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+Net profit/(loss) attributable to equity shareholders of the Company excluding
+extraordinary gains and losses
+48,441
+59,907
+Income tax expense
+23,318
+6,344
+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
+108,348
+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
+85,030
+42,097
+42,933
+102.0 Increase in operating profit
+Cash flow hedges
+19,018
+7,073
+Net profit
+11,945
+Profit before taxation
+50,803
+2,216,551
+1,685,674
+530,877
+Investment income
+6,032
+47,486
+(41,454)
+61,611
+Gains/(Losses) from changes in fair value
+(1,253)
+Impairment losses
+(13,165)
+(26,087)
+4,594
+12,922
+Operating profit
+112,414
+3,341
+Operating costs
+Derivative financial assets
+12,528
+6,610
+31.8
+Increase in loan of holding subsidiaries.
+Accounts payable
+Other payables
+Net cash flow from operating activities
+Net cash received from disposal of
+203,919
+20,756
+151,514
+34.6
+114,701
+85,012
+29,689
+225,174
+168,520
+5,205
+52,405
+18,371
+27,366
+(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
+5,843
+168.9 Increase in effective portion of cash flow hedges
+46.6
+-Unrealised profit increased from crude oil hedging
+Derivative financial liabilities
+3,223
+4,826
+(1,603)
+Short-term loans
+(33.2)
+5,939
+8,735
+(2,796)
+Inventories
+207,433
+152,191
+55,242
+Receivables financing
+30.2 A result of sharp increase in the price and sales volume of
+refining products
+636,160
+2,104,724
+4,720
+2,992
+634
+101
+(472)
+(139)
+977
+(410)
+(44,277)
+(72)
+6,736
+1,757
+905
+(37,541)
+(3,488)
+1,012
+(5,245)
+(34,836)
+(37,520)
+209
+(6,857)
+Cash flow hedging
+Financial assets held for trading
+Receivables financing
+Total
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+For the year ended 31 December
+(Income)/expenses
+2021
+RMB million
+(259)
+2020
+RMB million
+RMB million
+(665)
+165
+(973)
+301
+1,318
+(3,085)
+(8,605)
+2019
+(3,363)
+(107)
+(2,705)
+17,963
+5,939
+21,854
+(2,796)
+3,891
+(4,084)
+(5) Significant changes of items in the financial statements
+The table below sets forth reasons for those changes where the fluctuation was more than 30% during the reporting period:
+As of 31 December
+8,735
+Increase/(decrease)
+Operating income
+2021
+RMB million
+2,740,884
+2020
+Amount Percentage
+RMB million
+RMB million
+(%) Reasons for change
+Items
+99
+(1)
+1
+(125)
+Unit: RMB million
+Influence
+Beginning
+of the year
+1,525
+157
+End
+of the year
+767
+on the profit
+Changes
+of the year
+(758)
+1,350
+1,193
+7,545
+13,798
+6,253
+(14,873)
+10,690
+49,869
+Net cash flow from investing activities
+(145,198)
+(102,650)
+138,359
+139,922
+127,510
+774,182
+746,325
+743,719
+722,806
+141,377
+731,622
+6.164
+6.143
+5.970
+5.954
+5.993
+5.787
+6.043
+6.394
+6.225
+5.913
+140,892
+170,803
+Adjusted net assets per share (RMB)
+2021
+1,331,231
+As of 31 December
+2020
+2019
+1,283,236
+2018
+1,318,258
+1,097,045
+163,387
+2017
+1,074,985
+67,335
+133,166
+63,514
+52,466
+332,901
+328,199
+303,014
+83,256
+3 MAJOR DIFFERENCES BETWEEN THE AUDITED FINANCIAL STATEMENTS PREPARED UNDER CASS AND IFRS PLEASE REFER TO PAGE 216 OF
+THE REPORT.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+CHAIRMAN'S ADDRESS
+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 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 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.
+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.
+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
+8
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+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.
+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.
+Ma Yongsheng
+Chairman
+25 March 2022
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+9
+Chairman's Address
+57,619
+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.
+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:
+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.
+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
+Dear Shareholders and Friends:
+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.
+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.
+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
+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%.
+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
+for its compliance management system.
+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.
+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.
+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
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+7
+Chairman's Address
+Chairman's Address
+CHAIRMAN'S ADDRESS (CONTINUED)
+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.
+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.
+Total equity attributable to shareholders of the Company
+Net assets per share (RMB)
+Derivative financial instruments
+Non-controlling interests
+Net current liabilities
+Operating profit
+2021
+2,740,884
+For the year ended 31 December
+2020
+2019
+2,104,724 2,957,868
+2018
+2,879,192
+2017
+2,347,726
+Items
+Revenue
+94,628
+86,516
+82,884
+72,396
+Profit before taxation
+109,169
+48,615
+90,161
+13,669
+99,658
+Unit: RMB million
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+56,654
+(44,664)
+(42,548)
+Net cash flow from financing activities
+(57,942)
+(37,510)
+(20,432)
+Increase in procurement cost due to increase in the price of crude oil
+and refined oil
+34.9 Increase in derivative commodity margins
+2 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS
+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
+54.5 Increase in actual cash dividend paid for 2021
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+LO
+5
+Principal Financial Data and Indicators
+6
+Principal Financial Data and Indicators
+41.4 Mainly because of the cash consideration received from the restruction
+of PipeChina in 2020
+87,544
+Profit attributable to shareholders of the Company
+71,975
+8.27
+Return on net assets (%)
+9.30
+4.48
+7.73
+8.57
+7.08
+9.21
+Net cash generated from operating activities per share (RMB)
+1.392
+1.275
+1.455
+1.579
+Unit: RMB million
+Items
+Non-current assets
+1.860
+8.94
+6.22
+11.29
+33,443
+57,517
+61,920
+51,821
+Basic earnings per share (RMB)
+0.594
+0.276
+0.475
+0.511
+0.428
+Diluted earnings per share (RMB)
+0.594
+0.276
+0.475
+0.511
+0.428
+Return on capital employed (%)
+Non-current liabilities
+Other equity instruments
+subsidiaries and other business entities
+(4) Items measured by fair values
+55
+53
+31
+19
+11
+237
+CONTENTS
+62
+SINOPEC CORP.
+AND ACCOUNTS
+ANNUAL REPORT
+2021
+H2
+【便利店
+A SUT66
+为美好生活加油
+中国石油化工股份有限公司
+Official Partner of the Olympic Winter Games Beijing 2022
+Company Profile
+Chairman's Address
+Controlled Subsidiaries
+Bond General Information
+of Principal Shareholders
+82
+79
+77 Changes in Share Capital and Shareholdings
+Report of the Board of Supervisors
+Principal Financial Data and Indicators
+27
+65 Report of the Board of Directors
+Connected Transactions
+Significant Events
+Environment and Social Responsibilities
+Corporate Governance
+Management's Discussion and Analysis
+Business Review and Prospects
+75
+000
+SINOPEC
+中国石化
+Total
+RMB million
+RMB million
+RMB million
+RMB million
+Operating income
+Net profit attributable to equity shareholders of the Company
+Net profit attributable to equity shareholders of the Company
+excluding extraordinary gains and losses
+Quarter
+576,559
+18,160
+21,266
+740,918
+20,603
+739,193
+2,740,884
+11,179
+71,208
+684,214
+Fourth
+Third
+Quarter
+Second
+Quarter
+BEIJING 2022
+OPEC
+中国産化
+72,220
+(1,565)
+(1,565)
+54,280
+54,280
+Net cash flow from operating activities
+225,174
+168,520
+167,518
+33.6
+154,380
+153,619
+2021
+First
+Quarter
+RMB million
+83
+Net cash flow from operating activities
+Financial Statements
+Corporate Information
+2,959,799
+2,957,868
+30.2
+2,105,984
+2,104,724
+2,740,884
+RMB million
+112,414
+adjustment
+(%)
+RMB million
+adjustment
+Change
+adjustment
+Before
+After
+RMB million
+Before
+50,803
+121.3
+57,643
+Items
+114.0
+32,924
+33,271
+71,208
+Net profit attributable to equity shareholders of the Company
+50,331
+90,111
+123.7
+47,969
+48,441
+108,348
+Profit before taxation
+90,134
+90,273
+90,250
+2019
+2019
+2020
+China Petrochemical Corporation: The controlling shareholder of Sinopec Corp., China Petrochemical Corporation
+Sinopec Group: China Petrochemical Corporation and its subsidiaries
+Company: Sinopec Corp. and its subsidiaries
+In this report, unless the context otherwise requires, the following terms shall have the meaning as set out below:
+Sinopec Corp.: China Petroleum & Chemical Corporation
+DEFINITIONS:
+Sinopec 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 ⚫
+COMPANY PROFILE
+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.
+NDRC: China National Development and Reform Commission
+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.
+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.
+COMPANY PROFILE
+Company Profile
+2
+This annual report includes forward-looking statements. All statements,
+other than statements of historical facts, that address activities, events or
+developments that the Company expects or anticipates will or may occur
+in the future (including but not limited to projections, targets, reserve
+and other estimates and business plans) are forward-looking statements.
+The Company's actual results or developments may differ materially
+from those indicated by these forward-looking statements as a result
+of various factors and uncertainties. The Company makes the forward-
+looking statements referred to herein as at 25 March 2022 and unless
+required by regulatory authorities, the Company undertakes no obligation
+to update these statements.
+Documents for Inspection
+224
+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.
+RMC: Oil and Natural Gas Reserves Management Committee of the Company
+Sinopec Finance Co.: Sinopec Finance Co., Ltd.
+Century Bright: Sinopec Century Bright Capital Investment, Ltd.
+2020
+After
+adjustment
+RMB million
+2021
+RMB million
+Operating profit
+Operating income
+Items
+For the year ended 31 December
+(1) Principal financial data
+1 FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH CASS
+PRINCIPAL FINANCIAL DATA AND INDICATORS
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Refinery throughput is converted at 1 tonne = 7.35 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;
+For domestic production of crude oil, 1 tonne = 7.1 barrels;
+CONVERSION:
+Hong Kong Listing Rules: Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
+Hong Kong Stock Exchange: The Stock Exchange of Hong Kong Limited
+CSRC: China Securities Regulatory Commission.
+223
+17,674
+(15,188)
+Principal Wholly-owned and
+Attributable to: Equity shareholders of the Company
+9.70
+7.39
+7.44
+percentage
+points
+Net cash flow from operating activities per share
+1.860
+(0.21)
+1.392
+33.6
+1.275
+1.269
+Items
+Net assets attributable to equity shareholders of the Company per share
+Liabilities to assets ratio (%)
+2021
+RMB Yuan
+For the year ended 31 December
+2020
+2020
+After
+Before
+adjustment adjustment
+1.384
+2019
+(0.21)
+Weighted average return (excluding extraordinary gains and losses)
+on net assets (%)
+0.476
+Basic earnings per share (excluding extraordinary gains and losses)
+0.597
+(0.013)
+(0.013)
+0.448
+0.448
+9.49
+Weighted average return on net assets (%)
+4.46
+4.44
+4.89
+7.85
+7.90
+percentage
+points
+9.35
+After
+Before
+Change
+Principal Financial Data and Indicators
+4
+Principal Financial Data and Indicators
+PRINCIPAL FINANCIAL DATA AND INDICATORS (CONTINUED)
+(3) Extraordinary items and corresponding amounts
+Items
+Net (gain)/loss on disposal of non-current assets
+Donations
+3
+Government grants
+Other non-operating expenses, net
+Net (loss)/profit acquired through business combination under common control
+during the reporting period
+Subtotal
+Tax effect
+Total
+20,746
+Minority interests
+Gain on holding and disposal of various investments
+Annual Report 2021
+CHINA PETROLEUM & CHEMICAL CORPORATION
+percentage
+points
+adjustment
+adjustment
+RMB Yuan
+RMB Yuan
+(%)
+RMB Yuan
+RMB Yuan
+6.402
+51.51
+6.172
+48.89
+6.132
+49.02
+3.7
+6.151
+6.112
+2.62
+49.98
+50.10
+0.476
+113.8
+2019
+0.275
+adjustment
+RMB million
+adjustment
+Change
+adjustment
+Before
+adjustment
+RMB million
+(%)
+RMB million
+RMB million
+1,889,255
+1,738,896
+973,214
+850,176
+1,733,805
+849,929
+8.6
+1,765,702
+RMB million
+2021
+After
+2019
+20,300
+0.272
+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
+After
+2020
+Before
+2019
+14.5
+775,102
+13,500
+742,463
+Items
+RMB Yuan
+RMB Yuan
+RMB Yuan
+(%)
+RMB Yuan
+Basic earnings per share
+adjustment
+0.588
+0.272
+113.8
+0.476
+0.476
+Diluted earnings per share
+0.588
+747,294
+0.275
+2019
+Before
+RMB Yuan
+Change
+2019
+After
+adjustment
+257
+882,554
+1,760,286
+881,912
+121,071,210
+121,071,210
+121,071,210
+3.7
+739,965
+121,071,210
+For the year ended 31 December
+2020
+After
+2021
+adjustment
+2020
+Before
+adjustment
+744,738
+121,071,210
+18,572
+RMB million
+121,071
+reserve
+RMB million
+68.841
+income
+RMB million
+reserve
+1,181
+equity
+RMB million
+reserves
+RMB million
+earnings
+RMB million
+207,423
+130.645
+530,110
+18,572
+capital
+RMB million
+949
+shareholders'
+Balance at 1 January 2021
+Surplus
+Balance at 31 December 2020
+4,766
+Change for the year
+1. Net profit
+2. Other comprehensive income
+Total comprehensive income
+Amounts transferred to initial carrying amount of hedged items
+Transactions with owners, recorded directly in shareholders' equity:
+3. Appropriations of profits:
+-Appropriations for surplus reserves (Note 39)
+-Distributions to shareholders (Note 55)
+Total transactions with owners, recorded directly in shareholders' equity
+Other
+Total
+Share
+Capital comprehensive
+Specific
+Retained
+4,766
+240
+4,766
+209,280
+115,849
+522,275
+5,910
+1,189
+209,280
+115,849
+1,189
+522,275
+39,444
+13,612
+13,612
+(13,498)
+13,612
+39,444
+5. Others
+39,444
+(37)
+5,910
+(32)
+18,572
+23,338
+(37)
+135
+121,071
+121,071
+68,976
+36
+103
+53,056
+(1,857)
+(31,479)
+(31,479)
+1.857
+(33,336)
+(31,479)
+240
+1,857
+4. Net increase in specific reserve for the year
+71,208
+-Distributions to shareholders (Note 55)
+(35,110)
+(35,110)
+1,973
+1,973
+(1,396)
+(1,396)
+(6,796)
+(35,110)
+(8,192)
+(8,982)
+(6,124)
+(6,124)
+(6,124)
+(7,520)
+3,944
+(39,054)
+(8,982)
+(42,630)
+(3,944)
+121,071
+(13,498)
+13,822
+85,030
+17.574
+17,574
+(19,302)
+17,574
+3,944
+(67)
+71,208
+88,782
+13,755
+102,537
+(19,302)
+(648)
+(19,950)
+17,507
+(13,805)
+(56,435)
+723
+The accompanying notes form part of these financial statements.
+92
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Shou Donghua
+Chief Financial Officer
+STATEMENT OF CHANGES IN EQUITY
+For the year ended 31 December 2021
+Yu Baocai
+President
+Balance at 1 January 2020
+1. Net profit
+2. Other comprehensive income
+Total comprehensive income
+Amounts transferred to initial carrying amount of hedged items
+Transactions with owners, recorded directly in shareholders' equity:
+3. Appropriations of profits:
+-Appropriations for surplus reserves
+Change for the year
+(Legal representative)
+Chairman
+Ma Yongsheng
+723
+52
+775
+319
+(84)
+235
+159
+394
+120,188
+(690)
+2,664
+213,224
+318,645
+775,102
+140,939
+916,041
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+Total transactions with owners, recorded directly in shareholders' equity
+3,944
+Financial Statements (PRC)
+(35,110)
+(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
+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.
+(a) Investment in subsidiaries
+The initial investment cost of a long-term equity investment obtained through a business combination involving entities under common
+control is the Company's share of the carrying amount of the subsidiary's equity at the combination date. The difference between the initial
+investment cost and the carrying amounts of the consideration given is adjusted to share premium in capital reserve. If the balance of the
+share premium is insufficient, any excess is adjusted to retained earnings.
+For a long-term equity investment obtained through a business combination not involving enterprises under common control, the initial
+investment cost comprises the aggregate of the fair values of assets transferred, liabilities incurred or assumed, and equity securities issued
+by the Company, in exchange for control of the acquiree. For a long-term equity investment obtained through a business combination not
+involving enterprises under common control, if it is achieved in stages, the initial cost comprises the carrying value of previously-held equity
+investment in the acquiree immediately before the acquisition date, and the additional investment cost at the acquisition date.
+An investment in a subsidiary acquired otherwise than through a business combination is initially recognised at actual purchase cost if the
+Group acquires the investment by cash, or at the fair value of the equity securities issued if an investment is acquired by issuing equity
+securities, or at the value stipulated in the investment contract or agreement if an investment is contributed by investors.
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2021
+97
+Financial Statements (PRC)
+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:
+98
+(3) Cash and cash equivalents
+For the year ended 31 December 2021
+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)
+(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 original 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.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+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)
+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.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+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.
+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)).
+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
+71,208
+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.
+A lease is a contract that a lessor transfers the right to use an identified asset for a period of time to a lessee in exchange for consideration.
+(a) As Lessee
+(6) Leases
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(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).
+Financial Statements (PRC)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Financial Statements (PRC)
+(3,944)
+96
+95
+Chairman
+(Legal representative)
+Yu Baocai
+President
+The accompanying notes form part of these financial statements.
+Shou Donghua
+Chief Financial Officer
+Ma Yongsheng
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+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").
+93
+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.
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+116,440
+(35,110)
+3,944
+(39,054)
+(35,110)
+4. Net increase in specific reserve for the year
+469
+469
+526,314
+5. Others
+121,071
+(1,079)
+67,897
+201
+(878)
+6,024
+1,658
+213,224
+Balance at 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.
+The Company took over the exploration, development and production of crude oil and natural gas, refining, chemicals and related sales and
+marketing business of Sinopec Group Company after the establishment of the Company.
+The Company and its subsidiaries (the "Group") engage in the oil and gas and chemical operations and businesses, including:
+For the year ended 31 December 2021
+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(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.
+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.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+(b) Business combination involving entities not under common control
+(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
+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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+94
+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.
+(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))
+-
+Other equity instrument investments (see Note 3(11))
+Derivative financial instruments (see Note 3(11))
+Receivables financing (see Note 3(11))
+(4) Functional currency and presentation currency
+Financial Statements (PRC)
+888,720
+68,976
+747,294
+Notes
+2021
+RMB million
+2020
+Cash flows from operating activities:
+Other cash received relating to operating activities
+Cash received from sale of goods and rendering of services
+Refund of taxes and levies
+Sub-total of cash inflows
+Cash paid for goods and services
+For the year ended 31 December 2021
+Cash paid to and for employees
+Other cash paid relating to operating activities
+Sub-total of cash outflows
+Net cash flow from operating activities
+Cash flows from investing activities:
+Cash received from disposal of investments
+1,155,516
+2,959
+13,868
+1,172,343
+(823,402)
+RMB million
+862,093
+2,796
+9,407
+Payments of taxes and levies
+CASH FLOW STATEMENT
+Chief Financial Officer
+Shou Donghua
+(37,510)
+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 and cash equivalents at the end of the period
+(1,003)
+(1,239)
+56(b)
+21,031
+27,121
+87,559
+60,438
+108,590
+87,559
+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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+874,296
+-------
+(606,295)
+(49,784)
+Cash paid for acquisition of investments
+(52,212)
+(41,066)
+Other cash paid relating to investing activities
+Sub-total of cash outflows
+Net cash flow from investing activities
+Cash flows from financing activities:
+Cash received from borrowings
+Other cash received relating to financing activities
+Sub-total of cash inflows
+Cash repayments of borrowings
+Cash paid for dividends or interest
+Other cash paid relating to financing activities
+Sub-total of cash outflows
+Net cash flow from financing activities
+(134,009)
+(66,408)
+(256,799)
+(166,690)
+(65,001)
+(50,398)
+(59,216)
+(57,942)
+(70,578)
+116,292
+(44,139)
+(181,187)
+(164,635)
+(25,895)
+(19,239)
+(1,080,268)
+(834,308)
+92,075
+39,988
+32,738
+12,157
+Cash received from returns on investments
+22,712
+18,805
+Net cash received from disposal of fixed assets, intangible assets and other long-term assets
+Other cash received relating to investing activities
+72
+6,579
+136,276
+78,751
+Sub-total of cash inflows
+191,798
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+(601,109)
+(415,535)
+Net cash flow from financing activities
+Cash flows from investing activities:
+(95,778)
+(325,348)
+(85,481)
+(282,390)
+(179,679)
+(225,304)
+(2,918,434)
+56(a)
+225,174
+(2,343,048)
+168,520
+Cash received from disposal of investments
+9,812
+11,651
+Cash received from returns on investments
+10,134
+11,510
+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
+1,478
+141,426
+56(d)
+5,205
+Net cash flow from operating activities
+49,869
+Sub-total of cash outflows
+Payments of taxes and levies
+90
+Financial Statements (PRC)
+CONSOLIDATED CASH FLOW STATEMENT
+For the year ended 31 December 2021
+Notes
+2021
+RMB million
+2020
+Cash flows from operating activities:
+Cash received from sale of goods and rendering of services
+Sub-total of cash inflows
+Refund of taxes and levies
+Other cash received relating to operating activities
+Cash paid for goods and services
+2,980,918
+4,641
+158,049
+3,143,608
+RMB million
+2,295,665
+2,985
+212,918
+2,511,568
+(2,317,629)
+(1,749,873)
+Cash paid to and for employees
+Other cash paid relating to operating activities
+159,879
+Other cash received relating to investing activities
+58,669
+356,459
+4,219
+4,219
+558,680
+Other cash received relating to financing activities
+133
+Sub-total of cash inflows
+357,593
+700
+563,599
+Cash repayments of borrowings
+(338,232)
+(540,015)
+Cash paid for dividends, profits distribution or interest
+(49,027)
+(43,812)
+Including: Subsidiaries' cash payments for distribution of dividends or profits to
+minority shareholders
+(8,068)
+(4,821)
+Other cash paid relating to financing activities
+56(e)
+(28,276)
+(17,282)
+Sub-total of cash outflows
+1,001
+38,208
+Including: Cash received from minority shareholders' capital contributions to subsidiaries
+Cash received from borrowings
+Cash received from capital contributions
+Sub-total of cash inflows
+64,837
+134,355
+Cash paid for acquisition of fixed assets, intangible assets and other long-term assets
+Cash paid for acquisition of investments
+(144,921)
+(131,636)
+(13,085)
+(12,740)
+Net cash paid for the acquisition of subsidiaries and other business entities
+(1,106)
+(340)
+Other cash paid relating to investing activities
+(50,923)
+(92,289)
+Sub-total of cash outflows
+(210,035)
+(237,005)
+Net cash flow from investing activities
+(145,198)
+(102,650)
+Cash flows from financing activities:
+1,001
+195,770
+2,656
+70,516
+1,941
+1,038
+127,389
+121,071
+888,720
+141,426
+747,294
+286,575
+209,280
+1,941
+1,038
+127,389
+121,071
+(2.073)
+(2,400)
+327
+(535)
+862
+237
+37
+200
+209,280
+200
+286,575
+Amounts transferred to initial carrying amount of hedged items
+1,406
+(47)
+(12)
+1,394
+(1,079)
+315
+33,259
+34,665
+7,747
+42,412
+(47)
+48
+Total comprehensive income
+Amounts transferred to initial carrying amount of hedged items
+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
+298,755
+1,406
+(35,005)
+(32,589)
+7. Adjustment for business combination of entities under
+6. Distributions to minority interests
+5. Transaction with minority interests
+Contributions to subsidiaries from minority interests
+4.
+- Distributions to shareholders (Note 55)
+- Appropriations for surplus reserves (Note 39)
+6. Distributions to minority interests
+7. Adjustment for business combination of entities under
+common control
+Total transactions with owners, recorded directly in shareholders' equity
+8. Net increase in specific reserve for the year
+9. Others
+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
+---------
+common control (Note 60)
+(2,416)
+Total transactions with owners, recorded directly in shareholders' equity
+Net increase in specific reserve for the year
+(33,336)
+1,857
+(1,110)
+972
+(972)
+(972)
+(6,726)
+(6,726)
+(125)
+13
+(138)
+(138)
+3,325
+3,325
+(31,479)
+(31,479)
+(31,479)
+(1,857)
+1,857
+Balance at 31 December 2021
+9. Others
+8.
+2. Other comprehensive income (Note 38)
+Transactions with owners, recorded directly in shareholders' equity:
+3. Appropriations of profits:
+8,826
+capital
+Total
+shareholders'
+Minority
+to equity
+shareholders of
+Retained
+Surplus
+Specific
+comprehensive
+Capital
+Share
+Other
+Total
+shareholders'
+equity
+attributable
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+For the year ended 31 December 2021
+Financial Statements (PRC)
+Financial Statements (PRC)
+91
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Chief Financial Officer
+Shou Donghua
+The accompanying notes form part of these financial statements.
+President
+reserve
+Yu Baocai
+income
+reserves
+739,965
+42.097
+138,409
+287,187
+207,423
+1,741
+(321)
+122,864
+121,071
+Balance at 31 December 2019
+RMB million
+equity
+interests
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+the Company
+earnings
+reserve
+(Legal representative)
+RMB million
+Ma Yongsheng
+878,374
+Adjustment for business combination of entities under
+common control (Note 60)
+4,773
+4,773
+1
+4,774
+Balance at 1 January 2020
+121,071
+127,637
+(321)
+207,423
+287,187
+744,738
+138,410
+883,148
+Change for the year
+1. Net profit
+33,271
+Chairman
+33,271
+458,634
+266,286
+1,741
+(199,727)
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+28,081
+(151,310)
+Cash and cash equivalents at the end of the period
+15,984
+28,081
+Add: Cash and cash equivalents at the beginning of the year
+12,097
+6,494
+Net increase in cash and cash equivalents
+(5)
+34,575
+Effects of changes in foreign exchange rate
+22,512
+(20,588)
+(243,774)
+(479,222)
+(7,074)
+8
+(42,933)
+(284,979)
+(36,973)
+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.
+different taxable entities which either to intend to settle the current tax liabilities and assets on a net basis, or to realise the assets and
+settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to
+be settled or recovered.
+(16) Provisions
+Provisions are recognised when the Group has a present obligation as a result of a contingent event, it is probable that an outflow of economic
+benefits will be required to settle the obligations and a reliable estimate can be made. Where the effect of time value of money is material,
+provisions are determined by discounting the expected future cash flows.
+Provisions for future dismantlement costs are initially recognised based on the present value of the future costs expected to be incurred in
+respect of the Group's expected dismantlement and abandonment costs at the end of related oil and gas exploration and development activities.
+Any subsequent change in the present value of the estimated costs, other than the change due to passage of time which is regarded as interest
+costs, is reflected as an adjustment to the provision of oil and gas properties.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+the same taxable entity; or
+For the year ended 31 December 2021
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(17) Revenue recognition
+Revenue arises in the course of the Group's ordinary activities, and increases in economic benefits in the form of inflows that result in an
+increase in equity, other than those relating to contributions from equity participants.
+Financial Statements (PRC)
+they relate to income taxes levied by the same tax authority on either:
+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.
+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.
+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).
+(15) Income tax
+106
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+the taxable entity has a legally enforceable right to offset current tax assets and current tax liabilities; and
+Sales of goods
+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.
+(18) Government grants
+Financial Statements (PRC)
+for which financial information regarding financial position, results of operations and cash flows are available.
+whose operating results are regularly reviewed by the Group's management to make decisions about resource to be allocated to the segment
+and assess its performance; and
+engage in business activities from which it may earn revenues and incur expenses;
+Reportable segments are identified based on operating segments which are determined based on the structure of the Group's internal
+organisation, management requirements and internal reporting system. An operating segment is a component of the Group that meets the
+following respective conditions:
+(25) Segment reporting
+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
+(23) Dividends
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+108
+Financial Statements (PRC)
+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.
+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.
+105
+Long-term deferred expenses are amortised on a straight-line basis over their beneficial periods
+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.
+(iii)Derecognition
+The Group recognises the loss allowance accrued or written back in profit or loss.
+For accounts receivable and receivables financing related to revenue, the Group measures the loss allowance at an amount equal to
+lifetime expected credit losses.
+For financial instruments on the first stage and the second stage, and that have low credit risk, the Group calculates interest income
+according to carrying amount without deducting the impairment allowance and effective interest rate. For financial instruments on the
+third stage, interest income is calculated according to the carrying amount minus amortised cost after the provision of impairment
+allowance and effective interest rate.
+For financial instruments that have low credit risk at the balance sheet date, the Group assumes that there is no significant increase in
+credit risk since the initial recognition, and measures the loss allowance at an amount equal to 12-month expected credit losses.
+(ii) Impairment (Continued)
+(a) Financial assets (Continued)
+(11) Financial Instruments (Continued)
+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 derecognises a financial asset when a) the contractual right to receive cash flows from the financial asset expires; b) the Group
+transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset; c) the financial assets have
+been transferred and the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, but
+the Group has not retained control.
+The Group measures and recognises expected credit losses, considering reasonable and supportable information about the relevant past
+events, current conditions and forecasts of future economic conditions.
+(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:
+The business model for managing such financial assets by the Group are held for collection of contractual cash flows. The contractual
+cash flow characteristics are to give rise on specified dates to cash flows that are solely payments of principal and interest on the
+principal amount outstanding. Interest income from these financial assets is recognised using the effective interest rate method. The
+financial assets include cash at bank and on hand and receivables.
+Measured at amortised cost:
+The debt instruments held by the Group refer to the instruments that meet the definition of financial liabilities from the perspective of the
+issuer, and are measured in the following ways:
+Debt instruments
+Financial assets are initially recognised at fair value. For financial assets measured at fair value through profit or loss, the relevant
+transaction costs are recognised in profit or loss. The transaction costs for other financial assets are included in the initially recognised
+amount. However, accounts receivable arising from sales of goods or rendering services, without significant financing component, are
+initially recognised based on the transaction price expected to be entitled by the Group.
+The Group classifies financial assets into different categories depending on the business model for managing the financial assets and the
+contractual terms of cash flows of the financial assets: (1) financial assets measured at amortised cost, (2) financial assets measured at
+fair value through other comprehensive income, (3) financial assets measured at fair value through profit or loss. A contractual cash flow
+characteristic which could have only a de minimis effect, or could have an effect that is more than de minimis but is not genuine, does
+not affect the classification of the financial asset.
+(i) Classification and measurement
+(a) Financial assets
+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.
+On derecognition of other equity instrument investments, the difference between the carrying amounts and the sum of the consideration
+received and any cumulative gain or loss previously recognised in other comprehensive income, is recognised in retained earnings. While
+on derecognition of other financial assets, this difference is recognised in profit or loss.
+(b) Financial liabilities
+The Group, at initial recognition, classifies financial liabilities as either financial liabilities subsequently measured at amortised cost or
+financial liabilities at fair value through profit or loss.
+103
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+The cumulative change in present value of the expected future cash flows on the hedged item from inception of the hedge.
+The gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income.
+The portion of the gain or loss on the hedging instrument that is determined to be an ineffective hedge is recognised in profit or loss.
+If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged.
+forecast transaction for a non-financial asset or a non-financial liability becomes a firm commitment for which fair value hedge
+accounting is applied, the entity shall remove that amount from the cash flow hedge reserve and include it directly in the initial cost
+or other carrying amount of the asset or the liability. This is not a reclassification adjustment and hence it does not affect other
+comprehensive income.
+The cumulative gain or loss on the hedging instrument from inception of the hedge;
+Cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a
+component of, a recognised asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable
+forecast transaction, and could affect profit or loss. As long as a cash flow hedge meets the qualifying criteria for hedge accounting,
+the hedging relationship shall be accounted for as follows:
+Cash flow hedges
+-
+(3) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually
+hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. However, that
+designation shall not reflect an imbalance between the weightings of the hedged item and the hedging instrument.
+(2) The effect of credit risk does not dominate the value changes that result from that economic relationship.
+(1) There is an economic relationship between the hedged item and the hedging instrument, which share a risk and that gives rise to opposite
+changes in fair value that tend to offset each other.
+The hedging relationship meets all of the following hedge effectiveness requirements:
+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.
+The Group's financial liabilities are mainly financial liabilities measured at amortised cost, including bills payable, accounts payable, other
+payables, loans and debentures payable, etc. These financial liabilities are initially measured at the amount of their fair value after deducting
+transaction costs and use the effective interest rate method for subsequent measurement.
+Where the present obligations of financial liabilities are completely or partially discharged, the Group derecognises these financial liabilities
+or discharged parts of obligations. The differences between the carrying amounts and the consideration received are recognised in profit or
+loss.
+Financial guarantee liabilities
+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 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.
+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.
+Financial Statements (PRC)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(11) Financial Instruments (Continued)
+(c) Determination of fair value
+102
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+(11) Financial Instruments
+For the year ended 31 December 2021
+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.
+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.
+Fair value hedges
+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.
+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.
+(12) Impairment of other non-financial long-term assets
+Internal and external sources of information are reviewed at each balance sheet date for indications that the following assets, including fixed
+assets, construction in progress, right-of-use assets, goodwill, intangible assets, long-term deferred expenses and investments in subsidiaries,
+associates and joint ventures may be impaired.
+Assets are tested for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The
+recoverable amounts of goodwill and intangible assets with uncertain useful lives are estimated annually no matter there are any indications of
+impairment. Goodwill is tested for impairment together with related asset units or groups of asset units.
+An asset unit is the smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or
+groups of assets. An asset unit comprises related assets that generate associated cash inflows. In identifying an asset unit, the Group primarily
+considers whether the asset unit is able to generate cash inflows independently as well as the management style of production and operational
+activities, and the decision for the use or disposal of asset.
+104
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+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.
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+The recoverable amount is the greater of the fair value less costs to sell and the present value of expected future cash flows generated by the
+asset (or asset unit, set of asset units).
+Fair value less costs to sell of an asset is based on its selling price in an arm's length transaction less any direct costs attributable to the
+disposal. Present value of expected future cash flows is the estimation of future cash flows to be generated from the use of and upon disposal of
+the asset, discounted at an appropriate pre-tax discount rate over the asset's remaining useful life.
+If the recoverable amount of an asset is less than its carrying amount, the carrying amount is reduced to the recoverable amount. The amount
+by which the carrying amount is reduced is recognised as an impairment loss in profit or loss. A provision for impairment loss of the asset
+is recognised accordingly. Impairment losses related to an asset unit or a set of asset units first reduce the carrying amount of any goodwill
+allocated to the asset unit or set of asset units, and then reduce the carrying amount of the other assets in the asset unit or set of asset units on
+a pro rata basis. However, the carrying amount of an impaired asset will not be reduced below the highest of its individual fair value less costs
+to sell (if determinable), the present value of expected future cash flows (if determinable) and zero.
+Once an impairment loss is recognised, it is not reversed in a subsequent period.
+(13) Long-term deferred expenses
+(14) Employee benefits
+Employee benefits are all forms of considerations and compensation given in exchange for services rendered by employees, including short-term
+compensation, post-employment benefits, termination benefits and other long term employee benefits.
+(a) Short-term compensation
+Short term compensation includes salaries, bonuses, allowances and subsidies, employee benefits, medical insurance premiums, work-related
+injury insurance premium, maternity insurance premium, contributions to housing fund, unions and education fund and short-term
+absence with payment etc. When an employee has rendered service to the Group during an accounting period, the Group shall recognise
+the short-term compensation actually incurred as a liability and charge to the cost of an asset or to profit or loss in the same period, and
+non-monetary benefits are valued with the fair value.
+(b) Post-employment benefits
+The Group classifies post-employment benefits into either Defined Contribution Plan (DC plan) or Defined Benefit Plan (DB plan). DC
+plan means the Group only contributes a fixed amount to an independent fund and no longer bears other payment obligation; DB plan is
+post-employment benefits other than DC plan. In this reporting period, the post-employment benefits of the Group primarily comprise basic
+pension insurance and unemployment insurance and both of them are DC plans.
+Basic pension insurance
+Employees of the Group participate in the social insurance system established and managed by local labor and social security department.
+The Group makes basic pension insurance to the local social insurance agencies every month, at the applicable benchmarks and rates
+stipulated by the government for the benefits of its employees. After the employees retire, the local labor and social security department has
+obligations to pay them the basic pension. When an employee has rendered service to the Group during an accounting period, the Group
+shall recognise the accrued amount according to the above social security provisions as a liability and charge to the cost of an asset or to
+profit or loss in the same period.
+(c) Termination benefits
+(12) Impairment of other non-financial long-term assets (Continued)
+Cash flow hedges (Continued)
+-
+(3) (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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.
+Intangible assets, where the estimated useful life is finite, are stated in the balance sheet at cost less accumulated amortisation and provision
+for impairment losses (see Note 3(12)). For an intangible asset with finite useful life, its cost less estimated residual value and accumulated
+impairment losses is amortised on a straight-line basis over the expected useful lives, unless the intangible assets are classified as held for sale.
+Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based on volumes produced and reserves.
+(9) Intangible assets
+The Group estimates future dismantlement costs for oil and gas properties with reference to engineering estimates after taking into consideration
+the anticipated method of dismantlement required in accordance with the industry practices. These estimated future dismantlement costs are
+discounted at credit-adjusted risk-free rate and are capitalised as oil and gas properties, which are subsequently amortised as part of the costs
+of the oil and gas properties.
+The acquisition cost of mineral interest is capitalised as oil and gas properties. Costs of development wells and related support equipment are
+capitalised. The cost of exploratory wells is initially capitalised as construction in progress pending determination of whether the well has found
+proved reserves. Exploratory well costs are charged to expenses upon the determination that the well has not found proved reserves. However,
+in the absence of a determination of the discovery of proved reserves, exploratory well costs are not carried as an asset for more than one
+year following completion of drilling. If, after one year has passed, a determination of the discovery of proved reserves cannot be made, the
+exploratory well costs are impaired and charged to expense. All other exploration costs, including geological and geophysical costs, are charged
+to profit or loss in the year as incurred.
+Oil and gas properties include the mineral interests in properties, wells and related support equipment arising from oil and gas exploration and
+production activities.
+3%
+of residual value
+3%
+Estimated rate
+Estimated
+useful life
+12-50 years
+4-30 years
+(8) Oil and gas properties
+(d) Derivative financial instruments and hedge accounting (Continued)
+(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)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+(7) Fixed assets and construction in progress (Continued)
+Other than oil and gas properties, the cost of fixed assets less residual value and accumulated impairment losses is depreciated using the
+straight-line method over their estimated useful lives, unless the fixed asset is classified as held for sale. The estimated useful lives and the
+estimated rate of residual values adopted for respective classes of fixed assets are as follows:
+Plants and buildings
+Equipment, machinery and others
+Useful lives, residual values and depreciation methods are reviewed at least each year end.
