advice. 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. shall actively cooperate with the
+Remuneration Committee.
+Mr. Bi was a Director of China
+International Capital Corporation
+Limited ("CICC") before his retirement
+in February 2020. China International
+Capital Corporation Limited provided
+financial advisory services to China
+Petrochemical Corporation (being
+the controlling shareholder of the
+Company) and its subsidiaries
+during the period from 1 January
+2019 to the date of this report.
+However, the Board is of the view
+that Mr. Bi satisfies the independence
+requirements for Independent Non-
+executive Directors, taking into
+account the following factors:
+d. During the reporting period, the
+C ACCOUNTABILITY AND AUDITING
+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).
+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 2021.
+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 require such member to provide
+advice. The working expenses of the
+Nomination Committee are included
+in the budget of Sinopec Corp.
+A.7 Provision and use of information
+a. 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. All Directors of Sinopec Corp. have
+been elected at the general meeting
+of shareholders. The Board has no
+power to appoint temporary Directors.
+c. Sinopec Corp. engages professional
+consultants to prepare detailed
+materials for newly elected Directors,
+to notify them of the regulations of
+each listing place of Sinopec Corp.
+and to remind them of their rights,
+responsibilities, and obligations as
+Directors.
+(2) Other than being a consultant
+ending in March 2022, which is
+of honorary nature, Mr. Bi does
+not involve in the management
+or operation of CICC, and Mr. Bi
+has not had any engagement with
+CICC, nor holds any position in
+CICC after his retirement;
+(5) Mr. Bi has not involved or
+participated in, and will not involve
+or participate in, any transaction
+(if any) between the Company
+(or its controlling shareholder, or
+their respective subsidiaries or
+core connected persons) and CICC
+in his capacity as a consultant of
+CICC; and
+(6) Mr. Bi has met all requirements
+under Rule 3.13 (other than Rule
+3.13(3)) of the Hong Kong Listing
+Rules ("Listing Rules") and there
+are no other matters that would
+potentially compromise Mr. Bi's
+compliance with the independence
+criterion as set out in Rule 3.13.
+(3) Mr. Bi holds no share in the
+Company or China Petrochemical
+Corporation as at the date of this
+report;
+A.5 Nomination Committee
+a. The Board of Directors established
+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 Mr. Ng, Kar Ling Johnny, who
+serve as members. The principal
+responsibilities of 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.
+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.
+(4) Mr. Bi holds 1,501,451 shares
+in CICC, representing 0.03% of
+the total issued shares of CICC
+as at the date of this report,
+which constitutes a minimal part
+of the share capital of CICC and
+is immaterial in the context of
+independence, and Mr. Bi does
+not have any other economic
+interest in or in association with
+CICC;
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+33
+Corporate Governance
+34
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+b. 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 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.
+Currently, the Board has achieved
+diversity in terms of gender, culture,
+educational backgrounds, professional
+specialties, etc. 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, finance, and
+industry and energy economy, which
+are conductive to strategic planning
+and scientific decision-making.
+Remuneration
+paid by
+No
+Tenure
+(RMB1,000,
+before tax)
+LIST OF FORMER MEMBERS OF THE BOARD OF SUPERVISORS
+Whether
+paid by the
+shareholders
+in 2020
+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).
+No
+0
+No
+0
+0
+0
+40,000
+40,000
+of the
+Company or
+their related
+0
+Equity interests
+in Sinopec Corp.
+(as of 31 December)
+0
+Gender
+Male
+Yes
+0
+0
+Yes
+0
+No
+0
+0
+2020
+2021
+entities
+Yes
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+46
+Supervisor 2006.05-2021.01
+57 Employee Representative Supervisor 2020.05-2021.01
+58 Employee Representative Supervisor 2010.12-2021.01
+Male 61
+Male
+Male
+Zou Huiping
+Sun Huanquan
+Yu Renming
+Former Chairman of the 2017.06-2021.05
+Board of supervisor
+Position in
+Sinopec Corp.
+Age
+51
+Name
+Zhao Dong
+No
+entities
+Yes
+0
+Yin Zhaolin
+59
+Male
+Zhang Zhiguo
+57
+Male
+Jiang Zhenying
+0
+Male
+2020
+Chairman of the 2021.05-2024.05
+Board of Supervisors
+50
+50
+Male
+Zhang Shaofeng
+in Sinopec Corp.
+(as of 31 December)
+Equity interests
+0
+2021
+56
+Guo Hongjin
+Male
+0
+0
+0
+0
+|3| 3| 3|2|2|22|
+1,165.4
+417.2
+298.4
+403.2
+Yes
+Yes
+Yes
+Supervisor 2018.05-2024.05
+Supervisor 2021.05-2024.05
+Supervisor 2021.05.2024.05
+Supervisor 2021.05-2024.05
+60 Employee Representative Supervisor 2020.05-2024.05
+60 Employee representative Supervisor 2021.01-2024.05
+58 Employee Representative Supervisor 2021.01-2024.05
+Male
+Male
+Chen Yaohuan
+Lv Dapeng
+Male
+Li Defang
+56
+0
+ooo
+0
+Yu Xizhi
+No
+1,451.9
+0
+0
+No
+1,292.4
+Chief Financial Officer
+Vice President
+59
+0
+Male
+52
+Female
+Shou Donghua
+0
+0
+No
+1,411.0
+Vice President
+Zhao Rifeng
+Huang Wensheng
+Male
+55
+Corporate Governance
+49
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+On 29 November 2021, Mr. Yu Baocai was
+appointed as President of Sinopec Corp.
+On 29 November 2021, Mr. Ma Yongsheng
+was appointed as Chairman of the Board,
+Chairman of each of the Strategy Committee,
+Nomination Committee and Sustainable
+Development Committee (formerly, the Social
+Responsibility Management Committee)
+of the Board of Sinopec Corp. resigned
+as President and became a non-executive
+director.
+On 2 August 2021, Mr. Zhang Yuzhuo
+resigned as Chairman of the Board, Non-
+executive Director and Chairman of each
+of the Strategy Committee, Nomination
+Committee and Sustainable Development
+Committee (Social Responsibility
+Management Committee) of the Board of
+Sinopec Corp. due to change of working
+arrangement.
+Other Senior Management: Mr. Chen Ge was
+elected as Senior Vice President. Mr. Yu
+Xizhi, Mr. Zhao Rifeng, Mr. Huang Wensheng
+were elected as Vice Presidents. Ms. Shou
+Donghua was appointed as Chief Financial
+Officer. Mr. Huang Wensheng was elected as
+Secretary to the Board.
+Board of Supervisors: Mr. Zhang Shaofeng
+was elected as the Chairman of Board
+of Supervisors. Mr. Jiang Zhenying, Mr.
+Zhang Zhiguo, Mr. Yin Zhaolin, Mr. Guo
+Hongjin were elected as Supervisors. Mr. Li
+Defang, Mr. Lv Dapeng, Mr. Chen Yaohuan
+were elected as Employee Representative
+Supervisors.
+Board of Directors: Mr. Zhang Yuzhuo
+was elected as Non-executive Director and
+Chairman of the Board. Mr. Ma Yongsheng
+was elected as Executive Director and
+President; Mr. Zhao Dong was elected as
+Non-executive Director; Mr. Yu Baocai, Mr
+Ling Yiqun, Mr. Li Yonglin, Mr. Liu Hongbin
+were elected as Executive Directors and
+Senior Vice President. Mr. Cai Hongbin and
+Mr. Ng Kar Ling Johnny, Ms. Shi Dan, Mr.
+Bi Mingjian were elected as Independent
+Non-executive Directors. Mr. Tang Min was
+no longer the Independent Non-executive
+Directors of the Board.
+On 25 May 2021, the members of the Eighth
+Session of the Board of Directors and the
+Board of Supervisors (non-Employee-
+Representative Supervisors) were elected at
+the 2020 general meeting of shareholders.
+The Chairman of the Board was elected and
+the senior management appointed at the
+1st meeting of the Eighth session of Board
+held at the same date.The Chairman of the
+Board of Supervisors was elected at The 1st
+meeting of the Eighth Session of the Board
+of Supervisors. The changes of the Directors,
+Supervisors and other senior management
+are as follows:
+to age.
+On 28 January 2021, Mr. Zou Huiping
+resigned as Supervisor of Sinopec Corp. due
+On 1 January 2021, Mr. Yu Renming, Mr.
+Sun Huanquan resigned as Employee's
+Representative Supervisors of Sinopec Corp.
+due to change of working arrangement. Mr.
+Lv Dapeng and Mr. Chen Yaohuan were
+elected as the employee's representative
+supervisors of the seventh session of the
+Board of Supervisors of Sinopec Corp.
+through democratic procedure, for a term
+commencing from 11 January 2021 to the
+date when the term of the seventh session
+of the board of supervisors of the Company
+expires.
+12 INFORMATION ON APPOINTMENT
+OR TERMINATION OF DIRECTORS,
+SUPERVISORS AND SENIOR MANAGEMENT
+0
+0
+of the
+Company or
+their related
+No
+1,407.9
+Vice President, Board Secretary
+59
+Male
+Yu Xizhi
+0
+LIST OF MEMBERS OF THE SENIOR MANAGEMENT
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Huang Wensheng, aged 55, 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
+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
+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.
+Zhao Rifeng, aged 59, 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.
+Huang Wensheng
+Zhao Rifeng
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+48
+Corporate Governance
+47
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Shou Donghua, aged 52, Chief Financial
+Officer and General Manager of Finance
+Department 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. and General Manager of
+Finance Department.
+Petrochemical Corporation. In July 2020,
+he was appointed as Vice President of
+Sinopec Corp.
+was elected as Director of China
+Department of China Petrochemical
+Corporation; in January 2020, he
+Yu Xizhi, aged 59, 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 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
+(3) Other Members of Senior Management
+Chen Ge, aged 59, 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 as Senior Vice President
+of Sinopec Corp.; in July 2020, he was
+appointed concurrently as General
+counsel.
+Shou Donghua
+Position in
+Chen Ge
+Name
+Age
+0
+No
+1,586.7
+Senior Vice President
+59
+Male
+Chen Ge
+2020
+2021
+entities
+(as of 31 December)
+Equity interests in Sinopec Corp.
+of the
+Company or
+their related
+Whether
+paid by the
+shareholders
+in 2021
+(RMB1,000,
+before tax)
+Sinopec Corp.
+paid by
+Remuneration
+Sinopec Corp.
+Gender
+in 2021
+(RMB1,000,
+before tax)
+Gender
+Position in
+Sinopec Corp.
+Yes
+Board Director, 2021.05.2024.05
+55
+Male
+Li Yonglin
+Senior Vice President
+Yes
+441.8
+Senior Vice President
+Yes
+2020
+2021
+Company
+(as at 31 December)
+Equity interests in Sinopec Corp.
+the holding
+paid by
+Whether
+715.3
+Liu Hongbin
+Male
+59
+0
+zzzz à 303
+300.0
+300.0
+416.7
+416.7
+Independent Director 2018.05.2024.05
+Independent Director 2018.05-2024.05
+Independent Director 2021.05.2024.05
+Independent Director 2021.05-2024.05
+60
+66
+Male
+Female
+Bi Mingjian
+Shi Dan
+61
+Male
+Ng, Kar Ling Johnny
+54
+Male
+Cai Hongbin
+Yes
+Board Director, 2020.05.2024.05
+Senior Vice President
+(RMB1,000,
+before tax)
+0
+in 2021
+Remuneration
+41
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+Bi Mingjian, aged 66, 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 Deputy Chief Executive Officer, member
+and Deputy Chairman of the Management
+Committee, Co-Chief Operating Officer
+Shi Dan, aged 60, 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; in
+November 2017, she served 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.
+Bi Mingjian
+Shi Dan
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Corporate Governance
+40
+Ng, Kar Ling Johnny, aged 61, 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.,
+Fangdd Network Group Ltd. and Metallurgical
+Corporation of China Ltd. In May 2018,
+Cai Hongbin, aged 54, 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 and Ping An
+Bank Co., Ltd. In May 2018, he was elected
+as Independent Director of Sinopec Corp.
+Liu Hongbin, aged 59, 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.
+Ng, Kar Ling Johnny
+Cai Hongbin
+Liu Hongbin
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+he was elected as Independent Director of
+Sinopec Corp.
+42
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+Tenure
+Board Director, President 2016.02-2024.05
+Board Director 2021.05.2024.05
+Board Director, President 2018.10-2024.05
+Board Director, 2018.05-2024.05
+Sinopec Corp.
+59
+Male
+Ling Yiqun
+57
+Male
+Yu Baocai
+51
+Male
+Zhao Dong
+Male
+Ma Yongsheng
+Age
+Gender
+Name
+Position in
+LIST OF MEMBERS OF THE BOARD
+paid by
+No
+0
+응응
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+44
+Corporate Governance
+43
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Zhang Zhiguo, aged 59, 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.
+Jiang Zhenying, aged 57, 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 & 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 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.
+Yin Zhaolin
+Zhang Shaofeng, aged 50, 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 (PetroChina Company Limited); in
+December 2017, he was appointed as
+General Manager of Finance Department
+of CNPC (PetroChina 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
+I was elected as Chairman of Board of
+Supervisors of Sinopec Corp.
+Zhang Zhiguo
+Jiang Zhenying
+Zhang Shaofeng
+0
+0
+No
+116.7
+0
+(2) Supervisors
+Guo Hongjin
+Li Defang
+Yin Zhaolin, aged 56, 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-I Large.
+scale 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.
+Gender Age
+Name
+Whether
+paid by the
+shareholders
+paid by
+Sinopec Corp.
+Remuneration
+LIST OF MEMBERS OF THE BOARD OF SUPERVISORS
+CORPORATE GOVERNANCE (CONTINUED)
+Corporate Governance
+Corporate Governance
+45
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Chen Yaohuan, aged 58, 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 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 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 Petroleum
+Storage and Reserve Limited. In January
+2021, he was elected as Employee's
+Representative Supervisor of Sinopec
+Corp.
+Lv Dapeng, aged 60, 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 CPC Committee directly 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 Representative
+Supervisor of Sinopec Corp.
+Chen Yaohuan
+Lv Dapeng
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+of Sinopec Communist Party School. In
+May 2020, he was elected as Employee's
+Representative Supervisor of Sinopec
+Corp.
+Li Defang, aged 60, 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 Informatisation
+Management Department of Sinopec
+Corp.; in October 2014, he was
+appointed as Chairman 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
+Guo Hongjin, aged 56, 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.
+0
+Yes
+0
+0
+Zhang Shaofeng
+Tang Min
+60
+Male
+Zhang Yuzhuo
+Age
+Name
+Remuneration
+LIST OF FORMER MEMBERS OF THE BOARD
+oooooo
+0
+0
+0
+0
+0
+0
+0
+0
+13,000
+13,000
+Male
+Tenure
+50
+68
+Yes
+2020
+2021
+Company
+(as at 31 December)
+Equity interests in Sinopec Corp.
+the holding
+paid by
+Whether
+(RMB1,000,
+before tax)
+in 2021
+paid by
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Note: According to regulation of the authority, Mr. Fan Gang did not get remuneration from the Company.
+Former Independent 2015.05-2021.05
+Director
+2020.03-2021.08
+Former Director 2020.09-2021.05
+Tenure
+Former Chairman
+Position in
+Sinopec Corp.
+Male
+60
+On 1 March 2021, Sinopec Corp. became
+the first to publish its 14th-five-year plan
+to support rural revitalization, mapped out
+its education and consumption support
+enforcement plans respectively, including
+the vision to be realized in the 14th-five-year
+period, the planed fund and major projects,
+which ensured the all-round support work.
+In 2021, the Company accumulatively
+dispatched 349 village teams and 925 village
+cadres to undertake 610 village-level support
+projects, invested and introduced to-be-paid
+and non-to-be-paid funds of RMB580 million
+in total, trained over 30,000 entry-level
+personnel and supported local consumption
+by RMB950 million.
+4
+PERIOD
+In the reporting period, the Company
+targeted to build a world-leading clean
+energy and chemical company, stuck to
+green and clean development strategy,
+persistently carried out "green enterprise
+action", deepened the campaign of pollution
+prevention, kept environment risk from
+occurring, thus no substantial or sudden
+environmental incident happened. The COD
+and sulphur dioxide emissions decreased by
+2.1% and 4.2% respectively, and the solid
+waste was 100% properly treated.
+2 MEASURES TAKEN TO MITIGATE CARBON
+EMISSION AND ITS EFFECT IN THE
+REPORTING PERIOD
+In the reporting period, the Company, guided
+by the carbon peak and carbon neutrality
+targets, advanced the "energy efficiency
+upgrading plan" in depth, persistently
+intensified carbon assets management, thus
+the energy saving and carbon reduction
+has been further improved. In 2021, the
+Company decreased its greenhouse gas
+emission by 2.38 million ton carbon dioxide
+equivalent, recycled 1.52 million tons of
+carbon dioxide, used 0.31 million tons of
+carbon dioxide for EOR, recycled 717 million
+cubic meters of methane which is equivalent
+to 10.75 million tons of carbon dioxide in
+terms of greenhouse gas emission.
+3 ENVIRONMENTAL PROTECTION
+SOLUTIONS OF COMPANIES AND THEIR
+SUBSIDIARIES AS MAJOR POLLUTANT
+DISCHARGING COMPANIES IDENTIFIED
+BY ENVIRONMENTAL PROTECTION
+DEPARTMENTS
+(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
+disclosed environmental information
+in accordance with the requirements
+of the national list of fixed pollution
+source emission permit classification
+management and acquired their pollutant
+discharge license 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.
+(2) Construction and operation of pollution
+prevention facilities
+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,
+kept effective and stable operation of
+pollution prevention and control facilities.
+(3) Environmental influence evaluation
+for construction projects and other
+administrative permit for environmental
+protection
+In the reporting period, the Company
+standardized environmental protection
+management for construction projects,
+enforced whole process construction and
+operation management, with measures of
+the "simultaneous three" implemented,
+all new projects have acquired approval
+for environmental evaluation from
+government.
+(4) Contingent scheme for sudden
+environmental incident
+In the reporting period, the Company
+complied with the requirements for
+environmental incident contingent scheme
+by the State, promulgated “contingent
+scheme for sudden environmental
+incidents", and persistently improved
+its contingent scheme against sudden
+environmental incidents of enterprises
+and severe pollution weather.
+(5) Scheme for environment self-monitoring
+In the reporting period, the Company
+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.
+(6) Administrative penalties due to
+environmental problems in the reporting
+period
+In the reporting period, no penalty for
+significant environmental protection
+incident was imposed on the Company.
+The subsidiaries' administrative penalties
+have been disclosed in the website
+required by environment departments of
+local government.
+4
+1 WORK CONDUCTED IN ECOLOGICAL
+PROTECTION, POLLUTION PREVENTION
+AND ENVIRONMENTAL RESPONSIBILITIES
+IMPLEMENTATION IN THE REPORTING
+5
+ENVIRONMENT AND SOCIAL RESPONSIBILITIES
+42
+0
+21-30
+31-40
+41-50
+51-60
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+51
+Corporate Governance
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+18 CHANGES OF CORE TECHNICAL TEAM OR
+KEY TECHNICIANS
+During the reporting period, there are no
+significant changes of core technical team or
+key technicians.
+19 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
+2021, the Company has a total of 280,216
+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 schemes
+are responsible for the payments of basic
+pensions.
+20 REMUNERATION POLICY
+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
+constantly improve employee performance
+evaluation and incentive & discipline
+mechanisms.
+21 TRAINING PROGRAMS
+In 2021, the Company strengthened
+coordination for training programs, took
+innovative approaches to establish high
+quality training system, and conducted
+training programs for all types of talents. The
+training for management staff became more
+systematic, with the 8-level echelon training
+system being constantly improved, covering
+new employees up to top management staff
+of subsidiaries, with an emphasis on middle-
+aged and young management staff training
+programs. The technician, skilled worker and
+specialist training proved more practically
+effective, with programmes focusing on oil
+and gas exploration specialists' versatile
+knowledge and advanced study, high-end
+synthetic material specialists' research and
+study, "future scientist" creativity upgrading,
+state craftsman forging and upgrading. The
+programmes enhanced post exposure, basic
+skill training and contingent skill training.
+The international talent training was further
+strengthened, focusing on overseas project
+teams, with training projects covering
+overseas project managers, international
+trade managers, refining and chemical
+international talents. The headquarters
+trained 5,122 key talents of various types. In
+addition, the Company strengthened online
+training by rendering it more intelligent and
+tailor-made, and participants have spent
+over 50 million hours on the online training
+program during the year of 2021.
+52
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+1467
+(7) Other environmental information to be
+disclosed
+59
+(3) OTHER LOAN
+Project construction loan
+Working capital loan
+Class
+(2) ENTRUSTED LOAN
+During the reporting period, the Company
+was not involved in any entrusted financing.
+12 ENTRUSTED FINANCING AND LOAN
+(1) ENTRUSTED FINANCING
+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 trust, contracting or lease agreement
+subject to disclosure obligations.
+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.
+FACTO CONTROLLER
+10 CREDIBILITY FOR THE COMPANY,
+CONTROLLING SHAREHOLDERS AND DE
+Saved as disclosed by Sinopec Corp., the
+Company did not enter into any material
+contracts subject to disclosure obligations
+during the reporting period.
+OTHER MATERIAL CONTRACTS
+9
+8 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.
+7 SIGNIFICANT LITIGATION, ARBITRATION
+RELATING TO THE COMPANY
+In the reporting period, Sinopec Corp. strictly
+complied with the approval requirements 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 witness 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.
+The external guarantees prior to 2021 had
+been disclosed in previous annual report.
+The aggregate balance of outstanding
+external guarantees provided by Sinopec
+Corp. for the year 2021 was RMB26 billion,
+accounting for approximately 3.36% of the
+Company's net assets. The total amount of
+guarantees provided during the reporting
+period was RMB3.4 billion, accounting for
+approximately 0.44% 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:
+Class
+Significant Events
+Project construction loan
+Origin
+59
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+0
+3,060
+Overdue
+Undue
+amount
+unit RMB million
+During the reporting period, the Company was not involved in other financing or derivative investment.
+Transaction
+amount
+3,060
+Self-owned fund
+Origin
+154
+2,690
+Overdue
+Undue
+amount
+amount
+(467)
+(42)
+Transaction
+unit RMB million
+Self-owned fund
+Self-owned fund
+(4) OTHER FINANCING AND DERIVATIVE INVESTMENT
+1,642
+2,114
+500
+Exploration and Production
+126,874
+33%
+Refining
+57,513
+15%
+Chemicals
+67,794
+17%
+EMPLOYEES' PROFESSIONAL STRUCTURE AS FOLLOWS: (INCLUDING PRODUCTION, SALES, TECHNOLOGY, FINANCE, ADMINISTRATION AND
+OTHERS)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Technology
+87,231
+22%
+Finance
+8,612
+2%
+Administration
+30,725
+1%
+8%
+5,066
+2%
+50
+CORPORATE GOVERNANCE (CONTINUED)
+13 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 managers during the reporting period.
+14 CONTRACTUAL INTERESTS OF DIRECTORS
+AND SUPERVISORS
+As of 31 December 2021 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.