+For the year ended 31 December 2021
+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.
+Renminbi
+(26) Changes in significant accounting policies
+0.8416
+6,875
+6.5249
+1,054
+1,377
+2,888
+0.8176
+120,542
+144,294
+12,924
+6.3757
+2,027
+3,533
+1,159
+8
+Exchange
+rates
+1
+Original
+currency
+million
+RMB
+million
+Exchange
+rates
+At 31 December 2020
+million
+Original
+currency
+At 31 December 2021
+Total
+RMB
+million
+Others
+3
+20
+180
+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.
+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
+7.2197
+6.5249
+8.0250
+44,266
+483
+1,175
+61,682
+221,989
+6.3757
+7.2197
+6,943
+67
+23,737
+15,758
+2,403
+130,995
+160,307
+8
+8.0250
+1
+4,443
+49
+US Dollar
+EUR
+Financial Statements (PRC)
+Deposits at related parities
+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)
+6%
+5
+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
+Bulletin No.14 takes effect on 26 January 2021 (implementation date).
+(a) Bulletin No.14
+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")
+Financial Statements (PRC)
+In 2021, the Group has adopted the following newly revised accounting standards and implementation guidance and illustrative examples issued
+by the MOF, mainly include:
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Corporate Income Tax
+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.
+City Maintenance and
+EUR
+Crude Oil Special Gain Levy
+Others
+Hong Kong Dollar
+US Dollar
+Cash at bank
+Renminbi
+Cash on hand
+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.
+Renminbi
+Based on taxable value added amount. Tax payable is
+calculated using the taxable sales amount multiplied by the
+applicable tax rate less current period's deductible VAT input.
+Based on the revenue from sales of crude oil and natural gas.
+Based on quantities
+Based on taxable income.
+CASH AT BANK AND ON HAND
+Local Education surcharges
+Construction Tax
+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
+3%
+2%
+Tax basis and method
+1%, 5% or 7%
+Education surcharges
+25,189
+468,718
+309,841
+2,604
+31,534
+27,473
+314
+98
+(412)
+Transferred from subsidiaries
+1
+1
+Reclassifications
+Transferred to subsidiaries
+803,748
+61,611
+Additions for the year
+Decreases for the year
+Accumulated depreciation:
+(91)
+260
+33
+33
+(422)
+(286)
+(667)
+(1,375)
+(624)
+(2,607)
+(8,157)
+(11,388)
+Balance at 31 December 2021
+51,696
+646,020
+514,422
+1,212,138
+Balance at 1 January 2021
+(383)
+Balance at 31 December 2021
+(428)
+(620)
+(27)
+(2)
+(29)
+(21)
+(571)
+(592)
+Net book value:
+2,228
+24,327
+69,862
+22,096
+Balance at 31 December 2020
+22,250
+102,880
+108,359
+159,642
+153,082
+43,307
+Balance at 31 December 2021
+Decreases for the year
+Transferred to subsidiaries
+(7)
+(6,793)
+Balance at 31 December 2021
+27,372
+499,833
+330,453
+857,658
+Provision for impairment losses:
+Balance at 1 January 2021
+1,917
+41,406
+21,428
+Additions for the year
+359
+1,901
+3,472
+64,751
+5,732
+Decreases for the year
+360
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+10,850
+Decreases for the year
+(124)
+(135)
+(984)
+(1,243)
+Exchange adjustments
+(60)
+9,420
+(1)
+4,687
+49,826
+43,010
+97,523
+Net book value:
+Balance at 31 December 2021
+74,999
+(61)
+132,207
+6,774
+742
+1,209,822
+92,824
+Exchange adjustments
+(29)
+(844)
+Balance at 31 December 2021
+63,479
+611,012
+1,904
+(56)
+613,498
+Less: Provision for impairment losses:
+Balance at 1 January 2021
+4,069
+48,117
+37,221
+89,407
+Additions for the year
+(13,728)
+(929)
+1,287,989
+27,752
+391,719
+75,010
+Transferred from construction in progress
+Reclassifications
+Transferred from subsidiaries
+Transferred to subsidiaries
+49,356
+2,056
+1,592
+970
+Additions for the year
+29,458
+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
+Plants and
+buildings
+Balance at 31 December 2020
+Balance at 1 January 2021
+The Company (Continued)
+136,872
+381,733
+598,925
+593,615
+The Company
+Fixed assets (a)
+Fixed assets pending for disposal
+Total
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Cost:
+At 31 December
+2021
+RMB million
+4
+284,622
+At 31 December
+2020
+RMB million
+283,691
+4
+283,695
+13 FIXED ASSETS (Continued)
+(a) Fixed assets (Continued)
+284,618
+Balance at 31 December 2021
+RMB million
+(7)
+(55,562)
+(136,150)
+903
+870
+53,124
+51,331
+106
+102
+(217,987)
+53,008
+655,982
+768,161
+2,402
+576
+3,721
+3,532
+11,871
+13,140
+55,086
+(197,872)
+(28)
+(18)
+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)
+(8,315)
+(8,577)
+175,139
+194,458
+74,012
+86,335
+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)
+(60)
+from joint ventures (ii)
+Share of other comprehensive loss
+359
+493
+(2,301)
+RMB million
+12,538
+2020
+RMB million
+At 31
+December
+2020
+RMB million
+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
+Zhongtian Synergetic Energy
+At 31
+December
+2021
+2020
+At 31
+December
+Sinopec Capital
+At 31
+December
+2021
+Sinopec Finance
+At 31
+December
+2021
+RMB million
+11,548
+24,070
+20,108
+101,572
+Turnover
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million RMB million RMB million RMB million
+RMB million
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+CIR
+ZTHC Energy
+Sinopec Capital
+22,766
+Sinopec Finance
+2021
+5,177
+2
+26
+2
+Other comprehensive income
+Total comprehensive income
+181
+461
+551
+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
+4,742
+911
+2020
+31 December 2021
+Share of net assets from associates
+64,946
+88,862
+minority interests
+Net assets attributable to
+2,320
+480
+20,108
+24,070
+11,548
+12,538
+29,761
+30,955
+505,336
+526,241
+shareholders of the Company
+Net assets attributable to
+2,320
+480
+73,674
+PipeChina
+2021
+70,747
+14,583
+For the year ended
+Summarised income statement
+1,160
+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
+15,168
+48,568
+225
+(12,987)
+1,081
+2,466
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021 117
+Financial Statements (PRC)
+Financial Statements (PRC)
+118
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+13 FIXED ASSETS
+The Group
+(ii) Including foreign currency translation differences.
+Fixed assets (a)
+Total
+(a) Fixed assets
+At 31 December
+2021
+RMB million
+598,925
+7
+598,932
+At 31 December
+2020
+593,615
+Fixed assets pending for disposal
+(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).
+490
+86
+284
+1,152
+2,517
+3,205
+709
+1,062
+993
+485
+626
+1,621
+214
+231
+91
+13
+(182)
+2
+(154)
+38
+593,653
+Plants and
+buildings
+RMB million
+Oil and gas
+properties
+RMB million
+(940)
+143,165
+793,045
+(29)
+(18,710)
+(95)
+1,048,227
+(26,219)
+(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)
+(57)
+442
+(5,539)
+(617)
+Equipment,
+machinery
+and others
+RMB million
+Total
+RMB million
+Cost:
+Balance at 1 January 2021
+Additions for the year
+Transferred from construction in progress
+Reclassifications
+Decreases for the year
+Exchange adjustments
+Balance at 31 December 2021
+Less: Accumulated depreciation:
+138,550
+509
+757,592
+2,192
+5,487
+40,357
+996,702
+5,177
+65,182
+1,892,844
+7,878
+111,026
+646
+(1,970)
+Dividends declared by associates
+Share of profit from associates
+Share of other comprehensive
+income from associates (ii)
+(127)
+464
+(3,368)
+(123)
+Other comprehensive loss
+718
+986
+(6,136)
+(2,536)
+1,926
+2,263
+1,139
+6,164
+433
+1,664
+Profit/(loss) for the year
+(236)
+(407)
+1,057
+332
+(378)
+(206)
+(601)
+(584)
+1,664
+217
+832
+joint ventures
+Share of net profit/(loss) from
+500
+691
+454
+300
+128
+Dividends from joint ventures
+718
+986
+(6,720)
+(2,742)
+(1,442)
+2,140
+1,139
+6,164
+433
+Total comprehensive income/(loss)
+456
+(379)
+(87)
+Interest expense
+183
+14,881
+24,631
+209
+37,337
+17
+68,548
+6
+291
+451
+(372)
+3
+(308)
+29,778
+6,444
+2,194
+1,655
+990
+1,278
+4,184
+551
+(411)
+(2,054)
+(535)
+(16)
+(597)
+Tax expense
+954
+1,393
+(7,193)
+(2,868)
+2,304
+2,864
+1,518
+8,218
+520
+2,261
+Profit/(loss) before taxation
+(131)
+(89)
+(1,136)
+(945)
+(20)
+(107)
+(5)
+(474)
+(7,228)
+898
+52
+100.0
+90
+4,934
+83
+100.0
+9,350
+25.8
+51
+2.1
+199
+Over three years
+Total
+142
+15.1
+25
+25218
+1.8
+Between two and three years
+267
+1.6
+7
+4.8
+444
+Between one and two years
+89.9
+4,435
+91.3
+8,541
+Within one year
+balance
+%
+166
+94966
+5.4
+20
+369
+Between one and two years
+87.0
+3.965
+Within one year
+RMB million
+%
+RMB million
+prepayments
+balance
+Allowance
+to total
+prepayments
+Amount
+Percentage of
+allowance to
+Percentage
+allowance to
+Percentage of
+At 31 December 2020
+Percentage
+At 31 December 2021
+The Company
+77
+1564
+54.4
+49
+1.8
+5.6
+8
+2.9
+7.5
+RMB million
+8.1
+%
+prepayments
+Total
+Less: Allowance for doubtful accounts
+Prepayments
+9 PREPAYMENTS
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Financial Statements (PRC)
+112
+Financial Statements (PRC)
+111
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+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).
+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.
+Ageing analysis of prepayments is as follows:
+3,860
+3,341
+527
+345
+88.0%
+182
+85
+67
+54.9%
+18
+27
+218
+8,905
+610
+39,299
+149
+3,131
+519
+At 31 December
+2021
+RMB million
+9,350
+83
+9,267
+The Group
+to total
+prepayments
+Amount
+RMB million
+%
+RMB million
+%
+RMB million
+balance
+Allowance
+prepayments
+to total
+prepayments
+Amount
+allowance to
+Percentage of
+Percentage
+At 31 December 2020
+Percentage of
+allowance to
+Percentage
+At 31 December 2021
+The Group
+11
+2,626
+2,637
+16
+4,540
+4,556
+4,934
+77
+4,857
+2020
+RMB million
+At 31 December
+At 31 December
+2021
+RMB million
+The Company
+At 31 December
+2020
+RMB million
+Allowance
+107
+2
+99
+%
+RMB million
+%
+RMB million
+%
+RMB million
+to other
+receivables
+balance
+Percentage
+of allowance
+At 31 December 2020
+Allowance
+receivables
+Amount
+balance
+RMB million
+Allowance
+Amount
+Percentage
+to total other
+to other
+receivables
+to total other
+Percentage
+of allowance
+Percentage
+The Group
+At 31 December 2021
+897
+37,938
+898
+46,929
+38,835
+47,827
+receivables
+%
+Within one year
+Between one and two years
+1,200
+4.4
+1,563
+52.9
+1,278
+6.5
+2,417
+Over three years
+84
+3.3
+1,169
+2.2
+165
+20.6
+7,661
+Between two and three years
+196
+24.2
+8,513
+18.8
+112
+1.6
+51
+68.1
+24,010
+0.1
+35
+71.3
+26,579
+597
+2020
+RMB million
+Between two and three years
+At 31 December
+The Company
+102
+3.3
+1.5
+39
+6.0
+88.6
+2,337
+159
+0.5
+%
+balance
+Allowance
+RMB million
+%
+prepayments
+3.9
+to total
+prepayments
+%
+003
+21513
+4
+16
+At 31 December 2021 and 31 December 2020, the total amounts of the top five prepayments of the Group are set out below:
+Over three years
+100.0
+2.7
+123
+4,556
+Total
+10.1
+10
+2.2
+Amount
+RMB million
+2,637
+100.0
+60596
+1,531
+33,724
+35,255
+37,254
+1,590
+35,664
+At 31 December
+2020
+RMB million
+RMB million
+At 31 December
+2021
+The Group
+Ageing analysis of other receivables is as follows:
+Total
+Less: Allowance for doubtful accounts
+Other receivables
+10 OTHER RECEIVABLES
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+22.9%
+31.4%
+2020
+1,131
+2,939
+2021
+At 31 December
+At 31 December
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Percentage to the total balance of prepayments
+Total amount (RMB million)
+11
+3.9
+4
+4.4
+7
+At 31 December
+2021
+RMB million
+25.2%
+3,024
+3,637
+86.4
+527
+1.6
+610
+97.0
+579
+1.5
+597
+57.0
+85
+0.4
+149
+93.5
+38,894
+3,190
+3,131
+10.3
+4,062
+29.0
+181
+0.3
+117
+87.7
+34,478
+0.2
+83
+161
+8.8
+77.1
+100.0
+4,033
+39,299
+%
+% RMB million
+to accounts
+receivable
+balance
+Allowance
+accounts
+receivable
+Amount
+RMB million
+%
+RMB million
+%
+RMB million
+to total
+receivable
+balance
+to accounts
+Allowance
+receivable
+Amount
+accounts
+to total
+of allowance
+Percentage
+Percentage
+At 31 December 2020
+of allowance
+Percentage
+Percentage
+At 31 December 2021
+The Company
+3,860
+100.0
+3,411
+20,196
+1.6
+34,263
+623
+38,894
+RMB million
+RMB million
+At 31 December
+2020
+2021
+At 31 December
+The Company
+The Group
+Total
+Over three years
+Between two and three years
+Between one and two years
+Within one year
+4,033
+Total
+Between two and three years
+Between one and two years
+Within one year
+Ageing analysis on accounts receivable is as follows:
+Total
+Less: Allowance for doubtful accounts
+Accounts receivable
+ACCOUNTS RECEIVABLE
+7
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and swaps contracts. See Note 64.
+6 DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Over three years
+34,861
+39,299
+3,860
+35,439
+At 31 December
+2021
+RMB million
+21,239
+93
+21,146
+%
+RMB million
+%
+RMB million
+%
+% RMB million
+RMB million
+receivable
+balance
+Allowance
+receivable
+Amount
+balance
+Allowance
+to accounts
+to total
+accounts
+to accounts
+receivable
+to total
+accounts
+receivable
+Amount
+Percentage
+of allowance
+Percentage
+At 31 December 2020
+of allowance
+Percentage
+The Group
+Percentage
+At 31 December 2021
+108
+21,763
+21,871
+At 31 December
+2020
+RMB million
+88.1
+95.1
+9
+946
+38,894
+597
+3,190
+44
+50.6%
+3,146
+3,324
+3,411
+181
+44
+35.8%
+137
+500
+208
+8,312
+83
+0.2%
+26
+4,280
+34,263
+623
+RMB million
+RMB million
+%
+Loss
+allowance
+Impairment
+provision
+average
+loss rate
+Impairment
+Carrying provision on
+amount individual basis
+RMB million
+RMB million
+RMB million
+57
+190
+100.0%
+389
+4,062
+117
+0.0%
+117
+5,023
+34,478
+Loss
+allowance
+RMB million
+Impairment
+provision
+RMB million
+%
+loss rate
+average
+on provision matrix basis
+Weighted.
+Carrying provision on
+amount individual basis
+RMB million
+Impairment
+Impairment provision on
+individual basis
+RMB million
+carrying
+amount
+Gross
+8 RECEIVABLES FINANCING
+Over 3 years past due
+Total
+2 to 3 years past due
+1 to 2 years past due
+RMB million
+Current and within 1 year past due
+Impairment provision
+4,033
+534
+3,499
+579
+Gross
+carrying
+amount
+31 December 2020
+Over 3 years past due
+Total
+2 to 3 years past due
+87
+13
+1
+03250
+100.0
+21,871
+93
+100.0
+0.5
+99
+98.7
+0.2
+49
+10.0
+0.3
+76
+0.6
+99.0
+21,647
+0.1
+8500
+76
+0.3
+77
+21,239
+2
+0.1
+20
+6
+4.5
+1737
+76.8
+9.2
+87.9
+1 to 2 years past due
+Current and within 1 year past due
+31 December 2021
+on provision matrix basis
+Weighted-
+Impairment provision
+Impairment provision on
+individual basis
+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.
+7 ACCOUNTS RECEIVABLE (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+During 2021 and 2020, the Group and the Company had no individually significant accounts receivable been fully or substantially provided
+allowance for doubtful accounts.
+Accounts receivable (net of allowance for doubtful accounts) primarily represent receivables that are neither past due nor impaired. These
+receivables relate to a wide range of customers for whom there is no recent history of default. Information about the impairment of accounts
+receivable and the Group exposure to credit risk can be found in Note 64.
+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.
+2,057
+39.8%
+26.9%
+2,062
+15,628
+10,444
+2020
+2021
+At 31 December
+At 31 December
+Percentage to the total balance of accounts receivable
+Allowance for doubtful accounts
+Total amount (RMB million)
+At 31 December 2021 and 31 December 2020, the total amounts of the top five accounts receivable of the Group are set out below:
+108
+1250
+26.5
+2328
+0276
+0.2
+Total current assets
+2,665
+3,437
+7,516
+12,404
+1,223
+2,188
+4,777
+6,953
+7,492
+9,217
+Other current assets
+5,259
+15,779
+4,820
+5,441
+1,280
+1,258
+1,838
+5,375
+7,448
+6,562
+Cash and cash equivalents
+Current assets
+RMB million
+2020
+At 31
+December
+At 31
+December
+2021
+1,408
+14,940
+12,328
+6,615
+(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
+12,531
+14,032
+9,993
+9,336
+15,237
+13,744
+Non-current assets
+7,924
+8,257
+8,924
+17,845
+2,503
+3,446
+At 31
+December
+2020
+RMB million RMB million
+Other current liabilities
+At 31
+December
+2020
+2021
+RMB million RMB million
+At 31
+December
+2021
+RMB million RMB million
+PRC
+Zhongtian Synergetic Energy Company Limited PRC
+self-owned equity management
+management, investment consulting,
+49.00%
+10,000
+Project management, equity
+Sun Mingrong
+PRC
+PRC
+Sinopec Capital Co.,Ltd. ("Sinopec Capital")
+services
+("Sinopec Finance")
+Peng Yi
+49.00%
+Provision of non-banking financial
+Jiang Yongfu
+PRC
+PRC
+Sinopec Finance Company Limited
+14.00%
+500,000
+Operation of oil and natural gas pipelines
+and auxiliary facilities
+("PipeChina") (i)
+Zhang Wei
+PRC
+China Oil & Gas Pipeline Network Corporation PRC
+2. Associates
+18,000
+("Zhongtian Synergetic Energy")
+Mining coal and manufacturing of coal-
+chemical products
+17,516
+At 31
+December
+2020
+Sinopec SABIC Tianjin
+YASREF
+Taihu
+BASF-YPC
+At 31
+December
+2020
+2021
+RMB million RMB million
+RMB million
+2021
+At 31
+December
+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 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+116
+Financial Statements (PRC)
+115
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Joint ventures and associates above are limited companies.
+50.00%
+10,002 USD
+Crude oil and natural gas extraction
+ΝΑ
+British Virgin
+Islands
+The Republic of
+Kazakhstan
+("CIR")
+Caspian Investments Resources Ltd.
+38.75%
+At 31
+December
+(5,008)
+(5,147)
+(2,546)
+7,491
+7,484
+5,605
+6,626
+5,568
+7,580
+7,416
+8,120
+Carrying Amounts
+5,605
+6,626
+5,568
+7,580
+7,484
+7,416
+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
+8,120
+7,491
+Summarised income statement
+For the year ended
+118
+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
+2021
+2020
+2021
+2020
+2021
+Sinopec SABIC Tianjin
+YASREF
+Taihu
+BASF-YPC
+FREP
+31 December 2021
+18,949
+14,831
+16,239
+shareholders of the company
+Other non-current liabilities
+(6,773)
+(7,599)
+(29,650)
+(30,903)
+(85)
+(85)
+(8,761)
+(6,857)
+Non-current financial liabilities
+Non-current liabilities
+(4,050)
+(4,144)
+(18,164)
+(25,393)
+(1,081)
+(1,963)
+(2,646)
+(2,623)
+(6,350)
+(6,185)
+Total current liabilities
+(3,052)
+(3,547)
+(8,644)
+(15,844)
+(1,043)
+(1,931)
+(2,190)
+(242)
+50.00%
+(235)
+(42)
+Net assets attributable to
+14,981
+14,967
+4,515
+1,773
+11,851
+13,991
+13,920
+18,949
+14,831
+16,239
+Net assets
+(7,151)
+(7,981)
+(31,658)
+(32,626)
+(2,102)
+(1,524)
+(42)
+(92)
+(8,996)
+(7,099)
+Total non-current liabilities
+(378)
+(382)
+(2,008)
+(1,723)
+(2,017)
+(1,439)
+(92)
+27
+10,520
+Company Limited ("Sinopec SABIC Tianjin")
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+114
+Financial Statements (PRC)
+Financial Statements (PRC)
+113
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+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.
+51.2%
+74.0
+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%
+2020
+22,581
+At 31 December
+11 INVENTORIES
+At 31 December
+2021
+19,056
+Ageing
+Total amount (RMB million)
+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:
+897
+100.0
+38,835
+284,618
+100.0
+47,827
+Total
+6.5
+891
+35.3
+Percentage to the total balance of other receivables
+Allowance for doubtful accounts
+The Group
+Raw materials
+Work in progress
+Dividends declared
+Other equity movements under the equity method
+Change of other comprehensive loss under the equity method
+Share of profits less losses under the equity method
+Additions for the year
+Balance at 1 January 2021
+The Group
+12 LONG-TERM EQUITY INVESTMENTS
+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.
+152,191
+3,107
+Total
+Less: Provision for diminution in value of inventories
+155,298
+212,330
+4,897
+207,433
+3,372
+2,515
+78,481
+84,174
+13,066
+15,701
+60,379
+109,940
+RMB million
+At 31 December
+2020
+RMB million
+At 31 December
+2021
+Spare parts and consumables
+Finished goods
+13,716
+Disposals for the year
+6.2
+30.3
+Allowance
+receivables
+Amount
+to other
+receivables
+to total other
+Percentage
+to other
+receivables
+balance
+Allowance
+receivables
+Amount
+to total other
+Percentage
+of allowance
+RMB million
+of allowance
+Percentage
+At 31 December 2020
+At 31 December 2021
+The Company
+1,531
+100.0
+35,255
+1,590
+100.0
+37,254
+Total
+7.2
+2.3
+Percentage
+%
+RMB million
+%
+14,497
+Over three years
+0.3
+5
+4.2
+1,618
+0.1
+2
+3.0
+1,414
+Between two and three years
+1
+5.5
+2,123
+0.1
+2
+7.8
+3,740
+Between one and two years
+55.0
+21,378
+58.9
+28,176
+Within one year
+%
+balance
+RMB million
+%
+RMB million
+894
+Foreign currency translation differences
+Other movements
+Movement of provision for impairment
+Fujian Refining & Petrochemical Company
+1. Joint ventures
+by the Company
+RMB million
+Principal activities
+Registered Capital
+Legal
+representative
+Register
+location
+Principal place
+of business
+Name of investees
+directly or
+indirectly held
+Percentage of
+equity/voting right
+(a) Principal joint ventures and associates
+PRC
+Principal joint ventures and associates of the Group are as follows:
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Details of the Company's principal subsidiaries are set out in Note 59.
+For the year ended 31 December 2021, the Group and the Company had no individually significant long-term investment impairment.
+360,847
+(41)
+(41)
+(7,926)
+73,854
+17,609
+277,310
+Balance at 31 December 2021
+Movement of provision for impairment
+12 LONG-TERM EQUITY INVESTMENTS (Continued)
+PRC
+Gu Yuefeng
+Manufacturing refining oil products
+PRC
+PRC
+Sinopec SABIC Tianjin Petrochemical
+Ltd. ("YASREF")
+37.50%
+1,560 million USD
+49.00%
+25,000 USD
+Crude oil and natural gas extraction
+Petroleum refining and processing
+ΝΑ
+Saudi Arabia
+Saudi Arabia
+Yanbu Aramco Sinopec Refining Company
+ΝΑ
+Cyprus
+Russia
+Taihu Limited ("Taihu")
+petrochemical products
+("BASF-YPC")
+40.00%
+12,704
+Manufacturing and distribution of
+Gu Yuefeng
+PRC
+PRC
+BASF-YPC Company Limited
+Limited ("FREP")
+50.00%
+14,758
+199
+(3,069)
+(8)
+199
+Other movement
+42
+(315)
+(368)
+127
+(97)
+(1,176)
+(10,992)
+(7,120)
+(3,872)
+699
+675
+24
+441
+286
+155
+23,253
+9,322
+188,342
+Total
+RMB million
+losses
+RMB million
+(3,548)
+Provision for
+impairment
+Investments
+in associates
+RMB million
+136,872
+5,212
+13,887
+9,366
+4,110
+55,018
+RMB million
+joint ventures
+Investments in
+The Company
+Balance at 31 December 2021
+100
+AHMED AL-SHAIKH Manufacturing and distribution of
+petrochemical products
+(1,273)
+(641)
+227
+149,500
+173
+(2,406)
+12
+8,151
+14,472
+(1,019)
+155
+18
+(1,387)
+(786)
+(2,275)
+Disposals for the year
+Dividends declared
+Other equity movements under the equity method
+12
+3,961
+343,356
+Total
+RMB million
+losses
+RMB million
+(7,885)
+69,540
+1,014
+14,762
+812
+4,190
+Provision for
+impairment
+Investments in
+associates
+RMB million
+Investments in
+joint ventures
+RMB million
+266,939
+12,646
+Investments in
+subsidiaries
+RMB million
+Change of other comprehensive loss under the equity method
+Share of profits less losses under the equity method
+Additions for the year
+Balance at 1 January 2021
+(199)
+209,179
+(199)
+(3,705)
+63,384
+283,691
+Financial Statements (PRC)
+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)
+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.
+110
+7,639
+(58)
+(42)
+(193)
+2,464
+5,468
+1,933
+1,590
+1,931
+Other non-current assets
+Inventories
+(12)
+(12)
+83
+1,531
+10
+Other receivables
+2
+11
+Fixed assets
+12
+3,705
+(42)
+(7)
+206
+3,548
+4,897
+(40)
+(1,300)
+(18)
+3,148
+3,107
+123467
+17
+Goodwill
+Intangible assets
+14
+Construction in progress
+13
+83
+Long-term equity investments
+46
+9
+14
+Provision for
+the year
+RMB million
+Balance at
+Other
+Balance at
+1 January
+2021
+RMB million
+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
+Written back
+for the year
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+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
+Financial Statements (PRC)
+(54)
+Written off
+increase
+(decrease)
+77
+89,407
+Prepayments
+4,033
+(106)
+(30)
+(127)
+436
+for the year
+3,860
+Included: Accounts receivable
+Allowance for doubtful accounts
+RMB million
+RMB million
+RMB million
+RMB million
+2021
+31 December
+7
+9,420
+2,047
+(163)
+37
+3,298
+6.5249
+505
+934
+6.3757
+146
+1,141
+0.8416
+1,320
+2,407
+3
+3
+16,111
+24,959
+16,111
+24,959
+RMB
+million
+4,642
+Exchange
+rates
+31
+7.2197
+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.
+21
+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 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
+23 BILLS PAYABLE
+million
+rates RMB million
+currency
+112,385
+49
+43
+7,861
+7,861
+6
+Total
+Others
+1,272
+15,687
+93
+262
+941
+2,130
+(28)
+(33)
+144
+At 31 December
+2020
+RMB million
+97,523
+(24)
+(211)
+(2,547)
+(238)
+Exchange
+currency
+million
+At 31 December 2020
+Original
+Original
+At 31 December 2021
+Total
+Hong Kong Dollar loans
+Euro loans
+- US Dollar loans
+- Renminbi loans
+fellow subsidiaries
+Short-term loans from Sinopec Group Company and
+- Renminbi loans
+Short-term other loans
+- 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
+(1,141)
+2021
+RMB million
+19,389
+7,910
+RMB million
+Deferred tax assets
+Deferred tax liabilities.
+(1)
+Decreases for the year
+355
+241
+103
+11
+Additions for the year
+941
+(23)
+17
+27
+482
+226
+Balance at 1 January 2021
+Provision for impairment losses:
+65,063
+4,492
+23,670
+189
+3,800
+(24)
+236
+Amortisation of the intangible assets of the Group charged for the year ended 31 December 2021 is RMB6,363 million (2020: RMB5,907 million).
+114,280
+2,231
+119,210
+3,708
+29,714
+31,856
+2,089
+1,210
+Balance at 31 December 2021
+1,144
+1,110
+Balance at 31 December 2020
+Balance at 31 December 2021
+Net book value:
+1,272
+17
+407
+130
+482
+83,434
+76,994
+4,907
+28,194
+Balance at 31 December 2021
+8,217
+53,791
+5,140
+6,533
+111,864
+Balance at 31 December 2021
+(2,616)
+(84)
+185,545
+(688)
+(9)
+(1,003)
+Decreases for the year
+15,262
+2,122
+912
+379
+1,159
+(832)
+Accumulated amortisation:
+Balance at 1 January 2021
+24,957
+(538)
+(43)
+(310)
+(9)
+(7)
+(169)
+Decreases for the year
+7,923
+604
+2,458
+332
+1,123
+3,406
+Additions for the year
+57,678
+3,931
+21,522
+3,477
+3,791
+17 GOODWILL
+At 31 December
+Goodwill is allocated to the following Group's cash-generating units:
+Name of investees
+(11)
+(9)
+127
+127
+Other equity instrument investments
+Intangible assets
+13,322
+4,749
+(4,420)
+(13,415)
+1,008
+(15,037)
+16,777
+(2,709)
+1,790
+258
+1,286
+2,858
+2,411
+3,763
+15,793
+Tax value of losses carried forward
+869
+(517)
+10,915
+10,915
+For the year ended 31 December 2021
+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
+(492)
+The consolidated elimination amount between deferred tax assets and liabilities are as follows:
+(676)
+(870)
+(19,117)
+35,969
+30,596
+Deferred tax assets/(liabilities)
+371
+1,056
+Others
+(19,039)
+Fixed assets
+Cash flow hedges
+Payables
+1,032
+1,006
+Other units without individual significant goodwill
+Total
+1,004
+1,004
+Manufacturing of intermediate petrochemical products
+and petroleum products
+2,541
+2,541
+8,594
+Production and sale of petrochemical products
+At 31 December
+2020
+RMB million
+RMB million
+4,043
+Manufacturing of intermediate petrochemical products
+and petroleum products
+Sinopec Beijing Yanshan Petrochemical Branch
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO")
+Sinopec Zhenhai Refining and Chemical Branch
+2021
+Principal activities
+4,043
+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 recognised.
+Key assumptions used for cash flow forecasts for these entities are the gross margin and sales volume. Management determined the budgeted gross
+margin based on the gross margin achieved in the period immediately before the budget period and management's expectation on the future trend
+of the prices of crude oil and petrochemical products. The sales volume was based on the production capacity and/or the sales volume in the period
+immediately before the budget period.
+Receivables and inventories
+RMB million
+2020
+RMB million
+2021
+At 31 December At 31 December
+Deferred tax liabilities
+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
+At 31 December
+26 EMPLOYEE BENEFITS PAYABLE
+Balance at the
+beginning
+Short-term employee benefits
+Post-employment benefits
+defined contribution plans
+Total
+49,341
+2,435
+4,335
+39,504
+26,633
+3,520
+18,373
+RMB million
+45,459
+RMB million
+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.
+At 31 December
+2020
+Total
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+32 DEBENTURES PAYABLE
+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
+For the year ended 31 December 2021
+RMB million
+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
+2020
+33 LEASE LIABILITY
+After five years
+Between one and two years
+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
+6.5249
+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
+Long-term bank loans
+RMB
+million
+currency Exchange
+million
+rates
+RMB
+million
+Exchange
+rates
+currency
+million
+Interest rate and final maturity
+At 31 December 2020
+Original
+- Renminbi loans
+Between two and five years
+92
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+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
+6.3757
+Less: Portion with one year
+Long-term bank loans
+183
+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
+11,013
+(4,637)
+33,681
+12,988
+35,651
+(3,293)
+- US Dollar loans
+- Renminbi loans
+Interest rates at 1.65% per annum at
+31 December 2021 (2020:1.60%) with
+maturities in 2027
+The Group
+Lease liabilities
+Deduct: Portion of lease liabilities with one year (Note 29)
+Total
+36 SHARE CAPITAL (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+During the year ended 31 December 2014, the Company issued 1,715,081,853 listed A shares with a par value of RMB1.00 each, as a result of
+exercise of conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2013, the Company issued 114,076 listed A shares with a par value of RMB1.00 each, as a result of exercise
+of conversion by the holders of the 2011 Convertible Bonds.
+In June 2013, the Company issued 21,011,962,225 listed A shares and 5,887,716,600 listed H shares as a result of bonus issues of 2 shares
+converted from the retained earnings, and 1 share transferred from capital reserve for every 10 existing shares.
+The Group (Continued)
+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 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
+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.
+25,513
+Capital management
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 31,32 and 61, respectively.
+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)
+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.
+(6,124)
+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.
+127,389
+25,513
+95,558
+95,558
+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:
+Other non-current liabilities primarily represent long-term payables, special payables and deferred income.
+34 PROVISIONS
+187,033
+15,293
+RMB million
+2020
+At 31 December
+170,233
+185,406
+15,173
+RMB million
+At 31 December
+2021
+171,740
+The Group
+RMB million
+43,713
+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
+36 SHARE CAPITAL
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Financial Statements (PRC)
+128
+Financial Statements (PRC)
+127
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+(81)
+40,495
+1,135
+(6,435)
+2,163
+Original
+At 31 December 2021
+22,494
+1,942
+(150)
+151
+5
+6
+(380)
+381
+5
+265
+6
+(5,382)
+224
+277
+(5,912)
+5,955
+234
+2,586
+(7,684)
+7,610
+5,423
+2,660
+47
+(6,243)
+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)
+6,244
+97,396
+(2,620)
+2,637
+30
+7,043
+279
+(2,203)
+2,246
+236
+48
+47
+10,730
+(65,810)
+72,704
+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
+The Group
+Housing fund
+Work-related injury insurance
+Medical insurance
+Social insurance
+Staff welfare
+Salaries, bonuses, allowances
+of the year
+10,690
+(2) Short-term employee benefits
+Maternity insurance
+Accrued
+during the year
+Decreased
+during the year
+7,043
+74
+3,836
+of the year
+Balance at
+the end
+Decreased
+during the year
+Accrued
+during the year
+Balance at
+the beginning
+of the year
+14,048
+12
+69
+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
+8,147
+(1) Employee benefits payable:
+(8,148)
+8
+RMB million
+rates
+Exchange
+currency
+million
+rates RMB million
+Exchange
+Original
+Original
+currency
+million
+3,281
+At 31 December 2020
+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
+At 31 December 2021
+- US Dollar loans
+2
+12
+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.
+6.3757
+Non-current liabilities due within one year
+2,719
+15,173
+7,000
+3,759
+466
+4,613
+24
+6.5249
+4
+28,651
+- Renminbi loans
+Long-term bank loans
+The Group's non-current liabilities due within one year represent:
+Mineral resources compensation fee payable
+Income tax payable
+Consumption tax payable
+Value-added tax payable
+2020
+At 31 December
+At 31 December
+2021
+69
+Other taxes
+11
+(12,246)
+(3,793)
+(305)
+12,241
+74
+3,789
+15
+305
+8
+Total
+28 OTHER PAYABLES
+RMB million
+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
+At 31 December 2021 and 31 December 2020, other payables of the Group over one year primarily represented payables for constructions.
+76,848
+81,267
+8,279
+11,548
+132
+8
+6,586
+4,809
+5,089
+56,762
+56,084
+8,818
+RMB million
+50
+Additions for the year
+All A shares and H shares rank pari passu in all material aspects.