+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
+During this reporting period, a total of 16
+Directors, Supervisors and other senior
+managers received remuneration from
+Sinopec Corp. with a total amount of
+RMB12.1413 million.
+17 THE COMPANY'S EMPLOYEES
+As at 31 December 2021, the Company
+has a total of 385,691 employees. There
+are a total of 280,216 retired employees to
+be reimbursed by Sinopec Corp. Sinopec
+Marketing Co. Limited, the principal
+subsidiaries of Sinopec Corp., has 122,232
+employees.
+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)
+Marketing and Distribution
+122,232
+32%
+R&D
+6,212
+Other Segments
+Others
+2,540
+1%
+2,295
+2,300
+2,200
+2,100
+2,000
+1,960
+1,957
+1,900
+1,800
+1,700
+PHD
+Master's Degree
+Undergraduate
+or below
+TECHNOLOGY PERSONNEL AGE STRUCTURE
+2,500
+2,000
+1,500
+989
+1,000
+2,400
+TECHNOLOGY PERSONNEL EDUCATION STRUCTURE: (INCLUDING PHD, MASTER'S DEGREE, UNDERGRADUATE OR BELOW)
+8%
+30,426
+Production
+145,786
+38%
+Sales
+110,797
+29%
+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)
+Senior high school and
+technical school degrees or below
+136,667
+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 2021 in
+accordance with the requirements of the
+domestic regulatory authorities:
+35%
+21,839
+6%
+Undergraduate
+109,327
+28%
+Junior college
+87,432
+23%
+Technical secondary school
+Master's degree or above
+50
+INDEPENDENT OPINIONS FROM
+INDEPENDENT NON-EXECUTIVE
+DIRECTORS REGARDING OUTSTANDING
+EXTERNAL GUARANTEES PROVIDED BY
+THE COMPANY DURING AND BY THE END
+OF 2021:
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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
+In the reporting period, for subsidiaries
+not listed as major pollution units,
+the Company has acquired related
+permissions from national and local
+government, and enforces environmental
+protection measures. The above
+mentioned subsidiaries are not obliged
+to disclose in accordance with the
+requirements of national and local
+ecological environment authorities.
+3
+2 Solving the issues regarding the legality of land-
+agreements;
+China Petrochemical
+Corporation
+China Petrochemical 1 Compliance with the connected transaction
+Contents
+Other
+Other undertakings
+Corporation
+Public Offerings (IPOs)
+Party
+Undertaking
+IPOs
+Given that China Petrochemical Corporation engages in
+the same or similar businesses as Sinopec Corp. with
+regard to the exploration and production of overseas
+petroleum and natural gas, China Petrochemical
+Corporation hereby grants a 10-year option to Sinopec
+Corp. with the following provisions: (i) after a thorough
+analysis from political, economic and other perspectives,
+Sinopec Corp. is entitled to require China Petrochemical
+Corporation to sell its overseas oil and gas assets
+owned as of the date of the undertaking and still in its
+possession upon Sinopec Corp.'s exercise of the option
+to Sinopec Corp.; (ii) in relation to the overseas oil and
+gas assets acquired by China Petrochemical Corporation
+after the issuance of the undertaking, within 10 years
+of the completion of such acquisition, after a thorough
+analysis from political, economic and other perspectives,
+Sinopec Corp. is entitled to require China Petrochemical
+Corporation to sell these assets to Sinopec Corp. China
+Petrochemical Corporation undertakes to transfer the
+assets as required by Sinopec Corp. under aforesaid
+items (i) and (ii) to Sinopec Corp., provided that the
+exercise of such option complies with applicable laws and
+regulations, contractual obligations and other procedural
+requirements.
+Undertakings related to Initial
+Whether bears
+Term for performance
+Guarantor
+Sinopec Corp.
+Relationship
+with the
+Unit: RMB million
+Major external guarantees (excluding guarantees for controlled subsidiaries)
+5 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
+SIGNIFICANT EVENTS (CONTINUED)
+EXPAND THE ACHIEVEMENTS IN POVERTY-
+ALLEVIATION AND RURAL REVITALIZATION
+In the reporting period, the Company
+focused its rural revitalisation efforts on the
+8 counties designated for its assistance, the
+poverty of which has already been alleviated.
+The Company recognised industry, education
+and consumption as three main fields of
+work, and strengthened the linkage between
+the outcome of poverty alleviation and rural
+revitalization.
+Significant Events
+Significant Events
+57
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+Yes
+Within 10 years after 29 April 2014 Yes
+or the date when China Petrochemical
+Corporation acquires the assets
+Yes
+No
+From 22 June 2001
+performed or not
+deadline or not
+Whether strictly
+Background
+Type of
+4 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
+Zhenhai Refining & Chemical expansion
+project (phase 2) consists of building
+11,000,000 tpa refinery project and
+600,000 tpa propane dehydrogenatin
+and downstream projects. The project
+is expected to begin in March 2022 and
+mechanical completion is expected to be
+finished in June 2024. The Company's
+self-owned fund accounts for 30% of the
+project investment, bank loan is the main
+source of the remaining funds. As of 31
+December 2021, the aggregate amount
+invested was RMB2.1 billion.
+(2) Zhenhai refining & chemical expansion
+project (phase 2)
+Zhenhai Refining & Chemical expansion
+project (phase 1) consists of 4,000,000
+tpa crude oil modification project for
+old refinery 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. The mechanical completion was
+finished in June 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 2021, the aggregate amount
+invested was RMB23 billion.
+project (phase 1)
+(1) Zhenhai refining & chemical expansion
+1 MAJOR PROJECTS
+SIGNIFICANT EVENTS
+A SUY66
+便利店
+为美好生活加油
+H2
+氢能
+HNIT
+中国石化
+Environment and Social Responsibilities
+53
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+As an official sponsor for Winter Olympic and
+Paralympic Games Beijing 2022, Sinopec
+Corp. proactively implemented its concept
+of "clean energy, serve the Winter Olympic
+Games", dedicated itself to service, supply
+and promotion for the Olympic Games. The
+Company facilitated the construction of oil
+and hydrogen energy stations, used the
+hydrogen it produced to fuel the Olympic
+torches, and supplied clean energy for the
+Games. Meanwhile, the Company developed
+and manufactured the carbon fibre synthetic
+material used in the coat of the "flying
+upward" torch, which has promoted the
+Company's brand concept of "cleaner energy,
+better life".
+SUPPORT THE WINTER OLYMPIC AND
+PARALYMPIC GAMES BEIJING 2022
+(3) 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
+1,200,000 tpa ethylene project and
+downstream processing units. 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 2021, the
+aggregate amount invested was RMB3.0
+billion.
+(4) Wuhan de-bottleneck project
+Wuhan de-bottleneck project expands
+the original an 800,000 tpa-to-1,100,000
+tpa ethylene capacity expansion
+project. The project started at the
+end of October 2018 and mechanical
+completion was finished in June. 2021.
+It's put into operation in Sep. 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 funds. As of 31
+December 2021, the aggregate amount
+invested was RMB3.9 billion.
+(5) 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. The
+project started at the end of December
+2018 and is expected to achieve the
+mechanical completion in Jun. 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 funds. As of 31
+December 2021, the aggregate amount
+invested was RMB15.6 billion.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+56
+On 28 January 2021, the Board approved the
+continuing related party transaction cap in
+relation to refined oil pipeline transportation
+between Marketing Company and PipeChina
+for the period from 1 October 2020 to 31
+December 2021. The aggregate amount of
+the continuing related party transaction of
+the Company from 1 January 2021 to 31
+December 2021 was RMB5.93 billion.
+3. THE TRANSACTIONS WITH CHINA OIL &
+GAS PIPELINE NETWORK CORPORATION
+(PIPECHINA)
+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
+29 March 2021, 2 July 2021, 30 November
+2021 and 2 December 2021, on the website
+of Hong Kong Stock Exchange on 28 March
+2021, 1 July 2021, 29 November 2021 and
+1 December 2021.
+On 29 November 2021, Sinopec Corp. and
+Assets Company entered into the agreement
+on purchasing the equity assets, non-equity
+assets and liabilities of the production
+and operating business held by the Assets
+Company, Sinopec Yizheng Chemical Fibre
+Company Limited and Assets Company
+entered into the agreement on purchasing
+the equity assets, non-equity assets and
+liabilities of the production and operating
+business held by the Assets Company,
+Sinopec Corp. and Sinopec Beijing Yanshan
+Petrochemical Co., Ltd. entered into the
+agreement on purchasing the non-equity
+assets and liabilities of the production and
+operating business held by Sinopec Beijing
+Yanshan Petrochemical Co., Ltd. As of 1
+December 2021, the ownership, obligations,
+responsibilities and risks of targeted assets
+have been transferred to Sinopec Corp. or its
+subsidiaries.
+On 26 March 2021, Sinopec Corp. and
+Sinopec Group Asset Management Co., Ltd.
+("Asset Company") entered into acquisition
+agreements to purchase the equity interest
+in Cangzhou Toray and the polypropylene
+and utilities assets, Sinopec Corp. and Orient
+Petrochemical entered into agreement to
+purchase equipment and related assets.
+On the same day, Overseas Investment
+Company of Sinopec Corp. and Century
+Bright Company entered into agreement to
+purchase equity interest in Hainan Refining
+and Chemical, Beihai Refining & Chemical
+of Sinopec Corp. and Beihai Petrochemical
+entered into agreement to purchase the non-
+equity assets including the pier operation
+platform. As of 1 July 2021, conditions
+precedent for closing in above agreements
+have been met, the ownership, obligations,
+responsibilities and risks of targeted assets
+have been transferred to Sinopec Corp. or its
+subsidiaries.
+2 PURCHASE OF EQUITY AND NON-EQUITY
+ASSETS
+SIGNIFICANT EVENTS (CONTINUED)
+Company
+Significant Events
+55
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Longkou LNG project mainly consists
+of a wharf, terminal and power plant
+warm drainage and water Intake. The
+first phase designed LNG capacity is 6
+million tons per year. One LNG berth
+with 0.266 million cubic meter capacity
+will be modified and four 0.22 million
+cubic meter capacity storage tanks
+will be newly built up. The project
+started in Nov. 2021 and is expected
+to put into operation in Nov. 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 2021, the aggregate amount
+invested was RMB1.4 billion.
+(9) Longkou LNG project
+Tianjin LNG project (phase 2) mainly
+consists of a new wharf, 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 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 funds. As
+of 31 December 2021, the aggregate
+amount invested was RMB3.0 billion.
+(8) Tianjin LNG project (phase 2)
+(7) Weirong shale gas project (phases 1 & 2)
+Guided by the principle 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,
+unfolded comprehensively since August
+2018. The phase-one 1 billion-cubic-
+meter capacity was built up in December
+2020. It is expected to complete phase-
+two 2 billion-cubic-meter capacity 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 funds. As
+of 31 December 2021, the aggregate
+amount invested was RMB6.3 billion.
+Yizheng 3 million tpa PTA project mainly
+consists of oxidation, purification units
+and auxiliary units. The project started in
+July 2021 and the mechanical completion
+is expected to be finished in Aug. 2023.
+The Company's self-owned fund accounts
+for 30% of the project investment, bank
+loan is the main source of the remaining
+funds. As of 31 December 2021, the
+aggregate amount invested was RMB0.65
+billion.
+(6) Yifzheng PTA project
+Significant Events
+6. SPECIFIC STATEMENTS AND
+Name of
+guaranteed
+company
+Transaction date
+Total amount of guarantees for the Company (including those provided for controlled subsidiaries)
+Total amount of guarantees (A+B)
+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 4 (A)
+Total amount of guarantees provided during the reporting period*4
+liability guarantee performance
+No
+No
+No
+No
+NICO
+Normal
+Joint and several
+January 2021-June 2026
+(the mature date is
+estimated)
+Integrated LLC
+Natural Gas Chemical
+itself
+Jan-21
+The proportion of the total amount of guarantees to the Sinopec Corp.'s net assets (%)
+173
+Guarantees provided for shareholder, de facto controller and its related parties (C)
+The amount of guarantees in excess of 50% of the net assets (E)
+58
+58
+For the details of the guarantees provided by Sinopec Corp. for Zhongtian Hechuang Energy Co., Lt, Zhong An United Coal Chemical Co., Ltd., and
+Russian Amur Natural Gas Chemical Integrated LLC in the above table, please refer to the Company's respective documents dated December 29,
+2015, March 26, 2018, And April 16, 2020 26 January 2021 A notice disclosed on the website of the Shanghai Stock Exchange on 16 December
+2021 and a circular dated 7 January 2016, a circular dated 23 March 2018, and a notice dated 15 December 2021, respectively disclosed on the
+website of the Hong Kong Stock Exchange.
+* 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.
+* 3: Excluding the interest corresponding to the loan principal agreed in the guarantee contract, export credit premium and other expenses
+* 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.
+None
+9,117
+0
+9,117
+0
+3.36
+26,020
+11,157
+0
+3,437
+14,863
+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)
+Amount of debt guarantees provided directly or indirectly to the companies with liabilities to assets ratio over 70% (D)
+The listed company Zhongtian Hechuang 5,746
+itself
+The listed company Russian Amur
+히
+or not guarantee guaranteed yes or no)¹²
+guaranty
+- No No - No No
+Normal
+performance
+Joint and several
+liability guarantee
+parties
+connected
+for
+guaranteed
+Whether
+Sinopec Corp.
+overdue overdue Counter-
+Whether Amount of
+Whether
+Principal
+debt
+condition
+Туре
+Period of guarantee
+May 2016-December
+2023 (the mature date is
+estimated)
+Energy Co., Ltd
+May-16
+(date of signing)
+Amount"¹
+completed
+or not
+Sinopec Corp.
+The listed company Zhong An United Coal 5,680
+itself
+April 2018 December 2031 Joint and several
+No
+No
+No
+No
+No
+NO
+DO
+No
+No
+Apr-18
+No
+2035 (the mature date is
+estimated)
+Natural Gas Chemical
+Integrated LLC
+December 2021-December
+Dec-21
+3,2644
+The listed company Russian Amur
+itself
+Sinopec Corp.
+Chemical Co., Ltd.
+Normal
+liability guarantee performance
+Joint and several Normal
+liability guarantee performance
+Corporate Governance
+Report of the Board of Directors
+Annual Report 2021 69
+7
+2
+4
+0
+2
+2
+4
+Shi Dan
+Bi Mingjian
+2
+0
+0
+0
+4
+3
+7
+Ng, Kar Ling Johnny
+0
+2
+2
+0
+1
+1
+Former Independent Director
+Former Chairman
+proxy
+meetings held
+Meetings
+attend by
+No. of
+General meeting
+0
+0
+Meetings
+attend by
+attendance communication
+On-site
+Name
+Director titles
+(2) Attendance to the board meetings and general meetings during the reporting period by the former Directors of the eighth session of the Board
+Director
+Director
+Independent Director
+Independent Director
+Independent Director
+Independent Director
+0
+0
+Board meeting
+0
+1
+4
+0
+4
+3
+7
+2
+2
+0
+0
+1
+2
+7
+1
+1
+0
+1
+2
+4
+2
+0
+4
+2
+7
+Cai Hongbin
+0
+2
+0
+1
+4
+2
+7
+Liu Hongbin
+0
+1
+0
+0
+2
+2
+Zhang Yuzhuo
+Zhang Shaofeng
+Tang Min
+1
+4
+2
+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 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
+or trustees, or other organisations or groups,
+shall be deemed as shares held by non-
+resident 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.
+4:30 p.m. on Wednesday, 1 June 2022
+for registration. The H shares register and
+transfer of members of Sinopec Corp. will
+be closed from Thursday, 2 June 2022
+to Thursday, 9 June 2022 (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.
+The final cash dividend will be distributed
+on or before Thursday, 23 June 2022 to all
+shareholders whose names appear on the
+register of members of Sinopec Corp. on
+the record date of Thursday, 9 June 2022.
+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
+At the 7th meeting of the eighth session
+of the Board, the Board approved the
+proposal to distribute a final cash dividend
+of RMBO.31 (tax inclusive) per share for
+2021. Taking into account the distributed
+interim dividend of RMBO.16 (tax inclusive)
+per share for the first half of 2021, the total
+dividend for the whole year is RMBO.47 (tax
+inclusive) per share.
+Proposals for dividend distribution
+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,
+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 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
+Icash every year are no less than 30% of the
+net profits of the Company realised during
+the corresponding year.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+8 DIVIDEND
+7 BUSINESS PERFORMANCE
+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 held concurrent
+positions as 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 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
+2021, Mr. Yu Baocai, Mr. Ling Yiqun, Mr. Li
+Yonglin and Mr. Liu Hongbin strictly abided
+by the provisions of laws and regulations,
+the Articles of Association and the service
+contract, conscientiously fulfilled their duties
+of loyalty and diligence, devoted sufficient
+time and energy to organize production,
+operation and management in accordance
+with the decision and deployment of the
+Board, and earnestly implemented the
+decisions of the Board. 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."
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+68
+Report of the Board of Directors
+67
+The financial results of the Company for
+the year ended 31 December 2021, which
+were prepared in accordance with IFRS and
+the financial position as at that date and
+the accompanying analysis are set out from
+page 155 to page 215 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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
+Shares are residents of countries which had
+Pursuant to the Notice on the Tax Policies
+0.20
+242.14
+569.03
+Total amount of cash dividends (RMB billion, tax inclusive)
+0.47
+Cash dividends (RMB/Share, tax inclusive)
+2019
+2020
+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%.
+2021
+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.
+will report to the competent tax authorities
+for the withholding. For investors who are
+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
+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 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
+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):
+Related to the Pilot Program of the Shanghai-
+Hong Kong Stock Connect (
+According to the PRC Accounting Standards, the dividend distribution and bonus shares declared by Sinopec Corp. in the past three years are as
+follows:
+During the reporting period, 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 the Company 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,
+and operations and reform. The Independent
+Directors of Sinopec Corp. fulfilled their
+duties in good faith as required by Terms of
+Reference of the Independent Directors, put
+forward specific requirements on auditing,
+participated in the replacement of external
+auditor and other significant events, issued
+their independent opinions on matters such
+as appointment of senior management,
+connected transactions and profit distribution
+plan, and protected the legitimate interests
+of the minority shareholders' interests. All
+directors had no objection to the Company's
+resolutions, and every director's suggestions
+to the Company were accepted.
+DUTIES
+6 PERFORMANCE OF THE DIRECTORS'
+0
+0
+2
+1
+0
+1
+0
+1
+0
+1
+3
+3
+1
+Actual
+attendance
+No. of
+meetings held
+1
+Absent
+0
+0
+2
+0
+Note 1: No directors were absent from two consecutive meetings of the Board.
+Note 2: Mr. Zhang Yuzhuo resigned as the Chairman, Director of the Board on 2 August 2021.
+(3) Attendance to the general meetings by the Independent Director
+5 BOARD SPECIAL COMMITTEES ISSUED
+REVIEW OPINIONS TO THE BOARD WHEN
+PERFORMING THEIR DUTIES DURING
+THE REPORTING PERIOD, WITHOUT
+OBJECTION.
+(10) The 1st meeting of the eighth session of
+the Nomination Committee was held by
+on site meeting and via video conference
+on 25 May 2021, whereby the proposals
+in relation to the following matters were
+approved:(i) the appointment of President
+of Sinopec Corp.; (ii) the appointment
+of Senior Vice President, Vice President,
+Chief Financial Officer of Sinopec Corp.;
+(iii) the appointment of the Secretary to
+the Board of Directors of Sinopec Corp..
+(9) The 8th meeting of the seventh board of
+the Nomination Committee was held by
+way of written resolution on 25 March
+2021, whereby the proposal in relation to
+the re-election of the Board of Directors
+was approved.
+of the Social Responsibility Management
+Committee was held by way of written
+resolution on 25 March 2021, whereby
+the proposals in relation to the following
+matters were approved: (i) Report of
+Sustainable Development of Sinopec
+Corp. for the year 2020; (ii) Report on
+the environmental protection work of
+Sinopec Corp. for the year 2020 and the
+plan of 2021; (iii) Report on the anti-
+corruption compliance work of Sinopec
+Corp. for the year 2020 and the plan of
+2021.
+(8) The 3rd meeting of the seventh session
+(7) The 3rd meeting of the seventh session
+of the Remuneration and Appraisal
+Committee was held by way of written
+resolution on 25 March 2021 whereby the
+proposal in relation to implementation of
+the rules of the remuneration of directors,
+supervisors and senior management for
+2020 and the remuneration of the Board
+of Directors and the Board of Supervisors
+of the eighth session of the Board was
+approved.
+(6) The 7th meeting of the seventh session
+of the Strategy Committee was held by
+way of written resolution on 25 March
+2021, whereby the proposals in relation
+to the following matters were approved: (i)
+the development strategy of Sinopec
+Corp.; (ii) the investments plan of 2021
+of Sinopec Corp.
+(5) The 2nd meeting of the eighth session
+of the Audit Committee was held by
+way of written resolution on 28 October
+2021, whereby the proposal in relation
+to the third quarterly report for the three
+months ended 30 September 2021 was
+approved.
+(4) The 1st meeting of the eighth session
+of the Audit Committee was held by
+on site meeting on 25 August 2021,
+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
+2021; (ii) Financial statements for the
+first half of the year 2021; (iii) Interim
+report for the six months ended 30 June
+2021; (iv) Proposal in relation to the
+continuing connected transactions for
+the year 2022 to 2024; (v) Report on the
+main audit work for the first half of 2021
+and the overall arrangement of audit
+work for the second half of 2021.
+(3) The 16th meeting of the seventh session
+of the Audit Committee was held by way
+of written resolution on 28 April 2021,
+whereby the proposal in relation to the
+first quarterly report for the three months
+ended 31 March 2021 was approved.
+(2) The 15th meeting of the seventh session
+of the Audit Committee was held by on-
+site meeting and via video conference on
+25 March 2021, whereby the proposals
+in relation to the following matters
+were approved: (i) Financial results and
+business performance of the Company for
+the year 2020; (ii) Financial statements
+of Sinopec Corp. for the year 2020; (iii)
+Annual Report of the Company for the
+year 2020; (iv) Form 20F of the Company
+for the year 2020; (v) change in the
+accounting firm; (vi) Internal control
+assessment report of Sinopec Corp. for
+the year 2020; (vii) Report on audit work
+for 2020 and audit work arrangement for
+2021.
+(1) The 14th meeting of the seventh session
+of the Audit Committee was held by
+way of written resolution on 28 January
+2021, whereby the proposal in relation to
+the Internal Control Manual (2021) was
+approved.
+During the reporting period, the Board
+committees held ten (10) meetings, among
+which the Audit Committee held five (5)
+meetings, the Strategy Committee held
+one (1) meeting, the Remuneration and
+Appraisal Committee held one (1) meeting,
+the Sustainable Development Committee
+(formerly known as Social Responsibility
+Management Committee) held one (1)
+meeting, and the Nomination Committee
+held two (2) 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
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+During the reporting period, none of the Independent Directors had attended the general meetings of shareholders in person due to Covid-19
+pandemic or official duties.