+6,179
+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
+capitalised at
+31 December
+Accumulated
+interest
+to budgeted
+amount
+Percentage
+of project
+investment
+Caprolactam Industry Chain Relocation and
+Upgrading Transformation Development Project
+13.950
+1,000
+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
+Balance at
+31 December
+13
+10%
+2,999
+2,999
+29,052
+New Material Industry Cluster Project
+Zhenhai Refining and Chemical Refining and
+Tianjin Nangang Ethylene and Downstream High-end
+32
+Bank loans & self-financing
+27%
+3,700
+2,700
+Bank loans & self-financing
+2021
+RMB million
+RMB million
+RMB million
+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
+127,572
+159,729
+Balance at 1 January 2021
+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:
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+172,899
+Balance at 31 December 2021
+Provision for impairment losses:
+The Group
+RMB million
+(146)
+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
+60,182
+72,196
+(22)
+144
+302
+2,047
+66,448
+158,069
+(56)
+(6,733)
+(58,180)
+(927)
+(10,302)
+(111,026)
+(7,702)
+(90)
+(39)
+Cost:
+14 CONSTRUCTION IN PROGRESS
+Decreases for the year
+105,712
+1,427
+104,285
+12,733
+1,529
+11.204
+(491)
+(441)
+(50)
+4,642
+882
+3,760
+8,582
+1,088
+7,494
+118,445
+2,956
+115,489
+(1,146)
+(935)
+(211)
+2,272
+1,619
+Balance at 31 December 2020
+107,553
+1,184
+108,737
+Balance at 1 January 2021
+Additions for the year
+53,567
+5,593
+102,177
+Balance at 1 January 2021
+Cost:
+RMB million
+RMB million
+RMB million
+RMB million
+Total
+653
+Others
+Patents
+RMB million
+Land use rights
+RMB million
+Non-patent
+The Group
+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
+technology Operation rights
+117,319
+5,383
+115,047
+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
+The Company
+Balance at 31 December 2021
+Balance at 31 December 2020
+Net book value:
+Balance at 31 December 2021
+2,272
+Additions for the year
+10,481
+23,072
+Decreases for the year
+6,863
+Balance at 31 December 2021
+Balance at 31 December 2021
+6,495
+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
+Balance at 31 December 2021
+Accumulated depreciation:
+Balance at 1 January 2021
+30,217
+13,358
+189,018
+(2,197)
+(2,379)
+18,904
+(182)
+34,051
+153,200
+158,801
+184,974
+31,774
+15,147
+42,097
+13,165
+26,087
+2,311
+2,066
+12,972
+12,842
+92,824
+85,494
+9,884
+7,702
+5,928
+85,030
+(398)
+(3,341)
+1,253
+9,286
+10,395
+(6,032)
+(47,486)
+5,456
+9,125
+3,062
+Others
+2020
+Investment income
+Decrease/(increase) in deferred tax assets
+(10,143)
+Increase in deferred tax liabilities
+(Increase)/decrease in inventories
+Safety fund reserve
+Increase in operating receivables
+Increase in operating payables
+Net cash flow from operating activities
+(b) Net change in cash:
+Cash balance at the end of the year
+Less: Cash at the beginning of the year
+Net increase of cash
+RMB million
+(c) The analysis of cash held by the Group is as follows:
+- Cash on hand
+- Demand deposits
+(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 :
+Repayments of lease liabilities
+Total
+2021
+RMB million
+Cash at bank and on hand
+Cash at the end of the year
+87,551
+2,270
+49,832
+37
+49,869
+2021
+2020
+RMB million
+19,412
+RMB million
+15,327
+8,864
+28,276
+1,955
+17,282
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+4,225
+980
+5,205
+135
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+57 RELATED PARTIES AND RELATED PARTY TRANSACTIONS
+(1) Related parties having the ability to exercise control over the Group
+The name of the company
+:
+China Petrochemical Corporation
+Unified social credit identifier
+Financial expenses
+:
+Financial Statements (PRC)
+2020
+RMB million
+RMB million
+2021
+22,407
+(8,177)
+237
+(17,610)
+57,827
+23,956
+225,174
+168,520
+2021
+2020
+RMB million
+RMB million
+108,590
+87,559
+87,559
+60,438
+21,031
+2021
+RMB million
+1
+108,589
+108,590
+27,121
+2020
+RMB million
+8
+87,559
+802
+(58,372)
+775
+Fair value (gain)/loss
+RMB million
+Dry hole costs written off
+441
+Other comprehensive loss that can be converted into profit or loss under the
+equity method
+(4)
+2
+(6)
+Changes in fair value of other equity instrument investments
+(220)
+(220)
+19,018
+(7,240)
+441
+1,618
+(5,499)
+(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
+Effective portion of changes in fair value of hedging instruments
+Cash flow hedges:
+24,517
+Foreign currency translation differences
+Other comprehensive income
+(1,728)
+9111000010169286X1
+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
+RMB million
+amount
+Net-of-tax
+Tax
+effect
+Before-tax
+amount
+2020
+17,507
+(5,497)
+23,004
+(1,728)
+amount
+RMB million
+RMB million
+Net-of-tax
+Tax
+effect
+(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
+56 SUPPLEMENTAL INFORMATION TO THE CASH FLOW STATEMENT
+The Group
+(a) Reconciliation of net profit to cash flows from operating activities:
+Net profit
+Add: Impairment losses on assets
+Credit impairment losses
+Depreciation of right-of-use assets
+Depreciation of fixed assets
+Amortisation of intangible assets and long-term deferred expenses
+(462)
+Net loss/(gain) on disposal of non-current assets
+Adjustment for under provision for income tax in respect of preceding years
+Actual income tax expense
+934
+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)
+(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
+75
+Registered address
+(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:
+:
+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
+2021
+RMB million
+At 31 December
+2020
+RMB million
+Bills payable
+At 31 December
+2021
+RMB million
+2020
+RMB million
+61,682
+53,417
+30
+42
+-
+122
+19
+At 31 December
+Other non-current assets
+Prepayments and other current assets
+Other receivables
+9,405
+•
+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.
+(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:
+Other related companies
+Cash at bank and on hand
+Accounts receivable
+Receivables financing
+2127
+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:
+8,625
+186
+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.
+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.
+(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
+14,156
+58 PRINCIPAL ACCOUNTING ESTIMATES AND JUDGEMENTS
+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)
+2021
+4,642
+2,407
+3,010
+760
+13,941
+18,062
+577
+1,231
+3,116
+6.435
+5
+8
+3,798
+3,671
+228
+123
+10,139
+18,990
+50
+41
+4,627
+5,896
+85
+681
+12,078
+2,779
+16,735
+(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.
+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.
+136
+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)
+(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
+Taihu
+Transportation and storage
+Production related services
+Ancillary and social services
+Agency commission income
+Interest income
+Interest expense
+Note
+The Group
+2021
+RMB million
+2020
+RMB million
+(i)
+Exploration and development services
+FREP
+BASF-YPC
+Joint ventures of the Group:
+Zhongtian Synergetic Energy
+CIR
+Relationship with the Group
+No. 22, Chaoyangmen North Street, Chaoyang District, Beijing
+Exploration, production, storage and transportation (including pipeline transportation), sales and
+utilisation of crude oil and natural gas; refining; wholesale and retail of gasoline, kerosene and diesel;
+production, sales, storage and transportation of petrochemical and other chemical products; industrial
+investment and investment management; exploration, construction, installation and maintenance of
+petroleum and petrochemical constructions and equipments; manufacturing electrical equipment;
+research, development, application and consulting services of information technology and alternative
+energy products; import & export of goods and technology.
+Ultimate holding company
+State-owned
+Types of legal entity
+Registered capital
+Authorised representative
+Ma Yongsheng
+:
+RMB326,547 million
+Sinopec Group Company is an enterprise controlled by the PRC government. Sinopec Group Company directly and indirectly holds 68.77%
+shareholding of the Company.
+(2) Related parties not having the ability to exercise control over the Group
+Related parties under common control of a parent company with the Company:
+Sinopec Finance (Note)
+Sinopec Shengli Petroleum Administration Bureau
+Sinopec Zhongyuan Petroleum Exploration Bureau
+Sinopec Assets Management Corporation
+Sinopec Engineering Incorporation
+Sinopec Century Bright Capital Investment Limited
+Sinopec Petroleum Storage and Reserve Limited
+Associates of the Group:
+PipeChina
+Sinopec Finance
+Sinopec Capital
+297,381
+228,307
+(ii)
+191,888
+Net deposits placed with related parties
+Net funds obtained from/(repaid to) related parties
+30,305
+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.
+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). 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).
+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).
+Notes:
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+(ii) Purchases represent the purchase of materials and utility supplies directly related to the Group's operations such as the procurement of raw and ancillary
+materials and related services, supply of water, electricity and gas.
+(iii) Transportation and storage represent the cost for the use of railway, road and marine transportation services, pipelines, loading, unloading and storage facilities.
+(iv) Exploration and development services comprise direct costs incurred in the exploration and development such as geophysical, drilling, well testing and well
+measurement services.
+(v) Production related services represent ancillary services rendered in relation to the Group's operations such as equipment repair and general maintenance,
+insurance premium, technical research, communications, firefighting, security, product quality testing and analysis, information technology, design and engineering,
+construction of oilfield ground facilities, refineries and chemical plants, manufacture of replacement parts and machinery, installation, project management 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.
+(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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+137
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+57 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)
+Notes: (Continued)
+(31,144)
+Principal activities
+(x)
+(8,265)
+151,300
+(iii)
+19,443
+8,734
+(iv)
+33,930
+31,444
+(v)
+44,405
+31,915
+(vi)
+1,730
+2,952
+(vii)
+194
+160
+(viii)
+715
+704
+(ix)
+385
+919
+(viii)
+(17,585)
+(2,332)
+50,564
+Cost of hedging reserve
+21,079
+S[8
+22
+156
+34
+56
+37,525
+82
+3,637
+19,296
+16
+21,416
+8,151
+23,253
+RMB million
+RMB million
+RMB million
+2020
+2021
+2020
+The Company
+The Group
+2021
+49 INVESTMENT INCOME
+6,712
+Income from investment of subsidiaries accounted for under cost method
+Income from investment accounted for under equity method
+Investment income from disposal of business and long-term
+equity investments
+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
+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
+2020
+RMB million
+RMB million
+2021
+43,356
+257
+1,203
+30,881
+(69)
+47,486
+84
+6,032
+84
+409
+(1,013)
+(376)
+687
+2,475
+(17,687)
+266
+The Group
+RMB million
+50 INCOME FROM CHANGES IN FAIR VALUE
+Total
+Others
+Gain from ineffective portion of cash flow hedges
+through profit or loss
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+132
+The operating costs, selling and distribution expenses, general and administrative expenses, research and development expenses and exploration
+expenses (including dry holes) in consolidated income statement classified by nature are as follows:
+43 CLASSIFICATION OF EXPENSES BY NATURE
+The interest rates per annum at which borrowing costs were capitalised during the year ended 31 December 2021 by the Group ranged from 1.84%
+to 4.35% (2020: 2.60% to 4.66%).
+9,510
+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
+5,679
+996
+Net foreign exchange gains
+Interest income
+Accretion expenses (Note 34)
+Net interest expenses
+Purchased crude oil, products and operating supplies and expenses
+(1,824)
+Personnel expenses
+Exploration expenses (including dry holes)
+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
+42,531
+52,621
+9,716
+12,382
+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
+Depreciation, depletion and amortisation
+Add: Interest expense on lease liabilities
+428
+Others
+Provision for income tax for the year
+RMB million
+RMB million
+2020
+2021
+The Group
+54 INCOME TAX EXPENSE
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+17,522
+134
+133
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+4,732
+7,582
+2,719
+3,470
+1,669
+3,727
+301
+165
+Financial Statements (PRC)
+14,334
+Deferred taxation
+6,258
+7,073
+Tax effect of non-taxable income
+3,340
+6,142
+Tax effect of non-deductible expenses
+12,110
+27,087
+Expected income tax expense at a tax rate of 25%
+48,441
+108,348
+Profit before taxation
+RMB million
+RMB million
+2020
+2021
+Reconciliation between actual income tax expense and accounting profit at applicable tax rates is as follows:
+6,344
+23,318
+Total
+(117)
+(462)
+Under-provision for income tax in respect of preceding year
+(7,873)
+43
+220
+2020
+RMB million
+RMB million
+Others
+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
+Prepayments
+The Group
+51 IMPAIRMENT LOSSES
+(1,253)
+3,341
+Total
+(5)
+Total
+576
+2021
+2020
+RMB million
+2021
+2,370
+3,516
+1,160
+2,710
+1,210
+806
+2020
+RMB million
+RMB million
+2021
+26,087
+13,165
+43
+844
+144
+47
+262
+11,783
+9,420
+1,955
+206
+97
+11,361
+3,130
+RMB million
+(40)
+Less: Capitalised interest expenses
+Synthetic fiber monomers and polymers
+RMB million
+2
+(18)
+324
+(5,765)
+(1,562)
+(2,600)
+1,038
+(739)
+7,805
+81
+(20)
+(6,089)
+(110)
+(29)
+(1,562)
+1,038
+(739)
+7,805
+81
+(20)
+(6,089)
+328
+(1,031)
+1,359
+(3,485)
+(2,600)
+(591)
+(1,353)
+(1,728)
+92,280
+3,944
+Appropriation
+Balance at 1 January 2021
+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)
+(3,315)
+(690)
+(2,092)
+7,214
+(2,443)
+(715)
+6,768
+81
+(4)
+(2,001)
+Equity Attributable to shareholders of the company
+31 December 2021
+Changes in 2021
+1 January 2021
+31 December 2020
+1 January 2020
+Changes in 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
+162
+162
+Interest expenses incurred
+Other
+Balance at 31 December 2021
+comprehensive
+income that can
+Changes in
+(1,890)
+(1,569)
+(321)
+2,746
+1,037
+(4,088)
+RMB million
+income
+Total other
+comprehensive
+Minority
+interests
+RMB million
+RMB million
+RMB million
+Subtotal
+translation
+differences
+Cash flow
+hedges
+RMB million
+fair value
+hedges
+RMB million
+RMB million
+RMB million
+currency
+investments
+other equity
+instrument
+Foreign
+fair value of
+be converted
+into profit or
+loss under
+the equity
+method
+96,224
+(16)
+The PRC Company Law and Articles of Association of the Company have set out the following profit appropriation plans:
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+Financial Statements (PRC)
+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
+72,385
+112,519
+122,368
+149,208
+41 TAXES AND SURCHARGES
+155,397
+The Group
+Others
+2020
+RMB million
+117,000
+2021
+235,018
+259,032
+5,516
+7,253
+4,572
+6,432
+11,678
+13,409
+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
+Consumption tax
+242,532
+City construction tax
+Education surcharge
+Resources tax
+429,038
+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
+61,384
+2,048,654
+RMB million
+2020
+The Group
+2021
+RMB million
+2,679,500
+Operating costs
+Total
+Income from principal operations
+Income from other operations
+40 OPERATING INCOME AND OPERATING COSTS
+(b) After the transfer to the statutory surplus reserve, a transfer to discretionary surplus reserve can be made upon the passing of a resolution at the
+shareholders' meeting.
+351,707
+(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;
+213,224
+3,944
+27,133
+770,321
+56,070
+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.
+557,605
+542,260
+726,057
+422,566
+584,315
+2020
+RMB million
+2,048,654
+2,679,500
+2021
+RMB million
+Note:
+Total
+Rental income
+Sale of materials and others
+(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.
+Others (i)
+Natural gas
+Kerosene
+Synthetic resin
+Basic chemical feedstock
+Crude oil
+Income from other operations
+Diesel
+Gasoline
+Income from principal operations
+The detailed information about the Group's operating income 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, non-current liabilities due within one year, long-term loans, debentures payable,
+deferred tax liabilities, other non-current liabilities and other unallocated liabilities.
+Income from principal operations
+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.
+Reportable information on the Group's operating segments is as follows:
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+146
+Exploration and production
+63 SEGMENT REPORTING (Continued)
+External sales
+External sales
+Refining
+External sales
+Inter-segment sales
+Marketing and distribution
+External sales
+Inter-segment sales
+Chemicals
+Inter-segment sales
+Corporate and others
+External sales
+Elimination of inter-segment sales
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities
+Inter-segment sales
+Inter-segment sales
+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.
+(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).
+(iv) Chemicals - which manufactures and sells petrochemical products, derivative petrochemical products and other chemical products to external
+customers.
+14,840
+Consolidated income from principal operations
+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).
+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.
+Environmental contingencies
+Under existing legislation, management believes that there are no probable liabilities that will have a material adverse effect on the financial
+position or operating results of the Group. The PRC government, however, has moved, and may move further towards more rigorous enforcement
+of applicable laws, and towards the adoption of more stringent environmental standards. Environmental liabilities are subject to considerable
+uncertainties which affect the Group's ability to estimate the ultimate cost of remediation efforts. These uncertainties include (i) the exact nature and
+extent of the contamination at various sites including, but not limited to refineries, oil fields, service stations, terminals and land development areas,
+whether operating, closed or sold, (ii) the extent of required cleanup efforts, (iii) varying costs of alternative remediation strategies, (iv) changes
+in environmental remediation requirements, and (v) the identification of new remediation sites. The amount of such future cost is indeterminable
+due to such factors as the unknown magnitude of possible contamination and the unknown timing and extent of the corrective actions that may be
+required. Accordingly, the outcome of environmental liabilities under proposed or future environmental legislation cannot reasonably be estimated at
+present, and could be material.
+The Group recognised normal routine pollutant discharge fees of approximately 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.
+(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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+63 SEGMENT REPORTING
+Segment information is presented in respect of the Group's operating segments. The format is based on the Group's management and internal
+reporting structure.
+In a manner consistent with the way in which information is reported internally to the Group's chief operating decision maker for the purposes of
+resource allocation and performance assessment, the Group has identified the following five reportable segments. No operating segments have been
+aggregated to form the following reportable segments.
+(i) Exploration and production
+-
+which explores and develops oil fields, produces crude oil and natural gas and sells such products to the refining
+segment of the Group and external customers.
+(ii) Refining
+which processes and purifies crude oil, which is sourced from the exploration and production segment of the Group and external
+suppliers, and manufactures and sells petroleum products to the chemicals and marketing and distribution segments of the Group and external
+customers.
+(iii) Marketing and distribution - which owns and operates oil depots and service stations in the PRC, and distributes and sells refined petroleum
+products (mainly gasoline and diesel) in the PRC through wholesale and retail sales networks.
+145
+Income from other operations
+322,169
+Refining
+156,026
+104,524
+87,298
+57,513
+243.324
+162,037
+167,948
+113,214
+1,212,455
+826,219
+1,380,403
+939,433
+1,367,605
+7,075
+1,374,680
+1,062,447
+4,854
+1,067,301
+424,774
+70,242
+40,702
+495,016
+362,871
+563,147
+458,154
+732,356
+430,073
+1,295,503
+888,227
+(2,109,426)
+14,863
+RMB million
+RMB million
+2020
+2021
+Marketing and distribution
+Chemicals
+Corporate and others
+Consolidated income from other operations
+Consolidated operating income
+Operating profit/(loss)
+By segment
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Elimination
+Total segment operating profit
+Exploration and production
+Investment income
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+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
+Less: Non-operating expenses
+Profit before taxation
+Exploration and production
+8,450
+42
+6,390
+agreement
+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
+Book value at
+the Acquisition Date
+RMB Million
+Book value at
+December 31 2020
+RMB Million
+Total current assets
+974
+480
+Total assets
+6,712
+5,875
+Total current liabilities
+2,540
+1,020
+Total liabilities
+2,557
+1,031
+Total shareholders' equity
+392
+5
+3,234
+102
+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
+20
+84
+1,223
+87
+1 July 2021
+According to the
+agreement
+246
+(15)
+ET
+4,155
+560
+1 December 2021 According to the
+agreement
+7,723
+(376)
+7.177
+242
+(1,371,215)
+162
+62
+(6)
+20
+385
+1 December 2021 According to the
+3,086
+60
+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
+Between one and two years
+Between two and three years
+Between three and four years
+Between four and five years
+Thereafter
+Total
+301
+390
+112
+99
+110
+66
+102
+63
+64
+56
+Within one year
+846
+1,535
+1,498
+The implementation of commitments in previous year and the Group's commitments did not have material discrepancy.
+144
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+62 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 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
+824
+5,746
+RMB million
+At 31 December
+2020
+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
+RMB million
+2020
+171,597
+33,997
+205,594
+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).
+Commitments to joint ventures
+Pursuant to certain of the joint venture agreements entered into by the Group, the Group is obliged to purchase products from the joint ventures
+based on market prices.
+Exploration and production licenses
+Exploration licenses for exploration activities are registered with the Ministry of Natural Resources. The maximum term of the Group's exploration
+licenses is 7 years, and may be renewed twice within 30 days prior to expiration of the original term with each renewal being for a two-year term.
+The Group is obligated to make progressive annual minimum exploration investment relating to the exploration blocks in respect of which the license
+is issued. The Ministry of Natural Resources also issues production licenses to the Group on the basis of the reserve reports approved by relevant
+authorities. The maximum term of a full production license is 30 years unless a special dispensation is given by the State Council. The maximum
+term of the production licenses issued to the Group is 80 years as a special dispensation was given to the Group by the State Council. The Group's
+production license is renewable upon application by the Group 30 days prior to expiration.
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Natural Resources annually
+which are expensed. Expenses recognised were approximately RMB181 million for the year ended 31 December 2021 (2020: RMB231 million).
+Estimated future annual payments are as follows:
+At 31 December
+2021
+RMB million
+2,679,500
+184,412
+6,674
+68,148
+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
+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
+Exploration and production
+Depreciation, depletion and amortisation
+Corporate and others
+Marketing and distribution
+Chemicals
+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
+107,461
+18,276
+Other unallocated liabilities
+Total liabilities
+37,795
+25,319
+973,214
+850,176
+2021
+2020
+RMB million
+RMB million
+Capital expenditure
+Exploration and production
+Refining
+17,950
+Impairment losses on long-lived assets
+Exploration and production
+2,467
+2021
+RMB million
+1,268,814
+40,551
+1,309,365
+215,846
+168,183
+2,104,724
+At 31 December
+2020
+RMB million
+1,216,267
+36,782
+1,253,049
+64 FINANCIAL INSTRUMENTS
+At 31 December
+Overview
+The Group has exposure to the following risks from its uses of financial instruments:
+⚫ credit risk;
+liquidity risk; and
+• market risk.
+The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework, and developing
+and monitoring the Group's risk management policies.
+The Group's risk management policies are established to identify and analyse the risks faced by the Group, and set appropriate risk limits and
+controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
+conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and
+constructive control environment in which all employees understand their roles and obligations. Internal audit department undertakes both regular
+and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Group's audit committee.
+Credit risk
+(i) Risk management
+Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
+obligations, and arises principally from the Group's deposits placed with financial institutions (including structured deposits) and receivables
+from customers. To limit exposure to credit risk relating to deposits, the Group primarily places cash deposits only with large financial
+institutions in the PRC with acceptable credit ratings. The majority of the Group's accounts receivable relates to sales of petroleum and chemical
+products to related parties and third parties operating in the petroleum and chemical industries. No single customer accounted for greater than
+10% of total accounts receivable at 31 December 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)
+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.
+20,756
+2,166,040
+278,024
+296,820
+2,740,884
+2020
+RMB million
+8,495
+Refining
+860
+1,923
+Marketing and distribution
+1,211
+536
+Chemicals
+5,332
+3,675
+Corporate and others
+165
+10,035
+1,720,695
+14,629
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+63 SEGMENT REPORTING (Continued)
+(2) Geographical information
+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.
+2021
+External sales
+Mainland China
+Singapore
+Others
+Non-current assets
+Mainland China
+Others
+RMB million
+148
+2,048,654
+27,366
+671,718
+13,085
+1,796
+12,230
+11,269
+1,662
+(10,603)
+6,672
+6,032
+47,486
+9,010
+9,510
+5,850
+7,514
+3,341
+(1,253)
+665
+2,067
+112,414
+50,803
+3,516
+2,370
+7,582
+108,348
+4,732
+48,441
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+147
+Financial Statements (PRC)
+547
+13,837
+3,023
+4,499
+5,718
+5,161
+4,633
+36,864
+34,905
+10,487
+8,758
+2,198
+2,056
+61,384
+2,740,884
+56,070
+2,104,724
+2021
+2020
+Financial Statements (PRC)
+RMB million
+613
+(20,570)
+65,360
+(6,526)
+23,102
+19,634
+11,361
+9,592
+9,521
+(2,048)
+(4,421)
+4,417
+105,536
+RMB million
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+63 SEGMENT REPORTING (Continued)
+222,803
+194,434
+133,961
+118,458
+1,410,148
+1,311,112
+221,989
+company are controlled by
+Sinopec Group Company both
+before and after combination,
+and the control is not
+transitory
+209,179
+188,342
+19,389
+25,054
+28,550
+373,430
+29,976
+1,738,896
+159,358
+157,430
+129,103
+135,157
+210,215
+213,455
+65,103
+47,992
+197,447
+117,684
+Total segment liabilities
+761,226
+1,889,255
+Short-term loans
+377,499
+304,785
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+At 31 December
+Assets
+Segment 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
+Deferred tax assets
+270,766
+Other unallocated assets
+Liabilities
+Segment liabilities
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+2021
+RMB million
+At 31 December
+2020
+RMB million
+371,100
+354,024
+Total assets
+100% The acquiree and the
+1,065
+Asset company
+business
+RMB3,000
+RMB3,000
+55.00
+2,272
+*
+Production and sale of petrochemical products
+RMB500
+RMB500
+67.59
+3,441
+The minority interests of subsidiaries which the Group holds 100% of equity interests at the end of the year are the minority interests of their subsidiaries.
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong SAR, respectively, all of the above principal subsidiaries
+are incorporated and operate their businesses principally in the PRC.
+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 2021 141
+Financial Statements (PRC)
+Financial Statements (PRC)
+142
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+59 PRINCIPAL SUBSIDIARIES (Continued)
+Summarised financial information on subsidiaries with material minority interests
+Set out below are the summarised financial information which the amount before inter-company eliminations for each subsidiary whose minority
+interests that are material to the Group.
+Summarised consolidated balance sheet
+Marketing Company
+At
+At 31
+Crude oil processing and petroleum products manufacturing
+8,197
+55.00
+RMB4,804
+Sinopec Qingdao Refining and Chemical Company Limited
+Manufacturing of intermediate petrochemical products and
+petroleum products
+RMB5,000
+RMB4,250
+85.00
+2,004
+Sinopec-SK (Wuhan) Petrochemical Company Limited
+("Sinopec-SK")
+Production, sale, research and development of ethylene and
+downstream byproducts
+RMB7,193
+RMB7,193
+59.00
+5,130
+(c) Subsidiaries acquired through business combination under common control:
+Sinopec Hainan Refining and Chemical Company Limited
+SIPL
+At
+Manufacturing of intermediate petrochemical products and
+petroleum products
+RMB12,615
+100.00
+Sinopec Qingdao Petrochemical Company Limited
+Gaoqiao Petrochemical Company Limited
+Sinopec Baling Petrochemical Co. Ltd.
+("Baling Petrochemical")
+(d) Subsidiaries acquired through business combination not under common control:
+Shanghai SECCO
+Manufacturing of intermediate petrochemical products and
+petroleum products
+RMB1,595
+RMB7,233
+100.00
+Manufacturing of intermediate petrochemical products and
+petroleum products
+RMB10,000
+RMB9,606
+2,288
+At
+At
+RMB million
+RMB million
+RMB million
+Current assets
+159,599
+172,352
+22,759
+22,620
+20,932
+17,305
+1,464
+1,582
+4,761
+4,373
+6.066
+10,431
+6,791
+3,639
+Current liabilities
+(193,315)
+(201,678)
+(1,430)
+(475)
+(15,796)
+(15,232)
+(142)
+(458)
+RMB million
+RMB million
+RMB million
+RMB million
+Fujian Petrochemical
+At
+At
+Sinopec Kantons
+At
+At
+Shanghai SECCO
+At
+At
+Sinopec-SK
+At
+At
+2021
+2020
+2021
+2020
+2021
+Shanghai Petrochemical
+At
+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
+2021
+2020
+2021
+2020
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2020
+90.30
+RMB5,776
+RMB6,397
+Fujian Petrochemical Company Limited
+("Fujian Petrochemical”) (i)
+(b) Subsidiaries established by the Group:
+Sinopec International Petroleum Exploration and
+Production Limited ("SIPL")
+Sinopec Overseas Investment Holding Limited ("SOIH")
+Sinopec Chemical Sales Company Limited
+Trading of petrochemical products
+Trading of crude oil and petrochemical products
+Production and sale of catalyst products
+Principal activities
+Registered
+capital/paid-
+up capital
+million
+Actual
+investment at
+31 December
+equity
+interest/
+voting right
+held by the
+Minority
+Interests at
+31 December
+2021
+Group
+2021
+million
+%
+RMB million
+RMB1,400
+RMB1,856
+100.00
+11
+RMB5,000
+RMB6,585
+100.00
+Sinopec Shanghai Petrochemical Company Limited
+("Shanghai Petrochemical")
+Sinopec Kantons Holdings Limited ("Sinopec Kantons")
+Sinopec Yizheng Chemical Fibre Limited Liability Company
+Marketing Company
+Sinopec Lubricant Company Limited
+140
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+58 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, the Group's earnings could be affected by changes in depreciation expense or an immediate write-down of the
+carrying amount of oil and properties.
+Future dismantlement costs for oil and gas properties are estimated with reference to engineering estimates after taking into consideration
+the anticipated method of dismantlement required in accordance with industry practices in the similar geographic area, including estimation
+of economic life of oil and gas properties, technology and price level. The present values of these estimated future dismantlement costs are
+capitalised as oil and gas properties with equivalent amounts recognised as provisions for dismantlement costs.
+Despite the inherent imprecision in these engineering estimates, these estimates are used in determining depreciation expense, impairment
+expense and future dismantlement costs. Capitalised costs of proved oil and gas properties are amortised on a unit-of-production method based
+on volumes produced and reserves.
+(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 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.
+(d) Measurement of expected credit losses
+5,259
+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).
+(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.
+Financial Statements (PRC)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+59 PRINCIPAL SUBSIDIARIES
+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:
+Percentage of
+Full name of enterprise
+(a) Subsidiaries acquired through group restructuring:
+China Petrochemical International Company Limited
+China International United Petroleum and Chemical
+Company Limited
+Sinopec Catalyst Company Limited
+Sinopec Yangzi Petrochemical Company Limited
+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.
+RMB1,500
+RMB2,424
+100.00
+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
+100.00
+Marketing and distribution of petrochemical products
+RMB1,000
+RMB1,165
+6,915
+100.00
+Sinopec Great Wall Energy & Chemical Company Limited
+Coal chemical industry investment management, production and
+sale of coal chemical products
+RMB22,761
+RMB22,795
+100.00
+18
+Sinopec Beihai Refining and Chemical Limited
+Liability Company
+ZhongKe (Guangdong) Refinery & Petrochemical
+Company Limited
+Import and processing of crude oil, production, storage and sale
+of petroleum products and petrochemical products
+Crude oil processing and petroleum products manufacturing
+RMB5,294
+RMB5,240
+98.98
+137
+124
+(196)
+50.00
+RMB10,492
+233
+Manufacturing of intermediate petrochemical products and
+RMB15,651
+RMB15,651
+100.00
+petroleum products
+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
+RMB3,374
+RMB3,374
+100.00
+88
+RMB4,000
+RMB6,713
+RMB5,246
+100.00
+RMB20,000
+70.42
+75,560
+HKD248
+HKD3,952
+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
+RMB28,403
+(924)
+(5,434)
+(2,783)
+7,064
+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
+4,060
+1,751
+(292)
+(244)
+133
+interests
+Dividends paid to minority
+(377)
+659
+1,045
+(720)
+2,145
+628
+951
+243
+677
+1,814
+2,817
+2,132
+1,606
+(920)
+Comprehensive income
+586
+attributable to minority
+6.822
+7.205
+579
+(287)
+317
+476
+23
+121
+268
+707
+00
+2,390
+691
+interests
+3,447
+3.119
+5.476
+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
+RMB Million
+acquisition date
+RMB Million
+(losses) of the
+2020 to
+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
+acquiree from
+21,149
+Income of the
+acquiree from
+to the
+acquisition date
+RMB Million
+13
+(363)
+60 CHANGE IN THE SCOPE OF CONSOLIDATION
+Business combination under common control
+Business combination under common control in 2021
+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.
+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 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.
+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)
+Net profits/
+(losses) of the
+acquiree from
+1 January 2021
+to the
+acquisition date
+RMB Million
+Business combination under common control (Continued)
+(1) The relevant financial information disclosed for changes in the scope of consolidation are as follows:
+Net profits/
+Net cash flow
+acquiree
+The basis for the
+business combination
+Share of under the common
+acquired equity control
+Date of
+acquisition
+Basis of
+Determination on
+the acquisition date
+Income of the
+acquiree from
+1 January 2021
+Beihai petrochemical
+98.98% The acquiree and the
+1 July 2021
+business
+According to the
+agreement
+Business combination under common control in 2021 (Continued)
+Group Yanshan
+Business
+18,439
+(920)
+Non-current liabilities
+(59,604) (59,554)
+(17,823)
+(18,270)
+(847)
+(162)
+(700)
+(693)
+(170)
+(1,418)
+(1,553)
+(7,512)
+(8,509)
+Net non-current assets/
+(liabilities)
+266,833 264,017
+(8,869)
+(9,319)
+25,259
+27,282
+12,508
+11.875
+8,025
+8,936
+9,984
+10,624
+13.138
+22,187
+20,650
+12,177
+11,402
+(8,122)
+(6,377)
+Net current (liabilities)/assets
+(33,716)
+(29,326)
+21,329
+22,145
+5,136
+2,073
+1,322
+1,124
+4,565
+3,449
+13,678
+632
+(1,331)
+(2,738)
+Non-current assets
+326,437
+323,571
+8,954
+8,951
+26,106
+27,444
+13,208
+12.568
+8,195
+9,106
+7,648
+Summarised consolidated statement of comprehensive income and cash flow
+Year ended 31 December
+Marketing Company
+2021
+1,408,523
+1,099,680
+2,166
+2,017
+89,280
+74,705
+5,549
+4,871
+528
+1,064
+29,723
+21,626
+50,208
+Turnover
+28,702
+18,582
+22,415
+1,429
+1.160
+2,004
+639
+951
+243
+871
+2,047
+2.817
+2,132
+1,606
+Profit/(loss) for the year
+Total comprehensive income
+RMB million
+RMB million
+SIPL
+2020
+2021
+2020
+Shanghai Petrochemical
+2021
+2020
+Fujian Petrochemical
+2021
+Sinopec Kantons
+Shanghai SECCO
+Sinopec-SK
+2020
+2021
+2020
+RMB million
+2021
+2021
+2020
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2020
+(170)
+150
+29,554
+3,024
+45,459
+49,074
+936
+4,638
+41,009
+2,491
+Debentures payable
+38,356
+44,791
+1,240
+8,044
+28,651
+29,514
+5,993
+Lease liabilities
+Total
+171,740
+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.
+(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.
+262,059
+3,024
+114,036
+43,513
+15,456
+28,138
+308,905
+713,138
+560,698
+312,544
+253,575
+3,018
+Debentures payable due within one year
+Long-term loans
+23,880
+4,826
+Derivative financial liabilities
+20,756
+Short-term loans
+RMB million
+five years
+20,950
+4,826
+demand
+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
+cash flow
+RMB million
+RMB million
+five years
+RMB million
+(b) Interest rate risk
+20,950
+Bills payable
+23,880
+22.494
+Non-current liabilities due within one year
+92,141
+92,141
+92,141
+4,826
+Other payables and employee benefits payable
+151,514
+151,514
+Accounts payable
+10,394
+10,394
+10,394
+151,514
+amount
+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.
+(c) Commodity price risk
+- Derivative financial assets
+Receivables financing:
+- Receivables financing
+Other equity instrument investments:
+Other Investments
+Liabilities
+Derivative financial liabilities:
+- Derivative financial liabilities
+Level 1
+RMB million
+Level 2
+RMB million
+Level 3
+RMB million
+Total
+RMB million
+5,883
+12,488
+18,371
+5,939
+5,939
+1
+Total
+RMB million
+Level 3
+RMB million
+Level 2
+RMB million
+Level 1
+RMB million
+3,223
+3,223
+Derivative financial assets:
+2,419
+804
+804
+767
+25,077
+588
+6,527
+12,488
+6,062
+179
+2,419
+Equity investments, listed and at quoted market price
+Financial assets held for trading:
+Assets
+•
+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
+64 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2021
+Level 1 (highest level): fair values measured using quoted prices (unadjusted) in active markets for identical financial instruments.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (PRC)
+151
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+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).
+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.
+Financial Statements (PRC)
+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.
+.
+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
+At 31 December 2020
+- Derivative financial liabilities
+Derivative financial liabilities:
+- Other Investments
+Other equity instrument investments:
+•
+- Receivables financing
+- Derivative financial assets
+Financial assets held for trading:
+Assets
+The Group
+At 31 December 2021
+Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data.
+Receivables financing:
+Carrying undiscounted
+contractual
+Total
+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:
+Total comprehensive income for the year
+Total items that may be reclassified subsequently to profit or loss
+Total other comprehensive income
+Foreign currency translation differences
+Share of other comprehensive income of associates and joint ventures
+Cash flow hedges
+Total items that may not be reclassified subsequently to profit or loss
+Items that may be reclassified subsequently to profit or loss
+Cost of hedging reserve
+Items that may not be reclassified subsequently to profit or loss
+Equity investments at fair value through other comprehensive income
+Other comprehensive income:
+Profit for the year
+(Amounts in million)
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+for the year ended 31 December 2021
+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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Accounts payable
+203,919
+203,919
+203,919
+Other payables and employee benefits payable
+128,749
+Note
+128,749
+Non-current liabilities due within one year
+0.594
+0.276
+0.594
+0.276
+158
+128,749
+Year ended 31 December
+2021
+2020
+337
+17,507
+315
+103,358
+42,586
+89,549
+17,511
+34,837
+7,749
+103,358
+42,586
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+159
+Financial Statements (International)
+13,809
+11,721
+(4,457)
+7,073
+RMB
+RMB
+85,851
+42,271
+15
+(4)
+(1,728)
+(4)
+(22)
+(22)
+(220)
+441
+162
+(2,441)
+19,018
++བ
+11,721
+11,721
+Bills payable
+5,270
+10,443
+30,645
+1,195
+47,553
+42,649
+Lease liabilities
+Debentures payable
+27,786
+19,350
+1,230
+53,704
+49,341
+Long-term loans
+5,338
+29,554
+170,233
+12,030
+Liquidity risk (Continued)
+64 FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2021
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+243,818
+280,652
+73,641
+407,378
+786,862
+665,852
+Total
+233,210
+35,412
+62,025
+1
+Financial Statements (PRC)
+For the year ended 31 December 2021
+Within one
+year or on
+demand
+At 31 December 2021
+More than More than
+one year but two years but
+less than less than
+two years
+More than
+RMB million RMB million
+RMB million
+five years
+Carrying undiscounted
+amount cash flow
+RMB million RMB million
+five years
+Short-term loans
+Derivative financial liabilities
+27,366
+3,223
+27,787
+3,223
+27,787
+3,223
+RMB million
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+contractual
+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:
+64 FINANCIAL INSTRUMENTS (Continued)
+Credit risk (Continued)
+(ii) Impairment of financial assets
+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.
+The Group's cash deposits are placed only with large financial institutions with acceptable credit ratings, and there is no material impairment
+loss identified.
+-
+Total
+For accounts receivable and receivables financing, the Group applies the "No.22 Accounting Standards for Business Enterprises Financial
+instruments: recognition and measurement" simplified approach to measuring expected credit losses which uses a lifetime expected loss
+allowance for all accounts receivable and receivables financing.
+The 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.
+The detailed analysis of accounts receivable and receivables financing is listed in note 7 and note 8.
+The Group's other receivables are considered to have low credit risk (Note 10), and the loss allowance recognised during the year was therefore
+limited to 12 months expected credit losses. The Group considers "low credit risk" for other receivables when they have a low risk of default and
+the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
+Liquidity risk
+Liquidity risk is the risk that the Group encounters short fall of capital when meeting its obligation of financial liabilities. The Group's approach to
+managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal
+and stressed capital conditions, without incurring unacceptable losses or risking damage to the Group's reputation. The Group prepares monthly
+cash flow budget to ensure that they will always have sufficient liquidity to meet its financial obligations as they fall due. The Group arranges and
+negotiates financing with financial institutions and maintains a certain level of standby credit facilities to reduce the liquidity risk.
+At 31 December 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.
+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.
+9,628
+Liabilities
+12,528
+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.
+The engagement partner on the audit resulting in this independent auditor's report is Ho Ying Man, Simon.
+KPMG
+2,900
+8th Floor, Prince's Building
+10 Chater Road
+Central, Hong Kong
+25 March 2022
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+157
+Financial Statements (International)
+Financial Statements (International)
+(B) FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")
+CONSOLIDATED INCOME STATEMENT
+for the year ended 31 December 2021
+(Amounts in million, except per share data)
+Note
+Year ended 31 December
+2021
+(1,589,821)
+(2,076,665)
+Purchased crude oil, products and operating supplies and expenses
+Operating expenses
+56,070
+2,104,724
+2,048,654
+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.
+2,679,500
+61,384
+2,740,884
+Other operating revenues
+3
+Revenue from primary business
+Revenue
+2020
+RMB
+RMB
+4
+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)
+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.
+INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
+KPMG
+REPORT OF THE INTERNATIONAL AUDITOR (CONTINUED)
+156
+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.
+Financial Statements (International)
+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;
+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 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;
+155
+Selling, general and administrative expenses
+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.
+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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (International)
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an
+opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain
+solely responsible for our audit opinion.
+Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained,
+whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going
+concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the
+consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
+obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
+Evaluate the 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.
+RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+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.
+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.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
+The directors are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group's financial reporting process.
+In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern,
+disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to
+liquidate the Group or to cease operations, or have no realistic alternative but to do so.
+•
+5
+(54,978)
+(53,668)
+Profit for the year
+(6,344)
+(23,318)
+11
+Income tax expense
+48,615
+85,851
+109,169
+(9,510)
+37,744
+6,712
+885
+(15,198)
+4,803
+23,253
+21,22
+Share of profits less losses from associates and joint ventures
+Profit before taxation
+298
+42,271
+Shareholders of the Company
+66
+16
+16
+Diluted
+Basic
+Earnings per share:
+Attributable to:
+42,271
+Profit for the year
+8,828
+13,876
+Non-controlling interests
+33,443
+71,975
+85,851
+The following are the primary procedures we performed to address this
+key audit matter:
+10
+(15,018)
+5,732
+276
+(9,010)
+Interest expense
+Finance costs
+Operating profit
+Total operating expenses
+Other operating income/(expenses), net
+Impairment losses on trade and other receivables
+6
+Taxes other than income tax
+(9,716)
+(12,382)
+Exploration expenses, including dry holes.
+(107,461)
+(115,680)
+Depreciation, depletion and amortisation
+Personnel expenses
+Investment income
+(103,492)
+7
+Net finance costs
+Foreign currency exchange gains, net
+Interest income
+9
+13,669
+94,628
+(87,525)
+(2,091,055)
+(21,716)
+(2,646,256)
+8
+(2,066)
+(2,311)
+(235,018)
+(259,032)
+(5,780)
+How the matter was addressed in our audit
+Certified Public Accountants
+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.
+33,271
+121,071
+0.275
+2021
+121,071
+2020
+121,071
+121,071
+121,071
+(ii) Diluted earnings per share
+There are no potential dilutive ordinary shares, and diluted earnings per share are equal to the basic earning per share.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+153
+Financial Statements (PRC)
+Financial Statements (PRC)
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2021
+66 RETURN ON NET ASSETS AND EARNINGS PER SHARE
+earnings
+per share
+per share
+(RMB/Share) (RMB/Share)
+earnings
+(%)
+Diluted
+Basic
+Weighted
+average
+return on
+net assets
+2020
+Basic
+Diluted
+earnings earnings
+per share
+per share
+(%) (RMB/Share) (RMB/Share)
+2020
+2021
+67 EXTRAORDINARY GAINS AND LOSSES
+Net profit/(loss) deducted extraordinary gains and
+losses attributable to the Company's ordinary
+equity shareholders
+Net profit attributable to the Company's ordinary
+equity shareholders
+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:
+Weighted
+average
+return on
+net assets
+2021
+71,208
+121,071
+0.588
+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:
+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
+2,471
+2,471
+152
+22,789
+2,900
+1,525
+1,376
+149
+9,778
+8,735
+8,735
+10,111
+9.35
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+For the year ended 31 December 2021
+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
+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.
+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.
+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.
+NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
+At 31 December
+2020
+RMB million
+76,674
+74,282
+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
+Fair values (Continued)
+64 FINANCIAL INSTRUMENTS (Continued)
+88,593
+85,610
+0.588
+65 BASIC AND DILUTED EARNINGS PER SHARE
+4.46
+KPMG
+OPINION
+To the shareholders of China Petroleum & Chemical Corporation
+(established in the People's Republic of China with limited liability)
+Independent auditor's report
+KPMG
+REPORT OF THE INTERNATIONAL AUDITOR
+8th Floor, Prince's Building
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+(2,705)
+(107)
+Minority interests
+(34,836)
+1,012
+Equity shareholders of the Company
+154
+Attributable to:
+Central, Hong Kong
+Fax +852 2845 2588
+Internet kpmg.com/cn
+0.588
+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
+Refer to notes 2(g), 2(n), 8, 17 and 44 to the consolidated financial statements
+Assessment of impairment of property, plant and equipment relating to oil and gas producing activities
+Key audit matter is the matter that, in our professional judgment, was of most significance in our audit of the consolidated financial statements of the
+current period. The matter was addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
+thereon, and we do not provide a separate opinion on this matter.
+G P 0 Box 50, Hong Kong
+KEY AUDIT MATTER
+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
+香港中環太子大廈8樓
+香港郵政總局信箱50號
++852 2522 6022
+畢馬威會計師事務所
+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.
+(37,541)
+Telephone +852 2522 6022
+Total
+905
+0.275
+0.275
+9.49
+0.597
+0.597
+(0.21)
+(0.013)
+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:
+2021
+RMB million
+2020
+RMB million
+Extraordinary (gains)/losses for the year:
+Net gains on disposal of non-current assets
+Donations
+(0.013)
+Government grants
+6,736
+(665)
+165
+(72)
+Tax effect
+(44,277)
+(472)
+101
+977
+Net (loss)/profit acquired through business combination under common control during the reporting period
+(973)
+301
+(8,605)
+(37,520)
+2,992
+4,720
+Other non-operating losses, net
+(3,085)
+(259)
+Gain on holding and disposal of business and various investments
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021 167
+(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
+(c) Cash and cash equivalents
+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.
+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.
+Financial Statements (International)
+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:
+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.
+Equipment, machinery and others
+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.
+Buildings
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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.
+When the Group ceases to have significant influence over an associate or joint control over a joint venture, it is accounted for as a disposal of
+the entire interest in that investee, with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former investee
+at the date when significant influence or joint control is lost is recognised at fair value and this amount is regarded as the fair value on initial
+recognition of a financial asset (see Note 2(j)) or, when appropriate, the cost on initial recognition of an investment in an associate.
+The 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.
+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.
+Estimated usage
+period
+12 to 50 years
+4 to 30 years
+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.
+Financial Statements (International)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+for the year ended 31 December 2021
+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.
+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.
+(a) Basis of consolidation (Continued)
+(iii)Transactions eliminated on consolidation
+Inter-company balances and transactions and any unrealised gains arising from inter-company transactions are eliminated on consolidation.
+Unrealised gains arising from transactions with associates and joint ventures are eliminated to the extent of the Group's interest in the entity.
+Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
+(iv) Merger accounting for common control combination
+The consolidated financial statements incorporate the financial statements of the combining entities or businesses in which the common
+control combination occurs as if they had been combined from the date when the combining entities or businesses first came under the
+control of the controlling party. The net assets of the combining entities or businesses are combined using the existing book values from the
+controlling parties' perspective. No amount is recognised as consideration for goodwill or excess of acquirers' interest in the net fair value of
+acquiree's identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the extent of the
+continuation of the controlling party's interest.
+The consolidated income statement includes the results of each of the combining entities or businesses from the earliest date presented or
+since the date when the combining entities or businesses first came under the common control, where there is a shorter period, regardless
+of the date of the common control combination. The comparative amounts in the consolidated financial statements are presented as if the
+entities or businesses had been combined at the beginning of the earliest period presented or when they first came under common control,
+whichever is shorter.
+A uniform set of accounting policies is adopted by those entities. All intra-Group transactions, balances and unrealised gains on transactions
+between combining entities or businesses are eliminated on consolidation. Transaction costs, including professional fees, registration fees,
+costs of furnishing information to shareholders, costs or losses incurred in combining operations of the previously separate businesses, etc.,
+incurred in relation to the common control combination that is to be accounted for by using merger accounting is recognised as an expense
+in the period in which it is incurred.
+(b) Translation of foreign currencies
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Estimated
+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.
+3%
+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.
+Financial assets are initially recognised at fair value. For financial assets measured at fair value through profit or loss, the relevant
+transaction costs are recognised in profit or loss. The transaction costs for other financial assets are included in the initially recognised
+amount. However, trade accounts receivable and bills receivable arising from sale of goods or rendering services, without significant financing
+component, are initially recognised based on the transaction price expected to be entitled by the Group.
+The Group measures and recognises ECLs, considering reasonable and supportable information about the relevant past events, current
+conditions and forecasts of future economic conditions.
+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)
+(ii) Associates and joint ventures
+Financial Statements (International)
+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.
+residuals rate
+The Group classifies financial assets into different categories depending on the business model for managing the financial assets and the
+contractual terms of cash flows of the financial assets: a) financial assets measured at amortised cost, b) financial assets measured at fair
+value through other comprehensive income ("FVOCI"), c) financial assets measured at fair value through profit or loss. A contractual cash
+flow characteristic which could have only a de minimis effect, or could have an effect that is more than de minimis but is not genuine, does
+not affect the classification of the financial asset.
+(j) Financial assets
+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) Classification and measurement
+(i) Goodwill
+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
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+The particulars of the Group's principal subsidiaries are set out in Note 42.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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)).
+322,931
+1,941
+117,000
+90,423
+55,850
+34,503
+121,071
+743,719
+Balance at 1 January 2020
+1
+4,773
+4,773
+under common control (Note 38)
+Adjustment for business combination of entities
+RMB
+877,304
+138,358
+4,774
+738,946
+138,359
+Profit for the year
+42,586
+7,749
+34,837
+33,431
+1,406
+Total comprehensive income for the year
+315
+882,078
+(1,079)
+(12)
+1,406
+Other comprehensive income (Note 15)
+42,271
+8,828
+33,443
+33,443
+1,394
+322,931
+1,941
+117,000
+Non-
+controlling
+of the
+Retained
+Other
+shareholders
+Statutory Discretionary
+surplus
+surplus
+Total
+Share
+Share
+capital
+Total equity
+attributable to
+(Amounts in million)
+for the year ended 31 December 2020
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+Chief Financial Officer
+Shou Donghua
+Capital
+reserve
+premium
+reserve
+90,423
+55,850
+29,730
+121,071
+Balance at 31 December 2019
+equity
+interests
+RMB
+Company
+RMB
+earnings
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+reserves
+reserve
+Amounts transferred to initial carrying amount of
+hedged items
+(47)
+(47)
+55,850
+34,263
+121,071
+(1,958)
+(2,363)
+405
+(665)
+92,280
+200
+(35,005)
+(2,416)
+(32,589)
+(33,336)
+1,857
+(1,110)
+(125)
+870
+117,000
+3,500
+322,361
+hedged items
+Amounts transferred to initial carrying amount of
+Total comprehensive income for the year
+Other comprehensive income (Note 15)
+Profit for the year
+Balance at 1 January 2021
+(Amounts in million)
+In the Company's statement of financial position, investments in subsidiaries are stated at cost less impairment losses (Note 2(n)).
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+161
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+887,702
+141,377
+746,325
+13
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+(138)
+(34,880)
+Others
+Total transactions with owners
+Transaction with non-controlling interests
+Total contributions by and distributions to owners
+Baling Branch of SAMC
+Distribution to SAMC in the Acquisition of
+non-controlling interests
+Balance at 31 December 2020
+Contributions to subsidiaries from
+Appropriation (Note (a))
+Interim dividend for 2020 (Note 14)
+Final dividend for 2019 (Note 14)
+Contributions by and distributions to owners:
+Transactions with owners, recorded directly in equity:
+1
+48
+Distributions to non-controlling interests
+(23,004)
+(23,004)
+(23,004)
+(2,429)
+(32,451)
+(33,336)
+1,857
+(972)
+972
+(972)
+(972)
+3,325
+3,325
+(6,726)
+(6,726)
+(1,857)
+1,857
+(8,475)
+(8,475)
+(8,475)
+(138)
+160
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+Yu Baocai
+President
+Trade accounts payable and bills payable
+Derivative financial liabilities
+Lease liabilities
+Loans from Sinopec Group Company and fellow subsidiaries
+Short-term debts
+Current liabilities
+-----------
+Contract liabilities
+Total current assets
+Financial assets at fair value through other comprehensive income
+Inventories
+Trade accounts receivable
+Derivative financial assets
+Financial assets at fair value through profit or loss
+Time deposits with financial institutions
+Cash and cash equivalents
+Current assets
+Prepaid expenses and other current assets
+Other payables
+Income tax payable
+Total current liabilities
+152,191
+8,735
+5,939
+207,433
+35,439
+34,861
+12,528
+18,371
+22222
+1
+100,498
+113,399
+87,559
+108,590
+1,283,236
+74,543
+25,054
+19,389
+70,030
+1,331,231
+Total non-current assets
+69,431
+558,024
+1,525
+60,450
+767
+19
+17
+Right-of-use assets
+Construction in progress
+Property, plant and equipment, net
+Non-current assets
+RMB
+Goodwill
+RMB
+2021
+31 December
+31 December
+Note
+(Amounts in million)
+As at 31 December 2021
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+2020
+20
+Interest in associates
+21
+8,620
+136,163
+148,729
+8,594
+266,012
+268,408
+125,525
+155,939
+18
+593,615
+598,925
+782222222
+23
+Long-term prepayments and other assets
+29
+26
+Financial assets at fair value through other comprehensive income
+Deferred tax assets
+Interest in joint ventures
+52,179
+Transactions with owners, recorded directly in equity:
+58,709
+30
+915,074
+328,199
+332,901
+Equity
+Total non-current liabilities
+18,968
+19,243
+887,702
+Other long-term liabilities
+43,525
+35
+Provisions
+8,124
+7,910
+29
+Deferred tax liabilities.
+45,552
+Share capital
+Reserves
+Total equity attributable to shareholders of the Company
+(Legal representative)
+Chairman
+Ma Yongsheng
+Approved and authorised for issue by the board of directors on 25 March 2022.
+887,702
+915,074
+141,377
+140,892
+746,325
+774,182
+625,254
+653,111
+121,071
+121,071
+36
+Total equity
+Non-controlling interests
+171,740
+455,660
+170,233
+Lease liabilities
+124,622
+33
+161,908
+215,640
+32
+4,826
+3,223
+126,241
+24
+15,173
+31
+5,264
+2,873
+30
+23,769
+35,252
+15,293
+34
+239,688
+179,108
+11,778
+13,690
+30
+Loans from Sinopec Group Company and fellow subsidiaries
+72,037
+78,300
+30
+Long-term debts
+Non-current liabilities
+1,215,901
+522,995
+67,335
+83,256
+1,247,975
+Total assets less current liabilities
+Net current liabilities
+641,280
+6,586
+4,809
+31
+Contributions by and distributions to owners:
+for the year ended 31 December 2021
+Interim dividend for 2021 (Note 14)
+Financial Statements (International)
+163
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+87,559
+108,590
+(1,239)
+(1,003)
+Financial Statements (International)
+60,438
+28,360
+22,034
+(37,510)
+(57,942)
+(834)
+700
+133
+(666)
+87,559
+(15,327)
+NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
+(Amounts in million)
+48,615
+109,169
+Interest expense
+Interest income
+Investment income
+Share of profits from associates and joint ventures
+Dry hole costs written off
+for the year ended 31 December 2021
+Depreciation, depletion and amortisation
+Profit before taxation
+Operating activities
+RMB
+RMB
+2020
+Year ended 31 December
+2021
+(a) Reconciliation from profit before taxation to net cash generated from operating activities
+Adjustments for:
+(19,412)
+(1,121)
+(8,198)
+Interest paid
+Distributions by subsidiaries to non-controlling interests
+Dividends paid by the Company
+Contributions to subsidiaries from non-controlling interests
+Repayments of bank and other loans
+Proceeds from bank and other loans
+Financing activities
+Payments made to acquire non-controlling interests
+Final dividend for 2020 (Note 14)
+Investment and dividend income received
+Increase in time deposits with maturities over three months
+Decrease in time deposits with maturities over three months
+Interest received
+11,510
+10,134
+2,305
+3,372
+54,950
+Proceeds from/(payments of) other investing activities
+Repayments of lease liabilities
+Proceeds from other financing activities
+Repayments of other financing activities
+(7,512)
+(5,849)
+(4,821)
+(8,068)
+(31,479)
+(35,110)
+4,219
+1,001
+558,680
+(540,015)
+(6,186)
+(102,650)
+356,459
+(338,232)
+459
+(145,198)
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+Cash and cash equivalents at 31 December
+Effect of foreign currency exchange rate changes
+Cash and cash equivalents at 1 January
+Net cash used in financing activities
+Net increase in cash and cash equivalents
+115,680
+107,461
+7,702
+5,928
+Amendment to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, Interest rate benchmark reform - phase 2
+•
+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
+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.
+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.
+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.
+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.
+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
+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.
+Principal activities
+1 PRINCIPAL ACTIVITIES, ORGANISATION AND BASIS OF PREPARATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+for the year ended 31 December 2021
+Basis of preparation
+(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.
+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 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.
+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.
+(i) Subsidiaries and non-controlling interests
+The consolidated financial statements comprise the Company and its subsidiaries, and interest in associates and joint ventures.
+(a) Basis of consolidation
+2 SIGNIFICANT ACCOUNTING POLICIES
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+166
+Financial Statements (International)
+165
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Key assumptions and estimation made by management in the application of IFRS that have significant effect on the consolidated financial
+statements and the major sources of estimation uncertainty are disclosed in Note 44.
+The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
+which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
+current and future periods.
+164 Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+34,298
+The notes on pages 165 to 215 form part of these consolidated financial statements.
+225,174
+26,087
+13,165
+(398)
+3,062
+Loss/(gain) on disposal of property, plant, equipment and other non-current assets, net
+Impairment losses on assets
+2,003
+(3,723)
+Impairment losses on trade and other receivables
+(Gain)/loss on foreign currency exchange rate changes and derivative financial instruments
+15,018
+(4,803)
+(5,732)
+(37,744)
+(298)
+(6,712)
+(23,253)
+15,198
+2,311
+2,066
+233,101
+(9,147)
+(23,786)
+177,667
+248,960
+15,169
+82,408
+22,407
+(58,372)
+(17,610)
+(8,177)
+Net cash generated from operating activities
+Income tax paid
+Accounts payable and other current liabilities
+Inventories
+Accounts receivable and other current assets
+Net changes from:
+157,701
+168,520
+(84,689)
+Net cash used in investing activities
+2,656
+17,574
+85,851
+13,876
+71,975
+71,975
+887,702
+141,377
+17,574
+746,325
+3,500
+117,000
+92,280
+55,850
+34,263
+121,071
+RMB
+322,361
+RMB
+(67)
+17,574
+(3,944)
+(19,371)
+(19,371)
+(19,371)
+(15,739)
+(15,739)
+(15,739)
+17,507
+(50,844)
+(648)
+(19,302)
+(19,302)
+103,358
+13,809
+89,549
+71.975
+(19,950)
+RMB
+RMB
+RMB
+Capital
+Share
+capital
+Total equity
+attributable to
+Notes:
+Balance at 31 December 2021
+Others
+Total transactions with owners
+Share
+Transaction with non-controlling interests
+control (Note 38)
+combination of entities under common
+Distribution to sellers in the business
+non-controlling interests
+Contributions to subsidiaries from
+Distributions to non-controlling interests
+Appropriation (Note (a))
+Total contributions by and distributions to owners
+surplus
+Statutory Discretionary
+surplus
+shareholders
+RMB
+RMB
+equity
+interests
+Total
+Non-
+controlling
+of the
+Company
+earnings
+reserves
+reserve
+reserve
+premium
+RMB
+RMB
+RMB
+reserve
+Retained
+Other
+(8,982)
+(8,982)
+3,944
+1,973
+Purchase of investments
+Exploratory wells expenditure
+Capital expenditure
+Investing activities
+Net cash generated from operating activities
+RMB
+RMB
+(a)
+1,973
+Year ended 31 December
+Note
+(Amounts in million)
+for the year ended 31 December 2021
+CONSOLIDATED STATEMENT OF CASH FLOWS
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+162
+2021
+225,174
+168,520
+(127,965)
+1,478
+Proceeds from disposal of property, plant, equipment and other non-current assets
+51,520
+6,769
+(340)
+(1,106)
+10,000
+8,248
+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
+(6,700)
+(8,150)
+Payment for financial assets at fair value through profit or loss
+(6,040)
+(4,935)
+(13,315)
+(16,956)
+(118,321)
+The notes on pages 165 to 215 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.
+2020
+(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").
+(39,054)
+3,944
+(7,520)
+(8,192)
+(6,796)
+(1.396)
+(1,396)
+(42,630)
+(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.
+(41,234)
+(39,054)
+3,944
+(6,124)
+(6,124)
+(6,124)
+(6,124)
+(7,009)
+(13,805)
+(48,243)
+121,071
+(56,435)
+(b) The usage of the discretionary surplus reserve is similar to that of statutory surplus reserve.
+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.
+(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.
+915,074
+140,892
+354,480
+2,495
+774,182
+723
+96,224
+55,850
+399
+159
+240
+(802)
+117,000
+319
+27,062
+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.
+170
+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.
+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'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.
+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 Statements (International)
+(iv) Financial guarantees issued
+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.
+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.
+(iii)Derecognition
+(j) Financial assets (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+117
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+Notes:
+Actual income tax expense
+Adjustment of prior years
+(117)
+6,344
+23,318
+Tang Min (v)
+(462)
+Supervisors
+Jiang Zhenying
+300
+300
+300
+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
+Zhang Zhiguo (vii)
+Zhang Shaofeng (vi)
+75
+934
+Write-down of deferred tax assets
+Deferred taxation (Note 29)
+- Adjustment of prior years
+- Provision for the year
+Current tax
+2020
+RMB million
+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.
+Note:
+37,744
+298
+63
+182
+156
+34
+37,525
+82
+RMB million
+RMB million
+2020
+2021
+2.60% to 4.66%
+1.84% to 4.35%
+15,198
+15,018
+1,343
+1,135
+9,349
+17,522
+(462)
+14,334
+(117)
+6,258
+1,087
+1,391
+(65)
+(701)
+Tax effect of utilisation of previously unrecognised tax losses and temporary differences
+Tax effect of tax losses not recognised and temporary differences
+(730)
+(222)
+Effect of income taxes at foreign operations
+(1,011)
+(2,766)
+Tax effect of preferential tax rate (i)
+(8,330)
+(8,096)
+Tax effect of non-taxable income
+117
+3,281
+Tax effect of non-deductible expenses
+12,154
+27,292
+Expected PRC income tax expense at a statutory tax rate of 25%
+48,615
+RMB million
+RMB million
+109,169
+Profit before taxation
+2020
+2021
+Reconciliation between actual income tax expense and the expected income tax expense at applicable statutory tax rates is as follows:
+6,344
+23,318
+(7,873)
+5,948
+9,200
+Yin Zhaolin (vii)
+202
+23
+22
+60
+59
+83
+856
+3,269
+1,434
+Notes:
+Total
+Zhang Baolong (xvi)
+Yang Changjiang (xvi)
+611
+125
+613
+125
+Zhou Hengyou (xv)
+Yu Xizhi (xv)
+Li Defang
+Yu Renming (x)
+160
+247
+Sun Huanquan (x)
+555
+272
+Zou Huiping (ix)
+Jiang Zhenying
+710
+366
+23
+Zhao Dong (i)
+33
+הההה
+Financial Statements (International)
+179
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+(xvi) Mr. Yang Changjiang ceased being supervisor from 9 September 2020; Mr. Zhang Baolong ceased being supervisor from 9 September 2020.
+(xv) Mr. Yu Xizhi ceased being supervisor from 18 May 2020; Mr. Zhou Hengyou ceased being supervisor from 18 May 2020.
+(xiv) Mr. Fan Gang ceased being independent non-executive director from 28 August 2020.
+(xiii) Mr. Li Yong ceased being non-executive director from 22 September 2020.
+(xii) Mr. Li Yunpeng ceased being non-executive director from 24 March 2020.
+(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.
+(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.
+(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
+(v) Mr. Tang Min ceased being independent non-executive director from 25 May 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.
+(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.
+(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.
+6,095
+759
+761
+467
+886
+1,159
+1,050
+350
+350
+350
+350
+350
+350
+1,013
+342
+Supervisors
+Fan Gang (xiv)
+Cai Hongbin
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+178
+4,991
+1,551
+379
+1,803
+1,258
+Total
+Yu Renming (x)
+Sun Huanquan (x)
+Zou Huiping (ix)
+1,165
+417
+298
+403
+102
+692
+371
+Chen Yaohuan (viii)
+61
+140
+216
+Lv Dapeng (viii)
+44
+100
+154
+Li Defang
+61
+140
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+12 DIRECTORS' AND SUPERVISORS' EMOLUMENTS (Continued)
+(a) Directors' and supervisors' emoluments (Continued)
+94
+620
+299
+Total
+RMB'000
+RMB'000
+Supervisors' fee
+Directors'/
+2020
+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
+Guo Hongjin (vii)
+Emoluments paid or receivable in respect of
+director's other services in connection with
+the management of the affairs of the Company
+or its subsidiary undertaking
+Tang Min (v)
+Independent non-executive directors
+Li Yong (xiii)
+Li Yunpeng (xii)
+Dai Houliang (xi)
+Zhang Shaofeng (vi)
+Ling Yiqun
+Liu Hongbin
+Yu Baocai
+Ma Yongsheng
+Zhang Yuzhuo (iii)
+Directors
+Name
+The emoluments of every director and supervisor is set out below: (Continued)
+Johnny Karling Ng
+for the year ended 31 December 2021
+4,506
+(2,011)
+(bb) Segment reporting
+Dividends and distributions of profits proposed in the profit appropriation plan which will be authorised and declared after the date of statement
+of financial position, are not recognised as a liability at the date of statement of financial position and are separately disclosed in the notes to
+the financial statements. Dividends are recognised as a liability in the period in which they are declared.
+(aa) Dividends
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+174
+Financial Statements (International)
+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.
+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.
+(z) Income tax
+Termination benefits, such as employee reduction expenses, are recognised when, and only when, the Group demonstrably commits itself to
+terminate employment or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic
+possibility of withdrawal.
+The contributions payable under the Group's retirement plans are recognised as an expense in the consolidated income statement as incurred
+and according to the contribution determined by the plans. Further information is set out in Note 40.
+(y) Employee benefits
+When the Group leases self-owned plants and buildings, equipment and machinery, lease income from an operating lease is recognised on a
+straight-line basis over the period of the lease. The Group recognises variable lease income which is based on a certain percentage of sales
+as rental income when occurred.
+A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating lease is a
+lease other than a finance lease.
+(ii) As lessor
+For a lease modification that is not accounted for as a separate lease, except for the practical expedient which applies only to rent
+concessions occurring as a direct consequence of the COVID-19 pandemic, the Group determine the lease term of the modified lease at the
+effective date of the modification, and remeasure the lease liability by discounting the revised lease payments using a revised discount rate.
+The Group decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications
+that decrease the scope or shorten the term of the lease, and shall recognise in profit or loss any gain or loss relating to the partial or full
+termination of the lease. The Group make a corresponding adjustment to the right-of-use asset for all other lease modifications.
+A lessee shall account for a lease modification as a separate lease if both: (1) the modification increases the scope of the lease by adding
+the right to use one or more underlying assets; and (2) the consideration for the lease increases by an amount commensurate with the stand-
+alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the articular
+contract.
+Payments associated with short-term leases with lease terms within 12 months and all leases of low-value assets are recognised on a
+straight-line basis over the lease term as an expense in profit or loss or as cost of relevant assets, instead of recognising right-of-use assets
+and lease liabilities.
+Right-of-use assets of the Group mainly comprise land. Right-of-use assets are measured at cost which comprises the amount of the initial
+measurement of the lease liability, any lease payments made at or before the commencement date, any initial direct costs incurred by the
+lessee, less any lease incentives received. The Group depreciates the right-of-use assets over the shorter of the asset's useful life and the
+lease term on a straight-line basis. When the recoverable amount of a right-of-use asset less than its carrying amount, the carrying amount
+is reduced to the recoverable amount.
+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.
+(i) As lessee
+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.
+(x) Leases
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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.
+Financial Statements (International)
+3 REVENUE FROM PRIMARY BUSINESS
+Gasoline
+557,605
+726,057
+RMB million
+RMB million
+2020
+2021
+Contributions to retirement schemes (Note 40)
+Salaries, wages and other benefits
+PERSONNEL EXPENSES
+6
+- Others
+- Audit services
+Auditor's remuneration:
+Variable lease payments, low-value and short-term lease payment
+The following items are included in selling, general and administrative expenses:
+5 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
+Sale of materials and others
+Rental income
+OTHER OPERATING REVENUES
+4
+(i) Others are primarily liquefied petroleum gas and other refinery and chemical byproducts and joint products.
+Note:
+Others (i)
+Synthetic fiber monomers and polymers
+Natural gas
+Kerosene
+Synthetic resin
+Basic chemical feedstock.
+Crude oil
+Diesel
+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.
+173
+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).
+(n) Impairment of assets
+Any adjustment to the carrying amount of a hedged item is amortised to profit or loss if the hedged item is a financial instrument (or a
+component thereof) measured at amortised cost. The amortisation is based on a recalculated effective interest rate at the date that amortisation
+begins.
+The gain or loss from remeasuring the hedging instrument is recognised in profit or loss. The gain or loss on the hedged item attributable to the
+hedged risk adjusts the carrying amount of the recognised hedged item not measured at fair value and is recognised in profit or loss.
+A fair value hedge is a hedge of the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment,
+or a portion of such an asset, liability or firm commitment.
+Fair value hedges
+(m)Derivative financial instruments and hedge accounting (Continued)
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021 171
+When the hedging relationship no longer meets the risk management objective on the basis of which it qualified for hedge accounting (i.e. the
+entity no longer pursues that risk management objective), or when a hedging instrument expires or is sold, terminated, exercised, or there is no
+longer an economic relationship between the hedged item and the hedging instrument or the effect of credit risk starts to dominate the value
+changes that result from that economic relationship or no longer meets the criteria for hedge accounting, the Group discontinues prospectively
+the hedge accounting treatments. If the hedged future cash flows are still expected to occur, that amount remains in the cash flow hedge
+reserve and is accounted for as cash flow hedges. If the hedged future cash flows are no longer expected to occur, that amount is immediately
+reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment. A hedged future cash flow that is no longer highly
+probable to occur may still be expected to occur, if the hedged future cash flows are still expected to occur, that amount remains in the cash
+flow hedge reserve and is accounted for as cash flow hedges.
+If the amount that has been accumulated in the cash flow hedge reserve is a loss and the Group expects that all or a portion of that loss will not
+be recovered in one or more future periods, the Group immediately reclassifies the amount that is not expected to be recovered into profit or
+loss.
+For cash flow hedges, other than those covered by the preceding policy statements, that amount is reclassified from the cash flow hedge reserve
+to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows affect profit
+or loss.
+If a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or a hedged forecast
+transaction for a non-financial asset or a non-financial liability becomes a firm commitment for which fair value hedge accounting is applied, the
+entity removes that amount from the cash flow hedge reserve and include it directly in the initial cost or other carrying amount of the asset or
+the liability. This is not a reclassification adjustment and hence it does not affect other comprehensive income.
+The gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income.
+The portion of the gain or loss on the hedging instrument that is determined to be an ineffective hedge is recognised in profit or loss.
+(ii) The cumulative change in fair value (present value) of the hedged item (i.e. the present value of the cumulative change in the hedged
+expected future cash flows) from inception of the hedge.
+(i) The cumulative gain or loss on the hedging instrument from inception of the hedge; and
+As long as a cash flow hedge meets the qualifying criteria for hedge accounting, the separate component of equity associated with the hedged
+item (cash flow hedge reserve) is adjusted to the lower of the following (in absolute amounts):
+Cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all, or a component
+of, a recognised asset or liability (such as all or some future interest payments on variable-rate debt) or a highly probable forecast transaction,
+and could affect profit or loss. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective
+effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.
+Cash flow hedges
+(iii) The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges
+and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item. However, that designation
+does not reflect an imbalance between the weightings of the hedged item and the hedging instrument.
+(ii) The effect of credit risk does not dominate the value changes that result from that economic relationship.
+(i) There is an economic relationship between the hedged item and the hedging instrument, which shares a risk and that gives rise to opposite
+changes in fair value that tend to offset each other.
+A hedging instrument is a designated derivative whose changes in cash flows are expected to offset changes in cash flows of the hedged item.
+The hedging relationship meets all of the following hedge effectiveness requirements:
+Hedged items are the items that expose the Group to risks of changes in future cash flows and that are designated as being hedged and that
+must be reliably measurable. The Group's hedged items include a forecast transaction that is settled with an undetermined future market price
+and exposes the Group to risk of variability in cash flows, etc.
+Hedge accounting is a method which recognises the offsetting effects on profit or loss (or other comprehensive income) of changes in the fair
+values of the hedging instrument and the hedged item in the same accounting period, to represent the effect of risk management activities.
+Derivative financial instruments are recognised initially at fair value. At each date of the statement of financial position, the fair value is
+remeasured. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss, except where the derivatives qualify for
+hedge accounting.
+(m)Derivative financial instruments and hedge accounting
+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).
+The amount of the reduction is recognised as an expense in the consolidated income statement. Impairment losses recognised in respect of
+cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then, to reduce
+the carrying amount of the other assets in the unit on a pro rata basis, except that the carrying value of an asset will not be reduced below its
+individual fair value less costs to disposal, or value in use, if determinable.
+Management assesses at each 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.
+(w) Research and development expense
+Liabilities related to future remediation costs are recorded when environmental assessments and/or cleanups are probable and the costs can
+be reliably estimated. As facts concerning environmental contingencies become known to the Group, the Group reassesses its position both with
+respect to accrued liabilities and other potential exposures.
+Environmental expenditures that relate to current ongoing operations or to conditions caused by past operations are expensed as incurred.
+(v) Environmental expenditures
+Repairs and maintenance expenditure is expensed as incurred.
+(u) Repairs and maintenance expenditure
+Borrowing costs are expensed in the consolidated income statement in the period in which they are incurred, except to the extent that they are
+capitalised as being attributable to the construction of an asset which necessarily takes a period of time to get ready for its intended use.
+(t) Borrowing costs
+Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are
+credited to profit or loss on a straight-line basis over the expected lives of the related assets.
+Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them with the costs
+that they are intended to compensate.
+Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the
+Group will comply with all attached conditions.
+(s) Government grants
+Sales are recognised when control of the goods have transferred. Obtaining control of relevant goods means that a customer can direct the use
+of the goods and obtain almost all the economic benefits from it. Advance from customers but goods not yet delivered is recorded as contract
+liabilities and is recognised as revenues when a customer obtains control over the relevant goods.
+Sales of goods
+542,260
+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.
+(r) Revenue recognition
+2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+172
+Financial Statements (International)
+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.
+(q) Provisions and contingent liability
+Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-
+bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the consolidated
+income statement over the period of borrowings using the effective interest method.
+(p) Interest-bearing borrowings
+Trade, bills and other payables generally are financial liabilities and are initially recognised at fair value and thereafter stated at amortised cost
+unless the effect of discounting would be immaterial, in which case they are stated at invoice amounts.
+(o) Trade, bills and other payables
+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.
+4,683
+422,566
+351,707
+(14,873)
+3,052
+694
+8,776
+6,706
+2020
+RMB million
+RMB million
+2021
+Notes:
+Others
+Donations
+(Loss)/gain on disposal of property, plant, equipment and other non-current assets, net
+Fines, penalties and compensations
+Net realised and unrealised loss on derivative financial instruments not qualified as hedging
+Impairment losses on long-lived assets (ii)
+Ineffective portion of change in fair value of cash flow hedges
+Government grants (i)
+1,495.20
+1,218.00
+1,711.52
+1,948.64
+2,105.20
+1,411.20
+2,109.76
+RMB/Ton
+(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
+Jet fuel oil
+Fuel oil
+Lubricant oil
+Solvent oil
+Naphtha
+(1,252)
+Diesel
+(10,035)
+(3,062)
+(996)
+6,517
+RMB million
+RMB million
+5,679
+2020
+2021
+Investment income from disposal of business and long-term equity investments (i)
+Dividend income from holding of other equity instrument investments
+Others
+10 INVESTMENT INCOME
+* Interest rates per annum at which borrowing costs were capitalised for construction in progress
+Interest expense
+Accretion expenses (Note 35)
+Interest expense on lease liabilities
+Less: Interest expense capitalised*
+Interest expense incurred
+9 INTEREST EXPENSE
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+(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%).
+(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.