+2
+4
+2
+Actual
+attendance
+(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, if any,
+will apply;
+The pricing principles for the continuing
+connected transactions are as follows:
+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.
+and community services of RMB1.730
+billion, payment of property rent of RMB565
+million, payment of land use right of
+RMB10.831 billion, other lease payment
+RMB159 million, and the interest expenses
+amounted to RMB386 million. The sales
+income amounted to RMB122.563 billion,
+representing 4.25% of the total amount of
+this type of transaction for the reporting
+period, including RMB121.676 billion for
+sales of products and services, RMB165
+million for agency commission income, and
+RMB722 million for interest income.
+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 RMB382.445
+billion. Among which, purchases expenses
+amounted to RMB259.882 billion,
+representing 9.35% 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
+RMB246.211 billion, purchases of auxiliary
+(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.
+The aggregated amount of the continuing
+connected transactions for 2021 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.
+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
+On 27 August 2021, Sinopec Corp. and
+China Petrochemical Corporation entered
+into the sixth supplemental agreement on
+continuing connected transactions. 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 29 August 2021 on the website of the
+Shanghai Stock Exchange and 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.
+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
+the agreements on continuing connected
+transactions.
+1 AGREEMENTS CONCERNING CONTINUING
+CONNECTED TRANSACTIONS
+BETWEEN SINOPEC CORP. AND CHINA
+PETROCHEMICAL CORPORATION
+CONNECTED TRANSACTIONS
+Connected Transactions
+62
+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.
+Significant Events
+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 29 August 2021 on
+the website of the Shanghai Stock Exchange
+and the website of the Hong Kong Stock
+Exchange.
+Decision-making procedures:
+Funds from related parties
+Unit: RMB million
+Funds to related parties
+5 FUNDS PROVIDED BETWEEN RELATED PARTIES
+4 OTHER SIGNIFICANT CONNECTED
+TRANSACTIONS OCCURED THIS YEAR
+For details, please refer to item 2 "purchase
+of equity and non-equity assets" and item
+3 "The transactions with China Oil & Gas
+Pipeline Network Corporation" of the 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.
+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
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+ii
+(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:
+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.
+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.
+Related party 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.
+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.
+i normal commercial terms; or
+61
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+None
+Transaction
+Total
+amount
+nature
+Related party relationship
+Business
+unit: RMB million
+Related party
+Sinopec Finance
+amount
+(3) CREDIT OR OTHER FINANCIAL BUSINESS
+in the end
+3,199
+13,364
+154,648
+29,369
+151,233
+32,305
+Balance
+Transaction amount
+Total
+Total
+loan withdrawn
+Balance at
+beginning
+6,614
+10,428
+Interest
+rate range
+0.56%-4.25%
+1.08%-5.23%
+Note: generally, the loan interest rate at Sinopec Finance and Century Bright is no higher than that of the same type of deposits for the same period from major
+commercial banks.
+Sinopec Group 51%; Sinopec Corp. 49%
+Credit
+9,494
+In addition, governmental departments
+promulgated relevant carbon peak and
+carbon neutrality guidelines which stress on
+the need to curb high energy consumption
+and high emission projects, and promote
+green transformation and high quality
+development.
+In 2021, the NPC Standing Committee
+promulgated the Safety Production Law
+(revised in 2021) to strengthen the
+supervision on safety production. The State
+Council promulgated Sewage Permission
+Management Rules which set up a system
+to take sewage permit as core to monitor
+stationary pollution source. The NDRC
+promulgated Natural Gas Pipe Transportation
+Price Management Regulation and Natural
+Gas Pipe Transportation Pricing Cost
+Supervision Regulation (provisional) which
+specifies the trans-province natural gas pipe
+transportation pricing principle, method,
+procedures, cost structure and review
+method etc in detail.
+16 INFLUENCE ON THE INDUSTRY FROM
+NEWLY-ENFORCED LAW, ADMINISTRATIVE
+RULES, REGULATIONS AND INDUSTRY
+POLICIES
+THE COMPANY
+15 STRUCTURED ENTITY CONTROLLED BY
+SHAREHOLDER AND ITS RELATED PARTIES
+AND THE PROGRESS FOR CLEARING UP
+Not applicable
+14 APPROPRIATION OF NON-OPERATIONAL
+FUNDS BY THE CONTROLLING
+The deposits of the Company at the Finance
+Company and Century Bright Company
+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 Finance Company and Century Bright
+Company.
+In order to regulate related party 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 restrictions
+on Century Bright Company regarding the
+provision of 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 making
+payments, China Petrochemical Corporation
+will ensure that Century Bright Company
+will fulfill its repayment obligation through
+various channels.
+In order to regulate related party 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, ensuring the
+Company's discretion to use and control its
+deposits with the Finance Company. At the
+same time, as the controlling shareholder of
+the Finance Company, China Petrochemical
+Corporation undertook that in case of an
+emergency when the Finance Company
+has difficulty in making payments, China
+Petrochemical Corporation would increase
+the capital of the Finance Company to meet
+the need for the purpose of making payment.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+60
+the occurred amount includes the newly issued bills and discounts in the year
+Note:
+7,194
+Discounted bills
+23,590
+Balance
+at the
+beginning
+Related Parties
+Relations
+(1) Attendance to the board meetings and general meetings during the reporting period by the Directors of the eighth session of the Board
+3 DIRECTORS' ATTENDANCE TO THE BOARD MEETINGS AND TO THE GENERAL 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
+66
+Director titles
+Report of the Board of Directors
+59
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+(7) The 4th meeting of the eighth session
+of the Board was held by way of written
+resolution on 29 November 2021,
+whereby the proposals in relation to the
+following matters were approved: (i) the
+election of the Chairman of the Board;
+(ii) adjustment of the composition of
+the board special committees; (iii) the
+appointment of President of Sinopec
+Corp.; (iv) acquisition of relevant assets
+and equities of Sinopec Group; (v) the
+Terms of Reference of the Independent
+Non-Executive Directors.
+(6) The 3rd meeting of the eighth session of
+the Board was held by written resolution
+on 28 October 2021, whereby the
+proposal in relation to the third quarterly
+report for three months ended 30
+September 2021 was approved.
+(5) The 2nd meeting of the eighth session of
+the Board was held by on-site meeting on
+27 August 2021, 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 2021 and the work arrangements
+for the second half of the year 2021; (ii)
+amendments to the Article of Association;
+(iii) profit distribution plan for the first
+half of the year 2021; (iv) the report of
+Risk Assessment for Capital Deposits at
+Finance Company and Century Bright
+Company; (v) the financial statements
+for the first half of the year 2021; (vi)
+interim report for the six months ended
+30 June 2021; (vii) the continuing
+connected transactions for the year 2022
+to 2024; (viii) establishment of a joint
+venture by Shanghai Petrochemical and
+Baling Petrochemical; (ix) investment and
+construction of 1.5 million tonnes/year
+ethylene project for Zhenhai Refinery &
+Chemical Branch; (x) Notice of 2021 First
+Extraordinary General Meeting.
+(4) The 1st meeting of the eighth session of
+the Board was held by on-site meeting
+and via video conference on 25 May
+2021, whereby the proposals in relation
+to the following matters were approved:
+(i) election of the Chairman of the eighth
+session of the Board; (ii) to rename
+the Social Responsibility Management
+Committee and revise the Term of
+Reference of Social Responsibility
+Management Committee; (iii) the
+revision of the terms of reference of the
+Nomination Committee; (iv) composition
+of the special committees of the eighth
+session of the Board; (v) the appointment
+of President of Sinopec Corp.; (vi) the
+appointment of Senior Vice President,
+Vice President, Chief Financial Officer of
+Sinopec Corp.; (vii) the appointment of
+the Secretary to the Board of Sinopec
+Corp., the Authorized Representative
+of the Hong Kong Stock Exchange and
+the Authorized Representative of the
+Shanghai Stock Exchange.
+65
+Name
+Board meeting
+General meeting
+No. of
+meetings held
+2
+Absent
+0
+0
+4
+3
+Ma Yongsheng
+Zhao Dong
+Li Yonglin
+Ling Yiqun
+Yu Baocai
+Director
+Director
+Chairman
+Director
+proxy
+Meetings
+attend by
+Meetings
+On-site attended by
+attendance communication
+meetings held
+No. of
+(3) The 22th meeting of the seventh session
+of the Board was held by way of written
+resolution on 28 April 2021, whereby
+the proposals in relation to the following
+matters were approved: (i) the first
+quarterly report for the three months
+ended 31 March 2021; (ii) transformation
+and upgrading of refining business and
+improvement of ethylene business for
+Maoming Branch.
+0.31
+375.33
+(xviii) investment and construction of 11
+million tonnes/year refinery and high-
+end synthetic new materials project; (xix)
+the report of Sustainable Development
+of Sinopec Corp. for the year 2020;
+(xx) granting to the Board a general
+mandate to issue new domestic shares
+and/or overseas-listed foreign shares
+of Sinopec Corp.; (xxi) the re-election
+of the Board of Directors; (xxii) the re-
+election of the Board of Supervisors; (xxiii)
+Service Contract for the Directors of the
+eighth session of the Board (including
+remuneration clauses) and Supervisors
+of the eighth session of the Board of
+Supervisors (including remuneration
+clauses); (xxiv) Notice of 2020 Annual
+General Meeting.
+(2) The 21st meeting of the seventh
+11,328
+Associates and joint ventures
+30,682
+of the year
+Balance at
+the end
+Amount
+incurred
+21,012
+of the year
+9,670
+(4,185)
+Balance
+at the
+beginning
+Amount
+incurred
+(848)
+10,645
+Parent company and affiliated
+companies*
+Total
+Other related parties
+Sinopec Group
+of the year
+Balance
+at the end
+of the year
+9,797
+7,143
+6,087
+21,973
+(1) The 20th meeting of the seventh session
+of the Board was held by written
+proposals on 28 January 2021, whereby
+the proposals in relation to the following
+matters were approved:(i) the continuing
+connected transactions with China Oil
+& Gas Pipeline Network Corporation for
+the year 2020-2021; (ii) Information
+Disclosure Management Regulation;
+(iii) Investor Relations Management
+Regulation; (iv) the Internal Control
+Manual (2021).
+During this reporting period, Sinopec Corp.
+held seven (7) Board meetings. The details
+are as follows:
+1 MEETINGS OF THE BOARD
+The Board is pleased to present the report of
+the Board of Directors for the year ended 31
+December 2021 for the shareholders' review.
+REPORT OF THE BOARD OF DIRECTORS
+wwww
+Connected Transactions
+63
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Loans and other accounts receivable and payable
+No material negative impact
+*: affiliated companies include subsidiaries, associates and joint ventures.
+Reason for provision of funds between related parties
+Impacts on the Company
+3,593
+34,275
+(2,494)
+18,518
+15,757
+16,940
+(5,033)
+session of the Board was held by on-
+site meeting and via video conference on
+26 March 2021, whereby the proposals
+in relation to the following matters were
+approved: (i) the development strategy
+of Sinopec Corp. (ii) the Work Report of
+the seventh session of the Board; (iii)
+the Work Report of the seventh session
+of the Senior Management; (iv) financial
+results and business performance of the
+Company for the year 2020; (v) provision
+for impairment for the year 2020; (vi)
+the continuing connected transactions
+for the year 2020; (vii) profit distribution
+plan for the year 2020; (viii) audit costs
+for the year 2020; (ix) to authorize the
+Board to determine the interim profit
+distribution plan of Sinopec Corp. for the
+year 2021; (x) to authorize the Board to
+determine the 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) change in the accounting
+firm; (xiii) Internal control assessment
+report of Sinopec Corp. for the year 2020;
+(xiv) Financial Statements of Sinopec
+Corp. for the year 2020; (xv) Annual
+Report of the Company for the year 2020;
+(xvi) Form 20F of the Company for the
+year 2020; (xvii) Acquisition of relevant
+assets and equities of the Sinopec Group;
+Net profits attributed to the shareholders of the listed company shown in the
+consolidated statement for the dividend year (RMB billion)
+Former Director
+unit: RMB million
+(1) DEPOSIT
+13 BUSINESS WITH SINOPEC FINANCE CO., LTD. (SINOPEC FINANCE) AND SINOPEC CENTURY BRIGHT CAPITAL INVESTMENT, LTD. (CENTURY
+BRIGHT)
+SIGNIFICANT EVENTS (CONTINUED)
+Significant Events
+CHINA PETROLEUM & CHEMICAL CORPORATION
+2021 Internal Control Assessment Report of
+Sinopec Corp. was reviewed and approved at
+the 7th meeting of the eighth session of the
+Board on 25 March 2022, 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
+2021, 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 2021.