+(5,780)
+(21,716)
+(1,781)
+(761)
+(301)
+(165)
+(43)
+(220)
+398
+(14,629)
+Gasoline
+235,018
+259,032
+2020
+2021
+8
+8
+73
+59
+2,683
+2020
+RMB million
+RMB million
+2,393
+2021
+54,986
+1,084
+56,070
+61,384
+59,990
+1,394
+2020
+RMB million
+RMB million
+2021
+2,048,654
+276,139
+363,979
+2,679,500
+42,388
+45,464
+48,099
+68,443
+72,385
+112,519
+122,368
+149,208
+155,397
+242,532
+RMB million
+RMB million
+91,560
+78,542
+5,516
+7,253
+4,572
+6,432
+11,678
+13,409
+15,710
+18,044
+197,542
+2020
+RMB million
+RMB million
+213,894
+2021
+Products
+(i) Consumption tax was levied based on sales quantities of taxable products, tax rate of products is presented as below:
+429,038
+Notes:
+City construction tax (ii)
+Education surcharge (ii)
+Resources tax
+Consumption tax (i)
+7 TAXES OTHER THAN INCOME TAX
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+176
+Financial Statements (International)
+Financial Statements (International)
+175
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+8,983
+87,525
+103,492
+11,932
+Others
+189
+Financial Statements (International)
+Balance at 31 December 2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(77)
+(1,203)
+(1,177)
+Current financial liabilities
+Current liabilities
+18,258
+18,835
+45,413
+41,947
+12,531
+14,032
+9,993
+9,336
+15,237
+13,744
+(456)
+(32)
+(38)
+(9,549)
+(6,185)
+Total current liabilities
+(3,052)
+(3,547)
+(8,644)
+(15,844)
+(1,043)
+Non-current assets
+(1,931)
+(2,546)
+(5,147)
+(5,008)
+Other current liabilities
+(998)
+(597)
+(9,520)
+(2,190)
+(6,350)
+7,924
+8,924
+4,820
+1,408
+5,441
+1,280
+1,258
+1,838
+5,375
+7,448
+6,562
+Cash and cash equivalents
+Current assets
+RMB million
+2020
+2020
+2021
+RMB million RMB million
+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
+5,259
+Other current assets
+9,217
+7,492
+17,845
+2,503
+3,446
+6,615
+12,328
+14,940
+15,779
+8,257
+Total current assets
+3,437
+7,516
+12,404
+1,223
+2,188
+4,777
+6,953
+2,665
+(2,623)
+(2,646)
+(1,963)
+11,439
+13,523
+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
+13,991
+13.920
+18,949
+1,773
+4,515
+14,967
+14,981
+7,580
+7,416
+8,120
+Carrying Amounts
+7,491
+7,484
+5,605
+14,831
+6,626
+7,580
+7,416
+8.120
+Share of net assets from joint ventures
+412
+468
+Net assets attributable to non-controlling interests
+5,568
+16,239
+Net assets
+(7,151)
+Other non-current liabilities
+(6,773)
+(7,599)
+(29,650)
+(30,903)
+(85)
+(85)
+(242)
+(8,761)
+Non-current financial liabilities
+Non-current liabilities
+(4,050)
+(4,144)
+(18,164)
+(25,393)
+(1,081)
+(6,857)
+YASREF
+(235)
+(42)
+(7,981)
+(31,658)
+(32,626)
+(2,102)
+(1,524)
+(42)
+(92)
+(92)
+(8,996)
+Total non-current liabilities
+(378)
+(382)
+(2,008)
+(1,723)
+(2,017)
+(1,439)
+(7,099)
+5,568
+Taihu
+Summarised statement of financial position and reconciliation to their carrying amounts in respect of the Group's principal joint ventures:
+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
+1,278
+4,184
+551
+461
+551
+4,184
+1,278
+990
+1,655
+2,194
+6,444
+101,572
+29,778
+(308)
+3
+(372)
+26
+2
+Other comprehensive income
+181
+Total comprehensive income
+464
+Revenue
+RMB million
+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
+7,792
+240
+1,160
+Summarised statement of comprehensive income
+2020
+2021
+2020
+RMB million
+CIR
+Zhongtian Synergetic Energy
+2021
+RMB million
+2020
+RMB million
+RMB million
+RMB million
+2021
+Sinopec Capital
+Sinopec Finance
+2021
+RMB million
+2020
+RMB million
+RMB million
+2021
+PipeChina (ii)
+Year ended 31 December
+2020
+RMB million
+(127)
+Dividends declared by
+associates
+Share of profit from associates
+PRC
+PRC
+Equity method
+Manufacturing and distribution
+40.00
+("BASF-YPC")
+BASF-YPC Company Limited
+Company Limited ("FREP")
+PRC
+Equity method | PRC
+Manufacturing refining oil products
+50.00
+of business
+Principal place
+Country of
+incorporation
+Taihu Limited ("Taihu")
+49.00
+Yanbu Aramco Sinopec Refining
+37.50
+2021
+2020
+2021
+RMB million RMB million RMB million
+PRC
+PRC
+Equity method
+business
+Manufacturing and distribution of
+petrochemical products
+Measurement
+method
+Company Limited ("Sinopec SABIC
+Tianjin")
+Sinopec SABIC Tianjin Petrochemical
+Company Ltd. ("YASREF")
+Russia
+Saudi Arabia
+Cyprus
+Saudi Arabia
+Equity method
+Equity method
+of petrochemical products
+Crude oil and natural gas extraction
+Petroleum refining and processing
+50.00
+Principal activities
+interests
+Fujian Refining & Petrochemical
+Share of other comprehensive
+91
+231
+214
+1,621
+626
+485
+income from associates (iii)
+993
+709
+2,517
+1,152
+284
+86
+490
+442
+3,205
+1,062
+BASF-YPC
+13
+2
+Name of entity
+% of
+ownership
+The Group's principal interests in joint ventures are as follows:
+22 INTEREST IN JOINT VENTURES
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+(182)
+Financial Statements (International)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+(iii) Including foreign currency translation differences.
+(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.
+(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.
+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)
+185
+15,168
+6,626
+7,484
+12,045
+2,199
+22,473
+30,159
+RMB million
+RMB million
+2020
+31 December
+31 December
+2021
+Less: Loss allowance for expected credit losses
+Amounts due from associates and joint ventures
+Amounts due from Sinopec Group Company and fellow subsidiaries
+Amounts due from third parties
+25 TRADE ACCOUNTS RECEIVABLE
+for the year ended 31 December 2021
+6,536
+4,781
+38,894
+39,299
+Balance at 31 December
+Written off for the year
+Others
+Written back for the year
+Provision for the year
+Balance at 1 January
+Loss allowance for expected credit losses are analysed as follows:
+Over three years
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Between two and three years
+Within one year
+31 December
+2020
+31 December
+2021
+RMB million
+The ageing analysis of trade accounts receivable (net of loss allowance for expected credit losses) is as follows:
+35,439
+(3,860)
+(4,033)
+34,861
+Between one and two years
+RMB million
+Financial Statements (International)
+187
+Balance at 31 December
+Decreases
+Additions
+Balance at 1 January
+Accumulated amortisation:
+Balance at 31 December
+Decreases
+Additions
+Balance at 1 January
+Cost:
+Operating rights of service stations
+2020
+RMB million
+RMB million
+2021
+(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:
+Net book value at 31 December
+24 DERIVATIVE FINANCIAL ASSETS AND DERIVATIVE FINANCIAL LIABILITIES
+53,567
+912
+53,549
+493
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Derivative financial assets and derivative financial liabilities of the Group are primarily commodity futures and swaps contracts. See Note 43.
+31,856
+29,714
+21,711
+24,077
+(190)
+Financial Statements (International)
+(333)
+2,699
+19,536
+21,711
+53,567
+53,791
+(475)
+(688)
+2,365
+34,180
+34,361
+442
+Less: Allowance for diminution in value of inventories
+Spare parts and consumables
+Finished goods
+Work in progress
+Crude oil and other raw materials
+27 INVENTORIES
+(i) As at 31 December 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.
+Note:
+10,260
+6,706
+8,735
+5,939
+1,376
+149
+179
+588
+31 December
+2021
+31 December
+RMB million
+2020
+RMB million
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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).
+152,191
+207,433
+(3,107)
+(4,897)
+155,298
+RMB million
+212,330
+2,515
+78,481
+84,174
+13,066
+15,701
+60,379
+109,940
+3,372
+RMB million
+2020
+31 December
+(68)
+(127)
+2,173
+436
+1,848
+3,860
+RMB million
+(30)
+2020
+35,439
+34,861
+83
+18
+64
+221
+931
+2021
+RMB million
+Note:
+(23)
+(70)
+31 December
+2021
+Trade accounts receivable and bills receivable (i)
+Current assets
+Listed equity instruments
+Unlisted equity instruments
+Non-current assets
+26 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
+(106)
+for the year ended 31 December 2021
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+188
+Information about the impairment of trade accounts receivable and the Group's exposure to credit risk can be found in Note 43.
+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.
+3,860
+4,033
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+5,605
+74,543
+34,025
+17
+6
+291
+451
+27
+52
+118
+147
+Interest income
+(1,085)
+(1,164)
+(3,140)
+(3,224)
+(541)
+(667)
+209
+183
+Interest expense
+(411)
+2,304
+2,864
+1,518
+8,218
+520
+2,261
+Profit/(loss) before taxation
+(1,244)
+(131)
+(1,136)
+(945)
+(20)
+(107)
+(16)
+(5)
+(535)
+(89)
+(2,868)
+(1,467)
+14,881
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+Sinopec SABIC Tianjin
+YASREF
+Taihu
+BASF-YPC
+FREP
+Year ended 31 December
+Summarised statement of comprehensive income
+7,491
+2020
+2021
+2020
+RMB million RMB million
+24,631
+37,337
+68,548
+9,528
+15,190
+15,701
+27,499
+(2,222)
+38,691
+Depreciation, depletion and amortisation
+Revenue
+RMB million RMB million
+RMB million
+RMB million
+RMB million RMB million
+RMB million RMB million
+47,224
+(2,789)
+(7,193)
+1,393
+954
+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).
+(219)
+(1,593)
+(60)
+Share of other comprehensive loss from joint ventures (i)
+359
+493
+(2,301)
+911
+1,081
+456
+2,466
+217
+832
+Share of net profit/(loss) from joint ventures
+Note:
+(i) Including foreign currency translation differences.
+186
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+31,326
+5,861
+7,470
+2,801
+1,520
+31,856
+RMB million
+500
+2020
+RMB million
+29,714
+31 December
+2021
+Long-term receivables from and prepayment to Sinopec Group Company and fellow subsidiaries
+Prepayments for construction projects to third parties
+Others (i)
+Operating rights of service stations
+23 LONG-TERM PREPAYMENTS AND OTHER ASSETS
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+31 December
+691
+454
+300
+1,139
+6,164
+433
+1,664
+(236)
+(407)
+1,057
+2,263
+332
+(601)
+(379)
+(2,054)
+(87)
+(597)
+Other comprehensive income
+Total comprehensive income
+Tax expense
+Profit/(loss) for the year
+(378)
+70,030
+1,926
+986
+128
+Dividends declared by joint ventures
+718
+986
+(2,742) (6,720)
+(1,442)
+2,140
+(2,536) (6,136)
+1,139
+433
+1,664
+(584)
+(206)
+(3,368)
+(123)
+718
+6,164
+Financial Statements (International)
+70,747
+associates
+(1,092)
+(24,309)
+(17,495)
+(95)
+1,048,227
+793,045
+143,165
+Balance at 31 December 2021
+(5,517)
+(940)
+(57)
+Exchange adjustments
+(1,297)
+Disposals
+(1,714)
+(1,027)
+(22)
+(665)
+1,984,437
+Accumulated depreciation and impairment losses:
+Balance at 1 January 2020
+61,069
+(98)
+393
+Reclassifications
+11,783
+6,360
+4,739
+684
+Reclassification to other long-term assets
+Impairment losses for the year
+48,760
+32,054
+4,680
+Depreciation for the year
+1,256,883
+608,622
+587,192
+85,494
+(295)
+(196)
+(8)
+996,702
+757,592
+138,550
+Balance at 31 December 2020
+(3,173)
+(226)
+(2,806)
+(141)
+Balance at 1 January 2021
+Exchange adjustments
+(138,703)
+(131,501)
+(806)
+(6,396)
+Disposals
+1,892,844
+138,550
+757,592
+996,702
+Invest into the joint ventures and associated companies
+(29)
+(617)
+646
+Reclassifications
+111,026
+65,182
+(188)
+40,357
+Transferred from construction in progress
+7,878
+5,177
+2,192
+509
+Additions
+1,892,844
+5,487
+Invest into the joint ventures and associated companies
+(54)
+(54)
+Balance at 31 December 2021
+(990)
+(57)
+(904)
+(29)
+Exchange adjustments
+(14,574)
+(13,668)
+(135)
+(771)
+Written back on disposals
+(259)
+(170)
+(7)
+(82)
+68,166
+660,838
+656,508
+1,385,512
+598,925
+391,719
+132,207
+74,999
+Balance at 31 December 2021
+593,615
+381,733
+Reclassification to other long-term assets
+136,872
+Balance at 31 December 2020
+630,320
+418,702
+140,360
+71,258
+Balance at 1 January 2020
+Net book value:
+75,010
+(138)
+(133)
+(5)
+614,969
+620,720
+63,540
+(2,890)
+(138)
+(51,818)
+(48,125)
+1,299,229
+(464)
+(2,703)
+Exchange adjustments
+(3,229)
+Written back on disposals
+(169)
+(161)
+(8)
+Reclassification to other long-term assets
+(49)
+(1,090)
+Balance at 1 January 2021
+620,720
+Invest into the joint ventures and associated companies
+225
+(410)
+185
+Reclassifications
+92,824
+9,420
+6,774
+63,540
+1,904
+Impairment losses for the year
+48,568
+39,670
+4,586
+Depreciation for the year
+1,299,229
+614,969
+742
+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).
+(1,052)
+Reclassification to other long-term assets
+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
+Tax
+effect
+RMB million
+Before tax
+amount
+RMB million
+2020
+2021
+Effective portion of changes in fair value of hedging
+Cash flow hedges:
+15 OTHER COMPREHENSIVE INCOME
+for the year ended 31 December 2021
+15,659
+(3,881)
+11,778
+9,207
+9,405
+19,018
+(5,499)
+24,517
+in other comprehensive income (i)
+Net movement during the year recognised
+161
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(37)
+7,240
+(1,618)
+8,858
+transferred to the consolidated income statement
+Reclassification adjustments for amounts
+6,912
+(2,295)
+198
+(2,332)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+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
+2020
+Number of individuals
+2021
+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
+Dividends declared after the date of the statement of financial position of RMBO.31 per share (2020: RMBO.13 per share)
+2021
+2020
+RMB million
+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
+180
+Final cash dividends in respect of the previous financial year, approved during the year of
+RMBO.13 per share (2020: RMBO.19 per share)
+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
+Dividends payable to shareholders of the Company attributable to the previous financial year, approved during the year represent:
+7,073
+Changes in the fair value of instruments at
+fair value through other comprehensive income
+Transfer of loss on disposal of equity investments at
+fair value through other comprehensive income to
+retained earnings
+Balance at 1 January 2020
+Cost:
+properties
+RMB million
+Oil and gas,
+Plants and
+buildings
+RMB million
+17 PROPERTY, PLANT AND EQUIPMENT
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+182
+Financial Statements (International)
+Financial Statements (International)
+181
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+There are no potential dilutive ordinary shares, and diluted earnings per share are equal to the basic earning per share.
+The calculation of basic earnings per share for the year ended 31 December 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.
+Additions
+132,327
+390
+727,552
+1,563
+1,027,324
+(115)
+(115)
+Invest into the joint ventures and associated companies
+(1,318)
+(125)
+1,443
+Reclassifications
+16 BASIC AND DILUTED EARNINGS PER SHARE
+141,606
+32,214
+10,965
+Transferred from construction in progress
+1,887,203
+7,116
+Total
+RMB million
+Equipment,
+machinery
+and others
+RMB million
+5,163
+98,427
+(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).
+Note:
+315
+(22)
+(4)
+(18)
+(4)
+2
+(6)
+in other comprehensive income
+Cost of hedging reserve
+Net movement during the year recognised
+(12)
+(10)
+(4)
+(6)
+(4)
+2
+(6)
+(12)
+(38)
+(220)
+162
+(2,336)
+2,651
+17,507
+(5,497)
+(4,457)
+(2,441)
+(2,441)
+(4,457)
+(220)
+(1,728)
+Other comprehensive income
+Foreign currency translation differences
+441
+441
+and joint ventures
+Share of other comprehensive income of associates
+162
+(1,728)
+23,004
+73,674
+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 were temporarily idle
+or pending for disposal.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+184
+The Republic of
+Kazakhstan
+British Virgin
+Islands
+("CIR")
+Equity method
+Crude oil and natural gas extraction
+50.00
+of coal-chemical products
+Limited ("Zhongtian Synergetic Energy")
+Caspian Investments Resources Ltd.
+PRC
+PRC
+Equity method
+Mining coal and manufacturing
+for the year ended 31 December 2021
+21 INTEREST IN ASSOCIATES (Continued)
+Summarised financial information and reconciliation to their carrying amounts in respect of the Group's principal associates:
+PipeChina
+31
+Sinopec Capital
+31
+December
+2021
+RMB million
+13,140
+175,139
+194,458
+55,086
+655,982
+768,161
+74,012
+86,335
+38.75
+Current assets
+Non-current assets
+31
+31
+December
+2021
+RMB million
+31
+December
+2020
+RMB million
+RMB million
+2021
+December
+Sinopec Finance
+December
+2020
+RMB million
+Zhongtian Synergetic Energy
+Zhongtian Synergetic Energy Company
+consulting, self-owned equity
+14.00
+PipeChina (i)
+Principal place
+of business
+Country of
+incorporation
+Measurement
+method
+Principal activities
+% of
+ownership
+interests
+Name of company
+The Group's principal associates are as follows:
+The Group's investments in associates are with companies primarily engaged in the oil and gas, petrochemical, and marketing and distribution
+operations in the PRC.
+21 INTEREST IN ASSOCIATES
+Key assumptions used for cash flow forecasts for these 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.
+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.
+8,620
+8,594
+Operation of oil and natural gas
+Equity method
+PRC
+PRC
+investment management, investment
+("Sinopec Capital")
+PRC
+PRC
+Equity method
+Project and equity investment,
+49.00
+management
+Sinopec Capital Company Limited
+("Sinopec Finance")
+PRC
+PRC
+Equity method
+pipeline and auxiliary facilities
+Provision of non-banking financial
+49.00
+Sinopec Finance Company Limited
+services
+CIR
+31
+December
+24,070
+11,548
+12,538
+29,761
+30,955
+570,282
+615,103
+Net assets
+(286)
+(144)
+(28,422)
+(22,216)
+(411)
+(676)
+(514)
+20,108
+480
+2,320
+Net assets attributable to
+Share of net assets from
+64,946
+88,862
+non-controlling interests
+Net assets attributable to
+2,320
+480
+(602)
+20,108
+11,548
+12,538
+29,761
+30,955
+505,336
+526,241
+owners of the Company
+24,070
+(104,150)
+(103,243)
+Non-current liabilities
+3,721
+3,532
+11,871
+RMB million
+RMB million
+RMB million
+RMB million
+576
+RMB million
+2021
+December
+31
+31
+December
+31
+December
+2020
+31
+December
+2021
+2020
+2020
+1,032
+2,402
+102
+(699)
+(822)
+(8,315)
+(8,577)
+(18)
+(28)
+(197,872)
+53,008
+(217,987)
+(136,150)
+Current liabilities
+903
+870
+53,124
+51,331
+106
+(55,562)
+At 31 December 2021 and 31 December 2020, the Group had no individual significant property, plant and equipment which had been pledged.
+1,006
+1,004
+253,355
+(12,930)
+(3,140)
+(9,790)
+282,963
+24,023
+9,653
+14,370
+34,188
+248,775
+Balance at 31 December 2020
+Decreases
+Additions
+Balance at 1 January 2020
+Cost
+Total
+RMB million
+40,701
+294,056
+Balance at 1 January 2021
+253,355
+Balance at 1 January 2020
+Additions
+Accumulated depreciation
+310,677
+46,921
+263,756
+Balance at 31 December 2021
+(6,292)
+RMB million
+(3,430)
+Decreases
+22,913
+9,650
+13,263
+Additions
+294,056
+40,701
+(2,862)
+9,101
+RMB million
+Land
+RMB million
+125,525
+2020
+2021
+Balance at 31 December
+Exchange adjustments
+Disposals and others
+Reclassification to other long-term assets
+Impairment losses for the year
+Transferred to property, plant and equipment
+Dry hole costs written off
+Balance at 1 January
+Additions
+18 CONSTRUCTION IN PROGRESS
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+RMB million
+176,119
+159,729
+131,099
+19 RIGHT-OF-USE ASSETS
+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).
+125,525
+155,939
+(53)
+(34)
+(21,798)
+Others
+(107)
+(144)
+(11,464)
+(10,302)
+(141,606)
+(111,026)
+(5,928)
+(7,702)
+(844)
+5,702
+14,803
+9,358
+Principal activities
+Other units without individually significant goodwill
+Sinopec Beijing Yanshan Petrochemical Branch
+Shanghai SECCO Petrochemical Company Limited
+("Shanghai SECCO")
+Sinopec Zhenhai Refining and Chemical Branch
+Goodwill is allocated to the following Group's cash-generating units:
+Impairment tests for cash-generating units containing goodwill
+Less: Accumulated impairment losses
+Cost
+20 GOODWILL
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+183
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of petrochemical products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+31 December
+2021
+RMB million
+2,541
+2,541
+4,043
+4,043
+RMB million
+RMB million
+2021
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+31 December
+(7,861)
+8,620
+(7,861)
+8,594
+16,481
+16,455
+RMB million
+2020
+31 December
+31 December
+2020
+268,408
+31,774
+236,634
+9,966
+Additions
+28,044
+10,481
+17,563
+Balance at 1 January 2021
+28,044
+6,863
+10,481
+Balance at 31 December 2020
+(2,471)
+(1,575)
+(896)
+Decreases
+15,712
+6,354
+17,563
+1,004
+16,829
+(407)
+Balance at 31 December 2021
+266,012
+30,220
+235,792
+Balance at 31 December 2020
+268,160
+28,486
+Decreases
+239,674
+Net book value
+42,269
+15,147
+27,122
+Balance at 31 December 2021
+(2,604)
+(2,197)
+Balance at 1 January 2020
+1,529
+1,491
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+48,615
+124.6
+Income tax expense
+(23,318)
+(6,344)
+267.6
+Profit for the year
+85,851
+42,271
+109,169
+103.1
+Shareholders of the Company
+71,975
+33,443
+115.2
+Non-controlling interests
+13,876
+8,828
+57.2
+(1) Revenue
+Attributable to:
+Profit before taxation
+(47.0)
+44,456
+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)
+275.7
+Operating profit
+94,628
+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
+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)
+22.7
+Diesel
+78,335
+77,280
+1.4
+5,891
+4,789
+23.0
+Kerosene
+21,270
+20,828
+2.1
+3,772
+2,635
+43.1
+Basic chemical feedstock
+36,173
+36,683
+(1.4)
+5,486
+3,636
+6,300
+27.4
+7,731
+86,193
+Year ended 31 December
+2021
+Crude oil
+7,162
+2020
+7,422
+Change (%)
+2021
+2020 Change (%)
+(3.5)
+3,049
+2,029
+50.3
+Natural gas (million cubic meters)
+29,953
+26,280
+14.0
+1,606
+1,352
+18.8
+Gasoline
+90,836
+5.4
+(9,716)
+(12,382)
+Exploration expenses, including dry holes
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+15
+Business Review and Prospects
+Business Review and Prospects
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+(6) Health and Safety
+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
+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
+1.6
+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,
+10,029
+9,201
+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
+12,060
+12,493
+10.9
+18,999
+17,370
+17,244
+9.4
+1,252
+1,067
+1,047
+17.3
+9,057
+50.9
+and risk prevention and control to march
+toward its targets firmly. The following
+are specific measures:
+16
+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)
+26.6
+(1,589,821)
+30.6
+(54,978)
+(53,668)
+2.4
+Depreciation, depletion and amortisation
+(115,680)
+(107,461)
+7.6
+Revenue from primary business
+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.
+30.2
+Change (%)
+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
+TK-01
+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 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
+2,104,724
+Synthetic rubber
+Monomer and polymer for synthetic fibre
+9,691
+34.79
+30.70
+1,072.33
+1,199.44
+30.16
+0.0
+249.43
+249.52
+249.60
+(0.2)
+(1.8)
+284.22
+279.76
+4.5
+458.92
+459.02
+479.74
+2020 to 2021(%)
+2019
+2020
+2021
+280.22
+1,047.78
+11.9
+Crude oil reserves (mmbbls)
+Consolidated companies
+Overseas
+Others
+821
+961
+Shengli
+1,130
+1,291
+1,130
+1,291
+1,389
+1,578
+1,542
+1,749
+Consolidated companies
+Proved developed reserves
+Proved reserves
+China
+31 December 2020
+31 December 2021
+Items
+Change from
+Summary of Reserves of Crude Oil and Natural Gas
+Natural gas production (bcf)
+Overseas
+Apr-20 Jul-20
+0
+Jan-20
+DUBAI
+BRENT ICE
+WTI-NYMEX
+BRENT DTD
+20
+20
+40
+40
+60
+60
+80
+100
+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.
+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.
+BUSINESS REVIEW
+120
+USD/Barrel
+Movement of International Crude Oil Prices
+BUSINESS REVIEW AND PROSPECTS
+12-17-1
+Oct-20
+Equity accounted entities
+Jan-21
+Jul-21
+China
+Crude oil production (mmbbls)
+Oil and gas production (mmboe)
+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.
+Summary of Operations for the Exploration and Production Segment
+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.
+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
+(1) Exploration and Production
+2 PRODUCTION & OPERATION REVIEW
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Business Review and Prospects
+Business Review and Prospects
+11
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+(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.
+(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.
+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.
+(1) Crude Oil & Natural Gas Market
+1 MARKET REVIEW
+Jan-22
+Oct-21
+Apr-21
+Proved undeveloped reserves
+China
+Consolidated companies
+Chemical fertiliser
+976
+1,177
+(17.1)
+2,807
+1,955
+43.6
+19
+Management's Discussion
+and Analysis
+1,675
+1,582
+6,357
+6,734
+6,357
+6,734
+6,365
+6,740
+8,191
+8,456
+Wells drilled (as of 31 December)
+39.1
+31 December 2021 31 December 2020
+7,982
+(5.5)
+(28.2)
+6,537
+4,297
+52.1
+Synthetic resin
+17,923
+17,112
+4.7
+8,325
+7,148
+16.5
+Synthetic fibre
+1,457
+1,402
+3.9
+7,521
+6,381
+17.9
+Synthetic rubber
+1,286
+1,361
+11,099
+6,955
+Natural gas reserves (bcf)
+Equity accounted entities
+108
+16
+17
+102
+125
+102
+125
+153
+171
+244
+263
+15
+24
+259
+287
+309
+330
+Consolidated companies
+Overseas
+Others
+Shengli
+86
+Exploration and Production Activities
+46
+0
+Consolidated companies
+Overseas
+Others
+Fuling
+Consolidated companies
+Proved undeveloped reserves
+China
+Consolidated companies
+Equity accounted entities
+Overseas
+Others
+Puguang
+Fuling
+Consolidated companies
+China
+Proved developed reserves
+Proved reserves
+Items
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+12
+46
+46
+Equity accounted entities
+5
+51
+Synthetic resin
+13,669
+Change from
+2020 to 2021
+108
+201
+Shengli
+33
+55
+33
+55
+Others
+75
+201
+146
+146
+2226
+92
+212
+92
+212
+29
+52
+63
+75
+108
+Consolidated companies
+201
+365
+130
+1,942
+4
+385
+136
+2,115
+3
+Wells drilling (as of 31 December)
+2021
+2020
+Gross
+Net
+Gross
+Net
+Exploratory Development Exploratory Development Exploratory Development
+Exploratory Development
+China
+108
+201
+108
+160
+Overseas
+0
+123
+92
+29
+63
+94
+22232021
+212
+212
+52
+160
+0
+0
+0
+212
+China
+Consolidated companies
+Shengli
+Others
+Overseas
+Consolidated companies
+Equity accounted entities
+Total
+92
+Total
+22200002
+94
+0
+62
+2
+Consolidated companies
+0
+3
+0
+1
+0
+Equity accounted entities
+0
+120
+0
+61
+Total
+108
+324
+108
+263
+༠།ལ། |
+2
+212
+0
+96
+0
+2020
+Exploratory
+Development
+Exploratory
+Development
+Productive
+Dry
+Productive
+Dry
+Productive
+Dry Productive
+China
+363
+129
+1,828
+4
+383
+136
+2,015
+Dry
+3
+Consolidated companies
+2021
+363
+2
+0
+3,623
+3,191
+6
+8
+0
+0
+6
+8
+1,716
+1,826
+1,715
+1,824
+1,715
+1,824
+99
+119
+1,616
+1,705
+1
+2
+0
+1
+Oil productive wells (as of 31 December)
+2021
+129
+4
+114
+0
+2
+0
+100
+0
+Consolidated companies
+Ethylene
+0
+2
+0
+0
+0
+4
+0
+Equity accounted entities
+2
+1
+112
+0
+2
+1
+1,828
+2
+1
+383
+136
+2,015
+3
+Shengli
+170
+58
+944
+2
+204
+64
+1,080
+2
+Others
+193
+71
+884
+2
+179
+72
+935
+Overseas
+2020
+0
+Net
+21.15
+20.38
+31.16
+3.8
+45.41
+40.22
+39.78
+12.9
+73.83
+74.34
+76.38
+94.65
+94.77
+94.98
+(0.51) percentage points
+(0.12) percentage points
+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
+(5.3)
+2021
+66.06
+59.85
+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
+236.91
+248.52
+7.8
+146.21
+141.50
+159.99
+3.3
+65.21
+57.91
+62.77
+12.6
+63.21
+Light chemical feedstock production
+2020
+Total sales volume of oil products (million tonnes)*
+31 December
+31 December
+2021
+2020
+31 December
+2019
+the end of the
+reporting period
+30,725
+30,713
+30,702
+30,696
+(%)
+0.04
+0.06
+30,725
+30,707
+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
+Gross
+Total number of service stations under the Sinopec brand
+Number of company-operated stations
+2019 2020 to 2021 (%)
+the end of the
+previous year to
+0.9
+220.79
+217.91
+254.95
+1.3
+171.31
+167.99
+184.45
+2.0
+Retail sales (million tonnes)
+114.30
+113.19
+122.54
+1.0
+Direct sales and distribution (million tonnes)
+Annual average throughput per station (tonne/station)
+57.01
+54.80
+61.91
+4.0
+3,720
+3,686
+3,992
+Change from
+Kerosene
+Total domestic sales volume of oil products (million tonnes)
+Gasoline
+5,504
+59,385
+2,361
+56,223
+7,027
+60,295
+10
+2,742
+55,992
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+13
+Business Review and Prospects
+Business Review and Prospects
+BUSINESS REVIEW AND PROSPECTS (CONTINUED)
+Natural gas productive wells (as of 31 December)
+2021
+2020
+Region
+China
+Gross
+Net
+Gross
+Net
+7,539
+7,489
+6,976
+6,928
+28
+Consolidated companies
+11
+7,055
+Gross
+Diesel
+Net
+53,851
+53,851
+53,240
+53,240
+53,851
+53,851
+53,240
+53,240
+34,991
+34,991
+34,572
+34,572
+18,860
+18,860
+18,668
+18,668
+5,534
+2,372
+2,752
+7,539
+30
+6,976
+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
+42,391
+36,480
+5,911
+2020
+436,864
+436,864
+39,195
+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
+7,489
+Refinery throughput
+Gasoline, diesel and kerosene production
+China
+Acreage with exploration licenses
+390,023
+Unit: Square kilometers
+Puguang
+79
+6,928
+Area under license (as of 31 December)
+79
+67
+67
+Fuling
+779
+632
+632
+Others
+779
+6,681
+7,539
+6,631
+6,277
+6,229
+Total
+7,489
+6,976
+6,928
+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.
+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.
+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.
+During the year ended 31 December 2014, the Company issued 1,715,081,853 listed A shares with a par value of RMB1.00 each, as a result of
+exercise of conversion by the holders of the 2011 Convertible Bonds.
+During the year ended 31 December 2013, the Company issued 114,076 listed A shares with a par value of RMB1.00 each, as a result of exercise
+of conversion by the holders of the 2011 Convertible Bonds.
+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.
+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.
+All A shares and H shares rank pari passu in all material aspects.
+Capital management
+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 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.
+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.
+Capital commitments
+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
+37 COMMITMENTS AND CONTINGENT LIABILITIES
+At 31 December 2021 and 2020, capital commitments of the Group are as follows:
+184,430
+90,227
+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.
+31 December
+2021
+Authorised and contracted for (i)
+Authorised but not contracted for
+RMB million
+The schedule of the contractual maturities of loans and commitments are disclosed in Notes 30 and 37, respectively.
+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).
+(141)
+121,071
+1,563
+1,343
+31 December
+42,438
+(6,435)
+(1,490)
+(81)
+40,495
+43,713
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+193
+Financial Statements (International)
+Financial Statements (International)
+121,071
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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
+for the year ended 31 December 2021
+2020
+Associates (iii)
+33,997
+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
+2021
+31 December
+2020
+RMB million
+RMB million
+Joint ventures (ii)
+9,117
+6,390
+5,746
+8,450
+14,863
+14,840
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+195
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+37 COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+2020
+RMB million
+for the year ended 31 December 2021
+64
+63
+102
+66
+274,657
+205,594
+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).
+Commitments to joint ventures
+Pursuant to certain of the joint venture agreements entered into by the Group, the Group is obliged to purchase products from the joint ventures
+based on market prices.
+Exploration and production licenses
+Exploration licenses for exploration activities are registered with the Ministry of Natural Resources. The maximum term of the Group's exploration
+licenses is 7 years, and may be renewed twice within 30 days prior to expiration of the original term with each renewal being for a two-year term.
+The Group is obligated to make progressive annual minimum exploration investment relating to the exploration blocks in respect of which the license
+is issued. The Ministry of Natural Resources also issues production licenses to the Group on the basis of the reserve reports approved by relevant
+authorities. The maximum term of a full production license is 30 years unless a special dispensation is given by the State Council. The maximum
+term of production licenses issued to the Group is 80 years as a special dispensation was given to the Group by the State Council. The Group's
+production license is renewable upon application by the Group 30 days prior to expiration.
+The Group is required to make payments of exploration license fees and production right usage fees to the Ministry of Natural Resources annually
+which are expensed. Expenses recognised were approximately RMB181 million for the year ended 31 December 2021 (2020: RMB231 million).
+Estimated future annual payments are as follows:
+Within one year
+RMB million
+171,597
+Between one and two 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
+Between two and three years
+RMB million
+43,713
+2,163
+1,135
+(4,637)
+Decrease for the year
+Exchange adjustments
+Balance at 31 December
+(622)
+13,690
+11,778
+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.
+31 LEASE LIABILITIES
+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
+(466)
+1,387
+1,168
+Interest rates at 1.65% per annum at 31 December 2021
+with maturities in 2027
+38,522
+Contingent liabilities (Continued)
+26,977
+4.90% per annum at 31 December 2021
+with maturities through 2026
+Fixed interest rates ranging from 3.13% to
+11,127
+11,379
+4.25% per annum at 31 December 2021
+with maturities through 2043
+Total third parties' long-term debts
+Less: Current portion
+Long-term loans from Sinopec Group Company and fellow subsidiaries
+RMB denominated
+Amounts due to third parties
+USD denominated
+49,649
+38,356
+88,593
+76,674
+(10,293)
+78,300
+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
+Less: Current portion
+2021
+Amounts due to Sinopec Group Company and fellow subsidiaries
+Bills payable
+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
+93,764
+59,023
+76,458
+70,262
+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
+33 CONTRACT LIABILITIES
+161,908
+215,640
+5,700
+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
+4,227
+6,145
+7,746
+Amounts due to associates and joint ventures
+151,514
+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
+RMB million
+138,741
+146,415
+25,280
+9,793
+51,619
+10,394
+161,908
+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.
+38,125
+(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).
+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.
+Notes:
+(i) Sales of goods represent the sale of crude oil, intermediate petrochemical products, petroleum products and ancillary materials.
+(ii) Purchases represent the purchase of materials and utility supplies directly related to the Group's operations such as the procurement of raw and ancillary
+materials and related services, supply of water, electricity and gas.
+(iii) Transportation and storage represent the cost for the use of railway, road and marine transportation services, pipelines, loading, unloading and storage facilities.
+(iv) Exploration and development services comprise direct costs incurred in the exploration and development such as geophysical, drilling, well testing and well
+measurement services.
+(v) Production related services represent ancillary services rendered in relation to the Group's operations such as equipment repair and general maintenance,
+insurance premium, technical research, communications, firefighting, security, product quality testing and analysis, information technology, design and engineering,
+construction of oilfield ground facilities, refineries and chemical plants, manufacture of replacement parts and machinery, installation, project management,
+environmental protection and management services.
+(vi) Ancillary and social services represent expenditures for social welfare and support services such as educational facilities, media communication services, sanitation,
+accommodation, canteens, and property maintenance.
+(vii) Agency commission income represents commission earned for acting as an agent in respect of sales of products and purchase of materials for certain entities
+owned by Sinopec Group Company.
+(viii) Interest income represents interest received from deposits placed with Sinopec Finance and Sinopec Century Bright Capital Investment Limited, finance companies
+controlled by Sinopec Group Company. The applicable interest rate is determined in accordance with the prevailing saving deposit rate. The balance of deposits at
+31 December 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)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+(31,144)
+Net funds obtained from/(repaid to) related parties
+19,443
+8,734
+(iv)
+33,930
+31,444
+(v)
+44,405
+31,915
+(vi)
+1,730
+2,952
+(vii)
+for the year ended 31 December 2021
+194
+(viii)
+715
+704
+(ix)
+385
+(viii)
+(8,265)
+919
+(17,585)
+(x)
+30,305
+Interest expense
+Net deposits placed with related parties
+160
+(iii)
+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:
+43,394
+Trade accounts payable and bills payable
+14,170
+22,792
+Contract liabilities
+4,677
+5,937
+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
+13,690
+11,778
+158,761
+162,048
+Total
+247,599
+223,588
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Fixed interest rates ranging from 2.20% to
+26,494
+Total
+6,435
+3,116
+•
+•
+•
+•
+•
+The Company has entered into a non-exclusive "Agreement for Mutual Provision of Products and Ancillary Services" ("Mutual Provision
+Agreement") with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the
+Group with certain ancillary production services, construction services, information advisory services, supply services and other services and
+products. While each of Sinopec Group Company and the Company is permitted to terminate the Mutual Provision Agreement upon at least
+six months notice, Sinopec Group Company has agreed not to terminate the agreement if the Group is unable to obtain comparable services
+from a third party. The pricing policy for these services and products provided by Sinopec Group Company to the Group is as follows:
+(1) the government-prescribed price;
+(2) where there is no government-prescribed price, the government-guidance price;
+(3) where there is neither a government-prescribed price nor a government-guidance price, the market price; or
+(4) where none of the above is applicable, the price to be agreed between the parties, which shall be based on a reasonable cost incurred in
+providing such services plus a profit margin not exceeding 6%.
+The Company has entered into a non-exclusive "Agreement for Provision of Cultural and Educational, Health Care and Community Services"
+with Sinopec Group Company effective from 1 January 2000 in which Sinopec Group Company has agreed to provide the Group with certain
+cultural, educational, health care and community services on the same pricing terms and termination conditions as described in the above
+Mutual Provision Agreement.
+The Company has entered into a series of lease agreements with Sinopec Group Company to lease certain lands and buildings effective
+on 1 January 2000. The lease term is 40 or 50 years for lands and 20 years for buildings, respectively. The Company and Sinopec Group
+Company can renegotiate the rental amount every three years for land. The Company and Sinopec Group Company can renegotiate the rental
+amount for buildings every year. However such amount cannot exceed the market price as determined by an independent third party.
+(a) Transactions with Sinopec Group Company and fellow subsidiaries, associates and joint ventures (Continued)
+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.
+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
+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.
+Notes:
+228,307
+151,300
+(ii)
+Profit attributable to shareholders of the Company
+2,105,984
+12,233
+(13,493)
+2,104,724
+33,096
+347
+33,443
+Profit attributable to non-controlling interests
+8,828
+8,828
+Basic earnings per share (RMB)
+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)
+for the year ended 31 December 2020:
+Revenue
+Summarised consolidated income statement
+The Group,
+as restated
+RMB million
+Adjustment
+RMB million
+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.
+455,660
+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)
+196
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+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
+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.
+191,888
+Total assets
+5,875
+(36,955)
+28,360
+(555)
+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
+(i)
+297,381
+(447)
+(102,203)
+1,002
+167,518
+(784)
+1,738,896
+Current liabilities
+522,190
+1,020
+(215)
+522,995
+Total liabilities
+850,947
+1,031
+(784)
+851,194
+1,733,805
+Total equity attributable to shareholders of the Company
+4,831
+746,325
+Non-controlling interests
+141,364
+13
+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
+741,494
+38,318
+Financial Statements (International)
+92
+371
+1,056
+Others
+(517)
+(492)
+869
+1,008
+(11)
+(9)
+127
+127
+Financial assets at fair value through other comprehensive income
+Intangible assets
+13,322
+4,749
+Tax losses carried forward
+(4,420)
+(13,415)
+(15,037)
+Deferred tax assets/(liabilities)
+15,793
+30,596
+(870)
+(19,117)
+25,054
+8,124
+31 December
+2020
+RMB million
+2021
+RMB million
+19,389
+7,910
+31 December
+Deferred tax liabilities
+Deferred tax assets
+10,915
+10,915
+RMB million
+31 December
+2020
+11,207
+11,207
+31 December
+2021
+RMB million
+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)
+35,969
+16,777
+Property, plant and equipment
+(2,709)
+35,096
+RMB million
+2020
+31 December
+5,109
+69,431
+19,137
+9,267
+35,918
+RMB million
+31 December
+2021
+Deferred tax assets and liabilities before offset are attributable to the items detailed in the table below:
+29 DEFERRED TAX ASSETS AND LIABILITIES
+Value-added input tax to be deducted
+Prepaid income tax
+Advances to suppliers
+Receivables
+28 PREPAID EXPENSES AND OTHER CURRENT ASSETS
+for the year ended 31 December 2021
+4,857
+18,625
+131
+58,709
+1,790
+258
+Cash flow hedges
+1,286
+2,858
+Payables
+3,763
+Receivables and inventories
+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.