+The internal control system of Sinopec Corp.
+related to the financial statements is sound
+and effective.
+INTERNAL CONTROL
+9 RESPONSIBILITIES FOR THE COMPANY'S
+The aggregate cash dividend declared by
+Sinopec Corp. during three years from 2019
+to 2021 is RMB0.98 per share, and the total
+dividend payment from 2019 to 2021 as a
+percentage of average net profit attributed
+to the shareholders of the listed company in
+the three years is 220%.
+Note: The final cash dividend for 2021 is subject to the approval at the 2021 annual general meeting.
+65.1
+72.8
+the listed company in the consolidated statement (%)
+Ratio of the dividends to the net profit attributed to the shareholders of
+576.43
+332.71
+712.08
+Daily Cap
+127,920
+13,364
+Related party
+Sinopec Finance
+Century Bright
+79.9
+unit: RMB million
+Related party relationship
+Sinopec Group 51%;
+Sinopec Corp.49%
+Sinopec Group 100%
+Sinopec Finance Sinopec Group 51%; Sinopec Corp. 49%
+Sinopec Group 100%
+Century Bright
+Related party
+(2) LOAN
+Note 2: the current period's occurrence is on a time deposit basis.
+Note 1: 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
+45,974
+Related party relationship
+197,800
+29,464
+Balance
+in the end
+15,708
+Total
+withdrawn
+9,480
+Transaction amount
+Total
+deposit
+9,385
+Balance
+at beginning
+23,953
+Interest rate range
+current 0.35%-1.725%;
+time deposit: 1.35%-7.4%
+current 0%-0.25% time
+deposit: 0.08%-1.23%
+RMB80 billion by Sinopec
+Finance and Century Bright
+176,800
+Daily Cap
+Thirdly, Sinopec Corp.'s internal control system
+was effective. No material defects of internal
+control were found.
+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.
+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 behavior detrimental to the
+interests of Sinopec Corp. or its shareholders
+was discovered.
+In 2022, 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.
+Zhang Shaofeng
+Chairman of the Board of Supervisors
+CHANGES IN THE SHARE CAPITAL
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
+1
+There was no change in the number and nature of shares of Sinopec Corp. during the reporting period
+the shareholders. No violation of confidential
+provisions of persons who prepared and
+reviewed the report was found.
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+25 March 2022
+Secondly, the reports and financial statements
+prepared by Sinopec Corp. in 2021 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
+On 28 October 2021, the 3rd 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 2021 was reviewed and approved at
+the meeting.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+76
+REPORT OF THE BOARD OF SUPERVISORS (CONTINUED)
+Report of the Board of Supervisors
+Report of the Board of Supervisors
+75
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Through supervision and inspection on the
+production and operation management as
+well as financial management, the Board of
+Supervisors and all the supervisors conclude
+that in 2021, although the COVID-19 pandemic
+accelerates unprecedented change in a century
+and the external situation tends to be more
+complicated and severe, China is establishing
+its new development pattern, with all industries
+restructuring and deep adjustment. Energy
+development has entered into a phase of
+transformative and qualitative change. The
+Company conscientiously implements the
+decision-making and deployment of the board of
+directors to improve performance, coordinates
+energy supply, scores new achievements in
+scientific and technological innovation and
+promotes all work as a whole to maintain the
+steady advance of business operations, and
+achieves the best business performance in the
+company's history. The Board of Supervisors
+had no objection to the supervised issues during
+the reporting period.
+In addition, the Company organised the
+supervisors to attend the general meetings
+of shareholders and meetings of the Board.
+The Company 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.
+On 27 August 2021, the 2nd meeting of the
+eighth session of the Board of Supervisors
+was held, the Interim Financial Statements of
+Sinopec Corp. for 2021, the Interim Report
+of Sinopec Corp. for 2021 for 2021 and the
+proposal of continuing connected transactions
+for 2022 to 2024, were reviewed and approved
+at the meeting.
+On 25 May 2021, the 1st meeting of the eighth
+session of the Board of Supervisors was held,
+on which Mr. Zhang Shaofeng was elected as
+Chairman of the eighth session of the Board of
+Supervisors.
+On 28 April 2021, the 13th 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 the three
+months ended 31 March 2021 was reviewed and
+approved at the meeting.
+On 26 March 2021, the 12th meeting of the
+seventh session of the Board of Supervisors
+was held, and the proposals in relation to
+Annual Report of Sinopec Corp. for 2020, the
+Financial Statements of Sinopec Corp. for 2020,
+Sustainable Development Report of Sinopec
+Corp. for 2020, Internal Control Assessment
+Report of Sinopec Corp. for 2020, Work Report
+of the Board of Supervisors of Sinopec Corp. for
+2020, Work Report of the 7th Session of Board
+of Supervisors of Sinopec Corp., and Work Plan
+of the Board of Supervisors of Sinopec Corp.
+for 2021, were reviewed and approved at the
+meeting.
+As of 31 December 2021, the total number of shareholders of Sinopec Corp. was 517,592 including 512,026 holders of A shares and 5,566 holders
+of H shares. As of 28 February 2022, the total number of shareholders of Sinopec Corp. was 527,563. Sinopec Corp. has complied with requirement
+for minimum public float under the Hong Kong Listing Rules.
+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.
+(1) Shareholdings of top ten shareholders
+unknown
+Name of shareholders
+834,160,431
+0.69
+A Share
+中國人壽保險股份有限公司-傳統- 普通保險產品-005L-CT001滬
+中央匯金資產管理有限責任公司
+0
+213,881,539
+1,054,953,821
+0.87
+A Share
+香港中央結算有限公司
+0
+During the 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 annual report,
+financial statements, sustainable development
+report, internal control assessment report and
+working report of the Board of Supervisors etc.
+926,751
+(283,937,650)
+1.92 2,325,374,407
+The shareholdings of top ten shareholders as of 31 December 2021 are listed as below:
+A Share
+0
+0
+Number of
+shares subject
+to pledges or
+lock-up
+Unit: share
+Changes of
+shareholding¹
+shares held
+82,709,227,393
+25,386,207,159
+20.97
+H Share
+HKSCC Nominees Limited²
+68.31
+State-owned Share
+Total number of
+Nature of Percentage of
+Shareholders shareholdings %
+China Petrochemical Corporation
+中國證券金融股份有限公司
+In 2021, 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.
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+REPORT OF THE BOARD OF SUPERVISORS
+70
+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.
+24 OIL & GAS RESERVE APPRAISAL
+PRINCIPLES
+As of 31 December 2021, 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
+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.
+19 DIRECTORS' INTERESTS IN COMPETING
+BUSINESS
+During the reporting period, neither
+Sinopec Corp. nor any of its subsidiaries
+repurchased, sold or redeemed any listed
+shares of Sinopec Corp. or its subsidiaries.
+18 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.
+to issue shares to them on a preferential
+basis in proportion to their shareholdings.
+17 PRE-EMPTIVE RIGHTS
+During the reporting period, the amount of
+charity donations made by the Company
+amounted to RMB165 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 2021
+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, 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.
+The total revenue from the five largest
+customers of the Company in 2021 was
+RMB216,201 million, accounting for 7.89%
+of the total revenue of the Company, of
+which the sales value to the connected
+party Sinopec Group among the five
+largest customers was RMB73,186 million,
+accounting for 2.67% of the total revenue for
+the year.
+12 MAJOR SUPPLIERS AND CUSTOMERS
+During the reporting period, the total value
+of the purchasing from the top five crude oil
+suppliers of the Company accounted for 31%
+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 12% of the total value of the
+crude oil purchasing by the Company.
+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 and social-related policies and
+performances are provided in the section
+"Environment and Social Responsibilities"
+in this annual report as well as the 2021
+Sustainability Report of Sinopec Corp.
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+70
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+Report of the Board of Directors
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Beijing, China, 25 March 2022
+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, and devote
+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.
+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 changes in international
+geopolitics, spread of COVID-19, 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, 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.
+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 rules in 2021, 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.
+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 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 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 continues
+spread of COVID-19 pandemic, 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.
+72 Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+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 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. 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; 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.
+Dear Shareholders:
+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.
+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
+19,554,400
+Report of the Board of Directors
+Report of the Board of Directors
+71
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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 utilisation
+of its resources, and endowed the Company
+with strong resistance against risks, as well
+as remarkable capabilities in sustaining
+profitability.
+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.
+25 CORE COMPETITIVENESS ANALYSIS
+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. China
+achieved remarkable results in pandemic
+prevention and control, and its economy
+continued to grow. World economic recovery
+was weak, and with significant imbalance
+situation. 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 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.
+0
+73
+0.26
+68.83%*
+Sinopec Corp.
+Inclusive of 623,454,000 H shares held by
+Sinopec Century Bright Capital Investment
+Ltd. (overseas wholly-owned subsidiary of
+China Petrochemical Corporation) through
+HKSCC Nominees Limited.
+78
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+BOND GENERAL INFORMATION
+China Petrochemical Corporation
+Bond General Information
+Bond name
+Abbreviation
+Code
+Issuance date
+Interest commencement date
+Maturity date
+1. CORPORATE BOND
+100%
+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
+2,907,856,000
+65.67%
+Sinopec Oilfield Service
+Corporation
+10,727,896,364
+56.51%
+Sinopec Oilfield Equipment
+Corporation
+456,756,300
+58.74%
+China Merchants Energy
+Shipping Co., Ltd
+1,095,463,711
+13.54%
+(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.
+Amount issued (RMB billion)
+Sinopec Engineering (Group)
+Co. Ltd
+Outstanding balance (RMB billion)
+Interest rate (%)
+Investor Qualification Arrangement
+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 instalment of interest.
+12102 was publicly offered to qualified investors in accordance with Administration of the Issuance and
+Trading of Corporate Bonds.
+Floor trading at Shanghai Stock Exchange, in line with pledge repurchase requirement
+N/A
+Shanghai Stock Exchange
+Proceeds from the above-mentioned corporate bonds have been used for their designated purpose as
+disclosed. All the proceeds have been completely used.
+During the reporting period, China Lianhe Credit Rating Co., Ltd. tracked and provided credit rating for 12
+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, the latest credit
+rating results have been published through media designated by regulators within six months commencing
+from the disclosure of annual report for 2020.
+4.90
+No special terms for Issuer or investor option or investor protection, thus not applicable
+During the reporting period, the bondholders' meeting was not convened.
+During the durations of the above-mentioned bonds, the bond trustee, China International Capital
+Corporation Limited, has strictly followed the Bond Trustee Management Agreement and continuously
+tracked the Company's credit status, utilisation of bond proceeds and repayment of principals and interests
+of the bond. The bond trustee has also advised the Company to fulfil obligations as described in the
+corporate bond prospectus and actively 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).