+31 December
+2020
+RMB million
+RMB million
+2021
+31 December
+31 December
+2020
+RMB million
+RMB million
+2021
+31 December
+Deferred tax assets
+Deferred tax liabilities
+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
+9,960
+3,594
+2,378
+349
+127
+(2,244)
+4,146
+(2,630)
+(4)
+(2,316)
+(42)
+(268)
+1,286
+2,411
+(1)
+(12)
+(122)
+144
+(84)
+(148)
+13,322
+124
+38,944
+(4)
+519
+(2,265)
+7,873
+(305)
+73
+24
+1,142
+352
+116
+(4)
+702
+162
+(564)
+10,807
+19
+87
+(4)
+246
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2,546
+RMB million
+Cash flow hedges
+Payables
+Receivables and inventories
+Net deferred tax assets/(liabilities)
+Others
+Intangible assets
+other comprehensive income
+Financial assets at fair value through
+Tax losses carried forward
+Property, plant and equipment
+Cash flow hedges
+Payables
+Receivables and inventories
+Movements in the deferred tax assets and liabilities are as follows:
+29 DEFERRED TAX ASSETS AND LIABILITIES (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Property, plant and equipment
+Tax losses carried forward
+Financial assets at fair value through
+other comprehensive income
+RMB million
+RMB million
+RMB million
+RMB million
+2020
+31 December
+from
+reserve
+Others
+RMB million
+income
+Transferred
+Recognised
+in other
+comprehensive
+income
+statement
+Recognised in
+consolidated
+Balance at
+1 January
+2020
+Net deferred tax assets/(liabilities)
+Others
+Intangible assets
+Balance at
+Financial Statements (International)
+2,411
+7,000
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES
+11,479
+5,881
+430
+(5,504)
+186
+4
+(3)
+490
+(6,258)
+(305)
+16,930
+516
+101
+63
+352
+118
+Short-term debts represent:
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+Hong Kong Dollar ("HKD") denominated
+USD denominated
+RMB denominated
+Short-term loans
+Loans from Sinopec Group Company and fellow subsidiaries
+RMB denominated
+Corporate bonds
+2
+RMB denominated
+USD denominated
+RMB denominated
+Current portion of long-term bank loans
+RMB denominated
+Short-term other loans
+RMB denominated
+Third parties' debts
+Short-term bank loans
+Current portion of long-term corporate bonds
+European Dollar ("EUR") denominated
+116
+(19)
+income
+RMB million
+(26)
+1,378
+2,411
+RMB million
+RMB million
+statement
+income comprehensive
+1 January
+2021
+Balance at
+Transferred
+in other
+Recognised
+Recognised in
+consolidated
+Balance at
+16,930
+Others
+RMB million
+from 31 December
+reserve
+RMB million
+2021
+RMB million
+(8,554)
+13,322
+1,740
+325
+41
+(1,004)
+2,378
+4,749
+(2,451)
+(5,499)
+(203)
+(2,630)
+2,858
+1,572
+1,286
+3,763
+5,881
+24,959
+24,959
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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)
+Financial Statements (International)
+16,111
+16,111
+for the year ended 31 December 2021
+30 SHORT-TERM AND LONG-TERM DEBTS AND LOANS FROM SINOPEC GROUP COMPANY AND FELLOW SUBSIDIARIES (Continued)
+Long-term debts represent:
+Interest rate and final maturity
+Third parties' debts
+Long-term bank loans
+2,873
+RMB denominated
+Interest rates ranging from 1.08% to 4.00%
+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
+USD denominated
+622
+199
+622
+3
+3
+3,293
+4,637
+3,281
+4,613
+12
+24
+64
+7,000
+466
+3,018
+3,018
+35,252
+153
+2,407
+4,642
+1,320
+1,141
+934
+3,298
+31
+23,769
+172
+Current portion of long-term loans
+RMB denominated
+466
+(527)
+Cash and cash equivalents
+at 1 January
+3,034
+8,642
+Net increase/(decrease) in
+6,901
+7.699
+(4,095)
+cash and cash equivalents
+(2,847)
+2.176
+343
+(11)
+(14)
+(526)
+(1,802)
+(695)
+(467)
+1,727
+262
+3,182
+(653)
+(2,879)
+(7,828)
+1,606
+2,132
+2,817
+1,814
+677
+40
+243
+23
+951
+645
+45
+2,218
+(720)
+1,045
+21,149
+(920)
+Comprehensive income
+attributable to non-
+controlling interests
+541
+316
+98
+2,766
+7,064
+controlling interests
+Dividends paid to non-
+18,439
+10
+476
+325
+1,101
+(287)
+579
+7,205
+6,822
+16
+income
+Total comprehensive
+(920)
+4,871
+5,549
+74,624
+89,198
+2,017
+2,166
+1,408,523 1,099,680
+528
+Revenue
+RMB million
+RMB million
+RMB million
+RMB million RMB million
+RMB million
+2020
+2021
+RMB million
+69
+1,064
+21,626
+1,606
+2,132
+2,817
+2,047
+871
+243
+951
+29,723
+656
+1,160
+1,429
+22,415
+18,582
+Profit/(loss) for the year
+28,702
+50,208
+2,077
+649
+14
+64
+(2,359)
+(2,659)
+15
+(40,010)
+2,420
+activities
+(used in) investing
+(3,888)
+Net cash generated from/
+5,476
+3.119
+3,447
+586
+133
+(244)
+(292)
+(363)
+1,680
+420
+(649) 1,276
+(1,250)
+882 (1,066)
+(142)
+1,682
+(3,393)
+1,683
+(1,172)
+20
+(12,402)
+from financing activities
+Net cash (used in)/generated
+(2,340)
+(1,789)
+(4,335)
+1,534
+3,846
+(31,081)
+8,833
+3,950
+690
+Year ended 31 December
+Summarised statement of cash flows
+767
+1,028
+175
+164
+150
+Marketing Company
+2021
+64
+659
+691
+2,390
+707
+268
+121
+15
+(377)
+281
+SIPL*
+2020
+54.139
+28,923
+activities
+(used in) operating
+Net cash generated from/
+2020
+Shanghai SECCO
+Shanghai Petrochemical
+Sinopec Kantons
+2021
+2020
+2021
+RMB million RMB million RMB million RMB million RMB million RMB million
+RMB million RMB million RMB million RMB million
+2020
+Fujian Petrochemical
+2021
+2020
+2020
+2021
+Sinopec-SK
+2021
+2021
+2020
+RMB million RMB million RMB million RMB million
+6,916
+for the year ended 31 December 2021
+88
+4,854
+7,075
+1,374,680
+1,062,447
+1,367,605
+939,433
+1,380,403
+826,219
+1,212,455
+113,214
+167,948
+162,037
+243,324
+57,513
+87,298
+104,524
+156,026
+2020
+RMB million
+RMB million
+2021
+1,067,301
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+424,774
+70,242
+34,905
+36,864
+4,633
+5,161
+5,718
+6,674
+2,048,654
+2,679,500
+(1,371,215)
+(2,109,426)
+888,227
+1,295,503
+430,073
+732,356
+458,154
+563,147
+362,871
+495,016
+40,702
+322,169
+10,487
+202
+Other operating revenues
+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
+41 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+Financial Statements (International)
+201
+Annual Report 2021
+CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+41 SEGMENT REPORTING
+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
+Revenue from primary business
+External sales
+Corporate and others
+Marketing and distribution
+Chemicals
+Exploration and production
+Refining
+Other operating revenues
+Revenue from primary business
+Elimination of Inter-segment sales
+Inter-segment sales
+External sales
+Corporate and others
+Inter-segment sales
+External sales
+Chemicals
+Inter-segment sales
+External sales
+Marketing and distribution
+Inter-segment sales
+External sales
+Refining
+Inter-segment sales
+Exploration and production
+7,450
+8,758
+2,056
+(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
+The Group is a state-controlled energy and chemical enterprise and operates in an economic regime currently dominated by entities directly
+or indirectly controlled by the PRC government through its government authorities, agencies, affiliations and other organisations (collectively
+referred as "state-controlled entities").
+Apart from transactions with Sinopec Group Company and fellow subsidiaries, the Group has transactions with other state-controlled entities,
+include but not limited to the followings:
+•
+sales and purchases of goods and ancillary materials;
+• rendering and receiving services;
+39 RELATED PARTY TRANSACTIONS (Continued)
+• lease of assets;
+for the year ended 31 December 2021
+Financial Statements (International)
+68
+79
+3,182
+117
+5,181
+9,278
+1,066
+1,593
+Effect of foreign currency
+exchange rate changes
+Cash and cash equivalents
+95
+14
+(164)
+(439)
+(2)
+(8)
+(93)
+(117)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2020
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2,198
+• depositing and borrowing money; and
+uses of public utilities.
+(16,476)
+4,685
+- Chemicals
+- Marketing and distribution
+- Refining
+- Exploration and production
+By segment
+Operating profit/(loss)
+Result
+2020
+RMB million
+RMB million
+2021
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+41 SEGMENT REPORTING (Continued)
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2,104,724
+56,070
+61,384
+2,740,884
+65,279
+⋅
+(5,525)
+20,828
+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
+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).
+200
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+– Exploration and production
+Share of /(loss) from associates and joint ventures
+13,669
+94,628
+4,417
+(4,421)
+Total seperating profit
+- Elimination
+(393)
+(3,225)
+- Corporate and others
+10,818
+11,106
+21,204
+2021
+13,138
+Sinopec-SK
+23,071
+23,196
+16,093
+14,830
+2,893
+3,072
+115,680
+107,461
+2,467
+8,495
+860
+1,923
+1,211
+536
+5,332
+3,675
+165
+10,035
+14,629
+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
+204
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+2021
+RMB million
+20,090
+20,743
+46,273
+52,880
+Chemicals
+Corporate and others
+Depreciation, depletion and amortisation
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+Impairment losses on long-lived assets
+Exploration and production
+Refining
+Marketing and distribution
+Chemicals
+Corporate and others
+2020
+(2) Geographical information
+RMB million
+2020
+RMB million
+68,148
+56,416
+22,469
+24,756
+21,897
+25,403
+51,648
+28,217
+3,786
+2,312
+167,948
+137,104
+2021
+Marketing and distribution
+RMB million
+296,820
+2,740,884
+RMB4,000
+100.00
+Liability Company
+Sinopec Lubricant Company Limited
+RMB3,374
+100.00
+China International United Petroleum and
+RMB5,000
+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
+RMB5,294
+98.98
+Sinopec Yizheng Chemical Fibre Limited
+Production Limited ("SIPL")
+100.00
+RMB8,250
+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
+2,166,040
+278,024
+Sinopec Great Wall Energy & Chemical
+Company Limited
+issued capital
+Interests
+held by the
+Company
+Interests
+held by
+non-controlling
+(million)
+RMB22,761
+%
+100.00
+Sinopec Yangzi Petrochemical Company Limited
+RMB15,651
+100.00
+Sinopec Overseas Investment Holding
+USD3,009
+100.00
+Limited ("SOIH")
+Sinopec International Petroleum Exploration and
+Particulars of
+1.02
+Refining
+Capital expenditure
+304
+766
+298
+37,744
+(9,010)
+109,169
+31 December
+2021
+(9,510)
+48,615
+RMB million
+31 December
+2020
+RMB million
+- Chemicals
+Assets
+Segment assets
+- Exploration and production
+- Refining
+- Marketing and distribution
+Corporate and others
+371,100
+354,024
+304,785
+270,766
+377,499
+373,430
+222,803
+190,789
+133,961
+118,458
+Total segment assets
+1,410,148
+(61)
+(54)
+8,980
+3
+2,783
+2,117
+- Refining
+- Marketing and distribution
+- Chemicals
+- Corporate and others
+662
+(2,516)
+3,731
+2,200
+11,323
+1,723
+4,754
+3,188
+1,307,467
+Aggregate
+23,253
+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
+share of profits from associates and joint ventures
+Exploration and production
+Interest in associates and joint ventures
+188,342
+Short-term debts
+35,252
+23,769
+Income tax payable
+4,809
+6,586
+Long-term debts
+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)
+for the year ended 31 December 2021
+41 SEGMENT REPORTING (Continued)
+(1) Information of reportable segmental revenues, profits or losses, assets and liabilities (Continued)
+703,717
+810,880
+Total segment liabilities
+119,215
+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
+209,179
+Liabilities
+Exploration and production
+- Refining
+- 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
+Segment liabilities
+2020
+Liability Company
+RMB6,397
+22,187
+Non-current liabilities
+(59,604)
+(59,554)
+(17,823)
+(18,270)
+(747)
+(52)
+(700)
+(693)
+(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
+20,650
+12,177
+11,402
+9,106
+(196)
+(924)
+(5,434)
+(2,783)
+(8,122)
+(6,377)
+Net current
+(liabilities)/assets
+(33,716) (29,326) 21,329
+22,145
+5,136
+2,073
+1,322
+1.124
+10,624
+4,565
+632
+7,648
+(1,331)
+(2,738)
+Non-current assets
+326,437
+323,571
+8,954
+8,951
+25,988
+27,314
+13,208
+12,568
+8,195
+3,449
+(458)
+13,678
+233,117
+6,950
+15,123
+14,608
+6,915
+6,500
+5,011
+4,931
+3,441
+5,920
+4,841
+4,485
+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
+6,119
+75,486
+75,560
+non-controlling interests
+234,691
+12,460
+12,826
+30,377
+29,335
+13,830
+12,999
+12,590
+12,385
+10,616
+18.272
+11,807
+10,940
+Attributable to owners
+Net assets
+of the Company
+159,205
+6,341
+5,876
+15,254
+14,727
+6.915
+6,499
+7,579
+7,454
+7.175
+12,352
+6.966
+6,455
+Attributable to
+157,557
+ZhongKe (Guangdong) Refinery & Petrochemical
+3,639
+10,431
+Shanghai SECCO
+RMB500
+67.59
+(2)
+Production and sale of petrochemical
+products
+Sinopec Kantons Holdings Limited
+HKD248
+("Sinopec Kantons")
+Sinopec-SK (Wuhan) Petrochemical Company
+Limited ("Sinopec-SK")
+RMB7,193
+Gaoqiao Petrochemical Company Limited
+RMB10,000
+Sinopec Baling Petrochemical Co.Ltd.
+RMB3,000
+("Baling Petrochemical")
+Sinopec Shanghai Petrochemical Company
+Limited ("Shanghai Petrochemical")
+RMB10,824
+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
+Crude oil processing and petroleum products
+manufacturing
+Manufacturing of synthetic fibres, resin
+and plastics, intermediate petrochemical
+products and petroleum products
+Manufacturing of plastics, intermediate
+petrochemical products and petroleum
+products
+Except for Sinopec Kantons and SOIH, which are incorporated in Bermuda and Hong Kong SAR respectively, all of the above principal subsidiaries
+are incorporated and operate their businesses principally in the PRC. All of the above principal subsidiaries are limited companies.
+Notes:
+(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.
+60.33
+39.67
+petroleum products
+Marketing and distribution of refined
+29.58
+70.42
+90.30
+9.70
+Company Limited
+Sinopec Qingdao Refining and Chemical Company
+RMB5,000
+85.00
+15.00
+Limited
+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
+59.00
+Production and sale of refined petroleum
+products, lubricant base oil, and
+petrochemical materials
+products
+Manufacturing of intermediate petrochemical
+products and petroleum products
+Production and sale of catalyst products
+Trading of petrochemical products
+Marketing and distribution of petrochemical
+products
+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
+RMB28,403
+Trading of crude oil and petrochemical
+6,791
+41.00
+45.00
+159,599
+(193,315)
+RMB million
+22,620
+RMB million RMB million RMB million
+20,932
+17,305
+1,464
+(475)
+(15,796)
+(15,232)
+(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
+6,066
+Current assets
+Current liabilities
+2020
+At
+Sinopec-SK
+At
+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)
+55.00
+Summarised financial information on subsidiaries with material non-controlling interests
+Summarised consolidated statement of financial position
+Marketing Company
+At
+At
+SIPL*
+At
+At
+Shanghai Petrochemical
+At
+At
+Fujian Petrochemical
+At
+At
+Sinopec Kantons
+At
+At
+Shanghai SECCO
+At
+At
+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 31 December
+32.41
+year but less
+35,871
+Long-term debts
+78,300
+85,718
+2,169
+49,390
+27,518
+6,641
+16,563
+18,457
+3,174
+604
+Lease liabilities
+185,406
+35,871
+296,485
+12,031
+10,712
+35,411
+3,967
+233,210
+Derivative financial liabilities
+3,223
+3,223
+3,223
+Trade accounts payable and bills payable
+215,640
+215,640
+215,640
+Other payables
+131,468
+131,468
+15,833
+131,468
+35,252
+More than
+5 years
+RMB million
+67
+345
+519
+3,131
+85
+527
+3,860
+All of the entity's other receivables are considered to have low credit risk, and the loss allowance recognised during the period was therefore
+limited to 12 months expected losses. The Group considers there was no significant increase in credit risk for other receivables by taking into
+account of their past history of making payments when due and current ability to pay, and thus the impairment provision recognised during the
+period was limited to 12 months expected losses.
+Liquidity risk
+Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing
+liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
+conditions, without incurring unacceptable losses or risking damage to the Group's reputation. Management prepares monthly cash flow budget
+to ensure that the Group will always have sufficient liquidity to meet its financial obligations as they fall due. The Group arranges and negotiates
+financing with financial institutions and maintains a certain level of standby credit facilities to reduce the Group's liquidity risk.
+As at 31 December 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
+debts.
+208
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Short-term debts
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+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
+for the year ended 31 December 2021
+107
+665,852
+407,378
+187,033
+328,501
+15,957
+15,456
+10,109
+43,513
+1,428
+253,575
+Derivative financial liabilities
+4,826
+4,826
+4,826
+Trade accounts payable and bills payable
+161,908
+161,908
+Lease liabilities
+161,908
+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)
+(1)
+Other payables
+786,862
+929
+17,978
+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
+23,769
+5,512
+25,280
+72,037
+80,562
+1 year or
+on demand
+RMB million
+25,280
+1,339
+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
+7,056
+Loans from Sinopec Group Company
+and fellow subsidiaries
+17,042
+Long-term debts
+3,341
+Loans from Sinopec Group Company and
+fellow subsidiaries
+182
+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
+207
+Financial Statements (International)
+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)
+Credit risk (Continued)
+(ii) Impairment of financial assets (Continued)
+(ii) Impairment of financial assets
+The following table provides information about the exposure to credit risk and ECLs for accounts receivable as at December 31, 2021 and 2020.
+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
+Impairment provision on
+RMB million
+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.
+(i) Risk management
+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
+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.
+*
+206
+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
+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.
+54.9%
+88.0%
+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.
+The Group's risk management policies are established to identify and analyse the risks faced by the Group, and set appropriate risk limits and
+controls to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
+conditions and the Group's activities. The Group, through its training and management controls and procedures, aims to develop a disciplined and
+constructive control environment in which all employees understand their roles and obligations. Internal audit department undertakes both regular
+and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Group's audit committee.
+Credit risk
+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.
+Current and within 1 year past due
+The Group has exposure to the following risks from its uses of financial instruments:
+34,263
+623
+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
+Over 3 years past due
+218
+8,905
+1 to 2 years past due
+18
+27
+117
+0.0%
+25.2%
+amount
+3,024
+117
+5,023
+610
+39,299
+149
+4,062
+Total
+3,637
+carrying
+34,478
+Impairment provision on
+provision matrix basis
+26
+4,280
+500
+Gross
+0.2%
+57
+83
+137
+35.8%
+181
+2 to 3 years past due
+3,411
+3,324
+3,146
+50.6%
+44
+44
+Over 3 years past due
+Total
+Impairment provision on
+individual basis
+3,190
+534
+3,499
+579
+4,033
+389
+100.0%
+190
+208
+8,312
+38,894
+597
+157,437
+2,017
+2,166
+110,423
+56,052
+108,406
+159,603
+2,017
+(44,595)
+(49,649)
+(48,674)
+(975)
+(43,487)
+(1,108)
+(12,382)
+58,069
+(12,382)
+Exploration expenses
+Production costs excluding taxes
+2,166
+Total
+86,650
+218
+Gas Producing Activities (Unaudited)
+(9,716)
+Financial Statements
+Supplemental Information on Oil and
+Gas Producing Activities (Unaudited)
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table III: Results of operations related to oil and gas producing activities
+The Group
+Revenues
+Sales
+84,484
+China
+2020
+RMB million
+Total
+China
+Other
+countries
+72,953
+72,953
+52,354
+52,354
+Transfers
+2021
+RMB million
+Other
+countries
+(9,716)
+(3,930)
+impairment losses
+188
+Results of operation from producing activities
+23,994
+23,616
+378
+(3,687)
+243
+Equity method investments
+Revenues
+Sales
+8,812
+8,812
+Production costs excluding taxes
+Exploration expenses
+(2,246)
+8,812
+4,913
+8,812
+Supplemental Information on Oil and
+4,913
+188
+Depreciation, depletion, amortisation and
+(353)
+(8,225)
+(54,104)
+(53,644)
+(460)
+(52,608)
+(51,754)
+(854)
+Taxes other than income tax
+(11,249)
+(11,249)
+(7,379)
+(7,379)
+Profit before taxation
+32,219
+31,488
+731
+(3,875)
+(3,930)
+55
+Income tax expense
+(7,872)
+Financial Statements
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+237,537
+235,625
+(38,918)
+1,912
+(742,195)
+237,480
+(702,829)
+(39,366)
+235,914
+1,566
+Equity method investments
+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
+Net capitalised costs
+243,323
+(748,705)
+and impairment losses
+(2,246)
+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
+938,743
+40,932
+Accumulated depreciation, depletion, amortisation
+(787,623)
+235,914
+7,409
+Table II: Costs incurred in oil and gas exploration and development
+67,909
+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
+Total costs incurred
+605
+37,636
+38,241
+2021
+2020
+RMB million
+RMB million
+Total
+China
+Other
+countries
+Total
+China
+217
+Other
+countries
+Exploration
+21,762
+21,762
+16,752
+16,752
+Development
+46,147
+45,590
+557
+The Group
+(998)
+7,216
+4,913
+102
+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
+24
+Revisions of previous estimates
+32
+107
+32
+Beginning of year
+15
+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
+Proved undeveloped reserves
+171
+171
+Improved recovery
+End of year
+6,734
+6,734
+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
+1,824
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+219
+Financial Statements
+6,026
+6,026
+6,357
+6,357
+666
+666
+692
+Extensions and discoveries
+678
+678
+1,171
+1,171
+Production
+Non-controlling interest in proved developed and
+(1,108)
+(1,069)
+(1,069)
+End of year
+8,449
+8,449
+8,181
+8,181
+Proved developed reserves
+Beginning of year
+(1,108)
+4,913
+20
+1,252
+(303)
+(303)
+1,287
+742
+742
+25,281
+23,616
+1,665
+(2,945)
+(3,930)
+985
+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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table IV: Reserve quantities information
+The Group's and its equity method investments' estimated net proved underground oil and gas reserves and changes thereto for the years ended 31
+December 2021 and 2020 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.
+(355)
+2021
+(355)
+1,045
+(998)
+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
+1,287
+Total of the Group's and its equity method investments'
+results of operations for producing activities
+(533)
+(533)
+(940)
+(940)
+(4,391)
+(4,391)
+(1,930)
+(1,930)
+1,642
+1,642
+1,045
+2020
+China
+Other
+countries
+141
+109
+109
+Extensions and discoveries
+101
+101
+111
+111
+Production
+(248)
+(243)
+(5)
+(257)
+(250)
+(7)
+End of year
+1,440
+1,416
+24
+141
+Improved recovery
+10
+(171)
+Other
+Total
+China
+countries
+Total
+The Group
+Proved developed and undeveloped reserves (oil)
+(million barrels)
+Beginning of year
+1,232
+1,252
+20
+1,450
+1,433
+17
+Revisions of previous estimates
+194
+185
+9
+(161)
+1,232
+188,742
+Balance at 1 January
+Supporting equipments and facilities
+Long-term prepayments and other assets
+269,456
+259,087
+73,782
+69,508
+17,609
+14,761
+201
+428
+8,715
+12,661
+38,848
+30,855
+Total non-current assets
+Current assets
+872,679
+846,863
+Cash and cash equivalents
+34,575
+Deferred tax assets
+28,081
+Financial assets at fair value through other comprehensive income
+Interest in associates
+STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Amounts in million)
+Note
+31 December
+31 December
+2021
+2020
+RMB
+RMB
+Non-current assets
+Property, plant and equipment, net
+284,618
+283,691
+Construction in progress
+Right-of-use assets
+66,146
+59,880
+113,304
+115,992
+Investment in subsidiaries
+Interest in joint ventures
+46 STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY
+Time deposits with financial institutions
+71,107
+24,387
+21,571
+Loans from Sinopec Group Company and fellow subsidiaries
+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
+Short-term debts
+76,116
+Current liabilities
+275,105
+Derivative financial assets
+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
+63,661
+39,034
+Prepaid expenses and other current assets
+73,906
+53,816
+Total current assets
+223,080
+for the year ended 31 December 2021
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Financial Statements (International)
+1,376
+1,525
+- Trade accounts receivable and bills receivable
+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
+4,826
+4,826
+During the years ended 31 December 2021 and 2020, there was no transfer between instruments in Level 1 and Level 2.
+Management of the Group uses discounted cash flow model with inputted interest rate and commodity index, which were influenced by historical
+fluctuation and the probability of market fluctuation, to evaluate the fair value of the structured deposits and trade accounts receivable and bills
+receivable classified as Level 3 financial assets.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+149
+211
+Equity instruments
+12,528
+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:
+- Equity investments, listed and at quoted market price
+1
+1
+Derivative financial assets:
+- Derivative financial assets
+9,628
+2,900
+Financial assets at fair value through other comprehensive income:
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+Financial Statements (International)
+212
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+213
+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 estimates of proved and proved developed reserves also change. This change is considered a change in estimate for accounting
+purposes and is reflected on a prospective basis in relation to depreciation rates. Oil and gas reserves have a direct impact on the assessment of
+the recoverability of the carrying amounts of oil and gas properties reported in the financial statements. If proved reserves estimates are revised
+downwards, earnings could be affected by changes in depreciation expense or an immediate write-down of the property's carrying amount.
+The accounting for the exploration and production's oil and gas activities is subject to accounting rules that are unique to the oil and gas industry.
+There are two methods to account for oil and gas business activities, the successful efforts method and the full cost method. The Group has elected
+to use the successful efforts method. The successful efforts method reflects the volatility that is inherent in exploring for mineral resources in that
+costs of unsuccessful exploratory efforts are charged to expense as they are incurred. These costs primarily include dry hole costs, seismic costs
+and other exploratory costs. Under the full cost method, these costs are capitalised and written-off or depreciated over time.
+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
+Non-current liabilities
+88,593
+85.610
+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.
+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.
+44 ACCOUNTING ESTIMATES AND JUDGEMENTS
+The Group's financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that underlie the
+preparation of the consolidated financial statements. Management bases the assumptions and estimates on historical experience and on
+various other assumptions that it believes to be reasonable and which form the basis for making judgements about matters that are not readily
+apparent from other sources. On an ongoing basis, management evaluates its estimates. Actual results may differ from those estimates as facts,
+circumstances and conditions change.
+The selection of critical accounting policies, the judgements and other uncertainties affecting application of such policies and the sensitivity of
+reported results to changes in conditions and assumptions are factors to be considered when reviewing the consolidated financial statements. The
+significant accounting policies are set forth in Note 2. Management believes the following critical accounting policies involve the most significant
+judgements and estimates used in the preparation of the consolidated financial statements.
+Oil and gas properties and reserves
+31 December
+Long-term debts
+Loans from Sinopec Group Company and fellow subsidiaries
+Lease liabilities
+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)
+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
+2021
+RMB million
+916,041
+31 December
+2020
+RMB million
+117,550
+404,391
+Shareholders' equity under CASS
+Adjustments:
+(240)
+(1,857)
+117,000
+117,000
+8,881
+3,912
+12
+(182)
+102
+4,911
+469
+240
+9,464
+8,881
+116,919
+131,674
+39,950
+18,821
+(35,110)
+(31,479)
+(3,944)
+(469)
+204
+888,720
+Government grants
+(i)
+(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
+China
+Other
+countries
+The Group
+Property cost, wells and related equipments
+and facilities
+793,045
+752,352
+40,693
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+*
+42,271
+(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
+117,000
+2020
+RMB million
+42,097
+Government grants
+Safety production fund
+Others
+(i)
+(ii)
+51
+52
+775
+237
+Profit for the year under IFRS*
+(5)
+85,851
+(115)
+Adjustments:
+188,766
+117,000
+96,224
+35,271
+36,089
+3,955
+4,472
+209,432
+203,642
+525,462
+521,383
+121,071
+121,071
+(a)
+404,391
+400,312
+525,462
+521,383
+214
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+for the year ended 31 December 2021
+105,691
+46 STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY (Continued)
+(a) RESERVES MOVEMENT OF THE COMPANY
+104,426
+9,015
+Provisions
+Other long-term liabilities
+Total non-current liabilities
+Equity
+Share capital
+Reserves
+Total equity
+7,505
+5,840
+280,560
+234,844
+412,890
+344,918
+137,785
+121,838
+734,894
+725,025
+56,765
+49,311
+8,079
+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
+The Company
+2021
+RMB million
+2020
+RMB million
+9,382
+9,247
+(1,079)
+135
+8,303
+9,382
+55,850
+55,850
+55,850
+55,850
+92,280
+90,423
+3,944
+1,857
+Special reserve
+Appropriation
+Distribution to owners (Note 14)
+Profit for the year
+Others
+Balance at 31 December
+Share premium
+Supplemental Information on Oil and
+Balance at 31 December
+Statutory surplus reserve
+Balance at 1 January
+Appropriation
+Balance at 31 December
+92,280
+Discretionary surplus reserve
+Balance at 31 December
+Other reserves
+Balance at 1 January
+Share of other comprehensive income of associates and joint ventures, net of deferred tax
+Cash flow hedges, net of deferred tax
+Special reserve
+Balance at 31 December
+Retained earnings
+Balance at 1 January
+Balance at 1 January
+Gas Producing Activities (Unaudited)
+692
+- Trade accounts receivable and bills receivable
+RMB million
+RMB million
+RMB million
+Total
+RMB million
+5,883
+12,488
+18,371
+179
+588
+Level 3
+5,939
+12,488
+210
+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.
+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).
+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.
+The Group engages in oil and gas operations and is exposed to commodity price risk related to price volatility of crude oil, refined oil products
+and chemical products. The fluctuations in prices of crude oil, refined oil products and chemical products could have significant impact on the
+Group. The Group uses derivative financial instruments, including commodity futures and swaps contracts, to manage a portion of this risk.
+(c) Commodity price risk
+As at 31 December 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.
+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.
+6,062
+Level 2
+Level 1
+Assets
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Fair values
+(i) Financial instruments carried at fair value
+The following table presents the carrying value of financial instruments measured at fair value at the date of the statement of financial position
+across the three levels of the fair value hierarchy defined in IFRS 7, 'Financial Instruments: Disclosures', with the fair value of each financial
+instrument categorised in its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are defined
+as follows:
+•
+•
+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
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Liabilities
+Derivative financial liabilities:
+- Derivative financial liabilities
+At 31 December 2020
+(b) Interest rate 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.
+(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.
+for the year ended 31 December 2021
+Financial Statements (International)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+43 FINANCIAL RISK MANAGEMENT AND FAIR VALUES (Continued)
+Market risk
+for the year ended 31 December 2021
+COPIES OF THIS ANNUAL REPORT ARE
+The PRC:
+E-mail addresses
+86-10-59960386
+: http://www.sinopec.com
+ir@sinopec.com
+REGISTERED ADDRESS CHANGE INFORMATION
+No change during the reporting period
+PLACE OF BUSINESS IN HONG KONG
+AVAILABLE AT
+20th Floor, Office Tower
+Website
+Wanchai
+Hong Kong
+CHANGES IN THE PLACES FOR INFORMATION
+DISCLOSURE AND THE PROVISION OF
+REPORTS
+No change during the reporting period
+LEGAL ADVISORS
+Convention Plaza
+1 Harbour Road
+8th Floor, Prince's Building
+10 Chater Road Central,
+Hong Kong
+Council Ordinance
+NAMES AND ADDRESSES OF AUDITORS OF
+SINOPEC CORP.
+Domestic
+Auditors
+Address
+: KPMG Huazhen LLP
+Certified Public Accountants in
+China
+: 8th Floor
+Fax
+KPMG Tower
+1 East Chang An Avenue,
+Beijing, PRC
+Postcode
+: 100738
+Overseas
+: KPMG
+Auditors
+Address
+Oriental Plaza
+Public Interest Entity
+46
+: SNP
+No. 1, Jian Guo Men Wai Avenue,
+30/F, China World Office 2
+Skadden, Arps, Slate, Meagher & Flom LLP
+U.S.A.:
+Central, Hong Kong
+15 Queen's Road
+23rd Floor, Gloucester Tower
+Herbert Smith Freehills
+Hong Kong:
+86-10-59960028
+: 100728
+Tel.
+Beijing, PRC
+Postcode
+Chaoyang District
+No.22 Chaoyangmen North Street,
+REGISTERED ADDRESS AND PLACE OF
+BUSINESS
+Mr. Zhang Zheng
+REPRESENTATIVE ON SECURITIES MATTERS
+Mr. Huang Wensheng
+SECRETARY TO THE BOARD
+Mr. Huang Wensheng
+Mr. Yu Baocai
+AUTHORISED REPRESENTATIVES
+Mr. Ma Yongsheng
+LEGAL REPRESENTATIVE
+Beijing, PRC
+REGISTRARS
+A Shares:
+China Securities Registration and Clearing
+Company Limited Shanghai Branch Company
+188 Yanggao South Road
+London Stock Exchange
+Stock code
+: SNP
+New York Stock Exchange
+Stock code
+: 00386
+ADRs:
+Stock code
+Hong Kong Stock Exchange
+H Shares:
+Stock code : 600028
+: SINOPEC CORP
+Stock name
+Shanghai Stock Exchange
+A Shares:
+NAMES AND STOCK CODES
+PLACES OF LISTING OF SHARES, STOCK
+United States of America
+New York NY 10013
+388 Greenwich St., 14th Floor
+Citibank, N.A.
+The US:
+DEPOSITARY FOR ADRS
+Hong Kong
+183 Queen's Road East
+R1712·1716, 17th Floor, Hopewell Centre
+Hong Kong Registrars Limited
+H Shares:
+Shanghai Pilot Free Trade Zone, PRC
+China Petroleum & Chemical Corporation
+Board Secretariat
+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.;
+Chaoyang District
+Extensions and discoveries
+35
+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
+-
+-
+1
+1
+(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
+263
+Equity method investments
+associates and joint ventures (oil) (million barrels)
+Beginning of year
+290
+290
+Revisions of previous estimates
+8
+8
+290
+13
+290
+13
+Improved recovery
+Proved developed and undeveloped reserves of
+263
+244
+244
+DOCUMENTS FOR INSPECTION
+Documents for Inspection
+Corporate Information
+223
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Postcode: 100020
+Beijing PRC
+No.5, Dong San Huan Central Road
+Chaoyang District
+20th Floor, Fortune Financial Centre
+Haiwen & Partners
+224
+People's Republic of China:
+Canada Square, Canary Wharf
+Citigroup Centre
+Citibank, N.A.
+The UK:
+USA
+New York NY 10013
+388 Greenwich St., 14th Floor
+Citibank, N.A.
+The US:
+Beijing, PRC
+London E14 5LB, U.K.
+No.22 Chaoyangmen North Street,
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+a) The original copies of the 2021 annual report
+signed by Mr. Ma Yongsheng, the Chairman;
+Proved undeveloped reserves
+Beginning of year
+46
+46
+45
+End of year
+46
+Printed on environmentally friendly paper
+www.sinopec.com
+Beijing, China
+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:
+22 Chaoyangmen North Street, Chaoyang District,
+SINOPEC CORP.
+中国石油化工股份有限公司
+If there is any inconsistency between the Chinese
+and English versions of this annual report, the
+Chinese version shall prevail.
+Beijing, PRC, 25 March 2022
+Chairman
+Ma Yongsheng
+By Order of the Board
+d) Copies of the documents and announcements
+that Sinopec Corp. has published in the
+newspapers designated by the CSRC during
+the reporting period.
+c) The original auditors' reports signed by the
+auditors; and
+Sinopec Corp.
+中國北京市朝陽區朝陽門北大街 22 號
+ENGLISH ABBREVIATION
+Auditor registered in accordance
+with the Financial Reporting
+CHINESE ABBREVIATION
+Future income tax expenses
+Future development costs
+Future production costs
+Future cash flows
+Equity method investments
+10% annual discount for estimated timing of cash flows
+Standardised measure of discounted future net cash flows
+Discounted future net cash flows attributable to
+non-controlling interests
+Undiscounted future net cash flows
+Future income tax expenses
+Future development costs
+Future production costs
+Future cash flows
+The Group
+The information provided does not represent management's estimate of the Group's and its equity method investments' expected future cash flows or
+value of proved oil and gas reserves. Estimates of proved reserve quantities are imprecise and change over time as new information becomes available.
+Moreover, probable and possible reserves, which may become proved in the future, are excluded from the calculations. The arbitrary valuation requires
+assumptions as to the timing and amount of future development and production costs. The calculations are made for the years ended 31 December
+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 standardized measure of discounted future net cash flows, related to the above proved oil and gas reserves, is calculated in accordance with
+the requirements of "ASC Topic 932 Extractive Activities - Oil and Gas", "SEC Rule 4-10 of Regulation S-X", and "Industrial Information Disclosure
+Guidelines for Public Company - No.8 Oil and Gas Exploitation". Estimated future cash inflows from production are computed by applying the average,
+first-day-of-the-month price adjusted for differential for oil and gas during the twelve-month period before the ending date of the period covered by
+the report to year-end quantities of estimated net proved reserves. Future price changes are limited to those provided by contractual arrangements in
+existence at the end of each reporting year. Future development and production costs are those estimated future expenditures necessary to develop and
+produce year-end estimated proved reserves based on year-end cost indices, assuming continuation of year-end economic conditions. Estimated future
+income taxes are calculated by applying appropriate year-end statutory tax rates to estimated future pre-tax net cash flows, less the tax basis of related
+assets. Discounted future net cash flows are calculated using 10% discount factors. This discounting requires a year-by-year estimate of when the future
+expenditure will be incurred and when the reserves will be produced.
+Table V: Standardised measure of discounted future net cash flows
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+220 Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+10
+8,181
+8,191
+7
+8,449
+8,456
+End of year
+9
+7,216
+7,225
+10
+8,181
+Undiscounted future net cash flows
+8,191
+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
+2020 (Revised) Note
+RMB million
+333,534
+334,849
+(1,237)
+(10,521)
+(11,758)
+(2,420)
+(111,178)
+(113,598)
+(3,126)
+(77,659)
+(80,785)
+(1,875)
+(77,687)
+(79,562)
+(3,585)
+(271,824)
+5,500
+589,659
+595,159
+(275,409)
+10,713
+(5,103)
+930,302
+(407,903)
+941,015
+(413,006)
+countries
+China
+Total
+Other
+Other
+countries
+China
+Total
+2021
+RMB million
+1,315
+Beginning of year
+Proved developed and undeveloped reserves (gas)
+(4)
+4
+4
+1
+1
+9
+9
+10
+10
+Total of the Group and its equity method investments
+End of year
+Beginning of year
+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)
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+Proved developed and undeveloped reserves of
+45
+46
+(4)
+(billion cubic feet)
+(3)
+7
+310
+1,232
+1,542
+333
+1,416
+1,749
+End of year
+307
+1,433
+1,740
+310
+中国石化
+1,542
+Beginning of year
+Proved developed and undeveloped reserves (oil)
+(million barrels)
+2
+2
+21
+21
+8
+8
+6
+9
+9
+8
+86
+10
+10
+7
+(3)
+227,207
+1,232
+(2,448)
+31,940
+16,448
+6,684
+5,475
+(11,211)
+26,613
+44,602
+62,449
+(11,628)
+(7,413)
+(122,641)
+135,697
+(58,449)
+(98,705)
+Net changes for the year
+Net changes in income taxes
+Accretion of discount
+Previously estimated development costs incurred during the year
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+Net changes in estimated future development cost
+Sales and transfers of oil and gas produced, net of production costs
+Net changes in prices and production costs
+Equity method investments
+Net changes for the year
+Net changes in income taxes
+Previously estimated development costs incurred during the year
+Accretion of discount
+Net changes due to extensions, discoveries and improved recoveries
+Revisions of previous quantity estimates
+Net changes in estimated future development cost
+Net changes in prices and production costs
+Sales and transfers of oil and gas produced, net of production costs
+(72,118)
+The Group
+19,375
+(101,328)
+229,655
+China Petroleum & Chemical Corporation
+ENGLISH NAME
+中国石油化工股份有限公司
+STATUTORY NAME
+CORPORATE INFORMATION
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+222
+(105,604)
+72,666
+Total of the Group's and its equity method investments' results of net changes for the year
+(4,276)
+4,220
+1,180
+(1,292)
+979
+1,022
+232
+287
+437
+402
+369
+1,760
+(299)
+(752)
+(5,190)
+4,967
+(1,984)
+(2,174)
+68,446
+2020 (Revised)
+RMB million
+46
+2021
+(4,513)
+(4,513)
+(5,712)
+(5,712)
+(6,328)
+(6,328)
+(13,050)
+(13,050)
+(18,026)
+(18,026)
+31,259
+31,259
+49,217
+49,217
+(1,740)
+(1,284)
+370
+(3,900)
+176,949
+173,049
+1,125
+240,370
+241,495
+(1,452)
+(52,706)
+(54,158)
+(190)
+(93,164)
+(93,354)
+RMB million
+370
+(1,740)
+(1,284)
+20,350
+(D) SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED)
+Table VI: Changes in the standardised measure of discounted cash flows
+20,350
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+Gas Producing Activities (Unaudited)
+Supplemental Information on Oil and
+Financial Statements
+Annual Report 2021
+CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+2,029
+5,929
+221
+10,149
+10,757
+176,949
+178,978
+11,274
+240,370
+(10,201)
+251,644
+5,929
+10,757
+(4,828)
+(4,828)
+(10,201)
+10,149
+1,289
+17.4
+2,797
+7,521
+3.8
+6,407
+1,364
+981
+11,104
+7,986
+39.0
+1,181
+1,403
+(16.9)
+1,950
+(5.5)
+1,457
+48.8
+7,150
+2020 Change (%)
+43.4
+2021
+2.0
+5,311
+3,569
+7,010
+16.4
+9,743
+6,580
+4,302
+53.0
+17,924
+17,124
+4.7
+8,325
+(28.1)
+(5) Corporate and Others
+Unit: RMB million
+Synthetic fibre monomer and polymer
+Share capital
+Reserves
+Non-controlling interests
+Total equity
+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:
+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.
+Non-current assets was RMB1,331.2
+billion, representing an increase of
+RMB48.0 billion as compared with that
+Total equity attributable to shareholders of the Company
+2020 Change (%)
+47,109
+As of
+31 December
+1,889,255
+558,024
+2020
+1,738,896
+Change
+150,359
+455,660
+As of
+31 December
+2021
+Non-current liabilities
+Current liabilities
+Total liabilities
+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
+Current assets
+Non-current assets
+Basic organic chemicals
+48,059
+20,828
+Sales Volume (Thousand tonnes)
+Year ended 31 December
+2021
+Gasoline
+2021
+Average realised price (RMB/tonne)
+Year ended 31 December
+4,955
+31.9
+Diesel
+78,566
+90,873
+77,507
+5,890
+4,865
+21.1
+Retail
+33,644
+36,757
+(8.5)
+1.4
+6,537
+2020 Change (%)
+86,216
+2020 Change (%)
+102,364
+6,537
+7.2
+24,770
+26,548
+Direct sales and distribution
+18.5
+2021
+6,940
+4.7
+61,446
+64,325
+Retail
+21.4
+6,370
+7,730
+8,223
+5,351
+22.2
+Direct sales and distribution
+23
+and Analysis
+24
+Management's Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+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.
+23
+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
+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.
+(4) Chemicals segment
+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.
+promoted company-owned and actively
+explored emerging business models to
+maintain the increase of volume and
+profit of non-fuel business.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+35.6
+2,536
+44,923
+40,750
+10.2
+5,406
+4,426
+22.1
+Kerosene
+21,296
+2.2
+3,772
+2,634
+43.2
+Fuel oil
+25,847
+23,331
+10.8
+3,437
+Average realised price (RMB/tonne)
+Year ended 31 December
+5.4
+Management's Discussion
+and Analysis
+47,995
+33.2
+4,685
+(16,476)
+1,385,564
+944,066
+46.8
+Operating expenses
+1,320,285
+949,591
+39.0
+Operating profit/(loss)
+65,279
+(5,525)
+184,231
+Marketing and Distribution Segment
+1,411,544
+1,283,236
+28.1
+Operating expenses
+1,390,340
+21,204
+1,081,378
+28.6
+20,828
+1.8
+505,503
+371,629
+36.0
+494,397
+Operating revenues
+245,313
+49.0
+167,755
+Management's Discussion
+and Analysis
+Management's Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+The following table sets forth the operating revenues, operating expenses and operating profit by each segment before elimination of the inter-
+segment transactions for the periods indicated, and the percentage change of 2021 compared to 2020.
+Year ended 31 December
+2021
+2020
+RMB million
+Change
+RMB million
+(%)
+Exploration and Production Segment
+Operating revenues
+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
+Operating expenses
+Operating profit/(loss)
+Refining Segment
+Operating revenues
+249,998
+360,811
+37.0
+11,106
+10,818
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Management's Discussion
+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.
+Sales Volume (thousand tonnes)
+Year ended 31 December
+Gasoline
+Diesel
+Kerosene
+Chemical feedstock
+Other refined petroleum products
+In 2021, sales revenue of gasoline was
+RMB460.1 billion, representing an
+increase of 40.7% over 2020.
+The sales revenue of diesel was
+RMB327.1 billion, representing an
+increase of 22.8% over 2020.
+The sales revenue of kerosene was
+RMB64.6 billion, representing an increase
+of 39.7% over 2020.
+The sales revenue of chemical feedstock
+was RMB180.4 billion, representing an
+increase of 74.3% over 2020.
+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 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.
+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
+Average realised price (RMB/tonne)
+Year ended 31 December
+2021
+2020 Change (%)
+2021
+2020 Change (%)
+63,827
+56,259
+13.5
+7,208
+5,813
+24.0
+58,807
+61,167
+22
+21
+22
+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.
+2.7
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+1,297,701
+890,283
+45.8
+1,300,926
+890,676
+46.1
+(3,225)
+(4,421)
+(393)
+4,417
+Operating profit
+Chemicals Segment
+Operating revenues
+Operating expenses
+Operating profit
+Corporate and Others
+Operating revenues
+Operating expenses
+Operating loss
+Elimination of inter-segment profit/(loss)
+(1) Exploration and Production Segment
+Most crude oil and a small portion of the
+natural gas produced by the exploration
+and production segment were used for
+the Company's refining and chemical
+production. Most of the natural gas and
+a small portion of crude oil were sold
+externally to other customers.
+In 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.
+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.
+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:
+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 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.
+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.
+(2) Refining Segment
+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.
+(3.9)
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+*
+(%)
+(%)
+(%)
+162,700
+110,242
+3.4
+3.2
+5.9
+5.2
+87,298
+57,513
+1.8
+1.7
+(%)
+Operating revenues
+167,755
+5.2
+4.9
+Refining Segment
+External sales*
+173,109
+117,847
+3.6
+3.4
+6.3
+5.6
+Inter-segment sales
+1,212,455
+249,998
+2020
+2021
+As a percentage of
+consolidated operating
+revenue after elimination
+of inter-segment sales
+Year ended 31 December
+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.
+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.
+(2) Operating expenses
+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:
+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:
+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.
+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.
+Selling, general and administrative
+expenses was RMB55.0 billion,
+representing an increase of 2.4% over
+2020.
+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.
+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.
+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.
+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.
+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.
+(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.
+(4) Profit before taxation was RMB109.2
+billion, representing an increase of
+124.6% compared with 2020.
+(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.
+(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.
+(7) Profit attributable to shareholders of
+the Company was RMB72.0 billion,
+representing a year-on-year increase of
+115.2%.
+20
+20
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+2 RESULTS OF SEGMENT OPERATIONS
+The Company manages its operations through four business segments, namely exploration and production segment, refining segment, marketing
+and distribution segment and chemicals segment, and corporate and others. Unless otherwise specified, the inter-segment transactions have not
+been eliminated from financial data discussed in this section. In addition, the operating revenue data of each segment include other operating
+revenues.
+The following table shows the operating revenues by each segment, the contribution of external sales and inter-segment sales as a percentage
+of operating revenues before elimination of inter-segment sales, and the contribution of external sales as a percentage of consolidated operating
+revenues (i.e. after elimination of inter-segment sales) for the periods indicated.
+Exploration and Production Segment
+External sales*
+Inter-segment sales
+Operating revenues
+Year ended 31 December
+2021
+2020
+RMB million RMB million
+As a percentage of
+consolidated operating
+revenue before elimination
+of inter-segment sales
+Year ended 31 December
+2021
+2020
+826,219
+24.9
+23.7
+Operating revenues
+9.0
+9.5
+16.0
+15.2
+70,242
+40,702
+1.4
+1.2
+505,503
+371,629
+10.4
+10.7
+565,345
+460,210
+11.7
+13.2
+20.6
+21.9
+732,356 430,073
+1,297,701 890,283
+15.1
+12.4
+26.8
+25.6
+4,850,310 3,475,939
+100.0
+100.0
+(2,109,426) (1,371,215)
+2,740,884 2,104,724
+100.0
+100.0
+330,927
+Other operating revenues are included.
+435,261
+Elimination of inter-segment sales
+1,385,564
+944,066
+28.5
+27.1
+Marketing and Distribution Segment
+External sales*
+1,404,469
+1,097,352
+29.0
+31.6
+51.2
+52.1
+Inter-segment sales
+Operating revenues
+7,075
+1,411,544
+4,854
+0.1
+0.1
+1,102,206
+29.1
+31.7
+Chemicals Segment
+External sales*
+External sales*
+Inter-segment sales
+Operating revenues
+Corporate and Others
+Inter-segment sales
+Operating revenues
+Operating revenue before elimination of inter-segment sales
+Revenue
+5,563
+1,102,206
+27.8
+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.
+(1) Under CASS, the operating income and operating profit or loss by reportable segments were as follows:
+Operating income
+Exploration and Production Segment
+Refining Segment
+Marketing and Distribution Segment
+Year ended 31 December
+2021
+RMB million
+249,998
+1,385,564
+1,411,544
+2020
+RMB million
+167,755
+944,066
+1,102,206
+Chemicals Segment
+4 ANALYSIS OF FINANCIAL STATEMENTS PREPARED UNDER CASS
+Self-owned fund
+Self-owned fund
+Self-owned fund
+Self-owned fund
+157
+7,545
+Other equity instruments investment
+Total
+1,525
+9,228
+1,350
+13,798
+767
+15,915
+(14,873)
+694
+Corporate and Others
+15,659
+(6)
+15,653
+Impairment
+loss
+provision
+of the
+current year
+Unit: RMB million
+Funding
+source
+(14,179)
+Elimination of inter-segment sales
+Consolidated operating income
+Operating profit/(loss)
+9,592
+(2,048)
+(4,421)
+4,417
+6,878
+46,304
+112,414
+50,803
+9,521
+71,208
+Net profit attributable to equity shareholders of the Company
+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: 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+27
+Management's Discussion
+and Analysis
+33,271
+Cash flow hedges
+11,361
+23,102
+Exploration and Production Segment
+Refining Segment
+Marketing and Distribution Segment
+Chemicals Segment
+Corporate and Others
+Elimination of inter-segment sales
+Financial expenses, investment income, losses from changes in fair value,
+(20,570)
+(6,526)
+19,634
+other income and asset disposal gains/(losses)
+505,503
+371,629
+1,297,701
+(2,109,426)
+2,740,884
+890,283
+(1,371,215)
+2,104,724
+613
+65,360
+Consolidated operating profit
+28
+Derivative financial instruments
+Stock
+915,074
+887,702
+27,372
+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.
+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:
+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
+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.
+Non-current liabilities was RMB332.9
+billion, representing an increase of
+RMB4.7 billion compared with that of the
+end of 2020.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+25
+Management's
+Discussion
+and Analysis
+Management's Discussion
+(485)
+141,377
+140,892
+27,857
+974,181
+851,194
+122,987
+641,280
+522,995
+118,285
+332,901
+and Analysis
+328,199
+774,182
+746,325
+27,857
+121,071
+121,071
+653,111
+625,254
+4,702
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+(2) Cash Flow
+The following table sets forth the major items in the consolidated cash flow statements for 2021 and 2020.
+26
+26
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Items relevant to measurement of main fair values
+Beginning
+End of
+Items
+The Company has established sound
+decision-making mechanism, business
+process and internal control systems
+relevant to financial instrument
+accounting and information disclosure.
+of the year
+Profits and
+losses from
+Accumulated
+variation of
+fair values
+in the
+current year
+variation of
+fair values
+recorded
+as equity
+Financial assets held for trading
+1
+the year
+1
+(6) Measurement of fair values of derivatives
+and relevant system
+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.
+Unit: RMB million
+Major items of cash flows
+Net cash generated from operating activities
+Net cash used in investing activities
+Net cash used in financing activities
+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.
+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 used in the
+Company's financing activities was
+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.
+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.
+(3) Contingent Liabilities
+Please refer to "Material Guarantee
+Contracts and Their Performance" in the
+"Significant Events" section of this report.
+(4) Capital Expenditure
+Please refer to "Capital Expenditures"
+in the "Business Review and Prospects"
+section of this report.
+Year ended 31 December
+2021
+225,174
+(145,198)
+(57,942)
+(5) Research & Development and
+Environmental Expenditures
+2020
+168,520
+(102,650)
+(37,510)
+At the end of 2021, the cash and cash
+equivalents was RMB108.6 billion.
+4,354
+1,331,231
+49.0
+RMB million
+Operation
+cost
+RMB million
+Gross profit
+margin (%)
+of operation
+Increase of
+income on a operation cost
+year-on-year on a year-on-
+basis (%) year basis (%)
+gross profit
+margin on a
+year-on-year
+basis (%)
+Exploration and Production
+Refining
+249,998
+1,385,564
+Segments
+206,332
+1,061,650
+37.3
+7.0
+6.0
+46.8
+50.8
+4.0
+Chemicals
+Corporate and Others
+1,411,544
+1,317,918
+12.9
+Operation
+income
+Increase/
+(decrease) of
+Increase
+Management's Discussion
+and Analysis
+MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
+(2) Financial data prepared under CASS
+Total assets
+Non-current liabilities
+Shareholder's equity
+Change analysis:
+As of 31
+December 2021
+RMB million
+1,889,255
+331,934
+916,041
+As of 31
+December 2020
+RMB million
+Change
+1,738,896
+150,359
+327,181
+4,753
+888,720
+27,321
+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.
+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 shareholders' equity of the Company was RMB916.0 billion, representing an increase of RMB27.3 billion compared with
+that of the end of 2020.
+(3) The results of the principal operations by segments
+6.4
+28.1
+Marketing and Distribution
+(0.9)
+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
+29.4
+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.
+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.
+68.5
+3.004
+5,061
+5.3
+65,353
+68,783
+53.7
+2,596
+3,989
+13.5
+39,872
+45,234
+39.7
+2,673
+3,734
+0.0
+17,309
+17,313
+(3) Marketing and distribution segment
+The business activities of the marketing
+and distribution segment include
+purchasing refined oil products from the
+refining segment and the third parties,
+conducting direct sales and wholesale
+to domestic customers and retailing,
+distributing oil products through the
+segment's retail and distribution network
+as well as providing related services.
+In 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.
+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
+505,503
+466,971
+6.9
+36.0
+38.8
+(2.0)
+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:
+1,268,685
+2.2
+45.8
+45.1
+1,297,701
+2,216,551
+Elimination of inter-segment sales
+(2,109,426)
+(2,105,005)
+N/A
+N/A
+N/A
+N/A
+Total
+2,740,884
+0.4
+Corporate Governance
+32
+32
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+8 SENIOR MANAGEMENT APPRAISAL AND
+INCENTIVE SCHEMES
+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.
+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.
+31
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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
+4 COMPANY'S INDEPENDENCE FROM
+CONTROLLING SHAREHOLDER
+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).
+3 EQUITY INTERESTS OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+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.
+2 GENERAL MEETINGS
+During the reporting period, there was no
+material inconsistency between Sinopec
+Corp.'s corporate governance and the
+requirements of the PRC Company Law
+and relevant regulations of the CSRC. The
+Board of Supervisors of Sinopec Corp.
+had no objection to any of the supervised
+matters. None of Sinopec Corp., the Board,
+the Directors, the Supervisors, the Senior
+Management, the controlling 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.
+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.
+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
+1 IMPROVEMENTS IN CORPORATE
+GOVERNANCE DURING THE REPORTING
+PERIOD
+CORPORATE GOVERNANCE
+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.
+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.
+A.5 Nomination Committee
+9 CORPORATE GOVERNANCE REPORT (IN
+ACCORDANCE WITH HONG KONG LISTING
+RULES)
+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.
+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.
+C.3 Audit Committee
+a. The Board has established an Audit
+Committee. The Audit Committee
+consists of Independent Non-executive
+Director, Mr. Ng, Kar Ling Johnny,
+who serves as the Chairman, and
+Independent Non-executive Directors,
+Mr. Cai Hongbin, Ms. Shi Dan,
+and Mr. Bi Mingjian, who serve as
+members.
+b. During the reporting period, the Audit
+Committee held five meetings (please
+refer to the "Meetings Held by the
+Board Committees" under the section
+of "Report of the Board of Directors"
+in this annual report). The review
+opinions were issued at each meeting
+and submitted to the Board. During
+the reporting period, the Board
+and the Audit Committee had no
+disagreement.
+c. Audit Committee can engage
+independent professionals when
+performing its duties. Reasonable
+costs arising from such consultations
+are borne by Sinopec Corp. In the
+meantime, the Audit Committee has
+appointed consultant members and
+can request such members to provide
+advice. The working expenses of the
+Audit Committee are included in the
+budget of Sinopec Corp. In accordance
+with the policies of Sinopec Corp.,
+the senior management and relevant
+departments of Sinopec Corp. shall
+actively cooperate with the Audit
+Committee.
+d. The Audit Committee has reviewed
+the adequacy and sufficiency of the
+resources for accounting 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
+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.
+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.
+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.
+E INVESTOR RELATIONS
+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.
+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.
+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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+F
+d. According to relevant rules of Sinopec
+d. The external auditors of Sinopec Corp.
+made a statement on their reporting
+responsibilities in the auditor's report
+contained in the financial report.
+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.
+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, 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
+Corp. are published on Sinopec
+Corp.'s website at
+http://www.sinopec.com.
+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.
+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.
+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.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.
+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. 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
+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.
+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.
+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.
+d. During the reporting period, the
+Remuneration Committee held one
+meeting (please refer to "Meetings
+Held by the Board Committees" under
+the section of "Report of the Board of
+Directors" in this annual report).
+C ACCOUNTABILITY AND AUDITING
+C.1 Financial reporting
+a. Directors are responsible for
+supervising the preparation of
+accounts for each fiscal period to
+ensure that the accounts truly and
+fairly reflect the condition of the
+business, 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.
+manner.
+(1) Compliance with the Corporate
+Governance Code
+COMPANY SECRETARY
+b. During the reporting period, the Secretary
+to the Board actively participated in
+career development training for more
+than 15 training hours.
+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.
+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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+39
+Corporate Governance
+(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.
+(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
+(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;
+(3) Mr. Bi holds no share in the
+Company or China Petrochemical
+Corporation as at the date of this
+report;
+(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;
+(1) Mr. Bi was not a relationship
+holder of the Company or China
+Petrochemical Corporation in CICC
+throughout his service in CICC;
+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:
+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".
+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.
+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.
+a. The Board of Directors currently
+A.3Board composition
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+c. The Chairman encourages open and
+active discussions. The Directors
+fully and deeply participated in the
+discussions of significant decisions in
+the Board meetings.
+b. The Chairman of the Board places
+great emphasis on communication
+with the Independent Non-
+executive Directors. The Chairman
+independently held three meetings
+with the Independent Non-executive
+Directors in respect of development
+strategy, corporate governance, and
+operational management, etc.
+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.
+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.
+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.
+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 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.
+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
+Li Yonglin
+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.
+Ling Yiqun
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+G SHAREHOLDERS' RIGHTS
+a. Shareholders who individually or
+collectively hold 10% of the total voting
+shares of Sinopec Corp. may request
+the Board in writing to convene the
+general meeting of shareholders. If the
+Board fails to approve the request to
+convene the meeting according to the
+Rules of Procedure for General Meetings
+of Shareholders, the shareholders may
+convene and hold the meeting at their
+discretion according to applicable laws,
+and reasonable expenses incurred
+will be borne by Sinopec Corp. These
+aforementioned provisions are subject to
+the following conditions: the proposals
+at the general meeting of shareholders
+must fall within the responsibilities of
+the general meeting of shareholders,
+with specific proposals and resolutions
+and in compliance with relevant laws,
+administrative regulations and the
+Articles of Association.
+b. When Sinopec Corp. holds the general
+meeting of shareholders, shareholders
+who individually or collectively hold 3% of
+the total voting shares of Sinopec Corp.
+may propose a supplemental proposal
+10 days before the date of the general
+meeting.
+c. The 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.
+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.
+(2) Auditors
+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
+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.
+(3) Other information about Sinopec Corp.'s
+corporate governance
+Except for their working relationships
+with Sinopec Corp., none of the Directors,
+Supervisors or other senior management
+has any financial, business or family
+relationship or any relationship in other
+material aspects with one another. For
+information about shareholdings of
+substantial shareholders and changes in
+share capital, please refer to page 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.
+10 DETAILED IMPLEMENTATION OF THE
+SHARE INCENTIVE SCHEME DURING THE
+REPORTING PERIOD
+The Company did not implement any share
+incentive scheme during the reporting period.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+37
+Corporate Governance
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+Ma Yongsheng
+Zhao Dong
+11 INTRODUCTION OF DIRECTORS,
+SUPERVISORS AND OTHER SENIOR
+MANAGEMENT
+(1) Directors
+Ma Yongsheng, aged 60, Chairman of
+the Board of Sinopec Corp. Mr. Ma is
+a professor level senior engineer with a
+Ph.D. degree. Mr. Ma is a member of
+the 13th National Committee of Chinese
+People's Political Consultative Conference
+("CPPCC") and an academician of
+the Chinese Academy of Engineering.
+In April 2002, he was appointed as
+Chief Geologist of Sinopec Southern
+Exploration and Production Company;
+in April 2006, he was appointed as
+Executive Deputy Manager (in charge of
+overall management), Chief Geologist
+of Sinopec Southern Exploration and
+Production Company; in January 2007,
+he was appointed as General Manager
+and Party Secretary of CPC Committee
+of Sinopec Southern Exploration and
+Production Company; in March 2007, he
+served as General Manager and Deputy
+Party Secretary of CPC Committee of
+Sinopec Exploration Company; in May
+2007, he was appointed as Deputy
+Commander of Sichuan-East China
+Gas Pipeline Project Headquarter of
+Sinopec Corp.; in May 2008, he was
+appointed as Deputy Director General of
+Exploration and Production Department
+of Sinopec Corp. (Director General
+Level); in July 2010, he served as Deputy
+Chief Geologist of Sinopec Corp.; in
+August 2013, he was appointed as Chief
+Geologist of Sinopec Corp.; in December
+2015, he served as Vice President of
+China Petrochemical Corporation and
+was appointed as Senior Vice President
+of Sinopec Corp.; in January 2017,
+he was appointed as Member of the
+Leading Party Member Group of China
+Petrochemical Corporation; in October
+2018, he was appointed as President
+of Sinopec Corp; in April 2019, he was
+appointed as Director, President and
+Vice Secretary of the Leading Party
+Member Group of China Petrochemical
+Corporation; in November 2021, he was
+appointed as Chairman and Secretary
+of the Leading Party Member Group of
+China Petrochemical Corporation. Mr. Ma
+was elected as Director of Sinopec Corp.
+in February 2016, and was elected as the
+Chairman of the Board of Sinopec Corp.
+in November 2021.
+Zhao Dong, aged 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.
+38
+38
+Yu Baocai
+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.
+Zhang Shaofeng
+49
+Zhao Dong
+60
+Male
+Ma Yongsheng
+Age
+Gender
+Name
+Position in
+Male
+LIST OF MEMBERS OF THE BOARD
+Corporate Governance
+42
+Corporate Governance
+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.
+CORPORATE GOVERNANCE (CONTINUED)
+Bi Mingjian
+51
+Male
+2021
+Company
+(as at 31 December)
+Equity interests in Sinopec Corp.
+the holding
+paid by
+Whether
+(RMB1,000,
+before tax)
+Yu Baocai
+in 2021
+Remuneration
+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
+paid by
+Shi Dan
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+40
+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.
+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.
+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
+of Sinopec Communist Party School. In
+May 2020, he was elected as Employee's
+Representative Supervisor of Sinopec
+Corp.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Lv Dapeng
+Chen Yaohuan
+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.
+Li Defang
+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.
+45
+Corporate Governance
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+LIST OF MEMBERS OF THE BOARD OF SUPERVISORS
+Remuneration
+paid by
+Sinopec Corp.
+Whether
+paid by the
+shareholders
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Guo Hongjin
+Yin Zhaolin
+CORPORATE GOVERNANCE (CONTINUED)
+he was elected as Independent Director of
+Sinopec Corp.
+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
+Zhang Zhiguo
+(2) Supervisors
+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.
+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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+43
+Corporate Governance
+44
+Corporate Governance
+2020
+715.3
+Yes
+441.8
+Former Independent 2015.05-2021.05
+Director
+2020.03-2021.08
+Former Director 2020.09-2021.05
+Tenure
+Former Chairman
+Position in
+Sinopec Corp.
+68
+Male
+50
+Note: According to regulation of the authority, Mr. Fan Gang did not get remuneration from the Company.
+Male
+60
+Male
+Zhang Yuzhuo
+Age
+Gender
+Name
+Remuneration
+LIST OF FORMER MEMBERS OF THE BOARD
+Zhang Shaofeng
+Tang Min
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+paid by
+in 2021
+0
+0
+No
+116.7
+0
+0
+Yes
+0
+0
+Yes
+2020
+2021
+Company
+(as at 31 December)
+Equity interests in Sinopec Corp.
+the holding
+paid by
+Whether
+(RMB1,000,
+before tax)
+oooooo
+Name
+0
+0
+Male
+Ng, Kar Ling Johnny
+54
+Male
+Cai Hongbin
+Yes
+Board Director, 2020.05.2024.05
+Senior Vice President
+59
+61
+Male
+Senior Vice President
+Yes
+Board Director, 2021.05.2024.05
+55
+Male
+Li Yonglin
+Senior Vice President
+Yes
+Liu Hongbin
+Shi Dan
+Bi Mingjian
+Female
+0
+0
+0
+0
+0
+13,000
+13,000
+응응
+0
+No
+0
+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
+0
+Gender Age
+Position in
+Sinopec Corp.
+Tenure
+Age
+Sinopec Corp.
+Remuneration
+paid by
+Sinopec Corp.
+in 2021
+(RMB1,000,
+before tax)
+Whether
+paid by the
+shareholders
+of the
+Company or
+their related
+Gender
+Equity interests in Sinopec Corp.
+entities
+2021
+2020
+Chen Ge
+Male
+59
+Senior Vice President
+1,586.7
+(as of 31 December)
+Name
+Position in
+LIST OF MEMBERS OF THE SENIOR MANAGEMENT
+Yu Xizhi
+Shou Donghua
+(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.
+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
+Department of China Petrochemical
+Corporation; in January 2020, he
+was elected as Director of China
+Petrochemical Corporation. In July 2020,
+he was appointed as Vice President of
+Sinopec Corp.
+Shou Donghua, aged 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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+47
+Corporate Governance
+48
+Corporate Governance
+CORPORATE GOVERNANCE (CONTINUED)
+Zhao Rifeng
+Huang Wensheng
+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, 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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+No
+Chen Ge
+0
+Yu Xizhi
+55
+Vice President, Board Secretary
+1,407.9
+No
+0
+0
+0
+12 INFORMATION ON APPOINTMENT
+OR TERMINATION OF DIRECTORS,
+SUPERVISORS AND SENIOR MANAGEMENT
+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.
+Male
+On 28 January 2021, Mr. Zou Huiping
+resigned as Supervisor of Sinopec Corp. due
+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:
+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.
+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.
+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.
+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.
+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 29 November 2021, Mr. Yu Baocai was
+appointed as President of Sinopec Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+to age.
+Huang Wensheng
+0
+No
+Male
+59
+Vice President
+1,411.0
+No
+Jiang Zhenying
+0
+Shou Donghua
+Female
+52
+Zhao Rifeng
+Male
+59
+Chief Financial Officer
+Vice President
+1,292.4
+No
+0
+0
+1,451.9
+0
+Corporate Governance
+ooo
+Yes
+Male
+56
+Li Defang
+Male
+Lv Dapeng
+Chen Yaohuan
+Male
+Male
+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
+Guo Hongjin
+Yes
+Yes
+403.2
+298.4
+417.2
+1,165.4
+|3| 3| 3|2|2|22|
+0
+0
+Yes
+56
+Male
+Yin Zhaolin
+in 2021
+(RMB1,000,
+before tax)
+of the
+Company or
+their related
+Equity interests
+in Sinopec Corp.
+(as of 31 December)
+Zhang Shaofeng
+Male
+50
+50
+Chairman of the 2021.05-2024.05
+Board of Supervisors
+entities
+Yes
+2021
+2020
+0
+Jiang Zhenying
+Male
+57
+Zhang Zhiguo
+Male
+59
+0
+0
+0
+0
+Age
+51
+Position in
+Sinopec Corp.
+Former Chairman of the 2017.06-2021.05
+Board of supervisor
+Zou Huiping
+Sun Huanquan
+Yu Renming
+Male 61
+Male
+Male
+Supervisor 2006.05-2021.01
+57 Employee Representative Supervisor 2020.05-2021.01
+58 Employee Representative Supervisor 2010.12-2021.01
+46
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Gender
+Male
+entities
+Yes
+2020
+0
+0
+0
+No
+0
+Yes
+0
+2021
+Name
+Zhao Dong
+Equity interests
+in Sinopec Corp.
+(as of 31 December)
+of the
+Company or
+their related
+No
+0
+0
+No
+40,000
+40,000
+No
+0
+0
+No
+0
+0
+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).
+LIST OF FORMER MEMBERS OF THE BOARD OF SUPERVISORS
+Remuneration
+paid by
+in 2020
+Tenure
+(RMB1,000,
+before tax)
+Whether
+paid by the
+shareholders
+0
+0
+31-40
+TECHNOLOGY PERSONNEL AGE STRUCTURE
+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
+(7) Other environmental information to be
+disclosed
+ENVIRONMENT AND SOCIAL RESPONSIBILITIES
+42
+1467
+0
+21-30
+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
+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.
+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.
+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.
+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.
+(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.
+(8) Tianjin LNG project (phase 2)
+Tianjin LNG project (phase 2) mainly
+consists of a new wharf, five new
+220,000-cubic-meter storage tanks etc.
+LNG 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.
+(9) Longkou LNG project
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+55
+Significant Events
+Significant Events
+SIGNIFICANT EVENTS (CONTINUED)
+2 PURCHASE OF EQUITY AND NON-EQUITY
+ASSETS
+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.
+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.
+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.
+3. THE TRANSACTIONS WITH CHINA OIL &
+GAS PIPELINE NETWORK CORPORATION
+(PIPECHINA)
+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.
+56
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+(6) Yifzheng PTA project
+(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.
+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.
+(4) Wuhan de-bottleneck project
+SUPPORT THE WINTER OLYMPIC AND
+PARALYMPIC GAMES BEIJING 2022
+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".
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+53
+Environment and Social Responsibilities
+中国石化
+HNIT
+氢能
+H2
+1,642
+为美好生活加油
+A SUY66
+SIGNIFICANT EVENTS
+1 MAJOR PROJECTS
+(1) Zhenhai refining & chemical expansion
+project (phase 1)
+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.
+(2) Zhenhai refining & chemical expansion
+project (phase 2)
+Zhenhai Refining & Chemical expansion
+project (phase 2) consists of building
+11,000,000 tpa refinery project and
+600,000 tpa propane 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.
+(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.
+便利店
+4 PERFORMANCE OF THE UNDERTAKINGS BY CHINA PETROCHEMICAL CORPORATION
+2,114
+1,000
+5,066
+1%
+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%
+Other Segments
+Administration
+2%
+R&D
+Corporate Governance
+50
+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%
+6,212
+30,725
+8%
+Others
+TECHNOLOGY PERSONNEL EDUCATION STRUCTURE: (INCLUDING PHD, MASTER'S DEGREE, UNDERGRADUATE OR BELOW)
+2,400
+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
+2,500
+2,000
+1,500
+989
+8%
+30,426
+Technical secondary school
+23%
+2,540
+1%
+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)
+500
+Senior high school and
+technical school degrees or below
+35%
+Master's degree or above
+21,839
+6%
+Undergraduate
+109,327
+28%
+Junior college
+87,432
+136,667
+Type of
+5
+Undertakings related to Initial
+Statement of guarantee undue that might be involved in any joint and several liabilities
+Statement of guarantee status
+3,437
+14,863
+0
+11,157
+26,020
+3.36
+0
+9,117
+0
+9,117
+None
+* 1: Guarantee amount refers to the actual amount of guarantee liability that the company may undertake during the reporting period within the approved guarantee limit.
+* 2: As defined in the Rules Governing the Listing of Stocks on Shanghai Stock Exchange.
+* 3: Excluding the interest corresponding to the loan principal agreed in the guarantee contract, export credit premium and other expenses
+* 4: The amount of guarantees provided during the reporting period and the outstanding balance of guarantees amount at the end of the reporting period include the
+guarantees provided by the controlled subsidiaries to external parties. The amount of the guarantees provided by these subsidiaries is derived from multiplying the
+guarantees provided by Sinopec Corp.'s subsidiaries by the percentage of shareholding of Sinopec Corp. in such subsidiaries.
+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.
+58
+58
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Total amount of the above three guarantee items (C+D+E)
+6. SPECIFIC STATEMENTS AND
+The amount of guarantees in excess of 50% of the net assets (E)
+Guarantees provided for shareholder, de facto controller and its related parties (C)
+itself
+Natural Gas Chemical
+Integrated LLC
+January 2021-June 2026
+(the mature date is
+estimated)
+Joint and several
+Normal
+NICO
+No
+No
+No
+No
+liability guarantee performance
+Total amount of guarantees provided during the reporting period*4
+Total amount of guarantees outstanding at the end of reporting period 4 (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 (%)
+Amount of debt guarantees provided directly or indirectly to the companies with liabilities to assets ratio over 70% (D)
+INDEPENDENT OPINIONS FROM
+INDEPENDENT NON-EXECUTIVE
+DIRECTORS REGARDING OUTSTANDING
+EXTERNAL GUARANTEES PROVIDED BY
+THE COMPANY DURING AND BY THE END
+OF 2021:
+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:
+Background
+unit RMB million
+Transaction
+amount
+(467)
+(42)
+Undue
+amount
+Overdue
+154
+2,690
+Origin
+Self-owned fund
+Transaction
+amount
+3,060
+During the reporting period, the Company was not involved in other financing or derivative investment.
+unit RMB million
+Undue
+amount
+Overdue
+3,060
+0
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+59
+59
+Significant Events
+Self-owned fund
+Self-owned fund
+Origin
+(4) OTHER FINANCING AND DERIVATIVE INVESTMENT
+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.
+7 SIGNIFICANT LITIGATION, ARBITRATION
+RELATING TO THE COMPANY
+No significant litigation, arbitration relating
+to the Company occurred during the
+reporting period.
+8 INSOLVENCY AND RESTRUCTURING
+During the reporting period, the Company
+was not involved in any insolvency or
+restructuring matters.
+9
+OTHER MATERIAL CONTRACTS
+Saved as disclosed by Sinopec Corp., the
+Company did not enter into any material
+contracts subject to disclosure obligations
+during the reporting period.
+10 CREDIBILITY FOR THE COMPANY,
+CONTROLLING SHAREHOLDERS AND DE
+FACTO CONTROLLER
+Jan-21
+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.
+12 ENTRUSTED FINANCING AND LOAN
+(1) ENTRUSTED FINANCING
+During the reporting period, the Company
+was not involved in any entrusted financing.
+(2) ENTRUSTED LOAN
+Class
+Working capital loan
+Project construction loan
+(3) OTHER LOAN
+Class
+Project construction loan
+11 TRUSTEESHIP, CONTRACTING AND LEASES
+During the reporting period, the Company
+was not involved in any events relating to
+significant trusteeship, contracting or leases
+for the assets of any other company, nor has
+it placed its assets with any other company
+under a trust, contracting or lease agreement
+subject to disclosure obligations.