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+79
+12
+A Share
+China Petrochemical Corporation bears non-irrevocable joint liability guarantee. Interest is paid as usual
+during the reporting period without triggering any guarantee.
+7
+7
+1 June 2022
+Risk of suspension for listed trading,
+and countermeasures
+Listing exchange
+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
+Performance of corporate
+bonds trustee
+Sinopec Corp. 2012 Corporate bond
+12石化02
+122150
+1 June 2012
+1 June 2012
+Principal and interest repayment
+Name of Company
+Applicable trading mechanism
+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.
+110,044,157
+0
+中國人壽保險股份有限公司-分红-個人分紅-005L-FH002滬
+A Share
+0.08
+98,655,327
+110,044,157
+(717,014,841)
+Note 1: As compared with the number of shares held as of 31 December 2020.
+Note 2: Sinopec Century Bright Capital Investment Limited, an overseas wholly-owned subsidiary of China Petrochemical Corporation, held 623,454,000 H shares,
+accounting for 0.52% 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:
+Apart from 除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-CT001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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+77
+0
+0.09
+全國社保基金一一三組合
+0
+315,223,600
+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
+(6,814,300)
+0
+國信證券股份有限公司
+A Share
+0.17
+202,363,585
+183,178,790
+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
+0.09
+113,436,276
+13,846,100
+Changes in Share Capital and
+Shareholdings of Principal
+Shareholders
+A Share
+Share Capital and
+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
+% of Sinopec Corp.'s issued
+voting shares (H Share)
+7.95(L)
+11,307,899(L)
+0.04(L)
+68,263,244(L)
+0.27(L)
+66,210,083(S)
+0.26(S)
+Shareholdings
+1,704,518,264(L)
+6.68(L)
+There was no existing employee shares of
+the Company during the reporting period.
+(2) Existing employee shares
+Number of shares interested
+2,029,241,960(L)
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS (CONTINUED)
+of Principal
+principal Shareholders
+There was no issuance of securities of
+the Company during the reporting period.
+(2) Information disclosed by the shareholders of H shares in accordance with the Securities and Futures Ordinance (SFO) as of 31 December
+2021
+Name of shareholders
+BlackRock, Inc.
+Citigroup Inc.
+Status of shareholders
+Interest of corporation controlled by
+(L): Long position, (S): Short position
+Person having a security interest in shares
+Interest of corporation controlled by
+the substantial shareholder
+Approved lending agent
+3 ISSUANCE AND LISTING OF SECURITIES
+(1) Issuance of securities during the
+reporting period
+the substantial shareholder
+6,061
+5,840
+85,307
+65,779
+Contract liabilities
+7,505
+6,058
+Employee benefits payable
+188,568
+1,673
+Taxes payable
+46,333
+Non-current liabilities due within one year
+43,500
+Other payables
+362
+211,179
+8,398
+1,121
+Liabilities and shareholders' equity
+16,550
+Other non-current assets
+16,737
+Deferred tax assets
+Total non-current assets
+Total assets
+Current liabilities
+Short-term loans
+Derivative financial liabilities
+20,669
+Bills payable
+8,715
+12,661
+34,227
+26,828
+872,679
+846,863
+1,147,784
+1,069,943
+Accounts payable
+12,026
+68,976
+13,702
+35,271
+36,089
+3,103
+208,580
+3,581
+202,751
+621,470
+547,668
+121,071
+121,071
+67,897
+6,024
+5,910
+1,658
+1,189
+Retained earnings
+2,499
+Surplus reserves
+105,691
+104,426
+26,977
+31,522
+439
+Total current liabilities
+412,890
+344,917
+Non-current liabilities
+Long-term loans
+Debentures payable
+Lease liabilities
+Provisions
+Other current liabilities
+Other non-current liabilities
+Total liabilities
+Shareholders' equity
+Share capital
+Capital reserve
+Other comprehensive income
+Specific reserve
+34,258
+30,413
+Total non-current liabilities
+2,875
+39
+8,779
+1,889,255
+1,738,896
+Shou Donghua
+Chief Financial Officer
+BALANCE SHEET
+As at 31 December 2021
+Notes
+At 31 December
+2021
+RMB million
+At 31 December
+2020
+RMB million
+Assets
+Current assets
+Cash at bank and on hand
+Derivative financial assets
+Accounts receivable
+888,720
+916,041
+141,426
+140,939
+36
+213,224
+121,071
+121,071
+37
+120,188
+127,389
+38
+Receivables financing
+(690)
+2,664
+1,941
+213,224
+209,280
+318,645
+286,575
+775,102
+747,294
+1,038
+Long-term deferred expenses
+Prepayments
+Inventories
+223,080
+Non-current assets
+Long-term equity investments
+12
+Other equity instrument investments
+Fixed assets
+Construction in progress
+Right-of-use assets
+345
+360,847
+201
+284,622
+66,146
+105,712
+343,356
+428
+283,695
+59,880
+108,737
+Intangible assets
+9,334
+275,105
+Total current assets
+14,048
+23,408
+110,691
+99,188
+7
+4,503
+21,146
+7,776
+21,763
+227
+707
+Other receivables
+9
+|||
+4,540
+2,626
+46,929
+37,938
+63,661
+39,034
+Other current assets
+10
+209,280
+2020
+115,849
+85,030
+42,097
+Including: Net (loss)/profit of acquiree before business combination under common control
+(200)
+347
+Classification by going concern:
+Continuous operating net profit
+85,030
+42,097
+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
+6,344
+23,318
+54
+Net profit
+665
+2,067
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+112,414
+50,803
+23
+Changes in fair value of other equity instrument investments
+55
+3,516
+2,370
+53
+7,582
+4,732
+108,348
+48,441
+Less: Income tax expense
+52
+Asset disposal gains
+Items that may be reclassified subsequently to profit or loss
+Cost of hedging reserve
+65
+0.588
+0.275
+38
+(4)
+(22)
+(4)
+(22)
+17,511
+337
+441
+(2,441)
+(220)
+162
+19,018
+7,073
+850,176
+0.275
+0.588
+65
+8,826
+Cash flow hedges
+Foreign currency translation differences
+Total other comprehensive income
+Total comprehensive income
+Attributable to:
+Equity shareholders of the Company
+Minority interests
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+Other comprehensive income that can be converted into profit under the equity method
+Ma Yongsheng
+(Legal representative)
+Yu Baocai
+President
+The accompanying notes form part of these financial statements.
+88
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+71,208
+33,271
+13,822
+Chairman
+116,440
+(26,087)
+51
+RMB million
+RMB million
+Operating income
+Less: Operating costs
+Taxes and surcharges
+Selling and distribution expenses
+General and administrative expenses
+Research and development expenses
+Financial expenses
+40
+2,740,884
+2,104,724
+40
+2,216,551
+1,685,674
+41
+259,032
+2020
+2021
+Notes
+For the year ended 31 December 2021
+Total shareholders' equity
+Total liabilities and shareholders' equity
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+526,314
+1,147,784
+522,275
+1,069,943
+Ma Yongsheng
+Chairman
+235,018
+(Legal representative)
+The accompanying notes form part of these financial statements.
+Shou Donghua
+Chief Financial Officer
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+87
+Financial Statements (PRC)
+Financial Statements (PRC)
+CONSOLIDATED INCOME STATEMENT
+Yu Baocai
+President
+(13,165)
+44
+64,495
+5,850
+7,514
+Investment income
+49
+6,032
+47,486
+Including: Income from investment in associates and joint ventures
+23,253
+6,712
+Losses from changes in fair value
+50
+3,341
+(1,253)
+Credit impairment losses
+(2,311)
+(2,066)
+Impairment losses
+48
+Add: Other income
+9,716
+12,382
+45
+46
+42
+562
+62,535
+67,082
+11,481
+10,087
+57,891
+9,010
+Including: Interest expenses
+15,018
+15,198
+Interest income
+5,732
+4,803
+Exploration expenses, including dry holes
+47
+9,510
+973,214
+Other receivables
+331,934
+Change
+2020
+2021
+0
+Increase in liabilities
+Increase in current liabilities
+Reasons for change
+Change
+0
+0.58
+(0.03)
+48.89 2.62 percentage points
+100
+100
+51.51
+0.55
+0.87
+0.87
+31 Dec. 2020
+31 Dec. 2021
+Loan repayment rate (%)
+Liability-to-asset ratio (%)
+Reasons for change
+Quick ratio
+Net profit/(loss) attributable to equity shareholders of
+the Company excluding extraordinary gains and losses
+72,220
+9.89
+15.12
+EBITDA to interest coverage ratio
+Increase in total profit
+0.27
+1.14
+1.41
+EBITDA to total debt ratio
+Increase in total profit
+81,379
+4,556
+85,935
+and losses (RMB million)
+Net profit of the Company excluding extraordinary gains
+Increase in total profit
+73,785
+(1,565)
+(RMB million)
+Current ratio
+Principal data
+Principal accounting data and financial indicators for the two years ended 31 December 2021
+(182)
+12
+Other comprehensive income that can be converted into profit or loss under the equity method
+Cash flow hedges reserve
+4,766
+13,612
+18,572
+39,444
+18,572
+39,444
+(8,017)
+4,273
+10,555
+43,717
+1,319
+2,209
+900
+776
+13,600
+4,948
+Total other comprehensive income
+13,612
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Note: Please refer to the website of Shanghai Stock Exchange (http://www.sse.com.cn), China Money Network (WWW) for the name, office address, name, contact person
+and telephone number of the intermediary institutions providing services for the issuance and maturity of the debt financing instruments of the above-mentioned
+corporate bonds and non-financial enterprises in the interbank market. Chinamoney.com.cn) and other websites disclosed the relevant contents of the prospectus and
+other documents.
+Performance of corporate bonds trustee Corporate bonds trustee has performed its duties in accordance with regulatory requirements
+Financial Statements (PRC)
+89
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Chief Financial Officer
+Shou Donghua
+5.23
+The accompanying notes form part of these financial statements.
+Yu Baocai
+(Legal representative)
+Ma Yongsheng
+Chairman
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+23,338
+53,056
+Total comprehensive income
+4,766
+President
+10,974
+Increase in total profit
+8.28
+1,370
+5,319
+100
+1,595
+Sinopec Qingdao Petrochemical
+4,789
+9,311
+100
+3,374
+Sinopec Lubricant Company Limited
+Limited Liability Company
+4,330
+9,100
+100
+4,000
+Sinopec Yizheng Chemical Fibre
+Company Limited
+Company Limited
+22,482
+Sinopec Chemical Sales Company
+Limited
+100
+1,500
+Sinopec Catalyst Company Limited
+Million USD
+Holding Limited
+13,467
+23,019
+100
+3,009
+Sinopec Overseas Investment
+and Chemical Company Limited
+44,082
+229,548
+100
+5,000
+China International United Petroleum
+5,476
+22,423
+1,000
+36,602
+100
+15,651
+Principal Wholly-Owned
+and Controlled
+82
+Bond General Information
+81
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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 maturity of 5 years, 10 years and 30 years.
+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 2021, the standby credit line provided by several domestic financial institutions to the Company was RMB441.6 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.
+Note: Liability-to-asset ratio indicates the ratio of total liabilities to total assets
+Increase in total profit
+Increase in net cash flow
+18.91
+0
+100
+24.65
+43.56
+100
+Interest payment rate (%)
+Cash interest coverage ratio
+4.23
+4.05
+lled Subsidiaries
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+On 31 December 2021, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+Registered
+Capital
+Sinopec Yangzi Petrochemical
+14,187
+30,655
+100
+22,761
+Sinopec Great Wall Energy & Chemical
+Company Limited
+Exploration and Production Limited
+12,460
+Interest coverage ratio
+31,713
+8,250
+Total Assets Net Assets
+RMB million RMB million
+(%)
+RMB million
+Corp.