+173
+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:
+Sinopec Corp.
+performed or not
+From 22 June 2001
+No
+Yes
+Within 10 years after 29 April 2014 Yes
+or the date when China Petrochemical
+Corporation acquires the assets
+Yes
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+57
+Significant Events
+Significant Events
+SIGNIFICANT EVENTS (CONTINUED)
+5 MATERIAL GUARANTEE CONTRACTS AND THEIR PERFORMANCE
+Major external guarantees (excluding guarantees for controlled subsidiaries)
+Unit: RMB million
+Relationship
+with the
+Guarantor
+Sinopec Corp.
+Company
+Name of
+guaranteed
+company
+deadline or not
+Whether strictly
+Whether bears
+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.
+The listed company Russian Amur
+Undertaking
+IPOs
+Party
+Public Offerings (IPOs)
+Corporation
+Other undertakings
+Other
+Contents
+China Petrochemical 1 Compliance with the connected transaction
+The listed company Zhongtian Hechuang 5,746
+itself
+China Petrochemical
+Corporation
+2 Solving the issues regarding the legality of land-
+3
+4
+5
+6
+use rights certificates and property ownership rights
+certificates within a specified period of time;
+Implementation of the Reorganisation Agreement
+(please refer to the definition of Reorganisation
+Agreement in the H share prospectus of Sinopec
+Corp.);
+Granting licenses for intellectual property rights;
+Avoiding competition within the same industry;
+Abandonment of business competition and conflicts
+of interest with Sinopec Corp.
+agreements;
+Transaction date
+Term for performance
+(date of signing)
+Chemical Co., Ltd.
+Sinopec Corp.
+The listed company Russian Amur
+itself
+3,2644
+Dec-21
+December 2021-December
+Natural Gas Chemical
+Integrated LLC
+2035 (the mature date is
+estimated)
+No
+April 2018 December 2031 Joint and several
+No
+DO
+NO
+No
+No
+No
+No
+No
+Amount"¹
+히
+No
+Apr-18
+Normal
+liability guarantee performance
+Joint and several Normal
+liability guarantee performance
+The listed company Zhong An United Coal 5,680
+itself
+May-16
+Energy Co., Ltd
+Period of guarantee
+May 2016-December
+2023 (the mature date is
+estimated)
+Туре
+Principal
+debt
+condition
+Whether
+completed
+or not
+overdue overdue Counter-
+Whether
+Whether Amount of
+or not guarantee guaranteed yes or no)¹²
+for
+connected
+parties
+Joint and several
+liability guarantee
+Normal
+performance
+guaranty
+- No No - No No
+guaranteed
+Sinopec Corp.
+Reason for provision of funds between related parties
+Impacts on the Company
+3,593
+34,275
+(2,494)
+18,518
+15,757
+6,087
+(5,033)
+21,973
+*: affiliated companies include subsidiaries, associates and joint ventures.
+16,940
+Loans and other accounts receivable and payable
+No material negative impact
+During this reporting period, Sinopec Corp.
+held seven (7) Board meetings. The details
+are as follows:
+63
+Connected Transactions
+wwww
+REPORT OF THE BOARD OF DIRECTORS
+The Board is pleased to present the report of
+the Board of Directors for the year ended 31
+December 2021 for the shareholders' review.
+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;
+1 MEETINGS OF THE BOARD
+(2) The 21st meeting of the seventh
+(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).
+7,143
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+(4,185)
+Funds from related parties
+Associates and joint ventures
+Funds to related parties
+(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.
+5 FUNDS PROVIDED BETWEEN RELATED PARTIES
+Unit: RMB million
+Balance
+at the
+beginning
+Related Parties
+Relations
+of the year
+Sinopec Group
+11,328
+Other related parties
+Parent company and affiliated
+companies*
+10,645
+Amount
+incurred
+(848)
+Balance
+at the end
+of the year
+9,797
+Balance
+at the
+beginning
+of the year
+9,670
+Amount
+incurred
+21,012
+Balance at
+the end
+of the year
+30,682
+Total
+(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
+(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.
+Yu Baocai
+Ling Yiqun
+Li Yonglin
+Ma Yongsheng
+Zhao Dong
+7
+3
+4
+0
+Absent
+0
+No. of
+meetings held
+2
+Actual
+attendance
+2
+4
+1
+2
+1
+1
+1
+7
+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".
+2
+Director
+Director
+Chairman
+Director
+proxy
+(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.
+(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.
+For details of each meeting, please refer
+to the announcements published in China
+Securities Journal, Shanghai Securities News
+and Securities Times after each meeting and
+on the websites of Shanghai Stock Exchange,
+Hong Kong Stock Exchange and Sinopec
+Corp.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+59
+65
+Report of the Board of Directors
+66
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+(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.
+2 IMPLEMENTATION OF RESOLUTIONS APPROVED AT THE GENERAL MEETINGS OF SHAREHOLDERS BY THE BOARD
+3 DIRECTORS' ATTENDANCE TO THE BOARD MEETINGS AND TO THE GENERAL MEETINGS
+(1) Attendance to the board meetings and general meetings during the reporting period by the Directors of the eighth session of the Board
+Director titles
+Name
+Board meeting
+General meeting
+No. of
+meetings held
+Meetings
+On-site attended by
+attendance communication
+Meetings
+attend by
+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.
+(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.
+RMB80 billion by Sinopec
+Finance and Century Bright
+ii
+Sinopec Finance Sinopec Group 51%; Sinopec Corp. 49%
+unit: RMB million
+Daily Cap
+127,920
+13,364
+Interest
+rate range
+0.56%-4.25%
+1.08%-5.23%
+Balance at
+beginning
+6,614
+10,428
+Transaction amount
+Total
+Total
+loan withdrawn
+Balance
+151,233
+32,305
+154,648
+29,369
+in the end
+3,199
+13,364
+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.
+(3) CREDIT OR OTHER FINANCIAL BUSINESS
+Related party
+Sinopec Finance
+unit: RMB million
+Business
+Related party relationship
+nature
+Total
+amount
+Transaction
+amount
+Sinopec Group 51%; Sinopec Corp. 49%
+Sinopec Group 100%
+Century Bright
+Related party relationship
+Related party
+4
+Significant Events
+SIGNIFICANT EVENTS (CONTINUED)
+13 BUSINESS WITH SINOPEC FINANCE CO., LTD. (SINOPEC FINANCE) AND SINOPEC CENTURY BRIGHT CAPITAL INVESTMENT, LTD. (CENTURY
+BRIGHT)
+(1) DEPOSIT
+Related party
+Sinopec Finance
+Century Bright
+Related party relationship
+Sinopec Group 51%;
+Sinopec Corp.49%
+Sinopec Group 100%
+unit: RMB million
+Daily Cap
+Credit
+Interest rate range
+current 0.35%-1.725%;
+time deposit: 1.35%-7.4%
+current 0%-0.25% time
+deposit: 0.08%-1.23%
+Transaction amount
+Total
+deposit
+9,385
+Total
+withdrawn
+9,480
+Balance
+in the end
+15,708
+29,464
+197,800
+176,800
+45,974
+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
+Note 2: the current period's occurrence is on a time deposit basis.
+(2) LOAN
+Balance
+at beginning
+23,953
+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
+9,494
+Discounted bills
+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.
+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.
+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
+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.
+The amounts of the above continuing
+connected transactions between the
+Company and Sinopec Group did not
+exceed the relevant caps for the continuing
+connected transactions as approved by the
+general meeting of shareholders and the
+Board.
+The pricing principles for the continuing
+connected transactions are as follows:
+(a) The government-prescribed price, if any,
+will apply;
+(b) where there is no government-prescribed
+price but where there is a government-
+guidance price, the government-guidance
+price will apply;
+(c) where there is neither a government-
+prescribed price nor a government-
+guidance price, the market price will
+apply; or
+(d) where none of the above is applicable,
+the price for the provision of the products
+or services is to be agreed between
+the relevant parties, which shall be the
+reasonable cost incurred in providing the
+same plus 6% or less of such cost.
+For details of the pricing principle, please
+refer to relevant announcements published
+on 30 August 2021 in China Securities
+Journal, Shanghai Securities News and
+Securities Times and on 29 August 2021 on
+the website of the Shanghai Stock Exchange
+and the website of the Hong Kong Stock
+Exchange.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Decision-making procedures:
+The continuing connected transaction
+agreements were entered into in the ordinary
+course of the Company's business and in
+accordance with normal commercial terms
+that are fair and reasonable to the Company
+and its shareholders. The Company,
+according to its internal control procedures,
+adjusts the scope and the relevant caps
+of continuing connected transactions
+every three years, and will announce and
+implement upon the approval of the Board
+and/or independent shareholders. For the
+other connected transactions, Sinopec
+Corp., in strict compliance with domestic
+and overseas regulatory rules, will publish
+the announcement and implement the
+transactions only after submitting the
+relevant proposals of connected transactions
+to the Board and/or the general meeting of
+shareholders for consideration and approval
+according to internal control procedures.
+Related party transactions with the Sinopec
+Group that occurred during the year, as set
+out in Note 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 above-mentioned connected transactions
+between the Company and Sinopec Group
+were approved at the 2nd meeting of the
+eighth session of the Board and have
+complied with the requirements under
+Chapter 14A of the Hong Kong Listing Rules.
+The external auditor of Sinopec Corp.
+was engaged to report on the Company's
+continuing connected transactions in
+accordance with the Hong Kong Standard on
+Assurance Engagements 3000, Assurance
+Engagement Other Than Audits or Reviews
+of Historical Financial Information, and with
+reference to Practice Note 740, Auditor's
+Letter on Continuing Connected Transactions
+under the Hong Kong Listing Rules, issued
+by the Hong Kong Institute of Certified Public
+Accountants. The auditor has issued its
+unqualified letter containing its conclusions
+in respect of the above-mentioned continuing
+connected transactions in accordance with
+Rule 14A.56 of the Hong Kong Listing Rules.
+Sinopec Corp. has submitted a copy of the
+auditor's letter to the Hong Kong Stock
+Exchange.
+After reviewing the above-mentioned
+connected transactions, the independent
+non-executive directors of Sinopec Corp.
+have confirmed the following:
+(a) The transactions have been conducted
+in the ordinary course of the Company's
+business;
+(b) The transactions have been entered into
+based on either of the following terms:
+i normal commercial terms; or
+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
+7,194
+Note:
+the occurred amount includes the newly issued bills and discounts in the year
+60
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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.
+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.
+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.
+14 APPROPRIATION OF NON-OPERATIONAL
+FUNDS BY THE CONTROLLING
+SHAREHOLDER AND ITS RELATED PARTIES
+AND THE PROGRESS FOR CLEARING UP
+Not applicable
+23,590
+15 STRUCTURED ENTITY CONTROLLED BY
+16 INFLUENCE ON THE INDUSTRY FROM
+NEWLY-ENFORCED LAW, ADMINISTRATIVE
+RULES, REGULATIONS AND INDUSTRY
+POLICIES
+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.
+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.
+None
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+61
+Significant Events
+62
+Connected Transactions
+CONNECTED TRANSACTIONS
+THE COMPANY
+1
+(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.
+2
+5 BOARD SPECIAL COMMITTEES ISSUED
+REVIEW OPINIONS TO THE BOARD WHEN
+PERFORMING THEIR DUTIES DURING
+THE REPORTING PERIOD, WITHOUT
+OBJECTION.
+6 PERFORMANCE OF THE DIRECTORS'
+DUTIES
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+67
+Report of the Board of Directors
+68
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+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."
+7 BUSINESS PERFORMANCE
+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.
+8 DIVIDEND
+The profit distribution policy of Sinopec
+Corp. maintains consistency and steadiness
+and considers the long-term interests
+of the Company, overall interests of all
+the shareholders and the sustainable
+development of the Company. Sinopec Corp.
+gives priority to adopting cash dividends for
+profit distribution and is 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.
+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.
+Proposals for dividend distribution
+(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..
+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.
+(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.
+(8) The 3rd meeting of the seventh session
+0
+0
+1
+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
+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.
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+4 MEETINGS HELD BY THE BOARD
+COMMITTEES
+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:
+(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.
+(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.
+(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.
+(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.
+(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.
+(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.
+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.
+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
+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.
+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.
+332.71
+576.43
+Ratio of the dividends to the net profit attributed to the shareholders of
+the listed company in the consolidated statement (%)
+79.9
+72.8
+65.1
+Note: The final cash dividend for 2021 is subject to the approval at the 2021 annual general meeting.
+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%.
+9 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
+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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION
+Annual Report 2021 69
+Report of the Board of Directors
+0
+712.08
+Net profits attributed to the shareholders of the listed company shown in the
+consolidated statement for the dividend year (RMB billion)
+0.31
+375.33
+0.20
+242.14
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+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
+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%.
+Pursuant to the Notice on the Tax Policies
+Related to the Pilot Program of the Shanghai-
+Hong Kong Stock Connect (
+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
+of 20% on behalf of individual investors and
+securities investment funds. The Company
+will not withhold or pay the income tax of
+dividends for domestic enterprise investors
+and those domestic enterprise investors
+shall report and pay the relevant tax by
+themselves.
+For dividends of investors of the Hong Kong
+Stock Exchange (including enterprises and
+individuals) investing in the A Shares of
+Sinopec Corp. through Shanghai-Hong Kong
+Stock Connect Program, the Company will
+withhold and pay income taxes at the rate
+of 10% on behalf of those investors and
+2
+will report to the competent tax authorities
+for the withholding. For investors who are
+According to the PRC Accounting Standards, the dividend distribution and bonus shares declared by Sinopec Corp. in the past three years are as
+follows:
+2021
+2020
+2019
+Cash dividends (RMB/Share, tax inclusive)
+0.47
+Total amount of cash dividends (RMB billion, tax inclusive)
+569.03
+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.
+1
+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):
+1
+0
+Cai Hongbin
+7
+2
+4
+1
+0
+2
+0
+Ng, Kar Ling Johnny
+7
+3
+4
+0
+0
+2
+0
+2
+0
+1
+4
+2
+0
+7
+3
+4
+0
+0
+2
+Shi Dan
+Bi Mingjian
+0
+2
+2
+0
+0
+1
+0
+Liu Hongbin
+7
+4
+4
+2
+2
+Former Chairman
+Former Director
+Former Independent Director
+Zhang Yuzhuo
+Zhang Shaofeng
+Tang Min
+4
+2
+0
+Absent
+0
+No. of
+meetings held
+1
+Actual
+attendance
+1
+3
+3
+1
+2
+2
+0
+0
+proxy
+meetings held
+2
+No. of
+2
+Meetings
+attend by
+2
+0
+0
+0
+0
+0
+Director
+Director
+Independent Director
+Independent Director
+Independent Director
+Independent Director
+0
+1
+1
+4
+Director titles
+Name
+On-site
+Board meeting
+Meetings
+attend by
+attendance communication
+(2) Attendance to the board meetings and general meetings during the reporting period by the former Directors of the eighth session of the Board
+General meeting
+國信證券股份有限公司
+A Share
+0.17
+0.09
+113,436,276
+183,178,790
+A Share
+0
+202,363,585
+0
+834,160,431
+315,223,600
+0.26
+A Share
+0
+19,554,400
+0.69
+A Share
+213,881,539
+13,846,100
+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
+(6,814,300)
+0
+77
+A Share
+principal Shareholders
+1,054,953,821
+of Principal
+Share Capital and
+Shareholdings
+Shareholders
+Changes in Share Capital and
+Shareholdings of Principal
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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.
+Statement on the connected relationship or acting in concert among the above-mentioned shareholders:
+全國社保基金一一三組合
+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.
+0
+(717,014,841)
+98,655,327
+0.08
+A Share
+中國人壽保險股份有限公司-分红-個人分紅-005L-FH002滬
+0
+110,044,157
+110,044,157
+0.09
+Note 1: As compared with the number of shares held as of 31 December 2020.
+0.87
+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
+香港中央結算有限公司
+CHANGES IN THE SHARE CAPITAL
+1
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
+25 March 2022
+Chairman of the Board of Supervisors
+Zhang Shaofeng
+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.
+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.
+Fourthly, the consideration for assets
+transactions made by Sinopec Corp. was fair
+and reasonable, neither insider trading, damage
+to shareholders' interest nor losses of corporate
+assets were discovered.
+Thirdly, Sinopec Corp.'s internal control system
+was effective. No material defects of internal
+control were found.
+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.
+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.
+CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS (CONTINUED)
+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.
+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.
+A Share
+2 NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS
+(1) Shareholdings of top ten shareholders
+0
+unknown
+926,751
+(283,937,650)
+1.92 2,325,374,407
+A Share
+中國證券金融股份有限公司
+0
+0
+Number of
+shares subject
+to pledges or
+lock-up
+Unit: share
+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.
+Changes of
+shareholding¹
+20.97
+H Share
+HKSCC Nominees Limited²
+68.31
+State-owned Share
+Total number of
+Nature of Percentage of
+Shareholders shareholdings %
+China Petrochemical Corporation
+Name of shareholders
+The shareholdings of top ten shareholders as of 31 December 2021 are listed as below:
+shares held
+82,709,227,393
+25,386,207,159
+(2) Information disclosed by the shareholders of H shares in accordance with the Securities and Futures Ordinance (SFO) as of 31 December
+2021
+4.90
+Citigroup Inc.
+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.
+No special terms for Issuer or investor option or investor protection, thus not applicable
+China Petrochemical Corporation bears non-irrevocable joint liability guarantee. Interest is paid as usual
+during the reporting period without triggering any guarantee.
+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
+Principal and interest repayment
+Outstanding balance (RMB billion)
+Interest rate (%)
+Proceeds from the above-mentioned corporate bonds have been used for their designated purpose as
+disclosed. All the proceeds have been completely used.
+Amount issued (RMB billion)
+Interest commencement date
+Issuance date
+Code
+Abbreviation
+Bond name
+1. CORPORATE BOND
+Bond General Information
+BOND GENERAL INFORMATION
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+78
+Maturity date
+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.
+Investor Qualification Arrangement
+Floor trading at Shanghai Stock Exchange, in line with pledge repurchase requirement
+N/A
+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.
+Applicable trading mechanism
+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
+Shanghai Stock Exchange
+Performance of corporate
+Sinopec Corp. 2012 Corporate bond
+12石化02
+122150
+1 June 2012
+1 June 2012
+1 June 2022
+7
+7
+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.
+bonds trustee
+Sinopec Corp.
+68.83%*
+China Petrochemical Corporation
+68,263,244(L)
+0.04(L)
+11,307,899(L)
+7.95(L)
+% of Sinopec Corp.'s issued
+voting shares (H Share)
+Number of shares interested
+2,029,241,960(L)
+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
+(1) Controlling shareholder
+There was no change in the controlling
+shareholder and the de facto controller of
+Sinopec Corp. during the reporting period.
+4 CHANGES IN THE CONTROLLING
+SHAREHOLDERS AND THE DE FACTO
+CONTROLLER
+0.27(L)
+There was no existing employee shares of
+the Company during the reporting period.
+There was no issuance of securities of
+the Company during the reporting period.
+(1) Issuance of securities during the
+reporting period
+3 ISSUANCE AND LISTING OF SECURITIES
+the substantial shareholder
+Approved lending agent
+Interest of corporation controlled by
+Person having a security interest in shares
+the substantial shareholder
+Interest of corporation controlled by
+Status of shareholders
+(L): Long position, (S): Short position
+(2) Existing employee shares
+66,210,083(S)
+0.26(S)
+1,704,518,264(L)
+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
+China Petrochemical Corporation is the
+de facto controller of Sinopec Corp.
+(3) Basic information of the de facto
+controller
+(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.
+13.54%
+1,095,463,711
+China Merchants Energy
+Shipping Co., Ltd
+58.74%
+456,756,300
+Sinopec Oilfield Equipment
+Corporation
+56.51%
+10,727,896,364
+Corporation
+Sinopec Oilfield Service
+65.67%
+2,907,856,000
+Sinopec Engineering (Group)
+Co. Ltd
+Name of Company
+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
+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.
+6.68(L)
+Name of shareholders
+BlackRock, Inc.
+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.
+中國工商銀行 - 上證50交易型開放式指數證券投資基金
+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.
+19 DIRECTORS' INTERESTS IN COMPETING
+BUSINESS
+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.
+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.
+21 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.
+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.
+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.
+23 EQUITY-LINKED AGREEMENTS
+24 OIL & GAS RESERVE APPRAISAL
+PRINCIPLES
+We manage our reserves estimation through
+a two-tier management system. Our Oil
+and Natural Gas Reserves Management
+Committee, or RMC, at the headquarters
+level oversees the overall reserves estimation
+process including organisation, coordination,
+monitoring and major decision-making,
+and reviews the reserves estimation of
+our Company. Each of our branches has
+a reserves management committee that
+manages and coordinates the reserves
+estimation, organises the estimation process
+and reviews the reserve estimation report at
+the branch level, being responsible to the
+RMC of the Company.
+70
+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.
+As of 31 December 2021, the Company has
+not entered into any equity-linked agreement.
+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.
+18 REPURCHASE, SALES AND REDEMPTION
+OF SHARES
+17 PRE-EMPTIVE RIGHTS
+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.
+Report of the Board of Directors
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+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.
+11 DURING THE REPORTING PERIOD, THE
+COMPANY DID NOT VIOLATE LAWS OR
+REGULATIONS WHICH HAVE A MATERIAL
+IMPACT ON THE COMPANY
+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.
+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.
+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.
+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.
+14 FIXED ASSETS
+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.
+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.
+16 DONATIONS
+During the reporting period, the amount of
+charity donations made by the Company
+amounted to RMB165 million.
+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.
+25 CORE COMPETITIVENESS ANALYSIS
+15 RESERVES
+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.
+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 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.
+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.
+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.
+Dear Shareholders:
+REPORT OF THE BOARD OF SUPERVISORS
+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.
+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.
+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.
+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.
+73
+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.
+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.
+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.
+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
+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.
+REPORT OF THE BOARD OF DIRECTORS (CONTINUED)
+Report of the Board of Directors
+Report of the Board of Directors
+71
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+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 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 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.
+Risks with regard to the cyclical effects
+from the industry: The majority of the
+Company's operating income comes
+from the sales of refined oil products and
+petrochemical products, and part of those
+businesses and their related products are
+cyclic and are sensitive to macro-economy,
+cyclic changes of regional and global
+economy, the changes of the production
+capacity and output, demand of consumers,
+prices and supply of the raw materials, as
+well as prices and supply of the alternative
+products etc. Although the Company is
+an integrated company with upstream,
+midstream and downstream operations, it
+can only counteract the adverse influences of
+industry cycle to a certain extent.
+Risks from the macroeconomic policies
+and government regulation: Although the
+Chinese government is gradually liberalizing
+the market entry regulations on petroleum
+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.
+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.
+72 Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Sinopec Beihai Refining and Chemical
+99
+19,396
+13,461
+5,294
+Company Limited
+21,113
+Limited Liability Company
+44,082
+and Chemical Company Limited
+Sinopec Overseas Investment
+3,009
+100
+23,019
+13,467
+6,317
+4,270
+Holding Limited
+Sinopec Catalyst Company Limited
+1,500
+100
+11,330
+China Petrochemical International
+1,400
+100
+Million USD
+Sinopec Qingdao Refining and
+9,606
+85
+11,807
+27,441
+59
+7,193
+Sinopec-SK(Wuhan) Petrochemical
+Company Limited
+10,616
+17,468
+68
+500
+Sinopec Shanghai SECCO Petrochemical
+233,117
+486,036
+70
+28,403
+Sinopec Marketing Co., Limited
+Chemical Company Limited
+23,265
+40,040
+100
+229,548
+Sinopec Hainan Refining and
+Chemical Company Limited
+13,357
+23,807
+5,000
+100
+1,595
+China International United Petroleum
+31,713
+100
+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
+Registered
+Capital
+On 31 December 2021, details of the principal wholly-owned and controlled subsidiaries of the Company were as follows:
+PRINCIPAL WHOLLY-OWNED AND CONTROLLED SUBSIDIARIES
+lled Subsidiaries
+Principal Wholly-Owned
+and Controlled
+82
+Bond General Information
+4.05
+4.23
+Cash interest coverage ratio
+Interest payment rate (%)
+43.56
+100
+24.65
+12,460
+100
+Increase in total profit
+Increase in net cash flow
+Note: Liability-to-asset ratio indicates the ratio of total liabilities to total assets
+During the reporting period, the Company paid in full and on time the interest accrued for the other bonds and debt financing instruments. As at 31
+December 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.
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+81
+18.91
+0
+5,000
+Exploration and Production Limited
+22,761
+5,476
+22,423
+100
+1,000
+Sinopec Chemical Sales Company
+Limited
+Company Limited
+1,370
+5,319
+100
+Company Limited
+Sinopec Qingdao Petrochemical
+4,789
+9,311
+100
+3,374
+Sinopec Lubricant Company Limited
+Limited Liability Company
+100
+30,655
+14,187
+Sinopec Yangzi Petrochemical
+15,651
+100
+Sinopec Great Wall Energy & Chemical
+Company Limited
+36,602
+Company Limited
+Sinopec Yizheng Chemical Fibre
+4,000
+100
+9,100
+4,330
+22,482
+Sinopec Kantons Holdings Limited
+Company Limited
+60
+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.
+Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
+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.
+OTHER INFORMATION
+KPMG
+REPORT OF THE PRC AUDITOR (CONTINUED)
+84
+Financial Statements (PRC)
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
+83
+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;
+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 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;
+•
+•
+•
+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.
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+The Key Audit Matter
+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.
+•
+Chairman
+Ma Yongsheng
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+85
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+25 March 2022
+He Shu
+Yang Jie (Engagement Partner)
+Registered in the People's
+Republic of China
+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.
+As part of an audit in accordance with CSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS (Continued)
+REPORT OF THE PRC AUDITOR (CONTINUED)
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+Financial Statements (PRC)
+We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit
+findings, including any significant deficiencies in internal control that we identify during our audit.
+• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the 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.
+• 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 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.
+•
+•
+•
+KPMG
+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
+Assessment of impairment of fixed assets relating to oil and gas producing activities
+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.
+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,
+(1,290) Production and sale of polyester chips and
+polyester fibres
+8.28
+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
+1,429
+Net Profit/
+(Net Loss)
+RMB million
+13,830
+14,672
+50
+2,729 Import and processing of crude oil, production,
+storage and sale of petroleum products and
+petrochemical products
+Fujian Petrochemical Company Limited 10,492
+47,039
+50
+10,824
+Sinopec Shanghai Petrochemical
+and Chemical Limited
+18,214
+37,561
+55
+10,000
+Sinopec Shanghai Gaoqiao Petroleum
+Million HKD
+12,590
+12,956
+30,395
+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
+2,817 Production and sale of petrochemical products
+1,606 Production, sale, research and development of
+petroleum, petrochemical, ethylene and
+downstream by-products
+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��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
+Beijing 100738
+1 East Chang An Avenue
+8th Floor, KPMG Tower
+Oriental Plaza
+KPMG Huazhen LLP
+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
+248
+Interest coverage ratio
+0.87
+5.23
+35,439
+5,939
+8,735
+9,267
+4,857
+10
+35,664
+33,724
+11
+207,433
+152,191
+Other current assets
+24,500
+34,861
+23,773
+558,024
+455,660
+Non-current assets
+Long-term equity investments
+12
+209,179
+188,342
+Other equity instrument investments
+767
+1,525
+Fixed assets
+13
+598,932
+Total current assets
+593,653
+12,528
+67820
+Bond name
+Abbreviation
+code
+2. INTERBANK BOND MARKET DEBT FINANCING INSTRUMENT OF NON-FINANCIAL ENTERPRISES
+BOND GENERAL INFORMATION (CONTINUED)
+Bond General Information
+80
+(A) FINANCIAL STATEMENTS PREPARED UNDER CHINA ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
+CONSOLIDATED BALANCE SHEET
+As at 31 December 2021
+Assets
+Current assets
+Notes
+At 31 December
+2021
+RMB million
+18,371
+At 31 December
+2020
+RMB million
+Financial assets held for trading
+Derivative financial assets
+5
+221,989
+184,412
+(Legal representative)
+1
+Accounts receivable
+Receivables financing
+Prepayments
+Other receivables
+Inventories
+9
+Cash at bank and on hand
+Issuance date
+Construction in progress
+155,939
+Short-term loans
+Derivative financial liabilities
+Bills payable
+Accounts payable
+Contract liabilities
+Employee benefits payable
+Taxes payable
+Other payables
+Non-current liabilities due within one year
+Other current liabilities
+Total current liabilities
+Non-current liabilities
+Long-term loans
+Debentures payable
+Lease liabilities
+1,738,896
+Total liabilities and shareholders' equity
+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
+Total equity attributable to shareholders of the Company
+Minority interests
+Total shareholders' equity
+Provisions
+14
+1,283,236
+Current liabilities
+125,525
+Right-of-use assets
+15
+184,974
+189,018
+Intangible assets
+Goodwill
+Long-term deferred expenses
+Deferred tax assets
+Other non-current assets
+16
+119,210
+114,280
+1,331,231
+1,889,255
+17
+8,620
+18
+10,007
+9,584
+19
+19,389
+25,054
+20
+24,240
+27,635
+Total non-current assets
+Total assets
+Liabilities and shareholders' equity
+8,594
+Interest commencement date
+Maturity date
+Amount issued (RMB billion)
+Outstanding balance (RMB billion)
+Interest rate (%)
+0.87
+31 Dec. 2020
+31 Dec. 2021
+Loan repayment rate (%)
+Liability-to-asset ratio (%)
+Quick ratio
+Current ratio
+Principal data
+Principal accounting data and financial indicators for the two years ended 31 December 2021
+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
+Not applicable
+0.55
+No guarantee. Interest is paid as usual during the reporting period without triggering any guarantee.
+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
+Not applicable
+Principal and interest repayment
+Investor Qualification Arrangement
+Applicable trading mechanism
+51.51
+Change
+0
+0.58
+(0.03)
+48.89 2.62 percentage points
+100
+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)
+100
+Net profit of the Company excluding extraordinary gains
+73,785
+(1,565)
+72,220
+(RMB million)
+Net profit/(loss) attributable to equity shareholders of
+the Company excluding extraordinary gains and losses
+Reasons for change
+Change
+2020
+2021
+0
+Increase in liabilities
+Increase in current liabilities
+Reasons for change
+Increase in total profit
+2.5
+2.8
+2.95
+2021/8/5
+2021/7/23
+2020/5/27
+2020/3/31
+2020/3/31
+102101489
+102101480
+102101386
+102001109
+102000569
+102000568
+notes in 2021
+21中石化GN001
+The first green
+medium-term
+2021/8/5
+The third
+notes in 2021
+notes in 2021
+medium-term
+medium-term
+The second
+The first
+medium-term
+notes in 2021
+notes in 2020
+The third
+medium-term
+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
+21中石化MTN002 21中石化MTN003
+2020/4/1
+2020/4/1
+2020/5/28
+3.2
+2.2
+2.7
+2.7
+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
+2024/8/6
+2026/7/27
+2023/5/28
+2023/4/1
+2023/4/1
+2021/8/9
+2021/8/6
+2021/7/27
+Increase in total profit
+Yu Baocai
+Impairment losses
+The accompanying notes form part of these financial statements.
+2020
+2021
+Notes
+For the year ended 31 December 2021
+CONSOLIDATED INCOME STATEMENT
+Financial Statements (PRC)
+Financial Statements (PRC)
+87
+CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2021
+Chief Financial Officer
+Shou Donghua
+The accompanying notes form part of these financial statements.
+Yu Baocai
+President
+RMB million
+(Legal representative)
+Ma Yongsheng
+1,069,943
+522,275
+526,314
+1,147,784
+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
+115,849
+116,440
+209,280
+213,224
+Retained earnings
+Surplus reserves
+Chairman
+1,189
+RMB million
+Less: Operating costs
+Including: Interest expenses
+9,510
+9,010
+10,087
+11,481
+67,082
+62,535
+562
+42
+46
+45
+64,495
+57,891
+Operating income
+44
+259,032
+41
+1,685,674
+2,216,551
+40
+2,104,724
+2,740,884
+40
+Financial expenses
+Research and development expenses
+General and administrative expenses
+Selling and distribution expenses
+Taxes and surcharges
+235,018
+15,018
+1,658
+6,024
+439
+13,702
+Other current liabilities
+12,026
+16,737
+Non-current liabilities due within one year
+188,568
+211,179
+Other payables
+43,500
+46,333
+Taxes payable
+1,673
+Total current liabilities
+8,398
+5,840
+7,505
+Contract liabilities
+65,779
+85,307
+6,061
+6,058
+362
+1,121
+20,669
+16,550
+1,069,943
+1,147,784
+Employee benefits payable
+5,910
+412,890
+Non-current liabilities
+68,976
+67,897
+121,071
+121,071
+547,668
+621,470
+3,581
+202,751
+208,580
+3,103
+36,089
+35,271
+105,691
+104,426
+344,917
+26,977
+30,413
+34,258
+Specific reserve
+Other comprehensive income
+Capital reserve
+Share capital
+Shareholders' equity
+Total liabilities
+Total non-current liabilities
+Other non-current liabilities
+Provisions
+Debentures payable
+Lease liabilities
+Long-term loans
+31,522
+846,863
+15,198
+5,732
+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
+Changes in fair value of other equity instrument investments
+Items that may be reclassified subsequently to profit or loss
+Classification by going concern:
+Other comprehensive income that can be converted into profit under the equity method
+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.
+Ma Yongsheng
+Chairman
+(Legal representative)
+Yu Baocai
+President
+The accompanying notes form part of these financial statements.
+Cost of hedging reserve
+88
+347
+Including: Net (loss)/profit of acquiree before business combination under common control
+51
+(13,165)
+(26,087)
+Asset disposal gains
+665
+2,067
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+112,414
+50,803
+23
+55
+(200)
+52
+2,370
+53
+7,582
+4,732
+108,348
+48,441
+Less: Income tax expense
+Net profit
+54
+23,318
+6,344
+85,030
+42,097
+3,516
+Interest income
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+33,271
+INCOME STATEMENT
+For the year ended 31 December 2021
+Notes
+2021
+2020
+RMB million
+(2,311)
+Credit impairment losses
+(1,253)
+3,341
+50
+Losses from changes in fair value
+6,712
+Chief Financial Officer
+23,253
+47,486
+6,032
+49
+Investment income
+7,514
+5,850
+48
+Add: Other income
+9,716
+12,382
+47
+Exploration expenses, including dry holes
+4,803
+Including: Income from investment in associates and joint ventures
+71,208
+Shou Donghua
+34,665
+13,822
+8,826
+65
+0.588
+0.275
+65
+0.588
+0.275
+38
+(4)
+(22)
+(4)
+(22)
+7,747
+17,511
+441
+(2,441)
+(220)
+162
+19,018
+7,073
+(1,728)
+(4,457)
+17,507
+315
+102,537
+42,412
+88,782
+13,755
+337
+872,679
+26,828
+34,227
+808,540
+584,315
+156,174
+148,350
+1,774
+3,256
+30,551
+29,868
+10,102
+9,098
+10,644
+8,749
+13,602
+40
+11,892
+3,181
+Exploration expenses, including dry holes
+10,502
+8,297
+Add: Other income
+4,045
+4,922
+Investment income
+49
+30,881
+43,356
+Including: Income from investment in associates and joint ventures
+8,151
+2,953
+3,637
+770,321
+40
+28
+76,848
+81,267
+7,129
+14,048
+126,241
+124,622
+151,514
+203,919
+24
+10,394
+11,721
+4,826
+1,045,000
+20,756
+2622222223
+27
+Financial Statements (PRC)
+RMB million
+Operating income
+Less: Operating costs
+Taxes and surcharges
+Selling and distribution expenses
+General and administrative expenses
+Research and development expenses
+Financial expenses
+Including: Interest expenses
+Interest income
+27,366
+3,223
+114,701
+Gains from changes in fair value
+350
+13,612
+4,766
+Other comprehensive income that can be converted into profit or loss under the equity method
+Cash flow hedges reserve
+12
+(182)
+13,600
+4,948
+Total other comprehensive income
+13,612
+4,766
+Total comprehensive income
+53,056
+23,338
+18,572
+These financial statements have been approved for issue by the board of directors on 25 March 2022.
+(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
+89
+Financial Statements (PRC)
+(2,066)
+25
+Annual Report 2021 CHINA PETROLEUM & CHEMICAL CORPORATION
+86
+Ma Yongsheng
+Chairman
+644
+39,444
+39,444
+Credit impairment reversal
+Impairment losses
+Asset disposal gains
+Operating profit
+Add: Non-operating income
+Less: Non-operating expenses
+Profit before taxation
+Less: Income tax expense
+Net profit
+Classification by going concern:
+Continuous operating net profit
+Termination of net profit
+Other comprehensive income
+Items that may be reclassified subsequently to profit or loss
+18,572
+1
+(7,192)
+58
+(16,374)
+261
+45,150
+10,974
+776
+900
+2,209
+1,319
+43,717
+10,555
+4,273
+(8,017)
+71
+85,012
+29
+28,651
+223,080
+275,105
+Total current assets
+14,048
+23,408
+Other current assets
+39,034
+63,661
+37,938
+46,929
+2,626
+4,540
+|||
+Non-current assets
+10
+707
+227
+21,763
+7,776
+4,503
+21,146
+7
+99,188
+110,691
+Inventories
+Other receivables
+Prepayments
+Receivables financing
+Accounts receivable
+9
+Derivative financial assets
+Long-term equity investments
+Other equity instrument investments
+12,661
+8,715
+Accounts payable
+Bills payable
+Derivative financial liabilities
+Short-term loans
+Current liabilities
+Liabilities and shareholders' equity
+Total assets
+Total non-current assets
+Other non-current assets
+Deferred tax assets
+2,499
+12
+2,875
+8,779
+9,334
+Intangible assets
+108,737
+59,880
+283,695
+428
+343,356
+360,847
+201
+284,622
+66,146
+105,712
+345
+Right-of-use assets
+Construction in progress
+Fixed assets
+Long-term deferred expenses
+Cash at bank and on hand
+Current assets
+Assets
+36
+850,176
+973,214
+327,181
+331,934
+17,950
+18,276
+8,124
+7,910
+45,552
+43,525
+171,740
+170,233
+121,071
+38,356
+45,459
+49,341
+123123
+35
+19
+34
+333
+522,995
+641,280
+17,781
+31,762
+30
+22,494
+42,649
+121,071
+37
+120,188
+RMB million
+2020
+At 31 December
+RMB million
+At 31 December
+2021
+Notes
+As at 31 December 2021
+BALANCE SHEET
+Chief Financial Officer
+Shou Donghua
+1,738,896
+1,889,255
+888,720
+916,041
+141,426
+140,939
+747,294
+775,102
+286,575
+318,645
+209,280
+213,224
+39
+1,941
+2,664
+1,038
+(690)
+38
+127,389
+President
+Financial Statements (PRC)