+Sinopec International Petroleum
+Name of Company
+Percentage
+of
+Shares Held
+by Sinopec
+100
+45,150
+(16,374)
+261
+58
+2023/4/1
+2021/8/9
+2021/8/6
+2021/7/27
+2020/5/28
+2020/4/1
+2020/4/1
+2021/8/5
+2021/8/5
+2021/7/23
+2020/5/27
+2020/3/31
+2020/3/31
+102101489
+102101480
+102101386
+102001109
+2023/4/1
+102000569
+2023/5/28
+2024/8/6
+2.55
+2.55
+2024/12/28
+2021/12/27
+2021/12/28
+132100172
+2222
+2
+5
+10
+5
+5
+2
+5
+10
+5
+5
+2023/8/9
+2026/7/27
+102000568
+notes in 2021
+21中石化GN001
+The first green
+medium-term
+Bond General Information
+80
+(1,728)
+(4,457)
+17,507
+315
+102,537
+42,412
+88,782
+13,755
+34,665
+7,747
+Shou Donghua
+Chief Financial Officer
+INCOME STATEMENT
+For the year ended 31 December 2021
+Notes
+2021
+BOND GENERAL INFORMATION (CONTINUED)
+2. INTERBANK BOND MARKET DEBT FINANCING INSTRUMENT OF NON-FINANCIAL ENTERPRISES
+Bond name
+Abbreviation
+code
+Issuance date
+The third
+21中石化MTN002 21中石化MTN003
+notes in 2021
+notes in 2021
+medium-term
+medium-term
+The second
+The first
+medium-term
+notes in 2021
+2.7
+notes in 2020
+20中石化MTN001 20中石化MTN002 20中石化MTN003 21中石化MTN001
+notes in 2020
+notes in 2020
+The second
+medium-term
+The first
+medium-term
+Outstanding balance (RMB billion)
+Interest rate (%)
+Amount issued (RMB billion)
+Interest commencement date
+Maturity date
+The third
+medium-term
+2.7
+2.2
+3.2
+43,356
+30,881
+49
+Investment income
+4,922
+4,045
+Add: Other income
+8,297
+10,502
+Exploration expenses, including dry holes
+3,181
+2,953
+11,892
+13,602
+8,749
+10,644
+9,098
+Including: Income from investment in associates and joint ventures
+8,151
+3,637
+Gains from changes in fair value
+(7,192)
+71
+1
+Items that may be reclassified subsequently to profit or loss
+Other comprehensive income
+Termination of net profit
+Continuous operating net profit
+Classification by going concern:
+10,102
+Net profit
+Less: Non-operating expenses
+Profit before taxation
+Add: Non-operating income
+Operating profit
+Asset disposal gains
+Impairment losses
+Credit impairment reversal
+350
+644
+Less: Income tax expense
+100
+29,868
+3,256
+During the reporting period, United Credit Ratings Co., Ltd. issued the continuing credit rating report on May 21. The long-term credit rating of
+Sinopec Corp. remained AAA with its outlook being stable.
+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.
+Nationwide inter-bank bond market
+Circulated and transferred in nationwide inter-bank bond market
+Not applicable
+Nationwide inter-bank bond market institutional investors
+Interest is paid once a year. The principal will be paid at maturity with last instalment of interest.
+Convening of corporate bond holders'
+meeting
+other related events during
+the reporting period
+Guarantee, repayment scheme and
+Special terms for Issuer or investor
+option or investor protection,
+whether triggered or executed
+Credit rating
+Use of proceeds
+Risk of suspension for listed trading
+(if any), and countermeasures
+Trading market
+Principal and interest repayment
+Investor Qualification Arrangement
+Applicable trading mechanism
+2.5
+2.8
+2.95
+Not applicable
+No guarantee. Interest is paid as usual during the reporting period without triggering any guarantee.
+Not applicable
+RMB million
+1,774
+148,350
+156,174
+584,315
+808,540
+40
+770,321
+1,045,000
+30,551
+40
+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
+Interest income
+327,181
+11,330
+100
+Long-term deferred expenses
+Goodwill
+Intangible assets
+189,018
+184,974
+15
+Right-of-use assets
+125,525
+155,939
+14
+Construction in progress
+593,653
+598,932
+13
+Fixed assets
+1,525
+767
+Deferred tax assets
+Other equity instrument investments
+Other non-current assets
+119,210
+Current liabilities
+Liabilities and shareholders' equity
+Total assets
+Total non-current assets
+27,635
+24,240
+20
+25,054
+19,389
+19
+9,584
+10,007
+18
+8,620
+8,594
+17
+114,280
+16
+188,342
+209,179
+12
+67820
+9
+Inventories
+RMB million
+Prepayments
+Receivables financing
+Accounts receivable
+1
+184,412
+221,989
+5
+Derivative financial assets
+Financial assets held for trading
+Cash at bank and on hand
+At 31 December
+2020
+RMB million
+RMB million
+2021
+18,371
+12,528
+34,861
+35,439
+Long-term equity investments
+Non-current assets
+455,660
+558,024
+Total current assets
+23,773
+24,500
+Other current assets
+1,331,231
+1,889,255
+152,191
+11
+33,724
+35,664
+10
+4,857
+9,267
+8,735
+5,939
+207,433
+At 31 December
+1,283,236
+Short-term loans
+30
+22,494
+28,651
+29
+85,012
+114,701
+28
+76,848
+81,267
+7,129
+14,048
+126,241
+124,622
+151,514
+203,919
+24
+10,394
+31,762
+11,721
+17,781
+522,995
+17,950
+18,276
+8,124
+7,910
+45,552
+43,525
+171,740
+170,233
+38,356
+42,649
+45,459
+49,341
+123123
+35
+19
+34
+333
+641,280
+4,826
+20,756
+27,366
+3,223
+Shareholders' equity
+Total liabilities
+Other non-current liabilities
+Total non-current liabilities
+Deferred tax liabilities
+Provisions
+Debentures payable
+Lease liabilities
+Long-term loans
+Non-current liabilities
+Other current liabilities
+Total current liabilities
+Non-current liabilities due within one year
+Other payables
+Taxes payable
+Employee benefits payable
+Contract liabilities
+Accounts payable
+Bills payable
+Derivative financial liabilities
+Share capital
+Capital reserve
+Other comprehensive income
+Specific reserve
+2622222223
+27
+25
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+86
+The accompanying notes form part of these financial statements.
+President
+Yu Baocai
+1,738,896
+(Legal representative)
+Ma Yongsheng
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+Total liabilities and shareholders' equity
+Total shareholders' equity
+Minority interests
+Total equity attributable to shareholders of the Company
+Retained earnings
+Surplus reserves
+Chairman
+Notes
+Current assets
+Assets
+13,830
+14,672
+50
+Fujian Petrochemical Company Limited 10,492
+Company Limited
+30,395
+47,039
+50
+10,824
+Sinopec Shanghai Petrochemical
+and Chemical Limited
+18,214
+37,561
+55
+10,000
+Sinopec Shanghai Gaoqiao Petroleum
+Million HKD
+Net Profit/
+(Net Loss)
+RMB million
+12,590
+1,429
+(1,290) Production and sale of polyester chips and
+polyester fibres
+AUDITOR'S REPORT
+KPMG
+REPORT OF THE PRC AUDITOR
+Annual Report 2021 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 of Sinopec Corp. 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 KPMG Huazhen LLP or KPMG.
+3,536 Manufacturing of intermediate petrochemical
+products and petroleum products
+2,004 Manufacturing of synthetic fibres, resin
+and plastics, intermediate petrochemical
+products and petroleum products
+951 Manufacturing of plastics, intermediate
+petrochemical products and
+petroleum products
+871 Oil jetty and nature gas pipeline
+1,606 Production, sale, research and development of
+petroleum, petrochemical, ethylene and
+downstream by-products
+2,817 Production and sale of petrochemical products
+3,711 Manufacturing of intermediate petrochemical
+products and petroleum products
+4,097 Manufacturing of intermediate petrochemical
+products and petroleum products
+18,582 Marketing and distribution of refined
+petroleum products
+2,729 Import and processing of crude oil, production,
+storage and sale of petroleum products and
+petrochemical products
+715 Production and sale of catalyst products
+603 Trading of petrochemical products
+(27) Overseas investment holding
+873 Manufacturing of intermediate petrochemical
+products and petroleum products
+1,547 Marketing and distribution of
+petrochemical products
+6,268 Trading of crude oil and
+petrochemical products
+and petrochemical materials
+141 Production and sale of refined petroleum
+products, lubricant base oil,
+Principal Activities
+Investment in exploration, production and
+sale of petroleum and natural gas
+3,714 Coal chemical industry investment
+management, production and
+sale of coal chemical products
+1,945 Manufacturing of intermediate petrochemical
+products and petroleum products
+12,956
+60
+248
+9,606
+Sinopec Hainan Refining and
+Chemical Company Limited
+13,357
+23,807
+85
+5,000
+Sinopec Qingdao Refining and
+Limited Liability Company
+13,461
+19,396
+99
+5,294
+Sinopec Beihai Refining and Chemical
+Company Limited
+6,317
+4,270
+21,113
+100
+40,040
+23,265
+Chemical Company Limited
+Sinopec Kantons Holdings Limited
+Company Limited
+11,807
+27,441
+59
+7,193
+Sinopec-SK(Wuhan) Petrochemical
+Company Limited
+KPMG Huazhen LLP
+10,616
+68
+500
+Sinopec Shanghai SECCO Petrochemical
+233,117
+486,036
+70
+28,403
+Sinopec Marketing Co., Limited
+17,468
+8th Floor, KPMG Tower
+Oriental Plaza
+1 East Chang An Avenue
+Beijing 100738
+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 appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
+management.
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
+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 judgement and maintain professional scepticism throughout the audit. We also:
+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.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
+Those charged with governance are responsible for overseeing the Company's financial reporting process.
+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.
+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.
+RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
+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 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.
+• 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)
+As at 31 December 2021
+(A) FINANCIAL STATEMENTS PREPARED UNDER CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
+CONSOLIDATED BALANCE SHEET
+Financial Statements (PRC)
+Financial Statements (PRC)
+85
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+25 March 2022
+He Shu
+Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
+Yang Jie (Engagement Partner)
+Certified Public Accountants
+KPMG Huazhen LLP
+Beijing, 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
+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 (Continued)
+KPMG
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Registered in the People's
+Republic of China
+China Petrochemical International
+The Company's management is responsible for the other information. The other information comprises all the information included in 2021 annual
+report of the Company, other than the financial statements and our auditor's report thereon.
+KPMG
+KEY AUDIT MATTERS
+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.
+BASIS FOR OPINION
+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 2021, 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.
+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 2021, 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.
+OPINION
+The Shareholders of China Petroleum & Chemical Corporation:
+畢馬威華振審字第2202273號
++86 (10) 8518 5111
+kpmg.com/cn
++86 (10) 8508 5000
+東方廣場畢馬威大樓8層
+郵政編碼:100738
+東長安街1號
+中國北京
+(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
+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
+REPORT OF THE PRC AUDITOR (CONTINUED)
+84
+Financial Statements (PRC)
+83
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+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
+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;
+OTHER INFORMATION
+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;
+•
+•
+•
+The following are the primary procedures we performed to address this
+key audit matter:
+How the matter was addressed in our audit
+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.
+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.
+The Company reported fixed assets of Renminbi ("RMB") 598,932
+million as at 31 December 2021, a portion of which related to oil and
+gas producing activities. The Company reported impairment losses of
+RMB2,467 million for the fixed assets relating to oil and gas producing
+activities for the year ended 31 December 2021.
+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;
+1,400